When the three co-founders of beach towel startup Sand Cloud went on Shark Tank in 2016, they were still sharing a two-bedroom apartment that doubled as an office. 

A lot has changed in the three years since: Most notably, the startup booked $6.8 million in revenue in 2018 and is ranked No. 308 on this year's Inc. 5000 list of the fastest-growing private companies in the U.S. The founders attribute their company's growth to a sales strategy they've been practicing since day one: Make a small batch of each product and test it with consumers before producing large quantities. That method connects the co-founders with their customers and informs their plans for future products, according to co-founder Brandon Leibel. 

"We're never going to commit too quickly to something before knowing it's a winner," Leibel says. "We will either double down or we will try something new." 

Leibel launched the San Diego-based business with friends Bruno Aschidamini and Steven Ford in 2014. They originally created a beach towel with a pillow attached, but changed tack after they walked down the beach and discovered that no one was interested in buying it. They ended up developing what has become Sand Cloud's signature product, a thin towel made from Turkish cotton that customers can roll up and slip in a bag.

Once they knew they had a viable product, the co-founders worked on scaling. They quit their jobs and sold their furniture to make more space in the apartment-turned-office. Aschidamini and Ford even sold their cars. Leibel kept his so he could drive for Uber. He also cashed in his 401(k).

The company generated $30,000 in sales in its first year of business and $430,000 the following year. On Shark Tank, they accepted a deal with Robert Herjavec, who offered them $200,000 for 15 percent equity, and sales shot further upward. Between 2015 and 2018, Sand Cloud's revenue grew 1,469 percent. 

Over the years, the company has added items like water bottles, metal straws, and jewelry to its product line. Since their early experience developing their towels, the co-founders--who now have all moved into homes of their own--have tested every new product they create with consumers before rolling it out in earnest. "Shoppers are smart," Leibel says. "They can smell fakeness."