Not a "Boring Business": Buying a Maker of Premium Pens | Jeff Velker Interview

Deal facts

purchase price

~$2.5m

multiple

~1x revenue

revenue

$2.5m at close

financing structure

SBA loan + seller financing + equity down payment (~$400k from three partners)

notes

Three-partner deal: Jeff Felker (~35-37%), Adam (~29%), Joe (~25%). Down payment of $400k split among partners. Seller was non-negotiable on price; had prior valuation at ~$2.5m. Goodwill was collateralized for SBA loan, which guest notes is uncommon. Seller also contributed some owner financing.

Why this business

Jeff accidentally discovered Retro 51 when he thought a pen was stolen from his desk, bought one online, and was immediately impressed by the quality for the price. He then discovered the founder's public letter announcing he was closing the brand at year-end. Jeff called the founder cold and asked if he would allow the right person to continue the brand. The combination of product quality, cult following, accessible price point, and the chance to rescue a beloved 30-year-old brand resonated with his entrepreneurial instincts.

What's working

• Cult-like customer following — dedicated Facebook groups for buying and selling Retro 51 pens secondhand; fans thank Jeff for rescuing the brand at pen shows
• Broad, creative design catalog appealing to diverse audiences: literary series (Winnie the Pooh, Alice in Wonderland, 20,000 Leagues), military planes, animal rescue themes, and licensed designs (the Met, Imperial War Museum Spitfire pen)
• Limited-edition releases sell out within hours and command 4x prices on eBay, demonstrating strong brand equity and pricing power
• 50% gross margin (keystone pricing) provides solid unit economics
• Revenue growing: $2.5m at close (2021) to $2.7m, then $3.5m (2023), on track for $4m in 2024 — approximately 32% overall growth
• Long-term exclusive manufacturing relationship with Taiwan factory (33 years, sole customer relationship) ensures quality and reliability
• Journaling trend accelerated during COVID and has continued, supporting pen demand
• Premium pen segment less affected by economic headwinds than ultra-luxury pens ($400+)

What's hard

• Single-source supplier concentration: the Taiwan factory is their only manufacturer and Retro 51 is the factory's only customer — mutual dependency creates fragility
• Geopolitical risk of Taiwan-China relations adds uncertainty to the supply chain
• No obvious alternative supplier found that can match quality; secondary factory tested in mainland China carries brand stigma
• Stretch revenue goal of $5m by this point has not been hit due to macroeconomic headwinds (interest rates, inflation)
• Business was being wound down at acquisition: inventory depleted, team pared back, promotional activity halted — required significant rebuilding in first 60-90 days
• Only salesperson (sales manager) retired three months after close, requiring Jeff to take on the sales role himself
• First quarter of ownership (Q1 2021) was unprofitable — the only quarter in the red — as cash was reinvested to rebuild inventory
• Partners had never met in person until six months after closing; partnership coordination done entirely remotely pre-close

Notable quotes

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