As personal as it was, the struggle between Hollender and Newman reflected one that has long split the wider community of so-called green business owners. The issue is a basic one: What does it mean to run a socially responsible business? To Newman's thinking, Seventh Generation had more in common with activist groups like Greenpeace than it did with traditional corporations. He had no problem with rapid growth, but he envisioned Seventh Generation's catalog, as he had that of Niche Marketing, as a distribution channel for small, independent companies whose products might not otherwise reach consumers. Hollender advocated a different approach. The way he saw it, a company stood a better chance of influencing the world by developing leverage in the mainstream marketplace, building strong brands that can compete with the big players.
They were hardly the first business owners to grapple with such issues. The green business world is still reeling over the 2000 decision by Ben Cohen and Jerry Greenfield to sell their ice cream company to the Dutch conglomerate Unilever. The sale drew new lines in the battle, says Judy Wicks, owner of Philadelphia's White Dog Cafe and a former girlfriend of Ben Cohen, who went so far as to organize a group to try to buy Ben & Jerry's. Because their duty is to serve shareholders, not stakeholders, Wicks says, large public companies have a hard time being socially responsible. Socially responsible entrepreneurship, she says -- and many in Vermont agree -- is not about growing large or building brands. "What happened to Ben & Jerry's was a wake-up call," she says. "Twenty years ago, the socially responsible business movement was focused more on business practices -- not on ownership and size. But even the most socially responsible companies can end up adding to the concentration of wealth and power."
Obviously, many entrepreneurs disagree. "If you sincerely want the world to be a better place, and you believe business is a way to get there, then it's pure academic nonsense to set some arbitrary size limit above which you cannot be a responsible company," says Gary Hirshberg, who founded the organic yogurt maker Stonyfield Farm in Londonderry, N.H., in 1983. In 2001, Hirshberg stirred up his own brouhaha among do-gooders by selling a stake to the French dairy and bottled water giant Group Danone. Earlier this year, Danone upped its ownership to more than 80%. The way Hirshberg sees it, partnering with a Goliath like Danone means he can do good on a grand scale. "Things happen a whole lot faster when a company like Danone flexes its muscles," he says.
By the winter of 1992, Newman had his own answer to the conundrum. He had pleaded with Seventh Generation's board to be allowed to rejoin the company. Not only was his request rejected, he was also denied a spot on the board. He considered legal action but decided against it. "It's not my style," he says. And so, having lost control of Seventh Generation, Newman vowed never to start a business again.
Less than a year later, walking down Church Street in downtown Burlington, he ran into Bob Johnson, his old friend and former warehouse manager. Johnson had quit Seventh Generation and was now in the beer business, working as a brewer for an East Coast beer maker. But what he really wanted to do, he told Newman, was launch his own brewery. "Well, why don't we?" responded Newman. A few months later, their first test brews were ready and the partners rented a small space in downtown Burlington. Their new venture, the two men decided, would be different from Seventh Generation. Johnson had never gotten over the frustration he felt when warehouse employees were having check-ins or playing Ping-Pong instead of getting the orders out. Newman, for his part, was re-thinking everything. Did social responsibility require absolute honesty and regular check-ins, he wondered. Or was it possible to manage in a more traditional manner -- and still do the right thing? In any case, he was willing to try again. Money was tight, and they were funding the project mainly on credit cards. But then something fortuitous happened. Newman got a phone call from Hollender's attorney.
Seventh Generation had changed since Newman's departure. "Alan's leaving was a very difficult transition for the company," Hollender says. "I felt like we had endless healing processes." Employees loyal to Newman viewed Hollender with suspicion -- leading Hollender to hire a New Age consultant to come in and take a "spiritual inventory" of the place. The guru, who went by the name of Malachi, led a series of sessions called "withholds" in which small groups of employees vented their deepest feelings and frustrations to one another.
But that healing process was the least of Hollender's problems. Seventh Generation was on the ropes, and Hollender, frankly, had run out of people to ask for money. His options, as he saw them, were to seek venture capital or take the company public. Neither option seemed particularly consistent with social responsibility. On the other hand, you can't do much good from bankruptcy court. So in 1993, on the advice of the board, he decided to take Seventh Generation public.
To do that, he needed Newman's stock. Newman's first reaction? "Over my dead body." But then he started thinking -- the brewery did need cash. Eventually, a childhood friend of Hollender's, a New York City investment banker, bought Newman's stake for about $200,000, which went right into the new venture. The cash was serendipitous, to say the least, and Newman later named the brewery for his ability to pull things together at the last minute -- like a rabbit from a magic hat.
