Aaron Krause: Here Are 5 Important Business Lessons I Learned While Being On The Shark Tank

Prepare your website. Make sure it’s boosted, backed-up and duplicated. What could be worse than having it crash when millions of people attempt view it? As a part of my series about the ‘5 Important Business Lessons I Learned While Being On The Shark Tank’ I had the pleasure of interviewing Aaron Krause. Aaron is an […]

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Prepare your website. Make sure it’s boosted, backed-up and duplicated. What could be worse than having it crash when millions of people attempt view it?

As a part of my series about the ‘5 Important Business Lessons I Learned While Being On The Shark Tank’ I had the pleasure of interviewing Aaron Krause. Aaron is an accomplished entrepreneur and inventor with more than 25 years of experience in patenting and manufacturing innovative products. With products in major big-box retailers and acquisitions by such industry giants as 3M Company (NYSE: MMM), Krause is a self-made entrepreneurial success story who prides himself on hard work, dedication and imagination. Prior to his success, Krause graduated Syracuse University with a degree in psychology. Much to his parents’ dismay, he found his niche in the car detailing industry. This led to the development and patent of a double-sided buffing pad that solved many problems he and his associates encountered in the car detailing business. Under what became Krause’s first business, Dedication to Detail Inc., he refined the foam pad and created additional car detailing products. Knowing he was onto something special, Krause’s new mantra summarized that he was most dedicated to solving problems through innovation and invention. After successfully growing his company into a global operation, Krause agreed to sell Dedication to Detail, Inc. to 3M in September 2008. Krause received national attention when he appeared on the hit ABC television show Shark Tank in 2012 alongside his smile face sponge product, the Scrub Daddy. After presenting what is now considered an exemplary pitch for future contestants, Krause secured a capital infusion and partnership with celebrity mogul Lori Greiner. Since airing, tens of millions of Scrub Daddies have been sold. The contagiously happy fluorescent orange box synonymous with the product can be found on the shelf in most major retail stores across the country and globe. Continued media exposure and product line diversification have helped the brand exceed $180 million in retail sales. Scrub Daddy continues to be the most successful product in Shark Tank history since initially being awarded the title back in 2014. In 2016, Krause won Ernst & Young’s Entrepreneur of the Year Award for Greater Philadelphia, and Scrub Daddy won Philadelphia Business Journal’s Best Places to Work 2016. In keeping to his mantra, Krause has taken on a multitude of additional projects where innovation reigns supreme. His partnership with Tovi Hockey, formerly Carbon Sports LLC, was a natural fit for the self-proclaimed hockey fanatic. Tovi’s focus has been the development of a revolutionary hockey stick destined to change the game. But Krause’s efforts of modernization aren’t limited to the rink and kitchen. Krause partnered with the UK company Nifty to develop his latest invention: a patented battery-charging belt that is both practical and fashionable. Additionally, Krause is starting up four other companies in addition to serving as a manufacturing consultant and appearing regularly on QVC. Aaron’s inventions have garnered the attention of several media outlets and have been featured in The Philadelphia Inquirer, as well as on high-profile TV shows like Good Morning America, The View, CNBC Squawk Box, ABC News, and New York Live. Despite his hectic schedule, Krause finds time to coach and play ice hockey for the Flyers Youth Ice Hockey organization in Voorhees Township, New Jersey. Although his managerial duties often take him around the globe, he makes a point to mentor budding entrepreneurs, and enjoys spending time and traveling with his devoted wife, and 13 -year-old twins.

Thank you so much for doing this with us! Our readers would love to “get to know you” a bit more. Can you tell us a bit of the backstory about how you grew up?

I grew up the middle child in a family of super over achievers and academics. Both my parents are physicians. My one sister grew up to become a PHD and the other a United States federal judge. I knew from a young age, however, that I wasn’t cut out to be a bookworm. I had a knack for tinkering with things and enjoyed learning how they were constructed. To give you a better idea, in grade school I constructed a dental floss pulley system so I could operate my light switch from in bed. My parents were always supportive of my hobbies even if they slightly compromised the functionality of the house! I’m forever grateful for that. There are two principals my Father taught me at a young age that really stuck and undoubtedly shaped my life. One was that the men in our house are responsible for doing the dishes. As a result, I became an expert dishwasher. The other was the value of hard work. Instead of giving us kid’s allowance, he made lists of household chores we could complete to earn our own money. Then, on my 13th birthday, he told me I had to buy my own sneakers. I think I’ve had a mind for business ever since.

Can you share with us the story of the “aha moment” that gave you the idea to start your company?

It all began back in 2006 when I was running my first company, Dedication to Detail Inc. We specialized in manufacturing buffing pads for the automotive detailing industry and housed a lot of equipment on the premises. An average work day for me involved handling paperwork amid impromptu machinery repair so I was constantly washing my hands. Like any mechanic, I was using the typical gritty, rock-filled soap to get the grease off. I hated the stuff. The more I worked the more I washed my hands, and the more I realized that for my own sanity I had to find a different solution. There was nothing I liked on the market and so I decided to invent a more comfortable way to clean my hands. I began prototyping with various material scraps eventually settling on what I believed was a winner. The final patented product was made of yellow foam, rounded in shape, with two holes punched out of its center to clean fingers. It worked so well that I began marketing it to body shops and garages. In doing so I quickly learned two things: 1) most mechanics could not care less about having grease stained hands 2) owners weren’t willing to pay a premium to fix a superficial problem. The overwhelming response forced me to surrender the idea of retailing my hand scrubber and I refocused my attention elsewhere in the business. We continued to grow successfully until 2008 when I decided to sell Dedication to Detail Inc. to 3M. My hand scrubber was one of several inventions believed to hold no value by the multi-million dollar conglomerate, and was therefore left out of the deal. Subsequently, the yellow foam was moved into storage where it stayed untouched for five years. There’s a good chance I would’ve forgot about it completely had my wife not asked me to clean the lawn furniture one fall afternoon. The old double-sided sponge I had starting cleaning the furniture with scratched its finish. In scrambling around searching for something gentler to use I earthed what had become a very dusty box of hand scrubbers. This would be the first time using the product on anything besides my hands. To my surprise, it scrubbed the furniture perfectly clean with little effort and absolutely no damage to the finish. Then I began to notice a pattern. I could feel a shift in the foam’s structure when it moved from the warm soapy water and into the cool air; it was soft and squishy one second and rigid the next. Not long after I was shocked again, this time by how well it rinsed clean. In just a few squeezes it looked brand new. Intrigued and excited, I brought the scrubber into the house and tested its use on dirty dishes. While cleaning a coffee mug it occurred to me that by placing both my fingers through the holes I could scrub the sides and bottom of the cup simultaneously. Then, a revelation struck. If I altered the shape to include a cutout mouth it would allow you to clean both sides of a utensil at the same time. That’s when the “aha moment” hit me. This entire time I had the world’s greatest kitchen scrubbing sponge and didn’t even know it.

Can you share the most interesting story that happened to you since you began leading your company?

Discovering how difficult it is breaking into retail was an interesting journey for me. After spending countless hours making cold calls with no results, I called a friend for a favor. He agreed to put Scrub Daddy on the shelf in a few of his grocery stores. Several long weeks went by with no sales. I decided that the only way customers might consider buying a product they’ve never seen before, made by a brand they’ve never heard of before, was with live demonstrations. We built a booth just big enough for me to stand behind and placed two bowls on its counter; one filled with cold water and the other warm. I spent every weekend for months in his stores doing Scrub Daddy demos and talking to anyone that would listen. While word was slowly spreading around town I took it a step further and wrote letters to my local newspaper and home shopping network QVC hoping to get noticed. The demonstration and pitch I had by then perfected in grocery stores is what became my passing audition for QVC! When I think about how hard those first years were and how far I managed to make it, it’s still crazy to me.

Can you share a story about the most humorous mistake you made when you were first starting?

It happened on one of my first on-air QVC appearances. I’m attached to my Scrub Daddy necklace and wore it during a show despite the advice of my broker (and now longtime friend). There’s a segment early in the show where I scrub away burnt cheese and sauce from three stovetop burners. I was maybe 30 seconds into cleaning the first burner when I heard the producer’s voice in my earpiece say “Aaron we have a major problem. The pendant on your necklace is banging into the microphone”. There I was, camera on my face in the midst of the most critical demonstration, unsure of what to do and unable to react or ask anyone. The host beside me maintained our conversation so I just kept scrubbing assuming everything was ok. Evidently, everything it was NOT okay. The noise became so loud that the camera man was forced to pan low enough to crop my head out of view completely in order to give the attractive female host enough time to reach down my shirt and correct the problem. Needless to say I was taken by surprise but fortunately didn’t verbalize it or stop scrubbing! Can you tell us what lesson or take away you learned from that? The lesson I learned was to never wear jewelry of any kind during a show. Also QVC’s team is absolutely masterful at what they do.

Are you working on any exciting new projects now? How do you think that will help people?

I’m always working on more projects than I can keep track of but there are 2 particularly special ones in the pipeline. Mop Daddy is a new product scheduled to launch later this year. Its design was inspired by our incredible customers who expressed the need for a better way to clean floors with Scrub Daddy. Until now they’ve had to resort to getting on their hands and knees to scrub them by hand or by shuffling around the house with one under their foot! We’re eager to give them the comfortable and effective solution they deserve while further diversifying our lineup. The other project, also a new product, is a revolutionized classic. I couldn’t be more excited for the recent completion and soon to be debut of Eraser Daddy 10x with Scrubbing Gems. It cleans like a traditional spot-cleaning eraser without wearing like one thanks to the advanced engineering behind our exclusive new material. It’s a ground-breaking composite made from upcycled foam that’s embedded with gems of Scrub Daddy FlexTexture®. The combination allows it to scrub and erase at the same time. It’s destined to disrupt the entire category and you can expect to see it around the holidays this year!

Ok, thank you for all that. Let’s now move to the main part of our interview. Many of us have no idea about the backend process of how to apply and get accepted to be on the Shark Tank. Can you tell us the story about how you applied and got accepted? What “hoops” did you have to go through to get there? How did it feel to be accepted?

Going on television was not something I planned for or ever particularly wanted to do. My first encounter was selling Scrub Daddies on QVC. It was simply too good of a business opportunity to pass up but I admittedly did still need convincing. It took me a handful of shows before feeling comfortable enough to look forward to doing these airings but once that happened, I realized I loved it. One evening after doing a show, I remember rushing through the front door of the house and telling my wife that “I was born to be on TV”. She politely told me to be quiet, our favorite TV show Shark Tank was on. We proceeded to watch a pair of entrepreneurs’ totally stumble through their pitch, bomb the presentation and blow their opportunity by not knowing their numbers. It was a mess and I knew I could do better. So I took out my cellphone and applied from my seat on the sofa. Two months later I received a phone call from a producer. He asked me a few questions about my company and product, thanked me for my time, and hung up. These calls continued for several weeks and each time I was reminded to not get excited because there were many other applicants. One day the phone rang and instead of the normal back and forth, I was told this call would be our last. The next time we would speak would be in-person because I was being flown to LA for an audition in front of 30 execs from Sony and ABC!! That was a great day at the Krause household. I arrived there among a crowd of other terribly nervous entrepreneurs. We were greeted and promptly told to “look around and say goodbye. There are 200 people in this room and only 88 slots available on Shark Tank. So tomorrow, most of you are going home.”

I’m sure the actual presentation was pretty nerve wracking. What did you do to calm and steel yourself to do such a great job on the show?

Believe it or not, I wasn’t nervous. I had survived my first handful of QVC shows and there was no way Shark Tank was going to be more nerve racking than that. QVC was, and can still be, really scary. There are tons of things happening at once and you have to pay attention to them all. The main camera is constantly changing, your right ear is listening for the earpiece and your left is focusing on the host. All the while you can’t forget to maintain some kind of stage presence as you try to execute your demos properly! It’s 100% live so the pressure to not mess up is incredible. There’s also financial risk involved because you bring home whatever stock you don’t sell. So, walking into the tank was going to be a breath of fresh air. In order to prepare I spent months practicing my pitch on camera and in front of my most critical friends. I watched every single episode of Shark Tank multiple times and then developed flow charts of probable scenarios. My team and I made sure I wouldn’t be the guy with no answer. By the time it was my turn, I was beyond amped up and ready to go.

So what was the outcome of your Shark Tank pitch. Were you pleased with the outcome?

At the end of my pitch I received a round of applause from the Sharks which felt pretty incredible. I was in the tank for about 90 minutes total so a lot more happened than what the 10 minutes of air time suggests. It didn’t make it on television but at one point Lori actually got behind my setup to test Scrub Daddy out for herself. There were so many questions. It seemed like the more answers I gave, the more interested they all became which was reassuring. Before I knew it a full out bidding war had begun to unfold. I kept quiet and let them duke it out while my valuation slowly increased. The closing deal was better than I could’ve hoped for: double my asking amount and an invaluable partnership with Lori Greiner. I was ecstatic about the entire experience, especially because a few of the scenarios I had practiced rehearsing actually did happen. One was that if a Shark didn’t believe in me and went out I would not say ‘thank you’ in reply. This happened first with Robert Herjavec followed by Mark Cuban. The second scenario related to Kevin O’Leary aka Mr. Wonderful. I practiced telling him that he was out before giving him the chance to say it to me. The look on his face was priceless.

What are your “5 Important Business Lessons I Learned While Being On The Shark Tank”? (Please share a story or example for each.)

  1. The 5 P’s are real. Proper Planning Prevents Poor Performance.
  2. You’re not just pitching to the Sharks, you’re pitching to America. I knew that even if none of the Sharks invested I still had to win the public. I was careful to remain humble, composed and hardworking regardless of the deals outcome.
  3. Prepare your website. Make sure it’s boosted, backed-up and duplicated. What could be worse than having it crash when millions of people attempt view it?
  4. Prepare your inventory. Because you’re not just pitching that night, you could be selling!
  5. Know the limits of your deal. Before negotiating, identify what your lowest acceptable dollar amount is. Theorize other beneficial forms of the deal such as royalty, finance loan, or multiple investors in the same deal.

What advice would you give to other leaders to help their team to thrive and avoid burnout?

An entrepreneur that doesn’t burnout is a paradox! Truthfully I don’t know. My advice is to choose a different career path if endurance isn’t your thing. Employing staff that’s reliable and as hardworking as you are certainly helps but even with that being an entrepreneur is a lifestyle, not a full-time job. There are virtually no weekends, holidays, or vacations that I’m completely free from handling business.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

It would be no longer relying on fossil fuels to power the economy. I’d propose huge investments into wind, hydro electrical, tidal, geothermal and solar polar. As an early adopter of the electric car and owner of two, it’s not just something I believe in but live.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work us to love what you do.” -Steve Jobs. This is something I consciously think about each day. I actually get to earn a living doing something I absolutely love and it’s such a privilege. I’ve never been to work a day in my life and plan on keeping it that way forever!

We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch with, and why? He or she might just see this if we tag them 🙂

I’ve been lucky enough to have already experienced it. Dr. Felix Zandman and his book Never the Last Journey made a profound impact on me. The endurance and fearlessness he demonstrated in business and in life is enough to inspire anyone. When I learned he lived locally and that his children went to the same high school as me, I just had to try and get in touch. I wrote him a letter asking to meet, talk, anything. He went beyond entertaining my proposal and sent a limo to pick me up for an eleven o’clock lunch.

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