business: bottled tea manufacturer and marketer
founders: Seth Goldman, 33; Barry Nalebuff, 40
year started: February 1998
location: Bethesda, Maryland
1997 revenues: N/A
1998 revenues: $500,000
start-up costs: $600,000
sources: the majority from Nalebuff's business contacts; the rest from Goldman's friends and family
Seth Goldman was a thirsty guy who really loved tea. Barry Nalebuff was a Yale professor and marketing expert who really loved tea. Several years after kicking around the idea that genuine, made-from-real-leaves stuff didn't exist in the market, Goldman quit a high-paying job at a mutual fund company in Bethesda, Maryland, so he could bring it there himself.
Nalebuff, ready to bet on the idea, put up the first $200,000 of seed money. He used his contacts in the business world to find additional dollars. Goldman, meanwhile, made batches of his dream brew in his kitchen and gave tastes to supermarket buyers. He also showed them his distinctive labels that featured original artwork representing each flavor--such as a mosaic pattern for Moroccan Mint. "I told them `This is what I've got and I'd like to have it on the shelves in a month and a half,' " he says.
Remarkably, he did. Before long, the two had sold 100,000 bottles in stores nationwide. Their strategy? Honest Tea offers five flavors that sell for 20 to 40 cents more than Snapple and others.
After their booming start, the partners are now quenching their thirsts with cash.