Philanthropy

This Multi-Million-Dollar Company Built its Success by Hiring Ex-Convicts


This piece originally appeared in Philanthropy Daily on April 26, 2018.

In the continuing debate over criminal justice reform, it’s clear that former prisoners need jobs if they are ever going to get back on their feet. There are lots of small social enterprises ready to give former criminals work, but standing out among them is Dave’s Killer Bread.

Go to Dave’s Killer Bread website and you’ll learn that the company’s founder, Dave Dahl, served four prison terms, and that the company prides itself on having a third of its workforce at its Milwaukie, Oregon plant be former prisoners. (Some of these ex-cons talk about themselves in this video on YouTube.) But as Tova K. Danovich notes, Dahl’s story is more complicated that the simplified version on the company’s website.

Dahl is one of the few multi-millionaires in this century whose fortune didn’t come from technology. In 2015, Dave’s Killer Bread was sold to Flowers Foods for $215 million. Dahl’s share of the sale amounted to $33 million. So even though Dahl’s picture is on every package of Dave’s Killer Bread, he doesn’t have anything to do with the company anymore except as an investor.

Dave Dahl was born in 1963. His family is Seventh-Day Adventists, a church that encourages its members to eat healthily. His parents, Jim and Wanene Dahl, ran NatureBake, a bakery that, even in the 1970s, made products that were organic, made from sprouted wheat and foods that aren’t genetically modified.

“From the beginning,” Danovich writes, “Dave was the bad seed.” He quit the church and frequently got into fights. He also started using meth, and began stealing to support his drug habit. Dahl served four prison sentences, including one for a year for stealing a cellphone accessory that cost $12.99.

In 2001, his life hit bottom. Prisoners who were trying to commit suicide surrounded him, and he thought life was hopeless. So he wrote a note asking for help, or what, in prison slang, was a “kite.” The note made its way through the system, and a physician’s assistant gave Dahl antidepressants. His life began to change for the better.

Three years later, Dahl was released from prison. His brother Glenn offered him a job in the family bakery because he saw that Dahl had changed his life.  His brother remarked that Dave “had a whole different attitude about the way he looked at the past and the future. He had goals.”

Dave Dahl wasn’t given set tasks, but just noodled around in the kitchen. His noodling paid off with bread recipes that were really good. His signature move was putting grains on the outside of loaves. Customers really liked Dave’s recipes, and they enjoyed his promotional appearances, particularly when he’d respond, “I think that deserves a loaf of bread,” and tossed a free loaf to the crowd.

NatureBake became Dave’s Killer Bread, and the company began to hire prisoners. Dahl notes that they weren’t thinking “Oh this is a felon-friendly program, or anything like that.” Instead, they just hired the people they wanted, many of whom happened to be felons. “We just realized that here we were just doing the right thing and it was actually promoting the brand,” Dahl said.

But fame went to Dahl’s head. He started drinking occasionally, and then he became addicted to alcohol.

He went on a camping trip where a friend died. (Dahl says he doesn’t know what happened because he was too blasted to notice.) In November 2013 he had a breakdown where he showed up at Dave’s Killer Bread offices, screamed at employees, and punched out a cardboard cutout of himself. He also allegedly rammed three police cars. In 2015, he was found to be temporarily insane and was placed under court supervision and barred from driving or drinking.

Dahl was pushed out of the company he had transformed.

He now sells African art and has his own website. But he kept his stock. His recipes, the cartoon version of himself, and his story are still on every package of Dave Killer’s Bread. And the company still prides itself on the number of felons it has rehabilitated.

Dave Dahl’s story addresses several issues of interest to philanthropists.

One is the extent to which foundations should use their endowments for mission-related investments. I think this is a good idea as long as the businesses in which foundations invest are real enterprises whose success will ultimately come from the market and not disguised charity. And, as Peter Thiel suggests, it is better to invest in businesses that make physical products and not tech companies or enterprises that sell services.

There is also the issue of whether or not businesses should be social enterprises. Dave’s Killer Bread has never been a social enterprise, but a company that started hiring felons because it was the right thing to do. The result was a strategy that fit Dave’s Killer Bread like a glove and helped build their brand.

Jim Koch, founder of Boston Beer, says in his memoirs (which I reviewed for the Weekly Standard) that his company originally had a day where his staff volunteered to paint a community center. “We had probably spent $10,000 in good management time to do $2,000 worth of mediocre painting. We could do better.”

So instead Koch’s employees act as mentors to entrepreneurs with Boston Beer offering expert advice and access to capital. According to Koch, this “Reclaiming the American Dream” program has created 4,700 jobs. Again, Boston Beer found a way to help others that worked for them.

The strategy that doesn’t work, but is employed by far too many companies, is to hire credentialed “experts” who advise giving to a narrow band of charities which have little or nothing to do with a company’s mission but which will earn the company polite applause at annual meetings of the Council on Foundations.

This method of giving is practiced far too often, but it nearly always fails to make a real difference.

Martin Morse Wooster

Wooster is a senior fellow at the Capital Research Center. He is the author of three books: Angry Classrooms, Vacant Minds (Pacific Research Institute, 1994), The Great Philanthropists and the Problem of ‘Donor Intent’ (Capital…
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