Seth Goldman (Founder of Honest) Tea Shares His Story

Audio Transcription

Clay:
Yes, yes, yes and yes. Thrive nation, on today’s show we have an incredible guest, Mr. Seth Goldman. How are you, sir?

Seth Goldman:
I’m great, Clay, good to be with you.

Clay:
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. I’d love to ask you, my friend, what first inspired you to start Honest Tea?

Seth Goldman:
It was pretty simple, I was thirsty. I looked at the beverage cooler, and I said, “There’s a lot of drinks here, but there’s nothing that’s going to quench my thirst.” I was looking for something that just wasn’t as sweet as all the other drinks out there, and I didn’t find it, so that’s why we created it.

Clay:
Your products are now in the Chick-fil-A stores, Wendy’s, 100,000 stores all around the world. What was step one to launch Honest Tea? What was the very beginning? I understand you were making this at home?

Seth Goldman:
Yeah. The first step was I brewed some samples in my kitchen, and I brought them in thermoses to the local Whole Foods buying office in Rockville, Maryland, which was close by to where I still live. I got an empty Snapple bottle and pastes the label on, and said, “This is what it would look like.” Then I poured out the samples from the thermos and said, “This is what it would taste like, and I want to sell it in your store.”

Clay:
What kind of jobs were you doing to support yourself while you were starting what would be a $100-million dollar tea company out of your kitchen?

Seth Goldman:
I had been in the investment business before I launched, when the ideas were, we’ll say brewing. When I finally felt like there was enough of an idea to launch a business, I resigned from the investment firm I worked for, and started out of my house. So it was a full-time undertaking when I was going for it.

Clay:
How did you know that it was the time to quit the other job and to go all in with Honest Tea? So many people struggle with knowing when to make that jump, and when to pull the trigger. How did you know it was time?

Seth Goldman:
I think there’s never a perfect time, but my wife and I had just had our third son, so you could 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 enough, I was willing to try. There was enough of an idea, and it was an idea that I was passionate about and believed in, and felt like I could make into something. Other than that, it was like … The other thing, very totally coincidental or coincidentally happened is I ended up getting a check from an investment my father had made, it was literally 20 years ago, and it just ended up that I got money from that investment. That was my seed capital, and I thought, “There’s a sign. This fell into my lap, and that will be my startup capital.”

Clay:
How much money did it cost to start up Honest Tea? We’re talking tens-of-thousands, hundreds-of-thousands?

Seth Goldman:
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. That was enough to make the product, to do some very minimal marketing and buy all the inventory and labels and that kind of thing.

Clay:
Where did the name Honest Tea come from? Were you thinking about going with Dishonest Tea, and then you thought, “No, let’s make an honest company.” Where did the name come from?

Seth Goldman:
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. He came up with that name, and it was just the perfect name to capture what we wanted the brand to be, and that’s an authentic, natural, healthy brand. Once we had that, initially when I spoke to Barry, we weren’t thinking tea, we were just thinking about a less sweet drink and it could have been a seltzer and juice drink, but when he came up with the name Honest Tea, I’m like, “That settles it, that’s what we’re going with.”

Clay:
What was your relationship like with Barry before teaming up to build Honest Tea?

Seth Goldman:
He’d been my professor and we had always hit it off as student and professor, and we were, I would say we would like to intellectually spar with each other and just talk about ideas and challenge each other. Then we stayed in touch after I graduated from Yale School of Management, and would send emails, or sometimes I’d share a fun idea I’d come across or maybe ask for some advice, maybe if I got a job offer and that kind of thing. So it wasn’t like I emailed him out of the blue when I was ready to do something about this idea.

Clay:
A lot of people out there, a lot of entrepreneurs, we have half-a-million folks that will listen to this podcast every month, and I know a lot of them are saying, “How did you even know what terms to offer people when you’re raising capital?” Is there a certain formula you give people out there? I hear so many different approaches, I’d just like to get your approach on, if you’re an entrepreneur out there trying to raise capital, what’s the best?

Seth Goldman:
We did something a little different, and it was creative and it worked out, but it was risky. As one of our investors said, it was an equity structure that only a game theorist would love. Barry is a game theorist, so that makes sense that we offered it. What we did is we said, “Look, we don’t know how valuable this company is going to be.” What most entrepreneurs do when they start up is they basically issue themselves what’s called penny stocks, and just give themselves a ton of equity. We said, “We’re going to invest in this company at the same terms of all the other investors, but we’re going to give ourselves warrants,” which are basically options that say as the value of the company grows, we’ll have the right to those options. And when they become into money, when the stock price grows past the price of the options, then we end up getting more of the company.

Seth Goldman:
So we were incentivized to grow the value of the company, and we did grow it. That was how we came to benefit. But the point was, we only benefited when shareholders benefited, we weren’t giving ourselves free shares that weren’t earned.

Clay:
Barry was a professor, and I understood that both of your parents were professors.

Seth Goldman:
Yes.

Clay:
So your family conversations growing up typically were not about sports and celebrity gossip. What kind of conversations were your parents having around the dinner table, and how did that impact the way you see the world now?

Seth Goldman:
No, you’re right. My dad was an economist, and my mom’s a historian of China, and so we were always thinking in a global context. I think that did inform the way I approached Honest Tea, it wasn’t just a company trying to make money or just trying to move around some cases of tea, it was thinking about how can we create a business that has a positive impact on the world and on the people involved in the supply chain, the people picking the tea leaves, as well as the environment that we source from. That really has, I would say, come to be what we’ve done with the business, and what we strive to do in the business.

Seth Goldman:
I would say another thing I got from my parents was also a sense of humility that they always expected a lot, so I never got the “Great job.” If I got an A-, and it was, “It wasn’t an A.” Or if it was an A, “It wasn’t an A+.” I always have that feeling that we’ve got more work to do with Honest Tea and our impact.

Clay:
Some people who are raised in homes where there’s very high expectations, they tend to go the other way. Are you a secret lover of Adam Sandler films now?

Seth Goldman:
I can laugh at things like that. I think I did a good job of not taking it too seriously, and I did feel a lot of pressure to succeed, but I also found I had enough other interests that I came to understand success is not just in a grade. It’s certainly not just in a dollar figure, there’s other ways to measure it. I’ve certainly tried to pass that on to my kids as well.

Clay:
In 2012, I was reading this book called the Startup Playbook, the yellow covered book that sits behind me on my bookshelf. In the book, it did a profile on you and your company Honest Tea. There’s one line in that book that really blew my mind, it said 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. Fair trade, low sugar and caloric content, and a commitment to organic. I circled it, I highlighted it, I dogeared it and I thought, “I want to interview this guy.” So I would like to go through these three, because it sounds like you’re reading my wife’s brain 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?

Seth Goldman:
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. What it means is it starts with the waging, it makes sure that all of the people involved in our supply chain, whether it’s the people picking the tea leaves or processing the tea leaves are paid a living wage in the country where they’re working. It also means that a portion of the sales, when they sell the product to us and we buy the tea or sugar, a portion of our purchase goes back to that community for them to reinvest in their own priorities. Whether it’s their own infrastructure, or healthcare, or schools. We’ve helped finance everything from eyecare in India, to ambulances in Paraguay. Things that help them become more economically self sufficient.

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

Seth Goldman:
No. We have bottling plants around the country, we got bought by Coca-Cola in 2011, so we have bottling plants that work with other Coke products. There’s one in Virginia, there’s one in New Jersey, there’s on in Massachusets, there are a few in California, there’s some in Texas and some in Michigan as well.

Clay:
Are all the employees today Coca-Cola employees, or are they original Honest Tea employees?

Seth Goldman:
We have some that work out of our office in Bethesda, we still have the original office that Honest Tea was in before we sold to Coca-Cola. But then yes, a lot of the salespeople we work with are part of the Coca-Cola organization, as are some of the operations’ people too.

Clay:
We have a lot of fitness experts on our show, if I can summarize what they say, they say, “Sugar makes you fat.” They’re always talking about this, 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 fad. You were way ahead of the game, people were drinking this Honest Tea going, “What in the crap? This doesn’t have sugar in it.” Can you talk to me about your commitment to be the low sugar and low caloric guy before that was a move? You were the inventor of the move.

Seth Goldman:
21 years ago when we were starting this company, every bottled tea was at 100 calories per eight ounces, so they were all super sweet. So it really was starting from a place of just, “Let’s just have something that doesn’t taste this sweet.” Of course, within that less sweet taste, obviously does mean less sugar. So we definitely were doing this from a health perspective, but there was also just a taste profile perspective that we felt was relevant. Of course, today we’ve got even more varieties that are zero-calorie or unsweetened, and 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 majority of consumers are.

Seth Goldman:
When people picked up our bottle in the beginning, and they were looking for what they thought was just a regular bottled tea and they’d taste ours, it didn’t taste like what they were used to.

Clay:
You are an educated man, I know you’ve spent a lot of time thinking about food and thinking about health and being proactive about these things, but a lot of our listeners, 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, let’s say you have a plumber you’re talking to, an electrician, some corporate head who is like, “Organic orshmanic.” Can you explain why organic matters? My wife would love to pile on after you take a deep dive here.

Seth Goldman:
There’s a simple way to talk about it, and this is a way that I would say is not necessarily scientific, but it’s easy to understand. In most nonorganic agriculture they will use things like pesticides and herbicides, chemical compounds that are pesticides and herbicides, and the word cide of course is the same word as suicide and homicide, which is to kill. In the case of herbicides, killing herbs.

Clay:
Sounds yummy.

Seth Goldman:
In pesticides, killing pests. So they are compounds designed to kill living organisms. The science from the companies that sell those compounds will tell you that they are regulated to sell those products and they are allowed at diluted levels, they are safe to the consumer. I won’t dispute that. What I will say is that although they may not reach significant levels on the plant, they do build up in the earth, they do build up in the ecosystem, they build up in the water, and they build up in the air. As a result, when you look at humans, whether you look at the spinal fluid of a newborn baby, they’ll have the residue of these compounds in them, even if obviously the baby hasn’t consumed anything.

Seth Goldman:
These compounds do build up in our systems, and they are, as I said, compounds designed to kill living organisms. My point of view is the earth and people are better without those compounds in them. So organic agriculture seeks to have a lighter environmental footprint that doesn’t rely on chemical compounds designed to kill living organisms.

Clay:
Do you eat only organic food?

Seth Goldman:
I do my best. It’s not perfect, but certainly wherever I have a choice to buy organic, I will do it. But of course, here’s what’s interesting about organic, it often does cost more. One of the things we’ve had as our commitment at Honest Tea is to democratize organic, so what we’ve done, and this is one of the reasons we partnered with Coca-Cola is to bring these products to scale in a way that did not make them price prohibitive. As you mentioned, our products are sold at McDonald’s and Wendy’s and Chick-fil-A, in Subway, and these are outlets where the organic offering is not at a premium to the rest of the market. We’re very proud of that, because it means we, both through our distribution and pricing, we’ve been able to make organic more accessible, more affordable.

Clay:
In 2012, when I began cyber-stalking you, I discovered that 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?

Seth Goldman:
It was totally consistent both with our name and our aspirations as a brand. Of course, what we also learned, we looked at tea leaves and we realized that unlike an apple or a tomato, tea leaves are one of the few agricultural products that never get rinsed. If chemicals are sprayed on tea leaves, they stay on the leaves until hot water is poured on the leaves and basically washing the chemicals into the drink. We said that’s something we’ve got to do. We moved quickly to make the rest of our line organic, and it has helped differentiate us and helped us stand apart. Of course, everything we sell today is certified organic.

Seth Goldman:
Then what happened is a few years later, the USDA created the USDA Organic Seal. Then that helped brand it and set it apart. At the time, consumers didn’t have much knowledge, but we see them continuing to learn more and gain greater awareness about the Organic Seal.

Clay:
How did you land your deal with Whole Foods? Because my understanding is 1998, Whole Foods made an order for 15,000 bottles of tea. Were you just sitting around one day and then the phone rang, and they said, “Is this Seth Goldman?”

Seth Goldman:
No, no.

Clay:
How did it happen?

Seth Goldman:
No, what happened is their head of marketing used to be, he went to the Yale School of Management, so I had gotten to know him in DC. So when I had this idea, I went out to lunch with him with some thermoses, and I said, “I think there’s an opportunity to sell this in your store.” He said, “I can help you get the appointment, you have to convince the buyer.” So I got to the buyer and I’m pulling out the samples, and as I said, used that Snapple bottle with the label on it and showed it to him. The buyer was willing to take a gamble, he said, “We’ll take 15,000 bottles.”

Seth Goldman:
What was funny though is 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 said, “I appreciate the part about taking the product, I need you to pay for the first bottle. I don’t have, the whole company is just me and these thermoses and this bottle, so I really need you to pay for everything.” To their credit, he agreed.

Clay:
Can you 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 agrees to carry your product on their shelves, typically, you as the creator of the product, don’t get paid for 60 to 90 days after the product is sold. Can you explain how that works for the average listener out there?

Seth Goldman:
Different stores work differently, but in general, we’ll ship the product to them, and then they’ll pay us. As you said, sometimes it’s 30 days, sometimes it’s 60 days. Early for entrepreneurs, sometimes what they’ll let us do, if they will let them pay in 10 days, but they take a little discount. So if the store is well established, they can do that. 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. Sometimes we had that arrangement with some of our retailers.

Seth Goldman:
When you’re an early state entrepreneur, every penny counts and every penny is precious. You just have to find ways to get money. Sometimes what 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, during 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 terms.” Sometimes he’d let me extend to 60 days, I said, “I’ll pay you in 60 days rather than 30.” That was basically like a loan, where that enabled me to pay my other bills and pay our employees. Then of course, when the weather got warmer, then I would turn and pay him back everything I owed him.

Clay:
When you got the order for 15,000 bottles, you’re still making it out of your kitchen I believe, so did you expand your granite countertop, did you knock out a wall and make the kitchen bigger? How did you do it?

Seth Goldman:
I sprang into action and traveled up and down the East Coast, and I went to every type of different facility that did bottling. 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. They let us make tea in their facility.

Clay:
Did you drive to all these places, or did you call them, how did you get ahold of them?

Seth Goldman:
I drove, yeah. I had to meet with them in person. I would talk to them first on the phone, and explain what we were looking for. First of all, if they returned my call, sometimes they wouldn’t return the call, but when they did return the call, then I would have a conversation, and if they felt like it was close enough alignment, then I’d go meet them in person. So much of this, like any entrepreneur, when you’re starting out, because you don’t have much to go on, 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 have the right ideas behind it to build it.

Seth Goldman:
Because these bottling plants, they have a lot of people who come through, and they don’t know if someone’s for real or if someone’s going to be able to pay them. That’s often the case, they would insist on being paid up front, because I’ve seen it happen so often that the entrepreneur gets something and then disappears.

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

Seth Goldman:
We had a Saturn station wagon.

Clay:
Nice.

Seth Goldman:
In fact, what happened was I had picked up our spices, for our first production round we had this wonderful chai recipe, but I ordered and picked up the spices from a spice warehouse in Baltimore, and I had to drive it up to Buffalo for eight hours. It was a freezing cold day, so I had to keep the windows closed for that eight-hour drive. By the time I got up to Buffalo, that car had a permanent aroma of chai spice, which was very fragrant, but very strong.

Clay:
Strong with the ladies. So you’re driving this Saturn station wagon, what year was this?

Seth Goldman:
This was 1998, right at the beginning of the business.

Clay:
Are you a big music guy?

Seth Goldman:
Yeah, I was listening to music, partially because it was an eight-hour drive, so I just had tons. There was a whole soundtrack for that year, because I spent tons of time in the car. It was pretty intense.

Clay:
Did you listen to My Heart Will Go On by Celine Dion until your brain exploded that year, back there in 1998?

Seth Goldman:
No, that was not the song that kept me going. I heard a lot of U2, there was Matchbox 20, it’s 3AM, which really felt like it was my … I was really out at 3:00 AM, so I related to it.

Clay:
Who are some of your favorite musicians that you like to listen to? Are you still a Matchbox 20 guy?

Seth Goldman:
Not as much of their recent stuff, but I love Tom Petty, I still like U2.

Clay:
A buddy of mine I went to college with, Ryan Tedder, he went to Oral Roberts University with me, his goal someday was to write a song with Bono. He actually got it done, so One Republic has opened up for U2, and Ryan Tedder has won himself a couple Grammy’s. He had this goal, he kept saying, “I’m going to write a song someday with Peter Gabriel, Bono, and Paul McCartney.” And he actually pulled off the trifecta, so he did it. For any listeners out there who think that your dream is not possible, what advice would you give them there, Seth? For anybody out there who says, “I’m driving around in this 1998 Saturn station wagon, I’m listening to Tom Petty. I’m driving around trying to find …” What advice would you have to encourage the entrepreneurs out there?

Seth Goldman:
Number one, when you walk into our office at Honest Tea, the first thing you’ll see on the wall is a quote that’s from one of our bottle caps that says, “Those who say it can not be done, should not interrupt the people doing it.” There’s always going to be skeptics out there criticizing or second guessing you, and if you have a passion about what you want to do, you’ve got to do it. I think the other thing I would say, and this is another quote, this is from Oscar Wilde that said, “Be yourself, everyone else is already taken.” 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 to stand alone.

Seth Goldman:
The third one I would say is, this is a quote I once heard on a cartoon show, which was from Fat Albert.

Fat Albert:
Hey, hey, hey.

Seth Goldman:
It said, “He who throws mud only loses ground.” You never want to try to elevate yourself by disparaging others, see what you can do to shine your own light.

Clay:
What was the most difficult aspect of scaling Honest Tea, looking back on it?

Seth Goldman:
For us, it was the distribution. We had a product we knew consumers wanted, the problem was that we couldn’t get it into their hands. We needed distributors to do that. That’s where we had that challenge, and so we went to the distributors and they would say, “We don’t like this, because it’s not what we’re used to. It’s not sweet enough, it’s a little more expensive, it’s a different taste.” 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 corned beef distributors, anybody else who was going to the shelf. Eventually, the beverage distributors started taking us on, but we had to earn that opportunity and we did it by basically going around them. When the wall was put up in front of us, we went around it.

Clay:
Did you cold call everybody? Did you show up? What was your move to get ahold of these different distributors?

Seth Goldman:
A little bit of everything. I would say I was pretty good at stalking as well, so there was one particular distributor here in the DC Mid-Atlantic area, and I would hang out in their lobby, and the general manager would come in and say, “Are you here again?” Eventually, he got the message I wasn’t going to go away until he gave us a shot, and it was a big breakthrough for us when we got it.

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

Seth Goldman:
Oh my gosh, yes. Not too different from the distributors, the distributors were the toughest, but after that the bottling plants were tough. I said we got that chance with the plant up in, the apple juice plant up in Buffalo, but then the problem was when it got to apple season they said, “We can’t make any more tea.” I’m like, “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.

Seth Goldman:
So it was just really a drain on my energy, it wasn’t where my heart was in terms of what I loved doing, it wasn’t where my expertise was. It was also two other owners, so no one was taking the full responsibility. It just was the wrong use of my energy and of the money we had raised from our investors. It was only when we got out of that plant, we ended up selling it, a distressed sale, once we got out of it, the business really started to take off. I could focus on building the brand, building the business.

Clay:
Seth, 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 have done other things with your career. Why are you so committed to Honest Tea? Why didn’t you go do something else?

Seth Goldman:
I love this work, I love our impact, I love what we’re building, I love the relationships we have with the consumers, and with our suppliers, which has just been wonderful. I have recently also become involved in another company as executive chairman of the board, it’s a company called Beyond Meat. So between Beyond Meat and Honest Tea, I have two 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. One is earlier stage and growing quickly, and the Honest Tea is more scaling and going global now. Still the opportunity to have an impact and address issues I care about is really satisfying.

Clay:
What does Beyond Meat actually do?

Seth Goldman:
It sells a plant based protein. We have a product called the Beyond Burger that really tastes and chews and grills like a beef based burger, or animal based burger, except it’s made entirely from plants. As people have looked toward both healthier options and options with a lighter environmental footprint, there’s been a ton of interest and excitement about what Beyond Meat is doing. That’s been a really fun enterprise to be part of.

Clay:
Is it at comparable prices as meat? If I’m going to get a Beyond Meat hamburger, does it taste similar, is it a similar price?

Seth Goldman:
Yeah. It tastes similar, and 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. It starts out that way, but we just launched the Beyond Burger at Carl’s Jr. across the country, and that’s exciting, because 1100 restaurants. It’s called fast food, and so it is priced, it’s more expensive than the typical beef patty, but it’s not out of an affordable range.

Clay:
But it doesn’t taste like wood or something?

Seth Goldman:
No, exactly. It chews and grills just like a hamburger, so it’s really, it’s delicious. I had one just last month, I was out in California.

Clay:
For the listeners out there who are saying, “Gosh, I would love to be the next Honest Tea, the next Beyond Meat,” that kind of thing, could you talk about how many cold calls and how many meetings that you went to? Calls you made, you went to the places, and nothing happened. Times where you drove somewhere in that Saturn and you got stood up. How many rejections did you get in route to getting the wins?

Seth Goldman:
I think if I were writing a book, I wouldn’t call it this, but I did write a book about Honest Tea by the way called the Mission in a Bottle, but that name might have been 50 Shades of Rejection. We got rejected by every, certainly by the distributors as I mentioned, but also by investors. I needed to raise money, I mentioned we raised $500,000 for our first launch, but over the course of the next 10 years, we raised $10-million dollars. For every dollar I raised, I had at least 10 conversations with people who chose not to invest. That was always the challenge.

Seth Goldman:
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. So it just was a continual battle, but thankfully, that’s what the fun is, that’s where the challenge is. If everyone said yes the whole time, then somebody else would have already done it. It takes the entrepreneur to bring a new idea to life, or bring an existing idea in a different way. So with Beyond Meat, as you said, there have been veggie burgers out there, but there hasn’t been a veggie burger or plant based burger that tastes like Beyond Meat. So it’s creating something new and exciting, and helping people understand.

Seth Goldman:
What’s been the breakthrough for Beyond Meat isn’t just the taste, but because it tastes as good as it does, we were able to get it carried in the meat section of the grocery stores, as opposed to in the veggie burger section. That really reaches a different customer, and is a much bigger growth opportunity.

Clay:
As I was cyber-stalking you, I was looking at the terms and the buyout from Coca-Cola, it appeared to me from my perspective that you decided to team up with Coca-Cola and to sell, give the business to Coca-Cola so that you could increase the distribution. Is that correct, or am I misinterpreting why that deal happened?

Seth Goldman:
Totally. I mentioned, we had this commitment to democratizing organics, and so for us, we wanted to be available. Not just to healthy people in wealthy places, but to people everywhere. So that was what Andy Warhol said about Coca-Cola, everybody, whether you’re the King of England or a factory line worker, they are all enjoying the same product. That addition of making great products accessible to people at affordable prices is something that we’ve really been able to help make happen, and Coca-Cola has been part of that.

Clay:
Now that you have teamed up with Coca-Cola, what’s your official title and role on a daily basis?

Seth Goldman:
My title when I ran the business was the TEO, like CEO but of course I was focused on tea. Now I call myself the co-founder and TEO emeritus. I work half my time with Honest Tea now and half my time with Beyond Meat, and it’s a way for me to, like I said, be involved in both businesses, but also help to spread myself over the two as well.

Clay:
When you got, when they did buy you out, did they wire the money to you? Did they give you a nice big oversized check? Did they give it to you in ones and tens? How did the transaction occur?

Seth Goldman:
I think what happened was, because we were bought by the entire thing, we just had our CFO write the checks, so we wrote checks from Honest Tea’s bank account, because it became Coca-Cola’s bank account. It was just checks from Honest Tea written, so I ended up signing, I guess our CFO signed the check to me, just to make sure there was … But it came out of the business bank account that had been funded by Coca-Cola.

Clay:
When you finally got that big check, did you go out and buy as much ice cream as you wanted? What do you do with all the extra money now?

Seth Goldman:
No, we really made a point of not doing anything. We just said, “It’s there, but let’s make sure we all understand what makes us happy as a family.” In fact, what I did, and this was a little unusual, I invested the money right back into Honest Tea. We had an arrangement with Coca-Cola that let me continue to have some risk capital in Honest Tea, and that was a way for me to continue to stay focused on the business. Thinking about it like it was still my money and still my business, and I think that helped keep me engaged and helped keep me connected to the brand. Of course, here where I’m speaking to you now, 11 years since Coca-Cola invested, and I’m still involved with the brand. That’s unusual, right?

Clay:
Yeah.

Seth Goldman:
Most of the time when an entrepreneur sells a business, they go onto the next thing, or go golfing or bowling or yachting or whatever.

Clay:
I thought you were going to become a rapper, that what I thought you would do as a pure 2.0.

Seth Goldman:
We do have a rap online by the way, if you haven’t seen it, but we did that from Honest Tea. It’s a fun one called Rethink What You Drink.

Clay:
Nice.

Seth Goldman:
No, for me this is work I really do enjoy, and this is what has enabled me to feel a sense of completeness and happiness, so why change what makes you happy?

Clay:
Final three rapid fire questions for you here.

Seth Goldman:
All right, I’m ready.

Clay:
How do you organize the first four hours of a typical day, or how did you when you were growing Honest Tea, before the business was acquired? What time did you wake up, how did you organize the first four hours of your day?

Seth Goldman:
Mostly the same as it was 20 years ago. My wife and I wake up early, usually before 6:00, because when the kids were home we had to get up and exercise before 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 and at least go to bed in a bed that looked like it was well made. Then I’d go out and exercise for usually an hour, and that always gives me a chance to clear my head, usually by myself, just get out, workout my tensions, physical tensions or psychological tensions.

Seth Goldman:
Then be able to spend some time, when the boys were at home, be able to talk with them and just share a few ideas about the day, or just read a little bit about the news going on in the world. Then, and this is something that still is the case, I would bike to work. For me, that was just a great transition. I’m not stuck in traffic, I don’t have to worry about parking.

Clay:
How long are we talking about here? Are you biking a half hour or an hour?

Seth Goldman:
No. Here in Bethesda where Honest Tea is it’s literally just a 10-minute ride. In California, with Beyond Me, it is probably closer to a 30-minute ride. But for me, the ride is 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 at either place, I’m ready to go. I’ve gone through enough of a transition that I’m able to be ready, to be present.

Clay:
You’re an educated guy, you’ve read tons of books, but is there a specific book for any of the entrepreneurs out there that are maybe struggling to get that traction with their product? It’s a great product, everyone says, “I love your product,” but they’re struggling to get that traction. Is there a specific book or documentary or something that you would recommend that all the entrepreneurs should check out?

Seth Goldman:
The book I love, it’s Call of the Wild by Jack London. You may not think of it as an entrepreneur’s book, but basically it’s a story about a dog who reconnects with his instincts, things that are ingrained in him but have been suppressed. I think most entrepreneurs do have to go with instincts on a lot of work. A lot of times, especially in a corporate environment, you’re often discouraged to go with your instincts. So I think part of being an entrepreneur is getting back in touch with your instincts, so I love that as a way to spur people to more creative thinking and more feeling it from the gut, versus just …

Seth Goldman:
As I said, 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 a less sweet drink. 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 a less sweet drink. But it wasn’t through any focus groups.

Clay:
My final two questions here, it’s a two-part question, so here we go. You right now, all the entrepreneurs out there are listening, you’ve got the mic here, our listeners are very action orientated. Do you want them to check out Beyond Meat, is there a certain website to go to? Do you want to direct them to check out one of your books? What action step would you invite all the entrepreneurs to take?

Seth Goldman:
Certainly as an entrepreneur, if you’re serious about being in food, you should see our book, Mission in a Bottle. It is a story of the first 10 years of Honest Tea, and it’s written as a comic book, so it was a really fun and engaging way to share our story. Then I think I would encourage people to buy or visit HonestTea.com for Honest Tea, and BeyondMeat.com, because these are two products each in their own category that are disruptive. They went into existing categories, in the case of bottled tea or beverages and then meat, and found a new way to bring a product to life. 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?” If you can’t answer yes to that, I would encourage you to go back to the drawing board.

Clay:
Final part of my question here, you’re a guy, 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? If you launched your rap career today, what would be your rap name?

Seth Goldman:
I don’t even know exactly how it came across, but for some reason I have the name Dr. Butt McGee. I don’t really know what that came from, that’s the name of record if you go to YouTube and you look up Honest Tea Rap, you’ll see.

Clay:
What was the name?

Seth Goldman:
Dr. Butt McGee. I think it was, I’m not a doctor, but I can’t even explain the origins of it, it really was one of those things. It just came up.

Clay:
I would have guessed that, it seems like a reasonable guess. Thank you so much, Seth, 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 organizations. Again, just thank you so much for investing your time with all of our listeners today.

Seth Goldman:
Thank you, Clay. It was really fun to be with you.