1. HONEST TEA

2. 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

3. 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

4. The Honest Tea Growth Video National Entrepreneurship Network

5. 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

6. Honest Tea: Revenue Growth Pre Venture TIME GrowthEarly StageMaturityRaw Startup REVENUE/ PROFITABILITY National Entrepreneurship Network

7. 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 National Entrepreneurship Network

8. 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 National Entrepreneurship Network

9. 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 National Entrepreneurship Network

10. 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 National Entrepreneurship Network

11. 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 National Entrepreneurship Network

12. Typical Life cycle of a Successful Venture Pre Venture TIME Turnaround (Cash-flow) Break Even (Investment) Positive Cash flow GrowthEarly StageMaturityRaw Startup REVENUE/ PROFITABILITY National Entrepreneurship Network

13. Honest Tea Revenue vs. Life Cycle of Venture Pre Venture TIME Turnaround (Cash-flow) Break Even Positive Cash flow GrowthEarly StageMaturityRaw Startup REVENUE/ PROFITABILITY National Entrepreneurship Network

14. 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”. National Entrepreneurship Network