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To make this episode, I got to spend about 7 hours with John Mackey over 2 days and I read his great autobiography twice.
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I hope you enjoy this episode.
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I put a lot of time, energy, and love into making it and I'm very thankful to drop for John Mackey or two John Mackey for sharing so much of his story.
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I truly believe when entrepreneurs do that, it is an act of service for the next generation. Enjoy the episode.
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By the end of the first trading afternoon, Whole Foods Market was valued at a hundred million dollars.
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Even though my shares had been diluted over the years, my own net worth was now over seven million dollars. I was rich. How did that happen?
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It seemed to me like a crazy amount.
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It was exciting, even shocking to suddenly be worth so much after so many years of having no money.
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That evening after the markets closed, I slowly drove home, still in something of an altered state.
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I opened my first beer in several weeks and sipped it slowly on the porch, breathing in a sense of gratitude and wonder for how far we had come.
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I thought back to that little Victorian house where SaferWay, that was the original name of the business that eventually turns into Whole Foods.
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I thought back to that little Victorian house where SaferWay had begun and the modest dreams of success that Renee and I had shared as we woke up each morning on the top floor, took our showers in the dishwasher, and converted our bedroom to its daytime form as the store's office.
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I thought about Craig and Mark taking the leap of faith to merge with us and build an entirely new store bigger than any natural food store in the state.
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I thought about the hundred-year flood and our near-death experience.
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I called my father just to hear the pride in his voice and to share our mutual excitement at the success of the company he'd so wisely helped me build.
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I thought about my mother and wondered if she might finally be proud of her son.
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I thought about the many people who were celebrating tonight, enjoying their well-deserved reward for their belief in those crazy hippies and their strange new notions about how to eat.
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All of those expectations, all of that collective hope for our future, I had carried for 14 years.
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Now, I felt it lifting from my shoulders.
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I knew there would be new burdens to shoulder as we began our life as a public company, but just for a moment, I set down my beer, closed my eyes, and let the joy and relief overwhelm me.
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That was an excerpt from the book that I'm going to talk about today, which is The Whole Story: Adventures in Love, Life, and Capitalism, and it's written by John Mackey, founder and former CEO of Whole Foods.
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So, a few months ago, I received a very nice email from John.
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I didn't even know this, but he was a big fan of the podcast, and he'd listened to well over 100 episodes, and he offered he asked if I wanted a an advanced copy of his new autobiography.
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And so, after reading the book, which I loved so much, I emailed him, and we decided to meet.
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So, I actually spent seven about seven hours with John and his friend David over 2 days.
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We had dinner for about 3 hours, and then the next day, I actually went to John's new company and toured it.
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It's called Love Life, and spent about 3 to 4 hours with John again.
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And so, what I'm going to do is combine the notes and highlights I have from reading John's autobiography twice with the notes that I took spending so much time with him.
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And before we get into his life story, I think there's two really important things to understand about him.
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Number one, he loves entrepreneurs, and number two, he is very hard to classify.
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So, I loved this part, and I actually took notes on it before I met him, and then it was obvious just spending uh in person with him.
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And this is what he says about his love for his fellow entrepreneurs.
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That's definitely how he classifies himself.
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"When I meet other entrepreneurs, there's always a spark, an instantaneous recognition that we're wired the same way.
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I can sit down with a young entrepreneur who's just launched their first startup or an older one with a series of successful exits, a fellow grocery store founder, or the creator of a tech company, and I just know that we're going to find acres of common ground."
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And that was definitely my experience with John.
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The we had a 3-hour dinner that went by.
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I could not I was shocked when I looked at the time when dinner was over.
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There was, as he said, acres of common ground.
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And the reason I wanted to start with that quote because I really feel, not only what John did with his autobiography, but I think every entrepreneur autobiography that I've read, I really do feel as it's an act of service to the next generation of entrepreneurs, especially how open they are with their warnings or their explanations or even just sharing that the dark side and the the the downsides of entrepreneurship.
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And then the second and final thing I just want to go over before we jump into his early life is this this this diff- very difficult You just can't put him in a box.
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He's very hard to classify, hard to put into a neat little box, and he knows this.
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He's very self-aware about this.
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He says, "It's hard for people to fit me into their narrow political and ideological boxes. I sold Natural Foods. I practiced meditation.
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I espoused veganism, and I wore hiking shorts to work.
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I believe business should be informed by love, serve a higher purpose, and benefit all stakeholders.
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And yet, I pushed back against compulsive unit- union- lization.
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I defended capitalism and free markets.
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I argued for freedom of thought and personal responsibility.
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I resisted anything that resulted in more governmental controls and subsidies, and moved us away from the natural discipline and innovation of free markets towards the solidifying inefficiencies of socialism.
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People had thought I was in one tribal box, and now they were determined to put me into a different one, which I also didn't fit into.
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And another trait I would add to this, all right, I guess another few traits that I would add to this is spend It's obvious if you read the book and also spend time with them.
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He is also extremely, extremely competitive and a main theme that will reoccur as he's building Whole Foods at the very beginning is this idea where, you know, most of the people, as you can imagine, cuz the most of the people that have chosen to build and create natural food stores, most of his peer group, most of his friends, they were, you know, socialists.
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He is undeniably and unequivocally and unapologetically capitalist.
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In fact, he said he that he thinks that capitalism is the greatest thing that humanity has ever done.
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Okay, so the book starts and he's talking about the fact that he is a shirtless, long-haired, hitchhiking hippy. He's in Austin, Texas.
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He's 22 years old and he's just going He's having this existential angst about what am I doing with my life?
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And so, let's pick it up right from the book.
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I had recently dropped out of school again.
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My college years had been characterized by a series of starts and stops, multiple transfers between universities, and impromptu breaks to hitchhike around the country.
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It's funny, uh now that I'm thinking about it, there's multiple times and I don't know if I'll cover it later in the book, so I'm going to tell you now in case I forget, but even after he's running Whole Foods, he's trying to expand.
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They don't have a, you know, they're very capital constrained at the very beginning until the IPO.
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Um and so, he's trying to expand into other markets and he wants to go scout locations for other eventual Whole Foods in other areas of Texas.
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And the way he gets there is through hitchhiking.
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I just love that thought of a young founder.
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It's like, "Hey, I'll do whatever I have to do."
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And I guess it is a form of resourcefulness, right?
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All right, so he says, "I had impromptu breaks to hitchhike around the country, but this time I thought I might be done for good," meaning that never going back to college.
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This is going to be a main Something we also talked about is the fact that he's the two most important relationships that he he ever had in his entire life was the relationship that he has with his wife.
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They've been married for 34 years or thereabouts.
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And then the relationship with his dad.
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He says the relationship with his dad is the second most important relationship that he had in his life.
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His dad's a major character in this book, major influence on building Whole Foods.
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In fact, I asked John about that when we had dinner.
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He says he still thinks about his dad every day even though his dad's been gone for over a decade.
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But there's a devastating story later in the book where his entire His mom dies disappointed in her son.
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She did not want him to be a college dropout.
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She didn't want him to be a grocer.
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She You know, either one of the last conversations they have is the fact that please stop this ridiculous Whole Foods, you know, business journey and go back and and get a respectable job.
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And you know, John's a He's a He's a troublemaker. He's a misfit. He's a rebel.
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It's very obvious that he's got the same personality type that you and I have.
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So, he says by this time I thought I may be done for good.
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The academic life with its prescribed programs and predictable outcomes just felt too constraining to me.
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I was no longer willing to read books someone else decided I should read.
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That life was not for me.
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Now my only curriculum was my own curiosity and the university library was my classroom.
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He just like Steve Jobs drops out of school and then just drops into classes not for credits, not for degree, but because of his own curiosity.
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The key to do great work.
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I always quote the my one of my favorite essays, Paul Graham's essay How to Do Great Work.
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He says if this whole thing boils down to one word, curiosity, your own curiosity.
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And so this is something that me and John talked about and I think we really bonded over is the fact that we both don't think you should read books, be forced to read books that you hate.
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And the note I jotted down after our dinner was he doesn't think you should read books you hate.
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Rebelled in college because other people were choosing what he should read.
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Typical entrepreneurial behavior.
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I want to choose what I do.
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And so fast forward to now, John's in his 70s.
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He's read thousands of books.
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His MO the entire time throughout this entire book.
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If he gets curious about something, he needs to learn about something, he'll just devour entire shelves.
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But if you put him on a at a desk and you tell you're a professor or teacher says, "You have to read this even if you don't like it." He's going to rebel. And he talks about this.
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"I wasn't trying to be a rebel.
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It's just that I couldn't conform, not to the conventional track, not to my parents' hopes and expectations, not to the path my friends were taking.
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I was getting older and I understood from the concerned questions of my friends and family that I was supposed to be getting serious about my future."
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So this is some of the some of the things he would hear over and over again.
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"John, what are you going to do with your life?
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John, when are you going to finish school?
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John, what kind of future do you think you're get you'll find in this library?
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John, when are you going to get haircut?" That's hilarious.
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"I didn't have good answers to any of those questions.
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I had stepped off the marked path on which everyone I knew was still marching forward.
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One friend was becoming a lawyer, another was going to medical school.
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In my mind's eye, I could see their future.
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Status, security, income.
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I knew the beats to that tune.
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I just couldn't move my feet to it.
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I wanted something different, something real, something adventurous, but I didn't quite know what that was yet.
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And even more disturbing, I didn't have people around me who shared that feeling.
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I felt misplaced, caught between a life I couldn't live and a life I couldn't yet see."
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So this is the 1970s in Austin, Texas.
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He's definitely a hippie, so he winds up living He finds out from a friend.
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He winds up living in this co-op.
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It's kind of like a I would guess a a commune.
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Everybody lives in the same house, they share everything, and it's called the Prana House.
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And the Prana House, to live in the Prana House, you have to be a vegetarian.
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And while living in the Prana House, he also meets this woman named Renee.
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Renee is going to be his girlfriend for many years.
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She's also a co-founder of what turns into Whole Food.
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So, one of the responsibilities and the jobs that that John has as a member of Prana House is he actually is the food buyer for the entire community.
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And he also gets a job at this place called the Good Food Company, which is a chain, a very small chain.
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There's five small vegetarian natural food stores.
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And so, as a byproduct of working there, he he realizes himself, he's like, "Wait, I could do this.
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I could run a natural food store."
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And then something happens that's really important that changes the trajectory of his life is that Renee believed in his idea.
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So, he goes and and tells her, he's like, "Hey, why don't we start our own natural food store?"
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And she didn't laugh, she didn't think it was ridiculous, she didn't tell him stop doing that.
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She says, "That sounds fantastic. Let's do it."
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And almost 50 years later in the future, right, he's looking back at this time.
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He's writing these words almost 50 years after they happened, and he says that those three words, "Let's do it."
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were some of the most important moments in his life.
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And what he's going to describe here in the book is this idea that reappears over and over again at the beginning of something.
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And new ideas are fragile, and they they they new ideas need friends.
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"I'm forever in her debt for the way she responded when I first gave voice to my dream.
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I was inspired and excited, but also full of hesitation and self-doubt.
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If she had been cautious or dismissive, I might never have entertained the idea again."
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And so, I was able to talk to John about this at dinner.
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And he just said, he's like, "I had a drive to create something, to build something, to make a mark. It was an inner drive.
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Nobody was telling him that he should do that."
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In fact, in many cases, as you know, most people around you tell you not to do that. Don't be different. Take the safer route. Just get a job.
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Don't be this weird entrepreneurial rebel.
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But that inner voice will not be silenced by anything else but action.
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And so, even though he's only 23 years old at the time, he's never run a business, he takes this very seriously.
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This is a This was a mission to him.
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He says, "I took it seriously.
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I really did believe that the foods and supplements we'd be selling would offer our customers a better chance of staying safe and healthy.
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Passion was calling us, and it was demanding every bit of energy that we had to give."
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I just recently reread my highlights from the autobiography of the founder of Four Seasons, Isadore Sharp.
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And it's funny, this is also something that John does.
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Me and John talked about this at dinner, the fact that he rereads highlights of books after he reads them.
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And this idea is very obvious when you get to this chapter in John's life.
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He feels that work is play, and he had a passion about it, but he was deadly serious about doing his best and doing his best for himself, for his own standards, but also his best for his customers.
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And I think this idea can be applied to whether you're building McDonald's to building one of the world's greatest collections of high-end luxury hotels, and that's exactly what Isadore Sharp said in his autobiography.
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He was talking about the fact that he really felt that one of the differentiated aspects of Four Seasons was going to be their complete dedication to service.
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And so, he was talking He would tell his people, "Hey, we need to pay attention to what McDonald's does."
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And people on his team thought it was crazy, and Isadore was explaining this.
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He goes, "To compete, we would have to feel about service the way Ray Kroc, head of McDonald's, felt about hamburgers."
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Explaining why his company led competitors around the world, Kroc had said, "We take the hamburger more seriously than they do."
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Changing the way that people eat is an idea that John Mackey took more seriously than anybody else in his entire industry.
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So, to start the first store, which is called SaferWay at the time, there's no Whole Foods yet.
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This will turn into Whole Foods in a little bit.
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He raises He has this idea, he's like I want to raise $45,000 from friends and family.
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Another thing you have to know about John is uh he describes himself as an evangelical or um an evangelist rather, not evangelical.
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He's an evangelist and can be very charismatic and convincing.
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And so one of the wonderful byproducts of him beginning this entrepreneurial journey is the fact that it's going to eventually, the business of Whole Foods is actually going to bring him and his father together because he was very very different.
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He just grew up completely different from both of his parents.
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So I want to give you a little background there to cuz I think it'll enhance your understanding of the story.
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My father had grown up during the Great Depression.
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And when Pearl Harbor was bombed by the Japanese in 1941, he was just 20 years old.
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He wasted no time joining the military and marrying my mom.
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His generation had to grow up fast.
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They had no time to indulge youthful dreams or ponder the meaning of life.
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They had to rebuild a country devastated by the depression and war.
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He had not, my father had not followed his own passions in life.
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That simply wasn't what people did in that era.
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And it was hard for my mom to get on board with my life choices.
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She couldn't get over the fact that I dropped out of college.
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She never gave up hope that I'd wake up from my strange, impractical obsession with being a grocer and she wanted me to go back to school.
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And so his mom doesn't like the fact that he's doing this now.
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She never likes it, but his it changes the relationship that his father has with him. Listen to this.
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In my father's eyes, however, I'd shifted from being an aimless hippie dropout to a youthful entrepreneur with conviction and energy.
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For the first time in my adult life, my father's life skills and my own passions seemed to come into alignment.
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He was an astute businessman.
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He taught accounting at Rice University and then became the very successful CEO of a healthcare company.
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And so his dad is going to play a large role in guiding his son and trying to help him build the business.
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There is a benefit to this like youthful naivete that a lot of entrepreneurs have when they start.
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They don't know how difficult it's going to be.
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And John hates bureaucrats.
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It is something that pops up over and over again in the book.
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But even at the beginning this external bureaucracy, the city inspectors almost kill the idea before it's even born.
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So even back in the 1970s in Austin, there's all these per- he doesn't know all the building permits and all the inspections that you need to do.
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And so they would drop in and like, "What are you guys doing?
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You don't have the right permits. You can't do this."
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Do it essentially say, "Shut this down.
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You know, you're going to have to wait months and months until we go through everything and approve everything."
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And his whole point was like, "We don't we can't wait that long. We don't have any money.
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You're the business is going to die before it's born."
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And he calls this impending death by bureaucracy.
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And so he is advised on a way around this problem from an older, wiser entrepreneur.
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The the his landlord is in his 70s.
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Remember, John's I think 24 at this time.
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And you know, he's just saying, "I don't know what we're going to do.
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We are going to run out of money before they let us open.
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They're not letting us build out the store."
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And he's like, "Well, what time do the city inspectors work?"
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He says, "What do you mean?"
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He's like, "City inspectors work during the day.
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They leave for work no later than 5:00 p. m.
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and they sleep at night."
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And so he points his finger at John's chest and he says, "Then that means you build the store at night."
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And John points out like, you know, normal people that are not entrepreneurs might be aghast at, you know, doing something like this.
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And he says, "Any entrepreneur knows that regulatory structures often do not match the on-the-ground realities.
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And they tend to favor well-capitalized, established institutions over innovators and newcomers."
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And so slowly but surely, he obtained all the permits and everything that he needed, but he did the work first.
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He asked for forgiveness, not permission.
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And if he didn't do this, Whole Foods would never exist because they had no money.
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They had they they're living in the store.
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So the first store is this Victorian three-story Victorian house.
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Okay, so the first level is going to be the Whole Foods natural or the natural foods market.
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Uh the second is this cafe and the third is the office which they have to sleep in.
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This is what I mentioned at the beginning.
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They're sleeping in the office and they're taking showers using the water from the dishwasher.
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And so eventually he's realizing he's like, "Hey, I need help."
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And he has great writing here.
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He says, "We had built our business on a dream fueled by ambition, desire, enthusiasm, a sense of adventure, hard work, and a lot of help from our friends.
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But to be truly successful, it was going to take something more.
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We needed business experience and intelligence. I knew where to turn."
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And then he What does he turn? He turns to his father.
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And so his dad helps him build his own personal curriculum.
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And this is reading and rereading.
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This is professional research.
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So he gives him some Peter Drucker books.
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He says, "My dad also gave me Alfred Sloan's memoir about his years with General Motors."
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So there's a a quote in Poor Charlie's Almanack that says there's ideas worth billions in a $30 history book.
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That is literally true with Alfred Sloan's memoirs.
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This was the most popular book maybe half a century ago, maybe 40 years ago, something like that, with all the top founders and CEOs I've come across this in America were reading Alfred Sloan's book.
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One of those was Henry Singleton of Teledyne, who I found out because Charlie Munger said he that Henry Singleton was the smartest person he ever met.
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And Warren Buffett said the fact that business schools don't study Singleton is a crime.
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But anyways, Henry Singleton talks about reading Alfred Sloan's book and taking an idea from there and it helped that single idea helped him build Teledyne.
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So now we have John's dad giving him that same book.
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And so John says, "Could a car manufacturer really teach me anything about running a natural food store?"
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And regardless of his skepticism, he's going to read. This This is John's MO.
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He just does He does He's He's still doing this to this day.
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He's just a voracious reader, voracious consumer of information.
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So he says, "I filled my backpack until I could carry no more books, added more titles from the local library and bookstores.
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If I had anything to say about business, I read it.
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In fact, I devoured it, and I learned.
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By night, I read about business.
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By day, I worked in the store."
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John is still doing this.
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This is why he's going through over 100 episodes of Founders.
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In fact, me and him talked about He he He John completely gets it.
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He's like, "The amount of books I have found because of your podcast."
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Me and him talked about the books that he read that he didn't know existed until he listened to the podcast first and then read the books.
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That's exactly how you should be using Founders.
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By day, you're working on your business.
21:41
By night, you're obviously listening to the hopefully listening to the podcast and reading the books.
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And I learned, "By night, I read about business.
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By day, I worked in the store.
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Every few days, I'd call my father and talk to him about about what I was reading.
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I began to see the challenges our small business was facing from a more holistic perspective.
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I now understood the competitive disadvantages in the marketplace that we were working against that were working against us and giving our rivals a better chance of success." He gives us an example.
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"Take my former employer, the Good Food Company.
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They only had five stores, right?"
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This isn't It wasn't a big business, but it's bigger than his one, and that gives him an advantage.
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"Take my former employer.
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They had five stores compared to our one little store, and as a result, they were able to negotiate better prices than we were from the wholesalers and therefore price their products more competitively while still making a profit.
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That gave me the idea, what if we teamed up with other small stores and pulled our buying?"
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The importance of relationships and secret allies.
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Secret allies is this idea I got from this very obscure Rockefeller biography.
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It's still the best biography on Rockefeller I've ever read.
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In fact, I found it because the second time I read Titan, which is the biography every on Rockefeller everybody knows, I go through the bibliographies of all the books I read and I find a ton of other books, and I found that book in there.
22:52
I think the book is written 40 50 years ago, biography of Rockefeller, talks about Rockefeller's idea of secret allies, of making secret allies with other entrepreneurs and business owners in the early oil industry.
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John is going to do exactly that in the natural food industry.
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It's one of my favorite parts of this entire book.
23:09
He learns from his relationships and then he winds up buying this entire network. It's insane.
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It's one of my favorite parts of the book. We'll get there.
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So, what he does is he has all these other people.
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He goes and builds goes and seeks out and builds relationships with people in this industry.
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They're technically competitors and he's like, "Why don't we turn into allies?"
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And so he approaches two guys that are running another natural grocery store.
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These These guys, Mark and Craig, are going to wind up being co-founders.
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They're the third and fourth co-founders of what eventually be Whole Foods.
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And he pitches this idea.
23:38
He's like, "Hey, we're separate companies.
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Let's act as one and we buy from wholesalers as one unit.
23:42
That way we get better prices."
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And so he says, "Technically, they were competitors, but once we created the distribution company, we became allies."
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And so John starts building this relationship.
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We had long conversations about our stores, about the products we were selling, about retailing, and about business in general.
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Rockefeller did this exact same thing.
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And Rockefeller wind up dominating his network just like John's going to wind up dominating his.
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I I guess I should go back before I move on.
24:07
That the the the biography that I referenced is episode 254.
24:11
The name of the book, which I believe to be the best Rockefeller biography I've read so far, is called John D.
24:17
The Founding Fathers of the Rockefellers.
24:19
I'll eventually reread that That's a book I should probably read every like, you know, two or three years. I think it's excellent.
24:25
But this idea that both Rockefeller and John Mackey share is this idea is like, "Hey, we're going to build relationships with everybody in the industry.
24:31
We're going to kind of map out there."
24:31
It's essentially like building a map of their industry.
24:34
They're both in the at the very early stages.
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Rockefeller at the early stages of the oil industry.
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John Mackey is the the very early stage of the natural food industry.
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And it's important to know all these ideas are related to each other. Think about it.
24:46
He He realizes, "Oh, I'm at a giant competitive advantage disadvantage, rather, because he's doing all this reading."
24:51
Then he realizes, "Okay, how do I solve this problem?"
24:54
Then he realizes, "Oh, I should build relationships with the peers and competitors and some of them are going to turn to allies and he's going to acquire a bunch of these companies in my industry."
25:01
And then he continues to get ideas because it's all tied to this fact that he's a voracious reader and a voracious learner.
25:07
So, he gets an idea from an industry trade journal that actually helps him expand his mission.
25:13
So, there was a trade magazine called Natural Food Merchandiser and he reads this story about a company in Los Angeles.
25:19
It's a natural food store named Mrs. Gooch's. I won't bury the lead.
25:24
All these people he's about to name, he's going to build a network with them.
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He winds up acquiring almost every single one.
25:29
He was There was not another John Mackey in his industry. There was only one.
25:36
He was much more ambitious and organized and then he was just a conqueror.
25:39
He had the conqueror spirit.
25:41
It's funny, as I was reading the book the first time, I also gave out a copy to a friend of mine and he read the book and loved it as well and I was like, "How How many times am I going to have to learn How How am I still making the same mistake over and over again?"
25:56
And so, we were having this conversation.
25:57
It's just like, "This guy gets involved at the very beginning of his industry, right?
26:01
He then he's going to build the company that is the industry leader."
26:05
Almost like categorically, he defined the category he operates in.
26:09
Why was I surprised going into the book and then my surprise is obviously alleviated by the end of the book.
26:17
Why was I surprised that of course he was a conqueror?
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Every single person that's going to start at an industry at the beginning of an industry and then build the category the industry defining company is the same way.
26:27
They all have this ruthless competitive drive that is not matched by their other peers in the industry.
26:32
So, back to where we are in the story, he's reading this industry trade journal, this industry magazine and he hears about Mrs. Gooch Mrs.
26:40
Gooch's which he's eventually going to to acquire many years in the future and he says, "I read the story so many times that the pages were tattered."
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And so, this is what he learned from the story.
26:51
Unlike most natural food stores at the time, it sold meat.
26:53
And so when he first started Safer Way, he wasn't selling meat. It was all vegetarian.
26:59
Unlike most natural food stores at the time, it sold meat, poultry, and seafood alongside the kind of products we sold at Safeway.
27:04
The idealist in me was proud of our strictly vegetarian ethos, but the entrepreneur in me saw a massive opportunity.
27:12
Imagine if customers were able to do their entire grocery shopping for the week without having to set foot in a conventional supermarket. Mrs.
27:21
Gooches was doing a staggering $100,000 a week in sales in contrast to our 8 to 10,000 dollars a week.
27:29
So he had attacked this tiny part of the market cuz what's happened you you're going to shop at Safer Way, but then you have to go to a normal grocery store to finish everything to round out everything else that you're going to eat. By following Mrs.
27:42
Gooches example, he's like, "Oh wait, I'm I am underperforming 10x."
27:43
And because of all the experiences getting and all the reading he's doing, he's like, "I can't stay in this little this little tiny segment of the market. Why?
27:53
Because our conclusions seemed inescapable.
27:55
Size mattered in the retail business."
27:58
And so this is when he's switching his mind.
28:00
He's like, "Oh, only one only one thing is on my mind now, expansion."
28:04
He's going to echo what Jeff Bezos said in the early days of Amazon if you read his shareholder letters.
28:09
Somehow Jeff understood very early that the internet destroys the middle.
28:12
So he's like, "On the internet, you have to be either really, really small or giant."
28:17
So Amazon has to get big fast.
28:20
John Mackey arrives at a similar conclusion in the natural foods market.
28:24
He says, "The natural foods market is growing.
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If we don't expand now, we'll miss our shot.
28:27
In two years, it might be too late.
28:28
The business environment is tilted against us and we need to change that. We have to change that.
28:32
Location and size matter a lot."
28:38
And so what John does next is really smart.
28:39
And again, it just feeds back to the fact that he's this voracious learner, voracious reader.
28:43
And so he's He's "Okay, I'm going to jump out of the magazine and industry trade magazines and I'm going to actually go and fly and and do these store visits, which helps obviously build relationships with the people running the store.
28:55
I wanted to see for myself some of the new natural food stores I've been reading about in Natural Foods Merchandiser, that's the trade magazine I mentioned earlier, and meet the folks behind them. I planned a pilgrimage."
29:05
So, he's going to go coast to coast.
29:07
He says, "A pilgrimage and market research trip."
29:12
"Each visit gave me new ideas when it came to store layouts, displays, creative signage, product mix, and more.
29:18
What I gained from those visits was confidence.
29:22
My vision of a larger format natural food store was not crazy."
29:27
And so, he takes what he's learning and he acts on it. And he has this thesis.
29:31
He's like, "Listen, I don't think we're serving the entire market here.
29:33
I think if we make as we make the store bigger, the revenue will grow as well."
29:39
And so, he says, "We have to take a risk.
29:41
We have to get a lease on another bigger location."
29:43
There is hilarious stories in the book.
29:46
Because again, there's no, you know, you want to open a Whole Foods Market now.
29:50
Like you're going to have a line out the door of people that want you to put your Whole Foods, you know, in their commercial development.
29:55
But at the time, he's only operating in Texas.
29:57
He's like this, you know, they're more much more conservative environment.
30:00
And they they he keeps having these meetings.
30:02
He's like, "You're going to put in this damn hippie store?" They they keep going.
30:05
He's like, "No, it's a natural food supermarket."
30:08
He's like, "This is a hippie store."
30:08
And so, this guy actually they're going to wind up doing a deal cuz he actually he's like, "Oh, you're kind of like a younger me."
30:13
He's just like a younger weirder hippie version, but it's just hilarious.
30:16
The conversation they're having it just made me laugh.
30:18
He's like, "We're opening a natural food supermarket." I said.
30:21
And Ben, the guy he's talking to, Ben stopped me.
30:23
"Son, you're going to build some kind of hippie food store?" "No, sir.
30:26
It's a natural food supermarket."
30:28
"That's what I said, a hippie food store."
30:30
"Sir, we're just selling natural foods."
30:36
He looked even more confused. "Natural food? What is a natural food?"
30:40
And he starts describing and then then he goes he and he goes he interrupted me.
30:44
He goes, "Son, there are not enough hippies in the whole damn world for you to sell enough groceries to make that kind of store a success."
30:52
But one thing John did does have is he he calls it his evangelical enthusiasm that you know he he considers it one of his superpowers especially cuz he believes in it.
31:01
You know, he can enthusiasm and passion is infectious.
31:04
You can literally transfer the belief that you have in what you're doing to other people if you're passionate enough. And it works on Ben.
31:09
So he goes, "John," he said in his slow Texas draw, "I like you.
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You remind me of myself when I was young.
31:16
So damn idealistic and optimistic.
31:19
You think you could take on the world.
31:21
Life is going to teach you a few things before it's done with you.
31:24
That I can say for sure." He then paused. "What the hell, son?
31:26
Let's do your damn hippie food store."
31:28
I love that that that story so much.
31:30
Uh it's this store is now 10,500 sq ft and so again, John's thesis is not unique in the retail industry.
31:39
Again, he was discovering this independently.
31:41
But this idea of a larger store is going to equal more revenue.
31:45
Sam Walton discovered this as well.
31:47
We just covered a few weeks ago that obscure Sam Walton biography and every time Sam increased the square footage of store, the revenue went up as well.
31:57
And so this is the time where Whole Foods is born.
31:58
He talks to the two partners that they started the distribution business with.
32:01
Now he's like, "Okay, let's not just buy or you know, use our size to buy to get a better price from our our better wholesale price.
32:09
Let's actually combine the two in into one company."
32:13
And so there's four co-founders of Whole Foods.
32:15
It's going to be Craig, Mark, and then John and John's girlfriend Renee.
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And so John convinces them to do a merger and they're like, "Okay, well we need we're not going to use Safer Way and they're not going to use their Clarksville."
32:28
It's like, "What's the name?"
32:28
And they actually came up with the name because they took it there was an industry magazine called Whole Foods Magazine.
32:35
And they're like, "Why don't we just call it Whole Foods Market?
32:36
And one of the best things about autobiographies like this, it talks about the fact that at the very beginning, you're not never going to have enough money, you're never going to have enough time, you're never going to be ready to launch, and you have to do so anyway.
32:46
They just can't They They're not ready to launch a larger store, and there's some funny things they have to do to to make it appear like they have more inventory than they actually do.
32:54
But they can't afford to wait.
32:56
So, what are you going to do?
32:59
Like, you have to go forward, and you have to get creative.
33:00
By the time construction was complete, we were running low on money.
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We simply weren't going to be able to meet payroll unless we opened right away. But we weren't ready.
33:07
We didn't have our beer and wine license, we didn't have a butcher, and we had a significant lack of inventory.
33:14
With just a few days left before opening, the shelves were half empty.
33:17
The solution was found in juice, apple juice.
33:20
It was a popular product in those days, and we were able to get a hell of a deal on a full tractor trailer load.
33:27
We could fill up the empty shelves with gallon jugs of apple juice. And this is hilarious.
33:30
When the truck pulled up outside the store, the driver said, "Hey, man, where's your loading dock?" Loading dock? We don't have one.
33:36
All we had was a couple of dollies and a lot of people.
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And so they made this like one big long like human chain and unload a semi-truck full of apple juice.
33:46
We featured it on every open shelf and sold it at the special opening week price of 99% per gallon.
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Customers felt like they were getting a really good deal, and it created a convincing illusion that the store was filled to the brim.
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On September 20th, 1980 at 9:00 a. m. , we opened.
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You're going to see right from the very beginning, this is the right place, the right time, with the right person, with the right set of skills.
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How long did it take until Whole Foods Market first became profitable?
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I would answer only half jokingly, until about 2:00 in the afternoon on the first day.
34:24
Our sales far exceeded expectations, and they never slowed down.
34:29
We became the highest volume natural food store in the United States doing over $200,000 per week.
34:36
It was the right place, the right timing, and the right type of store.
34:43
Imagine the euphoria that you would feel if you were in John's shoes.
34:49
The amount of time, effort, energy, love, and risk that you took, and it was an unbelievable success from day one, but you know that entrepreneurs the entrepreneurial emotional roller coaster is euphoria and terror.
35:02
They open up and less than a year later, Austin, Texas gets hit by torrential downpours that cause what they call a once-in-a-hundred-year flood.
35:15
A hundred-year flood hits them in their first year of existence.
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The water broke through the windows like a tidal wave, deluging the store.
35:24
It was the worst flood that Austin had seen in seven decades. Thirteen people died.
35:29
The store had been eight feet underwater.
35:36
All of our equipment and inventory would need to be replaced.
35:38
We estimated the inventory alone was worth about $400,000, and virtually all of it was financed by our suppliers.
35:45
I started to feel much older than my 27 years.
35:48
Before the flood, I had really felt as if this was why I was on Earth.
35:54
This is what I was here to do.
35:57
This is what I was meant to do.
35:59
But now he's saying, well, I can think that all I want, but then nature delivers eight feet of water.
36:06
Nature puts my store eight feet of water.
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And it's not just that it's water.
36:12
When there's floods, that means the sewers overflowed and mixed with the floodwaters.
36:15
And so his entire store is full of fecal matter. So what do you do?
36:21
He's got no He has no idea how he's going to get out of this, but he's like, okay, well, what What I going to do?
36:25
I'm not going to sit So, he just starts getting to work.
36:28
Eventually, the waters recede and they grab a bucket and he starts mopping.
36:31
And here's the insane thing.
36:34
And this idea that what you've made is, you know, loved by other people.
36:40
And he notices a guy that's doing the same thing that's that's on another aisle of the store mopping.
36:43
And, you know, he's like, "I thought I knew everybody that worked here."
36:46
So, he goes, "Hey, I'm sorry.
36:47
Uh I don't remember your name. I'm John."
36:48
And he goes, "Hi, I'm Larry. I live down the street.
36:52
I'm off work today, so I thought I'd come up. I love this store.
36:56
I shop here all the time and I want to make sure that you guys come through this." And Larry wasn't alone.
37:03
As the day wore on, more and more volunteers showed up.
37:06
They came uninvited and unpaid for no reason other than they loved the store and didn't want to see it fail.
37:15
And this is just a first in a series of people that helped John and lend him a hand.
37:19
And if they didn't, Whole Foods probably wouldn't exist because they didn't have flood insurance.
37:24
So, the first thing he does, even though he's owes his suppliers a bunch of money, he's just like, "Well, you know, if we go out of business, we're not going to pay you.
37:29
Can you front us some inventory?" They agree.
37:31
Then he goes down to his local bank, City National, and he explains it to his local banker, this guy named Mark Monroe, and Mark Monroe agrees to give him a $100,000 loan.
37:43
Now, there's a crazy story.
37:43
Years later, when the loan was long paid off, I learned the reason that the application process had been so easy.
37:49
A stranger approached me at a conference and shook my hand.
37:53
"John, you won't remember me, but I used to work at City National Bank.
37:56
That was quite a thing that Mark Monroe did for you after that big flood.
38:00
The bank didn't approve that loan. The bank turned it down.
38:02
Mark Monroe personally guaranteed that loan for you.
38:07
That's the reason you got the money." I was stunned.
38:09
Mark had never said a word.
38:14
Only 4 weeks after the flood, we reopened.
38:18
And so, a large part of the book was about the very beginning of Whole Foods, like figuring out, then opening new stores, constantly revising what they want to build and how they're going to build it, and then expanding into other territories, which we'll get to, but one of the things that was very interesting that that John and I talked about at dinner is he said that the years go by fast and a lot gets lost to memory.
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So, I'm going to come back to this because at this point in the book, he's 28 years old, and this is what he says, "I look back."
38:44
Remember, he's writing these words almost half a century into the future.
38:47
"I look back on those days as some of the happiest of my life.
38:49
I was in love with our store.
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There was a palpable sense that we were doing something new, something important."
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And so, when I talked to John about this, he said the years go by fast, a lot gets lost to memory, that you should write it down.
39:05
He actually thinks that writing a memoir and interviewing people from your life and past is actually helpful, even if you don't publish the book, because he had an idea.
39:13
He said something that was fascinating.
39:15
He says, "The beginning of Whole Foods and the end of Whole Foods is like very fresh in in his mind.
39:21
And there's a lot in the middle that you'll tend to forget, you know, a lot will get lost to memory.
39:24
And so, by the process of writing a memoir, you're also interviewing and doing research of people that were that you knew back then and that could tell you their perspective on these events.
39:34
But, when I heard John talk about this in person and also when I read the book in the book, I thought of something that this is the advice that Phil Knight gave to to younger entrepreneurs that he neglected to do himself because at the end of his autobiography, Shoe Dog, he said this, "I struggled to remember.
39:49
I close my eyes and think back, but so many precious moments from those nights are gone forever."
39:55
That's the exact same experience that John Mackey had.
39:59
"Numberless conversations, breathless laughing fits, declarations, revelations, confidences, they're all fallen into the sofa cushions of time.
40:06
I remember only that we always sat up half the night cataloging the past, mapping out the future.
40:13
I remember we took turns describing what our little company was and what it might be and what it must never be.
40:19
How I wish on just one of those nights I had a tape recorder or kept a journal.
40:27
And one of the most entertaining and informative parts of the book is how much co-founder conflict that he has.
40:32
How many There's multiple coup attempts.
40:35
But this is one of an unusual co- you know, co-founder conflict is nothing new, but an unusual one is when you're in a romantic relationship with one of your co-founders.
40:44
And remember, they're they're hippies by their own admission and so John gets this idea he's like we should have, you know, free love.
40:50
And so he goes and talks to Renee, which is his girlfriend at the time.
40:54
He's like we should have an open relationship.
40:55
And the problem was this this backfired.
40:59
And so there's a story in the book where he tells Renee, "Okay, let's you know, see other people."
41:03
even though he was in love with her. And he comes home late.
41:06
He's like, "Oh, I'm working late.
41:08
I'm just going to sleep at the store."
41:09
And he decides, "Oh, you know, No, and then he's like, "Ah, I can't get any sleep here. I'm going to go home."
41:15
And as you could probably know where I'm going, goes home and you know, his co-founder and girlfriend is engaged in an activity that was previously reserved just for them two.
41:24
And he has this great line and he goes, "I was heartbroken and mad at myself.
41:29
What kind of idiot tells the woman he loves to start seeing other people?"
41:34
And so in addition to that, he also has traditional co-founder conflict and at the the root of their problem that he has with one of his co-founders is I told you before, John Mackey is a conqueror.
41:44
He says, "I was never going to be satisfied to stay small.
41:46
I was never going to be satisfied to stay small."
41:50
And so there's a tension between him and his co-founder Mark because they open a new store, its sales go a little slower, they're cannibalizing sales to some of their other stores.
41:59
John has a very long-term patient view and his co-founder doesn't.
42:03
He's like, "You're ruining We had a We had one great store.
42:07
Why can't you be satisfied with one great store?" And he tells us why.
42:09
"I was never going to be satisfied by staying small.
42:13
And over time, only one of the four co-founders is going to remain, and that's going to be John Mackey.
42:19
And it is during these conversations, these these philosophical disagreements, where he realizes, "Oh, we have a commitment mismatch.
42:24
I wondered if he was truly committed to the natural foods mission.
42:27
I knew he personally believed in eating healthy, but was he interested in trying to change how other people ate?
42:32
For me, it was becoming a calling, something I felt I had to do.
42:38
What we were doing was more than a business.
42:41
I knew it could be successful. It had to be.
42:42
We just needed to get through the slow start and start working on the next store as well."
42:46
And one of the ways that he was going to expand and to change how the rest of the country ate was through this thing I mentioned earlier. This is the network.
42:56
This is very similar to what the secret allies idea that John D. Rockefeller had.
43:00
And they're just a network of fellow entrepreneurs that own the country's best natural food stores.
43:04
And so, at this point, there is no such thing as a national chain of natural food stores.
43:11
At most, there'd be a chain of stores, like a handful stores in one geographic location, and they kind of just they never expanded outside of those boundaries.
43:18
And so, they were constantly traveling together, and so they would all be, "Hey, we're all going to meet up in Austin.
43:22
We're going to tour John's stores.
43:23
We're all going to meet up in LA and tour this store.
43:24
We're all going to meet up wherever they're located and tour."
43:27
He says, "I learned so much from these visits.
43:29
Coming home to Austin brimming with ideas for new product lines, marketing strategies, management approaches, store design, and more."
43:35
The network quickly felt like more than a business association.
43:37
These were friends, fellow travelers who are walking the same road that I was on.
43:41
It was also allows him to drastically expand into other regions cuz he's just going to buy up all of these people in the network.
43:48
What I could not possibly know back then was that over the course of the coming two decades, Whole Foods Market, the lean, hungry upstart of the bunch, would not only surpass each of those other businesses, but would end up buying pretty much all of them one by one.
44:02
The era of regional stores would soon come to an end, and we would begin our journey to become a national brand.
44:09
And so, as you can imagine, doing this over multiple decades, and especially at the beginning when he's completely under-financed, is a very stressful.
44:14
And so, one of the things he told me in person was that one of the things he's most proud of is all the He calls it inner work.
44:20
All the inner work that he that he did to deal with, you know, all like the stress that you have, the guilt, the anger, all these negative and somewhat, you know, can be debilitating uh emotions and like trauma that you're going to have as you build your company.
44:36
And so, he the book talks a lot about this inner work.
44:38
And so, for his inner work, he believes that MDMA and psilocybin and then breathwork was was very instrumental to making him a better person and managing all of, you know, the complicated messiness of being a human being.
44:52
I did tell them We talked about this.
44:54
He He said, uh "You should try MDMA."
44:56
I was like, "John, I'm not doing MDMA."
45:00
Uh I I just not I don't want to do any kind of psychedelics or anything like that.
45:03
It's up to whatever I don't, you know, judge other people.
45:05
If you like doing that, then and it's helpful, by all means, do it.
45:08
And he definitely talks about how helpful it was in this book.
45:11
But he did say that you could do breathwork, and he found that very helpful.
45:16
And before I read this book, I didn't even know what it was.
45:17
So, I'm just going to have him define what breathwork is in the book.
45:19
Breathwork, in broad terms, is a technique involving a facilitated session of guided breathing that puts one in an altered state of consciousness, allowing deeper spiritual insight and opening up a pathway toward clearing mental and emotional baggage.
45:33
And John credits it with his main thing.
45:35
Like, he's he's got this interesting com- combination of traits that some people might would feel are contradictions.
45:42
And when I was in in with talking to him in person, I realized that the two strongest ones, and this is his friend David that was with us also told me, is like love and discipline.
45:50
And so, he talks about like the his main theme is love.
45:52
And he says, "This is a result of all the inner work that he's done."
45:55
"Uh love was an enormous part of what got us started on the journey together.
45:58
Love fueled our creation of the store and turned it into something we could never imagine.
46:02
And love had kept it alive even through the most difficult moments.
46:08
And this goes back to the importance of I think having the right but basically the the the philosophical match for the co-founders because John goes through all this therapy and this inner work and he comes back and he tells his co-founder he's like, "Hey, I want to aim to build the happiest workplace in America, a workplace based on love."
46:24
And his co-founder Mark that is just like, "What the hell are you talking about?"
46:29
He literally says in the book, "Based on love, what the hell does that mean?"
46:33
I knew that Mark privately referred to me as wacky Macky and thought that my spiritual pursuits were not just crazy but detrimental to the business.
46:39
And so as time passes you have this growing rift and frustration between co-founders.
46:45
Mark's growing frustration became an all-out war for control over the direction of the company, the first real challenge to my leadership, the first and not last.
46:52
It's amazing how many times his board or or other people in the in the company want to kick him out.
46:59
And so this is what Mark's saying, "You're a terrible CEO, John.
47:01
Look at what you've done.
47:02
We've built this beautiful store into incredible success and then you had to go and completely screw it up.
47:06
So, obviously you you keep expanding, you're going to lose money for a little bit like a short amount of time." John was fine with that.
47:11
John thought, you know, "Expansion is is what I have we have to do if we want to change the way the the entire country eats."
47:20
His co-founder did not agree with him.
47:22
"You're going to run this company into the ground."
47:23
But the new stores weren't a mistake. I was still sure.
47:25
We just needed to give them time to grow into successful stores.
47:29
Mark did not have that patience.
47:31
To me, our mission was much larger than one store.
47:34
And in building a bigger company, mistakes and setbacks are inevitable.
47:38
This was the most painful part of the conflict.
47:40
Mark and I had been really good friends.
47:43
And so Mark demands to leave.
47:46
John and the rest of the shareholders have to buy him out.
47:50
He walked away with about $300,000 for his 10% of the business.
47:52
In 1985, that seemed like a lot of money.
47:55
But history would prove that to be a very poor financial decision on his part.
47:59
And so, this is just one of many examples in the book where the people around him are telling him he's wrong, telling him he should quit, telling him he should change strategies.
48:11
Just doubt, doubt, doubt.
48:11
And so, we talked about this in person.
48:12
It's like, "Why did you persist?"
48:14
And he has a very simple answer.
48:16
He says, "I just had faith that I could figure it out."
48:18
And I think he was motivated by the challenge.
48:22
Like, can I actually do this?
48:22
Like, there's a line in the book where he says, you know, once they got to the point of being they had multiple stores, they're definitely the market leader in Texas, but he wanted to find out like is Whole Foods is it just going to be a Texas company?
48:33
Or can we do do we actually have the potential to be and the the skill set and the talent and and the drive to actually be a national company?
48:41
And I think one of the things that, you know, is obvious when you spend time with him and his on his mission, he's like just super competitive.
48:47
He says, "I was also acutely aware of how being an entrepreneur had channeled my own competitive instincts.
48:51
I thrive on competition, and I love to excel in both sports and in business.
48:56
I was driven to outdo our competitors, to win in the marketplace.
49:00
This competitive drive was critical to our success.
49:03
I was amazed at how a good idea could become a store, and a successful store could become several, turning into a real business, and a real business could grow to become a large company.
49:14
And that chain of success could potentially change an entire industry."
49:21
And so, he makes the jump and he starts expanding to California.
49:22
But, as he does, he goes home to visit his mom who's in very, very poor health.
49:26
And so, this is the last conversation that they ever have.
49:31
And even up until the very end, she was not proud of her son.
49:34
She was only 64, but she looked so much older, literally wasting away before our eyes.
49:41
"John," she said, "I want you to make me a promise.
49:43
I want you to promise me that you'll go back to school and finally get your degree.
49:46
You could be so much more in life if you would just apply yourself to it.
49:50
I hate to see you wasting your life."
49:52
She still didn't understand that I found a career that both fulfilled my soul and was bringing financial rewards as well.
49:59
"Mom, I'm never going back to school." I told her.
50:03
"I'm doing what I love and Whole Foods Market is going to be a great company.
50:07
I'm more than just a grocer.
50:07
I'm a successful entrepreneur." She just shook her head.
50:11
I didn't know then that this conversation would be the last one I would ever have with my mother.
50:17
She died a few days later.
50:17
I'll always regret that her last moment with me was one of disappointment.
50:28
So, by this time in the history of Whole Foods, he realizes, "Hey, we're going to grow through acquisition."
50:31
That was the one of the most shocking things about reading the book because, you know, I've been shopping at Whole Foods forever.
50:35
I never thought about how the the company came to be and it's just he he grew Whole Foods.
50:41
He was very aggressive, more aggressive than anybody else in his industry, and he grew Whole Foods through acquisition, through buying up all these different chains of these regional natural food stores.
50:50
And so, they can't do that without capital.
50:52
And one thing that's very, very obvious if you read the book is John's distaste for venture capitalists.
51:00
He does not hide it at all.
51:01
This is something me and him talked about as well, which I'll get to in a minute.
51:04
And so, this is in the '80s and so, his father's having this conversation like, "We need more capital.
51:08
Where are we going to get this?"
51:09
And his father says, uh his father was a voice of caution.
51:11
He says, "Make no mistake, John. You cannot trust VCs.
51:14
You may need them, but you can't trust them.
51:16
They're going to need their money back and to do that, they need an exit strategy."
51:19
And so, him and his dad are going back and forth about the pros and cons of like, "Do we take this money? Do we not?"
51:25
He says, "What it would it mean for me as a CEO to have VCs and eventually public shareholders to answer to?
51:30
I liked running the company the way I did with my supportive board and a small group of patient investors who I knew personally and trusted.
51:38
I didn't know how I felt about bringing in outside investors with their own interests and agendas."
51:43
And so, the conclusion that he arrived at was "If I'm going to grow through acquisition and I want to grow faster."
51:49
He says there were no other viable options if we wanted to expand faster.
51:54
And so he flies to California and he goes to Sand Hill Road, where where entrepreneurs still go.
52:01
Remember, this is the '80s.
52:01
People still do this today.
52:03
Most of the VCs did not see any opportunity in front of them.
52:07
In fact, in fact, one of them on Sand Hill Road said, "This is never going to be a very large market."
52:10
Which is funny cuz when John leaves Whole Foods, they do 20 They're doing 22 billion a year in sales.
52:16
So, they don't have any success.
52:19
They go back and they pitch some local Texas VCs, one of which is very well known and prestigious inside of Texas.
52:25
And this is They were haggling over like they want to do the deal, but the valuation's a little lower.
52:31
And this is what the VC tells them.
52:32
John, he said, "We're a top-tier VC firm.
52:34
Just having us on board is going to raise the valuation of the company when you want to go public.
52:38
All money is not the same color."
52:40
It would be some time before I understood the truth in John Mackey's words.
52:44
At that moment, all money looked exactly the same to me.
52:48
Later, I would understand how being funded by a prestigious VC firm acts like a magnet to other VC firms the next time you need to raise money.
52:56
So, this is September 1988.
52:56
Whole Foods is doing 50 million a year in sales in 1988, okay? They agree to raise 4.
53:03
5 million and the venture capital firm gets a total of 34% of the business.
53:06
And he understands that now, once he takes the money, he's on the clock.
53:12
And so this is how he thinks about taking venture capital.
53:15
I began to think of our VC partners as hitchhikers with credit cards.
53:19
They were along for the ride and benefiting from our forward progress.
53:24
And as long as they felt we were going where they wanted to go, they'd help pay for gas.
53:29
But they did not have the same level of commitment to stay in the car for the entire journey.
53:34
If we got lost or diverted from the road we promised to take, they might try to grab the wheel.
53:41
I knew we couldn't afford to let them drive, nor did I put it past them to hijack the car, hire a new driver, and leave me standing on the side of the road.
53:50
Eventually, they themselves would need to exit, and I needed to ensure that they didn't push me out first.
53:58
John has a lot more to say about VCs and his perspective on them in the book, which I'll get to in 1 second cuz they're about to IPO.
54:05
This is something we talked about in person because one of the benefits of doing these, you know, I had dinner with episodes is for people that are they're so he's got fit five decades of experience as an entrepreneur, and it's a way to share lessons almost like send warnings out to younger entrepreneurs that you know, don't have all the experience that John did.
54:25
And so we we talked about this like, "Listen, it's obvious like I I read the book before I sat down to have dinner with you, and I talked to about this when we toured his new business, which he also took funding for for.
54:34
And he he makes he tells he explains why.
54:36
And so we had this conversation, and again, I didn't record any of the conversations I had with John.
54:43
So every you know that I read you is just when I got done, I just wrote down and paraphrased the lessons that I was learning for the conversations that I was having with them.
54:49
And so this is what I wrote down.
54:51
Be very careful who you take money from.
54:54
Short-term portfolio approach that most investors have is at odds with an entrepreneur's life's work.
55:01
I can tell you right now, it's very obvious when you read the book and you spend time with John, Whole Foods was his life's work.
55:08
He was a not not just doing it for money. He loved it.
55:12
He still loves it to this day even though he's not involved anymore.
55:14
And so it says, "John understands that capital is a service that entrepreneurs may likely need, but cautions to partner with people with the same long-term view you have."
55:25
And so we talked about the fact that for his new venture Love Life, he took some outside money for Love Life, but he's he took money from a long-term friend who is an investor, but that investor has a proven track record of supporting founders and being patient.
55:41
John is also funding the majority of the business himself so far out of his own pocket.
55:47
So, I think that added context of my time with John and also what I've been reading to you from his book will give you a sense of how he how he thinks on this subject.
55:55
So, they get to the point where they raise money in 1988 and then they have an IPO a few short years later 1991.
56:05
And this is his description that he says it was the second happiest day of his life.
56:08
First happiest day was marrying his wife Deborah, which happened, you know, a few months before, and then the initial public offering for Whole Foods because he says it was a relief at the thought that the hitchhikers would soon be exiting the Whole Foods car.
56:20
Over the past few years, I'd come to understand all too well why my father had cautioned me about VCs.
56:24
Their investment had been essential, but it came at a high price.
56:29
It almost cost me everything I had built.
56:31
I learned the hard way that VCs have strong opinions about where the car should be going and how quickly it should get there.
56:38
As we fell behind on some of our projections, our hitchhikers had started to exert some pressure.
56:43
They kept reminding me that none of our team had actual supermarket experience.
56:47
Never mind the fact that we've been running Whole Foods Market for more than a decade by this point.
56:52
They felt we needed people who had worked in the real world.
56:57
They believed we needed professional management.
56:59
And one of the most interesting parts of the story is that John and his father were the ones to push for the IPO more than his investors did, and this is why.
57:07
I raised the prospect of an IPO in the next board meeting, and the hitchhikers weren't very enthusiastic.
57:13
It's too soon, they said.
57:15
You're not ready to go public.
57:16
Let's do another round of venture financing and grow the company another few years before you IPO.
57:19
After the meeting, my father followed me into the office fuming, and he let it rip.
57:23
We've got to get those out of the company before they take over.
57:27
Since the VCs only owned 34% of the company, they weren't able to block our collective decision to go forward with an IPO, and so we began the process.
57:38
So now they are a public company, he drastically accelerates his drive to buy up as many of these other uh competitors as possible and grow through acquisition.
57:49
But there is there's a ton of detail in the book, and I really hope you read the book.
57:51
Every single person that I've given the book to has has enjoyed it. There's so much detail.
57:54
But I do want to pull out uh one of these acquisitions cuz I think there's a there's a counterintuitive lesson.
57:59
In fact, one of the things that me and John bonded over when we were speaking is the fact that he thought the podcast was a good discovery mechanism to find books and entrepreneurs that he never knew about.
58:10
And you know, if he liked the episode, he would buy the book and and read it.
58:13
And so one of his favorite uh discoveries through the podcast was Sam Zemurray from the book The Fish That Ate the Whale, The Life and Times of America's Banana King written by Rich Cohen.
58:21
And there's a story in the book that is something that Sam Zemurray would do.
58:24
So they're they're buying a bunch of their competitors, and one of the ones that that first inspired him was this company in Southern California called Mrs. Gooch's.
58:32
It was I think he thought it was like the best natural food store on the West Coast.
58:37
And so he goes to the board and is like, "We have to do this."
58:41
And he's always, you know, default aggressive, and they're always trying to reel him in.
58:45
He says, "This is our moment.
58:46
If we don't take it now, we'll lose it forever.
58:48
John, this is ridiculous." my father shouted. "You're being reckless. It's too much, too soon. We're growing too fast.
58:54
We're diluting our stock.
58:56
We need to integrate all the other previous acquisitions first.
58:59
You won't be able to manage a company of this size."
59:02
But Dad, this isn't just any acquisition. This is Mrs. Gooch's.
59:04
I know the timing isn't perfect.
59:06
We're not ready to buy them, but they're ready to sell.
59:11
The opportunity is there now, and it won't come around again.
59:13
And so when I got to that part in John's perspective on that acquisition, yes, we're not ready for it, but that doesn't matter. We still have to do it.
59:21
There's a line in Sam's biography of Sam Zemurray, The Fish That Ate the Whale, that says, "There are times" and this is what Sam did in his career sometimes.
59:27
There are times when certain cards sit unclaimed in the common pile.
59:32
When certain properties become available that will never be available again, a good businessman feels these moments like a fall in the barometric pressure.
59:40
A great businessman is dumb enough to act on them even when he cannot afford to."
59:50
Now, this is a devastating devastating part of the book.
59:53
When I was reading the book, one of the first things I wrote down when I knew I was going to have dinner at John was I was like uh the first question I wanted to ask him was like, "Tell me about your dad."
1:00:00
There was this conflict between, you know, his dad's practically his best friend, his advisor, he's on the board.
1:00:07
He's about to ask his dad to step down, and he didn't understand the fights they were having because his dad's going to have Alzheimer's, but they didn't know it then.
1:00:17
Now, this is probably the third or fourth time I've read these words, and it just hits so much harder now that I know the outcome of the story and then how, you know, this still affects John to this day.
1:00:28
John, please don't do this.
1:00:28
My father looked suddenly frail.
1:00:31
His air of authority and confidence had drained from his face that I as I'd uttered the words, "Dad, I'd like you to resign from the board."
1:00:39
My father had never begged me for anything in my life, but now he was begging me to change my mind. I was 40 years old. He was 72.
1:00:49
He'd been my mentor, advisor, investor, and ally for every step of the journey.
1:00:55
For 16 years now, he had put his trust in his college dropout hippy son and helped me grow into a mature leader of a $200 million public company.
1:01:03
And yet in recent years, he'd also increasingly been my adversary.
1:01:09
Again and again, he tried to put the brakes on when we needed to seize opportunities to move forward. "Please," he repeated.
1:01:17
"This is the last thing I'm doing in my my that's actually relevant."
1:01:22
"Look, Dad," I said, "you're always going to be my most trusted advisor.
1:01:23
I'm still going to talk to you about everything. This will not change.
1:01:27
But, you're increasingly risk-averse, and I want to grow the company."
1:01:32
Asking my father to leave the board was difficult.
1:01:38
It was an important step in my personal growth.
1:01:40
I was coming into my own as a leader and as a man. And it was devastating.
1:01:44
It had to be confusing for John because it's almost it's a little under 3 years later they figure out something had been happening the whole time.
1:01:52
And so, his dad calls him.
1:01:54
He's like, "I have something I need to tell you. I have Alzheimer's."
1:01:57
And so, the diagnosis comes in in 1996. His dad dies in 2004.
1:02:00
And the next 10 years also coincides with some of the most difficult times that John's going to have in his career.
1:02:06
And imagine, put yourself in John's shoes.
1:02:09
He's going through the most difficult time of his life, and his trusted advisor, the person he knows without a doubt has his best interests at heart, that loves him unconditionally, is slowly whittling away at the same time.
1:02:24
This part is devastating.
1:02:24
It's so difficult to read.
1:02:27
I went through another significant transition in my personal life.
1:02:30
My father, who had lived with Alzheimer's for years and was now barely recognizable as the wise mentor I so greatly loved and had depended on so much in the early days, died in November 2004.
1:02:40
It had been more than a decade since his wisdom had graced our board meetings, and many years since I'd been able to call on him for advice about strategy.
1:02:49
Sadly, his personality had long since succumbed to this horrible disease.
1:02:54
I was 51 years old, and both my parents were gone.
1:02:58
My father had been an essential part of shaping not only who I was as a man, but also who I was as a business leader and entrepreneur.
1:03:09
His death was a disconcerting experience that plunged me into a deeper reflection on my own life and mortality.
1:03:13
I had the strange sense that a mirror was being held up that reflected my own time on this earth.
1:03:21
Who was I and what was the truth about my own life? Was it good? Was it beautiful? Was it enough? Was I enough?
1:03:34
Four years after his father's death, he gives his commencement address and I think this advice is very powerful and something I've tried to do in my own life.
1:03:42
And the advice from his commencement address is honor your parents and forgive them for their mistakes.
1:03:44
He had a lot of resentment towards his mother and the fact that his mother up until her dying day didn't approve of, you know, her his choices in life and yet, you know, he's done that inner work that he and gone through all this therapy and so when I talk to him now, it's like I don't sense that he's still harboring ill will towards his mother.
1:04:03
And so this is the advice that he gave uh during his commencement address I think is really good.
1:04:06
Honor and appreciate your parents.
1:04:07
No one will ever love you quite like your parents do and although they have no doubt made plenty of mistakes in helping you grow up, they've also done their very best job that they knew how to do.
1:04:16
They've made far more sacrifices on your behalf than you will ever really know.
1:04:21
Please forgive them for their mistakes and imperfections and fully love them and honor them while you can because the simple truth is that you won't always have them with you as you move further along on your life journey.
1:04:37
So I want to transition into the second half or maybe the even the later half of the Whole Foods history.
1:04:41
I do want to uh wrap up just this expansion this this how he worked himself and his company to the most dominant position in their industry.
1:04:49
And so there's a paragraph I want to read to you that's his writing and then I'll summarize this cuz I think these principles are timeless and and applicable to almost every single one of us.
1:04:59
I think that's why Whole Foods Market emerged out of that first generation as the only dominant national company buying up all those other brands.
1:05:05
It wasn't because we had the best stores.
1:05:07
It was because that's such an important part.
1:05:09
It wasn't because we had the best stores.
1:05:11
It was because we were more ambitious and thought strategically about the long term.
1:05:14
We ran our business frugally and our stores to be highly profitable and we weren't ambivalent about either money or growth.
1:05:24
So, we didn't win because we had the best stores.
1:05:28
The best stores are the best products.
1:05:30
If you think about the store as an actual product, right?
1:05:31
What's crazy about this industry is the best products were actually losing money.
1:05:34
They had the highest quality stores, but they weren't running good businesses the way Think about that.
1:05:40
We won because we were more ambitious. We were more strategic.
1:05:42
We were more focused on the long term.
1:05:45
We were more frugal and we were more more focused on profit.
1:05:52
Now, there's two things John said when we were together that blew my mind.
1:05:53
One, he says that Walmart was one of the keys to success for Whole Foods and this was crazy like crazy to think about. Why?
1:06:04
Because the supercenters that they started opening up, right?
1:06:06
They caused grocery stores to So, now Walmart goes from a normal retailer to you can buy every single thing that you want including groceries in our supercenters.
1:06:16
So, their supercenters caused grocery stores to keep going down market over price, which means when the Walmart supercenters up first appeared and Costco is the same way.
1:06:25
First appeared on the scene, the grocery stores, their initial reaction was wrong.
1:06:30
Their initial reaction was we're going to try to compete with Walmart on price.
1:06:33
They didn't know the scope of the threat they were dealing with.
1:06:39
He said Whole Foods, we went up market.
1:06:42
We would sell higher quality at higher prices.
1:06:45
That was fascinating to me.
1:06:45
The second thing that he said is probably the craziest like and I mean that in a a great way, like the craziest thing anybody's ever told me about the impact that this podcast could have.
1:06:58
He said that if my podcast had existed when he was younger, Whole Foods would still be an independent company.
1:07:04
Because the podcast over and over again all of history's greatest entrepreneurs constantly emphasize the importance of controlling expenses.
1:07:14
The podcast would have served as a reminder and he would have put more of a priority on it as as Whole Foods grew and expanded.
1:07:19
He let it expenses get too high in the boom in the mid-2000s.
1:07:21
Over time this is very natural as you especially as you're more successful you let expenses expenses rise, but what history's greatest founders know is that costs and expenses are constant and revenue is cyclical.
1:07:36
So in a boom in a good time you're letting your cost structure creep up because your revenue has creeped up.
1:07:41
This is in human nature and then you're going to have some kind of slowdown or maybe increased competition.
1:07:44
So the revenue pulls back but the expenses stay the same.
1:07:48
That then opened opportunity for an activist investor to buy a large block of shares and influence the board.
1:07:54
This leads to John looking for a white knight which winds up being Amazon.
1:07:59
So I want to focus on the time from the financial crisis in 2007-2008 all the way up until when John gets this idea to to try to sell the company to Jeff Bezos.
1:08:07
So stock is down 90% from the peak. This is late 2008.
1:08:11
This left us deeply vulnerable to shareholder activists opportunity and he's going to find that opportunistic investors who might buy up a large swath of the company and then pose their own agenda on us.
1:08:22
We needed to take action fast but how?
1:08:25
And so a friend of his and a fellow entrepreneur recommends this private equity firm firm called Leonard Green and he says you should take money from them so you can shore up your balance sheet.
1:08:34
And so in November 2008 Leonard Green the private equity firm invested $425 million into Whole Foods in return for a 17% stake in the company.
1:08:46
They also agreed to always vote with management for the first 18 months.
1:08:51
This deal would turn out to be one of the best Leonard Green ever did.
1:08:52
By the time they sold their shares in 2011 just 3 years after investing our stock had regained all its previous value and much more and they made about $4 billion on the transaction.
1:09:07
This is where things get really complicated and frankly just really bizarre.
1:09:10
So, a few years later, he decides to share he has a really This is This is going to be reminiscent of what you and I just talked about with Sam Walton.
1:09:17
Sam Walton had a really talented executive, but that executive was so talented that he's like, I you know, I want to be CEO of Walmart, you know, I'm willing to wait a little bit, but if you're not going to make me CEO, just let me know now and I'll leave.
1:09:28
So, Sam, even though he's not ready to retire and relinquish his control, he doesn't want to lose the talented executive, he winds up making him CEO of Walmart, and then like 18 months later he's like, this is a giant mistake, and he goes back to the CEO position.
1:09:40
So, John has a very talented chief operating officer and and president named Walter Robb, and he says, I knew Walter was hungry for more, and that sooner or later someone's going to make him an offer to be CEO.
1:09:53
I don't want to lose Walter, and so the only way I can keep him was to promote him, but I wasn't yet ready to give up the CEO role.
1:09:59
So, he's like, hey Walter, will you be co-CEO with me?
1:10:05
And so keep that in the back of your mind.
1:10:06
I'm going to get to this email from the founder of Starbucks, which is friends with Walter Robb, in 1 second.
1:10:11
But, what's happening now is the reversal of a trend that in the beginning helped them.
1:10:16
Remember I just said Walmart was one of the keys to our success at the beginning.
1:10:19
Eventually that trend reverses. Why?
1:10:21
Other supermarket chains had discovered that it was easier to focus on the higher quality end of the market than try and try to appeal to Whole Foods customers while undercutting our prices than it was to focus on the lower quality end and try to compete with Walmart and Costco on price.
1:10:36
This encouraged them to encroach on our market share.
1:10:42
What I had known to be true for many years, that we were competing not just with other natural food stores, but with conventional grocery stores, was now clearly evident.
1:10:50
We hadn't been alone in our niche, we'd just been ahead of the cultural curve.
1:10:55
Now we had company, a lot of company in fact, and that increased competition from conventional grocers was the not great for our business.
1:11:05
And so, shortly after this, he gets an email from Howard Schultz, the founder of Starbucks.
1:11:09
It's sent to John and one member of the board.
1:11:12
And John summarizes the email here.
1:11:14
Absentee, petulant, disruptive, undermining, disconnected from reality, a problem for the company and the leadership team.
1:11:24
That is Howard Schultz describing John Mackey, but Howard's not on the board.
1:11:28
Howard's not involved in the company at all.
1:11:30
He's just close friends with the co-CEO, Walter Robb.
1:11:33
So, he says, uh, Schultz had sent me this unprompted personal performance review.
1:11:37
Schultz made his true intention clear.
1:11:40
He believed that it was time for me to step down and make Walter the sole CEO.
1:11:46
Now, it gets even more intricate.
1:11:46
The only other person on the email was one of the board members, this guy named John Sokoloff, who was part who worked with I Leonard Green, the PE firm that bought 17% of the company for $425 million.
1:12:01
So, John Mackey is talking to John Sokoloff about the Howard Schultz email, and in that conversation, Sokoloff's like, "Hey, you know, John, we should consider taking Whole Foods private.
1:12:10
The public markets are not the easiest place to execute a turnaround," he said.
1:12:16
"Whole Foods has a balance sheet that would easily support it, and I promise we could work out the financing."
1:12:20
And John's response was, "I worry that putting too much debt on our books would endanger the company, not to mention the private equity firms would control the company, and their purpose would not be well aligned with ours.
1:12:30
For now, I think we're okay as a public company," he told Sokoloff.
1:12:37
And John Mackey talks about the difficulty of running a public company, you know, and and what happens is, in good times, you kind of let things slip a little.
1:12:44
He says, "We as a company had allowed ourselves to become complacent over the years when our stock price was flying high."
1:12:49
And through the experience of running a public company, he realizes that what Warren Buffett would repeat the lesson from Ben Graham about Mr.
1:12:56
Market how accurate it was.
1:12:56
After decades of experiencing these highs and lows for myself, I understood why Ben Graham and Warren Buffett loved the parable of Mr.
1:13:01
Market, a kind of manic-depressive business partner who comes running in with a new price for the company every day. One day, Mr.
1:13:08
Market saw me as a visionary.
1:13:08
The next day, he saw me as the village idiot.
1:13:13
And so when he reports another disappointing quarter, he suffers another coup attempt to try to remove him as CEO of this company that he loved, that was his soul.
1:13:23
He called he calls it when I talked to him he calls it his baby.
1:13:27
He's still shopster to this day.
1:13:30
And so one of the ringleaders of this coup is Sokolov, and he says I wasn't in this is what John's response to this.
1:13:34
I wasn't ready to step aside.
1:13:35
Whole Foods was still very much my entrepreneurial child, and no co-founder wants to abandon their child amid stormy seas.
1:13:40
I wasn't going to do so prematurely because a board member who already made a fortune off his investment in the company under my leadership had no patience for a transition that would naturally take some time.
1:13:49
They want him to step down and make Walter Robb the CEO.
1:13:53
Now over and over again, all the he's getting all these like back channels of like uh I guess gossip is what he would I guess classify this.
1:13:59
And every time Walter Robb's like, "Hey, I didn't tell Howard Schultz to write that email.
1:14:04
I don't know where Sokolov is getting this idea. I'm I'm loyal to you.
1:14:09
I don't want you to step down.
1:14:09
If you want, I would resign to prove this."
1:14:11
And you know, John's like, "Okay, well, like no, if you I don't want you to resign either."
1:14:17
But this went on for so long that John needed to find a solution, and he winds up finding the solution.
1:14:21
But while because while this all was going on, he's reading a biography of Abraham Lincoln.
1:14:27
I actually read this book, too. It's incredible.
1:14:28
The book that captured my attention in those days was Team of Rivals by Doris Kearns Goodwin.
1:14:32
It's the enthralling historical account of how Lincoln managed to lead a team of strong, diverse, and often competing personalities through an era of national crisis and division.
1:14:42
So as he's reading the book, he asks, "Okay, if what would Lincoln do?
1:14:46
If he was in my position, what would Lincoln tell me to do right now?
1:14:50
Boom, it suddenly hit me.
1:14:52
I would ask Walter to resign as he had already offered to do on at least two occasions.
1:14:57
I thought about Salmon Chase.
1:14:59
This is literally from the biography.
1:14:59
He got the idea from the biography. It's incredible.
1:15:02
I thought about Salmon Chase, Lincoln's ambitious rival for the presidency in 1864, and the Secretary of the Treasury who had offered his resignation many times until one day Lincoln surprised him and accepted it.
1:15:16
It was time for me to accept Walter's offer, and I had the confidence that he would follow through and be a man of his word.
1:15:21
I spoke to Walter in exactly those terms, and reluctantly, he accepted my request.
1:15:27
Sokolov was not happy with this turn of events.
1:15:34
That is not the end of this though.
1:15:34
That is not the end of this.
1:15:36
There is more shareholder activists.
1:15:41
And this is the one that leads directly to the sale to Amazon.
1:15:42
So, as like most public company CEOs, I feared few things. This is 2017 by the way.
1:15:47
I feared few things more than shareholder activists.
1:15:51
Those calculating speculators who buy up shares in a company with the sole intention of engineering short-term increases in the stock price so they can cash out at a quick profit.
1:15:59
As a purpose-driven leader with a long-term vision, I felt threatened at an existential level by the notion that some person who might never have set a foot in Whole Foods could show up, buy a bunch of stock, and then start dictating strategies with little regard for the long-term costs of the company.
1:16:16
And so on that spring day in 2017, I learned that Jana Partners had just announced its purchase of 8. 8% of our stock.
1:16:23
They had given us no warning.
1:16:26
I had known for a while that Whole Foods was vulnerable to exactly this kind of attack.
1:16:31
And he describes the reasons why.
1:16:33
The shifts in our competitive landscape, our consequent slowdown in sales growth, and our flagging stock price all made us a target.
1:16:41
And so Jana meets with Mackey and the executives and he says essentially their message was this, we're going to take over Whole Foods Market, we're going to take control of your board, and we're going to replace management, and then we're going to sell this company to the highest bidder.
1:16:53
And so his response was that we created a plan to cut costs and improve operations.
1:16:57
We also announced changes to the board.
1:16:59
This backed off Jana temporarily, but I knew it wasn't enough.
1:17:04
And so he speaks with another investor in Whole Foods that knows what Jana Partners normally does, this guy named Michael Schury.
1:17:09
He says he pointed out that Jana Partners had won the vast majority of their activist battles by quickly and easily taking control of the board.
1:17:16
"I know you think your new board is a friendly one," he explained, "but I suspect they're still going to vote you out and quickly."
1:17:22
And so this is when John realizes he needs a white knight.
1:17:26
He needs a buyer to evade this hostile takeover that that's going to wind up with his expulsion from the CEO position and maybe even the board.
1:17:33
And so his initial thought was Warren Buffett.
1:17:35
If a sale was inevitable, shouldn't we be proactively seeking a buyer that we thought would take better care of the company?
1:17:43
Warren Buffett's name came up, and perhaps he would recognize the the long-term value in our company and be interested in helping to protect it and grow it right.
1:17:50
We reached out to him, but he replied that it wasn't a good fit.
1:17:53
Day after day I walked, meditated, and debated.
1:17:57
Night after night I tossed and turned trying to come up with a solution that didn't mean losing the company that I loved.
1:18:05
I knew the solution had to be out there, a creative out-of-the-box idea.
1:18:07
I just couldn't see it yet.
1:18:10
My frustration grew as the days passed, and then one morning immediately after I woke up, a question popped into my head that changed everything. What about Amazon?
1:18:24
And so they reach out, they set up a meeting with Jeff Bezos and his team at Amazon.
1:18:27
The meeting's actually at Bezos's boathouse, and they wind up having this incredible multi-hour meeting, and it looks like almost immediately they're going to wind up working something out and he talks about his inner monologue at this time.
1:18:39
I had nurtured Whole Foods, my child, my baby from her infancy.
1:18:44
I watched her take her first steps, held her hand as she entered the adult world, and looked on with pride as she slowly grew into this mature thriving business.
1:18:52
Was I now ready to let her go?
1:18:54
To marry her off to the richest man in the world?
1:18:57
It just took two days to get Amazon's answer.
1:19:04
So, Amazon buys Whole Foods in 2017.
1:19:04
By 2022, John Mackey is out.
1:19:09
He worked on Whole Foods for 44 years.
1:19:16
It was the summer of 2022 and I was getting ready to make the biggest transition of my life, leaving Whole Foods Market after 44 years as its leader.
1:19:23
And he talks about needing to do a bunch of inner work and therapy to get over this anger and resentment that he felt and this is a recurring theme.
1:19:32
When entrepreneurs sell their baby, when they sell their company, the person that gives you the money is now in charge.
1:19:40
And so, this is part of the service that I think John Mackey's doing to future generations of entrepreneurs or for future generations of entrepreneurs by writing about this so honestly.
1:19:46
This layered needed to be experienced.
1:19:48
The way in which I felt disrespected and disempowered since the sale of Whole Foods to Amazon 5 years earlier.
1:19:54
It surprised me with its intensity, how angry he was.
1:19:58
And beneath the anger was a more subtle and corrosive emotion, guilt.
1:20:03
Had I done the right thing in selling to Amazon?
1:20:05
Should I have fought harder to keep Whole Foods independent?
1:20:08
There wasn't an easy answer to those questions, but they needed to be asked.
1:20:12
The first question everyone always asked me is, do you regret selling to Amazon?
1:20:16
The most honest answer I can give is that I regret the circumstances that made it the best option.
1:20:20
I still believe it was the best strategic choice available at the time and while not every hope and dream I had for this marriage of companies has come true, there were several wonderful positives that came out of it.
1:20:32
At the same time, the there were a few disappointments and frustrations.
1:20:36
So, he talks about this over a few pages. I'll summarize.
1:20:38
The pros: lower prices for his customers, higher wages for his employees, more stores, better technology, and then way better online ordering and delivery.
1:20:47
The technology that Amazon bought brought to Whole Foods was just way better than what he could build himself.
1:20:53
The cons: There was more centralization of management, more bureaucracy, more sameness in the stores, and then a series of professional managers that were not aligned with his culture.
1:21:02
And what happened is slowly over time, his influence essentially receded and disappeared.
1:21:08
He thought he would still be able to run the the company and be the CEO of Whole Foods inside of Amazon.
1:21:14
My thoughts and strategic suggestions were not welcomed by the leaders in charge.
1:21:18
I was simply cut from the team with no further explanation. This disrespect hurt.
1:21:22
My aspiration for Whole Foods having greater cultural influence at Amazon was largely unrealized.
1:21:26
And he understands this perspective because he said, "Surely the thinking goes that their culture must be superior, or the acquisition would have been the other way around.
1:21:36
We had ourselves struggled with this same type of superiority trap in many acquisitions that we had done over the years."
1:21:43
The tipping point occurred in a video conference meeting I had in February 2021 with Dave Clark, Amazon's CEO of consumer businesses and my direct supervisor.
1:21:53
And so, they're having a back and forth about this idea, and John keeps pushing and says, "Damn it, John.
1:21:59
I told you we're not doing it.
1:22:01
What do you not understand about that statement?
1:22:03
You always want to argue about every thing.
1:22:05
Sometimes you just need to be a team player and do what you're told to do."
1:22:11
I tried to put things into perspective.
1:22:13
Dave, I don't think that's accurate.
1:22:13
I don't argue about everything.
1:22:14
Can you give me another example of when I've argued with you?
1:22:17
John, I don't have to give you a example. I work with you.
1:22:21
I know it's true, and it's not just me.
1:22:23
Everyone at Amazon knows it's, too.
1:22:26
If you didn't want to give up control of Whole Foods, then you shouldn't have sold the company to Amazon.
1:22:32
And then listen to John's surprising reaction. Dave was right.
1:22:34
I had given up control when the company was sold to Amazon.
1:22:38
I knew it was now time for me to go.
1:22:43
And so that's when he starts doing more therapy.
1:22:45
He goes back with breath work and MDMA, and he says it surprised me how much anger I felt about the disrespect Amazon had shown towards me and how much guilt I had harbored over the decision to sell.
1:22:55
This therapy helped him get rid of these like feeling of resentment and anger.
1:22:57
He says, "I was able to confront a deeply held fear that I'm not truly worthy of love due to my many faults and lack of perfection.
1:23:05
This therapy also reminded me of slogan someone some friends have shared with me previously. Holy I'm alive."
1:23:14
Waves of bliss flooded my body and were released.
1:23:16
It felt incredibly joy- I felt incredibly joyful to be here.
1:23:21
In human flesh, breathing, moving, living, and loving. What a gift. Holy I'm alive.
1:23:30
And so obviously I read this before I met John and I asked him about this.
1:23:32
I was like, "Do you have any resentment towards Jeff Bezos?" He's like, "No."
1:23:37
And he says the two smartest entrepreneurs that he's ever met are Elon Musk and Jeff Bezos.
1:23:41
And in fact, he considers both of them one thing that me and John bonded over is the fact that we had a lot of the same entrepreneur heroes.
1:23:48
So his entrepreneur heroes are like Buffett, Elon, Jeff Bezos, Steve Jobs, Rockefeller.
1:23:54
But he reiterated to me, he's like, "No, I have no ill will towards Jeff Bezos at all."
1:23:58
And he thinks that he's utterly brilliant.
1:24:02
And so then he ends the book the only way an entrepreneur can.
1:24:04
And he has a great framing about what what it is that we're actually doing.
1:24:07
We're actually playing an infinite game.
1:24:08
And so that was key in the book, key in the conversation I had with John. Whole Foods wasn't work. It was play.
1:24:17
And I think that's key to endurance in building a company for the long term. You love it. You love your work. It's fun. It feels like play.
1:24:26
And so he starts another company. It's called Love Life.
1:24:27
It's a holistic health and wellness club.
1:24:29
I got to tour the entire facility.
1:24:30
And so he talks about this.
1:24:32
He says, "I became aware of a familiar feeling, like an old friend, but one that has been too often absent in recent years.
1:24:38
I'm really excited to get to work.
1:24:40
It reminds me of the feeling I used to get as a kid when I waited impatiently on the sidelines for a game of pick-up basketball to begin.
1:24:47
The eager anticipation of play. Play.
1:24:50
That's what this was to me. I am a god of play.
1:24:53
The primary field in which I love to play and to be creative is business.
1:24:59
I don't believe life is simply about our happiness or pleasure.
1:25:02
It is also about discovering and following our higher purpose and contributing our unique gifts and talents in the brief time that we have on this planet.
1:25:10
When I first came up with the idea for SaferWay and Renee said, "Let's do it, Macko man."
1:25:17
We thought it would be fun.
1:25:17
That was the initial impulse.
1:25:21
If you told us then that the little venture that we started in a house would by the time I retired grow to be a company with 540 stores, 105,000 team members, and 22 billion in annual sales that changed the way America eats, we would have fallen over laughing.
1:25:41
But then we would have gotten right back to work building the company we loved.
1:25:46
And it was because we loved and enjoyed it so much that it became all those things we could have never imagined.
1:25:53
Whole Foods was and is a magnificent expression of my own higher purpose.
1:25:56
I'm endlessly proud of it.
1:26:00
But what I understand now is that my higher purpose did not begin or end with Whole Foods Market.
1:26:07
That's another reason I love business.
1:26:09
At its best, it's a wonderful, creative, ever-evolving game.
1:26:12
The best kind of game because the deeper you get into it, the more you must learn in order to keep playing it at a high level.
1:26:21
And the most important aspect of the game is that it keeps moving and changing and developing even as we play it.
1:26:29
In fact, because we play it.
1:26:33
Business is an infinite game.
1:26:33
Infinite games are open-ended.
1:26:36
They are played for the purpose of continuing the game itself.
1:26:42
The creation and growth of Whole Foods was a delight to be a part of.
1:26:44
Others will continue moving that ball down the field.
1:26:48
But I'm not done with business.
1:26:51
I'm not done pursuing my own higher purpose.
1:26:53
I'm not done with this wonderful infinite game.
1:26:55
I'm on a new adventure now.
1:26:58
I love being back in startup mode again, free from the shackles of bureaucracy.
1:27:02
It's what makes me feel alive, exuberant, and young in spirit.
1:27:08
Another wonderful game to play, another beautiful vision to bring into reality, new worlds to create out of nothing.
1:27:16
Let us love, let us create, and let us play.
1:27:20
Again, and again, and again. Forever.
1:27:25
And that is where I'll leave it.
1:27:25
For the full story, highly, highly, highly, highly recommend picking up and buying a copy of the book.
1:27:30
If you buy the book using the link in the show notes, you'll be supporting the podcast at the same time.
1:27:35
That is 358 books down, 1,000 to go, and I'll talk to you again soon.
1:27:42
There's two things that John and I talked about that I've seen in the book.
1:27:45
One of them was explicitly stated in the podcast.
1:27:47
That is the fact that John also shares my same habit.
1:27:50
Not only is he a voracious reader, but he also has to reread his highlights from the books that he's read previously.
1:27:55
The second thing that I loved, that was implied, but I think obvious, is that he was completely obsessed uh with building Whole Foods and and believing in his mission to change the way that people eat.
1:28:09
eat. And one of my obsessions has been obviously making this podcast so that I can collect and distill the knowledge of history's greatest entrepreneurs and then spread that far and wide because I do think these are truly is an act of
1:28:20
service to take the life story of an entrepreneur, take the lessons out of them, and then spread them as far as possible to so other people can benefit from that, you know, five, four decade, five decade near long career. And so,
1:28:28
And so, this obsession of, "Hey, I'm going to collect and distill the knowledge of history's greatest entrepreneurs."
1:28:34
is what the pod like it it comes in the form of the podcast, but I've made a tool to make sure that I never forget the lessons that I can pull them up on demand when I need them, and that tool is Founders Notes, which you can now get access to that tool.
1:28:47
So, Founders Notes let you tap into the collective knowledge of history's greatest entrepreneurs on demand in a very simple ways.
1:28:54
For the last 6 years, I've been putting all of my notes and highlights for everything that I read for the podcast into this giant searchable database that you can tap into.
1:29:02
And even if you didn't know about this tool, you've heard me use it over and over again because every time you listen to the podcast and when I'm referencing past ideas from past episodes, from past books, like Jeff Bezos, like Walt Disney, Sam Walton, Munger, Buffett, all of this, that is me searching through Founders Notes and pulling up those ideas.
1:29:20
And that is a really important point to get across.
1:29:22
What you see, if you subscribe to Founders Notes, that's the tool I use.
1:29:26
You see the exact same thing that I use.
1:29:28
It is a tool that I made for myself that you can now get access to.
1:29:32
Subscribers to Founders Notes are using Founders Notes to help them think through issues they're having in their company from anything from hiring to recruiting, to marketing, to leadership, to preparing for board meetings, to preparing for sales presentations.
1:29:44
If you're already running a successful company, I think it's a no-brainer to invest in this tool.
1:29:48
And now I've added a new feature that's also going to show you how I use Founders Notes and it's going to push ideas from history's greatest entrepreneurs directly into your brain quickly.
1:29:57
That is this private podcast feed that comes with every single subscription to Founders Notes, which I have called Sage Advice.
1:30:05
And so, let me give you an example.
1:30:07
The episode I just made, I read two bi- two autobiographies of James Dysons that, you know, it's probably 50, 60, 70 hours of reading, countless hours of inputting the notes and highlights into Founders Notes.
1:30:16
And so, what I did is I went and reread every single note and highlight.
1:30:20
And then, there's also an AI assistant that lives inside Founders Notes called Sage.
1:30:24
And I when you ask Sage a question, it reads all of the notes, highlights, and transcripts for every single episode.
1:30:29
And I would ask questions about James the lessons from James Dyson's books.
1:30:33
So, give me like give for example, give me a list of James Dyson's best ideas.
1:30:37
How did James Dyson think about marketing?
1:30:39
What did James Dyson say about persistence? Things like that.
1:30:42
And then, what I did is I composed all that into a single document and distill that down to what I think are the most powerful ideas from James Dyson's 50-year career, where he's built this multiple multiple billion-dollar company that he owns 100% of.
1:30:57
And so, you take 50-year career, 60 hours of reading, and distilling that down into an episode that you can listen to in 12 minutes.
1:31:04
And so, the idea with these mini episodes is I want to create a tool that if I can condense the ideas from somebody's entire career, multiple books, into something that is 10 minutes, then that means you're going to be able to listen to that over and over and again.
1:31:18
It's going to serve as a constant reminder and an easy way for you to download those ideas into your brain, so then you can use them in your career.
1:31:27
So, if you want access to the tool that will give you a superpower to access the collective knowledge of history's greatest entrepreneurs when you need it, make sure you go and subscribe at foundersnotes. com.
1:31:36
That is founders with an S, just like the podcast, foundersnotes. com.