Palmetto State Armory – The Story So Far…

Palmetto State Armory, over the past decade, has impacted the market for the AR-15 in dramatic fashion. One look at the proliferation of firearms and parts from PSA, and it’s clear PSA’s goal of “creating a wave rather than riding one” has been met. To learn more about the beginnings and rise of Palmetto State Armory, we recently sat down with founder and owner, Jamin McCallum.

Q:  Jamin, can start at the beginning and have you walk us through how PSA began?

Jamin McCallum – We officially formed Palmetto State Armory in 2008.  I was working at a CPA firm and I had just gotten back from a deployment where I did counter-IED.  While there, I had taken a couple of direct hits and I had a traumatic brain injury.  So, I found myself unable to focus on the CPA job.  It was very upsetting because I felt I was a really good CPA. 

What would happen is I would sit down in front a screen trying to do the work, but I couldn’t do it. I just lost the ability to focus.  It was like getting ADD as an adult.  So, I left that firm, went to another firm and had the same experience.  It was very frustrating…So, I ended up just walking out. 

Q: Did you have a plan or a vision of Palmetto State Armory at that point?

Jamin McCallum – No. I had to figure out what I could do…My thought then was, well I love guns more than anything, maybe I should start a gun company.   This was in 2008, and Obama had not been elected yet. The point being, it was not at all obvious then it was going to be the “slam dunk” that it ended up being. 

So, in February in 2008, I started the Palmetto State Armory.  My brother Josiah was in college getting his MBA, so I asked him what it was we could do.  At the time, Magpul had recently introduced their P-MAGS, and Black Dog was selling .22 mags.  This was just as we were looking around wondering what we could put on a web site?  At the time, Palmetto State Armory certainly had no plans on making gun parts or anything like that. 

Beginnings at a Sandwich Shop

So, we started a little Palmetto State Armory web site while sitting inside a sandwich shop called Groucho’s.  We had the IT guy from the CPA firm…he was doing a little consulting gig on the side.  He helped us build it there at the sandwich shop.  And, those Magpul P-MAGs were the very first thing we put on there, along with the Black Dog .22 mags.

We did that and some sales started to come in.  We we doing OK.  I was actually teaching at the University of South Carolina and I was working in the Guard as well.  Things were going fine, I guess, however, we weren’t making a ton of money. 

I remember thinking how many P-MAGs would I have to sell to make a decent salary? (laughs).  I can clearly recall thinking that it would not actually ever happen. That said, it was still pretty cool to be able to run our own business.

Q:  Where were you running PSA out of?  I’d imagine not the sandwich shop…

Jamin McCallum – Palmetto State Armory was ran out of my garage.  I had a 50-acre farm with two houses, one house my parents lived in and one house me and my family lived in.  The property had a big garage and we started doing it out of there. 

“There Was Inventory Everywhere”

Palmetto State Armory started selling ammo in the summer of 2008.  And we did that because the industry was really, really slow.  What I mean by that is that there was inventory everywhere.  You could get 5.56 relatively cheap, for instance.  So, during that summer we bought a lot of stuff.  We bought  so much inventory that my garage was ready to explode.  You had to climb on top of the stuff to move around. 

So, that summer, Palmetto State Armory had a ton of inventory, but we still weren’t making any real money.  The only consolation was at least we were not having to pay rent anywhere.  As far as expenses, my brother was the only one taking a salary, but other than that we had zero overhead.

“You Could Feel the Momentum”

But then in the very early Fall, you could just feel everything pick up.  It was people getting worried about the election.  By October, you could really feel it.  You could feel the momentum.  Then, just about a week before the election, stuff started flying like we just couldn’t believe. 

Then the election happened…and that week, that terrible Palmetto State Armory idea that my wife had threatened to leave me over made a million dollars…just like that (snaps fingers).  It was absolutely insane.

“How Can we Keep This Going?”

Ever since then, we’ve just been on a journey.  A lot of that journey has just been us asking how can we keep this going? 

To keep Palmetto State Armory going back then, I started visiting banks.  I did that because by this time, we had inventory now busting out of our house.  It wasn’t just our garage anymore.  Now, the mantle above my fireplace had stacks and stacks of Winchester hunting rounds organized by caliber. (laughs).  It was ridiculous.  Our house had become the Palmetto State Armory warehouse.

So, we knew we had to get a warehouse, but real estate was in the tank.  The economy was really, really bad.  We went to these banks and showed them the financials, but they just laughed at us.  Everyone we visited dismissed us and told us what Palmetto State Armory was doing was not sustainable. 

“I’m actually a bit of gun nut myself.”

So, as a last ditch move, I contacted the Small Business Administration. Because, when you apply at the Small Business Administration, they have to look at it.  They cannot just turn you down sight-unseen.  And because of that, this guy from the Small Business Administration came out to my house. 

We were very fortunate because he got out, looked around and he said, “you know, I’m actually a bit of gun nut myself.  I drove out here because I had to, and I was looking for a reason to say no, but what you’re doing is actually kind of cool.” 

So, due to that, Palmetto State Armory was able to buy our first big warehouse.  It was about a million and half dollars but it was a screaming deal.  It ended up being worth more than 4 millon…but it was about 40,000 square feet.  But I remember, we didn’t have any locks on the building.  We had also just bought a forklift from a business down the road that had closed because the economy was so terrible. 

“I’m Probably Going Bankrupt”

So, I was all alone with a forklift in our new empty warehouse we couldn’t lock.  I just remember staying there overnight, being all alone, driving a forklift around in this giant empty warehouse thinking, wow, I’m probably going bankrupt about two months from now. (laughs) 

So, we had the warehouse, but what happened next is the market really did start to slow down.  The reality of that was there were plenty of people out there holding their heads saying “l ordered 50,000 AR mags…why did I do that?” 

They were kicking themselves. They were saying “Wow, I couldn’t find AR mags anywhere, but now they are everywhere!  What am I going to do with all this inventory that isn’t worth what I thought it was going to be?”  

I had been trying to figure out how to go from someone who rode a wave to being someone who creates a wave.  Which is totally different.

Jamin McCallum

Being Someone Who Creates a Wave

But because we did have cash to spend, what we did is we told folks in that position, we’ll pay you hard cash for those mags you find yourself stuck with right now, but just not at full price.”  

And they accepted the offer.  We paid cash and we ended up with just a massive quantity of magazines.  So, because of that, very quickly Palmetto State Armory was able to go from being a normal full priced website to a “deals” website.

In a nutshell, Palmetto State Armory would get lots of things and then turn around and sell them cheap.  People ask how can we sell something at that price?  It’s because we were paying cash to people who had product they had bought perhaps impulsively, then we were able to take it, turning around and sell it online at low cost as compared to what it was selling for elsewhere. 

So, that was a nice transition, because I had been trying to figure out how to go from someone who rode a wave to being someone who creates a wave.  Which is totally different.

Opportunity Found

So, we were buying up pallets of mags.  But one day, we were looking through all these pallets of mags, and I found a single box of about sixty buffer tubes sitting there.  Now I love guns, but I was not big into gun parts.  I had a Wilson Combat AR at the time, and a Smith & Wesson AR, but I did not know that there was that big of a market for gun parts. 

So, I called the company who had sent us the pallet. I told them there had been a mistake, and they had accidentally sent us a box of buffer tubes.  They said I could just keep them, and not to send them back. 

Well, I had no need for them, so, I decided to simply put them on the Palmetto State Armory website for 20 dollars.  And they ended up selling out that day.  After that, I called the company and asked if I wanted more, how much would they cost.  They gave me a figure, and I thought…I can work with that.

And just like that, Palmetto State Armory was selling AR parts.  We just started expanding out our line of AR parts from there.  That said, we were not actually making anything.  We were just buying and selling.

So, we had an 07 FFL, but we applied for a variance,  and had a company making a lower for us…so we had a lower with our Palmetto State Armory logo on it and a bunch of parts, and so the only missing component was the barrel at the time.  Of course now we make 10,000 barrels a week in house, but at the time, Palmetto State Armory didn’t make anything.

Second Phase of Growth – “Making Our Own Stuff”

So, as a part of our second phase of growth, Palmetto State Armory ended up buying several manufacturers so that we could end up making our own stuff.  The third phase is us saying “we need to design new cool stuff.” 

Going from assembling stuff to manufacturing stuff is an engineering feat, and then going to making new concepts, that’s a totally different level, but we’ve assembled a great team and we’re getting better at it. 

“We’ve Cut Out the Middle Man”

The thing is, people think we’re cutting corners and that’s just not it.  We’ve cut out the middle man.  You’re literally going from the manufacturing floor to someone’s home. Using an AR lower as an example, what happens with most companies is they buy a forging from a forging company. 

They machine it out and they send it to an anodizer and then they send it back.  Our model is we start out with a slug of aluminum, we forge it ourselves, we machine it ourselves and we anodize it ourselves.  So, our cost on a lower is a lot less than what the competitions is.

A Palmetto State Armory barrel starts out as a straight piece of steel.  Then we button-broach it, we rifle it, we do the outer contour, you’re talking about going from steel to your house.  We don’t buy uppers, we buy aluminum.  We don’t buy barrels, we buy pieces of steel.  And the margins in there are fantastic.

It’s not about making money, it’s about producing freedom.  We could get more for the stuff than we do now, but I figure if everybody can get one of these, or multiple of these, they will be harder to ban later on.  If it’s in “common use”, it’s really hard to ban.

Jamin McCallum, Founder and Owner of Palmetto State Armory

So, it’s not a lack of quality…it’s a perception.  In college I took these marketing classes and they said you cannot mix quality and price point.  Well, it’s a value proposition.  The product is absolutely fantastic.  Maybe we charge to little for it, I don’t know…but the point is to get as much of it out there as we can. 

“It’s About Producing Freedom”

And that’s really a goal.  It’s not about making money, it’s about producing freedom.  We could get more for the stuff than we do now, but I figure if everybody can get one of these, or multiple of these, they will be harder to ban later on.  If it’s in “common use”, it’s really hard to ban.

So, what I tell people is “there is a price point Palmetto State Armory could charge that we choose not to charge.”  Because we’re not trying to maximize profits, we’re trying to maximize freedom. We’ve already made good money doing this. 

Palmetto State Armory employs about 750 employees. We do the best we can for them.  But we have people ask, “why don’t you raise prices?”  It’s because I want to have more of it out there.  I don’t need another fancy car in the garage or a house on the ocean. 

I would rather have a country be able to hold off tyranny for a generation.  And I can do that if I spread enough freedom out there.  If I die at 85, I think that would be a much better legacy than having a mansion on the beach.  If I can be the guy who helped put it out there everywhere, then that’s the best legacy I can have. 

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