Wired In: Dan Klein

Wired In: Dan Klein

Each week, staff writer Paul Wood talks with a different high-tech difference maker. DAN KLEIN, 29, is chief executive officer of Tiesta Tea Company, now in Chicago. From their University of Illinois apartment basement to Urbana Farmer's Market to almost 7,000 stores, he and preschool friend Patrick Tannous have created a loose-leaf empire.

You were a student when you started the company. What gave you the idea? Are you a big tea drinker?

It was my junior year when I studied abroad and decided to meet up with Patrick Tannous, my now business partner, for a weekend in Prague. Our adventures led us to a tiny Czech tea house where we shared our first cup of loose leaf tea, and ever since we have been hooked. Upon returning to the United States, we noticed that loose leaf tea was expensive, intimidating and inaccessible to mainstream consumers. This gave us the idea and our today mission of making loose leaf tea accessible, affordable and understandable. We aren't your average traditional tea company, we bring different tea blends to life with a world of ingredients. I have become a big tea drinker and have expanded my pallet through sipping tea.

Who else was instrumental, and who's on the team now?

Patrick, Tiesta Tea's co-founder, is my counterpoint to the success of Tiesta Tea. We have known each other since pre-school and have been best friends ever since. Patrick was my best man at my wedding. Alex Sosnov, our COO, has also been a main part of the company. The three of us spent our senior year of college packaging and selling tea at the Urbana Farmer's Market. Both of our fathers also helped us get us to where we are today. Currently we have 18 employees with six of the 18 being University of Illinois graduates.

Way back in a 2010 News-Gazette article, you mentioned "a handful of retail locations in the next year," probably in the Chicago area. You'd already been at other local places, right?

We are sold in Walnut Street Tea Company and World Harvest, which are still in Champaign today. For local in Chicago, we are in Jewel, Osco, Marianos, Target, Oh Olive and other cafes. Oh Olive was our first store that we were in.

Is working at Tiesta a bonding experience?

We started in our apartment basement with a couple of our buddies. We bought the beer and pizza and they helped us pack tea. From there, we moved to Chicago where we lived together with our friends while running the business. This entire journey has been a bonding experience. Back in 2011, I couch-surfed in four cities with Patrick for 20 days, going door-to-door talking to over 500 potential customers to keep the business afloat. It's been a wild ride with starting a company with my best friend, but we truly compliment each other and have figured out who is good at what.

What kind of help did you get from the Research Park and other UI programs?

Research Park gave us office space to help form our company. What got us there was being in an entrepreneurship class at UI where we placed first. Research Park and the Gies Business School has been helpful even up to today. They are always giving us recognition for how far we have gotten and have given me the opportunity to speak to students about entrepreneurship.

What's the great thing about your tea?

The great thing about our tea is that we use ingredients from all over the world to create these one-of-a-kind blends. We source our ingredients from all over to ensure premium taste. Another great thing is the price point, our teas are loose leaf tea blends found at the best price.

Tiesta was one of 15 student-formed companies taking part in the Illinois Launch program. You also had assistance from Jimmy John Liautaud of Jimmy John's Gourmet Sandwiches. Are you still using their packaging designs?

Jimmy John Liautaud helped us with a lot of things, one being the designs of our packaging, but also helping us realize that we should not build our own café. This saved us a ton of overhead costs and is why we can be so affordable in grocery stores. We are still using the colors that Jimmy recommended and the logo he helped create.

You grew fast — by going through shoes; 500 stores in 20 days from New York to Seattle. Do you think that strategy would work today?

To get momentum, the company needs to be spread by word of mouth. It is the No. 1 way to get brand awareness. Going door to door was an impulse idea because we needed business. I think today there is a lot of opportunity and growth in the e-commerce space. It is different than it was eight years ago, but could be similar to going door-to-door but seen as website-to-website.

How did you decide grocery stores are good spots for loose leaf tea? And how to you get to 6,500 stores?

Jimmy helped us realize that starting our own store would be costly, way more costly than it would be if we just sold in grocery stores. One thing that we have been a pioneer in, is by creating bulk tea fixtures to go in the produce section at grocery stores. There is a lot of research on why people should be shopping the perimeter of the store and we knew we had to get there. The tea aisle is not on the perimeter, so we created bulk tea for grocery stores. This way, people could experience the loose leaf tea by seeing it and smelling it before they purchased whatever amount they want. We are almost in 7,000 grocery stores now and it's because we have created great relationships with our retailers and have a strong believe in promoting our retailers. With expanding our loose leaf tea business to a ready-to-drink business, it has helped to be a transparent and healthy company.

And then how did you hook up with Costco? Were you able to bring costs down?

We met Costco at trade shows. And yes, we were able to bring costs down and lower our retail price because of their high volumes.

Now you've reached over $5 million in funding in venture capital and grants. What's next?

Continuing to grow profitably and introduce tea to new consumers, while continuing to grow our philanthropic presence in both Nigeria and Chicago.

You keeping hiring UI grads. Why? What is your symbiotic relationship with your alma mater?

UI grads are excellent teammates. They are smart, energetic and have a true passion for learning and growing.

What's your best advice for someone who's starting up? Did you ever make any mistakes that you learned from in your early years?

Get as much advice as possible from business owners and industry colleagues. Mistakes happen all the time, there are too many to count — but it's a way to improve.


Twitter handle, or Facebook or LinkedIn if you prefer: Dan Klein on Facebook, Dan Klein on LinkedIn

Favorite app: TripIt

On Facebook I follow: Family and friends

Book or Kindle? What are you reading right now? I love paper, but Kindle is great too. I'm an avid reader and still a newspaper subscriber with the Chicago Tribune

Do you have any wearable electronics? No.

Sections (2):News, Business
Topics (2):Entrepreneurs, Food