Numi Organic Tea: Reem Hassani and Ahmed Rahim

When they were in their 20s, Reem Hassani and her brother Ahmed Rahim were not the kind of people you'd expect to launch a multi-million dollar business. Reem was a California artist moonlighting as a substitute teacher, and Ahmed had been living the bohemian life of a photojournalist in Europe. But these two children of immigrants from Iraq had an idea: to introduce the dried lime tea they remembered from their childhood to the U. S. Working out of Reem's 600-square-foot apartment in Oakland, the siblings learned all about the challenges of lining up importers, packagers, and retailers to launch a premium loose-leaf tea brand—meant to be slowly steeped and savored. More than twenty years after it's launch in 1999, Numi Organic Tea is a privately held B Corporation that sells tens of millions of dollars of Fair Trade, organic tea every year. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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• 0:00Guy Raz?

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• 5:13Speaker 01

  We brought on some investors that put a lot of pressure on us. And when you're under pressure from the top down, from investors, and we're not performing from the bottoms up, then you're in the hot seat of 20% growth wasn't enough. They wanted 30, 40, 50. And then if we hit 30, that wasn't enough. So it was just a pressure of more performance. And some of them are used to getting 10 times their money.

• 5:43Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 5:57Guy Raz?

  I'm Guy Raz. And on the show today, how a brother-sister team took a childhood memory from Iraq and turned it into a flourishing beverage business, Numi Tea, one of the most popular premium tea brands in the country.

• 6:15Guy Raz?

  Tea is the second most consumed drink on earth, after water. And of all the countries in the world, Turkey holds the top spot. They drink the most tea. And surprisingly, given that so much tea comes from eastern and southern Asia, not a single country from those areas lands in the top 10. And when it comes to the US, there is no doubt where Americans stand. Each year, they drink more coffee than soda, juice, and tea combined. And unlike the rest of the world, about 80% of the tea consumed in the US is iced tea.

• 6:56Guy Raz?

  But even though coffee is king in the US, the domestic tea market has grown from under $2 billion in 1990 to more than $13 billion today. Which is interesting, because that time period aligns with two important trends in the food and beverage industry. The first was the third-wave coffee scene that started in the late 1990s. Brands like Intelligentsia, and Chicago, and Stumptown, and Portland. The quality of their coffee elevated the experience for customers and inspired a whole new type of coffee shop. The second trend during that time was the movement towards organic, fair trade, environmentally

• 7:39Guy Raz?

  conscious sourcing in all things food and beverage. And customers started to understand that these things would cost more money to buy. Which is how the premium tea market really started to gain traction in the US. When Numi Organic Tea was launched in 1999 by brother and sister Ahmed Rahim and Reem Hassani, their prices were five or even 10 times higher than what people were used to paying for teabags. But they knew that part of what they had to do was to educate consumers about the difference between what they were offering and what you might find at a church basement potluck. Numi tea was going to be more expensive because it was premium tea.

• 8:24Guy Raz?

  Not just green and black tea leaves, but herbs and dried fruit peels and spices that were sourced from sustainable producers around the world. When Reem and Ahmed founded Numi, they were both going through transitional phases in their careers. Reem was bouncing around, doing odd jobs, substitute teaching, language translation, art projects. Ahmed had been spending about a decade in Europe, living a bohemian lifestyle and tinkering with different entrepreneurial ventures. But both Reem and Ahmed grew up with tea as part of their culture, especially a particular type called Numi Basra, a tea made from dried limes that's popular in Iraq and in the Gulf States.

• 9:08Guy Raz?

  Their parents immigrated to the US from Iraq in the early 1970s, when Reem and Ahmed were kids. They settled in Cleveland, where both their parents established successful careers. Their dad was a doctor and their mom ended up as a home contractor and interior designer. But they still kept close ties to Iraq and their relatives there.

• 9:29Speaker 02

  We would go back every three, four years. So my mom was still very attached to her family there. We have huge families there. And when we would go, I remember the whole family would come to the airport. I mean, you're talking like 30 people coming to the airport to greet us. It was so amazing between my grandmothers and uncles and aunts and cousins. And then we would go to my grandmother's house, where she'd have a huge feast, and the whole, all families, both sides of the families would be there.

• 10:04Speaker 01

  For sure.

• 10:05Speaker 02

  Yeah.

• 10:06Speaker 01

  And I remember always playing with my cousins, because, yeah, we have 30-plus cousins, first cousins. They would always ask, too, what's America like? I remember once when we went, I was probably 19, and I think we watched Grease, the movie, like 20 times that summer. Because, you know, it was very new for them.

• 10:26Speaker 02

  Yeah.

• 10:27Speaker 01

  And of course, anytime there's a scene where they're about to kiss, they cut the image before the kiss and they start it again after the kiss. So you wouldn't even see kisses on TV.

• 10:38Guy Raz?

  Did you, were you guys, was keeping Islamic traditions important at home when you were growing up?

• 10:45Speaker 02

  My mother was religious, so she was, you know, practicing Muslim. Our dad became agnostic, pretty much. So he was more traditional than he was religious. I mean, we would celebrate Eid every year, you know, with the big feast and the lamb. I always used to say that we lived in two worlds. And our house was an Iraqi world and outside was, you know, the American culture. So inside, it was kind of like a little Iraq. They only spoke to us in Arabic because they wanted us to learn the language. So when we were kids, they had an Arabic-only policy. So if we spoke to them in English, they wouldn't answer us. And at the same time, so it was, you know, a both and.

• 11:29Speaker 02

  They wanted us to do well in school and they wanted to integrate with the culture. And both had, you know, flourishing careers here in the United States. So we were surrounded by that.

• 11:42Guy Raz?

  Ahmed, do you remember, when you were a teenager, did you feel different? Did you feel like, you know, you were sort of, were you in a primarily white environment around, you know, sort of white Christian kids? Or did you feel included?

• 11:57Speaker 01

  Well, I was definitely picked on quite a lot as a young child. Last kid on the school bus, standing by the bus driver because people just wanted to pick fights with me because I was different, had a different name and dark skin. There was a lot of minorities in the public school I went to. There was a lot of African Americans. And then my parents sent me to a private Catholic school for two years, which I never understood. And unfortunately, it turned my attention to all kinds of substances to get through the being in a Catholic school that I had to wear a tie and go to mass, which I never went to.

• 12:37Speaker 01

  So definitely a lot of non-inclusion and non-equality growing up in Cleveland as an Iraqi kid.

• 12:45Guy Raz?

  It sounds like you were going through, fair to say, a pretty rebellious stage. I mean, if you were kind of experimenting with drugs and I have to, I mean, have to mention that your parents probably were not aware of that, I guess, at the time.

• 12:59Speaker 01

  Well, I always say that psychedelics saved my life and definitely gave me an awareness of what the bigger world is like. And my parents, yeah, they finally found out when I was, I don't know, 13, that I was smoking marijuana. And they didn't know what to do because I was definitely the rebel of the four kids. And I kind of just did whatever I wanted and the psychedelic and drug world was kind of my outlet to just express and learn who I am.

• 13:28Guy Raz?

  Ahmed, you went to NYU to study psychology and theater. What was your intention? Did you, I know that you had done some photography in high school. Was that what you thought you wanted to become, a photographer?

• 13:42Speaker 01

  Well, you know, it was in the late eighties. I went without 100% knowing what I wanted to do and I had gotten a camera at my dad's old Nikon F2 camera and that became sort of my best friend and I just photographed everything and then as I was in the art school, I went into photography and learned how to print and develop and then that eventually led into filmmaking, which I continued to do in New York and then I did that again in Paris and Prague. I went to film school, but I survived mostly as a photographer to make a living.

• 14:20Guy Raz?

  I read, Reem, that you really want to be an artist, but your mom said, "You're too smart for art" and encouraged you to study biomedical engineering, which is what you studied at college.

• 14:32Speaker 02

  Yeah, she wanted me to be a doctor, of course. And then I took art classes everywhere I could and then art ended up saving my life at some point, yeah.

• 14:44Guy Raz?

  I guess something, you went through a pretty traumatic experience in your third year of college. You got in a car accident that really seems to have had a kind of a big impact on the direction that your life took. Is that, is that right?

• 14:57Speaker 02

  Yes, so I was in a near fatal car accident when I was 20 and almost lost both my legs from the knee down and, you know, was vacu-lifted out of the site and was in a trauma center with 12 hours, saving both my legs and revascularizing my legs and relocating my knees and...

• 15:22Speaker 02

  Had to learn how to walk again. Was on a wheelchair and casts for four months and ended up going back to school in leg braces. I was in leg braces for another about nine months. And between the age of 20 and 30, I think I had 15 surgeries on my legs.

• 15:41Guy Raz?

  And I should mention, you were like, a really good tennis player. Like, you were an athlete. That was presumably part of your identity.

• 15:48Speaker 02

  Yeah. Yeah, I was captain of my tennis team. Yeah, tennis was definitely a huge part of my identity. Tennis and dance. And I remember that one of the doctors told me, he said, "Well, let's put it this way, you know, you're not going to be a ballet dancer." At one point, they thought, you know, that she might not walk again. And I said, "Well, I'm going to play tennis and I'm going to dance." Kind of struggled to finish school at that point. Might have been post-traumatic stress. I mean, I feel like I kind of imploded because, you know, my family wasn't really into therapy or anything.

• 16:23Guy Raz?

  Yeah.

• 16:23Speaker 02

  It was like, you know, if you're going to a therapist or a shrink, that means that you're crazy.

• 16:27Guy Raz?

  Yeah.

• 16:28Speaker 02

  So I had a really difficult 20s, let's put it that way. I kept going downhill and got very depressed.

• 16:34Guy Raz?

  You were kind of on this track to become a doctor or be a researcher, but you went back into the direction of art, which is, sounds like that was your, kind of your personal passion. How did that happen? Because you decided to go to art school, I guess, in your, in your 20s, right?

• 16:52Speaker 02

  Right. So I moved to Boston. I got a job in research. But I would forget what they would tell me. And so I would kind of always make mistakes and didn't really do a good job. And, and so I kind of got fired immediately. And I remember that my boss had told me, he said, "You know, you should get an automated job."

• 17:16Speaker 02

  I said, you know, I'm gonna go study art. So I was doing artwork, you know, on the side at that point.

• 17:22Guy Raz?

  What were you doing, by the way? Sculpture, drawing, painting?

• 17:25Speaker 02

  Painting.

• 17:26Guy Raz?

  Painting.

• 17:26Speaker 02

  Painting, yeah.

• 17:28Guy Raz?

  All right. You go off to art school and would eventually make your way back to the Bay Area where you now live. And meantime, Ahmed, you would, you like, kind of left. You left the US, you moved to Europe. What were you doing?

• 17:42Speaker 01

  So a buddy of mine was living in Paris and said, hey, come visit me in Paris. And, you know, when you go in Paris in spring, what do you do? You know, you fall in love. And, uh, and so I stayed in Paris and France for almost two years. And, and then I was building my photography career and got into fashion photography and got into photojournalism. And a buddy of mine in Paris invited me to go to Germany to do some work in the mountains there. So I left for Germany. And, and then I was leaving with a buddy in Germany. We bought an old RV, a gutted RV, and we built a whole home out of it. And we were on our way to go to Spain, to go live in Spain.

• 18:25Speaker 01

  And three days before I left, I met a guy from Czech Republic. He's like, oh, come stop by there. The food's really cheap. You can fill up your RV with food. And a week in Prague turned into almost seven years and

• 18:38Guy Raz?

  Wow.

• 18:39Speaker 01

  Bought a farm there.

• 18:39Guy Raz?

  You were, you were like a real nomad. I mean, in your twenties, right? You were just following your, whatever, your curiosity.

• 18:47Speaker 01

  Yeah, there were no boundaries. There was, there was a lot of loneliness and, and unknown. But it was, these are the times to do it.

• 18:55Guy Raz?

  Did you have, at that time, do you remember having any anxiety about your future? Or any pressure from your parents in the sense? I mean, because did you ever have any anxiety about, you know, whether you were kind of just drifting?

• 19:10Speaker 01

  Oh, absolutely, every day. I went into some depression too, because, you know, being in a place where you have just friends, no family, and having a culture from ours where career and success is

• 19:24Speaker 01

  You know, it's a big deal. And so, yeah, it was, it was, it kinda was my shadow. And it walked with me every day and reminded me, you know, what are you doing with your life? Are you gonna make it as an artist? I was actually a pretty successful photographer, making pretty good money.

• 19:41Guy Raz?

  You were published in Elle and then like other fashion journals I read?

• 19:45Speaker 01

  Oh, yeah, newspapers. I wasn't struggling financially, like I was getting by handsome. But photographer, I started losing the poetry and this sort of artistic style that I really grew up into photography, doing black and white, abstract images, reflections, shadows, things that really got me excited. So it was at that moment that I said, you know what? I wanna separate art from money. Let's do something that just, you know, that allows me to make money. And then one day I'll come back to art and really give it my full attention and not to generate revenue or anything.

• 20:25Guy Raz?

  I guess from what I read while you were in Prague, you got asked to build a tea house? What's the, what's the story?

• 20:34Speaker 01

  So, you know, Prague was an emerging place then in the early 1990s. It was just, the wall had just been taken down in Germany. All the communism was kind of, that whole part of the Eastern Europe, Berlin and Krakow and Poland and Prague were just these booming cities where anything goes. And some friends that I played music with said, hey, there's these guys opening up a tea house. And tea houses were, are very common in Eastern Europe. They're very influenced by Russia and Middle East and the whole tea culture. Tea houses, you know, are where people go and spend two hours for lunch and have meetings and very different, not a fast-paced, no to-go cups.

• 21:19Speaker 01

  So they had, they were looking for people to help. And I was doing mosaics and tile work and all kinds of creative stuff with ceramics and painting. So they asked if I would be involved in some way in helping design, being part of it. And then I started serving tea and you know, we'd serve hundreds of pots a day.

• 21:39Guy Raz?

  This is just in, in, it's like a neighborhood in Prague or in central Prague?

• 21:42Speaker 01

  It's in Old Town, yeah, in Old Town Prague, right in the heart of, of Prague. So as I got really into the tea culture and I'd already gone to tea houses, you know, prior, but as I got into helping and working there, they asked me to be a partner. Then we opened up some more tea houses and then we ended up opening up a, a pretty big wholesale business of loose teas, about 300 loose teas that we sold to tea houses through a lot of Eastern Europe. But just learning the whole culture of tea, it, it just, yeah, it, it swept me away.

• 22:15Guy Raz?

  And I have to assume that you were not getting rich off of this?

• 22:19Speaker 01

  No, photography was still my career.

• 22:21Guy Raz?

  Okay, right.

• 22:22Speaker 01

  And I was living on my farm most days, I still had an apartment in Prague, but it definitely was not paying the bills. I still had to, to do photography. But you know, my lifestyle wasn't very expensive.

• 22:33Guy Raz?

  Meantime, Rime, you were, you were living in the Bay Area.

• 22:37Speaker 02

  Yeah.

• 22:38Guy Raz?

  This is in now, in the late 90s. What were you doing professionally at that time?

• 22:43Speaker 02

  So I moved out here to get my master's in fine arts and I was working as a, a substitute teacher. And I had a really bad day at work one day. Children were really difficult and I had to commute like an hour and a half or whatever to get there. So I was driving back, I was just crying and kind of like, you know, miserable, what am I doing?

• 23:07Guy Raz?

  This is in like 97, 98?

• 23:08Speaker 02

  This is 97, yeah. And two pieces of advice that had come to my head. And one of them was my father, who had always told me, just choose one thing, Rime, and master that thing. Didn't matter what it was, just choose one thing. And the other piece of advice was an old boyfriend who said, you know, just grind your teeth and do it. So, you know, whatever, just overcome your fear. And I had so many ideas of different, like, different ideas of things that could be done, you know, business ideas, basically. And so one of them was this dry desert lime that we drank as kids called Numi Basra, and, you know, that we'd always talked about

• 23:51Speaker 02

  in the family, somebody should import this tea.

• 23:54Guy Raz?

  Tea made from lime?

• 23:56Speaker 02

  From a dried lime that comes from the deserts of the Middle East. And I was like, okay, that's what I'm gonna do.

• 24:02Guy Raz?

  And the tea, I mean, we talk about tea, but, because all people think of tea leaves, but is it basically dried lime peel?

• 24:10Speaker 01

  The whole dried lime, yeah. There's no tea in it.

• 24:13Guy Raz?

  So it's, there's no tea in it. It's just whole dried lime steeped in water. That's how you make it.

• 24:17Speaker 01

  Yeah, that's it. You just crush it and, and, and you also use it in stews and cooking. It's used all throughout the Middle East. But for the tea, it's just the whole lime that's crushed. And, and it's got a very unique taste, very sour. But in traditional culture, it's, it's kind of, you're adding the tea into sugar. You're not even putting sugar into the tea. So you're drinking this very sweet and sour blend, and it's super delicious, hot or cold.

• 24:44Guy Raz?

  All right. So you are in Prague, and Reem, you are in Oakland. Did you, like, send your brother an email? I mean, this is 90, this is the late 90s, so emails, just kind of starting out. Or did you call him and say, hey, I have this idea. Can you help me? Is that, is that what you did? Or, or was it something else?

• 25:02Speaker 02

  No. So we were on a family trip. My dad had a medical convention in LA, and we all went. And we, I think it was in 97 or 98, 98. Yeah. And then we drove out to the Grand Canyon. And, you know, we went on a walk. And, you know, I said, I have this idea that I'm gonna do this Numi thing. And then Ahmed said, well, I'm gonna do it too. He had the idea too. So it was a synchronistic moment that we were both kind of merging this thought, this thought that came in from, from the universe.

• 25:38Speaker 01

  And we, we talked about it all the time in the family, because, you know, and we would gather, we would always drink this lime. So- We'd always be like, God, why isn't this available? Why doesn't anyone drink it? So to Reem's point, I was trying to import it to my tea houses. So I was trying to work with my cousin, who lived at the time in Oman, to figure out how to import it into Europe. So when Reem and I took this little walk in the Grand Canyon, and we started talking about it, I was like, well, I'm trying to do that right now, too. And then we were like, well, let's just do it together. And then it was like, well, where are we going to do it? So she said, why don't you come to Oakland? I was like, Oakland? I'd never been there. So I was like, Oakland, California?

• 26:22Speaker 01

  I was like, well, if I come back to the United States, California is probably the place to be.

• 26:26Guy Raz?

  So you decide, yeah, fine, after this trip, I'll come up to Oakland and hang out with you?

• 26:32Speaker 01

  Yeah, kind of. It was like, all right. Because I was thinking of leaving Prague, to be honest. I was thinking of still going to Spain, which I'm still going to end up in Spain one day. So I was in a pivotal point of I needed to, I wanted to go somewhere.

• 26:47Guy Raz?

  Yeah.

• 26:47Speaker 01

  And, you know, at the time, Bill Clinton was the president. And I was like, huh, this guy seems pretty cool. Smoke but didn't inhale and all this other stuff was happening. And it was just, I felt like this country at the time was a little bit of a place where I could come back and check it out. But I only thought I was going to come for six months. So I moved to Oakland and moved into Reem's apartment, 600 square foot apartment in Oakland.

• 27:10Guy Raz?

  And just to clarify, your idea was, like, we drank this as kids in Iraq. People will love this. People don't know this tea in the US. That was your idea?

• 27:19Speaker 02

  Yes. So that was our just initial idea. So we kept calling it this Numi thing. We didn't have a name for the company at the time. And we didn't know we were going to, you know, produce hundreds of teas. But yeah, we just said, let's do this.

• 27:35Guy Raz?

  When we come back in just a moment, how Ahmed and Reem used the Yellow Pages, their relatives, and that 600 square foot apartment to launch their business. And how, at their very first trade show, they turned their booth into a big attraction. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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• 31:35Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1998, and Ahmed and Reem have decided to launch a business, inspired by the lime tea that they both remember from their childhoods. But at this stage, it's really just an idea.

• 31:52Speaker 01

  Well, I don't think it was thought through, but I thought, again, I was coming, helping Reem get this stuff situated, get grounded. And when I came to Oakland, you know, Reem took me to the Berkeley Bowl and Rainbow Grocery, all these hip natural food stores, which I didn't really have in Europe. They didn't really exist yet. So I was actually really blown away by some of the offerings, especially back then, Pete's Coffee had a really nice loose tea collection. So I was like, huh. And with my experience in the tea houses, I was also noticing that there was a big void of certain types of teas in the market here back then in 99. So we're kind of just doing more of the research. But we then quickly decided,

• 32:36Speaker 01

  within our first couple of months, to do a trade show. And we didn't even have a product or a brand yet. So, but we were like, oh, well, let's just launch on this date, which was six, seven months out or something. So it kind of gave us a timeline and an idea that we had to start creating product. But then what that product was, we were kind of evolving it as we went.

• 33:00Guy Raz?

  All right, so you are now together in the apartment. And let's talk about, did you like sit down and write a business plan? Did you, what was the first kind of step you you took?

• 33:12Speaker 02

  Well, we didn't write a business plan, did we?

• 33:15Speaker 01

  No.

• 33:16Speaker 02

  No.

• 33:19Speaker 01

  No business plan.

• 33:20Speaker 02

  We're trying to figure out the name. That was our first step. But then we landed on Numi. And we just kind of, Numi, Numi. And we were going to spell it N E W M E. And then we were going to spell it N O O M I. And then we finally landed on N U M I.

• 33:37Guy Raz?

  N U M I, Numi, like from Arabic, Numi.

• 33:39Speaker 02

  Yes, so next step was to do the artwork. So of course, our priorities were the artwork.

• 33:46Guy Raz?

  Because I'm still trying to figure out, like, what did you guys? I know you were going to sell this tea, you were going to import it. But but then what? Like, where were you going to? Were you going to go to these stores, these like natural food stores and try to sell it to them?

• 33:59Speaker 01

  We were going to do a trade show. That's it.

• 34:03Speaker 02

  We had no idea.

• 34:04Speaker 01

  We got to go to the trade somehow.

• 34:06Speaker 02

  No, no, somebody told us you should do a trade show.

• 34:09Guy Raz?

  But what was the what was the product going to be? Was it just going to be loose tea that you were selling in bulk? Was it going to be, were you going to put it in bags?

• 34:16Speaker 02

  Yes, so I think at one point, Ahmed was feeling like it's sacrilegious to put tea into tea bags.

• 34:23Guy Raz?

  Yeah.

• 34:23Speaker 02

  But I said, you know, people only drink tea out of tea bags. So we have to sell tea in tea bags. But he said, well, we have to put a full leaf quality tea in that tea bag. So before he came, I opened up the Yellow Pages, believe it or not, there were Yellow Pages at the time. And I went through every packaging company that was in the Yellow Pages, learning about the machines that packaged teas. So we, at one point, I don't know how we got his name, but we stumbled upon the person who ended up being our co-packer for 10, 15 years. They were based in Salinas and had like a two hour conversation with him. He was so friendly, you know, and of course, it was now like maze that he spent

• 35:05Speaker 02

  that much time talking to me and then talking to Ahmed later, because, you know, there had to be minimum runs. So we learned about minimum runs, we learned about-

• 35:14Guy Raz?

  But what did you say to him? Did you say, hey, we're bringing in tea. We want you to put it in tea bags for us and then 10 tea bags into a box for us? Was like, was it that literal?

• 35:24Speaker 02

  Well, pretty much. I mean, he, I think he maybe did more of the talking and I did the note taking because he would, he explained how many bags per minute get, you know, put in, you know, that we have to buy the tags from somewhere, we buy the wrappers from somewhere and everything gets shipped to his facility. But we also asked him, like, how do we know if it's legal, what teas we put in the bags? Then Ahmed has the conversation with the FDA because we wanted to make sure everything we were doing was, you know, legal.

• 35:56Guy Raz?

  And when you say you talked to the FDA, did you just like pick up a phone and call the FDA?

• 36:02Speaker 01

  Well, that's the thing the FDA told me that nobody calls us, we call you. But I got to know one of the FDA guys because as we mentioned, we were learning about the different nuances of what you do in packaging and how you get it packaged. And I would just call and either leave messages or there was a couple of times I actually received the same person. And then he finally said to me like, you know, people don't really call us to ask us what you can do and what you can't do on your packaging and what ingredients. So I even said to him, I was like, do you mean like you can put anything in a product and sell it? And it's only until you call the person that they have to stop? And he's like, basically, yeah.

• 36:44Speaker 01

  And I was like, wow, that that's a pretty free market. And then Rima and I changed places too with CoPackers. I remember I used to call people for packaging and I'd say I'm from Numi and they would call me back, they would give me all the attention in the world. I'd be like, wow, they're really helping a tiny little startup. And then later on, I realized they thought we were Numi, the new United Motors Inc. company, which is now Tesla. So back then they had a warehouse and a facility to make cars in Fremont and I was amazed on how people were calling us back so quickly.

• 37:17Guy Raz?

  And presumably because you had worked in the tea business in Prague, you already had a connection to suppliers?

• 37:24Speaker 01

  Some, yeah, some, but some we didn't because in Europe we would buy sometimes from middlemen like in Germany.

• 37:32Guy Raz?

  Yeah.

• 37:33Speaker 01

  So like with some of the herbs we wanted to bring that I noticed wasn't here in the US like rooibos and honey bush was South Africa or the Numi lime in Middle East, I had to find new suppliers and even the green teas because of our our focus on certain quality and sustainable organic, fair trade didn't really exist then yet, but I started searching for new suppliers.

• 37:57Guy Raz?

  So initially you thought we're gonna, of course, gonna sell, you had to sell Numi tea, you had to actually, and did you, were you able to source those from Iraq or could you find another place to get them from?

• 38:10Speaker 01

  Well, at the time, my cousin was living in Oman and Oman is generally speaking where the lime is kind of well known to come from. So he helped me source it and arrange the containers and all the legal business work to get it to the port and on a container to get here.

• 38:31Guy Raz?

  Because that was going to be your, I have to assume your flagship flavor, right?

• 38:35Speaker 01

  Yeah, that's our namesake and our flagship. Even though it still doesn't perform that well 20 years later, we would never get rid of it.

• 38:44Guy Raz?

  So the idea initially was to have how many different, would you say, flavors of tea or types of tea?

• 38:50Speaker 01

  Yeah, and in that process of seeing what the market, what was available and what wasn't available, because we kind of really wanted to take more of an innovative approach, we decided to do two black teas, two green teas, and five herbals, the lime being one of them. And we've also decided to just do one ingredient in all of the flavors.

• 39:15Guy Raz?

  Right.

• 39:16Speaker 01

  So the black teas were single flavors, the green teas were single flavors, the herbs were just one herb, you know, lemongrass, mint, rooibos, honey bush, lime, nothing else, because I had noticed that the market was just saturated with all kinds of flavorings and blends that you really wouldn't taste the herbs or let nature speak for itself. So we just stuck with those nine and then the Numis Collection, which was an assorted box of all nine flavors.

• 39:45Guy Raz?

  I remember I interviewed Todd Carmichael and J. P. Eberdi, founders of La Colombe, and we talked a lot about the flavor profiles that they were looking for when they were trying to create the right blends of coffee. And were you doing that? Were you just like drinking a lot of tea and just swishing it around your mouth and kind of trying to find the right balance?

• 40:08Speaker 01

  Yeah, tea, I think, well, maybe coffee lovers won't like this, but I think tea is more nuanced and hundreds of more, if not thousands of more varieties of tastes than coffee. But I think for me, it was about where are we differentiating ourselves? Because I had done tons of cuppings in Europe and the tea houses, and we weren't really starting with a lot of blends. We were starting with straight ingredients, just one ingredient blend. So it was who's creating the most nuanced, full flavor? And then it was a lot about the leaf size. With the co-packer we had, we had to really do a lot of trials and tribulations

• 40:50Speaker 01

  to make sure the machine can adapt to a larger leaf, tea size, because most tea bags were like dust. So we really wanted to revolutionize putting a whole leaf in a tea bag at the time. So, yes, I was tasting all the time, making sure the quality was premium, and we didn't add any oils or flavorings, we just wanted the pure tea, so we wouldn't adulterate it with anything.

• 41:15Guy Raz?

  So this is in 1999, you haven't launched yet. And this, I think, is sort of the beginning of what would eventually be known as the third wave of coffee, right? Like, you had Starbucks, which was a second wave, and then now you had, like, La Colom and Stumptown, and coffee was what people were excited about in the late 90s. Coffee was just going crazy. Were people coming to you and saying, you guys might want to think about coffee?

• 41:45Speaker 02

  No. I mean, I would say that we kept pitching the idea that what's happening to coffee is going to happen to tea. So that connoisseurship and kind of the gourmet-ship of, if that's a word, of coffee is going to happen to tea. So we're just going to ride that wave.

• 42:05Guy Raz?

  So you are starting to kind of build out the infrastructure of what to do. And before you launched, was the idea to mainly go directly to grocery stores and to have them sell your tea on the shelves, or to work with restaurants, or both? How did you think of your distribution model initially?

• 42:26Speaker 01

  You know, when I look back on it, I don't think we even knew where the distribution of the product was going to go. Sure, we love the natural food stores, and we knew coffee shops would be great, but how are we going to get there? Is it all just shipped via, you know, the UPS/FEDex system? Or is it distributors? It was, let's just find out as we go.

• 42:51Guy Raz?

  So before you launched, I have to assume you had to import tea. Were you just like, were there just boxes of tea stacked in your apartment room?

• 43:02Speaker 02

  Well, we, you know, I think we had an import broker that helped us get all the teas in and then the loose teas went to the co-packer to pack. Then we brought all of that to my kitchen and kitchen and living room basically became the warehouse. So we would, you know, we would pack all the orders, get them all out of my small Toyota Corolla and kind of assembly line them into the kitchen and then we would take turns packing, packing and shipping.

• 43:31Guy Raz?

  And you had to have some money to import the teas and to work with a co-packer. And Reem, I can't imagine you had a whole lot of money, you know, at the time, you're in your 30s and early 30s and kind of doing different jobs here and there. And Ahmed, you had some success running a, you know, being a partner in a tea company, but you, by no means were you wealthy or, you know, did you have lots of money? How did you finance the business at the beginning?

• 43:59Speaker 01

  So we, we went to our dad and asked him if he would use the leverage of his house to get a loan. So we partnered with a bank in Cleveland and he refinanced his home and he had a line of credit on his home up to X amount, but we just started with a $250,000 line of credit. And wow, did money go fast then.

• 44:29Guy Raz?

  Wow, that's a, I mean, were you guys nervous about that? I mean, $250,000 line of credit, you know, that's gonna be paid back at some point. Did that cause any anxiety for either of you?

• 44:42Speaker 02

  Yes, I mean, our parents were extremely generous and they really believed in us. So they, you know, they didn't put pressure to pay it back, but we always kind of had it in the back of our mind. And our dad kind of bailed us out on several occasions because summers were really tight. Tea season isn't till the fall and you have to buy all your teas in the summer. So he would bail us out with his pension plan, you know, so it was, just felt like, you know, our father was really. Really, really there for us.

• 45:16Guy Raz?

  So, all right, so it's you finally get to launch the moment of launch, and I guess in 1999, the way to go was to go to a trade show. And that's, from what I understand, that's how you guys kind of launched, right?

• 45:29Speaker 01

  Yeah, we launched that in San Francisco.

• 45:31Speaker 02

  Gift show.

• 45:32Speaker 01

  A gift show.

• 45:34Guy Raz?

  And tell me, you set up a little booth there and put your teas out there. And I imagine you didn't have a whole lot of money to bring an architect. You guys built this yourself, right? The booth?

• 45:43Speaker 02

  Well, we built the displays, and then we would rent the tables, and then we would create tablecloths, all that kind of stuff.

• 45:50Guy Raz?

  But it wasn't like a card table with some tea on top. Like, you guys put a lot of effort into the look of this booth.

• 45:57Speaker 01

  Oh, yeah.

• 45:58Speaker 02

  Yes, three days, three days of work to get it up.

• 46:01Speaker 01

  And our booth was just an art display that Reema and I would hand sew. And well, she would sew, I would hang up. Tea stained fabrics and, you know, all this stuff we were doing. So it was basically, it was like you were passing by a gallery. It wasn't even like a business booth. It was a gallery.

• 46:19Speaker 02

  Yeah.

• 46:20Speaker 01

  The booth was definitely a showstopper.

• 46:22Guy Raz?

  And how did people react when they walked by?

• 46:26Speaker 02

  Well, we had a major passion, a major passion problem, because anytime somebody would come into the booth, we would have to walk them through like all those things that they'd have to smell the tea and then see the liquid and then drink it, of course. And, you know, I think we, all along, I think our life and our career, we've had this streak of hospitality, of Arab hospitality in us. So, everybody became welcome into the booth and, you know, it was just a sort of a tea fest, inundating them with all of our teas, not to necessarily sell product, but to share in it. So, you know, it's a little bit of a different twist on a sales technique.

• 47:11Speaker 01

  But luckily, you know, not knowing really what we were doing, we didn't even have like order forms. We had to create them the first night after the show. We're like, oh my God, people want to take orders. We got to create an order sheet. And I got schooled the first day by a gentleman who runs a spice company on margins and how to price it. So that first night after a trade show, I had to change pricing because I realized, oh, we're not charging enough. So, but you know, to our luck, everyone was like, you guys are going to be a huge success. I mean, and then the Rainbow Grocery Buyer and Nieman Marcus and Dean and DeLuca.

• 47:51Guy Raz?

  Just passing by you in this trade show.

• 47:54Speaker 01

  Yeah. So all these retailers would come by and they would just stop. And we had people piled back, wondering who's this nummy? What's this business? What are they even selling? I remember the Rainbow Grocery Buyer, Kevin, he stood there for like 20 minutes and I was like, oh my God, I love your store. And he's like, what do you guys do? And then, you know, once he got it, he was like, oh my God, I want every, one case of everything in my store. Same with Dean and DeLuca.

• 48:22Speaker 02

  And then Dean and DeLuca had left us a voicemail on our answering machine at the time. And when I listened to it, I was like, ah, this is Dean and DeLuca.

• 48:32Speaker 01

  I had no idea who Dean and DeLuca was at the time.

• 48:34Speaker 02

  It was such a big deal.

• 48:36Guy Raz?

  What's this? I mean, now, of course, this is not uncommon, right? But in 1999, was it unusual to see like whole leaf tea in the US?

• 48:47Speaker 01

  Yeah, very unusual. That's why, you know, when I would go to Pete's Coffee and see their loose leaf collection, I was totally blown away because that was probably the only place at the time that you can get a premium quality tea.

• 49:01Guy Raz?

  Yeah.

• 49:01Speaker 01

  And the grocery stores at the time when we launched only had very low grade tea bags, oil flavored, non-organic. Yeah, it was just, there was nothing premium on the shelf.

• 49:16Guy Raz?

  How did you guys do at that trade show?

• 49:18Speaker 01

  We did great. The gift show was a huge success. I mean, we got accounts we still are in today, 20 years later, and chains.

• 49:27Guy Raz?

  Do you remember how much you guys made in orders?

• 49:30Speaker 01

  I would say over 100,000 when we look at some of the chains that we got in like Sur La Tabla and Neiman Marcus and Cos Plus and Rainbow. I would say over 100,000 for that year.

• 49:41Guy Raz?

  And that's where you were basically selling your teas in the first year, first few years? Is that right?

• 49:48Speaker 01

  Yeah, food service got fairly popular quickly.

• 49:51Guy Raz?

  Food service meaning restaurants?

• 49:53Speaker 01

  Restaurants, hotels, Ritz Carlton's and Fairmount Hotels and all the fancy places and department stores. So that would be specialty, but food service picked up really quick. That was actually the majority of our business in our first year and a half to two years.

• 50:10Guy Raz?

  And in that first year you launched, Starbucks bought Tazo tea and started to sell Tazo at Starbucks locations. Did that turn out to be a good thing for you or a bad thing? Was it like all rising tides, floats all boats? Or was it a problem?

• 50:28Speaker 01

  It was actually a great opportunity for us because coffee roasters and the food service didn't want to support necessarily Starbucks. So they wanted, who's the new kid on the block? And Numi was a great fit. So we actually were able to take advantage of that opportunity.

• 50:47Guy Raz?

  People were ordering from you because they didn't want to support the quote unquote corporate Starbucks brand?

• 50:52Speaker 01

  Yeah.

• 50:53Guy Raz?

  And you guys were seen as kind of like the scrappy startup?

• 50:57Speaker 01

  Yeah, just a new innovative brand, privately held, brother sister. And it was already gaining a lot of traction and getting a lot of press. So it was, eyes were turning on us when that business sold.

• 51:13Guy Raz?

  How much work did you guys have to do in educating consumers about how to drink tea?

• 51:20Guy Raz?

  Was that hard or was it already being done because other people in the industry had already been doing that work?

• 51:27Speaker 02

  Well, I think that it was because it was in a tea bag. You know, there wasn't any educational component. But we often got, you know, comments, consumer comments that the tea wasn't strong enough or because people were used to tasting these really strong perfumes. So we had to constantly remind and still remind people that you're tasting the real tea, that it's more nuanced, that there's no flavorings in it, that it's just the real fruits, flowers and spices.

• 51:55Guy Raz?

  Because most people are drinking teas that are flavored with oils?

• 52:00Speaker 02

  Yeah, and then they'll add milk and sugar and all kinds of stuff.

• 52:04Guy Raz?

  And your teas are just flowers and herbs and leaves?

• 52:08Speaker 01

  And spices, yeah. And then the other thing we had to educate was the whole leaf quality because people were used to tea bags that are just tea dust and fennings that grow bitter really quickly. You know, if you leave a tea bag in for more than a minute, it'll start getting a stringent where we would tell people, no, you don't need to take it out in 30 seconds. You leave it in for five, seven minutes. You could leave it in for an hour. It's not going to get bitter. It gets better. And that was a big education.

• 52:35Guy Raz?

  And the United States has to be one of the few countries on earth where people, maybe Canada, people drink tea directly in a mug. They put the bag into a mug, right? Because imagine most everywhere else around the world, it's in a pot.

• 52:51Speaker 01

  Well, it's a to-go culture. So you want something that you can take with you. Where a lot of places, they'll actually sit. And obviously in this time where everything is on the run, yeah, the ceremony of tea you can still find if you go to China and Taiwan and Japan. Yeah, I think we've lost that here. I've heard in the US, there used to be a ton of tea houses before the Boston Tea Party and on all the taxation. And then it's switched to coffee. But unfortunately now it's, yeah, it's a mug, it's to go, it's at your desk, not the ceremony or the ritual of making a pot and really enjoying it.

• 53:29Guy Raz?

  All right, so you guys start to really get traction very quickly. And you had to presumably start to hire people.

• 53:37Speaker 02

  I mean, the first couple of years, we were pretty scrappy. It was just Ahmed and I. And then we had a family friend who helped us with putting in orders in. And we had our family members help us at trade shows. But then we started hiring people. So I think, you know, we hired a salesperson to help with sales. We hired, you know, office person, so put somebody in the warehouse. So I think by our third or fourth year, we may have had four or five people.

• 54:06Guy Raz?

  So, okay, so from what I understand, right? As early as like three or four years into the business, you guys were actually approached by other food companies who I guess were interested in acquiring you. And one of them was Haynes Celestial, which is, I think today is like one of the biggest natural food companies in the US. And it's sort of like an 800 pound gorilla. And this is the company that owned Celestial Tea, right?

• 54:32Speaker 01

  Yeah, they own Celestial Seasonings and 40, 50 other amazing natural food brands. And, you know, tea was definitely creating a buzz. Tea was, it was happening. Tea is the most consumed beverage in the world and everybody knows it. And then the Haynes Celestial, yeah, we had met with the gentleman who was running it then at a trade show. And then he gave us a call.

• 55:00Guy Raz?

  And what happened?

• 55:01Speaker 02

  Well, first he came by our booth with a couple other, you know, execs or something. And I didn't see their badge, but he said, you know, what you and your brother are doing is really interesting. We should talk sometime. And I was like, talk about what?

• 55:20Speaker 02

  And then little by little, I started looking at his badge. And I was like, oh, my God, CEO of Haynes Celestial. Anyway, he said, well, come by my booth. You know, so he was kind of brash and, you know, not very personable. Let's put it that way.

• 55:35Guy Raz?

  Yeah.

• 55:36Speaker 02

  And so then I told Ahmed, I was like, oh, my God, that CEO of Haynes Celestial wants us to come by his booth. So we went to his booth and he did not make eye contact with us once.

• 55:50Speaker 02

  And he was just busy with, I don't know, he had like a Walmart buyer or something at his booth. So we weren't too keen on the relationship, let's put it that way, because for us, it's all about, you know, human relationship and interaction. But anyway, and then, but we, you know, we decided to go forward and pursue it.

• 56:10Guy Raz?

  Pursue a conversation about a potential acquisition?

• 56:13Speaker 02

  Yeah.

• 56:14Guy Raz?

  I mean, that must have been, that just, that must have been kind of exciting. I mean, just four years in and, because I have to assume up until this point, you guys were doing well, you know, right? I think you, two, three million dollars in revenue a year, but you probably still weren't paying yourselves that, that much.

• 56:33Speaker 01

  Yeah, we were already probably north of four and a half million by year four, and we were probably taking two to three thousand a month of salary. So we were definitely not paying ourselves, you know? I mean, that's, I think our first year, we were a thousand a month, then it went to two thousand, then it went to three thousand. So, yeah, we weren't rolling and sleeping in cash.

• 56:56Guy Raz?

  So, so if Hay and Celestial comes around with a potential acquisition offer, I mean, I have to assume that that was kind of exciting.

• 57:04Speaker 02

  It was very exciting.

• 57:05Guy Raz?

  Yeah.

• 57:06Speaker 02

  I mean, we were kind of, you know, trepidatious. We were like excited. I mean, when we first launched, I remember I thought, okay, we're going to do this for like four, five years, and I'm going to retire and just be an artist. So, we both had that ambition. Yet, at the same time, you know, we were having a lot of fun, and we were, you know, growing the business, there was a lot of opportunities. But then, of course, we had a lot of financial strain at the same time. And we were in the summer, tea season's in the fall, and you're always, our cash is super tight.

• 57:38Guy Raz?

  It's in the fall because most people drink it hot?

• 57:41Speaker 02

  Yes.

• 57:42Speaker 01

  Yeah.

• 57:43Guy Raz?

  And the fall's chillier?

• 57:44Speaker 01

  Yeah, it gets cold in the, the tea season is usually from like October to March.

• 57:50Speaker 02

  And the summers were really tough, because you have to buy all your tea, you know, in June, because it takes three months, buy it, pack it. And then sell it by the fall. So those were our toughest months when cash, your cash needs high, but your, your cash flows low.

• 58:08Guy Raz?

  So, so Han Celestial starts to kind of talk to you and do they eventually make an offer, a firm offer?

• 58:15Speaker 01

  Yeah, they did make the hard offer. Um, Reem and I had to go into the van because we had no privacy in our office. So her and I had to go sit in the Numi van in the back of it to kind of listen to what the offer was and-

• 58:29Speaker 02

  One point he said, um, you have till the end of the day to make a decision. Remember? I was like, who the hell are you to put like our back against the wall and make us make a decision by the end of the day?

• 58:42Guy Raz?

  When we come back in just a moment, what Reem and Ahmed decided to do at the end of that day and why even though Numi tea was growing, it didn't feel like it was growing big enough or fast enough. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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• 1:00:44Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's the early 2000s. Haynes Celestial has just made an offer to buy Numi Tea, and they've given Reem and Ahmed a single day to respond. And Ahmed, from what I understand, you were already doing $4 million in revenue at that point, right?

• 1:01:04Speaker 01

  Yeah.

• 1:01:05Guy Raz?

  And they were offering you between $6 and $8 million bucks to buy everything, your intellectual property, your branding, your business.

• 1:01:13Speaker 01

  Yeah. I, you know, I was pretty clear at the time that there's no way for the offer. We were growing at 60, 70% a year at the time. You know, I went that next year from $4 million to $7 million, and then $7 million to $10 million. And let's say we were doing four then, and he offered us eight. We knew we were going to do that within 12 to 18 months. So we kind of said, no way.

• 1:01:35Guy Raz?

  So obviously, you set this as a low-ball offer.

• 1:01:38Speaker 01

  Yeah, and I think because we were a threat and because we were emerging so fast, we were growing at shelf 160%.

• 1:01:46Guy Raz?

  Wow.

• 1:01:46Speaker 01

  And our business, we knew we were going to probably double it the next year, which we almost did. For us, it was pretty obvious that they felt threatened, but also at the same time, they were intrigued and they liked our brand. But we weren't sure what was ever, what the destiny of the brand would be. And we, it was too near to us to let go. We just loved it too much, and it was, we were having a lot of fun in those years.

• 1:02:09Guy Raz?

  So even though, even though you had, because $4 million sounds like a lot of money, but you know, to pay for the co-packers and the product and the distribution and your employees. But you get an $8 million offer. Would that have kind of, at the time, solved your financial challenges?

• 1:02:29Speaker 01

  Yeah, for sure. I mean, we didn't have that much debt. We didn't have a bank loan. We just had this working line capital

• 1:02:37Guy Raz?

  Yeah.

• 1:02:37Speaker 01

  from the bank on our dad's house, which by then increased to almost a million dollars. Now, we were really beholden to this, you know, loan and making sure we can pay it back one day. So it would have taken out our debt and would have given us, you know, each a few million dollars. But that wasn't what we were, we were about. And that wasn't, at least for me, I wasn't thinking that's why I'm in this. I'm in this for a different journey.

• 1:03:02Guy Raz?

  All right. So you walk away from this offer, but you, your cash, you've got cash flow challenges.

• 1:03:10Speaker 01

  Yeah, I mean, there were some payroll Fridays I would just literally lay on my back on the floor of the office and wonder how are we gonna make payroll? The business wasn't profitable every quarter, every month. So there'd be some months we would spend more because we would go market at trade shows or we'd do promotions with retailers. And then it gets, you know, compounded by then having slow summer months where we're gonna lose cash. We're not gonna be profitable.

• 1:03:41Guy Raz?

  Was that stressful for the two of you to be running a business that was not profitable?

• 1:03:48Speaker 01

  Sometimes, you know, when you're building momentum and building success, you know, you're gonna get through it, even if you're not profitable. And other times, when you don't see where the end, the light is at the end of the tunnel, then yeah, I just ended up on my back staring up at the ceiling, wondering how it's gonna happen.

• 1:04:08Speaker 02

  Then we got, we also got investors too, maybe a year after that.

• 1:04:13Guy Raz?

  An outside investor?

• 1:04:15Speaker 02

  Well, we met this fellow at a trade show, another trade show. And he came to our booth and he was Indian. I thought he was, you know, he was a tea supplier. And then it turned out he's a huge fashion mogul. Family industry, created Tommy Hilfiger clothing. And loved our stuff, had read our press binder. And he flew out to see us and we went to dinner and he said, you know, I'll sign on this napkin. And we had a wonderful dinner and conversation and he felt like a brother and he invested in us. So.

• 1:04:59Speaker 02

  Just got lucky.

• 1:05:00Guy Raz?

  What about as you guys grew and had to kind of deal with the challenges of growth? What about the relationship between the two of you? Was it pretty clear what each of you did? And was that, did that help you guys kind of have an easy, smooth relationship? Or was there ever any tension between the two of you?

• 1:05:21Speaker 02

  Well, I think in terms of roles, it became more and more clear. You know, what our strengths were.

• 1:05:27Guy Raz?

  Yeah.

• 1:05:27Speaker 02

  There was a lot of difficult times where we argued and fought and.

• 1:05:32Guy Raz?

  About, about, about what?

• 1:05:34Speaker 02

  Some business decisions, but most of the business decisions we were on the same page with. It was more just the personal interaction. So I may have stepped on his foot on something. He may, he may have stepped on my foot on something. There was maybe issues with different employees. I would say things like that.

• 1:05:55Speaker 01

  So I think for me, when I look at some of the times that Rima and I were in challenges as brother and sister, were some of the times that we were most tried financially. And that would bring the worst out of me and, and my lack of ability to just be present to us as siblings and to the business.

• 1:06:15Guy Raz?

  Cause you were worried that, that the money would run out or?

• 1:06:18Speaker 01

  Yeah. I mean, I've learned to listen better and give space to allow the discussion to flow and not what I think is right. And I think that's where I missed the boat in days of stress and pressure is it was just, let's get things done. Let's do it now. These are timelines, deadlines.

• 1:06:39Guy Raz?

  Which is a, was a normal reaction. I mean, we humans are, were designed to survive.

• 1:06:45Speaker 01

  Yeah.

• 1:06:45Guy Raz?

  Right? And when you feel like you're not going to, most of us freak out.

• 1:06:51Speaker 01

  Yeah, and then we brought on some investors that put a lot of pressure on us. And if we didn't perform, then, you know, the management of people got tricky and not easy. And I've learned over the years that that's not what I enjoy doing is managing people on a day to day basis.

• 1:07:08Guy Raz?

  It's very hard.

• 1:07:08Speaker 01

  It's very hard. And when you're under pressure from the top down from investors and we're not performing from the bottoms up, then, you know, you're in the hot seat of 20% growth wasn't enough. They wanted 30, 40, 50, and then if we hit 30, that wasn't enough. So it was just a pressure of more performance and some of them are used to getting 10 times their money.

• 1:07:31Guy Raz?

  But meantime, was that, was that even possible to grow 30, 40, 50% a year?

• 1:07:38Speaker 01

  There were years we were growing 40, 60, 70%. But at this time, as we were maturing a little bit and we were probably north of 20 million, 15, 20 million, those kind of growths became a lot more challenging. Then the, well, there was the 2009, 10 recession.

• 1:07:54Guy Raz?

  2008.

• 1:07:55Speaker 01

  Where we, you know, we had a couple of flat years because food service completely went bust. You know, food service has always been a, you know, a good part of our business. So I think for Reem and I, I think the thing I've always been happy about is that on the business decisions, from flavors to product innovation lines to design, we've always aligned. We haven't had a lot of issues on the business side. Reem's trusted me with, you know, running the finance or operations side, obviously hiring the right people who run it. But interpersonal communication styles, just I realized that's not where I thrive and that doesn't, you know, I don't shine the best in that.

• 1:08:40Speaker 01

  So I think there was a lot of conflict during those years.

• 1:08:43Guy Raz?

  The other thing is that you weren't just selling, like if a consumer goes to the grocery store, many of them are just looking for a low price, right? But you weren't just selling premium teas, but you were.

• 1:08:57Guy Raz?

  You were using really expensive, still do use expensive material, biodegradable and I mean, your packaging, you go to great lengths not to use industrial inks and things like that, right? I mean, and that I'm assuming that's more expensive.

• 1:09:13Speaker 02

  Yeah, so you know, between purchasing organic tea, going fair trade, which adds a premium that goes back to the tea farmers, that adds more. And then the packaging itself, we are very conscientious around, you know, in our environmental footprint. So we use soy-based inks. From the beginning, we didn't understand why people use shrink wraps. So we never use shrink wraps.

• 1:09:37Guy Raz?

  Shrink wrap around the tea box, right?

• 1:09:39Speaker 02

  Around the tea box, yeah. So you're already got the bag sealed. And then finally, this year, because we knew that the packaging, that the tea wrapper itself, you know, was something that went into landfills.

• 1:09:52Guy Raz?

  Yeah.

• 1:09:53Speaker 02

  We converted all of that into a plant-based wrapper. That is hugely revolutionary if everybody could do that.

• 1:10:00Guy Raz?

  Were you ever under pressure from investors to reduce your price point? Or from distributors or retailers at all, Ahmed?

• 1:10:10Speaker 01

  Well, you know, it's funny because when we launched 20 years ago, we were the most expensive tea on the shelf by 20, 30%. And a lot of retailers were like, you're crazy. You're never going to sell this at $4.99 a box. And you know, the highest-priced tea other than us was $3.99. And we're like, well, we can't get it to you cheaper than that. And now, you know, we're probably standard around $6.99. And we're not the most expensive. We're still, you know, in the top two or three most expensive brands. So we still get that pressure. And we see, you know, our biggest challenge today is some of the big conglomerates are buying the smaller tea brands. So we do have to promote more now than we probably ever have.

• 1:10:54Guy Raz?

  Yeah.

• 1:10:55Speaker 01

  Which is ironic, 20 years into the business, we're promoting now than I think, yes, than we've ever had. When I look at our promotional spend, it's just getting tougher and tougher in the way that the big, you know, multi-billion dollar corporations are buying all these small brands. And we're pretty much one of the last privately held brands on the market.

• 1:11:15Guy Raz?

  When was it, like, what do you remember the turning point being in terms of? Hitting a point where you were not having to worry about cash flow and money. And when did you start to see profitability? Do you remember that?

• 1:11:29Speaker 01

  Yeah, it was after 10 years of running the business because we dumped a lot into the business to build the brand and do trade shows.

• 1:11:38Speaker 01

  But about 10 years into the business, we were able to kind of get a lot more solid and create a profitable EBITDA. And it was right around then that we had a lot of cash because we raised about 5 million. And then we raised about, you know, five years later, 25 million to take out some investors. And luckily, when we raised that 25, 15 years into the business, we were able to finally take out our dad's million dollar working line capital, which was probably, for me, the biggest moment of success. We relieved my father of any debt on the business, and he was so patient for all those years.

• 1:12:17Guy Raz?

  I know that in 2016, Smuckers acquired a small stake in Numi. It's still privately owned, and you've got some investors, and you guys are obviously owners of it. I wonder, Ahmed, I mean, you guys have been grinding away now for a long time at this. I know you recently stepped down as CEO. But is there ever a part of you that just wants to, you know, sell your stake and kind of enjoy your life without having to grind away every day?

• 1:12:50Speaker 01

  Well, I do enjoy my life every day, and I don't feel I grind away. Luckily, we have a great team. So I feel the balance of life is here. But as far as the choice of whether we want to sell, I think it all depends on who the partner is. I think we'd be open to it if it really made sense for the future of Numi because, you know, we don't want it to plummet and disappear in three to five years, which some brands do when they exit. But we want it to thrive, and we want the farmers and the planet to thrive because Numi has created a legacy. I mean, it's in educational courses, it's a founding B Corp, it's one of the leading fair trade organic brands in the whole world now.

• 1:13:33Speaker 01

  And we want it to continue to live those values and change the way people drink and eat.

• 1:13:40Guy Raz?

  And when you think about the, what you wanted to build and what it is today. I know that you know, you talked about you didn't have a business plan. It was kind of haphazard at the start in the late 90s. But do you think had you had this kind of crystal ball to see where you were today, you would have thought, yep, that makes sense? Or you would have been surprised? Or how do you think you would have thought about this, Reem?

• 1:14:04Speaker 02

  I think I would have been surprised that I would have lasted this long.

• 1:14:09Speaker 02

  Because at the time, I didn't plan my life more than three months at a time. And I remember calling a friend, you know, after maybe five years of walking to the, maybe even longer, walking to the same P O. box every day and picking up the mail. I said, I can't believe I'm still doing this. So that's one. And for sure, I would not have predicted that we would have gotten to where we have, where, you know, I go to a coffee shop or a little local cafe in my town and there's Numi, you know, and my husband's always like, she's the owner and all embarrassed. And they're like, oh, my gosh.

• 1:14:54Speaker 02

  So I would have never expected that.

• 1:14:58Guy Raz?

  Ahmed?

• 1:14:59Speaker 01

  I mean, Numi has been the best vehicle for me personally and to learn and grow so much about where we could put our time and to Reem's point, you know, giving yourself to something for so long to really mature in it and allow it to mature is that's where the lessons for me have really come.

• 1:15:19Guy Raz?

  Yeah.

• 1:15:20Speaker 01

  But I think there were some moments we could have probably grown more had we not protected the brand. Because I think there was a point where we protected the brand from being too mainstream, too quick and staying in the Ritz Carlton's and the Fairmount's and the Dean and DeLuca's. And because Walmart wanted us in year seven, eight, you know, Trader Joe's wanted us in year two, Target wanted us when we were young and we kind of said, oh, we're not ready for them yet. We could have grown more in the mass market and grocery quicker, which would have created more impact because, you know, more revenue, more product, more profits. So I just think there was moments we held it back from rapid expansion.

• 1:16:04Guy Raz?

  Reem, when you think about the journey that you guys went on, I mean, you were You were sort of drifting, right? In your early 30s, trying to figure out what you were gonna do. And it wasn't clear. And you had that moment when you were driving home from a substitute teaching gig and you just kind of lost it. You know, when you look back on your life now and what you've accomplished and what you guys have built, how much of that do you attribute to the hard work you put in? And how much do you think it has to do with luck?

• 1:16:32Speaker 02

  I mean, I would say a lot of hard work. A lot of hard work. I mean, from when we started, 30, I was 31. Those first 10 years was, you know, wake up at 6:00, 7:00, stop working at 11:00, work on the weekends, demoing at stores, going to different events. It was just constant, you know? I think we had a lot of good breaks. You know, the Tazo was a great break. You know, we got a lot of good press hits. One time, we were on the cover of a natural foods publication that all of a sudden got us distributors. So we had a lot of good breaks. We were lucky because, you know, our father helped us

• 1:17:17Speaker 02

  and he had worked hard and had made money. So it was a combination of a lot of things.

• 1:17:23Guy Raz?

  Ahmed, how about you?

• 1:17:24Speaker 01

  I mean, I'd say hard work is, it took a lot of hard work. It took the first three, four, five years of 90, 100-hour work weeks. Yeah, there were definitely some lucky moments that really helped us. And a lot of angels surrounded us. And I think those angels surrounded us because they cared. They saw what Numi's essence was about and they wanted to see us succeed. So to have those kind of people with us that really believe in the journey, believe in the mission, I wouldn't say that's luck. I wouldn't even say it's hard work. I would say it's just an energy force that Numi has been able to bring. It's now its own living creature. It's way beyond Rima and I. It's way beyond our team.

• 1:18:08Speaker 01

  So yeah, I think it's been, it's amazing.

• 1:18:13Guy Raz?

  That's Ahmed Rahim and Reem Hasani, co-founders of Numi Organic Tea. By the way, those tea houses Ahmed helped start in Prague, two of them are still around, though Ahmed's not involved anymore. And when it comes to tea, he sticks to herbal. About four months ago, he completely cut out caffeine, which means no more black or green tea at all. Thanks so much for listening to the show this week. If you're not yet a subscriber, please do subscribe wherever you get your podcasts. If you want to write to us, our email address is [email protected]. And if you want to follow us on Twitter, we're at Guy Raz or at How I Built This. You can also find us on Instagram.

• 1:18:58Guy Raz?

  That's at How I Built This NPR, or my personal account, at Guy dot Raz. This episode was produced by Casey Herman with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Dereth Gales. Our production staff includes J.C. Howard, Rachel Faulkner, James Delahoussaye, Julia Carney, Farah Safari, Liz Metzger, Janet Wu-Jiang Lee, and Annalise Ober. Our intern is Harrison Vijay Choi. And Jeff Rogers is our executive producer. I'm Guy Raz, and you've been listening to How I Built This.

• 1:19:43Guy Raz?

  This is NPR.