Brent Turner, K2's vice president and general manager of the snowboarding division, has become an even more influential member of the snowboarding community with K2's acqusition of Morrow and its likely purchase of Ride. We caught up to him to see how this transition period is going.
How much were you involved with the Ride deal? I was very involved.
Was it primarily you and K2 CEO Rich Rodstein doing the negotiations? No, K2 has an acquisition guy, Mike DeMartini, who spends a lot of time looking at companies. John Rangel, K2's senior vice president of finance, was also very involved.
What was the chronology of the deal? It all started happening during my vacation in the first week of July.
It's clear what K2 offers Ride–stability and financing–but what does Ride offer K2 that it already doesn't have? They offer us a couple of things. Overall, we see there's a lot of strength in the entire company and they bring a lot of resources to K2.
Ride is very strong in the Canadian market and that's an area where we've got a lot of work to do–we're actually in the process of restructuring K2's Canadian operations.
They've also got a really strong binding program–strap binding program–and as we found out this year, that's a portion of the market that hasn't died yet. And clearly the boards offer great performance and graphics.
Ride also has a good boot program and an apparel division that's about as big as ours–still small but growing.
You're in the process of integrating Morrow into your operation, what have you learned from that process that translates to your likely acquisition of Ride? They're a little different than the Morrow deal. We were able to pick up some of the pieces at Morrow. With Ride it's different–more along the lines of a merger instead of an acquisition.
But I think the thing we've learned is something we've been doing with Morrow from the beginning and that is keep the product development, marketing, and sales organization separate. This maintains each brand, but of course it's more challenging.
On a day-to-day management level, how will the Ride acquisition be different from the Morrow deal? That's probably one of those things I can't talk about yet. I don't really know yet.
One thing I anticipate though is that having multiple brands will bring many different viewpoints into the organization. It expands the gene pool in all respects, and that's good.
I think we've been able to learn the positives and negatives of other people's organizations, and they've been able to learn ours as well. Ultimately, that's very healthy for everyone.
What incentives or guarantees are you giving Ride employees so they don't jump ship to other brands? It's a great question, but I can't answer it.
But that must be a concern. Sure. It's always a concern.
Where will the Ride offices be located?I can't answer that question yet.
Who's going to run which brands? Once again, it's too soon to announce that.
What will happen to Ride's factory? We'll continue on with that. We see that as definitely a source of strength for the Ride brand. I'll probably swing by the factory before the ASR show, but from what I've heard it's a good factory that makes great boards.
Will Ride's step-in program now utilize Clickers? I can't say yet.
How will be product development be managed among the five different snowboard brands? I think there is a fair amount of synergy there, but we definitely have the desire to keep the technologies separate. Of course, when it comes to product development each brand will know what thee other is doing.
How will you remain passionate about five separate snowboard brands. That would seem to be one of K2's biggest challenges. It definitely can be a challenge, but what it means is that you have to have people who are passionate about each one of those brands.
We have people here now who are fighting for Morrow to have a certain technology or construction. That's what they think about all day. What K2 is doing is of interest to them, but ultimately they're concentrating on their own brand.
We were all competitors a few months ago, and it's hard to change that mentality. But to be honest, that's not something I really want to change. I think it's good.
What affect will this deal have on the snowboarding industry as a whole? I don't think it really should affect other brands too much. Is it a threat to other brands? I don't think so.
I think there's some concern on the part of a few retailers, but other retailers have called me up and told me it's a great thing. We sent out a letter that outlines how we'll keep the sales separate and market the brands separately.
Has the snowboard industry reached a point in its maturation when it's cheaper to buy marketshare than grow marketshare? Is it even possible to grow marketshare to the extent you just did with buying Morrow and Ride? That's a good question and a hard one to answer. We're betting that it's–not cheaper, that's not it–but quicker or more efficient to pursue this multiple-brand strategy and gain marketshare that way, than it is to only grow marketshare through growth–which is a strategy we're still pursuing.
But there's also a strong market leader in every market category, and that leader is Burton. Even though we have a multiple-brand strategy, there's not a single category where we come close to challenging Burton.
At the same time, if you're able to obtain a high marketshare position with one brand, then that's definitely more efficient than having multiple brands.
But we intend to keep each brand separate, and support them and market them as separate brands. If there's only one or two brands that are really driving the market, that's not really healthy. What's helped snowboarding is that there's been a lot of brands working hard to market their brands, and that's kept excitement high about the entire sport.