How I Built This with Guy Raz - Numi Organic Tea: Reem Hassani and Ahmed Rahim

Episode Date: July 5, 2021

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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of more performance, and some of them are used to getting 10 times their money. From NPR, it's 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 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. T 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 U.S., 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 U.S. is iced tea. But even though coffee is king in the U.S., the domestic tea market has grown from under $2 billion in 1990 to more than $13 billion today, which is interesting because that's a lot of. 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 in 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 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 U.S.

When Numi Organic Tea was launched in 1999 by brother and sister Ahmed Rahim and Riem Hassani, their prices were five or even ten times higher than what people were used to paying for tea bags. 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. Not just green and black tea leaves, but herbs and dried fruit peals and spices that were sourced from sustainable producers around the world. When Riemann 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 Ream 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. Their parents immigrated to the U.S. from Iraq in the early 1970s when Reim 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. We would go back every three, four years. So my mom was still very very very very very very very. very attached to her family there.

She's, 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 or she'd have a huge feast. And the whole, all families, both sides of the families would be there. For sure. Yeah. 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 Greece, the movie like 20 times that summer. Because, you know, it was very new for them.

Yeah. And of course, any time there's a scene where they're about to kiss, they cut the image before the kiss and they started again after the kiss. so you wouldn't even see kisses on TV. Did you, were you guys keeping Islamic traditions important at home when you were growing up? 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 aid every year, you know, with a big feast and a lamb. I always used to say that we lived in two worlds and our house was an Iraqi world

and outside was 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 a both and 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. 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?

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.

through the being in a Catholic school that I had to wear a tie and go to mass, which I never went to. So definitely a lot of non-inclusion and a non-equality growing up in Cleveland as an Iraqi kid. 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, I have to mention that your parents probably were not aware of that, I guess, at the time. Well, I always say that psychedelic 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. And 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? Well, you know, it was in the late 80s.

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 learn 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.

I read Ream that you really want to be an artist, but your mom said, You're too smart for art and encourage you to study biomedical engineering, which is what you studied at college. 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. 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 kind of a big impact on the direction that your life took. Is that right? 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. Wow.

and had to learn how to walk again. It was on a wheelchair and casts for four months. And ended up going back to school in leg braces. So 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. And I should mention you were like a really good tennis player. Like you were an athlete that was presumably part of your identity. Yeah.

Yeah. I was captain of my tennis team. Yeah, tennis was definitely 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 struggle 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. Yeah. It was like, you know, if you're going to a therapist or a shrink, that means that you're crazy. Yeah. So I had a really difficult 20s, let's put it that way. I kept going downhill and got very depressed.

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 20s, right? 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 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. I said, you know, I'm going to go study arts. So I was doing artwork, you know, on the side at that point. What were you doing, by the way? Sculpture, drawing, painting. Painting, painting. Yeah.

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 U.S. You moved to Europe. What were you doing? 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 i was building my photography career and um got into fashion photography and um got into photo journalism 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. 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 bought a farm there. You were like a real nomad. I mean, in your 20s, right? You were just following your whatever,

your curiosity. Yeah, there were no boundaries. There was a lot of loneliness and unknown, but it was, these are the times to do it. Did you have at that time, do you remember having any anxiety about your future or any pressure from your parents in the sense? Because did you ever have any anxiety about, you know, whether you were kind of just drifting? 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, you know, it's a big deal. And so, yeah, it was, it kind of was my shadow. And it walked with me every day and reminded me, you know, what are you doing with your life? Are you going to make it as an artist?

I was actually a pretty successful photographer, making pretty good money. You were published in L and then like other fashion journals I read. Oh yeah, newspapers. I wasn't struggling financially, like I was getting by and some. But 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 want to separate art from money. and 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. I guess from what I read while you were in Prague, you got asked to build a tea house? What's the story? So, you know, Prague was an emerging place then in the early 1990s. It was just the wall had 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 Krakoff 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 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 pace, no-to-go cups. So 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. This is just in, it's like a neighborhood in Prague or in central Prague? It's in old town, yeah, an old town Prague, right in the heart of Prague. So as I got really into the tea culture, and I'd already gone to tea houses 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 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 just, yeah, it swept me away. And I have to

assume that you were not getting rich off of this. No, photography was still my career. And I was living on my farm most. I started an apartment in Prague, but it definitely was not paying the bills. I still had to do photography. But, you know, my lifestyle wasn't very expensive. Meantime, you were living in the Bay Area. Yeah. This isn't now in the, the late 90s. What were you doing professionally at that time? So I moved out here to get my master's in fine arts. And I was working as 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? This is in like 97, 98. 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, Ream, 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 in the family. Somebody should import this tea. Tea made from lime. From a dried lime that comes from the desert to the Middle East.

And I was like, okay, that's what I'm going to do. And the tea, I mean, we talk about tea, but because all I think of tea leaves, but is it basically dried lime peel? The whole dried lime, yeah. There's no tea in it. There's no tea in it. It's just whole dried lime steeped in water. That's how you make it. Yeah, that's it. You just crush it 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 it's got a very unique taste, very sour. But in tradition, culture, 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.

All right. So you are in Prague and Riem, you are in Oakland. Did you like send your brother an email? I mean, this is the late 90s. So email is just kind of starting out. Or did you call them and say, hey, I have this idea. Can you help me? Is that, is that what you did? Or was it something else? No, so we were on a family trip. My dad had a medical convention in L.A. 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, oh, I have this idea that I'm going to do this new me thing.

And then Ahmed said, well, I'm going to do it too. He had the idea too. So it was a synchronistic moment that we were both kind of. of merging this thought, this thought that came in from the universe. And 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 Ream'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 Ream 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. I was like, well, if I come back to the United States, California is probably the place to be. So you decide, yeah, fine, after this trip, I'll come up to Oakland and have. hang out with you? 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 wanted to go somewhere. And, you know, at the time, Bill Clinton was the president. And I was like, this guy seems pretty cool. Smoked 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 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 Reams apartment, 600 square foot apartment in Oakland. 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 U.S. That was your idea? Yes. So that was our just initial idea. So we kept calling it this NUMMI 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. When we come back in just a moment, how Ahmed and Ream 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. 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. Well, I don't think it was thought through, but I thought, again, I was coming, helping Ream get this stuff situated, get grounded. And right when I came to Oakland, you know, Ream 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 kind of just doing more of the research, but we then quickly decided within our first couple of months, months to do a trade show. And we didn't even have a product or a brand yet. So what 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. 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 took? Well, we didn't write a business plan. Did we? No. No.

No business plan. We're trying to figure out the name. That was our first step. Then we landed on N-M-E, and we just kind of knew me, knew me, knew me. 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. I, and then we finally landed on NUMI. NUMI, NUMI, knew me, like, from Arabic, knew me. Yes, so next step was to do the artwork.

So, of course, our priorities were the artwork. 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 then what? Like, where were you going to go to these stores, these, like, natural food stores and try to sell it to them? We were going to do a trade show. That's it.

That's it. We had no idea. We got to go to the trade somehow. No, no. Somebody told us you should do a trade show. But 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? Yes. So I think at one point Ahmed was feeling like it's sacrilegious to put tea into tea bags.

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 Mays that he spent 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. 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. It was like, was it that literal? Well, pretty much. I mean, he, I think he maybe did more of the talking and I did the note taking because 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 rappers 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 a conversation with the FDA because we wanted to make sure everything we were doing was, you know, legal. And when you say you talk to the FDA, did you just like pick up a phone and call the FDA? 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 times I actually received the same person. And then he finally said to me like, you know, people?

People don't really call us to ask us what you can do and what you can't do on your packaging and what in green. 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. And I was like, wow, that's a pretty free market. And then Rima and I changed places too with co-packers. I remember I used to call people for packaging. and I'd say I'm from NUMMI, 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 NUME, 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. And presumably, because you had worked in the T-Business in Prague, you already had a connection to, suppliers? Some, yeah, some. But some we didn't because in Europe we would buy sometimes from middlemen like in Germany. So like with some of the herbs we wanted to bring that I noticed wasn't here in the U.S. like Rui Buss and Honeybush was South Africa or the Numi lime in Middle East, I had to find new suppliers and even the green teas because of our focus on certain quality

and sustainable organic. Fair trade didn't really exist then yet, but I started searching for new suppliers. So initially you thought we're going to, of course, going to sell, assume 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?

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. Because that was going to be, I have to assume, your flagship flavor, right? 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. So the idea initially was to have how many different, would you say flavors of tea or types of tea?

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. Right. So the black teas were single flavors, the green teas were single flavors. The herbs were just one herb, you know, lemongrass, mint, roebous, honeybush, 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 Numi's collection, which was an assorted box of all nine flavors. I remember I interviewed Todd Carmichael and J.P. O'Berdi, founders of La Colom, and we talked a lot of. 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? 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. had, we had to really do a lot of trials and tribulations 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, you know, adulterate it with anything. So this is in 19, 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 Cologne 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? No. I mean, I would say that we kept pitching the idea that what's happening to coffee is going to happen to tea. Right. 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. Yeah. So you are starting to kind of build out the infrastructure of what to do. And before you launched was the idea to mainly. 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? 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. 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? 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 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. And you had to have some money to import the T's and to work with a co-packer. And Riem, I can't imagine you had a whole lot of money, you know, at the time you were in your 30s and early 30s. and kind of doing different jobs here and there. And Ahmed, you had some success running, 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?

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

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 until 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 just felt like, you know, our father was really, really, really there for us. So, all right. So 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? Yeah. We launched that in San Francisco. Gift show. A gift show. And tell me what 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. Like, you guys built this yourself, right? The booth? Well, we built the displays, and then we would rent the tables, and then we would create tablecloths, all that kind of stuff. 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. Oh, yeah.

Yes, three days of work to get it up. And our booth was just an art display. That Rima 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 you were going, it was like you were passing by a gallery. It wasn't even like a business booth. It was a gallery. Yeah. The booth was definitely a showstopper. And how did people react

when they walk by? Well, we had a major passion. 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, is it a little bit of a different twist on a sales technique? 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've 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 had to change pricing because I realized, oh, we're not charging enough. So, but, you know, to our luck, everyone was like, you. you guys are going to be a huge success. I mean, and then the Rainbow Grocery buyer and Neiman Marcus and Dina Daluca. Just passing by you in this trade show. Yeah, so all these retailers would come by and they would just stop.

And we had people piled back wondering who's this new me. 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 one case of everything

in my store. Same with Dean and Duluca. 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, this is Dean and DeLuke. I had no idea who Dean and Deluca was. It was such a big deal. 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 U.S.? 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. Yeah. 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. How did you guys do at that trade show? 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. Do you remember how much you get you guys made in orders? I would say over 100,000 when we look at some of the chains that we got in,

like Sir La Tabla and Neiman Marcus and Cost Plus and Rainbow. I would say over 100,000 for that year. And that's where you were basically selling your T's in the first few years. Is that right? Yeah, food service got fairly popular quickly. Food service, meaning restaurants, restaurants, hotels, and Fremont 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. year and a half to two years. And that first year you launched, Starbucks bought Tazzo tea and started to sell Tazzo at Starbucks locations. Did that turn out to be a good thing for you or a bad thing for it? Was it like all rising tides, you know, floats all boats, or was it a problem? 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 NUME was a great fit. So we actually were able to take advantage of that opportunity. People were ordering from you because they didn't want to support the quote-unquote corporate Starbucks brand. Yeah. And you guys were seen as kind of like the scrappy startup? 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. How much work did you guys have to do in educating consumers about how to drink tea? Was that hard or was it already being done because other people in the industry had already been doing that work? Well, I think that it was because it was in a tea bag, you know, there wasn't any educational component,

it, 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 there's just the real fruits, flowers, and spices. Because most people are drinking teas that are flavored with oils? Yeah, and then they'll add milk. milk and sugar and all kinds of stuff.

And your teas are just flowers and herbs and leaves. And spices, yeah. And then the other thing we had to educate was the whole leaf quality because people who are 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 astringent. 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. 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. 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 U.S. There used to be a ton of tea houses before the Boston Tea Party 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. All right, so you guys start to really get track. very quickly and you had to presumably start to hire people.

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 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 somebody in the warehouse.

So I think by our third or fourth year, we may have had four or five people. 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 Haines Celestial, which is, I think today is like one of the biggest natural food companies in the U.S. and sort of like an 800-pound gorilla. And this is the company that owned Celestial Tea, right? Yeah, they own Celestial Seasonings and 40, 50 other amazing natural food brands. And, you know, tea was definitely creating a buzz. Tea was happening. Tea's the most consumed beverage in the world, and everybody knows it.

And then the Haines Celestial, yeah, we had met with the gentleman who was running it then at a trade show. And then he gave us a call. What happened? 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? And then little by little, I started looking at his badge.

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

Pursue a conversation about a potential acquisition. Yeah. I mean, that must have been, just positive. It must have been kind of exciting. I mean, just four years in. Because I have to assume up until this point, you guys were doing well, you know, right? I think you'd $2, $3 million in revenue a year, but you probably still weren't paying yourselves that much.

Yeah, we were already probably north of $4.5 million by year four, and we were probably taking $2,000 to $3,000 a month of salary. So we were definitely not paying ourselves. I mean, that's, I think our first year were $1,000 a month, then it went to $2,000, then it went to $3,000. So, yeah, we weren't rolling. in sleeping in cash. So if Hay and Celestial comes around with a potential acquisition offer, I mean, I have to assume

that that was kind of exciting. It was very exciting. Yeah. I mean, we were kind of, you know, trepidacious. We were like excited. I mean, when we first launched, I remember I thought, okay, we're going to do this for like four or 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. It's in the fall because most people drink it hot? Yes. Yeah. It's in the fall is chillier. Yeah, it gets cold. The tea season is usually from like October to March. 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 your cash needs high, but your cash flows low.

So Han Celestial starts to kind of talk to you, and do they eventually make an offer, a firm offer? Yeah, they did make the hard offer. Rima 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. One point he said, you have till the end of the day to make a decision, remember? I was like, who the hell are you to put our back against the wall and make us make a decision by the end of the day? When we come back in just a moment,

what Ream and Ahmed decided to do at the end of that day and why even though Numi T 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. Hey, welcome back to How I Built This. I'm Guy Raz. So it's the early 2000s. Hain Celestial has just made an offer to buy Numi Tea, and they've given Reim 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? Yeah.

And they were offering you between $6 and $8 million to buy, to buy, to, buy everything, your intellectual property, your branding, your business. 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, we 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. So obviously you said this as a low-ball offer. Yeah, and I think because we were a threat, and because we were emerging so fast, we were growing at shelf 160%. 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 it was too near to us to let go.

We just loved it too much. And we were having a lot of fun in those years. So even though you had, because $4 million, sounds like a lot of money, but you need to pay for the copackers 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? 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. from the bank on our dad's house, which by then increased to almost a million dollars, now we were really beholden to this loan and making sure we can pay it back one day. So it would have taken out our debt and would have given us each a few million dollars, but that wasn't what 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.

All right. So you walk away from this offer, but you, you've got cash flow challenges. Yeah, I mean, there was some payroll Fridays that would just literally lay on my back on the floor of the office and wonder how are we going to 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 going to lose cash. We're not going to be profitable. Was that stressful for the two of you to be running a business that was not profitable?

Sometimes. You know, when you're building momentum and building success, you know you're going to get through it even if you're not profitable. And other times when you don't see where 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 going to happen. Then we got, we also got investors too, maybe a year after that. An outside investor? 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 just got lucky. What about as you guys grew and had to kind of deal with it? the challenges of growth. What about the relationship between the two of you? Was it pretty clear what each of you did? Did that help you guys kind of have an easy, smooth relationship? Or was there

ever any tension between the two of you? Well, I think in terms of roles, it became more and more clear, you know, what our strengths were. Yeah. It was a lot of difficult times where we argued and fought. About what? About what? 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 have stepped on my foot on something. There was maybe issues with different employees.

I would say things like that. 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 doubt of me and my lack of ability to just be present to us as siblings and to the business. Because you were worried that the money would run out? 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. It was just, let's get things done. Let's do it now. These are timelines, deadlines.

It's a normal reaction. I mean, we humans are designed to survive. Yeah. Right? And when you feel like you're not going to, most of us freak out. 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.

It's very hard. 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'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. But meantime, was that even possible to grow 30, 40, 50% a year? 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 growth became a lot more challenging. Then that, well, there was the 2009-10 recession. 2008, where we, you know, we had a couple 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 Ream 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. Reams trusted me with, you know, running the finance

or operation side, obviously hiring the right people who run it. but interpersonal communication styles, just I realize that's not where I thrive and that doesn't, you know, I don't shine the best in that. So I think there was a lot of conflict during those years. The other thing is that you aren'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 using really expensive, still do. You use expensive material, biodegradable. And I mean, you're packaging. You go to great lengths not to use industrial inks and things like that, right?

I mean, I'm assuming that's more expensive. 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 were very conscientious around, you know, in our environmental footprint. So we used soy-based inks. From the beginning, we didn't understand why people use shrink wrap, so we never used shrink wrap. Shramp around the tea box, right? 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. We converted all of that into a plant-based wrapper. That is hugely revolutionary if everybody could do that. Were you ever under pressure from investors to reduce your price point or from distributors or retailers at all? 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 price 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, which is ironic. 20 years into the business we're promoting now, then 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. When was that, 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? 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. 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. 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 steak and kind of enjoy your life without having to grind away every day? Well, I do enjoy my life every day, and I don't feel like 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 NUMMI 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 NUME 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. And we want it to continue to live those values and change the way people drink and eat. And when you think about 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. And it kind of was kind of haphazard of 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, RIME? I think I would have been surprised that I would have lasted this long.

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 PO 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. my town and there's

Numi, you know, and my husband's always like, she's the owner and I'm all embarrassed and they're like, oh my gosh. So I wouldn't have never expected that. I mean, NUMMI has been the best vehicle for me personally and to learn and grow so much about where we could put our time and to Riem'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 yeah 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 we protected the brand from being too mainstream too quick and staying in the ritz carlton's in the fair mounts and then dina delucaz and and because walmart wanted us in year seven eight you know trader joes 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 into mass market and grocery quicker, which would have created more impact because more revenue, more product, more profits. So I just think there was moments we held it back from rapid expansion. Riem, 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,

to figure out what you were going to do and it wasn't clear and 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? 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, 7, stop working at 11, 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 Tazzo 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 and he had worked hard and had made money. So it was a combination of a lot of things. Ahman, how about you? 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. So, yeah, I think it's been, it's amazing. That's Ahmed Rahim and Riem Hassani, 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 hibt at npr.org. And if you want to follow us on Twitter or at Guy Raz or at How I Built This. You can also find us on Instagram. That's at How I Built This NPR or my personal account. at guy.ros. This episode was produced by Casey Herman with music composed by Ramtin Arablui. It was edited by Neva Grant

with research help from Dereth Gales. Our production staff includes J.C. Howard, Rachel Falkner, James Delahousie, Julia Carney, Farah Safari, Liz Metzger, Janet Ujong Lee, and Annalise Ober. Our intern is Harrison V.J. Choi,

and Jeff Rogers is our executive producer. I'm Guy Raz, and you've been listening. to how I built this. This is NPR.