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Unofficial Business: Coke fortune eluded the early startup guys

The real secret of Coke is how the guy who launched what became one of the world’s best known brands didn’t get rich off it. Neither did the man who owned the pharmacy where Coke was first sold. Same goes for another who ran the soda fountain where it was mixed.

It’s a history nugget that didn’t fit into the 130 or so words on a new Georgia Historical Society marker erected in downtown Atlanta this week. The marker memorializes the corner where the first Coke was served 130 year ago.

Coke threw a party to celebrate the anniversary and helped unveil the sign (which it essentially paid for). It also hung a giant screen on a Georgia State University building at the corner of Peachtree and Marietta Streets to show how Jacob’s Pharmacy looked when it sat on the site in 1886 and hosted the first sale of the brown elixir. Coke beverages now are sold in 24 million retail locations.

Plenty of people dream of starting their own business and making it big.

But the early days of what became the Coca-Cola show just how hard that is to pull off. And that even the entrepreneurs who come up with hot-selling products don’t always cash in big.

John Pemberton, the pharmacist who developed the Coke formula after borrowing heavily from a funky wine concoction, died two years after the first drink was served. By then he had sold his interest in the company.

His wife died a pauper, according to Mark Pendergrast, a Buckhead native and now Vermont resident who authored the book “For God, Country & Coca-Cola.”

Odds and ends

Joseph Jacobs, who owned the pharmacy, eventually built a successful chain. But early on he sold his share of Coke for stock in a glass factory (which soon burned, as did the downtown pharmacy). In return for his Coke stock he also received some “odds and ends such as bed pans, pewter syringes, wooden pill boxes, and empty bottles,” according to Pendergrast’s book.

Willis Venable, who ran a soda fountain in Jacob’s Pharmacy, sold his Coke dibs to boost his finances while building a house, according to a piece by Coke’s director of heritage communications.

Too bad. Coke had nearly $44 billion in sales last year.

Welcome to the conundrum lots of entrepreneurs and their backers face even today: When to keep fishing and when to cut bait?

Coke’s history is full of lessons. It highlights the importance of exceptional marketing (how did a sugar-water drink get connected with happiness? OK, there was the cocaine thing, but that was long ago). The power of globalization. The benefits of outsourcing (Coke franchised bottling operations for most of its history). The ability to pivot and turn debacles into wins (New Coke). The risk of relying heavily on brands that take on serious baggage (thanks to current health and obesity concerns).

Coke has a big, perfectly coiffed museum in Atlanta to tell its own history just the way it wants.

“It’s portrayed pretty accurately in the Coke museum,” Pendergrast, the author, told me. “They just leave out important things.”

The gritty stuff

That would be some of the gritty stuff. For example, he said, the earliest version of Coke included cocaine (as a natural ingredient in the fluid extract of coca leaves used in the drink). Attendants at the museum will tell you otherwise, and the company puts out a carefully worded statement insisting that “cocaine has never been an added ingredient for Coca-Cola.”

By 1903, when the company was under the ownership of Asa Candler, all but a tiny trace of the drug was eliminated, Pendergrast said. (Candler and, later, Robert Woodruff were crucial architects of Coke’s growth.)

Pendergrast has other nuggets that I’m thinking the Coke machine doesn’t love. For example, he said Pemberton was a generous person, but also a morphine addict and “a terrible businessman.”

In his book, Pendergrast wrote that “Coca-Cola was just one in a flood of other patent medicines foisted upon the public by hopeful marketers during the golden age of quackery.”

(Pendergrast, by the way, is frustrated that Coke doesn’t sell his book in its museum store.)

There are some winners in Coke’s early history.

For example, Frank Robinson, one of Pemberton’s earliest backers, came up with the Coca-Cola name, designed its distinctive script, authored early advertisements and boosted consumer awareness by distributing coupons for free samples. He also profited handsomely from his Coke investment, Pendergrast said.

Robinson, though, isn’t mentioned on the new historical marker downtown.

That’s OK. The Georgia Historical Society is writing an economic case study for eighth grader economic teachers that would include more corporate history. Maybe he’ll make the cut.

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