What Happened To Panasonic? The Ultimate Story Of Konosuke Matsushita

Ethan
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DIRE STATE

Once upon a time, Panasonic was one of the largest electronics brands in the world, making everything from TVs and appliances to batteries and phones. They were the pride of Japan alongside Sony and Toshiba throughout the mid to late 1900s as they recovered from the devastating ruins of World War 2.

But, the 2000s haven’t been so nice to Panasonic. They’ve shut down their communications business, much of their TV business, and even their LCD business. They’ve been forced to sell off many of their assets, including their security business, their semiconductor business, and most notably their entire $3.5 billion stake in Tesla. Things haven’t been looking much better internally either. 

Panasonic sells Tesla stakes


Panasonic’s revenue has fallen by over 40%, their gross profit has nearly halved, and they’ve written off tens of billions of dollars worth of losses. As such, their employee count has shrunk by over a hundred thousand people within the past 13 years. 

Honestly, the only thing at Panasonic that hasn’t gone straight down is ironically their stock price. But this isn’t all that much better anyway as the stock has basically just been going sideways for the past 30 years. And when you account for inflation, you’ll see that Panasonic stock is actually down 66% over the past 30 years. 

Panasonic stock is actually down 66% over the past 30 years.


Seeing all this, I decided to check the bankruptcy probability for Panasonic. Usually for big tech companies, the probability is less than 1%. For more distressed companies like GoPro, the number is usually in the low double digits. So, with that in mind, do you wanna guess how much it is for Panasonic? Maybe 70 or 80%? Well, it’s straight up over 100%. This is something that I’ve never seen before. 

So, odds are that unless a miracle happens or the Japanese government steps in, someone who’s already drowning in debt, Panasonic is as good as dead. But what happened? As far as I can remember, there was never really any pivotal moment for the company. 

They kind of just slowly lost steam over the course of decades, right? Well, there’s a lot more to the story as much of Panasonic’s demise can be attributed to them forgetting about their roots. So, join me as you take a look back at the rise and fall of Panasonic and try to pinpoint what went wrong. 



ALWAYS KEEP EXPERIMENTING

Panasonic's fall from grace shows how even major corporations can falter when they lose sight of their core strengths. This iconic Japanese brand went from electronics giant to borderline bankruptcy after failing to adapt to changing technologies and markets. 

Now, everyday investors face their own challenges finding stable returns amidst economic uncertainty. Just last week, the Federal Reserve opted to pause rates, leaving us with historically high interest rates of 5.25%. Investing in bonds now means locking in high rates before the Federal Reserve starts decreasing them once again. 

Companies and legendary investors are well aware of this and that’s why they’ve been investing hundreds of billions into bonds over the past year. 

Image of Konosuke Matsushita


Dates back to November 27, 1894 to a man named Konosuke Matsushita. Konosuke was born to a poor rice farming family and was the youngest of 5 daughters and 3 sons. 

By the time that Konosuke was just 4 years old, his father would end up losing their entire family farm as he speculated on the rice exchange. Having lost everything, Konosuke’s father would head to the city to find a job but that wasn’t enough. Pretty soon, young Konosuke himself would have to start working at just age 9. 

He would start off at a Hibachi store before moving on to a Bicycle store, but while the circumstances weren’t that great, these jobs taught Konosuke a great deal about the business world. How to attract customers, how to keep them happy, how to keep employees loyal, and most importantly, how to walk away with a modest profit. 

During these long days of work, Konosuke would start seeing streetcars pop up across Osaka and this would convince him that the future of business had to do with electricity. So, at age 15, he decided to leave his gig at the bicycle shop and join the Osaka Electric Light Company. 

As a natural hard worker, Konosuke would rapidly rise up the ranks and become an inspector by the time that he was just 22 years old. It’s crazy to think that he already had 13 years of work experience, 7 of which were in the electrical business by the time that he was just 22. 

All of this hard work had allowed Konosuke to escape the depths of poverty but Konosuke had far larger ambitions and this is when he started budding heads with management. In his early 20s for example, he would design an improved light sock and pitch it to his supervisor. But his supervisor would simply dismiss the idea, claiming that it was useless and would go nowhere. 

Invigorated by these remarks, Konosuke would decide to quit his job and try his hand at business. And with that, he would set up shop inside his tiny 2 room apartment with his wife and brother-in-law in June of 1917. If this was a Dhar Mann video, Konosuke’s new light socket would end up going viral and he would end up buying out his old employer and stick to his old supervisor. 

Konosuke’s light sockets


But unfortunately, it’s not and unfortunately, Konosuke’s light socket didn’t go anywhere. In fact, things were so bad that he would have to sell the few valuables that he had just to get by. Unwilling to quit though, Konosuke continued experimenting and creating new products and after several months he would finally land on a product that someone actually wanted: insulation plates for fans. 

This product gave him enough money to sustain himself leading to the Matsushita Electric aka Panasonic on March 7, 1918. But while things were going decently well with the insulation plates, Konosuke still didn’t have to heart to just give up on the light sockets. So, he would revisit and redesign his socket leading to the creation of 2 new products: an attachment plug and a two-way socket. 

Unlike Konosuke’s original light socket, these new sockets would gain steam almost immediately which brings us into Konosuke’s first principle: always keep experimenting. Even if your first idea doesn’t work, it’s more than likely that some iteration of it would. 

In fact, Konosuke felt so strongly about this that he would keep a pencil and paper by his bedside. This way, if he got any new ideas in his sleep, he could jot them down and put them to work. Anyway, the momentum of this new socket allowed Konosuke to move his operation to a larger two story house and scale his workforce to 20 employees, marking the beginning of Panasonic’s monumental run. 



GREAT PRODUCTS DON’T SELL THEMSELVES

Moving into the 1920s, things were going much Great Products Don’t Sell Themselves better. Panasonic had turned into a legitimate local business but that isn’t to say that the road ahead was always smooth. In fact, Konosuke would find himself in another difficult situation with his next product itself. 

What hurt the most with this product was that going into it, Konosuke was sure that it was gonna be a banger. It was one of those ideas that he got while sleeping and woke up thinking: Eureka! What was this product you ask? Well, it was a simple bicycle light. 

Battery powered lights were already a thing but they were completely impractical as they only lasted 2 to 3 hours. So most people, including Konosuke himself, resorted to using a candle lamp when biking. Frustrated by this reality, Konosuke would spend 6 months designing a bullet shaped bicycle lamp that was truly revolutionary lasting 30 to 40 hours. 

Excited, Konosuke would strike deals with a bunch of wholesalers and stock stores all throughout the city but to his utter disappointment, not a soul would buy these lamps. Why you ask? Well, because people had already made up their mind that battery powered lamps sucked. Konosuke kept holding out hope that the strength of the product would shine through in this overlooked market but it never happened. 

To make things worse, the Great Kanto Earthquake would strike in September of 1923 which destroyed much of his sales partners. But by now, I think you know that Konosuke never quits. 4 years later, he would return to the bicycle lamp market with a square-shaped lamp. Nothing much had changed internally, but Konosuke’s approach to selling these lamps was completely different. 

For starters, the light was an odd square shape, something that people had never seen before. This was very much on purpose. It was to emphasize that this light itself was nothing like people had seen before. Konosuke also bought out newspaper ads that read "National Lamps: Buy for Your Assurance, Use for Your Benefit." And to round it all off, Konosuke would hand out 10,000 samples to stores without any sort of obligation. 

old bicycle square-shaped lamp


The result? Well, Konosuke would end up selling 30,000 units per month by the end of the first year itself which brings us into Konosuke’s second principle: good products don’t sell themselves. Just because you have a good product doesn’t mean that people will line up outside your door wanting to buy. Even a good product requires an even better marketing campaign. 

Having realized this with the bicycle lamp, Konosuke would vow to never let marketing screw over a good product. And with that, he would completely restructure the company in 1929. He would create 4 succinct divisions, one for each of their major product categories: electrical sockets, batteries, bicycle lamps, and radios. 

Each of these divisions had their own national sales department with regional departments underneath them. And to top it off, Konosuke would directly link the sales departments with their respective manufacturing departments. This way, manufacturing was directly dependent on sales, reducing the likelihood of over or underproduction. 

With this brand new salesforce in place, Panasonic would enter the 1930s with pure dominance as they grew to be a national player employing over 10,000 people. But, just as Panasonic was hitting strides, WW2 would roll around. 



DOWNTURNS ARE A BLESSING

There’s really no easy way to put it, WW2 destroyed Panasonic. Throughout the war, Panasonic struggled to get materials and hire talent as young men were being recruited to the war. To make things worse, the company was forced to focus on industrial production efforts for the war. 

Konosuke was hopeful that things would get better after the war but they only got worse as I think we all know how the war came to an end. Japan was literally bombed into oblivion which not only destroyed everything that Konosuke had built but what the entire country had built. 

Just when you thought things couldn’t get any worse, General Douglas MacArthur and the Americans would begin occupying the country and basically take control. One of their reform orders was for Konosuke to step down and relinquish control of Panasonic. Konosuke didn’t even resist but you know who did? 

His 15,000 employees who signed a petition to keep Konsuke in power. They argued that Konosuke was a virtual part of their reconstruction effort and that removing him would basically destroy the company. Fortunately for Panasonic, Konosuke’s resignation order would end up getting rescinded allowing Konosuke to continue leading the company. 

But, while Konosuke had somehow managed to keep control of his company, he had lost all momentum. Any normal person would’ve been distraught beyond belief but Konosuke was never the pessimistic type. In fact, he was rather optimistic which brings us into his 3rd core business principle. Good times are good and bad times are even better. 

You see, Konosuke believes that downturns are the perfect time to evaluate the state of a business and reinvent it. When things are going well, you’re usually scared to do something different and screw up what you already have. 

But when things are going bad, well you’ve got nothing left to lose so might as well take a risk and see if that unlocks a whole new level. And that’s exactly what Konosuke would do. He would tell his employees to approach the business with the attitude that they had just opened which wasn’t far from the truth given that Panasonic would start targeting a completely different market: the global market. 

To be honest, Panasonic had no other choice given that the Japanese economy was in no state to support so many employees by themselves. So, the entire 1950s was focused on launching western products. This included washing machines, TVs, refrigerators, radios, portable radios, rice cookers, tape recorders, and ACs. This was also around the time that the name Panasonic actually came about. 

Given the new international focus, they needed an easy English name and they would settle on Panasonic. Pan means universal and Sonic means sound, so “Panasonic” was supposed to signify the company bringing the sound of Japan to the entire world. And this marked the beginning of Panasonic’s golden era: the 60s, 70s, and 80s but as we now know, this golden era won't last forever. 



THE BRUTAL FALL

It’s sad to say, but Panasonic’s peak basically aligns exactly with Konosuke’s death in 1989. Ever since Konosuke died, it has only been downhill for Panasonic and it’s no wonder why. They basically completely forgot about the principles that made the business successful in the first place. Take Konosuke’s principle of always keep experimenting for example. 

Well, after Konosuke’s death, Panasonic completely stopped experimenting and if you don’t wanna believe me just take it from Panasonic’s website itself. Here are all the products they launched in the 50s. 

products Panasonic launched in the 50s.


Here are all the products they launched in the 60s and 70s. 

products Panasonic launched in the 60s and 70s


Here’s all the products they launched in the 80s and even 90s. 

products Panasonic launched in the 80s and 90s


Here are all the products they launched in the 2000s. 

products Panasonic launched in 2000


Yeah, you’re not looking at that wrong, there’s not even a single product listed on there. Their last notable product was way back in 98 when they launched digital TVs for the US. You can only hit the ball out of the park if you try swinging. Panasonic has not swung in 25 years. Not only has Panasonic shied away from new products, but they’ve also dropped the ball on their existing product lines. 

You know how we talked about how there was no pivotal moment for Panasonic. It wasn’t like their products just suddenly sucked or their pricing went through the roof or anything like that. The reality is that Panasonic products are still quite great. 

But the thing to keep in mind is that great products don’t sell themselves, and this is perfectly exemplified by Samsung. Samsung ranks lower than Panasonic across the board when it comes to product quality, pricing, and customer service, but Samsung is worth over 10 times Panasonic. 

Do you know why? Because Samsung knows how to market their products whether it’s appliances, TVs, or smartphones. Seriously, when was the last time you saw a Panasonic ad? I bet the answer is too long ago to remember. Now, when was the last time you saw a Samsung ad? I bet the answer is too recent to remember. 

Basically, anytime you’re browsing the web or watching a video or shopping or driving, you probably saw Samsung branding. But you probably don’t even remember because you’re so desensitized to it. With this sort of marketing discrepancy, it’s no wonder why people choose Samsung or LG when buying a new TV or new appliances. Good products don’t sell themselves. 

Panasonic’s competitors understand this, Panasonic doesn’t. Something else that Panasonic doesn’t seem to understand is that downturns can be a blessing. Back in the 40s, Panasonic had lost basically everything but they were able to make it work by not losing hope and shifting gears. 

The early 2000s would’ve been the perfect time to do this again. Imagine if they were the first person to jump onto the smartphone trend instead of Samsung or if they were the ones to capitalize on OLED technology. They could’ve made a name for themselves in the modern tech era. 

But instead, it seems that Panasonic has lost hope which is likely the most disappointing part of all of this. Whether it was the failed light socket or the bicycle lamp or WW2, one thing that remained constant was Konosuke’s optimism for the future. 

Modern Panasonic, on the other hand, seems to have lost all hope. They’re not experimenting, marketing or leveraging the downturn. It almost seems like they’ve already accepted defeat and are just trying to hold on for as long as possible and with this sort of mindset, it’s no wonder why the writing is on the wall for their bankruptcy.


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