Business & Finance: Irium-Plated Alger

The Pepsodent Co. of Chicago is a business anomaly: everyone knows about its product and no one knows about the company. Millions have responded to Amos & Andy, who helped make “film” on teeth a wallflower’s nightmare; millions have listened to Bob Hope and been persuaded that “Irium” applied to their teeth would make them the toast of the town.* But while millions bought Pepsodent, no one could buy the unpublicized company that made it—nor can anyone buy it today.

Lasker and Luckman. For 25 years, the mastermind of this profitable anonymity has been Chicago’s famed advertising millionaire, Albert Lasker, the man who retired the industry’s haughtiest name, Lord & Thomas, when he himself retired from the advertising business last year (TIME, Jan. 4, 1943). In 1919 Pepsodent was a peewee four-year-old formula (gross sales: around $2,000 a week), manufactured by a Scottish Chicagoan, the late Douglas Smith. Lasker agreed to risk $300,000 to advertise the new product, asked only a minority interest in the company in return. Before long, thanks to Lord & Thomas, it was obvious that profit-minded Lasker had made one of the best deals of his life.

But for the past nine years the man who has really made Pepsodent click as a company has been a young character right out of Horatio Alger: a small, blond, Leslie-Howardish man named Charles Luckman. “Chuck” Luckman, now 34, began working as a Kansas City newsboy when he was nine, worked his way through high school and the University of Illinois toward his boyhood dream of becoming an architect. When he graduated in 1931, he had not only an architect’s license but also a marriage license. To pay for the consequences of the latter, he took a draftsman’s job at Colgate-Palmolive-Peet. He went into selling because a Colgate executive questioned the impact of one of his layouts and he had to prove personally how good it was. The nearest he has been to architecting since was to design his colonial house in Barrington, Ill. and his redwood ranch house in San Diego County, Calif.

By the time Chuck was 24, he was Colgate district manager in Milwaukee, where he turned $80,000 worth of red ink into a profit in one year. Two years later, when he was a divisional manager in Cincinnati, Pepsodent snapped him up as sales-promotion manager (“didn’t know about my age; I lied”). For four years he was promoted every year — except in 1939, when he became vice president and general manager. He stayed in that job for two years. Then he became executive vice president and, last June, president of Pepsodent. At that time, he got a good coat of Irium himself; besides his $100,000 salary, his stock interest in the company was raised from 5 to 15% (Douglas Smith’s son Kenneth holds the majority of the stock; the rest is still in Albert Lasker’s hands).

“Footballing” and Fair Trade. When Chuck Luckman went to Pepsodent, it was suffering from too much sales appeal: large merchants were “footballing” it, i.e., selling it below cost as a “loss leader,” while independent druggists, the backbone of the business, fumed. Brooklyn drug stores strung up banners screaming “We do not carry Pepsodent products”; in California there was a statewide boycott. But at that time any company attempting to set price minimums was in danger of violating the Sherman Act.

Chuck Luckman attacked the problem at the source. He donated $25,000 to the National Association of Retail Druggists to help start the ball rolling on legislation to allow minimum-price-fixing by manufacturers. Result: the Miller-Tydings Fair Trade Act of 1937. He also spent 51 of his first 52 weeks with Pepsodent in traveling around the field persuading jobbers and retailers that Pepsodent really meant its promise of better, safer profit margins. In his first years with the company, gross profit before taxes slumped to $600,000. Last year it was up to $3,000,000, an all-time high, and this year sales are running 11% ahead of 1943. According to a recent survey by an independent market-research outfit, Pepsodent for the first time in its history is now leading the tooth-cleansing business (the other three of the “Big Four” that do 55% of the total dollar volume: Colgate, Ipana, Dr. Lyons). Fair-trade practices have paid off Pepsodent.

Luckman and Hope. In his travels (he still requires all Pepsodent executives to spend at least one-third of their time in the field), Chuck Luckman sold the men who sell the product. His latest projects are more esoteric: to make druggists love Pepsodent he has 1) engaged Industrial Designer Raymond Fernand Loewy to work out blueprints for ideal drugstore layouts; 2) asked the American Medical Association to study cooperation between doctors and prescription departments—though Pepsodent makes no Pharmaceuticals.

Last week Chuck Luckman was in Manhattan, en route to a Florida conference with Albert Lasker. He had just signed up Charlotte (“So Long Letty”) Greenwood for his summer radio program while Bob Hope, “Pepsodent’s No. 1 property,” is on vacation. Luckman says: “Without looking I can tell the seasons of the year and the Crossley ratings just by the tone of Hope’s voice when he phones me for a raise.”

But Luckman’s resolute promotion of Hope himself, as distinguished from Pepsodent, belies his gags about his good friend. Last year Pepsodent paid $225,000 to finance Hope’s supersuccessful Army camp tours (TIME, Sept. 20), a new high. (Jack Benny—also a smart man with a dollar—recently decided to leave Grape-Nuts for Pall Mall cigarets, where he too will get a budget for personal promotion.) The fact seems to be that a team like Luckman and Hope pays off both partners.

*Irium is the trade name for the cleansingagent sodium alkyl sulphate.