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Entertaining Entrepreneurship

Sharelle Klaus of DRY Soda

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How do you start a whole new category of beverage — without any experience in the beverage industry? This week, we dip back into the archives for my 2005 interview with Sharelle Klaus, founder and CEO of DRY Soda. A former dot-com entrepreneur with a passion for food and wine, Sharelle was fed up with the lack of sophisticated beverage options available to her when she went out to eat while pregnant with each of her four children. She channeled that frustration into the launch of a startup focused on crafting culinary sodas, an entirely new category that would fill the gap for a huge untapped market.

When we spoke in 2005, DRY Soda had only been in business about a year, but it had already taken the West Coast by storm and was in the process of expanding nationwide. Today, DRY Soda can be found in restaurants and stores across the U.S. as well as internationally and online. Building on the success of their “botanical bubbly” line of eight culinary sodas, Sharelle also recently released her mixology manual, “The Guide to Zero-Proof Cocktails.” This episode takes you back to those heady early days, as Sharelle describes coming up with the recipes for the first four flavors, making her first sales, raising funding and building her team.

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Highlights from this episode:

“It was really clear to me that when I started my next company that it had to have a very clear revenue stream and I had to be totally passionate about it.”

“My dream was to get into politics. And so I majored in political science and moved to Washington DC., but really quickly recognized that I didn’t want to be in politics.”

“When you’re an entrepreneur, you’re good or you’re not good, and it’s very clear really quickly.”

“Part of the reason I liked being a consultant is I like to get into different industries and learn as much as possible. So that’s basically the fun part about being a consultant is that you, you kind of get a wide array of industries and expertise.”

“At that time the Internet didn’t have much. I remember it was like Yahoo and porno sites.”

“[Planet Squid] was a really great learning experience for me, and I knew that I would never, ever try to start a company again that didn’t have a clear revenue stream. But back then you could. I mean that was what was crazy about all of that.”

“The bubble burst, and so did ours.”

“I knew that I would never, ever, start a company again that didn’t have a clear revenue stream.”

“When you have to shut down a company, it is really difficult, and you’re not sure you can ever do it again because it’s just—you know, fortunately we didn’t have a lot of employees so that helped, but still, you know, losing investors’ money is never easy.”

“One of the things that I think that women find is that they’re sort of locked out as to some of the social circles that men are locked in, that have access to, which means they have access to a lot more investors. And if you’re sort of locked out of those social groups, then you’re at a disadvantage.”

“Believe me, when I started this company, lots of people said, ‘Oh, dear Lord, don’t get into a beverage company.’”

“I don’t have beverage experience or food experience. But in the end, that is exactly why I think we’ve been as successful as we have been.”

“I was able to break a lot of rules because I didn’t know any better.”

“I’m building a brand here.”

“Sometimes I say it’s good to be a dumb blonde.”

“If I thought about every rule that there was out there that I had to follow, then it would have taken me a lot longer to get us as big as we are. So, yes, blissful ignorance is exactly what it is.”

“I go out to eat a lot, but I also have four children, and because of that it’s really been half my life I haven’t been able to drink alcohol.”

“We want Dry to be an event.”

“I just tapped into everyone I know.”

“I did at least a thousand tests on each flavor.” Sharelle’s lab was “was probably a thousand dollars total.”

“Chefs love it.”

“It became really clear that the brand I was going to build was a sophisticated luxury brand.”

“I knew I needed a PR firm. I mean, if you’re going to build a brand, you really have to get some good press, you have to get some introductions into the restaurant business.”

“I was trying to do all of this for what at the time I thought was going to be $50,000. I was gonna start the whole company with my home equity line of credit for $50,000. We ended up being able to capitalize the company with $100,000.”

“I knew right away that for this to be a sophisticated product that it really needed to be sold into high-end restaurants, because that’s really where my personal experience was, that I wanted this soda in high-end restaurants and I wanted it served in a champagne flute.”

“Within four weeks it was in like 30 of the top restaurants of Seattle…and it kind of went from there.”

“I naively thought that…you know that I would have a couple of distributors and of course they’d want to sell it because the restaurants would be asking for it. Well that’s not at all how it works.”

After not being able to find a distributor, “I went myself into all the high-end restaurants.”

“Now they’re interested in the product and we’re getting a lot of great press. We’re in two national magazines this summer, Bon Appetit and InStyle. So that kind of press really causes, you know, is going to help us quite a bit with our national expansion.”

“We don’t skew as female as I thought we would.”

“I think 90% of the restaurants that bring us in are also developing drinks based around it because of the unique flavoring and the carbonation.”

“We’ve not had any doors shut…It’s really because we’ve created something that people want. And I think we’ve been really blessed in that area that we really did hit on something. And I think our timing is impeccable and that was lucky.”

“There’s a great new market and it’s called the adult soda market.”

“We were in the process of raising our Series A round of 750, which really could get us national within the next 12 months, but we’re actually we just are oversubscribed now at this point.”

“It really is about fast growth. The money is there now, so we just need to move.”

“We know it’s an attractive acquisition target, but we also know it’s a great cash business too.”

“Everybody comes with some great beverage experiences but not so much that they’re jaded.”

“I think when you bring a team together, at the beginning, everybody has to have a very entrepreneurial spirit.”

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