The QWERTY keyboard, the name coming from the order of the first six keys on the top left letter row of a keyboard, was based on the layout invented in the early 1870s by Christopher Latham Sholes, a newspaper editor and printer who lived in Kenosha, Wisconsin. The first iteration of his keyboard layout proved far from perfect, and over a period of five years, he refined his layout to very close to what we see today. In 1873, Sholes typewriter manufacturing rights were sold to E. Remington and Sons and the keyboard layout we use today was finalized within a few months. Though not proven, it is thought that the main reason for the layout was to reduce the likelihood of internal clashing of typebars inside the typewriter by placing commonly used combinations of letters farther from each other inside the machine.
Perhaps when you read “Remington” as the buyer of the rights to the typewriter, you may have thought to yourself, “Hmmmm. That name sounds familiar.” And, to all my hunting friends…you’d be right. Eliphalet Remington founded the company in 1816. Once upon a time, Eliphalet (quite the name hey?) wanted to purchase a rifle, but lacked the money to do so, so he made his own. That’s right, the company was founded as a firearms manufacturer. Perhaps you’ve heard of the Remington 700 or the Keen Sporting Rifle or the Hepburn No. 3.
But why would a rifle manufacturer buy the rights to a typewriter company? Why would the founder of a very profitable company put his name and fame on the line by getting involved in a new fad they may have proved fruitless? Why would Eliphalet risk his hard-earned revenue on a flier? Is it all in the name of diversification…or risk mitigation…or just something fun to do? Or is there some other driver underlying the issue?
Well, let’s look back at other examples of CEOs that made surprising acquisitions that seemingly made no sense at the time.
- In 1935, Mars maker of candy bought Chappell Brothers…which made canned dog food.
- In 1963, Tandy maker of shoe leather snatched up RadioShack…an electronics company.
- In 1965, General Mills maker of cereal purchased Play-Doh Company.
- In 1979, Getty Oil purchased an 85% stake in ESP Network…better known as ESPN.
- In 1999, Starbucks purchased Hear Music…a small music retailer and record label.
- In 2007, Clorox known for selling bleach, bought Burt’s Bees a chapstick producer.
While I’m at it, let’s think through some modern-day examples of CEOs that have bought seemingly unrelated companies. How about Elon Musk, CEO of Tesla who famously bought Twitter in 2022. Fairly unrelated yes? How about Mark Zuckerberg, CEO of Facebook risking his empire on the Metaverse, even going so far as to change the company’s ticker symbol that trades on the New York Stock Exchange to META. What is the metaverse and what does it have to do with his core business? Best I can tell, the metaverse is for extreme introverts who want to avoid human interaction at all costs.
So, what gives? Why would these companies and CEOs make acquisitions that are so seemingly unrelated to their core business? Unfortunately, there’s an oblivion of answers to this question, but allow me to share mine:
- Because they can.
- See #1.
For those of you who think I’m trying to be funny…rest assured I am not. That’s literally the answer. We spill a lot of ink on these CEOs decisions to seemingly veer off course in the unrelated businesses they buy or start. But in the end…it’s their business. They founded it, they run it, they earned the right to do what they want with it. If it works, they’re heroes. If it doesn’t, it’s their loss. To the extent it’s a publicly traded company that you’re investing in alongside them when it happens, that’s your decision to either double down and ride along with them, or sell the stock and find another investment.
In the end, investing is hard. And what companies do with their money can be infuriating or it can be a delight. But at the end of the day, we live in a free market society. Capital markets allocate money towards the best ideas. So if you agree, buy. If you don’t, sell and allocate elsewhere.
Oh, by the way…Remington? The company continued to sell typewriters until around 1955 when Sherry Corp bought that portion of the business. From there, the company underwent a tangled mess of mergers and buyouts. Ultimately, Remington filed for bankruptcy in 2018, then reorganized as Remington Outdoor. Then, as a result of declining sales during COVID, it filed again for bankruptcy again in 2020. History reveals that Eliphalet’s decision to buy the typewriter business may not have been the best decision. But he did it…because he could.
Free markets allow for the buying and selling of companies and the ideas it espouses. Let’s be grateful for the opportunity to live in this great nation where freedom of thought can be expressed!