At about the same time, Jeffrey Hollender was having an epiphany of his own. Hollender had been raised on Park Avenue in New York City, but his goals were much the same as Newman's. Eager to do something that would have an impact, he had dropped out of Hampshire College after a year and a half and in 1977 moved to Toronto, where he founded a nonprofit called the Skills Exchange of Toronto, which offered courses such as "Introduction to Meditation" and "Marxist Thought." His father, a successful advertising executive, was appalled and grew even more concerned when his son was arrested in Canada for failing to file proper work permits. Hollender moved back to New York City and started a for-profit version of the business, the New York Network for Learning. This time, Hollender was determined to make money. His father was an investor and an adviser, and the courses included "How to Meet Men" and "How to Lose your Brooklyn Accent." One offering, "How to Marry Money," landed Hollender on The Phil Donahue Show -- accompanied by one of his lecturers, Joanna Steichen, who had married photographer Edward Steichen when he was 50 years her senior. The Donahue audience took great pleasure in heckling the pair, accusing both of being unscrupulous money-grubbers. Wiping off his stage makeup after the show, Hollender wondered: "Is this what I have become?"
He was 28 and his lofty goals were starting to seem distant. At the same time, the buzz about his classes was fading, and the company needed to shift direction if it was going to survive. Working with an executive from the Waldenbooks chain, Hollender decided to offer taped, rather than live, lessons. The timing turned out to be perfect. Books on tape had grown increasingly popular, and Hollender soon found himself sitting on a lucrative library of material. In 1985, Warner Communications bought Network for Learning for more than $2 million.
Vermont was teeming with entrepreneurs who believed they had a better way to run a business. "We smoked way too much pot, stayed up too late at night, and talked about how to change the world," Newman says. "We were full of ourselves. It was so much fun."
Hollender became head of Warner's new audio book division. He was the corporation's youngest division president, often hobnobbing with high-profile executives in private dining rooms across Manhattan. But Hollender grew bored. Finding the lavish lifestyle less than fulfilling, he quit to devote himself to what he hoped would be a redeeming project -- a book called How to Make the World a Better Place. Research for the book led him to Vermont, a state teeming with entrepreneurs like Alan Newman, who believed that they had a better way to run a business -- with emphasis on environmentally friendly materials, fair dealings with suppliers, and generous benefits for their own workers. They were also spending long hours debating how to get the message out to the rest of the world. "We smoked way too much pot," says Newman, "stayed up too late at night, and talked about how to change the world. We were full of ourselves. It was so much fun."
Newman and Hollender met when Hollender traveled to Vermont as part of his research. At the time, Newman was growing increasingly serious about Seventh Generation. Sales from the first catalog had met expectations, and he sensed that the company had a real shot at success. But the company needed money. As it happens, raising money is one of Hollender's great talents. Neither man remembers connecting during their initial meetings, but their business interests clearly coincided. In early 1989, Hollender helped Newman write a business plan. He shopped the new plan to investors -- most of them friends who had invested in his previous venture -- and raised $850,000. Under the deal, Hollender and Newman would each own 23% of company stock. There were about 40 other shareholders, none of whom would own more than 3%. Hollender, who took the title of CEO and chairman, continued to live in New York City and commuted to Vermont a few days a week. He was mainly in charge of financing and product development. As president, Newman oversaw marketing and day-to-day operations.
With the new money, the company moved to new space in nearby Colchester. Newman quickly transformed it into a cheerful hippy den. There was a Ping-Pong table in the warehouse, free Ben & Jerry's, and chalkboards in the bathrooms where people could write things about the company they didn't feel comfortable saying out loud. The main conference room, where Newman held staff meetings, had no table or chairs. Only pillows. No matter how busy the company was, he conducted weekly "check-ins" at which every employee was invited to report on new projects or problems or just about anything. Some stuck to business, others discussed conflicts with co-workers or troubles at home. The idea, Newman says, was to create a culture of absolute honesty in which employees would not be hampered by fear of admitting mistakes or suffering disapproval. The way Newman saw it, such fears dominated most workplaces, which led people to hide or cover up errors. He even launched a policy known as "Five Dollars for the Best Mistake" -- rewarding people for admitting and taking responsibility for their missteps.
Hollender, for his part, kept a small office in midtown Manhattan with an assistant and a staff of about five. He stayed in close contact with Newman on the phone, speaking to him several times a day. The office culture in Vermont, he says, was "very different than the one I might have created." But he adapted -- sitting in Newman's beanbag chairs without complaint, though he conducted his own meetings in a smaller conference room outfitted with a table and chairs. Once in a while, he drew the line -- "Alan wanted to have a nap room," he says -- but he put in long hours and tried to remain open and honest with employees. That got harder as the company began to grow and evolve. "I didn't have everything under control," he acknowledges, "and it would have been misleading to create that appearance. When things were uncertain, I let people know that they were."
