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Why I Enjoy Working for My Company's Acquirer

Most CEO's of acquired companies stick around less than a year, but Honest Tea's Seth Goldman explains why he's staying put at Coca-Cola.
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In my last post, I discussed some of the guiding principles that have helped Honest Tea keep its brand mojo as part of The Coca-Cola Company. But the way we act isn't enough to ensure success--it's also important to think about the environment that allows our mission-driven enterprise to thrive within a larger corporation.

Of course there's more than one recipe for how a large corporation and a mission-driven company can coexist and grow together--but here are a few elements of our partnership with Coca-Cola that help make it a symbiotic relationship.

1. A Hospitable Environment for Entrepreneurship

Many acquired companies struggle to find a role in their new parent company, but the fact that Coca-Cola has a unit (Venturing & Emerging Brands (VEB)) specifically dedicated to incubate, support, and occasionally shelter brands like Honest Tea is extremely important. And while the proper framework is essential, the right mindset is also needed--a balance between patience and impatience. Most CEO's of acquired companies stick around less than a year because each party has a different sense of what is possible. Large companies make decisions more slowly, but once they get aligned behind a new brand, the results can be powerful.

2. A Supportive Environment for Sustainability

Many companies profess a desire to support green practices, but don't allocate the proper resources and talent to fulfill that commitment. Coca-Cola's PlantBottle is an exciting innovation that has the potential to lead packaged goods companies away from our reliance on non-renewable materials. We look forward to being able to sell Honest Tea in the PlantBottle in the coming years. And while Coke's commitments to package and water neutrality by 2020 are ambitious, they are the kind of big ideas our society needs to embrace if we are going to have a shot at fundamentally changing our extractive relationship with the environment. As a result of this mindset, our initiatives around organics and recycling find receptive internal audiences.

3. A Team With the Ability to Grow and Evolve

I often hear from entrepreneurs who became too frustrated with corporate bureaucracy to stick around once their company was sold. Before we partnered with Coke the Honest Tea team usually had to shout for attention beyond the scale of our business--whether it was being included in a shelf set in a store or getting production time at a bottling plant.As partners with Coke, we learned pretty quickly that yelling isn't very effective in a large organization that is heavily reliant on data, process, and routines. My senior team (five out of eight of whom were with us before the Coca-Cola relationship) and I have evolved, learning different ways for Honest Tea to gain access to sales and marketing opportunities--the biggest lesson being that great performance is the most effective way to create the next big opportunity.

So what's different for me personally since the deal? Actually not that much. I still bike to the office when I'm not traveling. And the work is still fun and challenging--the distribution struggles I've written about are certainly easier. The reporting structure is a little different--instead of reporting to a board, we have monthly Operating Reviews with the VEB team. And because we continue to have aggressive growth and profitability targets, we still enlist our office accounting and operations team to pitch in with sales.

Our team still frequently shares hotel rooms on the road, though admittedly in somewhat nicer hotels. A Maryland politician recently asked me what was next for me, but I told him there's still a lot of work to be done with Honest Tea. Moreover, I feel just as passionate about the issues that caused me to start Honest Tea--and now we actually have a chance to drive change at scale, rather than just be a model for others.

One notable difference is that I don't have the company's loans hanging over my head--every bank we worked with required me to personally guarantee them, even when the loans were far in excess of my net worth. That, along with the new mattress my wife and I bought once the deal was closed, helps me sleep a little better.

IMAGE: ox4photos/Flickr
Last updated: Feb 13, 2013

SETH GOLDMAN | Columnist | Co-founder of Honest Tea

Seth Goldman is the President and TeaEO of Honest Tea, the company he co-founded in 1998 with Professor Barry Nalebuff of the Yale School of Management. He's preparing the September release of a graphic novel titled Mission in a Bottle.

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



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