Small Business Advice from the Honest Tea CEO
Seth Goldman, the CEO of Honest Tea, shares four lessons learned on his way to brewing up a big success.
Start small, but keep your ideas big.
In 1998, Seth Goldman and Barry Nalebuff started Honest Tea when they realized there was a thirst in the marketplace for a less sweet bottled iced tea. They started brewing in Goldman's kitchen and packaging their samples in empty Snapple bottles. Fifteen years later, Honest Tea is stocked in 100,000 stores and on track to post sales of $100 million in 2013. Although the company is now largely owned by Coca-Cola, it still follows the earth- and supplier-friendly principles it was founded on. Goldman recently told the story of the business in a graphic novel called Mission in a Bottle: The Honest Guide to Doing Business Differently—and Succeeding. From the book, here is his key advice on starting a small business.
Lesson #1: Build something you beleve in right from the start.
As a start-up, you'll likely have worse costs, worse distribution, and pretty much worse everything, so you have to be much better on some important dimension—better enough that customers will overlook your weaknesses. The more you stand for something, the more you matter in their lives, the more they'll ask for your brand and perhaps even harass a store manager when they can't find it.
Customers want to have a relationship with your brand, but you have to earn their trust. It's rarely credible when a brand (or a person, for that matter) develops a new personality or a new set of values. It's essential that your brand has a clear identity from the outset (pictured, Honest Tea cofounder Barry Nalebuff, who's also a professor at Yale School of Management).
Lesson #2: Think ahead about what you want to accomplish.
If your game plan is to launch your product, market it for a year or two, and get bought out by a large company, then you're unlikely to succeed at any level. That's not how you build an enterprise that can stand on its own or that others will want to acquire. You need to build something for the long run and make decisions based on owning the brand forever. We always envisioned that Honest Tea could be more than just another bottled tea—it could be a national brand embodying a different way of doing business. Since its founding, one of Honest Tea's core missions has been to be a socially responsible company that has open, equitable relationships with its suppliers (pictured, Goldman with some tea pluckers).
Lesson #3: It doesn't matter how good it is for you if it doesn't taste good.
If an eco-friendly toilet paper gives people splinters, they won't care how green it is. With tea, there can't be a trade-off between delicious and healthy. It can't taste like lake water. It has to be delicious.
Lesson #4: Don't delegate at the beginning.
The best way to get a handle on the business is to learn every aspect. Don't worry, you're not supposed to know what to do, but don't be afraid to try doing it all. If things go well, you'll be able to hire people to take over the tasks where you don't add value. I taught myself how to use accounting software, but certainly not better than a professional. I learned how to buy and brew tea, but we eventually hired food scientists who could do it better. I made sales and deliveries, but dented up trucks along the way. Because I've done all this, I can have a conversation with any employee, supplier or customer about what they do, ask challenging questions, and not get snowballed.
One downside of not delegating is there's more work to do, but sleep isn't that important the first year. There's enough energy from the thrill and fear of creating something new to keep you going. But I still needed balance. I made sure I was home for dinner whenever I was in town, and I coached my son's baseball team.
Adapted from the book Mission in a Bottle: The Honest Guide to Doing Business Differently and Succeeding by Seth Goldman and Barry Nalebuff, illustrated by Sungyoon Choi. (c) 2013 by Seth Goldman and Barry Nalebuff. Published by Crown Business, an imprint of the Crown Publishing Group, a division of Random House LLC.