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He Got Fired, Then Turned His Side Hustle Into Billions!

  • May 16, 2024
  • 4 minutes read
  • 16 Views

The story of Herman Lay began when he was born in Charlotte North Carolina in 1909, where he ran a successful soda stand. After being fired from Sunshine Biscuits during the Great Depression, Lay realized the importance of diversifying his income and built his own potato chip business. Lay’s chips became popular and were mass-produced for mass-market consumption. During this time, Lay’s marketing was genius, and he used TV advertising and celebrity endorsements to promote the brand. In 1950, he acquired the rights to use Joe Spud Murphy’s patented cooking technique, which further strengthened his company’s position in the market and became the most in-demand product. The company was later renamed Frito-Lay and made significant changes, merging with Pepsi Cola and revolutionizing the U.S food market. Today, Frito-Lay is one of the world’s largest potato chip manufacturers, producing over $85 billion in revenue in 2021, with over 200 varieties of Lay’s chips ranging from local to international flavors.

  • (00:00:00) In this section, the story of Lay’s chips begins with the birth of Herman Lay in Charlotte North Carolina in 1909. Growing up, Lay excelled at sales and operated a successful soda stand. Despite bottling up his entrepreneurial instincts during college, Lay soon landed a job at Sunshine Biscuits, only to be fired during the Great Depression. This incident taught him the importance of diversifying his income and building something that would provide him with more independence. Lay then moved to Nashville, Tennessee, where he began experimenting with a new product that would revolutionize the U.S food market – potato chips. As a traveling salesman, Lay quickly gained a reputation for stocking chips in the back of his Ford Model A, benefiting from a recent innovation in the market that allowed potato chips to be sealed in wax paper bags. Encouraged by the potential of potato chips, Lay took out a bank loan to purchase a dealership from his former employee and renamed it HW lay distribution Co. The brand soon became so popular that it was forced to gear up mass production to keep up with demand. Lay’s genius marketing came into play, and the company began advertising on television and hiring a celebrity spokesperson to promote the brand. In 1950, Lay acquired the rights to use a patented cooking technique developed by Joe Spud Murphy, which future-proofed the company against its competitors and proved to be the greatest marketing tool of all. Today, Lay’s chips are one of the most popular potato chip brands in America.
  • (00:05:00) In this section, we explore the story of Herman Lay and Lay’s chip company. Lay started the company after delivering chips to his customers as a traveling salesman andfigured out a way to add seasoning during the cooking process and retain flavor on a scale of mass production. The first two flavors released were cheese and onion, and salt and vinegar. Later, these flavors became some of Lay’s most in-demand products. The company was named Frito-Lay and was generating $45 million in annual sales in the early 1960s. Lay was the head of the company until he merged with Frito to create Frito-Lay in 1961. The new company became the first national American brand and quickly released a range of new chips, including many now iconic brands such as Doritos, Funyuns, and Munchos. In 1965, Lay met with a businessman named Don Kendall about another potential merger with a beverage company, Pepsi Cola, and he wrote The Proposal on the back of a napkin, and Kendall accepted. This merger helped them expand into international markets and consolidate power over the American market. Over time, Frito-Lay employed 55,000 people, producing enough potatoes to reach the moon and back and has made a significant impact in the global food industry, generating over $85 billion in revenue in 2021. The company continues to be one of the largest potato chip manufacturers in the world, with over 200 varieties of Lay’s chips ranging from local to international flavors.
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