Nathan Handwerker had spunk, but not much else. Having arrived to the United States from one of the poorest parts of the geriatric Austro-Hungarian Empire in 1912 (part of modern Poland), he had gotten a dead-end job at Feltman’s German Garden on Coney Island. His situation resembled tens of millions of others who had come to the United States from eastern and southern Europe between 1880 and 1924. What set him apart? He had the traits often found in successful people. He was smart enough, had an elevated risk tolerance, knew how to construct systems that worked, and had a certain knack for persuasion. This was how Nathan Handwerker made the hot dog famous and turned his spunk into an empire.
At Feltman’s, Nathan Handwerker (a roll slicer) requested to spend more time working with the hot dogs in the kitchen. These were considered a low-quality food at the time. The restaurant sold them for 10 cents, at the bottom of the menu. Though they had a terrible reputation among the public, Nathan Handwerker saw them in a different light. He saw a food that was portable and easy to prepare. One need not sit down and devote time to eat a hot dog. A hot dog is easy to carry and consume anywhere, and you won’t need to spend 20 or more minutes cooking it.
Using these insights, Nathan Handwerker and his wife Ida took their life savings of $300 and bet it all on a little hot dog stand. Ida came up with the recipe and they used spices from a secret recipe from Ida’s grandmother.
The initial strategy was to sell them for a nickel, half the price that Feltman’s was charging.
In 1916, Nathan’s hot dog stand opened. Unfortunately for its owners, it was not an instant hit. The problem wasn’t one of price, although that was part of it. As is so often the case, the lower price actually drove customers away because they assumed it reflected a lower quality product, a product whose quality was already suspect.
The main problem was that nobody trusted hot dogs as a food (thanks in part to Upton Sinclair’s The Jungle in 1906). Unlike Feltman’s, Nathan’s stand only sold hot dogs. It was in many ways the pioneer of the fast food restaurant, focusing only on one easy to prepare meal. Unfortunately, that also meant Nathan and Ida Handwerker had no backup when the hot dog proved an unpopular item.
He displayed his knack for persuasion early on when he put the “famous” tagline underneath the “Nathan’s” name. According to The Food that Built America, he had earlier seen other businesses do it and decided that if they could, he could, too. Of course, Nathan’s was nowhere near famous at that point, but there was no reason why he couldn’t use the name. That name gave it some legitimacy. It was a play on what we would today call social proof. If it’s “famous,” then surely, it must be worth checking out!
The problem, however, still remained, and the “famous” tagline didn’t assuage the public’s fears that the hot dog was an unclean, dangerous dish.
Still, Nathan Handwerker was on the right track. Another of the seven universal principles of influence (which Robert Cialdini outlines in Influence and Pre-Suasion), would prove to be the missing ingredient.
Nathan Handwerker may have been inspired by the success of the White Castle company in the interior of the country when he made his next move. White Castle had successfully dealt with a similar problem that he had. Its staple dish, the hamburger, was also considered an undesirable and dangerous food. Yet, White Castle experienced a boom by emphasizing cleanliness at every turn. Its staff dressed in white uniforms (they still do). The name “White Castle” itself was an attempt to emphasize cleanliness.
Nathan Handwerker decided to go a step further.
He recognized that the unhealthy perception of his dish was the problem. People thought that the hot dog was a bad food for their health. He needed to find a way to get around this emotional barrier. His solution was simple, but also ingenious.
He hired a group of men to eat at his hot dog stand while wearing medical clothing. They claimed to be affiliated with the nearby hospital. When crowds saw this, they began to lose their inhibitions. Nathan Handwerker had pulled Robert Cialdini’s authority trigger and hit a bull’s-eye. Social proof came into the equation now, too, as more people were eating hot dogs and obviously not dying from them.
Nathan Handwerker had overcome his most important obstacle, but an entirely new catastrophe brewed.
Nathan’s Famous in the Great Depression
As fate would have it, not everyone lost his shirt after the 1929 stock market crash ricocheted into a worldwide economic crisis. The Great Depression meant that most families pinched pennies as huge numbers of people became unemployed.
Nathan’s Famous hot dog stand now looked like a godsend. The nickel it charged for its hot dog was all many families could afford at the time. As a result, business boomed. Nathan Handwerker had already made it by the time the Great Depression hit, but the economic downturn made him richer than he had ever been.
It is important to remember the lesson on pricing here, however. If he had not solved the perception problem around the hot dog, the low price would not have meant anything. Simply trying to undercut your competitors does not always translate into success. The public instead needs to believe that your product is beneficial before it will be in the mood to find bargains.
Indeed, you’re often better off charging a higher price, because your customer will view the product as being of higher quality. Each product and industry will be different, but this is something to keep in mind. Read Influence: The Psychology of Persuasion for more on this.
Why Nathan Handwerker Became Famous
With the career of Nathan Handwerker, we see that he had succeeded because of his fortitude. He had big problems, but an inventive mind, and the fortitude to take his suffering and find ways to win.
He also had a keen sense for persuasion, which required him to get outside of his own head. Most people are too self-absorbed to become truly great persuaders. Nathan Handwerker would have needed to question his own brilliant idea about a hot dog stand more than once before he got the equation right. Many people would have continued with a losing strategy because it had originated in their own minds. Michael Eisner’s downfall at Disney is a good example of this tendency.
The signs outside of Nathan’s Famous on Coney Island are as good a visual aid for persuasive greatness as you’ll ever find. Note the emphasis on “only” (scarcity), along with the command to “STOP HERE!” Then, the viewer is commanded to “follow the crowd” (social proof).
Nathan’s is a great story, full of life lessons on personal fortitude and overcoming narcissism. If somehow the “famous” hot dog stand failed, he is one of those individuals more likely to have found success in another field, because he had character traits that fortune could never remove.
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