Seth Goldman
CEO OF H ONEST TEA
By Edwards A. Holli
day
Y
ou could say Seth
Goldman was hungry
for success. Or more
accurately, thirsty.
A runner with an
entrepreneurial spirit, Goldman longed to find a
thirst-quencher that wasn’t tasteless but was also not
too sweet. Enter Barry Nalebluff, a business school
professor of Goldman’s whose urge to create a better
tea beverage was matched only by Goldman’s.
Together the pair launched Honest Tea 12 years ago
in Goldman’s Bethesda kitchen where they brewed
batch after batch of tea.
Today, Honest Tea has grown from a home-based business
to a $70 million global beverage player that Coca-Cola gambled
on in 2008 as a minority investor. Goldman’s ready-to-drink
beverage concept made Honest Tea a model for gazelle-like
growth within what has become a crowded product category.
But that wasn’t always the case.
Honest Tea actually filled a void in the marketplace when it
first launched, far ahead of today’s competitors, by offering an all
natural, low-sugar drink that was made and marketed with a
commitment to high standards. The company is committed to
using only real tea leaves, compared to most of the tea American
companies use, which is actually low-quality dust and fannings
left after quality tea had been produced. All Honest Tea products
were fully organic-certified by the USDA in 2004.
“When we started, we were so far on the outside of the
mainstream beverage society that we were in a very lonely
space,” Goldman said. “We focused on healthy drinks and
sustainability. Now, the whole industry is moving in our
direction. We helped the industry simply by proving such a
business model can be viable.”
Goldman’s passion for sustainability and social
responsibility extends beyond the product. In addition to
recently redesigning the tea’s bottle to use less plastic,
Honest Tea has recently tracked its carbon footprint from tea
bush through the warehousing process, from electricity used
in the leaf-drying process and production lines to the carbon
emissions from diesel truck transportation. To offset the
estimated 427,000 pounds of carbon dioxide produced
during the process, the company
has purchased renewable energy
credits (RECs), which go
directly to funding wind farms.
But Goldman knows how he
does business is equally
important inside the company as
it is outside. Behind every
exceptional, long-term growth
story, a winning idea, an effective
leader and a performing team can
be found. As “Tea”EO, Goldman
developed all three.
As a leader, Goldman believes
in developing people and
communicating the organization’s
goals and relevant news as the
company grows. “You have to
make sure that people understand
why their work is important and how it relates to the bigger
picture,” he said. “There must be a context for what they are
doing.”
Making the best use of each individual’s resources and
ensuring the best culture ranks high on Goldman’s priority list.
Of the current 112 employees, 10 started as interns. Honest
Tea is hiring 46 interns this year alone. In addition to
conventional methods of communicating with his employees,
Goldman writes a regular blog and shares it with his staff
before publishing it on the Web.
“With a name like Honest Tea, there has to be something of
substance behind the brand, and every employee needs to
understand the importance of what our brand represents,”
Goldman said. “For example, one of our board members who
is the head of an apparel company said, ‘Our customers put
our product on their bodies and that is a pretty intimate
experience.’ I realized that our customers put our product
inside their bodies … talk about intimate.”
A challenge of leadership as a first-time entrepreneur has
been determining how decisions are made, and the importance
of speed in decision-making to mitigate risk or bring a product
to market. “Not everyone we hire can adjust to our rapid
product development timelines,” Goldman said. “A person
coming from a mega-competitor is used to a 29-week lead time,
but we bring a product to market in 6 weeks. Our associates are
conditioned to make fast decisions and work differently.”
But Goldman’s evolution as a leader has been fueled more
by his personal life than his professional one. After their oldest
son was diagnosed with dyslexia, Goldman and his wife came
to understand that their son learns differently and sees the
world differently. This concept spills into Goldman’s approach
to management. Due to this personal experience, he is more
aware that not all employees fit into one way of working. Where
it makes sense, the company seeks to let the employee do what
he or she does best. They embrace a different approach to
helping employees be as productive as possible.
For Goldman, being a father of
three young boys when he started
the company helped him become
a better leader. You won’t find him
in the office on weekends or late
at night. The growth of Honest
Tea has afforded him more
balance in life, not less.
At 12 years old and going
strong, Honest Tea has lasted
longer than most small beverage
companies. Goldman credits the
company’s success to an early
jump on the market, his
commitment to sustainability and
agile flexibility.
“Keeping to our values is the
key to our success,” Goldman
said. “Take authenticity, for
example. Early on, a venture capitalist suggested that we
establish a Vermont mailing address because he thought it
would be better for the brand image. But that wouldn’t be
authentic. And besides, what’s wrong with a beverage company
being located in Bethesda? This is our home.”
As a leader in his industry, Goldman has racked up many
achievements. His most recent victories include election to the
board of the American Beverage Association, being named Ernst
& Young’s 2008 Entrepreneur of the Year for the Mid-Atlantic
region, winning the investment of Coca-Cola, creating Bethesda
Green, a local sustainability initiative that houses a green business
incubator for 12 emerging green entrepreneurs, and making the
Inc. 500 list of the fastest growing private companies.
Whether it’s his hunger or thirst for success, one thing is
certain—Seth Goldman personifies leadership.
“We helped the
industry simply by
proving such a
business model
can be viable.”
!
Comment on this article at 270inc.com
Edwards A. Holliday is president of Atlantic Leadership Group, a
performance improvement firm focused on developing leadership,
business strategy and people productivity improvement. E-mail him at
edwards@atlanticleadershipgroup.com.
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