Find Your Exit | Ori Zohar | Burlap & Barrel

 

In this flavorful episode of Exit Rich, host Michelle Seiler Tucker sits down with Ori Zohar, co-founder of Burlap & Barrel, the single-origin spice company that took Shark Tank — and kitchens across America — by storm.

Ori reveals how he and his partner Ethan Frisch, transformed one of the world’s oldest trades into a modern, mission-driven business that connects smallholder farmers directly to consumers. From their creative Shark Tank pitch (and the wardrobe mishap that almost went wrong) to surviving the pandemic by shifting 75% of sales to their own website, Ori shares the behind-the-scenes story of resilience, smart growth, and purpose-driven entrepreneurship.

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Ori Zohar is the co-founder & co-CEO of Burlap & Barrel, the first comprehensive single origin spice company in the US. A Public Benefit Corporation, Burlap & Barrel partners directly with smallholder farms around the world to build equitable, transparent, and sustainable spice supply chains. Their spices have been featured on Shark Tank and The Bear on Hulu, and they shipped over 1 million jars of spices to chefs and home cooks nationwide in the last 12 months.

Ori is a social entrepreneur with over 20 years of experience building mission-driven businesses. Ori’s background is in business-building, entrepreneurship, and eCommerce. He was named one of Food & Wine’s Game Changers and the Specialty Food Association’s Breakout Talent to Watch.

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From Shark Tank To Spice Empire: The Burlap & Barrel Success Story & Exit Strategies With Ori Zohar

Welcome to another episode of the show. Every episode, we have a wonderful special guest, and we love interviewing Shark Tank guests because who can you learn more information from than the Sharks? I learn more from the guests, actually. They’ve been on the show, Shark Tank. We have Ori Zohar.

Welcome to the show. His company name is Burlap & Barrel. He has a partner that you will also see on the show. I’m happy to have you here. Welcome to the show. I’m not going to go over the bio because you’re going to talk about you and your partner’s background. By the way, it is very interesting. Get ready. We’re going to bring up the Shark Tank episode.

“Next up is a modern version of the oldest trades in the world.

Shars, does this look familiar to you? Have you noticed that when you buy spices at the supermarket, they don’t have much flavor?

Gross.

I’m Ethan, a chef turned aid worker from New York City.

I’m a marketing executive turned entrepreneur. Born in Israel and raised in Baltimore, Maryland. We are the co-founders of Burlap & Barrel.”

Burlap & Barrel, really good entrance. I watch a lot of Shark Tank shows. I’ve been an international keynote speaker for years. I always say you’ve got to have that opening line that Selva says, “You’ve got to have something that catches or attention span of a human.” Now it’s like six seconds. That was a great opening. You seem like you struggled a little bit trying to take that off.

The Shark Tank Pitch & Opening Gimmick

I don’t even understand. First of all, I don’t know if the rest of your guests get this, but there’s definitely a little bit of PTSD watching Shark Tank episodes after all the intensity and prep and legal review and everything that it took to get there. We knew we were big fans of the show. We’ve watched it for many years. My mother is an even bigger fan, so we really became students of the show through all this.

You have to have a little bit of an opening gimmick to catch people’s attention. We initially pitch them on, “Let’s do a black and white grocery store and then drop the curtain and have this really colorful display around.” They’re like, “We cannot do that.” We’re like, “Let’s throw spices around.” We were just trying to find ways to catch people’s attention. What we settled on is, “Let’s wear our traditional clothing.”

You need a bit of an opening gimmick to catch people’s attention. Share on X

I’m on the business side, Ethan, my business partner is the chef and culinary side of it. We said, “Let’s start in our traditional role clothing, our corporate gigs, if you will, like this strong visual metaphor for our backgrounds. Let’s tear it off.” Ethan had this button chef’s coat with the tear-away buttons. I was wearing a dicky business suit that I’d stapled together. It was really held together by Velcro and staples and all that stuff. We got one shot.

For those who don’t know, when you sign up to do Shark Tank, they’re like, you sign your permission for any footage that they get, whether or not they’re filming, whenever they’re filming all that. I’m like, the last thing I need to do is trip over the carpet or do something. This was definitely the hardest maneuver of the whole presentation. It came up with a bang and hopefully humanized us. A little bit of struggle, a little bit of good. Do you know what I mean?

A thousand percent. It was great.

“Burlap & Barrel is a single-origin spice company and social enterprise working directly with the best spice farmers around the world to get you spices that are way better than anything you’ve ever tasted.

We’re talking heirloom royal cinnamon from the mountains of Vietnam and spicy lemony Zanzibar black peppercorns that grow wild on remote islands off the east coast of Africa. We’re taking on centuries-old systems that disconnect spice farmers from home cooks. By bypassing layers of middlemen, our partners farmers make more money, and you get spices that are fresher, higher quality, and traceable back to the origin.

By sourcing directly, we’re able to pay our partner farmers a price that helps support their livelihood. We’re able to get spices that have never ever been available before in the US. Our spices are guaranteed to be your new secret ingredients in the kitchen. We’re looking for $500,000 in exchange for 5% of our company.”

I want to tell you, I learned a lot about spices and seasoning watching this video and then doing some research on you. That’s absolutely beautiful. I had no idea how complicated the industry is. It seems like a very complicated and competitive industry. Why did y’all choose this without going too much forward? You talked about it later in the video, and we also want to dive into valuation a little bit.

We talked to a lot of founders who have been on Shark Tank, and what we heard from them is that they said whether they love you or hate you, whether you get a deal or don’t get a deal, you get to give this uninterrupted two-minute pitch in front of all the viewers of the show. That was actually where we spent the most time in all of our prep was how do we distill?

Normally, we talk to people who are like excellent home cooks who really are interested in spice, who have found us because they’re reading food and wine or Savor or whatever. Now we’re like we’re talking to America. We’re talking to Shark Tank viewers. We worked so hard to distill this and not make spices feel intimidating to make them feel like we use the term secret ingredient was this like a really fun way into the world of spices, saying, “I’m a little intimidated by cooking. I don’t buy spices online. I barely even buy them at the grocery store.”

We want to be like, “No, come into our world. It’s going to be this vibrant, colorful, fun, approachable world where you’re going to really end up eating much better food.” The first reaction we often get from spices is like, “I need to learn how to cook a new dish or a new cuisine to learn how to use turmeric.” We want it to be like, “No, you don’t.” Put a little bit of it in your rice, put a little bit with your chicken, put it in your coffee.”

I don’t know. Just to say, this is meant to be this warm, easy, approachable thing that you don’t need to be intimidated by, and that this can really level you up as a home cook. That was the angle that we took everything from because nobody knows that cinnamon is tree bark or that peppercorns are the fruit of a climbing vine. We want to show you a little bit of that, but really still have it feel really fun and warm.

I agree a thousand percent, and you’re going to dive a little bit more into this. When I look at spices, I mean, my husband was more of the cook than I ever was. Now I’m the cook, and I’ll look at these spices and I’m like, “I don’t know what goes with what. I don’t know what I should use on what.” We also want to talk a little bit about evaluation because you’re going to get some pushback on that. We’ll save that and play a little bit more video.

“Sharks, are you ready to spice things up in the kitchen with burlap and barrel? Now, sharks, in front of you, you’ll see four of our best-selling spices. Please pick up the jars, pick up the bowls, and give everything a good sniff. Take a little pinch in your fingers, or use the spoon to actually taste the spices themselves. Royal cinnamon, a very rare heirloom species of cinnamon from Vietnam. Super sweet and spicy.

It almost doesn’t even taste like conventional cinnamon. It’s incomparable. It’s really good.

Next is our black lime. These are sun-dried limes from Guatemala that turn black as they dry, and then they’re ground into a powder.

Super unusual, grated and marinated.

Really distinctive flavor.

I actually like this. It’s very unusual.

Next is our wild cumin, hand-picked forage in the mountains of Northeastern Afghanistan. I lived there for a couple of years, and this was really the spike.”

That’s the reaction we wanted. We were talking about, “How do you sample the spices?” Every time we’ve sampled on like popcorn or yogurt or whatever, the conversation immediately gets sidetracked into, “You should make popcorn or this would be great on chips.” We’re like, “We want them to smell and taste the spices directly. Want them to cough. We want them to feel that intensity.” We felt that that was the best way for possibly for the sharks to interact with it. It created a little bit of drama, and it created a little bit of story right there.

It’s the same thing if you’re doing a wine tasting. You don’t want them to just chug it down. You don’t want them to focus on the chocolate or the cheese that goes with wine. You want them to focus on the flavor and the smell, and the aroma.

“I’m eating the peppercorn.

Go for it. It’s very hot.

I don’t know.

It’s excellent.

How many spices are in your portfolio?

Are we about 75 individual spices?

Are you online only?”

Applying The 80/20 Rule To Inventory & Revenue

Let’s stop right there. 75 spices is a lot of spices, and the golden rule is 80% of your revenue will come from 20% of your inventory, typically. Out of 75 spices, what’s your percentage breakdown rule?

You’re exactly right. Royal Cinnamon is our number one bestseller. It’s literally almost like ten percent. That one spice is almost ten percent of our business. It’s really wild, but that rule is remarkably holds up really well.

Let me say something real quick, because this is very important for the entrepreneurs tuning in. That rule holds up for everything. Everything holds up for your revenue. Eighty percent of your revenue typically comes from 20% of your clients. Eighty percent of what comes from your marketing channels will typically come from twenty percent of those marketing channels. It really is your entire business, but go ahead.

It’s hard to find those things, but when you find them, you know because all of a sudden they start powering your business. The counterintuitive thing that we found out about spices is that a lot of people, sometimes, our new spice would be the entry point. People wanted to do all their shopping, or they were looking for something that they had run out of.

Maybe they ran out of paprika or turmeric, or maybe they were looking for like a wild peppercorn that they hadn’t tried before, but then they’d go into their cart and be like, “What else do I need in my home?” They add cinnamon and garlic powder, and they add the hits. Even if you didn’t come here for cinnamon and garlic powder, you often ended up with cinnamon or garlic powder in your cart. That’s what aggregated all of that demand in one place.

On the one hand, there was an additive to keep bringing in more spices. Even if they didn’t sell a ton, we just knew that people talked about Trader Joe’s like, “I don’t want to shop at Trader Joe’s because I cannot get everything I need there. I don’t want to go to three grocery stores all at once.” We try to be like a one-stop shop for spices, even though like exactly like you said that 20% of spices drive 80% of our sales, no questions asked.

We tried to be this “one-stop shop” for spices, even though 20% of spices drive 80% of our sales—no questions asked. Share on X

You’ve got to worry about life versus life. First in, last out. What about obsolete inventory? What’s your shelf life on your spices?

We’re lucky with spices that they’re this long-term shelf-stable product. We put a three-year best buy date on all of our spices when we pack. What we’ve gotten really good at is we have this like really incredible director of operations, Jake, who came out of Unilever and came out of running these big, crazy, intense supply chains.

We’ve broken our spice line into two parts. The top like twenty skews, that twenty percent that you talked about, is the can never run out of stock. We keep really heavy inventories of these spices. The bottom 80%, it’s okay if we run out. As you said, we have this really heavy inventory balance because we buy spices once a year at harvest. What ends up happening is we just buy smaller amounts of like the bottom 80% because if it runs out, it’s okay. We’d much rather run out here and there than like have these really heavy-duty inventory balances that then we end up having to dump in the market for like a fraction of the cost because they’re six months out from their best buy date.

That’s very important for everyone to know. If you have inventory, you’ve got to really know what sells and what your shelf life you gentlemen is.

Eighty percent is direct to consumer, and the other fifteen percent is split as a wholesale between bulk restaurant and grocery.

That is very important. Repeat that again for our client, for our audience.

Even when we were just in an early stage, there were only two of us in the business, and we still had four lines of revenue. It was direct to consumer, which was 75% still today it is 75% of our revenue.

Let’s pause there. Seventy-five percent is direct to consumer. Is that from your website, or is that from Amazon, or is that from other channels?

Seventy-five percent, I’m referring to just business on our website directly. We have another ten percent that comes from Amazon.

Seventy-five percent is on your website?

Yeah, exactly.

Does the whole 75% all come from your website?

The COVID-19 Pandemic’s Impact & Business Pivot (Direct-To-Consumer Growth)

Yeah, and it all changed in the pandemic. Before the pandemic, we were really selling more to restaurants and chefs doing wholesale. In March of 2020, all the chefs in all the restaurants closed down. We thought we were going to be out of business. By May, home cooks had more than made up for the 50% of our revenue that came from restaurants, and now came from home cooks on top of what was already coming.

By May, we had moved from we’re going to be out of business to “We’re going to be out of spices. It was this really wild flip here.” During our e-commerce, everyone was stuck at home. Everyone was going online to buy some groceries, because we’re out of stock. That really created this moment in a change of behavior.

Internally, Ethan and I were looking at each other, and we were just like, “We have to capitalize on this moment where unique behavior like patterns are getting broken and people are going online for spices,” which they would have never done if it weren’t the pandemic. If there wasn’t this really wild thing sweeping through the world that changed all their behavior. All of a sudden, we had these customers coming online, and our number one rule was “How do we just keep their attention? If they’re here, how do we hold on to them?”

When the pandemic eventually ends, if you can go back into grocery stores. How do we say no? We have so much fun stuff and fresh stuff, and high-quality spices that all you want to do is come back to our site. We’ve locked that change behavior into place versus it being just like a temporary change where you’re like, “I’m just going to do this right now, but I cannot wait to get back to the grocery store and buy those like mediocre spices at the shelf.”

Just to clarify, you’re 75% online, 15% brick and mortar, but out of that 75% online, 10% of that is Amazon.

The way that it is’s we’re 75% online with our website, and then the next ten percent is on Amazon. That’s been relatively nuisance, Shark Tank. At that time, we weren’t doing a lot. The fifteen percent is wholesale. The remaining fifteen percent is between grocery, food service to restaurants, and bulk to like food manufacturers, and just some restaurants need a lot of spices, but that’s the other 15% of our business.

Ladies and gentlemen, listen to me versus COVID failure, but he maintained it. The company maintained it because most people have really good breaks that catapult their business to the next level, but then they didn’t maintain that growth. They went back as normal. It is nearly impossible to get 75% direct to consumer on your website. Many entrepreneurs have 80% or 90% tied up in Amazon. When Amazon decides to cut you or promote someone else, you’re literally out of business. Great job because you achieved what most business owners never will. He was able to hold on to it. All right, let’s see what’s next here.

“We’ve been friends for over fifteen years. With Ethan’s culinary background, I was the eating side of the relationship. Whenever he was cooking, I wanted to hang out there and eat, and we really built a strong friendship over that.

I left kitchens to go to graduate school. I got a master’s degree in international development. I moved to Afghanistan, where I worked for one of the biggest nonprofits in the world, managing a huge.

What were you doing? I was building over 200 schools in very remote rural areas. I did logistics for Doctors Without Borders, but I tasted that cumin that you have on the table in front.”

One thing that I think is really crucial to understand is if you go to Shark Tank, if you don’t go on Shark Tank, just talking to your clients, know who they are, know who your audience is, know who’s going to be on the show. Gwyneth is a huge philanthropist. I never say that we’re right philanthropists. You say it for me.

By the way, we found that Gwyneth was going to be on the show.

You’re humanitarian.

She was going to be on the show like a week before filming, and you’ll see she serves us a little curveball later in the episode, but she is a really excellent.

If you know somebody, like one, if it’s going to be a typical shot, do research and just try to tie some of that pitch into what their sweet spot is to push their buttons to make them want to invest in you. That’s what pitching is, trying to tailor that presentation to your audience. I thought that was great.

“He’s being modest. You’re talking to one of the foremost experts on spices in the world. Very few people have even been a fraction of the number of spice farms that he’s been to.

Ethan, you were in Afghanistan. Take me through what happened next. You went back to New York with some cumin?

I put it in a duffel bag. Yeah. I started carrying at home, truly. I was just sharing it with friends in the restaurant industry, and the response was overwhelming. I just started trying to put the pieces together.

Out of your apartment in New York?

Yeah, exactly. We ran the business out of my living room. We’ve been in business for six years. We’ve evolved quite a bit since.”

A couple of things to unpack there. Number one, my fellow entrepreneurs. These two gentlemen they’re what most owners don’t. If you’re going to partner, don’t partner with someone who’s just like you. If you’re going to bring a friend into business, make sure that you are partnering with your weaknesses. Make sure you’re focused on your strengths and partner with your weaknesses. If you look at these two gentlemen, they have very different backgrounds. Extreme difference. Now, it’s funny, he’s the chef, but you’re the eater.

He’s the chef, and I’m the business side of it. We feel like we’re two sides of the same coin. We need both sides, but we’re really different, and our skill sets are really complementary. That’s been part of our secret sauce for how we’ve been able to build this business.

With this partnership, we feel like we're two sides of the same coin. We need both sides, even though we're really different. Our skill sets are truly complementary — and that's been part of our secret sauce. Share on X

You have to do that. Many business owners are afraid to lose control, and they don’t want to look less than, so they hire people and partner with people who are less than, and they have similar skills, and it’s very important to do that. Also, pay attention. Most business owners, if you’re out there and you’re getting discouraged, don’t because most business owners start out in their pickup truck. They start on a kitchen table. They started out of their garage, and you heard them say they started out of the living room. In a tiny, teeny, probably New York apartment.

You betcha. To give Ethan credit, like in the first year of the business, he was flying around the world. He was building these new supply chains. He was meeting with partner farmers. One thing that we figured out was that it was cheaper for us to fly to the partner farmer, meet them, spend time with them, and then carry back spices in checked bags. That was Ethan’s first method of bringing spices back. It was like hiring an analyst or doing research, or doing it through a broker or freight forwarder. We just did it ourselves.

That was really a lot of the first year was Ethan traveling around the world and building these new supply chains, but it was also based on trust. That was just another big lesson that we learned. We have no contracts with any of our partner farmers. You try to enforce a contract with a Sri Lankan cinnamon farmer. It’s all based on trust, and it’s all based on relationships. In the first year, Ethan loaded almost a thousand kilos over 2000 pounds, of spices into his queen’s apartment.

It was a lot.

That’s how the business really got off the ground, was was really working and shipping out of his apartment.

What I like to do, I’ll just mention one more thing, because sometimes guests get short-tempered and they get in trouble for this. A lot of time. I see short-tempered people go on their guest, and they are very braggadocious. I loved that Ethan was very modest, and you were his cheerleader. No, wait, what you’re not saying is this, you’re one out of four. It’s always better when somebody else tells you than when you try to sell yourself. I thought that was good, too.

Business Metrics (Revenue, Margins, Valuation, & EBITDA Strategy)

“Tell us about the business. Give us a range of costs and what your margins are, and your total sales, etc.

Our spices typically retail for $9.99. Our landed cost is $2.50. We have, on average, a 75% margin on it. Lifetime, we’ve done $12 million worth of revenue.”

Now $12 million lifetime, that was six years, I believe?

Yeah, over six years. That’s right.

We’re going to break it down right here, but $12 million is a lot. People have business for twenty years and never made $12 million.

“Walk us through those six years so we can see the sales ramp.

Our first year, we did $100,000 in revenue.

What year was that?

That was 2017. In 2018, we grew to $250,000 in sales. In 2019, we did $600,000 in sales. In 2020, during the pandemic, we ended the year with $3 million worth of sales. A lot of people cooked, didn’t they? In 2021, we closed the year at $5.1 million in sales.

What about this year?

This year, we’re on track to do between $6, and $7 million worth of revenue.

Good for you.

How much are you going to make on that?

The bottom line is around ten percent. It’s our net margin.

$690,000?

Yeah.”

A lot to unpack there, but I want to keep it moving. Number one, know your numbers. He knew his cost. He knew his cost from manufacturing to shipping to someone’s business or house. Number two, they did $12 million in revenue. I need to stop saying he, because you have Ethan. They did $12 million in revenue, and he knew his numbers. Now it’s not always about the revenue, my friends. It’s about the profit, what I like to call EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization. His is ten percent. Is that pretty common in your specific industry to have a ten percent margin? Is that low? Is that high?

Oftentimes, food companies, especially if they’re going into big national grocery stores, they’re doing it at a loss. Even if they’re growing in e-commerce, they’re sometimes spending up to a hundred percent of their revenue on paid acquisition and all that stuff. We are in a growth mode in our company. We’re not here to kick back and relax, and just like pull a ton of cash out of the business.

We were very intentional. Anytime we had extra money, we were like, “Let’s buy more inventory. Let’s hire more people. Let’s spend more on marketing.” We were in this moment, we were reinvesting every dollar we had in the business. I think that there are like phases for businesses to become the cash cow and pull a lot of money out of it and show crazy margins and all of that stuff.

For us as entrepreneurs, we’re like, we’re still growing, and growth is really expensive. We were intentionally staying profitable so that we could grow and cover our costs and everything every year. We wanted to just barely cover our costs every year. That’s where we were like, “Let’s hit a ten percent net margin, but everything else goes back into the business.” It was a good cash conversion.

Were you all paying your own salaries?

Those after salaries and everything. In the first years, we paid ourselves zero salary. After two years, we pulled $36,000 each out of the business, and we were like, “It’s all happening.” We’ve been slowly trying to get ourselves closer and closer to market salary. Again, like we’re not trying to cash out here, where we’re really trying to put all the money back into the business to keep going.

We’re going to plan your exit. Everybody needs to start with the inner mind.

Which is amazing.

“Unfortunately, this is not just a business. I know a tiny bit about it. To me, ketchup is the ultimate spice. I just don’t know. For those reasons, I’m out.

Thank you so much.”

I love Mark. I just don’t know how it is, and a lot of America’s lashes.

“Listen, guys, it tastes great. I think it does taste stronger. I also think it’s a really crowded space. There are so many spices out there. I like so much to be involved with things that are a little bit more unique. While I’ll be a customer, I’m not going to be an investor. I’m sorry. I’m out.”

We have two sharks out. When you and Ethan went into this, did you have an idea of who you really wanted as your shark?

Yeah. First of we’re really excited about Gwyneth coming in. We knew she wasn’t a big-time investor, but we knew that she loved food. By the way, at that point, Goop had already written about us a couple of times. We thought we were a little bit in her neighborhood in our universe. It turns out we weren’t, but we’ll get to that.

We also like Mark. Mark, in general, is a vegan. We’re like, he must know, and he must be consuming a lot of spices for flavor for all of that. We were a little bit disappointed when he came out without that. We like Mr. Wonderful. He’s a wild guy. He has his Chef Wonderful line and all that stuff. He already has a portfolio of food companies, and that could be really useful.

Yeah, but don’t give anything away.

Yeah. We were hoping for him, too. We had a few sharks on our wish list.

“Got it. Thank you. We appreciate it.

I wish you had come in and asked for $250,000, and we could have negotiated you up a little bit. The valuation is crazy. I’m out.”

Here’s what we can talk about valuation. Your valuation, I believe, was five million.

We came in 500k for 5%. We came in with a $10 million valuation. We came asking for a lot.

$10 million valuation. That is a lot, especially when multiples are on EBITDA and not on revenue. At that point, we are 690 in EBITDA. What is that, twenty multiples?

Yeah, a lot.

That is a lot. Did you know you were walking high? You’re going to lose all if you’re too high.

We were warned about that, honestly, beforehand. We heard that like you want to get them and you want to hook the sharks on a lower valuation and then get it bit up. When we were looking at it, we thought about a couple of things. One, we were like, “Listen, we’re a little bit further along company than most Shark Tank companies. We’ve actually shown revenue. We’ve grown. We’ve done all that stuff.”

Two, like you said, we were growing through a wild time, which was the pandemic. We were able to nail that and keep growing from there. We had this really healthy e-commerce business that didn’t have this concentration risk of one giant grocery store being like 80% of our revenue, and then maybe cutting us.

As you said, only on Amazon, and then Amazon changes the algorithm, or somebody outbids us. We felt like we had created a pretty stable and safe investment. For that, we wanted to ask for a higher valuation. The other thing that was going on in the back of our minds is that we heard from so many entrepreneurs who were like, they like you, they hate you, they invest in one of us. It’s amazing exposure. We’re like, “We’re going to make them work for it and see that they really want to be part of it.”

At the very least, if we get on Shark Tank and we get on TV and we get to share our pitch, we really hope that that’ll really drive our business and bring us in front of lots of new consumers. We were willing to risk it a little bit more. We’re a profitable, bootstrapped social enterprise. If we’re going to change that to bring in one of these heavy-duty sharks, it’s got to be for the right price. We’re not just going to give away 25% of our business to these hungry investors. We wanted to make it a bit of a stretch.

At the very least, if we get on Shark Tank and on TV to share our pitch, we hope that will help drive our business and put us in front of lots of new consumers. Share on X

There’s a fine line that you have to walk.

It’s a fine line.

You don’t want it so high that people just think, “Market your product and get consumers.” A lot of people do that. It’s got to be that fine line. If you really want a shark, you cannot go to twenty multiple. People really need to look at their EBITDA and not just their revenues. Ethan looks so sad right there.

Yeah. Listen, you’re in front of them. Who knows what’s going to happen? We also, by the way, filmed for like 45 minutes, an hour. I have no idea. We had no phones or clocks or anything. They cut this into a crazy power eight-minute session. Those were real reactions.

I’m taking your eight minutes and putting them into an hour.

I love it.

“Just the difference in the spices. It’s like a cacophony of fireworks in your mouth. When you’re using beautiful ingredients like this, it’s so easy to make food that’s much healthier because the quality is so fantastic.

I’m a little surprised that I’ve never heard of the brand before, which gives me a bit of pause because I’m very active in the space, which makes me wonder if you’re really going to be able to proliferate the market. I don’t know if it can grow at the speed that I would like it to. I think for those reasons I’m out.”

 

That was a shocker to you, because somebody in the business, not in the business, but she’s using the spices. She said it’s like an explosion in your mouth. It’s beautiful, but she never heard of you. At what point prepping for the shark tank did was she going to be on?

We only knew maybe a week or two before. You were with the team of producers, and the team of producers was like a week before filming, they were like, “Guess what? We got you lined up because the date was set, everything else was set.” It was maybe a week, maximum two weeks, before we knew the show was going to be part of it.

There are so many things if you had more time, you could have gotten in front of. There are lots of different things in front of people. There could have been a lot more prep, but you didn’t have the prep time. You did the best that you could. She would have probably been a good investor for sure. You did your best.

“I do really love what you’re doing. I’m out. I’m sorry.”

She’s making a spokesman. A good spokesperson.

By the way, she uses our spices now, and she posts about us and all that stuff. She’s been really positive. I will tell you that was definitely we were really excited to hear that Gwyneth was going to be on it because we were like, “She must know who we are.” Honestly, we realized that as a company, our best customers, we look at every order that comes in.

Our best customers are people who have AOL Hotmail or Yahoo email addresses. What we found out is that our best customers are these middle-aged ladies who have some disposable income, who know how to cook, and who also don’t live in major cities. They’re not going to drive around. They’re not going to drive for an hour to go to some specialty store to get ingredients. They’re going to order online.

What we were really succeeding with was this different audience that I think Goop really talks to. We weren’t in this cool kid area. We weren’t in this fashion-tastemaker era, aside from working with a number of journalists. It makes sense that we weren’t really in Gwyneth Paltrow’s orbit, but we were still really sad to hear that. We were really hoping that she would get it. We also knew our customers, and they weren’t exactly the goof customers. Now we are in her orbit. If anything, Shark Tank was very good to just get into Gwyneth Paltrow’s world.

That’s amazing. Who your clientele is, and guess what? That clientele is going to have stickability and loyalty. They’re going to stay with you through and through and through, and you’re not a trend. A lot of times, people jump on the bandwagon because, like, “Here’s a new trend in this.” They don’t have stick ability. They don’t have loyalty because they jump to the next brand.

“Thank you so much. What are you thinking, Mr. Wonderful?

I’m struggling with it because 500K is huge, and I don’t see the path to getting it back. Plus, I don’t send $500,000 out just to get it back. I want a multiple of it.

We came here with an idea for you.

Let’s hear it.“

I’m going to pause it real quick. I don’t want to spend a lot of time here, but that is because most guests don’t come for the idea. They’ll come with proposals or ideas for the sharks. You’re one of the only ones I’ve actually seen do that.

“Deals regularly. When we do a collaboration blend with a chef or an artist, or an influencer, we find that to be a very effective customer.

What else can you give?

We give a standard 20% on an $11.99 retail product. That’s $2.39 per unit sold.

I’ll make you an offer. While we’re talking about this. I’ll give you $500,000 for $2.30 royalty on an order.

What we’d really like to do is a Mr. Wonderful set of spices.

That’s a different deal.

You’d only get it on that?

We’d get the royalty on that jar, but you’ll still get it back.

Not all the jars, just your new specialty jar.

I’m not going to do that to you. You’re kidding?”

See, you had a good offer until you sat on his drawer because I invest in companies too. I would react in the exact same way. “Wait. No, I wanted all of it. I don’t want to just go to the door.”

We were able to do a really rich royalty on a subset of spices. If we do it across the whole business, then we would have needed, like they just asked us about our profitability and our EBITDA. If we’re cutting 20% off the top, that’s going to take us from profitable to unprofitable really quickly. It wouldn’t have set us up for success. We were hoping that he would get excited by it.

We do a Mr. Wonderful collection. He promotes it. It’s how he’s cooking and all that brings new customers in. The rest of the spices are $9.99. The business overall grows. We were trying to give him a little bit of, like, give him a section of the business that would be his playground that he would very directly get paid back from. Across the whole business, that would have either had to really increase prices on everything, or I don’t know what. We couldn’t swallow that pill.

When you said twenty percent, my skin crawled, because I’m like, “Wait a minute, that’s not profitable.” Even twenty percent before you said on your product, on your jar. I’m like, “Wait a minute, that’s not feasible. That’s not profitable long-term. You cannot do twenty percent.” That’s what I’m saying as an expert in what I do, and then we’ll call his jars.

I think a different solution could have been, “I’ll pay you twenty percent on all your products so he brings all new people, and then I’ll give you 5%, 2%, 3%, whatever percentage is beautiful on all the products.” He’s really motivated for that twenty percent, but he also knows he’s going to get compensated for all the products.

That’s a very good point. No argument there.

High insight. A lot of times, people hire me as their coach when they go on Shark Tank. Number one, to get their numbers right. Number two, to keep them on things like this. You guys did an amazing job. It’s just high insight.

“You’re not banking on you?

That makes no sense.

You’re not banking on you?

We were hoping to his like competitive.

Ten percent equity, and I want a twenty percent royalty on everything until I get back a million bucks, and then it goes away. Listen, it’s an offer, Mark.

There’s your offer, guys. What do you want to do?

We have a counteroffer.

We would do a twenty percent royalty on Mr. Wonderful’s branded line of spices and count on you to help promote them. We would do a ten percent affiliate cut on everything that you drive to us, and we would do 5% equity for $500,000.

There’s no way I’m doing that deal. I’m out.

Thank you so much. Guys, good luck.

Thank you for the spices.

Thank you.

The sharks are going to regret it. They put a fire under us, and we are just going to go even harder to get even bigger.”

The sharks are going to regret it. Did they regret it?

Post-Shark Tank Growth & Regrettable Decision Analysis

Yeah, we’re now we’ve only grown every single year since then. We filmed this in September of 2022. We ended up really growing. This year we’ll see. Holidays are big for us. You’re talking to us at the end of October. We still have November and December ahead of us. If we hit our numbers, we could even cross $10 million in top-line revenue this year.

Ten million?

Yeah. At that point, we were at $5 million, around when the sharks filmed that, that’s what we had done in 2021. We ended up being up on that in 2022. Now we’ve almost doubled since that filming.

We were $5 million in 2021?

Yeah. In 2021, we were $5.1 million after the pandemic. As you’re running in the pandemic, we jumped from 3 in 2020 to 5.1 in 2021. That’s what we were talking about then. We’ve doubled the business in just a few years.

Four years with the business. Have you been able to grow that profit margin?

We are continuing to just deploy all the cash we have back into the business. Honestly, a ten percent EBITDA is our high watermark. Just to give you an example, we added a new director of marketing this year. We’ve been growing the team. We’re 24 people now. We’ve still been very much so in this reinvestment mindset. When we get to 15 to 20 million, if we can get there, we’ll start flipping from this reinvestment mindset into this, like now we’ll need to build a little bit more cash in the business.

Ethan and I are still the only investors and the only stakeholders. We don’t have a lot of like the best thing that we think we can do for us, for the business, for our partner farmers, because we’re a social enterprise after all, is what we really want to do is to just keep growing and keep building that top line revenue versus getting to a point where we’re like building fat margins. We know that we can change. Right now, we’re just adding team, adding marketing, adding inventory, doing all that stuff. Money’s going right back into the business.

That’s great because you’re reinvesting in a business where so many entrepreneurs start up, and that money in their pocket to feed their lifestyle. That’s a good thing. All of you who are tuning in, it’s actually not the true financials of the business because there are a lot of things he can add back. We always add back personal expenses. It’s not necessary to run as important, sometimes more important than that, or the non-recurring.

If you just started an AI program, let’s say, or you just opened up a new location, these are all add-backs that can be added back to the bottom line as long as they’re not capitalized. If they’re capitalized, they cannot be added back. They’re expensive, but they can be added back. We had a manufacturing company that had $3 million in addbacks that were not capitalized, and they didn’t even realize it. It’s always important to also look at that bottom line, what can you add back to get to what his true EBITDA really is?

You’re 100% correct. Honestly, we don’t have the financial powerhouse that the finances that you have to really break this all apart. That’s exactly how we’re thinking about it, the bottom line profit, because we have to pay taxes on the profit. All the profit, we want to be profitable so that we’re above water, and we don’t need external capital or anything like that.

We want to minimize our profit. We’d much rather put that money right back into building the business, because we know that it’s going to kick back. Every dollar we put in is going to kick up our revenue by $3 or $4. We’re really incentivized to keep putting the money back into the business instead of pulling it out or sitting on a big pile of cash for who knows what in the future.

I would assume that most of your investment capital that you’re using from your business, like the cash, that it’s not being capitalized. It’s being expensed. In a lot of cases, it’s expensed. Just keep that in mind, my fellow entrepreneurs, that can be an ad back, and it’s really important to know what your numbers would be and what your margin really would be without investing. When you go to sell your company, you want that true EBITDA number. What did you learn? What do you feel helped you? Are you over your PTSD now?

A little bit. I used to watch Shark Tank all the time. I don’t watch it anymore. I don’t know if that happens to other people.

Just tell me. When you walked away, had George and Ethan’s bubble just burst? We’re just upset, like mortified? Did it give you fuel to put on the fire and say, “We can do this. We don’t need them. We can grow.”

We felt great. Honestly, like our measure, we talked about this before. Like, “How do how will we know if we have been successful?” That wasn’t like, “Are we getting a big investment from the sharks and all that stuff?” Our biggest thing was, “Did we deliver a clear message to the four million people that watch Shark Tank on a regular basis?” That’s just when it airs. There’s maybe four million more on Hulu and on re-airs and all that stuff. That was our measure of success is did the sharks buy it? We got such good notes from Gwyneth Paltrow and Mark, and everyone said how great the spices were.

That really was our measure of success. Did we give a compelling pitch? Did the sharks like the spices? Anything past that or like is gravy. If we get a deal, if we don’t get a deal, but we just know that, like the success or failure of Shark Tank would be on whether somebody at home watches it, says, “That’s really interesting. I haven’t thought about my spices in that way. I’m going to check this company out.” I can tell you that after the episode aired, our sales exploded. That was worth everything.

What did they increase to?

At that point, we were doing maybe 50 or 100 orders a day. The evening the Shark Tank aired from 9:00 PM to midnight, we took in about 1800 orders on our site. The next day, we took about 1200 orders on our site. We had this really wild wave that came through, and then every time it re-aired, our sales bumped up again, and we saw another wave floating through the business.

What was your retention rate?

We actually checked our Shark Tank customers. We tagged them when they came in, and then we followed their life to say, “How do they behave?” We found that our Shark Tank customers bought similarly or even better than our regular customers. I don’t know why. We thought they would be worse customers.

We found that our Shark Tank customers bought just as much — or even more — than our regular customers. We thought they’d be worse customers; we assumed they’d be deal-seekers. But they listened to the pitch, they got it, and they turned out to be… Share on X

We thought they’d be these deal-seeking customers, but no. They listened to the pitch. They heard it, and then they were really sticky. They really kept coming back for customer orders. Tank really changed the face of our business. It’s a little bit hard to quantify, but I would say that through today, Shark Tank has maybe bumped up our revenue by about a million dollars. It’s been really wild and really effective.

That’s free advertising, my friends. It really is. Great. Shark Tank is obviously a great experience. You want to be prepared. Obviously, you two are very prepared, and it was very well done. Anything you wish you had done differently, or if you went back on anything you would do, or any advice that you have for people going on?

My biggest advice, we spent so much time preparing, and every founder story you look at your company, and you’re like, “Here’s the story.” When we first did our rehearsals of telling our story, it was ten minutes long. We’re like, “This has got to be 30 seconds.” I think that it actually really helped us refine our communications to really think about, like, how do we share this story that feels complex?

There are so many other stories talking about the company and what we do and how we do it, and farmers and all that stuff. This is like exercise. It was just forced exercise and simplifying our story and our messaging. Shark Tank forced us to do that. I wish we’d done it earlier. Our people would come to our site, and they’d be like, “How’s your cumin?” We’d be like, “In the hills of Northern Afghanistan, there are these foragers.” They’d be like, “What does it taste like?” We’re like, “Once a year,” and Shark Tank helped us really realize that people wanted to know about flavor and how to use it and how it would make them a better cook.

All of our messaging beforehand was all about the farmer and where the spices come from. Eventually, we’d get to the point that they were better flavor and all that stuff. Shark Tank, through this exercise of simplifying, led us to flip the message on its head. You’re cooking at home, and your spices are crappy. Here’s the best way to make yourself a better cook is by upgrading your spices. It gave us this new way, and that shaped how we did all of our messaging and all of our customer communication going forward.

Shark Tank not only brought a lot of clientele and increased revenue exponentially, and gave you the exposure, and it taught you how to do due diligence and what people are really looking for and what those customers want to hear, because so many times entrepreneurs don’t get the message. They don’t deliver the message.

They say what they think people are interested in, but they never really did a study group to know what people are really asking and what people are thinking. You’ve learned a lot in business. What would you say are your three biggest takeaways about starting a business, growing a business, and where you are today and where you plan on going? At some point, you’ve got to plan your exit, and you and I are going to work on that.

Key Entrepreneurial Lessons Learned (Solving For Today, Customer Flow, Fractional Teams)

Yeah. This is where I want some of your advice on that. Just a few lessons is one, I think a lot of times entrepreneurs try to build stuff for scale. They are trying to solve problems. By the time we get to a million units, like, “We need this partner and we need the CFO or we need this whatever.” Before this company, I’d started a venture-backed fintech company of all things.

I don’t know. I’ve been the business operator guy, and I bounced around in different industries. We were solving everything for scale at that company. What we learned is that by trying to solve for something that was 3 years away or 5 years away. We were actually not solving the problem that we had today. What really helped us is, like, what do we need today? What do we need to solve? Who’s the right partner for that? We don’t want to buy a hundred thousand jars if we’re only going to pack 10,000 this year.

We really like solving the problem in front of us. Sometimes people look at this and say, “I could save 30% if I buy three times the shipment.” What I found entrepreneurs doing more often than not is that those drugs weren’t exactly right, or you outgrew them, or you needed something else and then all of a sudden, you have this giant liability on your books of like, “I now need to get rid of 80,000 jars that I didn’t use and actually don’t really fit our lids.”

I just want to stop right there, real quick, because that’s a very good point is so far ahead, and I had the build it. They will come mentality. I don’t know exactly what you’re building, so tell your clients to give you feedback.

Totally. Another lesson that we learned early on was that we tried to flow to where people were, where we had interested customers. For us, our mission as a social enterprise is to buy more spices from smallholder farmers, period. We don’t care if it’s a chef buying it or a home cook or a grocery store or whatever. We started the business, and we were going door to door, selling to restaurants and chefs.

They didn’t care about packaging. They didn’t care about anything. We just walk in there, open a bag full of turmeric, and they’d smell and be like, “This is the best turmeric I’ve ever tried.” That worked really well for us in the early days, while home cooks would have looked at the packaging and be like, “I don’t trust it. What’s going on here?” We started selling to chefs, but then, when the pandemic came in, our home cook sales took off.

We pivoted the business there. Now that we’re selling a lot to home cooks, we’re starting to focus a little bit more on groceries. For us, a lot of entrepreneurs have this like really clear idea of what they’re going to sell and who they’re going to sell through and all that stuff. We were like, “Let’s just see who’s excited about our product.” We had jars for home cooks. We had big one-pounders.

You can see over my shoulder here for chefs, and then we brought in the spices and bulk sacks, and we’re like, “We can sell any of these just to whoever wants it.” For us, that was a really big learning is to be a little bit like water and flow. Take the path of least resistance where the audience is there and saying, “I want this.” It’s changed as we grew as a business. That was really important for us to keep growing.

That’s very important because you have to have a balance, and a lot of entrepreneurs they’ve been told, “Look, focus on one thing because entrepreneurs are squirrels. They chase squirrels. There’s a squirrel. Let’s do this. Let’s do that.” A lot of mentors, consultants say, “Focus on one thing.” You’ve got to listen to your clients. You’ve got to listen to that feedback, and you’ve got to flow with water. You’re flowing with your clients and understanding what their needs are. You’re not going out there and say, “Let me start a restaurant.” There have been different times for different things.

Now we just got into these two big food service distributors, and all of a sudden our food service business, restaurants, is blowing up, but those food service distributors wouldn’t have taken us on five years ago. It all worked out on this path. The third thing that I’d say that a lot of entrepreneurs and I got wrong throughout my career, too, is that a lot of our team is fractional. I think you always your first thought is always like, “I need to hire a full-time head of marketing,” or “I need to hire a full-time blah.”

Our director of wholesale has been working with us for four years now, and she’s giving us ten hours a week, and she’s running our wholesale program, and that’s been just so incredible. She’s like, “I don’t know what I do with 40 hours a week. You don’t need me to sit around and twiddle my thumb or create work.” Even now, we have a little bit more than twenty people who work with us.

Eight of them are full-time, the rest are part-time. We found that it was actually a really good balance. A lot of these people who can only work part-time are locked out of the job industry. A lot of people who cannot come to an office cannot do whatever. We match that. When we needed full-time, we either upgraded the part-time people to full-time if they wanted to, and if that worked for them.

If not, we would assign them a different part-time role. We’ve really been able to grow our company, get a lot of really great expertise, without having to hire the massive team we wanted. We didn’t need a full-time person. We were able to build this team and fit all these puzzle pieces together. That’s really helped keep our overhead low and bring a lot of expertise into the business.

A lot of our team is fractional, but we've really been able to grow our company and gain amazing expertise without having to build a massive in-house team for everything we wanted. Share on X

There’s a balance there, too. A lot of times, entrepreneurs will start out, and they’re like, “I’ve got to have all these positions.” That’s one way entrepreneurs do it. They cost themselves out of the business. The other way they do it is, “They’re an entrepreneur, they’re a control freak. They think that their hand has to be in every pot.” They feel like they don’t want to lose control. They feel like they have to be in control in order for everything to work well. There’s that fine line, too, but fractional CFOs, fractional COOs, fractional marketing people, all of that really helps the bottom line. A lot of times, it can be a great win-win for the employer and the employee.

I bet that your model is also very much like this, where, like you could come in and work full-time for a company, but you can also have this massive impact just by giving them a little bit of your brain power. You can probably change the trajectory of the company. We keyed into this. We’ve really built a really good, nimble team of really smart people, some full-time, some part-time, but we’re like punching way above our weight because of it.

Is the business dependent upon you and Ethan?

Earlier this year, we reorganized, and now we have a director of wholesale, a director of marketing, and a director of operations. Now they are managing the teams instead of me and Ethan running the whole company. Honestly, that’s put so much weight off our plate. Now, the day-to-day operations of the business, Ethan and I have largely been able to watch it, get involved when we need to be, but it’s not on our shoulders anymore. That’s opened our time to build the next phase of the business.

Whatever’s coming next, now we have all this time to do that, to speak at conferences, to meet people, to build partnerships, to do all that stuff, while the day-to-day operations are running really beautifully. That’s been a huge unlock this year because before it, we had like twenty people pinging me and Ethan, and we were losing our minds. Now we have built some hierarchy, and we have built a really strong leadership team, and they’ve been able to run with it. That’s been hugely valuable to us.

Congratulations. You built a business and fired yourself as an employee. You built the business instead of a job. You now have a business you work on and not in. That’s where every entrepreneur’s number one goal is to build a business that works for you, rather than a business that you are working in every single day.

You are working on building a sustainable, scalable, and, when you’re ready, a sellable business so you could exit rich, my friend, Ori. Thank you so much for being on the show, Ori. Maybe next time we can have Ethan on with us, but he’s probably traveling somewhere, knee deep in a farm. You are a great guest. Thank you so much. We really appreciate all your go-to nuggets. Thank you to all of my audience and tune in for every excellent show.

Again, watching Exit Rich is like drinking through a fire hose. There’s a lot of information coming to you. Go back, listen to the episode, get those golden nuggets, and implement. Knowledge is power, but implementation is key. Make sure you share this with your friends, your fellow entrepreneurs, your network. Get the message out. Thank you again. Make sure you check out the Exit Rich podcast, subscribe to it, and get my copy of Exit Rich.

 

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About Ori Zohar

Find Your Exit | Ori Zohar | Burlap & BarrelOri Zohar is the co-founder & co-CEO of Burlap & Barrel, the first comprehensive single origin spice company in the US. A Public Benefit Corporation, Burlap & Barrel partners directly with smallholder farms around the world to build equitable, transparent, and sustainable spice supply chains. Their spices have been featured on Shark Tank and The Bear on Hulu, and they shipped over 1 million jars of spices to chefs and home cooks nationwide in the last 12 months.

Ori is a social entrepreneur with over 20 years of experience building mission-driven businesses. Ori’s background is in business-building, entrepreneurship, and eCommerce. He was named one of Food & Wine’s Game Changers and the Specialty Food Association’s Breakout Talent to Watch.