Torero success story: Stephen Aarstol

DIEGO LUNA | BUSINESS EDITOR | @diegotothemoon

Photo courtesy of Stephan Aarstol/Tower Paddle Boards Stephan Aarstol returning from a paddle board session.

Photo courtesy of Stephan Aarstol/Tower Paddle Boards
Stephan Aarstol returning from a paddle board session.

Stephan Aarstol’s pitch on ABC’s Emmy award-winning show “Shark Tank” has been called the worst business pitch in “Shark Tank” history. On the surface it sounds straight out absurd to believe that this man is the CEO of one of America’s fastest growing companies. Actually, what you’re reading is true. In fact, his persistence has lead him to have some of the most unorthodox business practices. However, that has never fazed Aarstol, because Aarstol is a graduate from The University of San Diego School of Business Administration.

The journey of an entrepreneur is anything but easy and one could even say it’s a rollercoaster ride of emotions, Aarstol would be the first to testify in favor of this statement.

Aarstol came to San Diego after getting his undergraduate business degree from Western Washington University, where he then held an internship-like position with San Diego based company, Space Electronics.

At the time Aarstol did not feel the salaries from Space Electronics were enough to cover living expenses so he got a job as a part-time bartender during the nights. At this time he decided to go back to school and get his MBA from the University of San Diego.

Aarstol graduated from USD in 1999 and now has his MBA in new venture management.

The internet boom glory days were coming to a close, and Aarstol had just managed to get a job for a start up company making internet portals for the medical imaging industry.

After working for this medical imaging company for about four years, the company was acquired by the Eastman Kodak Company and again Aarstol sought another opportunity to be autonomous.

Just as the internet bubble had burst, Aarstol had started a high-end poker chip company, one that would compete with the Las Vegas poker chips.

His 11 year poker chip business boomed and leveled off after about five years, averaging $500,000 in annual sales thereafter.

After reading The Four Hour Workweek by Tim Ferris, Aarstol mentions how he applied bizarre business tactics that have improved his time management and efficiency.

“It’s all about highly leveraging yourself,” Aarstol said. “If you are efficient and optimize your time you can do much more. I was able to turn my 50-60 hour work week to a 12 hour work week by just stop doing things on certain days. I was able to figure out the tools that save time and compress a lot of tasks.”

Aarstol also mentions that he only opened his email twice a day, stopped answering phone calls on Tuesdays, and he has able to implement a batch print label packaging system that allowed him to print, label, and package in three minutes instead of the usual two hours.

During the time Aarstol was running his poker chip website he launched two more ventures. One was a drink-token company that produced souvenir-quality drink and event tokens. The other venture was a kids toy company that made an interactive poker chip learning game that eventually flopped.

Before Aarstol found the golden egg, he had one more venture to go through. He began making web portals for the green energy industry, which had huge prospects because at the time the green energy industry was booming.

Aarstol recalls having the ah-ha moment that led to Tower Paddle Boards.

“Six months into making the internet portals a buddy of mine took me out paddle boarding,”Aarstol said. “I’ve tried to surf but it was a hard, and 20 minutes into paddle boarding I was catching waves left and right. I thought this could be a big business opportunity!”

Low and behold Tower was born. Aarstol began exploring Google Search Stats and was blown away how many people were searching for stand up paddle boards.

“The search stats were off the charts!” Aarstol said. “Stand up paddle boards were ridiculously expensive.”

Almost immediately, Aarstol killed one-third of the poker chip business, took inventory away, and sales fell from $500,000 to $300,000 overnight.

Tower took over right as the poker chip company took its last breath. In June 2010 Aarstol registered Tower’s domain, but it wasn’t until nine months after that they began to get traction.

In May 2011, “Shark Tank” reached out to Tower and asked if they’d like to be featured on the show.

“I had never seen the show before,” Aarstol said. “I was really worried that I would call the sharks by the wrong name.”

The stand up paddle board industry was booming around the time he pitched to “Shark Tank”. In fact, Tower began pre-selling their boards online, and sold everything before the first shipment made it to U.S. soil, which is the story they pitched to the sharks.

By mid-summer Tower had $100,000 in lifetime sales, and six weeks before their appearance on Shark Tank.

The ironic part about this, was that Aarstol had no idea Mark Cuban was to appear on “Shark Tank” until two days before. Consequently, it was Mark Cuban, owner of the Dallas Mavericks, Landmark Theatres, Magnolia Pictures and 100 other companies,  who had invested $150,000 for 30 percent equity stake in the company, which valued Tower at a whopping $500,000.

Aarstol was ecstatic and confused about this deal with Cuban.

“Everyone on “Shark Tank” thought it was an extremely generous offer,” Aarstol said. “All I thought was wow, I’m giving up a huge chunk of my company.”

The “Shark Tank” episode was filmed in 2011 but aired on March 2012, which was a nine month delay. Up until 2011, Tower had $265,000 in lifetime sales. After the episode aired sales grew to $1.7 million, the following year sales nearly doubled to $3.1 million. In 2014 sales were over five million and Tower was named the fastest growing private company in San Diego. 2015 was monumental for Tower Paddle Boards as they grossed a little over 7.15 million in sales and were Ranked No. 239 on the 2015 INC 500 list of the fastest growing companies in America, which is out of 30 million U.S. companies.

This year Tower is estimating they will have more than 10 million in sales. The most impressive thing is that Tower was able to do this with only five employees working five hour workdays and a five percent profit sharing on top of their salaries.

Of course, this makes it difficult to meet demand. Aarstol mentioned that there were times when Tower was 100 percent sold out and customers were frustrated.

A large portion of Tower’s success is attributed to Aarstol’s unorthodox business practices. Tower is primarily an online retailer with no brick and mortar stores. They keep costs substantially low, able to make 50 percent margins, have five hour workdays, be efficient by a factor of 10, and still be under the cost of the other guys.

The fact that Aarstol had one of the two billionaire shark investors may also be part of why Tower is very successful. Aarstol mentions his partnership with billionaire Mark Cuban and power of leveraging the odds.

“This is successful by email,” Aarstol said. “I’ve never spoken to him on the phone, he doesn’t have meetings, but he’s very accessible through email. I’ll email him at 11p.m. and he’ll reply in less than 10 minutes.”

Tower paddle boards is known a one of Mark Cuban’s most successful investments but is also known as the worst pitch in “Shark Tank” history.

Aarstol mentions how Tower is able to leverage both sides of the spectrum.

“It’s great to be known as one of the best,” Aarstol said. “Especially for vanity purposes, but we want to be Cuban’s best investment. Being at the top 10 investments is 100 times better than just being an ordinary investment, but if we’re number one on Shark Tank, it will be 10 times better than being on any top 10 list.”

Being a successful entrepreneur from USD is a great accomplishment. USD has the ability to leverage its students by a means of competitions such as the V2 pitch competition, which has been called the USD Shark Tank. In fact, Aarstol was the keynote speaker to the first V2 competition ever made.

Aarstol talks about how he wishes USD had this opportunity when he was a student here.

“If people know there’s money available, it gives the competition more legitimacy,” Aarstol said.  “It’s a great academic exercise and I think every university should have a similar program, and they are foolish if they don’t. It’s a competition for talent in the information age but I will say this, the money isn’t the important thing, it’s a token, I mean it’s certainly helpful but the more important thing is to say you won. When Tower got invested by Mark Cuban it wasn’t about the $150,000, It was getting Cuban on board and being on “Shark Tank” that were able to leverage the odds.”

Since Tower Paddle Boards, Aarstol has launched two more ventures to add to Tower’s existing product line. One of the ventures is a beach lifestyle magazine appropriately titled Tower Magazine. The second one is Sunglasses by Tower, which are great wooden handcrafted sunglass appropriate for any sunny San Diego day.

Aarstol believes very strongly in the USD entrepreneurship program and believes the university should operate under the power curve. He believes there is more value in being No. 1 today than being number two or three down the road.

“Silicon Valley is the number one place to raise capital,” Aarstol said. “Entrepreneurship is becoming very trendy, so if USD can get that number one spot it’s going to be very difficult to unthrone them. It boils down to what you want your school to be know as, and I believe USD can be number one, not number two or three.”

The University of San Diego has a notable reputation in the entrepreneurial community. In fact, USD’s entrepreneurship MBA program is ranked number three globally.

Stephan Aarstol is one of the many success stories that have risen to the surface in the recent years and he strongly encourages the students to grow their ideas to ultimately be number one. Aarstol shares his final thoughts on entrepreneurship.

“The idea is really just one percent of the equation,” Aarstol said. “If you have an idea, there’s probably 1,000 other people who already thought of it, it’s all about execution. Usually ideas will hold, your failure is going to be that you don’t get your idea out there enough.”

It is alumni such as Aarstol that allow USD to  have a successful entrepreneurship programs in the world.