Colin Barry

Neoprene (CMC, Wednesday, Week 8)


In the throes of the Great Depression, DuPont announces --- with great fanfare --- that they have invented a somewhat-better synthetic version of rubber. Rubber prices are at rock-bottom. What the heck?

Just how bad was the Great Depression?
GDP down 26%, 1929-1931
Unemployment > 15%
Stock market down 73% (1929-1931)
3,300 banks failed (1929-1931)

DuPont invests in basic R&D --- yields neoprene, nylon, plutonium, etc.
Pros to investing at the time:
-- Attract good scientists, set a precedent
-- Experimentation (stage investment in new products)
-- Profuse opportunities (obvious at the time?)
-- Sitting on cash ($20M)
-- Human capital is cheap
-- R&D: winner-take-all?

-- No goals for R&D
-- Too speculative, not applied, no clear endstate (ex ante)
-- Need $44M to commercialize neoprene
-- Diffusion of new products will be slower than usual => delay R&D?
-- DuPont makes intermediate goods: need demand from other businesses

Why could DuPont do this? Specific capabilities/competencies:
-- Organizational structure => M-Form corporation
-- History of product success => appetite for long-term commitment
-- Bridgewater, et al => experienced midlevel leaders capable of commercializing science
-- Advertising expertise

Internal DuPont memo on basic research (Stine). Key points:
-- Pure academic research (not necessarily applied) => may NOT lead to practical applications
-- Internal culture benefits
-- Proprietary tech
-- Pipeline to feed new biz
Still proves tough to manage over the long haul.
Wallace Carothers (star DuPont scientist and a shoe-in for a Nobel Prize) commits suicide in a Philadelphia hotel room in 1937 (cyanide and lemon juice cocktail). Bipolar before, but...