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What "The Founder" can teach all of us

TheRegalMachine

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I'd say that rich people being evil assholes goes more in tune with the SCRIPTED mentality.
That's the funny thing about SCRIPTED thinking many times it's contradictory.
Like the people who think rich people are assholes yet they're playing the lotto every weekend to get rich.
A lot of folks think all rich people should be nice people (and hand out money) and when they aren't perfect people they tear them to pieces.
Bill Gates for a long time carried the nice rich guy tag but then he goes and have an opinion on a subject and he's the bad guy.
It doesn't take much to turn people against you.
Your three points aren't wrong though.
My main point is people are going to be people even when they have money.
 
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luniac

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Careful not to fall for the SCRIPTED mentality that all business people are suppose to be perfect saints.
They are people too, with temperaments and personality flaws and mistakes.
And of course in the story of McDonald's Ray Kroc is the victor and when you're the winner, the losers will take a pick to your mountain of accomplishments to make themselves feel better.
I'm a strong believer that no one who becomes wealthy or builds a business isn't going to step on someone toes. Even if you try super hard not to, someone will still say ouch.
People love to tout "Steve Jobs was a dick!" and from his own mouth he admits he was. He stepped on many toes on purpose to make his dream reality. Does that mean his legacy is less than because of his human flaws? Does it justify people who legit hold a grudge against a dead man they've never met?
Even people who are known as being very kind mild manner individuals have their detractors who swear they've done them wrong and the world should hate them for it.
You're not going to enter the business world and not have your name cursed by someone out in the open or be accused of wrong doing. It just doesn't happen.
The McDonald's handshake deal is the quintessential he said/we said situation. Ray Kroc and the financial backers at the time have their account and the Brothers have their own account. We can picks sides, sure, but we can't forget that all this stuff happened behind closed doors which is okay.


The reason why Ray had to switch to the powder mix was not to make a profit, it was to help his franchisees who were getting F*cked by electric bills and waste because they had walk ins freezers full of ice cream that were running 24/7. I believe there is a scene where one of the franchisees mentions a freezer breaking and they lose all their inventory of ice cream. There were other situation too where keeping a load of ice cream just didn't work. These franchisees were normal people who couldn't keep up with the high bills and inventory loss. The change wasn't a selfish one for sure. Was it a drop in quality, maybe, did it get the job done, sells didn't plummet due to the instamix. Sometimes you have to do what has to be done in order to keep things running. If it means a drop in quality of one of your products then take the hit and hope for the best.

(Is it just me or do my replies read like some Ray Kroc fan boy apologist.)

He had to switch because he already f*cked up by expanding so damn fast which had EXACTLY the effect the brothers were concerned about, an inevitable drop in quality, perhaps not a laziness based quality drop, but a drop nonetheless.
Also why didn't the 2 brothers mcdonalds get F*cked by electric bills? they were doing just fine with the same exact system(LITERALLY the same system!)

It could have ended up like this:
ray croc creates a few local franchises that source food from the same places and are easily hands on managed(due to locality).
Over the next several years he earns a small fortune and becomes close friends with the brothers who are thankful that he hasn't betrayed their vision of quality, and didn't go crazy franchising.
As technology improves and ray's experience grows, he can now consider expanding further with less unforeseen risks.
Either way, he's a rich man till death. perhaps not as cash rich as nonstop franchising woulda made him, but friend rich.

Instead we get modern day McDonalds which serves poison. That's the power of capitalism, where one man can wield incredible power for good or ill.


P.S.
Actually Ray was super lucky according to the movie. the whole real estate approach came from a random dude who OVERHEARD his argument with the bank teller...
WOW WHAT A LUCKY BREAK RAY GOT ON THAT ONE!

which makes me wonder, Ray opened HOW MANY franchises before his secretary was like "uhhh dude we got almost no capital..." and ray's like "uhh da fuk??"

is this really how it happened? Seems very doubtful... if it were me id have live feed of my bank account 24/7
 
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masterneme

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It doesn't take much to turn people against you.
My main point is people are going to be people even when they have money.
Yeah let me tell you something, I'm from Spain and Real Estate has always been a big deal. As a result when the 2008 crisis happened we got a HUGE hit. It got us so hard than we got up to 25% unemployment.

Little by little we're getting out and not thanks to the "working class" but to the most productive people in the country. Who are those guys? The rich business men of course.

Recently I read an article about the 1%, it said they own 20% of the wealth compared to 17% they had 2 years ago. I thought that's a good sign of growth because of course those who are the ones offering products and services are going to own more wealth than the average Joe (or Fulano as we say here :D). And that's a huge chunk of money for the country because of taxes.

Then I made the mistake of reading the comments... Everyone was saying that it's a shame, calling them thieves and DEMANDING to take away their money and give it to "the poor guys" and "the oppressed workers".

There was one guy telling them that it's a consequence of working hard and if they wanted to be rich they should do the same. The replies were brutal and came with a rain of dislikes.

In Spain being an entrepeneur is very expensive, you get taxed many times. Your business gets taxed, your income gets taxed and your wealth gets taxed (yearly). You have to pay a monthly fee for being an independent professional (is low but still..), for every employee you pay an extra 50% of his salary to Social Security and 21% for every product you sell.

Still if you succeed in business they're going to hate you. Amancio Ortega, Spanish multibillionaire, donates tens of millions every year, his reward? Being called terrorist and a sea of hatred... :slowclap:
 

Scot

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The best part about watching The Founder was when my wife says to me afterwards, "I don't agree with everything he did, but we can both agree his ex-wife was useless."

As someone who's been struggling to get his wife to understand my entrepreneurial spirit, that was music to my ears.

Ps, don't know if it's been mentioned, Founder is on Netflix now.
 

TheRegalMachine

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Also why didn't the 2 brothers mcdonalds get F*cked by electric bills? they were doing just fine with the same exact system(LITERALLY the same system!)
How many milkshakes and ice cream could you sell in Illinois in the winter?
Do you think a restaurant in Alabama needs a furnace?
Did you know basements are nonexistent in Florida?
The electric bill was just one of the issues franchisees faced because as you said they were using the same system but it was so strict that it included building requirements. Requirements that weren't a catch all for other regions. Cookie cutter business models with little flexibility don't always work out well.

he already f*cked up by expanding so damn fast
He met the McDonald brothers in 1954 and by 1963 McDonalds had 110 stores. The numbers for 1964 were (net income of $2.1 million on sales of $129.6 million) for the company. He didn't become owner until 1961. The movie makes it seem like the franchise was built in very little time but it took him almost a decade to make the business profitable and even then was still in debt to multiple companies and investors.

Instead we get modern day McDonalds which serves poison.
I understand your have your convictions.

Actually Ray was super lucky according to the movie. the whole real estate approach came from a random dude who OVERHEARD his argument with the bank teller...
Extreme movie dramatization.
Harry Sonneborn worked for Tastee-Freeze which did business with the McDonald's restaurants.
He was the one who aided Kroc in buying of real estate under the restaurants.
They had a past and Sonneborn left Tastee-Freeze to work for McDonald's.
The Hollywood version makes Harry Sonneborn into some suave financial expert head hunter who stumbles upon Ray, when in reality he was a awkward VP to Tastee-Freeze who already knew about Ray and McDonald's.

Give it a read it's pretty short.
 

ocricci

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for me it was the "law of effection" applied - you can see leverage / scale applied on a great system
 
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luniac

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How many milkshakes and ice cream could you sell in Illinois in the winter?
Do you think a restaurant in Alabama needs a furnace?
Did you know basements are nonexistent in Florida?
The electric bill was just one of the issues franchisees faced because as you said they were using the same system but it was so strict that it included building requirements. Requirements that weren't a catch all for other regions. Cookie cutter business models with little flexibility don't always work out well.


He met the McDonald brothers in 1954 and by 1963 McDonalds had 110 stores. The numbers for 1964 were (net income of $2.1 million on sales of $129.6 million) for the company. He didn't become owner until 1961. The movie makes it seem like the franchise was built in very little time but it took him almost a decade to make the business profitable and even then was still in debt to multiple companies and investors.


I understand your have your convictions.


Extreme movie dramatization.
Harry Sonneborn worked for Tastee-Freeze which did business with the McDonald's restaurants.
He was the one who aided Kroc in buying of real estate under the restaurants.
They had a past and Sonneborn left Tastee-Freeze to work for McDonald's.
The Hollywood version makes Harry Sonneborn into some suave financial expert head hunter who stumbles upon Ray, when in reality he was a awkward VP to Tastee-Freeze who already knew about Ray and McDonald's.


Give it a read it's pretty short.

figures the movie dramatized excessively...

I still feel that if the brothers really were the type of people portrayed in the film, ray shoulda started off slower and get closer to them, become long term friends.
I think then he wouldn't face such backlash when it came time to alter construction for the different locations.

and hell yea i got some convictions about modern fast food, any sensible individual should. I think the whole food situation in america is unethical.
and it only saddens me further that ignorant people vote with their wallet for fast food.

i ordered the book, should be interesting. will report back lol with updated opinions.
 

TheRegalMachine

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hell yea i got some convictions about modern fast food, any sensible individual should. I think the whole food situation in america is unethical.
At that time the fast food in the US wasn't as shit as it is now, but it was the advent of artificial ingredients and food processing. When the US public were give the option of convenience they took it and business took advantage of it. Sadly the whole thing got out of hand and we have the fast food we have now.
 
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luniac

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At that time the fast food in the US wasn't as shit as it is now, but it was the advent of artificial ingredients and food processing. When the US public were give the option of convenience they took it and business took advantage of it. Sadly the whole thing got out of hand and we have the fast food we have now.

yes it boggles the mind.
 

MidwestLandlord

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He had to switch because he already f*cked up by expanding so damn fast which had EXACTLY the effect the brothers were concerned about, an inevitable drop in quality, perhaps not a laziness based quality drop, but a drop nonetheless.

In my opinion, the brothers were stuck in a mindset of what THEY wanted, and Kroc was listening to the only thing that matters: the market. If the quality was too low for the market, then it would of been rejected by the market. Instead, his sales exploded.

The market (people) is (are) smarter than people give it credit for. Hard to argue with market demand.

If I think "the market shouldn't want this!" but yet it DOES or "the market should want this!" but yet it DOESN'T... who's wrong? Me or the market?

It could have ended up like this:
ray croc creates a few local franchises that source food from the same places and are easily hands on managed(due to locality).
...
As technology improves and ray's experience grows, he can now consider expanding further with less unforeseen risks

Look at the huge demand Kroc discovered with McDonald's.

If Kroc had not filled this need, someone else would have.

So his biggest risk was that someone else would have came along and nationally franchised, putting a regional franchise at a significant disadvantage for national expansion later.

Whether Kroc understood consciously how competitive that sector was about to become is debatable, but if he hadn't been first it's unlikely that McDonald's would have been as successful as it was.

Over the next several years he earns a small fortune and becomes close friends with the brothers who are thankful that he hasn't betrayed their vision of quality, and didn't go crazy franchising.

This is assuming his motivation was wealth.

There is no way to know what is motivation was from a movie or book.

But I can tell you, money means very little when you have some of it.

Things like legacy take on much more importance.

Maybe he did it just because he could?

I still feel that if the brothers really were the type of people portrayed in the film, ray shoulda started off slower and get closer to them, become long term friends.
I think then he wouldn't face such backlash when it came time to alter construction for the different locations.

In my experience, people very quickly throw the "friend" portion of the relationship out the window if you are in business with them.

In fact, most will use the friend part as leverage against you to get what they want.

It's human nature to not want to be wrong, and you're a bad friend if you think they are wrong and disagree with them.

Tl;DR

I find it hard to judge a man that filled a need in the market so well that it became a multi-billion dollar empire.
 

luniac

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In my opinion, the brothers were stuck in a mindset of what THEY wanted, and Kroc was listening to the only thing that matters: the market. If the quality was too low for the market, then it would of been rejected by the market. Instead, his sales exploded.

The market (people) is (are) smarter than people give it credit for. Hard to argue with market demand.

If I think "the market shouldn't want this!" but yet it DOES or "the market should want this!" but yet it DOESN'T... who's wrong? Me or the market?



Look at the huge demand Kroc discovered with McDonald's.

If Kroc had not filled this need, someone else would have.

So his biggest risk was that someone else would have came along and nationally franchised, putting a regional franchise at a significant disadvantage for national expansion later.

Whether Kroc understood consciously how competitive that sector was about to become is debatable, but if he hadn't been first it's unlikely that McDonald's would have been as successful as it was.



This is assuming his motivation was wealth.

There is no way to know what is motivation was from a movie or book.

But I can tell you, money means very little when you have some of it.

Things like legacy take on much more importance.

Maybe he did it just because he could?



In my experience, people very quickly throw the "friend" portion of the relationship out the window if you are in business with them.

In fact, most will use the friend part as leverage against you to get what they want.

It's human nature to not want to be wrong, and you're a bad friend if you think they are wrong and disagree with them.

Tl;DR

I find it hard to judge a man that filled a need in the market so well that it became a multi-billion dollar empire.

yea true that man.
I guess i'm more of the brother type, innovate the speedee system and chill out locally with nice wholesome food.
screw the market with their dumb instamix demands, dumass society... lol
 
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ZF Lee

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Instead we get modern day McDonalds which serves poison. That's the power of capitalism, where one man can wield incredible power for good or ill.
Poison? Although fast food is not the best for health, go get the breakfast set. Or mcmuffins. It's more higher quality and finer, for my country, that is.

I actually like how they developed a bigger variety of burgers from the humble old days. The story after Ray Kroc's first innings should be more exciting than corporate backstabbing lol.

View: https://youtu.be/oqI4rR6lXU0

Just imagine the progress thread..
Notable! - Eric from Erics Cheesecakes
Closest to an offline food biz might be this....
But it would be insane to have a millionaire train up a billionaire.
However I am not sure whether such an OP would be allowed to disclose some financial transaction or paperwork stuff....some of those matters actually play very key roles. So it may still leave us wanting.
 

Chromozone

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I watched the movie last week due to this thread. Really enjoyed it!

As others have mentioned, I thought it was interesting how Kroc was struggling scaling the business as he was making such little profit initially. I can't remember who said it but I heard that "A startup is a business looking for a scalable business model". This movie really hammers this point home!

I personally didn't have too much sympathy for the brothers as they just didn't seem interested in helping to franchise and expand the company. I mean, Kroc mortgaged his own home in his 50's and arguably risked a lot more than the brothers, grew the company and bought them out. Can't see too much wrong with that!

There are plenty of companies that outgrow the initial founders.
 

luniac

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Poison? Although fast food is not the best for health, go get the breakfast set. Or mcmuffins. It's more higher quality and finer, for my country, that is.

I actually like how they developed a bigger variety of burgers from the humble old days. The story after Ray Kroc's first innings should be more exciting than corporate backstabbing lol.

View: https://youtu.be/oqI4rR6lXU0


Notable! - Eric from Erics Cheesecakes
Closest to an offline food biz might be this....
But it would be insane to have a millionaire train up a billionaire.
However I am not sure whether such an OP would be allowed to disclose some financial transaction or paperwork stuff....some of those matters actually play very key roles. So it may still leave us wanting.

I think the ingredients can vary a lot by country, I wouldn't be surprised if a McDonalds in france may source better ingredients. Still not organic of course.

Honestly when I do on rare occasions crave that fast food flavor I go to 5 guys. Huge juicy burgers and homestyle fries. expensive as hell though.
 
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TheRegalMachine

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Huge juicy burgers and homestyle fries. expensive as hell though.
Quality comes at a price, when you find a market willing to pay for that quality, and that quality comes with a simple production process, you're F*cking set.
Five Guys is a great story as well.
 

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I saw it yesterday, what a great movie. Thanks OP for the recommendation.


Actually Ray was super lucky according to the movie.

Despite the movie dramatization, luck is a minimal but very important factor in every success story. But the more you walk the right way, the more chances you have to find it. As Ray said, "I was an overnight success all right, but 30 years is a long, long night." :D


I think the key factor with Ray was not his persistence, but his obsession with success. That was what drove him to an insane persistence.


The thing is, the brothers were quite successful in their own terms before meet Ray. I was thrilled by the scene where they tell Ray how they build the Speedee system. And that reminds me of the book What Got You Here Won't Get You There by Marshall Goldsmith. They were able to build a revolutionary system, but they were unable to scale it.


Also Ray visiting the brothers for the first time reminds me of something that Andy Black says a lot: diesel and coffee. Go to meet the people. Get interested in their stuff, build relationships, try to help them.


Another thing I enjoyed in the film was watching how Ray listened instructional and motivational audios. More or less the same all of us are doing here in this forum :)
 

luniac

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almost read whole book, wow what a great story! this guy ray krok got some crazy hustle and no patience for bullshit. it really stood out to me how he verbally destroyed his own baseball team when they failed to provide a quality performance for the fans. That's the kind of mentality I wanna have for the rest of my life.
 
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TheRegalMachine

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almost read whole book, wow what a great story! this guy ray krok got some crazy hustle and no patience for bullshit. it really stood out to me how he verbally destroyed his own baseball team when they failed to provide a quality performance for the fans. That's the kind of mentality I wanna have for the rest of my life.
Glad you gave it a read. Ray Kroc was more than the burger guy or the a**hole who screwed over the McDonald bros.
Public opinion and the spread of certain information can tarnish a man's credibility and it's a damn shame.
 

luniac

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Glad you gave it a read. Ray Kroc was more than the burger guy or the a**hole who screwed over the McDonald bros.
Public opinion and the spread of certain information can tarnish a man's credibility and it's a damn shame.

agreed
 

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I just finished watching The Founder for the 3rd time, and WOW talk about a great film! Michael Keaton delivers an awesome performance as Ray Kroc.

Kroc's simple method for success was just one word: Persistence

I think this is absolutely brilliant, given that so many would-be entrepreneurs give up so quickly hoping to skip the process and go straight to the event. Nothing worth having in this life comes easy, and this movie illustrates that perfectly.

It's certainly something to watch to give you a slap of inspiration and reality.

If you want something, if you REALLY want something, you must be persistent, and whatever roadblocks come up, you gotta keep climbing.


I just watched it. It's a great movie.

The main takeaway is certainly persistence. There are a ton of other takeaways too, just like you guys pointed out.

I haven't read every post in the thread, but I think no one mentioned the scene where Ray tells his lawyer to not give his wife a single share of the company.

Ownership is key. The brothers, for example, lost a lot of money just by not getting that 1% of the company.
 
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luniac

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I think he didn't give her any ownership because he was bitter about her lack of support during his mcdonalds hardships.
 

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I think he didn't give her any ownership because he was bitter about her lack of support during his mcdonalds hardships.
It could be. Either way, owning just 1% would have made her rich. There's no way to deny that ownership is important. Even in a small company, 1% could make the difference between being the shot caller or not (example: owning 51% of a company).
 

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