Entrepreneurs

This 32-year-old turned a side hustle making herbal tea drops into a business worth millions

Tea Drops founder Sashee Chandran
Tea Drops | Michael Bezman Photography 
Tea Drops founder Sashee Chandran

Between the potentially harmful effects of technology addiction, career anxiety and a growing debt burden, young people today have plenty of reasons to stress.

Sashee Chandran, the 32-year-old founder and CEO of California-based start-up Tea Drops, is aiming to soothe those modern worries with an ancient tradition: making herbal tea.

"Now more than ever I think people need things that ground them and center them," Chandran tells CNBC Make It. "That's why meditation has blown up, that's why yoga is something that's super huge ... tea is this other vehicle for that."

But Chandran's products — blends of organic tea leaves, raw sugar, herbs and spices pressed into a "drop" that dissolves in hot water — are 21st century, user-friendly and aimed at millennial women. They're sold in 1,600 retail locations including Nordstrom, Neiman Marcus and Anthropolgy stores. A $12 box of eight drops is available in flavors like "blueberry acai white tea" and "cardamom spice."

Chandran's business is also starting to attract investors. In May, Tea Drops won a $100,000 investment from fashion entrepreneur Tory Burch, and in June, the company closed a $1.9 million round of seed funding led by women-owned venture capital fund AccelFoods.

For Chandran, who launched the business in 2015 as a single founder, that success is the result of years of hustle: She did everything from craft her own flavor blends to write a patent application herself, initially funding the business with just savings and a line of credit on her home.

"I remember the early days working 13 to 17 hours a day," she says, making, packaging and labeling each product.

Chandran grew up around traditional loose leaf tea and tea culture, something that her Chinese mother and Sri Lankan father brought with them with they immigrated to the U.S. In her home, having tea was a way to relax, bring the family together, and show love.

Sashee Chandran's mother and father.
Source: Tea Drops
Sashee Chandran's mother and father.

"For me, tea is this vehicle to certain memories and associations in my childhood," Chandran explains.

When Chandran was sick, her mom would prepare chrysanthemum tea. At parties on her dad's side of the family, women gathered around a cup of black tea or Chai with cardamom, ginger and nutmeg to talk and laugh.

"That's still a go-to," Chandran says. "Whenever my friends come over we make Chai and just talk and chat."

The idea to build a business around tea culture came to Chandran while working in market research at eBay. Chandran would try to prepare a cup at work for a moment of calm in her hectic day, but realized it was more of a hassle than a stress reliever.

"The process to make loose leaf tea was really cumbersome," she explains. "In order to make it, especially at your desk, you need an arsenal of equipment; you need a kettle, you need a strainer to strain the tea, then you have to wait for it to steep for three to seven minutes. By the time you make it you have to run to a meeting."

Instant tea, like the kind you might find in tea bags, is convenient but often considered lower quality compared to loose leaf, Chandran says. "I was never really satisfied with the quality of bag tea. It's usually referred to as 'tea dust,' it's like the last part of production in the tea manufacturing process, so the richness and the aroma and flavor is just never as strong," she says.

Chandran wanted high quality tea brewed quickly, with more time to enjoy and relax. So, she decided to invent something new.

Tea Drops founder Sashee Chandran blending flavors of tea.
Tea Drops | Diego Jimenez 
Tea Drops founder Sashee Chandran blending flavors of tea.

"I didn't have a business idea but I just started experimenting with different tea blends and properties," Chandran says. "I would get samples of loose leaf green tea, white tea, black tea, matcha and just start blending in my kitchen. About a year and a half, two years later, I developed this notion of a 'drop.'"

By grinding loose leaf tea and pressing it together with raw sugar into shapes, Chandran created an on-the-go product that could dissolve quickly. Initially it was just a side hustle on weekends and after work.

"I would sell it at small farmers markets and those types of venues," she says. "I got a lot of positive response."

But six months after filing for a patent on her "drops" idea, Chandran decided to quit her job and pursue tea-making full time in late 2015. "I got my finances in order, I saved as much as I could, I took a home equity line of credit on my house while I still had a job, and I used those savings to launch Tea Drops," she says.

To catch the eye of retailers and get her product out there, Chandran focused on appearing at trade shows for the gifting industry. "I remember doing 15 or 20 of them in one year," she says, hoping a buyer would notice her tea. "I would go from Dallas to San Francisco to Atlanta to New York."

Tea Drops founder Sashee Chandran at a trade show.
Tea Drops | Diego Jimenez
Tea Drops founder Sashee Chandran at a trade show.

As more retailers did take notice, production moved from Chandran's kitchen into a shared commercial space. Still, she faced challenges meeting growing demand. When Tea Drops' first big order for a few thousand drops came in 2016 from Anthropology and online retailer Uncommon Goods, Chandran wasn't sure she could manufacture the amount of tea the stores wanted to buy.

"I remember working in our commercial kitchen through the night ... I negotiated with our landlord that I could come in at like 1 in the morning and work until 5 or 6 a.m.," she says. "We would make the tea, we would hustle into [my converted garage] and we would assemble and put everything together. It would truly look like a madhouse."

By her second year in business, Chandran started to realize she would need to take on funding in order to scale.

While Tea Drops aimed at a cross section of two burgeoning trends — increasingly popular "self-care" rituals (which have over 7 million posts on Instagram) and an explosion of small organic food brands — Chandran herself was up against one large industry headwind: Most venture capital funding goes to men. Only 2 percent of women founders landed venture capital investment last year.

Chandran says she pitched over 72 potential investors, and heard "no" time and time again. "That can't help but do something on your mental psyche," she adds.

But she persisted, and Tea Drops landed its first investment in 2017 from angel investors and AccelFoods, an early stage venture capital firm run by former corporate attorney Jordan Gaspar and Wharton MBA financial strategist Lauren Jupiter.

AccelFoods managing partners Jordan Gaspar and Lauren Jupiter.
Courtesy of AccelFoods
AccelFoods managing partners Jordan Gaspar and Lauren Jupiter.

"[Tea Drops'] proprietary tea mold format and authentic brand, that seems to resonate with today's health-conscious millennial consumer, allow it to stand out," Gaspar and Jupiter tell CNBC Make It. "The U.S. tea category is a $12 billion market that has seen continued steady growth over the last five years, with growth up 10 percent from 2016 [through] 2017." AccelFoods led Tea Drops' $1.9 million seed round in June.

Chandran has also found support from prominent women like Tory Burch and Michelle Obama. After being selected to participate in the Tory Burch Foundation's Fellows Program, which gives funding to women-owned businesses, Chandran flew to New York to pitch in front of Burch and won the competition's grand prize of a $100,000 investment in May.

"We were extremely impressed with Sashee's pitch and ambitions to disrupt the tea market," Burch said in a statement about Tea Drops' win.

Former U.S. first lady Michelle Obama weighed in on the brand in July after Chandran mailed her a box of Tea Drops. Obama and Chandran both attended the United State of Women conference in May, where Obama was a keynote speaker. An organizer of the conference wanted to put together a gift for Obama as a thank you, and asked Chandran if she would like to add some Tea Drops.

"I was like 'Of course!'" Chandran laughs. "It's Michelle Obama, no problem, we got this."

She included a note about her business along with the gift, and sent it off.

Although Chandran didn't meet Obama in person, she received a letter from the former first lady months later. "You are building an exciting and innovative company and you have my warmest wishes for all that lies ahead for you and the Tea Drops Team," Obama wrote.

A letter sent to Tea Drops founder Sashee Chandran by former U.S. first lady Michelle Obama.
Tea Drops | Diego Jimenez 
A letter sent to Tea Drops founder Sashee Chandran by former U.S. first lady Michelle Obama.

While Chandran says she is "still not over it," her focus today is on building and scaling the business. "My goal is for Tea Drops to be the household tea brand of the millennial generation," she says. "There's really no one who speaks to tea in that way."

Although she's hasn't figured out how to respond to Obama, she jokes: "I feel like we should make a tea just for her."

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