I Watched Kodak Die From the Inside of a Darkroom

What a wedding photography side business taught me about market disruption, and why I am not afraid of AI

INSIDE THE LOOP // ISSUE 05

Before I was a software engineer. Before infusion pumps and IHE standards and forty years in medical device connectivity, I was a kid in a high school darkroom, learning to develop film by feel because the lights had to stay off.

That is where I met Myra. 1968. She was fifteen. I was learning lighting setups, main light, fill light, hair light, on a Mamiya/Sekor camera loaded with Kodak Tri-X. We did not know it yet, but the two of us had just enrolled, tuition free, in one of the cleanest case studies in market disruption this country has ever produced. The syllabus turned out to be brutal. It took thirty years to play out, and I was there for the whole thing, on both sides of it.

This issue is a departure. No EHR data. No HITECH spending figures. Just a story, because I think it explains something about AI that a citation cannot. Consider it a summer break from the footnotes. I left a few in anyway. Old habits.

A Camera Develops a Mind of Its Own

Here is the part most people get wrong about Kodak. They think the company missed digital photography. It did not. Kodak invented it.

In 1975, a Kodak engineer named Steve Sasson built the first digital camera in the company’s own labs. It was the size of a toaster and took 23 seconds to capture one blurry black-and-white image. Today the camera in your doorbell does better while you are still fumbling for your keys. His own management’s reaction to the toaster, by his own account: cute, but do not tell anyone about it. [1]

Eleven years later, in 1986, Kodak went much further. Company scientists built the world’s first megapixel sensor, a fingernail-sized chip that crossed the one-million-pixel line and put a genuinely filmless future within reach. Kodak did not just dabble in digital. Kodak invented it, led it, and then filed it under do not disturb. [2]

Then Kodak’s own internal research told them exactly what was coming. In 1981, the company commissioned a study to model the adoption curve for digital photography against film. The findings: digital had the technical capability to fully replace the film business, and Kodak had roughly ten years to prepare for it. [3]

Ten years of advance warning, from their own research, after their own engineers had already built the technology twice.

What did Kodak do with the warning? They spent it propping up film. The CEO Kodak hired away from Motorola in 1993 to drag it into the digital era, George Fisher, summed up the mindset he inherited in one line to the New York Times: Kodak regarded digital photography as the enemy, an evil juggernaut that would kill the business that had fueled the company’s profits for decades. Not a competitor. The enemy. [4]

They were not behind. They were ahead, by a decade, with the warning in hand, and they chose to fight the thing they had invented rather than build toward it.

By 2003, Kodak still employed roughly 64,000 people. By 2011, that number had fallen to around 17,000. [6] In January 2012, the company filed for Chapter 11 bankruptcy. [5] The 132-year-old company that put a camera in every American household did not lose to a competitor. It lost to its own decision to defend a workflow instead of reasoning about what its own invention actually meant.

Kodak is not the only ghost in this story. While Myra and I were building our photography business, another familiar name was making nearly the identical mistake in a completely different industry.

Borders Books was, at its peak, the second-largest bookstore chain in America. Big stores, deep inventory, a genuinely superior in-store experience. In 2001, when the internet had already started to look like a real threat to book retail, Borders made a decision that still reads as almost unbelievable: it outsourced its entire online sales operation to a young company called Amazon. As one retail analyst later put it, that was less like building a defense and more like handing the keys directly to a competitor. [7]

Borders kept its physical stores beautiful, kept its inventory deep, and let the company that would eventually destroy it run its website for years.

In July 2011, Borders announced it would liquidate. Almost 11,000 employees lost their jobs. [8] The CEO’s farewell statement cited the rapidly changing book industry, the e-reader revolution, and a turbulent economy. All true. None of it was the real reason. The real reason sat one click away on every customer’s screen, a company Borders itself had pointed them toward.

If you had put $1,000 into Amazon on the day of its 1997 IPO and never touched it, that investment would be worth more than two million dollars today, and closer to three by some calculations, depending on the entry price you use and the day you check. [9] Borders is worth zero. Both companies saw the same wave coming. One built the surfboard. The other handed someone else the surfboard, kept selling beach towels, and wondered what happened.

What This Has to Do With a Wedding Photographer From Murrieta

Here is where the story turns personal.