Over 130 years ago, Nintendo
was a small, rickety-looking shop in the heart of Kyoto. The shop’s founder, Fusajiro
Yamauchi, tossed out the idea of selling conventional Japanese
products like sake, silk, and tea. Instead, he held onto the idea that
selling a controversial product that was just legalized would be
more lucrative: playing cards. Later, his great-grandson would
follow in his footsteps by breaking into the video game industry — amid
the North American crash. Many told his team they missed
the opportunity and didn’t know what they were doing. In the 16th century, traders brought
Western-style playing cards to Japan. The cards quickly became a
popular pastime among locals and were often used to gamble. They were later banned when Japan
closed its borders to the world. Many who got into the business of
making them stopped immediately. Meanwhile, others looked for
ways to get around the ban. They ended up creating new playing
cards with disguised designs. One of them was called hanafuda. While Western cards had four suits
and 12 numbers, hanafuda consisted of four seasons and 12 months. Eventually, the government caught
on and banned them as well. But it was too late. Hanafuda was so popular that
many continued to play in secret. It wasn’t until the 19th
century that things changed. After a more open-minded government
took over, the ban was finally lifted. Afterwards, hanafuda was no longer seen
as exciting as when it was illegal. Still, a 26-year-old artist named
Fusajiro Yamauchi saw an opportunity. He believed they could become
popular again since they were used for different games. He was so convinced that he
gambled on the idea by selling his own hand-painted cards in Kyoto. He called his new venture Nintendo Koppai,
which means “leave luck to heaven.” Many considered it risky since
most businesses sold conventional products like sake, silk, and tea. But Fusajiro proved them wrong as
his cards quickly became in-demand — particularly by the yakuza who used
fresh decks for high stakes games. Eventually, Fusajiro had to train
apprentices to keep up with the demand. And within a decade, his gamble paid off. Nintendo Koppai became the biggest
playing card manufacturer in Japan. When Fusajiro retired, he
handed the business over to his daughter’s husband, Sekiryo Kaneda. Sekiryo proved to be a worthy successor
after creating a distribution system and sales force throughout Japan. But as the business grew, the Yamauchi
family fell apart — proving there are some things money can’t buy. In the 1920s, Tei and Sekiryo’s
eldest daughter, Kimi, married a man named Shikanojo Inaba. Shikanojo came from a respected
family of craftsmen and was next in line to take over Nintendo Koppai. But when his first child,
Hiroshi, turned five, he abandoned the company — and his family. Unable to cope as a single mother,
Kimi handed Hiroshi to her parents. He rarely saw his mother and
never saw his father again. Tei and Sekiryo raised Hiroshi
with the same iron fist that ruled the family business. They sent him to a preparatory school and
expected him to study law or engineering. But when World War II began,
all plans were put on hold. Since Hiroshi was too young to
fight, he worked in a military factory until the war ended. Afterwards, he fulfilled his
grandparents’ wishes and left Kyoto to study law at Waseda University. He also agreed to an arranged marriage
with a woman named Michiko Inaba. A few years later, Hiroshi
received an unexpected call and was asked to rush home immediately. His grandfather, Sekiryo,
had a sudden stroke. And one of his final
wishes was to see Hiroshi. Propped up on pillows on his bed, he
asked Hiroshi to drop out of university and take over the family business. Hiroshi reluctantly agreed. "It would be a lie if I said I was
enthusiastic about taking over. I was young, and I had mixed feelings. But in front of me, I had a
family business with no head and all its employees waiting to
know what was going to happen." At just 21-years-old, Hiroshi became
Nintendo Koppai’s new president overnight. None of the employees welcomed him and
resented his youth and inexperience. They turned out to be among
the many who underestimated his ability to turn the family business
into Japan's richest company. A few years into Hiroshi’s reign, he
set out to transform Nintendo Koppai. One of his early moves was
manufacturing plastic-coated cards to compete with the modern U.S. imports. Until then, all cards made in Japan
were uncoated — making Nintendo Koppai the first to change the standard. Hiroshi’s next big move was securing a
licensing agreement with Walt Disney. The agreement allowed them to feature
Disney characters on their cards and market to young people and families. It also led to creating a new distribution
system that would get their cards into larger department and toy stores. While the launch was successful,
Hiroshi struggled to expand and compete against the modern U.S. imports. It made him realize there was little
room for growth in the market and that it was time to venture into new businesses. So Hiroshi dropped “Koppai” from
the company name and took it public to finance its expansion. Afterwards, he launched an instant
rice product, started a taxi company, and opened a love hotel. While these ventures brought
in some revenue, Nintendo lost a fortune and sunk into debt. Hiroshi ceased operations and
started to think of a new business venture — one that could leverage its
access to department and toy stores. Meanwhile, Nintendo Koppai’s mainstay
business — hanafuda — continued as usual. By then, operations had moved
from a single shop to factories and offices around Kyoto. To many, it was still considered
small and even unideal to work at when compared to the companies in Tokyo. But to an electrical engineer graduate,
it was their only chance for a future. So much that they put their degree
aside and accepted a job as a janitor. Had they not, Nintendo would have
never gone on to launch some of the world’s greatest video game consoles. After Nintendo sunk into debt,
Hiroshi hired top university graduates to help him innovate. One exception was an electrical
engineer graduate named Gunpei Yokoi. While he was a known tinkerer and
once profiled by a magazine, he struggled to complete his degree. And after finally graduating,
he was rejected by every company that he applied to. Working for Nintendo as a
janitor and later maintenance worker was his last resort. In Gunpei’s first few months at Nintendo,
there was so little to do that he started tinkering with its equipment. One day, he cut crisscrossing pieces
of wood and put them together. Afterwards, he stuck a gripping tool on
the end to grab objects from a distance. As he was playing with his
invention, Hiroshi walked by and called him into his office. Gunpei was sure that he would be scolded. But to his surprise, Hiroshi
asked him to turn his invention into Nintendo’s first game. Gunpei simply added a group of
colored balls that could be grabbed and called it the Ultra Hand. The game was a commercial success. Nintendo sold over one million units. Over the next decade, Gunpei
developed more games, including the Love Tester and Beam Gun Series. The Beam Guns were so successful
that it led to launching the world’s first laser clay range. While it became a popular pastime,
the world’s first oil shortage stomped on its chances for success. Orders from abroad were cancelled,
and bills went unpaid — leaving Nintendo on the brink of collapsing. This is the end of part
one of Nintendo’s story. In the next part, the company
risks everything to succeed in a new industry: video games. By the time they launch in
the U.S., the market crashes. Companies like Atari go
bankrupt and dump truckloads of discarded games in landfills.
Should link part two.