Don Vultaggio: AriZona Beverage Company - The Snap Decision That Outsmarted Snapple

Summary

Episode Summary: How I Built This with Guy Raz

Guest: Don Vultaggio, co-founder of AriZona Beverage Company
Episode Title: The Snap Decision That Outsmarted Snapple
Original Air Date: September 1, 2025

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Overview

In this engaging episode, Guy Raz sits down with Don Vultaggio, the towering, straight-talking co-founder of AriZona Beverage Company, to dig into the improbable story of how two Brooklyn beer distributors built one of America’s most iconic beverage brands. Vultaggio recounts a journey defined by intuition, grit, creative packaging—and a wild willingness to zig where others zagged. The episode explores AriZona’s origins, its David vs. Goliath race against Snapple, the infamous “Arnold Palmer” can, and the fierce legal battle that eventually made Vultaggio sole owner. Along the way, we hear frank reflections on risk, loyalty, and the price of partnership.

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Key Discussion Points and Insights

1. Early Life and Founding Influences

• Growing Up Tall in Brooklyn (06:21)

  • Vultaggio comes from a working-class Italian-American family. At 6'8", he always stood out, and his mother advised him:

    “You’re tall, don’t do bad things because people are going to recognize you.” (06:22, Don Vultaggio)

  • He refrained from drinking and drugs, reasoning:

    “If I’m incapacitated, I’ll be too hard to handle, so I better not do any of that stuff.” (06:34, Don Vultaggio)

• Retail Roots (07:03)

  • Family life focused on practical retail questions, not sports.

2. From Beer Distribution to Brand Building

• United Distributors and Beer Wars (11:13, 12:19)

  • Don and co-founder John Ferolito started distributing beer in Brooklyn in the '70s, often facing intense competition and intimidation:

    “We were threatened a lot. We were threatened by the Teamsters ... and at one point, held in a closet at gunpoint in your office.” (12:19, Don Vultaggio/ Guy Raz)

  • The company’s dealings in cash made them targets for robberies:

    “I was in our office and I was held up ... I kind of cooled the situation down by kind of talking to these bad guys in a very fatherly way.” (13:23, Don Vultaggio)

• Early Products, Controversy, and Lessons (17:16, 18:34)

  • Their first drinks—Midnight Dragon and Crazy Horse malt liquors—were edgy and often controversial, provoking outcries over marketing and branding, but these products provided vital cash for future ventures.
  • On controversy:

    “I guess a Brooklyn style ... we said, we gotta be a little outrageous ... to get some attention on a shelf.” (18:52, Don Vultaggio)

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3. The Birth of AriZona (23:16, 29:14)

• The Snap Decision (23:16)

  • Vultaggio’s “lightbulb” moment: witnessing Snapple outsell beer in a NY store in the winter:

    “I made the decision right there. I said, I’m going in the tea business. Right then. Right then.” (23:39, Don Vultaggio)

• From Doubt to Disruption (28:11–29:14)

  • Initially discouraged by Snapple's dominance and potential for “just another me-too product.”
  • Breakthrough came upon seeing Gatorade in a 24-ounce can in a 7-Eleven:

    “I said now I got the package. This will be 50% larger than a 16 ounce Snapple bottle.” (29:14, Don Vultaggio)

• Formulating the Product (31:31)

  • “Flavor house” connection through a high school acquaintance; hands-on development for taste, using real tea and real ingredients, rejecting the industry shortcut of flavors alone:

    “Let’s make a great tasting tea. ... Put it in a great looking can and put it on the shelf next to Snapple at the same price.” (33:15–33:57, Don Vultaggio)

  • Flavors: Lemon and raspberry were chosen to match consumer tastes.

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4. Name, Branding, and Packaging Revolution (34:25–36:18)

• From Santa Fe to AriZona
  • The original name was “Santa Fe,” inspired by Don’s vibrantly decorated, Southwestern-style house in Queens.
  • The name changed after feedback that “Santa Fe sounds like a train”; they consulted a map and landed on Arizona for its dry, warm associations.
  • The branding—bright turquoise, pink, and yellow—stood out from the “drab” drink cases.

    “Nobody was doing turquoise or pink.” (36:21, Don Vultaggio)

  • Don’s wife contributed the now iconic big “Z” in the middle of “AriZona.”

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5. Early Sales and Distribution Strategy (37:24–40:08)

• Rapid Launch and Guerrilla Placement

  • First batch: 20,000 cases (37:33)
  • Used pre-existing relationships with retailers to place product:

    “The first weekend ... I had my sales manager ... I said, go out with a van and get me different types of stores ... He placed a case of each ... and nine out of the 10 stores sold 48 pieces, which is two cases.” (37:47–38:29, Don Vultaggio)

  • No national ad campaign; relied almost exclusively on eye-catching design and word-of-mouth.

• Competitive Advantage

  • Tall-boy can (24 oz) gave value for money and visual pop.
  • Sold at the same price as a smaller Snapple, appealing to cost-sensitive consumers.

6. National Takeoff and Outsmarting Snapple (41:28–42:44)

• Strong Early Growth

  • Year 1: 700,000–800,000 cases; next year: $100M in sales.
  • By year three: doubled again; $400M sales.
  • Quickly surpassed Snapple.

• On Big Companies Ruining Small Brands

  • Explains why Snapple’s sale to Quaker—and similar big acquisitions—often end badly:

    “Most entrepreneurial companies that are bought or consumed by larger companies usually don’t fare very well ... unintentionally, they destroy them.” (42:44, Don Vultaggio)

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7. The Arnold Palmer & Product Innovation (43:07–46:00)

• Origin of the Arnold Palmer Half & Half
  • Inspired by a failed attempt at a dairy-half-gallon Arnold Palmer drink.
  • Brought to life by AriZona’s design and flavor overhaul. Notably, the first artwork looked like then-president George Bush, leading to some comical confusion:

    “I got an order today for four green tea and two George Bushes. George Bush was president at the time and it looked like George Bush. Not intentional, but that’s what it is.” (43:47, Don Vultaggio)

  • Became AriZona’s second-best selling flavor.

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8. The 10-Year Legal Battle (46:57–55:36)

• Partnership with John Ferolito Unravels

  • As business boomed, John became less involved, focusing on other interests:

    “When AriZona started and it became very successful, he became more remote and more away from the business.” (46:57, Don Vultaggio)

• Dispute Over Sale (49:01–54:09)

  • John wanted to sell the company for billions; Don refused:

    “I have two sons in the business and I have four grandchildren. ... I think the worst thing in life is that be wealthy and not have anything to do.” (49:25, Don Vultaggio)

  • Legal battle over valuation lasted a decade; others were drawn in, including a former CFO.
  • Massive legal costs, emotional toll, and stunted company growth:

    “During that time, I said I was 70, 80% lawyer, 20% marketer.” (51:47, Don Vultaggio)

• Eventual Resolution

  • Settled in 2015, with Don buying John out for a reported approximately $1 billion (actual terms confidential).
  • Despite pain, Don expresses no resentment:

    “I don't have any harsh words for John. ... There’s more important things in life. There really are.” (55:22, Don Vultaggio)

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9. Operations, Culture, and Legacy (55:50–62:43)

• Cost Controls and Commitment to 99-Cent Can

  • No company debt; innovations in packaging and logistics to keep costs and prices low.

    “Our cost of making a can today is less than it cost us 33 years ago to make the same can.” (55:50, Don Vultaggio)

  • Commitment to value and quality:

    “You gotta give a consumer a fair deal ... quality of the beverage is...the most important ... The first reason they buy it is the can. And then from that point on, it’s about, it tastes good and it’s priced fair.” (58:05, Don Vultaggio)

• Succession & Independence

  • Rejects all acquisition offers; wants the company to remain family-owned:

    “I’m not for sale...It means I’m going to be unemployed and my kids are going to be unemployed. I don’t like that.” (60:03, Don Vultaggio)

  • Sees AriZona as a multigenerational business for his family.

• Hard Work and Luck

  • Don attributes success to both, emphasizing consistency and gratitude for health, family, and loyal customers.

    “Luck is an important thing in life right? ... I’ve been consistent in my life. So I’m a very, very lucky guy.” (61:26, Don Vultaggio)

• Never Retiring

  • Still deeply involved in the business—recently spent a day moving product by forklift at the factory:

    “I got there at 10:00 in the morning and got off the machine at 8:00 at night. ... It was one of the more interesting, exciting days of my life.” (62:06–62:37, Don Vultaggio)

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Notable Quotes & Memorable Moments

• “We were 20 years of nights. Because the first 20 years of our business prior to AriZona was a struggle. ... But it was always—we’re always on the edge.” (15:29, Don Vultaggio)

• On marketing:

  “We didn’t buy things that were like hula hoops. ... It was just about price.” (15:42–15:55, Don Vultaggio)

• On keeping the core value:

  “You gotta give a consumer a fair deal and then you can expect them to come back. If you don’t, they’re gonna go someplace else—there’s too many choices in America.” (58:05, Don Vultaggio)

• On partnership and conflict:

  “We didn’t fight. We had nothing. We’re not going to fight now.” (48:02, Don Vultaggio)

• On never selling:

  “I hope that’s a reality. I hope that’s something that this company becomes multigenerational and run by my grandchildren at some point.” (61:11, Don Vultaggio)

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Timestamps for Crucial Segments

• 06:21 — Don’s childhood and lessons from his family
• 12:19 — Dangers, tensions, and cash-carrying hazards in beer distribution
• 17:16 — Launching controversial malt liquors (Midnight Dragon, Crazy Horse)
• 23:16 — The Snapple epiphany: deciding to enter the iced tea market
• 29:14 — Spotting the Gatorade can and inventing AriZona's packaging advantage
• 34:25 — Naming and branding: from “Santa Fe” to “AriZona”
• 38:29 — Guerrilla sales tactics and store-level success in NYC
• 41:28 — Going national, surpassing Snapple
• 43:07 — The Arnold Palmer: innovation and a funny “George Bush” mishap
• 46:57 — The slow dissolution of a partnership
• 51:47 — “70% lawyer, 20% marketer”: Legal battle fallout
• 55:50 — Life after the lawsuit, factory innovation, staying independent
• 58:05 — The secret to longevity: fair pricing and relentless quality
• 61:26 — “Luck is an important thing in life”
• 62:06 — Still working the warehouse, staying hands-on

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Final Thoughts

Don Vultaggio’s story is a testament to determined entrepreneurship, the power of standing out, and a willingness to do things differently. He built AriZona not just through clever product innovation and bold design, but by relentlessly protecting his vision—even when it meant enduring years of legal turbulence. Throughout, he remains wry, reflective, and steadfastly loyal to the roots—and the people—that brought him success.

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For listeners who want a masterclass in branding, perseverance, and family business, this episode is not to be missed.

Transcript

[Guy Raz]

Wondery subscribers can listen to How I built this early and ad free right now. Join Wondery plus in the Wondery app or on Apple Podcasts. I recently stayed in an amazing Airbnb apartment on a trip abroad and the apartment I stayed at was beautiful and just so centrally located. It was amazing. I would go there again and again. Have you ever been lying in bed at an Airbnb, maybe scrolling through your phone when you realize, wait a minute, could I do this too? Hosts Asking that question has allowed me to feel at home in beautiful places around the world. Your home is probably worth more than you think. Find out how [e-mail] host if you've started your own business, you know just how many challenges there are, big and small. I mean, look at how I built this building. This show came with a lot of trials, late nights, very, very early mornings. But even though there were challenges getting started, there is something that makes setting up a business easier. Getting connected with AT&T business it doesn't matter what your business is dealing with, AT&T business helps to make it much, much easier. And that's the point of a provider in the first place. Making building your dream easier. Wake up to the power of att [e-mail] that's Business ATT listening on Audible helps your imagination soar. Whether you listen to stories, motivation, expert advice, any genre you love, you can be inspired to imagine new worlds, new possibilities, new ways of thinking. Audible has an incredible selection with over 1 million audiobooks, podcasts and Audible originals all in one easy app. Find the genres you love and discover new ones. Explore bestsellers and new releases, plus thousands of included audiobooks, podcasts and originals that members can listen to all they want, with more added all the time. Enjoy Audible anytime While you're doing other things, household chores, exercising while you're on the road, or commuting, you name it. Audible makes it easy to be inspired and entertained as part of your everyday routine without needing to set aside extra time. There's more to imagine when you listen. Sign up for a free 30 day audible trial and your first audiobook is free. Visit Audible. I want to ask you about a product that turned out to be a huge winner, which was Half and Half the Arnold Palmer. You guys partnered with this company or with him to bring it to basically make a can. An Arnold Palmer can.

[Don Voltaggio]

Yeah, I came up with this look with Arnold on the front and we introduced it and I went to a sales meeting a couple of weeks in and one of the sales ladies Said to me, I got an order today for four green tea and two George Bush's. George Bush was president at the time and it looked like George Bush. Not intentional, but that's what it is.

[Guy Raz]

She thought it was George Bush, not Arnold Palmer.

[Don Voltaggio]

I said, they ignored the umbrella. They ignored all that golf references and Arnold Palmer on the front. Yeah, but I said, who cares if they called it George Bush? That's fine, but me too.

[Guy Raz]

Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how a beer salesman made a split second decision to get into the ice tea business and beat Snapple at its own game. In the early 90s, bottled iced tea was dominated by three Nest, Lipton and Stapple. But around 1992, there was a new brand that started to pop up in convenience stores. It looked like it came from a crafts fair in New Mexico. The can was turquoise and pink. It had a huge logo printed across the front. And the can was giant, 24 ounces, as big as a tall boy beer. You'd see the word Arizona and you'd imagine a scorching hot summer day and a beverage that people in Arizona presumably would drink to quench their thirst. Except Arizona iced tea had nothing to do with the actual place. Arizona. It was launched by two guys in Brooklyn, Don Voltaggio and John Farolito. At the time, they weren't even tea makers. They were running a beer distribution business. But Don had noticed Snapple flying off the shelves and he thought, this is an opportunity. It wasn't Don and John's first shot in beverages. They'd already launched a seltzer brand that fizzled and two malt liquors, Crazy Horse and Midnight Dragon, that stirred up more controversy than success. But iced tea, that would become their empire. Don and John understood something simple but powerful. Packaging can change everything. Arizona took off almost instantly, outpacing Snapple, rivaling the big beverage corporations. And today, it's one of the best selling iced teas in America with billions in annual revenue. But the real story, how Don Voltaggio came to own it all, how he ended up buying out his partner, and how that deal, ugly, drawn out, almost impossible, dragged on for a decade, which we'll get to later on because it's a fascinating story. But for now, let's start at the beginning. Don Baltaggio grew up in Brooklyn in the 1950s and 60s in a working class Italian American family. And Don stood out in no small part because of his size, he's 6 foot 8 inches.

[Don Voltaggio]

When I was a kid and my mother told me, you're tall, don't do bad things because people are going to recognize you. You're going to stand out in the crowd. You're going to be picked out for bad deeds. I also came to the conclusion back then. I said, I'm never gonna drink or smoke marijuana or any of that. Cause I'm too big. If I'm incapacitated, I'll be too hard to handle, so I better not do any of that stuff. And I think it kind of governed my life. Being tall and being different than most. And, you know, I used to be challenged because people thought I was really older than I was.

[Guy Raz]

Did you play basketball?

[Don Voltaggio]

No.

[Guy Raz]

Were you a good athlete at all?

[Don Voltaggio]

I wasn't very athletic. And we didn't talk about sports at the table. We talked about retail. We talked about challenges of being a retailer. My dad worked for the A and P, and so I grew up with that kind of environment. We were more of a focused on, like, real world stuff than, like, what some athlete was doing.

[Guy Raz]

He was a manager at an A and P market, right?

[Don Voltaggio]

Yep. You know, he used to say, I leave when it's dark and I come home when it's dark. And oftentimes, if they had a problem at one of the stores that he managed, he would wake me up and I'd go with him in the middle of the night to see what happened. Somebody broke in or broke a window, that kind of thing.

[Guy Raz]

He'd bring you because he wanted to show you or.

[Don Voltaggio]

Yeah, he wanted to show me the world that he knew. And I think those things were very important to me, in my experience in business myself, of seeing things that happen that most consumers don't recognize or realize.

[Guy Raz]

And Don. I mean, I guess already in high school, watching your dad at A and P, I'm assuming you worked at A and P, too. Like, maybe you bagged groceries or stocked shelves. Did you do that as a kid?

[Don Voltaggio]

I worked at a place called Kefood, and my dad didn't want me to be a grocer. But when I graduated in 1970, I had no intention of going to college. And he set up an interview for a job at a brewery in Brooklyn. And that's how I started a beverage business. It was called Peel's Brothers, and they were on Bushwick Avenue in Brooklyn.

[Guy Raz]

And this was a job to just do whatever they needed. I mean, you were 18, so I'm assuming, like, drive the truck or stock the warehouse. Or whatever they needed.

[Don Voltaggio]

Yeah, well, it was a merchandising. I was in a sales department, so I didn't drive a truck there. But, you know, we build a display and put the signs up and, you know, and entice consumers to buy our product.

[Guy Raz]

So it wasn't like a muscle job. You were in a sales job early on?

[Don Voltaggio]

Yep. When I started there, you know, I lived a kind of quasi sheltered life with my parents, and I wasn't well traveled. I had never flew in an airplane TILL I was 35 years old. And I didn't, you know, from being in the retail, because I worked in that grocery store. I was social with customers, and I became comfortable with that. And when I became a salesperson, it just kind of carried over.

[Guy Raz]

All right, so you start out in the beer business working for a brewery, and I think the peels folded a couple years after you joined, but you were in that space. So from what I understand, you went into to go work for a beer distributor at that point, which I think you're around 20, 21, this is. You meet a guy named John Farolito, and he's also a young guy like you. And you guys become fast friends. You start to talk about ideas together. Tell me about that time.

[Don Voltaggio]

You know, we came from the same kind of background. You know, we were not middle class, lower middle class.

[Guy Raz]

He was also Italian American, but how.

[Don Voltaggio]

That mattered, it didn't. But, you know, it happened to be that we had things in common. He was a good guy. You know, he was my best man on my wedding, and he was. He was terrific.

[Guy Raz]

I ask this because a lot of times when people are looking for co founders, you know, it's a crapshoot. You just never know. It can be great at the beginning, get horrible at the end. A lot of things can happen. But oftentimes people say to me, well, what should I look for? And I say, shared values. Right. Which is a bit squishy, but I think that matters. Did you guys have shared values?

[Don Voltaggio]

We did. But, you know, like anything else, it's like picking a wife. Sometimes the person you pick changes, and maybe sometimes you don't change with them. So it's hard because if you say, well, I want to pick somebody today who's going to be great 40 years from now, it's hard. It's hard to think that far ahead, number one. And number two is it's hard because things change and things happen. And, you know, candidly, part of the. I call it the romance of the relationship between John and I was the fact that we, you know, started out with nothing, and then we turned it into something. It was kind of cool, you know?

[Guy Raz]

Yeah. Yeah. All right. So it's the early 1970s, and I guess you and John partner up and you start a beer distribution business. Tell me a bit about what you were doing.

[Don Voltaggio]

You know, because of my experience at Peels and John's experience working at this distributing company, we said we go to stores and offer them these popular brands of beer at not so much a better price, but more convenient. You know, they can deliver on Saturdays. We can deliver nights, that kind of thing.

[Guy Raz]

Yeah.

[Don Voltaggio]

And then at some point later on, you know, we started becoming more of a what called like a primary distributor, where we actually had the exclusive right to certain brands. But back in those days was whatever sold, you know, we bought and we sold.

[Guy Raz]

Tell me a little bit about two young guys getting into the distribution business. I imagine there are a lot of vested interests. A lot of companies that had kind of controlled certain areas and markets. This is a threat to their business. Were there dirty tricks played on upstarts like you guys?

[Don Voltaggio]

Yeah, we were threatened a lot. We were threatened by the Teamsters about. You can't do that. That's not allowed. Because the Shaffer delivery guy. We were delivering Shaffer.

[Guy Raz]

Shaffer beer.

[Don Voltaggio]

Yeah. That was produced in Brooklyn. Yeah, but, you know, the guy on the Shaffer delivery guy or the Shaffer sales guy didn't like us very much because we were selling beer that he says he could have sold. But there was always a rub, because you're buying beer from a distributor who bought it directly from the brewery and then reselling it. They, in some cases, hated you for that.

[Guy Raz]

And probably, again, given that there are unions involved and maybe some unsavory characters involved, it's risky, right? I mean, Don, I read stories about your time in this business back in the day where, like, you were robbed on at least 100 occasions. You were, at one point, held in a closet at gunpoint in your office. What happened? What's the story?

[Don Voltaggio]

Well, we were a company and a business that dealt a lot in cash because that's how grocery stores paid. And people who worked for us knew that we had a lot of cash coming in. And they told their friends about it over a bar or in a restaurant. And then they would come and stick us up. The time where I was held up, I was in our office and I was held up, and one of the guys I was with pushed the gun away from his head. Then they hit him over the head with the gun. And I believe I kind of cooled the situation down by kind of talking to these bad guys in a very fatherly way. And then when they left, they put us in the closet. Then when they left, I said, why'd you do that? He said, I don't like a gun to my head. I said, who does? Nobody likes a gun to their head.

[Guy Raz]

I mean, I have to imagine you had to have a gun in your desk just out of safety.

[Don Voltaggio]

I was never a gun owner. If you're not Clint Eastwood, where you can draw quick and shoot straight, you're better off not having one. But my dad told me, you gotta respect the gun. Right. Somebody holding a gun, you gotta be very respectful for what he's telling you to do, otherwise you might be a victim of the gun. Right.

[Guy Raz]

How quickly did your. By the way, what did you guys call your business? Your distribution business?

[Don Voltaggio]

United.

[Guy Raz]

United. Okay. And how quickly did it become profitable?

[Don Voltaggio]

You know, we lived off it, so it was profitable from day one, you know, but we were always reaching further than our finances were able to keep up with us. So, you know, we had some difficult times where there were some sleepless nights about how to meet payroll and how to pay the electric bill. And that went on. You know, I tell people, they say, well, you're an overnight success. I said, yeah, we were 20 years of nights. Because the first 20 years of our business prior to Arizona was a struggle. It was. You know, we did business, we supported our families, we pay for our homes and things like that. But it was always. We're always on the edge.

[Guy Raz]

But the beauty, it seems to me, of what you guys were in is it's not perishable, and it's not like apparel where it just goes out of fashion. Right. And so eventually you knew that all your inventory was going to sell.

[Don Voltaggio]

Yeah, for the most part, we didn't buy things that were like hula hoops. But back in the beginning, it was selling Schaefer to people who wanted Schaefer or Rheingold. Who wanted Rheingold. It was just about price.

[Guy Raz]

Yeah. And I guess by the early 80s, things begin to shift because you actually decide to buy the license for, I guess, a failing brewing company. And. And at that time, you and John start to think about launching your own brand, which we'll get to what you started in just a second. But I wonder why, like, why did you guys want to move from distributing beer to making it?

[Don Voltaggio]

Well, because we lived through a time where we always bought something from a distributor who bought it from the company. That made it. We never bought it from the company directly. If we bought Budweiser or Miller was from a distributor, and the distributors would have changing views on what they wanted to do. So we'd have a good connection with a guy who sold Budweiser. Then he'd call us one day and says, I can't sell you anymore. Because Anheuser Busch said they don't want us to do that any longer. So we're always on the edge about our future. So we thought if we had a brand that we own that we can control, it could be something that we wouldn't have the uncertainty about we had buying beer from somebody else and reselling it.

[Guy Raz]

All right, so you guys decide instead of going into beer to go into malt liquor. This is a beverage you called Midnight Dragon. Tell me a little bit about why you decided to go into malt liquor.

[Don Voltaggio]

Well, malt liquor in those days was a very popular category in the beer business. And I'll never forget, it was actually a beer manufacturer from upstate New York. He came to me with an idea about he wanted to do a malt liquor. And he asked us, he said, you guys know the category. What do you think? And he showed me his package and his product and his name, and I thought it was horrible. But I didn't tell him. I said, yeah, all right. But when he left, John and I looked at each other and said, why don't we do that? And then we developed a label and a bottle and a product and all that. But it started with that one visit from this brewery from Rochester, New York.

[Guy Raz]

All right. Midnight Dragon. I want to dig into this for a little bit, and it's a little bit uncomfortable, but I think that, you know where I'm going with this. The poster, you know, it was controversial.

[Don Voltaggio]

Okay.

[Guy Raz]

And in part because I think the way it was marketed. First of all, there was an ad that was very sort of. Sort of sexually suggestive. And John was asked about this because, I guess the National Organization of Women had protested it. And he's quoted as saying, look, real men like sex, and sex sells beer. I'm not interested in wimps and achievers who want to suck on a lime and drink Corona. That was his quote in the Wall Street Journal.

[Don Voltaggio]

Yep.

[Guy Raz]

I mean, wow. Tell me about. Just kind of reflecting on that. How did you feel about. I mean, did you think that the critics were just wrong and unfair, or did you think they had some. There was some legitimacy to what they were saying?

[Don Voltaggio]

Well, it was a beverage category that was very popular in America. We went at it in, I guess, a Brooklyn style, where we said, we gotta be a little outrageous because in order to get some attention on a shelf, we have to do something different. And it worked out pretty good.

[Guy Raz]

All right. The next product you launch was even more controversial. This one was called Crazy Horse, and it had a label with a Native American and like a feathered headdress. It also drew a lot of negative attention. I mean, I think at one point the US Surgeon General called it an insensitive and malicious marketing ploy because he argued it was aimed at Native Americans. Obviously, there's a lot of alcoholism in Native American communities. I think the atf, the Alcohol Tobacco Firearms Bureau, even banned it at a certain point. Again, you know, you may have just been focused on making a business product, but you saw what people were saying about it. And what did you think about that criticism?

[Don Voltaggio]

Back in, when we had Midnight Dragon, I would work to trade every day and I saw what was happening in the coolers and we said, we want to do like an upscale malt liquor.

[Guy Raz]

Okay.

[Don Voltaggio]

And I was watching an old western movie one night and they had, they used to break the bottle over the bar and use it as like a weapon.

[Guy Raz]

Yeah.

[Don Voltaggio]

And I said, boy, that's the bottle that had a long neck on it. Because all the malt liquors and actually all the beers in those days had these kind of rounded, not so pretty necks. And then the Indian on the front and the cowboy in the back. And a story about the west was what inspired came from my home. You know, at the time I lived in a home in Queens that we, my wife designed around the Southwest.

[Guy Raz]

It was like a Santa Fe motif home, right?

[Don Voltaggio]

Yeah. And we had a lot of, you know, Native American things in the house and decorations and stuff like that. It was very cool. And the package was terrific looking. And we went to a trade show, John and I, and we sold thousands of cases of it without even having a product yet. It was just the package. Then, of course, things happened, you know, to our surprise, it wasn't like we were trying to offend anybody. It was just, you know, we thought it was a cool look and it was because consumers loved it. It's actually, it's what saved our company because prior to that, we were floundering with Midnight Dragon. You were? Yeah, Midnight Dragon. We're just keeping our head above water. The Crazy Horse pushed us over the edge.

[Guy Raz]

What was it about Crazy Horse that did so much better? Why?

[Don Voltaggio]

It was a high priced beer. Higher priced, with a lot more margin in it, at that time in our lives, it was pivotal to our success into the future.

[Guy Raz]

Eventually, you changed into Crazy Stallion a couple years later. But initially it was crazy. I think the Crazy Stallion brand is still around. But Midnight Dragon is not right.

[Don Voltaggio]

Midnight Dragon is no longer sold. You're right.

[Guy Raz]

Yeah. Okay. But I think you guys were profitable, right? The business union was profitable. And what. What do you think your revenue was around back in those days?

[Don Voltaggio]

Yeah, no, no, more than that. Probably 30, 40 million.

[Guy Raz]

Wow. So you were at a significant business with the. With the malt liquor.

[Don Voltaggio]

Well, malt liquor and other brands that we're selling.

[Guy Raz]

That you were selling. Distributing. Okay, yeah. Alcohol is a. I mean, certainly then, of course, out. I think we know that, that alcohol consumption has been in decline in the US and beer and wine, and it's still in decline. Spirits as well. But back then in the. In the late 80s 90s, this is a good business. I mean, because the margins can be really good, but it's a highly regulated business. And so I would imagine that a smart, savvy person in this space is thinking, what if we look into non alcoholic beverages? Which is what was about to happen. So let's talk about this. This is 1991. Can you tell me the story of how you first kind of had this epiphany?

[Don Voltaggio]

I was on a store on Broadway in Houston. It was February 1991. I was selling Midnight Dragon, and a Snapple truck pulls up. Snapple. I saw it happen in New York, because it happened here. It started here in New York. And he starts peeling off, like, 40 cases of iced tea. So I said, hey, iced tea is not supposed to sell in the wintertime, number one. Number two is the order he was bringing into that store was far greater than the order I was trying to get on the beer. And I made the decision right there. I said, I'm going in the tea business right then. Right then.

[Guy Raz]

I'm just curious. Up until that point, 2.91, Snapple was not on your radar at all.

[Don Voltaggio]

So I wasn't really focused on the soft drink aisle. I was focused on a beer aisle until that day. And I said this the other day. Entrepreneurs could tell you the time when the light goes on. And that's when it went off for me.

[Guy Raz]

When we come back in just a moment, the story behind the turquoise and pink paint job on the very first can of Arizona iced tea. Stay with us. I'm Guy Raz, and you're listening to How I Built this. I just got back from vacation with my family, and I Stayed at the most incredible Airbnb in Athens with a view of the Parthenon from the beautiful bedroom. It was just amazing. And we had such a great time as a family, cooking together and hiking together. And, you know, I remember thinking while I was there, I could have put my house on Airbnb while I was away. Hosting on Airbnb provides you with another stream of income. And who knows, your earnings could help offset the cost of your trip. Your home might be the perfect place for someone else's time away. The personal touches you've added, your favorite kitchen gadgets, the artwork, or all of that can make someone else feel right at home. Your home is probably worth more than you think. Find out how [e-mail] host.

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[Guy Raz]

Hey, welcome back to How I Built this. I'm Guy raz. So it's 1991, and Don's made a snap decision to get into the iced tea business. He's seen how well Snapple is doing and he thinks he can capitalize on it. I think by that point, if I'm not mistaken, Howard Stern was already endorsing Snapple on his show.

[Don Voltaggio]

Oh, yeah, sure. Yeah.

[Guy Raz]

And that, I think, really supercharged that brand because Howard Stern was talking about it in such a way that made it sound so appealing.

[Don Voltaggio]

Yeah, you know, the. The brand was started by a couple of window washers from New York. One of them had a health food store Like a health, I guess, like a vitamin store. And Snapple was selling, they didn't start the brand but they saw it there and then they took it over and da da da. They became very successful and I saw it firsthand.

[Guy Raz]

So really, I mean you got really excited about iced tea and, and you started, I guess you start to look for a plant that could produce those lug nut cap, those wide mouth bottles just like Snapple. But from what I read once you did that and you went to that factory, you started to kind of have second thoughts and thought I'm not gonna, I can't out compete Snapple. There's no way this is gonna be a, this is gonna fail.

[Don Voltaggio]

Well John and I drove to a plant in Trenton, New Jersey who was making Snapple. And it's a man who ran the Peels brewery. He was a production manager there. And he asked whether we had a name. I said we didn't have a, we didn't have a formulation. And we essentially went through like what it would take. Well he said there's generic bottles, you know with a lug cap, there's a paper label, we can find a flavor house for you and da da da. And then on the way home we stop at 7:11 and we buy some Snapple to look at on the way back to Brooklyn. And we kind of talk ourselves out of the tea business because we said how are we going to get somebody to buy us over Snapple? How are we going to get them or convince them to buy us better looking label? But is that enough? The same shape bottle? Are we going to get lost in the mix? And we kind of said, you know something, we better stay in the beer business. We know that. Yep.

[Guy Raz]

Okay. For a couple of months you put this out of your mind. I'm not going to get into the tea business. Snapple's killing it. We're not going to do it. What changed?

[Don Voltaggio]

I walked into a 7:11 one morning which I did every morning to buy coffee on the way to the office and they had Gatorade in a 24 ounce can. And I had never seen that before. I knew that 24 ounce can because John and I delivered Schlitz bowl was in a 24 ounce can. They were the only brewery using that can. I buy the can, I take it back to the office. I look on the side, it's Reynolds Metals making it. We call up Reynolds, Reynolds says you could put tea in that can. Cause that's what I asked. And I said now I got the package. This will be 50% larger than a 16 ounce Snapple bottle.

[Guy Raz]

24 ounce can. So a tall boy can. So there was no gate. That was the first time you saw what we now call tall boy cans. That was the first time you saw. You'd seen it. No one was doing it up until Gatorade with a non alk with non alcohol.

[Don Voltaggio]

Okay, Schlitz was doing it with the alk.

[Guy Raz]

Right. So Schlitz had been doing it, but Gatorade in a can. And you said, wait a minute, we can sell it for the same price. How could you sell it for the same price if you're offering, you know, eight more ounces of product?

[Don Voltaggio]

Well, glass bottles were historically more expensive with a lug cap. They run slower in the beer business that we knew, you know, we knew the speeds of cans was faster. Plus the fact, because we were, you know, just looking at pure margin, we said, if we can be competitive and get people to buy it, then we'll figure out what we got. I wasn't so focused on, well, how are we going to make a, you know, killing on it? The question was, can we get consumers to buy it, see it and buy it? And I thought this was the angle. Bigger can, very, you know, stood out in the cooler. Unique and different. And we entered the market with that big can.

[Guy Raz]

Okay, let's talk about getting ready to enter the market, because you're almost 40 at this point and you have a lot of experience now in beer distribution, the beverage industry. First of all, how hard was it for you to come up with a recipe for iced tea? Was that, like, how did you do? Did you go to your kitchen and start playing around, or did you find, like, a beverage scientist and start working with him?

[Don Voltaggio]

I looked at the back of a beverage magazine and it was an ad for a flavor house in New Jersey. And I called it, and they sent a salesman in, and we talked about his background. And I realized that he went to the same high school and graduated the same year that I did. And my wife knew him in high school because I met her in high school.

[Guy Raz]

And I should mention, you married your wife in 76, Eileen.

[Don Voltaggio]

I did.

[Guy Raz]

And you're still married today?

[Don Voltaggio]

Yes. We're Gonna celebrate our 49th wedding anniversary in a couple of weeks.

[Guy Raz]

Amazing.

[Don Voltaggio]

Thank you.

[Guy Raz]

Congratulations. Okay, let's go back to.

[Don Voltaggio]

So anyhow, you know, now we have this guy in the office and he's, you know, he works for flavor house in New Jersey, and we start playing around with flavors.

[Guy Raz]

Okay, let me ask you about your palate. I'm Curious, right? Because you were looking for a particular flavor profile. Right. And how did you know? I mean, you're. I mean, do you have a particularly good palate?

[Don Voltaggio]

I do.

[Guy Raz]

You do? Really? For what? For any wine, beer.

[Don Voltaggio]

Because, you know, you have to have. You know, some people can drink something and say, I don't know, I don't get it. Or, you know, maybe I developed it over the years, but, you know, I was always someone who savored things. And, you know, when I was working on the original flavors, I knew what I wanted. I wanted, you know, tea character with true fruit flavor with good cleanup, good nose. And that's what I was striving for. And I was, of course, tasting the competition as well.

[Guy Raz]

And was it hard to do? I mean, or was he. Basically, he knew what he was doing and you could just kind of taste it and say, yeah, add a little bit more lemon, add a little bit more sweetener.

[Don Voltaggio]

The flavors he brought in at first were terrible. And I said, hey, Joe, I mean, I want tea. And he said, oh, you really want tea? But it was interesting because, you know, the typical response in the flavor category was, you know, you don't have to put a lot of tea in on a tea. You just put flavor. You can kind of fake it up. And then I realized that what other guys are not doing is putting real ingredients in because, you know, they choose to go a less expensive route. And we then said, let's make a great tasting tea. We came out with lemon and razz. Those were the top two flavors for Snapple. Great taste in raspberry flavor. Put it in a great looking can and put it on the shelf next to Snapple at the same price.

[Guy Raz]

Okay. Now you've got a differentiated product because it is going to be in a tall boy can, which is going to make it stand out. But that's not enough. You still need a brand. And Snapple. Snapple is a formidable brand. I mean, it has the wide mouth and still a big deal. So let's talk about how you started to think about what this was going to be. First of all, the name. Let's talk about the name. How did you come up with a name?

[Don Voltaggio]

Originally the name was Santa Fe.

[Guy Raz]

Santa Fe. Good name, Good name. Santa Fe T Company. Okay.

[Don Voltaggio]

Because our house in Queens looked like it belonged in Santa Fe.

[Guy Raz]

And when you say look, let's just describe the house again. So this is a house in Queens, in Rockaway, Queens, that looked like it was in Santa Fe. So what does that mean? Like, what were the colors of the.

[Don Voltaggio]

House, it was an adobe style. And my wife, she said, I'm gonna. I said, what do you want to do with it? She said, I'm gonna look like an adobe style. And I didn't quite understand what that meant, but I said, sounds great. But then she transformed it into a house that looked like a belonged in Phoenix, Arizona. Wow. And people saw it and loved the colors and the vibrancy, the turquoises, the pinks and the yellows and the zigzags and all kind of stuff. And that was the inspiration for the look of the can.

[Guy Raz]

And what about the name Santa Fe? It was gonna be Santa Fe T, but it's not called Santa Fe T.

[Don Voltaggio]

Well, we put Santa Fe on the can and I showed it to someone and they said, it sounds like a train.

[Guy Raz]

Oh, yeah, the Santa Fe railroad. Yeah.

[Don Voltaggio]

And I said, oh, boy, I don't like that. So we had a map of the country on the wall. We said Arizona. We wanted someplace dry, warm.

[Guy Raz]

Okay, so Arizona, you said on the name Arizona, and it's stylized with a capital Z in the middle.

[Don Voltaggio]

Yep. My wife, she went to Hunter College and she. She was an art major. I went home that night, I told Eileen, I said Arizona, and she came up with a big Z in the middle of it. Something that made Arizona look kind of cute on the can. And there we go. I wrapped it around a can and we said, wow, it's going to stand out in the cooler. In those days, the coolers were a lot more drab than they are today. You know, there was all blues and blacks and reds.

[Guy Raz]

The coolers in New York convenience stores.

[Don Voltaggio]

Yeah. Nobody was doing turquoise or pink.

[Guy Raz]

Yeah. And so from the time that you saw the Gatorade cans to the time that you actually had product to sell, how long would you estimate that was?

[Don Voltaggio]

Probably under a year.

[Guy Raz]

So it's fast.

[Don Voltaggio]

Yeah. Well, I mean, today we do something in three weeks because we're plugged in. But back then, we had to get the can supplier and all that. Didn't.

[Guy Raz]

The brilliance of cans to me also seems not just it was going to differentiate the product. And by the way, just to be clear, no iced tea was being sold in cans at that point.

[Don Voltaggio]

Well, I had 12 ounce cans, you know, the standard 12 ounce cans, not the big cans.

[Guy Raz]

Right. But nobody was doing the tall boy cans. So that was the first thing. And the second thing is it lighter than glass? Right. So that's got to save you some money, too.

[Don Voltaggio]

It doesn't break.

[Guy Raz]

It doesn't break.

[Don Voltaggio]

And afraid is a lot More. Because it's heavy, you know, and they.

[Guy Raz]

Right. The freight on glass heads more. Right, yeah. Okay, so you come out with this, I think, what was it In May of 92, when Arizona debuts?

[Don Voltaggio]

May 5, 1992, first load comes to New York.

[Guy Raz]

Okay, so you've got. And your first run. How many. Do you remember how many cases of it you made?

[Don Voltaggio]

I think we made 20,000 cases.

[Guy Raz]

Okay, and now how are you going to get them into stores? Because you had a distribution business. But so could you just literally say to these stores, hey, we had iced tea. Will you put them on your shelves?

[Don Voltaggio]

The first weekend we had Arizona delivered, it was early May, and I had my sales manager. I said, go out with a van and get me different types of stores. Let's place it. It was Friday. And then let's see what happens on Monday. Let's go back to him. And he comes back and he got a drugstore, gas station, a bodega, mom and pop supermarket. And he said, I placed it. He placed a case of each, put a sign on there. The price of Snapple, whatever Snapple sold for it was usually a buck in those days, but some places had it for more. And then we went back on the following week, and nine out of the 10 stores sold 48 pieces, which is two cases.

[Guy Raz]

Okay, but just. Just let me pause for. How did you get the stores to agree to let you put it in their coolers because they have limited space?

[Don Voltaggio]

Well, somebody gets kicked out, somebody gets moved over. You know, there are. There's always room in a cooler as long as you get the green light from the. From the shopkeeper to move something.

[Guy Raz]

But what gave you the ability to do that? Was it. Was it personal relationships? Because. Because it's right. It's. You knew a lot of these store owners.

[Don Voltaggio]

Well, you know, if you're selling a guy something already, you know him, it doesn't mean he'll take a new product of yours. But it's more likely he will than he won't because he knows you, and he knows that if it doesn't sell, you'll pick it up and take it home. You know, then give him credit on it. So it was relatively easy to get a grocer to take it on. Plus the fact it looks so dynamic and the can looks so good, that grocer said, yeah, sure, why not? I think I could sell it.

[Guy Raz]

But you did not put any marketing.

[Don Voltaggio]

Dollars behind it other than point of sale, like signs on stores and coolers? No.

[Guy Raz]

I'm curious. What was the cost to you per can.

[Don Voltaggio]

Back in those days, it was about a half a buck a can.

[Guy Raz]

So then you were probably, what, making 20 cents on each can, maybe we.

[Don Voltaggio]

Were making 17 cents a can.

[Guy Raz]

So that was thin. You had to sell a lot to make money.

[Don Voltaggio]

Well, you know, back in those days, to make three bucks a case was pretty good.

[Guy Raz]

Yeah.

[Don Voltaggio]

You know, because it was incremental. It was. We were going there already. The truck was there. To take a few extra cases off a truck. The economics were great.

[Guy Raz]

And in a sense, I mean, the fact that Snapple was doing so well was good for you because they were paying for marketing, and Coke and Pepsi's products were paying for marketing. And all you really had to do was just kind of be next to them on the shelves, and hopefully people would see this interesting can and say, oh, I'll try that.

[Don Voltaggio]

Well, exactly. Because they made tea cool. Snapple did, at least. And then walking around with that big can was cool for kids. But I think packaging is what did it. And the colors and the look of the can as well.

[Guy Raz]

And I should mention, the first year, I think 80% of the sales were in four states, four places. New Jersey, New York, Miami, and Detroit. So you were not. And you. You weren't really. Hadn't penetrated every market yet. But those four places were doing very well.

[Don Voltaggio]

We did. I think it was 700,000 cases, year one or 800,000 cases.

[Guy Raz]

And I guess the. The. Another turning point was Detroit. There was a guy in Detroit called Michael Schott who was handling distribution for you. He did such a good job. You guys brought him on as a. As a chief operating officer for you and really started to push this product out nationally.

[Don Voltaggio]

Yeah. By 93, we knew we had something. And Mike was the first real serious guy outside of New York, New Jersey, to take the brand on. And they did very well that year. And from that, we became a national brand. By 94, you know, we became a powerhouse.

[Guy Raz]

I don't know if I'm reading this right, that two years in, you're doing more than $150 million in sales. Does that square with your memory?

[Don Voltaggio]

Yeah, well, year two, we did $100 million. Year two, then year three, we did. We doubled it, more than doubled it again. So we got to like, 400 million.

[Guy Raz]

That's unbelievable. Okay, so you've got. I think by the early 2000s, Arizona, which had started in 92, is already producing more iced tea than Snapple. I don't know if you're outselling Snapple by that point. Maybe you are.

[Don Voltaggio]

Yeah. I am.

[Guy Raz]

You are already.

[Don Voltaggio]

But Snapple went through multiple owners and.

[Guy Raz]

They destroyed because they sold a Quaker and a bunch of different things. But again, when they sold a Quaker, you would think, oh, they're gonna be huge now. They got a huge marketing team behind them and a huge company behind them. But it didn't actually happen. It didn't become this threat.

[Don Voltaggio]

Most entrepreneurial companies that are bought or consumed by larger companies usually don't fare very well because that little thing that happens in entrepreneurial companies can't happen in these large companies. So unintentionally they destroy them. And that's what happened to Snapple. That's what's happened to a lot of brands that you see acquired and then look what happened.

[Guy Raz]

Yeah, but I want to ask you about a product that really just turned out to be a huge winner, which was half and half the Arnold Palmer. Arnold Palmer's, right. Everybody knows you go to a restaurant, he asked for an Arnold Palmer. It's half lemonade, half iced tea. Arnold Palmer, great golfer. I think there was a company that had like a license to sell the drink. And around, I think around 2001, 2002, maybe you guys partnered with this company or with him to bring it to basically make a can, an Arnold Palmer can. Tell me a little bit about that, the genesis of that idea, that flavor.

[Don Voltaggio]

House I mentioned, the guy I went to high school with brought it in to me and he said, what do you think of this? Now I play golf, but I never heard the term Arnold Palmer as a half and a half. But he told me about it and he had sold this company, Flavor, out in California, and they came out with an Arnold Palmer in a dairy half gallon. And I said, well, send me it. Because he said it didn't do very well. He said, would you be interested? He sent it to me. And the picture on the carton was awful. Didn't look like Arnie, and the product was awful. And being a big size container for somebody who says, oh, I want to try it, but I want to invest in a half gallon giant carton.

[Guy Raz]

Yeah.

[Don Voltaggio]

So I said, you did a lot of things wrong. I said to myself, she said, what do you think? You want to try it? And I said, let me put some thoughts behind it. And I came up with this look with Arnold on the front. Arnie didn't control a lot of photographs of himself, so he had photographers who would follow him. And I asked Arnie, I said, you got some pictures? He said, well, call these guys. And I did. And they said, well, all right, give us like a nickel a can. I say, I'm not gonna give a nickel a can to some guy. A photograph of him in play. So we had this lady who did our graphic designs. She painted the first picture, put it on a can, put some of his highlights of his career on the side of the can, and we introduced it. And I went to a sales meeting a couple of weeks in and one of the sales ladies said to me, I got an order today for four green tea and two George Bushes. George Bush was president at the time. And it looked like George Bush. Not intentional, but that's.

[Guy Raz]

She thought it was George Bush, not Arnold Palmer.

[Don Voltaggio]

George Bush.

[Guy Raz]

George Bush. I love this George Bush iced tea.

[Don Voltaggio]

I said, they ignored the umbrella, they ignored all that golf references and Arnold Palmer on the front. But I said, who cares if they called it George Bush, that's fine, but me too. And today it's our second best selling flavor.

[Guy Raz]

When we come back in just a moment, the end of a partnership and the beginning of a 10 year legal battle over what the brand is worth. So stay with us. I'm Guy Raz and you're listening to How I Built this. Hey, welcome back to How I Built this. I'm Guy raz. So it's 2005, and Arizona iced Tea is doing incredibly well, even outselling Snapple, the brand that inspired it. But behind the scenes, the partnership behind the brand between John and Don is starting to sour. In fact, it turns out that John has been drifting from the business for quite some time.

[Don Voltaggio]

When Arizona started and it became very successful, he became more remote and more away from the business. It was what the evolution of a partnership that started with us both working together and then it turned into mostly me and John not as active or involved as he was. He was pursuing other interests at that point. And our success gave him opportunities that we didn't have before. And he liked golf and he ended up buying a golf course. And I said, go, pursue your interests and have fun.

[Guy Raz]

But you guys are partners. You were full partners. And I want to be very sensitive here because John is not, you know, this is not a documentary show. We're interviewing one founder at a time. And your co founder, John, is not here to give his side. And so we're going to talk about him respectfully. I mean, oftentimes when one partner is doing more of the work, it can create tension because one person's like, hey, I'm doing all the work and you're getting all the profit. You're getting half the profit. Here. Did that create any tension or were you okay with it?

[Don Voltaggio]

I was fine with it.

[Guy Raz]

You didn't care?

[Don Voltaggio]

Because I never considered what I do work. I enjoy what I do. And I also. And I said to him at one point, I said, we didn't fight. We had nothing. We're not going to fight now.

[Guy Raz]

Did you call him to consult with him on anything or, I mean, did you say, hey, we got this new idea for a product, or was he completely out of the picture?

[Don Voltaggio]

There were times when I didn't speak to him for over a year. Wow. But also, I knew that at that point in his life, it wasn't for him. And oftentimes when I would make decisions, I did call him sometimes, but for the most part I didn't because there was, you know, he had trust in me and I had trust in the fact that what I was doing I felt was the best for both families. And we succeeded. It was great.

[Guy Raz]

All right, so let's get to 2005. By 2005, he decides he wants to sell his half of the company.

[Don Voltaggio]

Now, he wanted to sell the company?

[Guy Raz]

He wanted to sell the whole company, not his half.

[Don Voltaggio]

He wanted us to sell.

[Guy Raz]

He wanted you to sell. Okay. Because I guess there were people out there who were offering lots of money. Why weren't you interested in selling? I mean, apparently there was billions of dollars at stake here. There's arguments to be made, hey, 2005, we're on top of the world. Let's cash out.

[Don Voltaggio]

I have two sons in the business and I have four grandchildren. And I hope that one day they, my sons take over and then they have their children take over from them. Maybe it's an old fashioned approach, but I think the worst thing in life is that be wealthy and not have anything to do. You know, the guys from Snapple told me the worst day of his life was the day after he sold out. I believe it because he said, now what? You know, yeah. But I also understood that if he wanted to sell, I said, hey, sell it to somebody who will get into your shoes and get the same benefit you've been enjoying. That's fine. I can't have a guy buy you out and then say, I want to run the company because I know what they do to entrepreneurial companies. And I was concerned about. Then my stake would be hampered by some large company putting their big mitts on them, on the brand. And that's where it kind of, Kind of where the world kind of unraveled a bit.

[Guy Raz]

Right. Because nobody. Well, very few people would accept that deal. They would say, oh, they wouldn't buy out his share. Only not, you know, only to be in a situation where they couldn't control the business. Right. Because if an outsider, private equity or a big firm want buys into the company, they want to share, they want to control it generally.

[Don Voltaggio]

Yeah, sure. And for their obvious reasons, they say, I put a lot of money up and I don't want this guy who's the founder to control my destiny.

[Guy Raz]

Of course.

[Don Voltaggio]

But I think it's a mistake because I think the reality of it is who better to run something is the guy who started it and who's got vested interest in it.

[Guy Raz]

And just to be clear, when it became obvious that you were not going to sell, right. And that you were going to have to buy John out, the real dispute began, Right. Over what the company was worth. Right. And this gets pretty complicated, but suffice it to say John thought the number should be much higher, like in the low billions, and you said the number should be lower. And so this began a 10 year legal battle that I'm assuming neither of you knew was going to last that long.

[Don Voltaggio]

Couldn't have imagined it lasting that long, Right.

[Guy Raz]

Ten years of your life now, not every day you're in and out of court or depositions, but it's always hovering over you. There's a lot of stake.

[Don Voltaggio]

During that time, I said I was 70, 80% lawyer, 20% marketer because it took up that much of my time. But I was able to take that 20% of the time and keep running the business and keep growing the business, even though it was very difficult at times to make decisions. And also it was difficult for me to tell an applicant because oftentimes I'll interview people to say, come on board, without the certainty of where the company's going to be a year from now. And I felt it was wrong for me to have somebody leave his job, come work here and then tell him a year later, hey, by the way, we got bought by Coke and you're out of a job. So I wasn't able, in good conscience to recruit good people to grow my business. And I wasn't able to make the kind of investments that businesses need to keep growing your business. So I was kind of like frozen for 10 years. Yeah. Yeah.

[Guy Raz]

Okay. Why did it take so long? Again, I get it. And you get mad, I mean, and it gets personal. But I wonder, why didn't the both of you just go to a third party mediator and say, okay, you value the company, do a Fair analysis. And then let's see where it lands.

[Don Voltaggio]

If I look back at it. And I would say, well, what could have been done differently? Could that have worked? But there were other issues going on. There was family issues. There were ex employees that went over to his side.

[Guy Raz]

Right.

[Don Voltaggio]

And so I was fighting on multiple fronts because I had people who. My former CFO was on his side of the table, who was a friend of mine, but John promised them all kinds of wealth and there were lots of sticky issues. See one, I represented the company, as I did, and the profits of the company were shared. 50, 50, not a nickel, went to me over what John had received. I gave him half. But did we think it was going to last 10 years? No. Did we think the money that was spent on legal fees would have been possible? No.

[Guy Raz]

I cannot imagine how expensive that was. How did it, did it take a toll on your fees? Physical health, just sleepless nights or. I don't know.

[Don Voltaggio]

I don't know. You know, I've said when you've had guns to your head in multiple times, those things are things that kind of stand out. But, you know, my wife often said to me, how long are you going to fight? How long you want to keep this up? What are you doing? You know, that kind of thing. But I realized there were thousands of people who worked for me who depended on the decisions I was making for their future as well.

[Guy Raz]

Yeah. Okay. This case was settled or a court ordered settlement was reached between you and John in 2015. The public amount is a billion dollars. And then you guys reach a settlement. I don't know what for, but okay, a check was written to him. Do you think if he did nothing, if he just kept his 50% share, he'd have more money today?

[Don Voltaggio]

Absolutely. What we earned last year was what he got bought out for.

[Guy Raz]

So again, this is not an indictment of you or John. It's just sad. It's a sad story. And it's sad because this happens in business and money just messes with our minds.

[Don Voltaggio]

I don't have any harsh words for John. I really don't. I don't know what he thinks of me. Right. Because I haven't spoke to him since the lawsuit ended. But I wish him well and I hope he's happy because I'm happy. There's more important things in life. There really are.

[Guy Raz]

Yeah. Okay. He's out of the picture at this point and now it's all behind you. Okay. Now that the legal battle is over, does it allow you to do things that you couldn't do before.

[Don Voltaggio]

Absolutely. That's why we've been able to do as well as we've done. I built a factory in New Jersey that we needed desperately. You know, I'm very proud of it. It's a million 250,000 square feet of a building that every single piece of it we own, we paid for. We don't have any company debt. We have no banks, we have no lending institutions. I mean, it's incredible. You know, our cost of making a can today is less than it cost us 33 years ago to make the same can.

[Guy Raz]

Yeah, let's dig into that. I read, for example, that you actually thinned the aluminum in the cans, which made them lighter and cheaper, for example.

[Don Voltaggio]

Yeah. You know, aluminum is a component that when you buy cans at our level, aluminum goes up and down. Your price changes every 30 days. So taking aluminum out is a tremendous saving. But we didn't. We're not the only one who did it. Other people did it as well. Can manufacturers did it because of the obvious reason they use less material.

[Guy Raz]

And I read, for example, another way to keep your cost down is you use lightweight trucks. You use them at night to avoid city traffic. Is that right?

[Don Voltaggio]

That's right. Well, if a trucker has eight hours to work and he's stuck on the George Washington Bridge for six hours, it's only one move. I came to that conclusion. I was going over to George Washington Bridge at 1:00'. Clock. It was a nightmare. If you go after 8 o', clock, it's still a nightmare, but it's a.

[Guy Raz]

Short nightmare, less of a nightmare. Yeah. So what are you doing to stay ahead of. I mean, again, there's so many brands that we've done on the show that lose market share, that do start to fade. And sometimes it's a bad executive that comes in or a bad series of decisions or just tastes change or consumer interest change. Right. And things have changed, changed over the years. People. Some people say, oh, it's all about the future. Is all about no sugar. I know you have a no sugar beverage too, but. Or people say, oh, it's all about no carbs. Or it's all about, you know, clean ingredients. All. All kinds of things come and go. What is the secret of keeping your teas ahead of your competition?

[Don Voltaggio]

I think what we've tried to do and we continue to do is keep it simple. My belief is you gotta give a consumer a fair deal and then you can expect them to come back. If you don't, they're gonna go someplace Else there's too many choices in America. And, you know, quality of the beverage is, to me, the most important because the first reason they buy it is the can. And then from that point on, it's about. It tastes good and it's price fair.

[Guy Raz]

And the can of tea is still, I guess, priced at 99 cents. Yes, but not all stores sell it for that price.

[Don Voltaggio]

No, it's a suggested price. Some retailers choose not to sell it for that price or can't afford to sell it at that price. And we have other alternatives for them. And if they can't afford to do it, they got to do something else.

[Guy Raz]

Okay, but so how have you kept it at a 99 cent suggested price all these years?

[Don Voltaggio]

I'm asked that question like 10,000 times, right? And my normal reaction is, I don't know how I do it. But that's not true. Right. The facts are there are multiple things you need to do behind the scenes in order to give consumers and continue to give them value. Because oftentimes companies say the best thing to do or the easiest thing to do is raise the price, go into a customer and tell them, hey, it's going up on March 1st. But to me as a salesman, that's the worst day in your life. Because you don't want to tell a grocer or a customer, by the way, you have to pay more and then you have to charge more to your customer walking in the door. And can I do it forever? I don't know. But we're going to continue doing it as long as we can.

[Guy Raz]

Don, I'm curious. After you had to basically pay a lot of cash out, right? And I know it took a little bit of time to pay that back to the company. Were there ever. I mean, there must have been or must be over the years, private equity or other big beverage brands that have come to you and have said, hey, we're interested in buying you. Has that happened?

[Don Voltaggio]

Yeah, sure.

[Guy Raz]

And what's your response?

[Don Voltaggio]

I'm not for sale.

[Guy Raz]

You don't even want to entertain the offer?

[Don Voltaggio]

No, because, you know, I know what it means. It means I'm going to be unemployed and my kids are going to be unemployed. I don't like that. You know, 10 years ago when I settled the case with John, my first grandchild was born. That night. I went from signing a document to the hospital to see her at the first time. Now she's 10 years old. And I tell her one day, you're going to be running this company. And I hope that's A reality. I hope that's something that this company becomes multigenerational and run by my grandchildren at some point. And, you know, that's a good story.

[Guy Raz]

When you think about the journey you took. And I mean, listen, it's not a secret you are a billionaire. I mean, you entered a market dominated by big players and you're a massive product, Right? You've created a massive product that outsells the big guys. And you are a big guy. Now, how much of where you got to do you attribute to how hard you worked and how much do you think has to do with luck? Just timing and the world around you and circumstances.

[Don Voltaggio]

I mean, luck is an important thing in life, right? Luck to find the right wife, luck to have good kids, good grandkids. I've had good health in my life, which is also something you can attribute to luck. I've been consistent in my life. So I'm a very, very lucky guy. And I'm lucky to have been a business that after 30 plus years, we can still have customers who say, I like that product. My mother liked it. Now I like it too. Which is a very difficult thing to do.

[Guy Raz]

Yeah. Don, do you imagine working until your dying day, like going into the office every day?

[Don Voltaggio]

Yes, that's my plan. Actually. Last year my plant manager in New Jersey got jammed up. Forklift operators didn't come to work. So I said, I'm coming here to help out tomorrow. He says, what do you want? I said, I want a forklift with fill it up with fuel and a bottle of water on it. And I got there at 10:00 in the morning and got off the machine at 8:00 at night. And I unloaded and loaded 57 trails.

[Guy Raz]

Wow.

[Don Voltaggio]

And it was one of the more interesting, exciting days of my life. It was great.

[Guy Raz]

So really, I mean, you are there until the very end as far as you're concerned.

[Don Voltaggio]

And hopefully the very end is a ways off.

[Guy Raz]

That's Don Voltaggio, co founder of Arizona Beverage Company. Would you ever consider doing a George Bush iced tea brand now? Now that you know George?

[Don Voltaggio]

I don't know. Darl Palmer works. You could sell in Texas.

[Guy Raz]

Yeah, maybe. Maybe. Or maybe people like, who is that?

[Don Voltaggio]

We got to do the VPs. I like Ike Ice Tea.

[Guy Raz]

Eisenhower ice Tea. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, please check out my newsletter. You can sign [e-mail] or on substack. This episode was produced by Romel Wood with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Iman Ma'. Ani. Our engineers are Maggie Luthar and Gilly Moon. Our production staff also includes Casey Herman, Alex Chung, Kerry Thompson, Kathryn Seifer, Carla Estevez, Noor Gill, Sam Paulson, Andrea Bruce, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short [e-mail] survey think about the app you've been wanting to build, sell something you've created, run your community, manage your business, or launch your next idea. Now imagine it's live before Today's over. Meet base 44, the fastest way to turn any idea into a fully functional app. No code, no waiting. Just describe what you want and watch it come together. Backend design and all in minutes. A real product ready to share. From idea to live app Fast Start building [e-mail].