← The Foundr Podcast with Nathan Chan
The Foundr Podcast with Nathan Chan
657: They Bet Everything on a Sport Nobody Took Seriously… Now It’s Worth $200M
00:51:09
These two brothers sold a profitable airsoft business to bet everything on a sport most people had never heard of. In 2014, Rob and Mike Barnes founded Selkirk Sport in the pickleball space—back when the sport was small, the products were cheap, and the category felt entirely mom and pop. Eleven years later, the company is valued at over $200 million with revenue up 1,900% since 2019, and pickleball is closing in on tennis as America's most-played racket sport.
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- [00:02]
A
Hey, founder fam. I want to talk to you about something super exciting. We're officially partnered with Omnisend, the email marketing and SMS platform built specifically for e commerce founders. We've been recommending Omnisend to founder students for a while now because it just works. Whether you're launching your first store or you're scaling to seven figures, it really helps you automate your marketing and get real results. Did you know on average OMNISEND customers make $68 for every $1 they spend, which is an insanely good return. And because you're part of the founder community, you get 50% off your first three months with the code. Founder50. Just head to omnisend.com founder without the e to get started. All right, now let's jump back into the show. So what happens when two homeschooled brothers sell their profitable airsoft business to bet everything on a sport most people have never even heard of and then 12 years later built into a company valued at over 200 million with revenue up 1900% since since 2019? Well, today's guests are Mike and Rob Barnes. They're co founders of Selkirk Sport. The premium pickleball brand has become synonymous with this fast growing sport in America. They discovered pickleball in 2008 and saw something that nobody else did. Massive potential in a sport that felt very mum and pop with low quality products. Now they're a market leader in a sport that's exploding globally and could become the largest racket sport in the world. In this conversation you'll discover why they serialize their first 360 paddles expecting make mistakes and how that approach really shaped their premium quality obsession and their contrarian approach philosophy to athlete sponsorships. And why athletes is only 30% of the work and promotion is the other 70%. And why they invested $1 million into a dedicated R and D lab instead of slapping their logo on a cheaper white lab would paddle like everyone told them to. This is a masterclass in betting on an emerging category, building a premium brand from scratch and why sometimes the biggest opportunities are are in sports nobody's heard of.
- [02:11]
B
Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the founder podcast with Nathan Chan,
- [02:24]
A
Mike and Rob. Welcome to the show. You guys have grown Selkirk Sport into a company valued at over $200 million with revenue increasing over by 1900% since 2019. I'm an avid pickleball fan, know the brand was excited to speak with you guys but can you take us Back to like 2014 when you decided to. To sell your profitable airsoft business to bet everything on pickleball and that sport. At the time, nobody knew it.
- [02:55]
B
Yeah. Well, thanks for having us on. Really appreciate it. Yeah. So going back to 2014, so I guess even going a little farther back, Mike and I, so we were homeschool. We started our first business as a school project. He was 15, I was 17. And it was airsoft. And so kind of similar to paintball, you shoot like a little bb. And we kind of learned how to at the time, direct import just the
- [03:23]
C
parts because initially we were drop shippers, which was all the rage back then. We quickly found out though that just because we bought it for 10 and sold it for 15 on eBay, you weren't actually making money. And so that's when we stumbled across Alibaba and found out that we could import directly and then sell direct to consumer, which at the time we didn't even realize that was a strategy. But we did that successfully for a few years, started our own brand within the space. We're just pickleball players.
- [03:51]
B
Yeah, yeah. So we. That was probably like 80809 at that time. We were also pickleball players, played at our local like YMCA called Croc Center. And we just loved the game. And around 2013 we just kind of asked ourselves the question. The sport was just starting to grow still mainly in retirement states like Arizona and Florida. And we just asked ourselves, like, could we build a performance lifestyle brand in this space? Because as players ourselves, it was very. Felt very mom and pop. The quality of product was pretty low. Just, it did not feel like a professional sport and we felt like it could be that. And so we started. Our dad had retired at the time from the LA fire department and so him, me, Mike, and then my father in law who designed the logo and came up with the name, founded the company in 2014. We launched our first product in 2014, early 2014.
- [04:54]
A
And it was a. It was a bat, right? That was your first.
- [04:56]
B
Yeah. A paddle? Yep, yep. So it was a. We did a limited run, so we made like 360 of them and we actually serialized them one to the 300 just in case because we knew we were going to make mistakes, we knew we were going to screw it up because we were making it full in the US and we just, we were just getting into it and so we thought, okay, we can kind of call it our first run and then replace them with the, the better product if they have a warranty issue. And then we also, deep down, we're kind of like, hey, if this turns into some. These would be. A couple of. These would be kind of fun momentos. And I actually have one in my office.
- [05:31]
A
Okay, so tell me about how you guys got your first sale.
- [05:35]
C
Our first sale, I believe initially we went to a tournament, and we just got out a table, put the paddles out there, and started letting people demo them. And that's actually been a core philosophy of ours since then, is just getting the product into people's hands and getting demo paddles. There's some interesting stories that we really resonated with. One was Nathan's hot dogs when they were trying to. They were trying to get people to adopt and try out their product. And something that he did early on was he went and he gave to hospitals in the area, saying, if you came in with your coat on, you could try our. Try our product for free. And so then in line, you saw all these. All these nurses and doctors in line, which kind of validated the product that it wasn't. It wasn't bad for you. And then their sales exploded from there. And so, you know, it's always interesting. You see a lot of patterns like this where somebody's struggling to get adoption, but as soon as they start figuring out a campaign to try the product, another one is, I believe it was Wrigley's Come, where they, by hand, filled envelopes with a Wrigley chewing gum and sent it to every address in the nation. And from there, that's how chewing gum exploded and became adopted. So we're very much about just getting the product into people's hands.
- [06:56]
B
Yeah, so we did tons of demo days. We had our own dot com, too, which we did fairly well. And then we also. There was key retailers, especially online. There wasn't really much brick and mortar at the time because the sport was small. And so we just, you know, we're constantly getting on the phone and telling her story and sending them product to try and opening small accounts.
- [07:17]
A
Yeah, there you go. So pickleball was a thing like 12, 13 years ago, 15 years ago, barely.
- [07:23]
C
So it depends on where you were at. It exploded in about 2012-2014 in some of the retirement communities. And so Arizona, Florida was also fairly big in the Seattle area because it started in Bainbridge island in 1965. And a lot of the. A lot of people, if they were familiar with pickleball, it was because they played it in school in gym class. And so it is interesting back then, if you. The question we had to ask was, have you ever heard of pickleball? And nine out of 10 times they've never heard of. Was a. It was seen as a funny name. That was something that the sport really had to overcome. Now we don't. But now we don't even ask that question. The only question we ask is, have, have you played pickleball? Because pretty much everybody's heard of it.
- [08:07]
A
There you go. That's crazy because, like, yeah, my brother, like, I got into pickleball. I'd say 20, 20, 23, when my brother was like, oh, you know, there's this new sport people playing called pickleball. There's, you know, they're starting it. There's the one. There's a competition happening in this, in, In Melbourne. Like, let's go. I think you'd really like it because I love playing racket sports. Like, I've never been. I. I've never been very good at. I've got. Always got decent hand, eye coordination. But like contact sports, I'm not a very big guy. I don't like getting bumped or knocked around. So I've always been a racket sport guy. So I played tennis my whole life, and then I was an avid table tennis player. We had a table tennis table in our office. I was a reigning champion. And then, yeah, I got into pickleball. And it's kind of like, it's like in between. But it's quite an addictive sport. There's something about it around. Just the combination of strategy and. I don't know, it's really good cardio too. I find, like when I, When I play pickleball, guys, like, I'll. I can burn up to a thousand calories, like playing for like 90 minutes. It's crazy. Like, it's. It's just a high intensity sport. It's really fun. Yeah, it's such a great sport.
- [09:22]
B
Yeah. A little barrier to entry on the learning curve, too.
- [09:24]
A
Yeah, yeah, yeah. And look, the scoring took me a while to wrap my head around, but yeah, it's such a great sport. So look, what's interesting is you guys were homeschooled and you chose entrepreneurship over a degree. So your father said to you guys, he gave you a choice where he, you know, you could go to college or you could start a business in your basement. How does that kind of shape things for, like a risk approach right now for you guys?
- [10:01]
B
Well, yeah, I think it was low risk. Then, right when you're 17 and 15 and you're living at your dad's, right there's not really. You can't really fall really far. Right. So I think that's where he was kind of.
- [10:14]
C
He, he.
- [10:16]
B
And for some context too, where we live in Coeur d' Alene at the time, there wasn't like a lot of, like, career paths. We're a small town. You had to go to Spokane if you wanted some. So he just really saw that. And a lot of the people we knew that were doing well were business owners. And so he just kind of, he's like, hey, you're doing this small business, you're enjoying it. You seem like you're good at it. Like, you can go the college route, which we were kind of looking at, or you could just keep doing what you're doing and keep learning. And so it was really helpful for us that we were just kind of like, yeah, we're really enjoying this. Like, let's just keep, like, let's keep growing it. And we went that route. So we were very blessed and in a unique position where, like, you know, we were so young, we didn't have families, we didn't really have much to risk at all, which was great.
- [11:03]
C
And it helped us in terms of just being willing to go and do things and try things and experiment. And so for our entire time as entrepreneurs, we're constantly jumping into new things that we haven't done before. And we're not. We don't feel limited by the fact that we haven't actually done it before. We don't have specific experience. We're big believers into just jumping in and figuring it out. And that's something that has pervaded a lot of what we do. And it's kind of a mindset we try to promote internally as well. And it's, it's served us well.
- [11:37]
A
So you guys launched, you had a minimum order quantity of 300. They were wooden paddles too, right?
- [11:44]
B
No, they were. So they were aluminum cord, fiberglass faced. So they were composite. And we basically bought the cores from the U.S. we had an edge guard supplier make the edging and we bought the cap from an existing supplier in the grip. And then we basically put all the components together.
- [12:01]
A
Got you. Okay. So you sold most of those though, like you said, like in person, hand to hand, online. Wasn't really around. So the first few years, it took a while for the business to take off because pickleball wasn't that big too.
- [12:18]
C
Yeah, it was. Definitely took time to grow, but we saw consistent growth every year. And like you mentioned, we were huge believers in the sport because we saw how sticky it was. People would talk about how addicting the sport was. So even though most people weren't even familiar with it, we knew that as people played, the market was going to keep increasing. We saw that year after year as well. So we. While we were running Selkirk, we still had. My brother and I still had our airsoft business on the side, which was technically doing better. It was doing significantly better than the pickleball side of the business. But we really loved pickleball. We loved going to the tournaments, we loved the community. Like you said, it's a very fun sport, very active, and we knew the potential was so great. And so we actually put our airsoft business up for salad, sold it to one of our best customers so that we could dive and fully focus on
- [13:18]
B
pickleball, which was definitely a risk. Like, I remember I was married at the time. I'm still married, but I had just gotten married, and I remember talking to my wife and just being like, man, this is a huge risk we're doing. We're getting away from something we know is certain. Betting on something that, like, we just have a gut instinct is going to be huge.
- [13:40]
A
I'm curious, did you think it would be big as it is now?
- [13:43]
B
No.
- [13:44]
C
Yeah.
- [13:45]
B
No. We never could have dreamed then. It's. It is exceededly exceeded our wildest expectations.
- [13:53]
C
I mean, every year we would pitch ourself and say, like, man, pickleball could be bigger than we even thought last year.
- [13:59]
B
Yeah.
- [14:00]
C
So it's. It's been an exciting ride, for sure.
- [14:02]
A
Yeah. Like, I. I believe it's going to be eventually an Olympic sport.
- [14:06]
C
It will definitely be an Olympic sport eventually. There's some things that need to be figured out for that to happen, but it's. Participation is going to continue to grow internationally, and we do believe at this point it could be the largest racket sport in the world. And it's getting close. Even in the US to overtake tennis, it's overtaken racquetball, for example, many years ago. And so there's definitely still a lot of potential, especially internationally. We're seeing Southeast Asia adopt it extremely quickly. They already have a lot of infrastructure for badminton, and so they're essentially able to lower the nets. And the size of a badminton court is almost identical to a pickleball court. And so people are able to begin playing pickleball in their local badminton facilities pretty quickly. And facilities that are dedicated to pickleball are really exploding over there.
- [15:02]
A
So you said something interesting, because after I started playing pickleball, and then I went to the States and I also, you know, when, when they started opening up proper courts here in Melbourne, a lot of them have Padel as well. And then that's where I'm like, what the hell is this stuff with the glass? Like, and then, and then when I went to the States, my friend in New York who's like, man, let's go play Padel. So we went and played. Is it Padel or paddle?
- [15:28]
C
Depends where you are. But yeah, we, we say Padal.
- [15:31]
B
Basically we say Fidel.
- [15:32]
A
Yeah, yeah. So it's apparently, apparently Padel's massive in Europe and, and oh yeah, it's huge. Yeah. So. So obviously over time, you guys have been able to capitalize on Padel too, right?
- [15:43]
C
Well, we don't, we don't sell Padell rockets, but we're, we're, we're dedicated to pickleball. That being said, Padel is essentially experienced a similar growth curve to pickleball in Europe. And in Spain, for example, I believe Padel is one of their largest sports, larger than tennis in Spain. And we've seen there was a number of investments, especially a couple years ago, to try to have Padel grow in the US it's been hitting a wall. There's been a number of attempts to unseat pickleball in the US Before Padel. The, the tennis association started another. What was the other? We forget it now. At the time, everybody was comparing pickleball to this other sport that the tennis association was trying to get going, but it just fell flat on its face because pickleball has so much sticky power. We're seeing pickleball struggle entry into Europe, partly because it's more difficult to build infrastructure over there. There's higher barrier to entries and less, less interested in adopting something new. Whereas in, in Asia, Fidel is growing a little bit, but because it's such a higher infrastructure cost, it's struggling to be justified. And everybody would rather just build pickleball courts.
- [16:59]
B
You can just put, you can just put a pickleball court almost anywhere, right? You can do it in your driveway. You could build out the infrastructure. The infrastructure's far cheaper. And so there will always be a group like, especially Europe's spent a lot of money to build out Padel, and so they have all the infrast. They actually overbuilt years ago and they're like, kind of like finally filling it up. And so I think you'll always thrive there, but it's going to have a really hard time getting worldwide adoption any, anywhere Past like kind of a novelty in large cities.
- [17:29]
A
So you started like the business took a while as you guys shared to get going a lot of offline activity going to tournaments. That's what really drove it. Not really so much online component. When did the online piece digital marketing, when did you start investing in side of the business and and grow it from there? Because a lot of founders right now that's you know, listening to the show that, that it's all about D2C.
- [17:54]
B
Yeah.
- [17:55]
C
So pickleball early on it did not have a digital footprint and so we did a little bit online advertising. Where where we really took off with online and digital was when we launched our amped product in 2016. And so that was a product that we spent time on R and D. It was a significant improvement compared to prior products because at a thicker core and an innovative core. And so when we launched that product that's when we first invested in video. And it was crazy to think now but at the time a pickleball company producing video advertising and, and posting that digitally was. Was never seen.
- [18:36]
B
That was next level. Yeah. Yeah.
- [18:38]
C
So obviously it's, it's pretty. Pretty table stakes at the moment. And so we were the first ones to adopt that and it exploded for us and we really took that buying share early on. And so something that's been kind of contrarian for us when we make marketing decisions is we always try to ensure we're investing in areas where other brands aren't competing. So that time everybody, their entire marketing strategy was signing pros and showing up to tournaments and events. And we did that early on as well. But we saw nobody was focusing on this digital area. So we went all in there. And then after a couple years everybody saw the success and the digital space began to be flooded and saturated. And so that's where we actually started switching to other channels for, for our brand. Actually in some ways we went back to in person experiences and then we're actually one of the only brands that purchases linear TV advertising because the CPMs are great. We're able to negotiate great deals where we get a spot and nobody's competing with us. And so that's been something that's helpful with general brand awareness compared to our competitors.
- [19:50]
B
And still to this day from a digital our direct to consumer is one of the largest parts of our business and we are by far the largest in the space when it comes to that. And our team does it amazing. We have our. We have an awesome team that just is popping out great content and just on Top of it. Day in the day. Yeah.
- [20:11]
C
And so essentially our strategy has been to vertically integrate across our company. And a key way we're vertically integrated is with marketing. So we essentially have an in house marketing agency the last two to three years. And that's from numerous graphic designers, creative people, an entire media team. We actually put out our own documented documentaries on the sport. And so and then we have an entire direct consumer team. We don't use agencies for anything. And that's been a huge benefit because we're able to lower our costs in many ways. But also our team's very well integrated across the board so that we're able to output high level of content quickly at a lower cost.
- [20:59]
A
So you guys obviously had a really good run. As pickleball has grown, you guys have essentially grown. So you grow with the sport. So it makes sense to put out documentaries. Popularizer, popularized. And you guys have obviously had a decent part to play in popularizing the sport. I'm curious. So covert hit sales dropped significantly overnight and you made a counterintuitive decision to keep your staff and build inventory. What gave you the confidence to bet on that rebound when other businesses were pulling back? Talk me through that time.
- [21:39]
C
Yeah, so Covid was definitely a crazy experience for everyone, obviously. And so we were following things pretty closely. We were actually one of the first companies in our area to start informing our employees of what was happening and what we were doing to react to it. And so early on, as we saw that it wasn't going to be just two weeks like it initially stated, we actually made the decision because we saw our run rate and how quickly things were progressing and how quickly our sales drop. And so we made the decision to technically reduced the hours of all of our staff dramatically. So we were able to keep them on staff, but we reduced their hours so much that they qualified for unemployment, so they were able to receive unemployment from the state while at the same time working a minimal number of hours for us so that their, their salary essentially was able to stay the same and they were able to keep up with their work a little bit. But we, we reduced our costs. So we, when we saw what was happening, we cut costs dramatically to survive early on. And then as soon as things started to reopen and our sales started taking off again in June, we brought everyone on. So out of, out of everybody, everybody that we asked back, everybody that we brought back came back. We didn't lose a single employee that we asked back, which was, which was really great to see. So our employees were able to maintain a salary and then come back full time.
- [23:15]
B
It was definitely scary, man. It was though. It was. There was times you were just. Us family were in the building and at that time we had about 20 some people and obviously none of us really knew what was going on. You know, we sold out at Nets and like cheaper bundles, which was interesting, like, but so we were kind of tracking that. It's like, this is interesting. Like we're selling all this low end product and Nets were sold out across the industry, but we had to put stuff on sale and like, it was just us working in the business for the most part during that time. So it was, you know, we just, it was a pretty scary time. But then come around about two months later, things just slowly started coming back. We had our people come back and, and they just kind of took off to the races from there, where it was just every month it was like, wow, this is, this is a lot. This is interesting. Okay, we'll see what happens. And it just kept going.
- [24:07]
C
And what happened was a lot of people were introduced to pickleball. They put it up in their front yards and their driveways and it just took off from there. And that's also when we started seeing a demographic shift in the market. So prior to Covid, pickleball had a reputation for being a senior sport. And it was, in many ways it was very popular in various senior communities. But after Covid and it took off again, it became an Instagram and social media phenomenon. And so you started seeing many influencers post about playing pickleball. I remember it was probably around 20, 21 when I mentioned to someone about pickleball and their response was, oh, that's, that's a score. All the young people are playing. And it took me aback because prior to that it was always, oh, that's a sport. All the seniors are playing.
- [25:06]
B
Right?
- [25:06]
C
So this is the first time that someone had associated pickleball with, with a younger demographic. And the younger demographic is still the fastest growing segment of pickleball right now. And what makes pickleball great, fun, physical. There's a, there's a huge social aspect to it. It makes it a great sport for all ages. And I mean, from the very beginning, the founders even, it was dads that wanted to create a sport to play with their kids. And that that thread has followed pickleball throughout.
- [25:38]
A
I'm curious when it comes to growing a brand, you know, you guys have had exceptional growth for, for, for Celkirk, especially, especially post Covid, as pickleball ball has risen to popularity. I'm curious, what do you think besides the rising tide with pickleball and also having a great product, you guys have done strategically to really kind of grow this brand and this business that you would like to share?
- [26:11]
C
Yeah, so we, we sort of, for, for many years, we had a framework of 4Ps that we really wanted to execute well on. And so that was product which was foundational to everything, people. So we wanted to make sure we had good people and we were able to develop people. Well, process was hugely important. That's something that I think a lot of smaller companies miss is getting their processes dialed in. And that's critical to scale. And then the fourth was promotion. So those were, those were the four things that we wanted to execute well on. And what we saw was we, we had to constantly be willing to reinvent ourselves and reinvent our company. So it feels like every two years we're running, we're running a different company and the pickleball industry is constantly changing. And so we, we, we mentioned, we, we mentioned to people that how every two to three years our competitive set changes who our main competitors are are different than it was two, three years ago. And that's been pretty, pretty consistent. And so sometimes it's hard, you know, when you're, when you're in the, in the trenches, it's easy to be focused on just the details, your direct competitors. And we, we really try to work on the business instead of in the business. That was a book that impacted us really early on. The e. Myth Revisited by Michael Gerber. And a big concept that he promotes in that book is to work on your business. So work on developing the people, the processes, the entrepreneurial vision, and make sure you're willing and able to change positively so that you can continue to scale. And that's something that we've done since the beginning.
- [27:57]
B
Yeah. And obviously it's not easy.
- [27:59]
C
Right.
- [27:59]
B
Anyone that's done and does, there's days you question everything. But, you know, two, for us, a lot of it off the bat was really deciding. Being agile, but really deciding as a brand, who were we and who were we most importantly, not. And we wanted to be a performance brand. We were going to only focus on pickleball. So we're dedicated to not doing any other sports. We're a pickleball only brand and we were going to be a performance brand. So it was making decisions off the bat too, that were really difficult, especially when we weren't doing, you know, we were still struggling to grow. Like, hey, we're only Going to build high quality products. We started a separate brand called SLK by Selkirk. Even when we were starting to get more notoriety, that was more entry level products for Big Box because we didn't want to destroy the brand.
- [28:46]
C
Right.
- [28:46]
B
We, Big Box would have much preferred us to put an s on a $50 paddle. But we knew if we were going to build a performance brand that people wanted to be behind that was going to go against that long term vision. So it was making choices too early on that were more painful for a better outcome, you know, at the time, Lord willing.
- [29:07]
A
Yeah, I think you guys have done a really good job with your sponsorship strategy as well and finding advocates. Can you talk me through that, how you've done it differently from a traditional sports marketing perspective and how do you, how do you measure that return?
- [29:23]
B
Yeah. So where did you.
- [29:24]
C
Yeah, so our approach to sponsorships has been one of those things that we're constantly having to reevaluate and adjust and is one of the more difficult aspects because like you said, it's very hard to measure roi. And there's this struggle because you want to have some top players and every brand, one time somebody asked us for advice on who should we sponsor, how many people should we sponsor. And our typical response to anybody that is dealing that realm is find one person, maybe if it's a sport like ours, one male, one female, and they should have a great personality and good performance and just invest in them, promote them, make them the face of your brand. You don't need to have a huge depth. And so that's been our philosophy throughout most of the years, is having a couple of top players. But sometimes it's hard because people will measure based on how many gold your players get in the industry. And, and when you show up to tournaments, it, you know you want, you, you wish that you had the most players out of any brand in the space. And so we've always had to just refocus on what, what actually, what actually matters, how many do we actually need? And so early on we only had one pro, which was very odd. It was, it was very frustrating for some of our competitors that we were able to grow with a minimal number of pros because that was, that was the main marketing strategy was to just sign top players. And there's been times where we switched that. And so when the PPA started to come online and they're, they're getting TV viewership, we started seeing a difference with the, with the viewership of the various pros. And so it, from our Calculations we saw that pros were getting about 50 times the views they were the year prior just because the more tournaments were aired on TD. And so we actually did a complete 180 and signed as many pros as we could because it appeared that things were under underpriced. And so we, we did that, we signed numerous pros and it worked out well. And then as prices started to increase on the sponsorship side, we started scaling back because our, our general approach, especially when it's hard to measure ROI, is to go off of CPMs. So like for what we're spending, how many actual views are we getting and how valuable are are those views?
- [31:56]
B
And that was one thing that really going back to the digital strategy that early on really frustrate our competitors and they even would talk to us about it was, you know, we would have maybe the second best male, but he would be more well known because we would actually put money into promoting digitally and making sure everyone knew who he was. Right. It's kind of like, you know, if, if, if a tree falls in the wood, does anyone hear it? And our philosophy was you need to have personalities and you actually need to make sure your consumer knows they exist. Because people would just sign these athletes and never promote them. They're in their mind. The sponsorship was signing the athlete where in our mind that's the first piece. You know, you need to spend twice, if not three times as much making sure that athlete is known in the market.
- [32:39]
A
Yeah. Especially because pickleball is an upcoming sport. So like, you know, one of the athletes that I, you know, know and follow is, I think it's John Johns.
- [32:50]
B
Ben Johns.
- [32:50]
A
Ben Johns. Ben Jones. Yeah, he's the best of the best. Right? Like so. Yeah. Yeah. So, okay. All right, so you guys recently invested a million dollars into a dedicated research and development lab. What are you trying to solve there? And you guys, I, I know you guys, a lot of your manufacturing is done in the us. Why, why is that?
- [33:16]
B
Yeah, so going so you know, we were even talking offline a little bit about how important product is and that's actually my main focus. So that's what I do. Like we're co CEOs and I love product. So I actually directly oversee the R and D team and try all the product and really kind of make sure that portfolio is on track. And we had a decision a couple years ago where we were growing. We had good technology but we, we had a choice of were we going to hyper invest now for the future, including IP and building out a lab and we just felt where the sport was going, where our brand was going. We had to hyper invest and maybe we weren't going to come out with particular products that were perceived as the best at the time because we were investing in that long term vision. But we knew that was the, the winning strategy long term was to build a system that we could iterate and ide super quickly and be able to improve product and, and also have IP we could protect behind it. And so we went through that process and we spent one year, I think it was 25. We spent I think eight times what we did the previous year on RD. And so we did this hyper investing. We have our own IP attorney in house. We have a great team on the R and D side that cover any FAS that you really would need to cover. And we started hyper investing and then what that's done is we launched our first major product which was the Boomstick, which is probably the most successful launch in Pickleball history to date. And, and then we're already the, the, the tech we have coming behind it is going to be next gen. So we, we just knew we had to make an investment. It was going to probably be painful short term, but if we did it right and we invested in the right things, it's what was going to keep us in the front long term. And that's been thankfully been playing out to be the case.
- [35:11]
A
Yeah, interesting. So you also launched a sub brand to compete with lower priced imports. That's a really interesting strategy. Can you talk me through the thinking and why, why not just launch more cost affordable products under the Selkirk print? Like, like brand like you? You know what I mean? Like, yeah, what was the thinking there? Can you talk me through that strategy?
- [35:38]
B
So great question. So that like I even alluded to a little earlier on. So we, that was kind of one of those really hard decisions we had to make. So we were, at the time we were only made in the us we saw the market growing, we saw that there was need for lower, lower end product, but we could not build that here, at least on scale. And so we were, you know, we had people telling us like, hey, just start making it in Asia, put the s on the $50 paddle and that would have been the easy route to go and it would have been successful. You would have sold pro. We probably would have sold definitely more product at that time. But we asked ourselves, what do we want the Selkirk brand to be? And we really wanted to be the pinnacle of performance, the performance brand. And we felt if we had products with a large S that was at $50 and at the $200 range at the time that we could not accomplish that. We couldn't really made sure the brand fulfilled its purpose there. And so we, we chose to have to build a brand called SLK by Selkirk. And so the thought process there was, was what, what. Let's, let's make something that we're clearly defining as different but then heavily connect it so we get the, the brand power of Selker. So kind of have. The goal was like have our cake and eat it too as much as possible was have the, connect the strata brand connection to. So everybody looked at it as in a sense a Selkirk product, but then had it clearly like different logo treatments.
- [37:05]
C
Right.
- [37:06]
B
It was a big SLK logo across the front with small Selkirk connections and really connect it, but not. But on the shelf. It was clearly a lower end product that still met high standards under our brain.
- [37:21]
A
And how did you know that you needed to launch a product that was more cost affordable in the market and not just stay like, like you look at premium brands like, like Apple, like they, you know, they have, they, they have, you know, more cost affordable and they have levels but of their product. But how did you know that you needed to have a product that was more kind of more competitively priced?
- [37:44]
C
Yeah, I mean because we're so focused on pickleball, it allows us to go really deep and break broad within the pickleball industry. And our, our mindset has always been to capture as much market share as we can. And, and like Rob mentioned, we wanted to be careful about that. And, and so we just saw the success of some of these lower priced products. And what we. And, and actually even less than seeing the success, we saw people purchasing cheap products that played very poorly. And, and what we knew was, is as we're developing our premier product line that we could take some of the things we're learning and some of the technology and pass it down to the lower price points so that those lower price points could be the best they could be. And so even still, you know, we developed the boomstick and we'll actually be taking some of the learnings from that and some of the technology from that and introducing it into our SLK line so that people, even if they are purchasing a hundred dollar paddle, a $50 paddle, it's the best it could be and it's going to serve their needs well. Because what was one of the, one of the things we wanted to prevent was people using wood Paddles. Because if you buy a wood paddle and try to play pickleball, it's not going to be a great experience. And we actually would see people try pickleball with wood paddles and say that it wasn't very fun. They weren't really as interested in bringing it back because the product just performed so poorly. And we knew that if they actually were using real pickleball paddles, they'd be more likely to stick around. And so we wanted to improve the overall performance of the lower price points. And something that was, again, a little bit frustrating to us was we would see some brands that were just copycats. So it used to be that in China it was, you know, the product was very important. Quality overseas has gone much better. The factories have gotten much better. We have factories we work with overseas now to make premium products. But at the time they, it was not a premium product. And so we knew that if we could go to these factories, teach them how to make better product, we can actually launch our price points with something innovative that nobody else was doing.
- [39:56]
A
That makes sense. Smart. So you also launched Selkirk Labs. So you, you guys have done a lot of really innovative things. You haven't just stuck to selling a premium product. I, that was my mistake. For some reason. I thought, though, that you sold Padel, Pat. I thought you sold Padel as well. That was my mistake. So you guys, yeah, you, you know your lane, right? Like, you're doing many other interesting different things. Like you've launched a membership program that allows customers to test experimental products, but you don't. Yeah, so. So talk me through that as well.
- [40:34]
B
Yeah, so Selkirk Labs was kind of was a super fun project. So at the time we were getting larger. So this was in 2022, or we had the conversation earlier, but we launched labs of 2022 and the problem statement was we're getting larger to do R and D, to do, to plan for all our channels to launch a product. Right. It's just a long time period. And so, you know, you gotta, you gotta account for wholesale, big box online, all your different dealers, your advocates, your pros. It's a lot to wind up. And as you get larger, it gets harder.
- [41:08]
C
Right.
- [41:08]
B
To be agile. And so the thought process was to really do kind of a stripped down concept where what if we could develop projects that we could get to market super quickly, the consumer, then you actually had to be a member to buy the product at the time. So you'd actually have to fill out an application to then get access to purchase the product. We would then launch these projects in lower volume. Consumers would, players would purchase and then actually give us feedback. And so we would get tangible feedback on what they liked and didn't like and then we would take that feedback and actually implement it in mass market products. And so it allowed us to iterate quickly, get in time feedback. Also from a business standpoint, it was premium product, right. So very, you know, we were 333 is what we launched at, which was super premium at the time. It allowed people to be a part of something that they felt like their feedback mattered and they were actually a part of this, this like club in a sense. And, and so it really accomplished multiple goals for us where we had a, we had a, like even a higher echelon brand within the brand that were doing these cool R and D projects. We actually got tangible consumer feedback that we could then implement in mass market products. And it allowed us get this loop going much faster. And so that's changed now, but we still have programs within that that kind of use the same thought process. And so at the time, I don't even think in sports there was anything quite like it. And everyone told us we were crazy. Like when we did it it was like this isn't gonna work. And it worked better than we had hoped.
- [42:49]
A
Yeah, I think it's really clever because you know having having a, a group or a cohort of your best customers and constantly have constant feedback loops with them is golden. Like you guys, you guys asked me offline, you know, what are some patterns that I see that is a pattern, like it's not a common pattern but is a recurring theme when I speak to successful founders. They have like some form of, you know, you have your traditional advisory board. And I want to talk about just quickly, you guys have, you know, you've taken strategic investment from Bluestone Equity Partners, but so you'd have your, you know, your board, but then you have a customer advisory board in a non formal sense where you get that constant feedback loop. I think it's really clever because yeah, like every single successful founder at any scale, but decent scale is always speaking to the customer and has the customer in mind first and foremost. So you guys are family, family owned business for a long time. You recently took on strategic investment from Bluestone Equity Partners. How did you know what was the right time to bring on an external partner and, and how using the capital to accelerate growth. Because it sounds like you guys are already pretty good stewards of capital.
- [44:13]
C
Yeah, it's a great question. And we're really excited about our partnership with Bluestone. We talked to a number of firms throughout the process and they really stood out to us. The individuals we're working with are Walker and Shaz. And even after the investment, they've been great partners. We've been able to bounce ideas off of them. We have regular meetings and so it very much feels like a partnership which we, we appreciate. And they're, they're very well aligned with our various approaches. They're, they're, they're agile, modern. They're excited about the adoption of AI, which is, which is a big part of our, our brand initiatives. And so we, we thought it was the right time because we, we see on the horizon a lot of consolidation about to happen in pickleball. So pickleball was on a hockey stick growth path and to some degree that started to slow down a little bit. Pickleball is still growing. The acceleration slowed down a little bit. Part of that was because of some internal factors within the sport with approvals and regulatory bodies which are now resolved. And we're seeing some of that uncertainty re accelerate growth within, within the usa. But while the USA is growing, international is exploding and pickleball is just barely scratching the surface on its global growth opportunities. And we knew that within the US it would start consolidating. And part of that is because of the requirement to have an IP strategy to succeed long term. So we have an in house patent attorney. It's a big part of our strategy. And it used to be people could just launch a brand by finding a supplier in Alibaba, but that's not going to cut it moving forward. And the brands that succeed are going to be the ones that are really investing in product and technology. And we think that there's a, we want to be part of that consolidation play. So there are some funds set aside for M and A, but there's also a lot of internal growth opportunities that we're chasing. For example, we just recently launched the Selkirk Academy which is where we're offering premium pickleball education and clinics within the sport. Right now, pretty much all the clinics are just very broad. You learn a little bit about everything. We're offering more focus, specific clinics. So people that really want to get better, really want to improve, they can get better on their power game or on their control game, or on just competing in tournaments. And we have specific clinics for each of those, each of those topics. And so between all the growth opportunities and the coming consolidation, we knew it was the right time to bring on an external partner to accelerate our growth.
- [46:58]
A
And was there also the added benefit of taking some money off the table too?
- [47:02]
C
Right, there's a little bit of that, but the main priority was investing within the company and that's, that's. So we're really excited about the next, the next few years being able to execute within the space with Bluestone as our partner. Yeah.
- [47:22]
B
And it allowed us to, on top of all that, just even start more product initiatives. So we're expanding into eyewear. We're already, we're already into shoes and we're hyper expanding. There's a lot. But our goal is to have the most advanced core QI line in the world in two years. And so we're hyper investing in that category too, which is a lot of fun.
- [47:42]
A
Yeah, that's cool. Yeah, yeah. I, I find it so interesting that you guys very pickleball focused, but in all these different verticals and areas, like, you know, the clinics, the digital side, the coaching, the training side. Because I see that as well, like, you know, founders full time gig for me. But I've always had, I've always looked at pickleball. Even the training side of it. I see a lot of people going pretty hard on the training and the education side and the skills and the leveling up, all that. It's. It's a very, very fascinating space. So. All right. I have to work towards wrapping up guys. So despite your massive success, you've mentioned that you rarely celebrate the wins because you're always focused on the next challenge. As you look towards toward the next decade, what is the biggest threat to your industry and how you're preparing for it?
- [48:37]
C
That's a good question. Biggest threat to the industry. I mean, the biggest change that pickleball is going to experience over the next couple years is the fact that it's becoming a global sport. And so that's something that makes it very exciting for us over these next few years is to become a global company within a global sport. The biggest threats. I don't, I don't. Can't. It's probably something that we're not even aware of.
- [49:05]
B
Yeah, I mean, I think making sure the culture stays strong. I think that's one is like we don't want to just turn into another tennis. I think the ma. A magical thing about pickleball is the, the. And I think, I think there's going to be hell studies that come out about this. There's an aspect of where it's easy to learn, you can play with bunch of people, different ages. But it is so social. I'm sure you've experienced that. Like, you're. You're interacting, you're bantering a lot of times, like, some of people's best friends come from this sport, and so. And I think the health benefits mentally from that are just tremendous. So I think that's the one thing that I hope we could continue to kind of reinforce is like, that's a unique, special culture within our sport that I. I hope we never lose. And so I think that would be a threat in just losing that. I think. I think we're in good spot, but, I mean, we're not really worried about external sports, really. You know, there's been some issues with governing bodies, but I think that's getting worked out. So as long as we're good stewards on those things, I think. I think pickleball has nothing but, you know, Lord willing, up from here, so.
- [50:09]
A
Awesome. Well, guys, we have to wrap there. Thank you so much for your time. Congratulations on all of your success thus far, and I look forward to trying out those shoots when they come out.
- [50:19]
B
Yeah, yeah, yeah, man.
- [50:20]
C
You can send you some.
- [50:21]
B
Yeah, we'll get you some.
- [50:21]
A
Hey, founder fam. Thank you so much for tuning in today, and if you enjoyed this episode, please take the time to leave us a review and let us know what you think. This podcast is 100% free. We work so hard to go out and find the most successful founders and entrepreneurs all around the globe. So your feedback helps us grow, improve, and even bring on more incredible guests and insights. So if you have a second, please take a moment and leave us a review. It really means a lot to me and the founder team. It makes so much of a difference. Thank you again for listening, and I'll catch you on the next episode.