Nalebuff is on a roll now. “Barry isn’t always the best person to handle sales,” Goldman says, laughing. “I remember a conversation he had with Yale’s catering services that ended in a lot of phones being slammed.” Still, Honest Tea will ring up about $10 million in sales in 2006. Recent deals with Sam’s Club and Costco and with a handful of large distributors suggest that Honest Tea is poised for growth.
“Economic theory often predicts that the firm with the lowest price or best product will capture the market, but inertia is a powerful force to overcome,” Nalebuff says. “Unless you are vastly better than everything else out there, as a small company, you can never get past the mistakes you make and get noticed enough for people to care about what you’ve done.”
Back at the Honest Tea booth, Nalebuff is simultaneously serving tea, chatting with the husband of a former student, and guzzling Brazilian coconut juice. “This is a fantastic product,” he says, turning the bottle to find the name of the distributor. Nalebuff glances off to the side, and you can see that the wheels are turning. Who are the likely partners? Will the overall market grow? How would it be divided? How would manufacturing happen? Would customers even like it? “I wonder how we could combine it with our tea,” Nalebuff finally says. “Why not?” Why not, indeed.
As with so much in Barry Nalebuff’s world, the question here is, What is the game? And how can you think about it a little bit differently — to give yourself the edge to win?
Reprint No. 07108
Michael V. Copeland (firstname.lastname@example.org) is a senior writer at Business 2.0 in San Francisco. He received a 2006 Business Journalist of the Year award from the World Leadership Forum.