Green-Living Firms Try For Mainstream Balance
Tuesday, June 6, 2006
Steve Case, co-founder of America Online, talks of living "more in balance" these days and not long ago bought his first hybrid car. He recently gave the keynote speech to a gathering of entrepreneurs in Santa Monica that included the inventor of an organic herbal throat spray, the maker of an immune-boosting tea and a psychic healer who talks to dogs -- the types of ideas his new company, Revolution LLC, is trying to pick through for products and services that might succeed in the mainstream.
"Some fringy stuff," Case said of the ideas he heard during the Southern California conference.
But then again, so was the Internet 20 years ago.
There's an uneasy courtship going on between corporate America and the diverse, sometimes idiosyncratic collection of companies that make up the "sustainable lifestyle" movement -- firms that promote their products as healthy and easy on the environment. Wal-Mart Stores Inc. has begun buying organic cotton; Colgate-Palmolive Co. owns natural products pioneer Tom's of Maine; prominent organic food brands have become subsidiaries of major agribusinesses.
In the midst of it, Case is trying to position himself as an honest broker, someone who can translate green practices into mainstream tastes and apply mainstream business principles in a way that green businesses and consumers can accept. The aim is to build a "Nike of wellness," but to get there Case is trying to meld ideas derived from talks with Berkshire Hathaway Inc.'s Warren Buffett and Virgin Group companies' Richard Branson with businesses developed by people such as Jirka Rysavy, who lives in a shack without running water and developed a line of yoga products that Case is backing.
Like the diverse line of businesses Branson has brought under the Virgin label, Case sees his year-old Revolution developing into a sort of meta-brand, a signal to consumers that the product or service is environmentally friendly -- but not too "fringy."
"Everyone wants to make choices that are better for the people around them. The problem now is the choices have a tendency to be overly preachy. . . . It feels like a club you don't belong to," he said. "People are intrigued with these ideas. They're willing to give it a shot if given a safe, comfortable way to do that and not be targeted by the yoga police."
Revolution Living, the lifestyle unit of his District-based holding and operating company, has planted a flag in the estimated $228 billion sustainable lifestyle market with a $20 million minority stake in Rysavy's Gaiam Inc., a retailer of health and eco-conscious products; and investments in multimedia portal Lime and car-sharing service Flexcar.
Despite their unconventional leanings, one of the more valuable assets of the companies under the Revolution umbrella may be their high-profile connections to the conventional business world. Former Chrysler Corp. chairman Lee Iacocca is a board member and investor in Flexcar. Ex-Hewlett-Packard Co. chief executive Carly Fiorina sits on the board of Revolution Health Group, which is focused on consumer-oriented health care.
Case, who admits to being better at "building companies than running them" sets the general direction by identifying trends. Day-to-day management of Revolution Living falls to Michael Crooke, former chief executive of Patagonia, who is credited with turning around the outdoor apparel maker by instilling basic business discipline without alienating core customers.
At the company's sleek offices on Rhode Island Avenue NW earlier this year, young MBAs pored over financial documents and gazed at flat-screen monitors while being pitched ideas by business partners -- a reflection of the hectic deal flow.
"Everything is a race against time. The secret is out," Crooke said, referring to growing corporate interest in eco-conscious consumers and products.