Ben Gilbert

I mean, Thomas and Whitehead just have like a little toll booth set up in between the Coca-Cola company that owns the intellectual property and makes the syrup and markets it and the bottlers who are actually doing the work.

And they're just clipping little coupons as the money flies by on the way over to the bottlers and the Coca-Cola company.

That is the argument here is that there is economic value from Thomas and Whitehead and actually spurring bottling to happen at all.

That's true.

Within 10 years, they managed to find 400 proprietors of bottling operations, get them to stand it up.

And by 1925, there was 1,200.

So it is a busy, busy 25 years finding all these child bottlers.

Yep.

This reminds me a lot of our Visa episode where we were talking about the difference between if you're Visa and you're scaling as a network of networks versus if you're Amex as a closed-loop system.

And we were talking about how Visa achieved tremendous scale relative to their head office size, their employee headcount, and they did it in a very short period of time.

Coca-Cola is sort of in the same thing here, where they can scale so fast because of the bottlers, where they're not actually having to do all this work themselves.

I don't think Coca-Cola is the ubiquitous international product that it is today, where they just created and then won the market without this bottler scale thing.

Yep, and Coca-Cola would start referring to this as the Coca-Cola system.

I don't think we've ever studied a business before that has a system like this, where you can look at the Coca-Cola company, which is ostensibly what we're doing on this episode, but actually to understand the scale and impact and reach of the product, you sort of have to look at the system holistically, the sum of the Coca-Cola company and all the bottlers.

The crazy thing is this is still the system today.

Coca-Cola still doesn't bottle.

I mean, we can talk about the exceptions to that, but in large part, and their desired end state is there's all these bottlers around the world that they just sell syrup to.

It's funny, the thing that it made me think of was, it's kind of like our Rolex episode, where Rolex, you don't want to be in the authorized dealer business.

It's operationally expensive, the training's hard, but you do want the control over the retail experience.

And Rolex managed to have their cake and eat it too, like we talked about that on that episode, where they can kind of say, hey, it's a privilege.