An Wang: 'The Company Almost Died in Its Early Years'

Before Wang Laboratories became a $3 billion tech giant famous for its word processors, it was a fledgling company on the verge of collapse. The decision its founder, Dr. An Wang, made to survive was a lesson in entrepreneurial sacrifice.

The Scholar and the Startup

When An Wang founded Wang Laboratories as a one-man shop in 1951, he was armed with a brilliant mind and a world-changing invention. A Chinese immigrant who earned his Ph.D. in applied physics from Harvard, Wang had solved a critical problem in early

computing. While at Harvard's Computation Laboratory, he conceived of magnetic core memory, a faster, more reliable way to store digital information than the bulky, failure-prone methods of the day. This technology, which involved magnetizing tiny ferrite rings to represent data, would become the dominant form of computer memory for nearly two decades. Believing in his own potential, Wang left the academic world to build a company around his innovations, initially making and selling custom electronic components with what little capital he had.

The Lifeline from a Future Rival

The early years were lean. The company struggled to secure funding and find a market for its specialized devices. By 1955, Wang Laboratories was in a precarious financial state. That same year, Wang was awarded the patent for his 'pulse transfer controlling device', the technical name for his core memory breakthrough. It was his most valuable asset, but the company lacked the resources to fully capitalize on it. This led to a difficult crossroads. International Business Machines, the titan of the industry, came knocking. After intense negotiations, Wang made a fateful choice: in 1956, he sold the patent rights to IBM for $500,000. It was a substantial sum at the time, but for an invention that would power the computer industry for years, it was a bargain for IBM. For Wang, it was a lifeline.

A Painful Pivot to Survival

The $500,000 cash infusion saved Wang Laboratories from bankruptcy. It provided the operating capital necessary to stabilize the business and, crucially, to pivot. An Wang later expressed regret over the deal, feeling he had sold his 'birthright' to a competitor that he felt treated him poorly during the process. Yet, he also recognized that dwelling on the past was counterproductive. In his autobiography, he noted that obsessing over the patent would have implied his best ideas were behind him, a notion he firmly rejected. True to his word, he reinvested the money and steered the company in a new direction. Armed with fresh capital and freed from the core memory business, Wang Laboratories began its transformation, first by developing revolutionary desktop electronic calculators.

From Calculators to a Word Processing Empire

The decision to sell the patent and pivot proved to be a masterstroke. In 1965, the company introduced LOCI, a powerful desktop calculator that could generate logarithms with a single keystroke—a significant innovation at the time. This success laid the groundwork for the product that would make Wang a household name in corporate America: the dedicated word processor. In the 1970s, Wang Laboratories launched systems that revolutionized the office, replacing typewriters with screen-based editing and storage. The company's revenue exploded, and at its peak in the 1980s, it employed over 30,000 people and generated $3 billion in annual sales. The company even famously ran a Super Bowl ad in 1978 casting itself as a David challenging the Goliath of IBM—the very company whose check had saved it from ruin two decades earlier.