Two start-ups a couple of years apart became the inspiration for each other to get better and better and better.
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from Mom-and-Pop to major brands.
Stephen Semple is a marketing consultant, story collector and storyteller. I’m Steven’s sidekick and business partner, Dave Young.
Before we get into today’s episode, a word from our sponsor, which is, well, it’s us. But we’re highlighting ads we’ve written and produced for our clients, so here’s one of those.
[AirVantage Heating & Cooling Ad]
Dave Young:
Welcome back to the … Wait, what? Gosh, you told me the title, and I have some thoughts, and I forgot the name of the podcast there for a second. Welcome back to the Empire Builders Podcast.
Stephen Semple:
We’re doing two together here, Dave, Firestone and Goodyear.
Dave Young:
Stephen Semple’s over there. I’m Dave Young. And this morning we’re talking about Goodyear and Firestone, both?
Stephen Semple:
Yes, together.
Dave Young:
Because it’s kind of one thing now, right?
Stephen Semple:
No, they are separate.
Dave Young:
Was it?
Stephen Semple:
They’re separate.
Dave Young:
No, they’re separate.
Stephen Semple:
The story is so intertwined between the two of them. I couldn’t figure out a way to break it. But it’s almost kind of like when we did Hertz Avis, like they’re so interlinked.
Dave Young:
Yeah, yeah, yeah.
Stephen Semple:
Yeah. So we’re doing it as a single podcast, the two of them.
Dave Young:
All right. Where do we start?
Stephen Semple:
Well, what’s interesting is they were both started within two years of each other, both in Akron, Ohio. So Goodyear was founded on August 28th, 1898 in Akron, Ohio by Frank Seiberling. And today they’re the third-largest tire maker in the world with about 18 billion in sales.
And Firestone was founded in August, two years later by Harvey Firestone in Akron, Ohio. And in 1988, Firestone was purchased by Bridgestone for $2.6 billion.
Dave Young:
That’s the one. That’s the one I was [inaudible 00:02:51] yeah.
Stephen Semple:
Yeah, and Bridgestone today is number two behind Michelin with Goodyear being number three. So both really, really big, really big companies.
Dave Young:
And in 18 when?
Stephen Semple:
So 1898 was Goodyear, and 1900 was Firestone.
Dave Young:
And this is before, this is before mass production of automobiles.
Stephen Semple:
Yes. Yes. Because if you go back to Episode 35 where we talk about Ford, 1908 is the Model T. So it’s pre-model T.
Dave Young:
Yeah. So which came first, the tire or the car?
Stephen Semple:
Well, because there were tires on carriages.
Dave Young:
No, that’s true. All right.
Stephen Semple:
And today Michelin is the largest in the world. So if you want to learn about Michelin, go back to Episode 27, because it’s also really interesting how Michelin grew their business. But so we’re dealing with Goodyear and Firestone.
Dave Young:
All right. So Goodyear-
Stephen Semple:
And if you think about it, you’re right. Most of the transportation at this time when these companies started were either horse-and-carriage or bicycles. That’s what basically people were using.
And Harvey Firestone, he grew up on a farm and went to a business school and was a carriage salesman in Detroit. And at this time, the use of natural rubber is expanding due to vulcanization being created.
Because before vulcanization, natural rubber was not very durable. It would crack and all these other things. And carriage wheels were basically a wood wheel with a metal rim around it, no give, a hard ride.
Dave Young:
Right. Yeah, yeah. I mean, even a rim made of rubber would be better than a rim made of steel.
Stephen Semple:
Right. So basically he’s a carriage salesman. What he realizes is that what we should do is we should put rubber, instead of steel around the wheel, and that would make a smoother ride.
So he leaves Detroit, moves to Akron, Ohio, because Akron, Ohio at the time is the center of the rubber industry.
Dave Young:
Okay. Why is that?
Stephen Semple:
I think it had to do with just the fact there was a couple of companies that sprung up in the area. There was the resources in terms of water and a few things along that lines.
Dave Young:
And the rubber barons came in [inaudible 00:04:56].
Stephen Semple:
But there was a lot of that that was happening with … Look, you see it in technology. A couple of companies happen and then …
Dave Young:
Yeah, there’s this-
Stephen Semple:
It attracts the talent, it attracts the people, it attracts the investment.
Dave Young:
There’s this synergy that happens. It was before the word existed.
Stephen Semple:
Yeah, basically.
So he creates and starts selling a wagon wheel that has a solid rubber tire. And so he’s doing these solid tires, and he starts seeing the market shifting to a pneumatic tire. So a tire with a tube in it.
Dave Young:
With the air inside it. Yeah.
Stephen Semple:
And he’s also starting to see car sales increasing so he decides to do that. Because even though it’s a niche, he’s seeing it as growing, and he didn’t really get great traction on the wagon tire.
But the first pneumatic auto tire is this thing called a Clincher. The tire is attached to the rim by these metal hooks, but these metal hooks can kind of become a bit of a problem. They can tear the tire, things along that lines. So he decides to make, Firestone decides to make a superior car tire, and he creates this new rim and tire system that’s basically better than the Clincher tire.
But the problem, at this point, is the rim is part of the car. Basically, it’s hard to change all that. So who’s willing to-
Dave Young:
Every car has a different one and … Yeah.
Stephen Semple:
Right. So what he does is, is he approaches Henry Ford because he hears the Model T is coming out, and Firestone undercuts the Clincher to get a foothold in the industry. He says, “Look, I’m just going to come in with a really cheap price. That’s how I’m going to get into there.” And he gets an order for 2,000 units, $110,000 order, and he’s basically betting everything on the ability to deliver on this order. Okay?
Dave Young:
Wow. Okay.
Stephen Semple:
Now, enter Goodyear, a little bit of Goodyear history. So I mentioned Goodyear was founded by Frank Seiberling, and Frank had tried several businesses with no success, but he saw the rubber industry as an area for growth.
Younger brother joins, and they need a name, and what the inventor of vulcanized rubber was Charles Goodyear. So they decided to call the tire company Goodyear after Charles Goodyear.
Dave Young:
Just associate yourself with that. Yeah.
Stephen Semple:
Yeah. Now-
Dave Young:
Did Charles, was he in on it, or did they just named it after?
Stephen Semple:
They just named it Goodyear.
Dave Young:
Okay. You can do that, huh?
Stephen Semple:
I guess. They were able to.
Dave Young:
All right.
Stephen Semple:
So they’re buried in debt, things aren’t going so great, but what they wanted to do is the big growth around this time was bicycles. So they create a vision to create a new type of tire for the bicycle, because it’s a huge craze at the turn of the century, turn of a couple of centuries ago. So there’s like 300 manufacturers of bicycles in the United States, including the Wright Brothers.
Dave Young:
Right. Yeah.
Stephen Semple:
But again, they were solid tires. And what these guys created was a pneumatic tire, what Goodyear has created was a pneumatic tire for bicycles because it’s way more comfortable than a solid tire, right?
Dave Young:
Way more comfortable. Yeah.
Stephen Semple:
Yeah. So they’re all in and this has to work, but here’s the problem. Bicycle sales stop because, essentially, everyone who wants one has one. So bicycle sales kind of collapsed.
And so they’re struggling here, and what they decide to do is they look at the auto business, and they go, “Hey, the auto business is going over there, and we could create a better tire than a Clincher.”
Dave Young:
Yeah. [inaudible 00:08:24]
Stephen Semple:
Great. And so who do they decide to approach? They decide to approach Henry Ford because they hear about this Model T coming out. But Ford has already done a deal with Firestone, right?
But Goodyear says, “We got an advantage. Here’s the problem. Their tire, the Goodyear tire, Clincher tires will also work on a Goodyear rim. Clincher tires will not work on a Firestone rim.” And here’s what Goodyear says to Ford, says, “You got a problem. Because if somebody needs a new tire, not everywhere had access to Firestone tires, but everybody has access to Clincher tires. So, therefore, our solution is better.”
So basically, Ford cancels the deal with Firestone and goes with Goodyear.
Dave Young:
Oh, no.
Stephen Semple:
And basically says to Firestone, “I need you to make Clincher tires, which has almost no money in it for Firestone because they got to pay a licensing deal with Clincher.
Isn’t it interesting in all of this, Clincher clearly didn’t innovate because we’ve never heard of Clincher before this moment?
Dave Young:
Oh, right. Yeah. I mean, terrible name, but-
Stephen Semple:
Clearly didn’t innovate.
Dave Young:
Right, didn’t figure out that we don’t need these metal things.
Stephen Semple:
Because they’re clearly the leader at the time, and we don’t hear them any longer.
Dave Young:
Yeah, yeah. So they had a lead in the market, but …
Stephen Semple:
So 1908 comes out, the Model T comes out. It’s Goodyear tires on the Model T, Episode 35, go back and learn about the Model T, and Goodyear takes out ads that Goodyear tire is better. By 1909, all GM cars are Goodyear tires. By 1910, Goodyear is doing like four million in sales, which is like 30 million today.
Firestone is not done.
Dave Young:
Yeah.
Stephen Semple:
So back to Firestone, they see these Goodyear ads, and they figure we’ve got to get a competitive advantage over Goodyear.
We’re going to go back to 1908, go back a couple years. The auto industry, tire industry is exploding. The streets are getting clogged with cars, lots of dust, no rules, chaos, and tires are completely smooth. There’s no tread.
Dave Young:
Okay. Yeah. That’s …
Stephen Semple:
And they’ve been all sorts of thing people are putting rivets in, metal, all this other stuff to try to create some sort of traction on these tires, right? Especially as the speed of the cars are getting faster.
And what Firestone did, they did a lot of research to make traction. And what they discover is let’s do raised sections. Let’s put treads on the tire.
Dave Young:
Right. Okay. Well, I mean, there you go.
Stephen Semple:
Works way better. And what they decide to do, they call it the Firestone Non-skid-
Dave Young:
Stay tuned, and we’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Using Stories To Sell Ad]
Dave Young:
Let’s pick up our story where we left off and, trust me, you haven’t missed a thing.
Stephen Semple:
And what they decide to do, they call it the Firestone Non-skid, and they put that as the pattern on the tread. So if you look down onto a muddy road, what you would read is Firestone Non-skid. Isn’t that awesome?
Dave Young:
That’s so smart. I love that.
Stephen Semple:
So basically the ad is on the ground. They sell-
Dave Young:
Yeah, because it’s written in the mud. It’s written in the snow.
Stephen Semple:
It’s written in the mud, written in the snow, written on the ground, right? So they sell like 40,000 units in the first year.
And now Goodyear starts to feel the pressure from Firestone on the non-skid tire. So they’re like, okay, what are we going to do here? So what Goodyear comes out with is a diamond pattern because it actually has better grip than letters.
And at the same time, it’s still unique because they’re the only ones that have a diamond pattern. And they market it as, and I thought this … You know how we always love this whole idea of attaching the familiar to the unfamiliar? They market it as the first all-weather tire.
Dave Young:
All weather. Yeah.
Stephen Semple:
Right? Goodyear then, who was ahead of Firestone with this tire, and at this time, all the tire manufacturers are targeting the manufacturers. They’re trying to get in with the manufacturers.
Dave Young:
Yeah, yeah.
Stephen Semple:
And it’s 1910. Firestone’s doing three million in sales compared to Goodyear’s four million.
But what about consumers and replacement? What would make their lives better? This is the question Firestone starts to ask because it was really hard to change the tire at that time because early tires were attached to the rim, and the rims were permanently attached to the axle. So you couldn’t just remove the wheel and replace it with another wheel.
What Firestone creates is a rim called a demountable rim. It’s this novel idea that you could just take the rim off.
Dave Young:
Wow. Okay. That’s great.
Stephen Semple:
And risk of tire failure was high. So guess what this created? The whole idea of a spare, and now anyone can change a tire-
Dave Young:
Nice, yeah.
Stephen Semple:
… because you’ve got an extra tire. You could just take the rim off, put the new rim on, and you’re all good to go.
And this gets so popular that car companies are now creating ways to carry a spare, a rim and a pump, because now anyone can change tire by themselves.
By the end of the decade, all Model Ts have a spare. And guess what? Imitators, including Goodyear, jump onto this idea. It’s 1916.
Dave Young:
Sure.
Stephen Semple:
Firestone’s selling $44 million. Goodyear is 100 million and now the largest company in the world. So Firestone is still trailing Goodyear.
World War I happens. April 1917, this huge mobilization campaign happens. Goodyear and Firestone have to pivot to wartime production. Firestone’s doing rubber boots and all these other things. Goodyear has been pulled into this top secret plan. They’re going to create an aircraft called a blimp.
Dave Young:
The blimp? Ooh, okay.
Stephen Semple:
And you know what’s funny? I always wondered, why does Goodyear have a blimp? Because Goodyear was involved in the crating of the blimp. Isn’t that cool?
Dave Young:
Right. Yeah, that’s good to know.
Stephen Semple:
So they’re both making lots of money. The blimp is the Goodyear blimp. We now still see it at football games and all this other stuff, right? And Goodyear’s expanding like crazy because of the war effort, and November 11th, 1918, the war suddenly ends.
The war ending in World War I hurt a lot of businesses like Indian motorcycles, Goodyear, because what a lot of people don’t realize, unless you look back into history, that the war ended really abruptly. So much so that even the Allies, if you go back and read the history about World War I, we’re unsure whether to accept the surrender of Germany. No battle in World War I happened on German soil. It all happened in France.
And how World War I ended is Germany basically did this one final assault where they threw everything at it and was basically it didn’t work, and they surrendered. And everyone was like, “What do you mean the war’s over?”
But the problem is Goodyear thought the war was going to continue for a while longer and had a lot of debt and had done lots of expansion and were in serious trouble. In 1921, Goodyear had 85 million in debt. And so they had to bring in somebody to help refinance the business and part of the refinancing included Frank and his brother being removed from running the business. So in May 13th, 1921, they both resigned, the businesses gone to others.
Firestone, they still remain involved with the business. By the 1920s, cars are going faster, and Firestone does one more really big innovation. And that’s the balloon tire, which is a wider, bigger tire, flatter tire, lower pressure, smoother ride. Six months, they sell 25,000 tires a week, and that’s really the precursor to the modern tire.
Dave Young:
The radial-type tire.
Stephen Semple:
Yeah.
Dave Young:
Yeah. That’s really cool. Yeah, war does weird things. I mean, in addition to blowing things up.
Stephen Semple:
Yeah, it does weird things.
But the thing is, when I looked at Firestone and Goodyear, to me, what was really interesting was there’s no way you could kind of talk about one without the other because it really is a story of innovation, innovation, innovation.
Dave Young:
It really is a case of your competition makes you better, right? Because it went back and forth with both of them.
Stephen Semple:
It did go back and forth with both of them.
Dave Young:
Right? And the one that lost out was Clinker because they thought they didn’t need to innovate.
Stephen Semple:
Right. Right. They were the one that’s been lost to history as these two … Because they had, they were the market leader, and then these two coming along out-innovating each other, totally, like I had never even heard of them as a tire company. Lost to history.
Dave Young:
Me, neither.
Stephen Semple:
Yeah. Clincher.
Dave Young:
Clincher. It sounds medical. It’s such a cool story.
I have one experience with Goodyear to tell you about.
Stephen Semple:
Sure.
Dave Young:
Back 2020 or so. Gosh, has it been that long? Really has.
20 years ago or so, I was in the motor press guild, automotive journalist, and auto manufacturers and tire manufacturers would take journalists on these trips, these junkets. And I got to go on one for Goodyear. They flew us down to Dallas and then flew us out to San Angelo on Mark Cuban’s 757.
San Angelo, Texas is where the Goodyear proving ground is. So they have one of these big 10-acre, five-acre lakes that’s only a quarter of an inch deep or half in it. They can control it. It’s just a giant bed of asphalt that they can control the depth of the water. So we got to drive … We probably compared Goodyear to Firestone tires.
Stephen Semple:
Probably.
Dave Young:
You drive this pickup on a slalom course on the water with the new Goodyear tire, and then drive it with the competitor’s tire. It’s like, oh boy, the difference. But it was a fun trip.
I also got to drive that same day out on the Goodyear proving grounds. They had one of those mining haul trucks.
Stephen Semple:
Oh, wow. Yep.
Dave Young:
Right. The three-story tall mining haul truck, and I got to drive that thing.
Stephen Semple:
I was going to say, did you get to do a 180 on it? Did you get it to do a 360?
Dave Young:
No, they didn’t let us drive that out onto the wet track, but that was fun. I mean, there’s a big tire. I think at the time, that tire weighed 20,000 pounds and cost $20,000. That’s what I remember about it.
Stephen Semple:
And it’s interesting when you think about tires because tread pattern and rubber compound and things like that are all the things that really impact performance. And yet the world’s largest manufacturer of tires became famous with an ad where they put a baby in the tire along with the slogan, So Much Rides on Your Tires, right?
Dave Young:
Yeah, yeah.
Stephen Semple:
But coming back to one of the ones I love with the whole Firestone thing was putting the name in the tread pattern. I thought that was just …
Dave Young:
Yeah, I think it’s great. It’s really smart and innovative from an advertising point of view, but as Goodyear proved, easy to knock down. It’s like, well, obviously a proper tread pattern-
Stephen Semple:
Is better?
Dave Young:
… is better than the word Firestone for keeping your car on the road. But-
Stephen Semple:
But again, it was so interesting because Firestone then, or sorry, Goodyear then even recognized by the diamond pattern, they still became unique because they were the first one with the diamond pattern. So it was this very interesting back and forth between these two companies.
Dave Young:
They were like the cartoon, the sheepdog and the coyote. They’d clock in and fight all day, and then clock out.
And I would guess that the Goodyear and the Firestone, there were probably people going back and forth between one company and the other. They probably had the top secret. We hate each other, but the investors, whole different story.
Stephen Semple:
Well, it was funny. There was one thing I read about where basically if you were in the Firestone offices or foundry or whatever, you were not allowed to say the word Goodyear. And when you were in the Goodyear one, you were not allowed to say the word Firestone.
Like it would’ve really been a massive rivalry when you consider the two companies, like how remarkable is this that two companies found within two years of each other, like almost exactly two years of each other in the same city-
Dave Young:
And then live in the same city.
Stephen Semple:
… went on to become number two and number three in the tire business. The one that became number one-
Dave Young:
Kellogg’s and Post.
Stephen Semple:
… was across the pond in Europe, right? Completely separated from this battle.
Dave Young:
Yeah. Yeah. Well, thank you for this tiring story.
Stephen Semple:
You had to go there, didn’t you?
Dave Young:
Oh, gosh, I shouldn’t have done that, but I did. I did do it.
I’m looking forward to the next episode of the Empire Builders Podcast, Stephen.
Stephen Semple:
All right.
Dave Young:
Thank you.
Stephen Semple:
Okay. Thanks, David.
Dave Young:
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