NOVEL WEB Chapter 38: Chapter 38: Pepsi
The next day, Paul delivered the information about Pepsi.
Pepsi's headquarters were located in New York, and its market share was only about one-tenth that of Coca-Cola's. It wasn't until later that Pepsi, through its strategy of increasing volume and lowering prices, managed to capture the low-end market.
Many lower-income individuals, especially white Americans, drank Pepsi because it was cheaper. This earned it the nickname "Black Cola."
Pepsi had attempted three times to be acquired by Coca-Cola, but each attempt was rejected. This situation persisted until after World War II, when Pepsi gradually began catching up.
That afternoon, George had an appointment with Bradham, Pepsi's current owner.
"Hello, Mr. Bradham."
"Hello, Mr. George Orwell. Your name has been everywhere lately, and I've read your book, Of Mice and Men."
"Thank you for your support. I'm here today mainly because I'm interested in the beverage industry. I'd like to know if you're willing to sell some shares."
Bradham looked at the young man in front of him and thought, He's certainly straightforward. If he likes beverages, why not just invest in Pepsi? Then it occurred to him: Orwell is already a major shareholder in Coca-Cola. Could he be planning a merger? It's not out of the question.
"As far as we know, Mr. Orwell, you're already a significant shareholder in Coca-Cola. Why the interest in our company?"
Changes in the shareholders of a listed company must be disclosed, so this was public information.
"As you said, I'm just a major shareholder—I don't control Coca-Cola. I want to own a beverage company outright."
Bradham mused, Typical nouveau riche behavior—he wants to fully own anything he takes a liking to.
George continued, "I'm quite optimistic about Pepsi's future and have a few ideas of my own. I'm not interested in making money for others. Ideally, I'd like to start my own beverage company. Of course, I hope the original founding team continues to manage the business. I would also leave you with 10% of the shares. What do you think?"
George then offered $1.2 million to acquire a 75% stake. He had already instructed Paul to quietly acquire 7% of the company's shares on the stock market. Excluding the shares reserved for management, if he could secure the rest, he could proceed with delisting.
Three days later, after internal discussions, Bradham and the other shareholders agreed to sell. PL Company would acquire Pepsi. The next step was to complete the delisting process.
George made minimal changes to Pepsi. He advised Bradham to reposition the brand with a youthful image and even sketched out the blue packaging he envisioned for Pepsi, a design that wouldn't appear for another hundred years. This aligned with Pepsi's eventual post-WWII strategy. He also introduced the slogan: "Pepsi-Cola hits the spot."
Even if he followed the original timeline, George stood to profit steadily. While aluminum cans could already be produced, George hadn't registered a patent yet. If the opportunity arose, he could build the infrastructure himself. However, funds were limited at the moment, so he put those plans on hold.
With matters in New York settled, George traveled to MIT on the 4th to complete his enrollment. He officially began his university life but chose not to live on campus. Instead, he purchased a fully furnished three-bedroom apartment near the school.
That day, George unpacked essential items from his personal storage space and stocked the refrigerator with groceries. Without a resident nanny, he had to cook for himself. Luckily, he was an excellent cook and had no concerns about preparing his meals.
Classes officially began on the 6th. The first two years were primarily pre-university coursework, which George had already studied during his time in Washington. He quickly surpassed the curriculum and began exploring other subjects on his own.
Thanks to his exceptional learning ability, George had no difficulty keeping up. He even dispatched five clones daily—each with a different appearance—to study various subjects in the school library.
Thus, George spent the next few days quietly excelling as a model student.
On September 14th, Paul called: "Boss, I just received a call from Mr. Groman, the Vice President of American Bank. He's sent you an invitation to a charity auction gala on the evening of the 18th in New York. He said many high-society figures will attend. It's a great opportunity to network. He urges you to go."
"Got it. Send the invitation to my home."
"Yes, Boss."
After hanging up, George speculated that someone important was using Groman to reach him. This person likely had their eye on something George possessed. Among his patented and publicly known assets, only three battery technologies and the electric starter for cars stood out as worthy targets.
George had originally planned to bring these up in December.
Earlier that year, General Motors' stock had undergone a 10-for-1 split, reducing its price to $42 per share. Durant, holding several million shares, briefly became one of the richest men in America. But by April, auto stocks began to decline, as is often the case with leading-edge technologies.
Durant could've waited out the dip, but trying to protect investors and employees, he intervened to stabilize the market.
Alfred P. Sloan, a key figure at GM, later remarked that Durant's odds of success were as slim as stopping Niagara Falls with a hat.
Durant used margin to buy GM stock—paying only 10% upfront, with brokerage firms covering the rest. This strategy works when prices rise. But in 1920, prices were falling across the board. Brokers demanded more collateral, and when clients couldn't provide it, they liquidated holdings at a loss.
By late October, GM's stock had dropped to $17. By November 10th, it was down to $14—a third of its April value. Durant, once nominally wealthy, was now in serious trouble.
He didn't admit it publicly, but rumors spread quickly. Major stakeholders like DuPont and Morgan Bank demanded answers. On November 16th, Durant revealed the truth. He needed to pay an additional $150,000 in margin the next morning—barely enough to hold on.
Unfortunately, GM's stock dropped again the next day to $13.50, triggering new margin calls.
DuPont and Morgan realized that if Durant dumped his shares, it would wreak havoc on GM and their investments. They bailed him out, lending enough to settle his debts. In doing so, they averted a financial disaster—but Durant lost nearly all his GM shares, which passed to DuPont and Morgan.
There was more than misfortune at play—DuPont had set a trap, aiming to oust Durant. Once he stepped down, DuPont took control of the board, while Morgan Bank secured most of his shares.
George had planned to ride this situation by slowly acquiring GM shares starting in November. Durant would've welcomed the help, as it would stabilize the market. George could also offer Durant cash in exchange for shares as collateral.
Then, when the time was right, George would bring out his battery and electric starter patents to negotiate with the financial elite, trading short-term profits for long-term influence.
But someone else was already making moves.
When Leland of Lincoln Company wanted to meet George, he contacted Groman, who merely had someone make a phone call. This time, the invitation was hand-delivered—an indication of higher status.
George suspected General Motors or even the Morgan Family. The nickel-iron battery had been invented by Edison, whose backer was the Morgan Family. Though the battery had many flaws, its application in automobiles generated substantial patent royalties.
As a major financial entity, Morgan's think tanks would undoubtedly recognize the battery's future potential. So, it was very likely someone from GM wanted to meet George.
On the 15th, George took leave from school and returned to New York. He decided to visit the stock exchange the next day to buy GM shares, signaling his willingness to cooperate.
The next morning, George and Paul went to the brokerage. George glanced across the street at the grand Morgan Bank building opposite the New York Stock Exchange.
Inside, they met the same broker as before. GM's opening price was $16.50 with heavy sell volume. Before noon, George purchased 200,000 shares, posting $400,000 in margin. He estimated his stake at 0.8% of GM and even pushed the stock price up to $17.
Time was of the essence—he couldn't accumulate shares slowly or in secret. So he acted boldly. With Durant holding the line, the pressure was manageable. Even if his moves disrupted other plans and provoked retaliation, George wasn't concerned. He used real money, and for the next two days, he planned to buy even more. The $5 million he had set aside was for exactly this purpose.