155. Build Your Dream Business: The Million-Dollar Blueprint

0:00Launching a business is exciting, but it's even better when you know it can make millions. Today's guest has a knack for turning brands into profit-making powerhouses. Not only did he grow his first business to$1 million in sales within the first year, but he consults with other businesses to break patterns of their steady sales so they can get to exponential growth. This is Ryan Atkinson, and you're listening to the Upflip Podcast, where we uncover how great businesses are built and the secrets to replicating their success. On today's episode, Adam Callanan, founder of Bottle Keeper and newly launched Penetane, shares his best kept secrets on marketing a product's value, creating a cost-effective manufacturing process, and generating more sales online.

0:40It's his own method for generating millions, and he's here to share it with us. Adam, welcome to the show. I'm so, so excited to have you on. Thank you so much for being here. And I am thrilled to be here, Ryan. Thanks for having me. It's gonna be great because you're a serial entrepreneur. You were part of the founding team at American National Medical Management, which was acquired. You started Bottle Keeper, which you appeared on Shark Tank, and you secure to deal with Mark and Lorian. That was acquired. And now you're starting Pentane. I've got to ask, when did you know you wanted to be an entrepreneur?

1:09Is that something that you're built up for? How did you know you're going to be an entrepreneur like this? You know, I was not even remotely that kid that was leveraging all the kids in the neighborhood to go and sell rocks to strangers. And you hear those stories, and I was not that kid. I grew up wanting to be a doctor my entire life. From the age of six, I started having these weird dreams about saving people on operating tables, which is very odd for a six-year-old to have. But I built my entire life around medicine, around being a doctor. Actually found, we just moved out of a house recently, and I just found a book in a box that I used to use when I was eight year olds.

1:39It was how to read an EKG with like a whole workbook in there of like you're defining all the waves inside of an EKG. So that was the kid that I was. Going to college, I got a crazy science degree because I wanted to go to medical school. About halfway into college at the University of Arizona, I decided that I didn't want to go to medical school anymore, largely because I had had every doctor that I'd ever worked with, which was a lot at that point. Not every doctor, obviously, but the vast majority of them say, don't do it. It's not worth it. It's not what you think it is. And, you know, as I got halfway into college, I realized that the track that I wanted to take and what I wanted to do, I was going to be 35 years old, getting out of school and training with half a million dollars in debt.

2:14I certainly was going to, you know, if I had a family, it was going to be a struggle. Like my life was effectively going to start at 35. And that just, the older I got, the less attractive that got. So I translated that into business and went into an orthopedic device company that was pretty much a startup. I mean, it was working out of an apartment. in Phoenix, Arizona. And I was the first outside salesperson to come in. It was a family basically that had started this company. And so that was my first foray into it. I mean, I did early on, I always was very interested in how things work. I had a grandfather that was very influential in that, that, you know, it was like the wizard genius master tinkerer that invented a thousand things and never, you know, never figured out how to get any of them to work.

2:50So we got to take things apart and put them back together a lot. And that was very foundational. And frankly, that's a lot of what science and math is, is really just knowing where you are, you know, where you need to be and you have to figure the stuff out in between. Absolutely. And I feel like you figured out like a ton of stuff in between, because like I said, you were a part of that American national medical management team, which was acquired and you started bottle keeper, which I know people listening are going to be super enthusiastic to hear about. Cause like I said, you appeared on shark tank and we're going to dive into that story.

3:15But before we do that, can you tell us like what led up to bottle keeper and your founding story? I've already listened to it. It's very cool, but I want to give the audience an idea of like what started bottle keeper. Yeah, I will clarify A &M or American National. The company wasn't acquired. My position was acquired. That is a much longer story. That's not that fun. So we move forward. point of clarification. Yeah, there's a lot of scar tissue there, probably for another podcast. With Bottle Keeper, that was in May of 2013 that I sold my position in that company. And my cousin, Matt, had a few months earlier invented this product sitting on the beach drinking a beer out of a red party cup.

3:46And he's the kind of maniac that will only drink a Corona at a specific temperature out of a bottle. If it's not that, it's just not good. So he's on a beach drinking out of a party cup. It's warm in four minutes and whatever it is, it's gross. And he sees people using water bottles everywhere and just has this idea. Why can't I cut one of those in half and pat it or put something inside of it and put a beer bottle inside of it? And so he went and got an off the shelf water bottle, vice-gripped it to a table, hacksawed it in half. I actually should have brought it. I have one in my office. We have like the original prototype.

4:16It literally has like these vice-gripped marks on it with a hacksaw in the middle of it. And he took neoprene koozie material and super glued it inside and it fit his Corona perfectly. Like the beer bottle stuck out of the top about an inch so you could drink directly from the bottle, but it kept the beer super cold and it protected the bottle. You know, glass and beaches is not, you know, it doesn't notoriously make a lot of sense. And so that happened in the fall of 2012 and going into 2013, I now was kind of looking for the next thing to do. I decided to go and start a venture fund, which is an awful idea because I hate raising money.

4:44So I'm very bad at it. And Matt, my cousin kind of harassed me. And I say that very lovingly. We were super close. He was the best man at my wedding way before all that. And, you know, finally it was like, look, very admittedly, I was not convinced that this product was a thing. It just looked to me like a product that you would find at Spencer's Gifts for$7 and you'd give it as a white elephant gift. And that is fine. And that's a hobby if that's where you want to spend your time. But that's not a business. I mean, you got to sell a billion of those things to make any money doing that. And again, you have to be making money for it to be an actual business.

5:11So I agreed to come on with him to try it, to see what it was, but did so with really strict guardrails. And that was, we needed to be able to prove that we could get strangers to swipe their credit cards and click buy at a real price point before we went and contributed real time and some money to it. That was the first guardrail. The second guardrail is that if it worked, I never wanted to have employees. I had 80 people in multiple states and it was, you know, an orthopedic stuff. It was delivery vehicles and devices and warehouses. And it was so much stuff. It was so from a fixed expense standpoint, it was so heavy and that sucked.

5:43Honestly, it just sucked to operate. It wasn't fun. You couldn't get away from it. So those were sort of the guardrails we put in place with Bottle Keeper. So we proved out the first part of that with crowdfunding. There's a longer story to that, but we ultimately ended up at crowdfunding. And that was a really, really good way to get strangers from all over the country, in our case, from five countries, to click buy at a real price point. That's where we got started. That was in the fall of 2013. And it sort of took off from there. Yeah. I want to talk about this crowdfunding platform as well, because I believe you guys raised over like 350 % of what your actual goal was.

6:15Correct me if I'm wrong there, but I want to ask, once that happens, once you start actually getting people to buy and whatnot. Like what's going through your mind? Like, oh my gosh, I'm about to do this full time now. Or what was kind of going through your mind once you get people to buy? It's working. Yeah. I think that was going to happen. Now we got to do it. I mean, look, the reality is like on one hand, I'm trying to start a venture capital fund, which is a very complicated, challenging thing to do unless you're an expert at raising money, which again, I am not. And then this thing starts working and it's so simple.

6:41It's like you buy it for X, you sell it for Y. And our margins were incredible because we tested a real price point. We did. We tested at a$20 per unit price point and people were buying it at$20 per unit, pre-ordering it, you know, months ahead of when they were actually going to get it. We got publicity stuff. There was an article in Gizmodo about it and there was a lot of strategy behind all of that, but we did end up selling a lot more. Then was our minimum sort of, is this a thing or not a thing threshold? Interesting. I want to get a little bit tactical here with this crowdfunding platform because it's obviously a great way, like Kickstarter, there's a ton out there how to actually do this successfully.

7:14If you could give advice to someone listening that wants to start their own business and crowdfunding is a good way to do it. Kickstarter is a great way to do it. What are like one or two things you would advise them to do to market it successfully on those types of platforms? Yeah, I mean, I think the first very misunderstood component of doing both crowdfunding and really any early stage startup is that you don't need to go and pay a company or pay a consultant or pay this big infrastructure thing to help you do it right. The fancier it looks, you're supposed to be a mom and pop, like starting up and scrounging and it comes out and looks like a mega motion picture.

7:47I mean, there's a time and a place for that in a business, but it's probably not at the point of crowdfunding. And granted, it depends on what you're doing. If you're starting a cancer therapy company, you probably need that. We were starting a beer koozie company. So I literally shot it on a camera in my kitchen or crowdfunding video, which you can still find. It was unfundable. So that's the first thing is like you can do most of the things yourself. If there are some components you need help with, like video and, you know, some content creation, absolutely do it. But be really, really careful about how you do it and where those expenses go.

8:14The other is platform does matter. At least it did then. And again, as a reminder, this is 2013. So that's more than a decade ago. The platforms have probably changed a lot. Then Kickstarter wouldn't let us do it because they were focused on art projects. And that was just where they were in their journey. They literally kicked us off the platform, which was amazing because what it forced me to do was leverage resource and network and ended up at Fundable, right? It turned out I actually knew the guy that started Fundable. His name is Will Schroeder. And they were amazingly helpful. They gave us access to all sorts of stuff that we probably, you know, we could have had access to, but we would have had to pay for like PR.

8:48And they had an internal person that had a PR list that part of, obviously, they want you to be successful. So they had put a bunch of tools and systems inside their business to help you be successful. And that worked really, really well for us. Even then, that was a really new crowdfunding platform. It wasn't no name by any stretch, but it certainly wasn't Kickstarter. Interesting. And the reason you guys did the crowdfunding, just so I'm interpreting this correctly, is because of that first guardrail. You had to actually proof a concept, essentially, that you can sell this at a real price point and that you can put a customer out there and people are going to put their credit card and it actually buys.

9:17Is that the main reason for the crowdfunding initially? And those people, 100%. That was the only reason. And those people were not our family members. And this is a mistake first-time founders make all the time. They go and they ask their friends what they think about their idea. And that is worthless. I mean, it's nice. They're nice conversations to have. Ask your mom because it's going to make her feel included. And you want mom to feel included. That makes mom happy. Take what she says with a grain of salt. It doesn't mean anything. I was really, really adamant that we have to find a way to get complete strangers that don't know us.

9:48They don't know our backgrounds. They literally know nothing about us outside of this one-minute video that they see. and that they could be compelled enough based on the imagery and the copy and the language to click buy. In this case, enter their credit card information online and click buy. I just want to take a minute and ask you, our listeners, how we can help you get started on your entrepreneurial journey. What are you struggling with? Why haven't you started your own business or begun investing in real estate? I'd love to know what challenges you're facing and how our team at Uplip can help.

10:14Email me directly at podcast at upflip.com and I promise to read every single email. We'll get back to you guys on that, but email us with any questions that you have around entrepreneurship. And so obviously enough people did this where they're swiping their credit card, clicking buy, because then you guys eventually decide, hey, let's go on Shark Tank here. What kind of led up to you guys deciding to go on Shark Tank? And can you walk us through that process? It's an amazing process to all us hear about. So yeah, what led up to that? Well, there was a lot of time in between those two things.

10:38So that's an important caveat. From a timeline standpoint, crowdfunding closed in the fall of 2013. Starting a company where a guardrail is you can't have employees means you have to do everything. And that you is me. I'll separate that with Matt was responsible for the back end of our business. So he was dealing with manufacturing. He was dealing with our finance, you know, bookkeeping, payroll. There was no payroll. It was just he and I, we didn't make money for the first two years. But like dealing with that part of the business and I was responsible for the front. So anything a customer interfaced with or touched.

11:06So our website, our copy, the images, the videos, the paid media, the email, like literally every single piece that you can think of, I built or wrote or did internally. Now that sounds in hindsight, like that's a fun fact to look back and well, wow, that's crazy. it, but you do it in these tiny little pieces. And the reality is if you learn how to do those things, you're so much better at the point that you have to hire somebody at being capable of hiring the right person, number one, and number two, being able to hold them accountable because you speak that language. You'd know how to do that thing, which years later became tremendously helpful.

11:40But then I had no idea how to do paid media. So I was shooting videos on a backpack, you know, on a beach by my house in Southern California, putting them on Facebook and like, you know, slinging spaghetti against the wall. And that was the marketing strategy. And over time, you iterate and iterate and iterate. And then in August or summer of 2014, Facebook launched their video ad platform. At least they launched it to the masses and that everything changed. We went from like$2 ,000 a month to 20 to 60 to 100 to sell out a product in December. And that's where our massive growth came from. It's like in 2014, this is rough numbers.

12:11I don't remember exactly what it was, but we did like 150 ,000 in sales. In 2015, we did 1.8 million in sales. In 2016, team, we did 8 million in sales. And yet we still had no employees. We had no investors. It was just like running and gunning as fast as you can run and gun. That all came because of the Facebook launching their video ad platform where you're just probably shooting this on like an iPhone, maybe, and uploading and like you said, hoping it sticks and eventually it does stick to actually grow the company. That's part of it. Yes, we were very lucky in hindsight that we unintentionally timed Facebook launching a massive new component in their system that happened to be what we needed to sell our product.

12:46You had to see it in action. You couldn't just see a picture of it because it looked like a water bottle. That could not have happened had the foundation not been in place for that scale to happen. And that's where this system of automations that we built really, really came into play. That's a huge part of it. I mean, you can dump all the money in the world and run as much money into your system as possible. If you don't have the processes in place to handle that kind of traffic and that kind of load, it will burn to the ground. So that was really, really important. But that gets us through 2016.

13:14Shark Tank reached out to us in 2015, I believe, because they saw a Facebook ad. They have production, people that go out and look for companies. And we were spending a boatload of money on Facebook. And so they saw a video ad and reached out. So we started the process in 2015, but weren't actually on the show until 2018, when we were a significantly larger company. Oh my gosh. So that's a three-year process to like that first initial conversation when they reached out to 2018. What are some of the things that like you go through in the process when you are going on Shark Tank? So at the very beginning, it's a conversation of interest.

13:48And then again, this may have changed. This was almost a decade ago. You know, you shoot like a mock pitch video. So you have to like slam together a mock pitch video knowing it's going to look like crap, but they just want an idea that you have some energy, which frankly was very difficult for me. I am not a great on camera person generally. And you do that multiple times and then you get assigned a production person or a producer that basically is your point person and guiding you through the process. And there's a number of like cut points in the process where, you know, if they don't like something or they have too much of this or too little of that, you could get cut.

14:17And we did, even in the first time, we made it all the way to the end. So part of the whole have no employees thing is I wanted to be able to run the company from anywhere in the world with internet. So my wife and I were gone four or five, six months a year for the first five years of the business. We were traveling because we could, that was the whole point was build your business around your life and not your life around your business. And the production team wasn't okay with me just flying back for the one week of production, which I didn't know, or I obviously would have planned around that.

14:41So they pushed us in the next year. The next year they had too many beer companies. So it just kind of got pushed. And ultimately, you know, we didn't kind of fit into the slot where it all lined up until 2018. I mean, in the trailing 12 months leading up to airing, we did$11 million in sales. We were super profitable. Like we're way too big to be on Shark Tank, which is frankly, we're like 50 of the 55 five minutes of taping was about them beating the hell out of us for not needing to be there. Well, that's what I was going to ask. When you're doing that much in revenue and you actually get to that date, are you thinking like, oh, I don't even know if we should be on here or like what was going through your mind in that initial conversation?

15:13It's like most things, probably all things in business, in particular early stage business, you're just you look at what you have and you put pieces in place to mitigate the risk. So what are the risks associated to going on Shark Tank? They make you look like an idiot. OK, well, that's an emotional, personal thing. I don't care about that. They make the company look stupid. Like, okay, great. But I mean, so we're a tiny company. Early on, you film a show, an episode, and it doesn't go great, and they end up not showing that episode. That's a risk. And you don't know that until a month out. They overtape, at least they tell you this, they overtape what they have space for.

15:46So it's like, really, what's the downside risk is that they beat the hell out of us for not needing to be there. We knew that was going to happen. So we planned for it. We had answers to the questions. We had things that we needed help with. So we looked at more risk of like, how do we ensure that they put our episode on TV? How do we absolutely give ourselves the highest probability that our episode is going to air? And in our case, we had Alex Rodriguez was a guest judge on our show. So we changed our opening. We didn't know that until maybe three or four weeks before taping. We didn't know that.

16:17So we completely redid, which are the producer, they'll let you do whatever you want, basically like within some bounds. Like we wanted to get the sharks out of their seats and like take their shoes off and come sit in our beach setting. But you couldn't because the camera angles would be all wonky. But otherwise, you could pretty much do whatever you want. So we completely redid our intro. We designed a thing that would have Alex Rodriguez throwing a ball. We just figured if we could get Alex Rodriguez throwing a baseball on TV, there is no possibility they're not going to play that episode. Love that.

16:43Thank you. So we designed this dumb little game, like a carnival game where we had a bunch of bottle keepers with beer bottles in them, where you'd throw the ball at the bottle keepers and we'd show that the glass wouldn't break. So we just built that in the office at a plywood or whatever, an old milk crate. And that was the intro. And the reality is not only obviously it aired because we did a great deal and that's fine, but like they use that in their promo reels, which is what we thought would happen. So like we got so much extra exposure because of the fact they were literally using Alex Sugar just throwing a ball on TV and all of their promotional stuff.

17:13Oh my gosh. I absolutely love that thinking. It's honestly like people say this all the time. Like while they zig, we zag. And I feel like you were thinking about like the whole thing about it is like, well, we want to make sure this air, how can we do that? Let's use Alex Rodriguez actually to be throwing a ball because how could they not air that? Yeah, that was the thesis. Yeah. And from a financial perspective, how do you prepare before you go on Shark Tank? Are you like doing like flash, like note cards about like your margins and everything? You're like, how do you even prepare to be peppered by these questions by these sharks?

17:39I should say. There's definitely some of that. I mean, as you know, you're running from my perspective, if you're running the business, you probably know what those things are already. If you don't, you really should. But we absolutely put them down on note cards and memorize them and practice them because even, you know, between the time you're rehearsing those things six weeks out, they're going to change a little bit between now and then. And it's like, you just have to have one number memorized. There was a lot of that. I think the other more dangerous parts of preparation revolve, particularly if you're a product company, which most companies end up on Shark Tank are, is inventory.

18:09Like, how do you manage that? Because we taped in June, right before Father's Day, which was epic timing for us because that was our second biggest holiday of the year. So with, well, in the last 12 months, we did$12 million in sales. In the last week, we did$1 million in sales, which was totally true. But it was like only like three other weeks the entire year could we have said that. But if you tape in June and you air in December, but you don't know that you're going to air in December until November, like how do you deal with inventory? Oh, man. And you don't know. You might air in December.

18:40You might air in May because the season starts in November and goes until May or June. So that's the biggest to us risk of the whole situation. And we were able to mitigate that by working with our manufacturer. We had a company, a sole source company in the US that was unbelievable. And we got to them over years of managing our own manufacturers in Asia, which was a nightmare. More Matt's nightmare than my nightmare, but we got to deal with some of that together. The company is called DirectSource or DirectX, but they are a domestic company that we were effectively buying it from them. They had all their own facilities and people in Asia or China or Thailand or wherever, whatever it is you're trying to make.

19:15And so they agreed because we had history with them to make like 10 extra containers of product, but there were like 35 ,000 units in a container of product. And they would bring them into their warehouse in California and just hold them until we needed them. So, I mean, those sorts of creative, you know, in hindsight, creative outside of the box things, you know, made the biggest difference in the world because we didn't have to go. And I mean, we were a very profitable company, but we didn't have$3 million of cash laying around to go buy 10 or 12 containers of product, right? So that's where a lot of the risk is in going on the show.

19:47I like it. One more question. And then we're going to dive into profitability and the metrics that matter and everything that you're doing at Pentane. You secured a deal with Mark and Lori. How did you know? Talk about the feeling of excitement once you guys were like, let's do a deal with those two. Obviously, two very... I mean, they're all great sharks, but Mark in particular is my favorite. So I'm curious, what were those feelings once you guys actually did close a deal with them? Yeah, I mean, you have to set the stage that we got there and they immediately beat the s*** out of us. And Mark opened the episode with, you're either the worst business people in the world or you don't need to be here.