Lessons from Kodak: Inventor Steve Sasson Reflects on Innovation, Corporate Culture, and Disruption

Paul Spain:
Greetings and welcome along to the New Zealand Tech Podcast. I’m your host, Paul Spain. Today I’m in San Francisco, but this recording is one that was made previously with Steve Sasson, the inventor of the digital camera. That’s right. Steve Sasson is an American electrical engineer who during 1974 and 1975 invented and built the first ever self contained digital camera and also some years later, the first digital SLR camera. I visited Steve at his home in Rochester, New York where we discuss Steve’s pioneering work with technology at Kodak, including his groundbreaking innovations that paved the way for digital photography as we know it today. We’ll explore some of the technical challenges, organisational hurdles and cultural shifts that accompanied this revolutionary work. This first digital camera could store a tiny image, just 100 by 100 pixels, black and white, and could store those on magnetic media and display them on a tv.

Paul Spain:
Sassen shares his insights on the delicate balance between innovation and tradition, shedding light on Kodak’s missed opportunities and the broader implications for for companies navigating today’s fast paced technological landscape. This episode offers a deep dive into one of the most significant technological shifts of our time. One which ultimately saw Kodak’s business disrupted by those who had no old business model to protect, but everything to gain from success in the world of digital photography. The podcast was recorded some years ago on a previous visit to Rochester, New York. We recorded this podcast at the home of Steve Sasson, who was kind enough to make that opportunity available. I’m super excited to share this episode with you and of course want to offer a massive thank you to our show partners who really have made this episode and many, many others possible because of their support. So without further ado, big thank you to One NZ, Spark, 2degrees, HP, Workday and Gorilla Technology. Let’s jump in with Steve Sasson.

Steve Sasson:
Very honoured today to spend some time with Steve Sasson. Thank you for joining me.

Paul Spain:
Oh, thank you very much, Paul.

Steve Sasson:
Now Steve, yours was a fairly interesting story. You’ve started out after studying, you ended up at at Kodak and really were involved in some very groundbreaking inventions and discoveries over a period. So I wonder if you can start out by telling us a little bit about how you ended up at Kodak and this role that you found yourself in that had you playing with CCDs or charged coupled devices, which ultimately led to the invention of the digital camera.

Paul Spain:
Well, I went to university at Rensselaer Polytechnic Institute and I graduated from the university with a Master’s degree in electrical engineering in 1973. And I had always been interested in electrical engineering and I loved building electronic things. When I was a kid, I used to build transmitters and stereo amplifiers from parts I would scavenge from old television sets that people would. When they threw them out on the curb, I would bring them home and dissect them and take all the parts up. So I was builder by nature. And so when I entered Kodak, I joined Kodak and they started. They didn’t have a history of hiring a lot of electrical engineers back then, but the, the photographic state of the art at the time, cameras, conventional cameras, were more and more of their unit. Manufacturing cost was being associated with electrical components.

Paul Spain:
Film, advance shutter controls, focus, that kind of thing. And so I was sort of one of the first crop of sort of electric electronic guys that they hired and I hired into an applied research laboratory at the apparatus division for Kodak. This was the big division that was responsible for the design and manufacture of all of the equipment that used the sensitized goods that was traditionally manufactured at Kodak park, another big facility here in Rochester, New York. And so in this laboratory, it was a fascinating place. There were different groups with different disciplines. And I hired into what was called the electronics group. And there was maybe eight or nine engineers in that group. And I came in with a few other young engineers.

Paul Spain:
And this laboratory was dedicated toward applying the different technologies to solving problems for the company in terms of its equipment, whether it would be proposing new products or solving problems on existing products, or helping with manufacturing technology issues. It was a very broad place to work. And there were other groups in the lab as well. It was a math group, a physics group, a chemical group, all kinds of things. So really a cool place for a young engineer to end up. And my supervisor came to me one day. I had been working there for about a year, year plus or so. And you, you usually handled several projects when you were there, especially as a young engineer, you.

Paul Spain:
You weren’t really given super important stuff to do. You were learning. And so he came to me and said, here, I’ve got a. A. He gave me a choice between modeling an Excel movie camera exposure control system or looking at this new type of imaging device called the charge couple device that had just commercially become available from a company called Fairchild. And I jumped at the chance to do the CCD work because at university I did my master’s thesis on how light affected silicon. I built something where light would control the flow of current in a motor. And so I was interested in that.

Paul Spain:
I was predisposed to do that.

Steve Sasson:
But this was pretty early in terms of the. That type of electronics.

Paul Spain:
Oh, yes, it was. Nobody had Kodak, to my knowledge, had actually played with this particular device or any device like this before. This was an area array, which meant it was a two dimensional mosaic of photo sites. There were a hundred on each line and 100 lines. So there were 10,000 pixels, as we call them today. And it was meant such that when you exposed it, light to it, or a scene, and you imaged a scene on this, it would create a corresponding charge pattern that corresponded with the light at the different points on the surface. And then the charge coupling mechanism allowed you to take out each individual pixel in a certain order so that you could take this charge pattern and turn it into a electrical voltage pulse pattern and then that could be used to recreate that seed. And these devices were very crude.

Paul Spain:
Mike. The conversation with my supervisor, whose name was Gareth Lloyd, probably lasted 45 seconds. I mean, it was, it was. I said, yeah, I’d love to try that. And he said, okay, get one. Play with it. See what you can do with it. See if it can be any use for us.

Paul Spain:
We want to learn about it.

Steve Sasson:
So what do you think initiated that from, from his perspective? What was his role in, in that process? Did you know he came across new innovations and technologies that were available from other firms and just wanted to make sure your competency was kept up at such a level within Kodak that you understood when and how you might use these things?

Paul Spain:
Yes, it was basically his charter. The charter of the laboratory I was in, as well as each individual group’s charter, was to stay on top of all the relevant technology that was within your domain. And so electronics, of course, is a very dynamic area. And so anytime there were new devices or new technology that might be applicable, we would, we would explore it. This particular exercise was pretty far out there. I mean, there was no, there was no immediate application for this at all. I mean, these devices were very experimental. I like to tell the story that when I ordered this device, it came in a.

Paul Spain:
In. It was a. It was a 24 pin dip, as I remember, dual inline package. And it came as they traditionally did at that time, in a styrofoam box with the pins plugged in. And then on top of it was folded a piece of paper when you opened the box. And on top of it was was written 12 voltage measurements. There were 12 different voltage pins on there that represented the clock voltages that you needed to get this to work. And next to each one was written in pencil.

Paul Spain:
When this, the actual voltage that this device worked at when it left the factory. So handwritten. And then at the bottom it said, good luck. And because they.

Steve Sasson:
What do you think this thing was worth?

Paul Spain:
Oh, it was several hundred dollars. This is back in 1973. So this was, you know, this was a bit of a purchase. I was only allowed to buy two of them because they figured I’d blow one up before I got anything out of it. And that was all I was permitted to buy. I wasn’t. There was no carte blanche to buy anything else. It was just buy this thing and just evaluate it, you know.

Paul Spain:
And we had a lot of parts in the laboratory. One of the great things about working at Kodak is, especially in a research laboratory is they have lots of cool parts and stuff and measurement equipment and things. And so I could utilize that to evaluate it. But that was about the whole charter. Nobody told me to build a camera or anything like that. But my reasoning was simple. I thought if I could get this to work, which was my challenge, get it to work, I would eventually have to shine a light on it and do exposure of some kind to get the charge pattern out. And then I would have to measure its performance.

Paul Spain:
Well, what’s the best way to measure the performance of something? Well, to turn the output into a series of numbers because I was going to have to come up with numbers, right? And so I said, well, okay, if I digitize the output of this thing, I, you know, because each pixel came out as an. As a voltage pulse to turn it into a number. And then I thought, well, if I’m capturing numbers, then I have to store the numbers and I store the numbers in electronically. And then I thought, well, okay, in a way, I’m creating some sort of an imaging device. I’m storing a temporary light image permanently electronically. And so then I thought, well, I could build a camera with this thing. And so I thought I’d build an all electronic still camera then because I was an electronics guy and I was surrounded by mechanical guys because cameras were mechanical marvels at that time, right? Moving film and exposure and everything. I thought, wouldn’t it be cool to build a camera with no moving parts at all? I thought that would be really cool, right? One, I wasn’t mechanically oriented, so I didn’t know how to do it anyway, so.

Paul Spain:
So the irony was I built the first digital camera, but I wasn’t. I couldn’t have built a conventional camera at that time. So. So, you know, it helps not knowing some things, I guess.

Steve Sasson:
But, well, it’s just, you know, I guess it’s because you looked at things through a, a different lens, you had a different perspective on things that you were able to come up with this innovation. Right. I mean, obviously the environment there was the right sort of environment to be innovating in. And I’m sure there were lots of other inventions and you know, creations through, through these labs over, over the years. But there probably wouldn’t have been anybody else in your group that would have come up with the same concept.

Paul Spain:
Well, I think. Remember I told you when I used to build everything when I was a kid? Yeah. That’s how I expressed myself. When I had an idea, I didn’t like draw a picture of it, I would build it. And my form of expression was electronics. And I may also mentioned I worked there for about a year before that and I had built a lens cleaning machine, a machine that would automatically clean lenses for projectors. And I used digital technology. So that’s how I learned about digital technology, SSI technology.

Paul Spain:
And I sort of, that was in my head and I thought I was basically freezing time. When the image came out of the ccd, you had to read it out very quickly otherwise the image would disappear because of the charge that would be generated thermally inside the devices. And so I said I’ve got to read it out quickly and store it somehow. Now I could have read it to videotape or something, but I didn’t know how to do that. But I didn’t know how to turn it into numbers and then work with it digitally. So my previous experience and my natural inclination to build things is I would build a model of this, build the actual device and see if I could store the thing. So I used existing parts around the laboratory to pull together this very weird looking prototype. And there are other elements to a camera, which of course is the lens system.

Paul Spain:
But because you work at Kodak, it turned out our laboratory was right above the manufacturing line for the XL movie camera, which was A, was an 8 millimeter movie camera system that Kodak was producing at the time. And I saw that the image size of the CCD was smaller than that of a frame of Super 8. So if I could put that CCD somehow in the film plane of the optic systems of an XL movie camera, I wouldn’t have to build any optics, which I was totally incapable of doing anyway.

Steve Sasson:
Well, that’s pretty convenient.

Paul Spain:
So it was convenient. So I literally went downstairs and I can’t remember, remember if I stole or asked permission to do this But I basically went to the used parts bin and pulled out an old XL55 movie camera which was somehow broken and brought it up, took it apart, and that’s what I used for my optical assembly. So it goes back to the days of Brooklyn when I was tearing stuff apart and using the parts for other purposes. And that’s exactly what I did here. So, in a sense, I was doing what I naturally liked to do and normally did at that point in time. And yet I had access to a wider range of parts and a more sophisticated set of electronics. So I use that to pull together this prototype camera. And it took about a year or so to build the camera.

Paul Spain:
And then I had this other problem of how am I going to view the image? I thought, why just measure it? It’d be great to view it. I mean, you get curious, what does it look like? And so I had to build a playback. So some. Some sort of system that would turn it back into an image. And the only way to do that was you to do it electronically. I didn’t know how to print anything. And so I went to the. The.

Paul Spain:
My supervisor, Gareth Lloyd, who. Who now knew I was trying to build this camera and who was supportive of this crazy idea.

Steve Sasson:
Okay.

Paul Spain:
He was probably the only person I spoke to in management about what I was doing. Not because I was being deliberately hiding it, it’s just because nobody really cared. And I wasn’t sure it was going to work anyway. So why advertise if I was going to fail, right? So I would go to him periodically for reviews and say, oh, my camera’s doing okay, and he would support that. So then I have to build this playback unit, as I mentioned, and that required more sophisticated electronics. I had to take this set of numbers, rearrange them back into the matrix, and then put them in a format that would be more compatible for a television set, then create a television signal from that still pattern and send it to a TV set. That was the idea.

Steve Sasson:
And that probably wasn’t so common at that stage either, right? Because we didn’t have PCs and.

Paul Spain:
No, there were no other gadgets.

Steve Sasson:
And of course, first personal computers, you know, did use a TV rather than a traditional monitor, but that just wasn’t. Wasn’t the norm either.

Paul Spain:
No, it wasn’t. And so in order to do this, as you mentioned, There were no PCs, there were microprocessor chips, and Kodak had, Had, had. Were. Were trying to put some of these in their very early products. The first copiers we were making had the first microprocessors in them.

Steve Sasson:
And.

Paul Spain:
And I happened sitting next to a guy who was working with those microprocessors. So I said to my boss, I said, and since I. This project was in no way sanctioned in the sense of. There were no reports or reviews for management of how things were going, nobody came and asked me how it was going. I would just. When I would visited with Gareth Lloyd, I would mention how this part of it was going. I was doing other things at the time as well. And so I asked him, I’d like to do a study of microprocessors.

Paul Spain:
Well, that’s within our charter. New electronics is applied to our product base. And I said, can I get a microprocessor development system? And he said, sure, you know, that’s a good idea, right? Well, I bought this system. It was based. It was an old Motorola 6800, I remember, and it had tremendous addressing capability, better than what intel had for direct addressing, as I remember at the time.

Steve Sasson:
And you needed to be able to address all these.

Paul Spain:
All these charts of memory.

Steve Sasson:
Yeah.

Paul Spain:
And so this system came with a publicly verifiable bus, which allowed me to build custom boards that would fit into this thing. So. So I got this system and we said, oh, we’re going to do microprocessor research. It disappeared into our back lab and it became our playback unit. Now, if I had gone in and said I wanted to buy it to build this playback unit, there’s no way anybody would have given me the money to do that. So. So being creative with your request, certainly a helper for an innovator, I guess. But in any case, we spend a long time doing that.

Paul Spain:
And then it might surprise people to know that we worked on this for over a year and we never saw anything. All we measured progress was by voltage measurements or waveforms on oscilloscopes. That was it. And we would do system by system by system. By the way, I have to mention that I was really helped by a technician who was working with me. His name was Jim Shickler, and he was a really, really innovative guy as well. And he and I were learning together all of this stuff. And so he was a tremendous help.

Paul Spain:
We worked shoulder to shoulder for over a year in the lab, and we would constantly fix things all the time. Everything was breaking or assumptions we had made were no longer relevant. And so finally we got this thing to work together. And after all this time, you think we would know exactly what to do with it. It never occurred to us, what are we going to Take a picture of.

Steve Sasson:
It’s.

Paul Spain:
It’s. We were in a back lab, poorly lit, you know, very disruptive place. And. And so I. This camera, which was an odd looking thing which would unfold and that’s where we built everything. So there was no. Build a board here and then test it and then put it into the camera. It was built in the camera.

Paul Spain:
The camera was the test bed. So it was a very. It would unfold and when I could work on it, would work in that position. But finally, when he wanted to use it, you would fold it all up and it became about the size of a toaster contraption with a big little blue box on top. Would held the optics and things. And so I picked this thing up, I walked out and took a picture of a young lab technician. Her name was Joy Marshall. She was sitting at a teletype just down the hallway.

Paul Spain:
And she knew us as the weird guys at the end of the hallway. Nobody knew what the hell they were doing. And so took a head and shoulder shot of her. And I remember this because I like to tell this story because it’s so true of innovation. What would happen is you would Capture an image 50 millisecond exposure time, 20th of a second, the image would be captured and read into the dram. And then from there, from the dram it would be sent to the magnetic tape. It took about 23 seconds to do that. So when I saw the tape started to move, I knew that I captured the image.

Paul Spain:
That was my feedback.

Steve Sasson:
Right.

Paul Spain:
And so the tape started to move. After I took a picture, I walked back to the laboratory. After 23 seconds, you pop the tape out, put it into this playback unit. I just described it. Would read the tape back in and then we had to do image manipulation, which was all hand coded with assembly language. Was awful. Awful or couldn’t do that. And then up would pop the image.

Paul Spain:
And what popped up was you could see she had dark hair, a white background. You could see the outline of her face, her hair. But her face was complete static. Couldn’t totally recognize it. And so Jim and I were really happy what we saw. We knew a thousand reasons why you might not see anything.

Steve Sasson:
Right.

Paul Spain:
I mean, we knew all.

Steve Sasson:
So many things that can go wrong.

Paul Spain:
So many things. You just see nothing, you know? Yeah.

Steve Sasson:
Yeah.

Paul Spain:
We’ve never actually tested the whole system together.

Steve Sasson:
Yeah.

Paul Spain:
So we’re looking at this and I remember standing there staring at the screen, saying, wow, so much is working. This is fantastic. And Jim was just as excited. Well, Joy had followed us back because she was curious as to what this thing was. And she was standing in the doorway and we turned around, we saw her and she looked at us and she said, it needs work. Turned around and she walked out. And what had happened is when I designed the playback unit, I had reversed the order of the bits in my mind so that if it was all ones or all zeros, each pixel, it didn’t make any difference. And so that’s why the black hair and the white background were viewable.

Paul Spain:
But of course, any of the continuous tones it was in between, it was. Each pixel was digitized to a four bit word. Was, was, was, was reversed. And it took us about an hour to figure that out. And once they did that, I, I changed some wires because that was easier to do and changing the code. And then the picture came through. And that was taken in early December of 1975. So it was the first digital snapshot.

Steve Sasson:
Wow, that’s, that’s really cool. And how long was it before this started seeing the, the light of day in terms of being shown around within, within Kodak? Was there much more that you needed to, well, to do before you could show it off?

Paul Spain:
Well, you know, once we had taken pictures, I, I went to my supervisor, Gareth, and I said, hey, you know, the camera’s working. And I remember his comment was, oh, we’ll have to bring people into the lab to show them. And I said, no, it’s portable. He didn’t even know I was building a portable device. I mean, that’s how much attention was paid to this. Yeah, yeah. And so I said, no, I can bring it into, I can bring it around.

Steve Sasson:
So after a year’s work, he hadn’t.

Paul Spain:
They hadn’t gone into the lab to look at it.

Steve Sasson:
He hadn’t seen what.

Paul Spain:
Or if, even, even if he had, he would have seen something that was unfolded so it didn’t look like a problem. Portable device. Yeah, so. So he set up a series of meetings and whenever you’re inside a big corporation like that, what you typically do is show it to your boss and then he gets comfortable with his peers and then they invite their bosses and you go up the chain. It’s very typical. And that’s what happened here. We showed it in a conference room that was in our laboratory. It was about a 40 foot walk from my lab.

Paul Spain:
And they would go into the conference room and we invited them to say, we’re going to show them. You know what I called it? I called it an example of filmless photography, which was a really poor Choice of titles. Okay. Given the audience I was going to show it to. But that’s what it was to me. You know, I never really thought about the ramifications of it. I just simply said, I’m not using film.

Steve Sasson:
Yeah, the ramifications pretty big. When the very, very large majority.

Paul Spain:
It became evident that I had sort of missed that part of it. When my thinking. Because as I started to show it to groups and my demonstration was quite simple. I would walk in with the camera in my hand. Again, it’s about the size of a toaster. I could look through the viewfinder. I would take a picture of the person who was sitting on the front side on the right, whoever was sitting there. I would take a head and shoulder shot of them.

Paul Spain:
And then my tape would start to move as I described before. And I would use that time to describe what this thing was and what it had just done and to cleverly hide the 23 seconds it was going to take me in order to be able to take the next picture. And then I would go to the person on the left and I would take their head and shoulder shot. Then I would put the camera down on the table one, because it weighed eight and a half pounds. And the second thing is, they wanted to look at it. And then I would pop the tape out, hand it to Jim, who had brought the playback unit. We had put it on a cart and put it in the back of the room with the TV set there, plug it in, and then about 30 seconds later, up would pop the first picture. So you got to understand, I was taking pictures in Eastman Kodak Company of Eastman Kodak Managers in 1976.

Paul Spain:
I wasn’t using any film. I wasn’t using any paper.

Steve Sasson:
Okay.

Paul Spain:
And so it was very. It was a very interesting demonstration.

Steve Sasson:
Yeah, yeah. What sort of responses did you get, and did they line up with what you were expecting? Do you know what to expect?

Paul Spain:
Well, you know, I was very technically oriented, and so I thought that the conversation would center around how I did this. You know, I had pulled all of these different types of technologies, used them in unconventional ways to make this unconventional thing.

Steve Sasson:
Right.

Paul Spain:
So I was very proud of this device. We got it to work, so I thought they’d ask me how it worked. No, they asked me why. Why I thought this was a good idea.

Steve Sasson:
All right.

Paul Spain:
And I was kind of wasn’t prepared for that. Why would anybody want to look at their pictures on a television set? What would an electronic photo album look like anyway, these microprocessors? What does that got to do with anything. What about the photo chain? Where’s the photo chain going to fit into this? Are they going to be photo dealers?

Steve Sasson:
Right.

Paul Spain:
And how long will it take for this technology to get to the point where it might be available for the consumer? Because that’s what I was suggesting. This was going to be a consumer device. I didn’t know exactly how long. I didn’t really thought about it. I simply thought this concept, if put into a model, it was demonstrated this thing actually worked. Available light would take pictures. They were quite recognizable. Black and white only, but it was quite recognizable.

Paul Spain:
And so I was challenged a lot both in terms of certainly the why and then also the how. Would it ever get good enough? Would people ever accept that? Pick looking pictures on television sets? That’s, that’s nuts.

Steve Sasson:
Right?

Paul Spain:
And so I was challenged by a number of questions. The one that got all the time is how long it was going to take. And so what I did was because it was a completely digital system and it was, it was completely digital from the output of the CCD all the way to when it went to the TV set was all digital. I said I could maybe use Moore’s law to anticipate. So I didn’t know what it would take to make a good picture. So I called up the people in the corporate research laboratories and I asked them and they said, I asked them how many pixels would I need in order to make a consumer acceptable image. They were looking at this at the research laboratory. So they knew the answer.

Paul Spain:
1 million pixels, 2 million if you want color. That was their answer. So I said, okay, colors, we’re going to have to do color at some point. I had no idea how to do that, but luckily people in the research lab did. And so I used Moore’s law and I estimated between 15 and 20 years. So that’s what I told them. I said 15 or 20 years, this would probably be viable for consumers. And it turned out that prediction was actually pretty much on the mark for all the wrong reasons.

Paul Spain:
You know, I have so many, so many assumptions in that estimate that they, they were all wrong, but they were wrong in different directions. So they averaged out to be right.

Steve Sasson:
Yeah. And ended up landing and we launched.

Paul Spain:
Our first consumer camera 18 years later. So it was. But when you’re talking to managers and you’re talking about 20 years people, there’s less urgency in their voice.

Steve Sasson:
You know, I mean, that’s a very challenging thing. How old were you at this stage? You’d only been at the company 26, right?

Paul Spain:
I’m standing there 26 years old. So I was not qualified to do this. I wasn’t.

Steve Sasson:
And you were getting asked questions that were. Yeah. Really? Yeah.

Steve Sasson:
You.

Steve Sasson:
You were really in the deep end. Those weren’t things that you had. You had studied or, or, you know, probably been your primary thing to think about.

Steve Sasson:
Right.

Steve Sasson:
So it’s. That’s quite an interesting dilemma. Was there anyone else that was able to assist from that perspective? Was there anyone else, you know, that was able to back you up and, and support you from. From that perspective?

Paul Spain:
I will tell you, ever since I did that project in 1975, I worked in digital imaging inside of Kodak. I was never able to talk about any of this work largely, but we worked continuously in digital imaging. I became fascinated by this because I must tell you that I was challenged a lot by both marketing business, even technical, although there was a lot of technical support. Techies love new stuff and they. They were very supportive. I. There was never, usually, I never. The pushback I didn’t get was from technical people.

Paul Spain:
There was always. In terms of forecasting how fast we would get there, there was always the issue or if we would get there or how we would get there.

Steve Sasson:
Right.

Paul Spain:
That was always an issue. And that debate took place for many decades after that. But they never convinced me that it was impossible to do. And the reason was, is. Yes, in. Where I was in the room, I was in the room. And if somebody was arguing with me about whether this would work or not or be viable or something, usually that occasionally that person would be arguing with me and their picture would be staring at me from the picture I just took. I knew it would work.

Paul Spain:
It didn’t look that great now, but I was just me and Jim Shickler and a couple pair of pliers in the back lab.

Steve Sasson:
Right.

Paul Spain:
So I think that no one could prove to me it wouldn’t work. They would argue about how long it would take. So I did get a lot of support from the technical community. And also there was a lot of argument. There were many different business units that came and visited here. It wasn’t just the consumer people. It was the professional people. It was the people who were interested in microfilm.

Paul Spain:
I remember one incident where I showed it to a group of managers. This took place all throughout the spring and summer of 1976. And one fella looked at this and he stood up, he was from the microfilm area, and he took out a check and he slammed it on the table and he said, take a picture of that. So I did Right there. No preparation, no excuse. I took a picture of the check, put it up on the TV screen. He walks up to the TV screen and he said, not enough resolution. He says, if we get more resolution, this works better than anything I’ve seen anywhere else.

Paul Spain:
So these guys were looking for solutions. That thing itself was not going to do anything. But if a certain attribute of what I was showing would get better, they could see a pathway to being useful. He was interested in black and white imaging, high resolution of checks. Right. And so that’s what I saw. The different people from different marketing or businesses or parts of the economic spectrum would look at a certain attribute of it and say, if that got better, I might see a pathway.

Steve Sasson:
So you were usually presenting to people that were very interested in and how it would serve the needs of their particular division and very interested in the, you know, I guess the financial outcomes from the, you know, from the technology.

Paul Spain:
Yeah, they were very interested in it future wise. So I will tell you, the people inside of Kodak, they got it. I mean, I was challenged right away, you know what, there’s no film here. Why is this a good thing?

Steve Sasson:
Right?

Paul Spain:
And they got that right away.

Steve Sasson:
Right.

Paul Spain:
I wasn’t prepared for how to deal with it, right. But, but they got it and no one ever stopped me. You know, right after this, I started building another camera with a higher resolution ccd. I never built a portable camera because it got so big, you know, but. And I worked, like I mentioned before, continuously in digital imaging my whole career. So technically there was a lot of support for this and it was very interesting to a lot of people. I would say the marketing arm was less enthusiastic about publicly talking about this stuff and certainly management didn’t want to talk about it.

Steve Sasson:
How, how high up within management did, did this innovation go, do you think? In, in the first year, year or.

Paul Spain:
Two, I remember it was quite clear. We, we would go up, you know, different people would come in and they were higher managers as we went through the summer. And, and I must say that I give a lot of credit to Gareth Lloyd, who is my supervisor. He always let me present this and show it. Normally in a hierarchical organisation your boss would take over or their boss would take over because they were showing something quite disruptive and controversial and they have relationships and organisational things to maintain, but they never did. They let me present it now. Maybe you could also look at it as I’ve got nothing to lose and they do. I don’t know.

Paul Spain:
So we went pretty high up. The highest we showed it to was the head of the apparatus department, division, laboratory. And we showed it to him in a private showing. He came in, I mean the head of the whole apparatus division. So he was a VP of the company in charge of all the equipment, cameras, everything that was made, designed by Kodak Manufacturing.

Steve Sasson:
So only what a step or so down from the.

Paul Spain:
He was a step. He was a step down from the CEO and the upper management of the company. We showed it to him and then that was as high as it went. And then I found out later, I heard later that the CEO of the company, who I’ve never met, never seen in person, who worked at Kodak office, another part of the city, had heard about it and asked if he should see it. And the answer was no. And I was a little disappointed. One, I would have loved to have met the CEO of Kodak, of course, but that, why wouldn’t they want to show that? And only, you know, after you get a little older do you realize that here I was, this 26 year old kid walking around, I’ve got no right to be done any of this stuff to taking pictures without film, displaying them without paper, in available light. And it worked.

Paul Spain:
And so think of all the questions that that generates from a CEO’s perspective of this company, right? Over 100 year history of photographic technology. And so if you were a manager of that person or the manager above the manager of that person, that CEO is likely to turn to you and ask you that question. They probably wouldn’t ask me and they didn’t have answers. And so I think what happened is, is that there was just too many questions they didn’t have answers to and they knew the CEO would ask them and so they just wanted to avoid the issue. That’s what I think. I was disappointed for the reason of just not meeting a guy as opposed to any kind of a, of a, of a, of a bigger, bigger failure or anything. It was just, it was just. I was a little disappointed with that, but I was very happy with the technical work.

Paul Spain:
I was allowed to continue with my technical work. I actually, from an organisational point of view, I went down in the organisation. After I presented the camera, I got a boss. That was between me and my supervisor. Okay, yeah, yeah, that actually organisationally happened. Luckily it was a really nice guy and I learned a lot from him. And so I didn’t mind it at all. In fact, I remember telling my supervisor, he came in and he was sort of like trying to explain this situation to me.

Paul Spain:
Like, you know, what you did was like really, really cool. We have to give you a boss. And so, you know, it’s like we’re moving you down the organisation because you did so well. And. But I looked at it as well, if what I did was so important that they need somebody really looking after this and they don’t trust me, that’s a good thing. It’s more people are interested in it, you understand? Up to this point, nobody cared. I couldn’t get anybody to come into that laboratory.

Steve Sasson:
Right.

Paul Spain:
So that’s what happened. But I was allowed to continue my technical work, which was my primary interest. And then, of course, I learned more about CCD’s digitisation. And through the 80s, we learned about image compression, image manipulation.

Steve Sasson:
And so what, what were the steps in between? What was the next camera you built? What did that, you know, consist of? And, you know, how did you get from, I guess, what was a 10,000 pixel device, which is a pretty small fraction of a megapixel, isn’t it?

Paul Spain:
Yeah, yeah, yeah. Thumbnail today. Really poor thumbnail, right? That’s what it would be.

Steve Sasson:
Yeah. Where did you step to from. From there and how long did it take to produce the next one? Because you obviously had some very, very good expertise under your, under your belt of, you know, all the bits and pieces of how you put this thing together. What, you know, what was the next challenge, I suppose, in terms of building another one?

Paul Spain:
Well, in the course of all those demonstrations, I really did get some good conversation, some challenges. I couldn’t really deal with some of the problems about people never accepting this. But I looked at the technical challenge that were presented and I, in my mind, broke up the whole problem of digital photography into three parts. One was the sensor itself. And the sensor had to get, obviously a lot better. We had to deal with color. Resolution had to go up speed. Everything had to get better.

Paul Spain:
I really couldn’t do anything about that. Luckily, Kodak could. And luckily, at the same time, there were people doing some really innovative thinking about how to get color out of a monochromatic mosaic of pixels. And that was a fellow named Bryce Beyer, proposed the Bayer array, which of course is quite famous. And he proposed a micro lens array of a pattern of filters that would be put on top of these devices and it would do color. And he had a very significant patent on that. I had a chance to meet Bryce Buyer once. We casually talked in his office at krl.

Paul Spain:
And you know, it was, it was looking back on it, it was quite a moment at the time. It was just, I was just meeting this really interesting Guy had an interesting.

Steve Sasson:
Idea, you know, krl Kodak research laboratory.

Paul Spain:
Research laboratory, yeah. There was corporate research laboratories. I was in an applied research laboratory in a physically different place. The corporate research laboratories was much bigger area. You know, there were hundreds, if hundreds and hundreds of people working in a lot of different disciplines. And this is where they did develop the, the electronic imaging started there as well as the, obviously all of this silver halide emulsion technology and stuff. Research was done there as well. So that was a well funded, very high end area.

Paul Spain:
And so, so, so they were looking at CCDs making them because we knew Kodak knew well ahead of time that the, the research, what you needed in order for this to ever be viable, that is to replace photography. You can argue whether you want to do that or not, but if you were going to do that, it had to be much higher resolution and you had to be able to do it in really good color. Because film is really good.

Steve Sasson:
Yes.

Paul Spain:
And we knew how good film was. And you can’t displace a technology just because it’s cool and neat. Was something that does the primary job in a worse way.

Steve Sasson:
Right.

Paul Spain:
Of taking good, high quality pictures. So we knew, as opposed to throughout the 1980s, a lot of the video companies, Sony and Canon, the electronics companies, were proposing solutions that were based on their video mindset. Every company has a mindset, you know, they sort of use the tools and technology they have to solve every problem, right?

Steve Sasson:
Yeah.

Paul Spain:
And they saw it as a video problem. And we said, no, it’s not a video problem because video is never going to be good enough. It’s a computer problem. We knew it was going to center around the computer, not the television set. And so most of the work went to, starting in the early 80s, very high resolution CCDs. Now Kodak never publicly talked about any of this work until 1986, many years later. This is 10 years after all my work is done. They were working on this.

Paul Spain:
They put the buyer filter array on top of a CCD that they made and they were just prototyping them at the time, never announcing any of this stuff. But because the new competitors, the Sonys and Canons, were going to electronic shows and saying, hey, we’re going to do all of this stuff. We didn’t want to lose the confidence that the marketplace had in us in terms of our expertise in imaging and being able to project where it was going to go. So I remember they demonstrated that publicly for the first time in 1986 at a show, I can’t remember the name of the show. And they just demonstrated the image quality that they could get out of one of these. And it blew everything else away in the show. I mean, you know, it really was really good. And what we did that to really sort of, sort of calm the expectations of the public down.

Paul Spain:
We wanted people to trust Kodak because they will tell you when it’s ready. We know what’s going on. We’re not talking about it much. So that was the first time anything was shown. It was a really nice demonstration. But this work continued throughout the 1980s, and I continued working on this. I broke the problem up, as mentioned before, into three areas in my mind. One was the CCDs that was being addressed by Kodak.

Paul Spain:
One was computation, speed of computation. Those were microprocessors and how fast we could manipulate digital data.

Steve Sasson:
Okay.

Paul Spain:
And that was being done by microprocessor. There were new microprocessors coming out all the time.

Steve Sasson:
Right.

Paul Spain:
And also dedicated DSP chips were starting to come out. So this was digital signal process, digital signal processing.

Steve Sasson:
And this was key, wasn’t it? Because initially you were dealing with a, you know, in the scheme of things, not a huge amount of data, but as soon as you start dealing with higher and higher resolution images.

Paul Spain:
Yeah.

Steve Sasson:
You know, you’ve got exponential challenges in terms of, you know, how you. How you. How you manage that and deal with it and store it and so on.

Paul Spain:
When we go through the 80s, everything was getting worse, you understand? We would project everything was getting worse because we wanted to deal with more and more data at higher and higher speeds. Okay. And more and more complicated computations. So, you know, the problem was getting worse. The solutions were coming along, but the problem, we knew it was really bad, right. And then they were storing the image. How can you store a digital image that’s as convenient as film? Remember, you’re always comparing to the existing technology. So we needed some sort of solid state film.

Paul Spain:
And I saw that as a problem I could sort of look at. And I started to look at that in the early 80s. I started looking at electric ultraviolet read only memories. I remember buying some experimental ones from General Instruments. I remember going to a talk at mit, and I remember this because, again, I’m just a relatively young researcher, really curious about stuff. And the guy started talking about this technology. So I asked a question and they got so upset with the question that, you know, in terms of the ability for these things to continuously store these things, you could write to them, but they would sort of wear out after a while.

Steve Sasson:
Right, yeah.

Paul Spain:
And so I simply said, you know, how about that? Have you noticed any degradation in the. And he sort of answered the question somewhat. And then when I walked out early to go to lunch early, you know, and three researchers chased me down in the parking lot and asked me how I knew, they asked that question and what I was doing, what did I know? Right. And of course I said, well, I’ve done some experiments. Why are we doing experiment? Because I couldn’t talk so much about what my, my reason was. This was just a device thing, but I was piecing this together in terms of this, learning about this stuff. And then in the mid-80s, we got dealing with image compression, which is another technological hurdle. Can you eliminate the redundancy in an image? Well, yes, you can.

Paul Spain:
People know about image compression, but it was done on a high, very high powered computers and research laboratories. So I thought, can we get these out of the lab and into an actual device? And how good does it really do? Because it had to be really good. You couldn’t see the difference. And when we say you can’t see the difference and you’re at Eastman Kodak company, you can’t see the difference.

Steve Sasson:
Okay.

Paul Spain:
And so luckily, again, Kodak has such a collection of talent in all of these areas. Best place in the world to work for doing imaging. Dr. Majid Rabbani. I went to him, he was an image compression expert, and I asked him which image compression algorithm of the more than 20 that were being bandied about in the mid-80s as to what, what would be the best way to handle a continuous tone image like that? And he said, yes, well, use discrete cosine transform, which was a transform way to do this. And he said, that’s the best way to decorrelate the image. So when I looked at the technology required for that, I said, do you have anything easier? It was really computationally difficult. And I remember him saying, well, that’s not really my problem.

Paul Spain:
You asked me which is the best way to do it. Let me help you with this. And so we formed a project and we were going to do this little image transceiver, a device about the size of a old vcr. Then all of what would be capture a still one still image and it would store it, color image, store it, and then we would do image compression on it, squeeze all of the running Duncan see out of it, send it over a telephone line and then using identical unit, reconstruct it. And you couldn’t tell the difference between the, you know, what was reconstructed at the other end in this one, and to do it in under a minute. Okay, that’s.

Steve Sasson:
That’s fast.

Paul Spain:
That was very fast, and it was very challenging. And we work with the corporate research labs and Majid Rabani’s team using the algorithms that we had to create for this human visual response. And we were actually doing this really well so that we could not see the difference.

Steve Sasson:
Okay.

Paul Spain:
Now, the problem was speed. And I remember having to. We were using Texas Instruments fastest chip, but we couldn’t get it to run fast enough because the tools they gave us required, you know, to compile this stuff, to make this code work. They couldn’t run any faster. We had to get it to run faster. And I remember flying down. I remember flying down to Texas Instruments, to Houston, and I wanted to find the guys who did this chip. But how do you go? I can’t tell them why I’m coming, right? So I told him I was going to give them a talk on image compression.

Paul Spain:
They can understand I’m totally unqualified to give a talk on image compression. I’m working with Rashid Rabani, who is eminently qualified to do this. But nobody’s letting Masheed out to talk about this kind of work. So Majeet taught me enough and gave me some great samples of this. And I remember at the hotel when they picked me up, the fellow who picked me up was one of their researchers. He says, we have researchers that flew in from all over the world to hear your talk, are really interested in this image compression. So I’m thinking, oh, I’m dead, I’m dead. They’re gonna.

Paul Spain:
They’re gonna take me apart. But luckily, they had studied all the wrong algorithms. They had all studied, what I would call, you know, space domain algorithms. You know, this was a transform algorithm. You transformed it into a different domain and then you did it. And so luckily, they hadn’t studied that. And so I explained what we’ve done and passed around the pictures, and they were extremely impressive. Codex, really good at pictures.

Paul Spain:
So we did before and after prints, and you couldn’t tell the difference. And these guys couldn’t believe we said this was a compression rate of, you know, we took out 80, 80% of the stored bits, and they’re looking at it. Couldn’t believe we were doing this, right? And so. So I’m not there to impress him with our algorithm. I’m there to figure out how to do it faster. So I remember talking to them, and I put up the kernel, that was the DCT kernel there that we were doing this, that, this actual transform thing that would be repeated throughout the image. So it’s just a, the basic algorithm. And I said we’re trying to do this with your latest chip.

Paul Spain:
So it’s, now it’s kind of their problem. I said using your latest chip, but we just can’t get it to run fast enough. Does anybody know anything about this chip? And thank goodness, some guy in the back raises his hand, he says, yeah, that’s my chip, I designed it. So then I forgot about everybody else in the room. I walked down the hall, down the column to get to the seat, I said how fast can you do that? And he said oh, I can make it go way faster. The tools we give you have all these checks in it. You don’t really need to do all of those things. And I literally by the end of the day we had him sign a non disclosure agreement.

Paul Spain:
We gave him a test case and I was only like a week later hand coded came back, this thing had screened, right? Wow, really fast. So that’s what we did and we put that in the algorithm. Then the product was actually offered for sale. It was offered for sale in 1987. It was called the still video SV9600 transceiver. And quite frankly I didn’t know who would buy this thing. I mean law enforcement, maybe real estate people or something that wanted to get an image back to their home office or something. But it was awkward.

Paul Spain:
You had to plug it in, sit on a table, right?

Steve Sasson:
So this would capture a reasonable quality color image and then you could transfer it over a phone line, Over a.

Paul Spain:
Telephone line, anywhere in the world, under a minute and it would look the same. That was what it did. So I was very happy because we actually got this technology to work. And I wasn’t thinking about the transceiver, I’m thinking about putting it in a camera. But that’s the next step. You don’t really say that when you’re doing this. You just say that’s what we’re thinking, right? So, and it turns out then that this, it was launched in the company because it wasn’t a camera. They allowed it to go out and in fact I don’t think they even noticed it went out.

Paul Spain:
And we, our, our business unit knew it was going out there, but they, nobody really paid much attention to it. I don’t know how many we sold. It couldn’t have been more than 100, I don’t know. Anyway, turns out that CBS News had bought one of these and Tiananmen Square happened in 1989, and that became a very significant political event. And the government shut off all of the outlets for getting pictures out. But they didn’t know this existed. CBS News had it. They were the only people that had it.

Paul Spain:
So they were getting pictures out. So they were ecstatic with this. They were the only people getting pictures. A lot of the famous images you saw from there came through this. And so they got so excited, they wanted to do a television story about it. Now, here’s an interesting point. We’re in 1989. Digital imaging hasn’t happened yet.

Paul Spain:
People are talking about the possibility of cameras, but nobody’s really got one. And all of a sudden CBS News comes on and says, we want to do a special story about your device. So a major news organisation wants to do a free story about your cool technology. They go to Kodak and Kodak says, oh, no, don’t do that.

Steve Sasson:
So they’re going to promote, promoting this.

Paul Spain:
Electronic still imaging, right? And all we thought about, our marketing guys were thinking, well, you’re really going to create a lot of questions for our existing customers of film, right? And we don’t want to answer them, so don’t do the story.

Steve Sasson:
So it could have given you huge credibility. We didn’t want the leaders in this space.

Paul Spain:
We didn’t want that. Well, it turns out that, well, what happened is we had a very innovative leader. His name was Brad Paxton. He was charged with the Electronic Photography division, the division that was responsible for generating this and some other technological projects along the same line. And he, he, he knew management and he worked with them. And he came up with an agreement, said, well, we’ll do the story, but we won’t mention the word Kodak won’t say the name of the product. So they agreed to that. And then Bragg said, you know, I wouldn’t mind it if you showed the product.

Paul Spain:
And then when the product worked, the splash screen said Kodak Best 39600 on it. So it was very clear what the product was. So in a sense, we sort of skirted the rules and that the story was done. And I remember seeing that story standing in a lab watching it and saying, oh, my goodness. I never saw anything that we had done actually make an impact in the world. It was all the technology. But here it was, and they were, you know, it was doing some significant good for people in terms of information. So that was the first time any of our work actually saw the light of day.

Paul Spain:
But it was really the technical underpinnings for the next camera we built which was the ECAMM, which was built in 1989. So most of our work was not made public at this time in the late 80s. But there was a number of groups at Kodak starting up looking at building cameras using the CCDs that Kodak was developing. Again, not public with all of this stuff. And one of the cameras was one that I was working on with a, with a, with a, with a master camera designer. His name was Robert Hills, Bob Hills. And we decided we’d try to use some camera bodies that we were working with, with another company and make digital cameras that look like real cameras. Bob was a camera, real camera designer.

Paul Spain:
So he wasn’t going to make any of these crazy looking cameras. He was going to make one that looked just like a dslr. And so we took that technology that we had done for the transceiver, miniaturized it as best we could, put it in it, took the CCD that was KRL was making and we put it into a camera.

Steve Sasson:
And so this was into a conventional SLR camera, like about the size of.

Paul Spain:
A Nikon DSLR today.

Steve Sasson:
Right, right.

Paul Spain:
And we wanted to see if we, we had to handle them. And, and we were trying to demonstrate that we could create an architecture that would take the images out of a ccd, put them in a burst mode storage and then do image compression on them very quickly and then store them to a memory card. So to have to have a memory card in it as well. So we were taking all of this stuff and putting it into one package that looked like a real camera.

Steve Sasson:
Right.

Paul Spain:
And so we got this to work. They were operational in 1989. I think we made about six of them or so. And I remember at that time it was clear to me then that all the questions that we had been wrestling with for the previous 14, 15 years were being answered either by work being done directly at Kodak or by industry standards that were evolving or parts that were becoming available that would allow you to configure a device like this. We know because we built one.

Steve Sasson:
Right.

Paul Spain:
And when we showed this to management, we went to marketing in the professional Kodak professional. We showed them the camera, demonstrated the camera, really good pictures, one and a half megapixels, color. It was nice memory cards. They, we asked them, could they, could they sell a camera like this? And the answer was clear, yes, we can, but we won’t if it comes to the expense of one film camera. Why would we? I mean, it’s a rationate response because this camera costs a lot of Money. It was complicated, probably unreliable. When it would be manufactured, you’d have to do a massive training part and there’s no recurring revenue stream. So why would I as a business do this?

Steve Sasson:
Right.

Paul Spain:
So it was at this point in my career that became clear to me. We no longer were dealing with technical obstacles, we were dealing with business model obstacles and to some extent, cultural obstacles, because people were uncomfortable with some of the technological nuances of digital photography. Image compression was a cultural problem. As much as we technically could show that the mean square error between compressed and uncompressed images was in the original and the compressed images was pretty small. It’s possible for you to find an artifact somewhere in the image, maybe on some images, on some time. That was something that they never dealt with. When you dealt with film, your negative, was it. There was no.

Paul Spain:
Everything that was originally captured is there. When you explain image compression to the early photographers, like we’re going to throw away 80% of the bits you just captured for your original. That was an emotionally event for them.

Steve Sasson:
Right.

Paul Spain:
So our early cameras, digital cameras, had to have switches on them to get image compression off in case you wanted to do real photography. So this is just an example of the cultural challenges associated with a technological solution.

Steve Sasson:
Right.

Paul Spain:
But luckily, and I, I, I got kind of discouraged at that point. I had been working on this for 15 years. The technical answer was before us. I was holding it in my hand with the ecamm and the answer was no. And so I said, man, I, I don’t want to work with these guys anymore. So I went off and did printing because I could make like digital printing. What’s the image processing still the same for me. And they were doing thermal printing.

Paul Spain:
So I went off to do thermal printing and we were developing a printer that eventually turned into the kiosks that Kodak was actually quite successful at. So. And I knew the reason. My justification for moving from cameras to printers was simple. They had invested $60 million in gravure presses out in Colorado to make this thermal material. They’re serious about this business for cameras. They weren’t serious as far as I can tell.

Steve Sasson:
Right. And they could see from the printing perspective how that was going to help the business in terms of, you know.

Paul Spain:
There was, there was a return you could, it was a, it was a business model. They were used to thinking about selling materials.

Steve Sasson:
Right.

Paul Spain:
Consumables. So I went off there, but luckily. And Bob Hills went off making regular cameras again.

Steve Sasson:
Right.

Paul Spain:
And, but luckily there was a team of people, some of the people from our ECAMM team went and joined a team under a fellow named Jim McGarvey. And he was building cameras about the same time as well, some experimental cameras. And they found a market with the government who were the only people who could afford these cameras and would be willing to deal with all of the idiosyncrasies of these early cameras to gain a few benefits like instant manipulation or image transmission. So we started making cameras for them. Jim’s team started doing that. And of course you learn about what the customer needs and wants. We built some flexible platforms. Then they came out with some smaller cameras.

Steve Sasson:
Okay.

Paul Spain:
It was called the Kodak Professional, I think was in 1992. And it was a. It was, it was a Nikon body camera that had been gutted and put the electronics put in it and then a tethered electronics pack that they would carry around. So inconvenient, $25,000, you know. But it could do something that a certain segment of photographers wanted, which was photojournalists. They, they’d like to be able to see the image they just took and they would like to be able to transmit it back to their newspaper right away. That’s kind of cool. So the, all the drawbacks in terms of.

Paul Spain:
Yeah, something you take for granted today, but all the drawbacks associated with the big camera, complicated system, they could live with that to get this one feature right. And that’s how you make progress with a new disruption like that. And then of course that spread to desktop publishing and all the rest. And so throughout the early 90s, Kodak was. Had a very aggressive and successful professional DSLR business. We had a marketing arm that was selling these things. We weren’t making lots of money, but we were out there with it. And then we moved to the consumer space.

Paul Spain:
Kodak did the Apple Quicktake 100. I was marketed by Apple, Apple Neymar. Kodak didn’t appear anywhere. But we were the guys that designed to build the camera because we knew how to do it. And Kodak and Apple was very interested in getting the on ramp onto their new computer. They were the imaging computer of note in the mid-90s. And they needed an accessory to get in there, to get the images in there. Yeah.

Paul Spain:
So we built it. And all kinds of odd stories about these kinds of things where the camera, if you ever look at that camera, it looks like a binocular, not like a camera. That was deliberate because we would build a camera. We didn’t want it to look like a camera. Again, dealing with some of the cultural challenges of this, our name wasn’t on it.

Steve Sasson:
Right.

Paul Spain:
And we had no channels to market it anyway. So we were pushing the technology, we were commercializing the technology, but wasn’t widely recognized. It was us. Remember, the cameras we were selling for in the professional space had Nikon written on them.

Steve Sasson:
Yes.

Paul Spain:
I mean, it was a Kodak camera, but Nikon was still on the camera, so it wasn’t quite as visible.

Steve Sasson:
Right.

Paul Spain:
But both professional and the consumer started up in early 90s. Early 90s was the professional. In the mid to late 90s was the consumer space, and that’s when it started to take off. Kodak started making cameras under their own name. I think it was in 96 or so of the first, first consumer camera, first megapixel camera, I think was in 97 or 98. And that was kind of the defining design.

Steve Sasson:
Okay.

Paul Spain:
The dominant design where you had in a camera, you had the, you had all the storage, the, the sensor for the storage, you had a, a display on the back. You could review the images. All of the elements you take for granted today in a digital camera first appeared in cameras around 1997, 98, something like that.

Steve Sasson:
Now look, looking back at, you know, this period, which spanned 20 plus years, what were the big lessons that you learned around innovation and invention and being a successful innovator? What are the things that you really learned and that you would share with people today through the various things that you’re involved in teaching the next generation about innovation. It seems as though, you know, some of the greatest innovations come about maybe not quite by accident, but certainly, you know, the path at the beginning through to what the results are often isn’t particularly clear to a lot of those involved.

Paul Spain:
Well, the story of the evolution of digital photography took over 30 years. Okay, most of my working life. And so you learn some things. It’s not just about technology, it’s about people, it’s about organisations. It’s about the human ability to absorb change.

Steve Sasson:
Right.

Paul Spain:
So let me, let me list out some of the things that I, I think any innovator should be aware of or be conscious of that might not ordinarily jump to right away, especially if you’re driving a hard technological change culture, corporate culture, that is a really, really powerful force. You may think you have a lot of data to sort of convince somebody, but when you’re dealing with a cultural change, you really have to pay attention to it. And I found that if you use the culture, use the culture, don’t fight it. I’ll give you an example. When I and I did this inadvertently, by the way. When I did the first prototype, I could determine how many pictures I put on each individual cassette tape. And I was very excited because I could put hundreds of pictures on the table. I thought this was so cool.

Paul Spain:
But I decided to set the bit rate or the bit density to 30 images on a tape halfway between 24 and 36. I did that kind of deliberately because that sort of made it look like a camera. It was the same mindset of storing about that many numbers. Could I store hundreds on there? Yeah. You know what that would have done? Created another distance to the concept that was not necessary. It was already distant enough. So pick your battles and use the culture. Don’t fight it.

Steve Sasson:
Okay?

Paul Spain:
That’s one thing I learned. Second thing is public relations. When you’re inside an organisation. As a technologist, I didn’t really pay attention so much to public relations. But the way you present things, okay, you know, calling that movie filmless photography, that was kind of dumb. I mean, that sort of puts an alienation right away, right? I wasn’t trying to take away anything. I was trying to add to the conversation, right? But people somehow look at, you’re taking something away, and so pay attention to that. You know, the way you speak to people, the way you present these things, okay? You have to be persuasive and technical.

Paul Spain:
People don’t spend a lot of time being persuasive, Right? And they almost have a disdain for it. But in the end, when you’re. When you’re pushing a technology, you don’t have enough data, especially at the early phases, to convince them with a graph or a data result, right? You don’t have enough data. So what do you have to do? You have to appeal to their hopes and dreams, bring them in, make them want to believe with you. I know it’s kind of weird, but it’s true. Because digital photography for over 20 years was a distant idea. And you either believed it would happen or you didn’t want it to happen. But you talk about the advantages of it, taking advantage, and all those advantages that we talked about turned out to be true.

Paul Spain:
Ten times what we thought. Do you think I ever thought that cameras would get small enough to fit inside a little cell phone that fits in everybody’s pocket everywhere in the world today? No, I never thought about that. I thought about, you know, what? I just. How I described the early cameras because I had to use analogies in my presentations because digital calculators were just coming out in 76. I said, think about it. As a calculator with a lens. That’s the way I described it.

Steve Sasson:
Right.

Paul Spain:
I thought it’s digital. You know, calculators are digital, and it’s a consumer product. There weren’t many consumer products.

Steve Sasson:
That’s something people could relate to, some.

Paul Spain:
Of people relate to. And that’s all about the persuasion part of it, right? So it isn’t necessarily technically rigorous, but it’s emotionally really powerful. And so, yeah, I know engineers don’t like to talk about emotion, but I got to tell you, when you’re trying to convince people to change, that’s where it happens. So that’s kind of what I learned. There’s probably other things I go on with, but those are the ones that come to mind right now.

Steve Sasson:
Now looking, looking at the, the process of disruption. And of course, you know, Kodak was a company that made incredible profits over a very, you know, long period of time, generated a lot of revenue from what in itself was, you know, a very powerful disruptor with, with, you know, what George Eastman put together with the, this, you know, making photography something that was simple and easy and accessible to a really broad audience. Because before then, to take a photo wasn’t, wasn’t something that a normal person would do. There was, you know, a lot of, you know, complexity to it. But, you know, he made it into, into something that, you know, any, well, you know, most, most families could have a camera and, you know, go and get, go and get, you know, varying, you know, shots processed without a huge expense. So, you know, the, the, the history was that of being an innovative and a disruptive company. But then with digital photography, this was something that was really going to take away everything that had, you know, really led to the success of Kodak from, certainly from that sort of profitability perspective, unless there was a way in which, you know, Kodak could, could monetize digital photography to an incredible extent. And you know, I guess looking back, there’s, there’s probably a number of, of different perspectives, but, you know, what are the things that have sort of stood out for you, you know, over that, that period? And what do you think could have, could have been done, you know, better in hindsight from, from Kodak’s perspective? And, you know, how could that have happened? Because there are so many challenges from a, you know, cultural perspective, from a, you know, I guess that, that loss of revenue perspective.

Steve Sasson:
So you had a, you know, all sorts of people that would have been, you know, motivated on profitability. And the move to digital was something that was going to, you know, Take a, take a lot out of the, A lot of, you know, sales away, I suppose.

Paul Spain:
Pose. Well, it’s, it’s kind of a tough question to answer. Let me start off with just from my perspective. Nobody has more respect for photographic film than me. You really gain respect when you’re dealing with something trying to disrupt it. Think about what George Eastman did. He came up with flexible film and then eventually turned into a color form of photography. And that, that little piece of film that’s on a roll that costs almost nothing to make in mass production after you’ve made the investment and you can put it in any camera in the world, have it sit there for any length of time you want, then do a millisecond exposure, a couple of millisecond exposure, and then have it stay there in the camera for as long as you want, then have it taken out and developed by someone else anywhere in the world.

Paul Spain:
And then have it then have that same piece of film used to print it. Well, there is nothing in the electronic digital imaging train that’s nearly as elegant as that. I mean, it’s, it’s, it’s amazing, the technology. So I start off with a base of ultimate respect for the technology associated with film and also with the business model that was created by George Eastman when he democratized photography in the late 1800s. So I like to believe that if George Eastman were around today, he would be a, he would have been a big champion of digital imaging because his, his, he wasn’t a chemist by training, he was an accountant. He used the technology that was available to him to solve the problem he wanted to solve, which was to make photography available to everyone.

Steve Sasson:
Right.

Paul Spain:
As easy to use as a pencil as he used to say.

Steve Sasson:
Right.

Paul Spain:
Well, if he were around today, I think he would have looked at digital and said, yeah, not only does it allow it to be used today, but also can be made even smaller in lower power. So he would have been a big champion of it. So the challenge that we faced at Kodak wasn’t that we didn’t want to do this.

Steve Sasson:
Okay?

Paul Spain:
Kodak did tons of research into this in the mid-80s, in the 90s, created an incredible portfolio of intellectual property that has been licensed by just every digital camera factor and cell phone camera manufacturer in the world today. So that wasn’t the issue. The issue was how do we find a business model that is comparable to what we had with film and paper? And that became very difficult to do.

Steve Sasson:
And became impossible and that, and that’s, I think, the challenge that so many Industries and businesses have had is how do they get from an old way to a new way, as technology facilitates all sorts of innovations and doesn’t make.

Paul Spain:
The investment that they’ve already made in their infrastructure. Like Kodak had an enormous investment in making film. Hardly anybody looking over the last hundred, 150 years, how many people successfully commercialize photographic film? On a handful. That’s it.

Steve Sasson:
Okay.

Paul Spain:
Very difficult to do, extremely high investment.

Steve Sasson:
Right.

Paul Spain:
So once you’ve made that investment, you want to utilize it. That’s perfectly understandable. But then new technology comes along and displaces it, and that happens in almost every industry.

Steve Sasson:
Right.

Paul Spain:
You sort of have to get to a point where you just have to say, all right, the investment we made is done and we have to move on to new investments. And if you can do that in a timely manner, you can take the profits you’re making off of the old and apply it to the new. The problem with it is, is that you have to do it in a time frame that’s awkward because you’re doing quite well when you’re making the money. The transition hasn’t happened. And yet you have to voluntarily cannibalize yourself or sub optimize that return to take that money and put it into something that isn’t going to make a return for a while. And it’s doubly difficult for publicly held companies for the obvious need of satisfying the shareholder desire for constant dividends. So I think that’s a real challenge. And that’s why you see most of the innovation taking place with startups.

Paul Spain:
They don’t have dividends, you know.

Steve Sasson:
Yeah, and, and, you know, you look at the, the executives of large organisations and they’re generally being rewarded based on, you know, the last quarter, not what, you know, what’s being invested into, what can be done in one year, two years, five years, you know, 10 years out. Right. We haven’t found sort of maybe the right models that encourage that within large organisations. And yeah, I guess you also got to deal with the challenges of, you know, what disruption brings to a culture, to a workforce. You know, Kodak was a, was a huge company. I mean, I think what, well over a hundred thousand staff and, you know, digital would, would really, you know, shrink what the potential was for the business in terms of the, the number of people. So tremendous change to, to actually deal with. And, you know, in some ways it’s, you know, you, you wonder what, you know, was there a possible path that was dramatically better than the, than the path that the business took? And you know, I mean, you probably have the best thoughts on that of anything.

Paul Spain:
Well, I, you know, I. I think I might have a set of thoughts, but I think there’s a lot of, there’s a lot of different answers to that question. I will tell you though that of the, the CEOs that I personally knew, they were very smart guys. They got it, they saw it, they were dealing with almost intractable problem. Not only do we have sunk costs and we’re a publicly held company, I’m sure that if you talk to them, they probably would bemoan the amount of time they had to spend on getting a few more pennies on the dividend each quarter as opposed to planning what to do five and 10 years down the road. I’m guessing that’s the case. They were struggling with the cultural issues. Not everybody agreed with where we were going with this.

Paul Spain:
Then there was. We had a business model that was compelling, it was very successful. So you come along and you want to get rid of it. Well, what are you going to replace it with?

Steve Sasson:
Right.

Paul Spain:
And it wasn’t clear. Everything and everything was changing too. So by the time you have to start to make the move, you have to be healthy when you start to make the move. And when you start to make that move, it doesn’t look like you’re doing a healthy thing because you’re not in the short term, but you are for the long term. And so I think if Kodak had made some significantly different decisions many years before the problems really started to occur, decade maybe before, they might have been more successful doing it, but it would have been a wretching cultural change. Certainly the commitment to our workforce, the people who developed and worked with film spent their life doing it. They were the only people that could do it.

Steve Sasson:
Okay.

Paul Spain:
There’s all kinds of stories about film builders. When they left the company, all of a sudden they had to come back to fix problems. Right. So the commitment you made to these people is enormous.

Steve Sasson:
Right.

Paul Spain:
They’ve dedicated their life to the company. And our company, set by the culture that was created by George Eastman was one of. They had a commitment to their employees and so there was very reluctant to make those changes. So it was all of these things, these cultural things, long standing history in the technology, the significant commitment we had made to it that inhibited us from making radical changes. Plus everything changed. Think about the Internet. You probably would have had to react in the early 90s, late 80s, even to this in order to make a successful transition like that, to create the culture. Times take Time, change culture.

Paul Spain:
Where was the Internet at that time and all from? The Internet comes along and changes everything. Now Kodak was one of the first people to do photoshoot photo sites on the Internet. But again our mindset was put your pictures on the Internet and then you can order prints. That was the mindset. See, so we’re kind of stuck in the mindset. Here’s the, here’s the, here’s the revenue model we have. But they weren’t thinking about clicks, they weren’t thinking about social networks because they weren’t around. So you can sort of see the tidal wave that we were against it, that was against the company.

Paul Spain:
And, and like I say, I, I think the people that worked at Kodak, the CEOs I know, the managers I know, the technologists I know were really smart people. They got it, they just didn’t, couldn’t, couldn’t change the day.

Steve Sasson:
So there’s a concept that, that businesses should disrupt themselves. The idea, you know, makes sense, but.

Paul Spain:
It’S hard to do.

Steve Sasson:
You know, realistically it seems hard to do this way. There are a few that, that work out and manage, Manage how to, how to do that. It seems Timing is everything.

Paul Spain:
Timing is everything. Culture is everything. How you handle it. Remember you’re dealing with people. People can only change so fast, you know. And when people say reinvent themselves, what they somehow indicate is well, let’s get rid of these people and get these new people. I’m reinventing myself. You know, the selves are changing, right? So there’s that.

Paul Spain:
You do have to reinvent yourself. It’s changing all the time and you may not be able to react fast enough or if the change is big enough, you may not be able to change.

Steve Sasson:
Okay.

Paul Spain:
And then there’s a theory that corporations have a finite life. You know, where is it written in stone that every company has to exist forever?

Steve Sasson:
Forever, Right.

Paul Spain:
So there is that. The changes and the changes that Kodak dealt with were significant and they were huge. But it took over, took a period of time. Think about the challenges faced by companies today where I see major changes coming with artificial intelligence, virtual reality, automation beyond belief. That’s happening very, very fast. That’s going to affect our culture in ways that I think none of us can anticipate right now.

Steve Sasson:
Did the idea of having futurists or really long term thinkers exist during your time at Kodak? I mean it seems now there’s this, this futurist title is, you know, is reasonably common. You know. And you know, when I, when I meet these people They, I guess, you know, treated in different ways depending on the, you know, the organisation that we’re there within. And they have, you know, varying degrees of success, I suppose. Was that sort of, you know, concept something, something that you, you had. I mean, I guess it was the idea of that, you know, thinking ahead was something that you were involved in and lots of other people were involved in.

Paul Spain:
Well, I think, yeah, the term futurist is kind of a new one for my lexicon. I hear and see these people. I find them interesting to listen to. We had them back then. We had, we had, we had people that were strategic planners. That’s probably the closest term I could come to. I know smart people, they got it. They were more in.

Paul Spain:
They were. I would say it’s more of a practical implementation of a futurist. They, they had to deal. If you said something, you had to also back it up with some kind of a possible possibility of a plan.

Steve Sasson:
Right.

Paul Spain:
Of how to get there.

Steve Sasson:
Right.

Paul Spain:
Or what to do.

Steve Sasson:
Right.

Paul Spain:
You just couldn’t say, hey, the world’s going to change like this. You know, Their job was to figure out how to get from today to then.

Steve Sasson:
Right.

Paul Spain:
And so that’s what they did. We, we had a lot of predictions. We had people, external people come in and predict how long it was going to take for film to finally succumb to this electronic imaging and what we could do to either make it happen faster or make it happen slower. Both conversations took place and we never could satisfactorily come up with the answer. Everybody guessed. I remember thinking the year 2000. I figured the year 2000 we’d be done. This was back in 1989.

Steve Sasson:
Wow.

Paul Spain:
I was thinking that would probably be how long it would take before this really got practical. But I didn’t anticipate the Internet being as ubiquitous as it was. I certainly didn’t anticipate cell phones and the combination of that with cameras. So, I mean, I can sit here and tell you I missed a lot of the stuff that were. That makes up our world today. So I wouldn’t be a good futurist, I guess, but. But we’d had people thinking about that and we were wrong a lot of the time. There’s an old expression about engineers I love, and that is that engineers over overestimate what they can do in five years and underestimate what they could do in 20.

Paul Spain:
You know, and I think it’s true because I have a technical orientation. I’m an engineer. I think about solving the problems and how I can Use technology that I understand today to make it happen. And it usually happens in a foreseeable amount of time. But then think about the world’s inventing along with you. Most of these things I don’t know going on and all of a sudden they show up in odd ways and then all of a sudden they get reconfigured in a way using commonly used platforms that didn’t exist when I was first thinking about it. Think about the cell phone platform that’s being used for everything today. You know, I would have thought of that.

Paul Spain:
That is a product, not a platform.

Steve Sasson:
Right?

Paul Spain:
So it’s, it’s, it’s, it’s just a different way of thinking about these kinds of things.

Steve Sasson:
And look, you made a comment about maybe companies should have finite lives. And that’s something I’ve been thinking about too is, you know, should we, should we, you know, change our expectations about, you know, some of the most iconic businesses that, you know, you expect just to be around for forever. And certainly the, the shareholders expectation is such that what they invest in isn’t going to be wiped out. But yeah, I do, I do wonder what, what should the end of an era look like for a business? Should there be an exit? Or should companies, where their most profitable days have gone, should they be setting up, you know, separate offshoots that maybe they, they don’t necessarily own entirely to, you know, to disrupt the original business? Have you, what thoughts have you had in this area?

Paul Spain:
I’ve thought a lot about it. I, I don’t, I don’t know if I’ve got any answers. You know, all different companies react to the changes that are imposed upon them by the rest of the world differently. Some companies start to, you know, you, you, you, you sort of break your, you break your, break yourself up.

Steve Sasson:
Right.

Paul Spain:
You know, just to force yourself to do that.

Steve Sasson:
Right.

Paul Spain:
There was a book I read in the early 90s by a fellow named Hardy, I think his name was called the Age of Unreason. And he was trying to describe what was going to happen. I would call him a futurist, right. And I remember reading this thinking about how it might apply to my world at that time. And he talked about companies being shamrock companies where the, the center core would be the corporation and then there would be all these little bubbles attached to the outside of it, be separate entities but closely associated with it. And the people who worked inside the core corporation would have relatively short, intense working lives. He numbered him in hours, I remember, and then, you know, suddenly 50,000 hours or something. And then they would move to these, as they got older, they would move to these separate little shamrocks outside the wings of the shamrock and they would do support activity for the rest of their lives or whatever.

Paul Spain:
And then that would, and then maybe that shamrock would move to another company or something like that. He was describing something like that. And I, and I remember that to this day because it sort of looked like what was happening to Kodak. Kodak was breaking up into lines of business. We were taking the big core and trying to break it up into more responsive lines of business, smaller little bubbles. But they never really let those individual bubbles be independent.

Steve Sasson:
Okay.

Paul Spain:
They were still under the same umbrella. You know, they would give you separate P and L and all that. But they really controlled everything.

Steve Sasson:
Right.

Paul Spain:
They never really let go. So in a sense they didn’t really do what was being proposed by Harding as I remember. And so I think when how Kodak reacted was they, they, they should have let go of some of this stuff. You can either, you can either do you can either stick with the market that, you know or stick with the technology that you know, when you’re dealing with a transition. And, and we stuck with the market that we knew, imaging, but the technology then took us out.

Steve Sasson:
Right.

Paul Spain:
If we had stuck with the technology we know, which was coding very complex materials in very difficult circumstances on thin webs, moving very high speed, very big webs in the dark, you know, could we have utilized that to make other businesses and probably we should have done more of that, you know, in terms of this transition. And then since then our company would have moved from being a photographic company to a company making industrial materials or something else.

Steve Sasson:
Right.

Paul Spain:
So that’s, you know, I can speak from my experience at Kodak. All I can tell you is that companies today are dealing with bigger changes that are happening faster than we dealt with.

Steve Sasson:
Yeah, I mean it seems pace is a real, is a real key to success today. There’s so much competition, there’s this, you know, a lot of techniques that are, you know, used within small stuff startups that certainly looking back, often larger businesses didn’t leverage. But it seems like these startup type concepts are really important and big business has to embrace those things and find the right mechanisms to let innovation happen at pace and to decide the right timing. And that the, that’s the challenging thing, particularly if you’re disrupting an existing revenue stream. And you know, I would, I would wonder and you know, in some cases whether you know, a business, you know, would actually in the boardroom work out and calculate that actually they’ll be better off to let themselves die than to then to focus too much on the, the, the new innovation because then they might actually generate more revenue in some cases by, by, by stringing it out. Which you could say to a degree is what happened within Kodak. Right? It was, it was, you know, looking at, well, you know, if, if, if they move too fast down the digital track and promoted it too broadly, then that was going to, that was going to disrupt the, the film revenues maybe quicker than they, than they would otherwise. And you know, of course there, there is only one, one set of reality, one set of facts of what, of what happened.

Steve Sasson:
So you, you don’t know what might have happened, you know, had, had there been a, a faster move into digital within Kobit, you don’t know.

Paul Spain:
They certainly had the, the, the technical vision of where it was going, but we just couldn’t come up with a successful business model. Did some, you know, we talk about today, I see all the innovation startups and maker spaces and all these kinds of things and in a way I like to describe it as the democratisation of innovation because it allows everybody to be doing it. And when you talk to young people today, when I talk to young people, I like to tell them when you’re inside an organisation, you know, you have a boss and there’s a culture and all that kind of stuff, your job is if you’re not annoying your boss to some degree with a new thought that is uncomfortable, you’re not doing your job.

Steve Sasson:
Okay.

Paul Spain:
And too often we think we have to go in there to get along, you know, to be, to fit in to. If I don’t fit in, I can’t get power, you know, and that’s the wrong way to think about it in my view. And the company should not encourage that. The company should encourage, you know, have I been made uncomfortable today by any of my employees? Because if I, then I know that something’s happening. You know, I mean the, the people who best knew how photography was going to be done away with was the people inside of Eastman Kodak company. I know that because I work with them. I, I, you could take a look at the intellectual property trail. They knew it, they knew it was coming before just about anybody and they had the right answer, but just about before anybody.

Steve Sasson:
Okay.

Paul Spain:
But it was hard to let go of what we were successful at.

Steve Sasson:
Again.

Paul Spain:
We get back to the cultural challenges that a disruption poses and how to deal with that. And I don’t know if I have the answer to be Honest with you, there are certain suggestions you can make, but I don’t know if I have the answer. And to extrapolate that to today’s world, all I can say is it’s faster and it’s more severe. The platforms out there are amazing. Today people can pull together technology at such a high level with a relatively low investment. And even with a skill base, you don’t have to have studied something for 20 years in order to make a contribution in these fields.

Steve Sasson:
And there’s so much information that’s readily accessible and so much access to other experts. So I think Kodak invested in, you know, so many different businesses either through acquisition or, you know, smaller investments during, you know, probably across most of the time that you were with the business. But you know, at the end it didn’t, didn’t seem as though those, you know, partnerships and acquisitions delivered the sort of outcome that, that we might, you know, wonder about now. Do you know who were you able to see some of those things going on and you know, does it leave you with any lasting impressions on. Well, you know, what might have gone wrong there was that culture again with the behemoth of, of Kodak maybe you know, pushing its culture onto, onto these other, other, other firms?

Paul Spain:
Well, there were, there were obviously that you correct. There were a number of acquisitions that were, were done. The number of businesses we got into and got out of, got back into and got out of again, you know, I think the biggest acquisition, of course I was the Sterling Drugs in, in the late 80s, early 90s. And that, that was, that was an attempt to say I’m going to stick with the technology. I know and, and I’ve got all this massive amount of chemicals and.

Steve Sasson:
A.

Paul Spain:
Big portfolio of interesting chemicals. Can I apply that in the drug field?

Steve Sasson:
Right.

Paul Spain:
That was kind of a simplified view of that. And that turned out to be not the case. Maybe you could argue that due diligence wasn’t done there.

Steve Sasson:
Okay.

Paul Spain:
And we sold that. I think when George Fisher came, he sold out a few years later. So that was the biggest acquisition that represented a cultural. I know this area better than this new area, new technology. There were many others. Like Inkjet for example. We got into Inkjet and got out of Inkjet, got into Inkjet, got out of Inkjet several times because it was sort of fit our culture. Again, it was sell a high margin material for something that once the person has made the investment in the printer that they would keep buying that.

Paul Spain:
And by the way, HP did very well with that as well as Canon of Course, but we thought we could get. We were in that earlier than that.

Steve Sasson:
Okay.

Paul Spain:
And we could never stick with it. I think what happens is you come up with an idea inside a company and it’s easier to sell the idea because it’s a change. We got to do something. So they do this and it sort of is plausible. Hey, we’ll sell ink at very high margins. Sort of reminds me of selling film at high margins.

Steve Sasson:
Right.

Paul Spain:
And so they go and do that. Then it requires a lot of work. It takes longer than you think. It creates new marketing channels, new skills, and they sort of lose interest in it and then they decide to get out of it. So there’s a number of examples of.

Steve Sasson:
That that occurred there.

Paul Spain:
We tried different things that just never. We tried the photo sites. I forget the name of it now, but Kodak had that Internet presence on the people didn’t, didn’t get prints. So we just abandoned them. Maybe we should have thought about it differently. I’m not suggesting that we should have anticipated all the social networks and all the rest like that. Just didn’t think broadly enough like that. But to think that Instagram comes along and does so well with I don’t know how many people.

Paul Spain:
They had like a half a dozen or something. I don’t know. We were. We knew all that we could have done everything they did, but we didn’t. And I think that’s again, getting back to how. What you’re predisposed to thinking about the way the world should be.

Steve Sasson:
And.

Steve Sasson:
The.

Steve Sasson:
Scale challenges, just the size of Kodak versus the size of some of these startups. And that brings with it some challenges as well, doesn’t it? All the layers to go through to make things happen.

Paul Spain:
Well, there’s the size, as you rightly point out. There’s also the culture and the longevity. Remember, this company has been quite successful for over 100 years. Incredible. So all these companies we’re talking about today, how successful they are, come to me in a hundred years and if they’re still around, let’s talk. So let’s talk about that. Don’t forget the longevity. A lot of people who worked at Kodak, their grandfathers worked there and their fathers worked there.

Paul Spain:
Their families worked there. Okay, so, so, so, so there’s that. So, so it’s, it’s the size of. It was. For sure they treated their people very well. This, this company was, was regarded as, as a model employer. The way they treated their people and the people like the company. To this day, you’ll find a lot of People speak very favorably about working, working at Eastman Kodak Co.

Paul Spain:
I’m one of them. So it was a good company to work for, but the size of was hierarchical to a large extent. It was slow to change organisationally. They did try changing it, becoming more nimble, but they never really let control go. You know, I mentioned those lines of business. The lines of business were formed, you be agile, go off and do something great, you know, and then when you want to advertise a transceiver, oh, don’t do that, don’t do that. You know, that kind of. Because you’re really not separate companies.

Paul Spain:
These companies impact each other. For example, if you’re putting on an electronic product that may or may not compete with a product of another business unit, all right, your marketing arm of that business unit has a problem with you, they’ll go to upper management and say, hey, I bring in so much revenue and profit a year. They don’t bring in anything. Stop them from doing this because it’s going to impact me as a businessman. It’s rational to put controls on it. So really, the size of the company and the things they tried really weren’t as effective as they were thinking they would be because they never really let go of control.

Steve Sasson:
So look, looking back in hindsight, if there were, you know, two or three specific things that you think that the business now, with all the knowledge and all the information that we have, could have done differently, what are the things that would, would stick in your, in your mind as, as, you know, what might have been the playbook that would have, you know, seen Kodak, you know, be a much, you know, more successful business today?

Paul Spain:
If Kodak could have changed their culture, their management culture extensively and they reacted soon enough. And when I say soon enough, I mean like in the late 1980s, okay, I think reacting before that would have been imprudent because the technology was not really proven. I can speak with some authority about that. It was. There was, there were questions about, about that. But in the late 80s, in my opinion, it was pretty much established. Electronic imaging was coming to the forefront. People were buying VCRs and those kinds of things was necessarily digital, but it was electronic imaging.

Paul Spain:
So if they reacted then and they could have somehow started to get into the electronic imaging field some way, maybe making VCRs or something, I don’t know. We know how to manufacture everything. We could have, we could have done some of that stuff or, or if we had acquired some, some of the California startups, maybe move part of the company to California and Truly given them independence, I think that would have been the most difficult part. Kodak was always command and control. And. And it was because you had to control everything. Think about what they dealt with. Their whole imaging chain was, was control.

Paul Spain:
When you bought film, it was manufactured by Kodak. They controlled the chemicals that we used to develop the film. They made the machines that developed the film, okay? They made the printers that printed it. They made the paper that it was printed on. They controlled that whole imaging chain. And by doing that, they were able to sustain a business for over 100 years of superior image quality and good customer value.

Steve Sasson:
Okay?

Paul Spain:
Now all of a sudden, electronic imaging comes along. You can’t control anything. You know, algorithms written by somebody else printed on printers written by somebody else on computers that are run by some, built by somebody else. You don’t control any of that stuff. So that was against the thinking of the company. We’ve got to control these things. So you’d have to get rid of that mindset and go more to like a what we call open source kind of thing now. And that would have been difficult for.

Paul Spain:
I’m talking about people now. People. To do so, you would have had to blow the company up to some extent geographically, probably separate themselves, use the consumable business, which was very profitable, to fund the initiatives that are done and really, truly run by different people with a different mindset. And then they would have had to adapt to the rapidly changing times of the 90s in order to be successful there.

Steve Sasson:
Wouldn’t have been easy or something to come natural at all. Right.

Paul Spain:
Well, if you were a shareholder going to a shareholder meeting, you would have to ask the CEO. He had to answer the question, you’re taking all this money and you send it out to these guys in California, which, by the way, you don’t seem to be able to answer any questions about. Because he doesn’t control them, really. And by the way, they’re not making much money. Why am I investing in this stock today? So maybe another idea would be to take the company private at some point. I mean, I’m not a big corporate finance guy or anything, and I’m sure there’s difficulties to doing that, but I would think shareholder pressure would have precluded a lot of what I was talking about before and.

Steve Sasson:
Yeah, yeah, potentially the sort of thing that leads to a chief executive getting, you know, displaced.

Steve Sasson:
Yeah, well.

Paul Spain:
Oh, absolutely. Yeah. Because his job is to represent shareholder value. I mean, in addition to, you know, all of the other things. And he would have had to explain for a Period of time. Why the profits of this company are going to this loser that you don’t seem to want to control. That would have been a difficult, difficult thing to, to do.

Steve Sasson:
I, I mean I just think these things are, are incredibly, are incredibly challenging. That’s, you know, why I’m enjoying companies except exploring it. And there aren’t too many that have, you know, that have survived. I mean Microsoft is, is one that’s been interesting to follow because they, and I mean it looked like they were going to miss the whole cloud thing.

Paul Spain:
And it’s give them, give them a disruption like quantum computing and see how they react. This is the, these are the kinds of disruptions that are going to come. Artificial intelligence, you know, these things when they hit, are going to impact people. Look at the car companies. What are they, how are the car companies going to look when you have driverless cars? I heard a futurist talk about 17 years. You won’t be allowed to drive.

Steve Sasson:
Right.

Paul Spain:
And I’m thinking, will anybody care what car they drive if they don’t drive it, they just get in it. Will anybody care?

Steve Sasson:
No.

Paul Spain:
Who makes it? They won’t own them, they’ll rent them. It’ll be Uberized or something. Think of what that’s going to do to the entire automobile industry. That’s the disruption that Kodak was dealing with.

Steve Sasson:
Yeah, yeah.

Paul Spain:
You know, that’s the kind of thing. Can companies successfully deal with that or should they just reinvent themselves? We’re no longer needed.

Steve Sasson:
Yeah.

Paul Spain:
The reason we were created. We’re no longer needed.

Steve Sasson:
Can you imagine a chief executive. But that’s what standing up and saying that.

Paul Spain:
Kodak used to say that you press the button, we do the rest. Yeah, you don’t have to do the rest anymore. So therefore you don’t need it anymore. You know, so companies really have to take a look at why they were created and their basic function. Is it needed anymore?

Steve Sasson:
Well, it’s that diversification and I think, you know, I look at BlackBerry for instance, you know, they were very popular for a while, but they didn’t have the broad diversification. Now, you know, they still exist in a, in a, in a form today. Yeah, but you know, Microsoft was, you know, was competing alongside them in that sort of smartphone space there for, you know, for, for a period. But Microsoft had a whole lot of revenue streams so they weren’t sort of caught like Kodak was where, you know, and I don’t know the, the, you haven’t delved into the exact numbers. But you know, Kodak was So heavily reliant on F film. There, there wasn’t, you know, a whole lot of different streams that had, you know, similar sorts of revenues.

Paul Spain:
So Most companies have one or two products that supply 90 of the profits. And Kodak was no different than that. We had many products.

Steve Sasson:
Yeah.

Paul Spain:
And, and much. I mean, the portfolio was enormous.

Steve Sasson:
Yeah.

Paul Spain:
But if you take on which are the ones that really make the money, you know, it’s like Sony, you know, PlayStation games, you know, that’s where all the money was. Right. There wasn’t TV sets.

Steve Sasson:
Yeah.

Paul Spain:
You know, so to me, there is that. And you have to say, fundamentally is where I’m getting all of my revenue from.

Steve Sasson:
Okay.

Paul Spain:
And I’ve been doing it for a while and I’m really good at it. Is that going to be needed anymore? Fundamentally needed anymore when quantum computing comes along? Well, will Microsoft be needed anymore? Will it be done by some guys growing crystals somewhere else? Right. I mean, it’ll be the same kind of a thing.

Steve Sasson:
Right.

Paul Spain:
Google’s got the same thing. When bandwidth gets so high and information gets stored irreparably everywhere else, who cares? You know what I mean? So to me, it’s that fundamental question of why do I exist? What do I fundamentally exist? And look at the revenue stream, see where the profits come from and is it ever needed anymore? Not wanted. Needed. Yeah, yeah, that’s, that’s what it comes down to. And I think all companies have finite lives, you know.

Steve Sasson:
And then you look at Apple. Well, you know, the large majority of their revenue comes from the iPhone. And yeah, you know, Google are giving away the, the building blocks for their phones for, for nothing. And you know, look, some, some markets, Apple is, you know, still, you know, incredibly dominant with, with their phones and other markets, not so much, but their margins are so high that, yeah, it doesn’t seem to matter, but they’re going to have to keep innovating.

Paul Spain:
And yeah, the phone market for Apple is, that’s where they make most of their revenues profits is on those phones. And I mean, how many people need to buy a new phone or does it. Most people don’t need any new phone all the time. I know they. And you know, the irony is when they come out with a new phone, what do they advertise? The camera?

Steve Sasson:
Yeah, yeah, yeah, yeah.

Paul Spain:
Laugh at that. I mean, it’s a riot. It goes back to pictures and Kodak owned that business. Yeah, that’s what drives me nuts.

Steve Sasson:
Well, it’s been a great discussion. Steve, thank you very much for your time.

Paul Spain:
Oh, my pleasure, Paul. Thank you very much for coming to visit with me.

Steve Sasson:
So many, so many great insights there and thank you for, you know, sharing, sharing your story and your, your stories from within the world of Kodak and, you know, for your insight as we look, you know, back in time and, you know, we, we, we have some benefits of being able to do that with hindsight. You know, the Kodak story is certainly one of a company of, you know, incredible innovation, incredible achievements and, and you know, the same goes for the inventions that you were involved in. So, you know, congratulations on your, your great work.

Paul Spain:
Well, thank you very much, Paul. I appreciate you coming to visit and I like telling the Kodak story. Kodak was a great company. He’s a great company, but it, for over 100 years, it provided real customer value.

Steve Sasson:
So.

Steve Sasson:
Oh, we, we look forward to seeing what, what Kodak can, can do next.

Paul Spain:
Yeah, they’re, they’re involved in a lot of things.

Steve Sasson:
There’s still, there’s still a lot going on there.

Paul Spain:
Yeah, there’s, there’s still a lot going on there and they’re diversifying into a number of different areas and that’s, it’s encouraging to see.

Steve Sasson:
All right, thank you. Thank you.