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The Honolulu Advertiser
Posted on: Sunday, June 18, 2006

Ex-AOL chief has a new enterprise

By Annys Shin
Washington Post

Revolution Living, Steve Case's new "lifestyle" company, seeks environmentally friendly products that might succeed in the mainstream.

BILL O'LEARY | Washington Post

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WASHINGTON — Steve Case, co-founder of America Online, talks of living "more in balance" these days and not long ago bought his first hybrid car. He recently gave the keynote speech to a gathering of entrepreneurs in California that included the inventor of an organic herbal throat spray, the maker of an immune-boosting tea and a psychic healer who talks to dogs — the types of ideas his new company, Revolution LLC, is trying to pick through for products and services that might succeed in the mainstream.

"Some fringy stuff," Case said of the ideas he heard during the conference.

But then again, so was the Internet 20 years ago.

There's an uneasy courtship going on between corporate America and the diverse collection of companies that make up the "sustainable lifestyle" movement — firms that promote their products as healthy and easy on the environment. Wal-Mart Stores Inc. has begun buying organic cotton; Colgate-Palmolive Co. owns natural products pioneer Tom's of Maine; prominent organic food brands have become subsidiaries of major agribusinesses.

Amid all this, Case is trying to position himself as an honest broker, someone who can translate green practices into mainstream tastes, and apply mainstream business principles in a way that green businesses and consumers can accept. Case seeks to meld ideas, derived from talks with Berkshire Hathaway Inc.'s Warren Buffett and Virgin Group companies' Richard Branson, with businesses developed by people such as Jirka Rysavy, who lives in a shack without running water and developed a line of yoga products that Case is backing.

Like the diverse businesses Branson has brought under the Virgin label, Case sees his year-old Revolution developing into a sort of meta-brand, a signal to consumers that the product or service is environmentally friendly — but not too "fringy."

"Everyone wants to make choices that are better for the people around them. The problem now is the choices have a tendency to be overly preachy. ... It feels like a club you don't belong to," said Case, cousin of Hawai'i Congressman Ed Case. "People are intrigued with these ideas. They're willing to give it a shot if given a safe, comfortable way to do that and not be targeted by the yoga police."

Revolution Living, the lifestyle unit of his Washington-based holding and operating company, has planted a flag in the estimated $228 billion sustainable lifestyle market: It has a $20 million minority stake in Rysavy's Gaiam Inc., a retailer of health and eco-conscious products, and it has also invested in the multimedia portal Lime and the car-sharing service Flexcar.

Despite their unconventional leanings, one of the more valuable assets of the companies under the Revolution umbrella may be their high-profile connections to the conventional business world. Former Chrysler Corp. Chairman Lee Iacocca is a board member and investor in Flexcar. Ex-Hewlett-Packard Co. Chief Executive Carly Fiorina sits on the board of Revolution Health Group, which is focused on consumer-oriented healthcare.

Case, who admits to being better at "building companies than running them" sets the general direction by identifying trends. Day-to-day management of Revolution Living falls to Michael Crooke, former chief executive of Patagonia, who is credited with turning around the outdoor apparel maker by instilling basic business discipline without alienating core customers.

"Everything is a race against time. The secret is out," Crooke said, referring to growing corporate interest in eco-conscious consumers and products.

One of Crooke's first orders of business has been a "green audit" of all Revolution Living-owned companies. Anything not eco-friendly, down to the carpet and wall coverings, is being replaced, he said. Business cards are printed on recycled paper using soy-based ink.

The consumers Crooke wants to attract value "lifestyles of health and sustainability." They are likely to be baby boomers concerned with health and spirituality, or Gen X- and Y-ers who grew up recycling and took Pilates in gym class.

"There are people who believe anything sold at Whole Foods is healthy, ecological and probably socially responsible. That is far from the truth. But from Whole Foods' perspective they've successfully engendered trust," said Joel Makower, a green-marketing consultant and founder of Green Business Network. "If Revolution can establish itself as the trusted brand of alternative lifestyle products and services, they'll come out a winner."

Green consumers, who can be hyper-vigilant whether they're reading ingredient labels or watching TV commercials, are not easy to please. Their expectations are always rising, said Gwynne Rogers of the Natural Marketing Institute. Where organic coffee once was acceptable, now it must be fair trade, too.

Green entrepreneurs at the conference seemed to agree with Case that their ideas are on the verge of mainstream acceptance, but they were divided over the implications. Some wanted to be the next Stonyfield Farm — a small organic yogurt company that's now 80 percent owned by French multinational Groupe Danone — and welcomed big business's embrace of their ideas and products. Others feared having to compromise their standards for the sake of expansion.

After someone brought up Wal-Mart's intention to sell organic cotton clothing, Laura Coblentz, vice president of marketing with the Wild Oats grocery chain, spoke of problems that have arisen with the "commodification" of organic food. She was referring to organic food companies that have adopted practices similar to their conventional counterparts to meet higher demand and ship food farther distances.