The Exchanges

Q And is that because you, you knew instinctively or you were looking at data? How, how did you assess what was a good location for Whole Foods that, that a realtor might have thought was, was a disaster or what a realtor thought was a great location that you knew was going to be wrong?

A Well, first it starts with demographics. And what we did was we studied our successful stores to see what the demographics they had in common, and obviously population density is very important. In our case, the biggest indicator was college degrees. Who has a college degree? And the places that had the most college degrees, not surprisingly, also had the highest income. Not perfect correlation, because a university town might Not have the highest income, but they have the highest education levels. And we would do well there even if the income wasn't quite as high. We always did well in university towns. But when you get the combination of high incomes and high education levels, that would always be a slam dunk for us. And then, then it was just the basic retail. Does it have good parking? Does it have visibility from the street? Is it at an intersection? You don't want to be mid block. We had to learn that the hard way. Mid blocks where people can't easily make left or right hand turns in depending on which direction they're coming can be a real handicap because people are ultimately about convenience. If you make it easy for them to shop, easy for them to pull in, get their stuff and be out on their way 10 minutes later, if that's what they want to be, that's going to give you a competitive advantage.

AI assessment note: “what we did was we studied our successful stores to see what the demographics they had in common”

Q she said, yeah, let's do it. But it's not that easy, especially I imagine in 19 seventies, Texas to open a natural foods co-op. So, so, or store. So, so when, when she said, let's do it, you, you've got to, you got to get some money, right? So Uh, if, if my memory serves, at first you borrowed money from, from your father to get going, is that right?

A Well, friends, it's like so many startups, friends and family, right? Renee's family and friends, my family and friends, and yes, my dad, I didn't have any money, my dad loaned me 10,000 dollars for my share of the investment at five percent interest. So, so, um, that's how we got started. We needed 50, but we only had, we only were able to raise 45, so we, We made it, a go out of it anyway. And was it easy? No, but it was a lot of hard work, but when you're, how old, I was 24 and Renee was 20 when we started working on the store. And we didn't, one of the great things about being young is you don't yet know what you can't do. So you just go forward, and we didn't spend money, much money. We, we bought all equipment used, and we hired friends to do the plumbing and the electric, electricity, and We found, it was an old Victorian house, actually, that we ended up, ah, going into the first store. It was called Saferway, which was a pun on, our joke on Safeway. I didn't have a grand vision for opening up a chain of stores. The original vision was open up one store, ah, so we can earn a living, sell healthy food to people, and have some fun doing it. So it was an adventure. It really was an adventure, and it was fun. I look back on it now. It was a romantic time. I was young, and, ah, It was carefree. I, I, I love that time of my life.

AI assessment note: “yes, my dad, I didn't have any money, my dad loaned me 10,000 dollars”

Q Um, you know, ultimately you, you, you made an offer to, to, to acquire one of your competitors. Can you talk about, um, that process and that decision-making? Cause that, that feels like a critical moment in your scale journey going from one store where maybe you're earning a good living and doing some good in the world and living your values to, to actually building something that's got scale.

A Well, safer way. Cause we didn't know what we were doing. We put it in, Not in a busy commercial area. We put it on a sort of a residential street that was zoned for, for business, and Renee and I ended up living in that house. We lived where, so Safer Away was a three-story Victorian house, and on the first floor we put the store, and the second floor we had a, ah, a, a vegetarian cafe. It was a vegetarian store. Renee and I were both vegetarians. And then on the third floor we had an office that also had a, like a futon couch that we Could roll out at night, and we slept there. We, we were not zoned for residential. We weren't supposed to be living there. We were sneaked in there, basically. You know, in terms of scaling it, what we realized after about a year, a year and a half, the safer way is we, we lost money the first year. We lost half our money, 23,000 dollars in the first year, and Renee and I were not really taking any money out, but we began to, we learned. We got smarter and better, and I am a passionate reader. I just read and read and read, and I read everything about business I could But we realized we were too small. We needed a bigger store to compete. We were, we were at a competitive disadvantage. Before I knew what competitive disadvantage meant, I could see that we weren't going to win this game, that we needed to get bigger. And so, we found the location…

AI assessment note: “we needed to get bigger... and I started pitching them about Closing their store down, and merging”

Q ton of sense for Amazon. I get, I get the value there and the integration with prime that could be done. Um, uh, the physical footprint it provides Amazon, et cetera. It wasn't as clear why Whole Foods, uh, would, would make that decision. Um, what, How, how did, how did the conversation start with Amazon, and how did you ultimately decide that that was the right move to sell?

A You know, I, I, one of the questions I get most frequently is the question, do you regret the sale to Amazon? And the answer to that is, I regret the circumstances that existed at that time that made that the best alternative for us. The circumstances back in 2017 were, we were being attacked by shareholder activists. People that think only profits matter. And they wanted to, we tried to reason with them. This was Jana Partners, but They didn't want to, they didn't want to work with us. They just said, look, we're going to take over your company. There's not a damn thing you can do about it. We're going to throw out your board. We're going to vote your board out, and then we're going to, and we're going to get rid of the management that opposes us, and we're going to sell the company to the highest bidder, and there's not, and nothing you can do about it, and Whole Foods is stock. You know, we, now we'd faced a lot more competition. We needed to cut our prices, but the dilemma that we faced was how do we cut our prices, and That's the great long-term move, but in the short term, if you're selling something for a dollar and now you start selling it for 90 cents, well, initially, in the long run, that'll drive more people into your stores, right? You'll get more business with lower prices. In the short run, your sales just dropped 10% when you dropped your prices 10%, and your sa…

AI assessment note: “I regret the circumstances that existed at that time that made that the best alternative”

Q Did you take a minute? Did you, did you literally go and walk about as an avid hiker, um, to, to kind of create some space before your next act?

A I was already working on Love Life before I left. I mean, I've had this dream to do Love Life since we almost did it back in the, ah, in the, in the 19 eighties. Love Life is a, ah, you can go to love.life. We have a website so you can see it, see it there. And it's, the vision of it is to be basically one-stop medical wellness centers. And so, so we're opening our first location in El Segundo, California. Opening date, July ninth, so it's, it's under construction now. Um, I think it's gonna be unlike something that's not, people done parts of it, but not done all that we've done. We're gonna have a healthy restaurant, healthy food restaurant there. We're gonna have a fitness center, a gym, think Equinox. We're gonna have a spa, a really nice spa. We're gonna have all kinds of recovery modalities. We're gonna have all kinds of alternative, uh, medical treatments from acupuncture, Cupping, um, Ayurvedic, uh, physical therapy, chiropractic. I mean, all these different things. And we're gonna have medical doctors as well that are, that are functional doctors, that are lifestyle doctors, integrative doctors. And the whole idea is that we want to change the paradigm that people have about, about wellness and, and healthcare. And so, when do people normally go see a doctor, Jeff? When they're sick. Well, we think the doctor's main role is to help people be so healthy they almost neve…

AI assessment note: “I was already working on Love Life before I left.”

Q What was it hard to be perceived by people who were mission aligned as having switched from, uh, being a Jedi Knight to being Darth Vader?

A Sure. I mean, it, it bothered me a little bit. That's when my politics began to change. I, I, I began to study the history of business, history of capitalism, and I realized, my gosh, capitalism's done so much good in the world. It's so misunderstood. It's been attacked by, well, the intellectuals are the ones that don't like business, and intellectuals have never really liked business. I'm not saying all intellectuals, just as a general rule, as, uh, Deidre McCloskey calls it, the clerisy. Has always been skeptical about business, and has always thought business was, had the wrong motivations. They were, they were motivated by money, and, ah, that's a bad thing. And, yeah, some people are strictly motivated by money, but, you know, most of the entrepreneurs I've known are just very passionate people, and they're excited to, to realize their ideas in the world. They make money, too. They have to make money in order to, in order to be successful, but, frankly, it's about the dream that really drives them even more than the money.

AI assessment note: “it bothered me a little bit. That's when my politics began to change.”