0:00

To make this episode, I got to

0:02

spend about seven hours with John Mackey

0:04

over two days, and I

0:06

read his great autobiography twice. And

0:09

it was during one of our conversations that

0:11

John told me one of the

0:13

craziest things anyone has ever said about

0:15

the podcast. He had listened to over a

0:17

hundred episodes before we met, and

0:19

he told me that if founders existed

0:21

when he was younger, Whole

0:24

Foods would still be an independent

0:26

company. That since the podcast and

0:28

all of history's greatest entrepreneurs constantly emphasize

0:30

the importance of controlling expenses, he would

0:32

have put more of a priority on

0:34

it, especially during good times, during boom

0:36

times. It's very natural for a company,

0:38

and I think for humans in general,

0:40

I think this is just part of

0:42

our nature, to not watch our

0:44

costs as closely because everything is going so

0:46

well. In fact, this is something that Andrew

0:48

Carnegie talked about a lot. In one of

0:51

his biographies, it says, Andrew Carnegie

0:53

would repeat the mantra time

0:55

and time again. Profits

0:57

and prices were cyclical, subject

0:59

to any number of transient

1:01

forces of the marketplace. Costs,

1:04

however, could be strictly controlled,

1:06

and in Carnegie's view, any

1:08

savings achieved in costs were

1:11

permanent. Andrew Carnegie's idea was

1:13

something I was talking about with my friend

1:15

Eric, who's the co-founder and CEO of RAMP.

1:17

RAMP is now a partner of this podcast

1:19

and a sponsor of this episode. I've

1:22

gotten to know all the co-founders of RAMP

1:24

and I've spent a ton of time with

1:26

them over the last year or two. They

1:28

all listen to the podcast, and they've all

1:30

picked up on the fact that the main

1:33

theme from the history of entrepreneurship is on

1:35

the importance of watching your costs and controlling

1:37

your spend, and how doing so gives you

1:39

a massive competitive advantage. That is the main

1:42

theme for RAMP. That is the reason that

1:44

RAMP exists. The reason RAMP exists is to

1:46

give you everything you need to control your

1:48

spend. RAMP gives you everything you need to

1:51

control your costs. Those last two words, cost

1:53

control. I'm going to pull another line out

1:55

of Andrew Carnegie's biography. Cost control

1:57

became nearly an obsession. In

2:00

this episode that you're about to hear,

2:02

there is a shocking idea that John

2:04

Mackey told me about, about the role

2:06

that Walmart played in whole foods success.

2:08

And it has to do with how

2:10

impossible it was for other people to

2:12

compete with Sam Walton and Walmart. Now

2:14

give you a little hint. This is

2:16

what Sam said in his autobiography. Our

2:19

money was made by controlling expenses. You can

2:21

make a lot of different mistakes and still

2:23

recover if you run an efficient operation, or

2:25

you can be brilliant and still go out

2:28

of business if you're too inefficient. RAMP

2:30

helps you run an efficient organization.

2:33

RAMP is everything you need to

2:35

control spend and optimize finance operations

2:37

all on a single platform. Make

2:40

history's greatest entrepreneurs proud by going to

2:42

ramp.com to learn how they can help

2:44

your business control costs. That is ramp.com.

2:46

Also leave a link down below. I

2:48

hope you enjoy this episode. I put

2:50

a lot of time, energy, and love

2:53

into making it. And I'm very thankful

2:55

to John Mackey, or to John Mackey,

2:57

for sharing so much of his story.

2:59

I truly believe when entrepreneurs do

3:01

that, it is an act of service for

3:03

the next generation. Enjoy the episode. By

3:06

the end of the first trading afternoon, Whole Foods

3:08

market was valued at $100 million. Even

3:12

though my shares had been diluted over the years,

3:14

my own net worth was now over $7 million.

3:18

I was rich. How did

3:20

that happen? It seemed

3:22

to me like a crazy amount. It

3:25

was exciting, even shocking, to suddenly

3:27

be worth so much after so

3:29

many years of having no money.

3:31

That evening, after the markets closed, I

3:34

slowly drove home, still in something of

3:36

an altered state. I opened

3:38

my first beer in several weeks and sifted

3:40

slowly on the porch, breathing

3:42

in a sense of gratitude and

3:45

wonder for how far we had

3:47

come. I thought back

3:49

to that little Victorian house, where Saferway,

3:51

that was the original name of the

3:53

business that eventually turns into Whole Foods.

3:56

I thought back to that little Victorian

3:58

house, where Saferway had begun. done, and

4:01

the modest dreams of success that Renee and

4:03

I had shared as we woke up each

4:05

morning on the top floor, took

4:07

our showers in the dishwasher and

4:10

converted our bedroom to its

4:12

daytime form as the store's

4:14

office. I thought about

4:16

Craig and Mark taking the leap of

4:18

faith to merge with us and build

4:21

an entirely new store, bigger

4:23

than any natural food store in the

4:25

state. I thought about the

4:27

hundred year flood and our near death experience.

4:30

I called my father just to hear

4:32

the pride in his voice and to

4:34

share our mutual excitement at the success

4:36

of the company he'd so wisely helped

4:38

me build. I thought

4:41

about my mother and wondered if she

4:43

might finally be proud of her son.

4:45

I thought about the many people

4:47

who were celebrating tonight, enjoying their

4:49

well deserved reward for their belief

4:51

in those crazy hippies and their

4:53

strange new notions about how to

4:55

eat. All of

4:58

those expectations, all of that collective

5:00

hope for our future I had

5:02

carried for fourteen years. Now

5:04

I felt it lifting from my shoulders.

5:08

I knew there would be new burdens to shoulder

5:10

as we began our life as a public company.

5:13

But just for a moment I set down

5:15

my beer, closed my eyes,

5:17

and let the joy and relief

5:19

overwhelm me. That

5:22

was an excerpt from the book that I've been

5:24

talking about today which is the whole story Adventures

5:26

in Love, Life, and Capitalism and is written by

5:28

John Mackey, founder and former CEO of Whole Foods.

5:31

So a few months ago I received a very

5:34

nice email from John. I didn't even know this

5:36

but he was a big fan of the podcast

5:38

and he'd listened to well over a hundred episodes

5:40

and he offered, he asked if I

5:42

wanted an advanced copy of his new autobiography.

5:44

And so after reading the book, which I

5:46

love so much, I emailed him and we

5:49

decided to meet. So I actually spent about

5:51

seven hours with John and

5:54

his friend David. Over two days

5:56

we had dinner for about three hours and then

5:58

the next day I actually I actually went

6:00

to John's new company and toured it. It's called

6:02

Love Life and spent about three to four hours

6:05

with John again. And so what

6:07

I'm going to do is combine the notes and

6:09

highlights I have from reading John's autobiography twice with

6:11

the notes that I took spending so much

6:14

time with him. And before we get into

6:16

his life story, I think there's two really

6:18

important things to understand about him.

6:20

Number one, he loves entrepreneurs and number two,

6:22

he is very hard to classify. So I

6:25

love this part and I actually took notes

6:27

on it before I met him. And then

6:29

it was obvious just spending time in person

6:31

with him. And this is

6:33

what he says about his love for

6:35

his fellow entrepreneurs. That's definitely how he

6:37

classifies himself. When I meet other entrepreneurs,

6:40

there's always a spark, an instantaneous recognition

6:42

that we're wired the same way. I

6:44

can sit down with a young entrepreneur who's

6:46

just launched their first startup or an older

6:49

one with a series of successful exits. A

6:51

fellow grocery store founder or the creator of

6:53

a tech company. And I just know that

6:55

we're going to find acres of common ground.

6:58

And that was definitely my experience with John. We

7:01

had a three hour dinner that went by. I was

7:03

shocked when I looked at the time when dinner was

7:05

over. There was, as he said, acres of common ground.

7:07

And the reason I wanted to start with that quote,

7:09

because I really feel not only what

7:12

John did with his autobiography, but I think

7:14

every entrepreneurial autobiography that I've read, I really

7:16

do feel it's an active service to the

7:18

next generation of entrepreneurs, especially how open they

7:20

are with their warnings or their explanations, or

7:23

even just sharing the dark side and the

7:25

downsides of entrepreneurship. And then the second and

7:27

final thing I just want to go over

7:29

before we jump into his early life is

7:32

this very difficult.

7:34

You just can't put him in a box.

7:37

He's very hard to classify, hard to put

7:39

into a neat little box. And he knows

7:41

this. He's very self-aware about this. He says,

7:43

it's hard for people to fit me into

7:45

their narrow political and ideological boxes. I sold

7:47

natural foods. I practiced meditation. I espoused veganism

7:50

and I wore hiking shorts to work. I

7:53

believe business should be informed by

7:55

love, serve a higher purpose and

7:57

benefit all stakeholders. And yet I

7:59

pushed. back against compulsive unionization.

8:02

I defended capitalism and free

8:04

markets. I argued for freedom

8:07

of thought and personal responsibility.

8:09

I resisted anything that resulted

8:11

in more governmental controls and

8:14

subsidies and moved us away

8:16

from the natural discipline and

8:18

innovation of free markets towards

8:21

the sultifying inefficiencies of socialism.

8:24

People had thought I was in one tribal box

8:26

and now they were determined to put me into

8:28

a different one, which I also didn't fit into.

8:31

Another trade I would add to this, or I guess another

8:33

few traits that I would add to this is it's obvious

8:35

if you read the book and also spend time with them,

8:37

he is also extremely, extremely competitive.

8:40

A main theme that will reoccur as

8:42

he's building Whole Foods at the very

8:44

beginning is this idea where most of

8:46

the people, as you can imagine, most

8:48

of the people that have chosen to

8:51

build and create natural food stores, most

8:53

of his peer group, most of his friends,

8:56

they were socialists. He is

8:58

undeniably and unequivocally and

9:00

unapologetically capitalist. In fact,

9:02

he said that he thinks that capitalism

9:05

is the greatest thing that humanity has

9:07

ever done. Okay, so the book

9:09

starts and he's talking about the fact that

9:11

he is a

9:13

shirtless, long-haired, hitchhiking

9:15

hippie. He's in Austin,

9:18

Texas. He's 22 years old and he's

9:20

just going, he's having this existential angst

9:22

about what am I doing with my

9:24

life? And so let's pick it up

9:26

right from the book. I had recently

9:29

dropped out of school again. My

9:31

college years had been characterized by a

9:33

series of starts and stops, multiple

9:36

transfers between universities and impromptu

9:38

breaks to hitchhike around the

9:41

country. It's funny. Now

9:44

that I'm thinking about it, there's multiple times, I don't know if I'll cover

9:46

it later in the book, so I'm going to tell you now in case

9:48

I forget. But even after

9:50

he's running Whole Foods, he's trying to expand. They

9:52

don't have, you know, they're very capital constrained at

9:55

the very beginning until the IPO. And

9:57

so he's trying to expand into other markets. visits

32:00

was confidence. My

32:02

vision of a larger format natural food

32:05

store was not crazy.

32:07

And so he takes what he's learning and he

32:10

acts on it and he has this thesis. He's

32:12

like, listen, I don't think we're serving the entire

32:14

market here. I think if we make, as we

32:16

make the store bigger, the revenue will grow as

32:18

well. And so he says we

32:20

have to take a risk. We have to get a

32:22

lease on another bigger location. There

32:24

is hilarious stories in the book because again, there's

32:26

no, you know, you want to open a

32:28

Whole Foods market now. Like you're gonna have a

32:31

line out the door of people that want you

32:33

to put your Whole Foods, you know, in their

32:35

commercial development. But at the time he's only

32:37

operating in Texas. He's like this, you know, they're

32:40

much more conservative environment and he keeps having

32:42

these meetings like, you're gonna put

32:44

in this damn hippie store? He's like,

32:47

no, it's a natural food supermarket. He's like, this is

32:49

a hippie store. And so this guy actually, they're gonna

32:51

wind up doing a deal because he actually he's like,

32:53

oh, you're kind of like a younger me, just like

32:55

a younger, weirder hippie version. But it's just hilarious. The

32:58

conversation they're having, it just made me laugh. He's

33:00

like, we're opening a natural food supermarket,

33:02

I said. And Ben, the guy he's

33:04

talking to, Ben's taught me, son, you're

33:06

gonna build some kind of hippie food

33:08

store? No, sir. It's a natural food

33:10

supermarket. That's what I said. A hippie

33:12

food store. Sir, we're selling natural foods.

33:16

He looked even more confused. Natural food?

33:18

What is a natural food? And

33:21

he starts describing and then Ben, he goes, he

33:24

interrupted me, he goes, son, there are not enough

33:26

hippies in the whole damn world for you to

33:28

sell enough groceries to make that kind of store

33:30

a success. But

33:32

one thing John does have is,

33:35

he calls it his evangelical enthusiasm that,

33:37

you know, he considers it one of

33:39

his superpowers, especially because he believes

33:41

in it. You know, he can enthusiasm and

33:43

passion is infectious. You can literally transfer the

33:46

belief that you have in what

33:48

you're doing to other people if you're passionate

33:50

enough. And it works on Ben. So he

33:52

goes, John, he said in his slow Texas

33:54

draw, I like you. You remind me of

33:56

myself when I was young, so damn idealistic

33:59

and optimistic. You think you could

34:01

take on the world. Life is gonna teach you

34:03

a few things before it's done with you. That

34:05

I can say for sure. He then paused, what

34:07

the hell son? Let's do your damn hippie food

34:09

star. I love that story so much. This store

34:12

is now 10,500 square feet. And so, again, John's

34:14

thesis is

34:19

not unique in the retail industry. Again,

34:21

he was discovering this independently. But this

34:23

idea, a larger store is going to

34:25

equal more revenue. Sam Walton discovered this

34:27

as well. We just covered a few

34:29

weeks ago that obscures Sam Walton biography.

34:31

And every time Sam increased the square

34:33

footage of the store, the revenue went

34:35

up as well. And so

34:37

this is the time where Whole Foods is born.

34:40

He talks to the two partners that they started

34:42

the distribution business with. Now he's like,

34:44

okay, let's not just buy or use

34:46

our size to buy to get a better

34:48

price from our wholesale price. Let's

34:50

actually combine the two and into

34:53

one company. And so there's four

34:55

co-founders of Whole Foods. It's

34:57

gonna be Craig, Mark, and then John and

34:59

John's girlfriend, Renee. And so John convinces them

35:01

to do a merger. And they're like, okay,

35:04

well, we need we're not gonna use Saferway,

35:06

and they're not gonna use their Clarksville. It's

35:08

like, what's the name? And they

35:10

actually came up with a name because they took

35:12

it there was an industry magazine called Whole Foods

35:14

magazine. And they're like, why don't we just call

35:16

it Whole Foods market. And one of

35:18

the best things about autobiographies like this, it talks about the

35:20

fact that at the very beginning, you're not never gonna

35:22

have enough money, you're never gonna have enough time, you're never

35:25

gonna be ready to launch. And you

35:27

have to do so anyway, they just can't, they're

35:29

not ready to launch a larger store. And there's some

35:31

funny things they have to do to make it

35:33

appear like they have more inventory than they actually

35:35

do. But they can't afford to

35:37

wait. So what are you gonna

35:39

do? Like you have to go forward and you

35:41

have to get creative. By the time construction was

35:43

complete, we were running low on money, we simply

35:45

weren't going to be able to meet payroll unless

35:48

we open right away. But we weren't ready. We

35:50

didn't have our beer and wine license. We didn't

35:52

have a butcher. And we had a significant lack

35:54

of inventory. With just a few days left before

35:56

opening the shelves were half empty. The solution was

35:58

found in juice. Apple juice. It

36:00

was a popular product in those days and

36:02

we were able to get a hell of

36:05

a deal on a full tractor trailer load.

36:07

We could fill up the empty shelves with

36:09

gallon jugs of apple juice. And this is

36:11

hilarious. When the truck pulled up outside the

36:13

store, the driver said, hey man, where's your

36:15

loading dock? Loading dock? We don't have one.

36:17

All we had was a couple of dollies

36:20

and a lot of people. And

36:22

so they make this like one big long

36:24

like human chain and unload a semi truck

36:26

full of apple juice. We featured it on

36:28

every open shelf and sold it at the

36:31

special opening week price of 99% per

36:34

gallon. Customers felt like they were getting a

36:36

really good deal and it created a convincing

36:38

illusion that the store was filled to

36:40

the brim. On

36:43

September 20th, 1980 at

36:46

9 a.m. we opened. You're

36:49

going to see right from the very beginning,

36:51

this is the right place, the right time,

36:53

with the right person, with the right set

36:55

of skills. How long did it take until

36:57

Whole Foods Market first became profitable? I

37:00

would answer only half jokingly until

37:02

about two o'clock in the afternoon

37:05

on the first day. Our sales

37:07

far exceeded expectations and they never

37:09

slowed down. We became the highest

37:12

volume natural food store in the

37:14

United States doing over $200,000 per

37:17

week. It was the right

37:19

place, the right timing, and the right type

37:21

of store. Imagine

37:23

the euphoria that you would feel

37:26

if you were in John's shoes.

37:29

The amount of time, effort, energy, love,

37:31

and risk that you took and

37:34

it was an unbelievable success

37:37

from day one. But you know

37:39

that entrepreneurs, the entrepreneurial emotional roller

37:41

coaster, is euphoria and terror. They

37:43

open up and less than a

37:45

year later, Austin, Texas

37:48

gets hit by torrential downpours

37:50

that cause what they call

37:52

a once in a hundred

37:54

year flood. A hundred

37:56

year flood hits them in their

37:59

first year. year of existence.

38:01

The water broke through the

38:03

windows like a tidal wave,

38:05

delusioning the store. It

38:07

was the worst flood that Austin had

38:09

seen in seven decades. 13

38:11

people died. The store had been eight

38:14

feet underwater. All of our equipment and

38:16

inventory would need to be replaced. We

38:18

estimated the inventory alone was worth about

38:20

$400,000 and virtually all of it was

38:25

financed by our suppliers. I

38:27

started to feel much older than my 27 years

38:29

before the flood. I

38:32

had really felt as if this was why I

38:35

was on earth. This is what I was here

38:37

to do. This is what I was meant to

38:39

do. But now he's saying, well, I

38:42

can think that all I want, but then

38:44

nature delivers eight feet of water. And

38:47

nature puts my store up to eight

38:49

feet of water. And it's

38:51

not just that it's water. When there's

38:53

floods, that means the sewers overflowed and

38:55

mixed with the floodwaters. And

38:57

so his entire store is full of fecal

39:00

matter. So what do you do? He's got no,

39:02

he has no idea how he's going to get out of this, but he's like,

39:04

okay, well, what am I going to do? I'm not going to just sit here.

39:07

So he just starts getting to work. Eventually the

39:09

waters recede and they grab a

39:11

bucket and he starts mopping. And

39:14

here's the insane thing. And this

39:16

idea that what you've made

39:18

is, you know, loved by other people. And

39:21

he notices a guy that's doing the same thing. That's

39:23

that's on another aisle of the store mopping. And, you

39:25

know, he's like, I thought I knew everybody that worked

39:27

here. So he goes, Hey, I'm sorry. I don't remember

39:29

your name. I'm John. And he goes,

39:31

Hey, I'm Larry. I live down the street. I'm

39:33

off work today. So I thought I'd come

39:35

by and help clean up. I

39:38

love this store. I shop here all the time. And I

39:40

want to make sure that you guys come through this. And

39:43

Larry wasn't alone. As the

39:45

day wore on, more and more volunteers

39:47

showed up. They came uninvited and unpaid

39:49

for no reason other than they loved

39:51

the store and didn't want to see

39:53

it fail. And this is

39:55

just a first in a series of people

39:58

that helped John and lend him a hand.

40:00

And if they didn't, Whole Foods probably wouldn't

40:02

exist because they didn't have flood insurance. So

40:05

the first thing he does, even though he's owes his suppliers a

40:07

bunch of monies, it's like, well, you know, if we go out

40:09

of business, we're not going to pay you. Can

40:11

you front us some inventory? They agree. Then

40:13

he goes down to his local bank,

40:16

Citi National, and he explains it

40:18

to his local banker, this guy named Mark Monroe.

40:20

And Mark Monroe agrees to give him a $100,000

40:22

loan. Now there's a

40:24

crazy story. Years later, when the loan

40:26

was long paid off, I learned

40:28

the reason that the application process had been

40:30

so easy. A stranger approached me at a

40:32

conference and shook my hand. John, you won't

40:34

remember me, but I used to work at

40:36

Citi National Bank. That was quite a thing

40:39

that Mark Monroe did for you after that

40:41

big flood. The bank didn't approve that loan.

40:43

The bank turned it down. Mark

40:45

Monroe personally guaranteed that loan for

40:47

you. That's the reason you got

40:49

the money. I was stunned. Mark

40:52

had never said a word. Only

40:54

four weeks after the flood, we

40:56

reopened. And so a

40:59

large part of the book was about the very

41:01

beginning of Whole Foods, like figuring out and opening

41:03

new stores, constantly revising what they want to build

41:05

and how they're going to build it, and then

41:08

expanding into other territories we'll get to. But one

41:10

of the things that was very interesting that John

41:12

and I talked about at dinner

41:14

is he said that the years go by fast

41:16

and a lot gets lost to memory. So I'm

41:18

going to come back to this because at

41:21

this point in the book, he's 28 years old. And

41:23

this is what he says, I look back, remember

41:25

he's writing these words almost half a century into

41:27

the future. I look back on those

41:29

days as some of the happiest of my life. I

41:32

was in love with our store. There

41:35

was a probable sense that we were doing

41:37

something new, something important. And so when I

41:39

talked to John about this, he said that

41:41

years go by fast, a lot gets lost

41:43

to memory, that you should write it down.

41:46

He actually thinks that writing a memoir and

41:48

interviewing people from your life and past is actually

41:50

helpful, even if you don't publish the book. Because

41:53

he had an idea, he said something that was

41:55

fascinating. He says the beginning of Whole Foods and

41:57

the end of Whole Foods is like very fast.

42:00

fresh in his mind. And there's a lot in

42:02

the middle that you'll tend to forget. A lot

42:04

will get lost in memory. And

42:06

so by the process of writing a memoir,

42:08

you're also interviewing and doing research of people

42:11

that you knew back then and that could

42:13

tell you their perspective on these events. But

42:15

when I heard John talk about this in

42:17

person and also when I read in

42:19

the book, I thought of something... This is

42:21

the advice that Phil Knight gave to younger entrepreneurs

42:24

that he neglected to do himself because at the

42:26

end of his autobiography Shoe Dog, he

42:28

said this, I struggled to

42:30

remember, I close my eyes and think

42:32

back, but so many precious moments from

42:34

those nights are gone forever. That's the

42:36

exact same experience that John Mackey had.

42:39

Numberless conversations, breathless laughing fits, declarations,

42:41

revelations, confidences, they're all fallen into

42:43

the sofa cushions of time. I

42:45

remember only that we always set

42:48

up half the night cataloging the

42:50

past, mapping out the future. I

42:52

remember we took turns describing what

42:54

our little company was and what

42:56

it might be and what it

42:59

must never be. How I

43:01

wish on just one of

43:03

those nights I had a tape recorder

43:05

or kept a journal. And

43:08

one of the most entertaining and informative parts of

43:10

the book is how much co-founder conflict that he

43:12

has, how many... There's multiple coup

43:14

attempts, but this is one of

43:16

an unusual... Co-founder

43:19

conflict is nothing new, but an unusual

43:21

one is when you're in a romantic

43:23

relationship with one of your co-founders. And

43:25

remember, they're hippies by their own admission.

43:28

And so John gets his ideas,

43:30

like we should have free love. And so he goes

43:32

and talks to Renee, which is his girlfriend at the

43:34

time. He's like, we should have an open relationship. And

43:37

the problem was this backfired.

43:40

And so there's a story in the

43:42

book where he tells Renee, okay, let's see other people, even

43:44

though he was in love with her. And

43:46

he comes home late. He's like, oh, I'm working late. I'm

43:48

just going to sleep at the store. And he

43:50

says, oh, you know, nah, and he's

43:53

like, I can't get any sleep. I'm going to go

43:55

home. And as you could probably know where I'm going,

43:57

goes home and you know, his co-founder.

44:00

and girlfriend is engaged in an

44:03

activity that was previously reserved just for them

44:05

to. And he has this

44:07

great line and he goes, I was heartbroken

44:09

and mad at myself. What kind of idiot

44:11

tells the woman he loves to start seeing

44:13

other people? And so in

44:15

addition to that, he also has traditional co-founder

44:18

conflict and at the root of

44:20

their problem that he has with one of his co-founders is,

44:23

I told you before, John Mackey's a conqueror.

44:25

He says, I was never going to be

44:27

satisfied to stay small. I was never going

44:29

to be satisfied to stay small. And so

44:32

there's a tension between him and his co-founder

44:34

Mark because they opened a new store. It's

44:36

sales go a little slower. They're cannibalizing sales

44:38

of some of their other stores. John has

44:41

a very long-term patient view and

44:43

his co-founder doesn't. And he's like, you're

44:45

ruining. We had one great store. Why

44:47

can't you be satisfied with one great

44:49

store? And he tells us why. I

44:51

was never going to be satisfied by

44:53

staying small. And over time only one

44:55

of the four co-founders is going to

44:57

remain and that's going to be John

44:59

Mackey. And it is during these conversations,

45:01

these philosophical disagreements where he realizes

45:03

that we have a commitment mismatch. I wondered

45:06

if he was truly committed to the natural

45:08

foods mission. I knew he personally believed in

45:10

eating healthy, but was he interested in trying

45:12

to change how other people ate? For me,

45:15

it was becoming a calling, something I felt

45:17

I had to do. What we were doing

45:19

was more than a business. I knew it

45:21

could be successful. It had to be. We

45:23

just needed to get through the slow start

45:26

and start working on the next store as

45:28

well. And one of the ways

45:30

that he was going to expand and to change

45:32

how the rest of the country ate was through

45:34

this thing I mentioned earlier. This is the network.

45:37

This is very similar to what the

45:39

secret allies idea that John D Rockefeller

45:41

had. And they're just a network of

45:43

fellow entrepreneurs that own the country's best

45:45

natural food stores. And so at

45:47

this point, there is no such thing as a

45:49

national chain of natural food stores. At most, there'd

45:51

be a chain of stores, like a handful of

45:53

stores in one geographic location. And they kind of

45:55

just, they never expanded outside of those boundaries. And

45:57

so they were constantly traveling together. And so they

45:59

would all be, hey, we're all gonna meet up

46:01

in Austin, we're gonna tour John's stores, or we're

46:04

all gonna meet up in LA and tour this

46:06

store, we're all gonna eat up wherever they're located

46:08

and tour. He says, I learned so much from

46:10

these visits, coming home to Austin brimming with ideas

46:12

for new product lines, marketing strategies, management

46:14

approaches, store design, and more. The network quickly

46:16

felt like more than a business association. These

46:18

were friends, fellow travelers who were walking the

46:21

same road that I was on. It also

46:23

allows him to drastically expand into other regions

46:25

because he's just gonna buy up all of

46:27

these people in the network. What I could

46:30

not possibly know back then was that over

46:32

the course of the coming two decades, Whole

46:34

Foods Market, the lean hungry upstart of the

46:36

bunch, would not only surpass each of those

46:38

other businesses, but would end up buying pretty

46:41

much all of them one by one. The

46:43

error of regional stores would soon come to

46:45

an end. And we would begin our journey

46:47

to become a national brand. And

46:50

so as you can imagine doing this over multiple decades,

46:52

and especially at the beginning when he's completely under finance

46:54

is very stressful. And so one of the things he

46:56

told me in person was that one of the things

46:58

he's most proud of is all the he calls it

47:00

inner work, all the inner work that

47:02

he did to deal with the stress

47:05

that you have, the guilt, the

47:07

anger, all these negative

47:10

and somewhat can be debilitating

47:13

emotions and trauma that you're gonna have as you build

47:15

your company. And so the

47:17

book talks a lot about this inner work. And

47:20

so for his inner work, he believes that MDMA

47:23

and psilocybin and breath

47:25

work was very instrumental to making him

47:27

a better person and managing all of

47:29

the complicated messiness of being a human

47:31

being. I did tell him, we talked

47:34

about this, he said, you

47:36

should try MDMA. I was like, John, I'm not

47:39

doing MDMA. I don't want to do

47:41

any kind of psychedelics or

47:43

anything like that. It's up to

47:45

what I don't judge other people if you like

47:47

doing that, and it's helpful, by all means do

47:49

it. And he definitely talks about how helpful it

47:51

was in this book. But he did say that

47:54

you could do breath work. And he

47:56

found that very helpful. And before I read this book, I didn't even know what

47:58

it was. So I'm just gonna have him define what breath work was. strategy.

54:00

And so him and his dad are going

54:02

back and forth about the pros and cons

54:04

of like, do we take this money? Do

54:06

we not? And says, what would it mean

54:09

for me as a CEO to have VCs

54:11

and eventually public shareholders to answer to? I

54:13

liked running the company the way I did

54:15

with my supportive board and a small group

54:17

of patient investors who I'm new personally entrusted.

54:20

I didn't know how I felt about bringing

54:22

in outside investors with their own interests and

54:24

agendas. And so the conclusion that he arrived

54:26

at was, if I'm going to grow through

54:28

acquisition and I want to grow faster,

54:31

he says there were no other

54:33

viable options if we wanted to

54:35

expand faster. And so he

54:37

flies to California and he goes to San

54:39

Hill Road where entrepreneurs still go. Remember, this

54:41

is the 80s. People still do this today.

54:43

Most of the VCs did not see any

54:46

opportunity in front of them. In fact, one

54:48

of them on San Hill Road said, this

54:50

is never going to be a very large

54:52

market, which is funny because when

54:54

John leaves Whole Foods, they're doing $22 billion

54:56

a year in sales. So

54:58

they don't have any success. They go

55:00

back and they pitch some local Texas

55:03

VCs, one of which is very

55:05

well known and prestigious inside of Texas. And this is,

55:07

they were haggling over like they want to do

55:09

the deal, but the valuation is a little lower.

55:11

And this is what the VC tells them. John,

55:13

he said, we're a top tier VC firm. Just

55:15

having us on board is going to raise the

55:18

valuation of the company when you want to go

55:20

public. All money is not the same color. It would

55:22

be some time before I understood the truth

55:25

in Jerry's words. At that moment, all money

55:27

looked exactly the same to me. Later, I

55:29

would understand how being funded by a prestigious

55:31

VC firm acts like a magnet to other

55:33

VC firms the next time you need to

55:36

raise money. So this is September 1988. Whole

55:39

Foods is doing $50 million a year in sales in 1988.

55:41

Okay, they agreed to raise $4.5 million. And

55:45

the venture capital firm gets a total of 34% of

55:49

the business. And he understands that

55:51

now once he takes the money, he's on the

55:53

clock. And so this is how he thinks about

55:55

taking venture capital. I began to think

55:57

of our VC partners as hitchhikers with credit card.

56:00

They were along for the ride and

56:02

benefiting from our forward progress, and as

56:04

long as they felt we were going

56:07

where they wanted to go, they'd help

56:09

pay for gas. But they

56:11

did not have the same level of commitment

56:13

to stay in the car for the entire

56:15

journey. If we got lost or

56:17

diverted from the road we promised to take,

56:19

they might try to grab the wheel. I

56:22

knew we couldn't afford to let them drive, nor

56:24

did I put it past them to hijack the

56:26

car, hire a new driver, and leave me standing

56:28

on the side of the road. Eventually

56:31

they themselves would need to exit, and

56:33

I needed to ensure that they didn't

56:36

push me out first. John

56:39

has a lot more to say about VCs and

56:41

his perspective on them in the book, which I'll

56:43

get to in one second because they're about to

56:46

IPO. This is something we talked about in person,

56:48

because one of the benefits of doing these I

56:50

had dinner with episodes is for people

56:53

that are so...he's got five decades

56:55

of experiences on entrepreneur, and it's

56:57

a way to share lessons and

57:00

almost like send warnings out to

57:02

younger entrepreneurs that don't

57:04

have all the experience that John did. So we talked

57:06

about this. Listen, it's obvious. I read the book before

57:08

I sat down to have dinner with you, and

57:11

I talked about this when we toured his new business,

57:13

which he also took funding for. He

57:16

explains why. And

57:19

so we had this conversation, and

57:21

again, I didn't record any of the conversations I had with

57:23

John. So every note I read you is just when I

57:25

got done, I just wrote down and paraphrased the lessons that

57:27

I was learning for the conversations that I was having with

57:29

them. And so this is what I

57:32

wrote down. Be very careful who you take money

57:34

from. Short term

57:36

portfolio approach that most investors

57:38

have is at odds with

57:41

an entrepreneur's life's work. I

57:43

can tell you right now, it's very obvious when

57:46

you read the book and you spend time with

57:48

John, Whole Foods was his life's work. He was

57:50

not just doing it for money. He loved it.

57:52

He still loves it to this day, even though

57:54

he's not involved anymore. And so it says John

57:56

understands that capital is a service that entrepreneurs may

57:59

likely need but cautions to

58:01

partner with people with the same

58:04

long-term view you have." And

58:06

so we talked about the fact that for his new venture Love Life,

58:09

he took some outside money for Love Life, but

58:11

he took money from

58:13

a long-term friend who is an

58:15

investor, but that investor

58:17

has a proven track record of

58:20

supporting founders and being patient. John

58:22

is also funding the majority of

58:24

the business himself so far out

58:26

of his own pocket. So

58:29

I think that added context of my time with John and

58:31

also what I've been reading to you from his book will

58:33

give you a sense of how he how

58:35

he thinks on this subject. So they get to

58:37

the point where they raise money in 1988 and

58:41

then they have an IPO a few short years later in

58:43

1991 and this is his

58:45

description that he says it was the second

58:48

happiest day of his life. First happiest day

58:50

was marrying his wife Deborah, which

58:52

happened you know a few months before and then

58:54

the initial public offering for Whole Foods

58:56

because he says it was a relief at the

58:58

thought that the hitchhikers would soon be exiting the

59:00

Whole Foods car. Over the past few

59:02

years I'd come to understand all too well why

59:04

my father had cautioned me about VCs. Their investment

59:06

had been essential but it came at a high

59:08

price. It almost cost me everything

59:11

I had built. I learned

59:13

the hard way that VCs have strong

59:15

opinions about where the car should be

59:17

going and how quickly it should get

59:19

there. As we fell behind

59:21

on some of our projections our hitchhikers

59:23

had started to exert some pressure. They

59:25

kept reminding me that none of our

59:27

team had actual supermarket experience. Never mind

59:29

the fact that we've been running Whole

59:32

Foods Market for more than a decade

59:34

by this point. They felt we needed

59:36

people who had worked in the real

59:38

world. They believe we needed professional management

59:41

and one of the most interesting parts of the story

59:43

is that John and his father were the ones that

59:45

pushed for the IPO more than his investors

59:47

did and this is why. I raised

59:50

the prospect of an IPO in the next board

59:52

meeting and the hitchhikers weren't very enthusiastic. It's too

59:54

soon they said. You're not ready to go public.

59:56

Let's do another round of venture financing and grow

59:58

the company another few years. years before you

1:00:00

IPO. After the meeting, my father

1:00:03

followed me into the office fuming, and he

1:00:05

let it rip. We've got to get those

1:00:07

fuckers out of the company before they take

1:00:09

over. Since the VCs only own 34%

1:00:11

of the company, they weren't able to block our

1:00:14

collective decision to go forward with an IPO. And

1:00:16

so we began the process. So

1:00:19

now they are a public company.

1:00:21

He drastically accelerates his drive

1:00:23

to buy up as many of these

1:00:25

other competitors as possible and

1:00:27

grow through acquisition. But there's a

1:00:29

ton of detail in the book, and I really hope you

1:00:31

read the book. Every single person that I've given the book

1:00:33

to has enjoyed it. There's so much detail. But I do

1:00:36

want to pull out one of these

1:00:38

acquisitions because I think there's a counterintuitive lesson.

1:00:40

In fact, one of the things that me

1:00:42

and John bonded over when we were speaking

1:00:44

is the fact that he thought the podcast

1:00:46

was a good discovery mechanism to find books

1:00:48

and entrepreneurs that he never knew about. And

1:00:50

if he liked the episode, he would buy

1:00:52

the book and read it. And so one

1:00:54

of his favorite discoveries to the podcast was Sam's

1:00:56

Amuri from the book The Fish That Ate the Whale,

1:00:58

The Life and Times of America's Banana King, written by

1:01:01

Rich Cohen. And there's a story in the book that

1:01:03

is something that Sam's Amuri would do. So they're

1:01:05

buying a bunch of their competitors. And

1:01:08

one of the ones that first inspired

1:01:10

him was this company in Southern California

1:01:12

called Mrs. Gooch's. I think

1:01:15

he thought it was the best natural food store

1:01:17

on the West Coast. And so

1:01:19

he goes to the board and is like, we

1:01:21

have to do this. And he's always, you know,

1:01:23

default aggressive, and they're always trying to reel them

1:01:25

in. He says, this is our moment.

1:01:27

If we don't take it now, we'll lose

1:01:29

it forever. John, this is ridiculous. My father

1:01:31

shouted, you're being reckless. It's too much too

1:01:33

soon. We're growing too fast. We're

1:01:36

diluting our stock. We need to integrate

1:01:38

all the other previous acquisitions first. You

1:01:40

won't be able to manage a company

1:01:42

of this size. But dad, this isn't

1:01:44

just any acquisition. This is Mrs. Gooch's.

1:01:46

I know the timing isn't perfect. We're

1:01:48

not ready to buy them, but they're

1:01:50

ready to sell. The opportunity is there

1:01:52

now and it won't come around again.

1:01:54

And so when I got to that

1:01:56

part and John's perspective on that acquisition,

1:01:58

yes, we're not ready for it. But

1:02:00

that doesn't matter, we still have to do it. There's

1:02:02

a line in the biography of Sam Zemuri, the fish

1:02:04

that ate the whale, that says, there

1:02:06

are times, and this is what Sam did

1:02:08

in his career sometimes, there are times when

1:02:10

certain cards sit unclaimed in the common pile,

1:02:13

when certain properties become available that

1:02:15

will never be available again. A

1:02:18

good businessman feels these moments like a

1:02:20

fall in the barometric pressure. A

1:02:23

great businessman is dumb enough to

1:02:25

act on them even when he

1:02:27

cannot afford to. Now

1:02:31

this is a devastating, devastating part of

1:02:33

the book. When I was reading

1:02:35

the book, one of the first things I wrote down when I knew

1:02:37

I was going to have dinner with John was, I was like, the

1:02:39

first question I wanted to ask him was like, tell me about your

1:02:41

dad. There was this conflict

1:02:43

between, you know, his dad's practically his

1:02:46

best friend, his advisor, he's on the board,

1:02:48

he's about to ask his dad

1:02:50

to step down, and he didn't

1:02:52

understand the fights they were having because his dad's

1:02:54

going to have Alzheimer's, or they didn't know it

1:02:56

then. Now this is

1:02:58

probably the third or fourth time I've

1:03:00

read these words, and it just hits

1:03:03

so much harder now that I know the outcome

1:03:05

of the story, and then how, you know, this

1:03:07

still affects John to this day. John, please don't

1:03:10

do this. My father looks

1:03:12

suddenly frail, his air of authority and

1:03:14

confidence had drained from his face, as

1:03:17

I'd uttered the words, dad, I'd like you

1:03:19

to resign from the board. My father had

1:03:21

never begged me for anything in my life,

1:03:24

but now he was begging me to change my mind. I

1:03:26

was 40 years old, he was 72. He'd

1:03:30

been my mentor, advisor, investor, and

1:03:32

ally for every step of the

1:03:34

journey. For 16 years now, he

1:03:37

had put his trust in his

1:03:39

college dropout hippie son and

1:03:41

helped me grow into a mature leader of a

1:03:43

$200 million public company. And

1:03:47

yet in recent years, he'd also increasingly

1:03:49

been my adversary. And again and again,

1:03:51

he tried to put the brakes on

1:03:53

when we needed to seize opportunities to

1:03:56

move forward. Please, he repeated,

1:03:58

this is the last thing I'm doing in my life. life

1:04:00

that's actually relevant. Look,

1:04:02

Dad, I said, you're always going to be

1:04:04

my most trusted advisor. I'm still going to

1:04:06

talk to you about everything. This will not

1:04:08

change. But you're increasingly

1:04:10

risk adverse and I want to grow

1:04:13

the company. Asking

1:04:15

my father to leave the board was

1:04:17

difficult. It was an important step

1:04:19

in my personal growth. I was coming into my

1:04:21

own as a leader and as a man. And

1:04:25

it was devastating. It had to be confusing for John

1:04:27

because it's almost, it's a little under

1:04:29

three years later they figure out something had

1:04:31

been happening the whole time. And

1:04:33

so his dad calls him. He's like, I have something I

1:04:35

need to tell you. I have Alzheimer's. And

1:04:38

so the diagnosis comes in in 1996. His

1:04:40

dad dies in 2004. And the next

1:04:42

10 years also coincides with some of the most

1:04:44

difficult times that John's going to

1:04:47

have in his career and imagine, put

1:04:49

yourself in John's shoes. He's going

1:04:51

through the most difficult time of

1:04:53

his life and his trusted advisor. The

1:04:55

person he knows without a doubt has

1:04:58

his best interest in heart that loves

1:05:00

him unconditionally is slowly whittling away at

1:05:02

the same time. This

1:05:05

part is devastating. It's so difficult to

1:05:07

read. I went to another significant transition

1:05:09

in my personal life. My father who

1:05:11

had lived with Alzheimer's for years and

1:05:13

was now barely recognizable as the wise

1:05:15

mentor I so greatly loved and had

1:05:17

depended on so much in the early

1:05:19

days died in November It

1:05:22

had been more than a decade since his

1:05:24

wisdom had graced our board meetings and many

1:05:26

years since I'd been able to call on

1:05:28

him for advice about strategy. Sadly,

1:05:30

his personality had long since

1:05:32

succumbed to this horrible disease.

1:05:35

I was 51 years

1:05:37

old and both my parents were gone. My

1:05:40

father had been an essential part of shaping

1:05:42

not only who I was as a man,

1:05:44

but also who I

1:05:46

was as a business leader and entrepreneur.

1:05:50

His death was a disconcerting experience that plunged

1:05:52

me into a deeper reflection on my own

1:05:54

life and mortality. I had the strange sense

1:05:56

that a mirror was being held up that

1:05:58

reflected in my own life. my own

1:06:00

time on this earth. Who was

1:06:02

I and what was the truth

1:06:04

about my own life? Was it

1:06:07

good? Was it beautiful? Was it

1:06:09

enough? Was I

1:06:11

enough?" Four

1:06:14

years after his father's death he gives this

1:06:16

commencement address and I think this advice is

1:06:18

very powerful and something I've tried to do in

1:06:20

my own life. And the advice

1:06:23

from his commencement address is honor your parents and

1:06:25

forgive them from their mistakes. He

1:06:27

had a lot of resentment towards his mother and the

1:06:29

fact that his mother up until her dying day didn't

1:06:31

improve of his choices in life.

1:06:33

And yet he's done that inner work and

1:06:35

gone through all this therapy. And so when

1:06:37

I talk to him now it's like I

1:06:40

don't sense that he's still harboring ill will

1:06:42

towards his mother. And so this

1:06:44

is the advice that he gave during his commencement

1:06:46

address I think is really good. Honor and appreciate

1:06:48

your parents. No one will ever love you quite

1:06:50

like your parents do. And although they have no

1:06:53

doubt made plenty of mistakes in helping you

1:06:55

grow up, they've also done their very best

1:06:57

job that they knew how to do. They've

1:06:59

made far more sacrifices on your behalf than

1:07:02

you will ever really know. Please forgive them

1:07:04

for their mistakes and imperfections and fully love

1:07:06

them and honor them while you can. Because

1:07:09

the simple truth is that you won't

1:07:11

always have them with you as you

1:07:13

move further along on your life journey.

1:07:17

So I want to transition into the second half or

1:07:20

maybe even the later half of the Whole Foods history.

1:07:22

I do want to wrap up just

1:07:25

this expansion. This how he worked himself and

1:07:27

his company to the most dominant position in

1:07:29

their industry. And so there's a

1:07:31

paragraph I want to read to you that's

1:07:33

his writing and I'll summarize this because I

1:07:35

think these principles are timeless and applicable to

1:07:37

almost every single one of us. I

1:07:40

think that's why Whole Foods market emerged out

1:07:42

of that first generation as the only dominant

1:07:44

national company. Buying up all those other brands.

1:07:46

It wasn't because we had the best stores.

1:07:48

It was because that's such an important part.

1:07:50

It wasn't because we had the best stores.

1:07:53

It was because we were more ambitious and

1:07:55

thought strategically about the long term. We ran

1:07:57

our business frugally and our stores to be

1:07:59

highly profitable. and we weren't

1:08:01

ambivalent about either money or growth.

1:08:03

So we didn't win because

1:08:06

we had the best stores. The

1:08:09

best stores are the best products. If you think about the

1:08:11

store as an actual product, right? What's crazy

1:08:13

about this industry is the best products were

1:08:15

actually losing money. They had the highest

1:08:17

quality stores, but they weren't running good businesses

1:08:20

as the way to think about that. We

1:08:22

won because we were more ambitious. We were

1:08:24

more strategic. We were more focused on the

1:08:26

longterm. We were more frugal and

1:08:29

we were more focused on profit.

1:08:32

Now there's two things John said when we were

1:08:34

together that blew my mind. One, he says

1:08:37

that Walmart was one of

1:08:39

the keys to success for Whole Foods. And

1:08:41

this was crazy to think about.

1:08:43

Why? Because the super centers that

1:08:45

they started opening up, they

1:08:47

caused grocery stores. So now Walmart

1:08:50

goes from a normal retailer to you

1:08:52

can buy every single thing that you

1:08:55

want, including groceries in our super center.

1:08:57

So their super centers cause grocery stores

1:08:59

to keep going down market over price,

1:09:01

which means when the Walmart super

1:09:03

centers first appeared and Costco the

1:09:05

same way, first appeared on

1:09:07

the scene, the grocery stores, their

1:09:10

initial reaction was wrong. Their initial reaction

1:09:12

was, we're gonna try to compete with

1:09:14

Walmart on price. They didn't know the

1:09:16

scope of the threat they were dealing

1:09:18

with. He said, Whole

1:09:21

Foods, we went up market. We

1:09:23

would sell higher quality at higher

1:09:25

prices. That was fascinating to me.

1:09:27

The second thing that he said is

1:09:29

probably the craziest, like, and

1:09:32

I mean that in a great way, like

1:09:34

the craziest thing anybody's ever told me about

1:09:36

the impact that this podcast could have. He

1:09:39

said that if my podcast had existed when

1:09:41

he was younger, Whole Foods would

1:09:43

still be an independent company. Because

1:09:46

the podcast over and over again,

1:09:48

all of history's greatest entrepreneurs constantly

1:09:50

emphasize the importance of controlling expenses.

1:09:54

The podcast would have served as a reminder, and

1:09:57

he would have put more of a priority on it as Whole

1:09:59

Foods grew and expanded. He let expenses get too

1:10:01

high in the boom in the mid-2000s. Over

1:10:04

time, this is very natural, especially as

1:10:06

you're more successful, you let expenses

1:10:08

rise. But

1:10:10

what history's greatest founders know is that costs

1:10:13

and expenses are constant and revenue is cyclical.

1:10:16

So in a boom in a good time,

1:10:18

you're letting your cost structure creep up because

1:10:20

your revenue is creeped up, this isn't human

1:10:22

nature, and then you're going to have some

1:10:25

kind of slowdown or maybe increased competition. So

1:10:27

the revenue pulls back, but the expenses stay

1:10:29

the same. That then opened an opportunity for

1:10:31

an activist investor to buy a large block

1:10:33

of shares and influence the board. This leads

1:10:35

to John looking for a white knight, which

1:10:37

winds up being Amazon. So I

1:10:40

want to focus on the time from the financial crisis in 2007-2008 all

1:10:43

the way up until when John gets this

1:10:45

idea to try to sell the company to Jeff

1:10:48

Bezos. So stock is down 90% from the peak.

1:10:52

This is late 2008. This

1:10:54

left us deeply vulnerable to shareholder activists, and

1:10:56

he's going to find that opportunistic investors who

1:10:58

might buy up a large swath of the

1:11:00

company and then impose their own agenda on

1:11:02

us. We needed to take action fast, but

1:11:05

how? And so a friend of

1:11:07

his and a fellow entrepreneur recommends this private

1:11:09

equity firm called Leonard Green. And

1:11:11

he says you should take money from them so you can

1:11:13

shore up your balance sheet. And so in November 2008,

1:11:15

Leonard Green, the private

1:11:17

equity firm, invested $425 million into Whole Foods in

1:11:22

return for a 17% stake in the company. They

1:11:26

also agreed to always vote with management for

1:11:28

the first 18 months. This

1:11:31

deal would turn out to be one of the best Leonard Green

1:11:33

ever did. By the time they sold their shares in 2011, just

1:11:36

three years after investing, our stock had

1:11:39

regained all its previous value and much

1:11:41

more, and they made about $4 billion

1:11:44

on the transaction. This

1:11:47

is where things get really complicated and frankly,

1:11:49

just really bizarre. So a few years later,

1:11:52

he decides to share... This

1:11:55

is gonna be reminiscent of what you and I just talked about with

1:11:57

Sam Walton. Sam Walton had a really

1:11:59

talented... remove

1:16:00

him as CEO of a

1:16:03

company that he loved that was his soul. He

1:16:05

calls it, when I talked to him, he calls

1:16:07

it his baby. He's still shopster to this day.

1:16:10

And so one of the ringleaders of this coup

1:16:12

is Sokoloff. And he says, I wasn't,

1:16:14

and this is what John's response to this, I

1:16:16

wasn't ready to step aside. Whole Foods was still

1:16:18

very much my entrepreneurial child and no co-founder wants

1:16:20

to abandon their child amid stormy seas. I wasn't

1:16:23

going to do so prematurely because a board member

1:16:25

who already made a fortune off his investment in

1:16:27

the company under my leadership had no patience for

1:16:29

a transition that would naturally take some time. They

1:16:31

want him to step down and make Walter Rob the

1:16:34

CEO. Now over and over again, all

1:16:36

the he's getting all these like back channels of like,

1:16:38

I guess gossip is the way you would, I guess

1:16:40

classify this. And every time Walter Rob's

1:16:42

like, Hey, I didn't tell Howard Schultz to write that

1:16:45

email. I don't know where Sokoloff is getting this idea.

1:16:47

I'm loyal to you. I don't want you

1:16:50

to step down. If you want, I would

1:16:52

resign to prove this. And you

1:16:54

know, John's like, okay, well, like, no, if

1:16:56

you're, I don't want you to resign either. But

1:16:58

this went on for so long that John needed

1:17:00

to find a solution. And he winds up finding

1:17:03

the solution. But while, because while

1:17:05

this all was going on, he's reading a biography

1:17:07

of Abraham Lincoln actually read this book too. It's

1:17:09

incredible. The book that captured my

1:17:11

attention in those days was Team of

1:17:13

Rivals by Doris Kearns Goodwin. It's the

1:17:15

enthralling historical account of how Lincoln managed

1:17:17

to lead a team of strong, diverse

1:17:19

and often competing personalities through an era

1:17:21

of national crisis and division. So

1:17:23

as he's reading the book, he asks, okay, if

1:17:26

what would Lincoln do? If he was in my

1:17:28

position, what would Lincoln tell me to do right

1:17:30

now? Boom, it suddenly hit me. I

1:17:33

would ask Walter to resign, as he had

1:17:35

already offered to do on at least two

1:17:37

occasions. I thought about Salomon Chase.

1:17:39

This is literally from the biography got the

1:17:41

idea from the biography. It's incredible. I

1:17:44

thought about Salomon Chase, Lincoln's ambitious rival

1:17:46

for the presidency in 1864. And

1:17:48

the Secretary of the Treasury who had

1:17:50

offered his recognition resignation many times until

1:17:53

one day Lincoln surprised him and accepted

1:17:55

it. It was time for me

1:17:57

to accept Walter's offer. And I had the

1:17:59

confidence But

1:20:00

I suspect they're still going to vote

1:20:02

you out and quickly. And

1:20:04

so this is when John realizes he needs

1:20:06

a white knight. He needs a buyer to

1:20:08

evade this hostile takeover that is going to

1:20:10

wind up with his expulsion from the

1:20:13

CEO position and maybe even the board. And

1:20:15

so his initial thought was Warren Buffett. If his

1:20:17

sale was inevitable, shouldn't we be proactively seeking a

1:20:20

buyer that we felt would take better care of

1:20:22

the company? Warren Buffett's

1:20:24

name came up, and perhaps he would recognize the

1:20:26

long-term value in our company and be interested in

1:20:28

helping to protect it and grow it right. We

1:20:31

reached out to him, but he replied that it wasn't a

1:20:33

good fit. Day after day

1:20:35

I walked, meditated, and debated. Night after

1:20:37

night I tossed and turned, trying to

1:20:40

come up with a solution that didn't

1:20:42

mean losing the company that I love.

1:20:45

I knew the solution had to be

1:20:47

out there, a creative, out-of-the-box idea. I

1:20:50

just couldn't see it yet. My

1:20:52

frustration grew as the days passed,

1:20:54

and then one morning, immediately after

1:20:56

I woke up, a question popped

1:20:59

into my head that changed everything.

1:21:02

What about Amazon? And

1:21:05

so they reach out, they set up a

1:21:07

meeting with Jeff Bezos and his team at

1:21:09

Amazon. The meetings actually had Bezos' boathouse, and

1:21:11

they wind up having this incredible multi-hour meeting.

1:21:14

And it looks like almost immediately

1:21:16

they're going to wind up working something out,

1:21:19

and he talks about his inner monologue at

1:21:21

this time. I had nurtured Whole Foods, my

1:21:23

child, my baby, from her infancy. I watched

1:21:25

her take her first steps, held her hand

1:21:28

as she entered the adult world, and looked

1:21:30

on with pride as she slowly grew into

1:21:32

this mature, thriving business. Was I

1:21:34

now ready to let her go, to marry her

1:21:36

off to the richest man in the world? It

1:21:39

just took two days to get

1:21:41

Amazon's answer. So

1:21:44

Amazon buys Whole Foods in 2017. By

1:21:46

2022, John Mackey is out. He

1:21:51

worked on Whole Foods for

1:21:53

44 years. leaving

1:22:00

Whole Foods market after 44 years

1:22:03

as its leader. And he

1:22:05

talks about needing to do a bunch

1:22:07

of inner work and therapy to get

1:22:09

over this anger and resentment that he

1:22:11

felt. And this is a reoccurring theme.

1:22:14

When entrepreneurs sell their baby, when they sell

1:22:16

their company, the person that gives you the

1:22:18

money is now in charge. And

1:22:20

so this is part of the service that

1:22:23

I think John Mackey is doing to future

1:22:25

generations of entrepreneurs or for future generations entrepreneurs

1:22:27

by writing about this so honestly. This layered

1:22:29

needed to be experienced, the way in which

1:22:31

I felt disrespected and disempowered since the sale

1:22:33

of Whole Foods to Amazon five years earlier.

1:22:36

It surprised me with its intensity how

1:22:38

angry he was. And beneath the anger

1:22:41

was a more subtle and corrosive emotion.

1:22:43

Guilt. Had I done the right

1:22:45

thing in selling to Amazon, should I have fought

1:22:47

harder to keep Whole Foods independent? There wasn't an

1:22:49

easy answer to those questions, but they needed to

1:22:51

be asked. The first question everyone

1:22:54

always asked me is do you regret selling

1:22:56

to Amazon? The most honest answer I can

1:22:58

give is that I regret the circumstances that

1:23:00

made it the best option. I still believe

1:23:02

it was the best strategic choice available at

1:23:05

the time and while not every hope and

1:23:07

dream I had for this marriage of companies

1:23:09

has come true, there were several wonderful positives

1:23:11

that came out of it. At

1:23:14

the same time, there were a few disappointments

1:23:16

and frustrations. So he talks about this over

1:23:19

a few pages I'll summarize. The pros? Lower

1:23:21

prices for his customers, higher wages for

1:23:23

his employees, more stores, better technology, and

1:23:26

then way better online ordering and delivery.

1:23:28

The technology that Amazon bought, brought to

1:23:30

Whole Foods was just way better than

1:23:32

what he could build himself. The cons?

1:23:35

There was more centralization of management,

1:23:37

more bureaucracy, more sameness in the

1:23:39

stores, and then a series

1:23:41

of professional managers that were not aligned with

1:23:44

his culture. And what happened

1:23:46

is slowly over time his influence essentially

1:23:48

receded and disappeared. He thought he'd still

1:23:50

be able to run the company and

1:23:52

be the CEO of Whole Foods inside

1:23:54

of Amazon. My thoughts and strategic suggestions

1:23:56

were not welcomed by the leaders in

1:23:58

charge. I was simply cut from the

1:24:00

team. team with no further explanation. This

1:24:02

disrespect hurt. My aspiration for

1:24:05

Whole Foods having greater cultural influence

1:24:07

at Amazon was largely unrealized." And

1:24:10

he understands this perspective because he said,

1:24:12

surely the thinking goes that their culture

1:24:14

must be superior or the acquisition would

1:24:16

have been the other way around. We

1:24:19

had ourselves struggled with this same type

1:24:21

of superiority trap in many acquisitions that

1:24:23

we had done over the years. The

1:24:25

tipping point occurred in a video conference

1:24:27

meeting I had in February 2021 with

1:24:30

Dave Clark, Amazon's CEO of

1:24:32

consumer businesses and my direct

1:24:34

supervisor. And so they're having a

1:24:37

back and forth about this idea and John keeps

1:24:39

pushing and he says, damn it, John, I told

1:24:41

you, we're not doing it. What do you not

1:24:43

understand about that statement? You always want to argue

1:24:45

about every fucking thing. Sometimes you just need to

1:24:47

be a team player and do what you're told

1:24:50

to do. I tried to

1:24:52

put things into perspective. Dave, I don't think that's

1:24:54

accurate. I don't argue about everything. Can you give

1:24:56

me another example of when I've argued with you?

1:24:58

John, I don't have to give you a fucking

1:25:00

example. I work with you. I know it's true

1:25:03

and it's not just me. Everyone at Amazon knows

1:25:05

it's too. If you didn't want

1:25:07

to give up control of Whole Foods, then you

1:25:09

shouldn't have sold the company to Amazon. And

1:25:12

then listen to John's surprising reaction. Dave

1:25:14

was right. I had given up control

1:25:17

when the company was sold to Amazon.

1:25:19

I knew it was now time for

1:25:21

me to go. And

1:25:23

so that's when he starts doing more therapy, he

1:25:26

goes back with breath work and MDMA and he

1:25:28

says, it surprised me how much anger I felt

1:25:30

about the disrespect Amazon had shown towards me and

1:25:32

how much guilt I'd harbored over the decision to

1:25:34

sell. This therapy helped him get

1:25:36

rid of these, like the feeling of resentment

1:25:39

and anger. He says, I was able to

1:25:41

confront a deeply held fear that I am

1:25:43

not truly worthy of love due to my

1:25:45

many faults and lack of perfection. This therapy

1:25:47

also reminded me of slogans someone, some

1:25:49

friends have shared with me previously.

1:25:52

Holy shit, I'm alive. Waves

1:25:54

of bliss flooded my body and were

1:25:57

released. It felt incredibly joy. I felt

1:25:59

incredibly joyful. to be here in

1:26:01

human flesh breathing moving living

1:26:04

and loving what a gift

1:26:06

holy shit I'm alive and

1:26:10

so obviously I read this before I met John

1:26:13

and I asked him about this like do you

1:26:15

have any resentment towards Jeff Bezos he's like no

1:26:17

and he says the two smartest entrepreneurs that he's

1:26:19

ever met are Elon Musk and

1:26:22

Jeff Bezos and in fact he

1:26:24

considers both of them one thing

1:26:26

that me and John Bonnet over is the fact that we had a

1:26:28

lot of the same entrepreneurial heroes so his

1:26:30

entrepreneurial heroes are like Buffett, Elon,

1:26:32

Jeff Bezos, Steve Jobs, Rockefeller but he

1:26:34

reiterated to me he's like no I

1:26:36

have no ill will towards Jeff Bezos

1:26:38

at all and he thinks that he's

1:26:40

utterly brilliant and

1:26:43

so then he ends the book the only way

1:26:45

an entrepreneur can and he has a great framing

1:26:47

about what what it is that we're actually doing

1:26:49

we're actually playing an infinite game and so that

1:26:51

was key in the book key in the conversation

1:26:54

I would John, Whole Foods wasn't work it was

1:26:56

play and I think that's key to endurance

1:26:59

and building a company for the long

1:27:01

term you love it you love your

1:27:03

work it's fun it feels like play

1:27:06

and so he starts another company it's called love life

1:27:08

it's a holistic health and wellness club I got to

1:27:10

tour the entire facility and so he

1:27:12

talks about this he says I became aware

1:27:14

of a familiar feeling like an old friend

1:27:16

but one that has been too often absent

1:27:18

in recent years I'm really excited to

1:27:20

get to work it reminds me the

1:27:22

feeling I used to get as a kid when I waited

1:27:24

impatiently on the sidelines for a game of pickup basketball to

1:27:27

begin the eager anticipation

1:27:29

of play play that's

1:27:31

what this was to me I am

1:27:33

a god of play the

1:27:35

primary field in which I love to play and

1:27:37

to be creative is business I don't

1:27:41

believe life is simply about our happiness

1:27:43

or pleasure it is also about discovering

1:27:45

and following our higher purpose and contributing

1:27:47

our unique gifts and talents in

1:27:50

the brief time that we have on this

1:27:52

planet when I first came up with the

1:27:54

idea for Safer Way and Renee said let's

1:27:57

do it Mac oh man we thought it

1:27:59

would be fun. That was

1:28:01

the initial impulse. If

1:28:03

you told us then that the little venture

1:28:05

that we started in a house would by

1:28:07

the time I retired grow to be a

1:28:09

company with 540 stores, 105,000

1:28:12

team members, and 22 billion in

1:28:15

annual sales that changed the way

1:28:17

America eats, we would have fallen

1:28:19

over laughing. But then

1:28:22

we would have gotten right back to

1:28:24

work building the company we loved. And

1:28:26

it was because we loved and enjoyed

1:28:29

it so much that it became all

1:28:31

those things we could have never imagined.

1:28:33

Whole Foods was and is

1:28:36

a magnificent expression of my

1:28:38

own higher purpose. I'm

1:28:40

endlessly proud of it. But

1:28:42

what I understand now is that

1:28:44

my higher purpose did not begin or end

1:28:46

with Whole Foods Market. That's another

1:28:49

reason I love Business. At its

1:28:51

best, it's a wonderful, creative, ever

1:28:54

evolving game. The best kind

1:28:56

of game because the deeper you get into it,

1:28:59

the more you must learn in order to keep playing it

1:29:01

at a high level. And the most

1:29:03

important aspect of the game is that

1:29:05

it keeps moving and changing and developing,

1:29:08

even as we play it. In fact,

1:29:11

because we play it, Business

1:29:13

is an infinite game. Infinite

1:29:16

games are open ended. They are

1:29:18

played for the purpose of continuing

1:29:21

the game itself. The

1:29:23

creation and growth of Whole Foods was a delight to be a

1:29:25

part of. Others will continue moving

1:29:27

that ball down the field. But

1:29:29

I'm not done with Business. I'm

1:29:31

not done pursuing my own higher

1:29:34

purpose. I'm not done with this

1:29:36

wonderful infinite game. I'm on

1:29:38

a new adventure now. I love

1:29:40

being back in startup mode again,

1:29:42

free from the shackles of bureaucracy.

1:29:44

It's what makes me feel alive,

1:29:46

exuberant, and young in spirit. Another

1:29:49

wonderful game to play. Another beautiful

1:29:51

vision to bring into reality. New

1:29:54

worlds to create out of nothing. Let

1:29:56

us love, let us create, and let

1:29:58

us play. again and

1:30:01

again and again forever.

1:30:05

And that is where I'll leave it for the

1:30:07

full story. Highly, highly, highly, highly recommend picking up

1:30:09

and buying a copy of the book. If

1:30:12

you buy the book using the link in the

1:30:14

show notes, you'll be supporting the podcast at the

1:30:16

same time. That is 358 books down, 1000 to

1:30:18

go, and I'll talk to you again soon. There's

1:30:23

two things that John and I talked about

1:30:25

that absolutely loved. One of them was explicitly

1:30:27

stated in the podcast. That is the fact

1:30:29

that John also shares my same habit, not

1:30:31

only as a voracious reader, but he also

1:30:34

has to reread his highlights from the books

1:30:36

that he's read previously. The second thing that

1:30:38

I loved that was implied, but I think

1:30:40

obvious, is that he was completely obsessed with

1:30:43

building whole foods and believe

1:30:45

in his mission to change the way

1:30:48

that people eat. And

1:30:50

one of my obsessions has been obviously making this

1:30:52

podcast so then I can collect and distill the

1:30:55

knowledge of history's greatest entrepreneurs and then spread that

1:30:57

far and wide, because I do think these are

1:30:59

really is an act of service to take the life story

1:31:02

of an entrepreneur, take the lessons out of them, and then

1:31:04

spread them as far as possible so other people can benefit

1:31:06

from that five, four

1:31:08

decade, five decade long

1:31:10

career. And so this

1:31:12

obsession of, hey, I'm going to collect and distill the

1:31:14

knowledge of history's greatest entrepreneurs is what the pot, it

1:31:16

comes in the form of the podcast. But I've made

1:31:18

a tool to make sure that I

1:31:20

never forget the lessons and I can pull

1:31:23

them up on demand when I need them.

1:31:25

And that tool is Founders Notes, which you

1:31:27

can now get access to that tool. So

1:31:29

Founders Notes lets you tap into the collective

1:31:31

knowledge of history's greatest entrepreneurs on demand in

1:31:34

a very simple way. For the last six

1:31:36

years, I've been putting all of my notes

1:31:38

and highlights for everything that I read for

1:31:40

the podcast into this giant searchable database that

1:31:42

you can tap into. And even if you

1:31:45

didn't know about this tool, you've heard me

1:31:47

use it over and over again, because every

1:31:49

time you listen to the podcast and when

1:31:51

I'm referencing past ideas from past episodes, from

1:31:53

past books, like Jeff Bezos, like Walt Disney,

1:31:55

Sam Walton, Munger, Buffett, all of this, that

1:31:57

is me searching through Founders Notes and pulling

1:31:59

the up those ideas. And that is a

1:32:01

really important point to get across. What you

1:32:04

see, if you subscribe to Founders Notes, that's

1:32:06

the tool I use. You see the exact

1:32:08

same thing that I use. It

1:32:10

is a tool that I made for myself that you can now

1:32:12

get access to. Subscribers to Founders Notes

1:32:14

are using Founders Notes to help them

1:32:16

think through issues they're having in their

1:32:18

company, from anything from hiring to recruiting

1:32:20

to marketing to leadership to preparing for

1:32:22

board meetings to preparing for sales presentations.

1:32:24

If you are already running a successful

1:32:27

company, I think it's a no-brainer to

1:32:29

invest in this tool. And now

1:32:31

I've added a new feature that's also going

1:32:33

to show you how I use Founders Notes,

1:32:35

and it's going to push ideas from history's

1:32:38

greatest entrepreneurs directly into your brain quickly. That

1:32:40

is this private podcast feed that comes with

1:32:42

every single subscription to Founders Notes, which I

1:32:44

have called Sage Advice. And so

1:32:47

let me give you an example. The episode I

1:32:49

just made, I read two autobiographies of James Dyson's,

1:32:51

that's probably 50, 60, 70 hours

1:32:54

of reading, countless hours of inputting the notes

1:32:56

and highlights into Founders Notes. And so what

1:32:58

I did is I went and reread every

1:33:00

single note and highlight. And then there's also

1:33:03

an AI assistant that lives inside Founders Notes

1:33:05

called Sage. And when you ask Sage

1:33:07

a question, it reads all of the notes, highlights, and

1:33:09

transcripts for every single episode. And I would

1:33:11

ask questions about the lessons from James

1:33:13

Dyson's books. So give me like, for example,

1:33:16

give me a list of James Dyson's best

1:33:18

ideas. How did James Dyson think about marketing?

1:33:20

What did James Dyson say about persistence? Things

1:33:22

like that. And then what I did is

1:33:24

I composed all that into a single document

1:33:27

and distilled that down to what I think

1:33:29

are the most powerful ideas from James Dyson's

1:33:31

50 year career, where he's built this multiple,

1:33:33

multiple billion dollar company that he owns 100%

1:33:35

of. And so you take 50 year

1:33:39

career, 60 hours of reading

1:33:41

and distilling that down into an episode that

1:33:43

you can listen to in 12 minutes. And

1:33:45

so the idea with these mini episodes is

1:33:47

I want to create a tool that if

1:33:49

I can condense the ideas

1:33:51

from somebody's entire career, multiple books into

1:33:54

something that is 10 minutes, then that means

1:33:56

you're going to be able to listen to that over and over

1:33:58

and again, he's going to serve as a constant reminder

1:34:01

and an easy way for you to download those

1:34:03

ideas into your brain so then you can use

1:34:05

them in your career. So

1:34:07

if you want access to the tool that

1:34:09

will give you a superpower to access the

1:34:12

collective knowledge of history's greatest entrepreneurs, when you

1:34:14

need it, make sure you go and subscribe

1:34:16

at foundersnotes.com. That is founders with an S,

1:34:18

just like the podcast, foundersnotes.com.