Some shark bites are better than others; Tower Paddle Boards building a national brand
Stephan Aarstol, founder and CEO of Tower Paddle Boards.
Stephan Aarstol, founder and CEO of Tower Paddle Boards, says he had never heard of the reality show “Shark Tank” when he got a call in 2011 from one of their producers asking if he would appear on the hit reality ABC television show to pitch his new company to the gleefully carnivorous pack of tycoons (the “sharks”) who could potentially grant his entrepreneurial wish.
But Aarstol wowed the panel on national TV with his idea that he could tap into the burgeoning paddleboard industry by selling direct to consumers online, cutting production costs in half and passing the savings onto the customer, all while delivering a quality product.
At the time, the company had about $35,000 in sales and he had just hired his first employee three weeks earlier. “Shark Tank” panel member Mark Cuban was so impressed he agreed to invest $150,000 into Aarstol’s new company.
“Many of the entrepreneurs who have been on the show are really disgruntled. I’m going to be a millionaire now, they think, this is going to be seen by 7-8 million people, game over,” Aarstol said.
“The problem is that you get this huge wave in traffic and sales but it kind of washes over you and then its back to normal and people don’t realize that unless you do something else or leverage it some other way it’s gone. “
As most entrepreneurs know, at a certain point in time in the start up of any business, the dictum “beggars can’t be choosers” is repeatedly played out. Cuban took a hefty 30 percent equity stake in the company but Aarstol, who comes from an SEO perspective, was able to leverage and maximize his fleeting fame with numerous press placements on highly trusted sites and publications as well as amp up the social media around his ecommerce company.
Cuban’s initial investment in 2011 and a subsequent guaranteed line of credit for $300,000, less than what Aarstol originally asked for, but still enough to allow the fledgling company with two employees and an annual revenue of $255,000 to grow.
Accepting risk while keeping an eye on opportunities within the industry is a skill that entrepreneurs must possess when trying to reach that next plateau.
Aarstol convinced the media mogul that he would be able to generate revenue of $ 2 million to $3 million with three employees and could hit $5 million with four employees. Tower Paddle Boards now has nine employees and is on track to produce about $10 million in revenue for 2016.
“We used some of Cuban’s money to go to inflatable paddleboards,” Aarstol said. “It’s really hard to ship a paddleboard and 15 percent of them were getting damaged.
“So we looked at the inflatable boards on the market-they were inferior products and only 4 inches thick. We decided to make it thicker and redesign the ridges and made prototypes. They worked.
“We ship them in a UPS box for $25, for both domestic and international markets. We can do all kinds of things on the customer service front now and you can’t damage these things, they’re indestructible-people can drive over them in their car. So we basically changed the industry.”
The million dollar question for Aarstol, who has launched several companies and seen most of them fail, is how to keep growing the company now that it has cleared those first five-year hurdles and is riding its own wave of success.
Tower Paddle Boards is nationwide and only occupies 3 percent of the international market so there is plenty of room to grow those numbers, but Aarstol is focusing on a bigger picture and hedging his bets.
“We’re very profitable right now and paying a huge amount of taxes so we’re trying to pursue more of an Amazonian perspective of reinvesting all profits to minimize taxes,” he said. We’re creating another site called The Towermade.com, which are products made by Tower.
“This is really where we feel the future of ecommerce is – a branded product where you’re buying that product directly from that brand – no distributors, no retailers – an entire category. The Tower brand is beach lifestyle, anything on the beach –sunglasses, skateboards, bikes and then apparel will follow.”
With an email list of 35,000 and a magazine list of 40,000 subscribers, the idea is to grow his database to 150,000 by the end of this year and to half a million in three years.
He envisions a huge media property full of lifestyle customers who will soften the blow when paddleboards go out of vogue because he and his team will be offering them the next thing. Aarstol is also pioneering a new concept in the workplace, and one he has lived by for the last 10 years.
He will publish a book in July called “The Five Hour Work Day,” fivehourworkday.com, which chronicles the history of the workplace from the days of Henry Ford, who invented the eight hour work week, to the present. He describes how over the last 40 years blue and white collar workers are 80 percent more productive and should be maximizing output and minimizing input.
Put simply, workers should accomplish in five hours what now takes them eight hours to complete. Aarstol believes that this system encourages you to live differently, unlock productivity and find happiness by having a more balanced lifestyle. Five-hour workdays are being implemented in his company today and he hopes that more companies will adopt its practice.
“We are testing the five-hour workday at our company, we’re making it very public and proving to people that it can be done. Imagine starting your day at 8 a.m. and getting off at 1 p.m. – all the things you can do,” he said.
“Go to your kids games, exercise, have the afternoon free, pursue another idea or passion. There is so much wasted time today, all of these coffee breaks, lunches and people are getting away with it,” Aarstol added. “They’re spending an hour on Facebook and the biggest ecommerce day of the year is Cyber Monday, a day when everybody is working!
“We’re not only going to be the fastest growing company in San Diego and one of the fastest growing in the country but we’re going to do it with the whole company working these compressed hours,” he said. “Get in and get out – that’s what the experiment is about and it is working great.”