Yale School of Management

Program on Social Enterprise

Harnessing business skills and markets to achieve social objectives.

Honest Tea Cofounders Launch Seth & Barry Social Enterprise Fund

The two cofounders of Honest Tea—Seth Goldman '95, the company’s president and TeaEO, and Barry Nalebuff, the Milton Steinbach Professor of Management at Yale SOM and former chairman of the board of Honest Tea—have announced the creation of the Seth and Barry Social Enterprise Fund, a program aimed at fostering leaders determined to have an impact on society as well as business.

Yale SOM Dean Edward A. Snyder introduced Goldman and Nalebuff at an event on October 6, extolling the commitment they made at the company’s founding nearly 15 years ago to give back to Yale SOM. “Honest Tea shows that an enterprise can be successful and advance broader objectives,” he said.

The Seth and Barry Social Enterprise Fund will allow students to attend conferences, bring lecturers to campus, and provide funding for research and case studies. Goldman and Nalebuff are providing $500,000 to fund the program.

At the event, Goldman and Nalebuff talked about Honest Tea’s journey from classroom idea to $150 million in annual retail sales. From the beginning, the two wanted their new company to do more than just sell tea made from quality ingredients. Social responsibility was written into the prospectus the two sent around to investors when they launched the company in 1998 (“It’s brewed into the company,” Nalebuff said). The company gave roughly $700,000 to various philanthropic causes last year, but Goldman and Nalebuff also see the company itself as a force for good. Goldman explained how Honest Tea can have a positive impact through the way it purchases ingredients and how it treats its employees. “This is where the money is,” he said. Added Nalebuff: “The more we can sell, the more we can advance our mission.”

Goldman talked about how crucial his time at Yale SOM was to his success as an entrepreneur. He spoke of a case study his first year about a company with a social mission that failed because it was poorly managed. His second year, he won a university-wide business plan competition, a contest that allowed him to work closely with Nalebuff. “It forced me to synthesize all that I learned,” he said.

Both Goldman and Nalebuff stressed how difficult the journey has been for Honest Tea. It took nearly a decade before the two felt the company was secure. Since 2008, the number of Honest Tea accounts has grown from 15,000 to 85,000 nationwide. During the same period, Coca-Cola first bought a minority share of the company, and then earlier this year, exercised an option to purchase the rest. Goldman remains in his position, as Honest Tea continues to operate as an independent operating unit. He said the terms of the deal will allow the company to continue operate in a mission-driven manner. “We’re still in control,” he said. “We closed in March with Coke, and in April we converted all our tea to Fair Trade certified.”