Coca-Cola

**Ben Gilbert** (0:00)
David, I cannot believe we're about to do a four-hour podcast on syrup, sugar, and water. I mean, that's the entire business, is just syrup, sugar, and water combined, and it's a $300 billion company.

**David Rosenthal** (0:13)
Well, Ben, you know what I'm going to say to you in response to that. Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?

**Ben Gilbert** (0:21)
Ooh, save it, David. Save it.

**David Rosenthal** (0:28)
Is it you?

**Ben Gilbert** (0:41)
Welcome to the fall 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

**David Rosenthal** (0:49)
I'm David Rosenthal.

**Ben Gilbert** (0:50)
And we are your hosts. Charlie Munger has a famous thought experiment. It's the 1880s. You want to build a company from scratch that eventually becomes worth $2 trillion, starting with just $2 million. So you're looking for a $1 million X return, or as Charlie puts it, a Lollapalooza outcome.

**David Rosenthal** (1:09)
Of course he does.

**Ben Gilbert** (1:10)
Very Charlie.

**David Rosenthal** (1:11)
Very Charlie.

**Ben Gilbert** (1:12)
The constraint is it must be a non-alcoholic beverage business.

**David Rosenthal** (1:17)
Okay.

**Ben Gilbert** (1:18)
And another constraint, it must throw off many billions of dollars in dividends along the way to your shareholders.

**David Rosenthal** (1:24)
Okay.

**Ben Gilbert** (1:25)
This sounds almost impossible, but what ideas could you possibly dream up to give it your best shot?

**David Rosenthal** (1:32)
Well, I think the first question I would have is whether I could include any now illegal drugs in my product.

**Ben Gilbert** (1:43)
That certainly helps. So to build this giant valuable company, the first thing you need to know is you're not going to get there with something generic. So you have to build a brand that grows into a strong, protected trademark. And to reach that scale, it must be global. So it has to have a taste that's universal in all countries. Now, conveniently for you, all humans do require large amounts of water every day to live. So it is a giant market.

**David Rosenthal** (2:09)
Yes.

**Ben Gilbert** (2:09)
But you're not going to fully replace water. It's just going to be kind of a small fraction of the time. So, on to the beverage itself, you're going to want to optimize it to maximize the rewards of ingesting it. As refreshing as possible in any climate. Now, you're going to want to do a bunch of other stuff too. You want to fill it with calories to give energy. You want the flavor, texture and aroma that makes it pleasurable to consume. And you should throw in some brain stimulants like caffeine and sugar. That's sort of the ideal product mix.

**David Rosenthal** (2:41)
Among other things, yeah.

**Ben Gilbert** (2:43)
Now, you don't want competitors to swoop in for a free ride on the market you just created. So you should make sure your product, the real thing, is available everywhere, anytime someone asks for it.

**David Rosenthal** (2:54)
I see what you did there.

**Ben Gilbert** (2:55)
At a very low price. So there's really not an opportunity for competitors to ever fill the vacuum. There's never a reason for anyone to reach for anything other than your product.

**David Rosenthal** (3:04)
Always.

**Ben Gilbert** (3:05)
Always, David. And since everyone is not thinking about beverages all the time, like you probably are as the proprietor of this business, you're going to want to associate your beverage with all the things that they are thinking about. The good life, family, your sports heroes, beautiful people, Christmas. I mean, happiness generally. You are going to want to have a Pavlovian association between your drink and happiness. And you're going to want to spend huge amounts of money blanketing the entire world with this messaging. Now, to build something this valuable, you also can't have a big, expensive bottling and distribution operation. So you're going to need to figure out some clever way to get someone else's capital and employees for that while still maintaining the control that your brand requires. I mean, ideally, it would be great if you could serve the entire world with just a few of your own production facilities.

**David Rosenthal** (3:58)
That would be pretty great.

**Ben Gilbert** (4:00)
Yes. And the last thing, you must never, under any circumstances, change the formula or flavor.

**David Rosenthal** (4:10)
We were doing great there.

**Ben Gilbert** (4:12)
We were doing great.

**David Rosenthal** (4:13)
But, you know, this might be why Coca-Cola is not a $2 trillion company today.

**Ben Gilbert** (4:18)