Right action focuses on doing what is beneficial to everyone, including yourself.
—ROGER WALSH
It was an unusually warm spring day in 2017 when I arrived in New York City, eager to launch a new book. In the days ahead, I was scheduled to speak on several national TV shows about a topic close to my heart: the amazing health benefits of a whole foods, plant-based diet. I was feeling energized and positive about this new opportunity to pursue my life’s purpose—until I turned on my phone and it was as if all the sunlight and bright possibility had been sucked out of my world. The thing I’d been dreading and fighting to prevent for years was happening. Whole Foods Market, the company I’d dedicated my entire adult life to creating, building, and nurturing, was facing an existential crisis unlike anything in our history as a public company.
That history began all the way back in 1992. We had opened our first store in Austin in 1978, but 1992 was the year we first sold stock to the public, and I had to learn to balance my long-term, purpose-driven, multi-stakeholder approach to business with the short-term, investor-focused demands of quarterly earnings reporting. This wasn’t always easy, but the company was doing well, which helped. Over our forty-two-year history, Whole Foods has achieved tremendous growth. By 2017 we were nearing five hundred stores. We had gone from $300,000 in annual sales during our first year to over $16 billion in sales by the summer of 2017. We had averaged 8 percent same-store sales growth for more than thirty years, which is one of the best track records in the history of food retailing in America. In addition, we had the highest EBITDA (earnings before interest, tax, depreciation, and amortization) percentage among public food retailers, and sales per square foot in our stores, at $1,000 per square foot, were twice as high as the industry average.
But in 2017, that remarkable track record of growth wasn’t enough for Wall Street, in part because our sales growth was slowing. Our success had, naturally, spawned a new generation of competitors anxious to participate in the natural foods boom. Conventional grocers were finally waking up to the tremendous opportunity created in the marketplace by people who wanted to eat healthier. More and more grocers and retailers started to imitate Whole Foods and carry larger assortments of natural and organic products. They copied much of our marketing strategy; they increased the space dedicated to organic produce; they even adopted elements of our in-store design aesthetic. From the perspective of our higher purpose—to nourish people and the planet—I was proud of the influence we’d had on the market and the benefits to people who might never enter one of our stores. But, as the leader of a public company, I was keenly aware that our investors might not feel the same way, especially as that competition began to take a toll on our sales growth and our stock price began to fall. Given that I didn’t own a huge percentage of the company or have a special share class that gave me a controlling interest, I worried we were vulnerable to activist investors.
Those fears would be proven all too prescient on that spring day, March 29, 2017, when JANA Partners, a New York hedge fund, announced that it had bought 8.8 percent of our stock. Immediately, JANA proceeded to launch a campaign against Whole Foods. Despite our years of consistent success, they had developed a very negative narrative about the company. They wanted us to replace our board of directors and put the company up for sale to the highest bidder. JANA was motivated by one thing only—maximizing short-term profits—and it was determined to do whatever was required to execute its plans. We quickly realized that Whole Foods Market leadership was facing the most significant, high-stakes challenge in the company’s history. For me personally, it was an enormous test—how was I to shepherd the company I had led for so many years into the next phases of its existence without losing those qualities that made it special? My book tour was abandoned, my TV appearances canceled, as I devoted every waking minute to finding a way through this crisis.
What eventually transpired over the following weeks and months surprised everyone, including me. Whole Foods ended up merging with Amazon, forming a relationship that has proven to be very beneficial to both companies. For me, it was a time of difficulty and soul-searching. I had some dark moments when I truly feared that so much of what we had built could be lost. But ultimately, it was a period that deeply affirmed one of the leadership principles I have always depended on—the importance of finding solutions in which everyone wins. Before I share the rest of the remarkable story of the merger, or what I have come to call “the marriage” of Amazon and Whole Foods, I want to say a few things about the critical mindset that is at the core of what it means to be a conscious leader.
We all know the archetype: the dealmaker, the negotiator, the shark, the supposedly savvy businessman or -woman who always seems to get the better end of the stick—fifty-one cents or more on the dollar when the deal is made. Their goal is to always “win” the deal. After all, it’s a war out there in the business world—isn’t it? Think Michael Douglas as Gordon Gekko in Wall Street, quoting Sun Tzu’s The Art of War. Or Alec Baldwin’s character in Glengarry Glen Ross exhorting his underlings with f-bombs and insults to do anything possible to get people to “sign on the line which is dotted!”1 Or Kevin O’Leary, aka Mr. Wonderful, on the popular CNBC show Shark Tank, rubbing his hands together and saying, “Here’s how I think of my money: as soldiers. I send them off to war every day. I want them to take prisoners and come home so there’s more of them.”2 In this approach to the art of the deal, business is at best a game, but more often it’s a battle. The overriding goal is to survive and prevail, and crush the other party in the process. There is one winner, and the others are losers. That’s just the way it works. Deal with it, sucker.
Now imagine there was a different way. If you’ve read this far in the book, you know that we prefer not to view business as a battlefield. What if there was an alternative ethical strategy that we could use in both leadership and life that would result in positive outcomes for both ourselves and everyone around us? Wouldn’t that be a marvelous discovery? After all, trying to act ethically and do the right thing can often seem confusing and difficult. Leadership today—and, to be honest, life in general—involves increasingly complex webs of relationships and responsibilities, and it sometimes seems impossible to sort out the best way forward.
Amid this complexity, we have come to advocate and rely on an ethical strategy that is both simple to understand and highly effective: finding win-win-win solutions. It’s an all-encompassing strategic approach to leadership for effective long-term success. Employed carefully and thoughtfully, it will result in positive outcomes for everyone involved, including oneself.
You’ve probably heard the term “win-win,” but you may notice that we’re adding a third “win.” We begin with the basic idea of win-win—creating positive outcomes for both ourselves and the people on the other side of the table. We would contend that a win-win philosophy is at the ethical core of most business dealings. As Alexander McCobin, CEO of Conscious Capitalism, puts it, “A positive-sum worldview is a foundational premise of capitalism, where we seek out mutually beneficial exchanges so that we create more value for everyone than existed before the exchange.”3 A trade happens, and both people do well. One person receives a needed product or service; the other receives a gain on the exchange—both win! There is a double “thank you” taking place wherein both parties are happy. In fact, probably the greatest misunderstanding of business is the failure to appreciate that the vast majority of exchanges are win-win—otherwise they would not have taken place, since they are voluntary.
Conscious leaders, however, take this mindset one giant step further and simultaneously seek positive outcomes for the larger community—a third win. This community can be defined as widely as we wish to define it. In some contexts, the additional win could be for our families, our religious community, our city, our state, our nation, all humans, all animals, or even the health of the biosphere. The key ethical idea in win-win-win thinking is that we are seeking to find strategies and solutions that benefit us, the parties we are directly interacting with, and the larger communities that we exist within. It’s a triple victory—good for me, good for you, good for all of us.
In business, that third win typically represents the larger stakeholder group for which the business is creating value—customers, team members, suppliers, investors, and local and global communities. (See “The Conscious Leader’s Tool Kit: Stakeholder Integration,” page 51, for more on this topic.) The premise is that all the stakeholders are connected and interdependent. By managing the entire system with win-win-win thinking, we create positive synergies that benefit everyone. This helps the organization to be more successful and flourish at much higher levels over the long term. And that long-term view is critical, because some of those benefits aren’t fully seen and appreciated if our time horizon is too limited.
Win-win-win thinking is an ethical strategy that can help guide us, as conscious leaders, every single day as we navigate the many dimensions of exercising influence, wielding power, and negotiating deals. More important, this approach can help in a much larger endeavor—transforming our world for the better. But to truly appreciate this philosophy and its power, we have to evolve past our conditioned win-lose, either-or mindset. That can be quite difficult, given how pervasive it is in our society.
Win-win-win thinking is a deeply satisfying approach to our business relationships in part because it represents the essence of the Golden Rule—“Do unto others as you would have them do unto you.” In various forms, this has been taught and practiced as a key ethical principle for thousands of years. In evolutionary psychology, it is closely related to “reciprocal altruism”—both parties voluntarily creating value for the other to achieve mutual gain. And let’s be very clear: it does not have to involve long-term self-sacrifice. It doesn’t mean we put aside our best interests on behalf of the other person. That’s win-lose again, only the roles are reversed. In a win-win-win approach, we are looking to create outcomes where all parties feel that the outcome is beneficial.
Unfortunately, too much of our culture believes in the win-lose paradigm. It’s hard to convince people of another possibility. In fact, that’s how business is too often portrayed in contemporary discourse: as greedy, selfish, and exploitative—a win-lose, winner-take-all process whereby the “rich get richer and the poor get poorer.” As a result, there are, regrettably, more than a few Gordon Gekkos in the cinematic and literary imagination.
Of course, there are plenty of real examples of greedy, dishonest behavior in business, just as there are examples of bad behavior in all fields. But the idea that business is all about exploitation, and simply redistributes wealth to the top of the social hierarchy, is an unfortunate and inaccurate myth. The percentage of the world population living in poverty has fallen dramatically in the past two centuries, and business has been the major contributor to that trend. Global incomes have increased at an unprecedented rate over the same period, even as global poverty rates have fallen—a process that has accelerated in recent decades.4 In the magic of trade and voluntary exchange, the uplifting power of mutually beneficial outcomes has been one of the greatest sources of value for human civilization, improving the human condition and upgrading all of our lives in the process.
What happens when a person practicing a win-win-win philosophy encounters someone who is engaged in a win-lose strategy? Not surprisingly, this does occur regularly. If that’s the kind of person we’re dealing with, we must be that much more awake and aware of what’s going on. The other person isn’t playing by the same rules that we are! We can’t be as trusting; we have to be more on our guard. It’s imperative to protect our own interests. But that shouldn’t deter us from at least trying to seek a win-win-win deal. If we fail, however, the line is clear. Remember Stephen Covey’s words in his masterful book The 7 Habits of Highly Effective People. He calls for us to embrace the philosophy of “Win/Win or No Deal.”5 If we can’t achieve that win-win, Covey urges us to simply walk away.
Trust is so important. If it’s not there, do we really want to make a deal? Warren Buffett likes to say that he always wants his deals to be able to be done with a handshake. That doesn’t mean he doesn’t have lawyers check the details. It simply means that in some basic sense there is a high level of trust and mutual respect. If we don’t feel that, we should question the wisdom of going forward. At the very least, we need to be appropriately cautious. “Trust in Allah, but tether your camel,” as the old Sufi saying goes.
Research from game theory has provided another boost to the efficacy of this mindset. It has shown that the strategy proven to be most effective over the long term is “tit for tat.” In tit-for-tat strategies, the initial approach is open and cooperative. That means we choose to cooperate with everyone (seek a win-win outcome) until a person proves to be untrustworthy (seeking a losing outcome for us). Then our strategy has to shift—we can no longer cooperate with that player. We risk being taken advantage of. This is a very resilient approach, both in game theory and in life. We develop a reputation for being honest and trustworthy, but we don’t tolerate being taken advantage of. We protect ourselves, but our basic posture is one of trust and cooperation. It’s a win-win attitude with everyone—if possible. When that doesn’t work, we channel our inner Stephen Covey and say “No Deal.”
Sometimes it takes a crisis to help us break through conditioned, win-lose ways of thinking and acting. For Cheryl Rosner, as for many Americans, 9/11 was that kind of moment. The entire country felt the devastating social and economic impact of 9/11, but one industry took it especially hard: the travel industry. And Rosner, an executive with Expedia, was right in the middle of it. In the chaos of that tragic day and the week that followed, her team worked around the clock to make sure that their guests and customers, who in many cases were stuck without travel options, had places to stay. Their hotel partners were wonderfully accommodating, so, after the initial crisis had died down, she went on a little tour to thank them personally. What became clear in those meetings was that economic pain was taking a toll. The travel industry had pretty much shut down. “They were getting killed,” she remembers, “especially smaller, independent properties who suddenly had very little cash flow.” Layoffs and other business disruptions were imminent.
Back at the office, Rosner sat down with her CFO and explained the situation as she’d seen it. Both of them felt the urgency of trying to help these businesses—their partners—who, through no fault of their own, were facing desperate times. And to raise the stakes for Expedia, this was happening at the same time it was preparing to launch a new website, Hotels.com, and needed all the support it could get from these independent hotel operators. Perhaps there was a win-win solution? That evening, over a glass or two of bourbon, they discussed possibilities. After cycling through a number of what Rosner recalls as bad ideas, they finally hatched a plan. After much deliberation, they decided to extend no-hassle, zero-interest loans to many of these small businesses to help them survive the temporary downturn. These loans had a fluid payback period, and they included a benefit to Rosner and her team: preferable rates and pricing when the Hotels.com brand launched and travel picked back up. Not only would those better rates benefit Hotels.com as it entered the market, but they would also help inspire people to get back to traveling, drive business to these struggling partners, and bring benefits to the whole industry.
In 2002, Hotels.com launched and was a tremendous success, powered in part by the favorable terms and relationships Rosner had cultivated with these partners. The travel industry rebounded, and the no-interest loans were paid back sooner than expected. It was a big win for everyone: for the company, for its partners that were able to keep their businesses afloat, for the people who kept their jobs, for the travel industry, and even for the economy itself. All it took was a willingness to find a solution that could help everyone get through the crisis. It was a simple solution, but it took thinking outside the box to get there, and for Rosner the impact was particularly profound. It changed her sense of business, of how connected and interdependent we all are—economically but also in other ways. And it made her want to find ways to bring that spirit of mutual benefit forward as she moved into future entrepreneurial endeavors. It may have taken the shock of 9/11 to jolt her into a new perspective, but she took the lesson and ran with it. Every conscious leader can learn from such experiences, even without the backdrop of a tragedy.
Are win-win-win solutions really possible? Can we adopt such a bold approach on a consistent basis? Is this ethical strategy too idealistic for the “real world”? We don’t think so. Of course, life is complicated, and there are occasions when win-win-win solutions prove elusive. At Whole Foods Market, sometimes we’ve had to close a poorly performing store because, despite many failed attempts, we just couldn’t come up with any solutions to make it successful. However, I don’t believe this means that a solution didn’t exist; it’s just that at some point we ran out of time or imagination to find it!
Conscious leaders should dedicate themselves to becoming experts at navigating complex scenarios and finding win-win-win solutions across stakeholder groups, and to do that we need a sophisticated understanding of how systems work (see “The Conscious Leader’s Tool Kit: Systems Thinking,” page 99). We need to see the big picture and understand how the different components of the system interconnect and behave over time, balancing immediate and long-term needs to create value for as many stakeholders as possible.
If we can master the skill of finding win-win-win solutions whenever time and circumstance allow, we are going to have far more success, not only in business and leadership but also in life. People usually know who’s trustworthy, who has their best interests at heart, and if we earn that reputation, it will mean a great deal. We are likely to be much happier and more fulfilled. We will have fewer conflicts, because our attitude will encourage a higher level of trust and cooperation.
What really makes win-win-win such a powerful ethical strategy is that it encourages us to unleash our creative minds and develop more deeply innovative solutions. The win-lose, either-or way of thinking usually comes to mind first, because it’s easy and familiar and it requires far less imagination and creativity. It’s the path of least resistance. When we practice win-lose strategies, we are often too quick to accept undesirable trade-offs as both inevitable and necessary. If we look for such trade-offs, we will certainly find them. But the idea that someone must lose so that another will gain just isn’t true. In fact, we believe that this zero-sum mentality, as they call it in game theory, holds back both our own personal flourishing and the collective good of humanity. Instead, when we look for creative win-win-win (or non-zero-sum) solutions, our attention will be on finding these instead, often without any onerous compromises. Never underestimate the power of human ingenuity, once liberated from the default mental straitjacket of win-lose. Once we free our imagination to come up with creative solutions where everyone is benefiting, it is amazing how much positive energy and goodwill is unlocked.
Win-win-win thinking is not just applicable to the business arena; it’s desperately needed in our society right now. If more leaders in both the private and public sectors would begin to adopt the mindset of mutual benefit, the effects would ripple through our economy and our society, rapidly accelerating cultural evolution and progress.
Today, such a scenario seems far-fetched. As we write this book, the United States is more politically polarized than it has been at any other point in our lifetimes. Our culture is divided into angry and aggrieved political tribes. The various value systems that shape our population (see the appendix, “On Cultivating Cultural Intelligence,” page 229) are vying with one another for preeminence and control. Win-lose thinking dominates public discourse. People believe that their own values are on the side of the angels, while those values that express a different perspective are stupid, wrong, and evil and must be defeated. It’s a battle that seems to have little hope of resolution, and the spillover effects are polluting many aspects of our cultural landscape.
But there is nothing inevitable about this polarized state. Tribal thinking doesn’t have to be the default way that we interact. Changing this state of affairs, however, will take courageous leadership. More of our leaders would need to adopt a win-win-win approach to our national issues, employing all of their intelligence and creativity to find innovative solutions that transcend ideological conflicts and generate real value for the larger society. How do we move the society forward, ameliorate the polarization, and do it all in such a way that all of the major stakeholders—which are the various tribes or worldviews—“win” in some way? As conscious leaders, we need to develop a much higher degree of cultural intelligence and a mindset of mutual benefit to achieve those lofty goals.
Yet we can draw inspiration from the fact that it has been done before. Win-win-win thinking has often defined those moments in American history that changed the country for the better. In fact, one of the common threads among all the major social movements that have been successful and sustainable over the long run is that they had an undergirding of mutual benefit. There are many examples of this, but one that we always find deeply motivating and heartening is the Civil Rights Movement of the 1950s and ’60s.
Dr. Martin Luther King Jr. was fighting for the rights of his people—but also for more than that. He clearly saw that the Civil Rights Movement needed to seek not only the empowerment of black Americans and their liberation from Jim Crow, but also the ethical redemption of America as a whole from the shameful blight of racism. King’s extraordinary vision was a colorblind society with equal rights and dignity for all races and ethnicities. He presented that vision to the rest of America—appealing to the national conscience and to the collective hope that we could create a solution to our racial problems that would benefit all sectors of society.
King and his fellow activists’ passionate stance of nonviolence kept the public perception of the movement situated in a win-win-win framework. Their refusal to retaliate, even in the face of violence, appealed to the conscience and goodwill of citizens throughout the nation and helped prevent the movement from slipping into a win-lose stance that would have complicated that inclusive vision. It remains a beautiful vision, an aspiration not only for the country but for humanity as a whole. And it took the extraordinary leadership of King, together with other courageous leaders who stood beside him, to embed it so deeply into the national consciousness.
King’s dream of racial equality, dignity, and harmony challenged the American status quo to its core. But it was also congruent with the promise made in the Declaration of Independence that we are all created equal and with rights to life, liberty, and the pursuit of happiness. In that, the Civil Rights Movement created multiple layers of positive outcomes. It offered some measure of justice and opportunity to citizens who had too long been prevented from participating in the American Dream. And it has been deeply beneficial for our entire society—culturally, economically, morally—as we continue our national journey. That journey, of course, is far from finished, as we continue our work to leave behind the inherent racism that was seeded in our country from the beginning. There have certainly been plenty of bumps and setbacks along that road, but, thanks to King’s radical win-win-win vision, we have taken significant steps forward.
With such lofty ideals and cultural heroes elevating our hearts and minds, let’s return to the world of business—the existential crisis that Whole Foods Market faced in 2017. It might not have been a moment of great historic import or national significance, but the stakes were high for me and the many stakeholders who had built, nurtured, supported, and loved our company and its higher purpose. As I huddled with my executive team in the spring of that year, we asked ourselves two critical questions: What is the win-win-win solution here? And what is the best thing for all of Whole Foods Market’s stakeholders?
My own fear was that JANA Partners, being motivated by short-term profit-seeking and a win-lose framework, would be able to take control of the company and sell it off to the highest bidder. That highest bidder might not be a company that would honor our higher purpose—our core values, our mission, our standards, and what we stood for. Our culture almost surely would have been deeply harmed, and our headquarters could have been dismantled, with thousands losing their jobs. If our quality standards were overturned, we’d be forced to sell products that no longer fit our mission. The way I saw it, we were in danger of losing everything we had built.
We considered lots of options and strategies. Should we engage in a media war with JANA? Should we pit our vision of the future against theirs in the public mind? Should we commit to a struggle with JANA to maintain control of the board and prevent a sale of the company against our will? If we were to fight, would we win or were we likely to lose?
Though we knew we might ultimately be able to prevail in this struggle, we also recognized that it would likely be a long and expensive battle and a huge distraction for the company. In other words, we could lose even if we won. But it was an alternative that we took very seriously, and we prepared a complete strategy to follow should we opt to go in that direction.
During our discussions, the option of selling the company came up as well. We asked ourselves, “If we were to be sold, is there a buyer that we’d particularly prefer? Is there any company out there that would be a really good fit?” The name Berkshire Hathaway came up in our deliberations, and we contacted Warren Buffett to see if he had any interest in possibly buying Whole Foods. He responded that it wasn’t a good fit for him. We considered other food retailers—again looking for a solution that would create a win-win-win for all our stakeholders. I met with the CEO and chairman of Albertsons on an informal basis and concluded that Albertsons probably wouldn’t have been a good partner for us.
We also discussed the possibility of taking the company private. There was a strong concern that this would only be a temporary solution and could cause us to take on billions of dollars of debt to finance a private transaction. We were worried that a heavy debt load might bankrupt the company, and that was too big a risk to take. The more we looked for a win-win-win solution, the more frustrated we became, because no clear direction was emerging. However, that all changed in a single flash of insight one morning soon after I had awakened from another restless night of sleep: What about Amazon? Is there a chance they might be interested?
I had met Jeff Bezos the previous year and had really liked him—he struck me as a brilliant and authentic man, and his obvious entrepreneurial spirit strongly resonated with me. Moreover, Amazon had long been one of the companies I most admired. As one of the great technology companies in the world, I also imagined that they could really help upgrade Whole Foods in an area that had never been one of our strengths. As we considered the possibility, I grew very enthusiastic. More than simply seeing a way to escape from a difficult position, I began to see the long-term potential of this merger.
I often describe the relationship between Whole Foods’ and Amazon’s leadership teams as “love at first sight.” It’s not an exaggeration, but a colorful metaphor to explain what happened. After we contacted Amazon to see if they were interested, I flew to Seattle with three of our top executives for a meeting with Jeff and some of his team. That initial discussion took place at Jeff’s boathouse. We talked for three hours about all the amazing things we could do together, and the time just flew by. When the Whole Foods team retreated to a restaurant to process the conversation, we were all smiling and happy. We unanimously agreed that these were some of the smartest people we had ever met, and that we had made a special connection. But while we definitely liked them, we didn’t know for sure if the feeling was mutual. Like someone in a new romance, we were a bit nervous about it as we waited by the phone. It turned out that we had nothing to worry about. Just four days later, Amazon sent a team of ten executives to Austin to discuss in more detail what a merger between the companies would look like.
A “whirlwind courtship” ensued. We moved from dating to engagement to marriage in just a few short months. Our first meeting occurred on April 30, 2017, we entered into a formal engagement (merger agreement) on June 15, and the deal closed on August 28, after the tribal elders (the government) made the decision to approve the marriage. Reflecting on the years that have since passed, I still believe that the merger represents a win-win-win solution where each major stakeholder has benefited. Let me go through them one by one.
Our customers were always the most likely winners in the merger, especially given that Amazon’s explicit purpose is “to be Earth’s most customer-centric company.” Whole Foods Market has, of course, always cared deeply about its customers, but I will admit that Amazon’s customer-obsessed culture is helping us upgrade in that area, and to improve the ways we serve customers by creating an overall shopping experience that is richer and more seamless. Of all the stakeholders, the customer has benefited most from the merger—primarily through lower prices. Everyone loves savings. But it’s more than prices; it’s taking a long-term approach, which is intrinsic to Amazon’s culture. It’s been a welcome relief to be freed from the short-term expectations of Wall Street so that we can once again take a long-term, strategic view toward creating value for all our stakeholders.
The merger has also nudged us further out beyond our brick-and-mortar roots, and we are taking full advantage of Amazon’s unparalleled expertise in retailing. With Amazon’s help, we’re working to get ahead in the technology game. In previous years, we were a follower on the tech front, but now we’re becoming leaders. The in-store experience and the personalized, high-touch service provided by our team members is still a huge differentiator for Whole Foods, but we are no longer limited to just visiting our stores in person. Prime Now, with its deliveries directly to customers, is revolutionizing our business! Of course, none of these changes would be worth much if we sacrificed our quality. After all, our higher purpose is “to nourish people and the planet,” and we’ve developed industry-leading quality standards over the years. Our customer loyalty is based on that trust. So it’s been heartening to me to see Amazon respect and even champion those standards from day one.
Our team members are often drawn to Whole Foods because they feel a personal connection to our core values and higher purpose. We have a unique culture at Whole Foods, and Amazon has shown great respect for that. Of course, with any marriage there are changes. Over time, they will influence our culture, without question. And vice versa. The merger was a way to protect the enormous value we had created with the company and move us forward into the future—not to stay exactly the same. As in any good marriage, we will continue to consciously integrate and evolve together.
Our team members also benefited from Amazon’s decision to raise the minimum wage to $15 per hour for all full-time, part-time, temporary, and seasonal workers throughout the United States. Investments like these may raise our costs in the short term, but over the long term they will increase team member happiness and make it easier to hire and retain talent, thus improving our ability to serve customers.
Our suppliers have benefited in several ways. The introduction of our loyalty program, Amazon Prime, has created growth opportunities and increased sales potential for suppliers, which is a win. We’ve been able to maintain our commitment to sourcing from small and local suppliers, which likely would have been at risk in a different acquisition. Under Amazon, we’ve been able to continue to nurture local suppliers and leverage the purchasing systems we’ve developed to maintain our unique product assortment.
Our investors were also very happy. The day that JANA publicly announced that it had bought our stock, it was trading at about $30 a share. Amazon bought us for $42 a share just a few months later. If we hadn’t been sold at a competitive price, Whole Foods’ stock price likely would have fallen and investors would have experienced a huge loss. Our investors received a price that was 41 percent higher than our closing stock price on March 31, which was a huge win for them. The sage of Omaha, Warren Buffett, channeling the wisdom of his longtime partner Charlie Munger, is famous for saying that it’s better to buy a wonderful company at a fair price than a fair company at a wonderful price. I believe that Whole Foods is a wonderful company and Amazon paid a fair price for it. Essentially, it resulted in an additional $4 billion in value in the pockets of our shareholders.
Let’s not forget our communities. Whole Foods continues to distribute 10 percent of its total profits among thousands of nonprofit organizations every year. We actively support all of our communities with local philanthropy, Community Giving Days (aka 5% Days), food donations, and sponsorships, as we always have. Our three global foundations—Whole Planet, Whole Kids, and Whole Cities—have been able to continue to fulfill their missions, and Amazon has been very supportive, even making additional donations, for example through a partnership with Chase Bank that significantly benefited our Whole Planet Foundation. We believe there will be more joint efforts that support our foundations in the future.
As you can see from this story, I truly believe the Amazon merger was the best alternative for Whole Foods and the ideal win-win-win solution to the problems we faced with shareholder activists and new competitive challenges. No merger (or marriage, for that matter) is without challenges, but I think the past few years have borne out the enormous benefits of the deal. The alternatives certainly kept me up at night. At the time of the acquisition, I was acutely aware of the dangers of being sold off, dismantled, and potentially having the company culture destroyed. Now we’ve teamed up with one of the most successful, innovative, and dynamic corporations in the entire world.
Most of all, this experience has reaffirmed my conviction that when it comes to business negotiations and dealmaking—and really to life in general—if we work hard, think creatively, and bring our best selves to the table, we can almost always discover ways of doing business that increase value, build goodwill, and benefit multiple stakeholders. Through our own conscious leadership, we can strive to increase the circumference of the proverbial pie rather than merely serving up the spoils to a new victor.