September 22, 2023

Conversation: A Founder of the Soap Maker Method Discusses Its Sale

They started by mixing soap formulas in beer pitchers labeled “Do Not Drink” and wound up creating Method, an irreverent, design-driven, environmentally minded company that outsourced manufacturing. The company grew to $34 million in revenue and 39 employees in 2005, and more than $100 million and 100 employees in 2012. Those numbers remain modest compared to those of Big Soap, but a walk down the cleaning aisle in almost any supermarket reveals not just Method’s reach (Ginger Yuzu dish soap, Pink Grapefruit hand wash) but its impact on competitors (Clorox Green Works).

“We showed up at the party with a very different proposition,” Mr. Ryan said. “We’re superproud that we’ve had an influence.”

That influence will continue, Mr. Ryan and Mr. Lowry suggest, even though Method was acquired for an undisclosed price in September by the Belgian company Ecover, creating what they claim is now the largest green cleaning company in the world, with revenue “north of $200 million.”

In a conversation that has been edited and condensed, we recently asked Mr. Ryan why he and Mr. Lowry chose to sell, how they identified the right suitor, and what will happen to the Method brand.

Q. Was selling the company always a primary goal?

A. When we started the company, we knew we had two choices. One was to grow organically, which a lot of businesses do, and you control the business and grow slowly and steadily. We fundamentally believed that we would not have success in this competitive space unless we went after it fast and aggressively. So we had to take outside capital. And when we took that outside capital — at some point, you have to give it back with a return.

Q. You make soap, you sell it, you make more soap, you sell more of it. Why couldn’t you grow without being acquired?

A. Two primary reasons. One is just economies of scale. In the early years, we lost money on every product we sold. We were competing against companies that not only have a 100-year head start but have just built incredible efficiencies. They own their own plants. When you walk in a grocery store and that bottle of dish soap sells for $1.99, we could not make it for $1.99 in the beginning. We needed capital to accelerate growth, to get our volume to a place where the business would be profitable. Two is that the cost of doing business in the mass channel is really expensive. When you sell in a grocery store, you have to pay an upfront fee called slotting charges. And that takes a fair amount of capital. So growing organically is possible, but it’s really, really tough.

Q. You’ve built a brand that seems to resonate with consumers. Are you concerned about their reaction to the sale?

A. It was something that was heavy in our minds for a lot of years. The typical script for a socially driven company like ours is you get acquired by a major strategic. So look at Honest Tea, acquired by Coke. Kashi by Kellogg. Burt’s Bees by Clorox. Even Mrs. Meyer’s, in our space, by SC Johnson. I always justified it by saying, “Well, if that happens, it’ll give us the chance to work from a bigger, global stage, and we’ll try to change those companies from the inside out.” And once we did this deal, I was just so thankful we never had to go down that path. We recognized we had a partner at the table with identical mission statements, identical values and a real long-term commitment. It was just an opportunity too good to pass up.

Q. Did you say no to other offers because you didn’t see that cultural fit?

A. We can’t name names, but we did have, over the years, conversations with those usual suspects. And the movie looked pretty similar — full integration, we go from being a company to being an operating unit within a larger organization. The culture, the team, “the Method Method” that we spent the last 10 years building could have been nonexistent within 12 months.

Q. Will the Method brand continue to exist?

A. Very much so. We now have our own manufacturing. We’re turning on TV advertising for the first time in our history. We’re expanding more aggressively in Europe and Asia than we would have done otherwise. We’re creating a company with a long-term focus on the future. When you’re private equity-backed, it’s a much more short-term focus in how you invest and build the organization. The big thing that’s changing now, we’re a house of brands, which is Method and Ecover. And we have to set up a business where they coexist in a way that they don’t cannibalize each other and reach a broader audience collectively.

Q. Obviously, you’re in the honeymoon phase. How do you protect against something going wrong?

A. At the end of the day, it’s like a marriage — there is a leap of faith. And the way that you can protect yourself the most is just really trusting your instincts of who you’re jumping in bed with. It’s just like a job interview or any other relationship. If you’re getting to a point where you’re having to lean on a lot of legalities or other ways to try to protect yourself, it’s probably not the right relationship. It just comes back again to, are these people you trust, who share the same vision?

Q. While this was developing, how open were you with your employees?

A. You just can’t talk openly. It can do damage to the deal, but also, it’s a roller coaster, and you don’t want everyone riding the roller coaster with you. It’s incredibly distracting. There was a very small group that was in the know, and those were only the ones that were needed for due diligence. People knew we were looking and we were upfront about that, but they didn’t know to what extent, because we didn’t know to what extent. So when we did the announcement, there was initial shock, but over all it went well. And then for the next week, it was really challenging because what happened — what we were completely blindsided by — was how many people in their careers had been through a bad M. A. transaction. There were a lot of bad movies that started being replayed. What I told everybody was, “Look, I’ve never been through a bad merger in my life, and I’m not about to start now.”

Q. Things have been tough in Europe. Any concerns about partnering with a European company and expanding there?

A. I like the idea of investing when something is at its lowest. [Laughs.] No, we have not had too many concerns about it. This business is firing on all cylinders. I was definitely, in the back of my head, concerned that things would get derailed by the European crisis, but who we’re dealing with is very long-term focused and they’re also very globally minded. Europe is a big part of their business, but they’re also expanding aggressively in Asia — we are as well — and North America.

Q. And everyone needs soap.

A. And everybody needs soap. It’s a dirty world out there.

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Boeing to Weigh Options for Future of Popular 737

PARIS — Boeing expects to make a decision by the end of this year on whether to revamp its popular 737 jet with more fuel-efficient engines or to develop an entirely new single-aisle jet for delivery around the beginning of the next decade, the head of the company’s civil aircraft division said Sunday.

“Probably by the end of the year, we’ll have a decision that we can go forward with publicly,” James F. Albaugh, the chief executive of Boeing Commercial Airplanes, said at a briefing on the eve of the Paris Air Show, which was to open Monday.

Pressure on Boeing to define its future strategy for the fast-selling 737 has been building since late last year, when its European rival, Airbus, announced that it would bring an updated version of its competing A320 single-aisle jet, with new engines and a more aerodynamic wing, to market by mid-2016. Airbus has since lined up more than 200 firm orders for the A320neo — the letters stand for New Engine Option — with commitments from customers to buy as many as 200 more. Industry executives, including Mr. Albaugh, expect Airbus to have orders for well over 500 of the planes by the end of this week’s air show.

“That’s going to be no surprise to us,” Mr. Albaugh said.

He defended Boeing’s cautious stance, however, saying that the company preferred to take its guidance from airline customers rather than what the competition had chosen to do.

“What we have to make a judgment on is what is the best thing for us to do to support our customers,” Mr. Albaugh said. “Is it to improve an already good airplane — which is lower risk — or to do a higher risk, new airplane which will provide a new airplane not just for this decade but an airplane for the next 50 years? That’s what we’re trying to balance.”

Airbus has been promising fuel savings with the A320neo of as much as 15 percent over current engines. The new plane is expected also to run more quietly and with lower operating costs, and be able to fly farther or carry heavier payloads while emitting less greenhouse gas.

Airbus expects to spend around $1.5 billion on the enhancements, and Boeing has placed the costs of fitting a new engine to the 737 within that range. Developing an all-new replacement for the 737 would probably cost Boeing as much as $12 billion, analysts estimate.

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You’re the Boss: Rethinking 100 Restaurant Rules

Start-Up Chronicle

Southfork Kitchen has been open for almost six months. Sussing out a summer season that looms large, I thought it might be instructive to a look at my 100 rules to see which ones were pie-in-the-sky and which ones still hold water, which ones were idealistic foam and which ones have stood up to the reality of Saturday nights.

Truth be told, the 100 rules were, in large measure, a response to gauntlets thrown down by readers. In the very first blog post, I blurted out that, in addition to no meat and no loud music, I had a 100 other rules for my restaurant-to-be. Readers were sharp and took the boast literally. Cornered, and eager to please even during those elongated and halcyon days of construction, I came up with 100 rules.

They were based on what I considered the paradigm of all rules, the Golden Rule of Restaurants: treat guests as you would want to be treated.

It was no big deal. I thought each rule was reasonable, as helpful to servers as eaters. When guests are greeted warmly and seated promptly, when staff members can answer questions graciously, when the bread is fresh and warm, when good food arrives on time, when glasses are clean and magically refilled, when plates quietly appear and disappear, guests tend to leave larger tips. Unless there is a secret formula that eludes me, the happier the guest, the larger the tip. The larger the tip, the happier the server. The happier the server, the less frazzled the owner. Such is the merry-go-round of restaurants. Cue the calliope, please.

I thought the 100 rules would be accepted on both sides of the aisle with equal enthusiasm. Politics is apparently not my calling. There was blowback. Katrina-style. Half the servers considered me the sadistic cousin of Muammar al-Qadaffi; the other half thought I was stating the obvious. Diners were kinder. Especially those who had suffered at the quick hands or severe apathy of servers near and far, who had stewed over hot soup with no spoon in sight and watched their server vanish before they could speak up. Or maybe they did speak up but were drowned out by Radiohead, or maybe even Spoon.

Now, a half-year in, I took another peek at the 100 rules. Nine, by my count, need amending or clarification or adjusting according to our circumstances and our chef’s choices.

16. If someone requests more sauce or gravy or cheese, bring a side dish of same. No pouring. Let them help themselves.

Our clam chowder preserves the integrity of its vegetables — baby Tokyo turnips, heirloom carrots, celery root, organic celery, pearl onions, baby potatoes and English peas (when in season) — by having the creamy bacony broth poured at the table. Also poured tableside by staffers is the yuzu vinaigrette for the day boat fluke and the Meyer lemon sauce for the pan-roasted rainbow trout.

19. Offer guests butter and/or olive oil with their bread.

On the table goes a wheel of house-churned organic butter with honey in the hub and sprinkled with spiced paprika and sea salt. Olive oil is delivered by request only. And that happens rarely.

23. If someone likes a wine, steam the label off the bottle and give it to the guest with the bill. It has the year, the vintner, the importer, etc.

We can make this easier for everyone: give us your e-mail address and we’ll send you all the information — this goes for wines, recipes and sources.

32. Never touch a customer. No excuses. Do not do it. Do not brush them, move them, wipe them or dust them.

This is more complicated than I thought. We stick with the notion of never touching a guest flirtatiously or to elevate a tip, but when a long-lost cousin or an old friend from New Zealand arrives unexpectedly, hugging may be spontaneous and appropriate. When a guest is thrilled with his meal (and slightly inebriated) and tries to hug a server or hostess before she even knows what’s happening, this gets, pardon the term, touchy. The best response is to back off politely and explain: “Thank you, but you don’t want to get me in trouble. House rules — no hugging.”

55. Do not serve an amuse-bouche without detailing the ingredients. Allergies are a serious matter; peanut oil can kill. (This would also be a good time to ask if anyone has any allergies.)

A better time, I have learned, is when someone makes and/or confirms a reservation. The chef has time to prepare a dish without shellfish or peanuts or mushrooms. We still announce the ingredients of each amuse-bouche and should ask again at the table; the person making the reservation may not be aware of the allergies of his first date or a prospective mother-in-law.

57. Bring the pepper mill with the appetizer. Do not make people wait or beg for a condiment.

We do not bring pepper mills to the table unless requested. This is not to protect our pepper mills, but our kitchen staff, who believe they have seasoned everything perfectly. Salt and pepper will be delivered when asked for, and that should happen after a guest has had a chance to taste the dish, not before.

68. Do not reach across one guest to serve another.

As we have discovered, when four people sit in a booth, reaching is necessary. We apologize and explain at the start of the meal and hope everyone understands the physical limitations, as well as the charms, of a booth. They are the most requested seats in the house.

70. Never deliver a hot plate without warning the guest. And never ask a guest to pass along that hot plate.

Additionally, be twice as careful when children are at the table. They have been known to make sudden and unexpected moves. A small incident with an adult can turn into a major mishap with a small child.

100. Guests, like servers, come in all packages. Show a “good table” your appreciation with a free glass of port, a plate of biscotti or something else management approves.

Now that we give every guest petit fours with the prix fixe, we are already painting the dessert lily. Still, the owner does like to pour a little late harvest wine from local vineyards, one of the pleasures of Long Island about which too few people are aware.

(The next post offer additional rules, submitted by readers and deserving serious consideration.)

Bruce Buschel owns Southfork Kitchen, a restaurant in Bridgehampton, N.Y.

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