Marketing 101 for Designers of Great Products
STANFORD GRADUATE SCHOOL OF BUSINESS — A broken ankle ignited Perry Klebahn's quest to create the first high-tech snowshoe.
Back then, in 1990, Klebahn was a Stanford engineering graduate student specializing in product design. Unable to ski, he thought that slower-paced snowshoeing might be a more appropriate sport. While at Tahoe over the Christmas holiday, he strapped on a pair of rented snowshoes that he described as "big, crazy looking things."
Explained Klebahn: "It was a terrible experience. I didn't feel stable. I didn't feel safe. The whole thing was kind of rough."
That depressing outing led him to design a better snowshoe as the thesis project for his graduate engineering degree from Stanford University's product design program, but he didn't stop there. He went beyond solely promoting a better sporting goods product to reshaping the industry, Klebahn explained during his hour-long talk on January 17, sponsored by the Center for Entrepreneurial Studies at the Stanford Graduate School of Business and the student-led GSB Entrepreneurship Club.
Now associate professor and director of executive education at the Hasso Plattner Institute of Design at Stanford, affectionately called "the d.school," Klebahn spoke about the many lessons learned by building his former startup, the Atlas Snow-Shoe Company. Now part of K2 Sports of Seattle, Wash., Atlas still manufactures and markets the popular outdoor gear.
His initial lesson: Making a product that is best in class isn't enough.
Using metal rather than conventional wood, his redesigned snowshoes weighed just three pounds, about one-third the weight of traditional gear. While other brands needed assembly and annual varnishing to prevent wood rot, his products were pre-assembled and maintenance free. At about $175 pair, his items cost less than the $200 top-of-the-line brands. "Mine were dramatically better, in every way, shape, and form than traditional snowshoes. I thought I was off to the races," Klehbahn said.
Instead, he discovered he'd made a glaring error — underestimating the snowshoe market. Only a couple of thousand pairs were sold each year, and he joked that most of them ended up being rustic wall decorations. "I had left Stanford thinking that the product was the big key and everything else would follow — that you build the best products, and nothing else matters," he said.
Instead, he saw that he'd also have to build interest in his product and the sport by aggressively promoting snowshoeing in new ways. Following his go-for-broke strategy, Atlas took on much debt in the process, leaving Klebahn unable to pay himself a salary for the first four years.
His action plan included publishing a handbook listing popular snowshoe trails, appropriate apparel, and other tips. He convinced ski resorts to rent his brand of snowshoes and paid to construct snowshoe trails staffed with guides to lead groups of snowshoe novices.
He also reached deals with established companies that gave credence to his fledgling brand, teaming up major manufacturer Burton Snowboards for promotions where Burton's snowboarder pros hiked the backcountry using Atlas' snowshoes. One early fan of the sport, Ben & Jerry's cofounder Jerry Greenfield, even lent his ice cream company's credibility by sponsoring midnight snowshoe walks.
"I needed to give some role models so people knew the sport was safe, so it didn't feel so new and strange," Klebahn explained. Through those and other promotions, sales of Atlas snowshoes to small, independent stores eventually brightened.
It also took a while for sports retail chains, such as REI, to pay attention to the product. When sales to larger buyers did come, Klebahn said, it also brought "a whole level of complexity" to the startup's distribution and sales, forcing a huge growth and learning curve. In the midst of a dot-com boom where Silicon Valley technology firms offered stock options to employees, a benefit Atlas couldn't match, retaining employees was tough.
In response to an audience member's question, Klebahn said he wished he'd enlisted better business advisors from the start. "I was very much hell-bent on, 'this is my company, and I'm going to make it happen.' I wish I had surrounded myself with a couple of smart people who could have asked these questions earlier."
In 2000, Klebahn sold Atlas to run sales and marketing for outdoor clothing chain Patagonia. He went on to become CEO of Timbuk2, a San Francisco producer of messenger bags, from 2007 to 2009.
At Stanford, he teaches a new generation with startups in their eyes. His core classes include Launch Pad, a 10-week class designed as a rigorous simulation of real-life entrepreneurship, as well as d.leadership.
"To this day, the most gratifying thing is to go snowshoeing in one of the cool places in Tahoe and see all the people doing it, whatever snowshoes they use," he said. "I'm so proud of the result."