Founder stories are a fascinating study in persistence. Watching The Founder the other day, a biopic about Ray Kroc of McDonald's fame, reminded me of this truth. You see, the story of McDonald's is not about one, but two distinct founder stories.
Though Ray Kroc is the person most associated with the founding of McDonald's, he was not the founder. The founders were Richard and Maurice McDonald, two brothers who had left New Hampshire to seek entrepreneurial glory in California. After some career starts and stops and a failed movie theater venture, they brothers opened their first restaurant in San Bernardino, California in 1940.
The first restaurant was typical for the era and region, a drive-in with a huge menu. Patrons would drive up in their car to park, order over a speaker, and a waitress would come out with their order. While modestly successful, their data showed the bulk of their sales were on less than a handful of items, namely burgers and fries.
They made the radical decision to close down the restaurant to revamp the concept. The new menu only featured a handful of items. They implemented an assembly line system called the “Speedee Service System” for food preparation to dramatically increase speed and volume of orders. And they did away with the drive-up ordering system. Anyone that wanted to be served had to get out of their cars and wait in line.
The restaurant reopened in 1948 and was an immediate flop. People did not understand the idea of getting out of the car and waiting in line. At this stage it would have been normal to panic and revert back to the old formula. Instead, the brothers persisted, and by word of mouth built a loyal and fast growing following.
The second founding story brought Ray Kroc into the picture. He was selling milkshake machines when he met the brothers in 1954. The store was wildly profitable and the brothers had opened additional stores in a limited franchise arrangement. Ray however saw a bigger opportunity to take a working model and scale it across the US.
Ray Kroc quickly went to work signing up more franchises. By 1960, he had franchised 228 McDonald's generating $56 million per year. Already in a constant battle for control, the brothers agreed to sell the rights to their business to Ray Kroc in 1961 for $2.7 million. That also included the iconic name of McDonald’s. Eventually, Ray would grow the business to hundreds of millions of dollars and hit $1 billion in sales by 1972 across 2,200 restaurants.
Taking an idea to market is a two-prong battle. First is building and launching the concept as a tangible product that bring value. The second is spreading the word about that idea and scaling it to become a viable and revenue generating solution. Success requires both product and distribution.
This is why persistence is a quintessential entrepreneurial trait. Without persistence, it is easy to give up at any stage of the journey. As the Ray Kroc character in the movie says, quoting the former US President Calvin Coolidge:
"Nothing in the world can take the place of persistence."
The quote goes on to talk about talent, genius, and education not being enough. Persistence is the great equalizer when competing against pedigree or heavily resourced competitors. This is another critical ingredient along with high velocity decision making that differentiates startups from enterprises.
A large company is saddled with numerous obstacles in doing anything innovative. Annual budgets, quarterly financial reporting, political jockeying, internal rivalries, and the need to “business justify” spend on artificial timelines all conspire to stamp out new ideas. This is exactly why Kodak missed the boat on digital cameras and Xerox never commercialized the graphical user interface and mouse, even though both of these companies invented the technologies.
Amazon understood this early on when it transitioned from scrappy startup in the mid-90’s to billion dollar global enterprise by the early 2000’s. When Wall Street would pummel Amazon on profitability, Jeff Bezos would respond with:
“Entrepreneurs must be willing to be misunderstood for long periods of time.”
Startups are an hypothesis about the future viability of a business model. This is why venture capitalists say they have a seven to ten year time horizon to book returns on their initial investments. How many enterprises could say that? When bringing out anything new to the market, most enterprises give these ventures less than a year.
It is easy to look at the initial traction for any new idea and think it is a flop. The McDonald brothers could have easily folded when customers rejected the concept. The core of the idea however was sound, serving fresh and well prepared fast food quickly. Another Amazonian idea that comes from Jeff Bezos speaks to this perspective:
“We are stubborn on vision. We are flexible on details.”
I often refer to this as the journey versus the destination. Entrepreneurs innately understand the vision, it is in the details that they often fail. This causes them to doubt the vision, when in fact they took the wrong path to fulfill the vision. The same happens in larger companies, except the doubts get reinforced by the crush of internal naysayers and processes that seek to squash anything novel or disruptive to existing businesses and products.
Overnight success is anything but overnight. As an outsider, we can see the end result and assume everything was smooth sailing. What we do not see is the trough of sorrow and many years one can toil in the struggle before achieving traction.
Innovation and entrepreneurship is a long game. Vision is what fuels that journey, but vision is not a plaque on the wall or nice platitudes. It is the light that guides the way and the bedrock for success. It just requires the persistence to last in order to reap the rewards of the journey.
What are projects that you are working on currently that are long-term in nature? How do you ensure innovative ideas have the time and room to succeed in your organization?
Mark Birch, Editor & Founder of DEVBIZOPS
The AWS Startups club on Clubhouse has crossed 5,000 members within four months of launching! You can learn more about some of the key highlights along the way in my LinkedIn post. If you join the club, you will see shows that have been scheduled and get alerts for future rooms.
Thanks for everyone’s support and I will definitely share some of the community building dynamics that I used to help build our presence on Clubhouse in a later post. If you are interested in speaking on Clubhouse and you have a unique lens on how startups grow, operate, and scale, let me know.
Also a heads up that I am heading to San Francisco and will be there from Aug 18 to Aug 20. If anyone in the area wants to meet up, ping me here by replying to this newsletter or message me on LinkedIn.
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