Ben Cohen & Jerry Greenfield Caring Capitalists

Ben Cohen & Jerry Greenfield
Co-founders of Ben & Jerry's Homemade Inc.
Founded: 1978

"Business has a responsibility to give back to the community."-Ben Cohen

Whoever coined the phrase "nice guys finish last" obviously never met Ben Cohen and Jerry Greenfield. By making humanitarianism and philanthropy integral parts of their business ethic, they found a way to combine profitability with social responsibility, created a progressive new approach to employee management, and built one of the largest ice cream empires in the world.

Bored with their lives and wanting to do something that would be "fun," boyhood friends Cohen and Greenfield decided to start a food business in 1977. At first they considered making bagels. But when the necessary equipment turned out to cost more than they could afford, they settled for ice cream instead. There was only one problem-neither of them knew anything about the business. So they signed up for a $5 correspondence course in ice cream making offered by the Pennsylvania State University. Both got A's.

In May 1978, using $8,000 of their own money and $4,000 they'd borrowed, Cohen and Greenfield opened their first Ben & Jerry's Homemade Inc. ice cream scoop shop in a renovated gas station in Burlington, Vermont. True entrepreneurs in every sense of the word, they ran all aspects of the business themselves. While Greenfield was the principal ice cream maker, Cohen served as taste-tester, scooper, truck driver, director of marketing and salesman.

With its 12 eclectic flavors of ice cream, including Dastardly Mash (with nuts, chocolate chips and raisins), Heath Bar Crunch, Chunky Monkey (with bananas), Tuskegee Chunk (with peanut butter) and Cherry Garcia (named in honor of Grateful Dead lead singer Jerry Garcia), the store quickly became a rousing success.

Unfortunately, neither of the young entrepreneurs was very good with money, and they would later admit they had no idea what was going on financially. They actually closed the store one day to pay bills, putting up a sign that read: "We're closed because we're trying to figure out what's going on."

Realizing they needed an experienced businessperson to handle their accounts, Cohen and Greenfield hired local nightclub owner Fred "Chico" Lager as their first COO. With Lager watching the books, both sales and profits rose steadily.

In 1980, Cohen and Greenfield rented packing and storage space in a former spool-and-bobbin mill and began packaging their ice cream in pints, which they distributed to local grocery stores and restaurants in Cohen's station wagon.

The popularity of their "superpremium" ice cream spread rapidly, and the pint-packing operation quickly outgrew the spool-and-bobbin mill, so Cohen and Greenfield moved it to a larger location in South Burlington in 1981. In July of that same year, Ben & Jerry's first franchise opened in Shelburne, Vermont. Ten days later, Time magazine published a cover story about ice cream that opened with the sentence, "Ben & Jerry's, in Burlington, Vermont, makes the best ice cream in the world." The article went on to praise other local ice cream operations in equally laudatory terms, even saying another made the best ice cream in the universe. But Cohen realized that the first sentence, taken out of context, was as effective as it was misleading and played it for all it was worth. Even more customers flocked to the stores.

As Ben & Jerry's reputation grew, so did their company's profits. By 1984, their gross receipts increased 120 percent over the previous year, with sales of more than $4 million. But as the company soared, both men began to suffer a crisis of conscience. Greenfield went into "retirement." Cohen, realizing that he was no longer an ice cream man but a businessman, contemplated selling the business. Instead, he decided to adapt the company so that he and his friend could be proud to say they were the businessmen behind Ben & Jerry's.

At first they simply returned some of their profits to the Vermont community by sponsoring local concerts and film festivals and giving away tons of free ice cream at charity events. Then in 1985, Greenfield came out of retirement to oversee the newly established Ben & Jerry's Foundation, which donates 7.5 percent of the company's pre-tax profits to nonprofit charities nationwide.

Cohen also took it upon himself to be caring within the company. Believing that the company's success came from the support of its workers, he wanted to return that support. Besides being entitled to three free pints of ice cream a day, Ben & Jerry's began rewarding their employees with profit-sharing programs, free health club memberships, day-care service and college tuition aid.

To help foster a sense of community and further empower their workers, Cohen instituted the practice of having supervisors evaluated by their subordinates and encouraged the free exchange of ideas and opinions. He also established a pay scale in which the highest-paid employee could not earn more than five times the salary of an entry-level worker. (That ratio was later adjusted to 7 to 1 in 1990.) These and other worker-focused policies garnered praise from industry experts and prompted other companies to follow suit.

As the company grew, it became necessary to hire more senior-level employees, many of whom came from traditional business backgrounds, and, unlike Cohen and Greenfield, were more interested in profits than philanthropy. As he watched the company's "one big happy family" culture begin to erode under this new breed of manager, Cohen was heard to lament, "Growing is dying." Cohen's hands-on management style also annoyed many of the new top executives, adding to the tension between him and the company's senior managers.

To correct this problem, Ben & Jerry's brought in an outside consultant who advised that the company temporarily slow down its expansion in order to gain time to reconcile their economic and philanthropic aims. The managers eventually accepted the fact that the company would not discard such policies as the salary caps, and those who disagreed left. For his part, Cohen came to the conclusion that expansion was not inherently a bad thing, providing it was accompanied by efforts to use the resulting profits for public good.

Following this new policy, which Cohen dubbed "Caring Capitalism," Ben & Jerry's continued to grow and expand soaring to an incredible $132 million in sales by the end of 1992. In June 1994, Cohen announced that he was stepping down as the company's CEO. "We've never had an experienced CEO," he explains in an interview in The New York Times, "and we have reached the point when we need one." Although he retired as CEO, Cohen remains active in the company. As the company chairman, he concentrates on what he calls "the fun stuff," such as searching for new ways to promote worker morale and developing new ice cream flavors.

Greenfield's official titles at the company include vice chair of the board and director of mobile promotions. He often joins Cohen at speaking engagements, and both are very active in Businesses For Social Responsibility, a group that works to promote an alternative business model based on socially responsible business practices.

Ben & Jerry's has come a long way from 12 flavors and a renovated gas station. With annual sales topping $200 million, the company reigns as the world's second-largest producer of superpremium ice cream, and both of its founders are multi-millionaires. It just goes to show you, good guys don't always finish last.

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Rebels With A Cause
What makes Ben Cohen and Jerry Greenfield so unique as entrepreneurs is that they redefined corporate philanthropy. While many companies only go as far as to set aside a portion of their profits for charity, Cohen and Greenfield have actually created products that have in turn created jobs in economically depressed regions both in the United States and overseas.

In their quest to initiate innovative ways to improve the quality of life for a broad community, they have launched flavors such as Chocolate Fudge Brownie, which contains brownies made by homeless and unemployed workers in Yonkers, New York; Wild Maine Blueberry, made with blueberries harvested by Passamaquoddy Indians; and Rainforest Crunch, for which the company buys Brazil nuts collected in the Amazon rain forest by indigenous peoples, thereby providing an economically viable alternative to deforestation. In addition, 60 percent of the profits from that flavor go to environmental groups dedicated to preserving the Amazon rain forest.

Ice Cream Exploits

• The very first Ben & Jerry's Homemade Inc. ice cream flavor was a variation of vanilla.
• Not all Ben & Jerry's ice cream experiments have been successful. Jerry Greenfield admits he once made a batch of rum raisin that stretched and bounced.
• In 1983, Ben & Jerry's donated 27,201 pounds of ice cream to help create the "world's largest sundae" for The Guinness Book of World Records.
• It's a little-known fact, but Ben Cohen has always wanted to create a flavor called "Rose."
• In 1986, Cohen and Greenfield set out across the country in a "cowmobile" to promote their company by giving away free ice cream. Just outside Cleveland, the cowmobile caught fire. Fortunately, neither man was injured.