Seventh Generation: Alan Newman and Jeffrey Hollender. A Partnership that Flourished—until it Failed. (2021)
Alan Newman and Jeffrey Hollander co-founded Seventh Generation in 1989, building an eco-friendly household products company from a struggling catalog business into a $150+ million enterprise before being acquired by Unilever in 2016. Their partnership flourished during rapid growth but dramatically failed in 1992 when Jeffrey ousted Alan during a sabbatical, an event that haunted both men for decades until they reunited for this interview.
Summary
This transcript chronicles the founding and evolution of Seventh Generation through the partnership of Alan Newman and Jeffrey Hollander, two unconventional entrepreneurs with markedly different backgrounds and personalities.
Alan Newman grew up on Long Island and moved to Vermont in the early 1970s after rejecting conventional paths. He initially worked in catalog businesses, eventually taking over a failing Renew America catalog focused on environmental products in the mid-1980s. He rebranded it as Seventh Generation (named after the Iroquois principle about considering impacts seven generations ahead) and created an innovative catalog by focusing on customer education and benefits rather than technical features. The business showed early promise, growing from $1 million in sales in 1989 to $7 million in 1990.
Jeffrey Hollander grew up in Manhattan as the son of a powerful advertising executive. Uncomfortable with his affluent surroundings, he dropped out of Hampshire College and moved to Toronto where he created the Skills Exchange, a successful non-profit educational program. After being deported for lacking work papers, he moved to New York and started a for-profit skills catalog business that eventually evolved into a books-on-tape venture, which he sold to Warner Communications for millions of dollars. Researching his book "How to Make the World a Better Place," Jeffrey discovered Alan's work and approached him about partnering to raise capital and grow the business.
The two men became close partners and friends, with Jeffrey providing crucial fundraising abilities (raising $850,000 in initial capital) while Alan managed operations in Vermont. They created an innovative company culture featuring nap rooms, free ice cream, open communication about failures, and an environment that rewarded rather than punished mistakes. By 1990, despite economic recession and the Gulf War, they were scaling the business with co-packing relationships for household products like toilet paper, paper towels, and laundry detergent.
The partnership began deteriorating in 1991 when economic pressures forced layoffs of nearly 50% of their 120-person workforce. Alan, exhausted from working 120-hour weeks, requested a six-month sabbatical to strategize the company's next moves. Jeffrey, feeling abandoned during a crisis, responded with a "Dear John" letter essentially firing Alan from the company. The two men barely spoke for years, though they attempted reconciliation through a marriage counselor.
After Alan's departure, Jeffrey pivoted the company strategy dramatically. Rather than continuing as primarily a mail-order catalog business (which accounted for 80% of revenue), he decided to sell the catalog division and focus entirely on wholesale retail distribution through natural food stores and eventually mainstream retailers like Whole Foods (entered in 1998). This risky bet proved transformative, propelling growth from $10-12 million to nearly $50 million within five years. Jeffrey expanded the product line significantly, including successful ventures into diapers and other household products.
Jeffrey's leadership style evolved over two decades. By 2007, he wanted to focus less on profit-and-loss statements and more on building a broader responsible business movement. He became a public figure, served on the Greenpeace board, and got arrested for activism. However, this shifting focus created tension with investors and the board of directors, who felt uncomfortable with a CEO pursuing activism while raising capital. In 2010, after the company's most profitable year ever (50% growth, $150 million in sales), Jeffrey was fired over a Saturday morning telephone call by a board that preferred the operational expertise of Chuck Maniscalco (the "Gatorade guy").
Meanwhile, Alan had used his severance from Seventh Generation to co-found Magic Hat Brewing Company with Bob Johnson in 1993. Rather than competing on beer quality like other craft breweries, Magic Hat differentiated itself by positioning as a music company that happened to make beer. The strategy proved successful, making Magic Hat one of the top 10 largest craft breweries in America before the 2008 recession caused severe financial problems.
When Unilever acquired Seventh Generation in 2016 for $600-700 million, Alan felt validated that the company he founded had achieved his original vision of becoming international. Remarkably, Unilever invited Jeffrey back to the board a few years after his ouster, allowing him to "shepherd his legacy" within the larger corporation. Both men have since reflected on their partnership with nuance—acknowledging that while they were complementary and shared values, their both strong personalities and desire to control business decisions made long-term partnership difficult. They suggest their partnership might have succeeded with clearer written agreements and better board management, but recognize these personality conflicts may have been fundamental to their DNAs.
About this episode
<p>With its eco-friendly paper towels, diapers, and cleansers, Seventh Generation was one of the first—and most successful—green household brands to hit the market. But in the early 1990s, its two founders had a bitter falling out.</p><p>Alan Newman and Jeffrey Hollender have barely spoken since that time, but they both agreed to come on the show to talk about the business they were both passionate about, and the delicate nature of partnership.</p><p><strong>What you'll learn: </strong></p><ul><li>Why Alan says his great strength—and his greatness weakness—is his tendency to say “yes”</li><li>How Jeffrey and Alan lost their friendship and business partnership after only three years.</li><li>How Jeffrey grew Seventh Generation into a household name–and then got fired </li><li>How two formerly estranged partners feel about partnership now </li><li> Generation into a household name </li><li>Why Jeffrey and Alan agree that having a co-founder isn’t for everyone</li></ul><p><br /></p><p>Timestamps:</p><p>7:55 - Jeffrey makes it big in Canada selling adult-learning courses…before he’s forced to leave the country</p><p>14:15 - Alan moves to Vermont on a whim, and winds up in a mail-order catalog business</p><p>26:56 - Alan and Jeffrey meet for the first time and find common ground: Alan needs capital and Jeffrey has it </p><p>32:38 - An atypical office for 1989: Ping pong table, nap room, and employees get prizes when they make mistakes </p><p>43:00 - Crisis hits … and tears Alan and Jeffrey’s friendship apart</p><p>48:06 - Jeffrey sends Alan a “Dear John” letter, and Alan leaves the company</p><p>54:40 - Seventh Generation grows to new heights… then Jeffrey is fired as CEO</p><p>1:29:06 - Jeffrey and Alan reflect on why their partnership failed, and what it takes to have a good one </p><p><br /></p><p>This episode was produced by Casey Herman with music by Ramtin Arablouei. </p><p>It was edited by Neva Grant. </p><p><br /></p><p>Follow How I Built This:</p><p>Instagram → @howibuiltthis</p><p>X → @HowIBuiltThis</p><p>Facebook → How I Built This</p><p><br /></p><p>Follow Guy Raz:</p><p>Instagram → @guy.raz</p><p>Youtube → guy_raz</p><p>X → @guyraz</p><p>Substack → guyraz.substack.com</p><p>Website → guyraz.com</p><p><br /></p><p>See Privacy Policy at <a href="https://art19.com/privacy" rel="noopener noreferrer" target="_blank">https://art19.com/privacy</a> and California Privacy Notice at <a href="https://art19.com/privacy#do-not-sell-my-info" rel="noopener noreferrer" target="_blank">https://art19.com/privacy#do-not-sell-my-info</a>.</p>
Key Insights
- Alan Newman claims he discovered that focusing on customer benefits rather than product features was critical to catalog success—he emphasized saving money and comfort from a water-saving showerhead rather than environmental benefits.
- Jeffrey Hollander argues that he was able to predict investor outcomes with remarkable accuracy during funding pitches, consistently hitting specific numbers he would announce after leaving meetings.
- Alan Newman asserts that his greatest strength—his tendency to say yes to opportunities—is simultaneously his greatest weakness, having opened doors throughout his career despite limited planning.
- Jeffrey Hollander describes how being abandoned by Alan during the company crisis created feelings of abandonment and anger that led him to write the firing letter, recognizing in retrospect this could have been handled better with written agreements.
- Alan Newman contends that the greatest obstacle to business success is fear among employees about not knowing what they're doing, and that creating a culture where people share fears and ask for help increases productivity.
- Jeffrey Hollander argues that retail profitability per square foot—not environmental benefits—was often the winning argument when convincing retailers to stock Seventh Generation products.
- Both founders claim they were happier being in charge and that their inability to truly share authority was fundamental to their DNA, making partnership difficult despite shared values.
- Jeffrey Hollander asserts that Seventh Generation's products being "less bad" rather than truly good reflects a fundamental challenge the entire green products industry faces, creating consumer confusion about actual impact.
- Alan Newman claims that staying in the business during rapid growth while maintaining control over critical decisions proved successful with his Magic Hat partnership with Bob Johnson, who accepted Alan's leadership role.
- Jeffrey Hollander argues that his unwillingness to give up during impossible challenges, combined with maintaining passion for the mission, allowed him to experience luck when it came.
- Alan Newman contends that being in play during uncertain times causes luck to happen, attributing much of his success to continued engagement rather than pure chance.
- Jeffrey Hollander claims that the company would have been stronger if both founders had remained and found a way to work together, but acknowledges this was likely not possible given their personalities.
Topics
Transcript
Building a business means being 10 people at once. The strategist, the spreadsheet person, the one fixing the office sink. U.S. Bank made a card for exactly that kind of hustle. The creditor and issuer of this card is U.S. Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Hey, everyone. So the team is taking a break this week, which gives us an incredible opportunity to replay an episode that we still talk about today. And even though it ran a few years ago, to be exact, in January of 2021, as you are about to hear, it's probably the most dramatic story we've ever told about a business partnership and what happened to…
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