Its nineteen fifty whence he Massachusetts at six? A m on a cool September morning genial man named Bill Rosenberg opens his stores, glass door. He called the place open kettle is the first donating coffee shop. Provide seats for its customers, a group of men. Wait outside eager for their morning Java Summer factory worker. Mothers salesman and businessmen to hurry and where's heavy pants, and a workshop warning bell. Already ready for the usual you bad government to sugars and to blaze. Doughnuts gotta have a decent my day Rosenberg, The two men who sport suits ties hats morning guys, hey baby. I know what you're He smell so good. At wake me up before I've had a sick man said

low curved counter on leather top stools. Rosenberg goes behind the counter he smiled ass, he feels there cups with drink. They create as soon as the cops are empty, fills him up again, above the pot wall. Sign reads: ours is the best coffee in the world. Every morning his shop fields up like this. It never fails to make him smile. He heads into the kitchen He loves watching the donut dough cooking, the friars bubbling oil They turned golden Brown cooks, whisked them from the friar with giant spoons. He saved the doughnuts rich nasty fragrances. They cool on metal, racks, beside the racks. Deep balls are filled with frosty and vanilla, chocolate, strawberry and maple. Flavors rose or grabs tablespoon in digs out a taste of strawberry icing, his favorite dozens of doughnuts arise. Others are dipped in powders. Sugar and shot full of cream. Many are stuck with Jelly,

Succulent flavors, lemon blueberry, pineapple apples, Spice Rosenberg, picks up a jelly donut as he bite into it. A big magenta, blobs courts onto his shirt. He laughs wipes. It often looks it from his finger. There's just one thing about his store that he doesn't like: he calls a stand together, we're doing great, but I the name of the store you're, the one who named it open cattle true, I'll take the blame but we need another name: throw out anything that comes to mind MR down best donuts Maybe maybe you like? We can do better. I got it. What are you do with donating coffee, hinder the donor that shit Duncan doughnuts yeah? It's got a nice ring to it, but coffee

is rosenbergs, true love to prove it. Big new sign outside his store reads: Duncan doughnuts, the world's finest coffee, like ever. Dedicated coffee purveyor, who, following bill, in is passion about brewing the perfect cup decades in the feed. That passion will take his company where he ever imagined it would go head to head with global juggernaut called our bucks. Business wars is sponsored by Light Box ever heard of lab grown. Ireland's lab drone diamonds or essentially chemically identical to natural ones, just made in a lab at Light Box, they ve hacked the process to grow gorgeous stones. Every time it starts with a tiny piece of lab, grown diamond heated up at a plasma reactor to temperatures nearly as hot is the sun. After about two weeks, those lit

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From wondering I'm David Brown- and this is business world- we live in a divided world Are you a black, no sugar to creams person, or do you four grand a non fat, no whip extra shot. Is your cup car border compost, Are you in and out in under a minute or do you link? And hold meetings at a quarter table, in other words, are you Duncan Loyalist or a Starbucks fan. The answer made and on where you grew up. How you're willing to spend and how much

embrace or issue copies robbery, more and more places across the country and the world. You only have to. Cross. The street to decide between the two branches coffee is a one, hundred billion dollar plus global industry Starbucks company known for decades is Duncan doughnuts rule the roost, but their battle. About even more than coffee. Ultimately, it culture clash. Should the every man brand versus the elite one and both companies, one exactly that way, the siege of their arrival. We were planted in nineteen. Forty five, I then the Second World WAR was over United States it becomes the most powerful country in the world reading about America seem to be bigger and better than anywhere else, but there as one notable exception. America could seem to make a really great cup of coffee, coffee cups,

Fenty, knew that american brands like folders and Maxwell Housework flavorful, is pond water next to ITALY's rich espresso or Francis cabriolet, yet over the next decades. That would change it would take us were eighth grade dropout named Bill Rosenberg to teach average chose to take their cup Joe seriously. This is episode one a stately culture clash. It may nineteen forty five bill rose birdy, standing outside the offices of the lot terrain, coffee company in downtown Boston? Men and women are rushing by him on their way to work Rosen gazes up at the building in a daze he's about plant down more money than he's ever pay for anything in his life. He scared but excited his food truck businesses

What started is one truck serving hungry factory workers has expanded. The two hundred and forty four set of his sales are coming from coffee. It is most profitable item by far but rosenbergs not satisfied with the coffee he serving he's determined to find the very best product for his customer. He enters lot arrange offices were awaiting salesmen motions for him to take a seat Rosenberg his hat and sit down, not one for small talk. He gets right to business he's, thereby coffee for his booming food truck business. This one's eyes. Light up Mr Rosenberg I'd hate to talk you out of a sale, but are you sure about your water, its enormous leave me, I needed all hamlet. Are you going to sell the coffee for ten cents, a cup the salesman rolled his eyes, Are you crazy? You can't sell coffee in the Boston area for a dime. All the the theory is still there were a nickel true, but

can't sell good coffee for a nickel. I know you can't, but that's what people are paying, those other out which is selling six ounces of flavoured water, argue we'll twelve out is a real coffee for a dime Antonia. They won't pay it Rosenberg smiled. He stands Put on his hat just watch me. Rosenberg doesn't make coffee the usual way by percolating in a metal pod he's convinced that person. Coffee loses flavour because too much water flows through the grinds. So he makes drip coffee in one hundred gallon stainless steel containers are huge off bag containing dozens of pounds of ground coffee sit on top. After one hundred gallons of water, a boiled their poor over the ground just until the brew reaches the right strength. Customer can tell the difference between this coffee and other car. They ve had

and rosenbergs right, they will pay for quality even ten cents a cup. He can't keep up with a demand soon He has five one hundred gallon containers with timers that regulate the flow of the water. I convey belt moves: the brood coffee along and ten pound tanks, some get cream, others get sugar, others get cream answer then their labelled and sent out on his drugs Rosenberg. Is pleased with his luncheon service, but he's ambitious and restless he's, always been unnatural entrepreneurs as a boy during the great Fresh and he loved a big block of ice to the race track on a very hot day. Then he said ships of ice for a dime apiece and made one hundred seventy one dollars. Home in Quincy Massachusetts? He sits down today with his wife, bookie he's quiet and that's unnatural. For Rosenberg,

Bill you ve hardly said a word. What's on your mind, I know it should be contained business is booming, but every day I'm seeing more and more donut shops. Opening oh come on. You can't make money, selling coffee and don't that's a cup of coffee and a donut goes where fifty cents, but the key is volume cottage don't is building a huge new home, a few towns over now he owns are too small doughnuts doors their. This tremendous opportunity, in this business, I know you love to eat donut, but it doesn't mean you should be selling them, but I leave with my coffee. People love it. Add doughnuts, that's got, the winner trust me spooky memorial day. Eighteen, the bill, Rosenberg stands outside his coffee and donut store a giant Arabs scissors in his hand A curious crowd is gathering what's goin on. Why there's our?

flags flying over. You store is our own. Day. Big occasion hang around will be giving up three doughnuts in coffee. I can smell from here. They sure smell, good ethic, red ribbon, spans the shop store Rosenberg beams as he cut it. Crowd applauds reason side for their free doughnuts in job within once this small store is taking in three thousand dollars a week, that's equivalent Thirty one thousand dollars today coffee accounts. Sixty percent of sales customers seem to mind the prize. In addition coffee Rosenberg offers fifty two revolving flavors of doughnuts for five cents. Each Eighteen, forty nine to store celebrates its first anniversary. It's a mamma this but Rosenberg his? hungry for more. He has a dream of opening stores all over Massachusetts and that's when he dies

starting along route. One north of Boston only he makes his shops into living theatres, each story Has a window that lets customers peer into the kitchen. They want bakers, roll out the dough dust it with flour and cut the doughnuts? Then they put them on a screen. Lower the screen into the hot oil and fry them into delicious morsels. The visual combined with the enticing sent here, irresistible by nineteen fifty five, five, years after the first store opened, the demand keeps growing. And bird, can't keep up. He calls his staff together there's a new business model is franchising, the staff, looks puzzled. I've heard of it, but it's not popular, people say it's amiss fit for business. Well, It's brilliant. If we franchise, will sell the rights to our name logo products in business model. Do a third party that makes us the franchise or they'll

the franchise e they put up the money, for the business charge an initial franchise be take a five percent out of their sales plus five percent annually for advertising in exchange We provide all the guiding still need to make their own Duncan doughnuts door. Successful. But why would we tell them our trade secrets, but when you share with others. Everyone benefits. They do well, we all do well believe me be a cash cow in nineteen. Fifty five, the first Duncan doughnuts franchise opens in debt of Massachusetts about twenty miles from Boston in the next ten years. We're a franchise shops grows to one hundred, but even though business is booming bill in Burg is uneasy. The eighth grade about, doesn't feel confident about taking Duncan donuts the next stage he wants.

The company to grow exponentially. Will mean hiring a large swathes of people under standing management decisions at a higher level and even preparing to go public one day skilled sees not sure he has so nineteen sixty three bill hands ceo posed to his The five year old son Bob just graduated from Harvard Business School and look like a younger bespectacled version of his enthusiastic father. Bill stays on its chairman emeritus, but, while he's formerly seated power to his son, he's not about to sit back and lead Barbara. The show on one of his sons. First days at CEO bill takes Bob aside, Bob I just got a cup of coffee in the office and had to toss it out what open to our brewing standard, Well, you know I don't drink coffee, it am I'll bet a drink. It there's nothing!

more delicious builders, convinced Bob right person to lead the company he's smart peas, educated. We're all he's got a fancy. Mba from Harvard trouble is business, so confident Being CEO is the first job he's ever had still during his first years. The company does well when they go public. Nineteen sixty eight Bob proudly tells his father, where the darlings of Wall Street but is moving beyond Duncan Doughnuts New England routes and growing the company to fast when they move in Texas The result is disastrous. Six the ten new stores soon close the franchise the angrily blames the corporate office for not advertising enough and not paying enough attention to their stores. The company is bleeding money when outrage Franchisees sue Duncan doughnuts alleging that company violated its contract by focus.

On selling new franchise is rather than helping the ones they already own. When Bob hears about the suit he so upset, he vomit Now he has to tell his father with the franchisees or threatening. Their suitors ridiculous, not only, what they were alleging, not true, they're demanding four times the value of the entire company you better do something fast, because if they win that suit with vanished rosenbergs summoned to a meeting of the board of directors they to be avoiding his gaze we're sorry to say this, but it's time for you to resign. Legit Just give me one more quarter, please! I think We can write this ship New Haven, Connecticut. Nineteen. Seventy two Edna Marie standing the kitchen and Duncan doughnuts her husband, franchises. She,

then comes into wash the don't. Let's get made her own form of quality control, she watches the beggar cut the centres over the rod donut dough before, if rise, it but instead of letting him throw out the Doha Centre, she takes one passes it in the friar. Later it's delicious, in small a little how does she gives to employees? Then the store starts selling them and when Edna rose the donor holds in cocoanut coats them with chocolate or fields them with cream jelly, and they sell allied the demo ease. No, they ve got a hit on their hands. They summon Rosenberg as was in Burg, enters the New haven store. He sees mounds and mountains of donor holds on go trays. He parts one in his mouth These are amazing customers, Lovell gets love eight to ten percent of our sail to come in from don't I hold We should be selling these in all of our franchises

but we need a name for them. Something to catchy I run a buyer advertising agency, the ever I use, draw inspiration from a movie sensation, the wizard of OZ. These tasty not holds become known as munchkins on it. The munchkins are lodged bomb Rosen. Goes to Duncan doughnuts original, storing, Quincy Massachusetts, kids, here too the trays of munchkins parents by them a dozen times treat them by direct and coffee for themselves. By noon, store is packed, the franchisees do great business with munchkins their sales grow, so does their confidence Duncan doughnuts management. They dropped. The lawsuit Bob Rosenberg keeps his job munchkins save the day, but there's another threat looming on the horizon. Third,

one hundred miles away on the West Coast, a visionary from the Netherlands named Alfred PETE. Teach Americans that coffee comes from roasted beans, not just a can of grounds the lesson that will change the lives of two young Americans when it does the world of coffee will be transformed and Duncan we'll find itself in a rivalry that threatened The boil over. Thanks to a Valera response, wring our show. You know nobody. In a business because they want to collect sales tax or if they do The person I wanna meet because I have a lot of questions. No collecting sales tax other transactional. Taxes for the government is just something that businesses of all sizes have to do right will. Now. There are more than twelve thousand tax jurisdictions in the? U s alone. I want you to think about that. Twelve thousand

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everything. You need to start marketing your business today and they'll be there to help as your business growth. Now, what Melchior that's? What learn? More male chip, dot com its nineteen sixty seven summer time in Berkeley California, to there something man dressed in t shirts and genes are sitting at the table in the newly open, emporium PETE's COS. In tee, a few years ago. They were college roommates now they're, both married living in Seattle Baldwin is an english teacher. Gordon back is a writer. After taking a day at a literary conference, they need a jolt of Caffeine Baldwin takes a sip from the cup in front of him wow This is like nothing. I've ever tasted before backward, tries to coffee.

Hey it's fantastic that fleet we're just hills. Your mouth This is something you drank just for the job. It's ambrosia. It's like fine wine bottle one thing: I'm never drinking anything else. He means from it Baker and Baldwin have bags upedes being shipped to their homes in Seattle, the more they drink it, the more they love it. Their curious about the shops foundered, Alfred PETE Coffee is offered paints. Dna his father was dutch trader importing beans from Indonesia, EAST Africa and Caribbean They arrange a meeting with him in Berkeley, Bow were Baldwin Sink into PETE's comfortable chairs. In his small office, Peat is forty, seven and has a gentle manner and bright piercing eyes. Heat senses, he has an eager audience and tell them this story

in Amsterdam is a young man. I worked for a coffee importer. I travelled to coffee plantations and Java in Sumatra,. I learned about varieties of beans and what makes a great Cobb when did you come to America in nice? fifty five more after I arrived in San Francisco, I went up for breakfast. I worked a cup of coffee. Its did like dishwater. I spit it out find good coffee anywhere myself. How is this possible in the world's richest country, so lasting years. I've been importing good coffee beans to the states of last year. I open my store and what makes you copy. Taste. So amazing. I my beans until they turn dark. That's a european way it brings out full labour, and a bland beans from different countries. I analyze each bag beans to determine a roast suited to its particular characteristics.

Is fascinating. I never knew so much went into it over there. Three years. Baldwin backer keep ordering PETE's coffee being to be shipped their homes in Seattle, but never seem to have enough. Then in number of nineteen seventy Hocker has an epiphany. He rushed over two Baldwin's home and burst through the door, let's open it copy store here in Seattle importer, beans and Zella. Do what beat does whoa wait? Wait, wait, really you're serious, yes, listen we're addicted to those great beans, when I get the rest of Seattle addicted to them, too,. We Baldwin loves the idea, invest thirteen hundred and fifty dollars and borrow another five thousand from a local bank backward. Baldwin will run operations they meet. If doctors

for themselves. Some strong coffee, of course, and hammer out the details, Baldwin stuck in the most pressing first detail, the name Someone once told me that words, beginning with the letters ass, tea or especially powerful Well, there's an old mining town called STAR Bow. We can after their way way way way. Remember the name of the first maiden Moby Dick Starbuck. That's it with a twist. We'll call it Starbucks now Baldwin Her needle logo, they poorer, pictures in all marine books, one of you Midges up a sixteenth century north would cut she's a two tailed mermaid Her image is as seductive is the coffee itself On March, thirty, first thousand seventy one Starbucks coffee, tee and spice. Please in a small store in Seattle, historic height place market

where's, designed to look slightly nautical along wall with wooden shelves displays thirty different kinds of coffee They sell only coffee beans and the best home coffee machines, but they sometimes offer samples served in porcelain, cups that make the coffee taste Stephen better. They buy there coffee beans from Alfred PETE. Once the stores opened The founders travels to Berkeley were Alfred PE teachers than the art of roasting beans, but from the start, their bucking. The odds. Seattle is in an economic downturn. It's called the Boeing bust Boeing is the city's biggest employer and they just fired sixty two thousand workers, yet Starbucks catches on It's a hit with Seattle citizens who love the idea of savouring their coffee at home, specially on those gloomy days in winter and Starbucks is the

place in Seattle that offers quality coffee nineteen eighty one valkyrie in Baldwin have or stores in Seattle area is not allowed, but it's The sea is the attention of the man who will view coffee is a kind of religion he's twenty eight years old and his name is Howard Shops, from the moment he encountered Starbucks he and the entire business of coffee, will never be the same. On the next episode, Duncan doughnuts hits it out of the park with an over overworked baker words. Shelters trip to ITALY leaves forever changed. From wondering, This is business wars. We hope you enjoy this episode and we invite you to subscribe on Apple podcast, Spotify, Google, podcast teacher, I heart radio, wherever you're listening right now,

you'll find a link on the episode notes. Just tapir swipe would cover. You also see some offers more sponsors and we hope we will support our show by supporting them. If you like what you listening to would be great if you give us a five star rating and tell your friends how to subscribe to the way to support issues by answering a short survey at wondering dot com, slash survey, and tell us what business war stories you'd like to hear a clear note about conversations in this episode. We can't know exactly what was said at the time that this dialogue is based on our best research of this story were based on the books time to make the donut by William Rosenberg and pour your heart into it by Howard, shows I'm your host David Brown Elizabeth K wrote this story. Karen low is our senior producer editor at hidden produced by Emily Frost, sound designed by Kyle Randal, our exit,

producers are Jenny, Lauer, Batman and martial. Do we created by or Non Lopez wondering. Hey, I'm Stephen Johnson. The host of wandering show american innovations. We go deep into the stories. Scientists, engineers and ordinary people behind the greatest discoveries of the past century. This week, restarting We episode series on organ transplants common enough today, but less century ago they were still the stuff of science fiction. This is the story of how a hand of experimental surgeons, took this lifesaving procedure from the radical fringes of medicine. To the main stream, though, is an organ transplants and other great series subscribe, how to american innovations from laundry