But things seemed to be coming together. A March 1989 profile of the company in The New York Times painted Newman as the prophet of a new environmental movement. The article quoted him predicting that the watchwords of the new decade would be recyclable, renewable, and biodegradable. The story was a publicity windfall. By early 1990, monthly orders had jumped from fewer than 600 to more than 7,000. Earth Day 1990 was fast approaching, and Newman and Hollender could feel the momentum building. They expanded their product line like crazy, adding everything from beeswax crayons to biodegradable panty-liners to chemical-free carpet deodorizers ("with flea-chasing herbs!"). They hired some 80 new employees and drafted plans to mail three million catalogs.
Reporters began calling regularly. Most stories focused on Seventh Generation as an environmental pioneer, but reporters were also struck by the unusual pair that ran the company. The Associated Press called Hollender and Newman the "odd couple." People magazine noted that "Hollender favors pin-striped business suits" while "Newman's business attire consists of Patagonia shorts and Day-Glo green sunglasses." And yet, as managers the pair seemed deeply complementary. Newman inspired loyalty through sheer charisma, while Hollender was the indefatigable worker who led by example. "I was the emotion and Jeff was the intellect," Newman says. The partnership was working.
At the end of 1989, sales of catalog products were nearly $1 million; by the end of 1990, they topped $7 million. Hollender raised an additional $5 million and outlined sales projections for 1991 of $20 million, an increase of some 300%. Things were moving fast, and there was little time to talk. At one point, Newman and Hollender got word just before they were scheduled to depart for a conference in Los Angeles that the event had been canceled. They went anyway, figuring they'd have the roundtrip plane ride to catch up and strategize.
If the two had managed to slow down for a moment, they might have noticed that a major shift was under way in the marketplace. The economy had slowed and was on the verge of a deep recession. Iraq's invasion of Kuwait, and the subsequent Gulf War, further dampened things. Just as suddenly as their switchboards had lit up, the phones at the Seventh Generation office went silent. "It was like people put down their telephones and turned on CNN," says Newman. "The world had changed, but Seventh Generation hadn't."
As 1991 wore on, it became clear that hitting $20 million was a pipe dream; even remaining flat at $7 million would be a challenge. "It was like falling through the air and not knowing where the ground is," Hollender recalls. "It was the most stress I can imagine." Indeed, he had raised all the capital, and now it was his wealthy friends who had the most to lose.
In late 1991, the company dismissed about 50 employees, some of whom had been with Newman since his Niche Marketing days. A few months later, even more workers were laid off. Newman took the second round of layoffs particularly hard and wasn't sure how to proceed. "We hit a wall and had to reinvent ourselves," he says. "I was burnt out." What he needed was time to think things through. At the beginning of 1992, he told Hollender that he would be taking a six-month sabbatical.
Hollender was livid. He had resisted his own impulses to flee and felt Newman was abandoning him. "I thought, 'If you're leaving now, don't bother coming back."
Hollender was livid. He had resisted his own impulses to flee and felt Newman was abandoning him. "I was so angry and hurt," he says. "I thought, 'If you're leaving now, don't plan on coming back." Further complicating matters, the two men had begun to harbor deep differences about the company's direction. Despite the slumping sales, Newman remained confident in the catalog business. Hollender, on the other hand, believed that Seventh Generation's true potential was in becoming a full-scale consumer brand. His plan was to narrow the company's range of products, mass-produce popular items like recycled toilet paper, and retail the goods under the Seventh Generation label.
Such differences were left unresolved when Newman departed. His goal was to get away from the business, clear his head, and think. He hung out with his daughter, Zoe. He learned to play bass guitar. When he was good enough, he started playing with a rock band composed mostly of Seventh Generation employees. He heard from friends around town about Seventh Generation, but for the most part, he didn't call in. "Jeffrey was decidedly cold," he says. "I thought I would give him some space."
Hollender was doing some soul-searching of his own. He had been shaken by the experience of firing more than fifty people -- many of whom he had hired in the previous twelve months. "It was a very painful period," recalls Arthur Gray, a Seventh Generation investor and one of Hollender's closest advisers. "I don't think he lost his belief in the company, but he was sorely tested." Amid the strain, Hollender was in no mood to let Newman waltz back into the company. In the early summer months of 1992, after Newman wrote Hollender a letter outlining his ideas about repositioning Seventh Generation, Hollender wrote back informing him that he no longer had a job with the company. The letter stunned Newman. "I felt he had stolen my child," he says. "I knew he was unhappy with my leaving, but I thought we were in total agreement [on my coming back]." Gray, then chairman of Seventh Generation's board, says he shed no tears over Newman's departure. "Alan Newman was never interested in making money," Gray says. "He was one of those people who believes it doesn't matter. I saw Alan as an impediment."
