Agoura Hills-based Rareform closed a deal on Shark Tank this month. They’re part of a small group of mission-driven brands to gain recognition on the much watched reality show.
Most Shark Tank deals are focused on high-growth, mass market products. Rareform, a recycling-based lifestyle brand had a hard time explaining to the Sharks that their cause was just as important as the bottom line. In fact, four Sharks opted out quickly. Despite nearly $1.1 million in sales in the past three years, the company took a hit last year. That concerned Mark Cuban and Barbara Corcoran. And because of the unique nature of Rareform’s offering (it cannot be duplicated), QVC queen Lori Greiner didn’t bite either.
But Kevin O’Leary made an offer: a $300,000 loan (at 8 percent) for 10 percent equity. Rareform founders, Alec and Aric Avedissian, negotiated down to $150,000 loan for 5 percent after the show.
Alec Avedissian said the process of getting on Shark Tank was lengthy, taking almost one year to complete and challenging at times, but well worth it. The bootstrapped startup was looking for cash and visibility. They got both. After the appearance, they’ve been able to recycle over 50,000 pounds of billboard vinyl. On average, they used to repurpose 10,000 to 20,000 pounds of vinyl in a month, doubling and nearly tripling their sales in a month.
Explaining the brand and its concept, he says, has been a challenge. It’s as much about selling a well-made product as it is about educating the customer, and it’s hard to do both effectively.
“It’s a much longer sales pitch, let’s just say,” says Avedissian, seated in his Agoura office, a small administrative space accompanied by a warehouse where outdoor advertising companies such as Clear Channel dump pounds of billboard signs each week.
Avedissian started the company after a stint in El Salvador, volunteering with a fishing cooperative, Federación de Cooperativas de Producción y Servicios Pesqueros La Pa, or FECOPAZ. There he saw people engineering billboards as rooftops. “I have to admit, I thought billboards were made of paper. I didn’t know then that they are vinyl and highly durable.”
The durability is a Catch-22. Thousands of billboards go up each week in Los Angeles alone; one Google searched stated that there are nearly 6,000 structures to hold billboards. After a lifespan of approximately four to eight weeks, they’re trashed. But vinyl doesn’t decompose easily.
Realizing this, Alec and Aric, who had grown up in the greater Los Angeles area, pooled together funds from friends and family, and concentrated on designing a new surf bag. “I took it down to an auto upholstery manufacturer in Oxnard, and had the first batch of bags made.”
They were a hit in surf shops, says Avedissian, which lacked variety. Most surf bags in 2013, when the company launched, were one color and standardized. Rareform’s each bag is unique: no two billboards will be alike, hence all their products look slightly different depending on availability of material.
Since then, they’ve added backpacks, wallets, totes, and cellphone cases. Now they’re in 350 retailers across the country, in addition to 10 Whole Foods in California, a few Patagonia shops in Japan, and on BestBuy.com.
They’re getting more billboards each day, they say. Big brands and companies are reaching out directly to partner with their billboard waste: one such notable Southern California brand interested in offloading their billboards is Disney.
“We’ve figured out the supply side, which was tricky,” says Aveddissian. “What we needed Shark Tank funding for was to help with marketing, outreach, and hiring new talent.”
Rareform is not the only company repurposing billboard waste — though they may be the biggest player in the space right now. Hamilton Perkins, a Virginia-based startup, is also making bags with billboard vinyl. But each bag is uniform because the vinyl is placed on the inside of the bag, not the exterior. The outer fabric is recycled plastic bottles, made in Haiti. Thread International helped the startup connect with manufacturers of the recycled material. The bags are then sewn in Portland, Oregon.
The company’s 30-year-old founder, Hamilton Perkins, says he was initially thinking of making leather bags. But the innovative recycled materials made more sense in terms of sustainability. The bags retail for just under $100.
European brand Freitag has also long been repurposing vinyl tarps used by trucks in transport to make accessories. Though similar material, it comes from tarps, not billboards, giving Rareform a unique edge in the market — also it’s partly manufactured in LA.
“The biggest thing we were looking for,” recalls Avedissian, “is a partner in one of the Sharks, and ultimately, to have people learn about our story and become fans of the process,” which involves hand-cutting, washing, and sorting all the billboards in their LA warehouse. “We will continue to do this here in LA even as the company grows.” (The products are sewn in Mexico, due to cost reasons he goes on to explain).
So could Rareform’s appearance on Shark Tank — and the positive response to the brand — be the start of a growing interest in mission-driven brands on the show?