Awkward! Q&A with Stephan Aarstol, the guy who froze on Shark Tank
"I'm known as the guy that screwed up his pitch," Tower Paddle Boards founder and CEO Stephan Aarstol said in an e-mail to CNBC.com.
Aarstol appeared on "Shark Tank" in 2012 to pitch his online stand-up paddle board company, but after a glitch in his slideshow, he froze. Kevin O'Leary responded with, "Oh, don't worry, it's just the biggest day of your life," and Barbara Corcoran labeled his presentation the "worst pitch" she had ever seen.
It could have easily gone downhill, but luckily he recovered and "sharks" Mark Cuban and O'Leary saw past the stumble. They put forward deals, and ultimately he accepted Cuban's offer of $150,000 for a 30 percent stake in the company.
Since then, it's been smooth sailing for Tower Paddle Boards. Before Aarstol's appearance, the company had $100,000 in sales. After the worst pitch Corcoran had ever seen, business increased dramatically, with sales exceeding $3 million in 2013.
So what's it like to fly off the rails on national television? What's it like to work with Cuban? And what are the company's plans?
Check out the Q&A with Aarstol below.
What was the overall effect of being on "Shark Tank?"
Tower Paddle Boards had $100,000 in sales in the history of the company at the time Mark Cuban offered to invest. ... In 2012, it was $1.7 million. In 2013, we did over $3 million in sales. We project we'll do $5 million this year.
The direct effect of being on "Shark Tank" is that you get an instant traffic spike to your website, about a week spike in sales, and a number of deals that come to you. ... Business tripled overnight and grew from there.
Additionally, Tower's follow-on success has led us to become a spotlight customer for Amazon, PayPal, and major e-commerce provider Volusion. We've been featured in Forbes, Fast Company, Entrepreneur Magazine, and even singled out in People magazine as one of the "Biggest Winners" from "Shark Tank".
What do you think it was about your pitch that made the sharks bite?
I tried to explain that my competitive advantage comes from my Internet marketing expertise and how I had leveraged that to industry dominance for several other ventures. I explained how I could inject my expertise into pretty much any business and change its growth trajectory. The paddle board business was just the opportunity at hand. Cuban and "Mr. Wonderful" (O'Leary) got this.
Mark indicated he wasn't going to get in a bidding war and pressed me for a decision. I went in valuing Cuban's money at three times any of the other sharks as I felt he brought with him an implied celebrity endorsement. ... As I've heard, wise businesspeople say, "When someone offers you money, take it." So I did.
Any plans to expand beyond paddle boards?
I definitely plan to pitch other businesses to Cuban once I make him some real money with Tower. I've got three other business plans I'm sitting on. ... We've built a great foundation now, and my vision is that we can develop Tower into a prominent beach lifestyle brand. We've already expanded beyond our original pure e-commerce business and built a U.S. based paddle board factory to make high-end boards out of exotic materials. We're a manufacturing company now, in addition to a marketing company.
What has your involvement with the sharks been after the show?
I've never spoken with Cuban in person since the show, and I don't even have his phone number, but I can bounce things off him by e-mail and he responds remarkably fast, even late in the evening or on weekends. He's certainly the hardest working billionaire I know!
What would you advise an entrepreneur about to enter the tank?
My first piece of advice is that they need to get comfortable with giving away a piece of their company for much less than they think it's worth. That's just a reality of the show, ... not to mention, entrepreneurs tend to overvalue their businesses as they don't perceive all of the risks that an investor truly faces.
My second piece of advice is that which investor you go with is critical. Don't take the best financial deal. Rather, take the best investor for your company and your needs. ... I could leverage a celebrity endorsement, so I went with who I felt was the biggest celebrity on the panel, and I went in valuing his money at three times the rest of the sharks. You should go in with a multiple on what value you place on each shark cash.
Lastly, I frequently advise entrepreneurs to ask for a throw-in just before they accept a "shark's" offer. ... If I were to do the deal again, just before accepting Cuban's offer I would have asked, "If I hit this out of the park for you and we do "X" million dollars—$2 million for me—in sales next year, and we need more money to grow, will you float me a $500,000 line of credit to fund growth?" If they say, no, still take the deal. But if they say yes, then you've just prepared yourself better for success.
By Jill Weinberger
—By CNBC. Tuesdays have more bite with back-to-back episodes of "Shark Tank" on CNBC every Tuesday night from 8p-12a ET.