Excerpt from Natural Prophets: From Health Foods to Whole Foods – How the Pioneers of the

Industry Changed the Way We Eat and Reshaped American Business by Joe Dobrow.
 
Just as the national capital area was coming into its own in the 1990s, with a preponderance of
government contract-fueled service companies, as well as super-regional malls and upscale
shopping plazas to meet every consumer need, the homegrown retailers all headed into a steep
decline. Woodward & Lothrop, Peoples Drug, Crown Books, Hechingers – all ran into trouble
during that decade and eventually disappeared.

Amidst all the retail wreckage, however, was one company, born in 1991, that throughout the
decade streaked across the skyline like a comet: Fresh Fields.

Fresh Fields was never supposed to be a DC-based company. It was, in fact, run by a
carpetbagger of sorts: Brooklyn-born, Harvard Business School-educated, 32-year-old Mark
Ordan – who, inspired by the model he had seen in the Bread & Circus natural foods stores in
Boston, sought to create a similar concept… in Manhattan.

Ordan knew little about food. In fact, natural foods had left a bad taste in his mouth from an
early age, when he had been dragged by his aunt to Brownie’s, Manhattan’s original natural
foods restaurant, on East 16th Street, which served dishes like “chile no carne” and “potato
blimp ratatouille.”

The original plan was to open in New York, but the real estate market there was not very
favorable. Fresh Fields wanted 15,000- to 25,000-square-foot boxes, and there just weren’t many
of those in Manhattan, in part, ironically, because [Co-Founder Leo] Kahn’s Staples chain had
begun moving into the city and buying up former supermarket sites. So after mapping out the
existing natural foods retailers in the country, and overlaying various demographic studies, the
Fresh Fields team pinpointed the nation’s capital as the best place to start their enterprise. The
DC area was booming, as the Reagan-era surge of military spending had swelled the payrolls of
local defense contractors like Lockheed Martin and Northrop Grumman. Real estate was hot.
The population was well educated. The Tysons Galleria Mall had just opened in 1988, alongside
the incredibly successful super-regional mall, Tysons Corner Center. And, other than a few
lonely health foods outlets like the Bethesda Co-Op or Yes! Market, there was no natural foods
retail presence in the market.

Unlike the previous generation of natural foods entrepreneurs who had opened tiny one-off
stores, Mark Ordan intended to make Fresh Fields big. “We were interested in chains,” said
Ordan. “Interested to see how we could do it in multiple places. Because for me there was no
thought of opening one store, and for Leo that would be organically impossible.”

The first order of business was to raise money. The magnitude of the initial cash raise—$14
million—was not at all unusual for the former Goldman Sachs investment banker, but it was
absolutely stunning for the natural foods industry. Kahn put up $7 million, and Ordan quickly
raised another $7 million by tapping into his old network of Goldman real estate moguls and
wealthy entrepreneurs, as well as his Harvard Business School contacts such as Steve Mandel,
who was with a hedge fund called Tiger Management.
After the initial raise was done, Ordan received a call out-of-the-blue from Charles Lazarus,
founder and chairman of Toys “R” Us, and one of the retail legends he most revered.

“I have heard what you are doing,” Ordan recalled Lazarus saying, “and I would like to invest
$100,000.”

Ordan was a bit awestruck. “Mr. Lazarus, I can’t tell you how flattered I am. It’s unbelievable.
But we are full.”

“Then I want a million,” said Lazarus.

“Mr. Lazarus,” Ordan protested, “I don’t think you understand. I can’t take $100,000, and I can’t
take $1 million. We’ve done our equity raise.”

Lazarus, unperturbed, continued. “Mark, I will wire you two-and-a-half million dollars today.”

Ordan finally succeeded in deflecting the offer, but he was stunned. It may have been little more
than the “piling on” effect that sometimes happens when investors hear that other smart money
firms are involved, but it all seemed too easy, especially in an industry whose tie-dye undershirt
was still peeking through the Brooks Brothers jacket it had recently thrown on top.