The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
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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…”
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.”
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 …”
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.”
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…”
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.”
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.”
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.”
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.”
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.”
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 …”
Goldman: Early Honest Tea investors earned a 26x return
“That's right, yeah. 26 times their early investment.”
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.”
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”
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…”
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.”
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.”
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.”
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.”
Honest Tea was not profitable until its eighth year of operation
“Weren't profitable until the eighth year or so.”
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.”
Early Honest Tea angel investors saw a 26x return over ten years
“That's right, yeah. 26 times their early investment.”
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.”
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…”
Goldman: Whole Foods bought 15,000 bottles after pitch using empty Snapple bottle
“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…”
Goldman: Honest Tea brewed initial commercial batch using pool filter bags
“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…”
Goldman: Honest Tea became top seller in 17 Whole Foods stores in summer 1998
“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.”
Goldman: Beverage brands require distributors to protect high-turnover 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.”
Goldman: Honest Tea recalled all product in 2003 over broken glass
“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…”
Goldman: Honest Tea lost several hundred thousand dollars in 2003 recall
“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.”
Goldman: Honest Tea was not profitable until its eighth year
“Weren't profitable until the eighth year or so.”
Goldman: Major food and beverage companies regularly tried buying 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.”
Goldman: Coca-Cola's emerging brands unit approached Honest Tea in 2007
“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.”
Goldman: Coca-Cola grew Honest Tea from 15,000 to over 100,000 stores
“We were in 15,000 stores when Coke invested. Now we're in over a 100,000 stores.”
Goldman: Honest Tea sale created employee millionaires via sweat equity
“Some of our employees were made millionaires as well, and that, to me, was, you know, that was all sweat equity that they earned”
Goldman: 1997 bottled drinks were uniformly high sugar or sugar-free
“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…”
McCain Campaign Criticized Obama in 2008 for Drinking Honest Tea
“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.”
Goldman: Honest Tea CEO salary stayed under $100k for five years
“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.”