Seventh Generation: Alan Newman and Jeffrey Hollender. A Partnership that Flourished—until it Failed. (2021)

Episode Summary

Executive Summary: This episode traces Seventh Generation’s origin from a quirky eco-catalog to a major green consumer brand, centered on the volatile partnership between founders Alan Newman and Jeffrey Hollender. It highlights how complementary skills fueled rapid growth, but lack of clear role definition and communication led to their painful split. The story also shows how mission-driven businesses must balance values, growth, and governance.

Main Topics: Founding Seventh Generation from a rescued catalog business (Priority: 5/5): Alan Newman turned an unwanted environmental catalog into Seventh Generation, rebranding it around long-term thinking and making it commercially viable through better messaging and product focus. Jeffrey Hollender’s path into mission-driven entrepreneurship (Priority: 4/5): Jeffrey’s earlier ventures, including education programs and books-on-tape, shaped his interest in using business as a force for social good and led him to join the company as a partner and fundraiser. Complementary but fragile co-founder partnership (Priority: 5/5): Alan brought operational and catalog expertise while Jeffrey brought capital and credibility, but both wanted leadership and their relationship lacked written agreements and conflict protocols. Rapid growth, retail expansion, and product strategy (Priority: 4/5): The company grew through catalog sales, then shifted toward wholesale retail and hero products like toilet paper, paper towels, laundry detergent, and diapers, with Whole Foods becoming a key growth driver. Crisis, recession, and Alan’s ouster (Priority: 5/5): A recession and collapsing catalog demand triggered layoffs and strategic tension; Alan took a sabbatical and was then forced out via a 'Dear John' letter, ending the original partnership. Governance tension and Jeffrey’s later ouster (Priority: 4/5): As CEO, Jeffrey became more focused on activism, public-facing work, and employee ownership, which strained board relations and contributed to his removal in 2010. Legacy, acquisition, and lessons for founders (Priority: 4/5): Seventh Generation later went public, then was acquired by Unilever, while Alan went on to co-found Magic Hat. Both founders reflect on luck, persistence, and the importance of aligned co-founder expectations.

Key Arguments: Mission-driven businesses can scale when they translate values into customer benefits, not just moral appeals. Co-founder relationships matter as much as skills; shared goals are insufficient without explicit agreements about power and conflict. A brand can win by being 'better' rather than perfect, but the sustainability industry risks making consumers feel less guilty rather than truly changing consumption. Retail expansion required abandoning the catalog model because the wholesale channel offered greater long-term scale and economics. Board alignment is essential; founders who fail to bring investors and directors along can lose control of the company. Persistence and luck work together: staying in play creates the conditions for opportunity and timing to pay off.

Data Points: Year Seventh Generation launched: 1988 - Jeffrey and Alan discuss the company’s founding after taking over the Renew America catalog. Initial partnership formed: January 1989 - Jeffrey says he and Alan became partners in the business around this time. First fundraising round: $850,000 - Raised in 1989 from prior investors to support Seventh Generation’s growth. Catalog sales in 1989: $1 million - Jeffrey notes early revenue before the retail pivot. Catalog sales in 1990: $7 million - The company’s rapid growth after improved positioning and publicity. Planned 1991 sales: $20–21 million - Jeffrey says the company expected this level before the recession hit. Staff cuts during downturn: About 60 of 120 employees (50%) - Alan and Jeffrey describe layoffs during the early 1990s collapse. Orders for string shopping bags: Over 100,000 backorders - The product became so popular that it broke the mail-order system’s assumptions. Retail growth after Whole Foods entry: From about $10–12 million to almost $50 million in five years - Jeffrey credits Whole Foods with major credibility and growth. Company stake owned by employees: 20% - Jeffrey says employee ownership became a defining feature and he wanted to grow it to 30%. Unilever acquisition: 2016; reportedly $600–700 million - The company was acquired after years of growth in mainstream retail. Magic Hat national growth: Top ten largest craft breweries in America - Alan describes the beer company’s eventual scale before its later decline.

Pivotal Quotes: "My brain saying no, no. And out of my mouth comes, I'll take it." — Alan Newman: He describes the moment he accepted the unwanted Renew America catalog business. "I felt like I was on a ship that was sinking. And my partner... just stepped off and left me alone with a boat that was really sinking." — Jeffrey Hollender: Jeffrey explains his reaction to Alan taking a sabbatical during the downturn. "We were really in it for the good of the business, but we really needed each other during the growth spurt." — Alan Newman: Alan reflects on the partnership’s strengths and why it ultimately frayed.

Implications: Founders need written expectations, clear governance, and aligned incentives before growth accelerates. Mission-driven brands can scale dramatically, but sustainability, board relations, and co-founder conflict can decide whether they endure.