Founder Stories: Sip Herbals, Orleatha Smith

Jordan Buckner: [00:00:00] On today's episode, I am excited to have on Orl Smith , who is the co founder of Sip Herbals. It's a caffeine free, prebiotic rich herbal coffee alternative. She's appeared on Shark Tank and is quickly growing the company and wanted to have her on to talk through what it's like growing a product in this new kind of category in space.

Orleatha Thanks for coming on today. How are you? 

Orleatha Smith: I'm great. Thanks so much for having me. I'm excited to be here. Can't wait to have a talk. 

Jordan Buckner: I remember we first talked back in 2003, I think, and still kind of like early days of the business and you already kind of had a lot of experience in your Belgium and within the health and wellness space and we're, you know, launched this new company.

So tell me a little bit more about kind of your experience over the Last couple of decades is how that led into founding S ip Herbals 

Orleatha Smith: Yeah. So my business partner, Kelly and I had been in the wellness space for a while. We worked together for well over a decade. We [00:01:00] launched, scaled and grew and exited a wellness space SAS.

So we've been sort of deeply rooted in this community, very grassroots for us. And after we exited that SAS that's kind of when the pandemic hit. So we were like, okay, now what? And I was having a bunch of anxiety and tummy troubles and all kinds of things that were going on. And my business partner, Kelly said, Hey, it's probably your coffee.

And I didn't want to give it up. I was like, no, I'm not giving that up. White luckily my coffee cup. But then I put on my bio teacher hat my master herbalist hat and decided to get in the kitchen and figure something out. Cause I wasn't just going to be like and then we've, SIP was born, so that's kind of how it all started with the kickstarter and some herbs and Kelly and I in the kitchen.

Jordan Buckner: I love it. You know, I think this is a problem that's close to me as well because I used to love coffee and drink it every day and then had stomach issues from the acidity of coffee and had to give it up. That's actually part of [00:02:00] the reason I started Teaquares in my business. And so love kind of how it's kind of manifested in different ways for each of us.

And so for Sip Herbals, how long did it take you to come up with the, the recipe? 

Orleatha Smith: Oh, we tried a bunch of different times. I mean, we were like, okay, this one's too bitter. This one's too weak. This one's too this or whatever. And we kept trying and trying and giving it to people. And that's kind of how it came about is once we figured out we liked what we had created, we gave it to some friends who were in the wellness space.

And they were like, Oh, where can I buy it? Oh, well, let's figure out how you can buy this, you know, so that's kind of where it started. We were not planning on creating a whole new business. We were kind of planning on just creating something to make me not have all of those coffee withdrawal symptoms.

And I love tea, but I wanted something more full bodied. And so that's kind of where it came from. 

Jordan Buckner: You know, one thing that's common in the product or innovation space is people say, like, find a white space opportunity in the market, which is essentially an area that has relatively low competition and a [00:03:00] wide open kind of market potential.

And I think that. Yeah. With your herbal coffee alternative, it fits within there. The problem though, within that is that can be very expensive to find customers, educate them and reach them with a new product. And so you kind of started this with your personal. issue. What was it like as you were talking to more people?

Was this a very common problem where people like, Oh, nope, like I'm actually good with my coffee. Is it like a real niche and like who are those like kind of core customers and how are you finding them? 

Orleatha Smith: Well, there's about 50 million Americans or more who are moving away from coffee for whatever reason.

Some are health reasons. Some find that coffee interacts with their medications. And they go to these other coffee alternatives, which are, you know, fine. There's a bunch out there. So we didn't necessarily have to go scour the earth to find them. We are not the first players in the market, which is kind of great.

But we are the first players in the market to have a hundred percent natural ingredients, like only herbs and spices. There aren't no natural flavors. And I always put that in [00:04:00] quotes, air quotes. There are no like adaptogens because those, again, can mess with people's minds. Immune systems. We focus on the autoimmune community at first, because that's where we are.

I have an autoimmune disease. My business partner has an autoimmune disease and coffee like exacerbates some of our symptoms, makes us have flares. And so we were like, okay, let's talk to the autoimmune community because we're really specific in particular about our ingredients. And so that's where we found our biggest like sort of swell at first.

Because those people are definitely going to be label readers. They're definitely really concerned about all the ingredients. And, and so that's kind of where we hit that first. 

Jordan Buckner: As you are approaching them, did you find that group just with. Like finding Facebook groups and Reddit posts or is just like a community that you already were connected to because of your own issues?

How did you go about reaching them? 

Orleatha Smith: Yeah. So we're already connected to them because of our own issues, of course, but also there are so many different autoimmune diseases that, you know, we were, Specific about the ones that we were talking to, because some, it doesn't matter if you have coffee or not, but others are [00:05:00] very specific about, you probably need to stay away from coffee and caffeine.

So we knew that the autoimmune paleo or protocol group, AIP group was definitely going to be like our big customers. And so we knew the language to talk to them because we are those people. And so we said, Hey, you know what? We know that for instance, beans will make you have a flair and coffee is a bean.

And so maybe you need to be careful. And I was like, Oh, you're right. And now I was looking for something, but I didn't find anything. And we're like, here we are. 

Jordan Buckner: I love that. And once you started talking with them, what was that response like? Were people like coming over, trying and repeat purchasing? You know, was it a little bit of a slower kind of rise as people were building a new habit?

What did that look like? 

Orleatha Smith: So we tapped in on the people who were already had to have the mindset to give up coffee. That's where we're going to start because that's kind of like, you already know you need to give it up. And then there were the secondary market is the people who are like, Ooh, not sure I really want to give it up there.

Is there something out there? So there's still questioning if there's something that can replace it. So we hit that low hanging [00:06:00] fruit first and they came back in like at least one in three who tries this was coming back from that group. And so that's pretty good. Repeat customer rate around 30% of those people who are like, I'm looking for something clean to try.

And then. The other group of people who aren't quite sure, you know, that's kind of where we came up with samples. Like, hey, try it as a sample. If you love it, come back and get a bigger one. And so that's kind of the gateway into SIP is they'll try one of the samples, for instance, like Signature Roast, which is the closest to coffee, like just black coffee.

And then they're like, Oh, wait, that really does remind me of that. And then they're missing the Let's just say caramel macchiatos. And so they go and they try salted maple blondie, and they make it the way that they would have been like, Oh, this is really good. Right? Because we use only whole food ingredients.

So maple sugar and dates and real salt and vanilla beans. And so the flavor is actually real and not fake. So the palate can kind of grab that. And so that's where we got that group who wasn't quite sure. And they're like, Oh, wait, that's really good. 

Jordan Buckner: I love that. You also had the [00:07:00] opportunity to appear in Pitch on Shark Tank, which I think is always very exciting.

Tell me about the pitching, what the experience was like, the parts that you can tell, and what the after effects were for the business. 

Orleatha Smith: Yeah, so it was really a great experience for me. Going on shark tank. I know a lot of people, what they show you is really, really, really pared down from what actually happens.

So my pitch was a lot longer. Like I know some people ask of two who pitched for three hours or people who pitched for one hour. And then they get it cut down to like five minutes. so you're hearing what you're seeing on TV is a snippet of what actually happened. And so it was just a really good experience.

It was good to get good feedback from the sharks. We're like, Hey, you're doing good. You have a great business. You don't need us. And that was good to hear. But then you're like, wait a minute. I do need investment.

I'd love to have your investment and I'd love to have your push behind it. You know, I do need that. That would be great. But the good, the news was that after they said, no, we had other people who came in and said yes and had a better investment terms. And so [00:08:00] that was really good. So we're really excited after that.

And then of course, sales spiked. And we try to take advantage of that swell and that momentum. And so we've had a really good year after that, and we're looking forward to an even better 2025. 

Jordan Buckner: So I know, as you kind of alluded to, having cash is definitely a necessity for a business, especially an inventory based business.

What other challenges have you experienced as you've been trying to grow? And I know you had a lot of experience kind of as a SaaS business and as a product business. I know that things are similar, but also a lot different. Having to deal with inventory and supply chain and expiring ingredients and all the things that can go wrong.

Freight shipments missing. Or damaged. 

Orleatha Smith: Severely. 

Jordan Buckner: Yeah. So what are some of those other challenges that you, you've had to face? 

Orleatha Smith: Everything that you just said, right? You know, the craziest thing, I think the wildest thing and the hardest to sort of for me to understand and grasp was that most investors are looking for like a tech business when you're out there and you're like, Oh man, you know, I really would like to raise.

Cause you know, it's really, like you said, it's really capital intense. It's cash [00:09:00] intense at first when you're hiding at first, when you're in an inventory based business, you have to like have inventory to sell. And so. I found it sort of shocking when I'm like, Oh yeah, we're going to go out and raise money.

And they're like, yeah, we only, we really only will look for tech or SAS or an app or something healthcare related or nobody out there. Not nobody. Very few are looking for a CPG business that is not selling at least a million dollars in ARR. So if you're new, you're like, they're like a million dollars.

If you'll help me get there, I can get there. Right. But a lot of them , aren't there yet. So that was hard, really hard. Also coming from a SaaS business to an inventory, a product based business is very, very, very different in having a SaaS, having an app, you have developers to worry about and getting users.

You know, it's not as intense as a product based business where you have ingredients and you have all of the things that are going around with getting your product in stores. Do you want it in stores? Do you want to be online? [00:10:00] How's Amazon doing? That's a whole different animal. What about retail? You know, it's.

All different than so I'm learning a lot still, but it's been fun. It's been fun. 

Jordan Buckner: Yeah. I mean, that's one thing that is tough. I am the money part. I think you're right. That there's a huge influx of investment in food and beverage after I call it like the 2010s when a lot of consumer tech companies, the Warby Parker's of the world kind of made , their money and they're like, Oh, what other consumer categories can we invest in?

What's going to be next? And there's a huge influx of money into the food CPG food and beverage community. I think what has since played out is that the exit potential for CPG brands is not the same as today. Tech in terms of quantity, frequency, and total dollar amount. And so a lot of investors have pulled out.

There's still those who like really love and enjoy the space, but realizing for both founders and investors that businesses tend to be a little on the smaller side compared to those tax exits. You can have breakout brands like CFD foods or RX [00:11:00] bar, but they happen, you know, three or four times a year, not 30, 50, a hundred times each year.

And so I think investment criteria and return expectation is different for people who specifically understand CPG. You know, even one of my first investors, they told me, they're like, you know, we know this can take five to 10 years and repair to wait that long, kind of with you on this journey.

And so it's really finding people who believe in that. 

Orleatha Smith: Wow, that's really cool that you found someone who believed in you like that. That's great. That 

Jordan Buckner: was 2016, right? It was that tattoo in there waiting for me, I think. 

Orleatha Smith: I mean, unless you're doing something specifically crazy innovative, like for instance, you know, lab grown meat, for instance, or the vegan meat scene was huge for a while, but then that bubble kind of burst as well, so that made it even harder for those of us who are in the CPG space, because we're like, Oh, We're hoping you would have made it because they would see that CPG, you know, has a big potential.

But I mean, my market industry, for instance, is 30 billion. Well, you're in tea and coffee. You understand how huge it is and how much potential is here. And. [00:12:00] You know, it's kind of overlooked because it does take a lot longer. 

Jordan Buckner: I think there's a lot, there's people like Elliot Began from TIG, who are talking a lot about alternative investment paths for CPG, where instead of investors saying, all right, I'm going to have invest in 10 companies and expect one to be a success and pay for the rest of , the mediocre failures and thinking like, Hey, 10 companies and have.

Five or six of them that are success, but maybe a little bit lower. Right. And then having those opportunities to fund those companies with right size growth. So, 

Orleatha Smith: right. Yeah. I like to think of us as a really good Toyota, right? Like the apps of the world are like rocket ships, like, Ooh, take off really fast and big, and it's all exciting and like, but we were like a really good Toyota we're dependable.

We're going to be around a long time. We're a little bit slower. But we're going to get there and we're going to be, you're going to get there. Dependably. It's going to be consistent, right? Every time you jump in that Toyota, it's consistently going to start. 

Jordan Buckner: I love that analogy. One thing that's also challenging that you mentioned are the different channels to sell into, right?

And so. With that every time, like we're selling on your Shopify and [00:13:00] Amazon in conventional grocery and natural channel grocery and convenience store, each of those are different channels that you can sell your product, but each of those has a completely different business pricing, customer structure, and it's basically like starting a new element of your business, a new segment of your business with his own particularities and peculiarities as possible.

And so, you know, share with me What you've learned from channels, which one's working best, which ones are maybe a challenge and how you're approaching that moving forward. 

Orleatha Smith: Yeah. So what we learned early on is not to run into retail. We were like, Oh my gosh, Whole Foods, it's the Mecca, right?

It's like, you gotta get into Whole Foods. No, you need to back up and you need to grow your brand on your own channels so you can understand your own customer before you run out into retail. So that's kind of what we learned. Immediately is to grow our own Shopify store so that we could understand our customer.

And that way, when we go to, let's just say, Amazon, we know the wordings, the keywords, because we know what our customer is already looking for. So we know how to find [00:14:00] that person on Amazon and Amazon has been really good for us. Also been really good for us as fair. And again, when you understand your own customer, you can go to fair and you can actually pitch and figure out how to talk to the person there and the stores that are there.

We are moving slowly into retail and very very intentionally selecting the stores that we even want to pitch. Because it is expensive and, you know, getting on the shelf isn't hard. It's making sure that when people are in that store, you, they want to buy your product and that your velocity is high enough that you can afford the ad space.

And do they require that you use a certain distributor, you know, like you were saying, it's completely different than what's in your store. So that's kind of what we learned is to slow down. And no, we are not going to just run into the stores and, you know, get on shelf. But then how do you get off?

How do you sell to that customer that you don't get to talk to? Is your packaging right for retail? It might be great for your site, but is it right for retail? So that's kind of the things that we're learning as we grow, is to slow down a bit, learn your [00:15:00] lessons, take note of those lessons, and then use what you've learned to apply to the next thing.

Jordan Buckner: It's so tough too, because I've found just from my own experience and from others that when you're starting out, a single channel usually doesn't have the revenue volume that you need to financially sustain your business. And so you're constantly in this mindset of like, okay, what else can I try?

And I feel like because of that, you end up in multiple different channels. Whereas, you know, ideally there's one or two channels that are like really successful and it can financially support your business and you can slowly add from there. But I think the reality is each one because of its cost structure and expenses and you know, the customers there can be relatively slow.

And so it almost forces you to try out new categories and new channels just to get. That revenue going, right? 

Orleatha Smith: Yeah, and then it's kind of a catch 22 because you want to be successful when you get into those new channels so that they have a reorder. But if you run so fast into all of them at once and you're so thin and you can't really focus enough to grow those channels, especially [00:16:00] if you're by yourself, you're a solopreneur.

At least I have a business partner. Thank God who can help me. We can help each other and sort of manage more than one channel. But if you're doing it by yourself, You can grow so thin that you don't really necessarily have enough space to grow. 

Jordan Buckner: No, that's huge. One thing that I do love are your Emails and marketing that you have for SIP.

I get your emails every week and I think they're beautifully designed and love your photography as well. I'm curious to know what's been your learning and approach to acquiring customers through your marketing and also how you've been able to retain them. 

Orleatha Smith: So we. Take a lot of time. What we learned from our SAS is that take the time to hear your customer.

Take a lot of time and hear your customer survey them, give them coupons to talk to them, whatever you have to do to get information and, and their viewpoint, their pain points, what are they struggling with? What are they happy with? My background before I became an entrepreneur is in organizational development and psychology.

And I'm also a former biology teacher, right? So I'm very big on talking to people and [00:17:00] understanding how to help you. And so we took the time to send surveys and we still do send surveys every so often to our customers. Like, Hey, what are we doing? Right? What are we doing wrong? What can we do next? And so we take that information and we basically use it to talk to them.

So if they're telling us, you know, we found you because I have an autoimmune disease and I was told I can't have coffee and I miss my ritual. We take that word ritual because we heard that so many times. And we started to use it to talk to our customer. Like, okay, did you, do you miss your ritual? Replace your ritual, your ritual, your ritual, your ritual.

And it starts to go, oh yeah, they're talking to me. Yeah, we are talking to you. That's exactly what we're talking to. So I would definitely say talk to your customer. Survey them and then use that really important data to then talk to them even further, get even closer to them, build a relationship with them.

Jordan Buckner: I love that insight. And I'm a huge advocate of, as you mentioned, surveying, talking to customers and not just people who you want to buy your product, but people who are actually buying your product, right? Because they're spending money. They're actually finding [00:18:00] the value in your product. And so I love that you were able to pull out that work.

Ritual, right? It's, and that's a like taste and flavor are important, but then for the people who have already bought, how do you build that habit? Are they, you know, product bundles that they're getting in advance is a subscription because that can help, you know, keep their rituals so they don't have to think about it.

A lot of business and product based decisions that you can build on top of that, you know, other customers, other products might say. We want more flavors, like I love your flavor, but I don't like having the same one every week, every month. Or can you come up with new ones? And so that can drive your business strategy as well, I think is really important.

Orleatha Smith: For sure. And that's exactly how we came up with our latest flavor of cinnamon roll is because we were like, Oh, let's add a flavor. Well, let's not just pick a flavor out of the sky. Let's ask our customers. Who are actually buying our product now. Hey, what do you want to see us do next? And so many of them said like churro or cinnamon bun or just plain cinnamon.

And we were like, Oh yeah, that sounds delicious. It is now my favorite flavor. 

Jordan Buckner: I love it. I love it. Right. And I think that's the other thing is not just saying like, okay, we're going to [00:19:00] launch. Three different, similar cinnamon ones, but you find like, where's the similarity? Is that cinnamon essence, right?

Between Truro and Simmons World, all these things, and then use that going for it, which I love. I'm curious to know what's next for the business. I hear you have some new innovation coming up as well. 

Orleatha Smith: Yeah. So excited because we are going to launch. K cups coming here and in January.

So in the first of the year what we want us to do is help people with that ritual who are already have a Keurig, but they don't want to move away from it. But we didn't want to be wasteful. So we have compostable K cups. With recyclable, the aluminum is recyclable. So you just pull it apart, throw it in the compost.

So that , is what we are doing with our signature roast, which is really cool. So we're excited about that. It'll kind of help us grow in some different avenues, hopefully. 

Jordan Buckner: I love that. I'm super excited about it and can't wait to see what's next for the rest of the year. 

Orleatha Smith: Yeah. 

Jordan Buckner: Thanks so much for being on today.

I love kind of hearing all the updates and I can't wait to continue to follow your journey. 

Orleatha Smith: Thank you so much for having me, Jordan. It's been great.