Pete Campbell oversteps the mark when he pitches an idea for ad campaign to the head of Bethlehem Steel without telling Don Draper. Draper wants him fired but learns a lesson in corporate politics. Pete's wife wants to buy a Manhattan apartment but he has to approach his cold and distant parents for a loan. Pete's in-laws, however, are more forthcoming.

Don and Betty Draper have an argument when it becomes apparent that he doesn't want to spend Thanksgiving with her family and she plans on going only with the children. He also learns some information about his brother Adam. Pete Campbell confirms that he has landed an account from his father-in-law for a new skin care product called Clearasil. He objects however when Don gives the account to Peggy Olson, whom he has just promoted to junior copywriter. Peggy proves her mettle in auditions for the weight loss device but later is feeling unwell and goes to the hospital where she is given some shocking news. Don comes up with a brilliant presentation for Kodak on a new wheel-like storage device for a slide projector that he dubs The Carousel.

Don drops off the Sterling Cooper radar and visits the wife of the man whose identity he stole. Back at the office, Bert and Roger consider the merger offer, Peggy makes a play for a real office, and Peter loses his father-in-law's account.

Peter finds out that he will become a father, and has to break some bad business news to his father-in-law. Meanwhile an office focus group study for a client has some unintended personal consequences for Don.

The partners try to keep their cool after they discover that Roger has lost their biggest account, Peter's wife goes into labor, and Don tries to convince Faye to compromise her ethics to drum up new business.

As the firm prepares to go public, Don and Pete's actions cause them to lose two huge clients. However, Roger uses a new connection to put them in position to gain their biggest client ever.