Seth Goldman, who turned an organic kitchen experiment into Honest Tea, the Coca-Cola-owned beverage company projected to sell 300 million bottles this year, is relinquishing some responsibilities with the low-calorie tea maker after nearly two decades.
Goldman, 50, is becoming “TeaEO emeritus” of Bethesda-based Honest Tea and will become executive chairman of Beyond Meat, a start-up whose plant-based product aims to mimic the taste and protein value of meat. The investors include Goldman, Microsoft Chairman Bill Gates, and Kleiner Perkins Caufield & Byers, the Silicon Valley venture-capital firm.
“Changing my role at a company that I painstakingly built for the past 18 years, and is in a period of phenomenal growth, is a big deal for me,” Goldman said in an interview Wednesday. “But I am so excited by the mission and opportunity of Beyond Meat that I can’t resist the challenge of helping to guide the growth of an enterprise I believe can be a major driver of health and environmental change.”
Goldman said he will become a part-time employee at Honest Tea, located above a Five Guys and a Sweetgreen in downtown Bethesda, while working part time for California-based Beyond Meat.
“It is salary-neutral,” he said of the move. Goldman will keep an equity stake of less than 10 percent in Honest Tea, a private company he owns with Atlanta-based Coca-Cola.
Goldman said the reason behind the announcement is both personal and professional. The youngest of his three children graduated from high school this year, creating a window for an entrepreneur who helped guide Honest Tea to annual sales of more than $170 million, entering new markets through partnerships with Wendy’s and Chick-fil-A.
“My three sons are going out into the world and assuming more responsibility. The Honest Tea brand is graduating as well, to the larger Coca-Cola organization,” he said. “We were totally a stand-alone. Now what happens is it becomes part of the Coca-Cola portfolio.”
Honest Tea will keep its Bethesda address on the bottle and have a presence and employees in Bethesda, but a top executive, the marketing general manager, will be based in Atlanta.
In his new role at Honest Tea, Goldman plans to work with Coca-Cola’s Venture and Emerging Brands Unit to help find ways of reaching consumers, through Honest Tea or anything else.
“He will be doing everything from looking at consumer trends to meeting with emerging brand companies,” said Scott Uzzell, president and manager of Coca-Cola’s venture arm. “If he wants to go to jungles, deserts or the far seas, I am going to support it.”
Honest Tea’s vibe was built as much on marketing as it was on the products. It became a millennial favorite as an alternative to sugary soft drinks with a commitment to social responsibility, including sourcing ingredients from organic farms and reinvesting in those communities.
Goldman became a multimillionaire and a local business folk hero after Coca-Cola bought most of his share of the company in 2011, and his investors scored too.
Goldman said he will keep his Bethesda home, which is a short bike ride to his Honest Tea office, but split his time between here and Beyond Meat’s headquarters in Manhattan Beach, Calif.
He said both companies are mission-driven disrupters built on creating healthy and good-tasting alternatives to conventional beverages and food.
“When I describe Beyond Meat to friends and family, I get the same puzzled look that I encountered back in 1997 when I would describe my plans for a lower-calorie bottled tea with a commitment to social responsibility,” he said.
Honest Tea took off in September 1997 when Goldman, then employed by Bethesda-based Calvert Investments, saw the paucity of health drinks after finishing a run one day.
Goldman called one of his Yale School of Management professors, Barry Nalebuff, who had previously discussed teaming up to form a beverage business built around a less-sweet drink.
The pair chose tea, in part, because it is the world’s second-most popular beverage (after water) and was affordable. Nalebuff, a competitive strategy expert, came up with the name Honest Tea.
After weeks of mixing recipes in his kitchen, the Harvard-educated Goldman offered samples at Metro stops, road races and any place else he could corner a potential customer. Rejection was constant: investors, distributors, stores.
Yet they persevered. By 2006, they were selling about 1.5 million cases a year, which brought in $13.5 million in revenue.
Despite their success, Nalebuff said he and Goldman haven’t changed all that much in two decades.
“I am happy to say I live in the same house, I am married to the same woman and I have been a professor at Yale for 25 years,” Nalebuff said.
“I note that Seth has the same wife and house, too.”