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Tips for selling your company from Solo Stove founders

Here are some tips for selling your company from the founders of Solo Stove:

Build a profitable business: Solo Stove founders focused on building a profitable business, which made it more attractive to buyers .
Be open to opportunities: The founders received unsolicited offers to buy their company and decided to entertain them when the numbers became too big to ignore .
Create a sellable asset: The founders focused on building a strong brand, a great product, and a well-designed website, which they believed were sellable assets .
Build a capable team: The founders realized the importance of hiring employees and building a leadership team that could run the business without their direct involvement .
Be flexible and adapt to the market: The founders made the tough decision to sell their other company in order to focus on building Solo Stove and adjusted their strategies based on market conditions .
Protect your intellectual property: Solo Stove invested in patents and custom machinery, making it harder for competitors to replicate their products .
Take advantage of online platforms: Solo Stove leveraged platforms like Amazon to drive traffic and generate revenue .
Be patient and wait for the right offer: The founders resisted selling until they received attractive offers and ran a competitive bidding process .
Consider professional help: The founders worked with investment bankers and brokers to help them navigate the selling process .
Maximize the outcome: The founders aimed to maximize their financial outcome when selling the company .

Please note that these tips are based on the experiences of the Solo Stove founders and may not be applicable in all situations.

1

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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 10 or somewhere around there.

Guy Raz: And it was just the two of

(someone): Just the two of us, and it was really profitable. And so- Wow, that's a super efficient business. Yeah, I mean, profits, I remember between everything we were selling, 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 like, yeah, we could find one, it's not gonna 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 solos. 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 asset.

Guy Raz: And by the way, what would you have sold it for?

(someone): Well, I think at the time one of the bankers told us that we could probably get about seven or eight million dollars from Solo.

2

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): That's how it went. Um, but, uh, you know, 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.

Guy Raz: 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 turns out that in 2019, you already started to get some interest from people who started to approach you. Clearly, they were people who had been following your growth. And now there was interest.

(someone): 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 the market and have that competitive bidding process. Just grow the business. Don't worry about selling. But 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.

Guy Raz: It got to a point where you were being offered in the low nine figures a valuation in the low nine figures for business and some of these private equity groups were like, listen, and I guess you couldn't ignore it, it was a lot of money.

(someone): Yeah. I mean, those offers came in and John said, here's what one company said.

3

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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.

Guy Raz: How was that for you guys to start to train people and essentially become leaders and managers? How did it go?

(someone): 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. We gave it our best effort. And I openly apologize to those that had to suffer through my inexperience in being a leader. 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.

Guy Raz: And so you but meantime in the back of your minds you're always thinking we got to find somebody to lead this team.

(someone): Yeah. And Jeff was the one I remember him saying that you know the root problem isn't 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.

Guy Raz: Yeah.

4

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: So it's 2014, and at this point, Jeff and Spencer want to sell Solostove. 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.

(someone): 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 on the dollar? Pennies 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, this is an opportunity you can go with and run with and kind of get your feet wet. Take it for pennies on the dollar and let's just clean up our books.

Guy Raz: All right, so you realize 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, I think it 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 trademarked and everything, but I'm surprised that there weren't copycats or were there copycats popping up on Amazon.

(someone): So in the early days, no. And I think a big part of that was one, the Amazon rush was starting, but it wasn't in full force.

5

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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.

(someone): 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.

Guy Raz: 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.

(someone): Yeah, I mean that was there's two decisions, right? It's either let's get rid of this thing Yeah, and maybe start again and keep it small and manageable from you know, we 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 an office and I remember really just talking about it with Jeff and I remember him saying that, you know, if we're gonna, if we're gonna 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 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.

6

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): It's kind of a single person size. And so Solo kind of clicked on all corners for us.

Guy Raz: Okay, so you've got the name. And by the way, did you did you apply for patents for this product? Yeah, we did. And you create a website, presumably called solostove.com. That's it. Yep. And, and the same playbook, the same playbook that you'd used for the the gardening business and the mattresses, you do AdSense, you buy, you do search engine optimization, the same playbook.

(someone): Right. Yeah. A combination of creating content that people would search up and stumble upon our website.

Guy Raz: And what was the content?

(someone): Like, what were you writing? I don't know if we did a lot of blogging in the early days for it. We actually spent a lot of time on making the site look beautiful and evoking emotions. Being in the outdoors and camping is a very emotional Exercise and and 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 another source of traffic and revenue everything we could think of to bring people to our website and I mean you flip the switch right the proverbial switch and the website launches and and

Guy Raz: I mean, is it an instant hit or are people discovering it? What's the response from anywhere?

(someone): Yeah, it was quick and fast. It was more than we expected. The first year was about half a million dollars. Wow.

7

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: How did you avoid that?

(someone): 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.

Guy Raz: 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? And this was something you both resisted doing. So how did you start?

(someone): I mean, it's just that. We started putting out job postings. And one of the first girls we interviewed, 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 young girl who was interviewing for a customer service position. And we would promise that we will have an office when this position is filled. And that's how rough the start was.

(someone): 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.

8

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): Yeah. I mean, those offers came in and John said, here's what one company said. And I remember us just saying, we got to entertain this.

Guy Raz: 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?

(someone): 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.

Guy Raz: 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 or most of your remaining stake.

(someone): John Glaser Yeah, that's right. There was this new group that wanted to come in and buy a majority stake at a much higher valuation, well north of what we had just exited for a year ago.

Guy Raz: So they were going to make money and you guys are going to make more money.

(someone): Yeah, really? That's right.

9

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: 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.

(someone): 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. Oddly enough, we were heavily in the RV niche.

10

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: And by the way, what would you have sold it for?

(someone): Well, I think at the time one of the bankers told us that we could probably get about seven or eight million dollars from Solo. I think that was the number in my head, in my recollection of carving out just Solo on its own. That it was if you can build that out to be a real company, then that would be a really attractive company for for someone to buy.

Guy Raz: So alright, so you basically everyone 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 or 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.

(someone): Right. Which was hard for me to understand. 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 and was really profitable. And I couldn't understand why this wasn't something that everybody was pounding down the door and wanting to buy. You know, 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. 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.

What issues did they run into at first when they tried to find buyers?

When the founders of Solo Stove initially tried to find buyers, they faced a few issues:

Lack of infrastructure and team: At that time, the company was run by just the two founders, and potential buyers expressed concerns about the lack of a proper company infrastructure and team .
Perception of not being a real business: Some potential buyers didn't consider Solo Stove a viable business because it was primarily operated by two individuals working from their homes .
Difficulty in gauging sales and profitability: Initially, Solo Stove's sales and profitability were not widely understood, which made potential buyers hesitant .

Despite these initial challenges, the founders were able to successfully overcome them and eventually find buyers for the company by building a capable team, focusing on profitability, and maximizing the value of their sellable assets .

1

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): Wow. Yeah. And so I was making- That's great. Yeah. The thought was not to sell tons at a very low cost. It was 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, you know, would choose convenience and comfort over price as long as I provided them a good product.

Guy Raz: 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?

(someone): Yeah, I definitely felt leaning into e-commerce was the right move. And meanwhile, Jeff, we were both blogging at the same time and he was learning about what I was doing with mattresses. And it was, I, 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, my feeling was he was on the sidelines 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.

Guy Raz: 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.

2

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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.

Guy Raz: How was that for you guys to start to train people and essentially become leaders and managers? How did it go?

(someone): 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. We gave it our best effort. And I openly apologize to those that had to suffer through my inexperience in being a leader. 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.

Guy Raz: And so you but meantime in the back of your minds you're always thinking we got to find somebody to lead this team.

(someone): Yeah. And Jeff was the one I remember him saying that you know the root problem isn't 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.

Guy Raz: Yeah.

3

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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.

(someone): 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.

Guy Raz: 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.

(someone): Yeah, I mean that was there's two decisions, right? It's either let's get rid of this thing Yeah, and maybe start again and keep it small and manageable from you know, we 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 an office and I remember really just talking about it with Jeff and I remember him saying that, you know, if we're gonna, if we're gonna 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 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.

4

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): Wow. Yeah. And so I was making- That's great. Yeah. The thought was not to sell tons at a very low cost. It was 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, you know, would choose convenience and comfort over price as long as I provided them a good product.

Guy Raz: 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?

(someone): Yeah, I definitely felt leaning into e-commerce was the right move. And meanwhile, Jeff, we were both blogging at the same time and he was learning about what I was doing with mattresses. And it was, I, 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, my feeling was he was on the sidelines 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.

Guy Raz: 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.

5

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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 10 or somewhere around there.

Guy Raz: And it was just the two of

(someone): Just the two of us, and it was really profitable. And so- Wow, that's a super efficient business. Yeah, I mean, profits, I remember between everything we were selling, 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 like, yeah, we could find one, it's not gonna 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 solos. 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 asset.

Guy Raz: And by the way, what would you have sold it for?

(someone): Well, I think at the time one of the bankers told us that we could probably get about seven or eight million dollars from Solo.

6

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: 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.

(someone): 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. Oddly enough, we were heavily in the RV niche.

7

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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.

Guy Raz: How was that for you guys to start to train people and essentially become leaders and managers? How did it go?

(someone): 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. We gave it our best effort. And I openly apologize to those that had to suffer through my inexperience in being a leader. 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.

Guy Raz: And so you but meantime in the back of your minds you're always thinking we got to find somebody to lead this team.

(someone): Yeah. And Jeff was the one I remember him saying that you know the root problem isn't 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.

Guy Raz: Yeah.

8

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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.

(someone): 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.

Guy Raz: 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.

(someone): Yeah, I mean that was there's two decisions, right? It's either let's get rid of this thing Yeah, and maybe start again and keep it small and manageable from you know, we 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 an office and I remember really just talking about it with Jeff and I remember him saying that, you know, if we're gonna, if we're gonna 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 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.

9

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): And we thought this is going to be, this is going to be awesome. People are going to love this.

Guy Raz: Alright, 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? How much money did you need to get this off the ground? I mean, because you guys didn't have a lot.

(someone): 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.

Guy Raz: 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 decided to call it the Solo Stove. Where did the name come from?

(someone): 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 ChinaBusinessTraveler.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.

10

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): It's kind of a single person size. And so Solo kind of clicked on all corners for us.

Guy Raz: Okay, so you've got the name. And by the way, did you did you apply for patents for this product? Yeah, we did. And you create a website, presumably called solostove.com. That's it. Yep. And, and the same playbook, the same playbook that you'd used for the the gardening business and the mattresses, you do AdSense, you buy, you do search engine optimization, the same playbook.

(someone): Right. Yeah. A combination of creating content that people would search up and stumble upon our website.

Guy Raz: And what was the content?

(someone): Like, what were you writing? I don't know if we did a lot of blogging in the early days for it. We actually spent a lot of time on making the site look beautiful and evoking emotions. Being in the outdoors and camping is a very emotional Exercise and and 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 another source of traffic and revenue everything we could think of to bring people to our website and I mean you flip the switch right the proverbial switch and the website launches and and

Guy Raz: I mean, is it an instant hit or are people discovering it? What's the response from anywhere?

(someone): Yeah, it was quick and fast. It was more than we expected. The first year was about half a million dollars. Wow.

11

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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 10 or somewhere around there.

Guy Raz: And it was just the two of

(someone): Just the two of us, and it was really profitable. And so- Wow, that's a super efficient business. Yeah, I mean, profits, I remember between everything we were selling, 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 like, yeah, we could find one, it's not gonna 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 solos. 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 asset.

Guy Raz: And by the way, what would you have sold it for?

(someone): Well, I think at the time one of the bankers told us that we could probably get about seven or eight million dollars from Solo.

12

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: How did you avoid that?

(someone): 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.

Guy Raz: 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? And this was something you both resisted doing. So how did you start?

(someone): I mean, it's just that. We started putting out job postings. And one of the first girls we interviewed, 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 young girl who was interviewing for a customer service position. And we would promise that we will have an office when this position is filled. And that's how rough the start was.

(someone): 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.

13

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: And by the way, what would you have sold it for?

(someone): Well, I think at the time one of the bankers told us that we could probably get about seven or eight million dollars from Solo. I think that was the number in my head, in my recollection of carving out just Solo on its own. That it was if you can build that out to be a real company, then that would be a really attractive company for for someone to buy.

Guy Raz: So alright, so you basically everyone 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 or 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.

(someone): Right. Which was hard for me to understand. 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 and was really profitable. And I couldn't understand why this wasn't something that everybody was pounding down the door and wanting to buy. You know, 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. 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.

14

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: So it's 2014, and at this point, Jeff and Spencer want to sell Solostove. 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.

(someone): 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 on the dollar? Pennies 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, this is an opportunity you can go with and run with and kind of get your feet wet. Take it for pennies on the dollar and let's just clean up our books.

Guy Raz: All right, so you realize 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, I think it 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 trademarked and everything, but I'm surprised that there weren't copycats or were there copycats popping up on Amazon.

(someone): So in the early days, no. And I think a big part of that was one, the Amazon rush was starting, but it wasn't in full force.

15

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: 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.

(someone): 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. Oddly enough, we were heavily in the RV niche.

16

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): It's kind of a single person size. And so Solo kind of clicked on all corners for us.

Guy Raz: Okay, so you've got the name. And by the way, did you did you apply for patents for this product? Yeah, we did. And you create a website, presumably called solostove.com. That's it. Yep. And, and the same playbook, the same playbook that you'd used for the the gardening business and the mattresses, you do AdSense, you buy, you do search engine optimization, the same playbook.

(someone): Right. Yeah. A combination of creating content that people would search up and stumble upon our website.

Guy Raz: And what was the content?

(someone): Like, what were you writing? I don't know if we did a lot of blogging in the early days for it. We actually spent a lot of time on making the site look beautiful and evoking emotions. Being in the outdoors and camping is a very emotional Exercise and and 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 another source of traffic and revenue everything we could think of to bring people to our website and I mean you flip the switch right the proverbial switch and the website launches and and

Guy Raz: I mean, is it an instant hit or are people discovering it? What's the response from anywhere?

(someone): Yeah, it was quick and fast. It was more than we expected. The first year was about half a million dollars. Wow.

17

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): 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.

Guy Raz: 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.

(someone): Yeah. I mean, that's a good it'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 that much, just as easy for the next guy to buy it. But no manufacturer was making this. And so for somebody, 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?

Guy Raz: 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.

18

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: So it's 2014, and at this point, Jeff and Spencer want to sell Solostove. 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.

(someone): 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 on the dollar? Pennies 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, this is an opportunity you can go with and run with and kind of get your feet wet. Take it for pennies on the dollar and let's just clean up our books.

Guy Raz: All right, so you realize 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, I think it 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 trademarked and everything, but I'm surprised that there weren't copycats or were there copycats popping up on Amazon.

(someone): So in the early days, no. And I think a big part of that was one, the Amazon rush was starting, but it wasn't in full force.

19

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): The first year was about half a million dollars. Wow. In the first year of putting it out there.

Guy Raz: And how much did the stoves cost you to make?

(someone): Yeah, this this, you know, 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.

Guy Raz: 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?

(someone): Yeah, I think for me it was It was just being overwhelmed with everything is just you know, we had this I had this idea of this four-hour workweek That's why we set out to do this And as things became too much, you know performance in my day job kind of slipped, huh? it was a situation where I had a tough conversation with my boss. I called him my business partner. I gained some equity in that company I was working for. And that was a tough conversation.

20

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

Guy Raz: And by the way, what would you have sold it for?

(someone): Well, I think at the time one of the bankers told us that we could probably get about seven or eight million dollars from Solo. I think that was the number in my head, in my recollection of carving out just Solo on its own. That it was if you can build that out to be a real company, then that would be a really attractive company for for someone to buy.

Guy Raz: So alright, so you basically everyone 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 or 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.

(someone): Right. Which was hard for me to understand. 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 and was really profitable. And I couldn't understand why this wasn't something that everybody was pounding down the door and wanting to buy. You know, 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. 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.

21

Solo Stove: Spencer and Jeff Jan

How I Built This with Guy Raz

(someone): Wow. Yeah. And so I was making- That's great. Yeah. The thought was not to sell tons at a very low cost. It was 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, you know, would choose convenience and comfort over price as long as I provided them a good product.

Guy Raz: 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?

(someone): Yeah, I definitely felt leaning into e-commerce was the right move. And meanwhile, Jeff, we were both blogging at the same time and he was learning about what I was doing with mattresses. And it was, I, 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, my feeling was he was on the sidelines 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.

Guy Raz: 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.