Andy Laats (left) and Chad DiNenna, co-founders of Encinitas-based Nixon.
“We like to say a watch is halfway between a T-shirt and a tattoo,” says Andy Laats, co-founder of Nixon, the surf/skate/snowboard accessories company in Encinitas. “If we can build something that you have never seen before, but you have always wanted, then we have done our job.”
Nixon started out with seven watch models back in 1998, ranging from $65 to $120. Now the company sells 90 models from $65 to $2,600.
You can strap on a less expensive robin’s egg blue, wide band tide watch when you surf Swami’s, but who would snowboard Aspen with a two-grand chronometer? More than a few people, evidently.
In 2006, Laats, 46, and his partner Chad DiNenna, 42, sold Nixon, then mostly a watch company, to Billabong for $55 million, with a deferred payment of an additional $75 million. Last year, in a reverse ownership deal, they bought back the company, now valued at $465 million, with Trilantic Capital Partners, and Billabong as a minority partner.
But wrist watches? Back in the ’90s, Laats had left his job as product manager at Burton Snowboards out East to grab an MBA at Stanford. DiNenna, good friend and colleague from TransWorldMedia, the surf and snowboard magazine publisher, put “a whisper” in his ear, the next big thing, he said, was — “watches.” Crazy! thought Laats. The world of Menlo Park was about the Internet, the new, the digital. Watches were a 500-year-old bricks-and-mortar product. There were some 400 watch companies. Why be 401?
But DiNenna dug watches, was fascinated with them, and when he went surfing at Rincon, he couldn’t wear (let alone afford) a Rolex. He didn’t much like the me-too military look of the dive watch, either. Laats told him his concept was hip but niche. DiNenna countered that there was a need for it, a surf watch with tide tables, which could be checked between wave sets, kept on your wrist when you showered up, and then shown off to friends that night at the club.
Laats, the risk-averse finance wonk, an engineering graduate from Cornell, finally relented. “I’m going to steal your idea,” he told DiNenna. “You want to be co-founder now, or Employee No. 1 in six months?”
“It was pretty brutal of me to steamroll him like that!” says Laats, sitting beside DiNenna in the historic lumberyard building that serves as Nixon’s corporate sales and design headquarters.
“No complaints!” laughs DiNenna, now executive vice president for marketing to Laats’ CEO position.
It takes more money to start a hardware company than, say, a social-networking business. Nixon needed a million dollars, too much for “friends and family,” too small for Silicon Valley’s venture firms. They raised it midway from angel-investors.
DiNenna quit his day job, but kept his lifestyle of surfing, skating, snowboarding and partying, which became, in effect, Nixon’s first open-air product-testing laboratory. Later they would hire legendary skateboarder Tony Hawk and pro surfers Rob Machado and four-time world champion Lisa Andersen to give them advice. Nixon decided they didn’t want just to pay pretty faces to wear their watches, and later headphones, on billboards. They respectfully understood that whatever Hawk, Machado, Andersen, Dusty Payne, Jeremy Jones and Lyn-z Adams Hawkins Pastrana wanted in a watch was what their customers would want. This became a secret to their success, as they worked with external designers to visualize the feedback.
For instance, on most rubber-banded watches, the extra band material flaps around and gets in the way. Nixon’s pro team asked if there was a solution. The company patented a “locking looper” that locks down the extra flap so the watch band doesn’t catch when putting on a wet suit or snow jacket.
Olympic snowboarder Todd Richards told them that watches don’t need to do too much, just “Tell time, look cool, and not break.” This became a working mantra.
“When we get into a Nordstrom’s or a Barney’s, we don’t hide from our roots. We don’t change the message,” explains DiNenna. “We want to be three blocks from the beach — forever.”
Here it becomes interesting, because Nixon is in 70 countries, most a long way from any beach, and the entire action-sports industry (of which some 85 percent, says Laats, is headquartered between Ventura and Point Loma) is only about two-thirds the size of the watch business. In other words, the Nixon partners realized, if they could establish their watches as a lifestyle brand, their little niche would become a canyon, and they would be swimming in a wide sea of fashion — which is what has happened.
Nixon is a third-generation company. First were the equipment guys, board makers Clark, Hobie, Merrick, Burton, Bessell, Rusty. Then came the apparel folks, Ocean Pacific, Reef, Quiksilver, later Volcom, that focus on beach/mountain lifestyle. “But we make ambient products, accessories,” says Laats. “We tap into what our people think, not what they do, not how they live, but how they think, and finding that abstraction is how we resonate so far off the beach.”
OK, agreed. Couple of smart dudes. But let’s sum up how Andy and Chad did it:
So how does it feel to have done it, and when did they know Nixon had made it?
“Not yet!” Laats fires back, “It was a bit of a milestone when the company was valued at $464 million last year, but, generally, we don’t believe in taking our foot off the gas.”
Cy Bates and Galen Boden contributed research to this column. Steve Chapple’s Intellectual Capital covers game-changing people, ideas and perspectives. He can be reached at intellectualcapital chapple@gmail.com
Nixon started out with seven watch models back in 1998, ranging from $65 to $120. Now the company sells 90 models from $65 to $2,600.
You can strap on a less expensive robin’s egg blue, wide band tide watch when you surf Swami’s, but who would snowboard Aspen with a two-grand chronometer? More than a few people, evidently.
In 2006, Laats, 46, and his partner Chad DiNenna, 42, sold Nixon, then mostly a watch company, to Billabong for $55 million, with a deferred payment of an additional $75 million. Last year, in a reverse ownership deal, they bought back the company, now valued at $465 million, with Trilantic Capital Partners, and Billabong as a minority partner.
But wrist watches? Back in the ’90s, Laats had left his job as product manager at Burton Snowboards out East to grab an MBA at Stanford. DiNenna, good friend and colleague from TransWorldMedia, the surf and snowboard magazine publisher, put “a whisper” in his ear, the next big thing, he said, was — “watches.” Crazy! thought Laats. The world of Menlo Park was about the Internet, the new, the digital. Watches were a 500-year-old bricks-and-mortar product. There were some 400 watch companies. Why be 401?
But DiNenna dug watches, was fascinated with them, and when he went surfing at Rincon, he couldn’t wear (let alone afford) a Rolex. He didn’t much like the me-too military look of the dive watch, either. Laats told him his concept was hip but niche. DiNenna countered that there was a need for it, a surf watch with tide tables, which could be checked between wave sets, kept on your wrist when you showered up, and then shown off to friends that night at the club.
Laats, the risk-averse finance wonk, an engineering graduate from Cornell, finally relented. “I’m going to steal your idea,” he told DiNenna. “You want to be co-founder now, or Employee No. 1 in six months?”
“It was pretty brutal of me to steamroll him like that!” says Laats, sitting beside DiNenna in the historic lumberyard building that serves as Nixon’s corporate sales and design headquarters.
“No complaints!” laughs DiNenna, now executive vice president for marketing to Laats’ CEO position.
It takes more money to start a hardware company than, say, a social-networking business. Nixon needed a million dollars, too much for “friends and family,” too small for Silicon Valley’s venture firms. They raised it midway from angel-investors.
DiNenna quit his day job, but kept his lifestyle of surfing, skating, snowboarding and partying, which became, in effect, Nixon’s first open-air product-testing laboratory. Later they would hire legendary skateboarder Tony Hawk and pro surfers Rob Machado and four-time world champion Lisa Andersen to give them advice. Nixon decided they didn’t want just to pay pretty faces to wear their watches, and later headphones, on billboards. They respectfully understood that whatever Hawk, Machado, Andersen, Dusty Payne, Jeremy Jones and Lyn-z Adams Hawkins Pastrana wanted in a watch was what their customers would want. This became a secret to their success, as they worked with external designers to visualize the feedback.
For instance, on most rubber-banded watches, the extra band material flaps around and gets in the way. Nixon’s pro team asked if there was a solution. The company patented a “locking looper” that locks down the extra flap so the watch band doesn’t catch when putting on a wet suit or snow jacket.
Olympic snowboarder Todd Richards told them that watches don’t need to do too much, just “Tell time, look cool, and not break.” This became a working mantra.
“When we get into a Nordstrom’s or a Barney’s, we don’t hide from our roots. We don’t change the message,” explains DiNenna. “We want to be three blocks from the beach — forever.”
Here it becomes interesting, because Nixon is in 70 countries, most a long way from any beach, and the entire action-sports industry (of which some 85 percent, says Laats, is headquartered between Ventura and Point Loma) is only about two-thirds the size of the watch business. In other words, the Nixon partners realized, if they could establish their watches as a lifestyle brand, their little niche would become a canyon, and they would be swimming in a wide sea of fashion — which is what has happened.
Nixon is a third-generation company. First were the equipment guys, board makers Clark, Hobie, Merrick, Burton, Bessell, Rusty. Then came the apparel folks, Ocean Pacific, Reef, Quiksilver, later Volcom, that focus on beach/mountain lifestyle. “But we make ambient products, accessories,” says Laats. “We tap into what our people think, not what they do, not how they live, but how they think, and finding that abstraction is how we resonate so far off the beach.”
OK, agreed. Couple of smart dudes. But let’s sum up how Andy and Chad did it:
- They found a product they loved. They knew their market because they were their own best customers.
- They were a team, like Jobs and Wozniak, Brin and Page, and partnerships offer defense against loneliness and burnout, and provide opposing skill-sets, too. DiNenna knew he was not the financial whiz that his friend Laats was, and Laats, while no slouch on a snowboard, understood that DiNenna had that killer branding intuition that would keep their stuff authentic.
- They listened to the best, the recognizable pros whom they’d hired to tout their wares.
- They also came at the right time. Surfing, skating, snowboarding were no longer outlaw sports, yet surf, skate, board and attendant clothing companies already filled the gear stores. Watches took little new space, brought high profit margins, and watches travel. (You can wear a Nixon 48-20 Chrono in Stockholm.)
So how does it feel to have done it, and when did they know Nixon had made it?
“Not yet!” Laats fires back, “It was a bit of a milestone when the company was valued at $464 million last year, but, generally, we don’t believe in taking our foot off the gas.”
Cy Bates and Galen Boden contributed research to this column. Steve Chapple’s Intellectual Capital covers game-changing people, ideas and perspectives. He can be reached at intellectualcapital chapple@gmail.com
