John Mackey: Learning to Share Power
Whole Foods Market cofounder John Mackey dropped out of college in 1978 and borrowed $45,000 from family and friends to found his first health food store, SaferWay. He lived above the store as he got the business going. When he acquired another natural foods store, he renamed the business Whole Foods Market. Through a series of acquisitions, Whole Foods morphed from health foods into a supermarket selling healthy foods. Although he has created $14 billion in value for his shareholders, John takes no salary or bonus and owns only 0.2% of the company’s stock.
When you meet John, you know you’re talking to an authentic leader: a committed capitalist who is exceptionally passionate about healthy foods and transforming unhealthy eating patterns. He is devoted to his customers and his employees and outspoken in his views. He asked, “If Whole Foods doesn’t take a leadership role in educating people about healthy diets, who the heck is going to do it?”
I first encountered John’s philosophy through his remarkable debate with Nobel Prize-winning economist Milton Friedman about whether the purpose of the corporation was to serve its customers and fulfill its mission or maximize returns to its shareholders. As he said, “We don’t sell healthy foods to earn a profit. We earn a profit to sell healthy foods.” I was pleased when John asked me to write the foreword to his signature book, Conscious Capitalism. In it, he wrote, “We should commit ourselves to following our heart and doing what we most love and what is most meaningful to us.”
John had to overcome many obstacles to get on the path to sustained success. In 2008-2009, he faced the greatest challenge of his career. It started with Michael Pollan’s criticisms in The Omnivore’s Dilemma. Then Whole Foods’ acquisition of Wild Oats was challenged by the Federal Trade Commission (FTC) for monopolizing the natural foods market. In the midst of the FTC investigation, the Securities and Exchange Commission discovered that John had been posting criticisms of Wild Oats for eight years on Yahoo Finance’s message boards, using the pseudonym “Rahodeb.”
Meanwhile, Whole Foods’ spectacular same-store sales growth began to slow. In the face of this pressure, its stock price collapsed, declining 88% from $38.70 to $4.72 by December 2008. The drop caused hedge fund raider Ron Burkle to buy 7% of Whole Foods and agitate for changes in its leadership. As a consequence, the Whole Foods board stepped in to determine what was required to preserve the company.
John, who had a reputation for being a lone ranger and very outspoken, realized he needed to change. He eventually welcomed the board’s constructive inputs, recognizing that he had to transform his leadership from operating so independently to become more of a We leader. Ultimately, the board settled the FTC suit, agreeing to sell 32 Wild Oats stores in overlapping markets. It stripped John of his chairman title, appointing longtime board member John Elstrott in his place, and ordered John not to make public statements. The following year, Whole Foods veteran Walter Robb became co-CEO alongside John.
Since these changes, the business has gone exceptionally well. Whole Foods has expanded from 284 stores to more than 500, revenues grew from $8 billion to $17 billion by 2021, and Whole Foods stock soared 10 times from its 2008 low to $44. Whole Foods’ co-CEO structure has worked well, because John and Walter Robb created a formidable partnership based on mutual respect. Although John’s outspokenness occasionally gets him in trouble, he has proved himself to be much more than a passionate entrepreneur. Today, he is a great We leader of the Whole Foods team.