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July 24, 2007

News & Opinion: Food Fight

By: 800-CEO-READ @ 8:40 PM – Filed under: Management & Workplace Culture

We here at 8cr have some pretty simple rules on promoting books and ideas. Promote only the books & ideas we truly believe in, and promote them with the expertise we've developed over the last 20+ years. Inherent in doing that is approaching and introducing ourselves to new communities in an honest and forthright way. As we've learned over the past few weeks, not everyone shares this vision of how to promote their company. I'm speaking, of course, of John Mackey. The CEO of Whole Foods has been posting to yahoo! message boards under the pseudonym Rahodeb for the last 8 years promoting his own company and trashing its opponent, Wild Oats. The discovery of this comes at an especially bad time for the company, which is facing an antitrust suit from the FTC because of their planned acquisition of (who'd have guessed) Wild Oats! It has been written about pretty widely in the blogosphere already, but yesterday's Wall Street Journal article (subscription required) by David Kesmodel and Jonathan Eig is the best I've read. It really dives into the history of the man and his character, along with that of the company he built, that has been lacking elsewhere. So, from the Journal...

"I'm going to destroy you," the co-founder and chief executive of Whole Foods Market Inc. shouted at Perry Odak, CEO of Wild Oats Markets Inc., the first time the two men met six years ago at a retailing conference in Manhattan, according to Mr. Odak.

Mackey claims he didn't use that harsh a language, but doesn't really dispute the substance of the story. The quote below speaks to his sometimes contradictory nature.

Mr. Mackey fit in nicely among the health-food industry's scrappy entrepreneurs. He was a six-time college dropout, curly haired and casually dressed. He spoke passionately about food (the natural kind), politics (the libertarian kind) and capitalism (the aggressive kind). Colleagues who knew him as a young man say he was -- and remains today, at 53 -- a man of opposing characteristics: forthright and yet distant, compassionate and yet cutthroat, idealistic and yet capable of compromise.

And how is this very ugly situation playing out? So far, not very well.

On Tuesday, Mr. Mackey apologized and the Whole Foods board announced it will launch an internal investigation. The Securities and Exchange Commission is examining the chief executive's posts to see if they violated the law. Mr. Mackey's online alter ego came to light in a court filing by the Federal Trade Commission, which filed a lawsuit last month seeking to block Whole Foods's planned purchase of Wild Oats on antitrust grounds.

A Whole Foods recently opened in Milwaukee, which caused me some concern for the natural foods co-op I used to work for. When I asked an old friend in their marketing department how they were reacting to it, she was unfazed. She tells me that they feel a Whole Foods in town will educate more consumers than it takes away from them, and that it will eventually create a larger overall market here. I think that may be true, and if so, I think it's remarkable. I've always had a great amount of respect for the foresight Mr. Mackey has shown in building his natural foods empire. I appreciate the ways in which his company has established its credibility and reached out to the community to educate them about healthier foods. I do worry that this episode will damage some of that credibility. Alan Murray released a book in May of this year entitled Revolt in the Boardroom about the recent wave of CEO firings and resignations. It includes stories of big hitters like Carly Fiorini and Michael Eisner, along with CEOs of companies such as Merck, Pfizer, Home Depot, & Fannie Mae. If things keep going the way they're going over at Whole Foods, Mr. Murray may have to get started on a revised edition that includes Mackey. Postscript. The stories about himself aren't the only ones in which he comes off a bit abrasively this month (at least to me). By far my favorite article so far this month was Charles Fishman's piece on bottled water for Fast Company. Mackey was interviewed for the piece. The articles pretty long, so make sure you have some down time before starting it.