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Kroc Increased the Mortgage on His Home to Regain Control of His First Entrepreneurial Venture



Ray Kroc was the founder of the McDonald's chain, who wrote an autobiography called Grinding It Out. Back on August 12, 2009, I made a few comments on the book, and said that in some future entries, I would be quoting a few passages that I thought were worth remembering.

Well, the future has finally arrived.

Kroc's first entrepreneurial venture was Multimixer, a machine that efficiently made milkshakes. Kroc had sold a controlling interest, and wanted control back:


(p. 56) "All right," I said, "how much?"

I don't know how he kept from choking on his own bile as he mouthed the figure: "Sixty-eight thousand dollars."

That's all I remember of our conversation. I'm sure I said something. But I was so benumbed by his outrageous demand that I couldn't think straight. To add acid to the irony, he wanted the whole thing in cash. Of course, I didn't have that kind of (p. 57) money. So what we worked out was the culmination of the devilish deal he had tied me to. I had to agree to pay him $12,000 cash. The balance was to be paid off over five years, plus interest. My salary had to remain at the same level and my expenses in the same range. So, in fact, what I was doing was paying him the profits of my company.

I didn't know where in the hell I was going to raise the money, but I had made up my mind to do it. In the end, most of the cash came from my new home in Arlington Heights. I managed to get an increase in the mortgage, much to Ethel's dismay. Her apprehensions about my becoming Mr. Multimixer had been laid to rest at this point, and I don't think she ever got over the shock of discovering that we were nearly $100,000 in debt. She couldn't seem to handle it.

For me, this was the first phase of grinding it out--- building my personal monument to capitalism. I paid tribute, in the feudal sense, for many years before I was able to rise with McDonald's on the foundation I had laid.




Source:

Kroc, Ray. Grinding It Out: The Making of McDonald's. Chicago: Henry Regnary Company, 1977.





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