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July 28, 2024 • 1hr 34min
#358 I had dinner with John Mackey, Founder of Whole Foods
Founders
This episode covers the life and entrepreneurial journey of John Mackey, co-founder of Whole Foods Market. It is based on Mackey's autobiography "The Whole Story: Adventures in Love, Life, and Capitalism" as well as conversations the podcast host had with Mackey over dinner and while touring his new business.
The episode traces Whole Foods' growth from a single store in Austin to a national chain that revolutionized the grocery industry, as well as Mackey's personal development as an entrepreneur and leader over four decades. It provides insights into the challenges of scaling a mission-driven business, dealing with investors and competitors, and ultimately selling to a larger company.
#358 I had dinner with John Mackey, Founder of Whole Foods
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Key Takeaways
- Whole Foods started as a small natural foods store called Safer Way in Austin, Texas in the late 1970s, founded by John Mackey and his girlfriend Renee
- Mackey was driven by a mission to change how people eat, not just to make money. He saw natural foods as a way to improve health and wellbeing.
- Early on, Mackey realized the importance of scale in retail. He aggressively expanded Whole Foods through acquisitions of other natural food stores across the country.
- Mackey credits his father as a key advisor and mentor in the early days of building Whole Foods. Their relationship was strained later but reconciled before his father's death.
- Whole Foods went public in 1992, which brought new challenges in dealing with investors and Wall Street expectations.
- Increased competition from conventional grocers in the 2000s led to slowing growth and made Whole Foods vulnerable to activist investors.
- Mackey ultimately sold Whole Foods to Amazon in 2017 for $13.7 billion to fend off a hostile takeover attempt by activist investors.
- The sale to Amazon was bittersweet for Mackey. While it protected the company, he lost control and influence over his life's work.
- Mackey views business as an "infinite game" - an ongoing creative endeavor rather than something with a defined endpoint. He has since started a new wellness company called Love Life.
Introduction
This episode covers the life and entrepreneurial journey of John Mackey, co-founder of Whole Foods Market. It is based on Mackey's autobiography "The Whole Story: Adventures in Love, Life, and Capitalism" as well as conversations the podcast host had with Mackey over dinner and while touring his new business.
The episode traces Whole Foods' growth from a single store in Austin to a national chain that revolutionized the grocery industry, as well as Mackey's personal development as an entrepreneur and leader over four decades. It provides insights into the challenges of scaling a mission-driven business, dealing with investors and competitors, and ultimately selling to a larger company.
Topics Discussed
Early Days of Whole Foods (10:01)
- Mackey dropped out of college and was living in a vegetarian co-op in Austin in the 1970s
- Got the idea to start a natural foods store after working at another small health food store
- Opened the first store called Safer Way in 1978 with his girlfriend Renee
- Lived in the store and showered using the dishwasher to save money
- "Passion was calling us, and it was demanding every bit of energy that we had to give." - John Mackey
Expanding and Building the Business (18:23)
- Merged Safer Way with another local natural foods store to create Whole Foods Market in 1980
- Opened a larger 10,500 sq ft store that became the highest volume natural foods store in the U.S.
- Aggressively expanded by acquiring other natural foods stores across the country
- Built a network of relationships with other natural foods entrepreneurs
- Mackey's competitive drive and ambition set him apart from others in the industry
Relationship with His Father (24:02)
- Mackey's father was initially skeptical but became a key advisor and investor
- Gave Mackey business books and advice on strategy and finance
- Served on Whole Foods' board for many years
- Relationship became strained as they disagreed on growth strategy
- Mackey asked his father to resign from the board, not realizing he was developing Alzheimer's
- "I had the strange sense that a mirror was being held up that reflected my own time on this earth. Who was I, and what was the truth about my own life? Was it good? Was it beautiful? Was it enough? Was I enough?" - John Mackey reflecting after his father's death
Going Public and Dealing with Investors (32:03)
- Whole Foods went public in 1992
- Mackey was initially wary of taking venture capital, viewing VCs as "hitchhikers with credit cards"
- The IPO allowed early investors to exit but brought new pressures from Wall Street
- Mackey struggled with the short-term focus of public markets vs. his long-term vision
- Stock price volatility led to feelings of being alternately viewed as "a visionary" or "the village idiot"
Increased Competition and Slowing Growth (44:04)
- Conventional grocers began offering more natural and organic products in the 2000s
- Whole Foods' growth slowed as competition increased
- Company became vulnerable to activist investors as stock price declined
- Mackey credits Walmart's entry into groceries as initially helping Whole Foods by pushing other stores downmarket
- But eventually the trend reversed as conventional stores moved upmarket to compete with Whole Foods
Selling to Amazon (52:15)
- Activist investor Jana Partners acquired 8.8% of Whole Foods stock in 2017 and pushed for sale
- Mackey sought a "white knight" buyer to avoid hostile takeover
- Initially approached Warren Buffett but was turned down
- Idea to approach Amazon came to Mackey suddenly one morning
- Amazon acquired Whole Foods for $13.7 billion in 2017
- "Was I now ready to let her go? To marry her off to the richest man in the world?" - John Mackey on considering the sale
Life After the Sale (1:02:11)
- Mackey initially stayed on as CEO but found his influence diminishing
- Felt anger and resentment at loss of control over the company he built
- Did therapy and inner work to process emotions around the sale
- Ultimately left Whole Foods in 2022 after 44 years
- Has since started a new wellness company called Love Life
- Views business as an "infinite game" that continues evolving
Reflections on Entrepreneurship (1:14:13)
- Mackey sees business as "play" rather than work
- Believes in pursuing a higher purpose beyond just profits
- Emphasizes the importance of loving what you do to sustain long-term effort
- Views Whole Foods as an expression of his purpose to change how people eat
- "Let us love, let us create, and let us play again and again and again, forever." - John Mackey
Conclusion
John Mackey's journey with Whole Foods exemplifies both the triumphs and challenges of building a mission-driven business at scale. His story demonstrates the power of pursuing a higher purpose beyond profits, while also highlighting the difficulties of maintaining control and influence as a company grows.
Key lessons include the importance of thinking strategically about growth and scale, building strong relationships within your industry, and being willing to evolve your business model in the face of changing market conditions. Mackey's experience also underscores the potential conflicts between an entrepreneur's long-term vision and the short-term demands of investors and public markets.
Ultimately, Mackey views business as an ongoing creative endeavor - an "infinite game" that continues to present new challenges and opportunities for growth. His willingness to start a new venture after four decades with Whole Foods speaks to the enduring entrepreneurial spirit that drove him throughout his career.
The episode provides valuable insights for entrepreneurs at all stages, from those just starting out to seasoned leaders grappling with issues of scale, competition, and succession. It's a reminder that building a successful business is as much about personal growth and resilience as it is about strategy and execution.