Black Diamond Equipment: Peter Metcalf

Transcript from https://podmenti.com/t/1c87fc662df63404


There's no question it was risky.
I had my life savings in it. I had personally guaranteed the loan, even though I only owned ten percent of the business. And it was my job and career, so had it gone down, I would have lost everything.
And one of the largest outside investors said to me when he heard that
He looked at me and said
I'm sorry to hear that, but that's very reassuring. That means to me that you're going to do everything in your power not to let this company go down. And I looked him straight in the eye and said
Yes, I am.
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.

I'm Guy Raz and on the show today, how Peter Metcalf took a bankrupt business and built it into Black Diamond.
one of the world's best known brands for climbing, hiking, and skiing.
Way back in the first year of the show, we ran an interview with Yvonne Chenard, the founder of Patagonia. It's a classic episode, well worth your time, and we'll put a link to it in the show notes.
Anyway, before Patagonia became Patagonia, Yvonne ran a tiny little business called Chinard Equipment that basically sold metal tools for mountain climbers.
As you can probably imagine, the market for mountain climbers alone
was pretty small and niche, and by nineteen eighty nine, Chenard equipment
Basically went bankrupt.
But
It didn't exactly die. The employees who were left behind decided to raise the money to buy it.
The leader of that pack was Peter Metcalf, who is also today's guest. Peter believed that a new, reimagined brand could reach a much bigger set of consumers, and not just mountain climbers, but skiers and hikers, and eventually all kinds of outdoorsy types.
He renamed the company Black Diamond Equipment, and over the next 20 years, Peter turned Black Diamond into one of the most recognizable sports brands out there.
But
As you'll hear
The road from bankruptcy to success was anything but easy.
Along the way, Peter had to be nimble and decisive when faced with the prospect of failure.
The kind of skills he picked up from a life of climbing some of the most challenging mountains in the world.
Peter grew up in New York City in the 1960s, the child of two German immigrants.
He discovered rock climbing when he was just fourteen on a trip upstate.
And almost immediately he fell in love with the sport.
But he also found
A community.
I was just
magnetically attracted to these people immediately. This
Rather Bohemian, nomadic, iconoclastic group of outsiders that were made up of everything from young people to older people, physicists, scientists, mathematicians, professors, factory line workers.
Just a mishmash of eclectic people, people who really enjoyed and loved the outdoors, and also people who I think felt
This
desire and need to sort of push themselves doing something
A little bit unusual, somewhat adventurous, and also there was especially back at that time
Um, not n not the mainstream and it was certainly a bit risky.
So
I guess by the time you you were sort of sixteen, you were you were hooked in in in this sport and I read that I can't even believe this.
'Cause this would have been in the you know, maybe but
Early seventies.
right before uh like I guess a couple of months before you graduate high school
You joined a few friends in a Volkswagen van and drove from New York to Alaska
To go on a
Climb to tell me this.
First of all, I don't know how your parents let you do that. But tell me about that story. Yeah, so let me see, you know, I think
One of the blessings of being the child of
To
Immigrants to America.
Who came to the country
After a horrific period of time.
Yeah, for them every day
Life was an adventure.
And just living, surviving.
Was a true adventure.
And I think the
As in my youth I got instilled with that sense of adventure and
I engineered my life to be
Work as little as possible and climb as much as possible. So I didn't own a car.
I did odd jobs. I worked two winters on as
A rough neck on
Wildcat drilling rigs in Wyoming and Utah.
Chain hand. That is a dangerous job working on oil oil rigs.
Yeah, people say that and compared to climbing I didn't find it overly
Different.
I guess.
So by the time I was sixteen and beginning to plan this expedition to Alaska, I had already gone on my own out to the Canadian Rockies and doing some technical routes out there.
Let's find a big peak in Alaska that we can do a technic on, do an expedition, and let's go do it.
And the r the combination of the research led us to
A peak that had only been climbed a few times, had a beautiful unclimbed ridge on it.
We started the planning, organizing.
Bought thirty days worth of food, baked their own Logan bread.

Arrived at the um
the Alaskan Bush Pilot's little hangar there are right on the water,'cause you it's a water plane.
walked in the office, introduced ourselves and the first thing the
Receptionists said to us.
You're the expedition?
Yugi kids?
Do your parents know you're here? Um
Anyway, they flew us in and we were on the mountain for um just under thirty days, succeeded in doing this new route on this major Alaskan peak, and it was a game changer.
I I guess you I mean you I know you sort of
for the next several years would would kind of
go in and out of college, um and and have some seasonal jobs, but really it was all designed from what I read.
to finance these trips, different trips to go to the Alps or Alaska, just doing these
in intense climbs. And I read about
um a particular climb that you did in nineteen eighty, uh where you you I guess this was a this I again, I'm not a climber and I don't know these mountains, but this is a particularly challenging
climb which is the south face of of a mountain called Mount Hunter
Which
you know, from what I understand
Like it had been completed only once at that point and it was like uh took a hundred and forty five days or something. Yeah, yeah. This Mount Hunter climb
I had done now two major new routes in Alaska.
But
As it turned out it was
most significant failure of my climbing career
Nobody got hurt. It just was clear we're not gonna it wasn't gonna work.
The weather was just horrendous.
Just absolutely horrific.
And
We did not bring tents because I didn't believe in a route that steep that one could
actually find places I was to place tents and where
the slopes got low enough angle I thought we could find s snow and we could dig snow caves.
We had climbed
Through a long day of storms up these very steep
Looted.
Ice ridges that were very hollow, had a lot of air in them, very dangerous to climb, but you could climb them.
And
That night we finally were able to dig a cave and for the first time, get in there.
and realize that we were fully committed at this point in time. There's no way that we could safely descend
What we had just climbed that day, let alone the previous days, and that if we were going to live
Let alone to succeed on the route. The only way was up.
That was quite a
both sobering revelation at that moment, but it was also an absolutely inspiring revelation. Because as a climber, when you're doing big new roots, what you're constantly thinking about with part of your brain is
analyzing how am I gonna get down? Do I have the gear to get down? How long will it take? So you're using a certain amount of your energy
To make sure that you can retreat from something if you have to.
Yeah, it was very liberating. So it's like a hundred percent of our mental thought
And energy.
He's going.
is going to be focused on getting up this route, however we can do it. And so with each day, let's break it down into what are we going to do today? How far up this route are we going to get? And
One of the things that really taught me was that

You can do a lot more than you really thought possible if you just break it down into the components.
It also showed me the importance all of us.
of being brutally honest with one another, because in a situation like this, we were out now almost fourteen days, was thirteen and a half days, was six days worth of rations.
Just enough gear to keep us alive.
And there are some days where
Somebody didn't feel like leading another day were
somebody felt weak and scared. And we you just had to be able to say to your partners, Man
I just don't feel like leading this today. Can you lead? And it's like yeah, I'm I'm up to it today, I can lead this.
Everybody is dependent on one another, so you better be really c
aware and cognizant of the well being of your partners along the way, mentally, physically
You name it.
I I guess that climb
you know, would would eventually kind of
Get you thinking about
what you wanted to do. I mean you had been kind of an itinerant worker doing different jobs to finance your climes
But I guess around you know the early eighties, so you were probably I mean, I guess
uh you know, late twenties.
You happen to meet
Ivan Chonard, of course, the founder of Patagonia. He was on this show many years ago and
He also, if if if people listening remember that episode, founded uh uh another company called Chanard Equipment and they would m uh that was his
first company. And they basically made climbing gear.
You could met him.
And
that would eventually lead to to a job with him. Tell me a little bit about
About that.
Yeah, so by the early eighties I was realizing this itinerant life I was having focused on climbing
I didn't think it had a future.
I wanted to have more in my life than climbing.
Yeah. And at this point in time the the embryonic American outdoor
industry was just beginning to get large enough, that it was beginning to hire
Sales reps, which was brand new to the outdoor industry. And I thought
This this is intriguing. I'm outgoing. I know people in the industry. I know retailers. So I wrote a bunch of letters and
The
Patagonia Chenard was one of them. I had met Yvonne, but I didn't really know him.
And then the uh
Spring of eighty two I just got back from Alaska again and there was a letter from U
Yvonne's
general manager of Patagonia, Chris McDivitt.
Say that Yvonne was looking for someone to
become the to train and become the general manager of Shernote Equipment, the or climbing equipment company.
And as soon as I saw that I thought
Wow, this is it.
And and even though you didn't have a whole lot of retail sales, you were very qualified presumably for that job because you knew the equipment backward and forward, probably.
Yeah, my my expertise was
I knew the equipment incredibly well. What was wrong right with it, what was wrong with it. I had a
A plethora of new ideas for products just based upon my
using them all the time and I had modified products and actually built a few things along the way with partners of mine.
So th that part I knew. What I didn't know was manufacturing the m the actual marketing
the R and D process there. But it was a little company. It was a small number of people.
All right, so you you arrive at Chanard Equipment.
uh as the manager of climbing gear and
And from what I gather uh there was I mean, uh and this is not uncommon. I mean Yvan Chenard famously, uh he he really liked at least his reputation as uh of somebody who really kind of let go, right, and let other people run
the company and I guess he'd he'd like go off for three months and you know go fishing and then he you know he didn't want anybody to contact him.
Um anyway, dur I mean, during the years you were at Shenard Equipment, I guess
Ivan's focus began to shift over to
to Patagonia and and some tension began to emerge between the two of you, right? Wha what was going on?
Yeah, this is absolutely true. So first let me begin by saying
I oh Yvonne and Chris McDivitt.
So much thanks and appreciation. Everything I learned about business.
Or much of what I learned about business in
And how to operate one, the culture, the
familiar culture.
So many things was through all of them and they remain dear friends of mine.
And then
To your point r regarding the tension, yes, that did happen. And I think that what was s a little bit of a an irony here was that Yvonne, who built Chenaud equipment on innovative product in Patagonia then too, and to this day, um
When it came to climbing
At this point in time he had been sh shifted his focus
to the clothing, and also a bit away from climbing. He was surfing, he was kayaking.
And to him, I think the golden years.
were the 1950s. And maybe they're very early seventies. And I think that they were in the rear view mirror. And that the direction that climbing was moving, the improving gear.
the methods, the styles. It just wasn't his cup of tea. He didn't embrace it. He wasn't excited by it.
And that really came clear in nineteen eighty seven when
we produced the nineteen eighty seven Shenard Equipment catalogue which was like a yearbook. I I saw the catalogue as a yearbook on climbing, a celebration of Why Do You Climb, capturing the culture, the the climbing styles, the image, and we gave him a copy and he called myself and my
Marketing director, who really was my partner in the business.
Yeah.
We said as you looked at the catalogue that
He was really ashamed of it.
Hm.
That it represented everything that
he stood against in what was going on in the world of climbing. And as you can imagine, that was
Both very
Embarrassing
Concerning, frustrating, and disconcerting. But that did w that wasn't resolved. It was just a fundamental disagreement on this.
But we continue to
Mm move forward.
And you did I mean you did help.
things move forward. I mean but based on on some of your innovations, or the the brand, which

became a pretty solid small business again. I think it was doing like
Like seven million dollars in revenue.
Yeah.
Basically what I attempted to do and I think I was successful at it was bring the energy, the vision
And the products
to the company that had originally made it successful in the late fifties, sixties, and early seventies before Yvonne's focus began to shift to Patagonia and the clothing.
And the company really began to take off again and become the leader it had been, but had lost that leadership position.
But then I guess by the late eighties,
uh you guys started to face a a threat, almost an existential one, right, which was affecting other companies in in the outdoor space too. And and what it was was that you guys started to get hit with some pretty serious lawsuits, right?
Yeah. So you had this issue of
of equipment companies being sued literally out of existence.
And that was happening at this point in time.
Not safe enough. You might say, let's put it this way. I at this era y you can you probably remember that at some point in time
You go into a hardware store or now Home Depot.
And every step ladder began to have a sticker on the top.
Step saying, Do not step here. This could collapse. You could get hurt.
You know, in in nineteen eighty two that wasn't the case. You didn't have to have warning stickers all over everything. And the same was true with climbing equipment. There were no climbing standards at this time. Uh there was no quality assurance standards at this time.
And there was no labeling standards at this time.
But because of this rapid change in tort law.
Uh
This became just
Mm.
The dream of
Plaintiff's attorney's going after companies when somebody got hurt. So basically you guys were getting sued f in in what I guess you would uh you would argue were frivolous lawsuits, but still these were tying the company I mean a company making seven million dollars a year in revenue
To deal with four or five uh lawsuits, that's a massive expense. I mean that can
not only slow things down, that can tank a company.
Yeah, I mean I'm not sure I'd call them frivolous, but they're failure to warn, which was this w what you call them failure to warn suits that we
Fail to have
The appropriate instructional information warning language, whatever it was needed. And it also involved two fatalities. So the the size of the potential judgments against the company were huge, and without any of the standards, the risk to the company
Was
Enormous.
And I imagine the insurance policy was huge.
That's this was the one the m one of the major issues. When I arrived at Chenaud Equipment in nineteen eighty two
We had five million dollars worth of insurance. It costs I think ten thousand dollars a year and had a five thousand dollar deductible.
By the time that
All these seats hit and what we were facing.
the cost of an insurance policy
For one million dollars was three hundred and fifty thousand dollars with a two hundred and fifty thousand dollars.
A year with a with a with a quarter million dollar deductible. That's insane. The the premium was three hundred thousand over three hundred thousand dollars for a one million dollar policy with a two hundred fifty thousand dollar deductible.
I mean that just shows you
how these insurance companies assess the risk. They were basically saying
You are
A hundred percent likely to get sued.
Yes, we we were being, unfortunately, being sued.
And so this
That combination of those premiums made the company obviously
Not profitable.
Unsustainable.
Yeah, not sustainable.
I guess around this time, from what I understand. I mean it didn't
It it didn't seem to m uh understandably from Ivan Chenard's perspective, he's watching his apparel business Patagonia grow.
And he's got this other business, Chanard Equipment, which is just saddled with lawsuits and
Increasing insurance premiums
And he I mean he told us this story on when he was on the show several years ago.
Me kinda comes to the conclusion that
It it's pointless to to continue this, like
It's just gonna hurt Patagonia and his other businesses.
And so
You know, I think he he basically said I had I've had enough. I'm just gonna and I'm gonna file he files for bankruptcy.
Yes.
It was just it wasn't worth it, so he made the decision to put it into a chapter eleven.
Bankruptcy.
And asked me to come up with a plan.
To sell the assets as quickly as possible. And the assets were belays and ropes and carabiners and all the things that you would use to I'm forgive me, c climbing people listening who are climbers, I'm clearly a neophyte here, but all that equipment, right, needed to be sold.
Yeah, it was the existing inventory, there's tooling. We were a manufacturer of that. So we made it. And it was also a very tired manufacturing base, meaning most of the presses and equipment was very, very old. Um not I wouldn't call it state of the art. And it was based where was it based again?
Ventura, California. Okay, so which is where Patagonia's headquarters are. So this was also in Ventura and and everything was being made there.
And uh I got you. Okay.
Yep.
Yeah, so no one was interested in buying those assets. I interviewed several different people, companies, there was no interest. So that moment after two weeks Yvonne just said
Give me a plan.
On how to
liquidate the assets and lay people off as quickly as possible with the least loss possible.
And that is when I had the
the epiphany and thought, wait a minute here.
There is an opportunity here.
There's both an opportunity and
I don't wanna make a mockery of the past seven years where I
rebuilt this Schnort Equipment Company from where I had been in nineteen eighty two going down.
and made it once again a market leader. A little leading American climbing equipment company doing really good work. So you basically decide
That
that you wanted to buy the assets and create a new business.
Basically, uh a a a new business that would be a an outdoor climbing business.
Yeah, that's absolutely correct.
And from what I understand, you decide that
you that that you wanna see I guess if you can
gather the employees and all together uh figure out how to buy these assets and basically
Start your own company all together, is is that right?
Yeah.
I figure we'd probably need
Somewhere between three to five million dollars.
Total.
And and how many employees total were you were you talking to about joining you?
We were just under fifty people in the forties. And did those fifty people together could the did they have the money? Did they have the four million dollars together?
All together?
Well, no. I mean the the plan was never to get raised four million dollars in equity. It was I thought maybe if we could put together somewhere on around a million, we could borrow three to four million more. Um
Leveraged.
Like it. Okay.
Right.
You know, as a climber you're a risk taker within reason.
Um, you understand what you're up against, and if we could do this, it was Quixotic.
I mean it it was
It was romantic and uh
A quote I once read way back in the early eighties.
It was from Peter Drucker.
Who talked about how
The true opportunities for
Entrepreneurship.
which is based upon innovation, lies in the gap that opens up between where a market is
And where it's going.
And I thought that was
The genius we were
applying it Chenard equipment. It was what Yvonne had done in the fifties and sixties. He'd never articulated it like that, but that's what I saw.
And I thought that's what we can continue to do.
So from from what I gather, you begin what would become a nine month
negotiation.
I I guess in the grand scheme of things isn't long, but it is long'cause it consumes your life. It is everything, every day, all the time. It's frustrating.
And
The negotiation is to buy the assets.
of Channard equipment.
But what I'm trying to figure out is how did you
Start tape even
attract the possibility of getting the
The money, the three million.
That you needed.
To do this.
Yeah, all good very good questions.
Um
So immediately I dug into this, just
Fortunately, but you know, climbing, as I mentioned earlier, has I I had a lot of friends who were in finance attorneys
And I just started calling.
Anybody I knew who I thought could give me advice on how you do something like this. And the amount of free advice I got was phenomenal.
I mean this company would never have gotten off the ground if it wasn't for people like that. And then I got introduced to some significant investors, and some were entr intrigued and and interested, and we went a ways and each of them then said,
I'll only do it if I have fifty one percent.
Right. It's risky because from their perspective, this is like a niche business. This only appeals to a certain kind of person. There's no mass market here. That's their that's their argument.
Yeah, no, it's it's a good point. And
So that in no.
And I
For the effort that we're going to put into this
I did not want
Myself and the employee group to lose control of this business.
It wasn't worth doing. If if that was gonna be it, it was like this walk away from it.
would be a brilliant failure.
Right.
We're only gonna do this if we can do it our way.
When we come back in just a moment.
How Peter convinces people to invest in his new company without really telling them how they'll make their money back.
Stay with us, I'm Guy Roz, and you're listening to how I built this.
Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1989, and Peter is trying to raise about$4 million to buy the assets of Chanard equipment.
And one way to do that
is to reach out to their customers.
Shawn Equipment had a mail order business and I thought okay
I wonder if there's any wealthy people
in who are regular customers of Chanel Equipment. So I sat down with my I had two people running my mail order business
And this is back before the internet and all that. And I just said
I want you to print out
a list of everybody who's bought from you multiple times in the last year.
And that you've talked to multiple times and you think has money.
They're rabid consumers of our product.
And they seem like from your conversations that they're wealthy people. I got a list of about fifteen people.
And I just started call calling.
And saying here's who I am, hey, I'm the general manager of general equipment. As you heard, it's in bankruptcy.
It's gonna be liquidated, but I'm starting a brand new company.
Here's the vision behind it. I'm trying to raise money.
And would you be interested in investing?
And some people immediately hung up and said, Absolutely not.
Some it went away and a couple of those people
ultimately became the most significant investors in the company and advisors and board members.
Alright, after
A nine month negotiation.
Uh, which at times didn't look like it was apparently Patagonia had had had
put together a press release saying the deal fell through and and and it's not gonna happen. Like at at the last minute that didn't go go out.
You you did strike a deal.
Um, and and you you were able to acquire the assets and
And start from scratch, I guess.
Yes. And then in November we closed on it and December first we completed remarking everything and opened our doors.
Nineteen eighty nine, December first, nineteen eighty nine is the highly leveraged young
Black Diamond Equipment Company.
And highly leverage in in what way? Like how?
How much money were you ultimately on the line for?
I raised just under nine hundred thousand dollars of equity.
Um another like hundred and fifty thousand dollars worth of sub debt.
And then went to a
commercial finance company.
And got the debt we needed at a nearly fifteen percent interest. Fourteen percent. Wow.
It's high.
Yeah. And a fourteen percent interest on on how much money.
Uh we borrowed in the end.
Separate from the sub debt which was at fifteen percent to the investors.
Uh but another
Two almost three million.
Wow. I mean
That's scary.
Yes it is.
And that's a high inter I mean, again, this is the i the the eighties and nineties when interest rates were just higher than they are now. But still I mean
You know, your revenue had to be significant just to service that debt.
Yes, I figure that
Th the numbers showed we had to hit five million dollars. I mean
The company had been about seven million dollars, almost.
Or right about seven when it went down, short equipment. So that Black Diamond my numbers showed that we had to
Not go.
decline less than five. So you had to do a minimum of five million a year, which was realistic, but that was just I mean that would be like
Barely paying anybody anything, I guess, really and and really being lean and
still having to figure out how to innovate to grow in the in the subsequent years.
Yes.
Alright, so now you've got black diamond equipment. End of eighty nine, you own you and your team, your employees. It's now
An employee owned business.
And and and just to clarify, the the you guys controlled it. You guys had the you and the employees owned more than fifty percent of it, or you had fifty percent voting power.
Fifty nine percent.
If you include our Japanese distributor.
We were at fifty one. Okay, I got you.
And the investors we got were all people who are very willing
to invest in the long term. When I was asked about a liquidity strategy
I said, look, I don't have a liquidity strategy in the short term.
This is not philanthropy. We will have one.
But this is a long term investment. I can't tell you how long, but we're gonna build a successful business.
And
At the appropriate time we will find you liquidity.
But this was still risky a risky venture because
In order to
Make that an attractive investment.
Everybody involved had to imagine that this could be
Seven to ten times bigger.
Which of course it would get to
But at that time.
Who I mean, I I I think it was kind of
It was hard f I think it would have been hard for a lot of people to see that happening.
There's no question it was risky. I mean
And at the same time.
We were true believers.
And I wouldn't have, you know, for myself, I had my life savings in it.
I had personally guaranteed the loan, even though I only own ten percent of the business.
And it was my job and career. So had it gone down, I would have lost everything. Our house
Uh my job, my savings, everything.
And one of the largest outside investors said to me when he heard that
He looked at me and said
I'm sorry to hear that, but that's very reassuring. That means to me that you're going to do everything in your power not to let this company go down. And I looked him straight in the eye and said,
Yes, I am.
And you know, the goal at the time when you talk about how big it could be. No, we didn't envision it being a twenty five or fifty million dollar company.
We were going to be very satisfied if it was
self sustaining in five or six million could give a small dividend to the shareholders
and make a difference for the community. If we could be employed, make a difference to this community at five to ten million, hey, that would be great.
What's not clear to me is
When you took over the assets, right, I mean shonarta quitman basically said, We're done with this. I mean all these lawsuits and this and these insurance costs, it's not worth our time. Plus we've got Patagonia.
You basically say hey
we think we can do something with this, which was a a a a g an interesting gamble
But
How are you gonna deal with the insurance premiums? I mean that alone.
was gonna cost you hundreds of thousands of dollars a year.
Yeah, it's a very good question. So one of the things I did was r research this very carefully.

and brought together the small climbing industry of America, our competitors in the United States and our largest retailer, REI at the time.
held a series of meetings, found insurance experts, and realized that if we as an industry got together and decided that
Let's have standards for
Quality assurance, standards for quality control, labeling standards, performance standards. If we do all that together, if we come together, we can survive.
But if we don't do this,
None of you guys are gonna survive. We're not gonna get insurance. You guys are all going to disappear. And through a series of meetings and work
the g the industry organized that is self preservation and caring about the customer too.
And we found a way to pool, have an insurance pool.
Create standards.
And
find affordable insurance. But it changed the industry. Created the first industry group.
standards, everything was needed um before I could open the door as a black diamond and secure my investors.
I I guess sort of.
Uh pr pretty soon after you guys acquired this, you must have been thinking, you know,
Ventura is not the right place to be. Ventura's a wonderful place and it's a a surf town and and you know you're in California. But
I I think that you started to think about moving and you would eventually
make the decision to relocate to Park City to U or to to Salt Lake City in Utah. Um
And and tell me how how
You convinced
Everybody to do that to pull up and
go to Salt Lake City from
California.
Yeah.
True systematic search of the West.
At the time that I looked at Salt Lake Park City, there was no other outdoor nor ski company here. We would be the first, which made it a little bit
Um
create some anxiety for people that to come here, but from the standpoint of
What these environments had to offer.
It was absolutely outstanding. Yeah. So I went down to Salt Lake, contracted with an industrial
Commercial broker.
And said to him.
This is who we are, this is what we need.
Start showing me properties.
Should me

likely candidates that an industrial company would want out by the airport met with the owners of those buildings. They took one look at our balance sheet, what our history was, a one year old highly leveraged company, and said, No way I'm gonna do any tenant improvements for you.
to move into these buildings. You're too risky.
And so at that moment
I decided
Well, we don't really want to be out in the industrial park, I want to be up against the mountains on the east side of town anyway. And told the broker, I said, You know what?
Everything I've read is that Salt Lake City is on its knees economically. There's tons of bank repo properties.
Let's spend a day and show me every bank repo strip mall.
Big box building.
Bank owned old industrial building, whatever you have on the east side of town.
And as we started going around, I looked at one property after another and came across a property a
Bank repoed.
Non operating.
Scandinavian shopping village on the back side on the east side of town that was owned by the bank.
and thought okay this could be it. This place could be transformed into a cross between Toyota City and a Disneyland for climbers.
With our home, a place for climbing gym.
A retail store, a guide service, a restaurant for climbers, I turned it into the center of climbing for Utah.
So
You move, the team moves out there.
And you're now in
uh in in in salt like
Tell me a little bit about I mean, you had to hit five million a year.
Uh I think you did that and and
Uh
And a little bit.
better but I think by ninety one you had about seven million in in revenue.
Were you proferable by that point?
Yeah.

We are profitable on day one.
On day one.
We had to be.
Yeah. Because you had the debt, you had to service the debt.
So even if you were doing five million revenue
Uh you were profitable.
Sufficiently profitable to pay the debt.
But but I have to imagine that for the first couple of years salaries were pretty low.
They w Yes.
They were very low.
I think this is where
Having employee owners makes a difference where people
Who are working for you on low salaries also have a
A piece of the action.
Knowing that at some point in time that stock
will hopefully appreciate and be worth something more.
So
Um, by the mid nineties, you guys have had reached about twenty million dollars in annual sales. What was driving that?
those sales. What was what was driving the growth?
It was a combination of
A very steady stream of truly innovative products in all of the categories.
That a climber, alpinist, or off peace skier would need.
And then I should also add that
Yeah, life is serendipitous as well. That at this moment
Climbing.
For variety of reasons, including gear, just began to
Take off and grow very quickly.
Was there a reason why? Was it like a movie or something?
So
Fundamentally it was the advent of what is called
Sport climbing.
Up until the late Nighting Eighties.
The only climbing out there was what we call traditional climbing, where you place your own protection, meaning a piton and not a s springloaded caming device and ice screw into ice rock, etcetera.
And so
If
You didn't do that.
Oh, you didn't do it correctly and you fell, you could get killed or badly hurt.
Yeah. Sport climbing developed in Europe in the nineteen eighties where there's so much limestone. Different about limestone, it's very compact. And they just decided that they were gonna take industrial Bosch drills, battery operated drills, drill into the rock.
And place expansion balls.
The risk factor's greatly reduced. Just to c explain this to me and to people who are not climbers. Yeah. This
These were permanent uh screws.
th these are permanent anchors that were screwed into the rock and now you can see them all over the world. And this enabled other people
Months.
even years later to use those same anchor points
to safely climb a rock.
Yeah. I mean if you took a fall it'd be a very short fall, right? Right. So
You knew that every six feet, every eight feet there would be a
Something to clip your rope through. So it really made it much more accessible to people.
Okay.
And then and and just right behind that by a few years was the advent of climbing gym, which were slow to first take off. The first one was in the very late eighties.
And now today climbing gyms are absolutely everywhere. Yeah.
So we were at the right place at the right time. And our first five years in business
After that first five plus million, we grew for our first five years we were growing at a compounded
rate of over thirty five percent.
But I wonder whether by you know, by the time you start to hit twenty million revenue
Um, are you thinking
About expanding
the appeal of what you do. I mean in other words
Are you starting to think well maybe
Maybe we need to think about
he reaching a community just beyond climbers and and skiers, be you know, maybe a a a more of a sort of general outdoor enthusiasts.
Not quite.
For the first five years, we really didn't need to do a lot of planning. Yeah. Meaning strategic planning. And it was after five or six years that we had our first very slow year. And it was at that point I organized company wide strategic planning to talk exactly about this issue. And the first tier of this was really to look at, okay.
We are focused on climbers, skiers, alpinists.
But there's a larger thw swath of people who these products really appeal to. People who are not necessarily
the hardcore climber, alpinist off Pskier, but need the benefits of these products of a uh a quality headlamp.
Gloves, headlamps. Headlamps. So these are for like backpackers.
Hikers maybe.
hikers, backpackers, mechanics, I mean the number of people who can use a headlamp is unlimited.
They just didn't know it.
And when you introduced headlamps, I think in ninety eight
Did that have a significant impact?
It's a game changer. Wow. I mean that category
became a huge category. It proved to be far, far greater than we ever anticipated. I would use it all the time to set up my satellites and you know, and things like that.
Um what what made your headlamps
different than than the leading
Producer at that time.

Yeah, the leading producer was
coasting on its laurels. And right at this moment was when the first LEDs were being introduced to the market. There was no L E D headlamps, but they were appearing in electronic devices. Yeah. They were appearing as Christmas lights. And we looked at that
It's the low energy consumption in thought.
There is a potential future here. Secondly
Th no one was using at the moment chips.

No one was
You taking the reflector and engineering the reflector to better focus the light or using higher quality bulbs.
Those were the the key ingredients and put together in a very intuitive
Beautiful pack lighter package.
Alright, so the sport is kind of growing and but the the headlamps are really a game changer because now all of a sudden you're starting to presumably
Reach people who are not part of your traditional community.
Yeah.
And then we went on to do the same thing with
Trekking poles which is
A little bit more limited than say lighting and also gloves and mittens.
But I read about a project that that that was
less of a success. This was a I guess it would be like a new line of uh backcountry ski boots. It and you guys put about five million dollars into developing
This product four years.
Huge project.
Um but it
Uh
It
It didn't quite
take off in the way you expected, if if I'm not mistaken.
I mean it took off initially, the it was a huge success initially.
But th there was a fundamental mistake made. And let me give you a metaphor,'cause I worked in drilling rigs as a rough neck. And I remember once walking into a bar after a twelve hour shift with my
Fellow
Rough necks.
In red desert.
And the driller, my boss, walks up to the first guy at the bar and flicks his hat.
And but you guys get up.
And one of them swings.
And you realise it's my metaphor is that
If you're gonna flick the hats of a bunch of big guys.
They're not gonna take it without swinging back at you.
When we come back in just a moment.
What happens when the big guys take a swing?
at Black Diamond.
Stay with us.
I'm Guy Raz and you're listening to How I Built This.
Hey, welcome back to How I Built This. I'm Guy Roz. So it's 2009 and Black Diamond has just made a risky investment in a brand new category.
Ski boots for backcountry skiing.
We had some really good innovative ideas for those products.
in both fit and performance and uh flexibility, and came up with three brilliant boots.
and brought'em forth. And I thought that
Okay.
We're in this niche. The big alpine companies don't seem to be very interested in this niche. It's growing nicely, slowly but steadily. This is gonna be our niche, and let's do it.
Big tooling cost, but we'll get a long lifespan out of this tooling.
So we enter it.
Watch the product, it gets amazing press.
Well received. We do initially very well. We go to the y big European trade show where the booths are open and we have the product out there. The words all over the place.
And nonstop, we couldn't stop him. There come the guys from Solomon.
Atomic. All the competitors, the R and D guys, immediately come in with their cameras.
Putting the cameras inside the boots, looking at'em.
And just copying'em and within no time these companies that are doing you know
Tens of millions in ski boots. Just look at this and realize
This area's growing we're gonna get into this. So it became somewhat of what I'd call an arms race.
Meaning you're
Tooling for big pl for plastic boots is expensive, let alone the RD. And those ski companies could take a
What I call uh.
A medium
Expert boot.
Modify it.
with components and turn it into a boot somewhat similar to ours at ha at half the price. And so within a number of years, within a decade
Less than a decade.
We were being overwhelmed by the products that the big ski boo companies were coming out with, and it just became clear that
We can't compete against this. We're not in the big leagues. Yeah. And I think the takeaway from that was
You know, as a business person
Mm.
You have two fears in life as a niche player.
You won't be successful with your investment.
Or you'd be too successful.
If you're too successful, it becomes mainstream.
And bigger guys can get into it.
And outprice you.
Um, you guys twenty years on your twentieth sort of year in business.
two thousand nine.
You hit about eighty six million.
in revenue.
And uh two thousand ten it was uh you close a deal with a an investor who acquires
Black Diamond for ninety million dollars.
Um and a little over. A little over. And uh which is a nice return for everybody involved.
Um, but I imagine that, you know, twenty years a long time at that point, and you're thinking, Okay
This has been a twenty intense twenty years of just uh you know.
Just a lot of struggle, a lot of stress.
Uh and from your perspective I imagine you thought okay, I'm gonna
I'm gonna wind down. I'm gonna get out of here soon.
Yeah.
I recognize that I don't I didn't own the company. I was a ten, eleven percent owner of the company and I wanted this business to go on
Beyond me and
I felt it was a need for me to make a decision.
to change the ownership structure
while I still had a number of years left in me to actually run it and not wait until I'm exhausted. Let's just figure out what to do. So I went to my board this time
And said I know numerous people have been asking about liquidity.
Let's figure out. Give me a year. I'd like to take a year.
And figure out
What kind of transaction to do, how to do it.
private equity, sell it to another company.
Take it public. I don't know. But I wanna really research this.
And the plan that we came across was to sell to
A publicly traded
Balance sheet rich.
Company, Claris, and the deal we cut
With Clarence was
They

And on the day the deal closed, we would be the successor organization.
It would be black diamond. And then we would those who wanted to leave their money in the business.
could swap it for
Now public shares and those who wanted liquidity could get liquidity or combination thereof. So it was a it seemed like a great plan, and I think it was a great plan.
And so this now becomes
uh a publicly traded company, Black Diamond essentially becomes a publicly traded company at this point.
Yeah.
I made a commitment
For at least three years. I signed a three year contract.
Um that could be renewed.
To be the CEO
Um of that company.
To move it forward.
So one of the things and and by the way, it's still a publicly traded company, I think under the Claris name, right?
Yeah. Yeah. And this is two thousand nine, and so you see Patagonia at this point is massive, and North Face is a huge brand, and Columbia, these huge outdoor brands.
Many of which did not begin as apparel brands,
are just massive.


earlier. But now you really at this point, once this m this merger happened,
really wanted to expand apparel to make that I as from what I gather
A very significant part of the business.
Yes.
Can you explain the thinking behind that why you wanted to pursue that?
Sure.
We had some ideas on
What to do differently with apparel.
Patagonia were doing for s for example. Yeah. Secondly, we really know the sports very well. So when it came down to things like alpine pants and ski pants, the materials you need, the detailing of what you want.
We feel well we felt we really knew that. We also saw opportunities for.
different fabrics or hybrids of fabrics.
to have in the product.
And so those were modest. I mean, they're not revolutionary the way many of our hard good products have been, but we felt they were enough in to launch the brand and to s to grow it out from that.
You step down.
From
Running the business in twenty
I think twenty fifteen, twenty sixteen you transition out.
It's a long time, twenty six years running the the business and
Um
And and w I mean, I imagine at that point you were kind of done. I mean you had
uh put every everything you had into the into the into that into building that business.
Yeah.
Yeah.
I was done with the
Responsibility
that comes with the daily it's it's twenty four seven. It's not just daily twenty four seven. That business was my life
And I had still my health.
My passion for the sport.
We're still
very, very strong
And I wanted to do more to give back. I wanted to work to champion the these last wild places where we apply our craft.
And to do the activities myself.
Uh and useful climb.
Oh yeah.
Yeah, I'm very, very active and cl more active than I've been since
Before I went to work for Yvonne. And still do do the same kind of level of risky climbs.
Absolutely not.
Yeah, it's um
I don't have the
I can't dig as deep.
As I did in my twenties or thirties. You just don't have that ability.
The key if you're gonna stay alive doing this activity when you're turning seventy.
is to make sure that
You align your aspirations
with an honest assessment of your abilities. I wanna push
But I I know I know my limitations.
So I don't want to do it to the point where
I kill myself and I I don't want to dig as deep as I did.
But I enjoyed immensely and I'm still climbing today. I'm blessed.
When you think about um the journey you took and you know, g going from working for Chinard equipment to
Taking it over and and building a new company and then and then, you know, taking it to where it got to. I mean, how much how much of that do you attribute to the work you put in and how much do you think ha has to do with
Just
Good fortune luck.
Let's face it, lucky.
And serendipity.
plays a huge role in everybody's life.
But to the luck itself, I would equate it to it's probably sixty percent of
Hard work.
Tenacity.
The teams that you put together, all of that and forty percent
Is the serendipity and the luck.
I don't I think that's
Black Diamond certainly was
Emblematic of turning every disaster into an incredible opportunity.
But it was understanding how to do that.
And I think it's still that is nothing ventured, nothing gained. In alpinism we try great things and sometimes we fail. That's okay.
So long as we don't die in the process.
That's Peter Metcalf, founder of Black Diamond Equipment.
By the way, as Peter mentioned, at the age of almost seventy
He is still climbing and loving it.
This summer, he spent 10 days in the Swiss Alps, and he just returned from a climbing trip in the Catskills.
The very same area in upstate New York where he first fell in love with the sport.
More than fifty years ago.
Hey thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show and as always it's free.
And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gyros.com.
This episode was produced by Josh Lash with music composed by Ramtin Arablui.
It was edited by Neva Grant with research help from Alex Chung.
Our audio engineers were Robert Rodriguez and Maggie Luthhar.
Our production staff also includes Alex Chung,
Carla Estevez, JC Howard, Sam Paulsen, Chris Massini, Devin Schwartz, Carrie Thompson, John Isabella, and Elaine Coates.
I'm Guy Raz and you've been listening to how I built this.