The deal allowed Hollender to proceed with attempting to sell his struggling company to Wall Street. It was a pitch unlike anything the Street had seen. He printed his prelude to going public on 100% recycled paper. Plus, the statement was, as The New York Times termed it, "unusually candid." It conceded that the company's losses from the years 1991 and 1992 totaled $3.4 million, that its debt was so severe that 30% of its catalog orders still stood unfilled, and that, though it had recently decided to make a line of branded products, it had no money for shelf space and no intention of paying for it. "Without guarantees from retailers that such projects would be welcome," the Times reported, "a real question exists whether Seventh Generation can pull it all off."
Nonetheless, on November 8, 1993, Seventh Generation offered 1.2 million shares of stock to the public, at $5 a share, and 1.2 million warrants, at 10 cents a piece. The company managed to raise $7 million. Getting the money and seeing Seventh Generation's name in the papers again were energizing, but it didn't take long for doubts to set in. As 1994 wore on, Hollender realized that the ongoing costs of being a public company were enormous. The time and expense of dealing with accountants, attorneys, and investors was a massive headache. And Hollender's heart sunk when the company's stock price plummeted.
What's more, Seventh Generation still lacked the money it needed to make a real push into retail. So Hollender made his gutsiest move ever: He decided that Seventh Generation would sell its struggling catalog business, even though it accounted for 80% of revenue. He found a buyer in Gaiam, a healthy-lifestyle products company in Broomfield, Colo. Most of the staff either quit or went to work for Gaiam, leaving Hollender to rebuild Seventh Generation essentially from scratch. He poured the proceeds into developing products like bleach- and dye-free dish and laundry soaps, recycled toilet paper, and other paper products made from recycled materials and began building relationships with chains like Whole Foods and Wild Oats, as well as mainstream supermarket retailers like Kroger. Before long, the company was making progress -- though you wouldn't have known it from its stock price, which was stuck at about 70 cents. So in 1999, again on the advice of the board and with the help of wealthy New York friends, Hollender bought back his struggling company for $1.30 a share.
Turning to Gray and a new crew of consultants for advice on yet another repositioning, Hollender decided that his products needed to appeal not only to a sense of moral and ethical duty but also to health consciousness. The idea appealed to him on a personal level, too. His son, Alexander, then 9, suffered from severe allergies and asthma, and one of the things that helped the Hollenders keep him healthy was the use of Seventh Generation's mild, chemical-free products. The consultants eventually helped him reposition Seventh Generation under a new tagline: "Healthier for You and the Planet."
Today, Seventh Generation is based in a gleaming office building in downtown Burlington. The Ping-Pong table, beanbag chairs, and pillows have been replaced with more traditional office furniture. Hollender himself lives outside Burlington in a 6,000-square-foot mansion overlooking Lake Champlain. Two years ago, the house, constructed from untreated woods and equipped with water-saving laundry equipment and compact lighting, was the subject of a story in the Burlington Free Press under the headline "Greenhouse" -- which raised the hackles of many hard-core Vermonters, including more than a few former Seventh Generation employees. "There is no way that five people living in 6,000 square feet, miles from work, schools, and shopping, can be 'environmentally friendly' or sustainable for humanity in the long run," one reader wrote.
Hollender makes no apologies -- for his home or for the direction in which he's taken Seventh Generation. He continues to believe that the best way to make an impact is to head straight for the American mainstream and is not shy about battling giants like Procter & Gamble on their own turf, pushing hard for market penetration in mainstream supermarkets in health-conscious cities such as Denver, Austin, and Seattle. Though Seventh Generation's prices are generally about a dollar more than mainstream brands, the products have attracted customers willing to pay a premium.
Nor has Hollender abandoned the company's original values. Seventh Generation continues to demand brutal honesty. Hollender still conducts check-ins with his 30 employees regularly, and every employee participates in a painstakingly frank 360-degree review process. Bonuses are awarded not only on the basis of having achieved key business objectives but for exhibiting certain "trust behaviors" -- such as "listening actively without interruption." The company also turned heads, in late 2003, when it published its first Corporate Social Responsibility Report. The document details not only growth in markets like Denver, where Seventh Generation's chlorine-free baby diapers outsell all other brands, but also points out the ways in which the company has fallen short of its ideals. The fragrances in the green apple dish liquid and mint toilet bowl cleaner, for example, are still synthetic, the report says, though the company is looking for natural replacements. With such moves, Hollender hopes to establish Seventh Generation as a role model for corporate social responsibility. "Businesses no longer have a choice whether to behave in a moral fashion or not," he says. "The world will soon expect it from them."
Newman's Magic Hat, on the other hand, continues to build its customer base one New England community at a time. The brewery is a 50-employee operation whose best-selling beer, an apricot-tinged pale ale called No. 9, has helped attract fans in 12 eastern states. But its main focus remains on its hometown, Burlington. About 15 people work in a South Burlington warehouse Newman calls the "Artifactory." A retail store is festooned with vintage televisions, Mardi Gras beads, and other artifacts. Brews have names like Fat Angel, Blind Faith, and Thumbsucker. All employees have fanciful titles. The director of sales is the Ambassador of Ales and Odd Notions; the PR rep is the Minister of Fermentation Elation Relations. The company's official name is Magic Hat Brewing Co. and Performing Arts Center, and it shows: Each year, Magic Hat sponsors several arts and music festivals in Burlington, as well as about 20 other concerts, mainly at New England venues. The biggest event of the year is the Magic Hat Mardi Gras weekend in late February -- in which Newman leads thousands of drunken revelers, parading through Burlington's snow-covered streets wearing a goofy, fruit-covered "magic hat."
