﻿Potato chips are fun to eat, come in several flavors, and they taste delicious.
So it comes as no surprise that they are one of the most popular snacks in the world.
One brand of potato chips that have become widely loved for their wonderful snacks,
is Lay’s Potato Chips. After dropping out of college, struggling through the great depression,
and receiving almost 200 job rejections, Herman Lay, the founder of this popular snack brand,
went from selling potato chips in his car with just a few dollars in his pocket,
to be the head of what is now a multibillion-dollar corporation.
This is the story of Lay’s. Welcome to Planet Biz.
Herman Warden Lay was born in 1909 in Charlotte, North Carolina.
His father worked with International Harvester, an American manufacturer of
agricultural equipment and machinery. At first, his father was a bookkeeper with this company
but later on, he became a commercial salesman and the entire family moved to South Carolina.
In 1920, the Lay family was living in Greenville, South Carolina.
It was around this time that Herman Warden Lay embarked on his first business venture – selling
Pepsi-Colas. Just 11 years old at the time, Lay set up a makeshift stand in his family’s front
yard and sold the soda for 5 cents a bottle. The ballpark across the street from his house
was charging twice this amount and this price difference made Herman’s Pepsi-Cola stand a hit.
His business became so successful that he opened a bank account, bought a bicycle, and even hired
other boys to run the soda stand while he ventured into the business of delivering newspapers.
Lay seemed to have been born with an entrepreneurial spirit, which he later traced
back to his father. Herman’s father had succeeded in selling farm machinery to farmers who were
so accustomed to using horses that the horses may have as well been part of their families.
In Herman Lay’s words, “It was a pleasure to watch him work, because he did it so well.”
When the ballpark moved from Herman’s neighborhood, reducing the amount of
business that his Pepsi-Cola stand got, he wasn’t deterred. He went ahead and moved his
business as well, into the ballpark this time. He began to sell peanuts during the games and
soon succeeded in that too, becoming one of the top snack vendors in the park.
Unfortunately, in 1922, two years after his family moved to Greenville,
the Lays were dealt a devastating blow. Herman’s mother died of cancer. Despite this sad event,
Lay went on to attend and graduate from high school, winning a scholarship to attend college.
There, he made a decision that he was going to regret…
Apart from being a hardworking businessman, Herman was also a great athlete. He attended
Greenville High School where he lettered in three sports; baseball, basketball, and track.
Herman was an impressive athlete and was awarded an athletic scholarship to attend Furman
University. While at college, Herman Lay played baseball and basketball for his school’s team.
But despite his love for sports, his athletic skill, and his college scholarship,
Herman spent just two years in college. His passion for sales won him over and he dropped out
of Furman University to begin a career in sales. Herman would soon come to appreciate this
decision that he made, but first, he was going to regret it. The journey to becoming the successful
salesman that Lay dreamed about was filled with road bumps and storms. It was the period of the
Great Depression and Herman couldn’t have chosen a worse time in his life to venture into the world
of business. He struggled to find a career and was met with disappointment after disappointment.
Once, in 1928 during the Democratic Convention in Houston, Herman and a friend of his invested
100 dollars into ice cream. This was a lot of money, especially considering that it was during
the Great Depression. They planned to sell ice cream along the route of the convention parade.
Unfortunately, this plan was ruined. There was a last-minute route change for the parade
and the friends were left with no customers for their ice cream.
However, Lay couldn’t give up at this point. He had dropped out of college,
abandoning a scholarship. He had no choice but to face the struggles of building a career during the
worst economic downturn the industrialized world has ever experienced.
On his quest to find the career of his dreams, Lay worked several jobs at
different points in time. He traveled across the country in search of gainful employment.
His journey began in the West where he worked in the Midwestern wheat harvest. From there, he moved
on to Washington where he worked as a lumberjack. Eventually, he returned to South Carolina. There,
he worked a few more jobs. Between 1930 and 1932, Herman worked as a salesman in a jewelry store,
a trainee for a farm machinery company, and later on, at Sunshine Biscuits where
he was eventually laid off because of the poor economic situation of the country.
Lay was 24 years old and had only a four-year-old Model-A Ford vehicle and a few dollars in his
pocket. The future must have looked bleak, but he continued to give it his best. He placed
several classified ads in newspapers and sent out about 200 letters applying for different jobs.
All his efforts yielded only one positive response.
The response was from a company named Barrett Potato Chip Co. They were an Atlanta-based
distributor of Gardner’s Potato Chips. After the job interview, Lay himself turned the job down
because he felt it wasn’t right for him even though he wanted to be a salesman. In his words,
“The idea of driving a truck from store to store selling potato chips wasn’t my idea of a job.”
However, Herman Lay soon had to face the reality that he didn’t have much of a choice when it came
to working opportunities. A week after turning down the job offer, Herman returned to Barrett
Potato Chip Co. in the hopes of being able to get the job back. Upon getting there,
he was met with the sad news that the position had already been filled. Fortunately for him,
he didn’t leave empty-handed. The company took him on as an extra salesman. During an interview, Lay
described the nature of the work he did, “I would get a weekly allotment of potato chips and a cash
allowance. There was no salary, just an advance against whatever commissions I earned on sales.”
He was assigned a specific area to make his sales – northern Tennessee and southern
Kentucky, including the city of Nashville. Herman took up his new job with his trademark
zest. He enjoyed the control he had. Lay fondly called the areas he was assigned his territory
and took the work as his business. According to Lay, he would be on the road all day and half
the night, selling his goods to grocery stores, filling stations, soda shops,
road stands, schools, and even hospitals – all from the trunk of his car. He would later
say that it was the sense of independence the business offered that kept him going.
Lay’s determination and persistence finally began to pay off. Within a year, he became a
distributor in the Nashville office of the company he was working for. He borrowed $100 and founded
a distributing company which he named H.W. Lay Distributing Company. He began to hire employees,
and in just three years, Herman Lay’s distribution business had grown so much
that he had 25 employees working in his territory which had also expanded by then.
In 1938, Lay was offered Barrett’s Atlanta and Memphis plants if he was willing to buy.
The asking price was 60,000 dollars. Herman was interested. He tried to raise the money
in all the ways he knew how; he looked for friends and business associates to invest.
He even asked a life insurance broker and a gas station operator. With all his efforts,
he was able to raise just about $5,000. To add to this, he took out a bank loan of $30,000.
However, he still had a long way to go to reach his $60,000 goal. As the resourceful businessman
that he was, Lay convinced Barrett to take the difference in preferred stock options.
The transaction was successful. Lay was the new owner. He changed the company
name to H.W Lay & Company, which was eventually simplified to Lay’s. His business spread quickly,
buying new locations, and new snack food companies, expanding their product line.
By 1956, Lay’s had become the largest producer of potato chips in the United States.
It had over 1,000 employees and manufacturing plants in eight cities.
In September 1961, Lay’s merged with The Frito Company, forming the Frito-Lay corporation,
the largest-selling snack food company in the US, with total revenue of 127 million dollars.
Lay kept his eyes out for opportunities to reach a global market. In 1965, Lay found what he viewed
as the perfect opportunity to fulfill this goal. He negotiated another merger, this time,
with a brand that he was quite familiar with from his days as a child – Pepsi-Cola. At the time,
Pepsi-Cola had 5,000 employees in 100 countries. Once the merger was complete,
Lay became chairman of the board and the company adopted a new name, PepsiCo, Inc. In a delightful
turn of events, Lay had come full circle and was once again selling Pepsi-Colas. But this time,
not as a neighborhood kid, but as the chairman of the multimillion-dollar company that produced the
soda. Lay commented on the progress he had made saying, “little did I know as a youngster selling
snacks at the ballpark that I would one-day head one of the largest snack companies in the U.S.”
This merger with Pepsi-Cola made Herman Lay so rich that he was able to give out millions
of dollars to philanthropic causes. Today, PepsiCo is the second-largest food and
beverage business in the entire world, with the Frito-Lay corporation providing a large percentage
of the profits. Their products are enjoyed in more than 200 countries around the world.
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