Several years ago, Ori Zohar cofounded and helped build Sindeo, a mortgage tech company, into a classic Silicon Valley success story. Then it all fell apart. The company adhered to a “high-growth, high-burn-rate” style of investment and scaling, he says. By July 2017, it had helped generate more than a half billion dollars in mortgages across 12 states, and raised $32 million before it became clear that the company was overleveraged and the next-round investment wasn’t coming. “It was an exit, but an emergency exit,” he says about the decision to sell at a loss. “We were just trying to get some of our investors as much cash back as possible, and we weren’t able to make everybody whole.”
Yet even before Zohar walked away with basically nothing, he’d been thinking about how he’d do things differently if given the chance. So in February 2017, he’d joined forces with longtime friend Ethan Frisch, a former pastry chef turned international aid worker, to cofound a passion project: the single origin spice company Burlap & Barrel. The public benefit corporation is largely bootstrapped and works to improve the lives of farmers in different countries in much the same way that socially responsible coffee, tea, and chocolate sourcing operations do. (Its name pays homage to how spices are traditionally transported.)
Burlap & Barrel currently sells nearly 50 spices from 10 countries. Frisch, who worked previously at several top New York restaurants before earning a degree in conflict and development studies from the University of London, pioneered its first relationship for wild cumin from Afghanistan through contacts he made while working in the country as a policy adviser for the nonprofit Aga Khan Development Network. He’s also managed logistics for Doctors Without Borders in Jordan.
“With social enterprises, there’s this assumption that you’re either doing good for the world or you have a high-quality product. For whatever reason, the conventional wisdom seems to say you can’t do both,” says Frisch. “We’ve been very intentionally trying to turn that around. We have high-quality products because we have direct relationships with farmers who like working with us because it’s a partnership.”
To make that happen, the company finds potential growers through a variety of means, including governmental and nonprofit referrals, and their own in-country contacts and field trips. Then it helps those farmers build stable operations, which in some cases may mean supporting better cleaning, sorting, or drying methods. The goal is to eliminate all the supply chain middlemen that typically slows the path to market and adds additional costs.
Many spices are sold at bulk rates that don’t account for quality, either. So Burlap & Barrel follows an in-house rating formula that pays more for better-quality goods, ensuring farmers can concentrate on quality, not quantity. In general, it pays between five and 20 times the commodity rate. “Going in and trying to take as much as you can as something for as low a price as possible doesn’t set up a system where anybody is really incentivized to do their best work,” says Frisch.
The exact pricing for different products can vary widely, but since it started, Burlap & Barrel has imported more than 12 tons of spices and paid more than $150,000 to its limited-batch producers. It currently supplies hundreds of restaurants, ranging from the upscale Eleven Madison Park and Blue Hill in New York, and Nopa in San Francisco, to fast casual healthier-eating chains like Sweetgreen and Dig Inn, and sells to thousands of home cooks online. Revenues have tripled over the last two years, say Zohar and Frisch.
Unlike many ethical sourcing operations, the company hasn’t yet applied for any existing fair trade or sustainable product certifications. That may change, but the cofounders have yet to figure out what exact umbrella would work best for their extremely varied operations. As a public benefit corporation, however, the concept of providing famers in low-income countries fair access to higher-value markets is written into their bylaws. They must also create public reports showing progress on those standards. The first one, a newly released case study on their efforts in Zanzibar, shows that between 2017 and 2018, the company doubled the rates they’re paying farmers there.
This is actually Zohar and Frisch’s second act as partners. In the summer of 2010, well before either was launching startups or working for nonprofits, the friends started Guerrilla Ice Cream, a short-lived New York pop-up that operated out of a pushcart, and donated all profits to a street vendor advocacy group. Each flavor riffed on an important social or political movement and drew rave reviews.
This time around, they’re more ambitious, but Zohar especially is seasoned enough to think about how stable companies are really built. “We’ve been trying to be really thoughtful about how we grow this business . . . for the things that we think are really important,” Zohar says. “Which is farmer relationships and social impact.”