“There’s a lot of impact still to make here and important work to do. I also think in some ways we and I are uniquely suited to do that.” – Seth Goldman, CEO Honest Tea
KissMyCountry had the rare opportunity to interview Seth Goldman, CEO of Honest Tea – in person! When Seth realized we live near his company in Bethesda, Maryland he invited us to his office for the interview. Enjoy our talk with Seth Goldman as he talks about building Honest Tea, taking it to national distribution this July, and his continued dedication to sustainable business practices!
KissMyCountry: Seth, it’s really an honor to talk with you and we appreciate your being so responsive to speaking with KissMyCountry for our series. You started Honest Tea by experimenting in your kitchen. Lots of people mix up things in their kitchen, but very few end up running a multi-million dollar business based on their creations – even those that start with an idea as good as yours and Barry Nalebuff’s. Why did you succeed when so many fail?
Seth: I just think we really were very passionate and still are very passionate about this. This was something important to do. There was a great deal of ambition and energy behind it and relentlessness too. It’s interesting, there have been a lot of organic low calorie bottled tea companies that have come and gone. Some people say we were just at the right place at the right time – lucky. But a lot of that passion carried us when we weren’t running on much else. I think that counts for a lot. We’ve really been fortunate to be able to put together people who share that passion and that’s important too. In the beginning we were probably a little too conscious of being purists or mavericks and we didn’t bring on people from the beverage industry. On the one hand that hampered our growth but on the other hand that kept us mission-driven. I know we made a lot more mistakes or didn’t grow as quickly because of it but in the long term I think it really assured our long term success. We also had a lot of long-term thinking. We weren’t trying to turn a buck and we focused on the future and especially given how challenging our growth was in the beginning if we had made our tea any sweeter or made it cheaper we could have grown more quickly but we really had our vision and we stuck to it.
KissMyCountry: I’m really struck by how admired you are by other CEOs in the Green and sustainable arena. I hear your name again and again, which is impressive given the talent and success of this group. You’ve clearly connected with and inspired many. How do you feel about that, and – again – why you? Why do you think you’re one of the most mentioned and admired in this arena?
Seth: That’s nice. It’s very gratifying. It’s nice to hear. I definitely do put a lot of effort into sharing this mission and spreading it. I was one of the founding board members of Net Impact. It’s a national non-profit focused on seeding the next generation of socially responsible entrepreneurs. I was on the keynote closing panel at their conference this past fall and I’ve always supported it. We hold an annual event here at our office in Bethesda and we’ll have that here next month to welcome all the Net Impact interns. We’ve always hired Net Impact interns here since we started. Certainly that is one way to help and also I think a model for building a sustainable enterprise. One of the things we’ve always put on our shoulders is this feeling that this has to work not only because it’s our livelihood and we’ve got investors who are depending on us but because we need to show the world that this kind of model of business can succeed. If we don’t succeed and we remain a niche business or we don’t really flourish then we satisfy all those skeptics who say you can’t really mix business and a mission-driven agenda. And it’s interesting. The first generation of socially responsible businesses like Ben & Jerry’s were one step and I think we’re the next wave. Hopefully, young entrepreneurs may be able to relate to us because it’s relatively recent that we’ve been around and we’re still growing quickly. We still have a long growth curve.
KissMyCountry: Who are your heroes? As you face challenges at Honest Tea, who do you draw on for advice and inspiration?
Seth: Gary Hirshberg at Stonyfield Yogurt is certainly one of my heroes, he’s been on our board and he’s someone who has played an influential role for me so we certainly see ourselves following in Gary’s wake as well. Gary has played an important role because he took a product that was a healthy product and made it organic and increased availability by marketing it successfully to a larger audience and we see ourselves doing the same thing. And then he also partnered with a large multinational and then managed to keep control of the enterprise and the brand and is still running it, which is also a great model. We owe him a lot and continue to learn from him. Another great mentor has been Jeff Swartz, the President and CEO of Timberland. He was on our board. He was one of our first board members back in 2001. He’s just been a great inspirational friend in terms of how to really be focused on your mission and focused on your brand and thinking long term. He’s not on our board now, he transitioned off when Coke came in but is still somebody who I really admire. The first person who really gave me a chance in this socially responsible business world is the co-founder of Calvert, Wayne Silby. I was an intern for Wayne back in business school in 1994. He’s still someone I continue to interact with because I’m on the board of the Calvert Foundation. I see him at least on a quarterly basis which is fun. I’m still in touch with him even though I’m not in the investment world anymore. In fact the quote on our wall I first heard from Wayne (“ Those who say it cannot be done should not interrupt the people doing it – Chinese Proverb “). I certainly take it to heart here. I brought him up to this office last year, and he saw the quote, which was really neat. My parents are certainly in that group and we had a great experience just a few weekends ago when I was awarded an Honorary Doctorate at American University. I gave the commencement address and my parents got to come to that. That was for me a really nice feeling. I am really honored by this, and it was really nice to be able to share that moment with my parents, they’re both academics and they have a real appreciation of what that means. They’ve been an inspiration to me also in terms of always focusing their work on things they care about. There’s a great quote, from Teddy Roosevelt, “Far and away the best prize that life offers is the chance to work hard at work worth doing,” and they took that to heart.
KissMyCountry: Honest Tea has grown into a well known –and well liked – brand. In 2008 Coca Cola acquired a stake in Honest Tea, which seems to have benefitted both companies. What advice do you have for other CEOs of green or natural products companies if a Fortune 100 company expresses interest in investing?
Seth: One of the things that’s really helped with our relationship with Coca Cola is that we still control the brand. We made it clear to them when they approached us that hey we’re happy to talk to you but we feel the need to continue to control this. And the good news is that they recognized that. Our agreement was legally structured that way. That helped ensure that we would continue to build the brand the way we conceived it, maintaining our focus on healthier products and ingredients, more sustainable sourcing and an authentic approach to it. That was really important. What I would say is one of the reasons we were able to do that is because we offered a great deal of value to them. They offered a great deal of value to us. There’s no question about their ability to help us distribute the product, their access to resources and money and all that. Very powerful. But we offered them a lot, we offered something they didn’t have. They didn’t have a premium tea line, they didn’t have an organic product. They didn’t have a product that had this healthy positioning that we have. That helped make it so that when we said we wanted to run the brand they understood why it made sense. That was important. What’s really going to be interesting is over the next 12-24 months because Coke does have the option to increase their stake and so let’s see how we continue to run. There too I’d say Gary’s been a great role model because his company is now economically owned by Danone. But, from the outside you wouldn’t tell the difference as a consumer. We hope they will have a chance to be that way with us.
KissMyCountry: Seth, in 2008 you also founded Bethesda Green, a local sustainability initiative. Bethesda Green seems very integrated into Honest Tea – it’s mentioned on your web site and is a part of your list of accomplishments as TeaEO of Honest Tea. Is this mainly because of your personal commitment to Bethesda, or do you also want to inspire other CEOs to launch similar efforts in their communities?
Seth: For our first 10 years we were acting globally. We were looking at sourcing organics overseas and at tea gardens on the other side of the planet. We really needed to think about what we were doing locally as well. We’ve always been supporters of local races and charities. It’s almost a joke these days that if you’re in Bethesda and you need someone to donate drinks that Honest Tea will donate. And we’re fine with that. We want to be supportive of our community and we’re bringing people together. So that all makes sense. But as we were negotiating our lease for this new office we realized we do have this ability to convene companies who have a lot more resources than we have and partially because of who we are and how we work it wasn’t hard to convince others there was value in doing it and so it’s been really gratifying to see other businesses – whether it’s our landlord Federal Realty or Chevy Chase Bank and Calvert obviously bringing resources to this initiative and so really having an impact on this community. That’s been exciting from our perspective and we’d love to see how we can expand that. In terms of the message I didn’t have anything particular in mind but it’s been interesting to see the reaction, even at Coca Cola. I presented Bethesda Green at an international Coke conference earlier this month and I got questions from some people about how can we be doing this kind of thing in our community? If we can take some of the things we’ve instituted and expand them with other resources, that’s great.
KissMyCountry: What’s next for Honest Tea? What can we see from the company in the next few years?
Seth: Certainly in the next few months we’re ramping up and we’ve got a lot of new products coming out. Which you’re drinking (Half and Half). That’s been getting a great response. We’ve also launched this new line called Honest Kombucha which is a fermented tea. I don’t know if you’ve had Kombucha before. That’s certainly worth trying and it’s really unusual and different. That’s launched in Whole Foods and in the West Coast as well. The other really big thing is because we’re now partnered with Coke, between now and the end of July we’re going to be expanding our distribution nationally. Before the end of July we’ll have Honest Tea distributed off the Coke trucks in every state. So that’s quite a step for us. We’re now in stores like CVS and Kroger and places where bottled drinks are sold. That will really change the nature of our availability. In conjunction with that we’re going to start doing some themed promotions that we’ve never really done before. We’ve always tended to be very grassroots in our marketing and we’ll continue to be very grassroots but we’re going to do some larger spends that help make people more aware of where they can buy the drinks. Billboards, we’re going to do some small radio stuff, very selective. We just did this initiative in New York which was really fun where we put up a display on Wall Street the day that President Obama spoke on Wall Street, we put up a stand that said ‘Honest Tea Honor System, Pay a Dollar’ and then left the stand unstaffed to see what would happen. I think the results were that Wall Street was about 89% honest that day, and it was fun to watch as a social experiment. We like to do things like that that help to create a little curiosity. We have plans to do that in different cities. Personally I don’t have plans to move elsewhere than the beverage arena, I don’t have a potato chip company in my back pocket. Twelve years ago we started this and we wanted to have an impact on people’s diets and have an impact on the beverage industry and we started from the smallest possible place. Now we have this incredible opportunity and platform to really take that vision and expand it, which we’re just starting to do. So in a way we’re really in the middle of it and a lot of the impact is still on the table. There’s a lot of impact still to make here and important work to do. I also think in some ways we and I are uniquely suited to do that. In terms of what we owe investors certainly I feel obligated to see this through until the point when Coke buys the company. So there would be that obligation to fill. In terms of what I owe myself I feel that I started this vision and want to see it through.
KissMyCountry: And, what’s next for Seth Goldman? Besides Honest Tea, Bethesda Green – and your recent appointment to the American Beverage Association board, any other new plans you’d like to tell us about?
Seth: There’s a lot. One of the things that I’ve really had to do this past 2 years in particular is I’ve turned down a lot more than I accepted in terms of new responsibilities just because there is so much. I really owe it to our investors to make sure we see this through to get the best returns. And I owe it to myself because I’m an investor. I have made no other plans to do anything except build Honest Tea. As I said I spoke at this international Coke conference of Coke departmental folks from all around the world and so having that kind of platform was a chance to play a role in the larger system and I think that will continue. Those kinds of opportunities will continue to emerge. Certainly an expanded role not just within Coke but within the beverage industry is something that I can see, now being on the board of the ABA. We just had our first board meeting where we talked about recycling initiatives and how can we get up the average recycling rate around the country. The average recycling rate is less than 30 percent. How do you get those numbers up? There’s a lot of good things going on around sustainable packaging and the reduction of packaging but at the same time if only 30 percent is being recaptured we really need to increase that. So there is still a lot there. And also the broader role of being a leader in the socially responsible business movement. Just this past week I’ve met – and I frequently meet – with other people I’ve seen as colleagues like the folks who run Method, I interact with TerraCycle with Tom Szaky. I have a lot of interactions with this network of people. We’re allies in a – I won’t call it a war but certainly a campaign, in a movement. There is this whole issue of leadership. Just two weeks ago I was invited to a White House conference on small business. How do we spur the ‘gazelles’? I’m coming at it from a lens of yes, of course it’s important to create jobs but how do we create more sustainable businesses? And within that how do we change the conversation within corporate America too? Even if my job description were to stay the same there’s an expanded role that’s important and I anticipate getting involved in that. Right now I’m so Honest Tea focused. I’m going to speak at a Wall Street Journal conference. So those kinds of opportunities are fun too and I always get something out of those. So there’s a lot going on and my plate is pretty full as it is.
I majored in Government and I’d always thought of myself as having an interest in politics. I traveled after college and then I came back here and worked on Capitol Hill. I haven’t ruled out politics at some point. It’s exciting for me to see what kind of impact we can have on public issues and environmental and global issues as a private company. That’s certainly not something that I anticipated in college – being able to have that kind of impact from the private sector. In contrast I see what’s going on in Congress, and a lot of discussion of marginal change, and so much posturing and not real change happening. Not the kind of change we’ve been able to help be part of here around like source reduction, sustainability, and healthier diets. These are the issues that really define how we live, certainly as a country and even as people on this planet. People are passionate but I’m not sure they’re able to always make change happen. In part what I see in politics is that you come in with a passion, and then you have to start getting into compromises and by the time you’re looking at what actually gets passed it’s such a dilution of what you stand for. And what’s been so surprising and so satisfying is that I don’t feel that we’ve sacrificed or that we’re compromised by what we stand for. We were the first to make organic tea and we’ve only continued to up the ante. Everything is organic now. And we were the first to make Fair Trade tea and we continue to make Fair Trade tea and continue to expand our commitment there. And certainly around our source reduction whether it’s our partnership with TerraCycle or this new bottle that we just introduced that’s 22% lighter and we were the first to introduce that technology. We all live in this contradiction that we’re focused on sustainability and we live in a consumption economy. That’s a contradiction so I don’t want to make it sound like we’re pure and put ourselves on a pedestal. But what is satisfying is to really come at this with an agenda and not have to encounter a lobbyist or some faction and there’s no question that our product isn’t for everybody. So maybe if we were trying to be all things to all people we’d be diluted. We know what we stand for, and our product is out there that way, and some people don’t buy it but some people love it and it feels very gratifying to feel like what we stand for is making change happen and that it’s been embraced by a lot of people. If we can keep making change happen this way then that’s fine too. I certainly know for me I’ve been running this thing for 12 years one way and I’m certainly not going to be interested in anything else.
KissMyCountry: Seth, at KissMyCountry we like to talk about the places we love. What are your favorite places to live or travel?
Seth: Certainly for living our house backs right up on a park. So that’s just wonderful space and every day I’m in that park whether it’s running through it or after work biking through it. It’s just this open space, an open green space and this is where people live. People work, but the park is where people live. You’ve got people out there playing, relaxing. We have 3 sons and they’ve really grown up in that park. That’s such a nice space for us, in fact my youngest son is having his Bar Mitzvah next month. People have their special places where they go for the party, well we’re doing it in the park. That’s where we’ll have everyone over on Saturday. We’ll play Capture the Flag. So that’s a really nice space for me. Globally, it has to be the Tea Garden in India called Makaibari. It’s almost a sacred place. It’s such an amazing balance between plants and animals, between people and the planet, between the people who live there and the people who run it. Even the climate. We were there during April or May, at the time there was this feeling of the balance even within the weather. It was this incredibly moist place and you start the day with clouds hanging really low over the mountains and the temperature is kind of the same as your body temperature. It’s just an amazing place. We didn’t spend that long there but for our whole family it was a spiritual trip. That was a special place. I’m originally from New England – I grew up in Wellesley just outside of Boston. I do miss seeing my family and we go there at different times during the year but Bethesda definitely feels like home for us. We’ve been here 14 going on 15 years. It’s certainly a conscious community of people, mindful of the impact their actions have on the world and the environment.
KissMyCountry: Honest Tea’s headquarters are in Bethesda, Maryland. What do you like about operating a company there?
Seth: This is just such a livable existence. I bike to work. Our kids’ schools are all within biking distance, so a lot of them will stop by on their way home to pick up a drink and say hi. That just makes it very nice. For our employees it’s all accessible whether by metro or bike path or walking. Coming here doesn’t feel like I’m going to work. As a community we’ve helped create this great ethos now. It’s really nice to have this restaurant Sweet Greens downstairs. Actually both Gary and I are investors in it. That has certainly enhanced the quality of my life for two reasons. I love getting the salads but it’s also nice to go downstairs and see all these people drinking Honest Tea. Yesterday I wanted to get some fresh air but I made sure just to walk by to see the people drinking Honest Tea.
KissMyCountry: Where do you like to go in the neighborhood for lunch, dinner or just to relax with your friends or your family?
Seth: Bethesda Bagel. We always get stuff there. They’re fun not only because they sell Honest Tea but because they’re both local entrepreneurs that I know and I’m friendly with. Our whole family is vegetarian. Raku or Redwood, which has a very good veggie burger. Actually it’s funny. This weekend we thought we were going to be allowed the chance to have dinner just the two of us, but that didn’t work out. It’s striking still there aren’t that many restaurants that have real vegetarian offerings. A lot of them just have pasta or they’ll do a little mélange. There are different places that we go.
KissMyCountry: Thank you! We’d like to stay in touch.
Seth: Okay, sure. Sure.
Article appearing courtesy KissMyCountry.