Though they lie at nearly opposite ends of the business growth spectrum, international fresh foods retailer Whole Foods Market Inc., a company with $14 billion in annual revenue that soon will open its sixth store in Louisiana, and fledgling local catering innovator Dinner Lab share a potentially crucial asset — the business savvy of one of New Orleans’ foremost entrepreneurs.
John Elstrott not only chairs the board of directors of publicly traded Whole Foods Market, which operates some 400 stores in the United States, Canada and the United Kingdom, but is also integrally involved in a host of tiny businesses that aspire to become giants in their field.
While he is well-known in local business circles and has been instrumental in turning a string of startups into industry leaders, Elstrott’s low-key style has kept him largely behind the scenes and out of the eye of the business press, even as New Orleans’ reputation for nurturing entrepreneurial talent has soared.
“It’s very fulfilling for me to work with entrepreneurs to help them realize their dreams,” he said recently in characteristically understated fashion.
For several decades, Elstrott has put his entrepreneurial chops to work for growing businesses in Louisiana and around the country. He has co-founded and invested in grocery, environmental and technology companies and has put his strategic skills behind locally owned construction and manufacturing businesses.
In the lingo of business creation, Elstrott is a serial entrepreneur, but, in fact, he involved himself in all these business during a career that was anchored in academia.
During more than 30 years of teaching business at Tulane University, he founded the Levy-Rosenblum Institute for Entrepreneurship and the Tulane Family Business Center. And he guided scores of young business students toward careers in business innovation, sometimes becoming an investor and board member in their startups.
That’s how Elstrott came to be involved in Dinner Lab, a member-based catering and events business that has quickly spread into 24 cities, where teams of highly trained chefs and wait staffs serve hundreds of guests at pop-up dinner parties hosted in unusual settings. It plans to enter the Baton Rouge market within the next few weeks.
Four of the company’s five founders were students of Elstrott at Tulane. “We approached John early on, and he joined our board and made the very first investment,” co-founder and CEO Brian Bordainick said.
Like many startups that survive their first few years, Dinner Lab, which launched in 2012, evolved from its original concept as its founders responded to the marketplace.
“John was involved on the strategic side, and his experience of working with Whole Foods in its early days was a big help,” Bordainick said.
The fact that Elstrott had jumped into the health foods business in the l980s “when everybody thought he must be nuts” meant a lot to the Dinner Lab founders, Bordainick said. “When everyone was looking at us like we were crazy, John was very supportive. He was used to swimming upstream.”
Elstrott’s first big push against the current came in the early 1970s, as the LSU graduate worked on his doctoral dissertation in economics at the University of Colorado. A couple of his friends had an idea to develop a brand of herbal teas that could tap into an incipient popular interest in organic food products. They asked Elstrott to help.
For $3.50 an hour, Elstrott tackled a host of back-office tasks: preparing loan applications, developing an inventory system and securing an appropriate headquarters to replace the makeshift space the group had originally set up in a barn.
A year or so later, around the time of Elstrott’s graduation, Celestial Seasonings teas had begun to take off. His friends invited him to buy into the business and become chief financial officer of the company.
The newly married Elstrott and his wife, Patty, didn’t have to think twice, he said: “We invested most of our life savings — about $10,000 — in Celestial Seasonings.”
Any veteran of startups can attest that luck plays a role in business success, and first-time investments seldom turn into winners. But Celestial Seasonings bucked the trend.
Elstrott remained with the company for five years, until the couple, who now had two young children, decided to return to Louisiana to be near their families.
Today, Celestial Seasonings remains a major worldwide brand, and Hain Celestial Group Inc. has a market capitalization of $5.3 billion. Elstrott still owns stock in the company.
Elstrott said the value of his Celestial Seasonings experience grew exponentially over the years.
“I was fortunate to get involved in an area that was just taking off,” he said of the still-growing trend toward healthy foods and ecologically responsible retailing. “Once you get that first success, it’s like opening a door to a long corridor; lots of opportunities are going to come your way.”
Though he was teaching full-time at Tulane, Elstrott also headed full-tilt down an entrepreneurial path, investing money and time as a board member or mentor in one enterprise after another.
He first became involved with a new California tea maker called Traditional Medicinals, a winner that remains in his portfolio today. Ground-floor investments that followed included such names as Silk soy milk, a company he helped to build and sell; Sambazon, maker of “superfood” juice Acai; GoodBelly probiotics; and drug therapy developer MicroBiome Therapeutics.
One investment that kept Elstrott consistently engaged was a grocery business with roots in New Orleans and Austin, Texas.
In 1980 after local entrepreneur Peter Roy acquired the struggling Whole Foods co-op store in New Orleans, he sought Elstrott’s help to grow the business. Elstrott became Roy’s first “outside” investor. A short time later, a similar grocery business in Austin began to expand. The local company became its first acquisition, which is how Elstrott became one of the first shareholders in Whole Foods Market.
He joined the company’s board in 1984 and 25 years later was elected chairman. Over the decades he has seen Whole Foods Market expand in three countries to employ 87,000 people.
While Elstrott has long focused on the healthy food products sector, he also ventured — as an investor, board member or adviser — into the oilfield services hazardous waste cleanup, telecommunications, music and pharmaceutical industries.
Among his current investments, he is a board member of Resource Environmental Solutions LLC; Get Healthy Inc.; Barriere Construction Co.; Laitram Corp.; Zehnder Communications Inc.; and Baton Rouge-based PreSonus Audio Electronics Inc.
These days, Elstrott, who retired from Tulane in 2013, considers himself a “professional board member.” But others say his contributions go well beyond individual board rooms.
Tim Williamson, who 15 years ago founded nonprofit business accelerator Idea Village, said Elstrott “was in the vanguard” of the city’s efforts to become a hub for job creation and business innovation.
“A successful (business) ecosystem needs entrepreneurs and the people who believe in them,” he said, noting that Elstrott was among a handful of locals who long ago realized entrepreneurship would be critical to New Orleans’ future.
With their help, local business incubators have proliferated and capital sources, including angel and venture investors, have grown. Business plan competitions have become commonplace, and as young innovators have embraced New Orleans, the national business press have showered accolades on the city.
“John was an early believer,” Williamson said. “He was doing this before it was cool.”
Williamson said New Orleans’ rising entrepreneurial profile is exciting, but the city will need fresh energy to sustain growth when current supporters and benefactors begin to scale back their roles. “We hope the John Elstrotts of the future are the entrepreneurs who are working in the city right now,” he said.
Meanwhile, Elstrott shows no sign of slowing down. “I’m having too much fun,” he said.
This year he expects Whole Foods Market will hit $15 billion in revenue as it elbows its way through a growing crop of competitors and expands its geographic horizons. “Mexico may be next,” he hinted.
And at the other end of the spectrum, Dinner Lab, which tripled its revenue in the past year, aims to become a leader in culinary events in every large city in America.
Ultimately, Elstrott predicted, Dinner Lab will be known for putting on splashy parties with great food by innovative chefs in every culinary destination around the world.