honest tea. epilogue 2008 honest tea sold a minority stake of 40% for $43 million to coke honest tea...
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Epilogue 2011 Coca Cola Co. bought the rest of Honest Tea Inc. for an undisclosed amount Coke to preserve Honest Tea's ‘entrepreneurial culture’ as standalone business under Chief Executive Seth Goldman Honest Tea to remain based in Bethesda, while using Coke's manufacturing and distribution network The deal gives Coke a greater presence in ice teas National Entrepreneurship NetworkTRANSCRIPT
HONEST TEA
National Entrepreneurship Network
Epilogue 2008• Honest Tea sold a minority stake of 40% for $43 million
to Coke• Honest Tea products soon got much wider distribution,
across the country• Under this deal with Coke, Honest Tea retained control
over its products and contents• Coke started vetting Honest Tea’s ingredients to comply
with federal requirements• Honest Tea had sales of $72 million in 2010
(3 X more than what it was before)
National Entrepreneurship Network
Epilogue 2011
• Coca Cola Co. bought the rest of Honest Tea Inc. for an undisclosed amount
• Coke to preserve Honest Tea's ‘entrepreneurial culture’ as standalone business under Chief Executive Seth Goldman
• Honest Tea to remain based in Bethesda, while using Coke's manufacturing and distribution network
• The deal gives Coke a greater presence in ice teas
National Entrepreneurship Network
The Honest Tea Growth Video
National Entrepreneurship Network
What are the other decision points for Goldman in this case?
• Did you notice any pattern of growth in start-ups in a garage (kitchen!) scaling to corporate entrepreneurship?
• Do you think Goldman’s decision points would be different at each stage?
National Entrepreneurship Network
Honest Tea: Revenue Growth
Pre Venture
TIME
GrowthEarly Stage MaturityRaw Startup
REVENUE/
PROFITABILITY
1996 1998 2000 2002 2004 2006 2008
National Entrepreneurship Network
Raw Start-up
• Getting First Customers• Product development – experimenting and rapid
prototyping of Product/Service • Raising Money• Setting milestones• Make assumptions• Test business hypothesis• Registering business as a legal entity
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Early stage Start-up• Iterating Business Model (e.g. Sales vs. Cost of delivery
of product / service)• Identify target market segment / customer base• Refine / finalize product / service• Increase sales and customers • Achieve Cash-flow positive state sustainability• Institutionalize tracking cash–flow closely
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Early Growth• Increase Sales!• Formulate Business Strategy– Expanding Product/Service Line – Expanding Customer Base – Expanding Team
• Develop and manage human capital • Stabilize Cash flow Cycle• Aggregate business activities into business processes • Brand building• Establish competitive advantage
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Growth & Expansion
• Gain a larger market share • Find new sources of revenue to increase/sustain
profitability• Raise additional capital to support exponential growth• Leverage and Maintain competitive advantage
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Maturity
• Stability • Governance Framework for organization• Aggregate business processes into well identified
business functions – e.g. Marketing, HR, Finance • Institutionalize accountability• Systematic operations• Harvesting – Exit / merger / acquisition
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Typical Life cycle of a Successful Venture
Pre Venture
TIME
Turnaround (Cash-flow)
Break Even (Investment)
Positive Cash flow
GrowthEarly Stage MaturityRaw Startup
REVENUE/
PROFITABILITY
National Entrepreneurship Network
Honest Tea Revenue vs. Life Cycle of Venture
Pre Venture
TIME
Turnaround (Cash-flow)
Break Even
Positive Cash flow
GrowthEarly Stage MaturityRaw Startup
REVENUE/
PROFITABILITY
1996 1998 2000 2002 2004 2006 2008
National Entrepreneurship Network
All materials used in this session are available in the NEN CD,
Kick-Starting the Entrepreneurial Campus under Inside the
Classroom – section “Entrepreneurship
Concepts”, Sub-section “The Venture Life
Cycle”.