This is Solo Stove.
The brand known for its smoke free backyard fire pits and camping stoves.
Started in 2011, by brothers Jeff and Spencer Jan, Solo Stove has grown from
a Kickstarter campaign, to a $2 billion valuation when it went public in
2021.
I remember in that first conversation with them, Spencer and Jeff telling me that they had
reinvented fire. That Man that's a bold, that's a bold statement I mean.
The fire pit marketplace is, I'm sure most people can appreciate is one that has really not seen any
innovation over time, and Solo Stove came in and provided this upgraded
technology, upgraded innovation.
It's a company similar to Yeti with its products available in a variety of sizes and
prices. Entry level stove tops and fire pits start around $100, while
the largest fire pit,the Yukon, retails for $750.
The argument has always been that no one would buy more than one Yeti cooler.
But what Yeti has done a nice job is introducing a wide portfolio of products.
Solo Stove was a pandemic-era winner as people sought more outdoor activities.
I love Solo Stove, I obviously love fires and Solo Stove just takes
that backyard fire pit experience to the next level.
With manufacturing overseas, the company has battled supply chain and freight issues while
demand has soared.
I think we're through the woods on the supply chain challenges.
It was kind of an 18 month ish type dilemma that brands were facing and we're looking forward to to
2030 and beyond and being able to meet customer demand.
Here's how Solo Stove turned backyard fire pits into an outdoor lifestyle brand with over
$400 million in annual sales, this is suddenly obsessed.
So the story all begins in a garage.
Spencer and Jeff, two brothers, love the outdoors and were looking to start an e-commerce
business. And they were just tinkering around with things, looking on YouTube, and they learned
about this thing called secondary combustion.
This idea of basically getting warm air to circulate inside of a
stove and ultimately combust.
In simple terms, the secondary combustion process creates a higher temperature fire with a
cleaner burn compared to an open fire.
This is the key to its technology.
The original Solo Stove was an ultralight backpacking stove that could boil water in under
8 minutes using just twigs and leaves and sticks out on the trail.
But customers wanted more.
By 2014, the brothers launched two larger sizes.
Two years later, a backyard fire pit was released, known as the bonfire.
Launched on Kickstarter, The company met its goal of $15,000 in just 2
hours, eventually raising over $1 million.
Solo Stove is probably most well known by its firepit line.
The bonfire is our most popular.
It's the midsize.
But what's unique about the Solo Stove product is that it burns nearly smokeless.
So rather than sitting around your firepit playing musical chairs and wondering how the wind
knows exactly where you're sitting, you can sit around a solo stove for 4 or 5 hours
and not smell like a campfire.
Randy Griffin lives in Dallas, Texas, and purchased the Solo Stove bonfire in March
2019.
My dad had barbecue restaurants, so I kind of grew up in smoke.
A fire has always just been a calming, really peaceful place for me.
And so it was my 40th birthday, my wife wanted to we wanted to have a big
party on my back patio that we had just built.
And she was like, are you going to have a fire?
And I'm like, Babe, it's my 40th birthday party, of course I'm gonna have a fire.
So I started Googling smokeless fire pits and all of that.
Solo Stove came up and for my 40th birthday, I got my first Solo Stove.
It was a huge hit.
To scale the business. John Meyers was brought in as CEO in 2018.
What I thought was just so cool that Spencer and Jeff had done, is they had made it
accessible for an everyday person in a neighborhood, in a town, to be able to
have a campfire type experience without having to have a 50 acre ranch.
Marissa's resumé included leadership positions at several Texas based companies.
He saw growth potential far beyond Kickstarter.
I'd scaled a lot of businesses from a growth perspective, and I saw opportunities
really everywhere.
E-commerce still felt really early and untapped.
I saw opportunities in wholesale and retail for us to start partnering with brands like Dick's
Sporting Goods and Academy and Ace Hardware.
Some of the partners that we actually have today now.
Solo Stove from its origins was always a direct to consumer brand, so
it did rely heavily on word of mouth.
Oftentimes when you're using solar stoves, you're inviting people over to your home.
Then friends and family see this for the first time.
You talk about the product, they get to experience it.
And over time, as the company started to make money, they began to lean into performance
marketing and target consumers via various social media platforms.
Solo Stove generated about $16 million of revenue in 2018.
That jumped to $39 million in 2019, Marissa's first full year at the
helm. And then came the COVID 19 pandemic.
Solo Stove became an obvious go to to try to kind of break up the monotony of your day
or all the screen time that we were all experiencing during that time.
I think Solo Stove is starting to get some traction before COVID, but the flame
really took off with COVID.
But unlike many other consumer products, it didn't reach any level of
saturation or wasn't already highly penetrated.
So much of our business was coming from word of mouth.
And when we went into the pandemic and people stopped being able to really spend a lot of time
with friends and family because there weren't a lot of gatherings happening, we actually saw our
referral rate go down.
So the increase in demand was offset somewhat by the reduction in the
referral rate.
So I'm a realtor here in Dallas and I think the Solo Stove is a perfect housewarming gift
because right now, especially post-COVID, people are buying a house not only for
what's on the inside, but the outdoor living space.
Solo Stove finished 2020 with about $130 Million in revenue.
The following year, it formed parent company Solo Brands.
After acquiring outdoor brands Chubbies, Oru Kayak and Isle.
We started getting introduced to other brands that were using outdoor and other means to do the same
thing that we were doing. We thought, Man, these are brands rather than just collaborating with,
we'd love to just partner with.
With Solo Stove as its flagship company, Solo Brands went public in October 2021.
I bought right at the IPO price right when it came out and then it dropped significantly.
So I think it was like 20 bucks a share.
I put a couple thousand bucks in and now it's I don't even know what it is.
Four or $5 a share.
Solo Brands is priced at $17 a share under the ticker symbol DCC.
It reached a high of $21 a share shortly after its IPO and currently trades around
$4 a share.
I'm more sanguine about number five though,
Solo brands, the outdoor products
company with a stock that sells at ten times earnings,
I like that. The four companies generated about $404 million in revenue in
2021, with Solo Stove accounting for about 70% of Solo brands.
Through the first three quarters of 2022, Solo Brands has generated about $320
million in revenue.
When we look at the first full year as a public company, which would be 2022, the full numbers for
the year aren't quite out yet.
The company guided the full year revenues to grow 15 to 20%.
For a company that saw such exceptional growth from 2020 to 2021,
to actually grow again in 2022, then kind of growing on top of all this COVID
demand, in my view, is fairly impressive.
Despite this growth, Solo Brands saw two key headwinds in 2022.
The pandemic brought on a rapid and unexpected rise in shipping costs.
Almost all of the Solo Stove products are made in Asia, many in China specifically.
And these are big bulky items, and then they are transported via ocean freight
to the US. And the cost of that just ended up skyrocketing and kept
going higher and higher and ended up becoming more of an expense than the company was
anticipating. So they had to make some downward revisions to their gross margin as a result.
In 2021, Apple introduced privacy updates that allowed users to opt out of
tracking activity across apps.
It became much more difficult for companies to serve targeted ads on websites and social media
platforms.
It disrupted direct to consumer company landscape overall and how they would go
after and try to target customers and gain new customers.
Overall, it's caused an increase in customer acquisition costs for many different types of
companies, specifically direct to consumer companies that are still building a brand.
As Solo Brands enters its second full year as a publicly traded company.
It looks beyond firepits to capture backyards across the U.S.
It's introduced a heat lamp, pizza oven, and the Mesa.
It's entry level firepit.
Costco is this new emerging partner that just started in the fourth quarter,
so that should be a nice sales driver in 2023 overall.
The Mesa is a product that was launched in the fourth quarter, that could be the gateway
product for many consumers to get their first trial with with Solo Stove.
We believe our market opportunity in the US is probably 80 million households and we're just very
early in that story.
Still haven't even hit the 2 million customer mark for Solo Stoves, so we've got our work cut
out for us, but lots of opportunity out there, lots of households still to get in front of and
lots of just brand awareness opportunities with people that don't know who we are.
I do think there is some concern with Wall Street investors that you have a basically a
publicly traded fire pit company.
It could just be a one and done consumer buys it, and then they they never have to buy
another Solo Stove product again because it's stainless steel and it's going to last a long
time.
I think this is what we've been doing for thousands of years.
There's life in it, there's serenity in it, there's that place of calming and having
real deep, meaningful conversations that a lot of times you're just not going to get around
the kitchen table.
But you start a fire and you're in your backyard and life can get really sweet and you can go
really deep.