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

I think we come up with about 10 solid names and yet he got mixed reviews for some people that 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? In 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 Built This, a show about innovators, entrepreneurs, idealists and the stories behind the movements 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 snowboarders, 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 Shinard 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 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 beachgoers. 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 Seaters 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 ring and creating, turning over rocks, catching crawls, fish, bow hunting for deer, oftentimes before school. I don't think we realized how magical that was to grow up in nature like that. I 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 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. But 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 coding 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. Like, 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, you know, my parents, they paid for things and cash along the way. They really didn't save any money. They didn't have any debt either. You know, their biggest asset was that company. And, you know, I think growing up in that company and seeing both my mom and dad kind of wear all the hats of a small business, you know, 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 the 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 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 that 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 fish and rods. I always, you know, could build fish and 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 think I want to try to start a fishing rod company and be a customer of my dads, you know? So 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 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 1,500 rods a year. That's right, they're about 175 bucks. And one thing I read about was that 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? These are fishermen who go in pretty shallow waters. They're fishing under lily pads 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 bass in, right? Yeah. The guy that kind of made that style of fish in 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's a real specialized style of fishing. 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. 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 did you not even necessarily have an idea of what you want to do? No, 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 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 siding in rifles and portable bench that you would fold up and carry out and 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'd buy the saw horse at Home Depot, a foldable metal saw horse and I'd make this little custom top for siding 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 quickly realized I needed a pivot. And you know, our dad, Roger, he was already messing around with boats. 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 on the shallow water. Yeah, shallow water chasing redfish with the fly rod. You know, the great thing about the Texas coast, there's just thousands of acres of backcountry shallow water fishing. And again, I learned a lot about how specialized the boat business is and learned how difficult the boat business was. And my dad's joke was, well, Roy, if you don't sell too many boats, you can stay in business. Meaning I was losing money on every boat I sold. Yeah, because you would buy the hole, write 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 costs over 10 grand, 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, I mean, well, from what I understand, right, while you're, while you're basically rigging these boats and then selling them, right, you're putting in 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 for drinks and also to throw your fish in. 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 way, 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. 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 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, 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 to 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. And 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 way your place and you put it on a new one. Got it. 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. 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 igloos or the colmens. 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. All right. 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 rotimolded 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, where 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, you know, asked for a stocking order. And, and these were in the companies called ICTEC, right? Thailand manufactured, but it was branded as a, like, as ICTEC. Right. And ICTEC was a US base brand or No, it was an Australian base brand. Okay. And just to clarify, like, from what I understand, because you mentioned, like, like, like a roto molding or rotational molding, because I think most people can picture an igloo ice chest as 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, is a manufacturing process where you take polyethylene, which is a plastic pellet form resin. 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 and 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 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 boat. So, and they were probably a small company, right? I mean, I can't imagine, like, because you're a young guy, but they will perfectly find 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 ICTEC? 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 scholar business as a distributor. And, you know, I imagine given that your dad had a relationship with probably some 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 [BLANK_AUDIO] after what eight years into this that maybe he wasn't gonna 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 waterloo. And he had an idea of a young guy to run it down there, closer to him, and-- - So 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. 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. 'Cause as soon as he said, "Sold," I was thinking, "Oh, I might have undershot this deal." - So you, when you sold it, I mean, you know, again, you're 31, 32, from what I gather, it wasn't like gonna set you up for life. It wasn't gonna be enough money for you enough to work, but it was a 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. - No, but I think in the end, when I closed, I had just under $200,000. And at the time, capital gains was like 15%. Hey, those taxes. I went out and bought a used Rolex from my buddy and a bread of shotgun. I was on cloud nine, you know what I mean? - Yeah. Let's go hunting. - I love it. All right. So you got your Rolex and you have your shotgun and you're happy you're going hunting. Okay, but you know you've gotta 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 seasons 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. 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." I'll be there. - So Roy, you hire your brother 'cause 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'd built a pretty good business. You know, probably maybe as many as 100 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, 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 100 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 continued to open up accounts and grow the business together. But maybe at the time it felt temporary until he figured out what he was gonna 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 quite. - So there's a couple of things going on. You know, although that original Thailand ICTEC cooler, it was a good product, but there was a lot of opportunity for improvement. 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 too. You 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 gonna build a cooler for ourselves, the way we used them. - Sorry, there's something else I think is interesting 'cause you are selling ICTEC branded coolers but from what I've read, they had some agreement, 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 guys start talking about, hey, 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. When you're putting these coolers on boats, you need the ability to strap 'em 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 as 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 rodent molded part, 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 had in my head, it was 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 wanna ask, bring you in for a second ask you, like what do you remember talking to your brother about? Or 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 icy tech factory, where the icy tech 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 at a gas or somebody there and tell me the story of what you guys at the conversation 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 dirt red clay floor. And so we were really, we were dealing with the dirt floor manufacturing. - So the heat, the warm cooling, it would just absorb some of that clay. - Yes, that's right. - 'Cause these were white, I guess, these coolers. - Yeah, they were white. - All right, and you guys didn't have, I mean, you didn't have a whole lot of capital, you were ambitious, but like, didn't have many, didn't have much of a choice. Like, I have to assume that if they were willing to work with you, you would have worked with 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 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, I kind of felt like we ran into a wall they were talking to those guys. - But you also, you were gonna go visit another factory, I guess, this is a trip to Asia, so you're going to Thailand, but then you were also gonna 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 gonna be over in Southeast Asia. We sell this ICTEC 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. - It was a similar kind of product. - Yeah, that's right. - When you get just out of curiosity, is it like a three hour flight I think from Bangkok to Manila? - Yeah. - And who is the guy, I mean, you have a contact there you're dealing with, and who, like, what do you know? - His name is Ivan Brown. He was an 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, the flight from Bangkok to Manila was more expensive than our flight from 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 three hour flight and then we've land in the Philippines. - All right, 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 and big red letters, death-to-drug traffickers, you know. And 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 Azizu trooper type vehicle. And it was a lot of traffic really crowded. Well, come to find out, 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 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 'em to let us go. And we get a little speed built up and what a step's 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 gonna end up in jail or what was gonna happen. But we end up making it to his factory that was inside the old US 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 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 gonna 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 Raj and you're listening to How I Built This. (soft music) - The most successful business owners don't do it all themselves, they delegate. Upwork lets you build a team of highly skilled specialists for every function your business needs. So you can focus on what you do best and let experts handle the rest. Upwork gives your business fast access to highly skilled specialists with deep expertise. So you can fill critical skill gaps, launch projects faster and scale support up or down without committing to full time head count. With Business Plus, you can access the top 1% of talent on Upwork. AI-powered shortlisting delivers a curated shortlist of top freelancers match to your goals. In under six hours, no endless searching required. Thousands of growing businesses already trust Upwork to hire highly skilled freelance professionals for everything from one-off projects to ongoing support. With over 170,000 freelancers holding five-star ratings, you can hire with the confidence that comes from hiring someone with a verified track record. It's free to sign up and posting a job is easy. Visit Upwork.com right now and post your job for free. That's Upwork.com to connect with top talent ready to help your business grow. That's UPWORK.com, Upwork.com. Hi, it's Phoebe Judge, host of Criminal. I'm going on tour. If you like hearing me tell stories about people, well, I've decided to tell stories about my life and the people I love. A letter was left carelessly around, so I've sort of caught red handed. It's a show about secrets and forgiveness. I hope you'll come see it. Find all our tour dates and get tickets at thisascriminal.com/live. (soft music) 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 ICTEC, 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 was 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 to 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 gonna 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, would be the minimum order. So yeah, it was kind of a handshake deal, and let's do it. And by this point, after visiting him up into this point, we knew we were gonna 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 roughly 300 units, maybe 350 units, coolers of different sizes. - And you guys must've been pretty confident, you could sell this, 'cause 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 were 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 at this point, with ICTEC, I built out a pretty good book of business, and I knew if I could get coolers on the retail shelves, that there'd be sell through, and the frustration that we had with ordinary coolers falling apart, 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, 'cause you're gonna start importing these blank chests, right, coolers, without a brand name to it. Tell me a little bit about that conversation you started 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 Flyrod as a kid, which was one of my dad's customers, and it's a very premium high-end flyrod, and I love that name, Sage is named after the green stripe, and in the back of a rainbow trout. On the other hand, you had another very premium flyrod called G. Loomis, another one of my dad's customers, and it was named after the founder, Gary Loomis, 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 flight home, from the Philippines. - What were some of the names you were talking about? - I think Sherpa made the original list, and 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. You know, Sherpa's 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, 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 get their feedback which you better be careful what you ask for because you know you start getting their feedback and and yet he 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 it 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 gonna structure this business. So up until this point Ryan was still on his 10 dollar an hour salary and but you know we knew that we're gonna partner up and you know I had a decent balance sheet from from distributing the IC Tech Coolers over the years and Ryan's buy-in to get 49.5% of the company was to use his some of his proceeds from his Waterloo sale and so he bought the first three container loads of product that came in from the Philippines. Got it so about 100 yeah 100 grand but 100 grand yeah yeah and Ryan you I mean it sounds like you're looking at this business because your brother was gonna be the core quote the CEO but it sounds like you didn't really haven't it wasn't about Ego's like you were looking at it and 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 kind of got to 50/50 and we went to a family friend there's 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 gonna wait for your first container load or the first three I guess to come in and how many how many how many coolers are fitting to see 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 no 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 or yeah they're 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 ICTEC and said hey we got this you know very similar cooler better new brand you guys in is that what you start to do yes that's exactly right we we had the network of retailers that we 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 start phasing it so and move entirely to the Philippines produce cooler did you have any issues with because I an igloo cooler was like 30 50 bucks right or a call man or something like did you have any issues with some of these stores saying I don't know like it because just 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 cooler yeah that's a pretty good you know I think by the time it landed in our warehouse 100 dollars would be about right but yeah that part of the challenge was convincing these retailers to resell our products and a lot of them got it right away but there's a lot of no pushback based on the pricing like hey my customers they won't spend three four hundred dollars on a cooler so I can't tell 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 Barrings 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 yes target yeah and 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 to 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 forty dollar cooler you know it's all they're gonna make five bucks yeah that's right and it's all about at 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 this the shop for maybe a hundred eighty or two and two okay and then they can turn itself for three hundred that's exactly right in 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 great one retailer time tell me a little bit about how you guys were dividing things up right I mean were you 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 you know we thought that this was this company was gonna be very similar to our parents where we could handle it maybe higher one or two you know employees to help us in the warehouse or enter the phone and you know we quickly realized this opportunity was gonna be bigger than what we grew up with how did you how did you realize that just you know the demand the demand was coming but in that you know 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're really focusing on the Gulf Coast states you know that's what got us into the cooler business like the 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 have to say was it's just better you didn't have to say here so you can use it you all every one of our customers had been using coolers their whole life right they're 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 gonna hold ice longer and then I we did start leaning into marketing and educating the consumer on the why and I read that 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 stop, 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 the whole trade show and your product is really the only one that gets me Excited he says I think he 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 three or four hundred dollars for a cooler And I came home told Roy about him and I think we went on to 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 three or four hundred dollars for a cooler They're gonna justify it to their buddies. Yeah, and it started with the tagline that he helped us create called no wildly stronger keep I slunger 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 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 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 the business and like our dad's company No, 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 first 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 but stores like like you know Cabela's or Bass or I mean did you ever or you just too small at that point? You know at the time, you know I would hang around the trade shows and 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 Goed 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 the bigger guys And meantime Roy you're up 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 I've in an iron 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 of years that I've been Dreaming about we have a physical part integrated hinges integrated anchors, you know rubber feet rope handles All these things that that kind of came together and again. It was purely functionality driven All right, so you guys spend a couple weeks in 2007 perfecting Finally this cool that is your design and just out of curiosity How did you protect it right? It's I mean Ivan's making them in the Philippines you trust him But how do you make sure that no one's gonna 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 yeah, we felt like it was kind of a a waste of Resources, you know, instead of buying it prevent defense. It was more about being often to mind and put 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 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 and also I think it's important to note that we owned our mold 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 but you've got a cooler. I think by early 2008 Yeah, we're launching 2008 and it was the Yeti Tundra and we've 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 arranged in price from what to what oh? 245 to six or seven hundred dollars. Yeah, I'm just curious because We've had you know over the last 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 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 if we're gonna you know buy a cooler for a hundred dollars We're gonna have to sell it for $300 because a hundred dollars is going to the retailer and then a hundred dollars is going to you know us and All of your business at this point is not direct to consumer. It's it's through Retail channels your your wholesalers the majority of it is through our Specialty retail channels now we would sell direct to consumer that they called or maybe you're a 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 gonna 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 that like Within a few months or maybe weeks like you're bringing a container a week Yeah, that sounds about right. No, this is 2008 We're hiring a lot of folks to come in to to help customer service dish warehouse work to know everything in between and With Ivan and this Philippine factory we found the perfect partner to help get yet he off the ground All right, so everything's going great. Yep September 23rd 2008 you tried reaching Ivan and you can't get hold of him Yeah, so I Sin Ivan 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 in that's when we found out that Ivan had a 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 And I just know telling her, you know, sorry for her loss and you know, I It was a pretty big shock to the system I Know this is a tough tough 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 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 you know, I didn't, you know, it was, it was a big personal off. 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 friendship over those few years that we knew him. And I don't think I slept at all that night. And like I said, this 2008, we're going from 1 million to 3 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 I think we told him that we're going to make the most of it, but it doesn't look good. And there's a good chance that y'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. Hey, welcome back to How I Built This. I'm Guy Roz. 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 maybe 150 retailers at the time, but we felt like if this was going to be our last inventory, we're going to 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 in the Philippines at this point was because from what I understand, there was a dispute between some folks involved in the factory of who is going to 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 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, it was crickets. None of the retailers called up. We blamed that price increase on a cost of raw 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 continue to buy coolers. And they were selling coolers, maybe one or two a week, which was really good numbers for, you know, a small retailer like that. And their margin dollar expanded. You know, with that price increase, they were making more money. But meantime, how, 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 going to focus on the US. Okay. And you know, there's a big industry, especially in the Midwest with rotomolding and for auto manufacturing for parts. Yeah, it's, it's farm equipment. It's, 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 showed 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, it, we were, we were making these molds on paper. Yes. And then you were, and 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 in 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 the Philippines, that factory got up and running again. It's back online. It's back online. Yeah. We took everything we learned in the US. And we took that technology and we brought it to the Philippines. 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 no, as tragic and like oh shit 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 a 18 month period. Oh, it was a nightmare. Okay. 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 in already in 2009, early 2009, you created a YouTube channel, which is this is early YouTube. I mean, this is not, you know, this is still pretty early days on YouTube when people still thought of it as cats, you know, cats on skateboards. But you put out a YouTube to remember what the thinking was behind that because again, you know, 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, you know, 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 owned a camera and some audio equipment and then we started getting into some, you know, fun or videos of my friend, the same guy that owned the camera found this balancer down on 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. Yeah. And it's this, you know, 500 pound man versus, you know, a Yeti. It shows him tearing up an igloo, right? 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 thoning 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. Yeah. 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 you're cooler, might be able to get certified as a bear-resistant container." So all these places that require bear-resistant containers for camping 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. Even if you're not going to be anywhere near a bear, it's just, you know that it's like, "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? They're still too small, because I kept thinking like, "Where are the copycats? When are they 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 were so-called cooler wars as you had a bunch of different clones and other brands trying to get into this space. I guess around 2010, '11, you start to see some brands explore this space. Coleman got into it, 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? Because 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 going to be hard to improve on it. Which it was. Yeah. 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, but if it was me in your situation, I would have done the same thing because I would have thought, OK, 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 going to 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 pickup truck, living in a house that my parents own 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've probably lost more sleep thinking about what, 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 of 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 going to 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 percent 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 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 going to 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. Wow. That's-- This is by-- I think this is by 2013. Yeah, that's right. And up into 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 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 was your-- what do you remember about that? Oh, basically, I had one of our dealers that was real successful with the hard coolers. He was a 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 were 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 that 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, the 20 ounce and the 30 ounce, no colorways, 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 outdoorsman 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 thirty dollar cup. And you had already that double walled water bottle market was out there, hydroflask clean canteen, but nobody was thinking about a coffee mug. a cop, a Tumblr. - Yeah, just so happens, a real simple cup design, that market opportunity is so much bigger than bottles. And soft colors 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 100 million to 400 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 gonna start my next business, and I'm gonna do more. - No, not at all. - I love that. I wanted to do more hunting, fishing, and having 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. - 2011, okay. - And then 2012 had our first kid, 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 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 going to launch my next business and start all over again. - No, so the irony 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 alkan 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 recognized that, and today, I get to come in and have fun when I want to. - Yeah. - And 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 a sense, Roy, because 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 engines on those fishing boats. It was the coolers. How much of where you got to and how this journey kind of went, do you attribute to 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, the stars definitely align. 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 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 Philippines when we were 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, compared to what I've seen in other places I've been, you know? - Kiel, it's interesting because I mean, your dad obviously was a model, right, with FlexCoat, and it sounds like when you guys started Yeti, 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 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 got to do things as they wanted to do them. And then, you know, Yeti 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, FlexCoat. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on new podcast apps 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/oron/substak. This episode was researched and produced by Carla Estevez with music composed by Routiner of Bluey. He was edited by Niva Grant, and her engineer was Jimmy Keely. Our production staff also includes Casey Herman, Jayce Howard, Alex Chung, Kerry Thompson, Chris Messini, Catherine Cipher, Sam Paulson, John Isabella, and Elaine Coates. I'm Guy Ross, and you've been listening to How I Built This.