By Paul Lukas Reporting by Maggie Overfelt

(FORTUNE Small Business) – "I feel kind of blue," wrote the 24-year-old Will Keith Kellogg in his diary in 1884. "Am afraid that I will always be a poor man the way things look now." W.K.'s feelings were understandable in light of his circumstances, working for his older brother, the famed Dr. John Harvey Kellogg, at the latter's Battle Creek Sanitarium, a holistic-healing facility in western Michigan. While Dr. Kellogg basked in celebrity and adulation, Will essentially ran the operation, working 15 hours a day, seven days a week. He kept the books, bought supplies, answered correspondence, served as handyman and janitor, and filled mail orders for the sanitarium's many products. For his trouble, W.K. earned $6 a week (the most he would ever earn in 25 years of toiling for his brother was $87 a month). He worked for seven years before being granted a vacation--Dr. Kellogg didn't believe in them. All this for a boss who had occasionally whipped him when they were kids.

In 1894, Dr. Kellogg, attempting to come up with a more digestible form of bread for his patients, added to W.K.'s duties, giving him some boiled wheat paste and instructing him to run experiments on it. One batch of the stuff inadvertently left to sit overnight dried out. When run through rollers and then baked, it turned into crispy flakes that were unexpectedly tasty. W.K. soon figured out how to duplicate the process. He didn't know it, but he was about to put an end to his days of feeling the financial crunch.

In an odd way he had his brother to thank for his newfound drive. "Will Kellogg developed what is known today as an inferiority complex," according to a psychologist quoted in Horace Powell's The Original Has This Signature--W.K. Kellogg (1956). "In overcompensating for this complex, Mr. Kellogg went to limitless bounds, and it is likely this was the greatest driving force behind his success." When the wheat flakes he'd invented, called Granose, were a hit at the sanitarium, W.K. wanted to launch them commercially. But Dr. Kellogg wouldn't provide funds for a proper factory. Even so, W.K. moved 113,400 pounds of Granose in 1896, the first full year of production, selling mostly to former patients. A ten-ounce box sold for 15 cents, which meant the Kelloggs were turning a 12-cent bushel of grain into $6 worth of cereal. Such profits quickly spawned imitators, and Battle Creek was suddenly full of flaked-out entrepreneurs (see box).

W.K. wanted to be one of them--if only he could. "About 1898, the health-food business, without any advertising or promotion, was continuing to grow," he wrote. "When talking to the board, I recall having offered the suggestion that, if given the opportunity, the food company would develop in such a manner that the sanitarium would be only a sideshow as to the magnitude of the food business." At the same time, W.K. came up with a new kind of flake, this time derived from corn. Sanitas Toasted Corn Flakes, with the sanitarium pictured on the box, sold well, and W.K. decided it was time to move out of the barn that had served as his makeshift factory. So in 1900 he had a modern facility built--not coincidentally, while his brother was traveling in Europe. Enraged to find this unauthorized development upon his return home, Dr. Kellogg insisted that W.K. repay the factory's $50,000 cost. "I guess my father did not like that very well," said W.K.'s son John L. Kellogg.

Sales continued to grow, and the company produced a profit of $24,542 in 1901. But the rise of imitators in Battle Creek led to a loss of $6,428 the following year. Dr. Kellogg was still resistant to responding to the heated competition with more aggressive merchandising. "Let's be content with a small business," he'd tell W.K. The younger Kellogg didn't see why copycats should profit from his invention and stepped up advertising, particularly on his corn flakes. He also kept tinkering with the recipe, adding cane sugar--again, while his brother was away; it was normally a forbidden ingredient at the sanitarium. The sugar not only sweetened the cereal but amplified its nutty flavor. "The Doctor came back from Europe and had a fit," recalled John L., but W.K. remained undeterred. He also began to ward off competitors by including a signature line in bold red letters on each box. It read: "Beware of Imitations. None Genuine Without This Signature, W.K. Kellogg." The moves boosted demand, and production grew to 150 cases a day in 1905, with annual revenues at $100,000, still far behind top rival C.W. Post's operation.

Given that growth, W.K. suggested that he set up cereal as a distinct company, which he offered to run in return for a block of stock. His brother agreed, and the Battle Creek Toasted Corn Flake Co. incorporated in February 1906, with W.K. holding one-third of the stock and most of the rest owned by his older brother. Now knowing the best time to get things done, W.K. waited until his brother was traveling to overthrow him. The Doctor, forever frugal, had been paying some sanitarium employees in stock from the new cereal venture instead of using cash. W.K. began buying up that stock. By the time Dr. Kellogg returned home, W.K. held a controlling share. Finally free of his brother's grip, he set out to bowl over the burgeoning cereal market.

His primary weapon? "Much of the initial success of the company was the result of a decision at the outset to advertise extensively and intensively," reported the Battle Creek Enquirer and News. In many ways W.K. had no choice. His brother's patent application on the process for toasting flakes had been rejected in 1903, and in 1921, W.K. lost his trademark claim to the name "Toasted Corn Flakes" (prompting the company's name change to Kellogg Co. in 1925). By 1911 there had already been 106 other corn-flake brands in Battle Creek, so he hardly had a unique product. The Kellogg Co.'s ultimate success is a testament to the power of its advertising, first established by W.K. Kellogg and later shaped by advertising guru Leo Burnett (creator of Tony the Tiger).

W.K.'s experiments had begun in 1906, when he spent $150 on a newspaper ad in Dayton, one of the earliest applications of test-marketing products in a single city before going national. After its success, he spent about a third of his working capital on a clever--and hugely expensive--full-page ad in the Ladies' Home Journal. The ad told readers that 90% of them could not purchase Kellogg's Corn Flakes because most stores didn't yet carry it. So would they kindly pressure their grocers to stock the product? The gambit worked, and sales soared. By the end of 1906, W.K. had spent $90,000 on advertising and shipped 178,943 cases of corn flakes, generating a profit of $1 a case. An even more ingenious ad ran in 1907: Without mentioning Kellogg, it instructed shoppers to wink at their grocers on Wednesday and see what happened. Winkers were rewarded with a free sample of Corn Flakes, a gimmick that boosted sales 15-fold in New York alone. Those initial moves were so successful that not even a catastrophic factory fire in the summer of 1907 could slow Kellogg. "The fire is of no consequence," said one of W.K.'s partners. "You can't burn down what we have registered in the minds of American women." W.K. had an architect at the site within just 12 hours, built a brand-new, fireproof factory, and was back up to full production within only six months.

Kellogg also experimented with other advertising forms. By 1912, W.K.'s ad budget was $1 million, and he began using it to erect huge urban billboards, including one in New York City's Times Square that was then the largest in the world. Kellogg also became one of the first American companies to use full-color magazine ads and door-to-door product sampling, which were harnessed to launch new cereals, including Krumbles (1912), 40% Bran Flakes (1915), and All-Bran (1916). Although World War I materials shortages led to a $1 million shortfall in 1920, that turned out to be an aberration. The company kept right on marketing through the Great Depression, and kept growing too: Kellogg was a $5.7 million company in the early 1930s.

W.K. Kellogg had hoped to hand off his business to his progeny, but he never established a family dynasty because in some ways he seemed to resemble his abusive brother. As one observer told Kellogg's biographer, "There was something about the Kellogg breed.... Apparently there was no organization, house, or other thing big enough to hold two male Kelloggs." W.K.'s son John L. was instrumental in many early Kellogg successes, including improving the malt process that led to the birth of All-Bran and developing a wax-paper lining inside the box, a cheaper process that saved the company $250,000. But W.K. forced his son out in 1925 when John suffered two moral lapses: First he bought an oat-milling plant (heresy at the corn-and wheat-based Kellogg Co.), and then he divorced his wife to marry a Kellogg office worker. Then W.K. pinned all his hopes for a descendant to succeed him on his grandson, John Jr., beginning when the boy was just 14. Eventually W.K. pushed him out as well. In 1938, John Jr. committed suicide. According to Kellogg biographer Horace Powell, "He never could completely divorce his sorrow from the fact that there was no Kellogg to run the business." In 1939, with sales at $33 million, W.K. finally stepped aside as president, handing the reins to a former bank executive, Watson Vanderploeg. W.K. remained on the board until 1946, when he was 85 (he died five years later).

As television became popular in the late 1940s, Vanderploeg grew concerned by the challenges of the new medium. He ended up sitting next to adman Leo Burnett during a 1949 train ride. Vanderploeg couldn't believe this sincere man with a slovenly appearance was a huckster, but when Burnett told him, "Just give me one of your products, and I'll show you what I can do," Vanderploeg agreed. In those days TV advertisers sponsored entire shows, and the show's stars touted the product on-camera. Burnett and his team came up with a series of winners for Kellogg, including Howdy Doody (which featured the marquee puppet "eating" Rice Krispies), Superman, and Art Linkletter's House Party for the All-Bran crowd. And as Kellogg began introducing sugary kids' cereals like Frosted Flakes in the early 1950s, Burnett created the enduring bond between cereal ads and Saturday-morning cartoons.

Burnett also overhauled Kellogg's packaging. In 1951 he convinced Vanderploeg that cereal boxes should have as much visual appeal as magazines. "If you count each Kellogg package that goes through grocery store shelves," said Vanderploeg, recounting the argument that won him over, "that's a circulation of half a billion a year--better than Life." Burnett introduced bold, pop-art colors and deemphasized the company logo, freeing up space for cartoon characters, photos of Kellogg-sponsored TV stars, and bouncy illustrations from top-notch graphic artists like Norman Rockwell. Under Burnett's guidance in the 1950s, Kellogg's sales and profits doubled, scooping up $21.5 million in profits on $256.2 million in sales in 1960. Leo Burnett's agency still handles Kellogg's advertising.

But its job hasn't gotten easier since the heyday of the 1950s and 1960s, which saw the continued cartoonification of the cereal aisle (Kellogg worked with everyone from Hanna-Barbera characters like Yogi Bear to the Monkees). By 1970 a backlash against supersweet cereals began, starting with congressional hearings and leading in the late 1970s to the American Dental Association and activist group Action for Children's Television condemning products like Kellogg's Froot Loops as no better than candy. In 1978 sales of sweetened cereal fell 5%, the first such drop since they were introduced in the 1950s. Of more concern to Kellogg than the criticism was the aging of the baby-boomers, because 25-to 50-year-olds eat half as much cereal, sweetened or otherwise, as those under 25. Kellogg's efforts at diversification were either thwarted--it tried unsuccessfully to buy Tropicana and Binney & Smith, maker of Crayola--or ill advised. It acquired Lender's Bagels in the '90s but ended up selling it at a loss after three years. Kellogg's answer to every dip in the cereal market remained the same, as if W.K. Kellogg were still at the helm: more advertising. These pushes, along with price increases, have helped sales keep growing, albeit at a slower pace.

Certainly back when he served to glorify his older brother's work at the sanitarium, Will Keith Kellogg wouldn't have imagined that he'd be the Kellogg who'd be remembered. But while Dr. Kellogg has become something of a footnote, if not a punch line--satirized in the book and movie The Road to Wellville--W.K. became a noted philanthropist with his W.K. Kellogg Foundation. Even after his death, the inventor of the first cereal could claim yet another creation: Special K, a high-protein cereal released in 1955, after 25 years of W.K.'s prodding. It's fair to say that W.K. not only got out of his brother's shadow but also ended up overshadowing him.