By Peter High. Published in Forbes.
Seth Goldman was bitten by the entrepreneurial bug, and throughout his life, he dreamed of ideas to pursue. That tendency was enhanced when he crossed paths with Yale School of Management Professor Barry Nalebuff while pursuing his graduate degree in business administration. The student impressed the professor with his insights, and his willingness to productively debate ideas in class. A couple of years after business school, Goldman went for a run in New York City, entered a convenience store, and despite his thirst, was not impressed by the usual suspect beverages on offer. He viewed this as an idea to explore. As it happened, Nalebuff was returning from India, where he had participated in a tea auction. The process had led him to think of how best to brand tea. The name Honest Tea came to him.
These dual epiphanies proved fortuitous, and eventually they went into business together. In this interview, Goldman tells his side of the story, including a bottling issue that brought the company to the brink of failure, the value the company derived out of using game theory when engaging with investors in the business, and how they maintained so much creative control even after Coca-Cola purchased the business.
Peter High: Can you talk about your relationship with Honest Tea co-founder Barry Nalebuff, who was your professor at the Yale School of Management? How did your relationship move from student-professor to start-up co-founders?
Seth Goldman: Because both my parents are professors, my family had rigorous academic discussions at the table when I was growing up. To many students, Barry was an intimidating presence, and there were stories of students who were brought to tears in his classroom. I was fortunate that the first course I took with Barry was on political and economic marketing, and having previously worked on presidential campaigns, that was in my wheelhouse. My first interactions with Barry came from a position of strength, and I had strong insights that gave him a positive impression. The next course I took with Barry was on competitive strategy, and similar to the first class, I had some creative ideas. In this course, I put together a business plan for something related to urinary tract infections [UTIs], which is obviously substantially different than my idea for Honest Tea. Barry thought my idea showed bright and creative thinking, and he appreciated the fact that I was not a pushover in the classroom. I believe having that strong presence and pushing back in the right way can make a strong impression, which it did for Barry.