September 19, 2008

Feature conversation: Steve Demos.

The following conversation is only roughly edited. The final appears in elephant journal’s current issue.

Historically—right up through today—there’s been a split. You make money, you get your big house, big cars and trips to Me-hico—but you may work for an uninspiring corporation that may be less than brilliant for our planet earth, or your children and grandchildren.

Or, you dedicate yourself to a non-profitable non-profit, change lives, pursue your spiritual practice—but you don’t make much money doing so, you live in a little apartment, are one accident away from bankruptcy. When you hand your debit card over to pay for groceries or fix your clunker you get a queasy, nervous feeling in your gut.

“Live a good life—that also happens to be good for others, and our planet” is elephantjournaldotcom’s mission, and my personal aim. Can we enjoy our life? That’s the greatest richeness of all, a richness many multi-millionaires don’t possess. Still, rich folk have a fundamental relaxation that comes from knowing their I’s are dotted, their T’s crossed—a relaxation that poor folks may never feel.

The great thing about the Green explosion is that it’s actually relatively easy, now, to make money changing the world for the better. In our imploding economy, wind and organics and anything ‘green’ is growing anywhere from 10 to 45 to 200% a year—and in a rapidly imploding global ecosystem, ‘sustainable’ products and solutions will have to become more popular to keep things going.

It wasn’t always easy. Even 30 years ago, there were pioneers—many of whom came out of a little green football-shaped valley where the Great Plains met the Rockies—who toiled for decades before their business ex-ploded.

Steve Demos is among these Boulder pioneers—a titan who I like to call “the richest Buddhist in the world.” That is, if you dont’ count Steve Jobs. Enjoy!     ~ed.


Waylon H. Lewis for elephant journal.com: What kind of name is Demos?

Demos: Greek. “Many people” is the root demo. A democracy is a government of many people.

ele: You’re a legend in my hometown, Boulder, for having pioneered soymilk, with Silk Soy and White Wave. You knew Retzloff [founder of Aurora, Horizon, involved with Alfalfa’s, which became Wild Oats, which was bought by Whole Foods last year], Hass Assan [Fresh & Wild, Alfalfa’s], those other legends back in the day. How did the whole adventure start?

Demos: We have how many days?

ele: We have three days. [Laughter] We’ll be bringing food in, in shifts.

There’s something about a bathtub and tofu…

Demos: I’m gonna skip before White Wave and Silk and give you some of the checkered past, because it’s germane.

Twenty-two years old. Flunked my draft physical. Number two in the first draft.

ele: You intentionally flunked it?

Demos: Intentionally. Within five months, I had my thumb out and I was hitchhiking from Istanbul to New Delhi on the tops of trucks. I stayed. I made it. It took me three months to cross the Middle East. I stayed for four years. Mostly in the foothills of the Himalayas up across the river the Beatles made famous, in Rishikesh, Maharishi Mahesh Yogi, the Shivansh ashram and all that. We ended up…I don’t think it would be called camping…living in a cave there for a number of months.

I had something of an epiphany toward the end of the four year period. We had been studying Buddhism, aggressively. Doing a lot of long, intensive [meditation practices] and studying the concept of Buddhist thought—part of which is making a livelihood.

I left the U.S. with a great internal conflict going on. I was raised in an era where “big” was bad, “business” was bad, “profit” was ugly. You were basically a traitor if you were a businessperson.

ele: …Let alone over 30 years old, right?

Demos: [Laughs] And the funny thing was that [attitude] was itself not trustworthy. My father was a successful businessman, an entrepreneur [who] founded his own company and grew it to be what I thought was large at the time: more than 100 million bucks. He was never unionized in his entire history. He invented a profit-sharing plan in 1960.

I left the U.S. with this great contradiction: peer-pressure was telling me everything was wrong with Capitalism, and my D.N.A. was saying that the American Dream was alive and well. When I got to India, I was what everybody’s mother was telling them not to hang out with at the time, “He’d be too much of an influence.”

We stayed [in that cave,] trying to reconcile the conflict. “We” being the lady who went on to being the C.F.O. of White Wave—we were travel buddies from college. We were there when some genuine pilgrims came in—Rishikesh is a fairly holy area. And they started laying money at our feet. And we were so humiliated. We were really living a wannabe lif—even if we’d bought one-way tickets.

It became clear to us at that moment that our dharma [path] was not there. It was a true epiphany because we had worked out our karma-yoga [livelihood as spiritual practice] part. With the training and understanding that we had, it became apparent that there was nothing wrong with capitalism. If I was going to take this Buddhist concept of right livelihood and actually demonstrate it, I could validate my own D.N.A.

I’m a shameless capitalist. I was born in the intent and interest to be an industrialist. And I actually enjoy it.

I thought that the key conflict was going to be, “How do we resolve this ‘big is bad, profits are awful’ notion.” When you get deep enough in this Buddhist philosophy of right livelihood, you’ll find that it’s non-violent, non-oppressive, it does not treat profit as a destination. It treats profit as a resource which you re-allocate back into your supply chain, your consumer chain, your environment, your society.

This was 1977. We decided to demonstrate a right livelihood business. Our commitment was to ourselves; to prove that this not only viable but that it was more profitable than what we called “opportunistic capitalism.”

Opportunistic capitalism is traditionally, “I can do something; I can make a living at it, as long as I’m not hurting anybody, then that’s okay. I’m just taking advantage of the opportunity in front of me.” Conscious capitalism, right livelihood, is a very, different engineering process in the wealth creation process. You sit down with a design and you create a specific pathway to creating wealth that is narrow, primarily because it’s boundered by ethical and moral decisions. What we will and won’t make money doing.

ele: And you’re saying that despite it being narrow, it can actually be more profitable?

Demos: It is more profitable. The reason it’s more profitable is because it endears a consumer to a deeper level of loyalty and commitment to you than they would have on just a taste basis or a product basis. If I convince you that I stand for what you stand for, that we’re in philosophical alignment, but that I can commit a higher scale of resources to that philosophy than you can as an individual, then in our democratic capitalism, you’re going to vote for the philosophy that aligns with you.

As a matter of fact, you’ll pay more. You’ll pay a premium if you genuinely believe that the company is authentic, the company’s demonstrating your value system and the product is living to its brand promise and position. When we came back to the U.S., we had become deeply committed seekers. A part of it was at that time, I was a committed vegan. That’s changed because the environment’s changed. But I decided that I was never going to make a livelihood off of anything other than vegan, organic foods.

In 1977 I founded White Wave with the mission of fully integrating natural soy into the average American diet. And we were going to prove our theory on the profitability of right livelihood through the choice of soy products. It was an overnight success. Twenty eight years later, somebody actually bought the stuff..!

For the first 20 years, it was hell. And then for the last eight years, it was called the “Silk Rocket Ship” and it was heaven.

ele: I was reading about Polar Bean and all the products you’ve introduced over the years that didn’t really take, because they were too soon for the market.

Demos: At one time we were the number one seller of virtually every category of vegan food that’s currently on the market, whether it was cheese-less pizzas, meatless burgers, meatless hot dogs, miso-based salad dressings, Hot Pocket entrées. And then we invented a whole bunch of stuff, too, things out of tempeh, seitan, things out of ready-to-eat tofu.

We were like the old movie called “War Games,” where that kid sat and played war games in front of the computer and the computer was just spewing through scenarios. We were the war game scenario of what would stick with soy. How are we going to convince the American consumer to eat lower on the food chain? Because it embraced everything we were after—non-violence, environmentalism, organics.

We just were having trouble finding the entry point, acceptance. Ultimately, that became soymilk. The carton told people what was in the product, what to expect.

We learned a lot through the process of developing and delivering all these other foods. Many of them are still out there, selling, in some form. Many of them are not.

ele: Silk Soymilk was the first one to break out. You were saying in an interview I read that everything you’d made got put in the “health food” section, and that was like the death.

Demos: The penalty box.

Silk Soy is the most successful organic food in the history of the industry. At one point, we had 16 percent of the global market for soy. We were the largest organic brand in the world, [largest] organic purchasers of soybeans and sugar. We penetrated 15 million homes. We had about two percent of the dairy market. And we were generating 100s of millions of dollars a year in revenue and 10s of millions of dollars in profits.

We were the leading contributor to the Boulder shelter for the homeless, battered women, emergency family assistance, Boulder County A.I.D.S. project. Internationally, we sponsored Amnesty International, Surgicorps, Susan G. Komen Race for the Cure and we title-sponsored Willie Nelson’s Farm Aid for saving family farms. So, we felt that we demonstrated the principles as we grew up the business.

ele: From a right livelihood point of view, how were those years? After 1999, when it started growing quickly? How was it for you personally? Were you able to hold up through that?

Demos: Great question. I haven’t been to any psychiatric wards, so I think I’m doing fine. It was truly difficult in the beginning. I wouldn’t wish it on anybody. It was 20 years of beating our head against a wall, and ultimately the wall gave in. The last eight years, once you hit stride, is as close to heaven in business as you can possibly get. It’s not only because you’ve hit a rhythm with the business execution side that it’s fun. You change some skill sets. You know, we had nine factories and 1300 employees at the end.

ele: Yeah, you said it was scalable.

Demos: It was scalable. We had a brilliant design. First of all, the greatest accomplishment was the verification or validation that right livelihood actually does work. You don’t have to compromise your principles, not one iota, to create wealth and not create any guilt for yourself. But you must be fanatically committed to some of these principles, not the least of which is taking care of yourself. It took me 20 years to figure that out. I had no problem taking care of other people. But I had a lot of serious problems taking care of myself because I felt, for some reason, that I was invincible, and didn’t see myself as expendable. That is obviously not true, and was a bit of a lesson.

ele: Why did you finally find that it was important to take care of yourself?

Demos: Right livelihood is simply defined as “good for me, good for you and good for everybody who touches it.” And if I was going to truly live to right livelihood, then I was the last leg on that stool. I had taken care of everybody who touched it. The public liked the product, we gave back culturally, we were deep on our commitment to sharing the wealth with our employees. We gave back, $15 million to the employees when we sold the company.

ele: I read about that. Even to the drivers, right?

Demos: Yeah, if you worked for White Wave for more than two years, we gave you a bonus of $17,000 for every year that you worked there. Depending on your position in the company, we gave you additional bonuses.

ele: They didn’t even speak English, some of them, and they’re getting checks for…

Demos: That is true. Roberto was our order-puller in the freezer and he came out, and I’ll never forget it because Cheryl Lamb was V.P. of Sales and she was part of the Peace Corps for a while, so she’s bilingual. And I had her come with me and we pulled him out of the freezer to translate the fact that we were going to give him $50,000 on Friday in cash. It took a few times for him to understand that we were really doing this. [Laughter]

ele: I think even if he spoke English, it would have taken a few times. [Laughter]

Demos: Our truck driver, who had been with us since year two or three, received about $400,000, something like that. Other people put kids through college and bought homes.

ele: Don’t expect the same thing, Caroline. [A photographer]

Demos: Twenty one people made more than a million bucks after tax, each, on this business. So, we had a lot of good will. Community good will, employee good will, market good will. Right livelihood proved itself to be an extraordinarily powerful, positive force for making money.

ele: That all sounds nice. But you are giving $400,000 to a driver who you didn’t have to, right?

Demos: Oh, yeah, I did.

ele: So what was it in your motivation that actually made that make sense and how did you explain to Dean [Foods], for example, that you had to do it this way?

Demos: Oh, that’s a great story, because when we went to do this, we said, “Well, we’re gonna give back all of this money in the form of stock” and the lawyer said, “You can’t do that.” I said, “What do you mean, you can’t do that? Of course we can do that.” “Well, nobody’s ever done that before.” “That doesn’t mean you can’t do that. It just means that you guys have to figure out how to do that so that these guys don’t get clobbered with unreasonable taxes for this.” The Dean people supported it in the beginning.

We had a culture where, when we interviewed people we would say to them, “If you could walk on water, we have the pond.” You can excel in this company. We embrace mistakes, we embrace risks and gambling—but at the same time, we are extraordinarily focused on making money and growing a big business. And our culture was at a point where we never had to ask them to do anything, but if we had asked them anything, we would have had everybody line up. That was the nature of what we were doing, we were creating a true identity.

ele: For any small businesses, let alone a growing business, half of what we go through as a business is our staff culture. You had some system, I remember, I think, T.J. [McIntyre of Pixie Maté] was telling me about it, where you rewarded people if they could find mistakes in how your business worked.

Demos: Early in the business, we had what was called the…a “50-50-50 Plan” or something like that. We would give you 50 percent of what we made back for an idea that didn’t cost us more than 50 dollars to implement. I forget the details. But effectively we figured the best way to stimulate improvement inside the operations of the system was to go to the people who were on the floor and say, “Look, we’ll split what we get with you over some reasonable period of time.”

One guy came up and…I’ll never forget it because it was the simplest thing in the world, he said, “You’ll live up to this?” And we said, “Yeah we’ll live up to this. We’ll give you the money. We’ll give you 50 percent of what we make over some period of time.” I forget what it was. He said “All you got to do is cut off the leg of this tank and lower it three inches, and you’ll pick up five gallons every day of product you’re currently throwing away because it can’t run out the front of the tank.” He said, “Not only that, you’re paying the city to treat it because it’s organic material and they gotta break it down when it gets to the sewer.” He was absolutely right.

ele: And he did okay?

Demos: Oh, yeah.

ele: Maybe [the length of time] was 50 weeks.

Demos: Our goal was to engage everybody in a centralized vision, get them all on the same rocket ship and then execute it. We were committed to changing the way the world ate.

ele: At some point, to get out of that penalty box, you needed mainstream distribution. And Dean helped you out there, right?

Demos: Well, that’s the myth. Reality is, no. Dean was a Chicago-based dairy at the time we teamed up with them. We knew that the F.D.A. was going to announce that soy could be legitimately advertised as a bonafide cholesterol-reducer. We had been working 18 years at that point and the Pearly Gates were about to open up.

You couldn’t build a factory fast enough to keep up with the marketplace if it was going to open up like that. So, we said, rather than just picking up money from the venture capital market, let’s go line up with a strategic. So, we shopped the Nestles, the Cokes, the Pepsis, the Dean Foods, the Sweeza Foods of the world for that alignment, because they all had the right infrastructure, they had the delivery systems, they had the operating systems.

We paired up with Dean Foods—Chicago, 4 or 5 billion dollars at that time, [the U.S.’s] number one or number two dairy. On the assumption that we were going to be able to get product into their factories, and on their trucks and increase their distribution. I will categorically state to anybody that, in the three years that we were with Dean, and we received their money, not one drop ever went through a Dean factory, not one drop ever went on a Dean truck, not one sales call ever happened with a Dean person sitting beside us.

So, I will give all of the credit—going from a borrowed $500 to an ending annual revenue of $362 million—to the team at White Wave. That team, happily retired now, deserves everything they got. It wasn’t Dean. They gave us the money, without question. And ultimately when Dean—Chicago was acquired by Sweeza—Dallas??, they began giving us some access to factory, so that after I sold the business, they began putting the product in their factories. Even though…

ele: After you sold it completely?

Demos: Correct. I was still running it, but I had sold it. Even though they had full investment in the business, not one drop ever went through there at the time that they were invested but not earning.

ele: So, one thing we always rail against because we’re young and naïve and idealistic…

Demos: Stay that way.

ele: Yeah. [Laughter]

Demos: You don’t want to know what you don’t know.

ele: Yeah. That definitely is true of me. [Laughs]

Demos: [Laughs] That’s true of me, too.

ele: Right…is, we have a column called “Sell-out of the Issue.” We featured most recently, Burt’s Bees. And it’s by no means all bad when a company like Ben & Jerry’s or Stoneyfield sells out, but it’s usually at least not all good. So, under right livelihood, can a business get huge like yours and never sell out? Is that practical?

Demos: Well, let’s take a look at two different approaches, because I think you’re watching an ongoing social experiment in capitalism. Remember the root of this had nothing to do with soy. It had to do with this social demonstration of capitalism. And the theory was that if the product was so deeply infused with the values of the company and the culture, that they became inseparable in the minds of the consumer.

Then you could literally go out and affect large-scale business by selling, creating wealth. Selling the brand, the brand is such a halo brand that only a fool would tease apart the components that the consumers find compelling.

Great theory. Doesn’t hold water. Okay: the only way you know these things is to go down the path, work them out, figure them out. That said, Silk was probably the leading halo brand of its time. It may still be. There are a lot of halo brands out there, but not all of the products are really that good for you.

With all due respect, I don’t know of a dairy product that is good for you. So, when you start talking about halo companies, you want to look at the product. I mean, if you’re selling heart attacks in a cup, you can’t call yourself right livelihood.

ele: By halo, you mean a company that consumers identify with and love?

Demos: I want the product first to be a genuine solution to a biological need, that doesn’t hurt you. Okay? It has to taste good; it has to appeal to you. But let’s not sell saturated fat with high caloric content and say, “We’re helping change the planet.” I don’t care if it’s organic or not.

ele: The French do okay, right? With all those articles about [their diet]?

Demos: I’m not going to pass judgment on anything other than my understanding of right livelihood. And I’ll do it only for me. So, that way I’ll stay away from everybody else.

My theory was, if I deeply infuse this, then my social experiment was going to be, in capitalism, what I would be able to take this halo brand, sell it, create wealth, return it to all the investors and continue influencing the market with a deeply valued business.

ele: So, in a way, right now is an exciting time, right? ‘Cause now you’re in that position.

Demos: Well, yes and no, because we’re watching whether that’s actually going to occur for Silk. There’s been some compromise to its social outreach. They whacked off support of certain things—NPR, Surgicorps, Susan G. Komen…a bunch of that. So, even though they’ll talk a lot about corporate responsibility, I don’t know that all of those aspects stayed intact. The organic aspect, the nutritional aspect of the product and the core character of the product has remained intact. I do hear rumors of this and that.

So, at this point, I’d say that we are several billion dollars of revenue generated, hundreds of millions of dollars of profits generated, and we’ve convinced over 15 million homes to eat lower on the food chain, contributing to a positive give-back in capitalism. I’d say that aspect is successful. The problem is, it should be a billion-dollar brand now. I think it would be had it not had some of the underpinnings cut away from it.

Because, remember, this was the first company in the United States to devote its entire product to wind power. We paid for all the wind power for the farmers, we paid for all the wind power for the truckers, we paid for all the conversion for the refrigeration, we paid for all the conversion for the retailers, and we paid for credits for all of our factories in everything we did. We were five, seven years ahead of the curve. We were “greening” Wall Street. We were out-producing, out- performing on return on use of assets. We were the faster growing segment of the company. And we’d doubled our profits in one year.

But I think we scared ‘em. Culturally, we were such a positive influence, we started influencing the larger culture of Dean Foods…and I think that upset the board of directors.

ele: There’s a famous sort of Wall Street Journal article about you, touting your success and how great sort of the philosophy was.

Demos: You mean “The Bullet in the Head” article.

ele: And it was a month or so after that that you all parted ways, right?

Demos: I showed up at the Anaheim [Natural Foods] Expo with an arrow through my head. Who knows? All I understood was we scared ‘em. And I, along with Gregg Engles—the chairman and founder of Dean Foods—were on the front page of the Wall Street Journal with the cute little dot photos, touted as greening Wall Street. We were going to show Wall Street where green meets green. This was our mantra seven years ago. Prove to Wall Street that green can out-green the other green.

ele: So, you’re coming up on the end of your sabbatical, right? With your non-compete? [xxx]

Demos: Yeah, it’s done. We aren’t in competition with Dean Foods, anyway.

They wanted me to be the equivalent of the Pillsbury Doughboy or Orville Redenbacher, maybe a combo of the two. And I said, “I don’t do mascoting, I entrepreneur.” So I said no.

ele: Like the Wendy’s guy?

Demos: Yeah. I’ve got a difference in opinion in the way the business could’ve or should’ve gone, but that’s irrelevant. These guys paid for the business, it’s theirs.

I left and went around the world—this time, not hitchhiking. [Laughs] I realized I wasn’t done with capitalism, that the flaw in my last theory has to do with the nature of capitalists, the root of financial capital.

I don’t know, Waylon, what the root of your business is, but most start with a few borrowed bucks and then they wrangle their friends and family into it.

The capital base is important. Compare the European model: a developed class structure of wealthy people who own businesses and plan with no intent for what we call an “event.” No selling of the business, public offerings or trading of equity. Now, that means the employees and [investors] can’t get rich. But it also means that the culture never changes hands.

Now look at the nature of American business. It’s a short-term business: it’s based on debt structure. That means sooner or later, you have to return against that investment or debt.

ele: You have to if you have debt?

Demos: If you have investment you are compelled to return against that investment. If you take O.P.M.—other people’s money—then you are morally obligated. If right livelihood has any meaning to me, I can’t just take the money and run. Okay? So you are compelled at some point to find a liquidity strategy for these people.In the United States, that means going public or selling to a large strategic. There are some new ones emerging out of the sophisticated financial market, but in reality those are the two paths.

All the entrepreneurs in the natural and organic marketplace are basically poor hippies, so they all borrowed money, took on investment. They all had to capitalize their businesses with other people’s money. So they all were forced, at some point, to convert those investments and debts. I sat at a table with Gary Hirshberg [Stonyfield Farms] the day he was writing out checks to his co-op farmers. He was proud of the fact that he did what he said he was going to do: “I’m returning your money plus your profits by virtue of having to sell this company.” He still has cultural control of it—but that’s finite. Ultimately the ownership, the equity of that business, will be owned by Dannon in France, and they will dictate where that business goes. Period.

When I came off my sabbatical, my self-imposed exile—I realized that there was another way of going about this. That led to NextFoods. If you fund a business substantially yourself, then you could bypass several rounds of investment obligations—the only person you’d be obligated to return the investment to would be yourself. So I could go out, start and fund a company, get it rolling and own the vast majority of the company.

ele: One could own all of company, right?

Demos: In theory. I didn’t. I started bringing in the employees. They ended up owning 30-something percent of the company, before we started taking on big money.

My money was intended to fund a business to the first level of national testing. We’re in the midst of that with Whole Foods. And we’re in a regional test in Boulder.

The intent was to create enough value in the architecture, design and testing process that we could bring in additional money that would be minority interest in the business. Therefore, when we went to return to them—‘cause sooner or later—five, seven, ten years—we’d be returning to them—but we wouldn’t have to sell controlling interest in the business if we didn’t choose to.

ele: So you’re holding at least 51% of control.

Demos: I do at this time, but we’re going to need a lot more money. The costs to take a consumer product like GoodBelly into the mainstream, plus the infrastructure to make it successful, is in the $20 million range. Now, I’m not putting up $20 million to get GoodBelly off the ground. I put in a lot—the initial significant percentage of that investment. Now, as we create value by proving that there’s a market out there, that we have a clear point of differentiation, that our product is efficacious and that we’re an authentic culture that is demonstrating its value system—

ele: That’s the criteria of right livelihood for any business?

Demos: Right livelihood is personal, but yeah, you could list them as criteria. You’ve got to define and live to your value system. Then we start applying economic value to the concept, start taking in other investors. These investors will be coming in because they see the market opportunity for this—but we won’t let them in unless they line up with the culture. We won’t take their money if it doesn’t have a clean past, if it doesn’t have the same root we have.

But their intent is as an investor is not to be culture builder. So you have to consider, how are you going to get a return to them?  In three to five years, we can engineer an event for them and the employees. Presumably the business at that point will be several hundred million dollars and we’ll have access to that kind of capital.

ele: Why that’s interesting from a right livelihood point of view is that this time you don’t have to sell, you don’t have to lose control of your company. Is that what you tried to engineer?

Demos: You have a moral responsibility to take care of yourself on this planet. You’ve got to make yourself a livelihood.

American capitalism and free enterprise is one of the most powerful and wonderful forms of business and livelihood transaction in the world, with one exception. There’s no person home. There’s nobody home in American capitalism. There are no ethical boundaries, there’s no morality, you don’t take ownership. Right livelihood is the ability to create wealth, enormous wealth, and still embrace moral and ethical boundaries around it. Which, if that’s a leadership model for creating a livelihood, for fulfilling that responsibility, I’m here, I’ve got to take care of myself so I might as well make a bucketful of money while I do it. And here’s a way of doing it without anybody passing moral judgment on you. That was the goal originally—my demonstration of right livelihood—wealth creation without guilt. This time, I want to see if we can do it and maintain control of the culture, which requires an independent management team, [and] a different engineering of the monetization process after five to seven years.

ele: To wrap up the structure conversation: in any small, mindful or right livelihood business, say, a small magazine—there’s no way to get investment without people expecting a reward at some point—unless they’re angel investors.

Demos: I don’t believe that an angel investor’s an angel. It’s called enlightened self-interest. Anybody that’s says that “I believe in the good side of this business. I’m going to put some money on the table”..? Ask them if they could walk away from that money. Then you find out how angelic they are.

I don’t believe in angel investing. It’s luck of the draw in finding people who support the concept and have an appetite for risk that embraces what these young entrepreneurs or young businesses are trying to demonstrate. Everyone is in this for themselves, including me. I’m in this because I can drag my karma up. If I can prove that wealth creation is a valid path, you can make a whole lot of money in the vein of good karma, then that’s a demonstration of right livelihood.

ele: And that has the power to change.

Demos: If I out-profit the profiteers by virtue, then the profiteers will become virtuous. The best example that you can give [is] if I can convince you to be moral and ethical because your consumer will give you five percent more as a premium for demonstrating that morality and that ethics. If you actually do this and live to it in business, that’s a powerful model.

ele: And we see that happening with Whole Foods.

Demos: Very much so. And the irony here is that these ideas were powerful and germinal 30 years ago when I started—and now, they’ve come to fruition. There’s now greens fees to play. If you’re not environmentally aware, if you’re not socially responsible, altruistic and culture-building inside your own business then you don’t stand a chance of becoming a leading brand in the future. The irony with NextFoods is we’re not going to claim to be environmentalists or socially responsible because we already are—they’re at the very root of who we are and what we do.

ele: But does that mean that the packaging and every little step, you’re really trying to—

Demos: Has to be. The packaging ultimately has to be post-consumer waste recycled; the package has to be biodegradable. The product has to be as organic and natural as the reality will permit it and it had better be efficacious.

That’s a process. The first and foremost responsibility we have is to make a profit. The second is to figure out what we’re going to do with the profit once we make the profit. Now, NextFoods—of course it’s going to be organic, environmental, socially responsible. But it now requires us to be something greater than that.

We’re going to marry up deep science with these philosophies and dial up human nutrition to another level. The consumer is ready, intelligent, educated, savvy. They’ve gone from counting calories to counting saturated fats to talking about phytonutrients. Well, we know we can give them authenticity on the philosophical side. We’ve already demonstrated that. Now we want to give them authenticity on the science side.

So we’re going to take scientifically proven, medically validated products that have a positive effect on the human system that can be shown. And we’re going to include and incorporate that. We’re going to marry that up to natural and organic food. And we’re going to deliver efficacious solutions to problems that people are just now beginning to acknowledge they have. Because the average age of the American consumer is going up—there’s no surprise in this. My age group, the first swell of the baby boomers is what they call the “egg in the snake.” When a snake swallows food, it swallows it whole. And you can see an egg pass through a snake as it breaks it down and digests, because it really never changes from this shape going through the snake. If the snake is time and our age group is the swell of the population, then we’re visible going through time. We’re the egg going through the digestive process of this long evolution. That big consumer group, the baby boomers, are the wealthiest group in history. They’re the first age group to ever have lived one full career beyond retirement. They’re not saying, “I’m going to retire at 65 and I’ll be dead in three years.” They’re saying, “I’m going to retire at 55 to 65 and then I’ll have 30 to 40 more years going.” Okay, so that’s a large, powerful economic base of consumers.

Biologically—you may not believe this—you are mortal and you won’t believe it nor will the rest of the people in this room.

ele: I’ve heard about it.

Demos: [Laughs] Yeah, your body starts talking to you. It’s an ugly conversation that will come up at times you don’t want it to. So, this egg in the snake—this population swell, going through time—is starting to experience physical breakdown. This  “Me Generation” has repeatedly demonstrated there is no limit to the amount of money they will spend on vanity, wellness or quality of life. And their demands and needs are shifting. It’s your parents, it’s my age group: “I really want to live 30 to 40 years [more] in a quality fashion. I expect to be adventurous.”

Next Foods intends to meet the demands of that population group as it ages. We want to take care of ourselves by taking the initiative to look at nutrition carefully, what we put into our body. As an age group, we have led the culture in a lot of ways—lifestyle, food and philosophy choices. And so active lifestyle folks [who] are quite a bit younger [who] will follow suit, and thinking about quality of life a lot earlier—and they’ll look at these products because they want cleaner fuel to put in their systems. They want efficacious stuff that’s won’t give them diseases, conditions, tumors, early onset of cancers or high blood pressure. Our job is to identify and find products that meet those needs.

ele: Probiotics are already doing well in Europe.

Demos: Your mother wasn’t entirely right when she told you that all germs were bad, okay? There are bacteria out there that actually help your immune system—non-nutritive, biologically-active components who act as catalysts in your system to improve your health and well-being. “Probiotics” can be defined as an item that, when it’s fed and lives in the host, creates better well-being and balance than the host was getting on its own without the bacteria. Your body, when you were born, had a whole bunch of bacteria in it. They’re called probiotics.

ele: Antibiotics kill…

Demos: “Against life.” Bio is life, pro is for, anti is against. Antibiotics are to kill, probiotics are to help life. So, what we’re offering—which seems to be a theme in my career—is an opportunity to obsolete the need for dairy. This is a fermented or a cultured oat product: we’re delivering a probiotic in a fruit juice base that’s never seen a cow. That’s a first that you’ll not see in the United States. You won’t see it anywhere but in Sweden.

ele: We were talking about maté and chocolate, whatever it is—business-wise, it’s important to be first out of the gate?

Demos: It’s important to have a clear point of differentiation that nobody else has in the market and you’re the first one to come with that point of differentiation. You can’t be a “me too.” If you’re a “me too,” you’re going to fight on price. If you’re the same as somebody else, then why would I buy your product? The only reason would be if I know you better or if you’re cheaper. If price, product flavor and efficacy is at parity, you’re going to have a problem—you’re going to be constantly trying to wheel and deal. If you lead with innovation, the market embraces you. The consumer embraces you. You’ve got a competitive advantage—so you can set your pricing differently than anybody else.

ele: On right livelihood: how does your spiritual, meditation, Buddhist practice inform or help your business?

Demos: There is no separation between every breath in your life and that morality and those ethics and what you do in life, in your business. So [my practice has] always influenced it.

ele: When you sold to Dean, you and one of your main business associates immediately went on a 10-day retreat.

Demos: Yeah, but that was normal. I mean, she’s a deep meditation teacher in the vipassana [Buddhist] tradition now. We’ve always been doing 10-day to 30-day—

ele: This was your C.F.O.?

Demos: Yeah. We’ve done 10, 20, 30 of these [retreats] where you’re meditating 14 hours a day. Meditating is called practice. Practice for what? Practice to live. If you’re not demonstrating your value system every moment you’re alive, then you don’t have a value system, do you? There’s no separateness between my practice and my life. Whether I’m cross-legged on a [meditation cushion] or I’m talking to you, if I’m full of bullshit…I’m bullshit on the cushion and I’m bullshit talking to you. And if I’m not, I’m not.

When you’re genuine, everybody knows it. It’s like a good perfume. It smells good; it’s refreshing. So, I don’t see any difference between philosophy and living. If you’re not doing it, you’re not doing it.

ele: Thank you much.

Demos: You’re welcome. Thank you.

For more: books and yoga programs at omyoga.com. Video: elephantjournal.com



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