When you're truly authentic, a lot of good things happen. Everybody doesn't like you. Let's just state that for the record. A lot of people won't like you when you're authentic. And that's why most people aren't authentic because they're worried people won't like them. But the thing is the people that like you, they really like you for who you are, and not for who you're pretending to be. - Welcome to How Leaders Lead. Where every week you get to listen in while I interview some of the very best leaders in the world, I break down the key learning so that by the end of the episode, you'll have something simple. You can apply as you develop into a better leader. That's what this podcast is all about. As a leader, you know, there's often tension between the big ideas and dreams you have and the pressure you feel to conform to convention or other people's expectations of you. So how do you navigate that tension? - Well, I can't think of a better person to shed some light on that big question than my guest today. John Mackie is the co-founder and former CEO of Whole Foods, which has got to be one of the most compelling retail success stories in recent memory. But as you'll hear today, building it wasn't easy and it wouldn't have happened at all if John had caved to the expectations and conventions around him. Instead of following his own path, every leader needs to find their own path and follow it. And when you have the courage to follow yours, you can make some big things happen. This episode is going to inspire you to do just that. I guarantee it. So here's my conversation with my good friend and soon to be yours, John Mackie. You know, you built this incredible multi-billion dollar business at Whole Foods and you describe the process by using a very specific word. You say it was play. Why do you describe it that way? - I contrast play and work in a way that play is fun. When you're having fun doing something, it's play. Work is something that you do because you have to do it, but you may not be having that much fun. And if you have to do it and you're having fun, then it can be both work and play. But I was much more keen on the play part than the work part. I just kind of always have done what I really liked to do. I mean, from a very early age, I just broke away, went my own way as an entrepreneur, followed my heart, answered the call to the hero's journey that came through my soul. And when you're doing an adventure, when you're doing what you really care about, what you wanna do, it doesn't feel a lot like work. It's creative and it's fun. - I love that. The hero's journey that comes to your soul. Talk a little bit more about that. - Well, originally that's from Joseph Campbell, but it's a really good metaphor. And I actually sort of believe everyone's called a hero's journey in life. But most of us don't answer the call because we're, well, we're too afraid. We're afraid to break away from our family if we have to or our parents. We're afraid that we might fail. We're afraid that we don't have what it takes. We're afraid that we may be rejected. We lose our friends. There are all these fears that come up. And so people play it safe. And I just didn't. I just felt like life's an adventure and we're not here that long. So yeah, go for it. - You know, speaking of an adventure, and I wanna get more into the whole foods in a minute, but you sold your business to Amazon in 2017 and then you stepped down to see you just a couple years ago. Now, how did this idea of play lead up to what you're doing today with your new venture, Love Life? - The great thing about writing and then we're actually recommend everybody do that in their own life because only looking backwards retrospectively, can you see the patterns and the threads you've created? And they, the meaning, although you can see some of the meaning as you're going along, it's when you look back and you think about it in depth, like I did when I was writing the whole story that a lot of things clicked into place that I hadn't really completely understood before. I wanted them, for example, for a long time, I kind of thought my, you know, my higher purpose in life was to build whole foods. And I concluded now that actually, that was part of the adventure instead of the end all of the adventure. And so Love Life is like the next part, Act Two, we could call it, even though I'm older, but I also believe in what I call the infinite game that you can create a business that will outlive you and outlast you and you contribute to it. An infinite game is a game, we know what finite game is, right? A finite game is like basketball or baseball or a card game and you have a set of rules and you play for a certain amount of hands or a certain amount of points or whatever and then the game ends and you declare winners and losers. An infinite game is one that doesn't ever have to end. It goes on. So business itself in a way is an infinite game. Capitalism is an infinite game. You could say life is an infinite game, it's one that DNA keeps replicating and the players change, they move in and out, people die, new players come on board, but the game itself goes on. So I see that with whole foods goes on, it was great love in my life, a great creation and it was a lot of fun, but I've moved on now and doing something else. And what I'm doing now is also part of that hero's journey or something I feel called to do, which is love life, which is a business that is gonna be, I think, I hope, over time transformative of the way we manage healthcare. It's like a holistic health membership club. So we already have a telehealth business license in all 50 states, but we wanna set up facilities. We wanna open up these flagship locations all around the country and maybe eventually around the world. So the first one's in an old Best Buy, it happens to be in an LA area, it happens to be located right next to when a Whole Foods market's most successful stores in Southern California. I have the advantage of knowing all the highest volume stores, surprise, and Whole Foods. I'd rather locate close to them when possible 'cause I think there's a good customer overlap, but we have, we'll have a healthy food restaurant, we'll have a state of the art fitness center, we'll have a spa, we'll have all kinds of alternative health things from yoga, Pilates, physical therapy, chiropractic, acupuncture, we'll have recovery modalities like cold plunges and infrared saunas and hyperbaric oxygen chambers. You know, we'll have all the high tech stuff along with that. We'll also have a medical center, and that's what sets us apart from like just a typical gym because David, when do most people go see a doctor? When they need it, they are when they're sick. And oftentimes then the doctors just prescribe drugs and they're managing symptoms. Very seldom do they reverse a disease through pharmaceuticals unless it's a vaccination or it's an antibiotic and you have something into bacterial infection. Otherwise, they're just really managing symptoms. But our philosophy that we wanna change is that the doctor's job comes from trying to tend the sick into almost being a coach, helping people by going in and doing deep assessments and getting your kind of your baseline health and then creating an individualized plan for you personally with a health coach and the doctor standing above that, developing a plan for you to become the healthiest version of yourself, physically, emotionally and spiritually. And so I really think humanity could have this great lift off in terms of our health and vitality that would transform the medical care system. So anyway, to me that's playful, it's a lot of work, but it's fun, it's creative, I'm doing something. I'm back in startup mode, David, I mean-- - I know, you're starting it up. - And that's the startup mode is really fun because you haven't built a bureaucracy yet, you're not weighted down by the HR department and the legal department and you could be highly creative and playful and that stuff will come eventually as it scales, but also I get the opportunity to not repeat a few of the mistakes I might have made along the way. I make new ones. - Once an entrepreneur, always an entrepreneur. - You know, shifting gears for a minute, I wanna take you back, John, tell us a story from your childhood that shaped the kind of leader you are today. - I grew up in a family, particularly with a father that liked to debate things, that you had to be able to defend your point of view, you had to have logic, facts, evidence, you had to be rational. And if you can make a good argument, then maybe my father would change his mind. That was rare that you could make a good enough argument that changes mine, but I learned how to do that. So I became that kind of leader in the sense that if people, I wasn't too attached to the idea of being my own, if people had better ideas, I would wanna implement those ideas. Or if I had an idea and they could improve on it or iterate on it, I would go along with that. Or if I had a bad idea, which wasn't a rare occurrence, people would tell me all the reasons why it was a bad idea and we'd drop it. So I created a culture with my leadership team where we were peers and best ideas won, regardless of where they came from. And an idea was one that people liked and they would try to improve upon it. And so I think that leads to better decision-making. When ideas are thought through, well through, the team has to get behind them. They're dissected, they're debated, and the best ideas stay on top. It took me a long time, David, to figure out most people aren't rational. Most people don't change their minds when you give them good facts, good arguments, good evidence. Most people follow confirmation bias. They just wanna believe what they wanna believe and they'll go find the facts to back them up. The internet's really good for reinforcing confirmation bias. You do a Google, it's coffee good for me, and the Google again is coffee bad for me. You'll find good arguments on both sides and you can pick which ones you wanna believe. - That's great. And you started what is now Whole Foods when you were a self-professed hippie. Hippies are stereotypically laid back. Where'd you get the fire to build companies from the ground up? Because this is not something you can do with the Laissez-Faire attitude. - I think that's true I talked about the hippies was overdone, in other words, the media portrayed them that way because they saw them as a bunch of way about no goods 'cause they weren't jumping into society. But what they really were doing was they were just following kind of a different drummer. But that doesn't mean hippies didn't have a lot of passion. They didn't have a lot of things they were interested in. They dove deeply into them. They just might've been unconventional. A lot of entrepreneurship. I mean, somebody like Steve Jobs was pretty much a hippie. If you know his story, I mean, his lovers were Joan Baez and definitely walking around barefoot, I mean doing his own thing. So he wasn't branded that, but in fact, that's what he was. He was coming out of the counterculture. He never graduated from college. So I think that in that era, there was a counterculture movement that had three major sources to it. If you think about it, if you analyze it. First was a kind of a great awakening to alternative spirituality. The new age spirituality came out of that particular time, as well as kind of a rebirth of certain evangelical Christian forms came out as well. We also had a social justice movement for anti-racism, for more equity in society. Social justice really gained steam in the '60s and '70s. And then finally, they had the environmental movement that really took off. So the counterculture had kind of streams coming in from those three different areas. And I would also say that maybe there's a fourth that hasn't been fully identified. It was a great era for entrepreneurship. I think that my father's generation had wanted to be, they're the organization men. They were the ones that just wanted to get a good job, conform, earn a living for their family, be responsible providers, but they weren't really risk takers. They weren't out there trying to create new enterprises. And then we had an explosion of entrepreneurship that began really in the '70s and '80s and still going strong today, I think. - Well, so as you think back, and you think about Whole Foods and what you were going through at that point in time as an individual, what was the big problem you wanted to solve with Whole Foods? I mean, what made you think there was opportunity? - That's why we can go back to the play question, because I wasn't trying to solve a problem. I didn't go to business school, I never took any business classes. I wasn't trying to solve a problem. I was just fascinated and very interested in natural organic foods. I had a food awakening, I moved into this vegetarian commune. I wasn't a vegetarian when I moved in, but I became one soon after. I got interested in natural organic foods. The vision I had for before I moved in that co-op, I was about 23 when I moved in, 22 or 23. We were like a car, we were like a machine. And so what was food? Food was fuel, food was gasoline. So you might as well eat what tastes good, 'cause it's all kind of the same. So you eat the food that tastes good, and it's gonna give you the fuel you need to get through the day. And that, my awakening was the realization that actually we're this living organism with tens of trillions of cells in our bodies that need to be nourished. It's not just about calories, it's not just about fuel, we're not a car. Gasoline was not gonna work for us. We need to nourish our bodies, nourish ourselves. And if we do, we can enhance our vitality, supercharge our immune system, live longer, avoid getting the kind of chronic diseases, at least for a long, long time, the bedevil people when they get older, that all happened to me when I was in my early 20s. And then I was just on fire about it. I was passionate about it. And so I became a food buyer at the place I lived, for the food buyer there. And then I became, I learned how to cook, and I went to work for a small natural food store. And I came back to the community one night, and I talked to my girlfriend, and I met in the commune, and I said, "Renee, what do you think if we open up our own natural food store?" And she loved the idea, and so that's what we did. So for us, it was play, it was an adventure, it was a game. I wasn't trying to solve a problem. I was just doing something I loved that I cared about. - Yeah, well that's interesting, because today, almost every entrepreneur I talk to, and I talk to a lot of them, they build their whole business and how they approach and develop that business on the notion of solving a big problem. But in reality, you did, because there really wasn't a healthy grocery store. - Sure, there were lots of problems, that just wasn't our motivation, it's a problem. But whole foods changed the world in many ways. And but we also kind of caught a wave. I remember such a wall of skepticism we got going from the very beginning, when we tried to raise venture capital money, I mean, even though we were successful, they just thought this was just a very limited market for this hippie food. And that there wasn't very many people interested in that. My parents' generation never really got it. And so they just didn't believe it was even possible, but we were solving a problem. I mean, you can reframe it that way. Every entrepreneur solves a problem, or it wouldn't get any business. But sometimes like C job said, nobody knew they needed an iPod until it was invented. If you'd done market research, she said they'd told you you need a bigger CD that can hold 30 or 40 songs instead of 12. Not put something I can carry out in my pocket that will have 5,000 songs or all my music on it. Hey, do that for me, that'd be great. So was he solving a problem? Not really, people didn't even know they had a problem. He was doing something he was passionate about. And the result, that changed the world and the iPod morphed into the iPhone. And now look where we are. - Yeah, and you did. You did change the way people look at food with whole foods. It's amazing success story. But I understand that your mom told you when you restarted this to do something more meaningful with your life and just go into the grocery business. Obviously you followed your passion, but what advice can you give others on when and how to follow the courage of conviction that you have? - Well, and my mother's problem was, hey, I didn't finish school. So that really bothered her because she was a college graduate and my mom was concerned about respectability. And she wanted, she saw my IQ test, all my aptitude tests, he thought, you could do anything you wanna do in life. And John, you're choosing to be a grocer. In her mind, I was doubly mobile. And I could have been a doctor. I'd be respectable. I'd be a doctor. Her father was a doctor and I could be a doctor too. And she could never figure it out, never understand why I would choose to just be, for her, a grocer was a lowly position. You know, you have an apron on and you're just selling fruits and vegetables and meat. And she just saw that as, you know, kind of not very important work. And so she was ashamed of me. She was disappointed that I wasn't fulfilling my potential. But I'd say my father, because they're the generation that grew up in the depression and the World War II hit. My dad was 20 when Pearl Harbor was bombed. He joined the military. He had to grow up really, really fast. He never got, he got to follow his own hero's journey. He didn't answer the call at his heart. He did the responsible thing. He was always supporting me tacitly. I mean, because I think in some ways, I was his astronaut that he was launching out into space. I was doing the things I think he might have wanted to do, but life didn't really give him the opportunity to do it. So I had my father supporting me, my mother is just shaking her head saying, you know, so. - What are you doing, John? - Yeah, I know her deathbed. She tried to get me to promise that I'd go back to school and make something to myself. (both laughing) - So you have your mom telling you this, your dad's spurring you on. So is that what gave you the courage and conviction? How should people look at getting that fire to go do something like you did? - It's like I said, I really think most people are just too scared. They're too worried about what other people think. They're too worried about failure. And quite frankly, I just didn't care. I talked about in the book early on, I did psychedelic drugs first time when I was about 19 or 20. And it kind of knocked me off this path. I had a, I saw that there was this deeper universe that I had not, that I was just living on the surface of reality and that there was this much deeper reality. And then I became, I'd say, a seeker. I was questing for the meaning of life, seeking for purpose. I no longer wanted to follow the path that my friends were following for my parents wanted me to follow. I just was, it was my life and I was gonna do what I wanted to do. I will tell you a story that kind of sums it up. I'm how old am I now? I'm 19 years old and I decide me and a buddy, first time I drop out of school, we're gonna go hitchhiking around the country, going up to New York from Houston. And my mother was so freaked out about it. She was so upset about it. She said, if you walk out that door, I'm telling you right now, you can never come home again. And I gotta tell you that shipped me up. I paused, I was afraid. It's like my mother's rejecting me. I'm never gonna be able to come home again. And then I thought to myself, well, if that's really how she feels, I guess I don't wanna come home again. And I left. And of course, a few months later, she was crying and begging me to come home. Of course. Of course. That was a pivotal point in my life, David, because that was when I decided to take control of my own life. It was gonna be my life. I was gonna do what I wanna do. And I think people have to make that decision. I think entrepreneurs, if you ask entrepreneurs, they generally go to work when they're very young. As soon as I could, I started to earn money. Even before I was a legal age, I would do odd jobs. I really like to have money that I can spend on things I wanted to spend it on. And I wanted to be free. I have a great zest for freedom in life. I had it at a very young age. And so I don't know how to tell somebody else what to do. I mean, everybody has to find their own way. I just followed my heart. And it led me on this wondrous adventure. Fantastic. And I've written a new book myself called How Leaders Learn. I'd like to know how you went about building your know-how to run a business that when you didn't have the MBA, you'd really never done that before. So what was your approach? Well, first of all, I'm a fanatical reader. I am totally a voracious reader. I still am. I devour books. I love the creation of Audible Books now because I can listen to books when I'm in my car. I can listen to them when I'm hiking or walking. And I can read them. And the great thing is that I can be reading a book on Kendall. And then I can be listening to it on an audiobook. And then they sync up with each other. It's amazing technology. And we're passionate about something. So I had no business background when I start this business up. Zero. My resume goes like this. Dishwasher, busboy, boys camp counselor, assistant manager, good food store, CEO, Whole Foods Market. And now CEO of Love Live. Actually, I left out, I worked in AstroWorld for a while I scooped my screen there when I was 16. So the point is that I didn't have this background in business. I didn't take any business classes. None of that, I didn't study philosophy, religion, and the humanities when I was at the universities. But once I started a business, I was all in. It's like, wow, I didn't know anything. I just go down to the library and I pick up books on accounting, finance, marketing, H-human resources, every different aspect of the business I began to study. And when you're doing it, you're reading with intensity. Because all of the stuff you're reading, you can see how you could apply it that worked. Now, at the same time, my father became my mentor. And he was very successful in business. He was an accounting professor for 19 years at Rice University. But then he went out and he ended up being the CEO of a publicly traded hospital management company called Lifemark. He ended up selling out to back in the 80s that was sold out to Hospital Corporation of America. And so my dad took me under-- we got really close. Because for the first 16 years of Whole Foods existence, all the big decisions he was in on. And so he saved me from driving the bus off the cliff more than once. And then the third thing is when I did make mistakes, you learn from your mistakes. As an entrepreneur, I've made a lot of mistakes. But you know what? I do learn from them. I don't keep repeating the same mistake over and over and over again. So reading, guidance from my father, and making mistakes, but learning the lessons, that's how I've learned. And I'm still learning. My dad's not with me anymore, but I'm still voraciously reading. I'm still an entrepreneur. I've gathered enough wisdom up over the years where I'm now imparting wisdom as much as I am soaking it up from other people. Hey, everyone. It's Kula here from Three More Questions. And if you haven't downloaded the New How Leaders Lead App, you are missing out. If you're leading a team, I know it's really hard to find time to consume leadership development content and continue investing in yourself. That's the whole reason we launched this app. If you just take two minutes a day each morning to watch the Daily Leadership Insight in the How Leaders Lead App, you'll stay inspired with practical leadership lessons from the world's greatest leaders. Imagine starting your day with inspiration from Condoleezza Rice, Tom Brady, and Jamie Diamond, just to name a few. I've started using the app, and I love how the Daily Leadership Insight gets my mind right before the busyness of my day starts. Download the How Leaders Lead App today in the App Store and stay inspired with amazing leadership wisdom and just two minutes a day. In your father, he was a great mentor to you, and he was on your board of one of the original investors. And I understand you actually had a really tough decision to make as it relates to his involvement to the business. Can you share that with us? This was after Whole Foods Market had gone public in 1992. After we went public, we went on a bit of an acquisition spree because we had this currency, our stock. So we became an exit strategy for companies that were like Whole Foods Market, where you had these little small chains of natural food stores around the country, and the entrepreneurs had no effective way to be able to cash out. But now they could sell the business to Whole Foods, and they know that their employees and team members are going to be part of this larger company. I had relationships with all these people, and so we bought Bread and Circus in Boston. We bought Mrs. Gucci's in Los Angeles. We bought Unicorn Village and Bread of Life down in Florida. There were many, many others that occurred over the years. But my father, after we went public, he began to resist these acquisitions. He thought, "You're growing too fast. "We don't need to take on all their problems. "We have enough problems of our own." And he just saw the downside of it, and we began to fight a lot. Now, I'm going to jump ahead a little bit, because I did ask him to get off the board in 1994, after I'd had a big blowout fight with him about Mrs. Gucci's, and asked him to resign, because it was wrecking our relationship. We'd been super close, and now we were fighting. I was also worried it might leak out to the media, that this father/son blowout arguments were having, was unseemly. But here's the thing. My dad did resign. It was probably the most difficult decision I've ever had to do. I turned 40. I really didn't. I told him the mentorship's over. I'm still going to seek your advice from time to time, but I'm going to run this thing out. And it hurt him a lot, but I asked him to sell half of his stock, and he'd have all the financial security he'd need after that. In the other half, we were going to grow the company to be worth a lot more. However, David, here's the key thing. One year after I kicked him off the board, he got diagnosed with Alzheimer's. He already had it. If you read up on the early signals of Alzheimer's, one is an irrational emotional outburst. My dad was no longer that guy that we used to argue at the dinner table. I'd make rational arguments, and he'd get all emotional. That was so out of character for him. So after he got the diagnosis, and I read up on it, it's like, oh my God, that's what was happening. This were the first signs of his Alzheimer's, which by the way, that's a horrible disease. I don't wish that went on anyway. No, I've witnessed that myself. It's really tough. Now, I understand that your first brand was Safer Way. That's what you called your first store. How'd you end up with Whole Foods Markets brand name? So Safer Way was a store, Renee and I, my girlfriend from the commune that we created together. And we didn't know anything. I started working on it with her when I was 24, and she was 20. It was in a big, old Victorian house, and which is not a great retail storefront, but it was zoned commercial, and it was essential Austin. So it didn't have a very, it wasn't on a busy road. So it wasn't, it wasn't all the things that I know about retailing now, I didn't know that. But Safer Way was also a vegetarian, and it didn't sell alcohol or sugar. It didn't sell coffee or caffeine. It was very, very pure. We just wanted to sell only self food. It was good for people. And this may not surprise you, but Safer Way was not very successful. (both laughing) Well, it wouldn't have worked at Pizza Taco Bell or KMC. I can tell you that much. So we capitalized the business with 45,000, and Renee and I, even though we were only taking $200 a month, we lost 23,000 in the first year. And we eked out a small profit of about $5,000 a year too, but I was learning and getting the hang of it. And but one thing I learned was we were extreme competitive disadvantages. I was beginning to understand a little bit of business strategy, and I thought, we have a terrible location, we have no visibility, we don't have very good parking, we don't have good access. Our product mixes too narrow, we're vegetarian, we're not selling the products people wanna buy. And so we made a decision, counterintuitive decision to try to expand it, relocate it and expand it. And we merged with a small natural food store that was kind of a friendly competitor. And we changed the name to Whole Foods Market because they didn't like our name, and we didn't like their name, and that was gonna be a name we could both get behind. And that first Whole Foods Market sold meat, sold seafood, sold beer and wine, sold some sugars, and within six months of opening, it was the highest volume natural food store in the United States. It just took off. It was a, people asked me, how long gonna take your first Whole Foods Market sort of be successful? And I say about two o'clock in the afternoon and the first day. And so we didn't, all the mistakes we made to save for a week, again, I learned and we didn't make 'em at Whole Foods. Made some new mistakes, but not those old ones. - When I told my daughter, Ashley, I was gonna have this conversation with you, John. She was so excited. She's such a huge Whole Foods Market customer. - Where does she live? - She's in Louisville, Kentucky. She goes, and dad, the minute I walked in that store, I absolutely loved it. And I guess that was the case when you started your very first store. How do you sustain that kind of customer love? - Well, first, let me tell you a story before I get to that. The story is something like this that about the first 20 years when people go into Whole Foods Market for the first time, you could just see it over and over again. People would never see a store like that when they first went into it. Now the world has changed. Whole Foods helped change the world. But in the day, at least for the first 20 years of our existence, we were so different than every other store out there, that people would like your daughter or go into it and they'd be kind of blown away and get excited about it. By the way, I'm expecting the same thing to happen when we go into love life. It's gonna be like, wow, how come nobody's done this before? This is such a good idea. - Well, it's a great idea. I gotta tell you, I love the idea. I mean, I wish I had one near me. We're gonna have imitators there quicker because we live in a world where you can't keep secrets as well as you used to be able to. I can't fly under the radar so much anymore. But how do you get that kind of sustained? The secret, I believe, is it's simpler than it sounds. I always say that the retail business is kind of simple to understand in a way that management's jobs to hire the very best people you can find, make sure they're well-trained and that they're service-oriented, and then do everything you can to help them be happy in their work. Because if the employees/team members are happy, they will make the customers happy if they're well-trained. And then the happy customers make the investors happy because they not only come back, but they become your... Word of mouth will always be every business's most important marketing strategy it can ever have. Satisfied customers bring their friends in and that businesses grow virally. Particularly if you don't have a brand, if you're starting up an entrepreneurial site, it's gonna be, you count on your customers going out and selling their friends and what you're doing. I think most of the great brands, I challenge you to name a great brand that was probably built primarily with advertising, say right from the beginning, as opposed to becoming sort of a cult brand that grew through Word of mouth and through public relations, because the media would get excited about it. - Every great brand starts out by gets momentum, by getting talked about and the word of mouth really builds a business. You know, and, you know, looking back, John, what would you say would be the three biggest moves in your opinion that had the greatest impact on the growth of Whole Foods? If you could pick three. - Well, that's a great question, David. I've done a lot of interviews, no one's ever asked me that question, I think it's a really good one. 'Cause you're asking a strategy question. The first one was opening up the original big natural food supermarket, because there were only a couple in the whole United States and that one just took off. It's going from a small store to a larger store that meant we had a full selection so people could one-stop shop. When you're a small natural food store, people might come in there and pick up a few things. Think of something like Trader Joe's, for example, which is a very great company and I'm only going to have nice things to say about it. You can't do all your shopping in the Trader Joe's. It's a limited assortment store. So people, they're filling in at Whole Foods, but they're shopping somewhere else. With a natural food supermarket, if you are, you don't really have to go to another store 'cause you all the categories are covered, right? You may not have all the brands that you want, but the categories are covered. So that was the first and most important move we ever made. That's what led to the revolution that Whole Foods ended up creating, was people that wanted to live this natural food lifestyle didn't go, need to go anywhere else. The second one for us was when we got out of Texas and we went to Northern California because they didn't have any natural food supermarkets there and it was kind of the birth, that's where the hippies came from, that was the birth of the counterculture, between San Francisco, Marin County, Berkeley, and the explosion you were having in Silicon Valley, the Bay Area was about as hot as you could possibly be and we surprisingly had very little competition. Once we proved we could do that, it was easy to raise venture capital money, not easy, but we could get it. And then as we grew into other regions after that, we could see we could be a national company and that gave us this huge potential market that got the investment community excited. Wow, these guys could be really big someday and that's exactly how it played out. So those two strategies were very important. Then I would say, I'd actually say the IPO was very important to our success. You'll get a lot richer if you can hold on to your stock for a long time without diluting it down, but it's a slower path, right? Once we got that IPO money and we got our stock as a currency, we were able to consolidate and smaller players into our business, gain territory and talent that way and we could scale quicker. So I'd say those were the three biggest moves. You know, I've heard you also say that you really need to have patience as you grow, particularly a retail business. Does that hold true for you on a personal level as well, John? I'm not very patient. I've met very few entrepreneurs, you're actually a very patient. I'm a very impatient person, but that's a lesson I learned kind of the hard way that when, before our brand was well known, anytime we go to a new market, we had to start over from scratch. We had to cultivate a customer from nothing and grow it over time. Now the good news about that, David, is that our same store sales, we average double-dibs at same store sales for over 30 years. Think about that. We're almost double-digit for 30 years. That's incredible. But then as we got better known, the stores would start out at really high sales volume. We didn't have that same store sales, went into an S-curve, we'd start high, fall off, and then build it back. But for many, many years, we had such great same store sales because the store would start. I'll give you an example. An Arbor store, first one started at $75,000 a week, and it comes between 25 and 30% for like 15 years in a row. Do the math. You know the rule of 72. So if it's growing at 24%, we're doubling the sales every three years. So it went 75 to 150 to 300 to 600 to over a million dollars. So we had so many stores that followed similar to type trajectories. And of course, the market, as you know, they get excited about your same store sales. - Yeah, you have to do that. In the retail, it's same store sales, new unit development, the return on capital. Those are the three things that drive your style. - Those are the three most important metrics, I agree. - Absolutely. And you always have a lot of new brands of Whole Foods. It's one of the reasons why I like to go in there just to kind of see what's happening and what's new. Besides getting my New York strips, which I love your beats there, I know you didn't start out thinking that way, but I'm glad you partnered up with someone that showed you the light on that subject. You know, what did they take for a new brand or a product to earn its way on the shelves? - Well, the Pins-upon source of that new product, if it's coming from an established company that we already have a relationship with, that brand would have that new product would have an easy on-ramp, so to speak, because their salespeople would come in and present it and we'd almost always pick it up, for sure. But I think what said Whole Foods Apart for a long time was our commitment to local products. One of the things that began to happen is the natural foods industry gained steam, is you had not only entrepreneurship on the retail side, you had massive entrepreneurship on the manufacturing side and then the agricultural side, you had all kinds of, you know, the farmers markets didn't really exist. I'm not saying Whole Foods contributed to the farmers markets, but what I'm saying is, is that we were riding the same kind of wave. There weren't hardly any farmers markets in the United States 40 years ago. There was one in New York, it's the only one I knew about, but now every place has got farmers markets because so many people have kind of started, some are just gardeners, but a lot of them have started up these businesses with organic agriculture or regenerative agriculture. You have local manufacturers of saucers. There was no craft beer. When I was a kid, the beers that you could get were, you know, like Budweiser, Schlitz, Paps. Michelot was the gourmet beer. I remember cores when I grew up in Texas, cores was like we had friends in high school get drink at 18 when I was a kid and they would actually go to Colorado across the border to pick up cores beer and bring it back. So that was considered to be like a craft beer. And now you have not just craft beers, but you've got wineries popping up all around, you think you used to be California, wineries are everywhere in America now. There's so much entrepreneurship that's occurred. And Whole Foods Market was a platform for that entrepreneurship. If you had local entrepreneurs in Louisville, they could try it out in our stores there. And then if it was successful, they could spread to a wider geographical region. Well, when I was there, we were changed since I left, but we were divided into 10 geographical regions. And so with their own regional president. So if it was successful in one store, it could spread to the rest of the region. And then if it was successful in the region, the region would champion it to go to a second region. If it was successful in two regions, it could go national. So we saw lots and lots of entrepreneurs build their dreams. And we didn't charge them slotting allowances, and we made it easy to get in. And we weren't trying to make it difficult for them to grow. And so we were a logical place. They didn't have to pay to play. They could just come in, if the products worked and they sold well, then they knew they could grow with us. And so we fulfilled literally hundreds and hundreds, perhaps even thousands of entrepreneurs' dreams. They got started at Whole Foods. That is just such a great insight not to have them pay the slotting allowances. Just get them in on the shelf, earn your way on the shelf. That's right. They weren't trying to differentiate. I mean, think about it. I always say one of the best allies Whole Foods market had was actually Walmart. Because Walmart, when they started doing their super centers, they scared the crap out of the entire conventional supermarket and they said, "How are we going to compete with Walmart?" There's this juggernaut, and their prices were so low. So the first thing they tried to do to compete was they tried to become more like Walmart. They spent less capital on their facilities. The stores were more warehouse-y. They were more sterile. Keep the capital expenses down. Then they cut the labor, so they gave less service. They just tried to do everything they could. They tried to buy, and with Costco came along, they tried to do club packs, and they were really trying to compete on price. Whole Foods was just going in a completely different direction. We were trying to compete on quality and service and having different kinds of products that they weren't available. So Walmart did us a favor by basically making our competition obsessed with them and not pay much attention to us, as we flew under the radar. That's when we jumped away from just the hippie customers. Because the middle class housewives started coming in, because our produce was fresher and better, because our team members might have had piercings and tattoos, but they were awfully nice to them. And they reminded them of their kids anyway. That all kind of grew for Whole Foods, and part of that was not charging these local suppliers to play with us. We didn't pay to play. What was the biggest surprise you've ever had with a product that came into Whole Foods that you thought, there's no way it's going to win? Well, what I missed a boat on was Whole Foods Housewives and Venture Capital Arms. So we invested in a lot of suppliers. I think the one I overlooked the most when Beyond Meat came out, I kind of looked at their ingredients and I said, this is not a healthy product. And I just didn't account for the fact that it was a-- as I'm personally a vegan, it wasn't really a product I was particularly interested in, because why didn't think it was a healthy product. But it really caught on and it just exploded. And then impossible burgers came out, and you had this whole new category of products. I completely didn't see that a younger generation wanted to get their burger and fries, but they were happy to have one that wasn't actually really actually beef or real meat. So I missed that one. There are plenty of other ones. We'll be back with the rest of my conversation with John Mackie in just a moment. As you've heard us talk about, John felt like he overlooked an opportunity with Beyond Meat. Well, wouldn't you know it? One of my earliest episodes here on How Leaders Lead is with none other than Ethan Brown, the founder and CEO of Beyond Meat. And like John, Ethan also stresses the importance of bringing your authentic self to work. We're all mix of confidence and insecurity. And it's OK to be insecure about things and to try to address them. And so much of the work of being a better leader at this point is now internal work. How do I work through issues within myself that I want to address, right? And the better that I can do that, the more effective I'll be as a leader. I'm less into management books and I'm more into that process of better understanding why I make the decisions that I make, why do what I do so that I can improve on weaknesses and be a better person and be a better leader as a result. Go all the way back to episode six and listen to my entire conversation with Ethan Brown. Here on How Leaders Lead, episode six, and now we're over 200. Oh my gosh. You've got a lot of accolades thrown your way. I mean, you've built this big business. You know, yet, you know, at least on the surface of this conversation, you seem like you're pretty humbled down to Earth guy. How does John Mackie stay John Mackie in that sense? I always try to show up in the world as I really am. It's that going back to that breaking away from my family and doing what I wanted to do, I've always had a passion to just be authentic, to just be myself. When you're truly authentic, a lot of good things happen. Everybody doesn't like you. Let's just state that for the record. A lot of people won't like you when you're authentic and that's why most people aren't authentic 'cause their worried people won't like them. But the thing is the people that like you, they really like you for who you are. (laughing) And not for who you're pretending to be. And if you're kind of putting a false persona out there, then people might like the false persona, but not really know the real person. So I've never been very good at pretending to be somebody I wasn't. So I just thought, I better just be who I am because that's really all I'm any good at anyway. (laughing) - You know, with the kind of success that your company had, hubris sometimes can bring you down. I mean, you can get really, really cocky. Tell us a time when maybe you saw that creeping in at Whole Foods Market and what did you do to combat it? - The main thing is just to always get people to be focusing on what the competitors are doing better than you 'cause they're always doing some things better than you. We spend a lot of time going in and seeing what our competitors are doing. And I'd always ask the challenge, I'd always bet our team and we'd be going in there is. I don't want you to come back and tell me what we're doing better than them. You got to come back and tell me at least three things are doing better than us. Because I already know we're doing some things better than them, but so what, it's just arrogance. If you can learn from anybody and everyone, but if you have hubris, then you no longer are able to learn and grow. You're gonna be stuck. And so I've always put that challenge. I also think the team that I had, people like Walter Rob and AC Gallo, they were very driven, competitive people who wanted to be the best, but we're always seeing around the corner that somebody was coming up behind them. And so they had to run faster. I just, I think our culture was such a culture that we really weren't resting on our laurels. I think that people asked me what I think the biggest mistake that I made was. And I think it was when we came out of that 2008, 2007, 2008 recession, David, our stock had dropped, imagine it had dropped 90%. And we were trading at three times our operating cash flow. So you could have bought our company and paid for it with our own money in just three years. So that was a very scary time. And we took in some private equity money and got it in friendly hands to get the voting shares so that we wouldn't have an activist wouldn't take us over. But then when we came out of that, we came out of it and our same sort of sales went quickly into double digits again, and our profits just went through the roof. Cooper stood kick in at that point a little bit because we had this near-death experience. And as we were back into double-digit cops for the first time in a few years, we got giddy. And stock prices were going up and that was the missed opportunity, whole few tad, to cut prices. We could see that our competitors were beginning, the conventional supermarkets were beginning to pick up more and more of our products. They were changing the design of their stores. They were becoming more of a competitive threat. We didn't pay enough attention to it. We sort of blew it off. We had hubris collectively. And what we needed to do was, we always thought we were gonna have better quality, better service, better selection. And so we didn't take that threat strong enough. And that was kind of the best opportunity we ever had. If we'd cut our prices into that climb out of that recession, we'd still be an independent company today. shareholder activists wouldn't have come along. We'd be independent. I would have retired in anyway, but Amazon wouldn't own the company most likely. So I don't think we didn't completely escape from hubris. We made a mistake there. And I think at the end of the day, that had consequences down the road for us. - Do you think your, what is it? The whole paycheck perception was the reason why you ultimately end up having to sell? - Yes. And the fact that we couldn't easily, once the activists came on board, we couldn't change it. We needed to cut our prices. But you know how it is, if you're selling something for a, you have shareholder activists, they wanna get the stock price up. And you, if you go in, you're selling something for a dollar and you're selling it for 90 cents. That might be a great decision long term, but in the short run, your sales are gonna go down, your same store sales are gonna go down, and your profits are gonna go down, and the activists are gonna take over your company. So we needed to do that sooner. But I will tell you something that Amazon, let Whole Foods market, cut its prices significantly four separate times in the first two years, costing Amazon hundreds of millions of dollars. But Whole Foods market's prices are far more competitive. If we got them to where they needed to be, for us to be a sustainable business in that competitive marketplace, if we could have done that on our own, we'd be independent. We didn't do it when we had a chance, and when we realized we had to do it, it was too late. - It's interesting, you just created such a buzz when you were acquired by Amazon. Tell us a story behind that decision. - Well, we had Jana Partners took the activist position in us, and I met with those guys, right? You meet with the activists. A lot of times we have a common goal. They wanna get to stock price up, we wanna get to stock price up. Let's strategize on how we can do that. When our team met with them, it came down to Austin, they had this PowerPoint presentation, which is one they were showing to Wall Street. I looked at it, and of course they'd taken our stock price at the all time, all time high, and it's seen it as this negative story ever since. And they had some inaccuracies in that presentation. I remember when it was over, I said, that's a very interesting presentation. I disagree with some of the points. Would you give me a copy of that, and I'd like to address some of your concerns? They said, no, well, we're not gonna give you a copy. And I said, well, I can't address your concerns. He says, we don't care. And then he said, listen, John, I'm gonna tell you exactly what we're gonna do. The first thing we're gonna do is we're gonna take over your board of directors. You guys have a board that's too old, it's been with you too long, and we're gonna put up alternative candidates, and we're gonna take over your board. After we take over your board, we're gonna fire you, and we're gonna fire the rest of your team. We'll keep a few, but we're gonna fire most of them. And then we're gonna put your company up for sale to the highest bidder. And there's not a damn thing you can do about it. And then they stood up and walked out of the room. (laughing) Oh, and by the way, let's go have dinner. (laughing) - So then we looked at the alternatives that are facing us, right? So there are different alternatives. We did hire, we had bankers, we hired Evercore, as defense bankers, we hired WalkTill to be our attorneys. And we began to create strategies where we'd fight these guys off and keep them from taking over our board. We actually turned over a lot of our board that Evercore recommended we do because they just had too much tenure. Apparently it's bad governance and somebody's on your board 15 or 20 years. Used to think that would be a good thing, but no, that means they're too close to management. So we had to get rid of our long tenured ones or anybody that had any conflicts of interest we got rid of, brought in some new high power directors. So we were prepared to fight, but I still knew we needed to lower our prices and that wasn't gonna be able something we could do in the short run. That was the only way Whole Foods was gonna sustain up a long term. Number two, we could take it private. We certainly had a lot of interest in taking the company private. But the risk of taking the company private is what if we had another 2000, 2008, seven, 2008 downturn? Well, we'd had so much debt on our own balance sheet 'cause they do a bridge loan. Once they get control, they refinance it and borrow the money against the company's cash flow and it's balance sheet. We had good cash flow. But that was assuming the market was gonna be good. And if it turned down, we might go bankrupt. And then thirdly, we did, well, maybe they were friendly hands. Like we talked to Warren Buffett. He had good sense of humor. He made a joke about it and said, "Well, I own Dairy Queen. "I don't think it's a good brand fit for me." (laughing) But I think he'd probably looked at it and thought it was too pricey, you know, my guess. I met with Albertsons on an informal basis to just talk to them and I could see right away that was not gonna be a good fit for us. So what are we gonna do? So we probably were gonna fight. But I kept asking this question over and over and over again. What's the win-win-win solution? What's the best solution for our investors, for our customers, for our team members, for our suppliers and the communities we're part of? Is there a solution that'll be a win for all of them? Of course, I couldn't figure it out. But then I woke up one morning and it popped in my brain right when I woke up. I must've been dreaming about it. What about Amazon? And I'd met Jeff Bezos about a year before and a Microsoft CEO, someone I really liked him. We had a great talk together. We served on a panel just the two of us. He's interested in scuba diving. I am too. We'd like to read science fiction and fantasy books. We talked about that a little bit. You know, I'd always admire Jeff in Amazon when the greatest companies ever created. And I was a very enthusiastic customer of one-click shopping on Amazon. That's a very transformative technology, highly addicting, I might add. So I asked the question, what about Amazon? And we contacted them and they were very interested. And we flew down there just a couple of days after I went to three of my leaders. Senior leaders came with me and met with Jeff and three of his senior leaders. And we had an amazing conversation. The first conversation was amazing. And we talked about all the ways we could work together, all the synergies it could be. They're explaining the whole situation with whole foods, how we needed to cut our prices to take out the whole paycheck narrative. You know, one thing I love about Amazon is, they think long-term. They're really willing to think 10, 15, 20 years into the future. Jeff is that kind of visionary leader. Two days after that visit, they sent a team down to Austin and due diligence was on. We came to price agreement pretty quickly and we'd signed a merger agreement like six weeks after the first contact with them. - Wow. (laughs) That's great. - And it was a win-win-win for all of our stakeholders. Our customers did get lower prices. We cut prices four times in the first two years. Within two months of the merger happening, Amazon raised wages for every hourly person in their company and that included whole foods market. Number three, our suppliers. They not only didn't get cut, but Amazon studied all our velocity of every product we sold and they picked up a lot of our suppliers and took them into the .com or they took them into Amazon Fresh. So that was good for our suppliers. Our investors got a 30% pop on the stock price from before that came out. So they got a nice gain and the government got lots of money in taxes from a lot of capital gains taxes that were realized. (both laugh) It was a win-win-win-win all the way around. - Absolutely. You know, John, it's been so much fun and I wanna have some more with my lightning round of questions and then we'll wrap this up very quickly here. What three words best describe you? - Playful, creative and loving. - If you could be one person for a day beside yourself, who would it be? - Buddha. - What's your biggest pet peeve? - People that are chronically late. - Who would play you in a movie? - I hope Ryan Gosling or Matthew McConaughey. (both laugh) - You Texans, you know. What is it about Austin, Texas that feels most like home to you? - That's a tough one for me, David, it's changed so much. My home is where my wife is. - What's something you'd only know about Whole Foods Market if you were a co-founder? (both laugh) - The only thing you know is how little we knew when we started the business. - What's your favorite thing to do in your spare time? - Go hiking or play pickleball. - I understand you're a really good chef. What's your favorite meal that you serve your guests? - A bean investable stew and a chocolate avocado pudding for dessert. - If I turned on the radio in your car, what would I hear? - You'd hear podcasts or book and I'm listening to. - What's one of your daily rituals, something that you never miss? - A daily ritual that I try to never miss is I always try to practice gratitudes in the morning. - What's something about you that few people would know? - A few people would know, I share things about myself, so I don't keep that many secrets. But now I just wrote a book about myself, so a lot of secrets, I would have said people wouldn't know that I've done a like a psychedelics in my life, but now I just wrote a book and I talk about it in there, so I guess that one's out in the, cats out of the bag on that one. So something people don't know about me right now, I really, really, really love music. - You know, appreciate that. That's a good light to be around and we'll wrap this up. You know, when we were talking before we started this conversation or the official podcast, so to speak, you said there's big difference between an entrepreneur and a professional manager. How would you sum that up? - The entrepreneurs are generally, by the way, I see this happen to corporations again and again, it's happened to Whole Foods, is you have entrepreneurs that are founders that create a business and then you bring the professional managers in. So the entrepreneur is very purpose driven, they're actually, can be obsessive about something that they see a potential, something they're trying to create, something they're trying to bring into life, it can be extremely driven in that regard. And the professional manager is oftentimes much more interested in their careers than they are about the company. I'm not saying they don't care about the company, but it's also just to stop along the resume, so to speak, for the entrepreneurs, they're child and they love it like a child. The entrepreneur will always love their business more than any professional manager will. It's their child, they created it. No one loves your children like the parents do. - And John, you're the founder of Whole Foods now, I'm sure you go into Whole Foods and it's your baby. How do you let go or have you? I mean, you've got these professional managers running it now. You ever have any bitterness about what's going on or how do you feel? - Well, great question and the answer is that writing the book, let me finish completely with Whole Foods. My final gift to Whole Foods is this book. This is a story, this is our story. And secondly that I already knew this would be a problem, so I deliberately do not interfere in any way with Whole Foods. I don't stay up on stuff, I'm not staying up on the gossip. I really want my successor Jason Beeckel who has very intelligent guy, great integrity, and he's got to take the company in the direction that he and Amazon think is best for it. And I just wish him the very best. And the other thing is create another business like Love Life that takes your interest and your passion to that. - Last question. What's one piece of advice you'd give to someone who wants to be a better leader? - Spend more time appreciating people doing things that are good and right. And never criticize publicly. All criticism always needs to be done privately. It prays publicly, criticize privately. If you don't do that, I can almost guarantee you won't be a very effective leader in the long run. - And I want to end this podcast by asking you how you would end the meeting at Whole Foods. - We'd end all our meetings at Whole Foods and I believe I still do. We end them with appreciations. Appreciations are the single biggest thing you can do to open up a more caring culture. So they're voluntary, no one has to appreciate. But people know the difference between an authentic appreciation when you're just sort of flattering somebody 'cause the authentic appreciation, you have to open your heart to do it. And so this is a very simple technique. Doesn't take very much time. But the leader has to be the one to lead the way on that if you're trying to bring it into your culture. It's very powerful. You create a more loving, caring culture. It's the single most important thing I can tell you to do if you want to create a culture that has more love and more care in it. Just begin intermating with appreciation. Simple to do and it's very powerful. - It's leader led. So if you're the leader, how would you start that just so people can get a great tip to take to work tomorrow? - So David, I've really appreciate this podcast. You obviously have your very seasoned business executive with great accomplishments on your own, but you're remarkably open-minded. I can feel your joy and your joy, your day of re and your good sense of humor. Just the first time I've met you, I can feel that you were probably an outstanding leader just because of how you showed up in this podcast. And I really appreciate that about you. - Well, John, I really appreciate the fact that you're a real deal, that you've really changed America for the better, changed the world with what you've done, that you've got the vision to say, "Hey, I'm not done yet." And I've got this new concept called Love Life, which is gonna change the world as well. I love it when I see people make a difference in the world and they truly do care about people. And you obviously do. And I know you couldn't build Whole Foods without that passion, not only for the brand, but for the people that you had the privilege of working with. So thank you very much for being on this podcast. - Thank you, David. You're a natural lit appreciation. I don't think it's the first rodeo. - I've read the book on it. (both laughing) To quote John, "When you're truly authentic, a lot of good things happen. The success of Whole Foods is certainly proof of that. And if you really wanna dig into those lessons, I encourage you to pick up a copy of John's book, the whole story. One thing's for sure is you will read, and as you heard, to build his business, John had to follow his own path, even when it went against the grain. And that's something every leader needs the courage to do. The ideas you're drawn to, the career path you're on, the way you learn, it's all unique to you. Have the courage to understand what makes you tick, and then live with that authenticity. Yeah, it may mean that you're not universally liked. It may mean that you forged ground that other people don't wanna go on, but you'll be appreciated for who you are and what you're trying to do, and you will find the version of success that really fulfills you. So this week, here's what I want you to do. Spend a few minutes each day listening to decisions you made or actions you took that felt authentic to you. And then take some time to think about the actions that you might have taken that just didn't feel true to who you really are. Well, these moments of reflection are gonna help you follow your own unique path as a leader instead of conforming for the sake of being liked or upholding other people's expectations of you. So do you wanna know how leaders lead? What we learned today is the great leaders have the courage to follow their own path. Coming up next on How Leaders Lead, it's our quarterly best-of episode, which is jam-packed with our favorite insights from the last three months. Thanks again for tuning in to another episode of How Leaders Lead where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be. (audience applauding) (audience applauding) (audience applauding) (audience applauding) (buzzer)