When your year’s earnings are stolen and you need a quick way to make some cash on the cheap, you invent chocolate chip cookies.

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 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.

[North Texas Gutters Ad]

Dave Young:

Welcome to the Empire Builders Podcast. Dave Young here, along with Stephen Semple. Gosh, Stephen just keeps coming up with topics that are just so near and dear to my heart, and I think I might know the essence of this. Is it an empire? We’re going to talk about the birth of the chocolate chip cookie.

Stephen Semple:

Sure, but what’s the empire? There’s a lot sold?

Dave Young:

There’s a lot of… Boy, if you would have invested in chocolate chip cookies back in the day, think how much you’d have today. I’m guessing this has to do with Toll House-

Stephen Semple:

Yes.

Dave Young:

… and the inn… Was it an inn or a woman’s name?

Stephen Semple:

Yes. Inn.

Dave Young:

It was an inn. They’ve told the story I think on the bags or something. Anyway, have at it. I’m all in on chocolate chip cookies.

Stephen Semple:

So it’s the late 1920s and cookies have actually emerged as a business. The National Biscuit Company, Nabisco-

Dave Young:

1920s.

Stephen Semple:

… yeah, has been a top seller for the last 20 years with their Oreo, mainly bought in stores, not made at home. Basically, to really understand the birth, we’ve got to go back to Whitman, Massachusetts, to Ruth Wakefield, who taught Home Ec, and she was also college-educated and she was interested in cooking. Ruth, her husband Ken, quit their job, invest their life savings into converting a 19th-century old home into a restaurant. They want to create a restaurant of their dreams, has these seven tables, doing traditional New England food, even has a kid’s menu with a dessert menu, but by the time they open the doors, it’s 1930. They’ve invested two years in doing this.

Dave Young:

Oh, no. And?

Stephen Semple:

And they’re down to their last few dollars. Now, they had picked a location with lots of traffic. They had picked a location that was basically where wealthy people traveled from Boston to Cape Cod and went through this area. They called the restaurant the Toll House. Now, because it was located on an old toll road, it was not the toll building, but it was located on an old toll road.

Dave Young:

Sure.

Stephen Semple:

Things started slow, but word got out and it started to get busy and they were known for their desserts, including the simplest. They did this butter pecan cookie that came with ice cream. Soon, customers are requesting the cookie without the ice cream. So they add cookies, they add these cookies as a standalone dessert. It’s 1935. It’s Labor Day. It’s the end of season. They’ve got lots of cash. They’ve done really well, and they are robbed.

Dave Young:

Oh, no.

Stephen Semple:

All their money is gone. They’re now at this crisis point because they’re the end of the season-

Dave Young:

Were they keeping all their money in a cookie jar?

Stephen Semple:

Perhaps. Basically, it’s the end of the season, they have no money, and they need to make something that is affordable, but it won’t cost much to make so they can create cash. They start with the butter pecan cookie, but then, she has this idea of a chocolate cookie.

Dave Young:

Yeah, pecans are expensive.

Stephen Semple:

Right, right. So Ruth says, “Okay, here’s what I’m going to do. I’m going to take a baker’s chocolate bar. I’m going to cut it up and add it to this cookie.” That was the idea. Now, they’re made out of baker’s chocolate, which is unsweetened, and it didn’t work out so well, and so they then started taking a Nestle semi-sweet bar and they took basically an ice pick to that and chip it away and let small pieces into it, which then created this sweetness without it being overly sweet.

Dave Young:

Yeah, because you’ve got the sweetness of the sugar and the dough and all of that working for you, too.

Stephen Semple:

Yeah, and they called them chocolate crunch cookies.

Dave Young:

Chocolate crunch cookies.

Stephen Semple:

Because remember it was the pecan. They were still a pecan with the chocolate chips.

Dave Young:

Oh, okay.

Stephen Semple:

And people started asking for the recipe. In fact, Boston Globe newspaper published the recipe and the recipe went crazy. Now-

Dave Young:

Sure.

Stephen Semple:

… enter Edouard Muller, who’s the Nestle CEO, and he’s in the US office. Sales are down 60% because war breaks out in Europe, not down in the US, but he wants to break into the US market because the US market is small for them at that point. He sees this sales spike in the Northeast. He’s like, “There’s this 500% increase in sales around Whitman, Massachusetts area.”

Dave Young:

Of Nestle chocolate.

Stephen Semple:

Right. He’s like, “What’s going on with that?” So he approaches them about buying the rights for the recipe.

Dave Young:

Okay. Didn’t know you could do that, but sure.

Stephen Semple:

Well, and in many ways, one could argue it was published by the newspaper, so it was in public domain, but he approaches them and he says, “Look, I want the rights to this recipe.” They pay her a dollar for it, plus hire her as a consultant, publish the recipe on the package and share the name of the restaurant so it also promotes the restaurant. That’s the deal they cut.

Dave Young:

Toll House. Yeah. Okay.

Stephen Semple:

Nestle changes how their bar is made, making it easier to cut up, and they rebrand and sales drop.

Dave Young:

Sales dropped?

Stephen Semple:

Yeah. Because what they find is the texture’s all wrong, people can’t break it along the lines of the bar and all this other stuff. So they have this crazy idea: why not just sell the broken pieces?

Dave Young:

Sure.

Stephen Semple:

And they start off calling them Nestle Toll House Morsels.

Dave Young:

Yeah, brilliant.

Stephen Semple:

The other thing he does is he gets it out of the candy aisle and puts it in the baking aisle. Because that was the other problem is it was sitting in the candy aisle.

Dave Young:

It’s where it belongs. Yeah.

Stephen Semple:

Put it in the baking aisle. Sales soar. Now remember the story of Ruth chipping off the chocolate? So why’d they call them morsels? People, because they knew the story, were calling them chips.

Dave Young:

Chips. Chocolate chips.

Stephen Semple:

Right. Now global sales in Nestle in 1945 rise 125% to 225 million, which would be about four billion today. During the war, they advertise, “Bake for your soldiers overseas,” and offer this as a recipe. Now, following World War II, we come into the convenience age and we have the new Nestle CEO, Carl Abegg, who does pre-made cookie doughs, and he launches those in 1955. And here’s the thing. When we talked about this as being the birth of the chocolate chip cookie, up until 1950, the bestselling cookie was Oreo.

Dave Young:

Really? Okay.

Stephen Semple:

Yeah. 1955, Oreo is no longer the favorite cookie that has been for decades, is now the chocolate chip cookie.

Dave Young:

In a package like Chips Ahoy or something?

Stephen Semple:

Yeah. Well, just like chocolate chip… Yeah, just basically that ends up becoming the category.

Dave Young:

But you couldn’t make Oreos.

Stephen Semple:

Well, that’s true. That’s true. But the point is, it starts to shift. Now Nabisco starts to also want to enter the race with something new. Lee Bickmore wants to get into this game, but now not with a prepackaged chocolate chip cookie. The problem was, how do you make something shelf-stable, can’t use eggs and butter, they are hard and not chewy but they still taste good, they’re crispy rather than chewy? He does this test market with children and parents, and they also remove the nuts from the original recipe. So now what they’ve got is they’ve got this hard, crispy cookie with no nuts in it, and they decide to package that up. Well, what’s a great fun name to put on it? Chips Ahoy.

Dave Young:

Chips Ahoy. Yeah.

Stephen Semple:

Right? Fun way to emphasize a large number of chocolate chips.

Dave Young:

And it’s all chips. Yeah.

Stephen Semple:

Yeah. They advertise on kids’ shows and magazines. They have a cookie man as the character, and they advertise there’s 16 chips in it.

Dave Young:

So kids are breaking them apart, counting them.

Stephen Semple:

Yeah. That was Nabisco entering the race, and then basically Nestle does these attack ads saying the real Toll House cookie needs to be baked at home, and so this whole chocolate chip cookie war happens. But the part I wanted to talk about on this was what I thought was really interesting was the evolution of this idea of a chocolate chip.

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.

[Using Stories To Sell Ad]

Dave Young:

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

Stephen Semple:

What I thought was really interesting was the evolution of this idea of a chocolate chip. It came from this person having this restaurant, making the desserts, hit this point where, holy smokes, we’ve got to come up with something that is small-priced, that we can easily make, that we can create some cash, and she just decides, “Well, I’m just going to hack some stuff off of this bar of chocolate.” Advertises the recipe, it gets no one.

And the smart part, we’ve got to give Nestle… It would be one thing to say this is all a creation of Ruth Wakefield, we have to give Nestle some credit here. They noticed a sales increase in a particular market where they were doing nothing different and they went, “Hmm, we should investigate this.” They discovered this idea about the recipe and they approached her. And then, when they did the sales of it and it didn’t work, they recognized, “Maybe we need to do something different.”

Look, it’d be easy for a lot of businesses to go, “Well, that’s just a Massachusetts thing,” and dismiss it rather than going, “Okay, let’s actually do it in chips and let’s actually get it into the baking aisle rather than the candy aisle.” So to me, there’s two stories here. There’s Ruth Whitmore’s story in terms of the crating of this chocolate chip and the recipe, but there’s also the story of Nestle who did not give up on the idea and figured a few things out that really brought it into the mainstream.

Dave Young:

Yeah. If you can’t sell your product on its own, figure out what people are using it for and help with that, help people make more of that.

Stephen Semple:

Yes. Edouard Muller deserves some of the credit on this as well, as well as Ruth.

Dave Young:

Yeah. I think it’s interesting that Nestle always called them, they still call them morsels.

Stephen Semple:

They do.

Dave Young:

I had a dog once that ate a bag of chocolate chips, and that’s what we always called them was chocolate chips.

Stephen Semple:

Correct.

Dave Young:

Nobody in the home ever calls them morsels.

Stephen Semple:

And I think on the packaging, aren’t they chocolate chip morsels or something?

Dave Young:

No, they’re morsels.

Stephen Semple:

Oh, they still are morsels.

Dave Young:

I still looked it up, they’re Nestle Semi-Sweet Chocolate Morsels. We could dive into the nuance of that, but it’s almost like Kleenex, right? Maybe they didn’t want chocolate chip. Maybe they wanted chocolate chip to just remain as the generic-

Stephen Semple:

Maybe.

Dave Young:

… name for these little pieces of chocolate, and the morsels, they wanted to keep that identity. I don’t know. I don’t know, but it’s interesting. I just quickly Googled, and Nestle has the recipe on and the story on their website and they-

Stephen Semple:

They do.

Dave Young:

… show the ingredients as a bag of chocolate chip morsels.

Stephen Semple:

They still honor that story, yeah.

Dave Young:

Yeah, it’s amazing. By the way, the dog turned out okay.

Stephen Semple:

That’s good.

Dave Young:

It was a little dachshund. By the way, you’re not supposed to give chocolate to dogs. My kids were eating a bowl of chocolate chips and left it on the floor.

Stephen Semple:

Oh, dear.

Dave Young:

This poor little dachshund ate them and it wasn’t pretty for a while.

Stephen Semple:

What was the dachshund’s name, Dave? Can you remember?

Dave Young:

Oh, gosh, that was…

Stephen Semple:

Chip?

Dave Young:

No, I think it was Dixie maybe. We should’ve called her Chip. It happened on a cold night during a blizzard and we ended up having to get the veterinarian out of his house. He went down and met us and gave her a sedative because she was just shaking like a leaf on a tree.

Stephen Semple:

Yeah? Wow.

Dave Young:

I won’t tell you why we had to put her in the bathtub.

Stephen Semple:

No, we don’t need that.

Dave Young:

The chocolate was-

Stephen Semple:

We don’t need that part of the story.

Dave Young:

… rocketing out the other end of the dog. Where were we? Chocolate chip cookie.

Stephen Semple:

What’s interesting here is it would be easy to sit there and say Ruth didn’t get a great deal on this because it led to this massive product for Nestle at the same time. It’s one of those ones that’s hard to say because what I wasn’t able to find out is what the consulting agreement looked like in terms of how much was she being paid on that, because who knows, that might’ve been a lot of money. Again, it’s one of those ones, I thought it was interesting because so many companies today… One of the biggest challenges that I have with finding these stories is so many companies today have given up telling the origin story, like how did this idea come to be?

One of the things that’s interesting is, now it might be a legal obligation, but one of the things that’s interesting is Nestle’s still telling the story of the origin of this idea of the morsels, that it came from this person and this place. I actually think they need to lean into it more, but companies are not telling, they’re not telling these early stories. They’re very, very hard to find. What we know is people connect with those stories. They’re interesting, right? “Oh, this thing happened.” And don’t tell it in a phony way, tell it in an authentic way. So I commend Nestle for still telling that story and honoring that story and having that original recipe, and I think war companies need to be telling that story, and it can be the origin of a business, can also be the origin of a product.

Dave Young:

Well, here’s what we know about story. In terms of memory in humans, a well-told story becomes autobiographical vicarious memory. So when I hear the story of the Toll House cookie recipe and the struggles of owning a restaurant on a busy road and the Depression, and then you finally invent this cookie that people end up loving, the little part of me experiences that story.

Stephen Semple:

Right.

Dave Young:

Right?

Stephen Semple:

Yeah.

Dave Young:

And when I bite into one of those cookies, if I might remember that story and go, “Oh, this is the cookie that those people along that toll road were eating back in 1935.” Businesses think that all I need to do is tell you how the cookie tastes and what it’s made of, and you’ll be great with that, but no. The story seals it in my memory. It literally becomes part of my memory because it was told to me in story form. And that’s a powerful, powerful lesson. Even if you’re a plumber or veterinarian, we want to know your origin story. If you’re a veterinarian, there’s no way you became a veterinarian because you hated pets.

Stephen Semple:

Yes.

Dave Young:

Right? You fell in love with the idea of helping animals at some point in your life. I want to know that story, right?

Stephen Semple:

Look, I’m going to put a plug in right now. Go over to usingstoriestosell.com, sign up for a 90-minute starter session, and we’ll help you tell that story. We’ll help you figure it out. You’ll walk out at that 90 minutes for the first draft of what we call your origin story. There’s a little bit of homework and whatnot you have to do, but go over to Using Stories to Sell and we’ll help with that story.

Again, one of the things I found is interesting is Nestle still telling that story, and so many companies have moved on from telling it. Look, I think they could tell it better. I think they could tell it with more emotion. I commend them for doing it. Look, Budweiser does that in an interesting way every time you see the Budweiser wagon with the draft horses pulling-

Dave Young:

Yeah, with the Clydesdales.

Stephen Semple:

With the Clydesdales. That’s a way of saying,” “Hey, we’ve been around as a company for a long, long time,” in this really simple manner of using that. It’s brilliant, and people connect with it.

Dave Young:

Yeah. We love it. We love story.

Stephen Semple:

Yeah.

Dave Young:

It’s basically our operating system.

Stephen Semple:

It really is. It really is.

Dave Young:

It is. Well, thank you for the story of Toll House.

Stephen Semple:

All right. Awesome. Thanks, David.

Dave Young:

I feel like I don’t need a cookie because I’ve been watching my calorie intake. It’s working.

Stephen Semple:

There you go.

Dave Young:

I’m not going to have a cookie, but I’m going to think about a cookie.

Stephen Semple:

Well, and Dave, you’re doing really well. Dave shared at the beginning of this about how you’re fitting into some clothes that you’ve… Look, anytime we fit into some old clothes that we haven’t worn in a long time, that’s a good damn day.

Dave Young:

I agree. This is a pullover that I got at Whistler up in Canada almost 20 years ago. 2006 is when I was up there. It looks brand new. I could sell it as vintage. Probably should.

Stephen Semple:

There you go. You’re looking good, Dave.

Dave Young:

Thanks, Stephen. Thank you for another exciting episode of The Empire Builders. We’ll talk to you next time.

Stephen Semple:

All right. Thanks, David.

Dave Young:

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 at Apple Podcasts. If you’d like to schedule your own 90-minute empire building session, you can do it at empirebuildingprogram.com.