The Next Big Thing

An Interview With Steve Demos, Founder of WhiteWave and NextFoods


As the visionary who created WhiteWave, the largest organic and natural soy food company in the world, Steve Demos is a living legend. With Silk, he took soymilk from an unknown commodity to something that can now be found in practically every dairy section right beside milk, as well as whipped up in Starbucks soy lattes across the country. WhiteWave’s success proved that organic companies could be very profitable while still being environmentally and socially responsible—exemplifying “right livelihood,” a Buddhist philosophy that Demos built his business model on.

In 2002, he sold his company to Dean Foods, Inc. for $295 million, giving away $15 million to WhiteWave employees, from managers to truck drivers. For several years Demos continued to manage WhiteWave and then, in 2005, Dean and Demos went their separate ways.

But Demos’ story is far from over. After a self imposed “exile” or sabbatical, Demos is back with new vision, a new company, NextFoods, and a new product—Good Belly, a vegan, organic probiotic juice shot. He took some time to fill us in on his adventures, inspiration and the gastrointestinal system.

OP: So what have you been doing during your time off, if you can call it that, and what led you to come back and start NextFoods?

Demos: When I left WhiteWave, I needed to take a big deep breath and see what I wanted to do going forward. I wanted to go full circle and re-inspire myself, so I took off traveling around the world with my wife. We went to 20 countries. The most meaningful of all of it was a revisit to India because almost exclusively all of the inspiration for WhiteWave came out of the time I spent there as a young man.

On that trip, I hitchhiked on the top of trucks visiting gurus with a college buddy, Pat Calhoun, who ultimately became the CFO of WhiteWave. During that time, we became deeply immersed in Eastern philosophy and the concept of right livelihood. It was here that I reconciled a conflict inside myself. I was a product of the late 60s when business was “bad” and profit was even uglier; the headlines were of exploitation and unethical business practices. However, I had been raised by an entrepreneur and capitalism was imprinted in my DNA. My father was hardworking, honest and was sharing profits with his employees back in 1962.

When I went to India I discovered this concept of right livelihood and had the epiphany that there’s nothing wrong with capitalism, there is something wrong with people. If I was to fulfill my own destiny I needed to reconcile what I really knew I was supposed to do and that was to create a positive or enlightened form of business. I left India in 1974 to demonstrate a higher form of capitalism because I think economics and free enterprise are probably some of the most powerful forces on the planet and if we can only redirect all this in its totality toward a positive contribution to society, then we’re establishing a role model for other businesses out there.

Because India is where the deep inspiration and motivation to start a right livelihood business came from, I wanted to go back to that spot. One of my goals I never fulfilled when I was younger was to go to the headwaters of the Ganges, a place called Gangotri. Here, I realized that business and right livelihood are still deeply ingrained in my being. I had a lot of opportunities during this time period to run larger businesses or buy businesses, but those don’t really intrigue me so much as the process of creating, so I guess I’m your proverbial serial entrepreneur who doesn’t know any better than to rub two sticks together and hope they burst into flames.

During this nice little hike through the Himalayas, I also realized that biologically I was changing. My body was starting to have a conversation with me and I really didn’t like what I was saying. We’re probably going to be the oldest or the longest living generation in history to date. Our bodies are going to change as we age and the only way that we’re going to maintain quality of life as we age is by supplementing. I wanted to do this through natural sources as much as I could. I also wanted to learn more about the specific systems and prioritize the most important area to work on. When I discussed it with the doctors and lifestyle professionals I had around me, they were all very adamant that if you really want to help people, start with the digestive system. That’s where all the nutrition is absorbed into the body and that’s where the immune system is established. And the fact is, after age 40, your body stops making certain digestive bacteria. I saw an opportunity to create a right livelihood business to address these needs.

OP: So how do you personally define “right livelihood?”

Demos: Oh it’s very simple, in fact it’s often dismissed because it’s so simple. I can quote it in ten seconds: good for me, good for you, good for everybody who touches it. The product has to be good for society. It can’t take life, be violent or enslave animals. It must be sustainable in the deepest sense, so it’s going to be organic and an environmental steward. During my entire career we’ve only manufactured organic material. Some of it was transitional, but first and foremost we are about right livelihood and that embraces all of the environmental stewardships that are part of an enlightened sense of commerce.

It’s got to be socially responsible because good for “everybody who touches it” means that you have to be giving back to the society from which you’re extracting the wealth—including the employees who work on your project, the vendor chain and the consumers who are buying and giving you their hard-earned cash. You’ve got to share the wealth because if I make a lot of money and I keep it all, how good is it for you, especially if you happen to be an employee? And I can’t beat myself to death and not make a living. If I create wealth and I walk away with nothing, how good was it for me?

So, everything I do, everything I talk about, every ounce of energy I put in, every reason I’m in business revolves around this concept. Most simply put, it’s “the creation of wealth without the creation of guilt.” I think that true fulfillment is found in this concept—not just talking about it, but doing it.

OP: Besides right livelihood, you also have said that one of your missions was to merge science with organic. Why do you think this is an important step for the organic industry?

Demos: Large conventional corporations have been focusing on the “capitalism” part of conscious capitalism and the “livelihood” part of right livelihood for decades. In comparison, our industry is under-skilled, and although we are tremendously steeped in good heart and good intentions, if we don’t couple our disciplines and our skill sets up with science, then we’re going to lose our first mover advantage; we’re going to lose our visionary leadership position. As a startup going up against the likes of Unilever, Proctor and Gamble, Coke and Danone, the only way to extend beyond my marketing savvy was to line up with science, elevating the industry out of what they call the “granola crunchies.” We hear it all the time and it’s demeaning. They say it’s tongue-in-cheek, but it’s really a dismissal of our industry and I don’t agree with that. I think we’re very smart, insightful leaders. So I’m picking up the torch and running with it. I call my new company NextFoods because it’s the next evolution of where food’s going. It’s going to be functional foods that are deeply rooted in verified, validated science. Consumers are so jaded out there that they are not going to believe my marketing. They are only going to believe what a third party, objective, scientific community says. So NextFoods’ goal is to purchase, license and patent intellectual property that’s rooted in clinical studies that verifies the efficacy of our products. We’re going to combine that science with an organic delivery system that is smart in the way it markets.

Our current product came out of the Swedish Lund Hospital. Any time you dump antibiotics into a person, or ward off infections, you’ve got to re-establish gut health. So we found a patent-protected bacteria that had been extracted from the mucosa of the human gut and grew it on an organic oatmeal base. If you look around the world, you’ll find that we’re probably one of the only probiotics that is grown on a non-dairy base. All these large competitors that we’re up against are all dairy people and, the last time I checked, you weren’t born with a cow in your stomach, you were born with this bacteria in your stomach. The bacteria we are using has had around 15 clinical studies done on it. We already have human clinical tests that the Swedish government has permitted health claims on, but we will go through the FDA process in the United States so we can make the health claims here as well.

Meanwhile we are also working on getting this USDA certified organic. There are technical issues due to our launch out of Sweden that prohibit us from making too many of the obvious claims until we make product domestically. The oatmeal, the juice and the evaporated cane juice are all organic, but at this point there is no reciprocity with the Swedish organic certifier and USDA. While the fruits are from U.S. organic suppliers, the oatmeal is currently only certified to EU standards and won’t be USDA organic for the first month or two, so to be on the safe side, we haven’t made any claims yet. The only thing that is not organic is the vitamin mix which is about 6 to 7 percent of the product. Thus, we are in the 93 to 94 percent range on Good Belly being organic now. Over time, I’m sure we can boost this into the 95 percent-plus area. Remember we are a startup at this point and the most important thing is to get the product to market and begin the business process. We have aims to improve much of what we do today.

OP: Unlike WhiteWave, where you were involved in every aspect from production to placement, with NextFoods you have decided to help jumpstart the company and then step back and let others drive. What led you to this approach?

Demos: When I was a young man, my job as an entrepreneur was to do everything because I didn’t know whether I could prove it. I had to be in control of everything because it was a narrow path and I hadn’t identified the path. My job this time is to get a team aligned with the core values and the mission and then deliver the vision and hand it off. What I’m doing with NextFoods is centralized vision and decentralized authority, or “management from the middle.” This is all about the fulfillment of the team. I want them to walk the path and know how to get there. I think it’s very important that right livelihood is demonstrated without the personality involved. We love the hero part but my mission has nothing to do with that. I’m not looking for that anymore. I’m hoping that future interviews aren’t with me, they’re with this team and they’re talking about right livelihood, the mission and the vision. The vision may have come from me, but they are out demonstrating this and actually working it and they will get the rewards. The five senior VPs at NextFoods are all former directors or VPs at WhiteWave. They were hand picked. Then I’ve also taken the retired senior VPs from WhiteWave and put them on the board, so they can mentor the current management team. I’ll be the chairman of that organization and basically the inspiration for the vision. I’m playing Yoda. The intent is to control it at this point so that these people can reach the same levels if not greater levels with NextFoods that we did with WhiteWave. I like the role, it lets me travel and do other things; I work on some other projects and serve on boards. I’m not viewing this as the stressball that the management team is. They’ve taken on one of the hardest things in the world that I’ve ever experienced. A startup business is not meant for the thin skinned.

OP: So what do you think were some of the key factors that made WhiteWave successful?

Demos: It goes back to right livelihood, and I’ll add one thing—perseverance. You don’t know the depth of the difficulties that you’ll face with a business. You’d better be able to point at why you’re doing it, and come up with a right answer to get you through, because if the answer is “I’m doing this to make a living,” there are a lot of ways to make a living that are easier. But if I’m doing this because I understand right livelihood, then that’s very different. Now there is a deep commitment and a passion because I know the world’s better off with this product than without this product. I know that the people around me are breathing life into the same vision that I’m breathing life into, and that’s why WhiteWave was as successful as it was. We were deeply committed to the whole philosophy and that gave us the perseverance to keep going.

OP: Back at the Organic Summit in June, you spoke in a session titled, “Is this the organic we wanted?” So is this the organic you wanted? What do you think of the evolution so far? What have we done well and what could we do better?

Demos: I think it’s exactly what we wanted and it’s exactly where we want to be. We don’t want to lose sight of the fact that life and everything we’re doing is a process. We’ve gone this far through a lot of creativity, spirit and passion but is it flawed? Of course—I haven’t seen anything on the planet that’s not. But we set out to draw attention and make mainstream the concept of organic, and we did that, didn’t we? The question is where we want to be now? Well I don’t want to stop and I don’t think any of the graduates from my class want to either. I think we all want to further this concept and take it into even deeper levels of society, making it not only part of their conscious awareness, but part of their everyday life.

Also, going back to right livelihood, “good for everyone” means that in addition to demonstrating social responsibility and environmental stewardship, the business must be profitable. You can’t just be a bleeding heart liberal; it doesn’t work. You need to be a very effective capitalist. If you are, you amass a great resource called profit and you get to allocate that back to your entire value chain—your employees, community and charities you support. We live in the world that honors economics and money, and there’s no way of escaping this. It’s the common consciousness that we have around us, and if we don’t know how to work with it, we’re just ineffective, we’re dismissed—so go out and make a whole bunch of money. I don’t have any question about the good intentions of these people; most of those in the organic industry really do want to change the world. Just get money into their hands and they’ll do good. Everybody will have a different passion—helping the homeless or starving people in Africa or furthering environmental causes. So, my message in this is: be smart, make money, and figure out how to do good with it, but don’t wag your finger and pontificate from the sidelines. It doesn’t do any good.

OP: Speaking of which, you have mentioned that one of our biggest flaws is that we fight with each other in public. Can you talk about this a bit?

Demos: We’re out there trying to split hairs. Everybody’s trying to perfect the laws and this and that, but those things never will be perfected. They will always be debated. There will always be gray areas and some people cross the line but I don’t think it has any merit in furthering this mission to shoot each other in public. Take it behind closed doors and work it out folks. Life is a compromise. Never compromise the marrow of your core values, but we’ve got to be willing to be flexible because we’re not out to sell elitist food. We’re out to feed the world because we feel it’s a better system. So make it available, even if that means we have to compromise a little in the process of making it perfect. Don’t ever lose sight of making it perfect, but a job worth doing is worth doing imperfectly so long as you never stop working on making it perfect and acknowledge that you won’t ever get to perfect. We’re going to make mistakes. We just have to continually remind ourselves of what our core values are and stick to them as close as possible. I think it’s important for the industry to demonstrate its authenticity by narrowing the gap between its core values and its demonstration of those core values. There will always be a gap but the reality is, you’ve got to narrow the gap. I’m on the board of Sambazon, Traditional Medicinals and Pangea Organics; all three of them meet my criteria of right livelihood or I wouldn’t be on them. They have all the warts and uglies that everybody else has, but they have inspired leaders who genuinely believe in what they’re doing and the gap between action and core values is narrow.

I’m not trying to be the esoteric philosopher. I’m trying to be an effective capitalist who is demonstrating a deep philosophy that’s very easily summed up through action. If there’s anything of great merit out there it is how we demonstrate our values. With WhiteWave there was financial reward but that achievement was nowhere near as rewarding as the fulfillment, which was in two areas: one was the philosophy, but the other was that we did all this in a capitalist society. We actually went out there and did battle with capitalism and we walked our talk. So I would hope that I’ve communicated right livelihood without making it too philosophical. Enlightenment is how you live; it’s how you act. I’m a far cry from it, but I do make a conscious effort.

OP: That is all any of us can really do.