BOULDER — Boulder Valley’s outdoor industry is feeling the pressure of changing demographics, employee churn and the desire to coalesce as a community.
CEOs of Boulder Valley’s outdoor industry discussed the challenges and opportunities the industry faces at BizWest’s CEO roundtable this week.
Some outdoor industry brands are feeling the pain of changing tastes from consumers. Runners, for example, are looking less for specialty shoes and more for “athleisure” products they can use to go running and wear to the grocery store, said Jerry Lee, CEO of Newton Running Co. Because of that, specialty retail stores for high-end running shoes are being passed up for more affordable retail options, online shopping and mobile commerce.
“Our challenge is the Costcos of the world,” Lee said. “People are looking for deals. It’s a difficult challenge for us to meet the needs of younger runners in the world more with athleisure than performance-oriented products.”
Cliff Bosley, race director for BolderBoulder, said he has also felt the decline of specialty-interest in running and is looking at ways running can be integrated into other communities, such as physical therapy, massage and other groups that can be keys to generating interest in the sport.
An issue is that specialty outdoor and recreation retailers will never be able to compete with Walmart or Amazon when it comes to price, said Matthew Kaplan, vice president of membership and sales for the Outdoor Industry Association. What they need to do instead is create value through experiences and a high-touch aspect, such as a fly-fishing store that teaches you how to fly-fish when you buy a rod.
Gary Gomulinksi, executive vice president of Alpine Bank, said you’re seeing that in other industries, such as craft breweries that have events where customers can hike out miles into the woods to experience a pop-up taproom.
Alpine Start, an instant coffee company that started its sales by being in REI for campers and backpackers, is taking a different approach to creating experiences and growing its brand. The company has brand ambassadors who can apply for the role online and get access to a private Facebook group, discounts to the product and online video chats with professional athletes in exchange for telling friends and family about the brand.
“It’s amazing what they’ll do with a discount code,” said CEO Alex Hanifin. “They’re so grateful to be with the brand, they share it everywhere. They just feel so proud to be with Alpine Start. It’s not about the product; it’s about being part of a community.”
With changes in demographics and how people shop, brands are looking to be more personal, but even with going the extra-mile can still struggle because of super-cheap dupes online.
“What has been most frustrating to see is for my own company doing everything right — we write little notes or throw something extra in with their order — and it feels like they’ll all tell their friends and spread the word,” said Seth Haber, owner of Trek Light Gear. “So we’re creating that incredible, awesome community doing everything right and in a lot of ways we’re still getting battered by the Amazon effect and people who don’t care about brand loyalty, how something is made or whether it plants trees with your purchase.”
Haber said that, instead, people are able to duplicate his product without any of the social responsibility he’s putting into it and sell it cheaper.
Workforce and cost of living
Two major hurdles for the outdoor industry are the same issues that are haunting every Boulder Valley company: how to maintain a talented workforce and how to operate in a city where employees can’t afford to live where they work.
Andy Hawk, managing director of Active Interest Media Mountain Group, said that his company has built into its mindset that churn will happen, as long as there is a gap between the experience needed for a marketing manager and marketing director and how long each person is willing to stay in the role.
“We have churn built into our management culture,” Hawk said. “It’s not as big a deal when people move on. It’s a bummer for the company, but if we get down on ourselves every time someone leaves it will be a bad atmosphere. We cultivate good people who hopefully will be back one day.”
An issue that plays into workforce churn is cost-of-living: Employees often can’t afford to live in Boulder or even Boulder County, which means they’re dealing with commutes that will likely drive them to find different jobs closer to home.
“I’ve had no issues with hiring,” said Jim Lamancusa, CEO of Cusa Tea. “I hired a marketing manager and was flooded with applications. People want an opportunity in the outdoor space where they can move up in their career. The challenge is housing. Everyone I interviewed can’t afford to live here. So you get the perfect Boulder lifestyle but with a 45-minute commute. My employee went to Longmont.”
One way that Matt Bennett, vice president of ECHOS Communications, has been able to combat this is by looking to hire recent university graduates looking to stay in the area.
“They’ve usually already worked out rent in one form or another,” Bennett said.
But as the industry grows and Boulder prices stay high, companies will likely leave the area in order to build outdoor industry hubs in other Colorado cities. That can be a good thing, as the state continues to prove it’s a leader in the industry and competes against states like Utah and Oregon.
“Boulder will always be a mecca that attracts people,” Gomulinski said. “Boulder just needs to keep doing what it’s doing, and we can look at other places in the state. Instead of companies starting here then going to Salt Lake or Oregon, they’re going to Grand Junction. That’s success. Other places in the state are replicating what Boulder started. Boulder is what it is; it’s not going to change its rates. But it’s creating something.”
As in all startups, outdoor companies are looking to financial options like investing and bootstrapping. Both have their challenges. Hannifin, CEO of Alpine Start Foods, said seeking venture capital was the worst experience she had in running her business until she found the right people, and then it became the best experience. Haber, owner of Trek Light Gear, said bootstrapping the business has led to it growing slower than if it was using outside investment. Other companies, like biking apparel company ElevenPine, are doing a combination of the two.
“We started with bootstrapping and we still do some of that,” said company president Jeff Curran. “Now we’re using a convertible note, which is comfortable. I understand it and investors understand it. It’s a challenge when you have IP but also have to move quickly. You have to be the first mover to make noise in the market. If you need a Series A, it’s not easy. If you have between $1 million and $3 million, there’s a narrow list of VCs who will look at you.”
Looking ahead, solutions for getting investment, growing the business and getting through the hurdles outdoor companies face might lie in the community. Gomulinski said he’s working on growing Active Boulder, a trade group that will be to the outdoor industry what Naturally Boulder has been for natural products in the area.
“We want to replicate the success Naturally Boulder has,” he said. “There are deltas between the two industries. Financing is one component. So is the ability to create a new product — on the natural food side, you can sit in your own kitchen, play mad scientist, come up with something and start taking it to the people in the market. In the outdoor industry we don’t currently have that in-between. I think the Outdoor Retailer show being here could help with that — you walk in, talk with enough people and a week later a prototype shows up at your door. With Active Boulder, we’re trying to build that environment.”
Matt Bennett, vice president, ECHOS Communications; Cliff Bosley, race director, BolderBoulder; Jeff Curran, president, ElevenPine; Gary Gomulinski, executive vice president, Alpine Bank; Seth Haber, owner, Trek Light Gear; Alex Hanifin, CEO, Alpine Start Foods; Andy Hawk, managing director, Active Interest Media Mountain Group; Jerry Lee, CEO, Newton Running Co.; Matthew Kaplan, vice president of membership and sales, Outdoor Industry Association; Lim Lamancusa, CEO, Cusa Tea. Moderator: Christopher Wood, co-publisher/ editor, BizWest.
Bob Bond of EKS&H LLLP, Pat Perrin, Rudy Verner and Jim Fipp of Berg Hill Greenleaf & Ruscitti LLP.