10 episodes

Each week Stephen reverse engineers the keys to success that took little companies and built empires. We believe in building empires and learning from those that have already done it.

The Empire Builders Podcast Stephen Semple and David Young

    • Business
    • 5.0 • 5 Ratings

Each week Stephen reverse engineers the keys to success that took little companies and built empires. We believe in building empires and learning from those that have already done it.

    #018: Netflix – known for one thing; twice.

    #018: Netflix – known for one thing; twice.

    Transcript



    David 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.



    [Royal Plumbing Ad]







    David Young:



    Stephen, when you told me you wanted to talk about Netflix, my first thought was are we talking about the original Netflix or the Netflix of today or are we talking about the evolution because there's a lot to talk about with Netflix.



    Stephen Semple:



    And we're actually talking about all three, because we've got to go back to the beginnings, because the beginnings is where the stories are about how they became this successful thing that they are. So, we're definitely going back to the beginning. We also do need to touch a little bit on the evolution because they went through an evolution I think a lot of people have forgotten about. Because it's easy to forget that this company was founded on August 29th, 1997 and it was founded by Mark Randolph and Reed Hastings. So, this is long before or streaming. Heck, this is back when the DVD was launched, was created, because here's what ended up happening. So, Hastings had sold a software company. He had built a successful software company and he sold the software company and he decided he had two and a half million dollars that he was willing to invest in a startup.



    Stephen Semple:



    So, Mark and Reed had been creating all these ideas when they were working somewhere else and they were creating all these ideas, what should we start? And they had actually developed the idea of Netflix back when there was, remember the big VCR tapes coming back in those days? And what they realized is they couldn't make the business model work with a VCR tape, because what their business model was, they were going to sell and rent through mail and they just could not make the VCR so, they shelve the idea. And then one day they're driving into work and they hear an advertisement for a DVD. They go that's it, this will freaking work. They literally stopped the car and they tried to find a DVD to buy. They couldn't find one to buy. This is how new it was they could not and they're in freaking Silicon Valley and they couldn't find a DVD to buy.



    Stephen Semple:



    So, they bought a CD because they were like well, this is close, put a stamp on it, mailed it. Because they wanted to see whether it would work and low and behold the next day a DVD shows up in the mail and they go, let's start this company and that was August 1997. And they started with 30 employees and 925 DVD titles. And here's the funny thing is, 925 DVD titles was the entire DVD library. The entire DVD library was 925 titles. That's where they started and by April 2021, 25 years later, they have 208 million subscribers, they're doing $25 billion a year in revenue and have got 12,000 employees. Huge success and in fact, in the decade of 2010, they were the best performing stock on the market. The stock had a 3693% return.



    David Young:



    And other than still being in the entertainment distribution business it's not even the same company that was in 1997.



    Stephen Semple:



    No, not at all.



    David Young:



    They used to send a physical thing and now it's all streaming and online and who doesn't have it?



    Stephen Semple:



    They came up with this idea long before the internet was a big thing and before streaming and all of that. The interesting thing is, they were constantly being told, this idea will never work when they took it to investors, constantly. So much so, that Mark Randolph, one of the founders wrote a book called, "That Will Never Work" and has a blog called,

    • 18 min
    #017: Coke – they already had an empire, but…

    #017: Coke – they already had an empire, but…

    Coke.  Hold on a minute.  They are already an empire.  This is a lesson on how no matter how big you are, no matter how much you spend, and even if you are the best marketers on the planet; you cannot bend the consumer to your will.  If you have ever thought that you can use advertising to change consumer behaviour you need to listen to this podcast.



    David 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.



    [No Bull RV Ad]







    David Young:



    Steven Semple, today, we're going to talk about Coca-Cola.



    Steven Semple:



    It's interesting. And we're doing yet another department, we've been doing those lately.



    David Young:



    Yeah, that's not even really empire building. It's like how somebody that had an empire tried to kill it.



    Steven Semple:



    Yeah, basically, but there's a lesson to be learned here. Because often we hear clients that come to us, they sit there and say, I'd like the consumer to behave different, it would be better if they shop at these times or they behaved in this manner or they did this and the other thing. And we're always saying you can't use advertising to change the behavior of a customer. And I came across this around Coca-Cola and I found this fascinating because look, let's face it. Coca-Cola is arguably one of the most successful advertisers on the planet. One of the most successful brands, they have a huge budget, like they've been doing it forever.



    Steven Semple:



    And the company has been around since 1886, was founded by John Pemberton. And even when he founded Coca-Cola, he started with a big advertising budget. So by 1912, they were spending a million dollars a year in advertising, which was a huge budget at the time. That's $30 million in today's dollars. Then also think about how small the population was in comparison for that $30 million. So really it's probably more like 400, $500 million budget if you adjusted for inflation and population. So they've been great, done it for a long time, hugely successful, big budgets, but they have this one little problem. And this problem was they discovered that people were not asking for the product by name.



    David Young:



    They weren't standing up and saying, "I'd like a Coca-Cola, please."



    Steven Semple:



    No, they were standing up and saying, I'd like a Coke.



    David Young:



    Oh a Coke.



    Steven Semple:



    A Coke. And for the longest time, the company wasn't happy about it. They decided, consumer behavior must change. We must change consumer behavior. Consumers must use the full name. We are Coca-Cola, we have big advertising budget. We know what we're doing. So we are turning our marketing muscle to changing consumer behavior. We will bend the customer to our will, right? Because all we're asking you to say is Coca-Cola, damn it. Just instead of Coke, Coca, just add Coca, two syllables, easy, right? So here's what they did. In 1913, they started running an ad that said this, Coca-Cola, ask for it by its full name, then you will get the genuine. That was the advertising campaign. And they tried various things for almost 40 years. They weren't-



    David Young:



    To get people that quit saying Coke.



    Steven Semple:



    To get people to quit saying Coke. In 1942, they finally waved the white flag.



    David 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.



    [EMPIRE BUILDERS AD]







    Brought to you by the least full of shit marketers association of America. Yes, that's a low bar, but we clear it mightily.

    • 9 min
    #016: Gaggia Espresso Machines had a problem

    #016: Gaggia Espresso Machines had a problem

    What to do with the oily film that formed on the top of their espresso. The result built an empire and even changed how fine espresso is judged.  This is a lesson of overcoming resistance to new innovations.



    David 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.



    [Armadura Roof Ad]







    David Young:



    Stephen, a little sleepy this afternoon as we record this. And thinking that I might need a little cup of espresso, just a little pick me up, just a little jolt. What are you thinking?



    Stephen Semple :



    I'm thinking that's what we need to do. And we're going to take a trip back to September 5th, 1938.



    David Young:



    For our espresso?



    Stephen Semple :



    For our espresso. That is when... Now I have to apologize because if we have any Italians, they're just probably going to cringe when I say this name. Because the modern espresso machine was invented by Giovanni Achille Gaggia. Now I probably butchered that name, but that's as close as I can get. Before that time, how espresso was made was it was boiled and cooked. And what made this machine different and it became the father of the modern espresso machine is it made espresso under pressure. And so it literally changed the way espresso is made, looks, and tastes because one of the results of making it that way was you actually get that little cream on the top of the espresso, which did not exist before that.



    David Young:



    Coffee suds, kind of.



    Stephen Semple :



    Yeah. And Achille literally changed the way we look at espresso, and changed the way espresso is graded and how coffee snobs look and describe espresso. Because when it first came out what people were doing was spooning that little cream off the top of it. They're like, "Oh my God, what?" They would take their cup and they would scoop all of that off.



    David Young:



    And throwing it away.



    Stephen Semple :



    And throwing it away.



    David Young:



    They were saying, "Ooh, there's a foam on top of my coffee."



    Stephen Semple :



    Yeah. They were literally saying, "What is this scummy foam on the top of the coffee? And what's wrong with it." Now, normally what a company would do in that manner is choose to educate their customer, right? We've seen this over and over again working with companies have new technology or new innovations, "Let's educate the consumer on this. Let's let's tell them how much better it is." Achille decided to do something different. He decided to speak to the heart, not to the head. So guess what he did. He gave the foam a name. He romanticized it. He called it crema caffe naturale. Or natural coffee cream, which today we call la crema.



    David Young:



    La crema. And before that they looked at it like it was the same stuff you get when you boil a chicken and this foamy stuff rises to the top of... "Ooh, get rid of that."



    Stephen Semple :



    Yeah. Well, to the point today, that if you're competing and grading coffees, one of the things that gets graded is if there is no la crema on the top of the coffee there's something wrong.



    David Young:



    Ain't that great?



    Stephen Semple :



    Yeah. In fact this is a bit of a problem for Starbucks because Starbucks uses Arabica beans rather than Robusta beans, and Arabica beans naturally don't have as much of the crema.



    David Young:



    Oh my gosh.



    Stephen Semple :



    Yeah. It went from this negative to this positive by giving it this name.



    David Young:



    And then people want it.



    Stephen Semple :



    And then people want it.



    David Young:

    • 11 min
    #015: An interview with a small business that applied the Wrigley formula from episode 4

    #015: An interview with a small business that applied the Wrigley formula from episode 4

    Meet Rick Showers.  He does not sell gum.  He sells used RVs and he applied the lessons from Wrigley’s and is growing like crazy.  New sales record after new sales record.  Learn what he is doing to grow and the lessons he has learned along the way.



    Clockwise from upper left: Rick Showers, David Young, Stephen Semple



    David 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.



    [No Bull RV Ad]







    David Young:



    Stephen, today we're heading off in a different direction almost. This is our first interview podcast episode.



    Stephen Semple:



    Yeah. And I am so excited today. We have a real empire builder on our show with us today as we have Rick Showers, he's an owner of a small business that applied one of the lessons from the Empire Builders podcast to his business. He's just exploded from that. He's having record months, months after months. And the reason why I'm excited about this is so often people listening to our podcasts will say, "Well, that worked for Wrigley's and I'm not Wrigley's." Or "Wrigley's sell candy, and I sell RVs, or that was in 1920s, how about today? Or that was New York, and I'm in a small town outside of Edmonton," All these reasons why it wouldn't work well. Here's Rick to share a story. A small RV dealer that's outside of Edmonton that applied the lessons of Wrigley to his business in the spring of 2020.



    David Young:



    Wait, in the spring of 2020. What happened in the spring of 2020?



    Stephen Semple:



    There was this little, let me think, what is it? It had a number of next to it, oh right, COVID. The pandemic happened.



    David Young:



    So right at the start of it.



    Stephen Semple:



    Right at the start of the pandemic, we're taking our story back to that moment. And here's the thing, from that moment, he's doubled his business. So for full disclosure, Rick is a client of ours. And the ad that you heard at the beginning of this podcast was written by one of our partners, Mic Torbay. And it has run on several radio stations in Rick's market. If you've not heard the Wrigley podcast, I suggest you go back to it and listen to it now, before listening to this interview.



    Stephen Semple:



    So I just want to set the stage. It's the beginning of the pandemic, frankly, the world is going to shit, everything is closed, people are panicking, and Rick sells a luxury item. In the vast majority of the times when a recession or panic happens, the first thing that goes in the s*****r is luxury items. They're the first thing that get nailed, right? So at the time, no one knew RV sales would benefit. Like that was a surprise. We've got to remember that was a surprise. So here's all this pandemics stuff going on, Rick's shop is closed, everything's closed. There's worry about sales and we come along and suggest to Rick, Hey, here's what we think you should do. You should increase your marketing budget, which he did. And I'm going to tell ya, I mean, that took guts. Most people would've kicked me out of their office and we know advertising was getting cut right left and center because we saw it with our media partners.



    David Young:



    Well, thanks Stephen. Rick, thank you for being on our podcast.



    Rick Showers:



    More than welcome. Glad to be here.



    David Young:



    And I know this is an audio podcast, but as we're recording this on a Zoom meeting, you're in the woods, you look like you're in a way better place than either Stephen or I, enjoying yourself, enjoying some nice weather up in Canada. How long have you been in this business?



    Rick Showers:



    Oh,

    • 29 min
    #014: The birth of Play-doh. A cleaning agent becomes a toy.

    #014: The birth of Play-doh. A cleaning agent becomes a toy.

    Play-doh, seriously, it was not a toy.  This is serious stuff.  Learn how observing how your customer is using your products can lead to new product ideas and maybe even save your company.  You will also learn the mystery of how they created the name.  The first idea was doozy.



    David 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. Steven Simple 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.



    [Peak PTT Ad]







    David Young:



    Steven, another big old flash from the past right today. You've taken me back to my childhood. Is that what I understand?



    Steven Semple:



    We're going to play with some Play-Doh.



    David Young:



    Oh God, I'm hungry anyway.



    Steven Semple:



    Don't eat the hot dogs that you make, you're not supposed to eat that.



    Steven Semple:



    Here's the thing, it's amazing, we sometimes forget about things like Play-Doh. So Play-Doh's now owned by Hasbro, has been for a number of years. They still sell 95 million cans of Play-Doh a year.







    David Young:



    95 million cans of it.



    Steven Semple:



    95 million cans a year. And when there was a bunch of marketing companies got together a while ago and created this list of the most memorable brands in the world and number 24 was Play-Doh. Mark it in your calendar, September 18th is national Play-Doh Day.



    David Young:



    Oh, sweet. That's nice. They have their own day.



    Steven Semple:



    So when you have your own day, you're kind of a bit of a deal.



    David Young:



    Yeah. I mean, it's a foundational toy for most of us, right? We all remember playing with Play-Doh.



    Steven Semple:



    And here's the interesting thing, it didn't start as a toy. Didn't start as a toy. So, if we go back to 1920, there's a company called Kutol and it was founded by Cleo McGyver, McGyver, not MacGyver, McGyver, and it was a soap and cleaning product. And basically houses at that time were heated by coal, so there was lots of soot. And what was really popular in that time was wallpaper. Wallpaper was much more popular than painting. So, you basically had a house, it was heated by coal wallpaper on it, lots of soot, and basically, Kutol sold all these products basically to different grocery stores. And what happened is Kroger basically said to them, "Hey, do you have a cleaning product that would clean soot off of wallpaper? Did you have something like that?" And he said, "Sure, I do." And they signed a contract and then he went, "You know, this is really good news because we've been a struggling business about to go bankrupt. We now got this great contract from Kroger."



    David Young:



    We just got to figure out...



    Steven Semple:



    We don't have a product. So he went to his younger brother, Noah, and he said, "Can you make a product? I got an order. Can you make a product?" So, they created this putty pliable, like substance that you would basically roll on wallpaper and would collect the soot off the wallpaper and had cleaning product in it and whatnot. And it would clean the wallpaper. And the product did gangbusters in the company made tons of money until suddenly the 1950s come along. And you know what happened in the 1950s? Oil and gas, no longer coal. Way cleaner. Soot went way down, also a trend away from wallpaper to painting. But the big thing is, you didn't need this cleaning product. So demand went, boom, like this. So for the second time in the company's history, first time is struggling and they get those order from Kroger and they make this product. They're now a struggling company again, about to go bankrupt. And so basically they hired their nephew, Joseph to join the busines

    • 10 min
    #013: Get rid of all the bells and whistles. The Birth of the Sony Walkman

    #013: Get rid of all the bells and whistles. The Birth of the Sony Walkman

    The staff, the critics, and retailers all said it would fail.  It lacked all the things people wanted but gave them one thing they had not thought about.  And a star is born.



    David 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.



    [Tapper Jewelry Ad]







    David Young:



    Stephen, we're doing a flashback today, right? We're going back to when, the seventies?



    Stephen Semple :



    Yeah. And we're also doing a little bit of a departure because we're actually going to talk about a company at the stage that it was very... Still, it was already large. It was already successful, but I still think there is a lesson to be learned. And what we're going to talk about is the birth of Sony Walkman.



    David Young:



    The birth of a Sony Walkman. It was a thing before Guardians of the Galaxy for you kids that are listening.



    Stephen Semple :



    It actually played this little thing called a cassette.



    David Young:



    We can go into all kinds of minutia and trivia about cassettes and their interaction with pencils or big pens.



    Stephen Semple :



    I'll be wearing my shirt that has all the records and cassettes on it. I dress inappropriately, I apologize to everyone.



    David Young:



    And maybe we should offer a mixed tape prize.



    Stephen Semple :



    There we go. So anyway, going back to the birth of the Sony Walkman, it all started with the Sony chairman. And I'm going to butcher the name, so I apologize. Masaru Ibuka. And when he traveled he loved listening to music. Now Sony had this product... It was actually called the Pressman. It was for recorders. So it had a recorder and a microphone, but it also had the ability to play things back. So Sony had this product. And when he traveled, he took it with him and he would listen to music on planes and things along that line.



    Stephen Semple :



    And he found it was just too heavy. He said, "This thing is just way too heavy." And so he went back to his designers and he said, "Look, let's modify the Pressman. Let's get the weight down. Let's remove the recording feature. Let's remove the speakers. Don't put a radio in it, but basically let's strip this thing down that basically all it does is play a cassette through headphones. That's what this will do, nothing more. No speakers, no record, no radio, no bells, no whistles, no nothing."



    David Young:



    It doesn't even have to be much bigger than a cassette itself.



    Stephen Semple :



    Right. Yeah. And if you go back to the early Walkmans, they were not... It was funny, when CDs came out and went to the Discman, the Discman was actually bigger than the Walkman-



    David Young:



    But it had to fit a CD in it.



    Stephen Semple :



    Yeah. It was about that thick, but not much bigger than the size of a cassette and very reasonably priced and highly durable and all those other things. But here's where it gets interesting. His designer said, "No one's going to be interested in this. This is a stupid idea. No radio, who's going to want it? No speaker, no record. No. People carry around... They carry the boombox on their shoulder. And that's what they want because there's a group of people wanting to listen to the music, and we want to be able to record stuff and all that."



    Stephen Semple :



    And so he faced this tremendous pushback, but he said, "Look, we're doing it." And then he took it out to retailers and retailers are like, "No one would be interested in this. No one's going to want this. This is a dumb idea because it's got no speaker, no record, no radio. That's not how people consume this.

    • 9 min

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