Lately, there have been questions raised about the merits of wrestling as a sport both on the collegiate and international level. While several prominent ex-wrestlers, such as Vladimir Putin and former Secretary of Defense Donald Rumsfeld, have risen to wrestling’s defense, I’d like to add the voice of an underrepresented constituency–the poor-to-mediocre high school wrestler. In fact, I owe much of my success in business to the failure and adversity I endured as a high school wrestler.

In case anyone challenges my credentials as a bad wrestler, I humbly share that my record in my first season was 1-10, (there was a vacancy in one opposing team’s line-up, so I “won” the forfeit). Today as I lead a company generating more than $100 million in retail sales, I still rely on the lessons I learned fighting off my back.

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How do you make the right decision when your new business idea doesn’t align perfectly with your current mission? A recent experience at Honest Tea helped me realize there are two questions you have to ask yourself.

At Honest Tea we were faced with these questions with our newest product, Honest Fizz (a line of naturally-sweetened zero-calorie sodas). It came from the realization that for the first time since 2004, we would be launching a product that would not carry the USDA Organic seal.

Before we made the decision to jump back into the non-organic beverage waters, we asked ourselves two questions that are valuable for every entrepreneur exploring divergent growth opportunities:

To read further, click HERE.

It’s been almost five years since The Coca-Cola Company first invested in Honest Tea, and nearly two years since Coke purchased the remaining portion of Honest Tea. With a new year and the publication of our third annual mission report, Keeping It Honest 2012, it’s the perfect time to make some observations about what makes the relationship work.

First of all from a business perspective, the impact of the Coca-Cola partnership has been dramatic. Our sales have grown more than fourfold as Honest Tea has expanded its availability from 15,000 stores and restaurants in 2008 to more than 100,000 outlets today.

But beyond the basic business metrics, there are a few guiding principles that help ensure our mission-driven business is thriving within the larger corporation.

Click here to read on Inc.com

Occasionally we receive inquiries when our parent company, Coca-Cola, supports an effort or an organization that Honest Tea hasn’t historically supported.  These situations raise interesting questions and opportunities for reflection.

I have an older brother who votes Republican.  He served in the U.S. Army for 25 years, is active in his community, gives generously to charities, and is a father of four wonderful children.  Since I’m a lifelong Democrat, my brother and I fundamentally disagree on a wide variety of political issues, but there’s no one I trust more to advise me on finances and our families spend every major holiday together (where there’s always at least one lively conversation about politics). 

Honest Tea has been a part of The Coca-Cola Company for the past 15 months, ever since the mission-driven enterprise I started out of my house in 1998 was acquired by the world’s largest beverage company.  Distribution of our lightly-sweetened, organic and Fair Trade certified teas has expanded dramatically since the transaction – in 2008 when Coke invested in Honest Tea, we were in 15,000 accounts.  Today our products can be found in over 100,000 accounts.

As the first company to launch a certified organic bottled tea, Honest Tea has had a longstanding commitment to simple, GMO-free ingredients.  In fact, recently we’ve been a little frustrated with requests to certify that our products are GMO-free, because the USDA Organic seal certifies that our beverages have met the USDA’s rigorous standards, including the use of ingredients that are non-GMO and grown without the use of synthetic pesticides.

We’ve also had a longstanding commitment to transparency that is as strong today as when we began: 

·         We were among the first companies to display total calories per bottle (instead of just per 8 ounce serving) as well as among the first to display the calories on the front of our package, as part of the Clear on Calories initiative. 

·         We’re about to issue our third annual Mission Report which discloses and evaluates our efforts and shortcomings toward achieving our mission of democratizing organics, extending economic opportunity to communities in need, and expanding the reach of lightly-sweetened beverages.  Unlike many corporate social responsibility updates, our Mission Report is not a cheerleading document, but rather a thoughtful analysis that shares our shortcomings and challenges on everything from our carbon footprint to supplier community partnerships. 

·         And we certainly have tried to be transparent about the fact that we’re owned by Coca-Cola, and the inevitable challenges that arise when a mission-driven group of entrepreneurs works alongside a 126-year old multinational corporation.

There are bound to be moments when our enterprise does not share all of the same ideas as our parent company.   But there’s never been any pressure to compromise Honest Tea’s products, our ingredients, or our commitment to our mission.  Some may recall that we had a lively conversation with Coca-Cola back in 2010 when we received a request to remove the “no high fructose corn syrup!” language from our Honest Kids package.  We declined the request, and Coke accepted our decision.  As a member of the Coca-Cola family, Honest Tea is a voice for our approach to organic agriculture, Fair Trade and health and wellness – as evidenced by remarks I gave on trust and transparency earlier this month at Coke’s international meeting of its senior leadership and largest customers. 

Does the analogy of family members coexisting despite a diversity of viewpoints extend to a large corporation?  In many ways it does.  I’ve learned a lot from my brother over the years, from soccer to wrestling to tax preparation.  And I’d like to think that a few of my beliefs have rubbed off on him. 

 As seen on Wall Street Journal

As a fellow entrepreneur with a public-service orientation, I have been a longtime admirer of Mayor Michael Bloomberg’s entrepreneurial spirit and commitment to acting on his principles. Having launched Honest Tea 14 years ago with five thermoses and a belief that consumers were thirsty for a lower-calorie natural and organic beverage, I appreciate all he has accomplished. However, I write today as an entrepreneur frustrated by a proposal that arbitrarily complicates the practical realities of commerce.

When the mayor announced his proposal to ban sugar-sweetened drinks in portions over 16 ounces from New York City restaurants, many of my friends assumed Honest Tea would welcome the news as a public initiative to complement Honest Tea’s long-standing commitment to marketing lower-calorie drinks. Yet the mayor’s proposal would actually prevent Honest Tea from selling most of our drinks in New York City restaurants.

Under the proposed changes to Article 81 of the NYC Health Code, food-service establishments would not be able to sell packages larger than 16 ounces for drinks that have more than 25 calories per eight-ounce serving. Honest Tea’s top-selling item is our organic Honey Green Tea, which has 35 calories per eight-ounce serving and is in a 16.9 oz. bottle. We label 70 calories on the front of the package so consumers know what’s in the full bottle.

We initially went with 16.9 oz. (which is 500 milliliters) because it is a standard size that our bottle supplier had in stock at the time. We subsequently invested several hundred thousand dollars for 16.9 oz. bottle molds. Is 16.9 ounces the perfect size? Who knows? As a beverage marketer, we willingly submit to the unforgiving judgment of the market. What we did not anticipate was an arbitrary decision to constrain consumer choice.

One response we considered was putting 0.9 ounce less liquid in our bottles, but that would create a separate set of complications. We fill our bottles to the brim—not just because we like to deliver an “Honest” value, but also to ensure quality since we do not use preservatives. Then there is the costly prospect of having to change all of our UPC codes (those complicated black bars found on every product on a grocery shelf) because we would be offering a different liquid volume—all for 0.9 ounces!

And what if next year, Cambridge, Mass., comes up with a ban on 15.5-ounce containers? As soon as government starts getting between us and the consumer, we quickly find ourselves considering scenarios that are not based on market realities or consumer needs.

I challenge the mayor and the New York City Board of Health to seriously consider the impediments that entrepreneurs already face in our efforts to offer lower-calorie drinks. Starting a business and building a challenger brand with modest resources is already a daunting task. The proposed ban would create additional barriers to beverage innovation.

One of my favorite Honest Tea bottle-cap quotes is the Chinese proverb “If we don’t change the direction in which we are headed, we will end up where we are going.” Given that the life expectancy of our children’s generation is lower than ours, there’s no question our nation’s health indicators are headed in the wrong direction.

But the mayor’s proposal will not move us in the right direction. The obesity problem was not caused by one industry alone, and targeting one industry is not the solution. Working together on a multifaceted approach is.

As seen on INC.

Last week I put on a tie for the first time in a very long time. The occasion was the opportunity to testify on Entrepreneurship and Job Growth before the House Small Business Committee. As you can imagine, this is a topic I’m quite passionate about. Here are a few highlights from my remarks: Good Afternoon. Whenever there’s a discussion of fast-growth businesses, the focus is usually on the internet, computer and biotech businesses. So I’m happy to represent a fast-growing part of our economy that is a little more traditional, by which I mean everyone can understand what we do. My company Honest Tea, makes and markets lower-sugar, organic beverages. Our fourteen years of continuous double-digit growth have helped create 112 jobs in 22 states–jobs that create and support manufacturing jobs across the United States, and just as important, jobs that cannot be outsourced overseas.

Read More: http://www.inc.com/seth-goldman/honest-teas-seth-goldman-addresses-congress.html

 As seen on INC.

Aside from firing an employee, firing a product is the worst part of my job. And yet at this time of year, we face our annual cycle of terminating underperforming varieties. This month’s victims are, brace yourself, our beloved Pearfect White and Sublime Mate.Our whole product development cycle isn’t that different from planting a tree:

1. Before we plant any ideas (let’s call those seeds), we make sure they’ll be able to thrive in our ecosystem. You can’t plant a tea bush in Maryland (I’ve tried) and we won’t explore a beverage that can’t be certified organic. We also have to make sure that the drinks can taste great without a lot of additional sweetening. And finally, if it’s a tea, we need to make sure there is a Fair Trade certified supplier

 Read more: http://www.inc.com/seth-goldman/i-love-you-youre-fired.html

As seen on INC. 

Growing up we’re always told that it’s what’s on the inside that counts.  And while that’s certainly true with respect to personal integrity, I’ve learned that when it comes to beverages, if your label doesn’t catch peoples’ attention, they may not get the chance to taste what’s inside.  (Unless of course you have a sampling team in the store, which is still our primary marketing strategy.)

One of my favorite ways to test the effectiveness of our labels is walking into a store and seeing if I can spot our brand in a cooler in the back.  Our glass bottles definitely pass this test, and that’s one of the reasons we have no immediate plans to redesign their look.  But I often found that our PET bottles didn’t really stand out.  While we generally rely on our instincts, we recognized that it would be helpful to do more research before making such an important change.  So in 2008 we conducted a series of focus groups with both current and potential customers, so we could understand how consumers responded to our bottles alongside the competition.  The sessions, along with some other studies we conducted, reinforced the fact that the labels on our plastic bottles needed to more effectively communicate our authentic ingredients and taste appeal.

Read More: http://www.inc.com/seth-goldman/working-title.html

As seen on INC. 

Last month, I had the chance to speak to a room full of entrepreneurs and angel investors at the Bethesda Green Business Incubator about the dos and don’ts of raising money from “angel investors.” Here are a few highlights from my remarks.Many service-oriented businesses can be started with minimal start-up capital. But for companies selling a product, the money for inventory needs to come from somewhere. When we launched Honest Tea back in 1998, we got our first order for 15,000 bottles from the local Whole Foods region. We had a customer, but we didn’t have the cash on hand to buy the bottles, the tea, or pay the co-packer to make the finished product. So we raised about $500,000 from the only people who couldn’t say no – ourselves, our parents, my sister, and my co-founder Barry’s college friends. (Barry is 8 years older than I am, so his classmates had accumulated more wealth.)I’m not a lawyer, and you should consult one before raising investment funds, but it’s important to remember that there is a legal definition of an accredited investor, and any stock purchase agreement should take that definition into account.Once we got our product on the market and started selling, we needed more cash to expand our sales team and our inventory.

So, we started to raise money from people we didn’t know. We were approached by consumers who liked our products and wanted to invest. We also received numerous inquiries from prospective investors in response to media coverage. If there is a story, don’t forget to mention that you are raising money. Other investments were more creative. A PR/Design firm took their retainer in stock for a certain amount of time. I did speak to a few angel investment clubs, but they were not an effective use of my time.

So what are the main benefits of angel investors?

• Cash. You need cash to grow your business and angel investors have it. It sounds obvious, but don’t take money from angels or investors unless you plan on giving it back.
• Control. The terms are less demanding.  Angel investors are looking to have less control over your company than venture capitals or institutional investors regarding shareholder rights, governance, and decision making. They are around for the ride. Because Honest Tea raised funds from angels, our cofounder, Barry, and I were able to protect Honest Tea’s mission.
• Angels can offer advice, experience, and support.
• They have great networks, can serve as local cheerleaders for your product or service, and can help get you connected.

But there are tradeoffs: 

• Angel investors take more time. Over the ten years that we raised close to $10 million in angel funding from 100+ investors, I easily had over 500 conversations with potential investors. Our time might have been better used raising that same amount from ten strong institutional prospects.
• Angels may have less expertise in your industry. We were fortunate to tap into the local real estate network, but they didn’t have any beverage experience. They were a great source of cash, not beverage expertise. As the principals looked to diversify their portfolios, they didn’t have many contacts in the beverage industry.
• When times get tough, there’s no guarantee that angels will pitch in to keep the lights on.
• They can get cold feet – personal situations do change, divorces do happen…

Here are the Honest Dos and Don’ts:

Do’s

• Clearly define expectations. Be very specific about shareholders rights, expected timeframes, and exit strategies. Know your industry so you set realistic goals. It’s always safer to be conservative and under promise.
• Communicate frequently with investors. We sent quarterly updates on the good and the bad as well as industry-wide news.
• Demonstrate your own commitment. Put skin in the game.

Don’ts

• Never let an angel investor dictate terms. Listen to their feedback but don’t offer special status or authorize special shares. We only issued common stock to all investors for the first ten years.
• Do not make sudden cash calls. If you know you’re going to need money, work on it ahead of time. No one wants to feel like they’re helping a sinking ship stay afloat.
• Never get on a plane to meet an angel investor. You need money, but you are not desperate. If you put too much time into raising money from investors, you are probably not focused on the business.
• Insist on meeting the principals, eventually. You need to know who is writing the check.
• Don’t expect too much help with the business, aside from cash.
• Angels can be distracting.  Don’t invest all of your time managing your relationship with angels instead of doing your job.

One of my favorite quotes from one of my favorite Honest Tea angel investors is:

“Lack of money is no obstacle. Lack of an idea is an obstacle.” – Ken Hakuta

It’s a reminder that while a CEO always needs to make sure the enterprise has enough money to keep the lights on, the best way to make sure there’s money is to sell your product or service.

Want to hear more? Check out this highlight video from the event:http://www.youtube.com/watch?v=MUn6IpiTe9o

As seen on Huffington Post 

What’s the difference between an illiterate tea plucker and a Microsoft engineer? One generation. And Fair Trade funds.

This spring as I traveled through tea gardens in Southern India and Sri Lanka, I encountered what could be the last generation of tea pluckers. For centuries, tea leaves have been harvested by women who manually snap off the top two leaves and a bud at the top of tea bushes. The work is tiring, repetitive and doesn’t require a high school degree. All the tea pluckers I spoke with had left school by sixth grade or earlier, just like their parents, grandparents and great-grandparents before them.

But change is in the tea leaves.

After last year’s split between Fair Trade USA and their European parent, Fair Trade Labeling Organization (FLO), I decided to visit some of our suppliers so I could see first-hand the role that Fair Trade funds play in the communities we source from.

While India’s tea gardens have historically offered their workers relatively better employment conditions than those endured by surrounding subsistence farmers, Fair Trade tea gardens are raising the bar. In addition to providing working conditions that meet International Labor Organization standards, Fair Trade gardens allocate an additional royalty paid by brand owners (like Honest Tea) that puts the children of tea pluckers on a path away from the tea garden. Today Fair Trade certified tea represents less than one percent of global tea purchases, but in the U.S. it has been growing 38% annually for the past ten years, far outpacing single digit growth for the tea category.

In the Fair Trade gardens I visited, the children were required to stay in school through high school graduation. Fair Trade royalties subsidized the purchase of computers, books and even chemistry lab materials. Though the classrooms are crowded (40-45 students per room), the children have access to materials and facilities that would put many American schools to shame. Their economic motivation is clear. The daily wage for tea pluckers (mandated and enforced by state governments) varies from $1.75 per day in Northern India to $5.00 per day in Sri Lanka. By contrast, the starting salary for a computer engineer in Southern India is close to $150 per day.I asked dozens of high school students about their career aspirations. While engineer, doctor, astronaut and teacher frequently made the list, “tea plucker” did not. In fact, not a single student expressed an interest in staying on the garden, even as a manager.

I asked the owners of several tea gardens whether they were worried about educating themselves out of a workforce. They were confident there would still be tens of millions of people from poorer Northern India who would migrate to receive the relatively high wages and on-site health care. There are still several generations of agricultural workers to come, which is one of the reasons Honest Tea has decided to endorse Fair Trade USA’s Fair Trade for All campaign, with its commitment to expand the reach and impact of Fair Trade by expanding the kinds of growers who can be certified, without weakening the standards for working conditions or sales premiums.

Will the world of premium tea survive? While mechanical harvesters cannot operate on the steep hills where tea is grown, in many tea gardens the women are now using shears, a metal device that clips the top of the tea bush and collects the leaves, increasing their daily yield. Most processing facilities now have sorters and sensors that are able to separate and clip off the stems and twigs, tedious work that used to be done by hand. And tea buyers like me still end up with quality tea leaves

So as Fair Trade tea continues to grow, don’t shed a tear for the fading days of hand-picked leaves. But feel free to lose sleep over India’s next challenge — creating enough good-paying jobs to satisfy the rising expectations of millions of sons and daughters from the nation’s largest sector as they move off the fields and into the white collar workforce.