Re-independenting: One Paddle Brand’s Journey Back to Its Roots
As true in business as it is in life, some relationships just don’t have staying power. As boutique SUP brand Badfish learned through a recent partnership, it doesn’t matter how high your sales soar if you’re flying in the wrong direction.
By the time the late, great Tom Petty (and the Heartbreakers) recorded the enduring hit “Learning to Fly,” he’d already gone through the whole independent-record-label-acquisition-and-battle-for-control phase of his career. Never known as one to back down, the rock icon landed on his feet.
But as the song suggests, the learning curve for going out on your own can be perilously steep before you’ve developed wings to soar. For a fledgling startup, there’s something to be said for the stability and support that comes from working with an established entity. Then again, there’s nothing quite like the hands-on command and uninhibited creative control of independence, be it in the music business or the outdoor industry.
That’s the takeaway lesson for the founders of Salida, Colorado-based Badfish SUP, who recently decided not to renew a six-year licensing agreement with Boardworks and Confluence Outdoor. Instead, they chose to return to their roots as a solo act in the competitive stand-up paddle board arena. Following the path of a garage band that has outgrown its first big label, Badfish is going back out on its own in what company co-founder Mike Harvey likes to call a “re-independenting.”
“I think we were in a pretty unique situation,” Harvey said. “The more traditional model, when you start your business in a garage like we did, is you begin organically, grow to a certain point, and it either succeeds or fails. That could mean you take investors on and lose some percentage of ownership and control. Or if you’re really lucky—or good—you grow it to a point and sell it, part and parcel. That’s the arc for a lot of people.”
About 10 years ago, when Harvey and partner Zack Hughes first mapped out the blueprint for their cutting-edge boards designed to paddle rivers and surf river waves, the SUP arc was taking off. With their focus on whitewater and standing waves, the Badfish boys established a new niche that helped launch the now-ubiquitous sport of downriver stand-up paddling, or river SUP. They knew they were ahead of the curve. There was just one problem.
“We knew we had something brand new and unique that nobody else had, so speed to market became the No. 1 driving factor for us,” said Harvey, who also manages the development and construction of whitewater parks for Boulder-based Recreational Engineering and Planning. “We felt like we needed to get our boards built and distributed before all our ideas got ripped off by somebody else. Unfortunately, we were dealing with a lack of capital, lack of resources, and a lack of experience in manufacturing. We could make these things here but didn’t know how to transfer that into a scalable business.”
Enter Boardworks, a California-based surf company seeking to expand from ocean boards into river SUP. In 2011, the Boardworks rep suggested and set up a meeting between Badfish and Boardworks’ chief operating officer. The result of the meeting: Badfish inked an agreement that had Boardworks handling operations, production, warehousing and fulfillment. Harvey and Hughes would focus on marketing, branding and new board designs. At the time, it felt like a good fit.
“It’s a business model from the surf industry, where you have a ‘name’ shaper—maybe somebody like Rusty, who’s based in La Jolla, but people on the Jersey Shore or wherever really want Rusty boards. So they license their logo and shapes, and a company like Boardworks comes along and makes a bunch of them in Asia and sells them all over,” Harvey explained.
Out of the gate, there were clearly some advantages to the arrangement between Badfish and Boardworks. Boardworks brought scalability, distribution and brand awareness to a broader audience than Badfish likely could have reached on its own. Badfish wasn’t on the hook for inventory or massive infusions of capital to produce product. Plus, they were able to do more rapid prototyping and take bigger risks than a typical small business would, all the while preserving full equity in the brand. “The first couple years, it really was a productive partnership,” said Harvey. “They did a tremendous amount to help grow our brand and allowed us to move into designing inflatables (boards), which really allowed us to survive. It really was a great incubator, but there was never enough profit margin.”
But there were also drawbacks to the deal. Product development through a licensing partner was slow, Harvey said, since decisions were made based on how new Badfish products might impact sales of other products Boardworks was already selling. In order to maintain its cutting- edge identity, Badfish wanted to react quickly and go after the desired market, but the ship was too big to steer. And it ate up a lot of the profits. But the biggest drawback, says Harvey: “We weren’t a name brand,” noting the difference between Badfish and Rusty in the earlier example. “We licensed our name and our shapes, but we were an unknown entity. I can see now in the rearview mirror that the model wasn’t right for us.”
In the fall of 2014, Confluence acquired Boardworks. “We were the same small brand in this changing, growing market, but suddenly we were operating within the boundaries of this cold, corporate reality,” says Harvey. “Not to say that’s a bad thing—Confluence is very good at what they do—but it just wasn’t a good fit. We were a brand still discovering our market and growing within a dynamic segment that was also growing and changing. Since we weren’t really part of the company, it was hard to find room to establish ourselves in the market. We wanted to take a bigger bite of the apple.”
Returning the entire operation back to its independent roots allows Badfish to expand its offerings and react more rapidly to the demands of the market, including a growing desire for inflatable board designs and increasingly popular river surfboards that allow surfers to carve waves without a paddle. The creative freedom is rejuvenating, Harvey says, but the biggest benefit of re-independence so far has been the more-direct interactions with customers and strengthened relationships with retailers.
The biggest benefit of re-independence so far has been the more-direct interactions with customers and strengthened relationships with retailers.
“In the past, there was this layer between us and them,” Harvey said. “If [customers] needed something, they called Boardworks. But I actually really like customer service. I’m still basically kind of a nerd about this stuff. I like hanging out in a shop and talking to people about this board or that paddle. I didn’t realize how much I was missing it until I had the opportunity to get back into it.”
Naturally, re-independence demands much more work from a smaller team. Harvey and Hughes have brought in river SUP star and outdoor industry expert Luke Hopkins as a partner to help with the additional workload, assisting in design, manufacturing, sales and distribution. But there’s no relief from the bottom-line risks of going it alone. “When the boards show up, we have to sell them,” Harvey said. “Now it’s all on us.”
Stand-up paddling remains one of the fastest-growing segments of the paddlesports market, and analysts last year projected the global stand-up paddleboard market would grow more than 15 percent a year through 2020. That type of growth has attracted a lot of attention, however, and today’s SUP market is saturated with poorly constructed budget boards often selling at big box stores for a fraction of the cost of a performance-built Badfish.
The upside is that consumers have matured along with the market, so the sales reps no longer have to explain what they’re selling and why people want it. Now the consumer tells them.
Harvey now bemoans today’s business culture—heavily influenced by the tech sector—that emphasizes ultra-rapid growth and overnight ROI. “There’s this feeling that you can’t grow something slow anymore,” Harvey said. “I remember really well the panic of feeling like we had to get these boards to market as fast as possible, and I can see the folly in that now. I don’t regret any of it, but there’s something to be said about learning the market, learning the product, learning about your business, really, so that when you launch, you launch for the long term. We like to think that’s what we’re doing now.”