The Empire Builders Podcast

Recent Episodes

#240: Wham-O – Meat Slingshot to Toy Empire

Posted January 21, 2026 • 00:26:41

When no one wants your Meat Slingshot, what do you do? Make a better flying disc and name it after a pie plate, naturally. Dave Young: Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those. [ECO Office Ad] Dave Young: Welcome back to the Empire Builders Podcast. Dave Young here with Stephen Semple and today’s topic, Wham-O. It’s from Wham-O. In all the toy stores, I’m trying to think. Slinky wasn’t Wham-O, was it? Stephen Semple: No, Slinky was not Wham-O. Dave Young: Yeah. I’m trying to think of what Wham-O was. Stephen Semple: Frisbee’s. Dave Young: Frisbee’s. Stephen Semple: Hula Hoops. Dave Young: Okay. Stephen Semple: All sorts of crap, right? Dave Young: I didn’t realize the Frisbee was a Wham-O product. I mean, I remember the name. I remember the ads and it’s a cool name. Stephen Semple: Yeah. Well, it’s so funny. Wham-O was Frisbee, Hula Hoops, Slip ‘N’ Slide, Super Ball, all of those- Dave Young: Probably lawn darts. Stephen Semple: All of those sorts of things were Wham-O. But what I find funny is before getting on, we were talking about this whole thing of sounds and things like that and communication. And then all of a sudden it’s like, “Oh, we’re going to talk about a company whose name actually has that real kinetic feel of Wham-O.” Dave Young: Mm-hmm. I love a name that is also a sound. And if we have time, I’ll tell you about a client I’m working with that we changed the name of the company to make it a sound. Stephen Semple: Oh, that’s cool. Dave Young: Yeah. Stephen Semple: That’s awesome. Oh, the other ones that they did, Hacky Sack and Silly Strings was a couple of the other ones. Dave Young: Were they responsible for lawn darts? That’s my question. Stephen Semple: I’m not sure if they’re responsible for lawn darts. So since it didn’t come up- Dave Young: Maybe not. Yeah. Stephen Semple: … I guess probably not. The company started in 1949 out of, basically a lot of these things out, of the garage in South Pasadena. And it was Richard Knerr and Arthur Melin, who are basically two university graduates, started this company. And their first product was a slingshot, was a wooden slingshot made from ash wood. And the name Wham-O was actually inspired by the sound of the slingshot hitting a target. Dave Young: You release it… Yeah. Stephen Semple: Yeah. Yeah. Dave Young: Very satisfying. Stephen Semple: But here’s the funny thing is, it wasn’t originally… The idea behind making it was not actually a toy. They loved training falcons, and it was to train falcons for hunting. Dave Young: A slingshot? Okay. Stephen Semple: They would shoot the meat into the air. They got frustrated that the regular slingshot wouldn’t fire it the way they wanted to do it, so they made their own. Dave Young: So they made a meat slingshot. Stephen Semple: Made a meat slingshot. Dave Young: It turns out there wasn’t a huge market for meat slingshots. So you pivot and put it in the hands of children eventually. Stephen Semple: It’s the 1950s, dude. Dave Young: Uh-huh, that’s right. “You’re going to put an eye out.” Well, somebody already did. Stephen Semple: Be careful with that hamburger you’re firing out. Dave Young: But that was their fault, not ours. Yeah. Those were the days, right? Stephen Semple: Right. Dave Young: When the manufacturer could say, “Well, that’s your fault. You shouldn’t have been an idiot.” Stephen Semple: “What’d you expect a rock to do?” But again, so many businesses, it started with them just solving their own problem. And their own problem was they wanted this thing. But what they found out, they created one that was so good that all of a sudden was like, “Wow,” people became interested in this. Dave Young: It the wrist rocket? Stephen Semple: You know what? I was able to find- Dave Young: I don’t know if that’s the same kind of- Stephen Semple: I wasn’t able to find pictures of the original thing around, because it didn’t do particularly well, but it kind of put them onto a path. Because very quickly they added blow guns and boomerangs. Dave Young: Nice. Stephen Semple: Right? But the whole idea was these types of things. And they get to the stage with these various products. So they’ve got the slingshot, they got the blow gun, they got the boomerang, they got these little niches going on and they’re selling basically $100,000 a year of this stuff. But they’re thinking to themselves, “If we’re going to really make this a business, we need a bigger idea.” And I’m going to say, if you’re going to really make this a business, you need an idea which is not going to put somebody’s eye out. Dave Young: Probably. This is, again, like you said, the 1950s. Stephen Semple: 1950s. Really, no seat belts, like, “Come on now.” Dave Young: The BB gun’s already invented. Stephen Semple: You know, it’s funny, when you think back to how we were with safety and things like that, one of my really fond memories… Now this wouldn’t have been the ’50s, this would be the ’70s, but one of my really fond memories of being a kid was we’d be hauling stuff somewhere and we had this old green wood trailer with oversized tires on it that bounced like crazy when you’re driving down the road. And one of the funnest thing is we would go somewhere and coming home, all the kids would pile into the trailer in the back as we’re driving down the road. Dave Young: You’d be the ballast to hold down the sheets of plywood. Yeah. Well, who needs tie downs when you’ve got 200 pounds of children? Stephen Semple: And the weird thing is, it’s not like anybody thought that was weird. Dave Young: No. Stephen Semple: That was what you do. Dave Young: Yeah. And if you weren’t on the trailer, you were sitting on the edge of a pickup with your back to the road. Stephen Semple: Exactly. Exactly. Anyway, back to Wham-O. They’re needing a bigger idea. And while they’re on the beach, they come across this flying disc called Whirlaway. Dave Young: Okay. Stephen Semple: Right? And they decide… They also found another one called Pluto Platter. So it didn’t work. It wasn’t really selling. And so Wham-O, they buy the rights to this. They go, “Look, we’ll buy the rights to this.” They make a few couple of design changes. And Morrison saw this people also tossing these metal pythons, right? Dave Young: Oh, okay. Stephen Semple: And so that was actually where he came up with a little bit of the design change. He kind of looked at that and went, “Oh, this is much better than this Pluto Platter thing.” Dave Young: You drop the edge down and balances itself a little bit better. Stephen Semple: Yeah, yeah. And one of the pie plates they came across, guess what the name of the pie plate was? Dave Young: Frisbee maybe? Stephen Semple: Bingo. Dave Young: Yeah? Okay. Stephen Semple: Frisbee. Dave Young: Okay. So they buy that too or just- Stephen Semple: They just trademarked that because it wasn’t trademarked. So they went and trademarked the Frisbee name. And in the first two years, they sell a million Frisbees. Dave Young: Wow. Stephen Semple: Right? And what they did to promote it, so here’s the really cool idea, they go to university campuses and they also gave it to people and people, guess what, immediately found on university cool ways to do tricks and stuff with the Frisbee. So that then got it going. And look, this was pre social media days. Imagine what you’d be able to do today in terms of demonstrating all this crazy stuff on social media. Dave Young: Well, you’d have to get people off their phone. Stephen Semple: Yeah. But what they have now is they have a way of creating ideas. And what they realized was they had to look for things and just make them better. So they created this open door policy. They would listen to anybody, “Come pitch an idea, we’ll listen.” So the next one was a neighbor had come back from Australia with this bamboo exercise hoop, and you had to use it doing a movement like a hula dancer. Dave Young: Yeah. Okay. Stephen Semple: And so they do a handshake deal. And if it’s a hit, we’re going to give you royalties. And instead they make it out of this lightweight, colorful plastic, and they put little beans inside so that it makes a sound. Dave Young: Absolutely. Stephen Semple: It also has a little bit different feel to it. They took this idea to parks and they demonstrated it. And what am I talking about, Dave? What’s the name of the toy? What’s the name of the toy? Dave Young: Oh, it’s the Hulu Hoop. Yeah. Stephen Semple: Bingo. Yeah, it’s the Hulu Hoop. And in 1958, they launched the Hula Hoop, and it’s the biggest toy fad in history. And I think it still is. Dave Young: Oh yeah, I think. Stephen Semple: I think it still is. Dave Young: Yeah. Stephen Semple: And they were farming out the product they couldn’t keep up with production. Now, here’s where a little problem happens for them. Remember that handshake deal? If this is a deal, we’re going to pay your royalties? Dave Young: Yeah, yeah. Stephen Semple: They didn’t pay any royalties and they got sued. Dave Young: Shoot. They should have paid the royalties. Stephen Semple: On top of that, knockoffs happened, right? Dave Young: Yeah. Stephen Semple: Because it was pretty easy to copy and people were making it cheaper. And then by the end of 1958, they actually reported a loss because of so much of this competition going on. Dave Young: Really? Okay. Stephen Semple: Yeah. So they stopped production. They’ve got growing debt. They’ve got a warehouse full of unsold product. So they need to find another hit. Because what they’ve noticed is in their business model is the toy gets hot and then it drops off. So what they suddenly realize is they need to constantly be looking for these new ideas. So Robert Carrier is a guy from the upholstery industry and he came home one day to see his son sliding on the concrete driveway because it was wet. Again, remember, ’50s, right? Dave Young: Sure. Anything to entertain yourself as a kid. Stephen Semple: He takes some Naugahyde, incorporates a hose and holes, and now you’ve got… Dave Young: The Slip ‘N’ Slide. Stephen Semple: Right. Dave Young: Yeah. Stephen Semple: Right. So basically the guys at Wham-O come across this idea and they replace it with vinyl plastic and you’ve got Slip ‘N’ Slide. Dave Young: Yeah, yeah. Stephen Semple: And when they launched Slip ‘N’ Slide, it sold like 3000 units in the first few months. Dave Young: Mm-hmm. Stephen Semple: Right? Another inventor comes and sees them, Norman Stringley, who’s a petrochemical engineer who specializes in rubber, and he makes this really dense, high bouncing ball that could also spin in reverse. Dave Young: Okay. Yeah, the Super Ball. Yeah. Stephen Semple: Bingo, the Super Bowl. Dave Young: Mm-hmm. Stephen Semple: Smash hit, six million sold in 1965 alone. Dave Young: Well, and I think it was just a couple of years before that with the Absent-minded Professor and Flubber. Do you remember Flubber? Stephen Semple: Yeah, right. Dave Young: So that was like Super Ball was having a ball made out of Flubber. Stephen Semple: Yeah. And I don’t know whether this is true or not, but seemingly the whole Super Ball thing was also part of the inspiration for creating the name of the Super Bowl. Dave Young: Really? Stephen Semple: Yeah. And again, this is one of those ones I could not find confirmation of it. It may just be one of those things that’s a great story that now is part of the world out there. Dave Young: Yeah, the zeitgeist. The zeitgeist. Stephen Semple: The zeitgeist, yeah, that’s it. And then in 1959, the Wham-O Bird Ornithopter, which was this aluminum spars and all this other… and brightly painted look like a hawker or an owl. And it was rubber bands. Remember those things, they were rubber band powered? They were about like three bucks and they made 600,000 of those. And then- Dave Young: It was brightly painted so you could see it up in the tree when it got stuck. Stephen Semple: Yeah. Dave Young: And now you’re like, “Oh shoot.” Stephen Semple: And then they created the Wheelie Bar, which was something that was great for attaching to a swing bicycle. And the air blaster and the bubble thing. One of the things that they just did was they realized they needed to just continually be making new ideas because the cycle for their types of toys, they would go really popular and drop off, really popular, drop off, really popular. In 1969, they did Silly String. Remember Silly String? Dave Young: Sure. Yeah. Stephen Semple: Right? The Hacky Sack in ’83. So just on and on and on and on, they would do these things. And in 1982, I was never able to find the price that Wham-O was sold for, but Wham-O was sold to Kransco Group Companies in ’82. And then in ’94, Mattel bought them. Dave Young: Wow. Stephen Semple: Then in ’97, Wham-O became independent again. Dave Young: Oh, really? Stephen Semple: And then in 2006, they were sold to Cornerstone Overseas Investment Limited for $80 million. Dave Young: Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this. [Using Stories To Sell Ad] Dave Young: Let’s pick up our story where we left off, and trust me you haven’t missed a thing. Stephen Semple: Then in ’97, Wham-O became independent again. Dave Young: Oh, really? Stephen Semple: And then in 2006, they were sold to Cornerstone Overseas Investment Limited for $80 million. So the one thing I can find to put a value to Wham-O was they were bought, they went independent, and then they were sold again for $80 million. So I always like to try to go, “What was this company worth?” Dave Young: Those guys probably left when it got sold the first time, would be my guess. Stephen Semple: Yes. Dave Young: Yeah. Stephen Semple: Yeah, absolutely. Absolutely. Dave Young: But here’s my observation of this. These guys weren’t making games. Stephen Semple: Oh, interesting. Dave Young: Hacky Sacks sort of became a game, right? Stephen Semple: Mm-hmm. Dave Young: Because you could play it with several people. You’d have people in a circle all smacking the Hacky Sack. In fact, I have one. I thought it was laying back here. It’s sitting on my desk or around here somewhere in this stuff. Stephen Semple: Cool. Dave Young: But it’s one of the little original leather ones. Stephen Semple: Nice, yeah. Dave Young: But my observation is this is a stretch. Okay? Stephen Semple: Okay. Dave Young: This is just me following a trend. Stephen Semple: Do I need to sit down? Do I need to sit down? Dave Young: No, I don’t think so. I don’t think so. I think, in fact, knowing you as well as I do, I think you’ll jump right on board with this. Stephen Semple: Okay. Dave Young: These guys were making fidget toys. These guys were making things that you could do yourself just by yourself, right? Stephen Semple: With the one exception being- Dave Young: And it’s not necessarily Hula. Stephen Semple: Frisbee would be the one exception, but Hula you could do yourself. All these other things you could do yourself. Dave Young: And people figured out how to make Frisbee golf courses and then you could play that by yourself. Stephen Semple: Oh, that’s true. Oh, that’s true. That’s true. Dave Young: You’re just throwing towards a goal. Stephen Semple: Yeah. Dave Young: But they didn’t make Frisbee as a game. They made it as an activity. Stephen Semple: Yes. Dave Young: So you could say they’re activities, but they were also things that you could just go do this activity and just be outside playing with something and be out on the driveway bouncing your Super Ball or- Stephen Semple: I remember having a Super Ball. They were fun. Dave Young: … holding your Hula Hoop, or shooting at things with the original slingshot. Stephen Semple: With the meat? Dave Young: The meat slinger. They had to quickly have pivoted from that, because I don’t think falconry ever got huge, right? They were looking at things that were just kind of cool. And I say fidget toys because even as we record these things, I have four or five things on my desk that I always have in my hand and I’m always just doing something, right? Stephen Semple: Yeah. Dave Young: It keeps my brain focused on this conversation instead of wandering all over the place. Stephen Semple: We just didn’t have the terminology fidget toy, right? Dave Young: Well, here’s the other thing. If you want to take it a step further, ADHD wasn’t known about then. Stephen Semple: Correct. It was around, but we’d had- Dave Young: Sure. Lots of kids with ADHD that needed… Just take your Super Ball outside. You could kill a lot of time goofing off with a Wham-O toy. Stephen Semple: Well, and a great example of that is I was only diagnosed a few years ago as having ADHD. Dave Young: Yeah, same. Mm-hmm. Stephen Semple: So gone through my entire life with it, not knowing… Mind you, if I look close enough, the science were there. Dave Young: Well, sure. Yeah. When I told people, I think mine was almost 10 years ago, but anytime I’d tell somebody like, “Wait, you didn’t know? You didn’t know.” Stephen Semple: No, I was distracted. I didn’t notice. Dave Young: The rest of us knew. “How long have you been having these memory problems?” “For as long as I can remember.” Stephen Semple: So not long. Dave Young: I don’t know. Stephen Semple: But the one thing I want to tie back to on Wham-O, and it’s a great observation that that’s what they were basically creating, is the thing that they noticed very quickly was this was their natural business. Their natural business was you create something, it’s a hit, and it falls off. And they just bought into it. They said, “That’s the nature of this business.” So what you need to do is continually be looking for these new ideas. Dave Young: A new thing. Stephen Semple: So this is reason why we didn’t talk very much about… They literally had this open door policy. If you were an inventor of a toy, you could come see them. And look, they looked at a lot of crap, but at the same time that they knew that they had to constantly be out there, it’s not about, “Oh my God, we’re making all this money from the Hula.” What they learned from the Hula, because it almost killed their business, is they need to be constantly looking for that next idea, that next idea. And it’s not about, “Oh, it’s dropped off. We’ve got to revive this with marketing.” Toy, especially in those days, had this natural cycle that it went through. They bought into, “This is the way it is, so we got to constantly looking for new ideas, fill in that pipeline and creating it. And then also recognizing when this thing drops off, we’ve got to manage that drop off.” I really like the fact that they just really saw their business for what it was and said, “Okay, given that’s what it is, this is how we have to manage things.” Dave Young: Yeah. And honestly, this fits it so well because the inventors are probably… They’re just figuring out something that they enjoyed. Right? Stephen Semple: Bingo. Dave Young: I made this little thing. I made this little thing out of paperclips and look what it does and it’s kind of fun and I think you could take it to the next level. And I think there’s lots of things like that. And so they were filling that need of these inventors who were probably just solving their own little attention problem. Stephen Semple: Well, great. Oh, I discovered my kid was doing this and I did this and they’re now having fun with it and all the neighborhood kids are coming over and doing it. Dave Young: Frisbee was a way to play a game of catch without needing a glove and a ball or pretending you’re playing baseball, right? And so if you weren’t a baseball player, you probably didn’t run around with a glove and baseball anyway. So it was a way to… And most of these toys, you didn’t need anybody else. Stephen Semple: You didn’t need anybody else. Dave Young: Frisbee you did, but it was just a game of catch. Stephen Semple: Right. And also what they recognized was people would very quickly, like with Hula and Frisbee and all these things, people would very quickly figure out their own ways to make it fun and do strange things. Dave Young: Gamify. Stephen Semple: Which then also made it more… People gamified it on their own and will gamify it on their own. Give kids a bunch of stuff, they’ll gamify it. Dave Young: I’m sure it wasn’t too long before there was somebody, the first person in the Guinness Book of World Records for Hula Hoop. Stephen Semple: Oh, for sure. Dave Young: Right? Stephen Semple: Oh, for sure. Yeah. Yeah, absolutely. Dave Young: Because you just see how long you can do it, you see how many spins you can do it. Stephen Semple: Yeah. And again, the interesting part to me was it didn’t start as, “Hey, we’re making this toy.” It was, “we made this thing,” and then they started to discover that it was fun. It was just fun on their own firing without the falcons and now it’s a toy. Dave Young: Yeah, I love it. I love it. Stephen Semple: Yeah. Dave Young: The story of Wham-O. Stephen Semple: Wham-O. Dave Young: Wham-O, it’s a sound. Right? I know this is an audio podcast, but just do a Google search for the Wham-O logo, right? It’s a sound. You can hear it when you read it and you can see that it’s in motion, right? Stephen Semple: Yes. Dave Young: All of these things had that in common too. Everything was about motion and something moving, some kind of action. Stephen Semple: Well, the other thing that’s really smart about the Wham-O logo is it’s that it’s colorful. But the other thing is the way they’ve done the Wham-O, if you really look at it carefully, it’s the letters at the beginning are big and it gets smaller, which is kind of how you would say Wham-O, right? Dave Young: Yeah. Stephen Semple: If you actually listen to it, the sound drops off. And even the way they drew it, they were drawing upon the common way in which comics convey this. And if you think about it at the time, you would have had also things like Batman with the, “Pow!” Dave Young: Absolutely. Yeah. Stephen Semple: So they were also tying into a popular zeitgeist of communication, which is really brilliant. Dave Young: That probably was also attractive to the same kids. Stephen Semple: Correct. Dave Young: Right? Stephen Semple: Oh yeah, correct. Dave Young: And they would recognize it. They would see the language of the comic book and the logo of Wham-O. Stephen Semple: Bingo. Immediately, mm-hmm. Dave Young: The way it recedes, it’s not that it gets smaller in your brain, it’s that it’s getting farther away. Stephen Semple: No, but that’s what I meant by just trying to explain since we’re on a podcast that the lettering gets smaller. Dave Young: But it gives you that feeling of motion. Stephen Semple: But in our brain… Bingo. Dave Young: Mm-hmm. Stephen Semple: Yes. Yes. Dave Young: So they managed to put sound, color and motion into a static logo. Stephen Semple: Correct. Correct. Dave Young: And that’s a super cool thing to do. Stephen Semple: Yeah. Yeah. Really, really amazing thing to do. Yeah. Dave Young: Yeah. Stephen Semple: Yeah, it was very cool. Very cool. Dave Young: This is a long episode. Do you want to hear about this client I mentioned at the beginning? Stephen Semple: Go ahead, Dave. Dave Young: Short story. And this is a air conditioning client in Tucson, and his company was named Tailored Mechanical. Stephen Semple: Okay. Dave Young: I think he listens to the podcast, so he’s probably going to hear this and go, “Oh my God.” But we’re in the middle of rebranding. And we asked him when he became a client, like, “Are you okay with us recommending a change in the name of the company?” Because Tailored Mechanical doesn’t exactly tell you that they’re an air conditioning repair company, right? I’m not sure what they do if you tell me mechanical, right? They’re not auto mechanics and they don’t fix elevators and things like that. I don’t know. But anyway, his name’s Chris Plunkett and his wife’s name is Scarlett. And so we gave him a couple of new name suggestions, knowing the one that we really wanted him to pick. We gave him one that had air conditioning in the title, just the typical thing. And then we’re like, “I mean, your wife’s name is pretty cool. You could call this company Scarlett. There’s no other air conditioner company named Scarlett. That would be a cool name.But, dude, everybody already just calls you Plunkett because it’s a sound and it’s fun to say. And so that’s the name of your company, Plunkett.” Stephen Semple: Yeah, absolutely. Yeah. Dave Young: And the logo is like Wham-O, it’s got motion in it. Stephen Semple: Nice. Dave Young: It’s bigger at both ends because there’s a pa-pa. There’s two syllables and they’re both kind of consonants, Plunkett. And so that’s going to be fun and we’re going to have fun with it. Stephen Semple: That will be fun. Dave Young: It’s almost going to feel like a Wham-O kind of a brand, but the whole goal… Remember the whole goal with companies like this is, we just need to make him memorable, right? Stephen Semple: Yes, yes. Dave Young: And anyway, I love the Wham-O story. I love that this is the kind of smart decisions that people can make that closely make their brand memorable. Rememberable is even a better word. It’s not a word. Stephen Semple: Yes. Yes. That’s awesome. That’ll be a fun campaign. Dave Young: Mm-hmm. Stephen Semple: You should send me some of the ads and we should put them in on the podcast. Dave Young: Yeah. I mean, we haven’t even got to that stage yet. We’ve just got the trucks wrapped and people are looking… Stephen Semple: When you’ve got that, send it along. We’ll put them in the podcast. Dave Young: You don’t know what we’re doing to make the trucks also have motion even when they’re sitting still? Stephen Semple: What are you doing? Dave Young: They’ve got the big logo on them and they’re brightly colored. They’re different colors on both sides. And we’ve put NASCAR style numbers on the doors. Stephen Semple: Oh, nice. That’s fun. Dave Young: Big, big numbers. Stephen Semple: That’s fun. Dave Young: And people scratch their heads. It’s like, “Well, it’s just science. Trucks go faster if they have numbers on them. Have you never watched a race?” Stephen Semple: That’s just science. All right, David, that’s fun. That’s fun, man. Dave Young: It’s fun to have a client that lets you do fun things in the aim of creating entertainment, and that’s the currency of attention. Stephen Semple: Yeah, that’s awesome. Dave Young: Thank you, Stephen. Great. Stephen Semple: So much fun. Thanks, David. Dave Young: Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big, fat, juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire building session, you can do it at empirebuildingprogram.com.

#239: Cup O’ Noodles – Same Ramen Different Name

Posted January 14, 2026 • 00:21:46

Momofuku Ando is the father of Instant Ramen. Feeding Japan after the war. But how do you get Americans to eat it? Dave Young: Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is … well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those. [AirVantage Heating & Cooling Ad] Dave Young: Welcome to the Empire Builders Podcast. I’m Dave Young. Stephen Semple’s right there standing by, and he just told me what we’re going to be talking about and, man, it took me back to college days. In fact, I was looking at photos over the weekend. I have some photos of when I was in college, and this is way back 20 years before the turn of the century, to tell you how long ago this is. Stephen Semple: I hate how you put it that way. Dave Young: This is 20 years before the turn of the century. That’s a lifetime ago. But there were days in college where it’s like, “Well, gosh, Mom and Dad haven’t sent me any money and I haven’t gotten the job that I told myself I’d get,” so you go to the store, and what do you find? It’s either ramen or, if you want an upgrade, Cup O’ Noodles. And the Cup O’ Noodles, as everyone that’s ever been poor knows, is a noodle soup in a cup, and you take the lid off, put some water in it, throw it in the microwave, voila. Am I right? Is that what we’re talking about, or is this some new form? Stephen Semple: No, no, that’s what we’re talking about. That’s what we’re talking about, not some new Tesla called Cup O’ Noodles. No, no, you’re right, but I want you to hold onto that thought of it as being an upgrade from ramen, because we’re going to revisit that. Dave Young: Not an upgrade? Stephen Semple: We’re going to revisit that whole idea, because that’s brilliant. It was started in the 1950s and it was a new idea then, but today there’s over a hundred billion servings of instant noodles eaten every year. And it’s estimated that Cup O’ Noodles sells between 18 and 25 billion servings a year. It’s inside of a larger organization, so it’s hard to know exactly, but that’s the estimates I’ve come across. Dave Young: Dude, that’s like feeding the planet three times in one day. Stephen Semple: Right? Isn’t that crazy? Dave Young: Yeah. Stephen Semple: So, empire? Yeah. Dave Young: Yeah. There’s some guy sitting on top of that noodle money somewhere, and I guess we’re going to hear the story. Stephen Semple: So in the 1950s in the United States, food is boring. Eating out was like literally going to diners, and international food really only existed in big cities that had Chinatowns. Dave Young: Yeah. Stephen Semple: And, following World War II, there was actually a strong anti-Asian feeling in the United States. Meanwhile, back in Osaka, Japan, there’s a food crisis after the war because basically Japan has been decimated, and bread is being distributed by the U.S. and it’s really plentiful, but people wanted more traditional meals. Dave Young: They’re not used to bread. Stephen Semple: Right. It’s not part of what they normally eat. So Momofuku Ando is a 48-year-old businessperson. He’s lost his company. He went to jail for tax evasion. All sorts of bad things went on, but he’s out of jail and he’s looking to start his new business, and he sees people lined up for ramen, so there is a ramen tie in here. Dave Young: There you go, yeah. Just to be fair, I wasn’t talking about ramen from a store or from a vendor. I’m talking about those little bricks of Top Ramen. Stephen Semple: Yeah, yeah. Hold onto that. Hold onto that thought. We are going to come back to that, yes. So, ramen was created when noodles basically came over from China, and 1910 is the earliest record we could find of a ramen shop in Japan, so it looked like it was around 1910. Dave Young: Yep. The Japanese didn’t have noodles till 1910? Stephen Semple: They didn’t have the type of noodles in ramen, yes. Dave Young: Okay. See, I mean, we could go a whole nother direction on this if you wanted to, in the Japanese industrialization of them going around the world and bringing all kinds of new technology back to Japan in the early 1900s. Stephen Semple: Yes. Dave Young: Turns out, including noodle technology. Stephen Semple: Including noodle technology, and we forget how closed Japan was. Dave Young: Oh, yeah. Yeah. Stephen Semple: Basically, the only thing that was imported was silk. Right? That was about it. Very, very closed economy, and then yes, lots of … And when things changed in Japan, boy, they changed in a hurry. It went from basically medieval to industrial in like, that. It was crazy. Dave Young: Yeah. Stephen Semple: Yeah. Dave Young: I mean, you and I are both whiskey fans, and we know that the story of Japanese whiskey is the same story. The Japanese guy goes to Scotland, falls in love with Scotch whiskey, figures out how to make it, comes back to Japan and builds the Japanese whiskey industry. Stephen Semple: Yeah. Dave Young: Let’s go back to noodles. I’m sorry. I will distract us all day long. Stephen Semple: No, but it is an interesting thing. Now, the main drawback to ramen is it’s hard to make at home. The noodles need to be fresh. They’re hand-cut. They’ve got to come from shops. And so what Momofuku decides is he wants to make a ramen product that is tasty, non-perishable, easy to make, affordable, and ready in five minutes with hot water. Dave Young: Wow. Stephen Semple: That’s his goal. Dave Young: That’s a goal. Stephen Semple: On top of that, he has no culinary training. So he invests every last penny into this, because he needs something he can put into a grocery store as well on the non-perishable, because there’s few refrigerators or ovens in Japan at this time. Dave Young: Okay, yeah. Stephen Semple: And the key is the broth, and it can take days to make the broth. So here was his question. If everyone loves ramen, why is it so hard to make? And so he tries drying the noodles, then he gets the broth dried into the noodles, and he spends several years working on this and nothing seems to work. And one day, he notices his wife tempura-frying food and the batter dehydrates immediately the moment it hits the oil, because what does oil do? Removes water. So now what he does is he drops the noodle into this high-heat oil, and it creates a shell. He then takes fresh noodles, cooks them in the broth until it’s saturated, drops it into the oil, and the water is cooked out. It works. Dave Young: Wow. Stephen Semple: It works. He’s now got this dried noodle. Now he needs to get it in the store. So he starts with chicken ramen, and that’s more expensive. It’s about six times the price of regular ramen, but what he finds is people are willing to pay for the convenience. So in 1961, it hits stores in Osaka and it sells like crazy, and it’s called Magic Ramen by customers. Dave Young: Magic Ramen. I like that. Stephen Semple: Yeah, and he gets to the point where he borrows a million yen to open a factory. In the first year they’re doing 13 million packages, and the second year, 50 million packages a year. Now, to put that in perspective, 50 million packages a year, the TV dinners at that time is one half the number of sales of the amount of ramen that they’re selling in Japan, of this instant ramen. Dave Young: Wow. Okay. Stephen Semple: It’s 1962, and this idea is getting very copied. There’s now 70 companies in the space in Japan in a few short years. And some are also cheaper and the economy in Japan is still recovering, so Momofuku decides he’s going to spend a couple of million bucks and he’s going to bring this product to the United States. Dave Young: Okay. Stephen Semple: Now, the timing is really bad. In 1968, there’s a hoax letter written to the New England Journal of Medicine by Dr. Kwok that MSG is unsafe and The New York Times reports on it, and this becomes a placebo effect on all Chinese food. Dave Young: What year was this? Stephen Semple: ’68. Dave Young: ’68, okay. Stephen Semple: The letter was written on a bet by Dr. Howard Steele, who was a pediatric who was having a hard time getting published, and there was this bet that, “Oh, I bet you if you wrote something this way, it would get published,” so he creates this hoax and it gets published. Dave Young: And people still believe it? Stephen Semple: Yeah. He created this fake research facility with a made-up name, and it’s amazing. Sounds kinda familiar for the world we’re in today, and MSG is declared unsafe for years later. Dave Young: Well, my wife thinks MSG doesn’t agree with her. Stephen Semple: Well, some people, it may not. Dave Young: Maybe it doesn’t, but I don’t know. Stephen Semple: But again, that could be just a food intolerance, right? Dave Young: You don’t know, yeah. Stephen Semple: Yeah. So Momofuku travels to the United States. Here’s one of the things he figures out. He runs into a bit of a challenge with the U.S. market. He realizes he needs to do sampling, because it became successful in Japan because it was a familiar food that became convenient, right? So it was only one step away, a familiar food that became convenient. It was not a familiar food in the United States, so he decided he needed to do sampling, so he goes over to the U.S., sets up sampling in grocery stores. This anti-Asia movement is so strong, people won’t even try it. It’s too new. Dave Young: Yeah. Stephen Semple: Won’t even try it. Dave Young: And don’t know what ramen is. Stephen Semple: Right. So when he’s done, he’s got all this product left over and he decides, “I’m not going to take this product back to Japan,” so he leaves it for the staff, but what he notices is the staff are eating it, but very differently. Dave Young: Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this. [Using Stories to Sell Ad] Dave Young: Let’s pick up our story where we left off, and trust me, you haven’t missed a thing. Stephen Semple: So when he’s done, he’s got all this product left over and he decides, “I’m not going to take this product back to Japan,” so he leaves it for the staff, but what he notices is the staff are eating it, but very differently. What he discovers is the staff break up the noodles, and put it in a coffee cup and pour in the hot water, and eat it in the break room. The recipe called for these large noodles to be put in a pot and then you transferred the pot to a bowl. Dave Young: Oh. Okay, yeah. Stephen Semple: So your Cup O’ Noodles, you know when you’re talking about the bricks of ramen? All it is is a brick of ramen, broken up into little bits. Dave Young: Sure. Well, I used to make it. I didn’t like the long noodles, so I would do the same thing just instinctively, because I’m an American from the Midwest. Stephen Semple: Yeah. What he also observed in all of this was that people called it noodles. Yeah. So they took the ramen, broke it up in little bits, put it in a coffee cup, poured in hot water and called it noodles. Dave Young: Noodles. I mean, that’s what Mom made for us when we weren’t feeling so good, right? It was some chicken noodle soup. Stephen Semple: Right. So now we have the familiar, remember? Dave Young: Yes. Stephen Semple: Successful in Japan because it was the familiar made convenient. Now we had the familiar. How do you make it convenient? He goes back to Japan, and he comes up with the idea of a styrofoam cup that you put it in. He added some vegetables, which made it a complete meal. Now, the Asian food scare was still there, but it’s not Asian food any longer, it’s a cup of noodles. Dave Young: Yeah. Brilliant. Stephen Semple: And he stopped calling it ramen. He called it a cup of noodles. And actually, originally it was called Cup Noodle and in 1973 they added the O’, so now it was Cup O’ Noodles. Dave Young: So, I mean, you could start riots in the U.S. There could be millions of idiots, that they’re going to be upset now that they were fooled into eating ramen instead of noodles. Stephen Semple: Well, I’m safely here in Canada. This is your problem to deal with. Dave Young: Yeah? I think you should put some kind of warning label on this episode. Stephen Semple: “Warning, may cause riots.” I like it. We may do that. We may do that. Dave Young: Yeah. “We’re just a victim of Big Ramen.” Stephen Semple: Yeah. Yeah. It’s one more unwanted foreign influence in the United States. Dave Young: Uh-huh. Stephen Semple: Today, the estimate is Cup O’ Noodles is like an $8 billion business, but what I found that was so interesting about this was his innovation all came from observation. Dave Young: Yes. Stephen Semple: He observed that people in Japan were eating ramen but couldn’t eat it at home for a bunch of reasons, so he wanted to make this community thing for home. He observed his wife with the tempura batter, which made for the breakthrough, had this huge success in Japan. But when he came to the United States, it was the whole thing of noticing the people eating it were doing it differently. They’re breaking it up, putting it in a cup, adding hot water. Now, there’s a business innovation lesson here but there’s a marketing lesson as well, because our greatest asset as marketers is observation of people. Dave Young: Exactly. Stephen Semple: It’s observing how people think, observing how people feel, observing how they act, observing how they react to things, and great marketing comes from observation. So does great innovation. Great innovation is seeing something on the right and pulling it over to the left. What I loved was this moment where he suddenly realized, “Wait a minute, ramen was successful in Japan because we took the familiar and made it convenient.” And then once people were looking at it like a soup, he was like, “Ooh, we make this more like a soup. We’re now taking the familiar and making it convenient, rather than making it a new food,” and I thought that was an unbelievably amazing observation. Dave Young: It is. And I think sometimes we get our heads into the books or the business or dealing with the oh, my God, the million little problems that just pop up in front of us every day, and we don’t step back to see the big picture. We don’t step back to observe. Stephen Semple: Well, we lose sight of what’s the customer actually thinking, and really that’s all that matters is what’s the customer thinking, right? What’s in their head? What’s going on in their world? How are they going to react to these things? And the more you understand that, the more you understand the human being on the other side of the … All ideas look great when you’re sitting in a boardroom with four white walls, a dropped ceiling and a spreadsheet. You can make anything work. The real thing is, how about the human being on the other side of that equation? That’s what matters. That’s what matters. Dave Young: I don’t want this to sound … Oh, I don’t care. I don’t care how this sounds. Stephen Semple: We’re already starting a riot, Dave. Go for it. Dave Young: Sometimes I get … I don’t use ChatGPT to write very much, but I will hand it something I’ve written and say, “Dumb it down.” Stephen Semple: Yes. Dave Young: “Make the sentences shorter, make this understandable to a sixth grader,” and it does a pretty decent job of helping me figure that out. Stephen Semple: For sure. Dave Young: It’s not that I’m assuming that people are stupid, but there are some people. Think about this. This is touching on MAGA territory here, but if you think about how smart the average person is, realize that half of the people are less smart than that. When you have a cup of ramen and a word that nobody’s heard, ramen, nobody knew what ramen was in the United States in the 1960s or ’70s. Stephen Semple: No, they didn’t. Dave Young: But they all knew what a noodle is. Stephen Semple: Noodle was. Yes. Dave Young: Grandma’s made us noodles forever. We like noodles. We like them in casseroles. We like them in stroganoff. That’s just beef and noodles, and noodle soup. And so if you change the word ramen, you get over yourself, you get over the fact that, “Well, people need to understand that ramen is not quite the same,” no, no, no, no, no. These are noodles. Stephen Semple: Just call it a noodle. Dave Young: Just call it a noodle. Stephen Semple: And that’s what was brilliant in the name, Cup O’ Noodles. Dave Young: Yeah. I think there are business owners and marketers that feel like the answer is to educate people. Stephen Semple: It never is. Dave Young: Never is. That hardly ever works. You need to associate your product with something they already know and understand. Stephen Semple: Attach the unfamiliar to the familiar, and we’ve talked about that a number of times in this podcast. But one of my favorite business books is Made to Stick by Chip and Dan Heath, and one of the things that they talk about is there’s six things that make a message sticky, and one of them is simple. Simple, I have a different take. I hate the term, dumbing things down. I like instead, let’s simplify it, because when a message is simple, it’s easier for everyone to absorb. It actually takes less brainpower to figure it out, and let’s face it. I’m in a world today where I’m competing with 5,000 messages a day. If it’s complicated and it takes time, it’s not that a person’s lazy, it’s not that they’re dumb. It’s, look, there’s just too much coming at them. The brain is like, “I don’t have time for that, because I got too much stuff coming at me.” So the more you can simplify it down, connect it, make it concrete, attach the unfamiliar to the familiar, the easier the brain just goes, “I get that. I understand it.” We need to make it easy because we’re competing with so much. Dave Young: No, I agree. Stephen Semple: As soon as you go down this path of I got to educate the consumer, give me a break, because I’m supposed to be educated on the food I eat, the air I breathe, the water I drink, the education, how I teach my kids, my health, my finances, my car, my air conditioning. Dude, I don’t have enough time to get educated, all that stuff. I have a busy life, and what I want to do is watch the hockey game at night. Dave Young: I agree. I agree 100% with you. And I’ll add this. There are still people that are stupid that eat three times a day. Stephen Semple: Yes, there are. There are. Dave Young: And they eat three times a day and want a Cup O’ Noodles. Stephen Semple: Absolutely. Absolutely. Dave Young: The simplification works in both directions, right? Stephen Semple: That’s the key. Dave Young: Yeah. Stephen Semple: That’s the key. Dave Young: That’s why it works so well. Stephen Semple: Right, because it wins you actually both ends of the spectrum. What it does is wins you everyone. Dave Young: Yeah. Stephen Semple: Everyone. It wins you everyone. That’s the point I want to make. Dave Young: If the sixth grader can understand it, so can the PhD. Stephen Semple: Correct. Well, and not only that. You’ll attract the attention of the PhD because they too only have so much time. Dave Young: Yeah. Simplify, simplify. Cool. Stephen Semple: This was fun. So here’s the interesting thing, Dave, is going back to your early statement of, “Oh, I didn’t eat ramen, I ate a Cup O’ Noodles.” Dude, you eat ramen. Dave Young: Now you know. You know, I never thought that the ramen had enough carbs in it, so I always crumbled a package of crackers in as well, to make it kind of a paste. Sometimes there’s just not enough carbs in it, so you just add some potato flakes. It thickens right up. Yeah, I was a master at that. Stephen Semple: You there were a connoisseur. Dave Young: You can use it as grout. Thank you for bringing us the story of Cup O’ Noodles, Stephen. Stephen Semple: We’re going to start a riot. Thanks, David. Dave Young: Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app, and leave us a big, fat, juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire-building session, you can do it at empirebuildingprogram.com.

#238: Google – Do No Evil…

Posted January 7, 2026 • 00:26:06

Larry Page said in the early day, a guiding principle is Do No Evil. I wonder if we can say that today or is it just business as usual? Dave Young: Welcome to the Empire Builders Podcast, teaching business owners the not-so secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So, here’s one of those. [Out of this World Plumbing Ad] Dave Young: This is the Empire Builders Podcast, by the way. Dave Young here, Steve Semple there. I wonder, Stephen, if we could do this whole episode without mentioning the name of the company that we’re going to be talking about. I ask that for the simple reason of they already know. They already know what we’re talking about. They already know we’re talking about them. They probably knew we were going to talk about them. Stephen Semple: Because of all the research I’ve done on my computer. Dave Young: No, because they’re listening to everything. They probably already know the date that this is going to come out and how long it’s… I don’t know, right? When they first started, and I don’t think we felt that way about them, and I can remember back in the early 2000s, just after the turn- Stephen Semple: In the early days, they had a statement. Larry Page was very famous. Dave Young: Yeah, “Do no evil.” Stephen Semple: “Do know evil. Do no evil,” and that was a very, very big part. In fact, in the early stages, they made a bunch of decisions that challenged the company financially because they were like, “This is not good experience for the person on the other end.” I wonder if anybody’s guessed yet what we’re going to be talking about. Dave Young: Well, then you go public, and it’s all about shareholders, right? It’s like the shareholders are like, “Well, we don’t care if you do evil or not. We want you to make money.” That’s what it’s about because you have [inaudible 00:03:01]. Stephen Semple: All those things happen. Dave Young: Yeah. Stephen Semple: This company that we’re talking about, we’ll go a little while before we’ll let the name out, was founded… On September 4th in 1998 was when it was actually founded. Dave Young: Oh, ’98. It goes back before the turn of the century [inaudible 00:03:14]. Stephen Semple: Yeah. It was founded by Larry Page and Sergey Brin, who met at Stanford. Interesting note, the Stanford grads also created Yahoo. Dave Young: Okay, yeah. Stephen Semple: That’s giving you another little clue about the company that we might be talking about. Dave Young: In the same geek club. Stephen Semple: Yeah, so 1998. I was thinking back, one year after I graduated from university, Windows 98 is launched and, believe it or not, the last Seinfeld episode aired. Dave Young: Are you kidding me? Stephen Semple: No, isn’t that crazy? Dave Young: ’98. Stephen Semple: Yeah. Dave Young: I mean, I was busy raising four daughters in ’98. Stephen Semple: Yeah. Today, this company, as you said, because you didn’t want me to name the company, has more net income than any other business in US history. It has, now, I got to let the cat out of the bag, eight and a half billion searches a day happen. And yes, we’re talking about the birth of Google, which is also now known as part of the Alphabet group. Dave Young: Alphabet, yeah. It’s funny how they got to get a name that means everything. Did they have a name before Google? I know Google was like… Oh, it’s a number really, right? It’s a gazillion, bazillion Googleplex. Stephen Semple: As we’ll go into a little bit later, they actually spelled it wrong when they registered the site. That’s not actually the way that the word is spelled. I’ll have to go… But yeah, the first iteration was a product called BackRub was the name of it. Dave Young: Backrub, okay. Stephen Semple: Alphabet also owns the second largest search engine, which is YouTube. Together, basically, it’s a $2 trillion business, which is larger than the economy of Canada. It’s this amazing thing. Going back to 1998, there are dozens of search engines all using different business models. Now, today Alphabet’s like 90% in the market. Up until this point, it’s been unassailable, and it’s going to be really interesting to see what the future of AI and whatnot brings to that business. But we’re not talking about the future, we’re talking about the past here, so back to the start. Larry Page was born in Lansing, Michigan. His dad is a professor of computer science. His mom is also a computer academic. This is in the ’70s. Between 1979 and ’80, his dad does a stint at Stanford and then also goes to work at Microsoft. Now, Larry and Sergey meet at Stanford, and they’re very ambitious, they’re equal co-founders, but Larry had this thing he also talked about where he said, “You need to do more than just invent things.” It wasn’t about inventing things, it was about creating things that people would use. Here’s what’s going on in the world of the web at this time to understand what’s going on. Here’s some web stats. In 1993, there’s 130 websites in the world. In 1996, three years later, there’s 600,000 websites. That’s a 723% growth year over year. The world has never seen growth like that before. Dave Young: Right, yeah. It was amazing to experience it. People that are younger than us don’t realize what it was. Josh Johnson, the comedian, has a great routine on trying to explain to people what it was like before Google. You needed to know something- Stephen Semple: What it was like for the internet. Dave Young: Yeah. You had to ask somebody who knew. If you needed the answer to a question, you had to ask somebody. And if they didn’t know, then you had to find somebody else, or you had to go to the library and ask a librarian and they would help you find the answer- Stephen Semple: Well, I don’t think it’s like a- Dave Young: … maybe by giving you a book that may or may not have the answer. Stephen Semple: Here’s an important point. I want you to put a pin in that research. We’re going to come back to it. I was about to go down a rabbit hole, but let’s come back to this in just a moment, because this is a very, very important point here about the birth of Google. Larry and Sergey first worked on systems to allow people to make annotations and notes directly on websites with no human involved, but the problem is that that could just overrun a site because there was no systems for ranking or order or anything along that lines. The other question they started to ask is, “Which annotations should someone look at? What are the ones that have authority?” This then created the idea of page rankings. All of this became messy, and this led to them to asking the question, “What if we just focused on ranking webpages?” which led to ranking search. Now, whole idea was ranking was based upon authority and credibility, and they drew this idea from academia. So when we would do research, David, and you’d find that one book, what did you do to figure out who the authority was on the topic? You went and you saw what book did that cite, what research did this book cite. The further you went back in those citations, the closer you got to the true authority, right? Do you remember doing that type of research? Dave Young: Yeah, sure. Stephen Semple: Right. They looked at that and they went, “Well, that’s how you establish credibility and authority is who’s citing who.” Okay. They decided that what they were going to do was do that for the web, and the way the web did that was links, especially in the early days where a lot of it was research. Dave Young: Yeah. If a whole bunch of people linked to you, then that gives you authority over the words that they used to link on and- Stephen Semple: Well, and also in the early days, those links carried a lot of metadata around what the author thought, like, “Why was the link there?” In the early days, backlinks were incredibly important. Now, SEO weasels are still today talking about backlinks, which is complete. Dude, backlinks, yeah, they kind of matter, but they’re… Anyway, I could go down a rabbit hole. Dave Young: Yeah. It’s like anything, the grifters figure out a way to hack the system and make something that’s not authoritative seem like it is. Stephen Semple: Yeah. It’s harder that you can’t hack the system today. Anyway, but the technology challenge, how do you figure out who’s backedlinked to who? Well, the only way you can do it is you have to crawl the entire web, copy the entire web, and reverse engineer the computation to do this. Dave Young: Yeah. It’s huge. We’ve been talking about Google’s algorithm for as long as Google’s been around. That’s the magic of it, right? Stephen Semple: Yeah. In the early days, with them doing it as a research project, they could do it because there was hundreds of sites. If this happened even two years later, like 1996, it would’ve been completely impossible because the sheer size to do it as a research project, right? Now, they called this system BackRub, and they started to shop this technology to other search engines because, again, remember there was HotBot and Lyco and Archie and AltaVista and Yahoo and Excite and Infoseek. There were a ton of these search engines. Dave Young: Don’t forget Ask Jeeves. Stephen Semple: Ask Jeeves? Actually, Ask Jeeves might’ve even been a little bit later, but yeah, Ask Jeeves was one of them once when it was around. Dave Young: There was one that was Dogpile that was… It would search a bunch of search engines. Stephen Semple: Right, yeah. There was all sorts of things. Dave Young: Yeah. Stephen Semple: There was another one called Excite, and they got close to doing a deal with Excite. They got a meeting with them, and they’re looking at a license deal, million dollars for BackRub, and they would go into the summer and they would implement it because they were still students at Stanford. They got so far as running for the executives there a side-by-side test. They demo this test and the results were so good with BackRub. Here’s what execs at Excite said, “Why on earth would we want to use your engine? We want people to stay on our site,” because, again, it would push people off the site because web portals had this mentality of keeping people on the site instead of having them leave. So it was a no deal. They go back to school and no one wants BackRub, so they decide to build it for themselves at Stanford. The original name was going to be Whatbox. Dave Young: Whatbox? I’m glad they didn’t use Whatbox. Stephen Semple: Yeah. They thought it sounded too close to a porn site or something like that. Dave Young: Okay, I’ll give them that. Stephen Semple: Larry’s dorm mate suggested Google, which is the mathematical term of 10 to the 100th power, but it’s spelled G-O-O-G-O-L. Dave Young: Googol, mm-hmm. Stephen Semple: Correct. Now, there’s lots of things here. Did Larry Page misregister? Did he decide purposely? There’s all sorts of different stories there, but the one that seems to be the most popular, at least liked the most, is that he misspelled it when he did the registration to G-O-G-G-L-E. Dave Young: I think that’s probably a good thing because when you hear it said, that’s kind of the first thing you go- Stephen Semple: That’s kind of how you spell it. Dave Young: … how you spell it. I think we’d have figured it out, but- Stephen Semple: We would’ve, but things that are easier are always better, right? Dave Young: Yeah. Stephen Semple: By spring of ’98, they’re doing 10,000 searches a day all out of Stanford University. Dave Young: Wait, 10,000 a day out of one place. Stephen Semple: Are using university resources. Everyone else is just using keywords on a page, which led to keyword stuffing, again, another one of these BS SEO keyword stuffing. Now, at one point, one half of the entire computing power at Stanford University is being used for Google searches. It’s the end of the ’98 academic year, and these guys are still students there. Now, sidebar, to this day, Stanford still owns a chunk of Google. Dave Young: Okay. Stephen Semple: Worked out well for Stanford. Dave Young: Yeah, I guess. Stephen Semple: Yeah. Now, Larry and Sergey need some seed round financing because they’ve got to get it off of Stanford. They’ve got to start building computers. They raise a million dollars. Here’s the interesting thing I had no idea. Guess who one of the first round investors are who ended up owning 25% of the company in the seed round? Dave Young: Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this. [Using Stories To Sell Ad] Dave Young: Let’s pick up our story where we left off and trust me you haven’t missed a thing. Stephen Semple: Guess who one of the first round investors are who ended up owning 25% of the company in the seed round? Jeff Bezos. Dave Young: Oh, no kidding. Stephen Semple: Yeah, yeah. Jeff Bezos was one of the first four investors in Google. Dave Young: Okay. Well, here we are. Stephen Semple: Isn’t that incredible? Dave Young: Yeah. Stephen Semple: Now, AltaVista created a very interesting technology because AltaVista grew out of DEC computers who were building super computers at the time. They were basically one of the pre-leaders in search because what they would do is everybody else crawled the internet in series. They were crawling the internet in parallel, and this was a big technological breakthrough. In other words, they didn’t have to do it one at a time. They could send out a whole ton of crawlers, crawling all sorts of different things, all sorts of different pieces, bringing it back and could reassemble it. Dave Young: Got you. Stephen Semple: AltaVista also had therefore the most number of sites indexed. I remember back in the day, launching websites, like pre-2000, and yeah, you would launch a site and you would have to wait for it to be indexed and it could take weeks- Dave Young: You submit it. Yeah, there were things you could do to submit- Stephen Semple: There was things you could submit. Dave Young: … the search engines. Stephen Semple: Yes, yeah, and you would sit and you would wait and you’d be like, “Oh, it got crawled.” Yeah, it was crazy. We don’t think about that today. [inaudible 00:15:57] websites crawl. Dave Young: You’d make updates to your site and you’d need to resubmit it, so it would get crawled again- Stephen Semple: Oh, yeah. Yeah. Dave Young: … if there was new information. Stephen Semple: People would search your site and it would be different than the site that you would have because the updates hadn’t come through and all those other things. In 1998, Yahoo was the largest player. They were a $20 billion business, and they had a hand-curated guide to the internet, which worked at the time, but the explosive growth killed that. There was a point where Yahoo just couldn’t keep up with it. Then Yahoo went to this hybrid where the top part was hand-curated and then backfilled with search engine results. Now, originally, Google was very against the whole idea of banner ads, and this was the way everyone else was making money, because what they knew is people didn’t like banner ads, but you’re tracking eyeballs, you’re growing, you need more infrastructure, because basically their way of doing is they’re copying the entire internet and putting it on their servers and you need more money. Now, one of the other technological breakthroughs is Google figured out how to do this on a whole pile of cheap computers that they just stacked on top of each other, but you still needed money. At this moment, had no model for making money. They were getting all these eyeballs, they were faster because they built data centers around the world because they also figured out that, by decentralizing it, it was faster. They had lots of constraints. What they needed to do at this point was create a business model. What does one do when one needs to create a business model? Well, it’s early 1999, they’re running out of money. They hire Salar Kamangar, who’s a Stanford student, and they give him the job of writing a business plan. “Here, intern, you’re writing the business plan for how we’re going to make money. Go put together a pitch deck.” Dave Young: I wonder if they’re still using the plan. Stephen Semple: What they found at that point was there was basically three ways to make the money. Way number 1 was sell Google Search technology to enterprises. In other words, companies can use this to search their own documents and intranets. Dave Young: I remember that, yeah. Stephen Semple: Yeah. Number 2, sell ads, banner ads, and number 3, license search results to other search engines. Dave Young: Okay. Stephen Semple: Based upon this plan, spring of ’99, they do a Series A fundraise. They raised more money, and they also meet Omid [inaudible 00:18:22] who’s from Netscape, and he’s kind of done with Netscape because Netscape had been just bought by AOL, and they recruit him as a chief revenue officer. Omid tries to sell the enterprise model, kind of fails, so things are not looking good on the revenue front. It’s year 2000, and the technology bubble is starting to burst. The customer base is still growing because people love it, love Google, but they’re running out of money again. They decide to do banner ads, because they just have got no money. Here’s the interesting thing is, in this day, 2000, I want you to think about this, you have to set up a sales force to go out and sell banner ads to agencies, people picking up the phone and walking into offices, reaching out to ad agencies. Dave Young: Yeah, didn’t have a platform for buying and selling… And banner ads, gosh, they were never… Google ads, in the most recent memory, are always context-related, right? Stephen Semple: Yes. Dave Young: But if you’re just selling banner ads to an agency, you might be looking for dog food and you’re going to see car ads and you’re going to see ads for high-tech servers and all kinds of things that don’t have anything to do with what you’re looking for. Stephen Semple: That’s how the early banner ads work. Hold that thought. You’re always one step ahead of me, Dave. Dave Young: Oh, sorry. Stephen Semple: Hold that thought. No, this is awesome. Dave Young: I’m holding it. Stephen Semple: What I want to stress is, when we talk about how the world has changed, in 2000, Google decides to do banner ads and how they have to do it is a sales force going out, reaching out to agencies, and agencies faxed in the banner ads. Dave Young: Okay. Yeah, sure. It would take too long for them- Stephen Semple: I’m not making this up. This is how much the world has changed in 25 years. Dave Young: “Fax me the banner.” Stephen Semple: Salespeople going out to sell ads to agencies for banners on Google where the insertions were sent back by fax. Dave Young: For the people under 20 listening to us, a fax machine- Stephen Semple: Who don’t even know what the hell a fax machine is, yeah. Dave Young: A fax machine, yeah, well, we won’t go there. Stephen Semple: Yeah. Now, here’s what they do. They also say to the advertisers at this point, “Google will only accept text for banner ads for speed.” Again, they start with the model of CPM, cost per a thousand views, which is basically how all the agencies were doing it, but they did do a twist on it. They sold around this idea of intent that the ads were showing keyword-based and they were the first to do that. What they did is they did a test to prove this. This was really cool. They set themselves up as an Amazon affiliate and dynamically generated a link on a book search and served up an ad, an affiliate ad, and they’re able to show they were able to sell a whole pile of books. The test proved the idea worked. And then what they did is they went out and they white-labeled this for others. For example, Yahoo did it, and it would show on the bottom of Yahoo, “Powered by Google.” But here’s the thing, as soon as you start saying, “Powered by Google,” what are you doing? You’re creating share of voice. Share of voice, right? Dave Young: Well, yeah, why don’t I just go to Google? Stephen Semple: Why don’t I just go to Google? Look, we had saw this a few years earlier when Hotmail was launched by Microsoft where you would get this email and go, “Powered by Hotmail,” and you’d be like, “What’s this Hotmail thing?” Suddenly, everybody was getting Hotmail accounts, right? Dave Young: Yeah. Stephen Semple: No one has a Hotmail account, no longer they have Gmail accounts, they hardly have Gmail accounts anymore. Dave Young: No, I could tell you that we’ve got a lot of people at Wizard Academy that email us off with a Hotmail. Stephen Semple: Still have Hotmail accounts? Dave Young: Sure. Stephen Semple: Oh, wow. So it’s still around? Okay. Dave Young: And then some Yahoos, yeah. Stephen Semple: Wow, that’s amazing. That’s amazing. Well, still- Dave Young: Yahoo, the email, not the customer. They’re not a Yahoo, but they have an account there. Stephen Semple: In October 2000, they launch AdWords with a test of 350 advertisers. And then, in 2002, they launched pay-per-click Advertising. And then 2004, they go public. Now, here’s one of the other things I want to talk about in terms of share of voice. They had a couple things going on with share of voice. They had that, “powered by Google,” which created share of voice because… We often think of share of voice as being just advertising in terms of how much are people knowing about us. I remember knowing nothing about Google and then learning about Google when Google went public because Google dragged out going public. They talked about it for a long time, but it meant it was financial press, it was front page news. It got a lot of PR and a lot of press around the time that they went public. That going public for them also created massive share of voice because there was suddenly a whole community that were not technologically savvy that we’re now suddenly aware of, “Oh, there’s this Google thing.” Dave Young: And they’re in the news, yeah. So I’ve got an idea for us, Steve. Stephen Semple: Yep, okay. Dave Young: All right. Stephen Semple: Let’s hear it. Dave Young: Let’s pick up part 2 of Google at the point they go public. Stephen Semple: All right, let’s do that. That’ll be an episode we’ll do in the future, yeah. Dave Young: We don’t do very many two-parters, but we’re already kind of a lengthy Empire Builder Podcast here. Stephen Semple: Oh, yeah. I was just taking it to this point, but I think that would be very interesting- Dave Young: Oh, okay. Stephen Semple: … because look, Google is a massive force in the world today- Dave Young: Unbelievable, yeah. Stephen Semple: … and I think it would be interesting to do the next part because there’s all sorts of things that they did to continue this path of attracting eyeballs. Dave Young: We haven’t even touched on Gmail yet. No, we have not. We have not. Stephen Semple: Because that happened after they went public. Correct. Let’s do that. Dave Young: Okay. Stephen Semple: Here’s the lesson that I think that I want people to understand is share of voice comes from other things, but we’re going to explore that even more in this part 2. I like the idea of doing this part 2. They really looked at this problem from a completely different set of eyeballs, and this is where I commend Google, from the standpoint of there’s all this stuff in the internet and what we really want to know is who is the authority. They looked at the academic world for how does it establish authority, and how authority is established is how much is your work cited by others, how much are other… So, now, Google has of course expanded that to direct search and there’s all these other things, but they’ve always looked at it from the standpoint of, “Who in this space has the most authority? Who is really and truly the expert on this topic? We’re going to try to figure that out and serve that up.” Dave Young: Yeah. Stephen Semple: That’s core to what their objective has been. Dave Young: We could talk about Google for four or five episodes probably. Stephen Semple: We may, but we know we’re going to do one more. Dave Young: All right. Stephen Semple: Awesome. Dave Young: Well, thanks for bringing it up. We did mention their name. Actually, if we just put this out there, “Hey, Google, why don’t you send us all the talking points we need for part 2?” There, I put it out there. Let me know how that works. Stephen Semple: My email’s about to get just slammed. All right. Thanks, David. Dave Young: You won’t know it’s from them though. You won’t know. You won’t know. Isn’t that good? Stephen Semple: That’s true. That’s true. Dave Young: Thank you, Stephen. Stephen Semple: All right. Thanks, David. Dave Young: Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app, and leave us a big, fat, juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute Empire Building session, you can do it at empirebuildingprogram.com.

#237: Chocolate Chip Cookies – An Empire???

Posted December 31, 2025 • 00:20:06

When your year’s earnings are stolen and you need a quick way to make some cash on the cheap, you invent chocolate chip cookies. Dave Young: Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Steven’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those. [North Texas Gutters Ad] Dave Young: Welcome to the Empire Builders Podcast. Dave Young here, along with Stephen Semple. Gosh, Stephen just keeps coming up with topics that are just so near and dear to my heart, and I think I might know the essence of this. Is it an empire? We’re going to talk about the birth of the chocolate chip cookie. Stephen Semple: Sure, but what’s the empire? There’s a lot sold? Dave Young: There’s a lot of… Boy, if you would have invested in chocolate chip cookies back in the day, think how much you’d have today. I’m guessing this has to do with Toll House- Stephen Semple: Yes. Dave Young: … and the inn… Was it an inn or a woman’s name? Stephen Semple: Yes. Inn. Dave Young: It was an inn. They’ve told the story I think on the bags or something. Anyway, have at it. I’m all in on chocolate chip cookies. Stephen Semple: So it’s the late 1920s and cookies have actually emerged as a business. The National Biscuit Company, Nabisco- Dave Young: 1920s. Stephen Semple: … yeah, has been a top seller for the last 20 years with their Oreo, mainly bought in stores, not made at home. Basically, to really understand the birth, we’ve got to go back to Whitman, Massachusetts, to Ruth Wakefield, who taught Home Ec, and she was also college-educated and she was interested in cooking. Ruth, her husband Ken, quit their job, invest their life savings into converting a 19th-century old home into a restaurant. They want to create a restaurant of their dreams, has these seven tables, doing traditional New England food, even has a kid’s menu with a dessert menu, but by the time they open the doors, it’s 1930. They’ve invested two years in doing this. Dave Young: Oh, no. And? Stephen Semple: And they’re down to their last few dollars. Now, they had picked a location with lots of traffic. They had picked a location that was basically where wealthy people traveled from Boston to Cape Cod and went through this area. They called the restaurant the Toll House. Now, because it was located on an old toll road, it was not the toll building, but it was located on an old toll road. Dave Young: Sure. Stephen Semple: Things started slow, but word got out and it started to get busy and they were known for their desserts, including the simplest. They did this butter pecan cookie that came with ice cream. Soon, customers are requesting the cookie without the ice cream. So they add cookies, they add these cookies as a standalone dessert. It’s 1935. It’s Labor Day. It’s the end of season. They’ve got lots of cash. They’ve done really well, and they are robbed. Dave Young: Oh, no. Stephen Semple: All their money is gone. They’re now at this crisis point because they’re the end of the season- Dave Young: Were they keeping all their money in a cookie jar? Stephen Semple: Perhaps. Basically, it’s the end of the season, they have no money, and they need to make something that is affordable, but it won’t cost much to make so they can create cash. They start with the butter pecan cookie, but then, she has this idea of a chocolate cookie. Dave Young: Yeah, pecans are expensive. Stephen Semple: Right, right. So Ruth says, “Okay, here’s what I’m going to do. I’m going to take a baker’s chocolate bar. I’m going to cut it up and add it to this cookie.” That was the idea. Now, they’re made out of baker’s chocolate, which is unsweetened, and it didn’t work out so well, and so they then started taking a Nestle semi-sweet bar and they took basically an ice pick to that and chip it away and let small pieces into it, which then created this sweetness without it being overly sweet. Dave Young: Yeah, because you’ve got the sweetness of the sugar and the dough and all of that working for you, too. Stephen Semple: Yeah, and they called them chocolate crunch cookies. Dave Young: Chocolate crunch cookies. Stephen Semple: Because remember it was the pecan. They were still a pecan with the chocolate chips. Dave Young: Oh, okay. Stephen Semple: And people started asking for the recipe. In fact, Boston Globe newspaper published the recipe and the recipe went crazy. Now- Dave Young: Sure. Stephen Semple: … enter Edouard Muller, who’s the Nestle CEO, and he’s in the US office. Sales are down 60% because war breaks out in Europe, not down in the US, but he wants to break into the US market because the US market is small for them at that point. He sees this sales spike in the Northeast. He’s like, “There’s this 500% increase in sales around Whitman, Massachusetts area.” Dave Young: Of Nestle chocolate. Stephen Semple: Right. He’s like, “What’s going on with that?” So he approaches them about buying the rights for the recipe. Dave Young: Okay. Didn’t know you could do that, but sure. Stephen Semple: Well, and in many ways, one could argue it was published by the newspaper, so it was in public domain, but he approaches them and he says, “Look, I want the rights to this recipe.” They pay her a dollar for it, plus hire her as a consultant, publish the recipe on the package and share the name of the restaurant so it also promotes the restaurant. That’s the deal they cut. Dave Young: Toll House. Yeah. Okay. Stephen Semple: Nestle changes how their bar is made, making it easier to cut up, and they rebrand and sales drop. Dave Young: Sales dropped? Stephen Semple: Yeah. Because what they find is the texture’s all wrong, people can’t break it along the lines of the bar and all this other stuff. So they have this crazy idea: why not just sell the broken pieces? Dave Young: Sure. Stephen Semple: And they start off calling them Nestle Toll House Morsels. Dave Young: Yeah, brilliant. Stephen Semple: The other thing he does is he gets it out of the candy aisle and puts it in the baking aisle. Because that was the other problem is it was sitting in the candy aisle. Dave Young: It’s where it belongs. Yeah. Stephen Semple: Put it in the baking aisle. Sales soar. Now remember the story of Ruth chipping off the chocolate? So why’d they call them morsels? People, because they knew the story, were calling them chips. Dave Young: Chips. Chocolate chips. Stephen Semple: Right. Now global sales in Nestle in 1945 rise 125% to 225 million, which would be about four billion today. During the war, they advertise, “Bake for your soldiers overseas,” and offer this as a recipe. Now, following World War II, we come into the convenience age and we have the new Nestle CEO, Carl Abegg, who does pre-made cookie doughs, and he launches those in 1955. And here’s the thing. When we talked about this as being the birth of the chocolate chip cookie, up until 1950, the bestselling cookie was Oreo. Dave Young: Really? Okay. Stephen Semple: Yeah. 1955, Oreo is no longer the favorite cookie that has been for decades, is now the chocolate chip cookie. Dave Young: In a package like Chips Ahoy or something? Stephen Semple: Yeah. Well, just like chocolate chip… Yeah, just basically that ends up becoming the category. Dave Young: But you couldn’t make Oreos. Stephen Semple: Well, that’s true. That’s true. But the point is, it starts to shift. Now Nabisco starts to also want to enter the race with something new. Lee Bickmore wants to get into this game, but now not with a prepackaged chocolate chip cookie. The problem was, how do you make something shelf-stable, can’t use eggs and butter, they are hard and not chewy but they still taste good, they’re crispy rather than chewy? He does this test market with children and parents, and they also remove the nuts from the original recipe. So now what they’ve got is they’ve got this hard, crispy cookie with no nuts in it, and they decide to package that up. Well, what’s a great fun name to put on it? Chips Ahoy. Dave Young: Chips Ahoy. Yeah. Stephen Semple: Right? Fun way to emphasize a large number of chocolate chips. Dave Young: And it’s all chips. Yeah. Stephen Semple: Yeah. They advertise on kids’ shows and magazines. They have a cookie man as the character, and they advertise there’s 16 chips in it. Dave Young: So kids are breaking them apart, counting them. Stephen Semple: Yeah. That was Nabisco entering the race, and then basically Nestle does these attack ads saying the real Toll House cookie needs to be baked at home, and so this whole chocolate chip cookie war happens. But the part I wanted to talk about on this was what I thought was really interesting was the evolution of this idea of a chocolate chip. Dave Young: Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this. [Using Stories To Sell Ad] Dave Young: Let’s pick up our story where we left off, and trust me, you haven’t missed a thing. Stephen Semple: What I thought was really interesting was the evolution of this idea of a chocolate chip. It came from this person having this restaurant, making the desserts, hit this point where, holy smokes, we’ve got to come up with something that is small-priced, that we can easily make, that we can create some cash, and she just decides, “Well, I’m just going to hack some stuff off of this bar of chocolate.” Advertises the recipe, it gets no one. And the smart part, we’ve got to give Nestle… It would be one thing to say this is all a creation of Ruth Wakefield, we have to give Nestle some credit here. They noticed a sales increase in a particular market where they were doing nothing different and they went, “Hmm, we should investigate this.” They discovered this idea about the recipe and they approached her. And then, when they did the sales of it and it didn’t work, they recognized, “Maybe we need to do something different.” Look, it’d be easy for a lot of businesses to go, “Well, that’s just a Massachusetts thing,” and dismiss it rather than going, “Okay, let’s actually do it in chips and let’s actually get it into the baking aisle rather than the candy aisle.” So to me, there’s two stories here. There’s Ruth Whitmore’s story in terms of the crating of this chocolate chip and the recipe, but there’s also the story of Nestle who did not give up on the idea and figured a few things out that really brought it into the mainstream. Dave Young: Yeah. If you can’t sell your product on its own, figure out what people are using it for and help with that, help people make more of that. Stephen Semple: Yes. Edouard Muller deserves some of the credit on this as well, as well as Ruth. Dave Young: Yeah. I think it’s interesting that Nestle always called them, they still call them morsels. Stephen Semple: They do. Dave Young: I had a dog once that ate a bag of chocolate chips, and that’s what we always called them was chocolate chips. Stephen Semple: Correct. Dave Young: Nobody in the home ever calls them morsels. Stephen Semple: And I think on the packaging, aren’t they chocolate chip morsels or something? Dave Young: No, they’re morsels. Stephen Semple: Oh, they still are morsels. Dave Young: I still looked it up, they’re Nestle Semi-Sweet Chocolate Morsels. We could dive into the nuance of that, but it’s almost like Kleenex, right? Maybe they didn’t want chocolate chip. Maybe they wanted chocolate chip to just remain as the generic- Stephen Semple: Maybe. Dave Young: … name for these little pieces of chocolate, and the morsels, they wanted to keep that identity. I don’t know. I don’t know, but it’s interesting. I just quickly Googled, and Nestle has the recipe on and the story on their website and they- Stephen Semple: They do. Dave Young: … show the ingredients as a bag of chocolate chip morsels. Stephen Semple: They still honor that story, yeah. Dave Young: Yeah, it’s amazing. By the way, the dog turned out okay. Stephen Semple: That’s good. Dave Young: It was a little dachshund. By the way, you’re not supposed to give chocolate to dogs. My kids were eating a bowl of chocolate chips and left it on the floor. Stephen Semple: Oh, dear. Dave Young: This poor little dachshund ate them and it wasn’t pretty for a while. Stephen Semple: What was the dachshund’s name, Dave? Can you remember? Dave Young: Oh, gosh, that was… Stephen Semple: Chip? Dave Young: No, I think it was Dixie maybe. We should’ve called her Chip. It happened on a cold night during a blizzard and we ended up having to get the veterinarian out of his house. He went down and met us and gave her a sedative because she was just shaking like a leaf on a tree. Stephen Semple: Yeah? Wow. Dave Young: I won’t tell you why we had to put her in the bathtub. Stephen Semple: No, we don’t need that. Dave Young: The chocolate was- Stephen Semple: We don’t need that part of the story. Dave Young: … rocketing out the other end of the dog. Where were we? Chocolate chip cookie. Stephen Semple: What’s interesting here is it would be easy to sit there and say Ruth didn’t get a great deal on this because it led to this massive product for Nestle at the same time. It’s one of those ones that’s hard to say because what I wasn’t able to find out is what the consulting agreement looked like in terms of how much was she being paid on that, because who knows, that might’ve been a lot of money. Again, it’s one of those ones, I thought it was interesting because so many companies today… One of the biggest challenges that I have with finding these stories is so many companies today have given up telling the origin story, like how did this idea come to be? One of the things that’s interesting is, now it might be a legal obligation, but one of the things that’s interesting is Nestle’s still telling the story of the origin of this idea of the morsels, that it came from this person and this place. I actually think they need to lean into it more, but companies are not telling, they’re not telling these early stories. They’re very, very hard to find. What we know is people connect with those stories. They’re interesting, right? “Oh, this thing happened.” And don’t tell it in a phony way, tell it in an authentic way. So I commend Nestle for still telling that story and honoring that story and having that original recipe, and I think war companies need to be telling that story, and it can be the origin of a business, can also be the origin of a product. Dave Young: Well, here’s what we know about story. In terms of memory in humans, a well-told story becomes autobiographical vicarious memory. So when I hear the story of the Toll House cookie recipe and the struggles of owning a restaurant on a busy road and the Depression, and then you finally invent this cookie that people end up loving, the little part of me experiences that story. Stephen Semple: Right. Dave Young: Right? Stephen Semple: Yeah. Dave Young: And when I bite into one of those cookies, if I might remember that story and go, “Oh, this is the cookie that those people along that toll road were eating back in 1935.” Businesses think that all I need to do is tell you how the cookie tastes and what it’s made of, and you’ll be great with that, but no. The story seals it in my memory. It literally becomes part of my memory because it was told to me in story form. And that’s a powerful, powerful lesson. Even if you’re a plumber or veterinarian, we want to know your origin story. If you’re a veterinarian, there’s no way you became a veterinarian because you hated pets. Stephen Semple: Yes. Dave Young: Right? You fell in love with the idea of helping animals at some point in your life. I want to know that story, right? Stephen Semple: Look, I’m going to put a plug in right now. Go over to usingstoriestosell.com, sign up for a 90-minute starter session, and we’ll help you tell that story. We’ll help you figure it out. You’ll walk out at that 90 minutes for the first draft of what we call your origin story. There’s a little bit of homework and whatnot you have to do, but go over to Using Stories to Sell and we’ll help with that story. Again, one of the things I found is interesting is Nestle still telling that story, and so many companies have moved on from telling it. Look, I think they could tell it better. I think they could tell it with more emotion. I commend them for doing it. Look, Budweiser does that in an interesting way every time you see the Budweiser wagon with the draft horses pulling- Dave Young: Yeah, with the Clydesdales. Stephen Semple: With the Clydesdales. That’s a way of saying,” “Hey, we’ve been around as a company for a long, long time,” in this really simple manner of using that. It’s brilliant, and people connect with it. Dave Young: Yeah. We love it. We love story. Stephen Semple: Yeah. Dave Young: It’s basically our operating system. Stephen Semple: It really is. It really is. Dave Young: It is. Well, thank you for the story of Toll House. Stephen Semple: All right. Awesome. Thanks, David. Dave Young: I feel like I don’t need a cookie because I’ve been watching my calorie intake. It’s working. Stephen Semple: There you go. Dave Young: I’m not going to have a cookie, but I’m going to think about a cookie. Stephen Semple: Well, and Dave, you’re doing really well. Dave shared at the beginning of this about how you’re fitting into some clothes that you’ve… Look, anytime we fit into some old clothes that we haven’t worn in a long time, that’s a good damn day. Dave Young: I agree. This is a pullover that I got at Whistler up in Canada almost 20 years ago. 2006 is when I was up there. It looks brand new. I could sell it as vintage. Probably should. Stephen Semple: There you go. You’re looking good, Dave. Dave Young: Thanks, Stephen. Thank you for another exciting episode of The Empire Builders. We’ll talk to you next time. Stephen Semple: All right. Thanks, David. Dave Young: Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big, fat, juicy five-star rating and review at Apple Podcasts. If you’d like to schedule your own 90-minute empire building session, you can do it at empirebuildingprogram.com.

#236: Porsche – From Inexpensive To Luxury

Posted December 17, 2025 • 00:23:42

Ferdinand wanted to make cars for the people, but the Porsche brand we know is an empire of performance. Dave Young: Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients, so here’s one of those. [ASAP Commercial Doors Ad] Dave Young: Welcome to The Empire Builders Podcast. It’s the podcast where we talk about empires that were built, businesses, business empires. You know what we… If you’ve listened before, you know… Stephen Semple: Something like that. I get it. Businesses that have done pretty well over the years. Dave Young: They started small. Stephen Semple: They started small. Dave Young: They started small and then they got big. They got so big to the point that you could call them an empire. Stephen Semple: That’s it. That’s the idea. Dave Young: It’s a pretty simple premise. Stephen Semple: That’s it. Dave Young: So as we counted down, Steve told me the topic today and it’s Porsche. Stephen Semple: Yes, sir. Dave Young: Porsche. I’m assuming this is the car. Stephen Semple: The car, yes, the car. Dave Young: Okay. Stephen Semple: The car. Dave Young: And I’m trying to… I know some Porsche jokes, but I probably shouldn’t tell those on this show. I’m trying to think if I’ve ever actually been in a Porsche. Stephen Semple: Oh, well then you’ve got to come up and see me, Dave. Dave Young: You own one. I know you own one. Stephen Semple: Well, I have one. Bernier’s got two. I don’t know how many Steve has. Dave Young: I see how it is. I see how it is. Maybe I will tell my Porsche joke. So you guys that own them, do you call it Porscha? Because some of us just say Porsche. Stephen Semple: Well, if you actually take a look back, that’s the proper German pronunciation as Porsche. Dave Young: Porsche, okay. Stephen Semple: And it’s supposed to not be… It’s not Italian Porsche, right? So it’s Porsche. Dave Young: Porsche, Porsche. Okay, I’ll accept that. I’ll accept that. I’m guessing we’re- Stephen Semple: Well, look, you got to always call a dealership to double check. They’ll tell you. Dave Young: Now, if I had to guess where we’re headed to start this off sometime around the 40s, maybe earlier. Stephen Semple: A little earlier than that, actually. It was founded by Ferdinand Porsche in 1931 in Stuttgart, Germany. You’re not far off. But the interesting thing is where the growth really happened, even though that’s when it was founded, when things really started to happen, was actually post-World War II. Dave Young: That makes sense. Stephen Semple: You’re correct on that. Dave Young: So, it started in 31 and by the time you hit the late 30s and 40s, you’re part of the war machine. Stephen Semple: Yes. Dave Young: Okay. Stephen Semple: So it was founded in 1931, Stuttgart, Germany by Ferdinand. And when we take a look at the history of the business for a very long time, they were a part of the VW group, although they were recently spun off into their own separate business. And there’s a lot of shared history between VW and Porsche. A lot of people make fun of the fact that it’s basically a VW. There’s so much connection. Now here’s the other thing is, there’s a lot of connection in Nazi Germany here as well. And I mean- Dave Young: That’s what I was intimating but trying not to say, but yes, there was definitely. Stephen Semple: And not one of these ones of, “Oh, I’m a business and I got sucked up into the machine.” I mean, very early on. Very early on. Ferdinand was a member of the SS following the war, both he and his son were charged. Dave Young: No kidding. Stephen Semple: He served two years in jail. His son six months. So we’re not talking loose connections here. He was a buddy of Adolf. Let’s just put it out there. And if you remember, going back to episode 21, VW was founded by Nazi Germany. So episode 21 about The Beetle, and Ferdinand was the guy who designed the Beetle. Dave Young: Right, right. I remember you saying that, Ferdinand Porsche. Stephen Semple: And look, Porsche has not always had the success it has today. It’s become pretty big. They do 40 billion EU in sales. They have 40,000 employees. They make 300,000 cars. There was a time that they’re making cars in the hundreds and thousands. It wasn’t that long ago. But let’s go back to Germany to the early 1900s. And if we think about Germany at that time, pre-World War II, pre-World War I, there was lots of history of engineering and science in Germany. More Nobel Prizes in Science was awarded to Germany than anywhere else in the world at that time. Dave Young: Right. Stephen Semple: Germany was a real leader in science and engineering. And the first commercial automobile was made in Germany by Mercedes-Benz. So it’s 1906 and Daimler recruits Ferdinand because Ferdinand had been the winner of the Pottingham [inaudible 00:06:05] Prize, which is the automotive engineer of the year, which is given to new chief engineers and basically allows the person to have this designated doctor engineer honoris causa, Ferdinand Porsche. And he would go around calling himself all of that. Dave Young: Okay. Stephen Semple: And this is an honorary doctorate because he never actually finished college, but he had real engineering chops, Ferdinand. So he moves to Stuttgart, which at the time is a center of car making in Germany, including all the suppliers. And he works for Benz for 20 years. Okay. Now, it’s Germany in the 1930s and 2% of the population own a car in Germany as compared to the United States, which is 30%. Dave Young: In that time? Stephen Semple: In that time. Dave Young: Okay. Stephen Semple: Ferdinand comes up with this idea of we should make an inexpensive car. We shouldn’t be making car for the wealthy. We should make an inexpensive car. The board rejects the idea. Ferdinand leaves in 1929. And in 1931… Kicks around for a few years, and then 1931 starts a consulting firm. Now, this dude knew how to name things. You’re ready for the name of the company? Dave Young: Of the consulting firm? Stephen Semple: Of the consulting firm. Dave Young: Okay. Stephen Semple: I have to read this to get it right. The Doctor Engineer Honoris Causa Ferdinand Porsche Construction and Consulting and Design Services for Motor Vehicles. Dave Young: Now, if I know anything about German, that was all one word that you just said, right? Stephen Semple: Well- Dave Young: No spaces in between any of those words. Stephen Semple: Translated, you’ll see it as Dr. in H period, C period, F period, Porsche, capital G, small M, small B, capital H. Dave Young: It just rolls off the tongue, doesn’t it? Stephen Semple: Now, here’s the crazy thing. Up until 2009, that remained the official name of the company. You actually can find, if you see Porsche’s older than that, that if you look for that, it’ll be stamped somewhere in the car that that’s the manufacturer. Dave Young: They changed it finally because it was just too expensive to- Stephen Semple: It cost too much- Dave Young: Put that many letters in a dye cast. Stephen Semple: Exactly, exactly. Dave Young: Holy cow. Stephen Semple: So it’s 1934 and they land a contract with Germany to design a small affordable car for the people called the Volkswagen. Dave Young: Volkswagen. Stephen Semple: Beetle. Right, there you go. Now, here’s the thing that’s weird. Post World War II, the allies are in trying to rebuild Germany and no one owns VW. VW was owned by the state. So now it’s in the hands of the British and the British and the allies want to create a strong economy in West Germany because it’s now the Cold War. So the big defense to defending against East Germany and the expansion of communism is to really get the economy going in Germany. And so the British government, as we know from episode 21 about the Beetle, approached Porsche who designed it and said, “Help us get this car built.” And this is where it gets just a little bit weird because the son goes in one direction. Ferdinand’s doing his own thing. They both got arrested for war crimes. Son gets out first because he did six months. And his son’s name’s Ferry and his dad is in jail for two years. So between this time where dad’s still in jail and son’s out, here’s one of the things they did towards the end of the war. We don’t know exactly how many, but it was probably about 20 of their best engineers and they moved them out into the farmland of Austria and basically had them working in a barn because they didn’t want to get them arrested or killed, quite frankly. So Ferry gets out and he goes to this barn in Austria and he’s looking around and he goes, “What the heck are we going to do to make some money? Let’s start fixing up cars.” Now, not a huge business fixing up cars. It’s post-war and there weren’t a lot of cars in Germany anyway, but they had to do something. Then the dad gets out of jail and he ends up doing this work with Volkswagen. Now, here’s what’s interesting. And this is where the really tight ties between Porsche and Volkswagen start. The deal that the German government gives Ferdinand, the deal that the allies give Ferdinand is this. Dave Young: Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this. [Using Stories to Sell Ad] Dave Young: Let’s pick up our story where we left off and trust me you haven’t missed a thing. Stephen Semple: The deal that the allies give Ferdinand is this. We want your help designing and distributing this car. We will give you a royalty for every VW Beetle sold worldwide. Dave Young: Wow, that’s pretty generous. Stephen Semple: Well, no one knew it was going to be such a huge success and basically go for 50 years that car was being built. Dave Young: Right, right. Stephen Semple: So for a long time, the biggest source of revenue for Porsche was royalties on VW Beetle sales. Dave Young: Wow, okay. So it really- Stephen Semple: Isn’t that crazy? Dave Young: It really wouldn’t exist if that deal hadn’t been made. Stephen Semple: May not have, may not have. Now, meanwhile, Ferry, who has design chops of his own and loves cars, started tinkering around with vehicles. And what he started to do was put big engines in small cars. There was all these Beetle parts lying around. He would build a car, this little car, and he’d put a big engine in it. And if you go back in the time, if you go back and take a look in the late 30s, early 40s, and you take a look at Ferraris and things like that, you take a look at the race cars at the time, they were two-thirds engines. They’re these massive engines. So he went the opposite direction. He said, “Well, let’s take a little car and put a big engine in it.” And he’s driving around and he goes, “This is fun.” Because he’s basing it on parts lying around, which is the VW stuff. It’s an engine in the back. This becomes the Porsche 356, which is basically Porsche’s first car. So they start making this car and they wanted to make it somewhat affordable. So the price was $3,750, which would be $42,000 today. And they also wanted to have it as being a daily driver because again, everybody else making performance cars were not daily drivers, had a trunk, bunch of things, daily driver. And this is an important part of Porsche’s DNA. We’re going to come back to this a little bit later, this idea of it being a daily driver. So coming out of World War II, sports cars, industry’s happening and everybody’s got one. MG and Jag in the UK, there’s Ferrari in Italy, you get the idea. Now, one thing I forgot to mention that’s interesting and still today, the government state of Lower Saxony, which is basically would be the state, they still own 20% of Volkswagen. Dave Young: Really? Okay. Stephen Semple: I forgot to mention that. Dave Young: Who are they now? Stephen Semple: Well, Volkswagen’s still around. Volkswagen’s still- Dave Young: No, who is the Saxony? Stephen Semple: Well, it’d be like saying the state of Texas. It’s a state. Dave Young: Okay, it’s just a part of Germany. Stephen Semple: Part of Germany and that government still owns 20% of the company. Dave Young: What a world. Stephen Semple: Now there’s all this stimulus going on in Germany to try to get the economy going. One of the things that they did, there was a really interesting tax rate. There was an interesting tax structure. There was a very high marginal tax rate. Now, ordinary people were taxed at 15%, but the marginal tax rate could go as high as 95%. And the reason why they wanted to do this was create this incentive for reinvestment. So there’s all this… As they’re making money, there’s this heavy reinvestment. And in the early 50s, racing is really exploding. Automobile racing is really exploding, but the lines between professional and amateur is blurry. If you remember, James Dean and Steve McQueen and other actors, Paul Newman, were all racing. Dave Young: Right. Stephen Semple: They’re all racing vehicles. And Jaguar and Porsche were trying to do the same thing in terms of creating this daily driver that you could race. Now in the end, Porsche won, and I think part of it is because quite frankly, they just built a better vehicle. There was a time where the joke with Jaguars was you had to own two because one would always be in the shop and one… And going back to the early DNA, Ferry Porsche was quoted as saying, “We have the only car that can go from an East African safari to race in the Le Mans to take out to theater and then drive on the streets in New York.” Dave Young: Wow, okay. Stephen Semple: And look, today, Porsche still heavily advertises that. They will advertise a Porsche driving through the snow with ski racks on it. And not their SUVs, the 911. This is very much part of it. And if you think about it, this parallels what Rolex did in the early days. You remember from episode 184 with Rolex. Rolex, the Submariner, the Explorer. Dave Young: Target by niche. Stephen Semple: Target by niche and make it tough and something that you could use and wear day to day. So it’s 1954 and Porsche’s selling 588 cars and about 40% of them is in the US. So really what’s making things hum with them is all those Beetle sales. And it’s the ’60s, the Ford Mustang comes out, the Jag E type comes out, the Austin-Healey comes out, and Porsche decides they need a new vehicle. And they were going to do a sedan, a four door sedan. But what they realized was they didn’t really want to compete with Mercedes and BMW. So they looked around at the other German car manufacturers and they said, “You know what? That’s probably not the place to go.” They had designed it up and that project failed. They had also been working on a six cylinder Boxter engine. So Boxter engine, the cylinders are opposed, so they’re like boxing. And the whole idea is that lowers the center of gravity of the weight of the engine. And they had a project that they were working on that that didn’t go ahead. So they stepped back and they went, “Maybe what we should do is just reduce the size of the sedan and put that engine in it.” That’s what they did. And that became the Porsche 901. Except there’s a problem. Peugeot had the copyright for zero in the middle of a bunch of numbers in France. They couldn’t call it the 901 because of that copyright. Dave Young: So they called it- Stephen Semple: So they called it the 911. And that’s now the iconic Porsche car. 1966, they sell 13,000 of these cars. Now, here’s the thing that I think is very interesting. And Porsche, as far as I could figure out, is the only car manufacturer that does this. First of all, they’ve maintained the 911 forever, but even on top of that, Porsche really understands design language. We can all recognize a Porsche. Dave Young: Right. Stephen Semple: We can recognize one from 2020. We can recognize one from 1999. We can recognize one from 1970. Even though they’ve upgraded the technology, they’ve changed the design of the car. They’ve now come out with the Cayman and the Macan and the Cayenne. They’re all recognizable as that vehicle. They’ve done a great job of doing that. I think that was a lost opportunity, frankly, when Tesla came out because they had a clean design slate. Tesla could have done that. But I think that’s really interesting how they’ve managed to maintain, even though they’ll modernize it. In our minds, we still will see one and go, “That’s a Porsche.” Dave Young: Sure. And the great car brands are able to do that. Stephen Semple: Yes. Dave Young: Audi is always going to be an Audi. Volvo is always going to look like a Volvo. And in the Portals class at Wizard Academy, one of the videos that I use to demonstrate that, there’s a language. If you combine specific shapes and specific lines, that all adds up to that brand of car. And so I’ve got an old video that I got when I was in the Motor Press Guild from Audi. It was just a video that was made for journalists with an Audi designer explaining all the lines on the car when they came out with the Q7 and how it still maintained the Audi design language. It was fascinating. Stephen Semple: It is. Dave Young: So Porsche could tell you that and the cool thing is those designers can tell you that. It’s hard for you and I to go, “Well, I can look at it and say, “That’s a Porsche.” But to be able to put it into words that describe it to someone else, is a gift. Stephen Semple: What’s really interesting, my nephew, Jeffrey, he loves Audi’s. That’s what he has. And he’ll even make the comment, he doesn’t like the Porsche’s because you feel like you’re in a bubble. Audis are very square. If you look at the back of an Audi and you look at the rear end of a Porsche, it has hips. But again, he’s even, “They’re great cars, but I like the squareness of the Audi.” So that’s interesting. Dave Young: Audi Audi has a fairly, not perpendicular, but an upright grill more so than a … And that’s part of their design language. Stephen Semple: So the whole DNA of Porsche came from this whole idea of a small car. Dave Young: Big engine. Stephen Semple: Big engine, daily driver, that was the whole idea is, it’s supposed to be a car that you can drive every day. That’s the core, core, core, core principle. That’s why they always have decent sized trunks. I remember when Gary bought his Boxter, one of the things he loved about it is you can actually put two sets of golf clubs in that car. Dave Young: Okay. Stephen Semple: Right? Now, here’s what’s fun. There was a time where when they were really wanting to get things going, they did some great print advertisements. So they had ads like bug killer. Another one was calling it transportation is like calling sex reproduction. Dave Young: Okay. Stephen Semple: Now, two of my favorites, one was not perfect. It would list 20 or 30 races that Porsche won. And if you actually read it, there was two that it didn’t. Dave Young: That they didn’t, “We didn’t win all the races.” Stephen Semple: So not perfect. Dave Young: That could have been driver error. Stephen Semple: That could have been. But Dave, you were going to make some jokes. Porsche’s able to laugh at itself. It actually had an ad that said, “Small penis? Have I got a car for you? If you’re going to overcompensate, then by all means, overcompensate.” Dave Young: I love it, I love it. Well, and that’s always the thing, the jokes are not about the car. Stephen Semple: But they actually ran that ad and I believe it ran in Car and Driver Magazine. I cannot imagine getting that ad approved. Dave Young: That’s amazing. Stephen Semple: And look, their own drivers are like, “Yeah, whatever.” Dave Young: Sure, compensating all I want. Absolutely. I love that story. Well, thank you, Stephen. I love the story of Porsche. Stephen Semple: There you go. Dave Young: And get out there and enjoy it or just buy me one and send it here. Thank you. Stephen Semple: All right, thanks, David. Dave Young: Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big fat, juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute Empire Building session, you can do it at empirebuildingprogram.com.