Mr. Potato Head A dirt-poor farmer turned spud scraps into gold.
By Paul Lukas

(FORTUNE Small Business) – Pity the humble potato, whose long reign as America's staple starch is jeopardized by the low-carb craze. Not only are French fry sales down--by 5% since last year, according to the U.S. Potato Board--but now an inventor claims to have developed a low-carb processed-potato substitute made from cauliflower. The indignity!

All that would no doubt be a puzzlement to F. Nephi Grigg, who once called potatoes the "most healthful of all foods." That may be a bit much, but Grigg's hyperbole is understandable, for he built an empire around his own contribution to the potato pantheon: Ore-Ida Tater Tots.

Grigg's story is as classic as his signature product. A high school dropout, he was given to Yogi Berra-like pronouncements such as "You'll never go broke by taking a profit" and "Bite off more than you can chew, then chew it." But he had an energetic, charismatic drive honed during the Depression, when he and his brother Golden Grigg eked out a living in their native Idaho by growing and selling potatoes and corn.

By 1951, with America surging into postwar prosperity, the brothers Grigg determined that the future of produce lay in frozen food. So when a bankrupt flash-freezing plant in eastern Oregon was auctioned off for $500,000, they pounced, mortgaging their homes to raise the down payment. They called their operation Ore-Ida--a nod to their factory's location near the Oregon-Idaho border--and started shipping frozen corn out west.

The following year the Griggs began producing French fries, a process that entailed shaving the potatoes into rectangular blocks before slicing them. The shavings were later sold for a pittance as livestock feed, which piqued Nephi's Depression-born sense of thrift. Couldn't something more profitable be done with the scraps? By 1953 he had the answer: The shavings were ground, mixed with spices, extruded, and fried. The result was Tater Tots, and the world--or at least suburban kitchens and school cafeterias--would never be the same.

Nephi introduced his new product by bringing 15 pounds of Tater Tots to the National Potato Convention in Miami later that year. There he bribed the convention's chef to serve up the nuggets. They were an instant sensation, providing Nephi with a de facto focus group test and a splashy product launch all in one. Thanks in large part to Tater Tots, Ore-Ida gained 25% of the frozen-potato market during the 1950s. With demand outstripping capacity, the company went public in 1961 and built more factories, bringing sales to $31 million in 1964. But the rapid growth masked problems in Ore-Ida's corporate culture, including nepotism (upper management leaned heavily toward Grigg relatives) and potential conflicts of interest (several principals, including the Grigg brothers, grew potatoes and sold them to the company). Sensing they'd gotten in over their heads, the Griggs sold Ore-Ida to Heinz in 1965 for $30 million. The move marked Heinz's entry into frozen food and Ore-Ida's ascension from regional upstart to national powerhouse: It currently commands 46% of the frozen-potato market.

As for Nephi Grigg, he died in 1994 at the age of 80, but not before self-publishing Breefs by Neef, a bizarre manifesto detailing his thoughts on everything from marriage and religion to hair tonic and golf--and, of course, potatoes, which he described as being "worth more than gold." Roll over, cauliflower, and tell Dr. Atkins the news.