The Jacuzzi Seven were obsessed with flight and engineered better propellers. What is the difference between propellers of air or water???
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us. But we’re highlighting ads we’ve written and produced for our clients, so here’s one of those.
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Dave Young:
Welcome back to the Empire Builders Podcast, Dave Young here, alongside Stephen Semple, discussing empires, entrepreneurial empires that started from just somebody’s crazy idea and became something huge. And today, Jacuzzi.
Stephen Semple:
Jacuzzi.
Dave Young:
We’re not talking about a hot tub, we’re talking about a Jacuzzi.
Stephen Semple:
Correct.
Dave Young:
Which, sort of became the generic name for hot tubs, but I’m fascinated to hear the story. I’m guessing we’re headed to the 70s, baby. Is that ring true or no?
Stephen Semple:
The business was founded in 1915.
Dave Young:
All right, so we’re not headed to the 70s, but we’ll still be around. Was it founded as Jacuzzi?
Stephen Semple:
Well, here’s the interesting thing, here’s the really fun part.
Dave Young:
Oh wait.
Stephen Semple:
Guess what their first business was?
Dave Young:
Wait, I’m thinking. These might be like therapeutic Whirlpool things too, no? I don’t know. I’m getting ahead, I don’t know what their first business was.
Stephen Semple:
Their first business was in the airplane business.
Dave Young:
Okay. The 1915 three engine Jacuzzi. No, I don’t know.
Stephen Semple:
No, they started by making props for airplanes, that was their first business.
Dave Young:
Really?
Stephen Semple:
Yes. How crazy is that?
Dave Young:
That’s nuts. Okay.
Stephen Semple:
Isn’t that nuts? Yeah. So, they were founded in 1915 in Berkeley, California by seven siblings, there were seven kids in the Jacuzzi family.
Dave Young:
Holy.
Stephen Semple:
And they were-
Dave Young:
Was Jacuzzi their name?
Stephen Semple:
Well, actually, it was Iacuzzi, and when they immigrated, the classic.
Dave Young:
Yeah.
Stephen Semple:
Yeah, the classic mistake of being written down wrong, and that’s the new spelling is what stuck. They were immigrants from Casarsa della Delizia in Italy, and I’m sure I’m completely butchering that.
Dave Young:
Yeah, just say Italy.
Stephen Semple:
Yeah. And as said, the original family name was Iacuzzi.
Dave Young:
Okay.
Stephen Semple:
And it became Jacuzzi, and of course, it defined the hot tub business, which today is a $6 billion global market.
Dave Young:
But airplane propellers.
Stephen Semple:
Airplane propellers.
Dave Young:
Seven siblings had the bright idea of making airplane propellers.
Stephen Semple:
Yeah.
Dave Young:
But this is shortly after Orville and Wilbur-
Stephen Semple:
Oh yeah. This is-
Dave Young:
Had invented airplane propellers.
Stephen Semple:
Well, this is the day of biplanes, right? So, it’s 1915, and Rachele Jacuzzi, who’s the youngest of the seven, is visiting the San Francisco Fair, and he sees biplanes. And one of the sons is working as an engineer for the founder of McDonnell Douglas, and they’re obsessed with flight, and they see these stunt plane props, and they look at them and go, these are really inefficient. So, they invented propeller that is curved and smaller and more efficient, and it’s called the toothpick propeller. Got these little tiny blades. And they open up a machine shop to start making these propellers, and the first business is called Jacuzzi Brothers Inc., in Berkeley, and they start making these things. And when the US enters World War I, guess what? These propellers really help the early Air Force.
Dave Young:
Sure.
Stephen Semple:
Now. At the end of World War I, they need a new business, and they decided to lean heavily into the aircraft space, and they build and design the first monoplane with a fully enclosed cockpit called the Jacuzzi J-7.
Dave Young:
Really?
Stephen Semple:
Really.
Dave Young:
How did I not know that? Okay.
Stephen Semple:
Isn’t that crazy?
Dave Young:
That is.
Stephen Semple:
Now, it’s the first fully enclosed monoplane to be flown in the US, and they get a contract to carry mail for US Postal System. Now, on its maiden flight, it crashes and kills one of the brothers, and the parents basically say no more airplane business. So, they’re out of the airplane business. They’re done. So they need a new business, and at this point you would say, enter the hot tub business, right? Nope, not yet.
Dave Young:
No. No, not yet.
Stephen Semple:
So, Rachele is staring out at the orchard in the valleys of California, and he’s seeing irrigation starting, but it’s very inefficient, and he thinks of an idea to get groundwater out more efficiently for irrigation, and he creates a new technology, because think about it, he actually has expertise in fluid dynamics.
Dave Young:
Well, yeah, a propeller is an impeller as well. So, an impeller is something that moves water.
Stephen Semple:
Correct. Correct. So, he creates a new pump that’s widely effective, and this pump drives air into the ground. So, it’s driving air into the ground makes the pumps more efficient.
Dave Young:
Okay. All right.
Stephen Semple:
Right? So, one of the brothers, Candido, is basically the great salesperson and he goes out selling this pump, door to door, day to day, and soon they’ve got this great business doing irrigation pumps. And soon they’re doing deep well injector pumps, and they start really leaning into the whole agriculture, they got crop defrosters, and solar power generators, and all of this stuff that they’re making for the agricultural business.
Dave Young:
Wow.
Stephen Semple:
And Rachele, who’s the engineer of the family, dies of a heart attack, so who’s now going to lead the company? And the family decides, Candido, who is the salesperson, is going to lead the company. Candido is married with four kids, and Candido, he gets some really disturbing news about his youngest son, Kenneth. They find out the youngest son Kenneth, has rheumatoid arthritis. And at the time, when you had something like that, the expectation was he wouldn’t live beyond four.
Dave Young:
Okay.
Stephen Semple:
And he’s getting all these injections with salts and things along this line, and is in constant pain. Now, they had a doctor who tries a new therapy, hydrotherapy, and it’s the only thing that works for Kenneth. But the problem is, he gets this hydrotherapy twice a week and there’s this long drive, down crappy roads, and it’s super painful. So, the wife looks at Candido and asks, you build something?
Dave Young:
Sure.
Stephen Semple:
Now, you think about it, the family business is pumps, but Candido is a salesperson, not an engineer, but he comes up with something. He takes a sump pump and he adapts it to a bathtub, and it works. Now, Kenneth can have hydrotherapy every day at home. When they show it to the doctor, the doctor says, man, you got to make more of these. So, Candido now wants to enter the hydrotherapy business.
Dave Young:
Yeah.
Stephen Semple:
But the family’s not really thrilled because this is kind of a move to business to consumer, from business to business, this is quite a change. Plus, there’s big players in the appliance market, companies like GE, and if they enter the business, boy, this could be tough. And the pump and irrigation business is doing great, they just built a big factory to build this stuff. They’re doing about $35 million a year in that business, but Candido’s the salesman, he wears them down, and they create a new division.
Dave Young:
Good for him. All right.
Stephen Semple:
They spend five years developing the product, and by December 16th, 1952, they launch a hydrotherapy pump for your tub, the J-300. And it’s kind of this thing that you attach, it looks like… It’s really weird. It looks like basically a motor that you attach to an existing bathtub. But you know what? It’s post-World War II America, which is really the marketer’s dream because people want new products like the J-300.
Dave Young:
Electrical appliances that we can put in the tub with us.
Stephen Semple:
Yep. And the crazy thing is-
Dave Young:
Oh, I-
Stephen Semple:
… the crazy thing is, if you look at the old pictures of it, you literally plug it into a wall outlet.
Dave Young:
Oh yeah. Yeah.
Stephen Semple:
It’s freaking nuts. And this is also back in the day where the electrical outlets in bathrooms are not like they are today, where they’ve got built in little-
Dave Young:
No, there’s no grounding systems-
Stephen Semple:
No, none of that-
Dave Young:
… and ground fault interrupt. No, no.
Stephen Semple:
No, none of that. So, 1953, they launch the product and the first orders really are coming from pain sufferers, by 1955, they start having sales people go to drug stores and bath shops and door to door, and things along that lines, because what started as medical, they started to pivot it more to relaxation, because it’s a way bigger market. But what they know is if it’s successful, they worry GE is going to enter and overwhelm them, and they need to really make sure they get out there first. So, they hire Ray Schwartz for the business, and Ray Schwartz works for them for the head of publicity, and he’s an ex-sports reporter, [inaudible 00:10:20] you know what, I think product placement would be a great thing to do. So, it’s 1956 and there’s a new game show coming out and-
Dave Young:
Stay tuned, we’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
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Dave Young:
Let’s pick up our story where we left off, and trust me, you haven’t missed a thing.
Stephen Semple:
So it’s 1956 and there’s a new game show coming out, and it’s called Queen for a Day, I had never heard of this game show. But it’s basically the woman with the saddest story wins.
Dave Young:
Oh, gosh.
Stephen Semple:
These women… Right? This show gets 20 million viewers per episode, it’s a daily show, and basically, they’ll win this prize, and one of the things that Ray negotiates is the Jacuzzi tub being one of the prizes.
Dave Young:
Okay.
Stephen Semple:
After the first appearance, sales spike. He then persuades actresses and actresses to use the product and promote it, and it’s really one of the first influencer campaigns out there. This is really a new idea. And a few years they do a product placement in a movie, called Fortune Cookie, and it’s actually a pretty terrible placement, but it gets the product out there. But the design does have one flaw, you got to attach it to your plug, and plug it in. At this point, people are starting to figure out this electric wire in a bathtub is not the best idea.
Dave Young:
Yeah.
Stephen Semple:
Ray Schwartz wants to do something better, and he envisions a deep tub, hidden wiring, jets, more of a self-contained model. So, in 1968, the Roman comes out, which is really, when you look at pictures of the Roman, kind of the Jacuzzi tub that we envision today. And it’s $800, which is about $7,000 in today’s money, and what he decides to do, because it’s this built-in unit, he decides to go to home builders at trade shows, and he offers them a commission. Says, basically, we’ll give you a commission if you sell these at the time that you’re building a home.
Dave Young:
Okay.
Stephen Semple:
And the first trade show, he goes, he gets 50 orders. And as we get into the 1970s, and fiberglass technology really starts to get perfected, that’s when the Jacuzzi tub really starts to take shape. You start seeing the shaped seats, and all this other stuff going on. And they up the product placements, they get it into movies… And it’s still a family business, by 1974, they’re doing $67 million in sales, by 1999, they’ve done a 10 times growth, they’re doing $650 million in sales by 1999.
Dave Young:
Man.
Stephen Semple:
Yeah. But there’s some problems. The family’s fractured, Candido gets s nailed for tax evasion, he resigns, moves abroad, to avoid the US government. There’s 100 family members working for the company, there’s 250 different stakeholders… Shareholder meetings are a mess, the family is suing each other over business decisions, it’s nuts. And they decide, you know what? It’s time to take the company public. And we’ve talked about this before, there was a podcast back a little while ago, where we were talking about these family businesses going public, and I made the comment, sometimes it’s just the right thing to do.
Dave Young:
Yeah, yeah. I’m guessing this is one of those cases.
Stephen Semple:
This is one of those cases, where it’s like… Because you think about it, if you’re a minor shareholder, and there’s all this money tied up in the business, and you kind of want to buy a new house, you want cash, not the shares that you can’t do anything with.
Dave Young:
Yeah. You’d kind of rather just have money than a piece of the company.
Stephen Semple:
Yeah. But guess what? The market goes soft right around the time that they’re planning on going public, so they pull that, but they get an offer for $73 million for the business from Walter Kidde & company, and they figure, you know what? It’s time to sell.
Dave Young:
Okay.
Stephen Semple:
They sell, the company changes hands a few times, it’s one of those ones, it’s gone from this business to this business, because the whole way that private equity and all that other stuff works. And in 2024, they were $873 million in revenues.
Dave Young:
That’s a chunk of change.
Stephen Semple:
That’s a chunk of change, but the interesting-
Dave Young:
By anybody’s… Yeah.
Stephen Semple:
Yeah. But the interesting thing is, under the family, it went from, ’74 to ’99, it went from $67 million to $650 million, from 1999 to 2024, they went from $650 million to $873 million, not really any growth there. In fact, one could argue, just for inflation, probably a bit of a decline. But you know what I found that was fun about this? When I first started looking at it, and I was like, their first business was aviation, I was like, how do you go from aviation to Jacuzzi pumps? But when you go aviation to irrigation, that made sense, irrigation to the Jacuzzi, because again, of the challenge with the son, with Kenneth, okay, that made sense. But boy, at first it was like, it hurt my head when I was like, your first business was aircraft propellant? What?
Dave Young:
It makes sense. We know how to attach motors to things, and spin them, and move air and water, that’s kind of it, right?
Stephen Semple:
Yeah. So, the whole inspiration was solving of a problem that existed, and it’s this whole idea, I solve this problem, other people have this problem. But then what I thought was really interesting is launching a brand new product into a niche is really a powerful way to go, because you’re now in the medical community, it’s easier to spread that idea inside that niche. But what I thought was also very brilliant was once they got into that niche, what they recognized is that niche was small, so then they pivoted from medical to relaxation, and all of a sudden, now you’re dealing with much larger market. I don’t know if they would’ve had the same success, even starting with the consumer product first, just because again, it’s almost too big a market to start with.
Dave Young:
It’s really, it was such… Nobody knows they need this or want this.
Stephen Semple:
Correct.
Dave Young:
Right? There wasn’t anything to compare it with.
Stephen Semple:
Yes.
Dave Young:
So, other than saying, well, this really feels good for people that have rheumatoid arthritis, it feels good even if you don’t.
Stephen Semple:
But the way they started allowed them to attack a problem.
Dave Young:
And honestly, we come back to this, we talked about it with the Polaroid story, it’s a man solving a problem for his child.
Stephen Semple:
Yes, yes, yes. Amazing, right?
Dave Young:
Yeah. And so, then you’ve got this drive to build it, and you’ve got a drive to help other kids, other people that suffer the same.
Stephen Semple:
Yes. And again, it’s amazing how the reoccurring theme that we’re getting over and over and over again with these stories is, how often these are built by people not from the industry, who are just looking at something and going, this needs to be fixed, this barrier needs to be removed, this thing needs to be improved. And looking at it either as a consumer or just as, here’s a problem I want to solve.
Dave Young:
Yeah, absolutely. Cool story.
Stephen Semple:
Especially when I heard they built a monoplane, what?
Dave Young:
The flying hot tub brothers.
Stephen Semple:
Yeah, it wasn’t a time machine hot tub, it was a flying hot tub. Yeah.
Dave Young:
Yeah. Power of flight. Well, thank you for the Jacuzzi story, Stephen.
Stephen Semple:
All right.
Dave Young:
Iacuzzi, the Iacuzzi-
Stephen Semple:
Iacuzzi. The Iacuzzi story. All right, thanks David.
Dave Young: Mm-hmm. Thanks for listening to the podcast, please share us, subscribe on your favorite podcast app, and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire building session, you can do it at EmpireBuildingProgram.com.
