• December 2012

The Honesty Issue

Franklin D. Roosevelt said: “Confidence thrives on honesty, on honor, on the sacredness of obligations, on faithful protection, and on unselfish performance. Without them, it cannot live.”

As 2012 comes to a close, we think it’s a good time to reflect on such noble traits, with a special highlight on the importance of being honest. With the goal of developing a thriving business in 2013 and beyond, we couldn’t think of a better Entrepreneur of the Month to turn to for advice than Seth Goldman, president and TeaEO of Honest Tea.

The $90 million company he co-founded in 1998 with Professor Barry Nalebuff of the Yale School of Management has become an innovator within the beverage industry. It was the first tea company to introduce a USDA-certified organic and Fair Trade Certified bottled tea. But those are just some of the reasons that Coca-Cola bought a 40 percent interest in the company in 2008, and acquired it outright in 2011.

Bethesda Green is another one of Goldman’s honestly fabulous ideas. This incubator for green, sustainable businesses is run by Dave Feldman, who explains in this month’s column why it’s good to Go Green.

Speaking of tea and honesty:

  • “The Republic of Tea” is our Book of the Month. This great business story features letters from entrepreneur Bill Rosenzweig, to Mel and Patricia Ziegler, as they were brewing up The Republic of Tea. It’s a must-read for entrepreneurs. Don’t miss a drop.
  • In this issue we also look ahead to 2013. To help us, we asked two futurists for their insights: University of Houston Futures Studies professor Andy Hines sheds light on the future of work, and The Futures Lab president Derek Woodgate give us insight into how futurists forecast what’s coming.
  • Honesty at work is a passionate topic for Hiring expert Barbara Mitchell, who shines a spotlight on the dumbest lies job applicants tell—and what to do instead to land the job of your dreams. Don’t believe her? Then read this column by veteran entrepreneur Andrea Keating, who shares tips on how she’s been using honesty to hire, and manage, employees for the last 25 years at her international video-staffing firm, Crews Control.

As we enter the holiday season, we wish you, your employees, and especially your family, good health and true happiness.

Our gift to you is this parting thought from Ralph Waldo Emerson, that happens to be living under the cap of one of Seth Goldman’s Honest Tea bottles of iced tea. Find it, and send me an email to win our December 2012 Gift of the Month.

“What lies behind us, and what lies before us, are tiny matters compared to what lies within us.” — Emerson

Here’s to your indelible success. — Hope Katz Gibbs, publisher, Be Inkandescent magazine • founder, The Inkandescent Group

Magic in a Bottle—Seth Goldman Takes Us Inside Honest Tea

ENTREPRENEUR OF THE MONTH: DECEMBER 2012

SETH GOLDMAN
TeaEO and Co-Founder

By Hope Katz Gibbs, Publisher
Be Inkandescent magazine

There’s a Chinese Proverb painted across the entry wall of Seth Goldman’s Bethesda, MD-based company, Honest Tea: “Those who say it cannot be done should not interrupt the people doing it.”

Indeed, that belief has been part of the mission of the beverage firm that Goldman started in his house in 1998, with his grad school professor, Barry Nalebuff of the Yale School of Management. It was slowgoing at first, but Honest Tea has thrived for the last decade, with a 66 percent annual compound growth rate—a statistic Goldman attributes to the fact that consumers increasingly prefer healthier food and drink options.

That fact helped Honest Tea land a cash infusion from The Coca-Cola Company in 2008. It owned a 40 percent interest in the company until March 2011, when it acquired the boutique brand for an undisclosed price, a month after its option to buy came due.

“This is a recognition that, especially with early-stage brands, the entrepreneurs continue to be relevant and important,” Goldman told The Washington Post. “We have an amazing opportunity to take our mission to a much broader level.”

Be Inkandescent magazine had the opportunity to sit down for an interview with the graduate of Harvard College (1987) and the Yale School of Management (1995), who also holds an honorary doctorate of laws from American University. Scroll down for our Q&A, and click here to hear our podcast interview with Seth Goldman.

Click here to see the results of Honest Tea’s social experiment in 30 cities: How honest are you?


KEEPING IT REAL AT HONEST TEA

Be Inkandescent: You have had a passion for business since you were a kid. In fact, your first business was a lemonade stand. Seems telling! After graduating from Yale, you nearly pursued a prize-winning biotechnology idea. Why did you give that up to get into the tea business?

Seth Goldman: I have always had a creative streak, and an entrepreneurial streak. But I think the third streak that I couldn’t deny was wanting to fuse those two things together. What we have created at Honest Tea enables me to focus on issues around health, the environment, and sustainability, as well as economic opportunities. We get to help support organic agriculture in many communities around the world that grow tea. It’s a real privilege to be able to do this.

Be Inkandescent: Did you know it would become a huge company, being that tea is the world’s second most popular beverage, second only to water.

Seth Goldman: We weren’t sure, but as you can see from our original business plan on our website, we had an inkling. Tea is also an incredibly healthy product, one that’s packed with antioxidants, which is associated with everything from fighting cancer to hydration. And, it can be enjoyed for about 30 calories a bottle. It’s also an affordable luxury—unlike wine, for example. When I got to talking about this with Barry Nalebuff, my professor at Yale, who is my business partner, we knew we could make our tea accessible to consumers at a price point they can afford.

Be Inkandescent: Tell us a little bit more about Nalebuff, and how you came together to start Honest Tea.

Seth Goldman: Barry was my professor at the Yale School of Management, and is still there, in fact. He’s a very creative guy, a very untraditional thinker, and very strategic. What has been really fun this past year is that Barry and I have been finishing up a book that will be released in 2013 about the story of Honest Tea. It’s a Random House Business book, but it will be told in a comic book form.

Be Inkandescent: That sounds fabulous! It reminds me of Dan Pinks’ Adventures of Johnny Bunko, but it also seems like a bit of a risk given that it’s a different approach to a business book. Are you a fan of testing the waters before you jump into a big project? Did you do a lot of market research before you started Honest Tea?

Seth Goldman: That’s a good question. We probably didn’t do enough research, in fact. It was more of an instinct, because both Barry and I felt there was something missing from the beverage options we had. We didn’t do any big focus groups, but we did do a few tastings. And what we heard was that people agreed with us. Obviously, the shelves were full of tea products, but nothing that tasted good enough. That’s when we knew there was an opportunity to provide something new.

Be Inkandescent: Was that enough to get you through the start-up years?

Seth Goldman: Well, it was a process. Our original production runs were very challenging, and we always had an inch of sediment on the bottom of the bottle. In the beginning, customers told us that our teas weren’t sweet enough. So, we made them slightly sweeter, finding that 30 calories per bottle hits the spot. Customers love it, and still it’s significantly less sweet than other teas on the market.

Be Inkandescent: I was offered a bottle today when I came in, and chose the zero calorie lemonade. Was it part of your plan to diversify into other beverages?

Seth Goldman: When we started, we always thought of ourselves as a tea company. As we grew, we realized that the most important brand connected to it was “honest.” That enabled us to create Honest Ade, and from there we developed Honest Kids, which offers our drinks in kid-friendly pouches.

Be Inkandescent: That’s a perfect segue into our theme of the month, honesty, which you have inspired. Tell us more about honesty and business. What does it mean to you? Do you think being honest in the corporate world is a trend? Or is it just a buzz word that gets bandied about?

Seth Goldman: First of all, we take the concept of honesty very seriously at our company. I think one of the ways you can really ensure what you are doing is honest is by under-promising. The challenge we saw as we got into the beverage business is we heard so much distrust of beverage companies. People thought they were always over-promising—like saying that drinking tea is going to cure cancer. But there is now a broader phenomenon going on in corporate America.

Be Inkandescent: Are you referring to the trend that companies are trying to be transparent and authentic?

Seth Goldman: Absolutely. At Honest Tea, we work hard to do what we say. We also under-promise so we can exceed expectations. We never say we’re a socially responsible company, but that we have a commitment to social responsibility.

Be Inkandescent: You recently released your 2011/2012 mission report of how Honest Tea is doing. It’s filled with information, but it isn’t a cheerleading document.

Seth Goldman: We do our best to not put ourselves on a pedestal—especially in our annual report. The point of that document is to explain what we haven’t quite achieved, and what we hope to achieve going forward. Even though we’ve made a lot of progress, and are probably further along than a lot of companies, we know we can do better.

Be Inkandescent: What haven’t you accomplished, and what do you hope to achieve in the future?

Seth Goldman: Certainly, the biggest environmental impact we have as a company is that we sell tons of single-serve containers. And, our goal as a business is to sell even more. Of course, we recognize that the more of those containers that we put out that are not recycled, the more we are contributing to the waste stream. It’s a conflict, and we have a few initiatives to address it.

Be Inkandescent: We know Honest Tea is trying to increase the national rates of recycling.

Seth Goldman: Yes. We have taken a lot of action both locally and nationally on that. The other one is to look at the actual bottle itself. We ask ourselves, what can we do to lightweight the bottle, to make it lighter so it is less waste? Then, what can we do to make the material in the bottle more sustainable? We can’t totally change consumer behavior. And if we said our goal is to sell no bottles, then we would be out of business. We try to think about how can we be a business committed to sustainability, but also to growth.

Be Inkandescent: What do you think consumers want when they talk about honesty in the companies they buy from?

Seth Goldman: I think they want to understand that corporations are willing to have a real discussion about what matters, and not a glossy discussion that is just lip service. They also look for transparency. If you have problems or you do things wrong and falter, you want to be honest about it.

Don’t stop now! Click here to find out how Goldman convinced Coca-Cola to buy a minority share, and be sure to check out his 8 Tips for Entrepreneurs.

Seth Goldman's Tips for Selling Your Company to a Multinational Corporation

At Honest Tea headquarters in Bethesda, Maryland, there’s more going on than just brewing up some of the country’s most popular bottled tea. Scroll down to learn about what TeaEO and co-founder Seth Goldman has been up to since Coca-Cola bought his company in March 2011. And what tips he has for other entrepreneurs who want to hit the big time.

Be Inkandescent: In addition to being named one of The Better World Shopping Guide’s “10 Best Companies on the Planet,” you are listed in PlanetGreen’s “Top 7 Green Corporations of 2010.” The Huffington Post also ranked Honest Tea one of the leading “8 Revolutionary Socially Responsible Companies.” Obviously people are picking up on your message. Is that how you got Coca-Cola to invest?

Seth Goldman: Yes, sort of. We were very focused in surviving in the natural foods world for the first five years we were in business. The first 10 years were awfully tenuous. We were just trying to keep the lights on. Then, we started to get some expansion into some of the grocery stores around the country and some restaurants and other chains. At the time, Coke had developed a new division called Venturing and Emerging Brands. What they wanted to do was invest in companies that would be the big brands of the future, so they reached out to us and asked if we were open to a discussion about how we might work together.

Be Inkandescent: At the time, Honest Tea was raising money?

Seth Goldman: We were. My partner Barry and I decided to raise some money to grow, and we figured that if Coca-Cola would be a minority investor, we’d welcome that. They did invest and we continued to grow. We had a good working relationship and after they bought the company, that continued.

Be Inkandescent: What’s the biggest benefit of having Coca-Cola buy Honest Tea?

Seth Goldman: Today, Honest Tea is selling in more than 100,000 stores, including a few international companies. Coca-Cola helped us reach a different level of penetration to the American population. That really is the goal when we started the brand 15 years ago. It was to create something meaningful and that could really create an impact. There is a balance to strike: Do you want to be a model for change or a driver for change? I certainly want this to be a driver for change.

Be Inkandescent: You and Barry also have a commitment to investing in the local community.

Seth Goldman: That’s right. We decided that if we are going to be able to be viable, and support communities around the world, we needed to support the local community where we live and work, which for us is in suburban DC, in Bethesda, MD. The execs at Coke were willing to invest to see where we’d go. I think they liked that we have a commitment to supporting sustainability around the globe.

Be Inkandescent: Do you think this is a trend with large multinational corporations?

Seth Goldman: I think that large corporations are understanding that the whole landscape is shifting. Consumers are thinking differently about what they are looking for in terms of products and companies. I also think that a lot of large companies think that they are unlikely to be the ones to bring those innovations to the marketplace. While Coca-Cola wouldn’t have created a brand like Honest Tea, because we started in a very small niche, they like what we’ve built. When we started to gain traction, they realized that this was a great opportunity for them to be a part of something new.

Be Inkandescent: What do you think the future of Coca-Cola will be?

Seth Goldman: Twenty years from now, Coca-Cola will be very different than it was 20 years ago. Remember, Diet Coke was only introduced in 1985. Going forward, the company will probably be more diversified with different brands and products, certainly a different portfolio, and likely a different approach. In my view, this is one of the ways change happens. It’s when a larger corporation can take on not just the products, but the values of some of the other companies that it acquires. You’ve seen that in other companies as well. I think that is an exciting way to think about how large corporations will be changing.

Be Inkandescent: Honest Tea is certainly on the cutting edge when it comes to community outreach. Tell us about your first bike promotion.

Seth Goldman: We believe in being healthy, and biking to work helps with that. It also helps cut down on carbon emissions. So, we bought about 500 bikes, and in addition to giving most of them away in grocery promotions, we gave one to every employee at Honest Tea. Then we asked other companies if they wanted to do the same thing. A bunch of other companies joined us, and it was fun and made sense.

Be Inkandescent: I understand that Coca-Cola also invested in this project?

Seth Goldman: That’s right. And so we kept going. Next, I wanted to create a model of local sustainability, so we invested in recycling bins, and Coca-Cola wrote a check to help buy bins to put throughout downtown Bethesda. We brought in 35 recycling bins, and that led to street-side recycling in downtown Bethesda.

Be Inkandescent: And now you are looking to add bike racks to the streets of Bethesda that are made of recycled drink pouches. Tell us about that initiative.

Seth Goldman: We are so excited about this. But here’s a great lesson for other entrepreneurs. Like many initiatives, it has been a learning process. There was a big ribbon-cutting—and then we realized that the bike racks didn’t comply with the local code, so we ended up with all these great racks that we couldn’t place. I was like, “Well, we missed a step here.” We finally placed them in private areas—at schools, restaurants, and cinemas. But we have yet to get them on the streets as we had hoped. It has been a case where our desire to do it the right way was not balanced by the reality of what’s happening on the ground. And that is a lesson we take seriously. We hope it’ll happen eventually. Bethesda is a very bike-friendly place, with a lot of car traffic, so let’s get more bikes here!

Be Inkandescent: That sound like the plight of the social entrepreneur, similar to what we learned from Bill Drayton, founder of Ashoka, who was our November 2012 Entrepreneur of the Month.

Seth Goldman: Our first step is to work on a bottle made of plant-based materials. Right now our plastic bottle is made of petroleum-based material, which is obviously not a renewable resource. We are working to increase the recycled content, but we are also working with Coca-Cola’s partners, who have a plant-based option that they have developed. Our goal is to get into that and then obviously to increase the recycling rate and that will be a significant improvement.

That’s not all! To read more of our interview with Seth Goldman, check out our podcast this December on the Inkandescent Radio Show.

For more of Seth’s insights into being a successful entrepreneur, scroll down!


SETH GOLDMAN’S 8 TIPS FOR GOING BIG

1. Expect the unexpected.

What we have seen as we have gone out to the tea gardens in the countries where we buy tea is that even more gardens are converting to organic, and engaging in Fair Trade. It’s very gratifying to know that the fact that we are growing is helping to fuel change in other gardens around the world that we haven’t even seen. That’s not all. Some of the schools in the tea gardens that I visited are developing into really good schools. In fact, these are schools where people outside the village are trying to get their kids into them. The quality of the education is that good. And this happens, in part, because of the Fair Trade support they receive.

2. Say yes.

When then Baltimore Mayor and now Maryland Gov. Martin O’Malley appointed me to the Maryland Economic Development Commission, I knew I had to step up. He asked me to think about what we can do to make Maryland more friendly and hospitable to entrepreneurs. I put together a series of recommendations for the commission that included how to showcase entrepreneurs more. In November, I was able to have the governor give introductory remarks at Net Impact, which had its 20th annual conference in Baltimore. It was great to have Gov. O’Malley there to see how the organization inspires those 3,000 MBA and college students who were interested in socially responsible businesses. Indeed, Maryland welcomes their ideas and talents. Obviously they have the potential to launch a business here.

3. Be different.

When creating a product, the key is to offer something different from what is on the market. If I had launched “Seth’s Tea,” and it was just like all of the other teas on the market, it wouldn’t have worked. Honest Tea is different. It’s organic, lower-calorie than other options on the market, and the public likes this alternative. That was the first, and most critical step.

4. Be excited about your product or service.

For me, Honest Tea was never about just selling a drink; it was about changing the diet of Americans, thinking about agriculture, and thinking about economic opportunity. That is something I still get excited about every day. After all, business is so challenging that if you only get excited about the financial side, there will be enough setbacks that it won’t be enough to keep you going.

5. Stay close to your employees.

I want to know what is going on in the marketplace, and the people who know that best are my employees, who work there every day. They know what our consumers are saying about our product. So keep talking to them. Never get stuck behind your desk or a spreadsheet. Stay in touch with what’s happening in the field. It keeps you on top of trends and changes. And that’s critical for the growth of any small business.

6. Think ahead.

Our biggest challenge in the beginning was distribution. Our original business plan is posted on our website, and while it is a nicely written plan with some nice thoughts around the marketing around the brand, it doesn’t address how we were going to get the tea to the people. To be fair, we were starting out and we had no experience in the beverage business, so I don’t blame us for not anticipating that. But on the other hand, it is kind of laughable. We were a beverage company with a business plan, but no real understanding that it was going to take distribution to get there. My experiences have helped me appreciate the value of distribution, and obviously why the Coca-Cola relationship is so valuable for us.

7. Keep dreaming.

Some people say, “Oh, I see your product everywhere.” We have grown our distribution a lot, but I see all the places it’s not. To me, Honest Tea still has a long way to go. We are talking to some national restaurant chains because we want to increase our presence, and our sales. We want to become much more of an everyday item for people. So we keep dreaming big.

8. Stay honest.

The best thing I think any entrepreneur can do is to stay close to the consumer, and close to the ingredients, because that keeps you honest. Remind yourself why you are doing what you are doing and why it is meaningful to people. I still see all of the emails we get from our consumers. While I don’t answer all of them anymore, I do see them all. And, I still try to travel to the communities we source from on a regular basis so I can feel like I understand what our impact is in these communities.

For more information about Seth Goldman and Honest Tea, visit www.HonestTea.com.

Tell me, what is it you plan to do with your one wild and precious life?”

– Mary Oliver

Hold fast to dreams, for if dreams die, life is a broken-winged bird that cannot fly. Hold fast to dreams, for when dreams go, life is a barren field frozen with snow.”

– Langston Hughes

To follow, without halt, one aim: There’s the secret of success.”

– Anna Pavlova

I find out what the world needs, then I proceed to invent.”

– Thomas Edison

When the power of love overcomes the love of power, the world will know peace.”

– Jimi Hendrix

I was taught at a very young age that you can do whatever you want to, but you have to make it happen — not just talk about it.”

– Kathleen Jo Ryan

Running that first shop taught me business is not financial science; it’s about trading.”

– Anita Roddick, founder, The Body Shop

Speaking more than one language is no longer just an asset in today’s job market; it is a requirement.”

– Tom Adams, CEO, Rosetta Stone

I’m not afraid of storms,
for I’m learning to sail my ship.”

– Louisa May Alcott

Education is the most powerful weapon which you can use to change the world.”

– Nelson Mandela

Nobody talks about entrepreneurship as survival, but that’s exactly what nurtures creative thinking.”

– Anita Roddick, founder, The Body Shop

The fixity of a habit is generally in direct proportion to its absurdity.”

– Marcel Proust

There is only one success – to be able to spend your life in your own way.”

– Christopher Morley

Education is an admirable thing to have, but it is well to remember that nothing worth knowing can be taught.”

– Oscar Wilde

I don’t do very well without fear. There needs to be a part of me saying, ‘That’s going to fail,’ so I can prove myself wrong.”

– Harry Potter's Daniel Radcliffe

Don’t wait for someone else to lead you to your right life; that privilege—and responsibility—is yours alone.”

– Martha Beck

The best hobbies are the ones that take us furthest from our primary occupation.”

– Dr. Evelyn Vogel, Dexter

Only those who will risk going too far can possibly find out how far one can go.”

– T.S. Eliot

4oz tequila + 1oz TripleSec + 2oz lime juice + 1oz simple syrup (sugar=water), 1 cup crushed ice. Shake + dance around the kitchen.

– Avenida Margarita

Happy are those who dream dreams and are ready to pay the price to make them come true.”

– Leo Jozef Suenens

That which does not kill us makes us stronger.”

– Friedrich Nietzsche

Don’t judge each day by the harvest you reap, but by the seeds you plant.”

– Robert Louis Stevenson

The dove descending breaks the air / With flame of inkandescent terror.”

– T.S. Eliott

Destiny is not a thing to be waited for, it is a thing to be achieved.”

– William Jennings Bryan

Only those who will risk going too far can possibly find out how far one can go.”

– T.S. Eliot

By your stumbling the world is perfected.”

– Sri Aurobindo

The world I believed in, back in my most innocent, uninformed, childish mind—is real.”

– Martha Beck

Part of your destiny is to live in the zone of maximum satisfaction.”

– Martha Beck

Darkness cannot drive out darkness: only light can do that. Hate cannot drive out hate: only love can do that.”

– Martin Luther King Jr.

The only way to compel men to speak good of us is to do it.”

– Voltaire

Passion makes perfect.”

– Eugene Biro

Opportunity is missed by most people because it is dressed in overalls and looks like work.”

– Thomas Edison

You don’t go into a field that requires cracking people’s heads open or operating on something as delicate as the spinal cord unless you are comfortable with taking risks.”

– Dr. Ben Carson

That man is richest whose pleasures are the cheapest.”

– Henry David Thoreau

The person who makes a success of living is the one who see his goal steadily and aims for it unswervingly. That is dedication.”

– Cecil B. DeMille

As each woman realizes her power, she transforms the world.”

– Patrice Wynne, WomanSpirit Sourcebook

If it really was a no-brainer to make it on your own in business there’d be millions of no-brained, harebrained individuals quitting their day jobs.”

– Bill Rancic, "The Apprentice"

A warrior cannot complain or regret anything. His life is an endless challenge, and challenges cannot possibly be good or bad. Challenges are simply challenges.”

– Carlos Castaneda

Persist and persevere, and you will find most things that are attainable, possible.”

– Lord Chesterfield

Never cut what you can untie.”

– Joseph Joubert

Do you believe it is important to give back some portion of your wealth to support charitable causes?”

– Steven Schussler

As your desire is, so is your will. As your will is, so is your deed. As your deed is, so is your destiny.”

– Brihadaranyaka Upanishad

Always be on the lookout for the presence of wonder.”

– E.B. White

Happy are those who dream dreams and are ready to pay the price to make them come true.”

– Leon Joseph Suenens

The best reason to start an organization is to create a product or service to make the world a better place.”

– Guy Kawasaki

Change is a math formula. Change happens when the cost of the status quo is greater than the risk of change.”

– Alan Webber, author, "Rules of Thumb"

The biggest flaw in our existing theory of capitalism lies in its misrepresentation of human nature.”

– Muhammad Yunus

With ordinary talents and extraordinary perseverance, all things are attainable.”

– Sir Thomas Fowell Buxton

There are children playing in the street who could solve some of my top problems in physics, because they have modes of sensory perception that I lost long ago.”

– J. Robert Oppenheimer

You don’t love someone because of their looks or their clothes or their car. You love them because they sing a song only your heart can understand.”

– L.J. Smith

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