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Segment 9: On The Horizon At Tower Paddle Boards

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: Can you tell us more about what you’ve expanded into, and anything on the horizon for Tower Paddle Boards?

Stephan: Yeah. When I started the poker chip company, it had this huge rise up, and then flattened out, and then declined over a period of 10 years. Now (the poker chip business) is basically 10% of what it was at its height.

That’s what happens in online businesses, right? Because if you find success, a bunch of people copy you, and (your product) becomes commoditized. So we caught the paddle boards, when there wasn’t a lot of (competing businesses) out there. And then a lot of people copied what we were doing, and it leveled off a couple years ago.

It’s in this slow decline, and there’s a lot of churn in the industry. People are still starting paddle board companies and realizing, “Okay, this is actually kind of a tough market.” And then they go out of business, and then they sell everything, fire sale. So there’s this whole tumultuous issue that goes on as these industries decline.

I kind of knew that was coming in paddle boards. It’s going to be a great ride up, but then it’s going to be this slow decline. We’re still doing well in paddle boards, but we know we need to expand in something else. So the idea was always … to start with paddle boards, and then very quickly expand into other products.

That’s why we named the company Tower, because we wanted to create a beach lifestyle company. Anything you could hear, smell or see if you were sitting on a beach… those are the types of products that we would create.

Beach towels, skateboards, beach cruisers, sunglasses, suntan lotion, anything like that… that we thought was fair game, that would be represented by this brand, Tower. We were going to launch as paddle boards, and that would get the door open, and then we would start expanding into other stuff.

The first expansion we did with an entire other website was Sunglasses by Tower, where we did these wood sunglasses that were very California, surfer style glasses. We did some snorkel equipment, we did surfboards, we’ve done skateboards, we’ve done bikes. And the latest one we’ve done is electric bikes.

With each of these products, we’ve gone in there and said, “How can we make a truly remarkable product that people will tell other people about?” That’s the basis for all these businesses. We don’t just want to go in and create a “me too” product in these categories. So when we analyzed the electric bike business we said, “What can we offer?” And we went very high end on these bikes. We sell them for $1500, but it’s the same bike that you get in a retail store for about $4,100.

Brad: Wow.

Stephan: So, less than half-price. But it’s still an expensive bike. You can go out there and find an electric bike for $800 or $1,000, but it’s going to be kind of be a crappy bike and people are going to have a crappy experience. The transactional companies, that’s what they’re doing. They’re going after that because they believe people are just looking at price, and (some consumers) kind of are, and (the transactional companies) can sell a lot of these cheap bikes, and then get out before people realize what they bought.

But if you’re looking at this from a brand-building perspective, we’re willing to go after that higher-end market, price a little higher, and start a little slower, but we feel that eventually people are going to see that, holy cow, this bike is $1,500 but it’s really a $4,000 bike.

That’s how we like to attack markets, and that’s how we get around having to advertise. Sometimes we have to seed stuff a little bit with advertising, but our long-term goal is to not have to advertise, because then we can offer the best value proposition in the market.

We keep our costs extremely low, and we sell direct to consumer. And we try not to advertise. If we can do that, and we can create incredible products, and we can create the best value proposition in several classes of products. Everything in the beach lifestyle realm. That’s how we feel we can build a brand that has staying power, whether we use Amazon or not.


Next: 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 >>


 

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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 >>