Foodie and former dotcom entrepreneur Sharelle Klaus was frustrated with her nonalcoholic drink options in fine restaurants when she was pregnant with her fourth child in 2004. So she created her own.
"Fear is a very good motivator, so I am always just a little bit afraid," says Sharelle Klaus, founder of Dry Soda.
Sharelle Klaus—who in 1999 launched Planet Squid, an Internet portal for 10-to-14-year-olds that went under during the dotcom bust—wanted something to drink that would pair well with food, that was all natural, and not too sweet. So she got a phone tutorial one Saturday afternoon in early 2005 from a food scientist, bought the equipment (among her purchases: A refractometer to measure sugar levels), and spent weeks developing recipes.
"I felt I was the one to solve this problem [of a nonalcoholic drink that pairs well with food] because I really wanted a solution," says Klaus, now 41.
She wanted one badly enough to do literally at least 1,000 tests per flavor. She started with four, among them rhubarb and lavender, the last one of which she admits to crying in frustration as she struggled to get the right ratio of water, sugar, extracts, and phosphoric acid.
Dry Soda was born. The product was "the easiest sell ever—every chef 'got it,'" says Klaus, who took it around to Seattle-area restaurants herself. "They seemed to truly appreciate that we were trying to complement their food and that we were helping them accommodate all their customers—not just the wine drinking ones." (At 35 to 40 calories per eight-ounce serving, the soda also is the lowest calorie nonartificially sweetened one on the market, though Klaus initially focused on the foodie market, not the weight watchers.)
Within three weeks she'd successfully sold it in every restaurant she'd visited. Then she got a call from QFC grocery stores, her first big account. (Klaus had to personally put it on the shelves and in the refrigerators at about 30 QFC stores.) Another big success: An order from The French Laundry in California, one of the world's top restaurants. "I almost fainted," she says. "I am clearly a huge food nerd so was beyond starstruck by this one."
However, it wasn't all fizzy highs: In late 2008, when the recession hit and Dry's financing got cut, Klaus had to cut spending, which included laying off seven of her 13 workers. "I felt I had completely let them down," she says of her employees. "I really thought I was an idiot for starting Dry at that moment."
The company still grew despite a 90 percent cut to its marketing and sales spend. In 2009, Starbucks picked up Dry in its Northwest locations. And that lavender flavor Klaus struggled over? In 2010 Real Simple magazine called it "unexpectedly addictive." There currently are seven flavors, including juniper berry, which has received much buzz from bartenders.
Another challenge: Klaus's lack of experience in the industry when she started. "In the beverage business, there are a ton of accepted rules, but since I didn't know they existed, I didn't follow them," she says. Sometimes this was a good thing: Klaus asked for bigger promotions and displays than she might have if she'd been clued in. Other times, not so much: "I think we didn't understand some important rules that would have certainly helped us move quicker," she admits.
This year, sales of Dry—available in the U.S., Canada, and Hong Kong—are up just under 100 percent, Klaus says. The company so far has raised $10.7 million in funding.
"I never really believed that Dry would not survive," Klaus says. "I only started breathing again at the beginning of this year when we saw our sales shooting through the roof. But honestly fear is a very good motivator—so I am always just a little bit afraid."
Inc. contributing editor COURTNEY RUBIN was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.