Robert Marcovitch Explains The Deal Exclusive Interview With Ride’s CEO

So, are you breathing a little easier thesedays?

Yeah, a little bit, mostly because I feel veryconfident that the deal we did with K2 is in the best interest of themajority of the people involved. We all wanted to keep the momentum ofthe Ride, Liquid, and 5150 brands going. We talked to a lot of peoplebecause the company wanted to make something happen that would make themost sense for the company and its shareholders. The S-4 document filedwith the SEC really tells the tale in the clearest way. There’s nota lot that I can add to that.

So what will be Ride’s business strategy afterthe deal is completed?

We’ve had many discussions with K2,mostly scenario-building exercises about product, distribution, and otheroperational and financial matters. Of course, nothing will actuallyhappen until we receive shareholder approval and the deal is done. Thestrategy is to make this change of ownership in the most seamless mannerpossible with the least amount of disruption to everyone involved.

The key factor for everyone to understand is thatK2 was and is interested in our brands-not just our brand names.

They could have gambled that what happened toother brands was also going to happen to us. Perhaps they then might havebeen able to purchase the company or its assets for a lot less than theypaid for Ride.

But assets like tables, chairs, presses, andinventory don’t make a brand. Ideas, culture, passion, direction,and authenticity make a brand, and I believe K2 knew that and did notwant to see any of those intangible things disappear as they often dowhen businesses are sold. In our industry momentum is everything, andkeeping that momentum involves retaining as much of the business aspossible with the least amount of changes. That appears to be what K2wanted, and because of that it’s business as usual here at Ride.

We’ll be able to maintain the momentum wegenerated last year. That was definitely at risk without K2’sinvolvement. As a result of this merger we don’t foresee any majordisruption in our businesses or change in strategy once the deal iscompleted.

We’ve already sent a letter out to ourdealers that says we have no planned changes as a result of the deal forour product, marketing, and existing distribution channels of thebrands.

Of course, we’re looking at the synergiesbetween the two companies to ensure a long and prosperous future. What issupremely important is that K2 understands that when you buy a company asunique as Ride, there is a need to keep its special attributes intact.

How will K2 manage Ride so that momentum continues?

In my opinion there are many business modelsthat you can point to that show there’s an opportunity to grow andsupport five snowboard brands, whether it’s the Porsche/Audi/VWmodel or all the brands that a company like Kellogg’s or ProcterGamble controls.

So it’s not hard to find models that haveworked extremely well for brands, retailers, and consumers. The key ishaving the right people and the discipline. I’m pleased to know wehave both, and that bodes well for us going forward. K2 has been clearfrom the outset that it will support an environment that allows ourbrands to continue to develop their own personalities and enables ourpeople to do their thing.

So you don’t see any change indistribution?

We don’t see any need for changes in ourdistribution strategy. It has been a key factor for our success with ourretailers. We’ve carved out the niches for our brands and haveproven ourselves successful as a result.

Where will the Ride offices be located?

There has been no decision regarding where theRide offices will be located. In fact, there’s been no decision onany of the facilities.

Because K2 is located nearby this deal will be alot easier on our employees than if they had to take German lessons.

Everyone needs to understand that this is a dealthat will maintain that momentum we were talking about. To their credit,I think K2 realizes that you can’t go out and create a good team ofpeople everyday.

All the brands that K2 will own have distinctivepersonalities. Of course, all the brands will need some sort of alignmentwithin the K2 company, but I think what this deal does is cement the factthat there will be other authentic snowboard brands besides Burton thatwill enjoy life in the twenty-first century.

How will this deal affect the snowboardingindustry?

First, from a consumer’s point of view,it assures participants that whether they are just learning to turn ordoing backside rodeo sevens, they’ll have an assortment ofhigh-quality innovative products in the stores that best suits theirperformance needs in the years to come. I think that’s good for thesport and therefore the business.

Equally important, they’re sure to findproduct that matches their personality and they won’t findthemselves on the hill looking like they’re in the same uniform astheir friends. Individuality is important to the long-term health of ourindustry. The consumer continuing to have a freedom of choice of greatequipment from solid makers is very important to everyone.

Financially strong, reliable, well-focused brandswith distinctive personalities will keep snowboarding special.That’s good for everyone in the industry and we’ll be able tooffer the marketplace choices that are so important to everyone.

This goes for retailers as well. I hope thatretailers see this as an opportunity to invest their open-to-buy dollarsin snowboard gear with a greater level of confidence than ever before.Brands like Ride often do not have the financial clout to do everythingthey need to do to compete. This deal assures the long-term health ofmuch needed brands in the marketplace.

Retailers make a substantial investment in thesnowboard brands they carry, and with the deal these retailers now knowthat Ride is firmly backed and positioned as the niche brand they need itto be.

We made lots of difficult decisions at Ride in thelast year that benefited retailers and consumers. We can now continue tomake those decisions and benefit from our actions. We can safely makelong-term plans that are executable. That’s good for everyone inthis industry. We’re now able to concentrate on developing greatsnowboard products at all pricepoints. By doing that we can continue toraise the bar on the whole industry, which in my mind is good foreveryone.

So what are the chances that this deal won’tgo through?

The deal is subject to shareholder approval,but I hope that I made it absolutely clear in the S-4 why this deal is inthe best interest of the shareholders. Those shareholders who wanted tosupport a Pacific Northwest company still are. Those shareholders whowanted to invest in a snowboard brand still are. Those shareholders whowanted to invest in a growth stock still are.

Is K2’s corporate culture similar toRide’s?

What I found most impressive about K2 CEORich Rodstein is that he’s highly passionate about the snowboardbusiness at all levels. Rich believes that the combined companies will beable to increase their investment in the snowboard industry resulting inimproved products, marketing, and service levels. He is someone who isalways pushing to do things better. He loves the product. He clearlyunderstands that big is not necessarily better when it comes to theconsumers we’re servicing.

Burton has done a superlative job of makingthemselves look far smaller to our audience than they really are. For ourmarket, that’s a brilliant strategy. Building a business as K2 hasallows the brands it owns to operate in their accustomed style and yetenjoy being a member of a much larger family when it makes sense.

So what’s your career plan?

On October 5, regardless of how theshareholder vote comes down, you’ll likely find me in a bar with myfriends at Ride reminiscing as we do when major events like this votetake place. I guess the polite term is that I’m in trans
ition.

My five years of experience with the Rideorganization should stand me in good stead, but I’m realistic andknow that the company doesn’t need two CEOs.

Don’t get me wrong, I’m not running forthe door either. K2 is a pretty exciting organization with a lothappening in several different arenas. I hope that my strengths have beennoted and if all goes well K2 would like me to remain with the company.There were no golden parachutes as a lot of the people in the Internetchat rooms were saying, so retirement is not an alternative for me.

I think the thing that I can be most proud of isthat in the midst of really difficult circumstances, we were able to keepthe momentum going at Ride and keep a dream alive for those who have putin such a tremendous effort of late and those who toiled for the brandsin days gone by. We kept it going well enough that a company like K2looked at us and likely asked themselves, “How can a company withthe types of challenges they face do what they do?”

We kept our family here intact and formed aculture in the most difficult of circumstances. I think K2 saw theenthusiasm on the faces of the people and asked themselves, How do I getthis,” and realized that it’s not from buying the parts but bygetting the full meal deal.

It was a critical point in the brand’shistory, and by preventing us from falling off-track, I believe you willsee our family of people and brands grow and flourish within thisindustry in the manner with which they richly and rightly deserve, andyou will see the positive impact this transaction will have on our sportand our business in the years to come.