Below is an excerpt from our 2019 interview with Stephan Aarstol, the Founder & CEO of Tower Paddle Boards, who continues his conversation with Brad Kauffman of NoMiddleman.com. If you’d like to read or listen to the full interview, visit the Tower Paddle Boards blog post.

Brad: What’s on the schedule for the future for Tower?

Stephan: Well, we’ve got an interesting assortment of products here. We feel like we’ve got our cash cow in this paddle board business. We think as this business declines and a lot of these transactional brands flush out of business, we’re going to have a staying power there, because we’re getting our costs down. So we’re always going to have a nice healthy business there.

Then we’ve got the broad spectrum of products. We have some winners there, some losers, and then we’re going to have these new big growth markets like the e-bikes. So we’ve got that.

Then in looking at cutting our costs, we’re looking at exploring retail. Our own retail. Still direct-to-consumer, but we’ve been doing it out of our office. The space we’re in now is a really nice office showroom and retail store. We’ve done this for a couple years, but we realized that we’re paying pretty significant rent here and we can’t really scale this. We couldn’t open like a fancy store in 10 cities, it just doesn’t make sense. It doesn’t work for retail. It doesn’t work for our products in (traditional) retail.

You see some of these direct-to-consumer brands that are expanding in retail like a Warby Parker, whatever. They’re going to have 50 stores, something like that, and they’re profitable on each store. I don’t think, so far, with our product selection, we can create beach lifestyle stores and scale in that fashion, as just traditional retail. It’s not going to work for us. We experimented around with it.

But what we have stumbled across here is, we’re in process of moving our retail store to basically beach front (property). So in Mission Bay here (in San Diego), there are these little peninsulas where they have docks and little boat rentals and stuff like that, and there was this old kayak shop, a retail shop that basically went out of business, because retail is tough.

So we went into this kayak shop, and I knew the guy who was next door who is the landlord of all this, and they had been there 10 years and it opened up. And he said, “Hey, you have any interest in this?” The rent was pretty reasonable.

I asked, “You guys are right on the water here. Could we build a big deck on the back of this thing? Could we remodel and put some money into this? Could we dredge in and build a beach?” And he’s like, “Yeah, you can do whatever you want here.”

Wow, we said. So we got in there at pretty cheap rent and built this massive 2,500 square foot deck. We put maybe almost a quarter of a million dollars in remodeling this place, and now we’re going to have our offices there. And we’re going to have basically an event center. We’re calling it the Tower Beach Club.

It’s going to serve as our retail store during the day, but then when we rent it out for an event, a high-end wedding or corporate event or cocktail party… we take all the products and shove them all into the closet. And some of them we leave out, spread around the space, so these events are happening within the Tower brand, basically. They’re doing their wedding at the Tower Beach Club. There’s some surfboard art on the wall, there’s some skateboards, there’s an electric bike on display. We’re not over the top, in their face, but they can tell this is a cool beach club, this Tower thing. And 200 people get introduced to our brand when they do an event.

One of the first (corporate) events we’re doing there… they booked like $25,000 worth of boat rentals and stuff. Between the indoor and outdoor space it’s almost 5,000 square feet… We’ve got a bar in the center of it. We’re basically going to activate the Tower brand with 2,000 people, and they’re going to pay us thousands of dollars for the day for that event space.

So this is an interesting concept. First we were just like, “Oh, it would be cool to have our offices on the beach front. We’ll do a couple of these events and maybe it will kind of cover our rent. So instead of paying rent, we get free rent, we get cool offices. But then as we started to really remodel this place, we realized holy cow, we can rent this place for a lot. We’re going to rent it for $8,000 a day. Our monthly rent on this place is $8,500. So we basically have a goldmine that is an event space.

Now we have this beautiful retail store, and we’re going to throw events (that are) going to activate our brand with a couple of hundred people at each event, introducing people to the Tower brand. We’re basically getting rent instead of paying rent, and this is our retail location. This is our corporate office… but basically we’re testing this model of an event space as a retail showroom for a direct-to-consumer brand.

If this goes well, we can replicate this. We can put one in Miami Beach, we can put one in every beach town around the world. We’ll do a Tower Beach Club, and we’ll do these events, and we’ll have a nice little event business here that is cash-flowing the store, and then we have a retail presence in all of these things. So we think we really can blow up the brand.

And I think this is a unique way (of approaching retail), because you’ve got a lot of direct-to-consumer brands right now that are testing how they can do retail and be profitable, and I think a lot of them are not profitable, because they realize retail is just a tough business. They (the direct to consumer brands) are the reason these retailers are going out of business. But I think we may have stumbled on to something here.

And it works perfectly for our brand, the whole idea of this Tower Beach Club and wrapping in these great experiences. If you have your wedding at a Tower Beach Club, you’re going to have an affinity for the Tower Brand for the rest of your life, and most of your guests are going to say, “That was an awesome wedding they had. Right on the beach, in this cool venue.” So I think it’s going to work well.

Brad: Yeah. It makes all the sense in the world, especially when you keep reading about people trying to make their space more “Instagramable”, right? It’s a great play down that social media vein.

Stephan: Yeah, yeah.

Brad: Well, that’s cool. What about lakes? Does the beach lifestyle and lake lifestyle intersect for Tower?

Stephan: Yeah, they definitely do for us, because our basis is a paddle board company, and 90 percent of those are going on lakes and bays. They’re not going out in the surf (of the ocean) or a beach. But you know, there are beaches on lakes. I think our brand really fits those. I think maybe the core of our brand is a beach town, but you can also do it in any town with waterfront.

And the cool thing about these Tower Beach clubs is that they can adapt to very small markets and very big markets. We could put one in Miami beach and for events charge 20,000 dollars a day, rental fee for events, and our rent is going to be 50,000 a month or whatever it is. So that works for a big market.

And then you could also go to some tiny, like the town I grew up in, Bellingham, and you get something right on the lake there and your rent is not going to be very much because it’s a small town, and then it’s not going to cost much to host an event there. Maybe it’s 1,500 bucks a day or something to do a cool event. So it can scale to small markets and it can scale to large markets. It can scale the markets on the beach, it can scale the markets on a lake.

It’s just an interesting concept because our core products like our paddle boards that will be in the shop, they can do tours right out of this little even space for paddle board tours, or they can do electric bike tours. So whoever runs these event spaces could have all these ancillary businesses that are wrapped around our products, whether they’re on a lake or a true beach.

Next: Connecting with Tower Paddle Boards

As we wrap up the interview, we provide links and information on connecting with your favorite Tower brands—from paddle boards to sunglasses to electric bikes—as well as how to reach out to Tower Founder & CEO, Stephan Aarstol. Read more >>

Full Interview: Tower Paddle Boards

If you’d like to skip ahead or go back for previous content, no problem! See below for links and summaries for every segment of our amazing interview with Tower Paddle Boards founder Stephan Aarstol.

Segment 1: Introduction To Tower Paddle Boards And Founder Stephan Aarstol

In this segment, we dive into where it all began for Tower Paddle Boards. We cover Aarstol’s background in online marketing, and how he pivoted away from his poker chip company to pursue his hunch that paddle boards would soon be mainstream. Read more >>

Segment 2: The Shark Tank Effect At Tower Paddle Boards

When Shark Tank came calling, Aarstol answered, and Tower Paddle Boards took off like a rocket ship. But it almost didn’t happen—Aarstol froze on stage, delivering what he calls “the worst pitch in Shark Tank history.” Learn how he crashed, recovered, and landed a deal with Mark Cuban. Read more >>

Segment 3: How Tower Paddle Boards Cut Out The Middlemen And Delivered More Value To Consumers

How did Aarstol figure out how to cut out the middlemen and deliver Tower Paddle Boards direct to consumer, for half of the retail price? In this segment, Aarstol explains how he overcame the price-fixing of the industry’s dominant players to bring consumers lower prices, higher quality, and better service. Read more >>

Segment 4: How Tower Paddle Boards Sourced Factories

When building a direct to consumer business, finding a dependable factory is a competitive advantage, Aarstol says. In this segment he reveals his best tools and tips in sourcing factories: how to find the best ones, how to avoid the scams, and why anti-competitive behaviors are a sign of bigger problems. Read more >>

Segment 5: The Retail Equation At Tower Paddle Boards

“We never want to be that company that just pads our direct-to-consumer margins so we can accommodate retail partners that are taking a 50% cut,” Aarstol explains. In this segment, you’ll learn how Tower Paddle Boards uses their core principles to evaluate retail opportunities. Read more >>

Segment 6: Tower Paddle Boards on Amazon

For direct to consumer brands, Amazon is the elephant in the room. In this segment, Aarstol explains how Amazon has become expensive for consumers and crowded for brands—and why he believes Amazon is merely an online convenience store, carrying the high markups of offline retail middlemen. Read more >>

Segment 7: Disadvantages Of Amazon For DTC Brands Like Tower Paddle Boards

Amazon was good for direct to consumer businesses—until it wasn’t. In this segment, you’ll see the astronomical sales numbers Aarstol enjoyed in the early days, but also the growing challenges: disconnected customer service, increased return rates, and increased fees. Read more >>

Segment 8: Will Tower Paddle Boards Walk Away From Amazon?

Is it time for direct to consumer brands to leave Amazon? How will they survive if so? In this segment, Aarstol explains the two consumer behaviors that he believes will not change in the future, and why that’s good news for brands like Tower—helping them survive without Amazon. Read more >>

Segment 9: On The Horizon At Tower Paddle Boards

What’s next for Tower Paddle Boards? In this segment, Aarstol reveals his perspective on the ideal balance between pricing and quality, and how keeping expenses low (and advertising minimal) impacts Tower’s ability to expand into popular products with exceptional value for consumers. Read more >>

Segment 10: What Informs New Product Ideas At Tower Paddle Boards

By living the beach lifestyle themselves, Aarstol’s team has insights into new products and quality design. “If a company out of New York is creating beach lifestyle products, they really don’t understand the market as well as we do,” Aarstol says. “Our brand has this authenticity, because we’re making products that we know.” Read more >>

Segment 11: What Tower Paddle Boards Is About (From A Value Standpoint)

Tower Paddle Boards went in two unique directions, when it comes to delivering value. Product development is focused on what the consumer needs (not what it costs), and team productivity is fueled by Aarstol’s revolutionary idea to live more by working less—with a five-hour workday. Learn the secrets behind Tower’s popular products and productive culture. Read more >>

Segment 12: Tower Beach Club Offers New Experience With Tower Paddle Boards

In this segment, you’ll learn how Tower Paddle Boards is taking the beach lifestyle experience to an entirely new level with the launch of Tower Beach Club in San Diego. Whether you’re a fan of Tower, or a direct to consumer brand exec, you’ll want to read the innovative retail plans and fun experience ahead for Tower customers and visitors. Read more >>

Segment 13: Connecting with Tower Paddle Boards

As we wrap up the interview, we provide links and information on connecting with your favorite Tower brands—from paddle boards to sunglasses to electric bikes—as well as how to reach out to Tower Founder & CEO, Stephan Aarstol. Read more >>