Seth Goldman is co-founder and TeaEO Emeritus of Honest Tea, the company he launched out of his home in 1998. Today, Honest Tea is the nation’s top selling organic bottled tea, specializing in beverages that are organic, fair trade and Just A Tad Sweet®. In March 2011, Honest Tea was acquired by The Coca-Cola Company and is now carried in over 100,000 outlets.
Goldman is a leading voice among mission-driven entrepreneurs. He is the recipient of the REAL Food Innovator Award by the U.S. Healthful Food Council and sits on the boards of: Bethesda Green, Beyond Meat, and the American Beverage Association.
Goldman is the co-author of the business book in comic book form, Mission in a Bottle – The Honest Guide to Doing Business Differently – and Succeeding, a New York Times Bestseller published by the Crown Business division of Random House.
Goldman is a graduate of Harvard College and the Yale School of Management.
Editors note: This is interview was conducted a day before Seth announced that he intends to reduce his role at Honest Tea, leaving the role of TeaEO and shifting to a more stewardship-oriented role as TeaEO Emeritus while he takes on added responsibilities as Executive Chairman at Beyond Meat, a plant-based protein startup.
Why do you believe that having a higher purpose actually matters in business today?
When I was in college I majored in Government. I had thought the political route was the way to make change happen and address issues I care about. I can say now having been in the work world for 25 years, and running a company near Washington D.C., I appreciate even more how impactful business is in making change in contrast to the political arena. Obviously some change does happen, but a lot of people spend a lot of time running around in circles yelling at each other.
I guess I answered the question differently than by saying why businesses should care. It’s almost as if you care, then how do you address issues through business?
I’m curious how you and your team have been able to find the right talent that align with what you care about in a world where recruiting is largely transactional. How has Honest Tea been able to maneuver that?
I would say we wear our mission on our sleeve pretty brazenly. I don’t think anyone comes into our company mistakenly thinking this is a place that they’re going to be able to just chase money and not think about the impact of what they’re doing. We’re already screening out a lot of people just by the products we sell and the way we market them and the way we behave. And at the same time, I’d like to think that we screen in a lot of people.
I think our mission and the way we behave helps attract and puts off some folks who we wouldn’t necessarily be attracted to.
What’s interesting is that when we look at some of the beverage expertise, how do we attract people? What we see is that there are people who could be working in what I’ll call ‘values neutral work.’ They’ve worked in food science and production operations before and are good at what they do but they haven’t had the chance to work with a company or brand where they feel that the impact is deeper or something they care about.
One of the experiences that has repeated itself over and over in the CEO’s that we’ve worked with is that those who proudly wear the impact often wear it so proudly that candidates can then use that to their advantage during interviews. A candidate may pair it back to a CEO or members of the hiring team to what they think they want to hear because you are so proud in telling the world. The authenticity meter can be a bit hard to fair it out. I’m curious to hear about if you’ve had any bad hiring experiences where they said they truly cared about the impact Honest Tea wants to make, but at the end of the day, that really wasn’t the case?
Like any honest company, we’ve made bad hires. I wouldn’t say that we’ve hired people who claimed to be one thing around mission, and then aren’t. That’s usually not where the error is.
I will say that resumes are pretty clear. I can usually see when someone is genuinely interested in our mission by looking at the work they’ve done. Is this something they been living based on the choices they’ve made over their careers? What’s their nonprofit volunteer work activity look like?
What’s funny is that I’ve had interviews with people who seem like they get the mission, but there’s nothing in their resume that suggests they’ve had that. One of the first MBA summer hires that we made was this woman who was so passionate about the mission. But, she worked for a merchant bank before going to school.
I told her, ‘I can tell you care about what we’re doing. I haven’t seen anything in your work experience that speaks to it. Tell me why you care.’
Then she started talking about how her mother had died of cancer and how she had worked over the years to change her mother’s diet and how organics was such a key pillar in the change in diet.
So then, I told her that I hadn’t seen anything that would suggest that she understands this industry. And she talked about how she paid her way through college by working in food service. We’re always trying to get people who have worked in restaurants! I asked her why she didn’t put that in her resume.
She said it would have seemed not professional. But we’re a beverage company! It’s just interesting to see what people choose to highlight and not all of it will come out on a resume.
One of the areas in business that has seemed to come under tremendous fire is the traditional HR function. I’m curious to know if it’s something you think about a lot. What do you think is really right about what HR is doing and what do you think is broken?
I can tell you that I feel really good about our HR team. They’re very focused on culture. Part of it is personnel selection, but even more is how do we give our people the tools to live the best life they can for themselves?
A positive supporting work environment is a key element of it. But it’s not always the core of what someone is thinking about. Are they able to be present for family members who are going through challenges? Are they able to continue to develop their own skills? Even if the skills that they’re developing aren’t used at Honest Tea. Maybe they develop their skills here and use them elsewhere. Obviously we try not to make that happen all the time. But if we do it the right way, it’s a great way to retain people because they know we’re trying to continue to develop them.
So a focus of really developing people and intentionally strengthening the culture is what your HR team is really focused on.
Yeah it’s funny. We just finished with Halloween last week and I was out of the office a lot of the day. But it’s just so fun seeing some of the Halloween pictures and seeing people having fun with it. It’s nice people are in an environment where they feel comfortable being a little goofy and have fun doing that.
If I switch the course of this interview a little bit, as you’ve grown the organization you received a big investment from Coca Cola. Could you share about any contemplation on your part about taking a sizable investment from the Coca Cola Company. What were you most afraid of, and what were you most excited about?
The excitement part was easy. It was the distribution aspect. We were seeing all this growth and interest from large retailers who wanted the brand and we didn’t have the distribution to get it there. There’s nothing more frustrating to an entrepreneur than to see growth and not being able to connect the dots and make it happen. No matter how high potential your product is, if you can’t get it to people, you really don’t have a business.
We were growing quickly but we also saw on the horizon that we were going to limited in terms of what the brand could do. So distribution was easily the most exciting aspect of the deal. Nationally was the first point, but looking at internationally at some point as well.
The fear, the downside that so many mission driven businesses face is do you lose what’s special? Is there a risk of having your mission diluted? We’ve worked so hard for ten years to create this intentional brand with a specific mission and have worked to incorporate and brew the mission into the product.
What is often said is that a brand’s best days, from it’s marketing to it’s mission impact, are the days before it sells. And then after that it’s a slow decline where the product’s ingredients are cheapened. The compromises are made around sourcing. And then there’s some personnel cuts. All of a sudden, it’s not necessarily death, but it’s certainly a dilution through dozens and dozens of little steps.
So that was the fear. What has been so gratifying and exciting for us is that’s it’s been the opposite for us. It’s been a strengthening through dozens and dozens of little tweaks. Every tweak we’ve made over the years. SKU by SKU. Converting another bottle over to fair trade tea. That was a process that started in 2003, but it wasn’t until 2011 after Coke’s buyout of the brand that we completed our conversion to fair trade tea.
Then you can look at our kids line, where we started Honest Kids with organic sugar and some fruit juice. Then we found enough organic fruit juice concentrate available to take all of the sugar out of the product and only sweetened it with fruit juice.
This is a result of scale and also a result of the buying power we get by being a part of Coca Cola. That means we are able to buy a bottle at a lower price and use some of the savings to pay for more expensive sugar.
Those types of steps are rare. We can think of some companies that have done a good job at protecting their mission as they grow. I don’t know of many who have deepened their impact.
Note: You can view Honest Tea’s 2015 Mission Report here.
Do you feel that the impact Honest Tea has been making in the world had some influence on the Coca Cola Company in a small or large way?
I think it’s a large way. Number one, we are part of the Coca Cola Company and can look at their portfolio. We can look at what’s on the trucks and in the warehouses. Years ago that weren’t any organic brands or fair trade brands. There certainly weren’t as many low to zero calorie drinks that are present now. Going beyond that we can look at how some of their other products have evolved and some of their innovations. I’m absolutely confident that our presence has helped heightened their awareness of the marketplace appeal for different formulations.
Beyond that there’s this broader piece of transparency as a brand. And authenticity as a brand. I think our presence has been meaningful. And then of course the conversations that we have as part of the Coca Cola Company that weren’t being had. The questions we’re asking. Even though I ask questions that are uncomfortable. It’s helpful to have someone inside the company who is willing to ask tough questions.
Final questions of the interview. From a personal standpoint, what’s your morning ritual look like? is there something you do every day to make sure you’re operating at your apex?
There’s a few things. Number one, my wife and I make the bed every morning. That means we come home at night to a place that feels calm and relaxed. Number two, I always get up and exercise. It is the best way to clear my head, get the blood flowing and process whatever has happened the day before. By the time I get to the office I’m in a good place.
My house is about a mile from the office. The other thing that I do is that about 85% of the time I’m riding a bike to work.
When I’m biking I get to be out in nature and get climatized to the day. Versus if I’m driving I’m stuck in traffic and worried about parking. If I bike, I park at the bike rack right in front of the office. It is something I’m always appreciative of doing.
Sometimes if I have a meeting out of the office where I’ll need a car, I’ll still bike to the office and then bike home and then get in the car just so I have that chance be outside.
Looking back, if you could have a conversation with your 20 year old self, what would you share with 20-year old self knowing what you know today?
I never imagined business as a path to impact. I totally discounted it. I would have said that if you want to make an impact, that’s not the way you go. Obviously I ended up being open to it, but I would have counseled myself on being more open to that as a path to impact.
I do say that to people now because there are so many people who are about to enter the workforce and they just don’t think about business as a way to make a difference in the world.
Y Scouts is a leadership search firm that unites exceptional organizations with exceptional leaders. This interview is part of our Conscious Leadership Interview Series, where we ask CEO’s a series of questions about their leadership philosophies and practices. Contact us if you’d like to recommend a CEO to interview.