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Your home might be worth more than you think. Find out how much at airbnb.ca. Host. Wait, so in June of 2000, you were selling a million a month?
Yes. And January of 2001, you couldn't sell one that sales stopped? Yes, it makes sense. It makes no sense.
It doesn't make sense unless you understand grazes. It happened to me so many times. And no matter how many times the retailers go through this, no matter how many times I went through this, everybody's thinking to themselves, this time is different. Like this time, it's going to sell a million a month for the next three years.
And they can't even just do simple math, that there's not that many people. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I've got a lot of fun on the show today how Carlton Calvin helped turn a craze into a classic toy and built a massive company around scooters, hoverboards, and bikes. Razor.
In the summer of 2000, kids all across the US couldn't get enough of one thing. Scooters, but not the clunky ones you might remember. These were sleek, made from aircraft-grade aluminum. They had polyurethane wheels that glided far and fast, and a scooter was compact enough to fold up and carry anywhere.
They were called razor scooters, and within months, demand was out of control. A million scooters a month were rolling out of a small warehouse in Cerritos, California, and at the center of it all was a man named Carlton Calvin. Carlton didn't invent the scooter, that credit goes to Geno Tsai in Taiwan, along with his partner, Robert Chen. But Carlton helped launch the razor in the US, and he knew how to make it a craze, because he'd been chasing toy crazes for years.
He tried yo-yos, he sold fingerboards, he was in the pogs and slammers business, and Carlton understood something important, and it was almost intuitive. Kids are loyal to a toy one minute, and then abandoned it the next, and his business was all about timing. Spot the craze, ride it high, and then scramble before it fizzles out. But razor was different.
It was bigger, faster, and hotter than anything he had ever touched. But just as quickly as it rose, it collapsed, sales dried up almost overnight. But Carlton hung on, and slowly rebuilt razor into a bigger brand. And over time, razor became more than a craze.
It grew into a powerhouse, manual scooters, electric scooters, bikes, hoverboards, even a skateboard that twisted and swerved called the Ripstick. But before all of that happened, Carlton grew up in St. Paul, Minnesota, in the 60s and 70s. His mom was a school teacher, and his dad was an entrepreneur who started out in direct mail.
Carlton went to law school, but he hated it. So in his early 30s, he decided to pursue another interest, becoming an entrepreneur himself. You know, I've always wanted to be an artist, believe it or not. And I made that pitch to my wife, but I also felt, you know, like I needed to earn some money.
And so I thought, I'll work with illustrators and do children's books. So I thought of this idea called Masterpiece Fairy Tales, where I would tell the classic fairy tales, but I would take the paintings of the great impressionists and retell the story in their style. So it might be Van Gogh told the story of Puss and Boots. And you'd find an artist to kind of paint.
I found a really great artist who could paint in the style of these painters. Now you could do all that on Cheche at GPT. I was terrible. You could just say, paint me Puss and Boots and Van Gogh's style.
Yeah, I had Puss and Boots or sure. Yeah, exactly. Yeah, all right. So you're going to come up and that's great because all these stories are not, I mean, they're in the public domain.
So you could have a fairy tale book and hire some artists and you get a children's book. Okay, that's in, did you pitch this idea? So the problem was I didn't understand business at that point at all. But I did get, I got a lot of meetings out in New York.
It was very fun. I went to the big, beautiful publishing houses. And now I know that what you do when you have an idea that is you print up the books and you go to the book shows and you start selling to the bookstores and you build a teeny little company that eventually gets big. Do not understand that at that time.
But while I was doing it, I was working with the illustrators and some of the illustrators were involved in this craze called Pogs and Slammers. And that's what got me interested in Pogs and Slammers. Okay, so let's go on back for a second. You are pitching a fairy tale book idea and you get interested in Pogs and Slammers.
We will explain what those are in just a second. Before we do that, I'm trying to understand the connection between pitching a book, a Puss and Boots with Taloo Sletrex style artwork and Pogs and Slammers. So the connection is the illustrators that I was working with were getting work as illustrators for the Pogs. I see.
And this thing is going crazy. Okay, let's pause and explain what these are. They are like poker chips, like Wafer, cardboard, Wafer poker chips. Exactly right.
That you would do what with? It's like the game of marbles. So Pogs stands for Pineapple Orange Guava, started in Hawaii and they would put, these are the caps that would go on a bottle and keep it sanitary. So they are discs.
And it's just like marbles. One kid comes with five Pogs and another kid comes with another five. They stack them on a stack and then there's something heavy which is a separate item called a Slammer. What does it look like?
It basically is a bigger, heavier disc. You throw it at the stack and cause the discs to flip over and the ones that flipped over in your direction, you'd call one of heads or tails and you'd then collect all the Pogs. You would see something like a version of gambling. And I remember this is in the 90s.
I mean, I was already leaving high school and getting to go, but I remember seeing kids playing with these. My little brother actually. So this just went wild. Yes, explosive.
But at this time, so many of the crazes that were sweeping across the country would start in Los Angeles. So very fortunate to where I was. So you see, you're talking artists and they're like, yeah, we're just making art for these things called Pogs. And you're thinking, oh, this is interesting.
So what did you do? The next step was I wanted them to make Pogs for me. So I was going to have them illustrate and I was going to print the Pogs and I was going to sell them. But while I was doing that, my wife is also a lawyer and we were driving through Arizona to go on a case.
And I was just going along for the ride and you stop at the rest of the stops and they sell these paperweights with real scorpions embedded in plastic. And they're like domes. And I looked at it and I got an idea. Which was?
You could make a slammer when these bigger discs, I bet I could invent a scorpion in clear plastic and kids could throw it at these discs. So the scorpion slammer. Yeah, the real scorpion. Inspired by the scorpion paperweight.
That's right. Called Stinger. Stinger was my brand name. Okay, so this is like a light bulb moment that goes on this road trip and okay, but now you've got to find somebody who is going to first of like get the scorpions and then you've got to figure out how to embed them in plastic and they've got to find somebody who can make it for you.
So let's break this down with it. What did you then do? So I turned the papermate weight over and I saw they put their brand there, their company on the back. Just the name Mac.
I still remember it. This is you know 30 years later. And I thought you know, I'll call them up and ask them to make these discs for me. Right?
You know, it'll be a problem. I called them up. They said we're not there's no way we're going to make these discs for you. But we can sell you some scorpions if you want to try to figure out how to do it yourself.
So I ordered I got a hundred scorpions in a little jar of alcohol came in the mail or yes. And I went into my garage renting a house in Pasadena, went into the old craftsman house, happened to have a garage classic started my business in the garage story, went in there for six months. My wife thought I was crazy trying to figure out it's not trivial how to get a scorpion inside of little plastic disc. And so what would you do in your garage?
Are you like melting plastic and pouring it into mold? Oh, it's so cool. First of all, I did all the reading I could and I went down to the Natural History Museum in LA where they actually embed specimens in plastic and I talked to them and I checked out a book from the natural library unembedding specimens in plastic. But of course they're not making there's a couple problems.
One is I wanted mine to be a shadow proof and like the globes and other things are not shadow proof. So I did research on materials I called actually industrial chemical companies in LA and arrived at polyurethane as the kind of plastic that wouldn't break. But all kinds of problems just like you might imagine the first problem was you know scorpions if you don't dry them out took me a long time to figure this out. They turn white and you can't see the scorpion.
So then I took I went to Goodwill and I bought like five or six old ovens and I then put light bulbs in them to heat them and then I would desiccate the scorpions inside just dry them out dry them out under low temperatures under low temperatures and then I pour the rest of the plastic on top and that's how you got it. Wow. So so all right so eventually I'm assuming you figure out how to how to make this. Yes.
Okay, six months. So you successfully figure out how to embed a scorpion in polyurethane as a slammer for pogs and then what? So this is when I started to behave like a regular business person somehow gradually I learned about business I went to a toy show the Pomona toy show which you know back in the olden days. They used to be small toy stores and in order to buy toys toys toys stores go to these toys shows there was one in Pomona major one in the west coast and I rented a corner of a booth.
And I had one aquarium with this all total of six scorpions that I made that I never figured out how to make in this in a little aquarium and I was you know talking to people people walking by and a guy walk by who was a having to be in the pog in the slammer business was a toy distributor and he said if you don't leave this toy show today you know it's the first of three days you don't leave today and you sign exclusive contract with me I'll buy two hundred thousand of these at three dollars a piece. Who was this guy? Mickey. He had a warehouse and commerce big toy distributor most of toys you know there was a whole business back then of importing toys from China that were kind of unbranded and like talking parrots and all kinds of stuff and he would do that.
That was his job but you know that the pog and slammer business was again an open system and everybody was getting into it and he was in it too. So he said he loved these so much like I want an exclusive deal all their two hundred thousand dollars at what price? At three dollars a piece so six hundred thousand dollars was my first sale whatever. He was going to manufacture them.
Nope. I said you need you to figure that out. Yeah I got to figure him out and I didn't have any money. So did you even know that you could make it?
Absolutely. You know how much it was going to cost? It might have cost you a million dollars. I had never bought a scorpion before.
I knew a little bit about how much the plastic costs. But I figured that was it. That was my only cost. But I wouldn't even at that age it's just so hard to remember how naive I was and I didn't even understand what margin was or how much you need to manufacture something.
And so I just went ahead at that point. But I didn't have any money. So believe it or not the world is a great place. He wrote me a check for seventy five thousand dollars that day on the spot on my face as a deposit as a deposit so that I could open up a factory trying to figure out how to make them.
So all right. So you get this deal for us. It's amazing. It's amazing that a scorpion embedded in polyurethane could be.
But yeah I mean these slammers were going crazy kids were buying these cardboard pogs and the slammers. I know what ten year old boys like is really the answer. It's just like irresistible. How did you develop that that talent?
I think that's in born and that is like the secret is that you know that you're not going to be able to make it. The secret is that I didn't stray too far from what I am. Like I am a ten year old boy. My favorite story is I got into trouble while I was a law clerk because I snuck into my judges chambers in the middle of the night because he had the most powerful computer to do video gaming.
You know I just have a ten year old boy's mind for the longest time. And so I have a sensibility about naughty dangerous things or like scorpions that boys like. Okay so you so now you've got a seventy five thousand dollar check your in LA. Yes.
How are you going to make these that you're going to make two hundred thousand of these things. I mean I didn't know so but I began to go look for a warehouse near my house in South Pasadena where I could set up a factory. But the bigger problem was I immediately called Mac and said I need two hundred thousand scorpions. And they said no no you completely misunderstand the school of our business.
We go out with our kids at night in the desert with black lights. And pick up scorpions. Yes and turn over rocks and grab scorpions. Like I could maybe eventually have a hazardous job.
It is fun but hazardous. So they're saying to you hey we can't give you a two hundred thousand scorpions. What do you mean this is what this is like 1992 1991. 1995 I think 1995.
Okay all right so I mean really kind of pre-earn I mean it is around but not. It was definitely pre-internet for me like I had no notion of inter-matter email at that time. So what are you going to do you got to get two hundred thousand scorpions quick. So I had a Chinese friend and they said we eat scorpions in China.
Or they eat scorpions in China. And I think there's a lot of people in China eating scorpions. There's a lot of scorpions. There's got to be a lot there.
So I went down and at that time there was something called the Hong Kong Trade Council in downtown Los Angeles. And I went physically down there and talked to them. And they gave me and again this was the early days of China turning into a market. And they had you know they had people who were importing products from China on a list.
And they gave me a printout you know of a dot matrix printer of a list of Chinese importers. I called I had 20 of them. I called them all. You know I only found one that could find these scorpions but he did.
Wow and obviously these are dead scorpions. Yes. And it but just out of just a curiosity what was it going to cause a problem or challenge like is it hard import? You know in the US level of sophistication I didn't even think about it.
Like I didn't even understand like oh well are they going to be annoyed that there's scorpions coming into the states. You know and they put them in like gasoline jugs filled with alcohol to preserve them. And I suppose it makes them food safe too for how they even China. That's all they transport them.
Yeah nothing ever happened with the customs that I remember. So you found somebody who was going to enable this and do you remember how much it was per scorpion? Yes and of course a little bit interesting. I think they started at like seven cents a scorpion.
But as I got more popular and I wanted order more the price rapidly increased. Wow. So okay so started at seven cents for two hundred thousand scorpions and then who was going to get the scorpions but who was going to manufacture the discs. So then I asked my Chinese friend to help me find you know employees and she did and I hired her to sort of supervise them and I opened up this Chinese scorpion factory in southern California.
You know the warehouse and you put one in there like tables. You were going to hand to make two hundred thousand. We hand made two hundred thousand in America. How is that possible?
Like you hand poured the polyurethane and how many you just hired a bunch of people to get it. I had five scorpion arrangers and then I took bakery racks and converted them into makeshift ovens with light bulbs with insulation on the outside of a bakery rack. And I would stick bakery trays in there of scorpions. It was wild.
Alright so you how long did it take you to make two hundred thousand desks do you remember? It probably took three months. Three months of fill this order and you deliver it to this guy. Yes.
You know a bit at a time. Yes. As I can. And where is he selling them?
All around the country. Just a toy store. Well, toy store is everywhere. Magazine jobs.
I mean it was a it was a craze. So they have these you know, pots and slammers almost at newsstands and anywhere. And how and I'm assuming these these slammers did well. They did great.
Everybody knew about the scorpion slammers and it said sting around the side. I had it engraved into the mold. So it was really cute. And was that the name of your company?
Your business? Did you file like an LLC? No a small minds press. Oh that so it was still part of the original idea.
I know the idea. I had an LLC that was all set to make children's books. Okay small minds press was making these. So now you have your like you get a taste of what it's like.
Yeah cool. And did he order more? I mean was that it just turned out. So this is and then the day I delivered the last scorpion the pog craze collapsed.
They're like nobody nobody was buying blogs and slammers. Stop. Stop. The whole industry shut down immediately.
Like in matter of hours. That's wild. It was like the hottest thing. Yes.
And you probably you know cleared margins were probably good. Yeah. So you probably cleared like three four hundred kind of grand on that. Maybe yeah, maybe two hundred thousand dollars.
Yes. Okay. But that was it. Yeah.
But of course I was naive and I thought oh this goes on forever. So I'm saying I'm selling you know 75,000 scorpions slammers a month. I need to order like a few hundred thousand more scorpions to be ready to and that and the price of the scorpions went up. So all my profits were tied up in you know my second order of scorpions.
Oh I see. So you basically took the cash and ordered more as you as you would. Yes. But you could not sell those.
No, no sales. So were you left with surplus of scorpions or or slammers or both? Yeah. So I had scorpions lots and lots of scorpions and lots and lots of employees that I was very sad and didn't want to like a.
How many scorpions did you have? Like a couple hundred thousand at least. What did you do with them? So I did not know what to do with them honestly.
And again, humiliated in front of my wife. You know, this is like oh my god you all your profits. Like where's the money guy and so I took them and started to just like make keychains. And you know for like I was back in the market where I saw Max paperweight.
So I was in Arizona selling scorpion keychains. You know by the hundreds. You know it was a really sad moment for my career. But while I was in the process of making these scorpion keychains and anything else I could think of with a scorpion in it.
I was in Pasadena and I walked into a shop and like a random shop was selling yo-yos. And I'm like wow that's kind of weird. Weird because yo-yos were like a 50s thing. Yeah or just like it's not a toy shop.
You know that's a good sign for a craze. Like yeah I didn't explain that. Yeah it was like a random I don't even know what kind of shop it was at this point. But they had some yo-yos and they had like a hundred dollar aluminum yo-yo and you know it just seemed like wow that's interesting.
And then I got the idea. I could put a scorpion in a yo-yo. Yeah. And a yo-yo.
Yes. Now at that point it was just I didn't understand it was a craze but I understood that it would just be like keychains. Like it would be another thing that I could be doing to get rid of my two hundred dollars scorpion. And so I did and I didn't have a way to make the yo-yo so I started to make the yo-yo itself in China.
But I still embedded them in my factory in South Pasadena. I see so you get the yo-yos made in China and then you would sort of put the polyurethane disc. It's basically the slammer. Yeah essentially.
I mean I pour actually pour the polyurethane into the yo-yo and then put a scorpion in there bake the yo-yo the whole thing. And it turns out that we were on the cusp at that time of the greatest yo-yo craze in the history of yo-yos. Wait why? What happened?
There was a guy who invented something called the brain which was a yo-yo that was a high-tech yo-yo that could sleep. Which means spin at the end of the screen automatically without any talent. That is the essential move of yo-yos. If you're an old school yo-yo you would need to learn how to make it sleep.
But this would sleep automatically. And caused a huge explosion of interest because everybody could look like a pro. All of a sudden every kid wanted yo-yo. Yes and that's exactly right.
But you were not making the sleeper yo-yo. You were just making a regular yo-yo. But again I wasn't making the original pog but I was involved in a major craze that's sweeping through the culture. Again ten year old boys.
And I went to the science store from public television that was in the malls at that time. And a scorpion yo-yo was perfect for them. And so that was my first time I ever sold directly to a major account. So how did you have with the pogs and the slammers?
You had a guy who bought them from you and distributed them. But now you had the yo-yo. So I mean assuming you had some connections in the industry at this point where you could find somebody willing to buy them and distribute them. No it was just learning how to be in business.
So at this point I personally contacted the buyer at the science store. And then somebody told me that you can't do all these sales yourself. You can't expect to do well if you're just going to call the buyers at the major storage. You need an organization and you need sales reps essentially.
So you have a sales manager and that's what transformed my business. Yeah so you hire a sales manager to basically go directly to these retailers. That's right and actually hire a group of reps that would go to all the retailers in the country. Put a nationwide sales network together for me.
Overnight. Basically sales reps know people all over the country. And so scorpion yo it turns out you don't just have to sell them to science stores. They also sell extremely well in Toys R Us.
So I started to get my big first big customers. And I sold millions of scorpion yo-yoos globally. Wow. It was crazy.
And Toys R Us still in the late 90s was probably one of the biggest and not the biggest. And not the biggest distribution channel. Absolutely. I think for a long time they were my biggest customer even for the rate scooter stuff like that.
I remember as a kid in the 80s being taken to Toys R Us. And it was like magic. It was just a magical storm. Wandering through his aisles and looking at all the toys.
And it was like one of the great that in Happy Meal and McDonald's like two. And I didn't get them very often. It was amazing. Amazing.
Yes. And it's a great sadness that we don't have a specialty toy store nationwide anymore. Alright so you get these yo-yoos, these scorpion yo-yoos and what like all of a sudden you're basically your gamble and the scorpions pays off. And I have to order more.
Absolutely. There were millions of scorpions and the price keeps going up with the scorpions and I have all these employees. Still making them in a warehouse. That's how I know.
I could never get anybody else to make them. Never could figure that out. You know. So I was yes.
I was in South Pasadena and selling millions and millions of scorpions but knowing it by this time that I needed to be careful. Because you knew that the craze would end. Yes. Essentially with these crazes eventually my theory is everyone gets it.
You can't sell infinite number of yo-yoos to the same people essentially. So already once those yo-yoos went and they sold well. Extremely well. Order reorder reorder reorder.
Yep. So you were like making pretty decent money already. Yes. At that point I was on paper making lots of money.
More than I would be as a lawyer. Right. And I'm very grateful to my wife for her patience. Because she was a lawyer that man I could reinvest all the capital to keep the business growing.
So I didn't really wasn't able to take out a big salary or any salary really. Alright. So you know that this is not going to last. And does that mean you're already starting to keep your eyes peeled for what the next year?
Absolutely. And what were you doing? Were you just reading, looking, like going, I don't know. I don't know.
I don't know. Honestly I don't know why this is part of my personality. Like I don't know exactly why but I'm just keeping the only way you can describe it is keeping your eyes open and talking to everybody and seeing what's happening. And somebody I met introduced me to somebody who was selling something called fingerboards.
Oh yes. And people know them today as tech tech. Yeah. They're like little skateboards.
They're like little skateboards. They're plastic. Miniature skateboards. That's right.
And you'd use your fingers to like, you know, play with them. I remember my nephews used to play with them. Yes. Exactly right.
And they still do. But this was a very, again, Southern California, very organic movement. First, you know, it was just kids doing it with cardboard cutouts of skateboards. Then the person that I met had the idea to brand them, he had arrangements with all the skateboard companies to put the branding of the skateboard in the fingerboard.
And they were called fingerboards. But the person that invented it didn't have access to major companies like Toys R Us and Walmart and all that kind of stuff. Right. And I did.
So we struck a deal and I manufactured them and these are just finger skateboards. Finger skateboards at first. This is a major craze. And of course, you know, by this time I learned about product differentiation.
So I made all kinds of like parts of the street landscape, like barrels, 55 gallon drums and little barrels and street cones so the kids could fantasize playing with their fingerboards. And then I also branched out into things like BMX bikes and surfboards and pretty much any other extreme sport. I would go and get a famous brand and put it on it and you know, sell it. And where were you manufacturing these?
China. The guy who made the yo-yos was my connection and he started making all this stuff for me. It was again, they were flying off the shelves. And I had of course the original brand name, which was fingerboard.
Tech Day came out as a competitor and they were more authentic looking than mine at the time. You know, I had the original old school one and they had a sort of more authentic looking piece. This is the company's called Tech Deck. Yeah, it was called Tech Deck.
Now it's owned by Spin Master, who are good friends of mine. And they basically kind of copied the idea. Yes. Yes.
And so what happened? I mean, you had these products. Did they kind of take your market share? They did.
Yes. I had a niche, but they were far more experienced and advanced in the toy business than I was and had deeper relationships with all these retailers. And at the time they sent around a letter saying that I was infringing their intellectual property, even though the exact opposite was true. So it was really dirty.
It was actually my understanding of the world. All right. So your push kind of pushed out of this business? A little bit.
But I also knew that whatever the situation is, it's not going to last forever because it's such an amazing craze. Carlton, let me ask you a question. Yes. I never get like already at this point where you thinking in your mind, I have got to find something that is more long lasting like in your enduring toy.
No. No. I mean, I just couldn't. This is how I thought toys were, period.
This is, I mean, this is my only niche and I was just moving a million miles an hour. And it was emotionally draining to have your whole business collapse every year or year and a half. So at any moment, I thought this whole thing is going to just stop, you know, the whole business. Yes.
Absolutely. It was terrifying. Just a moment. Carlton goes to yet another boom and yet another bust.
This time with the razor scooter. Stay with us. I'm Guy Raz and you're listening to How I Built This. Hey, welcome back to How I Built This.
I'm Guy Raz. So it's 1999 and Carlton has lost his grip on the fingerboard craze and he's looking for an idea that could be just as popular. So I'm reading an article in the LA Times and there's an article about adults in Japan in Tokyo riding scooters called the razor scooter. And I thought to my immediately thought to myself, well, I'm in the craze business and I also make miniature extreme sports items.
This is going to be my ticket to kill, you know, tech tech. You know, I'm going to be the guy that gets the razor scooter license to make miniature razor scooters because I just know this is going to, I sense this is going to come to the United States and be huge. And so somehow I got the telephone number of the company, JD, you know, JD scooter company, you know, that was making these scooters invented the scooters and these were making, they were making them in China and they were called razor scooters or called everything. But they're the, when they started, they put a name on the ones that were coming directly from them, but they were a Chinese factory.
So they would make under, they were made under many different brands for in Japan already and already they were getting orders from other people. You know, I'm not the only guy for sure. They want something super hot in Japan. They're figures.
This is coming to the United States. Yeah. Yeah. Okay.
But to be clear, your vision was, it was not to import these, these ride on scooters, right? It was to have the company that makes them make miniature versions, like a miniature razor. Exactly right. But then I guess there must have been a point where you're, when you're thinking, wait a minute, I'm focusing on the wrong finger.
Like, why don't I, why don't I just sell the actual scooter like the life sized version? Absolutely. For the first time in my life, I was not going to be somebody participating in a craze. I had the notion that I could be the craze.
You know, that was it. I had this like, like, why should I make a knock off essentially of a razor scooter? I, you know, knock off is a not a very nice word. Like my scorpion yo-yo's weren't really knock off.
They're innovative blah, blah, blah, but they were still just participating in a craze, not owning a craze. Right. Right. Okay.
So you decide to sell the actual scooter in the US and from what I gather, like to get the ball rolling on this, you connect with two guys who will soon eventually become their business partners, starting with, there's a guy in LA is getting Robert Chen. And who exactly was Robert? So he was an inventor and he was doing folding bikes that he invented. So he had a warehouse in Cerritos, which is where headquarters is now, and also was getting interested in, you know, helping, you know, with the razor scooter business because it was just going crazy in Japan already.
Geno Si. I'm sorry. Geno Si. Sorry to introduce him, a genius, amazing human being, wonderful human being too, who was the inventor and the creator and the original razor scooter guy.
Right. Geno had been an entrepreneur for, he and Robert are older than me and they had been entrepreneurs for longer. He didn't waste time going to medical. I mean, law school.
And you know, so they knew business. He had maybe 10 different companies at that time. He was, he was a wealthy man already. So what, I mean, why would, I mean, you already had some experience clearly with the yo-yos and the pogs and the, the, the, the, the fingerboards, how did you convince them to give you the license?
No, this is a great question. I mean, this is, this is like an amazing part of like how this happens. I mean, basically it was based on trust and Robert is like, I want it, it's hard to express how good a person and honest Robert is and Geno too. And we all, and I like to think of myself that way too.
And we got, and Robert and I had an immediate connection and you know, a lot of untrust really people were approaching him. You know, not with, and also they didn't have this grand vision. You know, the grand vision is stop what you're doing, which is a big risk on their part and own a brand and the brand is everything. I mean, I clearly like any number of people, I had my relationships with Toys R Us and Walmart and Amazon, any, any type of, you know, all the players and I could bring them to the stores.
But, but of course they were not selling to the stores. They were selling to distributors. And so I was going to get them wholesale prices instead of them selling it through a middleman who then sold it to Toys R Us or Walmart. So there was a big opportunity to capture more profit for them.
But the big concept was branding, you know, and, and building a company for the future. So instead of just being a white labeled, you know, scooter, we're going to call it razor. And you were going to get the license for North America globally. Globally.
And it wasn't a license. I went into partnership with JD. Yeah, it was a partnership. So you become a partner.
Did you have to buy into it? For not nobody had to put in Capitol in. My business is not to be in Capitol intensive, but you know, you'll appreciate this. You know, business people appreciate this.
A business of this size that we formed would ordinarily require a lot of capital, but we were in very unique times and it's exclusive to crazes. But these Toys R Us and Walmart were paying COD for scooters to me. Wow. You would get paid on delivering not 90 days later.
Not 90 days later, not five days later. Wow. How? How?
And that's, I never could believe it, but that's how I financed the company. But this is before you, when you, I mean, when you got, when they agreed to work with you, you still have to pitch it to Toys R Us. So what did you go? Where was Toys R Us headquarters at the time?
New Jersey. So did you fly to New Jersey with one of these things? Absolutely. Yes.
And right away, they were like, we're in? Yeah. No, this is the biggest craze. Like, and maybe they were already being sold by knockoffs, even faster than razor could get into the market in the US.
They might have been being sold in like convenience stores in LA, you know, just like the Pogs. Like they're in, and certainly as it progressed, it got to the point where you could go to a pizza shop and they'd be selling knockoff scooters. D'well. Not razor scooters.
Right. So your pitch to Toys R Us, we get these in fast at scale. That's right. We've got the manufacturing capacity from the original.
You don't have to deal with these knockoffs anymore. Right. Yes. And Toys R Us says, all right, we're going to order these.
We're going to put in order, we want them in all of our stores. Absolutely. How long between the time that, that, that you get, you know, the green light until the time they're actually delivered was it quick? Yes.
I think they were like, no, like a month. Wow. Yes. They were just cranking them out.
Yes. Yes. In anticipation. I think they were just cranking them.
They could just put razor on all of them and ship them to me and I would ship them to Toys R Us and the other retailers. Did you need a lot of employees in the US to make this happen? I immediately scaled up to a real company from three, I had three employees selling finger boards and I put together whole team. Like I had a, you know, a president, I had vice president sales, marketing, just a, the skeleton but you know, customer service, every kind of, and I didn't even know, honestly, I had no idea what a company looked like.
Like I didn't know that you needed a marketing VP or a finance VP or a sales VP. I had no idea. I just thought, oh, you just do it all yourself. But that's not it.
And you're eight years into doing this kind of work. No, I'm only like doing like serious, you know, it took me a long time to get from, you know, making children's books to actually doing the POCs. Right. You know, that was a, and then from the POCs, it was probably just three years.
So now at this point, do you rename the company? Yeah. So you create a completely new entity. Correct.
Razor, you razor USA? Yes. Okay. With real like experience people, you know, in real jobs and me.
Okay. And how, and how much were, was each scooter going to sell for? The scooter sold for retail at $100 for the, and immediately I came up like, I was like, and really incredibly quickly with all like good, better, best, classic, like just because I'd already been in business a little bit. So it went from like a $100 retail for the base model to like $140 for one with some parts to it, like a suspension or really bar, all kinds of, you know, little, like we had the A, the A2, the A3, and we were golden.
So I, from what I understand, it's around June of 2000 when they start to get sold in the US, the razor scooters. Yes. And I mean, craze is an understatement. Yes.
What happened? So I was selling a million scooters a month. And the get go from the get go just because they were at Toys R Us and Walmart or where else. Yeah.
Target, I think, sharper image. I mean, everywhere, everywhere, you know, people, places that would normally all the sporting goods stores I sold to, Dick's Sporting Goods, Sports Authority, you know, I don't even, it's so hard to, you know, it's like, you know, Beanie Babies or, you know, cabbage bats kids at the time when, you know, parents are scrambling for them and can't get them. It was ridiculous. It was once in a lifetime experience for me and just once generational sales.
Why were these so popular? What's your theory? Why did, why was there such a craze around these things? Like a good question.
I mean, I sort of take these things on face value, but scooters have always been popular, but these were small, made out of aluminum, so super light. And they had ball bearing, you know, wheels from roller blades. And that is made them much better than the old fat better. It's sort of like the brain, like a technological improvement.
They were aesthetically beautiful, which isn't always the case. They were culturally, they were used by adults and children. That was, I think, influential. Adults could talk about them and ride them in a way that like yo-yos were never used by adults.
So it had a broader appeal, you know, and it had something to do with, you know, the internet coming and they were used in Silicon Valley, you know, in warehouses and, you know, we had people would use them like they'd fling them over their shoulders and unfolded. That's right. There was this vision of future transportation where adults would be riding scooters. That helped popularize it in local country.
There was a, my favorite thing, a cover of the New Yorker of a guy riding a, you know, razor scooter and then another man riding a tricycle. You know, just infuse the culture in a way that like yo-yos didn't turn other, other craze has happened before. Sorry. So this is like the year 2000.
It's going nuts. Yes. And you're selling a million a month. Yes.
And just overwhelmed. Yes. Just totally overwhelmed. But, but this sounds like it was different that this was not going to be a flash in the pan.
This was going to be lasting. Did you feel that way? I had no idea. You know, like probably in the back of my mind was thinking, how long is this going to last?
Honestly. Yeah. Yeah. Okay.
So what I don't understand is, I mean, you've got this thing, it's selling like crazy in the summer of 2000. Where's Mattel? Where's Hasbro? Why aren't they jumping on this and just cranking these out?
They can't move that fast. This is essentially the answer. It's just too fast for them. And also they're probably wise.
They're like, wise, but incorrect. They're like, oh, this is going to be over by before we could get into it. So we'll be able to sell any, right? And what, when did the copycats start to come?
No, they were there at the beginning. Okay. They were. Because they knew.
And that's right. And they're quick acting. Yes. And did you have, I mean, I remember, you know, I've written razor scooters and like it had the fender on the back that was the break, for example.
So was it a patent? Was it? This was where my legal training came in Hamney. But yes, we had a patent and that could also be a reason.
But I'm not sure that other bigger companies didn't get involved because they were aware of our patent. We certainly publicized it right away, but mostly people ignored our patent, you know, the fact that we had a patent. And this is already the beginning of like, you know, Chinese factory starting to just crank out copycats of products. Absolutely.
So you have an option here, you can just ignore them and just really double down on your brand or you could go after them. I think you chose to start to sue them. We did. We did a major lawsuit.
And this is in 2000. In 2000. And did the litigation instantly stop their sales? Like did you have an injunction or?
We prevailed quickly. I believe we got a preliminary injunction. I believe that the lawyers were great and we were able to have an injunction against everybody. Did you, but did it eat into your sales?
It did not. I sold as many as I could manufacture during the time I was selling them. So I couldn't have sold any more than I did. But they sold a lot and helped cause the thing that always happens, which is the sales completely stopped on a dime.
Wait, how? What do you mean they stopped? It stopped when? They stopped in spring of.
The spring of 2001. Yes. They stopped on a dime. I could not sell a single scooter out of my warehouse.
Wait, so in June of 2000, you were selling a million a month? Yes. Through the rest of the year. Yes.
You're selling a million a month at least. Yes. And in the spring of, so like by March of 2000, January of 2001, you couldn't sell one that's the sales stopped? Yes.
It makes no sense. It doesn't make sense unless you understand crazes. It happened to me so many times, which means, so this is how it relates to the knockoffs. They were also selling at the same time.
So between the two of us, we sold a scooter every single kid in America. Yeah. Literally, everybody between the age of five and 11 or 12 got one. Like 10 million scooters, maybe more.
Maybe 15 million. Yes. Maybe four. Wow.
And so I maybe only had a third of the market, believe it or not. Others were cheaper. I was at $130. They were a lot of scooters sold.
And no matter how many times the retailers go through this, no matter how many times I went through this, everybody's thinking to themselves, this time is different. This time it's going to sell a million a month for the next three years. And they can't even just do simple math, but there's not that many people. Right.
And so as much as I was trying to tell everybody in my organization, we can't be keep ordering scooters, we still had like a million scooters in the warehouse for the next month sales, which then we're zero. Okay. By the spring of 2001, what are retailers just stopped? Toys R Us, stocks, or nothing?
Yes. Nothing. They've gone from we will pay you whatever it takes to we don't want these. This was the olden days.
You know what they said? They said, we want you to take all these back. We've got too much inventory. And what did you say?
We said, no. We had only room in our warehouse, which has a million scooters in it, but it was a major conflict that I had. It was my first hardball experience with retailers where they're already paid you for them. Right.
They already paid us for them. Yeah. I mean, my reaction was because I am, I mean, of course I'm struggling to do everything I can, you know, it's sort of like after the pogs I tried to make keychains. So I'm trying to think of anything I can do, right?