The Surfboard Warehouse was a class project started by now 29-year-old Chris Hough during his junior year of college. After that class, Hough and wife Cristina decided to put the project to the test—the real life test, that is. The couple opened the online-only surf retail shop in July 2005 , with the idea of creating a website where customers could order a custom surfboard made from the shaper of their choice.
“We quickly grew a good reputation and began selling boards from some of the best shapers in the industry,” says Hough. “Back then it was simple, we weren’t liked because we were different. We’re still not liked, but I was told early on if your competitors hate you then you’re doing something right, so it’s all good!”
Since its initial launch, the company has implemented a retail model similar to that of Netflix that puts a different spin on surfboard fin sales, which has been readily embraced by several major fin companies and surfers alike, according to Hough. The program, dubbed Finatics, has been operating for the past three years and is done completely through a customized back-end computer system the company built.
We caught up with Hough to hear more about the strategy behind Surfboard Warehouse’s business model, and what the young business owner has up his sleeve for 2012.
How has the market changed since you first started the business back in 2005?
Back then, no one had web sites. We didn’t even have a shopping cart, it was call to order. We would get everything straight with the customer as to their board order, then order the board from the shaper, and have the shaper ship the final board to our customer. We were, and still are, a retail shop— we buy boards/accessories at wholesale and sell them for retail— we just don’t see any of our custom boards (In person anyway). We have a huge stock of everything else, I have been told by the fin companies that we have one of the largest in-stock selections of fins they’ve ever seen, and that’s not even talking about the ridiculous amount of track pads leashes, and board bags we have in stock. Currently we have a warehouse in Valrico, Florida, but we’ll be moving again soon for the fourth time because we’re running out of room.
Fast forward to now, everyone has a website, things aren’t simple. There’s lots of competition online. If you sell one surf related hard good online you’re our competitor, and if you’ve never sold one thing online and you’re a local shop, you’re still our competitor. Also, surfers that sell their stuff used on E-bay and the manufacturers that sell off their own retail sites. So that basically encompasses everyone, anywhere. Again, if I think about it, it scares me, just like the “economy” or what’s “trending.” Our competition is endless, but the mathematical equation is simple. We just have to do “it” (our niche) better than “they” do.
How have you measured your success in the market?
We’ve grown 35% plus every year for the past 3-plus years, this January was up 318% over last January. If you added up all the custom work we’ve done with our site we’ve easily dropped $100K on it since the beginning and it shows. Lucky for us early on hard goods companies started contacting US and asking if they could be a part of what we were doing with the custom boards and now we’re a top ten account for almost every accessory company we sell —and we sell everyone.
Can you explain a little more in-depth what your Finatics program is all about?
Everyone over complicates it. It’s very simple. It’s another idea of mine that took over a year to implement and get all the fin companies on board with. Finatic will be 3 years old in a few months and it’s really starting to blossom! Basically, Finatic is a one of a kind program that’s modeled after Netflix. While the plan follows the Netflix model closely, it wasn’t easy to implement. We had to build from scratch an entire front end and admin end program to handle all the subscribers.
A customer signs up, it’s $9.99 a month—Promo’d at .99 for your first month—and they have access to every single fin that FCS, Futures, and Kinetic makes. They use our system to pick 3 fin sets they want to test. We try to send them their top choice, but based on availability, we may send their second or third. The customer may keep the fins as long as they like, surf on them wherever they want! As long as they keep their account current there’s no deadlines. Whenever a Finatic member is ready, they slip the fins back in the prepaid envelope and send them back, we receive them, update their account so they know they’ve been returned and the customer updates their top three and the process starts again. Some Finatic members try 3 sets or more a month others seems to use it as a way to get their hands on the newest hottest fins for $9.99 a month and keep them for a while until the next latest and greatest fins come out. Still others seem to check out fins for particular surf trips their headed out on.
It makes us feel so good to know we’re helping shape the industry, creating better more informed surfers! Honestly a program like this is exactly what the industry needs, with many fin sets retailing over the $100.00 mark this year, you want to know what your getting! We’re finishing the programming for Finatic fin reviews, so that retail customers and Finatic members alike can see reviews from Finatic members that are actually testing the fins.
What has your shop done to give back to the local community and the overall action sports community as a whole?
We’re land locked for 60 miles and our closest beach is on the gulf of Mexico so we can’t exactly “give back” to our local surf community. Although Gulf surfers are sick and hardcore, shout out! I guess Finatic would be our “gift” to the action sports community. Honestly, we want to give everyone the chance to get their hands on the best fins, and let them try them all! If a $100 set of fins is for them then they can make that decision, with the proper information at hand, literally. You don’t have to have a “bro” at the local surf shop to sneak you a set of fins to try anymore.
That begs the question, where and how often do you surf?
I drive, and I drive, and drive some more. It was easier when gas prices were lower, but higher gas prices just make you get better at forecasting if you’re land locked, you don’t want to waste gas money for nothing! I drove to an island in the Gulf (forgive me if I don’t say where, but you know the code) just last week, surfed waist to chest with one of my buddies and had a blast. Nothing big just relaxing and fun. Just because I don’t live on the beach doesn’t mean I’m not there at sunrise!
I grew up in Tampa, and started surfing when I was about 14 or so with a group of my friends. I was one of those over stoked groms, who would figure out a way to make the 2 hour trip to the East Coast whenever there was swell. Here’s the funny thing, Florida surfers are some of the most passionate you’ll ever meet and we really don’t ever get any “surf.” Look at Slater, look at the Hoobgoods, look at the guys who started …LOST. We’re passionate, we love surfing. and God as our witness we may not have the best waves, but we’ll change the industry like we do.
What’s one key lesson you’ve taken away from running your own business?
What influenced the business model?
The surf industry, our customers, luck, God— you name it. We never stand still. My favorite thing to tell everyone all the time is that “We innovate, and we don’t imitate!” It’s a very important part of my philosophy. Let every one else imitate us—they can try and catch up, but by the time they do we’ve moved on. We’re about 3 years ahead of them and in internet time that’s a lifetime.