How This Sports Company Found a Competitive Advantage

0:00We were able to get to this more or less of a perfect storm where everything came in together. We had the number one player. We had an amazing product and the sport was just exploding. So that gave us that opportunity to really take off. Hey, what's going on? It's Benjamin Gottlieb back with Shopify Masters, your companion for starting and building a business. If you want to grow a sports equipment company, how do you do it? Well, if it's a new sport, you get more people to play, of course. Our guest today, Richard Lee, started a table tennis company and later acquired a company called Yola. It's a German table tennis brand that's been around since the 50s.

0:37But just a couple of years ago, in 2022, he led Yola's expansion into pickleball, a sport that's just exploding in popularity. Yola is now fueling growth in the sport by sponsoring the number one player in the world and also investing in more facilities all across the U.S. Richard, thank you so much for being here on Shopify Masters. Thank you, Ben. What is your background in sports and what kind of sports company did you originally want to start? Well, I grew up playing table tennis more in the direction of not in your basement, playing table tennis at a local club, getting coached by some Olympians, and was going the route of trying to make the Olympics myself.

1:18So being part of the high-performance direction of Olympic sport, playing the sport of table tennis. So you were playing table tennis here in the U.S.? Yeah. I grew up here in Maryland, outside of D.C., and table tennis was a huge part of my life. And I started playing when I met a coach when I was going to Sunday school for Chinese. And table tennis is mostly played by immigrant community, whether it's Chinese or Indian. That's how I got involved in that sport. So you get involved in table tennis, and then at some point you determine that you want to start your own company. You acquire this company, and I would imagine that pickleball wasn't on the radar when you did this, is that right?

2:06None of this was on my radar. You know, I went to school for engineering and then I just fell into interest in running competitions for table tennis. So because table tennis is no more as a basement sport here in the US, I wanted to try to find a way to get table tennis more into the mainstream. People don't understand how the sport is played. basically trying to get the rec side versus the professional side to understand each other better. So I started out running competitions around the U.S. and I was trying to find a way to make that happen. So you start doing this. You're very intimately involved in the table tennis community.

2:50And then comes your acquisition of this company, Yola. Tell me first, what was the history of this company and why did you decide to purchase it? Yeah, so I started running competitions in 1998 and we have worked with multiple brands. They sponsor our tournaments. And when we were looking for a new sponsor, we met Yola. And when we met Yola, they also were looking for distribution here in the US. I never really wanted to get into the equipment business. I was always, you know, focused on running competitions. And you're an athlete. What did I know about running a consumer product goods company?

3:33We took on the opportunity, probably made every single mistake possible, and continued to grow the business very slowly. We learned a lot about how to promote products into mass retail, big box stores. We were one of the first sporting goods companies on the Amazon platform at that time. And over the years, we just continued to build up the Yola brand here in the US. It wasn't until 2019 that we had an opportunity to look at the acquisition for the Yola brand. Well, I want to get into some of those mistakes. You said you made just about every mistake you can imagine. And for entrepreneurs that are listening, I mean, that is the secret sauce of being an entrepreneur is failing and failing and failing again until you get things right.

4:26But back to when you acquired this company, this is an older company from the 50s. I believe, as I mentioned, the start date for this company, 1952. You come in and purchase this. What was it like to purchase a company that was so established and been around for so long? Yeah, Yolo was a German company. So since 1952, it's been involved with sport of table tennis, sponsor of three Olympic games. And it was very old fashioned. A lot of the computer systems were from the 70s. The business model was very much in a very mature business structure in Germany. So what do I know about running a German company?

5:11So a lot of the concepts that I grew up with here in the U.S. is completely culturally different in Germany. So we had a lot of learning over the years to kind of better understand how we can transform the company for the future. I'm lucky that one of my friends that was at the company before, I was able to convince him to come back because he knew all the internal systems at the company. and he helped get it back on track. A lot of the concepts that we wanted to do for the future, you know, it takes time still. We're still in transition in today. So yeah, it takes a lot of energy, a lot of effort to make that happen.

5:52It certainly does. And the fruits of your labor are seen all across, not just the US, but also in Canada. I was just in our Canadian office in Toronto. There's a YOLA ping pong table there. I'm gonna be honest, I got my butt kicked in a skirmish there. But let's take this a step forward. Okay, so you buy this established brand. You have this experience in table tennis, right? In ping pong. But then you see an opportunity in the market and this opportunity is pickleball. Why did you pick pickleball? And how did you determine that this would be an opportunity for Yola? Well, honestly, the pandemic happened, right?

6:31And table tennis, you know, just like everyone, and we were completely nervous about our business, table tennis took off. We doubled our business because everyone was stuck at home and they were buying table tennis equipment to play tables at home. So we did fairly well. But for me, I would usually play table tennis for exercise. And usually I would go to a table tennis club. However, everything's closed. Indoor facilities, all closed. So we've been looking at the sport of pickleball for many years. I was like, hey, what is this sport? We had no idea what it's about. So finally, went out to try and play it.

7:12How'd that go? Yeah. So the courts, they just built some new courts behind our office here in Rockville. And I go out there and the court right next to us, there's these two guys playing like a hat at a fast pace. They're beating each other up. They're wearing uniforms with sponsors on them. And we go up there and ask, hey, who are you guys? we'd go online and find out who they are, but it was Ben Johns and Colin Jones, the number one pickleball team to ever play. So we got super interested and we got deep into understanding the sport. We got deep into understanding the equipment. And we found out that based on our experience in producing products for table tennis, that we potentially can make a better product for the sport of pickleball.

8:00So went back and started working on prototyping. And a couple months later, I had an opportunity to learn more about pickleball play. And I was taking lessons at the Y. Met this guy by the name of Eric White, who says, hey, I know Ben Johns. Like, okay, well, show me. So he was able to introduce me to Ben. And we were able to let Ben try our paddles. And Ben tried it for the first time. He said, hey, I think you got something going here. So he gave us some tips on what he needs to change, like the feeling. Another couple months later, we call him up and say, hey, Q, try our paddle again. And he was blown away.

8:42He's like, hey, I can use this paddle. And at the same time, he was looking for a new sponsor. So timing wise, it all came together. So the experiences from Tablelands definitely helped us develop products. But I think a lot of the success that we've been able to achieve in the pickleball market has been the 10, 15 years of experience in the sport of table tennis. We've been working our butt off to promote the sport of table tennis using little budgets to have the most impact. And all that scrappiness, we took that into promoting pickleball. and a lot of the things that we wanted to do in table tennis, we just didn't have a scale, the audience.

9:28Pickleball became that platform for us to be able to accomplish that. My guest today, Richard Lee, the president of YOLA. Richard, I think it's so indicative of how you just never know where that next great idea is gonna come from. You literally were just outside of your office nearby and saw a couple of the best players in the world playing pickleball. I mean, if that is not serendipity, I don't know what is, right? Absolutely. Just keep on trying new things. And we were thinking, hey, do we get into sport like another commodity brand? But things started to fit together properly. And we were able to get to this more or less of a perfect storm where everything came in together.

10:08We had the number one player. We had an amazing product. And the sport was just exploding. So that gave us that opportunity to really take off as where we are right now as the number one brand in Pickleball. Well, let's talk about the sport a little bit more before we get into some of the product advice that you have, perhaps for other aspiring entrepreneurs. It is such an interesting sport. I've played a little bit myself. And what I find so fascinating about pickleball is that you can be in any sort of shape or any sort of age and can be incredibly good at this sport. It kind of reminds me in that way, I guess, of table tennis.

10:44What is it about pickleball do you think that is so appealing, even now post-pandemic? The sport is so easy to learn. Anyone can pick it up. Doesn't matter your athletic ability, if you're a coordinator or not. You can play and play for the first time for 30 minutes and then you can really start to play games. When it's so easy to learn that that barrier of entry is so low. But, you know, when you try to be a good player, just like any other sport, you got to put in the energy and time to get good. So when it's so easy to learn, people just gravitate to it. Then it's a sport where you're on a small court.

11:26It's the size of a badminton court. And you have four people playing. It's mostly playing doubles. And you just have a huge sense of community. You have fun with your friends. You meet so many new people. And I think coming out of the pandemic, everyone was looking for that social interaction. as we look at the sport further grow, we see that that community building is huge. So the sport is really taking off, not just here in the US, but everywhere else in the world as well. And you can play it outside, right? I mean, this is the thing with table tennis. Maybe that's different. I mean, table tennis can be played outside, but if there's a little bit of a wind or, you know - Yeah, you don't play table tennis outside.

12:06Right, well, I mean, you walk by, I mean, I was just in Buenos Aires with my family. They have like table tennis table set up, I guess. but like the ball is blowing all over the place. You know, it's not the same experience. You can play pickleball just about anywhere, right? Anywhere. And I just came back from a trip visiting Vietnam, kind of checking out the market there. I played pickleball at the top of a soccer stadium. I played pickleball on a pedestrian area in the middle of the streets. They built out a court in the middle of the street and then a converted swimming pool, Olympic-sized swimming pool that wasn't being used.

12:44They put five courts inside the swimming pool. It was just amazing. Like, you can play anywhere. Literally, you're absolutely right. You can play anywhere. So you can play it anywhere, and the popularity is undeniable. But let's get into what you kind of brought up earlier, which is building the right product, right? At the end of the day, Shopify supports our merchants to the best of our ability and helping them create and sell and market their own products. What did you learn? What knowledge did you have from table tennis that sets you up perfectly as creators of a paddle and equipment that the pros want to use?

13:23Sure. So from the experience from table tennis, we are developing a lot of these blades. So in the professional side of table tennis, you have the blade, which is the wood and then you have the rubber that's the wear layer. The blade is actually usually five to seven ply and it's using natural materials and composite materials and we are you know finding what kind of wood or what kind of composite materials and how we glue it together at what temperature and how do we process this so that you get the perfect feeling for the sport of table tennis. That experience translated very well into our development into pickleball paddles.

14:04Same thing. Pickleball paddles have different types of cores. It has different types of surface materials, friction to spin the ball. So many of this experience translate directly into pickleball. So yeah, what is different then? I'm thinking about it. And if you're not familiar with paddles, you might just think like, yeah, that's another paddle. I mean, how different could it be? I mean, what really is different about a pickleball paddle? Again, it's a lot about the materials, but there's a lot of details in the construction of the paddle. So it's not just slapping together some materials and now you have a paddle.

14:39A lot of times, it's not just the material selection that's creating a competitive edge on our products. We have several patents and also patents pending that allow us to manufacture products that are proprietary to us. And the reason for this is that we've developed a lot of interesting technology, learning from the sport of table tennis, and we've brought that over to pickleball. So we've brought some technology that pickleball has never seen. And the feeling that we get off the paddle has been just very well accepted by the community. It's been well accepted by the community. And thank goodness that your experience with table tennis has paid off in growing in this space.

15:24Before we continue with this interview, I'd like to take a moment and thank you, our listeners, for joining us on the show today. If you have not already, please check out our YouTube channel. That's Shopify Masters on YouTube to watch videos of in-person interviews. They are awesome. And also subscribe to our channel and let us know what you think. Thank you so much. I'm back with Richard Lee, president of EOLA. Richard, I'm sure that there's some other entrepreneurs listening and thinking, oh my goodness, here is an entrepreneur who is take in an emerging market, an emerging sport, and capitalize on exponential growth and interest and turn that into a business.

16:00I'm curious if you might be able to provide some advice for our audience. How do you identify an opportunity like pickleball? It doesn't have to be in sport, but an opportunity like pickleball in other arenas. And then what do you do? What is your first step to making that a successful business idea? The best thing that you can do is to immerse yourself in that activity or that sport or that part of business. Then the really important part is to find a competitive advantage. If you can't find a competitive advantage, if you're just going to be another commodity in that space, you need to really think hard.

16:37Is that something you really want to get into? Because what we see in table tennis, for example, is a very mature market. There are so many brands. There's so many people in that space already that we need to look at how we stand out in that market. And that kind of nimble work that we've done over the past 15 years in table tennis allowed us to kind of really look at the pickleball market and say, hey, why should I enter this market? And if we can't come out with something amazing, something cool or something that's going to stand out, why bother? because we're just going to be gobbled up by someone else.

17:17That is really great advice. And what you were able to do is you found a way to make a paddle superior or different than the way that other folks were making, in addition to the other things you did with your business. But finding that competitive advantage, it sounds so simple, but as you've described, it does take a lot of iteration, a lot of work, and a lot of, it sounds like, community feedback too. If we were not able to create a better paddle, if we were not able to get Ben John say, yeah, I want to use this paddle, I don't think I would have jumped in. The amount of work that goes into building a business, everyone knows here, we're all entrepreneurs, and the chances of failure are huge.

18:00And to jump in there, you really need to say, hey, I have a real chance at success here. And that's when you can say, all right, I'm going all in on this. and really going all in on it. So step one is perhaps identifying an emerging market or a place where you could have success. Step two, immersing yourself in said market. And step three, what differentiates your product from others? Some really important learnings here from Richard. Table tennis, pickleball, you love racket sports. I mean, Richard, what's the next one? I don't know, but we have a lot to do in pickleball still. What's left in pickleball for you to do?

18:39So we are jumping into the shoe space in Pickleball. We're building ourselves an apparel. We just launched a sunglasses line. The sunglasses line is special because we have a technology called Color Boost in the sunglasses. And it literally highlights the ball. So you have sunglasses on, everything's a little grayed out, but the ball stands out. So when you can see the ball better, you react faster. So that's been a very interesting step into a new market we're not really comfortable with, but it is a product line extension for us in the pickleball space. So yeah, there's a lot of stuff that we're doing in the pickleball space still.

19:20I think that's gonna be occupying us for some time. I really don't have any more bandwidth for anything else at this point. Richard, let's get back to this thing we teased earlier in the interview. Some of the mistakes that you experienced along the way when you purchased this brand. Can you highlight maybe one of the major mistakes you made, but also how that was integral to your future success running this company? Sure, thanks, Ben. I think when I acquired the Yola company in 2019, my hope was to centralize everything for the company. I felt, hey, I know everything about products. I know everything I need to create for the market.

20:03Let's create some efficiencies. Let's make product that is all the same that we can share worldwide. What we found out, number one, is that every single market is completely different. People have different tastes. The culture is different. The cut for clothing is different. And what we found out is that when we centralized it, we were slowing ourselves down. Everyone was waiting for product to be developed from one place. Meanwhile, there are experts in Germany, in Asia, that are much closer to the market and can act faster. So we are still working on this today is to decentralize a lot of our product development so that those folks on our teams can act a lot faster and be a lot more nimble instead of being slowed down by us.

20:55That's just one major thing that we're still trying to figure out. And I think a lot of companies that are operating in many different countries deal with all the time. And so the learning was what? The learning was to rely on local expertise in different markets or to hire those types of folks and have them work at your office. I mean, what was the learning from that? Act fast. You can't wait. if our team is waiting for someone else in another country to, you know, let's say do some graphic design. Well, everyone's pointing at that guy and saying, hey, you're slowing me down. I can't reach my business goals because you're slowing me down.

21:35So you got to free their hands and let them get moving and get what they need into the market. So free them up, get the things, the products before the customers quicker and having localized people, not having one centralized plans for this stuff is being made was a big unlock, is what you're saying. Absolutely. And we're still working on it today. As we continue to expand our product assortments, we do have experts in certain fields that we don't have in other areas of the world. So as we start to build those markets and those product categories, then we are starting to look for, hey, is there someone in Germany that can also take care of something like this?

22:18Or someone in Asia. But as we evolve, it's always going to be, we might need to build that technology here first and then hand it out for others to take care of. So localized products, but also localized shopping. You feature this on your website where depending on where you are, you might get a different array of products. And it's something that you can do when you use Shopify. I'm sure this is not the only reason why you're on this platform, but But I have to ask you, why use Shopify for a, gosh, almost 70-plus-year-old brand? Why did you choose us? And were there other considerations at play when you were picking a platform?

23:01Absolutely. We explored many different platforms. We had been developing on our own using WooCommerce for a very long time. As we launched products where we had massive demand and server crashing, we decided that we couldn't do this all on our own anymore. So we explored many different platforms and Shopify turned out to be the best for us because we needed that ability to scale quickly. and we also need the ability to launch websites in multiple countries. Using a Shopify platform, we were able to achieve all of that. How did it help you unlock scale, the platform? So a lot of our subsidiaries are new.

23:52So we added China, Korea, India, Brazil, Canada, Australia as well. All these subsidiaries needed to have an e-commerce platform. So we could go and have them each do something locally and try to figure it out on their own. But we were able to take a design here and basically syndicate it to all the subsidiaries that need an e-commerce site, allowing us to quickly scale to do direct-to-consumer business. We do do a lot of B2B as well. And Shopify's platform also has the ability for us to trade with those businesses directly as well. Let's get back, if we can, to Richard. Just pickleball as a sport here in the United States and across the world.

24:46You mentioned you were in Vietnam early in the interview. But pickleball continues to grow. I believe it's the fastest growing sport in the US. And we're seeing this reflected in how entrepreneurs are embracing this as a possible product set to start selling, we are seeing incredible growth amongst pickleball merchants on Shopify. And again, I'm just curious, how do you identify which items or which things to create for a sport that is emerging somewhat new like this one? You need to listen to the market and you listen to the customers. Pickleball is evolving so fast. It is definitely a complete white space.

25:26What kind of clothes do pickleball players wear? What kind of shoes? What kind of water bottles? What kind of sunglasses do they wear? What kind of bags make them excited? So really, the best way is to get super immersed into the community. When you go play, when you go to the local courts, you see exactly what people are using. You get a sense of how do I kind of ride the wave too? But not only is it about products, it's also about services. The sport is growing so fast that, hey, who's coaching me, right? Where do I go play a tournament? Where do I go learn more about how to swing the paddle properly?

26:11Is there clinics? Is there leagues? Is there a facility? So that whole entire ecosystem is being built out right now. And for those who just are interested in pickleball overall, I really recommend just go and play first and understand what you're getting yourself into. Pickleball is this new sport, but it's also a new community that many folks, I'm sure you feel the same way, but I have many in my network who have become pickleball people, right? They'll play all the time. It's part of their new identity. And you've been doing some really interesting work in the space of building the pickleball community.

26:47Tell me a little bit more about that. So pickleball is all about community. And once you get in, you just meet so many new people. What we try to do these days is to try to bring even more people into the sport. We do a lot of partnerships. We do activations with companies. We get involved in the community outside of the sport to pull them into pickleball. We help out facilities in equipment and building up partnerships so that they can be successful in the sport as well. So building a community is not just, hey, I'm going to find some people and play, but it's also teaching and getting people to be more involved in the sport and being that catalyst for growing the entire sport.

27:34You say it's a community, Richard, but what do you mean by that exactly? How are you facilitating that as a brand? We see that when you are coming into the sport, we're not selling you just a paddle. We're selling you an experience. So Yola is not just a brand selling you a paddle, but we want to have you be a customer and be part of our entire journey with you. So when you come in, you're a beginner player. You might someday become a coach. You might someday go play tournaments. But all that journey that you're in, we want to be with you the entire pathway. So it really isn't just selling a paddle.