By definition, the word serendipity means “making happy discoveries by accident.” It’s a term that’s been romanticized in film and in novels, but seldom used to describe business decisions.
Don’t tell that to Peter Metcalf. As the co-founder and now chairman of Black Diamond Equipment, Ltd., he believes most of the company’s decisions since coming to Utah in 1991 have proven both “serendipitous and fortunate.” Unlike the definition, however, many of the company’s “discoveries” have been no accident at all.
Now, almost a year since the company became publicly traded (on May 29, 2010), Black Diamond is again making new tracks across the mountain climbing and skiing industry.
On the Right Track
Metcalf’s life has been “forged by the sports of climbing and skiing. I’ve always been a climbing bum. For about six to seven years, my goal was to work as little as possible. I lived by the credo that says ‘at either end of the economic spectrum lies the leisure class.’”
For Metcalf, that meant living as frugally as possible—no car, no house, no permanent job. “I never worked anywhere for longer than six months at a time,” he recalls. “I lived as a roughneck, did some commissioned sales work in clothing, but my passion was to climb.”
That passion drew him to Chouinard Equipment, a Ventura, California-based company founded in 1957 by then 18-year-old Yvon Chouinard. The company introduced many new climbing products and became a leading player in telemark skiing by the early 1980s. But during that decade, a depressed economy and litigation issues led to a restructuring of the manufacturing chain. Metcalf and several other former Chouinard employees signed the paperwork that created a new company—Black Diamond.
“We didn’t want a large majority owner or private equity,” he says. “We had 50 different investors to fund it, lots of life savings were poured in, and we were highly leveraged. The goal was not to get to any one particular size. I wanted to have a company committed to the sports we served, to make a difference for our community of users.”
Among the most important issues for Metcalf and the new company were liability, access to equipment and bringing forth innovative gear. “It needed to be a built-to-last business,” he says.
Metcalf also sensed another important decision that needed to be made: moving out of Ventura.
“I told people we’d relocate to a place of the source of our passion, our motivation, and we began a systematic search of the West,” he recalls. “We decided the best place we could possibly be was the Wasatch Mountains.”
The company had originally planned to move into a new building near Park City, but the developer couldn’t put that project together quickly enough. But while visiting Salt Lake City, Metcalf came across a 9-acre, 100,000-square-foot complex that at one time housed Engh Floral.
“It was funky and eclectic, like us, and would allow us to expand to the West as we needed to,” he says. The company moved to that site in 1991 and has been there ever since, adding and expanding as the need has arisen.
A Steady Pace
That relocation began a steady 20-year growth period, divided intentionally into what Metcalf calls five-year “strategic planning cycles.” New products were introduced, new innovations in equipment added, and sales continued to grow both domestically and abroad.
“We were finishing up another five-year cycle (in 2009),” he says. “We entered into the ski boot business (the first U.S. company to do so in decades) and had just created Black Diamond Asia literally from the ground up.”
Metcalf knew the next five years would prove to be an even bigger investment cycle, and as the economic environment had become more challenging, the company’s biggest lender was also experiencing a drying up of its resources.
“So it made us all think about things,” he says. “We were thinking on issues of capital growth and liquidity. While the company’s business growth was still in double digits, I wanted us to remain coming from a position of strength.”
The board of directors agreed, and the mandate they gave Metcalf was to develop a growth strategy. In May of 2009, he began a plan that would take Black Diamond to more than $100 million in sales by 2010.
Metcalf began “talking to people smarter than myself…Slowly and systematically, we were researching options. From a size standpoint and business acumen, I wasn’t sure we were ready to go public. But life is very serendipitous, and what I’ve learned is to be in the right place at the right time, knowing it and seizing it.”
That moment came in May 2010, when Gregory Mountain Products of San Diego, known largely for its innovative design and creation of backpacks, and Clarus Corporation, a public company that had no significant operations, came together with Black Diamond for a reverse merger—effectively turning Black Diamond into a publicly held company overnight.
Metcalf knew the cost of going public “would be horrendous, so the way to finance a chunk of that was to merge with Gregory and relocate that company to our site here in Salt Lake City.” In January of this year, Clarus officially changed its name to Black Diamond, preserving the global brand. The company now trades on the NASDAQ under the ticker symbol BDE.
Metcalf laughs when talking about the rapid transition into a public company, saying it was akin to “parachuting behind enemy lines with a hand gun when everyone else has a bazooka or a canon. Being public is pretty onerous from cost and reporting procedures, how a business is structured and disciplined. We needed to expand our legal and finance departments just for starters.”
A political science major in college, Metcalf remembers reading that “democracy is messy, inefficient, a pain in the ass, but the best system we have. Capitalism is still the best system we know. It creates a ready market for shareholders and employees. It creates great opportunities for us to continue expanding and innovating.”
At the Top
As for Black Diamond’s future, Metcalf says it “will continue to do what we’ve done for the last 22 years, but on an accelerated basis. We’ll continue to lead, innovate and be one with the sports we serve. We’ll add categories of products that are unique, that our core customers need. And I believe we’ll continue to acquire brands and make strategic acquisitions.”
And one more thing—Metcalf is convinced none of this could have happened had the company not been in Utah.
“We’ve felt appreciated since we moved here, and we’ve worked hard to become a part of the community. One of the big drivers for me in going public was knowing that we could keep the headquarters here, bring more jobs into the city, and stay right here. Hey—we’re a Utah publicly traded company!”