Success, Santa Barbara Style: Patagonian Sexwax With A Side Order of UGGS

 

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A version of this article previously appeared in Forbes.

When you can live where you want to live and make money doing what you love to do, you are, by my definition, a screaming success.

Six outstanding entrepreneurs have created this sweet flavor of success in one of the most beautiful places on earth – Santa Barbara, California.

Santa Barbara has become a high-tech startup mecca, rivaling cities many times its size. The latest evidence of the city’s dynamic startup ecosystem is the recent announcement by Citrix to investment significant resources in the Santa Barbara Innovator’s Program.

The community is blessed with a temperate climate (average high temperatures between the mid-60's and mid-70's °F), which motivates accomplished people, who can afford to live anywhere, to make Santa Barbara their home. Many of these individuals become restless in their youthful “retirement” and begin investing and advising young companies.

Combine this significant pool of sophisticated Angel capital and expertise with UC Santa Barbara’s world-class entrepreneurial program and throw in a critical mass of entrepreneurs bold enough to build businesses around their passions, it’s understandable how a modest-sized community has produced so many successful tech startups. From Lynda.com’s recent $1.5 billion dollar acquisition by LinkedIn to Bessemer’s substantial investment in ProCore, AppFolio’s recent IPO filing and Sonos’ $130 million secondary, the Santa Barbara tech scene is unquestionably on fire.

However, less obvious is Santa Barbara’s rich history as a hotbed of lifestyle startups, a number of which have generated billions in revenue and garnered worldwide recognition.

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Lifestyle businesses are typically looked upon with derision by investors, as they generally do not have economic metrics that lead to large exits. However, a number of Santa Barbara’s “lifestyle businesses” are anything but small.

As Emmy Award winning comedian Bill Grundfest aptly points out in this video, entrepreneurs should seek the intersection of the things they enjoy doing and the tasks which will make them money. Starving artists pursue vocations which no one will support financially while workaholics labor at jobs which are often lucrative but offer no intrinsic rewards.

6 Entrepreneurs Who Conquered The Magical Intersection Of Money & Fun

image002Flip Flop Millionaire – Most fashion entrepreneurs are happy to have one huge hit. UCSB alum Doug Otto had two. In 1974, he began making flip flops in his Goleta garage and drove up and down the California coast, selling them out of his van for $10 each. According to Doug, “productivity fell dramatically whenever the surf was up.”

The following year, Doug traveled to Hawaii to surf. When not hitting the waves, he sold his flip flops to several surf stores, which locals called “deckas.” Doug morphed this Hawaiian slang and christened his company “Deckers.”

In the mid-1980’s, while on a rafting trip in Colorado, Doug noticed that the guide had modified his sandals with a velcro watchband strap to keep them on his feet when he stepped in and out of the river. This humble innovation resulted an entirely new line of footwear, the Teva sports sandal. Three decades later, it has matured into a multi-hundred million dollar product category.

During the early 1990’s, Doug came across his second huge hit. While surfing in Australia, he noticed that the local surfers wore sheepskin boots to keep their feet warm. In 1995, Deckers purchased the UGGS brand for $16 million. During its 2014 fiscal year, UGGS sales are estimated to have exceeded $500 million, while Deckers’ overall revenue was in excess of $1.5 billion.

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Hot Wax - Dr. Zog, aka Fredrick Herzog, just wanted to surf after he graduated from UCSB. To fund his passion, he began shaping and selling surfboards in 1968 from a small shop. Not satisfied with the quality of surf wax currently on the market, he decided to make his own.

In 1970, Zog closed his surf shop and focused his efforts on formulating a better wax. By 1972, he had refined his product, which he mixed in his garage, packaged by hand and sold to surf shops up and down the California coast, from Santa Cruz to San Diego.

He selected the name “Sex Wax” as an irreverent homage to Madison Avenue’s obsessive use of sex to sell even the most mundane products. His cheeky marketing (“The Best For Your Stick,” “Quick Humps,” and “Dream Cream”) fueled sales and caused High Schools to ban T-shirts sporting the Sex Wax logo. Like all attempts to limit young people’s access to a product, the moratorium had the reverse effect, causing sales of Sex Wax merchandise to explode.

Today, Zog’s wax product line is used by surfers, snowboarders, musicians and hockey players. By following his passion, Zog created a globally recognized brand, in which apparel sales account for over 10% of the company’s total revenue. This is especially impressive, considering that the Sex Wax logo has never been licensed to a third-party.

image004What's SUP? – In the 1970’s, Wardog was an avid surfer and skateboarding. By the 1980’s he added windsurfer to his list of water-based passions. Shortly thereafter, he met a fellow windsurfer, Deb, who became both his business partner and his wife.

Throughout the 1990’s, Wardog and Deb financed their water sport activities by testing surfing products and selling their unique Wardog surf fins. In 2003, they discovered paddle surfing and two years later, they founded Standup Paddle Sports, opening the first retail store in the US dedicated solely to standup paddling. According to Wardog, “We registered the domain www.standuppaddlesurfing.com on October 21, 2005, before the sport was even referred to as ‘standup paddle surfing.’” A decade later, Standup Paddle Sports has become a leading SUP brand, serving customers globally.

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Bones Brigade – George Powell didn't realize he was going to change the skateboarding industry when he began experimenting with polyurethane skateboard wheels, he was just trying to create a better skateboard for his son. From those early tests in his kitchen, Mr. Powell launched the Bones wheels brand in 1977.

The following year he partnered with 19-year old Stacy Peralta. Together they formed the Bones Brigade, which included future skateboarding icons: Tony Hawk, Lance Mountain, Rodney Mullen and Guy Mariano. According to George, “…Stacy (Peralta)… handpicked all the skaters, determining who was going to be the best of the young, just emerging amateurs, and bonded them together into a team we called the Bones Brigade. The key for him was to NOT steal well known skaters from other companies, but to start over completely with a new crew of unknown skaters, to make it fresh and inspiring.”

By 1980, Powell•Peralta Skateboards was the biggest player in the industry. Despite the ups and downs of the skateboarding market in the intervening years, Powell•Peralta remains the world’s largest skateboard manufacturers.

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A Climbing Passion – In 1953, 14-year old Yvon Chouinard fell in love with rock climbing. At 18, he purchased a junked coal-fired forge and taught himself rudimentary blacksmithing so he could make metal piton climbing stakes.

He eventually became proficient enough to produce two stakes per hour, which he sold to his friends and fellow climbers for $1.50 each. He made enough pitons during the winter months to pay his bills during the April – November climbing season. Yvon slowly expanded his craftsman product line to include other climbing gear, but by 1970, pitons still accounted for about 70% of his sales.

A few years later, while in Scotland, Yvon purchased several rugby shirts, in the hopes that their tough construction would be ideal for the rigors of climbing. The reaction from his friends was immediate. He ordered a few more and found that he couldn’t keep them in stock. The rugby shirt soon became a national fashion craze and launched the company’s now extensive clothing line.

Even though 2014 sales have been estimated to exceed $700 million, Patagonia remains a private B corporation, which allows management the freedom to pursue its dual pursuits of profit and philanthropy. (Note: Patagonia’s headquarters are located just down the road from Santa Barbara, in Ventura, California).

Fielding Their Passion – After Co-founding and helping build the leading call intelligence company (Invoca: backed by Rincon Venture Partners, Accel and UpFront), Rob Duva was ready for something that would allow him to spend more time outdoors.

His latest venture, Fin and Field, combines his experience of building great SaaS solutions for big markets with his co-founder’s passion for fishing and hunting adventures. According to Rob, "The thing about creating a lifestyle business in Santa Barbara, is that the lifestyle here isn't cheap. Fin & Field is built to support other lifestyle businesses. It's nice knowing that we're making it easier for small business owners in the fishing and hunting industry to effectively run their lifestyle businesses, while living the life of sportsmen."

Although it’s still early days, Fin & Field is hoping to join the ranks of Santa Barbara’s lifestyle legends, as they tackle a market comprised of over 37 million sportsmen and 25,000+ small businesses.

If you follow me on Twitter (@johngreathouse) I promise I’ll never tweet you about Santa Barbara surf conditions or tell you about that killer burrito I just ate.

Images courtesy of each respective company, all rights reserved.

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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