Spikeball: Chris Ruder

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28:13Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2007, and Chris has the trademark for Spikeball and the URL. But of course, in order to revive the game, he needs money. So to start fundraising, he partners with his brother Matt and his childhood friends, Pat and Tim Kennedy. They were in, and we did cast a bit of a wider net to other friends, etc. And, you know, vast majority, they were cool about it, but it was kind of a thanks but no thanks. What did you think you needed? How much money did you think you needed to raise? We actually didn't set a number. We kind of just said, invest whatever you're comfortable losing, because chances are very good that you're going to lose it.

29:01Now, we're going to have fun doing this, but I don't recall, because at that time, I had no idea how much it was going to cost to manufacture. I had no idea how much to make a website. Back then, all websites were hand-coded, so they're really expensive to make. Packaging, marketing, et cetera. So we wound up raising, I think, a little over$100 ,000. So it was roughly$10 ,000,$15 ,000 a head. and yeah I remember we met at this bar called Casey's Tavern in South Loop in Chicago and that was sort of our quote first official gathering and where kind of everybody said yes I'm in or I'm out and yeah once we had that then yeah everybody kind of started doing some research to see okay how can we actually make this thing happen.

29:54And I mean this is 2007 and just kind of a gut check. I imagine that there were some people who might've been a little skeptical of this who were like, Chris, you know, you've got a good job. And like, do you think this is really going to work? And, and by the way, you've never run a business before. Like, what do you know about starting a business? Yeah. And I wouldn't blame them, right? Like not only have I not run a business, not that into sports. Yeah. I have a degree in photojournalism. I talked my way out of anything close to finance in college. So, you know, just looking at it on paper, like I should be the last one running this.

30:35So those that said no, I do not blame them one bit. But I think those that said yes saw the passion that I had. And I think they also thought it'd be a fun project. And like, you know what, maybe they weren't in love with their day jobs either and like, huh, this will be fun. Like do it with some friends and let's, you know, roll the dice and see what happens. And by the way, I think around this time you get a new job working for, I think for Xbox, for Microsoft Xbox. Yes. And doing like biz dev kind of stuff, business development. Advertising sales. So it's kind of a cool job, the product that there were advertisements that actually showed up inside the game.

31:16Oh, okay. I got you. All right. So that's your job. And this is a new job that you got to focus on. And meantime, you've got this side thing. But really, did you think that the spike ball thing, did you see it initially as a side hustle, just as a side fun project? Or did you have a bigger vision for it? No, absolutely side job. And I remember talking with my brother. I don't know if it was 08, 09, whatever. But I remember saying, success to me is if this thing one day could pay for a family vacation for me, me and my family. quitting my day job and going full-time. Because by that time, I had been in the corporate world for, I don't know, seven, eight years or something, making pretty good money, benefits, all that.

32:03And I'm like, there's no way this little rinky-dink spike ball thing could come close to that. My brother was like, yeah, wouldn't it be cool if maybe one day, like in 20 years, the company's big enough to maybe one of our kids could work there? Meaning like there would be one full-time employee at the company. It would be one of our children. All right. So you've got this new job at Microsoft, Xbox, and also kind of the side project. And with$100 ,000, roughly$100 ,000, where did you start? Who did you go to to manufacture the spike ball sets? Yeah, I remember talking to Tim Kennedy, and at the time he worked at Ronald McDonald House, which is the nonprofit arm of McDonald's.

32:48Yeah. And Tim knew somebody that worked for the company that makes all those little plastic toys that go in Happy Meals. Uh-huh. You know, with McDonald's being a Chicago company, of course, nearly all of their suppliers have offices in the area as well. So we got a meeting with those guys, and they wound up being our first manufacturer. So you basically brought it to this manufacturer, their office in Chicago, and you're like, well, this is it. We want to make these. And they were like, yeah, we can do that. Yeah, well, we took it to them and we said we've got some ideas on how we want to make it better, make it stronger, change the design, et cetera.

33:21But that was the prototype or sort of the base. And they were nice. But, you know, as you can imagine, a company like that is used to making quantities of, I would assume, 20, 30 million units of something. And I think our first order was 1 ,000 units. And they agreed to make them for you. They did. And if I remember right, I think it was about$40 ,000, maybe$50 ,000 for those first 1 ,000 sets. All right. So you get the first 1 ,000 prototypes made. And meantime, you're doing your day job. But the idea was, and this is 2007, maybe 2008 by the time you get them made, e-commerce is still not really – I mean it's still a couple years before it starts to take off.

34:10But the idea was to sell it through a website, spikeball.com. That was the idea? Yeah. Yeah. And I kind of had a feeling like even if we wanted to get into stores, I just didn't think we would be able to. Like it's a weird looking trampoline. It's kind of complicated to explain how you play. And, you know, I still had that sort of dot com buzz from San Francisco and kind of this in general. I love challenging the status quo. And I feel like the normal way a company would launch would be, yeah, the first thing you do is you call Dick's Sporting Goods and you try to get in there. And I'm like, you know what?

34:48We're going to actually do our own thing. Let's do spikeball.com and see if we can do it our own way. So the idea was we're going to sell through a website. Yep. And the site goes live in June of 2008. The spike ball sets are available. You've got 1 ,000 for sale. They're$50,$49.99. Meantime, tell me how the operation is working, right? Because it's you. You've got your day job. Your partners have their day job. And how did you guys divide and conquer? Who did what? Yeah, that was never very clear in hindsight. So we did a conference call, I believe every other week. And on that conference call, each person would sort of identify what work they were going to do during those next two weeks.

35:37And I remember if at times it felt like my role would kind of be like, you know, just nagging, just like, hey, this work didn't get done, what's going on? And like, it got fairly frustrating. And I remember talking to my brother a month or two later, and he said something along the lines of, Chris, I think what we're learning is most of us, I think, want to be silent partners. We want to be involved. We're pumped that we invested, but the day-to-day work isn't really of interest. So we came up with a plan that said, okay, guys, I'm going to essentially going to do all the work, but I need to somehow be compensated for that.

36:20But the company really doesn't have any money to pay me. So I came up with, I think it was like a three-year plan where if I hit certain sales numbers, I would earn stock from them. If I didn't hit the number, then I don't get anything. And some of the guys were cool with that. Some were not, but I spoke with a couple of them and I'm like, guys, look, I'm not trying to be greedy here, but if I'm staying up till two in the morning working and you're asleep in bed or going to a movie or hanging out with friends, then there needs to be, we somehow need to reconcile that. And eventually everybody was on board and I thankfully hit all three years of the sales numbers and it wound up working out for everybody.

37:08Yeah. All right. So the Psycho's live. June 2008. Spikeball.com. And, you know, you're not, I mean, it's just you and these guys, like your buddies in Chicago. It's not like you've got a big marketing budget. How did you even, who was going to find out about this? How were you going to even get any of these sold? What did you do to create awareness? Grassroots marketing is what it's officially called. But in our world, what that meant was going down to North Avenue Beach in Chicago. And yeah, we had like a Thursday night league that we'd play. So I like just started emailing a bunch of friends that lived in the area.

37:49And yeah, like in any time I'd see somebody like stop their bike or stop running and just kind of look at us. I'd walk up to them, introduce myself. Oh, I'm Chris Reuter, just started this company, and we've got a league here. If I can get your email address, I would love to add you to the newsletter. And I literally had a clipboard and a pencil, and that's how our email lists began. Other times, I'd see people playing volleyball, and I'd walk up to them with this weird trampoline-looking thing and ask people if they wanted to play. And yeah. Did they catch on? Were they like, oh, this is awesome?

38:27Or were they like, oh, yeah, not so much? Walking up to them, I thought, I'm like, because the rules of the games are nearly identical. So walking up to these players, I was pretty confident they're going to love it. And they played. And like anybody that plays, those first five to 10 minutes, it's kind of awkward. You don't know how far the ball is going to go. You don't know if you should have a flat hand or kind of cup it a little bit. And these were also two-on-two volleyball players. So you've got to be a pretty good athlete to play two-on-two. So they were used to being at the top of their game.

39:00They were used to looking pretty good when they play their sport. And they looked like absolute fools when they were using spike ball. Yeah. Because it's not a game that you can necessarily catch right away, right? It takes a couple of tries. Right. But once you have that first rally or that first spike, you're hooked. And that's where, you know, you can literally see the light bulb go off and that person like smiles a little bit more. Maybe they start talking some trash to their friends, but as long as they're willing to play for five to 10 minutes, they'll get it. But if they give up before then, our chances of keeping them are pretty low.

39:40All right. So you launch and how are sales in those first few weeks? If I remember right, in the month of June, we did about$4 ,000. All right. So, you know, not bad. Yeah, I thought it was pretty good. And then I think in July, I think we did like$700. I was like, oh my God, what's happening? Right, because most of those sales in the first month were probably people who knew you. Yeah, I consider nearly all of those pity sales. People that didn't necessarily want the product, they're like, oh, Chris and these guys are starting this new company, we'll support them. Yeah. And I see all the orders coming, and I knew nearly every single name in that month of June.

40:28But we finished that year at, I believe,$10 ,882. $10 ,882. So that's, you're selling what, about over 200 that year. And that means you're left with a little less than 800 to go in your inventory. But you had a day job. I mean, you were working for Microsoft. So I have to assume you weren't super stressed out about that. Yeah. And actually, I didn't know if 10 ,882 was good or bad. But it was 10 ,882 more than we had the year prior, right? So we hadn't even launched. But that wasn't going to cover your costs, I mean. Right. But again, if the lens I'm looking at this through is it's a fun side job.

41:17And okay, if we did 10 ,000 this year, if we can do, I don't know, 15 ,000 next year, that'd be amazing. Yeah. And yes, even if sales went to zero, I still got the day job. So really, what was the plan? I mean, you do a little over 10 ,000 in year one. And then I think year two, you did a little better, 18 ,000. Yep. But what were you relying on? I mean, how were people going to find out about it? I mean, you had your launch party. You had your Thursday night spike ball meetups in Chicago. But aside from that, what were you doing to create awareness? What resources did you even have to do that?

42:02I had been gathering the email addresses. So I do like an email newsletter. I don't remember if it was once a week or two a week or something like that. Yeah. That was part of it. It's interesting to hear you say, what was the plan? I remember Googling how to write a business plan. And I found a format and it was like, I don't know, a 20 page document or something. And you could just basically start filling in the blanks. Yeah. And I think I made it to page three before I gave up. And I remember thinking like, am I really going to get value from this? Oh, I should do it because business plans, That's what like real businesses do.

42:40And I hope Spikeball one day would become that. But, you know, I was almost doing it almost as if I feel like obligated, like that's what you're supposed to do. Yeah. Not because I was going to really get value from it. And I think, yeah, by the time I got to page three, I'm like, no, I actually need to work on a Facebook post or an email newsletter or trying to find some content rather than, you know, I'll get back to this document. And I never did. But to this day, we don't have a formal business plan, but yeah. But even with the, I mean, your newsletter was going to people who had already bought one.

43:14So how did new orders come in? What do you know about where people were finding out about it from? So nearly every customer that bought at spikeball.com would get a personal email from me. It was not automated. but let's say it was somebody that lived in San Francisco, a guy named Mike. And the order came through. I would send Mike an email saying, hey, Mike, thanks for the order. I'm actually going to head to the post office tonight and drop your box off. So it should arrive there, I don't know, Thursday. See, you live in San Francisco. I used to live there. What an absolutely beautiful city.

43:50If you don't mind me asking, how did you hear about Spikeball? Yeah. That was the general format. And I wanted people to know that there's an actual human behind this business. And it wasn't this just kind of nameless, faceless thing. I think people, when they got that email, they were kind of confused. Like, wait, the CEO is emailing me saying that he's going to personally drive this box to the post office? Like, what is going on here? But I think a lot of people were intrigued by it. So I'm curious about one order that you received, I think, fairly early into this, you know, maybe two years in.

44:25And it was from somebody just outside of Nashville. Yeah, it was Eve, and she works at Young Life. Which is, I think, one of the largest Christian youth groups in the U.S., maybe in the world. Yeah, it's massive, and I had never heard of it. But, yeah, I asked the question, how'd you hear about it? And she said something along the lines of, oh, yeah, I work with Young Life, and it's becoming very popular with our kids. and so I googled Young Life and yeah like I think there's like literally millions of high school kids that are a part of this all over the world she explained to me that I don't know if it's every week or every couple weeks the kids get together at somebody's house so there may be like 50 kids in somebody's living room and I believe it's like a two-hour meeting the first hour I believe they're talking about their faith and then the second hour is some sort of group activity And the preferred activity, at least in suburban Nashville, was spike ball.

45:27Once you start to kind of hear about that, because that's – I mean you're talking about Christian youth group. You're potentially able to expose this product to hundreds of thousands, millions of kids. So once you found out about this, did you immediately think, OK, this is a huge opportunity or not quite yet? Yeah, I thought I was onto something. And back then I was also reading a lot of Seth Godin books. And I remember him talking about how you need to give away a ton of your product for free. Yeah. And if the product can't really travel on its own, it can't market itself, then you might not have that great of a product.

46:05So as I'm talking with Eve, I was like, oh, do you have any other Young Life friends that you think may be into some free sets? And she'd give me some names and I'd ship them. And I then stumbled on, went to the Young Life website and saw that there was a directory of like, I think they call them Young Life leaders, like a global directory open to the public. And when you would send these out to some of these folks around Nashville and some of these Christian youth leaders, did you start to see an impact? Like would you see sales spike from Nashville on your website or the Nashville area? Yeah, I'd see that.

46:47And then, yeah, again, it was only available on spikeball.com. So I'd see the emails come in and I'd start seeing more email addresses that ended with at Young Life. And I was like, okay, this is starting to, the fire is growing. You also started to hear from Ultimate Frisbee players, which is interesting because that's also kind of a niche game, right? There is a group of people who play Ultimate Frisbee. Yep. And they would call it ultimate. I learned that. I used to think it was called ultimate frisbee, but they corrected me. And I think they were attracted to the sort of odd slash alternative slash niche nature of spike ball.

47:28And yeah. Yeah. And and and then PE teachers, too, which which makes sense to me because, you know, you've got mixed gender groups and different levels of athleticism. But this was a game that you could basically put a bunch of kids in and volleyball can be hard, especially for short kids. I remember being when I was when I was a little short, but you could get, you know, boys and girls around the net. And yeah, that makes. And so you start to hear from PE teachers. Absolutely. Yeah, they'd tell us like, you know, we're always looking for cool, new, innovative games. One thing we did hear from them, which I loved, they're like, you know, of a group of, let's say, a class of 25 kids, there's usually three to four that are pretty difficult to engage.

48:15You know, they may not want to participate and do what everybody else is doing. But when we bring out the spike ball nets, those are the kids that are most wanting to engage and they're most into it. Um, so that was one draw of it. We've heard from, you know, teachers that have, you know, students in wheelchairs and stuff. And I've seen countless videos of four kids in wheelchairs playing and they absolutely love it. There's one story I read about another – because you had – I mean initially the subcultures were like PE teachers and ultimate players and Christian youth groups. But apparently also like Amish and Mennonite communities.

48:55Did you know about this, that it was like super popular among Mennonites and the Amish? I did not initially. I knew it was very popular in central Pennsylvania, especially Lancaster, Pennsylvania. And we got an email from a reporter at the Wall Street Journal saying, Chris, I'd love to interview you about the Amish and Mennonite influence or participation in spike ball. And I was like, holy smokes, you know, what a dream to get a note like that from the Wall Street Journal. but not in a million years did I think that would be the topic. Yeah. And I had seen some pictures on social media before of people in what I would consider traditional Amish clothing or Mennonite clothing playing.

49:47And yeah, we wound up getting a front page story on the Wall Street Journal on that topic. Amazing. I mean, you had, I think year three, you're doing about$45 ,000 in revenue for that whole year, which is obviously promising. Still, not a whole lot of money, but was that also financing the, I mean, how are you manufacturing more product with such little revenue coming in? I believe the initial raise we did to start the company was maybe a hundred, right around a hundred thousand. And then I think it was in year three, I think we raised another 20 ,000 from the same guys. And that is what got us through.

50:36You weren't making a salary at all. Yeah. I had, I was getting literally zero. Um, and we were spending next to nothing on advertising. Yeah. So yeah, manufacturing the sets was by far the biggest expense we had. Right. All right. So was it still manageable? I mean, because it was still just you? You didn't have anybody helping you out? Still just me. And I forget what year that we kind of outgrew my basement, but got a larger self-storage unit in my hometown in Kankakee about an hour away. So whenever my basement would start running low on inventory, I'd drive down there, bring those back to my house in Chicago, put them in the basement.

51:22That inventory may last a couple weeks. And then, you know, depending on the time of year, go back to Kankakee, reload the car, et cetera. And, yeah. So I think it's around 2013, like five or six years after you launch the business, that you hit a big milestone, a million dollars in revenue. And you, at this point, you still had your day job. I guess you'd moved on from Microsoft at this point. I think you're working for Live Nation. But anyway, I mean, at this point, I guess you decide you can quit, right? you can quit your day job to focus on Spikeball full-time, right? Yeah. So we had a million dollars with zero full-time employees in 2013, and that's when my wife and I agreed it was safe to quit the day job.

52:10And maybe hire somebody to help. Yep, yep. That's when Scott Palmer, our current COO, joined. And, yeah, it was about a year later that when Dick's Boarding Goods actually reached out to us and said, hey, we'd love to carry your product. They reached out to you. Yeah. How did they find out about you? I was floored. I was like, wait, what? I'm not sure how. You know, people were playing in very high visible areas. So Harvard was one of the first colleges to really take off with this. And they're playing in Harvard Yard where, you know, tons of tourists, international tourists, Sheeps Meadow in Central Park, tons of people playing.

52:52So I would imagine some employee at Dick's kind of stumbled on it and was like, huh, this is kind of cool. Let's take a peek. And when they called you, did they say we're going to put you in every Dick's store? Or were they going to start at just a couple locations at the beginning? They emailed us. And when I saw it, I was shocked. I was like, wow, like I thought if we were ever to go into Dick's Sporting Goods, we'd have to call them and beg and plead. Yeah. But I remember my initial response was I didn't say this to them, but I remember thinking like, I'm not sure I really want to go into Dick's Sporting Goods because, you know, that's that's a big box store.

53:32And we're Spikeball. We're this like cool cult underground brand where, you know, we're kind of too cool for that sort of thing. And I remember talking to a friend of mine and I said this to him and he kind of smirked and I forget exactly what he said, but he essentially said, Chris, get over yourself. This is Dick's sporting goods. Like, are you kidding me? Uh, you know, that's exactly what I needed to hear. So, um, Dick's did want to go in all stores. I was nervous because I was like, wait, if we go into all stores and we fail, they're not going to give us a second shot. So I said, all right, how about this, guys?

54:11Let's start with maybe 25 or 50 stores. And if we do well, maybe we add another 100 or 200, but we'll eventually get to all stores. But the risk to go in all of them on day one, that's just too much for me. And they said, yeah, we'll go whatever speed you want to, Chris. So that's how we got in. So once you got into Dick's, I mean, that doesn't necessarily guarantee success, right? I mean, there are thousands of products in a sporting goods store like that. People still have to notice it. Did that change the equation for you guys quickly? Did it make a difference? It did. I remember, I think the product had been on the store shelf for literally four or five days or something like that.

55:04And Dix reached out and said, guys, sales data is off the charts. We're ready to go all in when you are, but we'll go at whatever pace you want. So the first couple days were incredible, and then we eventually added, I think, maybe another 50 and then 100. And I think they have north of 700 stores now or 800, something like that. And the tricky part, though, was a wildly different cash cycle when selling to Dick's Sporting Goods than selling on Spikeball.com. You know, when you sell on spikeball.com, you literally get that money in your bank 24 to 48 hours after the person buys it. When you're dealing with a retailer, especially the larger ones, you don't get paid sometimes two, three months after you ship it or sometimes after when they receive it.

56:01Yeah. And I almost got in some trouble in the early days not recognizing that. I was a member of this group called the Junto Institute, it was like an entrepreneurial group. And we all had to show up with our finances, balance sheet, P &L, et cetera, cash flow forecasts. And I remember showing it to the instructor and he said, Chris, you realize you're going to go out of business and run out of cash here in a couple months. And I was like, you're crazy. We're growing like crazy. We just got to exporting goods. Like, what are you talking about? And he said, Chris, sometimes companies die from growing too fast.

56:36You know, I think the line is you die from indigestion, not necessarily starvation. And what he showed me in very clear terms was, yeah, Chris, you're shifting from this e-commerce business where you get your money in one to two days to a wholesale one where you're going to have to wait a couple months and you're going to need to figure out how to do that transition. It terrified me. Why don't we come back in just a moment while Chris walks away from a half-million-dollar deal he's offered on Shark Tank, and why he decides to embrace the idea that Spikeball needs a new name. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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59:44Hey, welcome back to How I Built This. So it's around 2013, and Chris manages to avert a big potential cash flow problem by taking out a line of credit at the bank. Meanwhile, around the same time, he decides he could raise even more money by applying to be on Shark Tank. So, yeah, the way it works is you, of course, fill out an application like a paper application, but then they want you to send in a video and it's, you know, super low budget, just a selfie video of you telling your story and you send in version one and then the producers give you some tips and they say, okay, like, why don't you tighten this up or tell us more about this, or maybe go outside where you've got better lighting.

1:00:27And I felt like I went through maybe three or four versions of each video becoming better and better. And yeah, eventually made it to the point where they said, all right, Chris, here's the dates we're going to film. So come on out. So, all right. I've heard we've had some of the sharks on the show as guests. And it's interesting because in every case, they're very nice. Mark Cuban's been on the show a few times and he's really nice. And on the show, he can be a real jerk, too. And what I've realized is that they are acting. They are sort of caricatures of themselves in some way. And part of that is because that gives them more airtime.

1:01:11Like if there's a zinger, like a one-liner, they get more airtime. And I've seen your appearance on Shark Tank. And was your experience actually in the studio similar to what viewers ultimately saw when it was cut down and edited? Yeah. The sharks were all super nice. and I do think when whether it's Mark Cuban or the other sharks I think if you see them taking some jabs at the entrepreneur I think it's usually because the entrepreneur didn't come prepared or one thing that I also have noticed when watching the show is if they get a feeling that the person is there just to get exposure and they don't want actually want to get a deal they really don't like that and you wanted a deal you were really looking for a deal absolutely and you did get an offer from Damon John for half a million dollars for 20 % of the company, which you agreed to.

1:02:03Yep. But the deal actually fell through because they need to actually negotiate it after off-air. What happened? Why didn't it go through? Yeah. So we filmed in, I think it was September of 2014. And I think I spoke with him maybe like a month or two after we filmed. That was the first time I spoke with him since filming. And he was nice. He said, look, Chris, we can do the deal at what we agreed to on the show, or we can throw that deal out. And if you want to do something different, I'm open to that. And when we talked about sort of what direction it would be or what do we want to do, his main interest lied in licensing.

1:02:45So I think he said something along the lines of, you know, Chris, I've got friends at Marvel Comics. Let's maybe explore like a Spider-Man branded set or something along those lines. and while that sounds kind of cool it kind of felt like we're treating it like it was a toy and you know I consider ourselves like a sporting goods business I want this to become a legitimate sport and that didn't quite align with how I wanted to take the business and when I expressed some discomfort with that he said okay how about we license it you know he's like I got some friends at the NHL. Let's make some NHL team sets.

1:03:21And I was like, licensing in general, at least at this stage for our business, doesn't feel right. I want to build our own brand. Yeah. Yeah. You know, we never officially called the deal off, but as some relationships go, you just kind of stop calling each other. Yeah. And that's kind of how it went. All right. That's filmed in the fall of 2014 and it's aired in May of 2015. What did that do to sales? Did it have, I have to assume it had a significant impact because millions of people are going to watch that episode. Yeah, it was, it was massive. It was the final segment of the season finale.

1:03:57So yeah, we had a massive party at our office, huge sales on spikeball.com that weekend and in the weeks to follow. But the real lift was we started getting tons of inbound requests from retailers, primarily like smaller mom and pop sporting goods stores, toy stores, et cetera. And yeah, the thing I didn't plan for or think about was reruns. So we got that initial pop, which was amazing. And also it was a big pop, but a lot of people also DVR'd it. So they'd watch it a few weeks later. But reruns are still running to this day. So it's this gift that just keeps giving. All right. Now you've been on national TV.

1:04:41And by the way, I mean, Spikeball is so so we're talking about this game called Spikeball or this but Spikeball is a brand. And it's very intentionally a brand because you made a conscious decision to decouple Spikeball from the game and to encourage people to use the name Roundnet. Can you explain the reasoning behind that? Absolutely. So Spikeball is a company that makes equipment for the sport of Roundnet. And I got to know a woman named Mary Horwath. She's the former chief marketing officer of Rollerblade. And she was there back in the 90s when it absolutely exploded. Yeah. And back then, people were using the name Rollerblade.

1:05:28a lot of people were using it in a generic fashion. Let's go play rollerblade hockey. Let's go rollerblading, et cetera. And she realized that if people kept using it that way, that they could potentially lose their trademark and rollerblade would become a generic term. So she is the one that coined the phrase or the term inline skates. So that's why at the X Games, there is no competition, no rollerblade competition. There's an inline skating competition. and she saw how we were using the name spike ball as the name of the sport and in you know sometimes in a generic fashion and she and some other folks I spoke with said yeah you need a name for the actual sport similar to baseball basketball football you know those are all generic terms that nobody owns the rights to and I remember thinking like okay what what makes our product unique?

1:06:23Well, the biggest thing I believe is it's a round net. Like I can't think of a single other sport that has a round net in it. It's a super boring word when you think about it, round net. But if you take away everything you know about the name basketball or football or baseball, those are all pretty boring names as well. But what you know about the sport, all the brands, the athletes, et cetera, that's why you get excited when you hear those names. and you know when I did come up with the word round net part of me I'd say 10 % of me was like don't do it because I of course want the whole world saying the word spike ball but 90 % of me was like look if you are that controlling this thing will probably never get the sport definitely will not get to the size that I think it can be.

1:07:15And so you basically decided to create this, like a governing body for a sport called Roundnet? I came up with the name Roundnet. But as tournaments started becoming more and more of a thing, different leaders within the community started speaking up, saying, hey, I like this rule or I don't like that one. And yeah, it sort of emerged that governing bodies started coming around. And it's pretty well developed right now. You know, there's the International Roundnet Federation. That's sort of the global governing body. And then I think it's 37 countries also have governing bodies. And they all report up and into the IRF.

1:07:58We've seen this with pickleball. I mean, pickleball has been around since I think the 60s. But now it just exploded in the last like five years. It's absolutely everywhere. And I wouldn't be surprised if it was an Olympic sport in 10 years. But tell me about your ambitions with Roundnet. What do you imagine Roundnet to be in like 20 years from now? An Olympic sport? I mean, professional leagues? Tell me, what do you think? Yeah, I absolutely think we will be recognized by the Olympics. I think there will be professional Roundnet players and we will be considered a legitimate sport. Um, the one thing that is a bit unique about us is that this is all being driven by the players, by the community.

1:08:38So, you know, I didn't sit in a conference room with some other spike ball employees and say, huh, we should start doing tournaments. Groups of friends were getting together with like a clipboard and drawing up some brackets and the competitive juices were flowing. Same with the Olympic recognition, the IRF formed. And their tagline is paving the pathway to the Olympics. They are the ones studying what is needed, what's required. And I think you need, I don't know, 60 or 70 countries to have governing bodies. We've already got 37. That's a pretty darn good start. And do you go to, are you planning on going to any of these international tournaments or competitions?

1:09:24Yeah, I was at first ever world championship in Belgium last fall. Oh, wow. And I was just having this out-of-body experience. I can't believe I'm standing in a field in Belgium watching a group of Japanese people play a group of Mexican people, Roundnet. Nothing more gratifying than to see that this is what millions of people are choosing to do. Yeah. All right. So now you've created this name, Roundnet, and there are tournaments around the world. And let me ask you about the marketplace for Roundnet, because if you go to Amazon and you type in spike ball, understandably, there's going to be a bunch of competitors.

1:10:04And they look pretty similar, you know, and some of them are, you know, significantly less expensive. But they're allowed to do that, right? This is not a patented product. Anybody can make it. Yeah. I mean, we do have – we've got some patents that have been filed for, some that have been accepted. But yeah, the general concept, yeah, is not protected. And I remember when I think the first one showed up in 2014 or 15. Who was that? Who did it? Franklin Sports. I believe it was Spiderball. Oh, wow. That's a big company. And it was exactly like what you guys were doing. Lower end, you know, the same shape in general, same concept.

1:10:50Yeah. And I was at the toy fair in New York when I first saw it. So I was absolutely terrified. I'm like, there's absolutely no way we can compete. I was like, I can't, I've got three kids at home. My 100 % of my income now is from spike ball. And I cannot believe I just quit a cushy corporate job. I'm toast. Yeah. And then a year or so went by and didn't really feel anything. We kept growing. and then another one showed up and then another one. And I think there's like over 40 now or something like that. Right. But when you go to like the USA RoundNet website or the international RoundNet website, it's fairly clear everybody's playing on spike ball nets.

1:11:37So, I mean, you have managed to position this strongly, but essentially at these international RoundNet tournaments, Spikeball tends to be the main sponsor. Yeah. And even if we're not the sponsor, they are choosing our product. Yeah. The last numbers I saw were from 2021, where you report about over$20 million in revenue and probably by now higher than that. But I want to ask you about, I mean, the business is still growing. Obviously, you've had an impact. I mean, you see Spikeball. I see them every time I go to a beach or a park everywhere. But I have to imagine that from a business perspective, you have to think about diversification strategy, right?

1:12:24Because the tournaments are definitely going to promote the sport and more people will buy the product. But generally, people are going to buy the spike ball set once, twice, and that's it, right? Right. And so tell me about, because I know you guys acquired this software company called Fuego back in 2021. And I have to imagine that that's part of your strategy to grow. Tell me about what that does and how that will grow the business. Yeah, I'm very, very excited about Fuego. Fuego is a platform that makes running tournaments much, much easier. So created for Roundnet and this gentleman, Alex Tuzel, he was running Roundnet tournaments.

1:13:13And I think he, like most others, I think it was like a Google Doc or something that they were using to run the event. And it was very clunky. So he designed it and started using it. And then other tournament directors started asking him about it. And he's like, yeah, you can use it. Go ahead. And everybody fell in love with it. and we became friends with Alex and said, hey Alex, would you be up for selling your business? Like we'll buy it and you join us as a full-time employee but you keep doing what you've been doing. You'll just have some more resources and the exciting part we've been seeing the last few months is there's fairly significant interest from the pickleball world.

1:13:50We are hearing from pickleball tournament directors saying this is a heck of a lot better than what we've got and it makes life a lot easier and yeah, I see tremendous potential there. And we've seen people using it for like board game tournaments, volleyball tournaments, lacrosse tournaments. Like it's so very excited about its potential. It's still very, very early. So how, I mean, how much in terms of like looking at the future of the business, what percentage of the business do you hope Fuego to be in 10 years from now versus the product line? I think it can become a significant profit driver.

1:14:29if you think of consumer products where you're making a physical product, margins aren't that great, right? You have to make a thing, you have to ship it, and there's all sorts of stuff involved. If you think of software businesses, you make the thing once, and if a million people use it, you don't have to make it a million more times. So yeah, I'd love to see it. And I don't think it'll be able to be, with Roundnet, the sport being the size it is today, it's not going to be a major moneymaker. So in order for Fuego to become a significant driver to our bottom line, it needs to become a player in some other sports.

1:15:06And if it's pickleball that happens to say, yeah, we like this, then okay, we're going to start working on some features. So if you like it today, you're going to love it tomorrow. So when you, I mean, you know, when you think about the journey you took and here you are, and you've got, you know, a great sustainable business and it's growing, you know, how much of where you are do you think has to do with the work you put in and the time and the effort? And how much do you think has to do with just luck and the serendipity of this game catching on? I think I'd probably put serendipity at number one.

1:15:39You know, had the Kennedys never purchased that set years ago, I never would have seen it. Yeah. Luck is right up there as well. And I think another one is, you know, actually took that first step. So I'm grateful that I did take that first step and had a group of friends and family that took that step with me and completely recognize that I'm very privileged in that, you know, had friends and family that were able to write sizable checks and not everybody has that. yeah I've just you're you're pretty good at the game now I used to be now if I stumble on some rookies on the beach like maybe they're 22 years old and you know in general way better athletes than me but if this is the first time they've been playing yes I will beat them but if I go to a tournament, I get absolutely smoked.

1:16:36Yeah. It's depressing. That's Chris Reuter of Spikeball. By the way, Jeff Knurek, the original inventor of Spikeball, turns out he's now the cartoonist and co-creator behind Jumble, the word puzzle that's syndicated in hundreds of newspapers around the world. And he still sponsors Spikeball teams and promotes a sport through his own club and website. It's called Club Spike. 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 it's totally free. This episode was produced by Chris Messini and edited by Neva Grant with music composed by Ramtin Ereblui.

1:17:18Our production team also includes J.C. Howard, Casey Herman, Sam Paulson, Liz Metzger, Alex Chung, Elaine Coates, John Isabella, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.

1:17:38If you like How I Built This, you can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey.