Stephan Aarstol: Founder & CEO of Tower Paddle Boards

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Stephan Aarstol is an entrepreneurial thought leader and online marketing expert. With over 15 years of Internet experience, Stephan has worked with a large variety of startups, from ecommerce and medical imaging to educational toys and youth backpacking. As the CEO and founder of Tower Paddle Boards, Stephan attracted an investment from billionaire Mark Cuban on ABC’s “Shark Tank."

Stephan founded Tower Paddle Boards in June of 2010 after picking up the sport early that year in the waves of La Jolla shores. Like anyone else whose tried the sport, he's been hooked ever since. In 2012, Tower was named one of the top 10 success stories in the history of ABC's "Shark Tank" by Entrepreneur Magazine.

With only four employees, Stephan has grown Tower from $3000 revenue in 2010 to a projected 2014 revenue of $5,000,000. Before founding Tower, Stephan started a number of niche ecommerce businesses, including high-end poker chip company The site began as a solo venture side job and resulted in $2.5M in sales over its first five years. Stephan is an avid backpacker and has a passion for leading revenue-increasing initiatives for startups and high-growth organizations.

How did you get into the Retail industry?

In 2003, I started my 1st company selling online poker chips. I created my own brands and had them private labeled. I also sold accessory products that were me just reselling other brands. What I learned is that reselling online is a tough business because price shopping is as easy as doing a quick search. A cheaper option is always just a click away. With our branded items, we could compete on something other than just price, which is a much more attractive business. Everyone else was going out of business.

As a result, I've moved more and more towards producing the stuff that we sell and selling primarily our branded items. It has proved to be a successful model, and helps us make better products too. As I've seen the connection between producer and consumer get closer and closer over the past few decades, I'm convinced that if you don't directly make the stuff you are selling OR if you don't directly sell the stuff you are making, your business will probably be in jeopardy in not too long. 

Tell us about Tower Paddle Boards. What inspired the idea and what is your vision for the company?

It was a very similar business model to my other business With that company, I rode the wave of popularity of poker on TV. The paddle board industry was also a trending sport when I came across it, so I approached the business from the same prospective. A friend of mine took me out paddle boarding in La Jolla Cove in California in the spring of 2010. Within a few months, I had registered the URL and started to formulate the business. Our first sale was in October. In July of the following year, we had $100K in lifetime sales and landed an investment from billionaire Mark Cuban on ABC's Shark Tank. It's been a wild ride since then. Last year we were named the, "Fastest Growing Private Company in San Diego" by the San Diego Business Journal (for the period between 2011 and 2013). This year, we'll make the INC 500 list and are projecting over $9M in revenue.

What strategic partnerships/marketing strategies have you implemented that have attributed to Tower Paddle Board's success?

We started with next to no money with Tower. I literally killed off 1/3rd of my poker chip business by closing down our most popular line of poker chips because I need the money to buy my paddle board inventory. It was a calculated bet, but one that paid off. I was job hunting a few months later, but then the paddle board sales started to finally get traction. As we had not even close to enough money for inventory, there was zero dollars for anything else. I wasn't paying myself. And I certainly wasn't spending any money on marketing and advertising.

I built the business by leveraging SEO ("Search Engine Optimization"), which necessitates first putting together the best product and/or value proposition on the market (so work will spread quickly, and virally), and then getting the initial word out there thru content creation and the solicitation of links from other websites. We didn't spend a dime on advertising for the 1st 3 years, and we frequently couldn't even keep up with demand as is.

What industry trends are you noticing and how do you capitalize on them?

In our industry, there are two trends that we've capitalized on.

First is the reality that more and more people are getting comfortable buying things online. While online sales are just a tiny fraction of brick-n-mortar sales even today, it's a segment that is growing. Retail, on the other hand, is dying so we didn't want to be there. Our goal was to dominate the paddle board industry from an online prospective, and by looking at the opportunity thru that frame we realized we could really shake things up with our pricing. By opting out of the traditional 3-tier distribution channel, we could sell boards for nearly half the cost of our competition, and be more profitable in the process. It's truly a model where everyone wins (consumers and us), except our competition.

The second trend that we've capitalized on is largely because we came from outside the industry. While everyone was focused on hard boards (how the industry started), we jumped quickly to prominently promote our inflatable boards. We weren't copying anything that the industry was doing. When it comes to business strategy, I like to approach it from a contrarian prospective. Not only were we not looking at what competitors were doing, we were actually actively ignoring them. We still don't go to our industry tradeshows because we don't want to start thinking like everyone else. The result is that many competitors follow us now. Our goal is to just keep staying ahead of them.

Life Motto?

My best childhood friend got diagnosed with Leukemia when we were 7 years old and was told he had 2 years to live. He battled valiantly, and thru a lot more challenges that just this, and ultimately lived to the age of 13. He lived a lot in those 6 years and I was a careful spectator to it all. He really taught me how to live like our time here is very short and also gave me great prospective on how most people's troubles are really not that tragic in the scope of things.

Tower Paddle Board's Motto?

"Venture beyond."

Your greatest success as Founder/CEO of Tower Paddle Boards? Most difficult moment-how did you overcome and what did you learn?

Being named the "Fastest Growing Private Company in San Diego" by the San Diego Business Journal  in 2014 was probably my  greatest feeling of accomplishment. It was at a ceremony honoring the 100 fastest growing companies in the city, many of whom were venture backed and technology plays. When we won and the audience saw we were a surf company with 5 employees, I think they were pretty miffed. It was a great feeling to land that achievement with my team, but it was even more sweet knowing that I didn't really start this thing chasing the money, but rather I just thought what my ideal lifestyle would look like and then made that happen. When you do that, I think your odds of success jump because you are no longer working. You're just living.

My most difficult moment, oddly, was about 2 months before we won that award mentioned above. I had just had to fire a particularly difficult employee. It was a long overdue move, but nonetheless never an easy thing to do. Then I was traveling in China to sort out some QA issues with our paddle boards when I got an email from my #1 employee at the time saying she had taken a position with another company, and it was a payday loan company to boot. I was really taken aback. Here we are this hot start-up in the exciting action sports industry that is making products that we believe empower the human spirit. What's more, we're riding the wave of our appearance on ABC's Shark Tank and the resulting investment of billionaire Mark Cuban. And I'm losing talent to parasitic, soulless companies. it was a hard pill to swallow.

Your advice to an aspiring entrepreneur?

Contrary to what you are taught in business school, I believe the idea of "securing funding" is a fairy tale aside from friends & family funding. I see Silicon Valley as nothing more than an extended environment of "friends & family". The largest indicator of whether you will raise money for an idea has nothing to do with the idea, it's whether you have raised money before.

My advice is to just pursue business ideas that don't require funding. If you don't have a rich "friend or family", this is really the only path. Yes, I got funding, but it was after a decade of trying and I had to go on TV to get it. Kind of a fluke, I'd say. I probably wasted 5 of those 10 years scheming up business ideas that couldn't get off the ground without funding. That was a waste of 50% of my time. My recommendation is you make two lists: one for ideas that require funding, and another for ones that don't. Toss the first list, and get to work.

Describe the ideal experience using Tower Paddle Boards.

Tower makes "Tools to engage the human spirit". That's all a paddle board is really. Get a couple and you can spend more time exploring interesting places with your friends, family, kids, or significant other. It's a social sport. It will also get you in shape, get you out in the fresh air, and get you a tan. It's literally a product that can improve the quality of your life, all while making you look cooler! That's why I started the company. There is no downside to stand up paddle boarding.

How do you motivate your employees?

My thought is you don't need to motivate people to do something they love. At Tower, we try to figure out how to make the dream job for everyone here. Starting this company was my dream job, and I want everyone on the team to build for themselves what I already have. This doesn't work for everyone as you can't force some people to look at life and work as an opportunity, but we just try to hire those who do see the world in that way. Then I get out of their way. I've still got a ton to learn on this front, however, as I'm new to building a business alongside a team.

One food and drink left on earth, what would you choose?

King crab and a margarita.

What literature is on your bed stand?

I read business magazines and business strategy books on planes, or on the beach mostly. I don't really read in bed, and somewhat embarrassingly I don't read as much as I should. I take solace in Albert Einstein's famous quote, "Reading, after a certain age, diverts the mind too much from its creative pursuits. Any man who reads too much and uses his own brain too little falls into lazy habits of thinking." He's a smart dude, so I'm going with him on this.

Role model - business and personal?

Ideally, this could be one in the same, but it never seems to work out that way. For a business role model, I really admire Steve Jobs from what I've read on him. Yes, he was a bit of a prick, but he put his imprint on the world in a very positive way. The world is a better place, and not just in some small way, for having him contribute.

On a personal level, I'm still figuring that out. Both of my parents are amazing people and I've learned a ton from them. I also had many amazing teachers and coaches growing up. Today, I have many great friends and entrepreneurs that I look up to and try to emulate in different ways. I'm a lifelong learner, and I think it's important to keep finding new role models on the personal front as you grow. Otherwise, you'll stall at some point.

Current passion?

Aside from watching my amazing son blossom, and travelling when I can, I  don't really have any significant hobbies outside of building businesses. People always ask me what I do for fun, and I kind of don't have the answer they're looking for. Where some see it as "work", I see creating businesses as partially a creative pursuit and partially as a competitive sport. It's kind of my hobby.

Favorite travel destination?

The next one. I'm thinking of going to Croatia this year. I'm a bit of a wanderlust. I try to get away for a 3-wk trip somewhere exotic every year.  I did this even the 1st year we were in business with Tower, when I only had one employee. I think my employee thought I was kidding, right up until I left and told her to try to keep things running while I'm out. Travel is that important to me.

I took off with a couple college buddies for a backpacker travel trip thru Vietnam, Cambodia, and Thailand. I actually signed the deal for Mark Cuban's investment from Siem Reap, Cambodia. I was under non-disclosure so I couldn't tell my buddies. As a witness on the contract, I had the lady at the hotel desk who didn't speak a word of English and probably made a salary of $200/mo. I kind of laughed thinking about how different the world is as the only two signatures on this document was one of the richest people on the planet and this barmaid in one of the poorest countries on earth. It puts things in prospective.

What's next for Tower Paddle Boards?

We're going to build the biggest beach lifestyle brand in the world, and we're going to do it like no one has done before. We've already launched our beach lifestyle magazine at http://Tower.Life. We're in the final prototyping for our wooden sunglass company, which will live at Our surfboard company Tower.Surf will launch in Q3 or Q4 of this year. Our media channel is in pre-production as we speak. And we plan to roll out 3-4 new initiatives each year as we move forward.