John Mackey has made millions selling fancy organic food to well-heeled shoppers. The co-founder and chief executive officer of Whole Foods thinks of his creation as his calling and that it spreads goodness simply by thriving. This is the idea he’s pedalling in his new book, Conscious Capitalism, that every business should have “a compelling sense of higher purpose besides making money”.
Capitalism, the way he sees it, “is maligned as being greedy and exploitative, but its lifted humanity out of the dirt and [is] the greatest force for good on this planet”.
He is, at heart, “an accidental entrepreneur”, as he likes to say, whose mission with his swanky empire of wholesomeness, is to get us caring about where our food comes from and encourage us to eat healthier. “Well, I wanted to change the world, but thought I could do it one stomach at a time,” says Mackey from his HQ in Austin, where he’s back home for a few days from the tail end of his US book tour. “You give me way too much credit. I was 25 years old and was just trying to earn a living selling healthy food and have some fun.”
In 1978, Mackey and his girlfriend at the time, Renee Lawson Hardy, borrowed $45,000 and started Safer Way, a vegetarian food store in Austin, Texas, where local farmers and bakers would drop off corn stalks, squash, wildflower honey and home-made pumpkin loaves from battered pick-up trucks. “We had a big old house and put the store on the first floor, a little vegetarian café on the second and, on the top, we had an office with a futon, where we slept. We didn’t have a bathtub since it was supposed to be a commercial space, so we washed in the dishwasher, which had a hose. We were young and romantic and it all made sense.”
They wanted to offer shoppers an alternative to profit-seeking corporations, he explains, but “after running my own business my worldview completely shifted”. Back then, Mackey — a long-haired college dropout living in a hippy collective and a member of three food co-ops that “were anti-corporation, anti-everything” — quickly became disillusioned: his customers complained that his “prices were too high”; his workers “thought they were paid too little”; his suppliers wouldn’t give him good prices because the store was too small; and government regulators were strangling it “with an avalanche of red tape, fines and taxes”.
In the end, he became a capitalist wholeheartedly and hit the big time, discovering “that business and capitalism were fundamentally good and ethical”, he says, describing the philosophy he developed as he built his original health-food store. “To my co-op friends, I had become one of the bad guys. Deep down, I knew wasn’t selfish or greedy. I was an idealist.
“If I hadn’t moved into that co-op and met Renee there,” he reasons, “I doubt I would’ve started Whole Foods. There were 17 of us in a big house, nine men and eight women. I was the food buyer for the co-op and it awakened my food consciousness. I learned how to cook, became a vegetarian, discovered organic and got interested in political issues.”
Since setting up the first Whole Foods, Mackey endured his share of difficulties, cash-flow crises and flash floods, which nearly wiped it out. “The store was eight feet under water, everything was destroyed and we had no insurance or savings,” he recalls. “We would’ve died if everyone had not rallied around us.” Customers, staff and locals pitched in to clean, fix, restock and reopen the store. In the free-spirited counterculture oasis of Austin, the business became a buzzy local hot spot, despite being dismissed “as some sort of a fad only appealing to a bunch of weird hippies”.
Over the last 35 years, Mackey has proved almost everyone wrong and transformed a tiny haphazard hippy grocer to a $12bn organic monolith, with 342 stores across the US and the UK. Some consider Whole Foods, jokingly known as Whole Paycheck, an over-priced purveyor of luxury food inaccessible to your average folks; and others think it is a world-changing force for social good that’s revolutionised the way we shop and eat.
Ethical capitalism, outside the cause-driven niche, is an often-conflicting concept. But self-interest and altruism, Mackey insists, can co-exist. “They co-exist in each one of us, don’t they? We’re all self-interested yet we love and care about others. It’s kind of a no-brainer to me. Humans are complex, we have compassion.”
The primary purpose of business, whatever spin it’s glossed with, is about making money. “Who says? You think that’s all most businesses care about? I know hundreds of entrepreneurs and only a few started a business to make money. Most started it to make a difference in the world, not altruistic necessarily, but they had some kind of passion, some kind of dream. The people who create businesses tend to be very idealistic dreamers.”
There are also plenty of examples of well-intentioned businesses subsumed by commercialism, swallowed by multinational beasts or simply sacrificing their principles for power and profit along the way. “Some do to be sure. I’m not saying business isn’t flawed or there aren’t bad businesspeople out there, but there are bad doctors, too [and] bad journalists who twist things.”
Mackey, a softly spoken Texan, is down to earth, laidback and likeable, but as prickly as a scorpion when challenged. He’s had a rough ride lately: the Federal Trade Commission anti-trust battle and the subsequent controversy, various spates of protests and media flak for several of his public comments, such as using “fascism” to describe President Obama’s healthcare reform.
He is bewildered when I suggest he runs Whole Foods with almost socialist principles. “No I don’t,” he shoots back. “That’s capitalism. Socialism is when everybody is poor together. Socialism doesn’t take care of its people and it doesn’t pay well. Which socialistic countries in the world have created prosperity for people? They make everybody poor.”
But the more you talk to Mackey the more you notice irreconcilable contradictions. He is a self-styled libertarian with right-wing tendencies; he looks after his workers with generous wages and benefits but is anti-union; he is pro-consumer but charges eye-watering prices; and, most controversially, a vegan who sells meat, particularly as he considers himself “a big animal lover with several cats, a bunch of chickens, a donkey and a horse” who supports various radical advocacy groups such as the Humane Society of the United States and People for the Ethical Treatment of Animals (until it boycotted Whole Foods). “I’m not crazy about seeing meat in stores either” but he argues he “has no choice” or “couldn’t get away with pushing my ideology on people”.
Surely, selling meat, organic or otherwise, can never be sustainable or ethical? “So the alternative is to go out of business. That would be ethical?” he asks me, sounding cross and wounded. “My first store was vegetarian and hardly did any business. Most people in our society eat animal foods. If you think you can create a vegan supermarket, you’re welcome to try. You might be noble but you’re going to be a failure.” Later he talks about Rainbow Foods, the hugely successful vegetarian supermarket chain, the hipness of veganism and “maybe starting a vegetarian store in my old age”.
Whole Foods has doubtless done many good things: it sells healthier food and treats its staff, shareholders, suppliers and customers well. Last year, it removed chocolate from its shelves following concerns about child labour, teamed up with a workers coalition to help Florida’s exploited tomato pickers and took on Monsanto and other GMO giants over food labelling. Many would argue that these are little more than big-business compromises or half-measures. In fairness, Mackey readily admits: “Whole Foods isn’t perfect, but constantly evolving.
“I think I’ve done a few things that have made the world a better place. And before I die, I hope I will have done a lot more.”
Conscious Capitalism: Liberating the Heroic Spirit of Business by John Mackey & Raj Sisodia (Harvard Business Review Press), $26