Astonishing technologies will continue upending our world

Thomas Hart Benton’s ink, pencil and watercolor on paper titled “Poking Stick in Cotton Gin,” circa 1930, sold for $12,500 at a May 2018 Heritage auction.

By Jim O’Neal

A Luddite is an obscure term loosely used to describe people who dislike new technology. After a superficial self-assessment, I’ve concluded I’m probably a modern-day Luddite at heart. The evidence is abundant since I’ve scrupulously avoided Facebook, have zero interest in posting pictures or video on Instagram and consider Twitter an enormous thief of time. Social media is not a place I’m interested in wasting my remaining time on.

That said, I don’t know how to account for my iPhone 11, iPad Pro or the 75-inch Sony 4K LED that dominates our den (or the six other cable boxes on three floors). With my iPad, I rarely use my desktop computer except to print documents. I abhor texting and still have a Netflix account that sends me DVDs by snail mail. After spending the past 60 years questing for ever-larger TV screens, the idea of squinting at a cellphone or watch-size TV program is mildly abhorrent. Even more annoying is the spate of robo-calls offering new Medicare options. I routinely turn off my devices for hours (ah … peace).

The original Luddites were British weavers and textile workers who objected to the increased use of mechanized looms and knitting frames. It is popularly claimed that they named themselves after Ned Ludd, a young apprentice who was rumored to have personally wrecked a textile apparatus (“in a fit of rage”) in 1779. There is no evidence Ludd actually existed, but he eventually became the mythical leader of the movement. They even issued manifestos and threatening letters under his name.

The first major instance of malicious machine breaking took place in 1811 in Nottingham. The British government moved to quash the uprisings by making machine breaking punishable by death. The unrest finally reached its peak in April 1812 when a few Luddites were gunned down during an attack on a mill near Huddersfield. Finally, the army deployed several thousand troops and dozens of Luddites were either hanged or transported to Australia.

In the intervening years, astonishing new technologies have increased productivity, lowered costs and created hundreds of millions of new jobs. A few of the more obvious include:

  • The cotton en(gin)e that turned a marginally profitable farm crop into a bonanza by minimizing labor by over 90 percent while increasing workers from 700,000 to 3.2 million. Historians point out the South gained a 75 percent share of world demand, but also doomed them to remain an agricultural economy (with slaves). Others contend this single invention led directly to the Civil War.
  • Cyrus McCormick’s mechanical reaper helped convert millions of acres to food production and developed Midwest family farms with “wheat fields shining from sea to sea.” Presumably, American Indians, buffalo, dense forests and pristine rivers and lakes were unimpressed.
  • The Wright Brothers gave man the gifts of flight, aircraft factory jobs, cargo shipments and holiday travel for the masses. It also enabled two world wars and the ability to destroy entire cities.
  • Commercialization of the Bessemer process to supply the enormous steel demand for railroad tracks that crisscrossed the nation and enabled high-rise buildings with Otis elevators and office workers too numerous to count.
  • Henry Ford’s assembly line made automobiles affordable … in turn, creating more workers to stay up with demand and higher wages to buy the product. This was followed by oil-gas, tires, paved roads, motels and Uber/Lyft). Also smog, toll roads and clogged freeways in every city.
  • The Internet is obsoleting retail stores and shopping malls, while enabling Apple, Google, Amazon and global outsourcing that has raised 500 million people out poverty.

We are now challenged to reconcile population growth with climate change and plastic oceans; and robots and artificial intelligence with displaced workers and a K-12 Education System that is failing so many currently. Joseph Schumpeter’s 1942 theory of Creative Destruction is still valid.

The London Mensa Organization just accepted a 3 year old with an IQ of 142+. There will also be more Elon Musks and they will figure it out. One suggestion is to simply operationalize what’s known as “5G-based” nuclear power plants, which are 100 percent green (it will shut itself down if needed) and run on spent fuel stockpiles. Imagine unlimited clean power that will desalinate sea water and gobble up current waste. Bill Gates is an investor in the technology.

Just a casual idea as we watch the Washington Circus and the people we rely on for leadership.

Intelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is president and CEO of Frito-Lay International [retired] and earlier served as chair and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Walt Disney is Proof that Great Ideas Can Come Out of Nowhere

Walt Disney’s passport, dated Aug. 19, 1965, sold for $28,680 at an April 2007 Heritage auction.

By Jim O’Neal

I never met Walt Disney. He died four months after I joined Frito-Lay in 1966 and was among the last of a generation that smoked three packs of unfiltered cigarettes a day. He died of lung cancer.

However, like virtually everyone else in Southern California, we were familiar with the incredible theme park he built in nearby Anaheim. Disneyland opened to the public on July 17, 1955, and Frito-Lay had a direct relationship with Disneyland through a Mexican food restaurant in Frontierland called Casa de Fritos (Home of Fritos). It featured a unique product called a “Ta-cup” … basically, traditional taco ingredients served in a fried tortilla cup that helped with eating on-the-go using one hand.

I met the manager, Joe Nugent, during a meeting with Frito-Lay corporate officers from Dallas (The Flying Circus) who were in Los Angeles to review our zone’s 1967 profit plan and operating budgets. The only surprise was a mild rebuke to Nugent: “Dammit Joe, we told you last year that we don’t want to make a profit. The whole idea is to expose more people to Fritos and build the brand!” Joe just nodded and resorted to his previous tactic of lowering prices in the hope of lowering profits. Alas, it seemed that the more he dropped prices, the more the crowds waited in line to buy even more. What he experienced was the 1960s version of leveraging overhead costs, which lowered margins but increased total profitability. The Sam Walton slogan of “stack ’em high and sell ’em low.”

Another surprise was the mid-1967 completion of Club 33 at Disneyland, a private club with a top-notch restaurant that could only be accessed with a special card and hidden elevator. Frito-Lay was one of 33 local companies with membership, along with Carnation, Bell Telephone and Bank of America. It was the only place in the park where alcoholic beverages were served and in 2010, I read there was a 14-year waiting list for new members. Frito-Lay is now the crown jewel in the PepsiCo empire and analysts are advocating they get out of the beverage business.

From what I’ve read, Walter Elias Disney was a lot like the two men who started the Frito and Lay companies: humble beginnings, entrepreneurial and ambitious. Disney went broke when no one would buy his first animated films, Alice Comedies, so he moved from Kansas City to Hollywood in 1923, took out a home equity loan for $2,500 and rented the back room of a local real estate office where he created the studio that would become the Walt Disney Company‍. What a success story from another “garage” operation it has become.

We then moved to Cupertino in the Bay Area, where the business guys only seemed to talk about technology (using names like Ampex, Atari and H-P) and whispered about the next garage operation that would be a huge success. What we didn’t realize is that we had moved into one of the greatest wealth-creation areas in the history of the world … where two members of the Homebrew Computer Club – both college dropouts – set up shop to sell their techie friends the circuit boards one of them had invented. There are several versions of why they named their company Apple, but the consensus is Steve Jobs had been working at an apple orchard. Our old backyard is not far from the $5 billion Apple campus, but nobody tipped us about what the future might be.

We never heard the term “Silicon Valley” or about two guys in Vermont who had pooled their resources to make ice cream in an abandoned gas station after installing a 4½-gallon freezer. Ben Cohen and Jerry Greenfield were on the opposite end of the technology spectrum when they made a low-tech fortune with Ben & Jerry’s. Of course, not every inventor sticks his hand into a tin and comes up with “Chunky Monkey.” Most will fail. Even those who receive patents and set up small companies will not make these kinds of fortunes. Consider poor Eli Whitney, who invented the cotton gin in 1793 while working as a tutor at a Georgia plantation. His was probably the most influential invention in the 18th century and it got him into the history books, but nothing in the bankbook.

But that’s not the point. The dream that it’s possible, that an idea can come out of nowhere and can – with a lot of hard work – lead to success is more alive than ever. That kid working away or thinking about dropping out of Harvard to start his own company can change the world. Still skeptical? Just ask Bill Gates.

Intelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is president and CEO of Frito-Lay International [retired] and earlier served as chair and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].