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SPEAKER_03: We started putting out job postings, and one of the first girls we interviewed, we told her to meet us at the Starbucks because we didn't even have an office. We didn't even order anything. That's how cheap we were. We just sat outside at the little metal tables and met this young girl who was interviewing for a customer service position. We would promise that we will have an office when this position is filled. That's how rough the start was.
SPEAKER_04: Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Spencer and Jeff Jahn saw the early appeal of e-commerce and the beauty of a smokeless fire and built Solo Stove from a lifestyle business into a nine-figure brand.
SPEAKER_01: If you're the kind of person that grinds away at a job that you don't love all that
SPEAKER_04: much, and you're looking to earn more money and work less, well, this is not the episode for you, because you will learn how two brothers came up with a brilliant passive income idea, only to discover that the more successful they became, the more work they generated for themselves. Now, not to fast-forward too much, but the idea they had ended up working out pretty well, and today, both brothers, Spencer and Jeff Jahn, are only in their 40s and also pretty much retired. What they started was a brand called Solo Stove. Initially, it was a camping stove that produced almost no smoke. Today, the company sells everything from smokeless fire pits to pizza ovens to patio heaters. The idea came from years of trial and error and a desire to build a stress-free lifestyle business. Spencer and Jeff tapped into Amazon's direct selling platform back in 2010 when it became open to anyone. And they realized early on that you could source relatively inexpensive products from China, and then just resell them in the US on Amazon. By the time the brothers sold the majority of the company to investors in 2019, their stake was worth hundreds of millions of dollars. Spencer and his younger brother Jeff grew up in the 80s and 90s in Ontario, Canada. Both of their parents had emigrated from China. Although the brothers were close, they eventually wound up working on opposite ends of the world — Jeff in Dallas and Spencer in Shanghai, where he helped manage a firm that connected Chinese factories to buyers around the world.
SPEAKER_03: I mean, I guess it was about seven, almost seven years that I was in Shanghai working for that sourcing company. Boy, I ran around north, south, east, west, just going to all sorts of factories, trade videos, and it just depended on what our clients wanted and what industries we were in. Oddly enough, we were heavily in the RV niche. So recreational vehicles and campers, we did a lot of parts and products for that market. Sofas, recliners, tables, faucets. For RVs? For RVs, yeah. Elkhart, Indiana. Elkhart is where, is that where Winnebagos are made?
SPEAKER_04: Yeah.
SPEAKER_03: A lot of the RVs are made in that area.
SPEAKER_04: And the component parts, obviously, made all around the world. And so there are factories that specialize in just making the sofas and beds for RVs. And presumably their biggest market was the United States. Yeah, yeah. For RVs, for sure. I guess, you know, you're doing this job and it seems like it's doing pretty well, but I guess around 2008 with the financial crisis, it also affected the company you worked for
SPEAKER_03: right? That's right, yeah. We held on by the skin of our teeth. We had to let go basically the entire office. So I had to go through that. That was an experience I won't forget. I was probably a year or so into my job in charge of 20 some odd people, local Chinese in my office in Shanghai. And then suddenly my boss tells me, well, you got to lay them all off, you know, have at it. And I was like, I don't, like why do I have to do that? I was young, young in my career and it was a horrible experience to have to do that. And I remember tearing up when I had to tell them that, you know, here's what we can pay you if you leave now. And if you decide to wait until we let you like formally let you go, there might not be anything. And I hated, I hated how everybody rightfully so were upset at me. And I just hated that feeling of, of, of looking at these people in the eye who I thought were my friends and peers kind of all turn against me and feel like it was my fault and everybody was blaming me. And I just, um, I took a big pay cut and I'm really, uh, hunkered down with my, my boss at the time. And I remember telling them that I still believe in what we can do. It's just the market conditions are horrible and, um, let them know that I want to stick with them, but hopefully I'd get some equity in the future for kind of roughing it through. And that's kind of the direction I took. Yeah.
SPEAKER_04: I guess in the meantime, you start to think about maybe doing some like side hustles, like, uh, tell me about how you, how that happened. I mean, obviously you're in China and everything's made there. Um, and what, how did, how did you even start to think about maybe getting into that?
SPEAKER_03: Yeah, that, that's the, that's the rabbit hole. That's always fun to look back on, you know, I was there going through the rough patch in the great recession. I was married and had a young kid and, um, I got invited over to a friend's house, um, in Shanghai. Yeah. And, um, she invited me over for dinner and she had made these amazing like cinnamon sugar donuts and I was just blown away cause in Shanghai that was a real treat. Uh, and went home that night looking online, how to make donuts like that ended up on a blog that was a really good donut recipe blog. And at the bottom of it, there was this video of this guy saying, learn how this, this blog helps me continue doing what I love doing. And he was a school teacher and that led me down this rabbit hole of blogging and people making money by blogging. And I, uh, I quickly dove into this, um, program and showed it to Jeff and I was so excited. I was like, look, like people can actually, you can write something, right? Blogs.
SPEAKER_04: It was like a blogging piece of software.
SPEAKER_03: That's right. It was a broad, it was like a program, a course, um, that, that you could take, that we could take and sign up for and they would show you how to blog and what to do and step by step kind of going through the whole concept of blogging and making money off of AdSense and clicks and traffic and, and affiliate marketing. And it just blew my mind. And we quickly signed up to blog and Jeff was blogging and I was blogging. What were you blogging about? I blogged. I had a, you can go back to the wayback machine and find it. It was called China business traveler and, uh, and had hyphens all between the words. And I was like, well, I'll blog about traveling as a business person in China, what to expect with culture and travel and currency and culture and all of that and, um, trying to make a few clicks off of AdSense and maybe some affiliate mark, uh, um, money off of, uh, travel websites. And we did that for a year. And Jeff, he did one on personal finance. He was working for a bank at the time, I think. So you guys were, and you guys were both just getting into this.
SPEAKER_04: You're like, let's try this blogging thing and see. Let's make some money. Let's make some money. Let's supplement our income. And, and what happened?
SPEAKER_03: And we didn't make any money. We didn't, I mean, I think I made $75 of which like 50 never got paid out from commission junction because I didn't meet the threshold of the payout. You had to have like a hundred dollars to get it paid out or whatever it was. And uh, and it just didn't, it just didn't turn out financially for us, but I enjoyed it. I mean, I learned so much and so I, I transitioned from that. And I said, well, the blog's not working, but what if I sell something? And it just happened to be that there was this mattress program that we were trying to do at my day job that ended up not working out. We need a mattress program. So we call these projects programs. So a project for a US customer, a mattress company, a bedding company. He actually had retail stores in the, in the Pacific Northwest. And he, um, he, he, he wanted us to source mattresses out of China, memory foam mattresses. And so I went out to tons of memory foam mattress suppliers and, um, figured out how the product was made, you know, and the, uh, the costing of it. And through that I had, I had taken the Liberty of, of taking some of the samples and putting them in my own apartment and using them. And I loved it. I was like, these memory foam beds are great. And I was just thinking, well, what if I started another website where instead of blogging, I just sold memory foam mattresses to expats living in China who all were looking for soft beds as the Chinese, um, locals, uh, they actually enjoy hard beds. They think it's better for your back. Um, and so this soft memory foam bed was a, a rare find in Shanghai. And so I started peddling these mattresses, set up a website. What was it called? It was lumber max with two A's. It was M a X because ma X was taken. And did you, by the way, did you just set it up and tell friends about it?
SPEAKER_04: Or did you start to buy like, you know, um, did you start to, to sort of, um, you know, get paper, paper, click ads and stuff.
SPEAKER_03: Yeah. Yeah. I set it up knowing that there were little communities online for Shanghai expats. So there's expat forums that all the expats would go to. And it was very active. Uh, I also did, um, other creative marketing, uh, tactics that didn't cost a lot. I would go talk to all the, uh, to the chiropractors within the city and all the ones that service the expats. Um, I would talk to real estate, uh, companies who are dealing with the relocations of expats.
SPEAKER_04: And this is all the while you are still working as an eight, sort of an agent between us companies and manufacturers in China.
SPEAKER_03: That's right. I had a day job. I would go all day long at my day job. And then at night I would turn on slumber max, see what orders came in, deal with all the emails, customer service, and then actually physically myself, I would rent a taxi truck and I would, that would come to my apartment. I would dolly down as many mattresses as I needed to deliver that night, put them in the back of a truck and I would make deliveries around Shanghai.
SPEAKER_04: Where did you store all those mattresses? Just like against the wall?
SPEAKER_03: On the 25th floor of my high rise apartment, I've moved the sofas to the side and stuff the entire, I mean we had a tiny, it was like 150 square meters, wow, apartment in Shanghai. And so they were like 80 pounds each. And I attribute a lot of my back problems to having moved so many mattresses. The worst was when I would ask if there's an elevator or not. And sometimes some of those apartments they lived in didn't and they were on like the fifth floor and it was just hot and sweaty and moving those mattresses up. The strategy was to take off the cardboard box and they were encased in this plastic
SPEAKER_03: casing and the sweat of my arms I could wrap around and it wouldn't let it slide because I was so sticky that I would just get it up and then start making my way up the stairs.
SPEAKER_04: And so you were, you basically became the mattress guy for expats in Shanghai. And so at sort of its height, I mean how much were you making?
SPEAKER_03: I think annually you'd bring in a quarter million dollars or so. It's a great business.
SPEAKER_04: Yeah. And probably your cost was quite low, right? I mean what did you buy the mattress? Like what would you buy a twin size mattress for?
SPEAKER_03: Well I think more so queens and kings is what I remember. Kings mostly you'd buy for about 200 bucks and I'd sell them for about $1000 US. Wow. Yeah. That's great. And so the thought was not to sell tons at a very low cost. It was a very small market in Shanghai for expats. But they all have a lot of money and a lot of their relocation expenses are reimbursable by their companies. And so I knew that they would choose convenience and comfort over price as long as I provided them a good product.
SPEAKER_01:
SPEAKER_04: And I mean was that sort of the plan? Like I'll just keep doing this and make some money or was there a point where you thought, you know, I should kind of lean into this a little bit more.
SPEAKER_03: Yeah. I definitely felt leaning into e-commerce was the right move. And meanwhile, you know, Jeff is we were both blogging at the same time and you know he was learning about what I was doing with mattresses. And it was, you know, I kind of felt like, oh I wish I could do this with Jeff but it's such a niche market in Shanghai. I don't know what he's going to do. But you know my feeling was he was on the sidelines saying like what about me? Let's do something together. Like we can do e-commerce and let's figure something out. And I was like, yeah.
SPEAKER_04: Okay. So Jeff, this is a good time to bring you into the conversation because clearly you wanted to start partnering with Spencer at this point. Yeah, correct. And I guess while Spencer was working in Shanghai, you were raising your family in Texas and Dallas working at like a chemical company for your day job. And I guess you were looking at other Chinese products that you could help your brother sell in the US. And so did you have a specific idea in mind?
SPEAKER_02: Yeah. So this was another very niche product which was something we learned from the early days of blogging. They said, you know, pick something that's a niche instead of finding something that's extremely broad. And so there's these products for seedlings in the UK called cloches. And they're basically these covers that you put over seedlings or plants to protect them from frost or just it's like a mesh cover, right?
SPEAKER_04: That goes, it's like a plastic bell cover and it goes directly over the little seedling.
SPEAKER_02: Yeah. It's like a mini greenhouse. And so they're very inexpensive and they didn't seem like there was a much of a market in the US. They're pretty hard to buy.
SPEAKER_04: Let me just understand how it works. So there was a manufacturer that you found in China and obviously Spencer, you know how to find these places because this is what you were doing. And the idea was to just buy a lot of these cloches and then sell them on a website, just like set up a website called, I don't know, cloches.com and hopefully people would come. Thegardencloche.com.
SPEAKER_02: Yeah. So that was the website, which in hindsight is not the best name. It's very niche. But if you're looking for a cloche, we probably ranked quite high.
SPEAKER_03: Yeah. So we'd buy these things for 20 cents a piece and bundle them in maybe a pack of five and sell them for $15.99, $19.99 and just start selling. And we did. We sold cloches. We cornered that market.
SPEAKER_04: And this is sort of, I mean, this is at a time when sort of third party logistics businesses are really starting to also to blow up. How did you guys manage it? I mean, Jeff is in Dallas, Spencer, you're in Shanghai. Who fulfills the orders?
SPEAKER_03: Yeah. Jeff is in Dallas and I would get all the product and get it shipped over to his house. Okay.
SPEAKER_04: And you just had a garage full of cloches in Dallas? Yes.
SPEAKER_02: This was the beginning of many years of no garage and it just being filled with all sorts of product and my wife wondering what's going on.
SPEAKER_04: And so how did the business do? How much money were you guys making with this business? Yeah.
SPEAKER_03: In my mind, I think it was under $100,000 each year. I want to say it's closer about $50,000, $50,000 a year.
SPEAKER_04: So meantime, I mean, so you've got this website going, but Amazon is also a place as sort of an opportunity. And were you looking at Amazon as a place to also sell stuff?
SPEAKER_03: We did. And those were the early days of FBA fulfillment by Amazon. I had started to explore it and so we signed up for Amazon and we would put stuff on Amazon and we started to realize that Amazon is a huge opportunity and we definitely leaned into that.
SPEAKER_04: So once you realize that you could sell a lot of these, you could sell things, right? You guys had your own business selling these cloches, it's such a weird thing. I'd never heard that word before until today. So thank you.
SPEAKER_03: We're probably not even pronouncing it right. Yeah, right. Because I think it's a French word for bell and I think there's like an accent on the end and we're probably saying it all wrong.
SPEAKER_04: Given that my children and wife speak French, I should know this word. So what did you – I mean that business was doing okay, $50,000 in revenue or so a year. But I mean did the two of you guys start thinking or start saying, well, what else – let's try other stuff on Amazon and let's set up other websites or – Yeah, it was really just what else can we sell.
SPEAKER_03: If we could create a site that sold $100,000 and we repeat those little niche sites 10 times, well, that's a million dollars. And for me who was making $40,000, $45,000 a year, that's a big deal. And Jeff was probably in a similar boat. So tell me about your brainstorming process to figure out what the next thing you would
SPEAKER_04: try to sell would be. What did you guys kind of next land on?
SPEAKER_02: I think about this time, I came across the Four-Hour Workweek book and that was eye-opening. There's kind of a formula in there with the different types of products that work in an e-commerce type of business. And there was a list in there and I don't remember everything but there were definitely things. So basically something that you could ship easily that wouldn't break, that was high value, wasn't overly complex.
SPEAKER_03: Or overly seasonal. Yeah.
SPEAKER_02: And so with that in mind, we were thinking, oh, what could we do that would fit that?
SPEAKER_04: So you're thinking about a bunch of different things and I guess you start to think about the category of camping, right? And tell me about why you kind of veered in that direction. How did you land on camping as a category?
SPEAKER_03: Jeff was the one who came up with the idea. We grew up in Canada and did a lot of camping.
SPEAKER_02: Yeah, we explored so many different industries and products and we thought, oh, there's some opportunities with camping stoves. They're small, they're compact, easy to ship, they won't break. And so we came across the concept of this double walled gasification stove. A lot of people on YouTube would come up with their own ideas and we started just trying to make our own, seeing if this gasification stove, if it actually worked.
SPEAKER_04: Yeah. And for people who aren't familiar with this stove, what you would eventually come up with is basically the stainless steel cylinder, kind of like a can within a can that kind of sucks the air up from the bottom to feed the fire but also sends the air out through these holes at the top to burn off the smoke. And I mean essentially you want to build a camping stove, I gather, that reduced or eliminated smoke, but you also wanted to make it easy to start because starting a campfire is not easy for most people, right? Well, that was the beauty of when we looked at YouTube and saw how people were DIYing
SPEAKER_03: and when we were playing with cans and cans, we realized that the airflow, how it works, just naturally makes it easier for fires to light. I mean, it's not rocket science, fires need oxygen. And so the more oxygen you give it from different areas from underneath it, fires take a lot faster and then it being contained within the camping stove, it's protected from wind. And then you add on the ring that sits on top, which supports the pot that's put on top, that kind of creates an added extra windshield as well. And so it naturally was easier to start fires, but we weren't thinking like we're going to revolutionize this category with something brand new. It was just, can we make a slightly better mouse trap? And with my experience on the China side, I could be able to mass manufacture these. And then with our e-commerce abilities and with our understanding of digital marketing, we could have another portfolio brand that would bring in $100,000 and be another drop in the bucket for our path towards financial freedom and the four-hour work week. And I mean, the thought process wasn't complicated. It was just, what's next? This looks good. Let's iterate. Let's design.
SPEAKER_04: But I guess, I mean, neither of you guys were or are engineers. Is it complicated? I mean, how long did it take you guys to figure that design out?
SPEAKER_03: Yeah. I mean, Jeff was right. That time when we were playing around, we were literally getting cans out of the pantry and going buying different size cans and putting cans in cans and seeing what worked. And it is somewhat complex. It took us a while to find a supplier that was willing to work with us. And we actually shelved the idea for a year or so because it was so difficult. It was far more difficult than anything we had done up to that point.
SPEAKER_04: What I'm trying to figure out though is given that you had sold things that were already being manufactured, why didn't you just find a Chinese factory that was making camping stoves and just sell those on Amazon? Yeah.
SPEAKER_03: I mean, that's a good thought. I mean, I think one of the ideas as our evolution of thinking changed as to what was a good product, it needed to be unique. And if we were able to buy it off the shelf at some manufacturer and they're selling it to other people as well, it would be that much just as easy for the next guy to buy it. But no manufacturer was making this. And so for somebody, if you understand how manufacturing works, nobody wants to help a little startup. And we didn't even consider ourselves that because we were like, well, we'd buy $5,000 worth of this product. Well, the tooling and dyes and everything that you need to set this product up to even try to make is more than that. Why would a manufacturer take a risk on us? When we come back in just a moment, a manufacturer decides to take that risk.
SPEAKER_04: And Spencer and Jeff discover that the four-hour workweek of their dreams is about to get a lot longer. Stay with us. I'm Guy Raz and you're listening to How I Built This. After years of fine print contracts and getting ripped off by big wireless providers, if we've learned anything, it's that there's always a catch. So when I first heard that Mint Mobile offers premium wireless starting at just $15 a month, I thought, well, what's the catch? But after talking to them and then using their service, it all made sense. There isn't one. Mint Mobile's secret sauce is that they're the first company to sell wireless service online only. They cut out the cost of retail stores and pass those sweet savings directly to you. I live in the Bay Area and you'd be surprised, but cell reception in San Francisco can be terrible. I know, the capital of technology. But with my Mint Mobile phone, I get crystal clear reception everywhere I go. To get your new wireless plan for just $15 a month and get the plans shipped to your door for free, go to mintmobile.com slash built. And when you use that URL, you're also showing them how much you support our show. Cut your wireless bill to $15 a month at mintmobile.com slash built. As a business to business marketer, your needs are unique. B2B buying cycles are long and your customers face incredibly complex decisions. So isn't it time you had a marketing platform built specifically for you? LinkedIn Ads empowers marketers with solutions for you and your customers. With LinkedIn Ads, you can build the right relationships, drive results, and reach your customers in a respectful environment. You'll have direct access to 930 million members, 180 million senior level executives, and 10 million C-level executives. And you'll be able to drive results with targeting and measurement tools built specifically for B2B. And for how I built this for this show, LinkedIn has been an incredible resource when researching prospective guests for the show. Make B2B marketing everything it can be and get a $100 credit on your next campaign. Go to linkedin.com slash built this to claim your credit. That's linkedin.com slash built this. Terms and conditions apply. One more thing before we get back to the show. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And it's totally free. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2010 and Jeff and Spencer are learning that finding a Chinese manufacturer to make a camping stove is complicated.
SPEAKER_03: It's like finding a dance partner is you really need somebody to match your level, match your size, match your stride, match your ambition. So finding that was really just an exercise of meeting a lot of different factories, talking with them, understanding the machinery, getting my dumb questions out at the front so that when I met the next guy, it was a little bit more able to speak the lingo of different machinery needed and different welding techniques and all these different things that were needed to find that right partner. But I found a guy who was making coffee percolators for Europe. He was an engineer by trade and was very curious about what we were trying to do. And it was a puzzle for him that he became pretty obsessed on how do I make this thing if I have to make this from scratch, right? How do I bend the metal this way? Can you bend it this way? I don't know what else he saw in us, but he was willing to say, hey, let's try this.
SPEAKER_04: And when you got that prototype, did it do the job? Yeah, it performed and was beautiful.
SPEAKER_03: I mean, a flame when it burns using the double wall design that we had in the stove, it's mesmerizing. It looks like there's jets shooting out the side of the stove. And for anybody who uses it for the first time or sees it is just kind of taken back and it's like, what is going on right now? I've never seen a flame burn like that. And that's the feeling that we got when we burned this. And we thought this is going to be awesome. People are going to love this.
SPEAKER_04: All right. So you got this prototype and you want to start to mass produce it and then create a direct to consumer company around it. First question is how much money did you need to get this off the ground? I mean, because you guys didn't have a lot.
SPEAKER_03: Yeah, we didn't have a lot. I remember it's $15,000 we put in. And that was to do what? That was to get the tooling paid for. It was all we were willing to put at it because we didn't know, Guy, if this was going to work or not. Wow.
SPEAKER_04: All right. So first of all, you guys made the decision to try to make a go at this and you decided to call it the solo stove. Where did the name come from?
SPEAKER_03: Yeah. I mean, we literally just sat around thinking of names and really just at the same time searching for what domains were available that we could get. And we had gotten to the point of realizing that a long name, a long drawn out name like nabusinesstraveler.com is very hard to remember and to type in. And so we always wanted something really short and something that spoke to what we were doing. And we really thought it's the only stove you need if you're backpacking or camping. And it's great for one person. It's kind of a single person size. And so solo kind of clicked on all corners for us.
SPEAKER_04: Okay. So you've got the name. And by the way, did you apply for patents for this product? Yeah, we did. And you create a website presumably called solostove.com? That's it. Yep. And the same playbook, the same playbook that you had used for the gardening business and the mattresses, you do AdSense, you do search engine optimization, the same playbook. Right.
SPEAKER_03: So it's a combination of creating content that people would search up and stumble upon our website.
SPEAKER_04: And what was the content? Like what were you writing?
SPEAKER_03: I don't know if we did a lot of blogging in the early days for it. We actually, we spent a lot of time on making the site look beautiful and evoking emotions. You know, being in the outdoors and camping is a very emotional exercise. And we really wanted to lean into that. We eventually got to the point of buying banners, ads on different sites that we thought were useful. So eventually then putting it on Amazon, which was another source of traffic and revenue, everything we could think of to bring people to our website.
SPEAKER_04: And I mean, you flipped the switch, right? The proverbial switch and the website launches. And I mean, is it an instant hit or are people discovering it? What's the response from anywhere?
SPEAKER_03: It was quick and fast. It was more than we expected. The first year was about half a million dollars in the first year of putting it out there.
SPEAKER_04: And how much did the stoves cost you to make?
SPEAKER_03: Yeah, the margins were really high. We were in the 80% margins. And you also sold them on Amazon, right? That's right. Yeah. And the biggest thing that sales really did come from is Amazon. All right.
SPEAKER_04: So you've got this product that seems to be taking off, but both of you guys kept your jobs, right? Yeah. Yeah. Yeah. I mean, at what point, if you're doing the first year half a million in sales, at what point did you, I mean, did the two of you start to say, well, maybe we need to think about this in a bigger way? What happened to get you there?
SPEAKER_03: Yeah. I think for me, it was just being overwhelmed with everything. We had this, I had this idea of this four-hour work week. That's why we set out to do this. And as things became too much, performance in my day job kind of slipped. It was a situation where I had a tough conversation with my boss. I called him my business partner. I gained some equity in that company I was working for. And that was a tough conversation. I mean, even now it's hard to articulate all the feelings that went into figuring that out and the misunderstandings and what I should have done maybe. But I never thought any of this would really amount to much. I thought it would be a great side hustle and why talk about it if it's not going to be a big issue. And the problem was, is the bigger it got, the more I was afraid to bring it up to the guy I was working for because now it is an issue.
SPEAKER_04: Was he disappointed in you? I mean, did he understand or what?
SPEAKER_03: He was upset. He felt like I had talents that maybe I didn't share with him, which I think is understandable. But then after a night of sleep, the next day was a different tone and it was a more tone of, you betrayed me. And we were supposed to build this together. And in my mind, I was like, this is what I was building with my brother. This was never going to be something that we were going to create and then bring him on board. It was just me and Jeff's side gig that ended up blowing up.
SPEAKER_04: Wow. All right. So you've got this product, you've got this company. And I guess you guys decide in 2014 to turn to Kickstarter for the next iteration, a larger version of the stove. And was the idea to go to Kickstarter to generate attention? Because I think you guys, I mean, I'm assuming the cash flow was pretty good. I mean, you guys were probably, all of a sudden, both of you guys were making pretty good money. Yeah.
SPEAKER_03: Yeah. No, cash flow was good. It was profitable. We didn't pay ourselves anything in those first years because all the money went back into buying more inventory. Yeah. Yeah. We did Kickstarter in Jeff's backyard with our kids, their feet, so you can see kicking around in that video. But yeah, that was our first foray into Kickstarter and we did all right. And we were pleased with the results. But once Kickstarter is over, it's back to building our website and selling on Amazon.
SPEAKER_04: So all right. Meanwhile, I think this is around 2013, Spencer, you make a major move. You decide to come back to the US and you settle in Dallas where your brother is. And I guess you're still working your day job for that same company in China. But Jeff, around that same time, you actually decided to leave your day job, right?
SPEAKER_02: Yeah, that's right.
SPEAKER_04: Like I guess you became confident enough at this point that this thing was going to be or was already successful and that you needed to put all of your attention into it. And by this point, it was still just the two of you? Like help me understand how you were running a business doing close to a million dollars in revenue. Well, I mean, it's possible to do it, but you had to fulfill the orders, you had to deal with customer service. I mean, you were building a brand and it was just the two of you?
SPEAKER_02: Yeah. I think I knew before 2014 that this was on its way to be more successful than any of the other businesses, but I don't think my wife had the same confidence. And so I kind of had this plan of, well, if we can get rid of all of our debt, it was basically three things. If I could bring in enough income to allow her to be a stay at home mom, and we had, I think two kids at the time with the third on the way, and we could pay off our mortgage and then pay off our cars. If I could do those three things, then I had permission to quit my job. And so I eventually met those goals. Guy, just to add more flavor into this, we had started yet another brand as we were doing
SPEAKER_03: solo called Fox Outfitters. And Fox Outfitters was a lot of products, but they were in the camping space. So like camping mats, hammocks, stainless steel drinking cups and microfiber towels. All branded Fox Outfitters.
SPEAKER_04: And it was again. Same play. You can go to Alibaba or one of these sites and you can pick the products you want and put your logo on it.
SPEAKER_03: That's right. Yeah. And we would do as much customization as we could to make our own unique styles or bags or sizes or whatever it was. But I mean, they were very commodity products and we sold more of that than solo did all the way. I mean, I don't want to say, I mean, I don't remember when we stopped selling Fox, but probably about 2016, we were selling more on Fox than we were for solo. And we were selling about $2,000 and millions of dollars of Fox stuff. All together, by the time we got to about 2016, just with those two brands, we were probably doing like $3, $4 million worth.
SPEAKER_04: Wow. I mean, so you had, and they were again, all being handled by third party logistics, but did that enable the two of you to have a lifestyle job? I mean, given that you had these manufacturers of China making it, being shipped to the third party logistics center, I mean, did that mean you could just kind of watch the money come into your bank account?
SPEAKER_03: Some days it felt like that. There were days on Mondays that we would go fishing and realize that everybody else is going to work and we're going to the lake. And that felt great. But those days became very few and far between as the business continued to grow and that quote unquote lifestyle business was fading quickly. Everything between supply chain and fulfillment and customer service, we were doing every customer service email. It was just a lot.
SPEAKER_04: So most of your day was probably taken up by just dealing with customer service emails.
SPEAKER_03: Yeah. Guys on solo stove would, they love the product so much. We would, I mean, we didn't take phone calls early on because we tried it once and people would just call in wanting to talk about camping and hiking. I was like, you know, old timers that had nothing better to do and they were great, but you'd get on these calls for 30 minutes and realize like, this can't, this can't happen. We got to just switch customer service to an email only. Yeah. And for me it was, it became way too much and I just didn't want it anymore. I mean, there were times where I was like, the money's good, but you know, this isn't worth it. And now we were approaching that point. You know, this is probably about 2016 where we have to say, if we want to keep growing, we have to hire people. And we never wanted to do that.
SPEAKER_04: Why didn't you want to hire people?
SPEAKER_03: I personally just had a bad experience with managing teams. I just, I felt like I went through 2008 having to lay off my entire team in a very short period of time. And going through that, I felt like I wasn't a great leader. I felt like I wasn't the type of person that was skilled at building teams. And I don't know if that's a narrative I just told myself.
SPEAKER_02: I think about this time as well, it was becoming more and more competitive on Amazon. And so we were realizing there was a lot more competition and we noticed that in our sales. And so we had to start making hard decisions as to what direction we were going to go.
SPEAKER_04: And I guess the direction you guys kind of landed on in 2016 was maybe, let's see if we can sell our company, our business.
SPEAKER_03: Yeah. I mean, that was, there's two decisions, right? It's either let's get rid of this thing and maybe start again and keep it small and manageable from, you know, we, we had learned a lot of things, so it's not like we were starting from zero. We would just start another company and make it even better and more efficient. Or we hire people and get an office. And I remember really just talking about it with Jeff and I remember him saying that you know, if we're gonna, if we're gonna sell this thing then we should maximize the outcome. But that's what we decided to do is sell the company. So we found some brokers. We had a friend in this area in the DFW area who had sold a company before and he introduced us to an investment banker and we found some other investment bankers through some other friends and we just started talking to them saying this is our business. And what was your revenue at the time? Revenue at that time, I think, I think was, I mean between Fox and Solo I was probably close to about, I want to say like seven-ish million bucks, Jeff. Is that, do you think that's about right? Yeah, probably. Yeah. Seven to 10 or somewhere around there.
SPEAKER_04: And it was just the two of you.
SPEAKER_03: Just the two of us. Really profitable. Wow. And so. That's a super efficient business. Yeah, I mean profits I remember between everything we were selling, I think it was, I think it was a few million bucks of profits every year. So we, we started talking with people and said, here's our numbers, here's what we're doing and here's how profitable it is. Isn't it a great business? Like are there buyers out there for this? And really the feedback was, it's like, yeah, we could find one. They're not going to be, it's not going to be a great outcome. And really your business isn't a business because it's just you two working out of your homes. But you had a, you had a brand, you had solos. That's what we thought, right? It's like, here's a brand, here's a great product, here's websites that we thought were amazing. And we could tell the next person exactly what we're doing, what buttons to push and how to drive traffic and what, and we thought that was a very sellable asset.
SPEAKER_04: And by the way, what would you, what would you have sold it for?
SPEAKER_03: Well, I think at the time one of the bankers told us that we could probably get about seven or $8 million from, from solo. I think that was the number in my head, in my recollection of, you know, carving out just solo on its own. That it was, if you can build that out to be a real company, then that would be a really attractive company for, for someone to buy. So all right, so you basically, everyone, the feedback you're getting is, listen, you
SPEAKER_04: know, it's, you don't really have an infrastructure, you don't really have a company or you've got a brand, you can make a little bit of money on it, but it's not really, you're not going to have a lot of people like banging down your door to buy this thing.
SPEAKER_03: Right. Which was hard for me to understand, you know, I thought businesses were all about making money. I thought businesses were all about being profitable. And what we had was something that made a lot of money and was really profitable. And I couldn't understand why, why, why this wasn't something that everybody was bounding down the door and wanting to buy. And I, you know, we, I have a liberal arts degree, so I never understood how M&A works. I didn't even understand the term until we started selling our company, that that was the term you used. And I remember the, one of the investment bankers we met, we had to borrow an office to even have the meeting because we didn't even at the logistics office because we were like, well, they either come to me and Jeff's dinner table or we actually find some place to look presentable. And that's how far off we were from having a company that was sellable.
SPEAKER_04: When we come back in just a moment, Spencer and Jeff start to hire a team out of a new open floor office, a metal table and chairs outside Starbucks. Stay with us. I'm Jeff DeRoz and you're listening to how I built this. If you're an entrepreneur looking to hire, you know that it's incredibly hard to attract top talent. That's why you want a partner who gets it and ZipRecruiter gets it. ZipRecruiter knows how tough it is right now, but they figured out solutions for the problems you are facing. You can see those solutions for yourself because right now you can try them for free at ziprecruiter.com slash built. ZipRecruiter is ready to help you tackle your recruiting challenges. You can reach more of the right people because ZipRecruiter posts your job to 100 plus job sites. Team up with a hiring partner who understands what you need. ZipRecruiter, four out of five employers who post on ZipRecruiter get a quality candidate within the first day. Just go to this exclusive web address to try ZipRecruiter for free. ZipRecruiter.com slash built. And when you use that URL, you're also showing ZipRecruiter how much you appreciate their support for our show. Again, that's ziprecruiter.com slash B-U-I-L-T. ZipRecruiter, the smartest way to hire.
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SPEAKER_04: So it's 2014 and at this point, Jeff and Spencer want to sell Solo Stove, but nobody wants to buy it, at least not until they can build it out more. So in order to do that, they decide to get rid of their other company.
SPEAKER_03: When we realized what we needed to do was build Solo, we focused in and we said, let's just focus on Solo and let's just forget about Fox. So you sold Fox for like pennies on the dollar. Pennies on the dollar is what we did. We really just said, here's the inventory, we'll give it to you for pennies on the dollar. We got introduced to some good guys in Houston who wanted to have a stab at e-commerce. And we said, hey, you know, this is an opportunity you can go with and run with and kind of get your feet wet. Here's take it for pennies on the dollar and let's just clean up our books. All right.
SPEAKER_04: So you realize now you've got to do the thing that you don't want to do, which is to hire people and build an infrastructure. Meantime, I think you go back to Kickstarter to launch a new backyard fire pit. And this one does amazing. You think it could raise over a million dollars on Kickstarter. I'm curious about, I know they were all patented and you filed, you know, you got your patents and it was trademarked and everything, but I'm surprised that there weren't copycats or were there copycats popping up on Amazon?
SPEAKER_03: So in the early days, no. And I think, you know, a big part of that was one, the Amazon rush was starting, but it wasn't in full force. And then two, you know, we were really quiet about things. You know, we did Kickstarter and that was one of the concerns we had is if people see how much we sell, then there's more likelihood that people will want to copy. But at that point, product development needed to get going. And we said, well, what's next? And that led us to creating Bonfire, which was our first backyard fire pit. And the other point of it was if we could show demand for the product, perhaps we could get interest from retailers, well-known retailers who we know are always looking for new product. We thought this would be a great resume builder for us to approach a potential retailer like an REI who, if we could get in, that's yet another check mark on the box of what we need to build in terms of our resume.
SPEAKER_04: You thought, okay, you thought we, in order, cause now you're focused on how do we sell this company? This was the goal. Yeah. And so one of the ways was Kickstarter. The other one was now we've got to get into brick and mortar. We can't just be DTC. Sure.
SPEAKER_03: A little bit. We just wanted to show a glimmer of hope that retail was an option because when you sell a company, you're selling hope and future and future growth.
SPEAKER_04: Yeah. And so I guess the Kickstarter was really what attracted REI's attention, right?
SPEAKER_03: I like to think so. I don't know. You know, in the past, we thought about reaching out to REI and talk to some guys who had sold into REI and yeah, they had explained how difficult it is. And how hard it is to pitch them. And then you got to fly to Seattle and all of this. And after hearing it all, I said, you're right. That sounds horrible. I said, I don't want to do that. We're going to stick to selling online. But during Kickstarter, when we were doing that, we were in our first little office, which was no bigger than a shoebox. And I remember Jeff, we saw that email come through from the REI buyer and he said he wanted to carry all of our products and we couldn't believe it. And I, wow. That was the one thing that I remember getting really excited over. It just felt like validation for all the years of grinding, trying to build a brand, trying to create something unique. I felt like getting into REI was a badge of honor.
SPEAKER_02: And it was such an easy experience. It was just one email, very brief email saying that he wanted to carry all of our products and we just replied back. There was no meeting. There was no testing. Wow. It just went straight into their stores. Yeah.
SPEAKER_04: And again, in terms of like protecting the brand, I mean, you briefly mentioned there were copycats coming onto the market, but not, it never seemed to sort of threaten you guys. How did you avoid that? It never felt like there were big copycats we were afraid of all the way through when
SPEAKER_03: we sold the company. And even through those early years, I think the key to it was nobody really understood how much we were selling. It was hard to gauge. And then the second part of it, it's a very difficult product to create because we had invested a lot into custom machinery with our manufacturers. And so the barrier to entry was much higher than any other me too product that somebody could go get.
SPEAKER_04: So essentially when you made this decision that you have to figure out how to turn this into a sellable company, one of the things you had to do was to hire employees, right? Right. So, and this was something you both resisted doing. So how did you start?
SPEAKER_03: I mean, it's just that we started putting out job postings. And one of the first girls we interviewed, we told her to meet us at the Starbucks and we didn't even order anything. That's how cheap we were. We just sat outside at the little metal tables and met this young girl who was interviewing for a customer service position. And we would promise that we will have an office if, when this position is filled. And that's how rough the start was. And we realized from when we tried to sell it the first time that we needed a leadership
SPEAKER_02: team. We needed managers in place. And so we could explain to any potential buyers, Hey, if we step back and aren't involved in the daily operations, there's a team here. Yeah. That can run the business without us being involved.
SPEAKER_04: How was it? How was that for you guys to start to train people and essentially become leaders and managers? How did it go?
SPEAKER_03: It was a, it was an exercise of trial and error and there was a lot more error happening in those early days. And I feel really bad to those early employees. You know, we gave it our best effort. And you know, I openly apologize to those that had to suffer through our, my inexperience and being a leader. You know, I wish I was the one that could rally the troops and, and, and care about every aspect of their personal lives and, and, and work wholeheartedly to make them a better person. But it just wasn't me. I was about doing and getting things done. The problem was I wasn't excited to get better at this. I was excited about the stuff that we used to do, product dealing with marketing strategies and grow the brand and what the brand means. Like those were the things that were fun and exciting. We just didn't get to do them a lot in the latter times.
SPEAKER_04: And so you, but meantime, in the back of your minds, you're always thinking we got to find somebody to lead this team.
SPEAKER_03: Yeah. And Jeff was the one, I remember him saying that, you know, the root problem isn't, isn't our people, it's us. And we need to find somebody to replace us. And so we did. We started talking with everybody we knew.
SPEAKER_04: Yeah. And I guess eventually you landed on this guy, John Maris, but he was not, I don't know, initially you guys approached him to, to talk about something else, like for advice, but, but I have to assume that secretly you were thinking maybe this guy will come work with us.
SPEAKER_03: Yeah. John was a guy who was working at a local company called Claris Glassboards. And so I knew of this company obviously, and I knew that there were some, some really capable guys over there. Yeah. We reached out to John over LinkedIn really and honestly, just to ask about how to build a sales team and chatting with him. It just felt like when he left, I kind of looked at Jeff and said, this is, this is a guy that I think could run this thing. Very sales oriented. And he was a very energetic guy, really likable guy. And I think it was a matter of weeks. And he was in there taking the bull by the horns. If anything, I felt like we probably let go too fast. We really just, we didn't just hand over the reins. We balled him up into a tight ball and threw it at his face.
SPEAKER_04: So what, you just introduced John to the company one day and said, Hey everyone, this is your new boss.
SPEAKER_03: Pretty much. That's how it went. But, you know, time freedom and financial freedom was all we had our sights on and anything, any means to that end was acceptable by me. And if that meant, you know, quote unquote, handing my baby over to somebody else, I was ready.
SPEAKER_04: So the idea was once you brought him on John to build a company, 2018, 2019, and then, and then explore a sale in 2020. But it didn't, it turns out that in 2019, you already started to get some interest from people who started to approach you. They were clearly, there were people who are, who'd been following your growth. And now there was, there was interest. Yeah.
SPEAKER_03: Most of it came unsolicited, but yeah, it started to come in and they started to get really attractive. But I remember Jeff and I explicitly telling John, stop entertaining all these inquiries because we'll get them when we're ready to get them. And there'll be there when we run a process and put it on, on the market and have that competitive bidding process. Just grow the business. Don't worry about selling. But as those inquiries came in, they started to throw numbers at us that we didn't ask for. And those numbers started really big and just got bigger to a point where we couldn't turn it down and we couldn't say no. It got to a point where you, you were being offered in the low nine figures, valuation
SPEAKER_04: in the low nine figures for business and, and some of these private equity groups were like, listen, you know, and, and I guess you, you couldn't ignore it. It was a lot of money. And yeah, I mean, those offers came in and John said, here's what one company said.
SPEAKER_03: And I remember us just saying, we got to entertain this.
SPEAKER_04: I, so I think the first, the first, because you would go on to have essentially three exits from your company in a sense. And the first one was when this private equity group bought a majority stake and you and your brother retained a minority stake. And at that point, this is 2019, what did you guys do? Did you, did you fully disengage from solo stove? Yeah, we were, we were ready to be out and to kind of move to a board seat as board advisors.
SPEAKER_03: We were, man, I was so stoked to get out and to, to get to a point where I don't have to go into the office. I mean, all of that stress I could now shut off and spend time the way I wanted to spend it. And then we'd move to board seats.
SPEAKER_04: And then the timing is both great and also would get even better because it turns out COVID would be an incredible engine for, for, for growing this brand even further. And I think about a year later, after a year after the private equity group made that investment, another private equity firm came in with another offer to buy essentially to buy out a huge part or most of your remaining stake.
SPEAKER_03: Yeah, that's right. There was this new group that wanted to come in and buy a majority stake at a much higher valuation well north of what we we had just exited for a year ago.
SPEAKER_04: So they were going to make money and you guys are going to make more money. Yeah, really?
SPEAKER_03: That's right. I mean, it was mind blowing to me that, you know, from, from being in the low nine figures, just over a hundred million dollars to now being well into the mid nine figures on this next private equity exit. You know, we would sell less shares than we did the first time, but the rewards were much greater the second time.
SPEAKER_02: And I think one of the things that made it much easier the second time was that we weren't involved in the whole process of selling it. Yeah. Which was nice to step back and let other people deal with that part of the business.
SPEAKER_04: The company eventually went public in 2021 and you guys had shares. I think you still retain those shares, right? You hold stock?
SPEAKER_03: Yeah, that's correct. We didn't sell any stock at the IPO. That IPO was truly an IPO where new stock was issued. So it wasn't a liquidity event for us.
SPEAKER_04: And you guys today are completely not involved with the company at all. You have no connection to it.
SPEAKER_03: Yeah. Other than we own an equity stake. Yeah. And we own shares of the public company. From an operations standpoint, we're totally out. Feels great to say it. I mean, we don't, we don't, we don't do anything with the company and hardly hear from them these days.
SPEAKER_04: What do you think, Spencer, what do you think? I mean, you've got a long life to live. Do you see yourself starting another business? I mean, what do you see yourself doing with the rest of your life and how will you keep yourself occupied? I know that some people are going to hear this question and be like, what do you mean, guy? He's going to go running every day and go to the gym and do yoga classes and be involved in this church and go on vacation. But I don't know. There are a lot of people who I've interviewed on the show, hundreds who are multimillionaires, billionaires, who don't stop working until the day they die because it gives their lives meaning. And I understand that. Work is also, can also be incredibly fulfilling and meaningful. And I wonder if you see that in your future.
SPEAKER_03: Yeah, I think fulfillment's the right word. And if that takes me down a road of starting something for whatever reason, then I'll never say never. And at this current stage in my life, the most impact I can make, I think is with my family is with my kids and making sure that they grow up with a father at home, with the support of parents. And until I finish that task, I don't think I'm super hungry right now to start something that would take me away from doing that. What about you, Jeff?
SPEAKER_02: Well, I think one of the important things in life is to know when you have enough. I don't necessarily look at work as working at a job to make money or get a paycheck, but there's all sorts of different types of work. There's work at home that parents do all the time, and I'm trying to be better at that. There's work inside your community that you can do, work at our church. And I don't see starting a new company right now, but I'm not going to say I won't later on.
SPEAKER_04: When you guys think about your journey and where you've been and what happened, how much of what happened do you do in tribute to luck, and how much do you think has to do with the hard work and the skill that you have?
SPEAKER_03: For me, I think luck is definitely a huge part of our outcome. And the paradox is, as I think about luck, it's something you can't control. You have to realize that it's a part while at the same time working as if it doesn't matter. I think it helps you not pat yourself on the back too hard when things go right while at the same time not getting too hard on yourself when things don't go right. Some things are just out of your control, and luck is definitely one of them.
SPEAKER_04: Jeff?
SPEAKER_02: I think the older I get, I'm not sure if I believe in luck as much, but I definitely believe that there's something out of your control, some sort of divine help. All of the important things that have happened in my life, including starting this business with Spencer and meeting my wife and having kids and all of those other important things, I don't really consider as luck, but as things that I was blessed with. I certainly think Spencer and I both worked very hard at it, but I think we both acknowledge that there's something that was beyond our control that definitely helped with this.
SPEAKER_04: That's Jeff and Spencer Jan, co-founders of Solo Stove. By the way, remember how years ago they sold garden cloches, those little tent-like things that protect plants from frost? Well, it turns out that business is still a wide open frontier. In fact, the domain name cloche.com is currently on sale for $120,000. Hey thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's totally free. This episode was produced by Carla Estevez with music composed by Ramtin Arablui. It was edited by Neva Grant with research help from Casey Herman. Our audio engineer was Ko Takasugi Chernovan. Our production staff also includes JC Howard, Sam Paulson, Liz Metzger, Alex Chung, Elaine Coates, John Isabella, and Chris Messini. I'm Guy Raz and you've been listening to How I Built This. Hey Prime members, you can listen to How I Built This early and ad-free on Amazon Music. Download the Amazon Music app today. Or you can listen early and ad-free with Wondery Plus in Apple Podcasts. If you want to show your support for our show, be sure to get your How I Built This merch and gear at wonderyshop.com. Before you go, tell us about yourself by completing a short survey at wondery.com slash survey. Hey it's Guy here and while we're on a little break, I want to tell you about a recent episode of How I Built This Lab that we released. It's about the company TerraCycle and how they're working to make recycling and waste reduction more accessible. The founder, Tom Zaki, originally launched TerraCycle as a worm poop fertilizer company. He did this from his college dorm room. Basically, the worms would eat trash and then they would turn it into plant fertilizer. Now his company has since pivoted from that and they recycle everything from shampoo bottles and makeup containers to snack wrappers and even cigarette butts. In the episode, you'll hear Tom talk about his new initiative to develop packaging that is actually reusable in hopes of phasing out single-use products entirely and making recycling and TerraCycle obsolete. You can hear this episode by following How I Built This and scrolling back a little bit to the episode Making Garbage Useful with Tom Zaki of TerraCycle or by searching TerraCycle that's T-E-R-R-A-C-Y-C-L-E wherever you listen to podcasts.
