Oceanside Brothers Build A 3PL Company Around Heritage Lifestyle Brands
The crew at Gnarlywood Distribution is a dedicated bunch. Led by boisterous Dayton and industrious Pug, Teddy, and Hooter, the Hicks brothers and fifth “adopted” brother, Jay Consolloy, have come together to build a 3PL business model at their Oceanside, California headquarters that caters to the type of brands they grew up surfing and skating at their local SoCal breaks, streets, and parks.
Aside from being a family run distribution company, what sets Gnarlywood apart is that the company also has a full in-house team of branding, design, marketing, and sales specialists available to help build brands across the board. Under the company’s umbrella, several brands are solely owned, operated, and distributed by Gnarlywood, while other brands only utilize parts of the company’s services.
On top of everything else, the Hicks brothers also have a retail location in the village of Carlsbad, California, called Seaworthy. “Purveyors of Rad,” Seaworthy’s tagline, is meant to evoke a nostalgic feeling and the brothers, who say that the concept has already taken off, have plans to expand the shop’s footprint on the right coast, as well as internationally.
TransWorld Business recently had a chance to meet with all five executives at their headquarters—a lively warehouse complete with a mini ramp. Dayton and crew took some time out of their busy day to explain the model behind Gnarlywood and why the company hasn’t been built “by the books,” and why building heritage brands in the USA is so important to them.
How did Gnarlywood come about? What is the strategy behind the distribution company, and how did the other pieces of the business fall into place?
Dayton Hicks: The strategy was kind of two fold in the sense that we had our forward facing brands, brands that were isolated by themselves—Bucks Trucks and Windigo Surfboards—and innately from having these brands we understood the challenge of what it took to launch a small or new brand in the market, and how much focus and dedication it took on the front end with product and marketing, and the brand integrity in general. We are continually going through this with our brands and decided due to economic climate and things that were going on in the industry that it would be wise to offer a backend solution for brands out there that were like our's. That way we would cover our butt on both fronts. As we were growing the brand division that we also had this backend service that would really allow an outside group to really focus on their marketing and sales. That was where the concept started to happen and along that route we came up with the idea of vertically integrating the business so this was really a place where you could come with a logo idea and possibly a name, and we could help you develop it from there. We do everything in house from our creative department to sourcing and of course the backend distribution—we have a really strong distribution network as well. We find the right brands that we can help plug those guys in. We have an amazing portfolio of brands we work with now, they are up-and-comers or super relevant guys in the market.
How did Bucks Trucks get its start and how does that brand fit under the umbrella?
Dayton: With Buck Trucks, we saw an opportunity in that longboard market from a component level with Buck. We initially started it overseas in China and we got that first PO in and received a container and literally within three months had done a quarter of a million dollars. It was something we conceived out of nowhere–it just happened. The next PO, we did the metal testing and started to see that the product was whack. We had a moral issue with the whole thing. Not only from the standpoint that we've grown up skateboarders and surfers, and it was kind of a front to what we love, but on a grander scale we were outsourcing work outside the country. That was the point where we decided we are going to do what's right from an action sports level, as citizens of the US, and we are going to bring it back home. We did what we had to do to get that back here. It was an exceptionally difficult process and the original lead time on this was six weeks. It turned out to be a whole year, which was a whole year of not having a part to sell. We have a portfolio of businesses here and we subsidized our down time through our other ventures and it literally brought every one of them to its knees. The point there is, even in our darkest times here we never once questioned why we were doing it, and I know it's paying off at this point. Everything has its traction back and we definitely have that differentiation in the market. We have a lot of street credibility as far as adhering to our credo and we are opening up some options for people to come to us and get their back-end serviced by guys who actually came up in this lifestyle. If they are interested we are starting to facilitate some of the domestic manufacturing for them, as well.
Everything is vertically integrated. We push it as hard as we can to stay in the US and now we've gone down that rabbit hole to the point where we just recently opened up a skateboard factory in northern Michigan about fifteen miles from where all the wood comes out of the ground. We are pursuing not only making it here but actually growing it and ripping it out of the ground in the US. Everything up there is made by American workers and everyone of them is a skateboarder who loves the area—it's an absolutely beautiful area. Most importantly when we do that we remember what it was like as kids, what that new deck meant to you, how special it was. Those kids, when they are pressing those boards, there is a bit of magic that goes into it because they know what it is. We like to think of it as protecting skateboarding on that end—protecting the things that we love. We are rapidly trying to expand in that direction. With our trucks, we are sourcing out of the midwest in a pseudo-depressed area, and created 12 American jobs with the first PO on that. We are actively looking at possibly opening up our own foundry in our facility up there, for the express purpose that guys that love it are making it and we can put our money where our mouth is at any given point in time because we control the process—at no point was this sourced out. This is not something that was created over a chain of emails in between global time zones, and it makes it special.
What are some of the challenges and advantages to making products in the US?
Pug: It's more expensive. With Bucks, I've been on the road for the past couple months doing the tradeshow thing, and everyone is always like how do you compete with such and such brand? And I say we aren't competing with them because we make our product here in the US and in our opinion have the highest quality, the best made truck, it doesn't bend, and we don't really feel that we have to come down to an import product price when we aren't selling an import product. I think the market is more than primed to represent and understand the value attached to a product made here in the US. That's how we've approached every business we have here. We've done it backwards. Instead of worrying about nickels and dimes, we wanted to make the best product first and then we let the customer know what they are getting, what they are buying, and why the product—in the truck game—costs 5 to 10 dollars more than everybody else's. Because there are guys in the midwest who build parts for GM and Ford, and they are making this product, and it's not child labor or a million guys over seas somewhere just pounding out product and not putting any love or thought behind it.
Dayton: I think to expand on that on a macro level as well. Talking about domestic manufacturing, I think a lot of our business philosophy comes from Asia Pacific where we tend to look at it like a Japanese business plan, written where those things span a thousand years—it's not a five to ten year business plan, like a lot of places here do in the US. We look at what we do as we are developing heritage brands here and we look at brands like Independent that we all skated as kids, and there is a tremendous amount of respect. We work with John Falahee quite a bit at ATM Click and its been amazing to work with John he's a legend in the game. He has 34 years in the game. We've had that tutelage and a chance to play homage to it. When you have that extended outlook on a product that is going to outlive you, you look at it as something you have to be proud of now, your kids have to be proud of it, and your grandkids have to be proud of it when you are dead and gone because they are going to have to live with that reputation as well. We see that product being just as viable 150 years from now as it is right now. We always work under those auspices. It allows us some leeway where of course we have to mind margins, but we are always willing to give up quite a few points on these things to ensure it has heart and soul, that it has that pulse built into it. We know that pays off in the long run.
Aside from the skate lifestyle brands, you also have a surf element to the business correct?
Yes, Windigo. We've had that label for thirteen years. It started off as a project in old-school business, where we wanted to build the business one surfboard at a time. If it was jank, we would make it again until it wasn't, and we developed somewhat of a cult following with it. We do very little marketing outside of stickers and the whole business is based on a handshake. It's served us well.
Is Windigo also manufactured locally?
Our factory is kitty-cornered right here to our office. The boards are completely made under one roof, none of it is sourced out. They are hand shaped. The boards are made to work here in Southern Califonria. The branding is a little different than what is going on out there. We try to design and move that label forward with more of an intellectual idea behind it. Every board model is representative of a figurehead in history that really stuck by their guns and did what they believe in. We've got the Churchill, The Roosevelt, The Hitchcock. They are all made for our waves here, and it's all done under one roof.
I love the idea of basing the models off historical figures who stood up for what they believe in.
Leadership has always been a very important part of our lives due to our folks' influences. We take that very seriously here with our staff. At a higher level we take that very serious with the inspiration we can hopefully provide and the message that we can get out to people. If you've got something that you believe in you can make it happen. That's why those board models are so important to us. At the core it was pristine leadership and a complete belief in what was possible.
Tell us more about your retail location.
About two years ago, we opened up Seaworthy in downtown Carlsbad and our tagline is Purveyors of Rad. What we wanted to do was create a collection of things that we thought were rad. We love to surf, and it's really based on that, and skate. We do vintage retro sodas out of there and we are all scooter heads so we are entering that game. We love Carlsbad, it's our home. We saw an opportunity to spark a re-engineering and revitalization of the area, and we are still pursuing that. Carlsbad kind of pushes back in its own way. But we do a lot of events out of there, and I think it's really sparked some renewed interest in the village. We are currently developing that as its own brand, it will be available this year. We have some proprietary things that we are doing from a technology standpoint. There are some really crazy stuff that was developed by NASA and a few guys out here in Oceanside came up on that technology, believe it or not. We'll also be going more female centric this summer.
We are also looking to develop the footprint of Seaworthy. We have had some interest internationally in that so we'll be looking at that in the next year and a half. Possibly bi-coastaly as well. We really try to pay attention to things you can't get everywhere and things that are natively beautiful. We take our design cues down there from various points in history that really set the course for the country. You'll see the cultural aspects—there is definitely tribute paid to the greatest generation the WW1 WW2 era. Our dad and our whole lineage has some naval background and the four brothers, our dad was a naval officer and one of the things he often said at the dinner table was "The greatest gift that a samurai chief could give his troops was to take them to see the sunrise." So they were skilled in the art of ripping people to shreds but they also understood the innate beauty in things. We've tried to instill that concept in what we do. It's as grizzly as it should be but it's done as beautifully as possible and we are proud of that. Everything in that store has significant meaning, either to us as founders, or things that make our country what it is.
On a day to day basis what is the workflow like here?
Dayton: That's one of the great things about being a business owner. More importantly, doing it with your family and the best friends you could ever imagine. It's a completely different firefight every day. There is definitely a high interest from the sales point. We don't do a lot of marketing, we are going to try to change that. Since we do operate on the 3PL function and have multiple facilities and some are out of state, believe it or not, it is a pretty orthodox business flow—it is tied down and automated, otherwise it wouldn't be possible. To be honest, we work 7 days a week, about 8 a.m. to midnight every night, and midnight is often an early night.
Pug: The difference is, we love what we do. I don't even consider this a job, I consider this a lifestyle. We work, and then we surf—not as much as we used to, but we are getting back to that point. We all enjoy being around each other. we are family here and it's fun.
It mirrors a lot of what our brands do and our clients do. We are built to handle flux. A lot of workload comes because we are able to and willing to handle that flux. We have some guys here that are really starting to fire and need more time and counsel. We bend over to make those things happen because we innately know what it's like to be in that position, and we know what it takes to get past that. We've been in those positions and we've taken our lumps during those times. But what's great about working with this place is we have the systems that can handle that flux, we have the desire to help the client and most importantly we can help steer them away from the rocks.
Jay: There is light at the end of the tunnel. We do run these things by the numbers. When we hit our revenue marks we can hire. We know the trajectory we are on is the right one and everyone can bare the brunt of it and walk through the concrete wall if we have to in order to get there. Knowing that we do run it by the numbers and when we are ready to hire we will, and we will know each position intimately so we can train properly and find the right person to do it. We could talk about the people who help us out all day and this is what we do it for. People who didn't have the opportunities elsewhere and we were able to corral and see them flourish in opportunities we were able to create for them.
Is 2014 the year when you will be able to expand your staff?
Dayton: Absolutely, we are in the process of it right now. There is a great pool of talent here and its a very checkable group.
Why do you think the business model has been so successful to date?
Dayton: There's a million ways to skin a cat; people are only being taught one. That's what's going on here. It's not the same homogenized way of doing things. When you look at it differently A. it can have a heart, it can have a soul and a real purpose—and not on a hippie level or in some hokey way. But it's got pulse, it's not just digits moving around on a black line. When you can look at it differently that's where all these amazing value adds come from, and that's when you incorporate a kid that you never would have found if you had listened to a textbook. We've all got degrees, but I can speak for myself when I say everything I learned in business I learned from blowing a lot of money, and going to swap meets. The books taught us what not to do
Skipping back to the manufacturing facility in Michigan—how did you happen to find that spot and how did you cover the expense of buying your own facility?
Dayton: Pug has years in the industry and has his finger on the pulse of what's next. We have a partner up there, another guy our age— an ex-BMX guy—and we just started to put the pieces together and do the research on it. It was not cheap to put this together, it was a real layout, as is everything we do.
Pug: I've been in skate almost 15 years. I actually started in retail a long time ago. That's how it all started.
We learned this process in working with China for our trucks. While we were doing that, I was flipping a lot of wood from China, too. I started to piece everything together and was like wait a second, why are we giving these guys all our money? When they come here, buy full trees, and ship them. We figured out where all of it was coming from, threw a dart, and ended up there. Surprisingly enough, we have family ties to the area, the brothers and my wife actually, too. It kind of just fell together and we made it happen. Now we are doing some significant volume out of there and investing more to probably quadruple our volume by fall. It's impressive.
Is it paying itself off in that respect?
Dayton: To be honest, we are very careful about how we are scaling this thing. The call was already there to scale it and we want to make sure we can scale it appropriately.
Did you say this conference room was the called the War Room?
Yeah, it's where we kick around all our ideas.
So, it's not where all the fights break out?
Teddy: [Laughs] We actually don't really fight. If there's any tension it usually gets squashed right away. It's funny, people are always like how do you work with your brothers everyday? But it's like we work together, then we go surf together, go get dinner with them after, and we live together, so I'm with them 24/7.
Dayton: If you are doing things in ways that are so unorthodox—and it's a dark way of looking at it, but these clowns have all got to be at my funeral some day so I can trust the hell out of them, and I don't think it can be done any other way. Those are things we don't have to question. Political things, things we've encountered in prior careers, they don't exist here, we just get to run the engine hot.