Xcel Prepares For The Future By Keeping Its Focus On The Retailer

Ed D’Ascoli took a trip to Hawai’i in 1975 and never left. A native of New Jersey with a passion for surfing, D’Ascoli wound his way from Florida to California before landing in the only logical place for a hardcore 1970s surfer: O’ahu. As one of the handful of surfboard glassers living along O’ahu’s North Shore, he quickly slid in with an amazing crew of surfing legends, including Reno Abellira and Barry Kanaiaupuni.

With priorities firmly centered on surfing, the gregarious D’Ascoli started exporting surfboards to Japan before helping to launch the Japanese wetsuit brand Victory in the United States. Backed by surfers like Michael Ho and IPS World Champ Mark Richards, the Victory “V” was soon seen in lineups around the country. But after a feud among the Japanese owners spun the wheels off the Victory gravy train, D’Ascoli was left with a tough decision. “I knew how to do three things,” he recalls. “I knew how to glass surfboards, make wetsuits, and be a sales rep.”

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Fed up with glassing and not wanting to be burned by the repping game yet again, he rolled the dice and started his own wetsuit company. In July 1982, Xcel Hawaii, Inc. was launched from the rented bedroom of D’Ascoli’s Sunset Beach house with a couple of sewing machines and a 5,000-dollar bank loan. A wetsuit company from Hawai’i? What was he thinking?

Twenty years later, Xcel is a leading worldwide wetsuit brand and one of the larger employers along the North Shore. The D’Ascoli empire includes three retail stores, a lucrative wetsuit manufacturing contract with the military, a thriving dive-suit business, and a prestigious North Shore contest. But at its heart, Xcel — and its owner — is still centered on the simple pleasures of surfing.

TransWorld SURF Business caught up with D’Ascoli at the brand’s headquarters in Hale’iwa, Hawai’i — a 13,000-square-foot building that he and his father built themselves back in 1990. Here’s what he had to say:

Who came up with the Xcel name?

Ed D’Ascoli: An old girlfriend of mine. After my experience at Victory, I knew enough about marketing that it had to be a catchy name that had a little bit of meaning to it, but something that wasn’t too long so you can see it from a distance. We must have gone through a list of about 300 different names.

Did you imagine that this was the beginning of something you’d spend the next twenty years on?

If I knew it would turn into this, I probably wouldn’t have done it. I probably would have opened up a pizza restaurant {laughs}!

No, I didn’t imagine it could ever become so successful. I was living from hand to mouth at the time. I was paying rent, surfing, and making wetsuits on the side. Nobody really wore vests or wetsuits back then in Hawai’i.

That was right about the time the Japanese companies came out with one millimeter {neoprene}. That was ideal for us. We jumped on that and Lycra and combined them. The next year I started making fullsuits. My first two shops on the mainland were Carl Hayward’s Surf Shop and Secret Spot on the Outer Banks.

Was there a time when you said, “This has gotten a lot more serious than I ever expected it to be”?

I didn’t start working hard until about 1988 — about six or seven years into it. At that point it really became a job and we had to make a big decision. We’d grown large enough that we either had to move out of Hale’iwa because there was no place for us to go, or build our own place.

McDonald’s owned the piece of property we ended up buying. They had to unload this lot really quick because once they started building on their other piece of land across the street they discovered a huge foundation they had to remove from the old Hale’iwa movie theater. They had all sorts of headaches there, so they sold us this piece of property for less than what they bought it for.

Was it difficult finding the money to buy the lot?

Nonot really. The state of Hawai’i came in and helped underwrite the loan. My father was a general contractor, and he came out and we built the place ourselves. We saved a bunch of money that way.

I occupied only a small part of the building at first, and we rented out the rest of it. As Xcel grew, I took over more spaces.

What percentage of Xcel suits are built here?

Up until 1994, everything was built here. We played around with Mexico a little bit, but it was just a headache nightmare. We worked with a Chinese company and a Thai company and slowly helped them improve their quality. From early on their factories were nicer than anything I saw in the U.S., but at first I wasn’t satisfied with their quality, so we just gave them smaller test orders. Over the years, their quality quickly improved as I was growing. I didn’t want to own another factory, so we started having them make more and more of our suits. Today, they make most of our rubber, and most of our Lycra is done here.

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When did the retail component come along?

We always had the retail store in Halei’wa from day one. That was my cash flow — straight up. We opened the store in town in 1997 because the shops there weren’t committed to carrying the range of suits I saw there was a demand for. Most of their business was surfboards and clothing, so I understood why they didn’t want to make a big wetsuit investment. I decided to open up our own store in order to serve our clientele and have more image here. It really helps everybody out. Most of the surf shops still carry Xcel, and the shops really got people to understand what a wetsuit is all about.

How did your involvement with the Sunset Beach contest come about?

I actually started that with Reid Inouye {founder of the Hawai’i Pro/Am Circuit} nineteen years ago. I knew him from surfing, and he asked me if I would give some stuff away for prizes, make some jerseys, and put some banner up and he’d call it the Xcel Pro-Am. I said, “Shoots, why not!” I really needed that break. For a long time that contest was my only advertising.

It’s a great event. It’s the first contest of the winter season, so it’s a tune-up for a lot of guys going into the Triple Crown — especially the amateurs. In Hawai’i we’re stuck out in the middle of the ocean. It’s expensive to travel anywhere. It’s hard for our guys to get points and experience. With the Xcel, the up-and-coming locals can surf against surfing’s who’s who. It gives them some amazing experience.

If you look back over the past twenty years, has Xcel shown a nice consistent pattern of growth?

Nearly every year we’ve grown. The only year we didn’t was the year we built our facility here. That’s when I had to decide whether I wanted to grow the company more quickly or put the equity into something that would be a really solid foundation for the long term. It hurt us for a couple of years in terms of slowing our growth, but the equity we have off of this has financed our business.

What are your goals for the next five years?

I’m looking for steady growth. In the past two years we’ve been on the rise. We’ve become pretty much your third wetsuit company. As we move forward, we want to keep doing the same thing. We want to expand our market share, but stay focused. We’re a wetsuit company. I see a lot of other companies expanding into clothing or accessories. I’m just trying to get three T-shirt designs made! {Laughs} I have a backpack over here that I started designing two years ago. I just haven’t had the time to finish it. We put all our effort into wetsuits.

My other goals have to do with management. I’m training some people to get more involved with product design. I turned 50 this year. In five years I’m going to be 55. How well connected will I be then? Even now, I don’t surf like I used to when I was eighteen, and an eighteen year old will feel a wetsuit differently than a 50 year old will.

So I’m trying to give my staff my insights and judgment about how to develop their new ideas. I’m not trying to shove my ideas down their throat.

It’s the same thing with our marketing. One of the turning points for Xcel happened three years ago when we hired a young guy out of the TransWorld group of magazines to handle our ad campaigns. I told him, “Here are your parameters. This is what we want to say in our advertising — now put it into your own words.”

Every time he asked me what I thought of something, I just told him, “I don’t know. You’re the guy. You don’t want to hear from a 40-something guy. I want your ideas, not your ideas according to me.”

Was it hard to let go like that?

It was really hard. I remember we set up a photo shoot back when we had Archy {Matt Archbold} on the team in this classroom. {National Sales Manager} Greg Wade and I were sitting in the back of the room, just looking at each other, and saying, “We’ve got to do it!” Finally, we couldn’t stand it anymore, so we left and had a beer {laughs}.

That’s what started it. For me to be able to walk away from our marketing and have enough faith in these guys was a huge turning point. When you run a company, you’ve got to be able to recognize talent that fits with what you want to do.

What’s your philosophy about wetsuit design?

We’re not a one-feature wetsuit company. It’s a system, and that’s always been our focus. I don’t want to be the guy who has the suit with the least amount of panels or some type of dart seam that causes the rubber to bunch up under your arms or behind your knees. We don’t let the marketing department control the design of our suits. I guess it really comes down to we’re not a one-feature wetsuit, nor do we let a single feature overpower the ultimate goal of having the warmest, lightest, most flexible, most comfortable wetsuit.

Are you satisfied with the support retailers have given Xcel?

Absolutely. We want the retailer to make money, so we hold margins. Very few of our stores have to put our stuff on sale. The stores who are the tough payers take a lot of energy, time, effort away from the stores who are really behind us. Our goal is to work with the retailers who do a good business and believe in our line. For those stores, we do all we can to make our line profitable for them.

There are some accounts that we’ve been after for ten years, but we won’t open the guy down the street because account quality is far more important to us than account quantity. We’ve been getting into those stores just in the last six to eight months. These are shops who are set in their ways and have been with certain companies for decades, and we’ll go in there and become their second-place or top-selling wetsuit within two weeks. What we’ve been telling them will happen actually happens, and that’s gratifying for everybody.

Your competitors are also apparel companies who have some pretty big marketing budgets and sophisticated customer-service systems. Is that a big challenge?

At the level of advertising that we’re doing right now, we should be an apparel company. But by not being a clothing company and not being a large company, we don’t have those layers of middle management and the overhead that comes with them. We run a lean and mean machine. Let’s face it, the surf-wetsuit market isn’t that large, so you’ve got to be efficient and effective with what you do. You won’t see a Koa wood desk in my office.

How does your office in California help your business?

Our goal — which we’ve attained this year — is that anything hanging in stock we’ll ship to retailers 24 to 48 hours after getting their order.

For retailers, wetsuits are expensive items. The average retailer may only carry three mediums and three larges. If he has a good weekend, he could sell through half his stock. Is he supposed to wait twoly than a 50 year old will.

So I’m trying to give my staff my insights and judgment about how to develop their new ideas. I’m not trying to shove my ideas down their throat.

It’s the same thing with our marketing. One of the turning points for Xcel happened three years ago when we hired a young guy out of the TransWorld group of magazines to handle our ad campaigns. I told him, “Here are your parameters. This is what we want to say in our advertising — now put it into your own words.”

Every time he asked me what I thought of something, I just told him, “I don’t know. You’re the guy. You don’t want to hear from a 40-something guy. I want your ideas, not your ideas according to me.”

Was it hard to let go like that?

It was really hard. I remember we set up a photo shoot back when we had Archy {Matt Archbold} on the team in this classroom. {National Sales Manager} Greg Wade and I were sitting in the back of the room, just looking at each other, and saying, “We’ve got to do it!” Finally, we couldn’t stand it anymore, so we left and had a beer {laughs}.

That’s what started it. For me to be able to walk away from our marketing and have enough faith in these guys was a huge turning point. When you run a company, you’ve got to be able to recognize talent that fits with what you want to do.

What’s your philosophy about wetsuit design?

We’re not a one-feature wetsuit company. It’s a system, and that’s always been our focus. I don’t want to be the guy who has the suit with the least amount of panels or some type of dart seam that causes the rubber to bunch up under your arms or behind your knees. We don’t let the marketing department control the design of our suits. I guess it really comes down to we’re not a one-feature wetsuit, nor do we let a single feature overpower the ultimate goal of having the warmest, lightest, most flexible, most comfortable wetsuit.

Are you satisfied with the support retailers have given Xcel?

Absolutely. We want the retailer to make money, so we hold margins. Very few of our stores have to put our stuff on sale. The stores who are the tough payers take a lot of energy, time, effort away from the stores who are really behind us. Our goal is to work with the retailers who do a good business and believe in our line. For those stores, we do all we can to make our line profitable for them.

There are some accounts that we’ve been after for ten years, but we won’t open the guy down the street because account quality is far more important to us than account quantity. We’ve been getting into those stores just in the last six to eight months. These are shops who are set in their ways and have been with certain companies for decades, and we’ll go in there and become their second-place or top-selling wetsuit within two weeks. What we’ve been telling them will happen actually happens, and that’s gratifying for everybody.

Your competitors are also apparel companies who have some pretty big marketing budgets and sophisticated customer-service systems. Is that a big challenge?

At the level of advertising that we’re doing right now, we should be an apparel company. But by not being a clothing company and not being a large company, we don’t have those layers of middle management and the overhead that comes with them. We run a lean and mean machine. Let’s face it, the surf-wetsuit market isn’t that large, so you’ve got to be efficient and effective with what you do. You won’t see a Koa wood desk in my office.

How does your office in California help your business?

Our goal — which we’ve attained this year — is that anything hanging in stock we’ll ship to retailers 24 to 48 hours after getting their order.

For retailers, wetsuits are expensive items. The average retailer may only carry three mediums and three larges. If he has a good weekend, he could sell through half his stock. Is he supposed to wait two weeks to get his stock back up? That’s crazy! So on Monday our reps are on the road. By Tuesday we have the reorder, and by Friday the suits are back into his shop. That’s how we make it profitable for the retailer. It took us about four years of work to hit that goal. We had to make a commitment to inventory and customer service, but it also forced us to hone in on the styles that really sell and get rid of the more extraneous stuff.

We feel strongly that we’ll see more growth in surf, and it comes down to the fact that everyone in our company is focused on building the best wetsuits as possible for surfing.

Retailers can make money with us, and that’s what it’s all about. I’m a retailer myself. I know what it’s like to look at that bottom line, and I understand that every point counts. two weeks to get his stock back up? That’s crazy! So on Monday our reps are on the road. By Tuesday we have the reorder, and by Friday the suits are back into his shop. That’s how we make it profitable for the retailer. It took us about four years of work to hit that goal. We had to make a commitment to inventory and customer service, but it also forced us to hone in on the styles that really sell and get rid of the more extraneous stuff.

We feel strongly that we’ll see more growth in surf, and it comes down to the fact that everyone in our company is focused on building the best wetsuits as possible for surfing.

Retailers can make money with us, and that’s what it’s all about. I’m a retailer myself. I know what it’s like to look at that bottom line, and I understand that every point counts.