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Speaker 1: We're here with Scott Phillips and Terry Hunt. We're having a conversation
about Conscious Capital and I really wanted to get in and ask these guys specifically
what it is about the space that makes it interesting. You've been in the space for a little bit
and on top of them individually. Together as a group to just figure out how we could
help companies see the way this world is working and how maybe some investors can move their
money into funds that are sustainable helping companies that are doing that right thing.
Welcome guys. Scott: Hey, how are you?
Speaker 1: I'm good. First things first, whoever wants to take in first, so what is this realm
of Conscious Capital and how would you describe it.
Scott: Well, I'm sort of the new comer. Terry's been living this life for eternity so I'm
going to let him go first and answer that one.
Terry: Well, 30 years is an eternity. I don't believe that. Obviously, for any business
to be vital, there's got to be a profit motive but when you add to that profit motive a mission
statement and you pursue a mission that is something additive to the profit and not in
startup. You've got what we might call a conscious business or a mission oriented business. I
think if it is just as John Muir said that when you type on something in nature, you
find that it's connected to the whole world and such is the case with business. You're
connected to all of your staple because your investors, your team, your staff, your customers,
your suppliers, as well as the community at large.
As such you got a responsibility to all of those constituencies. When you've got a mission
oriented business, you have got this absolutely incredible rallying point around which you
build your business, to build your team and for individuals such as our self to build
a career that's defined by integrity and that is what is so unique I find about this space.
Speaker 1: The arguments that we heard years ago was it's not profitable, there's no way
you can be able to run business of this, what's changed, what's made this become a viable
option for say investors and firms that are looking to place money?
Terry: Well, I've got my opinion. Scott: You can go.
Terry: Well, I'm oppositional to that. I feel that has been what has been what has been
bountied around and that is false. We have got companies out there like celestial seasonings.
We have a method cleaning detergents, cliff bar, seventh generation. I mean some of these
companies are over a half a billion dollars in size. To say that there is a flaw in that
sector, I think is incorrect. I believe the flaw is in the investors approaching the sector,
willing to give a past on some inherent flaw in the business thesis or the business plan.
It's the investors perhaps not scrutinizing enough and not being analytical enough to
say, "This is the new investment and it has to stand on it's own as an investment side
by side with other investment choices I've got in the non-mission oriented world."
Scott: Terry and I are unapologetic about taking a small business and dramatically growing
it. Growing it not only from a revenue perspective but also from an earnings perspective. Making
money is a good thing because in the context of a mission driven business, what you're
doing is, you know if you take Terry's company, Wild Planet or you take the company that I'm
more directly involved in now, The Food Collective, between this we employ a hundred people. We'd
like that to be a thousand. In the way that you do that is that you drive revenue, you
drive profits and attract capital to be able to drive it more and more and more.
We joke about it all the time by saying listen, we're taking money away from the bad guys
and giving it to the good guys. The good guys may be our shareholders but it's also the
employees in the company. We hope that some of the people that we're employing in our
companies today will go on and take some of the profits that made from the companies that
we've helped grow and do it again and again and again. We do not apologize for doing that.
Speaker 1: Both of you are holding CEO positions in two very dynamic companies in the space.
Tell me what was involved in that decision and how it went and basically what kinds of
trials and tribulations are going into kind of healthy space and say we can get a look
at this as a business and top down to make sure that it's running efficiently?
Terry: Scott and I are helping businesses build their business plan and hire management
teams and then to receive funding. Wild Planet came to us seeking funding and we provided
these services for them. My partner there at Wild Planet, Bill Carvalho is a visionary
in the seafood sustainability area. They had a great idea about what was missing from the
market and what was needed in order to educate consumers. In going to investors, in seeking
the capital, one of the things that they wanted on board was a CEO who's already built and
exited the company successfully. The investors just lined up and just said
it's a pre-conditional closing that I joined the company and run it and hire the management
team that I had mind in the first place. In so doing, I really found myself that in a
position where I was moving from an area that was of men's interest, Scott and my business
preserved capital but that I'm much better suited to an operational world. That's where
really my roots are. This is my fourth natural foods company. This is really what I've been
doing for 30 years. Scott: Terry and I still stay connected. I
mean, I'm a significant investor. In Wild Planet, we talk all the time about Wild Planet
and I seek his advice. The Food Collective situation with me was a little different because
my predisposition in why Terry and are complementaries, I'm more an investor than an operator. I wanted
to sort of stay out of the operating role, The Food Collective but what happened is when
we came up with this opportunity which is penetrating the practitioner channel with
a first to market healthy meal solution, the management team here looked at me and said,
"Scott, we were short handed. We need some help. Can you step in and lend a hand." I
reluctantly joined the ranks of the people that are accountable. So far it's been a lot
of fun. Speaker 1: You're running this company effectively
as a CEO? Scott: Yeah. Right now, Terry and I, Terry
has got his hands full with the hyper-growth situation that he's got going with Wild Planet.
I have the same issue with The Food Collective so we're not actively speaking of new investments
right now but I would hope that inn a short order that that situation will change once
we get our businesses in the spot where, you know we can spend more time adding one or
two other companies to our portfolio. We are not in a, "Here's the money and mail us the
board reports" type investors. Terry is obviously a successful CEO and he can lend a lot of
help really, not pretend help to the companies. I've witnesses what he's done at Wild Planet.
I'm a little bit more dicey because I'm a little bit more of an investor but you know
I think the team would say that I've been helping so far. Our whole philosophy is to
not only provide capital, but also assist it. Typically, the company so we can get involved
in don't have access to a guy like Terry. When Terry steps in, he can help turbo charge
that growth. Terry: One of Scott's great skills is in strategy
as you said. I mean, he's a great strategic thinker and that when you put that in combination
with what we're doing here which is maybe slightly different but very similar missions
that we are trying to achieve for our companies is a very dynamic combination. I agree with
the management expert, Peter Drucker when he says that culture needs strategy for lunch
but you take both of those and that's what Scott is dealing with, you know very strategic
thing. Scott: I get eaten for lunch.
Terry: But you have a mission oriented company that you have got a culture of team members
rallying around that deep seated purpose and people really believe in what they are doing
and excited about getting to work is a huge energizing force within a business to be successful
of course taking into account that you better have a very viable product or service. For
The Food Collective, Scott's certainly has bought a very strategic thinker to the table.
Speaker 1: The idea of where the space was is you have your organic farmers and you have
your kind of hippie-dippy businesses that everyone would like to solicit and help where
they're not maybe big enough to organize and all that. Now, you have all these companies
like you've mentioned who have broken out and really change that paradigm. There's still
a lot of that moment pop shop vibe in the space and people would love especially in
healthcare world whose healthcare practitioners that are doing really and they can compete
with the negative [inaudible 00:09:49]. Where do you guys see that going on a micro-macro
scale? Scott: You want me to handle that? I'm not
sure I can. I think like any business or any industry there's a broad spectrum. They are
the people that are the lunatic fringe in any industry and in our business there is
that lunatic fringe. People that are very, very focused and are uncompromising on everything,
they can be successful but typically successful on a very small scale. The people in our industry
that are in it for the money, they don't get received very well. One of the things that
we feel great about and I'm kind of new to the game influenced by my wife and people
like Terry, they kind of come over and be a participant in the natural product space,
you have that in your blood in order to work in this environment.
It's pretty clear to me and terry clearly has it and I like to think I have it but that's
a requirement. If you can bring some skills from outside the industry and have that requirement,
there are plentiful opportunities for you to succeed in this space.
Terry: Out of this pool of small entrepreneurs, what's it going to take to help them break
out and be successful? I just don't think that there's any solution for the fact that
out of the hundred startups, 90 just are not viable ideas. You just can't fix it and you
can't fill up money or talent. It might just not be the right product or service. The market
that it is addressing is so small that it just simply won't break out. Now, at this
point I consider a lot of foods to be in example of a wonderful sub-category with a natural
and organic but that the category is too small right at this point to have let's say $50
million. Thirty years ago, natural and organic was on the same boat and so their time may
come. It just doesn't happen to be now. It's about recognizing what's the proper time for
this idea if it spent half of its time in the limelight at all.