During a career spanning more than four decades, Jeffrey Hollender has started many successful businesses and organizations. Recent ventures include Sustain Natural, an environmentally minded women's sexual health company Hollender co-founded in 2013 with his wife, Sheila, and his daughter, Meika, who is now CEO. In 2012, he helped launch the American Sustainable Business Council, where he's served as chief executive since April. But Hollender is best known as the co-founder of Seventh Generation, the Burlington, Vermont-based manufacturer of eco-friendly household products. He started the company in 1988--decades before many people were thinking seriously about the sustainability of their household's cleaning and paper products--and built it into a business with nine-figure annual sales. Here, he explains how he got his mission-driven company off the ground, and how it inspired his future. --As told to Christine Lagorio-Chafkin
Seventh Generation grew out of the first book that I wrote. It was called How To Make the World a Better Place: a Guide to Doing Good. It was my exploration into all the ways in which we as individuals can play a positive role in society. The truth is that when I wrote that book, no one would have described me as an ardent environmentalist. I was honestly much more focused on human rights and issues of equity and justice. In the end, I couldn't figure out how to turn "human rights" into a business. So I ended up selling toilet paper.
The company started through our taking over a mail-order catalog that was published by Renew America, a small, Washington, D.C.-based environmental organization. It focused on water- and energy-conservation products. Many people figured if they put a brick in their toilet tank they were saving water and didn't need us. We also sold everything you needed to lead a "green lifestyle" before that phrase even existed: organic cotton sheets, organic paint, and comforters made of milkweed. We started the Seventh Generation brand as items to be sold inside the catalog. Bathroom tissue and laundry detergent--the sort of iconic products the company is known for--they came along a year or two after we started the company.
We found our early customers by mailing the catalog to people who were donating to Greenpeace and the Natural Resources Defense Council. It was a challenge. We struggled to make the business work for the first decade because we were so far ahead of the awareness and demand for more sustainable, responsible products.
We were almost always about to go out of business. And because we kept running out of money, we had to keep raising more and more capital to keep the business going. The biggest cost was always the products themselves. We were so small that we couldn't get these products manufactured very cost-effectively; they were expensive, and that had an adverse effect on our gross margins.
The second year in business we did $1 million in sales. The next, $7 million. So we expected to keep up that growth, and go to $20 million in 1991--and we raised money to support that growth. But then all of a sudden, we kept missing sales numbers. The growth wasn't happening. We started cutting salaries, 5 or 10 percent. And we cut executive salaries by 50 percent. It wasn't enough. By the end of the year, we'd just done the same $7 million as the year before. That meant we had to let go about half of the staff, about 60 of 120 people, and burned up a tremendous amount of money because we just didn't have the revenue we were expecting. That's probably the most painful experience a business leader can go through.
I don't think it ever got that bad again, but a sustained challenge was the fact that people just didn't know why they needed scratchy, brown toilet paper. It took a lot of education to help people understand why certain products they were using were killing the planet.
Back then, you could go public with little or no sales, which you really can't do anymore. In 1993, we decided we'd be safer, and our mission would stay safer, if we took the company public. We were facing either taking venture capital funding, and losing control, or ending up with thousands and thousands of teeny little shareholders by being a public company. It felt safer, but it didn't go so well. We were still very, very small, maybe 60 people, and we were still struggling financially and not profitable.
By 1995, we were both operating the mail order catalog and distributing our product to natural product stores. We were running two very different businesses and didn't have the cash to do both. We sold off the mail order catalog, which was the biggest part of our business, and made the choice to risk everything on our new wholesale business.
It was a decades-long education of the public that led to any success. We were definitely tagging along with the organic trend. I would say Whole Foods did more than anyone or anything to really transform consumer awareness and understanding of safer, healthier products. Back in 2000, when they were still growing rapidly, we would have a whole aisle in their store, of toilet paper and laundry detergent and paper towels. And by association, people began to understand "Gee, leading a natural, healthier lifestyle isn't just about what I eat, it's about the products that I use around my home and the air that I breathe." And the opportunity to have Whole Foods present our products to all of their customers in such a compelling way was really transformational to the company.
I also think we made it because we were so passionate about what we were doing. And no matter how challenging things were and no matter how close we were to going out of business, we just never gave up, and always found a way to continue going. When people ask: "What's the secret to success?" I tell them it's not giving up, because if you hang on long enough, chances are that you'll find an opportunity to succeed.