Seth Goldman and Barry Nalebuff founded Honest Tea in 1998. In the recently released Mission in a Bottle, the co-founders tell -- in comic book form -- the story of building a successful mission-driven business. Goldman, now president and "TeaEO" of Honest Tea, joins Motley Fool CEO Tom Gardner to discuss sustainability, entrepreneurship, and what it means for a socially responsible, health-oriented business to be bought by Coca-Cola (NYSE:KO) .
The mission-driven Honest Tea dreams big, but sometimes has to be content to start with a single step. In this video segment Goldman describes the balance between practicality and aspiration in looking for Fair Trade ingredients and choosing bottles for the tea.
Tom Gardner: Can you talk about the process of designing your product -- both the graphic design and actually the shape of the bottle -- and how you went through iterating and finding the best bottle?
Seth Goldman: The main idea of Honest Tea at the time was just tea that was made with real tea leaves. That sounds simple, but most bottled tea was made with a powder or syrup, so it wasn't real tea leaves.
The design was intended to be simple and evoking -- maybe it's a Japanese esthetic -- just very simple and basic. We initially had hopes for a beautiful square-shaped bottle evoking either a fine vinegar or something like that, but when I went to the bottle supplier and he told me that was going to cost $128,000 and half a year to make I said, "I like the round bottle, very much." It was a combination of practicality and aspiration.
Gardner: Can you talk about one or two other examples where your dreams had to be put into the context of reality about the business?
Goldman: Sure. We were the first to make Fair Trade bottled tea. Back in 2003, we found a product -- Peach Oo-la-long -- that we could make with Fair Trade ingredients, so we said, "Well, if we can make one tea ..."
Fair Trade means not just that their working conditions are good, but a portion of the sales are going back to the community to support them.
We said, "Wow, if we can do it with one, why couldn't we do it with all of them?" And we looked at what it would take. First of all, the supply chain wasn't there, but even if it was, it would have cost more for us -- which meant we would have had to raise our prices or collapse our margins, either of which would have really defeated the business.
We said, "This is the path. We're starting with one step." It took us eight years, but in 2011, after Coke bought the company, we were able to make all of our teas Fair Trade certified. So, it wasn't a compromise. It was a practical step that got us where we wanted to go.