Marucci Sports - Kurt Ainsworth

26:24Wow. We had a big CNC lathe. We had engraving machines. We had sanding machines. I mean, we went all out on equipment. How much money do you think it costs to get all this equipment to buy it all? We were several hundred thousand dollars deep in equipment. Wow, to make baseball bats. Yeah, our neighbors thought we were kind of crazy, but they would come over and watch. And what was crazy is that, you know, Jack, after he'd be at football all day, then Jack would come over at night and cut bats late into the night on the lathe. And then Joe and I, during the day, we would sand bats, stain bats, paint bats, engrave them, and ship them off to customers.

26:58We were kind of the sales operations. We actually made all the bats during the day, and Jack would cut at night. Wow. How long would it take to make one bat? Back then, I think it was probably a couple minutes to cut it, but then you got a couple minutes to sand it. Then you got to stain it, let it dry, and then they engrave it. So, I mean, it took quite a bit of time. We weren't doing very many bats a day, I can tell you, back then. I've read that people have used cow femurs, the femur of a cow, to smooth a bat surface. Can you explain why you need a cow femur? It's just like a giant piece of bone, by the way.

27:34Yeah, we used to bone every bat. And we used to be in our logo until we had to take it off because it was an extra logo, they said, at MLB. We used to say bone rubbed on our bats. We used to actually use a cow femur and compress the grains of the bat to make it a harder bat. So if you didn't compress it, you could have seam marks in your bat. And to us, that meant softer. So we were compressing every bat with a cow femur. Wow. And a cow femur is better than like a steel rod? No, I think it was probably, it was kind of bringing back the old school days. I got you. All right. As we've gone on, we've used other products that are not cow femurs.

28:08We started with a cow femur. I got it. It's a better story than using modern technology. All right. So you guys are doing this through the winter. And then you go back for spring training. So you're going to go to Florida to go back and work out with the guys at the Orioles, hoping to obviously make the roster, right? And you come with a bunch of bats with the intention of handing them out to your teammates? Yeah, it was – basically, you would take a model they liked, you would copy it, make it in R-wood, R-finish, send it back to them. And the players really started liking the bats. So, all right.

28:46How much was a bat? like a hundred bucks back then it was probably more like 65 it should have been a lot more than that with the amount of time and effort we put in but i think they were like 65 when we started and and at that time this is 2005 now spring training 2005 again like you could probably still get away with it and not have to get like a because the m nfl mlb they're so obsessive over anybody being involved in those leagues without approval or paying licensing fees or whatever so So you could kind of get away with it at that time, like players could just use it in spring training? We got licensed that year.

29:22You got a license from the MLB. Okay. Okay. So once you got the approval, then it was okay to use it in Major League Baseball. Okay. And in terms of like weight, for example, because you said that you were on the Orioles, right? And you'd ask players, hey, you want to try this bat? You would take their bats that they liked and then send them back and you would try to match the weight and everything. But there has to be like a range, right? Like a bat can't be heavier than this and lighter than this, right? Yeah, there's a lot of regulations and it's changed over the year with MLB. And, you know, we adapt to those changes.

29:54But, you know, certain players want certain things and you've got to work with them to give them what they want. And, you know, of course, over the years, we're a little bit more sophisticated than we were back then. But the biggest thing for us is consistency. Makes sense. Yep. And it's just the three of us. We weighed our bats down to the tenth of an ounce, which we still do to this day. And we wanted to be perfect. So when a player would order 12 bats from us, this is where it gets crazy is that we would send two. We'd send four. We'd send three. And the clubhouse guys would call us and be like, this is why we don't order from small bat companies.

30:25We ordered 12. You sent us two or three bats. And we're like, well, hold on. We could send you 12, but all we had good wood for was two or three. And the phone would go silent and they'd go, what? Yeah, we could send you 12, but we only had that good wood. So I think players realized when they got our bats at the beginning, every bat was perfect. But given that your bats were better, I have to assume that you were throwing away a lot of wood. Yeah. Like you would get wood in and it would just not be good enough. So you just had to eat it. You couldn't use it. Yeah. That's another lesson we learned early.

30:58I think we started looking at our numbers. It's less than 10 % of our wood. More like 7 % probably goes to a pro player. Well, what do you do with the other 93 %? And in those days, we didn't have an outlet. We didn't have any retail bats. We didn't have a whole lot out there. So our wood started building up and adding up. And you start looking at each piece of wood, let's just call it a$20 bill. There was a lot of$20 bills laying around. It made for some uncomfortable conversations when you would miscut a bat or mis-sand a bat or misprint a bat. You're like, ooh, you just wasted a really good piece of wood.

31:33So what would you do with the wood that you're not going to – because it had to be perfect for the professional players. You just like turn it into sawdust? Or what would you do with it? No, we would do a lot of souvenir bats. We did a lot of graduation bats, birth bats, high school senior bats. And then the truth of it is, is that, you know, Joe and I would would take off with one of our other employees, our first employee who's still here to this day. You know, Brett Laxton, he pitched in the big leagues as well. We would load up a trailer of all of our extra cut bats and we would drive to Alabama to men's senior baseball league tournament.

32:03This is 40 year old and older men up to like 65. And we would sell every bat at the tournament and come back with an empty trailer. And that kind of kept kept our business going. All right. So also from what I gather, pretty soon after you guys started this business, you shifted from ash wood to maple wood. Why does that matter? Why is maple better than ash? Yeah, that was a huge move for us. That was kind of one of the early ways the stars aligned for us and the industry changed. Barry Bonds made Maple popular. He came in and started hitting with Maple and he was hitting all his home runs and then Maple became more and more popular and people looked into it.

32:42And Maple's just a harder wood. and if you really show people, a player comes in, you could take a nail with a hammer and drive it right into an ash bat. You take that same nail and try to put it in a maple bat, it's going to bend the nail. And you show a hitter that and they're like, why wouldn't you use a harder bat? And so players started going to maple really quickly over ash and then the emerald ash beetle, the ash borer beetle, came in and kind of wiped out most of the ash in the United States. So then it really forced everybody into maple And we had a really big head start on the Maple side.

33:15So that allowed us to gain market share pretty quickly. Okay, let's go back to spring training 2005 with the Orioles. You guys get the MLB to get licensed by the MLB. So they're legal. You are handing them out to players. By the way, because I would think that if you get in the hands of a star player, that's a bigger deal. Were you able to get into the hands of any players who were particularly visible? Yeah, sure. with some Hall of Famers on that team and some superstars, right? I mean, well, Sammy Sosa, Raphael Palmero, Brian Roberts. Wow. But yeah, to have those guys use it and validate the product, I think that is when we knew we were on to something.

33:54Were you, I mean, at that time, did you have to pay players to agree to just test out your batch or was it kind of casual? Like, yeah, no problem. Like, because today it's a completely different world. Everybody's an influencer, right? Everybody's like, where's my cut? I'm not going to use your product until I get it. Like, it's totally different world for the worst, I think. But back then, could you just been like, hey, Rafael Palmeiro, like use my bat. And he'd be like, sure. Yeah, it was even better than that for us. You know, we've never paid a player to swing a bat. And a lot of that was because we just couldn't afford to pay players.

34:25I'm going to be honest with you. But again, we were very fortunate that the major league teams were actually buying the bats. So I would go to the players and say, hey, do you want to try these? We'll have the clubhouse guy order them. And they were actually buying the bats. Oh, okay. So all they had to do is go to the clubhouse guy, like their quartermaster, and say, hey, I like this bat. Can you order a few of these? That's correct. And that's just kind of passed around from there and really helped us grow that brand. And by the way, I should have asked you this. You called it Marucci Bat Company because Jack was making them, and that was the only reason.

35:00You just thought it sounded cool. Yeah, it sounded better than Ainsworth Bat Company or Lawrence Bat Company. It has that designer feel to it. And I think that was probably our first really good decision we made is just keeping it as Marucci Bat Company. It just has that Italian high-end feel to it. Prada, Gucci, Ferrari, Marucci. Yeah, and I think Joe and I were kind of, at that point in time, we were thinking you could put it on anything and it would kind of add value, right? We weren't thinking just wood bats. Joe and I weren't at that time. We had always been thinking outside of wood of where could this take us down the road.

35:31All right. You start spring training and once again, season ends early. You re-aggravate that injury that you had in your shoulder. So again, that season's done. I'm curious, does your salary get affected when you can't play or is it just the contract they got to pay you no matter what? It's pay or play. Yeah, it depends on where you are. So if you're in the major leagues, you'll get your major league pay. If you're in the minor leagues, you get your minor league pay. And I had already been sent down that year, I think, at that point to not get the full major league pay. And I had two kids at that point when I got home.

36:08Wow. Yeah, it was two kids not having a salary coming home, working for a company for free. It was definitely challenging times. When we come back in just a moment, Kurt and his partners branch out into aluminum bats, a decision that makes all the sense in the world until it doesn't. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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40:05Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2005, and with his partners, Kurt Ainsworth is growing Marucci bats and hoping he can get back to pitching with the Orioles despite a bad shoulder injury. But that year, the team lets him go. Yeah, I mean, when the season ended, I was basically released. You know, I was no longer under a contract, no team control. So I was a free agent. And so I was, I had no pay coming in. And I was trying out for teams. Then, you know, started working out for teams that, you know, that really that offseason, November, December, throw in and then hopefully to get signed to go to spring training one more time to give it a run.

40:46So, meantime, you guys are focused on the bats, on selling the bats. And probably even if you're selling, I don't know, a thousand bats, right? I'm just doing the math. I mean, it's not a lot of money coming in. If you're selling them for$65 to$80, you're not doing serious revenue at this point. No, we weren't doing it. And especially you have three partners and you also have employees there every day. People helping you to do what? So we're paying guys to help us sand bats, paint bats, engraved bats, ship bats at that time. We had help, so we were paying them and not ourselves. So anything we were making was going right back into the business to pay the employees and to buy more inventory because wood was expensive.

41:29So you're a free agent and you're trying out for a bunch of teams and you get signed with the Los Angeles Dodgers. Yes. My team growing up in Los Angeles, 2006, you get signed, you go to spring training. And there, once again, you're able to do what you did with the Orioles. You're able to bring bats and put them in the hands of some players. And did you have some success there again? We did. And this was an upgraded bat. Our finishes got better that year. You know, Jose Cruz Jr. and some of the other players started really gravitating toward the bats and really started buying into the company.

42:06Yeah. And now I'm in the National League, so I was hitting. So I really had better bats than our hitters. And it became, it was pretty funny that you see hitters go up and take my bats to go out into the games. But, you know, I just, my first bullpen in spring training was great. And I just couldn't recover after that first bullpen, no matter how good a shape I was in. And it was super frustrating to me because I worked so hard. I mean, I was really throwing well. And then I just had that damage in my shoulder. And I knew it was coming. So I threw one game in a field. And my wife was there. My kids were there.

42:39My family was there, actually, at this game. And I walked over to them. I said, I'm glad y 'all are here. And they're like, what do you mean? I said, well, that was the last time you'll ever see me throw. And they're like, whoa, I can't take anymore. So I went and told the trainers. I said, look, I can't go anymore. I got to go see a doctor. So they flew me to Los Angeles. And they did MRIs again. And the doctor said, man, the labrum rotator cuff was all completely torn, and it was laying down perfectly on the MRI. So we couldn't tell how bad it was. He goes, I can't believe you were throwing a baseball.

43:07And I was like, well, in one thing, it made me feel good that I knew something was really wrong. But in the other thing is I knew my career was over that day. So even before spring training ends, you're done, 2006. Yeah, super early that year. I came home in a sling, and next thing you know, I'm driving my wife to the hospital, and we deliver our baby in the car on the way to the hospital while my arm's in a sling. So, I mean, we've had some crazy things happen along the way. Wait, how was that baby delivered? In the front seat of our Tahoe. And I just, another, just super blessed that I'm pulling through a parking lot.

43:39We're in traffic and I see an ambulance and I get out of my car, my arm in a sling, run over, beat on an ambulance. Ambulance drives around and helps deliver the baby in the front seat of our car on the way to the hospital. Oh my God. She's a trooper. All right. So you're done. You're like 28. You're done with baseball. And did it feel cathartic? Did it feel like, okay, now I'm just going to get this dream up and now focus? Or did it feel, were you sad about it? I was sad probably for a minute that day when the doctor told me how bad the surgery was. And then it was almost relieved. I was tired of rehabbing injuries.

44:19And it was one of those things where I worked hard. And I knew I worked hard. And the harder I worked in baseball, the more injuries I had. And I knew I could put that attention to something else. And the harder I worked at Marucci, I could see success. And it really just changed my focus and said, we're going all in on this thing and let's go do it. All right. So you're out of baseball. and you've got no salary. You have no salary. You've got three children. Yeah. And you've put all of your money into the equipment for this baseball business, which is far from profitable. Right. So what are you going to do to make money?

44:56Well, you know, my wife kind of gave me that hard discussion of like, hey, what are you going to do? You know, baseball's over. What are you going to do? You guys need to start making some money because we weren't taking anything out of Rucci. We couldn't afford to. So Joe and I got together and we started another business in Baton Rouge called the Big Leagues of Baton Rouge. The Big Leagues of Baton Rouge. Correct. And it was a baseball batting cages and training facility. And we opened that in the summer, really, of 2006. And we put together a staff there of a lot of ex-major league players that were in the area.

45:27As you said, Baton Rouge has a lot of talent. And we had a lot of players in there giving lessons. This makes sense, right? Because you guys had expertise. you start a baseball training facility to help any professional or college player, maybe even high school players? High school and youth mainly. So Joe and I would show up at 6.30 in the morning, work for Marucci from 6.30 to 2.30. We would kind of change into our PE uniforms, we called it. And then we would go do lessons till 9 p.m., Monday through Friday, and then lessons on Sunday, 12 to 6. And we were booked out for several months at a time.

46:00We were doing, I think, 220 private lessons each a month. Wow. So you were basically working like 12, 15-hour days. Yeah, it was a lot. And I had three young kids at the time. And we did that for 18 months. And I feel like I was raising other people's kids. My kids were coming up there, and they loved it. They were young at the time. But it got to the point where it was just too much. And at that point, Marucci started taking off and doing better. So we sold that business. And is it still around? the big leagues of baton rouge no uh crazy stories we actually kind of bought it back down the road and it's uh hitter's house now it's that same location where we are is our marucci hitter's house here in town and they're still doing batting cages retail store and there's a an area in the back where people can do lessons and get better so it was it was one of those things that's uh it's special to us because we wouldn't be here without big leagues of baton rouge all right so 18 months in you sell it and uh and because by this point you say you guys i mean you you in your forwards, Marucci Bat Company is taking off.

47:01And from what I understand, this is 2008, you guys are selling 15 ,000 bats a year at this point. So it's about, I'm thinking a little over a million dollars in revenue. Probably. But you guys were now able to start to take a salary from that, from the sales? Yeah. I mean, that salary would have been really small. We had made enough money in big leagues at Baton Rouge to hold us over a little bit. And then for this next, I would say this next adventure we decided to go on with Marucci Sports is what was where we then focused all of our attention. Okay. And, and Jack Marucci, still a third owner of the business, he would pop in from time to time or what?

47:40I mean, how was he, he wasn't making the bats at this point. No, he, he was more of a, he would talk to the clubhouse managers and some of the players would call him and then he would, he would send in bad orders from his phone. But you know, he was, He wasn't really coming to the office at all and seeing the bats be made at all at that point. But he had good connections and he was able to use those connections, yeah. He did. Okay. So this is something that's interesting to me because in 2008, I guess you guys had been using a wood mill. Yeah. Right? This is where you're getting your wood from.

48:15And what they were shipping – this is a wood mill in Pennsylvania. They were just shipping you pallets of wood to Baton Rouge? Yeah. And other bat companies were buying from them as well at this point in time. And it was an Amish-run mill that we would get the best wood from. And I guess you get tipped off in June of 2008 that somebody, some other bat company is looking to buy them. When you say some other bat company, I'm just thinking there's just one big one. Was it that one big one? Yes. At that point in time, that's what we were told, that the big one was at that point. But do you think Louisville Slugger had noticed you guys at this point?

48:51They did at that point. When we started having Albert Pujols and some of those guys winning MVPs, at that point in time, they started taking notice. Because we were taking a dent in the market at that point in time. And so when we got word from that employee that our competitor was there trying to buy it, Joe and I actually got on a plane against our lawyer's advice, brought a document with us, and bought the company. And we knew there was risk. So you want to acquire this company. You're thinking we've got to acquire this to keep the pipeline of wood. But how are you going to do that? I mean, your revenue is low.

49:27You've already over leveraged with all the equipment that you bought a few years earlier. So how are you going to buy that mill? We actually took on another investor and bought it outside of Marucci. You created a separate company to buy this mill. We did. We did and took on another investor and bought it under a different LLC name. I mean, so basically as a separate business, now the mill is selling the wood to Marucci. So, I mean, the investor is getting that. I mean, it's automatically there's going to be revenue coming into that business. That's right. Now, it would be a little bit different because we pretty much cut off every competitor at that time.

50:05And so now Marucci at that point in time now had access to more wood than we've ever had before. But now we needed more capital to go buy that wood. And so that's when we took on a couple of early investors in Marucci, bat company alone, just small investors, to help us pay for some of that wood. How much did it cost to buy the mill? I'm just curious. How much does it cost to do that? At that point in time, I think we were somewhere just under half a million dollars for the whole mill. Oh, I shouldn't say only, but half a million dollars to buy the mill. Yeah. That seems like a pretty good deal.

50:35It turned out to be a great deal. Yeah. And we kept the team. We kept the family involved. Yeah. You know, we covered a lot of debt that they obviously had at that time. So we ended up paying a lot more than a half a million when you end up adding in all the other stuff we paid. Yeah. You were OK, so you now got the mill and you've got to but you cannot grow this business just by selling wooden bats to professional players because that's a limited market. I mean, that can't be more than a 10 million dollar market opportunity, maybe. So to really turn this into something, you knew that you had to invest in the business to grow it further.

51:12What was the first thing you guys started to talk about? Because it seems to me like the opportunity is with like kids playing in little leagues and grown men playing in their fun softball leagues, whatever it might be like that to me seems like where the market opportunity would be. Yeah, youth baseball, right? And that's aluminum bats. So that was our next focus is we wanted to come out with an aluminum bat. And the aluminum bat was designed for high school and college players. And so this is a huge, this is like you're going to quintuple your potential market, right? There's tons of college teams and there's rec teams and there's high school teams.

51:51So, and probably aluminum bats, you could sell for more than a wooden bat, right? Yeah, the bats, it was, you know, you can manufacture them easier. You can mass produce them. It was higher margins and it was a bigger addressable market, right? That's kind of the big buzzword that we learned along the way. The total addressable market of wood, as you've highlighted, is very small. Right, right. But in order to make aluminum batch, I mean, you guys were going to need an infusion of cash, right, like capital. I think this is where you got introduced to this new potential investor, a guy named Reed Dickens, who would eventually become your CEO, right?

52:26That's right. And I guess from what I've read, Reed had been working in politics and he wanted to get back into business. So, I mean, the timing probably was good, right? Yeah. And so Reed cold called us and I can tell you, he said, look, let me come down there and meet with you and Joe. And Reed came down and he said, look, if we create this other separate LLC under Marucci Sports, I can raise the money that we need and we can create this other brand and go do aluminum bats. He kind of laid out a vision that we had never seen before. What did he say? He just said, look, I think this company can be the number one bat in the game.

53:03And Joe and I kind of looked at each other like, hold on, man. You got Louisville Sluggers been here 120 years or whatever. Don't get carried away. And he said, I really believe that we can create this stale industry. Because baseball at that time was pretty stale. So Reed wanted to bring a different energy and come in and create this momentum around this brand that we had. All right. So Reed comes in with all these ideas. Yep. and says, let's start a separate company. We'll call it Marucci Sports. 100%. And he brings in some outside capital. And I guess it was like$2,$2.5 million that he helps raise.

53:42That's right. Some of it was players, but some of it was kind of, I would say, family, office, or just wealthier people. Well, it would seem to make sense to bring players in because then they have skin in the game. And if they're playing, they're using the bat. So it's a double win, right? They're going to put in money and they're going to use the bats. Yeah. Well, what we didn't realize is that when you're successful, you actually need more money than when you're not successful. And we needed to go raise more capital fairly quickly after he joined and was the CEO and we were running because we were actually having some pretty good success early and we needed more capital.

54:18Who are some of the players that got involved early on in that early race? Yeah, so I mean, Albert Pujols was an early one, of course. Ryan Vogelsang, the next giant at that time. Sean Casey, Harold Reynolds. We've had David Ortiz, Jose Bautista. I mean, it was kind of a who's who of players. Will Clark, my childhood idol, was in there. So we had a really good group of guys that we started going to to raise that next round of capital. and that's what really brought us to acquiring marucci bat company and eliminating that license because as you're raising money some of the people are like their advisors were like wait a minute you don't own the brand and you're paying a royalty to marucci bat company on everything we're doing okay so because in order to to put the marucci logo on marucci sports products you had to pay the marucci bat company which you were a third owner of yeah to license the name because it's Jack Marucci's name.

55:18So ultimately, that had to be untangled. Yeah, and that's what happened in 2011. We negotiated with Marucci Sports and Marucci Bad Company to acquire Marucci Bad Company, become one company. And so, I mean, Jack Marucci probably, you know, he had to agree, you and Joe and Jack Marucci each owned a third of it, and you guys probably were like, let's do it. But he had to agree to that. He had to agree to either be paid a license fee or get some equity in the new business or sell his shares. Yeah, and I think there was a little bit of all of that. I think we all kind of rolled some of that. We took some cash off the table.

55:55Yeah, look, we had great relationships with Jack. I think he respected what we were doing and what we were trying to do. I think he could finally see that there was some other opportunities out there. You know, he had always kind of joked that all I want to do is pay for my kid's school and I'd be happy. Obviously, we paid a little bit more than the kid's school, but he trusted us to go build something with the name that we created together. Right. And you start to produce an aluminum bat. And I think it's available in the consumer market in early 2010. So how did you get anybody to even care?

56:27I mean, some kids probably knew about the Marucci wooden bats. They did. And I think locally we probably did okay early in 2009. We would go out to those tournaments and we would bring bats on the mobile tour. and we would go bring bats out on the road and show people and let them hit with it. And I would say 2009, we did pretty well in the first year. But then when the NCAA changed the regulations to BB Corps, which is just basically a rule change that made the bats perform more wood-like, everything changed. Can we just unpack this for a little? Because this is really complicated. It is. BB Corps is a certification, right?

57:04It stands for batted ball coefficient of restitution. And it's a safety performance testing and standard. And the first year you had these bats come out, they were ready to go. They had complied with this new standard. That's right. And you guys were one of the few batting, bat companies that had this ready to go because as the NCAA changed the certification, you guys could create the bat to that certification. But the second year, 2011, so the first year was great. But then you were decertified. In 2011, why? What was wrong with the bat? So they tested some bats, and they said the bats in the field were testing higher than the limit.

57:48What does higher than the limit mean? They sent it to a lab at Washington State, and they shoot a ball off a stationary bat, and it measures the rebound off of the bat. And so they measure it every inch along the barrel, and they had sent us reports back and said that our bat had failed. That it was bouncing back too hard, which meant that it would give a player an unfair advantage. That's correct. I see. Okay. At that point in time, we had no idea that there was like, you know, variances in the test and we didn't even really know what to do. This was so new to us. We didn't even have, you know, engineering labs at that time.

58:21We were young in business. We didn't know how to fight back at that time. Right. Huh. So in 2012, we were having a big coach's party. And I remember our engineer walking myself and our CEO at the time outside and saying, hey, the NCAA just told me that they're going to decertify our bats. And I literally couldn't speak. And I was like, wait a minute, what does that mean? We just bought Marucci Bat Company. We just took on these shareholders. All of our bats in the market, we're going to have to recall. And we have the hottest bat right now in the market. And I remember walking back to my hotel thinking the company was done.

58:57Everything we had done to get to this point was over. Because I just didn't understand what was going on and how they could decertify it. How much money did that cost you? Because you made all this product and now it's I guess you could sell it to high school players. No, it was taken off from the high school too. So when they decertified it, it was totally decertified. So we had vessels coming over from Asia with all decertified bats on them. What did you do with them? Melt them down? We did. We actually took them to a scrapyard and recycled them. There was nothing else we could do with them.

59:31And it was a multimillion-dollar hit for a company that didn't have money. I mean, in part, you know, again, like it's so fascinating because on the one hand, all your eggs were in that basket and the NCAA basket. But on the other hand, they had to be. Yeah. You had no choice because that's where the market was. So like the obstacle was the there was no other way around it. Like they could make or break a business, but it's so risky. I would just be thinking from a business perspective, if that happened, did you even anticipate the possibility of that happening? We didn't, right? Because we didn't change anything.

1:00:11We sent a bat in. It passed. We didn't change anything in our production. And next thing you know, we're getting decertification notices like, oh, my gosh, what is going on? And again, you find out down the road, obviously, that we were taking so much market share that our competitors were sending our bats in to the test lab and trying to say that our bats were over the limit. And look, that was a learning lesson for us because at that point in time, we then took bats from the field, sent them to the lab, and they were all over the limit. But nobody else was decertified but us. And so you talk about frustration.

1:00:42That was a tough learning lesson right there in 2012. Was any part of you like – conspiratorial is not the right word because I don't think that's the right word. But any part of you suspicious that you guys were decertified because the bats were doing so well and there were maybe more influential competitors who were trying to get the NCAA to shut you down? Yeah, there's no question. We've had conversations with some of those other companies over the years, and they said we could take some hits from some smaller companies. But what you guys did, y 'all were taking so much market share, you know, we kind of had to slow you down.

1:01:18Oh, wow. We were growing so fast. At the end of the day, I can look back now and say it was a blessing because we weren't ready for that growth that we were having. But at that point in time, that was the end. When we come back in just a moment, how Marucci Sports recovers from the great aluminum bat meltdown of 2012. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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1:03:37Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2014, and Marucci Sports is reeling from having its bats decertified. The ball is coming off the batter's swing with too much power. So to compensate, the company puts out a bunch of new bats, which, frankly, are kind of underpowered. Yeah, I think we overcorrected, right? We came out with bats that were so far under the limit that didn't perform very well. They weren't hitting as well? 100%. We put some subpar product out there just to make sure we were under the limit. And we had great sell-in, but we didn't have good sell-through. They weren't selling to kids.

1:04:17The kids weren't excited about the bats. And so we had to do something. Yeah. And then as soon as that happened, I was named CEO, I guess I would say, early in 2014. And I think that was one of the first things I did when I was named CEO, is I made the very unpopular decision of taking back bats from our retailers. You basically lost all this money. So you lost the money on the T-certification. Yeah. Then you just flood the market with bats that were not as good. Yeah. To try and see if you could salvage this thing. But that's another financial hit. That's correct. So you just melted those bats down again that you took back?

1:04:56We did. We did. And I will say our board, that was the first time we had a board. is an independent board of some really high profile and quality board members. And it was pretty shocking for them for my first move to take those bats back. But they stuck with me and they trusted me through this whole process. My first year was not very good. And I brought in a CFO that year that I said, hey, man, sorry. Right after we hired you, we're going to take these bats back. So our number one customer and all our sales, we're going to take these bats. But I promise you it'll be the right move moving forward.

1:05:30And I do think they thought I was crazy at the beginning, but it ended up being probably the best decision we've ever made. All right. So now you're retooling the bats to make them at the standards and quality that you had come to be known among players. Yep. How long did it take now? You're 2014. You're the CEO. How long did it take before you start to claw back? Because I still imagine it's going to take a while for you guys to get profitability and to recover from what happened in the previous two years. Yeah, 2015, we were pretty, we were profitable again, fairly, very profitable, actually.

1:06:05And it was, and that was on the strength of, of, of better aluminum bats? Better aluminum bats, deeper in wood bats, better in wood bats. So everything started going that year. And then we had more product categories, of course, that we were launching at that time, but 2015 was a big year for us. Okay. That, and when you say big year, like breaking$10 million in revenue? I'd say we were probably more like$25 million in revenue that year. Wow. So you're 11 years into the business now, and now you're a player. Yeah. When you took over as CEO, was it clear to you that at that, this is 2014, was it clear to you that within a few years you needed to find an acquirer to get you guys to the next level and you know to really bring in serious capital to let you do what you wanted to do yeah i don't think so i think we thought we could do it on our own i really do um we were putting together a great team we were having a lot of success uh we made a great acquisition with victus in 2017 victus is a was a company that was making custom wooden bat wood bats yeah i mean if you're out there we see this up-and-coming company we were every single piece of wood we can make was going on the field to a major league player, right?

1:07:20At the major league level. And so we couldn't make minor league player bats. And we were having to turn down orders every year. And we saw this company, Victus Sports, was getting all the younger players, getting the minor leaguers and getting all these young big league players that we couldn't service. And we're like, man, this company is doing a really good job. And so we built a relationship with them over some years and we ended up acquiring them. And, you know, we could tell they were going to be the future in bats. And quickly, as we surpassed Louisville Slugger, I think in 2013, they surpassed Louisville Slugger in 2018 as the number two bat.

1:07:51Used by major league players, I should say. Correct. And those are the stats that people are like, whoa, you surpassed Louisville Slugger on field? And that's when people know that baseball is, everybody knows Louisville Slugger. And so when they hear that, that's kind of a big stat. And so I think acquiring Victus was one of the biggest moves we made. All right. And to overtake Louisville Slugger among professional players is a big deal. But Louisville Slugger was bigger with youth sports, for example. So they may not have cared all that much. I don't know. Maybe they did. I don't know. But I want to ask about Victus because this is another company.

1:08:25They're making bats. You guys acquired them in 2017. It didn't make sense to just fold it into Marucci and just to stamp the Marucci name on the Victus bats? Yeah, I don't think so. It's a different culture. You know, Marucci has an honor the game feel and Victus has this change the game. They're more artistic and creative and almost like graffiti type art. And Marucci was more of this, I don't want to say conservative brand. Like we show up, we kind of joked about we'd show up and our shirts would be tucked in, we'd be wearing suits and the Victus guys would show up in a t-shirt and a hat on backwards.

1:08:59But it was different and it worked together and we pushed each other to the point of, you know, we made each other better. When did you start to make a decent salary? By 2014, I imagine you're actually making a pretty good salary. Yeah, we're making good money at that point in time, right? When we started Marucci Sports, we decided to take bigger salaries as we were raising some capital and, you know, we were putting in crazy hours. You know, I was traveling all over the place to all of our dealers. I was traveling to Asia. I was still doing, you know, all the product meetings that I still do to this day.

1:09:30So yeah, we were making more money at that point. And not every hour is created equal. There are certain people that add value without putting in the hours, right? I think what I did was I put in a lot more hours from the beginning, right? I was the guy that was, you know, here first turning on the lights and turning off the lights at night and traveling like crazy and really putting in the time. Because I knew that the more I worked, the more success we were having. And I kind of got addicted to that. And I think in 2020, you guys get acquired by a private equity firm called Compass. I think it was for around like$200 million, right?

1:10:07That's correct. Tell me the thinking around that acquisition. It was, I imagine, the idea would be, hey, now that we have a bigger fish here, we can scale in the way we want to scale. Yeah, I think some of it was in 2019, we decided that some of our shareholders had been in since 2009, right? It was no real return because we kept putting money back in the company. This was an opportunity for us to return some capital to shareholders. And at that point in time, we had a lot of shareholders that had been in for a while. So there was a little shareholder fatigue. And we saw an opportunity with the success we were having to then capitalize on that, go to market.

1:10:45it. And we went and did the whole roadshow with private equity and strategics and had a great outcome for all of our shareholders where everybody was super pleased. And it was great for us as well. And you stayed on as CEO? I did. They kept my entire team. That acquisition was awesome for us. And we quickly almost tripled our business within just three years with their ownership. Compass, basically, so they bought you guys for$200 million, making these acquisitions and growing. And that's the playbook oftentimes for private equity. It doesn't always work out, but it clearly did. In November of 2023, they then sell the holding company, the parent company that they built around Marucci Sports.

1:11:28They sell it to another holding company called Fox Factory for over half a billion dollars in November 2023. So a new parent company comes in. I mean, wow, what an amazing return in just three years. Yeah, it was an incredible run. Yeah. For us to find Fox through this process is just a dream come true. Going from private equity to a brand that literally has the same DNA of us. And Fox Factory makes like mountain bikes, right? That's right. Shocks, trucks, bikes. Yeah. You know, it's those high profile athletes. And what's crazy is if you walk their halls, it's all bike riders. It's all people that have the trucks.

1:12:12They're out in all the desert races and they love it. So it's got that same feeling as Marucci. Obviously, we were a lot smaller than Fox, but it's been just amazing being a part of that family. And you stayed on, again, part of that deal. You stayed on as CEO. I stayed on. They kept my entire team again and they're investing in us and letting us go. And it's been fun. So let's talk about where this is heading now, because from what I gather, you guys are – and you're set to do a couple hundred million dollars in revenue, right? Marucci Sports this year. And just basically the basic sort of knowledge I have about the baseball opportunity or the market would be, you know, for sure Japan and Korea are huge opportunities.

1:13:03They are. We've been highlighting Japan for the past five or six years. We have a full team there now, a full office and a hitter's house located in Tokyo. So we're doing a lot of investing in Japan. We see that as a huge opportunity. And I think that's our biggest goal is to grow our addressable market, right? Because we know baseball, you know what the size of baseball is. Softball is a huge emphasis of ours. And then, of course, going in Japan and then other categories. There's plenty of other categories we're in now, but it's not just these products that are out there. We're just going to make them.

1:13:34There has to be a story with it and technology. Yeah. So what is, if I say, what is Marucci Sports today? And I never met you before. And I'm like, what is it? What do you guys sell? How do you describe the brand today? You know, that's a good question. We are definitely outside of the diamond now. I think that was probably a stigma we had for many, many, many years that we were just a bat company. We now have our training facility. We have apparel. We're launching footwear at the end of this year. It's on field and training. Like spikes, like cleats and stuff? That's correct. Yeah, because you're a pitcher.

1:14:06I mean, is there a world where you make baseballs? We make baseballs now. So we pretty much make every product for a baseball player head to toe now. Oh, wow. Gloves, batting gloves, socks, now footwear, hats. I mean, we pretty much have every product now. We used to say we could outfit a player head to ankle. Now, as of December this year, it'll be head to toe. All right. So this year, you brokered a deal with Major League Baseball. Yeah. And starting in the 2025 season through the 2028, you will become the Rucci Bats will become the official bat of Major League Baseball. The only the only the second company to get that designation after, of course, Louisville Slugger.

1:14:52So you guys are the Louisville Slugger has always been the official bat of the MLB next year. There'll be Marucci Bats. yeah I mean it's kind of a pinch yourself moment right this is kind of a validation of all that hard work and all the years we put into this to be the official bat um and of course Victus as well Wilhelm Rucci and Victus will both be official bats next year so that's a it's a huge opportunity for us we don't take it lightly and uh you know we want to bring that new cool factor to the game like we like to change we like we like the the new changes that are happening in MLB and making it more fun for kids to play and making the games faster we think it's really good for the game yeah Yeah.

1:15:31Kurt, when you think about where you got, you know, where you got to here, we're talking about, again, if I met you in 2004, I'd be like, I don't know, man, you know, wooden bats, you know, the market opportunity here is limited. Yeah, so tens of thousands of these things, like, you know, I'd have been skeptical. But here you are, you know, you're now heading up a brand that's doing hundreds of millions of dollars in revenue a year. How much of where you got to now do you attribute to the work you put in and how much you think has to do with just getting lucky breaks? I mean, that's a great question.

1:16:06I think we've been very lucky along the way. Just where we're located, being in Baton Rouge, we've had some doors open just from being here. But I definitely can say just being consistent and putting in the time has helped. Yeah. You know, there's a sense of pride in this, I'll be honest with you. And I think when we sold this last time, it came out. when I was addressing our whole team. It's the first time. I'm not an emotional person, but it came out as I was addressing the team that I broke down. I couldn't get it out. It was such a special moment to us that we got to that point to sell to Fox.

1:16:38And then I enjoyed it for about one week. And now I'm driven again to do it again. I mean, I'm having fun. I got to be honest with you. This is such a challenge for me. I kind of like it. I can't stay home. And this team here is spectacular. and I'd go to battle with these guys any day. That's Kurt Ainsworth, co-founder and CEO of Marucci Sports. By the way, even though Kurt's MLB career was cut short by injury, he did play a role in at least one legendary triumph as a pitcher for Team USA during the Sydney Olympics in 2000. That year, for the first time in history, the U.S. became gold medal champions in baseball, beating Cuba in the finals 4-0.

1:17:23That game became known as the miracle on grass. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gyros.com or on Substack. This episode was produced by Devin Schwartz with music composed by Ramtin Erablui. It was edited by Neva Grant with research help from Catherine Seifer. Our engineers were Maggie Luthar and Jimmy Keely. Our production staff also includes Alex Chung, JC Howard, Carla Estevez, Sam Paulson, Chris Messini, Carrie Thompson, John Isabella, and Elaine Coates.

1:18:08I'm Guy Raz, and you've been listening to How I Built This.

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