‘Beyond the Tank’ exclusive: Stephan Aarstol of Tower Paddle Boards on show effect, working with Mark Cuban

“Beyond the Tank” is currently in the midst of a run of new episodes on ABC, and last week we had a chance to bounce back all the way to season 3 of “Shark Tank” with Tower Paddle Boards, a company that has grown at an extremely fast pace in the years that followed the show. However, as Founder and CEO Stephan Aarstol notes, only a certain percentage of this is a direct result of appearing on TV and pitching the company for investors. It’s almost akin to what the Sharks say during the “Beyond the Tank” intro: The real work comes after, since you have to figure out how to leverage your platform and the opportunities coming your way to establish stability, as opposed to being a company that hits it big for a few weeks and flames out.

Following Aarstol’s “Beyond the Tank” segment last week, we had a chance to chat with him a little bit via email about his company, how he has communicated with investor Mark Cuban since striking a deal on “Shark Tank,” and also if it took much convincing to get those Amazon guys into the water at the end of the segment. We don’t want to waste too long on this intro, since Aarstol sent over some really great insight that taught us a few things, even as someone who has covered this show pretty extensively over the past few years.

CarterMatt – We’ve heard SO much over the years about the “Shark Tank Effect” that helps to skyrocket sales. Has there been a similar “Beyond the Tank Effect” since the show aired, especially given that your first appearance came at a time when the original show was still picking up steam?

Stephan Aarstol, Tower Paddle Boards – I think the term “Shark Tank Effect” is used to describe different things by different people. There are really a few things going on.

The #1, and most obvious, “Shark Tank Effect,” is the traffic and awareness spike that happens on Shark Tank when 7 Million people are introduced to your brand/product on TV, and the simultaneous traffic spike on your website over the following 4 day period (spread out do to the Tivo effect). That’s what most people are probably talking about when they say “Shark Tank Effect.” The honest thing here is that this is underwhelming for some and overwhelming for others and I’m not sure why. I think the broadness of your product appeal and it’s price point are major factors here. If you sell a $20 item and especially a food item, I think you can get a ton of impulse purchases right there on the spot. Some brands literally do $1M in the month following the airing based pretty much just on that airing. This is rare.

For us, Shark Tank was about a $50K bump in sales over a 4 day period, then it’s gone. There were about 6M viewers, so today it’s maybe 20% more viewers. On the night of our original Shark Tank airing, we only had $8K in incremental sales and that boggled my mind – we have $5K for the day before airtime even. That next day I was really questioning who buys TV advertising at all anymore if this is the ROI ;) Our average sale is at a $650 price point, however.

With Beyond the Tank, we saw about a $45K bump in sales over the 4 days, but understand this is in January for a watersports item. If we re-air in the summer, we may well see 3-5x this number or more, I don’t know. And Beyond the Tank only airs to about 4 Million people. But to put this in prospective, we average nearly $30K per day now that we’re an established company (if you average it out year round) so a onetime bump of $45K isn’t really that noticeable. Nice, but it’s less impactful then when we first started out.

Even on many lower priced items, I’ve heard nightmare stories of people stocking up huge amounts of inventory and then selling like 40 units the night of the airing. The dream becomes a nightmare at that point. It varies, a lot, and the critical thing that most people miss is that this is like a wave, a tsunami really as it can damage as much as help, that washes over you and is gone… except for re-airs when another wave hits you (our original episode has re-aired like 6-7 times). Still, one and done, each time. You can’t build a sustainable business on that, no more than you can build a business off getting one article in the New York Times. It’s nice, but it’s not a business.

The #2 effect is the incoming business development effect, a good chunk inbound. Companies start coming to you wanting to partner. Doors that were not open before are suddenly open and many of them are approaching you before you even think to approach them. Other doors, that you tried and failed to open before, are now much more receptive to your pitch when you can say you were on Shark Tank and Mark Cuban (or whichever Shark) is an investor. For some companies, this far outweighs the initial wave as if you can land some big distribution deals those have perpetual gain and oftentimes are far larger in scope then you original business and/or distribution capability.

For us, in just a few days since Beyond the Tank, I’ve already had a dozen people looking to partner with us. Not much was there for us, so a lot of it is a waste of time, but something big could come up. I’ve also had 2 separate companies inquire about us buying them… and it’s been less than a week.

The #3 effect, and really what drove our business into the fastest growing company in San Diego in 2014 and the #239th fastest growing business in the US on the INC 500, was the press we were able to generate around the airing of us on a TV show. That coverage had an effect on our company that I estimate was a magnitude more than the wave of immediate traffic from the airing. I’d say the effect of that was 40x what the immediate wave was. The sad thing is that the overwhelming majority of companies I’ve seen go on Shark Tank and/or Beyond the Tank don’t even take advantage of this part. You do the math here. If an airing generates $100K in sales for brand X on Shark Tank, but they don’t do the press end of it well, they may well have missed out on $4 Million in revenue.

Leveraging earned media is an opportunity that you either roll up your sleeves and seize, or you don’t an the window on that opportunity is gone forever. When I talk about “Shark Tank Effect,” this is what I’m referring to. This time, we weren’t just focusing on bringing awareness to our core paddle board business, but also our beach lifestyle magazine, and our new wood sunglass company. This could propel our next significant wave of growth.

Obviously we saw Mark come to visit you on the episode, but how often do the two of your regularly communicate?

When Mark invested in us, it was in season 3 of Shark Tank. He was a guest shark at that point and so I had no idea how much or even if he would be involved after the investment. I assumed he wouldn’t at all, but at least I could use his name as a sort of celebrity endorsement. In fact, I negotiated to be able to put his face on the front page of my website. That was one of my main deal points.

After I closed the investment with his team (I wasn’t dealing with him at all up to that point), they gave me Mark’s email and said, “Ok, going forward please CC Mark on everything.” That was huge to me because I thought at least he would get some visibility into what we were doing. In the offer he made to me on Shark Tank, it was $150K for a 30% stake in my paddle board company, but he also negotiated for 1st right of refusal to invest in any business I raise money for in the future. This 2nd part was a 1st in the history of Shark Tank. So I wanted to crush this first business for him and open up opportunity down the road. The reality of the communication, however, was that I was emailing Mark and cc’ing the rest of the team. He’s the one that responds and often times within like 10 minutes even in the middle of the night. I swear he doesn’t sleep and must be the hardest working billionaire I know.

I never see him in person, nor talk to him on the phone. I’ve never spoke with him on the phone. This in person meeting filmed by Beyond the Tank was the 1st time I’ve seen Mark in person since my pitch. He’s a busy dude, so I completely understand. Everything is via email. I think that’s how he is able to manage having 100+ companies under him. He just doesn’t waste time on the phone or with in person stuff when it can all really be done asynchronously with email in a far more efficient manner. I email him a status update once a week or every other week, depending on how busy things are. And I can bounce an idea off him for his input whenever and he’s always very accessible. That being said, if the answer is no, a lot of times it’s just a non-response from him. I’ve learned that his “non-response” speaks volumes. I’ve started to use that in my own communications – you really don’t have to respond to everyone just because they emailed you, no more than you have to entertain a call from a solicitor. Just don’t respond or hang up. That didn’t used to be comfortable to me, but now I see it’s okay – they’re intruding on your time and efficiency.

Mark spoke a good deal about having you create more of a community experience for your brand so that branching into other products is easier. It’s been some time since the episode was filmed, so how have you worked to implement some of his ideas?

Mark really wanted us to do a lot more events where we are walking the walk, not just talking the talk and having people see that and experience that. We’ve done a few beach parties thus far, but this is something we may get more into as we go. There is a lot of growth things we’re doing so we’re pretty busy. We’re just a team of 8 people at the moment and we expect to do $10M this year, so we focus our energies.

I think Mark was right on with this assessment and what we did was really a massive transformation of our company culture and how we operate our company. I think this is taking his idea beyond just doing events – it’s becoming a beach lifestyle company to you roots. I read a bunch of books on branding, and in June of last year we rolled a number of changes to operate from more of a “brand-as-business” mentality. We moved the entire company to a 5-hour work day and at the same time rolled out 5% profit sharing. Everyone is on salary, so the effect of this is we nearly doubled the per hour earnings of everyone in the company overnight, and our productivity is still the same, if not better. As an example, if an employee was making $40k before, that equates to about $20/hr as with a 40-hr week for 50 weeks a year, that’s 2000 hours you divide the annual salary by. With our move, the hours per year shrunk to 1250 (50 weeks x 25 hrs per week) and the bonus would add about another $8K to this employees salary. So overnight they went to making $48K for 1250 hours, or $38/hr. And the cost to our P&L hasn’t increased.

I’m in process of writing a book on the topic called, “The 5-Hour Work Day” which details our little experiment. We also started doing “Tower Tuesdays” where we do weekly team activities outside of work like an art class, paintball, a Segway tour, etc. We also started doing 2 major all company trips a year. We just got back from a ski trip to take in Park City and the Sundance Film Festival. Our business is about showing people how to live differently, so we thought it was time we worked differently.

The fact that you guys got a meeting with Amazon on-camera was pretty impressive. How game were they for that (and how game where they to do an impromptu paddle-boarding trip afterwards)?

Amazon has been a great partner to us. A lot of people see a company like Amazon as this “thing,” but they fail to see that there are real people behind the scenes that you can connect with. There are like 60,000 people working at Amazon. I have used their platform before to build a business so I knew we were going to leverage Amazon from the start. We did really well there and they noticed. I made a few connections there and at some point we became part of a focus group or sorts where they were asking what more they could do for small brands like us. They really wanted to know what would help us, what we struggled with on their platform, and what pissed us off. I gave them honest answers, and from that and I’m guessing input from a lot of other sellers they came up a new pilot program called Amazon Exclusives. It was very focused on what partners like us wanted and needed out of Amazon, so I really appreciated their “customer centric” focus on the whole thing. Pretty soon, they were launching this new program and we were part of it. I believe we were the 1st brand they signed to the new platform.

We’ve become very tight with Amazon so getting a meeting on camera with them was not that difficult at all. Beyond the Tank was already doing a segment on us and they wanted me to keep them abreast of anything “interesting” that came up in terms of business development deals. When the Amazon thing seemed like it would happen, I let the producers know and they said that would be awesome. A short while later, I was flying up to Seattle to film the segment. Amazon was fine with the filming as it was great exposure for this new business unit.

As for the paddle boarding after it, those guys were totally game. It was a little cold out too, but they didn’t flinch. One thing that got cut on the editing floor was that both of them fell in at one point and the water in the Puget Sound is frigid. It was pretty epic and I thought for sure they would show that on the episode, but they didn’t.

Is there anything else you want to say about the “Beyond the Tank” experience and how you’d compare it to “Shark Tank”?

I think the shows are very different. Shark Tank is more like a sporting event where you go into battle and they film the whole thing, then edit it down and just show the audience the highlight film. There is major pressure on you to perform well there, and there is major risk there in making yourself look like an idiot. I certainly did, even though I came back and got a deal. The entire filming of Shark Tank for our episode took about an hour.

Beyond the Tank is more like reality TV where they are just peering into the life of a company to see what’s really going on. What’s going on is real, but it’s kind of scripted in the fact that what you are doing is sort of staged so the viewer can visually see the story. The entire filming of Beyond the Tank for our episode took 3 full days.

Some people like sports, some people like reality shows. Between Shark Tank and Beyond the Tank, there’s something for everyone. Mostly, I’m just happy that the shows are shining the light on entrepreneurship as I believe it is a central driver of the prosperity of us as a society. At its core, entrepreneurship is about improving the quality of everyone’s life. If you bring value to people, you get to take a slice of that added value as profit. The more value and the more people you affect, the more profit you realize.

Thanks again to Stephan, who we really think did an incredible job detailing everything in terms of his company and the production of both shows.

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