When you need the chocolate you find creative ways to make the deal work. See the best of both worlds.

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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Stephen Semple:

Welcome to part two of the Mars episode. If you haven’t listened to the first part, I suggest you go back and give it a listen because those are really the early days of Mars. But the Mars story was so interesting we had to break it into two parts, and there’s some really fun and surprising things that are going to happen in Phase 2 of this story.

The Mars Bar was this big success. He’s now had a couple failures. He needs a success. It’s 1934. His father, Franklyn, passes away.

Dave Young:

Okay.

Stephen Semple:

At the age of 50, and the future of the company in the U.S. is now in doubt, and there’s a small number of shares go to Forrest. But most of the shares go to his stepmother who does not like Forrest.

Dave Young:

Ouch. Okay.

Stephen Semple:

Forrest is pissed. 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.

Dave Young:

Um, okay.

Stephen Semple:

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 U.S., leaves the UK company in the 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, 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:

What they do is they create this candy based upon Smarties.

Dave Young:

Wait a minute, wait a minute. Murray?

Stephen Semple:

Murray.

Dave Young:

Mars.

Stephen Semple:

Mars.

Dave Young:

MM. And the candy-coated chocolate?

Stephen Semple:

Is M&M’s.

Dave Young:

M&M’s, yeah. Oh, wow. So it was the son of Mars and the son of Hershey’s.

Stephen Semple:

Yes.

Dave Young:

Who knew?

Stephen Semple:

Right.

Dave Young:

That’s amazing.

Stephen Semple:

So they need to build a factory and they want to make it stand out. So how they first package M&M’s is instead of in a little bag, remember where they used to always come in a tube?

Dave Young:

Oh, I remember them coming in a tube, but not in my childhood. That was sort of a theater thing later on.

Stephen Semple:

But that’s how they first came was in a cardboard tube. That was how they first came.

Dave Young:

Oh. You know, I kind of do remember that with like a folded wadded piece of paper at the end to hold it shut, yeah. Okay.

Stephen Semple:

Yeah, it was first in this… In Canada I remember them with a little plastic thing on the end, but yeah, they’re originally in the tube. So it’s 1941. War breaks out in the United States. Factories all across, all industries are dedicated to the war effort. And Hershey’s has a real problem here because their chocolate bar for the war effort is a horrible prop because it melts and all this other stuff. Mars proposes to the U.S. government M&M’s because it doesn’t melt, and they’re literally doing 200,000 pounds a week of M&M’s to the U.S. war effort.

Dave Young:

Wow.

Stephen Semple:

Now, I want to pause for a moment because there’s a couple of interesting things that I observed in all of this with Forrest. Not only was he a go-getter, he was really observant. And we’ve seen that over and over again with a lot of folks who’ve built empires. First of all, he looked at something familiar, the malted milk shake, and said, “Everybody loves this. We should make a bar that tastes like this.” Brilliant observation.

Dave Young:

Um-hum.

Stephen Semple:

Then he learns from Cadbury that they would do things for local markets slightly different.

Dave Young:

Modify it for the locals.

Stephen Semple:

So what he looked at was the Milky Way. He went, “Well, I should modify that for the UK market.”

Dave Young:

Um-hum.

Stephen Semple:

So not only that, he observed this idea from Cadbury and he observed that the UK market had a slightly different taste. Made a bar for that. Fantastic. Then when he tried to do a couple of things using his own ideas, they failed. And then he observed when in Spain, the Smarties and went, “Hey, I could make my own version of that.” But it’s this whole idea, and we’ve seen this so often with empires is this looking at the market, this observing these things going on. And in his case, it was things going on in other markets, right?

Dave Young:

Yeah.

Stephen Semple:

But nevertheless, just observing those things and then creating his version of it, which I think is just underappreciated.

Dave Young:

Do you think his instinct was… Boy, this is a weird one because I’m not sure of the mindset. Is the instinct to say, “You know what? I just got to get out of here for a while.” Or is the instinct, “I got to get out of here so I can see new horizons and find something new that I can take advantage of.”

Stephen Semple:

That’s really…

Dave Young:

I think they both end up kind of in the same place. And if you’re stuck, if you’re stuck and you can’t find the answer, get out of your own space.

Stephen Semple:

Yes.

Dave Young:

And be open.

Stephen Semple:

Yes.

Dave Young:

Not even necessarily looking, but just open.

Stephen Semple:

Just be open. We do this with our customer in reviews in the Bold Idea Day, because we make them travel to a different place.

Dave Young:

Can’t be at your place, yeah.

Stephen Semple:

When you travel into that different space, it puts you into a different headspace. How often have we seen things where somebody somewhere else and yes, it’s a combination of seeing those other things, but as you said, it’s that different headspace. So I think it’s a combination of the two. It’s really interesting. I’m in a coaching program called the Strategic Coach run by a guy by the name of Dan Sullivan, hugely successful program. And Dan tells a story of an early business that he had that predated Strategic Coach that went through all sorts of things that created this big challenge, and the business was failing. And I never believed this story when I first heard it, and I now believe it. I heard it. I was young. I was stupid. I was naive. Now a little wiser. The business is failing and one of the first things he did is he and his wife Babs, went on a two-week vacation.

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.

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Dave Young:

Let’s pick up our story where we left off and trust me, you haven’t missed a thing.

Stephen Semple:

One of the first things he did, the business is failing. And one of the first things he did is he and his wife, Babs, went on a two-week vacation. And when he came back from the vacation, he was like, “Here’s what I need to do.” With this instant clarity. Here’s what I need to do. But I just wanted to pause and recognize that, because that’s the early history of the Mars Corporation. So World War II comes to an end. Here’s the interesting thing. Mars kicked the crap out of Hershey’s during World War II. Hershey’s still sold a lot of chocolates to the Army.

Dave Young:

I’ve got to say Hershey’s probably did a better job at product placement in war movies, right? There’s always the GI giving a Hershey bar to some kid.

Stephen Semple:

Yes. Okay. So here’s one of the things I’m going to suggest people do to go back to the Wrigley’s episode, Episode 4. In terms of what did Wrigley’s do during World War II? Because remember, Wrigley’s continued to advertise through World War II.

Dave Young:

Um-hum.

Stephen Semple:

And then what happened as soon as the war ended, their sales exploded. Mars did not advertise during World War II. The war comes to an end, sales collapse.

Dave Young:

Did anybody even know what M&M’s were?

Stephen Semple:

Like I really don’t know what their success was before World War II. They were released pretty soon before World War II. So I’m going to say probably not. Forrest buys out Bruce Murray, and he hires an ad agency, Ted Bates & Company to create an advertisement for it. And here’s what Ted Bates & Company recommended. Again, radical idea in the late forties, early fifties was the customer is the kids.

Dave Young:

Oh, okay. Yeah.

Stephen Semple:

You need to appeal to the parents. It’s a two punch you need to do here.

Dave Young:

Yeah.

Stephen Semple:

And what do parents dislike about chocolate bars?

Dave Young:

Yeah. Cleaning it off their kids’ faces and hands.

Stephen Semple:

Melts in your mouth, not in your hand.

Dave Young:

Not in your hand.

Stephen Semple:

While the customer’s the kids, you need to appeal to the parents. They launch this campaign. Melts in your mouth, not on your hand. Hershey Bar is messy. M&M, no mess. Brilliant friggin’ message.

Dave Young:

Sure.

Stephen Semple:

1954 Forrest rolls out a national campaign. And look, it also fits that image of the 1950s where everything’s supposed to be everybody’s perfect and clean and pristine and all that other stuff. So sales start to improve. They immediately launch a peanut M&M’s and in this one, they do something also really fun. They make the candies the spokespeople.

Dave Young:

Gotcha. So this goes way back.

Stephen Semple:

This goes way back. This whole idea of the candies being spokespeople, while it happened recently, it was a relaunch of an old idea. Ads run on kids program. 1956, they’re selling 40 million dollars and they become number one in the United States.

Dave Young:

All right. On the backs of the M&M’s.

Stephen Semple:

They’re now three times the size of the old family business. But Forrest now needs to go back to his sister, because remember, most of the shares went to the…

Dave Young:

The step-mom.

Stephen Semple:

So he wants to go back now and buy the old Mars company back. Remember, he’s been writing this under his own name. 1964 he takes over Mars, merges the companies, does a complete overhaul. And at this point, they’re still number two to Hershey’s. But one of the things, they now are big enough as they start making their own chocolate and no longer buying from Hershey’s. Expand the product line but they’re always looking to Europe for inspiration. So here’s one of the things he remembered. His best ideas came when he was looking at other markets.

Dave Young:

Sure.

Stephen Semple:

He’s constantly looking to Europe for inspiration, and they create this whole idea of a product called Fruit Chewies. So they see these chewy, fruity candies in Europe, and it fails, and he admits that it’s a mistake and he pulls it off the shelf. But you know what? He still thinks it’s a good idea, but he felt like it was maybe mispackaged and mismarketed. So they change the formulation a little bit, and they re-release it, but they re-release it fitting into an idea, an obsession that’s working at the time. You know how we talk about this whole idea of looking at the marketplace and if something is really going on in the marketplace, trying to tie into that.

Dave Young:

Sure. Yeah.

Stephen Semple:

What was going on in the late fifties, early sixties? What was the big obsession? Going to the moon. So what does he call it? Starburst.

Dave Young:

Starburst.

Stephen Semple:

And it explodes.

Dave Young:

Wow. Okay.

Stephen Semple:

Right. He then finds another candy, again that’s going on in Europe, and I forget what the name of it was in Europe. He takes it and he rebrands it as Skittles.

Dave Young:

Ah. Okay.

Stephen Semple:

What somebody else in Europe was doing and he bought the idea and rebranded it. But what Forrest recognizes, “Oh, wait.” Again, anytime he tried to create something brand new, didn’t work. When he saw something and kind of reformulated it, it’d work, when he saw something that needed rebranding, he could do it. He became very conscious of where his success lie.

Dave Young:

That’s really cool.

Stephen Semple:

I think that that’s really quite amazing. But when you’ve got a company that you have five of the top 10 in your space, man, you’re doing something, right?

Dave Young:

Um-hum.

Stephen Semple:

The only stumble he had is he should have learned from Wrigley, but of course he couldn’t learn from Wrigley because Wrigley was doing it at the same time. But isn’t it interesting that we talk about how Wrigley had this success because they advertised during the war. So as soon as the war was over, their sales exploded. Well, one person could argue, “Well, do we really know that that was the impact?” Well, let’s take a look at M&M’s.

Dave Young:

Right.

Stephen Semple:

Didn’t advertise during the war, sales collapsed. And they actually ended up with a problem, but they bounced back with melts in your mouth, not in your hands. Brilliant, brilliant campaign.

Dave Young:

Yeah. Well, that’s really cool. I didn’t realize that one guy was responsible for all those ideas.

Stephen Semple:

Isn’t that incredible?

Dave Young:

Yeah.

Stephen Semple:

The dude was brilliant, especially as he understood kind of here’s what led to his success. And in many ways, he kept doing the things we talk about doing, repeating the success. This is what led to success. This is what led to success. He kept repeating that success.

Dave Young:

Yeah. Very cool.

Stephen Semple:

So a really, really, really cool thing. Power of renaming, power of local markets, all of those things is the lessons to be learned in there.

Dave Young:

Awesome. Oh, I’m glad you brought us the story of Forrest Mars.

Stephen Semple:

Forrest Mars. Yes.

Dave Young:

And his Mars Bars.

Stephen Semple:

Yeah. And isn’t it cool that they are still family owned?

Dave Young:

I’m glad to hear that. Maybe they’re the Wonk and not the Slugworth.

Stephen Semple:

Yes, that’s it. Now look, there’d still be a lot of bureaucracy around there when you’re doing that with billions.

Dave Young:

Is Wonka a brand owned by a company like Mars or is Wonka its own thing?

Stephen Semple:

You know what? We are going to do an episode on Wonka.

Dave Young:

All right, I can’t wait. I’ll get a hat. Tee, tee, tee. Hee, tee, tee.

Stephen Semple:

It’s one that sits around on the edges on a few of these things. And the Wonka story is kind of interesting.

Dave Young:

Yeah. Like is Willie real? Is Willie a real guy?

Stephen Semple:

Willie’s not.

Dave Young:

Okay. All right.

Stephen Semple:

But the Wonka part is kind of fun.

Dave Young:

Sure. All right, well I’m looking forward to it. Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big fat juicy 5-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.