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SELLING A BUSINESS
Selling a business can be a surreal experience. For Honest Tea founder Seth Goldman, it involved an investor call, a gong, and Erin Brockovich.
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Earlier this month we closed our transaction with Coca-Cola.  I can't say that I expected any of this to happen and so occasionally I felt as if I were watching things transpire, then I would realize that they were actually happening to me.  It's been an exciting, intense and occasionally surreal time—and that's not even including my son's participation in the Maryland State Wrestling Tournament, which was a source of additional stimulating moments. Here are some of the interesting experiences I had post-transaction:

The Media Announcement. We held a press conference at our office to announce the transaction.  I was joined by my co-founder, Barry Nalebuff, Mike Ohmstede from Coke's Venturing & Emerging Brands unit, and Montgomery County Executive Ike Leggett.  We also invited representatives from our community partners, such as Bethesda Green, Bethesda-Chevy Chase High School, the Boys & Girls Club of Montgomery County, and City Year, Washington, D.C.  

I noted that while the event was an important day for our shareholders, who are getting a nice return on their investment, it was also an important day for our stakeholders—community and national nonprofit partners, who we will continue to invest in through our continued presence in the community.  It was also exciting to unveil the design for our new PET bottle, which will feature the words "Est. Bethesda, MD 1998" on the bottom.

At the conclusion of the press conference, we unveiled a big, red, environmentally-efficient, co-branded vending machine half-filled with Coke drinks and half-filled with Honest Tea products.  Despite the fact that we've been working with Coke since 2008, when I pushed the buttons to order a drink, it was the first time I'd seen an Honest Tea bottle come out of a Coke machine.  As the bottle emerged from the machine with that characteristic thud, I recalled all of thousands of Coke machines I've spotted around the world, and at that moment the scale—of what we are doing, and what we can achieve—really hit home. 

My Final Investor Call. Immediately after the press conference, we convened a teleconference for shareholders. We announced the transaction to them, explained the timing, shared calculations for the return on their investment, and then opened up the floor for comments and questions. After some questions around logistics of the transaction, we heard from shareholders who not only shared their thanks, but reminisced about the early days with Honest Tea, and how proud they were to be part of the experience. We've been holding annual calls with our investors ever since we started, so it was bittersweet to realize that this was the last official conversation we would have with them. We thanked them for their confidence and their capital, and I was proud (and relieved) to have been able to deliver a return on both. One of our longest-standing investors noted that he invested a portion of his kids' college money in Honest Tea eleven years ago, and his kids are all now in college, so the timing was perfect for him.  

The Celebration. That night we had a celebration at Redwood, a restaurant down the street from our office. We welcomed investors, employees and several folks from Coke who helped close the deal. At the party we gave toasts, thanked the employees and investors who made it happen, and showed a video that captured many of the highlights and of course some of the low points of the past thirteen years. Barry noted that at a time when there are contentious changes of leadership going on around the world, he was stepping down as chairman without protest because he was confident that Honest Tea is in good hands.

I was delighted that my parents could join the rest of my family at the celebration. Along with Barry's parents and my sister, they have been some of the company's most reliable investors, so it was very meaningful for me to be able to celebrate the moment with them. Three years ago when I had talked with my Dad about taking on an investment which might eventually mean losing control of the company, he was concerned because he said, "I see how happy and fulfilled you are building this thing and I'd hate for you to lose that."  So it was especially nice for him to know that I am still excited about leading the enterprise.  

The Corporate Visit. The next morning we got up early to fly to Atlanta to introduce Honest Tea to all of the employees at Coke headquarters.  When I walked out of the airport I was met by Patrick and Matt, our two field marketing geniuses, who had arrived in Atlanta the night before. I was surprised to see them driving an Honest Tea vehicle, since they had left the closing celebration in Bethesda the night before, heading for the airport.  It turns out they had stayed a bit too long at the party, were likely to miss their plane, so they drove overnight (8 hours) to Atlanta! Though I was concerned for their safety, or at least their sanity, it was good to know that their passion and commitment to the brand was just as strong the day after the transaction.

The front entrance to Coke's headquarters feels a bit like one of Washington, D.C.'s national monuments—a big marble atrium, with flags around the perimeter.  It was surreal to walk in and see Honest Tea's flag displayed front and center. Shortly after I walked in, I was escorted into a meeting with the senior management of Coca-Cola North America.  Sandy Douglas, the president welcomed me, "Here's our TeaEO" and I received a very warm ovation.

Our team conducted a sampling event for Coke employees—we gave out 7,000 bottles of our Half Tea and Half Lemonade, hosted a tea-brewing session, and I gave some brief remarks.  I highlighted our entrepreneurial roots, our organic ingredients, the passion of our employees and the growth opportunity that we are excited to share with Coke as we spread organic and low-sugar drinks across the country. We closed the brief ceremony by ringing a gong to officially finalize the transaction.

TV Interviews and a Trade Show. The next week was highlighted by a media tour in New York and the Natural Product Expo in Anaheim. I did an interview with Pimm Fox on Bloomberg TV, and got to meet (the real) Erin Brockovich, who was scheduled to be interviewed just after me. I talked with her about the importance of organics, and her new book.  

Our booth at Anaheim was as busy as ever, or perhaps even busier, as we introduced the first brewed cocoa drink of its kind, Honest CocoaNova.  It was gratifying to see the excitement from our team about the new product line and to see the overall high level of energy and dynamism at the show, which is my single-best way to assess the health of the natural foods industry.

So now we're back to work in Bethesda.  In terms of economic structure, our enterprise has changed, but on a day-to-day basis, it doesn't feel any different.  Although I didn't realize it until a few days after the deal closed, for the first time in at least nine years, the company didn't hold any loans that were personally guaranteed by me.  When we first took out those loans, which were in excess of my net worth, I used to lose sleep over the risk I was exposing my family to.  But over time I stopped worrying, not because the risk had gone away but because I had so many other things to worry about.  

I'm not sleeping any better than I was before the transaction but, then again, I've always felt that sleep is overrated.

 

Last updated: Mar 24, 2011

SETH GOLDMAN | Columnist | Co-founder of Honest Tea

Seth Goldman is Co-Founder and TeaEO of Honest Tea, the company he co-founded in 1998 with Professor Barry Nalebuff of the Yale School of Management. Today, Honest Tea is the nation’s top selling organic bottled tea, and is carried in more than 100,000 outlets. Under Seth’s leadership, Honest Tea has developed innovative partnerships with its organic and Fair Trade Certified™ suppliers. Seth graduated from Harvard College (1987) and the Yale School of Management (1995), and is a Henry Crown Fellow of the Aspen Institute. Seth and Barry are the authors of the New York Times bestseller Mission in a Bottle, a business book told in comic book form, which was published in September 2013.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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