CEO Insight March 31, 2009, 11:49AM EST

Kopali's Zak Zaidman: Making Fair Trade Fruitful

Everyone likes the idea of eco-friendly foods, but selling them to the public takes physical and mental ingenuity

Zak Zaidman

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Zak Zaidman's do-no-harm principle led him first to make nonviolent 3-D software for kids and now to sell organic dried goldenberries, chocolate-covered bananas, and other wholesome snacks to their parents.

A 40-year-old Mexican native who sold Gravity, his San Francisco software business in 2000, Zaidman established Kopali Organics in 2006 after spending time in Costa Rica on an organic farm owned by his friend Stephen Brooks. The experience opened his eyes to the health and environmental hazards created by "chemical plantations"—that spray their crops with pesticides harmful to humans in Central America and throughout the world.

"We saw how the indigenous people's lives were being destroyed with the herbicides, pesticides, and fungicides sprayed by industrial farmers," says Zaidman. "When consumers in the U.S. eat super-cheap bananas, they're hurting the land."

So when Zaidman and Brooks started Kopali Organics to sell "Supergood Superfood," they dedicated themselves to fair trade: the practice of creating consumer products without exploiting the land or its occupants, chiefly via small family-owned farms. In 2008, Kopali took in just under $2 million in revenue, largely because it has the Whole Foods (WFI) supermarket chain as a customer. BusinessWeek's Rebecca Reisner recently spoke with Zaidman about the challenges of Fair Trade and marketing organic snacks. Edited excerpts of their conversation follow:

Tell me more about "Fair Trade." Is it a trade name?

In branded use, "Fair Trade" means the products are certified by international agents from TransFair, who go into countries where the food is produced and make sure the people who pick the fruit and have other jobs related to it get a fair amount of pay for the work they do and for the cost of living in the region. It means sustainable farming, without harmful chemicals.

How did you start out?

I met a group of organic farmers in Costa Rica who had to compete with large-scale chemical plantations. My business partner [Stephen Brooks] and I wanted to figure out a way to link consumers in the U.S. with the food produced on these types of sustainable farms. He had the agricultural background, and I knew about marketing. So we got on a bus and drove from California all the way down Central America to meet organic farmers in different countries and see their products. Now we have relationships with farmers from a dozen countries including Turkey and Uganda.

You work with farmers in rain forest areas. Even if the farms are organic, don't the farmers still have to cut down rain forest trees to create the farms?

Not necessarily. A lot of them are using land that had already been cleared, so they're not cutting down primary trees in the rain forest. And other farmers have learned how to grow food under the shade of rain forest trees.

How did you finance?

At first through bootstrapping, using credit cards. Then I starting using a social venture network, where you meet investors who want to use business for a positive change in the world. We received some small loans from angel investors that way.

What's your strategy for marketing and advertising on a shoestring budget?

We got another bus—a new bus—and outfitted it completely as a Kopali vehicle. We rigged it so it runs on vegetable oil fuel, and we drive it all over the U.S. to let people sample our products and tell them the story behind Kopali. We can sleep in the bus, so that saves hotel costs. Every day someone from Kopali visits grocery stores and supermarkets and stands in front of shoppers and gives them free samples so they can taste our products.

You nabbed Whole Foods as a customer the first year you started the business [2006]. How did you manage that?

We were at a conference, and one of Whole Foods regional presidents was there, so we told him about our ideas. He set up a meeting for us, and they liked what we were trying to do for the earth. The first order was for around $100,000.

You've also recently acquired Wegmans as a customer. What's your strategy for selling in supermarkets?

The first thing we did was remove certain things from our product line. We stopped making banana vinegar, which originally was our first product. We wanted to focus on a smaller line of products. We wanted "grab and go" products— things you'd buy today and want to buy tomorrow, too. Our superfood snacks come in convenient bags that make them an impulse buy. And we price all the bags at $3.99, because we know that's the price threshold for impulse buys. We use attractive packaging with "good earth" slogans all over.

But $3.99 a bag [bags of Kopali snacks weigh around 2 ounces] is still a little expensive for a snack food. Did it take a leap of faith on your part to start the business?

Not really—people spend $3.99 on a cup of coffee. And I believe in people's hearts. No one would want to destroy the world or have people get sprayed with chemicals or get cancer. That's why we get our story out there to consumers. The main challenge is making sure people understand the power that their dollars have to make the world better.