Pepsi CEO Took Russian Warships
The 'Relationship Permission' playbook
Good morning, everyone.
This week’s newsletter includes: some tips on how to negotiate with a Soviet Premier, alongside a good example of how to build relationships before you need them.
How To Get “Relationship Permission”
In 1989, Pepsi CEO Donald Kendall needed payment from the Soviet Union - but instead of cash, he walked away with navy fleet of warships…
In the late 1980’s, the Soviet Union loved Pepsi.
But there was one big problem...
Their currency - the ruble - was worthless outside the country.
Most companies would have walked away, but Pepsi’s CEO Donald Kendall wasn’t your typical Chief Exec…
He had served as a U.S. Navy pilot in WWII, earned a Distinguished Flying Cross, and started at Pepsi in 1947 - bottling soda and delivering crates by truck.
By 1963, he was CEO.
Donald had also built rare access to global leaders.
In the midst of cold war tensions, he famously asked Soviet Premier Nikita Khrushchev to try a cup of Pepsi at an exhibition.
Before the USSR collapsed, Donald struck one of the strangest deals in business history...
The Soviet’s placed a huge order for Pepsi syrup, but given their currency restrictions had no way to pay.
Donald didn’t want to lose the deal, so he asked the country what they could pay with.
The answer: warships.
With the help of a shipping company, Pepsi arranged to accept Soviet warships as a part-payment for the syrup.
The deal included 17 submarines, a cruiser, a frigate, and a destroyer.
For a brief moment, Pepsi technically controlled the sixth-largest navy in the world.
At the time, Donald joked to White House officials:
“We’re disarming the Soviet Union faster than you are!”
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Joseph Cass