400+ DTC brands in 2,300+ product categories! Subscribe to receive deals from brands

A Mark Cuban Company

Segment 2: The Shark Tank Effect 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: Tell me more about the Shark Tank impact. What year was that again, when you were on Shark Tank?

Stephan: Well I pitched in 2011. I think in July of 2011. … But it didn’t air for nine months so it didn’t get here until March of 2012. So I knew I had gotten a deal from Mark Cuban (in 2011) but I couldn’t tell anybody about it. About two or three months later, after they’d done their due diligence, we actually signed the deal, and then we got the money, I still couldn’t tell anybody (except people within the company knew). And then we used that money to get into inflatable paddle boards.

So anyway, the actual pitch on Shark Tank is known as the worst pitch in the history of Shark Tank that still landed a deal. There have been worse pitches but then nobody even gives them a deal because they just a clown out there. I was a clown that actually got some money. The way it happened was, I had like four or five slides and after sitting on sat all day, finally it’s my turn to go up and walk out onto the set.

And right before I’m about to walk out there they come up with this little remote-control-looking thing and told me this is for my slides, and you hit this button to go forward and this button to go back, and then as they’re explaining that, the doors open up and I’m walking out and thinking, wow, that was weird. Why did they why did they wait until the last second to do that?

I start going through my rehearsed pitch and I get to the slide part. I hit some button, and it jumps through all my slides. Then I try to backtrack the slides while I continue through my robotic pitch here and then I just sort of forgot my pitch, froze, sort of panicked … And then they started the sharks started tearing into me and making fun of me, and it was literally silence and stuttering and stammering for 3 or 4 minutes in real time. I just sort of froze. (laughing)

Brad: But you recovered and got Cuban as a partner. And then Cuban made a unique business arrangement at the time, the only time he’d ever done that. Can you explain more about that?

Stephan: Well yeah. So after I froze I sort of pull it together. It was kind of thinking in my head, “Oh my God, your son is gonna see this … his buddies at school are going to make fun of it … Pull yourself together man!”

I came to the realization that these guys were not interested in paddle boards. Everybody was like, we have no patent, [and] there are 80 brands selling paddle boards. Why would you be successful in this? Nobody thought the paddle board business was going to work.

So I literally pivoted in the tank there and started pitching a business-flipping company. I said, while we sell paddle boards, I’ve done this for a poker chip company. I’ve helped one of my brother’s companies which is tree-trimming equipment. I go into a business and I search-engine-optimize the web site. We get a bunch of free traffic. With the Tower Paddle Boards website, we bring in fifty thousand unique individuals to our website for free each month. And that’s how I build a business. And I said, I can apply this to other businesses … it’s really hard to start a company from zero and bring it to a million dollars in revenue, but it’s very easy to buy a 10 million dollar company, inject what I know, make it a 20 million dollar company, and then sell it.

So then Cuban and Mr. Wonderful got interested, and there actually ended up being a bidding war. I went from being this complete buffoon, to all of the sudden being in a bidding war. A lot of this got edited out from the show. It doesn’t even make a lot of sense in the show how I even got the deal.

The caveat was that Cuban invested $150,000, but he also negotiated for the first right of refusal to invest money in any business I raise money for in the future. That was a first in Shark Tank history. So he was really investing in just me, not specifically in the paddle board business … And the ironic thing is the paddle board company really took off.

In 2014 we were the number one fastest-growing private company in San Diego. I mean there were venture-funded companies, biotech companies, all of this. And we were just a five-person surf brand… 5 million in sales and we’ve only got five employees. The next year we were number 239 on the Inc. 500, and since then we’ve become one of the biggest success stories in the history of Shark Tank.

We’ve been mentioned on ABC’s 20/20, and we’ve been in People magazine several times talking about how this little paddle board company is Cuban’s best investment and one of the best investments in the history to show. At the time Cuban invested, we had $100,000 in sales lifetime in the history of the company. Since then, we’ve done over $33 million in sales. So we’re really blowing it up.

Brad: Those were in the early days of Shark Tank. Where’s the chicken and the egg here? Did Shark Tank raise the tide for all boats in paddle boarding, or it was going up anyway and this was just well timed?

Stephan: Well I think I don’t think Shark Tank affected how the paddle boarding industry grew. But I think what Shark Tank did for us … I think we would have been successful with or without Shark Tank, but I think we went three times faster. Because of being on Shark Tank, and more importantly, being able to leverage Mark Cuban’s name … we had a brand in Tower. Nobody knew that brand … but as soon as I put Mark Cuban’s picture on the website, and it was like oh, Mark Cuban’s behind this brand … gives us instant legitimacy, and we have a known brand overnight.

And then the ability for us to get press. Not just press for the sake of press, but as a search engine optimization company, we’re trying to get an article in Forbes magazine or the Wall Street Journal or something like that with a link back to our website. Think something about paddle boards and link to our Web site. Once you get a few of those really high-power, high-trust links, that’s when your organic traffic just goes through the roof.

So without Shark Tank and without having Mark Cuban as an investor, we’re not going to get a lot of press. Nobody really cared if you started a paddle board company, but those were much more newsworthy things. So that allowed us to get the press, which allowed us to get to the top of the search results a lot easier. So that greased the wheels of everything.


Next: 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 >>


 

NoMiddleman Logo with Slogan

 


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 >>