These is Bloomberg business Week with Carol Messer and Tim Steneveek on Bloomberg Radio. Well, each fall, Bloomberg Pursuits does a ski takeover. They highlight where to ski and what gear to use for the upcoming season. So in last season's takeover, we sent BusinessWeek contributor Gordy Megros to try out some skis from a new company called Peak Ski Company, based in Montana, co founded by ski racing legend Body Miller.
So here's what Gordy wrote after spending all day on the skis, Carol, Typically skis require a certain amount of speed and pressure to engage the tip and initiate the turn, but these carved without having to apply that force at speed on the steeps, they held the turn like a race ski, and in bumps and slush they were quick and forgiving. Not once did I feel off balance. He continued, anybody could use these skis. Beginners would love them because
they're easy to turn. Experts would too because they still can ski aggressively and feel solid underfoot.
It's a great feel of what these two gentlemen are up to. So let's talk more about the skis with the co founders of the company, Andy Worth and Body Miller. Andy also CEO and President of Peak Ski Company. He joins us from Bozeman, Montana. Body, by the way, of course you know him, Olympic and World Championship gold medalist many times over and the chief Innovation officer at Peak Ski Company. He joins us on zoom from Big Sky, Montana. Guys, so great to have you here with us. Body, let
me start with you. How did this all come together to create Peak Ski and why did you want to do it?
Well, I've been obviously in skiing since since I was grow a little and had exposure to a lot of different companies. Started on K two, Ben Fisher, then Rosenhold and Atomic, then Head for eight or ten years.
So being in the race rooms and seeing.
The economics of the way the ski companies worked and the challenging aspects of the construction methodology was kind of frustrating for me. It's pretty, it's pretty, it's pretty analogue, and they're sort of stuck in a lot of ways. We didn't really change much in the ski world. We were changing skis all the time, prototyping, but just watching what was happening in the consumer market, and then sort of understanding the business model of you know, those companies.
As I was with them, it was it seemed really unlikely that I would go into the hard goods side of the business. I know Andy felt the same way. We both kind of came into this as skeptics or contrarians, but as we dove into it a little bit more. I mean, I always wanted to bring better skis to the consumer market. There's a big gap between World Cup skis and the rest and World Cup skis, granted, are specifically designed for racing and hard snow, really.
Smooth, you know, perfectly.
Prepared hills, which obviously wouldn't apply as well to your consumer just because the hill's always a little messed up puffs of snow and nothing is manicured like we get in World Cup. But my goal was to bring really
good skis to the market. And then as I sort of Andy and I evolved through this, I had a connection with a company in Germany, a good friend of mine, and I'd always wanted to sort of modernize the manufacturing process, and I think I don't know that Andy and I would have done it had we just had the model of doing what we're doing right now. Which is, you know, building skis and selling them direct consumer. It's a it's a fine business, but it's the scalability is a little
bit problematic in this case. The real sort of enticing part was re engineering the manufacturing process so that instead of forty five minutes to build a ski and it's glue and they you know, for those of you get don't know, it's a bit like making a sandwich. They call it a sandwich construction. It's a lot of different layers laid up with blue or pore impregnated with blue, and then you compress it and cook it in a press.
It takes about forty minutes or so right now, which is why they've been building skis for next winter already right now, because that's how long it takes to build a million pairs of skis set. And we have a manufacturing process that we're in the in the in the Work song where we can build a ski in somewhere around ten seconds and no glue, be able to recycle it the same machine that it constructs it will take it apart and you can retask those materials. So well,
that was the part that really got us excited. That was sort of the why of doing this.
I want to talk We'll talk. Yeah, I want to talk more about that, but.
I hopefully that's what that's where the home run is.
I want to bring in Andy Worth here because he's a many your veteran of the ski industry, having run some huge mountains here in the US Squad Valley for many years, worked at Interest before that. Andy, talk about the business here and the financing of this. It's a little confusing to me about who the investors are and who you raised money from and how much money you've raised.
So give us the details on the business side here, and you know the reception that you've gotten from as you go out and try to raise money for this.
Thank you very much for that lead. I didn't I should have thought you guys were going to refer to Gordy's article on us. We were shippings of that in November pleasantly and certainly a respected writer in certainly writing for Bloomberg. That's a great lead out Relative to the business is body mentioned. We were both retired about four years ago. I worked in the private equity world and also running a bunch of ski resorts. As you know,
we came out this business with ventrarian approaches. The understatement skeptical in many ways, but after doing a great deal of research and realizing that what body had in his mind was something that could provide an exceptional product, new type of product to the market. And we had these strategic initiatives on which we were working and we commenced building the company, standing it up so to speak, and
launched in April last year. And Tom, TOI your point, we had established an initial pre cash valuation based on pro forma EBITDA on a three year basis and pretty contemporary multiples from what I was able to glean from other companies. That pre cash valuation was thirteen million small company. And then we raised completed an eight million dollar raised about oh gosh, three four months ago, so postcash or twenty one and in this case we're currently raising funds
through Republic Capital. This is crowdfunding, basically a safe note, and it has our enterprise value at thirty five million. The reason being Tom, is the we have a clear line of sight now on these strategic initiatives. The core of the business are the skis and that's what prompted and supports that initial fundraising effort and the valuations to which I mentioned that I referred to. In this case, we're starting to get a clean line of sight on
the three strategic initiatives, which include technology integration. It's extreme innovation across all levels. But technology integration through peak Locate, which is this proprietary device we're inserting in the skis Wait.
Wait, so we're bloomberg. So we get a little wonky about the financial side of it. So it's interesting, So do you guys continue along these ways? Is there venture capital money also in it? Is the goal to eventually go public? Like, how do you do you think about it? Andy?
Yeah, no, A great question, of course, and not surprisingly on this format. But I think really we're focused on right now is advancing on these strategic initiatives, and then lessons learned in other acquisition environments in my old career is we're gonna advance on these initiatives and you can get to the point where we can generate substantial value for our current investors and investors coming in through Republic.
In this mechanism, we don't have a you can't speak to any exit strategy because we're focused on an execution right now. But we know that we can take the value of the business right now thirty five million up substantially from here.
Well, it's interesting, but it come on back in because Tim and I were talking when we were prepping for this, because Tim's a Ski are really into this. Were you guys profitable, Like it can be hard to go up against the establishment, and you learned a lot about the industry and the mechanics and kind of I love what you said the economics of the way ski companies work. You probably learned a lot about it, which can be tough to go against. Though also so I'm just curious.
Were you guys profitable in the first year? I mean, how are you looking for about it? And we've got about a minute then we're going to come back and talk some more.
Okay, go ahead.
The typical sales channel that everyone's locked into is really the problem, so Andy and I address that by going direct consumer profitability.
We ended up not.
Being profitable year one, which you know, was frustrating, but also given the nature of startups, was not terribly surprising. But the margins are really good when you sell direct. Obviously, the margins are much better. You don't have to sell two hundred thousand pairs of skis to be breaking even, so I mean, Andy, I'll let you fill in. But the really positive stuff we took out a year one outweighed the fact that we had some quality control issues and just I guess you'd call them growing pains.
Well, and hang on for a second, because we're gonna we've got to do some news and we don't want you to get cut off, so we're going to continue the and get you to weigh in on that aspect of the business. When we come back. We're talking with Andy Wirth and Body Miller, as we said of the Peak Ski company co founders. Andy also CEO, Body also
chief innovation officer. And there was a great story that was written by Bloomberg business Week that really gives you details about what they set out to do, what Body set out to do, and it is interesting. I love when he obviously has learned a lot about the business and how they were doing it, and just this idea of being able to manufacture much more quickly changes the mathematical business.
And also what skis worked for him when he was young, when he was racing. So we'll get into all that. Let's get right back to Andy Wirth, CEO and president of Peak Ski Company and Body Miller, Olympic and World Championship gold medalist and the Chief Innovation officer at Peak Ski Company. They join us on Zoom from Montana. Buddy, I want to go back to you because I was struck when you said after the first year you were
frustrated about not being profitable. But I mean, it's really tough for a startup, and I think the expectation to actually be profitable after one year. I mean, look at Amazon, for example, it took more than a decade to regularly become profitable quarter after quarter. Why were you expecting to be profitable after the first year.
I sort of touched on it in the margins, the margins if we'd you know that we we didn't model out quite a bit. Andy's a bit of a quant and you know, I always like to to sort of use all of our experience and knowledge. It didn't feel like either of us were very naive coming into this. But the margins on our on our product are good, and we're selling right in kind of the sweet spot of where you know they typically net out for for a high quality, you know, small handmade ski company. But
the challenge was was quality control. It's just it's a byproduct of the manufacturing process itself. It's just very inexact. You're using materials that have variances to them, and the assembly processes is pretty uh, as I said, it's analog, and so there's us being direct consumer. We didn't feel like we had the latitude to give anything but perfect skis to people, so we ended up with a lot. I don't know, I think it was close to thirty percent of our inventory didn't pass the QC inspection of
the of the manufacturer. So it wasn't enough snitpicking. It was just the reality and that that was way outside of our modeling. And you know, that was tough. But the great news is we sold. We sold through you know, mid ninety percent of the inventory we had, which was basically you know above or right ear where we projected. So all of our projections that we could control were good and that would have led the profitability. The part that was the problem was we didn't have the inventory
to sell to get our numbers. But you know, again that's part of the inspiration or the drive to re engineer the manufacturing process because everybody wants better stuff, quicker, cheaper and more precise, and that's we're sort of delivering.
Hey, Andy, come on back in here. Because you're building this business with Body, I'm wondering where else you can go here? Because I know you guys were talking about doing a Body Miller ski academy. You end up pulling the plug on the Granby Ranch location in Colorado back in twenty twenty two. Where else can you guys go as a partnership.
Well, kind of the sky's a limit. As they say, we neither of us feel like retired guys nowadays. I can tell you that's for darn sure. We come at this business and this effort with a great deal of passion for the outdoors the mountains, certainly from the ski industry. Different angles of attack, but similar ethos and way of approaching things. There's a couple of different ventures that we
have that we're taking on and considering right now. All of our emphasis and focuses on Peak, and the primary reason being is coming back to this reengineering of the entire process by which skis are made that puts us in a position to be three four years down the road having our machinery process that we with a smile on our face. We call a treadstone because it is fairly confidential information that we're working with this group in Germany.
But nonetheless it's it's something that we anticipate be in a place where we can have thirty thirty five to forty percent of the world's market share made on our machines and our process. And that is where when I mentioned value creation, that's where it comes into place.
So does that mean Andy, you'll be making you guys will be making skis for other companies, other brands.
Yes, ma'am. In fact, it might be interested to know my best effort at Yogi Bearism is the least important thing about our company or the skis, but they're critical, and the reason being the skis are critical. But at the same time, we're in this to the innovation for the innovation on so many different fronts, including the process.
Right.
So body, it's like becoming the luxatica of skiing, right, Like, you don't care what the brand is, but if you can improve the process, that's okay, or being like a what is it a founder is talking about?
Yeah, you're talking about really established companies. But the irony is besides attaching and incredible people. Andy and I are big fans of many of the companies that we're competing against, and in this way, we're not looking to steal market share from them, because at a certain point it becomes annoying to manage logistics. In this case, our goal is to have ten purchase orders and be delivering two million
pairs of skis, and they advantage that. I think I don't see it stopping there because we can deliver them for twenty or thirty or forty dollars less than they make them for themselves. Now, Plus they can divest of all their other sort of liability because even though a lot of their equipment's amoritized, they're just understand that there's.
A lot of fluff there. There's a lot of.
Loss, and we can we can clean that up as well as there's things like gray market skis that you know, there's a little bit of the inventory is out of control. So I think I don't see it stopping. I can't see a company saying, hey, build us these five hundred thousand pairs and we're going to build the other five hundred thousand for forty dollars more and deal with fifteen percent weeks.
Their accountants or the whole financial team might say, oh wait, I mean, let's talk about that, guys, the impact of climate change, body and the lack of snow. How are you incorporating that risk and reality into your business. I mean, we've finally seen some snow here in New York City, but it's barely a sprinkling here. But innovating with the idea that more and more skiers maybe skiing on man made snow, how does that come into it? And body, we've got about thirty forty seconds here.
Yeah, it's you know, it's just the reality that we're facing. I think the ski industry is remarkably healthy. You know, I don't think it's an immediate thing for the ski industry. I think it's certainly important that we'd be dealing with it and addressing it, and in our company, recyclability of the skis is a huge part of the technology we're working with as well. So, you know, I think I
don't see it being a massive problem. But you are going to have years like this year where it's been really tough at the beginning of the season's been tough for But do.
You innovate differently? Body, do you make different types of skis because of maybe more man made snow just quickly, No.
Not really.
I mean you think a man made snow is on piece, you know, and then there's off these skis. And yes, the trend has been going much wider. So we certainly address that end of the market where it's on groomers on these skis. But the reality is there's a huge demand across the board.
Right, Hey, Andy, we got about thirty seconds left. I want to give you the last word here and just ask you what's top of mind as we begin the year here and you guys are trying to build this company.
I appreciate that, Tim, and it got to augment with point here is that the climate change matter is something that's an exigent threat for us overall. And what we do is number one, we reduce our footprint. Number Two, we're doing everything we can with this process to actually localize where skis are made. And so that's a pretty
substantial contribution in favor of that. But relative to Peak and what we're doing, I emphasize the fact that we have Body and he's got this brilliant mental level, creative mind that is unique. It's almost like Chuck Yeger working it's Lucky Martin on the Mack capable airplane back in the forties. He's got this unique ability to be an engineer but at the same time put those skis on snow that enables us to take up this whole own.
It's a nice compliment, very cool.
Thank you guys for joining us. Andy Warz, CEO and President of Peak Ski Company and Vody Miller, Olympic and World Championship gold medalist and Chief Innovation Officer at Peak Ski