Tower Paddle Boards garnered an investment from billionaire Mark Cuban on ABC’s “Shark Tank,” and was named one of the top 10 success stories in the history of the show by Entrepreneur Magazine. With only four employees, Tower has grown from $3K revenue in 2010 to a projected 2013 revenue of $4M.
Tower Paddle Boards is a design-centric, manufacturer direct stand up paddle board (“SUP”) company. We’re the brand, the importer, the retail shop, and the marketing arm all rolled into one. This allows us to sell comparable quality boards are $500 less than the competition. Tower’s intuitive website also simplifies the SUP buying process.
MO: How did you come up with the concept of Tower Paddle Boards?
Stephan: I had an existing eCommerce business selling high-end poker chips that I had been running since 2003. BuyPokerChips.com was doing about $500K/yr in revenues but it only took me about 12 hours/wk to run as a one person show so I was always looking for new ideas. I was actually six months into building a portal for the green energy industry when a buddy of mine visiting San Diego took me stand up paddle boarding (“SUP”) in the waves of La Jolla Shores in March of 2010. There was a 65 year old, out-of-shape guy next to me on a SUP that was catching waves left and right. It was only his fifth day. In a weird bit of irony, I got stung by a stingray a couple hours in, which is an excruciatingly painful experience for about 24 hours and cemented the experience in my mind. Regardless, I was hooked. I bought a board a few weeks later and my five year old son would ride up on the front, and pretty soon ride all by himself. I was amazed. Anybody can do this sport, I thought to myself. Being an Internet entrepreneur, I took a look at Google search statistics and found out it was a large and rapidly growing sport. I examined the competition and instantly knew I could compete favorably by employing a similar business model as I did with my poker chip company.
MO: Can you talk about the process from having the initial idea to getting the boards to market? What were some of the challenges you faced early on and how did you overcome them?
Stephan: After seeing the tremendous market potential of the SUP market, I registered the URL TowerPaddleBoards.com in June. I built the website myself on the side. As I knew very little about paddle board design, I tapped into SUP discussion groups to crowd source ideas for improving paddle board design. What I found was an opportunity. As I had already witnessed, paddle boards were expensive at $1200 to $1500 for a quality board. Also as most beginner boards on the market were massive at 11-12 feet long and heavy at 35 lbs, they were a trick to both carry and store.
Being outside of the surf market, which many would consider a disadvantage, was actually an advantage here because I was able to look at it from a fresh prospective. All the board designs were morphing over from surfboard designs, which are relatively thin and narrow thus had to be long to get adequate floatation. The community wanted lighter and easier to store, so I surmised I’d just make them shorter and wider, yet a lot thicker. As the exterior shell was the heavy part, you could reduce weight by reducing the surface area while maximizing the volume, which my design strategy did. Add to this our direct to market strategy when the other 80 competitors in the market were competing with an expensive, traditional 3-tier distribution channel strategy, and we could offer equivalent quality boards are almost half the price. It proved a winning formula.
I launched the website in October of 2010 selling competitors boards and accessories to test the market, and we had only $3000 in sales. I didn’t have any money to buy boards in large volume so I went out looking for money. My brother agreed to lend me $75K at 0% interest in exchange for my help in building out an extension of his arborist supply business, Wesspur Tree Equipment. We agreed and I had money to order my 1st container of boards, which I started to pre-sell to further finance inventory. They started selling well in March and I got an additional $30K short-term loan from a buddy at 64% interest to really test out the market over the summer season. I hired my 1st employee and within 2 weeks got a call from ABC’s Shark Tank. Six weeks later, our first container of boards has completely sold out before the container even landed on US soil, Tower had $100K in lifetime revenues, and I was pitching to the Sharks where I got celebrity billionaire Mark Cuban to invest $150K for 30% of Tower plus he negotiated for 1st right of refusal to invest in any business venture I raise money for in the future.
Things took off from there. We closed out 2011 with $260K in sales and officially inked the deal with Cuban in November of that year. Our Shark Tank episode aired in March of 2012. We did $60K in sales in the 4 days following the show, but more importantly because we worked hard to get a ton of press (which often included links to our website) our site traffic spiked and then held a sustained triple digit increase from the surrounding media and inbound web links. Sales tripled with traffic and things progressed from there. In June of that year Cuban mentioned us in Forbes Magazine as one of his best Shark Tank investments. Later in September of that year Entrepreneur Magazine listed Tower as one of the top 10 Shark Tank success stories. We closed out 2012 with $1.7M in revenues, and we’re on pace to do $4M in 2013.
MO: What’s one marketing strategy that’s worked really well for you?
Stephan: The demand for our boards and our rapid growth has outpaced out access to capital. We’re in a business where we have to make real products, sell those products, and ship them. Our production cycle times are 3 months, so to ramp up sales you’ve also got to ramp up your inventory investment. Our $1.7M in sales in 2012 is actually a very constrained growth number. We were out of stock of 3 out of our 4 paddle boards at the beginning of June, just as our busy summer season was starting. Then we stocked out of our top selling board again on December 2nd and missed the holiday season. Banks still won’t loan us money or even give us a $5000 credit card to this day, so we were stretching our available capital as far as it would go. It simply wasn’t enough to accommodate our growth trajectory. For this reason, we don’t even advertise. Even today we have a $0 advertising budget because we can’t keep up with our organic growth as it is, so no real need to advertise.
At the end of 2012, still not being able to secure a bank loan to finance our inventory needs, I laid out my growth plan to Cuban in an email. I basically said if you can fund us, I can grow this thing even faster. Within 10 minutes, he responded simply with, ” You have just been authorized for a 300k line. ”
The $0 ad budget marketing strategy that is driving Tower’s growth? Good old roll-up-your-sleeves PR! As my expertise is in search engine optimization (“SEO”), I knew exactly how to best leverage our exposure on ABC’s Shark Tank. The effect of a one-time event like airing on Shark Tank has potential similar to a massive wave. While it simply washes over many Shark Tank contestants (winner and losers), Tower looked at the one-time event as a way to accomplish three things – leverage Cuban’s celebrity, leverage the popularity of Shark Tank, and leverage it perpetually by getting articles in other media.
First, once we knew Cuban was our guest Shark, I valued his money at 3 times the others as an investment from him brings with it an implied celebrity endorsement, which is huge in the PR world, especially with the rise of social media. Having an investment from Cuban is one level, but being among his top investments brings this to a whole new level as a guy like him does countless major media interviews where they’re always asking him about Shark Tank and what his good and bad deals are. We’re extremely motivated to become his best investment.
Second, the popularity of Shark Tank continues to emerge. In Canada, it’s predecessor Dragon’s Den was one of the, if not the, top shows in the country. As we’re similar countries with a shared entrepreneurial spirit, it’s safe to assume that the same will transpire here and it is heading in that direction. Now that we’ve been listed by Entrepreneur Magazine as a top 10 success in the history of the show, we’ve got our eyes on getting to the top of that list for the same reasons I mentioned with Cuban. It allows us to leverage not just our appearance on Shark Tank, but actually leverage the immense influence of Shark Tank itself.
Lastly, we viewed airing on Shark Tank (deal or no deal) not as a one-time event, but as something we could leverage perpetually if we can use it to get a ton of press mentions and links back to our site. We did that and our traffic and business tripled overnight and this level has been sustained and then some.
The ironic thing is that this is the only marketing strategy that we could use as we don’t have any money to spend on marketing. In start-ups the necessity of having constrained resources forces you to think creatively, which also often times produces the most effective results.
MO: How did receiving $150,000 from billionaire Mark Cuban on ABC’s Shark Tank help influence the focus and direction of Tower?
Stephan: Mark Cuban’s investment of $150K in November of 2011 was instrumental in its timing as we needed to ramp up our inventory asset to accommodate our expected growth in 2012. We put a portion of the capital infusion to work right away to diversify into inflatable paddle boards. This has proved a great move for us as these work well with our direct to market strategy. We actually ship these inflatable paddle boards worldwide for free, so we’ve really opened up the world market to the Tower brand.
MO: What advice would you give to a young company looking to boost their SEO?
Stephan: I get a lot of people coming to me asking for SEO advice. My assessment is that most people don’t understand SEO very well and they think it’s a marketing strategy that can just be layered on top of an existing business or product. This may have been true in the early days of the internet, but no longer. Today good SEO is very close to good PR, as you can see from the story of Tower detailed above. The thing is most people find PR extremely difficult because their product or service isn’t remarkable in any way, or it even sucks. You’re swimming upstream trying to market a product or service like that, let alone get an independent third party to give you a freely earned press mention.
I like look at SEO holistically, and therefore you need to push it back to the product development stage. Spend your time focusing on building remarkable products and then just make them findable. You can’t really fool today’s advanced search engines, and certainly not over the long term. But if you have truly great products and services, it’s fairly easy to rise up the search engine results pages. Build remarkable products, then build remarkable content around your product. Then make it all findable, which is basic SEO that you can read about in any book and learn in a few weeks. SEO is embarrassingly simple with remarkable product offerings, just as it is nearly impossible without them.
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