Honest Tea

“Really, from the first year, we were, every year or so, we'd be approached by a major food or beverage company that wanted to buy us.”

“Having zero knowledge of the beverage industry in the beginning was actually a competitive advantage. Because we went in without any of the assumptions.”

“We were in 15,000 stores when Coke invested. Now we're in over a 100,000 stores.”

“So in 2003 we had a delivery of glass that was faulty. And there were a lot of blisters in the glass. Literally, you could look at it and see little bubbles. And so we ran it on the production line, and the way the line works is that if it ever sees a defect i…”

“We were doing about 3,000,004 million dollars in sales, and, ah, it totally stopped our sales. So we lost several months of sales. So several 100,000 dollars.”

“What if instead you started the founders at the same place as the other investors, and only when the company grows in value do the founders get more equity? And that's was, it was a reverse structure. And what that did was it helped as we grew and we raised mo…”

“That's right, yeah. 26 times their early investment.”

“Well, they approached us in 2007, and they had just created this group of venturing and emerging brands, And their goal was to invest in and build the next billion dollar brand for Coca-Cola.”

“So a lot of entrepreneurs in the venture capital mode is basically they're incentivized to own more of the company. They're incentivized to exit quickly. And we didn't take that kind of money. And I'm very glad we didn't. I think that was a key piece that let …”

“Some of our employees were made millionaires as well, and that, to me, was, you know, that was all sweat equity that they earned”

“Beverages are a high turnover product. And so as soon as a shelf empties of beverages, something takes its place. And so you need a distributor to be there to build and keep the shelf space protected.”

“By the way, the company has now sold more than a billion bottles of its beverage. It's now completely owned by Coca-Cola with annual sales of more than a hundred and seventy million dollars.”

“Our marketing effort was me and two interns giving out samples in Whole Foods stores, and we gave out more samples than we sold. But by the end of that summer, we were the best-selling tea in the 17 Freshfields Whole Foods stores in the Mid-Atlantic.”

“We ended up at a plant in Buffalo, New York that was making apple juice. Maybe it was a little down on its luck. It had some line time available, and they said, well, how are you gonna brew the tea leaves? And so we, Brought in these mesh bags, these large mes…”

“Weren't profitable until the eighth year or so.”

“My first year salary was at 50,000. Literally, I took that 50,000 dollar check and it was even, it was tax inefficient because I invested in the company and then I paid myself. I don't think I got over a 100,000 and for, probably not for the first five years.”

“When I met with the buyer and I, we poured out samples from the thermos, showed him my empty Snapple bottle. [498] Guy Raz: With the Honesty Label on it? [499] Seth Goldman: With the Honesty Label on it, of course. [501] Seth Goldman: And he had said well, lo…”

“Well, there's no question that would have led to faster growth, but it would have diluted what we were building.”

“Having zero knowledge of the beverage industry in the beginning was actually a competitive advantage. Because we went in without any of the assumptions.”

“So we voluntarily withdrew all product from the market. Every store. Yes. Everywhere. Not just Whole Foods. Everywhere.”

“We were in 15,000 stores when Coke invested. Now we're in over a 100,000 stores.”

“Well, we were doing about 3,000,004 million dollars in sales, and it totally stopped our sales. So we lost several months of sales. So several 100,000 dollars.”

“But by the end of that summer, we were the best-selling tea in the 17 Freshfields Whole Foods stores in the Mid-Atlantic.”

“Weren't profitable until the eighth year or so.”

“Well, to me, what was so exciting was some of our employees were made millionaires as well, and that, to me, was, you know, that was all sweat equity that they earned, so that was especially meaningful.”

“When I met with the buyer and I, we, Poured out samples from the thermos, showed him my empty Snapple bottle. With the Honesty Label, of course. And he had said well, look, this sounds interesting. We'll give it a try. We'll take 15,000 bottles”

“So a lot of entrepreneurs in the venture capital mode is basically they're incentivized to own more of the company. They're incentivized to exit quickly. And we didn't take that kind of money. And I'm very glad we didn't. I think that was a key piece that let …”

“By the way, the company has now sold more than a billion bottles of its beverage. It's now completely owned by Coca-Cola with annual sales of more than a hundred and seventy million dollars.”

“Well, there's no question that would have led to faster growth, but it would have diluted what we were building.”

“He said, but what if instead you started the founders at the same place as the other investors, and only when the company grows in value do the founders get more equity? And that's was, it was a reverse structure. And what that did was it helped as we grew and…”

“Beverages are a high turnover product. And so as soon as a shelf empties of beverages, something takes its place. And so you need a distributor to be there to build and keep the shelf space protected.”

“So we ended up at a plant in Buffalo, New York that was making apple juice. Maybe it was a little down on its luck. It had some line time available, and they said, well, how are you going to brew the tea leaves? And so we brought in these mesh bags, these larg…”

“There was a moment in 2008. President Obama had become an honest tea drinker, I guess, at the campaign for 2008. And the McCain campaign had criticized him for being, you know, out of touch with the American people.”

“That's right, yeah. 26 times their early investment.”

“I think it was 36 people for 550,000 dollars, and Seth Goldman of Honesty was 2500 dollars.”

“Like, I cold called Seth Goldman.”

“I think it was 36 people for 550,000 dollars, and Seth Goldman of Honesty was 2500 dollars.”