When Jon Carder became a multimillionaire at the age of 26, his mother thought he was a drug dealer.
“For a good four years, she thought for sure I was selling drugs. I bought a Hummer as a tax write-off. I remember driving up to my parents’ house, and my mom’s response was, ‘Oh, no, you’re selling drugs! I knew it! No one drives cars like that!’ She found it very hard to believe that a young kid could make that kind of money. The whole internet thing didn’t make sense to her at all.”
Carder’s first foray into business came as a 19-year-old Point Loma Nazarene freshman. He started out peddling diapers at the swap meet.
Jon Carder, cofounder and CEO of Mogl, with Mojo
“I didn’t have a lot growing up. I grew up in a lower-middle-class family. There were definitely some arguments about money. I always wanted to start a business to see if I could be financially free and not have to worry about those kinds of things.”
Working as a restaurant promoter handing out fliers off of Sports Arena Boulevard to pay for his college tuition, Carder noticed the abundance of pregnant women and mothers shopping at the nearby Kobey’s Swap Meet.
“So, I said, ‘That’s my first business idea. I am going to sell baby products at the swap meet.’ Such a random and horrible first idea, I might add.”
Carder didn’t have any start-up money, so he applied for two credit cards at the little booths set up on his college campus that lured students in with the idea of unlimited beer money. He ended up with two credit cards, a free pen, and a $2000 credit limit.
“I spent it all on baby products. I drove around Ocean Beach and looked for distribution trucks. I found someone who sold baby products. I bought diapers from them for 10 percent cheaper than I could have at, like, Albertsons,” said Carder with a nostalgic chuckle.
The following weekend, he set up a table at the Kobey’s Swap Meet. It was a disaster.
“My first Saturday sucked. It’s a $40 entrance fee. I think I made, like, $45. That’s $5 for eight hours of work. The next weekend was the same.”
His last day at the swap meet, Carder got so desperate to recoup his investment that he started selling the diapers for the same wholesale price he paid for them. In the end, all he had left were baby products and 300 bucks.
“I thought that I could just start a business and then — bam — I am living on the beach and everything is good! My neighbor told me, ‘What you need to do is sell your stuff on the internet. The internet is massive! It’s huge. It’s going to be the next big thing.’”
That was back in the early 2000s. At the time, Carder was clueless when it came to computers. Instead of a laptop, his parents sent him off to school with a typewriter. The neighbor who offered the advice was a web developer. He took Carder’s remaining $300 and built him a website.
“That first website was really bad. It was called Baby’s Heaven. The problem was, my web developer’s favorite color was purple and he was in a heavy metal band. It had this pearly gold gate in this black and purple landscape with a couple of clouds. It looked scary. I mean, you’d click on the gate and maybe dead babies were going to be there. Worst marketing idea ever! It was a disaster and no one was buying anything once we got the site live.”
After changing the website color scheme to blue and white and researching how to drive traffic to his site, Carder emailed Huggies.
“I noticed that Huggies didn’t sell diapers [on their website]. I sent an email to their customer service and asked if they would link to [Baby’s Heaven] since I sold Huggies diapers nationwide. That would never work now, but that was back in 2000. Two hours later they got back with me and said, ‘Sure, that sounds great, send us a banner.’ I didn’t even know what a banner was. Dan [the web developer neighbor] built this cute little banner with a baby with wings that said Baby’s Heaven. That was really my first start into business. I remember when they put the banner up, an hour later I got my first order. It was really an amazing feeling. I was dancing in the street and telling all my neighbors.”
From there, Baby’s Heaven took off. His junior year of college, the company got so big that Carder dropped out of school. He had 15 employees (all friends) and an office in Ocean Beach.
“As a 20-year-old kid, my life was Huggies diaper runs at Costco. Imagine a young college kid with one of those flat beds filled with Huggies diapers up to the ceiling. I would get the funniest looks from girls. They’d be, like, ‘Whoa. Gross, bro, use a condom.’ Guys would look at me, like, ‘Hey, man, hang in there.’ My parents were kind of confused. They thought it was like a cute side project that probably wouldn’t amount to much. But they let me do my thing.”
When it came to running a business, Carder was clueless. He had failed accounting, the only business class he ever took at Point Loma Nazarene.
“In fact, I was so bad at accounting, that when I asked Huggies to give us a direct line of credit, they were, like, ‘Sure, just send us your balance sheet.’ So, I went into QuickBooks and I was, like, balance sheet? What’s a balance sheet?”
By the time Carder was 21, Baby’s Heaven had done a couple million dollars in sales.
“A couple of million sounds really great, but it wasn’t a profitable business. We ended up never really having cash flow. I would spend all this money on marketing to drive products. The money would go into the bank and then money would come out of the bank to pay for products and shipping and more marketing cash. Our bank-account balance was nonexistent. I was living off of Top Ramen.”
Art student millionaire
Thank you, Matthew McConaughey
Knockaround conference room
May 16, 2014, was the best day of Adam Moyer’s life, not only because he became a father but because TMZ released photos of Matthew McConaughey and Brad Pitt tossing a football from balcony to balcony. In them, Matthew McConaughey was wearing Knockaround sunglasses, a line of affordable shades created by Moyer.
“It was unbelievable; the best day ever,” Moyer reminiscences.
Moyer launched Knockaround as a graduate art student while attending University of California San Diego. The idea for the company came to him shortly after moving from Virginia to San Diego in July 2005. He had three months before his classes started. Moyer and his girlfriend rented a small apartment in La Jolla and spent nearly all their time at the beach.
“It just sort of hit me one day. I had lost a couple of pairs of sunglasses that summer and I had this term knockaround in my head. It was a word my dad used. He had a knockaround version of everything — knockaround shoes for mowing the grass, a knockaround coat for shoveling snow. So, I just said, ‘I am going to do it. I am going to make my own sunglasses.’” Only problem was, Moyer was an art student. He had no idea how to go about starting his own business.
“I was really naïve. I just googled: ‘How do I start a business in San Diego?’ ‘How do I get my label on a pair of sunglasses?’ Before I knew it, I had my business certificate and a box of 288 pairs of sunglasses. The glasses themselves cost $300. The whole process of starting Knockaround cost me $500, which I took out of my savings.”
Because he was a graduate student, Moyer was given his own art studio on the campus when school resumed in the fall. While his classmates filled their studios with canvases, paints, and other art supplies, Moyer’s studio was filled with boxes upon boxes of Wayfarer-style sunglasses ordered from a manufacturer with the Knockaround logo on them.
“I would just give out pairs to the new friends I was meeting on campus. Word got around that I was the guy that was selling cheap sunglasses. I would have these undergrads show up at my little art studio on campus and they would say, ‘Are you the sunglass guy? Can I get a couple of a pairs?’ I sold them for $5. They cost me about a dollar to make.”
Moyer admits, “I never thought Knockaround was going to be what it became. I just thought it was a fun little project that kept some cash in my pocket. I mean, I always had $20 on me because there was always someone buying sunglasses. Back then I didn’t keep track of the finances of the business. I saw it as funny money.”
In 2009, Knockaround pulled in $50,000. In 2013, with only 11 employees, Knockaround did $5.7 million in sales. It’s on track to surpass those earnings in 2014.
Enough money to travel, surf, and become an alcoholic
By the time Jon Carder was 21, Baby’s Heaven tanked.
“I made [some] pretty tragic mistakes with that first business. I had no idea what I was doing.”
One of those mistakes included spending too much money on marketing and not enough on customer service. “I hired my girlfriend at the time to be in charge of customer service. She was a passionate, fiery woman. She couldn’t care less about the pregnant women and moms calling in about their orders. She would yell and hang up on the customers. What happens is if you aren’t happy with an order, you can issue a charge-back. If a company gets too many of them, you get into the penalty box and the people that process your credit cards will stop processing credit cards for you because you become a risk. We became a risk. We ended up having to build a huge massive reserve in the bank. We didn’t have any money in the bank, so we ended up selling the company to a competitor called Baby Universe. It wasn’t a very big exit. I would chalk it up to a failure and a very valuable learning lesson.”
Not one to give up, Carder began a new business the day after he sold Baby’s Heaven.
“My mom knew that we had sold the baby company and shut it down. She was, like, ‘I am so sorry that your little pet project didn’t work out, Son. Time to get a real job!’ I was, like, ‘Whoa, whoa, I’m not getting a real job. I have this other business I’m starting.’”
Carder’s new business required zero in the form of start-up money.
“I built it in one night in Dreamweaver. It was so janky. It was called Federal Equity. I think the name actually helped because it sounded fancy and real, but it was actually just me in my boxers sitting at a computer saying, ‘Federal Equity let’s go!’”
Carder’s new business helped people to find low rates on home loans. Consumers would fill out a free form, and Carder would match four banks that would then compete for the loan in order to find his client the best rate. “I made, like, $110,000 in the first three months. At that time I had no employees. I was 22. Keep in mind that I was eating Top Ramen and had no money during the whole baby company. I was like, Holy shit! Is this legal? This is crazy! It was totally legal; everything was fine. It was just a really brilliant model and not a lot of people were doing it back then.”
Carder credits the success of his second business to lessons learned during his reign at Baby’s Heaven.
“With my first business, I tried to diversify and do too many things. By the end, I had Clothing Heaven, Music Heaven, Office Heaven. I tried to get it all. I got greedy. I learned that really — it’s simple, but not easy — you just have to do one thing and do it better than anyone else. The most successful companies are just the ones that focus on one thing, like cups or chairs or pens, and do it better than anyone else. So, that’s what we did. We were the best lead generation company around, for the most part. So, when a company came around looking to buy one, they were looking for one of the best. They chose us.”
Four years into Federal Equality, when Carder was 26, he sold the company for a high eight figures.
“I remember the first time the money hit the bank account. I was blown away by all the zeros that appeared. I had this really janky set of golf clubs from Walmart that I bought for, like, $150. I remember going and buying a $350 driver. That was such a big deal for me. I remember thinking, That doesn’t even matter — I can buy all the golf clubs in here. That was a cool change in mental elements, because normally I would be really conservative about $350. The second thing I did was I bought a fish tank, a really big fish tank. This thing was ridiculous: you could, like, swim in it.”
With the sale of his company, Carder decided that was it; he was retiring.
“I didn’t have enough to retire in Rancho Santa Fe with a big mansion, but it was enough to travel and surf and become an alcoholic.”
That’s what Carder did, for about three weeks, anyway.
“I went to Indonesia and I invited all my friends. It was an amazing two-week surf adventure. But they all had to go back to their jobs, and I didn’t. I said, ‘I am going to stick around.’ I was in the middle of the Timor Islands, freshly minted, with this big fat bank account and no stress from work.”
Once Carder decompressed, sitting on the beach with a margarita became boring.
“I was, like, Okay, what’s next? As an entrepreneur, everything is, like, these life and death highs and lows. It’s incredible. Sitting on a beach does not have the same kind of ups and downs. I got incredibly bored and unfilled within two days. I think I am diseased with being an entrepreneur. There really is probably not much difference between being an entrepreneur and being bipolar. I am addicted to it. I cannot retire. I can’t sit on a beach and drink. I can’t even do it for a couple of days. Literally, on the second day, I was, like, Screw this and I went to an internet café and registered a new business, Mojo Pages. Ultimately, money in the bank was cool, but what matters to me, what makes me happy is knowing that I am taking on a challenge.”
Mogl sales gong
Along with Mojo Pages (similar to Yelp), Carder has since launched a second business, Mogl, a restaurant reward website and app enabling users to earn cash back for themselves and toward local charities each time they eat at a participating restaurant.
Who you know
Employees playing in the Knockaround warehouse
The Knockaround warehouse takes up an entire city block in Barrio Logan. Inside, it features midcentury design with sleek modern twists. The day I visit, Moyer and his employees eat lunch in the stockroom on picnic tables underneath a fluorescent mural of Tom Selleck that takes up an entire wall. A couple of the stock guys are playing a rowdy round of spike ball. In the corner of the warehouse, behind a ten-foot wooden canoe that Moyer constructs during his down time, is an adult jungle gym, complete with monkey bars.
Moyer wears a ball cap, tennis shoes, and shorts. The only business touch of his ensemble is a crisp, blue button-down, but even that looks casual.
He takes me on a tour of the Knockaround building, through offices and storage closets stuffed with lacrosse gear and team-building games. Knockaround’s main meeting room houses a large glass table and sizable chairs shaped like hands. There is a foosball table and glass display units housing custom Knockaround sunglasses. It is like a well-kept frat house. The wall in one room is occupied by photographs of celebrities donning Knockaround sunglasses — Snoop Dogg, Natalie Portman, Jessica Alba, and Ashton Kutcher. Moyer didn’t hire anyone to decorate Knockaround, He did it himself. His artistic talent is evident throughout the headquarters.
Exploring the space of Knockaround, a San Diego sunglasses company started by a young entrepreneur.
Six months out of grad school and unable to find a job in his field, it dawned on Moyer that if he took Knockaround to the next level, his sunglasses company could become his career. “My wife was holding down the fort at the time. She had a great teaching job. She was super supportive but there were definitely moments where she was, like, ‘What is going on with you?’”
Since Moyer no longer had access to his on-campus art studio, he moved the Knockaround operation into the garage of their tiny townhouse in suburban Tierrasanta.
“A friend of a friend worked for a website called Daily Candy. I sent him a pair of Knockarounds hoping to get a mention in this newsletter they sent to their massive email list where they mentioned products their readers should try. It worked: they mentioned us. I was used to getting maybe two or three orders a day. One morning, I logged in and I had 130 orders. It was a couple of thousand dollars in sales. That was really the big break, and when I say big, it was not even that big, but through that, Knockaround started getting a few other mentions on blogs.”
Moyer’s next break came from another friend who was a grad student in University of California Los Angeles’ MBA program. The university was hosting an entrepreneurs’ conference to which business people would come and pitch their ideas.
“My friend managed to get me on the panel. I was going to be their case study and they were going to bring in experts to give me marketing advice on how to grow my business. I was so nervous because I was going to be in a roomful of, like, a 100 MBA students. I froze up. It was a disaster, but I managed to get the Knockaround story out. Afterward, a couple of people trickled up to me. One of the people that introduced themselves was a guy who said he was from a venture-capital firm. His firm was looking to make small investments.”
That venture-capital company “invested a low six figures. It wasn’t a massive investment but it was the capital Knockaround needed to get up and running and to move out of my garage.”
Moyer moved Knockaround into a small shared warehouse space in National City. He split the rent with two of his grad-school buddies. They used it as an art studio while Moyer used it to pack orders for Knockaround.
“At that time, I was the only employee. Part of the investment was a salary of $45,000 a year to allow me to work on Knockaround full time. After you get an investment like that you have what’s called a burn rate. That is a business term I had no idea about because I was an art-school kid. Basically, a burn rate is when you are going to run out of money based on how much you’re spending and how quickly you’re spending. My burn rate was the scariest thing because, yeah, I was making a salary, and, yeah, we redid the website and I moved out of the garage and into a warehouse, but I saw that figure in the bank account getting smaller and smaller.”
Knockaround’s new website cost $20,000. The cost of purchasing the Knockaround.com domain name set them back another $2000; plus, there was Moyer’s $45,000 salary and the rent on his warehouse space.
“It took six months before we turned a profit and the Knockaround bank accountant started turning in the other direction. Those six months were scary. I was sitting in my little warehouse thinking, It’s all going to be over pretty soon.”
Moyer believes that a mixture of marketing tactics, luck, getting celebrities to wear Knockarounds, and press mentions have been the key to Knockaround’s success.
“The first celebrity to wear Knockarounds was Snoop. We were asked to donate glasses for the gift bags at the Colt 45 party up in L.A. We found out Snoop was going to be at the party so we put in a little extra box that said, “For Snoop.” We threw in, like, ten pairs of glasses in colors that we thought he would like. It was smart but so naïve. I mean, most companies, if they want to get Snoop Dogg in their glasses, they talk to his agent, they negotiate a contract, but for us it was, like, Maybe he’ll wear them. We’ll see.”
Two days later, Snoop attended the Nickelodeon Teen Choice awards and wore Knockarounds. There were photos of him in them all over the internet. Since then, he has consistently worn Knockarounds.
“When I saw those photos, I started to cry. I mean, honestly, I might start to cry right now. It was so overwhelming because, you know, things like Daily Candy, that was cool; and when I signed the deal with the investors, that was cool, too, but I grew up listening to Snoop Dogg and Dr. Dre. I was, like, My sunglasses are on Snoop Dogg! It was just so awesome!”
Moyer began sending glasses to celebrities’ agents in the hope that they would follow Snoop Dogg’s lead. Before long, photos appeared of other major celebs in Knockarounds.
“We sent a package to Ashton Kutcher and a few days later he wore Knockaround sunglasses and a hat onstage to a tech conference. Those photos got posted everywhere. I don’t know if we can keep up the success rate we’ve had over the last couple of years, but you know to a lot of people, [when celebrities wear your product]it legitimizes the brand. If you are on celebrities, or if you’re mentioned in GQ magazine, then people think, Oh, this company must be legit.”
Better to spend other people’s money
Mogl headquarters is located in an upscale Sorrento Valley office park tucked behind floor-to-ceiling windows and double doors. Mogl’s sleek waiting room has a museum-display quality. It hosts a sleek full-length white leather sofa and a trendy metal coffee table. In one corner, a flat screen is affixed to a wall. Faces of celebrities, humanitarians, and billionaires scroll across the screen. Underneath each photo is a quote about Mogl. Sir Richard Branson says, “Mogl is using business as a force for good.” His quote is followed by a similar one from Jerry O’Connell.
When Jon Carder greets me in the waiting room and opens the double doors to expose the heart of Mogl, it is bustling with young 20-somethings sitting in a long row of cubicles. Each one is balancing a phone receiver against their ear. A young man with a beard wears cargo shorts and flip-flops. He stands on his chair. He slams his phone receiver down and with a devilish and triumphant grin he pumps his fist in the air. He does a small dance.
Inside Mogl with Jon Carder
Jon Carder, Mogl founder and serial entrepreneur, talks about the operations and beginnings of the business. Special guest appearance by Mojo.
Carder smiles. “He’s the manager of the closers. He must’ve signed on a new restaurant.”
The closers are Mogl’s sales staff. They’re the ones who convince local restaurants to sign on with Mogl to lure new customers in via discounts. For the service, Mogl receives a $199 monthly fee from participating restaurants.
While Carder takes me around the office, a Great Dane that reaches my chest stops and sniffs my arm. A foosball table occupies one room along with bicycles. Another small room is reserved solely for napping. There is a boardroom with a long table and posh-looking white vegan leather seats. A stocked bar occupies a central area of the office. And if that weren’t impressive enough, the business park that hosts Mogl, which Carder refers to as “the campus,” offers a six-acre Japanese garden with walking paths, a fitness center with free classes, a heated lap pool, a sauna and steam room, basketball, tennis, sand volleyball and racquetball courts, and a putting green.
“After I sold [Federal Equity], all of a sudden it became, Jon Carder knows what he is doing. We should back this kid. There was a lot of trust in my ability to run a company. It was interesting. With Mojo Pages, I had a lot of success in the beginning and then we hit a dry spell where things weren’t working very well. I had to get rid of most of my staff and then no one would give me money. I had to fund it myself and keep it going for two years. It cost me a lot of money.”
Since then, Carder has hit up venture capitalists and angel investment circuits in an attempt to raise money for Mogl and Mojo Pages. He has been successful.
“What happens is 20 to 50 investors sit in a room and you pitch them [your idea]. You stand in front of everyone with a PowerPoint presentation. The first time I ever spoke in front of a large group of potential investors I got dry-mouth and my heart was beating a million miles per hour. It’s like an adrenaline rush, especially when you do a great job and everyone is, like, ‘Wow! That was a great pitch, I want to invest!’”
Carder’s ability to pitch a great idea to investors aided Mogl in raising nearly $25 million.
“It’s better to spend other people’s money on the company if you can.”
With a thoughtful shrug of his shoulders, he adds, “You are the one putting all the time into it; someone else can put the money in.”
It also helps that Carder has connections in the business world. A friend of his invited him to an entrepreneur resort on Richard Branson’s island.
“For the last four years I have gone out to [Richard Branson’s] island every year for a week. It’s an annual trip with about 10 to 15 other entrepreneurs. He’s freaking awesome. He is, like, nuts-crazy but in all the right ways. He is just super cool and doesn’t give a fuck and has a lot of fun. He is adventurous and flirty and smart.”
Through that connection, Carder was able to team up with Branson’s Virgin America company and secure Mogl as their airline’s diner program. Virgin America customers now earn airfare miles by signing up for and using their Mogl accounts.
“[Branson] is a big supporter of Mogl because of our meal-for-meal program. He loves companies that are about profits and purpose. He is a great example to me of how to be that type of entrepreneur. He is a billionaire five or six times over and he is such a nice, humble guy.”
It could all collapse
Even though Moyer is confident in his success with Knockaround, he still has nagging self-doubts.
“I worry that it will end. I think about it all collapsing. It’s probably the scariest thing because the amount of time and energy that I have put into Knockaround over the years. Knowing that there are factors beyond my control that could make the whole thing crumble pretty quickly is really scary. But what I can always fall back on is that I have learned so much starting Knockaround.”
Moyer plans on eventually selling Knockaround to start new projects.
“I don’t have dreams of it becoming a family business. I think the natural progression for a company like Knockaround is to get to a certain size and then there will probably be a strategic buyer out there interested in buying us. I am so excited to start future companies. I feel like I can do this with, like, five companies in the future. I am always thinking about what the next company will be. I have so many ideas.”
Moyer believes that a large portion of the success of his future companies rest in a great domain name. “Maybe I am scared because we ended up having to pay thousands of dollars to get knockaround.com, which is such a good, pure domain name. As soon as I come up with an idea for a company, even if I don’t know what that company will do, even if it’s just the name, I will do a search of the domain name and see if it’s available. If it’s not, I just toss that idea. I have [purchased], like, 150 domain names. Some are random words put together, some are actually cool ideas.”
Moyer views selling Knockaround as a way to secure financial freedom to pursue dreams that may not be as profitable.
“Knockaround is my baby. But one of the things that selling Knockaround will do for me is give me the financial freedom to do whatever I want and to fail, and to fail a little bit bigger. I don’t really need my next thing to be as successful as Knockaround as long as I have the money to do it. What I really want to do is get back into art. I have two art degrees and I am running a business. All my peers are artists. They are practicing artists, they are professors. They are doing exactly what I imagined I would be doing. I still think about that sometimes, but I’m glad that I am not making $40,000 as the assistant professor at, you know, Southern Missouri Technical College or something like that. I am glad I am not doing that, but I always think about those artist dreams that I had so long ago, you know?”
Switching gears, Moyer adds thoughtfully, “The other thing I want to do is vintage auto racing. I want to start a vintage car collection and race them. That’s all I think about.”
Change the world
Jon Carder did with Federal Equity what Adam Moyer envisions doing with Knockaround. He took the funds from that sale and launched Mojo pages and Mogl. For the most part, Carder has been successful but he envisions more.
“If you look at companies like Open Table, worth three billion dollars, and GrubHub, worth 3.4 billion dollars, [Mogl] is about three years away from that size as long as we hit the growth rates that we plan on. We will probably go public. That is the most likely outcome. Along the way, we might sell it,” Carder says.
One thing is certain; Carder has no plans on retiring for a second time.
“A big portion of entrepreneurs work on an idea just to make money. I did that in my first company, the baby company. I did it because I thought being an entrepreneur was a great way to make money. It was an incredibly risky way to potentially make money. Every business I do from here on out will never be just about money. You need to make money to survive, but ultimately what I do will be some sort of world-changing business.”
When I ask Carder to elaborate, he adds, “Down the road I would really love to work on human longevity. We are so close to curing so many things that kill us — heart disease to cancer. I mean, what’s better than more life?! Once I had money, my life entirely shifted. I became entirely focused on impact and believing I could change the world. It’s crazy to think, but actually, entrepreneurs are the ones that change the world. I would have never had that kind of gall to do something or even say something like that before selling my company and having a nest egg.”