Scrub Daddy: Aaron Krause. How a Failed Experiment Became a Billion-Dollar Sponge | How I Built This with Guy Raz

I said, hey, I got this new product, and it's this awesome sponge, and I showed it to him.

And he said, yeah, it's not going to sell.

And I said, oh, no, you're wrong.

It's a bright yellow smiley face in this neon box.

There's no way it's not going to sell.

And he said, all right.

So he went to the shelf and he just moved some sponges over and put it on the shelf and said we'll see.

You know how many people bought it?

How many?

Nobody.

Welcome to How I Built This a show about innovators entrepreneurs, idealists and the stories behind the movements they built.

I'm Guy Raz and on the show today how an inventor who made products to clean cars wound up making a sponge to clean dishes and grew it into a massive brand.

Scrub Daddy.

Some of the best-known products in the world didn't start out as great ideas.

They were actually meant to do something different.

Take bubble wrap, for example.

It was supposed to be wallpaper.

Yes, textured wallpaper.

Post-it notes were the result of a failed attempt to create a super strong glue.

The adhesive was actually too weak.

Terrible for permanence, but amazing for sticking something up short-term.

Viagra was invented to treat chest pain, but it had a side effect that well.

You know the rest of the story.

The point is, sometimes the problem isn't the invention.

It's the market.

And today's story is about a guy who did not set out to reinvent the kitchen sponge.

He wasn't even a consumer products entrepreneur.

Aaron Krause was an auto detailer running a small business that made buffing pads for car washes and auto body shops.

In the early 2000s, Aaron was looking for a scrubbing tool to clean his own hands after fixing greasy machinery.

He found it in a foam material that he came across from a German manufacturer.

The foam material worked great, and Aaron tried selling it to mechanics, but no one wanted it.

So he shelved the idea, literally put these sponges in a box and threw them in the back of his shop.

But a few years later he was cleaning stuff around the house and he happened to pick up those old foam sponges.

And he noticed something strange.

When you ran them under warm water, they got soft.

But under cold water, they got firm.

And it was kind of magic.

And what Aaron realized at that moment is that he didn't have a better hand scrubber.

He had a better kitchen sponge.

But the sponge market was dominated by a few huge players.

And trying to compete with those brands, especially for a small-time entrepreneur well, that's a fool's errand.

So he took a somewhat unusual approach.

Aaron hawked his sponges on TV, first on QVC, and then he pitched Shark Tank.

And that appearance would catapult Aaron's Scrub Daddy brand into the mainstream.

Today, Scrub Daddy generates hundreds of millions of dollars a year in sales.

And as you'll hear in this conversation, Aaron Krause is not a shrinking violet.

He is relentless.

He negotiates hard.

He fights for his product, even when he doesn't hold all the cards.

But we'll get there.

Aaron Krauss grew up in the 1970s and 80s in a suburb of Philadelphia.

His family cared a lot about academics.

His parents were both doctors, and he had two high-achieving sisters.

But for Aaron, school was never really his thing.

I was a B, C, and every once in a while an A student.

And my dad used to always say the same thing when I got my report card.

Son, is that the best you could do?

And my answer was yeah, because I'm on the soccer team, or I'm on the basketball team too, and I have a girlfriend.

And things that my other siblings really weren't interested in.

I had so many other interests and was all over the place.

And so I said, yeah, that's the best I could do.

And he accepted it.

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 different time.

Like the whole culture of entrepreneurship wasn't what it is like today, right?

Absolutely.

And being an entrepreneur, especially I think for my parents was a very risky thing.

And my parents really were very conservative people.

I grew up in an area, as you know, the main line, a lot of people did have money.

And my parents 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 till the time I was 13, I used to get presents and a big party, 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 I didn't understand how I was going to do that.

And so he started suggesting chores and jobs around the house, and I started earning my own money.

He was basically saying, you want something?

You got to work for it, and then you're going to have to buy it.

And I'm just not going to give you cash for everything.

Yeah.

So you know one of the things that I started doing, because my dad, you know, set up all these jobs around the house.

And one of the jobs that I could get the most money for was washing cars.

And I can make $10 washing his car.

And I ended up going around the neighborhood and actually washing everyone's car.

It was in high school.

Yeah, this is in high school.

And I actually turned it into a business.

And I loved it.

And I was creating coupons.

And I used my Macintosh to start using a business program to track my customers.

And so when I eventually and it was 100 expectation you're going to college, I was going for business.

Right.

And I guess you ended up at Syracuse for college where you did take business courses, but you actually, I think, majored in psychology.

Yes.

But while you were there, what happened to the car washing business?

And was that on hold for a few years?

Actually, no, just the opposite.

So 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 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 manufacturer of spiral staircases in the country at the time.

And I mean, I knew that I knew the owner of the company.

So I went there in a suit and tie, you know, because I have an internship this summer with the owner of the company.

And and I showed up and I

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 he was wearing like a welding helmet.

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 120 degrees in this factory.

It was the worst experience I'd ever had, I'm gonna say in life.

One day, After about a week and a half, Rich came over to me and said, Aaron, how do you like it?

And I flipped up my helmet and I said, oh, my God, Rich, this is I never expected this.

This is really, really hard.

And in fact, the only thing I like is the way the welding torch, it smells like cinnamon.

And he goes, oh, don't breathe that in.

It's highly toxic.

And I literally took the helmet off and I said, this isn't for me.

And I quit.

And I went back to see my friend and see what he was doing.

He wasn't running the car washing business.

And so I just picked it up right where I was.

And I started washing the cars again.

And tell me a little.

I mean, was it just you and you know bucket and sponges and soaps and you know armor, all in a bunch of things?

Like, was that the business?

You know, at my graduation my, my grandmom, my aunt, my parents, you know, they all came up for graduation and we were at the dinner table.

And my dad said so son, I just spent one hundred thousand dollars on your education and you have a degree in psychology.

What are you going to do with your life?

And I said, well, I am going to get a minor in marketing and I'm going to start my own business.

And he said, okay, well, what kind of business do you think you'll start?

And I said, well, I've been washing cars all of high school and throughout college.

I think I'm going to make it into a real business.

So my mom is at the table, she's crying.

And my grandmom says, oh my God, just disown him.

He's gonna be a car washer.

And my dad said, son, you have until the end of the summer to make it into a real business.

Because I was running it out of my parents' garage.

And he said you have until the end of the summer to make it a real business and move it out of the house.

And however much money you can save in a bank account and show it to me, I'll match it at a loan at two points higher than the bank, because you're a bad credit risk.

A loan to do what?

To start the business because I was going to need seed money.

I had to rent a location.

I had to put down payments.

Oh, you wanted to start like a –

You want to start a car washing business, not like going door to door and washing on their property.

You wanted like a location, a building where people would bring their cars in.

I wanted a detail shop, a real professional detail shop where we would pick up and deliver.

So if you remember Domino's Pizza back in the 80s, they had this incredible campaign.

It was – they would –

30 minutes or less, they would deliver your pizza or I think it was free or it's free.

So I was going to create the Domino's pizza of detailing.

It was free pickup and delivery.

And we get your card done in three hours or less, or there's a discount.

And I was going to franchise that.

That was my whole business plan.

And.

I saved up to 8000 in a bank account.

At the end of the summer showed it to my dad and he loaned me 8000.

I think it was at 9% interest at the time.

And that was enough money to get a lease on a very small garage in Ardmore, Pennsylvania.

And I started detailing cars from my previous clients, and then I started getting dealerships.

Right, who would come in.

And how did you...

I mean, clearly you must have liked detailing cars.

Like there was something about it that you actually enjoyed, like the work of like, cleaning a car and getting it really to look nice.

I mean, you must have enjoyed that work.

I loved it, to be honest.

It's very hard work, very grueling, but it's very, very satisfying.

You start with a car that's in a filthy condition that looks like it's never going to shine again.

And you restore it to glory and then you bring it back to the client and they are in shock.

So it's very satisfying work.

But I also enjoyed the business side of that, like growing it.

I enjoyed having a computer.

I enjoyed building. creating all the systems and the processes.

And like at the time, you know, computers were pretty new and these business programs were coming out and you could do really unique things like you do someone's car, and then you could set like a reminder for three months to call that person back and say it's time to get your car waxed again.

And so I could come in in the morning and have a list of people that I knew I could call today.

So, all right, you get the money to get the brick and mortar location.

And I imagine you have to start hiring people.

So who are your first hires?

Just anybody you could find?

You know, the first hire was a business partner.

I was kind of lonely doing the cars by myself.

And with one particular day, I happened to be dropping a car off next to a friend that I knew growing up in the neighborhood.

We went to overnight camp together.

We had mutual friends together.

And I was dropping this car right next to his house.

And so I dropped the car off and I went knocked on his door.

And it was probably about 1130, 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 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.

All right.

So you've got this business going.

And I mean –

It must have been profitable pretty quickly, right?

Because your overhead and you got your people and probably the rent wasn't that high on the place.

And a detail even probably in 1992 was at least 100 bucks, right? it wasn't that profitable.

And the reason why, there was a couple of reasons why.

I hadn't learned all my lessons in business yet.

And so 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 what your profit was going to be at the end of the day or the week.

All right.

So you were not really making a whole lot of money in this business, but you had a business.

You were there.

You had a place.

And I should mention you were living with your parents.

I mean, no shame in that, but like that's right.

You were saving money on rent.

I was saving money on rent and on laundry and everything.

And I lived at my parents.

I'm ashamed to say this.

This is so embarrassing.

I lived at home until I was 29.

But it really gave me the opportunity to spend all my focus on growing the business and not worrying about where I was living or where I was getting food.

And so I owe my parents a huge debt of gratitude for doing that.

I guess while you were running this business you kind of 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 buffing pad that you're using was not a good one.

And it kind of sparked this idea.

Maybe imagine to find a new buffing pad initially, but eventually you would come up with your own what?

What's the story?

It's really interesting.

So cars have been polished, the paint's been polished by started out with like lamb's 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 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 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 paint job.

And in around 92, 93, 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.

And 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 mirror, but the pad doesn't feather like a wool pad.

And I end up hitting the backing plate against the mirror.

And there's a big grinding sound and I jump and I break the mirror off the car and it was a Mercedes.

I think the mirror cost a thousand dollars.

Yeah.

And I was just absolutely sickened.

I was like, I can't believe.

And I blamed the pad.

I didn't blame myself.

I'm like, that is the wrong shape.

Why is no one making these foam pads in the shape of the wool pad?

It should have edges.

And so I have this idea for this buffing pad that should have edges to it.

And I started asking around for it.

Does anyone have this kind of buffing pad?

And nobody had it.

And so I said, oh, my God, forget I mentioned it.

And I went to the local library and I started reading about how do you patent something.

And then I looked up patents on other buffing pads.

And then I copied the format that they did.

And I actually wrote my own patent and sent it in.

And about two months later, I got back a letter that wasn't even in English.

I didn't know the language it was written in.

It didn't say you got a patent.

It didn't say you didn't get a patent.

I had no idea what it said.

You just couldn't understand.

It was like all this legal language that you couldn't understand.

It's legal mumbo jumbo, which is patent law.

And I have a family friend who was a patent attorney.

And I just went and called him.

I said, hey, can you take a look at this?

I got this back.

And every page that he flipped, his face got redder and redder and he got angrier and angrier.

And then he threw it down the table and said, let me ask you a question here.

If you had a toothache, would you take a drill and start drilling your own tooth?

And I was like, no.

He was like, what makes you think you can write a patent?

He's like, here's my recommendation.

We file with the USPTO and we beg them to rescind your application and pretend they never saw it.

And then I will write you a patent application.

And I was like, okay.

And we did that.

And he got me my first patent.

Got it.

Okay.

So you have – you're working on a patent for this new – this new design to basically to buff a car.

And I guess around this time you decide to focus on this and not the car washing and detailing business.

Well, we did both.

Remember, I had a business partner.

And he ran the car wash business.

I didn't completely leave the company.

But the only way to make this happen was there was no internet.

I opened up what we called the yellow pages.

And I started looking up foam.

Where do I buy foam?

And who cuts foam?

And this is where we find out why no one's done it.

So I'm going fabricator to fabricator and I'm getting laughed out of people's offices.

And I'm, you know, remember I'm a 23 year old kid.

Like, I don't know, people are laughing.

You don't know what you're doing.

And they're like, that shape can't be made.

And eventually I found this one guy and he said listen, you're going to need to build a piece of robotic machinery in order to make this happen.

Okay.

So I need like a hundred thousand dollars upfront to, And then I'll try to make a piece of equipment to make this thing.

Because what you're trying to do is you're trying to cut this flexible foam pad into a circle with beveled edges that meet at a perfect point in space.

And there's no equipment in the world that can make this.

So give me $100,000 now.

If I make the machine and it works, it's another $100,000.

And that's before we talk about how much each pad is going to cost you to make.

And you've got, what kind of capital do you have to work with?

None.

I'm using money from the company.

We're on a shoestring budget.

I already told you the car wash business is not making a lot of money.

I had already borrowed another $10,000 from my dad for the patent.

And there was no money to do this.

And I literally was at the verge of giving up.

And then one day, I remembered.

This crazy guy that owns a spiral staircase manufacturing company.

That you worked for.

That I worked for.

I think as an intern after your freshman year of college.

Yep.

And I said, Rich, I have this crazy idea.

I want to make this buffing pad.

And I showed it to him.

He said, you know what?

Come here every day after work, when the shop shuts down around five o'clock, and I'll work with you on it.

And we spent probably two months together working on this.

And he did it.

He welded together a bunch of hand cranking machinery and with two cheap I mean 100 drill presses and a 200 bandsaw.

We created the first edge buffing pad and all my employees are in awe.

They're like, dude, this is the best buffing pad we have ever used.

And I knew right away we had something really unique.

And so I put some ads in some local trade magazines, not local, national trade magazines.

It was called National Car Washing and Detailing Magazine.

And I put a full page ad showing the edge buffing pad.

So we started out selling direct through this ad we put into the magazine.

But very quickly, some of the distributors started calling us.

And there's a local company in Philadelphia that's a manufacturer of car washing and detailing chemicals called Ardex.

And I knew them really well because they brought me all my car washing chemicals.

And so I asked to have a meeting with the owner.

And I showed him our buffing pad.

And he gave me a check for 10000 on the spot and said give me as many pads as I can get for 10000.

And that was the first time I realized, oh my God, this is going to be big.

We're not just selling to individual shops now.

I'm selling to one of the manufacturers of car washing and detailing chemicals.

And if this works, he's going to start selling this and distributing it to all of his distributors.

And that's what happened.

It took off immediately from there.

And in three months, we were selling them all over the country.

And so we knew right away, this is the scalable business, not the car washing business.

How much was the pad, the pad cost?

Pad cost to make a dollar something, and we were selling them for three or $4.

So with this product, did you start to think, okay, this is really going to be our business?

Or did you start to think we're going to start making more things like this for the you know, the auto washing and detailing industry?

No, the only thing I could think of was that I couldn't keep washing cars and doing this at the same time.

And we needed to focus solely on this.

And then we needed to focus on how to produce this more efficiently.

And so we went to an automation company that makes robots.

And they built me this robot that would cut a pad in 11 seconds with no one involved.

Wow.

So now you're really focusing on...

On this new product, this, what were you calling it again?

So it was called the Edge Buffing Pads.

Edge Buffing Pads.

And the company name was called Dedication to Detail, which by the way, my dad gave me that name.

And then we bought this automated equipment and then we needed to move into a serious warehouse.

And so we rented our first 3000 square foot real like manufacturing sites.

All right, so let's talk.

So now you're out of the car wash and detail business and now you run the buffing pad manufacturing business.

Give me a sense of how much you guys were doing in sales a year, like over a million, two million or less.

Yeah, we started, I'd say, by...

By 98, we were doing over a million, a million and a half.

But I could see the writing on the wall, this was going to become multi-million dollars.

We were going to be selling these.

There's tens of millions of pads sold every year.

And it's not something that you would use or many of the listeners may use.

It's something that's used in every car wash, detail, body shop.

It's also used to polish marble, airplanes, boats. statues.

It's a huge business.

All right.

So you're doing pretty well selling buffing pads.

And then, I guess at one point this is around 2006 you come up with an idea for a totally would become a totally different type of product, which is not even for cars but for cleaning your hands.

So how did that happen?

So I used to build all these machinery, all this new equipment, and I was the only one who knew how to fix them.

And I'd come back in the office and my hands were filthy dirty.

And I used to have this white keyboard that I would type on.

And I remember looking down one day and seeing it was covered in soot and grease.

And I was like, geez, look at my hands.

I need a better way to clean my hands.

And I started out using different kinds of soaps like lava or Oh, yeah.

Does lava soap still – it must still exist, right?

I think it must still exist.

I remember those ads in, like, the 80s and 90s.

Like, it was always, like –

Car mechanics or something, you know, in those commercials, like using the lava soap.

Always car mechanics, right?

Because our hands are filthy dirty.

And I'm like a mechanic because my hands are like always under these machines and getting filthy.

And I couldn't get them clean.

And I couldn't use the soap anymore.

I wanted to use my soap that smelled good and bubbled up and foamed.

So I started experimenting with different materials.

And then one day...

I just saw the wall of foam that we make our buffing pads out of.

And I was like, I wonder if like our rough foam could scrub my hands.

And I tried it and it didn't work, but it worked a little bit.

The problem was I was using buffing pad foam, right?

It's too soft.

It's for rubbing on a car and not scratching it.

I want something that's really going to scrub my hands.

Well, I know every company in the world makes foam.

So I send out a request to everybody.

Send me the roughest, toughest foam that you have.

And this company in Germany sends me this rock hard yellow foam.

So I cut like a regular rectangular shape and I start scrubbing my hands with it.

And it's hard to hold.

So I cut a circle.

And that was really easy to hold on to.

And then I want to get my fingers cleaned.

Because it's hard to go around your fingers with this big thing.

So I cut a hole.

And then I could stick my finger into that hole and just spin it.

And it would scrub your whole finger all the way around.

And I scrub my hands with it with regular soap.

And it comes completely clean.

By the way, I'm only using cold water because in the back of the factories a lot of times you don't have a hot water heater.

Right.

So you're just using cold water out of the- Really fun in the winter.

Right?

Really fun.

Yeah.

And so anyway, it works great.

It's cleaning my fingers beautifully.

And then I want to get underneath my fingernails.

So I cut some ridges on the top of it so it would fit underneath my fingernails, but it was hard to hold it.

So I cut two holes.

And I could put my two fingers in and then the sponge stayed on my hand and I could just power through my fingers.

So you're doing this thing with this piece of foam and what?

Right away, like, okay, this is it.

This is great.

This is actually what I've been looking for.

Well, it needed to be a little bit stiffer and the pore sizes needed to be a little bit wider and it needed to be a little denser.

So I contacted the company.

I said, can you make this?

Can you do that?

And they said, sure, sure.

And they sent me prototypes, and I made some scrubbers.

And they were the best thing I'd ever used, and I loved them, and I used them every day.

And then the light went on.

What am I doing?

I'm in the body shop industry.

I'm selling to car washes and body shops and mechanic shops and detail shops.

These guys all have dirty hands.

We should make this a product.

Yeah, so we need a name.

And we're sitting in the office and i'm talking to my one of my office managers and He's looking at it and it looks like two eyes and some hair.

It looks like a radical skateboard guy maybe.

And it looks a little bit like the Go Daddy symbol, you know, like the Go Daddy symbol with the spiky hair.

And he's like, we should call it Scrub Daddy.

And I said, oh, my God.

That is the best name ever.

That was your reaction right away.

Oh, right away.

That's the best name ever.

And you're thinking of this as a hand scrubber.

It's only for scrubbing your hands.

That's it.

So really for the mechanics and auto detailers again, it's for a very specific industry that you're thinking.

Well, I'm in that industry, right?

That's what I know.

I'm not even thinking outside of it.

You're thinking consumers, right?

No, and these are all my customers already.

And that was it.

We started trying to sell it and market it, and no one wanted it.

How much were you trying to sell one of these sponges for?

So that's the problem.

It's a really, we call it a highly engineered polymer, and it was made in Germany.

So we had to ship it across the ocean, and then we had to cut it and shape it.

And it was $4.50.

And people are like, $4.50 for a brush to scrub?

For a thing to clean my head.

My guys can use lava soap.

Not only lava soap, but these guys, you're talking to the wrong market.

Like they don't care about dirty hands.

They would rather go home with dirty hands and spend $4 on a sponge.

And so it died.

It died right away.

No one wanted it.

I had made 150 samples.

And I'm a bit of a pack rat.

I always save things I'm working on.

And I think, oh, I'll come to this, you know, one day later.

And I spend money on these.

So I can't throw them out with good conscience.

So I put them in a box.

I labeled it scrap.

And I put it in the back of the factory.

So how long did you try and sell these?

Did you spend like months on this?

A year.

Wow.

And you put it aside.

Put it aside.

Yeah.

It died.

When we come back in just a moment, why Aaron eventually gives the scrubbers another chance and why he furiously hangs up the phone on the company that wants to buy him.

Stay with us.

I'm Guy Raz and you're listening to How I Built This.

Hey, welcome back to How I Built This.

I'm Guy Raz.

So it's the mid-2000s, and Aaron has shelved his idea for a hand scrubber.

But he's still designing lots of other things for the car industry, including something that'll become a hit product.

We had created the first double-sided buffing pad with a quick-connect disconnect, automatic centering, reversible adapter.

You'd snap it on, and it was like smooth as butter.

And I thought this was game-changing, and it was industry-changing.

And one of our customers who was a big chemical manufacturer for in the in the detailing business.

They saw the technology and they wanted the exclusivity for this system.

They wanted to exclusively license it or not to buy it out just to exclusively.

So they basically they liked it and they said all right, we'll do a deal with you, but you can't sell it to anybody else.

We're going to be your only customer, which is not.

It could be great, but it could also be not great.

It was not great.

It was.

I was foolish and I signed a worldwide exclusivity for this technology for very, very low, minimum quantities.

And you did that because?

Because I was, well, I was desperate to be honest.

At that point, I had dumped a huge amount of money into this project and we needed to get sales out of it.

I mean, I had put the company in a little bit of a financial stress point.

So how long was the deal that you signed with them?

It was in perpetuity as long as they met their minimum requirements.

And that became a real major issue for us.

Okay.

And I guess we should explain why this became a major issue for you, because something else was going on, right.

Which is that 3M, which is this massive manufacturing company.

They make everything from post-it notes to scotch tape and so much other stuff.

They also wanted to license some of your products, right?

I mean, they sold buffing pads too.

And I guess your pads were eating into their market share.

Yes.

And they came down and I toured them around my factory and they see this machine that I built, this fully automated machine that makes buffing pads.

And I watched the 3M engineer's eyes like blow out of his head.

And he was like, where did you buy that?

And I said, I didn't, I built it.

He was like, you're kidding me.

And I was like, no, I built it.

He's like, could you build another one?

I'm like, yeah, of course.

And from that point the discussions about them wanting to license our technology or use our buffing pad technology somehow turned into we want to buy the company.

We want to buy dedication to detail.

But there's a problem because the license to your hero product is different.

Somebody else has it in perpetuity.

Correct.

It's a huge problem.

So it must have been agonizing when 3M was like, we're interested in acquiring you.

And then you had to tell them, well, this is the situation.

And I guess what their response was, ooh, that's tricky.

That changes the equation here.

Yeah, they said we're not going to be able to probably move forward.

So I'm pretty devastated because I know this is the future of the company and it needs to be sold to 3M.

But I'll say this.

I didn't have a deal with 3M.

I had nothing.

They had expressed an interest and I saw the interest and I needed to be able to have the ability to do that.

But I also needed to keep running my business as if it would never happen.

And I start looking through the contract.

There's got to be some way out of this contract now.

So I said, listen, guys, we need to renegotiate this contract because it's really egregious.

Like you have the worldwide exclusivity on a product.

You have this in perpetuity.

And for minimums that are not even 1% of the market share, none of this is fair.

And in that negotiation I just need to find a way to make sure there's a clause that if someone wants to buy me, there's a way out.

And the way out, I let them negotiate themselves.

I said what happens in the case that a We want this amount of money paid to us and we want 12-month supply at a locked-in price.

And then if that happens and you get bought out, we'll let you down.

All right.

So you managed to get out of this exclusive contract which finally, I guess, allows you to start talking with 3M about an acquisition.

And I think you negotiated with them for what, for like a year, right?

But from what I understand, the back and forth was pretty heated, right?

Like this did not go smoothly.

No.

3M and I had a very contentious negotiation and due diligence.

The major sticking point with 3M was the price.

I distinctly remember this.

They have this thing called the zip code conversation.

And it's when you get to the point with 3M that they're going to buy your business, that they throw out a number and you see if you're in the same zip code.

And if you're not in the same zip code, the conversation's over.

And I told them from the get-go guys.

I know our sales aren't anything huge, but I'm not selling the company on our sales or our EBITDA.

I'm selling the company based on a technology that's going to change the entire industry that I own the patents for the next 15 years.

But their formula, I'm sure in any acquisition is clear.

It's EBITDA.

Look at multiple of revenue or of EBITDA and they're looking at your business and they're saying okay, here's a multiple of that.

Yeah.

Well, I told them if you do that, the conversation is over and I'll hang up on you.

And the day that we had our zip code meeting, they called me up and I had forbidden them to talk about EBITDA.

It had to be about the value proposition of what I was bringing them.

And I get on with these finance guys and the guy goes so Aaron, based on EBITDA, we're going to, And I hung up.

I hung up.

And they called back and said, we got disconnected.

I said, no, we didn't.

And the conversation's over.

Goodbye.

And the business guy called me up and said, Aaron, I don't understand what happened.

I said, I told you, do not come with that number.

I'm not interested.

If you're going to base it on EBITDA, there's nothing to talk about, because our business is just getting off the ground.

I'd rather keep going and I'll take all of your market share and then we can talk about a multiple.

Then

So he said, Aaron, what if we doubled the number?

And I said, not even close.

He said, triple the number.

I said, you're getting closer.

He said, triple the number and we'll buy some of your accessories.

We'll make a contract to buy accessories from you as well.

And I said okay, now we have a conversation, we started getting into that, the depths of what that number is gonna be.

And they were like, Aaron, you need to justify, We have a board.

We're shareholders.

We're a public company.

You need to justify literally every asset you have.

And so I have to go through a list of everything the desks, the computers, the patents, every piece of equipment.

And I have a patent on this thing called Scrub Daddy.

I got a patent for the next 15 years for this hand scrubber.

And I'm going through a list of all of these things that I have patents on.

I have a patent on a brush that has an ergonomic shape that helps you clean the buffing pads that I invented called the edge conditioner brush.

And I got a patent.

I patented an apron that has Velcro cord holders.

So when you're buffing the car, the cord doesn't fall and get wound up in the machine that's spinning at 2000 RPM.

And how many patents did you have?

More than 10 or 15?

I had seven or eight at that time.

Okay.

And you have to justify all the assets you have, because you've got machinery that you've created and you've got this buffing pad, 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.

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 a set period of time.

You own the exclusive rights that you have a monopoly.

Right.

And you can make your killing in that period of time.

And so I'm like, well, I have a patent on this brush for the next 15 years.

And they're like, yeah, not interested in that brush.

You can just minus that off of the deal.

You thought that brush was worth a million dollars, Aaron?

Minus $1 million.

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 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.

I know the number is undisclosed, right?

But are we talking about...

Somewhere between five and twenty million dollars.

Yes.

OK.

All right.

We're talking it's double digit millions.

OK.

So they said we don't need this.

We don't need that.

This is really what we want.

And and among the things they did not need was the scrub daddy.

Correct.

And they're carving that out of the deal.

And did you care?

I mean, but at this point. you weren't like, ha ha ha, they carved it out.

You were just thinking, no, I thought it was, I thought it was kind of trash too.

Like nobody wanted it sitting in a box collecting dust.

Like, yeah, of course they're not going to buy that.

And I think at one point they were like, you know, we're not paying you for it.

If you want to leave it in the deal, you know, sure.

We'll take it.

And I was like, no, if you're not buying it, we're taking out a deal.

I'll I'll start a separate company.

You know, I'll make an accessories business and I'll sell my accessories to someone else.

Right.

So you piece together a deal that is acceptable and you and your partner finally, you both get some cash out of this deal.

So this is the craziest thing.

I signed the papers, the money transfers.

I literally go from not just paycheck to paycheck because some weeks I didn't get a paycheck. to I'm a multimillionaire, like immediately.

And it's the most shocking.

I spent all weekend opening up my bank account and just looking to make sure it was real.

Looking at those zeros, yeah.

Just to make sure it was real.

And-

We had a great time that weekend.

You know, we went out, did a bunch of great dinners and exciting.

And you had two kids by this point.

Yeah, I had two little kids.

I think they were like three years old or something like that.

Because this is, you are 40, you're almost 40 at this point, right?

Yeah.

And on Monday morning come into the office and I get a call from the lead MA guy that we've been doing the whole deal with.

At 3M.

And he says, oh my God, you are the luckiest guy I ever met.

And I said, why?

Because I sold my company to 3M?

And he goes.

No, because I'm reading a memo from the CEO of 3M and it says shut down every acquisition.

The world's coming to an end.

And that was September 1st, 2008.

Financial crisis.

And the entire markets just began to collapse.

And we were completely insulated because we had sold the company and I had a contract with 3M to keep working with them.

As a consultant.

And when you're acquired by a company with a prestige of 3M, It's life altering.

And I was so proud to work with that company and go to headquarters.

And then I learned a lot about how corporations actually function, like big corporations.

And I can't tell you how valuable that is to me now that I'm running a much larger organization.

It sounds like you.

I mean, it sounds like you really took this job and you know in good faith and really like, if I'm reading between the lines, you kind of felt like I really want them to know that they made a good decision.

I'm glad you said that because I have a lot of passion around like that's my reputation.

And I felt like they bought this business and they did pay a huge multiple.

I mean, a very, very double digit multiple for this business.

And I was like I'm going to prove to them that they got not just what they bought, but every dime of it.

And I also had a consulting contract.

And I guess part of the agreement, right part of 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 I guess they had already agreed that they would buy products from this new business, right?

Exactly.

So you hit the nail on the head.

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.

They're called Innovative Accessory Products.

And it was probably the most incredible deal ever because I don't have any issues anymore.

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 the place is operating.

And I had to transfer all the knowledge to them in year one and year two.

And I had several like requirements that 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.

And combined of my new products.

We had to sell this amount or I didn't get paid out millions of dollars.

And that's where I learned the frustrations of working for a multi-billion dollar conglomerate.

It's mired down in red tape and politics and racism.

It was extremely frustrating for someone as entrepreneurial and ADHD as me.

And so I, there was parts of it that I loved.

And then there was parts of it that were like extremely frustrating for me.

Okay.

So you've got this going and you're, you know, working for 3M, but you've got this side business.

And 3M was your main, one of your, probably your biggest customer really for that side business.

So they were our biggest customer side of the business, not our only customer, but our biggest.

And, interestingly enough, one of the products that wasn't selling was the sponge called a scrub daddy that was sitting in the back that no one had wanted.

But we were selling the aprons and we were selling the conditioning brushes.

But the scrub daddy you were not selling.

No, no one wanted it.

But it was on your mind clearly because you brought it back out again, I guess not to sell but just to kind of use, right?

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.

So that's exactly right.

Like they're sitting in the box again. 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.

So I wasn't 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 it was going to be spring soon and the lawn furniture sits out there and gets all moldy and gets allergy on it and stuff like that.

So I started out using a traditional sponge.

It's that yellow, stinky sponge, and it's got that green scour on the back.

I know the sponge well.

And it scratches things really easily.

And I'm scrubbing this furniture, and it's taking the paint off.

And she's out there watching, and she's like, you're scratching the paint.

What are you doing?

And I was like, oh, shoot, I can't use this.

What am I going to use to scrub this stuff off?

And I remembered this box of rock hard scrubbing things at the office.

And I thought, you know, I'll bring a couple of those home.

And so I brought you know two or three of them home and I made a bucket of hot soapy water, because it was 50 degrees out and I didn't feel like working in cold water.

And I had never really experimented with hot and cold temperatures with this sponge.

It was always in the back of the factory scrubbing my hands with cold water.

So I dunked it into this bucket of hot soapy water and it went completely soft.

It literally squished down like a regular sponge.

And I took it out and squeezed it a bunch of times.

And I was like, well, it's what I have.

Let me try it.

And I started scrubbing with it.

And it started cleaning.

And it was pretty good.

But it was 50 degrees out.

And so the longer I had it out, the harder it got.

It started to crystallize in my hand.

And the cold air was making it rigid and firm again.

Correct.

The cold air was changing the sponge into a harder textured sponge.

And the harder it got, the better it scrubbed.

And then when i, you know, took it with all this dirt and muck in it, i would put that back into the warm water and it would go completely soft and i'd squeeze it and everything would rinse out of it.

I did all the lawn furniture and and held it up and looked at it and it looked like i hadn't used it.

It was brand spanking new.

So that night i go to do the dishes and uh, I'm scrubbing around the kitchen with a regular sponge and I see this thing sitting there.

And then I remembered that texture change thing and I thought hmm, I wonder, does that work in the sink?

And so I made it warm, and I started scrubbing some stuff, and then I made it cold.

When I made it cold, it scrubbed all the burnt spaghetti sauce off the plate in two seconds.

And now I'm going into my engineering inventing mode.

And what I'm noticing now is that everything is round.

Pots, pans, plates, coffee pots, muffin tins, casserole dishes, they're all round.

Why are we using a rectangular sponge with edges?

Because this is getting all the way to the sides of all these things, and it's the perfect shape.

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?

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 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 angel start to sing.

I like heard like, 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 2.0 was born.

Okay, you go back to your office, which is you've got your business with your partner and you've got the 3M buffing business.

Yep.

Did you?

I mean, were there still people?

Presumably there are people working there who remembered when you tried to sell this in 2008.

Everybody.

2007, 2008.

And did you say, hey, guys, do you remember this thing?

Tell me what you did.

Yeah.

Remember I told you, if you go back in the history, I'm constantly inventing new crazy ideas and concepts.

So people are always like, Aaron, are you kidding me?

This is a crazy idea.

You come up with another one.

And then my poor partner, we'd finally make money.

I'd be like, wait, I got a better idea.

If we do it this way, and then we got to reinvest all the money again, and then there's no money.

So Yeah, I knew it was going to happen.

And I went to my business partner and he said, I don't like it.

I think we wasted a lot of time and money on it before and 3M didn't want it.

And I'm not interested.

Yeah.

And I said, well, look, we got to move forward with it.

It's a great product, great idea.

And I know it's going to be successful.

And he was adamant that we're not going to do anything with it.

And I kind of felt his pain because for 18 years I had made him spend every dime that we ever made in profit, plowing it back into something.

Yeah.

And he could see the writing on the wall.

Here we go again.

Aaron's going to make us do this.

And I was like no look, we'll each put in 75, 100 gram and we're going to start this whole new thing again.

We need advertising, marketing, branding, packaging, and we're going to blow this thing up.

And he was adamant.

That he was not going to do it.

And it's a really sad story because we had our first real blowout fight ever.

We had 18 years.

We had never had a fight.

We had always gotten into discussions and they could get, you know, hey, I want to do it this way.

But ultimately, it always resolved.

We got into a yelling match.

So what happened?

Did he eventually agree that you should pursue this or –

I had the right to make the final decisions on everything as the CEO of the company.

And I pulled out the shareholder agreement and I said, here's the deal.

You're a 50 shareholder and I'm a 50 shareholder, but I have the right to make the decision on this and I'm telling you what we're going to do.

And he was very unhappy with that and he opted to leave the company.

Hmm.

So I had to buy him out of innovative accessory products and I had to make a go of Scrub Daddy on my own.

And did that end your relationship?

I guess you could say it did.

We had a really great talk.

The day that I gave him the check and he departed the company, I did say to him and I have the exact words, I'll never forget it.

We smoked these cigars that we had bought years ago in Hong Kong.

We got these Cuban cigars and we thought one day we're going to smoke these.

And so I said, well, I guess this is the time we're going to smoke the cigars.

And I said you know, I got to ask you.

We did so much great stuff together and we grew this whole business, and you know me.

Like, I'm never going to stop until this thing becomes something.

And he says, yeah, I do.

I know you.

And for 18 years, you plowed every dime we ever made into the company.

And we finally did it.

And I have money and a nest egg.

And I want to go and do things on my own.

I want to invest in other businesses now.

And You know, I don't want to like start a whole company over from scratch.

And and I said, OK, I respect that.

And and with that, you know, we shook hands, we hugged and and he went on his way.

And I he never really looked back.

And we we didn't really keep in touch much after that, to be honest.

All right.

So now you've got this conviction in this company thing and in this product and in you're really for the first time, going to go into consumer products.

So I guess the first, I've got a bunch of questions about this.

I mean, the first question I have is you had patented a design right, you basically patented the design of this sponge, but the underlying material was not yours.

It 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 an 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?

Exactly.

I negotiate with the company and get an exclusivity on the material.

They can't sell it to anyone else but me.

And it turns out for some very specific reasons that No one else can make it.

It's literally locked into this one particular facility in Germany.

It's kind of like bread.

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 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 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.

Basically.

So the deal was they would send out the raw material and you would cut them into shapes in the US.

So it actually started in my own facility.

Like I cut foam for buffing pads.

I had all the equipment.

Sure.

And so they would send us the material and we would cut out scrub knives one at a time by hand.

And we created – I spent $150,000 on packaging and logos.

And I created this beautiful product in a bright orange box called Scrub Daddy.

And I started calling all of the retailers.

And let's just pause for a minute.

Because your relationships were with people in the automotive industry, detailing and body shops.

Like you didn't have – I imagine you didn't have relationships with like – the Walmarts or Targets or Kroger's of the world right.

Zero.

Not of context.

I had no experience in this market.

I mean, I was in the OEM industrial professional world.

And my thought was, I called Walmart.

How far do you think you get when you call the receptionist for Walmart?

Right.

I mean, this is 2011, right?

This is early days of direct-to-consumer, right?

This is really when it's starting to... you know, become eventually what it would become.

I know you sold them on a website, but did you think, all right, this is the way we should do it.

Just let's just try to sell it online.

Sure.

We made a website, but there was no virality at that point yet.

You know, there was not TikTok or Instagram and maybe Facebook was just getting going.

And we made a website.

I

But it wasn't—nothing was happening.

You needed to get into a store.

I needed to get into a store.

Okay, there was—so you've got this product.

Where did you get—like, who gave you a chance to put this in a shop?

So after I contacted everyone from Walmart to Target to Lowe's and Home Depot and Kroger, and couldn't get past the receptionist—

I went to a friend of mine whose family owns five ShopRites.

It's a local, it's a small chain, maybe 250 grocery stores in the Philadelphia region.

And I went to him, I said, hey, I got this new product and it's this awesome sponge.

And I showed it to him and he said, yeah, it's not going to sell.

And I said, oh, no, you're wrong.

It's a bright yellow smiley face in this neon box.

There's no way it's not going to sell.

And he said, all right.

So he went to the shelf and he just moved some sponges over and put it on the shelf and said we'll see.

So give me the price.

And I told him it would be $3.99.

And he asked me what he can buy it for.

And I had to give it to him for less than half.

And so he could make money.

And we put it on the shelf.

And I walked that aisle for 10 hours a day waiting for a customer to buy it.

You know how many people bought it?

How many?

Nobody.

Everyone would walk down the aisle. wouldn't even turn.

Their hand would go out and grab the old Scotch-Brite sponge that their grandmom's been using and just keep going.

And I went to my friend.

I said, wow, you're right.

I mean, no one's even looking at it.

He said, look, no one's coming to the store to look for the latest in sponge technology.

They're coming here for their eggs, their milk, their cheese and maybe a sponge, and they're getting out of here.

He's like the only way you're going to get interest is if you set up a little display and do live demos in the store.

And I'll give you some space.

Do you want to try that?

I said, yeah.

So I built this little booth with hot and cold water and a couple pans and a mug.

And I wouldn't let you walk by me.

I mean, if you were walking, I'd be, ma'am, ma'am, I got to show you this.

You're not going to believe this.

And I would do a demo.

And every person that saw the demo bought one or two.

And then, after a couple of weeks, people would come back and tell me I have never had a sponge that I love so much in my life.

And my friend came to me and said, Aaron, I'm used to selling like two, three sponges a day.

You're selling a hundred.

You need to go to every one of my stores, all five of them and sell sponges.

But I couldn't do that because I was running another business.

Right.

And you couldn't constantly demo.

And even if you're demoing in a one shop, right?

I mean-

It's not enough to – No, it's not scalable.

Right, no.

Not scalable.

And then I did the math and I couldn't even pay someone 10 an hour because I'm not making the 399 price.

I'm selling to him for like a dollar or something.

They're making all the profit.

And I was like, oh, this is crazy.

I can't even pay someone to do this.

What am I going to do?

And it was frustrating and I was –

But I was really busy.

I was making buffing pads for 3M every day.

I was running a factory that runs 24 hours a day.

So I mean, I was occupied.

But I was really sad because I felt this had a lot of potential.

And then one day, and you remember, this is 2011.

I'm in the middle of another recession.

And if you remember 11, we're teetering on what they think might be depression.

And there's all these stories that are coming out in the newspaper.

And the local paper is called the Philadelphia Inquirer here.

They have like a million and a half followers.

And they're writing these articles about how bad the economy is and how many people are losing their jobs and that China's taking all our jobs and we might go into a depression.

And I instantly am like, they need to write a positive story.

So I call up and I got through to an editor and I said hey, I'm a business in the Philadelphia area.

I'm an entrepreneur and inventor.

I'm creating more jobs in the Philadelphia area.

And I have this new product called Scrub Daddy that's going to be the greatest kitchen sponge.

And they said, oh, that sounds interesting.

They came down.

It was supposed to be an hour interview and I wouldn't let them go.

So they spent the entire day with me.

And they wrote an article on the front page of the business section on the Sunday Inquirer that hits 15 million people.

And it's my big smiley face holding the sponges.

And it says, he's the daddy of the scrub daddy.

And the phone started ringing off the hook.

And I said, here we go.

It's about to start.

When we come back in just a moment the phones may be ringing off the hook, but sales are still pretty limited and local.

And Aaron has to figure out how to get scrub daddies in front of a bigger audience.

Stay with us.

I'm Guy Raz, and you're listening to How I Built This.

Hey, welcome back to How I Built This.

I'm Guy Raz.

So it's 2011 and Aaron is finally starting to sell some scrub daddies because of a story that ran in the Philadelphia Inquirer.

And pretty soon after, he gets a phone call.

The guy calls and says, hey, I saw the article and I love this idea.

Have you ever thought of selling this on QVC?

And I said, like, home shopping network?

Like, no one's going to buy sponges on that.

And he said, oh, no, you'd be surprised.

You could sell millions of sponges on that.

And I was like, so do you work for QVC?

He said, no, I'm a broker.

I said, well, how does that work?

He said, I can get you into QVC and then I get a cut of every one you sell.

And I said, well, isn't QVC down the street from me?

He's like, yeah.

I said, well, why would I just go there and try to get in myself?

And he said, sure, go ahead and do that.

Here's my number.

And when you can't get in, give me a call.

So I went to QVC.

I got booted out the door in 10 seconds.

They told me, go online and fill out a form.

A request, yeah.

Yeah.

I filled out the form.

I was rejected within hours.

It said, this doesn't meet any of our marketing criteria and wouldn't sell on TV.

Best of luck to you.

So I called the guy back and I said, well, I can't get in.

Why do you think you can get me in?

And he said, because they say no to everything because everyone wants to sell on QVC.

So they rely on a network of brokers, and we waste our time and our reputation to bring a product to a buyer that we know could sell on TV.

And I think this could sell on TV.

So I said, okay, we'll give it a shot.

So you get this opportunity to be on QVC.

From what I read, you know, this is normal.

It took you, you know, some time to warm up.

But like many products that go on QVC, it did pretty well.

Like you reach a national audience and it was probably huge.

It was huge.

Right, for Scrub Daddy.

Can you estimate like how much you sold as a result of your QVC appearances?

Well...

To be honest, on the first show, I failed.

I was like a deer in the headlights.

And so I didn't know what to do.

The cameras are all keep turning on and off.

And the host can see I'm nervous.

So 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 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 my broker was livid and was like, You didn't sell enough.

They're kicking you off air.

And I was devastated.

I thought that was the end.

And I got really lucky.

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 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 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 there's a high, because they're talking in your ear and the producer can tell you oh my God, great demo Aaron.

A huge spike in the phone sales.

You just got a thousand people on the phone and like...

It builds you up and you finish the show and you sell out of all your inventory and you're on cloud nine.

And then the sales are incredible and then QVC reorders.

And by the fourth show, I'm directing the show.

I'm like telling the – I'm telling, like the cameraman, which angle to come in and how to show the product right.

Wow.

Okay.

So this was like an –

I think a lot of people see QVC and they assume that's it.

You're set, you know, but that's actually not really the case.

And I think that even with that success, you had a tough time getting Scrub Daddy into retail.

You still couldn't get it into stores.

Yeah.

At that point, none of the retailers still would call me back.

And the only place we were selling it was at QVC and in five shop rights.

So could you theoretically just have kept doing it on QVC even if you didn't get into stores?

100%.

I mean, would that have been enough to create a sustainable business?

It would have been a spike and then a saturation point.

And then the minute that you had a bad show, you would have been kicked off.

Yeah, you needed to get into stores.

100%.

All right.

So so this is where and a lot of people know this part of the story or may be familiar with.

This is where Shark Tank comes in, because I guess you are a fan of Shark Tank at this point and you, you start to think well, if I'm going to get more exposure, maybe I should try to get on Shark Tank.

Is that what you start to think?

I think it was the QVC that did it.

I started having television experience and being really comfortable in live TV.

I would have never thought to apply for a show on television before, but now I'm not watching Shark Tank anymore like a regular viewer.

I'm watching it like, oh my God, look at that camera angle.

Can you imagine I could do a demo in front of seven to 10 million people?

It's going to be the best show ever.

And I'm bragging to my wife that I should have been a TV star.

And I turned to my wife, I said, I could go on this show and kill the sharks.

And I took my phone out and started searching, how do you go on Shark Tank?

And I found a website and I just filled out an application.

And the best thing was I told them Here is a link to my QVC, my last QVC show.

You can go watch how I do on TV.

And they obviously they responded and they invited you to film an episode of Shark Tank.

From what I understand, your hope was that you would do a deal with Mark Cuban, because he was the guy that you thought could really help you make this into a nationally known product.

Well, I thought we had a lot of synergies.

We're both entrepreneurs, and he's like the billionaire of the show.

And when I looked at the show, it was Barbara real estate and Damon is fashion and Kevin was nasty and Herjavec was technology.

And Mark is like sports and entrepreneur, and everybody knows him.

He's a celebrity.

I'm like, I'm going for Cuban.

So you pitch, he's not even interested in this product.

It was a very shocking experience.

I mean, I went in extremely confident into Shark Tank, except for I didn't know Lori was going to be in the show.

And the producer told me that an hour before the show that they had subbed Barbara out for someone new.

And this person gets products on the QVC, and I'm already on QVC.

So you don't need her for that.

Yeah.

Well, I don't need her for that.

I went in and I did what I thought was a flawless pitch.

And Herjavec starts out and tells me he doesn't see the retail value and he's out.

And I was like, are you kidding me?

This is going to be a huge retail product.

I'm like, you know what?

He's in tech.

He doesn't understand.

But then Mark... started telling me that I was just a one product company.

I'm like, you don't understand.

I'm an inventor.

I actually said to Mark Cuban, you don't understand who you're dealing with.

And he said, look, you may be the scrub daddy, but I'm not a scrub pimp.

So I'm out.

And the only comeback I could think of to that was that hurts, Mark.

I really wanted to work with you really bad.

And with Lori, it became really obvious that we were like kindred spirits.

Not only is she on QVC, but she's a product presenter like me, and she has a hundred patents.

And it instantly made sense for me.

But she actually called me out and said she thought that my pitch was a fraud.

She said, I just watched your pitch different than everyone else did.

And you use two different sponges and two different weights to show the texture change.

I think one of the sponges is hard and one of them is soft, or one of the weights is heavy and the other one's light.

And I was like, no, it's 100% real.

And she said, fine, let me come down off the set.

And she came down standing right next to me and she starts dipping into the hot and cold water and all the sharks are screaming laurie, does it work, is it work?

And she's like face to face with me and she goes oh my god, it's magic.

And i'm looking at her.

I'm like, oh my god, you might be my shark and i can't wait for that to air on the episode.

But they cut it from the entire episode because they want to make it more dramatic probably.

Yep yep, they knew that.

They knew we were going to do a deal, So you end up doing a deal.

Well, I think you offered like $100,000 for 10%.

Yeah.

And people listening to the show know that the deals that are brokered on the show that we see are not actually the deals that get finalized, because there's a lot of negotiation and lawyering and papering.

And oftentimes it doesn't resemble what you agree to on TV.

But Lori Greiner...

Clearly, I mean, it makes total sense because this is what she did.

She sold things and made things and invented things and sold them on QVC.

She's interested and she wants to do a deal with you.

Absolutely.

And you're 100% right.

The deals, just like every deal.

Like you negotiate for a house and then you make a deal, and then you go do an inspection and the deals change.

So I think Shark Tank is very real like that.

When 3M came to buy my business, Then they made an offer.

That whole deal changed by the time we got through due diligence.

So it's totally accurate.

That episode, I think you filmed it earlier in 2012 and it aired in like October of 2012.

And what did it, when it aired, tell me what it did to your sales.

Oh my God, we did a million dollars the night the show aired.

Wow.

It was the most transformative thing that could have ever happened to the company.

And I already heard the stories, the scare stories that you air on Shark Tank and your website blows up.

And so you better have inventory and you better have backup servers.

And we had all of it.

I had IT people sitting there watching.

And when the traffic got too heavy on one site, they flipped it to the next one.

And I had the inventory ready-made in our factory waiting for the show.

And the Bed Bath & Beyond person that wouldn't talk to us before called us.

And Walmart called us.

And Lori was really gracious.

And she joined a bunch of the calls and brought Star Power.

And they were blown away and instantly took the product in.

And then she would have other experiences with other entrepreneurs that she had.

And she'd be like, oh, call the Target buyer.

I know that person.

And she'd give me the number.

And I could just call them and take it from there.

And then things just blew up and she turned into like monster celebrity and she invested in all these companies.

And she was like, Aaron, you good?

You know what you're doing?

I'm like, Lori, I got this.

And we're now we're like more like good friends.

Then she doesn't like get involved day to day with the business.

She doesn't need to.

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 3M.

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?

Yeah.

So by 2014, I was out of horsepower.

I couldn't run the 3M thing at the same time I was running Scrub Diet and I had to make a choice.

And Scrub Diet was exploding and it was much more lucrative and I can control my own destiny.

And that was really big for me.

And I told 3M, I won't be renewing my contract and I'm moving on.

And 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.

All based around the same foam material?

Yes.

So Scrub Mommy is a double-sided foam.

So instead of just being the hard scrubbing, texture changing sponge, we put a really soft absorbing sponge on the other side.

That wasn't cellulose, that didn't smell, didn't stink.

So it's still a unique material.

And to this day, Scrub Mommy outsells Scrub Daddy by about 10% in every retailer.

And I'm wondering even when you get them into stores, how are you able to by 2014 or 15?

How are you able to get people to still know what it was?

Because Shark Tank, there's an audience, right?

But if you hadn't seen Shark Tank and you weren't familiar with that episode and you just passed by the Scrub Daddies on the shelves of Kroger in 2015, how did you get people to know?

What it did like didn't you have a similar problem that you didn't you know in the shop rights in 2012.

So, you know, Shark Tank is the gift that keeps on giving.

They don't just air once, they have reruns.

And then because of our success in 2013, like a few months later, they did our first follow-up episode. where we got into Bed Bath & Beyond.

And that gave us another boost.

And then the next year, we had a huge bunch of sales.

And they gave me another follow-up episode.

I've been on Shark Tank almost 15 times.

And almost every year, they do some follow-up.

And then CNBC picked up all the reruns and started airing them all the time.

And so I end up in episodes all the time on that.

And so throughout all that time, We're constantly out there.

And then people start uploading clips of me from Shark Tank onto social media.

And that gets a life of its own.

And then we start going, hold on, this social media thing, we should be involved in that.

And so by like 17, 18, we start posting on Instagram, TikTok, Facebook. and it explodes.

I mean, we have almost 5 million followers on TikTok, now almost a million on Instagram, and some of our videos get 20 million views.

And the videos that you also like.

One of your strategies, I guess there's like these clean influencers, what are they called?

Clean talk or, yeah.

Clean talk, yeah.

Like there's this whole I don't I'm not on TikTok, but there's a whole world like of people who just like clean stuff, right.

Like influencers who make sense, there's influencers for everything.

And you got into some of these people pretty early.

Yeah, so the influencer marketing.

I'm going to credit my best friend, who's my chief strategy officer here at Scrubbed Eye.

He found two or three of these influencers who have become mega, mega influencers in the cleaning space.

And you know what happens in COVID people start going crazy about cleaning and they're watching these videos like religiously.

And these influencers take us to the next level.

And so basically, it was like a combination of the Shark Tank reruns.

And then you start to invest in social media and that, and and so, year over year over year, you're just growing every year.

I also started to do a lot of podcasts, a lot of interviews, and I also got myself onto every major publication.

Lori got me onto The View.

Fortune Magazine did an article.

The Wall Street Journal did an article and put our sponges on top of a whole bunch of Scotch-Brite sponges and said 3M fights off Upstart.

And so all of this free media, all of it, and I consider social media even though we paid some influencers, it's still very, very inexpensive and it gets you a broad broadcast to everybody.

I'm curious.

I mean, did you?

I know that you sold your previous business to a part of 3M that was not in household cleaning supplies or consumer products, but Did 3M at any point come and say oh, we blew that one.

Or or hey, should we?

You want to talk again?

Or anything like that?

So in 2014, when I resigned, I said my goodbyes and they said Aaron the, the home products division, would like to talk to you.

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 3M was my friends, like family.

And unfortunately, one day the lead MA 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 3M, 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.

Wow.

I know that on a few occasions you've been public that you were like ready to sell.

And I think even in 2020, you told the Philadelphia Business Journal that you were ready to sell.

And tell me about that.

I mean, has the right offer just not come around?

I mean, because it sounds like maybe you would still sell today if the right offer came around.

Everyone has to be.

That's one of your strategies, right?

If you're not planning an exit strategy.

I don't know what you're doing in business.

There has to be some succession plan.

I won't be here forever.

I don't foresee my children running Scrub Daddy.

It's far too complicated and sophisticated a business.

And my daughter wants to be in education, and my son is a social media influencer and hockey player.

This isn't for them.

So what are we going to do with it?

So, yeah, I'm always open to sell.

It's just a matter of the price.

And you know, to date we haven't gotten the right offer, although we know that we've been valued in multibillion.

And selling this to like XYZ private equity firm doesn't tick it for me.

And I have no interest in that.

This needs to go to the right home at some point.

And that needs to be one of the largest companies in the world in the CPG space.

That needs to be a Procter & Gamble, a Unilever, a Clorox, a Henkel, a 3M.

It could be any of those.

Or I'm left with the last piece, which is we just go public.

Right.

How do you protect against copycats?

That happens every single day.

So the first thing is I told you our material is exclusive and really only one company in the world knows how to make it and can make it.

So every day there's a Chinese knockoff and it's a piece of junk.

So a lot of people will try to copy us.

You can't get the smiley face right because I have the patent on it, but they'll make some other shape.

And when you copy our trade dress, which is our packaging designs or our color schemes, I will actively pursue you and defend vigorously.

And so one way we protect it is we maintain our exclusivity and we only sell the top products in the world.

And we keep to the fact that Scrub Daddy, if you want a cheap $1 sponge, I'm not your company.

Now, we also started seeing, this is recent, last year, we started seeing counterfeits.

And I mean real, actual counterfeits.

That looked just like it.

Dude, it was my name on the box.

It said Scrub Daddy, Scrub Mommy.

It had my address, had my patent numbers on it.

They literally made a Scrub Daddy box, but they put cheap Chinese sponges inside of it and they were passing it off all over Amazon as if it was ours.

We hired a private investigator.

We found the company in China.

We sent a guy with a camera in on his lapel.

He filmed the whole thing.

We went to the Chinese government and said, this is fraud.

Someone's copying our brand.

And they agreed and we raided the facility and took all of their inventory.

And so we think that sets a good precedent.

Some people start to see that we protect our brand.

And we'll continue to do that anywhere that it's possible.

You have like, I think, over what, 250 employees or 300 employees now?

We have almost 500 worldwide.

Wow.

Aaron, you are 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 something that you want to – you could do for 10, 20 more years?

Do you want to – if you did sell it, would you start another business?

Like what are your sort of ambitions at this point?

So, as long as I find it still fun and entertaining and interesting 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.

So as long as I can keep doing that and I'm enjoying it, I can keep doing it until the right time suitor comes along.

And if it's not that, I would consider going public.

And at that point, I would step down.

I don't want to run a public company.

It's far too much red tape for me.

And as far as starting other businesses, I've already done it.

I'm in the middle of a brand new startup making this really unique hockey stick called Tovi T-O-V-I.

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.

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 she's tired of sitting home by herself a lot of nights, I can keep doing this.

When you think about everything that's happened to you and you know selling to 3M right before the financial crisis and you know even selling to them and then them not taking this product as part of the deal, like them allow.

You know you got to keep it.

They didn't care about the sponge, the scrub daddy thing.

And then where you are now, how much of that this where you are now?

Do you attribute to the work you put in?

And how much do you think had to do with getting lucky?

So I think it's the definition of luck, right?

And I think luck would be someone just coming to my door and dropping off a boatload of cash.

That's luck.

So I mean, I attribute more than 90% is hard work.

And then there's just great fortunes.

You're just fortunate because you worked that hard to put yourself into a position where you might get lucky.

You know, In 2020, I saw the writing on the wall and I got scared and sent everyone home and said well, I'm working from home.

We'll shut the factory down for however long.

And then I got letters from Walmart and Target and Lowe's that said you're considered a essential product in the home cleaning business and you're not to shut down.

In fact, we're increasing our orders 30%.

We were the unintended beneficiary of like a pandemic where cleaning becomes paramount.

But is that luck?

Well no, I created a cleaning product and I put a lot of time, money and effort into making this brand.

And because of that I was in the position that one day there happened to be a pandemic and cleaning became essential.

Yeah.

I mean it's it's, it's.

You know, you were determined to make this work like you knew it was going to work.

But still, like I mean it, on first glance, like the response was.

This is ridiculous as a smiley face sponge.

Like what?

It doesn't make sense.

That's what Kevin O'Leary said on Shark Tank.

He said, you're kidding me.

A sponge with a smiley face cut out, that costs two cents to make in China.

And I was like, you're missing the whole thing.

Every single person in the world uses some kind of sponge or cleaning tool.

And so the market share is so big that, even if I didn't get the whole market, this was still a monstrous opportunity.

Like I knew this was going to be something huge and I would have put all my effort into it, which I did.

That's Aaron Krause, founder and CEO of Scrub Daddy.

By the way, it's actually one of the most successful shark tank companies ever, which has led to some regrets from the sharks who did not do a deal with Aaron.

I'm very close with Damon John, and he's always making fun of the fact that he didn't get the deal.

And he was on the Drew Barrymore show.

And she's like, you ever miss, you know, ever regret something?

He's like, that stupid sponge.

And like I know he's kidding, because he uses Scrub Daddy, and he loves my barbecue brush and we talk all the time.

And all the sharks on my 50th did a video and gave me a happy birthday.

So nice.

It's pretty cool.

Thanks so much for listening to the show.

This episode was researched and produced by Chris Massini with music composed by Ramteen Arablui.

It was edited by Neva Grant.

Our audio engineers were Patrick Murray and Jimmy Keeley.

Our production staff also includes Alex Chung, Nora Gill Casey Herman, Sam Paulson, Catherine Seifer, Carrie Thompson, Rommel Wood, John Isabella and Elaine Coates.

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

[The Evolution of Scrub Daddy: From Failed Invention to Global Cleaning Phenomenon]-[Scrub Daddy: Aaron Krause. How a Failed Experiment Became a Billion-Dollar Sponge]

📋 Summary

The Accidental Success: How Aaron Krause Built the Scrub Daddy Empire

The Origin of an Idea

The Pivot to Consumer Goods

Overcoming Retail Barriers

The Shark Tank Catalyst and Beyond

Strategic Growth and Brand Defense

🎯Key Sentences

📝Key Phrases

📖 Transcript

[The Evolution of Scrub Daddy: From Failed Invention to Global Cleaning Phenomenon]-[Scrub Daddy: Aaron Krause. How a Failed Experiment Became a Billion-Dollar Sponge]

📋 Summary

The Accidental Success: How Aaron Krause Built the Scrub Daddy Empire

The Origin of an Idea

The Pivot to Consumer Goods

Overcoming Retail Barriers

The Shark Tank Catalyst and Beyond

Strategic Growth and Brand Defense

Deep Learning with ListenLeap

🎯Key Sentences

📝Key Phrases

📖 Transcript

ListenLeap Brings You Into Real Context Learning