Golf Entrepreneur

Entrepreneurship is a Marathon, Not a Sprint

noreply@blogger.com (Steve Tanner) — Thu, 13 Jun 2013 06:46:00 +0000

Last week I shared with you my version of TGA’s 10 Year Story, and through the process of writing it and planning for our anniversary campaign, I’ve done a decent amount of reflection.

One of the topics I've been thinking about is the myth I hear frequently about entrepreneurship being sexy and quick, a la Instagram and Tumblr. In my experiences, it's usually the exact opposite – complicated and long.

One of the more timely articles to cross my eyes recently was Seth Levine’s blog “The Ten Year Entrepreneur” in which he does a better job of describing this than I could. In it, he says: “Years 3-10 in a business are the real heart of entrepreneurship … figuring out how to scale an organization ... playing with product market fit that you thought you’d already figured out 10 times … trying um-teen different sales and marketing ideas … all while trying to make sure you don’t run out of money … this is the meat of company building.”

I couldn’t agree more.

I was on a conference call recently with some industry members trying to explain the lifecycle and timeframe of selling, starting and building a sustainable franchise. My comment was this – “building a business takes time … in the first year, a TGA franchise is generally focused on learning the business; in year two, they usually start having some success; and in year three is generally when they blow it up.”

Some of the folks on the call seemed surprised (not an uncommon reaction) at the risk and length of time involved. But in our world, success is never guaranteed and immediate income of a significant nature is rarely achieved. That's not entrepreneurship. If you want guarantees and large paychecks from the beginning, you're better off as an employee for an established company. Entrepreneurship is about value creation and risk with upside.

Interestingly, the timeframe I articulated was for a franchise coming into a proven model where things like “product market fit” and “sales and marketing ideas” should be relatively established. If you're starting a company from scratch, you're likely in for an even longer haul. We definitely had some initial success in our first few years at TGA, but it took several to break-even and several more to “blow it up” (if that’s even happened yet – my opinion is that it hasn’t).

In retrospect, years 1-3 were much easier than years 4-10, especially since we started franchising in 2006. Nowadays, the issues we deal with are bigger and carry larger ramifications. Our responsibilities, especially to our staff, have increased along with the overhead. It’s more time-consuming and challenging to modify policies and procedures now that they’re imbedded within a 70 franchise system. Culture has been established, and trying to change the less glorious aspects of it can set off what feels like World War 3.

But we made it, thankfully, due to a healthy mixture of persistence, stubbornness, instinct, and most importantly, passion and belief.

The lesson is this – if you’re an aspiring entrepreneur, get ready for a long, tough marathon because entrepreneurship is all about building a business with long-term sustainability and rarely does that look anything like a sexy, quick sprint.

I’ll end with a quote from my favorite robot dinosaur Fake Grimlock who I definitely encourage you to follow on Twitter if you don’t already:

	FAKEGRIMLOCK (@FAKEGRIMLOCK)
MOST OVERNIGHT SUCCESS TAKE YEARS TO MAKE HAPPEN

Happy entrepreneuring…

TGA's 10 Year Story

noreply@blogger.com (Steve Tanner) — Wed, 05 Jun 2013 20:00:00 +0000

The following story was published this week in TGA's newsletter and on our website. Hope you enjoy.

..........

My name is Steve Tanner and I’ve been with TGA since the company was launched in 2003, hired first as an overnight camp counselor, then as a coach, then as the first full-time employee, and now as COO and one of two equity partners.

To kick off our 10 year anniversary celebration, I wanted to tell the story of how TGA came to be what it is today through my eyes. But the story of TGA goes back much further than 10 years, beginning in the early 90s like so many other entrepreneurial journeys with the simple notion of “I wish _____ existed because it would be awesome and I’d be all over it.”

This was the thought Joshua Jacobs had as a teenager growing up in Los Angeles. Josh was a competitive and accomplished junior golfer – AJGA, college, the whole nine yards. But he found junior golf to be so SERIOUS. He went to a variety of overnight camps as a teenager and had a good experience but never did what he was truly passionate about – play golf. If only there was an overnight golf camp that traveled to great courses but focused first and foremost on making friends and having fun.

After graduating from Emory University, Josh’s early career path took him to New York City where he worked for an AV company and lived in Hoboken, NJ. It was from his apartment that he watched the atrocity of 9/11 unfold across the Hudson River. Like all of us, the tragedy made him reflect on what was important. More than anything, he missed his family back in Los Angeles so he packed his bags and moved home.

In reflection, all of us involved with TGA hope that the daily impact our organization has on kids and communities across America has become one of the many stars that shines today in the darkness of that time in 2001.

Wondering what to do next with his career, Josh sat down with his family – which includes several generations of accomplished entrepreneurs – and was encouraged to follow his dreams. With the support and mentorship from his grandfather Lee Warner and father Michael Jacobs, Josh thought back on his idea for an overnight golf camp and decided to take the plunge of trying to create as an adult that which he wished for as a kid.

Teen Golf Adventures, LLC was incorporated, camps were scheduled for the summer of 2003, a few kids signed up, and the company was officially in business. That first summer went well all things considered, but as it wore down Josh found himself thinking about how he was going to generate revenue over the next nine months until it was summer again.

The answer came in the form of the after school golf enrichment program that has been the catalyst for bringing TGA to a 10 year anniversary and introducing 225,000 kids to golf and tennis. But, ironically, it was conceived almost by accident. One evening in early fall, Josh found his elementary-aged sister reviewing her options for after school enrichment programs for the upcoming school year. He asked, “is golf an option?” to which she responded, “nope” … and the light bulb turned on. Golf at schools would solve so many of the problems that keep kids from trying the sport – transportation, information, cost … it just made so much sense. Josh bought some clubs, put together a curriculum, got six schools in West Los Angeles to agree to offer a program, and off he went.

The program grew quickly, from 6 schools in the fall session of 2003 to 13 in the winter and 18 in the spring season. Enrollment was great. Demand grew. Summer day camps came in 2004, along with a multi-level program and more and more schools. But it wasn’t for almost two years that anyone understood the magnitude of what Josh had created. That happened when people started calling the office to ask how they could start the program in their region of the country.

We started by licensing the curriculum and trademarks but quickly learned that we needed to provide business support as well, so we filed our first Uniform Franchise Disclosure Document in 2006 and became a franchisor. Our market evolved from Los Angeles to the U.S. and now to the international community. First-of-their-kind training programs, curriculums, student handbooks and software systems were developed. Golf’s sister sport, tennis, became an opportunity and then a reality. A 501c3 Not-for-Profit was birthed. So much has happened in the past 10 years, it’s too long of a story to tell but also too much of a blur to really tell correctly. But the vision has always remained the same – make golf and tennis accessible for all kids and provide a fun, positive experience that instills a passion for the sport within each student and then provides opportunities for them to pursue that passion.

And this is what gets us so excited about where we’re at and where we’re headed as an organization. TGA is a family of entrepreneurs and we’re not great at reminiscing or sitting still, so we currently have our foot on the accelerator doing things like:

Building a management team for the TGA Sports Foundation after receiving a generous grant from a TGA vendor, with the goal being to exponentially increase financial aid and scholarships offered to under-resourced kids.

Preparing to open new international markets in 2013 while YTD new franchise openings in the U.S. have been double any previous year.

Securing and activating major industry partnerships that will change the way the company looks when we celebrate our 15 year anniversary.

Continuing to expand our HQ team, soon to be more than double what it was two years ago, with awesomely talented and passionate individuals like Nate Wright, LeeAnn O’Donnell, Bradley Fontaine and Patrick Yarrow giving everything they have to the organization every day.

We continue to push harder and further because we have a unified vision – the belief that we have successfully pioneered a critically important model that breaks tennis and golf’s traditional barriers, can reasonably be scaled to every school and child in America (and beyond), and is something that has proven to add significant value to our students, parents, schools and partner golf and tennis facilities, as well as the industries and communities we serve.

While ten years is a milestone, we are far from satisfied. Still, less than 4% of kids in the U.S. play golf and tennis. That is unacceptable. And we are doing everything we can to break down the barriers and solve the problems quicker and better than ever before. Ten years from now when we celebrate our 20 year anniversary, we fully expect to have 10x the impact we’ve had so far. Please hold us accountable to this goal.

But today, we’re pausing for a moment to celebrate the journey that brought us here as it has been paved by thousands of amazing and dedicated individuals, most importantly our instructors and franchisees. TGA has reached the point where it is above any individual or team – it is the brainchild and creation of everyone who has contributed in their own way, big or small, to making the organization what it is today – 70 franchises, 225,000 kids empowered, thousands of jobs created, 2,500 schools impacted, and much more. For that, I speak for everyone at TGA HQ when I say THANK YOU!

I’d like to close by recapping the journey our three favorite letters, TGA, have taken over the past 10 years. In many ways, their evolution tells the company story on their own:

2003: TGA = Teen Golf Adventures

An overnight golf camp for teenagers.

2004-2006: TGA = Total Golf Adventures

Shift to after school programs for kids primarily 5-10 years old.

2007-2011: TGA = TGA Premier Junior Golf

Making TGA nothing more than an acronym because “Total Golf Adventures” made us sound more like a travel company than a school-based junior golf organization.

2011: TGA = Tennis & Golf Adventures

Marking our expansion into tennis.

2012-Present: TGA = “Teach Grow Achieve”

Coming to a clear understanding of TGA’s identity as a youth enrichment organization that marries athletics with academics, and applying an appropriate meaning to “TGA” that we believe will last for decades worth of anniversaries.

Thank you for listening to my version of the TGA story and offering your continued support to our organization. Cheers to a great past, a brighter future and always remembering to KEEP SWINGING!

Two Sets of Rules Are Better Than 20 Million

noreply@blogger.com (Steve Tanner) — Thu, 23 May 2013 19:05:00 +0000

Hi All,

It’s been a while, but I’ve been gone for good reason. 2013 is turning into a memorable year for me and TGA. We’re in the throes of building the TGA Sports Foundation, YTD franchise startups are double any previous year, we’re undergoing a shift in corporate structure as well as organizational culture, and it’s all given me a lot to write about. I just need to (and will) do a better job of allocating time for it.

There are several half written blogs saved on my computer from the past four months, things I found interesting and started writing about but never finished. One involved anchoring and bifurcation, topics that came full circle this week.

Anchoring has never felt right to me, but there’s also no evidence (even according to the USGA) that it helps. I understand on a philosophical level why they decided to make and uphold this rule change, but from a practical level it makes little sense to me for a governing body to allow something for decades and then decide to abolish it. Seems like they need to sleep in the bed they made as opposed to negatively altering the most important part of the game for dozens of professionals and thousands (millions?) of amateurs. There’s a reason the USGA wrote their ruling the way they did and have been hording hundreds of millions of dollars (while simultaneously eliminating their grants program), and I wish the magnitude of the legal battle they’re preparing for served as the writing on the wall about their wisdom (or lack thereof) with this decision.

More disappointing to me is the opportunity lost for the USGA to have strongly considered adopting two sets of rules – “bifurcation” – to prevent the anchoring ban from making the game of golf even harder for many amateurs.

I’ve heard great arguments against bifurcation, but at the end of the day my belief is this – golf doesn’t have one set of rules, it has 20 million as most amateurs create (knowingly or unknowingly) their own versions. Therefore, it makes sense to me to have one set of simplified amateur rules that the most casual of golfers can understand and follow. Make it three pages max. Allow anchoring. Play all OB, lost ball and hazard penalties like lateral hazards. Allow winter rules year-round. Etc. All of these things would make the game less difficult/frustrating and speed up pace-of-play, two of golf’s most painful ailments. And they would make the rules less confusing and create more conformity. Seems to me that steps like these would be the ones that are really "for the good of the game."

For the professionals, keep the existing rules unchanged and make them theirs. Every other major sport – baseball, basketball, football, etc. – has separate sets of rules for amateurs and professionals, even up to the competitive college level, so what’s the big deal about doing the same with golf?

I think it’s going to be a fascinating several months/years as this plays out with the PGA of America being angry about the decision, the PGA Tour claiming it will consider adopting its own rules, equipment companies considering lawsuits and amateurs facing the decision between worsening their game or being possibly labeled a cheater. Not a good situation, in my opinion, for the USGA to put everyone else, and themselves, in. For those of us in the industry and all the golf entrepreneurs out there, it’s worth following closely as the outcomes will have a big impact on what threats and opportunities exist.

Thanks for your patience with my lack of blogging, hope you’re doing well and I look forward to having a much more engaging dialogue for the rest of 2013. Happy entrepreneuring…

Best,

Steve

2013 Will Be A Great Year For The Golf Industry

noreply@blogger.com (Steve Tanner) — Thu, 03 Jan 2013 18:41:00 +0000

I love New Year’s Day. It’s a day in which most of us are reflecting on the past, thinking about the future, and doing so in a purely optimistic and hopeful way. One of my goals for 2013 is to approach every day like that.

I didn’t write a New Year’s blog in 2012. That’s because, while being optimistic and hopeful about most things, I wasn’t for the golf industry. I thought early on that 2012 was going to be painful, and in many ways it was.

More industry professionals lost jobs, saw decreases in pay and were forced to look elsewhere for career pursuits. I know because they were calling me. Unfortunately most didn’t have the capital to start their own business with TGA as they had been living paycheck to paycheck for years as golf professionals waiting for the industry to turn around.

The USGA didn’t help matters by telling pros and amateurs alike that they’re cheating if they anchor (i.e. use) a long putter, literally causing backaches for the ever-important baby boomer generation.

The PGA Tour further hurt matters by literally wiping away the dream for journeymen professionals of making it onto Tour with a few good weeks at Q School.

But, as in all years, good things happened too. Year over year rounds were up 7.7% through August, hopefully not the sole result of weather being more golf-friendly this year than last. And there's new leadership at the PGA of America, with Peter Bevacqua as the newly-appointed CEO and Darrell Crall filling the newly-created COO position, both of whom come from business and development backgrounds. These are positive steps forward.

But there was a bigger thing that happened in 2012, a bright spot that was/is very bright, that fuels my optimism and hope for 2013. That is the early sign of a significant and critically important cultural and philosophical shift within the industry. It’s difficult to describe this paradigm shift with concrete examples as it’s more of a feeling – little things picked up by open ears and eyes. People being more open-minded to new ways of thinking and acting. New ways to enjoy the game being thought of and tested. People being less territorial and more collaborative. I see it and hear it every day. The number of golf entrepreneurs is growing. The status quo is diminishing. And I believe this is exactly what needs to happen for the industry to rebound, the game to grow and those of us within it to thrive with viable opportunities to build a career and generate wealth.

For this reason, I think 2013 is going to be a great year for golf as this feeling hopefully becomes cemented in strategies, decisions and actions – and we’re investing in that belief at TGA. We’ve doubled our staff and increased overhead. We’ve identified and are pursuing new revenue streams. We are trying to execute an aggressive growth strategy. And because I believe so much in these things, I recently increased my equity position in the company.

I hope 2013 is a year of innovation, collaboration and entrepreneurship for the golf industry and I wish you all the best in it.

Show Me the Cash!

noreply@blogger.com (Steve Tanner) — Wed, 05 Dec 2012 07:22:00 +0000

I remember the moment well. I had just reviewed the P&L and things were looking good. The business was healthy. Sales were up. Expenses were down. Projections were being hit. Everything was moving in the right direction. I smiled.

And then, our Controller walked into my office and said: (numbers fictitious)

“We have a problem. I have $40k of bills on my desk and payroll is due this week, and we only have $80k in the bank.”

I thought of a phrase I’d heard a thousand times, and at this moment, I finally understood it:

A quick look at the balance sheet showed a monstrous Accounts Receivable number. Yes, sales were up and expenses were down, as the P&L showed. But people weren’t paying us on time. Revenue reported as sales wasn’t showing up as cash in our bank account.

Thankfully we were at a stage with the company where we could weather the storm. We have always been diligent about keeping the company debt-free so it’s easy enough for us to get a credit line from a bank or a short-term loan from investors if need be.

However, many early stage companies don’t have this luxury. Cash in the bank is their life blood. Run out and you’re done. You can have a stack of purchase orders and a P&L that makes you feel like a rock star, but without cash you’ve got nothing. Seems simple enough. But, in my experience, it’s often overlooked. And I’ve been guilty myself.

In my situation, cash flow comes from the royalties paid by our franchisees. We establish our operating budget based on them. If franchisees are late with their payments to us, we have a problem. Often, it’s the result of a trickle-down effect – the franchisees’ customers are late in paying them so they’re late in paying us. The cash flow problem runs downstream.

Which is why I encourage entrepreneurs, franchise candidates and early stage business owners to do two things:

Start with more cash than you think – like 2-3x
Establish a culture with customers of prepayment or 30 day term maximums (with a sizable down payment) from the outset and be ruthless about enforcing it

We were way too laid back in the beginning about Accounts Receivable. Our mentality was – “we want our franchisees to know that we have their backs and if that means delaying a payment to help them out, so be it.” The problem was that the effect was the exact opposite of our intent. It created debt-ridden franchisees, put the company as a whole at risk, and penalized the franchisees who were paying on time as they didn’t get all the services/products they otherwise would have had we had more money to invest in projects and infrastructure.

We’ve been working for years to turn around this mentality. But culture is hard to change. It takes a lot of time and energy. It’s much better to establish a good one from the outset. My suggestion for how to do so is threefold:

1) If you’re launching a company, start with as much cash as possible. Make sure to add a “cash flow” line to your pro forma to see how much you’ll need. Then double it.

2) If you’re in revenue and signing up customers, get them to pay as much as possible up front and be adamant that they meet your financing terms.

3) And if you’re in the throes of running a small business, give cash flow as much (if not more) attention than sales and income.

Because at the end of the day, cash really is king. And it’s the type of lesson you don't want to learn the hard way.

Does Buying a Franchise Guarantee Success?

noreply@blogger.com (Steve Tanner) — Thu, 01 Nov 2012 04:37:00 +0000

I was talking to someone recently who’s interested in purchasing a TGA franchise when he made a statement that encapsulated several thoughts I’ve been having:

“I get it – I’m not buying a business, I’m buying a system.”

I couldn’t agree more.

I believe that the purpose of buying a franchise is threefold:

Get a developed system in a proven market that operates like a well-oiled machine so you’re setup for success from the outset.

Get a recognizable brand that is growing exponentially due to HQ building it nationally/globally and franchisees building it locally.

Get access to the intellectual capital and support of a tight-knit family that includes HQ members and fellow franchisees.

In my opinion, it is rare that our “system” doesn’t work in a given area. All territories have their niches that require slight modifications, but the system as a whole is highly transferable from one area to the next. That’s the point of franchising.

When I look at TGA’s most successful franchises, they didn’t get there because of the system. They got there because of themselves. TGA provided a system that works, but that’s our job and that’s why we’re paid franchise fees and royalties. It was the franchisee who took the system and made it a successful business.

At TGA, we have a concept called the “Recipe for Success” that asks three questions on a scale of 1-10:

How hard are you working?
How closely are you following the model?
How well are you engaging the network?

It’s almost universal that franchisees who score high on these questions are doing well and the folks who don’t are not. This list translates well to non-franchised businesses as well … you’d just need to add questions about product and market.

People often mistake buying a franchise with buying success. It’s a big mistake to make as it can lead to (among other things) complacency. Building a business is hard, whether it’s a franchise or not, and success comes down to your ability to execute.

Buying a franchise tilts the odds in your favor as it provides a proven market, developed product and successful system. But, if you ever consider investing in a franchise, I encourage you to do so with the understanding that it is ultimately up to you to take these things and turn them into a successful business.

Are Your Competitors Really Who You Think They Are?

noreply@blogger.com (Steve Tanner) — Thu, 25 Oct 2012 03:38:00 +0000

Back in 2004 when I started with TGA, I had an Outlook folder titled “Competition” where I would put emails/information related to other junior golf programs. I chuckle about it now as it demonstrates how little I initially understood the business I was about to spend the next 8+ years helping to build.

I’m asked daily about TGA’s competition. Usually the question comes from a franchise candidate and goes something like this – “My city has a First Tee chapter and several local golf facilities have good junior programs. How does TGA compare with these competitors? Can the business be successful coexisting with them?”

As TGA grew in size and scope, it became clear that our market was not the same as The First Tee’s. They are a non-profit focused predominately on programs for under-resourced youth that emphasize life skills and take place at golf facilities. TGA is a for-profit focused predominately on parent-funded programs for middle/upper income youth that emphasize "enrichment" and take place at elementary schools. Both causes are important and needed, but besides having golf as the common denominator, they’re very different. TGA franchisees overlap with First Tee chapters across the country and our paths almost never cross.

It also became clear that TGA’s market was not the same as a golf facility's. When a golf course holds a junior program, almost all of the kids who register have played golf before and/or come from golfing families where mom or dad has taken an active interest in getting them into the game. When TGA offers our enrichment program at a school, almost all of the kids who register have never played golf before and come from non-golfing families – meaning, they’re not the ones showing up at the local golf facility.

At TGA, we’re not focused on competing for the 2.4 million kids who play golf but rather on capturing the 74 million kids who don't. As a result, our competition does not come from other golf organizations or programs.

We compete for kids’ limited time and parents’ limited budget. When parents make their purchase decision with TGA, they’re comparing us to karate and chess club and art class and soccer and basketball and drama and the many other activities available to kids. That's our competition. They are not analyzing whether they should sign up for TGA or The First Tee or the program at the local golf club.

And that, to me, represents three important things:

It’s a great example of the entrepreneurial journey and how your “competition” folder can end up looking nothing like it did in the beginning.
We have made important strides at TGA to become more razor-focused on who we serve, why we matter and what we want to accomplish.
There is a staggering number of kids in the U.S. not playing golf and we should all be obsessively focused on bringing the game to them as that is where the true opportunity exists.

Knowing your competition is a crucial element of understanding where you fit into the industry ecosystem. A business professor once said something along the lines of – “if you can’t identify and describe your competition within 30 seconds of being asked, you don’t understand your business.”

Eight years ago, I had no clue. Most entrepreneurs don’t. That’s what the entrepreneurial journey is all about. Thankfully we have a great team at TGA that figured it out together and did so fast enough that I'm able to write this blog from TGA’s office as the COO.

And with that, now I must get back to figuring out how to strengthen TGA’s value proposition against swim class, gymnastics, baseball, music lessons and cooking class.

Golf Participation is Soaring! Electronically, That Is.

noreply@blogger.com (Steve Tanner) — Thu, 04 Oct 2012 04:38:00 +0000

The NGF recently released a study saying that 56 million people in the U.S. play video game golf, 45.5 million of whom are non-golfers. That’s an amazing stat in my opinion.

First, I’m surprised that 39% of actual golfers (26.1mm) are also golf gamers (10.2mm). Given the perception of the golf industry, I find that data interesting in a good way.

More importantly, the fact that 39mm people who have "never played golf" are hitting the links on their big screen shows that a lot of people are interested in playing the game. Unfortunately it's just not in the way that we as an industry want or need. Concepts like the Chicken Stick and games like Tiger Woods PGA Tour Golf are moving the needle by making the experience remarkebly real-life in the comfort and convenience of one's family room.

Visit a TGA Premier Junior Golf Class and you'll hear almost all of our elementary and middle school students say that they’ve played golf before – miniature or “putt putt” golf, that is. Almost all of the hands go down when students are asked if they’ve ever been on a golf course or to a driving range.

Then consider that TV ratings have skyrocketed in the last 10 years. Thursday's record-breaking Ryder Cup viewership is the latest example of this. More people are watching the game now than ever before.

For me, all of this adds up to an important message – people are interested in the game of golf. A lot of people are interested. And that interest is growing. This makes me optimistic.

But that interest isn’t translating into rounds at the golf course where participation is down 13% over the last five years. People say that time and cost are the hurdles keeping them away.

For golf entrepreneurs, I believe that figuring out this dilemma is the biggest opportunity in the industry. It is also the most important conundrum facing the health of the game. Perhaps we’ll simply follow the cycle of the economy. But I think it requires a fundamental shift in how we think about the game.

I believe that the 18 hole round will always be the backbone of golf. But perhaps, as an industry, we need to look at an 18 hole round as one way, not the only way, to enjoy the game. The 46 million non-golfing gamers are telling us we should. We as an industry need to embrace this, innovate around it and find ways to monetize the opportunities.

Concepts like TopGolf, AlmostGolf and Off Course Network are already trying to do this. There are others as well. But the door is wide open for someone or something to come in and revolutionize the way golf is played and enjoyed. Are you going to be the one breaking through that door? If so, how?

Will TopGolf Revolutionize the Driving Range Experience?

noreply@blogger.com (Steve Tanner) — Tue, 18 Sep 2012 22:12:00 +0000

The executive golf course a block from TGA HQ has had some controversy the last few weeks and it’s an interesting discussion about the future of golf.

The Lakes at El Segundo is a city-owned facility that sits on land donated by the nearby Chevron oil refinery. The site boasts a fun and quick executive course (Par 29), good practice facilities including a two-tiered driving range and a decent 19^th Hole. It’s developed such a family-friendly environment that it doesn’t make sense for my company TGA Premier Junior Golf to partner with them because their junior programs are always sold out.

A few weeks ago the Daily Breeze broke the story that city officials were strongly considering replacing the practice facilities, clubhouse and restaurant with a concept called TopGolf. This is a brief description from TopGolf’s website:

TopGolf is the premier golf entertainment complex where the competition of sport meets your favorite neighborhood bar. The fun is in the innovative and addicting point-scoring golf games that anyone can play. Just picture a 240 yard outfield with dartboard like targets in the ground. The closer to the center and the further out you get, the more points you receive. Add in an awesome menu and refreshing cocktails, and TopGolf is far from your average bar or golf complex. It’s not golf – it’s TopGolf.

TopGolf's concept of a driving range with targets for points

Bringing in TopGolf would also require eliminating one hole and restructuring two others. It would be a major overhaul of The Lakes and initial estimates put the cost at $15 million.

The city says that it is necessary because the facility is losing money. According to sources, the range does $700,000 in annual sales which is almost certainly profitable. I drive past the course every morning and evening (and often during lunch and other times of the day) and it is always packed – like, two groups waiting on each tee packed. If The Lakes at El Segundo is losing money, I worry about the future of all executive courses – which is concerning as I believe these types of facilities are an important part of the game’s future.

I’ve heard great things about TopGolf. It looks like a fun, social and cost-effective way to enjoy the game in a timely manner. You don’t have to be a good player to enjoy hitting balls. As their website says, it’s like bowling with your friends – throw a gutter ball and no one cares… have a good laugh and another sip of your drink. These are the types of innovative approaches we need to make golf more inviting and enjoyable. Whether or not TopGolf is successful will depend on a variety of factors, but conceptually I think it’s fantastic.

TopGolf's "About Us" page where pics sum up the philosophy

However, The Lakes is a bad fit for it. This is one of the short courses that gets it right with their focus on families, timely enjoyment of the game and integrating with the community. The foot-traffic at the facility and the harsh response to the city’s decision is evidence that the community doesn’t want to see this change. Thankfully it seems as though the message has been said and heard.

Short courses have been the hardest hit by the downturn in the golf industry. While I believe TopGolf would be a failure at The Lakes, there are many other facilities that could be great spots for them. I hope TopGolf is successful growing their business and I applaud their innovative and much-needed approach to growing the game.

An Entrepreneur's Approach to Challenging Augusta

noreply@blogger.com (Steve Tanner) — Thu, 30 Aug 2012 00:52:00 +0000

I’m a week late in joining the Augusta conversation thanks to travel but have read a decent amount of commentary and put a lot of thought into it.

I think it was a smart decision for Augusta to allow female members because it’s the one I would’ve made. If I were a member there, I’d welcome female members for the more social environment. If I were running the place, I’d welcome them because it’s smart for business as it doubles the pool of potential members and it’s smart politically.

I do not, however, agree with the pressure put on them to do it. There are many social clubs in America that “discriminate” based on gender, ethnicity and other things like income and prestige. It’s right that they’re allowed to do so. They’re private and don’t involve access to jobs/education, fair pay, political equity or any of the other areas where women and men should be equal as human beings.

I can’t join the Belizean Grove. So what? I’ll very likely never be allowed to join Augusta even though I’m a white male because I’m not rich and powerful. I’m okay with that.

If women want to join a spectacular golf club in Georgia, they’re welcomed to create one. They can make it female-only if they want. That’s the beauty of America.

The entrepreneur in me has listened to Martha Burke for all these years and thought – if I were her, I’d transfer all of this time and energy into creating an amazing women’s-only club that rivals Augusta and use THAT as an example of why women are equal to (and in many ways superior) to men. That would’ve been a powerful entrepreneurial approach to this situation.

This is how all successful entrepreneurs I know look at the situations they find unsatisfactory. They identify the problem, create an innovative solution, determine if there are enough like-minded people to develop a market and then go for it. They don't bang on the door of the incumbent and demand change. And, on a tangentially relevant topic, one of the beautiful things about entrepreneurship is that it’s almost completely agnostic to gender, ethnicity, age and everything else besides brains, guts and luck.

I applaud Augusta because I agree with their decision. But I also believe that other male-only clubs like Cypress Point and Pine Valley are not doing anything legally or ethically wrong. If their membership wants it that way, they have the freedom to do so. And if you disagree, you have the freedom to do something about it.

The PGA Tees it Back While Telling Us to Tee it Forward

noreply@blogger.com (Steve Tanner) — Thu, 09 Aug 2012 06:10:00 +0000

Adam Schupak had an interesting tweet recently that I’ve been thinking about. It said:

Adam Schupak ‏‪@GolfSchupak

‪@JoshuaJTGA True but a mixed msg to say avg golfer should play fwd while pushing the pros back. If pros at 7700, whose going to play 6500?

There was intriguing dialogue back and forth about this concept between industry vets I know well and good points were made on both sides. But the more I thought about it, the more I agreed with Schupak’s stance.

When you’re a kid shooting hoops in the backyard, what does everyone dream about? Scoring 60 and hitting the game-winning shot in Game 7 of the NBA Finals, of course. Or, at least that’s the scenario that played out in my mind almost every afternoon for years.

Fast-forward to adulthood and the same concept applies. When you’re on the putting green lining up 8 footers, what do you imagine? Is this the putt to win the U.S. Open or to shoot 88 instead of 89 on the local muni?

Kiawah's 9th Hole, a 494 Par 4

Tee It Forward is a great program and one that I want to succeed. I bet we’ve all had too many bad experiences being behind a player or group that was playing inappropriate tees and holding everyone up. A recent NGF study determined that the average round of golf takes 4 hours 17 minutes and 30% of golfers think that this is too long. This is important considering most golfers cite golf’s time commitment as one of the two main limiting factors in how much they play (the other being cost). Therefore, speeding up and maintaining a healthy pace of play is critical to the industry.

People want to play the courses the pros play. The want to play under the same circumstances as the pros to gauge how far away they are from being as good as them. It’s the kid in us that still likes to dream and play make-believe every once in awhile. And telling folks to tee it forward while the pros are teeing it back eliminates the opportunity to do so. Which is why people don’t play from their appropriate tees as it is.

Of course, the PGA of America has an obligation to the players and fans to provide a tough and fair test of golf, as does the PGA Tour and USGA. However, I agree with Schupak that they’re sending a mixed message by using a 7,676 yard course for their national championship while promoting Tee It Forward during commercial breaks.

Next year the PGA Championship is at Oak Hill in NY. Wouldn’t it be neat if they kept it at the length currently listed on the PGA’s website of 7,134 yards, or even shortened it to under 7,000, to align with their campaign? That would send a powerful message, especially if they used other means besides length to challenge the players. Otherwise, as long as the pros keep teeing it back, I believe the PGA will have a hard time convincing the weekend warrior to tee it forward.

What Kind of Entrepreneur Are You Going to Be?

noreply@blogger.com (Steve Tanner) — Thu, 02 Aug 2012 06:02:00 +0000

I was talking to a serial tech entrepreneur and venture capitalist in the Bay Area recently and he had an interesting take on entrepreneurship. This was his comment:

There are three types of successful entrepreneurs:

The young and dumb kind who work tirelessly and fearlessly until they find something that sticks
The technical experts who solve a specific problem that only a handful of people know exists and how to fix
The authentic kind who have domain expertise, industry experience and the infrastructure needed (relationships, etc.) within a market to exploit its inefficiencies

Barring you being a technical expert, what kind of entrepreneur are you going to be?

When I look at my career, we were definitely in the “young and dumb” category when launching and building TGA Premier Junior Golf. But, thankfully, we succeeded due to a great concept and a decent amount of luck.

When we launched GLinks in 2010, we were sort-of authentic entrepreneurs. We knew through our experience in the golf industry that there’s a real pain point for young professionals to learn golf in a fun, convenient and cost-effective way. However, we came to realize that GLinks is mostly a marketing company and this is not where our expertise lies. With TGA, the marketing is easy because our partnerships with the schools give us direct and open communication channels with our customers. With GLinks, we had to get word out to the broader community…. A task that requires a greater investment in time, resources and capital. We ultimately decided that it wasn’t worth it (right now) when our main focus is on building TGA.

Last year, we launched TGA Premier Youth Tennis again as sort-of authentic entrepreneurs. Through TGA, we knew the youth sports market and franchising industries well, but we lacked experience in the tennis industry. This concerned us. So, we formed a founding partnership with the governing body of the tennis industry, the USTA. The combination of our expertise with the USTA’s gives us all of the tools we should need to be successful. If we could go back and redo GLinks, we would’ve used the same strategy and added a promotions guru to the founding team or partnered with a marketing/promotions group before launching.

The lesson in my friend's comment is that most entrepreneurs are either the young and dumb kind or the authentic kind, and you definitely have a better chance at success if you're in the authentic camp. As my MBA professors used to say, always entrench yourself in an industry before trying to start a company in it.

This advice provided me with clarity and I hope it gives you food for thought as you put your ideas through the feasibility funnel. And, for those of you aspiring entrepreneurs who don’t want to worry about such matters, the franchise industry has thousands of proven business models for you to explore.

The PGA Tour Golf Marathon Adds More Miles

noreply@blogger.com (Steve Tanner) — Thu, 28 Jun 2012 04:22:00 +0000

This has been a big week for Tim Finchem and the PGA Tour.

Yesterday, the Tour officially announced that the 2014 season won't kick off in Kapalua in January, but rather will start three months earlier at the Frys.com Open in October. The big change is that the four Fall Series events will start awarding a full allotment of Fedex Cup points, hence raising them to the same level as all other tournaments. The Frys.com Open is just a few weeks removed from the Tour Championship, so an already exhaustive season will go from nine months to ten, with the only break coming from mid-November to mid-January.

I know people very close to the Frys.com Open and am happy for them. This steroid shot from the PGA Tour speaks highly of their hard work and the quality of tournament they run. And, if they switch the course to The Institute (a club so private it makes Augusta look like a muni) as this article suggests, it would be an awesome way to start the season. I'm also happy for the McGladrey Classic, another Fall Series event where my favorite golfer, Davis Love III, is closely tied to as the Chairman.

While this decision boosts the profile (and surely the sponsorship dollars) of these events, I'm scratching my head about how it improves the experience for fans. The golf season already seems like a marathon and fans will now be asked to jump into a new one a few weeks after the last one ends. That's like having Week 1 of a new NFL season three weeks after the Super Bowl. Then, as quickly as fans are asked to embrace a new season, they're forced to take a two month break until the Hawaii events in January. I further worry that the longer schedule will result in lower-quality fields across the board as players have to pick and choose their events to avoid burnout. Finally, I've always personally enjoyed the Tour season starting in Hawaii as it's like a big breath of warm fresh air after the holidays.

Following this news yesterday, the Tour announced today that Web.com is the new title sponsor of the Nationwide Tour, effective immediately. Reports are that the deal is worth >$10 million/year for 10 years. I couldn't find financial details of Nationwide's deal with the Tour, but I suspect that it wasn't $10 mil. The Tour's recent decision to eliminate the traditional Q School model and make all aspiring Tour players go through the Web.com Tour for at least one season almost certainly sweetened the deal. I've already talked about why I disagree with this decision.

Two days and two big announcements by the Tour. I applaud them for being proactive about trying to grow their business. I hope we look back on this week in a few years as a big one in a good way, but I fear that we will not as I don't see these decisions being fan or player friendly. I hope I'm wrong because big in a bad way is not what a fragile industry needs right now.

Are You a Human Being, Visionary or Entrepreneur?

noreply@blogger.com (Steve Tanner) — Wed, 23 May 2012 23:14:00 +0000

A friend/mentor at the Tech Coast Angels sent me a one-sentence email today that simply said:

"Person who sees problem--human being; finds solution--visionary; solves problem--entrepreneur."

No commentary was provided and none was needed. The line comes from Naveen Jain and appeared in his article "How Entrepreneurs Become Visionary Leaders." The full quote is:

"An entrepreneur is not a person who starts a company but he is the person who actually solves a problem. It’s all about execution and it is a state of mind. A person who sees a problem is a Human Being, person who finds a solution is visionary and the person who goes out and does something about it is an entrepreneur."

My favorite part of this paragraph is that entrepreneurship is a state of mind. Starting a company is as easy as spending 30 minutes and $500 on Legalzoom.com. Anyone can do that and it doesn't make them an entrepreneur. Solving a real problem does. And that can happen whether you're the founder or one of 10,000 employees at your company.

Is First the Worst?

noreply@blogger.com (Steve Tanner) — Thu, 17 May 2012 00:11:00 +0000

I was taking a Sunday stroll with my family last weekend when, upon leaving our favorite neighborhood coffee shop, my wife asked - "Do you think Starbucks is successful because they were the first or because they make the best coffee?"

Great question.

The concept of first mover advantage is an important one to me as the COO and part-owner of a first mover. And there is no consensus on whether it's actually an "advantage."

Intuitively, being the first seems like a good thing. So much emphasis is placed on the "idea" that it makes sense that the first person with that idea will be the one who's successful. For many years, this is how I viewed the world.

Then I learned that great ideas are in abundance and the keys to success are execution, monetization and timing. It's not nearly as sexy to be #3 but be the best at providing the right solution at the right time with the right business model, but that's usually how you win the game.

My MBA professors almost universally agreed that being the first mover is a disadvantage. The first mover spends tremendous resources creating a market and learning how to service it. Customer acquisition costs are through the roof. Each iteration drains more time and money. And, right when you figure it out (if you're still around at that point), second and third movers with clean balance sheets and nimble teams come in and capitalize on the foundation you've built. First movers put in the labor... second and third movers eat the fruit.

There are many examples of this. Friendster before Facebook. AltaVista before Google. Atari before Nintendo. And so forth.

But I don't believe this is a universal truth. The exception is if the first mover can create significant barriers to entry, and fast.

Starbucks is successful in my opinion for two reasons. First, they had a great concept - create a "third place" for people to comfortably spend time outside of the home/office. Second, they were able to scale quickly, opening a new store every work day, by utilizing debt financing to open company-owned stores as opposed to franchising like most QSR's, thus providing this "third place" for people wherever they may be. Now, whether I'm in NYC or Temecula CA or Lake Geneva WI, I know that I can go to Starbucks to catch up on work and meet with clients/friends because I know exactly what I'm going to get. And that's why people go there - not for the burnt coffee.

There are other barriers you can create as well - exclusive contracts with key suppliers, strategic partnerships with large industry incumbents, IP, customer loyalty, economies of scale, switching costs and others.

At TGA, I'm confident in our first mover advantage because we've created several of the aforementioned barriers. But it hasn't stopped others from trying to compete. And that, to me, is a good thing. It validates the market, grows it and expands awareness of our concept. It also makes us appreciative of being five steps ahead and keeps us obsessively focused on getting to six, seven, eight...

If you've come up with a new idea and no one else is doing it, there may be a reason for that. But if you validate the concept in the marketplace, go for it. Focus on scale and creating barriers to entry quickly.

If you've come up with an iteration on an old idea, that's great too. It's how most businesses are started. I remember hearing a story that Steve Jobs had the idea for the iPad a decade before its release (and versions of the concept can be traced back to the late 60s) but he didn't feel the market was ready for it yet.

People have built great companies both ways. Whichever path you go, remember that execution, monetiziation and timing usually win the game.

Good luck and happy entrepreneuring.

Not Feeling the Love? You're Probably on to Something Good

noreply@blogger.com (Steve Tanner) — Fri, 11 May 2012 00:42:00 +0000

There was an article in the Harvard Business Review last weekend that caught my attention. It was called "If You're Not Pissing Someone Off, You're Probably Not Innovating." I found myself agreeing with much of it and finding it especially relevant to the golf industry.

The premise of the article is that industries are controlled by incumbents who do not look kindly on new ways of doing things. As a result, a "fundamental obstacle to innovation that all would-be disruptors must be prepared to face is the potentially hostile response of incumbents who don't want to see their market advantages threatened."

This is very true in the golf industry where "tradition" is the cornerstone of a powerful culture. "Innovation" to many is seen as a direct threat to the sanctity of the game they love and this causes emotions, both positive and negative, to run especially high.

Additionally, the industry is controlled, like most industries, by an exclusive "inner circle" that is difficult to penetrate.

Fred Wilson talks about this concept in a blog titled "Insurgents vs. Incumbents." In it he says: "The startup world is about insurgents. A person or a few people with an idea. And they drop everything and go for it. They are going up against the incumbents and that doesn't just mean the big companies that occupy the market position they want. That means all the people, institutions, and organizations that are in cahoots with the big companies."

In golf, this would be the PGA of America, PGA Tour, The First Tee, USGA, LPGA and a few others.

If you're a current or aspiring golf entrepreneur, be prepared to feel the opposite of loved by these groups. And that's okay. The golf industry has been contracting for a decade so these folks have reason to be defensive, and the data clearly shows that the current way of doing things is not working. It's also a $76 billion industry in a volatile environment, making it a great time/place for disruption.

Being an "insurgent" is awesome. It's thrilling, purposeful, educational, humbling and an opportunity to do something significant and meaningful. But be prepared to face people every day - every hour, even - who don't share your vision. Who will try to derail you. Who will be dismissive. Who will react negatively to the very premise of your concept.

But if you're getting this type of response from incumbents, know that you're on to something good. Be resilient. Because if what you were doing wasn't a threat to them, they either wouldn't care or would try to help.

We've faced this for years at TGA with success so it's definitely possible to overcome. And now that we've reached a point where our footprint is too large to ignore - two franchise systems, 67 franchisees, >150k students, strong growth and huge opportunities on the horizon for 2012 - the "inner circle" is starting to open up their arms.

I'm okay with having to prove ourselves to the incumbents and you should be too. The goal is to be one of them, soon. We just need to make sure that if/when that happens, we continue to be innovators. It goes back to something I wrote about in the past - it's the pace of innovation that determines the winners, not the original idea.

Don't Drive Into a Storm on Bald Tires

noreply@blogger.com (Steve Tanner) — Thu, 19 Apr 2012 18:57:00 +0000

I started to write this post about National Golf Day after seeing my Twitter feed held hostage for most of yesterday, but then, thankfully, I received an email about a more relevant topic for golf entrepreneurs so I switched directions.

In short, you can learn about National Golf Day here and read an account of the day's festivities here.

Which leaves me with this note that just crossed my inbox from an entrepreneur I met at StartEngine about his search for seed-stage investors:

"In retrospect, it would've been good to understand early on how important "traction" is. It's more important than many of the other elements we spent so much time working on (pitch, slides, due diligence, projections, even much of the networking). We'd have re-prioritized."

That's great feedback for me as a Mentor and great advice for all aspiring entrepreneurs. He's absolutely correct. "Traction" is proof that a market and customer exist. That is more important to investors than anything else. And it should be the top priority of entrepreneurs as well. What does a great pitch, deck, business plan, etc. matter if there isn't a market or customer?

The chicken/egg question that then arises is - how do you get "traction" when you have no money but investors want traction before giving you money?

The answer is to bootstrap. One of my most influential MBA professors wrote a great article and created a great slide show on this topic that I encourage you to read.

Bootstrapping requires acquiring customers early and often. It's a constant focus on sales. It's minimizing your start-up costs by generating revenue and churning cash flow quickly. If your product or service is really that good, you may even be able to get PO's before the product/service is built - which, in essence, would make your customers your financiers. Bootstrapping works especially well when manufacturing is involved.

But bootstrapping for a length of time isn't financially feasible for many tech entrepreneurs who don't have a clear and immediate revenue model. Too many of these folks are, in my opinion, focused on the astonishing success of the Instagram's of the world ($1 billion for a team of 13 with no revenue?!?!) and not mindful enough of the reality that 1,000s of companies with this model fail for every one Instagram that succeeds. TechCrunch et al just don't publish the failures (understandably) so the picture you see of easy start-up glory painted in the news does not reflect reality.

If I could do it all over again, I'd advise my friend at StartEngine (who has a mobile app company) to bootstrap, get a Minimal Viable Product (MVP) into the App Store, and then spend a minimum of 50% of his time thereafter focused on user/customer acquisition. If the product solves a major pain, people will use it even if it's not perfect. The bigger the pain-point, the more users you'll get. And that provides the traction you need to convince the investment community that you're worth the risk of their capital to see what the proverbial "flop" holds for your company. Add a revenue model to that equation - which I believe every start-up should have from the outset - and you're ready to put the pedal to the metal.

Equally as important for you the entrepreneur, "traction" let's you know whether you're spending time on a real business with a viable market and customer-base. With it, you know to endure the valleys because the peaks could be spectacular. Without it, you know (hopefully) that you're driving into a storm with bald tires and life is too short for such nonsense.

Leadership Change at the PGA

noreply@blogger.com (Steve Tanner) — Thu, 12 Apr 2012 22:55:00 +0000

This week saw more big news in the golf industry as Joe Steranka, CEO of the PGA of America, announced that he is retiring at the end of 2012 following 25 years with the PGA and 7 as its Chief Executive.

I met Joe once to discuss a potential partnership with TGA Premier Junior Golf. He was cordial (and is generally well-regarded throughout the industry as a nice guy and universally respected) but we didn't agree philosophically. He said: "I don't believe in privatizing or profiteering from junior golf." My stance was (and still is) that this mentality is why we've seen a 34% decline in youth golf since 2005 (when he became CEO) while other sports with different philosophies have grown.

It will be interesting to see how Mr. Steranka's legacy unfolds. Based on the state of the industry, it won't be positive. Golf has contracted significantly since 2005 and that is why I think this is a positive and necessary change. Whether or not the contraction has been the result of his policies, or bad luck with the economy - or even if he's done an incredible job at minimizing the bleeding - we'll probably never know. Like any administration presiding over tough times, the causes don't matter as much as the results. However, ultimately I believe his legacy will be handcuffed to the success of Golf 2.0, which is good news as I believe it has a great chance of success if executed properly.

I look forward to seeing a change at the top of the PGA and hope that Mr. Steranka's successor is collaborative, embraces innovation and supports entrepreneurship. I encourage his successor to study the inclusive and open-minded culture of the United States Tennis Association, which has led to a 13% growth in tennis participation since 2005 while golf has seen a 13% decline in that same time.

I wish Mr. Steranka all the best in the next step of his career and thank him for his service to the golf industry. He was dealt a tough hand and had mixed results, but from I've seen and heard, he deserves gratitude and applause from everyone in the industry for his commitment to the game.

Analyzing Taylor Made's Purchase of Adams Golf

noreply@blogger.com (Steve Tanner) — Thu, 22 Mar 2012 21:03:00 +0000

This has been a big news week in my world – the PGA Tour announced significant structural changes, my company TGA officially announced the launch of TGA Premier Youth Tennis with the USTA as a Founding Partner, Los Angeles announced itself as a meaningful startup community at Start Engine’s Demo Day (where I’m a Mentor), and Taylor Made announced its acquisition of Adams Golf.

I’m going to talk about all of these items in future blogs, especially TGA’s strategic decision to enter the tennis industry as the lessons learned are already reminding me of case studies I used to debate in business school.

Today, however, I want to look at Taylor Made’s Acquisition of Adams Golf, which was announced on Monday. I’m going to look at it from three perspectives – financial, strategic, and implications for entrepreneurs.

Financial:

Taylor Made Adidas Golf Group acquired Adams Golf for ~$70 million, or $10.80 per share. This represents a premium of ~71% over the share price from before Adams Golf announced it was examining major new strategic directions in early January and a 9.5% premium over their closing price last Friday of $9.86. Upon news of the acquisition, shares rose 8.8% to $10.73 on Monday (where it currently remains), indicating that the market likes the acquisition, at least for Adams Golf. Shareholders must like it too considering the stock at this time last year was $5.22.

Adams Golf had $11.85 million of operating income in 2011 on $96.50 million of revenue, so Taylor Made gets an equipment company that is profitable with ~12% operating margin. This seems pretty good considering Callaway, the other publicly-traded golf equipment company, had an operating margin of almost -10% last year with $81.09 million of losses on $886.53 million of revenue. Therefore, Taylor Made paid 0.72x revenue and 6x earnings. I don’t have any comps to compare these multiples to, but at first glance they look pretty good to me considering the lack of profitable equipment manufacturers in the industry.

Strategic:

Adams Golf’s focus on mid-high handicappers nicely complements TM’s portfolio of products that focus on low-mid handicappers. Therefore, the acquisition buys top-to-bottom market share for Taylor Made. Additionally, when analyzed through Porter’s Five Forces (which is a great model for looking at strategic decisions), the deal looks like a good one:

Threat of New Competition – the acquisition makes the largest golf equipment manufacturer even larger. I agree with many leaders in the golf industry who feel that we’re about to see consolidation amongst equipment manufacturers and this move is a step in that direction. As a result, threat of new entrants into the market decreases as barriers such as capital requirements, brand equity and economies of scale tilt more in favor of Taylor Made. Analysis – thumbs-up for TM.

Threat of Substitute Products or Services – since there are no alternatives to golf clubs – meaning, you need to have them and them alone to play on a golf course – this “force” doesn’t apply much to the acquisition. In terms of customers spending their time/money on activities that substitute for golf, this deal also has no impact. Analysis – neutral for TM.

Bargaining Power of Customers – consolidation almost always leads to less bargaining power for customers due to fewer options that create less competition. Analysis – thumbs-up for TM.

Bargaining Power of Suppliers – this move gives greater economies of scale to TM and therefore gives them greater influence over suppliers. Analysis – thumbs-up for TM.

Intensity of Competitive Rivalry – I believe the acquisition will increase rivalry in the short-term as competitors scramble to compete with a growing market leader through increased advertising spending and so forth. However, in the long-term, I don’t believe any equipment company can create a sustainable competitive advantage through innovation due to USGA regulations. Therefore, manufacturers will (and are) evolving from R&D houses to marketing firms. Once this happens, golf clubs will essentially become a commodity from a technological standpoint and industry leaders will need to succeed through brand equity. New private-label entrants will then be able to enter the market with equal quality and significantly reduced price-points through reduced overhead, thus increasing competitive rivalry for everyone. For both the short-term and long-term, that spells trouble for Taylor Made. But, I believe this will happen regardless of the Adams acquisition. Analysis - neutral for TM.

Implications:

For entrepreneurs, I think consolidation is bad news in the short term and good news in the long term. As technology becomes a commodity, and big players fail to innovate (as is often the case with consolidation), opportunities will arise for new entrants to capitalize on the huge market of people who want top-of-the-line technology but don’t want to pay $500 for a driver. If and when that happens, hopefully entrepreneurs will be there with a solution that makes golf more affordable and therefore gets more players into the game.

A 19th Hole - at the Beginning of the Round?

noreply@blogger.com (Steve Tanner) — Thu, 01 Mar 2012 23:38:00 +0000

I made a quick jaunt to Northern California last week with a hectic work schedule but was fortuitously able to incorporate a little golf into the itinerary. The golf was spectacular (see pictures below), my game was not. Complicating matters was that we were pushing it by trying to fit two rounds into very limited time. As such, we essentially pulled into the parking lots of each golf course, checked in, hit a few putts and teed off. You can imagine what those first hole scores looked like.

My TGA colleague Nate Wright had a couple of intriguing thoughts about this process that I’ve been chewing on since and wanted to pass along.

As I was finishing up my double bogey putt on the first green of our second course, Pasatiempo, he said – “Wouldn’t it be great if golf courses were built with 19 holes and the first was a warm-up?” I laughed it off but he persisted – “You could have a Marshal walk with each group and determine, based on the scores and what he or she saw, what tees the players needed to use for the rest of the round.”

I initially laughed it off again but the idea grew on me as I thought more about it.

There are obvious complications – incorporating a 19^th hole into existing layouts, adding to the length of a round, disrupting the concept of an 18 hole course, adding another employee to payroll, potential subjectivity of the Marshal determining tees (and the corresponding displeasure/arguments), etc.

But there are also benefits – minimizing the need for practice time before the round, increasing enjoyment of the round by having a warm-up hole to minimize high first-hole scores, faster pace-of-play on the other 18 holes due to players playing from the appropriate tees, etc.

The first “practice” hole would need to be very easy, such as a wide open 350 yard par 4 with a flat green. Maybe there would be rules regulating the maximum number of shots to get on the green at four and the number of putts at three. Maybe players with handicaps below a certain number could bypass it altogether and play from any tees they wanted. Maybe the practice hole could be added to the side of the driving range, where space is often more abundant and easier to carve out, as opposed to including it in the course layout.

With the USGA considering new rules and some golf courses starting to develop innovative ways to make the game more attractive, all options seem (thankfully) to be on the table. I think this idea stands up with many of the others and merits a place in those conversations so I wanted to throw it out there.

What do you think?

And, hat tip to Nate Wright for the ideas.

18th Hole at Pasatiempo - Me on the left, Nate Wright on the right

11th Hole at Monterey Peninsula Country Club's Shore Course

Let's #GrowGolf Through Honest & Open Dialogue

noreply@blogger.com (Steve Tanner) — Thu, 23 Feb 2012 22:52:00 +0000

I am a firm believer that the solution to the golf industry’s troubles is to grow the game amongst new players as opposed to trying to squeeze more money, time and participation out of existing players. This may seem like an obvious statement but not everyone in the industry agrees with me, starting with some major equipment manufacturers who have told me as much.

In order to grow the game amongst new players, we need to do two things:

1. Be honest in our assessment of where we stand and why. We don’t always see this, as evidenced by this recent Tweet by SNAG on February 13:

snaggolf‏@snaggolf – 10 million kids learning #golf using SNAG! http://tinyurl.com/7d7fn8j

If you click on SNAG’s link, you’ll see that it’s a Press Release not for SNAG, but The First Tee (and SNAG is not mentioned once) announcing The First Tee's goal of reaching 10 million children. It caught my attention because I know there are only 2.5 million kids total playing golf in the U.S. Nevertheless, I saw industry members Retweeting this post believing it to be accurate. I know and respect SNAG’s executive team and like what they’re doing for the game, so I hope this misleading Tweet was a mistake. Regardless, it's a good example of what many golf companies and organizations are doing – claiming lofty achievements that aren’t really there. And it needs to stop.

2. Have active, open and engaging conversations about ways to grow the game. To that end, two platforms have recently emerged that are facilitating good discussions:

A. The first is the Twitter hashtag #growgolf. As to be expected, some people add it to Tweets that aren’t actually about growing golf but you can find some real idea gems if you read through the timeline. More importantly, it’s a positive step towards initiating a valuable dialogue and I’m happy to see participation from industry leaders on down.

B. The second is a LinkedIn group for Junior Golf that has had some compelling discussions. If you’re in the world of junior golf, I encourage you to join the group and jump in on the conversations. I know it’s been an educational resource for me.

My challenge to the industry is to stop focusing energy and money on PR campaigns about growing the game that serve as smoke screens for the fact that, in the last five years, youth participation has dropped 34% from 3.8 million to 2.5 million and overall participation has dropped 13% from 30 million to 26.1 million. (The full participation report is below.) Those are staggering statistics. And, they tell me that none of us in the industry are doing a good enough job – myself included.

Once we take ownership of our reality, let’s have an open dialogue about solutions where innovation, entrepreneurship and efforts that have tangible proof of growing the game are embraced. I’m happy to see this happening on Twitter and LinkedIn and I hope other platforms arise as well – starting with this blog.

A Significant, Sustainable & Non-Radical Solution to Golf's Participation Problem

noreply@blogger.com (Steve Tanner) — Thu, 16 Feb 2012 23:29:00 +0000

The Wall Street Journal published an article last weekend called “The Battle for the Soul of the Game” and it captured the essence of this interesting time in the golf industry.

The article discusses how the golf industry is thinking about combating the game’s declining participation, causes of which include 5-6 hour rounds, expensive green fees, increasingly difficult courses and little overall accessibility. Industry leaders face difficult decisions because many of the popular solutions to these problems require a fundamental shift in the traditions, values and “soul” of the game.

Some of the more radical ideas include: two sets of rules – one for professionals and one for amateurs, golf balls that fly farther or shorter to accommodate courses of different lengths, doubling the size of the hole, building courses with less holes and so forth.

I understand why these ideas exist but I don’t support them because they disrupt a fundamental aspect of the game that I believe should be forever sacred – “the number.” Every round of golf produces a score. Golfers can compare it to previous performances. It’ll make them feel good about themselves, or strive to be better, or both. They can compare it to others. It can be discussed at ease with both golfers and non-golfers alike. They can even compare it to professionals. Thanks to one set of rules, 18 holes, normal-sized golf courses, standardized equipment and a 3” hole, every score produces a number that means something. In many ways it means everything. And it should never be taken away.

There are traditional solutions as well – moving the tees forward, eliminating carts on courses where they have to stay on the path, increasing marketing efforts, etc. – but these all feel to me like using a band aid where stitches are needed.

There is one solution, however, that was discussed in the Comments section of the article that I think is game-changing because it would solve these problems in a significant and meaningful way while also preserving the traditions of the game.

The concept is to create a system where people need to be able to achieve a certain handicap on a short course and pass a rules/etiquette assessment before receiving a card that would allow them to play on an 18 hole regulation facility. This policy would apply to juniors, men, women, everyone. It makes a lot of sense and would do several things:

1. Create inherent demand for building short courses and a sustainable business model to support them.

2. Provide a nurturing, non-intimidating environment for beginners to try the game and develop some skills before going to longer, harder, more expensive and time-consuming courses.

3. Offer all golfers more opportunities to enjoy the game in a relaxed setting for two hours or less.

4. Speed up play at 18 hole facilities.

Failing golf courses could convert into a short course as opposed to closing, thus saving jobs and making the transition to this model smooth for everyone. In the interim of building the short course, or in areas where it would be impossible to sustain one, regulation facilities could utilize the family tees or create a modified routing format (such as Tierra Rejada's innovative "Players Course") on certain days/times for beginners. USGA members with a handicap below a certain number would be grandfathered in while all others would need to pass through the program.

I’m sure there are many more considerations as I dive deeper into the concept, including potential legal and political complications, but this to me makes a lot of sense on many levels… much more so than some of the alternatives. It maintains the integrity of “the number,” preserves the game’s traditions, makes it more accessible to beginners, presents more opportunities for seasoned players to enjoy it and has a sustainable business model to support it.

And, this model would present ample opportunity for entrepreneurs to capitalize on the shifting landscape.

What do you think?

Last Week Was A Great Week For Golf

noreply@blogger.com (Steve Tanner) — Thu, 09 Feb 2012 17:59:00 +0000

The Waste Management Phoenix Open last week was, like always, an awesome tournament. Making it so unique was the fact that even if Spencer Levin won easily with zero drama (as most predicted entering the final round), or if Kyle Stanley didn’t pull off an amazing turnaround following his Farmer’s Open collapse the week before (something that golfers, entrepreneurs and many others can learn from), it still would’ve been an awesome tournament. Why? Because the people who put it on – the “Thunderbirds” – focus on making it an all-around fun experience as opposed to just a golf spectator event.

There’s the famed 16^th hole with its stadium seating, a seemingly simply concept considering all other major sports have 360 degree seating formats, but this is unique to this one hole. This one tournament.

There’s the Bird’s Nest across the street where the likes of Will.I.Am and the Goo Goo Dolls performed in the evenings, with players like Rickie Fowler making stage appearances. Again, unique to this one tournament.

Simply put, the Waste Management Phoenix Open is one big party. Which, not surprising for the golf industry, means that some folks don’t like it. Last week I shook my head as I read tweets and comment threads on blogs/articles questioning whether this was good for golf. “This” being the raucous crowds at 16, the drinking, the atmosphere.

I think there's no question that this tournament is good - make that GREAT - for golf. Here’s why:

Attendance for the Saturday round alone was 173,210. That’s a record for single day attendance of any golf tournament ever. In history. Consider this – event organizers for the Farmer’s Insurance Open the previous week at Torrey Pines (in the heart of San Diego) estimated attendance at 150,000 … for the entire week.

Overall attendance at the Waste Management Phoenix Open was over 500,000. Compare this to last year’s U.S. Open at Congressional, where total weekly attendance was “nearly 230,000 people.” And the field in Phoenix featured only two players in the Top 10 of the World Rankings, with the highest ranked golfer being Webb Simpson at #6.

My take is this – anything that brings people into golf and gets them excited about the game is good for the game. It should be encouraged, embraced, studied and replicated. The 16^th sat 22,000 people and anyone who watched the tournament could see that the fans, players, caddies and everyone else loved it. Who will forget Bubba Watson and Ben Crane reuniting as the Golf Boys? Pure entertainment.

For the detractors, I encourage them to read about the Haimish Line because I think their view comes from the wrong side of it.

Last week, 500,000 people hung out on a golf course in Scottsdale – more than ever before in the history of the game – because it was a fun, social environment. That's a valuable lesson for anyone in the golf industry looking to grow the game.

Clarity Within the Noise

noreply@blogger.com (Steve Tanner) — Thu, 02 Feb 2012 17:23:00 +0000

I was recently invited to be a mentor for an incubator called StartEngine, which is a 90 day program for very early stage technology companies to get their startups off the ground. I’ve met with several companies since and I’m noticing a recurring theme – the entrepreneurs are getting conflicting information from the various mentors/investors/advisors around them, and they’re having trouble making sense of it.

Here was an exchange I had last week:

Entrepreneur with a social media / mobile app company – “Last week we had an investor come in and say that we had to have a business/revenue model from the outset. Then one of our mentors told us that we don’t need to worry about a business model right now and instead just need to build product. Then a separate person told us that it’s all about users. Which is it?”

Me – “It depends. What do you ultimately want the company to be?”

Entrepreneur – “(insert standard 30 second pitch)”

Me – “Doesn’t answer the question. Let’s try it this way – why did you get into this business?"

Entrepreneur – “To make life easier for my market of users.”

Me – “Ok, then answer me this – one year from now, would you rather have 100,000 free users and be dependent on outside funding or have 10,000 paying users who each pay a couple of bucks and have you on the road to sustainability?”

Entrepreneur – “Not sure, which one would investors look more favorably upon?

Me – “That depends on what you ultimately want your company to be.”

This discussion is typical of several conversations I’ve had with other entrepreneurs about the unique challenges and decisions they face with their business. It’s not too different from the process I go through daily with folks interested in starting a TGA franchise. With all of the noise out there offering business advice and guidance – blogs, books, Twitter, advisors, mentors, investors, etc. – it is understandable why many young entrepreneurs find themselves with spinning heads.

When it comes to big decisions, my advice is simple – always remember why you got into the business (vision) and know what your long-term goals are (strategic plan). Then make decisions that align accordingly. It works because the vision is set in stone at a period in time, and thus will keep you grounded, while your long-term goals are malleable and thus will allow you to adjust and pivot.

I was discussing these thoughts yesterday with our Curriculum Consultant at TGA who has a doctorate and 25 years in education, and she told me about a book called “The Element” by Sir Ken Robinson. She described it as a book that identifies four conditions for achievement – aptitude, passion, attitude and opportunity. The two features of being in one’s “element” are aptitude and passion, and the conditions for it are attitude and opportunity. Basically, you’ll be successful if you do something you’re good at and passion about, so long as you have a positive attitude and the right opportunity. I ordered the book last night and I look forward to diving deeper into the concept as I think it aligns with the advice I’ve been giving to the entrepreneurs.

I make a concerted effort to constantly read, learn and surround myself with people smarter and more experienced than me. I certainly encourage all entrepreneurs to do the same. But when it comes to big decisions with your business, the focus shouldn’t be on what others are telling you but rather on what aligns with your reasons for getting into the business and what you ultimately want it to be.

Spend 2012 on the Right Side of the Haimish Line

noreply@blogger.com (Steve Tanner) — Thu, 26 Jan 2012 21:37:00 +0000

After a break for the holidays and the birth of my beautiful daughter Eva Grace Tanner, I’m returning to my weekly blog with a renewed vigor for 2012.

I’ve been reading a lot lately and one of the more interesting pieces was a Mark Suster blog titled “Spend 2012 on the Right Side of the Haimish Line" in which he references this NYT article by David Brooks.

Brooks defines haimish as “a Yiddish word that suggests warmth, domesticity and unpretentious conviviality.” The concept is that you risk crossing the haimish line into a less happy existence if you blockade yourself from normal folks. Examples of doing this would include staying at super-private hotels, working solely from behind a desk, etc. As I read these articles, I took the concept a step further by thinking about the professional consequences that would arise from boxing in one's experiences. i.e. If you play golf exclusively at private and luxurious clubs, yes, you'll miss out on the congeniality of playing with weekend warriors who are making friends, drinking beers and playing for the love of the game. However, if this same person is then responsible for addressing the challenges faced by these weekend warriors, they probably wouldn't do a very good job. They'd be too far removed. The challenges themselves would fall outside the false sense of reality that their experiences had created. And thus, professionally, they'd be operating from the wrong side of the haimish line.

As I went through this intellectual exercise, I thought a lot about the golf industry. And I’ve thought a lot about this concept of the haimish line since as several interesting headlines and observations appeared in the first few weeks of 2012.

First, at the PGA Tour’s season opening tournament in Kapalua, Commissioner Tim Finchem announced the Tour’s commitment to raise $100 million for The First Tee this year. Since 1997, The First Tee has been the sole junior golf organization supported by the golf industry and it operates on a $13 million annual budget. And yet, despite The First Tee’s claim that they’ve had 4.7 million participants, there are less kids playing golf in the U.S. today than there were the day it was founded. (2.8 million in 1995 vs. 2.5 million in 2010 - National Golf Foundation data.) Instead of opening their doors and offering support/resources to other youth programs, industry leaders are doubling down on their single all-in bet. That, to me, is a decision made from the wrong side of the haimish line.

Then, earlier this week, Finchem proposed a change to the Q School format. One of the great things about professional golf is that anyone can pursue their dream of making it on Tour. You don’t need to get drafted, you don’t need an agent, you don't need to be a certain age … you just need to pass through Q School, which is open to any good player. The new format would be a 3-tournament series that is only available to select Nationwide and PGA Tour players, thus eliminating the opportunity for college golfers, club pros and anyone else who’s been working meticulously on their game to bypass the mini Tours and go straight to the big leagues. The new format benefits existing tour players, adds three new tournaments and their corresponding revenue, and undoubtedly builds more prestige in the Nationwide Tour (which, perhaps coincidentally, is in need of a new title sponsor after this year). But nevertheless, it's a closed format. Derived from closed-minded thinking that, to me, comes from the wrong side of the haimish line.

On the flipside, Golf 2.0 has done a great job of identifying golf’s many challenges and it has the industry’s undivided attention. Its presence is everywhere at the PGA Merchandise Show in Orlando this week. The much harder and more important part is to now identify viable solutions and execute on them. Nevertheless, I applaud the PGA for hiring Boston Consulting Group to provide them with a sobering analysis. I also applaud them for recruiting the perfect person to lead Golf 2.0 in Darrell Crall. These are all things happening from the right side of the haimish line.

Additionally, the PGA of America clearly has a new social media strategy on Twitter that is much more active and open-minded. Historically they would only tweet well-manicured PR messages but now they’re engaged in an active dialogue with industry members, including retweeting criticisms and all. I’m also a big fan of the hashtag they’ve been promoting - #growgolf. These are smart, engaged decisions made from the right side of the haimish line.

All of these topics require further discussion and there are other smaller examples as well, but the point I want to get across is this concept of this haimish line. The golf industry has been operating from the wrong side of it for too long. And it’s understandable – industry leaders don’t pay for golf, probably haven’t experienced a six hour round in their professional careers and aren’t working shoulder-to-shoulder with the PGA Pro who’s folding shirts in the shop and struggling to get by. It’s good to see that they’re taking steps in the right direction to understand and address the challenges being faced by golfers, industry members and the game as a whole.

With that, I have a challenge for everyone, myself included - let's make sure we spend 2012 on the right side of the haimish line.