Agenda Show: The New Skate Business Model

I’m somewhere in the middle of the country between the Agenda and Surf Expo trade shows at 30,000 feet. Before I talk about the sea change in skateboarding I saw at Agenda, I have a request. Will the powers that be at both shows please figure out how to not have the shows overlap? 

Please, no explanations and finger pointing. Not interested. Yeah, yeah, I know. I don’t understand. I’m just a customer (kind of) that thinks it sucks and is inconvenienced by it. And I’m not even the customer you should care about.
 
There, I feel a whole lot better.
 
Okay, skateboarding. An English magazine product guide I picked up at Agenda listed 55 brands of skate decks. Some I knew, many I’d never heard of. And those are only the ones who have enough presence (and money?) to be in that publication. Lots and lots of small skate brands around. At the show, there were a bunch of small deck brands that were new or had only been around a year or two. My perception over two days (shared by others in the industry I asked) was that the newer brands were busier and full of kids while the older brands (guess what – I’m not going to call them the “core” brands) were slower and full of older guys.
 
Many of those older guys will remember a time when they were just kids skating who thought it would be cool to get a few decks made for their friends because they kind of had an idea for a graphic. So somewhere they got 50 decks made and, after selling them to their friends, found they had made a couple of hundred bucks.
 
Of course, it had taken them at least 100 hours of work to get them made and sold (maybe a lot more) so in fact they’d earned about fourteen cents an hour. But who cared. They had a few bucks in their pocket, had a lot fun, and sensed a new found respect from their friends. They were on to something. Next time they’d make a hundred.
 
And the guys who turned out to be pretty good at that (and committed, and worked hard, and had a vision, and managed to raise a few bucks, and were a little lucky) are the guys I spend time talking to at Agenda. I like them, I’ve known them ten or fifteen years, it’s interesting to hear what they think, and they’re my age (okay, not that old, but getting there).
 
As they built their brands, they created a business model based on a high retail priced product carefully distributed (initially) with differentiation based mostly on team riders. High gross margins and big marketing budgets.
 
That business model started to go to hell about ten years ago as skateboarding got big enough to attract outside attention and lacking any kind of product improvement or differentiation not based on marketing. As the skateboard deck became a commodity to more and more skaters, there was no way to sell enough of them at a high price to fund the marketing program. The leading brands in the industry lost their ability to control pricing.
 
But they were stuck with their business model in terms of how they thought about it and because of a corporate structure with committed overhead. And they were getting older- every day, week, month, year- in an industry where the fourteen year old if the arbiter of cool. Maybe the 12 year old. Attitude and reality was (is?) working against them.
 
Meanwhile, the kids with the new brands have discovered what the owners of the core brands once discovered. It’s cool to make 50 boards and sell them to your friends. But they aren’t trapped by an increasingly obsolete business model and overhead structure.
 
Who’s on their team? The kid who did the coolest trick caught on video at the local skate park yesterday. It was up on YouTube, Twitter, etc. and the brand’s web site before his session was over. Hmmm. Maybe web sites don’t even matter like they used to. Tomorrow it will be somebody else. Or it will be the same skater. But there’s no need to create and run a series of ads to build a single skater’s credibility.
 
Marketing budget? Practically zero. Maybe you end up with a “team” of 6,000 composed of a couple of skaters at various skate parks and neighborhoods around the country. Or maybe you don’t. And your “team” will change and you won’t know it or control it. Maybe you cobrand with local shops or skate parks. Some brands and some skaters will rise to the top just like they always have. But there’s not an initial and expensive structure and process required. It will be informal, inexpensive, and inexact. In a word, it will be surprising and the skaters, not the brand, will have a lot of control. I wonder, in fact, if you don’t try and control it at your peril.
 
But how different is this really? The heritage skate brands (Oh god, what an awful thing to call them) aren’t strangers to creating new brands. But the communications process and the cost structure are dramatically different from what they are used to.
 
The heritage brands can’t do a damned thing about this as long as they have to exist within their old cost structure. Maybe one of these brands should rename itself Phoenix and rise from the ashes by severing all ties with the parent and putting a few kids with computers and a travel budget into a small old house somewhere and start over with the same brand name. Don’t you wish you’d done that with longboarding ten years ago? Or maybe you approach half a dozen of the new brands that are thought to be the coolest and you offer each of them $10,000 for an equity stake in the business (actually convertible debt would be better).
 
I keep being told that, according to the numbers we have, skating is declining. But damn, I see a lot of people skating (Of course, that’s what I want to see). And I was reminded at the show that the industry is about due for the next demographic boost. The numbers I’ve seen bear that out.
 
So anyway, when I get to Surf Expo, to the extent they are there, I’m going to spend all my time talking to skate companies I’ve never heard of. Won’t be as much fun, but I have a sense I’ll learn more about where the industry is going.
 
Meanwhile, at Agenda, the coolest thing I saw was the tagged police cruiser with the skateboard through the front windshield and the product displayed in the trunk. That’s the kind of thinking we need. I also saw a really busy show, though not quite as busy on the second day partly, I think, because people had left for Surf Expo.
 
I visited RAEN (because they asked me to) and saw a business model I liked. They’ve got some actual product differentiation, a story to tell, and a price structure that makes sense. I was scared to death I’d break their material when I twisted the frame, but when I worked up the nerve to try, I couldn’t. I also liked the product look, but for all I know, that’s the kiss of death for them.
 
Speaking of old school, I went to Bud Smith’s retirement party thrown by NHS. I’ll miss Mr. Griptape.  Next day, retired or not, Bud was still in the NHS booth. I didn’t stay long enough to see if Denike had to have him removed by security when the show closed.   Hey Bob, maybe you can get him to sell some grip tape for free?

   

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8 Responses to “Agenda Show: The New Skate Business Model”

  1. Damian says:

    Bud will be missed and I concur with what you are stating here for the most part…very true about the run up for our next demographic!
    I have read that we are at about 40% of participation compared to 2007 and TMag and I talked about that very subject at the show…and the numbers do show that.
    I’m excited about the future!

    • jeff says:

      Hi Damian,
      Sorry I didn’t see you at the show. Brand rotation has always happened, and not just in skateboarding.

      Thanks for the comment.

      j.

  2. Bud Smith says:

    Hi Jeff,

    Thanks for coming to my party, I was overwhelmed and humbled.
    I always enjoy catching up with you and getting your take on the state of skateboarding. I’m so very thankful for being a small part of skateboarding and I’ve had a blast over the past 25+ years. Yes, I’ve sold a ton of grip tape but the numbers are not important, the PEOPLE I’ve met and made friends will always be what I value the most. Keep rollin on that MOB Grip!!!

  3. Michael Brooke says:

    Jeff
    I think you’ve covered some excellent points…
    Bud – it was a real honor to be part of your party. You’ve contributed so much to skateboarding. I told my kids at dinner tonight about your 50 million sheets of grip tape statistic. That is something to be damn proud of.

    As many of you know, I have spent over 15 years promoting the hell out of longboarding along with the pusth for variety in the skate world. It has been and continues to be the greatest ride of my life. I left California with a renewed sense of purpose. The fire that I have for riding skateboards has never been more hotter. This is due to the opportunity to meet with my friends, business associates and really get into what it means to be part of this industry. This is the power of meeting up.

    While I couldn’t make it to Surf Expo, I am very excited to see what ISPO will bring….Jeff…you coming?

  4. Neal Hendrix says:

    I’m not buying that participation numbers are as down as all of the brands claim. Granted, kids who’s parents bought them a new deck or new shoes every month, are now getting the new board and shoes every six months, but damn it seems like there are still a ton of kids skating. Regardless, great article. Skate brands like Polar, Welcome, Elephant, Palace, Fucking Awesome, 3D etc have brought a much needed breath of fresh air to skateboarding in the last couple years

    • jeff says:

      Hi Neal,

      Yeah, I’d like to ignore the numbers too, but we can’t do that just because it’s what we hope. Thanks for the comment.

      J.