Whole Foods Founder: The Biggest Myths About Capitalism, Getting Rich, & Finding Happiness

0:00:01 It’s easy to be a critic.
0:00:03 It’s actually hard to be an entrepreneur.
0:00:05 For years I was told that this was never gonna work.
0:00:07 My mother was begging me on her deathbed
0:00:09 to give up this stupid grocery dream.
0:00:12 I remember feeling that many times, you’re wrong.
0:00:13 Whole Foods is gonna grow.
0:00:14 We’re gonna change the world.
0:00:15 If you’re not willing to seize that opportunity,
0:00:16 somebody else will.
0:00:19 We really did all feel like we were part of this movement
0:00:21 that was gonna change the way America ate.
0:00:24 Life is shorter than you think it is.
0:00:27 It’s too short to not be doing something
0:00:29 that you really are passionate about,
0:00:30 that you’re drawn to.
0:00:39 Welcome to The Knowledge Project.
0:00:41 I’m your host, Shane Parrish.
0:00:43 In a world where knowledge is power,
0:00:46 this podcast is your toolkit for mastering the best
0:00:47 of what other people have already figured out.
0:00:48 If you’re listening to this,
0:00:50 it means you’re not a supporting member.
0:00:52 Members get early access, no ads,
0:00:55 my personal reflections at the end of the conversation,
0:00:58 access to the highlights from the books I’m reading,
0:01:00 hand edited transcripts, and so much more.
0:01:03 Check out the link in the show notes for more information.
0:01:04 My guest today is John Mackey,
0:01:06 founder of Whole Foods Market.
0:01:08 I wanted to hear John’s story all the way
0:01:10 from the creating of Safer Way
0:01:14 to Amazon buying Whole Foods and everything in between.
0:01:16 John is a master at resilience.
0:01:18 Let’s look at some of the things he’s had to overcome.
0:01:20 Consider this, right after the opening
0:01:22 of the first Whole Foods Market,
0:01:24 this huge store where they had apple juices filler
0:01:26 on the shelves to make it look full
0:01:28 because they couldn’t afford enough inventory.
0:01:30 A hundred year flood hit Austin
0:01:32 and put the store eight feet underwater.
0:01:35 John didn’t have any insurance and he had no money.
0:01:36 And if that wasn’t enough,
0:01:38 he had to deal with risk averse investors,
0:01:40 four different coup attempts, and so much more.
0:01:43 John has interesting takes on lots of things
0:01:45 from investors and capitalism to the clash
0:01:47 between the idea of Whole Foods Market
0:01:49 and the reality of running a retail business.
0:01:53 He also has a fascinating way to deal with critics.
0:01:56 It’s time to listen and learn.
0:02:06 There are too many podcasts and not enough time.
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0:02:12 even from shows you didn’t know existed?
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0:02:28 finds just the best parts and serves them up
0:02:30 based on whatever topic you’re interested in.
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0:02:44 That’s joinoverlap.com.
0:02:47 I think the best place to start
0:02:49 is going back all the way to the beginning
0:02:54 to Safer Way, which was the precursor to Whole Foods.
0:02:56 Where did the idea for that come from?
0:02:59 – And in my book, the whole story,
0:03:03 I actually talk about, I had the psychedelic experience
0:03:05 where I experienced this ego death,
0:03:07 ego dissolving when I was 22
0:03:09 and pretty soon after that,
0:03:10 that’s why I started the book there
0:03:13 and I’ll start the answer to your question there.
0:03:16 And then that really just changed my,
0:03:18 I got off the path my parents really wanted me to be on
0:03:23 and I just moved into this vegetarian co-op,
0:03:25 a housing co-op, sort of like a commune.
0:03:28 And I wasn’t a vegetarian at that time
0:03:30 and I really didn’t even know much about food.
0:03:34 I’d just been a typical American kind of junk food eater.
0:03:36 And that, but I had my food awakening,
0:03:38 my consciousness awoke there.
0:03:40 I’d always thought of my body as kind of like,
0:03:43 wait, you eat food to get fuel,
0:03:45 like a car needs to get gasoline.
0:03:48 And that mechanistic model doesn’t do credit
0:03:51 to the fact that you actually need to nourish
0:03:54 trillions of cells in your body with super healthy food.
0:03:57 If you do that, feel better, immune system be stronger,
0:03:59 you won’t get sick as frequently and you’ll live longer
0:04:02 and you’ll just probably in over and all have a better life.
0:04:05 I kind of got that when I moved into that co-op,
0:04:07 sort of had some older, wiser people in the co-op
0:04:09 and I learned how to cook.
0:04:11 I became the food bar for the co-op
0:04:12 and I got deep into it.
0:04:15 It was like, wow, this natural and organic food stuff
0:04:16 is pretty interesting.
0:04:19 Then I went to work for a small natural food store
0:04:23 in Austin, Texas at that time called The Good Food Company.
0:04:25 And I became the assistant manager there and I loved it.
0:04:27 I never worked retail before.
0:04:29 I loved, I became friends with customers,
0:04:32 friends with the employees that I was working with.
0:04:35 And then I remember coming back to the co-op one day.
0:04:36 No, before I came home that night,
0:04:38 I was looking around, I was closing up the store
0:04:41 and I thought, I love this, I could do this.
0:04:44 This is within my realm of life competence.
0:04:46 I could run a store.
0:04:48 And I came back and I talked to my girlfriend
0:04:51 at the co-op, Renee, and at this time,
0:04:55 I’m probably just about 23 and Renee’s 19.
0:04:58 And I said, Renee, what do you think we open up
0:05:00 our own natural food store?
0:05:02 And it changed my life.
0:05:03 Renee looked at me, grabbed my hands,
0:05:05 looked me in the eyes and said, she was a hippie.
0:05:09 And she said, oh, Mackleman, that’d be so cool.
0:05:11 Let’s do it.
0:05:12 And so we did.
0:05:14 And if she’d said, that’s a stupid idea,
0:05:16 my life might, I wouldn’t be here with you today,
0:05:18 my life might have taken a completely different trajectory.
0:05:20 But she said, she was excited about it.
0:05:24 We did it together and it was called Safer Way.
0:05:27 It was a vegetarian store and it was very pure.
0:05:31 We didn’t sell meat, we didn’t sell white sugar,
0:05:35 we didn’t sell alcohol, we didn’t even sell coffee.
0:05:39 And I was like to say, we did very little business.
0:05:42 We were not meeting the market where we found it,
0:05:45 so to speak, it was our own ideals.
0:05:46 And we did that for a couple of years
0:05:49 and we managed to lose about half the capital
0:05:51 we’d raised, which of $45,000.
0:05:53 But we began to figure out the business.
0:05:56 And as luck or fate would have it,
0:05:59 I found another location and had a lot of trouble
0:06:01 persuading the investors to relocate
0:06:04 and they would only do it if I found another big investor,
0:06:07 which I did, buddy, I played basketball with,
0:06:09 pick up basketball with and he’d inherit a lot of money
0:06:14 from his parents who died and he put in like 100,000 bucks
0:06:16 and I don’t know, $50,000.
0:06:19 And then we got more money from the shareholders
0:06:22 and we relocated and changed the name to Whole Foods Market.
0:06:25 And that was the first natural food supermarket in Texas.
0:06:28 I’d been inspired by Bread and Circus in Boston
0:06:32 and Mrs. Gooches in LA and Frazier Farms in San Diego
0:06:36 and thought this is an idea whose time could be coming.
0:06:39 And that became immensely successful
0:06:43 and we sold meat, we sold alcohol, we sold coffee
0:06:46 and we were still featuring natural organic foods,
0:06:50 but we were also now a more, a grocery store
0:06:51 that more people could identify with,
0:06:53 particularly our generation,
0:06:57 which was a kind of a counterculture, long hair,
0:07:00 hippie generation that was looking to reinvent the world,
0:07:03 starting with one of the first places
0:07:04 to reinvent it was food.
0:07:09 And so that store was immensely successful.
0:07:10 – That was a Lamar location?
0:07:12 – Yes, it was.
0:07:14 In fact, within six months it became the highest volume
0:07:16 natural food store in the entire United States
0:07:19 based on everything I know about the world back then.
0:07:20 – Let’s pause there.
0:07:23 We’re gonna come back to this in a second.
0:07:26 Talk to me about the tension between the idealism,
0:07:30 no meat, no processed foods.
0:07:32 – The tension’s always there.
0:07:35 I always say, you know, you’ve heard this cliche,
0:07:38 it’s easy to be a Satan on the mountaintop.
0:07:40 It’s easy for critics to judge
0:07:43 and say you’re selling out, you’re portraying your ideals,
0:07:46 as I’m plant-based, I hear it all the time from vegans.
0:07:48 So you’re just a, you know, you’re a hypocrite,
0:07:49 you say you’re an ethical vegan
0:07:51 and yet whole foods sold meat,
0:07:52 so you’re just a hypocrite and a liar
0:07:54 or you’re not even ethical vegan,
0:07:55 I don’t believe it, blah, blah, blah.
0:07:57 But it’s like, what exactly have you done
0:08:01 if you think a vegan store will work?
0:08:03 Do it, don’t just criticize other people
0:08:05 if you think you can make that a viable business.
0:08:08 The problem in that instance is that
0:08:11 about half of 1% of Americans are vegan
0:08:13 and 2% are vegetarian.
0:08:17 So you just don’t have a big, for that big of a market.
0:08:19 And another cliche, which is true,
0:08:22 is you kinda have to meet the market where you find it,
0:08:23 not where you’d like it to be.
0:08:26 So the tension between your ideals
0:08:27 and as long as we’re into cliches,
0:08:28 I’ll give you a third one,
0:08:32 which is the perfect is the enemy of the good.
0:08:34 If you just wanna have your ideals,
0:08:36 you can have ’em, but you may not have a business.
0:08:40 So you have to engage with the market,
0:08:41 you can try to influence the market,
0:08:43 you can try to educate the market,
0:08:44 but at the end of the day,
0:08:46 they vote every day with their pocketbooks,
0:08:47 exactly what they want.
0:08:50 If you’re not prepared to serve them what they want,
0:08:52 then they’re gonna go find it somewhere else
0:08:55 and your business may end up failing because you,
0:08:58 so there is that tension between your ideals,
0:09:02 but then you have to mediate between them.
0:09:05 I always like to say we’re always pushing our ideals,
0:09:07 but always listening to our customers.
0:09:10 It’s like a dialogue you’re having or a dance.
0:09:13 And if you don’t dance with your partner,
0:09:15 your partner’s gonna dance away from you.
0:09:17 So you have to meet ’em where you find ’em.
0:09:19 – I’ve always noticed that most of the people,
0:09:21 actually all of the people who criticize
0:09:23 other people doing things,
0:09:25 they’re usually not doing the same thing,
0:09:26 they’re not trying to do the same thing,
0:09:28 they’re not in the same space,
0:09:30 they’re just sort of like lobbing grenades
0:09:32 from the safety of the sidelines.
0:09:34 – And yes, I think that’s absolutely true.
0:09:36 And I also think there’s a tendency for all of this,
0:09:41 including myself, to project our own failings out
0:09:43 unto other people and criticize them then.
0:09:47 It’s like, you’re not doing what I think you should do.
0:09:49 Of course, I’m not doing anything.
0:09:52 So it’s easy to be a critic.
0:09:54 It’s actually hard to be an entrepreneur.
0:09:56 It’s hard to actually create anything.
0:09:58 It’s really hard, particularly anything
0:10:00 that’s gonna be successful and meet the test of time.
0:10:02 But it’s very easy to find fault
0:10:04 with what other people are doing.
0:10:05 And you know, I’ve learned the hard way.
0:10:09 For example, I just don’t read comments anymore.
0:10:12 Like, if you, when this podcast is,
0:10:14 if you allow comments on your podcast,
0:10:16 I’m not gonna read ’em because I’m gonna get,
0:10:17 all this hate’s gonna come our way.
0:10:19 Hate, they hate whole foods.
0:10:21 It’s gone down since Amazon bought it.
0:10:23 I hate John Mack, he’s a hypocrite, blah, blah, blah, blah.
0:10:25 The comments just allow people to vent
0:10:27 all this negativity.
0:10:30 And so I’ve learned just better to,
0:10:33 just to let the stuff go.
0:10:34 – You and me both.
0:10:37 So coming back to Lamar, so you opened Lamar,
0:10:39 what was it, 10,000 square feet?
0:10:39 It was huge.
0:10:41 – Yeah, 10,500 square feet.
0:10:44 Well, that’d be like the tiniest store at Old Feast now.
0:10:47 – No, but I mean, compared to the Victorian house you had.
0:10:48 – It was huge compared to that.
0:10:51 – And you’ve got all this inventory.
0:10:53 You borrowed money for a location.
0:10:55 You convinced the guy it’ll lend it to you
0:10:57 because he didn’t want to lend it to you.
0:11:00 And then a hundred-year flood hits.
0:11:04 – Yeah, so nine months after we opened up
0:11:05 that really successful store,
0:11:08 the whole first Whole Foods Market in 1980,
0:11:14 when we were building it, the owner of the building,
0:11:15 this Texas good old boy named Ben Powell,
0:11:17 he let me know that we were building it
0:11:19 in the hundred-year flood zone.
0:11:21 And I said, well, what does that mean exactly?
0:11:22 A hundred-year flood zone?
0:11:24 He says, well, John, what it means, partner,
0:11:27 is that about once every hundred years,
0:11:30 Austin’s gonna experience a hundred-year flood.
0:11:33 There’s gonna be eight feet of water.
0:11:35 The shoal crease can overflow its banks,
0:11:36 water’s gonna come down in the Lamar,
0:11:38 it’s gonna fill up your store.
0:11:39 And I said, really?
0:11:40 Kid, you’re kidding, right?
0:11:43 And he says, no, no, no, it’s in the hundred-year flood zone.
0:11:45 And I said, well, when was the last time that happened?
0:11:48 He says, well, I’m not rightly sure.
0:11:50 It happened over 70 years ago before I was born,
0:11:52 but that’s what happened.
0:11:53 And I was thinking, all right,
0:11:54 well, what are the chances
0:11:58 we’re gonna have a hundred-year flood anytime soon?
0:12:02 And so I thought, well, I’m gonna still take the risk.
0:12:05 And he said, well, let’s give you a little bit
0:12:08 of margin error, let’s build a slab that’s two feet high.
0:12:11 So our store was two-foot concrete slabs.
0:12:13 He had to step up to get there,
0:12:15 which made it a little hard for grocery carts
0:12:16 to get down in the front,
0:12:19 but we built a ramp for them to get down.
0:12:22 Anyhow, we had the hundred-year flood in the first year.
0:12:25 We were all fed, and it was…
0:12:28 And Renee, my girlfriend, was working that night,
0:12:30 and she swam out of the store,
0:12:35 ’cause it happened kind of late afternoon, early evening,
0:12:37 and it was Memorial Day weekend.
0:12:40 It was a Sunday night with Memorial Day the next day.
0:12:44 So that had some good things to it.
0:12:48 But you’re asking about the banker that this was…
0:12:50 The thing I didn’t know about stakeholders
0:12:52 then I didn’t have language for,
0:12:54 but I experienced people that love your business
0:12:57 because the day after the flood we had,
0:12:59 I don’t know, dozens of people come in
0:13:01 and help clean up the store that didn’t work there.
0:13:03 They were neighbors, they were customers.
0:13:05 They didn’t want us to die, they loved us.
0:13:09 We had, the suppliers gave us new inventory.
0:13:13 Our employees worked for free while we were…
0:13:15 ‘Cause we couldn’t make a payroll, we didn’t have any money.
0:13:17 They worked for free until we could get back open again,
0:13:19 which there was no assurance that we would.
0:13:23 But the most remarkable story that I found,
0:13:24 that about the flood, I didn’t actually find out
0:13:29 about until about 10 years ago when I met this conference.
0:13:33 And this guy coming up to me and he says,
0:13:35 “You know, John, you won’t remember me,
0:13:40 “but I used to work for City National Bank back in the day.
0:13:43 “Terrible thing that flood happened to you.”
0:13:45 And I said, “Yeah, yeah, you work for City Bank.
0:13:48 “You must have known our banker Mark Monroe.”
0:13:50 And he said, “Yes, Mark and I are really good friends.”
0:13:52 And that was quite a thing he did for you.
0:13:54 And I said, “Well, yeah, it sure was.
0:13:56 “I don’t know if we could have reopened
0:13:58 “without that $100,000 loan the bank gave us.”
0:13:59 I said, “It always puzzled me, though,
0:14:02 “but ’cause I was surprised the bank would give us the loan
0:14:04 “because it was just my signature guaranteeing
0:14:07 “and then my signature was kind of worthless.”
0:14:10 And he looks at me and he says, “You don’t know what happened.”
0:14:12 And I said, “Well, yeah, I do, the bank gave us the money.”
0:14:15 And he says, “No, John, the bank did not give you that money.”
0:14:16 I said, “Yes, they did.
0:14:17 “We got a check from the bank.”
0:14:20 He said, “John, the bank turned the loan down.
0:14:21 “The only reason you got that money
0:14:26 “was Mark Monroe personally guaranteed that loan.”
0:14:27 I said, “What did he personally guaranteed?
0:14:29 “Don’t know why the hell would he do that?”
0:14:31 And he said, “He did it because he said he really believed
0:14:33 “in you and he believed in Whole Foods
0:14:34 “and he knew you’d pay him back,
0:14:37 “even if it took you the rest of your life.”
0:14:39 And so he took the chance on you.
0:14:40 And I said, “That’s incredible.
0:14:42 “I need to thank him.”
0:14:45 That’s great, he says, “Well, you’re too late.”
0:14:47 He passed away about five years ago.
0:14:50 So that’s a good story, but when people ask me
0:14:53 about stakeholders, that’s what stakeholders are.
0:14:55 They’re people that are invested in your business,
0:14:56 care about your business,
0:14:58 and then you have certain responsibilities too.
0:15:00 – Did you realize you were onto something
0:15:02 when you saw other people helping clean up
0:15:04 that were customers and didn’t work there?
0:15:06 – It was only in retrospect later
0:15:08 that I realized we were onto something,
0:15:09 that I could see the patterns,
0:15:11 ’cause I hadn’t really been exposed
0:15:14 to any kind of stakeholder thinking before.
0:15:17 But then later, when I got exposed to it,
0:15:20 I realized, yeah, they were stakeholders,
0:15:22 they were our customers and neighbors,
0:15:23 they cared about us.
0:15:26 It also says something about that,
0:15:29 this we’re talking about now, May of 1981,
0:15:31 literally 43 years ago.
0:15:35 And the world’s different back then than it is today.
0:15:38 I really wonder whether people would come in
0:15:40 and help clean up, maybe they would,
0:15:42 but Austin back then was a much smaller city
0:15:45 than it is today, it was a much more neighborhood-based,
0:15:49 much more, and it was just a different consciousness
0:15:49 back then.
0:15:57 As you make progress, you also lose certain things.
0:15:59 – You didn’t wanna give up after the flood.
0:16:01 A lot of people, I think, would have just thrown their arms
0:16:04 up in the air and sort of tried to walk away.
0:16:07 – You know, that’s a very good comment and question,
0:16:09 and I think the answer to that, honestly,
0:16:14 is that I thought maybe Renee and I were gonna,
0:16:17 that the universe decided we weren’t gonna do this.
0:16:19 I was gonna do something else in life,
0:16:23 but I had a lot of friends and family that invested money.
0:16:26 I had a real, I felt like I can’t let these people down.
0:16:28 We gotta find a way to get back home again.
0:16:31 And in the book I talk about when Whole Foods
0:16:36 does its IPO in 1992, so 11 years later,
0:16:38 it was one of the happiest days of my life,
0:16:43 because finally, all the investors that believed in me
0:16:45 and believed in our vision, believed in Renee,
0:16:48 they could leave now, they could cash out.
0:16:51 And so that really took a load off of my chest,
0:16:54 so to speak, from my back.
0:16:59 – Talk to me a little bit about learning the X and O
0:17:00 as of retailing.
0:17:02 What are the X and O as of retailing in a grocery store
0:17:04 that you’ve learned over the years,
0:17:06 but you started out with no experience?
0:17:09 – Yeah, well, I mean, there’s literally thousands
0:17:11 and thousands of things.
0:17:14 I mean, I can just give you some of the most important
0:17:18 things you realize is that, hey, nobody has to shop
0:17:19 with you.
0:17:23 I thought it was so funny later on when the Federal Trade
0:17:25 Commission said Whole Foods was a monopoly,
0:17:26 and it’s like, you gotta be kidding,
0:17:29 we got less than 1% of the grocery business,
0:17:32 and they sort of made up this category that we were,
0:17:33 later we’re a monopoly of premium natural
0:17:35 and organic food supermarkets.
0:17:37 But my point is, of course, we weren’t a monopoly
0:17:38 of anything.
0:17:42 And what I learned early on is that customers
0:17:43 always have choices.
0:17:48 If they don’t like your prices, your service,
0:17:50 your quality, if you’re not convenient,
0:17:52 if they can’t get in and out fast,
0:17:54 that you don’t have a business.
0:17:58 So I learned that the most important stakeholder
0:18:01 is and always will be the customer.
0:18:03 That’s number one stakeholder.
0:18:07 And if a business doesn’t realize that or forgets it,
0:18:10 their business probably is gonna suffer in the long run
0:18:12 because people do, your competitors are constantly
0:18:15 innovating, they’re constantly studying what you’re doing,
0:18:18 copying your best ideas, and then iterating on them.
0:18:21 And this is how the human race makes progress,
0:18:26 to be honest, is that people have choices,
0:18:29 and you have to compete to serve your customers.
0:18:31 Does that mean some people do a poor job?
0:18:32 Of course they do.
0:18:33 I mean, that happens.
0:18:36 But there is this competitive drive
0:18:37 to serve your customers better.
0:18:40 That’s what I, that’s the single most important lesson
0:18:42 I learned in business, period.
0:18:44 But certainly it’s true in the retail business.
0:18:45 We don’t have any patents.
0:18:47 We don’t have any monopolies.
0:18:50 Everything we’re doing is wide open for people to see,
0:18:52 copy, I mean, people used to come in
0:18:54 and take pictures of our prices,
0:18:57 and they’d be looking at our products,
0:18:59 and they’re showing up in the supermarkets.
0:19:00 So everybody was studying us,
0:19:02 and we had no way to stop that.
0:19:03 So that’s one thing I learned.
0:19:07 Secondly, I learned that, yeah,
0:19:09 you got to take care of your customers.
0:19:10 Well, who takes care of them?
0:19:11 Your employees do.
0:19:12 Your team members do.
0:19:14 And if they’re unhappy,
0:19:17 they’re not going to take care of all of your customers well.
0:19:21 So if you really want good service to your customers,
0:19:24 make sure your team members are A, well-trained,
0:19:28 well-motivated, and that they are rewarded
0:19:30 for serving the customers well.
0:19:32 That you have a high standard,
0:19:33 and then you meet,
0:19:36 because happy team members lead to happy customers.
0:19:38 Happy customers lead to a prosperous business.
0:19:40 That makes happy investors.
0:19:43 So I learned then about sort of the interdependency
0:19:46 of all these stakeholders that are connected together,
0:19:48 and that in a sense of business
0:19:52 is this ecosystem of stakeholders,
0:19:57 an ecosystem of customers, employees, suppliers, investors,
0:20:00 and the communities that we’re all part of,
0:20:01 and that once you see that,
0:20:03 then you see that they’re a system,
0:20:06 and that you can create these synergies
0:20:08 between the different constituencies,
0:20:10 between the different stakeholders
0:20:13 to help this business to optimize itself at a higher level.
0:20:16 That was what we call conscious capitalism.
0:20:17 At the end of the day,
0:20:19 it’s being very conscious about how you’re,
0:20:21 you have these responsibilities to all these stakeholders,
0:20:23 and you’re trying to create value for all of them,
0:20:25 and that’s very difficult to do.
0:20:26 That’s awesome, nothing I learned.
0:20:27 That’s hard to do all of that.
0:20:29 There are little trade-offs that end up being made,
0:20:32 so but how do you minimize the trade-offs
0:20:33 and maximize the synergies?
0:20:37 And I also learned as the adage goes,
0:20:39 retail is detail.
0:20:42 There’s a thousand little details.
0:20:45 I mean, typical stores got tens of thousands of products,
0:20:47 and what’s more irritating that if you go to the store
0:20:51 and you have a recipe that needs broccoli in it,
0:20:53 and they just don’t happen to have any broccoli.
0:20:54 Well, you’re really pissed off.
0:20:57 First of all, you have to go to another store,
0:20:58 and it’s like, how can you run out of broccoli?
0:21:02 So, but then again, if you stock too much broccoli,
0:21:03 it’s gonna rot on the shelf.
0:21:06 So you have to develop the skills,
0:21:07 particularly in the grocery business,
0:21:09 where you have all these perishables,
0:21:13 to be able to keep your food fresh and in stock,
0:21:15 but turn it over fast enough.
0:21:18 But if you, and so there’s that relationship
0:21:22 where you want it fresh, but you also don’t,
0:21:25 if you also don’t want it to be out of stock,
0:21:27 and sometimes those are in tension with each other.
0:21:29 There are so many other things I could tell you about.
0:21:32 It’s just three-tailed businesses.
0:21:35 How do you price stuff?
0:21:38 Like, okay, you know, if somebody’s underpricing,
0:21:39 do you match that?
0:21:40 Which, what do you match?
0:21:42 What do you go lower on?
0:21:44 There’s a whole pricing strategy that you have to do,
0:21:46 and that can be complex,
0:21:48 because you have a variety of different competitors
0:21:49 competing with you.
0:21:52 If you’re competing with the Airwan in LA,
0:21:53 you’re not worried about price,
0:21:56 but they may be having higher quality,
0:22:01 higher, more high-end product that you have to compete against.
0:22:03 And do you choose to compete against it?
0:22:08 So, I suppose what I like about business in general
0:22:11 is that you never quite figured it all out.
0:22:12 You’re continually learning.
0:22:15 The world’s continually evolving and changing.
0:22:18 Like, let’s say, look at what happened
0:22:21 in the grocery business when COVID came in.
0:22:23 All of a sudden, you know,
0:22:26 people want stuff delivered at home.
0:22:27 And fortunately for us,
0:22:29 we were teamed up with Amazon at that time,
0:22:30 and Amazon was able to step up
0:22:33 and invest literally hundreds of millions of dollars
0:22:36 in delivery in order to enable Whole Foods
0:22:38 and Amazon Fresh to be able to deliver
0:22:40 when the demand went from virtually zero
0:22:44 to a huge percentage of your business.
0:22:46 So, I don’t know, I can keep going on this,
0:22:49 but you may want to have different questions.
0:22:51 – Keep going, I love the detail here.
0:22:53 Is perishable is the most important part
0:22:54 of the story to get, right?
0:22:55 – Absolutely.
0:22:57 Particularly in food retailing.
0:22:59 People choose their supermarkets
0:23:02 based usually on the quality, partly convenience,
0:23:04 but then if they have crummy produce,
0:23:07 crummy meat, so seafood’s fishy,
0:23:09 I mean, they’re gonna go someplace else.
0:23:12 Whole Foods’ competitive advantage has always been,
0:23:13 I just thought we did a better job
0:23:15 than just about anybody else out there
0:23:18 in overall produce perishable quality.
0:23:21 And that gave us competitive edge.
0:23:24 – Why is produce the first part of the story you walk into?
0:23:27 Because that sets the tone for the whole store.
0:23:30 People oftentimes pick their store
0:23:33 by how good the produce is.
0:23:35 And it’s not easy to do it well.
0:23:38 It takes a lot of skill to be able to manage your produce
0:23:40 so that you keep your in stock position
0:23:41 while you keep freshness.
0:23:46 It’s part science and part art.
0:23:50 And I mean, I just think produce is,
0:23:52 it’s also the healthiest part of the store.
0:23:54 Produce is the most important foods that we eat.
0:23:58 Fruits and vegetables are the healthiest foods we can eat.
0:24:01 And if you wanna have a strong immune system
0:24:03 and you wanna have high longevity,
0:24:05 you’re gonna have to learn to eat, like vegetables.
0:24:07 Infruits.
0:24:09 – Let’s go back to Lamar for a second here.
0:24:11 So you reopen.
0:24:13 And at this point, you’re profitable.
0:24:16 You’re the most, yeah, we became profitable.
0:24:18 Safer way was a struggle.
0:24:19 And that’s also an interesting story here.
0:24:21 We were struggling with Safer way.
0:24:24 We relocated to a better location,
0:24:26 make it bigger, expand our product mix.
0:24:28 And we went from a struggling business
0:24:30 to hugely successful.
0:24:33 And then I thought, wow, we got a tiger by the tail here,
0:24:34 let’s grow this thing.
0:24:36 And we just had a flood, so we had to grow it
0:24:39 just so we wouldn’t have all of our eggs
0:24:41 in one basket that might float down the river.
0:24:43 – But you had four founders at that time.
0:24:47 And not everybody wanted to grow the business.
0:24:51 – Yeah, one of my co-founders, Mark, Mark Skiles,
0:24:54 after we had the really successful store,
0:24:56 he really didn’t want us to grow
0:25:00 because he said, “John, we have a gold mine here.
0:25:02 “Let’s just not screw it up.
0:25:04 “We can be rich, we don’t have to do anything else.
0:25:08 “We can just live off this thing for the next 25 years
0:25:10 “and just have a wonderful lifestyle.”
0:25:13 And I said, “John, I don’t want to do that.
0:25:15 “I want to grow the business.
0:25:16 “I want to have more stores.”
0:25:18 And he was willing to go along with that
0:25:22 until the next couple of stores being opened up
0:25:24 were slow.
0:25:28 They didn’t take off right at the go point.
0:25:30 Now, remember that very first Whole Foods Market
0:25:32 took two small stores
0:25:34 ’cause we merged with this other natural food store.
0:25:37 We took them together and we had their customer basis
0:25:39 from both stores as a foundation.
0:25:41 And then we were unlike any other store
0:25:43 and so we were able to pull in
0:25:45 from a much wider geographical area,
0:25:47 which is one reason the store was so successful.
0:25:49 We opened a second store.
0:25:51 Well, we had to go out in the suburbs.
0:25:52 It wasn’t hippies anymore.
0:25:54 It wasn’t a counterculture market.
0:25:56 And it started slower.
0:25:58 Now, it grew really well,
0:26:00 but it took a few years before it became profitable.
0:26:02 And that proved to be the case.
0:26:04 Anytime Whole Foods went into a new market
0:26:07 for the first 10 to 15 years we existed,
0:26:08 it was a slow growth
0:26:10 because people just had never heard of this before.
0:26:11 And what are you?
0:26:13 This store’s weird.
0:26:15 And you guys are, you guys all dress weird.
0:26:17 You don’t look like a regular supermarket.
0:26:19 So, but once our brand got well known,
0:26:21 then our stores started to take off.
0:26:24 But in the day for Mark, when he remembers,
0:26:27 I mean, he was there, the new stores were slow
0:26:31 and they diluted down the first very successful store.
0:26:33 And he got, he blamed it on me.
0:26:35 He got angrier and angrier at me.
0:26:38 Angrier at me and that ultimately led to a break
0:26:41 where Mark decided to leave the company.
0:26:43 And he said, I was gonna wreck the company
0:26:45 with your growth dreams.
0:26:47 And he sold out his interest
0:26:49 and opened up a pizza place.
0:26:53 And I probably wasn’t the best decision he could have made.
0:26:55 He wasn’t the only one who thought
0:26:57 you were gonna wreck the company with growth dreams.
0:26:59 Over the years, I mean, Mark’s first nickname
0:27:00 was Wacky Mackey.
0:27:05 And through the years,
0:27:08 I think entrepreneurs always are climbing a wall of doubt.
0:27:10 Because the entrepreneurs looking ahead,
0:27:14 they’re seeing possibilities that other people don’t see yet.
0:27:18 And so it’s easy to be skeptical.
0:27:20 I just, for years, I was told
0:27:22 that this was never gonna work.
0:27:25 I mean, my mother was begging me on her deathbed
0:27:27 to give up this stupid grocery dream.
0:27:29 I think we had about four stores back in 1987
0:27:32 and just, you know, go back to school
0:27:34 and make something in my life.
0:27:39 So in general, there’s just a huge amount of skepticism
0:27:45 about what new entrepreneurial ideas.
0:27:49 And entrepreneurs got to have the faith and confidence
0:27:51 to move forward, even though people are constantly
0:27:52 telling them it’s gonna fail.
0:27:56 In my case, all of that criticism, all those attacks,
0:27:59 they just made me more determined
0:28:01 that I’m gonna prove all these people wrong.
0:28:04 I remember feeling that many times, you’re wrong.
0:28:06 What we’re gonna do, whole foods is gonna,
0:28:07 we’re gonna grow, we’re gonna change the world.
0:28:08 I felt that with Mark when he was telling me
0:28:10 I was gonna wreck the company.
0:28:12 And he didn’t wanna keep any of his stock
0:28:14 and he went all of his stock out for I wrecked the company.
0:28:16 So, yeah, that happened several times.
0:28:19 I had, I count four different coup attempts
0:28:22 that occurred over the history of the company
0:28:24 that I was able to beat back.
0:28:27 – Does that come from, like, is there a chip
0:28:29 on your shoulder or was there at the time
0:28:31 that was sort of like, I’m gonna prove you wrong?
0:28:33 – You know, I don’t think I had sort of
0:28:35 an inherent chip on my shoulder.
0:28:38 It’s just, in some ways, I’m a very competitive guy.
0:28:41 And when people will tell me it won’t work,
0:28:44 you’re gonna fail, it’s just, I just,
0:28:46 is it a chip on my shoulder?
0:28:47 I think a chip on your shoulder is just something
0:28:51 that you’re just kinda mad at the world about.
0:28:53 But when people would say what we were doing
0:28:56 wasn’t gonna work, it just made me more determined.
0:28:59 It’s kinda like you get a competitive challenge
0:29:04 from somebody, you could see I was talking about Erewan,
0:29:05 we were off camera, that I would love
0:29:07 to be competing more aggressively with Erewan
0:29:09 if I was still the CEO.
0:29:12 But, ’cause in general, I just,
0:29:19 I love games, I love play, I love to compete.
0:29:21 To me, it’s really fun.
0:29:25 And so, when people would tell me that it’s not gonna work,
0:29:28 it’s like, I’d look at it and I would say,
0:29:30 you know, maybe they’re, are they right?
0:29:31 No, they’re not right.
0:29:33 I’m gonna prove them not right.
0:29:35 And if I would hear about a competitor,
0:29:40 I just, I feel like that’s not unusual for entrepreneurs.
0:29:43 They’re constantly being told what they’re doing
0:29:45 is not gonna work.
0:29:47 And so, I think you have to have resilience.
0:29:49 And that resilience, in my case,
0:29:51 comes from kinda my competitive spirit,
0:29:54 which is like, it would just make me more determined.
0:29:56 I think that’s a healthy thing, by the way,
0:29:59 because too many people quit.
0:30:04 They hit a roadblock or they, a setback.
0:30:06 An entrepreneur gets setback so many times,
0:30:09 you get knocked down and you gotta get back up again.
0:30:13 It’s like a, you know, like if you’re a fighter,
0:30:15 I mean, you know, eventually,
0:30:16 you might have to admit defeat eventually
0:30:18 ’cause you’re gonna die if you don’t,
0:30:21 but in general, you just wanna keep getting up
0:30:23 and see if you can get the next punch in.
0:30:27 Anyway, that’s how I’m sort of wired.
0:30:31 – Growth meant more money, more capital needed.
0:30:32 – Yeah.
0:30:34 – Talk to me about the various sources of capital
0:30:38 and sort of when you chose, at first, to take outside money.
0:30:43 – Well, of course, like the classic entrepreneurial story,
0:30:48 the, initially, it was friends and family.
0:30:53 And then, my dad taught me, he’s my mentor,
0:30:54 that the best capital you have,
0:30:56 this is very different than the way people think
0:30:58 about it today, so the best capital you’ll ever have
0:31:00 is the capital you make yourself.
0:31:04 And if you don’t wanna lose control of your business,
0:31:07 then make sure you’re very profitable.
0:31:08 Don’t scale too quickly.
0:31:12 Grow your business thoughtfully and patiently,
0:31:14 keep your costs down, and plow the money back in.
0:31:16 And that’s how Whole Foods operated
0:31:19 for the first, most first decade of our lives.
0:31:21 We took venture capital money in,
0:31:26 we started trying to get it in 1988,
0:31:27 so 10 years after we started to save for a way,
0:31:31 and we got our first investment in 1989.
0:31:34 I called the VCs, I called them hitchhikers
0:31:38 with credit cards, and what I mean by that is that
0:31:41 they’re getting into your car,
0:31:42 and as long as you take ’em where they wanna get to,
0:31:47 which is an exit, which either has to be a sale or an IPO,
0:31:50 and we didn’t wanna sell the business we wanted to,
0:31:53 we wanted to grow it ourselves.
0:31:55 And so, we always had the IPO,
0:31:58 the initial public offering was in the back of our minds.
0:32:02 But I realized that the VCs,
0:32:05 they have a little bit of a different agenda.
0:32:06 They want to exit the car,
0:32:09 but they don’t want to exit the car too soon,
0:32:13 because they’d like to have the compounding occur
0:32:15 while they, once the company does an IPO,
0:32:18 most of the VCs, because of their,
0:32:21 the way they’re structured with their own investors,
0:32:23 they have to either distribute that within a year,
0:32:25 they generally have to either distribute the stock
0:32:27 or sell it on behalf of the investors.
0:32:29 And so, in Whole Foods’s case,
0:32:32 we actually wanted to go public
0:32:36 because the VCs wanted another round of VC financing,
0:32:38 but that was gonna give them control of the business.
0:32:40 And I’m talking to my dad about it,
0:32:41 we said we don’t want those guys
0:32:43 to get control of the business.
0:32:44 First of all, the first thing we’re gonna do
0:32:47 is replace me and put in a professional manager,
0:32:48 which they were trying to do already,
0:32:50 and it’s in the book,
0:32:53 the guy that was supposed to start working as president
0:32:56 died on the day he was supposed to start work.
0:32:58 And it was like, if that’s not a sign of the universe,
0:33:01 I don’t know what is, but we didn’t actually hire
0:33:04 that person from the supermarket industry.
0:33:07 And we got the VCs to a good exit,
0:33:08 they made a lot of money on Whole Foods,
0:33:10 they only were in the car for three years,
0:33:13 from 1989 to 1992.
0:33:16 And so they got out of the car,
0:33:18 and now we had our own currency.
0:33:21 Once you do a public offering,
0:33:22 you can go back to the public markets.
0:33:25 We did several rounds of financing over the years
0:33:27 to raise additional money from public.
0:33:29 So that’s why it’s an IPO,
0:33:31 that’s the initial public offering.
0:33:35 Corporations do other public offerings after that.
0:33:36 And we did several,
0:33:38 particularly when we made acquisitions,
0:33:42 we needed to cash out the investors in those businesses,
0:33:44 sometimes like with fresh fields,
0:33:46 we needed to do another public offering
0:33:51 in order to just cash out their venture capitalist as well.
0:33:56 So, venture capitalists,
0:33:59 they can be important in a business.
0:34:01 And it’s just,
0:34:03 I always tell young entrepreneurs a couple of things.
0:34:05 One is, they’re gonna tell you to try to,
0:34:08 don’t worry about your burn rate, just grow, grow, grow.
0:34:10 And I said, that’s not in your best interest.
0:34:14 They say that because they’re the ones supplying the money.
0:34:15 And eventually, if they need to,
0:34:17 they’ll do a cram down round
0:34:18 and basically take it,
0:34:20 do it at a much lower price.
0:34:22 And you’ll have an opportunity to invest,
0:34:25 but you’ve long exhausted your own funds to invest
0:34:27 and you’ll lose control of your business.
0:34:29 A scene happened many, many, many times.
0:34:32 So I always just say, know what you’re,
0:34:34 when you’re an entrepreneur and you need capital,
0:34:35 you oftentimes aren’t really thinking
0:34:37 about the consequences of it all.
0:34:40 So I always try to warn other entrepreneurs, look,
0:34:43 when you take the VC’s in, just know what you’re doing.
0:34:45 They’re not, they’re getting in your car.
0:34:47 They’re not there for the long ride with you.
0:34:50 They’re there for their own agenda.
0:34:52 You can go together for a while,
0:34:54 but you need to be careful.
0:34:55 That’s just generally my message.
0:34:57 – The minute something happens,
0:34:58 they’re thinking already.
0:35:00 – They really are.
0:35:02 Is there an optimal level of growth?
0:35:07 You know, I think there is,
0:35:10 but it could vary from business to business.
0:35:15 If you’re a business like Whole Foods was,
0:35:18 which was a retail business,
0:35:21 where culture is very important,
0:35:27 I found that once our growth got above 24%,
0:35:29 do you know what, you know the rule of 72?
0:35:30 – Yeah.
0:35:33 – So for their listeners, the rule of 72 is,
0:35:36 if you take your growth rate and divide it into 72,
0:35:37 that’s how quickly you will double.
0:35:41 So let’s say you’re growing your sales at 24% a year,
0:35:44 then 24 into 72 is three.
0:35:46 So in three years, you’ll actually double your sales.
0:35:50 Or if you’re growing at 18%, 18 into 72 is four.
0:35:53 So every four years, you double your sales.
0:35:56 So that’s really, we found that when we began
0:36:00 to grow faster than 24 to 25%,
0:36:02 that our culture would begin to get diluted.
0:36:04 And it was, we couldn’t,
0:36:11 the culture can incorporate a certain level of growth
0:36:13 before the culture itself begins to fray.
0:36:15 Too many new people are coming in,
0:36:19 they’re not getting indoctrinated or inculturated.
0:36:23 And our business would suffer when we grew that fast.
0:36:25 But if you don’t grow fast enough,
0:36:27 there’s another downside, if you’re not growing fast enough,
0:36:30 then people will, they won’t want to stick with your company
0:36:31 because they don’t feel like they have
0:36:33 very many opportunities.
0:36:35 I don’t, I can’t get advanced, you know,
0:36:38 the person, my leader ahead of me is the same age as me
0:36:41 and she’s not going anywhere.
0:36:42 But if you’re opening up new stores,
0:36:44 then you’re opening up new opportunities.
0:36:46 And that really gets people excited
0:36:48 because their own dreams get tied into the business.
0:36:51 So there is an optimum level of growth.
0:36:55 And it’s not too little that you’ll lose people
0:36:57 and not so high that your culture gets diluted down
0:36:59 and changes negatively.
0:37:03 So at Whole Foods, that sweet spot for us
0:37:07 was between about 15 and 25%.
0:37:09 But I see other businesses, particularly digital businesses,
0:37:13 that can scale at enormous rates without cultural problems
0:37:15 because they’re doing it with so few people.
0:37:19 – I think of it sort of as dividing the pie
0:37:20 versus growing the pie.
0:37:22 And the minute you stop growing the pie,
0:37:24 people are focused on dividing it.
0:37:24 – That’s true.
0:37:26 – And that causes a lot of internal politics
0:37:28 and organizations. – It does.
0:37:29 – And sharp elbows.
0:37:31 – One reason you gotta, and another thing is
0:37:33 if you keep focused on growth,
0:37:37 then people are busy not in fighting
0:37:38 because they’ve got enough work to do
0:37:42 that they don’t look around for something to, you know,
0:37:44 occupy their time.
0:37:47 – You did over, I think, 20 hour positions there.
0:37:49 What have you learned? – I did 23.
0:37:52 – What have you, and you only had one that went bad, I think.
0:37:56 – Yeah, and it was not, because it was not retail stores.
0:37:57 That was Amrion.
0:38:01 It was a mail order supplement company
0:38:04 that we thought we could use that to springboard
0:38:07 into the dot-com boom back in the late ’90s.
0:38:11 And the problem was the people that bought supplements
0:38:15 with the catalog, they were slow adopters to the internet
0:38:18 ’cause they were mostly in their 60s, 70s, and they never,
0:38:20 so they didn’t really make the adoption.
0:38:22 So that was a mistake on our part.
0:38:23 That one failed.
0:38:26 – What did you learn about acquisitions that,
0:38:28 I mean, that batting average is just insane.
0:38:31 – It’s pretty good, but the thing about it is we were always,
0:38:33 all the other acquisitions were retail stores.
0:38:37 And if they had problems, the team could know how to fix ’em.
0:38:39 But we had nobody in our team that knew how to fix
0:38:42 a mail order catalog that was slowly dying.
0:38:44 So I couldn’t send my best guy, go fix that.
0:38:46 They didn’t know what to do.
0:38:49 But if I sent my best guy to fix some stores we acquired
0:38:53 in Detroit, they could go fix ’em.
0:38:55 So I learned, it sticks to your knitting,
0:38:57 stick to what you know,
0:39:00 stick to what you know how to do,
0:39:05 and also if there are problems, you know how to fix ’em.
0:39:07 – Some of the acquisitions you made, you had choices.
0:39:09 And one of the early ones was,
0:39:11 what was the California chain, Mrs. Guchis?
0:39:15 – Mrs. Guchis, you didn’t have the capital at that point
0:39:17 to do the acquisition, you weren’t ready for it.
0:39:21 – We were public, and so we did have our currency.
0:39:25 When my dad was objecting to that merger,
0:39:28 he was saying, John, you have your hands full
0:39:31 with bread and circus, which was still less than a year old.
0:39:33 You don’t have the capacity to take on it.
0:39:35 On the opposite coast, you’re just gonna,
0:39:39 you can’t handle it, you’re gonna dilute your talent down.
0:39:42 And he was right, but as I kept pointing out,
0:39:45 it’s like, you’re right, but this opportunity
0:39:47 is not gonna come again, this is the crown jewel
0:39:50 natural food store chain on the west coast.
0:39:52 If we don’t take ’em, somebody else is,
0:39:54 we’ll have to figure out how to do it.
0:39:56 And we did, and we did acquire ’em,
0:39:58 and we did figure out how to do it,
0:40:00 mostly by leaving them alone.
0:40:02 They were already, we didn’t have to integrate them.
0:40:05 They were Mrs. Guchis, they already had great management.
0:40:08 We pretty much just left them alone for the first few years
0:40:09 and didn’t try to integrate them
0:40:11 into our company or culture.
0:40:13 Just let ’em operate independently.
0:40:16 That was the solution, and it worked.
0:40:17 – That’s a clever solution.
0:40:18 I like the fact that, you know,
0:40:22 often we’re not ready for that next leap, that next level.
0:40:23 We just finished, you know,
0:40:25 maybe we just finished the acquisition or something,
0:40:27 but it doesn’t come up again, right?
0:40:30 If you didn’t buy that, you were gonna get another chance.
0:40:33 – And you have to, one of the secrets to success
0:40:35 in life and business.
0:40:37 You have to seize the opportunities when they’re there.
0:40:40 If you don’t, these great opportunities only come,
0:40:42 they don’t come around every day.
0:40:46 And he who, you know, he who hesitates lost,
0:40:48 if you’re not willing to seize that opportunity,
0:40:49 somebody else will.
0:40:53 You have to know when to go all in.
0:40:55 It’s, you know, when to make the bets.
0:40:56 I knew Mrs. Guchis, they were very profitable.
0:40:58 They had a great brand, very successful.
0:41:01 Did not wanna lose those guys.
0:41:04 And plus, if we didn’t get ’em, somebody else would,
0:41:06 and they would end up being this great competitor
0:41:07 for us down the road.
0:41:09 We just had to make that deal.
0:41:12 We paid, we paid a really rich price for it too.
0:41:14 – You guys created a network, I think early on,
0:41:17 of sort of the operators of the whole food stores,
0:41:19 and you would meet regularly.
0:41:21 – Yeah, what people don’t realize is that
0:41:24 when we invented the natural food supermarkets,
0:41:26 they was co-invented by a few different people
0:41:28 in different parts of the country.
0:41:30 There hadn’t been, there were small natural food stores,
0:41:33 there hadn’t been these supermarkets, one-stop shops.
0:41:36 And one of us that were doing it,
0:41:40 we connected with each other, and we developed friendships.
0:41:42 We’d get together three times a year,
0:41:44 different, a different operator would host.
0:41:46 And that’s how I got to be friends
0:41:47 with the people running Mrs. Guchis,
0:41:49 the people running bread and circus,
0:41:53 the people running alfalfas in Colorado,
0:41:55 and Unicorn Village in Florida.
0:41:56 We were all meeting together,
0:41:59 and we were all in this common mission.
0:42:01 We wanted to sell natural organic foods,
0:42:02 we were spreading it,
0:42:04 and we were helping each other out,
0:42:06 sharing financial information.
0:42:07 We really bonded well.
0:42:08 It was a wonderful time,
0:42:12 because I felt like I was part of this larger movement.
0:42:15 And eventually Whole Foods ended up,
0:42:18 all those entrepreneurs ultimately sold out to us.
0:42:20 So Natural Foods Network ended up being this great
0:42:23 vehicle of relationship building
0:42:25 that allowed those entrepreneurs to all cash out
0:42:27 and become millionaires and make a lot of money,
0:42:29 and gave Whole Foods what we needed,
0:42:32 which was these various geographical platforms
0:42:35 that we could use to expand and grow alfalfa.
0:42:37 – One of the curious parts about this for me
0:42:40 was you were so open about your books
0:42:41 and what you were doing.
0:42:44 – It’s, you know, the best way to understand it was
0:42:46 that we really did all feel like
0:42:47 we were part of this movement
0:42:50 that was gonna change the way America ate.
0:42:53 We were all very idealistic.
0:42:54 The original founders were.
0:42:56 Then later on, you get the venture capitals coming in,
0:42:58 seeing this as a good opportunity.
0:43:03 But in the early days, we were all young and idealistic
0:43:08 and really thought the world would change the way it ate.
0:43:10 And to a large extent it did.
0:43:12 I mean, the world’s very different now
0:43:14 that the Natural Foods organic movement came out.
0:43:16 It’s not the same as it was.
0:43:19 And Whole Foods had a big, I think over time,
0:43:21 it changed the world.
0:43:22 – Why do you think you were the one
0:43:25 to be able to come out and buy all of those people
0:43:27 versus the other operators?
0:43:32 – I think it was, a lot of them just didn’t have the,
0:43:38 they were like my friend, Mark.
0:43:43 They liked being my co-founder, Mark.
0:43:44 They just wanted to be a big wheel.
0:43:47 And Mark just would be happy just to be a big wheel
0:43:48 with that one store.
0:43:50 And I think that’s true with the other people.
0:43:53 They were just happy to get the money
0:43:56 and they got local notoriety and whatnot.
0:43:58 They didn’t have the vision or desire,
0:44:00 really, to build a chain.
0:44:01 I just think I did.
0:44:03 I had that kind of drive.
0:44:04 I wanted it.
0:44:07 To me, it was like, this game’s getting more and more fun.
0:44:10 Let’s just keep growing it and building it.
0:44:12 And that’s just the way I was wired.
0:44:13 And I think the other people were wired
0:44:15 a little bit differently.
0:44:17 – Is there a difference between,
0:44:19 or actually I’ll rephrase this.
0:44:23 What’s the difference between professional management
0:44:25 and a founder-led company?
0:44:28 – It’s a huge difference.
0:44:33 Nobody ever loves their business as much as a founder does.
0:44:38 And I mean, I led Whole Foods for 44 years.
0:44:41 I will always, it’s like, if you’re a parent,
0:44:42 your child grows up.
0:44:43 I raised that child as best I can.
0:44:44 It’s on its own now.
0:44:47 I can’t tell Whole Foods what to do anymore.
0:44:49 And you just hope you put inculcated good values
0:44:50 and that they have a happy life.
0:44:52 I will always love Whole Foods.
0:44:54 I will always wish the very best for Whole Foods,
0:44:57 even though I’m not in it any longer.
0:45:01 And in fact, I deliberately try to stay out of the loop
0:45:03 because it bothers me when I hear things.
0:45:07 So I just try to leave it alone and do other things.
0:45:08 But professional managers,
0:45:12 they’re not, I’m not saying they couldn’t be,
0:45:15 but in my experience, they’re not usually mission-driven.
0:45:19 They’ve gotten their MBA from Harvard or Wharton
0:45:20 or Stanford.
0:45:21 They’re very intelligent.
0:45:23 They work hard.
0:45:27 But working at Whole Foods or Amazon,
0:45:31 it’s just part of their career path.
0:45:32 They wanna put it on their resume
0:45:34 and then they wanna use that to leverage
0:45:37 to get the next promotion maybe at another company.
0:45:38 – It’s a stepping stone.
0:45:39 – It’s a stepping stone.
0:45:41 Thank you, that’s exactly correct.
0:45:44 And one of the things that Whole Foods had for so long
0:45:47 is we did most of our promotions from within.
0:45:50 And so we built this very loyal,
0:45:52 committed, mission-driven business
0:45:56 that was very unlike most of the other businesses I saw.
0:46:00 And when we brought professionals in,
0:46:02 we’ve spent a lot of time making sure
0:46:05 they were good cultural fits, at least in the early days.
0:46:10 And later on, as we got bigger and more famous,
0:46:15 we began to attract people who really were looking in it
0:46:20 as more of a career move and we never could get them
0:46:22 to buy in to the mission.
0:46:27 And I think what happens after the founders leave
0:46:29 and retire that it’s very difficult for a company
0:46:31 to be anything but professional you let
0:46:33 at that point, going after that.
0:46:36 And that’s one reason most companies all last that long.
0:46:40 You start to build, as professionalism builds,
0:46:44 it begins to hire more professionals
0:46:49 and your bureaucracy begins to expand as well.
0:46:51 You get a bigger and bigger legal department,
0:46:53 a bigger and bigger HR department.
0:46:57 They have their own sort of professional ethics,
0:46:59 their own professional goals they want to accomplish.
0:47:02 But it’s hard to manage the cost now
0:47:04 because the professionals are running
0:47:06 their own little fiefdoms.
0:47:10 And you either say whatever you have to do
0:47:11 sort of what Amazon has done from time to time
0:47:14 is like everybody has to do a 10% cut.
0:47:18 Well, it’s kind of arbitrary, that hurts morale.
0:47:21 But how else do you check your growing bureaucracy?
0:47:23 What the way capitalism deals with it is
0:47:26 is that these big corporations eventually
0:47:30 just get sort of sclerotic and entrepreneurs come in
0:47:33 and create these very new businesses
0:47:36 that are very nimble, that are young,
0:47:38 that haven’t built up a bureaucracy yet.
0:47:41 I’m having this time is building love life now
0:47:44 and I’m determined as long as I’m still running
0:47:47 the company that we’re not gonna build up a big bureaucracy
0:47:51 because I mean, you just have to hold it in check.
0:47:53 I don’t think I did as good a job at Whole Foods
0:47:56 of checking that bureaucracy once it got.
0:47:57 Then once the professionalism got in there,
0:48:00 I had trouble controlling it.
0:48:01 I’m gonna make sure it doesn’t get a good
0:48:02 fit hold into love life.
0:48:03 – How did that show up?
0:48:06 Was that sort of through cost expansion
0:48:07 or was it sort of?
0:48:11 – You hire people to try to do something
0:48:13 you’re unable to do.
0:48:16 Or you’re just like, we need to hire somebody
0:48:17 to work on that.
0:48:19 And then of course they can’t do it by themselves
0:48:20 so they have to build a team.
0:48:23 And what’s not happening is sort of like
0:48:24 the federal government.
0:48:26 They add new government departments on them.
0:48:27 They don’t sunset them.
0:48:28 They don’t get rid of them.
0:48:30 They just add new ones on.
0:48:32 Well, corporations have more of a profit.
0:48:34 They just can’t operate indefinitely building up
0:48:37 a deficit the way the federal government can do.
0:48:39 So there is the shareholder push
0:48:42 to keep control of the cost to be sure.
0:48:45 But it’s hard to do it surgically.
0:48:48 You end up doing it, you take these,
0:48:50 everybody figure out how to cut your department
0:48:52 5% or 10% or whatever.
0:48:55 That also kills morale when you start doing layoffs.
0:48:58 So the better way is not to build it up
0:48:59 in the first place.
0:49:02 And that just means being skilled at saying no.
0:49:03 No, we’re not gonna do that.
0:49:05 No.
0:49:07 And because there’s always things that are nice to do.
0:49:10 And when you’re profitable and you have the resources
0:49:12 to do it, you start to add things on.
0:49:15 But you don’t do a good job of sunsetting them
0:49:18 or getting rid of them or just evaluating
0:49:19 their cost effectiveness.
0:49:21 I think the most successful businesses
0:49:23 and the most successful entrepreneurs
0:49:27 spend a lot of time worrying about their cost.
0:49:29 And even when they’re successful,
0:49:32 one of my mistakes, I think in looking back was
0:49:34 as we got more and more successful,
0:49:37 I tended to just not say no enough.
0:49:39 I’d still do it more than anybody else,
0:49:43 but I was, it was easy to just say yes.
0:49:47 And figure you can grow your way out of it.
0:49:49 – Talk to me a little bit more about the focus aspect
0:49:52 of this and saying no and what you say no to
0:49:55 because you have an organization that you’re running,
0:49:57 it’s large, you’re successful, you’re making money.
0:49:59 People are coming to you with these ideas,
0:50:01 maybe great projections, maybe not.
0:50:03 And they just need a yes from you.
0:50:05 And at that point, you’re disconnected from every,
0:50:06 you don’t see the–
0:50:08 – And you can’t easily evaluate
0:50:11 whether what they’re proposing
0:50:13 is gonna be successful or not.
0:50:16 And generally, when something is failing,
0:50:18 the people that are responsible for it
0:50:19 don’t wanna admit it’s failing.
0:50:22 And what they do is that we need more resources.
0:50:24 I can make this quick, but you need to give more resources.
0:50:27 So at some point, you’ll have to say no.
0:50:30 It’s better to say no early on.
0:50:33 Or if you just wanna, you just have to set
0:50:35 very limited budgets for it.
0:50:37 And then not let those budgets increase.
0:50:39 ‘Cause it’s a tendency for budgets
0:50:41 to sort of grow automatically.
0:50:44 It is just, well, we’re gonna have a,
0:50:46 we’re gonna have a 7% increase in that budget.
0:50:49 And it’s like, well, is that worth it?
0:50:51 I remember the, we did this for years,
0:50:54 and it was my least favorite day of the year.
0:50:59 We would bring the leaders in to talk about their budgets.
0:51:06 And I hated that day because I was always the Grinch.
0:51:08 I was always the one saying no.
0:51:10 Or we’re gonna eliminate that.
0:51:14 And probably we should have kept doing that.
0:51:15 We stopped doing it.
0:51:18 And I eventually said, we don’t need to do this anymore.
0:51:21 And because it was such a painful day for me,
0:51:23 ’cause I ended up having to be the asshole.
0:51:28 I guess every company needs somebody
0:51:34 that’s really watching the focusing, watching the cost.
0:51:36 Sometimes that’s the chief financial officer.
0:51:39 But in general, it needs to be kind of a cultural thing.
0:51:41 Whole Foods was not as good at that
0:51:43 if we were at other things.
0:51:46 And I wasn’t as good at that as I should have been.
0:51:48 – There’s a natural entropy to not only bureaucracy,
0:51:53 but expenses and just the scope of the work that you take on.
0:51:54 – It is.
0:51:59 It’s really, it’s something that as a business grows
0:52:01 that you have to be even more vigilant about it.
0:52:04 Because it’s, so many things are happening
0:52:06 that you can’t even, you can’t even see them anymore.
0:52:09 Your company’s gotten, it’s grown beyond your ability
0:52:12 to actually understand everything that’s going on in it.
0:52:15 And so you have to, you delegated that out
0:52:17 and you have to trust those leaders.
0:52:19 And that’s why companies end up getting managed a lot
0:52:21 by their budgets.
0:52:24 And you’re determining where you’re gonna expand,
0:52:25 give resources to and where you’re gonna take
0:52:26 resources away from.
0:52:30 They all would make cases for why they need more resources.
0:52:31 But your function as the leader
0:52:33 is to make the difficult decisions
0:52:35 that we’re actually gonna stop funding that.
0:52:38 Or we’ll let that run one more year,
0:52:40 but you’ll need to hit these objectives
0:52:42 or we’re gonna pull the plug on it.
0:52:46 So, I gotta say, ’cause I identify as an entrepreneur,
0:52:49 as Whole Foods got to be larger and larger,
0:52:50 a lot of ways I enjoyed it less.
0:52:54 Because it’s the creative part that’s fun.
0:52:56 And that’s what I’m doing again with Love Life,
0:52:59 putting deals together, thinking about,
0:53:01 this whole health scene is changing rapidly.
0:53:03 Who are you gonna partner with?
0:53:04 What are you gonna let go of?
0:53:06 What do we need to invest in?
0:53:09 And it’s, you know, I’m thinking about new ideas every day.
0:53:11 It’s, that’s very fun.
0:53:15 But when you begin to manage a really big corporation,
0:53:17 ah, it’s more about,
0:53:19 I didn’t get to be as creative any longer.
0:53:23 It wasn’t, my entrepreneurial spirit was sort of not
0:53:26 nearly as engaged as it was.
0:53:30 And that was only about the last 10 years or so.
0:53:31 Remember, 44 years a long time.
0:53:34 So there was a nice long creative run.
0:53:36 And it didn’t like change overnight.
0:53:39 It just slowly, as the bureaucracy got bigger,
0:53:41 as I was dealing more with problems
0:53:43 rather than opportunities,
0:53:46 my enjoyment of the business began to shift.
0:53:48 – Are there things that you said yes to
0:53:52 that a more professional manager wouldn’t have said yes to?
0:53:55 I’m thinking things that don’t make sense on a spreadsheet
0:53:56 but make sense for the company.
0:53:57 – Well, of course.
0:54:00 I mean, that’s the job of the entrepreneur,
0:54:03 is to see things that professionals, it would not see.
0:54:06 Where the professionals are making a more calculated decision
0:54:09 on, is this good for my career or not?
0:54:12 Or if this succeeds, will it really help my career?
0:54:15 But if it fails, will I end up getting fired?
0:54:16 The entrepreneur is just gonna,
0:54:19 they’re gonna take a more of a, let’s try it.
0:54:20 Let’s see what happens.
0:54:22 And if it works, we’ll get more money to it.
0:54:24 If it doesn’t work, we’ll discontinue it.
0:54:26 I’ve never had a problem.
0:54:31 It’s always been pretty easy for me to try things,
0:54:35 make mistakes and admit that it’s a mistake
0:54:37 and I can discontinue it.
0:54:38 It’s like, we tried that, it didn’t work.
0:54:39 It’s okay.
0:54:44 Professionals sometimes have trouble letting go of that
0:54:49 because they worry that this loss is gonna be a blemish
0:54:51 on their resume.
0:54:54 The entrepreneur, I don’t think quite thinks that way.
0:54:57 – Throughout this, you had, I think, four coup attempts
0:55:00 that your leadership had made at stages.
0:55:01 Talk to me about what that felt like
0:55:03 and how you dealt with those.
0:55:08 – You know, I use a good metaphor,
0:55:10 but it’s only for the people that know something
0:55:11 about the Lord of the Rings.
0:55:12 Fortunately, the movies came out,
0:55:14 but those books had a big influence on me.
0:55:18 When I was younger, I think I read those, the three books.
0:55:20 Five times before I got out of high school,
0:55:21 it was kind of like my cult reading thing
0:55:23 when I was a teenager.
0:55:25 And then, of course, the movies came out.
0:55:30 I’ve seen them multiple times and in the Lord of the Rings,
0:55:31 there’s this one ring.
0:55:34 The Amazon now has the Rings of Power show on
0:55:37 and they’re showing how these rings were made,
0:55:39 which is not actually in the Lord of the Rings,
0:55:41 so it’s really, really interesting stuff.
0:55:45 And the one ring, the Ring of Power,
0:55:50 it’s a great metaphor because there are three things
0:55:54 that I’ve found are very corrupting for most people.
0:55:58 Not everyone, but most people could be corrupted by money,
0:56:04 fame and power because what people want is love
0:56:08 and they think those things will give them love
0:56:09 if they have enough of them.
0:56:12 You have enough money or power or fame,
0:56:15 but in fact, those things do not satisfy the soul
0:56:17 and most people can easily be corrupted
0:56:18 and addicted by those things.
0:56:23 If you have money, you start to compare yourself
0:56:24 to people that have more money than you
0:56:25 and you’re dissatisfied.
0:56:30 If you have fame, you have certain Instagram followers
0:56:35 or you see who has more and you want more.
0:56:38 It doesn’t really lead to happiness if you get more
0:56:42 and power, you see this with politicians,
0:56:47 they want more power and these things, again,
0:56:49 do not satisfy the soul.
0:56:51 So these are the Rings of Power is corrupting.
0:56:55 Well, in this case, I’m the CEO.
0:56:59 I’m getting the most money or the most fame
0:57:01 and the most power and other people coveted those things
0:57:04 and they always felt like they could do a better job.
0:57:07 The coup attempts were always, I think, well intended
0:57:12 or people doing them thought they were well intended.
0:57:15 They thought they really would do a better job than me
0:57:17 and if I could just get out of the way,
0:57:19 then they would be able to wear the ring
0:57:22 and I wasn’t gonna just get out of the way
0:57:25 so they did what they could to get me out of the way.
0:57:27 I think that’s where the coups came from
0:57:32 and I just think partly human nature.
0:57:36 As you acquired more wealth and power and fame,
0:57:38 as you guys grew, how did you stay so grounded?
0:57:43 Well, of course, other people might tell you
0:57:45 that they didn’t think I stayed that grounded, so.
0:57:47 But I think I did stay pretty grounded
0:57:51 and I think it’s because I have this whole background
0:57:54 and philosophy and my book is kind of
0:57:56 about my own spiritual journey
0:57:59 and I got really clear at a pretty young age
0:58:02 like back in my existential days,
0:58:04 back when I was in my late 20s
0:58:06 and then the psychedelics took it to another level.
0:58:08 I got really clear about death.
0:58:13 What I mean about that is that we’re all gonna die.
0:58:14 I got that at a very young age
0:58:17 and most people, they’re always in denial.
0:58:19 There’s a big denial of death
0:58:21 and that when you’re young it’s like,
0:58:23 well, that’s what old people do, but I’m not old.
0:58:25 And then I got my whole life ahead of me
0:58:27 and they just put it out of their mind.
0:58:30 I was just aware that I only had so much time.
0:58:34 So my big question is, what do I wanna do
0:58:36 with the time that I have?
0:58:38 And so I always had this
0:58:44 awareness that time was running out
0:58:47 and that I needed to get on with stuff.
0:58:52 And so the successes I had, it’s like,
0:58:54 I once heard that somebody asked Picasso
0:58:57 what his favorite painting was
0:59:00 and he said the one I’m working on right now.
0:59:03 And so I never, I don’t think that stuff corrupted me
0:59:04 because I didn’t care about it.
0:59:07 To me it was creating the next thing.
0:59:11 It was the next thing I was doing that was fulfilling me.
0:59:14 I didn’t think money or fame or power
0:59:17 would really be very satisfying, and they weren’t.
0:59:21 I remember when I met Jeff Bezos for the first time,
0:59:27 well not the second time I met him
0:59:29 because I’d met him at this conference and we’d hit it off.
0:59:30 But when we were going up there to talk about
0:59:32 maybe Amazon buying Whole Foods,
0:59:35 we were meeting at Jeff’s Boat House,
0:59:39 which is next to his mansion, like Washington.
0:59:42 And they wouldn’t tell us who the meeting place was
0:59:44 until we landed.
0:59:46 And then they gave us an address when we got there,
0:59:49 we were searched, our car was searched
0:59:52 because they were worried about somebody trying to kill Jeff.
0:59:54 And I was thinking to myself,
0:59:57 I would never want to be so rich and so famous
1:00:01 and so powerful that I couldn’t live a normal life
1:00:04 that I didn’t have any anonymity.
1:00:05 That was like a real wake up call.
1:00:08 It’s like, I’m sure Jeff’s one of the most envied people
1:00:10 in the world, but I would not want to have
1:00:12 to live my life like that.
1:00:15 So a little bit of fame, a little bit of money,
1:00:17 a little bit of power to a certain point
1:00:19 is gratifying to the soul.
1:00:22 But past that point, you get diminishing returns.
1:00:26 It’s no longer bringing you any kind of happiness.
1:00:27 It’s now a burden.
1:00:32 So I got clear about death at a pretty young age
1:00:34 and I just wanted to accomplish things.
1:00:36 And I didn’t think my accomplishments were that big a deal.
1:00:39 Other people are accomplishing stuff as well.
1:00:42 So I didn’t spend a lot of time comparing myself to others.
1:00:44 Either people that had less or had more.
1:00:48 I was too busy creating the next painting
1:00:49 ’cause that was what was fun.
1:00:50 That was what was exciting.
1:00:52 That was where the joy and the love came
1:00:53 and then the relationships with the people
1:00:55 that you’re doing it with.
1:00:57 That’s the real satisfying part.
1:00:58 – When did you realize that love
1:01:00 was the center of everything?
1:01:04 – I think I’ve had glimpses of it many times.
1:01:08 I mean, I talked about it the first time I had that ego death
1:01:11 and LSD, that I had this realization that we were all.
1:01:14 It was just the one being that it was all
1:01:18 founded ultimately on play and love and games.
1:01:21 And then when I did MDMA for the first time,
1:01:25 Adam, MDMA, Ecstasy, Molly,
1:01:27 when it was legal back in 1984,
1:01:29 that just burst my heart open.
1:01:30 And I wrote it down.
1:01:32 I was like, never forget this.
1:01:34 There is nothing more important than love.
1:01:36 And of course you will forget it,
1:01:39 but once you had that deep connection to it,
1:01:40 you never quite forget it.
1:01:43 And then my spiritual path took me,
1:01:44 studying the course of miracles,
1:01:47 doing breathwork, doing meditation.
1:01:50 I wanted to go deeper into love.
1:01:52 And so that’s just sort of been a life,
1:01:57 part of my life purpose, life mission is to,
1:02:00 ’cause I just, that’s what makes life worthwhile.
1:02:04 Everybody that gets to the, and they’re on their deathbed,
1:02:06 imagine you’re on your deathbed,
1:02:08 do you think you’ll be thinking,
1:02:10 God, I wish I’d made more money.
1:02:12 I wish I’d been richer.
1:02:13 I wish I’d been more famous.
1:02:15 I wish I’d had more power.
1:02:17 Now you’re gonna be thinking about,
1:02:20 I wish I’d told my son how much I loved him.
1:02:22 I wish I hadn’t let that relationship go.
1:02:24 I wish I hadn’t said those things.
1:02:27 Your regrets are always gonna be about relationships
1:02:30 and the ways that love failed in your life.
1:02:32 I mean, if that’s the clearest indication
1:02:34 that love’s the most important thing
1:02:36 is because that’s what happens when you’re dying
1:02:38 is you’re looking back
1:02:41 and you’re thinking about the people that you loved
1:02:43 and didn’t love well enough.
1:02:46 You’re not thinking about the other shit.
1:02:46 You’ve let it go.
1:02:49 And so I’ve just been clear about that for a long time.
1:02:51 How do you learn to love yourself?
1:02:55 There’s always like an inner critic, right?
1:02:57 To love yourself unconditionally.
1:02:59 Of course, you’re asking great questions
1:03:02 and you’re also leading me through the book pretty well.
1:03:07 So in my case, my whole life in some ways
1:03:11 has been an attempt to be able to truly accept myself
1:03:12 because I have in it,
1:03:14 I think everybody has an internal critic.
1:03:15 We now just have an internal critic.
1:03:19 That internal critic is judging everybody else
1:03:20 and then frequently judging ourselves
1:03:22 is inadequate, not perfect.
1:03:27 And in my case, in some ways, the whole life adventure
1:03:29 and you get back into the deep thing
1:03:31 about the way I was raised, my parents,
1:03:34 my, you know, I was kind of that raised
1:03:36 where if I brought a home and report card
1:03:38 and had all A’s and one B, it was like,
1:03:40 what are you gonna do about that B, son?
1:03:41 It’s like, there was no like,
1:03:44 that’s really great, fantastic report card.
1:03:49 And then when I’d have failures,
1:03:52 you know, my own self-judgments would be pretty intense.
1:03:54 So I think you come to love yourself
1:03:57 and what I experienced when I finally did it,
1:03:59 and it was just a few years ago now,
1:04:01 was a little over two years ago,
1:04:03 on a goddess spiritual journey,
1:04:06 I experienced, I got really in touch
1:04:10 with my inner child, this little boy
1:04:15 that was so very beautiful and so idealistic
1:04:18 and so loving and just wanted to help people.
1:04:21 And it had been hurt.
1:04:24 As we go through life, we get wounded.
1:04:26 And the little boy, it had many wounds.
1:04:29 And, but he’s still this beautiful little boy
1:04:30 and I saw him very clearly.
1:04:32 I saw this, that child like of myself
1:04:35 and I realized that my entire life,
1:04:38 I’d tried to do good and I’d made a lot of mistakes.
1:04:41 I’d hurt people, but I knew that at the core,
1:04:44 there was this good person that really loved.
1:04:47 And I saw that and that was the first time
1:04:50 I really, I think, unconditionally loved myself.
1:04:53 – That’s really powerful.
1:04:58 Talk to me, let’s go back to the Amazon sale,
1:05:00 but before we get there, let’s rewind.
1:05:05 So, crisis hits, sales aren’t what’s expected.
1:05:09 Janna Partners, who’s an optimist firm comes in.
1:05:10 Walk me through from that moment
1:05:12 to the meeting with Bezos.
1:05:18 – So, whole foods, you know, it’s, we weren’t in,
1:05:27 people think we were like failing or in decline
1:05:29 and that was not true.
1:05:31 Whole Foods was actually incredibly successful.
1:05:34 We had, at the time, the activists and investors
1:05:35 invested in Whole Foods.
1:05:36 We had the highest sales per square foot
1:05:38 of any public food retailer.
1:05:41 We’d had the same store sales growth
1:05:44 of 8% over 30 plus year period.
1:05:47 By every, we, almost every objective measurement,
1:05:49 Whole Foods was the most profitable food retailer,
1:05:51 grocery store operator out there.
1:05:54 We had so many wonderful things going for us,
1:05:57 but competition was catching up with us.
1:06:00 We were being copied, the whole paycheck narrative,
1:06:02 the media just ran wild with that.
1:06:07 And we were increasingly being tacked by governments.
1:06:08 I talked to them in the book
1:06:11 about how we had the first California
1:06:16 and then in New York, a tactics for mispricing,
1:06:19 which we weren’t deliberately mispricing anything
1:06:21 and we were making more mistakes
1:06:23 in favor of the customers and others,
1:06:25 but it’s just on the things like cut fruit.
1:06:26 If you have a little tear weight
1:06:28 and you could be off a penny or two,
1:06:33 but if you have an ambitious weights and measures
1:06:34 department of consumer affairs,
1:06:36 it’s kind of an extortion thing.
1:06:38 And that’s what happened to us, both California and New York,
1:06:41 generating massively negative publicity.
1:06:42 That drove our sales down.
1:06:43 We lost a lot of customers from that
1:06:45 when it happened in New York.
1:06:49 And then what we needed to do was we needed to be able
1:06:53 to drop our prices across the whole company,
1:06:56 but we began to start that happening.
1:06:59 We got attacked by activists.
1:07:02 Activists are shareholder activists.
1:07:03 We’ve been attacked by a lot of other activists
1:07:06 over the years from animal rights activists
1:07:08 to a variety of different kinds of activists,
1:07:11 but these were particularly shareholder activists.
1:07:14 They don’t think the business is being managed
1:07:17 to maximize shareholder value.
1:07:19 And so this particular group of activists
1:07:23 was Janna Partners and they,
1:07:28 we met with them soon after they took a position
1:07:31 and to find out what, you know, if we could work together
1:07:33 to try to create more value for the shareholders.
1:07:36 And they had this PowerPoint presentation
1:07:39 and they showed it to me and my leadership team
1:07:40 and a couple of my directors.
1:07:43 And, you know, there were some things in it
1:07:44 that were accurate and there were a lot of things
1:07:46 that were not accurate.
1:07:49 I asked them, could I get a copy of that presentation
1:07:50 that you’re making ’cause I like to address
1:07:52 some of these concerns.
1:07:53 I don’t think everything you put in there is accurate.
1:07:55 I like to correct the record.
1:07:57 He says, no, you can’t have it.
1:07:58 And I said, well, why not?
1:08:00 And he says, well, we don’t want to.
1:08:01 Listen, John, let me just tell you
1:08:02 what’s gonna happen here.
1:08:04 Let’s cut to the chase.
1:08:06 We’re gonna take over Whole Foods.
1:08:07 Here’s how we’re gonna do it.
1:08:09 We’re gonna take over your board first.
1:08:12 After we do that, we’re gonna fire you
1:08:15 and any other management people that won’t line up with us.
1:08:17 And then we’re gonna put this up for bid
1:08:18 and sell it to the highest bidder.
1:08:21 And there’s not an effin’ thing you can do about it
1:08:23 and walked out of the room.
1:08:25 It’s like, whoa, I don’t think we’re gonna
1:08:27 have a partnership with these guys.
1:08:29 And we had our bankers, we had our lawyers,
1:08:31 and we began to look around
1:08:34 for what I would call the win, win, win solution.
1:08:37 How do we get a win for every one of our stakeholders?
1:08:40 How can we do something that would be best for our customers,
1:08:42 best for our team members, best for our suppliers,
1:08:43 best for our investors,
1:08:45 best for the communities that we’re part of?
1:08:46 I started asking that question.
1:08:47 I was putting that question,
1:08:51 and you might say out to the universe, out to my soul,
1:08:53 give me an answer for this question.
1:08:56 And we looked at all the different alternatives.
1:08:59 The most obvious one is we’ll fight Janna.
1:09:01 All my competitive instincts were,
1:09:02 we were beat those guys.
1:09:04 And so that was the first thing.
1:09:06 But we needed time to do that.
1:09:11 We know we needed to reverse our same store sales decline.
1:09:16 We needed to have a chance to change our prices.
1:09:18 But if you’re selling something for a dollar,
1:09:22 and now you’re selling it for 90 cents in the short run,
1:09:24 in the long run, that’s a good decision probably.
1:09:25 But in the short run,
1:09:29 your sales just dropped from a dollar and 90 cents.
1:09:31 Your same store sales just went negative.
1:09:34 Your profits, there’s a lag period.
1:09:36 Your profits are gonna fall.
1:09:39 And then maybe a couple of years from now,
1:09:41 when people become aware that you have these lower prices,
1:09:43 you’ll see your traffic go up
1:09:45 and it’ll end up being a really good business decision.
1:09:46 We needed that time.
1:09:48 Janna wasn’t gonna give it to us.
1:09:52 So fighting them was gonna be very difficult.
1:09:53 And they knew that.
1:09:59 Secondly, we could find a sympathetic investor,
1:10:02 somebody who would buy us and give us the time
1:10:04 we needed to turn the business around,
1:10:06 drop the prices and not worry.
1:10:07 We’d be off the public markets.
1:10:10 And the logical one, there are people that do that.
1:10:11 Warren Buffett’s like the best example.
1:10:13 And we actually contacted Warren
1:10:14 and asked him if he’d be interested.
1:10:17 And he has a good sense of humor and he said,
1:10:21 “Ah, you know, I own Berry Queen.
1:10:23 “I don’t think Hulfe is a good brand fit for me.”
1:10:27 And so nothing came of that.
1:10:29 And then it was, maybe we could take it private.
1:10:30 Am I going private?
1:10:34 Would mean we’d work with a private equity firm or two.
1:10:38 And they would do, it’s a kind of a two-step process
1:10:41 where they would put up some money
1:10:43 and they’d borrow money from the rest of the money
1:10:46 needed from a consortium of investment banks.
1:10:49 And then after they get control of the company,
1:10:52 the second step is they would pay back that bridge loan
1:10:54 and they got from the investment banks
1:10:56 and they would borrow longer-term money
1:11:00 using the company’s own balance sheet to finance the loan.
1:11:02 Which means they would borrow,
1:11:05 say Hulfe’s were sold to Amazon for 13.7 billion,
1:11:07 so it took it private for the same amount.
1:11:11 They’d put in about a billion and they’d borrow 12.7 billion.
1:11:13 And so Hulfe’s would be on the hook
1:11:15 for the interest rates of that.
1:11:17 Now, we had really good cash flow.
1:11:19 We had EBITD dollars very high.
1:11:22 I think we were making about 1.3 billion dollars
1:11:23 in EBITD dollars when Janet bought us.
1:11:25 So it’s, again, I did the Hulfe’s,
1:11:29 it was failing in some way, that’s just a media myth.
1:11:33 And so we could have serviced the debt
1:11:37 provided that 2008 didn’t happen again, right?
1:11:42 In 2008, the plug went out of the tub
1:11:47 and we saw that the whole economy shrink.
1:11:51 Our Hulfe’s market stock dropped 90%.
1:11:53 We were selling it three times our cash flow.
1:11:55 We could have bought our company and paid for it
1:11:58 in three years for their own cash flow.
1:12:00 And so a situation like that occurred again,
1:12:02 we would have failed.
1:12:06 And so going private option was one,
1:12:07 we seriously looked at,
1:12:09 but then the private equity firms
1:12:10 would have control of the business.
1:12:12 Remember, I wanted to get those venture capital
1:12:14 hitchhikers out of the cars.
1:12:16 Now, I’m taking them into the car,
1:12:18 but they’re definitely driving the car.
1:12:20 You’re not in control any longer, they’re in control.
1:12:22 And their agendas are very different.
1:12:24 And I just thought it was very risky.
1:12:25 You’re risking the business.
1:12:28 And if it works, they could make,
1:12:29 well, they can make billions of dollars.
1:12:31 That’s why they’d be interested in going private.
1:12:35 And so I couldn’t find the right solution.
1:12:38 And then I kept on, I kept asking the question again
1:12:40 and again and again, what’s the win-win-win solution
1:12:41 for all the stakeholders?
1:12:46 And then one day I woke up, right when I woke up,
1:12:49 the idea flashed in my mind, what about Amazon?
1:12:51 That was the question, what about Amazon?
1:12:54 And I had met Jeff the year before
1:12:56 at this Microsoft CEO summit.
1:12:59 And I hit it off with Jeff, we did a panel together.
1:13:03 And he was very interested in Whole Foods.
1:13:04 We talked about Whole Foods a lot.
1:13:08 He also was interested in science fiction and fantasy.
1:13:10 And we’ve read a lot of the same books,
1:13:11 like the Lord of the Rings.
1:13:13 And he was into scuba diving.
1:13:15 And I’ve been scuba diving a long time
1:13:17 and dive all over the world.
1:13:20 So we hit it off, we had a good rapport.
1:13:22 So then he said, in fact, John,
1:13:23 this has been a great conversation.
1:13:25 Let’s get together sometime and let’s talk further.
1:13:27 And I said, well, you got my number,
1:13:29 but I didn’t hear from him.
1:13:31 So, but here it is.
1:13:32 And I’m thinking, what about Amazon?
1:13:34 ‘Cause I knew they were getting,
1:13:36 I’d read that they were getting more and more interested
1:13:38 in the food retailing.
1:13:40 I knew that Amazon Fresh was kind of struggling
1:13:42 as a business, but they hadn’t opened up
1:13:44 any physical stores yet.
1:13:47 And so I said, well, let’s find out.
1:13:49 And we called them up and they wanted to talk.
1:13:52 And we flew into Seattle.
1:13:54 And I had three executives with me
1:13:55 and Jeff had three with him.
1:13:58 And we had kind of like,
1:14:01 you know, when you fall in love with somebody,
1:14:03 you’ll have this amazing conversation
1:14:06 where your souls kind of meet.
1:14:08 That happened on that conversation with Amazon that day.
1:14:10 We talked about all the things we could do together.
1:14:14 And we got really excited about the technology.
1:14:16 And they told us about their,
1:14:18 they really wanted to be big in grocery
1:14:20 and they thought Whole Foods could help them.
1:14:24 And also, I liked the Amazon team.
1:14:28 They weren’t these kind of professional financial types.
1:14:30 Like I thought they probably were,
1:14:33 they were really good guys, super smart.
1:14:35 You know, Jeff’s really brilliant man himself
1:14:37 and he hired really brilliant people to work with him.
1:14:39 And, but they were kind of regular people.
1:14:42 They weren’t stuff shirts.
1:14:43 They were really interesting guys.
1:14:46 Diverse and clever minds like Jeff.
1:14:49 So I remember our team retreated after,
1:14:50 we talked for about three hours
1:14:53 and our team went to a restaurant to kind of process.
1:14:54 And we’re kind of looking around at each other saying,
1:14:57 that was an incredible conversation.
1:14:58 Wow, man, those guys are smart.
1:15:01 I think we could do some amazing stuff together.
1:15:02 And then we’re looking around
1:15:03 and I voiced it for the whole group.
1:15:06 I said, maybe so, but do you think they liked us too?
1:15:09 And it turned out they did
1:15:13 because they came down just three days later.
1:15:17 And six weeks after that first meeting,
1:15:20 we had signed an agreement to get married, to merge.
1:15:22 And yeah.
1:15:25 – What kind of questions did the Amazon team ask
1:15:26 at that meeting?
1:15:27 Over you goes.
1:15:29 – Everything.
1:15:31 The thing I liked about Amazon was how good
1:15:31 their questions were.
1:15:33 You can oftentimes tell about somebody’s intelligence
1:15:34 by how good the questions.
1:15:37 They’re asking, by the way, you’re asking me great questions.
1:15:40 And they really were asking great questions.
1:15:44 And then that would lead to answers.
1:15:45 You know, I’m very candid.
1:15:48 So I was answering very truthfully to their questions
1:15:51 unless I thought it would harm her business in some way.
1:15:53 And then, but they were, we’d ask them questions
1:15:55 and they would be equally forthcoming.
1:15:59 So it was a very, very good dialogue.
1:16:01 Just they wanted to understand their business.
1:16:04 They just, you know, they were asking the right questions
1:16:05 to how to understand it.
1:16:09 Why are your things for sales going down?
1:16:11 And then you could explain about competition
1:16:13 and I could explain about, well, we know we can get it back
1:16:16 but we need to drop prices.
1:16:18 So let me just tell you, so that when the deal
1:16:20 got went through, and I remember I was asking
1:16:22 that question, what’s the win-win solution
1:16:23 for all of our stakeholders?
1:16:25 The Amazon merger, every one of our stakeholders
1:16:27 benefited from that merger.
1:16:29 We really did drop our prices.
1:16:32 We dropped our prices four times significantly
1:16:33 in the first two years of that merger.
1:16:37 I hardly ever hear the whole paycheck narrative any longer.
1:16:39 Hopefully, the sill scene is expensive
1:16:40 but I don’t hear that narrative any longer
1:16:42 because we’re far more competitive price-wise
1:16:43 than we used to be.
1:16:46 It cost Amazon hundreds of millions of dollars
1:16:49 to invest that, but they think long-term.
1:16:53 They, Jeff and his team think 10, 15, 20 years in the future.
1:16:55 They’re willing to make that investment.
1:16:58 They raised our wages and every one of our early people,
1:17:02 Amazon decided we’re going to, this was back in 2017,
1:17:05 within 30 days of the merger, they said we’re gonna raise
1:17:07 the minimum starting wage at 15 bucks.
1:17:11 So that meant everybody got a raise because of people
1:17:16 that were at 15, 25 and the gap,
1:17:19 they couldn’t stay at 15, 25.
1:17:20 They needed to go up too.
1:17:23 So pretty much every hourly person got a raise.
1:17:25 It was good for our suppliers.
1:17:27 Then not only the Amazon not cutting them
1:17:30 or suppliers out, but they studied our sales
1:17:33 and they saw, wow, they picked up a ton of our suppliers.
1:17:36 And so that was good for them.
1:17:39 It was good for our investors, right?
1:17:42 They got about a 30% premium on the deal
1:17:45 from what the stock had been before Janna got involved.
1:17:49 And then it was good for our government.
1:17:52 They got a massive amount of capital gains taxes
1:17:55 from the deal and good for our communities
1:17:57 that we’re a part of because Amazon did not change
1:18:00 our philanthropic that we had, hopefully it has
1:18:03 three foundations, not only did Amazon not tell us
1:18:05 we had to stop doing those, they contributed
1:18:06 additional monies to it.
1:18:09 So every one of our stakeholders was a winner in that.
1:18:12 That doesn’t mean that that merger has been perfect.
1:18:13 There’s been a lot of things.
1:18:15 I talk a little bit about it in the book
1:18:17 and stuff off the record I won’t talk about here,
1:18:19 but I had my share of disagreements with Amazon.
1:18:21 I fought with them many times.
1:18:25 And ultimately that led to me to retire.
1:18:27 – What do you think of activist shareholders
1:18:32 having been a public company, CEOs and founder at that?
1:18:37 – Yeah, it’s like I’m not opposed to shareholder activists
1:18:42 trying to help companies in constructive ways
1:18:44 to become more successful and profitable.
1:18:49 But I think it’s a flaw in the current in the United States
1:18:53 flaw in our system because we treat short-term shareholders
1:18:55 with the same type of respect that you treat
1:18:56 long-term shareholders.
1:19:01 I think that long-term shareholders that are really making
1:19:04 long-term bets on the business and lets the team
1:19:06 execute over the long term, that’s really what you need.
1:19:09 When you have short-term people that are just trying
1:19:14 to make a pop to the stock price in a short period of time,
1:19:15 which are what shareholder activists are trying to do,
1:19:19 get a sale, I don’t think that’s good for the economy.
1:19:23 And there’s pretty simple solutions to it.
1:19:26 We need to make a distinction in tax policy.
1:19:28 Right now a short-term capital gains,
1:19:30 anything less than one year.
1:19:33 What I’d love to see is that if you held something
1:19:37 for say 10 years, maybe your taxes,
1:19:41 capital gains taxes went down to close to zero.
1:19:43 And if you sold it in less than a year,
1:19:46 maybe they’d be much higher, maybe it’d be 50 or 60%.
1:19:50 So you create these incentives to hold longer
1:19:52 and that would make a shareholder activist
1:19:55 at least have to hold the stock for a couple of years
1:19:58 so they’d have less lower gains.
1:20:01 Also those gains that they need to make need to be,
1:20:07 the individual shareholders are oftentimes taxed
1:20:10 on those situations and the management is not thinking
1:20:13 about taxation and all in those decisions.
1:20:17 So it’s almost as if they should be taxed first
1:20:19 and then the distribution shouldn’t be taxed at all.
1:20:20 That would be another solution.
1:20:23 I think there’s many ways that you can make changes
1:20:25 and regulations and laws that would make
1:20:28 shareholder activists constructive
1:20:31 and a good thing for business rather than what it is today
1:20:33 to be seen as they’re kind of pirates.
1:20:37 So I do think that its reform could be possible there.
1:20:40 – A lot of founders today seem to be going dual class
1:20:44 shares where they either retain a super voting share
1:20:46 or they issue non-voting shares.
1:20:50 – It may not surprise you that Love Life has that
1:20:50 in our structure there.
1:20:52 That didn’t really exist when Whole Foods got founded
1:20:56 back in 1978 but no we have two classes of shares.
1:20:58 I’ve learned that lesson.
1:21:02 – Talk to me about sort of the clashing worldviews I guess
1:21:04 between socialism and capitalism
1:21:07 and how you think about these things.
1:21:09 – That’s a much longer topic.
1:21:11 So you wanna dive into it?
1:21:13 – Sure, let’s go.
1:21:16 – Well, first I’m like a,
1:21:21 I’m a totally enthusiastic capitalist.
1:21:26 And meaning I’m not seen as unbiased in this
1:21:27 when people talk to me about it
1:21:29 because I know my history.
1:21:32 I know what the world was like 200 years ago.
1:21:35 As capitalism got started in the late 18th century,
1:21:39 some last 250 years, but just 200 years ago,
1:21:41 these statistics tell you all you need to know.
1:21:44 200 years ago, 94% of everyone alive on the planet
1:21:47 lived on less than $2 a day in today’s dollars.
1:21:50 85% lived on less than $1 a day.
1:21:53 The average lifespan was a 30.
1:21:56 Oh, by the way, so let’s give it to today.
1:22:00 The only 6% of the world’s population lives on less
1:22:02 than $2 a day.
1:22:07 It’s gone from 94% to 6% in the last 250 years.
1:22:13 The average lifespan 200 years ago was 30.
1:22:15 Now it’s across the planet.
1:22:17 It’s getting closer to 80.
1:22:19 It’s gone from about 77.
1:22:22 I think it’s 76 for men and 78 for women
1:22:25 across the whole planet from 30.
1:22:26 It illiteracy rates 200 years ago.
1:22:29 88% of the people alive couldn’t read.
1:22:32 Now it’s under 10%.
1:22:35 And child birth, I mean, child deaths and child deaths,
1:22:37 children die before they’re age of 10.
1:22:42 The type of advancements we’ve made in vaccines,
1:22:46 in antibiotics, modern dentistry,
1:22:50 the amazing innovations that we have today and music,
1:22:54 and the world is so much better than it was.
1:22:57 People that complain about the world being a disaster
1:22:58 don’t put it in a historical context.
1:23:00 Do we have problems today?
1:23:01 Sure we do.
1:23:01 Of course we do.
1:23:03 We will have problems, by the way.
1:23:06 But these are different problems than we had
1:23:09 when people talk about existential threat of climate.
1:23:12 And I’ll say the existential threats are far less today
1:23:15 than they were 200 years ago.
1:23:17 And it’s been capitalism.
1:23:21 Science plus capitalism has allowed humanity
1:23:26 to prosper collectively, we’re so much better off.
1:23:28 It’s not utopia.
1:23:29 It’s not perfect.
1:23:32 And that’s why socialism still holds such an attraction,
1:23:35 particularly for young people, is they’re born
1:23:40 and they see, they don’t see racism the way I see it
1:23:42 in the context of what it was like
1:23:46 in the United States 200 years ago, or 170 years ago,
1:23:49 or even when I was a little boy growing up in Houston, Texas,
1:23:51 and they had Jim Crow laws.
1:23:53 They had racial segregation was legal.
1:23:57 There’s so much less racism today than there was.
1:23:59 And in fact, we’re the least racist we’ve ever been.
1:24:04 There’s always gonna be inequality,
1:24:07 but there’s no more inequality today
1:24:09 than there was at the founding of our republic.
1:24:12 And that’s just, people change in terms of where they are
1:24:17 in that hierarchy, but there’s always gonna be inequalities
1:24:20 ’cause there’s different, there’s inequalities
1:24:24 due to people’s certain constitutional abilities,
1:24:27 intelligence, the way their parents raised them,
1:24:29 the communities they were born in,
1:24:32 there’s just lots of reasons why people become more,
1:24:35 some people become more successful than others.
1:24:40 My point is socialism is a utopian dream that’s failed.
1:24:42 It’s a God that failed.
1:24:47 There are 41 countries in the last 120 years,
1:24:49 100, yeah, we’re starting with the Russia,
1:24:53 1917 or 1918, that have tried socialism.
1:24:55 Every one of them has failed.
1:24:57 All 41 have failed.
1:24:59 Socialism has never worked.
1:25:02 And when people talk about what about the Nordic countries?
1:25:05 It’s like, they’re not socialistic.
1:25:07 If you look at the Economic Freedom Index,
1:25:11 which charts how economically free a country is,
1:25:14 all the Nordic countries are in the top 25
1:25:16 in the entire world.
1:25:19 And three of those five are ahead of the United States
1:25:20 in economic freedom.
1:25:22 Well, what about Sweden?
1:25:25 It’s like, well, Sweden’s my favorite example,
1:25:28 because when you talk about Sweden,
1:25:30 it’s like, okay, well, let’s look at what Sweden does.
1:25:32 Did they lock down during COVID?
1:25:33 They didn’t.
1:25:35 No, they didn’t, they stayed open.
1:25:37 And they said that, they already said that was a disaster,
1:25:40 but now if you look at deaths for Sweden
1:25:43 over the last four years from COVID,
1:25:45 they’re pretty good compared to much better
1:25:47 than the United States, for example.
1:25:49 That’s on a per capita basis.
1:25:51 Yes, on a per capita basis, of course,
1:25:54 there’s a much lower population there.
1:25:56 Sweden’s economic freedom index is lower
1:25:57 than the United States.
1:25:59 There are, I think the United States is now up to about,
1:26:03 like number 18, Sweden’s like number 15 or 16.
1:26:06 Corporate tax rates in Sweden are like 20%.
1:26:08 I always tell people it’s like,
1:26:10 so would you favor corporate tax rates
1:26:11 dropping in the United States down to 20%?
1:26:12 Well, no.
1:26:18 School choice.
1:26:20 Sweden has universal school choice.
1:26:22 Students can go to any school they want to.
1:26:24 The students make the choices.
1:26:26 The parents and students make the choices.
1:26:30 School choices bitterly fought against the United States
1:26:35 by the, well, the progressives and the teachers unions.
1:26:38 Sweden’s a very progressive country
1:26:40 that’s universalized school choice.
1:26:47 Sweden has amazing freedoms in other areas.
1:26:52 And they’re so far from socialistic.
1:26:55 It’s just they have a big social welfare program
1:26:58 with their healthcare, but they’re also–
1:26:59 That’s kind of the ideal, though, isn’t it?
1:27:02 You have capitalism and it propels you forward,
1:27:04 but then you have a social safety net.
1:27:06 I always tell people it’s like,
1:27:08 if you want to use Sweden as an example,
1:27:10 you got to take the whole shooting match.
1:27:11 I would take the Swedish.
1:27:13 If you gave me everything Sweden has,
1:27:16 but they don’t want to take the low corporate taxes,
1:27:21 they don’t want to take the universal healthcare,
1:27:24 they don’t want to take all the things that Sweden,
1:27:26 they want to lock down the economy
1:27:27 and they don’t want to take all the Sweden,
1:27:29 they just want to cherry pick it.
1:27:31 But if you took it all, I’d probably,
1:27:33 because what the trade off is,
1:27:35 you’re going to have those big social welfare programs
1:27:37 that Sweden has and you’re going to have
1:27:39 higher personal income taxes,
1:27:41 but you’re going to have lower corporate income taxes
1:27:43 and you’re going to have more economic freedom.
1:27:45 I’d probably take the Swedish package, if you could opt,
1:27:48 but you’d have to give me the whole thing
1:27:49 and people don’t see it that way.
1:27:52 – Why do you think we’re still, we as a society,
1:27:55 not we as individuals are drawn to it still?
1:27:57 I mean, there’s talk about price caps,
1:27:59 there’s all of this stuff and it seems to be,
1:28:00 this time is different.
1:28:03 We’re smarter than all the other 41 times
1:28:04 that’s been tried and failed.
1:28:10 – It’s very, in a capitalistic society
1:28:14 where you have economic freedom in free markets,
1:28:17 no one’s actually running things.
1:28:20 Markets are self-adapting and correcting.
1:28:22 Many people are very uncomfortable without any of that.
1:28:25 They think somebody has to be in control of it all.
1:28:29 And so they’re willing to give up their economic
1:28:32 and personal freedoms for the security
1:28:35 of thinking somebody’s in control, someone’s doing it.
1:28:42 And they believe that despite all the other failures,
1:28:44 which by the way, they’re not aware of,
1:28:47 they just can rationalize those failures away.
1:28:50 Well, that was Stalin or that was Mao or that was Castro
1:28:53 or that was Hugo Chavez, these were dictators.
1:28:56 If we just got to get the right people in,
1:28:58 if we get the right people in running things,
1:29:00 it’ll be different this time.
1:29:03 What they don’t understand is the right people never get in
1:29:07 because the people that are most drawn to power
1:29:10 and control of others, the monsters,
1:29:13 they eventually eliminate all the well-meaning professors
1:29:15 and put them in the gulags
1:29:18 and the dictators end up in power and in charge.
1:29:19 And you lose your economic freedom
1:29:22 and you end up these totalitarian nightmares
1:29:26 that started well-intentioned with good intentions.
1:29:29 But when you take away individual freedom,
1:29:31 but almost by definition, socialism does,
1:29:33 you cannot allow economic freedom,
1:29:35 you can’t allow individuals to make these decisions.
1:29:37 People have to do what they’re told
1:29:40 and you end up using coercion and force
1:29:42 to try to make the utopia work.
1:29:43 It’s very interesting.
1:29:47 If you study like, take the Kibbutz in Israel,
1:29:50 which was such a well-intentioned socialistic movement
1:29:52 and the people that founded it were socialists.
1:29:57 And it’s what happens, the first generation was so idealistic
1:29:59 and made all these sacrifices for the Kibbutz.
1:30:03 The second generation, if they’re not quite as much into it,
1:30:06 they want to have more private possessions.
1:30:07 They’re not willing.
1:30:08 They don’t want their children raised by the collective.
1:30:10 They want to raise their children themselves.
1:30:12 They want to have their own possessions.
1:30:14 So you might say that individualism
1:30:15 starts to creep back in.
1:30:16 And by the third generation,
1:30:18 they don’t even want to stay in the Kibbutz.
1:30:20 They want to get the hell out into the rest of the world.
1:30:23 The world’s a big place, lots of opportunities.
1:30:28 So those ideals ultimately are not what most people want.
1:30:30 And so socialism is bound to fail.
1:30:33 It will always fail.
1:30:34 It’ll never succeed.
1:30:36 It’s a dream that doesn’t work.
1:30:38 It always turns into a nightmare.
1:30:40 But every generation is born,
1:30:43 has to be the young or always idealist.
1:30:46 I was a socialist when I was young.
1:30:47 Before I started my own business,
1:30:50 surely we can create a utopia together.
1:30:52 It’ll be different this time.
1:30:54 But human nature is not changing.
1:30:57 And your ideals are…
1:31:00 Safer way was an idealistic thing.
1:31:02 And it’s like I had to meet the market where I found it,
1:31:04 not where I wanted it to be.
1:31:12 I just think that it’s always going to be this…
1:31:17 You can always describe it as in these perfect terms.
1:31:21 Capitalism is always compared against its failures.
1:31:25 And socialism is always compared to its ideals.
1:31:27 And that’s not a fair comparison.
1:31:30 You have to compare reality against reality
1:31:32 or ideals against ideals,
1:31:34 because capitalism has noble ideals as well.
1:31:39 And so if you just have complete, lazy, fair capitalism,
1:31:40 you end up with the mafia.
1:31:44 You have to have somebody that keeps the violent people
1:31:47 from beating up the ones who are their competitors.
1:31:52 So there is no perfect solution to…
1:31:55 We have to muddle along with freedom and some regulations
1:31:56 and do the best that we can.
1:31:58 But it’s going to be…
1:31:59 Capitalism is really…
1:32:00 It’s never been done before.
1:32:04 Humanity, economic freedom has always been under the thumb
1:32:06 of other people throughout all history
1:32:11 until the late 18th century when freedom broke through
1:32:14 and this great upward lift of prosperity,
1:32:16 the genie got out of the bottle.
1:32:17 And they’ve been trying to…
1:32:19 Intellectuals and people have been trying to cram
1:32:21 that genie back in the bottle ever since.
1:32:23 They haven’t been able to do it yet.
1:32:25 But if they ever do, then we’re going to see progress
1:32:28 from screeching to a halt and begin to go in reverse.
1:32:30 – Well, I think we already have in some countries
1:32:34 where they’ve gone more socialist than capitalist.
1:32:36 – Well, whenever they go socialist,
1:32:39 they start like Venezuela is a great example
1:32:42 of what was the richest country in South America
1:32:44 before Chavez got in there.
1:32:46 And they had the richest oil reserves
1:32:49 and they completely screwed it all up,
1:32:51 which pretty much is always what happens.
1:32:54 – How did you land on the win, win, win philosophy?
1:32:56 Is there like a moment or example
1:32:57 where you started to think that way
1:32:59 or did you always think that way?
1:33:01 – No, I did not always think that way.
1:33:03 It’s we, I think we’re trained to think
1:33:05 in terms of win, lose.
1:33:08 I mean, think about almost every game, every sport.
1:33:10 There’s a winner and there’s a loser.
1:33:12 We’re taught in the way,
1:33:13 what reason people don’t understand that
1:33:15 about capitalism by the way,
1:33:17 so that I can tie this back into it is,
1:33:19 capitalism is a win, win, win, win game.
1:33:21 It’s good for all the participants.
1:33:24 The people, customers don’t have to trade with the business.
1:33:25 If they don’t like the prices
1:33:27 or the service or the selection,
1:33:28 they can go down the, you don’t like Whole Foods,
1:33:31 you can go down to Trader Joe’s and you got alternatives.
1:33:36 If you, if you don’t like working for Whole Foods,
1:33:37 you don’t have to.
1:33:39 There’s plenty of other places you can go work at.
1:33:41 So Whole Foods has to do a good job
1:33:44 or people won’t stay working there.
1:33:45 If you don’t do a good job with your customers,
1:33:46 they’ll trade somewhere else.
1:33:49 If you don’t do a good job with your suppliers,
1:33:50 they don’t have to trade with you.
1:33:53 They can cut you off.
1:33:56 They don’t have to be in business with you any longer.
1:33:58 Same way with your investors.
1:34:00 If your public like Whole Foods was publicly traded,
1:34:02 you could sell your stock if you don’t like it.
1:34:06 So you have all of these stakeholders
1:34:08 and the business has to be managing
1:34:10 to create a win for the customers,
1:34:11 a win for the employees,
1:34:14 a win for the suppliers and the win for the investors
1:34:16 and win for the communities that you’re part of.
1:34:19 That’s when I began to realize the importance of win,
1:34:21 win, win was through stakeholder philosophy.
1:34:23 But I’ll take it one further.
1:34:26 Once you really can internalize win, win, win in your life
1:34:27 and that’s how you try to live,
1:34:29 you’re always looking with every person you interact.
1:34:30 You’re looking for a win, win, win.
1:34:34 Good for you, good for me, good for all of us.
1:34:36 It really becomes an ethical system.
1:34:38 It’s pretty much can just only,
1:34:40 you can resolve any ethical question
1:34:42 by always going back, what’s the win, win, win here?
1:34:43 How do we all win?
1:34:46 It solves almost all ethical questions.
1:34:49 It’s kind of an ethical code in and of itself.
1:34:50 I love that philosophy.
1:34:53 It’s also the only one that endures across time
1:34:55 ’cause we all know what it’s like to be on a losing end
1:34:57 of a relationship or feel like we’re losing.
1:35:00 You know, it’s true and think about it.
1:35:05 When you’re with somebody who’s always looking out for you,
1:35:09 who’s looking for a win for you too, you trust them.
1:35:12 Your relationship deepens and with trust,
1:35:14 there’s so many more things you can do together.
1:35:19 So part of the win, win, win is knitting people together.
1:35:20 But you have to, there are people
1:35:21 that don’t think win, win, win.
1:35:23 It’s almost like you’ve gotta be asking the question.
1:35:25 Is the person I’m dealing with,
1:35:28 are they looking for a win for me too?
1:35:30 Are they just looking to see how much they can get from me?
1:35:34 So you need to have the attitude of win, win, win,
1:35:36 but you also to be conscious of people
1:35:38 that are working from a different framework
1:35:40 who might try to exploit you.
1:35:43 And you need to be more cautious around them.
1:35:45 But once you know you’re dealing with somebody else
1:35:47 who’s operating from a similar framework,
1:35:50 man, oh man, there’s almost nothing you can’t do together.
1:35:51 – And the interesting thing is like
1:35:55 Whole Foods wouldn’t exist today without your suppliers
1:35:58 back after the flood, thinking in a win, win way
1:36:00 where they extended you more inventory.
1:36:03 – It’s true and it wasn’t altruism on their part.
1:36:05 It’s, we had been a very successful business
1:36:08 and they felt confident once we got back on our feet,
1:36:10 we’d be able to pay them back.
1:36:12 But still, they had to take at least a little bit
1:36:14 of a leap of faith to do it.
1:36:16 – That’s kind of win, win in action, right?
1:36:18 In a moment of crisis, you’re going out of your way
1:36:20 to make sure that your partner,
1:36:22 that you want to have a long-term relationship with,
1:36:24 not only survives but thrives.
1:36:26 – Exactly correct.
1:36:28 – Can we talk about Debra for a second?
1:36:29 – Sure.
1:36:33 – One of the most interesting parts of the book for me
1:36:36 was your first date with Debra and how it didn’t go well.
1:36:38 And then you sort of mentioned this letter
1:36:40 you wrote to her after.
1:36:42 What did you say in that letter?
1:36:44 ‘Cause you totally changed her mind of it.
1:36:46 – Yeah, well in that letter,
1:36:51 I just kind of, kind of like I’ve done in this podcast,
1:36:54 I just opened myself up and I just said,
1:36:56 here’s, I don’t know exactly what I did wrong
1:36:58 but I knew I did something wrong.
1:37:01 But here’s who I am, I got, I really like you,
1:37:03 here’s who I think you are.
1:37:05 I realized that I kind of blew the state
1:37:09 but it’s okay, even having one date with you
1:37:10 is very special.
1:37:12 And I think you’re a very special person.
1:37:14 I think you’re gonna, I wish you the very best.
1:37:16 I hope you have a wonderful life.
1:37:17 This was before email.
1:37:19 I stayed up all night writing this letter
1:37:21 and polishing it and rewriting it
1:37:25 and then I stuck it under her door about 5 a.m.
1:37:28 I mean, I had that very faint hope
1:37:30 that it was a Hail Mary pass.
1:37:32 You know, I did think I was gonna get a second date
1:37:33 but maybe if she really liked this letter
1:37:35 maybe she’d give me a chance.
1:37:36 So I was motivated.
1:37:38 I was looking for a win-win there
1:37:41 and it worked because she did like the letter.
1:37:43 She called me up and said,
1:37:45 I wasn’t going out with you again
1:37:47 but anybody that could write that good of a letter
1:37:49 is worth a second date.
1:37:53 So second date went better and she likes to say
1:37:55 by the third date she knew we were getting married.
1:37:56 So.
1:37:56 – That’s incredible.
1:37:59 – 34 years, 34, over 34 years ago now.
1:38:01 – Especially, you know, I sort of read that story.
1:38:03 I wanted to know what was in the letter
1:38:05 but then I sort of map it to dating today
1:38:10 which is you have a date, maybe it goes okay, just okay
1:38:12 or less than okay in your case.
1:38:13 You know, she wasn’t gonna give you another date
1:38:15 but you instantly go home, you flip open this app
1:38:18 and all of a sudden there’s like 15 people
1:38:21 vying for your attention and you feel good about that
1:38:23 whereas this never would have happened back then
1:38:24 I don’t think.
1:38:25 – You know, I never thought about it.
1:38:28 You’re possibly right, you know, my ego was hurt
1:38:30 and if I had other women that were ready to go out
1:38:32 with me I might have said, well, you know,
1:38:33 that’s her loss.
1:38:35 – Well, she might have done the same, right?
1:38:36 – She might have done the same,
1:38:37 more likely she would have.
1:38:39 But you know, that was a blind date
1:38:43 and it was harder to meet people back in the day.
1:38:45 You couldn’t just have an app
1:38:50 and I thought I was being very clever at the time.
1:38:52 I asked my married friends if they were single,
1:38:55 is there anybody they’d like to be going out with?
1:38:58 Because I wasn’t gonna get any tips from my single friends
1:39:02 and so fortunately I had a friend that was married
1:39:05 and he owned an art gallery and Deborah was a customer
1:39:06 and so he got her metered that way
1:39:08 and so I think you’re gonna really like this woman.
1:39:11 She’s, you know, she’s really beautiful, she’s smart,
1:39:14 she’s really sweet, girl next door type that you like
1:39:18 and yeah, she was like my soulmate.
1:39:19 – That’s amazing.
1:39:22 I wanna come back to business a little bit
1:39:25 but we’ll sort of like cover a lot more different topics
1:39:27 but what do you think of business funding?
1:39:32 – Business planning, I have mixed feelings about it,
1:39:36 I think that it’s a useful tool
1:39:39 but you need to always remember it’s a tool
1:39:42 and it’s a useful tool because it’s good to think
1:39:43 about your business.
1:39:45 When you’re doing business planning,
1:39:48 you’re going into a different frame of mind,
1:39:51 you’re going into what I call an analytical frame of mind.
1:39:54 You’re gonna analyze where you’re at
1:39:58 and then you’re gonna create like a spreadsheet
1:40:00 kind of projecting about the future
1:40:02 and you’re creating this plan around it.
1:40:04 That’s all very useful to do.
1:40:06 It’s good to think about your business that way
1:40:11 from time to time but the tool shouldn’t become the master.
1:40:14 Some businesses become slaves to their business plan
1:40:17 and it’s like, we’re behind the plan now.
1:40:18 So what are we gonna do differently
1:40:19 to get us back on plan?
1:40:22 It’s like, well, don’t do something stupid
1:40:24 to try to get yourself back on plan
1:40:26 because maybe your plan’s wrong
1:40:28 and so the tool is something to help you think
1:40:31 about the business but it’s the master
1:40:33 if you start making business decisions
1:40:36 to hit some stupid plan that you may change the damn plan.
1:40:39 Don’t think I’ll tell that story,
1:40:42 it was about Amazon, they’re a real planning company
1:40:43 and I had some problems with them,
1:40:45 we made it over planning but I don’t think
1:40:46 I’m gonna get into details about that one.
1:40:49 – No problem, what qualities do you think
1:40:52 that most successful entrepreneurs have?
1:40:56 – I think different entrepreneurs have different
1:40:59 and I think there’s not one size that fits all
1:41:00 but I’ll talk about it in general terms
1:41:03 and I think there’s some that have a lot of overlap.
1:41:06 Well, most entrepreneurs are very creative.
1:41:08 I think the average intellectual
1:41:11 does not understand how creative entrepreneurs are
1:41:13 or how frequently intelligent they are
1:41:15 because they’re not maybe intelligent
1:41:19 the way the intellectuals are, they’re street smart.
1:41:22 They also see opportunities, they see connections.
1:41:24 Entrepreneurs are very future oriented,
1:41:28 they oftentimes see the world and the way the world could be.
1:41:31 They see possibilities when others see problems.
1:41:35 An entrepreneur oftentimes sees a problem
1:41:38 as an opportunity to be solved, wow.
1:41:41 And they frequently do solve it.
1:41:46 So entrepreneurs also are, they have to be very resilient.
1:41:50 Really you are gonna, it’s just nature of the beast.
1:41:52 There’s trial and error, there’s failure.
1:41:54 You’re groping your way, you have an idea
1:41:56 that could be a very successful idea
1:41:58 but you don’t exactly know how to put it into practice
1:42:02 and so also entrepreneurs are quick to see things
1:42:05 that are working elsewhere and it’s like
1:42:07 they can take ideas from one context
1:42:08 and add it to another.
1:42:10 That’s something I happen to be really good at.
1:42:12 I see an idea here and it’s like wow,
1:42:13 we could apply this to love life
1:42:15 or we could apply this to whole foods.
1:42:17 That’s a terrific idea, let’s make that work.
1:42:22 They’re also willing, as I told, said earlier,
1:42:26 oftentimes entrepreneurs are willing to go and move forward
1:42:29 and others are not, others hesitate.
1:42:31 They’re worried about their downside.
1:42:32 You know, I don’t know if you’ve read,
1:42:36 have you read Elon Musk’s biography by Walter Isaacson yet?
1:42:37 – I’ve read most of it.
1:42:40 – Yeah, I love that book for a lot of different reasons
1:42:43 but I know Elon a little bit
1:42:46 but I got to know him better in that book
1:42:49 and the thing that just blew me away
1:42:50 because I consider myself a guy
1:42:53 who’s willing to move aggressively
1:42:57 and to seize opportunities and take chances
1:42:59 but what he did again and again and again
1:43:04 which, you know, it never, it always paid off for him.
1:43:06 He was always willing to get up there
1:43:08 like a person who’d won a bunch of chips in a poker game
1:43:10 and he just put the whole pot, he’d put it all in.
1:43:14 He could have lost everything multiple times
1:43:16 and it was like, that guy’s either the most courageous,
1:43:18 boldest entrepreneur I’ve ever seen
1:43:21 or he’s a damn fool and you’d have to conclude now
1:43:23 by his tremendous success and wealth
1:43:25 that he’s just the most brilliant entrepreneur
1:43:29 because I mean, in the book, talk about some of his friends.
1:43:32 Also, I know like his brother Kimball or Luke Nosik,
1:43:34 these guys came and helped bail him out
1:43:36 when a couple of times when he was near,
1:43:37 you know, when he might have failed.
1:43:39 So he had friends and he had loyal friends
1:43:41 who would help him in those crisis situations
1:43:44 but his boldness, I mean, the way Starlink,
1:43:47 I mean, not Starlink, the way SpaceX got created
1:43:49 and he goes and visits the Russians
1:43:51 and to get missiles from them
1:43:54 and he thinks they’re trying to sell them too expensive.
1:43:56 So he just decides, well, I wanna build my own rockets.
1:43:59 It’s like, he figures out how much the materials are costing
1:44:01 and he says, well, we can do this for a lot cheaper
1:44:05 than they can, again, and then he does it.
1:44:06 – And he doesn’t just say it.
1:44:11 – And he’s able to attract these amazing people
1:44:13 to be on his team, that’s, by the way,
1:44:14 that’s something I haven’t talked about
1:44:16 in entrepreneurs, I’ll say right now.
1:44:19 Entrepreneurs generally have a lot of charisma.
1:44:22 They talked about Steve Jobs having, I never met Steve,
1:44:26 they talked about Steve having a reality distortion field
1:44:28 and I think that’s true of a lot of entrepreneurs.
1:44:30 They’re so passionate about their vision
1:44:33 that that creates a kind of charisma
1:44:37 and it attracts people to them that wanna work with them.
1:44:41 I mean, people like, everything I’ve read,
1:44:45 people like Elon or Steve, these guys can be really,
1:44:48 they can be very, it can be assholes at times,
1:44:50 but they are so passionate about what they’re doing
1:44:53 and they create sense of sense of purpose
1:44:56 that they draw very talented people
1:44:57 that wanna be on their teams
1:45:00 and those people stay for a long time.
1:45:03 So I do think that the ability to create a great team
1:45:05 is an underrated skill
1:45:07 that I oftentimes think entrepreneurs,
1:45:09 I don’t know if they consciously create them.
1:45:11 I mean, Steve Jobs used to say
1:45:15 that he would only hire A-listers
1:45:17 because he says if you hire B-listers,
1:45:19 B-listers will hire C-listers.
1:45:23 So he had these high standards of performance
1:45:26 and he wouldn’t sacrifice those high standards
1:45:28 for what he wanted in his team and his people.
1:45:32 And by all accounts, Steve attracted
1:45:34 just brilliant people to work with him.
1:45:36 – Is there a difference between a talent collector
1:45:38 and a team builder?
1:45:40 – Great question and the answer is,
1:45:42 I never thought about it before,
1:45:44 but yeah, absolutely, of course there is.
1:45:50 Sometimes those entrepreneurs that are driving forward,
1:45:51 not sometimes, almost all the time,
1:45:54 they have to have other people on their team
1:45:56 who correct for their faults
1:45:59 because their faults generally are very, very big.
1:46:01 For example, I’ll take my own situation.
1:46:08 I was never very good at hiring
1:46:11 and that’s because I think people’s weaknesses
1:46:13 come out of their strengths.
1:46:17 One of my strengths was I see people’s potential.
1:46:20 I see the very best in them.
1:46:22 And by the way, when you do that,
1:46:25 people wanna perform to a very high level of you
1:46:26 because they don’t wanna let you down.
1:46:29 And so I could see their potential.
1:46:32 And the downside, the shadow side of that,
1:46:33 you might say, is that oftentimes
1:46:35 didn’t see their weaknesses that clearly.
1:46:38 So I’ve oftentimes needed people on the team,
1:46:40 like I particularly worked really well
1:46:42 with my Chief Financial Officer, Glenda Flanagan,
1:46:46 ’cause she always saw the downside in people.
1:46:49 And she could see the shadow when I was blind blind to it
1:46:51 and she said, I don’t think we should hire him.
1:46:54 I know he’s impressed you here
1:46:55 ’cause he’s dazzled you, John.
1:46:57 You think he’s so unbrilliant and whatnot,
1:46:58 but yeah, can you just see
1:47:01 he’s kind of a slimy guy?
1:47:02 I mean, I don’t think we can trust this guy.
1:47:04 I don’t think he’s gonna fit into our culture.
1:47:05 I found out the hard way
1:47:07 that she was almost always right.
1:47:11 When I’d overrule her and hire somebody anyway,
1:47:12 I’d always regret it.
1:47:13 So I finally learned to say,
1:47:16 I trust her judgment in this more than I trust my own.
1:47:19 So I think a good entrepreneur, a good team builder,
1:47:22 is gonna be able to build a team
1:47:24 that complements their strengths
1:47:27 and compensates for their weaknesses.
1:47:29 That’s a different thing
1:47:31 than just being able to collect talent
1:47:33 because it’s like a difference
1:47:35 between like a good basketball team
1:47:37 is one that not just has a lot of talent,
1:47:40 but it’s a talent that can play well together
1:47:42 where they’re synergistic
1:47:44 and the hole is greater than the sum of the parts.
1:47:45 If you just have a lot of talent,
1:47:47 people who don’t work well together
1:47:49 and are backbiting each other,
1:47:50 then they might be brilliant,
1:47:53 but your team’s probably gonna lose.
1:47:56 – To what extent do you think that the teams
1:47:59 and the organization should be built around the founder
1:48:03 versus putting the founder into a more typical structure?
1:48:09 – Well, I think that question sort of answers itself.
1:48:11 The founder founded the company.
1:48:13 So you can’t fit the founder into another structure.
1:48:15 It wouldn’t be the founder any longer.
1:48:17 – Where I was going with this is like the outside people
1:48:21 are always like you need to bring in a professional grocer.
1:48:22 You need to bring in an MBA.
1:48:25 You need to bring in all these people from the outside
1:48:26 and what do they wanna do?
1:48:29 I think they tend to be more structured, more organized.
1:48:30 – Well, you need both.
1:48:33 You need, that’s the paradox.
1:48:37 You do need creativity, but you also need structure.
1:48:40 You need generative people and you need structural people.
1:48:43 I, for example, very generative,
1:48:45 I needed more structural people around me
1:48:47 and also needed people to tell me when my ideas
1:48:50 were full of shit ’cause sometimes they really were
1:48:53 and I needed people that I had a high enough
1:48:56 trusting relationship with me and they trusted me enough
1:48:57 that they could come in and just say,
1:48:59 “John, this is not gonna work
1:49:00 “and here’s the reason why it’s not gonna work.
1:49:02 “We can’t figure out how to make it work.”
1:49:04 Now, every once in a while I would say,
1:49:05 “I’ll figure out how to make it work
1:49:08 “and go forward with it and figure it out.”
1:49:10 But oftentimes it’s like, you know, you’re right.
1:49:11 I can’t figure out how to make this work.
1:49:12 We’ll let it go.
1:49:15 – But how did you get to a position where you could do that?
1:49:18 Most people don’t allow their ego that,
1:49:19 “Oh, that’s a good argument.
1:49:20 “You had really good points.
1:49:21 “I hadn’t thought of that.
1:49:22 “I’m gonna change my mind.”
1:49:27 – One of the challenges that I think many entrepreneurs,
1:49:30 every successful entrepreneur eventually faces
1:49:31 and some don’t rise to the occasion
1:49:36 and that is that success can breed an ego expansion
1:49:40 where you start thinking that you’re
1:49:43 some kind of universal genius.
1:49:46 – I think in my case, I had so many failures.
1:49:49 I had my, if you get your face slammed in the ground
1:49:52 a few times, it’ll learn a little humility.
1:49:56 I’ve, remember Saferway was a failure for me
1:49:59 and we had to get into the first whole foods
1:49:59 to make it successful.
1:50:01 Then we had a flood after nine months.
1:50:03 We were bankrupt.
1:50:05 And then I started some new stores
1:50:07 and one of my founders quit because he said,
1:50:08 “You’re wrecking the company.
1:50:11 “These new stores are never gonna amount to anything.
1:50:13 “You’re diluting down our gold mine
1:50:16 “with these mines that don’t have any gold in them.”
1:50:20 So I had, and there are many other examples of times
1:50:24 I bought the amaryon, I pushed the do.com.
1:50:26 We can’t let the internet opportunity escape
1:50:27 us, $100 million we lost.
1:50:29 So you know what, I’ve had my serious successes
1:50:32 but I’ve had enough failures to recognize
1:50:35 I am far from infallible in my judgment
1:50:38 and to learn to trust people that I’m working with
1:50:40 and make decisions collectively.
1:50:43 I almost, only rarely did I go against my team.
1:50:46 If they took a universal stand,
1:50:49 I would almost say that the hole is smarter than me
1:50:50 and just let it go.
1:50:54 And I think any good entrepreneur would back down at times
1:50:56 when that people they love and trust
1:50:58 are all telling them this is a mistake.
1:50:59 You gotta listen to it.
1:51:00 – We all have blind spots.
1:51:02 – We all have blind spots.
1:51:05 – What advice would you give to current,
1:51:07 younger entrepreneurs or future entrepreneurs?
1:51:11 – That’s a very open question.
1:51:13 Do you wanna try to get it?
1:51:13 You wanna try to?
1:51:15 – Well, I like the ambiguity of it actually
1:51:17 ’cause I wanna see where your mind goes with it.
1:51:19 – So first of all, just in general,
1:51:24 I get asked a similar question slightly different.
1:51:26 I get asked, what advice would you give
1:51:29 a young person, entrepreneur or not?
1:51:32 And the advice I’d always give is follow your heart.
1:51:35 Life is shorter than you think it is.
1:51:38 It’s too short to not be doing something
1:51:40 that you really are passionate about,
1:51:42 that you’re drawn to.
1:51:43 Don’t do something because you’re just trying
1:51:45 to get safety and security.
1:51:48 You probably won’t be happy as you get older
1:51:51 or you might have to change when you get older.
1:51:55 So I always tell young people, it’s like,
1:51:56 what do you really care about?
1:51:58 What are you passionate about?
1:52:01 Go after that, follow, I call it the hero’s journey
1:52:05 or I got that from Joseph Campbell’s, the hero’s journey.
1:52:09 But the hero’s journey is one where you feel
1:52:11 an inner calling and inner drive
1:52:13 and you simply answer it.
1:52:15 You do it, even though it’s scary
1:52:16 and you go off on your adventure.
1:52:18 You don’t know how it’s gonna turn out.
1:52:21 So Whole Foods was my hero’s journey.
1:52:23 I’m on a new one with Love Law.
1:52:24 I don’t know how it’s gonna turn out.
1:52:27 I could fail, I mean, based on probability,
1:52:28 it will fail because most things do fail,
1:52:30 most businesses do fail.
1:52:33 But that’s the calling and I’m answering the call.
1:52:37 Answer the call, if you hear that inner calling,
1:52:41 don’t hang up the phone, do it, go for it.
1:52:42 Life’s a grand adventure.
1:52:45 Don’t sell yourself short and try to play it safe
1:52:47 because you won’t be safe.
1:52:49 There’s no safety, you’re gonna die.
1:52:50 That’s why I said, remember earlier on,
1:52:53 I said, I got clear about death.
1:52:56 I’m gonna die, I’m gonna live my life as an adventure.
1:52:57 It’s more fun that way.
1:53:00 I can’t guarantee it’ll work out.
1:53:04 If it doesn’t, I’ll learn and grow and do better next time.
1:53:05 Talk to me about the new venture.
1:53:09 Well, Love Life is kind of a continuation
1:53:14 of my hero’s journey call to try to help people be healthier.
1:53:17 First with National Regaining Foods
1:53:22 and now with Love Life, it’s a holistic membership club,
1:53:24 is really what it is.
1:53:29 And it’s got elements, it’s got a healthy restaurant.
1:53:33 It’s a plant-forward whole foods restaurant.
1:53:34 Got some animal foods in there,
1:53:36 but it’s definitely focused on people eating
1:53:38 a lot more fruits and vegetables.
1:53:42 We’ve got a state-of-the-art fitness center.
1:53:47 We have all kinds of classes, spin classes.
1:53:49 It’s like a huge health center.
1:53:52 It is, so I’m just telling you the parts of it.
1:53:56 So you’ve got a gym, we’ve got yoga, we’ve got Pilates,
1:53:58 we’ve got, we have a spa.
1:54:01 We have all this recovery equipment
1:54:06 from hyperbaric oxygen chambers to cryotherapy,
1:54:09 to red light therapy, to infrared sonnus,
1:54:11 to regular sonnus, to cold plunges.
1:54:15 There’s other lymphatic massage suits you can wear
1:54:17 and microcurrents that you can,
1:54:20 we’ve got lots of different bio hacks there.
1:54:24 And then of course you have a spa with massage
1:54:26 and facials and things that you would get
1:54:30 at any kind of, not a medical spa, no Botox,
1:54:32 but where you get it at a good spa,
1:54:34 pretty much like in a resort setting.
1:54:38 Then we have, we have pickleball.
1:54:40 We have three indoor pickleball courts
1:54:42 because we think play is important
1:54:44 and pickleball is a community builder.
1:54:46 People, since I was trying to play in pickleball
1:54:49 about three years ago, I’ve made at least 50 new friends
1:54:52 that I hang out with because of pickleball.
1:54:54 And then the medical center, which is the most important part.
1:54:59 And our medical, our healthcare system
1:55:01 is now really a disease management system.
1:55:04 And it’s not preventative.
1:55:08 It’s not really dealing with lifestyle diseases.
1:55:09 It’s, our medical system’s good
1:55:11 if you have an infectious disease.
1:55:15 It’s good in terms of things like vaccinations,
1:55:18 antibiotics, surgery, first aid.
1:55:21 But the chronic diseases that kill people,
1:55:24 obesity, heart disease, type two diabetes,
1:55:31 autoimmune diseases, cancer, they’re not very good at that.
1:55:34 They might manage that, the symptoms of the disease,
1:55:36 but they don’t really prevent it or reverse it.
1:55:39 So Love Life aims to change that to disrupt that paradigm.
1:55:43 We think now with the testing protocols we have
1:55:45 that you can get, most people don’t know how healthy they are.
1:55:46 It starts with a good assessment
1:55:48 so you can find out where you stand.
1:55:52 And then once we had that, then with the wearables,
1:55:54 the data you can get from an Aurora ring,
1:55:58 Apple Watch, Garmin, there’s so many different
1:56:00 continuous glucose monitor.
1:56:03 We can begin to track peoples.
1:56:05 And then once you have good assessments and tracking,
1:56:09 then it’s about the doctor works with you
1:56:12 and a health coach to create kind of a precision
1:56:17 individualized plan for you, unique to yourself,
1:56:19 that allows you to become the healthiest version of yourself,
1:56:22 to be more vital, more healthy, more alive,
1:56:27 stronger immune system, more energy, positive attitude,
1:56:30 and also Love Life’s working on peoples’ emotional
1:56:32 and spiritual health as well.
1:56:35 We’re doing breath work, we’re doing meditation classes,
1:56:40 and when psychedelic therapy is legal in California,
1:56:42 like it is in Colorado and Oregon,
1:56:44 we’ll be doing that under therapeutic sessions.
1:56:46 So the whole idea is to help every person
1:56:51 that becomes a member to become the very healthiest,
1:56:54 physically, emotionally, and spiritually that they can be.
1:56:56 And hopefully, if people start young enough
1:56:58 and work with us long enough,
1:57:00 that these chronic diseases, they’ll never get them.
1:57:02 They’re not inevitable.
1:57:04 We’re all gonna die of something,
1:57:08 but we should live to be 100 without these
1:57:09 chronic diseases wrecking our lives
1:57:12 and be a sound mind and high vitality.
1:57:14 And the wisdom, it’ll be good for the planet
1:57:16 ’cause we’ll have healthy, old, wise people
1:57:19 being a greater percentage of the population,
1:57:21 wise enough to try to keep us out of wars
1:57:24 and all the stupid things that we do
1:57:27 when we’re not as wise as we should be.
1:57:29 – Talk to me a little bit about,
1:57:30 first, actually, I’m very surprised at that.
1:57:32 I love what you’re doing.
1:57:34 I wish you’d open one in my city.
1:57:37 I think that needs to exist in every sort of center.
1:57:38 – Well, though, we hope to,
1:57:40 certainly we hope to open them in New York.
1:57:41 – Absolutely.
1:57:46 To what extent do you think the diet
1:57:48 is the biggest bang for the buck here
1:57:50 versus exercise versus everything else?
1:57:54 – I actually feel like,
1:57:59 first of all, I think the most important thing is attitude.
1:58:03 I mean, a positive attitude, a sense of purpose and meaning.
1:58:08 It’s like the body, as long as the body
1:58:10 feels like it has something it needs to do,
1:58:11 it wants to stay alive.
1:58:13 It’s like, you can’t dial me now,
1:58:15 I got important work to do.
1:58:17 And that’s communicated through all the cells.
1:58:19 It’s like, we’re not done here yet.
1:58:23 So I think, first of all, the mind and the attitude
1:58:26 is most important for health and longevity.
1:58:29 I know people that eat terrible diets
1:58:31 that have very positive attitudes
1:58:32 that are remarkably healthy,
1:58:35 even though they should be falling apart.
1:58:36 It’s just that they’re-
1:58:37 – Warm buffa.
1:58:40 – Well, warm buffa’s a good example
1:58:41 ’cause he eats a terrible diet.
1:58:45 On the other hand, he’s got a great positive attitude,
1:58:47 but he also doesn’t take any toxins in
1:58:48 other than his diet.
1:58:50 He’s not a smoker, he doesn’t drink.
1:58:55 He actually, he’s not taking a lot of the things
1:58:59 that wreak our health sooner than necessary.
1:59:02 But yes, I think Warren has an incredibly positive attitude
1:59:03 and I think it’s one of the reasons
1:59:05 he’s gonna probably live to be 100
1:59:09 and still be trucking along, still sharp as a tack.
1:59:10 Other than, of course, he missed out
1:59:11 on that Whole Foods opportunity.
1:59:16 Then I think diet, though, is very important.
1:59:17 I mean, I was a grocer.
1:59:21 I do think the diet that people eat in America today
1:59:24 is, I mean, the statistics tell you all,
1:59:27 74% of Americans are overweight, 43% are obese.
1:59:31 We’re dying from diseases like heart disease
1:59:33 that are dietary diseases.
1:59:38 Obesity, a lot of the autoimmune diseases
1:59:41 are also related to, that’s more complicated,
1:59:43 but diet is a huge factor in terms
1:59:45 of how strong our immune systems are.
1:59:50 So, you know, it’s not that complicated.
1:59:52 People make it, I mean, I always tell people,
1:59:54 if you wanna, if you try to get your information
1:59:55 from the internet, you’re gonna be confused.
1:59:57 – Well, let’s talk about this for a second,
2:00:00 but before we do, what percentage of Whole Foods sales
2:00:02 at the time you left were actually Whole Foods?
2:00:06 – I don’t know the answer to that, quite,
2:00:08 but I do know that I knew and I know what our produce,
2:00:10 I really don’t think I should reveal those statistics
2:00:12 because there’s not public information.
2:00:15 I don’t want Whole Foods unnecessarily mad at me,
2:00:19 but they were not as high as they were when we started out.
2:00:22 And that’s because the processed food industry
2:00:26 incorporated our standards and made processed foods
2:00:27 that met Whole Foods market standards
2:00:30 because we’d sell it, but they were just meeting them,
2:00:31 you might say.
2:00:34 And when we first started,
2:00:36 we didn’t have very many processed foods.
2:00:39 We didn’t have junk that we could easily sell.
2:00:42 So we mostly sold produce and meat and bulk foods.
2:00:43 People cooked.
2:00:45 I will tell you one interesting statistic.
2:00:49 Our very first store was over 20% of our sales
2:00:50 were in the bulk foods department
2:00:52 and we didn’t have any candy to act in.
2:00:56 So it was just whole grains, whole grain flour,
2:01:00 beans, nuts, seeds, things like that, Whole Foods.
2:01:05 And today it’s under 1%, 20% to 1%.
2:01:06 – So what is Whole Foods?
2:01:07 I mean, you’ve written a book on this,
2:01:10 but what does it mean for people listening?
2:01:11 – When I say Whole Foods,
2:01:15 I mean a food that’s as close to its natural state as possible.
2:01:17 So it’s been minimally processed.
2:01:21 So, and that would be like the things I listed,
2:01:25 fresh fruits and vegetables, meat, seafood,
2:01:27 those have been manipulated too.
2:01:31 So I think you want to try to get animal foods
2:01:34 that have been grass-fed, for example,
2:01:36 of your beef or there, there have not been,
2:01:40 animals have not been put in feed lots,
2:01:42 have not been crowded together,
2:01:45 that they have lived out there for natural animal lives.
2:01:48 So, sort of natural meats.
2:01:53 Then you’ve got your beans, your nuts, your seeds,
2:01:55 all your legumes.
2:02:02 You’re going to have things that are produced
2:02:04 with minimally processing.
2:02:06 So you can cook food, for example,
2:02:09 but if you say, take oil, oil or sugar,
2:02:10 those are not Whole Foods.
2:02:13 If you add oil, whether it be olive oil or seed oil,
2:02:15 you’re not getting a whole food,
2:02:19 you’re just getting the pure fat of that food.
2:02:20 And what is sugar?
2:02:23 Sugar is taking a whole carbohydrate food
2:02:25 and stripping away the fiber in the germ
2:02:28 until you’re just left with pure carbohydrate.
2:02:31 The biggest challenge humans have with our diets
2:02:36 is that we evolved, our genes preclude us,
2:02:40 or our genes, we evolved in scarcity,
2:02:43 we evolved with starvation was our biggest problem,
2:02:45 not for just the last few thousand years,
2:02:47 but for tens of thousands of years,
2:02:49 perhaps hundreds of thousands of years,
2:02:50 it just wasn’t enough food.
2:02:55 And so, we’ve evolved to crave calorie dense foods.
2:02:57 And it’s in our genetic structure.
2:03:00 And we like foods that have a lot of protein
2:03:04 or have a lot of sugar or have a lot of fat.
2:03:06 Oil, pure fat, nothing but fat.
2:03:08 Sugar, nothing but carbohydrate.
2:03:12 High concentrations of protein.
2:03:14 People are always putting protein powders
2:03:15 and things like that in their smoothies.
2:03:17 We crave calorie density.
2:03:21 We also crave salt because it was scarce as we evolved.
2:03:25 And so, as a result, the food system today,
2:03:26 it gives the market what it wants.
2:03:29 It wants calorie density, but it’s killing us.
2:03:30 It’s making us sick.
2:03:32 It’s making us obese.
2:03:34 We need to, people are always asking me
2:03:37 as a plant-based guy, where do you get your protein?
2:03:38 It’s like, in every food I eat,
2:03:40 is protein’s not scarce?
2:03:42 Where do you get your fiber?
2:03:44 Because you’re not getting fiber from those processed foods.
2:03:47 You’re not getting it from the animal foods.
2:03:49 That means something like 90 plus percent of Americans
2:03:52 have less fiber than is optimal for their gut health.
2:03:55 We now know the gut is the first and most important
2:03:57 part of our immune system.
2:03:59 So, that’s whole foods.
2:04:02 Whole foods are, the definition’s a little bit fuzzy.
2:04:05 So, a little bit of processing’s not too bad,
2:04:08 but the more you do, the worse it tends to become.
2:04:11 And now we eat highly processed foods.
2:04:12 Not just three times a day.
2:04:15 Some people just eat and eat and eat all day long.
2:04:17 – That’s a really good way to look at it.
2:04:20 I think there’s a scale.
2:04:22 I’m gonna get this wrong, but it came out from Brazil
2:04:24 and it sort of did the one through four
2:04:26 in terms of processing for what food was.
2:04:28 – That’s a good idea, actually.
2:04:30 – Yeah, and then that’d be great to put on labels
2:04:34 at grocery stores or even on the shelves,
2:04:35 people could see, this is a three,
2:04:37 so it’s better than a four.
2:04:42 – But you know what happens then is that those get gained
2:04:46 in the sense that there’ve been all kinds of rating systems
2:04:48 that have tried to be applied,
2:04:51 but then the food manufacturing companies,
2:04:53 not only do they lobby,
2:04:57 but they’re constantly trying to change those rules
2:04:59 so that their products look good.
2:05:01 It’s more complicated than you think.
2:05:04 ‘Cause we tried to do something at Whole Foods.
2:05:05 We actually did it.
2:05:07 We called it, it was based on Joel Ferman’s work,
2:05:10 an aggregate nutritional density index.
2:05:12 So we were looking for nutrient density in foods.
2:05:15 You can get those, you can get how many vitamins
2:05:19 and minerals and then the phytonutrients that foods have
2:05:20 and we rated all our food
2:05:23 and we put up the ratings all around the store.
2:05:28 Okay, fresh vegetables, particularly leafy greens,
2:05:31 or by far the most nutrient dense food you can eat,
2:05:32 nutrients per calorie.
2:05:34 Yeah, I mean, it’s not even close.
2:05:36 And then all the vegetables are way up there.
2:05:37 Then the fruits are under that.
2:05:40 Then you’ve got beans under that.
2:05:43 Then you’ve got whole grains.
2:05:44 Then you’ve got nuts and seeds.
2:05:47 All the Whole Foods are much higher nutrient density.
2:05:49 Then you get into the animal foods.
2:05:51 And this is what became controversial,
2:05:54 is that the animal foods on a per calorie basis
2:05:55 have fewer nutrients.
2:05:58 This was very upsetting to people and they got angry.
2:06:00 People, the team members got angry about it.
2:06:03 People that wanna eat a paleo diet were angry.
2:06:04 The people that ate a carnivore diet,
2:06:07 carnivore diet were angry because they really want,
2:06:09 they like their animal foods, they’re calorie dense.
2:06:12 There’s a lot of calories in animal foods, they taste good.
2:06:14 But you’re not telling people what to eat.
2:06:16 Why is more information than getting people–
2:06:19 Kill the messenger, man, that’s not a new thing.
2:06:21 They didn’t like the message we were delivering.
2:06:24 And because people knew that I was a plant-based guy,
2:06:28 they thought Macky’s trying to make everybody eat his diet.
2:06:29 And all we were trying to do
2:06:31 is give out the information of nutrient density per calorie.
2:06:33 It was important information.
2:06:37 But at the end of the day, I talked about how I had caved in.
2:06:40 My team was not, they didn’t wanna keep doing it.
2:06:43 What do you think would happen if a grocery store did that?
2:06:45 And they sort of had like a color coding system,
2:06:48 for example, which is like green, yellow, or red.
2:06:51 And that’s all they did just on the shelf beside the–
2:06:53 – They’d have a lot of red products on their shelves
2:06:53 and people would ask them,
2:06:56 “Why the hell do you sell on all this red food?”
2:06:56 – Yeah.
2:06:57 – And so–
2:06:58 – But if they took away the red food,
2:07:00 then the people wouldn’t go.
2:07:02 – What they would do is they’d dumb it down
2:07:04 so that a lot of stuff that you think is red now
2:07:06 would all of a sudden be green.
2:07:09 It’s like, because most of the food
2:07:11 that we’re selling at supermarkets is not good for people.
2:07:14 If you start telling the truth,
2:07:15 one or two things are gonna happen.
2:07:18 People are gonna be either stopped shopping at your store
2:07:19 because all that store selling is red food.
2:07:21 I’m gonna go to this other store
2:07:24 that doesn’t put all this red, it’s the same food,
2:07:25 but I don’t wanna know–
2:07:26 – Not confronted.
2:07:28 – I’m not confronted with it.
2:07:32 Or they will be forced to change the ratio mix
2:07:36 so that some of the red food now is perceived to be healthy.
2:07:38 So it’s very difficult.
2:07:41 You have to meet the market where you find it,
2:07:43 you have to give the market what it wants.
2:07:46 And when the market, if you feel judged by people,
2:07:48 you don’t wanna do business there anymore.
2:07:51 So it’s one of the reasons that the people
2:07:53 in Whole Foods Me Departments were very unhappy
2:07:55 that they were not getting good Andy scores.
2:07:57 So they didn’t think this was good.
2:08:01 This is bullshit, this is not a good system.
2:08:04 – If you could wave a magic wand, I guess,
2:08:07 and change a policy or maybe more than one policies,
2:08:08 what would it do?
2:08:10 What would you do for the entire country?
2:08:12 – Policies and where?
2:08:14 Like, in terms of health.
2:08:16 Like, if you get, you can probably diet,
2:08:18 might be the best place to start.
2:08:20 But like, what would you say?
2:08:21 What would you do?
2:08:23 How would you do this?
2:08:26 – It’s very, that’s a very challenging question
2:08:30 because in general, I don’t, I think people need,
2:08:32 these are adult, people need to make their own decisions.
2:08:33 And I don’t think you should be telling people,
2:08:34 I can’t eat things.
2:08:36 – But can we nudge it?
2:08:39 – Yes, but then I think you can nudge it.
2:08:43 But then, when you start using power
2:08:45 to try to change people’s behavior,
2:08:48 how do you know that the people that take over the power
2:08:49 will do it in an actually good way?
2:08:52 We get, it’s like the good intentions of socialism,
2:08:54 the bad elements take it over.
2:08:55 And the next thing you know,
2:08:57 the healthy foods are being eliminated
2:09:01 because the people in power, it’s been co-opted.
2:09:04 – With that education wouldn’t even work, right?
2:09:06 Because if we educate people,
2:09:08 then we’re gonna co-opt the education at some point.
2:09:09 And then–
2:09:10 – If you go onto the internet
2:09:12 and Google is coffee good for me,
2:09:14 you will get a massive amount of data.
2:09:15 – You’ll get whatever you want it to say.
2:09:18 – That’s right, exactly, exactly.
2:09:20 And confirmation bias is so powerful.
2:09:23 People just confirm what they wanna believe.
2:09:26 So, you know what, if I could do
2:09:31 anything that would help the health of America the most,
2:09:33 I’d probably wanna change,
2:09:36 I’d wanna make nutrition education
2:09:40 more something that would be emphasized in the schools
2:09:43 and emphasize in particularly the medical schools.
2:09:44 Because they’re not given,
2:09:46 doctors are given almost no nutrition.
2:09:48 They don’t, they come to believe
2:09:50 that it doesn’t have anything to do with health.
2:09:52 That their potions and their elixirs,
2:09:54 their drugs are the thing that will restore health.
2:09:57 And that’s not right, it’s not true.
2:09:59 – I think I heard a couple weeks ago
2:10:00 that the average med school student
2:10:03 gets 30 minutes on nutrition or something.
2:10:05 – Yeah, it’s pretty low, not much.
2:10:07 Don, I wanna thank you for taking the time today.
2:10:10 We always end the podcast on the same question,
2:10:12 which is what is success for you?
2:10:16 – You know, I think success for me
2:10:19 has been just being following my heart
2:10:20 and being true to myself.
2:10:25 Because doing, following my bliss,
2:10:27 as Joseph Campbell said, I’ve tried to follow my bliss.
2:10:31 And I’ve been very successful by my own internal measurements
2:10:33 because I have been true to myself.
2:10:35 I have followed my heart.
2:10:37 And it’s led to me this,
2:10:39 my life’s been this grand adventure.
2:10:40 I’m a very happy person.
2:10:43 I have a lot of love in my life.
2:10:45 I have a lot of friends.
2:10:47 I can do what I wanna do.
2:10:49 I meet cool people like you.
2:10:54 And yeah, to me, that’s a successful life
2:10:56 is a life well-lived, one that’s true to yourself,
2:10:59 true to your own values, true to your beliefs,
2:11:00 and has a lot of love in it.
2:11:03 I wouldn’t imagine a successful life
2:11:06 that with that didn’t have a lot of love in it.
2:11:08 (upbeat music)
2:11:14 – Thanks for listening and learning with us.
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