Famous fund manager peter lynch once said if you like a product, find out who the owner is because maybe the owner represents a good stock to buy. On that principle, when i heard my family kept going to a company in my neighborhood called fresh fields, and organic food chain, i began to say maybe its an investment year, so i looked into it, and it turns out fresh fields was looking for some capital. My firm invested. We love the company. Then along came a Company Called whole foods who said they wanted to buy it. I initially said i did not want to sell, but when i met john mackey, i realized he had a gifted vision of where this business was going to go, so we did sell, enter turned out he was right. He built an incredible chain, and i still go to the store almost every day. What compelled you to start safer way and then whole foods . You were at university of texas. Did you drop out to do this . I dropped out of school, like, six times. I got 120 hours of electives. I just studied whatever i wanted to. I was living in a vegetarian coop when i was 23 years old. Thats when i had my food awakening where i understood for the first time that what you ate affected how you felt and your health and your lung charity longevity. I went to work for a small Natural Food Store in austin, and i found the purpose of my life. I was on fire for healthy eating, organic and Natural Foods. Came home one day and asked my girlfriend living in the coop if we ought to start up our own store. She said she thought that would be a lot of fun, cool, and six months later, we had raised 45,000 dollars from friends and family, and we found a small store location in austin and we were in business. David did you have the vision of building a global or National Company or just a you would do a couple of stores . What was your original vision . My original vision was to breakeven. Raisedst gear, we 25,000 in capital, and we it d to lose 20,000 of the first year. We had no grand vision. The best way to understand it is we were passionate about selling natural, organic foods. We did not take any business classes. s. Were not mba we just were passionate. We were young. I was 21 when we started the first store. Renee was 20. We were having an adventure. We were playing at having a grocery store. It was so much fun. Andot pretty good at it then we started to grow it. When we did our ipo in 1992, no the investors want to know, you try to build a model of your company. I thought i think we could someday have 100 stores. Someday, we might even be able to do ab 1 billion in sales, some day we could have that, and they were not that impressed with that. They did not think i was going to be that big a company. Of course, where were 20 billion in sales now. I was very wrong about the upward potential of the business. David at the time, when you were doing this in 1978 in the early 1980s, was Natural Foods well known or Natural Foods and organic foods . When we were trying to raise Venture Capital money, we had 30 Venture Capitalists invested, and a dozen or more turned us down. I remember one of the guys turning me down saying, i dont much of abusiness has future. He said i want to explain to you, and he said you guys are just a bunch of hippies, and you are selling food to other hippies. I ran into that guy, like, eight years later. He told me that was the biggest mistake he had ever made in his venturecapital career. Turns out it was not just selling food to hippies. It caught up it caught on in the upper middle class and spread from there. The rest is history, as they say. David when you dropped out of college, did you say to your father, im going to be like Mark Zuckerberg or bill gates, build a big company . Did he have the confidence in you to do that . John Mark Zuckerberg was not alive, so could not have referred to him. Bill gates had just started microsoft, and my dad would never have heard of that. My dad was very supportive. He just wanted his son to do something he was passionate about. He could see that i was very excited about, so he was very supportive. David in the early years, he helped you somewhat as an accounting professor and gave you some advice. My dad was my mentor because i did not have a business background. I always say from 1978 to 1994, i never made a move at whole foods without checking with my dad. In 1994, i turned 40 years old. We had gone public two years before. My dad was now wealthy on paper with all the stock he had bought, and he wanted to hold onto what he had and i wanted to grow the business. I just thought we could really grow this thing. We fought in our board meeting. We were screaming at each other in public board meetings. I said, i want you to sell half of your stock tomorrow im firing you. I dont want you on the board anymore. I want you to sell half your stock tomorrow and take the other half and leave it in the company. We are going to grow whole foods. Its going to be a big company someday. He was very hurt. His feelings were hurt. I said im 40 years old. Im ready to run the company by myself. He said, 40 years old . You dont know anything. Youre only 40. Turns out he was right. I know a lot more today than i knew then, but he was wrong about the potential growth of whole foods because the company took off after that, and he made a lot more money off of that have he kept in. The biggest problem that people still were not convinced that Natural Foods and organic foods were good for you . Was it that the price you had to charge was somewhat more expensive than, lets say, safeway, or was it the safe ways of the world wanted to compete with you what were the biggest problems . John the biggest problem was the limitation of the marketplace initially. When we opened up in a hip area youngeru had a lot of bohemian people, the stores would take off from the very beginning, but when we went into the suburbs like, when we opened a store in greenville avenue in dallas, it took off, but when we took up to richardson, a suburb of north dallas, it was really slow. The store started really slow. The suburban stores did not have enough what we call natural food consciousness to really be successful. It took us years to grow those businesses. David when whole foods came along and it was very popular in many areas, it became known in some areas as whole paycheck im sure youve heard that before. The occasion was that your prices were expensive, but i assume your response is that you are selling Higher Quality or more complicated things, and your prices are not a big drag on your overall ability to get people to come into the store is that right . John its a very good question. Of course, i do hear that all the time. Its a little bit of a complex answer. History, weour probably only got serious competition in the last 15 years. The first 25 years we existed, very few people [indiscernible] so it was no big deal. As we got more successful, we got more competition, and one of the ways they competed was to undercut us in price. One of the things whole foods knows is it needs to be a competitive marketplace in terms of price. That was one of the reasons we wanted to sell to amazon is jeff and his team think longterm. It was going to be difficult for us to lower our prices and hold onto our company. When you lower prices initially, it hurts your sales. Something you were selling for dollar now you are selling for . 90, it looks like your business is declining. You will get it back over time as people realize they are Getting Better prices, but it is a painful transition. With amazon, you have already drop your prices three times and you are going to keep dropping. Thats another great benefit of the merger. We are getting more and more price competition. Amazon is willing to be patient and let that play out over time. David every acquisition looks great at the time you do them. Now youve had a couple of years behind here behind you. John do we love everything about amazon . No, theres about 2 we dont love, but 98 is a pretty good marriage. David a couple years ago, you had, as you wrote in your book conscious leadership, a hedge and advocatedg for a higher price. You looked at some alternatives and one of them that seemed the best was selling to amazon. Is that right . John thats correct. The activist investors and their partners wanted to i met with them, and they basically said, we are going to take over your board and we are going to throw you out. You are going to sell the company, so why not just save us a lot of anguish and you just agree to do that . We did not want to sell the company to the highest bidder. We had to think about alternatives. One was going private. Another was to put the company in private hands. We contacted warren buffett, for example. Another was to fight to maintain control. As i was trying to think about what the best solution was, one morning, i woke up and it pops in my brain what about amazon . Before. T jeff a year really admired him still do. I thought these guys would be perfect. Ive heard they want to get into the grocery business. This would be a Good Opportunity for them to get into it. Their technology could help whole foods. We contacted amazon. Couple days later, we flew up to seattle and met with jeff and his team. We had an amazing first conversation, lasted about three hours. It was like we were finishing each others sentences. All the things we could do together. We got super excited. A few days after that, they sent a whole team to austin to continue the conversation. Six weeks after that first meeting, we signed a merger agreement. We negotiated the price, signed a merger agreement and were on our way. David every acquisition looks great at the time you do them. Now youve had a couple years behind you. Is it working out . Like for aetaphor i merger is its like a marriage, particularly between big companies. We had a love at first sight and a whirlwind romance. Its a fair question to ask how thats working out. Its about three years later now , as a matter of fact. Is it perfect . You know, no. When people ask me this question, i say, do i love absolutely everything about my wife . Ive and married dirty years. The answer is no. I love about 98 . Theres 2 that really bothers me. I say its kind of similar with amazon. Do we love everything about amazon . Well, theres about 2 we dont love, but we love almost everything. 98 is a good marriage and amazon is working out great for us. We are a much Better Company today. Gettingmazon is about people to buy things and ship it to their home. You have been about people to come into you have been about people coming into your stores and buy things as they look around. How has it worked out in that respect . Theres overlap in the cultures. We are both very customerfocused. One of the things amazon has done which has been fantastic and one reason the merger has worked well they respect our culture. They are not trying to change our culture. Our culture is changing because we are taking on lots of attributes that amazon has, but they are not forcing us or coercing us. We are doing it voluntarily to make our company better. Are evolving, but i think in a healthy, constructive way. People ask me if i could do it all over again, what i make the same decision, and the answer is yes, we would make the exact same decision. David i know whenever i go to whole foods, which is about a , so i go my house frequently, they asked me if im a prime member. John a High Percentage of our customers are prime members, so they like that. Theres a minority of customers who are not, and every time they get asked, they dont necessarily like that they keep buting asked the question, on balance, remember, the majority of our transactions are coming from prime members. That has been a good thing. They are Getting Better prices and better deals. Amazon has helped whole foods, though, is technology. Particularly with covid, the inunt of work we are doing deliveries has tripled in the last year. We did not really have it was a small percentage before amazon acquired us. David lets talk about covid for a moment. When covid came, many people worried Retail Stores would have to shut down, but food Retail Stores have benefited, you could argue, because people need to eat a lot more, i guess, or they are going up to buy staples. What was it like at the outset . Retailer salesl are up primarily because restaurant sales are down so much. People are not eating out so much because they are home more and that has been good for all retailers. It has been good for whole foods as well. Maybe a little less good for us because we do a lot of prepared food in our stores, so that is way down. People are not going to our salad bars or our hot food bars. Offices are shut down around our stores, so we are not getting that traffic we used to get in, but on the other hand, overall sales are up substantially because Everything Else is up so much. David has it made the way you are going to manage in the future differently . Has been online sales, and that will continue. Once people get a taste of that, they like it. Amazon, if you are a prime member, delivery is free, so i think that will be a permanent shift for many people. The hardest thing about managing the business now is theres an element of fear, right . People are scared of the virus. Everybody is masked up. We require masks for all our team members and customers. In austin, its 100 degrees outside right now and wearing a not a very comfortable thing to do. People have been shutting down in their homes. There has been unrest around the country. I dont know about you, but i would have to say 20 20 is the weirdest year of my entire life. David you have been ceo of this company for 42 years. Is it the expectation to do this another 5, 10 years . John i literally married my daughter off to the richest man in the world. I just kind of came along to make sure the marriage settles in well. David how have you pivoted because of your because of covid . We arehe main thing is more handsoff. We dont have any suppliers coming in. We can have 1000 people in this building and we probably have 60 in the building right now. We are running the company like many other corporations, off of zoom off of amazon chime, actually, because that is the amazon internal system. We are not giving the business to stores as much. In some ways, whole foods is trading on its Cultural Capital we have built up over the decades because we are kind of a heavy touch type of leadership. Like i said, i want to get into stores, and its not so easy to do. People dont want to travel on commercial flights. People are driving to get to stores if they can, but theres unrest. People are tired of wearing masks. They are tired of being cooped up. This whole thing has gone on a lot longer than anyone anticipated, and i think many corporations are struggling with unemployment. The country is under massive stress right now and whole foods has not been spared from that. David have you learned about yourself and your company during this period . Anything you did not already know . For me, its like when i can get into the stores, it recharges me. If you are the ceo of a big corporation, you mostly hear about bad stuff, right . Bad stuff goes your way. The good stuff happening in the stores it is important for me to get down into the stores to connect with team members because it reminds me what is really important, which is the day today business and interaction with the customers. To a whole you go foods anywhere in the country you have 500 stores or so in the country now. I assume you are instantly recognized . John now i go in, i wear a mask. Nobody knows who i am. But, no, they recognize mostly because they know im coming, generally. I do some surprise visits occasionally, but i get recognized very quickly. Dave david you go in and say this is not set up the right way or you should charge something different, do they listen to you . John i have learned painfully that if i like it or not, im the father of whole foods, and the team members really want dad to love the store. I have learned to moderate my criticism because they really tried to make the store look good because they knew i was coming, so i just try to stay positive and connect with the people and maybe after i leave, i will tell the leadership of the region, i did not like this, this, or this. David you have built one of the most Famous Companies in the united states, but you dont own ownersf it relative to of other large companies. Does that make you lose sleep but night . John one of the most destructive emotions there is in the world is envy. Envy poisons your soul. I learned to deal with people envying people and i learned to deal with my own and beat a long time ago, at its far better to just be grateful i have had an amazing life. I am a very wealthy man by any objective standard, but there are people wealthier than me. Other entrepreneurs have made more money so what . I have everything i could ever need or want. Greed those things poison our souls. I have no place for envy. Im happy for them. Im happy they have had successful lives, and, yeah, so have i. Life is good. David in your book, you talk about the importance of a certain type of leadership where you are trying to be a conscious leader, which is to worry about the longterm purpose of the company, not just profit. Is that right . John yes. In the book, we talk about purpose first. What purpose first put purpose first. Whole foods has always been purpose driven from the beginning. We want to make the world a better place. We want people to eat healthy. What we learned over time is the importance of leading with love, to care about your people. We have a chapter about leading with love. Then we learned, of course, the importance of integrity. In business and in life in general, integrity is so important. You have to do what you say, be trustworthy, authentic. You have to be honorable. David you talk about the importance of culture. You developed a whole foods culture. Has it changed under amazon or have you been able to keep your culture . What is that culture . John cultures are like living entities. They change over time. They evolve. Our culture has evolved in the last three years, but culture comes from your values. It comes from your purpose, and it comes from the way you lead the company, what your Leadership Principles are. 100ere named one of the best companies to work for for 20 consecutive years. I would say covid is challenging the culture. For one thing, we cannot get around and