When I set out to write this blog post, my intention was to make the case that entrepreneurs are really just average people who become entrepreneurs when they step up to the plate to fill a void or right a wrong. In other words, under the right circumstances, anyone can become an entrepreneur. That’s the point I wanted to stress.
So I began to collect stories of people who showed little or no proclivity toward entrepreneurship in their early years, but in adulthood became fed up with the status quo and decided they should build a better mousetrap.
I managed to find a few really good ones, but I kept gravitating toward one in particular. Problem is, there was so much to this story that the original storyline – entrepreneurship by choice and not by birth – kind of just spawned a number of side stories and subplots. Then I had to scrunch everything down so it would read like a blog post and not a novel. So here’s my executive summary.
There’s always room for improvement
When I was growing up in New York the local supermarket stocked the popular tea brands of the day – Lipton, Red Rose, Salada and Tetley. No matter which brand you tossed in the shopping cart the flavor was always “black” and the tea came in a box of individual teabags. By the time I was in business for myself, the bottled, or ready-to-drink tea, had made its debut in a host a flavorful concoctions. It was the age of convenience and variety.
Fast forward a few more years and a guy by the name of Seth Goldman has a problem. He’s just finished a run in Central Park, he’s thirsty, and like so many times before, he searches for a bottled drink with more flavor and less sweet. He’s disappointed yet again.
It’s now 1998 and Seth’s soon-to-be business partner, Barry Nalebuff, has just returned from overseas where he learns that bottled teas for the American market are made with the least desirable parts of the tea plant – literally, the dust left over from processing. The two decide they can brew a better tea with better ingredients.
Barry suggests a new name to reflect their new vision – Honest Tea – and the two go to work in Seth’s kitchen experimenting with different formulations. Five weeks later they approach the buyer at what’s now Whole Foods Market with a few samples. They walk away with an order for 15,000 bottles.
An entrepreneur is born
Seth was 34-years-old at the time and Barry was 40. I point this out because neither of these guys exhibited extraordinary entrepreneurial skills in their youth and neither was anxious to start a business right out of high school. In fact, both became teachers – english for Seth; math, economics and business for Barry.
My point here is that while entrepreneurs are a very different breed, few pop out of the womb with sample products in one hand a sales script in the other. What usually happens is they’re confronted with a problem and instead of ignoring it or being consumed by it, they get to thinking: there’s got to be a better way. They start looking at the possibilities and they start forming their vision.
And for Seth and Barry, making money wasn’t the primary focus. That just happened to be the natural outcome of a well-thought-out vision. It began with filling a void. The marketplace, it seems, did want a better tasting, less-sweet tea. Then the two decided to go the fair trade route, ensuring that everyone, right down to the person who picks the tea leaves, is paid a fair wage. They also went organic, which for the tea drinker means healthy, but for the communities sourcing the tea leaves it means sustainable agriculture and a vibrant ecosystem. Here’s a vision everyone could embrace because everyone benefits.
I talk often about standards, those set points in our lives that determine what we find acceptable and unacceptable. We alone determine our standards, which slide between the extremes of good and evil. It’s easy to lower your standards especially when money is the prize.
For Honest Tea to grow they needed more distribution and in the beverage industry that can come from only one place – a friend in the biz with an established network. Enter Coca-Cola. But before we go there, remember my comment in last week’s blog about what happened to Dial-a-Mattress when they expanded. Outside corporate suits came in to run the show and they immediately clashed with the homegrown entrepreneurial culture.
For Seth and Barry it’s been a delicate balancing act. They lost some of their most ardent supporters when Coke took a seat at their boardroom table, but have expanded distribution from 15,000 stores to 100,000. Coca-Cola is now Honest Tea’s parent company, but like all parents know, you can learn a thing or two from your child if you pay attention.
What Coke learned is a healthy respect for the Honest Tea business culture. This wouldn’t have been possible had this merger been a simple buyout. Instead Seth and Barry sold 40% of Honest Tea to Coca-Cola in 2008, and the remainder in 2011. In that three year period the beverage giant’s executives got to work intimately with the Honest Tea team, appreciate a new business culture and see what makes entrepreneurs tick. The respect generated then allowed Coca-Cola to give Honest Tea the independence it needs to grow now.
Still, big business and small business don’t often see eye to eye. To get its product and message of fair trade and a healthy, organic lifestyle out to 20 million people, Honest had to accept that Coke does not support GMO labeling. More recently, Honest Tea has had to forgo the organic label on a select few products in order to make them affordable to its loyal fanbase. These decisions were made only after carefully studying all the variables and while remaining as true as possible to Honest Tea’s original vision.
Sometimes standards need to be moved. So where do you draw the line?
Be flexible, but stick to your guns
Every business begins with an idea. Every business grows with a vision. Every business is sustained by customer loyalty. And every business fails when its vision is lost.
The entrepreneur, more than most, will be asked to compromise. This is when your standards will either make or break you. The standards you set for yourself dictate the values you bring to the marketplace. Those values dictate the profits and the goodwill you derive from the marketplace.
Compromise is often a necessary part of business. What you’re willing to compromise on and the extent to which you’re willing to compromise will play a big part in your future success.
All the best,