01 Dec 2007
How two East Coast HBS alums went West to launch a radical, lightweight outdoor gear business and struck an innovative deal with an industry heavyweight.by Kathryn JonesTopics:
The trail weaves back and forth in steep switchbacks before we reach the summit of Green Mountain, elevation 8,144 feet, high above Boulder, Colorado. On this September morning the mountain air feels brisk and invigorating. Purple fall asters bloom between rocks, and clouds pile up above the ponderosa pines. Far off in the distance, the Continental Divide’s rugged peaks scrape the sky.
“How many of those have you climbed?” I ask one of my hiking companions, Demetri Coupounas (MBA ’93), who goes by the nickname “Coup.”
“All of them,” Coup replies matter-of-factly.
He beckons to his wife, Kim (MBA ’95), and points at a mountain across the valley. “Look how tiny the glacier is, Kim,” Coup says with a tinge of regret and surprise in his voice. “I’ve definitely noticed it getting smaller.” Even in the Rocky Mountains, global warming takes a toll.
Kim recites the names of mountains at or near the divide, while Coup knows their elevations by heart: Albion, Audubon, Elbert — the Rockies’ highest peak. It’s a “fourteener,” as mountaineers say, meaning more than 14,000 feet high. Vertical adventure, in other words.
For experienced climbers, backpackers, and trail runners such as Kim and Coup, summiting Green Mountain is an easy 3.3-mile hike that they can do before work. The couple have climbed some of the world’s most beautiful and challenging peaks, including legendary Kilimanjaro, Africa’s highest mountain, and Alaska’s Mount McKinley (also known as Denali), the tallest in North America. Most recently they scaled part of the barren, rocky Andes between Chile and Argentina. The outdoors is their shared passion and where they feel most alive.
It’s also their business. In 1998 Kim and Coup cofounded GoLite, a small but thriving company that has made a big splash in the fiercely competitive market for outdoor wear and gear. GoLite’s mission sounds simple and logical enough — give serious trail runners, alpine athletes, fast-packers (backpackers who speed along trails), and even once-discouraged hikers like me the lightest weight packs, clothing, sleeping bags, tents, and other gear for maximum performance, comfort, and enjoyment. And now, shoes. Last year the Timberland Company, a heavyweight in the footwear business, acquired the GoLite brand for its new line of strong but super-lightweight trail running footwear, allowing Kim and Coup to expand their brand without selling the company. More on that later.
Going light on the environment in the manufacturing process was a big deal to Kim and Coup, too. Their ultra-light philosophy and eco-friendly mindset drive every GoLite idea and product: “Do much more with much less.”
Less is, indeed, more in the backcountry. Usually I’m weighed down with gear: sturdy (but heavy) hiking boots, a pack with an aluminum frame, clothing to layer as needed, and a Windbreaker. On backpacking trips I’ve toted 40 pounds. But on this day all my gear, including shoes, weighs about 3 pounds. Kim and Coup outfitted me with an ultralight day pack (1 pound, 5 ounces), a surprisingly comfortable trail hiking skirt with attached shorts (5 ounces), a zip-top base layer (8 ounces), a wind shirt (3 ounces), and the most lightweight shoes I’ve ever hiked in (10.9 ounces). Freed from carrying a load like a pack mule, I can focus on the blissful experience of being outdoors surrounded by beauty instead of how much my knees or my back hurt.
“Most people, once they lighten up, won’t go back,” Coup says.
My old hiking boots have logged some spectacular miles, from the bottom of the Grand Canyon to the top of Wheeler Peak, a “thirteener” and the highest mountain in New Mexico. But they’re about to be retired.
Rad Versus Trad
Kim and Coup once lugged heavy gear on their outdoor adventures, too. “It was the old-fashioned view of backpacking,” Kim says. Then in 1998 Coup read a book that changed his life: The Pacific Crest Trail Hiker’s Handbook. It was written and self-published by a reclusive mountaineer named Ray Jardine, who had won a loyal following for his philosophy that backpackers should lighten their loads by making their own gear. He even gave how-to instructions. Learning about the “Ray Way” was the “eureka!” moment for Coup. Why not start a company to make Jardine’s lightweight gear?
In hindsight, it seems like the business Coup and Kim were born to create given their love of the outdoor life. Still, it was a strange alliance between a scruffy, eccentric outdoorsman and two clean-cut East Coast, Ivy League Republicans on the fast-track for careers in finance or politics.
After graduating from Princeton, Kim and Coup earned degrees from both HBS and the Kennedy School of Government. Coup, who’s 41 and a numbers whiz, worked as the policy director for the anti-deficit Concord Coalition in Washington, D.C.; a strategic planner in the office of the American Stock Exchange’s chairman; and a special assistant to the chairman of the Securities and Exchange Commission. He also worked in the first Bush administration’s White House.
Kim, 40, worked as a strategy consultant at The Parthenon Group, an investment banker at Goldman Sachs, and the COO of the Shackleton Schools, a high school in the Boston area that used outdoor expeditions as teaching tools. She also served as the COO of Up with People, a nonprofit international youth leadership program. Kim and Coup also have worked on national political campaigns.
After reading Jardine’s book, Coup was inspired, even obsessed. He wrote a business plan, and his father, a Boston tax attorney, put up seed money and became a silent partner. (Jardine is no longer involved in the company; his ideals soon clashed with the realities of a commercial venture.)
Soon after, Coup and Kim moved to Boulder, the laid-back college town that’s home to other outdoor companies and the industry’s main trade organization, the Outdoor Industry Association. In 1999 GoLite introduced its first line of products. They consisted of Jardine designs to be used together: backpack, sleeping pad and bag, insulated clothing, tent, umbrella, and other gear. Total weight: about 9 pounds.
As the product line grew, Coup and Kim sought out the most durable but lightweight materials. The packs, for instance, feature the same high-tech fiber used to make bulletproof vests. “It’s stronger than steel by weight and prevents the pack from tearing,” Kim explains. To slim down their products even more, Kim and Coup eliminated zippers, pockets, heavy buttons, and other embellishments that can add up to extra pounds. The company’s apparel and gear stand out for their simple but functional designs, brilliant colors, and, of course, light weight.
Soon GoLite won a cult following and became a favorite brand of top outdoor athletes. But traditional gear makers at first didn’t take the company seriously. Coup admits that he miscalculated just how hard it was to challenge well-entrenched notions and create something new. “We had to break through a whole lot of modes and barriers in this industry,” he says.
The lightweight trend, however, began to catch on. More companies started taking weight out of existing products or introducing new lightweight lines. But GoLite insists it was the first and only mainline outdoor brand that has offered a full system of lightweight gear and apparel.
Chasing the Sky
By lunchtime, we’re back in Boulder. Sausage, steak, and veggie burgers sizzle on a grill in the parking area behind GoLite’s corporate headquarters in a nondescript business park. Employees sip beer and chat under a blue canopy set up for a company barbecue. Two employees are celebrating birthdays, and someone has brought a cake. Kim shows up with two huge salads, winning cheers from the vegetarians in the group.
Dan Brillon, GoLite’s COO, wears shorts and a T-shirt. Previously, he was the director of mergers and acquisitions at Microsoft working directly for Bill Gates. Then several years ago he quit his job and moved to Boulder to pursue his passion, trail running. He quickly became known in outdoor circles as “fast Dan from Seattle.”
When Kim and Coup heard about his corporate background, they hired Brillon to help them put GoLite on a faster track for growth. Brillon was a believer in the company and the GoLite philosophy, but “it hadn’t taken off the way it should,” he says. “When you think about how people have been taught about backpacking — that heavy is better — until you change that, it’s a challenge for a company like GoLite. We’d go out year after year and say, ‘There’s got to be better way.’ But you’ve got to buy into the whole philosophy, and most people don’t buy that way.”
Still, the nimble little company with big ideas began to attract suitors searching for growing niches in the crowded outdoor market. GoLite was approached by numerous well-established outdoor and sporting goods companies. But Kim and Coup weren’t interested in selling the company yet. Meanwhile, Timberland, based in Stratham, New Hampshire, had been assembling a collection of brands under the umbrella of its outdoor group to diversify from a work boot and casual footwear company. They included Smartwool, a performance brand of wool-based clothes, socks, and accessories.
With further diversification in mind, Timberland took notice of trail running, an up-and-coming sport that had already surpassed paddling as an outdoor pursuit, according to the Outdoor Industry Association. And the “go lighter” concept appealed to the company. “It’s hard to find growth opportunities these days,” says Gary Smith, president of Timberland’s outdoor group. “People are less active than they used to be.”
For those who are, however, “lighter, faster, farther is something that helps people not only compete better, but also makes recreation exponentially more enjoyable,” he adds. GoLite’s vision dovetailed with Timberland’s own development of a new kind of trail running shoe that it hoped would revolutionize footwear for trail runners and so-called sky runners who prefer high elevations. Instead of a sole that is hard on the bottom and soft in the middle, Timberland’s in-house “Invention Factory” designed one that is soft against the ground and with suspension systems to improve stability on trails. The company now holds patents on the technology.
It was an innovative product in search of a brand. “Is this really a Timberland idea, we asked ourselves,” Smith recalls. “Timberland is all about leather and stitching. We had well-established equity with consumers there. But we felt if we marketed the shoe under a smaller brand, it might be taken more seriously as a specialty product.”
The creative deal hashed out between the companies called for GoLite to get a cash infusion (neither party will say how much) and access to Timberland’s large distribution network. Timberland acquired the GoLite brand, including trademarks, but licenses it back to the Boulder company. “GoLite got to cash out on the most valuable part of its business, the brand,” Smith says.
“It’s a great marriage between a consumer brand and a technical product,” adds Bill Dodge, general manager of GoLite Footwear, which is managed out of Timberland’s New Hampshire headquarters. After the deal was done, GoLite’s Brillon tested the shoe for himself. He drove down to Pikes Peak and ran uphill 13 miles, climbing 7,500 feet, and downhill 13 miles. “I run this about once a month,” he says. “The first time I wore the shoes I took five minutes off my time, and my legs weren’t trashed.”
For Kim and Coup, the decision to ink an alliance with Timberland was relatively easy despite some misgivings about hooking up with a much bigger company. “More than anything, it’s just the sheer scale,” Coup says. “Timberland’s on two orders of magnitude larger than us in terms of people, in terms of sales, in terms of complexity of operations, and in terms of the number of countries it operates in.”
But size has its advantages. As a small newcomer, GoLite ran into roadblocks in selling through established market channels. Many top-notch sales reps balked at taking on a new company that would compete with the brands they were used to selling. Similarly, many retail outlets weren’t interested in adding a new brand to their already crowded shelves and racks of outdoor wear and gear dominated by names such as The North Face, Patagonia, JanSport, Columbia, and others.
“When I first looked at this industry, I thought the barriers to entry were quite low,” Coup recalls. “But what we have found is that the barriers are actually quite formidable but camouflaged extremely well. You have to have a really good sales force to crack certain accounts,” such as large dealers of outdoor gear.
The Timberland deal has given GoLite room and money to grow. “Both Timberland and we are committed to GoLite’s success, so the synergies in our relationship are high, and we are working collaboratively,” Kim adds. “They’re not getting in our way, and to the degree they can, they are being helpful on things that we would not have had access to as a smaller brand, such as introductions to certain international distributors.”
Kim and Coup say that, despite their scrutiny of case studies in their HBS classes, they still made many classic mistakes. What’s been the biggest challenge? “Top management ineptitude,” Coup responds, barely breaking a smile.
“Sometimes we go into things faster than other people and oftentimes faster than a company should,” Kim explains. “We went into Europe far too early during GoLite’s second year of operation. We spread our resources, capital, and people too thin. So we basically had to pull out of Europe for two years, and now we’re back in that market with the proper mindset. We made so many classic mistakes. Some happened because we thought we’d figure it out as we went along, and sometimes we didn’t. For example, we decided not to hire certain executives with industry experience when we should have.”
“We didn’t invest in the very best people until fairly recently,” Coup adds. “We’ve been too cheap and put in too little cash over too long a period of time. We’ve had some fabulous people from day one, but some very uneven teams until recently.”
As of September, GoLite had about 25 employees. It plans to boost its development department from four to twelve people this year. Other departments will grow, too, over time. “We’re investing a lot more in ourselves,” Coup says. “We aim to be about twenty times our present size in five years in terms of sales. In terms of personnel, we’ll probably be only two or three times our current size.”
Keeping the company in Boulder and operating independently seems to be the best way to preserve its small-company culture. “If Timberland and GoLite are doing things the way we ought to, we’ll keep the nimbleness and the innovation and the vibe of this place, but we’ll gain the scale and professionalism of that place,” Coup says. “And we’ll help them by sprinkling some magic entrepreneurial pixie dust to put some fun and zest back into their culture. In broad strokes, that’s what we’re both after. We both have an awful lot of work to do to realize the full impact. We’ve really just taken baby steps so far. But we like them; they like us. And we’re learning to work well together.”
That morning, as we climbed down Green Mountain, Coup showed me how to trail run, keeping your eyes ahead of you and plotting your next step. He makes it look so easy and takes off down the trail. I try it for a while, too. It’s the first time I’ve ever run on any trail. I was carrying too much stuff before.
“Some complain people are going too fast on the trails. Others complain people are going too slow,” Coup says. “But really all of them are going for the same thing: total detachment, in a very healthy way, from their reality. You want to experience that. Some people golf. Some people shoot an arrow at a target. Other people do martial arts. And here on the trails some people are happiest. They are transcending everyday reality. They’re blissing out. Some people get that by carrying a light pack for a multiday trip; others get it by running. But the point is just to get outside. Going light just makes it a lot more fun.”
— Kathryn Jones is a contributing editor to Texas Monthly and frequently writes about business and the outdoors.
Class of MBA 1993, Section A
Class of MBA 1995, Section A