Can Business Still Save The World?
The pioneers of socially responsible companies -- stars like Anita Roddick and Ben Cohen -- had big hearts and even bigger mouths. They hated capitalism but loved what it could help them do. Now they have followers. Sort of. Meet the new generation of activist entrepreneurs
"When we first started Ben & Jerry's, we had no intention of going into 'business' -- we saw it as pretty much a lark. Then there came a time about five years ago when Jerry and I noticed that we were no longer scooping ice-cream cones behind a counter and working in the ice-cream shop, that we were bosses and administrators who were spending a lot of time on the phone and doing paperwork. When we were introduced to people and they asked, 'What do you do?' there came a point when the answer was not 'I'm a homemade ice-cream shop owner' but 'I'm a businessman.' And I had a hard time mouthing those words." -- Ben Cohen, cofounder of Ben & Jerry's Homemade Inc., in the article "Coming of Age," in Inc.'s 10th-anniversary issue, 1989
The times they are a-changin'
Chances are, when you hear the term socially responsible business, a handful of companies -- and their founders -- leap to mind: Ben & Jerry's Homemade (Ben Cohen, Jerry Greenfield). The Body Shop International (Anita and Gordon Roddick). Smith & Hawken (Paul Hawken). Patagonia (Yvon Chouinard). They're the (once) wild-and-crazy pioneers of a new frontier -- the folks who brought us ice cream named for devotees of electric Kool-Aid and shampoo squeezed out of mud from the Atlas Mountains. At the same time they espoused "principles before profits" and a commitment to making the world -- from the New York City subways to the Pentagon to the Amazon rain forest -- a better place. They set up shop in the late 1970s or the 1980s, and most of them, with the help of doting media, grew fast and furiously.
But the road to success had its bumps as well. For a self-professed socially responsible company, fast growth doesn't present just the typical entrepreneurial challenges -- things like maintaining product quality, keeping pace with demand, managing cash flow, and coping with sales shortfalls. It also presents special challenges, ones that come with adhering to a higher standard -- that is, doing all of the above while treating employees, suppliers, and customers well, which includes being forthright in marketing claims and vendor relationships. In other words, walking the talk is the name of the game.
"All I can say is that we strive to be socially responsible," says Wild Planet's Daniel Grossman.
And that's where, for all the positive change they effected, some of the 1980s icons got into trouble in the mid 1990s. Ben & Jerry's got called on the carpet for claiming that its Rainforest Crunch ice cream was made with nuts collected by Amazon "forest peoples." In fact, to compensate for quality problems, the nut supplier, Community Products Inc. (which Cohen also owned), bought 95% of the nuts from commercial vendors. In a similar fashion, the Body Shop got skewered when a magazine article questioned its claims about animal testing, alleged that the company used petrochemicals in some of its "natural" products, and charged that its Trade Not Aid program accounted for less of its supplies than it had claimed. (The Body Shop denied all the magazine's charges.)
The people who started socially responsible companies in the '90s had the benefit of learning from their predecessors' mistakes. Which made us wonder: How did those lessons influence the way the new founders shaped their companies?
The younger entrepreneurs are quick to acknowledge their '80s counterparts as their mentors, the people who laid the groundwork for a whole new way of doing business. "They are prophets," says Wild Planet CEO Daniel Grossman. "There is no doubt." But the new breed has added its own, decidedly more pragmatic ingredients to the socially responsible business mix. "Ben and Jerry basically threw everything on the wall to see if it stuck," says Sustainable Harvest founder David Griswold. "That's not the process kind of approach that today's socially responsible businesses are taking."
The differences we uncovered between the '80s revolutionaries and today's company builders were as startling to our minds as a first taste of Ben & Jerry's "Orgasmic Flavors" of ice cream was to our palates more than two decades ago.
What you sell is important
The product or service of the new companies, not just the mission, must be socially responsible -- that is, it must advance the health and well-being of those it affects (individuals, companies, the environment), not undercut them. (See "The Young Turks," below, for profiles of the seven companies we've chosen to represent the new breed.) Hence: barely sweetened iced tea and totally biodegradable tea bags (Honest Tea Inc.); garden, home, and pet products made from recycled or organic materials (WorldWise Inc.); organic, shade-grown coffee with a guaranteed base price for growers (Sustainable Harvest Inc.); Web development using urban workers (CitySoft Inc.); nonsexist, nonviolent toys (Wild Planet Toys Inc.); revitalized communities and neighborhoods (Village Real Estate Services); and recycled paper products (New Leaf Paper LLC). "We want the product that we're providing to have an impact," says Seth Goldman, cofounder of Honest Tea.
Proud to be in business
Most of the current batch of ceos either went to business school or intended to (but got sidetracked by a business opportunity). But those who didn't go that route, like New Leaf Paper cofounder Jeff Mendelsohn, understand the necessity of management expertise. "The best thing I did was hire a really good operations guy with a commitment to social responsibility, because he knows how to manage, run sales operations, and so on, better than I do," says Mendelsohn.
The young founders are businesspeople -- and proud of it. "I did a lot of entrepreneurial things from a young age," boasts WorldWise CEO Aaron Lamstein. "I started one of the first computer bulletin boards in Marin County in 1980, using a TRS-80 Model 3 -- that's before the IBM PC." Lamstein was planning to study for both law and business degrees when his mentor swayed him in another direction by suggesting that he start a company around an environmental concept. Seth Goldman even won a business-plan competition as a student at the Yale School of Management and later started Honest Tea with one of his professors.
Several of the new socially responsible entrepreneurs, including Goldman and Sustainable Harvest's David Griswold, make a point of hiring business-school grads (or using interns from the schools) to beef up their ranks. "I've had business-school graduates here because I feel like the longevity of the company really depends on competing, using the rules of business," says Griswold, who'd applied to business school but kept deferring when the chance to sell the beans of Mexican coffee farmers presented itself. "Good deeds alone don't work."
That's a far cry from the likes of Ben Cohen, Anita Roddick, and Yvon Chouinard, for instance, who saw businesspeople as tools of the military-industrial complex and profits as a dirty word. In fact, in the '90s, when the young turks joined their elders in the Social Venture Network (SVN), an organization for entrepreneurs and investors interested in promoting social responsibility in business, the tension between the business-school contingent and the veterans was palpable. (See "Social Venture Network," below.)
"At that time Anita and Ben ... certainly in their public statements, were very clear," says Wild Planet's Grossman, who first attended an SVN meeting as an intern while he was earning his M.B.A. from Stanford Business School. "They were saying, 'We would never hire an M.B.A. M.B.A.'s are poison. They think about only one bottom line. They're fixated on the notion of net profits at the expense of everything else." It was only later, out of necessity, that the stance softened. "Ben and Anita dropped their rhetoric about the M.B.A. thing because, frankly, through the Trojan Horse we entered, and we were there steadily for years," says Grossman.
Solid commitment to change
Today's CEOs were dedicated to the mission that shaped their companies -- or some variation of it -- before they opened their doors for business. They have a history of working with nonprofits, the government, or other socially responsible endeavors. Their companies, it seems, are a natural outgrowth of their long-held values.
Daniel Grossman, who entered business school with plans to apply his hard-core business skills to the public sector or a nonprofit, served for eight years in the U.S. Foreign Service. David Griswold cofounded and ran Aztec Harvest, a sales-and-marketing outfit for coffee farmers from Mexican cooperatives that was owned by the farmers. Seth Goldman was a press secretary on Capitol Hill and marketed socially responsible mutual funds for Calvert Group. Village Real Estate Services founder Mark Deutschmann was a devotee of historic preservation.
CitySoft CEO Nick Gleason was a community and labor organizer in Oakland, Calif., and ran his own urban-development consulting company, serving nonprofits, foundations, school districts, and governments. His move to the for-profit sector evolved directly from his nonprofit experiences. "I came to believe that the lack of new wealth creation was really the root cause of urban problems," says Gleason. "Activist organizations and entrepreneurship are very similar in terms of trying to create teams, successes. Both attempt to help a group of people achieve goals in a resource-constrained environment."
In contrast, before the company founders of the '80s started their businesses, they were generally involved with activities removed from their companies-to-be -- Anita Roddick owned a small hotel in Littlehampton, England, and was raising two young daughters; Yvon Chouinard saw mountain climbing as a calling. And they more often fell into the socially responsible world than intentionally traveled there. "The first generation went through their formative years in the '60s and didn't found their businesses with the idea that they were going to change the world, by and large," says Grossman. "Ben and Jerry kind of stumbled into making ice cream to make ends meet and then things were added as they went along."
Focusing on two bottom lines
Today's CEOs are just as dedicated to building a viable, profitable business as they are to hewing to a mission -- and they think strategically to make both happen. So they speak of a "double bottom line."
"Part of our concept is that we must have an incredibly focused mission that includes equally environmental and social issues and economic issues -- that is, making sure that we have a really solid, healthy, financially secure business," says WorldWise's Lamstein. "You can't put one in front of the other. You can't be successful if you can't do both." Says Goldman: "A commitment to socially responsible business cannot be used as an excuse to make poor business decisions. If we were to accept lower margins because of our commitment to social responsibility, then we'd be doing the broader socially responsible business movement a disservice because we wouldn't be as competitive or as attractive to investors."
The strategic thinking that Lamstein used to get WorldWise up and running is a case in point of double-bottom-line thinking. Committed to constructing a business around environmentally responsible products, Lamstein initially devised a three-pronged model: a chain of retail stores, which would showcase WorldWise products in the context in which they'd be used; a mail-order catalog; and a research-and-development arm for creating branded products to sell wholesale.
With that model in mind, Lamstein began researching both the environmental and economic sides of the business -- that is, which products the company should make, which materials and methods it should use to make them, and how it should be financed and earn revenues. Investors that he approached found the concept intriguing but couldn't understand why he wanted to spend $1 million to $2 million to start a chain of stores when he had no idea whether people wanted to buy his environmentally friendly merchandise. He took the investors' skepticism to heart. "Since I'd researched about 10,000 products, I thought, 'Why not focus on the wholesale side of the business and develop a brand that has virtually zero competition?" Lamstein recalls.
The question then was, How do you do that? After all, environmentally friendly products were not new. Then Lamstein hit on the answer: bring products that are selling in niche markets into the mainstream. The idea was to start selling already existing products under the WorldWise brand to test which ones worked in the mass market. Once the company had gathered enough intelligence about what sold and had established some cash flow, it would develop new products of its own.
An exotic fruit-and-nut mix whose ingredients came from the Amazon rain forest was the company's first offering. Through his mentor, a seasoned businessman, Lamstein signed up Costco as a customer in 1993. "Our whole concept was that our products had to work as well as or better than others, look as good or finer, cost the same or less, and be better for the environment," says Lamstein. Because the cost-competitive piece was so important, Lamstein turned the typical start-small-and-build paradigm on its head. "We were selective about items," he says, "but we sold them in large quantities so that we could buy our materials competitively."
The mass market bit on the idea -- quite literally -- and WorldWise soon began developing its own products, the first of which was a charcoal starter for barbecuing that required just newspaper and no lighter fluid. Since its launch, the company has added Target, the Home Depot, and Wal-Mart to its customer list.
Control growth for the long haul
To be able to sustain a profitable business and stick to a mission (even when times get tough), the young CEOs have to pay close attention to their companies' growth rates. In many cases they're careful not to grow too fast. "We're trying to do managed growth," says Sustainable Harvest's Griswold. "We don't want to overextend ourselves. What matters is the experience of running your company and the impact you're having on those you're working with. Size is not the most important thing; we're looking for balance as well as success." Mark Deutschmann concurs, noting that he takes on only a certain amount of business at Village Real Estate Services so that he can maintain a healthy personal life as well as stick to his values. "If we grow too fast, there's a chance we might not give enough attention to every detail and every person," he says.
"I came to believe that the lack of new wealth creation was really the root cause of urban problems," says CitySoft's Nick Gleason.
Of course, for many of the socially responsible companies, including Wild Planet Toys, reaching as wide an audience as possible is crucial if their mission is to be realized -- it's important to spread the word as well as to bring in enough revenues to carry on. The companies deal with the tension between encouraging growth and staying socially responsible by using standard management techniques.
"The bigger issue is, fundamentally, What are the measures of control in the business?" says Grossman. "If you're a business that started kind of by accident -- and I don't mean that in any negative way -- then you don't have a kind of planning culture, and you probably don't have a culture where you think a lot about, What does it mean to have one big customer who's driving all your growth? What does it mean to have margins that are subpar for the industry? All those things that they grind into you in business school. Given those things, then, I think that among the young companies you find a greater measure of control over the path of the business. So I can look at our income statement, and I can say, 'I see some concern going forward, given the thinness of these margins,' which then directly relates to what we're able to spend on expenses, hiring, all of that stuff. So I think that just comes with the territory."
CitySoft and New Leaf Paper have tried to manage the tension between growth and goals in similar ways. Both have formed partnerships with larger companies in order to take on big projects without spreading themselves too thin. New Leaf Paper, which must cope with huge economies-of-scale issues in order to compete with the paper manufacturers that use virgin fiber, has formed alliances with various large stable companies like Old Navy Clothing, Nike, and Hewlett-Packard to ensure that its orders are of decent volume. New Leaf Paper also has set up partnerships with paper mills, both to develop and manufacture its products. CitySoft, whose revenues have jumped by 300% a year, is trying to shift from selling Web-development services to individual customers to acting as a subcontractor for larger technology integrators.
Business relationships matter
Principles of social responsibility must apply inside the company (to compensation, work hours, benefits, culture, and structure) as well as outside the business -- to the best of the company's ability. Critical outside relationships include those with suppliers and customers.
Among our representative companies, benefits (aside from the traditional health insurance, vacation, and sick time) range from employee stock options (offered by four) to paid time off for volunteer work (offered by three). They all offer nonhierarchical, open structures, though they also have senior management teams. The companies' vendor relationships also reflect their social agendas. WorldWise, for instance, makes a point of using only U.S. manufacturers, which it can visit to ensure that they meet its standards; proximity to customers also means energy savings and less pollution. (In the interest of full disclosure, Lamstein notes that his company did have one item assembled in Mexico but stopped producing that product altogether when it was underpriced by competitors manufacturing in China.) Honest Tea developed a relationship with I'tchik Herbal Tea, a small woman-owned company on the Crow Reservation, in Montana, from which it buys the peppermint leaves for its First Nation tea. I'tchik gets royalties from the sales of the tea made from the peppermint, as does a Native American organization called Pretty Shield Foundation, which includes foster care among its activities.
Sustainable Harvest takes things even further. Given the nature of his business (it's essentially a liaison between coffee farmers, roasters, and retailers), David Griswold has been able to establish an extraordinary level of accountability with every party he does business with. He personally sources the coffee he imports, forming long-term relationships with the small family farms and cooperatives that are his growers. He's even gone so far as to break down the standard 152-pound bag of beans into 50-pound boxes made from recycled materials so that growers and roasters alike will have an easier time lifting his merchandise. "We go for a level of transparency -- lay it out with your customers and suppliers," he says. "We consider what everyone needs to be profitable, looking at the other side of the fence: 'What do you need? This is what I need."
Wild Planet Toys also presents a comprehensive model for openness -- in this case, inside the company. For starters, Wild Planet uses open-book management, which means that everyone has access to all the company's financial data, except for figures on equity ownership (though everyone does receive stock options) and salaries. "Jack Stack [president of Springfield Remanufacturing Corp. and an early proponent of open-book management] has this great motto of sharing his kingdom with everyone," says Grossman. "I don't know how widely that happened in the 1980s companies. I know that happens here. It's a very valuable tool. People don't have to whisper and wonder, 'Gee, are we really making a profit? What does our bank account look like?' Profits, margins -- it's all right there."
In addition, since its inception in 1993, Wild Planet Toys has conducted annual social assessments of its inner and outer workings to make sure that the company is adhering to its stated values. Those values extend from "We believe in providing positive influences for children" to "We emphasize teamwork and make decisions as a team" to "We get involved in our community, particularly in partnerships with kids."
"I think the people who came out of the '60s were a little less democratic in terms of some of the things that they implemented," says Grossman. "I'm not judging or faulting them, but I think that their view was: 'Hey, we're leading a revolution, and the people who work for us have to understand these issues. We will help them understand those issues; we will bring them along the path. But this is the way it's going to be.' That's definitely not my style; sometimes to a fault it's not my style. It's the psychic rewards that are the most important. Not just 'Do you have a channel for dissent?' but 'Are you engaged in the company? Are you part of crafting the path to the future?"
Nick Gleason, who spent time working on the shop floor of the airline-engine plant of Pratt & Whitney, has an eminently logical take on running a democratic company. "One of the things I learned from working in manufacturing companies is you should push decisions out to their furthest reasonable place," he says. "The CEO should make certain decisions, and certain decisions the person on the assembly line should make. The issue is what decisions should be made where. I shouldn't be running projects; the projects team should be running projects. I should be facilitating decision making around fund-raising and working with investors. And if you get too far off the appropriate decision-making roles, then you get confusion or ineffectiveness or lack of preparation."
Do the best you can at the time
In today's socially responsible businesses, understatement is the name of the game. In keeping with that sentiment, the founders hold the following guidelines in common: Don't make promises you can't keep or claims you can't stick to. Be scrupulously honest.
Seth Goldman was very clear in explaining that the peppermint leaves he buys from I'tchik Herbal Tea are not grown on the Crow Reservation but are bought from still another source, and that he can't make claims about the labor conditions under which the company's herbs and teas are grown, because he hasn't visited the farms. Aaron Lamstein was totally up-front about the fact that he can't vouch for every condition under which workers manufacture his products, since the factories he uses are spread out across the United States, nor can he claim that all the components that accompany WorldWise's goods are recycled or organic.
"Before we go into a product agreement with anyone, we have extensive discussions -- first about environmental issues, second about social issues," says Lamstein. "Tremendous numbers of components are produced for our products: the box, the label, the product itself, the instruction sheet -- each could be made in a separate place. We don't visit the component manufacturers of every item. We don't have the answer to every question. Like all businesses trying to be on the cutting edge, we're learning as we go along. Our philosophy is that we need to do the best we can in as many places as we can. We also need to provide value to the customer."
Jeff Mendelsohn acknowledges that since New Leaf Paper is a rapidly growing company with only 10 employees, its priorities are developing its customer base, expanding its product line, and providing its customers with top-notch recycled papers and its employees with a fair and fulfilling work environment. "There are a number of social-responsibility issues that will become part of our agenda as we grow," says Mendelsohn. He notes that one of the mills that New Leaf Paper used recently closed its doors. "We were really sad for the employees, but we had no control over the situation," he says.
Daniel Grossman goes one step further. He doesn't even describe Wild Planet as a socially responsible company. "I'm very careful about saying, 'This is a socially responsible company,' because it's not," he says. "There are plenty of things, if you came here, if you looked at them, you could say, 'Is that responsible?' So all I can say is that we strive to be. We're public about it, and we assess our performance."
Wild Planet manufactures its toys in China, and even though it screens the factories it works with and has an office in Hong Kong, Grossman acknowledges that the company doesn't have the level of control over the manufacturing process that it would have if the toys were made in the States. "The reality is, if we're trying to create models that are sustainable, you're not going to have the control over every piece of the business, so you have to pick your places, and you have to be really clear."
In Wild Planet's early years, Grossman says, there was discussion about producing the toys in the United States. "But that would have meant that we'd end up selling probably to the top 5% of the market. And our mission was to provide these pro-social, if you will, toys to all kids, not just kids whose parents shop at FAO Schwarz. So we made that decision, we made that compromise."
Grossman applies that scrupulous honesty to matters inside Wild Planet as well. "I feel like we as businesses have obligations to our employees, and part of that obligation is to help everyone understand what the environment that we're operating in is like, to help everyone understand how our performance relates to that environment, and to make clear that the business is not a family. I think that's a setup, frankly," he says. "Sometimes people have to leave for reasons that are beyond our control. We talk about family style, but it's not a family. Anybody who's been in it knows that."
Forget the hype
For today's companies, social responsibility is not about marketing and image. In "Lost in Patagonia," a profile of the outdoor-clothing maker that appeared in Inc. in August 1992, Edward O. Welles wrote: " Image is a word that is liberally bandied about at Patagonia, and the concept serves as a key cog in the company's strategy." That's not the case in these new companies. They go about doing their socially responsible deeds quietly.
"When we first brought out our peppermint tea, our label didn't mention that we were sharing the revenues with the Crow Nation," says Goldman. "We didn't want people to think that was a gimmick." Mark Deutschmann notes that Village Real Estate Services concentrates primarily on marketing its services, not on publicizing its Village Fund, which owns 5% of the real estate business and is committed to the revitalization of urban neighborhoods.
CitySoft, too, focuses its marketing on its product and Web-development services. In fact, says Gleason, having a reputation for being socially involved could actually hurt his business. "Our whole company is focused on demonstrating the mainstream viability of urban talent, and so here's what happens if we get covered as a social story: we automatically become nonmainstream," he says. "Our goal is to have AOL want to hire us and have other companies replicate our hiring because they believe it will help them win in their business world. But if they view us as a social-service activity, not only will they be less likely to hire us and take us seriously, they'll be less likely to take the concept seriously, and they'll be less likely to do that kind of hiring themselves. Managing the messages and keeping people focused on the business is very important."
Of course, despite all the lessons that these CEOs have taken to heart, it remains to be seen how their companies will fare down the road. Many of the current crop of businesses are five years old or younger and post sales from $2 million to $8 million. Ben & Jerry's, by contrast, was acquired in April 2000 by giant Unilever for $326 million and had sales last year of some $248 million.
Still, this much is clear: the socially responsible companies of today, unlike their forebears, aren't driven by a cult of personality (read: Ben Cohen, Yvon Chouinard, Paul Hawken, Anita Roddick). The very lack of name recognition among the newer CEOs we discovered in our quest proves that point. Even more important, social responsibility for the recent crop of company founders -- at least at this early date -- seems to be not about them nor even about their companies. It's about the mission.
Thea Singer is an associate editor at Inc.
The Body Shop International, established In 1976
Roddick, like many social-venture entrepreneurs, never dreamed she'd run a public company someday.
"I think a lot of us would have slit our wrists if we ever thought we'd be part of corporate America or England," she says. "Big business was alien to me. What I wanted to do was create a livelihood, and I think women are quite good at that -- probably better than blokes. We mush up an interest and a skill, and that's a livelihood."
Roddick's company, the Body Shop, was arguably the most successful British enterprise of the 1980s and remains one of the best-known global brands to this day. But the company has taken its share of hits, both financially and emotionally.
In 1994 a journalist named Jon Entine wrote a magazine article about the Body Shop that suggested that the company was guilty of hypocritical marketing. At about the same time, the company's stock price on the London exchange plummeted amid a troubled North American expansion plan. Roddick says today that the Body Shop's problems were caused by poor hiring practices and some lousy mall leases foisted on the company by real estate brokers.
But some observers suggest that the company struggled because Anita Roddick, ever an outspoken crusader, was focused on being a social activist and was almost indifferent to her business's bottom line.
Today Roddick is still the cochairman of the Body Shop, but she says her first priority is writing. Her new book, Business as Unusual (Thorsons), was published in the United States in January, and she's already working on another manuscript. "I'm at a point in my life where I want to be heard," she explains. "I have knowledge, and I want to pass it on." --Mike Hofman
Smith & Hawken, established in 1979
During demonstrations against the World Trade Organization summit in Seattle in 1999, Paul Hawken was among the protesters teargassed by police. In the midst of the melee, an old ally came to his rescue. "Paul was very nearly dying -- choking to death with the gas -- and I pulled him out of line and fed him water and vinegar" to flush his eyes, recalls the Body Shop's Anita Roddick. "I said to him, 'Fuck, here we go again. Always in the middle of the mess."
These days Hawken is consulting, writing, teaching, and -- as in the case of the Seattle protests -- marshaling the forces of antiglobalism. Hawken, who lives in Sausalito, Calif., says his political philosophy hasn't changed much since the days when he was running Smith & Hawken, writing the classic Growing a Business, and appearing in a 17-part PBS series based on that book. "My view then and now is that there is a powerful oligarchy in this country that most people are blind to," he says. "We are not a democracy, we are a plutocracy. This country was founded because of corporate abuse, the crown-chartered corporations that taxed without representation. Now we are still being abused by corporations, though they do it with money, power, and corrupt politicians. Until our country makes a distinction between money and governance, power and business, we will have an unjust society that preys upon itself and the world in the name of freedom, democracy, and the American way of life."
If Hawken sounds as if he doesn't like business very much, that's because he doesn't.
So if you love business, why should you bother listening to Hawken? He has a pat rebuttal. "Simple," he says. "The world of business will either be socially responsible or there won't be a world for business to be in." --M.H.
Stonyfield Farm, established in 1983
This yogurt purveyor's experience combines the idealism of the '80s pioneers with the pragmatism of the recent crop of socially responsible entrepreneurs. Before taking the grand leap into the business world, Hirshberg had worked for an ecological advocacy group called the New Alchemy Institute. "We saw Stonyfield Farm as a for-profit with a nonprofit's mission," Hirshberg recalls. "Fundamentally, we thought we could fund ourselves. I was tired of having my palm faceup at the nonprofit. I saw creating a business as breaking out of the nonprofit rut. The irony is that I spent the first 10 years of my business constantly raising money."
That first decade of entrepreneurship, which involved turning a New Hampshire dairy farm with 11 Jersey cows into a profit maker, was "horrendous," Hirshberg says today. He says Stonyfield got its act together only around 1991. Today the company sells more than $70 million worth of yogurt annually. Hirshberg is still at the helm as CEO. And his green social mission is also still front and center at the company, with environmental messages printed on the lids of millions of yogurt containers each year. The company also donates 10% of after-tax profits to fund Profits for the Planet, initiatives that "help protect or restore the earth."
Though Hirshberg is very active, he admits that the social-venture movement's "noise level" has dropped significantly in the past few years. He says that is a result of the backlash that hit colleagues like Ben Cohen and Anita Roddick. To prevent an exposÉ on his company, Hirshberg says, he's "almost fascistic" about monitoring what promises the company makes about its products and its activism. "I don't think we've been strident," he says. "By my nature, I guess I've always been a bit more cautious." --M.H.
Ben & Jerry's Homemade Inc., established in 1978
Critics have long held that the management skills of Ben Cohen and partner Jerry Greenfield are as soft as a pint of Chunky Monkey left out on a summer afternoon. But the partners are still plugging away, 23 years after they started their ice-cream company in a converted gas station in Burlington, Vt. Today, however, their focus is almost exclusively on the company's social work, especially the foundation that they endowed with company stock in 1985. The company has donated 7.5% of pretax profits to the foundation and to Vermont community groups every year since then.
But Ben & Jerry's may face the prospect of marketing the names of two men who quit in a huff. Last spring the Anglo-Dutch conglomerate Unilever bought Ben & Jerry's for $326 million. So far, the marriage has not been a happy one for the maverick founders, who were disappointed with their new bosses' choice for a CEO. Unilever, which also sells Mentadent toothpaste and I Can't Believe It's Not Butter, installed a candidate who had previously worked for the company in Mexico; Cohen and Greenfield wanted a board member to get the top job. In November the partners threatened to quit, and their fans have set up a Web site -- www.savebenjerry.com -- to rally support for them and to catalog their many beefs with the parent company.
The Body Shop's Anita Roddick says Cohen is sad about his eponymous company's direction, which is focused on aggressive revenue growth. "I think both Ben and I think we'd move out of our companies if they became less progressive," she says. "Ben's not interested in yet another ice cream, and I'm not interested in yet another bubble bath. We're too old just to make more money." --M.H.
The Young Turks
Company: Sustainable Harvest Inc.
Headquarters: Emeryville, Calif.
Founder and president: David Griswold, age 39
Business: Sourcer/importer of shade-grown, organic "relationship" coffees -- that is, coffees bought from small family farms and cooperatives in Asia, Africa, and Central and South America with which the company has formed long-term relationships. The company follows "fair trade" practices, meaning it pays some growers a guaranteed minimum base price regardless of the world market price.
2000 revenues: $2.8 million
Became profitable: 1998
Number of employees: 3
Company: Honest Tea Inc.
Headquarters: Bethesda, Md.
Cofounder and president: Seth Goldman, age 35
Business: Maker of barely sweetened bottled iced tea and fully biodegradable tea bags filled with whole tea leaves
2000 revenues: $2 million
Projected to become profitable: 2002
Number of employees: 12
Company: Wild Planet Toys Inc.
Headquarters: San Francisco
Cofounder and CEO: Daniel Grossman, age 43
Business: Designer/manufacturer of nonsexist, nonviolent, imagination-inspiring toys
2000 revenues: $30 million
Became profitable: 1996
Number of employees: 40, including 10 in Hong Kong
Company: CitySoft Inc.
Headquarters: Watertown, Mass.
Cofounder and CEO: Nick Gleason, age 33
Business: Web developer with the mission of recruiting and hiring its workforce from urban neighborhoods; CitySoft does no training but does team up with tech-training centers to develop training standards.
2000 revenues: $2 million
Became profitable: 1997
Number of employees: 50
Company: WorldWise Inc.
Headquarters: San Rafael, Calif.
Cofounder and CEO: Aaron Lamstein, age 33
Business: Developer/manufacturer of garden, home, and pet products made from recycled materials and sold in mass markets like Wal-Mart, Target, and the Home Depot
2000 revenues: Under $10 million
Became profitable: 1996
Number of employees: 15 in corporate office, 45 independent manufacturing reps
Company: Village Real Estate Services
Founder and owner: Mark Deutschmann, age 43
Business: Real estate company that specializes in urban residential sales and revitalizes urban neighborhoods
2000 revenues: $1.2 million in commissions on $92 million in sales
Became profitable: 1997
Number of employees: 10, plus 35 affiliate brokers
Company: New Leaf Paper LLC
Headquarters: San Francisco
Cofounder and president: Jeff Mendelsohn, age 34
Business: Manufacturer/distributor of recycled paper
2000 revenues: $8 million
Became profitable: 1998
Number of employees: 10
Social Venture Network
Established in 1987
Right from the start, the founders of San Franciscobased nonprofit Social Venture Network wanted a "safe harbor" where social-activist entrepreneurs could meet to commiserate, coinvest in deals, and share best practices. As part of that mission, SVN, its 400 members, and its key organizers never spoke publicly about their work. Until now.
SVN is embarking on a major overhaul. Judy Wicks, founder of White Dog Enterprises, is chairing the group's national advisory board, and Ben Cohen of Ben & Jerry's has agreed to donate $150,000 a year for three years to fund an ambitious new slate of projects. A year ago, SVN hired a new president named Chris Gallagher. Though Gallagher is only 31 years old, "if anyone can be successful in that role, Chris should be able to do it," says Stephen Williamson, the CEO of prominent juice maker and social-venture company Odwalla Inc.
Gallagher once worked as the director of strategic communications at Williamson's California juice company. "Chris and I sat shoulder to shoulder through months of very difficult times," Williamson says, referring to Odwalla's well-publicized 1996 recall of apple juice that had been contaminated with E. coli bacteria.
Gallagher says his goal is to turn the well-meaning SVN into a brawny advocacy organization. "A challenge over the years has been determining how much we should keep the spirit of fluidity of the network and how much we should also try to be a force in the world," he explains. "We're increasingly looking for a way to make an impact, to become an organization that has a public voice, and to take principled action." --M.H.
If you're interested in finding VC's that specialize in socially-minded funding read the following -- Help For Socially Minded Businesses.
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