In the ongoing seventh installment of Authors in August, David Gardner, one of the co-founders of Motley Fool, hosts John Mackey, who is a co-founder of Whole Foods Market, in a podcast episode to discuss his book from 2024 in detail. The Complete Tale: Journeys in Romance, Existence, and Economics .
John reflects on the evolution of the company from Safer Way to Whole Foods to Amazon.com to Love.Life, highlighting how passion, purpose, and unforeseen events have influenced a business that has revolutionized the food industry in America. In reference to their discussion on Conscious Leadership in 2020, this episode delves into how purpose and profitability intersect, and the lasting satisfaction derived from navigating the challenges of both life and entrepreneurship.
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The footage was captured on August 14, 2024.
David Gardner: I am delighted to welcome you to the seventh installment of my yearly Authors in August series for Rule Breaker Investing. In this edition, we have the privilege of learning from a prominent entrepreneur who is still active in the business world. As a young individual, he believed in the importance of improving our dietary habits. His initial retail establishment in Austin, Texas was humorously named Safer Way, a playful reference to the Safeway chain. Decades later, John Mackey successfully sold his venture, Whole Foods Market. Amazon.com His business had expanded to employ 85,000 people, generating $16 billion in sales and consistently being recognized as one of the best companies to work for in America. A key achievement was John’s initiation and leadership of a significant cultural shift towards improved food quality and healthier lifestyles, a movement that has since been copied by numerous others. Walmart What is the experience of initiating something small yet beautiful in the past, nurturing its growth, and witnessing how it has positively impacted the world? Tune in to this week’s Rule Breaker Investing to discover the full story of Trader Joe’s.
I am thrilled to have John Mackey join me this week. To provide some transparency, John is a member of the Motley Fool Board of Directors, and I serve on the board of his new company, Love Life. John is a close friend whom I greatly admire and have learned from for over 15 years. He was first featured on this podcast in September 2020 discussing his book “Conscious Leadership,” which I found to be one of the best reads on the subject. Today, we will be focusing on his latest book, “The Whole Story,” released in 2024, where John shares his life experiences under the subtitle “Adventures in Love Life and Capitalism.” Welcome back to Rule Breaker Investing, John Mackey.
John Mackey: Thank you for having me as a guest once more, David.
David Gardner: John, we’ll talk about the book soon, but first, let’s discuss the recent successful launch of your first flagship store, Love Life, in El Segundo, California. It’s worth mentioning to those in Los Angeles. As a co-investor, John, how did the opening event go?
John Mackey: It was an amazing experience. The grand opening took place on a Saturday and attracted a large crowd of several hundred people. I gave a presentation on the entire journey, followed by a book signing in our community room that can accommodate around 100 individuals. Although we had a soft opening on July 9th, we were not fully equipped and did not conduct any marketing activities at that time. Our focus was on resolving technical issues, preparing the team, and ensuring a smooth grand opening. The attendees were very enthusiastic about our concept. Love Life stands out as a unique holistic health membership club, offering a large, historic space. Best Buy The facility covers an area of 45,000 square feet and offers a variety of amenities such as a nutritious restaurant, a cutting-edge fitness center, yoga, pilates, a spa, and various advanced recovery techniques including cold plunges, infrared saunas, cryotherapy, lymphatic massage suits, and a pulsometer. Additionally, there are hyperbaric oxygen chambers available. To promote community engagement, there are three pickleball courts on site. The center also houses a medical facility where doctors are specialized in functional medicine, integrative medicine, East West Integration, and lifestyle medicine. Upon becoming a member, individuals undergo tests to establish their baseline health, after which a personalized plan is created by a wellness coach and doctor to help them achieve optimal health. The focus is on early detection of diseases and working towards reversing them, unlike traditional medicine practices in the US where individuals typically visit doctors only when they are sick or for preventive measures like vaccines.
In most cases, modern medicine focuses on managing symptoms rather than addressing the root cause of health issues. The primary cause of death in the United States is heart disease, which has remained the leading killer for more than a century. While past infectious diseases like tuberculosis and smallpox have been effectively controlled by medical advancements, current challenges lie in chronic conditions such as heart disease, obesity, and autoimmune diseases. Unlike infectious diseases, these conditions do not have clear technological or pharmaceutical solutions. However, they can often be reversed and prevented through adopting a healthy diet and lifestyle, as well as regular health monitoring from an early age. By utilizing wearable technology and undergoing periodic testing, individuals can track their progress towards better health. This comprehensive approach is offered through our platform and app, enabling individuals to achieve optimal physical, emotional, and spiritual well-being. This holistic vision of promoting health and vitality is at the core of our mission at Love Life, distinguishing our services as a unique and innovative approach in the healthcare landscape.
David Gardner: I am a big fan of the article in the LA Times. It is easily accessible to anyone, no matter where you are located. The current focus is on Love Life, which is in Elsa Geno, California. There is a recommended app mentioned by John. The article highlighted the many on-site benefits and advanced technology available. However, much of the advice shared by John is simply common sense, such as visiting the doctor preventatively rather than waiting until you are sick.
John Mackey: Certainly. The doctor’s role is to help you maintain good health so that you don’t have to visit the doctor frequently.
David Gardner: After the initial introduction, John, we may revisit the Love life topic later, but for now, let’s shift our focus to the book. To begin, let’s actually start at the conclusion. In the final section of your book, you look back on everything discussed earlier, both in the book and your personal life, with a particular emphasis on the journey of Whole Foods Market. Initially named Safer Way, you recall in Chapter 39 a pivotal discussion with your business and life partner, Renee Lawson. You mention a conversation where Renee supported your idea for Safer Way, highlighting the initial motivation for starting the venture as a mix of enjoyment and a desire to earn a living while positively impacting others. Reflecting on the humble beginnings of a small business in a Victorian House, you humorously note that envisioning the eventual growth of the company to 540 stores, 105,000 employees, $22 billion in revenue, and a significant influence on American dietary habits would have seemed absurd back then.
After that, we would have immediately resumed working on developing the company we were passionate about. Our deep love and enjoyment for the work led to unexpected achievements and transformations. This is why I find joy in navigating life’s challenges.” John Mackey, founder of the business, expressed his admiration for the continuous surprises life offers. Reflecting on the past, John, how significant do you believe the love and joy you experienced while building the company were in its accomplishments, and how has that love progressed over time?
John Mackey: That is a key theme in the book, running consistently throughout. David, you highlighted a couple of key aspects there. Firstly, from the outset, both Renee and I were focused on making a living, but we approached it with a sense of excitement and novelty. The idea of embarking on this journey felt like an adventure to us. The term “adventure” resonates deeply with me, as it forms part of the book’s subtitle, which revolves around the themes of love, life, and capitalism. For me, venturing into entrepreneurship has been the most enjoyable experience of my life. It can be likened to a game, and I understand, David, that you have a fondness for games as well. Running a business is akin to engaging in a strategic game. The process of building and developing a business is intricate and multifaceted. The greater the complexity of the endeavor, the more stimulating and enjoyable it becomes. The journey to mastery is prolonged, and once complete mastery is achieved, the excitement and allure tend to diminish. It can even become mundane and uninteresting.
A high-quality complex game such as business is described as an infinite game that becomes more enjoyable over time, rather than becoming boring. The book discusses the idea of life as a game, with the first chapter focusing on the Game of Life and the final chapter on the concept of the Infinite Game. Unlike finite games with clear rules, winners, and losers, an infinite game is one that is played continuously, with players striving to improve their skills indefinitely without a definite endpoint. This concept can be applied to life, capitalism, and businesses, where the goal is to keep playing and improving without a clear end in sight. The book also explores the themes of fun and games, as well as love, reflecting the author’s spiritual journey focused on deepening experiences of love and incorporating love into business practices. This evolution culminated in the creation of a business named Love Life, symbolizing the importance of love in all aspects of life.
David Gardner: Love is a powerful emotion that often begins in childhood, particularly when we think about our parents who love us in a unique and irreplaceable way. This bond should never be underestimated. The story of John’s father is woven throughout the book. He was a valuable member of John’s board for many years, but his struggle with dementia in his later years meant that John lost the father he had known. John recalls his father’s business acumen and success as a CEO in the healthcare industry, as well as a pivotal moment when he sought advice on how to improve his own business acumen. His father directed him to key books by Peter Drucker and Alfred Sloan to help him develop his thinking and leadership skills. General Motors John, what was your response, and did you peruse them?
John Mackey: Yes, I have read them, especially the Drucker book, which I have read multiple times. My physical copy is in poor condition after many years of use, so now I have it on my Kindle. Drucker’s thorough and systematic approach to various aspects of business has provided me with a solid foundation. Additionally, I have delved into memoirs of entrepreneurs, such as Alfred Sloan, and have gained valuable insights from them. Recently, I have been listening to a podcast called Founders Podcast, which I have found quite engaging over the past couple of years. Are you familiar with it?
David Gardner: I am well-liked by many people.
John Mackey: David Sindra, a man who reads biographies and autobiographies of entrepreneurs, gives a detailed summary of the books in his podcast episodes lasting around 60 minutes. Through listening to his podcast, I have purchased approximately 20 books that he has recommended and read them. I consider myself a bibliophile, passionate about reading and quickly absorbing information. During my time at university, I focused on studying philosophy, religion, world literature, and psychology, rather than taking any business classes. Initially, I had a negative view of business and never imagined pursuing it as a career. However, my interest in natural and organic foods eventually led me to start my own business, where I discovered the excitement and fulfillment of entrepreneurship. While I used to perceive business as solely number-focused and dull due to my accountant father, I now see it as an adventurous journey of creating, building, and learning along the way, which I find both challenging and rewarding.
David Gardner: John, I have come to understand your reading preferences over time, and I have greatly appreciated the recommendations you’ve shared with me. You are one of the most well-read individuals I know. I have a quick question for you – can you recommend five essential books by John Mackey that everyone should read? As a bonus for our listeners this week, what additional book do you suggest we all should have read?
John Mackey: This is a challenging question for me to answer because I have gone through numerous books. Could you possibly specify further? Are you referring to books related to business? Or perhaps you are interested in knowing about the books that resonated with me the most or had a significant influence on me?
David Gardner: I really appreciate it. By helping me be more specific, could this contribute to my personal growth and development?
John Mackey: The thinker who had the most significant impact on me during my 20s and early 30s was Abraham Maslow. I delved into all of his writings and gained valuable insights from his theories on the hierarchy of needs, self-actualization, and self-transcendence. Maslow’s optimistic perspective on human potential was a cornerstone of the human potential movement he co-founded. His books have stood the test of time and continue to influence mainstream psychological thought. I highly recommend them for anyone seeking personal growth. In terms of business ethics, a book that has profoundly resonated with me is “Ethics and Excellence” by Robert C. Solomon. This book introduced me to the concept of stakeholder thinking and I have revisited it numerous times for its valuable insights.
Solomon and Ed Freeman were close friends, and I was acquainted with Ed as well. I had been pondering about stakeholders without having the right terminology for it until Solomon provided me with the language he had learned from Ed. This led me to delve into Ed’s books on Stakeholder Management, which I highly recommend. Certain books have a profound effect on us and can be considered as classics of world literature, such as the works of Russian authors like Tolstoy and Dostoevsky, as well as modern authors like Souls and Nitzan. These authors were exceptional observers of human behavior, and their books have a transformative impact on readers by expanding their worldview. Personally, I also found Ken Wilbur’s books to be influential.
David Gardner: I have not personally read his work, but you have referenced him multiple times in your book.
John Mackey: Ken’s introductory book is titled “A Theory of Everything” and consists of just a few hundred pages. It serves as a comprehensive explanation of all aspects of existence. The integral perspective emphasizes the continuous evolution of all entities, such as humans, cultures, and minds.
Integral thinking proposes that individuals progress through various stages of personal development, transitioning from conventional to modernistic, and potentially to post-modernistic, integral, and even beyond. I strongly believe in this concept and have delved into numerous self-help books to support my growth as a person. One book that profoundly impacted me is A Course in Miracles, which I began studying in 1984. It is worth noting that I came across this book shortly after trying MDMA for the first time when it was still legal, also known as Ecstasy or Molly today. This experience heightened my awareness of the transformative power of love. A Course in Miracles serves as a spiritual guide to deepening one’s connection to love. The book suggests that our reality is akin to a dream – we wake up every day to a new dream that we perceive as real, much like a dream while we sleep feels authentic in the moment. Interestingly, in this dream-like existence, we are the dreamer, but there are other individuals in the dream who appear to act independently of us.
We may feel like we have no control over our thoughts, but in reality, we are the ones creating them as the dreamer of our own dreams. The course suggests that even though we may believe things are different, we are actually still in a state of unawareness. Its teachings aim to guide us towards a deeper awakening to love by asserting that love is our fundamental essence, obstructed by various negative emotions like judgments, anger, fear, guilt, and resentment. These negative thoughts prevent us from recognizing the presence of love. Through the practice of forgiveness and releasing these hindrances, we become more conscious, allowing our hearts to gradually open up to experience more love. The ultimate goal, as outlined in the course, is to fully awaken from the dream state and no longer be bound by illusions.
David Gardner: I was about to mention that we need to wake up in the end. John, I appreciate your input, it’s very useful.
John Mackey: There are some books, and there are many others as well.
David Gardner: I have a book suggestion for you, in case you haven’t already seen it. Are you familiar with the book A Swim in a Pond in the Rain by George Saunders?
John Mackey: No.
David Gardner: Highly recommended for you.
John Mackey: Could you please send a text message?
David Gardner: Certainly. I shared that with you because I believe you will find it valuable in the future. A creative writing professor at Syracuse University delves into Russian literature, particularly their short stories, in this book. While some stories may be familiar to you, the professor also provides his insightful commentaries on them. It’s an exceptional book that I believe you will enjoy, as I have.
John Mackey: Are you referring to Russian short stories by authors like Chekhov and Tolstoy?
David Gardner: Sure. You will enjoy Checkhov and [inaudible], I believe. For every 50 book recommendations you receive from me, you can expect to give me a thank you. Speaking of books, let’s revisit your book, John. I recall a fascinating chapter that you shared with me about a challenging experience you faced, which I like to refer to as “The Flood and the Loan.” It is common for entrepreneurs to have stories of overcoming near-death situations in their business journey. John, could you share with us the details of the flood incident followed by the loan story?
John Mackey: A few years ago, we ran a vegetarian store called Safer Way, which had strict guidelines – no alcohol, coffee, or sugar. The store was located in an old Victorian house, where my friend Renee and I eventually moved in. Despite making many mistakes initially, we eventually managed to move on and merge with another small natural food store. This led to the birth of Whole Foods Market. Although we transitioned from being strictly vegetarian to selling meat, seafood, alcohol, coffee, and sugar, we maintained our commitment to high-quality natural and organic products, free from artificial additives and preservatives.
Within six months of its opening, the first Whole Foods Market store had become the top-selling natural food store in the United States, surpassing all others in volume. Nine months after its launch, the store was constructed in a designated 100-year flood zone. Despite being warned by the building owner about the risk of flooding, the store was still built with the assurance that such an event was unlikely to occur frequently. However, to mitigate the risk, the store was elevated two feet higher than the ground level. Unfortunately, in its first year of operation, a rare hundred-year flood event took place, resulting in the store being inundated with eight feet of water. The store suffered extensive damage, and one employee had to swim out of the flooded store while closing it for the night.
David Gardner: Wow.
John Mackey: The store suffered extensive damage due to a flood, leaving it in ruins. Despite the lack of familiarity with the term at the time, the concept of stakeholders became apparent in 1981 as those who cared about the store’s well-being stepped in to support. These stakeholders, including both known individuals and strangers, rallied together to assist in the cleanup efforts. The community’s overwhelming show of solidarity was exemplified by individuals expressing their love for the store and their determination to help it survive the crisis. Team members volunteered their time to aid in the restoration process when financial constraints made payroll impossible. The unwavering commitment of the team and the generosity of suppliers and investors played crucial roles in the store’s eventual recovery.
The most significant event was when our bank granted us a $100,000 loan based solely on my signature, which was surprising because my signature held no value. Typically, banks require collateral for such loans, but in our case, they didn’t. I was extremely grateful for this. Years later at a conference, a man approached me, and though he seemed familiar, I couldn’t quite place him. He mentioned he used to work at City National Bank and recalled how they had provided us with the loan. I expressed my appreciation for the bank’s support during a flood. The man revealed that the bank had actually initially rejected our loan application due to the high credit risk we posed. However, a banker named Mark Monroe had personally guaranteed the loan because he had faith in our ability to repay. This act of kindness and belief in us left me feeling grateful and humbled.
He took a chance on us without informing me. I immediately expressed my desire to thank Mark for his support, but was informed that he had passed away a few years ago. He was an unrecognized hero. This highlights the significance of stakeholders in a business, as they are individuals who have a vested interest in its success. In business, creating value for all stakeholders is crucial. Customers have the choice to shop elsewhere if they are unsatisfied, while employees can seek opportunities elsewhere. However, by providing fair pay, growth opportunities, and valuable experiences, employees are motivated to stay. Suppliers and investors also have the freedom to choose whom they do business with. As a company, being involved in and supporting the community is essential. The speaker learned about the importance of stakeholders after reading Bob Solomon’s book “Ethics and Excellence,” and realized that they were the ones who ultimately saved Whole Foods Market. Since then, the speaker has been dedicated to showing gratitude to these stakeholders.
David Gardner: Such a captivating narrative you shared on the podcast about “The Flood and the Loan.” While I was already familiar with the flood story, your detailed account in the book truly resonated with me and shed light on the concept of conscious capitalism. This approach emphasizes creating a mutually beneficial ecosystem where all participants thrive, fostering a culture of success and collaboration. Your insights, particularly on investing in companies like Whole Foods for the long term, are commendable.
I found the discussion on the early days of the Natural Foods movement in the early 1980s quite enlightening. During this period, natural and organic foods were gradually gaining popularity, with only a few high-quality stores in major cities and minimal national competition. The emergence of “The Network,” as you referred to it in Chapter 10, played a pivotal role in shaping the movement. Could you elaborate further on the composition, history, and significance of this network?
John Mackey: In the past, during the rise of the natural foods and organic industries, there was a transition from health food stores that mainly sold supplements and some packaged food, known as pill shops, to natural food stores that primarily focused on selling food items like organic produce, whole grains, beans, nuts, seeds, and natural meats. As awareness grew, entrepreneurs across different locations, including Austin, realized they were part of a larger movement after reading the Natural Foods merchandiser trade journal. This led to a connection and a sense of unity among like-minded individuals who saw themselves as part of a movement.
The majority of us were part of the counterculture movement, identifying as hippies and advocating for a shift towards consuming natural, healthy, and organic foods instead of processed junk food. We viewed ourselves as agents of change in revolutionizing America’s eating habits. Our group was spread out across different regions, coming together three times a year to share insights on various aspects such as finances, marketing, and merchandising strategies to improve our businesses collectively. This collaboration not only enhanced Whole Foods as a company but also fostered strong friendships among us. We were early in seeking venture capital funding and conducting an initial public offering, which provided us with a valuable financial foundation. Over time, many of the entrepreneurs decided to sell their businesses to us, allowing them to achieve financial success and pursue their personal goals. Meanwhile, Whole Foods expanded its reach by acquiring businesses like Bread and Circus, Mrs. Gooch’s, Unicorn Village, Bread of Life, and Fresh Fields, enabling us to establish a presence in different regions.
We made platform acquisitions and also acquired talented individuals to fuel our growth. In any growth process, there will always be constraints, similar to how food can limit species in biology. In our case, capital was a limiting factor until we went public, after which talent became the main constraint. Acquiring other companies brought in skilled individuals such as Walter Robb, Will Paradise, AC Gallo, and David Lannon, who significantly enhanced Whole Foods when they joined our team.
David Gardner: I recently found it very fascinating. The network thrives due to the shared enthusiasm in cities like Miami or Los Angeles, allowing individuals to connect and get to know each other. This was never explicitly planned and is not meant to be seen as opportunistic. In a humorous turn of events, you ultimately ended up acquiring most of them.
John Mackey: It wasn’t aggressive in any way, but sometimes when I recount the story, journalists portray it as such, suggesting that we seized control without mercy. [laughs] That was not the case.
David Gardner: We made a purchase from them.
John Mackey: They sold their businesses of their own accord, as we were not pressuring them. They were enticed by the generous financial offers we made, prompting them to sell or prompting them to initiate the sale themselves. Frequently, they would reach out to us and ask if we would be interested in buying their business.
David Gardner: In numerous instances, these individuals eventually joined your team and evolved into some of your key deputies and top performers as time passed.
John Mackey: Indeed, it proved challenging for the entrepreneurs who had established their own businesses to transition to a subordinate role under my leadership. I often joke now that I came to understand this reality through a challenging experience. Once you have been a CEO, it can be hard to find another suitable role. [chuckles] The transition was quite tough. Following Amazon’s acquisition of Whole Foods, one of the difficulties I faced, as they candidly mentioned later on, was that if I wanted to retain control over my business, I should not have sold it to Amazon. It was a valid point, and while they initially allowed me a considerable degree of autonomy in managing the business, this changed over time.
David Gardner: Indeed, it is purely coincidental that on the same day I am speaking with the founder of Whole Foods Market, two other leading companies in the food industry are also undergoing CEO changes. Starbucks The market experienced a significant impact as the company’s stock surged by approximately 20% following the announcement of the appointment of their new CEO, Brian Niccol, who currently holds the position of CEO. Chipotle .
John Mackey: Really? Wow.
David Gardner: Were you unaware of that?
John Mackey: No, I haven’t observed that today.
David Gardner: Oh wow, it’s already today.
John Mackey: I’ve spent the whole day getting ready for this podcast. [laughs] You haven’t been keeping up with the news.
David Gardner: None of us anticipated this turn of events, but John, now that we are gathered here, your book delves into the backgrounds of the executives you have collaborated with, also known as your E-team. It emphasizes the significance of leadership and the impact of these personalities on Whole Foods. Today, Starbucks made a significant move, resulting in a 20% increase in its market capitalization, soaring from around 80 billion to approximately 100 billion. This move involved hiring Chipotle’s current CEO, causing Chipotle to suffer a decrease in its market capitalization by about 10 billion, dropping from around 70 billion to 60 billion. In light of these developments, I can’t help but bring this topic to the table and ask for your insights, Mackey.
John Mackey: Was Howard Schultz still in charge of Starbucks?
David Gardner: Howard had returned as CEO for the third time, after having previously held the position. Interestingly, Howard is mentioned in your book and can be discussed further if desired. He later passed on the role to another CEO who was struggling and was subsequently replaced.
John Mackey: Did Brian Niccol replace that CEO?
David Gardner: Today.
John Mackey: Certainly, Brian has led Chipotle to great success. The impact of a CEO can be significant, as seen with Sprouts in the grocery sector where market value has significantly increased under their CEO’s guidance. Effective leadership plays a crucial role. It remains to be seen how this will play out, especially considering the differences between Mexican food and coffee. There may be concerns regarding non-compete agreements with Chipotle and the possibility of recruiting employees from there.
David Gardner: It would be interesting to keep an eye on that too. It is surprising. It’s not common, especially in this field that you are familiar with, to witness someone, I mean, we are accustomed to it in sports. Oh, you just traded us your star center fielder. But we rarely see this happening on such a large scale in the corporate world.
John Mackey: As I ponder it further, I’ve come to realize a significant aspect beyond just having good management skills. Starbucks has struggled in the area of food, unlike their well-established expertise in coffee which rivals the consistency of McDonald’s products. Food has always posed a challenge for them. Even though I didn’t mention it in my book, I recall a conversation with Howard years ago where he inquired if Whole Foods could assist with their food offerings, given Starbucks had thousands of locations nationwide. I declined due to the scale being too vast. It seemed like Howard might have considered acquiring Whole Foods at one point to address this issue, but nothing materialized. It’s evident that while Starbucks excels in coffee, their food offerings fall short in quality, potentially impacting the brand. If Brian Niccol can enhance Starbucks’ food offerings, it would undoubtedly be a worthwhile investment for the company.
David Gardner: A member of our team, Sina Hassona from Motley Fool, humorously suggested that Niccol decided to join the new company because he could now introduce breakfast options, like breakfast burritos, which many customers have been eagerly requesting at Chipotle.
John Mackey: Chipotle does not serve breakfast.
David Gardner: That concludes our discussion for now. Next, we’ll shift our focus to Brian Niccol. John, let’s revisit the topic of your book. The most joyous occasion in your life was marrying Debra, your wife of 32 years. Debra hails from a sizable Catholic family, similar to my upbringing. The account of your wedding day in the book didn’t take me by surprise due to our shared Catholic background, but it was still quite remarkable. Could you kindly recount the memorable moment from your wedding day and share your thoughts on it once more? [chuckles]
John Mackey: Well.
David Gardner: What happened?
John Mackey: You need to return to the past. My wife is from a Catholic background, and even though she didn’t actively participate in the Catholic faith, her spiritual pursuits led her elsewhere. Since her family placed great significance on Catholic traditions, we had a grand Catholic wedding ceremony. With her extensive family, I often humorously mention that our wedding had approximately 500 attendees, with around 75 being my guests and the remaining 425 from her side. [chuckles]
David Gardner: I believe that was meant to be humorous.
John Mackey: I am from a small family. We went through premarital counseling, which we did when we were slightly older than most other couples. We had to attend two weekends of sessions where Catholic mentors advised us to stick together through tough times as all marriages face challenges. They also discussed birth control, emphasizing a method different from the rhythm method, although it essentially aligned with it. This was the only approved contraceptive option back in 1991 when I got married, 33 years ago. I believe the Catholic Church may have updated its teachings since then. During the wedding, I share a humorous anecdote about getting lost and almost being late for my own ceremony.
However, in this instance, I arrive before the wedding begins and the priest officiating our marriage immediately takes me aside. He explains that before conducting the ceremony, I must sign a document. Upon reading it, I discover that it states I must agree to raise any children we have as Catholic. I express my surprise and frustration at being presented with this requirement on the day of the wedding. I question why it couldn’t have been addressed earlier. The priest reassures me that there should be no issue. However, I argue that this feels like coercion. I am informed that if I refuse to sign, the priest will not proceed with the ceremony.
David Gardner: Wow.
John Mackey: I initially considered calling their bluff, but ultimately decided against it as it would deeply hurt Deborah. It felt manipulative and I saw it as coercion. I ended up signing the agreement, but I didn’t see it as legally enforceable. In the end, it seems Deborah got the upper hand as we never ended up having children.
David Gardner: Can you share about the happiest day of your life and why it was so special, even with some pressure? Also, John, could you tell us about the second happiest day of your life and what made it memorable?
John Mackey: The IPO of Whole Foods on January 23, 1992, was like a memorable event for the team, comparable to losing one’s virginity. It was a unique experience as they made their debut on Wall Street with only 12 stores. The founder expressed the need to remove venture capital investors to prevent them from taking control. Despite starting Safeway in 1978, it took 14 years to go public. Investors who had faith in the company had the option to either sell their shares for a significant profit or hold onto them for the long term.
The main idea is that I had delivered on my commitment regarding the car, allowing the venture capitalist and others to exit if they wished. Our initial investors could also choose to exit partially or entirely. This situation reminded me of Warren Buffett’s transition from a limited partnership to Berkshire, where investors had the option to move their funds. I felt a sense of accomplishment in fulfilling my promises to our early backers, which brought me joy. Additionally, the successful IPO made me financially comfortable, as my net worth reached around $7 million. This transformation from being financially struggling to prosperous was a remarkable and happy moment for me, as it seemed like our efforts were being recognized and appreciated by others.
David Gardner: Shifting focus from an initial public offering (IPO), I would like to highlight the exceptional achievements of only a few CEOs who have not only proven their intelligence and success but have also distinguished themselves as writers and intellectuals. Among them, John stands out for his passion for reading, engaging with prominent figures like economist Milton Friedman, authoring books, and spearheading a new business ideology. Today, I would like to delve into the concept of conscious capitalism with John. Before we do that, let me share an insightful passage from his book, specifically from Page 329. In this excerpt, John reflects on the challenge of being pigeonholed into specific political or ideological categories due to his unconventional business practices and beliefs. Despite advocating for values like love in business, serving a greater purpose, and benefiting all stakeholders, John has also defended capitalism, opposed excessive unionization, and emphasized the importance of individual freedom and personal accountability over government intervention and socialist principles. John’s journey from being a countercultural figure with doubts about capitalism to becoming a proponent of conscious capitalism exemplifies a philosophy that defies simple categorization. So, why do people find it difficult to neatly define this approach to capitalism championed by John?
John Mackey: I believe there are numerous reasons for this perception. One issue is the significant influence that Marxism has had and continues to have on intellectuals, evolving into what is now referred to as cultural Marxism. Another factor is the misunderstanding of business as a zero-sum game, where one person’s gain must result in another person’s loss. Individuals like Elon Musk and Jeff Bezos are often criticized for being excessively greedy as they amass significant wealth. However, it is essential to recognize that their success is not solely due to greed or unfair practices, but rather because they have generated value for society. Companies like Amazon have positively impacted our lives, contributing to the wealth these individuals have amassed.
As an Amazon customer who is also a prime member, you can now enjoy the convenience of one-click purchasing and receive your items on the same day or within 24 hours at competitive prices. This exceptional service has contributed to Amazon’s success, making Jeff Bezos one of the wealthiest individuals globally. Tesla SpaceX and other companies he has worked with, PayPal These significant benefits are generated for customers through trade, which is done willingly. Many individuals fail to recognize this aspect of business. Capitalism, in its essence, is positive. One does not necessarily have to be a conscious capitalist to contribute to the greater good. Capitalism naturally results in the creation of value for all involved parties. However, when one embraces conscious capitalism, they grasp the interconnectedness and engage in more mindful practices. While it is true that there are greedy business people, the same can be said for professionals in other fields such as doctors and lawyers.
David Gardner: Yes.
John Mackey: Politicians?
David Gardner: Yes, also politicians.
John Mackey: Human behavior remains consistent regardless of whether one is employed by the government or a business. Both sectors have individuals who can be either ethical or unethical. The advantage of operating within a business and capitalist system is that if a company fails to meet the needs of its customers, they can simply take their business elsewhere. This provides a form of regulation through market competition. In contrast, disciplining government entities can be challenging as voting alone does not always lead to effective accountability. Businesses that do not provide value to their customers risk losing them to more competitive alternatives, leading to ongoing advancements and progress. Capitalism is favored for its ability to create mutual benefits for customers, employees, suppliers, investors, local communities, and the global society.
Many individuals are unaware of the significant advancements that humanity has achieved in the past couple of centuries. This is not typically included in school curriculums. Instead, students are primarily taught about historical mistakes, crimes, and negative events, without much focus on the progress and positive developments that have taken place. For instance, around 1800-1820, over 94% of the global population lived on less than $2 a day, with 85% living on less than $1 a day when adjusted for inflation. Today, the percentage of people living on less than $2 a day has decreased to about 6%, which, although still too high, demonstrates the impact of capitalism in reducing poverty levels. Additionally, 200 years ago, 88% of the world’s population were illiterate, whereas today, that figure has dropped to 12% and continues to decline. Life expectancy has also significantly increased from an average of 30 in the past to nearly 80 years worldwide today. These improvements extend to various aspects of life, as highlighted in Steven Pinker’s book, “Enlightenment Now,” which emphasizes the remarkable progress made across different spheres. Despite acknowledging challenges like climate change and potential trade-offs that come with progress, it is essential to recognize the overall advancements and encourage a positive outlook on the present compared to any other period in human history.
David Gardner: At what time period and location would you prefer to be born?
John Mackey: In my opinion, there has never been a better time to be alive than the present. Looking back 200 years, people did not have access to modern dentistry or antibiotics. During the Civil War, if someone was injured, amputation was often the only option as infections could not be treated with antibiotics. General anesthesia was not available, so opium was used for pain relief, leading to many people becoming addicted. We have made significant advancements in various areas, but this progress is often overlooked. I am striving to share this untold story to the best of my ability.
David Gardner: I appreciate your articulation of the message. Over the years, I have both listened and conveyed similar ideas to others. Many of those currently listening are likely investors who have received guidance, including from me, on aligning their investment portfolios with their optimistic vision for the future. It’s a remarkable time to be alive, where we can save money and allocate it towards organizations that make a positive impact on the world and have sustainable growth. This collective effort can lead us all to prosperity, although it is a gradual process. Market fluctuations are common, with periodic downturns every few years. Achieving financial success requires patience and perseverance, but it’s a privilege to be part of this journey. I, for one, am grateful for the opportunity to experience these moments.
John Mackey: I suggest another excellent book for those looking to cultivate a more optimistic outlook, in addition to Matt Ridley’s “The Rational Optimist,” which is also highly recommended. Jeremy Siegel’s book “Stocks for the Long Run” is another great read on this topic. I have read all the editions of this book because it illustrates how the stock market mirrors societal advancements and the innovative companies that challenge the status quo, the game-changers.
David Gardner: Thank you.
John Mackey: Those who break the rules are the ones who have the power to make a positive impact on the world. Progress is achieved thanks to these individuals who challenge the status quo. In my opinion, the term “rule breakers” is more fitting than “disruptors.” [laughs]
David Gardner: I appreciate your kind words. This is a significant aspect of my life’s endeavors, and I acknowledge that you excel in branding. The phrase holds great importance to me.
John Mackey: Rule breakers and rule makers make for effective branding.
David Gardner: Not bad. Let’s talk about rule breakers, John. There are a couple more topics I’d like to discuss with you. Let’s delve into the topic of rule-breaking Amazon. You made the decision to sell your company to Amazon, which is known as one of the biggest rule breakers of our time. In your book, you discuss the reasoning behind this decision. You were facing immense pressure from shareholder activists who were trying to take control of the company and compromise its values for short-term financial gain. This is what we refer to as unconscious capitalism. Selling to Amazon seemed like a strategic move to avoid this fate. However, after spending five years with Amazon, you eventually parted ways with the company and bid farewell to Whole Foods Market, a business you had founded and cherished. Would you like to share any further insights on your experience with Amazon, the decision to sell, or your reflections post-departure?
John Mackey: The most frequently asked question I receive is whether I regret selling the company to Amazon. My answer is that I regret the circumstances that led to that decision, but given the limited options we had, it was the best choice. We explored other possibilities such as selling to Warren Buffet or Albertson’s, but ultimately selling to Amazon seemed like the most viable option for our company’s future. While I sometimes think about the alternative paths we could have taken, I believe that selling to Amazon was the right decision as it allowed us the time and resources needed to revitalize the company. One of the key benefits of the acquisition was that it enabled Whole Foods to lower prices and stay competitive in the market, something we struggled with due to increasing competition and imitation of our products. Despite initial challenges, Amazon’s support in dropping prices at Whole Foods helped the brand remain relevant and competitive in the long run.
It required a significant investment of hundreds of millions of dollars, but one admirable aspect of Jeff Bezos and Amazon is their long-term perspective, looking ahead 10 to 15 years. This strategic approach has been beneficial. The focus on Whole Foods’ pricing has diminished significantly. Amazon promptly raised the wages of all employees post-merger. By raising the minimum wage to $15 in 2017, this also led to pay raises for most staff. Hourly employees at Whole Foods also received salary boosts, incurring substantial costs for Amazon in the process.
David Gardner: Wow.
John Mackey: Our suppliers maintained their business relationships with Whole Foods and also started doing business with Amazon after the company analyzed our sales and customer base. This move resulted in a significant increase in value for our investors compared to before the activist investor intervention. Despite some disagreements with Amazon’s leadership over the years, I always strived to protect Whole Foods’ culture, which was a top priority for me. While Amazon did not aim to change Whole Foods, their strong corporate culture and size made them a dominant force. I was concerned about how our culture might be affected by this acquisition, leading to some of the conflicts I faced. One major cultural dispute ultimately influenced my decision to step down and focus on personal matters. Despite these challenges, I have a deep respect for Amazon and believe that aligning with them was the right move at that time.
David Gardner: You have now moved on because running a business is like playing an endless game, and you enjoy participating in that game. John, is there anything more you would like to share about your personal life before we finish with our discussion on buying, selling, and holding?
John Mackey: As my 71st birthday approaches in just three days, I often question my motivations for starting Love Life. While building a business is enjoyable, my main drive stems from witnessing the remarkable transformations that occurred during our Total Health Immersions program at Whole Foods. Participants would spend a week in a retreat-like environment, receiving intensive education on managing their diet and overall health. The progress they made in just a week, such as weight loss, lowered blood pressure, and improved cholesterol levels, was astounding. Some individuals even managed to shed over 100 pounds in a year, showcasing the program’s transformative impact on their lives. This success has fueled my dedication to enhancing people’s well-being through Love Life.
Embarking on this venture represents my hero’s journey, a calling I cannot ignore. I am aware that there are no guarantees of Love Life’s success, but the thought of not trying it and living with regret is far more daunting to me. By taking this leap of faith, I am embracing the unknown and following my purpose, rather than just coasting through life with financial security. I am excited about the potential of Love Life and invite everyone to visit our new location in Los Angeles, located in El Segundo, just south of the airport.
David Gardner: As previously stated, I am a shareholder and a member of the board. I also advocate for others to participate in these actions. [laughs] John, let’s conclude with our game of buy, sell, or hold. Although these are not actual stocks, if they were, John Mackey, could you share whether you would buy, sell, or hold onto them, and provide a brief explanation for your decision? Let’s begin. Are you prepared?
John Mackey: Hit it.
David Gardner: Should one consider purchasing, selling, or holding onto shares of the New York Yankees as if it were a stock?
John Mackey: You should definitely invest in the Yankees as they are currently performing exceptionally well this season. With star players like Judge and Soto, and a prestigious history in baseball, the Yankees are undoubtedly a top choice for any investor.
David Gardner: Many individuals have a strong dislike for them, and I believe that as a devoted Astros supporter, you also hold negative feelings towards them. Despite this, I wholeheartedly concur with your response.
John Mackey: I’m not rooting for him as I support the Astros. [laughs] If you want to know my opinion on the Yankees’ future prospects, then I would recommend buying.
David Gardner: Purchase. The following option. If private land ownership were treated like a stock, would you buy, sell, or hold onto it?
John Mackey: In my opinion, I prefer holding onto real estate investments because I already own a significant amount of land, and it doesn’t appreciate as much as stocks do in the long run. While many believe that real estate offers higher appreciation, I believe this is not the case, as emphasized in Jeremy Siegel’s book, “Stocks for the Long Run.” However, I am content with my current real estate assets, which include a ranch, a house in Boulder, and a house in Austin, as they are part of my lifestyle with my spouse. I have no intention of selling these properties. When it comes to investments, I would choose to hold onto real estate rather than sell, unless the goal is to generate substantial profits. If one is not an expert in the real estate field, it may be challenging to profit significantly. Personally, I would only sell properties that are not of personal importance to me.
David Gardner: Today’s youth can either purchase, trade, or retain items.
John Mackey: If you put it in terms of grandchildren, I would suggest purchasing. [laughs] I am turning 71 soon, so I suppose I will keep what I have, but I am not interested in acquiring more.
David Gardner: So, what do you think about the younger generation, whether you refer to them as Gen Z, millennials, or by any other name?
John Mackey: In my opinion, we are currently living in the best era in the history of the world. When people ask me about the ideal time to be born, I always respond by saying a century from now because I believe that the future will be even more promising. Looking back at how the world was a century ago, we can see significant improvements in many aspects. Therefore, I am optimistic that life will be ten times better in a century from now. So, young people, embrace the future.
David Gardner: I agree with your point. I understand the direction you are taking with this topic. Could you elaborate on why you think labor unions, if treated as a stock, should be categorized as buy, sell, or hold, in a few sentences?
John Mackey: I believe I would maintain my stance. Labor unions have been on the decline for some time, however, they are starting to gain some momentum. I view labor unions as a rival to corporations. If employees are not treated well, they have the option to unionize, which creates competition for the employer. Competition can be beneficial as it motivates companies to improve working conditions to retain their workforce. Historically, labor unions have played a crucial role, especially when considering the harsh labor conditions of the 19th century. While I don’t believe they are as essential today, there are instances where they still serve a purpose. Therefore, I would stick with my decision to hold this perspective.
David Gardner: Rule Breaker Investing is the topic that I cannot leave out. John Mackey could be compared to a stock, although he isn’t exactly one. This is not about selecting individual stocks to buy, sell, or hold.
John Mackey: Purchase, child, purchase.
David Gardner: You can be sure of it. What is the reason?
John Mackey: I enjoy investing in stocks recommended by the Motley Fool. While not all of their recommendations are successful, I have held onto the ones that have performed well for many years. I sell the underperforming stocks, engage in tax harvesting annually, reinvest the proceeds, and monitor my investments closely. I like to compare the performance of my Motley Fool portfolio with my Vanguard index funds, and currently, the Motley Fool portfolio is outperforming the index funds.
David Gardner: Thank you for your kind words. We were fortunate to have exceptional fathers who guided us in business and investing, offering valuable advice throughout our lives. John Mackey, your wisdom and experiences are truly inspiring. It is a pleasure to showcase you in this year’s authors in August. I am excited to see what you will write or read next, whether it is another book or a different topic. Your insights are always appreciated.
John Mackey: If I were to choose another book, it would be about Love Life. I hope that it will have an interesting enough story to write about in the future.
David Gardner: Thank you very much, John. I hope you have a wonderful week ahead. Take care.
John Mackey: Thank you, David. Same to you. I’ll be in touch shortly.
