Seth Goldman – Co-Founder, Honest Tea

Seth Goldman co-founded Honest® Tea in 1998 with Professor Barry Nalebuff of the Yale School of Management. In March 2011, Honest Tea was acquired by The Coca-Cola Company, helping to further the reach and impact of Honest Tea’s mission by becoming the first organic and Fair Trade brand in the world’s largest beverage distribution system. Today, Honest Tea is the nation’s top selling ready-to-drink organic bottled tea and Honest Kids® is the nation’s top-selling organic kids’ juice drink. The brands are carried in more than 130,000 outlets in the United States, including all Wendy’s, Chik-fil-A, and SUBWAY restaurants. In 2016, Honest Tea’s distribution expanded to Europe.

In 2016, Seth transitioned to a new role at Honest Tea as TeaEO Emeritus and Innovation Catalyst for Coca-Cola’s Venturing & Emerging Brands business unit. This transition allows him to take on an additional role as Executive Chairman of Beyond Meat, a privately held California-based enterprise on the cutting edge of plant-based protein research and development.

In 2015, Seth was named the #1 Disruptor by Beverage World, and Beverage Executive of the Year by Beverage Industry magazine; he was also inducted into the Washington DC Business Hall of Fame. Seth has also been recognized by the United States Healthful Food Council with a REAL Food Innovator Award for helping change the food landscape by providing options that are healthier for both the body and the planet.

Seth serves on the advisory boards of Ripple Foods, the Yale School of Management, the American Beverage Association, and Bethesda Green (a local sustainability non-profit he co-founded). He graduated from Harvard College (1987) and the Yale School of Management (1995), and is a Henry Crown Fellow of the Aspen Institute. Seth and Barry are the authors, along with graphic artist Soongyun Choi, of The New York Times bestseller Mission in a Bottle. The book, told in comic book form, captures their efforts to create a mission-driven business in a profit-driven world. Seth lives with his wife and three sons near Honest Tea’s Bethesda, MD headquarters in an eco-friendly house.

Tell me about your early career.
My earlier work was much more in the activist mode. I worked for a nonprofit, and also on Capitol Hill and a political campaign. That was more of my inclination. Right after school, I had spent two and a half years traveling abroad. It was a little bit of an entrepreneurial undertaking just being out in countries where I didn’t speak the language, or know anybody, and have to get around. That was a way for me to gain the confidence operating in unfamiliar environments and circumstances.

How did the concept for Honest Tea come about?
I was first exposed to the idea, mainly, because I ran track in college. As a runner, I was always thirsty, and I just always felt that the drinks out there were just too sweet. So, just this feeling that there was something missing in the marketplace. That crystallized when I was at the Yale School of Management and my professor was leading a case study around the beverage industry, where once again this idea emerged. My professor was pretty excited about the idea. He wanted to do some samples and focus groups, but I wasn’t in a place where I could do anything seriously about it at the time. Subsequently, after I graduated from business school and worked a few years, when I was in New York, and after I gave a presentation, I went out for a run in Central Park and I went to a store to buy something and I realized there was just nothing there. So I reached out to that same professor, Barry Nalebuff, and said I think I was ready to do something about it now. He had actually just come back from India, from studying the tea industry, and he came up with the name, “Honest Tea”, so everything just started to connect. An idea of a less-sweet drink that had social-responsibility embedded into it.

How was the first year in business?
It was fun, exciting, and challenging. There was just so much to do in such a short amount of time. I launched the company in my house, February of 1998. The goal was to get on the shelf by Memorial Day, which is a very tight timeline to launch a company, raise the capital, sell the product, and make the product, but we managed to do that. We made a lot happen in a short amount of time.

What was your marketing strategy?
Very grassroots. A lot of sampling. It was basically anything that we could afford. So, it was giving out samples to the stores. Getting free media coverage, in terms of selling our story with people. So, that was basically being authentic and getting the story out there.

How fast did the company grow during the first few years in business?
We grew really quickly. When you grow from nothing, you grow really quickly. We went from $0 (sales) to about $250k in first year. From there, we went to $1 million, to $1.9 million, and to $3.2 million. It was about 100% growth, or 80% growth, every year.

How do you define success?
For me, there’s three different forms of success: personal, business and impact. In terms of business success, it’s when you’re creating something that penetrates people’s lives to the point that it plays a role in their lives by changing their behavior, and patterns of consumption. When it becomes a brand that they know, trust, and embrace.

In terms of impact success, it’s if you have an impact on the issues you care about. For us, it’s about having a prioritizing diet and health. Can we play a role in helping people move to better and healthier diets? We like to think we can. Another thing important to us is our environmental footprint. We know that being organic has a lighter environmental footprint, so we’re focused on if we can help more communities shift to organic sourcing. Right now, we’re buying 20 million pounds of organic ingredients, so that could be a way to talk about having an impact. The other thing we focus on is fair trade sourcing. We’ve invested more than $1 million back into our supplier communities, so we’re focused on helping those communities shift from subsistence farming to being more sustainable, not just environmentally, but in terms of economic self-sufficiency, which is a positive step.

And then, in terms of personal success, for me, I think this is a bit more about the definition of happiness, but it’s the idea, or equation, that what you have is greater than what you want. Some people assume that the way to be happy is to have more. For me, I think the way to be happy is to want less. To really understand what is important to you, so you can protect and support that, and not get hung up on the things that don’t really drive you.

What is the key to success?
I think the key is understanding that equation. If you know what it is that really makes you happy, then it’s much easier to focus in on it. If you don’t know, and if you haven’t identified what is important to you, it’ll lead you to want all different types of things that’ll lead you to be unhappy. Most people assume that money will make them happy. It takes a lot of time and effort, and they end up with money, and then they realize it doesn’t make them happy, and that could be a bit of a letdown.

What is the greatest lesson you’ve ever learned?
Recognizing that happiness isn’t about having more of everything. It’s about having the right things. I learned another lesson in 1988, when I was doing advanced work for a presidential campaign. I was doing a lot of intense work. It was really high-stakes. I just remember running around. Things were very tense, and at the end of the campaign, the supervisor said, “You did a great job, but you can do that same job and just sort of take the tension out of it. Just think about enjoying it. That doesn’t mean you don’t have to rush. Just sort of flip your mindset and enjoy doing it.” That really hit me.

What are some quotes that you live by?
The one that’s on our office wall at Honest Tea is, “Those who say it could not be done should not interrupt the people doing it”, which is a Chinese proverb. For us, that’s something we really live by. We’re doing something that many people assume is just too hard to do, or not the way beverage businesses are built. Most companies will assume that if it’s what the consumer wants today, then that’s what you should be providing them. We’re really trying to think about what the consumer wants tomorrow, or what the consumer aspires to want. We’re not offering a product that’s supposed to win the taste test, because the product that will win that test will be the sweeter product. We’re developing products we hope our consumers will develop a taste for.

The other is a quote from a Fat Albert episode, which is “He who throws mud only loses ground.” It’s this idea that you’re never going to help yourself by trying to put others in a negative light. The best is to, when you can, be positive with what you’re doing.

Another one is a Chinese proverb, “If we don’t change the direction of which we’re headed, we will end up going where we’re going.” So, you look at some of the real problems we face in the world, and in this country, and unless we change our behavior, these problems are not going to go away. We need a different approach to some of the ways we live, and some of the businesses I’m involved with are part of that.

What are some of your favorite books?
One book I really love is The Call of the Wild by Jack London. What I love about it is that it highlights the fact that we’re all animals. So, it talks about instinct. The story starts off about this dog, that started off as more of a domesticated type of dog, and eventually, the wild part of his animalistic instincts come out and I think so much of society tries to teach people to suppress those instincts. As entrepreneurs, we do have to rely on our instincts. So, you have to make sure you know what is in your mind, and connecting with your own instincts is an important task.

Tell me about one of the toughest days you’ve had as an entrepreneur.
We had quite a few. I’ll talk about one that was personal. We were trying to raise money, and we were really in “fly by night” mode. Things were tight. We were strapped for cash, so if someone said they wanted to invest in the business, I would talk to them. We had this person up in Boston who claimed he represented a wealthy family. I had talked to him on the phone quite a bit, and he asked me to come up to Boston and arrange a meeting. I had some meetings there too, but I went up to Boston, and it was my son’s birthday. I believe it was my son’s 8th birthday, so it was maybe 2002. So, I pushed for an earlier meeting, like 1:00 PM, so I could get on a plane after and make it back to spend some time with my son. So, I go to the meeting and it’s just this guy. Meanwhile, I told him over the phone that I needed to meet with the family. He was just trying to take advantage of the fact that we were strapped for cash. He was playing games, and trying to get something for himself. So, it was a waste of a trip. And then, there was a snow delay on my flight home, and I basically only got to say “Happy Birthday” to my son as he was falling asleep. I’ve always been pretty good about protecting my family time, but I was unsuccessful and my wife was disappointed in me. My son was too young to know, but I was disappointed that it happened, and just having this feeling like I’m trying to chase these investors was tough, and demoralizing to have that not work out. There were more life and death situations, but that was the one that was, personally, just miserable. There were other years when we were running a bottling plant and I’d be driving back and forth, and the bottling plant wasn’t working well and we were losing money, so I had to drive back and forth to Pittsburgh. That was challenging. There were other times when there was broken glass in a bottle of tea and we had to withdraw all of our product from the market. Those were intense moments. There was another time when I was driving through a blizzard to a production modeling facility and I flipped my car off the highway. That was definitely a low point.

When faced with adversity, what pushes you to keep moving forward?
Certainly, the impact. The opportunity of the business. The idea that if we do this right, we can really help move people’s diets in a better direction. That’s certainly part of it. I would also say the impact we have on our supplier communities, by knowing we’re helping thousands of people in these communities live better lives. So, just the duel sides of our impact: the consumers who drink it, and the suppliers who supply our ingredients, are really motivating.

What advice would you give to young entrepreneurs?
There’s a few. First, make sure you’re doing something you believe in. The work is way too hard to just do it for the money. No matter how much money you’re making, there’s other ways to make money. Of course, a lot of times it won’t end up working out anyway. So, make sure you’re building something you really believe in and have a sense of ownership. The other thing is to make sure that your differentiator is clear. For example, some entrepreneurs may think they’ve got a great tasting salsa. Well, there are many great tasting salsas. So, you must have a fundamental difference that would be compelling. With Honest Tea, we came to the market with drinks that had 100 calories for an 8 ounce serving, and we brought our tea in at 17 calories per serving. This other company that I’m now involved with is called Beyond Meat. We sell a burger, but it’s not anything like a veggie burger. It’s really a breakthrough product. It’s dramatically different, which is important. You can’t come out with a “me too” product and expect to get traction. Finally, I think it’s important to find great people you can bring into your enterprise. Whether that’s partners or employees, it’s important to bring in people who are going to share the passion, and who don’t think the same way you do. All those things are important parts of what you’re doing.

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