Carey Smith sold Big Ass Fans, the company he founded in Lexington, Kentucky, for $500 million in December of 2017 and then moved to Austin.
He bought Lance Armstrong’s 8,800 square foot home near downtown in 2018 and launched Unorthodox Ventures, an Austin-based business incubator and VC firm that invests in innovative companies with great products.
Smith runs Unorthodox Ventures with a small group of former employees, known as the Kitchen. They are headquartered in an office park off Friedrich Lane in South Austin.
Smith sat down earlier this week with Silicon Hills News to talk about Big Ass Fans and Unorthodox Ventures on the Ideas to Invoices podcast.
A former air conditioning salesman, Smith saw a big opportunity to create an industrial fan business in 1999. At first, he called the company HVLS Fan Company, but his customers kept calling the headquarters and asking if they were the company that made the big ass fans. Smith decided to rebrand. He even went down the road apiece, as they say in Kentucky, and found Fanny, the company’s donkey mascot. They took a picture of her and used it as their logo. And instead of CEO, Smith became the CBA or Chief Big Ass of Big Ass Fans.
“What we had going for us, our customers named the company,” Smith said. “And though it was a little cheeky, the word ass is used in the Bible 46 times, there wasn’t anything really nasty about it.”
Big Ass Fans grew from six employees to more than 1,200 employees and revenue hit $265 million a year under Smith’s direction. The company made the fans in the U.S. to control production and reduce the chance intellectual property might be stolen in China. He also opened operations in Australia, Malaysia, and Singapore as he grew international sales.
When he started the company, Big Ass Fans had no competitors. When he sold it, he had about 100 competitors. But Big Ass Fans still controlled about 80 percent of the market even though its fans were twice as expensive as some of its competitors, Smith said. The company built long-lasting quality fans that met a market need, Smith said.
To make sure the company maintained its culture as it grew, Smith said he made sure to compensate people well. He paid salaries about 40 percent on higher than the average wage in the state of Kentucky and 30 percent above the standard wage for the U.S. He also paid annual bonuses to everyone in the company. And he created sports teams and family-oriented events. He also had a stock appreciation rights program.
When Smith sold the company, he wrote checks totaling $50 million to his employees from the C-suite down to the production team.
“We minted 13 multi-millionaires and 15 millionaires and about 120 more people that walked away with significant amounts of money,” Smith said.
“In terms of building a culture, the name of the game, it all comes back to Kindergarten you treat people the way you would want to be treated,” Smith said. “You treat people as equals and people appreciate that and respect that.”
Big Ass Fans also put a premium on customer service.
Smith also bootstrapped the company. He tells entrepreneurs now that there is a time and a place for money. But many times, raising money from investors is a mistake because the entrepreneur loses control of the company, Smith said.
After selling Big Ass Fans, Smith decided to found Unorthodox Ventures because he enjoys building businesses and helping other entrepreneurs. It’s an intellectual exercise he enjoys, he said.
“What amazes me is how many young people there are that are very bright and very driven. And I think we at the company here, have something to offer those people because we’ve done it,” Smith said.
It took 20 years to go from zero to $500 million, Smith said.
“We can help them get to that point faster,” he said. “If you inject capital and knowledge at the right points, you can slice time off that venture.”
At the end of the day, Smith wants to make sure the entrepreneur has a sizable chunk of the company they started.
To date, Unorthodox Ventures has invested in Tushy Bidets and it acquired Austin-based Go Fish Cam earlier this year.
He invested in Tushy Bidets because it’s a superior way of disposing of waste, Smith said. In his facilities in Lexington for the fan company, he installed bidets for everyone.
“Americans, interestingly enough, are not on the cutting edge of the bathroom,” he said.
Tushy Bidets has a great product and Unorthodox Ventures is happy to be investors in the company, Smith said.
Unorthodox Ventures looks for good products which have a good market and customer demand, and the right founders, Smith said.
“We think it’s very important to have the right individuals,” Smith said.
Smith also likes to see entrepreneurs who are fully committed to their startup and product.
“You’re looking for people that are looking to change their lives and change other people’s lives and are willing to give up a comfortable day job to do it,” Smith said.
Smith went decades without a paycheck.
“I didn’t think about money, I’m not that driven by that,” he said.
The company always showed a profit, but he used to tell people that if he had a dollar left over at the end of the year, he missed an opportunity to invest it in the company.
“We plowed all the money back into the company,” he said.
Business is a higher calling than just making money, Smith said.
“What makes business interesting is it’s an incredible intellectual journey,” Smith said. If you do it right, you can make it a cool experience for a lot of people, he said. And if you sell the business, you need to share the profits with the people who helped you build it, he said.
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