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Aug. 19, 2021

108. The Five-Hour Workday, 5 Years Later with Stephan Aarstol

What worked and what failed in a brilliant experiment to increase productivity, income, and quality time.


What worked and what failed in a brilliant experiment to increase productivity, income, and quality time.

 

ABOUT STEPHAN

Stephan Aarstol founded beach lifestyle inspired, direct to consumer eBike brand Tower Electric Bikes in 2018. This is a diversified sister company tacked onto established direct to consumer SUP company Tower Paddle Boards, the most searched brand name in paddle boards, which after funded by Mark Cuban on ABC’s Shark Tank in 2021 went on to become one of the biggest success stories in the history of the show.

In 2014, Tower was named the fastest growing private company in San Diego and the following year they ranked #239 on the INC 500 list of America’s fastest growing companies. To date, under the guidance of CEO Stephan Aarstol, they have done well over $40 Million in sales and their growth continues.

Stephan has been an internet business executive since 1999, and founded his first DTC company in 2003. He speaks regularly at Harvard discussing the HBS case study "Selling on Amazon at Tower Paddle Boards," and he and his company were highlighted by Jeff Bezo’s himself in Walter Isaacson’s latest book on Bezo’s titled “Invent & Wander”. Stephan earned an MBA from the University of San Diego in 1999, and today is in their Alumni Hall of Honor. In 2019, he was named Entrepreneur of the Year at his undergrad alma mater, Western Washington University.

In 2015, to challenge long held delusions about unhealthy start-up work culture, Stephan moved his whole company to a 5-hour workday and would later write a book titled “The Five Hour Workday” about the experience, which would spread the idea to tens of millions of people worldwide, and get press in over 20 countries (New York Times, Wall Street Journal, Financial Times, and more). He was subsequently hailed, "The World's Best Boss" by Hamburg Germany's #2 newspaper, MorgenPost, and "America's Best Boss" by the UK's Daily Mail. In 2017 Stephan was named to Our City's 2017 list of the Top 10 Most Influential Business Leaders in San Diego.

Tower was named to Internet Retailer's 2016 "Hot 100" list of the world's most innovative e-retailers, and while a relatively recent entrant into the booming electric bike market, Tower and founder Stephan Aarstol’s proven record of success in the contemporary direct to consumer (“DTC”) brand world will surely lead to them taking a leading brand position within in the market over the coming decade.

In addition to his Shark Tank appearance, Stephan has been featured nationally on CNN Money, CNBC's Power Lunch, the Huffington Post, ABC's Beyond the Tank, Fox & Friends, 20/20, Fortune Magazine, People Magazine, and the Adam Corrolla Show. He’s been widely published in business centric periodicals including: Fast Company, Entrepreneur, INC, Forbes, the Washington Post, and more. 

 

STEPHAN'S WORK & WEBSITES

 

 

 

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Transcript

The reaction was largely positive, but I think some people certainly felt pressure. And I said I want you to try to walk out the door at 01:00, but if you can't do that, throw time at it until you can. But really, what we were changing is I want you to start thinking a couple hours every day about how you work, not just working, but how are you working?

 

Welcome, everybody. Today I am geeking out. I have one of the people I've wanted to have on the show for a long time. Stephan Aarstol. He is the founder of Tower Paddle Boards and Tower Electric Bikes. He's one of the biggest success stories of Shark Tank, the series, and he's the author of The Five Hour Work Day. And first of all, thank you for coming out today. Stephen, so glad to have you here.

 

Thanks. Thanks for having me on the show, Wade. I appreciate it.

 

So one of the things that really excited me. And again, I read your book quite a few years back. And what I love is what you're looking to do, not just for a sake of productivity, but helping create something better than simply work for work sake. As Tim Ferris might say it, or having something more meaning could you share with people who are not as familiar with what you're doing just a little bit about what you did in the with creating a fire hour work day in your company and why you started doing that when things were going so well?

 

Why did you even mess with it? Most guys don't like to mess with things. Why did you even bother?

 

Yeah. I mean, I've always kind of like experimentation and just the nature of startups today. I'm always a very contrarian thinker. I'm like if everybody is doing something this way, that's probably the wrong way to do it in today's world. So I always think like that. We think like that in sort of business strategy with what we do. And in about 2015, in I think May or June or something like that, that's when we started the Five Hour Work Day. We did it as an experiment. We were going to do it for three months, initially working 08:00 a.m. To 01:00 p.m. Straight through, get rid of lunch.

 

And the idea was I was trying to attract and retain the people that work at three times a speed of everybody else. So I was renegotiating with labor in a sense. And the idea was, this is kind of how I had worked in the last ten or 15 years prior to that, and all my entrepreneurial buddies were kind of working like that. They come into the office, head down, get your workout. But it's not like you're trying to be the first one in the parking lot and the last one to leave.

 

So you get a promotion, whether or not you do anything. It was productivity focused, and I wanted to create a company culture like that. So that was one part of it. The other part of it was. So the company I had on Shark Tank was called Tower Paddle Boards, com and direct to consumer paddleboards. And that company had had a good run. So in 2014, we were the number one fastest growing private company in San Diego with five people were doing $5 million. And we're beating biotech companies in these big venture funded capital companies.

 

And then in 2015, we were number 239 on the Inc. 500. So we approved, you know, we could grow. We said, okay, well, we got that. But how do we make this a really big brand? How do we make 100 million dollar brand out of this? And I started reading about branding. One of the big things was you had to basically live your brand, and we weren't doing that. We were a beach lifestyle company two blocks from the beach. But we were working like a startup, so we wanted to do an experiment, and it was really just going to be a test for three months to get people.

 

And when I did it, it wasn't just okay. Here have this extraordinary life. We're going to to work eight a.m. To 01:00 p.m.. Straight through no lunch. But you've got to figure out how to be as productive as you were before, or you will be fired. So I'm going to give you your life back. But at the same time, I'm going to put pressure on you, which I was trying to emulate the pressure that is on entrepreneurs. If you do this and you knock it out of the park, you're going to have an extraordinary life.

 

But you always have this sort of threat hanging over your head if you're going to go out of business, so that keeps you going. So that's what we did. And then it ended up working pretty well. We increased revenues 50% that year. We continue to do it for two years. That's been five years ago now, and there have been some problems, but that's kind of how it rolled out. Yeah.

 

Awesome.

 

Yeah.

 

One of the things when people asked me, I do a lot of work around three day weekends or four day work weeks. And I'd read Tim Ferriss book, quite a while ago. I followed Dan Sullivan in the Strategic Coach for over 25 years. So I'm very familiar with a lot of these concepts. And I just figured, gosh, even for a lot of people, a four day work week or a five hour workday, something that's just less, a little bit less would make a big deal out of people.

 

And yet a lot of people say to me would then should employers give it to their employees? And my answer is also been no, because we don't know what we're going to get back. It's still math. And that's the thing. I think a lot of people when they hear what you're talking about, what I'm talking about. So this is socialism is like, no, this is very much grounded in math. If you can't do the productivity, we don't want it. But like you said, the cost of employee turnover, finding the best people who as you know, I know you mentioned a lot of 80-20 thinking and different ideas that some people can produce 5, 10 15 times what other people produce that it's still got to be grounded in reality.

 

How did you keep things grounded in reality? And how did your employees respond when you first started doing this?

 

Yes. I one interesting thing I want to touch on there first because you brought up Tim Ferriss' 4-Hour Work Week. We can of course, I read that. And that sort of changed my life. It changed a lot of entrepreneurs life. And the reason is focus on the individual. Right. It's about you opting out of this crazy work world and then outsource firing and then giving all these other people to do your bidding. So it's very and yeah. So you say the question comes up, I'll help. Should you do this for your staff?

 

No, no, no. This would be crazy. There. I need to afford this lifestyle myself. But to me, it occurred to me I'm like, what if I could just build an entire company of people just like me or my entrepreneurial friends? That would be like, we would have superpowers. And so that's why it was an experiment. But it was not an easy experiment to do. It's a very uncomfortable experiment because at the time I'm hiring kids right out of school. I'm paying them in San Diego, California, $36,000 a year to start.

 

I tell them this is a work to learn. This is a start up environment. Mark Cuban is of the opinion. Mark Cuban is a 30% owner to the company, so he sort of advises on some stuff easy for the opinion that people should pay him to work for him because they're getting someone value at. I don't go quite to that extreme, but I'm kind of like, look, you're a young kid. If you're smart, you're going to work to learn. You're not going to work until you can make $10 more than your buddies and spend it on stupid stuff.

 

So that's kind of where that came from. Give me your question one more time. I kind of like.

 

Sit there and that's so huge. Just real quick thing. One of the things that I've learned in a similar way is I look back at different people, and I know my father is an entrepreneur. When he started a business, it really was just sink or swim in the business model he was in. And more over the years, people have made it a little easier for people succeed. But then you sometimes take away that entrepreneurial edge and the person who doesn't get that they should apprentice somewhere. I'm a 20 year entrepreneur.

 

Last year a friend of mine who does online virtual summits. I wanted to learn how he doesn't. He doesn't mean a huge scale. I apprenticed in his company to help him run the event. It's not a humility thing. It's not an ego thing. If I want to learn, I can help. So I think that's awesome. Yeah. Question was, how did your employees respond to the first? Oh, wow. This sounds awesome. And then the accountability part of it.

 

It wants a bit of a shock to the employees. They were like, oh, this is exciting. Different segments. And we had, like, our warehousing Department, where they had to shift the stuff and unload containers and do stuff like that. And they were like, oh, yeah, this sounds really great for you guys that sit behind the computer. You're not really working anyways in their fines. And they said, but we got to ship out the same number of packages and probably 50% more because we're growing. It's really isn't going to work for us.

 

I said, look, figure it out. And that's the beauty of the five hour day doesn't just work for certain types of things. It really works for everybody. And we didn't bring in efficiency experts and say, how do we refine our systems? You just said, you're your own efficiency expert, which is exactly the motivation that is put upon an entrepreneur. It's like, you figure out how to do it faster, and then you get to walk out the door. That's what we did. And they magically figured out using the same software because we were already a tech company.

 

We weren't like some backwoods company that all of a sudden was going to find productivity. We were already very productive company. So they were already using ship station. And our warehouse was set up pretty good. But the time getting they were doing one package for five minutes. We're not an Amazon here with robots running around, but one package for five minutes was what it came out to. And then they started they measured it. And then they said, well, let's move this product over here. Let's do this.

 

They started to do some of that, like, spaghetti stuff, some basically management theory that shipping guys wouldn't usually do, right. And then they said, well, let's dig into the software. What can we do? And it basically learned to use the software, how it was supposed to be used. And that, in my opinion, is where the huge productivity gains come today. It's like the person who knows how to use Excel. And then the person who really knows how to use Excel, like, you can just move it ten times the speed.

 

And that's really the company culture that we developed in the shipping Department. They got, that down to 2.6 minutes per package. And that was within two months. And we have been going along for five years just like this. So that to me, just shows like, basically, they were wasting half their time, and that's in a very physical labor environment. If you go, really to a purely knowledge environment. I mean, it's unbelievable. The amount of waste that we were doing and really go to 5 hours wasn't that extreme, in my opinion.

 

Before that, we were a nine to five company with an hour lunch. That's a seven hour day. I don't know where the eight hour day comes from, but that's a seven hour day because you have an hour off for lunch. And then some people do lunch at their desk for half an hour, and some people go out for an hour and a half and have martinis or whatever. And then you've got, where am I going to eat for lunch? You got, some wasting time upfront, and then you come back.

 

And depending on what you ate, you had this food can. So you probably wait east in 2 hours. So to me, I was like, I'm just getting rid of lunch hairs, basically, all we're doing, and I'm going to have them focus for 5 hours straight. But the reaction was largely positive. But I think some people certainly felt pressure. And I said, I want you to try to walk out the door at 1:00, but if you can't do that, throw time at it until you can. But really, what we were changing is I want you to start thinking a couple of hours every day about how you work, not just working, but how are you working?

 

And I think, interesting with the pandemic here. What we did is we created an artificial constraint within the company. And the reason we did that, we thought that would work the experiment, because that's why startups work. That's why three guys in a garage upset 100 million dollar company because they don't have any money, they don't have any resources, and they have no choice but to creatively think about how to do something different later. So that constraint is what gives startups power. And this is kind of one thing I've learned from Cuban is I'm always complaining to him about just give me a million dollar line of credit and I'll blow this thing up.

 

Where cash constraint here. And he's like, look, kid, everybody is cash constraint. He's like, figure out a creative solution. And so those constraints create better things. So that's really what we did there. And I think people are uncomfortable with constraints. So that's kind of the employee reaction you get. But then there's excited about walking out the door. So overall, I would say it was a pretty good reaction, but it also exposed some people. We really did fire some people because they weren't as productive, and all of a sudden they couldn't hide behind a hours anymore.

 

So it was definitely a change on that front.

 

Yeah, it's very interesting. A lot of people I talk with our kids, our kids are about to be 15 and twelve. The idea of forcing people to eat their vegetables. And sometimes in my experience with employees, you have to set regulations because you tried the first time to say, okay, well, let's let you figure this out. And just the same way, I can't remember stuff really well and to implement I'm just more on at that. But I'm really good at creative things. There's other people that have almost the exact opposite skills, like, okay, if you tell me what to do, I can do it really, really well, but I'm not going to create it, and I'm not going to think of it.

 

And sometimes as an entrepreneur, I mean, I love what you're talking about or just trying to make it more entrepreneurial. One of the things I do with a software company I have it have a compensation software that tries to reward team members to be entrepreneurial. And it's still so interesting that they still almost want the boundaries at times. Some employees of okay, certainty are these hours, and there's a fear of things going away. But overall, as I try to remind them, I'm sure you do, is the market is really what's at stake here.

 

It's not whether or not Stephan decides to be a nice guy and pay you or not. Ultimately, if the market kicks Stephan's butt, then there's no money there. So this is about trying to operate with real forces, not just something that is contrived. How did this experiment impact the lives of your team members, your employees, and you, once they were able to start doing this well, yeah.

 

And ultimately, this experiment, I would consider it as a failure. I mean, there were things about it that were successful, but, like last year, we didn't do the five hour work day at all. After the first year, we did the three month trial, and it worked so well. We continued it for two years. But then things started to fall apart in certain areas, and there were some unintended circumstances. So we went to summers only, and we didn't do it during the pandemic. A, There are other reasons there.

 

The company was about to implode, and then you had the pandemic on top of that. But then we doubled revenues, and then now going forward, we're doing it for four months every year, but only in years following years where we've grown revenues. So if revenues are going down, okay, that's where all of our sleeves. Let's double down and let's work. If things are going well and they're going well, because that team that is the existing team on the field created it. Here's your company bonus. You get the five hour workday.

 

So we're having to earn it every day. So what you bring up exactly is very important. You can't really change human nature. You can't force people to be entrepreneurial just because you say, I want you guys to try to be more entrepreneurial. It doesn't work. I mean, some people are going to be, and some people are not going to be. So with the five hour work day, we wanted some people to be sort of more productive people. And a lot of people that didn't have work training or work history, they were able to do it.

 

But then a lot of people that had worked, like an hourly job, we're not able to do it. It very quickly became just like, we have a five hour work day. I'm going to work the same way. I've always worked in just over 5 hours. And then they'd work on the weekend, and maybe they have to go to boat show or some event or whatever. And they'd say, well, I put in my 12 hours there, so I'm going to take four days off now, just like this, this is not how it goes.

 

This is still a salary job. Like, you may still have to put in a twelve hour day, we have a couple of containers come in and we've gotta hustle. And that was a hard thing for people to wrap their head around. Some people. The other people were like, of course, I had one employee in my company. He has a five hour work day. He's a surfer here, and I believe he had a girlfriend at the time. He volunteered to go live in China in the factory for six months on a Cot, working 612 hours days in the factory because he wanted to educate him more on the manufacturing process of surfboards.

 

And so this is what you're trying to bring into your company is people like this that you give them a better deal, and they see this as what it is. This is an opportunity for me, and I only have to work this limited amount, and the rest is sort of voluntary. And some people take it that way. And some people took it totally a different way.

 

Did you find people in any way adjusted their lifestyle costs? I know San Diego is not a cheap place. One of the things when I talked to people in general is, look, if you can't at least, look at your lifestyle expenses. If somebody says, hey, like you do, I'm offering you an opportunity. Can you take the same hourly and work less hours? That was one of the first things I proposed to a Corporation I work for 20 years ago. Hey, can I just work four days and make 80% of the income?

 

In essence, I want same hourly. Can I just do that? And at the time was no, because if you do it, everybody else is going to do and what not. But I think a lot of people lose sight of this. Just like you said, the entitlement, once it become, well, 5 hours is now the new 8 hours. And, like, oh, I'm so exhausted. 5 hours and oh, my gosh, I have that work 5 hours in 1 minute. It how did people or did people even adjust their lifestyle expenses.

 

Or did they even consider that as one of the variables that they could consider? Yeah.

 

Well, they didn't really have to in this model because everybody was paid on salary. So it wasn't like we were going to pay 70%. About a year after we wrote the book, Amazon came out with a test where they did that. They said, okay, we're going to do a workplace experiment. And they said we'll pay you 75% of your wages annual have to work 32 hours wasn't really an experiment. They were just doing part time work. But the experiment that we wanted to do is pay people the same, but squeeze their hours.

 

And the magic math of a startup was this didn't cost us any more money. Right. And to the employees, if you looked at it, we almost doubled their salary. You know, they went from making $40,000 a year. You know, that's basically $20 an hour. If you're working 2,000 hours a year, 40 days a week, all of a sudden, you you're working a 25 hours a week, like 1000 hundred and 50 hours over that same. And then we also rolled out, like, profit sharing. So they came out to making, like, $38 an hour after that, if you're looking at just your hourly wage.

 

And this was a big thing in the Tim Ferriss book. Was it's about input and output? So you're really trying to, as an entrepreneur, maximize your hourly wage. And that's sort of an important thing. And so we were doing that for the employees. I don't know. That just sort of went right over their head. But that's what we were trying to do. In your prior question, he said, how did people's lives sort of change? That was one thing that was one of the unintended circumstances. So all of sudden you're walking out of the door at 01:00 after two years of this experiment or just prior to two years, we had about a nine person company.

 

And I lost four of the nine people within a 90 period, 90 day period. One of them, I fired. That one was kind of my fault. But the other three people and they were pretty senior people in the company. They left. So they're just, like, mass exodus all at once. Okay. Now these are people that have a five hour work day. Now they're making 60 or $70,000 a year, and they're in their 20s. I mean, this is the first job because even though we start them low, we move them up really fast, that they're sort of rock star employees.

 

And so these people were leaving. And I was just like, okay, well, what's going on here? Something's not working because we're still able to get good people in here, but we're not able to retain them. So that part of the five hour work day didn't work. And really, what had happened is people's outer lives had, I would say, improved so you're walking down at one. And, you can use that time however you want. So this gets back to your question about for finances, how did that change.

 

So if these people wanted to make more money, they could just drive over because you can convert that extra time however you want. I was a single father at the time. My son was playing baseball, so I basically caught all of his games. All of a sudden I could go hit a game at 04:00. So you use that time, how you want to use it. A lot of these kids were like young kids just out of College, and they want to spend more time on their relationships.

 

So I think those relationships improved and got better because a lot of those people left the company to move to Mexico or go van across America with their loved one. So it was positive in the rest of people's lives for the company. And I was looking at this not just improve in their lives when I wanted to improve the company, too. So I think it was a negative on the company because we lost some of our company culture when we were a startup working long hours. You're kind of working in the trenches together, and that forms these really strong bonds with people.

 

And it's hard to leave a company like that. I think when people leave a company, they're not so much leaving the company as they're leaving the people they work with. And so that's I thought maybe we broke the company culture I think we had. So it became very easy to leave this company because the rest of your life was great. So that's good for employees, but that doesn't serve the goals of the company. A lot of companies going to follow my lead if I tell them this is the future of your company, right?

 

So that didn't work for us. So that's why we did the twist where we tweak the experiment. And we said summers only we did it from June 1 to the end of September. That's when also when we do 70% of our revenue and we squeeze people for time there because that was a huge benefit. Is that putting pressure on people and just making them sweat it out and figure out how to work faster. And then in the off season, we went back to start up hours where we were doing more project based stuff to prep for the year, building the business development type stuff.

 

And so we tried to to get the benefits of both of those.

 

That's cool. One of the things I find a lot of people, especially entrepreneurs, maybe even more solopreneur, smaller business owners, eight to 1020 people as employees. When I'll ask them, why aren't you taking Fridays off? And not every Friday, it's even Fridays off in general during summer, because some people are part of the country where it's cold most of the year. And summer comes. I mean, heck, you're in Chicago, one of the nicest places on the planet three months out of the year. And a lot of them couldn't come up with a reason why they just had not developed their life outside.

 

And so the default as well. Okay. I have nothing to do on Friday. I guess I'll just go back to work. And that's the part that, like you say, there's in any Arena, I guess there's striving for excellence, whether it's as an athlete. As I tell people, look, I want to hustle for four days and do awesome. And I want to create a great family life and a great personal life. Three days. And yet, as you know, you can't make people do that. And one of the most interesting things to me also, now I'm hearing what you're saying.

 

What's been going on is having come from the insurance industry and certainly knowing most employers know what the cost of employee turnover, how just devastating it is to a business to retrain people and just the downtime and all that stuff. And one of the common challenges is what do you do with that person who's, like a seven and a half or an eight out of ten, but they're never going to leave you? And it's tough because it's like, okay, well, that's steady. That's bankable. It's not stellar.

 

It's not top shelf, but you can really build a lot off of that. What would you say in that conversation as you start looking at what you've learned? Does that person who is loyal, willing to contribute, but not able, let's say, intellectual, just not as sharp or whatever it is not able to do things? Are you finding that this new way of doing things is more creating a place for that person who wants to help, but maybe just isn't the top top performer?

 

Yeah. I think it's not. I think what we're trying to do is we're trying to get rid of those people. But the problem is and we did this in 2015. And this company, Tower Paddle Boards, was started in 2010, and that was the time all of the direct to consumer brand Warby Parker. And those were started about that same time. And the reason we were able to do that impressive growth is because it was a really good hiring market in 2010. I mean, I could go out and hire people.

 

I mean, there was huge unemployment. It was a crazy economy. I mean, we were just coming out of it. And so I was like, man, I'm just getting incredible people here to work. 2015 were near full employment. It's not as easy to get people. So I'm like, how do I get back to hiring those great people? And so I think that was critical for a small company. Like, right now, our company is five people. We're hiring a six person. We'll do about 6 million in revenue this year.

 

But to have a company like that. You can't have those seven and a half or eight. You have to have nine, and you fire the age. That's kind of what we had to do. I'll touch on one thing you mentioned there about the four day a week and taking Fridays off. So the point of this experiment wasn't to write a book. Initially. We started the experiment in 2015. The book published in, I guess, 2016. But I was writing articles that Wade always written articles in some magazine tank and Forbes and stuff like this, just sort of their online stuff as about what we were doing as a startup because we were a shark tank company.

 

And we got some press with that. And it wasn't much of a writer. And most of these articles wouldn't get huge, like shares or follows and stuff like that. But then I started write about the experiment event we were doing with five hour work day. And that first one, Got, 10,000 social shares. So huge, huge. Just resonated with people because I think everybody realized, yeah, we're getting a couple of hours of work done at the office. We're all just wasting each other's time. Like, what are we doing?

 

People just knew that, right. And so we decided, okay, we're going to write a book about this. So we wrote before hour work day. And then the idea was we're going to put a book in every paddle board that we shipped out because it it dovetailed with our business brand, this beach lifestyle company, work hard, play hard. And then people would sort of resonate with our company. They would like our company. They would tell other people and that would build our brand. So that was the intent there.

 

But what we in writing the book, I had to go back and study work. How did the world works? We worked over time. Do we work different in different countries? And it was fascinating when I found and one thing I found was the eight hour work day. I wasn't it in, like, 1913. So essentially you had the Industrial Revolution come along and you had these sort of factory lines, the assembly line. And all of a sudden the factory owner said, wow, we can massively increase productivity.

 

Let's work these workers longer. So the machines could go 24 hours a day. And they started to have people try to work them 24 hours a day. And I mean, they got pretty close. They were doing 12 hours and then 14 hours and then 16 hours days. But in the early 19 hundreds, they had a problem. He turnover, like Ford Motor Company factory. They Wade 70% turnover of employees. And this is nationwide. I believe one half of the workforce was either dying or being named on the factory floors.

 

So there was a huge health problem because the world had changed productivity of change. And they're just saying, we're going to have these people just try to keep up with this. And that's where he changed it. And he said, okay, we need to do something different here. So that's where the eight hour work I am from. They had three eight hour shifts. So the humans would work 8 hours. Initially, it was six days a week. And then the machine would go 24 hours a day. And so that was designed where this factory floor fast forward 100 years.

 

We're working an eight hour work day. Why? Because it works good in factories. I mean, what percentage of the US population works in factories like nine? And then the work day is very different around the world. Mexico, I have no idea. I'm 20 minutes from Mexico. Mexico works six days a week, eight hour day. They work 48 hours work week. Some European countries work 35 hours a week in China, they got the nine nine six that are working six days a week, 09:00 a.m. To 09:00 p.m..

 

It's so different in every part of the world. Right? So but when I challenged and when we wrote that book and I did sort of a Press tour, like, the people that booked me were a lot of very conservative, you know, media that brought me on to depute this, like Socialists because it was offensive to them that anybody would challenge the eight hour work day. And I'm like, you know, it was just invented. And it was invented for a much different time. We should at least be thinking about.

 

And they were actually very responsive to that. They're like, oh, I didn't really know that. So it was an educational process for me as well. But one thing that I learned and this wasn't like the master plan from the beginning. But what is the assembly line of today? And in my opinion, the assembly line of today is an information assembly line. We have the information age that is the new industrial revolution in information revolution. So today it's about passing information. I reach out to you or I reach out to my overseas manufacturer, and they get back to me the next day, the customers and you do all of this.

 

And the faster that information can flow, the more productive you can be. And the more tools you use to automate that PC, that productivity of information, the better that's like an ecommerce store. If people can buy stuff on our store without ever talking to us. And the store is open 24 hours a day, it doesn't require staff. And all of this is this is how we can be a six person company and do 6 million in revenue. And this is why when we won the fastest growing company in San Diego, everybody was like, Why?

 

I don't get it. There's five of you like, you're a certain company. They don't even think a search company is a real company in San Diego. And I'm like, look like the world has changed. Okay. But that is the assembly line of today, this information. Well, so everybody knows when they get back into office on Monday, it's kind of like you're underwater for half a day. As you dig out your email, you're basically starting up this engines of information flow again, and it comes to a screeching halt Friday afternoon, and then you restart it.

 

So all of the entrepreneurs that I know they're successful, they work a couple hours a day, like six, seven days a week. Even when they're on vacation, they'll just do an hour of clearing her email or doing something like that. And a lot of people look at those people and they say, oh, these sort of workaholics, right? They can't even get away. They can't even enjoy their vacation. And I'm kind of like, yeah, well, I'm in the Bahamas and you're back there at work. I think I understand what I'm doing here, but the idea is to be productive.

 

Now.

 

I think you've got to work a little bit every day. That's why when you go home, no field a couple of emails in the evening, shrink the time you're actually in the office. That was the concept with five hour work day, but you kind of work all the time. So at the time we wrote the book, France made, a law. They made a law that employers couldn't contact their employees after 05:00 p.m.. So they said, like, look, you're working all the time. We've got cell phones. Now.

 

Employees are taking advantage of workers. So we're not going to allow them to contact these employees. No work after work hours. And then other countries and Microsoft did an experiment in Japan with a four day work week. And Japan is a work crazy. It's worse than the US, right. But I think that's the exact wrong solution, because that doesn't work for the assembly line of information. If you go to four days and you shut down for three days, all of a sudden, you have to start up those engines, and you have this even a longer break in there.

 

If you have any project you're working on, if that person goes on vacation, it's like a block particular PC to productivity because you can't get anything past there. So it's kind of like they forced everybody to be on their vacation. So that's the problem you've got to solve, and you've got to try to be productive consistently. So my talk is you just shrink down the regular day, but you still feel some stuff in the email field and stuff on the weekend. And that's why we felt that was successful.

 

And that's why I think a lot of these three day work week or four day work week, they're designing that just from socialistic angle. Yeah, sure, that is absolutely going to improve people's lives, but it's going to be a problematic for your business.

 

Yeah, definitely. One of the things I've looked into, and the reason why I will do. Well, first of all, you take a very rigid dogmatic definition of three day weekend. I wouldn't touch anything. I have a software business. Almost nothing happens on Friday. My clients have gotten used to that. Nothing happens. I get to play beach volleyball for about five to 6 hours in the morning. I still check my email at about 03:00 p.m. In case something's exploding. To your point, it takes me 15 minutes now.

 

I don't check it at 08:00 a.m. Because if I check at 08:00 a.m., I'll be thinking about the whole time I'm at the beach. So I'll let that go because again, I was just on email the night before, very often late until Thursday. And this is the other part is I tell people, look, I'm still getting 32 36 hours. If we have a three day week because it's two holidays or whatever. I still find myself working 30 35 hours a week because that's just kind of my my creative rhythm or whatever it is.

 

And certainly in my case, I give myself the the lab try to say, okay, well, on weekends I'm going to work on passion projects that don't make money, but I still create stuff. So to your point, and I'm an author and I write books on parenting, spirituality, personal finance, everything I say, OK on the weekend, I'm not going to make money off spiritual is all right on that. That's not work. That's sort of like the dogmatic definition at the end of the day, yes, I'm still creative.

 

One of our teachers, you said, what? Don't go on vacation. Don't vacate your brain for summer. She goes, summer, recreation, recreation. And to your point, just absolutely stopping cold Turkey. I agree. I don't fully even take to that because I almost feel guilty. Like, I want to think I want to do something. And why would that shift if someone were to come to you today and say, okay, look, I'd like to do this thing in my company. I like the spirit of what you're doing.

 

And for the three, the three main reasons I see is employee retention, hopefully. And again, as you said, there's some interesting things that happened there that you didn't, maybe anticipate productivity. And then what do you want to call it? Work life balance, harmony, long term happiness, that sort of stuff. What would you tell somebody today that is looking into that an employer that says, yes, I'm open to doing this. I want to do this. What would they be best to start doing? And what do they need to look out for?

 

My recommendation is don't do it full time. Don't go to commit to, like, year round, I think would be an absolute disaster if, like a country wide. They just said switching to the five hour work day, just people would get entitled very quickly and they would just start working like they're working on the eight hour work day, 5 hours a day. There is no magic about 5 hours versus 8 hours versus 12 hours. It doesn't matter because the nuclear power you have in front of you, all of these productivity tools, all of the connectivity also allows you to waste time.

 

I mean, you have kids. I don't know if your kids are doing remote school over there in Florida, but here in California, it's an absolute disaster because you have these kids zooming into their classes, and then they're watching TikTok on their phone, and my son's fail completely failing out of high school. Wade has the capability to do very well in high school, but it's not working, right, because the same tools that allow this productivity allow you to waste time, and that's the work environment that we work.

 

So what I would recommend and I think this can benefit any company is I would do the summer experiment, do it for just three months, and say, okay, I'm going to give you three months, and then we're going back to regular work for the rest of time, but enjoy your summer. We're going to go 08:00 a.m. To 01:00 p.m. Straight through no lunch. And if you can't figure out how to be more productive, I'm going to fire you and just leave that as the experiment and say, everybody's going to be like, this is incredible.

 

And maybe those workers will start thinking, man, if we really knock this out of the park, maybe he'll do this next summer if you haven't committed to it. And so what they will do is they'll force themselves to find productivity tools. They'll find ways to do their job faster. And then when you pull it off, you'll have magically trained your workforce to work at twice the speed and work yet today. And I'm telling you that will for sure work, because right now, people, they're just throwing one time at things and they're not squeezed for time, and they don't have to use these productivity tools.

 

And the waste is just incredible to when we're writing the book, I looked at studying the history of productivity in the US. Productivity between 1971 and 2011 for the US workforce went up 80%. Now a lot of people look at that. And they said it was incredible. We almost doubled productivity. But I look at that. And I'm like, my mom used to work in a bank in the 80s, and I would go into her office. She had a typewriter, and I'd have to use a typewriter, right.

 

My high school papers. And she had a typewriter. She had a computer on her desk, but it was one of those bank computers that I don't know really what it did. It was just sort of an internal computer system. She would type letters and mail them, put a stamp on that mail. If she had a phone attached to the wall, it would have meetings. It was like, Holy, this is a crazy work. I'm like, what did you guys even do if I look at our work environment today?

 

If the Internet goes out of our office, I just say, all right, let's just go home. It's pointless to even be here. And we still have computers on our desk and all of these programs that we can do. There's a lot of stuff you could do, but it's not even worth working. Productivity with entrepreneurs is up for sure. 1000 PC for 71 in 2011. And if it's not, you're doing something completely wrong. So as a boss that has employees, I'm like, angry that you've doubled productivity since the time where the phone used to be attached to the wall like that's craziness.

 

And, you know, you should be pissed off about that in the US economy. And everybody should just be pissed off about that, and we're not. And so that's really what that was about. And you mentioned another point that I wanted to touch on here. You said you did this four day work week or whatever, and then it freed up time for you to pursue some hobbies hobby businesses, even and stuff like that. That is actually one benefit that I think a lot of people can realize from this.

 

And so when we you started the five hour work day, it was 2015, we grew revenues. We went for 5 million to seven and a half million in the next year. We did, I think, 7.2 million. I mean, other stuff was going on. We were in the paddleboard company. We had been we had grown to 800% in four years. So we were on this hyper growth company. You can't do that forever. It sort of leveled off. Everybody saw we did it very publicly. So everybody saw what we did and copy what we did through more advertising dollars at it.

 

And we started to come down, and we went down five PC, 3 million, and then four 3 million. And we got off of Amazon, Amazon, or took over the world. And when we're adjusting to that, what are we going to do? So we intentionally walked away from about four 5 million. But that's a hard thing for a small company to do. But we were on this downhill slide. And then as we were doing that, I'm like, okay, I need to diversify. So when we were on the five hour work day in the summer, my staff went home.

 

But I said, okay, it's 01:00. Now I'm going into business development. I started to work on other businesses. And that's really where we started tower electric bikes. And we also remove our are sort of offices. This was a cost cutting measure. Instead of having our shop and offices on the main street, we end up finding this kayak shop on the water. And we went in there, we rented it, and we put about 3000 into it, turned it into an event space. So now, instead of paying rent for our office.

 

We rent this out, this event space out for $6,000 a day for a wedding, and we collect rent instead of paying rent. And we do pop up retail within this, and we office out of the back of this. So these are all creative ideas obtain in my off hours because it was after the 5 hours. Now I don't want to think about that anymore. And this was a strategy I actually learned while reading Tim Ferriss book in 20 06, 20, 07, 20 08 I had this poker chip company, and it did the same thing.

 

It came up and a lot of products online to get commoditized. People see what you're doing. They started to come down. And so I was trying to diversify, but it was hard to do that sitting one computer. So I literally had one desk here, and I had one desk in a different room. And so I would spend part of my day in here. And at that time, it was like 12 hours a week. I was spending on that business. And then I would go sit at my other desk and didn't have access to my email.

 

There was total business development, so that separation is an important thing you can do. So when you're asking, like, what can companies do, you shrink down, you have five hour work day for your existing business, and then you're not allowed to work on any of that and do other stuff. There was another business that we created at that time, and it's been just sort of sitting there for about two years because we're we're sort of correcting our revenue problems. In 2020, we actually doubled revenue. So we're back in this growth trajectory now, and the ebikes have just exploded.

 

So that is it's kind of like we're in the paddleboards. Tower Electric Bikes is where Tower paddle Boards was in 2011. And we can see the future here again. It's a direct to consumer brand we saw for about half price. So two years ago when again, we're on the five hour work day. I'm using off hours to start this business called no Middleman Com, which is an aggregation of all the direct to consumer brands in the world. It's just sort of an information shop site, sort of everything showroom, and you just go on there.

 

And who makes the best company to make boots or whatever? Here's the three to five best direct consumer rents. Click through Buy Direct from them. We feel like the Amazon antidote because Amazon is eating the world. It was eating us. And we said, how do we survive? So we created that thing. But the thing is, you don't create those things. If I just throw time at Tower paddle boards and I just try to make it a little better, and I can do that a little bit, but you don't section off time.

 

So that's why squeezing the time of that, it frees you up to do other stuff, and that's kind of what you're talking about with your hobby businesses. Yeah.

 

And that's the other thing I've found is you've probably seen this. A lot of people talk about the average millionaire has six to seven streams of income. And if you've been in business, the term serial entrepreneur is a dubious one, because sometimes it means a person just real messed up a lot. And sometimes it means actual Wade, multiple businesses.

 

But it was a lot like serious killer.

 

Exactly. That's the other thing. So, for example, a software business that I still have, I didn't intend to start it, but it started and customers pulled it from me, and I was smart enough to listen. Thank God. And I run that in probably one day a week. And it's not one pretty day, but it's a couple hours a day I can run at a certain time. And to your point, a segment, it's like, okay, here's this other venture. And each one of them is its own little business.

 

Because when I do have a business that's doing 80% of my income autopilot eyes closed. Great. It's really hard for me to grow it. It's sort of a diminishing return is phenomenal. And yet it's really hard for me to kill it. It's like, okay, that's worth something. But to your point, if you just say, okay, I'm going to do this for 40 hours, I'd still be sitting on that one business name, but I can't get it to grow in some sometimes it just won't. I love your idea of the event space.

 

I think that's brilliant. And that's the thing. As entrepreneurs constantly just thinking of, as I tell people, I've been blessed to be an entrepeneur for 20 years, and I seem to find a way to keep continue to play it's like a video game, like, okay, what do I do next? And this was working. And sometimes my wife will say, well, this was working a while ago. I said, yeah, it's not working now. And my dad's from the insurance industry, and it's such a steady industry. My gosh, you almost can't kill it if you're an insurance agency owner.

 

And yet that was too boring for me. So I wanted a little more excitement. So here I am. What would you say is kind of a wrapping it all together. If you look at the overall where you've come with it, where you're going with it.

 

Do.

 

You really attract, or how do you then packages to the person that wants to be excellent who's having a hard time because some people want to excellent. Their version of excellent is, hey, Elon Musk. So it's 80 hours a week, and it's the B word. It's billions. Okay. Well, to me, you're probably not going to get it on 5 hours a day, and then that's okay. But how do you find that you find that person that really wants to buy into this that's maybe going to be longer term and then maybe to go with that.

 

How do you know if you, as the entrepreneur, are wired for this or versus like or no, you shouldn't even try this. What's that decision point, or how do you define those two?

 

Well, I think that sort of a misnomer is that you couldn't become a billionaire by working 5 hours with that mentality. I think you absolutely can. I think people like Elon Most and Cuban Cuban wasn't a huge fan of the five hour work day, but he's not a family eight hour work day. I mean, he works around the Lok, and I'll throw stuff to him on the weekend at 11:00 at night, and he responds to ten minutes. So the guy works around the clock and he's a billionaire.

 

But why has he been doing that? But some people have that higher capacity to do this. You were talking about some people had the capacity to be entrepreneurs. Some people have the capacity to work for 12 hours a day at a very high level in a knowledge working environment. But you're talking I would say about 5% of the population. You can just sort of say, okay, everybody in the workforce now do this. They can't hold up and there's going to be problems there. So your billionaires could do it.

 

But I think it has very little to do with the five hour work day. And I don't think and this was what failed in the five hour work days. We weren't able to attract and retain people like people didn't care about the five hour work day. Honestly, today, in my opinion, maybe we have a funny subsegment, but we're hiring people right out of school. We're turnover is already pretty good. But it doesn't matter if I bring them in at 36. And now we've raised our minimum Wade to 50,000 a year in salary.

 

But it doesn't matter if I pay them that or gave them eight a couple of years later, they'll be happy to come now, and they'll want to leave the money. They don't care what they get paid. So that money has no motivation on getting people to work for you and attracting good people. That's number one. The second thing is the work day doesn't matter either. So if I give them a five hour work day where Elon Musk gives them 16 hours work day, it doesn't matter.

 

Do they want to work at SpaceX and do they want to work at Power Electric? But that is the the interesting thing. Are they passionate about Mics or the bike industry or what you're doing there, or even the direct to consumer movement, or they passionate about technology. So those people that I get in that they're coming in. That's why this sort of company culture and mission is so critical. That's how you're bringing in good people and retain good people five hour or a PC bill for that.

 

But I thought that would be a magic bullet, because to me, I was like, if I had this when I was coming out of school, I could go work at this company for 5 hours so I can make good money. I could knock it out of the park, and I would still get raises. And then I would have all this free time to do my other side businesses and stuff like that. So it would work perfect for me. I would never leave that company until my side business took off to such a degree that I was forced to say, this is foolish.

 

They're spending this much time on only ten PC of my income. But that's not most people in the world. So I was designing it for those type of people. And God, I would love if I get people like that and just hold on to them for five years. That would be great. But I think another thing I kind of want to circle back to this is with a benefit of the five hour work day for employers and stuff like that. And really for the knowledge working world is this idea of space to think.

 

The idea of having there's a reason that people, they sleep at night to get up and they have ideas in the shower. It's because they've reset their brain. They've got space to think. So even for your employees, for the employer, or if you're a solo entrepreneur, you have a small staff like me. I was able to diversify my business into all these things, and that's actually what saved the company going into the pandemic. I mean, the event space went to zero, but we were diversified. We had paddle boards, and we had electric bike.

 

And fortunately, both of those had a boom from the pandemic a couple months into it. But the event space went to zero. But we're very well diversified now. And that diversification was because of the five hour work day is because I gave myself time to think to do other stuff well with employees. You're paying somebody a salary, they're a knowledge worker, and you're paying them for the quality of their ideas, basically. And so you give them that five hour day, and then they're off doing whatever.

 

They're still having ideas. You're basically buying their brain for 24 hours, and you're forcing them to create space. Just focus on your job for this amount and then create some space that I'm telling you that's actually going to work better. So when you get to the question of can you make a billion dollar company with this five hour work day? I think maybe in today's world that moves so fast where you need this space thing, maybe you can't in the old model, maybe you need a model like this where it's a focused work effort and then give the creatives in your environment PC to think, and they'll create other stuff.

 

Come on. Amazing ideas. Awesome.

 

Wow. Thank you so much. I have learned so much just from listening you talk. And what I just love is how grounded so much of your stuff is. You're not attached to it. There was the title of the book you wrote, or sometimes people are still trying to prove something that maybe that they tried. And as you said, it's an experiment. It's nice to have people that are doing science, not just doing marketing. Marking is great, but as opposed to just simply trying to prove something. So thank you for that.

 

Where can people find out more about the book? The paddle boards, the bikes, no middleman. And we'll put the links for those who watch them. Also put in the show.

 

Notes, SaaS, you can find our social media. It's at Tower Beach Club that encompasses are not really just our event space, but it's an overarching for all the Tower brand beach lifestyle companies, the Tower electric bikes or paddle boards. And then obviously you can go to those websites. And if you want to reach me or anybody on the staff were very small companies that respond to the websites. Our contact information is on there. You can reach us that way. If you're interested in the book, it's called The Five Hour Work Day.

 

You can find that on Amazon, or you can buy one or paddle boards or electric bikes, and book will come with that. It's funny.

 

I like that. That's right.

 

Even we never intended to sell a lot of books, and I had no, I'm not an author. I didn't even think the book was going to be that good, but it actually ended up being a pretty good book. Interesting book. And we ended up selling maybe 3000 copies. But I don't know how people make money the book selling world, because it's just a labor of love, I guess, unless you're in the .11% of people who actually create a book and they sell a million copies of it.

 

So we don't expect to sell a ton of copies. When we're creating this book, it was to put it in the paddleboard, get it out there, and get distribution. So at one point we said, well, good, we're just going to change it. But were just going T charge $100 for this book. And the weird thing happened. All of a sudden, people started to buy the book. It was like there was valuable information in this, and we would sell ten books a month or something like that.

 

And I'm like, well, this is great. We're making $1,000 by I get books, and then it makes it more valuable to go buy our things. But I don't know, we've stopped experimenting with that. We just put it down there. And I don't know what the price is to put if you can buy it.

 

That's awesome. And one of the other things I think that I'd say about the book when you're an author or if you host a workshop, there's that idea of gosh, If you can get one idea out of a workshop, which to me, is almost kind of a sad low bar to set, a weekend workshop, you get one good idea. Like, I would hope I'd get more one good idea. But like I would say about the four hour workweek, like I'd say about the five hour workday.

 

Like I'd say about a lot of books I've read. While not everything might be perfectly dogmatically forever Evergreen going to work. There's so many ideas I got from the book that if you're listening this, it is one of the books you want to listen to, whether you would simply want to get more results in last time or you want to create a better lifestyle. And it still comes back to me. Time abundance is like the money abundance. Money abundance doesn't fix everything needed. Just time abundance if you have problems with still problems, but it's a lot nicer to have a lot more free time.

 

It's not like to have a lot more money if you can. So thank you so much again for joining us. I really appreciate this. And for all your listening, as always, I look forward to helping you create more money in less time doing you do best, helping the people you can help best. And you can better enjoy your family or friends in your life. Thanks for listening.

 

Stephan Aarstol

Shark Tank Alum, founder of Tower Paddle Boards, Tower Electric Bikes, Tower Beach Club, & author of The Five Hour Workday.

Stephan Aarstol founded beach lifestyle inspired, direct to consumer eBike brand Tower Electric Bikes in 2018. This is a diversified sister company tacked onto established direct to consumer SUP company Tower Paddle Boards, the most searched brand name in paddle boards, which after funded by Mark Cuban on ABC’s Shark Tank in 2021 went on to become one of the biggest success stories in the history of the show.
In 2014, Tower was named the fastest growing private company in San Diego and the following year they ranked #239 on the INC 500 list of America’s fastest growing companies. To date, under the guidance of CEO Stephan Aarstol, they have done well over $40 Million in sales and their growth continues.
Stephan has been an internet business executive since 1999, and founded his first DTC company in 2003. He speaks regularly at Harvard discussing the HBS case study "Selling on Amazon at Tower Paddle Boards," and he and his company were highlighted by Jeff Bezo’s himself in Walter Isaacson’s latest book on Bezo’s titled “Invent & Wander”. Stephan earned an MBA from the University of San Diego in 1999, and today is in their Alumni Hall of Honor. In 2019, he was named Entrepreneur of the Year at his undergrad alma mater, Western Washington University.
In 2015, to challenge long held delusions about unhealthy start-up work culture, Stephan moved his whole company to a 5-hour workday and would later write a book titled “The Five Hour Workday” about the experience, which would spread the idea to tens of millions of people worldwide, and get press in over 20 countries (New York Times, Wall Street Journal, Financial Times, and more). He was subsequently hailed, "The World's Best Boss" by Hamburg Germany's #2 newspaper, MorgenPost, and "America's Best Boss" by the UK's Daily Mail. In 2017 Stephan was named to Our City's 2017 list of the Top 10 Most Influential Business Leaders in San Diego.
Tower was named to Internet Retailer's 2016 "Hot 100" list of the world's most innovative e-retailers, and while a relatively recent entrant into the booming electric bike market, Tower and founder Stephan Aarstol’s proven record of success in the contemporary direct to consumer (“DTC”) brand world will surely lead to them taking a leading brand position within in the market over the coming decade.
In addition to his Shark Tank appearance, Stephan has been featured nationally on CNN Money, CNBC's Power Lunch, the Huffington Post, ABC's Beyond the Tank, Fox & Friends, 20/20, Fortune Magazine, People Magazine, and the Adam Corrolla Show. He’s been widely published in business centric periodicals including: Fast Company, Entrepreneur, INC, Forbes, the Washington Post, and more.