My Story

My Story

From Flipping Donuts to a Mid 8-Figure Exit: My Story is Your Story

I didn't have a flashy education, a smart business partner, or a family trust to get things going. When I started NewAir, I didn't even know what a PO was. My business experience was running a swimming pool cleaning service in flip-flops and a tank top to pay for my mediocre college education. Somehow, 25 years later, after retaining all the stock and growing sales to almost nine figures, I exited my company to private equity for a mid-eight-figure deal.

I had a unique childhood growing up in Fountain Valley, CA, as one of 12 children in a home where we all worked in the family donut shop, even if that meant graveyard shifts on a school day. I still remember asking my dad for a raise on my 25 cents/hour wage. His response? "You eat more donuts than you make!" Besides making donuts, we always worked. I had a paper route for the Orange County Register and the Sunday Los Angeles Times, and we also delivered the local newspapers to bring in a few extra dollars. Lunch at school was interesting; my parents never had to make me a normal lunch. I just brought a bag of donuts and traded other kids for some "real food."

After I barely graduated from Fountain Valley High School in 1992 (I was unofficially voted least likely to succeed), I set off to Orange Coast College. I also learned the swimming pool service and repair business and used that business to pay for my college degree in Microbiology from CSULB. After college, I sold my pool business for my first business exit, negotiated at a bar with the terms written down on a napkin.

I interviewed and took a position with DTSC (Department of Toxic Substances Control) as a Hazardous Waste Scientist. Around the same time, I got married, and soon after, we had a growing family. I was the young kid at DTSC, working with a bunch of engineers and geologists who kept telling me to first work in the private sector before I lost my mind working for the government. After a year or two, I noticed my younger brother Steve had successfully started an internet business with his friend. While I was driving a beat-up 1990s small two-door Toyota truck, his friend, who wasn't even shaving yet, had a Porsche. I started to research the industry and saw there was a high demand for air conditioner-related searches online. One day while driving home, the full idea popped into my head. I went home and got to work on that website.

My background was in microbiology and chemistry, not computer science or programming, so initial development was slow. Luckily, my wife was there to help me. To make things easy, I started developing the site as a Yahoo store. By this time, my wife had our second child. I would get home from work around 7 pm (I was commuting from Huntington Beach, CA, to Glendale daily in that beat-up truck), have dinner and hang out with the kids, and then once they were asleep, I would work from about 8-11 pm or later and repeat the process every day to roll out the site. Mariella and I were living in a condo in Huntington Beach at the time, and during the day, she was answering customer calls and shipping all our products. Why do we remember certain moments and not others?

I don't know, but one experience is seared into my memory. Early on, we were buying and selling from Grainger, and Grainger drop-shipped too many products to a customer. Instead of one heater, they sent a case of heaters to this customer in San Francisco. I was still working as a hazardous waste scientist and was about to go to San Francisco for a work conference. I thought I would just pick up the heaters. So I called the customer and told him not to worry about shipping them back; we would send over a "courier" (yours truly) to pick up the product. While driving with some co-workers, I asked them to park next to the building for 10 minutes while I picked something up. Straight out of a movie, I walked up to the guy's apartment as the courier and picked up the product. The customer could not believe the great service.

Before I left my job as a hazardous waste scientist, we ended up moving from the condo to a house. The only problem was that the escrows were off by about six months, so we sold the condo first and moved into my mom's house while we waited to close on the house in Fountain Valley. Yes, you heard that right—I was married with kids, and we moved BACK to my parents' house. Business kept growing, and at one point, we were shipping 20-40 products a day from my mom's garage! Mariella was driving to Grainger daily to pick up the orders, and then she would ship them from my mom's house the same day while I was still working. My parents' front yard would be full of big packages waiting for the UPS driver. Often, the driver would make Mariella load the truck! We were working from 6 am to midnight between the business and my job. As we got busier, several times we missed the early UPS pickup at the house, and Mariella would load our van with products and drive around town looking for UPS trucks! She would track them down until they stopped and asked if she could drop off the shipment with them. Believe it or not, there are so many UPS trucks out on the street around 4 or 5 pm that every evening she was able to find one.

Finally, we moved into the new house at Euclid and Slater near our old building at Mt. Wynne Circle. We thought we had a huge warehouse—our 400 sq. ft. garage! How nice it was to have a place to put the products. We turned the whole garage into our operations center. We were even able to hire our first employee! At that time, we would start work at 6:00 am and would not finish the day until around midnight, all the while taking care of our family, which had now grown to four children and a big German Shepherd named Hero!

Around 2004, we moved to a larger 4,000 sq. ft. building on Harbor and Heil with a warehouse around 1,800 sq. ft. Again, we outgrew this warehouse and had to expand with a second warehouse in Westminster. It was at this second warehouse that we received our first container shipment of NewAir AF-330 Swamp Coolers. Like any business, there were a lot of hurdles along the way. We had a customer service rep telling customers that our air conditioners were the size of little people, our credit card processors stopping our ability to charge credit card accounts mid-month during the summer because we were growing too fast, and so many orders on busy summer days that the warehouse would work until 9-10 pm for weeks on end. So many events happened, but we found a way. We always made it through because of the great team that always worked until the job was done. After the first 3-5 years, Mariella gradually shifted her focus back to the family and was less active in the business.

In 2012, we made a big pivot. I completely changed the company to focus on selling our brands to large retailers instead of only selling direct to consumers on our websites. We dove into the multichannel strategy before it was a thing. In the next five years, the company grew 250%. 2016 marked another big change for the company as we moved into our current distribution center, tripling our footprint—this was our 7th move! We also rapidly increased from around 35 employees to over 60 in 2017, propelled by our rapid sales growth. This fast growth was breaking our processes. The move was a disaster. Our warehouse systems were not synched up, we had product in the old and new warehouse, and our big customers were not getting their orders fulfilled. It took two weeks to get things under control, and we really hurt our reputation with our customers. We had to earn back that trust. This is when everything had to change!

The company continued to grow in size and complexity, and through various events, I understood that while we had a great brand, we didn't have the systems or leadership team that we needed to get to the next level. That next level was an exit. An "exit" became my goal after talking to some investment bankers and understanding the economics of it. I had the epiphany, but how would I get there? I knew I had to make my role less important. I had to hire great leaders who could implement proper processes. I needed to put the company on a professional platform and move away from our homegrown system. I knew that we needed to increase our margins. And importantly, we needed to produce cleaner financials so we could work with bigger banks to get more favorable lending terms and a better credit facility. These are all things that I should have done years earlier when we were at 10 or 20 million in sales, but I waited until this point when it was not an option anymore.

Over the next few years, we hired amazing people. I finally realized that experience and leadership are way more important than youth and eagerness. We implemented a new ERP and WMS to run the accounting, shipping, warehouse, and other aspects of the company. At this time, we were warehousing 115,000 sq. ft. and looking to grow another 100,000 sq. ft. on the East Coast. Systems mattered! We pulled off the integration in nine months.

Starting in 2001, we had grown from zero sales and zero funding to our first million in a few years. Then to around 10 million in sales by 2008. We had continued to double our sales a few more times, and things were going great. Then COVID hit. We all thought the world would end. We braced for cuts, but then to our surprise, business ramped up, not down. Private equity groups and other large private companies started calling us, inquiring about an acquisition. It was time to engage in an exit process. Selling the company is a whole story in itself. The quick version is that we ran a full process, surrounded ourselves with amazing advisors and a great M&A bank, and completed our transaction in mid-2021, 20 years after starting the company and working out of my parents' house.

The company continued to grow in size and complexity, and through various events, I understood that while we had a great brand, we didn't have the systems or leadership team that we needed to get to the next level. That next level was an exit. An "exit" became my goal after talking to some investment bankers and understanding the economics of it. I had the epiphany, but how would I get there? I knew I had to make my role less important. I had to hire great leaders who could implement proper processes. I needed to put the company on a professional platform and move away from our homegrown system. I knew that we needed to increase our margins. And importantly, we needed to produce cleaner financials so we could work with bigger banks to get more favorable lending terms and a better credit facility. These are all things that I should have done years earlier when we were at 10 or 20 million in sales, but I waited until this point when it was not an option anymore.

Over the next few years, we hired amazing people. I finally realized that experience and leadership are way more important than youth and eagerness. We implemented a new ERP and WMS to run the accounting, shipping, warehouse, and other aspects of the company. At this time, we were warehousing 115,000 sq. ft. and looking to grow another 100,000 sq. ft. on the East Coast. Systems mattered! We pulled off the integration in nine months.

Starting in 2001, we had grown from zero sales and zero funding to our first million in a few years. Then to around 10 million in sales by 2008. We had continued to double our sales a few more times, and things were going great. Then COVID hit. We all thought the world would end. We braced for cuts, but then to our surprise, business ramped up, not down. Private equity groups and other large private companies started calling us, inquiring about an acquisition. It was time to engage in an exit process. Selling the company is a whole story in itself. The quick version is that we ran a full process, surrounded ourselves with amazing advisors and a great M&A bank, and completed our transaction in mid-2021, 20 years after starting the company and working out of my parents' house.