Arlington hookah entrepreneurs set market ablaze

Social Smoke founder Ali Nadimi knows exactly how much capital he had to start a hookah company back in 2003. It was $3,000, all of it borrowed.

“That was the max on my credit card,” said Nadimi, than an engineering student at the University of Texas at Arlington. “I placed an order for all the hookahs $3,000 could buy from a couple of Arab manufacturers in this country. My bedroom became the first office.”

 Time out for background: A hookah is a water pipe, with which tobacco – typically flavored with an endless variety of fruit or spice flavors – is smoked through long tubes. Unlike virtually every other form of smoking the tobacco itself is not burned but rather toasted, the heat transferred from smallish charcoal briquettes to the dampened tobacco (shisha) through a thin aluminum grill about the thickness of aluminum foil.

Does that eliminate the nicotine buzz? Of course not.

More background: Though tobacco smoking in this country has been in general decline, the popularity of communal hookah smoking – most pipes have multiple tubes – has been booming, as have been proliferating hookah lounges. Nadimi calculates that there are at least 500 such establishments around the country, up about five fold during the past five years. They’re most popular near college campuses. And they need equipment.

Arlington, for example, has three hookah lounges, all less than three years old. Hookah lounges are also typically restaurants offering Middle Eastern fare.

But back to Nadimi and 2003.  Nadimi does not consume alcohol. But he had noticed that when he brought his hookah to parties and other social gatherings it was popular, often resulting in similar requests: Where can I get one of these?

“I thought then that this just might be a good business,” Nadimi said. “I maxed out my card and ordered the hookahs.”

And sold them. Quickly.

“I didn’t know what the potential was, but right away I figured that the company had more potential than just a one-man operation selling hookahs to friends,” Nadimi said.

The company? Nadimi and his older brother Abrahim – a UT-Arlington engineering grad – kibitzed and came up with the name Social Smoke.

Ali is 27, Abrahim 30.  And they, with other family members, are now operating what quite likely is the largest hookah distribution business on the planet, all operating out of an Avenue H warehouse at the Arlington/Grand Prairie city limits line. The 20,000-square-foot building is their fifth facility.

Their father, Sayyid Nadimi – electrical engineering and a former UT-Arlington instructor – is now the company CEO, though his role is oriented to product development and relationships with product manufacturers or subcontractors. He speaks several languages, including Mandarin. Their younger brother, Mohammed, runs the warehouse. Other relatives are also involved. And there are 13 other employees. Sayyid Nadimi left Iran in 1979. 

“Our first warehouse was actually a tiny leased space in somebody else’s warehouse, enough space for two palettes,” Abrahim said.

Though Social Smoke has retail activity, more than 90 percent of its volume involves wholesale distribution, almost always directly with actual customers. The Nadimis don’t like middle men, whether it’s in sales, distribution or their own suppliers.

Events haven’t always gone smoothly, particularly with suppliers from countries like Egypt. An early big order from that country contained so many cracked, poorly calibrated or sloppily manufactured items that the Nadimis had to mix and match components. And it was very difficult to work out restitution terms. So difficult that they’re still trying.

“There are just a lot of countries with severe quality control problems,” Sayyid Nadimi said.

Solution? Be inventors. The Nadimis design their own hookahs and virtually everything else related to the industry. Then find manufacturers that are both competitive and meet their standards. Suppliers come from an estimated 15 countries, though about 70 percent of the “authentic” Middle Eastern hookahs with the Social Smoke label are now manufactured in China. So much so that the elder Nadimi spends as much as six months a year there.

“One of the things you learn in a business like this is that interpreters are also middle men, so it pays to learn the language,” Abrahim Nadimi said. “Dad taught himself Mandarin so that one more middle man could be gotten out of the way.”

Abrahim said he believes Social Smoke already is the largest “horizontal” hookah company in the world – the biggest to include all aspects of the business.

And there’s another product line expansion on the horizon that will make its debut by the end of the year. The Nadimis just aren’t saying what that is.

“To reveal it right now might give our competition an advantage,” Sayyid Nadimi said. “Just keep checking our Web site (www.socialsmoke.com).” 

okcarter@bizpress.net