5 telling quotes from Whole Foods CEO at employee town hall

  • A Whole Foods Market purchase awaits placement in a car trunk, outside the Jackson, Miss., store Friday, June 16, 2017.   Amazon is buying Whole Foods in a stunning move that gives it hundreds of stores across the U.S., a new laboratory for radical retail experiments that could revolutionize the way people buy groceries.

    A Whole Foods Market purchase awaits placement in a car trunk, outside the Jackson, Miss., store Friday, June 16, 2017. Amazon is buying Whole Foods in a stunning move that gives it hundreds of stores across the U.S., a new laboratory for radical retail experiments that could revolutionize the way people buy groceries.

Posted6/25/2017 7:19 AM

Whole Foods CEO John Mackey doesn't shy away from an extended metaphor. He called the deal announced June 16 for online behemoth Amazon to buy his grocery chain a "whirlwind courtship," saying the two companies met on a "blind date" a little over six weeks ago and now are "officially engaged." The grocery founder, whose planned $13.7 billion combination with Amazon jolted the retail industry last week, didn't end the comparison there. "But like an old traditional marriage, where there are all kinds of rules and chaperones," he said. "We can't consummate the marriage until we're actually officially hooked up. This is not -- this is not a Tinder relationship."

We know this thanks to a transcript the company filed with the U.S. Securities and Exchange Commission of an employee town hall, which was held Monday after the deal was announced. In it, Mackey, Amazon executive Jeff Wilke and other Whole Foods executives shared how quickly the deal came together, hinted the company could launch another brand, and said the deal was "kind of a dream come true."


Mackey meant that literally: "About a year and a half ago, I dreamed that we merged with Amazon. I woke up, and I told my wife about it. And she said, 'That's crazy.' And I said, 'I know. That's really weird, isn't it?' "

Companies don't file a transcript of employee meetings like this very often, said Charles Elson, the director of a corporate governance center at the University of Delaware; Whole Foods probably did it out of an "abundance of caution" in case something was disclosed to employees that should also be shared with investors, he said. Mackey, after all, is known for being outspoken -- he recently called an activist investor "greedy bastards" and made waves for calling the Affordable Care Act "fascism" several years back. In the transcript, following his Tinder comment above, he said "I got a feeling I'm off script." (Amazon's CEO, Jeffrey P. Bezos, is the owner of The Washington Post.)

So what did we learn? Here are five telling comments Mackey made in the transcript:

• "I think, sometimes, our company's gone a bit too much team member focus at the expense of our customers. And that's one definite evolution that's gonna happen."

Whole Foods' long-standing generosity to employees -- a discount of at least 20 percent on store items, a low-cost health care plan, the ability to vote on important benefits -- has long been held up as an example of a common customer service ethos: Treat employees right, and they'll in turn treat customers well, leading to higher profits. While Mackey doesn't seem to back away from that mantra -- for instance, he says changing certain benefits like paid time off that rolls over "would be monumentally stupid" -- he also spoke of $300 million in cuts to the company's cost structure, even as the retailer invests more in the customer experience. (An email to a Whole Foods spokesperson seeking clarification was not immediately returned.)

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Whatever the plan, Mackey says the embattled chain wants to be more like Amazon. "They are more customer-centric than we are," Mackey said. "They really are. And one of my take-aways is that, by God, we're gonna become as customer-centric as Amazon."

• "I don't want people goin' away, thinkin' that nothin's gonna change around here. 'Cause things are gonna change. There's just no question about that.' ... When this deal closes, we're all Amazon people. We're not Whole Foods people and Amazon people. We're all Amazon people. We're one- one large tribe, one large family."

This is a different tone than was taken when Amazon bought online shoe retailer Zappos way back in 2009. In a letter to employees at the time, Zappos CEO Tony Hsieh said "Amazon supports us in continuing to grow our vision as an independent entity, under the Zappos brand and with our unique culture," noting that "we plan to continue to run Zappos the way we have always run Zappos." Hsieh has indeed gone on to keep things distinct, running Zappos through a self-management, no-bosses system known as "holacracy."

Mackey was careful to say that many things at Whole Foods, such as quality standards, some benefits, and his job at the top, would remain the same. And Amazon's Wilke indicated a hands-off approach: Iif Whole Foods culture evolves," he said, "it'll be in ways that you decide." But Mackey also made it clear change was afoot. "It's gonna change our culture. I mean, it's the truth. It's inevitable. But it doesn't necessarily mean it's a bad thing."


• "Over time, there could be other formats that evolve that -- that might -- wouldn't be branded Whole Foods Market, potentially, wouldn't be our standards."

An employee asked whether Whole Foods would keep its high quality standards in place after the deal, and Mackey assured the employee they would. "You know the pixie dust we were talkin' about?," Mackey said, referring to the potential he sees in the Amazon tie-up. Undercutting quality would be "the death dust," he said, saying "we've been assured" by Amazon that would not change.

But he also went a bit further, saying over time new "formats" that "wouldn't be our standards" and wouldn't carry the Whole Foods brand could emerge. The company already has a separate store known as 365 that carries its proprietary brand; another brand could be something Amazon adds to lower prices and "distance the chain from its 'Whole Paycheck' nickname," reported Reuters.

• "They're at the forefront of technology. And we are- we're a little behind there. So I think that we can expect that we'll go to the front of the class, eventually, in the grocery business."

Mackey compared the grocery chain to being the "class dunce" when it comes to technology, saying he hoped they'd end up as the industry's valedictorian." What exactly that means isn't known, but it's clear Mackey sees a real boost in the technology Amazon could bring to his stores.

Speculation since the deal was announced has been rampant, from whether it could use technology to cut down on comparison shopping in its stores, cut cashier jobs -- an Amazon grocery store in Seattle opened last year lets people buy food without talking to anyone -- or provide launchpads for drone delivery. (Spokespersons for the two companies told the Post's Danielle Paquette no layoffs would come as a result of the merger and no job automation was planned.)

• "They have had the courage that almost no other public company has had the courage to, basically, resist the drumbeat of short-term, quarterly earnings that have had us trapped here for a couple of years, as our same-store sales came down."

This comment, as well as other praise of Amazon's executives Mackey made during the town hall ("They're so authentic. They say what's on their mind. They're not playin' a bunch of BS games") doesn't specifically reference activist investors. But it reads like something that could be subtly needling Jana Partners, the hedge fund that in April announced an 8 percent stake in the company and suggested Whole Foods put itself up for sale.

According to a recent feature in Texas Monthly, Mackey said "these guys just want to sell us," calling them "greedy bastards" who believe they make a quick profit on Whole Foods' sale. "Their mantra is basically shareholder value," Mackey said to the magazine about Jana. "They don't care about the stakeholders or long-term value. It's just, 'How do we make as much money as we can as quickly as possible?' "

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