How I Built This with Guy Raz - Manduka: Peter Sterios

Episode Date: April 24, 2023

Peter Sterios discovered yoga by accident when he was in college, and wound up—also by accident—launching a multimillion-dollar business around it. He used yoga to ease neck strain and loosen his hamstrings, but eventually became a serious practitioner and teacher, running his own studio in central California. In the late 1990’s, before the proliferation of yoga brands, Peter came across a mat that was thicker and more durable than any he’d seen. He anticipated there would be growing demand for quality yoga gear, and decided to take a risk: ordering $25,000-worth of mats to store in his garage and sell to yoga studios and students. Over the years, he grew the business by targeting prominent yoga teachers who became IRL influencers, effectively spreading the mat by spreading the mat. Despite early cash flow issues and many personal challenges, Peter helped grow Manduka into one of the best known yoga accessory brands in the U.S.This episode was produced by Kira Wakeam, with music by Ramtin Arablouei.Edited by Neva Grant, with research help from Katherine Sypher.You can follow HIBT on Twitter & Instagram, and email us at [e-mail] Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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20 seasons. And I asked him, what if one day, instead of performing on SNL, You were given the keys to run S&L. You will definitely want to hear his answer. Check out my interview with Kenan Thompson over on my other podcast, The Great Creators. Just search for the great creators with Guy Raz wherever you listen to podcasts. And now, on to today's show. You're selling one product. It was a black yoga mat that was, it was designed to be the one yoga mat you will ever need to buy.

Yeah. As I started to ramp this business up, I actually. Actually, a friend of mine was a business consultant, and I hired him. I said, here's the business model. An indestructible product, lifetime guarantee. He said, you're insane. There's no built-in obsolescence. There's nothing.

It's a dead end. Don't do it. And I said, here's your money. Thank you for the advice. And then I moved on because I knew that it was filling a void. There was nothing like it. There was nothing like it. 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 Peter Stereos discovered yoga in college, then grew it into a passion and a business with Manduca, a now multi-million dollar yoga accessories brand. So let me start with the elephant in the room. Yes, I'm a bit under the weather, but the show must go on. bear with me through this introduction. I did the actual interview you will hear before I came down with this cold, so it should sound just fine. Okay, on to today's topic. Yoga. Yoga is big business. Americans alone spend more than $12 billion a year on yoga-related activity. Brands like Lulu Lemon and Athleta and Allo have built entire businesses on it. And by the year 2025, the total value of, of the global yoga industry will exceed $200 billion. Not bad for a once obscure Indian practice that was popularized in the West by BKS. Engar in the 1960s and 70s. Today, yoga is far and away the most popular form of group exercise in the U.S. But up until around 20 years ago, when it was just starting to explode, most people who did yoga wore sweatpants or aerobics gear,

That is until an entrepreneur named Chip Wilson saw an opportunity to sell them yoga-specific apparel. He founded Lulu Lemon. And if you haven't heard that episode of How I Built This, it's worth scrolling back to find it. Anyway, another problem in the earlier days of yoga was the quality of yoga mats. But in the mid-1990s, a man named Peter Stereos noticed a visiting yoga teacher using something different. Peter was living in San Luis Epispo in California. He was an architect by trade and also a faithful practitioner and teacher of yoga. In fact, at one point in his life, Peter studied in India with the great BKS Yengar himself, but we'll get there.

Anyway, that day, Peter noticed his teacher had a mat that was thicker, more durable, heavier, and with a better grip. Now, it's very likely that if Peter could have easily bought a mat just like it, we wouldn't be telling you the story of Manduca. a brand that today is one of the best known manufacturers of yoga mats, accessories, and clothing. But at the time, it was very hard to buy that mat. The materials it was made from were actually for an entirely different purpose. And here's a hint. Think professional sports stadiums. Anyway, that one encounter with that special material would prompt Peter to leave his full-time job as an architect

and start a business selling yoga mats. He built his business up slowly but consistently by targeting what he calls yoga stars, the best-known yoga teachers in America. And it turns out they loved his yoga mats and happily promoted them. Peter grew up in a middle-class family in Fresno, California. He first discovered yoga at college in San Luis Obispo, where he studied architecture. He was an avid athlete at the time, basketball, swimming, weightlifting, but even as a young man, he was starting to develop some issues with chronic pain.

The pain that I was experiencing was just the result of long hours leaning out over a drafting table with drawing. And just the crazy hours that schools of architecture seem to demand of students, you know, kind of the bragging rights of how many all-nighters have you pulled to get the high. project done. So it was physical abuse, self-abuse in a way to the 10th degree. And it started to take its toll on me, especially at 19. I had severe arthritic pain in my neck. You were even diagnosed with moderate arthritis in your neck. Correct. And it was like serious enough to get a specialist and say, you've got to make some change. I mean, presumably this is like the late 70s, presumably at that time, I mean, physical therapy obviously has changed,

but I'm sure you were kind of given like a regimen of physical therapy to do. But this is like really beef, obviously when yoga is still really fringe. Was there a connection between your neck pain and coming across yoga? Or was that just like totally random? Totally random. I was late. I'd been up till 4 a.m. went home, got a half an hour sleep, took off to class that I was late to around 9 o'clock, and there's this door propped open. And for the life of me, I have no idea why I stopped, turned, pulled the door open, and walked in a step to see what was going on. And it was the craziest thing. For a kid from Fresno, no clue of anything other. than kind of sports and, you know, family and friends to go into this room full of women

and a female instructor doing yoga with no context for what I was seeing. Like it was like I was on another planet. You had no idea what like these, and it was all, mostly or all women in this place? All women. And just like, and you had no idea. It was just like what you thought, this is interesting. I want to try it because most people. might just keep walking, right?

Yeah, I mean, I was embarrassed, actually, that I'd walked in while the class was in session. And just right in the middle of the class, I asked, loud enough for the teacher to hear, what is this, you know? Yeah. And in that moment, it could have been kind of a difficult situation, but the teacher turned to me with kindness and said, it's yoga. Do you want to try, you know, like putting me on the spot? And I was embarrassed.

I'm sure I was, you know, turning pink and red in my face. But when I looked around the room and everyone in the room, all the girls in the room were looking at me and smiling, like encouraging look on their faces. And I thought, hmm. And in that split second, I said, sure, when's the next class? And then next week, I showed up at this class to do yoga. And that's how it all began. Obviously, yoga has changed a lot. We're going to talk about that because presumably this is like, I think people probably just had towels on the floor or, you know, wearing like aerobics gear or whatever.

But what was that class like? I mean, you know, you were athletic, but yoga requires, not requires, but it's over time, you know, it's about flexibility and stretching. Was it hard? it was one of the most difficult athletic things I'd ever done and so for me I'm a good day bending forward touching my knee kept standing that was it that was a good day yeah that's how a stiff I was so yeah that that first class was the took me to a level of intensity pain intensity that I really had never experienced before yeah but the teacher could see that I was kind of overdoing stuff. She came over and gave me a few adjustments in this one pose. And then after that, the end of class, she laid us all down on the floor for the final relaxation.

And this relaxation exercise that she did was only two minutes long, three minutes long. But where I went during those three minutes, I have no idea. But it was like all the pain in my neck was gone. my mind was refreshed. You know, I had hardly slept the night before, and I just felt fantastic. So I was hooked.

Huh. Okay, so you start taking these classes. And I guess when you graduate, you eventually wind up moving to Santa Fe, New Mexico, right? And you were able to get a job pretty quickly, I think, like working with another architect. Yeah. But when the architect was ready to offer me the job, he said there was one condition. And I said, what's that? And he said, you have to go out for the local rugby team.

And I'm looking at him going, first of all, what is rugby? Yeah. Had no clue. And second of all, why is this a requirement? It turned out he was the captain of the rugby team. And as I had mentioned, the local, like just friendly. Yeah. Yeah, regional rugby team, exactly.

No one was getting paid. And at that time, I was still swimming, weightlifting, and, you know, keeping myself fit. And he saw me and saw, oh, this is a rugby player in the making here. And so I said, sure, I'm happy to try. And it turned out that I loved it. It was, it gave me that kind of competitive. additive adrenaline rush that I was becoming accustomed to having in my life, either through, you know, rock climbing or snow skiing or whatever it was, it got that life force going in me.

That was what you were doing. So you were not doing yoga. You weren't like taking yoga classes and playing rugby. Well, actually I was. So I sometimes would leave practice. and go to the 7 o'clock yoga class at this studio. But I couldn't tell anyone on my team that I was going to yoga. That would have been kind of a mistake with the type of people that were on the rugby team.

So I kind of kept it hidden. But you were not, I mean, but yoga was just, it was like a side thing. It wasn't, it wasn't like a serious focus for you. No, it was cross-training. Yeah, yeah. As a matter of fact, my goal with. yoga was to loosen my hamstrings. That's how materialistic you might say I was in those days. It's a perfectly reasonable goal as somebody who needs to loosen his hamstrings would say.

But you were, I mean, you had this job as an architect, you run this rugby team. And a few years in, you went up taking a trip to New Zealand, I guess initially to play some rugby there. But you actually decide to stay on. Like, you wound up living in New Zealand for like seven, eight years teaching architecture, right? Right. And I think it's fair to say, a huge turning point in your life happened during that time. You bet this guy, Shandor Rematei, and he's this guy, he's still alive, I think, right? Yeah. And he's a really influential yoga teacher who kind of created this type of yoga called Shadow Yoga, I guess. Tell me about him. How'd you meet him?

Sure. So Shandor is one of those powerful and also controversial teachers of yoga, Western teachers of yoga, who lived at the time I met him in Australia. And he would come to New Zealand twice a year. It was the first male yoga teacher I had met after. after at this point I'd been practicing yoga for about five years. It was amazing because he was an athlete. I was an athlete, but he did a yoga demonstration on the Friday night before the weekend workshop that just athletically was some of the most

incredible things I'd ever seen a body do. Just, you know, pulling up into a handstand with no wall to balance on, you know, and just hanging out in a handstand like he's, sitting on the couch, you know? Wow. And so that was a curiosity to me. How is this guy who's obviously athletic and muscular so flexible? I want to know what his secret is. And so the weekend was profound. Literally that weekend was the major course change in my life. This was around, what, like 1990 when you first met him? Yeah. Yeah. And he was a guy, he is, I think, originally from Hungary, but he ended up, he grew up in Australia.

Yeah. And he was like, as you mentioned, like, I mean, he had served in Vietnam, like he was a veteran. And so you don't think like, oh, here's a yogi. That's right. Yeah. That's right. That's the paradox of him. He was not only in Vietnam, he was special forces in Vietnam.

for the Australian Army. And he saw things that he never shared. And I'm sure that he went through a lot of PTSD before they even knew it was PTSD. And he used yoga to create balance back in his life. And at that point, he'd been doing yoga since he was six years old with his father. And he meets this master yoga teacher in Puna near Bombay, Mumbai, Mumbai now. And he studies with this master teacher for 25 years. What's the master teacher's name again?

B-K-S-I-N-R. Oh, B-K-S-I-K-K-S-A-K. Yeah, I mean, wow. Like the Yoda of yoga. Kind of. So he was, I mean, he essentially goes to the source, like one of the sources. He comes back to Australia and New Zealand, and he's just doing clinics. But you really, you see this guy and you're like, wow, I need to become his student.

Yeah. And so when it was time for me to leave New Zealand after eight years, I told him that I was going and he said, I really think you should go to India and meet I Angar. And I said, well, there's a three-year wait list to get into those classes. And he said, don't worry about that. I'll write you a letter. No problem. And understandably, a three-year waiting list to study with Iyengar. That's right. But Shandor kind of lets you skip the line because obviously he was an important student of Iyengar's. Big time. He's part of the family. He was family. So I show up at the Institute and I had written a letter.

Is the Yengar Institute? Yeah, the Iyengar Institute. And so the school secretary looks at me and you said, well, we're closed this whole week because it's Iyengar's 70th birthday. You're welcome to come and participate in the demonstration. and the lectures. So it was really an amazing time to show up for the first time. And the very last day, there was an afternoon session where all the major newspapers of India and international magazine photographers and writers all showed up for this special last program just of I Angar talking about his life of yoga. And the first question is from a reporter from,

Mumbai, young guy, probably 25 or 26 years old, and he says, here's his question, why do you do yoga? Now, I anger had just spent four hours talking about why he does yoga. And he had this reputation of being really a fierce, demanding kind of person. And you could see on his facial expression that he was angry by the simplicity of that question. So as I'm watching, he's watching, Watching him, all of a sudden his face softens and his answer is just as brief. He says, I like the way it makes me feel. And he moved on. And so I realized what he meant by that answer.

The obvious answer is, like most people's experience the first couple of times they go to yoga, it feels fantastic. But there's a depth to that answer. I like the way it gives me more ability to feel. I like the way it makes me feel. What yoga does is it opens you up to possibility and gives you this sensitivity and intimacy to feel where you maybe are in a state of contraction because of stress.

So Hei Angar's answer was I like the way it makes me feel. I have now this heightened ability to feel these places physically that I'm holding stress. And that has informed my life as a yogi. And frankly, it's also informed my life in business. But, I mean, did you, were you able to get into the program? I mean, did you, I mean, I know that you would go back and forth for some time, but were you able to actually stay and participate?

Yeah. So on the last day of this ceremony, I went to the school secretary and I said, I have to leave tomorrow, but I'd really like to stay. And he said, listen, I'm going to make an exception for you. And I come back and see me again tomorrow and I'll have the right permission, let's say, for you to attend classes. And so I showed up the next day for that first morning class at 6 a.m.

So for six days a week, Monday through Saturday, I was at 6 a.m. yoga class, which was two and a half hours long. Wow. And then in the afternoons, I would, I Angar had a personal library downstairs that he allowed students to go down and use. And so the afternoons were spent in the library reading. And then after reading, I would go up and do my own practice. And that was, for me, that year of doing yoga six days a week in India was what transformed me.

You know, like it changed my intensity, let's call it. I joke about this sometimes. before I started doing yoga, I was a type A, or actually I was a type triple A, you know, like beyond A. And what that year in India did for me was completely transform that mentality of doing. And in a way, reminded me of the power in being and being present in particular. Did you actually study with Iyengar? Was he the teacher?

Yeah. So you got to know him a little bit. Oh, he would, I have pictures in my album of he would use me as a model sometimes in the morning classes. Wow. And he would make adjustments on me because my body at that point was pretty pliable. And so that was another one of those moments where I felt privileged in a way that I was being picked to be a model. All right. So you wind up staying at the E. Engard Institute for, I think, about a year. Yeah. And then you return to the U.S. and come back to San Luis Obispo, which is when you went to college.

And you get a job there at an architecture firm. And at this point, you're also pretty seriously into, obviously, into yoga practice. And so I guess what are people start to ask you to teach, like to teach yoga to them? Yeah. The word got. out that I'd been to India. And so people started like contacting me and saying, hey, when are you going to start teaching? So I ended up, okay, I'll rent this senior center. They had a hall that we could do yoga in and the city rented it to me. Wednesday night, class 530 to 7. And the first couple weeks I had like eight, 10 people show up and it was nice. But within a month, I had like 40 people showing up. And you would just, it was just in this community.

community center and people just like pay you 10 bucks or something. That's right. 10 bucks. Okay. 10 bucks. So, you know, making $400 to teach a yoga class and paying $30 rent. It was like, yeah, let's do this. Rent for the, oh, for the hour or two hours.

Yeah. At the space. Yeah. Yeah. Yeah. So this class kept growing and then this one friend of mine said, Peter, it's time you get a space, you know. And I just happened to be walking.

downtown San Luis and I walked by this building and I looked upstairs this two-story building, old brick building and it had these huge 10-foot-tall windows so the ceilings up there

must have been high and it turned out it was the first Odd Fellows Hall in San Luis Obispo that had been empty for 12 years because of a leaky roof

and odd fellows are like masons I think right something like that I didn't even know to be honest but it was 2,500 square feet And I thought, this is the perfect size for a yoga studio. So the landlord was skeptical because he said, what business are you going to put up there? And I said, yoga.

And he says, what's that? You know, so it was that whole kind of fringe thing. Yeah. But he said, listen, you're going to probably be out of business in six months. So I'll just rent it to you for $400 a month. And it was a hit. So you were basically running the architecture office, architectural firm in the daytime. And then beginning in the evening, you were teaching classes.

Correct. And on the weekends. This was your life. Well, it was part of my life. The other part in those days was that I started writing for yoga journal. And so I'm writing a monthly column. And at that time, I had been married for, I think, two years. And then I was also traveling.

a lot as Shandor's kind of, what would you call it, a step in when his travel schedule was too busy to go to all the places he got invitations for. You were his protege. I was his business manager. Okay. I basically organized his calendars in North America, including Canada and Mexico, every year that he would come. And he'd be in the States for two months, usually, a month on the road.

and then three weeks at my studio teaching intensives. So one of the things I remember when I first tried yoga, maybe in the late 90s, was how painful it was for me to sit cross like it still is 25 years later. But less so. But it was really, in part it was painful because the sides of my feet just on the pressure on the floor was painful. and I would take two yoga mats and I would stack one on the other and that gave me a bit more cushioning

because yoga mats were like, and to the day, many still are like this, they were just like these very thin pieces of, you know, I don't know, they're made out of some kind of polystyrene or something. Yeah, plastic, yeah. It's just some version of plastic, yeah. And I guess you saw that Shandor he was using a different kind of mat.

that was not the one that I'm describing. It was thicker. It was a different material. Yeah, his mat, one year he shows up here at my house in San Luis Obispo, and he has this black mat, and I go, what the heck is that? And he said, it's this black mat from Germany. And I said, how do I get one? But what was different about it?

It was thicker. Thick, black. You know, like yoga at that point was still kind of new agey. and the colors tended to be pastels. Purples and yeah. Yeah, purples and pastel blue and pastel green and blah, blah, blah. So here's this mat that's double the thickness, two inches wider, six inches longer,

and heavy. Standard yoga mat's about a pound. This mat was seven pounds. So here's what was revolutionary about it. It was a performance mat, high performance mat. The other mats were just carpet underlayment that was better than nothing. This mat was engineered as the backing for astroturf to be durable and to have a certain amount of stretch but not too much stretch and a certain amount of cushion but not too soft, not too cushiony. And in the same factory that the carpet underlainment was coming from out of Germany, they also made material for astroturf.

Under astroturf. Yeah, the underlayment for AstorTurf. And so it was the perfect, you know, accidentally it was the perfect composition for a yoga mat. So you see this mat that he has and you want one. And how did you get, I mean, presumably you just ordered one from the company. No, there was no company. There was a guy in Germany selling them out of his garage. Because these were not made as yoga mats.

Correct. So some guy was just having them. cut them up into like yoga mat length. Exactly. And he was selling them as yoga mats. Correct. His friends in and around Europe. And so I said, Shander, how do I get one?

He says, here's Klaus's phone number. His name was Klaus. Here's Klaus's phone number. Let's call him. And so we called him right there from my kitchen in San Luis Obispo. And I said, Klaus, how do I get one of these? And he says, no problem. Where do I send them?

And I said, here's my address. And he said, how many can I get? And he said, well, it's not how many can you get. It's how many do you need to buy for me to send them to you? And I said, well, how many do I need to buy? And he said, $25,000 worth. When we come back in just a moment, how that seemingly ridiculous offer leads to a very serious business. Stay with us.

I'm Guy Raz, and you're listening to how I built this. 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. It's usually just at the top of the app. And it's totally free. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1997, and Peter has just learned that if he wants to get one of those thick black yoga mats from Germany, he'll have to buy a thousand of them, like $25,000 worth. Because Klaus, the guy who makes them, isn't looking for a customer. He's looking for a business partner. Yeah, well, he wanted a distributor. in the United States. He wasn't interested in shipping from Germany. And I just felt like this

relationship was one of those moments. He's offering me an opportunity to start a business. And so from that moment, I thought, okay, I've got a decision to make. I'll get back to you. Yeah. Were you still running the architecture office? Okay. Yeah. So you got that going. You're teaching yoga. I had a yoga studio. I had an architecture office. And I was remodeling our house, major remodel where we were living out of a single bedroom with one bathroom and the rest of the house was gutted. Got it. And this guy saying, I'm only, the minimum order is 25,000.

So I'm trying to understand from the end of that phone call with Klaus and Germany where he's like, you got to order $25,000 to, I don't know, maybe a week later where you're like, okay, I'll do this. What did you start, tell me about your thought process. Like you, how do you connect the dots to him saying you got to order $25,000 worth of it to you thinking, well, maybe. maybe I can actually sell these and make money off of this? The thing about making money off it was instantaneous

because even in the short time in San Luis Obispo, every student that saw his mat wanted one. So all of a sudden the wheels inside my head were spinning. So that was, it was more, where am I going to get the money? And we were remodeling our house, $80,000 in debt with credit card debt. and the way I was funding the house remodel was at a time when credit cards had these things

called convenience checks where you could get an advance of $10,000 to $20,000 for zero interest, actually, if you paid it off in time. And so I just thought, well, shit, I'm already doing all these other credit cards. I'll just get a few more $25,000. It's two more credit cards, and I'll just purchase it and then worry about paying the cards off when I need to worry about it. Yeah. All right. So you decide you're going to get this cash advance and then use that to buy the $25,000 with the yoga mats. And then you would just presumably the plan was

you would sell them in your yoga studio. Correct. It's a risk, but you have a pretty good idea that you could sell them. You put the order in and I have to assume it's going to take a, I don't know, a month or two before they get there. Thousand yoga mats arrive. Did you have like a warehouse or a place that they got to? I naively believed that I could put the mats in my garage. Just the garage seemed big enough to hold a small container worth of mats. And so I just figured I'd cross that bridge when it happened. And sure enough, I overestimated.

And so I had to basically clear out everything that was in my garage to make room for the mats. They show up to your, what, like a UPS truck or like, I don't know, a moving truck? No, a small container. A container. A small container. Full of, and they just, like, a forklift, just like drops it on your driveway? Yeah. They came on pallets, 18 boxes per pallet.

The neighbor kid that I hired would help me move it into the garage, stacked floor to ceiling. All right. So you get this full shipment. And you've got a third. thousand yoga mats and so, but you have a yoga studio so you can sell them there, but still, selling a thousand just out of your studio, I have to imagine, would be hard. It was impossible. It wasn't, it was the, uh, when you start a business without a business plan, you have this

passion that you can solve any problem. And that was my mentality. That's the way I grew up. That's what my dad taught me that, you know, problems are opportunities. That was one of my dad's favorite things to say. And so that's the mentality that I'll deal with that when it happens. And there are so many personal things that happened during those times, including divorce, that freed up space in my house where I could use parts of the house for warehouse as well.

Yeah. So you were going through a divorce and starting this business. And I can't imagine it was an easy time. but what was the, I mean, the name Manduca. How did you, what, I mean, did, because they were just pieces of material for Astridurf. So how did you decide, I mean, it makes sense. You wanted to differentiate them if there were going to be other yoga mats. So how did you decide to use that name and to come up with a logo and then to brand them?

So because Shandor introduced me to the. mat. I wanted to find a name that kind of gave a little bit of acknowledgement to the roots of the map. And so when I thought about words that Shandor used, Sanskrit words that might make a great word for a yoga mat company, especially a yoga mat company that has excellent grip, and obviously a frog came to mind. And I thought, well, what's the Sanskrit word for frog? And there was a word called Becca and unfortunately at that moment there was a company that was starting to offer product called Becca Yoga Products and so that name was out and the other name was Manduka for Frog and the reason I liked Manduca and when I realized it that was it because Shander's Hungarian and when

he says the word Manduca with his Hungarian accent it was so funny to hear it was just this my Hungarian accent isn't very good, but manvuka. And so every time he would say that, I'd giggle. And it was subconscious. I don't know why I was giggling. Sometimes he even call me on it. He's like, what are you laughing at? Not so funny.

And so for me, yes, this is the perfect word. And frog because it was a grippy, like a, yeah. Yeah. And then I obviously did some research on the symbolism of frog. And it's quite an auspicious animal, especially in yogic terminology. And to me, that was really a perfect word for this company. Yeah. I have to assume that it was clear in 1997 that even though yoga was growing, I mean, the market in San Luis Obispo would have been too small to kind of get these sold there.

How did you, so, I mean, initially, I mean, you were obviously, you'd studied with the Engar. you were, you know, writing for the yoga journal at this point and knew some people or knew, you know, probably a lot of people in the yoga community, how did you just create awareness about the product or this thing that you were trying to sell initially? The connections that I had through yoga journal, there was a network of what I call celebrity yoga teachers that I was getting to know at these conferences where we'd sit around and eat And I'd meet, you know, some big names in those days were already making 100,000 a year as a yoga teacher. So there was money to be made there.

And I wanted to associate with those teachers. And I would go out of my way at these conferences to kind of rub elbows with. And they became my friends in a way. And so that first shipment came. I gave 75 mats for free to every celebrity yoga teacher I knew. Wow. You gave it to them and said, hey, try this. And when you say celebrity yoga teacher, who are you, what are some names?

Baron Baptiste. Oh, wow. Shiva Ray. Shiva Ray. Patricia. Very famous yoga teacher. Patricia Walden. Eric Schiffman in L.A.

Eric Schiffman, who had massive follow. Massive. And I have a funny story about this guy. Eric Schiffman, this last guy that I described, in the early days of orders, all we had was an answer machine. at our yoga studio to take orders. And this pattern started showing up that on Monday morning, I'd have 25 orders from Tulsa or 25 orders from Oklahoma City. And I'm like, what is going on in these Midwest towns?

And then I realized, I suspected it was Eric, and I checked his schedule on his little bit of web presence that he had in those days. And sure enough, it was where he was. was teaching weekend workshops. And so he was at the end. We custom built, Eric is 6'4. We custom built him a mat that was 100 inches long instead of 72 inches long. And so he was an easy guy for me to develop this relationship with because he was doing it for free.

Like he was an influencer before influencers got paid. And he was just, and these were also different because a yoga mat was just like this, afterthought, but this was heavy. Already it was unusual. Like, people probably noticed them. Yeah. Notice these celebrity yoga teachers using them. Yeah.

So, you know, the other thing that I'm curious about is in 1997, these were very expensive compared to, I mean, yoga mat was like, you go to Target or maybe not Target then, but you'd go somewhere and get one for like 20, 25 bucks. Oh, cheaper. Cheaper. You get them for like 15 bucks. Yeah. And these were like 60.

$65 was the advertised price. I mean, that is, you know, already that, I mean, there's an argument to be made that because the price point was so high, it did attract attention, right? People are like, well, wow, if it's so expensive, it must be really special. I think it worked. The one, as I started to ramp this business up, I actually, a friend of mine was a business consultant, and I hired him. I said, listen, I want to hire you. I want to get your expertise. Here's the business model.

and I said, an indestructible product, lifetime guarantee, you know, one color, heavy. He said, you're insane. Don't do it. There's no built-in obsolescence. There's nothing. It's a dead end. Don't do it. And I said, here's your money.

Thank you for the advice. And, you know, and then I moved on because I knew that it was filling a void. I mean, for years, first three years, I was the only. person in that space. Yeah. And there was nothing like it. There was nothing like it. And I guess you, I mean, once you started to see how people responded to that first shipment, you, what, like, you went to, to Germany.

You went to that, that factory in Frankfurt that was essentially making mats for Astroturf. But you kind of, what, you went to them and said, hey, could you, could you actually on your line, like, make me mats specifically for fitness and yoga? That's exactly what we did. There were a couple, you know, customer issues that we were starting to see we had to address. One of them was the weight that these mats were heavy, which created some problems for smaller people, like carrying them.

And we, you know, just worked with it in a way. We didn't back away from it. We did eventually, two years after we launched the black mat, we came out with this alternative mat that wasn't black and it was half the weight. We also had a problem with slipping. And so the early mats weren't designed tactily on the top surface to resist sweat, you know, to resist slipping. And so I went on that trip, one of about six trips to Germany over the years just to meet. maintain relationship with, that first trip was addressing weight, color, and slip. Because it was black and it was seven pounds and if you sweat, it was slippery.

Correct. So, and we solved, with that one trip, we solved all those problems. And we even, I anticipated a problem that, that I thought would be happening once they started to be used as studio mats by creating a texture on the bottom surface of the mat. which was this dot pattern that you see in shower mats and things like that, that helps the mat stay put on a hardwood floor or a stone floor. So that was that first trip. It was a very productive trip.

And that was about a year in or less? About two years in. And now here's the thing. I mean, you alluded to this a couple minutes ago, which is when you talked to a business consultant in front of yours, which is you have, where you were offering a guarantee, it was designed. to be the one yoga mat you will ever need to buy. We weren't offering the guarantee at the start, but we had a tagline. The tagline was good for a lifetime or two.

We had this little or two lifetimes as a joke. But we didn't explicitly do the lifetime guarantee until about year eight. So but even then, I mean, you were selling a product that you knew most people would only buy one of. Correct. And in the late 90s, you know, it wasn't today, it's a $40 billion industry, but in the late 90s it wasn't. But did you have a sense that something was changing in yoga, that it was starting to, there was kind of like this boom happening? The boom was definitely happening in terms of the growth of yoga studios. Yeah. Because this is still pre-Lulu Llemon, I think. It's pre-Lululemon, yeah. Yeah. So the products and especially the clothing products hadn't really in those days been realized.

So I didn't know what the extent was, but I didn't believe the business consultant that it was limited. I just figured that whatever the United States is doing, it's going to track internationally at some point. And that's what's happened. that the growth started happening in the strangest of places, especially in Taiwan or in Japan. And then I realized that that's where Shandor teaches in Taiwan and Japan. And when he would be traveling with his mat there, people in Japan would say, where do you get him? And he'd send them to us. So we started to have, within three years, we had an international business going as well.

And especially when we made those technical adjustments to the grip and the textures. it increased the price to 75, but the performance just easily paid for that additional money. And this is obviously pre- like Instagram influencers and social media marketing. This is the late 90s, early 2000s. I saw there's an ad that you put in a yoga journal, like a print ad, and it's just like this is Manduca, and then it's just a list of like the most prominent yoga teachers. and that presumably an ad like that at the time would have had a significant impact. Yeah, the first week that ad ran, we doubled sales.

And then three weeks later, we're still doubling every week our sales. And it got to the point where that first year, I think we were on back order for three months out of 12, just because we couldn't keep up and there was a two-month lag time between the order and the delivery. Well, because you were probably a tiny part of this Frankfurt factory, this German factory, his business. Their main business was AstroTurf. Well, it was carpet underlayment and AstroTurf. Yeah, exactly. It was a huge factory. And so the production cost from Germany was high, but our sales price was high. And we managed that. And we never sold the big box stores in the early days. We tried to maintain our studio relationships

and our individual retail customers. And Big Box was only a thing that came later. And so what I'm trying to figure out is because from what I gather reading about these early days was that you constantly had cash flow issues. Like you were constantly not able to make payments. But if they were like flying off the shelves, if you could not actually, I mean, if it was just, you know, you were growing like by 100% every year, what was going on was it just you just weren't managing the business right well the problem in those early days is

we didn't have a finance department we didn't have it was me it was just like five of you you and for i had i had a warehouse guy i had a marketing gal i had an office manager who dealt with customers and i had a kind of an outside sales rep who was basically a guy that just made commission and would travel a lot and we didn't really have anyone managing the money. Yeah. Where we would get into trouble is when we'd send a shipment to Yoga Works, who had at that time, you know, beginning to have seven, eight franchise yoga works around the

chain, yeah. So, and they wouldn't pay us on time. The retail business was perfect, but the wholesale business would catch us literally with our pants down sometimes, and then we'd have to hustle. Yeah. Because in the early days, I had to. to pay half at the time of order and half at the shipping date. So basically, I had to pay 100% of that inventory before it even left Germany or on the day that it left Germany.

Because obviously, because your terms were not going to be great because I was a business that was tiny. Yeah. And because as our orders grew, the business was like, the factory was a little cautious. Like, what if we send all these mats? But, With track record and a relationship from that first visit, the second visit was how do we change the terms. And so we changed it thankfully 25% up front, 25% when it ships, 25% after the first month and the balance after the second month. And that allowed you to basically function sustainably. Yeah. That was the key.

When we come back in just a moment, why Peter eventually decides to sell Manduka and how he then has to learn to let go of it. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. So it's the early 2000s, and Manduca is still just a five-person company, but it's starting to make some money and even turn a profit. And after specializing in just one product, that heavy black yoga mat, Manduca, starts to branch out. First to lighter weight mats and then to other yoga accessories. You know, bolsters, blocks, straps, eye pillows, all sorts of creative and useful tools. So I went out and I sourced materials that were organic cotton or whatever it was.

We even did some air inflatable yoga bolsters to experiment with lighter weight things so students could travel with them. So I just, I didn't look at the, the balance sheets, the spreadsheets and say, okay, this is going to cost too much to make. I just said, this is a product that studios need or individuals at home need. And they all sold reasonably well. Yeah. And so that was growing the bottom line for us. We, our international business was growing. Everything was growing. But to that point where I could manage it all, I was starting to see something's got a shift. And at the time, I mean, I think Gaia or Gaia, I mean, that I think which is the biggest, probably one of the biggest yoga brands in the world, was already out there.

Did you see companies like that as like a competitor or sort of like, we want to be like them or bigger than them? No. No. I just looked at what my intuition led me towards and also what I was listening to studio owners and friends of mine, what was needed, what was lacking. And as a studio owner myself, what was needed and lacking in my own studio. I guess the other, I mean, another thing that was going on while, I mean, because you start Manduca in 97 and, you know, you obviously you're selling one mat and then you start to have the factory change the formula and then yours, you go to two mats, sort of a lighter mat. Something else happens, which is your mentor, you know, this guy that you practice with, right, Shandor. I guess at a certain point he kind of pushes you away.

He says you've got to go on what happens? Like, I mean, you're his student and what? He encourages you to stop practicing with him. What happened? So after 20 years of being his student, but also 10 years as being his North American business manager, You know, the relationship was solid. He was the best man in my first wedding. But, I mean, there were signs that things were changing.

And I was not really paying attention to them because I thought our relationship was solid. What I see in hindsight now is he realized in maybe my personality something lacking. And this devotion to the guru. and maybe it was even starting from my Catholic upbringing, there was something broken in that way of relating to myself. And in a nutshell, I think what he gave me is now what I consider the ultimate gift. Because ultimately in yoga and in business, frankly, in a way, we all have that moment where we confront the, let's call it the inner teacher.

Like who knows what's best for our lives. It's not outside ourselves. It's within ourselves. And if I'd have listened on a business level, if I'd have listened to the advice that I was getting from these experts, I would have never started Manducah. and likewise if i had been a follower of shandor for the last 20 years i wouldn't be here talking to you i don't think to be honest but what explained that he i mean it seems odd

i mean he was mad at you for some reason it's weird i don't know what did you did you ever understand why he was angry or i don't see it as anger but uh that state of confusion last for a year maybe maybe two because simultaneously I was my wife had already left but the divorce wasn't final my dog probably an only real friend at that time in my life that I felt close to my dog died unexpectedly from a brain tumor so you couldn't have piled in more stress into a life and still running all these other businesses and things Tell me what was going on. I mean, I know that you obviously went through a number of really huge challenges.

The divorce and the fallout from the end of your partnership and friendship with Shandor. And then you had kind of a scary health diagnosis. I think it was a tumor that was found? Yeah. It turned out to be benign, but it was still scary. Yeah. Must have been really scary. Yeah, it was.

it was one of those moments that, you know, life can gift you with if you if you kind of make it to that realization where you decide what's truly important. And this is where my, you know, at that point, 25, 30 years of yoga practice really overlaid into my personal and professional life as a business owner. And that was a gift from this diagnosis, the diagnosis which initially was cancer. And it turned out after they removed the tumor to be benign. And that was after four years of treating it holistically, naturally. Wow.

Yeah. So all of this is the backdrop for a decision you make. in 2007 to step down as a CEO, your company, your business. You didn't have, you owned it. It was yours. Were you, I'm assuming you were feeling just overwhelmed that you just couldn't do it anymore. You didn't want to run it anymore. Once I made the decision to sell, I didn't feel overwhelmed.

But leading up to that, yeah. Yeah, of course. It's like saying goodbye to a child, you know. And even to this day, guy, you know, like Manduca is still part. of me and yesterday I get this email still from Manduka that's celebrating 25 years and they acknowledge me in the email which is just of course I'm I'm it's part of me tell me tell me tell me about the decision to sell 2007 2008 this is obviously the beginning of the financial crisis yeah you guys hit about two two and a half million dollars in sales so you're still very small but

I mean, fast forward today, Manduca is this really big company. Tell me the motivation for selling. You were just tired. You were just done? I was at a crossroads and looking at the second half of my life. And the second half of my life, I wanted to be different than the first half of my life. And the fatigue wasn't so much the issue as the quality of life. and I made the choice for quality of life over some legacy of corporate success.

And when I made that decision, I had a sales trip down to Yoga Works and I was talking to their buyer and I said, hey, by the way, if you know anyone who wants to buy a yoga mat company, I might want to talk to them. And the buyer, who's this guy, you know, I didn't know that well, said, well, actually, I think I know someone. And I go, who's that? And he said, me. And I laughed at him. I said, well, that's wonderful.

But I think I'm probably going to ask more than you can afford. He said, oh, well, I know people. And, you know, I can introduce you and I want to be a part of it. And that's how it started. I didn't have to go find anyone to go find someone. Wow. I just started in a Yoga Works warehouse. And eventually this person sort of organized the funding, the financing to buy it?

This person introduced me to a venture group in New York. This is Channel Stone Partners. Right. And so he made the introductions. And part of the introduction, like he didn't want a finder's fee, he just wanted a job. And he was the C-O-O-Chief of Operators. for the new company. Well, so basically it was a fairly quick acquisition.

I mean, you sort of put out your price and they agreed to it? No, no. It took a year. From that moment in the warehouse to the day we signed on the dotted line, and it was unbelievable timing because a month after we signed, the whole economy collapsed. And that was a bit worrisome for me a little bit. But no, it was, we negotiated over a year.

And they were new at this. And there was a little bit of haggling over price. But I basically told them we were undercapitalized, understaffed, and we still produced, you know, two, two and a half million in gross sales. The potential for this company is 10 to 15X what you're getting it for. So, and they said, yes, we agree. And in the end, that's how we came to a. a price. So you signed an agreement with them to stay on for, I think, five more years. And in the

press release from that time, you're quoted as saying, you know, this is great. We're going to maintain our core values. A lot of, you know, we had to these are the right partners. They share my dedication to this vision. They have the best interest of the company and our customers at heart. And that's normal. You know, you see that in any acquisition press release. Did that, was that, did that come to fruition? Was that actually how it played out? You know, appearances and what actually is the reality is sometimes quite diverse. And I would say that the first, I mean, their first decision which I was against was to move the company from San Luis Obispo to Los Angeles. And the reason I was against it was the quality of life issues.

and we had this perfect working model of what I was concerned about, which was Patagonia, where Cheneard sold it to a venture group and they moved it, I think, somewhere in Southern California. And then he bought it back and moved the company back to Ventura because it was close to a beach break for all his surfer employees. And he had a quality of life for his employees that was more valuable than the bottom line. And so that track record of Patagonia was fresh in my mind. And I was saying, listen, guys, yes, it's going to cut costs for shipping and it's going to get a bigger labor pool and bigger access to customers. But I guarantee you in another five or ten years, San Luis Obispo is going to be the place you want to have your headquarters because you'll be able to attract people here. And they didn't listen.

And that was kind of the first heads up for me that, you know, the press release is one thing. The reality is another. And within a couple years of this employment agreement with them, they would pay me to create ideas and develop products. And then they would act without any regard to my recommendations. And they learned some painful lessons without even acknowledging that in a way I was correct. but at the end of three years, they stopped communicating with me. And the last two years of my employment with them, they paid me and they never called me, which is the way it happens, I guess, sometimes.

Yeah. But the brand has definitely strived to present itself as honoring its roots. And the different generations of owners, I think there's been four generations, generations of different venture capital groups now. They've all in their own unique ways tried to maintain that reputation of Manduka. You know, I'm curious what you make of where yoga is now, because it is what started out, at least in the West, as a sort of hippie-dippy spiritual thing. It was, you know, I think first came to the U.S. in the 20s or something like one of the world's fairs and then, you know, really

kind of kicks, kicks off in the Bay Area, San Francisco in the 50s. And today, it's not, I mean, it is a massive part of the fitness industry. It's a, I mean, in 2016, it was like $17 billion in the U.S. alone. So the global, I think the global yoga market's like $40 billion. And that's like, that's a significantly huge market. I mean, you're talking about, it's not the beauty industry, but it's like, it's really big. And, you know, the thing. And, you know, the thing. things that Manduka sells the accessories and those Lulu Lemons and all the other brands out there that have really become multi, you know, million billion dollar businesses on the back of this. What originally began is this spiritual practice in rural India. I mean, of course it's inevitable.

It happens with so many things. But I don't know. Do you have mixed feelings about that? I don't. I mean, I played a major role in that. you know, corporate transition of the traditions of yoga into a Western environment. And I felt my place was part of a lineage of innovators to make yoga more accessible for people with bad ankles on the floor, you know, bad knees on the floor, whatever, to be able to get

down to the floor and practice yoga and then stand up and feel safe with balance and stability. So the legacy of Manduka is that it was built by yoga teachers. I didn't have a sales department until year six, I think. So to me, that was something that I, to this day, feel really good about. As you sort of recount your story and where it's quite a story, right, from Fres. know to Santa Fe and New Zealand and Buna and India back to San Luis Obispo. And this brand that you built, that you created is now one of the biggest brands in yoga. How much of where you are today do you attribute to how hard you worked and how much do you think has to do with just chance and luck and just serendipity, coincidence?

I would say the title of my book is gravity and grace. And, you know, everyone has a relationship to this word grace, whether it's a spiritual or a religious meaning or just, you know, appreciating nature, you know, where we feel this non-physical connection to things or energies, etc. And I want to maybe finish this with a story about, nine years ago, I was in Spain in this little fishing village called Cadiz on the eastern coast of Spain. And so I took a train up the coast and then I drove to this little

village and I get terribly lost. And now I'm starting to worry because the rental car to get back to the train station, I can't remember where I parked the car. So I'm standing in this maze. There's people and merchants and little shops. And I look down right at the window of the shop and here's a Manducah sticker on the inside of the glass. And I'm like, oh my God. The door's locked. I look in and it's this tiny little yoga studio.

And that feeling of being lost and then having this little logo that I drew on a napkin in a restaurant, you know, how many years ago. That frog. That frog. I drew that frog on a napkin. And that frog symbol has survived, you know, four venture capital groups, and I'm seeing it in some little village in Spain.

That, to me, is such a gift to my life. That's Peter Stereos, founder of Manduca. By the way, even though, though he fell out of touch with his former mentor, Shandor Remete, they did have an unexpected reunion about four years ago when they ran into each other at a farmer's market in San Luis Obispo. It was awkward in a way, but it was also beautiful. Because for the first time since the breakup, he exchanged a hug with me.

You know, like he walked over to me. We embraced like brothers. And it was like, how are you? And we had a moment of just exchanging as to people not teacher guru. And now it confirms for me this wisdom that he provided me by saying goodbye. And it was beautiful. Hey, thanks so much for listening to the show this week. Please do follow our show so you never miss a new episode.

And it's free. On Apple and Spotify, just click the follow button at the top. If you want to contact the team, our email address is HibT at ID.Wondry.com. If you want to follow us on Twitter, our account is at How I Built This, and mine is at Guy Raz. And on Instagram, I'm at guy.orgh. This episode was produced by Kira Akeem with music composed by Rumtin Arablui. It was edited by Neva Grant with research help from Catherine Seifer. Our production staff also includes J.C. Howard, Casey Herman, Carrie Thompson, Alex Chung, Elaine Coates, John is a

Bella, Chris Messini, Sam Paulson, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.