Business Advice from the Inventor of the Plastic Credit Card
A young man named Stanley Dashew graduated from college and founded Dashew Business Machines in the midst of the Great Depression. His Los Angeles-based company produced evolutionary imprinters that became the hardware foundation for the emerging credit card industry. Dashew worked directly with senior management of Bank of America (BOA), and later American Express, to create the modern-day credit card system for which he is most well known — but he didn’t stop there. Stanley Dashew’s extraordinary career includes achievements as an inventor, industrialist, entrepreneur, philanthropist, sailor and champion of world peace. He has made several fortunes and counts dozens of patents and inventions among his accomplishments.
Dashew released his first book in January 2011 entitled: You Can Do It! Inspiration and Lessons from an Inventor, Entrepreneur, and Sailor. This inspirational memoir was written over a ten-year period with co-author and executive coach Josef S. Klus. He currently blogs and shares his philosophy, approach to finance, activism, health and more as a contributor to the Huffington Post.
One of his articles described his experience of developing the plastic credit card, and his process offers great insight still relevant to these times. Dashew shared on his Huffington Post blog, the following tips for entrepreneurs and small business owners gained directly from his experience inventing the plastic credit card. These suggestions can assist you in building a successful small business even when times get hard.
1. Identify The Problem:
Think about what bothers you and chances are, whatever the problem, others feel the same way. Dashew made his first fortune in starting a company that automated the credit card industry, because paper cards were very problematic and really grated on the nerves of bankers. The paper cards would tear and fray, and become difficult to read both at the merchant and bank-processing levels. It didn’t require a background in high finance or retail for Dashew to understand and identify the problem.
2. Find The Fix:
Dashew saw a clear solution in the case of credit cards — create durable credit cards with data lines such as account number and expiration dates, name, street, address, city and state. He had to find a way of creating a plastic credit card and tracked down the material through an old contact, Dunstan Sheldon. Sheldon had come up with a plastic material that could be embossed upon that hadn’t been patented. Next Dashew set to work devising a way to fulfill the banks’ other requirement for a way to issue cards in large volume at low-cost and be able to maintain faster files and accounts on the state-of-the-art technology.
3. Connect The Dots:
Dashew identified the problem, found the necessary emboss-able plastic and started thinking like a banker about all the data processing they wanted for their customers’ credit cards. After doing more research and learning that the flow of credit card paperwork began with the merchant at the point of sales, Dashew realized if the starting point couldn’t be automated, the entire system would fall like a house of (credit) cards.
4. Gather the Troops:
If you lack skills or experience to overcome a roadblock to your success, don’t be afraid to ask for help. As Dashew says, “OK, I’m not an engineer, but I have some engineering genes in me. Also, I knew some very talented engineers. This is why it is so important to form strategic partnerships with people who have skills which you lack.”
He worked with the engineers on reproducing and embossing a keyboard embosser that embossed plastic credit cards with their name, account number, and expiration date — a machine operated by punch cards, one for each customer, able to emboss 1,000 cards per hour. They also developed an imprinting machine which imprinted all the information on a plastic card, which was inserted into the imprinter and printed out all the info on the card, and was then signed by the customer.
These machines printed account numbers, dollar amount, merchant number and date onto a sales draft that could later be scanned and read by optical character readers. The results were not only faster — but foolproof. It eliminated the problem of human error caused by sales clerks writing down the wrong information or bank clerks misreading the right information. Existing technology was used to build these machines, but Dashew emphasizes that it was applying this technology in a new way that met the bankers’ needs.
5. Roll with the Punches:
In 1958 Dashew ran into big problems. The Bank of America executive who had helped secure the deal lost his bid to be president and along with his departure, Dashew Business Machines were shown the door — just after they had ordered costly parts for 10,000 credit-card imprinters in anticipation of the millions of BankAmericards to be made.
He thought about throwing in the towel but instead came up with an original strategy. He hired Joe, (the newly unemployed BOA exec), to find a way of creating an entirely new credit card that could be used nationwide. It was an unheard of concept since at the time bank charge cards, like banks themselves, were restricted by law to do business in only one state. It was an enormous undertaking and they never accomplished it (the first “national” credit card would not emerge until 1966 with MasterCharge, which would later become MasterCard) — but something even better happened. While speaking with Chase Manhattan Bank (now Chase Morgan), Joe got a deal to take over its failing charge card operations and it was relatively easy to raise financing on Wall Street to cover the deal.
Soon after, American Express bought the company they had created to handle the Chase operations. The deal called for cash and a generous amount of Amex stock. Within a year, following the successful conclusion of a lawsuit, Amex stock skyrocketed. It was now 1965, and Dashew was in the thick of revolutionizing the financial habits of middle-America. It was BIG and they knew it.