Web entrepreneur and 99designs customer Stephan Aarstol was looking for another business to immerse himself into when he discovered the sport of stand up paddle boarding – and the incredible business opportunity it offered. So incredible in fact, that it compelled the producers of ABC’s Shark Tank to invite him to pitch his idea to the sharks.
Read on to learn about how his digital marketing expertise allowed him to carve out a business with a distinct competitive advantage over its competition and ultimately landed him a deal from one of the most famous and successful businessmen around.
Where did the inspiration behind Tower Paddle Boards come from? Can you describe the founding story? I had another eCommerce site called BuyPokerChips.com, which I started in 2003 and only required about 10-12 hours a week to run as a one-man show. With my free time, I was looking to start another business. Then, in 2010 I was about 6 months into developing a portal for the green energy business when an old college buddy was in town and invited me to go stand up paddle boarding. I jumped at the opportunity.
We went out at dawn in the waves at La Jolla Shores. It was kind of challenging to learn the balance in the waves, but I got it after about 30 minutes. There was a 65 year old, out-of-shape guy next to me catching waves left and right, so I asked him how long he had been doing this. He said it was his 5th time, and I was blown away. I was catching waves after just an hour.
I went out and bought a board a week later and was absolutely shocked at how expensive they were. It dawned on me how broad the market was for this new sport I had stumbled across. Being a web entrepreneur, I did research on related Google searches, and what I found blew me away. This was an industry that was growing 100% a year for five years straight, and customers were paying way too much for what is essentially an oversized surfboard.
Sales were slow initially as I built out the business in 2010. We only did $3,000 in revenue that year. But in 2011 we came out with our own boards and our first container of 100 boards pre-sold out before it even landed on US soil, and I hired my 1st employee. A few weeks later we got a call from a producer at ABC’s Shark Tank asking if we wanted to pitch the business on the show. Six weeks later, with our lifetime sales at only $100K, I was pitching the Sharks and ended up getting a deal from Mark Cuban valuing the company at $500K. His investment closed in November of that year and we closed out 2011 with sales of $265K. In March of 2012, my pitch aired on Shark Tank, and we did $1.7M in sales that year.
That is impressive growth – where do you hope to see the company in a year from now and onward? We’ve established the Tower brand as a leader in manufacturer direct sales of stand up paddle boards. The market is still growing at a good pace worldwide, and our share within that market is growing as well.
Beyond paddle boarding, our plans for the future are to expand Tower into a more holistic beach lifestyle brand. We’re in the process of launching a digital magazine at tower.life that will house compelling writings and videos for beach lifestyle enthusiasts. Our initial aim is simply to provide value to our audience. As the community evolves, we’ll figure out what products we can produce to further serve the beach lifestyle crowd.
A year from now, we’d like to have a lively and engaged beach lifestyle community. In five years, we’d like to be known worldwide as a holistic beach lifestyle company with authentic roots in stand up paddle boarding, but offering products and services extending far beyond those roots.
You guys were on Shark Tank in March 2012! Tell us about that experience. What did your prep for the show look like? The producers called us out of the blue – I had never even seen the show. They knew paddle boarding was a hot trend, so they wanted a paddle board brand on the show. As a manufacturer direct company, we do things quite differently than the 80 or so brands out there at the time, so they liked our approach. When they told me Shark Tank airs on ABC during primetime on Friday nights, I said I’d do it.
We then had to go through their application process to get on the show. First we had to create a pitch video which had to be submitted in 5 days. It was a scramble to get that done in time! Then I had to fill out an extensive application which they needed in about 2 days.
It was June so we were in the peak of our high season too, and our first board container had sold out so business was going crazy. On top of that, I had already booked my summer vacation with my son so I was on vacation for 2 weeks in the middle of all of this – at one point I was on a remote island for 4 days without web or phone access. Once I got through the application process, they assigned me 2 producers to help me practice my pitch and practice fielding questions.
They made me very aware that I could be knocked out of the running at any time, so it was kind of like a 6 week audition. After a few weeks, they said, “Ok, we’re bringing you up to LA to film,” and I was sequestered in a hotel for 4 days with other entrepreneurs also preparing to pitch. After a dress rehearsal pitching to a staff of 40 or so producers, we got the green light to actually pitch to the sharks. This is about the time I learned that Mark Cuban was the guest shark. Two days later, the doors opened and I walked into the tank and pitched the sharks.
Stephan in the middle of his pitch to the sharks on ABC’s Shark Tank. Check out the full segment here
I screwed up my pitch pretty bad. My slide show malfunctioned, and I lost my train of thought and froze. Then I stumbled and stammered to get started again for several minutes while the sharks tore into me. It was a pretty epic fail. But the nature of the tank is it’s all a live shoot and you either run out of there screaming or you gather yourself and continue. After a few minutes, I gathered myself and continued. In the end I got offers from Mark Cuban and Mr. Wonderful, but I took Cuban’s. He offered $150K for 30% of Tower Paddle Boards, and negotiated for 1st right of refusal to invest in any business I raise money for in the future. This last part was a first ever on Shark Tank.
Sounds like a stressful experience that paid off in the end! Now that this trend has taken off, it’s a competitive space to be in. What sets you apart from your competition? Two things differentiate Tower Paddle Boards from our competition – our value proposition and our commitment to clean design.
We innovated on the distribution front, and this gives us an advantage in the value proposition we can offer to customers. We basically sell a $1200 board for under $800 including delivery costs. It’s a high-quality board, but at prices which are comparable to the cheapest boards on the market. We are also a leader in the emerging market of inflatable paddle boards.
Our commitment to design has also been a differentiating factor in our success. Our initial hard boards had a clean, retro 1960s triple stringer look – simple, and elegant. It’s a time tested design that has been popular for over 50 years, so we went classic. On our inflatable boards, we also went with a clean white look with gray pinstripes. This is a sharp looking board that looks great even on your $500K yacht.
What advice do you have for others starting a business? One simple piece of advice: Focus on finding existing demand that is yet unmet, and then fulfill it. Don’t waste your time conjuring up product or service ideas – instead, build them, and then try to figure out how to sell them.
Fix an existing problem. For me, it was my shock at the price of getting a quality paddle board. I gave it some thought and figured out how to just tweak the distribution channel and solve that problem for people like me. Then I sold a few boards to test out the theory. Then I went all in.