Sophia Collier is a woman who just won’t quit. In the first part of our story, Collier stormed Washington, DC to try and convince the FCC to allow her company, Broadwave, to share the broadcast spectrum — despite howls from cable-TV and direct-broadcast-satellite industry giants.
That was only the latest wrinkle in a career ranging from a stint at an ashram to the top slot at a mutual-fund company. In the second part of the story, we circle back to trace the earlier triumphs in a remarkable career.
Reinvention II: Pop Star
Collier wasn’t necessarily opposed to doing something as ordinary as going to college. The soda business just caught her fancy before she could get there. On a hot August day in 1977, not long after she dropped out of her ashram and moved to Brooklyn, New York, Collier and a friend experimented with mixing up seltzer, juice, fruit, and a few secret ingredients. Since they liked the results, they figured others would too. “The memory of the variety of seltzers and syrups that once existed will always be a part of New York,” Collier says. “I remembered the fruit sodas that were mixed to order when I was a young child. But by the 1970s, Coke and Pepsi were big, and ginger ale was considered an alternative beverage. No natural sodas existed.” Her own fond memories were enough to convince her to start bottling her concoction as Soho Natural Soda; she used the $10,000 that she had earned as book royalties to fund the startup.
Every part of the business was a crash course in something or another, and Collier soaked it up like a college freshman turned loose without distribution requirements. She especially enjoyed tinkering with flavorings. “One of the most exciting things about a soda company was the opportunity to be involved with the product itself,” she says. “We loved seeking new tastes and experimenting with all kinds of wonderful fruits and spices. We’d go to our suppliers and say, ‘Please bring out all of your very best ingredients, so we can try them,’ and they would. I especially love orange juice, and it turns out that orange juice has as many different blends as single-malt scotch.”
Collier and her partner soon discovered that even the highest-quality flavor essences were only a tiny part of the total cost of producing soda. “We could create the ultimate quality soda without hurting our ability to have a profitable product,” Collier says. “The truth is, it’s easy to make great soda. Most companies just choose not to do it because they think the public can’t tell the difference between good and bad.”
Collier set out to prove that notion wrong, starting with the first line of consumers: retailers. She likes to say that she earned her MBA on the streets of New York, hustling deli owners up and down Manhattan for orders of a case or two. “They key thing is not to insult the manager,” she says. “A lot of the stores were owned by immigrants who were very recent arrivals. The manager was sometimes 14 years old. So I’d ask for the manager, look him in the eye, then open the cap on a cold soda, and just give it to him to try. Almost no one can resist an open soda.”
Investors, however, have a knack for resisting all sorts of yummy-seeming stuff. “One gentleman, Jim Wickersham, asked me what my goals were,” she recalls. “I told him that my goal was to make a great soft drink. Then he asked me what my real goals were, saying, ‘Don’t you want to make money?’ “
Intrigued nonetheless, Wickersham put Collier in touch with the Rockefellers. “By then, I knew the proper answer: My goal is to make money for me and my investors,” Collier says, in a still-gentle but now-firm tone of voice. After the once-over from Wickersham, she also overhauled her wardrobe, laying in a supply of cashmere and pearls. “Now I always have them on. I’m always ready,” she says, resplendent on a rare, hot New Hampshire day in her sweater set and sensible short haircut.
The Rockefellers were duly impressed. “I brought the cold sodas and the business plan,” she recalls. “And I remember looking into the eyes of those stony-faced people in the family office in Rockefeller Center. They looked like the characters in American Gothic. So I finished up, and the man said to me, ‘Ms. Collier,’ and I expected him to tell me to get out. ‘You were fantastic.’ ” Fortuitously, the Rockefellers had been looking to invest in a socially responsible, profitable, natural product. The fact that two women ran the business out of a warehouse in Brooklyn was a bonus. “Everything that was a negative to other people was a positive to the Rockefellers,” she recalls now. It was a good lesson in the importance of finding like-minded investors — not simply financial ones — a lesson she would put to good use later on.
The Rockefellers and others funded the company to the tune of $1.3 million, and Collier and her partner eventually built the business to about $25 million in sales. By the mid-1980s, however, the pair realized that their ambitions for the brand and their financial resources were mismatched.
“Sophia recognized on her own that it was time to sell,” says Jane Owens, Soho’s longtime lawyer and now senior vice president, general counsel and secretary at Sapient. “Big companies like the Coca-Cola Co. and Anheuser-Busch Inc. were trying to get into the space, and Seagram wanted in as well.” Soho was a familiar brand on Wall Street, since it literally fueled many 3 AM deals in the 1980s. Salomon Brothers represented the company despite its minute size and sold the brand in 1989 to Joseph E. Seagram & Sons for about $15 million.
Due to some unfortunate management decisions since Collier sold it, the Soho brand is now gone. Yet Collier doesn’t regret having let it go. “When you sell part of your company to venture capitalists, you make a moral, if not explicit, promise that you will give them a chance to liquidate their investment at some point,” she says.
Reinvention III: Bleeding-Heart Capitalist
After the Seagram transaction, Collier bought a 30-acre farm near Portsmouth, New Hampshire, a city that happened to have had the highest per capita sales of Soho in the country. There, she went into retreat to plot her next move and ponder why her first venture had gone so well. “You wonder if it was a fluke or a unique circumstance that allowed you to become successful,” she recalls. With millions of dollars in the bank, Collier could well afford an extended period of soul-searching.
In some ways, however, her financial situation was precisely the problem. Indeed, she had described this very quandary in her book, Soul Rush: The Odyssey of a Young Woman of the ’70s (William Morrow & Co., 1978), when she wrote about trust-fund kids who were her classmates at boarding school. That kind of money, she wrote, gives you “the opportunity to ‘graduate from the upper class.’ ” Freed from the quest for material wealth, you become “free to pursue anything in the whole world that interests you, without regrets, questions, or doubts.” At 33, Collier herself had only held one job since leaving the ashram — which had taken up a quarter of her working life and then was gone. She could do anything she wanted for her sophomore effort. What would it be?
Collier spent a great deal of that introspective period buried in her books. “Because I didn’t go to college, I’ve always been involved in trying to learn more things,” she says. She built a huge collection of art books that now sits on shelves in her office suite. She spent months researching the personal-computer business and looked into starting a software company. She also investigated a number of troubled local banks that might have been ripe for a turnaround.
Upon further consideration, however, she realized that she couldn’t ditch the itch to keep playing on a national stage. “One thing I didn’t like about the banks was that they were regionally based,” she says. “I realized that my favorite businesses are ones that have strong brands that can be sold nationally or internationally.” She also wanted to preserve two important elements of her first venture: an ability to influence the business through good marketing and a social-responsibility bent.
As she struggled to find a place to park her assets, Collier happened on a business that satisfied all of her requirements. At the time, socially responsible investing was something of a joke. There were just a handful of funds, and they generally trailed the major stock-market indexes. Seeing no reason why she and others like her needed to sacrifice performance for conscience, Collier and a few investors bought a money-market fund from Working Assets in San Francisco for $3.4 million. As a gesture of faith, she put the majority of her liquid assets in the fund and then set out to launch new investment vehicles from that base. She christened her new company Citizens Funds.
The Citizens Core Growth Fund, which launched in 1995, quickly became the company’s best-known product. It’s a twist on the Vanguard Index 500, the world’s most popular mutual fund, a market-weighted mirror of the Standard & Poor’s 500 basket of stocks. Collier’s fund is also an index, but it’s a collection of 300 or so large-cap stocks that have passed the company’s social screening process. Citizens avoids companies that harm the environment or get a large chunk of their sales from military contracts. “We also wanted to see at least one woman or person of color in an important position in the company,” Collier says.
Value judgments mean nothing, however, if the fund doesn’t beat the market. “We wanted to earn a market rate, if not better, and felt that if we couldn’t, we didn’t have any right to be in the business at all,” Collier says. Until 2000, the fund beat the S&P 500 Index handily every year. “Last year was a great year for polluters and military contractors,” Collier notes glumly. The fund now has $623 million in assets, and the company has a total of about $2 billion under management. Today, Citizens is worth at least 10 times what Collier and her investors paid for that first money-market fund.
Like other investors in the late 1990s, Collier and Citizens benefited from a healthy sampling of technology stocks in the index fund’s portfolio. But despite that bump, it’s worth noting that Collier built a stellar record with zero experience in the mutual-fund industry. “I was amazed, frankly” says John Shields, the CEO Collier hired as her replacement in 1999. “I had worked in the industry for 27 years, and I’d seen plenty of people with lots of experience who did not do as good a job as she did. Before I got here, I would not have thought that would have even been possible.”
Reinvention Next: Stay Tuned
Collier took a keen interest in the technology stocks in Citizens’s portfolio, in part because being involved in a tech company had always been on her list of things to do. So when the Broadwave challenge presented itself, she leapt at the opportunity to get on board.
Last November, Collier’s efforts were rewarded when the FCC agreed in principle that companies like Broadwave should be able to share the crowded digital spectrum. Now the FCC needs to sort out the auction issues before Broadwave can get a license to build its system. That could take another year or more, aggrieved parties could sue, and any number of unforeseen technological glitches could develop. If Broadwave manages to clear those hurdles, then consumers will get a crack at determining whether the company survives. Collier figures that the company could be profitable with 2% of the current market for cable and direct-broadcast-satellite systems, assuming it can offer high-speed Internet access and about 100 television channels for approximately $40 per month.
At this, the halfway point on her wild career ride, Collier doesn’t really have to work so hard. She could ditch the apartment in Washington and spend more time in Portsmouth. She could carve out another interesting, less stressful niche for herself. But, she says, the Broadwave struggle — and the ones that have come before it — only serve to energize her. “People like to participate in things that are fun and exciting,” she says. “It doesn’t have to be a popular idea at first. It just has to be great. If it is great and you can find a way to reveal that to other people, you’ve found the best reason to be part of something neat and new.”