The Exchanges

Q So you're, you're cleaning the dishes, right? You've already cleaned the furniture. I mean, I would Be thinking at this point, I should revisit this thing. This thing is actually, this is interesting. I mean, is that what you're thinking that night?

A I'm enjoying washing the dishes and seeing it rinse clean, and I look at it, and I'm like, oh my god, if it had a smile face on it, I could clean the silverware on both sides. And I grab a steak knife, and I, and I cut a smile in it, and I stick the spaghetti spoon in the mouth, and I squeeze it and pull. And both sides come clean at the same time. And when I tell you this, I honestly heard the angels start to sing. I like heard like, ah, I was like, oh my God, we missed it. This has nothing to do with you cleaning your dirty hands in a body shop. This is the greatest kitchen scrubbing tool in the world. I just need to market this differently. And that's when Scrub Day two point oh was born.

AI assessment note: “I was like, oh my God, we missed it. This has nothing to do with”

Q I, I'm curious. I mean, did you, I know that you sold your previous business to a part of three M that was not in household cleaning supplies or consumer products, but did three M at, at any point come and say, oof, We blew that one, or, or hey, should we, do you want to talk again, or anything like that?

A So in, uh, 2014, when I resigned, I said my goodbyes, and they said, Aaron, the, um, the home products division would like to talk to you. And I said, about what? And they said, oh, I'm sure you know about what. And I went and met with them, and they were all loving Scrub Daddy. And It looked like that was going to lead to another acquisition. And I was more than happy to entertain that. I felt like three M was my friends, like family. And unfortunately, one day the lead M and a person called me and said, we have to stop all of our discussions. The VP of the home products division who loves you and loves your product and sees the vision. They got promoted to another part of three M which happens all the time. And they brought in someone new who has no experience in the home products care. And their first directive was shut down every acquisition until I understand the business. And they stopped talking to us and gave back all our diligence information. And that was it.

AI assessment note: “the home products division would like to talk to you”

Q I mean, given that your parents were both doctors, right, and they were sort of encouraging you to go into academia, I imagine, I mean, you know, again, you grew up growing up in the eighties, and I remind people, like, it's a different time, like, the whole culture of entrepreneurship wasn't what it is like today, right?

A Absolutely, and being an entrepreneur, especially, I think, for my parents was a very risky thing, and my parents really were very conservative people. You know, I grew up in an area, as you know, the main line, a lot of people did have money, and my parents, you know, as two doctors, it's not like I grew up poor, but my dad was a stickler for making me work for every single thing that I got, and up to the time I was 13, I used to get presents and a big party, you know, my birthday party, and at 13, I didn't have a party, and I was asking, where's my party, and where's my presents, and my dad said, well, your present from now on is you get to buy your own sneakers. I was like, what are you talking about? And, uh, and I didn't understand how I was going to do that, and so he started suggesting, you know, chores and jobs around the house, and I started earning my own money.

AI assessment note: “being an entrepreneur, especially, I think, for my parents was a very risky thing”

Q I mean, you've been at this for a long time, right? What do you, I mean, how long do you want to keep running it? I mean, is it, is it something that you want to, you could do for 10, 20 more years? Do you want to, if you, if you did sell it, would you start another business? Like, what are your sort of ambitions at this point?

A So as long as I find it still fun and entertaining and interesting, um, which I am, I'm still developing new products all the time, getting new patents. We just got our eighth patent on a toilet scrubbing system that's coming out this year. Um, so as long as I can keep doing that and I'm enjoying it, um, I'm gonna, I'm, I can keep doing it until the right suitor comes along. Um, and if it's not that, I would consider going public, and at that point, I would step down. I'm not, I don't want to run a public company. It's far too much red tape for me, um, and as far as, you know, starting other businesses, I've already done it. Um, I'm in the middle of a brand new startup making this really unique hockey stick called Tovi, T-O-V-I. Um, it's a revolutionary hockey stick that we have NHL approval for, and I love the sport of ice hockey. I've always loved it. I've always played it, um, and I, Love to change that sport forever, and so I've already started what will be my next business should I ever exit scrub day, but until this becomes like too stressful, and until my wife tells me that, uh, she's tired of sitting home by herself a lot of nights, uh, I, I can keep doing this.

AI assessment note: “I can keep doing it until the right suitor comes along.”

Q But while you were there, what happened to the car washing business? I mean, was that on hold for a few years?

A Actually, no, just the opposite. So, um, when I graduated high school, I did think that was the end of my car washing career, and I actually sold the car washing business to one of my friends who was in 11th grade so that he could have a business. And, um, and then I went off to college, and when I came home, my mom, who's a pediatrician, she got me a job working for one of her patient's parents, who owns the largest, uh, manufacturer spiral staircases in the country at the time. And I mean, I knew that, I knew the owner of the company, so I, I went there in a suit and tie, you know, cause I have an internship this summer with the owner of the company. And, uh, and I showed up and, um, I remember I walked in and I said, you know, I'm here to meet Rich. And she went and she brought some guy up covered in soot, wearing those like, you know, those big leather gloves and like, and, and, and he was wearing like a welding helmet. And, and I was like, I'm here to see Rich. And he's like, and he said, I'm rich. Go home and change into clothes you never want to see again. And the next thing you know, I was on an assembly line welding staircases, and it was a 120 degrees in this factory. It was the worst experience I'd ever had. I'm going to say in life. Um, one day after about a week and a half, Rich came over to me and said, Aaron, how, how do you liken it? And I flipped up, you know, …

AI assessment note: “I actually sold the car washing business to one of my friends”

Q So, all right, you get the money to, to get the brick and mortar location, and I imagine you have to start hiring people. So who were your first hires? Just anybody you could find?

A You know, the first hire was, um, a business partner. I was kind of lonely doing the cars by myself, and it was one particular day I happened to be dropping a car off next to a friend that I knew growing up in the neighborhood Uh, we went to overnight camp together, we had mutual friends together, and, uh, I was dropping this car off right next to his house, and so I dropped the car off, and I went and knocked on his door, and it was probably about 11 30, you know, in the morning, and he answered the door, and he was still, like, in pajamas. It looked like he just rolled out of bed, and I was like, oh my god, what are you doing? He's like, you just ruined my best Nintendo score, and I'm like, are you kidding me? Do you know what I'm doing all day? And he's like, oh, dude, in 92, we were in a recession. Pretty, pretty serious recession. And he said, yeah, I put a lot of applications out. No one's hiring. I said, you got to come and see what I do for the day. And if you like it, I'm looking for a business partner, 50, 50. And that was my first, I don't want to say employee, but it was my first person in the business that we were working together. And from there, we started hiring local people to start washing the cars as we grew and grew.

AI assessment note: “You know, the first hire was, um, a business partner.”

Q stumbled on a problem, which was from, from what I understand, I'd love to hear the story. You're buffing a car and it, it's, Damaging the vehicle, like the, the buffing pad that you're using was not a good one, and it kind of sparked this idea maybe, I imagine, to find a new buffing pad initially, but eventually You would come up with your own. What, what's the story?

A It's really interesting. So cars have been polished. The paint's been polished by, started out with like lambs wool, and then eventually people started using wool yarns and making like this hairy wool pad. And that's been the standard forever. And when I started detailing cars, um, that's, that's what it was. You had this hairy wool pad and you would attach it to a buffing machine and it would spin at 2000 RPM. And the problem with these pads are it's, you know, it's like a, it's like a carpet, right? And when it gets caked up with chemicals and it wears down, it doesn't become a buffing pad. It becomes a grinding wheel. And if you're not an absolute expert, it's very easy to burn the paint off the car. And then you just bought someone a 2000 dollar paint job. And in around 9293, people started experimenting with polyester urethane foam. That's kind of like the same padding that's in like your seat cushions and everyone's felt it, you know? It was like a sponge, and it would give, and so it was much more forgiving. I started experimenting with this, and instantly I was like, oh my god, this is the future of buffing pads. But the problem was, there was no technology in them. So they were just taking a piece of foam and die cutting a cylindrical shape. So it was flat on the sides, flat on the bottom, flat on the top. Well, I'm doing this car And I'm trying to get underneath this …

AI assessment note: “I'm trying to get underneath this mirror... and I break the mirror off the car”

Q And, and you have to justify all, all the assets you have because you've got machinery that you've created and you've got this buffing pad and And then the hard assets, like office equipment, right? You've got to justify to them so they can go to their board and say, hey, here's what he has.

A And here's why the company is worth this kind of money. And the patents were like the most important, right? Because you get a patent for, you know, a set period of time, you own the exclusive rights that you have a monopoly, and you can make your killing in that period of time. And so I'm like, well, I have a patent on this brush, you know, for the next And they're like, yeah, not interested in that brush. You can just minus that off of the deal. Oh, you thought that brush was worth a million dollars, Aaron? Minus one million dollars. Oh, this apron? Really cool idea. By the way, not interested. Minus a million dollars. What's this thing? Scrub Daddy for cleaning hands. What are your sales? Zero? Yeah, minus that off. They went through and carved out five items and said, not interested in any of them. And they went through this list. And literally showed me the math and said, okay, so we're taking these out. And here's the number you said you'd sell the company for. And we're taking those items out of the deal. Those are valuable. And here, and you agreed on that price. What was I going to say? I said, oh, I guess you're right. I guess we have a deal, and we'll sell the company.

AI assessment note: “And here's why the company is worth this kind of money.”

Q But it was on your mind clearly because you brought it back out again, I guess not to sell, but, but just to kind of use, right? Tell me, tell me what happened because from what I understand, this happens around 2011 where you kind of take these scrub daddies that you'd made in like 2007 out of the box and you start to play with them again.

A So that's exactly right. Like they're sitting in the box. Collecting dust. Every once in a while, I probably grab one over the years to clean my own hands, but they last a long time. Um, so I wasn't, you know, pulling a lot of them, maybe one or two a year. In 2011, my beautiful wife was nagging me to clean the lawn furniture because, uh, it was gonna be spring soon, and, you know, the lawn furniture sits out there and gets all, like, moldy and gets allergy on it and stuff like that, so I started out using a traditional sponge. You know, it's that yellow, stinky sponge, and it's got that green scour on the back.

AI assessment note: “So that's exactly right. Like they're sitting in the box. Collecting dust.”

Q All right. So you've got this business going and, and I mean, it must've been profitable pretty quickly, right? Because you're Your overhead, and you got your, you know, your, your people, and probably the rent wasn't that high on, on the place, and a detail even probably in the 1992 was at least a hundred bucks, right?

A It wasn't, it wasn't that profitable, um, and the reason why, there's a couple reasons why, I hadn't learned all my lessons in business yet, and so, you know, I wanted to get big, and I wanted to do volume, and so I tried to keep my prices as low as possible, And because my prices were as low as possible, I couldn't hire the best talent, so the people that I had doing the cars weren't really skilled laborers, and they wouldn't do a great job, or it would take them too long to do a car, and every car is different. Every shape of every car is different. One car's got a total mess in the back, because they had a baby, and the other car is a brand new Mercedes, and so it was so variable. That you had no idea how, like, what your profit was going to be at the end of the day or the week.

AI assessment note: “It wasn't, it wasn't that profitable, um, and the reason why”

Q And, and I guess part of the agreement, right? Part of the, the way you could make this deal work was they allowed you to do your own side work. Like you were a consultant for them, but you could start another business if you wanted. And, and I guess they had already agreed that they would buy products from this new business, right?

A Exactly. So you hit the nail on the head. I, they knew I was starting a new business because they were already a customer of it. And so I was running the same factory. For them, and under the same roof, I was running a totally separate company called Innovative Accessory Products, and it was probably the most incredible deal ever because I don't have any issues anymore. Like, all I had to do was run the business. I didn't do the marketing. I didn't do the sales. When the machine broke, it was their machine. I called them up and said, your machine broke. It's not my machine anymore, and it's going to cost, you know, this is how much the new motor is, but I had to go and fix the machine, make sure that it The place was operating. And I had to transfer all the knowledge to them in year one and year two. And I had, uh, several like requirements that we, we had to achieve in order to get paid out our full earn out. And some of them were that we had to hit a certain sales number, um, you know, and combined like of my new products, we had to sell this amount or I didn't get paid out millions of dollars. Right. That's where I, that's where I learned the frustrations of working for a multi-billion dollar conglomerate. Um, you know, it's, it's mired down in red tape and politics, and it was extremely frustrating for someone as entrepreneurial and ADHD as me. And so I, I, there was parts …

AI assessment note: “Exactly. So you hit the nail on the head.”

Q the design of this sponge, but the underlying material was not yours. You was, you, you were going to have to depend on this German company To give you the material. So in order to protect your product, did you sign a exclusive deal with them? Like, what did you do to make sure that somebody else couldn't just get this material and just cut it in a different shape?

A Exactly. Um, I negotiate with the company and get a, an exclusivity on the material. They can't sell it to anyone else but me. And it turns out for some very specific reasons, no one else can make it. It's literally locked into this one particular facility in Germany. It's kind of like bread, you know, you ever eat bread at a specific bakery. It's always different than the next bakery. And certain bakeries, they make a special bread and it's like, it comes down to their processes and their ovens and their temperatures, but it's very specifically at that facility makes that bread. And that's, that's how I can liken it. This company had some technologies that this wasn't going to be easily copied. And now I own the exclusivity.

AI assessment note: “I negotiate with the company and get a, an exclusivity on the material.”

Q Yeah, makes sense. All right, so it sounds like at, by this point, right, Scrub Daddy is really starting to take off, but meantime, I mean, you are still working for Three M. You've still got a pretty big job there making the buffing pads, and you're running the separate accessories business, so how are you doing all of this stuff and Scrub Daddy at the same time?

A Yeah, so, you know, by 2014, I was out of, ah, horsepower. I couldn't run the three M thing at the same time I was running Scrub Daddy, and I had to make a choice. And Scrub Daddy was exploding, and it was much more lucrative, and I couldn't control my own destiny. And that was really big for me. And I, I told three M, I won't be renewing my contract, and I'm moving on. And, you know, by that time, We really started to understand the retail landscape and we understood you can't be a one product company. You need to create a brand block. And so even on the show, if you watch the show, again, we were talking about Mark Cuban. Mark Cuban says to me, well, you're just a one product company, right? I'm like, not for long. We got scrub mommy. We got scrub baby for doing baby bottles. I got a holder. So I was already thinking this way. And then we came out with scrub mommy.

AI assessment note: “I couldn't run the three M thing at the same time... I had to make a choice.”

Q Right. For Scrub Daddy. Do you, can you estimate like how much you sold as a result of your QVC appearances?

A Well, to be honest, on the first show, I failed. I was like a deer in the headlights, and so I, I didn't know what to do. The cameras are all keep, you know, turning on and off, and the host can see I'm nervous, or she took the sponge out of my hand and tried to start doing demos herself, which she couldn't do. I got through no demos, and I think they had brought in 20,000 sponges, maybe, and we only sold 40%, which is a fail. And, and when you fail on QVC, you don't get a second chance. Like, it's airtime they gave you, and they just kick you off, and And my broker was livid and was like, you didn't sell enough. They're kicking you off air. And I was devastated. Um, I thought that was the end. And, uh, and I got really lucky. The, the broker called me up after I failed and said, I've never seen this in all my years at QVC. He said, I just got a call from the buyer and the producer, and they loved your energy and the product. And they wish that, you know, you had more time to talk. They're going to give you another show. And so I got a chance to sell the other 60%, and um, every time I went on, they would reorder like 30 to 40% more, and give me another show. By the fourth show, I loved it, and I was addicted to it. I mean, you're, there's a high, because they're talking in your ear, and the producer can tell you, oh my god, great demo, Aaron, huge spike in the phone sales, you…

AI assessment note: “they had brought in 20,000 sponges, maybe, and we only sold 40%”