Start a golf club company?

dtwainright · March 28, 2006

Tell me what you think...

Very hypothetical question here…and therefore, no wrong or right answers, and I don’t plan on really doing this…but what would it take to start a golf club company?

I’m talking about the R&D, manufacturing, testing, market research, etc…

What would you do if you could start a company? Other than building yourself the perfect custom set of clubs :) , what you focus on that the other big companies are lacking.

You guys that have been around a while, what has made some of the big companies survive compared to smaller start-ups…other than tons and tons of $$$. What would it really take to compate with the big guys?

Just thought I’d throw that out there and see what you guys have to say.

Regards,
TW

spk74 · March 28, 2006

I've been trying to get a job with one of the big companies for a little over a year. As an engineer, IMO, design and marketing clearly dominate the golf club industry and engineering or "R&D" plays a distant third fiddle.

So I think the first thing you need a big name designer with a solid reputation. They will provide a marketable (distinguishable) product. For example: Mr. Cleveland for Callaway's wedges, Mr. Maltby for Tommy Armour, Mr. Wishon's components, and most recently Mr. Ortiz for Bobby Jones.

Next you'd need to quickly develop relationships with the international suppliers (the actual manufacturers). I recently interviewed with the golf ball segment of one of my favorite companies. They pointed out to me that their golf club segment was in the business of specifiying and assembling golf clubs, not in engineering or manufacturing. So, in my estimation, assembly and supply chain would probably be the easiest facet.

I imagine product testing fits in there somewhere, combining product development with marketing...anyone...anyone?

Just my 0.02

dtgolder · March 28, 2006

Don't ever let anyone tell you that you can't do something...you CAN do this--but there'll be many obstacles and hurdles (but that's the fun).

So...my first question is "What's your competitive advantage?"

What makes you different from everyone else out there...are you better made? less expensive? cooler looking? more effective? or???

Once you've decided that, the rest starts to fall into place...so any idea of what your competitve advantage will be?

Ping started from nowhere...so did Callaway...so can you!

spk74 · March 28, 2006

Callaway started in wine and textiles and then bought another golf equipment company, I thought. And, IMO, Callaway Golf hit it big when he/they hired Richard Helmstetter (pool cues) to design the Big Bertha.

willie991 · March 28, 2006

Companies that "appear" successfull...

Achusnet/Titleist/Cobra/Footjoy: Huge cash influx during boom time of 90's. Owned by Fortune Brands. (I think Fortune Brands also owns Jack Daniels.) Large corporation with tons of cash for R&D, marketing/advertising. Name sells a ton of equipment, but by own admission makes largest profit in ball business.

Taylor Made: Owned by Salomon/Adidas (French ski maker/clothing, shoe company). Again, tons of corporate $$$ for marketing, etc. Corporate profits are much higher in units other than TM.

Callaway: Made their name and dollars during the 90's boom. Ely built a dynasty. Lots of $$, but has had difficulty turning a profit as of late. Rumored company offered for sale. If industry doesn't turn around, continued band-aid fixes of CEO changes, etc. won't keep afloat.

Ping: Closely held family corporation. Facilities, foundry, R&D owned free and clear through good times of Karsten and 90's boom era. If had to show stockholder return on investment, would probably be in trouble. Sales lag behind the three mentioned above. But, still a great family owned corp that will continue solid on reputation of solid product and excellent customer service.

Nike: 5 years ago, a laughing stock in the golf business. Lots of money invested.... LOTS! Looks like might be beginning to pay off. You'd have to have Bill Gates like money to attack the industry as they have.

Cleveland: Couldn't make it as a small, privately held company. French company purchased with large corporate dollars. Namesake (Roger Cleveland) moved over to Callaway.

Companies that were successfull...

Spalding: Gone!

Hogan: Gone!

MacGregor: Trying to come up for air a 3rd or 4th time and, in reality, probably won't survive.

Wilson: Complete sporting goods manufacturer that struggles with the golf unit.

Orlimar: Gone

Founders Club: Gone

Ram: For all practical purposes, gone.

Tommy Armour: After three or four buyouts struggling... a mere shadow of what they were in the early 90's.

Couple of "renegade" companies...

Adams: Built success on original "Tight LIes". Has stayed strong through leadership of Barney Adams. What will happen when Barney is gone?

Tour Edge: Second tier company that has hit a jackpot with the "Exotics" line... recently. Probably just a blip of success.

I'm not real optimistic about the success of a start-up company today. In fact, will go so far as to guarantee failure of a small, undercapitalized start up venture. Look at dollars being spent in the industry and the split. Conservatively predict a miniscule percent of a shrinking industry and the dollars aren't there.

Come up with an innovative, "perfect" club design. Borrow enough to capitilize molds and a "run" with an asian casting company. Against immeasurable odds, your "perfect" club design takes off. Before you can raise more capital to meet immediate demands, knock-offs have hit the market at 30 cents of the dollar of what you need to make a profit, let alone pay back your earlier capitilization. You have no money to fight any patent/copyright infringement and, if you did, the courts won't protect you.

Have I painted an ugly enough picture yet?

If you have a unique, marketable club design... analyze which current company would be best positioned to bring it to fruition. Who has some "stale" product in the area of your design? Who has capital to bring your concept to market? The large companies have people taking "runs" at them every day. If your product is good enough for you to build a company around... the "experts" will recognize it. If it is just another stale product in a stale industry... don't waste your money if they won't waste theirs.

Options: Find a new, innovative niche product. Brush tees... distance measuring devices... these are items that were slow to take off, but have made some money in some side line products. Again, the competition is huge.

Develop a new metalurgy. The industry has stagnated with titanium alloys in drivers and carbon steel/stainless alloys in irons. Shaft technology is limited to steel and graphite. We've not seen new material technology in quite a few years. Find something truly new that has qualities above and beyond what is out there today. Karsten developed the investment cast process from the aerospace industry. The automotive industry, here in America, has fallen on difficult times. Find a chemist/engineer that has existed inside one of the automaker's think tanks for years. He can't communicate with common people. His entire world is metals and alloys and exotic materials. Develop the questions you need to ask to get the information you need to know when he is close to something great. A new metalurgy... a really new manufacturing process... can be sold and make you money.

Develop a new manufacturing process. Ping is the ONLY current company manufacturing product in the US. ALL other US golf club manufacturers have their heads cast or forged overseas. With the current volitile world situation, come up with a method through robotics, etc. that will allow you to cast, forge... or your new yet un-named process here in the US competitively. The process cannot use people. The commodity of people is too cheap in Asia compared to the US. The process must eliminate people and employ a less expensive alternative. If Callaway or Titleist could bring their product to market with a 10% or more savings in cost of overseas manufacturing you could get wealthy... very wealthy.

Develop an icon. Tiger Woods "blossomed" through the 90's boom. Times were good for golf, but TW made times better. Thousands of people bought clubs and took lessons and shouted "I'm Tiger Woods!" There will be some huge dollars generated by Wie, Pressel, etc. But, as great as they are, LPGA players will not do to the game what TW did. Now... don't crucify me... IF one of those female players were to have repeated success.... repeated wins... on the PGA tour that would be huge! Don't think it will happen, but the payback to the industry would be astronomical. Find an icon. Find the next TW.

I've rambled long enough. It will be interesting to hear some ideas others come up with. Thanks for a good thread that could be lots of fun!

dtwainright · March 28, 2006

Interesting points...thank you for the insight.

I haven't thought too much about my competitive advantage (You must have taken some business courses in college).

I have some ideas, but nothing too specatular. My initial idea is to cater to custom built sets...ie: I love those irons, but I want this...or I want those shafts, etc... Not a very large market, but I wouldn't want to be the WalMart of golf clubs.

Keep the ideas/insights coming. I'd love your feedback no matter the thought...the sky's the limit!

Regards,

TW

NPVWhiz · March 29, 2006

Just a very, very competitive business to be in. Some alums of a top business school, very smart fellows with an excellent business plan tried to start a company seven or eight years ago. They had cool technology, decent club designs. They didn't make it. (Liquid Metal Golf). This is a brand driven business, and in many ways that brand recognition is bought, plain and simple, via player sponsorship and airtime. Technology does play a role, but promotion expense is a huge part of this business if you want to make any margin. Some very shrewd people have tried to make a buck at this business, and it's just a difficult nut to crack.

kdubya · March 30, 2006

I've been trying to get into the big companies as an engineer for about a year, applied to a couple but never got to an interview. Seems there are way more openings for production/supply chain/quality engineers rather than club designers. R&D for them must be tiny.

I have been thinking of just designing a set of irons and having them manufactured.... just to toy around with them. I have a couple CAD models that I have looked into getting cast (forging is out of the question obviously). You can get a complete iron set of wax patterns for the investment casting made from your CAD data for about $500 through online rapid prototyping companies. I'm thinking I could have 3-PW made for under $1200 if I shaft and grip them myself. Problem is I have no idea if they would be complete crap or not. If they got to a point where they weren't crap I could sell them through a website... have the heads cast as they are purchased so there would be pretty much zero investment needed other than the tooling.

dtwainright · March 30, 2006

Thanks for all the feedback...keep it coming!

Willie991: Thanks for the thoughts...you brought up a many good points. I work in a very patent-driven business (it's the top barrier that other companies have to fight against) so why don't the big companies patent the clubs that clone makers copy? Or do they, and the clones are just different enough? (This tells you how little I know about the golf industry)

Why don't the big companies offer more tiered pricing for clubs? Other than buying last years model for $400-500, why not make current clubs @ the $300 price point, then one @ $600 and so on...It seems that only a couple of companies do this.

I look at all of this from a supply chain point of view...it seems that these companies make what they think they are going to sell instead of building what the customer wants...I'm just thinking here, but why can't you order clubs like you can a Dell? Lower costs...higher revenue...and happier customers...just a thought because I don't know a great deal about "making" the club. Do foundries make them buy 5,000 sets of one iron at a time?

Sorry this is so long, but one more thing...

kdubya: Awesome that you know how to create the CAD models. I’ll show my ignorance again...but why can't you get them forged? Other than money, are there only a small percentage of places to get it done? Or would they require you to make too many heads?

This really may be a dumb question, so please don't butcher me...but why aren't irons CNC machined like putters? Time? Cost? Feel?

Thanks for reading all this and I look forward to your responses.

Regards,

TW

glcoach · March 30, 2006

Good thread. I think a lot of people have the Walter Mitty fantasy of designing and building a golf equipment powerhouse.

If we could only win powerball, all our problems would be solved:)

CSR · March 30, 2006

Hogan: Gone!
MacGregor: Trying to come up for air a 3rd or 4th time and, in reality, probably won't survive.
Wilson: Complete sporting goods manufacturer that struggles with the golf unit.
Orlimar: Gone

You might want to look again.

Hogan still makes a great blade and above average wedges. Also owned by a company called Callaway.

MacGregor- their new line is much better than you think. Try the new driver and play the blades, you'll be more than impressed.

Wilson- yes, they're second tier, but still successful. Harrington and Jesper think they're worth it.

PGMlady · March 30, 2006

What about customer service???

That's the first thing that the Acushnet puts their employees through. You have to work customer service for 2-5 years depending on other job openings. You can't build satisfied customers without the customer service.

kdubya · March 30, 2006

The reason you can't get started forging clubs is that you have to mill forging dies out of very hard steel, which costs a ton. I think its at least a couple tens of thousands of dollars. Im pretty sure that the big companies cast or CNC mill thier early prototypes for forged clubs because of this.

For cast clubs you just have to mill soft aluminum molds to make the wax patterns that are required for investment casting. Or you can bypass that step and have the patterns made directly on a 3d printer, which is cheaper if you are only making a few sets.

The reason irons arn't milled for general production is that there just is not any reason to. CNC machines can give you really good tolerances, but the only dimensions that are super important are in the grooves. Many clubs have the face grooves CNC milled in after they are forged or cast.

If you ask me, the only reason so many putters are milled is because the tool marks look cool. They can get away with it because the metals they use are so much softer... plus they are charging insane amounts of money for them. There is no way in hell that a tiny milled piece of aluminum on a stick should cost $200.

app10 · March 30, 2006

Thanks for all the feedback...keep it coming!

Willie991: Thanks for the thoughts...you brought up a many good points. I work in a very patent-driven business (it's the top barrier that other companies have to fight against) so why don't the big companies patent the clubs that clone makers copy? Or do they, and the clones are just different enough? (This tells you how little I know about the golf industry)

Why don't the big companies offer more tiered pricing for clubs? Other than buying last years model for $400-500, why not make current clubs @ the $300 price point, then one @ $600 and so on...It seems that only a couple of companies do this.

I look at all of this from a supply chain point of view...it seems that these companies make what they think they are going to sell instead of building what the customer wants...I'm just thinking here, but why can't you order clubs like you can a Dell? Lower costs...higher revenue...and happier customers...just a thought because I don't know a great deal about "making" the club. Do foundries make them buy 5,000 sets of one iron at a time?

Sorry this is so long, but one more thing...

kdubya: Awesome that you know how to create the CAD models. I’ll show my ignorance again...but why can't you get them forged? Other than money, are there only a small percentage of places to get it done? Or would they require you to make too many heads?

This really may be a dumb question, so please don't butcher me...but why aren't irons CNC machined like putters? Time? Cost? Feel?

Thanks for reading all this and I look forward to your responses.
Regards,
TW

Agreed. I've often thought about the "Dell of golf clubs" -- especially if you have high quality components that can be matched and then ordered directly. The first step is a proprietary offering directly from the website, and NOT using retail channels (big box sporting goods or golf stores or pro shops, etc). Look, for example, at what Innovex Golf has done (I have no affiliation with or interest in them) - online sales directly from their website, plus an affiliated network of specialty distribution (the latter of which can be turned mostly into service locations if they ever get to scale). The prices are significantly lower than comparable sets from what I understand. In a different market, look at what Aperion Audio has done with speakers -- again, direct sales over the internet, one of the best customer service reputations in the industry, high quality product getting positive reviews, and very high value for dollar. I think companies like Innovex and Aperion are onto something here. IF you can build a high quality product and reduce the distribution costs, you may be able to build a significant business.

willie991 · March 30, 2006

Hogan: Gone!
MacGregor: Trying to come up for air a 3rd or 4th time and, in reality, probably won't survive.
Wilson: Complete sporting goods manufacturer that struggles with the golf unit.
Orlimar: Gone

You might want to look again.
Hogan still makes a great blade and above average wedges. Also owned by a company called Callaway.
MacGregor- their new line is much better than you think. Try the new driver and play the blades, you'll be more than impressed.
Wilson- yes, they're second tier, but still successful. Harrington and Jesper think they're worth it.

Hogan has basically closed up their Ft. Worth facility. Callaway now has a forged iron with the X-tours. Hogan will be a "red-headed stepchild". Really no prominence on tour. Leonard went to Nike and Furyk to Srixon.

MacGregor, I'm sure, makes fine clubs. Purchase a set... or one of the new drivers and then try to resell it or get anywhere close to your money back. Struggling. Signed Greg Norman.... Wow! He's sure seen a lot on tour. Probably their biggest name right now is Olazabel. I wish them well, but if the industry stays somewhat stagnant... MacGregor will fall once again.

Wilson's money, I still say, comes from other units of the corporation. Their big numbers in the golf industry are in beginner sets, etc. If you think Parnevik and Harrington play Wilson for any reason other than the endorsement dollars...

I apologize for being too negative. I've just seen too many folks fail in this industry. Good business people... Excellent craftsmen... Known designers... I've seen too many hurt to not make every attempt to put the "fear of God" into anyone looking at investing their life savings. If, after studying the failures you still firmly believe your business plan will lead to success... go for it!!! Just don't go in blindly, assuming there is a pot of gold sitting there waiting for you to haul it home.

dtwainright · March 30, 2006

I apologize for being too negative. I've just seen too many folks fail in this industry. Good business people... Excellent craftsmen... Known designers... I've seen too many hurt to not make every attempt to put the "fear of God" into anyone looking at investing their life savings. If, after studying the failures you still firmly believe your business plan will lead to success... go for it!!! Just don't go in blindly, assuming there is a pot of gold sitting there waiting for you to haul it home.

No need to apologize, but I'd like to focus on and talk about why these companies failed. I don't know much history behind a lot of these companies, but I'd like to learn. Did these companies focus attention away from a core product and were stretched too thin? Did they have manufacturing problems too many years in a row and just couldn't get anything to market? Maybe it's some inside dealings that we'll never know about.

Also...what did Taylor Made do that was soooo different than Ben Hogan or Wilson? Do they really have a better product (maybe not...I said maybe -> please don't butcher me... since a couple of folks here think that the R&D is pretty small), was it the look? the sheer quantity of clubs in the store (most shoppers pay attention to what's in the front of the store, not the few clubs in the back...I did work high-end retail for 6 years, I know how this works)?

Boy...I really need to get some work done today . Please let me know what you think...tell me about your dream club company!