S'well: Sarah Kauss (2020)

In 2009, Sarah Kauss had a well-paying job in real estate development, but she was itching to do something more. On a hike in Tucson with her mom, she got an idea for a business while swigging warm water from a metal thermos: Why not design a water bottle that kept cold things cold and hot things hot, but was also beautiful to look at? Just six years after launch, S'well reportedly made $100 million, and today, Sarah is especially focused on how the brand can help eliminate plastic waste around the world. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2 a.m. kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one hard question. How do we make sure AI goes well for people? So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan,

• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

  Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems. But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands on the table in rewards you never earned, money that could have gone back into the business. Path B, you pause and get The US Bank Triple Cash Rewards Visa Business Card.

• 2:14Guy Raz?

  Now you're earning 3% cash back on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association pursuant to a license from Visa USA Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer.

• 2:58Guy Raz?

  For the first time ever, new Delta SkyMiles Reserve American Express Card members can earn two Delta Comfort round trip flights for travel within the 48 contiguous US states, Puerto Rico, or the US Virgin Islands. Plus, you can earn 50,000 bonus miles towards your next getaway. And who doesn't appreciate an elevated airport experience? Delta SkyMiles Reserve Card members get access to the Delta Sky Club, your pre-flight oasis to recharge with 15 visits and four one-time guest passes each medallion year when flying Delta together. That's up to $950 in annual value.

• 3:40Guy Raz?

  Value estimate based on $50 per visit rate to purchase additional visits or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the card that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in, filling up, and getting on with my day.

• 4:23Guy Raz?

  And it reminds me a little bit of the founders I talked to on this show, because the best ones obsess over things their customers will never see: tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port-fuel-injected engines. Actual results may vary.

• 5:07Guy Raz?

  Visit mobili fuels.com for details. Hey, it's Guy here. And just a couple of things before we get to the show today. First, I've got something very cool to share with you all. After months of hard work and even some electronic sweat and tears, I can finally say the How I Built This shop is now open. Check out this curated collection of products for every idealist and innovator out there. In fact, I'm wearing my How I Built This hoodie as we speak. So if you want to get your own, or maybe a How I Built This hat, or t-shirt, or mug, check out wonderyshop.com to find all of your How I Built This gear.

• 5:49Guy Raz?

  The second announcement is that later this week on How I Built This Lab, I'll be talking to Shiza Shahid of the Malala Fund and founder of Our Place, the brand behind that cookware that you see all over Instagram. But for today's show, we're running an episode from a few years back. It's the story of Sarah Kaus, who created the Swell water bottle. The episode first ran in April of 2020, just a few weeks after most of the world shut down because of COVID, back when it seemed strange to interview somebody while they were sitting in their bedroom. Anyway, it's one of my favorites, and I hope you enjoy it.

• 6:29Guy Raz?

  You went to a trade show and you literally saw a table with knockoffs of your bottles there. Is that right?

• 6:37Speaker 01

  Yeah, so not only were there Swell bottles at this trade show, but the Swell bottles had won an award and had a ribbon on a display case at the trade show.

• 6:47Guy Raz?

  Was it the same logo with S apostrophe well?

• 6:51Speaker 01

  Yeah, it was the same logo and it had the trademark symbol on the side of it.

• 6:54Guy Raz?

  What was your first reaction like?

• 6:57Speaker 01

  I almost passed out.

• 7:05Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 7:16Guy Raz?

  I'm Guy Raz and on the show today, how Sarah Kauss turned the humble thermos into a sleek accessory called Swell and watched her business grow by the tens of millions of dollars.

• 7:34Guy Raz?

  So one of the common threads you might have noticed on the show is the element of design. Design matters a lot. And not just design of your product, but the design of your business, the logo, the colors you use, the customer interface. All of these things differentiate successful brands, especially when they're trying to break out of the pack. So for example, think of Spindrift sparkling water. That is a crowded space, but Spindrift stands out, not only for the quality of its product, but for the simple and clean design of it. Or SoulCycle. The founders of that company spent months coming up with the colors gray,

• 8:15Guy Raz?

  black, yellow, and the simple geometric logo, a bike wheel with spokes. So, design matters. And that is, in part, the story of Swell. It's a water bottle, yes, a very good water bottle, but when Sarah Kauss launched it back in 2010, there were already lots of good bottles out there. Thermos bottles that kept your drinks hot and cold, Camelback bottles with those foldable straws, squeezy plastic cycling bottles, but almost no bottle that looked sleek and beautiful, a bottle you'd want to put on your Instagram feed. And that was Sarah Kauss's great insight. That is how she broke through the pack.

• 8:59Guy Raz?

  And as you will hear, she didn't have personal wealth. And lots of her friends wondered why she was throwing away a perfectly safe career in accounting to pursue water bottles. But Sarah had a hunch that lots of people would want a better bottle. People who didn't want to buy and throw away single-use plastic. People who wanted a functional and nice-looking bottle at the same time. And she was right. In 2016, just six years after it launched, S'well reportedly did about $100 million in revenue. And by the way, Sarah managed to scale the company without ever taking a dime of outside money. She did it by building Swell methodically and strategically.

• 9:44Guy Raz?

  Anyway, right now, the company is dealing with the same economic anxiety that everyone else is facing. And I'll ask Sarah about that. And because of the current situation, I couldn't interview her in a studio. So Sarah joined me from her home in Florida, which is where she grew up.

• 10:01Speaker 01

  I am sitting in my bedroom in Jupiter, Florida. The reason I'm sitting in my bedroom and not my home office is my son, who's just under two, likes to come and knock on the office door and say, "Mama, mama." So this was the quietest place in my house that I could hide. So it's a beautiful sunny day in Jupiter. I'm watching the boats on the Loch Tahachi River go by. It's a bit bizarre that it's so pretty out, given what's going on in the world.

• 10:29Guy Raz?

  And that river you're looking at, you actually grew up by that very same river, right?

• 10:34Speaker 01

  Yes. Life was simple. Life was easy. You could ride your bike outside and have all kinds of adventures. There was always some kind of something to be discovered, something to be built. It's a beautiful place to have grown up.

• 10:51Guy Raz?

  Yeah. And tell me about what your dad did for a living.

• 10:55Speaker 01

  He ran and owned a car wash. He built and ran that business for 40 years. You know, five, six days a week working at the car wash, which also had a gas station, a little shop, and a few tenants, including an ice cream store that my mom ran and a plant nursery that he rented out. So he was a small business owner in Florida.

• 11:17Guy Raz?

  Wait, all of this was at the gas station? There was an ice cream shop and a nursery and a gas station and a car wash?

• 11:23Speaker 01

  It was genius. So you dropped your car off on one side and you had to walk through the retail establishments to pay for your car wash. And of course, you had to wait 15 to 20 minutes until your car was done. So why not buy a plant, an ice cream cone, and maybe some greeting cards while you're waiting? So it was sort of one-stop shopping.

• 11:43Guy Raz?

  Yeah. So your mom and dad basically worked together every day. I mean, your dad was kind of running the facility. Your mom was running the ice cream shop. It sounds like they made it work.

• 11:53Speaker 01

  They made it work, yeah. They're still really very close. And I think that, you know, building a business, building a family, you know, going through all that together, it's a unique opportunity to sort of talk about your day and talk about your lives together. But they certainly made it work.

• 12:07Guy Raz?

  What kind of kid were you in high school? What do you remember about you as a high school student?

• 12:12Speaker 01

  Oh, I was as awkward as they come in high school. I had terrible hairstyle. I wish somebody had told me at the time that those Big Bangs were going to come back and haunt me in later years. I was certainly not a popular girl. I was a bit of a nerd. I was co-president of the Save the Manatee Club with my best friend.

• 12:32Guy Raz?

  Love it.

• 12:32Speaker 01

  Yeah. I was at a club called DECA. It was a business club. And I went to state and national conventions working on business problems. My senior year, I was voted most likely to succeed in business.

• 12:46Guy Raz?

  So you were already into business in high school? Like, I remember those kids in high school. They would be mocked, you know? There's that kid in the business club. And some of them would carry briefcases. But you were kind of like that?

• 13:00Speaker 01

  I was definitely like that. I actually, I think because I grew up with entrepreneurs that were always running a business, I think that I knew that I would go into business in some form or faction from a pretty young age.

• 13:12Guy Raz?

  Yeah. So you went off to the University of Colorado and you studied accounting, which is a very practical thing to study. And I guess you, your first job out of college was with Ernst & Young as a trainee or a junior CPA?

• 13:29Speaker 01

  Correct, yes. So I took the CPA exam right out of college and I went to work at Ernst & Young, I think the weekend after I graduated. And I was in Denver for two years, working as an auditor. And then I moved to Los Angeles and I was still at EY and I worked in the tax division for two years.

• 13:47Guy Raz?

  And basically, that means that you were, your first two years, you were sent to a client and you would just go through all their books and just make someone's life miserable by asking them, what's this, what's this for? What's that? Right? I mean, is that sort of what you did?

• 14:00Speaker 01

  Yeah, that's, that's basically right. I mean, I wouldn't say we were there to make everyone's lives miserable, but I can't say there was a single client that was ever happy to see us coming. You know, they would give you this audit room somewhere in the basement without heat or air conditioning or window and say, oh, how long are you staying? Can you leave tomorrow?

• 14:15Guy Raz?

  Yeah, no one's like, woo-hoo, here come the auditors. Welcome. All right. So you do that. And then you do tax auditing too, after your first two years?

• 14:24Speaker 01

  Yeah, after my first two years in Denver, I was getting a little bit itchy to try to do something different. And this was 2000, where all the dot com companies were really quite exciting. And I kept reading about the clients that EY had had in California, and they were all the dot com companies. They were mostly new media companies and really the first DTC companies that I went to go work with. And it was really a bit of the Wild West, because a lot of these internet companies were transacting, you know, potentially for the first time. And we were helping them think about and solve questions and problems that were absolutely brand new. So as non-glamorous as the tax role sounds, it was actually pretty

• 15:06Speaker 01

  interesting work, just because of the types of individuals our clients were.

• 15:11Guy Raz?

  It's amazing because this really does speak to how you were really kind of, whether consciously or not, laying the groundwork for what you would eventually do. Because all of those skills would be crucial when you started your business eventually. I mean, just having that knowledge and the ability to think about financial issues from the beginning gave you a huge advantage.

• 15:31Speaker 01

  I agree, absolutely. You know, in hindsight, almost everything that I did helped lay the groundwork for where we are today, but it didn't feel like that at the time. I was such a restless soul, right? It was, I just couldn't wait to do the next thing and find myself and figure out what the universe had in store for me, that I didn't realize that all of that was, you know, potentially very valuable and necessary steps to get to where we are now.

• 15:57Guy Raz?

  Yeah. All right, so you do your thing at Ernst & Young and you decided to go to business school, to Harvard Business School.

• 16:05Speaker 01

  Yeah.

• 16:05Guy Raz?

  And did you make that decision because you thought, all right, I've done this, now I need to build a network of people, or I need some new ideas about the next thing to do, or was that the thinking?

• 16:16Speaker 01

  It was. After a few years of really working with these clients, I just wanted to become one of my clients. And one of the common themes that my clients had were a lot of them had gone to business school. And so it was more just the gift of time, of a couple of years, to try to come up with some idea or some kind of what's next for me. Because I realized that EY, I didn't aspire to be my boss or my boss's boss. But, you know, I met so many amazing and fantastic people in business school that I wasn't really networking with to help me with my business. They were just my knucklehead friends that were helping me get through this experience of school that now happened to be, you know, the movers and shakers of business.

• 17:00Speaker 01

  So I don't know that I needed to go to school to learn finance or marketing or operations. But I think for me, it was the combination of the confidence plus the network of friends that kind of helped support me through the times that I needed.

• 17:14Guy Raz?

  Now, you were there from 2001 to 2003. And I should mention, right, that you were there at a time where I don't think entrepreneurship was really being emphasized, right? Like, most students were really kind of going there and they would end up at McKinsey or at a big finance firm on the partnership track. Is that right? Entrepreneurship wasn't really a thing quite yet.

• 17:37Speaker 01

  That's right. It really wasn't a thing when I was in business school. I think I took one half class on entrepreneurship, but it was more how to finance a business than how to start and grow a business. Now, of course, there's whole centers devoted to it, and there's a lot of resources that I wish that I had had. But no, it really wasn't a thing back when I was in school.

• 17:55Guy Raz?

  Do you think that going there, in the back of your mind, you had this idea, maybe I'll graduate and become an entrepreneur? Was that your thinking or not quite yet?

• 18:04Speaker 01

  You know, it was. I mean, even my essay before I went into business school, I wrote about how I wanted to start some company at some point and do something. I just really was looking for that big idea when I was in school. And unfortunately, I didn't find the idea while I was in school. I was still searching for it when I finished school. I was actually at HBS during the time of September 11th. So, the economy took a real change from the time when I started in 2001 to the time when I left in 2003.

• 18:34Guy Raz?

  Yeah. So, you finished in 2003. And what did you do when you graduated?

• 18:39Speaker 01

  Oh, I had a really hard time finding a job when I graduated. So, myself and just a couple of my friends, we actually wound up staying at Harvard Business School, and the school created jobs for some of us. So, you're working in a position that, quite honestly, I was making less after business school than I did before. You've got a massive amount of student loans, and you also just don't know when the economy is going to get better. And it was a really strange and difficult time for myself and a couple of my friends that wound up basically kind of sticking around and not finding our next step.

• 19:12Guy Raz?

  All right. So you get a job at, working at HBS for a while. And then, and then I guess eventually you got a job with a real estate development firm?

• 19:21Speaker 01

  I did. So my, my previous roommate from before business school, when I worked in California, she said, well, there's an interesting job at my company. I know you have no real estate experience, but they're looking for someone. And I was able to talk my way into international real estate development role for a number of years, helping to build big private partnerships for mostly laboratory buildings for scientists.

• 19:48Guy Raz?

  Huh. Tell me about your, kind of your state of mind then. Were you happy? Was your life interesting? Were you thinking, all right, I'm on the right track now?

• 19:58Speaker 01

  You know, I was really unsettled at the time. I liked my job. I liked the people. But professionally, I found myself sort of really wondering, was this all that there is? You know, I certainly was finally, you know, making a pretty good, normal, decent salary, you know, being a VP at a public company. I had some, some stock options that, you know, would vest over time and, you know, was obviously helping me with my savings account, but, you know, helping me pay off my loans. I just, I sort of started to get a little bit itchy, almost the same way that, you know, when I was at EY, I knew that I didn't want to become my boss's boss. You know, it was certainly a really interesting challenge to see if I could figure it out. But it wasn't necessarily the thing that was making me feel really

• 20:43Speaker 01

  excited about my career.

• 20:45Guy Raz?

  And you were living in New York at the time, by the way?

• 20:47Speaker 01

  I was. My, my company had put me up in a month to month rented apartment because I was doing a real estate project there. So I was really living a nomadic life, but they, they put me up in a studio apartment there.

• 20:59Guy Raz?

  So, did you have time to think about, or did you make time to think about what else you could do? Did you talk to people about it, or did you kind of keep it inside?

• 21:09Speaker 01

  I kept it inside. You know, I would say that from the outside, everyone thought that, oh, things were going pretty well. I think I was at the point in my life that I didn't want to whine and moan about, they seem to be high-class problems about, oh, you know, I'm not feeling fulfilled. But I was working so much and I wasn't really making the time to think about what came next. I almost had to go on a vacation with my mom and really step away from the day-to-day of my busy life to even have any type of, you know, reflection time. I literally had to get outside of my own life, you know, in a place that required you to put your BlackBerry at the time away and not be so focused on, you know, the next ping that you're going to get on your email. Because

• 21:54Speaker 01

  I wasn't really making the time to think about my own personal situation and what came next.

• 21:59Guy Raz?

  All right. This is, this is an important moment because I think it's around 2009. You and your mom go on a vacation hiking trip to Arizona. I guess your mom had been cancer-free and was celebrating.

• 22:12Speaker 01

  Yes, it was a really big, exciting moment. My mom had had breast cancer and was so brave and so strong and really got through it to the other side and was done taking all of the horrible medicine. And we said, you know, if you can just get to the other side of this, we're going to go away and have a fancy spa vacation. So we went off to Tucson, Arizona. And it was one of those moments that because we were celebrating her, her health and really having those deep conversations and those, those thoughts about, you know, life, you get one and, you know, what are you going to do with it? And, you know, how do you want to spend your time and what's really important? And my mom started it. And she said, you know, if I had to do it all over again, I would have been a painter.

• 22:56Guy Raz?

  Wow.

• 22:57Speaker 01

  She said she loved to paint. And she taught painting classes in high school. But she wanted to have a career and raise her family. And she studied something else and she did something else. And she said, you know, now that I got through this cancer thing, I'm going to take painting lessons. And she said to me, she said, what is it that, that you've always wanted to do? And don't wait for a health scare. Don't, don't wait for, you know, until you get my age to go do it. You know, what is it that you wanted to do? And I don't, it just, it all came out of me, just, just in that conversation.

• 23:29Guy Raz?

  All right, so you're on this hike. You're, this is intense, man. I'm like, your mom's survi- like, she's telling you all these things and you're like, "Oh, my God." Must have been, you must have been crying a lot and laughing. Like, it must be-

• 23:42Speaker 01

  Yeah.

• 23:42Guy Raz?

  -super intense. Because this is really the beginning of what would be the rest of your professional life. What, what happened on that hike?

• 23:50Speaker 01

  It was one of those things, Guy, that it was everything, everything just came together. I just, you know, I was walking with my reusable water bottle. So I, for many, many years, have, gave up single-use plastic. I think part of it was, you know, Boulder being part of me going to CU and, you know, being a very environmental school. And, you know, I grew up recycling, so there was, I always used a reusable bottle. But it was, it's hot in Arizona and we're hiking for a long time. And so I'm, you know, I'm walking with this metal bottle on a hot day and drinking hot water. So the first thing that occurred to me is, wouldn't it be great if somebody invented a water bottle that actually kept things cold?

• 24:26Guy Raz?

  Right, right.

• 24:27Speaker 01

  And then I had just recently been at my business school reunion at Harvard and they had a professor that made a presentation about climate change and talked about how those that are affected by the water crisis were only going to become worse in the future. And so I had this idea on the hike that if there was a company that, that was creating a better water bottle and you tried to tie it to a social mission by, by working on plastics and climate change and educating people about the water crisis, it could be really interesting to do something good while doing something good.

• 25:05Guy Raz?

  Hmm. Wow. So you're thinking, all right, maybe there's something to do with water, a water bottle, a better water bottle. You finish your hike, your trip to Arizona ends, you say goodbye to your mom, and you go back to New York and you go back to your job.

• 25:22Speaker 01

  Yeah.

• 25:23Guy Raz?

  But does this idea, like, like, when you are on the flight back to New York, when you get back to your apartment, like, is this idea now planted in your head?

• 25:32Speaker 01

  It was. I started writing a little bit of a business plan. It's embarrassing to call it that now, but it was more of an outline, a manifesto of what I thought this company could be.

• 25:42Guy Raz?

  And what did you write?

• 25:43Speaker 01

  Oh, I wrote that we were going to be the water bottle partner to Fashion Week and the TED Conference and Sold in Bloomingdale's and, you know, changing the world. And, you know, I sat down and just started writing, like, if a product could do all this, you know, how would it work? You know, of course, there weren't any practical bits in there. There wasn't anything in there about the financial statements or, you know, how to do processes or procedures or manufacturing. It was more of just a thought piece about what could happen if this really worked.

• 26:16Guy Raz?

  So what was your first, what do you remember your first step being? I mean, here you are, you are working for a real estate development company, no background in manufacturing or supply chain or design even. What was the first thing that you remember doing after writing down your manifesto?

• 26:35Speaker 01

  Well, I remember going to the sporting goods store, Paragon Sports in Union Square, and I purchased one of every water bottle on the market and started using them myself and passing them out to my friends and asking them to use them as well, just to try to get some feedback on how it could work better, how it could look better, how it'd be packaged better, really just trying to educate myself on what was out there and what I wanted to build.

• 27:02Guy Raz?

  And what did you find out?

• 27:04Speaker 01

  Well, I mean, I found out that there were a lot of bottles out there, right? This was a very crowded marketplace. But what I discovered was there wasn't anything that really looked great. I mean, everything was appropriate for the gym. Everything was fine for hiking, right? But there wasn't anything that I thought could catch like wildfire, like a fashion accessory, a thing. And so I thought it really needed to catch your eye. When I designed this, it really needed to be Beautiful, for lack of a better word. And there were some bottles that were functional, but they were marketed for extreme camping and hiking. And that wasn't the market I was going to try to go after. And so I just thought if I could convert the non-converted.

• 27:48Speaker 01

  So if I can convert people to use a water bottle that haven't, because it actually works, right? It's like the thermos, it keeps things hot and cold. But in a way that it's the thing to do instead of the, you know, the Evians and the Fijis and the Smart Waters. You know, if I could try to go after sort of that set that was using what they were drinking as more of a statement, the bottle needed to really be a statement piece.

• 28:16Guy Raz?

  Yeah. When you started to talk to friends and other people about this, I'm assuming people were like, Sarah, there are millions of bottles out there. Like, you know, are you sure you want to get into this? Did anybody say that?

• 28:32Speaker 01

  No, that's exactly what they said. Everybody, you know, closest friends included, thought this was a foolhardy idea. I actually went to a business school, a classmate's wedding, and I was explaining, oh, I, you know, I just quit my job and I'm just getting ready to launch this company. And I, what do you think about the idea? And one of my good friends jumped into the conversation and felt the need to defend me. And she said, but she used to have a really good job. And she felt so uncomfortable for me that I was explaining myself to a perfect stranger at this wedding, that she almost wanted to defend my honor by saying, well, I used to have a business card that made sense to people.

• 29:14Guy Raz?

  What did it take for you to quit your job? I'm assuming when you quit that job, you figured, well, if this doesn't work, I can get another job like it again. Is that what you were thinking?

• 29:24Speaker 01

  No, that's right. I think my downside risk protection was, you know, I still had my CPA at the time. So I thought, okay, if this really doesn't work out, I guess I could always go back to, you know, helping people with their taxes, which I really didn't want to do. So I was super motivated. But yeah, so I always thought there would at least be something for me to do if this went sideways.

• 29:46Guy Raz?

  And how much money did you have to live off? Like, what was your runway?

• 29:50Speaker 01

  So I had $30,000 in the bank at the time.

• 29:53Guy Raz?

  That you had saved up from your job?

• 29:55Speaker 01

  Correct.

• 29:56Guy Raz?

  And that was going to last you, you know, it could last you a while, but you also needed that money to, I guess, to start the company.

• 30:02Speaker 01

  Right, to start the company, to buy the first initial inventory, build the first website. It seemed like a lot to me at the time, but when I really started getting into, you know, beginning to build the business, it actually wasn't going to take me very far.

• 30:17Guy Raz?

  So let's start with how you began to build the business. First of all, you have an idea for a water bottle that's going to be a beautiful bottle, that's going to do everything that a really good thermist does, but it's going to look cooler. Who do you call? Like, where did you go?

• 30:32Speaker 01

  I started designing the product actually in PowerPoint. Of course, now we have, you know, 3D printers and engineers on the team. We do things properly. But, you know, back then, I started with a line drawing that I had made myself. And I thought, okay, how do I take this drawing and turn it into an actual product? And I just wound up taking my business school friends out for coffees and say, you know, this is what I'm struggling with. This is what I really need your help. You know, how do I find a factory? How do I do this? And I wound up finding a friend of mine in school whose dad had made some products and could put me in touch with the right people and kind of send me on my way.

• 31:08Guy Raz?

  Wow. So eventually, you land on a, on somebody who can help you design the bottle?

• 31:13Speaker 01

  Correct.

• 31:13Guy Raz?

  And how, how did you land on that design of the bottle that most people listening now will, will recognize?

• 31:20Speaker 01

  You know, I wanted it to be really classic and really simple. You know, I wanted it to be something beautiful and iconic enough that could be sold in the MoMA store. But I didn't want it to be like the ones in the sporting goods store with, you know, the carabiners on the top and, you know, the neoprene on the side and the neon colors with the reflective tape. And I just wanted it, you know, the whole idea was just to try to encourage people to drink tap water and not to use so much plastic. And so I wanted it to be as sleek and elegant as possible. And so I really just tried to make it functional more than anything.

• 31:57Guy Raz?

  All right. So you've got a prototype. And then where do you get it made? Is it again, like the father of that friend from business school kind of connected you to possible like factories in China that could make a prototype?

• 32:10Speaker 01

  Yeah, so I actually originally really wanted to make the bottle in the US and spent a fair amount of time reaching out to factories in the US. And I couldn't find anyone that was interested in working with me. We just didn't have the scale. And we, you know, I couldn't say that I wanted to make, you know, thousands or millions of pieces day one until I had the demand. And so I wound up finding that the factories that I had been connected with in China were willing to take a risk on small entrepreneurs and do a small run until we were really up and running. So.

• 32:42Guy Raz?

  So what was your initial run? How many bottles?

• 32:45Speaker 01

  So I made 3,000 pieces and they were all blue. They were all the same size and they were all exactly the same. And I had them shipped to my apartment.

• 32:54Guy Raz?

  How much did that cost you?

• 32:56Speaker 01

  Oh, it was the majority of my savings at the time.

• 33:02Guy Raz?

  I bet.

• 33:03Speaker 01

  I actually convinced the factory to let me do a 50% down payment and a 50% payment 30 days later. So that helped a little bit, but I had a bit of a fire under me to sell.

• 33:15Guy Raz?

  And the name Swell was on the side? The logo and everything was printed on it?

• 33:21Speaker 01

  Yes.

• 33:21Guy Raz?

  How did you come up with it?

• 33:23Speaker 01

  Oh, I wish I could say that I came up with the name myself. Unfortunately, I'm an accountant at heart. So I actually originally named the company Can't Live Without It because I thought you can't live without water. Yeah, I thought I was a genius. I actually spent $1,000 on the URL can'tlivelivethatit.com. Which is available if anyone's interested. Yeah, no, it turned out that was a terrible name for a water bottle company because I, so I actually hired a team to help me build the first website. And I had them sign an NDA. And I tell them my big top secret, you know, idea for starting this water bottle company that's going to change the world. And they said, okay. What are you gonna call it? And I told them, can't live without it.

• 34:07Speaker 01

  And they just started laughing, just like you did just now, Guy. And they said, you know, we like you. And we're gonna tell you this. No one's gonna buy this product if you call it can't live without it. And so even though I hired them to create the website, on the side, they helped me come up with some other names. And they actually came up with the name Swell. And as soon as I heard it, I knew that that was the right name.

• 34:29Guy Raz?

  But I'm imagining that Swell existed, like swell.com, or there was their company is like Swell.

• 34:36Speaker 01

  Yeah, no. Swell existed. So Swell actually turned out to be really difficult to register. But it was actually a business school friend of mine that said to me, you know, how are things going with Swell? And I said, oh, we don't get, we can't use the name. We have to go back to the drawing board. She just, she was a banker. I don't know how she came up with this idea, but she said, well, why don't you put an apostrophe in the word Swell?

• 34:57Guy Raz?

  Huh.

• 34:58Speaker 01

  And then it's a logo and not a word. And of course, I called my attorney and said, hey, could we do this? And he said, sure, yeah, that's no problem. Of course, this is after he had billed me for lots of time and hours and expenses and didn't come up with the idea himself. But it was, it was the way that we were able to register.

• 35:15Guy Raz?

  That's crazy, because you look at it and you think, it just works perfectly.

• 35:19Speaker 01

  Yeah, I think the word Swell, I mean, it works perfectly because it's so positive. You know, it's so old fashioned of a word. And the idea of Swell is so old fashioned. You know, I was trying to hearken back to the time that people weren't walking around with plastic water bottles and they were drinking water out of the tap or their filter at home. And the fact that we build wells for people, you know, we bring clean drinking water to people in need, you know? So the fact that we're separating the S with the word well, sort of leans into the mission of what we're doing. It's, it's, everything that I was looking to do was sort of wrapped up into a word, which it turned out quite lucky for us.

• 35:54Guy Raz?

  All right. So it's 2010. You are in New York, living in New York, still.

• 35:59Speaker 01

  Correct.

• 36:00Guy Raz?

  These 3,000 bottles arrive from China. And then what? Like, how do you start to think about getting people's attention and getting, creating awareness around it? What did you do?

• 36:10Speaker 01

  I, I literally just packed up and went into stores. And I asked to speak to the buyer, or speak to the owner, in the case of smaller stores, and, and just explained, said, this is me, I'm Sarah, this is my product, this is what I'm trying to do. How many can I put you down for? And...

• 36:26Guy Raz?

  Were you nervous doing that?

• 36:28Speaker 01

  I was really nervous. I have to say, I am not a natural born salesperson.

• 36:33Guy Raz?

  Yeah.

• 36:33Speaker 01

  But I had to sell the inventory because I had to pay off the other payment.

• 36:38Guy Raz?

  Were there days where you would like walk around store to store and walk in and just feel like there was no interest or?

• 36:47Speaker 01

  There were days and weeks, actually, that I would, I would sort of pound the pavement and try to find people to buy the product and I would only get no's. It was a bit depressing in the beginning, you know? I wrote that manifesto, that, that small business plan and said, you know, we're going to be sold in Bloomingdale's. And buyer said, no way, we don't sell water bottles. You know, in those early days, I got a lot of no's before I got a few people to start saying yes.

• 37:14Guy Raz?

  When we come back in just a moment, how Sarah got those buyers on board and how Swell began to get a lot of attention, including from people you don't want to get a lot of attention from, copycats and counterfeiters. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 37:42Guy Raz?

  Does your team want a website that looks and feels handcrafted but is still fast to ship? Well, Framer is built exactly for that. With Framer, you design on a visual canvas with responsive layouts, hosting, and a CMS built in. So the work is production ready from day one. And you can get it done with help from Framer's AI agents. Framer is the AI website builder that helps creators, teams, and businesses ship production ready sites faster than ever while getting every detail right. Prompt, inspect, edit, and publish in one place at a whole new pace. AI agents and humans work together. The agents bring

• 38:25Guy Raz?

  speed and scale, and people bring taste, judgment, and control. Learn how you can get more out of your site from a Framer specialist or get started building for free today at framer.com/built for 30% off a Framer Pro annual plan. That's framer.com/built. Rules and restrictions may apply. AI isn't just opening new business opportunities, it's changing the way businesses get work done. The questions they ask, the decisions they make, the routine tasks they can hand off. That's the idea behind NetSuite Next, the next generation of NetSuite with AI woven into the tools your business already relies on.

• 39:09Guy Raz?

  NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.

• 39:54Guy Raz?

  If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built.

• 40:13Speaker 02

  Football is back, and PrizePix is bringing out their best offer yet. New users who sign up will get $150 in lineups if you win your first $5 lineup. That's right. If you win your first $5 lineup, you'll get $150 in lineups. On PrizePix, you simply pick two to six players, pick more or less on their stat projections, and submit your lineup. Then sweat it out as you watch your picks play out live. It's the best way to get more locked in on game day. Make all the picks you want, this football season, all in the same app. And now, PrizePix is available nationwide. So what are you waiting for? Lock in for kickoff, because everyone and everything is on PrizePix. What you on?

• 40:58Speaker 03

  Download the PrizePix app today and use code WONDERY, that's code WONDERY, to get $150 instantly in lineups if you win your first $5 lineup. PrizePix, run your game.

• 41:10Speaker 04

  Must be present in certain states. Visit prizepix.com for restrictions and details.

• 41:19Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2010. Sarah Kaus has 3,000 brand-new Swell bottles in her apartment, and she starts pitching them store by store in New York City. And when she can't get any traction with stores?

• 41:37Speaker 01

  Yeah, I'd say, you know what? I really think if you used the product, I really think if you tried it, you would understand how great this is. And lo and behold, oftentimes I would get a call back and say, you know, I tried this. I put ice cubes in last night, or I made tea before I went to bed, and it's still hot, it's still cold. Come back and tell me a little bit more about this product. So, you know, I had to take a little bit of a risk and give away some product in some cases to try to get people to really understand it worked like I said it was going to.

• 42:05Guy Raz?

  So did you eventually sell all 3,000 of those bottles?

• 42:10Speaker 01

  I did, I did. So it took a number of months, but I eventually sold all of those bottles, some on the website, on swell.com.

• 42:19Guy Raz?

  And who knew about the website? How would people even find out about it?

• 42:22Speaker 01

  I put it on my Facebook page. I told my friends and family members, and I asked if they would repost it as well, and created a Swell Facebook page, and I just asked people to start liking it. I also started to reach out to the press at that time as well, myself.

• 42:36Guy Raz?

  How did you do that?

• 42:37Speaker 01

  So I went to Barnes & Noble, and I didn't buy the magazines, but I wrote down the address of almost every editor, mostly women's fashion magazines, and started writing letters. And every day, I tried to send out a couple of boxes to different editors with a letter and saying, you know, this is my product, this is what I'm trying to do, and here's a sample. I would love it if you could try it, and if you like it, could you write about it?

• 43:02Guy Raz?

  And how would you know that it was the right editor? I mean, because, you know, a person could be a features editor, but the person who writes about products could be an assistant editor, and you would never know.

• 43:12Speaker 01

  I would not know, but I would hopefully guess that if this, what I thought was a beautiful product would show up on their desk and they weren't the right person, that potentially they would pass it along. I also had a hunch that even if they weren't the right person and a product arrived, that they might just use it anyway.

• 43:28Guy Raz?

  Yeah.

• 43:29Speaker 01

  And that, you know, maybe that's one way that I could win people over. You know, having a swell bottle sit on the desk in someone's office as they're trying to think of story ideas, you know, potentially they'll, they'll think about us.

• 43:41Guy Raz?

  And when you initially reached out to the editors, did you write a letter saying, "Hey, I'm Sarah Kaus. This is me. I started this business. I'm making..." Did you tell a little bit about yourself?

• 43:52Speaker 01

  I did. I told them about myself. You know, I told them about what I was trying to do. I talked about how much plastic was in the ocean. I talked about how many people, women and girls primarily, are affected by the water crisis and how we're trying to give back to UNICEF and make a difference in the world. And I talked about the product. You know, I said, "This is, this is a hydration fashion accessory. This is not a water bottle. You've never seen anything like it before. And this is why it's important to your reader."

• 44:17Guy Raz?

  Were you thinking initially that this should be something that women would want to use out and about, particularly women?

• 44:26Speaker 01

  Yeah. So actually, my, my target in the beginning was women because I was really making something for myself and, you know, friends like me. And I thought, you know, women also do a lot of the shopping for the household. So if you really want to get in with a group, if you target someone, why not try to make this a fashion accessory and appeal to not just women, but to their spouses and their, their families, their kids. So, you know, we really did start with women as the target. Now, we're actually pretty balanced in our customers being women and men. But that's really where the idea started in the beginning.

• 44:59Guy Raz?

  Meantime, did you order more bottles from China or, or did you still, did you kind of hold off until you sold all 3,000?

• 45:06Speaker 01

  Well, at this time, I was still working through my first 3,000. And I got a call back from Oprah's Magazine, from the O Magazine, who I'd sent one of my samples to.

• 45:18Guy Raz?

  Oh, wow. Because you can imagine, O Magazine, they get a thousand samples a week.

• 45:25Speaker 01

  Or a day, right?

• 45:26Guy Raz?

  Or a day.

• 45:27Speaker 01

  What happened was the editor called and said, "I got your bottle."

• 45:30Guy Raz?

  Wow.

• 45:30Speaker 01

  I took it on my family vacation to Peru. And it worked. I used it every day. I kept my water cold. We really want to run this product and we want to run it on the O-list, which is the must-have list for the summer. But the catch was, she said, you need to send me one of every color you have because color looks good on a page.

• 45:50Guy Raz?

  And you only had them in blue?

• 45:52Speaker 01

  I only had blue. And of course, I still remember what I said. I said, well, I'm standing in the warehouse right now.

• 45:57Guy Raz?

  Which was what, your apartment?

• 45:59Speaker 01

  Yeah, like my kitchen, living room, tiny apartment.

• 46:02Guy Raz?

  Oh, you said, I'm standing in the warehouse. Okay, yes.

• 46:04Speaker 01

  I can bring you as many as you want, but they only come in blue. And it was this heartbreaking moment because she said, well, call me back when you have more colors because we really need colors to go on the page.

• 46:15Guy Raz?

  And so you said?

• 46:16Speaker 01

  I said, I will. And I literally hung up the phone. I walked out the door. I went to Barnes and Noble. I purchased a Pantone color book. I picked out six additional colors and I called the factory and I said, listen, I need you to make me two bottles each in these six colors and FedEx them here. I need one for Oprah's Magazine and one for myself to take pictures to put on the website so we can, we can show that we're selling these products. And that's how we went from one color to seven. And we were featured then in the summer of 2011 in Oprah's Magazine, which was a really big milestone for the business.

• 46:56Guy Raz?

  Yeah. We talked to Sarah Blakely three years ago on this show and, you know, there was the Oprah effect for Spanx. What happened to Swell? I have to imagine, like, people, all of a sudden, your web traffic went up.

• 47:08Speaker 01

  Well, the web traffic went up so much that we, and I say we, I was still the only employee, I had to really work on the backend of the website because we crashed immediately. So there was absolutely an Oprah effect. But I would say more than anything, it was sort of this stamp of confidence in the business that, that either gave me more confidence as I went into retailers, or it gave retailers more confidence to try the product and put it on the shelf. I made a little sign that said, you know, I was featured in Oprah's Magazine. And that certainly helped, you know, opening up retail doors.

• 47:40Guy Raz?

  How are you fulfilling web orders? I mean, there must have been a lag time between the time somebody ordered it. Because now, when you order something, you expect to get it in two days or three days. But I imagine you didn't have the, you weren't able to fulfill all these orders that were coming in through the website quickly.

• 47:55Speaker 01

  Well, at the point that I had ordered the additional inventory, I realized I was going to need a fulfillment center. So at that point, I wasn't actually sending the orders myself from the post office. So I had set up a fulfillment center, luckily, and worked with a company that basically works with direct-to-consumer companies. So surprisingly, even though we were a pretty small company, orders were going out in a day or two.

• 48:19Guy Raz?

  Wow. All right. So you start to fulfill orders, and you're now getting more interest from smaller boutiques. But you also had a pretty big turning point, in addition to the O Magazine 2011, when you landed a deal with Crate and Barrel. They ordered a few thousand bottles. How did that happen? Did they approach you? Did they hear about you through just media attention?

• 48:40Speaker 01

  I think Crate and Barrel did hear about us through media attention, but the way that I actually met them was through a trade show. So I had been going to some of the gift trade shows and standing in a little booth, almost like a science fair booth, where you stand there next to your poster board and you say, oh, hi, this is my product. And I remember being very excited to meet the buyer from Crate and Barrel. And they said they were going to put us in all of their stores, but also their catalogs that would go to so many homes in America. So that was a really big, exciting turning point.

• 49:08Guy Raz?

  That first full year, which was 2011, do you remember how many trade shows you went to?

• 49:14Speaker 01

  I went to 17 trade shows that year, and it was exhausting. I would stay on friends' couches and start doing customer service for the e-commerce site, or billing credit cards, being the only employee and doing all of the jobs. And of course, my friends would want to talk. You hadn't seen them in years, and you'd say, oh, can I crash at your place in Atlanta? The last thing you want to do after talking about a water bottle all day is talk to anybody. So those were trying times, that's for sure.

• 49:43Guy Raz?

  But that must have been really, I mean, going to all those trade shows must have been absolutely crucial, because that's where you've got the critical mass, where you meet those retailers and distributors.

• 49:53Speaker 01

  Correct.

• 49:54Guy Raz?

  So Crate and Barrel, was that a huge deal for you? I mean, you'd already had the O Magazine thing, but was Crate and Barrel an even bigger thing?

• 50:01Speaker 01

  Crate and Barrel was a bigger thing because it gave us a bigger stance. It gave us national attention. And in some cases, from a press perspective, they really want a retailer to tell their readers to go to. And so we started to sort of get a little bit more press because we had better retail placement. It was also the first time we figured out how to make a barcode sticker. Crate and Barrel was our first national account, so it was the first time we had to read a vendor guide.

• 50:28Guy Raz?

  Oh, yeah.

• 50:29Speaker 01

  And so they had these requirements that said you have to actually have a SKU number and a barcode sticker. So I Googled how to do it and I printed out the barcode stickers on my home printer, invited my girlfriends over and we had pizza and wine and stuck all the stickers on. I actually shipped the bottles from my warehouse to the house to put the stickers on because the stuff that was in our warehouse wasn't compliant with their vendor guide. And so it was a real learning opportunity to say, hey, listen, if you're going to start working with some of these really big partners, you're going to have to get smarter on how to service them.

• 51:03Guy Raz?

  Meantime, it's just you. You are the company. You are Swell.

• 51:06Speaker 01

  It was just me.

• 51:08Guy Raz?

  Wow.

• 51:09Speaker 01

  Yeah.

• 51:10Guy Raz?

  Woo. Do you remember what your sales were in your first year?

• 51:13Speaker 01

  I think my sales in the first year were just under $100,000.

• 51:18Guy Raz?

  All right. So, by the way, did you ever think, okay, now I got to go out and raise some money if I want to scale this thing?

• 51:26Speaker 01

  I considered it, but then quickly discounted it because I thought, you know what? This is going to be a big waste of time and I'm not really sure if it's going to work. And so why don't I just wait until we're bigger and more successful because we'll have a better pitch and a better story to tell to investors if that's the path we want to go down.

• 51:42Guy Raz?

  So your idea was, let me get some traction and then I'll find the money to scale it.

• 51:46Speaker 01

  Exactly.

• 51:47Guy Raz?

  Right. Okay. Makes sense. So you continue to kind of get attention and you're in Crate and Barrel. And by 2012, you did like $2 million in revenue. Did you, I'm assuming by that point, you had to hire people to help you?

• 52:04Speaker 01

  I did. I hired my first employee that year. Her name is Katie and it was her first job out of college and she showed up to come work with me. She was very brave.

• 52:15Guy Raz?

  I remember the first time I saw a really sort of notice a swell bottle was at the TED conference in 2013. Was that a deliberate strategy in your mind? Like, let me put these in these in the TED bags? Because you have to, because, right, it's a barter system. Like, TED is not really buying them from you.

• 52:31Speaker 01

  TED does not buy it. It's a donation.

• 52:33Guy Raz?

  It's a donation.

• 52:34Speaker 01

  It's an expensive, you know, two, 3,000 people that go every year. And so, you know, but it was, it was very deliberate because, as you can imagine, being as scrappy as I was starting Swell, I didn't have a marketing budget. And so I thought, how do I get my bottle in the hands of influencers, of people that are sort of on the cutting edge of ideas? TED being one of those real obvious places. And I had sent a bottle to TED and said, you know, again, this is my bottle and this is my story. And, you know, surprisingly, they called me back. And even though that's really what I wanted, it was a huge decision to pull the trigger and make the donation because it was expensive and it was product that I

• 53:19Speaker 01

  had to basically give away and not sell with the hopes of, you know, something coming out of it.

• 53:26Guy Raz?

  How did you know that donating all these bottles into the TED gift bag, how were you able to track whether that was going to be, you know, whether there was going to be a return on that investment?

• 53:35Speaker 01

  You know, it is hard to track, but we can try to see where orders come from. You know, on the website, we have a little "how did you hear about us" line. So we try to see, you know, are people talking about TED there? But we have a pretty big corporate business where we actually work with big companies and we put their logos on bottles. And some of the first bigger corporate orders that we received were CEOs and founders of companies that had attended TED. They actually wrote to us from the TED conference.

• 54:03Guy Raz?

  So we wanted the same thing?

• 54:04Speaker 01

  Yeah, exactly. And so, and a couple of years ago, Shonda Rhimes was one of the TED speakers. And she wrote into, you know, info@swellbottle herself and said, "Oh, hi, I'm Shonda and I just got a swell bottle at the TED conference." And she purchased wells for all six of her shows at the time.

• 54:21Guy Raz?

  Wow.

• 54:21Speaker 01

  And the cool thing about that was, then you had the likes of, you know, Kerry Washington and all of the amazing stars that she has access to because of her shows, all walking around with a swell bottle. So it's really hard to really quantify. But when you pull back and you think, you know, how did I meet Shonda? How did we meet LinkedIn? You know, how did, how did we get a bottle to Guy Raz? It was a big, you know, calculated expense, but at the same time, it certainly has paid off for us.

• 54:47Guy Raz?

  Now, I read that like a year after you started Swell, you, uh, you went to China to go visit the factory that was making the bottles for you. And then you went to a trade show in Hong Kong and you literally saw a table with knockoffs of your bottles there. Is, is that right?

• 55:03Speaker 01

  That is a true story.

• 55:05Guy Raz?

  What, what happened?

• 55:05Speaker 01

  So I had gone to so many trade shows, you know, over the first year. And here I am in Hong Kong and I saw a big, you know, promotion for a trade show. And I thought, great, I spend all my free time at trade shows now. Why don't I go check out this show and see what it's like? And not only were there swell bottles at this trade show, but the swell bottles had one in a ward and had a ribbon on a display case at the trade show.

• 55:30Guy Raz?

  What?

• 55:31Speaker 01

  Yes.

• 55:32Guy Raz?

  Was it the same logo with S apostrophe well?

• 55:36Speaker 01

  Yeah, it was the same logo and it had the trademark symbol on the side of it.

• 55:39Guy Raz?

  Oh, my God.

• 55:40Speaker 01

  And it was all of our colors. It was everything. It was, it was as if we had gone to the show ourselves. Yeah.

• 55:46Guy Raz?

  My God. What was your first reaction like? What's going like?

• 55:49Speaker 01

  I almost passed out.

• 55:50Guy Raz?

  I'm sure.

• 55:51Speaker 01

  I couldn't believe it. And I was there with my boyfriend at the time, who's now my husband. And luckily he kept his wits about him and went over and started talking to someone standing by this, you know, display case.

• 56:01Guy Raz?

  What did he say? He said, hey, what are you doing?

• 56:03Speaker 01

  Yeah, he said, oh, hi, tell me about this. And the, the gentleman that was working in the booth was super smiley and happy. And he pulled out his business card and gave it to us and said, oh, hi, I'm from Swell. And his business card also had Swell on it. Of course, I had never seen this man before.

• 56:17Guy Raz?

  So what'd you do?

• 56:19Speaker 01

  We contacted the officials that were running the show and showed them my business card and showed them the Swell website in the US and said, listen, this is a counterfeit company. This is not Swell. We are not showing at the show. We found someone that had the keys to the display case and we took all of the samples out, stuffed it all into our bags and we went back to our hotel. I mean, we couldn't believe

• 56:45Guy Raz?

  Wow.

• 56:46Speaker 01

  what we had just seen.

• 56:51Guy Raz?

  When we come back in just a moment, Sarah gives one of the biggest pitches of her life in a Starbucks to the man who founded it. Stay with us. You're listening to How I Built This.

• 57:38Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2011, not long after Sarah started Swell, and she's just found knockoffs of her bottles at a trade show in Hong Kong and has no real way to stop them.

• 57:54Speaker 01

  I had done the initial registration of the patents and design patents and intellectual property, but certainly didn't have a lawyer on staff or really the budget. Unfortunately, we did have to hire some attorneys and we really did have to try to get to the bottom of it to make sure that this was stopped immediately.

• 58:12Guy Raz?

  You did eventually win a lawsuit. You received $19 million in damages against defendants that were accused of trademark infringement. These were similar, these are just knockoffs. These were counterfeiters who were making bottles and calling them Swell.

• 58:29Speaker 01

  Correct. So we've had a number of lawsuits, that one included, of individuals and companies that are there making products that directly infringe upon our intellectual property rights.

• 58:39Guy Raz?

  I mean, we talked about this a little bit with Randy Hetrick of TRX, because TRX straps... Massively counterfeited. He spent years and years and years in litigation, eventually won. I mean, it can eat up a huge part of a company's budget and take away from marketing and other things and just time and like mental space, right? I mean, just dealing with all that is a lot.

• 59:05Speaker 01

  It is a lot. I mean, it absolutely affects the bottom line. I think it's hard to quantify, but I think you're right. I think more than that, it's the brain space. It's the opportunity cost of time when you have your time and attention or your team or the fact that you're spending money on legal and not on product development or marketing. It really creates a lot of stress and strain on the organization. It also creates a fair amount of confusion for customers in the marketplace. We hear from customers, through customer service, that they bought us well, what they think is us well, and it's not working. It's not keeping things hot and cold, or it's dense, or the paint is coming off. And we ask the customer, hey, send us a picture of it, and it's not real. I think

• 59:48Speaker 01

  that's the thing that I have the hardest time with is it's not just that they didn't buy the product from us. It's just that customers are having an inferior experience. And it could really be turning customers off from our brand because they're not getting the real thing. And I think that's where it really gets my blood boiling.

• 1:00:07Guy Raz?

  So as you were growing, 2012, you do 2 million in revenue. 2013, Starbucks approaches you. They want to put your bottles in some of its stores in two cities, Atlanta and Austin. They did great. They sold out. But you wanted them in all the Starbucks. How did you get them into all the Starbucks?

• 1:00:27Speaker 01

  So I actually was at Starbucks headquarters for a meeting with our buyers, talking about the program that we were doing in Austin and Atlanta. And it was very fortunate because at the time, this was in December 2014, they were opening this new store in Seattle called The Roastery. And it was sort of this Willy Wonka chocolate factory coffee experience.

• 1:00:49Guy Raz?

  Yeah, I've been there.

• 1:00:50Speaker 01

  Where you could see the beans roasted. Isn't that cool?

• 1:00:52Guy Raz?

  It's amazing.

• 1:00:52Speaker 01

  It's the neatest. So my buyer said, hey, there's an opening tonight of a new store. Why don't you come to the opening? And so I go to the Roastery opening, and who's standing at the coffee bar waiting for his espresso but Howard Schultz? And so, yeah, I just had this moment where I realized that this was my time to try a much bigger pitch for swell at Starbucks. So I asked my buyer, I said, hey, do you want to come with me? I think that's, that's your boss over there. And she said, oh, God, no. She said, I'd be way too nervous to speak with the CEO. And so I said, okay, well, here, hold my bag. And so I give her my purse, I grab my swell bottle, and I beeline over to Howard before anyone else can get to him. And I just told him my story and said, hey, listen, we're both CEOs here. I'm running a much smaller company, you're running a

• 1:01:37Speaker 01

  much bigger one. But we could be doing so much more business with you if you could just give us the opportunity to sell in more stores.

• 1:01:44Guy Raz?

  Wow.

• 1:01:45Speaker 01

  And he listened. He said, okay, well, here's my card. And why don't you contact me? And after the holidays, we'll sit down and have a meeting. And he was true to his word. He had me in for an hour and a half the following February. Yeah, and we hatched a plan. We, it was, it was one of those incredible moments where I really would have kicked myself if I hadn't done it. But I still can't believe I actually did it.

• 1:02:09Guy Raz?

  And that meeting led to Starbucks putting swell bottles in like, I think, 14,000 of its locations around the world?

• 1:02:18Speaker 01

  That's right. So I think 10,000 stores in the US and Canada, 25 countries in Europe, all over Asia, Russia, South Africa. I mean, it was incredible.

• 1:02:30Guy Raz?

  And if you hadn't done that, if you hadn't, you know, had the courage to go up to him, had you been too nervous, that may never have happened.

• 1:02:38Speaker 01

  Absolutely. I had a moment before I went to go talk to him, and I was grabbing my swell and thinking about what I wanted to say. And I just thought, how am I going to get on the plane tomorrow back from Seattle and live with myself if I don't go do it? I mean, the worst that can happen is he says, no, thank you, leave me alone. And the best is that something comes of this. And so I thought, well, I've got absolutely nothing to lose. And it worked out. You know, from that, you know, we sold a lot of product. But more than that, you know, we became more of a household name.

• 1:03:11Guy Raz?

  Yeah.

• 1:03:12Speaker 01

  We had a sign in all the Starbucks that said, you know, Starbucks' favorite height. Fashions accessory is swell with our logo bigger than the Starbucks logo.

• 1:03:21Guy Raz?

  Wow.

• 1:03:21Speaker 01

  That's better than sales. That's brand recognition.

• 1:03:23Guy Raz?

  That's incredible. I think by 2015, that year, your sales hit $50 million. You had not raised any money. You had not gone to investors. Did you at that point kind of give up on that idea and say, I don't, I don't need to do this anymore?

• 1:03:37Speaker 01

  We were actually having some investors come to us.

• 1:03:40Guy Raz?

  I'm sure.

• 1:03:40Speaker 01

  And we had some really interesting conversations, but at that point, we were just so busy and trying to scale this company. We're like painting the plane after we took off. We didn't really have time to think about an investor pitch or really what that would look like. So luckily we were self-funding pretty well at that point. We really didn't need the outside capital.

• 1:04:00Guy Raz?

  It's amazing. I mean, did, did any investors kind of not maybe say this directly, but sort of suggest that like, hey, look, if you don't take our money and you don't, you know, scale up even faster, you're going to get crushed. Cause some other big brands are just going to make a similar bottle and crush you.

• 1:04:17Speaker 01

  I mean, I definitely heard that from a few people, but I honestly was so focused on what I was trying to do that I wasn't really that concerned about what others were doing. And I had a lot of confidence in swell and in myself and what I was doing. And, you know, I have met some really nice investors. I just didn't meet anyone that I thought was really going to be that helpful to what I was trying to do.

• 1:04:44Guy Raz?

  I'm curious about this idea of confidence, right? Because some people just have it. They're born with it. And, but I think most of us aren't. Most of us, we grow into our confidence and confidence can come and go, right? Depends depending on your circumstances in life and where you are. But as you built this business and as you saw more and more people buying it, I'm assuming that your confidence grew more and more as well.

• 1:05:11Speaker 01

  I would say yes, although I think with every phase of the business, there was always something that sort of put me on the back foot. And so I didn't have time to have too much swagger or overconfidence because there was always something that I could have done better. I should have known or, you know, a person or a process or a system that, that needed to be upgraded. And so, you know, I think where I really have come full circle on the confidence piece is. Being able to admit that sometimes things aren't working perfectly and to be able to be honest about that imperfection and ask other entrepreneurs or even just, you know, other employees for advice or help.

• 1:05:55Speaker 01

  Because I think that if I had been overconfident in any step of the journey, that it might have blindsided me or the company for sort of that next big step forward on the growth perspective.

• 1:06:09Guy Raz?

  So as you got to a point where your sales are huge, I mean, and you are, you know, you've got to grow the company and you've got to build it out and you've got to get a space and how did you hire and what did you do? How did you manage all that chaos happening while still, you know, with all that growth?

• 1:06:30Speaker 01

  It was chaos for sure. You know, it was drinking out of the fire hose or, you know, any one of those analogies, but it was, um, it was a really interesting, fun time. You know, it was trying to figure out, you know, how do you get six months ahead of yourself instead of always being three months behind? But it was a lot of fun. I mean, I had, I had a really energized, you know, team. There was something that was a bit magical to our scrappiness that, that we seemed to be able to get through a lot of that chaos and make, I don't know, thrive on it, really.

• 1:07:02Guy Raz?

  Yeah. It's amazing that even in the last, since Swell jumped onto the scene. I mean, over the past 10 years, pretty much every airport has a water filling station. It's a common thing. Parks, public parks have a water filling station, not water fountains, but stations where you put your bottle under and there's a, you know, there's a sensor. And I have to imagine that Swell is part of that, right? Don't you think?

• 1:07:25Speaker 01

  Yeah. I like to think that we really did create part of this movement of people carrying a reusable water bottle, you know? Part of why I started Swell was I was trying to get people to stop drinking so much single-use plastic. And so it makes me very happy to see so many, you know, water filling stations pop up and so many people carrying a reusable bottle.

• 1:07:46Guy Raz?

  You mentioned earlier your ex-boyfriend, because he's your husband, Jeff,

• 1:07:51Speaker 01

  Yes.

• 1:07:52Guy Raz?

  who joined the company, I guess in 2016 as the COO. How's that been to work with your partner?

• 1:08:00Speaker 01

  It's been great, honestly. The poor guy, you know, he never applied for a job. He basically got kidnapped one day.

• 1:08:07Guy Raz?

  Right.

• 1:08:08Speaker 01

  It was one of those situations where I would come home from work after, you know, something had happened, you know, the website being down, for example. And being my partner, I really just needed to vent about it. I would say, oh, this happened today, and I just needed to get it off my chest. But he would spring into problem-solving mode, and he would stay up until 2:00 in the morning fixing the thing, fixing the website, fixing the thing, coming up with a new system for it. And so he said, listen, Sarah, why don't I come in for a half-day every Tuesday and help you get in front of these things, instead of you coming home after the fact? And it was one of the classic cases of escalation of commitment, you know? That half-day on Tuesday basically just escalated to, you know, him working full-time for the company.

• 1:08:52Speaker 01

  And, you know, it's not what I would have expected, having met him, you know, after Swell was started. I never would have thought, oh, I'm gonna make this guy come and work for me and fix all of my problems. But it's been so incredibly valuable for the company to have him there by my side. I really couldn't do it without him. There's no way that Swell would be the company that we are today, you know, if he wasn't willing to sort of put his ego aside and say, listen, I'm gonna drop what I'm doing to support you and your dream and your company, so all of this will work.

• 1:09:28Guy Raz?

  Yeah.

• 1:09:30Guy Raz?

  Your business, I mean, I know you don't release financial information anymore, I think in part because of all the counterfeiters, is that right?

• 1:09:39Speaker 01

  That's correct. I found that the more that I talked about our revenue numbers, the more that we seemed to have a bit of a target on our back.

• 1:09:46Guy Raz?

  Yeah. But, I mean, you still own 100% of the company?

• 1:09:51Speaker 01

  I do, I do.

• 1:09:52Guy Raz?

  Wow.

• 1:09:55Guy Raz?

  I mean, it is...

• 1:09:58Guy Raz?

  It's pretty insane. I mean, it's pretty crazy, right? I mean, there are very, very few businesses that have been on the show where the entrepreneur who founded it still-- Sarah Blakely is a good example of this-- where they still owned the entire company unless they were independently wealthy at the beginning and just had endless supplies of cash. I don't know. I mean, when you think about success that you've had with this brand, do you attribute that to skill, to hard work, or more to luck, or a combination? What do you think?

• 1:10:34Speaker 01

  You know, I think it has to be both. You know, I would say that it absolutely has been hard work. It's been a lot of hustle. You know, no one's ever going to outwork me, and I live for Swell. And this has really been my life's work these last 10 years. But I have to say, luck has played such an incredible role in our success. I was lucky to be born to parents who were entrepreneurs, who taught me the power of hard work and positive thinking and doing the right thing. I was born in a country and a society that values education for girls, and I went to great schools, and I have a network of friends who supported me on this journey. And the power of timing was so lucky. You know, I started Swell because I had a personal mission to eliminate single-use

• 1:11:18Speaker 01

  plastic bottles. But at the same time that I started the company, there were so many people around the world waking up to the issue of climate change and global warming and how they potentially had the need to take personal action. And so, yes, it's been a lot of work, but all of the stars aligned in a really lucky way for that work to have turned into something.

• 1:11:44Guy Raz?

  That's Sarah Kaus, founder of Swell. Swell recently became an official B Corp, which means the company is now legally required to consider the impact of all its decisions on its customers, workers, the community, and the environment. And by the way, remember the original name Sarah had for Swell? Can't Live Without It? Well, the domain name, can'tlivewithoutit.com, is still presumably owned by Sarah, but should you be interested, you can still register, can'tlivewithoutit.shop, can'tlivewithoutit.biz, can'tlivewithoutit.life, and many other variations.

• 1:12:24Guy Raz?

  Hey, thanks so much for listening to the show this week. If you want to contact the team, our email address is [email protected]. If you want to follow us on Twitter, our account is @howibuiltthis and mine is @GuyRaz. And on Instagram, we're @howibuiltthis and I'm at Guy.Raz. This episode was produced by J.C. Howard with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Raini Toll. Our production staff also includes Casey Herman, Liz Metzger, Carrie Thompson, Alex Chung, Josh Lash, Sam Paulson, Catherine Seifer, Elaine Coats, John Isabella, Chris Messini, and Carla Estevez.

• 1:13:07Guy Raz?

  I'm Guy Raz, and you've been listening to How I Built This.