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P.H.: Do you ever consider the company from a kind of Robin Hood perspective, of taking from the rich and donating to the poor?
Thum: I've never thought of the brand like that. I think of Ethos in a very positive way, and I think of what it's meant to do. It is a very tricky branding problem- how do you take what is ultimately a very serious global problem and make people feel positive and empowered through the purchase of what is a consumer good? I think that the brand threads that needle very well. We spend a lot of time figuring out how to explain that to people. I think the reason that we're able to do that is that the brand is honest about how it goes about doing it. The motivation that we had when we founded the company and that Ethos as a brand came out of is really, truly to try and create something that would simultaneously enfranchise people in the solution of the problem and also make them aware.
P.H.: Did you ever consider starting Ethos as non-profit corporation? What advantages and disadvantages do you have over non-profit corporations?
Thum: Yes. Absolutely. We looked at setting up Ethos as a non-profit corporation and looked at a non-profit owning the business. For a whole host of reasons that are quite complicated that very rarely works. The corporate co-venturing laws in the United States that regulate how you run businesses owned by nonprofits are quite complicated. Also, starting a consumer brand requires a significant amount of capital. For Paul Newman to do what he did was very different to the extent that Paul Newman put his face and name on a product and it started selling. We had to actually go out and create a brand. If you look at the cost of creating a brand, usually companies spend somewhere between 10 and 20 million dollars for a consumer packaged goods brand. Those are the kind of economics that really require a for-profit model unless you began with something like Paul Newman had.
P.H.: Did you intend to donate all of your profits initially? Is the amount of money that Ethos and Starbucks donate for each bottle the most that is economically feasible?
Thum: There are three things that go into the consideration of how you make decisions about that as a corporation. One of them is that when a company acquires a business or a brand, or creates a business or a brand, it thinks about it from the perspective of the investment, the stream of cash flows that come into the business thereafter. And then it ultimately compares that to the current rates of return to shareholders. So if you think about Starbucks and Pepsi, who is a new partner through a joint venture, these companies have a fiduciary responsibility to their investors to make economically sound decisions. And so Ethos water, I would say, is as close to the margin, based on those economic decision factors, that we could get. We give 2.6 times the number of pennies per bottle as a part of Starbucks that we would have given as a start-up.