The Whole Foods Rebellion | Tiny Acorns, Mighty Oaks | 2
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Wondery Plus subscribers can binge all episodes of Business Wars The Whole Foods Rebellion early and ad-free right now. Join Wondery Plus in the Wondery app or on Apple Podcasts. It's 1990 and Whole Foods CEO John Mackey is in Berkeley, California. He's on a visit to the company's newest store. As Mackey passes the picket line and reaches the store entrance, the protesters jeer at him.

Once inside, Mackie makes a beeline for the store's manager. Who the hell are all those people out there? Do they even work for us? No, they don't. They used to work at the old co-op. The building that is now a Whole Foods used to be a grocery store run by the Berkeley co-op. The co-op was a darling of the city's progressive movement. But two years ago, it went bankrupt. Mackie gives the store manager a puzzle look.

So why are they protesting against us? Because our workers voted against unionization. They see us as the evil corporation taking things over. Mackie rolls his eyes. Back when he lived in a hippie co-op, he thought like that too. Whole Foods may have grown out of the hippie movement, but Mackie remains profoundly opposed to unions. Without their demands for ridiculous wages, they might all still have jobs. Maybe, but it's a real problem for us, John.

The next day, Mackie meets with the mayor of Berkeley.

Mr. Mackey, it's no use. I support the union's position. Whole Foods pays below market wages. Your clerks get $8.50 an hour. Safeway, Albertsons, and others pay at least $5 more.

The numbers don't lie. It's exploitation. I disagree. Many of our workers are college age. How many other major chains employ so many people with so little experience? It's not just about the pay. Your employees have to wait five years to get full medical coverage. Union clerks get that after three months. Our employees voted 86 to 5 against unionization. They have a right to say no. They should not be coerced into paying union dues.

I haven't heard such nonsense since the 50s. You need to get a union in there. This isn't going to go away. Mackie's eyes narrow.

In food stores like his, labor accounts for almost two-thirds of operating costs. To stay price competitive, Whole Foods needs to keep labor costs under control. The Berkeley co-op didn't. And he's not going to make the same mistake. Whole Foods has a positive, non-hierarchical relationship with its workers. They share our values, share our mission, and those jobs are secure. We signed a 22-year lease on that building. Get used to us, because we're here to stay. ♪

Mackie leaves the meeting feeling strangely energized. This external resistance has only sharpened his belief in Whole Foods' mission. Whole Foods now has annual sales of $74 million. It's a large business and growing fast. Its success is built upon its image as an ethical corporation with a progressive sensibility. But as it expands, so will the tension between its hippie roots and its business needs.

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His pursuit of growth saw him clash with his co-founders and seek funding from venture capitalists. But now that he's used the venture capitalists' cash to break into California, Mackey's looking to reduce their power by taking Whole Foods onto the stock market. This is Episode 2, Tiny Acorns, Mighty Oaks.

It's fall 1991, and nearly a year has passed since Whole Foods opened its store in Berkeley. The supermarket chain now runs 11 stores across Texas, Louisiana, and California. The company's appetite for expansion is, however, yet to be sated. It's driven by CEO John Mackey's mission to provide chemical-free foods to U.S. citizens and open new markets nationwide.

And everywhere he looks, Mackey sees growing consumer interest in organic and natural foods. This is exactly what he hoped might happen. But the surge in attention also threatens Whole Foods. Across the country, new organic supermarket chains are forming. These local and regional chains now pose a threat to Whole Foods' goal of becoming the leading organic supermarket in the U.S. To stop that from happening,

Mackey needs to expand fast. But that will require far more money than Whole Foods is making in annual profits. Mackey's already taken investment from venture capitalists, but he's come to realize that the investors' plans for the business might not include a place for him. So he has decided to hold an initial public offering, an IPO, and sell shares in the company on the stock market.

An IPO will raise capital from investors, which he can use to fund Whole Foods' expansion. Getting listed on the stock market will increase Whole Foods' visibility and credibility, although it comes with additional regulatory and financial reporting requirements. But to make the IPO a success, Mackey needs to convince investors to buy the first shares at the highest possible price. So he beefs up Whole Foods with another acquisition.

Mackie's new buyout target is Wellspring Grocery. It's a pair of natural food stores located in North Carolina. Mackie and his team buy the business mainly with stock in Whole Foods. The owners of Wellspring are happy to take the stock. They know that when Whole Foods does its IPO, that stock will gain value. In return, Whole Foods gains a presence in a whole new state.

There are other unforeseen benefits, too. During the first executive meeting after the acquisition, Wellspring's co-founder stands up to address his new colleagues. But instead of talking about assets and growth, he talks about flavor and hands out samples of golden olive oil for everyone to taste. Wellspring's team cares deeply about the pleasure, beauty, quality, and artistry of the food they sell.

It's something lost on Mackie. He sees natural food as functional, there to support health. The Wellspring team sees food as a pleasure, and their outlook will soon spread across the Whole Foods chain, allowing it to appeal not just to the health crowd, but to foodies too. It's a eureka moment for Mackie. He now sees that with every acquisition, Whole Foods can gain depth as well as scale,

if it's willing to learn from the companies it buys. But most importantly, by buying Wellspring, Whole Foods now has stores on the East Coast and the West. And that allows Mackey to tell Wall Street that the chain now covers the country coast to coast. On January 23, 1992, Whole Foods joins the Nasdaq Stock Exchange.

Whole Foods isn't a big enough deal to ring the bell or have a confetti drop in Times Square, as often happens when major companies go public. But for Mackey, it's still a momentous occasion. He feels a heady mixture of excitement and satisfaction, but also a sense of being overwhelmed. He spends the day watching the movements of his company's stock price. The shares open at $17, then creep up...

Until at the end of the first day of trading, a single share in Whole Foods is valued at nearly $25. The IPO raises $23 million for Whole Foods. Mackey's net worth now exceeds $7 million. After so many years of scrimping and saving, it feels bewildering to be worth so much, on paper at least.

The IPO means Mackey no longer has to answer to the venture capitalists who he feared might try to remove him as CEO. It also arms Whole Foods with the funds it can use to buy smaller natural foods chains. What started as a solo natural food store is about to become an empire. As Mackey mulls over Whole Foods' next step, he hears a welcome rumor. The owner of Boston's Bread and Circus, the rival he admires more than any other, is looking to sell.

It's 1992, and nearly 15 years after Mackey first walked through the doors of Bread & Circus. At that time, he was struck by the quality of the store's fresh produce. Since then, Bread & Circus has grown. It now operates six stores in Massachusetts and Rhode Island, and a distribution center in Boston. Now, as he again enters one of Bread & Circus' stores,

Mackey is amazed by what he sees. Lush, colorful, dewy mountains of perfectly hand-stacked fruits and vegetables. He also feels a little envy. As he surveys Brett and Circus's fresh produce, its clear whole foods has yet to match the quality of its competitors' perishables, the term for vegetables, meat, milk, and other foods that have a short shelf life.

Mainstream supermarkets use preservatives, wax coatings, and other chemical wizardry to extend the shelf life of their perishables. But organic food purveyors avoid using these artificial helping hands. That means in organic supermarkets, speed and timing is everything. Without careful management, the produce will spoil before it's sold, and few places manage it better than bread and circus.

So, if he buys Bread and Circus, Mackey won't just establish a foothold in the Boston market. He'll also gain the company's perishables expertise. They can then apply that knowledge to the entire Whole Foods chain. So Mackey's come to Boston to convince Bread and Circus owner Anthony Harnett to let Whole Foods buy his store. Mackey asks Harnett if he would sell. Harnett says he'll only sell for $30 million.

The figure hangs in the air. 30 million is far more than Mackey expected. Whole Foods IPO only raised $23 million for the company. But Harnett's in no hurry to sell, which means he can pretty much name his price. Even if that price is equivalent to a third of Whole Foods' market valuation. Mackey tries to push him down, but Harnett won't budge. Mackey suspects that wealth isn't the only criteria for Harnett's selling.

Mackey understands that to a founder, a business is not just a property to be traded. It's like a child, a creation that carries something of the founder's spirit and whose future they desperately want to guarantee. So Mackey changes tack. He reminds Harnett that they share the same values and underscores how Whole Foods will secure Bread and Circus's legacy. Harnett remains skeptical.

He's not sure if these Texan hippies really have the business know-how to keep their hastily growing empire intact. But Mackey's assurances are enough to keep Harnett interested in continuing the conversation. Harnett asks Mackey to sign a non-disclosure agreement so Whole Foods can examine Bread and Circus' finances. But Mackey's 70-year-old dad is alarmed at the plan. He thinks Whole Foods will be better off without Bread and Circus.

Since the IPO, his father's become increasingly conservative in his business judgments. But Mackey can't deny he has a point. Bread and Circus is losing money, or at best, breaking even. Why would anyone pay $30 million to acquire a failing business? Mackey counters that Bread and Circus' fundamentals are strong. It's making a 9% profit margin on its sales, a good amount for a supermarket.

But the companies losing money because their general and administrative expenses are too high. General and administrative expenses, or G&A, are accountant lingo for non-production costs like utility bills, executive salaries, and rent. Mackey's plan is to tamp down on those costs. Bread and Circus's G&A is 10% of its sales. Whole Foods' G&A is just 2%.

Whole Foods keeps its G&A low by having a lean corporate structure and decentralized leadership. The thinking is if they brought those same practices to bread and circus, well, Whole Foods could make it highly profitable almost overnight. Mackie's dad appears won over.

But at the next board meeting, the argument flares up again between the two men. Mackie's dad accuses his son of being delusional for thinking what works for Whole Foods in Texas and California will also work in Boston. Mackie sees red. He points out that he made his dad rich, yet his dad still treats him like a child. His father and son descend into a yelling match. The other directors sink into their chairs.

These arguments are becoming increasingly familiar. Mackie and his dad are now pulling in different directions. The older man wants to rein in the growth. Mackie wants to speed it up. That night, Mackie reflects on how these family arguments must appear to the other directors. He feels a surge of shame. He's approaching middle age, but when faced with his father's criticism, he feels like a teenager all over again.

Worse yet, Whole Foods is now a publicly traded company. These fights look grossly unprofessional. And Mackie worries someone might leak details of these disagreements to the press. Something has to change. Meanwhile, Whole Foods continues negotiating with Bread and Circus' founder, Anthony Harnett. But Harnett's still not sure if he wants to cash out. Even with the promise of a multi-million dollar payday,

Bread and circus is his baby. Letting go is an emotional decision as much as a business one. He worries about Whole Foods' ability to run his stores. The chain might be on the stock market and doing good business, but Harnett feels its culture is unprofessional. He thinks Whole Foods stores are successful, but not great, whereas bread and circus stores are great.

Rather than arguing back, Mackey invites Harnett to visit Whole Foods' new flagship store in Mill Valley, California. Mackey doesn't say it, but he believes the Mill Valley store to be superior to any run by bread and circus. The following day, Harnett flies out to California. Harnett comes away impressed by how far Whole Foods has come.

He finally agrees to sell, but only if he gets the right to buy the stores back should Mackey run Whole Foods into the ground. Through clenched teeth, Mackey accepts. Whole Foods buys the bread and circus chain for $26 million. Six million in cash, the rest in Whole Foods stock. This is a major turning point, cementing the company's status as a national force.

By now, Whole Foods is an expert at integrating acquisitions into its business, while also preserving what made the acquired company desirable in the first place. Bread and Circus teaches Whole Foods how to excel in perishables. Whole Foods schools Bread and Circus on how to give store employees more autonomy and create a happier workforce.

Just as with Wellspring, Whole Foods isn't just buying stores. It's buying know-how. Know-how that's making it a better company. We learned a lot from Bread and Circus. They were the best at selling fresh food, and they had this structure that kind of supported that. It was a very expansive experience. But as the company continues to grow at a fearsome rate, Mackey's clashes with his father are coming to a head. John, please don't do this.

It's 1993 and Mackie is in his dad's home office in Houston. Tensions about the future of the business have reached fever pitch between the two strong-willed men. Their disagreements now flare up at every board meeting. He's decided to take drastic action. "Dad, I want you to resign from the board." Mackie studies his father's weathered face. It hasn't been an easy decision to make. His father's always supported his natural foods dream.

He invested his own money in Mackey when nobody else would. He steered and guided Mackey through tough decisions, even when he opposed them. Mackey knows that the success of Whole Foods owes a great deal to his dad's business acumen. Without him, Mackey surely would not be running a company worth $200 million. But he has also hardened his heart in preparation for this very moment.

Mackie is 40. He's no longer a plucky young upstart, but a business leader entering the best years of his career. And his dad is 72, a man who should be winding down, enjoying his retirement. Mackie's father was previously his staunchest supporter. These days, he feels more like an adversary. Mackie knows he has to make the right decision for Whole Foods' future, not for its past.

Please, son. This is the last thing I'm doing in my life that's actually relevant. Mackie can see the hurt in his father's eyes. For a second, he wavers. Is this truly the right decision? Then he remembers the embarrassing spats at the boardroom table and his father's increasingly conservative stance towards taking risks. He knows that his father's holding the business back. He has to go. Dad, these fights, they're ruining our relationship.

We need them to stop, for both our sakes. I know, I know. But look, we can change that. No, I don't think we can. This is the only way. Mackie leaves the room feeling an overwhelming sense of sadness. Asking his father to resign from the board is the most difficult decision of his life. You know, some say, never go into business with your family.

But as many successful entrepreneurs will tell you, those involved in the founding of a business become part of an extended family, and that makes breaking up hard to do. Mackey's early partners had different ideas about what Whole Foods should be. Some wanted stability and profitability. Mackey wanted to push forward, take risks, change what America eats. That difference led to painful splits, including a broken friendship and the firing of his own father from the company's board.

Hindsight's 20/20, and Mackie wouldn't have gotten Whole Foods to where it is without all these people. But if you're starting out, think about the long haul. Align with partners who share your vision. Disagreements will happen, but if you're pulling in opposite directions, someone is gonna get dragged. And in this case, it was Mackie's father. But now, that deed's done. Another obstacle has been removed. Now, there is nobody left to stand in Mackie's way.

He's free to be the CEO he wants to be. Free to succeed and to fail. And he's about to mess up big time.

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We're talking stunning templates you can customize in minutes, not hours. Just drag and drop from their massive library of professional images and graphics, add some smooth animations, and even throw in interactive polls to keep everyone on their toes. Need to collaborate with your team? Just share your presentation instantly and edit together in real time. And here's something I love. Their AI tools can help summarize your text or even generate entire slides from a prompt. No

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It's the late 1990s and the internet is changing the world. And John Mackey wants in. Whole Foods has a simple homepage on the web, but he's been watching a new dot-com company called Amazon with a lot of interest. It's a small but fast-growing online bookstore and it's convinced him that Whole Foods needs to join the e-commerce revolution before it's too late. But selling groceries online in the 90s is uncharted territory.

Aside from the technological hurdles, Whole Foods has no experience with direct-to-consumer shipping. It has none of the infrastructure necessary to deliver groceries to people's doors. But in this prospector's economy, the company finds it easy to raise capital. Whole Foods raises $30 million from investors to support its online ambitions.

With this fund, Mackey assembles a team of tech experts to build a website that will launch Whole Foods into the digital age. That website is wholepeople.com. The name reflects Mackey's desire to make the website more than an online supermarket. Wholepeople.com won't just sell non-perishable groceries. It will also be a high-end lifestyle marketplace tailored to the wealthy, eco-conscious consumers who already shop at Whole Foods.

It'll sell health supplements, eco-friendly products, clothes, yoga gear, books, even travel packages. But here's the problem. Launching an online store in 1998 is incredibly difficult. Remember, this is a time of dial-up modems and painfully slow-loading web pages.

Online payments are clunky and vulnerable to fraud. Moreover, the software for your e-commerce website has to be built from scratch. There are no off-the-shelf solutions like Shopify in the 1990s. Soon enough, the challenges start piling up. Whole Foods' first tech team in California struggles to deliver. So Mackey relocates the entire operation to Boulder, Colorado, where he now lives, so he can be more hands-on. But there's a catch.

The dot-com gold rush is in full swing. Whole Foods California engineers aren't about to leave Silicon Valley, where startup fortunes can be made overnight. So, when Mackey announces the move, the response is brutal. Almost the entire team quits. Now, the wholepeople.com project has to be rebuilt from scratch. It's a serious setback. Development drags on for months. Competitors pull ahead.

But Mackey doesn't waver. To him, wholepeople.com isn't just a website. It represents the future of the business. But belief isn't always enough. And he's about to learn that not every bet on the internet pays off. November 1999. It's the moment Mackey has been waiting for. After years of work, setbacks, and millions of dollars invested, wholepeople.com goes live.

It's supposed to be the future, the moment Whole Foods takes its brand beyond the aisles and into the emerging digital realm. As the servers go live, Mackie feels giddy with excitement. But there's just one problem. No one's buying. Well, almost no one. The launch is a disaster. The site is clunky, slow, and hard to navigate. Online shopping isn't yet second nature, and the few customers who do visit the site aren't impressed.

And then, just a few months later, the dot-com bubble bursts. The investor cash that fueled the tech industry's explosive growth vanishes. Starved of funding and yet to reach profitability, promising online startups implode overnight. Wholepeople.com doesn't stand a chance. By the time Whole Foods pulls the plug, it has lost the company more than $60 million.

For Whole Foods board of directors, this isn't just a failure. It's the final straw. They had already been growing uneasy with Mackey's bullishness, and they resented that he was spending most of his time in Boulder, far from Whole Foods headquarters in Austin. They worried he was too distracted, too removed from the day-to-day business. Now, with millions wasted on a failed experiment, their worst fears are confirmed.

Mackey, the visionary who built Whole Foods from a single store into a national powerhouse, now looks reckless. Even his most loyal supporters are questioning his leadership. Some employees have taken to calling him "Wacky Mackey" when he next returns to sweltering Austin. He can feel an oppressive sense of disapproval in the air. Mackey had been the main cheerleader for the e-commerce site. He has to take responsibility. The question is clear.

Is it time for Whole Foods to move on without Mackie? December 2000, Colorado. Whole Foods founder John Mackie has just wrapped up a day of skiing with his nephew. He's relaxed, feeling the blood come back to his nose and fingertips with a tingle, ready to unwind for the evening. Then he checks his messages. There's one marked urgent. A board member needs him to call back immediately. Mackie dials and the news hits him like an avalanche.

Some of the directors want him out. They're pushing to replace him with the company's president, Chris Hitt. Mackie is stunned. To him, Whole Foods isn't just a business. It's his life's work. He feels like the heroic Hobbit Frodo from Lord of the Rings, desperately clutching the ring of power as the forces against him close in. And this time, he might not be able to hold on. January 2001.

John Mackey steps into the Whole Foods store in Fort Lauderdale, Florida, and hears the familiar hum of commerce buzzing around him. The colorful sections are neatly stacked with fresh produce. The shelves brim with organic goods, and the place is full of customers browsing with baskets in hand. Whole Foods has grown to the extent the company's annual sales now exceed $2 billion. It runs 117 stores in 22 states, plus the District of Columbia, and yet...

It's here, among the aisles, that Mackey feels most at home, most connected to his purpose and calling. Still, he's not come to Florida to admire his work. Tomorrow, his fate as CEO will be decided. The board will meet here to determine whether to fire him, but that's tomorrow. Right now, he's just trying to clear his head. But then, he sees Whole Foods president Chris Hitt roaming the aisles. Mackey freezes for a moment.

Chris. Chris, you don't have to do this.

Hit exhales, arms crossed. But before he can respond, Mackie forges ahead. We built this company together for 16 years. I know we don't always see eye to eye, but we can still work together. We make a formidable team. Hit shakes his head. Here's how it is. It's time for you to go. Either you can go quietly and peacefully with honor and accept a different role more suited to your talents...

or you're going to get thrown out on your ass. That's your choice. Chris, we can stop this now, but once we step into that board meeting tomorrow, there's no going back for either of us. Hit doesn't blink. It's over. But you don't have the votes. I guess we'll find out. With that, Hit turns and walks out of the office, leaving Mackie alone. The battle lines are drawn. Tomorrow, in that board meeting, only one of them can prevail.

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His career and Whole Foods' future hangs in the balance. The board has now heard both sides, Mackey versus Chris Hitt, and they've been deliberating. Mackey's phone rings. He takes a deep breath. It's the moment of judgment. He picks up the receiver. A voice on the other end delivers the verdict. Mackey stays. Relief washes over him. The coup has failed. Wacky Mackey lives to fight another day.

But there's a catch. The way he runs Whole Foods must change. The board wants a new direction, a new structure. No more unchecked risks. No more isolation in Boulder. Mackey doesn't hesitate. He promises they will. Summer 2002, somewhere along the Appalachian Trail, straddling the border of New Jersey and New York,

John Mackey is on a 2,200-mile journey of personal discovery, hiking north after witnessing the September 11th attacks firsthand in Manhattan. This world-shaking event has inspired many to reflect on their priorities, including John Mackey. So he's trekking to the mountains in search of clarity, reflecting on his life, leadership, and the future. After a long day on the trail, he checks in with Whole Foods headquarters as he does each evening. ♪

Usually there's nothing pressing, but today there's a problem. The Whole Foods store in Madison, Wisconsin is about to unionize. Mackey is astounded. This would be the first store to vote for a union in Whole Foods' 24-year history. But he doesn't want to abandon his trek of self-discovery either. He asks the executive on the phone whether they can just ignore it. The executive tells him no. You need to go there and convince them not to unionize.

The following day, Mackey arrives at the store in Madison. What he finds shocks him. Workers tell him the store is understaffed, morale is low, wages are below the industry average, and the health care plan is dismal. Worse yet, employees feel disrespected. Mackey doesn't buy it. He prides himself on Whole Foods being a worker-friendly place. But as he listens, he realizes something unsettling.

The corporate culture he thought defined his company simply doesn't exist here. There is substance to their complaints, but he's determined to keep the union out, all costs. He pleads with employees, give us a chance to fix this, but they remain unconvinced. To them, Mackey is just another millionaire boss out to protect his fortune. Shortly after their meeting with Mackey, they vote to unionize.

Madison's vote causes panic at Whole Foods headquarters. The company fears other stores will now follow Madison's lead. So Mackey writes a company-wide memo telling employees that the Madison store made a mistake. He also reminds them that Whole Foods is built on love and promises that the company will do better. He then starts doing store visits to get a better understanding of the mood on the shop floor.

He soon discovers that the Madison workers aren't alone. The culture he built isn't as strong as he thought. He immediately raises pay and improves benefits at every store bar Madison to get ahead of future unrest. A year later, the Madison store workers vote to de-unionize and gain access to the same benefits as the non-union stores. But it doesn't take long before Mackey finds that the disconnect between the company's ideals and its reality

Runs deeper still. It's 2003, and Whole Foods' annual stockholder meeting is underway at a hotel in Santa Monica, California. At the podium on the stage, Mackie is delivering the company's latest results. A voice from the crowd cuts through the corporate pleasantries. What about the animals, John? Mackie looks up. A small group of animal rights activists is scattered through the audience.

One of them steps forward, her voice sharp with accusation. You claim Whole Foods sources its meat humanely, but that's a lie. Mackey exhales. He's heard this before. We're doing more than almost any other company to improve animal welfare. We work closely with our suppliers to... It's not enough. Your suppliers still keep animals in factory farm conditions. If Whole Foods really cared, you wouldn't sell meat at all.

Mackey's jaw tightens. He prides himself on running an ethical company, one that pushes for better standards. You're attacking the wrong people. We're trying to change the system from the inside. But the activists aren't buying it. He doesn't understand why these people are going after Whole Foods when so many other companies are doing far worse.

So after leaving the stage, he seeks them out and introduces himself to the group's leader, Lauren Ornelas. Lauren, we are committed to humane sourcing. Our standards are much higher than the rest of the industry. Why are you targeting us? Because it's clear to us that Whole Foods doesn't care enough about the animal welfare practices of your suppliers. That's

That's not true. Our suppliers might not be perfect, but our team visits suppliers and assures me we only use those with the highest standards. But have you seen the farms? Or are you just trusting what your executives tell you? Mackie doesn't have an answer for that. Lauren reaches into her pocket and pulls out a card. Let's keep talking. Mackie takes it. Ornelas is right. He has trusted the reports rather than his own eyes. Could it be possible that he doesn't know the full story?

In the months that follow, Mackie's email inbox becomes a battlefield. At one end, Lauren Ornelas, a relentless animal rights activist. At the other, Mackie, the vegetarian CEO who prides himself on running an ethical company. Ornelas emails regularly, challenging him, pushing him to see the uncomfortable truth about industrial animal farming.

She's persuasive. So persuasive, in fact, that Mackie starts reading more, questioning more. Finally, he makes a radical decision. He goes vegan. Not for health reasons, not as a trend, but out of ethics. But for Ornelas, it's not enough. She tells him if he truly cared, he'd use Whole Foods' power to drive change. Not just in what they sell, but in how their suppliers treat animals.

So Mackie does something revolutionary for the time. He gives the animal rights activist a seat at the table. In a tense meeting, he sits her down with one of Whole Foods' poultry suppliers. Bernalas makes her case. Better welfare standards, better treatment, real change. The poultry supplier's representative doesn't argue against that.

Instead, he tells Mackey a hard truth. Those improved standards will double the price of the poultry sold at Whole Foods. Mackey doesn't flinch. He tells the supplier if they make the changes, Whole Foods will pay whatever it costs.

And just like that, a new Whole Foods era begins. One where the company isn't just stocking ethical food, but making suppliers rethink how they operate. But change is messy. The poultry supplier moves to align itself with the new welfare expectations. But then Whole Foods decides it's dragging its feet on making the adjustments. So the supermarket drops the supplier.

This move sends a message to all of Whole Foods' suppliers. Ethical sourcing isn't just a fashionable slogan. It's now part of the Whole Foods mission and one with brand benefits. The push for better animal welfare boosts Whole Foods' reputation, adding to the idea that shopping there isn't just good for you, but good for the planet, too. But to animal rights activists like PETA, it's just a way to make Whole Foods customers feel better about eating meat.

The changes also have an unintended side effect. As the poultry supplier warned, better standards mean higher prices. Whole Foods was already seen as an upscale grocery store. It's earned itself the nickname "Whole Paycheck," and now its prices are rising even more. Even so, by 2006, Whole Foods is thriving.

In addition to its 180 stores across the U.S., the company's gone international with several locations in Canada and the U.K. But Mackie doesn't just want Whole Foods to be the leader in natural foods groceries. He wants it to own the category. Only one thing stands in his way: wild oats. It's Whole Foods' last major competitor in the premium organic grocery space.

Wild Oats started out in 1987 with a single store in Boulder, Colorado, and grew rapidly through a series of acquisitions. It now has 113 stores in 24 states and Canada. It's still smaller than Whole Foods, but close enough to remain a potential threat. And increasingly, the two companies dance around each other, teasing from afar and eyeing the same turf. All of which is bringing out Mackie's competitive streak.

And not just in the boardroom. Online, under a secret pseudonym, he's waging a shadow war. On Yahoo Finance message boards, Mackie posts messages slamming Wild Oats. He questions their business, their leadership, and their future. At the same time, he showers Whole Foods with praise, hyping up his own company with glowing reviews, all without anyone knowing it's him. But soon, he won't need to troll Wild Oats anymore.

because he's about to make a move to take it out of contention. In February 2007, Whole Foods announces its plan to buy Wild Oats. Whole Foods will pay $700 million in cash for the company. The deal will add Wild Oats 110 stores to Whole Foods, bringing the total to 300 stores. The deal takes out the last natural foods grocer that could have challenged Whole Foods.

For Mackey, it's a full-circle moment. Thirty years after starting in the grocery business, he's about to conquer this subset of the market. Whole food stock price leaps on the news. Investors are ecstatic. It's victory, or at least it seems like it. Because soon, in the newsroom of the Wall Street Journal, a reporter will be busy piecing together a story.

It's a story about a mystery poster on online forums. Someone who has spent years trashing wild oats. And the journalist is about to figure out who is behind the mystery account. John Mackey. On the next episode, Mackey's secret persona threatens the wild oats deal. Bigger rivals join the organic bandwagon. And a struggling Whole Foods turns to the world's biggest online retailer for help.

From Wondery, this is episode two of the Whole Foods Rebellion for Business Wars. We've used many sources for this season, including The Whole Story by John Mackey. A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said, those scenes are dramatizations, but they're based on historical research.

I'm your host, David Brown. Simon Parkin of Yellow Ant wrote this story. Research by Marina Watson. Sound design by Kyle Randall. Fact-checking by Gabrielle Jolet. Voice acting by Chloe Elmore, Gloria Garayua, and Brent Williams.

Our managing producer is Desi Blalock. Our senior managing producer is Callum Plews, produced by Tristan Donovan of Yellow Ant. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louis for Wondery.

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corporate fraud. In our latest series, whistleblower Edward Snowden changes the national conversation about privacy on the internet as he risks his own freedom and his family's well-being. Follow American Scandal on the Wondery app or wherever you get your podcasts. Listen to all episodes ad-free and be the first to binge the newest season only on Wondery+. You can join Wondery Plus in the Wondery app, Apple Podcasts, or Spotify. Start your free trial today.