657: They Bet Everything on a Sport Nobody Took Seriously… Now It’s Worth $200M

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0:39Just head to OmniSend.com forward slash founder without the E to get started. All right, now let's jump back into the show. so what happens when two homeschooled brothers sell their profitable airsoft business to bet everything on a sport most people have never even heard of and then 12 years later built into a company valued at over 200 million with revenue up 1900 since 2019 well today's guests are mike and rob barnes they're co-founders of selkirk sport the premium pickleball brand has become synonymous with this fast-growing sport in America. They discovered pickleball in 2008 and saw something that nobody else did.

1:18Massive potential in a sport that felt very mum and pop with low quality products. Now they're a market leader in a sport that's exploding globally and could become the largest racket sport in the world. In this conversation you'll discover why they serialized their first 360 paddles expecting to make mistakes and how that approach really shaped their premium quality obsession and their contrarian approach philosophy to athlete sponsorships and why athletes is only 30 % of the work and promotion is the other 70 % and why they invested$1 million into a dedicated R &D lab instead of slapping their logo on a cheaper white lab would paddle like everyone told them to.

1:56This is a masterclass in betting on an emerging category, building a premium brand from scratch and why sometimes the biggest opportunities are in sports nobody's heard

2:10Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan. Mike and Rob, welcome to the show. You guys have grown Selkirk Sport into a company valued at over$200 million with revenue increasing by 1900 % since 2019. 2019 i'm an avid pickleball fan know the brand was excited to speak with you guys uh but can you take us back to like 2014 when you decided to to sell your profitable airsoft business to bet everything on pickleball and that sport at the time nobody knew it yeah well thanks for having this on really appreciate it um yeah so going back to 2014 so i guess even going a little farther their back mike and i uh so we were homeschool um we started our first business as a school project he was 15 i was 17 uh and and it was airsoft and so kind of similar to paintball you know you shoot like a little little bb um and we kind of learned how to at the time direct import just the parts because initially we were drop shippers which was all the rage back then we quickly found out though that just because we bought it for$10 and sold it for$15 on eBay, you weren't actually making money.

3:34And so that's when we stumbled across Alibaba and found out that we could import directly and then sell direct to consumer, which at the time we didn't even realize that was a strategy. But we did that successfully for a few years, started our own brand within the space. We're just pickleball players. Yeah. Yeah, so that was probably like 2008, 2009. At that time, we were also pickleball players, um played at our local like ymca called croc center and uh we just loved the game and around 2013 we just kind of asked ourselves the question the sport was just starting to grow uh still mainly in retirement states like arizona and florida and we just asked ourselves like could we build a performance lifestyle brand in this space because as players ourselves it was very felt very mom and pop the quality of product was pretty low just it did not feel like a professional sport and we felt like it could be that and so we started our dad had retired at the time uh from the la fire department and so him me uh mike and then my father-in-law uh who designed the logo and came up with the name uh founded the company in 2014 uh we launched our first product in 2014 early 2004 t yeah and it was a it was a bat right that was your first yeah a paddle yep yep so it was a uh we did a limited run so we made like 360 of them and we actually serialized them one to the 300 uh just in case because we knew we were going to make mistakes we knew we were going to screw it up um uh because we were making it full in the u.s and we just we were just getting into it and so we thought okay we can kind of call it our first run and then replace them with the the better product if they have a warranty issue and then we also deep down we're kind of like hey if this turns into something these would be a couple of these would be kind of fun mementos i actually have one in my office okay so tell me about how you guys got your first sale our first sale um i believe initially we went to a tournament we just got out a table put the paddles out there and started letting people demo them.

5:47And that's actually been a core philosophy of ours since then, is just getting the product into people's hands and getting demo pals. There's some interesting stories that we really resonated with. One was Nathan's Hot Dogs. When they were trying to get people to adopt and try out their product, and something that he did early on was he went and he gave to hospitals in the area saying, if you came in with your coat on, you could try our product for free. And so then in line, you saw all these nurses and doctors in line, which kind of validated the product that it wasn't bad for you. And then their sales exploded from there.

6:29And so, you know, it's always interesting. You see a lot of patterns like this where somebody is struggling to get adoption. But as soon as they start figuring out a campaign to try the product, another one is, I believe it was Wrigley's Gum, where they by hand filled envelopes with a Wrigley chewing gum and sent it to every address in the nation. And from there, that's how chewing gum exploded and became adopted. So we're very much about just getting the product into people's hands. Yeah. So we did tons of demo days. We had our own dot com, too, which we did fairly well. And then we also, there was key retailers, especially online.

7:05There wasn't really much brick and mortar at the time because the sport was small. And so we just, you know, we're constantly getting on the phone and telling our story and sending them product to try and opening small accounts. Yeah, there you go. So pickleball was a thing like 12, 13 years ago, 15 years ago. Barely. So it depends on where you were at. It exploded in about 2012 to 2014 in some of the retirement communities. And so Arizona, Florida was also fairly big in the Seattle area because it started in Bainbridge Island in 1965. And a lot of the, a lot of people, if they were familiar with pickleball, it was because they played it in school, in gym class.

7:46and so it is interesting back then if you the question we had to ask was have you ever heard of pickleball and nine out of ten times they've never heard of it it was a it was seen as a funny name that was something that the sport really had to overcome now we don't now we don't even ask that question the only question we ask is have you played pickleball because pretty much everybody's heard of it there you go that's crazy because like yeah my brother like i got into pickleball I'd say 2023, when my brother was like, oh, you know, there's this new sport people playing called pickleball. They're starting it.

8:22There's a competition happening in Melbourne. Like, let's go. I think you'd really like it because I love playing racket sports. Like, I've never been very good at, I've always got decent hand-eye coordination, but like contact sports, I'm not a very big guy. I don't like getting bumped or knocked around. So I've always been a racket sport guy. So I played tennis my whole life. And then I was an avid table tennis player. We had a table tennis table in our office. I was a reigning champion. And then, yeah, I got into pickleball. And it's kind of like, it's like in between, but it's quite an addictive sport.

8:58There's something about it around just the combination of strategy. And I don't know, it's really good cardio too. I find like when I when I play pickleball guys like I can burn up to a thousand calories like playing for like 90 minutes it's crazy like it's it's just a high intensity sport it's really fun um yeah it's such a great sport yeah a little barrier to entry on the learning curve too yeah yeah yeah and look the scoring took me a while to wrap my head around um but yeah it's such a great sport so look what's interesting is you guys were homeschooled and you chose entrepreneurship over a degree.

9:41So your father said to you guys, he gave you a choice where he, you know, you could go to college or you could start a business in your basement. How does that kind of shape things for like a risk approach right now for you guys well yeah i think it was low risk then right when you're 17 and 15 and you're living at your dad's right there's not really you can't really fall really far right so i think that's where he was kind of he he and for some context too where we live in cord lane at the time there wasn't like a lot of like career paths um we're a small town you had to go to spokane if you wanted some.

10:25So he just really saw that. And a lot of the people we knew that were doing well were business owners. And so he just kind of, he's like, Hey, you're doing this small business. You're enjoying it. You seem like you're good at it. Like you can go the college route, which we were kind of looking at, or you could just keep doing what you're doing and keep learning. And so it was really helpful for us that we were just kind of like, yeah, we're really enjoying this. Like, let's just keep, like, let's keep growing it. And we went that route. So we were very blessed and in a unique position where like, you know, we were so young, we didn't have families.

10:59We didn't really have much to risk at all, which was great. And I, it helped us in terms of just being willing to go and do things and try things and experiment. And so for our entire time as entrepreneurs, we're constantly jumping into new things that we haven't done before. And we're not, we don't feel limited by the fact that we haven't actually done it before. We don't have specific experience, we're big believers into just jumping in and figuring it out. And that's something that has pervaded a lot of what we do. And it's kind of a mindset we try to promote internally as well. And it's served us well.

11:37So you guys launched, you had a minimum order quantity of 300. They were wooden paddles too, right? No, they were, so they were aluminum cord fiberglass faced. so they were composite um and we basically bought the cores from the u.s we had an edge guard supplier make the edging and we bought the cap from an existing supplier in the grip and then we basically put all the components together got you okay so you sold most of those though like you said like in person hand to hand online wasn't really around so the first few years it took a while for the business to take off because pickleball wasn't that big too yeah it was definitely took time to grow but we saw consistent growth every year and like you mentioned we were huge believers in the sport because we saw how sticky it was people would talk about how addicting the sport was so even though most people weren't even familiar with it we knew that as people played the market was going to keep increasing.

12:40We saw that year after year as well. So while we were running Selkirk, my brother and I still had our airsoft business on the side, which was technically doing better. It was doing significantly better than the pickleball side of the business. But we really loved pickleball. We loved going to the tournaments. We loved the community. Like you said it's a very fun sport very active and we knew the potential was so great and so we actually put our airsoft business up for salad sold it to one of our best customers so that we could dive and fully focus on pickleball which was definitely a risk like i remember i was married at the time i'm still married but i had just gotten married and um and i remember talking to my wife just being like, man, this is a huge risk.

13:32We're getting away from something we know is certain. Betting on something that we just have a gut instinct is going to be huge. I'm curious, did you think it would be big as it is now? No. No, we never could have dreamed then. It has exceedingly exceeded our wildest expectations. Every year we would pitch ourselves and say, man, pickleball could be bigger than we even thought last year. So it's been an exciting ride for sure. Yeah. I believe it's going to be eventually an Olympic sport. It will definitely be an Olympic sport eventually. There's some things that need to be figured out for that to happen.

14:12But its participation is going to continue to grow internationally. And we do believe at this point it could be the largest racket sport in the world. And it's getting close even in the U.S. to overtake tennis. It's overtaken racquetball, for example, many years ago. And so there's definitely still a lot of potential, especially internationally. We're seeing Southeast Asia adopt it extremely quickly. They already have a lot of infrastructure for badminton. And so they're essentially able to lower the nets. And the size of a badminton court is almost identical to a pickleball court. and so people are able to begin playing pickleball in their local badminton facilities pretty quickly and facilities that are dedicated to pickleball are really exploding over there so you said something interesting because after i started playing pickleball and then i went to the states and i also you know when when they started opening up proper courts here in melbourne a lot of them have padel as well and then that's where i'm like what the hell is this stuff with the glass like And then when I went to the States, my friend in New York was like, man, let's go play Paddle.

15:24So we went and played – is it Paddle or Paddle? That's where you are. Yeah. We say Paddle. We say Paddle. Yeah, yeah. So apparently Paddle is massive in Europe. Oh, yeah. It's huge. Yeah. So obviously over time, you guys have been able to capitalize on Paddle too, right? We don't sell Padel rockets, but we're dedicated to pickleball. That being said, Padel has essentially experienced a similar growth curve to pickleball in Europe. And in Spain, for example, I believe Padel is one of their largest sports. It's larger than tennis in Spain. And we've seen there was a number of investments, especially a couple of years ago, to try to have Padel grow in the U.S.

16:11It's been hitting a wall. There's been a number of attempts to unseat pickleball in the U.S. Before Padel, the Tennis Association started another. What was the other? We forget it now. At the time, everybody was comparing pickleball to this other sport that the Tennis Association was trying to get going. But it just fell flat on its face because pickleball has so much sticky power. We're seeing pickleball struggle entry into Europe, partly because it's more difficult to build infrastructure over there. there's higher barrier to entries and less, less interested in adopting something new. Whereas in, in Asia, Fidel is growing a little bit, but because it's such a higher infrastructure cost, it's struggling to be justified.

16:55And everybody would rather just build pickleball courts. You can just put, you can just put a pickleball corner almost anywhere, right? You can do it in your driveway. You can build out the infrastructure. The infrastructure is far cheaper. And so there'll always be a group, like, especially Europe spent a lot of money to build out, panel and so they have all the infrastructure uh they actually overbuilt years ago and they're like kind of like finally filling it up um and so i think you'll always thrive there but it's going to have a really hard time getting worldwide adoption any anywhere past like kind of a novelty in large cities so you started like the business took a while as you guys shared to get going a lot of offline activity going to tournaments that's what really drove it not really so much online component when did the online piece digital marketing when did you start investing in that side of the business and and grow it from there because a lot of founders right now that's you know listening to the show that that it's all about d2c yeah so pickleball early on it did not have a digital footprint and so we did a little bit online advertising where we really took off with online and digital was when we launched our Amped product in 2016.

18:10And so that was a product that we spent time on R &D. It was a significant improvement compared to prior products because it had a thicker core and an innovative core. And so when we launched that product, that's when we first invested in video. And it was crazy to think now, but at the time, a pickleball company producing video advertising and posting that digitally was no scene. That was next level. Yeah, yeah. So obviously it's pretty table stakes at the moment. And so we were the first ones to adopt that and it exploded for us. And we really took that buying share early on. And so something that's been kind of contrarian for us when we make marketing decisions is we always try to ensure we're investing in areas where other brands aren't competing.

19:03So at that time, everybody, their entire marketing strategy was signing pros and showing up to tournaments and events. So we did that early on as well. But we saw nobody was focusing on this digital area. So we went all in there. And then after a couple of years, everybody saw the success and the digital space began to be flooded and saturated. And so that's where we actually started switching to other channels for our brand. Actually, in some ways, we went back to in-person experiences. And then we're actually one of the only brands that purchases linear TD advertising because the CPMs are great.

19:40We're able to negotiate great deals where we get a spot and nobody's competing with us. And so that's been something that's helpful with general brand awareness compared to our competitors. And still to this day from a digital, our direct-to-consumer is one of the largest parts of our business. And we are by far the largest in the space when it comes to that. And our team does it amazing. We have an awesome team that just is popping out great content and just on top of the day. And so essentially our strategy has been to vertically integrate across our company. and in a key way we're vertically integrated is with marketing.

20:20So we essentially have an in-house marketing agency the last two to three years. And that's from numerous graphic designers, creative people, an entire media team. We actually put out our own documentaries on the sport. And then we have an entire direct consumer team. We don't use agencies for anything. And that's been a huge benefit because we're able to lower our costs in many ways, but also our team's very well integrated across the board so that we're able to output high level of content quickly at a lower cost. So you guys obviously had a really good run as pickleball has grown. You guys have essentially grown.

21:04So you grow with the sport. So it makes sense to put out documentaries, popularize, and you guys have obviously had a decent part to play in popularizing the sport. I'm curious, so COVID hit, sales dropped significantly overnight, and you made a counterintuitive decision to keep your staff and build inventory. What gave you the confidence to bet on that rebound when other businesses were pulling back? Talk me through that time. Yeah, so COVID was definitely a crazy experience for everyone, obviously. And so we were following things pretty closely. We were actually one of the first companies in our area to start informing our employees of what was happening and what we were doing to react to it.

21:58And so early on, as we saw that it wasn't going to be just two weeks, like it initially stated, we actually made the decision because we saw our run rate and how quickly things were progressing and how quickly our sales dropped. And so we made we made the decision to technically reduce the hours of all of our staff dramatically. So we were able to keep them on staff, but we reduced their hours so much that they qualified for unemployment. So they were able to receive unemployment from the state while at the same time working a minimal number of hours for us so that their salary essentially was able to stay the same.

22:41and they were able to keep up with their work a little bit, but we reduced our costs. So when we saw what was happening, we cut costs dramatically to survive early on. And then as soon as things started to reopen and our sales started taking off again in June, we brought everyone on. So out of everybody that we asked back, everybody that we brought back, we came back. We didn't lose a single employee that we asked back, which was really great to see. Our employees were able to maintain a salary and then come back full time. It was definitely scary, man. It was though, it was, there was times you were just, us family were in the building.

23:20And at that time we had about 20 some people. And obviously none of us really knew what was going on. You know, we sold out at Nats and like cheaper bundles, which was interesting. Like, but, so we were kind of tracking that. It's like, this is interesting. like we're selling all this low-end product and nets were sold out across the industry um but we had to put stuff on sale and like it was just us working in the business for the most part during that time so it was uh you know we just it was a pretty scary time but then come around about two months later things just slowly started coming back we had our people come back and and they just kind of took off to the races from there where it was just every month it was like, wow, this is a lot.

24:04This is interesting. Okay, we'll see what happens. And it just kept going. And what happened was a lot of people were introduced to pickleball. They put it up in their front yards and the driveways, and it just took off from there. And that's also when we started seeing a demographic shift in the market. So prior to COVID, pickleball had a reputation for being a senior sport. And it was in many ways. It's very popular in various senior communities. But after COVID and it took off again, it became an Instagram and social media phenomenon. And so you started seeing many influencers post about playing pickleball.

24:48I remember it was probably around 2021 when I mentioned to someone about pickleball and their response was, oh, that's a sport all the young people are playing. And it took me aback because prior to that, it was always, oh, that's the sport all the seniors are playing, right? So this is the first time that someone had associated pickleball with a younger demographic. And the younger demographic is still the fastest growing segment of pickleball right now. And what makes pickleball great, fun, physical, there's a huge social aspect to it. It makes it a great sport for all ages. and I mean from the very beginning the founders even it was dads that wanted to create a sport to play with their kids and that that thread has followed pickleball throughout I'm curious when it comes to growing a brand you know you guys have had exceptional growth for for for Selkirk, especially post-COVID as Pickleball has risen to popularity.

25:54I'm curious, what do you think besides the rising tide with Pickleball and also having a great product you guys have done strategically to really kind of grow this brand and this business that you would like to share? Yeah. So we sort of, for many years, we had a framework of four Ps. that we really wanted to execute well on. And so that was product, which was foundational to everything. People, so we wanted to make sure we had good people and we were able to develop people well. Process was hugely important. That's something that I think a lot of smaller companies miss is getting their processes dialed in.

26:33And that's critical to scale. And then the fourth was promotion. So those were the four things that we wanted to execute well on. And what we saw was we had to constantly be willing to reinvent ourselves and reinvent our company. So it feels like every two years we're running a different company. And the pickleball industry is constantly changing. And so we mentioned to people that how every two to three years our competitive set changes. who our main competitors are different than it was two, three years ago. And that's been pretty consistent. And so sometimes it's hard, you know, when you're in the trenches, it's easy to be focused on just the details, your direct competitors.

27:23And we really try to work on the business instead of in the business. That was a book that impacted us really early on, The E-Myth Revisited by Michael Gerber. and a big concept that he promotes that book is to work on your business so work on developing the people the processes the the entrepreneurial vision and make sure you're you're willing and able to change positively so that you can continue to scale and and that's something that we've done for since the beginning yeah and and obviously it's not easy right i mean anyone that's done and does it's a you know there's days you question everything but you know uh two for us a lot of it off the bat was really deciding being agile but really deciding as a brand who were we and who were we most importantly not you know we wanted to be a performance brand we were gonna only focus on pickleball so we're we're dedicated and not doing any other sports we're a pickleball only brand um and we were going to be a performance brand so it was making decisions off the bat too that were really difficult, especially when we were still struggling to grow.

28:31Like, hey, we're only going to build high-quality products. We started a separate brand called SLK by Selkirk, even when we were starting to get more notoriety that was more entry-level products for Big Box because we didn't want to destroy the brand. Big Box would have much preferred us to put an S on a$50 paddle, but we knew if we were going to build a performance brand that people wanted to be behind that was going to go against that long-term vision. So it was making choices too early on that were more painful for a better outcome, you know, at the time, Lord Willie. Yeah. I think you guys have done a really good job with your sponsorship strategy as well and finding advocates.

29:13Can you talk me through that, how you've done it differently from a traditional sports marketing perspective and how do you measure that return? Yeah, so our approach to sponsorships has been one of those things that we're constantly having to reevaluate and adjust and is one of the more difficult aspects. Because like you said, it's very hard to measure ROI. And there's this struggle because you want to have some top players. And every brand, one time somebody asked us for advice on who should we sponsor, how many people should we sponsor. And our typical response to anybody that is dealing in that realm is find one person, maybe if it's a sport like ours, one male, one female, and they should have a great personality and good performance.

30:06And just invest in them, promote them, make them the face of your brand. You don't need to have a huge depth. And so that's been our philosophy throughout most of the years is having a couple of top players. But sometimes it's hard because people will measure based on how many gold your players get in the industry. And when you show up to tournaments, you wish that you had the most players out of any brand in the space. And so we've always had to just refocus on what actually matters, how many do we actually need. And so early on, we only had one pro, which was very odd. It was very frustrating for some of our competitors that we were able to grow with a minimal number of pros because that was the main marketing strategy was to just sign top players.

30:55And there's been times where we switched that. And so when the PPA started to come online and they're getting TV viewership, we started seeing a difference with the viewership of the various pros. And so from our calculations, we saw that pros were getting about 50 times the views they were the year prior just because more tournaments were aired on TV. And so we actually did a complete 180 and signed as many pros as we could because it appeared that things were underpriced. And so we did that. We signed numerous pros and it worked out well. And then as prices started to increase on the sponsorship side, we started scaling back.

31:43Because our general approach, especially when it's hard to measure ROI, is to go off of CPMs. So for what we're spending, how many actual views are we getting and how valuable are those views? And that was one thing that really, going back to the digital strategy, that early on really frustrated our competitors. And they even would talk to us about it was, you know, we would have maybe the second best male, but he would be more well-known. because we would actually put money into promoting digitally and making sure everyone knew who he was, right? It's kind of like if a tree falls in the wood, does anyone hear it?