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.
