AMERICAN WINDSURFER: At the end of the millennium, where’s windsurfing at and where’s it going?
NEIL PRYDE: I’m an eternal optimist. I believe that windsurfing has crossed the threshold of surviving and we are seeing growth in a viable sport. Much of this is coming through improvement in the equipment. It’s gotten a lot lighter. You don’t need as much equipment as you used to have to go to the beach with.
You can now plane in wind speeds of 7 or 8 knots, so you have many more places to sail. Secondly, the power range of the modern rigs is so wide that you need only 2 or 3 rigs and can cover almost every condition. All this has changed the dynamics of the sport dramatically. I think people are just now starting to realize this.
The other important area is the realization that windsurfing really needs wind and to really optimize the sport, you have to be prepared to travel to resorts. Just like skiers and snowboarders have their resorts, you have windsurfing resorts. The growth of windsurfing travel is very encouraging. We see it in our business. More and more of our equipment is going into rentals. People are renting not buying. Now that’s not great for the dealers and people who make a living from selling
equipment. This we accept in short term. There is going to be some pain from this.
AW: With this prognosis, where do you see the spawning grounds? How do we get new windsurfers hooked so that they will go to the windy resorts?
NP:This is probably the most difficult area, because it’s different everywhere. France, for example, is a country that has a long coastline. A lot of people live near the sea, so people look to the sea for recreation, naturally. It happens from friends, family, girlfriends, whatever. They look into the sport. There are schools. There are even government programs promoting it. Maybe it is not a very formal organization, but there is a structure there that gets people into the sport.
Germany is a different situation. It is landlocked and there are no good places to enjoy the sport within the country itself. So it is more difficult to encourage young people, even though they do have a very well-developed teaching system. But it doesn’t get people hooked. This is probably why the growth of the sport in Germany is not as strong as in France, where the sport is quite popular. Germany has problems. Let’s face it, there are 80 million people in Germany, so there is still going to be a fairly good-sized portion of people who will talk each other into going on holidays together and picking up windsurfing this way.
AW: Wasn’t there a survey that showed windsurfing as the number one sport people want to learn?
NP: I think it was the newspaper in France that ran the survey. That’s correct. I think windsurfing is visually very exciting. It’s an exciting sport to watch. That’s its first selling point as a sport. And there’s a natural, “Wow, I want to try it.” Given the opportunity, I think a lot of people want to give it a go. Probably this is where the failure is. People’s first experience is where a lot of them fall over the first hurdles. They are attracted to it because of the visual, but they find it physically very difficult when they try it. So they give up.
On the other hand, they might be very lucky and go to a place where the conditions are right and there’s somebody that’s patient enough to teach them. And bingo, they’re in. So it’s a bit hit and miss. I think visually it attracts people, but then people need to get over the first hurdle.
AW: Is there something that the industry can do to make this hurdle less challenging?
NP: I think the main thing is to keep working on making the equipment better, lighter and easier to use. I’m not sure the industry can support everything that has to be done. But I think this is where the dealer has a crucial role, because this is the person who has direct contact with buyers and potential consumers. Probably the most influential person here is the dealer, and the good dealers have schools. They are aware of what’s needed to turn people onto windsurfing and they do it.
For the industry it is difficult, because we sell to the dealers. The dealers sell to the public. So as an industry, it’s difficult for us to be too involved in all the teaching programs while
at the same time providing equipment. I think, more than anything else, we need an injection of new dealers.
AW: So where’s the source of inspiration going to come for new dealers to come into this water?
NP: Oh, we see it. You see new dealers coming into the sport, and they usually come in with a burst of enthusiasm. You see the business pick up. It happens. It’s not happening as much as we would like, but it is happening.
AW: It’s happening in South America, isn’t it?
NP: That’s what I feel. You’ve got an enthusiasm that we see for the sport in a lot of the so-called newer markets that is super encouraging. South America, Eastern European countries, even in Asia, we’re seeing quite high levels of enthusiasm and it’s great to be part of that as a company. We’re actually putting a lot of energy into growing the sport. We sponsor events in Estonia, Latvia and Lithuania under the umbrella of the Baltic Cup and we have also supported the “Asian Windsurfing Tour”. This means putting money into and presenting five events around Asia. We are also involved in events in the Caribbean and South America and we are getting super levels of enthusiasm.
AW: Now, what’s this rumor I hear that you’re talking about retirement?
NP: [Groan] I still enjoy the sport and the business and I have no immediate plans to get out. Obviously, we’re not immortals. Unfortunately none of us are immortals, huh?
AW: How old are you now?
NP: I’ll be 60 this year. But I am pretty active and fit and race my yacht still.
AW: You’re remarkably accessible. The communication within your company is outstanding.
NP: That’s one thing I think we’re forced into. We are in Hong Kong, where we have zero home market and everything we sell is to another country. Communications are the absolute essence of our business. Other brands built their business on a home market and took it somewhere else. We didn’t have any home market. All we had was Hong Kong with nobody to sell to. So it’s a huge leap to have a global perspective on business. This I think is our strength. But it was a weakness when we were building, and it made it very expensive and perhaps painful. But once we built it, we’ve automatically become a global player and we are certainly the most widely distributed brand in the business.
AW: Tell me about the infrastructure of your communication? It seems like, with your busy schedule, every time I e-mail—
NP: Well, you just hit it—e-mail. That’s the key. That’s what’s making things easy today—electronic communications. It’s just making it so much easier to do things—marketing, product information, feedback to us. Everything relating to running the business is just so much easier today, because of electronic communications. The use of the Web to put out information, not only to the public but also to our distributors, speeds up the whole process dramatically. This is going to be a real boon to us. I am quite excited about it.
AW: Look into the new millennium. What would you like to see happen for windsurfing?
NP:One of the things I’d like to see, is getting the Olympics as a more representative presentation of the sport than what it is today. We’re in the Olympics, but the Mistral one-design class is not really relevant to what most of the world practices. So I’d really like to see windsurfing as we know it, in the Olympics.
AW: That’s interesting coming from a sailor and a yachtsman like yourself.
NP: That’s what makes it so odd. Yachting and sailing are not windsurfing. Windsurfing is a very unique sport. It’s not to be mixed up with yachting or even sailing, which are wind-driven recreation on the water. Windsurfing is windsurfing. I’d really like to see that unique form of the sport in the Olympics —where we’d have a true representation, with every young kid in the world eyeing it.
I am actually quite satisfied with the way the sport is going. Of course I would like to see it bigger and more popular, but in general the trend I see is quite positive. I think as more windsurfing resorts develop around the world, we’ll see more people thinking about and planning for windsurfing vacations and travel just like skiers and snowboarders do. This will be progress for our sport, because once they get hooked, they go to these resorts and are motivated, they come back and become part of the sport. Renting is an option. It reduces the cost. The cost of travel becomes easier, because you don’t lug expensive and heavy equipment. All these things are going to lead to a regeneration and growth in enthusiasm.
AW: We did a survey recently and 81.1% take an annual windsurfing vacation. 87.4% take 2 or more each year, and 66.9% fly to their vacations!
NP: Windsurfers are very mobile as a group, that’s for sure. That’s one of the key issues, I think, when you look at the industry. People tend to judge the industry as to whether it’s going up or it’s going down by saying, “Oh look how many boards are sold or how many sails are sold. Are we selling less of this and that? Oh, the industry is going down.”
But when you look at the total spending on this sport, including hardware, and you add up the cost of the clothing, wet suits, travel, the motor car and the petrol to get where you are going—all this is part of the sport. When you look at that spending, I’m sure you’ll find that it’s growing. Plus the vacation accommodations and all the rest of it, that’s part of the sport. When a skier adds up how much he’s going to spend on skiing, he takes into account the lift tickets, the cost for the ski lodge. That’s all part of the cost of the sport. So in windsurfing, the hardware is not the only part that’s driving the business or the industry. I don’t think everybody has quite realized that yet.
AW: What would you want to be remembered for? Your name certainly is world renowned. People are constantly amazed that Neil Pryde is a real man. [Chuckle] How would you like to sum that up?
NP: I never thought about it, to be honest. Of course, I suppose the most important thing is to leave behind a company that is a leader in the sporting industry—with a reputation for great products and quality. I think that is enough, actually. That’s the satisfaction. You feel that you have built a brand that is meaningful and valuable and remembered.
AW: When you started in this thing, did you ever think you would get this far into windsurfing?
NP: Windsurfing had not even been invented when I first started being involved in sail making. Windsurfing was invented about 1967, ‘68. I started sailing in 1963.
As a company we didn’t get into windsurfing until about 1976. But you’re right, we had no idea how involved we would become. When we started making windsurfing sails, it was just another
customer who needed sails. We didn’t think that we would be right in the forefront of driving and developing the sport. It was something that just evolved.
AW: Are you happy it happened?
NP: Yeah. I mean, it’s been very satisfying. Obviously extremely satisfying. Maybe it didn’t make us very rich, but it’s very satisfying. One always hopes that you can go out of the business with a good return, that you can live on comfortably for the rest of your life. That’s always a goal, isn’t it? I think that for every business it is. We have of course been quite successful and the company is financially strong.
AW: I know you had bad years, years when you thought you were going to lose the company. How did you deal with those bad years?
NP: Well, you just go ahead. You find solutions. That’s the simple answer. You never give up. You just keep working at it, and if you have enough fight, you’ll find a solution.
AW: Sitting now and looking back at the challenges that you had and how everything had to work together to bring you to where you are today, what comes to your mind as the single element that held everything together?
NP: In terms of my own personality or style, I am naturally a very competitive person. All my life I have been in sport. I came into this business from sport, being a competitive sailor. That’s probably the most important thing that’s driven me. You want to be Number One.
Secondly I had good grounding in business school, being a professional accountant. I came out of an industry with a good financial background, I think that gives you the discipline to know your limits and where you can operate, where you can not operate. That combined with a very competitive spirit makes a pretty good start toward making a success out of something.
The thing is, there is a large element of luck in this. I think there’s no substitute. Everybody needs a certain element of luck in anything you do. Sometimes maybe you say you don’t have to be lucky, but you don’t want to have bad luck! [chuckle] You need luck, that’s for sure. You get the breaks and when you get the breaks, you have to be smart enough to know this is an opportunity: Grab it and go with it. I think these are the key elements in building a business.
Once you’ve built the business, I think it’s probably a different skill to keep the business running. The key to it, is to be able to keep on evolving as market situations change. Let’s face it, this business has changed a lot and I think probably my other attribute, if you want to call it that, is that I’m pretty flexible. Even though I might be stubborn and competitive, if I have a fixed idea about something, if I see it’s not working, I’ll change 180 degrees. I’ll change my mind very quickly. If you talk to any of my people, they find it pretty frustrating because they’ll say that I’ve changed my mind a thousand times. You have to. If you see that it’s not working, you can’t go down all the way to the end. You evolve and you make sure the company evolves with the new circumstances. Businesses are a very dynamic environments. Everything is changing by the day. I mean, Internet didn’t exist 4 or 5 years ago and now we are using it daily. I think the ability to accommodate these changes is critical.
AW: Speaking of changes, any comment about North/Mistral acquiring F-2 and Fanatic and developing a kind of a monopoly in windsurfing?
NP: I’m not concerned, because historically monopolies seldom succeed. Sailor consumers are going to buy what they want to buy. They are looking for the right product at the right price. I really don’t see how a monopoly is going to be successful in the sporting goods industry anyhow. I could understand if there were some logic in what they were doing. For example, if you consolidate all the manufacturing in a single factory, you get economies of scale in manufacturing, but that doesn’t seem to be what they’re doing.
AW: What are they doing?
NP: Well, that’s a good question. I mean, nobody knows, I guess, but what we hear is that manufacturing is still separated and even subcontracted. Mistral boards are made by Cobra. It doesn’t seem to have any logic. So I don’t see any threatening moves in this that are going to impact us. I am sure they are going to try to exert pressure on the market and force dealers to take their products. But dealers are humans. They don’t like monopolies. I think they’ll react very negatively to this. And as long as there are alternatives in the market, not everybody has to buy their brands. So I am skeptical.
There are very few times that monopolies succeed. Actually, if you look at history and start asking yourself, “How many mergers and acquisitions actually succeeded in adding shareholder value?”, the answer is a very low percentage of success rate. A huge number of mergers go on, but in the end, you look at the balance sheets of these companies after they merged and you find that not that many of them really succeed. Let’s face it, windsurfing is a small industry. The volumes are low. I am just skeptical that they’ll succeed.
AW: Is there a danger that this monopoly could destroy the good companies they’ve merged?
NP: Oh yes. I think there is a very real risk, because to keep a brand alive, each brand needs separate product design. It needs its own marketing. All these elements that existed when the companies were separate are still going to exist even when they have merged. Otherwise brands die. I think what will happen is that commercial pressures will start forcing cost cutting. Marketing budgets will get cut. The products will lose their individuality. Pretty soon some brands will start disappearing.
You only have to look a few years ago when an American investor bought Fanatic. Then he bought Copello and wanted to pull all this together. Then
he bought Alpha. Look at it today. Alpha has
disappeared. Copello has disappeared.
AW: Right!
NP: It happened. So I think you’re correct. I think the real risk is that we will loose these brands. So actually, what’s been gained? So I’m a skeptic. Let’s face it, we’re in a sport where the brands are more than just a brand name on a piece of hardware. I think windsurfing is a very individualistic sport. I think a lot of people’s lives, personalities and feelings have gone into developing these products, especially in boards. They have shaped the products.
I think when people buy a board, they don’t necessarily buy an F2 board, they buy an F2 board shaped by Peter Thommen. That’s in danger of being lost in this whole thing. Even sails are a little different because a sail is an aerodynamic wing. It’s not an individually shaped product like a surf board. It’s created. It’s mass produced. If it’s the right shape and it has the right aerodynamics, it works, no matter what brand name is on it. But the brand names in the sail business have the resources to produce the right aerodynamics and the right shapes, so the brand name is a lot more meaningful than on the board, where shapers quite frequently change their minds about what the right shape is.
Look at surf boards. I mean there are hardly any brands of surfboards in the world that are internationally distributed. It’s a very custom shape oriented product. I don’t think surfboards are very much different [from windsurfing boards]. That’s why I say that in something like F2, the character of the brand is actually in the people more than in the product. Now that’s the sad part. However, we’ll see what happens.
AW: What do you think will happen?
NP: My gut feeling is that 4 or 5 years down the track we’ll see that some of these brands will disappear or they’ll be back, perhaps independent again. The ones that are existing will be on their own again. I have the feeling that somebody like Klaus Jacobs who is an industrialist, is probably not committed personally to the sport. He’s treating this as an exercise in building a company and if it doesn’t succeed, he’ll drop it at a certain point and go in another direction.
AW: So in essence, the whole sport is riding on the whims of one man.
NP: That’s one of the problems we have about being such a small industry and a sport, unfortunately. I mean, for a major industrialist like Jacobs, I guess this is relatively small money. This is one of our problems.
AW: What do you see your role here, if any at all?
NP: We are not going to adapt by doing anything special. We are just going to go on doing what we are doing already, which is trying to make good products and providing good service and supporting the sport where we can do it.
NP: So if Mr Jacobs comes and offers you billions, will you sell?
NP: No.
[Chuckles]
NP: Billions, probably yes.
[Laughter]
NP: Millions, I’m not sure. [Laughter]
NP: Of course, everything is for sale. Let’s face it, there’s a price for everything in this world. We would think long and hard, put it that way.