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Coca-Cola Secret Formula is a Reminder

This week Coke and Pepsi cooperated in an investigation that led to the FBI arresting 3 alleged conspirators. They allegedly conspired to sell secret Coke information to Pepsi. One of them worked for Coca-Cola in an administrative role. The news is big, because the payout was in the millions. The finer print reveals that the conspirators actually only sought $10,000. It was the FBI that handed over $30k in cash and then offered to pay out millions for more, in order to string them along and catch them. It worked.

So aside from the reports of scammers seeking millions for Coca-Cola secrets, the truth is it was scammers seeking $10k (and willing to accept $5,000, according to the Times report) for high-level Coca-Cola secrets. That’s $5,000 cash for risking felony prison time. For three people.

A sober reminder of the value of information, and the value of cash. That information may have been worth millions; we will never know. It certainly has a very high perceived value, or the FBI scam and news reports would not be so effective. Was a felony prison risk worth one-third of a $5,000 payout? That’s $1666.67

Would your secretary walk off the job and take trade secrets with her for a $1700 cash “incentive”? What about your freelance programmer?

I have personally witnessed freelance programmers offer to re-use code developed for prior clients, with complete disregard for confidentiality/non-disclosure agreements. Based on my experience, I understand it to be part of the economics of freelance work.

One of the reasons freelancers can afford to accept work at competitive rates (especially those competing against offshore coders) is the latent value of the developed code. Latent for them, that is. The clients may very well appreciate the value of the proprietary information (just as Coke and Pepsi did in this espionage case), but does the hired consultant? Not unless there is an avenue to monetize that latent value. Your code, resting on their hard drives and archive CDs long after you have terminated your engagement, is of potential value to them. And the channel for monetizing it is the sales pitch – telling a prospective client about their prior experience developing for others.

So let’s say I approach the freelance coder that you just used for an assignment, and I offer.. oh, say $1700, for them to build me the same thing they built you. Would they take it? Would you ever know? What if all I wanted was the information? They wouldn’t even have to build me anything.
So how would I know what freelancer you hired? Exactly. And how would I know about your project? Exactly. It really is that easy.

One Comment

  1. yee wrote:

    just read the article… actually, i don’t think it’s that easy, first of all, it’s not just “any” project, you’re not acquiring the trade secret of how to make chocolate, it’s telling you distinctively that you will be making godiva from now on. Second, you know this is THE SECRET that Coca Cola have spent millions of dollars and mission impossible style to keep. The formula itself may not have worth much; corn syrup, carbonated water, blah blah blah… But the sentimental value has to be enormous

    Wednesday, April 30, 2008 at 12:27 am | Permalink