How DRY Soda founder Sharelle Klaus pioneered the culinary soda category
After the dot-com bubble burst, the self-described foodie pivoted to something bubblier — and much more profitable
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. Listen now on Apple Podcasts, Overcast and Spotify. If you love it, please help more people find it by leaving a review!
“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.”
When Sharelle Klaus first had the idea for creating a line of sophisticated non-alcoholic sodas that could be paired with food in the way that wine is, she’d already had some experience as an entrepreneur under her belt. But it was in a very different industry. As the internet began to take off in the late 1990s, she’d seen an opportunity to create a corner of the web for a younger demographic. In 1999, she launched Planet Squid, an internet portal for 8-to-14-year-olds. Without a specific revenue stream, though, Planet Squid fizzled out when the dot-com bubble burst. But the lessons from that first startup proved to be valuable. She knew her next venture would not only have to have a clear revenue stream, it would also have to be centered around something she was truly passionate about.
“Believe me, when I started this company, lots of people said, ‘Oh, dear Lord, don’t get into a beverage company.’”
A self-described foodie with four kids, Sharelle remembers how it felt to be pregnant and go out to dinner and not have many options for a beverage pairing with your meal. She missed the experience, the event of it all. And so, the idea of a culinary, non-alcoholic soda was born. This was something she was passionate about, but she admits she didn’t have any food and beverage experience — and she thinks that just might be one of the secrets to her success. While she hired a team with relevant experience, her own lack of knowledge about the “rules” made it easier for her to try things out that someone with experience wouldn’t have even considered, “because I didn't know any better,” she says.
“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.”
Sharelle was a voracious learner, though, soaking up as much as she could from experts ranging from food chemists (“the most important person I met”) to a friend who owned a bottled water company. You’ll get to hear how she set up a lab in her kitchen and began creating and tasting different flavors. What’s also interesting to me now, as the owner of Muck Rack, a PR relationship management platform company, is that Sharelle says she had a PR firm and a design firm lined up before she even had the soda flavors nailed down. She knew she was building a brand, not just a product. Marketing and PR would play a huge role in helping her generate demand and convince distributors to carry the line.
“Within four weeks, it was in like 30 of the top restaurants of Seattle...and it kind of went from there.”
Sharelle learned pretty quickly that big distributors weren’t going to carry the line until it already had traction. In the meantime, a groundswell of demand pushed her strategy. As interest grew in the restaurants, grocery stores started calling and people wanted to know where they could buy the product outside of a restaurant. Sharelle, who says she hadn’t thought about going into retail for at least a year, accelerated the plan, and then the big distributors came calling. “And it’s just, it has absolutely taken off from there,” she told me.
At the time of our conversation, DRY Soda was only available in Washington, Oregon and California, but Sharelle was fielding calls from major distributors and already had her sights set on a nationwide expansion. Their PR efforts were also continuing to fuel interest and growth, garnering press coverage in national magazines like Bon Appetit and InStyle.
“I think when you bring a team together, at the beginning, everybody has to have a very entrepreneurial spirit.”
While Sharelle says the business benefited from the fact that she wasn’t already steeped in the food and bev industry, she knew she needed experienced hands on her side. She describes how she pulled together a leadership team where everyone has beverage industry experience, but in a variety of different areas. She also emphasizes the importance of bringing in people who appreciate how “scrappy” and entrepreneurial you are and get the value of equity, especially since they won’t be getting paychecks right away.
Back when we spoke, DRY Soda was in the process of raising its first Series A round of $750,000, which would take the product nationally. With strong brand-building and demand, the company was already meeting its projections, and Sharelle recognized it could one day become a target for acquisition. Today, it remains private — and thriving. As she told me, “I love building the brand. And I’m happy to take this company where it needs to go.” For the millions of people who had been thirsty for a zero-proof alternative that doesn’t skimp on flavor or sophistication, thanks to Sharelle’s drive and determination, now there’s a category for that.
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