prAna Founder Beaver Theodosakis and CEO Scott Kerslake On Expanding Into Surf
Beaver Theodosakis and his wife Pam were slightly ahead of their time in the business world when they started rounding up their neighborhood’s old newspapers and packing boxes and turning them into recycled paper hang tags and gift wrapping for their humble apparel brand, prAna. The year was 1990-something, and prAna had exactly 7 retail accounts, mostly among climbing stores.
Today, although a lot has changed since then, Theodosakis will tell you that the company’s main values and principles remain the same. Now in a 90,000 square-foot building, and operating with a staff of about 125 dedicated employees under the Columbia Sportswear umbrella of brands, the founder still reflects fondly on the days when computers and in-depth business strategies were not yet a part of the brand’s future.
“Since day one we even made our own paper. I have one of the tags here that Pam and I made in our kitchen – this was before recycling,” explains Theodosakis. “We would gather the newspapers from the neighborhood, put them in a big blender, add some pine tree scent and some emulsifier. Then we would roll it with a slab, dry it, and print on it with ink. Each one was tied with a little safety pin and hemp string, so it shows some intention and human involvement. And we still do that with our hang tags.”
Today, as Theodosakis gives the tour of prAna’s Carlsbad, California office space, one of those original hang tags remains framed on the wall of his office as a reminder of the company’s vision, which hasn’t swayed from the early days. Sustainability remains at the forefront of what the brand creates today, but that offering has expanded significantly over the past several years. The company has seen growth in markets outside of climbing and yoga, including branching out into outerwear, women’s swimwear, and men’s boardshorts. CEO Scott Kerslake believes the brand’s story naturally lends itself to the active and outdoor markets, and the growth the brand has seen within those channels seems to support that, he says.
As a way to further support those markets, the brand has been active in the community, bringing on surf specific ambassadors like Chadd Konig and Kelly Potts, as well as branching out to represent the brand at Agenda Show in Long Beach and this upcoming Surf Expo (September 3-6), and becoming a member of SIMA to reinforce that, “we aren’t visitors, we aren’t just stopping by, but we really are a part of this space.”
We caught up with Kerslake, Theodosakis, and Vice President of Design and Merchandising Ellen Krimmel to hear more about where the brand is headed under new parent company Columbia, and it’s specific push into broader channels within the swimwear and boardshort categories.
Talk a little more about the inspiration behind the brand as it got started in your garage 20 years ago.
Beaver Theodasakis: It was fun, homemade stuff. We were dying clothes in the washing machine. It was very homegrown; from the recycled box we picked up from behind the supermarket, to the way we placed each item carefully in the box, to the hang tag made from handmade recycled paper, the branded piece of leather, and every customer got a handwritten note inside their box.
We started with seven retailers and it just grew from there. We went for thirteen years without sales reps. It was all organic growth like that, people telling stories.
The money we saved from sales reps allowed us to do more with trade. It was very much a pull strategy, to where we created so much consumer demand for the brand by having the best climbers tell the story about the product and supporting the competitions and all these good causes. The consumers would put pressure on the retailers. I don’t know how many hundreds of times at the tradeshow we’d be standing there and a dealer would walk up and say okay “show me this prAna stuff, all my employees and customers are talking about it.” We had created a vacuum, because when it landed most times it wouldn’t even get to the rep. The employees would buy half of it and the customers were waiting for it and they would buy the other half. It was very unconventional.
Was Outdoor Retailer one of the tradeshows you did from day one?
BT: Yep. 20 years ago. We’ve been at every one. We had a ten by ten [booth], and we painted a little banner. We didn’t spend money on anything that wasn’t important to the end consumer or our product. Our desks were old doors with sawhorses holding them up. We wouldn’t buy a computer.
How long did it take for you to get an office space, employees, and build that piece of the business?
BT: About a year to a year and a half. We had one 1,300 square foot space. It was in a strip mall with about a dozen spaces in it. So slowly we’d punch a hole in the wall and add a space, and then another one. Then we moved to a 17,000 square foot building, and started bringing on more employees, little by little. It was never force-fed because we never had investors or pressure to grow. It was just what felt right, how many times the phone rang, and how much stuff we made and how much money we had to make that much stuff – it was a nice working pace. If we had reps out there selling too much stuff that we couldn’t deliver, that would have been a treadmill we were on. But it was all about what felt right and what was organic. We really just let it evolve that way.
Scott [Kerslake] has been at prAna a little over five years. We got the business to a certain point. I use a race car analogy: we were winning races but the wheels were wobbling, and we weren’t going to win championships. So we brought Scott in to scale the business and really assemble a great team of people, product design, marketing, and really built up all the infrastructure and business intelligence. He created a whole new chassis which is allowing us to create this kind of growth.
Has that allowed you to expand to new retail doors in different regions? Or have you stuck with the same retail base and just elevated what you were already working with?
Scott Kerslake: If you look at the number of doors over that period of time, it’s actually been fairly steady. We have stuck to our knitting in many ways, but have gotten better on the product front, better on the execution front, so we have been able to effectively gain more market share.
BT: And it has allowed us to create product extensions.
SK: Yes, and Swim and Surf are the perfect examples. Some of those extensions have been what has enabled us to go into different channels. Sometimes we will work with four buyers at the same retailers now, when we used to just talk to one. In REI’s case, its 6,7,or 8 now. It’s really expanded our reach inside individual doors. It’s like opening new doors in that way.
Is that a marketing push that you are focusing on, or have you stuck to only the brand’s roots when speaking to the end consumer?
BT: Our roots are not specific to just the activities of yoga and climbing. We had the vision that [prAna] could be relevant to a 20-something kid going climbing in the South of France or a 50-year-old lady going shopping at Nordstrom. The brand has that much breadth. And now with our product categories expanding, I think we’ve really tried to open the aperture of the brand with the simple messages of what prAna is about: Mindfulness, living a simple, vibrant, healthy life, and building things in a more sustainable way. These are all some of our core messaging and it’s resonating with a lot more folks.
SK: You mentioned people wanting to connect to something greater, and I think that is the nugget with this company. It’s standing for something more, and attracting people into it who have a sense for that. Everyone wants that—it’s human instinct. It’s a little more visible for some than others, but everyone gets that at some point. That’s the beautiful thing about this brand and it’s culture. That’s what it inherently stands for and I think it’s attracting a broader audience. When talking about Agenda, the people who are attending that show are people who skate or surf, and they still have that instinct. So it’s an alternative to the brands in that space who are more narrowly focused, and I think that is where we have an opportunity to invite them in.
It sounds like you are really well positioned to tell the brand story to a broader audience. How has your new parent company played a part in that?
SK: They completely get it. Their perspective is to let us know where they can help. They’re not intrusive at all. They want us to be independent. They’ve been really clear: ‘We don’t want another Columbia. We don’t want another Sorel.’We want you guys to be your brand.’ But they are really good to have in our court in many areas. It’s a whole other level of expertise.
BT: Drawing on the race car analogy again, they are a good pit crew to have.
Have you been working really closely with them since the acquisition?
SK: Yes. That’s one of the cool things, too – they are just really good people. That’s a huge bonus. It’s kind of a rare thing in the business world to have likeminded souls. They are approachable and are really smart, and they don’t want to be overbearing. So far, so good.
What has been the strategy around the evolution of the brand’s product offering and broader market appeal?
SK: When I first came to prAna and I was working on strategy, I wrote in our five year business plan that one of our biggest threats is action sports companies who were coming into the outdoor space, because they had so much credibility, they were so focused, and the branding was so much more fresh than others in that industry. I've been thinking about the connectivity from that world and eco-system compared to the eco-system we are used to, and the threads that exist when you think about surfing or snowboarding and the connection to nature. I was out at the beach this morning and I was watching everybody and taking in the whole scene, and clearly there is a level of joy. People are just loving being out there. It's social for some people, it's totally meditative for others, it just depends on where they come from. But the connectivity is to wandering, and just being outdoors, and it's very similar to climbing. This company has always been very connected to nature. The color palette is very connected and inspired by nature. There is the element of being connected to physical surroundings, and then the mindfulness piece is also in some ways very intuitive to people who surf, skate, or snowboard. Because when you are surfing, if your brain is somewhere else it’s not happening. You've got to be right there. Climbing is very similar and yoga, well that's the main principle behind yoga. I think it’s an interesting thread that will give us the potential to bring people in or offer them an alternative.
In a lot of ways we are in a great position because of our connection to something bigger. Clearly the brand and the company stands for something more than just products. There is a purposefulness here. More and more people are starting to figure out, as it relates to a healthy lifestyle, that they care what kind of food they put in their body. Where does the food come from? And there is a similar connectivity around environmental issues, and then by extension ‘hey, where does that shirt come from, and how much oil and petroleum did that use, and what are the factories like? How do they treat people?’ People are waking up to this. It is a more conscious consumer. It's growing, it's happening. We hit all of those trends in an interesting way, and have potential to connect to a broader audience.
Do you feel like the brand is already crossing over into the action sports space, and are you making a conscious push for this, or letting it happen organically?
SK: If you look at how many doors we are in that represent that domain, they have more than quadrupled in the last two years. Probably more than quadrupled. I think it's definitely happening, the numbers bear that out. We are not going full tilt, because in a lot of ways we are not a full tilt company. We are a little more methodical about it and a little more low key. I think we are almost low key to a fault, so we are learning as a company that we need to be a little louder about what we're saying. It's a humble brand and a humble company.
Can you speak more about your ambassador program?
SK: Most of our ambassadors have a greater purpose in their life. They are getting kids into the outdoors, bringing young girls into surfing, they care about environmental causes. It’s actually an interesting contrast with action sports circa 1995, which was all about everyone getting into trouble. They all have good principles and are driven by that – that's one of our main focuses. We won't bring someone in just because they are good at the sport. We would rather have someone who is actually not at the top tier but who is doing stuff to give back, like Chadd [Konig] going to the Philippines to rebuild schools after the devastation there.
Going back to your question about marketing, it's just a signal of us standing for something more than just products. For sure we don't want to be just another board short company or swim company. There is much more work to do in life and giving back, so we want to have a different focus.
When you look at the product alone, is there a potential for you to continue expanding into different categories, or is that something you have plans to do in the near future?
Ellen Krimmel: We are methodically expanding into different categories. We expanded into swim in Spring 2013. We introduced outerwear in Fall 2012. I think our plate is full with the current categories, but we are always looking at ways to continue to innovate and improve the product line, and be more relevant to our consumers, and we are getting a little more sophisticated about that. You could say of course you want to be relevant to consumers, but giving the breadth of the distribution base of prAna, we have vastly different markets we are trying to appeal to. We've got the South for example in the US, which is a little more conservative than the coast. Those customers want different things. We have distribution in Asia and certainly in Europe. We have a little different vibe over here right now on the European side, and in Asia, especially if you are looking at Japan in terms of trends and how receptive they are to seeing color and what they are gravitating to in terms of prints and patterns. So you are putting out all of these different ingredients of what the customer wants in the sauté pan, and trying to serve this meal at the end of the day that everyone is going to love.
We are in Yoga/Fitness, Outdoor/Active Lifestyle, we are in neoprene, and are exploring some different areas of that category for Spring 2016, including some much more earth-friendly materials. We will be looking more closely at accessories. There is certainly room for evolution there. We are in wearable accessories – yoga mats, bags – and are expanding those categories in terms of the breadth and depth of the offer.
SK: In looking at our Fall  catalog, you really get the idea that our line expands into a lot of categories. The obvious expansion for us is something like footwear, and a much more robust accessories program. Footwear is tough, it's a whole different business. I'm not saying we wouldn't do that in the future. When you talked about the strength of Columbia, they are really good at that, between Sorel —a beautiful brand where they execute flawlessly—and even Columbia, which is quite good. So we can draft off them a little bit. But I think what we need to do is focus. We are in the right categories we just need to execute consistently across all of them to be successful. And maybe speak more clearly and loudly about our story to make sure everyone hears it.
I thought it was interesting you talked about Asia and Europe. Do you segment your line to specific retailers in specific regions?
SK: That's the process we are involved with as a company at the moment. We are beginning to segment our line, even for different areas of the US. This is a big effort for us to get to the next level of relevance in the market, both geographically and in vertical markets, and we are making sure that we are cementing the line accordingly. A really great specialty outdoor retailer may not want what a high-end boutique wants, or what a high-end hotel and resort wants. It's just about being more clear in offering smaller capsules. That's one of the things that Marci [Thornsberry, specialty channel sales manager] is trying to get her arms around and be more clear about. She's not going in with all 350 products. She is going in with a tight capsule. We don't currently do different sizes and different lines in Asia for example, but in the future we will.
Is Asia a growing market for you?
SK: It has a lot of potential. We do most of our business in North America. We've been in Europe for 20 years, and Asia and South America have gigantic potential for us. I am going down to Chile in a few weeks because we have a really great opportunity in Chile, Argentina, Ecuador, and Peru, with a built-in distributor who is ready to go and who has stores plugged in. When we talk about segmenting the line, this is really one of the things that's important for us to get to the next level in geographic expansion. We really want to be a global brand with soul, and there aren't a lot of them.