It started with a Secret Santa gift exchange. It ended with a profitable business.
Reddit's annual Secret Santa gift exchange — where Reddit matches up each participant with another to send a gift to — is dubbed "the world's largest gift exchange." Since its inception in 2009, it has resulted in the exchange of over a million presents among 900,000 people in 225 countries, and even high-profile people like Bill Gates, Snoop Dogg and Jimmy Fallon are known to participate.
Chris Waters is one of those annual participants. In 2015, Waters was 29 and working as an account manager at a software company in Scottsdale, Arizona. He was competitive when it came to gifting, and the Secret Santa swap was his Super Bowl.
"I was always the one, where, if I go to the office white elephant gift exchange, I want my gift to be stolen three times," Waters tells CNBC Make It. (White elephant is a gift exchange in which participants can "steal" a better gift from others.) "I want to be that one that gives a gift where people aren't disappointed."
In 2015, Waters was matched with a young man named Blane, who was in his early 20s, living in Phoenix, Arizona. Waters saw a lot of himself in Blane.
"The guy was basically just like me, but four or five years younger," he recalls, ticking off their similarities: Blane was a student at an Arizona school (Waters graduated from University of Arizona), they both studied journalism and they were both big sports fans. Since Blane lived just 20 minutes away, Waters decided to do something special for the guy with whom he was matched by happenstance.
"I had this opportunity to do something really, really cool for an Internet stranger," Waters, 32, says.
Waters happened to have a financial windfall from a recent poker game with friends, so he decided to use the money to build a scavenger hunt date for Blane and his girlfriend. At the end, the Secret Santa gift would be waiting. Waters asked Blane some questions to get a feel for what they might enjoy and asked them to block out an entire day.
The morning of the scavenger hunt, Dec. 19, 2015, Waters had a friend knock on Blane's door to start the adventure.
"At exactly 8 a.m., there was a knock on the door and he had this centuries old suitcase with a bouquet of flowers on top," Waters recalls. Inside were envelopes with symbols on them and there was a box secured by a chain and lock. There was also a note that "basically said, 'Get excited, here's your day. You need to find your gift, follow all of the instructions. Sincerely, the architect,'" Waters says.
Waters Secret Santa scavenger hunt was elaborate. Clues took Blane and his girlfriend to a cemetery, the zoo, to a Mexican restaurant for lunch, on a nature hike and more. Everything had already been paid for by Waters (he had spent around $400 total on his Secret Santa gift), and the hunt ultimately led the couple to an underground speakeasy where the gift, a $40 bottle of champagne, was waiting.
Waters met up with the couple there. "We sat and chatted for like an hour, because they were understandably a little bit blown away by like the money and care and time that went into this whole thing," he says.
Waters was happy with how the Reddit Secret Santa adventure had turned out. But the friend he recruited to knock on Blane's door, Jeremiah Larsen, suggested that the scavenger hunt was a good business idea. Larsen said he could see people paying Waters to construct similar scavenger hunts for special occasions and offered to build his friend a website.
Waters thought, why not? Larsen immediately bought the domain name and built the website for Constructed Adventures. The pair didn't take it too seriously at first; there was just placeholder text on the website and photos of Nicholas Cage from the movie "National Treasure."
But then Blane posted about the elaborate scavenger hunt on Reddit (Reddit encourages participants to post a thank you note) and linked to the Constructed Adventures website. The post hit Reddit's front page and went viral, and Waters and Larsen received 11,000 hits on their wonky website in one night.
Once the requests started rolling in, Waters and Larsen stayed up all night, finessing the site and managing the wave of inbound business. They realized that they may have struck gold with their idea. They scheduled calls with prospective clients for after Christmas.
Now, what started out as a fun way to make a stranger's day special has exploded into a lucrative business that Waters projects will bring in around $80,000 in revenue for 2018 and is already profitable.
Waters' original Reddit scavenger hunt went viral on Dec. 21, 2015, and by January 2016, he had already executed his first paid adventure: A Scottsdale dad hired Waters to create a fun day for his family. Waters charged a flat rate of $350, which included a fun day around Scottsdale along with two meals.
Other paid adventures that first year of business included "The Treasure Hunter" for a 13-year-old's surprise birthday party (based on her favorite movie "National Treasure.") Waters provided a journal containing riddles, clues, a compass and cryptex, and the birthday girl and her best friend set out on a hunt to find a treasure, leading them to different places like the library, her church and a park. Ultimately, the treasure hunt led them to a surprise party where the teen's friends and family were waiting.
There was also "The Proposal," an adventure that Waters constructed for a boyfriend to propose to his girlfriend. Envelopes with clues and keys took the couple through a dreamy date, which included a trip to a Japanese friendship garden, dinner at a restaurant and ended at a winery.
At the time, Waters was still working full-time at the software company, so he would run an adventure every two weeks as a sort of side hustle, working on weekends to create and build his elaborate scavenger hunts. The $350 rate, Waters recalls, was "criminally low" (much of it was used to pay for the adventure itself). Waters and Larsen hardly made any money from it, but Waters was enjoying himself.
Then in 2017, things took a turn. Waters left the stability of his corporate job to focus entirely on the burgeoning business.
His decision to quit his full-time job for Constructed Adventures came out of "emotional necessity," he says. The business wasn't pulling in that much money at the time and Waters and Larsen weren't paying themselves, instead investing whatever money they got back into the company and its adventures. Larsen was living in Portland, Oregon, taking care of the business side of Constructed Adventures, while Waters would create the adventures and run them. But Waters had recently started a new, corporate job in San Diego, California, working crazy hours and he was miserable.
"I'm a firm believer that life isn't perfect, everyone has their problems. But if you keep getting hit with roadblocks in your relationships or your work, you need to just make a change," Waters says. "If something's not working, you change it."
So that October, Larsen graciously gave Waters his share of the business. Larsen was already making good money at his own small company (an online brand management business) and knew that Waters was not happy at his job. That enabled Waters to ramp up Constructed Adventures and use some of the money that came in to pay himself.
Business was chugging along, but what really helped Waters skyrocket to success was landing a spot on NPR's popular podcast "How I Built This," which includes interviews with successful entrepreneurs. Waters was a fan of the podcast, and while most of the featured guests on the show are big names like Steve Madden and Bobbi Brown, he knew there was a five-minute segment at the end of the show called "How You Built That." So Waters pitched himself and was chosen for the segment. The interview was short and sweet, but it was still great exposure for Constructed Adventures.
After the episode dropped in October 2017, business exploded and Waters hasn't looked back since.
"It changed everything for me," Waters says. "I was always that person at the corporate office just being like, I'm not a human being who was meant to sit behind a desk all day. I always say that. And I remember, even though I had no idea how I was going to do that, I just knew that I wasn't."
Now, Waters travels around the country running adventures, from Reno, Nevada to Miami, Florida. He still operates an adventure every two weeks, but his prices have gone up. There is an adventure fee, plus a budget, both of which vary depending on the adventure. But Waters says the minimum budget he typically works with is $4,000 to $5,000 for individuals and corporate adventures require a $5,000 minimum budget. The budget is used to pay for the expenses that occur during the adventure, such as meals and tickets to events.
Waters has masterminded some wildly elaborate adventures so far (he's done 45 to date). He's particularly proud of an adventure he created for a woman in Florida to celebrate her anniversary. The mission of the adventure was for the woman to find her family. The hunt sent her to a private airfield where a helicopter was waiting, stocked with snacks and her swimsuit. It flew her to a wild animal park, where an otter came out with the next clue.
Such elaborate and unique scavenger hunts aren't easily built, but Waters says he's creative by nature. Once he books an adventure, he flies to the area. He starts by figuring out what the finale of the scavenger hunt will be; then he comes up with the beginning, then he creates what he calls "anchor points," things that need to happen to keep the hunt flowing. The adventures are also highly personalized. Clients fill out lengthy questionnaires and Waters interviews them over the phone. He also checks out their social media, diving into their life to glean as much information as possible.
Waters says he's booked solid with adventures until July 2019. The success allows him to be picky about who he works with (someone who immediately just wants to talk about money and budget and not the adventure, he says, is typically not the client for him).
"It's really important that it's perfect, and even if I make a little less money because I just go over budget and eat into my flat [fee], to have that experience is really cool, both from an emotional side, that's important to me, but also from a business side," Waters says. "It's the reason why I can stay booked out so far in advance, just because I do a really good job and I take my time."
Waters is the only full-time employee of the business but he often hires people to help the day of the adventure. For 2018, which will be his first full year operating Constructed Adventures full-time, Waters is projecting total revenues of around $80,000, and he expects to double that in 2019.
But despite the financial success that has come with Constructed Adventures, Waters says it's never really been about the money. Running the business has enabled him to travel, and for 2019, he has his first international adventures on the docket: one in Costa Rica and one in Italy. And he loves being the conductor of a perfectly orchestrated day for a stranger. He still participates in the Reddit Secret Santa swap every year, gifting an internet stranger an adventure.
We live in a world where when a stranger approaches, it can be a scary or negative experience, Waters says. "I want people to have a stranger approach them and give them an envelope, and them get excited. So if I can inspire more people to do that, that's really cool."
Like this story? Like CNBC Make It on Facebook!