After months of silence, Jeffrey Hollender discusses his sudden, emotional ouster from the company he built into a model of corporate responsibility.
Hollender had been planning to transition out of day-to-day management of Seventh Generation for some time. That transition did not go as planned. Though Hollender was initially excited when the company hired Chuck Maniscalco, a former PepsiCo executive, to take over as CEO, he has come to regret the choice of leadership he once supported. Hollender retained the title of Chief Inspired Protagonist and remained the company’s moral compass.
“I think that, while the idea to bring in a CEO was the right idea,” he says, “bringing in someone who didn’t have any corporate responsibility experience, bringing someone in who came from such a big company was not the right decision.”
For example, Hollender says, one of the most successful ways that Seventh Generation grew was by building a loyal and passionate customer base, not through advertising or traditional marketing but through a consistent commitment to transparency and specifically talking about what’s wrong with the products and what’s wrong with the company. “That’s not something that most people at large companies are comfortable with. They are surrounded by lawyers who tell them not to talk about those things,” Hollender says.
Senior Director of Corporate Consciousness, Dave Rappaport says the company has no intention to backtrack on any of those transparency habits. “There’s been no change to all the things we’ve been working on.” (Read more in part two of this post about how Seventh Generation is re-affirming its commitment to Hollender’s values, and what Hollender suggests customers can watch for to be sure.) Rappaport adds there are plans to become even more transparent with an initiative to be announced later this year where the company will make raw data available on responsibility and sustainability. He compares it to how data.gov makes government data available.
But the divergence between Hollender and his former company seems to run deeper than transparency, touching on a perennial question for successful values-based businesses: how to scale without sacrificing standards, be they product standards or investor standards. Hollender built the company into a $150 million a year business, and Maniscalco’s appointment was meant to signal a new era of growth, to transform Seventh Generation into a $1 billion sustainable business. That’s a kind of scale that has scuttled the best-laid plans of other iconic business leaders at companies like Ben and Jerry’s and the Body Shop.
Hollender was careful not to reveal too much when asked about money. “What I can say, is that over the past couple of years, not directly related to hiring a new CEO, I would say the board and I increasingly began to see things a little differently. And my interests for Seventh Generation, which produced pretty good financial results, I think, perhaps, began to diverge with what the board wanted to focus on.”
Hollender confirms this divergence of vision with the board happened as the company brought in more private equity money to fund the expansion of the company, including a recent $25 million round of funding that Hollender says was raised by the board on Maniscalco’s resume.
“You know one of the things I always advise people,” he says speaking of values-based businesses generally, “is to be more careful about the money you take than the people you hire, because you can’t get rid of the money. Once someone owns your leg or your arm or your ear, they’re stuck to you.”
Hollender as always, is quick to point out his own failings, though the company may not agree in this case. “I don’t want to blame the money I took. If I took the wrong money ever, that’s my fault. That’s not the fault of the person whose money I put in. I think what I failed to do was to institutionalize the values that the company was committed to so the issue was off the table... What I learned were too many things were dependent on my perspective and my belief and that’s not good for any business. The values have to be woven into the fabric not just culturally, but legally."
He says certain practices aren't enshrined in company policy, and thus, could now conceivably be altered as new shareholders are added with company growth. He cited the practice of giving 10 percent of profits to charity every year, including support to a great organization WAGES in the Bay Area. Rappaport says out there is no intention of lowering that commitment, and, in fact, the company is even making new products to support WAGES, though he admits there are no current plans to enshrine the practice in company bylaws. Hollender's wife is in charge of the giving program on the board.
He wants them to keep holding the company to the same standards. “I hope Seventh Generation is successful. I wish it well. I hope the new CEO they hire is able to get the business on the track to continue its growth. As with any values-led-business we need more of them, not less of them. We need them to succeed. And we need them to show other businesses that it’s possible to do business differently.”
Maniscalco is officially the CEO of Seventh Generation, the company tells GOOD. And Hollender and Seventh Generation will be linked for a little bit longer at least, as he gets ready for his next venture, detailed in part three of this post, which involves a new book, Planet Home: Conscious Choices for Cleaning and Greening the World You Care About Most a guide to green living that bears Hollender’s name alongside the Seventh Generation logo to be released this month.