Recently I've gotten hooked on History Channel's series The Food that Built America.

If you haven't seen it yet, it's a great watch (there are full episodes at the link above). The show goes into the back-stories of some of the early food, beverage, and restaurant companies in the U.S. like Coca-Cola (KO), Hershey (HSY), McDonald's (MCD), and many others. The history is pretty fascinating, showing a lot of things you may not have known about the U.S. just a century ago. It is also entertaining, detailing some of the early business rivals such as Hershey and Mars. Ever wonder how M&M's got their name? Was Colonel Sanders actually a colonel? Watch the show!

I mention it here because there are business lessons in the show, and business lessons by nature turn into investing lessons for those not actively involved in building a business. That describes us.

Here are 3 investing lessons from The Food that Build America!

Innovation Drives Growth

Food companies seem like boring, basic old-world businesses nowadays, but back in the late 1800s and early 1900s, they were on the cutting edge of innovation.

Take Nabisco, for example (now part of Mondelez (MDLZ)). At the time, crackers were sold bulk out of barrels at your local store. There are several problems with this. First, crackers near the bottom would become old, crushed, and stale ("bottom of the barrel!"). Second, it was difficult to distribute product like this widely.

To solve the problem, Nabisco came up with two innovations. First, they became the first company to use folding cartons to package crackers in 1896. This helped solve the distribution problem, but the real breakthrough came in 1900 when Frank Peters invented wax paper lined cartons, which kept crackers fresh, dry, and intact for long periods of time. This allowed Nabisco to achieve the nationwide distribution that had been alluding to them. The Uneeda Biscuit took off, and its success allowed Nabisco to fund the creation of many other iconic foods, including Oreos, Triscuits, and Fig Newtons.

It is pretty interesting to learn of all the little innovations like this. Henry Heinz's idea to package ketchup in clear glass bottles to display the product seems basic today but was a revolutionary idea for its time.

The story here is that innovative companies are the companies that can grow the fastest. And growing a business fast usually equates to a rapidly growing investment. Look out for this key characteristic!

If You're Gonna Think Anyway, Think Big

Innovation is great, but to really capitalize on it, companies need to think big - really big!

The best example of this in the show is the story of McDonald's. Dick and Mac McDonald's "Speedee" system was an incredible innovation. At the time, drive-in diners were the rage, but they were slow and inefficient. Dick and Mac realized this from running a drive-in barbecue, having trouble turning a profit. They analyzed their sales and noticed that just a few items - burgers, fries, sodas, and milkshakes - made up 80% of sales (a good illustration of the "Pareto Principle"). Around this knowledge, they designed a system based on speed and efficiency, where customers could be served in a matter of seconds instead of 30 minutes or more.

It was just about this time that the U.S. interstate system was coming online, opening up a new rush of car travel across the country. Travelers did not want to wait for food. Ray Kroc - a traveling salesman - found the McDonald's restaurant and was blown away by its speed and efficiency.

Ray Kroc immediately thought big - franchise this across the USA! But the McDonald brothers were more focused on absolute adherence to their formula, reluctant to sell franchises. Still, they agreed to let Kroc try it.

We all know what happened next. Ray Kroc was wildly successful, adding his own twist to innovation (a landlord aspect to the franchising model), and pushing the concept across the country. Eventually, he became big enough to buy the McDonald brothers out. It was his big thinking that took an important innovation and made it into a powerful global company.

The opposite of this can be seen in the White Castle story. White Castle was actually the first quick-service burger chain, opening in 1921 (a full 34 years before McDonald's). But opposition to franchising and insular, family-centric ownership has prevented it from achieving the same kind of success. CNBC even did a video on why it never grew into a national chain.

The lesson? Innovation combined with aggressive, big goals lead to the greatest growth successes.

Green Dot Principles Apply

The most relevant revelation, and the one that inspired this article, is that our 3 "green dot" principles - rising revenues/large market, recurring revenues, and moat - applied even 100+ years ago when many of these food and beverage companies were rising up.

Take Coca-Cola, for example. Certainly, Coke filled out the innovation and "think big" lessons mentioned above. Like McDonald's (and many other companies), Coke had two different people drive these two lessons. John Pemberton invented the drink, but Asa Candler built the business.

Coke could never have gotten to be the global behemoth it is today - it is the 2nd most recognized word in the world - without the 3 "green dot" characteristics.

Certainly at its founding in 1889, and even when it went public in 1919, The Coca-Cola Company had all of the makings of a great investment. Its market potential was simply enormous: every person on planet earth could realistically become a customer! Its revenues were recurring, as its product was rapidly consumed and needed to be repurchased over and over again by the same customers. Finally, it would have been clear even in 1919 that Coca-Cola was developing a valuable consumer brand that customers were familiar with and asked for by name - an indication of the "automatic purchase" brand advantage.

Investors that identified Coke early on, and HELD ONTO THE STOCK (this should be our 4th principle), would have turned a $100 investment in the IPO into well over $1 million dollars today.

Why It Matters

Clearly, the companies profiled in The Food That Built America have had their day. While they still benefit from a recurring revenue style of business model, and many of them have long-established brand moats, the days of significant revenue growth are far behind. Most of them have been global for decades now, their market opportunities largely fulfilled. This would violate our "rising revenues" check, making most of these YELLOW dot companies today. Not bad investments, but largely financially driven through share buybacks and dividends. They are not going to deliver 5-10 bagger investment returns.

But what we can do - like the founders of these companies did - is look for what the next great opportunities are, and the companies pursuing them. We can look for innovative companies pursuing large market opportunities, with recurring revenue and established or nearly established moat characteristics. These will be the next great companies that History Channel viewers in 50+ years will be eager to learn about.