How I Built This with Guy Raz - Solo Stove: Spencer and Jeff Jan

Episode Date: August 14, 2023

Over a nine-year period, Spencer and Jeff Jan grew Solo Stove from a DIY project into a 9-figure brand. Their original idea was modest: work a four-hour week and earn a passive income from a DTC camping stove, which was easy to use and as sleek as a spaceship. When they launched the business in 2010, the brothers lived thousands of miles away from each other: Spencer in Shanghai, where he located the manufacturer for the stove, and Jeff in Dallas, where he managed logistics out of his garage. Using all the tools at their disposal—Kickstarter, Amazon, and Starbucks for office meetings—the brothers grew the brand to where it attracted a 9-figure acquisition. Which actually happened twice—making them both wealthy enough to enjoy a 0-hour work week.This episode was produced by Carla Esteves, with music by Ramtin Arablouei.Edited by Neva Grant, with research help from Casey Herman.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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walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca slash host. We started putting out job postings and one of the first girls we interviewed, we told her to meet us at the Starbucks because we didn't even have an office. We didn't even order anything. That's how cheap we were. We just sat outside at the little metal tables and met this this young girl who was interviewing for a customer service

position and uh you know we would promise that we will have an office if when this position is filled and uh that's that's how that's how rough the start was welcome to how i built this a show about innovators entrepreneurs idealists and the stories behind the movements they built i'm guy ross and on the show today how Spencer and Jeff Jan saw the early appeal of e-commerce and the beauty of a smokeless fire and built solo stove from a lifestyle business into a nine-figure brand. If you're the kind of person that grinds away at a job that you don't love all that much and you're looking to earn more money and work less, well, this is not the episode for you because you will learn how two brothers came up with a brilliant passive income idea,

only to discover that the more successful they became, the more work they generated for themselves. Now, not to fast forward too much, but the idea they had ended up working out pretty well, and today both brothers, Spencer and Jeff Jan, are only in their 40s and also pretty much retired. What they started was a brand called Solo Stove. Initially, it was a camping,

stove that produced almost no smoke. Today, the company sells everything from smokeless fire pits to pizza ovens to patio heaters. The idea came from years of trial and error and a desire to build a stress-free lifestyle business. Spencer and Jeff tapped into Amazon's direct selling platform back in 2010 when it became open to anyone. And they realized early on that you could source relatively inexpensive products from China and then just resell them in the U.S. on Amazon. By the time the brothers sold the majority of the company to investors in 2019, their stake was worth hundreds of millions of dollars. Spencer and his younger brother Jeff grew up in the 80s and 90s in Ontario, Canada. Both of their parents had emigrated from China. Although the brothers were

close, they eventually wound up working on opposite ends of the world. Jeff in Dallas and Spencer in Shanghai, where he helped manage a firm that connected Chinese factories to buyers around the world. I mean, I guess it was about seven, almost seven years that I was in Shanghai working for that sourcing company. Boy, I ran around north, south, east, west, just going to all sorts of factories, trade shows, and it just depended on what our clients wanted and what industries we were in. And oddly enough, we were heavily in the RV niche.

So recreational vehicles and campers. We did a lot of parts and products for that market. Sofas, recliners, tables, faucets. For RVs. For RVs, yeah, Elkhart, Indiana. Elkhart is where where Begoes are made? Yeah. Yeah.

Yeah. A lot of the RVs are made in that area. And the component parts obviously made around the world. And so their factories to specialize in just making the sofas and beds for RVs. Yeah. And presumably their biggest market was the United States. Yeah. Yeah.

For RVs for sure. I guess, you know, you're doing this job and you're, you know, it seems like it's doing pretty well. But I guess around 2008 with a financial crisis, it also affected the company you worked for, right? That's right. Yeah. We held on by the skin of our teeth. we had to let go basically the entire office. So I had to go through that.

That was a experience I won't forget. I was probably a year or so into my job in charge of 20-some-odd people, local Chinese in my office in Shanghai. And then suddenly my boss tells me, well, you got to lay them all off, you know, have at it. And I was like, I don't, why do I have to do that? I was young, young in my career. And it was a horrible experience to have to do that. And I remember tearing up when I had to tell them that, you know, here's what we can pay you if you leave now. And if you decide to wait until we let you, like, formally let you go, there might not be anything.

And I hated how everybody rightfully so were upset at me. And I just hated that feeling of looking at these people in the eye who I thought were my friends and peers. kind of all turn against me and feel like it was my fault and everybody was blaming me. And I just, um, I took a big pay cut and I'm really, uh, hunkered down with my, my boss at the time. And I remember telling them that I still believe in what we can do. It's just the market conditions are horrible and, um, let them know that I want to stick with them. But hopefully I'd get some equity in the future for kind of roughing it through. And that's kind of the direction I took.

Yeah. I guess in the meantime, you start to think about maybe doing some like side hustles. Yeah. Tell me about how you, how that happened. I mean, obviously, you're in China and everything's made there. And what, how did, how did you even start to think about maybe getting into that? Yeah, that's the, that's the rabbit hole that's always fun to look back on. You know, I was there going through the rough patch in the Great Recession.

I was married and had a young kid, and I got invited over to a friend's house in Shanghai. Yeah, and she invited me over for dinner. And she had made these amazing cinnamon sugar donuts. And I was just blown away because in Shanghai that was a real treat and went home that night looking online how to make donuts like that. Ended up on a blog that was a really good donut recipe blog. And at the bottom of it, there was this video of this guy saying, learn how this blog helps me continue doing what I love doing, and he was a school teacher. And that led me down this rabbit hole of blogging and people making money by blogging.

And I quickly dove into this program and showed it to Jeff, and I was so excited. I was like, look, like people can actually, you can write something, write blogs. It was like a blogging piece of software. That's right. It was like a program, a course that you could take. Yeah, that we could take and sign up for and they would show you how to blog and what to do. And step by step kind of going through the whole concept of blogging and making money off of ad sense and clicks and traffic and affiliate marketing. And it just blew my mind.

And we quickly signed up to blog. And Jeff was blogging and I was blogging. What were you blogging about? Yeah, I blogged. I had a, you can go back to the way back machine and find it. It was called China Business Traveler. And had hyphens all between the words. And I was like, well, I'll blog about traveling as a business person in China, what to expect with culture and travel and currency and culture and all of that.

And I'm trying to make a few clicks off of AdSense and maybe some affiliate money off of travel websites. And we did that for a year. And Jeff, he did one on personal finance. He was working for a bank at the time, I think. So you guys were, and you guys were both just getting into this. You're like, let's try this blogging thing and see. Let's make some money. Let's make some money.

Let's supplement our income. And what happened? And we didn't make any money. We didn't. I mean, I think I made $75 of which like 50 never got paid out from commission junction because I didn't meet the threshold of the payout. You had to have like $100 to get it paid out or whatever it was. And it just didn't turn out financially for us. But I enjoyed it.

I mean, I learned so much. And so I tried. transitioned from that. I said, well, the blog's not working, but what if I sell something? And it just happened to be that there was this mattress program that we were trying to do at my day job that ended up not working out. What do you need a mattress program? So we call these projects programs. So a project for a U.S. customer, a mattress company, a betting company. He actually We had retail stores in the Pacific Northwest. And he wanted us to source mattresses out of China, memory foam mattresses.

And so I went out to tons of memory foam mattress suppliers and figured out how the product was made and the costing of it. And through that, I had taken the liberty of taking some of the samples and putting them in my own apartment and using them. And I loved it. I was like, these memory foam beds are great. And I was just thinking, well, what if I started another website where instead of blogging, I just sold memory foam mattresses to expats living in China, who all were looking for soft beds as the Chinese locals, they actually enjoy hard beds. They think it's better for your back. And so this soft memory foam bed was a rare find in Shanghai. And so I started peddling these mattresses, set up a website.

What was it called? It was called SlumberMax with two A's. It was MAAX because M-A-X was taken. And did you, by the way, did you just set it up and tell friends about it? Or did you start to buy like, you know, did you start to sort of, you know, pay per click ads and stuff? Yeah. Yeah. I set it up knowing that there were little communities online for Shanghai expats.

So there's expat forums that all the expats would go to. And it was very active. I also did other creative marketing tactics that didn't cost a lot. I would go talk to all the chiropractors within the city and all the ones that service the expats. I would talk to real estate companies who are dealing with the relocations of expats. And this is all the while you are still working as sort of an agent between U.S. companies and manufacturers in China. That's right. I had a day job. I was working all day long at my day job.

And then at night, I would turn on slumbermax, see what orders came in, deal with all the emails, customer service. And then actually physically myself, I would rent a taxi truck and I would come to my apartment. I would dolly down as many mattresses that I needed to deliver that night, put them in the back of a truck. And I would make deliveries around Shanghai. Where did you store all those mattresses? Just like against the wall? On the 25th floor of my high-rise apartment, I've moved the sofas to the side and stuff the entire. I mean, we had a tiny, it was like 150 square meters.

Wow. Apartment in Shanghai. And so they were like 80 pounds each. And I attribute a lot of my back problems to having moved so many mattresses. The worst was when I would ask if there's an elevator or not. And sometimes some of those apartments they lived and didn't. They were on like the fifth floor. And it was just hot and sweaty and moving.

those mattresses up. The strategy was to take off the cardboard box and they were encased in this plastic casing and the sweat of my arms I could wrap around and it wouldn't let it slide because I was so sticky that I would just get it up and then start making my way up the stairs. And so you were, you basically became the mattress guy for expats in Shanghai. And so at sort of its height, I mean, how much were you making? I think annually it'd bring in a quarter million dollars or so. It's a great business. Yeah.

And probably your cost was quite low, right? I mean, what did you buy the mattress? Like, what would you buy a twin-sized mattress for? Well, I think more so queens and kings is what I remember. Kings mostly, you'd buy for about $200, and I'd sell them for about $1,000, US. Wow. And so I was making, yeah. That's great.

Yeah. The thought was not to sell tons at a very low cost. There's a very small market in Shanghai for expats. But they all have a lot of money, and a lot of their relocation expenses are reimbursable by their companies. And so I knew that they would choose convenience and comfort over price as long as I provided them a good product. And I mean, was that sort of the plan? Like, I'll just keep doing this and make some money. Or was there a point where you thought, you know, I should kind of lean into this a little bit more? Yeah, I definitely felt leaning into e-commerce was the right move.

And meanwhile, you know, Jeff, as we were both blogging at the same time, and, you know, he was learning about what I was doing with mattresses. And it was, you know, I kind of felt like, oh, I wish I could do this with Jeff, but it's such a niche market in Shanghai. I don't know what he's going to do. But, you know, my feeling was he was on the sideline saying, like, what about me? Let's do something together. Like, we can do e-commerce and let's figure something out.

And I was like, yeah. Okay. So, Jeff, this is a good time to bring you into the conversation because clearly you wanted to start partnering with Spencer at this point. Yeah, correct. And I guess while Spencer was working in Shanghai, you were raising your family in Texas and Dallas working at like a chemical company for your day job. And I guess you were looking at other Chinese products that you could help your brother. sell in the U.S. And so did you have a specific idea in mind?

Yeah. So this was another very niche product, which was something we learned from the early days of blogging. They said, you know, pick something that's a niche instead of finding something that's extremely broad. And so there's these products for seedlings in the UK called Kloches. and they're basically these covers that you put over seedlings or plants to protect them from frost or just... It's like a mesh cover, right?

It's like a plastic belt cover. And it goes directly over the little seedling. Yeah. It's like a mini greenhouse. And so they're very inexpensive and they didn't seem like there was much of a market in the U.S. They're pretty hard to buy. Let me just understand how it works. So there was a manufacturer that you found in China.

And obviously, Spencer, you know how to find these places because it's what you were doing. And the idea was to just buy a bunch of these, buy a lot of these clotures and then sell them on a website, just like set up a website called, I don't know, cloches. And hopefully people would come or? The gardenclosh.com. Yeah. So that was the website. which in hindsight is not the best name. It's very niche.

But if you're looking for a Kloche, we probably ranked quite high. Yeah. You know, we'd buy these things for 20 cents apiece and bundle them and maybe a pack of five and sell them for, you know, $1599, 1999, and just start selling. And we did. We sold. We sold Kloches. We were, we cornered that market.

And this is sort of, I mean, this is, you know, at a time when sort of third-party logistics, businesses are really starting to also to blow up. How did you guys manage it? I mean, Jeff is in Dallas. Spencer, you're in Shanghai. Who fulfills the orders? Yeah. Jeff is in Dallas and we would, I would get all the product and get it shipped over to his house. Okay.

And you just had a garage full of cloches in Dallas? Yeah. This was the beginning of many years. of no garage and it's just being filled with all sorts of product and yeah my wife wondering what's going on and so how did the business do how much money were you guys making with this business yeah in my mind i think it was it was under a hundred thousand dollars each year i want to say it's closer about 50 50 thousand dollars a year so meantime i mean so you've got this website going But Amazon is also a place as sort of an opportunity.

And were you looking at Amazon as a place to also sell stuff? We did. And those were the early days of FBA fulfillment by Amazon. I had started to explore it. And so we signed up for Amazon and we would put stuff on Amazon. And we started to realize that Amazon is a huge opportunity. And we definitely leaned into that. So once you realize that you could sell a lot of these, you know, you could sell things, right?

You guys had your own business selling these closures. It's such a weird thing. I'd never heard that word before until today. So thank you. We're probably not even pronouncing it, right? Yeah, right. Because I think it's a French word for Bell. And I think there's like an accent on the end and we're probably saying it all wrong.

I should, given that my children and wives speak French, I should know this word. But so what did you, I mean, you know, that business was doing okay, $50,000 in revenue or so a year. But, I mean, did the two of you guys start thinking or start saying, well, what else? Let's try other stuff on Amazon and let's set up other websites. Yeah, it was really just what else can we sell? Yeah. If we could create a site that sold $100,000 and we repeat those little niche sites 10 times, well, that's a million dollars. And for me who was making $40, $45,000 a year, that's a big deal.

And Jeff was probably in a similar boat. So tell me what, tell me about your brainstorming process to figure out what the next thing you would try to sell would be. What did you guys kind of next land on? I think about this time, I came across the four-hour work week book. And that was eye-opening. There's kind of a formula in there with the different types of products that work in an e-commerce type of business. Yeah. And there was a list in there, and I don't remember everything, but there were definitely things.

It was basically something that was that you could ship easily, that wouldn't break, that was high value, you know, wasn't overly complex. Or overly seasonal. Yeah. Yeah. And so with that in mind, we were thinking, oh, what could we do that would fit that? So you're thinking about a bunch of different things. And I guess you start to think about the category of camping, right? And tell me about why you kind of veered in that direction.

How did you land on camping as a category? Jeff was the one who came up with the idea. You know, we grew up in Canada and did a lot of camping. Yeah, we explored so many different industries and products, and we thought, oh, there's some opportunities with camping stoves. They're small, they're compact, easy to ship. They won't break. And so we came across the concept of this double-walled gasification stove. A lot of people on YouTube would come up with their own ideas. and just we started just trying to make our own, seeing if this gasification stove, if it actually worked.

Yeah. And for people who are familiar with this stove, which you would eventually come up with is basically the stainless steel cylinder, kind of like a can within a can, that kind of sucks the air up from the bottom to feed the fire, but also sends the air out through these holes at the top to, like to burn off the smoke. And, I mean, essentially, you wanted to build a camping stove, I gather, that reduced or eliminated smoke, but you also wanted to make it easy to start because starting a campfire is not easy for most people, right? Well, that was the beauty of when we looked at YouTube and saw how people were DIYing, and when we were playing with cans and cans, we realized that the airflow, how it works, just naturally makes it easier for fires to light. I mean, it's not rocket science. Fires need oxygen. And so the more oxygen you give it from different areas from underneath it, fires take a lot faster.

And then it being contained within the camping stove, it's protected from wind. And then you add on the ring that sits on top, which supports the pot that's put on top. That kind of creates an added extra windshield as well. And so it naturally was easier to start fires. But we weren't thinking like we're going to revolutionize this category with something brand new. It was just can we make a slightly better mouse trap? Right. And with my experience on the China side, I could be able to mass manufacture these.

And then with our e-commerce abilities and with our understanding of digital marketing, we could have another portfolio brand that would bring in $100,000 and be another drop in the bucket for our path towards financial freedom and the four-hour work week. I mean, the thought process wasn't complicated. It was just what's next. This looks good. Let's iterate. Let's design. But I guess, I mean, neither of you guys were our engineers. And is this, is it complicated?

I mean, how long did it take you guys to figure that out, that design out? Yeah. I mean, Jeff was right. That time when we were playing around, we were literally getting cans out of the pantry and going buying different sized cans and putting cans and cans and seeing what worked. And it is somewhat complex. It took us a while to find a supplier that was willing to work with us. And we actually shelved the idea for a year or so because it was so difficult.

It was far more difficult than anything we had done up to that point. What I'm trying to figure out, though, is given that you had sold things that were already being manufactured, why didn't you just find a Chinese factory that was making camping stoves and just sell those on Amazon? Yeah. I mean, that's a good thought. I mean, I think one of the ideas, as our evolution of thinking changed as to what was a good product, it needed to be unique. And if we were able to buy it off the shelf at some manufacturer and they're selling it to other people as well, it would be that much just as easy for the next

guy to buy it. Yeah. But no manufacturer was making this. And so for somebody, you know, if you understand how manufacturing works, nobody wants to help a little startup. And we didn't even consider ourselves that because we were like, well, we'd buy $5,000 worth of this product. Well, the tooling and dyes and everything that you need to set this product up to even try to make is more than that. Why would a manufacturer take a risk on us? When we come back in just a moment, a manufacturer decides to take that risk and Spencer and Jeff discover that the four-hour work week of their dreams is about to get a lot longer. Stay with us. I'm Guy Raz and you're listening to how I built this. As a business to business marketer, your needs are unique. B2B buying cycles

are long and your customers face incredibly complex decisions. So isn't it time? Hey, welcome back to how I built this. I'm Guy Raz. So it's 2010 and Jeff and Spencer are learning that finding a Chinese manufacturer to make a camping stove is complicated. It's like finding a dance partner is you really need somebody to match your level, match your size, match your stride, match your ambition. So finding that was really just an exercise of meeting a lot of different factories, talking with them, them, understanding the machinery, getting my dumb questions out at the front so that when I

met the next guy, it was a little bit more able to speak the lingo of different machinery needed and different welding techniques and all these different things that were needed to find that right partner. But I found a guy who was making coffee percolators for Europe. He was an engineer by trade and was very curious about what we were trying to do. and it was a puzzle for him that he became pretty obsessed on how do I make this thing if I have to if I have to make this from scratch right how do I bend the metal this way can you bend it this way um and you know perhaps perhaps there I don't know what else he saw on us but um he was willing to say hey let's try this and and when you got that prototype did it did it

do the job yeah it performed and uh was beautiful i mean a flame when it burns using the double wall design that we had in this stove, it's mesmerizing. It looks like there's jets shooting out the side of the stove. And for anybody who uses it for the first time or sees it is just kind of taken back and it's like, what is going on right now? I've never seen a flame burn like that. And that's the feeling that we got when we burned this. And we thought this is going to be awesome.

People are going to love this. All right. So you got this prototype. and you want to start to mass produce it and then create a direct-to-consumer company around it. First question is, how much money did you need to get this off the ground? I mean, because you guys didn't have a lot. Yeah, we didn't have a lot. I remember it's $15,000 we put in.

And that was to do what? That was to get the tooling paid for. It was all we were willing to put at it because we didn't know, guy, if this was going to work or not. Wow. All right. So first of all, you guys, you made the decision to try, you know, to make a go at this. And you call and you decide to call it the solo stove. Where do the name come from?

Yeah, I mean, we literally just sat around thinking of names and really just at the same time searching for what domains were available that we could get. And we had gotten to the point of realizing that a long name, a long drawn out name like China, a business traveler.com is very hard to remember and to type in. And so we always wanted something really short and something that spoke to what we were doing. And we really thought it's the only stove you need if you're backpacking or camping. And it's great for one person. It's kind of a single person size. And so solo kind of clicked on all corners for us. Okay. So you've got the name. And by the way, did you, did you apply for patents for the this product. Yeah, we did. And you create a website, presumably called solostove.com.

That's it. Yep. And the same playbook, the same playbook that you had used for the gardening business and the mattresses, you do AdSense, you buy, you do search engine optimization, the same playbook. Right. Yeah, a combination of creating content that people would search up and stumble upon our website. And what was the content? Like, what were you writing? I don't know if we did a lot of blogging in the early days for it. We actually, we spent a lot of time on making the site look beautiful and evoking emotions. You know, being in the outdoors and camping is a very emotional exercise, and we really wanted to lean into that. We eventually got to the point of buying banners, ads on different sites that we thought were useful.

So eventually then putting it on Amazon, which was a lot of. another source of traffic and revenue. Everything we could think of to bring people to our website. And, I mean, you flipped the switch, right, the proverbial switch, and the website launches. And I mean, is it an instant hit or do people, are people discovering it? What's the, what's the response from anywhere? Yeah. It was quick and fast. It was more than we expected. The first year was about half a million dollars. Wow. In the first year of putting it out there. And how much did the stoves cost you to make? Yeah. The margins were really high. You know, we were in the 80%, 80% margins. Wow. And you also sold them on Amazon, right? That's right. Yeah. And that's where a lot of the sales

really did come from is Amazon. All right. So you've got this product that seems to be taking off, but both of you guys kept your jobs, right? Yeah. Yeah. Yeah. I mean, at what point, you know, if you're doing the first year, half a million in sales, at what point did you, I mean, did the two of you start to say, well, maybe we need to think about this in a bigger way?

Like, what was, what happened to get you there? Yeah. I think for me, it was, you know, it was just being overwhelmed with everything. It's just, you know, we had this. I had this idea of this four-hour work week. That's why we set out to do this. And as things became too much, performance and my day job kind of slipped.

It was a situation where I had a tough conversation with my boss. I called my business partner. I gained some equity in that company I was working for. And that was a tough conversation. I mean, even now it's hard to articulate all the feelings that went into figuring that out and the misunderstanding. and what I should have done maybe. But I never thought any of this would really amount to much.

I thought it would be a great side hustle and why talk about it if it's not going to be a big issue. And the problem was, the bigger it got, the more I was afraid to bring it up to the guy I was working for because now it is an issue. Was he disappointed in you? I mean, did he understand or what? He was upset. He felt like I had talents that maybe a...

I didn't share with him, which I think is understandable. But then, you know, after a night's night of sleep, you know, the next day was a different tone. And it was, you know, a more tone of, you know, you betrayed me. And this was, you know, this, we were supposed to build this together. And in my mind, I was like, this is what I was building with my brother. This was never going to be something that, you know, we were going to create and then bring every, you know, bring him on board. There was just me and Jeff's side gig that ended up blowing up. Wow. All right. So you've got this product, you've got this company, and I guess you guys decide in 2014 to turn to Kickstarter for the next iteration, a larger version of the stove.

And was the idea to go to Kickstarter to generate attention? Because I think you guys, I mean, I'm assuming the cash flow was, was, pretty good. I mean, you guys were probably all of a sudden, both of you guys were making pretty good money. Yeah. Yeah. No, cash flow was good. It was profitable. You know, we didn't pay ourselves anything in those first years because all the money went back into buying more inventory. Yeah. Yeah, we did Kickstarter in Jeff's backyard with our kids, their feet so you can see kicking around in that video. Yeah. But yeah, that was our first foray into Kickstarter. And we did all right. And we were pleased with the results. But once Kickstarter is over, it's back to building our website and selling on Amazon. So, all right. Meanwhile, I think this is around 2013, Spencer, you make a major move. You decide to come back to the U.S. and you settle in Dallas where your brother is. And I guess you're still working your day job for that same company in China.

But Jeff, around that same time, you actually decided to leave your day job, right? Yeah, that's right. Like, I guess you became confident enough at this point that this thing was going to be or was already successful and that you needed to put all of your attention into it. And by this point, it was still just the two of you. Like, help me understand how you were running a business doing close to a million dollars in revenue. you, well, I mean, it's possible to do it. But you had to fulfill the orders. You had to deal with customer service. I mean, you were, you were building a brand, and it was just the two of you? Yeah. I think I knew before 2014 that this was on its way to be more successful than any of

the other businesses. But I don't think my wife had the same confidence. And so I kind of had this plan of, well, if we can get rid of all of our debt, it was basically three things. If I could bring in enough income to allow her to be a stay-at-home mom, and we had, I think, two kids at the time with the third on the way, and we could pay off our mortgage and then pay off our cars. If I could do those three things, then I had permission to quit my job. And so I eventually, met those goals. Guy, just to add more flavor into this,

we had started yet another brand as we were doing solo called Fox Outfitters. Fox Outfitters was a lot of products, but they were in the camping space. So like camping mats, hammocks, stainless steel drinking

cups and microfiber towels. All branded Fox Outfitters. And it was again. Same place. You can go to Alibaba or one of these sites and you can pick the products you want and put your logo on it. That's right. Yeah.

And we would do as much customization as we could to make our own unique styles or bags or sizes or whatever it was. But, I mean, they were very commodity products. And we sold more of that than Solo did all the way. I mean, I don't want to say, I mean, I don't remember when we stopped selling Fox. But probably about 2016, we were selling more on Fox than we were for Solo. millions and millions of dollars of Fox stuff. I mean, we probably, all together, by the time we got to about 2016, I mean, just with those two brands, we were probably doing like $3, $4 million with. Wow.

I mean, so you had, and they were, again, all being handled by third-party logistics, but did that enable the two of you to, to, to, to, to, to, to, to, to, to, to. have a lifestyle job? I mean, I mean, given that, you know, you had these manufacturers of China making it being shipped to the third party logistics center. I mean, did that mean you could just kind of watch the money come into your bank account? Some days it felt like that. There were days of Mondays that we would, you know, go fishing and realize that everybody else is going to work and we're going to the lake. And that felt great. But those days became very few and far between as the business continued to grow. And that quote unquote lifestyle business was fading quickly. Everything between supply chain of fulfillment and customer service we were doing. Every customer service email. It was just a lot. So most of your day was probably taken up by just dealing with customer service emails. Yeah.

Yeah. Guys on solo stove would, they love the product so much. We would, I mean, we didn't take phone calls early on because we tried it once. And people would just call in wanting to talk about camping. and hiking. I was like, you know, old timers that had nothing better to do. And they were great, but you'd get on these calls for 30 minutes and realize like, this can't, this can't happen. We've got to just switch customer service to an email only. Yeah. And for me, it was, it became way too much and I just didn't want it anymore. I mean, there were times where I was

like, the money's good, but, you know, this isn't worth it. And now we were approaching that point. You know, this is probably about 2016 where we have to say, if we want to keep growing, we have to hire people and we never wanted to do that. Why didn't you want to hire people? I personally just had a bad experience with managing teams. I just, I felt like I went through 2008 having to lay off my entire team in a very short period of time. And going through that, I felt like I wasn't a great leader.

I felt like I wasn't the type of person that was skilled at building teams. And I don't know if that's a narrative I just told myself. I think about this time as well, it was becoming more and more competitive on Amazon. And so we were realizing there was a lot more competition. And we noticed that in our sales. And so we had to start making hard decisions as to what direction we were going to go. And I guess the direction you guys kind of landed on in 2016 was maybe, let's see if we can sell our company, our business. Yeah, I mean, that was, there's two decisions, right?

It's either let's get rid of this thing and maybe start again and keep it small and manageable from, you know, we had learned a lot of things. So it's not like we were starting from zero. We would just start another company and make it even better and more efficient or we hire people and get in office. And I remember really just talking about it with Jeff. And I remember him saying that, you know, if we're going to, if we're going to sell this thing, then we should maximize the outcome. But that's what we decided to do is sell the company. So we found some brokers.

We had a friend in this area, in the DFW area, who had sold a company before, and he introduced us to an investment banker, and we found some other investment bankers through some other friends. And we just started talking to them saying, this is our business. And what was your revenue at the time?

Revenue at that time. I think I think was I mean between Fox and Solo I was probably close to about I want to say like seven-ish million bucks Jeff Is that? Do you think that's about right?

Yeah probably Yeah seven to ten or somewhere around there And it was just the two of you Just the two of us And it was really profitable And so that's a super efficient business Yeah I mean profits I remember Between everything we were selling

I think it was I think it was a few million bucks Of profits every year So we started talking with people and said, here's our numbers, here's what we're doing, and here's how profitable it is. Isn't it a great business? Like, are there buyers out there for this? And really, the feedback was, it's like, yeah, we could find one. They're not going to be, it's not going to be a great outcome. And really, your business isn't a business because it's just you two working out of your homes.

But you had a brand. You had solo. That's what we thought, right? It's like, here's a brand, here's a great product, here's websites that we thought were amazing. And we could tell the next person. exactly what we're doing, what buttons to push and how to drive traffic and what to, and we thought that was a very sellable, um, asset. And by the way, what would you, what would you sold it for? Well, I think at the time one of the bankers told us that we could probably get about seven or eight million dollars, um, from, from solo. I think that was the number in my head, my recollection of, you know, carving out just solo on its own, that it was, if you, if you, you know, if you you can build that out to be a real company, then that would be a really attractive company for

someone to buy. So, all right. So you basically, the feedback you're getting is, listen, you know, it's, you don't really have an infrastructure. You don't really have a company. You've got a brand. You can make a little bit of money on it. But it's not really, you're not going to have a lot of people like banging down your door

to buy this thing. Right. Which was hard for me to understand, you know. I thought businesses were all about making money. I thought businesses were all about being profitable. And what we had was something that made a lot of money. It was really profitable. And I couldn't understand why this wasn't something that everybody was

pounding down the door and wanting to buy. And I have a liberal arts degree. So I never understood how M&A works. I didn't even understand the term until we started selling our company. That that was the term you used. And I remember one of the investment bankers we met, we had to borrow an office to even have the meeting because we didn't even at the logistics office. Because we were like, well, they either come to me and Jeff's dinner table or we actually find some place to look presentable.

And that's how far off we were from having a company that was sellable. When we come back in just a moment, Spencer and Jeff start to hire a team out of a new open floor office, a metal table and chairs outside Starbucks. 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 2014, and at this point, Jeff and Spencer want to sell Solo stove. But nobody wants to buy it, at least not until they can build it out more.

So in order to do that, they decide to get rid of their other company. When we realized what we needed to do was build Solo, we focused in and we said, let's just focus on solo. And let's just forget about Fox. So you sold Fox for like pennies of the dollar. Penny's on the dollar is what we did. We really just said, here's the inventory. We'll give it to you for pennies on the dollar. We got introduced to some good guys in Houston who wanted to have a stab at e-commerce.

And we said, hey, you know, this is an opportunity you can go with and run with and kind of get your feet wet. Here's take it for pennies on the dollar and let's just clean up our books. All right. So you realize it now you've got to do the thing that you don't want to do, which is to hire people. And build an infrastructure. Meantime, I think you go back to Kickstarter to launch a new backyard fire pit. And this one does amazing. I mean, you think they're raised over a million dollars on Kickstarter.

I'm curious about, I know they were all patented and you filed, you know, you got your patents and it was trademark and everything. But I'm surprised that there weren't copycats or were there copycats popping up on. Amazon. So in the early days, no. And I think, you know, a big part of that was one, the Amazon rush was starting, but it wasn't in full force. And then two, you know, we were really quiet about things. You know, we did Kickstarter and that was one of the concerns we had, is if people see how much we sell, then there's more likelihood that people will want to copy. But at that point, product development needed to get going. And we said, well, what's next? And that led us to creating bonfire, which was our first backyard fire pit. And the other point of it was

if we could show demand for the product, perhaps we could get interest from retailers, well-known retailers who we know are always looking for a new product. We thought this would be a great resume builder for us to approach a potential retailer like an REI who, if we could get in, that's yet another checkmark on the box of what we need to build in terms of our resume. You thought, Okay, you thought we in order, because now you're focused on how do we sell this company. This was the goal. Yeah. And so one of the ways was Kickstarter.

The other one was now we've got to get into brick and mortar. We can't just be DTC. Sure, a little bit. We just wanted to show a glimmer of hope. Yeah. That retail was an option because when you sell a company, you're selling hope and future and future growth. Yeah. And so I guess the Kickstarter was really what attracted REI's attention, right?

I like to think so. I don't know. You know, in the past we thought about reaching out to REI and talk to some guys who had sold into REI. And yeah, they had explained how difficult it is and how hard it is to pitch them and then you've got to fly to Seattle and all of this. And after hearing it all, I said, you're right. That sounds horrible. I said, I don't want to do that. We're going to stick to selling online. But during Kickstarter, when we were doing that, we were in our first little office, which was no bigger than a shoebox. And I remember Jeff, we saw that email come through from the REI buyer. And, and I was. And I remember, Jeff, we saw that email come through from the REI buyer. And he said he wanted to carry all of our products and we couldn't believe it. Wow. But that was the one thing that I remember getting really excited over. It just felt like validation for all the years of grinding, trying to build a brand, trying to create something unique. I felt like getting into REI was a badge of honor.

And it was such an easy experience. It was just one email, very brief email saying that he wanted to carry all of our products. and we just replied back. Like, there was no meeting. There was no testing. Wow. It just went straight into their stores. Yeah.

And again, in terms of, like, protecting the brand, I mean, you briefly mentioned there were copycats coming onto the market, but not, it never seemed to sort of threaten you guys. How did you avoid that? It never felt like there were big copycats we were afraid of all the way through when we sold the company and even through those early years. I think the key to it was nobody really. understood how much we were selling. It was hard to gauge. And then the second part of it,

it's a very difficult product to create because we had invested a lot into custom machinery with our manufacturers. And so the barrier to entry was much higher than any other Me Too product that somebody could go get. So essentially, when you made this decision that you have to figure out how to turn this into a sellable company, one of the things you had to do was to hire employees, right? Right. And so, and this was something you both resisted doing. So how did you start?

I mean, it's, it's just that. We started putting out job postings. And one of the first girls we interviewed, we had, we told her to meet us at the Starbucks. And we didn't even order anything. That's how cheap we were. We just sat outside at the little metal tables and met this, this young girl who was interviewing for a customer service position. And, you know, we would promise that we will have an office if when this position is filled.

And that's how rough the start was. And we realized from when we tried to sell it the first time that we needed a leadership team. We needed managers in place. And so we could explain to any potential buyers, hey, if we step back and aren't involved in the daily operations, there's a team here that can run the business without us being involved. How was that for you guys to start to train people and essentially become leaders and managers? How did it go? It was an exercise of trial and error.

And there was a lot more error happening in those early days. And I feel really bad to those early employees. You know, we gave it our best effort. and I openly apologize to those that had to suffer through are my inexperience in being a leader. You know, I wish I was the one that could rally the troops and care about every aspect of their personal lives and work wholeheartedly to make them a better person. But it just wasn't me. I was about doing and getting things done. The problem was I wasn't excited to get better at this.

I was excited about the stuff that we used to do. product dealing with marketing strategies and grow the brand and what the brand means. Those were the things that were fun and exciting. We just didn't get to do them a lot in the latter times. But meantime, in the back of your minds, you're always thinking, we've got to find somebody to lead this team. Yeah. And Jeff was the one.

I remember him saying that the root problem isn't our people. It's us. And we need to find somebody to replace us. And so we did. We just started talking with everybody we knew. Yeah. And I guess eventually you landed on this guy, John Maris, but he was not, I don't know, initially you guys approached him to talk about something else like for advice. But I have to assume that secretly you were thinking maybe this guy will come work with us. Yeah, John was a guy who was working at a local company called Claris Glassboards. And so I knew of this company, obviously, and I knew that there were some really capable guys over there.

Yeah, we reached out to John over LinkedIn, really and honestly, just to ask about how to build a sales team. And chatting with him, it just felt like when he left, I kind of looked at Jeff and said, this is a guy that I think could run this thing. He was a very sales oriented, and he was a very energetic guy, really likable guy. And I think it was a matter of weeks, and he was in there taking the bull by the horns. If anything, I felt like we probably let go too fast. We really just, we didn't just hand over the reins. We balled them up into a tight ball and threw it at his face. So what you just introduced John to the company one day and said, hey, everyone, this is your new boss.

Pretty much. That's how it went. But time freedom and financial freedom was all we had our sights on. And anything, any means to that end was acceptable by me. And if that meant, you know, quote unquote handing my baby over to somebody else, I was ready. So the idea was once you brought him on, John, to build a company, 2018, 2019, and then explore a sale in 2020. But it didn't.

It turns out that in 2019, you already started to get some interest from people who started to approach you. Clearly, there were people who had been following your growth. And now there was interest. Yeah, most of it came unsolicited, but yeah, it started to come in and they started to get really attractive. But I remember Jeff and I explicitly telling John, stop entertaining all these inquiries because we'll get them when we're ready to. get them and they'll be there when we run a process and put it on on the market and have that competitive bidding process just grow the business don't worry about selling but um as those inquiries came in they started to throw numbers at us that we didn't ask for and those numbers started really

big and just got bigger to a point where we couldn't turn it down and we couldn't say no it got to a point where you you were being offered in the low nine figures uh valuation in the low nine figures uh for business and and some of these private equity groups were like, listen, you know, and I guess you couldn't ignore it. It was a lot of money. Yeah. I mean, those offers came in and John said, here's what one company said. And I remember it's just saying, we've got to entertain this.

So I think the first, the first, because you would go on to have essentially three exits from your company in a sense. And the first one was when this private equity group bought a majority stake. and you and your brother retained a minority stake. And at that point, this is 2019, what did you guys do? Did you fully disengage from Solo Stove? Yeah, we were ready to be out and to kind of move to a board seat as board advisors. We were, man, I was so stoked to get out and to get to a point where I don't have to go into the office.

I mean, all of that stress I could now shut off and spend time the way I wanted to spend it. So we've moved to board seats. And then the timing is both great and also would get even better because it turns out COVID would be an incredible engine for growing this brand even further. And I think about a year later, a year after the private equity group made that investment. another private equity firm came in with another offer to buy, essentially to buy out a huge part of most of your remaining stake. Yeah, that's right. There was this new group that wanted to come in and buy a majority stake in a much higher valuation well north of what we had just exited for a year ago. Wow.

So they were going to make money and you guys were going to make more money. Yeah, really. That's right. I mean, it was mind-blowing to me that, you know, from being in the low nine figures, just over $100 million, to now being well into the mid-nine figures on this next private equity exit. You know, we would sell less shares than we did the first time, but the rewards were much greater the second time. And I think one of the things that made it much easier the second time was that we weren't involved in the whole process of selling it. Yeah. Which was nice to step back and let other people deal with that part of the business. The company eventually went public in 2021 and you guys had shares. I think you still retain those shares, right?

You old stock, yeah. That's correct. We didn't sell any stock at the IPO. That IPO was truly an IPO where new stock was issued. Yeah. So it wasn't a liquidity event for us. And you guys today are completely not a. involved with a company at all. You have no connection to it. Yeah, other than we own an equity

stake. Yeah, and we own shares of the public company. From an operation standpoint, we're totally out. It feels great to say it. I mean, we don't, we don't do anything with a company and hardly hear from them these days. What do you think, Spencer, what do you think, I mean, you've got a long life to live? Do you see yourself starting another business? I mean, what do you see yourself doing with the rest of your life and how will you keep yourself occupied? I know that some people are going to hear this question. What do you mean, guy? He's going to go running every day and go to the gym and do yoga classes and be involved in this church and go on vacation. But I don't know. There are a lot of people who I've interviewed on the show hundreds who are multi-millionaires,

billionaires, who don't stop working until the day they die because it gives their lives meaning. And I understand that. I, I, I, I, uh, work is also, can also be incredibly fulfilling and meaningful. And I wonder if you see that in your future. Yeah, I think fulfillment's the right word. And if that takes me down a road of starting something for whatever reason, then I'll never say never. Um, and at this current stage in my life, the most impact I can make, uh, I think is with my family. is with my kids and making sure that they grow up with a father at home, with the support of parents. And until I finish that task, I don't think I'm super hungry right now to start something that would take me away from doing that. What about you, Jeff?

Well, I think one of the important things in life is to know when you have enough. I don't necessarily look at work as working at a job to make money or get a paycheck, but there's all sorts of different types of work where there's work at home that parents do all the time. And I'm trying to be better at that. There's work inside your community that you can do, work at our church. And I don't see starting a new company right now. but I'm not going to say I won't later on. When you guys think about your journey and, you know, where you've been and what happened, how much of what happened do you do attribute to luck and how much do you think has to do with the hard work and the skill that you have?

For me, I think luck is definitely a huge part of our outcome. And the paradox is, as I think about luck, right, is something you can't control. you have to realize that it's a part while at the same time working as if it doesn't matter. I think it helps you not pat yourself on the back too hard when things go right, while at the same time not getting too hard on yourself when things don't go right. Some things are just out of your control, and luck is definitely one of them. Jeff? I think the older I get, I'm not sure if I believe in luck as much,

but I definitely believe that there's something out of your control, some sort of, you know, divine help. All of the important things that have happened in my life, including starting this business with Spencer and meeting my wife and having kids and all of those other important things. I don't really consider as luck, but as things that I was blessed with. I certainly think Spencer and I both worked very hard at it, but I think we both acknowledge that there's something that was beyond our control that definitely helped with this. That's Jeff and Spencer Jan, co-founders of Solo Stove. By the way, remember how years ago they sold garden closures, those little tent-like things that protect plants from frost? Well, it turns out that business is still a wide open frontier. In fact, the domain name, Closh.com is currently on sale for $120,000.

Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's totally free. This episode was produced by Carla Estevez with music composed by Ramtin Arablui. It was edited by Neva Grant with research help from Casey Herman. Our audio engineer was Co. Takasugi Chernivan. Our production staff also includes J.C. Howard, Sam Paulson, Liz Metzger, Alex Chung, Elaine Coates, John Isabella, and Chris Messini. I'm Guy Raz, and you've been listening to How I Built This.