Swimming with a Shark: The Story of PRX Performance

 

The Audacity of PRx Performance

Billionaire investor Mark Cuban said in a 2014 Inc magazine article, “Many bold companies don’t set out to be audacious. They see a better way to do something and work to make it happen—” Maybe that’s how PRx Performance founders Erik Hopperstad and Brian Brasch, went from an idea born next from a bonfire and a few beers to a Shark Tank appearance and a lucrative partnership with Cuban’s most Wonderful co star, Kevin O’Leary. I had the chance recently to pick PRX Performance CEO Brian Brasch’s brain for an eye-opening thirty minutes. Read what he told me below.

Thanks for taking time to share a little of the PRx Performance story. You guys have a Crossfit background. Did you all immediately start training at home or was it at a local box?

I didn’t really feel like I had the knowledge of how to train at home until I started going to CrossFit. So yeah, my partner and I started CrossFitting in 2010; that’s where I’d say a lot of those ideas were born.

Yeah, I saw that you and Erik were at a friend’s competition and you watched a collar come off and that’s how you got the idea for the PRx Performance Talon right?

Yeah exactly, she was just really upset; she’s really just ultra-competitive and the fact that the equipment failed and that ruined months of training for her— I was in the automotive business at the time in manufacturing so when you see something break and it defeats months of someone’s work, you know that there’s a market.

Here’s the other interesting thing about that. We all see things like that and everybody’s like, “Man! There should be a__” . Like the  Racks came from the need to keep your cars indoors in the North Dakota winters.  I know that you’ve got experience in business startup, but how did you know that this concept for PRx Performance was one that would be a winner?

First: you need passion for something. Just seeing an opportunity isn’t enough. You’ve got to love the industry, which at the time we were just huge CrossFit fans. Two: you need to be able to commit time after your existing job to doing something. And time is just a huge piece of it. And then too, what you need to do is – and this is something I’ve learned even after the fact – is just go out and talk to people. Like, just ‘cause one person needs something and you need it doesn’t mean everybody needs it. So just really dive in. What we’re talking about here is execution. People have amazing ideas all the time but you’ve got to take those first steps, and once you kind of qualify that there’s a need and ‘I think I know how to make this or I’ll figure out how to make it’, then let’s give it a shot. After that it comes down to resources. Capital, etc and there’s a million ways to go down that rabbit hole but that’s what you need to get started is that validation point.

I said that you’re a serial entrepreneur.  Is this the first business that you’ve been involved in within the fitness space?

In the fitness space? Yes.

I watched your video and it said that the manufacturing business has been creating metal products for one hundred years, so is that a business that you were already involved in or did you buy it? How did you create that connection?

I bought in. In my previous background, I was with Microsoft and I just wanted to buy my own business, so I bought into a manufacturing business that had been around for ninety years at the time. When I came in, I added laser cutters and robotic welding, and that’s when I saw this need for this barbell collar.  I then had a friend who I was working out with and she goes, “Hey I’m going to start a gym. Would you build me a rig?”

That was Jessica Grondahl right?

Yeah, that was Jess. And at the time it was taking one of the only suppliers nationwide six months to deliver product and I built a rig from scratch in eight weeks and delivered it to her. So luckily, I had the resources and all of a sudden, I’m in the rig business.

Okay so basically certain things came together: you were doing CrossFit, you bought into this fabrication company, and I’m assuming she kind of knew because CrossFit’s a tightknit community so she knew, this guy has a connection with a fabricator, maybe he can help me out.

Yeah, exactly.

First Things First

What were some best practices that you knew because you’d done this before, that you all needed to do from the get go for PRx Performance to have a chance to break into the crowded workout equipment space?

There’s two things and I’m going to give you the simple one first.

• Talk to two hundred people. Would you buy this? How much would you pay for it? Do it whether they’re in that market demographic or not, and that’s going to help you fine tune the product, fine tune the price, as well as help you fine tune the message— but two hundred people is kind of a rule when you’re going to take something new to market. I mean, that’s essentially what crowdfunding is. It’s just validating the product and the need for the product. I hope before somebody starts doing their crowdfunding campaign that they’ve already talked to two hundred people, and those two hundred people said yes, so you get two hundred sales the first day. Not that everybody’s going to say yes.
• Download a business canvas. People hear business plan, and I’ve done business plans that are forty-fifty pages, but you don’t need to be that intense. If you just start with a one-page business canvas: you talk about the customer, the problem, the alternatives, the solutions, the benefits, the advantages, what you’re bringing to the table, what kind of messaging you’re going to use, the distribution and then run through the financials; both startup and ongoing cost. You can run through that pretty quickly. Put it all down, have your little elevator pitch ready and that’s just a great place to start.

This originally started off with just you and one partner right? How did you all meet?

My wife was the maid of honor in his wedding. So, a lot of time spent around campfires and beers. And every New Year’s we’d talk about how were going to get in shape. In 2009, I was like, “Hey Man, you’ve got to try CrossFit! And next thing you know, it was just game on. Fast forward to 2013, we’re sitting in front of the fire, drinking beers and saying, “You know what? We can do better than these other guys! Let’s start building stuff. Let’s start a company— what names are available?” And it just went from there.

I’m starting to see a North Dakota fire and beer theme here.

Ha ha! Clearly in July, it was not in January!

The reason I brought that up is trust is a huge thing. You’ve got this idea and you’ve finally gotten the courage to say, “You know this might change my family’s life! Now you’ve got to trust somebody enough to tell them. Because what’s everybody afraid of? Someone’s going to steal their idea. It sounds to me like you built a relationship over the course of years before you said, “Yeah, this is the guy I’m going to partner with on this business idea.”

Absolutely! And it’s not even really about the ideas. You know, people have an idea, but there’s not much value in an idea.

There’s value in doing the research, creating the patent, making the samples, and testing the market. Ideas aren’t really worth anything. I’m sure that there’s amazing fitness equipment out there that never went past the idea stage and there’s some bad fitness equipment products, but somebody marketed it properly and took it to market and now it’s worth a ton of money.

Yeah and now you’re the consumer at home mad like, “I wish they hadn’t been so brave then they wouldn’t have tricked me and I wouldn’t be saddled with this piece of garbage!” Ha ha!

The Courage to Try

So let’s talk about this. CrossFit has changed the world. Not just the fitness landscape but the business landscape; creating opportunities that just weren’t there before. I mean even ten years ago no one would dream that long socks with pizza and donuts on them would be a hot ticket item for men and women.  But because CrossFit is such big business now are you all afraid that the market is saturated with companies throwing products at affiliates and CrossFitters? Is it getting crowded out there for small business? What would you say to somebody who looks at these big companies and wonders how they’ll compete with them?

Absolutely. I think that’s kind of a two part question. One regarding the patents, and the other one is really the path to market. And, is it becoming overcrowded? Absolutely! But that doesn’t mean people can’t become successful and win if they execute better than the other guy. So if you have the idea that’s different, or if you can do it better, I’d encourage people to go for it because the market is so huge. What I would also encourage other people is look for new markets that are emerging and growing. I don’t think anybody expected CrossFit to get this big but you could see it ramping. Not was there not a great supplier; there was only one working through and learning as they grew, but the equipment needs changed. And as people were performing different exercises like putting bars over their heads and dropping it ten times, all of a sudden nothing on the market would fill those needs.  So, it might even be a new CrossFit movement that comes out in the next six months that creates its own little submarket. So just looking for those opportunities is, in my eyes, what’s important. Because if you’re an inventor it’s always easier to have something new and different than to have a “me too” product and compete with thinner margins.

When you said that, and I hadn’t thought about it until just now, there’s a value in going small. Because people respect it when you’re like the mom and pop or a veteran owned business. So you have a small company that might just be one fabricator working in his shop but people will patronize him simply because they know, “He doesn’t have a million orders to fill. He’s just got me.” Hopefully he’s got more than just you but you feel like if there’s a problem, you can call this guy and he’ll fix it. Everyone who has a homegym is a gym owner but they don’t have the same need; for me I just need a power rack that I can pass on to my grandkids.

It’s funny you say that because I was going to bring that up next. Anybody who’s tried both the other products out there, we are leagues, bounds and leaps ahead of everyone from the functionality to the look and feel and ease of installation.  That’s just who we are. We wanted to create something you can literally leave in your will to your kids, to the grandkids. And you know with American made, we overbuild it. We’re definitely limiting our market, but you know people who have a garage, they want something that’s going to last.

People get nervous about patents. PRx Performance now competes with two companies offering products similar to your racks.  Well, if you’re fighting a bigger kid down the street, you’d get your big brother and a patent is the government being big brother to help you out right?

In full disclosure too, all a patent is, is the right to sue. At one time we had seven companies copying us. We went through the normal steps, two companies backed off right away. But after you send Cease and Desist, triple damages start to accrue and we are getting our strategy together. I mean this is our dream! We’re not going to let everybody get away with it! So it’s going to be a long process, but thank goodness we have a partner who’s going to help us. It’s not a cheap thing to protect what’s yours.

And now he’s invested in the idea because he wants to back his money.

So to wrap up, we’ve focused on the United States because that’s where PRx Performance is based, but I was talking to a guy who’s in Australia about two weeks ago and you know it’s a continent. And they have such a huge problem there because especially in some of the smaller areas, they don’t have manufacturers there to make equipment for them. And shipping to Australia is murderous.

Well, there are two reasons that it’s that way in Australia. One: it’s such a huge country. Two: the shipping rates are about triple what they are in the United States. I mean, our packages, people are surprised when it shows up on their doorsteps. Just our rack is 180lbs. If you try to ship one of those in Australia—I mean it’s about $150 just to ship one in the U.S. for starters. So, in Australia, another $500, not to mention the cost to get it over there. Between that and just not having all the resources there, they have their own problems and opportunities too, it’s just a different market.

So it seems to me that the environment is ripe if you’re in Australia to ship within the continent.

We’re actually in talks with someone in Australia now.

Wow, that’s huge! But do you have any words of encouragement or advice for someone in that situation; where it’s not an overcrowded market that’s the problem but the intimidation of there not being anything really that you can look at as a blueprint? I mean, I’ve never been there but for example powerlifting is huge there so if I’m in Perth, or Corinda and I’m a blacksmith; I know that if I start making that stuff, maybe I can’t afford to ship outside of Corinda but I can help out my own town. After all, if there’s nothing there, that means no competition.

That is good from one perspective, but when we started building rigs— you’d think it’d be easy. I mean, you’ve got bars, you’ve got holes but we went through so much R&D and didn’t finalize our final rev until about two years. So even if they get their hands on a different one, it’s not quite as clear and straight forward as it would seem. Not to mention once you’ve gotten it perfected, do you know that market, do you know how to reach that market? There’s something to be said for having the passion for the industry ‘cause it’s more than just understanding the products.  It’s knowing how to get the product to market.

Okay so I lied. We’re not wrapping because I just thought of this related to the innovation hurdles for PRx Performance in the early days. I promise we’ll be done after this.

Ha ha okay.

You have a connection with a business that’s been making, fabricating metal for ninety plus years. But making a collapsible power rack is a different proposition. I can’t even imagine trying to describe it to a fabricator; like explaining a lowrider with switches to someone who’s never seen a car. How did you get that conversation going was it a matter of just drawing stuff, saying “Okay, it’s kind of like this but it’s also like this?”

Well, the first thing to remember is an acronym I’m going to describe. I didn’t just work with the engineers in that company. And this is a great resource if you don’t have a lot of money, but you need a lot of educated people is to come up with an ISO or NSO (Nonqualified Stock Option). ISO is people working for you but NSO is what I want to focus on. So it allows you to go out to industry experts and say, “Hey, I’m starting a company, this is what I’m doing, would you do this for me? Would you design this, would you market for me? Would you build a website? And in return I’ll allow you to opt in my company, they invest over a four year period but the work has to be done in the first year. We brought in about 18 experts in their own little industries together including five engineers. Some that had a fitness background and said, let’s make this perfect system. So we did that with no cash. So someday it’s worth more and more money and they trade in their options for stock, they’re going to be paid in perpetuity or sell the shares so it’s going to be a nice win for everybody who believed in our dream.  It’s kind of a cool way to get started and get everybody invested with you.

Thank you very, very much. Good luck with your business. I was so motivated; I’d seen the PRx Performance episode on Shark Tank and I felt like I won a little bit too because you guys are home gym guys. If I’m ever in North Dakota, I’ll be sure to start a fire in honor of this conversation!

John, that’s awesome. And thanks for your time as well! Have some beers with those fires, ha ha!

Brian’s Recommended Resources

 Costarters.co Creates accountability. It’s nine weeks, you meet once a week and you’re with fifteen other entrepreneurs and that’s a great environment

Patentwizard.com With a little bit of research you can file a provisional for under $1000 and that buys you a year. And you can feel free to have conversations and talk to everybody. But you’ve got a year to file a non provisional if it’s done right, that’s going to be $10-15k so now you’ve got a deadline to prove that it’s worth it.