How I Built This with Guy Raz - Nature’s Path: Arran and Ratana Stephens

Episode Date: May 23, 2022

Starting a business with your spouse can either bring you closer together or tear you apart. For Arran and Ratana Stephens, their business has lasted for nearly 40 years, and their marriage has thrived for much longer. As business partners, they seem perfectly matched: he’s the hard-charging visionary, she’s the practical, business-minded one who sometimes has to talk him out of a bad decision. But in 1985, Arran made a very smart move: seeing how organic food was starting to take off, he mixed up his first batch of Manna bread in a bathtub and started selling it, eventually expanding to national distribution. From there, he and Ratana pivoted to breakfast cereal, initially purchasing a factory that couldn’t make a single cornflake. Today, Nature’s Path sells organic cereals, tortilla chips and other snacks in more than 50 countries around the world. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. April 6th, 1990, we had bankers and lawyers and VIPs. We had Minister of Agriculture was there and other bigwigs. and we could not get the equipment to produce a single cornflake.

You just spent $6 million. What do you mean? You can't get it to produce corn flakes. Or any flakes. Or any flakes. You turn the machine on and it starts going, Zhez, does it actually do that at least? Yes, it would do that.

But the product would seize up inside of the extruder barrel, and it wouldn't come out. It could not. Oh, my God. It did not work. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built. I'm Guy Raz and on the show today how Aaron and Rottena Stevens sprouted their first

organic grains in a bathtub and grew that business into nature's path, a cereal and snack brand that's now sold in more than 50 countries around the world. There are two companies in America that basically own the morning. One is called Kellogg's, the other, the other, General Mills. The top 10 cereals in the U.S. include honeynut Cheerios, Frosted Flakes, cinnamon toast crunch, fruit loops, and so on. In other words, General Mills, Kellogg's, General Mills, Kellogg's, and on and on, with one important exception. Post, the other serial giant in America is in there with honey bunches of oats. But when it comes to the organic cereal market, well, the names are a bit different. You've got your Cascadian farms, Kashi Puffs, Barbara's Puffins,

you know, the names you might see at Whole Foods or a Natural Foods co-op. These are the brands that dominate the organic space, which might sound like a breath of fresh air, you know, plucky little upstarts, until you discover one important thing. All of those brands are owned by Kellogg's, General Mills, and Post. Now, there's nothing wrong with that. Most of these brands were at some point independent, and they're still pretty good products. But over the past 20 years,

big multinationals have bought up many of the organic brands you're probably familiar with, which makes today's story somewhat unusual in that nature's path is both a significant player in the breakfast cereal market and still totally independent. totally owned by its founders, Aaron and Ratna Stevens. If you've walked into a Whole Foods, you've seen their stuff.

The corn puffs with the baby gorillas, pandas, and koalas on the bag, the heritage flakes with its hippie font, and unflashy logo of a field of grains on the bag. And yet, despite almost no marketing, nature's path owns about 3 to 5% of the organic cereal market. That's pretty significant for a company, that started out by selling frozen, sprouted wheat bread from the back of a vegetarian restaurant in Vancouver, Canada. Aaron and Rotna didn't start nature's path until they were in their early 40s.

And even then, it would take at least five more years before they started to get some traction with cereal. And along the way, the two of them built a company that now produces everything from waffles to tortilla chips. The two of them met, well, they basically had an arranged marriage. Aaron was a Canadian traveler and devotee of a spiritual guide in India. Ratna was Indian and also a student of the same spiritual leader. They barely knew each other when they got married. That was in 1969, and they're still happily married. Anyway, you'll hear all about it.

But first, Aaron Stevens grew up on an organic farm outside of Vancouver. But when he was in high school, his father moved the family to Los Angeles. I must say that we had a very loving family, but my mother, I think, went through a midlife crisis. My dad went through his midlife crisis, and they separated. And I went from a straight A student to a straight F student, except for art. And I decided to drop out of school and pursued art. I went down to Laguna Beach and ended up in Venice, California. Aaron, I gather, I mean, you really kind of came of age in the 60s, right?

Teenage and early 20s. 20s and that, I mean, you were, you know, I hate to use this word because I think it's overused, but you kind of made your way towards like hippie culture. Is that right? Is it fairly true? Well, I kind of predated hippie culture. It was then known as the beat generation. Right.

And I met a lot of the icons of the whole beat generation, some great jazz musicians and artists and poets. It was quite a wild time. But it was a time when I got sucked into some of the. darker aspects of the counterculture, which was, you know, substance abuse. And then at the age of 17, I ended up in a monastery up in the Chatsworth Mountains. And there I had a very profound mystical experience that kind of altered my whole perception of life. And so I, from that point on, I became a seeker. I went to churches. I went to, I studied Vedanta

and Gurdjif and kind of a plethora of different spiritual traditions that I was very interested in. And somehow or other I was put in contact with St. Karpal Singh through correspondence, but I really wanted to go to India to be with him. And I finally got my wish in 1967, and I went and traveled with this great teacher who took me under his wing and treated me like a son. and I spent seven months with him there in India. And toward the end of that seven-month period, I thought that when I go back to Canada,

I would like to start a vegetarian restaurant because me being a vegetarian and there was no place for a vegetarian to eat at that time. I'm curious, Aaron. I mean, you're 23 years old. It's 1967. India, I mean, was really becoming an important place for a particular kind of

let's say, spirit-seeking Western visitor, obviously the Beatles famously were among them. What was your impression of India? I mean, when you got there and you finally meet your spiritual sort of mentor and you're in the old city in Delhi, which is a really cool place, was it everything you imagined? Was it what you hoped it would be? Well, on January 20, 1967, you know, the plane touched down in Delhi, and it was like a, it was like a different world, different smells, different, you know, it was the warmth of the place, and there were cattle-drawn wagons and camels in the street, and it was very different from India today. But somehow India felt like a mother in a way. It kind of received me, and I felt this incredible bond to, you know, India. I felt that, you know, some kind of old memories seem to be ignited as soon as the plane touched down there in Delhi because my grandmother was born in India of a British military family,

and she married Dr. Harold Stevens, my grandfather. So I felt very much embraced and loved by India and the people. I learned the language. You know, I wore Indian clothes and it felt like my home. And I felt so out of place when I came back to Vancouver seven months later. All right. So you come back to Vancouver after a seven-month trip in India, inspired by your time there to open up a restaurant. It was called Golden Lotus.

What kind of restaurant was it? Was it Indian food or all kinds of food? Well, my concept for vegetarian dining was something. I wanted to show people how tasty it was, how nutritious and inexpensive it was to eat this way. And so I borrowed some of the best recipes from India, from Mexico, from China. Vegetarian? Yeah, all vegetarian.

And it became extremely popular. It was just the right thing at the right time. How did you finance? I mean, you're 23 years old. How did you finance a restaurant? Well, I had $7 and hope and a prayer. But how did you do it? I mean, you had no experience in the industry.

You didn't, maybe you were decent cook. I don't know. How did you do it? Not really, but I borrowed $1,500 and I found the assets of a failed restaurant about 10 blocks away. I bought those assets for $500. I carded all the equipment on my back because I didn't have a car. Back to the restaurant, installed it. I had to hire a couple of people.

And by the time I'd run out of money, the doors opened. I made the food, I prepared it, I served it. Some days there were only maybe $25 in sales, and then other days were really busy. And eventually it caught on. There was an article in the paper that praised it to the heavens, and it was a tongue-in-cheek article. And from that time on, the place was busy. It was jammed. Aaron, did you own the business outright, or did you have partners at Golden Lotus?

No, it owned it outright. Right. That's pretty impressive. And running a restaurant is a complex business. I mean, you've got to get, you know, the right amount of food and the right amount of supplies, and you don't want to buy too much, and you've got to figure out how to price it out, and you've got to hire chefs and kitchen staff and wait staff. How did you manage all that?

I mean, just the logistics of it. Do you remember ever feeling overwhelmed by it? Oh, yes, especially when, you know, having to work like 14, 15 hours a day, and there wasn't anything to show for it. Those are the times when I would do my practice, I would meditate and I'd find that inner direction and the peace and calm and clarity of mind. Let me turn to you, Ratna, first. You were also born in the 1940s in what is now, I believe, Pakistan. Yes.

But when you were still pretty young, your family had to flee the country. It was during the partition in the late 1940s, it was very chaotic and violent time. And you eventually resettled in India. But despite all of that, I read that she actually had a pretty happy childhood. Yes. The childhood was beautiful. I was adopted by my grandmother. She never had a daughter.

So she said to my mother and my father that you guys can have more children. But I'm a widow. And I would like to adopt your child, your daughter. She gave me tremendous amount of love and care. She was not educated, but she knew the value of independence. She felt she's a daughter and she need to go to university. Somehow my father and my uncle objected to this. They said to her, so you want her to be a lawyer or a doctor,

she should be married off. And she said, you mind your own business. she is my daughter and she's going to be what she wants to be. She knew the value of education. Wow. I want to jump ahead a little bit and understand, Erin, how you and Ratna met. You took a, from what I understand, you take a trip. This is your second trip to India, 1969, presumably again to meet your sort of spiritual mentor.

68. It was 68, not 69. No, and 69. Okay. I was there for six months. I left the restaurant for six months. Wow, you just left the restaurant in the, presumably in the hands of competent people who kept running it. Yes.

How did you, tell me how you met Ratna. Where did you, where and how? Well, both Ruttena and I were students of St. Kirpal Singh. So we had this common spiritual connection. and the birthday of our mentor, I think it was February 6, 1969, the next day after the celebration, there were probably 10, 15,000 people that had come there. And a friend of mine came up to me, and he said, Mr. Arunji, would you like to marry an Indian girl?

And I said, I don't know. If there's some compatibility, I don't know. And anyway, that evening I was introduced to Ratna at a dinner table where she sat at one end of the dinner table and I at the other. And we were both kind of embarrassed, I guess, looking at our plates. And after some time, I kind of looked up from my plate to see what she looked like. And she looked up from her plate at the same time. And our eyes locked there for a moment. But I felt something there.

It was a few days after that meeting that I, I said, this is the one I was meant to marry. But before that, I just, because you are neither Hindu nor Indian nor Punjabi, I just said the person who introduced us, no way, I'm not marrying. Indian girls did not marry, they did not marry foreigners. That was just out of the question. But at least, Radna was, at least was he handsome? Well, she can answer that.

He was dressed in simple Indian clothes. And I said, he's handsome, but the way he's dressed, it doesn't seem very good. You're the name of thinking, I'm not going to throw away my future with this guy. Right? I mean, but obviously you did get married. And so what, I mean, because it essentially was kind of like an arranged marriage in a sense, right? Yes. Yeah, we actually ended up getting married without dating, without living together.

But it felt perfectly fine. It felt this was the way it really was meant to be. We got married and fell in love in that order. It's remarkable because, of course, arranged marriages are still very common in many countries around the world. and work, right? And often times, they work better than marriages in Western countries that are not arranged. But I've never, I don't think I've ever heard of an instance of an arranged marriage with somebody completely from the outside. You know, somebody coming from the West to India.

Was that unusual at the time? It was quite unusual. Very. My mother and father didn't quite understand it at the time. But they gave her their love, you know. Yeah. So, all right. So, Radna, you agreed to.

marry Aaron and he was a Canadian and I mean it's crazy because obviously you're still married so it's worked right we know the ending of this but let's go back to 1969 because if I was if I was there I'd be like right now I don't know man this is a little it's a little risky here you know this guy you don't barely know him he's like Canada you have to leave but but clearly you were like let's do it and and you agreed to move to Canada with Aaron? I had an ardent faith in our teacher. And many people talked many good things about Aaron.

So when I was talking with a guy who introduced us and he said, listen, daughter, if your teacher is not against it, why should you worry? Wow. I said, are you telling me that our teacher is. for this marriage. He said, otherwise, I would not have been bringing this proposal to you. Yeah. I said, fine. Wow.

When you trust and you have faith, every doubt dispels. Wow. And we also loved each other very much. Love came afterwards, but starting, there was faith. You believed in the guidance of your teacher, but you did follow. in love. And that took some time. Very much.

We were still in love. That's good. That's good. I'm glad to hear it. Good. And, Ragnah, how was your, at the time, were you already fluent in English and sort of, that was no problem? My English was not very good as far as speech is concerned. I used to just laugh it off.

I said, okay, come on. Tell me how to pronounce a girl. And you won't believe it. it took me a month how to pronounce girl. I used to say girl. Right. So my pronunciation and sometimes my sentence structure was not very good. I'm sure Aaron's Hindi was much, much worse.

It was worse. It was worse. But all right, so you get to Canada and Aaron, you have this restaurant, Golden Lotus. It's 1969. So I'm assuming the both of you go. right back to work at the restaurant. Right back to work. And Ratna, had you ever been involved in a food business at all?

Do you have any experience with food? No. Before 1969, I was never involved with food business. I didn't even cook. My father did have a food business. You know, this is sugar-coating almonds, sugar-coating, pistachio. But that was not my area of study. I didn't care.

I mean, that's my father's work. And what did you do at the restaurant? What did, I mean, how did, what was your job there? Do you remember? I cooked. You cooked? There was a very nice woman, it was called Mrs. Nagra. She taught me how to cook, and I was a fast learner.

You know, she was making 75 cents an hour. I was making a dollar, and then she went up to a dollar, and I went up to a dollar in a quarter. You know, one thing I want to say about Ratna, she brought her, she brought her blessings. to it in a way. We have a very dear friend. He's now passed away just recently. Sid Kaiser. He used to say about Retna,

he said, Retna can make a nickel scream. Not now. She knew how to save money. She was very, very frugal. We were both very frugal. And the workers in the restaurant decided that they wanted to turn it into a cooperative. So I decided,

okay, you can have the restaurant for $2,500. So I sold the restaurant for $2,500 because I wanted to be free from it. I didn't want to have multiple partners. Because a cooperative would mean one person, one share, one vote, and all that. And all of a sudden you had a lot of chiefs. So I decided to go off and eventually started a little a store called Joti Importers, where I imported Indian goods. And meanwhile, Retina was pregnant with our first child.

And this was in Vancouver. In Vancouver. Yeah. And so Ratna was making muffins, which we sold in the store. And she had all these burn marks on her arms because she would, she kind of burned her arms many times when she's pulling the muffins out of the oven. Are you also selling Indian food as well at the store? No.

No. It was called, quote, then, health food, you know. So how did you decide to start? I mean, because this was a store that was selling textiles and things like that, how did you decide to start selling food in the shop? I always loved food. I love the whole concept behind organic food and whole food where in those days, you could only get whole wheat bread in one store in Vancouver,

and then we started selling whole wheat bread. And there was a doctor in Vancouver who was writing prescriptions for whole wheat bread. Everything in the supermarkets was white bread. was white bread, white flour, white rice. And so in 1971, we opened Canada's first large natural food supermarket on the corner of 4th and Burrard. And we had a lot of trouble in those days filling the shelves because they were not that many products available.

But we were the first store to carry tofu, you know, soy-based products. Where were you sourcing it from? It was hard to get that in 1970 in the store? I'd go down to Chinatown with my VW van and loaded up with buckets and buckets of tofu and bring it back to the store. So you could tell that the market was just becoming ripe for natural and organic foods. And clearly there was people were coming in. You were a market for it. So I guess around 71, you decide to open a bigger store to sell more, more prices.

It's called Lifestream. Do you remember how, I mean, today, right, the barrier to do that. In a place like Vancouver would be enormous, right? Just getting the space and the lease and the real estate. And you'd have to put so much money up and there'd be lawyers and real estate agents. Was it just easier to do it in 1971? Yeah, it was a lot easier. There was very little red tape.

And rents were cheap. And believe it or not, that store was filled with customers. And most of them were hippies and young people and little old ladies with fly hours in their hats. You know, I mean, outside there was this notice board for people who wanted to go down to Mexico or California or whatever. It says Aquarius wants to meet a Capricorn to travel with. It was pretty far out. I mean, it was a happening place. And that business, it doubled every year for several years in a row. So it was, and how big was that store? Well, it seemed huge at the time. It was about 4,000 square feet. And we built all of our furnishings or what he called

fixtures. We built them all out of wood. So it was a very organic, natural feel to it. Okay. Wow. So, but that's not in, yeah, it's pretty good. And, you know, I remember I interviewed John Mackie, the founder of Whole Foods on the show a couple years ago. We talked about his first location in Austin. And, you know, back in the late 60s, there weren't, I mean, there was no haines celestial or, you know, these massive organic food brands. nature's path. There's nothing like that. No, there's a lot of mom and pop. Right, a lot of mom and pop stores. So how did you, tell me a little bit about how you filled

a 4,000 square foot store with natural products. Where were you, I mean, were these mostly American companies? Were they mostly Canadian brands? Well, I imported directly a macrobotic line from Japan. One of our biggest suppliers was Arrowhead Mills out of DeF Smith County, Texas. And that's like flour. It's like green. All different types of grains and stuff. So we were importing products from aeron, bottled oils and sauces and what have you. When I saw things that were selling quite well, I decided to start bottling them ourselves

so that we could offer the products at a better price to our consumers. So we had a warehouse on 6th Avenue, not too far away, where we bought. We bottled things. We bottled oils, juices, sauces. We made nut butter and jams and jellies and all kinds of stuff. Right. And at the back of the store was a small restaurant that was owned by me and Aaron. And the restaurant was like a takeout restaurant in the back? No, there was about 15 seats. But very profitable because my wife was running it.

Nice. And so you've got this store and the rest of it. restaurant and the store, was it profitable pretty quickly or right away? It was profitable. But we didn't know how much because we didn't really have a proper accounting system. Yeah. You know, in the first year, my accounting system consisted of a couple of Apple boxes into which the receipts would go and then I'd hire a bookkeeper at the end of the month

to sort it all out. So it was really hard to know exactly how much profit, but we were making profit, but everything got plowed back into the business. And how much profit it made, I really don't know. And from what I understand, like, Erin, you focused on the store, and Radna, you focused on the restaurant in the back. Is that right? That's true. Restaurant and the family.

The kids were very young. Yeah. I needed to give them attention. How did you guys manage that? You had, I think, your first child, you would have four kids. You had your first child shortly after you arrived in 1970. Yes. You know, back in India, you would have had five.

family to help you, have had relatives. And so how did you manage? Tell me about it. Rutten is a, she's kind of a superwoman, you know. Yeah. You know, guy, I'm surprised at myself. I just wonder how did I do it? Yeah.

And so from what I gather, you had two retail stores in Vancouver by 1980. You had a warehouse that was making things like peanut butter and yogurt. like 20 to 25% of the things you were selling at Lifstream were your own products and brands. You had $7, $8 million of annual sales. So were you... No, it's about $12 million. It's about $12 million. I mean, better.

I mean, did you feel, I mean, $12 million in annual sales. Now, it depends. Of course, there are expenses and there's rent and there's employees. But did you feel financially secure at that point? Or do I have that totally wrong? Well, yes and no. that continual growth of the business required more cash than what the profits would be. Okay, so there was a point where I brought in a couple of partners.

To get some financing help? Yeah, to get some financing and also their talents as well. These were other people who had experienced in the natural foods world? No, they were just friends. Yes, friends who did not have any experience in business. But if they had no experience in business, why'd you bring them on? You asked him. I don't know.

I wasn't very practical, you know. Wait, yeah, tell me this story. There was a friend of yours and this friend wanted to join. And tell me what you thought. You were thinking, what? I thought we were really aligned, you know, in every possible way. And I said, well, why not share the business, you know? Yeah.

And Brennan was laughing. I know where this is going. But I want to hear the story. I just trying to understand. Did you feel like you needed a partner because you were, I don't know, you wanted just that extra confidence that there was somebody else in the foxhole with you? Yeah. Somebody would also, he had a good job outside and he was putting some of his salary into the business.

Okay. For $33,000, Aaron gave away one third of the business. Wow. Yeah. And I kept on saying, Aaron, please. So we did have some discussions upstairs in our bedroom. So you gave away a third of the business to a partner. And this was somebody who was a friend.

And how did it go? Did it work out okay? No, it didn't go well. It didn't. By 1981, it became almost unworkable. I was the first one there in the morning and the last one to leave. I was the one that had all the heavy responsibilities. My other partners did not have any house mortgaged, and we had our place mortgaged.

So you had more than one partner? I had two partners. Okay. You call them Frick and Frack. Anyway, they all felt that I shouldn't get more salary than them. Everybody should be equal. Right. Okay.

There were a number of things. And it came time where we needed money from the bank because of our growth. Our growth trajectory was like 30, 40 percent growth a year. You needed money from the bank to finance that growth. We had to get money from the bank at that point. Yeah. If I can give you my perspective, guy. Please.

When the time to give assurances to the bank, I was not willing to do that. I said, sorry, Aaron, this is not right. And, you know, despite what I said to you, you gave the shares for a very little amount. And I'm not going to give the guarantee. Yeah. So I refused to sign a guarantee, a personal guarantee. to the bank and Retina was behind me saying, I'll go to personal guarantee over my dead body. Anyway, I said, unless you agree to sell your shares to me.

Wait, you said this to your business partners. You said, look, I'm not going to apply for a personal guarantee unless you guys sell your shares back to me. I said at that point, sell your shares to me or you buy my shares. We had a shotgun agreement, you know, a shotgun clause, but nobody signed it. All right, so it had no value. So we ended up selling the business to a completely outside party. All right. So you sell, so you basically, you and the partners decide, to resolve this,

you're just going to have to sell this business. You've been doing 12 million Canadian dollars in revenue a year. So I'm thinking, you know, take that and at a multiple of five, that's a $60 million business, which should be a pretty good. outcome? Is that about right? No, no, we sold it for less than $2 million. Wow. How is that possible? Well, that's a question. The purchasers said, we want you to remain as president, right? Right. And we will give you 10% of the business back. Oh. Okay. So it felt like a not a bad deal. Right. However, when it came down to it, I said, well, what do I have 10%?

of? Do I have 10% of the retail stores? He said, no, we decided to separate that off. I said, what about the real estate that we had? You said, no, that's in a separate business. And I said, what do I have 10% of? He said, well, you have 10% of the wholesale part of the business. And I said, well, that's hardly even making a profit. These other things are making profit. He said, well, that's up to you to make it profitable. Anyway, I resigned. I left it, Wow. It was some bitterness there. I'm sure.

Do you remember, Rodna, what do you remember about that time? Do you remember feeling like it was a defeat? Aaron is an innovator. He's driven. When he falls down, he gets up, shakes all the dust, and keeps him running again. So we could have done much better.

But that inspired me to find out what is profit, what is lost? what is book value, what is cash flow. So I took a securities course. Wow. So that whole experience, I mean, which was a tough experience, you basically said, okay, I need to understand what happened here and to prevent that from happening again.

So you basically dove into learning about finance and accounting. Yes. Aaron is a creator, not a wholesaler. I knew it was not going to last. So knowing what we know now, we did make a mistake. When we come back in just a moment, how Ratna and Erin figure out how to start a new business without partners and how they cope with a brand-new cornflake factory that cannot make cornflakes. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

Hey, welcome back to How I Built This. I'm Guy Raz. So it's the early 1980s, and because of a bad business partnership, Erin and Ratna have just sold their health food store Lifestream. But they're still running their restaurant in the back of the store. And business there is doing so well, they decide to open a second location, and they call it Woodlands. It was a big restaurant, 120 seats. Oh, wow. Yeah.

And basically, it served a couple million meals out of there. it became a very popular restaurant. What do you think made it so popular? Ratna. Ratna made it. Food and people. Tell me what I would eat there if I got there in 1981. We'd get like a lentil soup or a tofu stir fry or like a chickpea curry.

Aspanocopita, lasagna, musaka. Oh, yeah, nice. Tofu Spanish pie, chana. That sounds good. A huge salad bar. A great selection. of fresh baked pastries. Oh, nice.

I mean, this place was jammed for lunches and for dinners, and always making money, and it was being really well-run by Ratna. And it was making a good 25% profit margin on it. In the meantime, I got kind of bored of being in the restaurant business, and so I started manufacturing our first product, which was in 1985, was born out of the back of the Woodlands restaurant.

It was called Mana Bread. It was a sprouted organic loaf. Like a Zikil bread? No, no, quite different from that. This one has no yeast, no sugar, no salt. No oil. No oil. Got it.

You get bored of the restaurant business and you're thinking, I want to get back. Because you had made, you've been making your own products. You had a company that made peanut butter and yogurt and other products. So did you start to think, you know, I think I want to go back and start something new around food, making food? Well, the concept there was, look, if a company selling sugared, flavored water, which is bad for you in the environment, can become a multi-billion dollar brand, why can't we make something that's healthy and take the lessons from these big companies, make a really big company out of something that's good for people and planet? And you started, you started to have this conversation in the early 80s? In the early 80s, probably in 1984. And so in 1985, nature's path was launched out of the back of the restaurant,

and it quickly outgrew the large kitchen that we had in the restaurant. But just let me ask you, what was nature's path going to make? The idea from the beginning was inspired by PepsiCo and Coca-Cola. In a way, it was inspired by their business model, not by their product. It started with manor bread. Yeah. And the main ingredient was sprouted organic grain. When you sprout grain, you convert the starch in the grain into maltose and other complex sugars.

Right, right. And therefore it becomes sweet without adding any sweetener. And it's really delicious, kind of like cake. But manor bread has a limited shelf life and limited appeal. It's very good for people who are purist and healthy. So, Brett, had a short shelf life. So I'm assuming in order to sell it, I guess you had to sell it frozen, right? Correct.

Yes. Okay. Where were you selling it at the restaurant? No, no. We sold it through a network of distributors. Oh, I see. And stores in the United States. Wow.

And Canada. And Canada. And the brand was called Nature's Path? Nature's Path, Mana Bread. Right. Sold in the freezer section of, I mean, Whole Foods was already around. There was Mrs. Gooches. There was bread and circus in the U.S.

We were in all of them, and it sold very, very well. So it became a several million dollar a year business. Just the man of bread. Just the man of bread. And by the way, by 1985, were there trade shows already for natural foods? Yes. There was the Natural Food Expo in Anaheim. So were you going down there and setting up a booth with,

Wanted bread? I went down there in 1985. We couldn't afford a whole booth. So we shared a booth with another company from Vancouver, an eight-foot booth. They had four feet, and I had four feet. And at the trade show, I was there with my daughter, Gerdib, our daughter, Grideep. And one day, as customers would walk by, they wouldn't even notice the booth. So I went out there.

I was kind of like one of those hucksters, you know, I had to say, Yeah. Come and try our man of bread. Come try my manor bread. And come and taste it. And it was great. And I wrote up orders from probably a hundred different accounts. Hmm.

And then I took it to the distributor down there and I said, look, I've got all these orders here. I would like you to carry man of bread. Wow. So based on the orders that I was able to get at the show, we got wholesale distribution across the United States for manna bread. Needless to say, you don't make manna bread anymore. No. But this was really, this was the beginning. This was the first product.

But already in 1985, you knew that you were going to develop a line of different products. Is that true? Yes. And making Manor Bread probably. Were you making it in like a, did you rent space in a kitchen? Did you just use a third-party manufacturer and give them the recipe to make it for you? Well, the restaurant space we had was quite large. It was about 6,000 square feet.

Okay. So you could have a large. hire people to make it. Yeah, we had a bakery in the back. Right. And because they worked very well and they're inexpensive, I used a couple of bathtubs to do the sprouting of the grains. Of course, when we moved the Man of Bread operation out of the restaurant

because we outgrew it very quickly, we had to rent a space. And I had special stainless steel containers made for the sprout operation. And then I started adding some other things, other products to that mix. Because as Ratna said earlier, we were facing a limited amount of business

with the frozen product because it was frozen. Yeah. So I started to think about what kind of product could we make that has a good shelf life on it and we're not dependent on freezers. And I thought, well,

why not organic breakfast cereal? That's something that has a shelf life of, you know, 10 and 11 months. So I found, I found a copacker outside of LA that made the product for us. I said, it has to be organic. And they said, oh, yes, yes, it's going to be organic. But the only thing organic about this company was its name.

So the word organic had no meaning behind it, really? It had no meaning. It had no teeth and no rules or regulations. And then I went to the owner of the company that was making them. And I said, you know, I've been asking for an organic certificate, at least, you know, an affidavit. that all the grains and all the ingredients and the cereal are certified organic. Yeah. And he said, he said, organic, shmorganic.

He said, he pointed to the table. He said, if there's carbon in this table, it's organic. And I just, from that moment on, I said, I'm going to make my own cereal. I don't want to be dependent on people like this who have no ethics. There was no certification at the time? There was no certification at the time. No Oregon Tillith or whatever it's called. No, Oregon Tilt.

wasn't around yet. It was about to come, though. But you are the one who helped create those and implement those rules, Aaron. Yes, I've been a champion for organics right from the very beginning, and I said, look, because people are abusing this term organic, we need something that has laws behind it, has teeth behind it, so that if anybody breaks these rules or these laws, they'll pay a fine and they'll go to jail. Yes, let's put them in jail. Yeah. The third party organic certification was born in the late 80s. And one of the first was Oregon TILF. Yeah.

I don't think USDA came around until the 90s. No, I was involved in the development of the USDA organic rule when I served on the Organic Trade Association. So you came to the realization that cereal, there was an opportunity in cereal. And I want to ask you about that. First, to you, Aaron, because I know, Rodney, you wouldn't. fully come into the business for a couple more years, but you were still obviously involved. What was the first kind of cereal you started to make? It was called mana, multi-grained flakes, manna, millet, rice. Yeah. Right. And so it was basically

these kind of flakes made from millet. Millet and whole grains, different whole grains, yes. And of course, I'm assuming you couldn't make it yourself. So you were working with an outside sort of manufacturer to make this. And, and, and, you, and, you, you were working with an outside sort of manufacturer to make this. And how did the cereals do? I mean, were they selling okay? Yes, they sold extremely well. We were actually selling truckloads of cereal before long. And we knew we had a tiger by the tail there or the tail had us.

So you came to the conclusion that you wanted to make your own cereal for a number of reasons. First, you could do quality control, but also over time it would be more economical. But building a factory would have been very, would have been very, expensive. From what I gather, even, I mean, even in like by 1987, your combined revenue for the, for the, for the, for the, for the, for the, for the, for the, for the, for the, for the, for the, for the, for three million dollars, which isn't bad, but it's not, I mean, it, it, it, to, to, to build a factory would have been hard. It ultimately cost about six million dollars to do. So how did you do? Did you go to, did you have to start to go to banks to see if you get loans?

Yes. First of all, I went to the Western Economic Development Corporation, which was a federal organization that loaned money to businesses. Maybe like the small business administration in the U.S., some like that. Yes. And we went to the Royal Bank, for example, the largest bank in Canada, and they said, you guys are going to get killed by Kellogg's and General Mills. How do you think you're going to survive?

Of course. And they didn't want to give you a loan for that reason. Nobody would touch us. And finally, we found a smaller bank that actually decided to back us. Canadian Western Bank. You said we're going to make organic cereal in our own. And I guess we should explain this because a cereal factory is actually very complex because you're basically making a mush, right, of all these whole grains.

And then putting it through like an extruder, which is like something that you make sausage out of. And it just pushes it through and then you've got to shape it and then bake it and dry. and toasted. There's a lot that goes on just to make a cornflake. That's right. So tell me a little bit about how you, I mean, 1989, you decide to start building a factory. Where do you even begin? I mean, you get the loan, but then where do you get the equipment and where do you get the production lines and all those things?

Well, we found a supplier that offered to build us a turnkey cereal factory. So basically something that you just walk in, it's all there, you open it up, you hit the go button, and then done. It was using a very large extruder. They had never built an extruder this large for breakfast cereal. They had built smaller ones. This was a 138 millimeter size screw barrel. But they had only made 72 millimeter extruder barrels before that time. And just out of curiosity, how much cereal could that make a day, what they were building you? How many bags is there? Do you remember? Well, it would be about 2,000 pounds an hour. Wow, that's a lot of cereal. Okay, so you are on fire here.

You're ready to go, and they build this for you. By the way, you are in now. Like, you guys are kind of underwater, right? Because you took out this big loan to do this. Were you nervous at all about taking on so much debt? We were pretty jazzed. We were pretty pumped up. We felt that, I felt, anyway, I felt that we could overcome the obstacle.

I've always been a very strong optimist. Yeah, of course, there was some nervousness, and I can tell you that on the day of our opening of the factory, which was April 6th, that was my father's birth, where I remember the date, April 6th, 1990. The opening date came, and we had bankers and lawyers and VIPs. We had Minister of Agriculture was there and other bigwigs, and we could not get the equipment to produce.

a single corn flake. Or any flakes. Or any flakes. You just spent $6 million. What do you mean? You can't get it to produce corn flakes. It could not. It did not work.

Because the turn key. What do you mean it did not work? You turn the key. This company had never produced a large extruder. Proven. And proven it on cereal. So when you scale up... I'm just saying you turn the machine on and it starts going,

does it actually do that at least? Yes, it would do that. But the product would seize up inside of the extruder barrel, and it wouldn't come out. So what we did on that opening day, we did not turn the factory on. We invited everybody there, and we went out and bought the big giant competitor's cornflakes, and we sprinkled them on the conveyor belt. And then people asked her, how come the machine is not making noise? We had to come up with an answer pretty quick.

We said, well, it would be too noisy to start all the equipment up, and we wouldn't be able to hear each other. So you basically put another brand's corn flakes on the conveyor belt to make it look like your factory was working. That's right. It's like a Potemkin village. That's right. Take it till you make it.

Yeah. Wow. Did anybody know? Nobody knew. They did not know you were faking this. Our people knew, though. Our people knew, but nobody else out. Wow.

I mean, you had to, right, because you had to figure out what to do. Yes. But it would have been so embarrassing, right? There was press there. That's true. So they just saw these beautiful golden cornflakes in the conveyor belt and snapped pictures. And that was it. Yeah.

But this is, you're still, everyone leaves the factory. The machine is still not working. You've just paid $6 million for equipment that doesn't work. So what did you do? We struggled over the next few months. We struggle like anything to try to get this equipment to work. We started producing it in August of 1990. Yep.

Truck loads. Truck loads. Truck loads of product as hog feed. Wait, sorry, you were making thousands of pounds of product that you would send for hog feed? Yeah. Yeah. Yeah. Why wasn't it good enough?

Was it the flavor? Was it the texture? If it wasn't up to our high expectations, we would not sell it. We couldn't really sell it for more than a penny or two a pound. And we'd rather give it away than sell something. something that is less than optimum quality. But when the machines were not running, we kept on working, improving, finding help from the manufacturers, different manufacturers, and finally took over three months to produce the flakes.

But three months is a long time to waste so much food. Yes, waste a lot of money. Very many businesses could survive that, right? I mean, that's just, I would be losing my mind. I would be shouting at the guy who put in the equipment. What are you doing? This is defective. Well, actually, we threatened to sue him.

And rather than face a lawsuit, he came up and settled out of court and reimbursed us the entire cost of the equipment. Wow. Okay. But now you've got bad equipment. I guess that's not bad. It was more or less free. But how did you fix it? Well, we found a consultant that used to work for that person, and he said, well, let's try something here.

Let's try adding a little bit of water here to the mixer and the conditioner. And oil. And a little bit of oil, vegetable oil. And remarkably, everything started to flow and work. It's just a simple, simple solution. But those were a very difficult times, guy. You know, many people from restaurant I sent to the factory to work. because they needed people.

And more than half, they left because they said this company is going to go bankrupt. Wow. Because we are throwing away so much cereals. They used to come and talk to me. Wow. Yes. So you were maybe headed towards bankruptcy, maybe not towards bankruptcy, but you were not, there was a downturn in your business after this factory opened, right?

No, definitely. We were headed towards bankruptcy. I remember at times the factory could not afford the payroll. So luckily I had some money and I said to Aaron, I'm going to loan you this money. You had money from the restaurant. Yes. And so you said, let me loan this business some money. Yes.

But meantime, I guess Aaron kind of recruited you to come work in the factory, right? that basically said, look, I need you here. I certainly did ask her. I had to, almost on my knees, I had to ask, please come and help me here. And you form, sort of, quote, in quotes, formally joined, I guess in 1992, Ratna. Is that about right?

Yes. But I have some condition before I joined. What was your condition? That he will not have another partner. It will be family business. We will be the partners. And he will not interfere what I will be doing. You know, Retna has this tremendous strength in finance, and she has a great understanding of it and of people.

My strengths were in creativity, in creating products that became very successful, and in marketing and sales. But operationally and financially, those were my weak points. But see, this is an important point, right? Because you have enough self-awareness, Aaron, to understand that that is a weak point, right? That you have that weak point. And so in order to fill that gap, you have to find the person and the person happened to be your wife. So you were very lucky that your life partner was also just perfectly placed to be your business partner.

Who would have thought, you know, when we got married in 1969, that this shy, demure, pretty girl, you know, had such a power behind her. When we come back in just a moment, how Aaron and Ratna start to get nature's path, into the major grocery chains and why when some very big companies offer to acquire them, they say no. Stay with us. I'm Guy Raz and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1995 and Aaron and Ratna have sold off their restaurant business and are fully focused on getting Nature's Path cereals into more stores. And they're aiming for all kinds of stores, by the way, not just the little,

mom and pop organic markets. Right from the very beginning, I had the philosophy of that we will sell to anybody that wants our products. We will sell in the supermarkets. We will sell in co-ops. We will sell in natural food stores. I didn't feel that our products should be confined to any one group of people. So right from the get-go, we were selling to Safeway and to...

And this was Safeway Canada or Safeway, USA? Yeah, Safeway Canada. And then we parlayed that into the Safeway USA as well. Was it hard to get on the shelves at Safeway? I mean, that's a massive, huge supermarket. We pled poverty. We pled poverty. We said, look, you know, we can't afford to pay all the listing fees.

Right, because this is the thing people don't understand. You have to pay the supermarket, right, to place your product. Millions of dollars. It's like being in the app store. You've got to pay them a cut of your app. If you want your stuff in a supermarket, you got to pay them for the right shelf space and, right? In the beginning, they took pity on us. And so we would get away with just a free fill of product.

It's not that way anymore. It's changed. Yeah, it's changed so much. But let's just back then to get, I mean, how do you get into Safeway? Was it, I mean, and even when you did get into Safeway, I'm assuming it was just a tiny little bit of shelf space, not much. We had a former Safeway and Woodward's manager. He was our VP of Sales.

And he had a lot of connections at Safeway. So he would go in there and he said, look, we're going to stack them high and we're going to watch them fly. And so we would get end aisles and we blow out hundreds of cases a day out of certain stores. And what was the value proposition? What was the value proposition on the bag? Because, again, we have to remember, 1995, the average consumer was not as educated about organic and natural as they are today. That was our job. Our job was to educate.

We tried to educate our consumers with every. purchase about the value of organic farming, you know, the importance of avoiding GMOs and all these other things. So we even got into deep trouble with the grocery trade over some of our packaging materials. When we said contains no GMOs, we were approached by the Grocery Council of Canada and said, we're going to boycott you unless you take this off your bags. Yeah. And that became a big issue in the press. But the press tended to take our side because they say, why is Goliath picking on this little tiny company? So here's my question, right?

If you were in grocery store in 1995 and you had an option between Kellogg's cornflakes and nature's path cornflakes, which were, I have to assume, significantly more expensive because what you were selling was a different quality, organic, natural, was going to be more expensive. if the consumer didn't fully understand what they were getting, how are you making the case to them that they should go for yours? I think there was kind of an awakening happening in North America where people began to become concerned about preservatives in packaging, the preservatives in the product.

They were concerned about the cancerous effects of pesticides. And so, you know, our products were grown without any of these chemicals. I was interviewed by CBC way back in 1971 in our store, and the guy asked me, where do you think this organic movement is going? I said, it's going to be like a tidal wave. It's going to wash over everything. And it has happened.

Organics has now become mainstream, and it's not so unique anymore, but in those days it was unique, and people were willing to try something unique. As long as it tasted good. All right, so you start to really kind of make inroads into the supermarkets. And meantime, by the late 90s, I guess you are, in a sense, kind of positioned.

And we've had conversations with other natural brands, you know, natural products like Seventh Generation, the cleaning products. They were in a similar place in the late 90s where they started to ride the Whole Foods wave because Whole Foods just went on a tear, started kind of, you know, buying up Mrs. Gooch's and bread and circus. and really expanding across the U.S., and it's just the whole category of the natural and organic food just exploded.

Was Whole Foods? It must have been really significant to your growth. Yes, Whole Foods has always been one of our best clients, best customers, but we also sell to Costco and Kroger and all the rest of them. Sometimes the natural food store says, well, why don't you just sell to us? Why do you sell to the supermarkets?

And I said, because we want our product to get everywhere. And presumably, clearly, you didn't want to just be for like, you know, crunchy granola eating people. You also want to appeal to families and kids, which is, which is, helps explain where you have gorilla munch and koala crisps and the, you know, the other kids sort of focus brands. You do use cane sugar and, and, and I'm not saying that's bad. I'm just saying that nowadays people are kind of looking at cane sugar and there's, you know, Some people are moving towards coconut sugar or agave. We make cereals of that too.

We also make cereals for every particular category that you have out there. People that want no sugar at all, or they want to have monk fruit, or they want to have coconut sugar or agave. Our fruit juice. Our fruit juice. Yeah. And now the move has gone to where people say, I don't want any sugar in my cereal. And we did reduce one of our most popular cereals. we reduced the sugar level in it, and the sales dropped right off.

What was that? That was optimal. That was called optimum. Optum. Oh, and so the sales dropped off when you reduced the sugar. Wow. Yes. So what would you do?

You had to restore it, the level of sugar up? Yes. Well, we had to restore it a bit, but not to the previous level. And sales did bounce back a little bit, but you have to be careful. You know, if you take a product that people are used to and love it and you suddenly drastically change it, you took all the sugar out of it, and it suddenly doesn't taste anymore. And then people say, well, this is what I want, but their actions speak differently. So one has to be very cautious in making too radical a change in a product. So we decided to

launch separate category of cereals that are either low sugar or no sugar, so that we didn't change the old popular ones. So here's what I'm wondering. You were not the only natural cereal brand out there, you know, by the late 90s. Unfortunately, that's. Right. But that's the way the world is. They're always going to be competitors. And you're clearly doing well.

And there's people who like Gorilla Munch and, you know, these different brands and the flakes. But there are other brands that come out. You know, Cascadian Farms and Mure Glenn and others. And but I'm not asking you to critique their product or say, tell me why yours is better. What I'm trying to understand is what, how are you able to compete? How are you able to get the word out when you didn't. presumably have a huge marketing budget. How did you manage to get people to know and to buy your product? Was it just word of mouth? Or was it more sort of deliberate intentional strategy?

It was we always engage in guerrilla marketing. I think it was mostly word of mouth and we used our packaging to get our message out as well. Yes. Your packaging is really, I mean, I can remember, I don't know exactly one, but for as long as I can remember, seeing that big panda face or gorilla face on the box or the koala, it jumps out of you. The gorilla in the jungle and you're like, oh, I want to eat that cereal. The gorilla is eating the cereal. I want to eat the cereal the gorilla is eating.

Right? We have rhinos too. Rino cereal. Yeah. How important was packaging and product design do you think to your success? I think whether it's us or it's a startup. up, the packaging is very, very critical. It's your, maybe your only means of getting attention on a very crowded supermarket shelf.

It's the best real estate on a shelf. Yeah. Yeah. It's the most expensive real estate in the world. That's the supermarket shelf. But part of your packaging certainly was just a window, just a clear window that allowed you to see the product inside. It can be that. Or it, like with our eco-pack, it's transparent.

bag, but we also sell in boxes too. But what we did with our boxes, we reduced the size. We took a huge gamble on reducing our billboard by shrinking the box, but not shrinking the ingredients inside. So the amount of cereal was the same, but the size of the box was different. That's right. That's right. Why did you do that? We did it because we felt sustainability. For so many reasons. And we took a big gamble because everybody else was using big boxes, big faces with a lot of empty bag inside. You get a small little bag of cereal in your giant box. In a huge box, yeah. Right.

So you are in this crowded marketplace. Breakfast cereal is, it is kind of insane, right, how crowded that market is. It must be the most competitive category out there, period. I must be. And also, over time, you had to. expand beyond cereals, right? I mean, today you're doing pastry, like toaster pastries, like, you know, sort of like organic pop-tarts and frozen waffles and you had tortilla chips.

And, I mean, how important was it to, when did you start to understand that you really had to expand your product lines? And you've got 150 plus different products today, you know, when did it, when was it clarity that in order to thrive, you had to do that? It's a lot more fun to grow than to shrink. Yeah, sure. And either you grow in the market or you start to die. There's no in between.

There's no static in the marketplace. What's a product that you guys got really excited about and went in full on and it turned out to just be a flop and you lost money on it? Oh, there's a whole bunch of those. Tell me. Let's start. Tell me one. Well, we made a beautiful breakfast biscuit and it was in the shape of our logo.

It was supposed to be like a grab-and-go breakfast in a cookie form? Yes. Yes. Right. Some companies make those like Belveda and some of these brands. It was like organic Belvita. It was tasted good. Excellent.

But we could not make it inexpensive enough for the market to take hold of it. Yeah. The price was so much higher. Our cost was so much higher than Belveda that people said, well, I'm just going to go buy the cheaper one. So that was a flop. But you've got to throw things at the wall. not everything's going to stick. Yeah.

But you also, the bigger you grow, the more cushion you have to fail, which is great. To some extent. And the bigger you are, the more costly are your failures. But it doesn't mean you should ever stop. We have a big R&D team, and they're always coming up with new ideas and concepts. However, I must say that during COVID, the buyers out there are not quite so interested in new products. They just want to get stock of the products that you have been delivering to them through the past.

In terms of leadership, right, how did you, I mean, Rodna, clearly you came in with a plan to kind of create systems and organization and to clean up the books and to professionalize this operation. And so would you sort of describe yourself at the time in the 90s and even beyond as like the chief operating officer? and, Aaron, you were the chief executive officer, or not, is that not quite right? I think that's a pretty accurate summation. However, about three years ago, I decided to step down as the CEO, and Ratna stepped up as the CEO. You see, for me, the titles were not important and are not important.

Yeah. For me, what was important and is important, the company grows, survive, and be a force. not only in business, but also in sustainability and social responsibility. I mean, and with all due respect, Aaron, because you have a vision here, but Ratna really is the brain to this operation. I'm just, I know I'm supposed to be objective here, but, you know, right? You know, going over the details of our past, I had forgotten how many mistakes I had made in business.

And I am humbled by the failures. And the successes, both. Yeah. Aaron is a visionary, definitely, and we are very grateful. Because of him, nature's path exists. And because of her, nature's path exists. She's the yin to my yang, you know? She's always there, although we argue and we don't always see eye to eye,

we have this vision for the business and for the family, and we have love for each other. How did the two of you, here you are, and we're having this great conversation, and you're both so nice and lovely. And I love your relationship. It's such a model. But let's be honest, there's no such thing as a perfect relationship. Some of us are lucky you've got great partners, and we go, but we fight and we argue with tension, conflict. I mean, what was an example where you did not see eye to eye on how to operate this company?

Ratna, you've got a better memory for these things. No, I can tell you in the beginning, when I was sitting on the production floor, the way people are behaving and working, people who really don't want to work, I just said, Aaron, what did you do? That's the worst job you have given me, but I will do it. So does that mean you had to fire people? If she wants somebody to go, she gets me to do it. I used to get him to do it.

because it's very hard. But she won't come to work that day. But it sounds like in general you more or less each had your areas that you focused on and that you didn't really have too many dragged down fights. No. Is that fair to say? No. No, we didn't.

As long as we had our separate offices, you know, and I would focus on sales marketing and growing the business, and she'd be focusing on the back end working with, the people. She was, Rutna is very empathetic. She's extremely good with people. People love her. They call her the soul of the company. They call her Mama Ratna. And, you know, I was a little bit like Don Quixote, you know, tilting at windmills. And that time I have to rain him. Yeah, sometimes she had to rain me in. Because I sometimes I forget that advice, you know, only expand to the extent you can personally control it. And sometimes I get carried away and

I need to get reeled back in. I can tell you, I used to threaten him by saying, I'm not going to sign any check. You go ahead and do what you want to do. So, Radna, you controlled the purse strings? Like, if he wanted to make a purchase, you had to sign, you were the finance person. He has to justify it why,

because it was not going to be like live stream. And almost every time she would say no, even though she later on say, well, I think that's a good idea. you should go ahead and do it. Yeah. But at the beginning she'd always say no. And some things she said, no, we're all the way through, and they never, they never happened.

I want to ask you about something that, you know, naturally would start to happen in the organic foods business, which is some of these brands became huge, almost like multinationals. And then some of the giant brands, General Mills and Kellogg's and Kraft, they understood that there was a lot of money to be made in natural and organic. I can continue to do so. And they're buying up and have bought up a lot of these smaller brands because it's good for their brand. I have to imagine you start to get approached as you grew to a pretty big company, 100 by 2010, 100 employees. You know, your revenues, you know, in the hundreds of millions of dollars. Did you start to get approached by some of the big companies to sell?

We were getting an average of one a week. One a week. And this is like what? big companies, but also like private equity and venture firms. That's right. And did anybody ever put money on the table or make an offer with real money and say, like, we'll give you X dollars, X number of dollars. Did you sell to us?

Did anybody ever say that to you? Not directly, but we are invited at Kraft's headquarters. We offered a delicious vegetarian meal. Was it mac and cheese? No. No. No. It was made by sheds.

Made by chef. They pulled out the stops. Okay. They would have whined and dined us if we would have drank their booze or eaten their whatever. But we didn't. We talked with the craft people, and they would have given us an offer that would have made our head spin. At that time. At that time.

And then when one of the large company, I won't mention it, we were at PWC offices. They were so persistent. and they wanted to talk to us. They knew many things about us. They even knew ourselves. And when we were taking the elevator, I said to Aaron, I said, Aaron, we will have quite a few million dollars.

But what are we going to leave to our children? A bunch of money to spoil them. Why don't we leave them a mission and a business with a mission? At that time, we both agreed. And we cut our customers. conversation and our communication with that company. So here's the thing.

So it's totally admirable. We've had companies on the show that have the same position, right, that do not want to sell. And we've had companies that have sold, including to Kellogg's and General Mills. And many of those brands continue to operate as they did before. They're just, you know, and the argument that the founders have made is, look, if Kellogg's is going to scale our brand and bring it to an even bigger audience, We're fine with that. I mean, it is true you could probably walk away with hundreds of millions of dollars, maybe more, if you sold nature's path. But at the same time, it sounds like what you're saying is we're just not as long as we're alive, Aaron and Ratna, we will not entertain that.

We rule that out. Our kids also feel the same way. But if they feel differently, it's their call. You say that things don't change much when it's a call. company changes, but I know personally some of the people who have sold out, and they really regretted it because they felt that after they sold out, they felt that the soul was gutted out of the company. Yeah, and it's not just about money. I mean, I think you've got close to 1,000 employees now between all your, right, your different factories, and is that about right?

A little under that. Over 800. Yeah. 800. This is a lot of people. Direct employee. And that's a lot of people that you know and you know their kids and you know they're, you know, you've been part of their lives. So it's not just about selling and making money. It's like you're giving up all of that too. And that's worth sort of a lot. Yeah. I think most of your kids, maybe all of your kids are involved in the company? Two of them are directly. One is indirectly. And up to now, we've had four of our grandchildren have also come in as interns to work in the company. And presumably eventually one of your kids, if they want, will take over? Yes.

Yes. That's a plan. That plan is crystallizing as we speak. So when you think about the journey you took, Aaron, you didn't finish high school, you know, and you didn't necessarily have a clear path, but you clearly found a calling and, of course, built an incredibly successful business. Ratna, you had no idea when you were 18, 19 years old that your future would be in Canada. I mean, your life was in India, but this is the way your life kind of turned out. When you think about all that you have built together, how much do you think that has to do with how hard you worked and your skills? And how much do you think has to do with just luck and fate?

Well, there's an old saying, the harder I work, the luckier I get. that's true to a certain extent but I would say fate and luck also play their part but effort cannot be underrated we are very grateful that we were focused and single-minded whatever we did and especially individually what I did I was determined

I have to go early in the morning if it was 6 o'clock shift I should be there 5.30 if I'm needed till 8 30 so be it is hard work. It's a combination of all these things. It's not only one single formula. Effort, common sense, faith, and I will also add grace.

Yeah. That's Ratna and Aaron Stevens, co-founders of Nature's Path. By the way, when their son Arjun got married back in 2010, it actually inspired a whole new flavor of cereal. The wedding couple made a special granola loaded with berries and coconut and chocolate. It gave it out to their guests as kind of a party favor, and people loved it so much that they decided to turn it into a product. And they called it Love Crunch. Hey, thanks so much for listening to the show this week.

If you want to contact the team, our email address is hibt at ID.wondry.com. If you want to follow us on Twitter, our account is at how I built this, and mine is at Guy Raz. And on Instagram, I'm at guy.raz. This episode was produced by J.C. Howard with music composed by Rumtin Arableu. It was edited by Neva Grant with research help from Claire Morashima. Our production staff also includes Elaine Coates, John Isabella, Liz Metzker, Carrie Thompson, Catherine Seifer, Alex Chung, Chris Messini, Sam Paulson, Carla Estevez, and Josh Lash. I'm Guy Raz, and you've been listening to How I Built This.