This guy nearly choked on 'Shark Tank' but got a deal with Mark Cuban - and now his whole company works only 5 hours a day
This is Stephan Aarstol, CEO of Tower Paddle Boards. His startup sells stand-up paddle boards.
Here's what a standup paddle board looks like. It's basically a surfboard with paddles. Paddle boarding is one of the fastest growing water sports in the US.
Aarstol's company is doing well. It only has 11 employees but is on track to hit nearly $10 million in revenue this year. In 2014, it was among the fastest growing private companies in San Diego.
Part of its success has to do with Aarstol's 2011 appearance on ABC's "Shark Tank." He convinced Mark Cuban to back him and now his company's considered one of the ten best "Shark Tank" investments ever.
But Cuban's backing almost never happened. Just 30 seconds in to his pitch on "Shark Tank," Aarstol completely froze, going silent for more than a minute. "It was embarrassing. I'm known as the worst pitch on 'Shark Tank' who still landed a deal," Aarstol tells us.
It didn't help that other "sharks" started making fun of him. “Don’t worry, it’s only the biggest moment in your life,” Kevin O'Leary told him while he gathered himself.
It was only after another shark, Robert Herjavec, asked a model to demonstrate the paddle board that Aarstol was able to pick up himself. "I was sort of looking down, thinking, 'You idiot, your son is going to see this, you need to pull yourself together!'" Aarstol tells us.
Soon, three sharks sat out of the deal. That left only Cuban and O'Leary as the possible investors. "I thought I was going to have a bidding war, but all of a sudden everybody was out. And so I sort of pivoted and started pitching my expertise in internet marketing," Aarstol tells us.
Aarstol had experience in online marketing through his previous startups. It also helped that he had generated revenue of $100,000 in only 4 months at the time, with almost no marketing cost. Cuban and O'Leary started to buy into it.
Eventually, Aarstol was able to strike a deal with Cuban. But it didn't come cheap. Aarstol went in to the show seeking $150,000 in exchange for just 10% of his company. Instead, he had to give up 30% of his company for $150,000 of cash to get Cuban on board.
Aarstol says he laughed at the valuation Cuban put on his company. But he still took the deal because of Cuban's endorsement value. "We look at it as this perpetual PR initiative. That’s hugely valuable, a lot more than money I would say," he says.
And Cuban seems to like Tower Paddle Boards too. He recently called it one of his best "Shark Tank" investments. The company's growth rate explains why: when Cuban first invested in 2011, it had $260,000 in revenue. This year, it expects to get to $10 million.
Aarstol is also known for his interesting work style: everyone at his company only works five hours a day, from 8AM to 1PM.
Aarstol argues shorter workdays motivate employees to work more efficiently, allowing them to spend time on other activities. He believes it helps boost employee morale and nurture more creativity, too. "Productivity has gone through the roof," he says.
He says Cuban doesn't mind his 5-hour workdays, but admits he's probably not the biggest fan, either. "Mark works around the clock, and his brand is all about out-hustling everybody. So he looks at it as 'OK, it works for your company, but it’s not going to work for everybody.'"
Still, Aarstol believes more companies should adopt his 5-hour workday mentality. "When you talk about knowledge workers, it’s about managing energy and how much real work gets done in a day," he says. "It’s a new world and there are very efficient business models. This shift is needed."
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