A Bespoke Walk in the Snow

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3:01So we're talking about Jackson Hole in Wyoming, Park City and Deer Valley in Utah, Schweitzer Mountain Resort in Idaho, Heavenly and North Star in California. They all opened later than originally planned. I'm going to let you keep going because you've been so excited about this. This has serious economic implications in the towns and states where these resorts operate. According to the Bureau of Economic Research, it came out last year and it said that snow activities in the economy for the U.S. was a$7.7 billion business in 2023. And that in Colorado, Utah, and California, it was the, quote, largest conventional activity.

3:35It's a big deal. It's a very big deal. Yeah. For more on the ski industry and how this season is looking, we welcome Bob Shea. He's founder and CEO of Surefoot. Surefoot is the biggest custom ski boot company in the world. They've got 29 locations in North America, Canada, and Europe. Bob joins us here in the Bloomberg Interactive Brokers Studio. Welcome. How are you? Thank you. Good. I'm really good. So for people who aren't familiar or haven't stepped foot into a Surefoot, explain the process because I think people understand ski boots, but then Surefoot takes the shell and then customizes it.

4:03What do you guys do? I mean, basically a person comes in the door and then there's some conversation with them to find out their history of skiing and how much they've skied, what level they're at and everything, and then they're kind of evaluating. But then the technical part starts. We put your foot onto a 3D imaging machine, which makes an orthotic for underneath your foot, the first step in there. And then we put you onto another image that takes a scan of your foot. So really what we do at that scan is we match that to the shell. So we basically have a visual of your foot exactly, and we match it into we find the right shell for you.

4:39So now that shell matches your ability, your history in skiing, what you enjoy about the sport. And then we put it together with a custom liner that we make. And we have numerous different ones, about five or six ones. So we, you know, looking at your foot, decide from there which one's going to work best for you in the sport. And that whole process, because we've sort of packaged it all together on the same roof, It just takes about an hour where we can go from you walking in the door to walking out with a boot that's totally custom fit for your foot and ready to ski in. You've done this. Yeah, I did this back in 2021.

5:15I finally got my first pair of Surefoot boots. I mean, I've lived in places where Surefoot has had locations. And finally, I was like, you know what? I'm getting to my late 30s. I don't get ski boots very much. It's time for me to have like a really comfortable pair of boots. And I've wanted a pair of Surefoots forever. And they haven't always been comfortable. no they haven't and you know the thing is is and you know i had a scan done in like 2000 let's say 2007 maybe for a pair of orthotics for cycling shoes yeah and they were able to tell when i went to the store that my foot had actually changed yeah since that so they had to make a they did re-scan it and do a new pair of orthotics based on the new scan because i guess that's what happens when you age yeah well i think it's it's most feet do that you know if you have some flexibility mobility in your foot it's wearing tear too right yeah but go ahead Yeah.

6:02Yeah. Over time, it really, you know, your foot's going to change a bit. And the scans are extremely precise. So it's, you know, we can be talking about a minute difference, but that minute difference is a big deal. It's a big deal in biking shoes, if you're really into it. And it's a big deal in ski boots. Bob, how did you get to this point? Because to me, it makes a lot of sense. And I'll be honest with you, I wear orthotics in just general, and it just makes such a difference in shoes and sneakers and what have you. How did you get to this point? You know, really, it started, I grew up skiing and ski racing, and boots always just killed my feet.

6:34Like, really, I have very wide forefoot, and boots, you know, when you're trying to jam into a ski racing boot, it's just, there's a lot of pain. And I really, it took time off the slope. I couldn't stay out as long as I wanted to as a kid. And so over time, I just started developing ways to make it a little better. And then as I got done with ski racing in college, I was like, I don't want to leave this sport. I love the sport, and I can make a difference in it. So that was really the impetus for it, you know, thinking about it. And then a lot of trial and error. I mean, crazy trial and error.

7:09Tell us, what was some of the errors? I remember one of my first employees is that John Higgins was, you know, he was on the U.S. ski team, a collegiate ski racer. And we were together, we were trying to make a pair of boots for me with a new, this foam material that we had found. So we inject it into my foot, and he gets it all over his hands, everything. And then I'm standing there, and it feels like it's going to break the bones in my foot. I'm like, John, you've got to get this off. You've got to get this off my foot. It's breaking the bones. And a guy was walking by kind of through the back corner of the space that we were in, and he was a chemical engineer, and he looks at John and goes, if you don't get that off your hands in the next, like, 30 seconds, it's never coming off.

7:53So now John takes off to get that off his hands. Oh, my God. And I've got this on my foot. You're like, hey, hey. I think it's breaking the bones in my foot. And I'm like, but luckily it didn't. And he got it off his hand. And we probably took a step back for a couple of years from that. But that's really how it began. So we're going to talk more about the origin story in a few minutes. And before we get there, one of the reasons we wanted to talk to you is because you serve this higher end consumer. And we talk a lot about what the economy looks like right now. And just when you talk about skiing in general, you're already talking about a segment of the consumer that can afford to travel to a ski area, pay for an expensive lift ticket oftentimes, stay in an expensive area, and then do something that requires expensive equipment.

8:36Give us an idea. And you're a private company, so we don't have access to a ton of your own data. But how is the consumer you're dealing with right now? How are sales? What are some numbers you can give us? I mean, I think all of us are always a little, you know, you just kind of have this tendency when you're in business, you know, you're a little worried. But right now, things are actually going along pretty well. You know, business, we're up a little. But then, as you were talking about just before how we didn't have snow, we take a dip, you know, with that when it's early. But in general terms, we see the consumer is fairly strong, you know, coming in.

9:15And, you know, what's really happened, Tim, is I think that. People, recreation is just a bigger part of our lives. We all, you know, we want to do that. We want to be out there. And luckily, we're in the sport that people really love. Bob, have you seen that coming off the pandemic of people even like kind of that? Obviously, after the pandemic, it was like, I got to get out in the world because I couldn't for so long. But do you see it kind of lasting? Yeah. I mean, honestly, I see it in my own company, how many people aren't in there. I think it became more important for everybody. You know, it's like you're out of the office a bit.

9:50You got outside and it just it seems healthy. And that's what to me it seems like happened to the mountains. We look at it like it's a healthy place to be, to exercise and stuff. And so I think it's good for the it's good for my business, good for the sport, my life. Well, people in New York City know that you have a store in New York City, but it's kind of a unique store because it's it's not near a ski mountain. I think every other store that you have, maybe save for Vancouver or London, is right at the base of a ski mountain. Is New York the biggest location in terms of what it does in sales?

10:24It was the first city store. It's not our biggest volume store. We have that in the mountains. But many of our stores are very similar in size. But really why we put them here is because there's just people who want to – there's different personalities. personalities. They want to get it done before they go to, you know, on their trip and those there. And now you can get the exact same thing. So really early season, our city stores flourish. I mean, how busy are you right now? Is it crazy? Really? Yeah. You know, honestly, it's the most fun part of my job. I was in the New York store this morning for, you know, and it's just, I love when it's just busy in there and everyone's talking about sport and skiing and enjoying it.

11:04uh very briefly you bought a company back in 2012 uh that is not a winter company yeah and now that's attached to the the store in in new york city in terms of running how big of a growth area is running for you you know that that's uh i mean the reason we got into running was because we were runners to stay in shape for skiing i mean you know we we all run and you know as part of it and then because the orthotics that we make the custom you know the basis of the ski boot is used by so many athletes and runners like Boston Marathon winners and so many people. That's where it really came from, is that we knew a lot about feet and running and what we could do with that.

11:44It's great for us. So we talked about your story of you starting this company with your brother. I mean, you've been doing this for more than 40 years at this point. Completely bootstrapped, no investors. You also don't franchise at all. I'm sure this has come up when people have come, hey, you should franchise this. Why not? You know, we get asked once a week about the franchising thing, at least. But, you know, it's just that we wanted to have better quality control over it. And we want to give our employees opportunity. And that's what really comes down to is that we, in order to open more stores, we train people.

12:17And when they're ready to go to store, like our most recent store, we opened in Big Sky. Chris Chiardo, the manager there, worked for us a long, long time, and he wanted to move there. So we opened a store there. That's pretty cool. I think that's pretty cool. I mean, I'm also assuming that folks have reached out to either invest in you, buy you up, like, and you just, you're, you want to continue to go it alone. Yeah. You know, I think it's, we've had, you know, we have my, have had minority investors and stuff in there, but we've also had some hard knocks with those. And so as long as we control the business and we enjoy what we're doing.

12:54And, you know, we have my daughter is in the business. My, you know, we have family in the business. I want to do it for a long time. Yeah, go ahead. What's your supply chain like? Is everything done in the U and not in the U S do you have to, I wish it was all done in the U S that, you know, it's, I really wish that it was done here, but we're not able to, there's just things that are not. So yeah, we've had challenges with the supply chain right now. We try to mitigate them and the cost and, and the terror costs have gone up. Yeah. Yeah. I mean, And it's been a tough thing, too. And I really think I look back and think, wow, I'm glad this didn't happen when we were in business five years or something.

13:31I don't know how a small business gets through it. We're able to manage it a little better, but in there. The biggest story in the ski industry, obviously, is snow and making sure that people can actually get on mountains. The second biggest story in pretty much any ski town that you go to is the cost of living. And I'm wondering, you are known for having these long tenured employees who live in the communities where you have stores. And these are very transient communities because they're ski areas where people come for the season and then leave. How do you make sure that you can have employees that can actually live somewhere, like attracting and retaining a long term employee in a place where truly nobody can afford to live?

14:13Yeah, it really has. I mean, you know, we talk about it being so hard right now, but, you know, there's been many points where it has been. But what we've always tried to do is make our employees really productive, the whole system that they do, and then pay them the best that we can in there. But it is a challenge, you know, in there. And you have to, yeah, we have to deal with that. I mean, look at some of these markets. They're crazy. They're crazy expensive now. So we have some employee housing. But the real thing is how we keep people. You do have employee housing. Yeah. Oh, interesting. We do.

14:44We have employee housing in all the big markets, but that's more for new employees that are coming into the company. Like to help them get settled and so on. Yeah, their first, second year. But all of our management and everything, we've always wanted the company. I always say if we're not going up, we're going out. We have to go up to give employees opportunity to keep growing, keep growing. And that gives employees opportunity. Their stores keep growing, get bigger. They can be rewarded more for that and compensated. But no doubt, it's a big challenge. Where's the growth in your industry? How do you think?

15:19I mean, 40 years you've been doing this. It sounds like you still look for new opportunities. Constantly. I mean, really what it comes down to is we're still a small percentage. We're probably somewhere around 3 % or 4 % of the dollar volume of ski boots sold in the world. And so we have a lot of room to grow in that. Would you ever consider making your own ski boot? Just to remind everybody, you buy the shell from a company that makes the ski boot and then you do the liner and kind of everything else. But would you ever make an actual Surefoot ski boot? Yeah, I mean, we have right now, we have 3D technology that we're working on with boots and everything.

15:52But I think as long as we can get the shell that we think is really great for a customer in the market, then we'll keep doing that. So what we really do is we buy the shell without the liner, so it saves the consumer money. And then we have a great shell on the outside and the interior we've made. But we are always working on, so if I come up with a great idea about a shell, you'll see it. I like that. But in terms of growth, like, okay, no offense, but I'm like thinking, wait, I got orthotics, but these sound better. Like, can you, in terms of the medical market or people who go to foot doctors, what's the percentage like through your machine, like that you have?

16:30The percentage even in that market is, yeah, we're small. Even when we're one of the largest makers of orthotics in the United States, but like actually kind of a long shot we are, but we make so many in our stores. If you combine what we do in our stores and what we do in our factory, we're by far the largest. But there's lots of room because a lot of people don't really know how beneficial they are to you. Right. So if if something happens to you, if all of a sudden you have plantar fasciitis, your foot's hurting, you're aching from running. That's when you start seeking us out. So, Bob, if somebody comes in and gets an orthotic through you, I mean, is it covered by insurance?

17:06It is if a doc, you know, if they have a prescription for it. Majority of what we sell are not. That's not really true. In our medical division, it's mostly prescription. and then in our consumer it's not but you know they are covered and they're the same scan so we can make we can do anything with that yeah it just seems like a mass market like it's major it is a big market yeah well the reason you have that market is because you bought this company Amfit the orthotics company based in Vancouver Washington back in 2023 you bought super runner shops back in 2012 any more acquisitions on the horizon um you know right now we're doing something really big that we're about to introduce our own line of footwear and the footwear is made specifically for orthotics to fit your orthotics in it so so you have a perfect platform like right now in ski boots you have a perfect platform when we make the boot whole thing so you're standing totally aligned but a pair of shoes you pull out the insole the orthotics can be bigger than the insole so it doesn't doesn't fit quite right and you can't get it you know in there so we are in And in a few weeks, we're about to introduce a line of shoes that is just for that.

18:14So when you get a line scan, your body's put into alignment, you put it to our shoes, you're going to stand in a very balanced, comfortable position. You guys are doing this on your own or is it a collaboration? We're doing it on our own. I think we're breaking some news here. That's pretty cool. You know, I debated whether I should even say this on here. But it's a big deal. We've been working on it for years. And it's really cool. We have some, I was just at the World Cup in Vail and I had on a pair of the winter boots and I had like four or five people ask me about them. What are those? Where are they?

18:46I'm like, oh, nice. We have a little luck here with the product. Men and women? Yeah, we have men and women. Yeah, of course. We have men and women ski, run, everything.

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