Why Capitalism is the Best Thing You Can Do For the World, with John Mackey.

All the execution of the initial idea. Half of my life was just do I have the guts to place this order? Ended up launching in 42 days we raised $600,000. Entrepreneurs are a billion fold over anybody else. Solving a problem because a great problem is a great business opportunity.

Hey fastlaners, this is Ryan Daniel Moran. Welcome back to Freedom Fastlane. Today you're going to hear a clip from our December called Freedom Fastlane Live. It was held here in Austin, Texas. And what we try to do at Freedom Fast Lane Live is put the best capitalists, entrepreneurs, brand builders and investors into one place, invite people to join and watch what happens. We just try to create the biggest business up leveling possible. This year's event featured Peter Diamandis, JP Sears, Cameron Herold, the founder of Whole Foods, John Mackey, a panel of people who built hundred million dollar businesses, our investor panel and a bunch more. And in past events we've had billionaire Jeff Hoffman, Pat Flynn, Robert Herjavec, Gary Vaynerchuk and others. So today you're going to hear a clip from the recent event. We don't release the entire event for obvious reasons, but there are certain clips that we find particularly beneficial that we want to share with you. So that's what you're going to hear on today's episode. If you want to be on the waiting list for the event in 2017, you can go over to freedomfastlanelive.com Enter your best email address and you will be on the notification list for when we release the speakers. Until then, enjoy this clip from Freedom Fast Lane Live.

Anybody excited to be an entrepreneur now?

So John, I'm chomping at the bit because you said something that got me all jizzle jazzard.

Which was what is jizzle jazzle?

Well, funny you should ask. It's a term that was made up in the last those socks are getting.

Me kind of jizzle juggle.

One is glad to be of service. John, you mentioned the perception that when you earn a dollar it takes from someone else. This actually came up in yesterday's keynote. Do you remember we talked with Alicia about it and she said at some level, you know, I feel like I'm taking when someone buys my product. And I said, well, we can go into that if you'd like, but I want to hear your perspective of I have my opinion. But if it is not a true transfer, where does the wealth go? Or how is it created? Or if it's not a true transfer, what is it? If it's not the one person receives and the other loses. What's a more appropriate way to look at it?

It's because it's based on voluntary exchange. I mean, how's she taking. She's not taking anything. She's exchanging. She's got the wrong metaphor. It's not about taking. It's about creating value for another person and exchanging it. And the other person doesn't have to exchange it if they don't want to. If the other person doesn't think they're getting a good deal, they don't make the trade. And so as entrepreneurs, we create value for people. If you can't create value for people, you're going to go out of business. But we're all value creators, and then we trade that value creation to other people. We make their lives better, or they wouldn't be trading with us. It's poor Alicia. It's just the opposite of what she thinks she's creating. Well, no, she's creating great value. She's making the world a better place. And she shouldn't feel guilty about that. She should be very proud of what she's doing because she's making a huge difference.

The way I look at it is there's no limit to the amount of value, because value is an abstract concept. But what about dollars? Is there a fixed number of dollars in an economy?

No, because human beings. I mean, it wouldn't matter if there were a fixed amount of dollars, because that would just make everything more valuable. I mean, you could have a. It would just mean everything was more valuable because the currency. I mean, the currency would just get more valuable as well. It's a subtle thing. I mean, it would be a worthy conversation to talk about how much dollar creation should the government do? Theoretically, it should do as much dollar creation as necessary to support the growth of the economy so you don't move into a deflationary state. But in and of itself, that money creation is neutral. It's the creativity. I use those examples of companies. Look how much better Google's made our lives, or Facebook has made our lives, or Apple. They've made our lives better, and they've created things that didn't exist before.

I 100% agree.

Uber used to create value in Austin.

It did. So I want to ask, do you think that the purpose of business, or let me ask you this. Do you think money as an end is a worthwhile means? Or does.

Business necessitate having a purpose and money being a byproduct? So is money. Would you argue that money can be an end, or would you argue that it's a byproduct.

It's a byproduct. I mean, but you got to pay attention to it, because if you don't pay attention to it, then you're not going to have working capital, you're going to go broke. So I find that two types of entrepreneurs sub optimize. In my experience. The first entrepreneur feels guilty about money. Perhaps Alicia feels guilty about it, and they feel guilty about it. And so they aren't able to optimize because they feel like if they're making too much, that's a bad thing. And the second type are those who only care about money, that they're obsessed with it. They just want to get rich, and that's their goal. And they move away from purpose and they. Sometimes they can make a lot of money, but oftentimes, in my experience, they crash and burn down the road. Because if you're not creating value for all your stakeholders, you're going to have trouble holding on to people that work for you, and you're going to be tempted to cross over and cheat or to win. I just find that stuff catches up with you over time. You can get away with it for a while, but ultimately, if you don't have high integrity and money is what your God is, then.

You know, Remember in the Lord of the Rings, I think that's such a good metaphor. The ring wraiths, people. Money is a good thing, but if you become obsessed with it, you become a ringwraith and you hollow out and you just kind of go over the dark side in the Lord of the Rings mythology. That's how I feel about it. It's a good thing, but you've got to keep it in perspective.

It seems to me that I'm of the opinion that if there is a voluntary exchange, the creation of money is a reflection of value created. And the opposite is true as well, that if someone starts a business just to make money and customers are choosing it voluntarily, it does produce value. But I'm yet to see that sustained on an individual level. The individual's pursuit of money as the aim has that plateaus, that there's not a culture if there is not a purpose beyond that. I'm of the opinion that if the pursuit of money exists at the beginning, that that does create value, because there would be no customers if there was value in the first place. What is your perspective on that?

I agree. Money's very important. Money is the exchange vehicle we use. Otherwise, it's hard. We'd have to barter Right. So I'm creating value and.

If we don't have money to act as the medium of exchange. So money was a great invention. If we don't have money to act as a medium of exchange, then I've got to think, okay, well, let's see then I need, you know, I need a half of it. If you want to take this much food, then I'm going to get. If I'm talking to a dentist and it's like, okay, well, I'm going to have to be some kind of barter with that dentist and it's going to be hard. Money facilitates the entire flow of value exchange to the economy. But money is just a symbol of it. It's just representative of it. It's not the value itself. That's the thing I'm trying to point out. If you make that the. I always say that in the conscious capitalism world, the people that work most abstractly with just money, the financial sector, they're the ones that least understand conscious capitalism. They just don't get it. Because for them, money is everything.

Some of them become Ringwraiths.

Whole Foods is a world leader, we would say has raving fans all over the world.

We're not a world leader and a lot of people hate us. But besides that, we've got some good stuff.

Well, we'll get into the haters part. I want to go there. But when you started very humbly.

And I don't know the scale up story, I know the origin story, I know where it is today, but I don't know the scale up story. And you started with a vision and a purpose. Was there someone who was brought in or did one of the founding partners have the operational vision? Because you obviously had to hire a lot of people along the way. You had to do a lot of things over the last 30 years. So what in one minute or less, can you tell us what happened in 30 years?

Well, of course it's been almost 40 years, but I could do 30. But I can't do 40. No, no. I can do it in like a minute, I think. First store was about half a mile from here, 8th and Rio Grande. It was called Safer Way. Started with my girlfriend. We started with $45,000. We lost half the money in the first year because I knew what the heck I was doing. And we lived in the store. We lived on the third floor of the store. So we literally lived in the store. And I realized our store was too small. It was in a competitive disadvantage. And I managed to convince our existing Shareholders and I recruited new shareholders to go relocate to have the biggest natural food store in Austin, which we did at 10th and Lamar. It was amazingly successful. It became the highest volume natural, natural food store in the United States within just a couple months of opening. There were only a few around and we were the best and the most successful. When we started out. Then we had our flood which wiped us out. Nine months after we started Whole Foods. That's when I learned about stakeholders. Because the stakeholders saved us from dying. They all came to our aid. I write about that in the book. Then we needed to do a second store in order to not have another flood. They wiped us out of business. We got the second store that reason that was successful. Then we did a third story. It was successful. But then we began to outstrip working capital. As you grow, a business is very important. We began to, we had to raise venture capital money. So just to show you how different the world was in 1988 than it is today, Whole Foods Market was doing about $50 million in sales and making about a million dollars a year. Back in 1988, we got a post money valuation of $12.5 million for the business. We got $4.5 million and sold 34% of the company. So people talk about, I mean, we were trading at a multiple of earnings of 8 times earnings. Now people trade at 8 times sales and they're losing millions of dollars a year. So once we got the venture capital money, we went outside of Texas. We went open a store in Palo Alto and we were able to get up to about 12 stores. We ran out of venture capital money. We did an ipo. I'll tell you about venture capitalists. Sorry, some probably venture capitalists in the room. They're hitchhikers with credit cards. As long as you get them to where they want to go, they help pay for the gas. But by God, if you get off the road and get a little lost, they'll hijack the car, throw you out on the side of the road and bring in another driver. So we did not want to give the venture capitalist control of our business. So we went public instead. This was a time when it's easier to go public than it was to do other options. Once we got that money, then Whole Foods began a roll up strategy. We began to acquire platform acquisitions. Mrs. Gooch's in LA Breton Circus in Boston, Fresh fields in Washington D.C. and they became the foundations that we could use in terms of infrastructure and people to grow in Los Angeles, to grow in Boston, to grow in Washington, another one, Unicorn Village, to grow in Florida.

So we began through acquisitions, and then we began to more rapidly grow, and as we accumulated profits, we could grow even faster. So, no, of course I did not do it by myself. That's the most absurd thing. It's just a total ego trip. Any entrepreneur, I mean, our media can only deal with the entrepreneur as like a Steve Jobs or Bill Gates type of hero. But I guarantee you, ever you get beneath the hood, there's always a team, there's always talented people that compensate for the weaknesses of the entrepreneur. If I had any major gift, it was simply I was so bad at so many things, and I knew it. So I was always trying to recruit people that were good at things I was bad at. And then I just empowered them, and together we did it.

Awesome.

That was about two minutes.

Yeah, that was great. You have been very open about your political leanings.

I'm less open today since I got people tacking Whole Foods all the time, so.

Oh, so let's go there, actually. So let's talk about haters, because it seems to me when someone. The one side of purpose is that it gets the right people on the bus. The opposite of that is that the people who disagree with where you want to go or what you want to do or who are purists and who disagree, speak really, really loudly, which I think is some of the best PR in the world. When people don't like you and they talk about you, I don't understand those who. Because you are. You're vegan, you don't eat any animal products, but Whole Foods has animal products. And as a result, there's some backlash in the vegan community from that, which I think is unwarranted. And some of them are very, very loud.

So I can reduce it all down to two things.

Please.

Short on time. First of all, if you're part of any kind of movement, there's purists and there are pragmatists. Entrepreneurs by nature are pragmatists. We got to satisfy the market. If I just wanted to force my eating views on everybody else, I'd go out of business. So you have to sell what ultimately people want to buy. You can't have your own belief system interfere with that too much or you're not going to succeed in business. So you have to serve your customers. You just can't foist your own belief system on other people. That's just crazy. But the thing about it is, purists judge you for heresy in any kind of movement. People that don't toe the orthodox line are seen as heretics. So in a lot of ways, I'm very hated in the vegan community because I'm seen as a heretic. You know, you know John Mackey, and yet you still sell animals. That's intolerable for them. Intolerable. And it's like, I don't want to sell animals. Stop buying them. It's not my fault you people are eating meat. I'm not eating them. However, the market wants to eat animal foods. We're going to sell animal foods. We're just going to do it as humanely and as consciously as we can do it. The second thing is, if you're going to be successful in life and you make money and you succeed, you're going to deal with envy. People that want to tear you down. A lot of the haters are just simply envious people that get upset about other things. The envy is always in disguise. Nobody shows it directly. They just attack you in other ways. But oftentimes the motivation is envy. So it's either heresy or envy. Those are, I think, things that people hate the most.

Do you think we agree that entrepreneurship and capitalism will solve all the world's problems, or at least can solve all the world's problems? Do you think that government has a role?

Absolutely. Look, I'll give you a simple political philosophy in a nutshell. Anything that you can make a profit doing belongs in the private sector, because you're going to have entrepreneurs who are going to create innovative solutions and you're going to make progress. Things that business can't make money doing. There's social problems, let's say I'm on the board of the Humane Society of the United States, for example. They can't make money doing what they're doing. They're helping dogs and seals and cats and livestock, animals. They can't make money doing that. So things that you can't make a profit at belong in the private. I mean, in the private sector. But in the nonprofit world. However, there are certain things that the nonprofit world can't deal with either. There are global environmental issues. There are things you need rules in the society. You need laws. You need police. You need defense. There are things that neither the private sector nor the capitalistic sector nor the nonprofit sector are equipped to deal with. That's government's job. It's a huge job. If they would just stick to that and do it well and let business do what it does well. And if the nonprofit sector do what it does well, we will Be living in a virtual utopia.

Amen to that, brother.

We are coming. We're just, thank God. At the end of just a loud and obnoxious political cycle. And it looks like it's going to be loud for a while.

I was going to say you think we're at the end of it.

At least the decision has been made. But now you think the decision's been made.

I mean, there's recounts going on.

I'm curious what you think is someone who would like the government to probably be in our lives less. What do you think would be a step in the right direction? Or what would you like to see happen? Or what do you think is the responsibility of entrepreneurs right now?

Those are very different questions. Responsibility of entrepreneurs? Look, we're the creators. We're the value creators. We're doing the most important thing you can possibly do. Create, make the world better. I think that's like. And it's so much fun. I will tell you, there's nothing more fun, or at least I never discovered anything more fun than building a business. It's the greatest joy you can possibly imagine. It's challenging. It forces you to become a better human being. It forces you to grow. Sometimes you're up against it, you get competition that forces you to get better, to innovate. That's just been, for me, it's just been the most wonderful life to be able to be an entrepreneur and create a business and watch it grow. You just can't believe how satisfying that is. However, I have other friends who are. I call serial entrepreneurs. They create businesses and then sell them and then go create another business. It's like fascinating to me. In fact, I like to invest in those people because the serial entrepreneur, any.

Serial entrepreneurs here want to, particularly after.

You'Ve had a couple of big wins.

And there are. I have friends that are in that category, so I always want to invest with them.

Is it true that you're becoming more coming back involved?

Yes. We've had a co CEO for the last six years and now I'm stepping back to be the sole CEO again and I'm actually really excited about it. I mean my co CEO is amazing, brilliant guy and he's done amazing things for Whole Foods. But when you have a co CEO, it's challenging. So I'm excited now to be able to run again.

It's my understanding and correct me if I'm wrong, but you're coming back. Kind of like not so dramatic, but kind of being brought back like Steve Jobs was brought back to bring Some.

No, no, no, no, no, no.

Not to. I just mean, like to bring it into a new direction. I was curious how you are navigating that. Do I have a misunderstanding?

Well, of course. Steve left for several years and I never have left Whole Foods. So that analogy breaks down there. But how many people have children? It's a young crowd. Oh, great. Is there anything you wouldn't do for your children?

I don't have any biological children. Whole Foods is my child. There's nothing I wouldn't do for it. I want it to flourish. I haven't taken any compensation at all. Stock options, nothing for 10 years. I just love Whole Foods. I just want it to be happy and healthy and holy. So that's what it's all about for me. I am a servant leader. I'm serving Whole Foods as best I can and will do so as long as I'm able to.

Since the company is so well known.

Different stock analysts have opinions. Customers have opinions. People don't talk so much when they're happy. People talk a lot about when there's bad news or they think something's wrong or they want to complain. Especially being a public company, how do you block out the speculation and what other people think is going on and just stay committed to the purpose?

Well, it's not easy. I'm a pretty sensitive guy when you get down to it. But I have toughened up over the years. I've got a much thicker your skin because I just see where people are coming from and they don't know. People project onto you. If you ever become a public figure at all. People think they know who you are, but they don't know who you are. So you're just dealing with people's projections all the time. Once you get that, when people are angry at you or judging you, it's like, hello, you don't even know me. So I don't let that bother me anymore.

Well, John, I think you are a model of what it means to be a capitalist. Thank you for what you do. We believe in what you're doing and hope you're doing it for a long time. So thank you for being here.

Thanks, Ryan. Thank you.

Give it up for John Mackey.

Hope you enjoyed today's clip from Freedom Fast Lane Live. In my experience, all of my biggest breakthroughs in both the people I've met and the information I've consumed have come as the result of attending events like Freedom Fast Lane Live. And our attendees, even our speakers, would say exactly the same thing. So I'm going to encourage you to head over to freedomfastlanelive.com make sure that you are signed up for the notification list for when it goes live. We'll also be teasing out speaker announcements throughout the year as they become official. You're not going to want to miss Freedom fast lane live 2017, so make sure you're on the notification list at freedomfastlane live.com hope to see you there. Hope you enjoyed today's episode. Make sure you share it with someone you think would find value in it, and we'll see you guys on the next show.