Honest Tea: Seth Goldman (2017)

In 1997, after going for a long run, Seth Goldman was frustrated with the sugar-filled drinks at the corner market. So he brewed up a beverage in his kitchen, and turned it into Honest Tea. PLUS, for our postscript "How You Built That," we check back in with Jaya Iyer for an update on Svaha Inc., a unique apparel brand that focuses on STEM-themed clothing for babies, kids, and adults. (Original broadcast date: January 16, 2017) See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey, really quick before we start, just wanted to share some really exciting news with you. We are taking "How I Built This" live to Chicago. On Wednesday, July 18, I'll be interviewing live onstage Peter Ray Hall, the founder of RXBAR. The event is sponsored by American Express. And to get your tickets, go to nprpresents.org. And hope to see you in Chicago.

• 0:27Guy Raz?

  And one more thing. It seems like you can walk into any store these days and choose from dozens of bottles of artisanal water or organic juices. But before any of that, Seth Goldman was trying to convince the beverage industry that, yes, people will buy a bottled drink that is not loaded with sugar. And as you will hear, it took a lot of convincing. This story first ran last January, but it's worth hearing again. I hope you enjoy it.

• 0:59Speaker 01

  So in 2003, we had a delivery of glass that was faulty. And so we ended up with some product in the marketplace that had broken glass inside the bottle. In fact, we had two different Whole Foods stores. And Whole Foods has a rule: three strikes and you're out. We knew we couldn't afford, as a business, to lose our largest customer. So we voluntarily withdrew all product from the market.

• 1:21Guy Raz?

  Every store?

• 1:22Speaker 01

  Yes, everywhere, not just Whole Foods, everywhere.

• 1:24Guy Raz?

  Wow, how much did that cost you?

• 1:25Speaker 01

  It totally stopped our sales. It was just painful.

• 1:34Guy Raz?

  From NPR, it's "How I Built This," a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:48Guy Raz?

  I'm Guy Raz, and on today's show, the story of how Seth Goldman and Barry Nalbou took Honest Tea from a kitchen sink in suburban Maryland to the shelves of virtually every grocery and convenience store in America.

• 2:04Guy Raz?

  So the year is 1997. Seth Goldman is living in Bethesda, Maryland with his wife and three young kids. He's 32. He just graduated from the Yale School of Management. He's got this great job at an investment firm. But Seth, he's got an itch. He feels like he wants to start something, and it keeps nagging at him day after day after day. So he starts thinking about different ideas. Maybe a web-based system that would raise money for public schools by tapping into alumni networks. He came up with an idea to simplify diagnostics for urinary tract infections. There were a bunch of other ideas that would pop into his head, but nothing really got

• 2:45Guy Raz?

  him excited until one afternoon, when he finished a long run and walked into a convenience store, hot and sweaty.

• 2:54Speaker 01

  And I went to a beverage cooler, and I said, there's nothing here.

• 2:58Guy Raz?

  Nothing seemed appealing.

• 2:59Speaker 01

  Yeah. And it was all 100 calories per 8 ounces. And so the difference was fizz or no fizz, color, different names, different bottles. They were almost uniform in their taste profile, their sweetness profile, which was 6 or 7 teaspoons of sugar per 8 ounces, or none. Why isn't anyone making a drink with 1 or 2 teaspoons?

• 3:18Guy Raz?

  Just like a little bit sweet.

• 3:19Speaker 01

  Yeah, just a tad sweet.

• 3:21Guy Raz?

  So how did you go from that to thinking about starting a tea company?

• 3:26Speaker 01

  So when I felt that thirst, I reached out to my professor from business school. And when I had Barry Nelliffe, when I had been his student, we had done a case study of the beverage industry, and we had agreed there was a gap. There was that space.

• 3:38Guy Raz?

  A sweetness gap.

• 3:39Speaker 01

  A sweetness gap.

• 3:40Guy Raz?

  Huh.

• 3:41Speaker 01

  So I reached out to Barry. I said, I think I'm ready to do something about this.

• 3:44Guy Raz?

  But you were not a tea expert.

• 3:45Speaker 01

  No, not a tea expert. And more importantly, not a beverage industry expert at all. No knowledge of that. And that was where having zero knowledge of the beverage industry in the beginning was actually a competitive advantage, because we went in without any of the assumptions. One of the things that happened, literally the same month that I went for that run in New York City, was that an investment my dad had made in 1977, so it was more than 18 years ago at the time, came to fruition. And I was presented with a check for $50,000. And that was kind of the risk capital.

• 4:17Guy Raz?

  Yeah.

• 4:18Speaker 01

  And it was enough for me to say, OK, well, look, I'm going to put this, if we lose this, we lose it, but this is what I'll bet.

• 4:25Guy Raz?

  But at the beginning, I mean, you were thinking, I'm going into this with two feet.

• 4:30Speaker 01

  Yeah.

• 4:31Guy Raz?

  I'm going to quit my job, but... I mean, you were still young enough where

• 4:33Speaker 01

  That's right.

• 4:34Guy Raz?

  you could always like go back into finance.

• 4:36Speaker 01

  Yeah, that's right.

• 4:37Guy Raz?

  So, so you have a $50,000 check from your dad.

• 4:39Speaker 01

  Yeah.

• 4:40Guy Raz?

  And then, and was Barry able to put in a little bit of seed money?

• 4:43Speaker 01

  Oh, yeah. Barry had been on the board of a company that had gone public. So he put, because he kept his day job.

• 4:47Guy Raz?

  As a professor at Yale.

• 4:48Speaker 01

  As a professor at Yale. He's still a professor at Yale. What was funny was that before I went to submit my resignation at Calvert, I kind of called Barry for one last boost of confidence. I said, I'm going to go in there, you know, we just had our third son, but I'm going to step down and, and there's this long pause. He says, well, I bet if you went to Calvert and asked to go on a sabbatical, I bet you they'd let you do that. And I said, well, that's not, I was hoping for the boost of confidence. You know, I knew I had to take the plunge. You couldn't get investors to invest or employees or buyers to commit without, you know, me being committed.

• 5:18Guy Raz?

  Can I just do a quick check, Seth? Sure. You are a father of three kids with, with a good job at Calvert Investments. And you tell your wife you're going to quit to start a tea company, which is an industry you know nothing about. And nothing about that terrified you?

• 5:35Speaker 01

  More importantly, nothing about that terrified her. Yeah, I think it was, I believe in myself, probably a little bit of hubris, right? Like, I think I can do this, even though I don't know anything about it. Right. But I'm, I'm ready to try.

• 5:54Guy Raz?

  So you, you quit and then basically you and Barry, what did you start to do? Like, how did you start to get, did you start to raise money? Was that your first thing?

• 6:02Speaker 01

  So it was a little bit of the chicken and egg. So, so the first thing we did was I did write a business plan. These days, people really put together PowerPoints. They don't write business ones. But I wrote about a 20-page business plan that mostly showed the thinking behind the business. I think every, every potential investor wants to understand there's actually some thought here about where this goes and what, how it becomes something. I managed to secure an appointment with Whole Foods.

• 6:24Guy Raz?

  That early, even, even before you had a product?

• 6:27Speaker 01

  So that was lucky because the, the marketing director at Whole Foods, or at that time it was called Fresh Fields Whole Foods. It was in mid-Atlantic. He was a graduate of the Yale School of Management as well. So he helped me get an appointment with the buyer.

• 6:38Guy Raz?

  Wow. Seth, I just want to pause here for a sec because from what I've read about you, I understand that in the midst of all this happening with Whole Foods and all that excitement, your son, Ellie, got pretty sick.

• 6:53Speaker 01

  Well, it was the ultimate test in compartmentalizing because literally the day before the Whole Foods, our first presentation, when we're going to present the, so it's probably the most important day in the company's history where we're going to go present the tea. And Barry and I are in the kitchen and we've got mugs and bowls that we were brewing the tea and it was not an official looking lab. So the kitchen's full of all these things. My wife walks in with our middle son and she's got this ashen look on her face and I, oh no, she's so upset we made the kitchen such a mess. And I said, we'll clean this up. And she says, that's not what I'm worried about. We just came back from the doctor and Ellie, our middle son, had a coarctation of his aorta. He was going to need major surgery within the month. And so that's a pretty heavy news to get.

• 7:35Guy Raz?

  How old was he at the time?

• 7:37Speaker 01

  He had just turned four.

• 7:38Guy Raz?

  Man.

• 7:39Speaker 01

  It was intense. And probably if that had happened a few weeks earlier, I probably wouldn't have left my job at Calvert because whether it's the health insurance benefits or just the risk level, I couldn't do that. But I'd already taken the plunge. I knew, you can bet that when I was at the Whole Foods meeting, I was selling with great intensity. I needed to succeed. And then while Ellie was in the hospital and I stayed with him that whole week, but I would go down at sort of after midnight, we had someone working on formulas, blends, and he would come in and meet me in the lobby of Children's Hospital and we'd taste tea together and go back up and sleep by Ellie's bed. And I think, you know, life happens.

• 8:24Speaker 01

  It's part of the experience. It's part of the journey and I'm so thankful to have Ellie still with us and such a delight and such a wonderful presence for me and for all the people he touches.

• 8:40Guy Raz?

  Wow. You know, I'm thinking about you pitching this product at Whole Foods in the midst of all this. And what did you do? Did you bring them samples, like the samples that you made in your kitchen? Just put them in some random bottles or something?

• 8:57Speaker 01

  We got an empty Snapple bottle.

• 8:59Guy Raz?

  You used empty Snapple bottles?

• 9:01Speaker 01

  Yes, we had to take snap. Well, what's really funny is that Barry had sent over some thermoses one day in the mail. And when I met with the buyer, and we poured out samples from the thermos, showed him my empty Snapple bottle.

• 9:14Guy Raz?

  With the honesty label on it?

• 9:16Speaker 01

  With the honesty label on it, of course. And he had said, well, look, this sounds interesting. We'll give it a try. We'll take 15,000 bottles, which of course was both terrifying and thrilling.

• 9:26Guy Raz?

  How did you make that? How did you make that much tea?

• 9:29Speaker 01

  That was the scary part. So we got this commitment from the buyer. And the next thing we did is we basically went up and down the East Coast looking at bottling plants. And we went to beer plants and soda plants, apple juice plants. So we ended up at a plant in Buffalo, New York that was making apple juice. Maybe it was a little down on its luck. It had some line time available. And they said, well, how are you going to brew the tea leaves? And so we brought in these mesh bags, these large mesh bags that are actually, can be used to clean a pool, like a filter. And so that was what we used.

• 10:01Guy Raz?

  You just filled them with tea leaves?

• 10:02Speaker 01

  And dunked it in boiling water. And every once in a while, the bag would break. And then the pipes would clog. It was not pretty.

• 10:11Guy Raz?

  How did you know the tea was, I mean, that the tea was going to be good?

• 10:14Speaker 01

  Well, that was so funny. You know, when I talked to Barry, he's very good at making things sound simple. And sometimes they are, sometimes it's a little more complicated. He's like, well, look, you take a tea bag, you dunk that in water, if you multiply it times 15,000.

• 10:29Guy Raz?

  No problem.

• 10:31Speaker 01

  So theoretically, that works. What we found is that when you, especially in the beginning, too many tea leaves, you don't get the full infusion.

• 10:38Guy Raz?

  Yeah.

• 10:38Speaker 01

  No, the bag breaks, then you've really got a problem. So we just had to keep iterating. It was a very makeshift operation.

• 10:46Guy Raz?

  So, once you had all the bottles, I mean, how did it sell? Like, did it do well right away?

• 10:51Speaker 01

  So what happened was, you know, obviously, we went to the shelf. Nobody knew what it was. And so, all that first summer, this was 1998 now, all we did was give out. Like, our marketing effort was me and two interns giving out samples in Whole Foods stores. And we gave out more samples than we sold. But by the end of that summer, we were the best-selling tea in the 17 Freshfields Whole Foods stores in the mid-Atlantic.

• 11:14Guy Raz?

  Wow.

• 11:15Speaker 01

  And so, what was then happening was that the consumers were starting to ask for the tea, which was really neat. And it was so different. And so, what was nice is, we have low switching. You know, some brands, maybe in the cereal category, if one, you know, if Raisin Bran is on sale, someone will go buy Post or whatever.

• 11:31Guy Raz?

  Yeah.

• 11:31Speaker 01

  You know, you switch back and forth. But with Honest Tea, if it's not there, you don't go back and buy Snapple or Arizona because the taste is so different.

• 11:39Guy Raz?

  Yeah.

• 11:39Speaker 01

  And so, when we got somebody, and we were clearly not for everybody, they were very loyal.

• 11:45Guy Raz?

  What was like, what was the thing that made Honest Tea different from, like, everything else that was on the market at the time?

• 11:53Speaker 01

  So, two things. First of all, just much less sweet than everything else. But the other thing, and the reason the name Honest Tea made sense, is because what we learned is, most of the bottled tea in the US at the time, and still today, is not brewed with, you know, it's not brewed tea. It's a powder or a concentrate. It bears a relationship to the tea leaf, like the fish filet bears a relationship to the fish. You know, somewhere along the way, there was a fish. But our tea, we bring in the tea leaves to the plant, and we brew them there.

• 12:18Guy Raz?

  I mean, so, once you were in Whole Foods, pretty quickly after you launched, I mean, it seems like you were sat, like, I guess the impression of the average person would be, wow, you're sat, you're in Whole Foods.

• 12:27Speaker 01

  Keep in mind, it's only 17 stores. So, it was just a, it was a start. And so, but we had, I guess, proved the concept.

• 12:34Guy Raz?

  Yeah.

• 12:34Speaker 01

  And so, then, we were able to go back out to investors and say, we proved the concept. Now, it's time to expand. So, we got more investment money raised. And then, we went to the other buyers, and the buyers for the, for the West Coast. And we went to buyers from other stores, you know, Moms, My Organic Market here in the mid-Atlantic was one of our earliest accounts. And they, it was working there, and they started to bring it to their other stores.

• 12:55Guy Raz?

  So you're, I mean, you know, it's, it's, I mean, you're making lots of tea, you're growing. What were the challenges at that point?

• 13:03Speaker 01

  Oh, there were so many because it was still, well, first of all, cash is always a challenge. We were, we were growing quickly, but we were spending money to do it. We had salespeople, we were doing marketing.

• 13:15Guy Raz?

  And then just probably getting the tea to stores, right?

• 13:18Speaker 01

  Getting tea to stores and, and we were still getting rejected by all these distributors.

• 13:21Guy Raz?

  And distributors are, they're the gatekeepers?

• 13:24Speaker 01

  They are.

• 13:24Guy Raz?

  They decide where your drinks go?

• 13:26Speaker 01

  Because this is unlike, you know, a tech company.

• 13:29Guy Raz?

  Yeah.

• 13:30Speaker 01

  No matter how good our product is, we can't ship it through the mail. Beverages are a high turnover product. And so as soon as a shelf empties of beverages, something takes its place. And so you need a distributor to be there to, to build, to keep the shelf space protected. And so what happened was we were going to all the distributors of Snapple in Arizona.

• 13:50Guy Raz?

  And they were saying?

• 13:51Speaker 01

  When they returned our calls, they would just say, it's not sweet enough. It's too expensive.

• 13:55Guy Raz?

  Wow.

• 13:56Speaker 01

  It tastes like grass. It's not what we're used to, which of course it wasn't. And what they, where they were not effective was they, they were tasting it for their own palates. They weren't thinking that there's a whole population out there that, you know, has a different appetite.

• 14:12Guy Raz?

  Did you, I mean, when, when you pitched it to investors who invested in like these kinds of things, did, I mean, were they saying, oh, this is awesome. I can't wait to jump in? Or were they just saying, did you get a lot of no's?

• 14:24Speaker 01

  We got a ton of no's. The main reason we got so many no's is this was, now is sort of 1999, 2000. This was during the whole dot com boom.

• 14:31Guy Raz?

  Yeah.

• 14:31Speaker 01

  And we were a very old economy. And so, you know, people would much rather throw millions of dollars at, you know, something.com than put a few, maybe $10,000 or $20,000 into a beverage company.

• 14:44Guy Raz?

  Like you had investors come in and say, you know, you should follow our advice and do this. What were some of the things they told you to do?

• 14:49Speaker 01

  Everything, you know, so we, yeah, we had these fancy investors from Boston. They said, you know, well, you know, you could, you should be an energy drink because that's really growing. Or you should be a dot com. You know, if you made the product cheaper, you could make better margins on it. I said, it sounds like you're interested in the opportunity, except everything that we do. But we also knew to really succeed in the long term, we had to be different than all the other big companies out there. And if we, you know, to create a sweet tea, there were tons of companies already doing that.

• 15:20Guy Raz?

  But when you were in those early days when people are saying, this doesn't taste great, or they're probably saying, like, add more sugar, did you ever think, hmm, maybe they're right?

• 15:26Speaker 01

  Well, there's no question that would have led to faster growth, but it would have diluted what we were building. This was about building something that we could always believe in, that we would, that would be meaningfully different. And that, you know, to take people in a different direction, you have to disrupt where they're going.

• 15:47Guy Raz?

  Seth Goldman. In a moment, when we come back, Seth explains how honesty became an actual political issue in the 2008 presidential campaign. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 16:08Guy Raz?

  It's How I Built This from NPR. I'm Guy Raz. So by the early 2000s, honesty had become one of the highest selling beverages at Whole Foods stores, and things were going pretty well. But then, there was a hitch. At the time, the company had its own bottling plant near Pittsburgh, and something happened there that could have completely destroyed the company.

• 16:30Speaker 01

  So in 2003, we had a delivery of glass that was faulty. And there were a lot of blisters in the, in the glass, literally, you could look at it and see little bubbles. And so, we ran it on the production line. And the way the line works is that if it ever sees a defect in the bottle, it's supposed to kick it out, reject the bottle.

• 16:49Guy Raz?

  Yeah.

• 16:50Speaker 01

  But the line didn't do that. And so, we ended up with some product in the marketplace that had broken glass inside the bottle. In fact, it was two different Whole Foods stores. And Whole Foods has a rule, three strikes and you're out. Fortunately, no one got hurt or injured, but we did have bottles with pieces of broken glass in them. And we knew we couldn't afford, as a business, to lose our, our largest customer. So we voluntarily withdrew all product from the market.

• 17:13Guy Raz?

  Every store?

• 17:14Speaker 01

  Yes. Everywhere, not just Whole Foods, everywhere.

• 17:17Guy Raz?

  Wow. How much did that cost you?

• 17:19Speaker 01

  Oh, it was, well, we were doing about $3 million, $4 million in sales, and it totally stopped our sales. So we lost several months of sales, so several hundred thousand dollars. I don't know that it cost a million, but, but a huge... You know, just momentum stopper. Here you are trying to build. You got your salespeople out trying to sell product instead. Now they're trying to take product.

• 17:36Guy Raz?

  You recall it all and you destroy it.

• 17:37Speaker 01

  We destroyed it all. And it was just painful. We weren't profitable until the eighth year or so. I mean, it took a lot of time. Now, we kept things really lean. So it wasn't like we went on a spending spree. We were sharing hotel rooms and cutting corners everywhere we could, not on the ingredients, but you know, just trying to keep the lights on.

• 17:57Guy Raz?

  So what were you like, what were you paid as CEO?

• 17:59Speaker 01

  My first year salary was at $50,000. Literally, I took that $50,000 check and it was even, it was tax inefficient because I invested in the company and then I paid myself. I don't think I got over $100,000 for, probably not for the first five years. And then, you know, it grew. But the stock, obviously, really grew.

• 18:20Guy Raz?

  So during this time, were there like lots of other companies that were offering to buy you guys out?

• 18:25Speaker 01

  Yeah, we were approached by lots of companies along the way. I mean, it was very, partially because we were growing quickly and partially because we were doing something others weren't doing. So really, from the first year, every year or so, we'd be approached by a major food or beverage company that wanted to buy us.

• 18:42Guy Raz?

  And I read like, one of those, one of those companies was Tetley Tea?

• 18:46Speaker 01

  Tetley, yeah.

• 18:47Guy Raz?

  And they, they kind of threatened you, right? They said, if you don't, if you don't sell to us, we're going to crush you.

• 18:52Speaker 01

  We're going to go, right, we're going to do exactly what you're doing and just do it bigger. And we were always, that was another thing I couldn't lose sleep about, which was always competition.

• 19:00Guy Raz?

  And you and Barry owned like, what, like 90% of your company, right? Even though you had tons of investors.

• 19:06Speaker 01

  Right.

• 19:07Guy Raz?

  How were you able to do that?

• 19:08Speaker 01

  Well, this was one of the key strategic elements that Barry brought to the company. And he is, literally is a professor of game theory. And so he said, you know, the problem with so many startups is the entrepreneurs give themselves all these penny stocks in the beginning. And as a result, they start with just much more stock than everybody else. And then everybody else just kind of just comes along for the ride. He said, but what if instead you started the founders at the same place as the other investors? And only when the company grows in value, do the founders get more equity? And that's, it was a reverse structure. And what that did was it helped, as we grew and we raised more money, we didn't get diluted. And the other thing was we relied on angel investors.

• 19:49Speaker 01

  So a lot of entrepreneurs in the venture capital mode is basically they're incentivized to own more of the company, they're incentivized to exit quickly. And we didn't take that kind of money, and I'm very glad we didn't. Yeah, I think that was a key piece that let us keep control.

• 20:04Guy Raz?

  When did you, when did you start to realize that, you know, like, honesty was becoming part of, like, the cultural zeitgeist?

• 20:10Speaker 01

  We had some funny moments. There was a moment in 2008, President Obama had become an honesty drinker, I guess, at the campaign for 2008, and the McCain campaign had criticized him for being, you know, out of touch with the American people.

• 20:24Guy Raz?

  Yeah, what was his favorite one?

• 20:25Speaker 01

  The Black Forest Berry.

• 20:27Guy Raz?

  Black Forest Berry, right.

• 20:28Speaker 01

  And McCain's campaign manager had criticized Obama for, you know, drinking organic, you know.

• 20:34Guy Raz?

  But like, he kept, Obama kept, like, a stock of it in his, like, with him all the time, right?

• 20:39Speaker 01

  I'm told that he still does. In fact, I had an encounter with him a few years ago, and he brought over his, the Body Man, the first thing he asked, of course, was, "Barbara, what, tell, tell, tell him what I drink, and what do I always have to have with me?"

• 20:48Guy Raz?

  Wow. So, at what point were you able to kind of just feel like, okay, this is gonna work?

• 20:53Speaker 01

  Well, I would say, so, when Coca-Cola became an investor in 2008, that was a surreal experience, because...

• 21:00Guy Raz?

  They approached you.

• 21:01Speaker 01

  They approached us. Well, they approached us in 2007, and they had just created this group of entering and emerging brands, and their goal was to invest in and build the next billion-dollar brand for Coca-Cola. And so, you know, going to the headquarters in Atlanta, sitting down with the President of Coke, North America, and then the chairman, and, you know, sort of party was, like, looking down, like, I'm really here, we're really having this conversation. So that was the first moment, like, this, this is actually gonna work, this is gonna be around.

• 21:27Guy Raz?

  Coke bought about 30% of the company.

• 21:29Speaker 01

  40%.

• 21:30Guy Raz?

  40% of the company. And, and they bought an option to buy a majority, which eventually they did, they bought the company out, uh, fully in 2011. But like, this was your company. I mean, did you feel like you were, you were giving away control?

• 21:41Speaker 01

  Well, you know the story. So often, when a brand is sold, the entrepreneur gets really frustrated, and they butt heads, and the entrepreneur rarely lasts a few months.

• 21:50Guy Raz?

  Yeah.

• 21:51Speaker 01

  The friend of, uh, my friend of mine who ran Vitamin Water said, he said, "Nah." And he left shortly after. Coca-Cola bought it. He said, you know, the first few, first few weeks, they want to know your opinion. And the next few weeks, they want to know your phone number. So after that, they don't want to know you. You're irrelevant.

• 22:06Guy Raz?

  So why didn't that happen to you?

• 22:08Speaker 01

  Because, and I give Coke a lot of credit, they understood this is a brand that is different than what they sell in market. They couldn't connect with the organic consumer or the natural foods marketplace. And so they gave us this incredible latitude and autonomy. And there were moments where we ran up against them around regulatory language or, or just marketing approaches. And they respected what we did. So what's so, continues to surprise me is this brand is still my brand. And, and the biggest part was the distribution. We were in 15,000 stores when Coke invested. Now we're in over 100,000 stores. So that's, that's where the difference is.

• 22:47Guy Raz?

  I hope my numbers are right, that early investors, people who put in $50,000 in the company at the beginning, made a return of $1.25 million 10 years later. Is that right?

• 22:58Speaker 01

  That's right. That's right. Yeah. 26 times their, their early investment.

• 23:01Guy Raz?

  How many, do you know how many millionaires were created by Honest Tea?

• 23:04Speaker 01

  I don't know. Well, to me, what was so exciting was some of our employees were, were made millionaires as well. And that, to me, was, you know, that was all sweat equity that they earned. So that was especially meaningful.

• 23:15Guy Raz?

  This is a question I've asked everybody who's been on the show. How much of what happened with you and Barry and Honest Tea was because you guys are just really good at what you do? And how much of it was just luck?

• 23:28Speaker 01

  I really don't believe in luck. I believe that the reason we're still here is the perseverance. And I, to the extent there's luck, you know, it's the timing, the way the consumer has evolved. But, you know, I've heard some, and so say, oh, you know, you were in the right place at the right time. I said, well, you know, it took 10 years to get to that right place. So this was not a, this wasn't, you know, something that just happened overnight. A friend of mine likened it to water. You know, eventually water finds its way to, you know, comes going downhill and it gets to where it needs to go. And I think we finally got to a place where we could connect with consumers and do it in a way that was still meaningful.

• 24:06Guy Raz?

  So I'm curious, Seth, as you kind of like look back on all this, is there like one trait that, like one really important trait that you either developed or just had or have that you think all entrepreneurs need to have?

• 24:20Speaker 01

  Well, you have to be resilient. And this is, this is something that's so important. To put this on the bigger picture, just for our, for like our economy, we, people have to be resilient. So one of my, one of the best ways I developed resilience growing up was I wrestled in high school. I was the worst wrestler on the team. My first year, I was 1 in 10, and that was only because somebody didn't show up and I got the forfeit. So I, I had learned how to fight off my back, you know, and I had experienced rejection. And it's so important to be able to bounce back from something like, not just, I mean, all the time, but in, in life and especially when you believe in it, it makes it that much easier.

• 25:02Guy Raz?

  That's Seth Goldman, founder of Honest Tea. By the way, the company has now sold more than a billion bottles of its beverage. It's now completely owned by Coca-Cola with annual sales of more than $170 million. Seth is no longer formally involved, and though it made him a rich man, his life hasn't actually changed all that much. Seth still lives in the same house in suburban Maryland where he made that first batch of Honest Tea.

• 25:35Guy Raz?

  Hey, thanks so much for sticking around because it's time now for How You Built That. And today, we're going to update a story we ran about a year ago. This one started when Jaya Iyer was raising her three-year-old daughter in Oakton, Virginia.

• 25:47Speaker 02

  My daughter told me that she wants to grow up to be an astronaut. So that's when I started looking around for clothes with astronaut or space theme, and I realized that there were really none for girls.

• 25:59Guy Raz?

  And sure, Jaya could have bought an astronaut shirt or pajamas in the boys' department, but her daughter's favorite color was pink.

• 26:08Speaker 02

  I actually looked every place and there was nothing at all.

• 26:12Guy Raz?

  Not a single pink astronaut shirt. But as it turned out, Jaya was just the right person to tackle this problem. She actually has a PhD in clothing merchandising.

• 26:24Speaker 02

  So I actually got in touch with some freelance designers and I created a few designs, like I made a monster truck. Which was on a T-shirt that didn't say anything boy about it. I made a pink T-shirt with a race car on it. I made a girl firefighter on one.

• 26:40Guy Raz?

  And of course, Jaya also sketched out that pink T-shirt with an astronaut on it. She put her drawings online. She launched a Kickstarter campaign and she raised 30,000 bucks.

• 26:51Speaker 02

  And I was lucky that I had the support of my husband, who was always telling me, you know, if you really believe in it, go and do it.

• 26:59Guy Raz?

  So with the Kickstarter money, Jaya found a factory in India willing to make the shirts. She then expanded her line, shirts with computer code, test tubes, and a solar system that glows in the dark, all for kids. But there was a problem.

• 27:14Speaker 02

  We actually had a lot of parents reaching out to us, saying, hey, we don't have anything like this for the moms of these kids.

• 27:20Guy Raz?

  Lots of moms who work in science were asking about clothes for grownups. So Jaya started designing dresses with things like the periodic table, the double helix, the solar system, equations.

• 27:33Speaker 02

  Many school teachers, college professors, actually are our customers. You know, it makes them feel great about teaching math and saying that, hey, you know, I'm wearing a math dress because I love math. And they say we feel like Miss Frizzle.

• 27:47Guy Raz?

  Since we first spoke with Jaya last year, her revenue has grown to about $1.5 million. And she now sells items for men, like cufflinks, ties, and socks. Jaya calls her company Svaha, which is the name of her daughter, who, by the way, is now six years old and no longer wants to be an astronaut. Instead, may be a singer or a robot designer. And if you want to find out more about Svaha or hear previous episodes, you can go to howibuiltthis.npr.org. Also, if you want to tell us your story, please go to build.npr.org. We love hearing from you about the things you're building.

• 28:28Guy Raz?

  Hey, thanks for listening to the show this week. Please also consider subscribing to our show on iTunes. And do us a favor, write us a review while you're there. You can also write to us at [email protected]. And if you want to send a tweet, it's at howibuiltthis. Our show was produced this week by Remtin Arablouei, who also composed the music. Thanks also to Neva Grant, Sanaz Meshkhanpour, Noor Kutsi, and Jeff Rogers. Our intern is J.C. Howard. I'm Guy Raz, and you've been listening to How I Built This from NPR.