Franklyn Mars bails his son Forrest out of jail. Then Forrest decides to build a bigger company. Mars is an absolute empire.
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.
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Dave Young:
Welcome back to The Empire Builders Podcast. Dave Young here talking to Stephen Semple, and we’re going to talk about business empires that went from nothing and turned into, as we say, empires.
Stephen Semple:
Yes, sir.
Dave Young:
Right? That’s the premise. Now people know the underlying premise of the podcast. Let’s get on with it. You whispered in my ear, as you hit the countdown button, that today we’re going to talk about the Mars Corporation. The Mars Corporation.
Stephen Semple:
Yeah.
Dave Young:
But we’re not talking about Percival Lowell and his telescope thinking that there were canals on Mars.
Stephen Semple:
No, no we’re not.
Dave Young:
We’re talking about candy bars. Is that right?
Stephen Semple:
Yeah, we’re talking about a lot of candy bars.
Dave Young:
So I at least got that going for me. I figured out that this is not the Bugs Bunny villain. This is …
Stephen Semple:
Dave, you’re not feeling well, but you still bring it. I like it.
Dave Young:
Yeah. Just in this day and age, full transparency, I’m doing this with COVID.
Stephen Semple:
Yeah. Yeah. Yeah.
Dave Young:
But fortunately, we record over the internet.
Stephen Semple:
That’s it. Got our virus protection on.
Dave Young:
I’ve got a mask sitting right next to my microphone.
Stephen Semple:
Yeah. Mars is massive. One half of the top candy bar names on the planet are part of Mars: Mars, Snickers, Skittles, Milky Way, 3 Musketeers, and M&M’s.
Dave Young:
All right, so how far back does this go?
Stephen Semple:
Well, we’re actually going to do two sections of this. We’re going to go right back to the beginning, and also we’re going to do something around the time that they added some of these extra names that was really kind of interesting.
Dave Young:
So how many years back? Is there a Mr. Mars or a Mrs. Mars?
Stephen Semple:
Oh, yes. It was Franklin Mars.
Dave Young:
All right, all right.
Stephen Semple:
1911, Franklin Mars.
Dave Young:
1911.
Stephen Semple:
Yeah.
Dave Young:
Because what I picture the Mars Corporation full of now is a bunch of suits that are like Slugsworth in Willy Wonka.
Stephen Semple:
Well, they are $45 billion in revenues.
Dave Young:
Yeah. Yeah.
Stephen Semple:
They are 130,000 employees.
Dave Young:
Dang.
Stephen Semple:
And they’re still owned by the Mars family.
Dave Young:
Oh. Well, that makes me feel good.
Stephen Semple:
There you go.
Dave Young:
That actually does because I just picture that big of a company, nobody in the boardroom actually cares about chocolate, but I’m glad to … So let’s dive in. I’m all ears now.
Stephen Semple:
And they’re literally one of the top five privately-owned companies in the world. But yes …
Dave Young:
Amazing.
Stephen Semple:
It’s really remarkable that they’re still family-owned. So as we were talking about earlier, founded in 1911 by Franklin Mars in Tacoma, Washington. And the reason why we’re sort of taking two looks at this company, there’s kind of what Franklin Mars did to start the company, but it was really his son, Forrest Mars, who made it huge.
Dave Young:
Okay.
Stephen Semple:
So Forrest grew up as a little bit of a hustler. When he was young, he was not close to his father. In Chicago in 1923, Forrest is 19 years old and he’s hustling to make a living. What he’s doing is he’s illegally plastering billboards all around town.
Dave Young:
Oh, okay.
Stephen Semple:
And he gets arrested and needs to be bailed out. So he hadn’t talked to his dad in a decade, but he picked up the phone and called dear old dad and said, “Hey, can you bail me out?”
Dave Young:
Wait, whose billboards was he plastering around town?
Stephen Semple:
I have no idea, but it was like companies would hire these kids to plaster up billboards …
Dave Young:
Oh, okay.
Stephen Semple:
And it was illegal.
Dave Young:
Okay.
Stephen Semple:
So city ordinance against it and all that stuff.
Dave Young:
Just any blank wall, huh?
Stephen Semple:
Exactly, exactly. So Forrest calls his dad, and his dad at the time was a candy salesman. They were not close. Forrest Mars was selling candy, but he was also trying to crack into the business. He had been making a few little candy things and really trying to get into the chocolate business, which if we remember, the early days of the chocolate business in the United States was heavily dominated by Hershey. In the 1920s, there was no rival to Hershey’s. It was Hershey’s and nothing else. Frank had started a chocolate bar called Marrow bar, and he had had a little bit of success.
Dave Young:
Wait, marrow?
Stephen Semple:
Marrow. Marrow bar.
Dave Young:
Like bone marrow?
Stephen Semple:
Yeah. Yeah, like bone marrow. Marrow.
Dave Young:
He didn’t consult us on the name. I just want to point that out.
Stephen Semple:
I guess not.
Dave Young:
Not on this one.
Stephen Semple:
So Frank and Forrest are sitting having a malted shake, and that’s a really popular drink across the country, and Forrest suggests to his dad, “You should make a bar that tastes just like this.” And Frank likes the idea and they decide the team up and they make Milky Way.
Dave Young:
All right. Now we’re talking.
Stephen Semple:
Now we’re talking. And they go all in and they need a steady supply of chocolate, milk chocolate, to make this happen and they get that from Hershey’s. So Hershey’s was also supplying other small chocolate makers.
Dave Young:
Okay.
Stephen Semple:
Now here’s one of the things. When you look at a Hershey’s bar, it’s a little, thin bar, right? When you look at a Milky Way, it’s big, right? Big, it’s fluffy. It looks way bigger and it’s a huge success. They launch it in 1924 and in 1944, 20 years later, it’s basically doing what’s equivalent to today would be $12 million in sales.
Dave Young:
Wow. Okay.
Stephen Semple:
So his dad is happy. His dad is like, “This is awesome. We’re making money. This is a huge success.”
Dave Young:
And Milky Way sounds way better than a Marrow bar.
Stephen Semple:
Yeah. Yeah. And again, it stands out because it’s larger and it tastes like a malted shake.
Dave Young:
Yeah.
Stephen Semple:
So his dad’s happy, but Forrest wants more. So Forrest encourages him in moving into new markets and they want to create new products. And the business is growing quickly. Becomes national with the Milky Way, then they launch Snickers, and then they launch 3 Musketeers. All huge successes.
Dave Young:
Wow. Still huge successes, yeah.
Stephen Semple:
The profits are now over $2 million back in the 1920s.
Dave Young:
So father and son are reconciled.
Stephen Semple:
Well …
Dave Young:
Well …
Stephen Semple:
They’re doing business together.
Dave Young:
Okay.
Stephen Semple:
So it’s 1932 and they hit $25 million in the sales, and they’re second only to Hershey so they’re now the number two candy bar maker in the United States.
Dave Young:
All right.
Stephen Semple:
And Forrest still wants more, Frank’s really content, and they get in a lot of fights. Forrest, the son, basically demands of the dad, saying, “Hey, these are my ideas. These are my vision. You should give me 30% of the company. I should have ownership in the company.” Frank doesn’t agree. Forrest leaves because he thinks he can do more.
Dave Young:
Wow. Okay.
Stephen Semple:
And what he decides to do is learn more about the chocolate business. So he goes to Europe, goes to Switzerland, and he basically convinces Nestle to hire him.
Dave Young:
Okay.
Stephen Semple:
Because he wants to create the first international candy company. He wants to learn everything there is to learn from a large company and Nestle, at this time, is the largest in the world, absolute largest in the world. And candy companies at the time were very, very secretive. There was lots of R&D and everything from packaging and manufacturing. And Forrest gets a job in the factory and he learns all he can, just basically is a sponge soaking it all up. And once he’s gotten all the knowledge he needs, he leaves and he sets up shop in Slough, England, invests all of his money.
Dave Young:
Stay tuned. We’re going to wrap up this story and you how to apply this lesson to your business right after this.
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Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.
Stephen Semple:
He sets up shop in Slough, England, invests all of his money. And his first idea is he wants to change the Milky Way to local market, and he learned this idea from Nestle. So basically what Nestle was doing, how they made their chocolate for the Italian market and how they made the chocolate for the English market and how they made the chocolate for the French market was all slightly different …
Dave Young:
Okay.
Stephen Semple:
Because all three of those markets have slightly different preferences in terms of sweetness and milkiness and things along that line. So he takes this idea and he makes a version of the Milky Way for the UK market. And guess what he calls it?
Dave Young:
The Mars bar.
Stephen Semple:
The Mars bar. And it’s funny because I’ve always thought that the Mars bar and the Milky Way bar were kind of similar, but different. And I never knew until researching this that basically they’re the same bar, just modified for markets. But he finds himself now going against Cadbury, and Cadbury’s no slouch.
Dave Young:
Sure.
Stephen Semple:
Cadbury’s from the UK. This is a big challenge. And one of the things that Forrest decides to do is claim that his health bar has nutritional benefits. It has all these nutritional … “A meal in a Mars” is kind of the slogan that they do. Now it’s interesting because I think he got this idea from Guinness.
Dave Young:
Oh, sure. The meal in a pint.
Stephen Semple:
Right, but Guinness used to advertise “Guinness for Strength.” And a number of years ago, I was in Dublin and I went to the Saint James Brewery, which is where Guinness started, and they show all these old Guinness ads there and one of the ones that you saw this whole line of was “Guinness for Strength.” And this whole idea of advertising, “You should have a Guinness at lunchtime for the extra nutritional benefits.”
Dave Young:
Okay.
Stephen Semple:
So I don’t know this for certain, but I know the timeline is parallel. This “meal in a Mars,” he might’ve got that idea from Guinness.
Dave Young:
So yeah, I may go have a beer and a candy bar for lunch.
Stephen Semple:
There you go. For lunch.
Dave Young:
I can’t think of a better way to take a nap at 2:00.
Stephen Semple:
Two great tastes that taste great together. So basically, he does really well. He sells a million bars in the first year and he expands quickly. And by 1934, he’s the third-largest candy bar maker in the UK.
Dave Young:
Wow. He’s a go-getter.
Stephen Semple:
He really is. Now one of the keys that he really felt that the success to Milky Way and the Mars Bar was that they looked bigger, that they were a bigger bar. So what he decides is to launch a new bar called Big Bar. It’s really big. It’s a really big bar. But here’s the problem: It’s too big. People don’t finish it. Kids don’t finish it. And if you don’t finish it and you got a chocolate bar and you put it in your pocket, it melts.
Dave Young:
Yeah.
Stephen Semple:
And it failed. It failed terribly. Now around this time, tropical fruit prices drop. And so he decides to create a pineapple-flavored, like adding pineapple flavor to his chocolate bars.
Dave Young:
Okay.
Stephen Semple:
Fails. The Mars bar was this big success. He’s now had a couple failures. He needs a success. It’s 1934. His father Franklin passes away …
Dave Young:
Okay.
Stephen Semple:
At the age of 50, and the future of the company in the US is now in doubt. And there’s a small number of shares that go to Forrest, but most of the shares go to his stepmother who does not like Forrest.
Dave Young:
Ouch. Okay.
Stephen Semple:
So Forrest is pissed.
Dave Young:
Yeah.
Stephen Semple:
And basically, he decides that what he needs to do is just go on a vacation and cool off. So he takes a vacation to Spain and he saw these chocolate candies made by Rowntree that are called Smarties that don’t melt, and he had never saw a candy coating on chocolate. So he decides to take Smarties to America. He returns to the US, leaves the UK company in his hands of the number two, but he needs a supply of milk chocolate, and where does he need to get that is Hershey’s.
Dave Young:
Okay.
Stephen Semple:
But he’s brand new. Hershey’s is not super interested in doing it. So what he does is he knows the president of Hershey’s. His son, Murray, is never going to make it in the Hershey’s business. So he offers Murray, he says, “Hey, if you guys sell me this chocolate, I’ll make Murray … I’ll give him an executive position, plus 20% of the company.”
Dave Young:
Wow. Okay.
Stephen Semple:
So they go, “Done.” Murray’s now set up.
Dave Young:
Murray’s out of our hair.
Stephen Semple:
Murray’s out of our hair.
Dave Young:
Not our problem anymore.
Stephen Semple:
This Mars episode was so interesting. We needed to break it into two parts. So tune in next week where you’re going to hear about the origin of M&Ms and a bunch of other things that may surprise you.
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.
