THE DAILY Goes One-on-One With Quiksilver’s Bob McKnight

Quiksilver Chair & CEO Bob McKnight

Quiksilver Chair & CEO BOB MCKNIGHT, 53, has led the company’s steady growth for over 30 years, after joining fellow California surfer JEFF HAKMAN in acquiring the U.S. licensing rights to the six-year-old Australia-based company in ’76. McKnight, who earned a B.A. from the Univ. of Southern California, took Quiksilver public in ’86, and it was listed on the NYSE in ’98, by which time the company had long since diversified its products beyond boardshorts. Quiksilver’s logo, true to its late ’60s origins in Australia, still features a wave breaking over a snowcapped mountain, reflecting products for the active life on land, not just at the beach. Today’s offerings range from apparel, boardshorts, denim, wetsuits, watches, footwear, eyewear and golf equipment (under the Cleveland brand), to surfboards and snow wear.  Continuing to stay true to the spirit of an active lifestyle out of which Quiksilver was founded, McKnight surfs around the world and is active in snowboarding, golfing and other sports.  He spoke recently with SportsBusiness Daily staff writer Jeremy Caslin about the company’s acquisition of Rossignol, its recent stock performance and his confidence in Quiksilver’s future in the face of an increasingly competitive business landscape.

Favorite vacation spot: Sumatra, Indonesia.

Favorite musician/group: Perfect Circle.

Favorite movie: “Gladiator.”

Favorite surfing movie: “Big Wednesday.”

Last book read: “The Mountain and the Wave: The Quiksilver Story.”

Favorite non-action sport to play: Volleyball.

Favorite athlete: GEORGE BRETT.

Average number of times surfing per week: Three.

Top three places to surf: Sumatra, Hanalei Bay (Hawaii), and Tavarua Island, Fiji.

Q: Quiksilver’s HQs are in Huntington Beach, California, a stone’s throw, or less, from the surf. Come clean: How often do you skip a meeting to catch waves?

McKnight: Whenever the surf’s good, the meetings get canceled.

Q: You’ve said your mantra has always been to “Focus on the lifestyle and don’t deviate from that.” What does this mean?

McKnight: As long as we stay focused on the core customer, which is the 12-20-year-old girl or boy that surfs, skates, snows, is in the lifestyle, [and] we stay focused on that customer for product and color and prints and fit and finish and innovation and technology and all that, and then we keep focused on the marketing part by using core athletes in the ads and having the right picture and putting the ads in the right places where action sports enthusiasts go to read, and we also make sure that our core distribution is healthy and that we look good there, and we have windows and in-store displays and our product looks great. If we align those three things properly then we should be sustainable forever.

Q: Is it still possible, as a global company with annual revenues over $2 billion and growing, to stay true to the counter-culture roots of Quiksilver, the “lifestyle” out of which it was born?

McKnight: Absolutely. No problem.

Q: No challenge?

McKnight: No challenge? It’s a challenge always. It was a challenge 30 years ago when we started. It’s still a challenge, but as long as we stay focused on what we stand for and what we’re all about, it’s not that hard. It’s what we do instinctually.

Q: With so much saturation in action sports apparel, how do you avoid being run over by knock-offs and other brands?

McKnight: We don’t even think about that. We don’t worry about that. We just keep our head down, do our thing. We know who we are. Our employees, designers, salespeople, marketing people come in every day, park [their egos] at the door, look [themselves] in the mirror. We know who we are and we just go attack.

Q: Who would you say are your top two competitors right now?

McKnight: Nike and Burton.

Q: How much of a factor is Nike in action sports apparel?  Is that becoming more evident?

McKnight: Yes, they’ve definitely seen the zone, they’ve identified it, they’re coming after it. They are entering it through the skate area. They’re a great company with good leadership. And I think they’ll be good competition.

Q: What are some of the other lifestyle brands you admire?

McKnight: Starbucks, Mercedes-Benz, Harley-Davidson, Ralph Lauren.

Q: Starbucks has grown globally, as Quiksilver is growing. Do they provide any kind of example or model?

McKnight: I think the only thing that we can really learn from Starbucks is just that focus of staying true to their logo, what they do, what they stand for. So to everybody in the world if you say “Starbucks,” they know exactly what that is. We’d like that to be the same with our brand, that when people say Quiksilver or Roxy or DC [Shoes], they know exactly what that is.

Q: Wall Street reacted somewhat negatively to the company’s acquisition of Rossignol in 2005, but you’ve said Wall Street doesn’t “understand most things we do.” Why the lack of respect or understanding from Wall Street?

McKnight: I wish I knew. We’ve got the ‘West Coast syndrome.’ We’re young people, we surf, we’re involved with action sports. I don’t know. ... Definitely when we bought Rossignol they did not like that. But they didn’t [either] when we bought Quiksilver Europe. They didn’t like it when we bought DC [Shoes]. They don’t like anything we do. They didn’t like it when we started Roxy. I can’t worry about that. I run this company for the long term and for shareholder value, and the whole Rossignol idea is to take our company out of the limited board sports space and get us into the board sports plus outdoor, which is a huge space. ... It sets us up for the next ten years of growth and profitability, and so if they don’t get it, well, too bad, but I think in a few years they will get it.

Q: What have been the biggest obstacles with Rossignol?

McKnight: It’s a hard goods company and hard goods are tough. It’s weather-dependent, in terms of the skis and all that. I think when we add the apparel piece, which is more winter and summer, and more lifestyle and more ski wear and outerwear and fashion wear, I think it’ll limit the risk of just being so tied to snow conditions. Right now it’s very weather-dependent and this year in particular has been a horrible weather year, so it’s been tough.

Q: You recently signed a distribution deal for Mexico, and with Quiksilver having offices and stores around the world at this point, where is there left to grow?

McKnight: The Midwest is a good place to start. There’s a lot of growth to do in the interior of America. Definitely Russia, Mexico, parts of South America, parts of Asia-Pacific where we haven’t really done a lot of business. I’m talking about Singapore, Korea, Taiwan, Philippines, Indonesia. India should be something for the future. So there’s plenty of places to grow.

Q: Could you have envisioned something like the X Games 20 or 30 years ago?

McKnight: Yeah. We all know how exciting these active, outdoor individual sports are because we all do them. And we know that right now there’s a cult following among kids, but all those kids 20 years ago are now the guys running these companies. If they don’t do it themselves personally, they know in their hearts and minds what it’s like, the adrenaline rush, and how entertaining and fun these sports can be, and they’re the guys running companies now. So we knew that eventually if the right CEO is in the right place they’d get it, that it would happen.

Q: What advice would you give to young entrepreneurs looking to start up a business the way you did?

McKnight: Hopefully you have a lot of money to start it up with. It takes a lot of capital. I would recommend if you have an idea go work for somebody who is close to that field and learn the skill or learn the trade on somebody else’s dime and then try to make sure you have enough bankroll to go do your own thing.

Q: Who are some of your management or executive role models?

McKnight: [Former GE Chair & CEO] JACK WELCH. [Starbucks Chair] HOWARD SCHULTZ. And obviously [Nike Chair] PHIL KNIGHT. He’s very focused in what he does.