business

Small-Business Success Story: Spikeball Inc.

This entrepreneur revived Spikeball and turned it into a multimillion-dollar business.

Kiplinger's spoke with Chris Ruder, 42, founder and CEO of the Chicago-based game company Spikeball Inc., about his path to entrepreneurship and eventually leaving corporate America to focus on his business full-time. Here's an excerpt from our interview:

What is Spikeball? It's a game played two on two with an orange-size ball and a small net in the middle -- if volleyball and four square had a baby, it would be Spikeball. A player starts a point by serving the ball down onto the net so that the ball ricochets up at the opponents, who have three hits to return the ball to the net. If they don't, their opponents score. When the ball is in play, there are no boundaries. You run, jump and dive. The first team to reach 21 points wins. The game was originally sold in the late '80s.

How did you acquire it? In 2003, my brother and I went to Hawaii with two of his friends, who brought their beat-up Spikeball set. When we played it on the beach, I loved it, and passersby asked about it. For a few years afterward, we talked about bringing Spikeball back to life. When I looked into it, I learned that the game wasn't patented and the trademark had expired. I paid about $800 for the trademark, and we eventually got a patent for design changes we made.

How did you launch? Six of us -- family and friends -- chipped in a total of $100,000, and we found a manufacturer in China. We incorporated in 2007 and started selling in 2008. For the first five years, I kept my day job in corporate advertising sales and ran Spikeball on the side. We sold mostly on our website and a little on Amazon.com, but smaller retailers from all over the U.S. began to ask us if they could carry Spikeball. I knew nothing about retail, so I politely put them off. Finally, a shop in my wife's hometown called. I told the owners we would love to work with them if they would show me the ropes, and they obliged. We added more retailers; in 2013 we hit $1.3 million in sales, and I quit my day job.

Growth was a challenge? In early 2014, Dick's Sporting Goods called. I was floored. The norm is for you to call the 800-pound gorilla and beg for shelf space. Then REI called, then Big 5 Sporting Goods, then Modell's. Before, we had fantastic e-commerce margins, and buyers paid us within 48 hours of purchase. Now, the big guys were placing large orders and paying us wholesale prices 30 to 45 days later. We were on the verge of a cash-flow crunch, so we took a couple of short-term loans from the shareholders, then took a bank line of credit. In 2016, we had 16 employees and $13 million in sales.

You promoted the game? We identified niche communities that were well organized and met often, such as Young Life, a faith-based youth group. We sent them the product, and once it was introduced, the game traveled far on its own. We even developed a curriculum for phys ed teachers. When we saw a spark in the Ultimate Frisbee community, we poured gas on it. We hired kids to play Spikeball with free sets on the sidelines of Ultimate events. We sponsored college Ultimate teams. In 2016, we created a national ranking system, now with 2,000-plus teams.

What are you most proud of? We're profitable and haven't raised outside money. If we had, we might be at $100 million in sales today, but I would have a boss and we wouldn't be able to control our destiny.

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