'Shark Tank': Paddling to Success With Mark Cuban

Today's cuppa: Breakfast blend coffee


Business success is not about promises -- it's about results.

Those who watched last night's (Friday, Sept. 28) episode of ABC's "Shark Tank" got to see an update on an earlier investment from Mark Cuban, an Internet entrepreneur who now owns basketball's Dallas Mavericks and invests chunks of his billions in promising new ventures.

Last season, Cuban invested $150,000 for a 30-percent stake in Tower Paddle Boards of San Diego, Calif. Below see the original segment ...

Since the original episode aired, Tower's sales have increased over 800 percent, its Website traffic has tripled, and three new employees have been hired.

But the brief update that aired during the Sept. 28 episode only gave a bit of the story. Considering the state of the economy and the difficulty of launching new businesses -- especially one selling a product that is not vital to life or heath -- HCTV shot email questions to both company founder Stephan Aartsol and Cuban to learn more.

Here are Aartsol's answers to our questions (edited for grammar and clarity):

What about Tower's pitch got Cuban interested?

More than any of the other Sharks, Cuban instantly understood the value of good Search Engine Optimization (meaning there are a lot of SEO people out there, like there are a lot of engineers out there; but like a great engineer, a great SEO person is worth 1000 so-so SEO people). I'm an SEO guy with an MBA and entrepreneurial experience, which allows me to apply my specialty in a more creative and holistic fashion.

HCTV: So, what's SEO? Essentially it's techniques that allow your Website to show up more prominently in search-engine results. Learn more here.

I think Cuban got that right away, while the other sharks were like, "Yeah we've got people that do SEO for us too'." Anyone can learn basic SEO in a few weeks, to be honest, but it's largely worthless today. This was one part.

The other part (and this was edited out of what was shown on TV) was that I'd applied SEO to other businesses that I've been involved in or consulted for, and all of them have become industry leaders or seen a dramatic change in their growth trajectory. My brother did similar stuff with a business that he inherited called wesspur.com. It was a 20-year-old company with $250K in revenues about 10 years ago, and it's grown to over $8M in an industry that's not growing. That's the power of applying great SEO on top of good management. It's really like free advertising. Some companies are spending tens or even hundreds of thousands of dollars per month on Google AdWords.

Kevin O'Leary was interested as well, and wanted to fund me to just do any business in this manner. I countered back to him that it's hard work to start from scratch, so a far better strategy, when you've got a war chest like these guys do, is to do a sort of "business-flipping" strategy. Acquire a $5M business, inject my expertise then sell for $20M in a few years. That's when Cuban really got interested, I believe.

What was the strategy that allowed the company to grow so quickly?

We created the best value proposition in the market by selling direct only, when all of the other 100 competitors use the existing distribution channel (brands sell to distributors who sell to shops who sell to consumers). We sell direct to consumers and knock about $500 off a product that people already think is overpriced. Do that, and word gets out in today's connected marketplace.

Unlike our competitors, our Web expertise allows us to reach the consumer directly. We currently get about 40,000 unique visitors to our Website each month. A critical key to world-class SEO is creating a better value-proposition -- something worth talking about. It's not something you can just layer onto an existing business, so really it all starts at the product-development stage. Very few businesses fully comprehend this, even today.

What's Tower's special sauce, as compared to other paddle-board sellers?

(See above) Our value proposition is our differentiator and what allowed us to grow so fast. We can sell a high-quality board and prices comparable or favorable to our low-quality competitors.

Who are the company's best customers, and why?

We only sell to individuals, so no one is that much different than another. Some buy a few boards or come back a few months later to get an additional board, so those are the best financially.

Really, what we consider our best customers are the ones that are influential over their peers, and these are the ones that spread the word. We nurture this with our SUP Crew concept (http://www.towerpaddleboards.com/v/sup-crews.htm) and are taking this to new heights over the next 6 months in a brand ambassador program we're rolling out.  

Why did Tower go on "Shark Tank"?

They called us. They were looking for a SUP (Stand Up Paddleboard) company because they know it's the hottest water sport in the world. They found us and realized that we were different than the rest, and they liked the idea that I was an MBA taking a more technical approach to the laid-back surf industry. They thought that might make for a good story arc on the show -- kind of a Jeff Spicoli-type walking onto set, with the Sharks rolling their eyes, then a slow reveal that I'm actually a pretty serious business person with a solid business model.

HCTV: Who's Jeff Spicoli? What, have you never seen "Fast Times at Ridgemont High"? No? OK, then watch this ...

I went on because it's, of course, priceless promotion. From an SEO mindset, there's a lot more to this than most see. Some companies go on "Shark Tank," and a huge wave washes over them. They capture a few sales and get back to the same old thing. Being in the SEO world, I realized that publicity like this can lead to a ton of high-quality -- and more importantly high-trust -- articles and links to our site. It's basically an earned-media windfall,  if you roll up your sleeves and do it right, no different than traditional public relations, and there is a sustained brand boost you can create.

Small companies can't usually afford to go after this type of media the way big companies do, but "Shark Tank" allows us to play in that world. You'll be able to see from our media page that we aggressively went after these -- from my hometown publications, from my current town publications, from my two alma maters, from industry press, from business-focused press, etc.

So we went on for money (always helps) + promotion. I didn't even know Mark Cuban was one of the sharks until two days before my actual pitch. Once I saw he was involved, it was a no-brainer to target him. Getting him to invest is a different animal than the rest of the sharks as he's also a quasi-celebrity, so there's the implied celebrity endorsement (which usually costs money even).

I valued his money at roughly 3-4 times the rest of the sharks, so there was no way I would have given any of the other sharks the same deal I gave him.

Now, here's what Cuban had to say (not edited, because he's rather succinct):


What made you think Tower Paddle Boards was a good investment?

The Stand Up Paddleboard market is growing incredibly fast and Stephan had a successful history using SEO to drive sales. It was a great combination. 
What was the strategy that allowed them to increase sales over 800 percent and hire new workers?

He leveraged the visibility the show brought to his site along with his SEO skills to drive sales. Bottom line: he is good at what he does. 

What's been the financial upside for you of the investment?

I think the return so far has been 33 percent and I expect that to grow.

How big do you think the company can - or should - get?

I don't think like that. I expect him to work his ass off to see how far he can take it. 

Do you personally paddle-board?