A Secret Recipe For Success

Two decades ago Paul Newman mixed up some salad dressing in a tub in his basement and bottled it for gifts. What to do with the stuff left over? He and a longtime pal, author A. E. Hotchner, wondered if they could sell it to a local grocer. They found a store to hawk it--Stew Leonard's, the huge supermarket--and a bottler. They sold 10,000 bottles of Newman's Own in just two weeks.

The rest, as they might say, is charity. Their company is now a huge business, selling dressing, pasta sauce, popcorn and more in eight countries--and they give away all its profits to thousands of organizations, including the Hole in the Wall Gang camps they created for children with serious illnesses. Newman and Hotchner maintain they don't know beans about business, but they have just written the story of their remarkable enterprise: "Shameless Exploitation in Pursuit of the Common Good." NEWSWEEK's Jennifer Barrett spoke with the accidental entrepreneurs.

BARRETT: Why write this book now?

NEWMAN: Well, we're passing one landmark. [This month] we'll be giving away our 150 millionth dollar. So, a lot of the book people have asked us to do some kind of history about this business.

You've been quoted as saying, "There are three rules for doing business--fortunately, we don't know any of them."

HOTCHNER: Actually, my favorite is: "It is useless to put on the brakes when you're upside down.''

Newman: The one I like best is, "When things look darkest then they go black."

You both have spoken at some of the best business schools in the country.

Hotchner: Newman undid everything at Harvard, though. Go on, tell her what you did.

Newman: I haven't the slightest idea.

Hotchner: Basically, he said to them, "You guys can go to school and learn this stuff, but if we have any kind of a budget or a plan, we're screwed." There were a lot of falling professorial faces at that.

How do you explain your success, then?

Hotchner: Neither of us knew beans about beans, and we didn't know exactly what we were doing. But we knew we had a challenge and it was fun. Sometimes, when the profit-and-loss sheets came in, we really couldn't believe it. We had a chart on the wall that was supposed to chart our sales from June of the first year to the following January. And by November, the line had gone off the charts and up the wall. By January, it was going across the ceiling.

Newman: The other terribly important ingredient is that we never took ourselves too seriously.

Hotchner: We never have.

Newman: We can't because...

Hotchner: Nobody else does either.

Do you ever feel uncomfortable having your face plastered on all these products?

Newman: The most difficult part for me is that, until this company got started, all of the charity and philanthropy that I was connected with was done anonymously. But the more public and successful the company was, the more public and successful the charity was. It's a kind of circular exploitation: you use your celebrity status to hustle the products and that, in turn, can develop a sort of reciprocity that you have something to show for it.

A growing number of companies, from Ben & Jerry's to Stonyfield Farm, now donate some of their proceeds to charitable causes. Do you think you've played a role in that?

Hotchner: Small entrepreneurs have come to us and asked us, "How does this work and how did you set it up?" But by and large--and this is both in the good and in the bad sense--corporate philosophy is pretty much designed by the board of directors. Some groups are more charitable than others. But their uniform excuse is, "Oh, we'd love to give more but it's the stockholders' money." And what they don't follow through on is that they never ask the stockholders what they think about it. I think the corporations should poll their stockholders and see how they feel about it, but they don't seem to do that. They make up their minds for them.

So businesses could be doing more in this area?

Newman: There is a tremendous amount that the business community in this country can do to counter the very bad image of America that has been occurring with the Enron scandal and the unilateral action in areas of war... and in developing countries and tariff barriers and all this kind of things. I think the business community can do a lot to counteract the bad image that's been projected overseas and they should take that challenge and run with it.

Hotchner: I agree 100 percent. The only way to overcome greed is with charity.

Newman's Own has already expanded well beyond salad dressings to everything from pretzels to pasta sauces. What's next?

Newman: There's my daughter's organic line, which is a completely separate unit. That's her company and I'm very, very proud of what she's been able to do. She's on everybody's radar now.

Hotchner: We are constantly expanding what we've got. There's a new pesto-and-tomato spaghetti sauce and a limeade coming out. And there are other things in the pipeline.

You can't share them yet?

Hotchner: Well, they're things that have to do with an invasion of Fort Knox.

You mention in the book that you originally intended to open a restaurant in Westport, Conn., called Newman's Own, but were talked out of it by a former restaurant owner. Any thoughts still about opening a restaurant?

Newman: We can barely handle what we've got.

Hotchner: How close were we then?

Newman: I don't think we were more than 28 percent there.

Hotchner: [Laughs] Well, we are never more than 28 percent there. Seriously, if there had been a really good location, we might have done the restaurant instead of all of this.