Hi, my name is Auge, I'm an entrepreneur and investor, and today we're going to talk about the Kodak case. Remember, as always, we'll discuss the main lessons at the end, so we'll see you when the video is over. As we said, today we'll talk about the Kodak case, the company that managed to bring the passion and hobby of photography closer to so many people around the world, making it more comfortable, easy, and accessible. George Eastman, the founder of Kodak, had always come from a fairly well-off family, but due to life's circumstances, all that fortune disappeared, and he was forced to start working at just 14 years old. When he turned 24, he went on vacation to Santo Domingo with the intention of immortalizing those days. He took a camera in his luggage, but due to its complexity, he was unable to take a single photo. That device was so complicated that he had to pay a professional photographer to teach him how to take pictures. George realized that photography was something exclusive to people with extensive knowledge of the subject. After a long time of research and experimentation in his mother's kitchen, he found a possible formula that could make all that technology more accessible so that Anyone could capture their best moments, culminating in their great invention: roll film. In 1888, the Kodak company was founded in Rochester. The first camera model the company patented and brought to market was the Kodak Bien Vista. It greatly simplified the complex process of capturing images. Its motto was "You press the button, we do the rest." The camera was sold with a circular roll of 100 exposures already loaded. Once used, it was taken to the Kodak factory for development and then returned with a new roll inside. This made it possible for anyone to take photographs without knowledge of chemicals or developing. Not only did this art become more accessible to the masses, but they were also inventing a revolutionary new business model for the time. While other camera manufacturers focused on making a profit through the sale of the camera itself, Kodak sold its cameras at an affordable price for the time, around $25 (approximately $1,600), leaving a fairly tight profit margin. However, by offering a development model that depended on the The company made a large profit margin on the replacement of a new roll of film, which cost $10 at the time (about $640 today). This was where most of the profits came from. The business model devised by George Eastman allowed Kodak to lead the photography world for over 100 years. But in the technological world, evolution is ever-increasing, and sooner or later, the company would have to start rebuilding its strategy to adapt to the changing times. It was Kodak itself that, in 1975, created the first prototype of a digital camera, which no longer required chemical film or rolls, thus completely eliminating the developing process. However, the company wasn't entirely sure that this digital model would dominate the photography market in the future, so Kodak decided to continue betting on the traditional type. In the 1990s, it continued to lead the market in the US with a 90% market share, but its business model had remained practically unchanged for over 100 years. Obtaining most of its profits from the sale of supplies, it was already clear at that time that digital would eventually drive everything analog out of the market, not only in photography but in many other markets as well. Kodak believed that a portion of consumers would continue to opt for traditional photography, as it was so authentic that it would never completely disappear, and that digital could never reach the same level. Furthermore, another reason for their resistance to change was that they were fully aware that if they switched to digital cameras, their business model would no longer be sustainable, since in this new world there was no need for film or prints, and their profitability would be significantly affected. After all, Kodak had been leading the market for over 100 years and, so to speak, was responsible for the birth of amateur photography as we know it today. This gave the company a great name and reputation that the new digital camera manufacturers did not have, so they thought they could afford to remain comfortable in their traditional business model. At this time, other companies like Nikon, Canon, and Sony rushed to release their first models of Digital cameras: these three manufacturers had never been leaders in the photography sector, so they had nothing to lose. The world was opening up to a new market, and since the undisputed leader in photography was resting on its laurels, they couldn't miss the opportunity. Kodak, for its part, remained stuck in its comfort zone, clinging to the idea that its name and reputation guaranteed it a place in the market and that consumers would remain loyal to its brand. However, the market adapted very quickly to the new technology, as it further facilitated the photographic process. The company wasn't focusing its strategy on the customer but on its own profitability. The business model that George Eastman had initially devised had also worked because it was focused on making photography easier for people, but due to the evolution of technology, it was destined to become obsolete. Kodak was acting stubbornly, wanting to continue imposing its traditional photography model simply because it was more profitable for them, but that way of taking photographs was no longer the most convenient for the consumer, and therefore it would eventually disappear. Little by little, traditional cameras fell into disuse. Digital camera sales were gaining momentum, and by the time Kodak realized this and started releasing its own digital models, it was too late. All the other manufacturers were already leading the market. As a strategy, they began launching their products at very affordable prices, but the quality left much to be desired, and the brand quickly lost much of its reputation. Kodak, which had been the undisputed leader in photography for over 100 years, responsible for a great revolution in this art by adapting and bringing it closer to the masses, becoming one of the most influential and important companies in the world—a position it had achieved through innovation and revolution—was going bankrupt simply for refusing to change. After declaring bankruptcy in 2012, the company has been trying to rise from the ashes, reinventing itself and releasing new products like smartphones and action cameras, this time adapting to the new digital society. However, it is still unclear whether it will manage to consolidate itself as a major company again, as it still has a long way to go. A clear example that position and seniority are not sufficient guarantees to stay on top if one refuses to change and adapt. Let's face it, society will suffer the consequences. Resistance to change is a mistake. Large, established companies that have been in the market for too long fail to realize that adaptation and evolution are necessary to stay afloat. Well, before starting with the main sections, I have to announce that we have been working these last few months on an incredible entrepreneurship course called Flint, and it will be released on December 10th. If you are interested, all you have to do is write to our free course because we will take your email and notify you when it is released. It is a super powerful course, and we are incredibly excited for its release because we have interviewed mentors and developed a strategic plan so that you can start your company without any difficulty, without wasting time and money. So sign up for the free course, and we will also notify you when the other one is released. Number 1 was George Eastman's ability to simplify a value proposition that only photographers were using. Sometimes creating a business is simply about simplifying something that already exists in the market. At that time, cameras were a highly professional product, only accessible to those who truly knew how to use them. Simplifying something that already exists is a very good way to create value for many people. The second example was the incredible business model created by Kodak, simplifying the initial product and reducing the pressure to actually make money from consumables. This business model has been implemented in many other areas, such as espresso, razors, and printer ink. Choosing an initial element where the price is significantly lower than if you compete with all the competition, and what you achieve is generating long-term profits from consumables in your business. Think about whether this is possible because it's a very good way to have recurring income. In the end, many people become obsessed with creating an incredible product, but once they sell it to that entire potential market, they lose recurring revenue, and their business isn't sustainable in the long run. In contrast, with this solution, you increase the time your customer spends with your company, and they continue buying your products without You have to be constantly innovating and launching new products, and lesson number three is: change or be changed. Here we're going to talk about what Kodak really did wrong. A business has to constantly be looking at new market trends, and no matter how much of a romantic you are and think things won't change, I assure you that humans will keep innovating, and your turn will come. Before that happens, you have to be proactive and change your business model before things change around you, because otherwise, you could end up like Kodak. They were very convinced that people would continue using their old cameras when, in reality, in no time at all, they saw how the market completely changed. It's super important that you stay up-to-date with new trends so that the moment you see a possibility that your business model might change, you're the first to adopt it. And that's it for another case study on learning entrepreneurship. You know, the best business cases every week. Subscribe if you haven't already, like, comment, and share it with two. Fellow entrepreneurs, and I'm still in the free course if you're not already, because we'll also let you know when the really important one comes out in December, so see you in the next one, until next week, bye shaving, because what really popularized it, lesson number 1, was George Eastman's ability to simplify a business model that has been used a lot, flower and all