According to a recent MIT paper on successful startups, the prognosis for Ben & Jerry’s would not have been good. The reason? Their location and name.
Ben & Jerry’s
Ben was a pottery teacher. Jerry had recently been rejected by medical schools. After completing a five-dollar correspondence course in ice cream making, they decided to start an ice cream store. Discovering that Vermont was the only state without a Baskin-Robbins outlet, they headed north.
In 1978 they opened the first Ben & Jerry’s Ice Cream Store in a renovated garage near the University of Vermont. Ice cream and Vermont winters complement each other (they said) because you feel warmer when the inside of your body and the outside air have a similar temperature. As for quality, the ice cream would be super premium with unusual flavors. Their Chocolate Heath Bar Crunch required (according to them) a six-foot ladder for dropping the Heath Bars. Only then could they achieve the ideal-size chunk.
Location should have been Ben and Jerry’s first problem. Vermont is not close to the epicenter of startups. The money and expertise are elsewhere.
In the following contemporary map, you can see minimal entrepreneurial activity in Vermont. The peach color identifies the high density startup locations:
The MIT study also found that it was more likely for a successful firm to have a short name. The maximum was three words (and they included “inc”). In addition, with an 82% lower probability of growth, firms with their founders’ names were doomed.
We should note that the MIT authors said location and names were not causal. Instead they are a “digital signature” shared by successful entrepreneurs.
Our Bottom Line: Growth and Jobs
Like today’s startups, when they were young, Ben & Jerry’s, Apple and Biogen fueled economic growth through their innovation and job creation.
My sources and more: This Slate article summarizes two MIT papers on startups from 15 states and also from Massachusetts. Please note that the story of Ben & Jerry’s originally was published in my book, Econ 101 1/2 from Harper Collins.