“Those who say it cannot be done should not interrupt the people doing it.” ~ Chinese proverb posted at the entrance of the Honest Tea headquarters.
A couple months ago I wrote about attending a seminar with Seth Goldman, the “Tea-EO” of Honest Tea. I took an instant liking to him, recognizing a fellow idealist who wanted to bring more goodness into the world. Seth and his business partner, Barry Nalebuff, decided to write a book about their experience, and in 2013 they published Mission in a Bottle. I read the whole thing in one afternoon.
Despite being written in the style of a graphic novel (AKA comic book), the book is actually a legitimately helpful piece of business/life advice. It was funny, personable, motivational, and it made me respect Seth even more. Each section ends with “Lessons Learned,” in which Seth and Barry talk about the biggest takeaways from the various phases of their business, which seems crucial for any budding entrepreneurs.
What most impressed me was the very upfront disclosure of their financial and business deals. Seth is all about being open and, of course, Honest, so the book is full of the actual costs, losses, investment propositions, and other usually-hidden aspects of managing a startup.
Regarding the business itself, I think what struck me most was the revelation on page 69 (see image). The great majority of the cost of Honest Tea (as well as any other bottled beverage on the market) is bottling, not the ingredients. As in, the price comes from everything BUT the tea. Even if you filled the bottle with air, it would still cost almost as much as filling it with tea – or soda, or anything else.
Therefore, using Organic vs. conventional ingredients, Fair Trade vs. regular tea, and so forth, hardly makes a dent in the final cost, so why don’t companies make this affordable upgrade? (This is the reason HT was able to afford Organic ingredients; by being only “a tad sweet,” the reduced amount of sugar in Honest drinks allowed them to supply Organic.)
I was also highly impressed by the academic touch given to the economics, marketing, and business strategies employed. Seth and Barry first met in Barry’s class at the Yale School of Management. It felt like I was getting a crash course from an Ivy League professor. I haven’t taken Economics since high school, and now here’s a Yale professor giving top-tier financial advice for new business owners . . . for free . . . in a comic book.
But it’s not just numbers and figures; the book is also funny. For instance, how did Honest Tea get past exclusivity contracts that prohibited their brand from being sold at the Yale Dining Hall? As Barry puts it, “It’s good to be married to the head of licensing!”
I really enjoyed seeing their story come to life, and I was rooting for Seth the whole time. What’s more, even with the minority acquisition by Coca Cola (a 40% investment), having the backstory made this business deal a lifesaver for the company. If HT hadn’t done it, Coke would’ve come out with (AKA bought out) another tea company, possibly squashing Honest Tea’s efforts.
The company received lots of criticism (including calls for boycotting the brand) after they signed the deal with Coca Cola, but these were short-sighted. By accepting the offer, Honest Tea finally had the financial backing and distribution necessary to continue fighting the good fight. As Barry puts it in one of his Lessons Learned sections: “The problem with most great business ideas is they are a great idea for someone else, not you.” With Coke as a partner, rather than a competitor, Honest Tea could now become a much greater force for good.
I really enjoyed this book, and I’d highly recommend it for anyone starting a business, especially a manufacturing one. They talk about mistakes (purchasing a bottling plant), why new product lines didn’t work out (tea bags), and I think most importantly, they reveal their exact investment deals, which is priceless information for any new business owner wanting tips on how to raise money.
A few months ago, I hardly gave a thought to Honest Tea, and certainly never looked for it in stores. Now that I actually look for the drinks, I see them everywhere. I respect the company, I respect what Seth is continuing to do in third-world communities, and I love this brand. It’s more than just a drink; it’s a way to use business as a force for good. As Barry puts it at the end of the book, “The most important word in our name wasn’t Tea- it was Honest.”
Images provided by the contributor.