Sunday, May 4, 2008

Don Grossman, I feel your pain. I grapple with some level of discomfort regarding compensation and the degree to which I truly want to better the world. As an entrepreneur or a CEO we [will, or do] expose ourselves to being judged by two disparate and excruciating audiences.

I have to commend Seth Goldman for allowing himself to be raked over the coals with respect to the $43 MM deal with Coca-Cola (NYSE: KO). There is an excellent article in the latest Inc. Magazine (http://www.inc.com/magazine/20080501/did-seth-go-to-the-dark-side.html). For those too lazy to read the article, just note the name of the article, "Did Seth Go to the Dark Side?" Jeffrey Hollender adds, "[t]he club of people who haven't sold their business is getting smaller... What I worry about is bolting on a green, natural, responsible business to a larger company that is fraught with problems... the best you can hope for is that the larger company doesn't screw the smaller one up." It was suggested that Coke might substitute organic ingredients with cheaper ingredients in an offer to reduce costs of Honest Tea.

Goldman further opens himself up to criticism in an Inc.com blog (http://blog.inc.com/the-mission-driven-business/). He responds to many of the respondents (mostly unhappy with the buyout) with patience mostly, but at times he just points to arguments he made elsewhere. Renee, on March 31st wrote: "Coke is Coke is Coke, but Honest Tea wasn't. Now it is. " While I've heard more eloquent arguments before; hers is quite pungent.

Overall, I am pleased with this dialogue. The big buyouts are another capitalistic incentive for us to champion a mission driven enterprise. Goldman is a young guy. He's not going to take his big piece of the pie and retire. He is pushing the envelope by moderating the Inc.com blog and he'll probably move on to start another mission driven enterprise. That's the story of the entrepreneur. Rarely do entrepreneurs make great managers once a company reaches a plateau. Coca-Cola's bottling and distribution network achieve far better economies of scale. Maybe it's easier for Coca-Cola to adopt some measure of corporate responsibility as the result of an acquisition. Could this be seen as a disruptive innovation from the inside-out? Like a green trojan horse? These answers remain to be seen.

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