#231 William Rosenberg Founder of Dunkin Donuts

Summary Notes


In "Time to Make the Donuts," William Rosenberg, founder of Dunkin' Donuts, shares his entrepreneurial journey from a 14-year-old school dropout to a self-made multimillionaire. Despite facing numerous health challenges, including cancer, and personal trials like divorce, Rosenberg's tenacity, innovation, and positive attitude propelled Dunkin' Donuts' growth from a single coffee shop to a global franchise. His story is a testament to hard work, risk-taking, and the importance of learning from both successes and failures. However, his decision to involve his son in the business proved to be a double-edged sword, leading to internal conflicts and ultimately a buyout of the company. Rosenberg's narrative underscores the complexity of mixing family and business and the pivotal role of belief and passion in achieving success.

Summary Notes

Early Life and Entrepreneurial Beginnings

  • Mario Puzo, author of "The Godfather," offered to write Bill Rosenberg's life story in the late 1960s.
  • Bill Rosenberg founded Dunkin' Donuts in 1950 and was busy expanding the business during that time.
  • At the age of 84, Bill Rosenberg reflected on his life and business experiences to share his knowledge.
  • He emphasizes the importance of hard work, determination, persistence, innovation, vision, and passion for success.
  • Bill Rosenberg started as a poor kid who dropped out of school at 14 during the Great Depression and became a multimillionaire.
  • He stresses the importance of learning from obstacles and using experiences to one's advantage.
  • Bill Rosenberg started his first company, Industrial Lunch Service, with one truck and grew it to a fleet of 200.
  • He recognized the potential of franchising early on and believed in taking steps one at a time.

"Back in the late 1960s, Mario Puzo, the author of the Godfather, said to me, 'Bill, I want to write your life story. You've got a hell of a story to tell.' I said, 'Thanks, Mario, but I'm too busy right now.'" "Everything in this book is based on what I know to be true and what I believe to be the facts." "My successes came from hard work born out of determination and risk-taking, persistence, innovation, vision, and passion."

The quotes highlight Bill Rosenberg's opportunity to have his life story written by Mario Puzo, his decision to focus on his business instead, and the core principles that led to his success.

Dunkin' Donuts and the Philosophy of Success

  • Bill Rosenberg shares his journey, including personal triumphs, trials, and battles with cancer.
  • He encourages readers to learn from his experiences and apply his insights to their own ventures.
  • Rosenberg's approach to success involves learning from others who have faced similar problems and building upon their solutions.
  • He believes in the power of a positive mental attitude and being a lifelong learner and teacher.

"Take advantage of my experiences and use them to your greatest benefit." "My philosophy is this: don't reinvent the wheel. Your problem is not brand new. Someone encountered it previously."

Bill Rosenberg's quotes emphasize the value of learning from others' experiences and adopting a positive outlook on life and business.

The Founders of PayPal

  • Jimmy Soni reached out to share an advanced copy of his book, "The Founders," which details the early days of PayPal.
  • The book offers insights into the challenges faced by PayPal and how they were overcome.
  • It includes stories of notable figures such as Elon Musk, Reed Hoffman, Peter Thiel, David Sacks, and Keith Rabois early in their careers.

"The book is called 'The Founders, the story of PayPal and the entrepreneurs who shaped Silicon Valley'." "The book is definitely a book I'm going to reread in the future, and the podcast that I recorded on it will be released after the book is released."

The quotes discuss the upcoming book by Jimmy Soni about PayPal's founders and the anticipation of its release and subsequent podcast episode.

Lessons from Family and Early Work Experiences

  • Bill Rosenberg had a complicated relationship with his father and later with his son.
  • He learned from his father's mistakes and was determined to provide for his family to avoid poverty.
  • Rosenberg's mother taught him resourcefulness, which he later applied to his business.
  • He learned the importance of asking questions, seeking answers, and not assuming to know everything.

"Though I dropped out of school in the 8th grade to help support my family, over the years, I learned a key lesson, as did other entrepreneurs like me. We know that we don't know." "My mother would get [fish remnants] for nothing and make fish stew. These are the things my mother learned to do and that I learned to apply in my business, find solutions under any circumstances."

These quotes illustrate the crucial lessons Rosenberg learned from his parents, which shaped his entrepreneurial mindset and approach to problem-solving.

Overcoming Obstacles and Sales Skills

  • Bill Rosenberg learned to overcome fear and became a skilled salesperson.
  • He focused on the benefits to the customer when pitching products or services.
  • His confidence and determination were fueled by early work experiences and a positive attitude.

"You don't sell to people. You get people to buy from you." "If someone else can do it, I can do it, too."

The quotes reflect Rosenberg's sales philosophy of focusing on customer benefits and his self-assurance in his abilities to succeed in business.

Government Influence on Business During War Effort

  • The U.S. government mandated large producers to set up cafeterias in factories.
  • This was to feed workers who were contributing to the war effort by working around the clock.
  • Bill Rosenberg saw this as an opportunity to start his first business.

"The government decided that companies that wanted to be big producers had to set up cafeterias in their factories to feed their workers."

The quote explains the government's role in creating new business opportunities during the war, which influenced Bill Rosenberg's decision to enter the food service industry.

Entrepreneurial Decisions and Opportunities

  • Bill Rosenberg was approached with an opportunity to take over and run a complete system to feed factory employees.
  • He faced a choice between this new venture and a promotion to national sales manager in Boston.
  • These opportunities demonstrate the crossroads many entrepreneurs face when deciding which path to pursue.

"Bill, we need to set up a complete system to feed all of our employees. I would like you to take it over and run it."

The quote highlights the moment when Bill Rosenberg was presented with a significant business opportunity that would lead to his first entrepreneurial venture.

Early Influence of a Donut Shop

  • A retail donut shop near the Hingham shipyard left a lasting impression on Bill Rosenberg.
  • The success and appeal of the donut shop would later influence the founding of Dunkin' Donuts.

"The little town had a donut shop that sold fresh, hot donuts. The place was always mobbed. I couldn't believe the business it did."

This quote reflects on the early inspiration for Dunkin' Donuts, as Bill Rosenberg recognized the potential in the popularity of a small donut shop.

Ignoring Naysayers

  • Bill Rosenberg emphasizes the importance of ignoring negative people when pursuing a venture.
  • This advice mirrors counsel given to Arnold Schwarzenegger by Lucille Ball, reinforcing the idea of turning rejection into motivation.

"In every venture that I've ever undertaken... I ran into people who resisted what I was trying to do."

The quote underscores the inevitable presence of negativity and resistance in any entrepreneurial journey and the need to persevere despite it.

Urgency to Pursue Entrepreneurship

  • Personal tragedy and the end of World War II heightened Bill Rosenberg's urgency to start his own business.
  • The loss of his brother in the war and his "fire in the belly" pushed him to take the leap into entrepreneurship.

"I had a fire in my belly. That essential ingredient that all entrepreneurs must have to go out on our own."

Bill Rosenberg describes the burning desire and drive necessary for an entrepreneur to succeed, which was a driving force in his decision to start his own business.

Early Business Partnerships and Integrity

  • Bill Rosenberg's first partnership taught him the importance of integrity in business.
  • He learned that making a good deal with a bad person is impossible, as reflected in Warren Buffett's quote.

"You can't make a good deal with a bad person."

The quote encapsulates the lesson that the character of the people you do business with is crucial, and that unethical partners can undermine success.

Overcoming Adversity and Work Ethic

  • Bill Rosenberg nearly quit his business due to a flu outbreak and immense pressure.
  • His workaholic nature and dedication to overcoming obstacles exemplify the resilience required in entrepreneurship.

"I came from within inches of quitting that day. Then I said, wait a minute. I've worked really hard."

This quote reveals the moment of near-defeat for Bill Rosenberg and his subsequent resolve to continue, highlighting the mental toughness needed in business.

Innovation and Efficiency

  • Bill Rosenberg constantly sought ways to improve efficiency, such as implementing a color code system for sandwich pricing.
  • His focus on improving operations predated his success with Dunkin' Donuts.

"We established a color code system, and that sped things up."

The quote shows Bill Rosenberg's innovative thinking to streamline operations, a practice that would contribute to his later success.

Importance of Good People and Loyalty

  • Bill Rosenberg reflects on the loyalty and dedication of his employees during a snowstorm, which deeply moved him.
  • The story illustrates the value of having a committed team in business.

"Jimmy came up to me and said, bill, I got the gang together because I didn't want you to get stuck with all that merchandise and have to throw it away again."

The quote highlights the impact of employee loyalty and initiative on the success and morale of a business leader.

Mr. Inside and Mr. Outside

  • Bill Rosenberg recognized his strengths in promotion and business development and sought a partner to handle internal operations.
  • The partnership dynamic is likened to the successful football strategy of Mr. Inside and Mr. Outside.

"I knew if we could get a top flight inside man... we would make the business fly."

The quote illustrates the strategic decision to complement one's strengths with a partner's skills to enhance business performance.

Handling Difficult Situations and Human Nature

  • Bill Rosenberg learned about human nature through various personnel challenges, including dealing with dishonest employees.
  • He reflects on the difficulty of correcting deep-rooted personal issues and the consequences of giving second chances.

"If a man was a thief, a gambler, a drunk, or a drug addict, it was pretty difficult to correct those problems."

This quote conveys the realization that some personal issues are beyond the capacity of an employer to fix and can have detrimental effects on the business.

Founding of Dunkin' Donuts

  • The success of donuts and coffee sales led Bill Rosenberg to focus on a retail donut store.
  • The founding of Dunkin' Donuts was influenced by the profitability of the retail model over wholesale.

"We had twelve wholesale trucks... and we made more money from that one store than we made from twelve wholesale trucks."

The quote explains the economic rationale behind Bill Rosenberg's decision to focus on retail, which ultimately led to the creation of Dunkin' Donuts.

Theme: Entrepreneurial Innovation and Differentiation

  • Bill Rosenberg observed existing donut stores and identified areas for improvement.
  • He introduced seating and beverages, expanding the traditional donut store concept.
  • Bill questioned the limited variety of donuts and saw potential in offering a wider range.
  • He recognized the poor quality of coffee in donut stores and aimed to elevate it, making it a signature offering alongside donuts.

"We were the first to put seats and beverages in a retail donut store so customers could eat out on the premises."

This quote highlights Bill Rosenberg's innovation in transforming the donut store experience by adding seating and beverages, which was a novel concept at the time.

"I wondered, why can't we make 28 different kinds, or 52 different kinds or 108 varieties of donuts?"

Bill Rosenberg's curiosity about the limited variety of donuts led him to contemplate significantly increasing the range of options, showing his ambition to diversify the product offerings.

"People talked as much about our coffee as they did about our donuts."

By improving the quality of coffee, Bill Rosenberg aimed to make it as renowned as the donuts, thus creating a dual focus on both products and enhancing the customer experience.

Theme: Marketing and Promotion Strategies

  • Bill Rosenberg implemented a buy-one-get-one-free promotion on opening day, which was highly successful in attracting customers.
  • The promotion was so effective that family and friends had to assist with the unexpected customer volume.

"On opening day, we gave away a free dozen donuts with every dozen bought."

This quote describes the promotional strategy Bill Rosenberg used to generate interest and a strong initial customer base for a new store location.

Theme: Business Expansion and Preference

  • Bill Rosenberg compared his industrial lunch service company and donut business, favoring the latter due to its direct relationship with customers.
  • He saw potential in the donut business and decided to focus on it, despite having fewer stores than the larger, more mature industrial lunch service.
  • The simplicity of opening stores and owning customer relationships was appealing to Bill Rosenberg.
  • He encountered resistance from his partner, Harry, who was content with the current scale of the business.

"I like the donut business way better."

This quote reflects Bill Rosenberg's preference for the donut business over his other ventures due to its growth potential and direct customer engagement.

"The name Dunkin'donuts attracted people. Customers liked our products and the way that we conducted business."

Bill Rosenberg recognized the strength of the Dunkin'donuts brand and its positive reception by customers, which reinforced his decision to focus on expanding this business.

Theme: Franchising and Growth Strategy

  • Bill Rosenberg decided to sell franchises as a means of rapid expansion.
  • He embarked on a cross-country road trip to research and understand the potential of franchising for donut stores.
  • The trip confirmed his belief in Dunkin'donuts' unique value proposition and the urgency to franchise before competitors seized the opportunity.

"I decided that we're going to sell franchises."

Bill Rosenberg's strategic decision to franchise Dunkin'donuts was a pivotal moment in the company's expansion, setting the stage for nationwide growth.

"Traveling around the country, I realized we really had something different."

The quote reflects Bill Rosenberg's realization of the uniqueness of Dunkin'donuts during his research trip, which solidified his confidence in franchising as the right growth strategy.

Theme: Partnership Conflicts and Resolution

  • Bill Rosenberg's partnership with Harry became strained due to differing visions for the company's future.
  • Harry and his wife's jealousy over Bill's recognition and reluctance to expand caused tension.
  • The conflict escalated to a lawsuit, with Bill offering to buy out Harry to resolve the impasse.
  • Harry and the former mutual lawyer engaged in unethical behavior by starting a competing business, Mr. Donut, and securing locations intended for Dunkin'donuts.
  • Bill ultimately decided to focus on growing Dunkin'donuts instead of pursuing legal action.

"Harry grew bitter towards me."

This quote captures the deteriorating relationship between Bill Rosenberg and his partner Harry, which was a significant obstacle in the company's expansion.

"I bought Harry out."

Bill Rosenberg's decision to buy out his partner allowed him to take full control of the business and pursue his vision of franchising and expansion without further partnership conflicts.

Theme: Financing and Growth Management

  • Bill Rosenberg sought alternative financing methods due to banks' reluctance to lend to franchises.
  • He negotiated extended credit terms with suppliers, leveraging the immediate cash flow from sales.
  • Identifying and addressing the bottleneck of financing stores was crucial for continued expansion.

"As Dunkin grew from five to ten, then 20, and now 30 stores, I did what I could to find sources of financing other than going to the banks."

Bill Rosenberg's proactive approach to securing financing through means other than traditional bank loans was instrumental in facilitating Dunkin'donuts' growth.

Theme: Focus and Decision Making

  • Bill Rosenberg considered diversifying into other ventures but ultimately decided to concentrate solely on Dunkin'donuts.
  • He recognized the importance of focus and the risks associated with spreading resources too thin across multiple businesses.

"I wanted to devote my time to expanding Dunkin donuts."

This quote emphasizes Bill Rosenberg's strategic decision to focus on growing Dunkin'donuts, highlighting the importance of dedication and concentration in business success.

Theme: The Pitfalls of Family Business and Succession

  • Bill Rosenberg faced challenges when his son, who lacked practical experience, joined the business.
  • His son's approach, influenced by academic rather than real-world knowledge, led to poor decisions and ultimately the sale of the company.
  • The narrative serves as a cautionary tale about the complexities of family business succession.

"You really don't know what the world is all about until you get out into it."

Bill Rosenberg shared his belief in the value of practical experience over formal education, which foreshadows the issues he later faced with his son's management of the company.

Theme: Customer Focus and Business Philosophy

  • Bill Rosenberg maintained a relentless focus on customer satisfaction and quality control.
  • He emphasized the importance of being attentive to the customer experience and cash flow.
  • His business philosophy placed the customer at the top of the organizational hierarchy.

"I was always a stickler about the maintenance and operations of the stores."

This quote reflects Bill Rosenberg's unwavering commitment to quality and customer service, which he saw as fundamental to the success of Dunkin'donuts.

"The customer is the boss."

Bill Rosenberg's business philosophy prioritized the customer above all else, a principle he insisted on despite the company's structural changes.

Belief in One's Product

  • A genuine belief in one's company and products is essential for success.
  • The speaker expresses disbelief that someone could be associated with a company for decades, benefiting from its profits, without using its products.
  • The contrast between the life of luxury of the son and the father's struggles is noted as a significant difference.

"You just can't do it. And my thought is, like, you never even use the products of the company that your dad has been running for multiple decades, the company that's generated the profits, that has given you a wonderful life, a life that is 180 degrees different from the life that your father had to struggle through."

This quote highlights the speaker's incredulity towards someone who benefits from a business without engaging with its core offerings, emphasizing the importance of product belief and engagement.

Importance of Sharing Success

  • The speaker emphasizes the value of sharing profits with employees, aiming to make them wealthy.
  • The philosophy of enriching employees as a path to personal wealth is presented as a wise business strategy.
  • This approach is likened to the practices of Les Schwab, who shared 50% of store profits with employees, attracting better personnel.

"He felt like you should pay your employees as well, as much as possible. Your goal should be to make everybody works with you as rich as possible."

The quote encapsulates the speaker's belief in the importance of generously compensating employees, suggesting that their financial success contributes to the overall success of the business and its leaders.

Shrewd Compensation Systems

  • Charlie Munger recommends reading Les Schwab's autobiography for insights into effective compensation systems.
  • Schwab's practice of sharing profits with store employees is highlighted as a key to his success in a challenging industry.
  • The speaker admires Schwab's straightforward and lovable personality and his criticism of greedy business practices.

"If you want to read a book that will demonstrate really shrewd compensation systems in a whole chain of small businesses, read the autobiography of Les Schwab, who had a bunch of tire shops all over the northwest, and he made a huge fortune in one of the world's really difficult businesses by having really shrewd systems."

This quote underscores the recommendation to study Schwab's compensation strategy as a model for creating wealth in difficult industries through fair and motivating profit-sharing methods.

Family Business Dynamics

  • The speaker discusses the pitfalls of family businesses, particularly the blind spots parents can have regarding their children's capabilities.
  • The speaker reflects on the mistakes made by siding with his son to the detriment of the business.
  • The conflict between old and new regimes within the company is highlighted, with the son favoring business school graduates over experienced employees.

"It was eager to have Bob take over. I think this is common in family businesses when a parent hands over the reins to the child. But the danger is that the parent, like myself, becomes blind to some of the drawbacks of such an arrangement."

This quote illustrates the speaker's initial enthusiasm for his son taking over the family business and the subsequent realization of the risks involved in such decisions.

Consequences of Mismanagement

  • The speaker recounts the consequences of his son's mismanagement, including the rehiring of a dishonest manager and poor location choices for stores.
  • The speaker regrets not heeding the warnings of his experienced employees and the resulting financial losses.
  • The speaker's loyalty to his son led to repeated poor business decisions and ultimately a significant financial downfall.

"I should have listened more closely, but I didn't. Little by little, some people left or were let go. I had put my son in charge, and I stood behind many of the decisions he made."

This quote reflects on the speaker's acknowledgment of his failure to listen to seasoned employees and the negative impact of his son's leadership on the company.

Reflections on Leadership and Legacy

  • The speaker reflects on the lessons learned from his business experiences, both positive and negative.
  • He expresses the desire to pass on these lessons to others through his autobiography.
  • The speaker's relationship with his son and the impact on the business is a central theme, serving as a cautionary tale for involving family in business.

"Some of our interpersonal dynamics were typical of many father son relationships. I had arguments with Bob. All fathers and sons have them, especially those who are in business together."

This quote acknowledges the complex dynamics of father-son relationships within a business context and the speaker's struggle to balance familial loyalty with business acumen.

Final Thoughts and Recommendations

  • The speaker concludes with the importance of learning from others' experiences and building upon their successes.
  • He stresses the need for passion and belief in one's business, drawing parallels with other successful entrepreneurs.
  • The story serves as a lesson in the potential hazards of mixing family and business and the value of wisdom over mere intelligence.

"The importance of belief. The idea that the mind is a powerful place and what you feed it can affect you in a powerful way."

The final quote encapsulates the speaker's belief in the power of the mind and the necessity of having a passionate belief in one's business, which is a common trait among successful entrepreneurs.

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