Honest Tea: Seth Goldman In 1997, after going for a long run, Seth Goldman was frustrated with the sugar-filled drinks at the corner market. So he brewed up a beverage in his kitchen, and turned it into Honest Tea. PLUS, for our postscript "How You Built That," we check back in with Jaya Iyer for an update on Svaha Inc., a unique apparel brand that focuses on STEM-themed clothing for babies, kids, and adults. (Original broadcast date: January 16, 2017)
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Honest Tea: Seth Goldman

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Honest Tea: Seth Goldman

Honest Tea: Seth Goldman

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GUY RAZ, HOST:

Hey, really quick before we start - just wanted to share some really exciting news with you. We are taking HOW I BUILT THIS live to Chicago. On Wednesday, July 18, I'll be interviewing live on stage Peter Rahal, the founder of RXBar. The event is sponsored by American Express. And to get your tickets, go to nprpresents.org. And hope to see you in Chicago.

And one more thing. It seems like you can walk into any store these days and choose from, you know, dozens of bottles of artisanal water or organic juices. But before any of that, Seth Goldman was trying to cnovince the beverage industry that, yes, people will buy a bottled drink that is not loaded with sugar. And as you will hear, it took a lot of convincing. This story first ran last January, but it's worth hearing again. I hope you enjoy it.

(SOUNDBITE OF ARCHIVED BROADCAST)

SETH GOLDMAN: So in 2003, we had a delivery of glass that was faulty, and so we ended up with some product in the marketplace that had broken glass inside the bottle. In fact, there were two different Whole Foods. Stores, and Whole Foods has a rule - three strikes and you're out. We knew we couldn't afford, as a business, to lose our largest customer so we voluntarily withdrew all product from the market. Every...

RAZ: Every store?

GOLDMAN: Yes. Everywhere, not just Whole Foods, everywhere.

RAZ: Wow. How much did that cost you?

GOLDMAN: It totally stopped our sales. It was just painful.

(SOUNDBITE OF MUSIC)

RAZ: From NPR, it's HOW I BUILT THIS, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built.

(SOUNDBITE OF MUSIC)

RAZ: I'm Guy Raz. And on today's show, the story of how Seth Goldman and Barry Nalebuff took Honest Tea from a kitchen sink in suburban Maryland to the shelves of virtually every grocery and convenience store in America.

(SOUNDBITE OF MUSIC)

RAZ: So the year is 1997. Seth Goldman is living in Bethesda, Md., with his wife and three young kids. He's 32. He just graduated from Yale School of Management. He's got this great job at an investment firm, but Seth - he's got an itch. He feels like he wants to start something, and it keeps nagging at him day after day after day.

So he starts thinking about different ideas, maybe a web-based system that would raise money for public schools by tapping into alumni networks. He came up with an idea to simplify diagnostics for urinary tract infections. There were a bunch of other ideas that would pop into his head, but nothing really got him excited until one afternoon when he finished a long run and walked into a convenience store hot and sweaty.

GOLDMAN: And I went to a beverage cooler, and I said there's nothing here.

RAZ: Nothing seemed appealing?

GOLDMAN: Yeah. And it was all a hundred calories per eight ounces. And so the difference was fizz or no fizz, color, you know, different names, different bottles. They were almost uniform in their taste profile, their sweetness profile, which was, you know, six or seven teaspoons of sugar per eight ounces or none. Why isn't anyone making a drink with one or two teaspoons?

RAZ: Just, like, a little bit sweet?

GOLDMAN: Yeah, just a tad sweet.

RAZ: So how did you go from that to, like, thinking about starting a tea company?

GOLDMAN: So when I felt that thirst, I reached out to my professor from business school. And when I had - Barry Nalebuff - when I had been a student, we had done a case study of the beverage industry. And we had agreed there was a gap. There was that space.

RAZ: A sweetness gap?

GOLDMAN: A sweetness gap. So I reached out to Barry. I said, I think I'm ready to do something about this. I ran...

RAZ: But you were not a tea expert.

GOLDMAN: No, not a tea expert.

RAZ: No.

GOLDMAN: And more importantly, not a beverage industry expert at all, no knowledge of that. And that was where having zero knowledge of the beverage industry in the beginning was actually a competitive advantage because we went in without any of the assumptions. One of the things that happened literally the same month that I went for that run in New York City was that an investment my dad had made it in 1977 - so it was, you know, more than 18 years ago at the time - came to fruition, and I was presented with a check for $50,000. And that was kind of the risk capital.

RAZ: Yeah.

GOLDMAN: And it was enough for me to say, OK, well, look. I'm going to put this - this is - if we lose this, we lose it, but this is what I'll bet.

RAZ: But at the beginning, I mean, you were thinking I'm going into this with two feet.

GOLDMAN: Right. Yeah.

RAZ: I'm going to quit my job. But, I mean, you were still young enough where...

GOLDMAN: That's right.

RAZ: ...You could always, like, go back into finance.

GOLDMAN: Yeah, that's right.

RAZ: So you have a $50,000 check from your dad.

GOLDMAN: Yeah.

RAZ: And then - and did - was Barry able to put in a little bit of seed money?

GOLDMAN: Oh, yeah. Barry had been on the board of a company that'd gone public, so he put - 'cause he kept his day job...

RAZ: As a professor at Yale?

GOLDMAN: ...As a professor at Yale. He's still a professor at Yale. What was funny was that before I went to submit my resignation at Calvert, I kind of called Barry for one last boost of confidence. I said, all right, I'm going to go in there. You know, we just had our third son, but I'm going to step down, and there's this long pause. He says, well, I bet if you went to Calvert and asked to go on a sabbatical, I bet you they'd let you do that. And I said, well, that's not - (laughter) I was hoping for the boost of confidence.

RAZ: Yeah.

GOLDMAN: You know, I knew I had to take the plunge. You couldn't get investors to invest or employees or buyers to commit without, you know, me being committed.

RAZ: Can I just do a quick gut check, Seth?

GOLDMAN: Sure.

RAZ: You are a father of three kids with a good job at Calvert Investments, and you tell your wife you're going to quit to start a tea company, which is an industry you know nothing about, and nothing about that terrified you?

GOLDMAN: More importantly, nothing about that terrified her (laughter). Yeah, I think it was - I believe in myself, probably a little bit of hubris - right? - like, I think I can do this even though I don't know anything about it, right? But I'm ready to try.

(SOUNDBITE OF MUSIC)

RAZ: So you quit. And then basically you and Barry - what did you start to do?

GOLDMAN: Yeah.

RAZ: Like, how did you start to get - did you start to raise money? Was that your first thing?

GOLDMAN: That was so - it was a little bit of the chicken and egg. So the first thing we did was I did write a business plan. These days people really put together PowerPoints. They don't write business plans. I wrote about a 20-page business plan that mostly showed the thinking behind the business. I think every potential investor wants to understand there's actually some thought here about where this goes and what it - how it becomes something. I managed to secure an appointment with Whole Foods.

RAZ: That early, even before you had a product?

GOLDMAN: So that was lucky because the marketing director at Whole Foods - or is - at that time was called Fresh Fields - Whole Foods was mid-Atlantic - he was a graduate of the Yale School of Management, as well, so he helped me get an appointment with the buyer.

RAZ: Wow. Seth, I just want to pause here for a sec because I - from what I have read about you, I understand that, like, in the midst of all this happening with Whole Foods and all that excitement, your son Elie (ph) got pretty sick.

GOLDMAN: Well, it was the ultimate test in compartmentalizing because literally the day before the Whole Foods - our first presentation, when we're going to present the - so it's probably the most important day in the company's history where we're going to go present the tea. And Barry and I are in the kitchen, and we've got mugs and bowls that we were brewing the tea in. It was not an official-looking lab. So the kitchen's full of all these things. And my wife walks in with our middle son, and she's got this ashen look on her face. And I thought, oh, no, she's so upset we've made the kitchen such a mess, and I said, we'll clean this up. And she says, that's not what I'm worried about. You know, we just came back from the doctor. And Elie, our middle son, had a coarctation of his aorta. He was going to need major surgery within the month. And so, you know, that's a pretty heavy news to get.

RAZ: How old was he at the time?

GOLDMAN: He had just turned 4.

RAZ: Man.

GOLDMAN: It was intense. And probably if that had happened a few weeks earlier, I probably wouldn't have left my job at Calvert because, you know, whether it's the health insurance benefits or just the risk level, you know, I wouldn't - couldn't do that. But I had already taken the plunge. I knew - you can bet that when I was at the Whole Foods meeting, I was selling (laughter) with great intensity. I mean, it needed to succeed.

And then while Elie was in the hospital - and I stayed with him that whole week - but I would go down at sort of after midnight. We had someone working on formulas, blends. And he would come in and meet me in the lobby of Children's Hospital. And we'd taste tea together, and I'd go back up and sleep by Elie's bed. And I think, you know, life happens. It's part of the experience. It's part of the journey. And I'm so thankful and - to have Elie still with us and such a delight and such a wonderful presence, you know, and - for me and for, you know, all the people he touches.

RAZ: Wow. You know, I'm thinking about you, like, pitching this product, you know, at Whole Foods in the midst of all this. And what did you do? Did you, like - did you bring them samples that, like - the samples that you made in your kitchen, just put them in, like, some random bottles or something?

GOLDMAN: (Laughter) We got an empty Snapple bottle.

RAZ: You used empty Snapple bottles? (Laughter).

GOLDMAN: Yes, we had the face down. What was really funny is that Barry had sent over some thermoses one day in the mail. And when I met with the buyer, and I - we poured out samples from the thermos, showed them my empty Snapple bottle. And...

RAZ: With the Honest Tea label on it?

GOLDMAN: I put a Honest Tea label on it, of course.

RAZ: OK, right.

GOLDMAN: And he had said, well, look. This sounds interesting. We'll give it a try. We'll take 15,000 bottles which of course was both terrifying and thrilling.

RAZ: How did you make that? How did you make that much tea?

GOLDMAN: That was the other - so - the scary part. So we got this commitment from the buyer. And the next thing we did is we basically went up and down the East Coast, looking at bottling plants. And we went to beer plants and soda plants, apple juice plants. So we ended up at a plant in Buffalo, N.Y., that was making apple juice. And it was a little down on its luck. It (laughter) had some line time available. And they said, well, how are you going to brew the tea leaves? And so we brought in these mesh bags, these large mesh bags that are actually - can be used to, like, clean a pool like a filter.

RAZ: Oh, yeah, yeah.

GOLDMAN: And so that was what we used...

RAZ: You just filled it with tea leaves?

GOLDMAN: ...Put tea leaves in it and dunked it in boiling water. And every once in a while, the bag would break. And then the pipes would, you know, clog. It was not pretty.

(SOUNDBITE OF MUSIC)

RAZ: How did you know the tea was - I mean, that, like, the tea was going to be good?

GOLDMAN: Well, that was what was so funny. You know, when I talked to Barry, he just - he's very good at making things sound simple. And sometimes, they are. Sometimes, it's a little more complicated. He's like, well, look, you take a teabag. You dunk that in water. If you multiply it times 15,000...

RAZ: No problem.

(LAUGHTER)

GOLDMAN: So theoretically, that worked. What we found is that when you - you know, especially in the beginning, too many tea leaves - you don't get the full infusion.

RAZ: Yeah.

GOLDMAN: You know, the bag breaks. Then you've really got a problem. So we just had to keep iterating. It was a very makeshift operation.

RAZ: So once you had all the bottles, I mean, how did it sell? Like, did it do well right away?

GOLDMAN: So what happened was, you know, obviously, when we went to the shelf, nobody knew what it was. And so all that first summer - this was 1998 now - all we did was give out. Like, our marketing effort was me and two interns giving out samples in Whole Foods stores. And we gave out more samples than we sold. But by the end of that summer, we were the best-selling tea in the 17 Fresh Fields-Whole Foods stores in the mid-Atlantic.

RAZ: Wow.

GOLDMAN: And so what was then happening was that the consumers were starting to ask for the tea, which was really neat. And it was so different. And so what was nice is we have low switching. You know, some brands - maybe in the cereal category - if one - you know, if Raisin Bran's on sale, someone will go buy Post or whatever. You know...

RAZ: Yeah.

GOLDMAN: ...They switch back and forth. But with Honest Tea, if it's not there, you don't go back and buy Snapple or Arizona because it's - the taste is so different.

RAZ: Yeah.

GOLDMAN: And so when we got somebody - and we were clearly not for everybody - they were very loyal.

RAZ: What was, like - what was the thing that made Honest Tea different from, like, everything else that was on the market at the time?

GOLDMAN: So two things. First of all, just much less sweet than everything else. But the other thing and the reason the name Honest Tea made sense is because what we learned is most of the bottled tea in the U.S. at the time and still today is not brewed with - you know, it's not brewed tea. It's a powder or a concentrate. It bears a relationship to the tea leaf like the fish filet bears a relationship to the fish (laughter). You know, somewhere along the way there was a fish. But our tea - we bring in the tea leaves to the plant, and we brew them there.

RAZ: I mean, so once you were in Whole Foods pretty quickly after you launched, I mean, it seems like you were set. Like, I guess the impression of the average person would be, wow, you're set. You're in Whole Foods. You're - now...

GOLDMAN: (Laughter) Now, keep in mind it's only 17 stores, so it was just - it was a start. And so - but we had, I guess, proved the concept.

RAZ: Yeah.

GOLDMAN: And so then we were able to go back out to investors and say we proved the concept. Now it's time to expand. So we got more investment money raised, and then we went to the other buyers - the buyers for the West Coast - and we went to buyers from other stores. You know, MOM's - My Organic Market - here in the mid-Atlantic was one of our earliest accounts. And they - it was working there, and they started to bring it to their other stores.

RAZ: So you're - I mean, you know, it's - I mean, you're making lots of tea. You're growing. What were the challenges at that point?

GOLDMAN: Oh, there were so many because it was still - well, first of all, cash was always a challenge. We were growing quickly, but we were spending money to do it. We had sales people. We were doing marketing.

RAZ: And then just probably getting the tea to stores, right?

GOLDMAN: Getting tea to stores. And we were still getting rejected by all these distributors, so...

RAZ: And distributors are - they're the gatekeepers...

GOLDMAN: They are.

RAZ: ...They decide where your drinks go?

GOLDMAN: Because this is - unlike, you know, a tech company...

RAZ: Yeah.

GOLDMAN: ...No matter how good our product is, we can't ship it through the mail. Beverages are a high turnover product. And so as soon as a shelf empties of beverages, something takes its place. And so you need a distributor to be there to build - keep the shelf space protected. And so what happened was we were going to all the distributors of Snapple and Arizona and...

RAZ: And they were saying?

GOLDMAN: When they returned our calls, they would just say it's not sweet enough.

RAZ: Wow.

GOLDMAN: It's too expensive. It tastes like grass. It's not what we're used to, which, of course, it wasn't. And what they - where they were not effective was they were tasting it for their own palates. They weren't thinking that's - there's a whole population out there that, you know, has a different appetite.

RAZ: Did you - I mean, when you pitched it to investors who invested in, like, these kinds of things, did - I mean, were they saying, oh, this is awesome - I can't wait to jump in? Or were they just saying - did you get a lot of no's?

GOLDMAN: We got a ton of no's. The main reason we got so many no's is this was around - now in sort of 1999, 2000 - this was during the whole dot-com boom.

RAZ: Yeah.

GOLDMAN: And we were a very old economy. And so, you know, people would much rather throw millions of dollars at, you know, something.com than put a few - maybe $10,000 or $20,000 into a beverage company.

RAZ: Like, you had investors come in and say, you know, you should follow our advice and do this. What were some of these things they told you to do?

GOLDMAN: Oh, it was everything, you know? So we - yeah, we had these fancy investors from Boston. They said, you know, well, you know, you could - you should be an energy drink because that's really growing. Or you should be a dot-com. You know, if you make the product cheaper, you can make better margins on it (laughter). I said, it sounds like you're interested in the opportunity except everything that we do (laughter). Sort of like - but we also knew to really succeed in the long term, we had to be different than all the other big companies out there. And if we - you know, to create a sweet tea, there were tons of companies already doing that.

RAZ: But when you were in those early days when people are saying this doesn't taste great...

GOLDMAN: Yeah.

RAZ: ...Or people saying, like, add more sugar, did you ever think, maybe they're right?

GOLDMAN: Well, there's no question that would have led to faster growth, but it would have diluted what we were building. This was about building something that we could always believe in, that we would - that would be meaningfully different and that, you know, to take people in a different direction you have to disrupt where they're going.

(SOUNDBITE OF MUSIC)

RAZ: Seth Goldman. In a moment when we come back, Seth explains how Honest Tea became an actual political issue in the 2008 presidential campaign. I'm Guy Raz, and you're listening to HOW I BUILT THIS from NPR.

(SOUNDBITE OF MUSIC)

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(SOUNDBITE OF MUSIC)

RAZ: It's HOW I BUILT THIS from NPR. I'm Guy Raz. So by the early 2000s, Honest Tea had become one of the highest-selling beverages at Whole Foods stores. And things were going pretty well, but then there was a hitch. At the time, the company had its own bottling plant near Pittsburgh, and something happened there that could have completely destroyed the company.

GOLDMAN: So in 2003, we had a delivery of glass that was faulty. And there were a lot of blisters in the glass. Literally, you could look at it and see little bubbles. And so we ran it on the production line. And the way the line works is that if it ever sees a defect in the bottle, it's supposed to kick it out, reject the bottle...

RAZ: Yeah.

GOLDMAN: ...But the line didn't do that. And so we ended up with some product in the marketplace that had broken glass inside the bottle. In fact, there were two different Whole Foods stores, and Whole Foods has a rule - three strikes and you're out. Fortunately, no one got hurt or injured, but we did have bottles with pieces of broken glass in them. And we knew we couldn't afford, as a business, to lose our largest customer. So we voluntarily withdrew all product from the market. Every...

RAZ: Every store?

GOLDMAN: Yes. Everywhere, not just Whole Foods, everywhere.

RAZ: Wow. How much did that cost you?

GOLDMAN: Oh, it was - well, we were doing about $3 million, $4 million in sales, and it totally stopped our sales. So we lost several months of sales, so several hundred thousand dollars. I don't know that it cost a million, but a huge, you know, just momentum stopper. Here you are trying to build. You've got your sales people out trying to sell product. Instead, now they're trying to...

RAZ: You recall it all, and you destroy it.

GOLDMAN: We destroyed it all, and it was just painful. Weren't profitable until the eighth year or so. I mean, it took a long (laughter) time. Now, we kept things really lean, so it wasn't like we were - you know, went on a spending sprees. We were sharing hotel rooms and cutting corners everywhere we could, not on the ingredients, but, you know, just trying to keep the lights on.

RAZ: So what were you - like, what were you paid as CEO?

GOLDMAN: My first year salary was that $50,000 (laughter). Literally, I took that $50,000 check. And it was even - it was tax inefficient because I invested in the company, and then I paid myself. I don't think I got over a hundred thousand in - for - probably not for the first five years. And then it, you know, it grew. But the stock obviously really grew.

(SOUNDBITE OF MUSIC)

RAZ: So during this time, were there, like, lots of other companies that were offering to buy you guys out?

GOLDMAN: Yeah. We were approached by lots of companies along the way. I mean, it was very - partially because we were growing quickly and partially because we were doing something others weren't doing. So really, from the first year, we - every year or so, we'd be approached by a major food or beverage company that wanted to buy us.

RAZ: And I read, like, one of those one of those companies was Tetley.

GOLDMAN: Tetley, yeah.

RAZ: And they - you - they kind of threatened you, right? They kind of said...

GOLDMAN: Yeah, well...

RAZ: ...If you don't sell to us, we're going to crush you.

GOLDMAN: We're going to - right - we're going to do exactly what you're doing and just do it bigger. And we were always - that was another thing I could lose sleep about - was that there was always competition.

RAZ: And you and Barry owned, like - what? - like, 90 percent of your company.

GOLDMAN: Yeah.

RAZ: Even though you had tons of investors...

GOLDMAN: Right.

RAZ: ...How were you able to do that?

GOLDMAN: Well, this was one of the key strategic elements that Barry brought to the company. And he is - he literally is a professor of game theory. And so he said, you know, the problem with so many startups is the entrepreneurs give themselves all these penny stocks in the beginning. And as a result, they start with just much more stock than everybody else, and then everybody else just kind of just comes along for the ride. He said, but what if instead you started the founders at the same place as the other investors, and only when the company grows in value do the founders get more equity? And that's - was a reverse structure.

And what that did was it helped - as we grew and we raised more money, we didn't get diluted. And the other thing was we relied on angel investors. So a lot of entrepreneurs in the venture capital mold is, basically, they're incentivized to own more of the company. They're incentivized to exit quickly. And we didn't take that kind of money, and I'm very glad we didn't. Yeah, I think that was a key piece that let us keep control.

RAZ: When did you start to realize that, you know, like, Honest Tea was becoming part of, like, the cultural zeitgeist?

GOLDMAN: (Laughter) We had some funny moments. There was a moment in 2008. President Obama had become an Honest Tea drinker - I guess in the campaign for 2008. And the McCain campaign had criticized him for being, you know, out of touch with the American people.

RAZ: Yeah, so what was his favorite one? It was like...

GOLDMAN: He - the Black Forest Berry.

RAZ: Black Forest Berry, right.

GOLDMAN: And McCain's campaign manager criticized Obama for, you know, drinking a organic, you know, beverage (laughter).

RAZ: But, like, he kept - Obama kept, like, a stock of it in his, like - with him all the time.

GOLDMAN: That's - yeah, I'm told he still - in fact, I had an encounter with him a few years ago. And he brought over his - the body man - the person who escorts him...

RAZ: Yeah.

GOLDMAN: Says, body man, tell him what I drink. And, you know, what do I always have to have with me?

RAZ: Wow. So at what point were you able to kind of just feel like, OK, this is going to work?

GOLDMAN: Well, I would say - so when Coca-Cola became an investor in 2008, that was a surreal experience because...

RAZ: They approached you?

GOLDMAN: They approached us. Well, they approached us in 2007, and they had just created this group Venturing and Emerging Brands. And their goal was to invest in and build the next billion-dollar brand for Coca-Cola. And so, you know, going to the headquarters in Atlanta, sitting down with the president of Coke North America and then the chairman. And, you know, I'm sort of - part of me was, like, looking down, like, I'm really here. We're really having this conversation. So that was the first moment, like this is actually going to work. This is going to be around.

RAZ: Coke bought about 30 percent of the...

GOLDMAN: Forty percent.

RAZ: Forty percent of the company.

GOLDMAN: Right.

RAZ: And they bought an option to buy a majority, which, eventually, they did.

GOLDMAN: Right.

RAZ: They bought the company out fully in 2011. But, like, this was your company. I mean, did you feel like you were giving away control?

GOLDMAN: Well, you know the story. So often when a brand is sold, the entrepreneur gets really frustrated...

RAZ: Yeah.

GOLDMAN: ...And they butt heads and the entrepreneur...

RAZ: They leave.

GOLDMAN: ...Really only lasts a few months.

RAZ: Yeah.

GOLDMAN: The friend of - a friend of mine who was - ran Vitamin Water said, he said, you know how - and he left shortly after Coca-Cola bought it. He said, you know, the first few weeks they want to know your opinion, and the next few weeks they want to know your phone number. So after that, they don't want to know you (laughter). You know, you're irrelevant.

RAZ: So why didn't that happen to you?

GOLDMAN: Because - and I give Coke a lot of credit. They understood this is a brand that is different than what they sell in market. They couldn't connect with the organic consumer or the natural foods marketplace. And so they gave us this incredible latitude and autonomy. And there were moments where we ran up against them around regulatory language or just marketing approaches, and they respected what we did. So what's so - continues to surprise me is this brand is still my brand. And the biggest part was the distribution. We were in 15,000 stores when Coke invested. Now we're in over a hundred thousand stores, so that's where the difference is.

(SOUNDBITE OF MUSIC)

RAZ: I hope my numbers are right that early investors - people who put in $50,000 in the company at the beginning - made a return of $1.25 million 10 years later. Is that right?

GOLDMAN: That's right, yeah, 26 times their early investment.

RAZ: How many - do you know how many millionaires were created by Honest Tea?

GOLDMAN: That's - I don't know. Well, to me, what was so exciting was some of our employees were made millionaires, as well. And that to me, was, you know, that was all sweat equity that they earned. So that was especially meaningful.

RAZ: This is a question I've asked everybody who's been on the show. How much of what happened with you and Barry and Honest Tea was because you guys are just really good at what you do, and how much of it was just luck?

GOLDMAN: I really don't believe in luck. I believe that the reason we're still here is the perseverance. And to the extent there's luck, you know, it's the timing, the way the consumer has evolved. But, you know, I've heard someone say, oh, you know, you were in the right place at the right time. I say, well, you know, I've been in the (laughter) - it took 10 years to get to that right place, so this was not a - this wasn't, you know, something that just happened overnight. A friend of mine likened it to water. You know, eventually, water finds its way to, you know, it comes - going downhill, and it gets to where it needs to go. And I think we've finally got to a place where we could connect with consumers and do it in a way that was still meaningful.

RAZ: So I'm curious, Seth - as you kind of, like, look back on all this, is there like one trait that, like, one really important trait that you either developed or just had or have that you think all entrepreneurs need to have?

GOLDMAN: Well, you have to be resilient. And this is something that's so important, and I - to put this on a bigger picture just for our - for, like, our economy, we - people have to be resilient. So one of my - one of the best ways I developed resilience growing up was I wrestled in high school. I was the worst wrestler on the team. My first year I was 1-10, and that was only because somebody didn't show up, and I got the forfeit. So I had learned how to fight off my back, you know, and experience rejection. And it's so important to be able to bounce back from something, like, not just - I mean, all the time. But in life and especially when you believe in it, it makes it that much easier.

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RAZ: That Seth Goldman, founder of Honest Tea. By the way, the company has now sold more than a billion bottles of its beverage. It's now completely owned by Coca-Cola, with annual sales of more than $170 million. Seth is no longer formally involved. And though it made him a rich man, his life hasn't actually changed all that much. Seth still lives in the same house in suburban Maryland where he made that first batch of Honest Tea.

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RAZ: And please do stick around because in just a moment, we're going to hear from you about the things you're building. But first, a quick thanks to one of our sponsors, American Express. No matter what you do in business, from building a better mouse trap to building a better app, it's easier when you don't do it alone. The powerful backing of American Express - don't do business without it.

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RAZ: Hey, thanks so much for sticking around because it's time now for How You Built That. And today, we're going to update a story we ran about a year ago. This one started when Jaya Iyer was raising her 3-year-old daughter in Oakton, Va.

JAYA IYER: My daughter told me that she wants to grow up to be an astronaut, and so that's when I started looking around for clothes with astronaut or space theme, and I realized that there were really none for girls.

RAZ: And sure, Jaya could've bought an astronaut shirt or pajamas in the boys' department, but her daughter's favorite color was pink.

IYER: I actually looked every place, and there was nothing at all.

RAZ: Not a single pink astronaut shirt. But as it turned out, Jaya was just the right person to tackle this problem. She actually has a Ph.D. in clothing merchandising.

IYER: So I actually got in touch with some freelance designers, and I created a few designs. Like, I made a monster truck which was on a T-shirt that didn't say anything boy about it. I made a pink T-shirt with a race car on it. I made a girl firefighter on one.

RAZ: And, of course, Jaya also sketched out that pink T-shirt with an astronaut on it. She put her drawings online, she launched a Kickstarter campaign, and she raised 30,000 bucks.

IYER: And I was lucky that I had the support of my husband, who was always telling me, you know, if you really believe in it, go and do it.

RAZ: So with the Kickstarter money, Jaya have found a factory in India willing to make the shirts. She then expanded her line - shirts with computer code, test tubes and a solar system that glows in the dark, all for kids. But there was a problem.

IYER: We actually had a lot of parents reaching out to us, saying, hey, we don't have anything like this for the moms of these kids.

RAZ: Lots of moms who work in the science were asking about clothes for grown-ups, so Jaya started designing dresses with things like the periodic table, the double helix, the solar system, equations.

IYER: Many schoolteachers, college professors actually are our customers. You know, it makes them feel great about teaching math and saying that, hey, you know, I'm wearing a math dress because I love math. And they say, we feel like Ms. Frizzle (laughter).

RAZ: Since we first spoke with Jaya last year, her revenue has grown to about $1.5 million, and she now sells items for men, like cuff links, ties and socks. Jaya calls her company Svaha, which is the name of her daughter, who, by the way, is now 6 years old and no longer wants to be an astronaut - instead, maybe a singer or robot designer. And if you want to find out more about Svaha or hear previous episodes, you can go to howibuiltthis.npr.org. Also, if you want to tell us your story, please go to build.npr.org. We love hearing from you about the things you're building.

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RAZ: Hey, thanks for listening to the show this week. Please also consider subscribing to our show on iTunes. And do us a favor. Write us review while you're there. You can also write to us at hibt@npr.org. And if you want to send a tweet, it's @HowIBuiltThis. Our show was produced this week by Ramtin Arablouei, who also composed the music. Thanks, also, to Neva Grant, Sanaz Meshkinpour, Nour Coudsi and Jeff Rogers. Our intern is J.C. Howard. I'm Guy Raz, and you've been listening to HOW I BUILT THIS from NPR.

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