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posted: 3/29/2014 8:00 AM

Suburban entrepreneurs build tea business from the leaf up

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  • Patrick Tannous, left, and Dan Klein hold samples of their products at their Rosemont facility.

       Patrick Tannous, left, and Dan Klein hold samples of their products at their Rosemont facility.
    Joe Lewnard | Staff Photographer

  • Tins of nutty almond cream, a "relaxer" tea, line a shelf in Rosemont.

       Tins of nutty almond cream, a "relaxer" tea, line a shelf in Rosemont.
    Joe Lewnard | Staff Photographer

  • Dan Klein, left, and Patrick Tannous founded Tiesta Tea in 2010.

       Dan Klein, left, and Patrick Tannous founded Tiesta Tea in 2010.
    Joe Lewnard | Staff Photographer

  • Mixed tea leaves awaits packaging.

       Mixed tea leaves awaits packaging.
    Joe Lewnard | Staff Photographer

 
 

Patrick Tannous and Dan Klein spent their last $7 on a Philly cheesesteak to share for dinner. It was 2011, and they had been to more than 500 stores and three trade shows in 20 days trying to build interest in Tiesta Tea, their brand of loose leaf tea.

"We got kicked out of stores by people who didn't want to hear about tea and didn't know us," Klein said.

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The two road tripped from Chicago to Seattle, Vancouver and New York, and by the time they reached Philadelphia the young entrepreneurs were exhausted and out of money.

"We weren't sure if we were going to have a business anymore, there was so much uncertainty," Tannous said. The two ate their cheesesteak and called their parents to ask for enough money to make it back home.

A month later, Tiesta Tea's sales doubled. They quadrupled the month after.

Now Tiesta Tea is sold in more than 3,500 stores nationwide, including major retailers Mariano's, Meijer, Winn-Dixie, HomeGoods, Bed, Beth and Beyond, Joe Caputo and Sons, Egg Harbor Cafe restaurants and more.

Later this year their products will show up at Target and The Vitamin Shoppe.

As for Tannous and Klein, both now 25, a lifelong friendship has turned into a successful business partnership that is still growing.

The two have been friends since preschool in Arlington Heights and kept their friendship going while Klein went to St. Viator High School and then the University of Illinois in Urbana-Champaign and Tannous attended Wheeling High School and the University of Illinois at Chicago.

The idea for Tiesta Tea was born while the two were on separate study abroad trips in college. They met up at a tea house in Prague that served loose leaf tea, and they realized there wasn't an accessible way to buy loose leaf tea back home.

"We saw that as an opportunity," Tannous said.

After graduating from college in 2010, they signed up for a business competition at University of Illinois, where a group of investors that included Illinois sandwich shop magnate Jimmy John, listened to proposals from young entrepreneurs.

Tannous and Klein pitched their idea -- they were seeking $250,000 to open a tea shop of their own.

The investors passed on the idea, but Jimmy John gave them valuable advice. Don't open your own shop, he counseled, but create a product to sell in stores where people already shop.

That advice helped Tannous and Klein revamp their business plan and launch Tiesta Tea in August 2010.

At first their only order was at Oh Olive in Libertyville.

"We were packing tea in a basement in Champaign with our fraternity brothers," Tannous said.

Their friends weren't sure what to think, but eventually several came on board and now help run the company.

"I was sitting on the couch playing video games while Patrick and Dan were on the phone talking tea," said Alex Sosnov, 26 of Wheeling, now the chief operating officer. "I kind of made fun of it at first, but then I saw what they were doing and got more and more involved as they grew."

What started with a $60,000 investment -- half from a University of Illinois entrepreneurship grant and half matched by their parents -- has turned into a business bringing in "well over 7 figures" a year, the friends say.

By the end of 2010 Tiesta Tea was in 10 stores. That grew to 150 by the end of 2011 and 1,500 by the end of 2012, Klein said.

The company has eight employees, all part-owners. That includes Tannous and Klein, who split their time between the packing plant in Rosemont, the company headquarters in Chicago and flying around the country promoting the brand and meeting with buyers and investors.

Tiesta tea sells 40 different flavors, categorized into five different utilities of what the tea will do for the consumer -- relaxer, slenderizer, energizer, immunity and eternity.

It took many long conversations and a lot of tasting to get to the final menu of 40 flavors. "We tried literally thousands of teas just to get to 40," Klein said.

The full tea leaves are mixed with real fruits, herbs and spices versus bagged tea which is often dust from tea leaves, Tannous said.

"We're trying to make loose leaf tea accessible, affordable and understandable," Klein said. He said he expects the tea market to continue to expand as people increasingly have health concerns about coffee and other drinks. "We are starting to see an explosion of tea and it's only going to grow."

The name -- Tiesta Tea -- is a play on "fiesta" and "siesta." Tannous and Klein said they hope to give their consumers a tiesta, a tea experience they won't forget.

In 2013 Tiesta Tea was named the most innovative brand by Forbes Magazine. Just last month Tannous and Klein were ranked among the top 15 entrepreneurs under 35 by the specialty food industry.

This isn't the first time the two have started something small and watched it skyrocket.

In 2004 while a student at St. Viator, Klein started selling wristbands that read "Students for Relief" and donating the money to tsunami relief in Asia. In what started as a small project -- Klein at St. Viator, his younger brother at MacArthur Middle School and Tannous at Wheeling High School -- the group wound up selling over a million wristbands.

Being so successful at such a young age has its ups and downs, but Klein said they try to use the company's youth to their advantage, and draw in new customers on social media.

"We know that we don't know everything," Klein said. "A lot of entrepreneurs get successful and get cocky. We know we still have a lot to learn."

"It shows that if you put your all into something, believe in it, and go after it every day, you can make it happen," Tannous said.

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