Insight
Goldman used value-triggered equity grants to prevent founder dilution during fundraising
“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…”
Insight
Goldman: Zero Industry Knowledge Was a Competitive Advantage for Honest Tea
“Having zero knowledge of the beverage industry in the beginning was actually a competitive advantage. Because we went in without any of the assumptions.”
Opinion
Skipping venture capital preserved Honest Tea's control and prevented premature exits
“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 …”
Insight
Goldman: Lack of beverage experience was a competitive advantage for Honest Tea
“Having zero knowledge of the beverage industry in the beginning was actually a competitive advantage. Because we went in without any of the assumptions.”
Insight
Goldman: Structuring founder equity to vest on valuation growth prevents dilution
“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…”
Assertion Contradicted
Goldman: Most US Bottled Tea Is Made From Powder or Concentrate
“Most of the bottle tea in the U.S. At the time, and still today, Is not brewed with, you know, it's not brewed tea. It's a powder or a concentrate.”
What-if
Goldman: Adding sugar would have accelerated Honest Tea's growth but diluted brand
“Well, there's no question that would have led to faster growth, but it would have diluted what we were building.”
Insight
Goldman: Acquired founders rarely last more than a few months post-sale
“So often, when a brand is sold, the entrepreneur gets really frustrated, and they butt heads, and the entrepreneur rarely lasts a few months.”
Assertion Supported
Goldman: Most bottled tea is made from powder or concentrate, not brewed
“Most of the bottle tea in the U.S. At the time, and still today, Is not brewed with, you know, it's not brewed tea. It's a powder or a concentrate.”
What-if
Goldman: Adding sugar would have accelerated Honest Tea's growth but diluted brand
“Well, there's no question that would have led to faster growth, but it would have diluted what we were building.”
Opinion
Goldman: Avoiding VC money helped Honest Tea maintain control
“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 …”
Assertion Supported
Goldman: Early Honest Tea investors earned a 26x return
“That's right, yeah. 26 times their early investment.”
Assertion Supported
Goldman: Yale SOM connection secured Honest Tea's first Whole Foods buyer meeting
“The marketing director at Whole Foods, or at that time it was called Freshfields Whole Foods, it was a mid-Atlantic. He was a graduate of the Yale School of Management as well. So he helped me get an appointment with the buyer.”
Assertion Supported
Whole Foods ordered 15,000 bottles after Goldman pitched with a thermos
“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”
Assertion Supported
Honest Tea brewed its first batches using large pool filter bags
“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…”
Assertion Not checkable as stated
Honest Tea Became Top-Selling Tea in 17 Mid-Atlantic Whole Foods Stores
“But by the end of that summer, we were the best-selling tea in the 17 Freshfields Whole Foods stores in the Mid-Atlantic.”
Insight
Beverage brands need distributors to defend high-turnover retail shelf space
“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.”
Assertion Supported
Honest Tea voluntarily pulled all its products from every store in 2003
“So we voluntarily withdrew all product from the market. Every store. Yes. Everywhere. Not just Whole Foods. Everywhere.”
Assertion Not checkable as stated
Goldman: Honest Tea lost several hundred thousand dollars in 2003 recall
“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.”
Assertion Supported
Honest Tea was not profitable until its eighth year of operation
“Weren't profitable until the eighth year or so.”
Assertion Supported
Honest Tea expanded from 15,000 to over 100,000 stores with Coca-Cola
“We were in 15,000 stores when Coke invested. Now we're in over a 100,000 stores.”
Assertion Supported
Early Honest Tea angel investors saw a 26x return over ten years
“That's right, yeah. 26 times their early investment.”
Disclosure
Goldman: Honest Tea employee sweat equity created multiple millionaires
“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.”
Insight
Goldman: 1990s beverages had a gap between high-sugar and zero-calorie
“It was all a hundred calories per eight ounces, and so the difference was fizz or no fizz, color, you know, different names, different bottles, they were almost uniform in their taste profile, their sweetness profile, which was, you know, six or seven teaspoon…”
Seth Goldman