Growing up, Laurie Alter’s older brother Mark Christy wanted to keep “her and her hamsters and her dolls” as far away as possible—he said he was “desperately trying to be cool,” and having a Ford Pinto as his ride didn’t help, either.
Christy’s annoyance later trickled down to Alter’s high school suitors, including her now-husband, Jeff Alter, son of late surf and sailing industry innovator Hobart “Hobie” Alter.
“I would see them at school and say, ‘I hear you are interested in my sister, but just know I will kill you—I know who you are, I know what you’re about. If I see your car, if I see your name—dead,” he laughed with his sister as they reminisced last week.
Today, the siblings are close, running the retail side of the Hobie brand together. She’s in charge of two home furnishing stores they named Tuvalu, while he oversees five local surf shops under the Laguna Beach Properties Inc. umbrella.
The Business Journal honored Hobie/Tuvalu in the medium-sized business category at the 18th annual Family-Owned Business Awards luncheon on June 14 (see related stories, pages 1, 6, 8 and 10).
Back when they were growing up, Christy used to race to Hobie Surf Shop in Dana Point to pick up the latest Ocean Pacific corduroy shorts—every kid at school wore them. He became friends with Hobie Alter after a round of golf at what was then Ben Brown’s Golf Course in Laguna Beach.
Alter’s name preceded him—aside from selling Christy’s favorite shorts since 1958, he’s credited with bypassing balsa wood to develop foam-core surfboards that revolutionized surfing. He also introduced Hobie Cat, a line of lightweight sailing catamarans that he sold to Coleman Co. in 1976 for $3.6 million.
Alter’s sons, Jeff and Hobie Jr., focused on Hobie Designs Inc. in San Juan Capistrano, which handled global licensing and production of hard goods, including stand-up paddleboards and surfboards. Christy—at the elder Alter’s urging—bought the retail side of business in 1996. They, along with Dick Metz, were already partners in several real estate investments, including the building that’s home to the Laguna Beach Tuvalu store. The elder Alter had sold the retail operations in the early 1990s to Pete Siracusa, who also owned the Rusty Pelican restaurant in Newport Beach and expanded the Hobie retail footprint to Santa Monica and Irvine. The stores changed hands again a couple of years later, going to Utah-based ski equipment manufacturer Right Fit Sports. But lack of snow that dragged on for several seasons took down “the whole ski industry,” and Right Fit, unable to pay its vendors or rent, entered bankruptcy to sell its assets, including the four Hobie stores.
“I was in contact with the judge once or twice a week with proposals from people that had no business thinking about the surf industry,” Christy said of prospective buyers. “Then Hobie called me up late one night and said, ‘You know, I’ve got the perfect guy’… And he said, ‘It’s you.’”
Christy refused at first, reflecting back on his days as a retail clerk at Stuart Avis Men’s Clothing, considered “a rite of passage for all the kids who went to Laguna Beach High.”
“I said, ‘I … didn’t like it and don’t know the first thing about it.’ And he said, ‘That’s OK, I never knew anything about running stores, but I knew enough to hire great people and let them do what they do.’”
Growth Designs
Christy did just that, partnering with local attorney Joe Gelber on the deal and hiring Jake Schwaner, “an incredible general manager” who later became a minority shareholder.
He also shut down the stores in Santa Monica and Irvine, which he described as “flash and glitz” and “soulless box,” respectively. He kept the Laguna Beach and Dana Point locations and “really focused on re-establishing those as the industry leader, best of breed.”
He brought back vendors—the stores now carry hundreds of brands—and gutted the cluttered interior decor designed by Right Fit’s architect in New York.
“Hobie, who was not quick with praise, came in, and he put his arm on my shoulder, and he said, ‘This is perfect. This is exactly how I would love to do it myself if I were still doing it,” Christy said.
He has no plans to add new doors, and instead is focusing on boosting the company’s offerings.
“It’s really tough to navigate the retail climate out there,” Christy said. “Across the board, if you talk to vendors, they will tell you that flat is the new up.”
He said the stores’ revenue is in the “eight figures” and that the business is “growing and profitable,” largely due to “the diversity of the merchandising” and emphasis on customer service—you won’t find his staff texting or eating burgers behind the counter.
“Our culture is like the Nordstrom of surf shops,” Christy said, adding that Hobie also supports local schools and nonprofit groups. “You’ve got to be experiential and real and have a value-add or people are just going to go click something online.”
Diversification
His sister has adopted a similar mantra at Tuvalu. Aside from sourcing unique furniture and home accessories collections for the San Clemente and Laguna Beach stores, she and her staff of about 45 offer interior design services.
“Some customers are coming in on a Thursday, and they’re having a party on Saturday, and they want instant satisfaction—so we’re selling off the floor, delivering it, and setting it up for them,” Alter said. “Other people want it completely turnkey, not involved.”
When she opened the first store in Ladera Ranch in 2003, about a quarter of revenue came from design services. Nowadays, the split is 40/60 in favor of retail.
“My vendors are saying [that] traditional brick-and-mortar home furnishing retail stores are struggling, and the stores that do offer design are pushing forward because it’s about balancing in times when things are a little bit light,” Alter said. “Also, a nice thing with design, it’s repeat customers. We’re doing a house in Henderson, Nevada right now because a client has a (second) house here … We pride ourselves in building relationships with our customers and making it easy for them.”
Tuvalu has an e-commerce site featuring items from about 700 vendors, but Alter’s clients use it mostly as a source for inspiration, preferring instead to visit a store and “touch everything.” She recently joined the Design Collective, a website that pools merchandise from noncompeting U.S. boutiques and targets consumers who “really want to support brick-and-mortars, and who are trying to stay away from the Amazon type of situations.”
Alter and Christy named the stores after a chain of islands off the coast of Fiji.
“We opened an atlas, and we just started reading names, and Tuvalu kind of like came off the tongue easy,” she said.
Their business relationship has also been an easy one—their strengths are complementary.
“She’s certainly a hell of a lot better at it than I, and she knows it,” Christy said.
As the pair accepted the Business Journal award, he quipped, “When we were just about to open, and [the staff was] trying to bring in merchandise, [I said], ‘Hey, I need a new couch.’ And she said, ‘You need a sofa,’ and I said, ‘What the hell is the difference?’ And she said, ‘a thousand dollars,’” eliciting an explosion of laughter from the ballroom crowd.
Christy is also co-owner of The Ranch at Laguna Beach—the same resort and golf course where he befriended Hobie. He and other investors purchased the resort in 2013 from Aliso Creek Properties LLC.
“Somebody had to restore that place for Laguna and do it right,” Christy said. “We think that the money will follow. But it was never about the return on investment. We have no exit strategy.”
Future Waves
Is there a third generation to take over from the two?
Alter’s daughter, Ashlyn, is focused on the medical field at the University of California-Davis, while her son, Tyler, is playing volleyball for Ohio State University. Christy’s son, Jackson, manages the Hobie store in Laguna Beach, but “his passion is sports.”
“We’ll see where the road takes him,” he said. “It would be cool if it was this, because it would be nice to keep the business in the family.”
“They are all trying to figure out what their direction is,” she added. “It would be wonderful. Especially for Tuvalu, we kind of created this baby now, and what’s the next step for it? I don’t know. It’s a big part of our life, so I want to make sure that everybody who works here with me is passionate about this—because if you’re not—life is too short.”
