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The rise and fall of Hudson's Big Store in Detroit

 

Excerpt:

A legend begins

Joseph Lowthian Hudson and his father were running a men's clothing store in Ionia, then a small lumber town. When the Panic of 1873 struck, the town's sawmills were silenced. Without work, their customers couldn't shop. Then Hudson's father died. J.L. Hudson went bankrupt. His creditors got 60 cents on the dollar.

Hudson dusted himself off and moved to Detroit to start over. In 1881, he opened his first store on the ground floor of the old Detroit Opera House on Campus Martius. In 1888, he was so successful, he repaid all the creditors he had shorted in bankruptcy in full — and with compound interest. [emphasis mine.]

 

The imploded store mentioned in this story was reported to be near where Gratiot Ave and Woodward Ave crossed. I have recollection of a building being imploded closer to Six or Seven Mile Rd and Woodward at the time, similar in description.

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How Momofuku Ando invented instant ramen — and transformed Japanese cuisine

 

Excerpt:

How Momofuku Ando invented instant ramen in his 40s
Momofuku Ando was born as Wu Baifu in Taiwan in 1910, and after World War II he emigrated to Japan and took his new name. There, he pursued a medley of jobs — including sock sales and making salt — while tinkering with recipes.

But it wasn't until he was in his 40s that ramen inspiration struck. Ando provided a mythical origin story for his middle-aged dabbling in food, as Karen Leibowitz explains at Gizmodo. In his biography, Ando claimed he was struck by inspiration when he saw people huddled around a ramen stall in postwar Osaka. With food shortages rampant, he believed noodles could cure world hunger.

Of course, there are cracks in the corporate origin story — Ando didn't found Nissin until 1958, well into the postwar period. The product also got its start as a relatively luxurious convenience food, since the first "Chikin Ramen" sold in Japan cost more than fresh noodles did.

 

This is not the first time Ando's tale has been encountered, and it is a success story. Ramen Noodles still sell on grocer aisles today.

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Ironically, real estate development remains one of the trickiest acts to pull off in American business.

 

In a follow up article by the Detroit FreePress:

The challenge for Gilbert on Hudson's site: Making it work

One way to achieve a good return is to pack the new project with rent-producing tenants — either as apartment renters, office tenants or successful retailers. But how does Gilbert make the building pay in a market where rental rates for residential and office space remain among the lowest in major U.S. cities?

 

Real estate professionals say Class A office space in downtown Detroit can rent today for about $20 per square foot, compared with about $35 in downtown Chicago and more than $50 in New York City. The higher the rent a developer can command, the easier it is to pay off construction loans and earn a profit. Residential rents have generally stayed below $2 a square foot, with just a few exceptions.

 

This follows the problematic challenge cited in the previous two paragraphs:

Even Gilbert, who has achieved near-miracles in downtown Detroit since moving Quicken Loans there in 2010, can't escape the iron law of finance that a project needs to at least pay for itself.

 

The Hudson's site may prove his biggest challenge. As a new rendering released Thursday afternoon by Gilbert's Rock Ventures shows, the curvy, swoopy modernist design is a hugely ambitious statement. Gilbert's team wasn't giving out any figures, but clearly the project envisioned would cost hundreds of millions of dollars.

 

Are these pie in the sky ambitions, or does Gilbert hold an integrated view that can be blended together as a mix of residential community with commercial interests which can be brought about as a synergistic melding in the Detroit area.

 

Real estate professionals say Class A office space in downtown Detroit can rent today for about $20 per square foot, compared with about $35 in downtown Chicago and more than $50 in New York City. The higher the rent a developer can command, the easier it is to pay off construction loans and earn a profit. Residential rents have generally stayed below $2 a square foot, with just a few exceptions.

 

If the residential rates continue to rise as they have of late, Gilbert may be onto something here. It may not be time to toss Detroit onto the scrap-heap of history just yet.

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The Invention of the Baby Carrot

Selected excerpts:

The year is 1986, and you operate one of the largest carrot farms and processing plants in California. The weather is beautiful, your farm is vast, and business is good. Life is perfect except for one thing: every day, you need to throw out tons of the vegetables you worked so hard to grow, because they just aren’t pretty enough to sell.

 

Up to 400 tons of them, actually -- up to 70% of each haul. That’s multiple blue whales' weight in carrots, every single day. This is the position carrot farmer and producer Mike Yurosek found himself in.

 

Today, the supermarket produce section is a highly curated window into the American farm -- the towering pile of onions has made it through a rigorous and somewhat questionable battery of selection criteria. As former farmer, and PhD student Anna Lee wrote for the Washington Post:

“Some criteria are rightly based on food-safety and shelf-life considerations, but many are manifestations of misguided normative ideas about what produce should look like. Cucumbers should be straight, cauliflower florets should be tightly held, and rhubarb stalks should be ruby red. If not, retailers tell farmers, consumers won’t buy them.”


It’s been like that for quite a while, basically as long as we’ve had supermarkets.

 

Yurosek tried to be resourceful. He used some of his cull as animal slop, but his farm was so big and he had so much waste -- 400 tons a day -- that his pigs’ fat turned orange. He went on this way for decades, enduring the daily tragedy of the cull, and dreaming of a better world.

 

Then, in 1986, he had an idea. Frozen food processors chopped up their vegetables, including carrots, before freezing them. Pea-sized carrot cubes tossed in with peas. Crinkly-cut carrot coins. This was partially because a solid frozen carrot is a pretty inconvenient item -- it would take forever to thaw. But Yurosek also realized this meant frozen food processors got away with using irregular produce. "If they can do that,” he thought, “Why can't we, and pack 'em fresh?"

 

He got to work prototyping. The first batch he tossed into an industrial potato peeler, and then sliced up by hand. When a local frozen foods processor was going out of business, he got a deal on their old green bean cutter, which was made to clip green beans down into smaller pieces. He found that one of the most aesthetic cuts was to put them through the green bean cutter first, and then through the potato peeler. The result was a 2-inch, skin-free, slightly rounded stub of carrot -- a close cousin to the baby carrot of today. (Baby carrots are also sometimes called “baby cut carrots” in order to distinguish them from carrots that are literally immature or naturally dwarf.)

 

I'd never really thought of how a lot of the snack-sized carrots came to be. If you had asked me before, I would have said they were just picked before reaching full maturity, as some are.

Come to think of it - I can't say I've ever run across bacon marbled with orange fat. What do they do with carrot fed pigs?

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Interesting.

Come to think of it - I can't say I've ever run across bacon marbled with orange fat. What do they do with carrot fed pigs?

I guess the non-aesthetic parts of the veggies could go into soup, and little porky could join them there.

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I'd never really thought of how a lot of the snack-sized carrots came to be.

I think of it every time I eat the carrots! But I wonder how most things are made these days, I just don't have the time to look into each curiosity. What I'd never considered in your post, though, is how selected is the produce section for display. Even if asked directly, "Does all the produce look like that when sprouting from the ground?" I would have replied, "Yes..?"

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As a teenager, I worked for a gentleman farmer. We worked three acres, mostly by hand, and sold a lot of the produce from a roadside stand, supplemented with trips to the two main farmers markets in the area.

 

Potatoes were divided by 'class'. Number 1 and number 2 potatoes were higher priced, and bought to supply the supermarkets. Unclassified where sold to turn into hashbrowns and mashed, being the spud was very irregularly shaped, not lending itself well to being pared easily.

 

Most of your root veggies have to grow around rocks that are in the ground, so carrots, radishes, parsnips, potatoes, etc, often have irregularities to them which make them less aesthetic, but are fine for canning and freezing.

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The Secret Sauce

 

How Buffalo Wild Wings Turned the Sports Bar Into a $1.5 Billion Juggernaut.

 

Excerpted section:

Smith, a 57-year-old accountant who’s partial to spicy garlic wings, has run Buffalo Wild Wings for almost 20 years. She says when she and her chief financial officer, Mary Twinem, pitched the company’s initial public offering in 2003, investors kept asking, “How can two women run a sports bar-and-grill?”

During a tour of a new location in Edina, Minn., near the company headquarters, Smith explains how the buffalo logo laser-etched onto the company’s “nucleated” glasses helps sustain a foamy beer head. She tells a manager it’s time to consider using IV-style bags to get sauce into the shaking pails. She explains how her research into competing chains made her decide that none of her restaurants would pay more than 13.1 percent of revenue for rent and depreciation.

The company started in 1982 with one restaurant in Columbus, Ohio. When Smith joined as CFO in 1994, Wild Wings had about 30 locations, no financial statements, and no computers. “We hired someone to do payroll because she had a typewriter,” she says. The company did most of its own shipping. “If we wanted to open a new store, we had to decide whether to buy a new truck.” A man hired as CEO in 1996 never showed up for work. “One of the directors said, ‘I guess you’re going to have to do it,’ ” Smith recalls.

 

As she cleaned up the books and ditched the shipping operation, Smith often wondered what she’d gotten herself into. “But I knew there was something there,” she says. Buffalo wings were still a menu novelty. “I’d talk to guests, and they’d say they’re coming in three or four times a week for the wings.” College students wrote to ask when a Wild Wings would open near their campus.

 

The restaurants focused on sports as younger clientele came to watch cable and satellite channels they couldn't afford at home. “Somebody from Ohio State would say, ‘Would you put on the game?’ ” Smith says. Wild Wings became an early adopter of flatscreens and high-definition TV. By the time its first national ad ran on ESPN in 2006, the chain had 400-plus locations and was adding 50 to 60 a year.

 

Then the recession hit, pushing most casual-dining restaurants into a slump from which few have emerged with any real vigor. The sit-down operations couldn’t compete with McDonald’s and Burger King on price, and a rising breed of fast-casual alternatives such as Chipotle and Panera Bread lured away millennials with fresh dishes, lower prices, and speedier service. Yet Wild Wings’ growth actually increased during the downturn, partly because it emphasized more than food. While TV spots for Chili’s and Applebee’s touted tumbling salads and juicy steaks at cut-rate prices, goofy B-Dubs ads suggested it would keep the sports revelry going by secretly manipulating game outcomes. Wild Wings looked fun, and cost-conscious families saw it as a two-fer, says Jennifer Bartashus, a Bloomberg restaurant industry analyst: “If you’re going to spend $40 on your family, the lure of being able to entertain yourself at the same time is strong.”

 

How can two women run a sports bar-and-grill? They just do it. They've not let anything stop them yet.

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On CNBC today, an executive from Domino's said something that would qualify as a micro-thumbnail success story. [The quote may not be exact, but it captures the sense accurately.]


"About 90% of our franchisees started as hourly workers in our stores... working up to managers, and then franchisees"

 

That's such a high percentage, that I double-checked their web-site, and they say this.

 

"...our franchise business model, which is primarily an internally-based franchise system. Opportunities for external candidates are very limited and are sought only when we do not have an existing franchisee or new internal franchisee who can buy or build the stores in need."

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Many franchisees have minimum net-worth qualification for consideration. McDonald's is $750,000 in non-borrowed assets. Domino's entree level is $25k, making it much more accessible for an employee to work their way up the ranks to become an owner/operator.

 

[Tom] Monaghan returned to Ann Arbor, Michigan, in 1959, and enrolled in the University of Michigan, intending to become an architect. While still a student, he and his brother James borrowed $900 to purchase a small pizza store called DomiNick's in Ypsilanti, Michigan. "I started out in architecture school, and got into the pizza business to pay my way through school,” he has said. “The pizza business was losing so much money I never got back into architecture.” This business would, after a lawsuit from Domino Sugar, grow into Domino's Pizza. Tom, after opening a further three stores, traded his brother James a Volkswagen Beetle for his half of the business. Monaghan dropped sub sandwiches from the menu and focused on delivery to college campuses, inventing a new insulated pizza box to improve delivery. The new box, unlike its chipboard predecessors, could be stacked without crushing the pizzas inside, permitting more pizzas per trip, and keeping them warm until they arrived. Spreading his model to other college towns through a tightly-controlled franchising system, by the mid-1980s there were nearly three new Domino's franchises opening every day.

 

Most folk in a money losing proposition would seek other opportunities. He's since sold controlling interest for $1 billion.

 

Opportunities for external candidates are very limited sounds very much like a tightly-controlled franchising system.

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Martha Matilda Harper, the Greatest Businesswoman You’ve Never Heard Of

She pioneered retail franchising and created the American hair salon industry.

by , January 11, 2017

 

After a brief thumbnail sketch of her earlier life, including how she acquired her hair tonic and hygiene approach from her German holistic doctor:

In 1888 Harper used her life savings of $360 to open her first salon. That same year, George Eastman launched Kodak in Rochester with $1 million in venture capital. Convincing women to have their hair done in public would be a tough sell, so Harper chose the location of her salon strategically. She used connections through Roberts to secure space in the prominent Powers Building in downtown Rochester, and placed a large photograph of herself showcasing her floor-length hair on the door.

The customers did not come, so Harper employed a brilliant marketing tactic. Next door to her fledgling salon was a children’s music school, which lacked a waiting room. Every day well-heeled mothers would bring their children to class, only to be left standing in the hall. Harper invited the women to rest in her salon, and lured them into trying her services; what would become known as the Harper Method.

After nearly a quarter century in servitude, Harper knew how to pamper her clientele. She designed the first reclining chair so they could have their hair washed without getting shampoo in their eyes, and had a half circle cut out of her sink (with running water) for ladies to rest their heads. The emphasis was on customer service, long before the term was coined. Once women experienced the Harper Method, they were converts.

The start of the expansion of her empire:

By dictating that poor women would open the first 100 salons, in one fell swoop Harper became a pioneer of social entrepreneurship and modern franchising. (The word franchising comes from the French, and literally means “to free from servitude”.) Ray Kroc of McDonald’s is widely credited with being the father of American franchising, but Harper beat him to it by 60 years.

After the fact:

In 2001 Harper was posthumously honored with an award from the International Franchising Association; and was inducted into the National Women’s Hall of Fame in 2003.

“She is lost in history and I think it’s too bad,” says Knapp. “It happens and makes you wonder about your worth sometimes in life. Martha stood for a lot of things and it’s a shame that it’s been lost in the history pages.” 

Well, she's not been totally lost.

 

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Climber Completes the Most Dangerous Rope-Free Ascent Ever
or
Alex Honnold has become the first climber to free solo Yosemite’s 3,000-foot El Capitan wall.

In January 2015, when Caldwell and Jorgeson summited the Dawn Wall, a project they had spent years studying and training for, Honnold was there to meet them. Jorgeson told a reporter, “I think everyone has their own secret Dawn Wall to complete one day.”

What’s my Dawn Wall? Honnold asked himself. But he already knew the answer. For years he’d been thinking about what it would take to free solo El Capitan.

The reporting paints a determined individual who is so remarkable as to warrant study by neuroscientists for his unmatched mental ability to control fear. Alex Honnold more straightforwardly puts it as:

“With free-soloing, obviously I know that I’m in danger, but feeling fearful while I’m up there is not helping me in any way,” he said. “It’s only hindering my performance, so I just set it aside and leave it be.”

Perhaps not the most eloquent summary, but in his own words wrapping up the last couple of years:

“Years ago, when I first mentally mapped out what it would mean to free solo Freerider, there were half a dozen of pitches where I was like, ‘Oh that’s a scary move and that’s a really scary sequence, and that little slab, and that traverse,’” Honnold said. “There were so many little sections where I thought ‘Ughh—cringe.’ But in the years since, I’ve pushed my comfort zone and made it bigger and bigger until these objectives that seemed totally crazy eventually fell within the realm of the possible.”

To wrap up with the best quote from the first subsequent interview:

The whole pursuit of this dream has allowed me to live my best life, that makes me hopefully the best version of me.

 

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