Bear Naked and the “build-a-great-little-green-brand-then…sell-out-to-The-Man-for-millions” phenomenon.

Via on Sep 2, 2009

bear naked

Bear Naked & Company:

Success Stories or Natural Products Sell-outs?

Can you turn the world greener, and get rich doing so?

An open question on the Eve of Naturally Boulder Days, given that several of the presenters are Millionaires who Sold their companies to The Man for Millions.

Via Wikipedia: Bear Naked is a natural food company with some organic products that was founded in 2002 by Brendan Synnott and Kelly Flatley. In November 2007, Bear Naked was sold to Kashi Company, a subsidiary of Kellogg’s. At the time of the sale, Bear Naked had gained control of a large portion of the granola market and was the second largest granola brand in the United States behind Quaker. The acquisition price of Bear Naked was not disclosed directly, although Kellogg’s reported that it acquired Bear Naked and Gardenburger for a combined price of $122 million.

I’ve had conflicted feelings about the build-a-great-little-green-brand-then…sell-out-to-The-Man-for-millions phenomenon that is the Natural Products industry for years. The list of great little green sell-outs is long, and drips with money and promises for continued green integrity: Odwalla, Boca Burgers, Naked, Cascadian, Muir Glen, Green & Black’s, Horizon, Silk, Dagoba, Larabar, Wild Oats (sort of), Ben & Jerry’s (sort of), Bearito’s, Kashi, The Organic Cow, Alta Dena, Lightlife, Alexie, Back to Nature, Gardenburger, Bear Naked, Morningstar Farms, Seeds of Change, Debole’s, Arrowhead, Westsoy, Little Bear, Westbrae, Garden of Eatin’, Nile Spice, Breadshop, Casbah, Health Valley, Celestial Seasonings, Natural Touch, Tofutown, Spectrum Organics, Mountain Sun (the juice), Rice Dream, Earth’s Best, Health Valley…

bear naked kellogg

Now, getting rich while turning the business world greener is, on the other hand, my dream. But selling out at the end of the yellow brick road…taking your millions and moving on, while your brand gets compromised by The Man year after year (as in the case of Burt’s Bees, Dagoba, or Silk Soy)…has got to rot your gut a bit.

So, I guess, the devil’s in the details. If you sell to a big corporation that understands that the brand you built is best left well enough alone, well then you got your cake and you get to eat it, too. But if you sell to say, Dean, you might find that they like your name, and don’t care what’s inside the package just so long as their bottomline stays deep, dark green.

Are companies that stay not-huge deliberately, like Patagonia, an old-fashioned anachronism?

Is there a way to get rich without selling out (I’ve heard that the founder of Outside Magazine, one of very few indie mags left, makes $10 mill plus a year)?

Or is selling to a big, rich, uncaring company just how we green The Man from within? And can you assure such “greening from within” if you give up the reins?

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10 Responses to “Bear Naked and the “build-a-great-little-green-brand-then…sell-out-to-The-Man-for-millions” phenomenon.”

  1. Melissa says:

    Too bad more companies can't be like Eden Organics. They seem to provide a lot of products without selling to a larger company. They are still family-owned and operated and tell consumers where their food is grown.

  2. Cameron Burgess uncompromise says:

    A lot of this seems to come down to the entrepreneur's lack of flexibility in determining how best to monetize their venture. A previous post of mine talks about Vision, Strategy & Output, and the relationship between the three – http://ow.ly/nNqF

    'Selling Out' is not the only option available to greenpreneurs – in fact, given the concerns you've raised, it should be considered only if the values of each organisation are in alignment.

    Better structuring of entrepreneurial projects provides significantly more flexibility, and the potential to monetize a brand without compromising it's integrity (we'll be going through a lot of this in the 'how do you eat an elephant' series – http://ow.ly/nNsf ).

    This is especially important for values-driven brands who are considered by their advocates, stakeholders, customers & suppliers to have an ethical obligation to 'holding the space' for enterprise-with-integrity.

    Brands such as these are devalued over time if they don't maintain their values-orientation – meaning that the asset purchased may very well lose market share and diminish in value if not kept on track (making it a poor investment for the buyer).

    Creating two entities – a trading entity and an intellectual property entity – means that one or either can be sold or licensed under strict criteria and the license to manufacture under that license can be revoked on the basis of its terms not being met.

    Alternatively, a sale could be structured so that the company becomes a separate operational division within a larger corporation, providing the benefits of centralised infrastructure, whilst permitting the previous owners to remain on the board of that division for an agreed period (their primary purpose being to maintain brand integrity).

    Large corporations are generally interested in the brand, as most (if not all) of the manufacturing capabilities of these smaller companies are generally going to be dissolved into a larger manufacturing enterprise that provides greater economies of scale. If the small, green brand wants to sell, without selling out, they could license the brand (to someone like Kellogs) and generate an upfront payment as well as an ongoing revenue stream through license fees as long as the brand is in use.

    Of course, that's just one way of going about it – ultimately it comes down to a clear vision being articulated, and an intelligent strategy being devised to ensure that the entrepreneurs remain in integrity with their own values, whilst creating a compelling financial outcome for themselves.

    Ultimately, in my experience, this comes down to a limited knowledge of what's possible, and a lack of clear vision and strategy being established early enough in the projects development (before the entrepreneur is exhausted from years of 80 hour weeks) to ensure that the exit is viable for all concerned.

    The only other possibility is that these entrepreneurs really don't care what happens to their enterprise once it's out of their hands (which strikes me as highly improbable).

  3. crazy rudy says:

    I doubt I would have ever tasted Bear Naked granola if it hadn't showed up on the shelf at WalMart… to cling to form would have us still living in the age of dusty hole-in-the-wall "healthfood" stores… very romantic, very elitist… lighten up!.. The proof is inside the package…

  4. [...] second problem I have with the above get-green-sell-out-make-green scenario: the natural products, eco, fair-trade marketplace is fundamentally different that other [...]

  5. [...] and critic of Brendan’s selling the fantastic Bear Naked granola company, world’s largest eco granola co to The Man (Kellogg’s), this was one interview [...]

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