Extreme Sandbox: Roaring through the biggest adventure on your bucket list

I have known Randy Stenger and Extreme Sandbox since even before his epic appearance on Shark Tank in 2016. When I first heard about his unique business model of a heavy equipment adventure, I knew it was something I wanted to be a part of. I was able to convince Randy to open his second location at my resort in Texas (Tanglewood Resort). Today he is up and running on a 10-acre sandbox on my property. Extreme Sandbox is one of the favorite activities at the resort for both corporate and leisure clients and consistently receives 5-star reviews. Randy is a driven entrepreneur and will be successful at whatever he undertakes.

Roger W. Thiltgen

President of Tanglewood Resort Properties Inc

Randy's passion - about business and really everything he tackles - is total. We teamed up with Extreme Sandbox because we shared a commitment to continuous improvement, innovation and safety. In fact, we've adopted some of Randy's safety protocols into Komatsu operations. Randy's eagerness to also tag-team CSR work, training and education, and customer appreciation activities has been a welcomed and pleasant surprise.

Rich Smith

Product And Services Division for Komatsu America

I can’t say enough about Randy Stenger and his team at Extreme Sandbox. We've brought many clients to his Minnesota-based facility over the past few years and have always benefitted from his professionalism, safety consciousness, and sense of humor. Randy is the perfect mix of bold entrepreneur and strategic pragmatist. He dreams big and then he makes it happen. Randy exudes enthusiasm, passion, skill, and eagerness to be bigger, bolder and better in everything he does. Randy’s deep background in merchandizing and customer service is not only refreshing and evident throughout, but lends credibility to his pursuit and obvious accomplishment of this endeavor. This is a business to watch….and I, for one, want to be a part of it.

Peter Bailey

President, The Prouty Project

Investor Q&A

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What does your company do?

Bulldozers. Excavators. Wheel Loaders. At Extreme Sandbox, we see adults live out their wildest childhood dreams by letting them play with construction equipment on our 10-acre "sandbox." We did $800k+ in sales in 2017 because there's no other place where a person can drive a bulldozer, crush a car, and then finish off with a ride in our fire truck. Perfect for young and old, men and women, individuals and corporate groups, we've grown to 3 locations and want to keep expanding nationally.

Where will your company be in 5 years?

After starting with one location in Hastings, Minnesota, we've added another outdoor venue just north of Dallas and an indoor Extreme Sandbox Mini in Roseville, Minn. Buoyed by a successful 2016 Shark Tank appearance and a hard 5-star rating on Trip Advisor, we feel poised to expand into more cities and more states, until eventually, Extreme Sandbox is popular enough that every American can cross "play with a bulldozer" of their bucket lists.

Who are you and what is your company all about?

My name is Randy Stenger and I am the founder and CEO of Extreme Sandbox. Extreme Sandbox is a heavy equipment adventure company that lets people play on construction equipment.

Where did the idea for this company come from?

Most people think I was in construction prior to starting the sandbox. I tell them that no, I've had about as much experience there as they have. I've had never once set foot in construction equipment. What makes me qualified is that I'm a big kid at heart. I refuse to grow up. The idea came about because I'm a father of three boys. In about 2010, I was driving by a construction site, and my oldest, who was probably 8 or 9 then, looked out the window and asked me if I thought it would be fun to play on that equipment. I was like, "Heck yeah, it would." That’s how the idea was born. From there it just took a lot of work to get it off the ground. Before this, I went to University of Georgia and obtained a Bachelors Degree in Business Management, While I was in college I was a volunteer firefighter/EMT which ultimately led me to a career in law enforcement. I served as a Police Officer in Colorado for approx. 5 years before leaving my public service background and going "corporate". I was in the corporate world as an executive with Target. I started in the stores as a manager and then moved to a position at Target Corporate. I started pursuing this idea while working as a corporate executive, and it really took about a year or two to get off the ground. As much as the idea is pretty novel and simple, it was obviously more challenging to find the right site. I live in the Twin Cities area of Minnesota. Finding the right site and the insurance provider probably took us about a year or two so we could get off the ground and launch.

When did you launch?

Our first site officially opened in April 2012 in Hastings, Minnesota. We pre-sold tickets. We got the approvals and everything in November 2011 right before Thanksgiving. We started pre-selling, and we got some equipment out to the site. We had media wanting to do a story on us when they saw the city council approve us to open in five month. I rented a kiosk at a mall in Minneapolis and had all these pictures. I was selling gift certificates for something that didn't even exist yet. That's my entrepreneurial spirit -- I jump off the ledge and then figure out how I'm going to land. It's about taking risks, but SMART risks. So we pre-sold and had a ton of interest. By the time I actually opened the site in April, we already had about $20,000 to $30,000 in pre-sales.

How has the business gone for the last six years?

When we really started the business in 2012, it was such a crazy idea that we had no clue what the reception would be. A lot of people think I spent millions of dollars to get this off the ground. I tell people I'm just really smart and responsible with my money. Really, I only started with about $30,000. I rented just three pieces of equipment. I had one skid steer, one excavator, and one bulldozer. I had ten acres of land. I don't want to say it was just a gravel pit, but it was just an unused piece of property. Then we rented a construction trailer. The idea was just to test it out for about 18 months to see how it went. We thought it was brilliant. But we're like, "Will people actually pay us money to play with construction equipment?" We thought there was no way, but it ended up taking off. At the time, I was still working my corporate job Monday through Friday in a suit in downtown Minneapolis at the Target Corporate. Then I had this side hustle on weekends and evenings with Extreme Sandbox. I was putting in 100 or more hours each week. I did both for about eight months. After the first six months, we got so much press coverage the business started exploding. That's where I left my corporate day job and went full-time for Extreme Sandbox.

How does the customer experience play out?

Obviously, safety is our number one priority. Everything is reservation only, which has been a great for us because we don't have employees waiting in an office waiting for people to show up. From a cost perspective, it means we don’t have as much overhead or payroll. People usually reserve about two to three weeks out. This is a bucket list experience that people wait for, so they'll book six months in advance to do this. On the day of their reservation, they show up to our site. We greet them and get them in. We have a classroom training session that lasts 20 to 30 minutes. Obviously, as our programs have grown, our processes have evolved. We've got our own video series that does most of the training. Our instructors will sit with them and go over everything. We have waivers they sign. Then we play our training videos that are all proprietary. It's all stuff that we've created on our own. After that, depending on the package of equipment they've selected, we take them out to the equipment. Everyone sits in the equipment by themselves, but we've got a remote wireless communications system. Our instructors are always standing 50 to 100 feet away. We load up the guests, we show them things in the cab, and then we take them to practice areas. This is where our instructors are coaching them through everything, and then ultimately they play a little bit on their own. We usually finish with some type of obstacle course. It can involve something as simple as knocking a tennis ball off a cone with a 26-ton excavator all the way to lifting up a 4,000-pound car. We really try to show them the full range of what those machines can do.

What kind of machines are you using?

We primarily have three types right now. Excavators, bulldozers, and wheel loaders are the three primary types at our sites, and we also have mini excavators. We have two of each of those. As we've grown the model, we've realized running in pairs is ideal. We can have one instructor talk to two people, and it also makes it a better experience for our customers because they can be doing this with their family and friends. But while construction equipment is at our core, we are always looking for new and interesting "toys". We offer an Extreme Fire Truck experience, have partnered with a local farmer to provide a Harvest Experience (let clients drive a combine), and ultimately have branded ourselves as Heavy Equipment Adventures which can apply to many toys we always dreamed of playing with.

How do you make money?

We've always focused on quality over quantity. I'd rather get one client at $500 than ten at $50. We don't go for huge volumes. We really try and make this a truly unique bucket list experience. That goes all the way down to why our sites aren't flooded with people. A busy day for us might just be five to ten clients. What we're able to do then is really slow down the process and make it more interactive so that we get to know our customers and can tailor the experience to them. Our average individual probably spends $300 to $500. Our entry-level price point is $195 for our initial individual packages. Then we do an all-day package that is $900. There's a lot of variations and options within that. Group events are probably about half of our market now. Typically we tell groups to budget around $150 to $250 a person. We custom build these group packages based on our clients' needs. Most of our group packages are for corporate team building. By year two, we started getting inquiries from some of the larger companies headquartered here in Minneapolis: 3M, General Mills. I realized that corporate team building is such a niche. These corporate groups are looking for new ways to engage their employees. They want something new and different. They're sick of going bowling or going golfing. All of those things have been done. The other added bonus I saw was the price. The price we could charge them was different, because generally the person doing that isn’t paying with their own money. A corporate group is willing to write a check because it doesn't necessarily come out of anyone’s personal pocket. We found that those are more lucrative events, and our margins are much higher. It's kind of like we work smarter, not harder. We found that if we do five to ten corporate groups a month, the margins are a lot higher. That's probably why half of our business now is corporate team building.

When you think about capacity, are you at 100 percent capacity with six machines in use all the time?

We've got tons of areas to grow there. We have three sites now. Hastings, Minnesota is our original site. Then we opened a second location just north of Dallas, Texas in 2016. That's another outdoor site. Then we opened a simulator-based indoor mall prototype in Roseville, Minnesota, which is a Minneapolis suburb. But as far as capacity, we generally schedule Wednesday through Saturday, so four days a week. Even with that, I'd say we're under 50 percent of our capacity. We've got plenty of room to grow. Part of that is intentional. I'm not trying to turn this into an attraction where we've got hundreds of people coming every day. The reality is we’ve got plenty of room to grow, but we also want to make it a truly unique experience for our clients. If we ever got to that point where we're running 75 percent or more capacity, we'd probably end up raising our rates. We've got room to grow with other ways.

When you think about growth, what are your key measures for success?

The two priorities of our company are safety and then customer service. We've never had an incident with a customer in six years. We know what we're doing there, and that's always our focus. For service, we use TripAdvisor as a huge benchmark. If you look at our TripAdvisor page, all we have are five-star reviews. Our Texas site's a good example. If you didn’t think we could replicate what we did in Minnesota in Texas, we can point to TripAdvisor. All we have are 131 five-star reviews. Our clients love what we do. Financially, our goal is to grow each site into generating $1 million in a year. We're not there yet. Our Hastings site is probably the closest, and we generate about $600,000 there. There's tons of room to grow there. We have enough room because a lot of my costs are fixed as far as equipment, the land, even a lot of my team. Several of them are salaried.

How do you grow the Minnesota location from $600,000 annually to $1 million?

We know we have a winning product/service, so now it just comes down to getting the word out. Even six years in, it's amazing how many people don't know about us. We've primarily focused on guerrilla marketing. Most of it is word of mouth. Because people aren't looking necessarily to go drive a bulldozer, so we have to really get out there and sell ourselves. Most of it comes down to marketing and letting people know what we are. We also get people who think it's just for guys. We try to market to women more than anything because 30 to 40 percent of our clients are women. Women are usually better at working the equipment than men. I hate to tell the guys that, but it's usually true. Ultimately we also know that adding more sites across the US will increase sales at ALL locations. When you have something as unique as we do, and with the popularity of social media, our clients ultimately our the best salesperson. We focus on giving a great experience but also make sure they capture those memories with great photos. Then those very happy clients spread the word in their social media channels. It's not uncommon for a client to visit our Texas Sandbox location, post a photo on Facebook, and they their family member who lives closer to our Minnesota Sandbox will book a session there. So as we get more sites around the country it will help boost revenue at ALL of our locations.There's a lot of opportunities for us to market it more. And then also just proving that price perception thing. People are initially reluctant to spend $300 or $500, but it’s easier for us now that we’ve got six years of five-star reviews online. I tell anyone that questions whether it’s worth spending $300 or $500 for a day at Extreme Sandbox that in six years of doing this, I have never, not once, had a customer do the experience and later tell me it wasn’t worth every penny. That’s why it’s a lot. It’s marketing for us to really prove that experience beforehand. Between that and the corporate market, we can still do a better job marketing. That's how I think we will grow the business into multiple million-dollar-plus locations.

How do you think about expansion?

The first two to three years was really all about the proof of concept. It's taken us a lot to get the processes to where I can take someone off the street and have them up and running in ten minutes on a piece of a 26-ton excavator. No one in the world really has the skill set we do. We're a very unique thing. Then we wanted to see if we could replicate it, so that's where Texas came in. We opened it successfully here. Now we're in our sixth year in Minnesota. I feel like we have the foundation of the house built. We have all the processes in place. We've got the core team in here. We know how to open new sites. The process really is to grow with additional locations around the country. That's the model that we're looking at. Initially, we've been company-owned. We're exploring two avenues. Either we continue with company-owned and open some more sites on our own in cities that we think would be a good fit, or we are considering a franchise model. We were on “Shark Tank” in 2016. And we got tons of attention from that. We still get probably four emails a week from people wanting to franchise our business. We haven't decided to do it yet because we know it's costly to get a franchise model started. But that might be another area we look at.

How do you make the decision on whether to franchise?

We've built the foundation. We've done all of this self-funded so far. It's all been rolling money into it. We've got everything built. But to prove any franchise model, you have to show your margins and how much profit you're making. We're not there yet. We're just breaking even. We're at that point in Extreme Sandbox where we built the model, we have the vision, we have additional prototypes we plan on modeling off of in the future. We feel like it's the right time for an investment to add the fuel to the fire to help us scale. That's where we'll be able to prove out the model and then grow it from there.

Why are you fundraising?

There are a couple different areas where we could direct the money. We would like to raise between $150,000 and $500,000. Ultimately, it's fueling our growth. Because this has been built by me, we've rolled all of the funds back into it. There are opportunities for us to eliminate some debt and get the company in a good place by realigning and restructuring some of the finances. Around $150,000 goes towards that. But that is really just the start, we obviously want to use the majority of the funds to scale. A part of it will be marketing the business. Part of it would be staffing, whether it's filling marketing roles or operation roles. Team is really our biggest asset, and we need to actively retain our existing team while also recruiting others to help us grow with new sites. And then if we raise more, we can open a new location. We generally need about $100,000 - $200,000 to open another site. So anything we raise over $350,000 - $400,000 would apply to opening that other location.

You’re bringing in several hundred dollars per customer, but what are your expenses?

The equipment is obviously expensive. Komatsu America is our official equipment sponsor, and we've had that relationship for a couple of years. They've been direct partners with us to help us grow the brand. What that essentially means is we officially lease the equipment from Komatsu. However, it’s a very aggressive lease and there are some confidentiality clauses with Komatsu on what details we can disclose. But our equipment cost is minimal because of that. That's one of the big advantages we have over anyone else wanting to try this. Komatsu is the second largest equipment manufacturer in the world, and they've really bought into our brand. They see the vision. We're kind of more of a sales and marketing company, not only ourselves but also for Komatsu. We've helped advance their brand. A lot of our costs are in the land and the facility. We usually need 10 to 20 acres, so most of our expenses go towards that. It’s usually through a loan or a mortgage on a property, if it's $50,000 to $100,000 as a down payment on a build out. We also look for strategic real estate partners who have sites that are ready for build to suite with us signing a long term lease agreement. In general we like to stick to what we know, which is giving a superior 5-star experience so we don't have any concerns about whether we own or rent the property and facility.

When you think about some crucial hires, do you have any sort of in the executive realm?

We're a pretty lean organization. I've never believed in having a lot of layers. Each one of our sites usually runs with two full-time employees. As we've grown, we're now at a point where I need to bring in more higher-level people. We're still a small company, but we’re growing, and I need some of those key leaders. It's been primarily me. I'm the visionary that's out there running the business day-to-day. I need to bring in some key partners. There's opportunity in training and operations, because it's all about consistency with the sites. We do a lot of training to make sure our processes are the same. Human resources staff would help us. Bringing in some finance people to run the back end and handle the numbers would also help. I've been able to run this like a small business, but I'm at the point now where I really need to bring in some key people to help us grow. And I think that's part of what we would use as well. Some great team members work for me, but we don't have benefits. We don't have some of those key perks that attract good talent. I'm at that awkward stage where you're a small business trying to grow, and I don't have these amazing benefits packages to acquire some of that talent.

1	Appeared on Shark Tank in 2016.
2	Two locations drove $750k in 2017 revenue, with a new mall location opened at the end of the year.
3	TripAdvisor loves us: Over 98% of our 600 total reviews are 5 stars.
4	We have three locations -- outdoor sites in Hastings, Minnesota and just north of Dallas, Texas -- plus an Extreme Sandbox Mini location inside Rosedale Mall in Roseville, Minnesota.
5	Our reservation-only experience has a price range that spans from $195 for initial individual package to a $900 all-day package.
6	Official equipment sponsorship with Komatsu America.
7	In October 2017, we launched “Inside the Sandbox,” a VLOG on our YouTube channel that now has 85 episodes.
8	Corporate team building events are an increased revenue driver. Over 45% of 2017 revenue was generated from group events.

1	Risk of natural disaster. With our business primarily being at outdoor sites, our locations are always subject to any form of natural disaster that could impact our operations at any one or multiple sites.
2	Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
3	Risk of serious injury to a customer or employee. While safety is always our number one priority, we are a recreational activity using heavy equipment that can always pose a risk for serious injury or death. We focus on continuous improvement to reduce any chance of injury, but the risk is always present and could impact our business if an incident occurred.
4	Operating costs may be unpredictable. We primarily source our equipment through sponsorship deals with equipment manufacturers, so there is always a risk that a sponsorship agreement is not available and we would then have to pay market rates for equipment. Additionally, developing new sites can vary in cost dramatically based on different markets and areas of the country. Often it is cost prohibitive to open a location in prime metro real estate, and thus to keep costs lower we may build sites outside of major metro areas further.
5	We are currently involved in litigation. We have filed a complaint against a company for breach of contract in Toronto, Canada. This open litigation involves the failure for the company to deliver equipment per the agreement and they're failure to return a deposit ($40,450). We may be subject to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, however, these legal proceedings may have a material adverse effect on our business, financial condition, or results of operations.
6	The success of the Company will depend on its ability to compete for and retain additional qualified key personnel to enhance the growth. The Company's business would be adversely affected if it were unable to recruit qualified personnel when necessary or if it were to lose the services of certain key personnel and it were unable to locate suitable replacements in a timely manner. Finding and hiring such replacements, if any, could be costly and might require the Company to grant significant equity awards or incentive compensation, which could have a material adverse effect on the Company’s financial results and on your investment. The loss, through untimely death, unwillingness to continue or otherwise, of any such persons could have a materially adverse effect on the Company and its business.
7	The company intends to use a significant portion of the proceeds from the offering for unspecified working capital. The offering proceeds will be used by the Company in the ways management deems most effective towards the Company’s goals. This means that although we definitely have plans for the proceeds (focused on sales, marketing, and site development) the Company will have ultimate discretion to use the proceeds as it sees fit and the Company has chosen not to limit the Company’s use of the funds to specific uses that investors could evaluate. Such portion of the proceeds from this offering will be used for the purpose that the company’s management deems to be in its best interest in order to address changed circumstances or opportunities. As a result of the foregoing, the Company’s success will be substantially dependent upon its discretion and judgement with respect to application and allocation of such portion of the proceeds of this Offering. The company may choose to use the proceeds in the manner that the investors do not agree with and investor may have no recourse. A use of proceeds that does not further the Company’s business and goals could harm the Company and its operations, and ultimately cause an investor to lose all or portion of his or her investment.
8	All control and voting power is currently held by CEO, Randy Stenger, which may affect an investors' decision to invest.
9	At the moment our current liabilities outweigh our current assets, which could prove detrimental in the long term.
10	The Company has multiple outstanding loans, some of which have high interest rates, which may be of concern to investors.
11	The LLC Units into which the Convertible Notes could convert have not yet been authorized, which is a concern.

Date	Amount	Security
	$7,401	Convertible Note
07/2018	$100,000	Loan
01/2018	$30,500	Loan
07/2018	$36,000	Loan
04/2016	$30,000	Loan
01/2017	$39,539	Loan
11/2017	$360,396	Loan
02/2013	$27,000	Loan
08/2013	$30,000	Loan

Lender	Issued	Amount	Oustanding	Interest	Maturity	Current?
TJ Stenger	02/20/2013	$27,000	$9,000	5.0%	12/31/2018	Yes
Paul & Catherine Stemper	08/31/2013	$30,000	$27,500	0.0%	12/31/2018	Yes
Tanglewood Resort	04/12/2016	$30,000	$30,000	6.0%	04/12/2019	Yes
Merchants Bank	01/31/2017	$39,539	$31,156	7.75%	12/15/2020	Yes
Komatsu Financial	11/01/2017	$360,396	$360,396	4.49%	11/01/2022	Yes
Paypal	01/04/2018	$30,500	$18,450	0.0%	11/04/2018	Yes
Kabbage Loans	07/16/2018	$36,000	$30,540	26.91%	01/16/2019	Yes
Loan Builder	07/25/2018	$100,000	$106,786	12.99%	07/24/2019	Yes

$150,000	55% towards operating expenses (primarily adding staff/benefits to recruit and retain talent), 20% towards marketing expenses, 20% towards debt consolidation (payoff higher interest loan balances), 5% WeFunder fee
$500,000	Same as above. For approx every $250k additional raised we plan to open (1) additional Extreme Sandbox location in a major US metro area. At $400k-$500k level this will add (1) additional site from this round of fundraising.
$1,000,000	Same as above. For approx every $250k additional raised we plan to open (1) additional Extreme Sandbox location in a major US metro area. At $500k-$1M level this will add (2-3) additional sites from this round of fundraising.

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