Yahoo Finance Why this entrepreneur DESTROYED $500,000 of stock
The New Investors video series brought to you by Yahoo Finance reveals the secrets of the most successful entrepreneurs and business people in Australia today. This is the seventh episode of the season.
Hayden Cox was once a 15-year-old who just broke his beloved surfboard.
"I was working part-time jobs at Woolworths and Pizza Hut... I didn't really have that much money, so I thought, 'Well, what's going to be the cheapest way to get a new board?'" he told Yahoo Finance's New Investors show.
"And that was to build one myself."
That teenage dilemma triggered a lifelong journey of entrepreneurship – designing, manufacturing and selling surfboards under his own brand Haydenshapes.
Cox's boards are now sold in more than 70 countries, with the business operating out of both Sydney and California. The company has developed a loyal following for their performance designs and unconventional materials technology, winning numerous surf industry awards.
Prominent surfers like Craig Anderson, Dion Agius, Nate Tyler and Cole Houshmand spruik the brand, ripping it up for the everyday surfer to see what Haydenshapes boards are capable of.
But to start with, Cox knew nothing about business, chemicals or mass production.
And there would be some brutal lessons along the way.
"This whole journey has never been plain sailing. Even today it's always a challenge."
Staring at the face of bankruptcy
There was the time that Cox invented ground-breaking new technology for making boards, called FutureFlex, but it ironically almost sent him to the wall with crippling debts.
As his own company was hitting the limits of how many boards it could produce, he licenced FutureFlex for other board makers, or "shapers", to mass-produce.
"I couldn't build enough boards to get over that sort of break even point in the business. And the [other] shapers weren't really understanding how to bring that technology to market," he said.
"And they never really hit this point of saturation in the marketplace where everyone realised: oh, this is amazing."
The licensing model was sending him and the business to the brink of bankruptcy.
"When I designed the technology, it was kind of like the smartphone. No-one knew that they needed it… No-one wanted them in the marketplace," he told Yahoo Finance editor-in-chief Sarah O'Carroll.
"I brought the FutureFlex concept to market before people understood that carbon fiber epoxy and EPS foam were a great set of materials to build boards out of."
Cox had faith in the technology – he even had world champion surfer Tom Carroll ride it and love it. But the situation was dire.
"[I] was at a point where you can't pay your bills, you're barely paying your staff, you can't keep up with tax payments," Cox said.
"Lots of debt. Had no money to pay anyone. I was almost half a million dollars in debt."
Cox decided then to stop licensing the technology out and bring all the manufacturing in-house. He selected a factory in Thailand that would mass-produce his boards.
But that presented its own problems.
"The first 700 boards that they produced, I wasn't happy with the quality and I had to force them to destroy every one of those boards," Cox said.
"As sad as it is to destroy close to half-a-million dollars worth of product...if I didn't get that right I was going to be a failure.”
As a lifelong surfer himself, he knew his customers' personal experience with his boards were paramount to his business recovering from the brink of collapse. He needed to fly to Thailand and show the factory first-hand how he wanted the boards to be made.
There would be no compromise.
"Your business [solely] relies on the experience that a surfer has riding the board. And if they have a bad experience, it's done," said Cox.
"So you have to get that right every single time."
It's not all as it seems
Cox said any startup could be showered with accolades, and even astronomical sales, but in the background it could be in turmoil.
"Your challenges that you face being in business will be just as challenging when externally everyone thinks you're doing great," he said.
"For example, when we're winning Surfboard of the Year twice in a row… Externally, everyone thinks, 'Oh, you're killing it. You're doing amazing.'
Cox explained that although they’re selling more boards than they have ever sold, the everyday obligations of running a business – such as HR issues and cash flow – remain a constant challenge.
But despite the hard work, Cox is proud of what he's built without any external help.
"My wife and I run the business and own the business today, and that has brought a lot of cash flow and capital challenges along the way," he said.
"[But] I'm proud that we are family-owned."
The New Investors video series brought to you by Yahoo Finance reveals the secrets of the most successful entrepreneurs and business people in Australia today. This is the seventh episode of the season.
