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When Opportunity Comes Face to Face with Hard Work and Preparation
Then luck struck. Or as some might say, "Opportunity came face to face with hard work and a lot of preparation." Just as Stuart perfected his production techniques, demand for evaporated milk skyrocketed as gold prospectors swept through Seattle on their way to Alaska to join the great Klondike Gold Rush. Prospectors started buying it off the shelves as fast as my great-grandfather produced it. By 1909, Carnation had grown from one plant to seven, and sales had gone from nothing to over $4 million a year. At 10 cents a can, that meant 40 million cans of evaporated milk were being produced each year.
Stuart's production process was extraordinary because it took about 60% of the water content out of dairy milk, thus making it easy to transport and store without refrigeration. Stuart, it seems, was in the right place at the right time. His perseverance, discipline, hard work, and faith—plus a little luck—launched the Carnation Company on the path to becoming a multi-billion dollar global food company.
Three generations later, the Stuart family hit pay dirt again. In 1985, international food giant Nestlé bought Carnation for $83 a share, or about $3 billion in cash. That price was nearly double the stated value of the company just a few years earlier and, at the time, was the highest price ever paid for a food company. Our extended family, which had much of its wealth tied up in the nearly 27 percent of Carnation stock it controlled at that time, suddenly landed on the Forbes 400 list of the wealthiest families in America, with close to $1 billion in collective assets!
It was an exciting time for us. We had achieved the American dream. In one fell swoop, we became wealthy beyond our wildest hopes and expectations. But therein lay the seeds of a problem.
Since Carnation's founding in 1899, members of my family had always identified closely with the company and all it stood for. The company had five presidents, three of whom were Stuarts. And even though H. Everett Olson, Carnation's CEO and the Chairman at the time of the sale, wasn't a family member, Wall Street and the business press always described the Carnation Company as "a tight-knit family enterprise."