YETI: Roy and Ryan Seiders. How Two Brothers Turned a $400 Cooler Into a $2 Billion Brand

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Fast funds term apply at so-fi.com/guiraz. I think we come up with about 10 solid names, and yet he got mixed reviews. For some people, it felt too cartoonish for others, like gross, this hairy, smelly, big foot, possibly. And I was way more confused than I went into it, so I just like, gosh, I don't know if I'm making the right decision here. But I went back to the same group of 20 people like two weeks later, and I had one question. I said, "Hey, out of my list of 10 names, which ones can you remember?" And all 20 people, the one constant they all could remember was Yeti. So that was all the validation I needed. Whether they liked it or not, it struck a chord, and that's marketing 101. Welcome to How I Build This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements that they built. I'm Guy Ross, and on the show today, have the ambition to build a tougher and colder cooler led to Yeti, a high-end brand that does over $2 billion in sales. It's easy to assume that founders who come up with an idea for a niche market secretly have bigger ambitions. Maybe they're making a product for elite runners, or mountain climbers, or surfers or snow borders. But the dream, at least we assume, is to eventually sell it to everybody. The thing is, a lot of the entrepreneurs I've had on this show don't really seem to think that way. When he started Patagonia, Ivan Shenard wasn't trying to turn it into a global lifestyle brand. He was a mountain climber who wanted to make better gear for climbers. The founders of Hoko weren't trying to make shoes that you'd see people wearing at the airport. They wanted to make a better shoe for serious runners. And that's basically the story of Yeti. When two brothers, Roy and Ryan Cedars started the company, they weren't thinking about tailgate parties, or backyard barbecues, or beach goers. They were thinking about hunters and fishermen. Roy and Ryan were serious outdoorsmen, and they were constantly frustrated by their coolers. Most of what was available were the familiar plastic coolers made by companies like Igloo and Coleman. And they were okay for keeping things cold. But the brothers wanted something even tougher, something that could take a beating. And importantly, something you could sit or even stand on. So Roy and Ryan decided to make a better one. It was thick, incredibly durable, nearly indestructible, and it cost around $400. But that was okay, because they weren't trying to sell it to everybody. They were making it for people like them, serious outdoorsmen who were willing to spend a lot more money for something that would last. But then something happened that they never expected. People outside the hunting and fishing world started buying Yeti coolers. They began showing up at tailgates and barbecues and beaches. The cooler even became a kind of status symbol. Today, the Yeti brand does more than $2 billion a year in sales, and it is so much bigger than anything the Cedars brothers imagined. Roy and Ryan grew up in Driftwood, a small community in the Texas Hill Country just outside of Austin. And as kids, Roy and Ryan and their siblings were pretty much free to roam across hundreds of acres of land. Running up and down the Indian Creek, turning over rocks, catching crawfish, bow hunting for deer, oftentimes before school. I don't think we realized how magical that was to grow up in nature like that. Right, really, at the time I felt like every kid had access to the outdoors across street from their house. So this is really the late 80s is kind of your childhood right when you're when you guys are really like just kind of free range, just like you leave the house and you should be home for dinner. Yeah, that's right. It was kind of crazy. No cell phones, and we, you know, we'd come home at dark, but we were exploring and canoeing and doing all kinds of fun stuff and running around barefoot. So I know that your dad, his career was, he was a middle school shop teacher. Your mom was a nurse, but I guess and this really happened when you were either really little or right before you were born, but basically when you were little, he was a fisherman and he came up with a solution to a problem he had, which would eventually develop into a business he would start. And tell me a little bit about this thing that he created. So basically being a shop teacher, one of the semester projects was to build fishing rods. And there was always a problem with the coating that went over the thread wrap that held on the guides on the fishing rods. It just wouldn't hold up, you know, so he came up with this idea of maybe a clear flexible epoxy, and at the time nobody was using epoxy on fishing rods. So he contacted a chemist, came up with a brand name and a formula that he thought would work good, went to his first fishing tackle show, and it kind of really took off from there. He was able to get out of teaching and focus full time on that. At the time, he had four kids or maybe three with a fourth one on the way. And he started that company in Houston, and then when we moved up to driftwood in '84, he built a shop out behind our house there, and that's where he ran the business as we grew up. Yeah, so basically as long as you can remember, your dad was an entrepreneur. He was selling this. Flex code. It was the name of the company, and still around today. You know, it was a small business, and it was enough to put four kids to college, and we took an annual ski trip to Colorado, piling in my parents suburban. So my parents, they paid for things in cash along the way. They really didn't save any money. They didn't have any debt either. Their biggest asset was that company. And I think growing up in that company and seeing both my mom and dad kind of wear all the hats of a small business, it's pretty darn educational. Tell me about your dad, because I know that he was a very present like in your life as children. Like, right? I mean, he, I'm assuming, tell you to hunt at a fish. He was very hands-on, both my dad and my mom. And I think our dad was kind of the ultimate teacher, just kind of showing us the way and whether it was hunting or fishing and really anything that we were into, he was into. Like, I remember, we got into skateboarding as kids and, you know, it wasn't long after that that he was building us of eight foot vertical half pipe ramp. But, you know, at the same time, he also kind of gave us free range to do whatever we wanted as well, you know, running around across the street from our house. All right. So Ryan, you go off to Texas A&M, yeah. And you studied wildlife management, which makes total sense. I mean, did you, did you go into college thinking like you wanted to get into land conservation and that kind of work? No, I mean, I basically just wanted to graduate from college. I felt like that that was kind of the minimum acceptable thing to do, you know. And so I went to A&M, not exactly sure what I was going to do, but my entire life before that the only thing I had done to make money was build fishing rods. I always, you know, could build fish rods, sell them and make extra money through middle school, high school, even college, you know. So pretty quickly after I got to A&M, I realized that, hey, you know, I, I think I want to try to start a fishing rod company and be a customer of my dads, you know. So I, I worked with my dad for maybe two or three months to save up some money to place my first blank or the fish rods at graphite blank. And then as I put those rods together and sold them, I was able to branch out. And I just kind of grew my business from there. They're called Waterloo, Waterloo rods. Waterloo rods, yeah. I thought it was a cool name. I thought it looked good. It was easy to remember. I wasn't super organized in the business, you know, I was getting by, but as far as being able to support a family or really, I never really felt like I was doing great other than kind of getting to live the lifestyle I wanted to live at the time. I read that you sold about 1,000 to 1,500 rods a year. That's right. They're about 175 bucks. And one thing I read about was that like this one of your specialties of the rods you were selling were for grass fishermen. And I went down a rabbit hole on it, because this is like, you need a really durable rod, right? Like this is, these are fishermen who go in pretty shallow waters. They're fishing under lily pads and, and plants. And so the fish can get tangled up in those plants and the rod can. And so it's got to be really strong to reel that, that bass in, right? Yeah, the guy that kind of made that style of fishing famous is Terry Oldham. And he was kind of giving me the direction of the design of that rod, which needed something lightweight, but, you know, really stiff 80 pound test braided line. And they would drop these big weighted jigs down through the grass, the lily pads, the hydrilla. So it was a real specialized style of fishing. And, and with Terry's help, we had a sought after rod that kind of helped me get started with water lily. All right. So meantime, Roy, you go off to Texas Tech. And tell me a little bit about what you, like what you thought you would do. Did you also think like your brother, like your dad, you go start something or, or, or did you not even necessarily have an idea of what you want to do? No, I, I, I knew I wanted to start my own business right after college. And like Ryan, I grew up building fishing rods, but he beat me to the punch on that. So I, I didn't know exactly what I wanted to do. I just knew I wanted to start my own business. The first thing that I tried was, I put together this little shooting bench for signing in rifles and a portable bench that you would fold up and carry. Yeah. And it had like a, like a seat and a table, obviously connected. It didn't have the seat. It had just this table connected. And I would, I'd buy the saw horse at Home Depot, a foldable in metal saw horse. And I'd make this little custom top for, uh, signing in your rifle. And I sold some to friends and family. And I sold some to a local sporting store in Austin called McBrides. But I, you know, I quickly realized that this product or the market opportunity wasn't going to be enough to support a full time business or myself. And, uh, quickly realized I needed a pivot. Right. And, um, you know, our dad, Roger, he was already messing around with boats. Uh, we were getting these aluminum holes built down in Florida, bringing them up to my dad shop there in Driftwood and rigging them out. And these boats were specialized for the way we were fishing down the shallow water. Yeah, shallow water. Yeah. You know, chasing redfish with the fly rod. Um, you know, the great thing about the Texas coast, there's thousands of acres of backcountry shallow water fishing. And, uh, again, I learned a lot about how specialized the boat business is and learned how difficult the boat business was. And, uh, my dad's joke was, well, Roy, if you don't sell too many boats, you can stay in business. Many I was losing money on every boat I sold. Yeah, because you would buy the hull, right? The aluminum hole. You'd haul it out to back home to Texas. And then you would outfit it and put in and customize it. Do you remember like, how much did it cost you and how much would you sell a boat for? Oh, I bet it cost, you know, everything with the motor cost over 10 grand, right? Right. But I'd put a million hours into each boat. I mean, it took a long time to assemble it and put it together. And then, you know, I'd turn around and sell it for 15 grand or whatever it was. So it was a losing deal. It's interesting because I mean, well, from what I understand, right, while you're, while you're basically rigging these boats and, and then selling them, right, you're putting a nice, you know, motor and a nice, you know, rubber floor, but you're also putting coolers in there, right? Because you need a cooler in there to, uh, for drinks and also to throw your fish in. Um, and that I guess was, it wasn't the first time, presumably you guys had exposure to coolers because your, you guys are fishermen. But it was, I guess that first time that you sort of were using coolers in a business setting like in a, you know, in some of the, you were actually selling. Yeah. So I was putting a few coolers on the boat, two to three coolers on each boat. And we were using the coolers to keep our fish fresh and our drinks cold. And, but we'd also use them as seats, you know, in front of the center console or behind the center console. And occasionally we'd put one up on the bow of the boat to be used as a casting platform. To stand on top of. Yeah. You stand on top of it. And what you're doing is you're elevating yourself off the, off the bow of the boat to get visibility as you're sidecasting to these red fish. You're, you're in such shallow water, you can actually see where the fish is. Yeah. And you're casting right in like right sort of in the direction that it's swimming. You literally, you're not casting until you see the fish. So with these coolers that were available to me at the time really didn't match up to the rest of the quality of the boat, right? And like you said, we grew up using coolers, you know, for all of our outdoor pursuits. But putting them on the boats was really exposed me to kind of the frustrations of ordinary coolers falling apart. When you are daily abuse and are daily wear and tear, the hinges would break, the latches would snap. But I think this was kind of my light bulb moment for, you know, realizing that man, these coolers are, they would fall apart with little or no use. And really, really, they'd become a seasonal product. You use it for a season, you go to a way, you're placed, you put it on a new one. God, and meanwhile, Ryan, I guess you have kind of a light bulb moment as well. Because I guess at some point, you're in Florida for a trade show and you go into like a hardware store or something. And you actually see some coolers that catch your eye. Yeah, so basically I was out in Florida and I think we had a, it was Mark Caslow's shallow water fishing expo. And me and a buddy had driven out there in my dad's van and we walked into that ace hardware and I turned to the left. It's all this big pile of coolers. And they were, I mean, the first thing I noticed about them was they were heavy duty and I'd never seen anything like it compared to the igloo's or the coalmins. And that caught my eye and I was thinking, hey, Roy needs this on his boats. It'll solve our, our problem of tearing up these coolers every trip almost, you know. Alright, so Roy, you find out about these coolers. What struck you, what struck you about them like? What made them different? Our problem with ordinary coolers was a durability issue. You know, we weren't real concerned with ice retention. Our frustration was way more about durability, you know, the durability around the hinges and it was rotomolded and in thicker walls. And so everything about it was just beef you're meant to last unlike ordinary coolers that would fall apart. So, you know, I saw it right away as a solution for the boats, but it is also, I recognize if we're frustrated with ordinary coolers falling apart, others were too, right? So I, I got a hold of the distributor that had been importing them into the US and I said, hey, I think I could sell some of these coolers around Texas. Is there any chance I can get a distributor price? Like I need to be able to go out and resell to retailers. Yeah. And so they set me up as a distributor for Texas and I just, I started knocking on doors and selling them to small mom and pop sporting goods stores and hardware stores, you know, I sold that shooting bench, McBride's in Austin. I walked in there and I gave them a sales pitch around this new cooler and asked for a stocking order. And these were in the companies called IC Tech, right? Thailand manufactured, but it was branded as a like-- As IC Tech. Right. And IC Tech was a US base brand or-- No, it was an Australian base brand. OK. And just to clarify, like from what I understand, because you mentioned like a roto molding and a rotational molding, because-- and I think most people can picture an igloo ice chest is like. But what made this different was the plastic was heavy duty. It's like almost like industrial strength plastic that was so strong. You could stand on it and you could sit on it and it just-- and it was heavier. Is that a fair description? Yeah. It was heavier. It's roto molding is a manufacturing process where you take polyethylene, which is a plastic pellet form resin. And you put it into a hollow mold and you begin to coat the walls. And it really piles up in the corners and makes for a real durable part. And the overall wall thickness is quite a bit larger as well. You know, I remember in the early days when a customer called up and said, well, tell me about your product. What makes it durable? I'd say, it's roto molded. And I said, it's the same process used to make whitewater kayaks. And all of a sudden, they get that imagery of a heavy duty, single piece plastic part. All right. So you basically contact this company and you have a business outfitting boats, so-- and they were probably a small company, right? I mean, I can't imagine like-- because you're a young guy, but they were perfectly fine to give you a distribution deal to sell these. Yeah. I mean, they were a small company. I think they saw an opportunity with myself and hustling in Texas to go open up doors for them. And that's what I did. So I, you know, I started buying them a couple dozen units at a time and then pretty soon that snowballed into where I was importing them directly from Thailand, where the manufacturing was happening. Under the brand name, ICTech? Yes. So Roy, it sounds like the boat outfitting business at a certain point didn't make sense any longer, right? Because it wasn't sustainable. Like it sounds like you kind of just bagged that business and just focused on selling these ice chests. Yeah. I let the boat business go pretty quick and just strictly focused on building the school or business as a distributor. And you know, I imagine given that your dad had a relationship with probably some mom and pop hunting and fishing stores because of his business, you would already develop some relationships, right? Presumably trying to get people to buy your boats and try that relationship that you had helped. Well, I think maybe my dad's contacts maybe opened a few doors for us. But at the end of the day, we just knew the fishing tackle industry and it was more about knocking on doors and giving them a product demonstration. All right. Meantime, your business, Ryan, sounds like based on what I've read, it was fine. You were selling enough to sort of sustain a life. But you kind of start to feel after what eight years into this that maybe it wasn't going to go anywhere beyond where it was. I mean, I never really looked past building rods. You know, that's the only thing I'd ever really known. And one of my best customers at the time in 2005, he asked if I would consider selling water loot. And he had an idea of a young guy to run it down there closer to him and he loved these rods. He loved him. He was by far my best individual customer. And I thought it was interesting that he was curious about buying the company, you know, moving it down closer to the coast. But I really didn't thank much of it, you know, and I was up late one night working. And I got a call from him and he said, hey, what would you sell this company for? And I kind of thought off the top of my head of what it would take for me to save up some money and what I thought was get ahead at the time. So I named a price and as soon as I said it, he said sold. And my heart just sunk because as soon as he said sold, I was thinking, no, I might have undershot this deal. So when you sold it, I mean, you know, again, you're 3132, from what I gathered, I wasn't like going to set you up for life. It wasn't going to be enough money for you enough to work. But it was a nice, nice check. It allowed you to like take your time for, I guess, a year or so to figure things out, right? But we're not talking about, you know, a million dollars. It was no. But I think in the end, when I closed, I had just under $200,000. But at the time, capital gains was like 15%, pay those taxes. I went out and bought a, a used Rolex for my buddy and a bread of shotgun. I was, I was on cloud nine, you know what I mean? Yeah. Let's go hunting. I love it. All right. So you got your, you got your Rolex and you have your shotgun and you're happy. You're going hunting. Okay. But you know, you've got to, you got to make a living. Yeah. You know, I had never worked for anybody else. I'd never put together a resume. I'd never had any other job that was paying me other than just helping out my dad or building fish and rods. That's it. And so January rolls around 2006. And you know, I could see Roy was getting pretty busy distributing icy tech. You know, I could see he's getting stressed out. So I call him up in January when hunting season is over for me. And I said, Hey, would you let me come down and help you in the warehouse? I could see you got a lot going on. And he said, Yeah, come on down. I'll pay you $10 an hour to help out. And I'm like, see you in 30 minutes. You know, I'll be there. So Roy, you're, you hire your brother because you're basically your business at this point was selling these icy tech coolers. Yeah. That's correct. You know, by the time Ryan sold Waterloo, I'd been distributing icy tech for just over two years now. And I built a pretty good business. You know, probably maybe as many as a hundred retailers. And I was out there continuing to hustle and pick up new accounts going to trade shows. So when Ryan showed up in January of 2006, it was a pretty good timing on man. I could use some help in here, whether it was answering the phone or helping me in the warehouse or helping, you know, go to these trade shows. So I'm curious because I mean, right now at this point, you are doing well as an icy tech basically is not working for the company, but you're getting a cut from every sale on these coolers. And like roughly, like, I mean, do you think at the end of the year, like you were pulling in, you know, over a hundred grand? No, probably not that much yet. You know, maybe 50 grand, 60 grand, something like that. But you hired your brother. Yep. You were paying him $10 an hour. Okay. Nice. And he was wearing his Rolex. And we continue to open up accounts and grow the business together. But maybe at the time it felt temporary until he figured out what he, he was going to do next. All right. Here's my question. You've got two clearly ambitious guys, brothers. You're selling a product for another brand, right? It's not your brand. It's another brand. And I'm thinking, was that okay? Were you starting to think, hey, I should, maybe I could do this or not, not quite. So there's a couple things going on, you know, that, although that original tie land ICTEC cooler, it was a good product, but there was a lot of opportunity for improvement. And so as soon as you ship this cooler out into the field and you have a failure with the customer, it was a big, expensive process to have the customer ship it back to you and then replace it. And I think that's when I started losing sleep thinking about what would be the ultimate cooler if we were going to build a cooler for ourselves the way we used them. All right. There's something else I think is interesting because you are selling ICTEC branded coolers. But from what I've read, I went, they had some agreement, some, some distribution or licensing agreement that meant that that brand could not be sold in the US starting in 2006. Yeah. So the original distributor that was bringing the ICTEC coolers into the US market, he trademarked ICTEC in the US. So really, as soon as he departed the business, I could no longer use that ICTEC name, which was a blessing in disguise. Yeah. Okay. So you know, you guys start talking about, hey, maybe, maybe we build our own. But before we talk about that, what was wrong? What was the issue you had with the existing coolers? Well, you know, there were some quality issues and whether it was a leaking drain plug or a boat lid, but there was also some functional issues. You know, when you're putting these coolers on boats, you need the ability to strap them down, time down to the boat. And so some of the design ideas I had were putting a tie down slot on either side of the cooler. So I could run a one inch strap through there and lock it down to the boat. That was already molded in the plastic. That's right. Molded is part of the cooler itself. Yeah. You know, rubber feet were important. And you know, I started thinking about, okay, having rubber feet won, it keeps it from sliding around in the bed of your truck or your boat, but it also protects the fiberglass finish on your floor of your boat, a full frame gasket that has a better job selling it. And hinges that weren't, were not, you know, a component that were actually molded into the, to the rotimolded parts, so that the lid and the base of the cooler, you know, are part of the hinge system and you're running a quarter-inch stainless steel rod through there. So the design that you know I was had in my head is purely functional utility and I put a texture on the top of the lid so you could stand on it. Like a sandy like a rough texture. Make it non-slip and about the time Ryan showed up, I was already booking a flight to go see that Thailand factory. So these were all ideas you had but you had to figure out if you could do this. Ryan I just want to ask bring you in for a second ask you like what do you remember talking to your brother about? Do you remember saying hey we could do this, we could make this, we could create a brand or was it not quite fully formed yet? You know I don't think it was quite fully formed I would say that going over to Thailand to the ICTEC factory where the ICTEC cooler was being produced we were hoping that they would work with us you know in an effort to not have failures once the cooler left our warehouse. Yeah so when you get to Thailand right you go and visit this factory and you meet the guy who's running it I guess or somebody there and tell me the story of what what you guys of the conversation you had. So the original intent was to work on the quality issues and try to solve for some of those problems and I think setting foot on the factory floor we quickly realized why we were having these problems you know lots of manual labor lots of customization lots of imperfect manufacturing process you know one example is I kept wondering why the bottom of our coolers had a red stain right as they came into the US you'd flip it over and there'd be real faint red stain on the bottom well they would take the plastic cooler out of a mold and they would set it on their floor which was this this dirt red clay floor and and so we were really we were dealing with the dirt floor manufacturing. So the heat the the warm cooling it would just absorb some of that clay. Yes that's right because these were white I guess these these coolers. Yeah they're white. Alright and you guys didn't have I mean you didn't have a whole lot of capital you were ambitious but like you never made that much of a choice like I have to assume that if they were willing to work with you you would work to them. Yeah I think so but we realized that this factory wasn't capable of building a design for us from the ground up and they really didn't want to listen from what I remember you know when when Roy was talking about ideas for improving the cooler I mean it was just kind of in one ear and out the other and just really didn't want to talk about improvement or design change and stuff like that you know kind of felt like we ran into a wall they're talking to those guys. But you also you were going to go visit another factory I guess this is just a trip to Asia so you're going to Thailand but then you were also going to go somewhere else tell me you know how do you even know about another place to go to. So this was the early days of searching for manufacturers online and I found this factory in the Philippines that was making a cooler for the Australian market and I reached out to this manufacturer in advance of our Thailand trip and I said hey we're going to be over in Southeast Asia we sell this icy tech cooler and do you mind if we come visit you during our trip. So we started this conversation with this supplier in the Philippines and other than just that email communication we really had no idea what type of factory it was who we were dealing with. But you knew what they made. Yeah we knew that they made a cooler. And it was a similar kind of product. Yeah that's right. When you get just just out of curiosity is it like a 3 hour flight I think from Bangkok to Manila. Yeah and who is the guy and we have a contact there you're dealing with and who like what do you know. His name is his name is Ivan Brown he was a Australian expat living in the Philippines and opened up this factory to make a cooler for the Australian market. Got it so he picks you guys up with the airport. Yes and actually in the flight from Bangkok to Manila was more expensive than our flight from you know the US to Bangkok and Ryan and I are second-guessing ourselves here like do we really want to go visit this factory and spend this type of money to go over there and Ryan was like well why don't you just go without me and then I was like man I don't want to go without you maybe we shouldn't go and then basically we talked ourselves into going like we're already here we're already in Thailand let's just take this 3 hour flight and then we land in the Philippines. Alright so Ryan you guys land in the Philippines what do you remember about your first impressions getting there? Well so you know this was a hundred percent outside of our comfort zone you know growing up in Jeripwood going to these countries you know we'd never had any reason to go to but I remember flying in and you're signing your paperwork as you're on the plane your custom paperwork in big red letters death-to-drug traffickers you know and and it was just it felt really funny to go there well we roll in having never met this guy and you know Ivan he picks us up in like an Azuzu trooper type vehicle and it was a lot of traffic really crowded well come to find out it kind of like watering your yard where you either have an even or odd you know address on when you can water your yard during the drought that's how they control traffic in in Manila and so he had the wrong license plate that day to be driving around so as we're leaving the airport you have these kids with machine guns trying to stop us he's trying to bribe them to let us go and we we get a little speed built up and and what steps out in front of us and Ivan just keeps on going that guy steps out of the way and it was a wild experience I didn't know if we're getting it up in jail or what was going to happen but we end up making it to his factory that was inside the old U.S. Clark Air Force Base which is out of I think the name of the town there was Angelie City and you know the first thing is we walked into his factory floor and it has concrete floors and so that's a big improvement right and he's an engineer by his background and and started sharing some of these ideas that I had built up of my head over the years and his machinery and equipment was definitely more advanced than the Thailand manufacturer so you could see right away that this was going to be our path to making our own cooler when we come back in just a moment Roy and Ryan head down that path to a brand new manufacturer and it works out great until they get a horrible piece of news stay with us I'm Guy Roz and you're listening to how I built this this message is a paid partnership with Apple card I've noticed that a lot of people we talked to on this show founders entrepreneurs creatives they spend a surprising amount of time thinking about systems not because they love complexity but because they're trying to reduce it the best systems usually make life feel simpler calmer more manageable financial well being works the same way because most people don't want to spend all day thinking about money they just want to understand where things are going feel in control and remove some of the stress and guesswork from everyday life that's part of what apple card is designed to do you can apply for apple card right in the wallet app on your iPhone in minutes once you're approved you can use apple card right away with apple pay without any friction and here's the fun part you spend and then you earn unlimited daily cashback on every purchase every day not a month later that's it it really is that straight forward and you earn three percent daily cashback on anything you buy from the Apple store and at select merchants when using apple card with apple pay one more thing people really seem to like is being able to track spending right from their iPhone you can see purchases search transactions easily and get a clear picture of where your money's going over time it just makes things feel a little more transparent and manageable easily pinned down spending with apple card apply in the wallet app on your iPhone today subject to credit approval some transactions may not be displayed in maps merchant offers may change at any time apple card issued by Goldman Sachs Bank USA Salt Lake City Branch terms and more at applecard dot com when you're working with a team it's easy to get stuck what was supposed to be a simple landing page can turn into a pile of tickets and handoffs framer helps your team move faster it's the pro AI website builder for creators teams and businesses that want a professional site done right and more quickly with framer agents and humans work in tandem the agents bring speed and scale while the people bring taste judgment and control teams can collaborate in real time iterate on the same page and publish instantly in framer you can build custom code components create and manage CMS content optimize SEO settings and more and framer is an enterprise level solution trusted by the world's leading brands like perplexity and mirror learn how you can get more out of your site from a framer specialist or get started building for free today at framer dot com slash built for 30% off a framer pro annual plan that's framer dot com slash built for 30% off. 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Ask yours at Claude.ai/hibt Hey, welcome back to how I built this. I'm Guy Ross. So it's 2006 and after realizing that their manufacturer in Thailand doesn't want to make improvements to the icy tech, Ryan and Roy connect with a guy named Ivan who has a factory in the Philippines. So on that trip we had found our future. We had found the factory that we were going to work with. And he is already building a cooler for the Australian market. We essentially white labeled that. But at the same time, we started developing the original Yeti that was designed from the ground up with our own ideas. Okay, so it's a clarify. Like initially, just to get your business off the ground, you figured, okay, let's just buy the off-the-shelf ones. We'll put our label on it while we actually developed this cooler we've been dreaming about. It's going to take us some time. But let's just get this going with existing inventory. That's exactly right. The minimum would be a container load like a 20-foot container load. Okay, would be the minimum order. So yeah, we, it was kind of a handshake deal and let's let's do it. And by this point, after visiting him up into this point, we knew we're going to start with our own brand. But we didn't have that brand name yet. Yeah, I'm curious. How much would a container load cost at that time? I think if I remember correctly around $30,000 and that was probably for a 40-foot container, and that would be, you know, roughly 300 units, maybe 350 units, coolers of different sizes. And you guys must have been pretty confident. You could sell this because you knew that you had sold these ICT coolers before and so you knew how to bring them in. But still 30 grand. I mean, for two guys who are worried about the cost of flying from Bangkok to Manila, that's no joke. No, it's not. But I knew the demand was there in the US. And we, at this point, with the ICTEC, I built out a pretty good book of business. And I knew if I could get coolers in there on the retail shelves that there would be sell through. And the frustration that we had with the ordinary coolers falling apart, you know, that frustration was real. And we were providing something that was a solution to it. So you guys go back to Texas. Tell me about how you start to think because you're going to start importing these blank, you know, chests, right, coolers without a brand name to it. Tell me a little bit about that conversation you start to have. It was literally on the flight home, Ryan and I were sitting side by side and we started putting together a list of potential brand names. And I think going back to our dad's business and growing up in the industry, I think we had a pretty clear idea of what made a strong name or a strong brand. Now I could remember using sage fly rod as a kid, which was one of my dad's customers. And it's a very premium high-end fly rod. And I love that name, sage is that named after the green stripe and in the back of a rainbow trout. On the other hand, you had another very premium fly rod called G. Lumis, another one of my dad's customers. And it was named after the founder Gary Lumis. And I remember thinking to myself as a kid, how terrible that was to name a brand after a founder. And I think we had a pretty good fill for what made a strong name. And so we began to put together that list on the on the flight home from the Philippines. What were some of the names you were talking about? I think Sherpa made the original list. Tundra made the original list and those are two names we used later. You wanted names that would have folk like fishing or hunting or something else. Really cold durability. No Sherpa is a Himalayan mountain guide, the frozen Tundra. And it has kind of a tough filth to it, Tundra does. But we also felt like Toyota, you know, Tundra truck, they kind of owned that name. And, you know, Yeti made the original list of names. And I think right away, I liked it. I liked that it had a kind of a punchy sound. I liked that, you know, is this Himalayan ice monster that's from a tough cold environment. I liked that it had four letters like Sage. And look good on a hat. You know, I felt like we probably had a winner on that list, but I get home and I start losing sleep thinking about this name, knowing how important that decision was on a brand name. So I go out to like 20 family and friends and I start running through these 10 names and I'd get their feedback, which you better be careful what you ask for because, you know, you start getting their feedback and and Yeti got mixed reviews at best. You know, for some people it felt too cartoonish, for others like even this like gross, this hairy, smelly, big foot possibly. And so I got out of that informal polling and I was way more confused than I went into it. So I just like, gosh, I don't know if I'm making the right decision here. But what happened next was was the validator. I went back to the same group of 20 people, like two weeks later. And I had one question. I said, Hey, out of my list of 10 names, which ones can you remember? That's the only question I had. And all 20 people, they could remember maybe one or two names at best, but the one constant, they all could remember was Yeti. Wow. So that was that was all the validation I needed. Whether they liked it or not, it struck a chord and and that's that's marketing 101 love. And you could have and you probably thought about Sasquatch or Bigfoot or other news too, like that. Okay, so Yeti, this is 2006. So you land on Yeti. And how did you guys, you know, your brothers, how are you going to structure this business? So up until this point, Ryan was still on his $10 an hour salary. And but, you know, we knew that we were going to partner up. And, you know, I had a decent balance sheet from distributing the icy tech coolers over the years. And Ryan's buy in to get 49.5 percent of the company was to use his some of his proceeds from his water Lucille. And so he bought the first three container loads of product that came in from the Philippines. So about 100. Yeah, 100 grand, about a hundred grand. Yeah, yeah. And Ryan, you, I mean, sounds like you're looking at this business, because your brother was going to be the core quote, the CEO. But it sounds like you didn't really have an, it wasn't about egos. You're like, you were looking at it and you're like, well, he's been in this business longer. He's got a lot of knowledge. Yeah, I know, Roy and I had always got along well. And, you know, I was just thrilled to be a part of it. I did have, you know, this money that I could buy the first three container loads cost. Eventually, we, we kind of got to 50 50 and we went to a family friend as a lawyer and he said, hey, you don't ever want to own anything 50 50. And so it was just automatic. Hey, Roy, you're 50.5. I'm 49.5. I was, I was excited as I could be, you know, yeah. Okay. So now you, um, you're going to wait for your first container load or the first three, I guess, to come in. And how many, how many cool those are fitting because these is at this point, you're just selling one size, right? Yeah. So we're selling multiple sizes of this first generation cooler that was called the Yeti Sherpa. And so roughly 350 units could fit on the container load. We started selling through that. And then we got another one coming on the water. So that was over a period of a few months. And you had a warehouse already because from the time you're working with ICTEC? Yeah, I had a warehouse just down the straight from where we grew up. So I'm thinking that first cooler that's coming in or the first container is it just the two of you unloading cooler by cooler stacking them up in the warehouse or did you start? Did you bring in some people to help you or? No, it was us. It like it would take us a full, you know, three hours to unload a container is like one by one by one. And were they in the container? Were they in like cardboard boxes? Yeah, they were already pre-packaged, ready to be shipped back out in a cardboard box. So I'm assuming you went back to the existing retailers that you had relationships with the rice you tech and said, hey, we got this, you know, very similar cooler, better new brand. You guys in, is that what you. you started to do? Yes. We had the network of retailers that we'd built out over the years, and we basically introduced them to a new, better product. So is a natural way to introduce it, and at that point we started phasing out the Thailand cooler. You started phasing it. So, and moving entirely to the Philippines produced cooler. Did you have any issues with, because a, an igloo cooler was like 30, 50 bucks, right? Or a coalman or something like, did you have any issues with some of these stores saying, I don't know, like it, because just to help me understand, like at that time, probably just making one cooler and then shipping it must have cost you at least a hundred bucks per, per cooler. Yeah, that's a pretty good, you know, I think by the time it landed in our warehouse, $100 would be about right. But yeah, part of the challenge was convincing these retailers to resell our products. A lot of them got it right away, but there's a lot of, you know, pushback based on the pricing, like, hey, my customers, they won't spend $300, $400 on a cooler. So I can't tell you, you know, how much resistance we got with this initial, you know, trying to sell these into these retailers with, you know, a premium product. But there was a pretty unique dynamic going on where when I walked into McBride's in Austin or Behrings Hardware in Houston or the Tackle Box in San Antonio, which are small, little sporting goods stores or hardware stores, none of those guys were selling coolers, although every single customer that was walking through their door was a cooler user, like if you're walking into a sporting goods store, you're a cooler user. So we weren't replacing another product on their shelves. We were giving them a cooler to sell and the reason they weren't carrying coolers is because the big guys, the Coleman's and the igloos, they were chasing the mass market retailer. They were chasing target and probably at one time, those cooler companies had a decent product, but after years and years of competing for that shelf space at Walmart and Target, it was a cost of engineering exercise and it was a race to the bottom. You know, the prices were low and the quality reflected that, which ultimately created our frustration, but also it created a huge void in the market because a small sporting goods store with limited square footage, they can't make any money off of a $40 cooler. You know, they're going to make five bucks. Yeah, that's right. And it's all about these small shops, it's inventory turns, you know, dollars generated per square foot. And so here we are. We showed up with this three or four hundred dollar cooler and we gave them a product to sell that was actually differentiated than what was being sold at Walmart down the road and they could put a hundred dollars in their pocket after they sold one. In other words, you guys, it costs you about a hundred bucks to make it. You sell it to the shop for maybe a hundred or eighty or two of them to okay and then they can turn around sell for three hundred. And knowing that every customer that walked into those doors was a potential buyer, all you had to do was convert a small percentage of them to make it successful. So let's talk for a moment about divide and conquer. Like Roy, it sounds like you were out there pounding the pavement, trying to convince store by store. It's a lot of work, right? One retailer of time, tell me a little bit about how you guys were dividing things up, right? I think Roy really was more about product design and running the business. And Roy had a family at the time, he had married and kids and I was not. So I could really hit the road at that time. So by the time I got there and the coolers started coming in, yet he braided coolers, I was going to trade shows in an effort to find new retailers. Yeah, I think early on, we thought this company was going to be very similar to our parents where we could handle it, maybe hire one or two employees to help us in the warehouse or enter the phone. And we quickly realized this opportunity was going to be bigger than what we grew up with. How did you realize that? Just the demand, the demand was coming. But in that, obviously trade shows would get more distribution, but it sounds like really you're focusing on Austin, San Antonio, places within a few hours drive. We were really focusing on the Gulf Coast states, you know, that's what got us into the cooler business. It's like in Texas, Louisiana, Alabama. Yeah, down into Florida. And you didn't have to create a use case because people were using them for putting fish or drinks, really you're just all you like to say was, it's just better. You didn't have to say, here's how you can use it. Well, every one of our customers had been using coolers their whole life and their outdoor pursuit. So they, I think they could recognize right away that this was a different animal, that this was a better product. And like I said, there was a frustration in the market around durability. Ice retention was kind of a secondary piece to it and with thicker walls and a full-frame gasket, people could recognize that, oh, this thing's going to hold ice longer. And then we did start leaning into product marketing and educating the consumer on the Y. I read that somebody who I guess really helped out with that was this guy named Walt Larson who ran an advertising firm in Minneapolis. And he, I guess he was pretty well known in the industry, right? And what like you guys met him at a trade show? Yeah. I was at the eye cast trade show one summer, actually that fish and tackle manufacturer's trade show. And Walt walked by, stopped, you know, I'm running the booth. And you know, at the time I didn't know who he was, but he stopped and said, hey, Ryan, you know, I've walked the whole trade show and your product is really the only one that gets me excited. He says, I think you got a great product, but I don't think you're doing a very good job of educating the consumer of why they would pay $300 or $400 for a cooler. And I came home, told Roy about him. And I think we were playing up to see him the next week and, you know, he had a compelling case for how we needed to educate the consumer. You know, when someone pays $300 or $400 for a cooler, they're going to justify it to their buddies. Yeah. And it started with the tagline that he helped us create called, you know, wildly stronger, keep us longer, right? And then we built off of that. Yeah. And he was real big into customer testimonials and into, you know, having like kind of a pro staff. At the time, outdoor television was huge. You know, the outdoor channel, the sportsman's channel, there was one called the outdoor life network. And it was kind of at its peak, but did you guys didn't have a budget to advertise on those places? Did you? You know, we didn't have a budget, but we, you know, we were growing the business and we were cash flow positive and, you know, from, from year one, you were cash flow positive. Man, we really were, we, we were living off the land outside of Yeti, right? Yeah. Kathy, my wife was teaching school. I was driving my high school pickup truck, living in a house that my parents owned out on their property in driftwood. And so we were taking no money out of the business. And like our dad's company, you know, our dad never went to outside funding. You know, he, he built it from by bootstrapping it, and that's, that's just what we knew. We had to make this thing work by itself. It wasn't even on your, on your horizon, the idea of, oh, let's go raise money. Like it wouldn't even have occurred to you at that time. No. No, not at all. We did end up working with a local bank to get a revolving lot of credit, to get us through seasonality, but never did we ever consider going out and raising money to bring in an outside investor. Okay, so it's, you know, 2006, great for a start. You've got full year 2007. I think you guys at least doubled 2007 in sales. Yeah, I think we went from a half million to 1.2. So we, we doubled. So you could see momentum. And again, it's like store by store by store. And I wonder, because Ryan, you were doing a lot of that, that traveling and also going to trade shows. Did you ever try to pitch one of the big stores like, you know, Cabela's or a bass or, I mean, did you ever, or are you just too small at that point? You know, at the time, you know, I would hang around the trade shows and hopes that getting a bass pro shop or a Cabela's type buyer to stop by, but it really worked in our favor to go to these independently owned sporting goods type stores, you know, with the bigger guys, once you get these bigger customers, they start naming their terms and, yeah, and hitting you with all kinds of penalties and stuff like that. And so I felt like once we started selling to some of these bigger accounts, we had the power to say no when they were trying to push us around because we didn't have to have them. We had a really diverse retailer network that we could sell all the product we could get and all the product that we could manufacture and had the power to not get bullied by any of the bigger guys. And meantime, Roy, you're still obsessed with this cooler design. So were you going like 2007, are you faxing or emailing at this point, design schemes back and forth to Ivan and the Philippines? No. Actually, Ryan and I ended up flying back over to the Philippines in 2007 and we're making a replica by hand, with their mold makers. And Ivan and I are hand sketching my design ideas. We're taking it down to the factory floor. And over the two-week period, we have the cooler that's been kind of stuck in my head for the last, you know, a couple years that I've been dreaming about. We have a physical part. Integrated hinges, integrated anchors, into rubber feet, rope handles, all these things that kind of came together. And again, it was purely functionality driven. All right. So you guys spent a couple of weeks in 2007 perfecting finally this cooler that is your design. And just out of curiosity, how did you protect it, right? I mean, Ivan's making them in the Philippines. You trust him, but how do you make sure that no one's going to rip it off? Is there any way to do that at that point? Yeah. There was definitely some opportunity to apply some patents or intellectual property. But learning from our dad, once again, you know, we grew up understanding that getting a patent is an expensive process, but even more expensive is actually protecting it when you do have infringement. So we felt like it was kind of a waste of resources, you know, instead of buying it pre-vent defense, it was more about being often minded and putting money into the brand. It makes so much sense. I mean, you could chase copycats and it could bankrupt your business and we've had brands on the show that went through that, or you could just focus on really making a brand that people associated with quality. And that's what we were doing. And also, I think it's important to note that we owned our molds. Like, when we built these tools, we paid for those tools, so we had ownership of that mold making that created the design. Got it. Okay. So you've got a cooler, I think, by early 2008. Yeah, we're launching 2008 and it was the Yeti Tundra and we finally got to a place where this is a cooler that we built from the ground up and we came out with probably at the time six or seven different sizes. And they ranged in price from what to what? Oh, $2.45 to $6 or $700. Yeah, I'm just curious because we've had, you know, over the 10 years in the show, we've had certain products and certainly in cosmetics where the founder very deliberately priced their product at a premium tier because it signals quality. I mean, it's great because the margins are great, but you guys weren't playing that game. Like, you were literally pricing it because of the cost to manufacture it, right? Yeah, our pricing exercise was purely driven on what do we need to price it at to make money, right today? It wasn't like, hey, let's appeal to the psychology of people. No, no. It's like if we're going to buy a cooler for $100, we're going to have to sell it for $300 because $100 is going to the retailer and then the $100 is going to, you know, us. And all of your business at this point is not direct to consumer. It's through retail channels, your wholesalers. The majority of it is through our specialty retail channels. Now, we would sell direct to consumer if they called or maybe your website, I'm sure your website by that point. We had a website, but it just had our phone number on it. Okay. So if they called, we were going to sell them, but we weren't going on our way out of our way to sell direct to consumer. Okay. So you guys launched this, this Tundra and it really takes off. I read that like within a few months or maybe weeks, like, you're bringing a container a week. Yeah. That sounds about right. You know, this is 2008. We're hiring a lot of folks to come in to help customer service, to warehouse work to know everything in between. And with Ivan and this Philippine factory, we found the perfect partner to help get Yeti up the ground. All right. So everything is going great. Yep. September 23rd, 2008, you tried reaching Ivan and you can't get hold of them. Yeah. So I, I send Ivan an email and he didn't respond and which I thought was a little bit unusual, but I didn't think much of it. So I call him that evening, which would have been his next morning. And I get a hold of his wife and that's when we found out that Ivan had tragically passed away on the phone. She says he's gone. Yeah. I don't remember a whole lot about the phone call. I just remember filling this gut punch. And I just, you know, telling her, you know, sorry for her loss. And, you know, I, it was a pretty big shock to the system. Um, I know this is a tough, tough, um, time for you guys because he was a friend and tragically he was, he was killed in the Philippines. What did that mean? I mean, aside from the, just the personal loss, I did, I mean, he was running the factory. Was it going to affect? Inventory, I mean, you were, you were depending on a container coming in a week. Yeah. So I remember I got off the phone call with his wife and I called Ryan. I shared the news with him. And, um, you know, I didn't, you know, it was, it was a big personal loss. So first and foremost, you know, Ivan was more than a business partner. We'd travel over to the Philippines to visit the factory. He would come over to the US and attend trade shows with us. So we had really developed a, a friendship over those few years that we knew him. And, um, and I don't think I slept at all that night. And, um, like I said, this 2008, we're going from one million to three million in sales. I think we have, you know, probably six or seven full-time employees. And I remember Ryan and I went into the office the next morning and we told the small team that we had about what had happened to Ivan. And, um, I think we, we told him that we're going to make the most of it, but it doesn't look good. And, and there's a good chance that you all need to go ahead and start looking for your next job opportunity. Yeah. Because we really felt like without Ivan's leadership, this factory was not capable of running without him. Hmm. I'm connecting the dots here. You're thinking our business is done. Yeah. We're thinking it's done. When we come back in just a moment, Ryan and Roy slowly piece their business back together and how they start to market Yeti using bears. Real grizzly bears. Stay with us. I'm Guy Roz and you're listening to how I built this. One thing I've learned from talking to hundreds of founders is that as a business grows, complexity can become a huge problem. Suddenly, you've got different systems for finance, inventory, customers, operations, and they don't always talk to each other. 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And it reminds me a little bit of the founders I talked to on this show because the best ones obsess over things their customers will never see. Tiny details and visible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port fuel injected engines. Actual results may vary. Visit mobilefueles.com for details. Hey, welcome back to How I Built This. I'm Guy Ross. So it's a fall of 2008, and Ryan and Roy are reeling from the news that their manufacturing partner Ivan has been murdered in the Philippines. The details aren't clear, but what is clear is that the brothers can no longer work with Ivan's factory. So they decided to do something unexpected. The first thing we did was we sent out a price increase to our retailers. And we probably had a hundred maybe 150 retailers at the time, but we felt like like if this was gonna be our last inventory, we're gonna liquidate a higher margin. - To basically to maximize cash. - Maximize cash, perhaps slow things down a little bit? - While you're trying to figure out-- - That's right. - So the idea was, let's just raise the price. It might piss some people off, but it'll slow down sales for now, and then we will have time. - Yeah. - And just to clarify, the reason why you couldn't rely on the factory and the Philippines at this point was because from what I understand, there was a dispute between some folks involved in the factory over who is gonna run it, and so, manufacturing came to a halt. They were not making anything there for a while. - The factory was shut down. - And all your molds were there. - That's right. But long-term, no matter what, even if the factory got back up and running, we really had a lack of confidence that the factory could continue to operate without Ivan's leadership. So, as we kind of try to get the lay of the land and try to figure out next steps, we sent out that price increase. And it was a meaningful price increase, maybe 15% where it took a cooler that retailed for $295 and pushed up to $350, which was a meaningful barrier. When you jump that $300 barrier and go to $350, like, yet he was already had a reputation of they're durable, they're well-insulated, but damn, they're expensive. And so, I was bracing myself, sending out that email and just like, okay, here it comes, Ryan, let's get ready for all the negative feedback from our retailers. And really, it was crickets. None of the retailers called up. We blamed that price increase on a cost for all materials increase, which was total bullshit, but we had to tell them something. And what was happening with our retailers is the demand continued to come in their doors and people were continued to buy coolers and they were selling coolers maybe one or two a week, which was really good numbers for a small retailer like that. And their margin dollar expanded. You know, with that price increase, they were making more money. - But meantime, how were you trying to frantically get your molds back from the Philippines? - No, we were trying to get them to open back up. And like you said, there was a dispute going on. - Yeah. - But we also, the second thing we did that same week is we started identifying potential rotomolders that could build our product for us. And this time, we're gonna focus on the US. - Okay. - And you know, there's a big industry, especially in the Midwest with rotomolding. - Surely for auto manufacturing for parts. - Yeah, it's farm equipment, it's water tanks. There's very little consumer products. Other than maybe kayaks. But we started booking flights to go see them. And we wanted to focus on the US because one, you know, Ivan getting killed was a really big scare for us. And the last thing we wanted to do is go back over to Asia. And then two, we'd be shedding that overseas freight expense from the shipping containers, which was on a large cubic footprint, like a cooler, was a pretty meaningful piece of the cost of the goods. And then we'd be decreasing our turn times and lead times, which would help with our cash cycle. So we had a feeling that the US could be competitive, although that we'd definitely be paying a premium for labor. And Ryan and I show up to this factory in Iowa. And the first thing they asked us, well, can you share us your CAD files with us? Well, I think at the time I didn't even know what a CAD file was. You know, we were making these molds with paper. And then you didn't have a computer model of it. No, no. We were making these replicas by hand the old school way. So I began to work with one of their engineers to start putting this tundra into a digital format for the first time. So it wasn't long before that Iowa factory, we had this kind of this next generation design. And then they also introduced us to these really high-end, Italian-made molds. And the fit and finish of the product was just superior to these sandcast molds that we were making in the Philippines. Meanwhile, back over in the Philippines, that factory got up and running again. It's back online. It's back online. And we took everything we learned in the US. And we took that technology and we brought it to the Philippines. And we started getting more and more confidence that this Philippine factory could run without Ivan's leadership. And it wasn't long before the Philippine factory was making this next generation design as well. So as tragic and like OSHIP moment as this was, we came out the under other end of it 18 months later, just like a much stronger dual-sourced, better product, financially healthier because of that price increase. But it was a nightmare of an 18-month period. Oh, it was a nightmare. OK, so one of the things that I'm curious about is marketing. And we talked a little bit about this with Walter Larson, who came aboard. And I saw that already in 2009, early 2009, you created a YouTube channel, which is-- this is early YouTube. I mean, this is still pretty early days on YouTube when people still thought of it as cats on skateboards. But you put out a YouTube, do you remember what the thinking was behind that? Because again, you're still-- you're growing, but you don't have a massive budget for advertising. And what did you think you were going to do with YouTube at that time? Well, I felt like we could create some really short videos talking about the value proposition of Yeti. And I had a high school buddy that own a camera and some audio equipment. And then we started getting into some funer videos of my friend, the same guy that own the camera film, this balancer down on Sixth Street here in Austin, and hired him to come do this video where it's talking about the difference between an igloo, cooler, and a Yeti, and it's this 500 pound man versus a Yeti. It shows him tearing up an igloo, slamming it on the ground, stepping on it, hinges breaking, lid caving in. And then he tries to do the same thing to a Yeti Tundra. And he's stoning off cliffs, he's jumping up and down on it, and just there's no better way to share durability stories than that kind of funny content. The one that I think anyone who knows about your YouTube channel may know is a fair-- one that I think probably just transformed this whole strategy, which was you had a video of a bear trying to open a Yeti cooler that was packed with peanut butter and fish, fresh fish. And it's an amazing video. Anybody listening can find it. Because spoiler alert, the bear cannot open it. They cannot open the Yeti cooler, which is, I mean, man, what a great way to explain how good this thing is. If I remember right, there was an interagency grizzly bear committee, and they actually contacted us and said, hey, if we think that your cooler might be able to get certified as a bear-resistant container, so all these places that require bear-resistant containers for camping, you have to have this certification on the container where you're storing your food. And so we sent out our smallest cooler out there, and then they throw it in there with the grizzly bears that they have at this grizzly bear and wolf research center. And if it can stay out there for two hours, without the bear being able to get into it, they'll give you the certification. And it just spoke to the durability of the cooler. I mean, it's so cool, because you opened it up, I mean, even today, it says certified bear-resistant. And even if you're not going to be anywhere near a bear, it's just, you know that it's-- Oh, I got a cooler that can withstand a bear attack. Amazing. But even at this point, you're not yet on the radar of the big guys, right? You're still too small, because I kept thinking, like, where are the copycats when they're going to come in, right? I kept looking over my shoulder thinking, man, someone's going to figure us out. You know, I felt like someone that was better capitalized, more resources, engineers, whatever, were going to come in and outdo us, out, you know, figure out something that was better than us. So yeah, I think we were, you know, running as fast as we could to fill that shelf space at the specialty retailers, because that's where the void was in the market. And I think in 2009 and '10 is when we really-- there was a tipping point. And that is when we started getting phone calls from, you know, Pennsylvania and Oregon and Montana. And these were retailers calling us up and saying, hey, I've had three customers over the last two weeks come in and ask for your product. I guess I need to start reselling them. So we were literally answering the phone and setting up retailers 10 a day. You know, one of the things that I-- I mean, I guess at the mid 2010s, there was so-called cooler wars as you had a bunch of different clones and other brands trying to get into this space. But I guess around 2010, '11, you start to see some brands explore this space. Coleman got into a pelican which makes cases for cameras. starting to make kind of Yeti-style coolers. What do you remember, first starting to see, because it's both a validation, but it's also scary, right? 'Cause you're like, uh-oh. - Oh, I think there was some concern. I think we joked about someone coming out with the Yeti killer, you know? If I remember right. - As you know, every healthy, you know, you need some type of competitive landscape. And I think everyone that came into the market that seemed like all at one time, they were all fighting it out for second place. Yeah. And we felt like we had nailed the product and that it was gonna be hard to improve on it, which it was. - Yeah. So, all right. So, I imagine now that, you know, once you had $20 million in sales in a year, you're starting to get attention, capture some interest from investors. And at this point, you had not taken it on any money. This was self-financed. And indeed, by the middle of 2012, you guys agreed to sell some of your shares to a private equity group. And that would enable you guys to take some money off the table, retain some ownership. If it was me in your situation, I would've done the same thing because I would've thought, okay, we've been on this journey for six years. There are a lot of big players coming into this space, we're not as well capitalized like we do need some institutional backing if we're gonna compete. So, maybe I'll sell, you know, a chunk of my ownership or most of it and take some money off now and work with this better capitalized group to build it out our business. Was that your thinking at the time? - So, yeah, in many ways, that's exactly right. I think we looked up in 2011. And Ryan and I had not taken a dime out of the company or very little minimal amount to live off of. So, we had zero wealth to speak of outside of Yeti. You know, again, I was driving my high school pick up truck, living in a house that my parents owned out on their property. And we had some meaningful scares along the way, including the loss of Ivan. And we had competition coming. You know, I think I probably lost more sleep thinking about what, what if, what if, you know, what if there's a product liability lawsuit? What if there's a volcano that goes off in the Philippines, which is a real thing? And so, having all your eggs in one basket and bootstrapping this from day one, you know, it was time to diversify ourselves personally. So, mid 2011, we start running a process taking Yeti to market, which I had, we had no idea what that looked like. But as we kind of narrowed it down to a handful of potential buyers, we were really just looking for a liquidity event to take some chips off the table, but also a partner that could help us navigate the next stage of growth. - Yeah, at this point, I think it was the reported amount, was like close to $70 million for about a 2/3. I don't know if that's exactly accurate, but that's what's been reported. But if that is accurate, it's pretty good, you know, you guys are gonna walk away with a nice amount of money, which will enable both of you to feel financially secure for life, but you still get to keep a significant percent of the business. I think roughly 10% each, right? Is that about right? - Yeah, that's about right, you know, I can't remember the exact, you know, after tax take home, but that's, you know, in the end, it was a life-changing event. When those wires crossed into our bank account, I think I probably slept better that night than I had in the last six years. - I mean, Ryan, this is better than the, than the Beretta Shotgun, the three grand $3,000 Rolex that you got from-- - Yeah, no, it was a lot better, and it was a fun, that was a fun process to be a part of, to go to market to the private equity and have the interest that we did, and pretty soon you're right back in it, and you're excited about the future of Yeti, you know. - Did you, I mean, so up until this point, you were a cooler brand, right? You're making, you're known for coolers, but now you've got core tech behind you, and the product line is gonna expand. I think within the first few years, you bring, you introduce the soft bag, the soft cooler bag, and then the drinkware, which from what I read initially, some people on the board thought that might be a distraction, that really you're a cooler business, and getting into the insulated cups, coffee cups, and whatever, that's not the business for you guys to get into. - Yeah, so, to kind of set the stage, Yeti grew to a hundred million in sales, just on hard coolers alone. - Wow. - That's what, no, that's-- - This is by, I think this is by 2013. - Yeah, that's right, and up until that point, there was still runway in the hard cooler market, but kind of the big knock on us during the sales process is that we were a one product company, and the obvious extension to us was soft coolers. You know, when I walked into Target, the same dynamic existed in soft coolers that did with hard coolers, they'd been commoditized, they would leak, they would fall apart, and so you could see the market opportunity was big, and by that time, we had built out a good team of engineers and designers, and then Ryan came over to my desk one day, and he put a vacuum insulated bottle on my desk, and he said, "We need to do something in this space," and I think it was a clean canteen. - Yeah, Ryan, what do you remember about that? - Oh, basically, I had one of our dealers that was real successful with the hard coolers. He was that gear guy like me, and he sent me a vacuum insulated bottle, and I just took it home, put ice in it, drank water out of it, and the next day, there was still ice in them, like this thing's amazing, and vacuum insulation had been around forever with a bunch of different brands, but I took that bottle in and threw it on Roy's desk and said, "Hey, we need to look at this." And then a month later, Roy shows up at one of our monthly operations meetings with a 30 ounce cup and a 20 ounce cup, he called it a Yeti Rambler. And so I didn't have a vision to turn it into a drinking cup, but I just thought the vacuum insulation was cool, and I let Roy take it from there. - After getting cortex blessing, it was a real short put on getting it to market and standing up the supply chain. It wasn't long after that that we introduced these two sizes. - Yeah. - The 20 ounce and the 30 ounce, no color ways, just stainless steel with a clear plastic lid, and like we caught lightning in a bottle. And for the first time, Yeti had a product that had mass appeal. It wasn't just our hardcore outdoorsmen that were users. We were selling them to soccer moms. And it was, it was this affordable luxury, you know, that although not everyone can afford a three or four hundred dollar cooler, they could afford a $30 cup. - And you had already that double-walled water bottle marked it was out there, hydroflasked clean canteen, but nobody was thinking about a coffee mug or a cup, a tumbler. - Yeah, just so happens a real simple cup design, that market opportunity is so much bigger than bottles. And soft coolers came into the market at about that same time. You know, I think they were about a month apart, but it was drinkware that really changed the trajectory of Yeti. And we went from a hundred million to four hundred million. - That's amazing. - In a matter of 18 months. - In 18 months. And that was highly, highly supply constrained. We could not keep up with demand. And we couldn't even keep up with the cooler demand because the brand awareness we're selling so many cups, brand awareness was exploding. So drinkware turned into our half of our business basically overnight, but was elevating the entire brand in all of our products. - I mean, it's an amazing story because it's a completely new product line. I know that by 2015, right now that's almost, it's about nine years in, you step down as CEO and Ryan you step down as president. I imagine, you know, both of you guys now, you know, we've had founders in the show who had private equity come in, got bought out and are still with the business 20 years later 'cause they just lived and breathed it. But it sounds like both of you guys had felt like it was time you wanted to move on. Tell me, tell me that you're thinking behind that first, Ryan, why did you want to step down? - I felt like we had worked, put in a lot of time, you know, during the years of 2006 to 2012 and I didn't really want to be pushed anymore. Roy was good at pushing me, getting me to work harder and really kind of seized this opportunity up. And, you know, once we had some financial security, I was ready to do more hunting and fishing and family things. - It wasn't like, you weren't like, I'm going to start my next business and I'm going to do what I love that. You were like, I want to do more hunting, fishing and how in my family. - Yeah, and I still wanted to be involved in Yeti but more at my own pace. And Roy and I are still employees of Yeti today. But I, you know, I haven't been into the office in years. - And you had a young family, I think you had gotten married around 2012. 2011 11 okay and then two 2012 had her first kid and and so I was you know looking for a break and looking to you know, I wasn't Didn't want to come into the office and grind it out and Roy you had already had had you had kids by the time you guys launched Yeti in 2006 so your kids had only really known you working and grinding at Yeti was it similar for you or That you wanted more time with your kids and to just hang and or be a dad full-time or did you were you already thinking all right I'm gonna launch my next business and start all over again No, I so the irony of of things was The outdoors is what brought us to Yeti in the first place But in many ways it took us away from the outdoors as well because we didn't have time for you know We didn't have time to go spend time on the water or you know annual kind or tarp and fishing trip And I might be home with the family, but I wasn't Being a good dad. I wasn't present. You know, my mind was on Yeti and you know What we were doing was not sustainable and I think we recognize that and you know today I get to Come in and have fun when I want to yeah, and have it's a creative outlet When you guys think about this journey you took right, you know I mean even just falling into this cooler business in the sense Roy because of Of outfitting boats right and then that it could have been rubber mats on the boats that became the thing, right? It could have been ropes. It could have been the the engines on those fishing boats It was the coolers how much of Of where you got to and and how this journey kind of went went do you attribute to the The work that you put in the grind which is a lot and how much do you think had to do with luck and fortune and just the stars aligning Man that the stars definitely align and and and you can see these stepping stones growing up in the outdoors with our parents and growing up in our dad's Business and kind of getting you know the playbook of a small business and then finding the right people and whether it was Walt Or in even a door closing on us like the loss of Ivan But another door would open now so timing was everything I would also say We were willing to kind of put ourselves out there and show up in the in the Philippines when we were you know in our 20s and we put ourselves in a position to kind of Have this luck right and even the luck of being born in the United States of America And it's a real privilege to be able to kind of choose your own path and do whatever you want and compared to what I've seen in other places I've been you know You know, it's interesting because I mean your dad obviously is a model right with with with flex coat and It sounds like when you guys started yet like that was sort of your vision like it was gonna be a nice lifestyle business and But there was no sort of like grand plan to turn this into an international brand I know I would say where we got lucky was picking an Industry or picking a product category that could spill outside of the fish and tackle industry Yeah, I think we thought we were doing something like our parents, right and that's that was the goal to live the lifestyle of You know what our parents had and like I said our parents put four kids to college They they got to do things as they wanted to do them and then you know yet He began to take on a life of its own and never ever in my wildest dreams today We ever think you would do what it did And it's been an amazing ride That's Roy and Ryan Cedars co-founders of Yeti By the way the brothers still see a lot of each other in fact They live right across the street from one another Meanwhile their dad Roger Cedars recently turned 80 and finally sold his own business flex coat 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 and if you're interested in insights Ideas and lessons from some of the world's greatest entrepreneurs Please do sign up for my newsletter at gyros.com or on Subsdaq this episode was researched and produced by Carla Estevez with music composed by routine error bluing It was edited by Neva Grant and her engineer was Jimmy Keely our production staff also includes Casey Herman Jayce Howard, Alex Chung, Carrie Thompson, Chris Mussini, Catherine Cipher, Sam Paulson, John Isabella, and Elaine Coates I'm Guy Ross and you've been listening to how I built this