Founder of Motorola
Paul Galvin's career strikingly illustrates
the principle that failures can become growth experiences
which ultimately lead to success. Galvin experienced several
early business failures before founding his ultimate success,
Motorola. Those failures gave Galvin a risk-taking ability
that became a key ingredient in Motorola's success. Here
is that story.
Paul Galvin was born in the small town of
Harvard, Illinois, on June 27, 1895. His biographer tells
us that Galvin's upbringing in this small town environment
gave him a personality, "friendly, yet with a certain reserve,
salty, yet at times very gentle, (with a) stress on personal
loyalties, (1) shrewd assessment of men, and (2) strong
moral code" [1, p. 3]. Upon finishing high school, Galvin
took a summer job as a clerk at the Harvard railroad roundhouse
and the following fall he enrolled at the University of
Illinois, 150 miles away by train or buggy. There he relied
on his savings and part-time jobs to meet his expenses and
complete two years of study. But, by the end of his sophomore
year, he concluded that he was not getting enough out of
the school effort to continue. He returned to Harvard to
work as a clerk in the railroad station and a year later
went to Chicago where he found a clerk's job with Commonwealth
Edison. Shortly thereafter Paul Galvin enrolled in an officer's
training program in anticipation of America's entry into
World War I. He eventually became an artillery officer and
saw duty on the front lines in France. His wartime experience
strengthened Galvin's faith in the virtues of a well-disciplined
organization able to withstand crisis through mutual loyalty
and the leader's concern for the men [1, pp. 39-40]. The
wartime experience also strengthened Galvin's determination
to make a place for himself in the business world.
Returning to civilian life in 1919, Paul
Galvin began his search for a business in which he could
achieve success. He first obtained a job with the D&G Storage
Battery Company. Then in 1921, he joined another Harvard
man, Edward Stewart, to form a storage battery manufacturing
company in Marshfield, Wisconsin. The location was selected
because of cooperation from the local chamber of commerce.
The location proved disadvantageous due to shipping costs,
and in 1923 the company went out of business. "With only
a dollar and a half in his pocket, Galvin packed his wife,
Lillian and their ten-month-old son, Bob, into a broken
down old car and started back to Illinois" [1, p. 51]. Back
in Chicago, Galvin found a job with the Brach Candy Company
as personal secretary to Emil Brach. Three years later,
in 1926, Galvin again joined Edward Stewart to establish
a battery manufacturing plant for a second time. This time
Galvin's company had the advantage of a Chicago location
and economic prosperity in the nation. But then, a defect
was discovered in the product, customers began to be lost
to rivals, and before the problem could be solved, the company's
creditors struck, taking possession of the company property.
Once again, Galvin's dream of business success ended in
All was not lost, however, for in fighting
to stave off the second failure, Galvin, Stewart and an
engineer they had hired had developed a device called a
dry battery eliminator which enabled a home radio to draw
electricity from an electric outlet. The head of the radio
department at Sears, Roebuck encouraged Galvin to re-establish
himself in the business of making the eliminator which Sears
would then buy. The eliminator portion of the bankrupt business
was about to be sold at auction by the creditors, and Galvin
decided to bid for it with the $1,000 he had managed to
raise. His bid of $750 was the highest and he once again
became owner of the tools, plans and design for the battery
On September 25, 1928, the new Galvin Manufacturing Corporation
began operation with five employees in one-half of the first
floor of a rented building. Galvin didn't even have the
money for the first month's rent, but the landlord waived
the usual requirement of advance payment.
The firm initially survived more on the repair of eliminators
than on the sale of new ones. But Paul Galvin saw home radios
as a more promising market and began to produce small numbers
of AC sets for sale to other business firms that would then
put their labels on Galvin's sets. Through strenuous sales
efforts, Galvin soon managed to line up about twenty such
businesses as buyers.
Sales fluctuated dramatically in those early days and the
cash situation was so tight that on pay days the company
would often have to run orders to the radio outlets on South
State Street where eliminators and radio chassis would be
sold for cash. That cash was then rushed back to the plant
where it was used to pay the men. Yet the men were loyal
to Paul Galvin and Paul's brother, Joe, who directed them
while Paul was out selling the product. By the summer of
1929, Galvin's home radio business was booming.
Then, on "Black Friday", October 25, 1929, the stock market
took a sudden, dramatic drop. The demand for radios dropped
and manufacturers of brand name products began dumping their
inventories of sets on the market. The prices of the branded
sets fell below what dealers had been paying for the private
brands such as Galvin's and Galvin found his market disappearing.
Once again, he was on the brink of failure.
At this juncture, Paul Galvin got a break. One of his suppliers
called his attention to the fledgling automobile radio market.
The market was small because the sets were installed on
a custom basis making them expensive. Paul Galvin saw an
opportunity to mass-produce car radios, thus lowering the
price and opening a large new market for the Galvin Manufacturing
Galvin's problem then became that of working out the engineering
problems and producing a marketable product before the firm's
dwindling sales led to bankruptcy again. Galvin decided
that if the firm were to survive, he would have to have
a working model in time to be shown at the Radio Manufacturer's
Association Convention in Atlantic City in June 1930. The
technical problems were formidable, and as the months passed,
one solution after another proved impractical. But Galvin
had unbounded optimism. He drove himself and his men relentlessly
and finally, a few days before the convention, a working
test model was completed and installed in Galvin's car.
Hard work and the leader's refusal to give up had paid off.
The new car radio was not an overnight success, but a number
of dealers bought a few sets each and that gave Galvin the
encouragement to continue production and to work on product
improvement. In 1930 the company incurred a loss of $3,745
on sales of $287,000, but with the car radio an established
product, the future looked hopeful.
With a saleable product, Galvin next had to develop a marketing
program. Initially, he had to rely on unlabeled sets which
he sold to distributors who then attached their own label.
But Galvin had learned the perils of this private label
business while producing radios. The private label had almost
been his downfall. In 1930 he therefore coined a name for
his product - MOTOROLA. The name came to him one morning
as he was shaving. It seemed to him to suggest motion and
radio. In 1930, he began to sell a small number of sets
under this label.
In 1931 Galvin began the crucial task of establishing wholesale
distributorships. Seven were opened that year. Over the
years the distributorships became a major source of strength
for Motorola, in large measure because of the close friendships
that Galvin developed with the owners.
Galvin's success in the car radio field was boosted by the
development of an improved source of power supply in 1931.
Then, in 1933 Galvin manufacturing came out with a new model
that developed problems in the field and the company had
to recall thousands of sets. But Galvin wasn't discouraged.
After venting his wrath by destroying the sets with a sledgehammer,
he authorized the development of two new models that were
successfully introduced in 1934.
Galvin's marketing campaign gradually expanded. In 1934
he entered into an agreement whereby B.F. Goodrich Company
agreed to merchandise Motorola radios through its hundreds
of stores. That same year, Galvin hired Victor Irvine to
handle advertising and promotions. A modest national advertising
campaign began with once a month, one-column ads in Collier's
and the Saturday Evening Post. A large-scale highway advertising
campaign was launched with thousands of red, black and yellow
Motorola signs set up along highways throughout the country.
Troubles were encountered in Florida where the Seminole
Indians were taking the heavy steel signs for use as flooring
in their homes. However, Motorola was able to arrange a
peace treaty preventing further problems.
In 1937, Galvin re-entered the home radio business. His
distributors had been encouraging him to do so and because
car radio production was concentrated in the first six months
of each year, the plant had excess capacity waiting to be
used for the last six months of every year. But the new
venture had barely begun before Galvin sensed the approach
of what was to become the steep national economic recession
of 1937. Acting quickly, he ordered distributors to slash
their inventories with modest price reduction. Most were
able to do so just before the onset of the recession with
its frenzied dumping of inventories. Motorola itself had
to lay off two-thirds of its workers. Once again, it was
questionable whether or not Motorola could hang on. Then
fortune smiled on the company. The Philco Company was hit
by a strike and had to contract with other companies to
produce its radios. Motorola was one of the companies selected
and the business helped to tide Motorola over the recession.
Diversification was carried further when Galvin assigned
a team of his top men to the task of developing a marketable
police radio in 1939. In 1940, Galvin was asked what his
company could do to produce a superior field radio for the
Army and by 1941 Motorola had invented and was producing
the "Handi-Talkie" two-way radio. Motorola was thus firmly
established in the field of mobile and portable two-way
As World War II came to an end, Galvin laid
his plans to achieve post war growth. When World War II
began, Motorola was a small company with its reputation
resting primarily on its car radios. During the war, Motorola
achieved a position of leadership in the two-way radio communications
business. In this post war period, Galvin decided to diversify
further. He planned to expand his home radio sales and add
a line of phonograph products. He planned to be a leader
in the new television industry, and he made a wise decision
to enter the semi-conductor business.
The television venture stands as a classic example of the
consumer's stake in competitive private enterprise. The
first industry coup was scored by RCA with a fine ten-inch
set retailing for over $300. Galvin realized that if Motorola
were to become a significant factor in the market, the firm
would have to come out with a superior product at a price
below the industry minimum. He put two competitive engineering
teams to work on the problem, and one of them came up with
the answer - a superbly designed, seven-inch screen set
that could be sold for much less than the industry norm.
Galvin then introduced an audacious marketing plan, calling
for a larger volume and lower price than most of his associates
thought possible. The doubters proved wrong. Retailing at
$179.95 (compared with RCA's more than $300), Motorola enjoyed
a tremendous volume of sales in 1947 and quickly moved to
fourth place in the industry.
In the car radio field, Galvin moved the company into the
original equipment end of the business by acquiring the
Detrola Company which had been supplying Ford Motor Company.
Soon Motorola had 50% of the Ford business as well as a
large percentage of the Chrysler and American Motors business.
In the field of semi-conductors, Galvin heeded the advice
of Dr. Dan Noble, Motorola's research director, who foresaw
a new era in solid state electronics. Noble convinced Galvin
of the need to establish a military electronics laboratory
in Phoenix, Arizona, in 1949. Out of this venture, Motorola
developed into a leading manufacturer of semi-conductors.
(The decision to go all out in this area was made largely
as a result of the urgings of Galvin's son, Bob, and Dr.
By the middle 1950s, Motorola had become
too big for Galvin to continue to make all of the major
decisions. Galvin therefore reorganized the firm along product
division lines in 1954. In 1956, Paul Galvin relinquished
the presidency of the company to his son, Bob. Paul Galvin
became the chairman of the board and chief executive officer
and each of the division managers became executive vice
In June of 1958 Paul Galvin was found to have leukemia.
His failing health forced him to become inactive in the
company for a year. Then his health improved briefly, he
returned to the company in the summer of 1959; he discovered
that the organization he had built was able to carry on
his work. A few months later, on November 5, 1959, he died
knowing that Motorola was in good hands.
Paul Galvin's Managerial Style
Paul Galvin's success was based upon a combination
of stubborn refusal to let failure lead to disappointment,
a tremendous ability to motivate employees, and a "sixth
business sense" which enabled him to make a number of correct
intuitive decisions at crucial points in Motorola's history.
The ability to motivate employees contained many elements.
Galvin was able to inspire the employees with visions of
the ultimate success to be achieved. In the early days,
Galvin saw each of his men as being a crucial part of the
team and he was able to make the men aware of their individual
importance in his eyes. Galvin readily admitted his own
mistakes and encouraged others to do so in the knowledge
that honest mistakes were inevitable if progress were to
be made. Yet Galvin was ready to display his anger at careless
mistakes and with any man who let the team down by loafing.
Galvin was concerned about the financial welfare of his
people and made certain that they shared in Motorola's success
through high pay and fringe benefits including a profit
sharing plan. Galvin was noted for the personal attention
he gave to employees suffering through serious sickness,
Two incidents make clear the love and respect that Galvin
earned in return from his employees. One was the discussion
of the proposed company profit sharing plan in 1947. Galvin
invited some 2,000 men to a meeting to hear the plan described
and give suggestions. Only sixteen men showed up. Crushed,
Galvin had the absentees queried the next day and discovered
that, "The men simply did not see the need for any meeting.
They were almost unanimous in saying that if P.G. felt the
Profit Sharing Plan was for their benefit, they didn't see
any reason for a meeting"[1, p. 182].
The other incident was the series of attempts by organized
labor to unionize Motorola. Galvin saw a place for unions
in industries that had a long history of labor-management
strife, but Motorola, to him, was different. It was an organization
based on mutual respect, total team dedication to results
and a fair sharing of the rewards. In Galvin's view, there
was nothing for a union to add except unneeded conflict.
So effective was his method of dealing with employees that
they supported him in his view to the end of his career.
His ability to move decisively and correctly on the basis
of intuition has already been chronicled. Classic examples
were his bold decision to ward off bankruptcy by designing
a low-cost radio; his 1932 decision to take the company's
cash out of the bank just two weeks before the bank folded'
and his bold decision to enter television with an initial
massive sales effort. He wasn't always right, but his correct
moves occurred often enough and were sufficiently significant
to transform a five man shop into giant Motorola with its
thousands of employees in 1959.
Paul Galvin started out with the goal of
becoming a successful small businessman. He had no vision
of building an industrial giant. But Motorola became big
because Galvin could not stop. He believed that continued
growth was necessary for survival, and so, rather than risk
failure, he continued to push his company forward. Perhaps
in this regard Paul Galvin's story represents the inherent
fate of many of the present generation of new small businesspersons.
If there is one message of lasting value in the Paul Galvin
story, it is that ultimate success can be built upon the
string of short-run failures. As Galvin himself used to
say, "Do not fear mistakes. Wisdom is often born of such
mistakes. You will know failure. Determine now to acquire
the confidence required to overcome it. Reach out." [1,
*Copyright 1990. The American National Business Hall of Fame. All rights reserved. No portion of ANBHF may be duplicated,
redistributed or manipulated without the expressed permission of the ANBHF.
1. Petrakis, Harry Mark. The Founder's
Touch. New York: McGraw Hill 1965.