"Sirius XM Radio's interview of Honest Tea's TeaEO" by Eliza Roberts

I had the fortune of attending a live interview at the Sirius XM radio station of the TeaEO of Honest Tea, Seth Goldman. I have always loved Honest Tea as a beverage. My favorite flavor is “Peach Oolalong” “Just a Tad Sweet.” But, Seth's modesty, his passion for using business to bring about positive change, his humor, and his honesty about work/ life balance and the challenges of starting your own company made me love Honest Tea even more.

Seth got the idea to start Honest Tea while sitting in a business class at the Yale School of Management and discussing the beverage business case on Coca-Cola and Pepsi. He realized that there were sweet sodas and watery beverages, but no drinks that were less sweet. After graduating and experimenting in his kitchen in Maryland with thermoses on loan to him and a tea that he said tasted initially like grass, he approached the local Whole foods to tell them about his new concoction.

The next thing he knew, Whole Foods ordered 15,000 bottles as an experiment and Seth and his co-founder, a professor at Yale, had to find a way to manufacture it on a large scale. He and some MBA interns offered samplings at stores throughout the region and by the end of the month it was the best selling tea in all stores. Today, 10 years later, Honest Tea is the best selling beverage within the healthy drinks category and has grown to 60 million in sales. Honest Tea was also the first to offer fair trade tea in 2003 and by March of this year expects all of its teas to be fair trade.

What is his advice to MBA students, or people who want to be just like him? Seth offered two words of wisdom:

1) Do what you really care about. Don’t take a job that you are NOT going to be fired up to go to every day.

2) Once you find what you want to do, go after it like nothing can stop you!

What are his thoughts on Corporate Responsibility? For companies working to implement CSR initiatives, the best approach is not just taking money from high profit margins and distributing it as in-kind donations to a local non-profit, but rather finding a way to make CSR the core of what you do. For Honest Tea, giving back and offering healthy, organic, fair trade beverages to consumers is at the core of what they do. His goal in running Honest Tea is to not just be successful and grow the business, but to try to change the way business operate by demonstrating that organics, healthy foods, and sustainability should be relevant to companies operating within the private sector.

Honest Tea’s corporate culture is all about honesty. The office has absolutely no walls to encourage innovation. There is an experimental kitchen that is filled with random dried fruits shipped in from farmers from all over the world who want to supply to Honest Tea. And my favorite part, the office has a gong. Apparently, the gong is hit whenever the company achieves a sales goal. I love the image of Coca-Cola executives visiting the office upon purchasing 40% of Honest Tea’s shares, yet unable to have a private meeting because of the lack of walls and at the same time trying to make sense of the gong hanging from the office wall and the test kitchen that is the only test kitchen used by Honest Tea to create new products.

What kind of impact will Coca-Cola’s outright purchase of the company within the next year or so have on Honest Tea? Seth explained that he expects some cross-fertilization to take place between the companies. He was invited to attend a sustainability brainstorming session in Atlanta recently and hopes to be able to influence sustainability initiatives taken on by Coca-Cola. The most positive outcome is that Honest Tea will be able to take advantage of Coca-Cola’s distribution network. I will not only be able to purchase my Peach Oolalong at the stores in the DC metro area, but at truck stops, convenience stores, and everywhere else where Coca-Cola delivers at present. With Honest Tea’s new distribution capabilities, Honest Tea will be able to increase its sales and in turn increase purchases from fair trade suppliers, thus supporting the fair trade and organics movement throughout the US and the rest of the world. Furthermore, more US consumers will have an option to by a healthier alternative to soda and purchase the drink at a lower cost than other organic beverages.

But, what will happen to Honest Tea in the coming years? Will Honest Tea be able to maintain its corporate culture (and the gong in the Bethesda, Maryland office)? I hope so. The key now is for Honest Tea to demonstrate to Coca-Cola that the culture, employees and the way it operates today brings value to the company and to the delicious tea products that end up on the shelves of retail stores today.

Eliza Roberts Globa MBA, 2011