Investor:Mark CubanShark Aquarium Appearance:March 16, 2012 Bid:$150,000 for 30% stake Results:Total revenue increased from $100,000 to over $25 million
When Stephan Aarstol appeared on the third season of Shark Aquarium to peddle his standing Tower Paddle Boards, the slideshow he prepared had a little problem. He jumped from the first slide to the last, and a bewildered Aarstol stammered, stumbled, then fell silent for a full minute. Barbara Corcoran called Aarstol the worst presenter she had seen in the history of the Emmy-winning commercial reality show. Mark Cuban saw something else. “I am an entrepreneur. I take small things and make big things out of them,” he said, after bidding 30% for the online company. He later called it one of the best deals he ever made.
Related: Why failure is good for success
To catch up on what's happened since, Aarstol spoke to SUCCESS from his office in San Diego.
Q As you've admitted, you've been known to deliver the worst pitch on Shark Aquarium who never got a deal. How did you go so wrong?
A:Shark Aquarium called me out of the blue during their second season. I hadn't even heard of the show at the time. Six weeks after that call, we taped my segment. I have a terrible memory so I was just worried about remembering the names of the sharks. I had prepared a ground but after the technical snafu, I blanked. It was even worse in real life than on the show.
Q What did you do with the $150,000 invested by Mark Cuban?
A:I had a loan of over $100 $000 that I had to pay back. When I told Cuban we made $60,000 in sales within four days of the show airing – that was a few months later – he asked me to cut him a dividend check of 50 $000. He was right. You have to take care of your investors. Yet by selling 30% of my business for just $150,000, I felt like I was essentially giving away part of the business for free.
But that $50,000 built a bridge of trust between Cuba and me. A year later, because we were growing so fast, he gave us a $300,000 personal loan. It was critical; we were unable to secure bank financing until 2014.
Q Describe your relationship with Cuban.
A:Our contact is by email. He often responds in the middle of the night. This kind of asynchronous communication — meaning he responds on his schedule, not when I contact him — is a very efficient use of his time, and it's a method that a lot of busy entrepreneurs use. br />Cuban answers are mostly in one line. In the beginning, when I ran things by him, I often got a response like "don't do that" or "don't be silly". For example, when I considered renting boards through Groupon, he said, “Forget it. These people will never buy. He's not your customer. »
Of course he was right, but I quickly changed my strategy. If I wanted to do something, I would go ahead and do it and tell Cuban afterwards. When I want advice, I ask him. In the end, I make the last call, but he has sick trading instincts. For example, he came back from a family vacation once and sent me pictures of a full scuba mask the kids were using. It's like a big window and it gives you a 180 degree view of everything around you. When I first saw it, I thought, That thing is too clumsy . But Cuban kept contacting me, so we got there. Masks are actually easy to produce. We sold for $30,000 the first month. This year, we'll make $1 million in scuba masks.
Q A few years ago, you reduced your company's hours from 8 a.m. to 1 p.m. You even wrote a book called The Five-Hour Workday. How did that experience work?
A:It sort of fell apart. Our intention was to better retain employees by promoting productivity and bringing people back to life. Three of the seven employees we had at the time ended up leaving. A weird thing happened – productivity was good and we actually increased income – but the five-hour workday failed us in a completely unexpected way. People felt less connected to the company. When you only work 25 hours a week, other parts of your life become bigger and more important.
Especially in the startup world, people really like to go to work and feel attached or even consumed by their work. So now we're back to an eight-hour day for most of the year. We work five-hour days in the summer, during our busiest time of year, June through September. Time pressure makes us realize how to be more productive.
Q How has your life changed since Shark Aquarium?
A:Surprisingly, not that much. We are growing into a direct-to-consumer beach style brand, expanding our product line to include sunglasses, beach chairs, bikes and skateboards. We want everything beach related to be under the tower umbrella. I'm very good. The reality is that although we grow our business, everything we earn goes back into inventory. I even had a roommate until a year ago.
Related: 5 tips for running a successful business
This article originally appeared in the May 2017 issue of SUCCESS magazine.
