While struggling in the great depression, Margaret Rudkin was brave enough to offer her healthy bread, made for her son, to the local baker.

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Dave Young:
Welcome back to the Empire Builders Podcast. Dave Young here with Stephen Semple talking about empire building.

Stephen Semple:
We have another remarkable female entrepreneur that we’re highlighting.

Dave Young:
Oh, cool. So I don’t know much about this one other than I’ve seen a lot of their marketing over the years and they’ve become a meme. There’s a meme called Pepperidge Farms Remembers. And so we’re going to talk about Pepperidge Farms, probably not the meme, but that was a throwback to their marketing campaign. How did they start, Stephen?

Stephen Semple:
Well, when you become a meme, you know you’re a big deal.

Dave Young:
Oh, yeah.

Stephen Semple:
Pepperidge Farm was founded in 1937 by Margaret Rudkin in Fairfield, Connecticut, and she went on to sell the business to Campbell’s Soup in 1961 for $28 million in 1961 money and became the first woman to sit on the board of directors of Campbell’s Soup. She also later wrote a cookbook, The Margaret Pepperidge Farm Cookbook in 1963, and it was the first cookbook to make the New York Times bestsellers list.

Dave Young:
Wow. All right.

Stephen Semple:
So she’s a big deal. She’s a big, big, big deal. And Pepperidge Farm, they lived on this 123-acre farm and it was named for the Pepperidge tree that was on the property. Margaret was a mother of three and a smart lady. She was valedictorian of her high school and had a career and worked as a bookkeeper for nine years, and we’re talking in the early 1920s, before marrying Henry Rudkin. So she took a very different path. And Henry was a stockbroker and they went on to have three children, and in 1929, they moved to this farm in Connecticut right when the crash happened.

Now, her husband’s a stockbroker, and while they were not wiped out like many, but times were still tight for them. Now, her son, John, had developed asthma and a number of allergies, and their doctor who was way ahead of his time recommended staying away from processed food. So again, this is like 1930. And one of the things that she realized that she needed to do was make a better bread for her son, John. She wanted to make this whole wheat bread and she had never baked it before. So she pulled out these recipes from her Irish grandmother and it took time and their early results were not great.

In Margaret’s words, the first loaf should have been sent to the Smithsonian Institute as a sample of Stone Age bread. It was hard as a rock and about one inch thick.

Dave Young:
I like her sense of humor, and Stone Age bread.

Stephen Semple:
Stone Age bread. So after trying a few recipes, she finds one that is nutritional and her son likes. The doctor also liked it and saw the results, and so he wanted to buy it for other patients. Since they could use some extra cash, the market crashed, husband is a stockbroker, they decide to sell it to Dr. Donaldson, and he recommends it to his patients and other doctors. Margaret also decides to see if she can sell it to a local grocer. So here was the challenge.

Dave Young:
We go from Stone Age bread to prescription-strength bread.

Stephen Semple:
I didn’t think about it that way, but here’s an interesting challenge, and here’s where I give Margaret a lot of chops. A lot of chops on that. This and one other thing where she was just brilliant. So here’s the challenge, it’s the depression. The economy is terrible, and the going price for bread is 10 cents. For her to make her products so that she can make money, she needs it to sell for 25 cents. Two and a half times the price. So here’s what she did. She sliced up her bread and gave the grocer a taste, he decided to buy it all, and by the time she got home, there was a phone message asking for even more.

Dave Young:
Oh, wow.

Stephen Semple:
And with that call, the business was born and she decided to call it after the family farm, which was named after the Pepperidge Farm trees. Then Henry, her husband, started taking the bread with him to Grand Central Terminal in New York to be sold in specialty shops in New York. She now needed to move the bread production into one of the barns, it was growing so much. Within a year, sales hit $100,000, which is about $2 million today. By 1939, sales were over $150,000 and she was baking half a million loaves of bread. She can barely keep up.

Dave Young:
I can barely keep up.

Stephen Semple:
Yeah, think about that. And then late 1939, Reader’s Digest published an article called Bread Deluxe that told Margaret’s story to the world. And this experience teaches her about the power of story because the business explodes. Very little of the article was about the bread, most of it was about her story and the farm, and her son, and all that other stuff. And she saw and she went, “Holy crap, there’s a power to story,” which as we know has remained part of the culture of the business to this day.

So she has to expand, she takes out a $15,000 loan, moves into the factory, and decides to employ only women, wanting to maintain this historical connection to baking. They’re now doing 50,000 loaves a week, about two and a half million loaves a year.

Dave Young:
Wow, okay.

Stephen Semple:
Then World War II breaks out. Two things happen. One, she has to cut production because she doesn’t want to compromise quality and it’s hard to get the things that she needs to do it. But then Lee Marshall, remember the name, Lee Marshall? Wonder Bread. So he’s recruited by the government to manage food supplies because the supply shortage is creating problems. And so all bread producers have to send him all of their information, sales, production, recipes, everything. Now, Margaret, a smart businesswoman, really smart businesswoman, she realizes if she sends this information, it’s going to give him an unfair advantage.

Dave Young:
No kidding, yeah.

Stephen Semple:
So she immediately changes the size of the loaf to a smaller loaf and there’s no sales history to share now. And if you notice, Pepperidge Farm loaves are smaller, right?

Dave Young:
Okay.

Stephen Semple:
That’s the history of the smaller Pepperidge Farm loaf.

Dave Young:
So she just basically stopped producing anything bigger than that?

Stephen Semple:
Yeah, she even managed to find a way to keep the recipe secret, which was brilliant. And as I said, to this day, the loaves are smaller, they’ve kept that history.

World War II ended, sales rebounded and they are now making it available in the entire East. She opens up more factories, and she can now do 77,000 loaves a week, but she realizes she needs to do more than bread. And Margaret sees the rise of sweets in the American diet. While away on vacation in Belgium, she comes across these crafted cookies that are made for Belgian royalty.

She gets the recipe for six cookies, hires the baker’s engineer, and buys a cookie oven, and releases cookies called Bordeaux and Brussels.

Dave Young:
All right.

Stephen Semple:
She packages them differently and puts them at a premium price just like the bread’s at a premium price. They look and feel different, and she has this huge success with these cookies. But her last one is the one that I like the most. She next turns to the children’s market. And here’s the interesting thing. You know, Dave, how we often talk about inspiration coming from looking outside your market, looking outside your geography? Well, she came across the cookie idea while in Belgium, so she wants to create something for the children’s market, so she heads back again to Europe. And while in Europe she discovers these little crackers, little gold fish made by a baker for his wife on her birthday because his wife is a Pisces. And this is the birth of the Goldfish cracker.

Dave Young:
I love that.

Stephen Semple:
She looks at that and goes, “I’m going to make a little cracker, a little goldfish cracker.” As I said, in 1961, Campbell Soup came along and bought them and she became the first female on the board of Campbell Soup. And today they’re doing $2 billion in sales, this empire that she built of the bread, and the cookies, and Goldfish crackers.

Dave Young:
Nice. I’ve always liked Goldfish crackers, probably because I’m a Pisces.

Stephen Semple:
Is that the connection for you?

Dave Young:
No wonder. No, that explains it.

Stephen Semple:
Well, I remember we would buy them, my kids love them so much. I would go to Costco and I’d buy the big thing of goldfish crackers and then I’d fill the little tiny sandwich bags.

Dave Young:
Yeah, yeah.

Stephen Semple:
Because man, the price difference between the big bag and the ones that were already pre-packaged, I could package it for that price.

Dave Young:
Yeah, exactly.

Stephen Semple:
But the thing I find remarkable, and we have to remember, she did these things at a time when being a female businessperson was not easy. Really, really hard. And she developed these things, but the part that I love is, again, and we’ve talked about so much, look outside of your world. Now, the bread came from a need to solve the problem for her son that turned into a business. When she wanted to do the cookie, she looked outside of her market. When she wanted to do something for children, she looked outside of her market, she traveled elsewhere looking for ideas and inspirations outside of her four walls, outside of her community.

And so often we see that, and what amazes me is how often businesses resist doing that. We even find resistance when we’re working with somebody and we say, “Okay, we want to spend a day with you to learn about your business and we need you to travel somewhere.” And they’re like, “Well, do I really need to travel?” Yes, it changes your mind, changes your whole, even if you’re talking about your business, being in a different place creates a different energy. And it’s like, I love the quote from Seth Gordon, “No great idea comes from a room with dropped ceilings and four white walls.”

Dave Young:
Yeah, exactly. And the flip side of that is when we want to get to know their business, we travel to see them, right?

Stephen Semple:
Yes.

Dave Young:
Because the business owner cannot give you an accurate picture of what their business is really like because they’re inside it, it’s in them and they’re in it, and you can’t see them real. You have to go breathe their air and walk their streets and talk to their customers because they’re going to tell you just happy, wonderful things about how great they are and how awful their competitors are. And sometimes they’re viewing their little world through their own shade of rose-colored glasses.

Stephen Semple:
I will even go so far as to argue that this traveling for us, this traveling out of this, our space, out of our office, out of our place, and going to theirs also fuels our creativity in terms of how we’re able to look at their business.

Dave Young:
Oh, absolutely.

Stephen Semple:
It’s interesting, I just did last week for a client, an annual retreat where they came and saw us in Toronto and we held it inside of a recording studio. That’s where we met. And it’s really interesting the different energy it created because you’re wandering around looking at these platinum albums on the wall and all of this other stuff, and it’s just like you’re in this really cool creative environment and you’re sitting inside of a recording studio talking about the business, and there’s no question that creates a different type of creative energy. So I really admired her. I admire her for this conscious thinking of, “I’m moving into this market, I’m going to travel Europe and look for inspiration.”

Dave Young:
Yeah, love it. It’s a good way to get some cross-pollination of your ideas.

Stephen Semple:
Absolutely, yeah. So got to admire her. I mean, the things that she managed to accomplish, what a force in business and someone to really look up to and sort of go, “Wow, she did some really cool and creative things.” And how many people would’ve rolled over, especially thinking about the time we’re in right now where there’s economic worries. You’re in the depression, there’s no worse economic worries. And you have the guts to go to a grocer and say, “Here’s a bread I think you should sell, and we’re going to have to sell it at a 250% premium.” And that did not stop her.

She was like, “This is good enough that I know if I can just demonstrate this to people, that people will want to buy this bread. There will be people in the marketplace who will want to reach into their pocket.” And it wasn’t like it was a niche. It’s not like you could ship this bread far and wide. And she sold a crap ton of it in the first year.

Dave Young:
Yeah. We also know that in times like that, spending doesn’t quit altogether and often we will do the little indulgence of buying a small luxury. We’ll treat ourselves to something that reminds us that we’re not starving to death. We can afford a nice loaf of bread, and it’s just a few pennies more, but let’s do something to make us feel good. I think that’s so important.

Stephen Semple:
Have you ever heard of the name Faith Popcorn?

Dave Young:
Yes, futurist.

Stephen Semple:
Yeah, correct. Now, I can’t remember when she wrote this book, but it was like-

Dave Young:
Was it The Popcorn Report?

Stephen Semple:
The Popcorn Report. And in the Popcorn report she talks about this whole idea of small indulgences, that during times of economic challenge, so in other words, you’re going to stop going out for dinner, but what you will do is go out for dessert. So high-end dessert places will do really, really well and restaurants won’t do as well because you’ll be looking for that small indulgence. In the grocery store, something like a Häagen-Dazs ice cream will do really well because it’s something you can bring home to have as a special treat that night. And it’s a small amount, it’s expensive, but a small indulgence. So yes, it is something to keep in mind that these small indulgences occur.

Dave Young:
And then to bring it full circle, to have a marketing campaign and to grow a business to a size that you become a meme. And that meme is from Family Guy.

Stephen Semple:
Oh, is that right?

Dave Young:
You become big enough that an animated satirical show makes fun of your marketing campaign and then that becomes the meme.

Stephen Semple:
Wow.

Dave Young:
It’s Pepperidge Farm remembers, and that was the tagline in those ads.

Stephen Semple:
It was?

Dave Young:
An old guy in a wagon, I think.

Stephen Semple:
Yep.

Dave Young:
Pepperidge Farm remembers. And so it just has become this ever-present meme now. That’s probably, I would guess millennials probably know it more from the meme than the products or the ad campaign.

Stephen Semple:
That’s got to be good for a billion dollars in sales just right there, man.

Dave Young:
Right. And then they go to the store and like, “Wait, wait, Pepperidge Farms is real?”

Stephen Semple:
“I got to try some of that.”

Dave Young:
“I got to try that.” Yeah, heck yeah. All right. Cool story, Stephen. Thank you for bringing that onto the Empire Builders Podcast.

Stephen Semple:
And I know you’ll remember.

Dave Young:
Pepperidge Farm remembers.

Stephen Semple:
You do that well. All right, this was fun. Thanks, David.

Dave Young:
Thank you. 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. And if you have any questions about this or any other podcast episode, email to questions@theempirebuilderspodcast.com.

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