The State of the Industry: An Outdoor Recreation Roundtable
Paul Johnson: The first question has to do with tariffs. They’re a bit of a rollercoaster out there right now, but I assume this question applies mostly to those of you that have a product or products, but to the extent it applies to those of you that are supplying a service, please comment. But how have tariffs affected the supply-and-sell side of your business and how do you expect them to affect the supply-and-sell side of your business?
Scott Clinger: Tariffs will impact us, for sure. Most of what we do is we try to source steel from the United States and Canada and aluminum from the United States and Canada as much as we can. However, two of our most recent product lines are all titanium. They’re our largest product lines. Sourcing that domestically doesn’t exist for us. It’s about 350 percent the cost. Most of the U.S.-based titanium is focused for the Boeings and the SpaceXs and some of those industries, the aerospace industries, defense industries. So, we are forced to go overseas and the only places that really do that are Russia and China, and that’s going to impact us pretty dramatically with everything that’s going on. We were lucky, I think, that we had some product on the water already so that in theory that’s supposed to be protected, but we don’t actually know.
But that’ll be about a 140 percent increase. We’re a consumer brand. We do have margin, but we don’t have that much margin. The uncertainty right now is impacting our planning for what we need to do. We’re starting to evaluate some of those product lines. Where can we make modifications to our materials that won’t degrade the quality of the product? Titanium is light. It has some properties that are really beneficial when you’re hanging a product 18, 20 inches off the front of the end of the muzzle of a rifle. So, weight matters. So, it’ll be interesting. It’s definitely going to impact us pretty dramatically.
Eric Vaughan: Are you planning on you guys taking a little hit and then also putting a little bit of extra for the end consumer?
Clinger: With price sensitivity, you have to weigh what’s going on with consumer confidence. I don’t know if any of you guys are seeing–we’ve seen a little bit of a dip in consumer confidence in the last month or so and so how do you absorb what you can absorb, but then you’ve got to pass it along and our customers have purchase orders with us. So even if we had a price increase today, we have purchase orders in for the next handful of months, so we won’t see that savings for a little bit. So, at some point, we’re going to have to absorb some of it, but it also needs to be passed along. That’s a fine balance that we’re all going to face.
Johnson: So, other than the titanium, which doesn’t sound like there’s a great supply here in the U.S., have you looked at the cost of sourcing the other materials locally? Do you have an idea of how much that would increase?
Clinger: None of it’s really increased so far, so the bids that we’re getting back for on steels are minimal if not flat. Again, as much as we can, we’re an America-first company, so we’ve always sourced steel and aluminum as best we can. We start here, then we go to Canada and stay with friendly countries and then we’ll go overseas to Europe for steel. There’s a lot of really good high-quality steel mills in France and Germany, so we’ll try there. And then after that, we’ll move to other places, to the Chinas and what have you, that have higher tariffs. But most of our stuff we source domestically and we’ve tried to source domestically as much as we can. And our product’s a little unique in that the State Department controls where we can manufacture. We can’t manufacture overseas, we can’t export our prints due to ITAR (International Traffic in Arms Regulations), so we have to do everything in the United States anyway. So it just behooves us to try to supply and do everything as much as we can here.
Johnson: Mark, how about Wildhorn Outfitters?
Mark Thomas: Yeah, this is really impactful for us. Four of the five categories that we sell into are manufactured in China right now, and there’s a couple of really big challenges for outdoor brands. I don’t know if all of you are really seasonal, but for those of us that are super-seasonal, we do long-range planning. And so I’m supposed to be buying inventory now for winter, but I don’t know what the tariff’s going to be when they come into port in October. And so you don’t know how to plan your cash flows and you don’t know what risks you’re actually taking or not taking.
We don’t have the margin to pass enough of it on to consumers. We’re a direct-to-consumer brand and we sell on Amazon as a third-party seller. We do a lot of direct-to-consumer and Meta and Google and all these other platforms. The cost of acquisition is going up. So, the margins are already tighter in big, bulky outdoor gear items. And about 80 percent of outdoor goods are produced in Asia. So, the industry needs to adapt, because even after this, even if tomorrow they say, ‘Hey, tariffs are down to 30 percent,’ great. I’ll put my orders in and I’ll immediately work on plans to get out. To me, it’s going to be a permanent shift for us. We’ll lean hard into our fifth category for the next 18 months while we work on these other things.
And I don’t want to sound catastrophic because I think as entrepreneurs, our job is to just adapt, like, whatever, do what you want to do, give us some time and capital, we’ll figure it out. But my view is that the arbitrage in China’s pretty much not something that I want to try to deal with anymore, but it will take us some time because ski goggles is a big category for us, and you can’t even make lenses here for ski goggles because the EPA regulations are too steep, and so it’s really expensive to make them. There hasn’t really been an industry in the U.S. to make ski goggles for that reason, so we would be starting from scratch to try to build that here.
Same with ski helmets. There’s quite a few things that just don’t really exist in the U.S., because if it did, we would be doing it or at least looking at it. I think for outdoor brands, it’s a planning problem. It’s a cash flow challenge as well. Your container is going to cost 145 percent more than it did before, and that’s paid upfront. So, yeah, I think big massive changes for the outdoor industry are coming because of the sheer volume that’s coming out of Asia right now. But I’m also optimistic there’s going to be a de-escalation in the next near term, hopefully. I really need it to be near term, in the next 30 days. But like I said, even after that, it’s a full sprint to completely readjust the supply chain long term.
Johnson: So, are you looking at trying to bring everything back to the U.S.? At least investigating the possibilities?
Thomas: Yeah, I’m having conversations with a full factory build here. We’ve actually been looking outside of China for years. This is not a new thing. It’s just that the options haven’t been very good. So, yeah, we’ll look locally, we will look to see how these things settle. There will be friendly places you can manufacture that aren’t here that are still going to be an advantage. And we’ll look at those places, too. Everything’s on the table, in my mind, for the industry to readjust. And I think brands will have to collaborate more, too, because you look at a brand like Wildhorn and you look at our volumes; we’re not Smith, we’re not Oakley. They’re large enough that they could do a vertically integrated factory. Wildhorn doesn’t have enough volume to have a full assembly plant to keep people busy all year, so what we do is buy from contract manufacturers who make goggles for 15 different brands, and so our volume fits into their schedule. I think that a brand like Wildhorn and the other sort of 20 percent of the industry that is not Smith or Oakley is going to have to come together and say, ‘Hey, how do we all come together to build supply here instead of just each little brand?’ Trying to go vertical is not super-realistic, I don’t think. So, I think industry segments will work together to find ways to build out supply here, it would be my guess, in the next three to five years.
Johnson: Anybody else affected by the tariffs?
Jordan Washburn: On our end, the whole bike industry revolves around Taiwan, some Vietnam. The interesting thing though is, we’re the same mentality: Focus on what you can control and not what you can’t. Politics aside and everything, I’m not the guy negotiating those deals, but I am the guy who needs to respond to whatever. So, plan for the worst, hope for the best. But what’s interesting though is that we design and manufacture our own frames, but then we use high-end components that are common in the industry like Fox Suspension, RockShox, Shimano and SRAM, and a lot of those are coming out of Taiwan and different countries. And so, even if we manufacture a part here stateside, the entire industry, it doesn’t matter if it’s one part, all bike prices will go up. And I’m hopeful and confident that likewise, it won’t stick where it’s currently at. It could be better than ever at the end of this or worse than ever. So we’re just rolling ahead and hopefully the economy is at a point where people still want to buy stuff. But we look at it like, worst worst-case scenario, if things sit as they are, our direct prices may be what a traditional retail price was last week. We know people were buying bikes at that price, but the whole industry is going to go up.
Clinger: I’d be interested in your take: Everybody is up against the same problem. At least in our world, anybody who makes anything out of titanium is getting titanium from not the same source but the same country, or it’s getting passed through the same country. Everything shifts. Every supplier has a supplier, and I actually like your idea. In our industry, there are what’s called buy groups. Dealers who are competitors in the same town will come together and consolidate their purchasing power and negotiating power with manufacturers to be able to buy at a little bit better discounts.
Thomas: I think that if they persist, if this whole global trade thing is just being replaced by a different system and it persists, I think eventually customers are going to start behaving differently and they’re not going to consume the same way. They’re not going to buy the same way. They’re not going to buy a new pair of ski goggles just because it looks cool. They’re going to actually say, ‘I need something that lasts me 10 years.’ And so you might actually see a real big shift to that type of model. … Here’s the thing: China actually is not just the lowest cost. They’re actually one of the highest-quality places you can get certain things, too. But there might be a shift where the consumer eventually changes, too, where they just buy less stuff and they spend more. If they’re going to buy a bike, bikes are already expensive, but if they’re going to buy a $10,000 bike because that’s all they can buy, they’re going to ride that thing for a really long time. Or a pair of gloves. If they’re going to buy a pair of gloves, they need it to last seven seasons or eight seasons or whatever, then that will also, I think, impact how we come together and manufacture things, too, instead of really big volumes.
Mandy Sadorus: We’ve been a little bit different. I mean, we’re lucky enough that we have verticals that don’t depend on that type of thing, but as a broker, we have so many different things that we pull into pieces to put together a simulator that we have noticed. Our operations, in general, we operate in full transparency between our vendors and our end user. And so with us, it’s like, “OK, how can we creatively solve the problem for you? You’ve got your mind and heart set on this one piece, but their tariffs are jumping their costs so much, so have you thought about this other product that we broker out as well?” So, we’re trying to be creative and collaborative that way. And collaboration in general, I think, is such an important thing, and I love that because I think that your idea could benefit so many different industries, utilizing it in different spaces.
Johnny Riche: One of the things, maybe on the flip side for us, is being a fashion and function brand, and all of our products are small. When it comes to this Colesma watch that’s built in China, we have a lot of margin when we’re ordering 100,000 of one watch and the margins are great. So fortunate for us, we don’t have to necessarily pass that cost on to the end user because we just understand we’re going to make a little less in that margin. And on that flip side, our eyewear is made in Italy … and a lot of eyewear is made in China, right? We kind of have this joke, if you have $10 eyes, buy a $10 pair of glasses. But you don’t. If you want high-end stuff, you know that it’s coming from Italy or Switzerland in that field.
And so with China, if they bump those prices up, it’s almost kind of good for us because that means our competitor, their prices have to increase. They might pass that on to their end user where we don’t necessarily have to, and we have a higher-end product. We’re looking at it like it’s actually kind of good for us if they do that. Some of our competitors may go out of business, they may not have as many sales. Our stuff is more exclusive, more fashionable. The people that can afford that, this isn’t really going to affect them very much, that 20 percent or whatever that would have to increase. Once again, our margins are there enough that we don’t have to do that.
Thomas: That’s actually an interesting comment. So, what you’re saying is, you’re a premium brand with premium pricing and the non-premium brands are going to have to increase their pricing, and the consumers are going to be like, “Why would I buy this cheaper brand when I can just go buy a premium brand?” You don’t think the premium stuff will just feel the need to keep increasing as well, just to maintain that distance between your .…
Riche: I think if you’re a terrible company, yeah. I think if you’re not trying to look out for the best interests of both sides of America and your brand, you would be that way. But when you look at a bag that they make over there, and it’s literally the leather, the stitching, the buckle, that bag maybe $1,000 is the cost. They retail it here in America for $20,000. That’s a lot of margin there. If they take that and go, well, now that bag’s $25,000 because our prices went up to $2,000 for that bag, then for us, that’s crazy. That’s terrible. We want our customers to be repeat people that love our stuff, buy it, and they go, “Oh, there is a lot of crap going on, but these guys haven’t raised their prices. Things are still the same. We’re going to be loyal over the next five years, 10 years, 20 years.” So we’re looking at this long-game thing going, “OK, yeah, XYZ Company, raise your prices on all your stuff.” I know there’s businesses that don’t have that type of margin, but in the fashion and function of eyewear and watches, it’s there. When you buy a Rolex, we have stuff that’s made in the same factory. You’re not paying because it’s nicer. It’s the brand, it’s Rolex that you’re paying for, that name. And so if they were to increase that, you would question that if you were a fan or if you were brand-loyal, you’d be like, “Well, why are they doing that?” We understand that there’s margins in these products, let’s not pass that on. Let’s just eat some of that and then wait it out, and then we’ll be the ones that they go back to go, “Yeah, they never raised their price. No, they were doing things the right way.”
Johnson: I would imagine that the lower-end products, even if they do raise their prices, they’re still going to be quite a delta between them and you. I don’t think people are going to feel like your product isn’t as good because it’s not as exclusive compared to the lower-end brands as it once was.
Derek Tillotson: We’re in the middle of our third Kickstarter, and my finger was hovering over the launch button on April 2. I was like, “Well, let me hold off for a second.” And that was the day that the tariff, the craziness started, and then we launched a week later, then the tariffs went up again. So, I would say the Kickstarter model is going to really change with uncertainty because you’re basically ordering stuff or you’re collecting orders for things that you’re going to fill in six months or whatever. And so anyway, that industry is going to change, I think, if this uncertainty persists. But we looked at making one of our rain flies, we have a hammock that has a rain fly, and we found a U.S. manufacturer and we got a bid for it, and it was $160 for a fly. … Same fly, $30 out of China.
And so yeah, there is a 150 percent tariff, and my logistics guy’s going nuts. He’s sweating it out, but still, there’s so much of a margin there as far as that arbitrage is so huge for us that to make our things, I don’t know if it really matters. It’ll be so hard for us to beat the price. The tariff would’ve to go up to 500 percent to be more expensive than making it in the U.S. And so I don’t know if there is anything going to change. We’ll probably adjust a little bit on our prices. We’ll probably spend a little bit less on our customer acquisition costs and things. But anyway, Kickstarter is exciting right now.
Sadorus: That’s such an interesting [thing]. I would never have thought about that. Such an interesting model that you have to now navigate.
Thomas: Yeah, because you can’t really change the price once they’ve pledged, right?
Tillotson: And somebody’s like, “Well, maybe we can ask for more after.” Like, no, Kickstarter is a marketing play and this is our gamble. We would’ve made money, now we might lose money. We might make money though by the time it lands, who knows? And so whatever it is, I just hope that it equals out and there’s some predictability to it, because the uncertainty is the biggest killer for us.
Clinger: Whether it’s 100 percent or 10 percent, it’s the vacillating between the two that is what causes angst for us.
Johnson: When you placed that Kickstarter, did you build in some room to accommodate some up and down in that?
Tillotson: On April 2, we said, ‘Oh, there’s tariff.’ Let’s increase the price a little bit on the end. We can do this or this. We’ll spend a little bit less on marketing” because people generally don’t go to Kickstarter for elite camping gear. And this version of our product that we’re selling is our most kind of specialized and top-of-the-line item. And so I felt like we had to keep the prices pretty low. Anyway, so we adjusted the prices, launched and then they got the 100 percent tariff on top of it, and it’s like, oh. So anyway, yeah. We’re not going to lose our shirts over it. It’s more of a marketing thing to get the idea of the product out there, but it’s definitely making my logistics guy nervous. And we would normally just receive all of the goods in the U.S. and then break them up and ship to some of those smaller markets because we opened up global pledges. And so we have people in Hong Kong that are ordering, people here and there, and all over the place. So we’ll send some inventory to Europe, some to Norway, which is a separate part of Europe as far as the customs are concerned. And then this week we planned to fulfill all of our outside orders to the U.S. to Australia and things from Taiwan, actually. We would normally just receive it all in the U.S. and then ship it out from the U.S., but we’re going to try to get around that for that part of the fulfillment, which will be like 20 percent of the fulfillment will. Where we would normally land it in the U.S. and then we would be employing U.S. people, we’d be doing all of that. Now that’s all going to happen overseas just to get around the tariffs.
Johnson: Have any of you noticed any other sales trends in 2025?
Washburn: More extensive product is selling, but, yeah, all of the lower end of the bike market is a little soft. … I read an article, they say that the top 10 percent wealthiest people in America account for over 50 percent of consumer spending. And I think that’s like our $7,000, $8,000, $9,000, $10,000 bikes are selling way more over this last year than the $4,000 and below. And I think it’s just because that demographic is maybe a little less concerned. And if you lose your job, it’s just three more days of riding a bike.
Riche: My brother-in-law, they run seven different boat dealerships and last year’s boat show was the biggest boat show they’ve had in 20 years. It’s like, dude, people with money, they’re buying stuff. They’re out. Whatever’s changed in their mind, they are out spending money right now on these luxury items. And that kind of transition with Rockwell, is that some of our higher-end eyewear and things like that, the more expensive watches, we are seeing an uptick in that, selling more. Where that was never our bread-and-butter before. Those were just items that we had out there because maybe there was somebody who would want that. It was always the $100 to $400 price range that we sold the most of. But now it’s like, oh, wow, maybe we should start marketing more of these because they’re doing so much better.
Johnson: That is very interesting. So it’s not that the higher-end stuff is remaining steady, you’re actually seeing an increase in sales?
Sadorus: Ours has been, honestly, if you look at trends–what was it 20, 25 years ago, what was the big thing in homes? Home theaters. Now the trend is golf simulation and multi-use space. And so really a great space for us it’s just those new construction spaces, those big high-end developments because we’re working with developers that are wanting to just like, OK, this is what’s cool about us. Everybody, every home has an in-home golf simulator.
And what’s cool about that, especially too with the new technology that’s coming out, I mean, we are resellers for TruGolf, and TruGolf has a product called Apex that is also a multi-sport. So you’re looking at a space that can be a golf simulator, a home theater, a multi-sport unit, so your kids can go down and play Slap Shot Hockey or Zombie Dodgeball, which is my particular favorite, or just all of those different spaces, and their tech is just getting better. And so it’s sort of the same similar thing. Yeah, maybe some of our people that would’ve wanted to invest in that type of space before won’t be able to, but there’s still that space where people that have money are good to go.
Clinger: We’re looking at different parts of the market. The outdoor person that’s paying X dollars a month, is that person being impacted by the chaos in the market? Because those are sometimes the canaries in the coal mine for at least from our core user: Are they willing to spend the $100 to $120 a month? It’s affordable to do their hobby.
Eliza Keegan: Yeah, definitely. That’s a great question. We just last week here in Salt Lake had our climbing wall association annual summit and an earnings report came out and the highest year ever was 2023 for the climbing industry. And almost everybody saw … a dip last year, which is really interesting, and I think it’s reflective of people being more conscientious about their spending. And just going back to the tariffs question, because I think it’s a unique scenario with us being a service industry, it’s a huge upfront investment to build a climbing gym. Our full-service climbing gyms are anywhere between $5 million and $10 million, and there are major markets in the U.S. that don’t have climbing gyms. And so what I expect to happen and how I think our industry will be impacted by these tariffs is, we are seeing more conscientious consumers and we are seeing a dip in users. And with these tariffs, our gyms are wood and steel, so that upfront investment is going to get even more expensive. I think it has the potential to maybe stop people from building new climbing gyms. And so we saw this huge growth in the industry, and then COVID happened, and all those construction projects were ceased, and then we started building more gyms again, and now potentially we’re going to see the industry slow down and less growth.
What’s interesting, and I’m just learning this as we’re expanding into new markets, the rest of the world doesn’t operate on subscription models. They are very conscientious of giving their credit card information out. And so both in Asia and in Europe, it’s all paid in full. And so we’re trying to push the subscription model over there, but it’s not apples to apples.
Johnson: So when you say paid in full, like a full one-year paid membership?
Keegan: One-month, three-month, six-month, one-year, and then you have different tiers of consumers based on what they’re willing to spend. But, yeah, I don’t think a subscription model is common over in Europe and Asia.
Sadorus: That is interesting because we have an office in London, and so obviously different markets, right? But with Trackman, they do a subscription model, so you can have a subscription and go play anywhere that has a Trackman. And so our partners in London, they still operate on the subscription model.
Sadorus: We’re in Eastern Europe, so it’s probably different.
Johnson: Have you found any effective strategies in 2025 for engaging with customers that maybe are the same as what you were doing before and maybe they’re different?
Clinger: Johnny, you said something, I think, that is probably the thing that we are seeing the most, and that is lifestyle, right? From a sales standpoint, good salesmen sell features and benefits. Great salesmen sell the outcome, but the best salesmen sell the feelings. I want to belong to the Rockwell family. I want to belong to the SilencerCo team. I’m a Momentum gym member, and they identify as that. And from our standpoint, at least what we’re seeing is, people are moving to that lifestyle. And if they’re a climber, they’re a climber. And if you can lock them into the lifestyle, another $10 a month, OK, this is just what I do. And so I think there is something that we’re seeing about that that is anchoring people to our brand, that is anchoring them to be able to say, “Hey, we’re going to continue on with new acquisitions.” About 60 percent of our customers last year were new to SilencerCo. We’re in a growing market, but we’ve created a lifestyle.
Riche: Once someone purchases from you, are they purchasing more? Is it more than just once? It’s maybe four or five?
Clinger: Yeah, our average consumer is about 5.4 products, roughly. … All suppressors, yeah. It’s really all we offer. … I mean, at this point it’s 17 years. We have do-all products, and then we have scalpels. The do-all product is kind of the “gateway drug” for people. It’s the, “Hey, we’ve got this thing. I want it for this gun and this gun and this gun and this gun. I’ll just buy the accessory, put them all together.” And then they get out there and they take their friends with them, and their friends are shooting a loud gun, and they’re like, “If you’re not going to buy one, I’ll buy another one and give it to you because this is really annoying.” Then you find your friends who are just super-rude and you don’t invite them anymore, because their guns are loud. And so you’ll end up adding more and more, and it becomes a lifestyle. My wife is not a huge gun person, oddly enough. She doesn’t like loud noises. And if I can put a silencer on the gun, take the kids out, all of a sudden it becomes ‘you can take the whole family with us.’ And if everybody that we go out with, brother-in-law, whoever, they all have silencers, then it becomes a fun environment. Again, it’s the feeling of being there together and shooting. And if you can figure out how to sell that, that’s been good for us.
Riche: Talking about lifestyle and culture, the culture of our business, we were able to take our guys and say, “What are you passionate about?” “Oh, I love MMA, I love skiing, I love snowboarding.” I was like, “OK, go after those people. We want those ambassadors, people that are good at those, representing our brand.” Let’s make sure we take care of those people, get them in our product, make sure they like it, and then it kind of stems for them. Then they’re part of the family. And I’ve seen like SilencerCo, I went to the gun show, we actually did some watches for you guys. We went to the gun show, and I saw that culture, like the guys and the people that were in the booth, in your guys’ booth, and, dude, those guys all love the same thing. Those dudes all buy the same hat, shirt, pants, gear. … So that culture’s there, and that’s really how we’ve built our business, is that marketing. I talked about monster trucks. What the hell does monster trucks have to do with watches and sunglasses? But we’re offering an experience for our fans to come and do something and have a great memory and walk away and going, “Oh, man, Rockwell put that on? How cool.” And they’re part of what it is that we’re doing. And so we’ve been able to create a really cool culture that the lifestyle is just a part of that. Because we want anybody that buys a watch to reflect they’re part of the team, they’re part of Rockwell. They can wear that, a badge of honor.
Clinger: And it’s tapping into what people do. Ours, some people think it’s a bit extreme, but we have a nutria... Most people don’t know what nutria are. … It’s a big, old rat that’s down in Louisiana that is basically eating all of the swampland, right? It’s an invasive species. So we have a series coming out. We just launched a video this week of a bunch of guys on air boats riding around shooting nutria and harvesting them, they get five bucks a tail, but that’s Louisiana. That’s what happens in Louisiana. These things are invasive, get them out of here as best you can. You can’t stop it. Shooting pigs in Texas and in the South in general, $600 billion, $700 billion, I think is the last number of damage that happens to crops. And these pigs, you have to eradicate 78 percent of the pig population to hold it steady. That’s how fast they reproduce. So again, so we’d go out and we’d fly in helicopters and we go shoot them out of helicopters like a video game. Or you go out on buggies and do things. … It’s the lifestyle. And so if you can tap into that and say, “Hey, how do I create the best environment? How do I create the best downhill bike environment and the best climbing experience and the best outdoor sleeping experience and the best golf experience?” I can tell you, I’m going to go for your product [Vaughn]. I’m 12 years old, I’m going up GAD 2 at Snowbird, and I take my glove off and it drops down on the face of GAD 2. It’s snowing, and now I’m like, “Well, now what do I do?” So if you can tap into that experience and be like, “You know what you do?” You unzip and you pull your hand out and your glove never falls. Because that’s an experience, and now if you can tap into that, you have a way to communicate with your customer and that drives their lifestyle. “Hey, I do this. I don’t want to drop a glove. That’s what I do.” I like bouldering. In the winter, I want to get ready to go out in the spring and get outside. I’ve got to be ready. How do you tap into that lifestyle?
Washburn: Along those lines, we always joke that we create technology to help people escape technology. We don’t sell bikes; we sell experiences. And the more we see things in this digital age, everyone aspires to be the Amazon, and it fits certain products of the one-click purchase and super-systematized, automated. But one thing that we’ve really honed in and are hammering deeper, I mean, our mantra this year is “butts on bikes.” If we can get people to experience the product, they want to buy the product. That’s kind of the taste. But we also are doubling down on, yes, we want to scale, we’re an online company primarily, but people that are willing to spend money want that experience and that personalization, that they aren’t getting elsewhere. So, every single order that comes through, whether it’s online or wherever, they get a personal phone call. And we walk through the order with them: “Hey, just want to make sure the color looks good here. We looked at your body measurements. These are the recommendations we’ve made. Have you considered this?”
They then get text updates along the way as it’s in the build queue. They get a personal call when it ships. We always say, we’re focusing on being helpful guides. I think in all of our industries, you can quickly get an elitist mentality: “Oh, you’re new to golf?” Like, you have no business looking at it. “You’re new to guns, climbing, whatever it is?” And same thing, bikes are probably the worst. It’s like, “Oh, you’re a newbie? You have no business looking at a $6,000 bike.” It’s like, “If you’re new and you have that money and you want to spend $6,000, like, of course.” But being a helpful guide and being welcoming to the newbies, being welcoming to the switchers, people that are coming from other brands, and then the third bucket, we always look at our customers as our fans. We want everybody to become a fan. And if you can create a sticky and a welcoming, warm environment and cater your vernacular and that experience to the newbie, the switcher or the fan, it’s not if I’m going to get an Ari, it’s which one’s my next? That’s the goal. Automate … But people don’t want to talk to a robot when they call. They don’t want a phone tree. They want a human on the other end of the line, and I think that’s kind of where a lot of the experiences are going.
Sadorus: We’re all about that experience-based as well. … I swear to you, I am so tired of spam text, spam phone calls, spam emails. It’s all about that piece, that relationship piece. It’s the relationship-building. It’s helping them exactly through that process of being that, I’ve never picked a golf club, and now you do this and then we’re going to get you into our lifestyle brand and we’re going to get you engaged in being a part of the golf world. All of those pieces are so important, but really, truly, it’s that relationship piece, right? That piece, that human touch is so important, I think.
Riche: Jordan, it seems to me, e-bikes, man. I don’t know if it’s because I’m in my late 40s, but it’s like all my friends are buying e-bikes, right? … But in that competitive market, which being mostly direct-to-consumer, how come it’s you, right? Why would someone choose Ari over the other brands that are out there? Do they get a chance to ride them? How does that work?
Washburn: Back in 2005, we were the ugly duckling. People were like, “No one is going to swipe their card for five grand to buy a bike, sight unseen, that they’ve never ridden. Like you’re crazy.” And now in the Amazon age everyone’s like, “Dude, how do you do that?” And so, one of the things that we’ve done to combat that is we try to remove as many obstacles as possible. Human touch is one, just building trust. Awards. I mean, if you have award-winning technologies and stuff, that adds credibility. Guarantees, the custom fitting aspect ... but the other thing too that we did was a 30-day “love it or return it” guarantee. And so we said, “Look, get the bike and ride it. Put it through its paces on your favorite roads, your favorite trails. Ride it hard. And if it’s not the best bike you’ve ever ridden, send it back, we’ll give you a full refund.” And so most companies don’t do that. And if they do that, it’s, “No, it’s new in-box. You better not have ever ridden it or you don’t get your money back.” And so our returns are less than 1 percent, I think because we go through all the tuning, the custom setup, we test ride each bike ... I mean you literally just have to slip on the wheels and the handlebars. There’s people helping you along the way. So I think that reduces the returns. And then also just the peace of mind of like, “Hey, if it doesn’t work out, it doesn’t work out. That’s OK.” And so people are willing to take a risk, knowing that you got 30 days and worst-case scenario, you got a 30-day demo. And for free.
Clinger: So, my wife and I went to Black Diamond early to go climbing. And when you walk in and you see people doing things that you have no idea how they’re not falling off the wall. How do you overcome the hurdle to the new person? For me, it’s easy. We do 250 live-fire demos a year. We’re reaching 20,000 [to] 30,000 people a year to give them their first experience. How do you overcome the hurdle of somebody walks in and they’re watching somebody climb a wall and they go, “There’s no way I can do that?” Because you had mentioned getting somebody to start riding a mountain bike or backpacking or whatever it is. How do you overcome that elitist attitude of “Here comes another newbie?” I’m particularly thinking of the climbing because we had that experience so many years ago and … I don’t know how you overcome that to get new clients.
Keegan: I think we lean on our community to sell climbing heavily. We have incentives like guest passes. Every month our members get a free guest pass. And if somebody falls in love with climbing, they want to tell all their friends about it. They want to bring their friends. And so we create very low barriers of entry for people to bring their friends.
And I think having a really psyched and knowledgeable front-desk staff where when somebody comes in the front desk or comes to the gym for the first time, they’re able to give a full tutorial on “Here’s exactly the equipment you need, here’s exactly where you start, these are the routes you should be climbing, these are the boulders you should be climbing,” and we provide them everything they need to have a basis of knowledge to be able to participate.
And I think that’s a really interesting perspective. But what also has happened in our gyms, we have some youth athletes who are just world-class. And I think walking into one of our gyms and seeing an 8-year-old, like, upside-down on the wall is so cool and so inspiring and that makes me want to climb. I’m like, if that 8-year-old can do that, I can maybe not do that, but do something like it.
Washburn: A hundred percent, having knowledgeable and expert staff, friendly. I think too, it’s always a balance of people wanting aspirational content. You want to watch LeBron James dunk over somebody. It’s like, “Wow, it’s cool to see the pinnacle of human performance.” But at the same time, we’re seeing a lot of trends too, of, have the max tier ... We had an athlete in Red Bull Rampage this year, and he is hucking back flips off 90-foot gaps and it’s completely unrelatable for 99.99 percent of the world. But it’s like, wow, that’s cool that he can do that; it’s cool the bikes can do that. But then you do more relatable content like trail-riding content for us and road-riding stories, community. And we’re also doing a lot more too. … The whole age of AI, I don’t know if anybody has all the answers, but one thing we’re experimenting with is doing a lot more stories and blogs on our website: how-tos, bike general stuff, how to corner better, how to wash your bike, how to maintain, and we’re doing long written-format stuff and maybe humans aren’t reading it, but AI is and summarizing and referring traffic. We’re seeing a lot of traffic referred to us from ChatGPT for the first time in the last few months. And so if people aren’t reading it, something is, and so [we’re] being an authority in that space.
Tillotson: On the point of content, when we started our company, Instagram stories, or if you looked at the company’s feed, it was all super-curated, really beautiful images. And I was a content creator before starting the company, so I would do things in the travel space but mainly video, and I was terrible at taking photos. So it was very stressful to think, “I got to make all these professional photos.”
But luckily there’s been a shift from that professional, in-studio type photography stuff into more of the storytelling stuff. I think that’s our secret sauce in this space. We’re now one of the biggest hammock companies on social media. We have around 400,000 followers across the channels and it’s awesome. I posted a video last week of us loading up a hammock with 2,000 pounds of salt, bags of salt, and that video has 3 million or 4 million views now just in a couple of weeks. And so the fact that the shift has gone from just beautiful photos to telling stories of the product, is awesome for us because our product does well in that space. People go camping, they use it in fun ways, they hang it up in beautiful spots and they share their content with us. A lot of times we’re able to repackage it and stuff. And so that’s one of the shifts that I’m definitely happy about over this last year.
Sadorus: It’s that piece of an authentic person who is just the end user: real, raw and everybody can relate to it, and it’s so important.
Riche: I think for a lot of us, maybe not in SilencerCo just because of how you guys are regulated, but Amazon reviews, people making reviews about your product and unboxing videos and these things. It’s like, man, I never really paid much attention to it. And then it was like, holy cow, you read some of these things and even though you don’t want to as a business, you have to go, “OK, what are we doing and what aren’t we doing right?” And then we would translate that into some of our production, into some of our content and advertising to overcome maybe five comments on this one thing that we’re negative, how do we respond to that? “OK, well, let’s make some content, some fun stuff that maybe we will solve that problem for the next person that buys it and they don’t have that trouble.”
To be able to look and see … how do you do it to where it is appealing to that end user and the people that are purchasing your stuff. So, yeah, I think at the end of the day where we never really looked at comments and never really understood that part of it, we now had to readjust and do some things to make it so we can tackle the problem before it ever becomes a problem.
Sadorus: Well, and really capitalize on the people that are already shouting your name out. I mean, you need to be hitting all the channels, right? Jordan mentioned this, but, yes, you want boots on the ground, community word-of-mouth, but I know we’re going to talk about the Olympics, but the Olympic effect is real. Climbing was introduced to the Olympics in 2020 and there was a very identifiable spike in participation after that that will just continue to grow. And I know we’re going to talk about the Olympics, but marketing to your average dirt back climber in our scenario, but also sponsoring athletes and ESPN competitions. … Nathaniel Coleman is from Salt Lake City and he was the first U.S. male to place silver in the Olympics and he grew up in our programs. He’s a product of momentum in a lot of ways, and so trying to utilize him and his story, I think you’re hitting a lot of different demographics and a lot of different users.
Johnson: You have teed up the next question perfectly. [In] 2034, the Olympics are coming. Are you doing anything right now to plan for it? Do you have an idea of what you’re going to be doing?
Sadorus: We absolutely are. I mean it’s such a great space for, in particular, our rentals because of one of our partners. We partner with Drip Swag. And again, it’s all about that experience and the memory from that experience. When you think about the Olympics and all of these pre-events leading up to and events during, companies that are involved and want to do things for their customer base or for their employees, they’re going to do these events. We have a multi-sport. We can do any of these events and it can be branded a hundred percent to their company. We have Drip Swag there that can be on-site and literally etched into a Stanley mug that’s already pre-etched on one side and it’s personalized. And so that space for us is going to be huge because we want to be able to support and help businesses build their business through this experience as well and getting their name out there.
Obviously we have our partner with Drip, but we are just doing some really strategic planning in terms of the types of relationships and connections that we’re making so that we can push that. And then on the flip side, I mean we’re going to have how many people here staying in the valley? And it’s winter. They’re still going to be fun things to do, but they’re going to want access to something else. They want to play golf. I mean, people who love golf just want to golf all the time, so having and creating those spaces for them, that’s something that’s huge on our list of things that we’re working on. So we’re excited about it. I think it’s going to be so great for all of us.
Thomas: It’s way too far in the future. Nine years from now? I don’t even know nine days from now what some decisions we need to make.
Clinger: So I’ll date myself, but when the Olympics were here last time we had some different strategies surrounding the Olympics. This will be my second time through. … It’s a long ways away, but at least thinking about what that might look like. So we hosted people and ended up figuring out how to spend a lot of money, but hosted companies from all over the world ... And again, this as a previous life, we were a software company back in the day ... Taking clients to the USA-Russia hockey game. We bought tickets to the figure skating qualifiers. We bought downhill ski tickets, we bought aerial ski tickets and brought and invited people in and kind of said, “All right, how do we want to do this?”
Again, 2034 is potentially seven or eight lifetimes for some of you entrepreneurial types. But at least from our standpoint, we’re at least starting to kind of say, “Assuming we’re still all here, we are going to be looking at how do we bring our top customers in to give them an experience?” I mean, we were lucky enough to have gone to the opening ceremonies and that was an experience. … I don’t keep track of too many people from that. That was six careers ago. But those that I do, still talk about it, and you talk about a relationship business. … However long in advance you can figure it out, figure it out. I’m sure the Olympic committee is probably already interested in taking sponsors and this doesn’t happen for free. And so there’s opportunity.
Thomas: We actually have a partnership with the ski and snowboard team already, and so we’ll just probably continue to work with them. And when we get closer, we’ll identify athletes and opportunities. But I think most of the brands in here could work with that organization in some capacity. We do it as a supplier. We’ve sponsored athletes in the past, but it’s a really great marketing organization and getting close to them now probably would be smart even though we’re nine years away.
Clinger: The last time it came through, I think the committee did a great job of rallying support from the community, but it was years in advance that Marker went into the Olympic community and said, “Hey, everybody who’s running around here, we’re going to get Marker coats for everybody.” My dad was a runner at the bobsled, right? Ran tickets from one place to the other, walked press from one place to the other, just a pretty menial task but that needed to get done, and he still wears all of his Marker Olympic gear. So, again, the lifestyle brands, how do you participate in this? How can you get into the swag bag? Might cost you a little bit of money. But again, where your brand fits, start thinking about it now. It’s probably less for the figure skating group, but my dad was out running around outside Park City in February. It was cold. Does he have little gloves that he can get? And how do you place product and do these things? Again, there were probably six or eight Marker coats that were bought because my dad loved his Marker coat that he got when he was a volunteer. Again, that had a little bit of a halo.
Riche: Kind of going to Mark’s point a little bit … at one point in time, we sponsored about 1,500 different athletes across all different genres of sport, primarily action sport. So Dew Tour, X Games, winter, summer. And instead of sponsoring the event, which Dew Tour wanted $50,000 a stop, we’d go to the athletes and we would sponsor the athletes. And for a lot of those guys, they wanted watches and sunglasses ... well, at the time it was mainly watches ... or something cool. Most men would spend money on a watch. So it opened a lot of doors for us where we necessarily didn’t have to pay money. We could trade them in product to put our watch on and wear it. And then it was kind of like this kind of a back door into the sport, the event itself. And so that was going to be my question, with the U.S. Olympics where you guys are a part of that, does it cost you or do you supply, do you pay a certain amount to be a part of the team and then support the athletes that way?
Thomas: Yeah, there’s a few different ways you can do it. If you want to be an official supplier, you can just be an official supplier and pay a fee. We negotiated a different relationship where we are an official supplier, but also the only brand that can use their brand on Amazon in certain categories. We have an exclusive relationship there. The relationship then moves beyond that to athletes and we’ll go through the U.S. Ski and Snowboard team and say, “Hey, who are the up-and-coming athletes or which athletes are looking?” And so they’ll introduce us to athletes, but then it’s a one-to-one relationship with the athlete. And it also depends on what you sell because the team might be sponsored with apparel, so I can’t do any apparel. But the team does not usually have a global eyewear sponsor. That way you can target individual athletes.
Riche: So my question is, with a guy like you that has a relationship already there, right, where maybe some people that, would be wanting to get in doesn’t have that, could you co-op, like if you’re having a relationship with me and Eric, could you say, “Let’s say that there’s a fee, but we help cover that cost or whatever that is.” And then you say, “Hey, guys, I met two other guys, that one guy represents a watch company with sunglasses, the other guy’s got these really killer gloves.” Is that a risk to you to be able to have those conversations with those, to open that up?
Thomas: Yeah, I think we certainly could have those conversations with them and find something interesting. A few years ago … I think it was London, Beats by Dre, they rented a house or a club or something and it was athletes-only. So nobody that was going to bug the athletes could go in with them, only the athletes. It was like a place to just go hang out and not be pestered or bothered by the press or by brands or by salespeople or anything. And they would have a bunch of product in there they could put on and zone out, and it was a huge hit. Athletes were lining up around the block to get into this house. And I don’t think they went through the Olympic committee or anything. It was just like ... if you’re an athlete, you can come into our house. I think that would be a really cool thing to think about too for the Olympics. You can just do stuff. You don’t need permission to do that. You just need to spread the word so they know.
Sadorus: That’s really, truly, once again, relationships, right? Gosh, all of us can collaborate, like throw a portable simulator house, get some watches up, get gloves out.
Thomas: Also, I’ll say this, we also work with adaptive skiing, people who are missing a leg … these people are studs. They do the craziest things with less to work with, but they’re overlooked. And Orlando Perez, he’s one of our athletes. The fact that ... we gave him some gear, it wasn’t a huge investment, and he never stops talking about us. Because they don’t always have the same opportunities, but they will be bold brand ambassadors for the opportunity. And so there’s a whole community of adaptive athletes up in Park City.
Johnson: What new technologies have your companies embraced over the last five years and why?
Washburn: I mean, I think we kind of touched on it, but electric bikes are blowing up, taking the industry by storm. And the definition of e-bike from a government level also covers things like e-motos and stuff like that, which we don’t play with throttles at all. It’s all just pedal-assist. But that has been, and will continue to be, the biggest innovation I think in the bike industry. There’s cool drivetrains and suspension innovations and things, but e-bikes themselves, pedal-assist, they are great for the newbies or for those that need the assistance. But we had our men and women’s pro Enduro mountain bike team win national champs last year and they train 80 percent of their time on pedal-assist e-bikes.
And it’s because we approach it as it’s a high-performance bike first that just happens to have power. And so it’s the ultimate professional training tool. You can ride the exact same terrain every day, steep climb, but you get just chronically fatigued. You’re like, you did a big ride one day and the next day you’re like, “I’m too sore, I’m too tired.” With an e-bike, you can have the same terrain and do a cardio, like a steady state endurance workout five days in a row and then blow yourself up on the last day and have a super-intense, high-intensity interval training workout and stuff. So it allows you to get more reps in, more practice laps, adjust your training. I’m convinced, and a lot of the studies are showing, that you can get a better workout on e-bikes, just depending on how you use them, because you’re not just chronically fatigued or you’re not chronically redlining.
Clinger: But the closer I get to 50, the more I’m like, I can go out and enjoy. I don’t have the time, unfortunately, given workload and everything, family and whatever, to go out and be able to do an hour-and-a-half ride with my friends every other Saturday. So last year was the first time I’d ever ridden an e-bike and … the entire hour and a half, I was gassed by the end, but I could go up all the hills and I could drive in eco mode and then I guess I got tired. I rode into trail mode and then I went into turbo mode for the last two towns. It was like just “Carry me up the hill.” But it was unbelievable to get out and spend an hour-and-a-half doing something that I couldn’t have done on an analog bike. But selling that experience is pretty amazing.
Washburn: It allows a wider range of people. It’s a community builder. … I think there’s too much business in it not to, long term, accept e-bikes. Plus the definition of e-bike is getting clear because people, even a few years ago, they’re like, “E-bikes are turning up our trails. You’re going 70 miles an hour uphill.” It’s like we’re talking about a different thing. But on a legislative level, for a long time, e-bikes included Sur-Rons and everything else, and so it’s like, of course you don’t want that tearing up Park City or wherever. But as definitions get better, as education gets better and marketing, that’s kind of what we’re trying to tell is, this actually drives business, it gets more people into the sport. You’re not going any faster uphill than the best version of yourself would. So it’s a lot of educating on that side of things.
Riche: Jordan, educate me real quickly. You talk about Class 1. What are the different classifications in the e-bike world?
Washburn: So there’s Class 1, 2 and 3. A Class 1 is pedal-assist that assists you up to 20 miles an hour. Twenty miles an hour, it gets how much input you put into it. So you are cranking to get up to 20 miles an hour and it’s pretty quick on single-track but not an e-moto. And Class 2 is a throttle e-bike and that, we don’t mess with that because that is treated more like a moto, so it’s banned from most trails. And then Class 3, we actually just launched a road bike with it. It’s pedal-assist, but it allows you to get up to 28 miles an hour, and it is a rush. I was like, yeah, mountain bikes are cool but E-Road, when we were developing it, I was like, yeah, you do the Alpine Loop or any of these big climbs on a road bike with assist, it is a rush because you are getting the cardio that you want, but … it’s like you’re carving the canyon in reverse and you’re just like in this flow state. It is so fun. It’s the right kind of ride.
Riche: So, I have a Super73 that has pedals and you can unlock it with an app so that it could go 31 miles an hour. And then me and my wife bought ours at the same time and so we’ve had them for a couple of years and she went to unlock hers and it said, “As of 2005, it’s stuck at 22 miles an hour” or whatever. So she’s kind of pissed. …
Sadorus: So, Trackman offers a product that’s the Trackman 4 launch monitor and it’s so cool because it’s portable so you can use it in-house but then you can take it out on the golf course and it’ll actually track your data for you. So that, I think, has been amazing for what we do and it’s just such a cool product. But that’s something that I think, going back to that space a little bit of first 10 users versus pro athletes, that’s something that really helps them move through that path and gives them the data that they need.
Clinger: We’ve gotten into metal 3D printing in the last couple of years. Most of what we do is subtractive manufacturing. So you start with raw material and in the CNC world you actually make chips; you don’t make a part, you make chips, and what’s left is a part. Kind of a weird way to think about it, but that’s the way that it works. But you can create geometries using 3D printing, laser centering, etc., that you just can’t do otherwise, which is good for certain platforms. And so we’ve embraced that. … As you can imagine, the firearm space might be 15 years behind anything you guys do as far as technology and consumer engagement for technology. And I think that technology is a big deal. … We have a lifetime warranty on our product and one of the things we’re trying to do is, just like any other company that you deal with when you return a product, there’s tracking and I can see where it is, that doesn’t exist in our space. You send a product back to the manufacturer, and we have a notification thing, but no customer has a portal where they can go in and do that. And so while it sounds silly to say we’re going to really try to lean on the Internet, that’s something that we’re actually trying to do, is figure out a way to create a customer portal because we’re so far removed from our customer through two-step distribution, we don’t know who they are oftentimes. So how do we engage with them when they need a warranty to send something back, they can track it? Because our product is so highly regulated, it’s kind of important to know where it is in a process. And so anyway, just generic technology and engagement with outbound phone calls and a personal touch is the use of technology that doesn’t sound as sexy as an e-bike, but actually the more simple thing can often be the most important thing.
Johnson: So the 3D printing, are you using that for prototyping or for creating parts that you can otherwise do?
Clinger: Yes, the answer to that is yes. But most of it is for production. We have a product line that is designed for real heavy use, mostly gas gun AR-style weapons for really heavy-duty use. The geometries and the things you can do to build a product that allows you to reduce the back pressure. So on what we call a gas gun … a suppressor contains the explosion, slows down the gases and it’ll come back through the port and the gas comes in your face. So creating a geometry where you can subsequently contain an explosion, cool down the gases as much as you can and then expel them forward all simultaneously is sort of the challenge with traditional manufacturing. So we’ve engaged in 3D printing and we work with a handful of manufacturing houses to do that, but that’s a really unique application. Subtractive manufacturing is less expensive. We can do it faster and make a great product that way, but 3D printing is a component of our industry that is here to stay.
Johnson: This is neither here nor there with the overall business discussion, but the technology just fascinates me. I’m curious, how much do silencers slow down the projectile?
Clinger: Not at all. … We run things through a chronograph and if there’s minor increased deviation, it’s within a few feet per second, but it certainly doesn’t slow it down. … What it does, generally speaking, it increases the accuracy because there are a couple of things that most shooters, when you watch them, unless you’re trained a lot, every shooter will flinch due to recoil and they’ll flinch due to the sound. It just happens. And as the silencer will reduce the recoil 30 percent, 40 percent, and obviously contains that concussive blast, it actually calms you down, lets you shoot a little bit more accurate, which again, if you’re target shooting and scores matter, you want to be as accurate as you can. And then if you’re harvesting animals, you want to do that in the most humane way possible. You don’t want to flinch and pull and hit a leg. You want to go for the vitals, be as humane as you can. Drop the animal, harvest it.
Riche: I have a question. Is anyone using AI like ChatGPT?
Thomas: We give subscriptions to all our employees. … It doesn’t have to be ChatGPT. It’s sort of like, “Hey, find the thing that’s the best for you in your current role and experiment with it.” So it could be Midjourney for the creative team. It could be Claude for somebody who wants to build something with code. It could be general-purpose ChatGPT for our Argentine team. And that’s been great for them, because it enhances their English, their understanding of what’s going on because they can talk to it in Spanish.
Riche: We have a small team, but even then we’re like, “Oh, we need to write this little article or we need to do this.” It’s just as simple as punching that in and it’s like, oh, man, that would’ve taken me probably a week to think of that and think of how to phrase it or how to word it. So just as simple as that, as far as technology, that’s helping us write ads or create some marketing pieces and do some new things that we would have to rely on a human to create.
Thomas: I view it too as our employees aren’t always going to be our employees. They’ll move on. And I think the first future will be those who can use it and those who can’t. And you want to be on the line of those who can use it. And then after that it’ll be those who can use it and also critically think. And so I want everyone who works for us to get in there now because it’s really important for my future. There’s probably going to be AI CEOs that are going to be way better than what I’m doing. I’m kind of excited for that. That’s actually my No. 1, would be to replace myself with that. So I think it is absolutely critical for our employees, for their future, and it will make our businesses more efficient. Like the research functions, I use those a lot. I have a ChatGPT Pro subscription just for the deep research stuff. I can learn 80 percent of a topic in a couple of hours. I can have it do research on my industry or whatever’s going on, in 15 minutes. It would take me a week. … I use it every single day. I use a spectrum of tools. I’m experimenting with everything I can get my hands on so I can just have exposure and I ask my team to do the same.
Riche: Would you recommend that to other entrepreneurs?
Thomas: I think you’re crazy if you’re not doing it because it’s evolving at a speed and pace. That is, every 90 days there’s some new thing and every six months there’s this new leap forward. … I’m not smart enough to understand exactly where it’s going or how smart it’s going to get. I can tell you there’s already models that are way smarter than me. Not that that was very hard to get to that point, but when I’m talking to the latest models now I’m like, this thing, its reasoning is better than my own reasoning. So if that’s true now, what’s that going to be in a year? So our people need to use it for their own benefit, but also so the company can continue to be competitive. … I have a lot of competitors that are direct factory brands from China, and my advantage has always been brand and storytelling and content. Well, what happens when the barriers to those things are literally zero? … We need to be on top of that.
Keegan: There are platforms that will integrate in whatever internal operating software you’re using. We use Gmail, and so Gemini. Gemini, we actually did a Super Bowl commercial with Google this year about Google Gemini. So our entire company received accounts and we did a deep dive to thoroughly understand the software and the integration. And there were significant improvements in our efficiency. And I think one of my favorite tools with Gemini or some sort of AI is, we have so many meetings and we have gyms all over the world and all of the meetings are summarized into one or two paragraphs. We could have a video meeting and there’s a to-do list at the end that just is spit out. And with emails, you guys probably get a ton of emails. I can just read a two-sentence, this is what this email is about. … I’m like, OK, do I really need to read it or not? So I have more time in my day.
Clinger: And to that point, if it’s integrated, somebody emails you, there’s a little Gemini button at the bottom that you can start typing. … I think the critical piece to this is all just learning prompts. It is just knowing what to prompt. And I’ll say, “I want to say this, I want to say this,” and I’ll hit that. And he’s like, “Would you like me to actually make this sound like English?” “Yes, please.” And then it’ll write a really professional setup and then within two seconds, you’ve got an email response and it saves you minutes. And if you do that over a day, it saves you hours.
Sadorus: It’s a tool. … Do you want to sound like you have the education level of an eighth-grader or do you want it to sound professional? So it’s all about knowing those real, true prompts and the way to utilize it as a tool and not as a replacement of yourself, right?.
Keegan: Right. And for our employees, we have so many employees and I now am telling them, if you’re not running your communication to a customer or to a co-worker through ChatGPT, you should start. It minimizes spelling errors and even tone. Sometimes tone can come across so negatively. …
Clinger: So if customers come onto our website and they have a simple question, Chat responds back to them. A person doesn’t do that. If there’s a confidence score greater than this, it just sends a reply back. If it doesn’t, then it’ll show up and be like, oh, hold on a minute, we’ll get you with a live operator.
Thomas: We’re even experimenting with building all of our financial models into AI and having it build 13-week cash flows, inventory predictions. So we’ve plugged in all of our data into an AI tool that absorbs it and then starts building things that your CFO or your controller would do in the past. It’s not quite there yet, but I can’t imagine, in the next 12 months, that a lot of the financial functions of the business are just offloaded to AI, I would guess. So right now it’s a lot of tinkering, but not a huge leap in productivity in certain ways, but in 12 months I can see so many pieces of our business just being offloaded and all of a sudden, your employee is like this language model.
Clinger: I think the challenge to all of this though is you have to understand the underlying content, right? Yes, if you have an ERP system that you can have ChatGPT spit out the code to do certain functions, but somebody has to review that code and know if this is good or not, this is how it should be.
Thomas: You still have to be able to think critically about what this AI is doing for you.
Clinger: In our group of companies I manage, I’m the chief revenue officer over three other brands. And I had to write sales plans for each of those brands and I was like, OK, I can sit down and spend three weeks doing this, or I can dedicate three days, one day to each one, and have ChatGPT help me spit this out. But each one is different because each company has a different business model, each company has different sales channels. … And if you can just ask it the right prompts, you still have to know what the outcome is or the output. You have to understand the content. Man, I literally got three weeks’ worth of work done in probably 12 hours and everybody read it and was like, “Oh … that was great. It covered all of these topics. It had different models, different margin calculations, everything of what our goals are,” but it was just a time-saver so I didn’t have to sit down and try to think through all of that.
Thomas: And these things are developing infinite memory now, too. I don’t know if you use ChatGPT, it rolled out this infinite memory. It remembers everything you’ve ever told it, everything it’s ever told. … So each brand is now going to have, if you have a brand account, a company account for that brand … you could have a new employee come in and you could tell the AI, “Bring this person up to speed on this role” and they would be able to do it. It’s a wild future that we’re running into, blindfolded.
Johnson: The attorney in me can’t help but issue a warning. We use AI, generative AI. We’re very careful about which ones we use because anything you put out there, it can be learned, unless you’re in a closed system. So everybody be careful with that.
Clinger: Which one do you use for your closed system?
Johnson: So, I use Junior AI. It’s been trained on patented applications. And we’re looking at a couple of others right now. But they specifically say, “No, this does not get incorporated into the model. Everything remains private, confidential.” And I think you maybe can do that with some ChatGPT subscription levels. …
Thomas: Yeah, I mean, depending on the size of your business. If you’re large enough, you could probably build your own, you could take an open-source model, run it on your servers and have it offline, train it on your data. That’s what larger companies will do, I’m sure.
Clinger: Most of what we talk about probably is less proprietary patent-related stuff. It’s, “Build me a sales model that’s applicable to a $100 million business that does these things” and this is how it goes. All of that’s out there in books, in whatever the Internet has consumed. It’s less, “Hey, here’s my proprietary way I want to do this thing.” … That’s where you’ve got to be careful.