Chairman Of The Boards: Bob McKnight believes in surfing.

Is Bob McKnight the most powerful man in surfing? The claim is at least arguable, as his already vast Quiksilver empire continues to grow at an incredible rate. TransWorld SURF Business caught up with McKnight mid March at the SIA Show in Las Vegas. Here’s what he had to say about the growing surfwear company and its future.

TransWorld SURF Business: In the latest quarterly reports, Quiksilver’s sales were up again¿almost 60 percent in the United States and 50 percent in Europe. What’s contributing to this success?

McKnight: I think it’s a case where the worldwide Generation Y market¿the fourteen- to eighteen-year-old male or female¿is such a huge demographic that our marketplace has doubled.

The youth business is growing about twenty to 30 percent a year. But we’ve gotten a big kick from Roxy¿all of sudden we’re now doing a line for girls who share the same enthusiasm for sports and the outdoors as young men do.

This new group is very positive about life, and they spend about 35 to 40 percent of their money on apparel and another 30 percent on entertainment. Their entertainment is snowboarding, surfing, and all that stuff. So you start talking about 60 percent of what they spend their money on are things we have something to do with.

I think that this momentum is going to continue for quite some time. We have about a fifteen-year window, which I think holds well for everything all of us do¿surfing, skating, snowboarding¿all that stuff.

With your growth and expansion in young men’s and juniors’ lines, do you think lot of your customers aren’t ‘core surfers anymore?

I think that’s always been the case, and that’s the case for everybody like Billabong, Rusty, and O’Neill. Probably five to ten percent of all our stuff is worn by people who actually surf, skate, or do any of the ‘core sports.

But the deal is that while this Generation Y customer might go to the coast for a week during the year, he wants to look like a surfer while he’s there. And so he goes back to Des Moines, and to him, he’s a surfer¿and you’re not going to tell him any different.

This kid is the same everywhere in the world. And they’re instantaneously connected now by MTV, the Internet, advertising, magazines, television, and all the things everybody does in the media.

The trends and ideas no longer start on the West Coast, move inland, and slowly move to the East Coast. Everybody knows what’s going on immediately now. Dennis Rodman’s haircut is seen as fast in Chicago as it is in Los Angeles.

You started Quiksilver in 1976 in the U.S.¿almost 25 years ago. You, your managers, your reps, and basically everyone in the company is older now. How do you stay connected to the young kids?

We have to get our senior management to stay young. By staying young I mean by hanging out with as many of these kids and our riders as we can.

I also try to be involved with the designers and go on trips with them. I go to the clubs where they go, read all the magazines they read, look at all the stuff. And then I demand that of my other senior people.

Can you explain the corporate structure of the company?

Quiksilver was founded in Australia by Alan Green and John Law, who made Ugg boots for winter. In the summertime, they started making swimwear. So they went back and forth for a number of years between Ugg boots and boardshorts. That’s why the logo is a wave breaking over a snow-capped mountain¿they wanted it to represent both lifestyles. In time, they sold the Ugg business.

In 1976, I got to know Jeff Hakman through my surfing in Hawai’i and Bali. We were best friends. We decided to approach these guys in Australia to become the licensee of Quiksilver boardshorts in America.

In 1976 we came here, started making boardshorts, and sold them out of my Volkswagen van as we dre up and down the coast. Our first three accounts are still three of our best accounts: Val Surf, Newport Surf and Sport, and Hobie in Dana Point. We never lost a core account, but we got rid of some. We’re number one, two, or three in every surf shop in America.

In 1991 we bought their Quiksilver’s licensee in Europe called Napali, and folded it into our company as a wholly owned subsidiary. So my company, Quiksilver, Inc., is America, Europe, and Mexico. Plus we also are the licensee of Quiksilver Australia for Canada and parts of South America.

We contribute to a fund called Pavilion that does big events and pays for our big pros like Lisa Anderson, our high-level snow guys, events like The Crossing a promotional tour, and the Extreme IMAX movie. It’s really unique kind of company structure.

Is the U.S. organization larger than the other ones?

Yeah, we have about 700 people working for us. When you put us and France together, we’re probably three-quarters of the Quiksilver business worldwide. Between us, Mervin, and Napali we probably have about 1,200 employees.

You’re making a Roxy perfume now. What other expansion plans do you have?

We have two or three more years of strong growth with our young men’s business. Levi’s went from seven-billion dollars of sales to six-billion dollars. That whole JNCO, Fubu thing is slowing down. So there’s denim business out there, and why not us? We think there’s maybe a 50- to 100-million-dollar denim business we can evolve into.

Our business in Europe is growing 40 percent, and that should continue, because we’re not even present in Germany and some of the other countries.

We think the Roxy thing is a complete phenomenon. If you use Esprit clothing as a target, they were a billion-dollar company. I think we can do that.

Young women love to shop, and we’re building a brand that’s highly recognizable for that certain age group. The growth can be absolutely explosive if you hit the girls’ market right between the eyes. So far we’ve done that.

We’re always looking at deals out there. The shoe industry is interesting to us. The outerwear industry is interesting to us. There are other things that, while not as fun or sexy as buying another brand, can really help your gross margin. Like owning our own screenprinting facility.

Your ad campaign has been very consistent, some say even stale. Are you going to change it anytime soon?

Our job is to fill in the gap from coast to coast and all over Europe. The only way you can do that is by doing national campaigns. The red logo¿we call it the clicker bar¿is an icon we all gravitate around internationally. The ads are different in Australia and in Europe, but the clicker bar ties them together, so everyone thinks they’re seeing the same ad.

Now that Slater’s off the tour, how does that affect the market?

I don’t think it’s as important as it is to have a good ambassador for your company. We want the characters like Shaun Palmer, Strider, or Marvin Foster. Guys who maybe crash and burn and all that, but they’re really good for selling product. We’ve always had that strategy, and it’s worked well for us.

What will Lisa and Kelly be doing instead of the tour?

We have this giant promotion coming up called The Crossing. We’ve rented the 80-foot Indie Trader One sailboat and we’ve painted it with tropical graphics. We’re gonna take the boat and go right along the equator around the world for the next fourteen months and try to find all the best surf spots in the world.

We have Ricky Grigg on board as a link back to the University of Hawai’i to do a biology science Web site for the schools. We’re interested in the surf spots with the hook of studying the fauna, the marine life, the ecology, and the cultures of those regions. We want to gain all this experience and knowledge so later on we can maybe help develop those regions into suitable surfing zones. Hopefully we’ll do it correctly so they surfers don’t wreck them.

The Crossing is going to be fantastic because Kelly can go on a lot of these trips, and he can’t wait. He’ll be able to work on his boards, have a great time, enjoy Pamela Anderson, and come back a more well-rounded person. Then he’s gonna come back. He’s so goddamn competitive, he’ll come back and kick everyone’s ass.

Every couple of weeks there will be another group who fly to the boat in a new undiscovered, uncharted region, to find more and more beautiful surf. Don King and Jeff Hornbaker will film, and it’s going to be incredible.

Does the company plan to hold another contest in Bali?

Yeah, we definitely want to be at G-land. It’s such a consistent wave. I don’t want to say better, because on Cloudbreak’s best day and on G-land’s best day, I have a real hard time choosing.

What will it take for you to put it back there?

The politics need to settle down. I think right now it’s unsafe and the country may go into revolution at any moment.

The money’s no good. There’s no food. Plus, I think it’d be really distasteful and kind of rude for us to have a contest while the country is kind of in a meltdown.

Do you have anything else going on?

We’re doing this big millennium event. We’re taking over Namotu and Tavarua for the first week of the new millennium. We’re gonna bring down a bunch of Quiksilver founders, employees, and invite six guys or girls who represent the most modern, forward, futuristic surfing today. And we’re going to have bands on the island, and MTV will be following the whole thing.

Fiji is one of the first places where the New Year happens, and one of the plans is to go over there at midnight and have Kelly and Lisa be the first male and female to surf the first wave of the new year.

Who do you think the next surfing champ will be?

Well, Derek Hynd says Mick Campbell. I think the guys who will have a shot will be Mick Campbell and Shane Beschen. I think Taj Burrow, if he can keep his head straight, will have a good shot. Mick is prepared to die to win the championship.

After so many years, how much longer will you stay around with Quiksilver?

I still really enjoy it because I love seeing the family at Quiksilver. I really don’t run the day-to-day anymore. My job is to oversee the philosophical direction and make sure the product isn’t going too disco or whatever.

I’ve been through some good eras at Quiksilver and some really bad ones, and this one’s really fun. I’m 45 right now, so for sure another five years. Maybe 50 is the magic age, but I don’t see myself entirely removed even then. Maybe I’ll be chairman of the board and let somebody else run what I do now.velop those regions into suitable surfing zones. Hopefully we’ll do it correctly so they surfers don’t wreck them.

The Crossing is going to be fantastic because Kelly can go on a lot of these trips, and he can’t wait. He’ll be able to work on his boards, have a great time, enjoy Pamela Anderson, and come back a more well-rounded person. Then he’s gonna come back. He’s so goddamn competitive, he’ll come back and kick everyone’s ass.

Every couple of weeks there will be another group who fly to the boat in a new undiscovered, uncharted region, to find more and more beautiful surf. Don King and Jeff Hornbaker will film, and it’s going to be incredible.

Does the company plan to hold another contest in Bali?

Yeah, we definitely want to be at G-land. It’s such a consistent wave. I don’t want to say better, because on Cloudbreak’s best day and on G-land’s best day, I have a real hard time choosing.

What will it take for you to put it back there?

The politics need to settle down. I think right now it’s unsafe and the country may go into revolution at any moment.

The money’s no good. There’s no food. Plus, I think it’d be really distasteful and kind of rude for us to have a contest while the country is kind of in a meltdown.

Do you have anything else going on?

We’re doing this big millennium event. We’re taking over Namotu and Tavarua for the first week of the new millennium. We’re gonna bring down a bunch of Quiksilver founders, employees, and invite six guys or girls who represent the most modern, forward, futuristic surfing today. And we’re going to have bands on the island, and MTV will be following the whole thing.

Fiji is one of the first places where the New Year happens, and one of the plans is to go over there at midnight and have Kelly and Lisa be the first male and female to surf the first wave of the new year.

Who do you think the next surfing champ will be?

Well, Derek Hynd says Mick Campbell. I think the guys who will have a shot will be Mick Campbell and Shane Beschen. I think Taj Burrow, if he can keep his head straight, will have a good shot. Mick is prepared to die to win the championship.

After so many years, how much longer will you stay around with Quiksilver?

I still really enjoy it because I love seeing the family at Quiksilver. I really don’t run the day-to-day anymore. My job is to oversee the philosophical direction and make sure the product isn’t going too disco or whatever.

I’ve been through some good eras at Quiksilver and some really bad ones, and this one’s really fun. I’m 45 right now, so for sure another five years. Maybe 50 is the magic age, but I don’t see myself entirely removed even then. Maybe I’ll be chairman of the board and let somebody else run what I do now.

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