Tea For Two - Couple Both Earn MBAs, Brew Business in Boulder

Rong Pan (MBA '03) and Qin Liu (MBA '04) are natives of China. The couple both earned MBAs through the Leeds School of Business (Pan through the full-time program, Liu through the Evening MBA program). Yet the owners of Ku Cha House of Tea in Boulder still had lots to learn about the symbolic drink of their culture. Like, for example, how to brew the perfect pot of tea. And what are the thousands of varieties and properties of tea, including black, green, white, and oolong, just to name a few. And how location can make or break a business.

Consumed socially and habitually by people since 3000 B.C., tea is native to China, but C. sinensis spread to India and Japan, then to Europe and Russia, arriving in the New World in the late 17th century. Today this brewed beverage is experiencing a rebirth. Last year, Wired magazine proclaimed that "Tea is the New Coffee" because
Web 2.0 darlings of Silicon Valley had traded in their Red Bulls and caffeinated coffee drinks for this ancient thirst quencher that fed their souls with its storied history and global heritage. Tea consumption is increasing, and specialty tea shops are an expanding niche in the beverage market. In 2007, total sales of tea products
neared $7 billion in the United States alone, up $2 billion from two decades ago, according to the Tea Association of the United States of America.

"We both love tea," said Pan of she and her husband Liu, who met at Tsinghua University in Beijing, China, when attending GRE preparation classes together. "The idea developed over time from our ideas and concepts; we explored different business models. We didn't want a bar or cafe setting, but we wanted to focus on the retail side of tea. In fact when I was in my business preparation class at the Leeds School, we had to submit proposals for a business. I submitted one for a tea cafe: it got killed," she says now with a laugh.

But the idea for a tea shop lingered, and in late 2005 the couple opened The Leaf in a storefront on the west end of downtown Boulder focusing strictly on retail. The couple had studied for their MBAs at the same time, though with different concentrations.

"Qin was focused on business management and entrepreneurship while I was focused on the finance side of things," Pan said. As an MBA student, Pan secured an internship with Key Bank, where she worked until earlier this year before quitting to focus her energies on the tea shop full time. Liu continues to work as a software
engineer as he manages the shop with Pan.

"We saw an opportunity to do well here in Boulder," Liu said. "We didn't realize the commitment we had made, or the cash flow that was needed," Pan said. "We struggled, but we learned," added Liu. "We moved locations to survive." The shop moved to its current location near the heart of Pearl Street in 2007 where it draws more pedestrian traffic and has twice the square footage. The extra space led to more possibilities than just a place to buy exotic adventures one tea cup at a time. "We debated for a long time whether or not to have a tea drinking room, but drinking tea is such an integral part of the tea experience," Liu said. "You can buy a cup and drink it here, like it, and take some home. It's also been a great marketing tool because we can have events here, which we do every Sunday afternoon, with live music. Before on the second floor (where the tea drinking room is), we used it for merchandise but it failed. When we tried it for events, it was much more successful."

"It's very complimentary to the tea retail, but retail is still our core," says Pan.

The shop sells 140 different types of tea, imported directly from India, Japan, China, as well as U.S. distributors, in addition to ceremonial tea pots and accessories. The couple hopes to grow the tea shop as a hub for tea culture, exposing visitors to music, art, and experiences of their native culture. Their customer base is diverse, the couple said, from old to young, from foreigners seeking the familiar teas from home to Americans exploring new flavors from abroad. In China's tea houses, there can be up to 6,000 types of green tea alone; Ku Cha offers fewer than 50 kinds of each category of tea so as not to overwhelm or confuse their customers. "If we taste it, and we like it, then we will carry it. We won't sell something we don't like ourselves," Pan said.

Of course, the couple usually discusses and debates business matters together over, what else?, a pot of tea. "You can't always be so polite; you have to be more straightforward," said Pan of being married to her business partner. "It can get heated but now that I am involved with more of the day-to-day operations, I am starting to understand his business choices better."

Said Liu: "Communication is key, though, and we have a common goal."