Have you seen the media freaking out over Amazon buying Whole Foods?
The photos you may have seen of empty Whole Foods shelves were taken during this past season’s hurricanes when customers bought up supplies at a fast pace in case of emergency. It had nothing to do with the Amazon deal.
It is all fake news according to Whole Foods CEO John Mackey.
The truth is that Amazon and Whole Foods are very much in love. That’s the image Mackey chose to portray this past weekend during his two talks at Liberty Con in Washington DC. Mackey gave an interview at a dinner on Saturday night and the keynote speech on Sunday morning.
During the interview, he described the magic he felt when the Amazon and Whole Foods teams met for the first time to discuss their “marriage.” In any partnership, Mackey says each side should benefit, and that is what is happening.
“You know when you fall in love you have what I call ‘the conversation.’ You stay up all night and talk; and it’s like oh my god, it’s amazing, she’s the one. That’s how we experienced Amazon the first time we met them. We were finishing each others’ sentences before the first meeting was over.”
Customers need not worry about Amazon changing the culture of Whole Foods. Mackey says the best thing Whole Foods will get from Amazon is the customer centric attitude and cheaper prices. And Whole Foods might just insert a little wholesome natural vibe into Amazon’s business.
Mackey spoke about exciting things to come for the merger but said he couldn’t reveal those at this time. “You know how they say I could tell you but I’d have to kill you? Well, this is I could tell you, but Amazon would kill me.”
After the dinner, I asked John why he thought the media was casting the Whole Foods buyout as a controversy. He thinks it is the same old desire to create drama. Just a regular business transaction is not as exciting as a big scary company taking over a natural food store.
But he doesn’t think that is the same reason Amazon is so often cast as a bad guy in the media. That, he thinks, has more to do with Jeff Bezos being the richest man on Earth and possibly in history. That puts a target on his back.
And that might also explain why Trump bloviates about Amazon as well. Mackey criticized Trump for the recently announced tariffs on imported steel and aluminum. Mackey said this doesn’t make sense from an economics perspective.
But that is something he wouldn’t have understood before starting his business.
A Bunch of Hippies Selling Vegetable
At his talk on Sunday morning, Mackey shared his backstory about the beginning of Whole Foods. A young man in the 70’s, Mackey was the typical hippie. He dropped out of college to hitchhike across the country with a friend. Then he lived in co-op houses with other hippies, where he came up with the idea of starting a natural foods store.
And that is when his socialist hippie friends started calling him Darth Vader. How selfish of him to earn a profit while providing people with clean healthy food!
Yet he had to pay rent, source the vegetables, keep the lights on, and deal with everything else required to run a business. He didn’t even have a proper living space, choosing instead to convert the attic office into a bedroom every night. He says he probably broke health codes by using the industrial dishwasher to shower.
And he still wasn’t making much money. The first store was all natural to the point where Mackey couldn’t even exclusively shop there. They didn’t sell sugar, alcohol, or many processed foods.
When he merged with another natural food store, they started selling liquor, and some foods with sugar. That is what customers wanted, and what needed to happen in order to turn a profit.
But Mackey doesn’t think profits are the purpose of a company. Although a company cannot exist without profits, it is also true people cannot exist without breathing. But it does not follow that breathing is the purpose of existence. It is just something necessary to continue living.
Businesses ultimately only exist if they are serving the customer.
You have to go where the market is. That is how Whole Foods became the stomping ground of yuppies in California during the 80’s.
One early prospective investor declined to invest because he said Whole Foods just seemed like hippies selling food to other hippies, and that would never be a large enough market. He missed out.
Mackey came to the libertarian philosophy through serving others. Everyone benefits. Everyone gets richer.
And if you listen to Mackey, you shouldn’t be worried about big companies like Amazon taking over fan favorites like Whole Foods. Whole Foods only grew through mergers and partnerships in the first place. They acquired single owner health food stores in order to expand.
In voluntary relationships, every party can gain. It is not a zero-sum game, they can create more wealth together.
No one was coerced into buying or selling Whole Foods. Customers don’t have to shop there, workers don’t have to work there, and activist shareholders never had to buy or hold their stock.
Of course, as a business owner, Mackey is no stranger to others trying to insert themselves unwanted where they don’t belong. He was surpised when the merger was approved by the US government so quickly. It is unfortunate that the government has this power at all.
Mackey even stayed strong through a year and half of union protests outside his store, when the unions tried to coerce Whole Foods into unionizing its workers. But the Whole Food workers didn’t even want to unionize! They were fine the way they were and frankly didn’t want to pay union dues. Mackey and his workers won, despite the union leader’s thuggish promise that he would get what he wanted.
One other piece of wisdom John Mackey shared is especially important for anyone who wants to be successful.
On her deathbed, Mackey’s mother was disappointed in him. He had so much potential, she said, and he had become a simple grocer! She tried to make him promise that he would go back to college, and make something of his life.
Mackey would not make that promise. It didn’t feel right to him, and it was his life to live. That was the only way he was going to reach his full potential.
So in an attempt to appease his mother, he told her didn’t have to go back to school. He would be so successful that someday he would be awarded an honorary degree, he said.
Mackey received an Honorary Doctorate of commercial sciences from Bently in 2008 when he delivered their commencement address.