Innovation on Tap

Stories of Entrepreneurship from the Cotton Gin to Broadway's Hamilton

Eric B. Schultz

• Publisher: Greenleaf Book Group Press
• Year: 2019
• Print ISBN: 9781626346635
• eBook ISBN: 9781626346642
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Innovation on Tap is the story of innovation in America told through the eyes of 25 entrepreneurs, from Eli Whitney and his cotton gin to Lin-Manuel Miranda and his Broadway smash, Hamilton. The stories illustrate the sweep and impact of innovation. From razor blades, insurance, and baseball to smart cities, online running communities, and cybersecurity, innovators across three centuries gather in an imaginary barroom to discuss the essential themes of entrepreneurship--Mechanization, Mass Production, Consumerism, Digitization, and Sustainability--while emphasizing and reemphasizing the importance of community to their success.

Part One

MECHANIZATION

Chapter 1

ELI WHITNEY:
ACCIDENTAL ENTREPRENEUR

Born in December 1765 on a farm thirty miles west of Boston, Eli Whitney demonstrated early signs of mechanical genius. At twelve years old he fashioned a violin that made “tolerably good music” and was, many said, “a remarkable piece of work for such a boy to perform.” Later, Whitney dismantled and reassembled his father’s watch, the most sophisticated piece of machinery on an eighteenth-century American farm. As a teenager, he designed machines in his father’s workshop that mechanized the manufacture of nails, stickpins, and walking canes.

While Whitney was unsure what he wanted to do with his life, he was certain he wanted to escape the drudgery of family farming. With funds provided by his father, he entered Yale University in 1789 to secure a “liberal education” of Latin and Greek, ancient history, geometry, ethics, and rhetoric. Friends were perplexed by the decision, one admirer informing Whitney that “there was one good mechanic spoiled when you went to college.” Indeed, it’s likely that nothing Whitney learned at Yale enhanced his innate mechanical skills. However, it is also likely that had he not attended Yale, he would have failed as an entrepreneur and been lost to history. Despite his mechanical genius, it would be the support of the greater Yale community at critical moments in his career that enabled Whitney to succeed.

Graduating in 1792, Eli accepted a tutoring position on a plantation in South Carolina, providing a way to repay the tuition advanced by his father and plot his career. He was grateful for the job but distressed by the location, which—compared to New England—featured a humid, subtropical climate. “In four days I shall set out for South Carolina,” he wrote to his brother. “The climate is unhealthy and perhaps I shall lose my health and perhaps my life.”

This fear was well founded. Whitney and his contemporaries lived at a time when medicine was powerless against regular outbreaks of tuberculosis, typhoid, scarlet fever, yellow fever, and diphtheria. While attending Yale, Whitney himself nearly died of some unspecified disease—what his sister called “Hypo.” In 1792 he contracted smallpox, and in 1794 malaria, a sickness whose fever and chills would visit him periodically throughout his career. It’s possible that Whitney lost months and perhaps years of productivity due to personal illness and the ravages of disease on his workforce, an element of “business risk” with which all entrepreneurs in America’s early republic had to contend.

THE YALE TUTOR MEETS COTTON

Whitney had been recommended for his tutoring position by fellow Yale alumnus Phineas Miller (1764–1803), the first act in a partnership essential to Whitney’s success. Miller had been hired to tutor the children of General Nathanael Greene (1742–1786) at the general’s Mulberry Grove plantation, situated along the Savannah River. When Greene died suddenly, Miller became manager of the plantation on behalf of the general’s widow, Catharine (1755–1814). Catharine and Phineas eventually married, their union bringing sound management and profitability to Mulberry Grove.

Whitney set out for Savannah, sailing from New Haven and barely escaping disaster when his ship slammed into rocks off Manhattan. Stepping ashore in New York City, he encountered a friend on the street, shook hands, and contracted a case of smallpox, adding two weeks of convalescence to his journey. Whitney then spent six miserable, seasick days sailing to Savannah before arriving at Greene’s Mulberry Grove, just across the river from his new job. That’s when he was informed that the wages for his tutoring engagement had been halved, making the position untenable. Catharine extended her home and hospitality to Whitney while he regrouped. In turn, he made himself useful through odd jobs, including the redesign of a tambour embroidery frame that Catharine had found difficult to use. This inconsequential act would soon have historic implications.

When friends of the late general stopped by the plantation to pay their respects to Catharine, the group’s discussion turned to agriculture. One of the visitors expressed regret that the South lacked a reliable cash crop. Cotton seemed promising, but nobody had been able to design a mechanized cotton engine, or “gin,” that could efficiently separate the sticky green seed from the white cotton boll. A series of textile inventions in Great Britain, including the flying shuttle (1733), the spinning jenny (1764), and the spinning mule (1779), had powered spectacular global growth in the textile industry. The visitors to Mulberry Grove agreed that the market for cotton was insatiable but impractical for American farmers to supply in quantity without substantial improvements to the speed with which raw cotton could be processed.

There had been some limited success. Planters along Georgia’s coast had been able to grow Sea Island cotton, a long-staple variety whose fiber was up to 2½ inches in length. Long-staple varieties such as Sea Island were prized by the British textile industry. The cotton’s shiny black seeds could be easily separated from the boll by a roller gin, a device that forcibly squeezed the seeds from the fiber, preserving its long staple for spinning. A roller gin could remove seeds from long-staple cotton about five times faster than by hand.

Unfortunately for Southern planters, Sea Island cotton required sandy soil and protection from upland insects. A crop some had hoped would revitalize the Southern economy turned out to be profitable for a few well-situated planters but a dead end for most others.

On the other hand, short-staple cotton had been grown ornamentally in the South for years, but traditional textile mills spurned its shorter, ¾-to 1½-inch fibers, making it appropriate only for the coarse, handwoven cloth known as homespun. Short-staple cotton was also cursed for its fuzzy green seeds, which, as the guests at Mulberry Grove knew, adhered to the lint so tenaciously that traditional roller gins proved ineffective. Common wisdom held that separating a single pound of clean staple was an entire day’s work for a single person.

What short-staple cotton lacked in manufacturing appeal, however, it more than made up for in hardiness. It flourished almost anywhere with fertile soil and a two-hundred-day growing season. In the United States, those requirements were met by a colossal swath of rich land that stretched from Virginia to eastern Texas.

American mechanics had been unable to solve the ginning problem of short-staple cotton. “The colonial records are filled with claims that a successful gin had at last been ‘invented,’” historian Carroll Pursell writes, “but no one made the claim stick.” The state of Georgia had gone so far as to appoint its own commission to address the issue. With few good crop options available, some Southern farmers began to plant short-staple cotton in the 1790s, hoping a process would be developed to make it salable in quantity. In 1792, two to three million pounds had been picked “but for the want of a suitable Gin but a small part of it had been prepared for Market.” Raising a crop destined to rot in the field or warehouse was an act of agricultural desperation.

In the midst of this worried conversation, Catharine Greene introduced the group to Eli Whitney, telling the story of her new tambour frame. Whitney denied any claim of mechanical genius and further admitted that he had never seen cotton or a cotton seed in his life. However, he also sensed opportunity, soon writing to his father about “a number of very respectable Gentlemen at Mrs. Greene’s who all agreed that if a machine could be invented which would clean the Cotton with expedition, it would be a great thing both to the Country and to the inventor.” No such machine existed in September 1792, a fact important to the defense of Whitney’s future patent claim. Otherwise, these well-connected, well-traveled gentlemen planters would have been in hot pursuit. Even the rumor of a solution would have set the countryside in a frenzy. What Whitney found before him, suddenly and unexpectedly, was a problem that had stumped a nation, in a region facing economic collapse for lack of a profitable crop.

A FLASH OF GENIUS?

Just days after his conversation with Greene’s guests, Whitney wrote his father to say that he had struck upon the idea for a machine to clean short-staple cotton. This revelation comes as close to a “flash of genius” as exists in the annals of invention. Within a few weeks of his arrival at Mulberry Grove, Whitney had designed a cotton gin prototype that could clean ten times as much cotton as a single person working by hand. Sensing great opportunity, Miller and Greene agreed to underwrite further development of the gin.

The heart of Whitney’s new machine was a cylinder studded with rows of stiff iron wire. When the cylinder was turned by hand, horse, or water power, the wire teeth grabbed the cotton fiber and forced it through an iron breastwork (a grille so tightly spaced that green cotton seeds were unable to pass through), literally tearing the fiber from the seed, which then fell into its own compartment for removal. A set of spinning brushes would then sweep the cotton off the iron teeth and into a hopper. Once in motion, a clattering cotton gin tossed clean, seedless cotton into its hopper like exploding popcorn.

Though more complex than the traditional roller gin, Whitney’s device could be duplicated from memory by a talented mechanic. Whitney and Miller recognized this weakness and, from the start, sought to keep prying eyes from viewing the inner workings of their invention.

Contemporaries wrestled with the question of how Whitney could instantly solve a problem that had puzzled others for decades. Some modern historians remain incredulous. Charles Morris concluded, for example, that “it is hardly credible that Whitney, with no experience in the cotton industry, more or less immediately conceived such a complex solution upon a chance overhearing of a conversation.” Is there some way, then, to plausibly explain the nature of Whitney’s “flash of genius”?

Invention often involves the ability to apply models across industries. Samuel Colt (1814–1862) conceived his idea for the revolver aboard a sailing ship when he observed how the spokes of the ship’s wheel aligned with its clutch. Henry Ford’s moving assembly line was inspired in part by the visit of one of his managers to a Chicago meatpacker’s line created for disassembling animal carcasses. Perhaps Whitney had been exposed to some device that would lead to his design of the cotton gin?

There is one tantalizing clue. In 1852, Judge Garrett Andrews (1798–1873) of Washington, Georgia, published a letter in the Southern Cultivator reporting on a conversation with his friend, eighty-three-year-old Thomas Talbot. Talbot had lived on the plantation adjoining Mulberry Grove in 1792, the year of Whitney’s arrival. He remembered Whitney and Miller’s first ginning house, which was “gated, so that visitors might look through and see the cotton flying from, without seeing the gin.” Talbot also offered a fascinating observation, saying that Whitney had conceived the idea for his invention “from a gin used to prepare rags for making paper, . . . which he saw on a wrecked vessel.”

A wrecked vessel? Whitney had survived a shipwreck off Manhattan. A gin used to prepare rags for paper? Could there have been such a machine on board Whitney’s ship from New Haven, perhaps being shipped to a paper mill in New York? And what exactly would this machine have been?

In 1792, paper was manufactured by hand except for a single automated device introduced by the Dutch around 1750. The Hollander beater was an oblong tub used for washing rag scraps, tearing apart the fibers, and reducing them to a pulp. Power was applied to a beater roll, which turned and pulled the rags through a grate, slicing them into smaller scraps. The Hollander was a marvel of mechanization, producing pulp about eight times faster than by traditional hand methods.

The similarities of the inner workings of the Hollander and Whitney’s cotton gin are striking. Is it possible that Whitney’s “flash of genius” was based on the application of an existing mechanical concept, which he examined by chance aboard a ship heading from New Haven to New York? Whitney’s “flash of genius” may also have been inspired by one other advantage: a total ignorance of the needs of the textile industry. Only a Yale-trained farm boy from New England with a Dutch paper-making apparatus as his model would have designed a gin that violently tore cotton from the seeds rather than attempting to gently remove the seeds. The resulting product was sure to be inferior to long-staple cotton.

And it was, but it turned out to make little difference. The speed and efficiency of Whitney’s new cotton gin, along with the dire economic straits of Southern agriculture, forced the textile industry to adapt. End users traded unlimited quantity for inferior quality and adjusted their practices accordingly.

Today, open sourcing of research and development is common. Inside experts bring deep knowledge but their own set of biases, sometimes being too quick to see why something should not be done. In one study of open-sourced R&D, 30 percent of cases that could not be solved by an experienced corporate research staff were solved by nonemployees. In another modern open-source environment, observers found that “‘ninety to ninety-five percent of the time, the individual who comes up with the awarded solution does not have the background and résumé’ of someone you would hire to solve the problem.” Eli Whitney was apparently just such a case.

AN ACCIDENTAL ENTREPRENEUR

At twenty-six years old, Eli Whitney was the astonished inventor of the cotton gin. “Tis generally said by those who know anything about it,” Whitney wrote his father, “that I shall make a Fortune by it.” After searching for direction and purpose, Whitney had stumbled into a future that satisfied him on all counts: a brilliant innovation, potential wealth, and possibly fame. He had become an accidental entrepreneur.

Unplanned, unintended, unexpected—this new opportunity was suddenly the compelling force in Whitney’s life. He confided to a friend that “I hear of wars and rumors of wars; but very little of the news of the Day. I have not seen a News Paper these three months.” The challenge before him was to move from surprised inventor to focused entrepreneur by mechanizing manufacture of the gin and choosing a business model that matched the brilliance of his invention.

Events moved quickly. In May 1793, Miller and Whitney formed their partnership. Whitney’s role was to patent and build the gins while Miller secured financing and marketed the business. In June 1794 the two signed a document sharing half interest in the patent, with profits to be split.

Throughout this period and until his untimely death from fever at age thirty-nine in December 1803—just the terrible fate Whitney had feared for himself—Phineas Miller exerted a steadying influence on his younger friend. Miller brought to the partnership not just capital, but also confidence, energy, resourcefulness, loyalty, and optimism. As the most important player in Whitney’s professional network, he propped up the inventor through periods of despair while continually promoting their cotton gin business. There could have been few better partners or friends, and it is difficult to envision Whitney having anything like the success and acclaim he eventually enjoyed without this support early in his career.

Whitney’s patent was enthusiastically received in March 1794 by the recently retired secretary of state, Thomas Jefferson, endorsed by his successor, Edmund Randolph, and ultimately issued by President George Washington. With three members of the Constitutional Convention in his corner—the very men who had introduced the intellectual property clause of the Constitution—Whitney seemed to have the protection he required to support his new ginning machine. The happy inventor wrote his father, “I had the satisfaction to hear it declared by a number of the first men in America that my machine is the most perfect & the most valuable invention that has ever appeared in this Country.”

While visiting Philadelphia that year, Whitney was also introduced to Oliver Wolcott Jr. (1760–1833), comptroller (and soon to be secretary) of the Treasury Department—and yet another Yale alumnus. Wolcott would prove, like Miller, to be an indispensable member of the community that would ensure Whitney’s ultimate success.

Eli Whitney was triumphant and ready to conqu...

Table of contents

• Cover
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface: It All Started in a Bar
• Introduction: Innovation on Tap
• Part One—Mechanization
• Part Two—Mass Production
• Part Three—Consumerism
• Part Four—Sustainability
• Part Five—Digitization
• Conclusion: A Model for Innovation and Community Lin-Manuel Miranda and Hamilton
• Acknowledgments
• Notes
• Index
• About the Author