Beyond Seinfeld’s ‘Unfrosted’ – What we can learn from a Michigan serial entrepreneur

Jerry Seinfeld’s “Unfrosted” recently released but had a disappointing debut on Netflix, even being called “one of the worst movies of the decade.”

But with an all-star cast that includes Seinfeld, Jim Gaffigan, and Amy Schumer, plus America’s love for Pop-Tarts (sales are estimated at $3 billion in 2022), the movie has the potential to become a cult classic.

While viewers may want to relive the 93 minutes they spent watching this film, the true history of toaster pastries teaches valuable lessons about the tenacity of serial entrepreneurs and the strategic decisions that create competitive advantage.

Over the past 15 years of mentoring, studying, and working with student entrepreneurs, I have learned that an entrepreneur’s idea does not have to be “new to the world” to be successful.

New invention: cold cereal

In 1876, Dr. John Harvey Kellogg, a well-known physician and author, became director of the Battle Creek Sanitarium, a famous medical spa that attracted thousands of patients each year to the small town of Battle Creek, Michigan.

John’s brother, William Keith Kellogg, ran the day-to-day operations, and John sought to provide his patients with fresh air and a whole-grain vegetarian diet that he called “biological life.”

Inspired by this diet, the brothers developed a healthy breakfast formula known today as cold flaky cereal. John Kellogg saw the cereal as a treatment for sick patients and founded the Sanitas Food Company to produce the cereal for nursing home patients.

Will Kellogg thought healthy people might also enjoy the product, and although he saw wider commercial potential, he didn’t put the idea into action until he saw a patient in a sanitarium making a similar product and becoming a successful entrepreneur: Charlie “C.W.” Post.

Post couldn’t afford the full cost of room and board at the sanatorium, so he worked in the kitchen to get the recipes.

After leaving the sanatorium, Post founded his own company, the Postum Cereal Company, in 1894, bringing the first ready-to-eat cold cereal to a wider market.

Due to the success of Post, Will Kellogg left the sanitarium business in 1906 and founded the Battle Creek Toasted Corn Flakes Company, a direct competitor to Post. The company was renamed the Kellogg Toasted Corn Flakes Company in 1909 and the Kellogg Company in 1922.

A stroke of luck leads to commercial success

The history of this cold cereal predates the story of Pop-Tarts, but it illustrates some of the ways entrepreneurial ideas are born.

In the case of Kellogg’s Corn Flakes, lucky chance played a role.

There are slightly different versions of the original story, but the gist is that the Kellogg brothers rolled out a wheat flour dough, left it overnight, and discovered that the stale dough easily peeled off and could be used to make a cold cereal. Will later developed a corn flake with a crispier texture.

Another lesson from being an entrepreneur is that success comes simply from recognizing an opportunity.

The method for making cold cereal was discovered by chance and then perfected by the Kellogg brothers through trial and error. C.W. Post adopted (some might say stole) the method commercially without taking the time to invent and perfect the product.

The Kellogg brothers may have invented a healthy breakfast alternative, but Post was the first to bring the invention to market and therefore the first to demonstrate its commercial viability.

Toaster Pastry Lace

Post may have won the battle against cereal’s early cold cereals, but Kellogg won the toaster pastry competition depicted in “Unfrosted.”

After Post’s death in 1914, his daughter Marjorie Merriweather Post, played by Schumer in the film, took over the company at age 27, becoming one of America’s first female chief executive officers. The Postum Cereal Company became General Foods Corporation in 1929, after Marjorie Post made a number of acquisitions.

What happened next shows that being first to market doesn’t always create a competitive advantage. In fact, there is often what marketing experts call a “late-mover advantage.” One industry study found that first-mover companies beat out late-mover companies in only 15 of 50 product categories.

That’s what we see in the Pop-Tart story.

In February 1964, Marjorie Post announced the release of Country Squares, a shelf-stable fruit-filled pastry, which gave Kellogg the idea to create its own version.

Within six months, before Country Squares had even hit store shelves, Kellogg’s introduced “Fruit Scones,” which were quickly renamed Pop-Tarts, a nod to the then-popular Pop Art movement.

Pop-Tarts were a big hit, and in 1967 Kellogg’s added frosting that didn’t melt in a toaster and more flavors to add to the four original flavors: blueberry, strawberry, brown sugar cinnamon and apple currant.

What happened to Post’s Country Square? In 1965 it became a Tostem pop-up, and in 1971 it was sold to the Schultz & Birch Biscuit Co., which is now the world’s largest supplier of private label toaster pastries.

Paying tribute to this history, the Pop-Tarts website states, “While others may have attempted the art of toaster pastry, only one person has perfected it.”

While there are times when the first mover has an advantage, in the long run it is usually the follower who wins.