Seth Goldman (Founder of Honest) Tea Shares His Story

Show Notes

Seth Goldman shares how he started the $150 million Honest Tea brand out of his kitchen making tea one thermos at a time, why he had to drive around in his 1998 Saturn Stations Wagon in search of a bottler, how he was able to get his product inside 10,000 + stores around the world and much, much, more.

Show Notes:

  1. Seth Goldman shares how he started the $150 million Honest Tea brand out of his kitchen making tea one thermos at a time.
  2. The time will never be just right to start a business.
  3. Why he had to drive all-around northeastern American in a 1998 Saturn Station Wagon in search of a bottler.
  4. The story behind the Honest Tea name.
  5. How he raised the money needed to fund the growth of Honest Tea.
  6. His path for pushing through countless rejections to get Honest Tea inside 100,000 stores including Chick-fil-A, McDonald’s, Subway, Wendy’s and retailers throughout the world.
  7. Why after selling Honest Tea to Coca-Cola, he then reinvested heavily right back into the company.   
  8. How to determine what terms to offer investors when raising capital.
  9. Why he decide to allow Coca-Cola to acquire his brand to increase distribution and much, much, more.
  10. On today’s show, we are interviewing the founder of a worldwide beverage brand, Honest Tea. With a mission-focused business, Seth Goldman has successfully been able to put his $100 million brands into Chick-fil-A stores, Wendy’s and over 100,000 stores around the world. Seth Goldman, welcome onto the Thrivetime Show! How are you sir?!
  11. Seth Goldman, at the age of 48, in May of 2014, you sold your 1 billionth beverage and according to an article in Forbes, your company became a $100 million brand after 15 years in the making, but I would like to start at the bottom and the very beginning where it all started. Take us back to 1998. What first inspired you to start honest tea? FUN FACT – Honest Tea: A $100 Million Brand 15 Years In The Making –
    1. I was looking for something that isn’t as sweet as all of the other drinks out there so I created it.
    2. The first step was that I made samples in my kitchen and took them to whole foods
    3. I poured the tea into Snapple bottles, ripped off the label and say “This is what it would look like.
  12. Seth, what kinds of jobs were you doing before you started Honest Tea?
    1. I was in the investment business already before the ideas were “brewing”
    2. I stop that and built it out of my house
    3. There is never a perfect time. We just had our third son and that isn’t the perfect time.
    4. There was enough of an idea and passion that I knew I could make something out of it.
    5. I ended up getting a check from my father 20 years ago to get me going with the company
  13. How much money did it cost to start up?
    1. I put in $50k but we raised $500k
    2. That was enough to get things going.
  14. Seth Goldman, I’ve read that you first came up with the idea for the business while studying for your MBA at the Yale School of Management in 1995. Where did the idea come from?
  15. Seth, I believe that you and a buddy were out for a run around Central Park in New York and that at the time you could not find anything pleasing and healthy beverages. Is this ultimately what made you pull the trigger and want to start the business or what was that tipping point for you that made you start the business?
  16. Seth, I would love for you to share who Barry Nalebuff is and what his role was in the founding of honest tea?
    1. He was my professor and we always hit it off
    2. We liked to challenge each other
    3. We would stay in touch after I graduated. I would get advice from him when I would get a job or make big life decisions.
  17. Seth Goldman, where did the name Honest Tea come from?
    1. My co-founder Barry was in India and he came up with the name.
    2. It was what we wanted to capture as a natural brand
    3. When he came up with the name Honest Tea, I decided that that was it. We would do tea!
  18. What is the best way to raise capital?
    1. We did something different and risky.
    2. We told everyone that we would invest as much as other investors invest.
    3. When the stock prices of the company would rise, we would get more of the company. That way, we would only give ourselves shares of the companies instead of just giving ourselves free shares.
  19. Seth Goldman, I understand that your parents were both professors and so your family conversations were typically not about sports or celebrity gossip. What kind of impact did this make on your life and the way that you see the world?
    1. My dad was an economist and my mom studied China
    2. We were thinking about how to grow a business that would help the world
    3. I got from my parents a sense of humility. I never got a great job. We always have more work to do.
    4. Success isn’t a grade or a dollar figure.
  20. I first became a fan of yours in 2012, when I read the book The Startup Playbook where it reported that you “set out to build a beverage company that would change the definition of what a beverage should be. That the standards you set for the company are immovable:
  1. Fairtrade
    1. It starts with the wages. Whether it is people picking or processing. They are paid a fair wage. A portion of the proceeds goes back to the community to invest. We help them become more economically efficient.
  2. Where are most of your beverages made?
    1. We got bought by Coca-Cola in 2007. New Jersey, California, Texas and many more states.
  3. Where are most of your employees from?
    1. Most of the employees are employees of Coca-Cola
  4. Low sugar and caloric content
    1. 21 Years ago when we were starting this company every tea was 100 calories in 8 oz because of the sugar.
    2. We definitely were doing it from a health perspective but also a health perspective.
    3. When you start out that way it is hard because it isn’t where the majority of consumers are and didn’t taste like what they were used to.
  5. A commitment to organic
    1. The simple reason: In most non-organic agriculture use pesticide and herbicide compounds. They kill herbs and pests. They kill living organisms.
    2. The companies will tell you that they are safe at diluted levels to the consumer. They may not reach specific levels on the plants but they do build up in the air. Newborn babies are at times born with these compounds inside them even though they have never ate any compounds.
    3. Organic often does cost more. We try to democratise organic. We bring these products to scale so that they can be cheaper. It isn’t a premium. Everyone can access them.
  1. Why are and were you so passionate about these principles for your company?
  2. Seth, in 1998, it’s my understanding that Wholefoods made an order for 15,000 bottles of the tea that you were making in your kitchen at the time. How did this deal come about?
    1. Their head of marketing went to the Yale School of Management. I got to know him when I went to Yale. I brought him some samples and he told me I had to convince the buyer not him. I gave the buyer a sample and he said he would take 15,000 bottles. He said he wouldn’t pay for any of them unless they sold.
    2. We’ll ship the product to them. Sometimes it is 30 days or 60 days. When you’re in the early stages sometimes you can get paid in 10 days for a discount.
  3. Seth Goldman, how were you able to scale up and keep up with all of the orders?
    1. I sprang into action and went to every facility who did bottling. Soda plants, breweries etc…
    2. We found an apple juice packing facility and they let us use their equipment.
    3. We drove everywhere and met with these people in person. When you’re starting out and you don’t have much to go on, you have to meet these people and show them that you are a real person. They would often insist on paying upfront.
    4. We had a 1998 Saturn Station Wagon. I would pick up our spices from a warehouse and drove 8 hours. That wagon was permanently stained with the smell of chai.
  4. Who are some of your favorite musicians?
    1. U2
    2. Tom Petty
  5. What one piece of advice would you give someone out there?
    1. Those who say “It cannot be done should not interrupt the people doing it”
    2. “Be yourself, everyone else is already taken.” – Oscar Wilde
    3. “He who throws mud only loses ground.”
  6. What was the most difficult aspect of scaling Honest Tea?
    1. The distribution
    2. We had the product but we didn’t have a distributor. They were not huge fans because it wasn’t like anything on the market. We had to work around the beverage distributors and went to any distributor that would give us a shot.
    3. We would do anything to get a shot with a distributor.
  7. Seth, why was owning a bottling plant an epic disaster?
    1. The bottlers were tough. They told us they couldn’t make more tea so we had to buy a bottling plant. It was really a drain on my energy. It wasn’t where my heart was and it was really a waste of energy and time.
  8. Seth, what was your plan and path for marketing to beverage distributors and stores?
  9. Seth, I would love you to share about how cheese and corn-beef distributors helped you to market Honest Tea?
  10. In 2001, Honest Tea was able to classify more than half of the products as organic…why was this so important?
    1. It was totally consistent with our name and our brand. Chemicals are sprayed on the leaves until hot water is poured on them and makes the tea. Being organic has really set us apart. When the USDA created the Organic Seal, it really branded our product.
  11. Seth Goldman in 2002, legislation brought about the creation of the “Organic Seal.” Why was it so important so that you were ahead on the trend and ready to certify your products before most other beverage companies at that point?
  12. Seth, you have degrees from both Harvard and Yale and you could have done anything with your career, why are you so committed to growing Honest Tea?
    1. I love this work. I love the impact we have on consumers and buyers. I have become a partner with a company called “Beyond Meat”.
  13. Beyond Meat. The Beyond Burger.
    1. We have a product called the Beyond burger that taste like beef but is made entirely of plants. There has been a ton of interest of the country.
    2. We just launched the burger at Carl’s Jr. which is a huge achievement.
  14. How many rejections did you have to go through?
    1. We got rejected by everyone. Distributors and investors.
    2. For every dollar we raised I had to get 10 rejections.
    3. That is where the fun and challenge is.
    4. It is creating something new and exciting.
  15. In the book The Startup Playbook, it reported that one of your proudest achievements was seeing an intern running Honest Tea’s West Coast Division at the time. Why does was this so important to you?
  16. Seth, I’ve read that you are always looking for alternative ways to connect with people, you prefer to engage in guerilla marketing campaigns that are unique in your sector. I would love for you to share some examples of you some of your favorite Honest Tea guerilla marketing moves over the years?
  17. You once said, “You want everybody that interacts with your brand to be excited about it. That could mean getting distributors to give you more shelf space, or getting your employees to believe in the opportunities you offer. It also means making your customers feel invested in your cause. To me, that’s bee a much more powerful driver than the financial incentive.” I would love for you to break down what this means for us?
  18. Seth, in 2008, Coca-Cola decided to buy 40% of your company, why did you feel that this move was a good decision for the Honest Tea brand?
    1. We sold to Coca-Cola to increase distribution which could bring down the cost which allowed more people access to Honest products.
    2. I was the “Tea”EO
    3. Now I work half my time with Beyond Meat and half of my time with Honest Tea.
    4. When sold the company we invested the money back into Honest Tea and that was a way that I could stay focused on the business. It helped keep me engaged and connected to the brand.
  19. Seth Goldman in 2011, Coca-Cola bought your business. How has this helped you to scale your business?
  20. How is running a global brand different from being a scrappy startup entrepreneur?
  21. In 2013, you produced a fun graphic book called, Mission in a Bottle: The Honest Guide to Doing Business Differently and Succeeding, what first inspired you to write this book?
  22. Seth, you’ve said that “it is crucial to develop your own talent. To do that, you have to offer more to your employees than great compensation. You have to make it clear to them that as the company grows, they can grow along with it.” How does Honest Tea go about doing this?
  23. Seth, you’ve said, “Sticking to values will help you survive.” I would love for you to share an example of where you had to stick to your values with Honest Tea over the years?
  24. Seth Goldman, I’ve heard you say, “It’s not just whether someone has the energy or someone has stamina. It’s not that they have the belief in what they are doing in such a strong way that they will be resilient when they get knocked down and they will get knocked down. If they are not getting knocked down they are not trying enough.” Seth, I would love for you to elaborate on this idea?
  25. Seth, you believe that having a mission is very important for every business owner. How did your mission fuel your passion and your resiliency?
  26. Seth, you come across as a very reactive person despite constant demands on your time. How do you typically organize that first 4 hours of your work day?
    1. Wake up before 6:00 AM
    2. Make the bed
    3. Exercise for an hour
    4. Spend some time with the boys
    5. Bike to work (10 minute ride) transition time
  27. Seth, you come across as a very well read person. What is a book or a few books that you would recommend for all of our listeners to check out?
    1. The Call of the Wild – Jack London
  28. Check Out:
    1. Mission in a Bottle
  29. What would be your rap name?
    1. Dr. Bet McGee

ACTION ITEMS: How many “No’s” or rejections do you need to get in order to reach your goals? For example, in our office, we know that we have to make 200 calls in order to get one appointment. Write out your numbers and metrics and celebrate each rejection because it means you are closer to the “yes”

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Audio Transcription

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Today, the founder of honest tea, Seth Goldman shares how we started the $150 million honest tea brand out of his kitchen, making tea one thermostat at a time. He explains why the title never be just right to start that business. Seth Goldman explains why he had to drive all around North Eastern America in a 1998 Saturn station wagon. In order to search for the perfect bottler, he explains the story behind the honest tea name, how he raised the money needed to fund the growth of honesty, and how he emotionally was able to push through the thousands of rejections it took to build the $150 million company that you and I now know as honest tea. All this and more during our exclusive interview with the founder of honest tea, Seth Goldman

Yes, yes, yes and yes. Thrive nation. On today’s show, we have an incredible guest, Mister [inaudible] Goldman. How are you, sir?

Good to be with you.

Hey, I am very fired up to have you on this show because your story is so epic and it started off with such humble beginnings and I’d love to ask you, my friend, what first inspired you to start honest tea?

Well, it was pretty simple. I was thirsty. I had looked at the beverage cooler and I said, there’s a lot of drinks here, but there was nothing that was going to quench my thirst. I was looking for something with that just wasn’t as sweet as all the other drinks out there and, and there weren’t, I didn’t find it. So that’s why we created it.

Your, your products are now in the Chic Fil A stores. Wendy’s 100,000 stores all around the world. Um, where did you, where did you go? Step one to launch honesty? What were, what was the very beginning? I understand you were making this at home.

Yeah. Um, so the first step was I brewed some samples in my kitchen and I brought them in thermoses to the local whole foods buying an office in Rockville, Maryland, which was close by to where I’m, where I still live. And, uh, I got an empty Snapple bottle and in case of the label on them, and this is what it would look like. And then I poured up with samples from them, and this is what it would taste like and I don’t want to show it in your star.

What kind of job for you doing to support yourself while you were starting a, what would be $100 million company out of your kitchen?

Yes. So I had been in the investment business before I launched a, when the idea is where we’ll say brewing. Um, and when I finally felt like there was enough of a, an idea two to launch a business, I, I resigned from the investment fund I worked for and started out in my house. So it was a full-time undertaking when I was going for it.

How did you know that it was the time to quit? The other job and to go all in with so many people struggle with knowing when to make that jump and when to pull the trigger. How did you know it was time?

You know, I think there’s never a perfect time. In fact, my wife and I had just had a third son. Uh, so you can say that’s absolutely the wrong time to do it. But it felt like there was a point in my life where I had enough confidence that I believed in my skills and us. It was one you try. Um, there was enough of a, an idea that I felt like it was some and it was an idea that I was passionate about and believed in and felt like I could make it into something. And, um, and other than that, it was like, all right. Um, the other thing that the very totally, you know, coincidental or, or, or, um, coincidentally happened was that I ended up getting a check from an investment in my father had made, oh boy, it was a twin literally 20 years ago. Um, and it just ended up that I got money from that investment and that was kind of my feed capital. And I said, all right, well there’s a sign they don’t, you know, it kind of fell, it fell into my lap and that will be my startup capital.

How much money did it cost to start up?

Well, um, I put in $50,000. That was the check I ended up getting, but we raised a total of $500,000 and that basically got us through our first year and a little bit more. And that was enough to make the product and to do some very minimal marketing and buy all the inventory and labels and that kind of thing.

Where did the name come from?

No, so actually my co-founder Barry, he was my professor from the Yale School of management and he had been in India where he’d been doing a case study of the tea industry and he came up with that name and it was just the perfect name to capture the, uh, what we wanted the brand to be an ad, authentic, natural, healthy brand. And once we had that, you know, initially when I spoke to Barry, we weren’t thinking t we were just thinking about, uh, a less sweet drink and it could have been a seltzer and juice drink, but when he came up with any amount of steam, like all that settles it, that’s, that’s what we’re going with

now. What was your relationship like with, to, to build honest tea?

Yeah, well he had been my professor and we had always hit it off as student and professor. Um, and we were, you know, I would say, um, we’d like to have intellectually spar with each other and just sort of talk about ideas and challenge each other. Um, and then we stayed in touch after I graduated from Yale School of Management and we’ll send the emails or sometimes I’d ask, you know, or rideshare fun idea. I’d come across or, or maybe ask for some advice around, uh, you know, maybe if I got a job offer and that kind of thing. So it wasn’t like I, you know, the amount of the blue when I was ready to do something about this idea.

No, a lot of people were out there listen to this podcast every month and I know a lot of them were saying, well man, how did you even know what terms to offer people when you’re raising capital, is there a certain formula? There’s so many different approaches. I just like to get your approach on if you’re an entrepreneur out there trying to raise capital, what’s the best?

We did something a little different and it was creative and it worked out, but it was risky and it’s uh, as one of our investors said it was a, it was an equity structure that only a game theorist would love will. Barry is a game theorist, so that made sense that we offered. What we did is we said, look, we have to know how valuable this company is going to be. What most entrepreneurs do when they start up is they basically issued themselves what’s called penny stocks and just give themselves a ton of equity. And we said, we’re going to invest in this company at the same terms as all the other investors and we’re going to give ourselves warrants, which are basically options. That’s a, as the value of the company grows, we’ll have the right to those options. And when they become, you know, in the money, when the stock price grows past the price of the options, then we end up getting more of the company. So we were incentivized to grow the value of the company and, and, and we did grow it and that was how we came to benefit. But the point was we, we only benefited when shareholders benefited. We weren’t giving ourselves kind of free shares that weren’t earned.

I understood the both of your parents were professors typically we’re not about sports and celebrity gossip, but what, what kind of conversations with your parents having around the dinner table and how did that impact the way you see the world now?

Yeah, no, you’re right. My, my dad was in the economist and my mom’s a historian of China and so we were always sort of thinking in a global context. And I think that did inform the way I approached on this t wasn’t just a company trying to, you know, make money or just trying to move around some cases. And t was thinking about how can we create a business that had a positive impact on the world and on the people involved in the, in the supply chain that people picking the tea leaves as well as the environment that we source from. Uh, and, and that really has, I’d say, come to be what we’ve done with the business and what we strive to do with the business. Um, I would say hell delving I got gotta make from my parents was also a sense of humility that, uh, you know, they, they always expected a lot. And so I never got the feeling, I never got like the great job, you know, I got an email if I got an a minus and it was, well it wasn’t a, or it wasn’t a, it wasn’t a plot. So, so I always have that feeling that, you know, we’ve got more work to do with honesty and with the ar impact,

very high expectations. They tend to go the other way. Are you a secret? A lover of Adam Sandler films now

I can laugh at things like that. I, I think, um, I, I did a good job of not taking it too seriously and then I did feel a lot of pressure to succeed. But you know, I also found I had enough other interests that I came to understand success is not just you a, it’s certainly not just in a, in a, in a dollar figure if there’s other ways to measure it. And, and that’s certainly tried to pass that on to my kids as well.

I was reading this book called the startup playbook, the yellow-covered book behind me on my bookshelf. And in that book it did a profile on you and your company honesty. And there’s one line of books that really blew my mind. It said set that you set out to build a beverage company that would change the definition of what a beverage should be, that the standard you sent to the company are immovable, fair trade, low sugar and caloric content and a commitment to organic. I circled it, I highlighted it, I dog eared and I thought, I want to interview this guy. This is the, so I would like to go through these three cause it sounds like you’re walking my wife’s brain and, and you’re scanning her brain and making that your values. So let’s talk about fair trade first. What does it mean for you to be fair trade?

Yeah. Well there is a real definition of what fair trade means and our products do get certified as fair trade by a group called fair trade USA. And what it means is it starts with the wages and makes sure that all the people involved in our supply chain, whether it’s the people picking the tea leaves are processing, the TVs are paid a living wage in the country where they’re working. And it also means that a portion of the sales when we win, when they sell the product to us and we, by the t or sugar, a portion of our purchase goes back to that community for them to reinvest in their own, uh, priorities. Whether it’s their own infrastructure or healthcare or schools. We’ve helped finance everything from eyecare in India, two ambulances and Paraguay. Um, things that helped them become more economically self-sufficient.

Where are most of your beverages made now? Are you still making 95% of them from your kitchen?

No. No. We have a bottling plants around the country. You know, we got bought by Coca Cola and 2011 so we have bottling temps that work with other coke products. There’s one in Virginia, there’s one in New Jersey, there’s one in Massachusetts, there are a few in California. There’s some in Texas and some in Michigan as well.

And so all the employees today,

we have some that work out of our office in Bethesda. We still have the original office. That honesty at was in before we sold. The Coca Cola sales people we work with are part of the Coca Cola organization as as are some of the operations people too.

We have a lot of fitness experts on our show and in math I can summarize what they say. They say sugar makes you fat. You know, they’re always talking about the sugar makes you fat, avoid the sugar you decided to make your company low sugar and to manage that caloric content before it was the fat. You know, you were kind of like way ahead on that. Gay people were drinking this honesty going, what in the crap? This doesn’t have sugar in it, but talk to me about your commitment to be the low sugar and low caloric guy before that was a move you or the blue or that you are the inventor of the move.

21 years ago when we were starting this company, every bottled tea was that a 100 calories per eight ounces. And so they were all super sweet and so it really was starting from a place, I’m just, let’s just have something that doesn’t taste as sweet. And of course within that, uh, a less we taste, obviously it does mean less sugar. And so yeah, we definitely, we’re doing it from a health perspective, but there was also just a taste profile perspective that we felt was relevant. And of course today we’ve got even more varieties that are zero calorie or unsweetened. And um, it’s, it is where consumers have shifted. But you’re right, when you start out that way, it’s hard because it’s not where the consumer would, the majority of consumers are. And when people picked up our bottle and the beginning and they were looking for what they thought was just a regular bottle TMA, they taste ours. It didn’t case like what they were used to.

You are an educated man. I know you’ve spent a lot of time thinking about food and see you about health and being proactive about these things. But a lot of our listeners, you know, they’re great at business, but they’ve never thought about organic and what it means to be organic and why it even matters. So let’s just say that the listeners out there, I see you have a plumber. You’re talking to an electrician, some corporate head who’s like organic Morsh manic. Can you explain why organic matters and why it’s skewed? My wife would love to pile on after you, you, you, you, you take a deep dive here.

Here’s a simple way to talk about it. And this is the way that I would say is not necessarily scientific, but it’s easy to understand that in most non organic agriculture, they will use things like pesticides and herbicides, a chemical compounds that are pesticides and herbicides and the word side of course, it’s the same root word as suicide and homicide in which is to kill a indicates herbicides, killing herbs and testify showing pests. So they are compounds designed to kill living organisms. Now the science can, the companies that sell those, those compounds will tell you that they are regulated to those products and they are allowed at, you know, diluted levels. They are safe to the consumer. And, and I’m not, I won’t dispute that. What I will say is that although they may not reach significant levels in the, uh, on the plants, they do build up in the earth.

They do build up an ecosystem. They built up in the water and they build up in the air. And as a result, when you look at, uh, humans, whether you look at the spinal fluid of a, of a newborn baby, they’ll have the residents of these compounds in them, even if, you know, obviously if the baby hasn’t consumed anything. So these compounds do build up in our systems and they, and they are, as I said, a compound designed to kill living organisms from our point of view is the earth and people are better without those compounds, uh, in them. And so organic agriculture seeks to have a lighter environmental footprint that doesn’t rely on, um, you know, chemical compounds designed to kill living organisms.

Do you eat only organic?

We do with my best, you know, like it’s not perfect, but certainly, um, wherever I have a choice to buy organic, I will do it. But of course it is. Here’s what’s interesting about organic is that obviously it, it, it often does cost more. And one of the things we had is our commitment and honesty is to democratize organic. And so what we’ve done is, and this is one of the reasons we partnered with Coca Cola, is to bring these products to scale in a way that does not make them price prohibitive. And as you mentioned, you know our products are sold at Mcdonald’s and Wendy’s and chick filet in subway and these are outlets where you know, the, the organic offering is not at a premium to the rest of the market and we’re very proud of that because it means we’ve both through a distribution and pricing, we’ve been able to make organic more accessible, more affordable.

In 2012 and I began when I began cyber stalking you, you guys were one of the first beverages out there to have the official seal as being an organic beverage, the first organic bottled tea. Can you explain why that was such a game changer for the growth of the young, honest tea company at the time?

Well, it was totally consistent both with our name and our aspirations as a brand. And of course what we also learned, we looked at teams and we realized that unlike an apple or a tomato, Kiwis are one of the few agricultural products that never gets read. So if chemicals are sprayed on leave, they stay on the leaves until a hot water was poured on the leaves and is basically washing the chemicals ready to the drink. So we said that’s something we’ve got to do. And um, we, we moved quickly to make the rest of our line organic. Uh, and it has helped differentiate us and helped us stand apart. And of course everything we sell today is certified organic. And then what happened is a few years later the USDA created and USD organic seal and then that helps brand it and set it apart in it. And at the time consumers didn’t have much knowledge but we see them continuing to, to, to learn more and gain greater awareness about organic seal.

How did you land your deal with whole foods? Cause my understanding is in 1998 whole foods and I had an order for 15,000 bottles of t Rita’s sitting around one day. And then the phone rang and they said, is this Seth Goldman? Yeah. How did it happen?

So what happened is their head of marketing used to be, he went to the Yale School of management. And so I had gotten to know him in DC and so when I had this idea, I went out to lunch with them with some thermostats and I said, you know, I think there’s not much to unity to sell this in your story. He said, well, I can help you get the appointment. I can’t help, you know, you have to convince the buyer until it got to the, to the, um, the buyer and I poured out the samples and as I said, use that Snapple bottle with a label on it and showed it to him and he, the buyer was willing to take a gamble. I said, well, we’ll take 15,000 bottles. What was funny though, as he said, we’ll take the 15,000 bottles and we won’t pay for them, but if they sell, then we’ll pay you.


I appreciate the part about taking the product. I need you to pay for the first bottle. I don’t have, you know, the whole company is just me and these services, uh, and this bottle. So I really need you to pay for everything. And to their credit, he agreed.

Now can you explain why, explain how retail works for people out there that don’t know. Because typically if you have a product and let’s say a company like a whole foods or a target degrees to carry your product on their shelves, typically, you know, you as the creator of the product don’t get paid for 60 to 90 days, uh, after the product is sold. Can you kind of explain how that works for the average listener out there?

Yeah, so different stores worked differently but in general, um, you know, we’ll ship the product to them and then they’ll pay us. And as you said, he’s, sometimes it’s 30 days, sometimes it’s 60 days in, early for entrepreneurs, sometimes what they’ll let us do if they will let them pay him 10 days, I think take a little discount. And so if the, if the store is well established, they can do that. And for the entrepreneur, the reason that makes sense is because you need to have cash to pay the rest of your bills, even if it comes at a discount. So sometimes we had that arrangement with some of our retailers. I mean, when you’re an early stage entrepreneur, every penny counts and every penny is precious and, and uh, you know, you just have to find ways to, to get money. And so sometimes when we would also do is we would talk to some of our suppliers in particular, our bottle supplier who was a very well established supplier and I’d say to him, you know, during the January, February, I said, this is our slow time of year. We’re not going to sell as much tea right now. So what I need you to do is give me longer term. Sometimes he’d let me extend to 60 days. I would pay, I, I’ll pay on 60 days rather than 30. And that was basically like a loan where, um, that enabled me to pay my other bills and pay our employees. And then of course when the weather got warmer than I’d return and pay him back everything I owed him.

Now when you got the order

for 15,000 bottles, you’re still making it out of your kitchen? I believe so. What did you, did you want to expand your granite countertop? Did you knock out a wall and make the kitchen bigger? How’d you do it? Sprang into action and traveled up and down the east coast and I went to every type of different facility that did Bob links. So I went to soda plants. I went to a beer brewery. I went to a place that made jelly and eventually, and I had a friend helping me. Eventually, we ended up at an apple juice packing plant up in Buffalo that had some extra line time available and they let us make tea in their facility.

Did you drive to all these places or did you call them or how?

I drove, yeah. I mean I had to meet with them in person. I mean, we, we, we would, you know, I would talk to him first on the phone and explain what we were looking for at first of all, if they returned my call, that sometimes they wouldn’t return the call. But when he did return the call, then I would, um, you know, have the conversation and if they felt like there were clothes and that’s alignment, then I’d go meet them in person. And you know, so much of it is like any entrepreneur when you’re starting out, um, because you, you don’t have much to go on. And so you have to meet these people. You have to be able to demonstrate that you’re a genuine person and doing this the right way and, and, and have the right ideas behind it to build it. Because, you know, these, these bottling plants there, they have a lot of people who come through and maybe they don’t know if someone’s for real or if someone’s gonna be able to pay them. That’s often the case. They, they would insist on being paid upfront because, uh, I’ve seen it happen so often. The entrepreneur, you know, get something. And then disappears.

What kind of a sweet vehicle were you driving back then? Were you driving?

Ah, we had a Saturn station wagon.


In fact, what happened was I, I picked up our spices for our first production run. We had this wonderful chai recipe, but I ordered and picked up the spices from a, a spice warehouse in Baltimore and I had to drive it up to buffalo for eight hours. And it was a freezing cold day, so I had to keep the windows closed for that eight-hour drive. And by the time I got up to Buffalo, that car had a permanent aroma of Chai spice, which was very [inaudible],

very strong Saturn station wagon. Uh, what year would this, what year was this?

Ooh, so this was 1998 right at the beginning of the business.

Are you a big music?

Oh yeah. I was listening to music and, but partially because it’s an eight hour drive. So I just had, I had just, um, ton, and there was a, you know, a whole soundtrack for that year because I spent tons of time in the car. Uh, it was, it was pretty intense.

Did you listen to my heart will go on by. No, that was not the thing that kept me going. But, um, you know, I heard that

a lot of you there was matchbox 20.

It’s 3:00 AM I felt like it was, it was, uh, hearing that at 3:00 AM so I related to it.

There was some of your favorite musicians that you’d like to listen to

when I was not as much of their recent stuff, but I loved Tom Petty you too.

Um, but um, yeah, a buddy of mine, I went to college with Ryan Tedder. You went to Oral Roberts University with me. His goal someday was to write a song. He actually got it done. And so one republic less has it has opened up for you too. And Ryan tedder is one himself, a couple grammys, but he had this goal, he kept sending us, I’m gonna write a song some day with Peter Gabriel Bano and Paul Mccartney. And he actually pulled off the trifecta. And so he, he did it pretty, the listeners out there who think that your dream is not possible, what advice would you give them? They’re set for anybody out there who says, you know, I’m driving around this 1998 Saturn station wagon. I’m listening to Tom Petty. I’m driving around trying to find my eye. What advice would you have to encourage the entrepreneurs out there?

No, we’re number one when you walk into our office and honesty at the first thing you’ll see on the wall as a quote, it’s from one of our bottle caps. It says, those who say it cannot be done should not interrupt the people doing it. So, you know, there’s always going to be skeptics out there criticizing or, or second-guessing you. And you know, if you have a passion about what you want to do, you got to do it. Um, I think the other thing I would say, and this is another quote, this is from Oscar Wilde says, be yourself. Everyone else is already taken. So there’s no point in trying to bring a brand to life if it’s just copying what somebody else has. You’ve got to, to really succeed. You have to have a clear point of difference, a clear competitive advantage over whatever else is out there and, and to stand alone. And the night, the third one I would say is, um, it’s a quote I once heard on a cartoon show, which is a miss from fat Albert.


Said he who throws, muddle and he loses ground, you know, don’t you, you never want to try to elevate yourself by disparaging of it. See what you can do to, you know, shine your own light.

What was the most difficult aspect of scaling? Looking back on it?

Yeah. For us it was the distribution. You know, we had a product we knew consumers wanted. The problem was that, uh, we, we couldn’t get it into their hands. We needed distributors to do that. And that’s where we had that challenge. Uh, and so we went to the distributors and they would say, oh, we don’t like this because it’s not what we’re used to. It’s not sweet enough. It’s, it’s a little more expensive. It’s a different taste. And so we had to basically go around the beverage distributors to get to market and we ended up working with charcoal distributors or cheese distributors or beef distributors, just anybody else who was going to the shelf. And eventually, the beverage distributors started taking us on. But we had earned that, uh, that opportunity. And we did it by basically going around them when the, when the wall was put up in front of us, we went around it.

Did you cold call everybody? Did you show up or is your, uh, moves to get ahold of it?

I wouldn’t say I was a pretty good at stocking as well. So there was one particular distributor here I think.


That Atlantic area. And I would hang out in their loud. The general manager would come in and say, you hear again? And eventually, he got the methods. I wasn’t going to go away until I give it a shot. And it was a big breakthrough for us when we got it.

So why was it looking back on it, why was owning a bottling plant such an epic disaster for you guys?

Oh my gosh. Yeah. So, not too different from the distributors. The after disturbance were the toughest. But after that, the bobolink tents were talking to, I said, we got that chance with the plan up and uh, the apple juice plant in Buffalo. But then the problem was when he got to apple sees and they said, well, we can’t make any more tea. I’m like, well, wait a minute, we’re going to be out of business. So we ended up buying a portion of a bottling plant and it was just a total distraction. It was building something. It was putting my time and energy into something that wasn’t building the honest brand. And so it was just really a drain on my energy. It wasn’t, uh, it wasn’t where my heart was in terms of what I love doing. It wasn’t where my expertise was. And, um, and it was also two other owners, so no one was taking the full responsibility and it, it just was the wrong use of my energy end of the money we had raised from our investors. So it was only when we got out of that plant, we ended up selling it at sort of a distressed asset sale once we got out of it that the business really started to take off. And I can focus on building the brand, building the, uh, the business.

I don’t know when you’re going to start to get serious about your academic career, but apparently, you only have degrees from Harvard and Yale. So you could’ve done other things with your career. Why are you, why are you so committed to honest tea? Why didn’t you, you know, go do something else?

Well, I love this work. I love our impact. I love what we’re building. I love the relationships we have with consumers and with our suppliers, which has just been wonderful. And I have, you know, recently also become involved in another company as Executive Chairman of the board. It’s a company called beyond meat. And so be between beyond meat and honest tea. I have to really, what I think are important and meaningful enterprises I’m involved with that are having a positive impact on the world. And they’re at different stages of growth. You know, one is a earlier stage and growing quickly and the honest tea is more scaling and going global now and so still the opportunity to have an impact and address issues I care about is really satisfied.

What does beyond meat? It is a plant based protein, we have a product called the beyond burger that really tastes and choose and silvers and grilled like a beef based Burger or animal based Burger. I except it’s made entirely from plants and so it’s, as people have looked toward, you know, both healthier options and options with a letter and venom environmental footprint. There’s been a ton of interest and excitement about what beyond need is doing and that’s been a really fun enterprise to be part of.

Is it a comparable prices to get like a beyond meat hamburger? I mean, does it, does it tastes similar? Is it similar price or,

yeah, it tastes similar and it is, it is, you know, I would say it’s slightly more expensive as any new technology is, whether it’s a phone or going back to what we talked about with organics, you know, it starts out that way, but we just launched the beyond burger at Carl’s Jr, uh, across the country. And that’s exciting because 1100 restaurants and you know, that is a, it’s called fast food. And so it is priced at a, at a, you know, it’s more expensive than the typical beef patty, but it isn’t out of, uh, you know, it’s not out of a, an affordable range,

but it doesn’t, it doesn’t taste like,

no, exactly. No, it tastes, it tasted, choose and grills, uh, just like a hamburger. So it’s really, it’s delicious. I had one just last month, I was out in California.

Gosh, you know, I would love to, to be the next honest tea and beyond meat, that kind of thing. Could you talk about how many cold calls and how many meetings you went to, you made you calls, you, made, you went to the places and nothing happened times where you drove somewhere in that Saturday and you’ve got stood up times where you, how many rejections did you get in route to getting the wins?

I think the Itch, you know, if I were reading a book, I wouldn’t call it this, but I did write a book about honest tea by the way, called the mission in the back of named might’ve been 50 shades of rejection. We got rejected by every, you know, certainly by the distributors as I mentioned, but also by investors, right? I needed to raise money. I mentioned we raised $500,000 for a first launch, but over the course of the next 10 years, we raised $10 million. So it was, and for every, you know, every dollar I raise, I had at least 10 conversations with people who chose not to invest. So, um, that was always a challenge. And then of course, retailers, we’d go to retailers and restaurants that we wanted to carry the product and they, for whatever reason, wouldn’t do it. And so it just was a continual battle.

But frankly, you know, that’s, that’s what the fun is. That’s where the challenge is. If it’s every, everyone said yes the whole time, you know, that somebody else would have already done it. And so it takes the entrepreneur to bring a new idea of life to breathe or bring an existing idea and a different way. And uh, you know, so look with beyond me. It’s not like, as you said, there had been Veggie burgers out there, but they haven’t been a Veggie Burger or plant-based Burger that tastes like beyond meat. And so it’s creating something new and exciting and, and, and helping people understand. And, and what’s been the breakthrough for beyond me isn’t just the taste, but because it tastes as good as it does. We were able to get a carried in the meat section of the grocery store as opposed to in the Veggie Burger section.


So that really

reaches a different customer and it’s a much bigger growth opportunity. As I was a, a cyberstalking you, I was looking at the terms and the buyout or from Coca Cola, it, it appeared to me from my perspective that, that you decided to team up with Coca Cola and to sell the business to Coca Cola so that you could increase the distribution. Is that, is that correct or am I, am I misinterpreting why that deal?

Oh, no. You know, I mentioned we have this commitment to democratizing organics and so for us, um, you know, that we want it to be available not just to healthy people and wealthy places, but to people everywhere. And so, um, you know, that was what Andy Warhol said about Coca Cola, right? Everybody, whether you’re the king of England or the, or a factory line worker, they all enjoying the same product. And we had vision of, you know, making great products accessible to people at affordable prices is something that we really been able to help make happen. And Coca Cola has been part of that.

So now that you have teamed up with Coca Cola, what’s your official title and role on a daily basis?

So my title when I ran the business was the Tel your CEO. But of course I was focused on tea and now I call myself the cofounder and CEO, Ameritas. I work, you know, half my time with honest tea now and half my time with beyond meat. And it’s a way for me to, as I said, be involved in both businesses, but also help to sort of spread myself over the two as well.

When you got to buy you out, did they wire the money to you? Did they give you a nice big oversized check and they give it to you and once the transaction occur?

Yeah, I got to go. I think what happened was, because we were bought by the entire thing, we just had our CFO rate the checks. So we wrote checks from honest tea’s bank accounts because it became coca colas bank account. So it was just checks from honest tea, uh, written. So I, I ended up signing it, or I guess I was CFO send the check to me. Just for, you know, to make sure there was Stan, but it came out of the business bank account that had been funded by Coca Cola.

When you, when you finally got that big check, did you go out and buy as much ice cream as you wanted or what, what, what do you do with all the,

you know, we didn’t, we really made a point of not doing anything. They just said, you know what, it’s there. Um, but let’s make sure we all understand what makes us happy as a family. And then we, uh, in fact what I did, um, and this was a little unusual as I invested the money right back into honest tea. We had an arrangement with Coca Cola that let me continue to be, um, have, have some risk capital in honest tea. And, and that was a way for me to continue to stay focused on the business, uh, as an thinking about it. Like, it was still my money and still my business and, and uh, you know, I think that helped keep me engaged and helped me keep me connected to the brand. And of course here around speaking to you now 11 years since Coca Cola invested and I’m still involved with the brand. And that’s unusual, right? Most of time when an entrepreneur sells the business, they go on to the next thing or go golfing or bowling or yachting or whatever.

I tell you were going to become a rapper.

We do have a rap, a line ever. By the way, if you haven’t seen it, it’s, it was, but we did that from honest tea. It’s a fun one. Um, help rethink what you drink.


but, uh, no, I have, uh, you know, for me this is work I really do enjoy and this is what has enabled me to feel a sense of completion, completeness and, and happiness. So, so why change? What makes you happy?

Three rapid fire questions. How do you organize the first four hours of a typical day? Or how did you, when you were growing the, before the business was acquired, what time did you wake up? How did you organize the first four hours of your day?

They mostly the same, you know, same as it was 20 years ago. So, you know, my wife and I wake up early, usually before six o’clock, because at least with the kids were home, we had to get up and exercise before, uh, they were awake. So that usually meant we would get up, we’d make the bed together because no matter what happens in the day, we could get home, at least go to bed in a bed that looked like it was, you know, well, well made, then I’d go out and exercise for usually an hour. Uh, and that always gives me a chance to clear my head, to be able to usually by myself, just, you know, get out, workout my tensions or physical tensions or sort of psychological tension and, um, and then, uh, be able to spend some time if when the boys were at home and be able to talk to them and just share a few ideas about the day or just read a little bit about the news going on in the world. Uh, then, and this is something that it still is the case. I would bike to work. And for me that was just a great transition. So sort of, um, I’m not stuck in traffic. I don’t have to worry about parking.

How long are we talking about?

No. So in a, here in Bethesda with honest tea, it’s literally just a 10 minute ride, uh, in California where it would be on need is probably closer to a 30 minute ride. But, um, I, for me it’s, the ride isn’t this wonderful transition either from home to work or from work to home and it just lets me so that when I walk in the door of either place, I’m, I’m ready to go. I’ve got sort of gone through that enough of a transition that I’m able to be the ready, it’ll be present.

Now. Uh, you’re, you’re an educated guy, you’ve read tons of books, but is there a specific book for the entrepreneurs out there that are maybe struggling to get that traction with their product? It’s a great product. Everyone says, oh, I love your product, but they’re still struggling to kind of get that tracks. Is there a specific book or documentary or something that you would recommend on the entrepreneurs should check out?

Well, this is a, it’s called the wild by Jack London and it’s, you may not think of it as an entrepreneur. It basically, it’s a story about a dog who kind of reconnects with his instincts and things that are ingrained in him. But I’ve kind of been suppressed and, um, I think most entrepreneurs do have to go with instincts on a lot of work and, and a lot of times, you know, especially in a corporate environment, you’re dropping discouraged to go with your instincts. And so I, you know, I think part of being an entrepreneur is getting back in touch with your instincts. And so, uh, I love that as a way to spur people to toward more creative thinking and more, you know, feeling it from the gut versus just sort of, uh, you know, I, as I said it, a company like Coca Cola would never have come across the idea of honest tea on its own because the market research isn’t going to tell you people want to less sweet drink. You know, market research and focus groups would have highlighted that people like a sweeter taste. And of course we’ve demonstrated there is an appetite for less sweet drink, but, but it wasn’t through any focus groups.

And my final two questions here for you right now, all the entrepreneurs out there listening, if you’ve got the, you’ve got the mic here and uh, you know, our listeners are very action orientated. Do want him to check out beyond me to, is there a certain website to go to? Do you want to direct them to check out one of your books? What, what action step would you would invite all the entrepreneurs to take?

Well, certainly as an entrepreneur, if you’re, if you’re serious about being in through and you should see our book mission in a bottle, it is a story of the first 10 years of honest tea and it is, it’s written as a comic book. So it was a really fun and engaging way to share our story. Uh, and then I think I would encourage people to buy or visit [inaudible] dot com for honest tea and beyond meat um, because these are two products, each in their own category that are disruptive. They went into existing categories and you know, a case of bottled tea or beverages and then me and found a new way to bring a product to life and, and you have to really look for whatever category you’re going into and think about, can I bring out something that is distinct and different enough that it clearly represents something new in the marketplace? And if, if you can’t answer yes to that, I would, I would encourage you to go back to the drawing board.

Final part of my question here. A Guy, you, you have the time freedom to do what you want to do. Now you’ve probably thought about your rap career. What would be your rap name? And he wants to rap career tag. What would be a wrap?

I had a, I, you know, I don’t even know how exactly it came across, but for some reason they never really know what that came from. So that will, that’s the name of record on a, um, if you go to youtube and you look up on his feet wrap, you’ll see that’s, that’s what,

what was the name? What, what was the name,

Dr. McGee? I think it was a, um, I’m not a doctor, but it was this, uh, I can’t even explain the origins of it. It really was one of those, it just sort of came up.

I would have guessed that. It’s a smell of it seems like a reasonable guess, but thank you so much for, for being on the show. We’d love to have you on again sometime in the future and we hope that this really benefits your organization’s and, and a good, just thank you so much for investing your time with all of our listeners today. It was really fun to be with you. Now, if you have just listened to today’s podcast, I want you to to be a doer and not just a hearer of what we just learned. You see, Seth Goldman, if you listen to the podcast, he got rejected by hundreds and hundreds of people in route to building $150 million brand that we know today. But he got hundreds and hundreds of rejections. It wasn’t like that. He had some amazing sales pitch that allowed him to avoid rejections. He got rejected all the time.

And then when he’s trying to raise money, he got rejected all the time. When he tried to get in stores, he got rejected all the time. And if you’re out there and you fear rejection, so, therefore, you never ask for the deal, you never make the cold call, you never make the pitch. You ultimately will end up living your entire life as a rejection. So the key to not becoming, uh, a, an intender who loses all the time is to actually get a ton of rejections. Think about that. The most successful people that we’ve interviewed on this show all have been rejected more than anybody else. Therefore, the people who many would say are the biggest losers. The biggest people who are the people who are rejected the most actually are the biggest winners. So I ask you today, how many times are you willing to be told no before you get that?

Yes. How bad do you want it? How bad do you really want it? How many rejections are you willing to get today? And, uh, I’m willing to get rejected. So I ask you each and every week, maybe every other show, every specific show that I can recall in recent memory. I try to, uh, mention, uh, and encouraging you to share this podcast with a friend. And so at the risk of being rejected, I would ask you, ah, who could just share today’s podcast with, could you share it with them on Spotify? Could you share it with them over there on a, on Facebook? Could you share it with them on Twitter? Could you share it with them via email? Could you text it to them? Or maybe you just reject me. But either way, like a bamboo, like let like, like a weed, like bamboo, like rhubarb.

I’m coming back tomorrow and I’ll be asking you to share the today show with somebody else because I give a crap because I want to mentor millions. And because I know there’s somebody out there that needs to hear the content on today’s show. My name is Clay Clark. I’m a man bear pig and a business coach and is always like to end the show with a boom. So then he further ado, Andrew, are you psychologically ready to bring the boom? I’m so ready. Are you spiritually ready to bring the boom? I am spiritual. Are you physically ready to bring the boom? So ready? Are you metaphysically ready? No, just physically. Okay. Here we go. All right. We’ll move on with that with great trepidation. We move on. Here we go. Three, two, one. Boom.


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