In Industry Known for Wipeouts, Quiksilver’s McKnight is Surfwear’s Dean
Robert B. McKnight Jr. has the soul of a surfer but “dude” isn’t part of his vocabulary.
The chairman and chief executive of Huntington Beach-based Quiksilver Inc. easily goes from riding the waves with his surfer buddies to buying up brands and hammering out budgets at his company’s “Surf City” headquarters.
“Bob reflects a very business-like approach to an industry that isn’t known for that,” said Dick Baker, president of Quiksilver rival Ocean Pacific Apparel Corp. in Irvine.
At Quiksilver, McKnight has found his own “Endless Summer.” The 47-year-old has been able to do what others have tried and failed at: build an enduring business out of a personal passion for surfing. “He’s still just a surfer, yet he’s the head of the world’s biggest surf brand,” said legendary surfer Pete “PT” Townend, now editor of Surfing magazine in San Clemente. He appeared in the first Quiksilver ads in the 1970s wearing his signature bright pink boardshorts with a matching surfboard.
In a business marked by fast-rising stars and just as many has-beens, McKnight’s Quiksilver is a surfwear icon. Those who know McKnight say his business savvy, humility and integrity have made him a survivor in the fiercely competitive industry.
“I think I have good common sense, values and integrity,” McKnight said. “In this business, it’s easy to lose sight of it. It’s a notoriously sleazy business. I’ve tried to rise above it.”
McKnight got his start 25 years ago when he and fellow surfer Jeff Hakman licensed the Quiksilver name from the company’s Australian founders and debuted a line of shorts here in the U.S. McKnight has built Quiksilver into a fashion powerhouse spanning several brands and genres.
For the year ended Oct. 31, Quiksilver counted sales of $515.7 million and net income of $31.8 million. Last week, the company’s shares were trading near their all-time high of 30, giving Quiksilver a market value of more than $600 million.
But McKnight’s career was somewhat of a fluke, he says.
On a 1973 trip to Bali, Indonesia, McKnight met Hakman (as well as his wife Annette). McKnight and Hakman struck up a friendship riding in a “Beamo” van on their way to the beach. Hakman, now chief executive of Quiksilver Europe, showed McKnight a pair of shorts from Quiksilver Australia and said he planned to bring them to the U.S.
“I thought they looked like some stupid pair of swim trunks,” McKnight said.
But Hakman’s enthusiasm won over McKnight. Hakman was able to convince Quiksilver’s founders, Alan Green and John Law, to give them a license for the U.S. in 1976.
The venture didn’t sit well with McKnight’s father, Robert B. McKnight Sr., who had his own business importing goods from Japan.
“I told him, ‘Guess what, dad? I’m going to make swimwear for surfers,’ ” McKnight recalled. “He said ‘Don’t do it.’ Those were the first words out of his mouth.”
These days, McKnight’s advice to his own kids is different.
“I love Quiksilver,it’s in my DNA. I want my kids to work here,” said McKnight, a father of three whose oldest daughter, Christie, already has her sights set on designing and attending Otis College of Art and Design in Los Angeles.
After all, McKnight makes a good living doing what he loves. Last year he received a $150,000 raise to $550,000 in annual salary and a $770,000 bonus, albeit that was considerably less than the $1.2 million bonuses he received in each of the previous two years. Moreover, McKnight owns about 5% of Quiksilver, a stake worth about $21 million before exercising options.
“I tell people to go to school, not to become a frickin’ CEO nerd, but to learn to understand cash flow, marketing,everything, including business law,” he said.
McKnight himself studied business at the University of Southern California with a minor in cinema. Back then, McKnight figured he would work for his father or break into the movies.
Using a Super 8 movie camera his dad gave him, McKnight made three surfing films and screened them at theaters along the coast to make money while in college.
“I really thought I was going to be in the movie business,” he said.
McKnight also worked at The Cannery restaurant in Newport Beach as a valet and bar assistant while in college. (That’s where he said he learned how to make a mean mai tai, his favorite drink.)
When McKnight and Hakman started making shorts in the 1970s, Ocean Pacific, Gotcha International and Lightning Bolt were the hot brands among surfers and beachgoers.
While those brands have peaked and faded, McKnight has turned Quiksilver into a mass-market brand without losing the cachet that first made it popular, said Mike Kingsbury of MKM, a sports marketing firm in Huntington Beach.
“He has been able to keep small surf shop accounts and penetrate department stores,” Kingsbury said.
In the past year or so, McKnight made some big moves to diversify and grow Quiksilver. The $41 million purchase in July of parent Quiksilver International Pty. Ltd. gave the company ownership of its global trademark and showed how the once-small U.S. licensee had become the driving force behind Quiksilver.
In March of last year, Quiksilver acquired Hawk Designs Inc. from skateboarder Tony Hawk and his family for an undisclosed price, giving the company a foothold in the booming skateboard apparel market. A year ago, Quiksilver’s European unit acquired Freestyle SA, the European licensee of Irvine-based Gotcha International.
“They were the first to go public, they’ve acquired companies, they have retail stores and it’s a global brand,” said Richard Woolcott, founder of Costa Mesa-based Volcom Board Wear and a former Quiksilver employee.
Industry executives credit McKnight with helping to modernize the once ragtag surfwear industry. Quiksilver is one of the top backers of surfing contests and events. The company also has built professional and amateur surf teams that have helped surfing evolve into a mainstream sport complete with its own heroes such as Quiksilver surfer Kelly Slater.
And along the way, McKnight has helped pave the way for a new generation of surf businesses and entrepreneurs, like Woolcott, by mentoring employees and expanding the market for surf-related goods.
Those who know McKnight say he is a tough competitor in business and in the sports he plays, from tennis and golf to surfing and snowboarding.
“He’s got a shorter haircut, he looks good in a suit, but he’s still a surfer at heart and that keeps him balanced,” said Tom Hollbrook, Quiksilver’s vice president of sales and marketing.
McKnight also is known for his generous treatment of employees. Rivals who have sought to lure away Quiksilver workers have had little luck, observers say.
“Bob’s one of the few guys who has reaped this huge success and it hasn’t gone to his head,” said Joel Cooper, chief executive of San Clemente-based Lost Enterprises and a co-founder of Quiksilver rival Gotcha International.
A.G. Edwards & Sons Inc. analyst Mitch Kummetz says McKnight is the reason Quiksilver has been able to maintain authenticity even as it has grown into the mainstream.
“He’s the chairman of this important company, yet he views it from the eyes of a participant because he still is one,” Kummetz said. “It’s important to him that his brand is cool, not only because it’s profitable, but it’s something he wants to associate with his brand.”
At Quiksilver’s Huntington Beach headquarters, visitors enter through double doors flanked by red surfboards. The office is decorated with custom rattan furniture and surf memorabilia.
McKnight’s office sits on the second floor above the entrance lobby, where, like a lifeguard, he can keep an eye on who’s coming and who’s going.
On top of McKnight’s desk, neat stacks of paper are a testament to his need to be organized. Hanging on a wall is a collage of surf photos and paintings given to him, including one of a goldfish by his daughter Christy, done when she was 4. Behind him are circa-1970 hanging lamps that look like something out of an Austin Powers movie.
When McKnight isn’t in the office, he often is taking trips to some of the world’s finest surf breaks and snowboarding runs with dozens of friends, or hosting parties at his beachfront home for his favorite non-profit foundation, the Ocean Institute in Dana Point.
Quiksilver has been a training ground for many in the apparel industry. Several former employees have gone on to make their own mark in the industry.
Among them are Woolcott; John Warner of La Jolla Sports, a licensee of the O’Neill and Lost surfwear brands; Mike Lesher, chief executive of Irvine-based Counter Culture; and Shaheen Sadeghi, developer of The Lab Anti Mall in Costa Mesa.
Sadeghi, who spent about three years at Quiksilver as its president in the early 1990s, said McKnight doesn’t make any quick decisions. He also tends to delegate work to division heads.
“It’s more important to him that he make the right decisions,” Sadeghi said.
When Volcom moved into Quiksilver’s former Costa Mesa facility in 1999, Woolcott took up in what had been McKnight’s office.
“I’m not worthy,” Woolcott told McKnight.
Woolcott first started at Quiksilver as a sponsored surfer and eventually worked his way through the marketing department.
“I think what (McKnight) and his team at Quiksilver have done is given the rest of us in this industry a benchmark,” he said. n
