THE NATION’S NEWSPAPER As seen in Special Reprint Edition Money March 14, 2005 Raising the bar on how business gets done Clif Bar is good for you, environment By Julie Schmidt USA TODAY dioxide generated by the company's manufacturing, offices, business travel and employee commutes, it says. BERKELEY, Calif. — Mary Erickson, 82, sits in the kitchen where it all started 15 years ago. "Gary feels a calling to craft a new way of doing business," says Lanny Vincent, an innovation management consultant who has worked for Clif Bar as well as for giants such as Hewlett-Packard. "He and Kit want to show that it's possible to have a business that not only makes money but does good." Her kitchen, where she and son Gary first made the first Clif Bar. They started with her cookie recipe. "Gary said it cannot have eggs or sugar or butter," she says. "I said, 'Gary, what are you going to keep in?' " All because a guy got hungry and disoriented. It was 1990 and Erickson, now 47, was on a 125-mile oneday bike ride that turned out to be 175 miles. He was tired and had 50 miles left to ride. The right stuff, apparently. The son she describes as "average" as a boy and then, with a smile, "well above average," has grown Clif Bar into a $100million-a-year venture. The company is a leader in the billiondollar energy-bar industry targeting athletes and healthminded consumers. It's been profitable every year since its 1992 launch. But profit is only one definition of success at Clif Bar. Serving people and the planet are just as important. Clif Bar, owned by Erickson and his wife, Kit Crawford, devotes the equivalent of 1% of revenue to community causes. That includes donating money to breast-cancer prevention and letting employees volunteer on company time for Habitat for Humanity. Clif Bar employs a "Wellness Diva" whose job is to find ways to keep Clif Bar's 147 employees healthy and productive. That includes fitness classes and health screenings. Clif Bar also has a staff ecologist who analyzes the company's environmental impact. One result: Clif Bar's investment in a wind farm creates enough clean energy to offset the carbon He'd eaten five of his six PowerBars, a pioneer of the energybar industry. "I couldn't take another bite," he said. "I thought, 'I could make a better bar than this.' That was it, my epiphany." He headed to Mom's kitchen and, after dozens of failed recipes, came up with Clif Bar, named after his father Clifford, 80. Top ingredients include brown rice syrup, soy rice crisps and roasted soybeans — ingredients that provide fast energy. Clif Bar launched at a bicycle show two years later. It was the second major player in a new food category headed for explosive growth. Within three months, 700 bike shops carried the bar. Erickson sometimes slept in his car between shifts at the bakery making them. First-year sales hit $700,000. By 1994, the company had two employees plus Erickson and a partner who had joined him in 1986 in running a small bakery. "Within any 24-hour period, I might be developing a new Clif Bar flavor or sweeping the floors," Erickson says. Reprinted with permission. All rights reser ved. AS SEEN IN USA TODAY’S MONEY SECTION, MARCH 14, 2005 That's still true, says 10-year Clif Bar employee Paul McKenzie. "Just the other day, no one was here who could drive a forklift. Gary said, "I'll do it.' " Early ambition Erickson grew up in a middle-class home, the son of a California state workplace inspector and a schoolteacher mom. His determination surfaced early. At 11, he set out to be the best pitcher in his baseball league. He threw so many pitches he tore his rotator cuff. He wanted skis, so at age 14 he got a parttime job at a ski shop to get an employee discount. He wanted to travel the world, so in 1981, he worked three jobs — parking cars, tuning skis and hammering nails — banked $20,000 and set off. While on a 1,200-mile bike ride over 10 days in 1986, he discovered what would become Clif Bar's philosophy: Take the white road, not the red. Each day, he and his biking partner scoured maps to plot their course. The red roads, so marked on the map, were big and the most direct. But they were loud, busy, dangerous and unpleasant. The white roads were small, not the most direct, but the most pleasant. Sustaining the planet Some results of Clif Bar's environmental focus: u Eliminated use of shrink wrap by redesigning boxes, saving $450,000 a year. u Uses organically grown cotton and non-toxic inks on promotional T-shirts, sweatshirts and tote bags. In 2003, that meant more than 13,000 T-shirts and 6,000 tote bags. u Packs products in 100% recycled cardboard. u Diverts more than 80% of office trash from landfills through the use of recycling and composting. u Invests in wind farm in South Dakota to create enough clean energy a year to offset carbon dioxide emissions generated by the company, the equivalent of removing 340 SUVs from the road for one year. Source: Clif Bar "I've seen what happens to companies that get bought. . . . They lose the values that were set up," says Erickson. Clif Bar is "like a kid. You want to see it go off and do something meaningful." Change of heart Erickson almost took the red road with Clif Bar. In 2000, he decided to sell. Nestle had bought PowerBar and Kraft had bought Balance Bar, his top competitors. They could bury Clif Bar with advertising bucks. His partner wanted out. Erickson became convinced selling was the right thing. He told his parents, his friends, his wife. They all supported him. They all knew he wasn't being honest with himself. As he waited to sign the contract that would make him rich, Erickson started to shake. He couldn't breathe. He took a walk around the block and began to weep. "I felt in my gut, 'I'm not done,' " he writes in his book, and then, "I don't have to do this." He felt free "instantly." Back at the office, he told his partner, "Send them home. I can't sell the company." It was a bet-the-company move. He needed $80 million to buy out his partner and service the debt. Clif Bar had to grow fast to handle it. He took back "Companies on the red road listen to a lot of noise: the market, shareholders, the board, economic consultants, advisers and conventional wisdom," Erickson wrote in his 2004 book, Raising the Bar, Integrity and Passion in Life and Business, which tells Clif Bar's story. Clif Bar, he says, is a white-road company. Shareholder return isn't defined by profit but by "knowing that we create healthy products that people want," Erickson says. Clif Bar's goal isn't to go public, as is often the path of business in America. Its goal is to stay private so it can continue to do good works. Reprinted with permission. All rights reser ved. Page 2 AS SEEN IN USA TODAY’S MONEY SECTION, MARCH 14, 2005 the CEO reins from his partner and ran Clif Bar for four years. The last two have been challenging. While still profitable, Clif Bar sales leveled off after 2002 when they hit $106 million, Erickson says. He won't be more specific. The low-carb craze hurt the high-carb-bar business and Clif Bar's own low-carb bar flopped. L ast year, Erickson handed the CEO reins to Sher yl O'Loughlin, who learned the consumer food business at General Foods and Quaker. Clif Bar strives for natural growth as more consumers seek healthy products. Little money goes to advertising, which Erickson says creates unsustainable demand. The strategy seems to be working. Luna, Clif Bar's bar targeting women because it is lower calorie and has higher calcium and iron, posted a 7.6% rise in sales for the 52-week period ending Jan. 23, says market research firm Information Resources. Clif Bar sales rose 10% while six other top sellers lost ground. That includes the No. 1 bar from the low-carb-focused Atkins. Erickson and his wife now focus on shepherding the company's soul. O'Loughlin looks after the numbers. Even for liberal Berkeley, Clif Bar has a hip feel. When O'Loughlin arrived for her first interview seven years ago, "A dog met me at the door," she says. They still roam around behind their masters. Employees can hop on a two-story rock-climbing wall in the office, or use the company gym, with personal trainers. There's a washer and dryer for personal laundry, a car-wash service, on-site masseuses twice a week and a hair stylist who comes by once a week. Employees are encouraged to volunteer about 21 hours a year for community service on Clif Bar's time. They also get three-day weekends every other week by working longer days. About Gary Erickson First job: Paper route. Fitness plan: Works out at least 10 hours a week. Breakfast routine: Fruit smoothie with four kinds of fruit, organic yogurt, organic flaxseed oil, fiber blend, vitamin supplement. Drives: Gray Audi A6 wagon. College: Graduated in 1980 with bachelor's of science in business from California Polytechnic State University. Family: Wife Kit Crawford, three children, 20, 16, 11 (two from Kit's previous marriage). Professional kudos: Named "Best Boss" in 2003 by Fortune Small Business. Why he's successful: "He's got the guts," says dad Clifford Erickson. How family life changed him: "Maybe he won't do 62 miles an hour on a bicycle down a mountain pass anymore," says biking and climbing partner Jay Thomas. The risk he didn't take: In 1982, he learned that Kit had broken off an engagement to someone else. But he was in Europe and wouldn't be back in the USA for six months. He wrote her a letter asking her to wait for him so he could take her to dinner. He never sent the letter. "I chickened out," he says. By the time he returned, she had met someone else and was soon married. It wasn't until 1994 that he and Kit married, 16 years after he first met her and felt an "instant something." Warning to entrepreneurs: Don't do 50-50 partnerships. "You'll have a day of reckoning." Reminder: "Successful entrepreneurs take who they are and what they already know and create surprising combinations." Source: Clif Bar No surprise, Clif Bar gets so many job applicants it no longer advertises most new openings. "They can take me out of here in a box," McKenzie says. Erickson and Crawford live north of Berkeley on a 50-acre farm. She raises chickens and has goats and horses. Gary, often dressed in jeans and hat, raffles off organic eggs at Clif Bar's employee meetings. It's a quiet place for a man who hasn't lived a quiet life. Erickson has trekked the Himalayas, mountaineered deathdefying ice chutes and drunk 11 espressos in one day. But he still gets his best ideas while riding his bike for hours because he can listen to his gut. When he prepared to sell the company, he hadn't been riding. "This meant I wasn't listening," he says. Reprinted with permission. All rights reser ved. Page 3 Entrepreneurship Raising the bar on how business gets done neurship, synthesis APPLICATIONS: business, entrepre get its star t? How do ownDISCUSSION: How did Clif Bar ford, define success? How ers Gar y Erickson and wife, Kit Craw causes? When did Erickson does Clif Bar donate to community the company’s philosophy? get the idea for Clif Bar? What is nce. How does Erickson Explain its metaphorical significa sured? What is Clif Bar’s believe shareholder return is mea s? goal? Why is this unusual in busines red roads are “big and the ACTIVI TY: According to the article, “loud, busy, dangerous and most direct” paths, but are also ds are “small, not the most unpleasant.” By contrast, white roa your own terms, define “red direct, but the most pleasant.” In Then, peruse today’s paper, road” and “white road” companies. did each company get its and identify an example of each. How operating mo del? Finally, start? What is its business or image. describ e each company’s public VOCABULARY 1. diva 2. offset 3. innovation 4. epiphany 5. ambition 6. shepherding Community USA TODAY Snapshots® It’s smart to give back Volunteerism varies by education level. In 2002, 29% of U.S. adults did charity work. By completed schooling: Graduate school College graduate Some college High school graduate 20% Some high school 13 % Grade school 8% 53% 43% 33% Note: 2002 data, latest available Source: National Endowment for the Arts APPLICATIONS: responsibility, civics, character education, analysis What correlation exists between education and volunteering? For what reasons might a person’s likelihood of volunteering increase with his or her education level? Statesman George Mason wrote in the Virginia Declaration of Rights, “ … it is the mutual duty of all to practice … forbearance, love and charity towards each other.”* What does this mean? How does charitable giving, in the form of time or money, benefit society? (To answer this question, consider what the world would be like if no one volunteered or contributed to charity.) What conditions could U.S. citizens improve if everyone volunteered on a weekly or monthly basis? In your opinion, what other behaviors are citizens bound to practice toward one another? How does society benefit when people look out for the collective good, rather than the individual self? By Cristina Abello and Suzy Parker, USA TODAY *Source: www.americanhistory.com Copyright Reprinted © 2005 USAwith TODAY, a divisionAll of Gannett Co., Inc. permission. rights reser ved.All rights reser ved. Page 4