When Switch entered the snowboard market four years ago, the step-in category was essentially nonexistent. Strap-in binding technology was proven and standard. Now, five years after moving in and pushing for change, step-ins have become the fastest-growing category of snowboard products. The category was up 90 percent at specialty stores and up more then 100 percent at chain stores, according to SIA Retail Audit figures for ’97/98.

Yet the state of the snowboard industry is not the safe haven of sales it was just two years ago. Competition is getting tougher and retail dollars are getting tighter. How’s a single-product company to able to compete? SNOWboarding Business traveled San Francisco, where we met with Switch management to find out how they’ve succeeded in changing the status quo in binding systems and what their plans are for future survival.

As with many tales in the history of snowboarding, the concept of the Switch Autolock binding came from a love of the sport and a desire to make it more fun. Erik Anderson and Jeff Sand, founders of the company, spent their first day on snowboards struggling with faulty equipment. “When both Jeff and I started snowboarding together,” Anderson explains, “we recognized that there was something missing. I came from a ski background, so I was used to the step-in bindings. “I kind of saw the transition that happened in the ski industry from super old-world technologies to the development of plastic-shell boots to the development of safety bindings and all that came along with that,” Anderson continues. “I saw within a like industry, a development process that went from leather and wood and metal to carbon and titanium and plastics. I took that as a point of comparison to developing this idea for snowboarding.”

Modest Beginnings

Both Anderson and Sand came from design backgrounds and actually met while designing The North Face store in San Francisco. During the early days of development, both were working full time at other jobs. After hours, they’d work on the step-in binding until two in the morning. Their work space was a 150-square-foot office located above a metalwork shop.

While design was their specialty, starting a business was not. “I recommend that other people who try to start a business follow a more tried-and-true approach where you bring in people with the right expertise,” Anderson says. It was clear they would need someone to handle each of the vital pieces of the puzzle: sales, product development, and administration.

By this time Tony Guerrero had come on board, moonlighting at first and then full time. “Tony made perfect sense for sales,” Anderson adds. “That was what he was really good at-he had all the right connections. He was like Mr. Salesman-just unstoppable.”

Then there was product development. Anderson took on the administrative role while Sand handled product development. And though he admits his knowledge of running a business was zero, Anderson jumped into the project head first. “Knowing that I was not really good at it was the thing that made it the most interesting,” he says. “So I sort of picked that up for what it was and struggled to create the fundamentals of business.”

Financing for the company came from the three men, who put all they could into it. “Each of us invested everything we personally had,” Anderson says. “We got our parents involved and got them to invest in it. So through the first production year it was all financed internally.”

By this time in the history of snowboarding, 1993, things were booming. According to Anderson, after attending the SIA show in Las Vegas, the Switch team was confident in the decision to enter the market. “In ’93 it was a crazy time at the trade show,” he explains. “Crazy people there, everything was out of control in the North Hall, it was all snowboarders. It was just mayhem. And then you went over to the ski hall and it was totally dead. I was like, ‘Wow, this is reallgoing to go off.’”

Insight into the creation of the company and the future of snowboarding also came from ski-industry guru Happ Klopp, founder of The North Face. “In the beginning he was instrumental in bringing perspective, in terms of making the right connections,” Anderson says. Klopp is now the chairman of the board of directors for Switch, and he continues to be involved with the company.

Road Hazards

During the first few years of running a business, obstacles always come up that could potentially destroy a new company. Switch has had its fair share. In the first year of production, 1994, they almost failed to produce altogether. Anderson explains: “We had this one guy, Austin. He had his own manufacturing facility, if you want to call it that. The idea was he would help us develop all the tooling, work out all the bugs, and also be responsible for the production of the product.”

As time ticked by and ship dates began closing in, Anderson and Sand confronted Austin. “Finally it came up that he didn’t have the expertise to make the production tooling,” Anderson continues. In order to get the product out that season, they had to work with three different manufacturing facilities and assemble the bindings in-house. “At that point, when you’re a new company and financing is sketchy and management is inexperienced, a lot of things can go wrong,” Anderson adds. “And I guess in a way we were lucky that more things didn’t go wrong.”

Another major roadblock Switch is still trying to get around is a patent infringement lawsuit filed by Ride two years ago. To date, the two companies are awaiting a court date scheduled for next spring. Until then, it’s business as usual.

Growth And Change

Anderson and Sand couldn’t have had better timing. Switch entered the market when snowboarding exploded and growth was unprecedented. In 1996, Dan Adams joined the Switch team as the chief financial officer. According to Adams, from 1995 to 1998 Switch has continued to grow in sales units. In its first sales year, 10,000 units were sold. The next year, Switch grew approximately nine times in terms of binding sales. The explosion in the Japanese market coupled with Switch’s license-partner strategy contributed to this jump. “We became the number-one step-in binding, taking over K2 in marketshare,” Adams adds. That year, Switch was featured in Entrepreneur Magazine as the 22nd fastest-growing private company in the U.S.

In 1997, total binding units grew by 30 percent, running equal in marketshare with K2, according to Adams. “1997/98 was a repeat of the previous year,” he says. Switch showed moderate growth, with Japan decreasing and the U.S. and Europe increasing. Sales breakdowns worldwide according to Adams in 1996 were 40 percent Japan, 40 percent U.S., and twenty percent Europe. For ’97/98 it’s 50 to 55 percent U.S., 25 percent Japan and Europe.

He said that international sales are still important, but the U.S. market now takes precedence: “For us, more attention is paid to the U.S. because we can be more competitive. We have a direct sales force that allows us to compete head to head with other companies-in Europe, distribution is not direct.”

In an effort to avoid distribution problems, Switch established an office in Europe a year ago. The original objective was to grow the step-in market and develop the Switch brand overseas. This spring, Switch decided to close that office. According to Adams, “The European market has not grown as fast as we’d hoped. It just didn’t make sense financially to continue to invest in that office.” International sales and customer support will now be handled in the San Francisco office by Peter Niepoth, international director. He previously handled international sales for Nike’s ACG program.

With its phenomenal growth rate in the past few years, Switch expanded its employee base rapidly. They outgrew the 150square-foot office long ago. Approximately 25 employees reside in 3,000-square-foot space just around the corner from its first location. But with competition stepping into the ring and retail dollars shrinking, some tough decisions arose this year.

“If I had been a better manager at growing my company, I don’t think I would have had to lay people off,” Anderson says. “In terms of the organization itself, we have taken a step back and looked at where our projections were in terms of growth and in terms of where we would be financially, and recognized that we just couldn’t sustain all the investments we were making in Europe and in marketing.”

Kristy Roach is now the marketing and sales vice president and she will be working closely with both Guerrero, now the sales vice president, and Niepoth, establishing a tight sales and marketing team.

Adams emphasized that although they have cut back in marketing and international departments, other areas such as product development and customer service are still growing.

Strategic Maneuvers

Essentially modeling their objective for growth after the success of bicycle-industry giant Shimano, Switch began licensing its technology to boot companies early on. “We’ve developed this technology for the boots,” Anderson explains. “That’s a critical part of the success of this idea, but we’re really focused on bindings.”

Though he acknowledges Burton, Salomon, and K2 as Switch’s biggest competitors, he believes that the licensing gives his company an advantage when it comes to compatibility and standardization. “We believe that eventually some kind of standard will occur,” Anderson says. “Our multibrand strategy and licensing program could be a big part of making Switch’s success going into the future.”

Switch currently works with Vans, Heelside, Nice, Exo, Northwave, Nidecker, DeeLuxe, Duffs, 32, and it’s own line Flexible. According to Adams, Vans is clearly the strongest boot partner. By offering compatibility in a number of categories and price ranges, Switch presents customers greater options.

While staying focused on one product has contributed to Switch’s success in growing the category, it can be a drawback as well. In order to remain competitive, Adams says they have toyed with the idea of expanding into other related snow products. “It has been a strategic decision of ours to diversify, to add products,” he says, “but right now the opportunity on snowboarding boots and bindings is significant. At some point we will want to diversify to add dimension and value to the brand as well as the category we enter. We’d be less likely to add snowboards because we don’t see how we can add value to that category. We’d be more likely to do something in snowshoes.”

Marketing Challenges

Overcoming resistance to the concept of step-ins was one of the biggest challenges Switch faced in the beginning and is still battling today. “I think this past winter has been kind of a transitory year,” says Roach. “Going from a question of whether step-ins were a worthwhile investment for both consumers and retailers to make, to really reaching critical mass and also a critical performance for it to be a viable product for the future.”

Roach says there is more acceptance on all levels. “Consumers are embracing the retailers that are accepting step-ins into the shop,” she explains. “But on top of that, there’re professional riders who are riding the products now, and that’s really helped out a lot.” The Switch team includes names like Axel Pauporte, Rob Dow, Jay Nelson, Marc Franc Montoya, Jason Smith, Leigh Coats, Tina Mornval, and others.

And while competition is growing, Roach believes the entrance of bigger players continues to legitimize the category. “I think overall it’s a net positive,” she says. “Really we benefit every time the step-in category is validated.”

The Future

It’s the overwhelming opinion of the folks at Switch that advancements in snowboarding lay in further development of boots and bindings. “I side in 3,000-square-foot space just around the corner from its first location. But with competition stepping into the ring and retail dollars shrinking, some tough decisions arose this year.

“If I had been a better manager at growing my company, I don’t think I would have had to lay people off,” Anderson says. “In terms of the organization itself, we have taken a step back and looked at where our projections were in terms of growth and in terms of where we would be financially, and recognized that we just couldn’t sustain all the investments we were making in Europe and in marketing.”

Kristy Roach is now the marketing and sales vice president and she will be working closely with both Guerrero, now the sales vice president, and Niepoth, establishing a tight sales and marketing team.

Adams emphasized that although they have cut back in marketing and international departments, other areas such as product development and customer service are still growing.

Strategic Maneuvers

Essentially modeling their objective for growth after the success of bicycle-industry giant Shimano, Switch began licensing its technology to boot companies early on. “We’ve developed this technology for the boots,” Anderson explains. “That’s a critical part of the success of this idea, but we’re really focused on bindings.”

Though he acknowledges Burton, Salomon, and K2 as Switch’s biggest competitors, he believes that the licensing gives his company an advantage when it comes to compatibility and standardization. “We believe that eventually some kind of standard will occur,” Anderson says. “Our multibrand strategy and licensing program could be a big part of making Switch’s success going into the future.”

Switch currently works with Vans, Heelside, Nice, Exo, Northwave, Nidecker, DeeLuxe, Duffs, 32, and it’s own line Flexible. According to Adams, Vans is clearly the strongest boot partner. By offering compatibility in a number of categories and price ranges, Switch presents customers greater options.

While staying focused on one product has contributed to Switch’s success in growing the category, it can be a drawback as well. In order to remain competitive, Adams says they have toyed with the idea of expanding into other related snow products. “It has been a strategic decision of ours to diversify, to add products,” he says, “but right now the opportunity on snowboarding boots and bindings is significant. At some point we will want to diversify to add dimension and value to the brand as well as the category we enter. We’d be less likely to add snowboards because we don’t see how we can add value to that category. We’d be more likely to do something in snowshoes.”

Marketing Challenges

Overcoming resistance to the concept of step-ins was one of the biggest challenges Switch faced in the beginning and is still battling today. “I think this past winter has been kind of a transitory year,” says Roach. “Going from a question of whether step-ins were a worthwhile investment for both consumers and retailers to make, to really reaching critical mass and also a critical performance for it to be a viable product for the future.”

Roach says there is more acceptance on all levels. “Consumers are embracing the retailers that are accepting step-ins into the shop,” she explains. “But on top of that, there’re professional riders who are riding the products now, and that’s really helped out a lot.” The Switch team includes names like Axel Pauporte, Rob Dow, Jay Nelson, Marc Franc Montoya, Jason Smith, Leigh Coats, Tina Mornval, and others.

And while competition is growing, Roach believes the entrance of bigger players continues to legitimize the category. “I think overall it’s a net positive,” she says. “Really we benefit every time the step-in category is validated.”

The Future

It’s the overwhelming opinion of the folks at Switch that advancements in snowboarding lay in further development of boots and bindings. “I think there are solutions to the connection of boarders to snowboards that are beginning to be actualized,” says Roach. “I don’t feel like anybody, has gotten it completely dialed. But that connection process in the future probably isn’t going to involve straps. And this evolution of product we’re going down the path of, it’s really for a purpose that is performance. It’s not convenience.”

As far as the future of Switch goes, the company faces the same issues as the rest of the industry-survival of the fittest. “When the industry really does change to a slower pace, with less product being sold and less people on the hill,” Anderson says, “there’ll be some pretty serious changes for Switch and for a lot of other companies.” “I think there are solutions to the connection of boarders to snowboards that are beginning to be actualized,” says Roach. “I don’t feel like anybody, has gotten it completely dialed. But that connection process in the future probably isn’t going to involve straps. And this evolution of product we’re going down the path of, it’s really for a purpose that is performance. It’s not convenience.”

As far as the future of Switch goes, the company faces the same issues as the rest of the industry-survival of the fittest. “When the industry really does change to a slower pace, with less product being sold and less people on the hill,” Anderson says, “there’ll be some pretty serious changes for Switch and for a lot of other companies.”