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The "Rahodeb" incident, in which Whole Foods Market CEO John Mackey was caught touting his company's stock on Yahoo Finance message boards, is not the first time Mackey has shown extremely poor judgment when it comes to the Internet. Around the same time he started posting on Yahoo Finance as "Rahodeb," a handle taken from the name of his wife, Deborah Morin, he launched a dotcom called WholePeople, which turned out to be an out-and-out disaster, as I wrote back in 2000. But as I reported that story, I also heard persistent rumors that there was a lot of sleeping around going on at Whole Foods, starting at the top. Sounds like the kind of thing we approve of. In most cases. But not the way Mackey did it. Here's why:

  • Whole Foods is run more like a hippie commune than a business — which seems to work well for the grocery business. For Mackey's dotcom, however, free love and blurred lines of responsibility added up to a toxic workplace. Here's what one longtime Whole Foods employee told me:

  • It is very public that John Mackey has long-term relationships outside of his marriage. He once opened a speech saying, "About the same time my wife took her second lover... " Once you get past all the whispering about it, it does change the feel of the environment — combined with the fact that there are a lot of young people working there.

  • Mackey picked Carl Morris, a personal friend and the chief information officer of Whole Foods, to run WholePeople. And who, rumor had it, was Deborah Morin's second lover? None other than Carl Morris.
  • Not that Mackey had a problem with that. Office gossip had it that he was sleeping with Carl's wife, Donna, in an arrangement the parties involved approved of. Supposedly.
  • All of which seems like it would add up to nothing more than one heck of an office Christmas party. Except that Carl hired Morin to work on WholePeople, with disastrous results. Morin, thought just a consultant, wreaked havoc on WholePeople's tight launch schedule with design demands for the "Heart" website section she ran.

Morin's hiring, of course, was just one of many bad, hasty decisions that Mackey and Morris made in their e-commerce misadventure. The result? A dotcom which ended up losing $500,000 a week. A site that was shuttered three months after it launched. 177 people laid off. Millions of dollars of venture capital wasted. And how did Mackey get WholePeople, at last, off Whole Foods' hands? Why, by calling on a friend, office-supplies magnate Jirka Rysavy, to whom he unloaded it on the cheap. As the debacle unfolded, Mackey complained bitterly to a close associate, "I'll never get venture capital for anything.... I'll be a grocer for the rest of my life." Who knew, at the time, he had such a career ahead of him as a message-board poster? And that he'd drag Deborah, willy-nilly, into another dotcom disaster?