← How I Built This with Guy Raz
How I Built This with Guy Raz
Carlton Calvin: Razor. The wild rise, collapse, and reinvention of a mobile toy empire.
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A
Wondery subscribers can listen to how I built this early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. I love traveling with my family. We did an awesome trip this summer and we discovered so many cool things and one of the things that made the trip so special were the Airbnb experiences we did immersive tours, cooking classes, a chance to get coffee with a world class barista, even a meetup with a renowned chef. I had so much fun on those experiences that I decided to host my own Airbnb Original Experience in San Francisco. It's called the Reinvention Lab and it's designed to help you think about how to unlock your next big move in your career or even in your life. I'll help you discover your own story in ways I do on this show with my guests and attendees will get a chance to take a deep, deeper dive with me on so many lessons I've learned from this show, lessons that have transformed how I work and think about the future. So come join me in San Francisco and take your idea to the next level. To learn more about my Airbnb Original Experience, sign up for an Airbnb account and head to airbnb.com guy and I'm excited to see you there. Listening on Audible helps your imagination soar. And no matter what you like, Audible's Romance collection has something to make you swoon. Here's your invitation to have it all. Find a book boyfriend in the city and another on the hockey field. Or if nothing on this earth touches your heart, you can always find love in another realm. Hear modern rom coms from authors like Lily Chu and Ali Hazelwood, the latest romantasy series from Sarah J. Maas and Rebecca Yarros, and Regency favorites like Bridgerton and Outlander. And that's only the beginning. Audible has an incredible selection with over 1 million audiobooks, podcasts and audiobooks Audible originals all in one easy app. And you can enjoy Audible anytime while doing other things. Household chores, exercising on the road, commuting, you name it. Audible makes it easy to drop into your fantasies during your everyday routine without needing to set aside extra time. There's more to imagine when you listen. Your first great love story is free. When you sign up For a free 30 day Audible trial, visit audible.com built if you've started your own business, you know just how many challenges there are, big and small. I mean, look at how I built this building. This show came with a lot of trials, late nights, very, very early mornings. But even though There were challenges getting started. There is something that makes setting up a new business easier. Getting connected with AT&T business. It doesn't matter what your business is dealing with, AT&T business helps to make it much, much easier. And that's the point of a provider in the first place. Making building your dream easier. Wake up to the power of ATT business@business.att.com that's business.att.com Wait. So in June of 2000, you were selling a million a month?
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Yes.
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A
And January of 2001, you couldn't sell one. The sales stopped?
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B
Yes.
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A
Doesn't make sense. It makes no sense.
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B
It doesn't make sense unless you understand crazes. 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. Yeah, 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.
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A
Welcome to How I Built this. A show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz. And on the show today, how Carlton Calvin helped turn a craze into a classic toy and built a massive company around scooters, hunting hoverboards and bikes. Razor. In the summer of 2000, kids all across the US couldn't get enough of one thing. Scooters. But not the clunky ones you might remember. These were sleek, made from aircraft grade aluminum. They had polyurethane wheels that glided far and fast. And the scooter was compact enough to fold up and carry anywhere. They were called Razor scooters. And within months, demand was out of control. A million scooters a month 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 RZR in the US and he knew how to make it a craze. Because he'd been chasing toy crazes, raises for years. He tried yo yos. He sold fingerboards. He was in the pogs and slammers business. Carlton understood something important, and it was almost intuitive. Kids are loyal to a toy one minute and then abandon it the next. And his business was all about timing. Spot the craze, 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 RAESR 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 schoolteacher, and his dad was an entrepreneur who started out in direct mail. Carlton went to law school, but he hated it. So in his early 30s, he decided to pursue another interest, becoming an entrepreneur himself.
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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, like, impressionists and retell the story in their style. So it might be Van Gogh told the story of Puss in Boots, you.
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Know, and you'd find an artist to kind of paint.
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I found really great artists who could paint in the style of these famous painters.
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Now, you could do all that on ChatGPT.
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B
Oh, it's terrible.
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You just say, paint me Puss in Boots in Van Gogh style.
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B
Yeah.
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And it would do it.
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B
Puss in Boots, for sure. Yeah, exactly.
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A
Yeah. All right, so you. 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. And you get a children's book. Okay, that's. Did you pitch this idea to anybody?
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B
I. So that the problem was I didn't understand business at that point at all. But I did get. I got a lot of meetings out in New York. It was very fun. I went into the big, beautiful publishing houses. And now I know that what you do when you have an ideal dad is you print up the books and you go to the book shows and you start selling them to the bookstores, and you build a teeny little company that eventually gets big. Did not understand that at that time, but while I was doing it, I was working with illustrators, and some of the illustrators were involved in this craze called Pogs and Slammers. And that's what got me interested in Pogs and Slammers.
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A
Okay, so let's wind back for a sec. You are pitching a fairy tale book idea.
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B
Yes.
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And you get interested in Pogs and Slammers, which we will explain what those are in just a second. Okay, before we do that. I know. I'm trying to understand the connection between pitching a book, a Puss in Boots with Toulouse Lautrec style artwork, and Pogs and Slammers.
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B
So the connection is the illustrators that I was working with were getting work as illustrators for the pox.
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A
I see.
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And they said, this thing is going crazy.
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Okay, let's. Let's pause and explain what these are. These are. They're like poker chips. Like wafer, sort of like cardboard wafer poker chips.
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B
Exactly right.
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A
That you would do what with?
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B
It's like the game of marbles. So POG stands for pineapple, orange, guava. That started in Hawaii and they would put. These are the caps that would go on a bottle and to keep it sanitary. So they're discs and it's just like marbles. One kid comes with five pogs and another kid comes with another five. They stack them in a stack and then there's something heavy which is a separate item called a slammer.
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A
What does it look like?
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It basically is a bigger, heavier disc. You throw it at the stack and caused the discs to flip over. And the ones that flipped over in your direction, you'd call one or heads or tails. And you'd then collect all the pogs that were in the.
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Ah, you would.
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Gambling.
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It's a version of gambling. And I remember this is in the 90s, just. I mean, I was already, you know, leaving high school and getting together, but I remember seeing kids playing with these. My little brother actually would. So this just went wild.
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B
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.
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A
All right, so you see, you're talking to 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?
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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 bogs 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 help, you know, just going along for the ride and you stop at the rest stops and they sell these paperweights with real scorpions embedded in plastic, you know, and they're like domes. And I looked at it and my. I got an idea which was you could make a slammer, one of these bigger discs. I bet I could embed a scorpion in clear plastic and kids could throw it at these disks.
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So the scorpion slammer. Yeah, the real scorpion slammer, inspired by the scorpion paperweight.
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B
That's right. Called Stinger. Stinger was my brand name.
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Okay, so you're. So this is like a light bulb moment that goes light bulb moment on this road trip. And. Okay, but now you've got to find somebody who is going to. First of all, you gotta get the scorpions and then you gotta figure out how to embed them in plastic. And then you gotta find somebody to make it for you. So let's break this down a little bit. What did you then do?
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B
So I turned the paperweight over and I saw they put their brand, 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, be no problem. I call 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 100 scorpions in a little jar of alcohol. Came in the mail or. Yes. And I went into my garage. I was renting a house in Pasadena, Went into the, you know, from 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 a little plastic disc.
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A
And so what would you do in your garage? Were you like melting plastic and pouring it into mold?
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B
Oh, it's so. It's so cool. First of all, I did all the reading I could and I cleaned. Went down to the Natural History Museum in la where they actually embed specimens in plastic. And I talked to them and I checked out a book from the Natural Library on embedding specimens in plastic. But of course, they're not making. There's a. There's a couple problems. One is I wanted mine to be shatterproof and like the globes and other things are not Shatterproof. So I did research on materials. I called, actually, industrial chemical companies in LA and arrived at polyurethane as the kind of plastic that wouldn't break. But all kinds of problems, just like you might imagine. The first problem was, you know, scorpions. If you don't dry them out, took me a long time to figure this out. They 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.
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Just dry them out.
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Dry them out under low temperatures, under low temperatures, light bulb temperatures. And then I'd pour the rest of the plastic on top. And that's how you got a disc.
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A
Wow. So it's. So, all right, so eventually, I'm assuming you figure out how to make this.
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Six months. Yes.
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A
Okay, six months. So you successfully figure out how to embed a scorpion in polyurethane as a slammer for pogs. And. And then what?
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B
This is when I started to behave like a regular business person. Somehow, gradually, I learned about business. I went to a toy show, the Pomona Toy show, which, you know, back in the olden days, there used to be small toy stores. And in order to buy toys, toy stores would go to these toy shows. There was one in Pomona, a major one in the west for the West Coast. And I rented a corner of a booth, I mean, like a tenth of a booth. And I had one aquarium with this all total of six scorpions that I made that I'd ever figured out how to make in this, in a little aquarium. And I was, you know, talking to people. People were walking by, and a guy walked by who was a. Happened 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. If you don't leave today and you sign an exclusive contract with me, I'll buy 200,000 of these at $3 apiece.
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A
Who was this guy?
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Mickey? He had a. He had a warehouse in commerce. Big, big toy distributor, most of toys. You know, there was a whole. There's a whole business back then of importing toys from China that were kind of unbranded and like talking parrots and all kinds of stuff. He. And he would do that. That was his job. But, you know, the. The. The pog and slammer business was again, an open system, and everybody was Getting into it. And he was in it. In it too.
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A
So he said he, he loved these so much. He was like, I want an exclusive deal. I'll order $200,000. These at what price?
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At $3 apiece. So $600,000 was my first sale ever in business.
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A
And. And he was going to manufacture them?
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B
Nope.
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A
I said, he needed you to figure that out.
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Yeah, I gotta figure him out. And I didn't have any money, so I said, but did you even know.
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That you could make.
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B
No. I mean, absolutely not.
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You know how much it was gonna cost? It might have. It might cost you a million dollars. You had no idea?
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I had never bought a Scorpion before. I knew a little bit about how much the plastic costs, but I figured, you know, but, but that was it. That was my only cost that I knew. But I wouldn't even, even at that age, it's just so hard to remember how naive I was. And I didn't even understand what margin was or how much you need to manufacture something. So I just went ahead at that point. But I didn't have any money. So believe it or not, the world is a great place. He wrote me a check for $75,000 that day.
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On the spot.
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On the spot. On my face.
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As a deposit.
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As a deposit. So that I could open up a factory trying to figure out how to make them.
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So all right, so you get this deal for.
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Yes.
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It's amazing. It's amazing that a scorpion embedded in polyurethane could. But yeah, I mean these slammers were going, they were crazy. Kids were buying these cardboard pogs and the slammers.
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I know what 10 year old boys like is really the answer. It's just like irresistible.
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A
How did you develop that talent?
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I think that's inborn. And that, that is like. The secret is that I didn't stray too far from what I am. Like I am a 10, 10 year old boy. My favorite story is I got into trouble while I was a law clerk because I snuck into my judge's chambers in the middle of the night because his, he had the most powerful computer to do video gaming on. You know, I just have a 10 year old boy's mind for the longest time. And so I have a sensibility about, you know, naughty, dangerous things or like, like scorpions that, that boys like.
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A
Okay, so you, so now you've got a $75,000 check, you're in LA.
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B
Yes.
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A
How are you gonna make these, how are you gonna make 200,000 of these things?
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B
I mean, I didn't know, so. But I began to go look for a warehouse near my house in South Pasadena and where I could set up a factory. But the bigger problem was I immediately called Mac and said, I need 200,000 scorpions. And they said, no, no, you completely misunderstand the scale of our business. Like, we go out with our kids at night in the desert with black.
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A
And pick up scorpions.
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B
Yes. And turn over rocks and grab scorpions. Like I could maybe eventually get you a hazardous job. It is a hazardous job. Fun, but hazardous.
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A
So they're saying to you, hey, we can't give you 200,000 scorpions. It's impossible. So what, what do you. I mean, this is what, this is.
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Like 1992, 1991, 1995, I think.
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95. All right. So I mean, really kind of pre Internet. I mean, Internet's around, but not really.
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B
It was definitely pre Internet for me. Like, I had no notion of Internet or email at that time.
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A
So what are you going to do? You got to get 200,000 scorpions quick.
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B
So I had a Chinese friend and they said, we eat scorpions in China or they eat scorpions in China. And I figured if they're going to, there's a lot of people in China, if they're eating scorpions, there's a lot of scorpions. There's got to be a lot there. So I, I went down and at that time there was something called the Hong Kong Trade Council in downtown Los Angeles. And I went physically down there and talked to them and they gave me. And again, this was at the early days of China turning into a market. And they had, you know, they had people who were importing products from China on a list and they gave me hand, you know, a printout, you know, of a, with 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 me scorpions, but he did.
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A
Wow. And obviously these are dead scorpions are gonna be sent.
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B
Yes.
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A
And it, but just out of, just outta curiosity, what was that gonna cause a problem or challenge? Like, is it hard import 200,000 insects.
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Into 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, 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 eat them in China. That's how they transport them? Yeah, yeah. No, I, I, I did. Nothing ever happened with customs with the. That I remember.
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A
So you found somebody who was going to enable this and, and do you remember how much she was per Scorpion?
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B
Yes. And of course, a little bit. Interesting. I think they started at, like, 7 cents a scorpion. But as I got more popular and I wanted to order more, the price rapidly increased.
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A
Wow. So, okay, so it started at 7 cents for 200,000 scorpions. And then, and then who was going to. You get the Scorpions, but who was going to manufacture the discs?
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B
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, In, In Southern California in, like, a warehouse.
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A
You. A warehouse? And you put what in there?
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B
Like tables?
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A
You were going to hand make 200,000 of these?
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B
We handmade 200,000 in America.
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A
How is that possible? Like, you hand poured the polyurethane and.
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B
That's right.
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A
You just hired a bunch of.
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B
I had, like, 75 scorpion arrangers. And then I took bakery racks and converted them into makeshift ovens with light bulbs with, like, insulation on the outside of a bakery rack. And I would stick bakery trays in there of scorpions. It was wild, you know.
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A
All right, so you, how long did it take you to make 200,000 discs? Do you remember?
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B
It probably took three months.
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A
Three months to fulfill this order. And you deliver it to this guy?
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B
Yes. You know, a bit at a time. Yes. As they came off the rack.
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A
And where is he selling them?
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B
All around the country.
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A
Just a toy store?
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B
Yes. And everybody, a lot of people knew. Well, toy stores everywhere, magazine shops. I mean, it was a craze. So they had these, you know, pogs and slammers almost at newsstands and anywhere.
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A
And how. And I'm assuming these, these slammers did well.
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B
They did great. Everybody knew about the scorpion slammer, and it said stinger on the side. I had it engraved into the mold, so it was really cute.
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A
And was that the name of your company, your business? Did you file, like, an llc?
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B
No, it was Small Minds Press.
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A
Oh, so it was still part of.
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B
The original, I mean, of the idea. I had an LLC that was all set to make children's books.
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A
Books?
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B
Yeah.
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A
Okay. Small Minds Press was making these. So now you have. You're like, you get a taste of what it's like to have. Cool. And did he order more? I mean, was that it? Just 200,000.
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B
So this is. And then the day I delivered the last scorpion, the pog craze collapsed. They're like, nobody. Nobody was buying pogs and slammers in. Not even.
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A
It just stopped.
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B
It stopped. The whole industry shut down immediately, like, in a matter of hours. It seemed like.
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A
It's wild. It's. It. It was like the hottest thing.
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B
Yes.
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A
And you probably, you know, cleared. Your margins were probably pretty good.
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B
Yeah.
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A
You probably cleared, like, three, 400 grand on that.
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B
Maybe. Yeah, maybe $200,000. Yes.
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A
Okay.
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B
Yes.
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A
But that was it.
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B
Yeah. But of course, I was naive, and I thought, oh, this goes on forever. This is my first craze, you know, So I. I'm saying I'm selling, you know, 75,000 scorpions slammers a month. I need to order, like, a few hundred thousand more Scorpions to be ready to. And that. And the price of the scorpions went up, so all my profits were tied up in, you know, my second order of Scorpions.
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A
Oh, I see. So you basically took the cash and ordered more as you. As you would.
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B
Yes.
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A
But you didn't. You could not sell those.
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B
Nope. Zero sales.
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A
So were you left with a surplus of Scorpions or slammers or both?
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B
Yeah, So I had Scorpions. Lots and lots of Scorpions and lots and lots of employees that I was very sad and didn't want to let go.
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A
How many Scorpions did you have?
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B
Like, a couple hundred thousand at least.
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A
What did you do with them?
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B
So my. 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. 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, you know, back in the market where I saw Max paperweights. I was in, you know, Arizona selling scorpion keychains, you know, by the hundreds. You know, was a really sad moment for my career. But while I was in the process of making these scorpion keychains and anything else I could think of with a scorpion in it, I was in Pasadena, and I walked into a shop, and at, like, a random shop was selling Yo Yos. And I'm like, wow, that's kind of weird.
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A
Weird because yo yos were like, a 50s thing.
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B
Yeah. Or just like, it's not a toy shop. You know, that that's a good sign for a craze. Like. Yeah. I didn't explain that. Yeah, it was like a random. I don't even know what kind of shop it was at this point, but they had some yo yos and they had like a hundred dollar aluminum yo yo. And you know, it just like seemed like, wow, that's interesting. And then I got the idea. I could put a scorpion in a yo yo.
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A
In a yo yo?
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B
Yes, yes. Now that was at that point it was just, I didn't understand it was a craze, but I understood that it would just be like keychains. Like it would be another thing that I could be doing to get rid of my 200,000 scorpions. 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.
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A
I see, so you get the yo yos made in China and then you would, you would sort of put the polyurethane disc, basically the slammer.
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B
Yes, I actually. Into the yoyo Essentially, yes. I mean I 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.
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A
Wait, why? What happened?
- [27:08]
B
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 string automatically without any talent. That is the essential move of yo yodom. 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.
- [27:36]
A
A sudden every kid wanted a yo yo.
- [27:38]
B
Yes. And there was. That's exactly right.
- [27:41]
A
But you were not making the sleeper yo yo. You were just making a regular yo yo.
- [27:45]
B
But again, I wasn't making the original pod, but I was involved in a major craze that's sweeping through the culture again. 10 year old boys. And I went to like there was a 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.
- [28:11]
A
So how did you have, I mean, with the pogs and the slammers, you had a guy who bought, you know, who bought them from you and then distributed them. But now you had the yo yo. So I'm assuming you had some connections in the industry at this point where you could find somebody willing to buy, buy them and distribute them or did you?
- [28:29]
B
It was, you know, I just was learning how to be in business. So at this point, I personally contacted the buyer at the science store. And then somebody told me that you can't do all these sales yourself. You know, you can't expect to do well if you're just going to call the buyers at the major stores. You need a. You need an organization, and you need. You need sales reps, essentially. And I hired a sales manager, and that's what transformed my business.
- [28:58]
A
Yeah. So you hire a sales manager to basically go directly to these retailers.
- [29:02]
B
That's right. And actually hire a group of reps that would go to all the retailers in the country. He put a nationwide sales network together for me overnight. Basically. Sales reps know people all over the country. And so I. 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. My first big customers, and I sold millions of scorpion yoyos globally.
- [29:31]
A
Wow.
- [29:31]
B
It was crazy.
- [29:32]
A
And Toys R Us still, in the late 90s, was probably one of the biggest, if not the biggest distribution channel.
- [29:40]
B
Absolutely. I think for a long time, they were my biggest customer, even for the raid scooters and stuff like that.
- [29:46]
A
I remember as a kid in the 80s being taken to Toys R Us, you know, and it was like magic. You know, it was just a magical store. Wandering through those aisles and looking at all of the toys, and it was like one of the great. That and a Happy Meal at McDonald's, like, were two, and I didn't get them very often. It was just amazing. Amazing.
- [30:06]
B
Yes. And it's a great sadness that we don't have a specialty toy store nationwide anymore.
- [30:13]
A
All right. So you get these yo yos, these scorpion yoyos, and what, like all of a sudden you're basically. Your gamble on all these scorpions pays off.
- [30:22]
B
And I have to order more. Absolutely. I have to order many more. I have to order millions of scorpions. And the price keeps going up with the Scorpions. And I have these. All these employees and still making them.
- [30:32]
A
In a warehouse that I could never.
- [30:35]
B
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.
- [30:51]
A
Because you knew that the craze would end.
- [30:53]
B
Yes, that. That essentially, with these crazes, eventually my theory is everyone gets it. You don't. You can't sell, you know, infinite number of yo yos to the same people, essentially.
- [31:07]
A
So already once those, those yo yos went and they sell. They sold well.
- [31:11]
B
Extremely well. Order. Reorder. Reorder. Reorder. Yep.
- [31:14]
A
So you were like making pretty decent money already.
- [31:17]
B
Yes, at that point I was on paper, making lots of money, more than I. Way more than I would be as a lawyer.
- [31:26]
A
Right.
- [31:27]
B
And I'm very grateful to my wife for her patience because she was a lawyer. That meant I could reinvest all the capital to keep the business growing. So I didn't really. Wasn't really able to take out a big salary or any salary, really.
- [31:42]
A
All right, so you are, 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.
- [31:52]
B
Absolutely.
- [31:52]
A
And what were you doing? Were you just reading, looking like going, I don't know.
- [31:57]
B
I don't know. I do. Honestly, I don't know why. This is part of my personality. Like, I don't know exactly why, but I'm just, just keeping. The only way you can describe it is keeping your eyes open and talking to everybody and seeing what's happening. And somebody I met introduced me to somebody who was selling something called fingerboards.
- [32:21]
A
Oh, yes.
- [32:22]
B
And people know them today as tech deck.
- [32:28]
A
Yeah, they're like little skate. They're like little skateboards, that.
- [32:31]
B
Plastic miniature skateboards. That's right.
- [32:33]
A
And you use your fingers to like, you know, play with them. I remember my nephews used to play with them.
- [32:39]
B
Yes, exactly right. And they still do. It's still a. But. But this was a very, again, Southern California, very organic movement. First, you know, it was just kids doing it with cardboard cutouts of skateboards. Then the person that I met had the idea to brand them. He had arrangements with all the skateboard companies to put the branding of the skateboard in the fingerboard, and they were called 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.
- [33:16]
A
Right.
- [33:16]
B
And I did. So we struck a deal and I manufactured them.
- [33:21]
A
And these are just finger skateboards.
- [33:22]
B
Finger skateboards. At first this was 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 that 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.
- [33:57]
A
And where were you manufacturing these China?
- [34:00]
B
The guy who made the yo yos was my connection and he started to make all this stuff for me. It was again, they were flying off the shelves. And I had, of course, the original brand name, which was Fingerboard Tactic, 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.
- [34:22]
A
This is the company's called Tech Deck.
- [34:24]
B
Yeah, it was called Tech Deck. Now it's owned by Spin Master, who are good friends of mine.
- [34:28]
A
And they basically kind of copied the idea.
- [34:31]
B
Basically. They did, yes, absolutely.
- [34:33]
A
And so, and, and so what happened? I mean, you had this pro, these products, did they kind of take your market share?
- [34:40]
B
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. And, you know, it was really, so. It was really dirty, actually, in my, my understanding of the world.
- [35:05]
A
All right, so you're, you're push. Kind of pushed out of this business a little bit.
- [35:10]
B
But I also knew that whatever the situation is, it's not going to last forever because it's such an amazing craze.
- [35:17]
A
Carlton, let me ask you a question.
- [35:18]
B
Yes.
- [35:18]
A
Did you ever get, like, already at this point, were you thinking in your mind, I have got to find something that is more long lasting, like a more enduring toy?
- [35:29]
B
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.
- [35:53]
A
You know, the whole business.
- [35:55]
B
Yes, absolutely. It was terrifying.
- [36:01]
A
When we come back in just a moment, Carlton goes through yet another boom and yet another bust, this time with the razor scooter. Stay with us. I'm Guy Raz, and you're listening to how I built this. I love traveling with my family. We did an awesome trip this summer and we discovered so many cool things. And one of the things that made the trip so special were the Airbnb experiences. We did immersive tours, cooking classes, a chance to get coffee with a world class barista, even a meetup with a renowned chef A I had so much fun on those experiences that I decided to host my own Airbnb Original Experience in San Francisco. It's called the Reinvention Lab, and it's designed to help you think about how to unlock your next big move in your career or even in your life. I'll help you discover your own story in ways I do on this show with my guests and attendees will get a chance to take a deep, deeper dive with me on so many lessons I've learned from this show, lessons that have transformed how I work and think about the future. So come join me in San Francisco and take your idea to the next level. To learn more about my Airbnb Original Experience, sign up for an Airbnb account and head to airbnb.com guy and I'm excited to see you there. We all have moments when we could have done better. Like cutting your own hair. Yikes. Or forgetting sunscreen so now you look like a tomato. Ouch. Could have done better. Same goes for where you invest. Level up and invest smarter with Schwab. Get market insights, education and human help when you need it. Learn more@schwab.com ever had one of those afternoons where your brain just quits on you? You're sluggish, hangry, maybe even a little foggy? What if it's your glucose? See, glucose is an energy currency for your mind and body. When it's stable, you're on point. When it crashes, so can you. That's why lingo is so interesting. Lingo is a glucose wearable designed to help you connect the dots between your glucose and what you eat, how you move and how you feel. It shows your glucose data in real time. Instead of guessing, you see the impact of your choices. Maybe that healthy snack is actually sending your glucose on a roller coaster. Or that afternoon walk is the perfect stabilizer. It's about unlocking your consistent best all day long by truly understanding your body's unique responses. Get to know your glucose and learn about how to build healthy habits that work for you with Lingo. Designed for you by Abbott through November 30th. Use code GUY10 on HeloLingo.com to get 10% off a lingo plan. Purchase one use per customer. This offer cannot be combined with other offers, US Puerto Rico and UK only. The Lingo Glucose system is for users 18 years and older not on insulin. It is not intended for diagnosis of diseases, including diabetes. Individual responses may vary. 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.
- [39:37]
B
So I'm reading an article in the LA Times and there's an article about adults in Japan, in Tokyo writing 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 tac. You know, I'm going to be the guy that gets the razor scooter license to make miniature razor scooters. Because I, 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 J.D. you know, J.D. scooter Company, you know, that was making these scooters, invented the scooters.
- [40:27]
A
And these were making, they were making them in China.
- [40:30]
B
China.
- [40:31]
A
And they were called razor scooters.
- [40:33]
B
They were called everything. But they're the, when they started, they put a name on the ones that were coming directly from them, but they were Chinese factory. So they would make under, they were made under many different brands for, in Japan already. And already they were getting orders from other people. You know, I'm not the only guy for sure that once something is super hot in Japan that figures this is coming to the United States.
- [40:58]
A
Okay, but to be clear, your, your vision was, was not to import these, these, these ride on scooters. Right. It was to have the company that makes them make miniature versions. Like a miniature razor.
- [41:12]
B
Exactly. Right.
- [41:13]
A
But then I guess there must have been a point where you're thinking, wait a minute, I'm focusing on the wrong thing here. Like why don't I just sell the actual scooter, like the life sized version?
- [41:26]
B
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.
- [41:37]
A
Yeah.
- [41:37]
B
And that was it. I had this like, like why should I make a, a knockoff essentially of a razor scooter? I, you know, knockoff is a not a very nice word. Like my Scorpion yo yos weren't really knockoffs, yo, they're, they're innovative, blah, blah, blah. But they were still just participating in a craze, not owning a craze.
- [41:55]
A
Right, right. Okay, so you, you decided 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 your business partners. Starting with, there's a guy in LA is a guy named Robert Chen. And so who exactly was Robert?
- [42:15]
B
So he was an inventor and he was doing folding bikes that he invented. So he had a warehouse in Cerritos, which is where our headquarters is now, and also was getting interested in, you know, helping Gino with the razor scooter business because it was just going crazy in Japan already. Gino Tsai, I'm sorry, Geno Tsai, 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.
- [42:50]
A
Right.
- [42:51]
B
Gino had been an entrepreneur for he, he and Robert are older than me and they had been entrepreneurs for longer. He didn't waste time going to medical, I mean, 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.
- [43:09]
A
So what, I mean, why would. I mean, you already had some experience clearly with the Yo Yos and the Pogs and the, and the, the fingerboards. How did you convince them to give you the license?
- [43:22]
B
No, this is a great question. I mean, this is like an amazing part of how this happens. I mean, basically it was based on trust. And Robert is like, it's hard to express how good a person and honest Robert is. And Gino 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 untrustworthy people were approaching him, you know, not with. And also they didn't have this grand vision. You know, the grand vision is stop what you're doing, which is a big risk on their part, and own a brand. And the brand is everything. I mean, I clearly like any number of people. I had my relationships with Toys R Us and Walmart and Amazon. Not Amazon, Target, 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 building a company for the future.
- [44:42]
A
So instead of just being a white labeled, you know, scooter, we're gonna call it Razor.
- [44:46]
B
That's right.
- [44:47]
A
And you were gonna get the license for North America.
- [44:50]
B
Globally.
- [44:51]
A
Globally.
- [44:52]
B
And it wasn't a license. I went into partnership with J.D. okay, yeah. It was a partnership.
- [44:58]
A
So you become a partner. Did you have to buy into it for.
- [45:03]
B
Not. Nobody had to put any capital in. My businesses tend not to be capital 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.
- [45:28]
A
To me. Wow. You would get paid on delivery not.
- [45:32]
B
90 days later, not 90 days later, not five days later.
- [45:35]
A
How, How?
- [45:36]
B
They needed them, they wanted them. And. And that's. I never could believe it. But I. That's how I financed the company.
- [45:45]
A
But this is before you. When you. I mean, when you got that, when they agreed to work with you, you still had to pitch it to Toys R Us. So what did you go? Where was Toys R Us headquarters at the time?
- [45:56]
B
New Jersey.
- [45:56]
A
So did you fly to New Jersey with one of these things?
- [45:58]
B
Absolutely, yes.
- [46:00]
A
And right away they were like, we're in.
- [46:02]
B
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.
- [46:27]
A
Wow.
- [46:28]
B
Not Razor scooters. Right.
- [46:29]
A
So your pitch to Toys R Us is we get these in fast at scale.
- [46:34]
B
That's right.
- [46:34]
A
We've got the manufacturing capacity from the original.
- [46:37]
B
You don't have to deal with these knockoffs anymore, right? Yes.
- [46:40]
A
And Toys R Us says, all right, we're going to order these. We're going to put in an order, and we want them in all of our stores.
- [46:45]
B
Absolutely.
- [46:47]
A
How long between the time that. That you get the green light until the time they're actually delivered. Was it quick? Was it like.
- [46:55]
B
Yes, I think they were like. No, Like a month.
- [46:58]
A
Wow.
- [46:59]
B
Yes.
- [46:59]
A
They were just cranking them out in China.
- [47:02]
B
Yes, yes. In anticipation. And they shut down all these other customers so they didn't have to make them and slap all these other weird brands on them. They could just put Razor on all of them and ship them to me and I would ship them to Toys R Us and the other retailers.
- [47:16]
A
Did you Need a lot of employees in the US to make this happen.
- [47:20]
B
I immediately scaled up to a real company from three. I had three employees selling fingerboards, and I put together a whole team. Like, I had a, you know, president. I had vice, you know, vice president of sales marketing. Just 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. Nope.
- [47:54]
A
And you're eight years into doing this kind of work.
- [47:57]
B
No, I'm only, like, been doing, like, serious. You know, it took me a long time to get from, you know, making children's books to actually doing the pogs. You know, that was a. And then from the pogs, it was probably just three years.
- [48:11]
A
So now at this point, do you rename the company Razer?
- [48:14]
B
Yep.
- [48:15]
A
So you create a completely new entity called Razor usa?
- [48:20]
B
Yes. Yep.
- [48:21]
A
Okay.
- [48:21]
B
With real, like, experienced people, you know, in real jobs and me.
- [48:28]
A
Okay. And how. And how much was each scooter going to sell for?
- [48:33]
B
The scooter sold for. For retailed at $100 for the. And immediately I came up, like, in really incredibly quickly with all, like, good, better, best, classic legend, because I'd already been in business a little bit y. So it went from like $100 retail for the base model to like $140 for one with some parts to it, like a suspension or wheelie bar, all kinds of, you know, little. Like, we had the A, the A2, the A3, and we were golden.
- [49:04]
A
So I. From what I understand, it's around June of 2000 when they start to get sold in the US the Razor scooters.
- [49:12]
B
Yes.
- [49:13]
A
And I mean, craze is an understatement.
- [49:17]
B
Yes.
- [49:18]
A
What happened?
- [49:19]
B
So I was selling a million scooters.
- [49:21]
A
A month from the get go.
- [49:23]
B
From the get go.
- [49:25]
A
Just because they were at Toys R Us and Walmart or where else?
- [49:29]
B
Yep. 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 Sporting Goods, Sports Authority. You know, I don't even. It's. It's so hard to, you know, it's like, you know, Beanie Babies or, you know, Cabbage Patch Kids at the time when, you know, parents are scrambling for them and can't get them. It was ridiculous. It was once in a lifetime experience for me. And just Once in generational sales.
- [50:00]
A
Why were these so popular? What's your theory? Why was there such a craze around these things?
- [50:05]
B
That's 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 Rollerblades. And that is. Made them much better at scootering 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, influence. So adults could talk about them and ride them in a way that, like, yo yos were never used by adults. So it had a broader appeal, you know, and it had something to do with, you know, the Internet coming. And they were used in Silicon Valley, you know, in warehouses. And, you know.
- [51:03]
A
Yeah. People would use them. Like, they'd fling them over their shoulders.
- [51:06]
B
That's right.
- [51:07]
A
Unfold.
- [51:07]
B
There was this vision of future transportation where adults would be riding scooters that helped popularize it in local. There was a. My favorite thing, a cover of the New Yorker of a guy riding, 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. Or other. Other crazes happened before.
- [51:33]
A
All right, so this is like the year 2000.
- [51:35]
B
Yes.
- [51:36]
A
It's going nuts.
- [51:37]
B
Yes.
- [51:38]
A
And you're selling a million a month.
- [51:41]
B
Yes.
- [51:43]
A
And just overwhelmed. Just totally overwhelmed. But this sounds like it was different, that this was not gonna be a flash in the pan. This was gonna be lasting. Did you feel that way?
- [51:55]
B
I had no idea. You know, I probably, in the back of my mind, was thinking, how long is this gonna last? Honestly?
- [52:04]
A
Yeah. Yeah. Okay. So what I don't understand is, I mean, you've got this thing. It's selling like crazy in the summer of 2000. Where's Mattel? Where's Hasbro? Where are the big toy companies? Why aren't they jumping on this and just cranking these out?
- [52:19]
B
They can't move that fast is essentially the answer. It's just too fast for them. And also, they're probably wise. They're like, wise but incorrect. They're like, oh, this is gonna be over before we could get into it, so we won't be able to sell any. Right.
- [52:38]
A
And when did the copycats start to come out?
- [52:42]
B
No, they were there at the beginning.
- [52:45]
A
Okay. Because they knew and that's right.
- [52:47]
B
And they're quick acting. Yes.
- [52:49]
A
And did you have. I mean, I remember, you know, I've ridden razor scooters and like, it had the fender on the back. That was the brake, for example. So was it a patent?
- [53:01]
B
Yes. This was where my legal training came in handy. 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 just because they were aware of our patent. We certainly publicized it right away, but mostly people ignored the fact that we had a patent.
- [53:22]
A
And this is already the beginning of Chinese factories starting to just crank out, you know, copycats of.
- [53:29]
B
Absolutely.
- [53:29]
A
Of products.
- [53:30]
B
Yes.
- [53:30]
A
How so you have a choice. You have an option here. You can just ignore them and just really double down on your brand, or you could go after them. And I think you chose to start to sue them.
- [53:39]
B
We did. We did a major lawsuit.
- [53:41]
A
And this is in 2000.
- [53:42]
B
In 2000, in the fall.
- [53:45]
A
And did the litigation instantly stop their sales? Like, did you have an injunction or.
- [53:50]
B
We. We prevailed quickly. We. I believe we got a preliminary injunction. I believe that the lawyers were great, and we were able to have an injunction against everybody.
- [54:06]
A
But did it eat into your sales?
- [54:09]
B
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.
- [54:28]
A
Wait, how? What do you mean they stopped? Stopped when?
- [54:31]
B
They stopped in spring of the spring of 2001.
- [54:37]
A
Yes.
- [54:38]
B
They stopped on a dime. I could not sell a single scooter out of my warehouse.
- [54:41]
A
Wait, so In June of 2000, you were selling a million a month?
- [54:45]
B
Yes.
- [54:46]
A
Through the rest of the year, you're selling million a month at least.
- [54:48]
B
Yes.
- [54:49]
A
And in the spring of. So like, by March of 20.
- [54:52]
B
January.
- [54:54]
A
January of 2001.
- [54:55]
B
Yes.
- [54:56]
A
You couldn't sell one. The sales stopped?
- [54:58]
B
Yes.
- [54:59]
A
Doesn't make sense. It makes no sense.
- [55:00]
B
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 to every single kid in America who wanted one. Like, literally everybody between the age of, you know, 5 and 11 or 12 got one.
- [55:29]
A
Like 10 million scooters. Maybe. Maybe more.
- [55:31]
B
Maybe 15 million. Yes, maybe 15.
- [55:33]
A
Wow.
- [55:34]
B
And so I maybe only had a third of the market. Believe it or not, you know, and others were cheaper. You know, I was at 100 and $130. There were a lot of scooters sold. And no matter how many times the retailers go through this, no matter how many times I went through this, everybody's thinking to themselves, this time is different. Like, this time, it's going to sell a million a month for the next three years. And they can't even just do simple math that there's not that many people. Right. And so as much as I was trying to tell everybody, everybody in my organization, we can't keep ordering scooters, we still had like a million scooters in the warehouse for the next month's sale, which then were zero.
- [56:16]
A
Okay. By the spring of 2001, what? Our retailers just stopped ordering? Toys R Us stops ordering them.
- [56:22]
B
Zero. Yes.
- [56:23]
A
Nothing.
- [56:23]
B
Nothing.
- [56:24]
A
They've gone from we will pay you whatever it takes to we don't want these anymore.
- [56:29]
B
This was the olden days. Do you know what they said? They said, we want you to take all these back. We've got too much inventory.
- [56:36]
A
And what did you say?
- [56:38]
B
We said, no, we don't have any room in our warehouse, which has a million scooters in it. But it was a major conflict that I had. It was my first hardball experience with retailers where they're like, they'd already paid.
- [56:51]
A
You for them, right?
- [56:52]
B
They'd already paid us for them.
- [56:53]
A
Yeah.
- [56:54]
B
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.
- [57:05]
A
The.
- [57:07]
B
Pogs, I tried to make keychains, so I'm trying to think of anything I can do.
- [57:11]
A
Yeah, right.
- [57:12]
B
But not having had a lot of success with keychains, my impulse was to fire everybody. That was my impulse.
- [57:22]
A
Just basically kind of collapse the business and cut back.
- [57:26]
B
Yeah. Like, I. I could do it myself. Like, it would be me and Robert and a couple people.
- [57:30]
A
You were that concerned about the business surviving?
- [57:33]
B
Absolutely. I. Because I never had a craze that continued before. I never had a craze that continued before. And I never had a brand before. And I didn't understand what it meant to own a brand. I thought I just had the next yo yo or the next, you know, fingerboard and that it was just all over and that there was hardly any business here, you know, that I couldn't handle just by myself because I handled fingerboards and pog. You know, pogs by myself.
- [57:56]
A
So. So you are thinking about. And how many employees did you have.
- [58:00]
B
That at the time, probably 45 or 50. Yes. This is like the fourth time that my entire business has completely collapsed. And I'm like, and now I got all these people looking at me and like, okay, now come on, where's your next hit? But I don't think I'll be able to do it again. And I'm just a very, very frugal, you know, and not optimistic, skeptical person. And I just said, it's over. We should just save every penny we can.
- [58:29]
A
When we come back in just a moment, how razor scooters turn a corner after going electric. Stay with us. I'm Guy Raz, and you're listening to How I built this. The entrepreneurs I talk to always want to know what the future holds for business. Are rates rising or falling? Is inflation up or down? Maybe someday someone will invent a crystal ball. But until then, over 42,000 companies have future proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory and HR all into one fluid platform with one unified business management suite. There's one source of truth giving you the visibility and control you need to make quick decisions. With real time insights and forecasting, you're peering into the future with actionable data. And when you're closing the books in days, not weeks, you're spending less time looking backwards and more time on what's next. I talk to hundreds of entrepreneurs every year, and I hear from so many of them how NetSuite by Oracle has transformed the way they work. Whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. Speaking of opportunity, download the CFO's Guide to AI and Machine Learning at netsuite.com Bilt the guide is free to you at netsuite.com BILT netsuite.com BILt if you've shopped online, chances are you've bought from a business powered by Shopify. You know that purple shop pay button you see at Shopify checkout? The one that makes buying so incredibly easy? That's Shopify. And there's a reason so many businesses sell with it. Because Shopify doesn't just make amazing buying experiences for customers. They're also the experts in helping small businesses grow big. Stop seeing carts going abandoned and turn those sales into sign up for your $1 per month trial and start selling today. And@shopify.combilt go to shopify.comb built shopify.comb built hey, welcome back to How I built this. I'm Guy Raz. So it's early 2001. The razor craze has collapsed. And Carlton is ready to fire a bunch of people and manage the business by himself. But his partner Robert, he says no.
- [61:14]
B
He's just like, you shouldn't do this. You just have to have more faith that we'll be able to come up with new things and we should keep all these people. And you know, I really respect Robert so much and you know, again, for so many years we just had this partnership where we talk over everything and he. I'm not. I don't get set in my ideas. I think, like to think I think I'm open minded. And he has a lot of influence over me. And he persuaded me is really the answer. And I just did. I just kept going.
- [61:47]
A
Okay, before we find out what happened, what about the inventory that you had? I mean, you had all of this inventory. What was going to happen to that inventory?
- [61:59]
B
Really what happened was, so to be really candid is that Geno was a great partner and these scooters did not cost very much to manufacture. He owns razor with me, but he also owned the factory that made them. And he charged us a pretty penny for those scooters. And so we owed him a lot of money for these like leftover scooters. We'd already paid him for all the other scooters, but, you know, but for the leftover scooters, he said, listen, I'm going to, you know, help you with that. You know, you don't have to pay me the full price on those scooters. And so. But that came out of all of our profit, essentially. But he took a hit. We took a hit. And so I just sat on him. I sat on him. But, you know, after a certain amount of time, the retailers were able to work through their inventory of their extra inventory. And then they needed somewhere between 2 or 4 million scooters a year to keep going. You know, at that time, you know, there were 4 million new customers turning from 4 years old where they couldn't ride a razor scooter to 5 years old. So there was still all the new kids. So wonderful. They were not a flash in the pan. That's basically the answer. That's what happened.
- [63:30]
A
Yeah, because. So it was this craze, right? Yes. All of a sudden everybody had one. But really it was the beginning of a kind of a classic toy.
- [63:41]
B
Absolutely. Which is so rare. Yes, exactly right. It became a foundational part of childhood.
- [63:47]
A
And is you still sell them today.
- [63:49]
B
Yes. I mean, I think that, you know, to be just totally fair, our patent has expired.
- [63:56]
A
Yeah.
- [63:57]
B
And, you know, at lower price points, I'm more of a quality based, you know, higher end scooter, even at the basic $30 scooter. So I don't have the market share that I had of that product that I did originally. But everybody gets some form of the scooter that I.
- [64:17]
A
Right. Like you think about sort of foundational toys like a bike.
- [64:20]
B
Yep.
- [64:21]
A
A skateboard.
- [64:22]
B
It's even more than a skateboard because it doesn't take as much talent as a skateboard to ride.
- [64:26]
A
Yeah, yeah. But now you are in a category which is wheeled mobility toys.
- [64:33]
B
Yes.
- [64:34]
A
Right.
- [64:34]
B
Yes.
- [64:35]
A
This is different than the pogs and the slammers. And so now I'm assuming you're trying to find things that work within that category.
- [64:43]
B
Correct. And also for the first time, I had a brand. So when you have a brand, I began to think of brand extensions. So just commonsensical things. When we came up, you know, it was just like a theme, but that we would try to do what we did with the scooter, essentially, you know, which is look at the classic toys that young kids have, like, you know, power wheels or pogo sticks or. We had a lot of them and we would just razorize them. So we'd bring them out in shiny aluminum and high quality. Higher quality and some innovation. I always wanted to do something innovative with the product too. So, you know, updated versions of classic.
- [65:23]
A
Products like Big Wheels, which were made out of plastic originally.
- [65:27]
B
And we made it out of aluminum.
- [65:28]
A
Aluminum.
- [65:29]
B
And actually when we did it, the market was primed and accepting. It really was like anything with Razor on it had appeal. And so that item sold well. It wasn't a crazy hit, but it sold well.
- [65:43]
A
And it was basically an updated version of a Big Wheel, which is an updated version of a tricycle.
- [65:48]
B
That's right. Yeah. We called it the Scream machine. So the business was. Began to thrive almost immediately because both scooters began to sell again, like, you know, maybe after eight months or something. And people were buying this new. These new products from Razor. They were very supportive. Toys R Us support, supported. People believed in Razer as a brand and they were good products without, you know, being crazy hits. But of course, me as my personality, I'm looking for something magical always.
- [66:26]
A
And what was the next magical thing?
- [66:28]
B
The next magical thing was an electric scooter.
- [66:34]
A
So this is already in like, this is back in like 2005, I think.
- [66:37]
B
Yeah, very early on.
- [66:39]
A
I mean, this is before it was even on people's radar screens.
- [66:44]
B
Way before. Right.
- [66:45]
A
It was basically a battery powered scooter with a throttle and a brake, right?
- [66:51]
B
That's right. And actually the first iteration was really outside inventor. They made a battery powered motor that could mount on a razor scooter and that sold well. But it didn't take me long to, to realize that was not the way to sell an electric scooter. You don't want to just like bolt one on. You want to make it from the ground up as an electric scooter.
- [67:22]
A
And this really begins your, I wouldn't say a total shift, but a kind of a shift into a powered electrified ride on things like not just scooters, but then dirt bikes and electricity, like sort of ATV style vehicles, but that were not ATVs or dirt bikes that were thousands of dollars, but that were more like toys.
- [67:47]
B
Exactly. Right. This was transformative. This was explosive. Again, this. So the electric scooters, as soon as I put them out there, they flew off the shelf. It was great sales.
- [68:00]
A
And then. But you didn't, you didn't abandon analog things. There's a product that you guys brought bring out in 2006 called the Ripstick, which is, I still see them. It's like basically imagine two sort of platforms connected by a, by a rod and it's like a kind of a skateboard meets a. I don't know what. And it's. It like I, I've tried to stand on these things. I don't have the balance. But this thing, how did this thing come about?
- [68:28]
B
So this is, again, I was in my own neighborhood and all of a sudden I saw like five kids on something called the wave board. And I said, okay, this is a craze. So I called a couple of my people, you know, who sold into smaller venues, and he goes, yeah, this is crazy. And so I contacted the inventor and I said, you got to do it with us. We're going to make this a giant craze. And we did.
- [69:00]
A
And again, it was like the formula was, let's come up with something. We'll put it in Toys R Us.
- [69:05]
B
Yes.
- [69:06]
A
And Walmart. And so it was like, if you build it, they will come kind of.
- [69:09]
B
Absolutely. It sold itself. It was just out of control.
- [69:13]
A
When did that model start to shift?
- [69:16]
B
What do you mean?
- [69:18]
A
I mean, obviously Toys R Us isn't there anymore and Walmart and Target still sell toys, but it's somewhat different. I mean, was there a point where it, you couldn't just make a toy put it there and I think there.
- [69:32]
B
So there's a distinction, like if it's a craze that still works, very few crazes. So we also discovered television. And so we could take innovative items that were not organically growing like the, you know, ripstick was, that had an organic momentum, word of mouth that exploded into the culture and everyone had to have one. But we were coming across very good items that didn't have any organic momentum on their own. So they needed television advertising to get them going and through a very long phase of making wheel goods, which nobody had been doing and putting them on tv.
- [70:19]
A
But it sounds like by the time you start to release these electric versions, these are battery powered versions of little motorcycles and go karts and dirt bikes and then the ripstick that you start to. You really find a way to create some kind of stability in the company, the brand.
- [70:43]
B
Oh yes. The razor scooter was notoriously, you know, something that was created and lasted forever. And actually these electric motorcycles and scooters, they just keep getting stronger and stronger and stronger and they're not as easy to knock off as the scooter. You know, they're not. It's not so much the patent, but the actual technology in making them is quite challenging, you know, to do it well. And so that is, we have a very, very steady business on our evergreen items.
- [71:19]
A
Let me, let me ask you about, because I want to get into the, the really the other product that would also blow up called the hoverboards, which is not a hoverboard. It's not hovering like you think Back to the future. It looks like it, yeah. But it's basically like a segue without the handlebars.
- [71:34]
B
Correct, Right.
- [71:35]
A
And, and this, this is kind of begins around 2015.
- [71:39]
B
Yes.
- [71:41]
A
Before we get to that story, what were you doing about copycats? Were you still suing people who were knocking off your electric scooters and things like that, or were you just saying it is what it is and let's just focus.
- [71:55]
B
Yeah, it is what I mean, basically my patents on the scooters were expiring and, and it's. And people can't successfully. Haven't yet. So there's the measured pessimists in me haven't yet successfully knocked off the electric product.
- [72:13]
A
Right, okay. And your main sales channel was still the retail stores?
- [72:17]
B
Yes.
- [72:17]
A
The physical stores.
- [72:18]
B
Yes.
- [72:19]
A
When, when did that start to shift to Amazon and to online?
- [72:23]
B
You know, when it. The day Amazon started buying, we started to shift with them. We were very early on Amazon, but we had two dramatic shifts. The most saddest dramatic shift for Razer has been the loss of Toys R Us. You know, not only is it a loss from the kids perspective of a fantasy place to go, but they actually always carried our entire line. And when we came out with something innovative, they got way behind it, you know, and we could always rely on three big customers, Walmart, Target, and Toys R Us, if we're going to put something on television, that they would get behind it and support it. And now without Toys R Us, you lose a third of the triad. And we really lost a very significant part of our sales when Toys R Us went bankrupt and it was not completely replaced by the other people.
- [73:11]
A
All right, let's talk about the hoverboard. So this is a product that I guess is brought to you by an inventor or you discover it, and it's a guy named Shane Chen. And tell me about how you came across this product and also why you thought it was gonna just go crazy.
- [73:29]
B
So I had a really good relationship with Shane, and every year he would show me these wild and crazy inventions that he made. And I'm like, yeah, yeah, yeah. You know, I'm happy to keep showing me. You know, we could try it a little bit, but I don't know, it just seems too odd. And amongst the things that I kept rejecting was the hoverboard. And I kept saying, you know, it's too hard to use. You know, I can't. I can't ride it. And if I can't ride it, you know, I don't want to. I don't want to sell it, right? And then I had my incredible, you know, marketing guy who has been with me from the start. Ali. He. He even was like, he could ride anything. And he's like, this isn't so easy to ride. But then at some point, like, everything that is really going to be a phenomenon, it began to catch on on its own without my help, without anybody's help. And I said, shane, it's time to be in business again. And that was that. And he invented it. He had the patent on it, and we signed a deal. Now there was, you know, I had to, like, fend off, as I often do, you know, fend off other people who want to sell it. But I was successful, and I have a long relationship with Shane, so it wasn't impossible. And we got it, and it was like another incredible. It was like our peak year. It was the second major cultural event that we were involved in.
- [74:54]
A
Jamie Foxx, like, came out onto The Tonight show on one. At one point, Justin Bieber had one.
- [74:59]
B
Everybody, all the. It was again, a huge cultural phenomenon.
- [75:05]
A
So really, I mean, you were, you know, just expanding, constantly expanding your line. I mean, today you've got. So I don't need. How many, how many different products do you sell?
- [75:16]
B
I mean, we probably have, you know, hundreds of products, but I would say we still have a solid 50 or 60 different important items. Good items.
- [75:26]
A
Right.
- [75:27]
B
Yeah.
- [75:27]
A
And what is your best selling product today?
- [75:30]
B
The electric motorcycle and the electric scooter. I mean, in terms of dollars. In terms of dollars. And then the scooter obviously sells quite a bit too. So we're back to sort of Steady Eddy, you know, looking for our next craze. So the year after. Last year was quite good for us. And this year looks. Well, this year's another horror show.
- [75:54]
A
Because of terrorists.
- [75:55]
B
Yeah, because of terrorists.
- [75:56]
A
Because everything you make is coming from China, correct?
- [75:59]
B
Basically, yes. And we have a little bit of apparatus operations in Vietnam, but. But China.
- [76:04]
A
And so what does that mean for your business right now?
- [76:07]
B
I mean, it's. It was an unmitigated disaster. Like we were. I was literally, I have, you know, made money every single year. I was actually think, thinking we were going to lose money this year. You know, you're getting hot news. I, I suppose, I mean, I don't know who else you're talking to, but our prices are significantly higher at retail. We're not benefiting from it because it's really, you know, retailers who forced to raise prices because of the tariffs, but they're using it to pay the tariff and they don't pay us anymore. And our sales are going down. Their sales are good. If you look at their total dollar volume of sales, they've raised the prices. They're selling fewer units, but their overall dollar transaction is good. But our sales are going down. But not. We're not crashing, but it's a terrible situation.
- [76:59]
A
Yeah. And so what do you do?
- [77:02]
B
I mean, at first I've got a really great team and we just madly began to figure out how to ship from Vietnam or Vietnam essentially, or Thailand. We began to move everything until it was a pause and then we sort of moved everything back. We were just basically running around like our chicken with his head cut off, trying to respond to whatever happening next.
- [77:30]
A
What about looking for the next thing? Like, it's still part of your, like, ethos.
- [77:36]
B
It is part of our ethos, but this is like a very interesting time because I am looking to make some art at this point.
- [77:50]
A
So maybe Looking to sell the company.
- [77:52]
B
Well, not so much sell the company, but I want to pass on to the next generation. I'm 63 years old.
- [77:58]
A
You've got kids. Are they interested?
- [78:01]
B
Not at all. Nope.
- [78:02]
A
They want to be filmmakers because it's still privately owned.
- [78:07]
B
Still privately owned. And so I'm really looking to empower the next generation. I just would, in some weird, idealistic way. I would like to see it live forever, essentially. The company.
- [78:21]
A
What do you think could be the next razor scooter or hoverboard?
- [78:25]
B
Oh, you know, if I knew that. But. But actually, what's interesting, what I'm working on is that intrigues me, and this is going to be just sound boring at this point, but I think discovering trends using artificial intelligence or some other method of combing the culture for what's happening and finding it early, that's what was in my weird brain. And being able to figure out how to do that, you know, algorithmically, is very intriguing to me. I mean, I don't know that it's going to happen. I can't promise it's going to happen. That's one thing that's very exciting to me and in fact, exciting to me in general is artificial intelligence for the business. For sure. I'm very interested in how that could roll through the business.
- [79:16]
A
Carlton, when you think about just the journey you took, went to law school, almost became a lawyer and kind of fell into the toy business because you wanted to make fairytale picture books and started with these pogs and then kind of cut the bug and built a really significant brand here with razor. How much of it do you attribute to the work you put in and how much do you attribute to luck and timing?
- [79:45]
B
I love the luck story. What if I didn't read the article in the LA Times that the razor scooter was going crazy in Tokyo? And what if Robert hadn't been such an amazing person, such a visionary, to put me and Gino together with him and start the company? And what if we had shut down, you know, because I was discouraged the year after? You know, there's all these, like, luck is so humbling as part of success. And, you know, things happen in a cultural moment, which means you can never bring back the hula hoop. Like, how do we explain things like this? I often think that, you know, the Beatles, if you brought them into the market today, might not not, you know, become famous. I mean, I feel I do have this, like, weird ability to, like, hone into the culture early and act quickly. But luck is such a wonderful thing. There's just no way around it.
- [80:50]
A
That's Carlton Calvin, co founder of Razor by the way, pogs and slammers. They've not totally gone away. You can still buy them on Amazon and you can find the slammers with the scorpions inside on ebay. And because the phrase scorpion slammer is so unforgettable, it's also the name of a very hot hot sauce made, of course, with scorpion chilies. Hey, thanks so much for listening to the show this week. Please make sure to click the Follow button on your podcast app so you never miss a new episode of this show. And if you're interested in insights, ideas and lessons from the world's greatest entrepreneurs, please sign up for my newsletter@guyraz.com or on substack. This episode was produced by Kerry Thompson with music composed by Ramtin Erabloui. It was edited by Neva Grant with research help from Sam Paulson. Our engineers are Patrick Murray and Maggie Luther. Our production staff also includes Alex Chung, Karla Estevez, Casey Herrmann, Chris Masini, Romel Wood, Andrea Bruce, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey@wondery.com survey.
- [82:23]
B
And now a next level moment from AT and T Business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding and International Sleep Day is tomorrow. Luckily, AT&T5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T5G requires a compatible plan and device coverage not available everywhere. Learn more@att.com 5G Network.