Mr. Coke and the CEO Entitlement Mindset

I want to tell you this story about Mr.Coke. I’m sure he has a name (actually he has several names) but the story of Mr. Coke provides some great insights to how bumbling can’t get in the way of ad spend.

In fact, the story of Mr. Coke could be the only one they teach in business school. I’m retelling the story from memory, but the longer, more accurate version with the various Mr. Cokes’ given names appeared on Planet Money in 2019. It has a different point than I’m making here and is absolutely worth the 20-minute listen.

Once upon a time, Mr. Coke was sitting in his office and two guys came in. They wanted to make a deal to buy Coke syrup in bulk. They had this idea that they could bottle Coca-Cola and sell it that way.

Mr. Coke knew it was a stupid idea. If it were a good idea, Mr. Coke would have been the one to have it. After all, it was Mr. Coke’s idea to etch a “fill line” on the glasses he required soda fountains to buy so that they couldn’t water the sugary beverage down.

Mr. Coke was the most successful soda guy in the world, which made him a de-facto genius and an excellent man of business.

So he decided to enter an agreement wherein he would sell these guys Coke syrup for 90 cents per gallon in perpetuity, knowing this bottle fad would soon fade.

Fast forward a couple of years and the next Mr. Coke had a problem on his hands. There were very few soda fountains and a whole lot of people buying bottles of Coke. Since the first Mr. Coke didn’t make any arrangements for revisiting the sales price, there was a real concern that the bottlers would make more money because they had a better idea.

So Mr. Coke decided he was going to squeeze the bottlers. He couldn’t revisit the contract, but he could take out ads. He hired billboards and produced metal signs that said, “Coke 5¢” and had them affixed to pretty much every flat surface in Christendom.

Of course, Pepsi and other soda brands couldn’t charge more than that, so the price of soda stayed the same for 70 years.

Eventually, another Mr. Coke struck a deal with the bottlers, but by then he had a different problem: soda machines.

There were tens of thousands of soda machines that only took nickels. This is where the story gets interesting and infuriating to me.

The Mr. Coke of the 1950s had to find a way to raise prices. He didn’t want to double the price to a dime so he made an appointment with the President of the United States of America, Eisenhower and asked him to fix the problem by ordering the treasury to mint a 7¢ piece.

This is also probably the only story Americans need to know about business in the U.S. It’s worth noting that Coke was publically traded and had been generating a quarterly dividend since the 1920s. There wasn’t anything wrong with their profits except that fixing their own mistakes, short-sightedness, and hubris might have reduced them.

Why should Mr. Coke bear the burden of his mistakes in a land where taxpayers could do it?

Eisenhower balked and Mr. Coke had to pay someone to figure out how to make a change machine, but it is the very asking that belies the U.S. business legend.

The fiction that captains of industry are anything other than spoiled children unable to deal with a problem they can’t get the government to fix for them gets more apparent daily. But it’s always been a myth.

It’s something we’re kind of trapped in now, maybe we always have been.

Keep the Faith,

Tony

PostScript

It’s been a kooky few weeks filled with personal stuff that will take longer to tell than it warrants. I wrote a little something on AI art I think you might like. An observation that I cut for time and interest is that I cycle through a lot of writing podcasts. Most are garbage, but even the good ones give the following advice: “See what’s selling and write something like that.”

When Dragged Into the Light was coming out, I had to go to Amazon and find books like mine to “inspire” the cover designer. Forgive me if I don’t take the pearl-clutching over “originality” seriously.

As always, you can respond to this email for just me to see, or click through and comment for everyone if you’d like to start a conversation.

TR