Book Review: Mission in a Bottle, by Seth Goldman and Barry Nalebuff
Mission in a Bottle is the story of the founding of Honest Tea by Seth Goldman and Barry Nalebuff. This incredible book was recommended by Sergio, the owner of Wild Kombucha in the Bucha Box Traveling Kombucha Podcast hosted by Bennett Boundless. Sergio said:
This book was very, very good resource for us. It lists all the numbers and is super-honest and open about how they ran the business. It’s super-detailed, and lists all the margins for the product, and how they were able to raise money…
An unusual feature of this book is that it’s graphical — illustrated by Sungyoon Chai. The content is attractive and clear, as in this two-page spread showing their break-down of production costs:
And while the cartoon-like illustrations make it easy to follow, the content is detailed and informative. It succeeds as a story, with all the obstacles to the start-up told in relentless personal detail. It also succeeds as a case study in starting a beverage business. We are with the founders of Honest-Tea every step of the way,
appreciating their efforts and their mission to change the world by starting a new kind of drink business: where previously the over-sweetened iced tea market (beloved in the American South) was ripe for a less-sweet, honest, alternative.
Seth was a business school student, Barry his MBA professor at the Yale School of Management, running with an idea that came out of a classroom discussion.
Launching the business
They launched the company on Feb 2, 1998 and the first steps include setting up QuickBooks, opening a PO Box, and writing a business plan. They tackle label and logo design, brew their first product in a kitchen and look for commercial facilities to scale up. From the get-go they focus on quality: trucking in low pH spring water, selecting organic flavorings.
By Ch 13 they are in the financial weeds, designing a radically different option to attract investors with “Warrants” in place of ordinary shares. The books succeeds in describing this complex way of raising capital in an understandable manner.
The book does not sugar-coat the challenges they faced: everything from quality issues with the product to betrayal by partners they had trusted. They are honest about the ways the business impacted their personal lives. They have to wrangle distribution agreements in the face of established brands exclusive contracts. The first time they have to fire an under-performing employee is painful. They enjoy marketing success following chance meetings at Oprah at a yoga retreat and Senator Barack Obama on an airplane (both fans of their drink).
Among the more bizarre challenges was the time that what appeared to be part of a severed penis was found in a bottle of their tea. Bad publicity led to state-wide recalls before the truth finally emerged (you’ll have to read Ch 36 “A Stiff Drink” to find out what caused the scare.)
Throughout the development of the brand, Seth is the hands-on guy while Barry is the academic who secures financing and deals with contracts. Following each 20 or so of the (brief) chapters they summarize the lessons learned: from the start-up phase, growing pains and the emerging brand phase.
Hitting the big time
The grand finale happens in March 2008, when, 10 years after they began the journey, Coca-Cola became a 40% owner. While the price Coke paid is one of the few numbers they don’t reveal, all other aspects of the negotiation, and how they dealt with interest from Pepsi who got wind of the deal, is described.
In 2009 they briefly entered the kombucha market, but quickly withdrew when high-alcohol became an issue in their ferment. However, in 2013 Barry co-founded Kombrewcha which distributes 3.2 – 4.4% ABV hard kombucha. Clearly, the lessons learned from Honest Tea are applicable to the ‘booch business.
The final 21 pages of the book are not illustrated. They offer advice to other entrepreneurs, outline a survival guide and list the do’s and don’ts of dealing with outside investors. Their “10 Rules For the Road” are worth the price of the book. While this list might seem trite, each rule is woven into the story of their brand.
- Build something you believe in–thatss the first step to building a great brand.
- Don’t aim for 10% improvement. Make it radically better and different.
- Prepare to be copied. Don’t start unless you’ll survive imitation.
- Build up reserves of money and energy for bad luck and mistakes.
- Never, ever give up control–until you sell.
- Don’t compromise on the big things–compromise on everything else.
- Figure out how to achieve your goals on a tiny budget–then cut that number in half.
- It’s a marathon not a sprint.
- Take care of your family, personal, and spiritual health–if you aren’t laughing or smiling on a regular basis, re-calibrate.
- Build the enterprise and the brand as if you’ll own them forever.
- Don’t pay too much attention to the rules–as long as you’re not breaking the law.
Thanks to Boocha Babe Kombucha for letting us know that Seth was featured on the July 11th 2018 NPR podcast How I Built This.
The Missionary Position? It’s interesting that GT Dave chose to use the title of this 2013 book on the label of his Synergy brand. A popular phrase among beverage missionaries!