Starting a business is hard enough. Try launching and building an entirely new global sport. That’s one heck of a challenge. But when you have a good idea, a product, and an organic way to connect with people, it’s actually possible.
Chris Ruder is the CEO of Spikeball, and he initially thought his little business would be a fun side hobby. The company idea even started off with the age-old question, “Wouldn’t it be cool if..?” But within five years, that little business with zero employees was earning $1.5 million in revenue and attracting attention around the world. That didn’t happen by magic, though, and on this episode of Up Next in Commerce, Chris and I dug into scaling a company by asking the questions you think are dumb — including to your own customers. For Chris, simply asking, “How did you find out about us?” was the turning point to finding an audience and then nurturing it so that it grows in the most organic way possible. He also gave the inside scoop on his Shark Tank experience, and why he encourages other entrepreneurs to take advantage of that opportunity if they are ever presented with it. Plus, Chris explains how he’s been navigating the supply chain issues, including by finding new ways to expand the company beyond just physical products. Enjoy this episode.
Main Takeaways:
- Ask The Dumb Questions: Many new founders come into an industry with questions that may seem dumb or obvious, but they need to be asked. Find people around you who can help guide you or inform you so that you can continue making the right moves without having to backtrack. This includes asking questions of your customers. Ask them what they think, how they found you, and what made them click “buy.”
- Set Customers Up To Be the Hero: When you engage with customers, you can offer them the opportunity to be your ambassador, but in the most authentic way. Work with them to develop their own community and following, set them up to be the hero, and in turn, you will see more organic growth and brand love than simply paying people to promote your brand for you.
- The Shift to Stuff: The last two years have seen a major change in how people shop and what they shop for. Consumers have moved away from experiences and moved toward buying more stuff to fill their time and satisfy their itch. CPG companies have been forced to supply more than ever, and the logistics and supply chains have suffered as a result. Work with your vendors and shipping partners to find more creative solutions, and try to find additional ways to bring manufacturing closer to home — even if that means adding different kinds of goods and services to your product portfolio so that you are not beholden to the supply chain.
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
Key Quotes:
“We did the thinking thing for a couple of years and I think that’s what most people do with an idea. You think about it, then you begin sentences with, ‘Wouldn’t it be cool if,’ or ‘We should that,’ and you do nothing. And then, whether it’s a few weeks or years later, you see that somebody else launched it and you’re like, they stole the idea.”
“When I launched it, I didn’t think in a million years it would be big enough to employ me full time, let alone 40 other people like we have now, I thought it’d be a fun hobby.”
“I couldn’t have been more ill equipped to start this, but I think my background and lack of experience did give me the comfort in asking the dumb questions or what people that know better would consider were dumb questions.”
“Let’s say you had ordered one for me, I’d reply to the order confirmation and say, ‘Hey Stephanie, thanks for buying a spike ball set. I’m going to be dropping your set off at the post office tonight should arrive there in about two days or so. I see you live in Austin. What a beautiful city. By the way, if you don’t mind me asking how’d you hear about Spikeball?’ And that last question turned out to be just absolute gold.”
“I had identified that there was a fire burning within [certain] communities, and said alright, how can I pour gas on this fire? So I started giving free sets to PE teachers saying, ‘Oh, do you know of any other PE teachers at other schools?’ ‘Hey, ultimate players, how about I sponsor your team? And I’ll give you guys a bunch of free sets and you have to give a free one to your favorite opponent at every tournament you play.’ And these are college ultimate teams and they’re playing at the tournament, so now tons of other college students at all these other colleges are seeing our product and the cool thing was they’re not seeing it from me, somebody that works for the company that’s out there that has this ulterior motive trying to sell you something. It’s from one of their peers. And that I think was pretty critical.”
“We don’t need Spikeball to be in the spotlight. If we are, great, but that’s not the goal. We want to work with the leader in whatever community and how can we help he or she develop their own community in their hometown and make them the king or the queen? We’ll give them free equipment. We’ll give them whatever support we can.”
“We’ve been talking about how can we make more money from non-physical goods? Right now nearly all of our revenue comes from selling a physical product. And if it’s not a supply chain issue, a couple of years ago it was tariffs. If you think of how many things have to work perfectly to start with a pile of plastic pellets in China and have that eventually turn into a beautifully manufactured product that lands at a warehouse south of Chicago, so many things have to happen perfectly between them.”
Bio
Chris Ruder is the founder and CEO of Spikeball, which sells gear for the sport of round net. Round net and Spikeball have grown in popularity in the last decade and now reach a global audience of more than four million players.
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Transcript:
Stephanie:
Welcome back to another episode of Up Next In Commerce. I’m your host, Stephanie Postles, CEO at Mission.org. Today on the show, we have Chris Ruder, who’s the CEO of Spikeball. Chris, welcome to the show.
Chris:
Happy to be here, thank you Stephanie.
Stephanie:
Very excited to talk all things Spikeball. I actually just found out about Spikeball when I moved to Austin in January so I feel like I’m really behind the curve. But for anyone who’s like me, what is Spikeball? How would you describe it?
Chris:
The most common description I hear is it’s that weird trampoline game you saw people playing at the park or beach. In Austin more often than not I believe it’s Zilker Park, I heard tons of people play there. Yeah, it looks like a mini trampoline almost, but you don’t jump on it. You’ve got an inflatable rubber ball and you play two on two, it’s a game that you volley back and forth. A lot of similar traits to volleyball, but rather than hitting a ball over the net, you spike the ball onto the net and two teams, each team gets up to three hits just like in volleyball, and when you hit it on the net towards the other team, it’s now their turn to use their three hits to get it on and if you can’t get the ball on the net the other team gets a point. First team to 21 wins. So usually that description confuses more people, so relying on the internet to looking at an image usually works a lot better.
Stephanie:
Yep, yeah. We were playing it, my neighborhood had a little street party and one of the women brought it out and I was like, “What is this?” And my three-year-old was trying to play and he just kept stealing the ball and after a while I got the hang of it but super fun. When was the first time you experienced Spikeball in your life?
Chris:
- Which seems like 100 years ago. But I was 14 at the time and lived in a town called Kankakee, Illinois which is about an hour south of Chicago and some of my brother’s friends actually bought one at a toy store, brought it back to the neighborhood and they played a bunch, I was sort of the young annoying brother, so I wasn’t really allowed to play with them, but it looked cool. Played a little bit then and from what little we knew, the original company that launched it launched it in 1989 but killed it in 1991. So it had a very brief first life and then my brother, those friends and I kind of kept playing on and off over the years and then eventually, whenever we’d play, people would ask us about it and, “Oh, cool game, where can I get one?” Finally the light bulb went off and I’m like, “Huh. I wonder if we can bring this thing back to life.” So that’s what we did.
Stephanie:
[inaudible] were you working in a corporate job and were you ready to kind of go on your own or was it more just like, “Oh, that’s a cool idea. I’m going to sit and think about it for a long time.”Chris:
Well, we did the thinking thing for a couple years and I think that’s what most people do with an idea, right? You think about it, then you begin sentences with wouldn’t it be cool if or we should … and –
Stephanie:
One day.
Chris:
Yeah, and you do nothing and then whether it’s a few weeks or years later, you see that somebody else launched it and they’re like, “Damn, they stole an idea.” So we definitely did that for a couple years and then finally I was like, “All right guys, enough of the talk. Let’s go ahead and see if we can give this thing a shot.” To answer your question yeah, by that time, that was 2007 when we incorporated, and at that time I believe I was working for the Xbox division of Microsoft, so advertising sales is kind of what I did for about 10 years, and they were pretty cool jobs but I wasn’t that into them. Xbox, pretty cool stuff. I worked for Live Nation for a couple of years, so sold advertisements around concerts and music artists and stuff. But they were essentially jobs. They paid well, people were nice enough, but I wasn’t really that motivated. So when Spikeball came around, the big difference for me was … I was like, “Wait, I’m actually making decisions here. I have a say in the general direction of where this thing goes.” That was intoxicating to me. It was a very new thing. Working at these gigantic companies and being on … I was essentially a lower level salesperson, I didn’t have a whole lot of autonomy and I didn’t really know control, but yeah, I did with Spikeball, so …
Chris:
When I launched it, I didn’t ever think, I didn’t think in a million years it would be big enough to employ me full-time let alone 40 other people like we have now. I thought it would be a fun hobby, and that’s what it was for the first couple years and then it kept growing and growing and like, “Oh my god, like this is kind of a real thing now,” so …
Stephanie:
It’s a business.
Chris:
Yeah.
Stephanie:
So when you were even first exploring this idea, because now my mind is racing, thinking like, “How many other things existed in history that just kind of failed but could come back?” Like what did it look like to take a product that had already been out in the world, like was there patent issues, was their old founder still wanting ties to it? What did that look like?
Chris:
Yeah. We’ve talked to the attorneys and they said the trademark had been expired for 10 years or something like that, so nobody owned the name Spikeball. All you had to do was file for the trademark and I think that cost us $800.00 or something. There never was a patent that protected the product itself. So the attorney’s like, “Yeah, you guys can do what you want.” This was 2007, the original product was pulled or killed in 1991. So that’s what, 16 years of nothing. So nobody in the world, very few people had heard the word Spikeball when we came around and relaunched.
Chris:
We did talk to the guy that invented it and had brief conversations around doing something together and nothing really came of that, so me, my brother, my cousin and those other childhood friends all chipped in. It was a total of about $100,000.00, $110,000.00 all in, and incorporated, spent the $800.00 for the trademark and yeah. We decided I was going to be the one that was going to be running it so they all were essentially silent shareholders, so I kind of ran it on my own and knew nothing about starting a business, sporting goods, manufacturing overseas and I have a degree in photo journalism. Talked my way out of most business classes in college, so was not more … I guess by the traditional sense I couldn’t have been more ill-equipped to start this. But I think my background and sort of lack of experience did give me the comfort in asking the sort of dumb questions or what people that know better would consider were dumb questions, so … Yeah.
Stephanie:
So you said the first couple years were a little bit slow. What were you doing behind the scenes to kind of start ramping things up? Because when you look at it now and like you said, you see it everywhere, there’s leagues, there’s a ton of players, it’s very competitive, very intense players at least here in Austin. What were you doing to kind of create that scale and excitement around the game that didn’t exist before?
Chris:
Yeah. I mean going way back to our launch day, I think it was June 14, 2008, friends and family down at North Avenue Beach in Chicago, beautiful beach right on Lake Michigan and very high foot traffic area, a bunch of people running by, going by on their bikes, et cetera, so we brought a bunch of Spikeball sets down there for the afternoon. I literally brought a clipboard with a pen and anytime somebody would stop and kind of give the weird look and you could kind of read their lips and they’re like, “What is that trampoline game?” I’d walk up, I’d introduce myself, “I just launched this company, I got this thing Spikeball. Why don’t you come and play?” It was like a million turns of that flywheel. We finished year one at … I think revenue was $10,882.00, if I remember right. I had nothing to compare that to, I was like, “I think it’s good. It’s $10,882.00 more than we started with.” Then the next year I think we were $18,000.00, then the next year $45,000.00 and the year after that I think we were over $100,000.00 and by year five we were at $1,400,000.00 with zero full-time employees.
Stephanie:
Okay, that’s a big jump from 100 to 1.5, so what happened then? I mean it seems like you were doing a lot of things that weren’t really scaling which is what a lot of companies should do in early days of trying to spread the word, get the excitement, going to the beach. What did you do between those two years though to kind of elevate the sales like that?
Chris:
Well it went, 10, 18, 45, 100, 475, and then yeah. So it was –
Stephanie:
Still a big jump.
Chris:
Yeah, we had a couple years there, three or four x. But to answer your question of what was I doing, I guess typical day was go to the day job, come home, hang out with wife and kids, they go to bed around 8:00 or 9:00, Spikeball work begins around 9:00, and then back then, our “warehouse” was my basement, so around midnight is when I would do shipping. So go down to the basement, grab one or two boxes, depending on how many sets I had sold that day. Slap a label on it, drive at midnight to the post office, there’s a late night post office not far from my place, drop those off, come back to the house, work until … I keep working until 1:00 or 2:00 in the morning, go to bed, go to the day job, same thing.
Chris:
One thing I was doing that I think did allow us to grow so fast in those early years was all of our sales were at spikeball.com back then. We were not in any retail stores. I don’t think we went on Amazon until maybe year four, year five, something like that. So I emailed nearly every single customer that purchased from us. So let’s say you had ordered one for me, I’d reply to the order confirmation, say, “Hey Stephanie, thanks for buying a Spikeball set. I’m going to be dropping your set off at the post office tonight. Should arrive there in about two days or so. I see you live in Austin. What a beautiful city. By the way if you don’t mind me asking, how did you hear about Spikeball?” That last question turned out to be just absolute gold and I wasn’t asking that because I was such a smart marketer, I was genuinely curious because most of our first sales were people with the same last name as me or friends that I knew, what I sort of consider pity sales, like, “Oh, Chris started this company. We’ll buy one just to be nice.” But when I started seeing people from all around the country buying it, I was like, “How in the heck did somebody from Austin hear about?”
Chris:
So I started asking people how did you hear about it, and I identified three groups that I never would have considered before. The first was PE teachers, and they were way into it because the price point of $60.00, they love it and they can make up their own games using the equipment. I heard from ultimate Frisbee players, I don’t know how the seed got planted in the ultimate community but –
Stephanie:
Yeah. Who was the influencer there?
Chris:
Don’t know, but I owe them a beer or a cup of coffee.
Stephanie:
Yeah.
Chris:
I heard from so many people. “Yeah, I was at an ultimate tournament and I saw it,” or, “My buddy that plays ultimate told me about it.” Then the third group was faith-based youth groups. Again, no clue how that happened, but within that group, I heard from a lot of people at Young Life, and I had never heard of Young Life before, so I googled it and I learned that it’s this gigantic worldwide high school Christian group thing, and they all get together once a week in their local chapters and have some sort of group activity and it was quickly becoming Spikeball, so …
Stephanie:
That’s cool.
Chris:
With each of those, once I had sort of identified that there was a fire burning within those communities, like, “All right, how can I pour gas on this fire?” So started giving free sets to PE teachers saying, “Oh, do you know of any other PE teachers at other schools? Hey ultimate players, how about I sponsor your team and I’ll give you guys a bunch of free sets and you have to give a free one to your favorite opponent at every tournament you play,” and these are college ultimate teams, and they’re playing at the tournaments and now tons of other college students at all these other colleges are seeing our product and the cool thing was they’re not seeing it from me, somebody that works for the company that’s out there that has this ulterior movement trying to sell you something. It’s from one of their peers, and that I think was pretty critical and the Young Life sets, when we’d send out free sets, we’d say, “Hey, this is compliments of this other Young Life group. They thought you would like it.”
Chris:
So that I think … Because when I launched the company, again knowing nothing, I was like, “Okay, it’s sports, it’s probably going to be younger folks, so 18 to 34-year-old males is probably our target.” Coca-Cola doesn’t even have a marketing budget big enough to go after a target that wide. I just didn’t know any better, but asking that question, I was able to identify these smaller niche groups and that I think gave us a bit of a turbo boost to keep going, so …
Stephanie:
That’s great. You were tapping into all the things people talk about now, like personalizing the email, I see you’re in Austin and then asking where did this come from, I love it, and then also the piece around essentially setting your customers up to be the heroes by saying, “Oh, this gift is coming from someone else.” You’re stepping back and not even kind of being in the arena and letting the customers kind of talk to each other which I think is brilliant and a much more organic way to kind of spread [inaudible].
Chris:
Absolutely, and organic, we hear that a ton. The highest compliment I can receive, and we do hear from time to time, is when people just tell us how authentic our brand is. I’ve shared this with others in that I don’t necessarily … We don’t need Spikeball to be in the spotlight. If we are, great, but that’s not the goal. We want to work with the leader in whatever community and how can we help he or she develop their own community in their hometown and make them the king or the queen. We’ll give them free equipment, we’ll give them whatever support we can, and that usually shows up in the form of somebody starting a club at high school. Somebody starting a club in college or people running tournaments. We as a company, we run a couple dozen tournaments per year. We just had our national championship a few weeks ago, had almost 1,000 players there which was just insane.
Stephanie:
Wow. That’s awesome.
Chris:
But if you look at the number of events we host versus how many just happen total, it’s a tiny percentage. And I love that, I want the community to have that ownership and I want them, I want local leaders developing everywhere and how can we stay in the background but help them build this big thing? So that’s our general approach and knock on wood, it’s been working so far.
Stephanie:
Yeah. That’s great. So I mean when thinking about letting the community kind of run these tournaments and kind of getting into the community, do you have guiding principles to kind of help them get started? Because I could see if there aren’t really some core themes to stock with, all of a sudden there’s a thousand different ways to play Spikeball, people are going to different communities and being like, “That’s not how you play.” So how do you set up the leader of that community up for success so then it spreads in a way that’s true to the brand and the actual game?
Chris:
In the early days when we’d host tournaments and we’d have people from the West Coast flying to the East Coast and vice versa, there were definitely very uneven rules. Not uneven but inconsistent. West Coast guys, there was a tournament at Harvard and their rules around serving were wildly different, so lots of confusion. We standardized a lot of that, but again it wasn’t me and some other employees sitting in a room, just determining what the rules are going to be. We’re in the room but we’re in the room with players and other community members and saying, “Hey guys,” and kind of debating and going back and forth, saying, “Here’s what we think it should be. What do you think?” So it’s done together. I don’t want, especially around rules of this sport, I don’t want the company demanding or making these changes. I want everything to be done in conjunction with community, so we do have … There are official rules to the sport. We’re way more formal today than of course we were years ago. Spikeball is the name of the company, the brand, but it’s actually not the name of the sport. The name of the sport actually is roundnet.
Stephanie:
Oh really?
Chris:
Really, round net, right? So Spikeball is a company that makes equipment for the sport of roundnet. With that said, most people think, and they say, “Oh yeah, I just played Spikeball.” It’s like, “Well you actually played roundnet using Spikeball equipment.” Most people don’t know that, and I had to come up with the term roundnet because if we kept using Spikeball the way it was, it would become a generic term and if it became a generic term we would lose the trademark and now that’s much more difficult to … I learned this through speaking with a woman named Mary Horwath, she used to head up marketing at Rollerblade, way back in the day in the eighties and nineties when they were first blowing up and she’s the one that came up with the term inline skates, inline skating because people were using Rollerblade in a generic fashion. So she’s like, “Chris, get ahead of this early. Just like the name baseball or basketball, right? Nobody owns the name to that word. It’s generic and everybody can use it.” We had to do that because the vision of our company is to become the next great global sport. Okay, if we wanted to become a big legitimate sport, it needs to have a generic name.
Chris:
So with that said, there is the IRF, which is the International Roundnet Federation, there are a couple dozen countries that are members of that. There is a board for it, it is a legal non-profit. But then there’s also the Spikeball Roundnet Association which is what the company is involved in and we will sponsor different groups, sponsor different teams, tournament directors, et cetera. So trying to build this entire ecosystem around this new sport. Spikeball is sort of the … Not sort of, it’s the biggest company supporting it. We’re starting to see smaller companies like some people are developing apparel brands around roundnet, others are creating training videos and stuff like that. So I’m hoping it will, this entire ecosystem will build up and we all will sort of build businesses together. But it’s a lot, but it’s fun.
Stephanie:
That’s so interesting. I mean when you think about big brands kind of like Google, everyone wants to be that where it’s like your company is so amazing that it’s used in everyday language, but I never actually thought about the implications of does it become generic, then you lose all your ability to defend the brand. That’s really good, I feel like that’s the first time I’ve ever heard this, so you’re spreading your knowledge and it will help everyone listening which I love that.
Chris:
Yeah. I was talking to … I forget his exact title, but I think it was like the lead attorney at Crossfit and this is years ago, but he’s telling me, he’s like, “We spend an ungodly amount of money every year defending our trademark.” Because a lot of people think Crossfit is a sport and they use it in a generic fashion. So they unfortunately have to sue Crossfit gym owners for using it in an inappropriate fashion and now they’re making it work. Crazy successful company, but yeah. He was like, “Be careful, because if you do it wrong, it can really come back to bite you,” so …
Stephanie:
Wow. What a great lesson to learn early on. You can avoid those legal costs.
Stephanie:
So guys went on Shark Tank, I think it was around 2015 or so?
Chris:
Yep. Yep.
Stephanie:
Okay. I want to hear about that because we’ve had a couple other companies on the show who have been on there. Everyone has different experiences. Some people got offers, some took them, some didn’t, some didn’t get anything but lots of exposure. I want to hear a bit of the behind the scenes of like what was that like for you?
Chris:
Yeah. It was a fantastic experience. Any time I get a call from an entrepreneur saying I’m thinking of going on or thinking of applying, my answer is always yes, go for it. We did do a deal on the show. Did it with Daymond John, but the deal never closed. So we spoke a few times after filming and never quite saw eye to eye on general future of the company and that was fine, there was no hard feelings. But yeah, it was an amazing experience.
Chris:
The tricky part was we filmed in … I think it was like October of 2014, but we didn’t air until May of 2015. So we were the final segment –
Stephanie:
You know that? Like did they tell you it’s not happening until then?
Chris:
No, so after you film, the producers, as you’re leaving, they say, “Hey, thanks. We thought it went great or whatever, and if your episode is going to air, we’ll call you two weeks before it airs and if we never call then it’s not going to air. But you filmed this season Chris, so if it’s not in this season, it’s never going to air. So it’s not like it will go to the next season.”
Stephanie:
Okay.
Chris:
But what that means is if you’ve only got two weeks to prepare, and it takes us 90 to 100 days to get our product from the factory. So we need an insane amount of inventory to prepare for what could just be a windfall les. So our warehouse was just bursting at the seams for those seven, eight months for an event that we never knew if it was going to happen or not.
Stephanie:
Oh, so you were preparing. You’re like, “We are going to air,” and you were preparing your warehouse for it.
Chris:
So obviously after we finished filming, I knew that we had done a deal. But just because you’ve done a deal does not mean you’re going to air. The only people that care about the quality of your actual business are the sharks. The only thing that producers care about is were you entertaining. So if you get a deal done but you were the most boring person in the world, you’re probably not going to get on air.
Stephanie:
Yeah. Did you know that before going on and did you prepare yourself to be entertaining?
Chris:
I can’t tell you how many episodes I watched. I talked to a handful of people that had been on it before and did know, like usually the people that just get eaten alive by the sharks, those are usually people that … It’s not that they have a poor business, it’s that they didn’t prepare for the show. Like either they didn’t know their numbers or sometimes people are just jerks, they just show up and they’re way more arrogant than they should be. So I wanted to make sure I knew my numbers, I knew I had a rock solid business. Even before Shark Tank, we were already skyrocketing, we were profitable, so I was like, “All right. Even if things go terrible, we’ll be fine.”
Chris:
But yeah. I was so nervous about the memorized part. Right when the entrepreneur walks … Here’s another thing. Right when the entrepreneur walks through the doors and you see them walking out, that’s literally the first time they’ve seen the sharks. So when I flew out there, I assumed that I don’t know, probably meet the sharks before we film, maybe have a cup of coffee backstage, and then we’d go do the thing. No, they want that element of surprise and it makes sense, but the producers are like, “All right, as soon as you walk through the doors, you’ll see an X out there, so just stand there, and you have to stand there in complete silence for a minute or two while we get the audio and lighting and everything set up.”
Stephanie:
Wow. Awkward.
Chris:
Awkward in all caps. I mean you’re standing there with just your arms by your side and you’re maybe 12 feet from the five sharks that are just facing you in complete silence. I mean even doing that with a good friend of yours is awkward, right?
Stephanie:
Yeah. Weird, yep.
Chris:
Let alone five sharks. So the one or two minutes felt like it was about six months. Then finally somebody yelled action or go or I don’t know what, and then I had to do the memorized part and in general I’m terrible at memorizing things.
Stephanie:
Yep. Same.
Chris:
But I can’t tell you how many times I had practiced the pitch and I literally recorded it and that was what I listened to on the drive to and from work. It was myself and we had four others. They played a couple points but they weren’t talking, but the night before, we were out in the parking lot of the hotel until about midnight practicing our entrance, practicing my pitch and once the pitch was over and we got to Q&A, that’s when I was able to exhale and I was like, “All right, I know my stuff. I’ve got a great business. I can now be confident.” And yeah, it was a great experience. We still get re-runs to this day. Like it was six years ago that it aired and re-runs are airing all over the world. Like a year or two ago, we get emails from retailers all over the world … Not often, but maybe a couple a week saying, “Hey, we’d like to carry your product.” And in one day, we got five separate emails from retailers in Norway. I’m like, “That’s weird. What’s going on in Norway?” It turns out Shark Tank had run the night before. So it’s –
Stephanie:
The gift that keeps giving for years and years.
Chris:
Exactly, exactly.
Stephanie:
That’s the definition of good evergreen content right there, some content marketing. So thinking about today’s landscape, I’m guessing like you said, it runs [inaudible] Shark Tank and any other initiatives you’re doing. You get some pretty big spikes in orders. What are you doing behind the scenes because I’m hearing from a lot of my guests of course around all the logistics and supply chain issues and what are you doing when your spikes sometimes might not … You’re not prepared for reruns to give you big orders?
Chris:
Yeah. The unfortunate thing that we’re doing right now is spending a lot of money. We used to pay pre-COVID, we’d spend maybe around $5,000.00, I think it was maybe $5,000.00 or $6,000.00 to get a 40 foot steel container from China to our warehouse in Kankakee, which is just south of Chicago. $5,000.00, $6,000.00. We’re now paying about $28,000.00 for that same container. So multiply that by however many hundreds of containers and holy smokes, that is just painful.
Chris:
So we’re making it work. We’re having to really increase our financial skills in sort of managing cash flow. But we’re talking with a lot of our customers about doing more FOB, freight on board, where they take the freight in China as opposed to us being responsible to bringing it to the U.S. and then getting it to them there. We’re also exploring, “Okay, can we make the box smaller so we can fit more units on a single container?” We’re such a small company, we do not have the leverage to demand better pricing or it was laughable, one of our retailers suggested recently that we see if we can contract an entire ship in order to get better rates. What world are you living in that you think we can just … Home Depot does that, Walmart does that, absolutely. But Spikeball? I guess I should be flattered that they thought that was realistic, but –
Stephanie:
Yeah, that’s nice. I mean can you partner with big retailers on that and be like, “Hey, get my stuff over here?” Like if you’re selling at Dick’s or something, be like, “Can you help with this instead?”
Chris:
Well that’s what … They actually want that. So that’s what I was mentioning earlier, that FOB. So some of the … It’s only the larger retailers that are actually sophisticated enough for having the capabilities to do that where some will literally pick it up at the factory and if you think of Walmart, what they’re paying for a 40-foot container, I have no idea what they’re paying but I’m assuming it’s an absolute fraction of what we’re paying. So it’s better for both of us. We can charge Walmart less if we don’t have to pay that $28,000.00 for a container. So yeah, with the pricing of the containers and everything else, with … I’m hoping we’ll start to see some connects in things coming back to normal. I don’t think we’ll ever get back to a $5,000.00 or $6,000.00 container, but spending way more time on freight and logistics than I ever thought we would. I don’t know, it was interesting. Like I read an article a few months ago saying that a lot of the supply chain issues are due to huge spending … Changes in spending habits for Americans. So pre-COVID, we spent a lot of money on going out to restaurants, going on vacations, and a lot of service-based businesses. COVID hits and everybody’s stuck at home and we’re now all buying stuff.
Stephanie:
Yep. Workout stuff, sports stuff, all the things that you’re in. Yep.
Chris:
Yes. And where does all that stuff come from? It all comes from China. And yes, to your point, what kind of stuff? The number one industry that saw the biggest benefit from COVID was outdoor recreation. So last year was fantastic for us from a top-line perspective. This year and last year, the bottom-line though was like, “Okay. Sales are growing at a pretty amazing clip, but we need to figure out how to do it in a profitable fashion.” We’re a bootstrapped company, independent, very proud of that.
Stephanie:
Yeah. So I mean when thinking about what’s happening right now and a lot of businesses like yours are adjusting to kind of find new partnerships and ways of getting the products here. Do you think that in a year or two things will maybe be back to normal and people will have to kind of like unravel the new plans that they just created or do you see a lot of companies kind of bringing things back to the U.S. Because I hear about all the issues and I’m like, “Man, I know it’s hard to get manufacturers here who will build what people want, but it seems like a lot to deal with getting stuff from overseas,” and if that lasts, maybe you just need a new plan altogether. What are your thoughts?
Chris:
So yes, we are talking to U.S. manufacturers and we have been talking to them for a few years now. We have not been able to get the numbers to work. I think we’re getting close on one right now, and it wouldn’t necessarily be for the whole portfolio of everything we make, but it would be for a new product. And who knows. Maybe that could grow into them making more of our stuff. I’d love that because yeah. Just all the supply chain stuff right now. I also love the idea of … And we’ve been talking about how can we make more money from non-physical goods? Right now nearly all of our revenue comes from selling a physical product, and if it’s not a supply chain issue, a couple years ago it was tariffs and it takes a lot. If you think of how many things have to work perfectly to start with a pile of plastic pellets in China and have that eventually turn into a beautifully manufactured product that lands at a warehouse south of Chicago, so many things have to happen perfectly between then and we are dabbling in the software world.
Chris:
We have this tournament management software called Fwango where a lot of the tournaments, whether we host them or independent directors host them, they used to be run on Google Sheets or an Excel spreadsheet and you needed a lot of volunteers for tournaments and if you drew up the brackets and then one team didn’t show, you’d have to redraw the whole thing and it was a huge nightmare. This Fwango software makes it so easy. You need a fraction of the number of people to help run it, it has all these bells and whistles and we’ve been wondering, could this be used for other sports as well? And we’ve been talking to people in other sports that are sharing some frustrations around tournament management software, so …
Stephanie:
That’s smart.
Chris:
I don’t know. There may be a thing there, but even before that came around, I was challenging the team saying, “Guys, right now, all of our money is coming from a physical thing and most companies that make a physical product, when they say they want to diversify, they usually make some other physical product.” And I imagine we’ll go that route, but I absolutely want to go the softwares route as well. Like I’m very jealous of software margins, and just seeing what a lot of these guys are doing, so if we could balance that out, and that could be a significant portion of what we do, that would just be a wonderful hedge against $28,000.00 containers.
Stephanie:
Yeah. What about playing the game in VR or sports betting or that’s my two ideas right now? That’s all I’ve got.
Chris:
You’ve been listening to some of our meetings, haven’t you?
Stephanie:
Yeah, I had prepared for this interview. Been on all your board meetings. But yeah, I could see that being huge. Like why … If you don’t have to go in person and can play online, it seems like that space is really … I mean hearing about all these virtual communities popping up and people buying virtual land, it seems like in the next 10 years, people are going to be leaning heavily into that world. I don’t fully get it yet, but I feel like it seems like it’s growing exponentially.
Chris:
Yeah, yeah. Whether it’s VR, whether it’s betting, we’re having some internal chats around NFTs and crypto and is there something we can do there. We come out with some limited edition products a couple times a year, so maybe if you buy an NFT, you get first look at those. Maybe you get a VIP treatment at some of our tournaments. Not exactly sure, I think there’s something there, but not exactly sure what it is yet but could be fun.
Stephanie:
Cool. I love that. Yeah, that’s exciting. I’ll be watching on the sidelines and listening. Just kidding. Well where do you guys want to be over the next one to three years? Like what are you most excited about right now?
Chris:
I’m trying to be excited about our challenges with supply chain and finances. I am confident that we’ll figure it out. I am confident we’ll be a hell of a lot stronger in one to three years once we have this figured out. But right now it’s kind of hard to be excited about it, but we’ll figure it out. I am excited, we had to cancel our tournaments for a little over a year and that was a big bummer. That’s the best place to see our community in action, just hundreds of people if not thousands of people together, so we were supposed to have our world championship, first ever world championship was going to be last year, we had to cancel it. We were going to have it this year, we had to cancel it due to COVID. So I’m hoping we’ll do it next year. It’s most likely going to be in Belgium.
Stephanie:
Okay. Cool.
Chris:
We had it scheduled last year and by the time … We actually opened registration, thinking it was going to happen and I think we had like over 20 countries registered for it. Then COVID went in full force, so we had to cancel it, but whether it’s an event like that or more of our events on ESPN, so a lot of our tournaments are showing up on ESPN now and continuing to march toward sort of the legitimization of the sport.
Chris:
This morning a friend of mine sent me a clip. You know the show of Squawk on the Street on CNBC?
Stephanie:
Yep. Yep.
Chris:
Somehow David Faber this morning started talking about how he stumbled on a Spikeball net on the beach or something.
Stephanie:
Wow. Here comes more sales. Thanks David.
Chris:
Right? Yeah, just so many bizarre references like that. So yeah, I got an email from a guy this morning saying, “Hey, we’re getting ready to plan some JoJo Siwa tour all over the U.S. and Europe or something. Let’s see if we can get Spikeball involved in that or something.” All these random things coming, and we don’t pay for this sort of stuff. It more or less just happens organically and I think again people are attracted to the brand, so looking forward to doing more of that and yeah. We’ll see but it’s been fun.
Stephanie:
Cool. Yeah, it’s amazing. All right, well Chris, thanks so much for coming on the show and giving us some of the behind the scenes at Spikeball. Until then, where can people find out more about yourself and Spikeball?
Chris:
Across all social media channels, just @Spikeball, and for me, I’m most active on Twitter @spikeballchris.
Stephanie:
Amazing. Thanks Chris.
Chris:
Thanks Stephanie.
