This summer I had a blast working for Honest Tea, the fastest-growing, organic bottled tea company in the country. I will admit, however, that there were a few moments in June when I wondered whether I had made the right choice.
During my first few weeks, as part of our national promotion with Ford, I drove a branded Escape Hybrid SUV across the East coast, passing out samples of Honest Tea. One particularly absurd moment I had was a vigorous debate about the value of organic foods with an 80-year old woman with orange hair and rhinestone studded glasses in front of a natural foods supermarket on Manhattan’s Upper West Side. “I hate everything organic,” she needled, “give me a sugary Coke.” Another telling moment was when I restacked six spilled pallets (roughly 600 cases of iced tea) inside a tractor trailer at a beverage warehouse in eastern Maryland on a sweltering 95 degree day.
I am a student at Harvard Business School-at times my ego whispered-why on earth am I selling tea out of the back of a truck? And what exactly was I learning about business strategy while sampling tea inside a Whole Foods supermarket? My doubts were echoed by our Head of Sales, a 25 year veteran of the beverage industry, who quipped as we struggled to unload several cases of Peach-oo-la-long: “They don’t teach forklifting at Harvard Business School, do they”?
Although I was warned not to wear a tie to work and I knew that my summer was not going to be filled with DCF analyses, I don’t think I recognized quite how “hands-on” it was going to be. To gain respect among the sales and operations staff, I had to first get my feet wet, literally, by sloshing around in puddles of tea at the bottling plants and pounding the pavement of Washington, D.C. and New York City, prospecting for new sales accounts.
As the summer progressed, I began to realize that I was faced with a tremendous opportunity. The benefit of working for an entrepreneurial company like Honest Tea for the summer (on an HBS Rock Fellowship) is the chance to experience all sides of a business. In a few short months, I tackled a variety of marketing, sales, operating, and financial challenges-and my summer became an applied laboratory for lessons learned during the RC year. A few highlights and takeaways:
Operations Managers Don’t Sleep. Honest Tea had recently launched a new product line packaged in plastic bottles, the first order for which had to be delivered on June 14th for the inaugural flight of Independence Air, a new airline based in Washington, DC. Unfortunately, on June 13th, the taste and color profile did not quite match our current products in glass-and the new machinery on the line was experiencing hiccups. After 40 hours with the operations manager at the plastic bottling plant, brainstorming solutions, mixing ingredients, and even sketching a process diagram, I successfully delivered the 50 cases of tea as promised-Professor Kent Bowen, I imagined, would be proud.
Juice Guys Meet Tea Guys. In exchange for sponsorship of several summer film festivals, a local radio station offered us studio time to create a radio ad. We discovered late one Thursday afternoon that the best available slot was the next day at 2pm. I rented audio equipment, wrote a script, identified a sampling venue, interviewed customers on the street, and produced an advertisement at the radio studio-all in less than 24 hours. This advertisement allowed Honest Tea’s own customers to champion our tea’s virtues and shape the entrepreneurial, hometown brand-ala Nantucket Nectars.
Find Your Strategic Peak. How does a tiny, upstart beverage company grab market share from industry gorillas? The vision of founders Seth Goldman and Barry Nalebuff (strategy professor at Yale’s School of Management) was to create a product that defied competition and carved out its unique niche. Why would Snapple try to sell an “anti-Snapple” that wasn’t sweet? I was able to sell Honest Tea into large accounts this summer because the competition had little interest in offering a similar beverage.
ZOPA with Lemon, Please. The bread and butter accounts for Honest Tea are restaurants, delicatessens, and supermarkets. Accompanying a distributor sales representative on his sales route (known as a ‘crew drive’), I typically had about a minute and a half to convince an owner to buy several cases of tea. I must have learned something in negotiations class as I convinced bodegas in midtown Manhattan to buy our organic, lightly sweetened beverage. I became an official “cement head”- the nickname for sales reps who pound the pavement from account to account.
To VC or not to VC. Throughout the summer, we debated the merits of an additional equity infusion. Would Honest Tea consider adding institutional VC investment to its lineup of angel investors? Would Honest Tea consider moving from guerilla marketing to formal advertising? How would these decisions impact the brand, valuation, and operating control- issues which are strikingly similar to the ones we debated regularly in Entrepreneurial Management last spring.
Entrepreneurship is a roller coaster ride. Giving away tea to local police, community organizations, and fellow vendors is a great way to gain sales support and visibility. It can also gain you a seat on a roller coaster ride. One hot, humid summer night at the Herndon, VA city festival, we experienced the death defying Giant Hammer. Our ticket to ride-two ice cold bottles of Green Dragon Tea.
Responsible to Whom? During my summer, I thought a great deal about questions raised in LEAD and LCA – how do you balance work and family and what exactly are the ethical and financial challenges of running a ‘socially responsible’ company? While Honest Tea is taking off at warp speed, and its staff is stretched fairly thin, Honest Tea’s CEO makes a point of having dinner with his family almost every night. Honest Tea partners with community organizations and promotes a healthy, environmentally friendly product-yet its core strategic business decisions must ensure that it competes competitively in a cut-throat beverage industry.
The rest of my summer was spent with my wife Aviva and good friends. When I wasn’t traveling to every town and film festival on the eastern seaboard, I was enjoying dinner at home with classmates Chris Eisenberg (OA) and Warren Durbin (OA), their spouses Margaret and Cecily, lots of plastic plants, and a big, friendly golden retriever named Murphy. Our large house was a unique living situation that a classmate referred to as the HBS commune. I learned a lot about our founding fathers while visiting a handful of the hundreds of free museums, memorials, and exhibits in Washington, DC. When the summer ended, Aviva and I decided to backpack through the Canadian Rockies-successfully avoiding being eaten by a grizzly so that I could return to HBS to enjoy my EC year.
All in all, a great summer!