Carlton Calvin: Razor. The wild rise, collapse, and reinvention of a mobile toy empire.

Wondery Plus subscribers can listen to how I built this early and add free right now join Wondery Plus in the Wondery app or on Apple Podcasts Wait, so in June of 2000 you were selling a million a month. Yes, and January of 2001 You couldn't sell one this the sales stopped. Yes. It doesn't make sense. It makes no sense It doesn't make sense unless you understand crazy. It's happened to me so many times and No matter how many times the retailers go through this no matter how many times I went through this Everybody's thinking to themselves this time is different. Yeah, like this time It's gonna sell a million a month for the next three years and they can't even just do simple math that there's not that many people Welcome to how I built this a show about innovators entrepreneurs Idealists and the stories behind the movements they built I've got Ross and on the show today how Carlton Calvin helped turn a craze into a classic toy and built a massive company around scooters hoverboards and bikes Razor In the summer of 2000 kids all across the US couldn't get enough of one thing scooters, but not the clunky ones you might remember these were sleek made from aircraft grade aluminum They had polyurethane wheels that glided far and fast and the scooter was compact enough to fold up and carry anywhere They were called razor scooters and within months demand was out of control a million scooters a month We're rolling out of a small warehouse in Cerritos, California and at the center of it all was a man named Carlton Calvin Carlton didn't invent the scooter that credit goes to Geno Tsai in Taiwan along with his partner Robert Chen But Carlton helped launch the razor in the US and he knew how to make it a craze Because he'd been chasing toy crazes for years. He tried yo-yos. He sold finger boards He was in the Pogs and Slammer's business Carlton understood something important And it was almost intuitive kids are loyal to a toy one minute and then abandon it the next and his business was all about Timing spot the craze right at high and then scramble before it fizzles out But razor was different. It was bigger faster and hotter than anything he had ever touched But just as quickly as it rose it collapsed sales dried up almost overnight But Carlton hung on and slowly rebuilt razor into a bigger brand and over time Razor became more than a craze it grew into a powerhouse Manual scooters electric scooters bikes hover boards even a skateboard that twisted and swerved called the ripstick But before all of that happened Carlton grew up in St. Paul, Minnesota in the 60s and 70s His mom was a schoolteacher and his dad was an entrepreneur who started out in direct mail Carlton went to law school, but he hated it So in his early 30s, he decided to pursue another interest Becoming an entrepreneur himself You know, I've always wanted to be an artist believe it or not. Okay, and I made that pitch to my wife But I also felt you know like I needed to earn some money and so I thought I'll work with illustrators and new children's books So I thought of this idea called masterpiece fairy tales where I would tell the classic Fairy tales, but I would take the paintings of the great like impressionists and Retail the story in their style So it might be Van Gogh told the story of puss and boots, you know, and you find an artist to kind of that's right to to paint I found really great artists who could paint in the style of these famous painters now You could do all that on chachy PT Pain of you just say paint me pushing boots and van Gogh style and it would do it I had puss and boots are true. Yeah exactly. Yeah, all right So you so you're gonna come up and that's great because all these stories are not I mean they're in the Public domain so you could have a fairy tale book and hire some artists and And you get a children's book. Okay. That's in did you pitch this idea to anybody? I So that the problem was I didn't understand business at that point at all But I did get I got a lot of meetings out in New York was very fun I rent, you know, went to the big beautiful publishing houses and I now I know that what you do when you have an ideal That is you print up the books and you go to the bookshows and you start selling to the bookstores and you build a teeny little company that eventually gets big Did not understand that at that time, but while I was doing it. I Was working with illustrators and some of the illustrators were involved in this craze called Pogs and Slammers And that's what got me interested in Pogs and Slammers. Okay, so let's go on back for a second You are pitching a a fairy tale book idea. Yeah, and you get interested in Pogs and Slammers Which we will explain what those are in just a second. Okay, before we do that I know I'm trying to understand the connection between pitching a book a push and boots with To lose the trek style artwork and Pogs and Slammers So the the connection is the illustrators that I was working with Were getting work as illustrators for the Pogs I see and they've said this thing is going crazy All right, let's let's pause and explain what these are okay. These are they're like Like poker chips like wafer sort of like cardboard wafer Poker chips exactly right they that you would do what with it's like the game of marbles. So Pog stands for pineapple orange guava Started in Hawaii and they would put this these are the Caps that would go on a bottle and to keep it sanitary. So they're discs and it's just like marbles One kid comes with five Pogs and another kid comes with another five They stack them in a stack and then there's something heavy Which is a separate item called a slammer. What does it look like it basically is a bigger heavier disc You throw it at the stack and okay, cause the discs to flip over And the ones that flipped over in your direction you'd call one or heads or tails and you'd Then collect all the Pogs Yeah, it's like a it's a version of gambling and I remember this isn't the 90s. Yeah, just I mean I was already and you know Leaving high school and getting to go but I remember seeing Kids playing with these my little brother actually would so this just went wild. Yes explosive But at this time so many of the crazes that were Sweeping across the commentary would start in Los Angeles. So very fortunate to where I was all right So you see you're talking artists and they're like yeah, we're just we're making art for these things called Pogs And you're thinking oh, this is interesting. So what what did you do the next step was I wanted them to Make Pogs for me so I was gonna have them illustrate and I was gonna print the Pogs and I was gonna sell them But while I was doing that my wife is also a lawyer And we were driving through Arizona To go on a case and I was help you know just going along for the ride And you know stop at the rest stops and they sell these paper weights With real scorpions embedded in plastic, you know and they're like domes and I looked at it and my I got an idea Which was you could make a slammer when he's bigger discs I bet I could embed a scorpion in clear plastic and kids could throw it at these discs So the scorpion Slammer yeah the real scorpion fired by the scorpion paper weight that's right called stinger stinger was my brand name Okay, so you're so this is like a light bulb moment that goes on this road trip and Okay, but now you've got to find somebody who is going to First like I get the scorpions and then you got to figure out how to embed them in plastic And then you got to find somebody to make it for you so let's let's break this down a bit. What did you then do? So I turned the paper mate weight over and I saw they put their brand their their company on the back Just just the name math. Yeah, still remember it. This is You know 30 years later and I thought you know, I'll call them up and ask them to make these discs for me, right? You know, be out problem I call them up. They said we're not there's no way we're gonna make these discs But we can sell you some scorpions if you want to try to figure out how to do it yourself So I ordered I got a hundred scorpions in a little jar of alcohol came in the mail Or yes, and I went into my garage. I was renting a house in pacitina Went into the you know from old christmas house happened to have a garage classic started my business in the garage story Went in there for six months. My wife thought I was crazy Trying to figure out it's not trivial how to get a scorpion inside of little plastic disc And so what would you do in your garage or you like melting plastic and pouring it into mold? Oh, it's so it's so cool First of all, I did all the reading I could and I went down to the Natural History Museum in LA where they actually embed specimens in plastic and I talked to them and I checked out a book from the natural Library on embedding specimens in plastic But of course they're not making there's a there's a couple problems one is I wanted mine to be Shatterproof and like the globes and other things are not shatterproof So I did research on materials I called actually industrial chemical companies in LA And arrived at polyurethane as the kind of plastic that wouldn't break But all kinds of problems just like you might imagine the first problem was You know scorpions if you don't dry them out took me a long time to figure this out They'd turn white and you can't see the scorpion So then I took I went to goodwill and I bought like five or six old ovens And I then put light bulbs and then to heat them and then I would desiccate the scorpions inside just dry them out Under low temperatures under low temperatures light bulb temperatures and then I'd pour the rest of the plastic on top and that's how you got it Wow, so it's so all right, so eventually I'm assuming you figure out how to how to make this yes, okay six months So you successfully figured out how to embed a scorpion in polyurethane as a slammer for pugs and Then what this is when I started to behave like a regular business person somehow Gradually I learned about business. I went to a toy show the Pomona toy show which you know back in the olden days There used to be small toy stores and in order to buy toys toys toy stories were go to these toy shows There was one in Pomona major one in the west for the west coast and I rented a Corner of a booth. I mean like a tenth of a booth and I had one aquarium with this all total of six scorpions that I made that I'd ever Figured out how to make in this in a little aquarium and I was You know talking to people people were walking by and a guy walk by who was a Happen to be in the Pog and the slammer business was a toy distributor and he said if you don't Leave this toy show today, you know, it's the first of three days You don't leave today and you signing exclusive contract with me. I'll buy 200,000 of these at three dollars a piece Wow, who was this guy um Mickey He had a he had a warehouse and commerce big big toy distributor most of toys You know, there was a whole there's a whole business back then of importing toys from China They were kind of unbranded and like talking parrots and all kinds of stuff He and he would do that. That was his job, but you know that the the the Pog and slammer business was again an open system And everybody was getting into it and he was in it in it too So he said he said he loved these so much. He's like I want an exclusive deal all their $200,000 these at what price at three dollars a piece so $600,000 with my first sale Ever in business and and he was gonna manufacture them. Nope. I said he needed you to figure that out. Yeah I got I got to figure him out and I didn't have any money So he I said, but did you even know that that like that you could make? No, I mean absolutely no You know, I don't know how much it was gonna cost it might have good Might cost you a million dollars. You know idea. I had never bought a scorpion before I knew a little bit about how much the plastic cost But I figured you know But but that was it. That was my only cost that I knew but I wouldn't even at that age It's just so hard to remember how naive I was and I didn't even understand what margin was or How much you need to manufacture something? So I just went ahead at that point, but I didn't have any money So believe it or not the world is a great place. He wrote me a check for $75,000 that day On the spot on the spot on my face as a deposit as a deposit so that I could open up a factory to try to figure out how to make them So all right, so you get this deal for yeah, it's amazing. It's amazing that a scorpion embedded in polyurethane Could but yeah, I mean they would these slammers were going live a crazy kids were buying these cardboard pogs and And the slammers. I know what 10-year-old boys like is really the answer. It's just like irresistible How did you develop that that talent? I think that's inborn and that that is like the secret is that I didn't stray too far From what I am Like I am a 10-year-old boy My favorite story is I Got into trouble while I was a lock clerk because I snuck into my judges chambers in the middle of the night because his He had the most powerful computer to do video gaming on you know, I just Have a 10-year-old boy's mind for the longest time and so I have a sensibility about you know naughty dangerous Things they're in like like scorpions that that boys like okay, so you so now you've got a $75,000 check You're in LA. Yes. How are you gonna make these that how you gonna make 200,000 of these things? I mean, I didn't know so but I Ganned to go look for a warehouse near my house in South Pasadena Where I could set up a factory But the bigger problem was I immediately called mac and said I need 200,000 scorpions and they said no, no you completely misunderstand the scale or business like we go out With our kids at night in the desert with black lights and pick up scorpions. Yes, and turn over rocks And grab scorpions like I could maybe eventually get you a hazardous chop. It is a fun, but hazardous So they're saying to you hey We can't give you a 200,000 scorpions in a possible so what what do you I mean? This is what this is like 1992 1991 1995 I think 95 okay, all right, so so I mean really kind of pre pre-inter I mean the interest around, but not it was definitely pre-internet for me Like I had no notion of interment or email at that time So what are you gonna do you got to get 200,000 scorpions? quick so I Had a Chinese friend and they said we eat scorpions in China or they eat scorpions in China And I figured if they're gonna there's a lot of people in China if they're eating scorpions it lures a lot of scorpions It's got to be a lot there so I I went down and at that time There was something called the Hong Kong Trade Council in downtown Los Angeles, and I went physically down there and talked to them and they gave me and again this was at the early days of China turning into a market and they had You know, they had people who were importing products from China on a list and they gave me a hand, you know a printout You know of a with a dot matrix printer of a list of Chinese importers. I called that I had 20 of them. I called them all You know, I only found one that could find me scorpions, but he did Wow, and and obviously these are dead scorpions. Yes. Yes, and it but just said it just a I had a curiosity Was it gonna cause a a problem or challenge like is it hard import a 200,000, you know, yes Into the US level of sophistication. I didn't even think about it like I didn't even understand like oh well Are they gonna be be annoyed that there's scorpions coming into It states, you know, and they put them in like gasoline jugs Filled with alcohol to preserve them and I suppose it makes them food safe too for how they eat them in China. That's how they transport them Um, yeah, yeah, no, I I did nothing ever happened with customs with the okay that I remember So you found somebody who's going to Enable this and and do you remember how much she was per scorpion? Yes, and of course the little bit interesting Um, I think they started at like seven cents of scorpion, but as I got more popular And they wanted order more the price rapidly increased Wow, so okay, yeah, so started at seven cents for 200,000 scorpions And then and then who was gonna what you get the scorpions, but who was gonna manufacture the discs? So then I asked my Chinese friend To help me find You know employees and she did and um, I hired her to sort of supervise them and I opened up this Chinese scorpion factory in in in Southern California in like a warehouse and you put what in there like tables You were gonna hand to make 200,000 we handmade 200,000 in America How is that possible like you hand poured the polyurethane and that's right I and how many you just hired a bunch of I had like 75 scorpion arrangers And then I took a bakery um Racks and converted them into makeshift ovens with light bulbs You with like installation on the outside of a bakery rack and I would stick bakery trays in there of scorpions. It was Wild, you know All right, so you how long did it take you to make 200,000 discs? Do you remember it probably took three months Three months of a fill this order and you deliver it to this guy. Yes And you know a bit at a time. Yes, as I came off the rack and where is he selling them Globe all all around the country Just a toy store. Yes, and everybody a lot of people knew well toy stores everywhere magazine shops I mean it was it was a craze so they had these You know pogs and slammers almost at new stands and anywhere and how and I'm assuming these these slammers did well They did great everybody knew about the scorpion slamer and it said stinger on the side I had it engraved into the mold. So it was really cute And was that the name of your company your business did you file like an LLC? No small mines press So oh that so it was still part of the original idea I know the idea I had an LLC that was all set to make Children's books. Yeah, okay small mines press was making these so now you have You're you're like you get a taste of what it's like to have cool and and did he order more? I mean was that it just And so this is and then the day I delivered the last scorpion the pog craze collapsed They're like nobody nobody was buying blogs and slammers and it's just stop it's stop the whole industry shut down Immediately like in matter of hours. It seemed that's wild. It's it was like the hottest thing. Yes And you probably, you know clear the margins were probably pretty good. Yeah, so we probably cleared like three 400 on a grand on that Maybe yeah, maybe 200,000 dollars. Yes. Okay. Yes But that was it. Yeah, but of course I was naive and I thought oh this goes on forever. This is my first craze You know, so I I'm saying I'm selling you know 75,000 scorpions slammers a month I need to order like a few hundred thousand more scorpions to be ready to And that and the price of the scorpions went up. So all my profits were tied up in You know my second order of oh, I see so you basically took the cash and ordered more as you as you would yes, but you didn't you could not sell those no zero sales Zero so you were you left with a surplus of scorpions or or slammers or both yeah, so I had scorpions lots and lots of scorpions And lots and lots of employees that I was very sad and didn't want to let go How many scorpions like a couple hundred thousand at least what did you do with them? So And I I did not know what to do with them honestly and again humiliated in front of my wife, you know, this is like oh my god You all your profits like where's the money guy and it's so I I took them and Started to just like make Keychains and you know for like I was back in you know back in the market where I saw Max paper weights I was in you know Arizona selling scorpion keychains, you know by the hundreds You know was a really sad moment for my career But while I was in the process of making these scorpion keychains and anything else I could think of with a scorpion in it I was in Pasadena and I walked into a shop and it like a random shop was selling yoos and I'm like Wow, that's kind of weird Weird because yoos were like a 50s thing or just like it's not a toy shop, you know that that's a good sign for a craze Like yeah, I didn't explain that yeah, it was like a random I don't even know what kind of shop it was at this point, but they had some yoos and they had like a hundred dollar aluminum yo-yo and You know, it just like seemed like while that's interesting and then I got the idea I could put a Scorpion in a yo-yo yo-yo. Yes. Yeah. Now that was at that point. It was just I didn't understand it was a craze But I understood that it would just be like keychains like it would be another thing that I could be doing to get rid of my 200 Scorpion and so I did And I didn't have a way to make the yo-yo so I started to make the yo-yo itself in China But I still embedded them in my factory in Salpacadena I see so you get the yo-yo is made in China and then you would you would sort of put the polyurethane disc Basically the slammer. Yes, I actually into the yo-yo. Essentially. Yes. I mean I poor actually poor the The polyurethane into the yo-yo and then put a scorpion in there bake the yo-yo the whole thing and It turns out that we were on the cusp at that time of the greatest yo-yo craze in the history of yo-yo's Wait, why? What happened? There was a guy who invented something called the brain Which was a yo-yo that Was a high-tech yo-yo that could sleep Which means spin at the end of the screen automatically without any talents That is the essential move of yo-yo dim if you're an old-school yo-yo You would need to learn how to make it sleep, but this would sleep automatically And caused a huge explosion of interest because everybody could look like a pro All of a sudden every kid wanted a yo-yo. Yes, and And there was it that's exactly right But you were not making the sleeper yo-yo you were just making a regular yo-yo But again, I wasn't making the original pod, but I was involved in a major craze that's sweeping through the culture 10-year-old again 10-year-old boys And I went to like the there was a science store from public television And that was in the malls at that time and a scorpion yo-yo was perfect for them And so that was my first time I ever sold directly to a major account So how did you have I mean with the pogs and the slammers you had a guy who bought You know who bought them from you and then distributed them, but now you had the yo-yo So I mean assuming you had some connections in the industry at this point where you could find Somebody willing to buy it by them and distribute. No, it was it was You know, I just was learning how to be in business So at this point I personally contacted the buyer at the science store And then somebody told me that you can't do all these sales yourself You know you can't expect to do well if you're just going to call The buyers at the major stores you need a you need an organization and you need you need sales reps essentially And I hired a sales manager and that's what transformed my business Yeah, so you hire a sales manager to basically go directly to these retailers That's right and actually hire a group of reps that would go to all the retailers in the country put a nationwide sales Network together for me overnight basically sales reps know people all over the country and so I Scorpion yo-yo turns out you don't just have to sell them to Science stores. They also sell extremely well in toys or us So I started to get my big my first big customers and I sold millions of scorpion yo-yo's globally Wow, it was crazy and toys are us still in 19 in the late 90s was it was probably the one of the biggest if not the biggest Distribution channel absolutely. I think for a long time they were my biggest customer even for the rate scooters I I remember as a kid in the 80s being taken to toys are us, you know, and it was like Magic, you know, it's just a magical store wandering through his aisles and looking at all the toys and it was like One of the great that and a happy meal of McDonald's like we're two and I didn't get them very often It was some amazing amazing. Yes, and it's a great sadness that that we don't have a specialty toy store nationwide anymore All right, so you get these yo-yo's these scorpion yo-yo's and and what like all of a sudden you're Basically your gamble on all these scorpions pays off and I have to order more Absolutely, I have to order many more. There were millions of scorpions and the price keeps going up other scorpions And I have these all these employees and still making them in awareness That I could never get anybody else to make them never could figure that out, you know um So I was yes, I was in South Vasadena and selling millions and millions of scorpions but knowing it by this time that I needed to be careful Because you knew that the craze would end yes that that essentially with these crazes eventually In my theory is everyone gets it. You don't you can't sell You know infinite number of yo-yos to the same people essentially So already once those those yo-yos went and they sell they sold well extremely well order reorder reorder reorder yep So you were like making pretty decent money already yes at that point I would on paper Making lots of money More than I way more than I would be as a lawyer right And I'm very grateful to my wife for her patience because she was a lawyer That man I could reinvest all the capital to keep the business growing So I didn't really wasn't really able to take out a big salary or any salary really All right, so you are You know that this is not gonna last and does that mean you're already starting to keep your eyes peeled for what the next thing Absolutely and and and what were you doing where you just Reading looking like going I don't know what I don't know what I do honestly. I don't know why This is part of my personality like I don't know exactly why but I'm just Just keeping the only way you can describe it is keeping your eyes open and talking to everybody And seeing what's happening and somebody I met Introduced me to somebody who was selling something called finger boards Oh, yes, and people know them today as Tech deck. Yeah, they're like a little scape but they're like little skateboards that plastics miniature skateboards That's right and you do you use your fingers to like You know play with them. I remember my nephews used to play with them. Yes exactly right and they still do It's still a but but this was a very again southern california very organic movement First, you know, it was just kids doing it with cardboard cutouts of skateboards Then the person that I met had the idea to Brand them he had arrangements with all the skateboard companies to put the branding of the skateboard in the Fingerboard and they were called finger boards, but the person that invented it didn't have access To major companies like toys are us in Walmart and all that kind of stuff Right, and I did so we struck a deal And I manufactured them and these are just finger skateboard finger skateboards at first This is a major craze and of course, you know by this time I learned about product differentiation So I made all kinds of like parts of the street landscape like barrels 55 gallon drums and little barrels and street cones So the kids could fantasize playing with their finger boards and then I also branched out into things like DMX bikes and surfboards and pretty much any other extreme sport I would go and get a famous brand and put it on it and You know sell it and where were you manufacturing these China the guy who made the yo-yo's? Yep was my connection and he started make all this stuff for me It was again, they were flying off the shelves and I had of course the original brand name which was finger board Tech did came out as a competitor and they were more authentic looking than mine at that time You know, I had the original old school one and they had a sort of more authentic looking piece This is the company's called tech deck. Yeah, it was called tech deck now. It's owned by spin master who are good friends of mine And they basically kind of copied the idea basically they did yes and so and and so What happened? I mean you had this product these products did they Kind of take your market share they did the yes I had a niche, but they were far more experienced and advanced In the toy business that I was and had deeper relationships with all these retailers And at the time they sent around a letter saying that I was infringing their intellectual property Even though the exact opposite was true and you know, it was really so it was really dirty Actually in my my understanding of the world All right, so you're you're pushed kind of pushed out of this business a little bit But I also knew that whatever the situation is it's not gonna last forever because it's such an amazing craze Carlton let me ask you question. Yes, did you ever get Like already at this point where you thinking in your mind I have got to find something that is more long lasting like it or enduring toy. No, no I mean, I just couldn't this is how I thought toys were period This is I mean, this is my only niche and I was just moving a million miles an hour And it was emotionally draining To have your whole business collapse every year or year and a half So at any moment I thought this whole thing is gonna just stop You know the whole business Yes, absolutely. It was terrifying When we come back in just a moment Carlton goes through yet another boom and yet another bust This time with the razor scooter stay with us. I'm gyra's and you're listening to how I built this You Hey, welcome back to how I built this I'm gyra's So it's 1999 and Carlton has lost his grip on the fingerboard craze And he's looking for an idea that could be just as popular So I'm reading an article in the LA Times And there's an article about adults in Japan in Tokyo riding scooters called the razor scooter And I thought to my immediately thought to myself Well, I'm in the craze business and I also make miniature extreme sports items This is going to be my ticket to kill you know Tech-tech, you know, I'm going to be the guy that gets the razor scooter License to make miniature razor scooters it went because I just know this is gonna I sense this is gonna come to the United States and be huge and so somehow I got the telephone number of the company JD You know JD scooter company, you know, that was making these scooters and vented the scooters And these were making they were making them in China China And they were called razor scooters They were called everything but they're the when they started they put a name on the ones that were coming directly from them But they were a Chinese factory So they would make under they were made under many different brands for in Japan already And already they were getting orders from other people, you know, I'm not the only guy For sure that one something is super hot in Japan that figures this is coming to the United States Yeah, okay, but to be clear your your vision was It was not to import these these these right on scooters, right? It was to have the company that makes them Make miniature versions like mint like a miniature razor exactly right But then I guess they're must have been a point where you're Where you're thinking Wait a minute. I'm focusing on the wrong thing here like why don't I why don't I just sell the actual scooter like the life-sized version? Absolutely for the first time in my life. I was not going to be somebody participating in a craze. I had the Notion that I could be the craze, you know, yeah, and that was it. I had this like like I why should I make it? A knockoff essentially of a razor scooter. I you know knockoff is a not a very nice word like my scorpion yo-yo's We're really knockoffs you know, they're they're innovative blah blah blah, but they were still just participating in a craze not owning a craze Right, right. Okay, so you you decide to sell the actual scooter in the US and From from what I gather like to get the ball rolling on this You connect with with two guys who will soon eventually become your business partners starting with There's a guy in LA is a guy named Robert Chen And who who exactly was Robert? So he was an inventor and he was doing folding bikes that he invented So he had a warehouse in Saritos, which is where headquarters is now and also was getting interested in you know helping Geno with the razor scooter Business because it was just going crazy in Japan already. Geno-tsai. It be I'm sorry. Geno-tsai. Sorry to introduce him A genius amazing human being wonderful human being too Um, who was the inventor and the creator and the original Razor scooter guy right Geno had been an entrepreneur for he he and Robert are older than me and they had been entrepreneurs for longer He didn't waste time going to medical. I mean the law school and you know, so they knew business He had maybe 10 different companies at that time. He was he was a wealthy man already So what I mean why would I mean you already had some experience clearly with the yo-yos and the pugs and the the the the finger boards How did you convince them to give you the license? No, this is a great question. I mean this is this is like an amazing part of Like how this happens. I mean Basically, it was based on trust and Robert is like I want it like it's hard to express how good a person and honest Robert is and Geno - and we all and I like to think of myself that way too, and we got and Robert and I had an immediate connection and you know A lot of untrustworthy people were approaching him You know not with and also they didn't have this grand vision You know the grand vision is stop what you're doing, which is a big risk on their part and own a brand And the brand is everything. I mean I clearly Like any number of people I had my relationships with Toys or Us in Walmart and Amazon Any not Amazon. Yeah, you know all the players and I could bring them to the stores But but of course they were not selling to the stores. They were selling to distributors And so I was gonna get them wholesale prices instead of them selling it through a middleman who then sold it to Toys or Us or Walmart So there was a big opportunity to capture more profit for them but the big concept was Branding you know and and building a company for the future So instead of just being a white label. Yeah, you know scooter We're gonna call it razor that's right and you were gonna get the license for North America globally Globally, and it wasn't a license. I I went into partnership with JD. Okay. Yeah. There was a partnership So you become a partner. Did you have did you have to buy into it for? Not nobody had to put any capital in My businesses tend not to be in capital intensive, but you know you will appreciate this you know business people appreciate this A business of this size that we formed would ordinarily require a lot of capital But we were in very unique times and it's exclusive to crazes But these Toys or Us in Walmart were paying COD for scooters to me Wow, I know you would get paid to on delivery not 90 days later not 90 days later not Five days later. How how they needed them they wanted them and and That's I never could believe it, but I that's how I financed the company But this is before you when you I mean when you got that when they agreed to work with you You still have to pitch it to Toys or Us so what did you go where was Toys or Us headquarters at the time? New Jersey. So did you fly to New Jersey with one of these things? Yeah, absolutely. Yes And right away they were like we're in Yeah, no, this is the biggest craze Like and maybe they were already being sold by knockoffs even faster than razor could get into the market in the US They might have been being being sold in Like convenience stores in LA, you know, just like the Pogs like they're in and certainly as it progressed It got to the point where you could go to a pizza shop and they'd be selling knockoff scooters Oh, wow, not razor scooters, right? So your pitch to Toys or Us as we get these in fast at scale That's right. We've got the manufacturing capacity from the original you don't have to deal with these knockoffs anymore Right. Yes, and Toys or Us says all right, we're gonna order these we we're gonna put in order We want them in all of our stores absolutely How long between the time that that that you get you know the green light Until the time they're actually delivered was it quick? Yes, I think they were like no like a month Wow, yes, they were just cranking them out. Yes China. Yes. Yes in anticipation And they shut down all these other you know customers So they didn't have to make them and slap all these other weird brands on them They could just put razor on all of them and ship them to me and I would ship them to Toys or Us and the other retailers Did you need a lot of employees in the US to make this happen? I immediately scaled up to a real company from three I had three employees selling finger boards And I put together a whole team like I had a you know President I had vice you know vice president of sales marketing just a the skeleton But you know customer service every kind of and I didn't even know Honestly, I had no idea what a company looked like like I didn't know that you needed a marketing VP or a finance VP Or a sales VP. I had no idea. I just thought. Oh, you just do it all yourself But that's not it. No And you're eight years into doing this kind of work. No, I'm only like been doing like serious You know, it took me a long time to get from you know making children's books to actually doing the pox You know that was a and then from the pox it was probably just three years So now at this point do you rename the company razor? Yeah You see create a completely new entity correct razor razor USA. Yes Yep, okay with real like experience people, you know in real jobs and me Okay, and how and and and how much or was each scooter going to sell for the scooter sold for Retailed at a hundred dollars for the and immediately I came up like and Really incredibly quickly with all like good better best classic like just because I'd already been in business a little bit Yeah, so it went from like a hundred dollar retail for the base model To like a hundred and forty dollars for one with some parts to it Like a suspension or wheelie bar all kinds of you know little like we had the a the a two the a three and we were gold So I from what I understand it's around June of 2000 when they start to get sold in the US the razor scooters yes and I mean craze is an understatement. Yes What happened? So I was selling a million scooters a month from the get go from the get go Just because They were toys are us and Walmart or else. Yep target. I think a sharper image. I mean everywhere everywhere You know people places that would normal all the sporting goods stores. I sold to dick sporting goods sports authority You know, I don't even it's it's so hard to you know, it's like You know beanie babies or You know cabbage pants kids at the time when you know parents are scrambling for them and can't get them. It was ridiculous It was once in a lifetime experience for me and just once in generational sales Why were these so popular? What's your theory? Why did why was there such a craze around these things? That's a good question I mean I I sort of take these things on face value But scooters have always been popular, but these were small made out of aluminum so super light and they had ball bearing you know wheels from roller blades and That is made them much better and scooter than the old fat better. It's sort of like the brain like a technological improvement. They were aesthetically beautiful which isn't always the case. They were Culturally they were used by adults and children that was I think influential So adults could talk about them and ride them in a way that like yo-yos were never used by adults So it had a broader appeal You know, and it had something to do with you know the internet coming and they were used in Silicon Valley, you know in warehouses and You know, yeah people would use them like they'd fling them over their shoulders That's right unfold. There was this vision of future transportation where adults would be riding scooters That helped popularize it in local cut. There was a my favorite thing um a cover of the New Yorker of a guy riding uh, you know razor scooter and then the another man riding a tricycle You know just infuse the culture in a way that like yo-yos didn't or other other crazes happened before All right, so this is like the year 2000. Yes. It's going nuts. Yes And you're selling a million a month. Yes And just overwhelmed just totally overwhelmed but but And but this sounds like it was different that this wasn't not gonna be a flash in the pan This was gonna be lasting. Did you feel that way? I had no idea You know, I probably in the back of my mind was thinking how long is this gonna last? Honestly, yeah Yeah, okay, so what I don't understand is I mean you've got this thing It's selling like crazy in the summer of 2000 Where's Mattel? Where's Hasbro? Where are the big toy companies? Why aren't they jumping on this and just cranking these out? They can't move that fast is essentially the answer It's just too fast for them and also they're probably wise. They're like Wise but incorrect. They're like oh, this is gonna be over by before we could get into it So we won't be able to sell any right and What when did the the copycat start to come? No, they were there at the beginning They were okay because they knew and that's right and they're quick acting. Yes, and did you have I mean I remember You know I've written razor scooters and like it had the fender on the back that was the brake for example So was was it a patent? Was it did you this was where my legal training came in handy Um, but yes, we had a patent and that could also be a reason But I'm not sure that other bigger companies didn't get involved because because they were aware of our patent We certainly publicized it right away But mostly people ignored our pet and you know the fact that we had a patent And this is already the beginning of like you know Chinese factory starting to just crank out You know copycats of absolutely of products yes, how so you have a true you have an option here You can just ignore them and just really double down on your brand or you could go after them And I think you chose to start to suit them we did we did a major lawsuit and this is in 2000 in 2000 In the fall and did the litigation instantly stop their sales like did you have an injunction or we we prevailed quickly We I believe we got a preliminary injunction I I believe that The lawyers were great and we were able to have an injunction against everybody did you did you but did it eat into your sales Um, it did not I sold as many as I couldn't manufacture During the time I was selling them so I couldn't have sold any more than I did But they sold a lot and Helped cause the thing that always happens Which is the sales completely stopped on a dime wait how what do you mean they stopped it'll stop to win they stopped in spring of The spring of two of 2001. Yeah, they they stopped on a dime. I could not sell a single scooter out of my warehouse Wait, so in June of 2000 you were selling a million a month yes through through the rest of the year Yes, there's something million a month at least yes and in the spring of so like by March of 2000 January of 2001. Yes, you couldn't sell one. That's the sales stopped. Yes. It doesn't make sense It makes no sense. It doesn't make sense unless you understand crazes that happen to me so many times Which means so this is how it relates to the knockoffs. They were also selling at the same time. Yep So between the two of us we sold Like a scooter to every single Kid in America we wanted one but like literally everybody between the age of you know five and eleven or twelve got one Like 10 million scooters maybe maybe more maybe 15 million. Yes, maybe Wow And so I maybe only had a third of the market believe it or not you know and there others were cheaper You know, I was at a hundred and hundred and thirty dollars. They they're they were a lot of scooters sold and No matter how many times the retailers go through this no matter how many times I went through this Everybody's thinking to themselves this time is different like this time It's going to sell a million a month for the next three years And they can't even just do simple math that there's not that many people Right and so as much as I was trying to tell everybody in my organization we can't be keep ordering scooters We still had like a million scooters in the warehouse for the next month sales which then were zero Okay, buy the spring of 2001. What are retailers just stop or toys are stops or zero? Yeah, nothing nothing they've gone from we will pay you whatever it takes to we don't we don't want these You know this was the olden days do you know what they said they said we want you to take all these back We've got too much inventory. What did you say we said no? We don't have any room in our warehouse which has a million scooters in it But it was a major conflict that I had it was my first hardball Experience with retailers where they already paid you for them right they'd already paid us for them. Yeah, I mean My reaction was because I am I mean of course I'm struggling to do everything I can you know It to it's sort of like after the Pogs I tried to make keychains so I'm trying to think of anything I can do yeah, but Not having had a lot of success with keychains My impulse was to fire everybody. That was my impulse Just basically kind of collapsed the business and cut back. Yeah, like I could do it myself Like it would be me and Robert and a couple people you were that concerned about the business surviving Absolutely, I because I never had a craze that continued before I never had a craze that continued before and I never had a brand before and I didn't understand what it meant to own a brand I thought I just had the next yo-yo or the next You know fingerboard and that it was just all over and that there was hardly any business here You know that I couldn't handle just by myself because I handled fingerboards and bogged you know bogs by myself So so you are thinking about And how many employees that you have they at the time probably 45 or 50 Yes This is like the fourth time that my entire business is completely collapsed and I'm like and I got all these people looking at me And like okay now come on where's your next hit But I don't think I'll be able to do it again and I'm just a very very frugal You know and not optimistic skeptical Person and I just said it's over. We should just save every penny weekend When we come back in just a moment how razor scooters turn a corner After going electric Stay with us. I'm Guy Ross and you're listening to how I built this You Hey, welcome back to how I built this I'm Guy Ross So it's early 2001 the razor craze has collapsed and Carlton is ready to fire a bunch of people and manage the business by himself But it's partner Robert he says no He's just like you shouldn't do this you just have to have more faith That we'll be able to come up with new things and we should keep all these people and You know, I really respect Robert so much and you know again for so many years we just had this Partnership where we talk over everything and he I'm not a I don't get Sat in my ideas. I think like to think I think I'm open-minded and he has a lot of influence over me and he persuaded me It's really the answer and I just did I just kept going Okay, before we we find out what happened What about the the inventory that you had? I mean you had all of this inventory What was going to happen to that inventory? Really what what happened was so to be really candid is that Geno was a great partner and you know These scooters did not cost very much to manufacture you know he owns Owns Razor With me, but he also owned the factory that made them and he charged us a pretty penny for those scooters And so we owed him a lot of money for these like leftover scooters. We'd already paid him for all the other scooters But you know, but for the leftover scooters, he said listen, I'm gonna, you know help you with that You know, you don't have to pay me the full price on those scooters and so but that came out of all You know all of our profit essentially But he took a hit we took a hit and so I just sat on him. I sat on him but You know after a certain amount of time The retailers were able to work through their inventory Of their extra inventory and then they needed Somewhere between two or four million scooters a year to keep going You know at that time, you know, there were four million new customers Turning from four-year-olds old where they couldn't write a razor scooter to five years old So there was still all the new kids. So wonderful. They were not a flash in the pan. That's basically the answer That's what happened to him because So so it was this craze right all of a center really had one but really it was the beginning and of a Kind of a classic toy absolutely, which is so rare. Yes exactly right. It became a foundational part of childhood And is you still sell them today. Yes. I mean, I I think that You know to be just totally fair our patent has expired yeah, and you know at lower price points I'm more of a quality-based, you know higher-end scooter even at the basic $30 scooter So I don't have the market share that I had of that product that I did originally But everybody gets some form of the scooter that I say right like you think about sort of foundational toys like a bike Yeah, a skateboard It's even more than a skateboard because it doesn't take as much talent as a skateboard to ride. Yeah But now you are in a category, which is wheeled Mobility toys. Yes, right. Yes. This is different than the Pogs and the slammers And so now I'm assuming You're trying to find things that work within that category correct and also For the first time I had a brand so when you have a brand I began to think of brand extensions. So just common sensical things Oh, and we came up, you know, it's just like a theme but that we would try to do what we did with the scooter essentially You know, which is look at the classic toys that young kids have like You know, power wheels or Pogo sticks or we had a lot of them and we would just razorize them So we'd bring them out in shiny aluminum and High quality and some innovation I always wanted to do something innovative with the product too. So, you know, updated versions of classic product like big wheels Which were made out of plastic originally and we made it out of aluminum and aluminum and actually when we did it The market was primed and accepting. It really was like anything with razor on it had appeal And so that item sold well wasn't a crazy hit, but it was sold well And it was it was basically an updated version of a big wheel which is an updated version of a tricycle That's right. Yeah, we called it the screen machine. So the business was began to thrive almost immediately because both scooters began to sell again Like, you know, maybe after eight months or something and people were buying this new these new products from razor Um, they were very supportive. Toys are us support of supportive people believed in razor as a brand And they were good products without You know being crazy Yeah, it's but of course Me as my personality. I'm looking for something magical always And what was the next magical thing? The next magical thing Was an electric scooter So this is already in like this is a back in like 2005 I think. Yeah, very early on. I mean, this is before People it was even on people's radar screens Way before right. It was basically a battery powered scooter with a Throttle and a break, right? That's right and actually the first the first iteration was Really outside inventor they made a battery powered motor that could mount on a razor scooter and that sold well But it didn't take me long to realize that was not the way to sell an electric scooter You don't want to just like bolt one on you want to make it from the ground up as an electric scooter and this really begins your I wouldn't say a total shift, but a kind of a shift into a powered electrified Right on things like not just scooters, but then dirt bikes and like like sort of ATV style vehicles, but that were Not ATVs or dirt bikes that were thousands of dollars, but that were more like toys exactly right This was transformative. This was explosive again This so the the electric scooters as soon as I put them out there they flew off the shelf It was great sales And then but you didn't you didn't abandon analog things you there's a product that you guys bring out in 2006 called the ripstick Which is um still see them. It's like basically Imagine two sort of platforms connected by a By a rod and it's like a kind of a skateboard meets a I don't know what and it's it like I've tried to stand on these things. I don't have a balance, but this thing How did this thing come about so this is again? I was in my own neighborhood And all of a sudden I saw like five kids on something called the way board And I said, okay This is this is a craze so I Called a couple of my people's you know who sold into smaller venues and they go, yeah, this is crazy And so I contacted the inventor and I said you got to do with us. We're gonna we're gonna make this a giant craze And we did and and again, it was like the formula was let's come up with something We'll put it in toys our us. Yes, and and Wal-Mart and so it was like if you build it They will come kind of absolutely it sold itself. It was just out of control When when did that model start to shift? What do you mean? Like like I mean obviously toys our Russ isn't there anymore and you know Wal-Mart and target still sell toys But it's somewhat different. I mean was there a point where it you couldn't just Make a toy put it there and I think they're I so there's a distinction like if it's a craze that still works very few crazes So we also discovered television and so we could take innovative items That we're not organically growing like the You know ripstick was that had an organic momentum Word amount that exploded into the culture and everyone had to have one But we were coming across very good items that didn't have any organic momentum on their own So they needed television advertising to get them going and through a very long phase of making real goods which nobody had been doing and putting them on TV But it sounds like by the time you start to release these electric versions these are battery-powered versions of You know of little motorcycles and and go carts and dirt bikes and then you the ripstick that you start to you really find a way to create Some kind of stability in in the company in the brand. Oh, yes. The razor scooter was notoriously You know something that was created and lasted forever and actually These electric motorcycles and scooters. They just keep getting stronger and stronger and stronger and they're not as easy To knock off as the scooter You know, they're not it's not so much the patent But the actual technology and making them is quite challenging You know to do it well. And so that is we have a very very steady business on our evergreen items Let me let me ask you about because I want to get into the really the other product that would also blow up called the hoverboard Yes, which is not a hoverboard. It's not hovering like you think back to the future It looks like it. Yeah, but it's basically like a segue Without the handlebars, right? They and and and this this is kind of begins around 2015. Yes Before we get to that story What were you doing about copycats? Were you still suing people who were knocking off your electric scooters and things like that or were you just saying it is where it is and let's just Yeah, it is what I mean basin my patents on the scooters were expiring and And it's and people can't successful haven't yet. So there's the measured pessimists in me haven't yet successfully knocked off the electric product Right, okay, and your main sales channel were still the retail stores. Yes, but physical stores. Yes When when did that start to shift to Amazon and to online? You know when it the day Amazon started by we started to shift with them. We were very early on Amazon But we had two dramatic shifts The most saddest dramatic shift for Razor has been the loss of Toys or Us, you know Not only is it a loss from the kids perspective of a fantasy place to go But they actually always carried our entire line and when we came out with something innovative They got way behind it, you know And we could always rely on three big customers Walmart target and Toys or Us if we're going to put something on television That they would get behind it and support it and now without Toys or Us you lose a third of the triad And we really lost a very significant part of our sales when Toys or Us went bankrupt And it was not completely replaced by the other people All right, let's talk about the hoverboard. So this is a product that I guess is brought to you by an inventor Yes, or you you discover it and some it's going to shame chance. Yes, and tell me about How you came across this product and and also why you thought it was going to just go go crazy So I had a really good relationship with Shane and every year He would show me these wild and crazy inventions that he made and I'm like yeah You know, I'm happy to keep showing me You know we could try it a little bit, but I don't know. It just seems too odd And amongst the things that I kept rejecting was the hoverboard And I kept saying um you know it's too hard to use You know, I can't I can't write it and if I can't write it You know, I don't want to I don't want to sell it right and then I had my incredible, you know, marketing guy Who has been with me from the start Ollie? He he even was like he could write anything and he's like This isn't so easy to write But then at some point like everything that is really going to be a phenomenon It began to catch on it on its own without my help without anybody's help and I said chain It's time to be in business again and that was that and he had he invented it He had the pattern on it and we signed a deal now there was You know, I had to like fend off as I often do You know fend off other People who want to sell it, but I was successful and I have a long relationship with Shane So it wasn't impossible and we got it and it was like another incredible it was like our peak year. It was a second major cultural event that we were involved in Jamie Foxx like came out onto the tonight show on one at one point. Yep. Justin Bieber had one and everybody all those all but it was again a huge cultural phenomenon so really I mean you were You know just expanding constantly expanding your line. I mean today you've got so I don't need how many how many different products do you sell? I mean we probably have you know hundreds of products, but I would say we still have a Solid 50 or 60 different important Items good items right yeah, and and and what is your best selling product today of the Electric motorcycle and the electric scooter. I mean in terms of dollars in terms of dollars And then the scooter obviously sells quite a bit too So we're back to sort of steady Eddie You know looking for our next craze is so the year after last year was quite good for us and this year looks well This year's another horror horror show because of terrorists. Yeah because of terrorists Because everything you make is coming from China. Correct. Basically. Yes, and we have a little bit of operations in Vietnam But China and so what does that mean for your business right now? Yeah, I mean it's It was an unmitigated disaster Like we were I was litter I have you know made money every single year. I was actually thinking we're gonna lose money This year You know you're getting hot news. I suppose I mean, I don't know who else you're talking to but our prices are Significantly higher at retail. We're not benefiting from it because it's really You know retailers who forced the raised prices because of the tariffs But they're using it to pay the tariff and they don't pay us anymore and our sales are going down Their sales are good and you know if you look at their total dollar volume of sales They've raised the prices. They're selling fewer units, but they're overall dollar transaction right good But our sales are going down, but not We're not crashing, but it's a terrible situation Yeah, and so how do you what do you do? I mean at first You know, I've got a really great team and we just madly began to figure out how to ship from Vietnam or you know, Vietnam essentially or Thailand, you know, we began to move everything Until it was a pause and then we sort of moved everything but we were just basically Running around like our chicken with his head kind of trying to respond to what's ever happening next What about looking for the next thing like I it's still part of your like ethos of my matter It is hard of our ethos, but this is like a very interesting time because I Am looking to make some art at this point and so maybe looking to sell the company well Not so much sell the company, but I want to pass on to the next generation. I'm 63 years old You've kept kids are they interested? Not at all. Nope. They want to be filmmakers This is a price still privately owned still privately owned yeah, and so I'm really looking to empower the next generation I just would in some weird idealistic way. I would like to it's a see it live forever essentially the company What do you think could be the next Razor scooter or hoverboard? Oh You know if I knew that But but actually what's interesting what I'm working on Is that intrigues me and this is going to be just sound boring at this point, but I think um Discovering trends using artificial intelligence or some other method of combing the culture for what's happening and finding it early that's what was in my Weird brain and being able to figure out how to do that You know algorithmically is very intriguing to me. I mean, I don't know that it's gonna happen I can't promise it's gonna happen that's one thing that's very exciting to me and in fact Exciting to me in general is artificial intelligence for the business for sure I'm very interested in how that could could roll through the business Carlton when you think about you know The just the journey took it means to you know what to law school almost get a lawyer and and Kind of fell into the toy business because you wanted to make you know, but fairytale picture books um And start with these these pugs and then kind of cut cut the bug and built a really you know significant brand here with Razor How much of of it do you tribute to the work you put in how much do you tribute to luck and timing? I love the luck story You know there's like what if I didn't read the article in the LA Times that the Razor scooter was I'm going crazy in Tokyo and what if Robert hadn't been such an amazing person such a visionary to put You know me and Geno together with him and start the company and what if What we had shut down, you know because I was discouraged the year after you know, there's always like Luck is is so humbling as part of success and you know Things happen in a cultural moment which means you can never bring back the hulu Like how do we explain things like this? I often think that you know the Beatles if you brought them into the market today Might not not you know become famous. I mean I I feel I do have this like Weird ability to like hone into the culture early and act quickly But luck is such a wonderful thing There's just no way around it That's Carlton Calvin co-founder of Razor by the way pugs and slammers they've not totally gone away You can still buy them on Amazon and you can find the slammers with the scorpions inside on eBay and because the phrase Scorpion slammer is so unforgettable. It's also the name of a very hot the hot sauce made of course with scorpion chilies Hey, thanks so much for listening to the show this week Please make sure to click the follow button on your podcast app so you never miss a new episode of this show And if you're interested in insights ideas and lessons from the world's greatest entrepreneurs Please sign up for my newsletter at gyros.com or on substack This episode was produced by Carrie Thompson with music composed by Runtina Roblui He was edited by Niva Grant with research help from Sam Paulson our engineers or Patrick Murray and Maggie Luther Our production staff also includes Alex Chung, Carla Estevez, Casey Herman, Chris Messini, Ramell Wood, Andrea Bruce, Andaline Coats I'm Guy Ross and you've been listening to how I built this If you like how I built this you can listen early and add free right now by joining Wundery plus in the Wundery app or on Apple podcasts Prime members can listen add free on Amazon music before you go tell us about yourself by filling out a short survey at Wundery.com/survey