On today’s episode, Kunle is joined by Howard Panes, Founder & CEO of GameFit LLC, a health and fitness company that created Stealth Fitness, a mobile app with games that make exercise and fitness exciting.
Having had lots of failed ventures and Nos to his ideas, Howard pushed and gave everything in his business. As he thought he was losing everything, he came up with an idea for a business from a business meeting of an entirely different matter. From then on, his success skyrocketed.
In 2015, he started Stealth Fitness and sold over 1 million in five years. He created a community on Facebook where people from across the US connect, build friendships, and plank together. The Stealth Fitness app continuously upgrades as it creates more games and groups for its customers.
It’s an inspiring episode as you’d hear Kunle and Howard talk more about facing failures and driving oneself to reach one’s goals. Howard shares his HOWIE method, habits that continuously help him succeed in his ventures.
Here is a summary of some of the most important points made:
On today’s interview, Kunle and Howard discuss:
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On this episode, you’re going to learn from an entrepreneur that sold over $100 million worth of e-cigarettes in eighteen months. He’s taking all of his learnings from that experience to build a trail of eCommerce businesses, one of which is a fitness device, which he says he sold over a million units to date. It’s a great episode you do not want to miss.
Welcome to the 2X eCommerce podcast. The 2X eCommerce podcast is the podcast dedicated to digital commerce insights for retail and eCommerce teams. Each week, we get either an eCommerce founder and a commerce expert or a rep from a best-in-class eCommerce SaaS platform. They share their insights to help you grow metrics such as your conversions, your average order value, your repeat customer rate, your audience size, and ultimately sales.
Every week, we’re here to help you sell more sustainably. My purpose in putting this show up is to help this community of eCommerce operators, merchants, and marketers to grow their eCommerce base to sell more sustainably online. That’s why we turn up every week for over a year on this podcast. We’re a year-round podcast.
On this episode, I interviewed a chap called Howie. His full name is Howard Panes. I didn’t know what to expect from this conversation. First of all, we had technical issues. I’m talking about lengthy technical issues almost when we wanted to postpone the interview but we got there eventually. I was pleased we got there.
First of all, he is full of life and a friendly individual. He’s hugely successful. He started in business in tough circumstances in the sense that he was running gyms and then he stumbled on e-cigarettes at the start of that trend and he doubled down in eighteen months with $20,000 capital. They were able to generate over $100 million in revenue and they got acquired by a big conglomerate. They acquired life-changing money. He wouldn’t disclose what they acquired for it. If someone is splashing $50 million on cars after getting paid for an acquisition, you probably get the scale of the check he was paid.
He didn’t stop at that. He didn’t retire there completely. What he’s done is gone back to his health core and his health purpose. We discuss his life. He tells me his life story. He gets back to health. He creates a device, which is planks. He did a Kickstarter for that. They raised over $300,000 on Kickstarter. This plank is called Stealth Fitness. You put an iPhone, an Android, or a mobile phone in the device and then you try and plank with it, and then there’s a game in it. There are Stealth Fitness games. The longer you’re balanced, there’s more gamification in that.
It’s a terrific idea. The patent is pending on that. We had a thorough conversation on how he’s built an eCommerce brand. He’s not a detailed guy. He’s a CEO and Founder but he knows the fundamentals like human psychology, the importance of customer data, and why you need to convert. All of those top first principles thinking of growth, he knows that and he gets people to execute on those principles if that makes sense.
He’s put out a first-of-its-kind device on Kickstarter and crowdfunding and it did pretty well. They’re selling till now. He’s thinking about continuous product expansion. There’s not one question I asked him where he couldn’t come up with a convincing answer if that made sense. If you’re looking to get to an inspirational story, from zero to hero, this episode is one to read. If you’re looking to get inspired on how to spot a trend and seize the opportunity, this is an episode you want to read.
His first E-cigarettes business was offline so it was retail, it was wholesale distribution with retailers. With his new businesses, they’re online. He’s still using some of those first principles thinking from his offline experience, from his retail experience in eCommerce. There’s a lot to unpack here. It was a long conversation but, to me, it was a quality conversation. Enjoy this episode. I’ll catch you on the other side.
Howard, welcome to the 2X eCommerce Podcast. Happy to have you on.
Kunle, thanks for having me. I appreciate it.
I appreciate it. When the opportunity to speak with you came. I jumped in. I was like, “Let’s go.” It’s one of the fastest responses that our team put together. I like to know who you are. I will start with your childhood and where you grew up and connect that to your first venture or your first real job. I want to know who Howard is, please.
I’m the healthiest wealthy guy. At a young age, 10, 11, or 12, I took interest in martial arts, bodybuilding, and Tony Robbins. I was digging in deep. I came from an entrepreneurial family. My grandparents came from Eastern Europe. My grandfather was a fruit cart vendor that built a nice company. I was around hard working. My father wasn’t around lunch, he was working 2 or 3 jobs. My mother, at a young age, was an entrepreneur. She was in the jewelry business and kids’ clothing. She was creative. A lot of the creativity came from my mom and also that positive can-do attitude.
I grew up in a middle-class family in New Jersey. My grandfather came from a Jewish family. He liked to give to Israel, was a big benefactor for success, and like to give back to the community. A funny story was I was going to a Hebrew school in a church parking lot in a trailer, that was the first place I went to school. I had a class of four people in my class. From kindergarten, I was learning English and I was learning Hebrew. I was learning a second language. I was in this trailer at the church and I get both energies, which was great.
Through the years, he built a nice school that wasn’t too far from where we lived. I went to private school from kindergarten through 8th grade. I loved it. My class was like family. I don’t know why I was always in trouble. I was a class comedian. This is the first time I’m telling this. I like to tell jokes. I don’t tell good jokes. I like to laugh at my own jokes. I like to keep things light in life. I like to lead my days through jokes, having fun with people, and being super friendly and outgoing to everybody and anybody. I treat everybody equally. That’s the way I’ve been since a young age.
I went to public school. I was like, “This is what real school is like. The Wild West.” People came up to me asking me for protection money. I was like, “I’m a small guy.” These big dudes are like, “Do you want to give me some protection money?” I’m thinking to myself, “Is something bad going to happen to me in this school?”
At a young age, I was into music. I was into hip-hop and rap. My brother and I were breakdancing. We like to break dance. I got into DJing. I was DJing at a young age. I was DJing at my high school. I did some of the problems there. I was big into DJing and mixing harmonic keys. I belong to record clubs. I was big into BMX bikes, racing, and jumping. I was a risk taker. At age 14, I built my first motorized skateboard. I had a motorized skateboard. It’s this bike motor I mounted onto this tire and built this motorized skateboard at 14. It went 40 miles an hour. I was towed around in that.
I’m big into my fitness. I’m working out. I remember I got my mother to sign me up for a gym that was 20 or 30 minutes away. She’d take me six days a week to this gym. All big bodybuilders. It was intimidating. The first time I went in this gym when I was 14, these guys were massive. For me, that was one way for me to push myself, “How can I get to the next level?” I was doing martial arts four days a week. I had this Korean master, a 6th Dan black belt. I was training with him. I was pushing myself. I wanted to be better and stronger. I have always had this urge to see how hard I push myself.
These are not middle-class parents pushing you. It was you. It was self-driven.
Nobody was pushing me. I had this thing in my head that I wanted to push myself. I wasn’t born the biggest guy. I was lucky if I was over 5’0” feet at the time. In high school, everybody was bigger than me. If I wasn’t going to be the biggest, I had to be the strongest, toughest, and smartest. When you’re 6’2” or 6’3”, they either said, “You dress up going to a job interview and you got a much better chance at your success.” I said, “The millionaires are above 6’0” but the billionaire guys are only little guys.”
The funny thing is I went to high school in Parsippany for three years. I moved to high school in my senior year. Imagine that. People are like, “Who would move to high school in senior year?” In my mind, I didn’t care. For me, I was ingrained in my own stuff that I just moved to high school in my senior year. I went to a new high school and it was great. I graduated and went to Syracuse. For four years, it was a business major and a minor in exercise and nutrition.
One of my things was I had to have a car up at college. Unless you were part of the sports team at college, you couldn’t train at the gym. They were like the Sports Performance Center at the time. I was like, “I need a car at college.” In freshman year, I made sure I had a car up there. I was hitting the gym six days a week. It was called Hercules. For me, with fitness, the classes were okay. Doing well in school was okay. For me, fitness and training, to be honest, was the most important thing. Getting in and training, for me, was my life. For me, I was ingrained in bodybuilding.
When I got out, I got my first offer at Staples for $23,000. I told my mother, “No way I’m working in Staples. $23,000 a year, this is where are the college for? no way.” She said, “What do you want to do?” She had a personal trainer at the time and I said, “I’m going to go into training.” I like training. Training makes me feel good. I feel good about myself. I got positive energy. I always noticed around me many people who were depressed, not feeling good, complaining, and not energized. I said, “For me, Howie P, I don’t want to ever be that guy.”
I talked to my brother that day and he was like, “Howie, when you were 12, you’re putting sticky notes in like, ‘I’m gonna have it all. I feel amazing.’” I was always feeding my mind with my aspirations. I wanted to have unlimited wealth. I wanted to be able to control my destiny. I didn’t want to work for anybody. I wanted to be able to conquer anything that came my way. I trained myself at a young age. Up at Syracuse, when I graduated, I didn’t do the Staples route. I became a personal trainer.
What year was this?
1990. I worked for a guy for six months. I learned the business. I did it in-home training. After six months, I said to him, “Can you take care of me a little better? I’m working hard.” Do you what I got in thanks, in lieu of the bonus? I got a 50-page non-compete. That was me learning my first lesson that when you work hard for somebody else, there’s no appreciation a lot of times. What did I do? I said, “You keep all your clients. I’ll train them till you find somebody else.” Eloquently, I said, “I’m going to park my way in 90 days.”
I built my in-home business and opened up a gym. I was training people in between trying to pay my rent by in-home people. Finally, I brought them under one roof. After three years, I had 5 or 6 trainers working for me. I opened up another gym. I closed the first one. It’s HowFit, Howie Fitness. I had HowFit for a long time. While I was building HowFit, I had trainers, athletic training, flexibility, some physical therapy guy there, and massage therapy.
I built it up to 5,000 square feet. I couldn’t break the $1 million a year mark. I was maybe $700,000 or $800,000. I had a good business. I’m making a few $100,000 a year. I’m making good money for myself. In between, I said, “I got to make more money.” I’m only making good money when people are training here. When I’m training, I’m making a couple of $100 or $150 an hour. I’m doing well but how am I going to level up?
I tried weight loss products. I tried inventing my own fitness product in 2000. I had the NRG Ball. It was the world’s first medicine ball with interlocking handles. It was revolutionary for functional training. I was involved in functional training before anyone knew what functional training was. I was ten years before my time. I had six videos, squatting, lunging, bending, twisting, pushing, pulling, and working all the primal movements. I had six different videos. I was shooting videos in California in between doing my gym. I had a health and fitness search engine, beach cards, tattoos, t-shirts, and the list goes on.
I was putting everything on the line. Everything I did, I gave 100%. Things weren’t clicking. The NRG Ball, I spent $1 million of my savings on that. It was the best product, push-ups, and circle squats. I was on doing YouTube before people were even talking about YouTube. I was pushing my videos, my training. I thought about franchising. I never franchised although I had a great brand.
I was hitting rock bottom. In 2009, Equinox, Life Time Fitness, and New York Sports Club all open within five miles of my gym. This was tough. It was putting a hurt on me. I was always looking for opportunity, always looking to make deals, and hustle. Even when I was on trips, I was working from the beach 24/7. They’re like, “You don’t relax. You never relax.” I said, “I don’t have time to relax.” I want success. I want to have some massive business that I could scale and make a difference. I felt held back, Kunle.
Did you have business partners and mentors all through this journey or was it just you?
It was pretty much just me. I hired a coach at one time. This gentleman was a great guy. He’d beat me weekly. You put together your goals and stick with the plan. I remember one thing from him, which was a great saying. He said, “Spend your time doing revenue-producing activities and let everybody else do the stuff that you don’t want to do.” I always kept that in the forefront of my mind. Do things that are revenue-producing. It’s mainly the people that were around me and trial and error pushing and doing. I did an energy shop for gamers. I had a partner with that where we built the Guitar Hero trailer. I traveled around the US. I went to Columbus, Ohio for the gaming championships throwing caffeine.
I call it 29 failed ventures. In 2010, a bunch of guys asked me and I told them I’d help in this deal to bring mixed martial arts to China. This is where the story starts. I set up this meeting with Tap Out in California. One of the guys I trained was one of my clients and I said to him, “Can I get a little piece of the action? I’m broke. I need help. Things aren’t going good.” I’m going through a divorce. My business is failing. I’ve got a lot of competition. None of my products and ventures have gone the way I thought. I lost my house in a short sale. I was 5’0” feet under from 6’0” I’m always trying to keep my head up, go strong every day, and follow that path to success.
In 2010, I’m in California. I’m sitting in a meeting with these guys. The guy next to me is blowing smoke. One of my biggest pet peeves as a health guy is cigarettes. I’m like, “Why is this guy blowing smoke in my face? Dude, why are you smoking at the table here with us?” He was one of the guys looking to invest in the deal. He goes to burn my hand. I go do, “What are you doing?” He says, “This is an electronic cigarette. It’s only vapor.” This hit me like a bomb. I said, “This is going to be it, How.”
I had that in mind. I was always looking for opportunities. He goes, “Cancer-free smoking.” I go, “What?” I was mind blown. I said, “This I can latch on to. This was for me.” At that moment, I was like, “This is what I’m going to do. I’m going to take this. I’m going to own it. I’m going to go into the market strong.” I was thinking about the opportunity right there. It went through my head in 30 seconds. I said, “Can I get some samples?” He goes, “You can buy it for me, private label. I manufacture in California.” I said, “Let me see.” I get some samples from him. He walks away. I don’t know where he went.
I got to my buddies, “Guys, did you hear what this guy said? This is the future.” They go, “What are you talking about? We’re here for MMA fighting.” I go, “I need to borrow $10,000. He said I need $10,000 to start this business. You guys could be my partners. It’s electronic cigarettes. This is the future.” They go, “How, ADD. This is why you’re a bad businessman. You can’t focus. Your head is elsewhere.”
I heard this many times in my life. People are like, “You got a problem focusing. You don’t stay with one thing. You’re jumping to too many things in life.” This is my superpower. You’re out there and you can’t lock into one thing, it’s a superpower sometimes. For me, it gave me the opportunity to find something that helped me. I call it to skip the millions and go to billions. I can never be a millionaire. I skipped the millions and went to the billions.
The beautiful thing about this story is I said to these guys, “Can I borrow $10,000.” They said no. I took the samples. We left the meeting. Fast forward, I went back to my gym. I went to the internet. I was getting samples from China on e-cigarettes. I’m trying and puffing them. I’m not a smoker. Three months in, I got all these samples piled up from all these manufacturers and I said, “What am I going to do? I’m not a smoker. I need a smoker.”
Right next to my gym is a salon. Think about proximity there. Eli is from Israel. He’s there with his wife Yana. They were good friends. Yana was a good friend. She had a hair salon next to my gym. I trained Yana. Eli was a hardcore hustler. I have always seen him smoke cigarettes. He told me once that when you go to the Israeli military, they give you a uniform and a pack of Marlboro.
I see them smoking outside one day and I’m like, “I’m going to catch him one day in the hallway and I’m going to pitch them this idea of electronic cigarettes and see what he thinks. Maybe he wants to partner with me.” He’s walking by the hallway, I catch him. He sees the – cigarette in my hand. This is an unbelievable story. I remember it vividly. I go, “Eli, I got a new business for us.” He looks at it and goes, “E-cigarette? I tried that in 2008. Two years ago.” This was 2010. He said, “My wife bought me a kit for $250. I opened it up and it was like an encyclopedia, step 1, step 2, step 15, and step 20. I never graduated 8th grade in Israel. I put it back in the drawer and I never took it out again.”
This is where the magic came. I said, “Eli, this is disposable.” Susie will go to 7-Eleven every day. She’ll buy a cup of coffee and our brand. He goes, “Let me see. Let me try that.” This is how it went down. I’m saying to myself inside, “I hope he likes it. Here we go.” I pitched it to him and he takes it. I’ve never seen someone’s face glow with a smile. He goes, “This is gold, Howie. Let’s cash it in.” That’s the Logic story began.
We hustled. You talk about with a lot of readers here eCommerce. We were street fighters. We went store to store. We started selling out of the salon. We ordered lanyards. We were going store to store with these plastic tips. I stand in line and the guy said, “I want Marlboro.” I said, “Try Logic. It’s cancer-free smoking.” Were we allowed to say that? No. In my mind, that was cancer free. It was nicotine, propylene, and glycol. It is cancer free. We just couldn’t make the claim. You’re next to me in the store. This is the future. They tried it. I’d sell one by one, store by store. He started selling out in the salon. People loved it.
We did sell online. We weren’t the first. We had 200 competitors. What made us succeed? I gave a bunch of mastermind intros and talked about our product. What is the product and service you’re selling? What’s it going to take to be successful? For us, it was a few things. The simplest thing was having a product that always worked.
Ours was disposable. We had no wires, no refills, and no defects. We made sure that every Logic worked. It had to have the best flavor and the thickest vapor. That’s what people wanted. Imagine the simplicity and focus. We had to focus on the brand name, which was Logic. We couldn’t claim anything on the packaging. We said, “If we call it Logic, if people use their logic, usually they’re making a good decision.” That’s why we ended up calling it Logic.
It was white labeled. You got the name Logic on it. You printed the name logic on it. Did you do the packaging and all of that stuff?
What we did is we first found an off-the-shelf disposable OEM manufacturer that would make 5,000 for us in our first order for $3 each. We were selling it for $9.99 in the beginning. We made sure that the stores could double their money. If we were selling to them for $19.99, they would double their money. We then customize. We went from 0 to $100 million in sales in eighteen months.
How did you do it? You had to deal with 9/11. 9/11 is pretty much almost every block in the States. I can understand that they have the distribution. How did you scale that fast? What about your staff, the resources, and the capital? What was your capital base?
10,000 each, that’s it.
Break it down for us, please. Break the math and then break the organizational skill. What did you need to have? The thing must have been crazy. Things would’ve been moving at warp speed.
It was wildfire. We started with $10,000 and we bought products. On that product, we turned that product, and then we’re able to buy more products. I talked about starting a plant-based food company. With Logic, when we sold it to the convenience store, it was no consignment. That wasn’t our vocabulary.
I’m going to tell you, we had the word commitment. What did that mean? We gave them the best product. We said, “We’re going to guarantee it for you.” What does that mean? It means if you don’t sell it, we’ll buy it back but we want the money now. We got the guaranteed money upfront. We were never waiting. We never had accounts receivable. In the first 24 months, no accounts receivable. You got to pay in advance. We came and we delivered it and you had to pay for the product. We just kept churning it.
What was our breakthrough? Our breakthrough was we hooked up with a company called Harold Levinson. They’re the sixth biggest C-store distributor in the US. They have 150 to 250 sales guys that are on the street every day. They formed the whole internal team. They saw our performance. They saw how good our product was selling. We had jobbers. People call them trunk slammers. We had guys in New Jersey that we got early on, 4 or 5 of them that were able to sell. In the beginning, they were moving 100,000, 200,000, or 1 million a month of products. They had access to 2,000 7-Elevens with their network.
Were these freelancers? Were these your employees, these sales guys?
No. I was handling the warehouses. Put it this way, for the first year and a half, it was out of the back of my gym. We had a little area back there. It is the craziest story ever. No joke, we had a 200-square-foot office at the side of my gym. We moved to a bigger office, 300 square feet, in the back of a strip mall. The office was only 20×20. I have pictures on my social media. Each master case held 244 Logic and we were wholesaling them.
Think about this, we had e-cigarettes that cost us $1.80 and we were selling them for $5. The convenience stores are marking them up 40% to $9.99. Our cartomizers, eventually, we had the rechargeable ones. After a year and a half, we were paying $1.80 for five of these and whole selling them for $9.99. We had a 300% markup. Our margins were massive. We had no accounts receivable.
We brought it on Patria, North Carolina which had 3,000 locations. It was a machine.
How did you receive payments? Was it like, “I’m going to confirm a bank transfer from my app.” Was it like, “Here’s a POS,” and then you pay with a credit card? How will you get to ensure that you’re getting it from these stores?
The stores were writing checks or giving us cash, $540 per box, cash.
These are the real Wild West times for e-cigarettes.
We had money. We had two cash machines in our office where guys are bringing suitcases. We were depositing in a bank. It was like Pablo Escobar.
Good timing. What was the journey there? When was the peak? Did you exit it? Tell us more, please. It’s an Incredible story.
What happened was we had a small space then there was a bridge club behind us that had 3,000 square feet. We said, “We’ll do that.” It was nuts. We had DHL coming in. We were unpacking DHL because we were air shipping a lot. We were making enough margin where we airship that we figured we can have it fresh and it would last longer. If you put it on the sea where everybody else was and they were too cheap to refrigerate it, their oils were all dried out. We had the best battery and the freshest oils. We were the number one disposable. We had it locked down.
This is all coming from China.
Yeah, all from China. We had three facilities. I was living in China for three years, back and forth.
Whereabouts in China did you live? What part of China?
We were living in a hotel. We were living at the Bali Lai hotel in Shenzhen. They gave us big suites. It was unbelievable. We were in the back of planes for the first six months. After six months, we had caviar at Cathay Pacific at first class.
The hospitality of the Chinese once you’re doing well is quite nice. I’m familiar with Shenzhen.
We were making too much money and paying New Jersey too much. When I say in the middle of the night, over a period of three weeks, I sourced a facility in Pompano Beach, Florida. It was either Puerto Rico, which my partner wanted, or Florida. We looked at Puerto Rico. We met with tax advisors and attorneys. This thing was a whirlwind. We were on a rocket ship. This thing was a machine.
We opened up in Pompano. We had a 50,000-square-foot facility and a refrigerated warehouse. I got the Crown electric lifts because it was enclosed so you couldn’t have any fumes in there. I got these 30, $30,000 Crown high-tech forklifts. We were in Pompano. We exited in ‘15. Goldman Sachs did my deal. It was a little bigger than a small deal.
What did you sell for?
The numbers aren’t disclosed because of many different reasons. You tend to have people pop out of the woodwork that you didn’t know. My partner said it was family members. He didn’t want family members from six generations coming after him.
What multiples did you sell for? Was it based on revenue or was it based on EBITDA?
I can’t disclose anything about the sale. All I can tell you is Goldman sold it. It was an all-cash deal. I’m sorry. We sold it to Japan Tobacco in an all-cash deal. It wasn’t like, “Let’s give you a stock.”
There were no earnouts. You sold $100 and you walked away with your partner.
There was hold-back money. When you sell it to the Japanese or at least the experience I had, it was the most thorough due diligence. What we had to go through was unbelievable. For every customer service inquiry, which was tens of thousands of pages, they went through everything, nicotine factories, certifications, and testing on all our chargers. Everything you can imagine was gone through with a fine tooth comb. It’s good. Everything was certified. We hooked up with a good and certified firm for all our accounting.
The data room and functionality with Goldman, luckily, we had guys who ran big companies. Tony Gaines was one of the chief guys at Budweiser with over $16 billion in sales under his belt. Tony Gaines and Miguel Martin, who was formerly CEO of Sales and Marketing for Philip Morris with 2,500 people in the room, are people that helped me and Eli who were the street fighters and street sales guys bring everything together with a proper CFO.
In the beginning, I was doing everything. It was counting each piece of tape and repackaging everything. We only had 3 or 4 people in the office. When you talk about manpower, we didn’t have the manpower. We had heart, soul, and, “Go do it.” For me, these companies now are raising billions and we had $10,000 each. We were number one per sale and per register in 2015 through Nielsen. At every convenience store, we sold the most of any other brand.
In 2015, we exited and we sold. It was sad. You think that you get that wire and you’d be super happy. I hit a lot of the operations and the people there. They were family. It wasn’t like today where everything’s remote. For me, the office was the energy. That was the heart and soul of the company where we got together and magic happen. In the warehouse, we turn on the music, we’re dancing, and we’re throwing boxes and loading trucks.
I got such a passion for business and for what we were doing. I don’t find that a lot today. For me, I go all heart and soul. It’s all the people that were with us that made a difference. For me, complimenting them, pushing them, and being a team player. Too many people are telling people rather than having an open mind and listening and taking ideas and suggestions. This is what helped us become the number one brand in 2015. I’m proud to say that Logic is top three in the world.
With the new acquirers, they’re still taking care of it well with Japanese Tobacco.
They spent the money. They got the FDA certification, which was $100 million. It was me and my partner from the beginning to the end. No investors and no lines of credit. We had opportunities. I offered many people stakes in the company at a time, even a lot of celebrities that want to invest and they told me, “Howie, I can help you.” I said, “You’re at the $1 blackjack table. You need to move to the $10,000 table. You’re too low.”
First of all, a quick observation, you’re a people person. That emotional intelligence played in the leaders you hired when you talked about the Philip Morris executives who came in to structure out Logic in a short amount of time. Am I right in the time horizon that it was four years of operating until you exited?
It was a little under five years.
At the point of exit, when did the discussion start? Did the discussion start early? How long did it take? Did you attract them or did they find you? Did they say, “Logic is the fastest selling e-cigarettes in most convenience stores. We need to buy them.” Were you structuring yourself, listing yourself out with Goldman for acquisition?
After three years, we acquired a lot of IP. I was big into trademarks and filing IP on functionality, puff counter. We filed a lot of patents for our innovation pipeline. We wanted to have a good innovation pipeline. We found out through earlier meetings that companies that want to buy us like to see an innovation pipeline. We wanted to build out an innovation pipeline.
We met with several companies. My partner, Eli, had reached out to Goldman. We did have a relationship there. We did have interested parties but we said, “Let’s reach out to Goldman, maybe they have some clients that may be interested.” It happened to be that Japan Tobacco was one of their clients and we were able to put the deal together.
With all that you’re doing, because the audience is eCommerce, what percentage did the digital eCommerce account for in your top line?
It was very little. Ours was mainly convenience stores. Also, we have Walgreens and some big pharmacies. Mainly, 95% was in-store as opposed to eCommerce.
In 2016, you don’t have the company. You have a ton of cash in the bank. What’s life from 2016 to 2022 look like? Obviously, we know you have a health product now. Paint us a picture of what happened immediately. Did you go on holiday? Did you splurge? Paint that picture, please.
I bought $15 million or $20 million worth of cars. I splurged on cars. I started getting into social media with Instagram. I wanted to talk about the story and try to help others and motivate them. Some people see it as showing off. I see it like, “Look at what’s possible.” I didn’t go to an Ivy League school. I was not a good student. I’m a muscle guy. I like to hang out in the gym. How smart can that dude be?
I tell people, “Believe in yourself.” I call it the HOWIE Method. I look deep into myself and I said, “What stamped on me when I was at a young age?” I’ll do it simply. The H is health, you got to lead your life with health. Health is wealth. The O is originality. You got to look in your mirror and that is you. You’ve got to be you, be real, and be proud. You can like other things from other people but bring them to you. You’re the guy or gal that was born special with all the talents. You have to find them. You have to look deep inside you.
The W in Howie is work. You got to put the work in. There’s no hack in hard work. Tim Ferriss talks about the 4-Hour Workweek but I never found the 4-Hour Workweek. Mine was 80 to 100 hours. I did that for twenty years. I’m still working 75 hours a week because I love it. I’m passionate. I want to make a difference. I want to make breakthroughs. That’s me. Not everybody has the same goals or what makes them happy.
For me, business is sports. I’m not going to run 100-mile marathons. I’m not doing triathlons. I’m not climbing Mount Everest. It’s okay. For me, my Mount Everest is, “What’s the next company I can build? How can I do something that’s a game changer and never existed in the world?” That’s where the I comes in, innovation. How do you innovate? How do you do something different? Instead of being a copycat, how do you innovate, do something different, solve a problem, and offer something good to the community and society that can help people feel better and look better? That’s where Stealth Fitness came in.
E is one of the best, it’s energy. Energy is what drives me. Energy moves the world. Energy is the power. In the morning, you sun gaze, you look into the sun and let that energy come into you. Everything is about energy. The HOWIE method like the five habits I talked to you about before, it’s five simple things, health, originality, hard work, innovation, and energy. It’s five easy things that can help you make a difference.
When you talk about 2016, I bought a ton of cars. I bought a bunch of real estate. I was like, “I got to get back into fitness and health. What can I do to be a game changer in this space?” When I say game changer, it became a fitness gaming company. We did start as a product that’s called Stealth Fitness. I said, “Most of the world doesn’t work out. Most people aren’t fit. There are hundreds of millions of obese children.”
How do you get people to work out? Get into a habit. Start your day with a win. Instead of making your bed in the morning, what else can you do that’s like brushing your teeth and that easy to spark that internal flame to get yourself fit and feeling good? I came up with it and I said, “The plank is probably the best exercise and easiest to do. It’s the least stress on the body, although it’s hard. If you could hold a plank for 1 to 3 minutes, you’re getting hard work. I said, “The problem is if you look at planks, it’s a problem.”
Everybody hates planks because they’re boring and they’re sitting down looking at their phone waiting for the time to go by or they’re watching a YouTube video. I said, “Imagine if someone can plank and play games at the same time on their phone.” We created Stealth Fitness. You have a 360 degree. You’re on the board and you’re planking and playing games. My body is the controller of the game. We developed a whole gaming platform. I’m playing a game and the accelerometers on the phone are feeling the angles of the board.
It’s that sense of gravity on the plank in your forearms. When you tilt left or right, you’re moving left or right. It’s almost hepatic.
I’m playing the game. We built the whole gaming fitness company based upon one exercise, the plank, and we sold over 1 million of them.
You sold a million of these.
Over the last five years. You talk about eCommerce, this is an eCommerce company. I went from the opposite. It’s funny. I went from selling in-store now to selling direct to the home and building a subscription model.
You sold over 1 million Stealth Core.
We’re shooting videos for the Stealth Squat product and then we’re coming out with Stealth Cycle. This this is going to be a monster. I love it because we have 75,000 on our Facebook.
You have a community.
There’s a community of 75,000 strong on Facebook. People go to each other across the country to plank with each other. It’s the friendships that have been built and the motivation in the scores. There are challenges. There are new games and groups. It’s amazing. It’s become this vertically integrated fitness company, Sealth Fitness. Stealth is health.
What has been your major acquisition channel? Do you have infomercials like on TV and sell direct? Has it been digital channels? How do you get customers after they’ve bought from you to buy again? Is there a gift or referral? How do you grow beyond the first purchase?
I have much smarter people on my team than myself. I always like to say I’m an idea guy. I don’t get into the nitty-gritty a lot of times. I know that we get a lot of customer acquisition through Facebook before it got kneecapped by Apple. Facebook was incredible for us. That’s where most of our marketing was taking place.
We would send them to Try Stealth, that’s the landing page. We’d upsell them. They would be presented with our lowest price item, which is $99. We then upsell them to a more expensive model called the Stealth Orange Model, which is a bigger platform and more cushion. It was $40 more. We had 30% conversion there on the upsell. We give them a one-time offer on this subscription for $29 for the year instead of $39. Right.
For the games for the app.
That’d be 40%. We operate anywhere from a 4 to 1 to 5 to 1 on our conversion, which is good. For every $1 we spend, we bring in $4.
Your return on advertising spend is 4.
Three is good but we’ve been between 4 and 5.
Is this post-iOS 14.5?
Yeah. What we found right now is we’re running a lot on YouTube and Google. We found that YouTube is powerful for our brand and selling our products. It’s been explosive for us. The toughest thing with our businesses is when you have one product. When we could cross-sell them with a Squat Trainer and then cross-sell them with the bike, it’s going to be explosive. Being able to build $100 million of sales with one planking device.
Two sizes and one product.
We had three sizes. The first one, we made in the US. People are like, “Made in the US. You should make it in the US.” We made it in the US but our cost was so high. We had to make it overseas. Stealth Fitness has been incredible. My latest venture is going to be incredible. You see the nostalgic Lunchables. They have a turkey and cheese and then the Bologna and the pizza.
My buddy had this idea. We’re launching the world’s first plant-based Lunchable company called Mighty Yum. It’s plant-based fun for everyone. 340 million kids that are overweight around the world, we’re looking for a solution to offer plant-based lunch on the go for kids. This is going to be a game changer. I’m super excited. This is what I’ve been working on.
It’s phenomenal. You’re a serial entrepreneur in the true sense of things. How long has Stealth Fitness been running?
We did a Kickstarter back in 2017. We sold more on our Kickstarter than Peloton did. Peloton did 300 in their Kickstarter back in 2014 and we did approximately 350. Do you know what’s great? You can test products. You don’t even have to develop products. You can split-test them. We used a platform that used to be called Mojo. You guys could check it out. A lot of the infomercials use it. I don’t know what it’s called now but you could look it up. It was called Mojo. This is one of these platforms that allow you to do split testing. For some reason, my team told me it’s a lot better than using Shopify for a single product. Hopefully, that’s helpful for your audience to check them out.
We’ll check it out, for sure. It’s for single-product listings and it has upsell capabilities. It links up to information. There’s this expectation of the experience you want when you look at the product and infomercial on TV, what you expect when you get on the website, and how that feel. When my team and I were looking at Stealth Fitness, we were like, “Is this an infomercial?”
That’s why I asked you whether it’s an infomercial. I could see your YouTube feature at the top on this one and even the colors and all. Am I right in saying that you have patents related to Stealth Fitness? There’s a comparison on your website, you have static forearm plank, Bosu ball, and ab dolly. Have you put some patents and some research behind it?
I’ve probably spent over $1 million on patents and legal all over Europe and China. We launched Stealth China. We launched Stealth Japan. We have utility patents and strong design patents. I learned that from Apple. Apple goes in hard with design patents. A lot of times, design patents are easier to enforce than utility patents.
That’s true. What about the gaming experience? I could see on your website that you have a Stealth app. You have free games and then you have premium games. What is the up take there and how does it work?
The pricing fluctuates. The pricing is around $39 for the year. You get 3 or 4 free games. We have 30 or 31 games. There are upgrades and new games that are developed either monthly or every other month. I know what new products it’ll be. You get monthly upgrades to the software. We give you 3 or 4 free games. The premium games are new exciting games to keep them energized and challenged. A lot of people love the free games, especially Galaxy Adventure, which was one of our first ones that have 5 or 6 different screens to challenge your core. You’re working your whole body.
It’s called Stealth because you’re sneaking fitness in. That’s why we call it Stealth. You’re sneaking fitness in and you don’t realize how hard you’re working and you can work 3 to 5 times harder than you would without the game and without the planking board. You’re going to work 3 to 5 times harder and be able to get stronger and faster with Stealth. Plus, you’re working on more angles. Also, you’re working your vestibular and your inner ear at the same time. You’re building new neuro networks in your body by using Stealth. There’s so much more going on than just training your core and working your muscles. It’s on a neurological level. There’s going to be a lot more coming out.
For example, I was reading a study. I forgot who it was but they have a lot of burn victims and they’re getting them out of pain by using gamification through their procedures of helping them focus on the game and being able to work the mind through gaming to take the pain out of the body. That travels over with Stealth. A lot of people don’t like to work out because they’re not used to that pain. They’re not used to muscle burning. I’m used to it because I got it at a young age. For me, I’m used to pain. I conditioned myself at a young age. Most people don’t like the pain.
For you, it was intrinsic. From your childhood, you were self-motivated, a situation in which you’re put through pain because you’re told to. The moment you have that autonomy, very often than not, you wouldn’t care about putting yourself through the pain because there’s no one pushing you. The trick is, how can we intrinsically motivate children? You guys are onto something with gamification where you make it fun in a way that they don’t even feel its pain and then they get used to that feeling and that endures lifelong. There are lots of opportunities there.
That’s why sports are good for kids. Every kid should be in sports. I love martial arts and I love wrestling. My son was a wrestler. I remember vividly, he was probably 7 or 8 and he’s wrestling at a tournament and he’s about to lose and he’s fighting hard. He was close to losing and he won. He shook it out with his competitor. She takes off the headgear and her hair comes down and he couldn’t believe it was a female. It was amazing. I was even shocked because I didn’t know.
You see in MMA, there are a lot of tough females. He was in shock. He gave him a whole new respect. That was cool. I’m watching my kids wrestle. I got two boys and my daughter. They both wrestled. I love the fact that it was either them losing or winning. There were no excuses. It was good. The results are right there. I like the fact that you’re either winning or you’re losing and you know. For me, I love that. In business, it’s the same way. I tell people, “Not every day is going to be a great day.” You’re taking punches and you’re giving them.
Don’t wait for people. You got to take massive action. With this new startup, I can’t wait for people to determine my future success. I’ll figure it out. You can’t wait around for people. I find most people wait around for people to help their success. You got to take initiative. If someone’s not picking up, if someone’s not doing, you got to make the ball move by yourself. A lot of people today are waiting. You can’t wait. I don’t know what everyone’s waiting for. You got to take massive action. This is the only way to move the needle in anything you’re doing. I feel like everybody waits. They’re doing their digital marketing. They’re not getting their conversions. They tweak it. Sometimes you have to redo all the messaging. Sometimes you got to make massive changes.
We told the story of planks being boring but you can do Stealth and get in great shape by playing games on your phone. We had another marketing firm saying a whole different message. Planking is the best exercise but the message was, “Do you have three minutes a day to commit to and change your life forever?” I was like, “It’s genius.” It worked. It exploded. We were doing good but then we were starting 10X-ing.
There’s an opportunity for everybody’s business to push the envelope, push harder. Don’t accept because the expert tells you, “This is the return on spend you should be getting.” A 3X is good. What about 20X? I want 20X. I should get 20X. The expectations people set up for themselves are too low. They have to set the bar high. For me, this new company, plant-based Lunchable, in the first year, I want to sell 1 million a week. They’re like, “How are you going to do 1 million units a week?” I’m like, “They need this. I’m going to make it happen.”
We set everything up. We’re doing our first trade show. I’m back in the beginning, freeborn Logic days. I’m having a 10×10 booth. I’m working on it. I’m going to be out there. I’m talking. I’m hustling. I’m doing things. They’re like, “How can you go backward? You sold Logic. You can afford it.” Out in 1 million, 2 million, or 3 million. I want to start off lean and mean. I want to be able to scale. I want to be smart.
I was on another podcast and they said, “What would you tell the CEO of these big companies?” I said, “I can’t tell them anything because I was never a big company.” When I sold my company, I had twenty employees. I don’t know about big companies. I did big numbers. I run things tight. I like big scale. I like using the 3PLs, outsourcing, manufacturing, building a brand, being able to scale, have that manufacturing, being able to do digital, be able to do the creative, and being able to be on top of making sure that the quality is great. People love the product.
Trust me, I’ll be in the stores giving out samples to people because I want to meet hundreds of people, get their feedback, and see the excitement because that’s what drives me. I got to be on the street. I watched a guy from Bang Energy. He built Bang Energy. I don’t know the guy’s name. He’s in there. He built a nice billion-dollar brand. I like to be feet on the street. I like to see what people were saying about the product. I like to be hands-on.
Howie P, what can I say? This is fire. This is probably the best interview we’ve had in 2022. You set the bar.
I got one more thing. My brand is called Think Billions. Skip the millions and go to the billions. I bought a 16,000-square-foot castle in the desert in the middle of the mountain at an exclusive club. It’s got a retractable glass roof. It’s a Moroccan. It was hand-built over six years by guys from Morocco that flew in. I didn’t build it, I just bought it from somebody else. That baby was already created. I’m throwing a limited 100-person mastermind there on October 21st, 22nd, and 23rd 2022.
I curated all the special people that have helped me grow and I’m going to bring them all together. In order to get to the billions, it’s important to meet the people that think billions and have built billions. My buddy, Vic, says, “It’s all about getting to the high line.” What are the people in the high line doing? You got to pay for access. It’s a hard pill to swallow. People worked hard in their lives. You got to pay for access but it’s worth that access because it helps you level up quickly when you can have the right people and the right information to help you if you’re at 1 million to go to 10 million. If you’re at 10 million, go to 100 million. If you’re at 100 million, go to 1 billion.
It’s not as hard when you have the right people you’re surrounding yourself with. The Think Billions event is about that, curating the best team of people at my private residence. It’s a three-day event. It’s health, wealth, and mindset. There are going to be workouts every day. Fresh juice, healthy food, great energy, and we’re going to have business boot camp. We’re going to get down and dirty. We’re going to find out what your biggest challenges are. You’re not leaving until we help you.
Where do we sign up?
What’s the cap here for this event? How many guests are you going to have? Are you going to cap it out here?
It’s going to be probably 20 or 25 speakers. I’m going to have some cool guest speakers.
What about the attendees?
It’s probably 30 to 40. It’s $25,000 a ticket. This is the cheap first version because, in 2023, it’s going to be the $100,000 event. This 2022, if you have a business doing $1 million, $5 million, or $10 million a year, $25,000 is inexpensive to get access to my experts that are part of my network, my venture capital people, my bankers, and my tax people. There’s going to be an elite group that I give them access to. Of course, they have access to me and my decades of building my network.
October 21st to 23rd, Palm Desert, California, open only to high-level thinkers. Are you one of them? Think Billions. Apply now. Super interesting stuff. Howard, I could go on and on. With regards to your latest venture, Mighty Yum, do you have a website yet?
You have your main website, which is HowardPanes.com. It’s been incredible having you. We had technical issues but we made it and it was well worth it. Thank you for coming on the 2X eCommerce Podcast.
Thank you so much. I hope everybody gets a lot out of this. My goal in life is to help others to be their best. If you wake up every day happy and you’re healthy, you’re winning. Don’t be hard on yourself. Talk positively to yourself. Don’t criticize yourself. It’s easy enough for other people to criticize you. Talk good about yourself every day. You will grow and you will reap the rewards that you deserve.