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BiggerPockets Business Podcast 12: Step-by-Step Case Study: Manufacturing, Marketing and Selling a Physical Product with Cody Berman of Arsenal Discs

BiggerPockets Business Podcast 12: Step-by-Step Case Study: Manufacturing, Marketing and Selling a Physical Product with Cody Berman of Arsenal Discs

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How do you go about creating a product line out of thin air? In this episode, Cody Berman breaks down the process from start to finish—and opens up about his exact costs and profit margins. 

Cody grew up playing disc golf. (Think of it as golf with frisbees.) By the time he was 19 years old, the game was growing FAST. He spotted a big opportunity in the equipment market and decided to do something about it.

You’ll learn how Cody and his partner went about their market research (cost per unit, engineering, official regulations, margins, markup, MSRP), how they launched a Kickstarter campaign to raise seed money, and how they called 200(!) prototyping and molding companies to get the best deal possible.

He also talks about the moments that almost made them quit—from being told they would need $100,000 to start (they wouldn’t) to surviving a disastrous early production run that led to an all-nighter and a lot of wasted capital.

Cody goes on to reveal the way he markets Arsenal Discs in online groups, how he handles packaging and shipping, and his tips for entrepreneurs thinking about selling via Amazon. 

Don’t miss this action-packed episode, and subscribe so you won’t miss the next one!

Click here to listen on iTunes.

Listen to the Podcast Here

Read the Transcript Here

J: Let’s welcome to the show Cody [Burman 00:03:37]. How you doing, Cody?

Cody: Hey, doing awesome. So pumped to be here.

Carol: Thank you for joining us. I’m really excited to talk to you about a lot of things, but especially one venture in particular. Thanks for coming along.

J: Yeah, so I’m going to let you give a little bit of backstory about yourself before we jump into that venture that you’re currently working on. Can you tell us a little bit about just where you started, what you’ve done in your past, and how you kind of got to what we’re going to be talking about later today.

Cody: Yeah, so I won’t spend too much time on myself. I know we want to get into the meat of the story, but I’ll try to give you a 90 second elevator pitch. Grew up in a family that was really focused on frugality, saving, so I kind of had that money mindset going on. Although I didn’t really have the entrepreneurial too much of a spirit when I was younger. It wasn’t until I was 19 when I read the Four Hour Workweek, and that book literally transformed my life. I was like you can earn money outside of a traditional day job, and you can also build up these income streams that if you put the work in, say for one, two, three, four years up front, you can ride out that income in perpetuity as long as you don’t completely screw your company or venture over. It was just a mind boggling revelation.

Cody: Right when I kind of discovered that book, I started raddling my brain. I’m like what can I do for a side hustle? Tried starting a tutoring company. I was in college at this time. Didn’t work out because I just didn’t really put the effort in. Tried starting a specialty clothing company. I got as far as phone calls with manufacturers in China on Alibaba, and I’m like wow I’m in over my head. Then, the third venture that we’re going to get into is a disc golf company, and that’s where I kind of first hit the side hustle groove and actually started making some real money and building passive income streams.

J: That’s awesome. Now, just to take a step back for our listeners. So, you’re young. At least compared to us. How old are you?

Cody: I’m 23 right now.

J: You’re 23. You started your disc golf company, Arsenal Discs, a couple years ago, and I guess we’ll talk about timelines but basically for everybody that’s listening that can’t see you on video you’re a kid. You’re not a baby, but compared to us you’re a baby. For a lot of entrepreneurs, you started really young.

J: Another thing that’s worth pointing out, and again we’re not going to talk about it a lot here, but you were a guest on the Bigger Pockets money podcast last year. I highly recommend that our listeners tune into that episode as well. I think it was episode 26. You’re heavily entrenched in the FI world, the financial independence world. You have your own podcast, and you’ve kind of gone on your financial independence journey starting really young. I think that’s an important thing for our listeners who can’t see you, who aren’t watching this interview now who can’t see how young you are. I think it’s just an important thing that I wanted to point out.

J: You got into the disc golf world. You started a company called Arsenal Discs. Can you tell us a little bit about when you started that company, how you decided to get into that business? Basically, how that all evolved.

Cody: Yeah, so I think I’ll start with the second question first. I’ve been playing disc golf since I was eight years old. My uncle and cousin actually kind of brought disc golf into the central Massachusetts area where I’m located right now. They’ve been kind of entrenched in the disc gold world since 2001. I started playing when I was eight. Kind of brought up in that whole community. I worked in the pro shop which is the disc golf specific retail shop. I was selling snacks, I was returning discs from the lost and found. So, I kind of had the whole community behind me. I knew all these different people. I knew the pros. I was going to all the tournaments and stuff. Grew up with that my entire life.

Cody: Now, fast forward again to when I read the Four Hour Workweek, I’m 19 years old, and the stars just aligned. I just saw a gap in the market. It was a lot of these … You guys are calling me young. There was a lot of older people that were running these companies. 50, 60 year old guys who didn’t really know how to do social media. They weren’t really up on the website stuff. I’m like there is a gap that I can fill here. I have the tech skills. I have the marketing skills. I know how I can access these 20, these 30 year old people. That’s kind of the origin of Arsenal Discs, and it’s just been a wild ride from there.

Carol: Very cool. A quick question. For some of the listeners out there, just in case they don’t know, just a 10-second overview of what is disc golf.

Cody: That is a great question because a lot of people are like I have no idea what that is. They think it’s like selling beach frisbees. I’m like no, no, no. Not at all. Think of ball golf except instead of hitting a ball into a hole you’re throwing a disc into what’s called a pin. A pin is this metal fixture with a bunch of chains hanging around it. You still have drivers, you have putters, you have mid-ranges, you have pars, you have bogeys. It’s literally like the same sport as golf except the tools are different. Instead of getting a ball in a hole, you’re getting a disc into the chains or the pin.

Carol: Cool. Okay, so I said 10-seconds, but I have to ask a little bit more. You said your uncle and who brought it to central Massachusetts?

Cody: My uncle and cousin. We literally live on the same street. I grew up from them, and they built two courses back to back year after year, and they just kind of started the whole disc golf trend in central Massachusetts. There was no courses before them, and that was back now 18 years ago I guess. Wow.

Carol: Really cool. There are courses all over the United States? Is that a fair assessment? Are they kind of everywhere?

Cody: Now, there are over 5,000 courses in the United States. The number has 600% growth over the past 10 years.

Carol: That is huge. I had no idea it was that big of a market. That’s fascinating.

J: That’s crazy. Any idea about how many, I’m sure you know the number, about how many disc golf players there are in the US?

Cody: In the US, it’s around one and a half million. Worldwide it’s at like three to four million right now. It’s a lot of presence in Japan, Scandinavia, but US is probably about a million and a half.

Carol: No kidding.

J: Interesting. Okay, so you decided to actually start producing the discs. Before we get into that, it’s interesting because I love the idea of taking something that you’re passionate about, something that you love, something that you know well, and figuring out how to make money from that. But given that it’s such a decent sized industry, I’m now guessing … At first, I was like okay, well he liked disc golf and he decided, okay, I’m going to give this a try. I’m going to make some discs. But it sounds like you could actually create a good business model, and you put this down on paper, and the numbers should pencil out given the size of the market. What was your business planning? What was your business modeling from the beginning?

Cody: Yeah. So, I guess we’ll … yeah. I’m sure we’ll get into the more technical engineering parts which is totally my business partner, not me. But from the modeling perspective, so I went to school for financing economics. I know we didn’t talk about that, but I had built complicated models making sure this would work out. If we can penetrate .1% of the market, we’re going to be profitable.

Cody: We were building out all these models. Seeing how much it would cost to produce each disc which we didn’t know at first and had no idea. Kind of just jumped in blindly, but we did definitely kind of pan out and see how many discs are we going to need to sell, what do we think the cost per unit’s going to be, what can we retail these for, what’s the mark up, what’s the MSRP, and just doing a lot of market research that frankly I had no idea before we kind of dived in head first.

J: How old were you when you started this venture?

Cody: I was 19.

J: Wow. So, were you in college, were you out of college?

Cody: Yeah, I was a sophomore in college when we started. It was my sophomore going into junior year of college when we made our first prototype.

J: That is-

Carol: My mind is blown right now. I think about where I was, not to make this all about me but for one second, I think about where my head was at … Just the fact that you had the foresight and wherewithal to realize that this was not only an opportunity, but that you went ahead and you were able to model it out and figure out all of the different components of it is beyond fascinating to me. I love this. Very cool.

J: Yeah. I’ve made the point about you being young a couple times, and I don’t want to give the impression that that is done in a negative way. It’s actually a very much-

Carol: Amazing.

J: It’s a compliment, yeah. I’m jealous. I think a lot of us wish we would’ve started when we were your age and a couple years younger when you started. Okay, so you have this idea for a product for disc golf, and presumably at some point you met your partner. What was the origin of you and your partner coming together? Am I skipping anything leading up to you and your partner coming together? Basically take us through the beginning of the story of the start of the business.

Cody: Absolutely. I just want for 20 seconds to clear the slate here. Just because everyone’s like, “Oh, you’re such a rockstar,” but it was honestly just taking action. I didn’t know more than other people. I wasn’t some super genius. I was still drinking four nights a week being a piece of crap sophomore in college, but it was just the fact that I went in and started the business that I’m here today. I just wanted to tell you that. I’m not some rockstar Albert Einstein person or anything like that.

Cody: But the origin story of me meeting my business partner, actually we went to middle school and high school together, and we had been pretty good friends. He kind of had an entrepreneurial spirit to him. Kind of split ways in college. I was going to college for finance economics like I said. He was going for mechanical engineering. When I had this idea in my head, because we had kind of talked about a few different business ventures, all of them didn’t really have any kind of legs whatsoever, but when I pitched this to him he was super excited.

Cody: He’s just very talented in the mechanical engineering space. I knew that. I reached out to him. I knew that I didn’t have the capabilities to draw all these CAD designs which is a computer aided design. I knew that I didn’t have the capabilities to run the discs through flow tests and all these fancy things online. I knew I didn’t want to do that and I didn’t know how to do that. I just hit him up one night. I remember distinctly it was one AM, I give him a call, I’m like, “Yo Jim, I have this idea,” and we talked for three hours until four AM, and we’re like, “We’re doing it.” That’s pretty much how it happened.

Carol: Really cool. It sounds like you have really different, very complementary strengths, right? You’ve got all the finance, the business, the marketing piece of it. He has all of the engineering and all the technical capacity. What did you do once you talked about it and you decided you were going to go for it? Did you kind of model it together from there on, or did you start getting lots of discs that were already out there? How’d you do your market research, and how’d you begin making what you made?

Cody: Absolutely. Going back to something Jay asked earlier was trying to figure out the pricing per unit and margins on that stuff. At this point, we had no clue. We had zero idea what it cost to make a disc. We barely knew what retailers were buying the disc for. We really didn’t know what markup was and MSRP, all that stuff. But we just went in and we’re like, “Let’s just try to make a disc.” Jim, my partner, starts building these CAD files, the computer aided design.

Cody: We’re building all these discs out. Like you said, we were doing market research. We were taking discs that we really liked, figuring out why they performed better than other discs we didn’t like, and then we’d make our own tweaks to them. During this whole time, we didn’t really have the money to just be pumping out prototype after prototype after prototype. He would run them through this system called [Ansis 00:14:24] which would give us different flow tests on the computer. You could see how the wind would effect a disc. You’d see the aerodynamics. You’d see how the discs would be effected. Whether it would turn left or right. We just did this for months and months and months.

Cody: Let me just kind of … I don’t want to go on a tangent here, but we had a Google sheet. In the disc manufacturing process, I know we’re probably going to dive into this a little deeper, there’s three main legs. There’s the prototyping company. We reached out to, I’m not kidding, 70 different prototyping companies both US and international. There’s the mold maker. A mold is basically a big steel block. In the middle of that mold or the steel block is the shape of the disc. That fills up with plastic and once it’s done, it cools off, it opens up and the disc pops out.

Cody: The last person is the actual manufacturer. This is the person who has the mold in their machine, and they’re the one who were like pumping out thousands or hundreds of thousands of units. We reached out to over 200 companies. We had this Google sheets. Just trying to figure out where we could get the best pricing, how we could optimize this process, and yeah let’s just kind of take it from there. I don’t want to go on a crazy tangent here.

Carol: No, that’s a good tangent. I’m curious … so there’s these three different legs. How did you even discover there were the three different legs? And I want to back up even more than that to clarify something before we go into the three different leg discovery. What’s your business partner’s name?

Cody: James or Jim. I call him Jim.

Carol: Thank you. Jim. So, you’re saying that Jim had a program on his computer so that before you even physically produce these, you could model all these through this computer system to figure out what it was that you needed in the first place. Is that accurate?

Cody: Somewhat, yeah. It’s definitely beneficial to test on real land, but he could run flow tests to see, okay, this disc is going to fly terribly before we even spent the money to produce it.

Carol: Very cool. Then, you figured out kind of what it was, and then you realized there are these three different legs to have them produce. How did you figure out that you had to go to three different types of vendors if you will? Because I’m sitting here, and I suspect there are a lot of listeners, too, who are like I have this product idea but what the heck do I do with it to get this thing made. I would suspect most people … Maybe they’ve heard you, you go to China and you figure out how to get something made, but you and Jim figured out there were three very significant different people that you had to work with. How did you discover that and how’d you make that happen?

Cody: Honestly, we didn’t know going in. We kind of just started reaching out, figuring out what companies would do what, and what companies wouldn’t do other things. We quickly realized that there wasn’t a company that was going to do all three for us. If they were, it was not the best cost. We were definitely playing on cost here. Because like I said, I was 19 years old.

Cody: We were trying to be scrappy. We had to get the cheapest price possible for prototypes, the cheapest price possible for molds, and the cheapest prices possible for manufacturing. Well, actually that’s not true because we did choose to go domestic instead of in China. But yeah, we just kind of started reaching out. We did a lot of reaching out in US and China mostly. We did some Scandinavian countries. A few in India, but it was just kind of guess and check. We had so many different phone calls talking to people from the plants. Some of the people were difficult to communicate with. It was just-

Carol: I was just going to ask that. That’s so funny.

Cody: Yeah, it was just really grinding. We were making five to 10 phone calls a day. Sending out 20-something emails just trying to figure this all out because we did not know. We honestly didn’t have a clue what we were doing.

J: At this point, you have a business plan. It all pencils out. You realize we can make these things and presumably if we can get them made for the right price, we can sell them, we can turn this into a business and make money. You hook up with Jim, and now you figure out this is what we need to build. Then, you get to the next step which is actually prototyping. I’ve heard from people, and I’ve done a little bit of this myself, but I’ve heard from people that do a lot more of this that the prototyping stage can be really expensive. What was the whole process of getting a prototype made? How much did it cost? Did you have to put in a bunch of money on your own to do this? What was the whole prototyping and getting your first “draft” of a product for lack of a better term? What went into that?

Cody: Yeah, so that’s a great question and you’re really digging into my memory here because now I’m just thinking back. It was crazy. We actually went to Jim’s school, he went UMass Lowell. It’s really well-renowned up in the northeast for engineering. We were so pumped we were going to go in and we were going to machine one of his CAD designs out of ABS plastic using a lathe and using a machine. We go in there, we’re super pumped, and the guy goes, “Your disc is too big for the lathe. We have no machines that can do that.” We’re just like are you serious? We’re like are you kidding me?

Cody: Actually, and then we went to another one of his professor. Actually, I won’t give him this shoutout on here because I’m about to say something negative, but he goes, “There’s no way you guys can do this. You’re going to fail. It’ll cost you at least $100,000 to make one disc.” And we’re like bet.

Carol: You’re like game on. Let’s go, buddy.

Cody: Yeah, we’re like game on, pal.

Carol: Seriously. [crosstalk 00:19:22]-

Cody: That was our first foray into prototyping, and we were just crushed. Honestly, I remember the next few days after that I was like, “You know what Jim, maybe we just throw in the towel. We probably can’t do this.” Then, Jim and I are like, “You know what? Eff it.” I know I can’t swear on this show.

J: Sure you can.

Carol: Sure.

Cody: But yeah, we were like you know what? We can do this. We’re scrappy. We’re young. We have the energy, and we just started reaching out, like I said, to 70 different prototyping companies. We finally settled on a company in China. A lot of these companies in America were just like, “Oh, we can probably make that disc for two grand,” we’re like, what? One disc for two grand is absolutely ridiculous. We ended up finally after hundreds of … maybe not hundreds, dozens of phone calls finding this company in China who would make our prototypes for 150 bucks a piece. Obviously, that’s still a lot of money to a 19 year old. Anyone who’s listening who’s older, that’s maybe not that much money to you, but to a 19 year old that’s a lot of money. That’s a lot of beers.

Cody: At that point, we’re reaching out. We finally get this one who we’re connected with. They’re making the disc for us, and we’re just kind of sending in very carefully crafted revisions. We’re not asking them for 20 different prototypes. We get a prototype, they send it back on express shipping. We’re like okay, this disc doesn’t quite fly. This is kind of where we go back to getting back on the land and testing them out because obviously the systems are only so much. Then, we just kind of revised and tweaked from there until we liked the disc that we got.

J: That’s awesome. Yeah, and you hear these big companies talk about yeah we went through a thousand different revisions and we made minor modifications. At 150 bucks a piece plus shipping, you’re probably looking at 200 bucks a piece. You do 100 revisions, there’s $20,000 right there. For a 19, 20 year old couple of kids in college, that’s significant.

Cody: Yes. It was not a small sum of money. We were just really scrappy like I said.

J: How long-

Carol: Was that your own cash? Was that your own cash? Were you borrowing from someone?

Cody: No, that was our own cash. I had been kind of … I know we alluded to this a little bit. Just I’ve always been a side hustler earning money, saving money, and Jim was the same way. We had probably 10 or $15,000 saved up when we started this.

J: That’s awesome.

Carol: That’s awesome.

J: What was the total time from you hook up with the vendor in China that can prototype for you to you get to the point where you say we have a product that we’re ready to go into production?

Cody: I guess this is kind of not a cop-out answer, but we had five different discs that we started with. We had three drivers, a mid-range, and a putter. We had the first disc done probably within three months since prototype number one, but took probably six or seven months for all of our designs to finally be finished and we’re like we are ready to start manufacturing.

J: That’s awesome. Okay, so we have a business plan, we have designs, we now have a prototype, and we have a final prototype that we’re ready to get into production. Did you go with the same company in China to do your production, or did you have to now start shopping that out as well?

Cody: No. So, we did get a quote from the prototyping company, but figure the prototyping company wants to charge us five times what other companies in China wanted to charge us to make the molds. We ended up going with another company in China for the molds. Then, it was such a long process. Getting them shipped over to the United States, you wouldn’t believe the paperwork you need to send 500 pound steel blocks over on cargo ships from China. [crosstalk 00:22:38] So, that was our next step.

Carol: Really?

Cody: Yes. It was such a pain. Now, honestly you guys are kind of refreshing my memory, but you think back and it’s like, oh, that was not too hard. But when you’re in the heat of the moment, I’m sure you guys have had things like this in your own lives, own businesses. It’s just all you can think about. So stressful. Just like [crosstalk 00:22:55] this little thing that you’d never expect … yeah.

Carol: So much. So much. I actually wanted just a tiny bit more. You’re talking about the paperwork. Are we talking like five pages of paperwork, or are we talking 40 or 50, or just so much it was massively overwhelming?

Cody: It was 20, 25 piece paperwork, and I had to give my cousin a POA, power of attorney, because I had no clue what I was doing and he’s my cousin who is an attorney. Yeah, it was just really overwhelming. I was lucky that I had him kind of in my corner, but it was just a lot. We were getting-

Carol: So, it was hard to decipher, too? It wasn’t just-

Cody: Yeah. I got a call from a customs agent. I’m like Jesus. I’m just trying to get a mold over here.

Carol: Wow. Right? For discs. I mean, come on. Right? Come on.

Cody: Exactly.

J: I know a lot of our listeners are probably sitting there thinking, huh, why is Carol asking you about paperwork? But we’ve done this before and we know that doing all the importing and customs stuff, it’s actually a complicated part of the whole process.

Carol: It really is. Just to kind of address that, yeah, I just want our listeners to really, really get a sense, get an idea of what this whole process is like. I think Cody’s our first person that we’ve talked to that’s had a physical, non-food type of product. That’s a product that needs to be manufactured. There are so many little nuggets, little bits and pieces to making that happen. I want everyone to get a really good idea of what that’s all about.

J: Cool. Okay, so you get the molds over here, these 500 pound molds. How did you figure out who to send them to to actually start producing your product?

Cody: This is a whole other journey in itself. We finally found a manufacturer that we wanted to work with. They gave us a decent quote. They were 20 minutes away from our hometown in central Massachusetts. I don’t want to give their name a bad name here because I’m going to talk about how we moved away from them later on, but it just seemed like all the stars had aligned. They were super close to us, they seemed like they knew what they were doing, and they were giving us a reasonable price point. We were like let’s work with these guys. We can go in. We can be kind of boots on the ground if we need to go in and check product quality. If we need to tell them a specific thing about the discs, whether it’s weight or color. And we’re like this is going to be awesome.

J: Okay. I want to step back a little bit because I think this is really important for … Not just important, but it’s really interesting to me. You were spending about 150, 200 bucks per disc for prototyping. Presumably, you got much higher bids than that, but that’s where you came in. How much did you pay for the molds?

Cody: The molds all together were $12,000.

J: Okay, so that was for you said five or six molds?

Cody: Five. It was one big mold with five inserts.

J: Got it. Okay, so every time you do a pour of the material into the mold, you’re actually making one of each disc?

Cody: Yes. No, no, no, no, no. Sorry. The molds, think of a mold like a pizza oven, and the mold is the pizza oven. You shove your pizza in, and then that pizza will keep duplicating. We’ll have to put one of our drivers in, keep pumping out that same driver, then do a tool change, put our putter in, keep making that same putter.

J: Okay. You had five different … You had a putter mold, you had a diver mold, et cetera, et cetera.

Cody: Yeah, yeah. Yep.

J: For all five or six of your molds, you paid about $12,000. A couple thousand dollars per mold.

Cody: If people are in the injection molding industry, that was an absolute steel.

J: Yeah, that’s really low. We’ve done some of that and we were looking at much higher prices than that. That’s awesome.

Cody: Some of our quotes were 150, 200K in the US. I’m like obviously we can’t afford this. We’re two college kids barely scraping by. Not barely scraping by, that’s not true, but we did not have that much capital to work with.

J: Sure. That’s [inaudible 00:26:31]. If there’s a theme of this show so far, it’s make 100 or 200 or 500 phone calls because it is possible to do what you want to do even when the first people … when the professor tells you you can’t do it, when the first quote you get is $100,000, just keep making those phone calls.

Carol: Keep going. Just take action. Like you said, take action and keep taking action until you get what you need.

Cody: Yeah.

J: Okay, so a couple hundred bucks for each prototype. Couple thousand dollars for the molds. You find a company that can actually produce them here, and so what happens with that company in Boston?

Cody: This company seemed like it knew what they were doing, but they also manufactured stuff for the US military and hospitals. So, you could imagine that a little disc golf company was not exactly on the forefront of the priority list. It would be like pulling teeth just trying to get them to run prototypes for us.

Cody: Then, when they ran prototypes … Now, people who don’t know the disc golf industry, there is very strict manufacturing guidelines. Your disc can’t be too sharp. It has to be a certain rigidity. It can’t go over a certain limit. The plastic has to be a certain compound mix. There are so many crazy regulations. Someone who’s never manufactured in that space before, even if you’re an awesome manufacturer, it’s not just common knowledge. We went through so many different iterations of trying to get the right disc, trying to get the right mix, trying to get the right weights with them, and they just honestly didn’t know what the hell they were doing.

Carol: I have to ask a question about that. So, where’d you find out all those rules and regulations? As you’re talking through this, I’m like okay. I guess that’s similar for a basketball, or a football, or whatever sports. Is there some type of governing body for disc golf that has all those rules and regs that you had to become really familiar with?

Cody: Yup. So, there’s the PDGA which is the professional disc golf association, and they have manufacturer guidelines. One of the biggest things, this is the thing we struggled with the most, and anybody else who’s ever maybe ventured into disc golf, I don’t know if any of your listeners have, but the weight restriction is very difficult to make a disc in a plastic compound that feels good in your hand that isn’t over the weight limit. The reason why they have a weight limit is because after a certain weight for a certain size disc, it’s considered a deadly weapon. You don’t want to get hit with a three pound disc in the neck walking through a state park.

Carol: No way.

J: Wow, interesting.

Carol: That is so fascinatily cool, and horrible at the same time but cool.

Cody: It’s such a … honestly, I don’t know how they came up with the regulation, but it’s 8.3 times your diameter of your disc in centimeters is the max weight it can be in grams.

J: Interesting.

Cody: Yeah.

Carol: What? Like where’s that formula come from?

Cody: Who knows.

Carol: Crazy.

J: Okay, so did you actually get any products out of this first company?

Cody: Barely. This is an … oh my gosh … this is, yeah. So, we get all these discs. We have probably 2,000 discs. This is our first run. I didn’t even talk about this. We ran a Kickstarter campaign and raised 10,000 dollars from the disc golf community maybe a few months after our idea kind of spurred off. Sorry I didn’t mention this before. I’m just literally just … this is coming back to me now. We had kind of a delivery date we had to hit, so during this whole time we’re frantically making these 200 phone calls. It’s not like lackadaisical, “Oh, I’ll make a couple today, couple tomorrow.” We had a deadline and we wanted to deliver because we didn’t want unhappy customers.

Cody: We get an order of I think it was two or 3,000 discs from this company, and we’re going through them. We’re super pumped. We thought they were going to be all good because we weren’t being too close to the eye on product control because we thought they knew what they were doing. About two-thirds of the units were just unsellable. Either they had divots in them or they’re over the weight limit.

Cody: So, we’re down to 800 discs and I think our Kickstarter we had maybe 700 or 750 orders. We were just scraping the minimum that we could possibly produce at the quality standards we wanted to fulfill these orders. We were rifling through until I think we stayed up until six AM or seven AM one day. We were rifling through discs for I don’t even know, 16 hours straight, and then we were just like so disappointed because two-thirds of them were garbage.

J: Wow. That’s-

Carol: Oh my gosh.

J: That’s even more disappointing given that it came from a company that was used to making stuff for military and hospitals.

Cody: Yeah.

Carol: Oh my gosh, so were you and Jim just up all night just dropping every four letter word there is, throwing stuff everywhere, just so angry and so miserable and so dejected, or how were you feeling throughout this whole thing?

Cody: We were feeling crushed. We had a scale next to us, like I said the weight limit was the biggest problem. We weigh like three discs. One of them would hit the weight limit, the other two we’d just whip at the wall as hard as we could.

Carol: Get a drywall company in there when you’re done. Oh, that had to be horrible. So sad.

J: So, you did have a few usable discs here. Did the manufacturing company, were they also dealing with your packaging? How were you doing the packaging? Because presumably the discs had to get packaged in some way for your end users.

Cody: For that first Kickstarter campaign, Jim and I did all the packaging for over 700 discs. It was wild, and it was within a four day window we did that.

Carol: What?

Cody: Yeah.

J: Crazy.

Carol: That was a non-sleeping adventure for sure.

Cody: It was not a sleeping adventure that is for sure.

J: Where did you go from there? I assume was that first run the last run that they did, or did you give them another shot?

Cody: No. No chance. We were like this is absolutely ridiculous, and they’re like, “Oh, this was just sampling. We didn’t know this was for final products,” and we just had a debate with them. We didn’t want to get lawyers involved, so we’re just like all right we’re moving.

Cody: We find another company in Massachusetts, in western Mass, and this isn’t our end destination. Don’t worry, we’re still going on the ride. They were much better about the manufacturing. They were much easier to comply with. We were higher up on their priority list. But again, like I said before, if you’ve never manufactured disc golf discs before, then you have no clue what you’re doing. There’s so many intricacies and idiosyncrasies that come with the manufacturing of these discs. Again, this is almost a year actually where we’re kind of just fuddling around with this company. Some units would be good. We’re still selling, but it wasn’t going quite as planned.

Carol: So frustrating because it sounds like you had all this stuff on the front end. You were just jamming through it and it worked, and it worked, and it worked, but then you’re getting this actual production is just all the glitches are. What’d you end up doing to finally find someone good?

Cody: Yeah, so we’re with this company for I think a year and a half out in western Massachusetts, and it’s literally just a battle trying to get good discs out. It’s so much harder than you could’ve possibly imagined, and way harder than we could ever imagined. We finally end up teaming up with … beginning of this year actually, conversations in late 2018, one of the biggest or one of the bigger disc golf manufacturers. This is someone who actually has experience. Finally, hallelujah. Someone who can make our discs. They send us our first 100 samples, and they’re all perfect. We’re like oh my gosh, this is what we’ve been waiting for for three years.

Carol: The skies opened up. You’re like, “Yay! This is going to happen!”

Cody: Yes.

J: When you say manufacture, is this a brand that you’re competing with, or is this just a company that is making discs for other companies?

Cody: They have their own brand, but they also do manufacturing for other companies. I can’t name them because we do have an NDA, but they do manufacture for other companies. They’ve been in the industry for 25 years making these discs. They know exactly what the hell they’re doing which was such a relief compared to these other companies who were just kind of messing around and hoping things work.

Carol: Very cool. You’ve got someone to manufacture them now. That’s a beautiful thing. But then of course there’s … and anybody wanting to sell a product, there’s a whole distribution, and selling, and who do you sell them to, and how do you sell them, and all of those things. Let’s start with that. How’d you figure out your distribution, and I guess your market, and correct me if I’m wrong, your market is disc golf players, correct?

Cody: Yes. Yep.

Carol: Okay, great. How do you reach them?

Cody: Yeah, so when we first kind of started getting our customer base, like I mentioned before, we were doing this Kickstarter campaign. But honestly, so something that’s interesting about the disc golf community is that there’s all these local Facebook groups. Jim and I were in over 400 local Facebook groups. We were talking to people who were running tournaments. We were talking to pro shop owners like I mentioned before. A pro shop is a disc golf specific retail store that just sells disc golf products. We’re just hitting all those up as hard as we can. Like you kind of mentioned before, it’s really about that boots on the ground. We weren’t spending tens of thousands of dollars on Facebook ads. It was all just interacting with individuals, making phone calls, being in Facebook groups. That was kind of our whole marketing strategy from the start. Yeah, we’ve kind of stuck with that and it’s been really good up to this point.

Carol: Very cool. With 400 different groups, you and Jim are integrally involved with them on a one-on-one basis to really get the word out and get your products sold.

Cody: Yeah. We try to do … I think our goal was we do 30 a day, and we just post in there, say who we are, say we’re a new company. Some of them hated us and banned us, but other ones were like, “Oh, this is so cool. We’d love to chat with you. Maybe you can sponsor our tournament,” or whatever. That’s kind of how it all started. Just getting our name out there.

Carol: Awesome.

J: That’s awesome. Do you sell on Amazon or any of the online sites as well, or is it strictly direct to consumer?

Cody: You kind of catch me in a weird time right now. We were selling on Amazon before. We are going to be selling on Amazon in a little bit because we’re doing a huge production run actually in the next couple of months. Probably a couple tens of thousands of discs. But Amazon’s margins, I mean you know Amazon, it’s kind of like Walmart, they just gouge you in the margins. We make so much more money when we sell direct to consumer or when we sell to pro shops.

Cody: And sorry Carol. I know I’ll get back to your question. You said what are our distribution channels. We mainly sell to what are called the pro shops. We’ll sell them say 100 or 200 discs at wholesale pricing, and then they’ll sell at retail with 40 or 45% markup, but we also sell direct to consumer. We’re selling … if you want to go on and buy one of our discs, you can buy it at retail price. Like MSRP. That’s our main distribution channels. We also do tournament sponsorships where we’re giving away discs just for brand awareness and stuff like that, but that’s mainly how we just get our discs out to market.

Carol: Awesome. You mentioned earlier with the Kickstarter that you and Jim personally did all of the packaging on those first 700. Do you have that outsource now? Is that something a different vendor does?

Cody: Yeah. Only when we have specialty runs. We actually did a specialty run of putters. We did only 500 putters, but we were doing them in larger quantities. We sent them out to a few of our wholesale partners who we have exclusivity with. We set those out ourselves because it was only five boxes, and we wrote them a personal note and stuff for their tournament. But most of the time, it’s through our fulfillment center which is where our manufacturer’s located. Because we are not going to be shipping out thousands and thousands of boxes. It’s just not going to happen.

Carol: So, the fulfillment center is right at where it’s manufactured? I caught that correctly, yes?

Cody: Yup. It’s in the same area code. It’s not the same exact company, but they do the fulfillment for their discs as well.

Carol: Great.

J: Okay, so you have a company that manufactures the discs. They send them directly to a company that does all of your fulfillment. They do the packaging, and then presumably they get the orders. Either you send them the orders or they get the orders directly, and then they send them out. At this point, you’re never touching your product. You’re comfortable that the manufacturer’s creating a product that is essentially defect-free, and that they’re being fulfilled. At this point, you’re basically hands-off of the production and fulfillment side of things. Is that correct?

Cody: Yeah, pretty much. Only, like I said before, if we have a special run I like to see the discs. If we’re doing a special plastic, of course I’d want to see them before we sell them. But yeah, pretty much hands-off in terms of fulfillment. Just doing marketing and website stuff, and that type of things.

Carol: This is just, what? 2016. So, just three yours ago, right? That you started this whole thing? In three years, even though you’re so very humble and you’re like, “I didn’t know what we were doing. We were just guessing,” and so on and so on and so forth, you kind of took that whole Four Hour Workweek concept that you talked about that really transformed your life, and you have managed to create a product that you don’t physically have to touch anymore. That is generating income on a regular basis. Congratulations. That’s very cool. Very cool.

Cody: Thank you.

J: That’s awesome. Can we talk a little bit about your numbers? Are you comfortable talking a little bit about your numbers?

Cody: Yeah, absolutely.

J: Okay. We talked about all the cost getting up to production. What are you now spending to produce a disc?

Cody: One disc, soup to nuts, so we also stamp the discs. I don’t know if people know about disc golf, but most of the discs are decorated with a stamp on top just designating, hey, this is the 50-cal. That’s one of our discs. Or hey, this is the other putter. Everything all together is about $5. Just rounding because it depends on the plastic and stuff, but it’s about 5 bucks to product a disc.

J: Got it. What do you sell them for?

Cody: Wholesale, we’re either between 8.50 and nine, and retail it’s 14 or 15.99.

J: Got it. Okay. So, your margins are somewhere … your gross margins, and when we say gross margins that’s basically the sale price to the production price, somewhere in the 40 to 60 or 70% range.

Cody: Exactly.

J: Awesome. That’s really good. What outside of the production cost, and the actual materials costs, and the packaging and all that, do you have other employees or contractors? Are you doing other stuff, or is the additional development stuff, is that still you and your partner?

Cody: We’re pretty lean in terms of hiring contractors. We will hire a contractor say if we need graphic design, but we’ll just go on Fiverr. We’re not trying to pay other people’s salary or have people working for us and be in charge of them. Most of the stuff that we need done that we don’t know how to do, we just go on a Fiverr or Upwork and have it done for us.

J: That’s awesome. Where are you spending most of your time these days? Are you developing more products, new products? Are you focusing on sales and marketing, or something else? What are you doing mostly in the business these days?

Cody: Yeah, so I’ve definitely honestly been focusing less time than I should have on the business. I’ve just been doing a bunch of other random ventures, too. But most of the time focusing on marketing, developing new products, developing new strategies, figuring out, hey, how can we go and sponsor 10 new tournaments this year, or how can we make this cool one disc challenge? Just stuff like that. Just kind of creative marketing is probably what I spend most of my time doing.

J: Cool. Have you gotten any copyrights or patents or any … Have you protected your intellectual property? Is there a way to do that with these types of products with these discs?

Cody: When you file your disc with the PDGA, your design itself is automatically kind of patented within the disc golf world, but we also have design patents on our actual stamps for the disc as well.

J: Awesome.

Cody: Someone couldn’t go sell our exact stamp on a disc.

Carol: Wow. That’s really neat. Back to a marketing thing real quick, where’d the name Arsenal come from?

Cody: Honestly, I don’t know. We were just kind of spit-balling back and forth, and we wanted … all of our discs have a weapon themed name to go with it. Just to give you an idea of the demo of discs, it’s mostly 20 to 40 year old men. So, we’re like this is going to appeal with them. All of our discs have to do with some kind of weapon. That’s why it’s called Arsenal Discs. A lot of people are like, “Oh, do you have this disc in your arsenal?” That’s something that people would say in disc golf.

J: Ah, very cool.

Carol: Very clever. I love that. Love it.

J: Okay. Well, unless Carol, unless you have anything else, I think now is a great time to jump into the next segment of our show which we call the four more.

Carol: Yeah, let’s do it.

J: Excellent. Okay, so the four more is where we’re going to ask you four questions, and then after that we’re going to give you an opportunity to tell us more about where people get in touch with you, and where they can buy your awesome discs. How does that sound?

Cody: Awesome. Sounds good.

J: Okay. Carol, do you want to take question number one?

Carol: Of course. I want to take the first one. Cody, what was your first job or your very worst job, and what lessons did you learn from it?

Cody: Oh, okay. First job was working in the disc golf shop handing out snacks and lost discs. I was 10 years old making five bucks an hour. Worst job honestly was being a waiter. I hated serving people.

J: I’m right there with you. Awesome. Okay, next question. What was that defining moment when you realized that you had the entrepreneurial itch and you wanted to kind of go out on your own and start your own venture?

Cody: I think it was definitely Four Hour Workweek. I got to give a shoutout to my man Tim Ferris because that was just life changing realizing that. You didn’t have to work in a corporate job to succeed and make money.

Carol: Good. Good. I want to ask what’s an opportunity along the way that you have said no to, and do you still think it was the right decision?

Cody: Yeah. We’ve definitely had some people reach out who wanted partnerships and things like that that we just didn’t think it was a good fit at the time. Looking back, honestly I wouldn’t really change anything. I think we’ve had good trajectory even though we’ve been a lot of ups and downs like I said. We’ve had so many times where we were close to giving up, and I don’t think I would change it at all.

J: That’s awesome.

Carol: Cool.

J: Okay. Question number four, can you tell us something that you’ve recently splurged on that was totally worth it?

Cody: I’m so not a splurger. Let’s see.

J: Okay, if you’d like to answer the question another way-

Cody: Oh. All right, I got one.

J: Yeah, go for it.

Cody: I just recently went on a vacation down with all my college friends in Florida. Although, I didn’t splurge. I did travel Hack the Flight and everything, but I did spend more money than typical.

Carol: Awesome. Where in Florida did you go?

Cody: It’s Palm Coast, so it’s the northeastern part of Florida.

Carol: Fun. What a good time.

Cody: It was awesome.

Carol: That’s a really good splurge. Awesome. Okay, so thank you. Those were our four, but the last one is the more. Where can our listeners find out more about you?

J: And your products.

Carol: And your products.

Cody: Absolutely. I’m going to cheat here and send them to two different locations. If you’re listening to this podcast, I also have a podcast called The FI Show like you mentioned at the beginning, Jay. We didn’t talk about my financial independence journey too much, but I’m really passionate about that subject if you want to hear about really cool people retiring early and figuring this stuff out. Definitely join us there. If you want to check out the discs at ArsenalDiscs.com. Don’t worry if you forgot the second S. It will redirect from Arsenal Disc as well. But that’s where you can find me.

J: For those that might not know, disc is D-I-S-C not D-I-S-K.

Cody: Thank you.

J: No prob. Cody, this was absolutely awesome. I love not only hearing about your journey, but we really appreciate you walking through literally step-by-step on how you developed a product that came from your mind and turned it into a successful business. Thank you so much for that.

Cody: Thanks for having me on. For anyone out there who’s thinking of starting a physical product business, obviously we did not take the optimal route. We switched manufacturers three times, we reached out to over 200 companies. But just the fact that we got started, like I said before, is literally why I’m sitting here talking to you guys today. If you’re thinking about it, there is a way to do it whether you have to make 500 phone calls, a thousand phone calls, pull some strings, there is a way that you can make your dream happen.

J: I think you just took our closing away from us. Thank-

Carol: I am speechless. Speechless. That was beautiful.

J: Thank you for that. That was a perfect summary. Cody, thank you so much, and we look forward to talking to you again soon, and hearing an update on Arsenal Discs.

Cody: Thanks for having me on. It was a ton of fun guys.

Carol: Thanks Cody.

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In This Episode We Cover:

  • The story behind Arsenal Discs
  • How to start a business in college
  • Meeting his business partner in college
  • The story behind how they built the actual discs
  • How to get from a product idea to an actual product
  • The other hidden processes when starting a business
  • Handling obstacles and rejections
  • Doing whatever it takes to launch a product
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “I was always a hustler.” (Tweet This!)
  • “Keep making those calls.” (Tweet This!)
  • “We have to deliver because we don’t want unhappy customers.” (Tweet This!)

Connect with Cody