Natural Selection | Rob Johnston built Johnny's Selected Seeds one variety at a time. Will his sale of the business to his workers jeopardize its future?

First things first: The guy who founded Johnny's Selected Seeds isn't named Johnny.
That guy is named Rob. He's the guy who left the University of Massachusetts when Vietnam-era unrest closed the campus and never returned, the guy who went to work on a farm in New Hampshire, got passionate about natural foods and the seeds from which they derive, decided to turn that interest into a business, and later moved the business to a friend's farm in central Maine.

Rob is the guy who had no experience at running a company, but learned as he went. He's the guy who took on the Monsantos of the world, who rode the wave of the back-to-the-land movement and built his vision into a company that last year had sales of nearly $13 million, who started with one employee — himself — and now, at peak times of the year, employs 140.

Rob is the guy whose company sends out 450,000 catalogs each year to gardeners and farmers eager for spring, people who flip through pages filled with pictures of tomatoes and celery and catnip and any vegetable you can imagine and dream of muddy fingers and hours spent under a hot sun. Rob is the guy whose company has earned a stellar reputation with those gardeners and farmers, people who almost universally say Johnny's stands for quality seeds and excellent service.

Rob is the guy, the perfectionist, who insists that excellent isn't good enough, not for his company. He's the guy who believes the world is a better place because his company exists. And he's the guy who, after three decades spent building Johnny's into something of significance, decided last year to sell the business to his employees — even though he believes the move is a risk that could cause his company to wilt and fade away.

So if that guy is named Rob, why is the company named Johnny's? It was originally called Johnny Appleseed's. "Then," Rob says, "I got a letter from the attorney of the Johnny Appleseed clothing company." And Johnny's Selected Seeds it became.

It's about the seeds
Robert L. Johnston Jr. hasn't talked to many reporters in the 34 years he's owned the company. And any he did speak with probably realized talking isn't his favorite activity. "Rob," says Amy Keimel, marketing manager at the company, "is a very quiet and unassuming personality."

But recently, on a bright December day, Johnston welcomes a visitor from Mainebiz to the company farm in Albion, in Kennebec County. Johnston, with a shaggy gray beard, is wearing jeans and a red-and-black flannel jacket, and points to the 25 acres of farm fields Johnny's has under cultivation.

December, alas, is not the best month to see the fields, which are brown beneath a weak winter sun. At other times of year, though, this is where Johnny's workers test competitors' seeds and where the company develops new varietals, to produce seeds its competitors lack.

The company came to these fields in 1975, two years after its founding, with a nearby farmhouse as its headquarters and its shipping department in a garage. Johnny's at first grew slowly. It wasn't until 1985 that the company hired its first salesman, and it wasn't until 1991 that the company built a real headquarters, a squat building that sits at the front of the fields. "We built the business gradually," Johnston says, "which was a good way to do it, because we could pay as we went."

The pace of growth quickened, though, and in just more than a decade the company outgrew the new building. That meant a move in 2002 to a much larger, town-owned building in Winslow. It's only about 15 minutes distant, but you sense the shift from "the home farm" to the Benton Avenue building in Winslow was a shock to company culture, that it symbolized a not entirely welcome move toward a more corporate future. Johnston in particular seems chagrined by the new headquarters. He apologizes for the building's lack of character — and rues its distance from the farm. "It can drive you nuts thinking about all the time I'm paying people to drive back and forth," he says. "But I settle myself down by thinking that it gives people a chance to think and relax, and that it's not completely wasted time."

Giving a tour, Johnston pans the corporate layout, but touts the building's attributes — the climate-controlled rooms that suck away the heat and humidity and keep seeds in hibernation; the retail store that features gardening tools developed by the company; the quality-assurance room where seed specialists ensure that the failure rate for each varietal line is below one percent; the shipping room where 1,500 types of seeds are stored.

But in the midst of the tour, Johnston stops. "Our customers don't care about any of this," he says. "Our customers care about receiving a seed that will earn them a living or a seed that will grow in their garden." And that, he adds, is what he gives them.

Success breeds complacency?
Central Maine is the state's agricultural heartland. You don't have to drive far from Waterville or Winslow before subdivisions give way to dairy farms that have been in the same family for generations, or to small organic farms owned by relative newcomers. When Johnny's sells to in-state commercial customers, there's a good chance the package isn't traveling far.

But Johnston doesn't believe central Maine has helped the company. When asked about the location, Johnston says he was reluctant to move so far north and mentions the management book Good to Great, which argues that companies wanting to excel must confront the "brutal facts" of their existence. "One of our brutal facts is that we're in central Maine," Johnston says. "Why is that a brutal fact? Because this isn't a horticultural hotbed. When we want to hire skilled workers to work on the farm side of the business, we have a hard time finding them."

And, of course, the region's growing season is very short, meaning the company has to rely on a network of farmers, including some in Europe, to produce the vast majority of its seeds. The seeds are shipped to Winslow, repackaged, and shipped again to Johnny's customers.

Despite the obstacles, Johnny's Selected Seeds is a central Maine success story, and anyone who has lived in the region can tell you there have been too few of those in recent decades. The company is growing sales by about eight percent each year, having convinced farmers — commercial growers comprise about 70% of sales — that they can rely on its product. Johnny's deals mostly in vegetable seeds, which also account for 70% of sales.

Johnston's timing was good. He started the company as back-to-the-landers came to places such as rural Vermont and Maine and put a new emphasis on growing quality food. It was an era during which big agribusiness was producing food designed for durability over long shipping distances. But a subset of growers, joined by some consumers, rejected that mindset, creating a market for a company that offered seeds designed to produce great-tasting vegetables. "I was starting a company in a favorable demand climate," Johnston says.

Johnny's earned a reputation for quality and stellar service, a reputation it maintains. "I have purchased from Johnny's for many years," an Alabama woman wrote recently on a gardening website, "and the service and products have always been first rate. The order routinely arrives sooner than stated and the germination rate of the seeds is excellent."

That comment was set among dozens of favorable comments about Johnny's, including this one: "Can't say enough good things about Johnny's for quality products and reliable, professional, courteous customer service." You'd think those kinds of compliments would please Johnston. Instead, they worry him. To his way of thinking, success can breed complacency, and he sometimes sounds like he'd be happier running a company that has to scratch and fight to survive.

Get a bad meal from a new restaurant, Johnston says, and you'll never go back. But get a bad meal from a restaurant you trust and you'll forgive the error. "Most people don't think of having a brand as a problem," Johnston says. "But when we were starting out, we couldn't make a mistake. You don't get cut any slack when you're new. Now we're in the position where people will cut us slack if there's a problem — and I don't like that."

With dirt on his shoes and, on this day at least, a hole in his sweater, Johnston is not exactly the picture of a buttoned-down company executive. But he's as competitive and driven as any CEO, and three decades at the helm haven't softened his focus. He recently noticed that a company mission statement said Johnny's should have an "excellent" website. "I crossed that out and wrote 'superior,'" he says. "What the hell is excellent?"

Employees take control
Johnny's Selected Seeds has long been known for its homey, text-heavy paper catalogues, and the website is just one of several indicators that the company is changing. The Internet now accounts for a quarter of company sales.

The company also is putting a new emphasis on marketing, but the biggest shift at Johnny's involves ownership. After long considering the move as he approached retirement age, Johnston, 56, decided last year to sell the company to its employees. The shift is technically complicated but gradual. In November, using a combination of company cash and money borrowed from Bangor Savings Bank, employees purchased 30% of the company. They are scheduled to make two more such purchases. A 2009 buy will give employees a majority share, and a 2012 purchase, if all goes according to plan, will give them total ownership.

Johnston is guaranteed a job as chairman until the last share is paid. At that point, he says, it's up to the board of trustees and employees, many of whom he hired himself, to decide if they want to keep him on. To many at the company, the shift in control seems natural. "Most of the employees here have a sense of ownership," Keimel says, "and selling to someone else might have seemed like a betrayal."

But Johnston worries about the change. His research tells him that companies with employee stock ownership plans — or ESOPs — tend to become too safe and cautious. They lose entrepreneurial energy and focus, as employee-owners decide to protect their assets rather than making investments or changes. The company, Johnston fears, could drift, as could its reputation for quality. "There's a chance that what's valuable here could get squandered," he says.

So why would Johnston take the chance? Selling to employees keeps the company independent, he says, and leaves it in the hands of those who know it best. "I thought it was the high road," Johnston says. "And I thought it was worth giving it a shot, to see if the employees could pull it off. I thought it was risky, but had the greatest potential payoff."

There are 11,000 employee-owned companies in the U.S., including prominent Maine companies such as Pittsfield-based Cianbro Corp. and Sebago Technics in Westbrook.

Michael Keeling, executive director of The ESOP Association, a trade group, says employee-owned companies can thrive "if the company has a culture of employee involvement and participation in workplace decisions." (For more on employee-ownership arrangements, see "The ESOP fable", see below.)

Johnston's personality, of course, is stamped on his company. He admits, for example, that its strengths mirror his interest areas, while its weaknesses, such as marketing, are topics he finds less compelling.

And his opinion often has been the stand-in for company opinion. In 1999, when Johnny's decided it would not automatically reject genetically engineered seeds, Johnston wrote company positions on the hot-button issue. "By virtue of my being owner and company chairman, they are the official position of the company," he declared to company customers, adding that some employees disagreed with his position.

Johnston says he is trying to loosen his grip, though it isn't easy. "I don't think I have control issues," he says. "Some of the people here think I do, but I don't. There certainly are things that are being done here in a way that I wouldn't do, but I've let that go."

Making lives easier
Farming isn't an easy way to make a living; farmers have plenty to worry about. In fact, it sometimes seems there's little on which a farmer can really rely. Mother Nature always has a trick up her sleeve, a typical piece of farm equipment has thousands of parts that can and do break, and the marketplace depends on capricious consumer whims.

But Rob Johnston hopes, at least, growers can rely on his company. "I'd like to think that we're simplifying the lives of our customers," he says. "We're one less thing they have to worry about." Rob, in fact, is a guy who likes to think that his company and his customers are in a partnership, because they both share the same aim: to grow better-tasting food.

And he's a guy who dreams of making the farming life even easier, who hopes that, one day, if a farmer in the field runs short of seeds, that farmer could call up the Johnny's website and have the seeds delivered the next day. He's says that level of service would be truly "superior."

Rob is also the guy who, three decades back, couldn't have imagined that his small start-up, with its catalogues printed on a friend's typesetter, would grow as it has, who couldn't have known what his future would become when he left college, when he left a math degree in the dust, for a farm in another state.

Rob is a guy who says he was never interested in making money, but has loved dreaming up services for his customers. He's a guy who believes his company is making the world a better place, in its own small way. "What can you do in life?" he asks. "All that you can do is toss a pebble on the mountain. Hopefully you can improve the beauty of the mountain nonetheless. That's sort of my barometer." Rob is the guy who isn't named Johnny.