Voice of the Modern Manufacturing Economy Since 2013

KOTA Longboards

by Eric Peterson on January 22, 2018, 08:18 am MST

www.kotalongboards.com

Denver

Founded: 2012

Privately owned

Employees: 6

Industry: Consumer & Lifestyle

Products: Skateboards

After navigating through some turbulence, founder and CEO Mike Maloney is flying high with a new factory and a focus on direct sales and co-branded longboards.

"It literally started in my driveway," says Maloney of the genesis of KOTA, shorthand for Knights of the Air and a nod to his previous career as a U.S. Navy fighter pilot.

He'd flown for United and worked for CH2M HILL and clean-coal startup Novinda before going into skateboard manufacturing in 2012.

Things have changed in five years: KOTA's original homemade longboard press made two boards every three hours; the company can now press a dozen in 45 minutes.

Once pressed, the boards still cure in Colorado's high and dry climate. Maloney says it's a logistically difficult task, but one that's worth the trouble. "They can go anywhere in the world and the boards will say, 'Thank you,'" he says.

After that, the boards are hand-stained, says Maloney, "because it's translucent and you can see the grain of the wood." Then comes final assembly, wheels are affixed, and they're ready to ship.

KOTA targets the 67 million adults in the "active lifestyle demographic," says Maloney. "That is a huge part of the market, and there is a lot more disposable income in it."

But it's not even close to the traditional core skateboarding demographic, as 40- and 50-somethings tend to shy away from straightlining downhill. That's why Maloney developed a longboard design with a camber and a concave saddle that's made for big, loping turns.

The camber allows riders "to set an edge like a downhill ski," says Maloney. "We're no longer questioning whether that market segment will respond. We know they will."

Available in four shapes and with about 50 stock graphic designs, KOTA's 44-inch boards are made of hard rock maple with a standard seven-ply construction; an optional eighth ply adds extra stability. Retail price is $329 complete.

KOTA has sold about 4,000 boards in its first five years, but there was a few bumps along the way. "Frankly, 2016 was a really soft year," says Maloney. "We were building our direct business and that really fell off."

Part of that decline might have resulted from an appearance on the CNBC show, The Profit, in 2015. "What was portrayed on that show is not what this company is," says Jeff Ludwig, a recent investor in KOTA. "The motive of these shows is to promote and enhance the host."

In 2016, Maloney moved KOTA about six miles southwest from RiNo to Denver's Ruby Hill neighborhood and opened a new factory/showroom. "We knew we were going to leave RiNo," he says. "Our rent was quadrupling."

Maloney persevered through 2017, which he describes as a rebuilding year. "We are gritty people," he says. "We feel we have built something extraordinary."

The company signed a deal with Anheuser-Busch InBev in June 2017 to offer promotional longboards for the company. The company's boards are also rented at Denver's Halcyon Hotel and co-branded with NASCAR, 511 Tactical, CamelBak, and other corporate clients.

"We were chasing retailers," says Maloney. "We pivoted to focusing on direct sales and co-branding. Within five months, we picked up AB. . . . It plays into why we started KOTA in the first place: It was to build a brand."

Maloney also cites an uptick in retail accounts in spite of the pivot; KOTA boards are now available at Scheels and the company is in discussions with REI.

The move is paying off, he adds. "By the end of August [2017], we had exceeded all of our revenue from 2016."

For 2018, the big goal is "finding ways to enhance our direct sales by gaining more reach," says Maloney. "We can't buy reach." It follows that the strategy is leveraging co-branding deals to elevate KOTA's profile.

There's room to grow in the new facility, he adds. "We can do 20,000 boards a year out of here," says Maloney. "We're really bullish about where we're going in the future."

The company also engages with the community through a 501(c)3 nonprofit, Carve It For Life! (CIFL!), that promotes "PTS and stress healing around recreation from longboarding," says Maloney. "It becomes physically invigorating but mentally relaxing."

"Everybody who goes through the program gets their own longboard. They get the tool of their healing to take with them."

"We just started with this major collaboration with the Wounded Warrior Project," says Maloney, noting the initiative could raise $25,000 for the organization. "We're glad to be a part of it."

Challenges: "What we're trying to do is hard," says Maloney. "It's not impossible, but it's really hard and capital-intensive. It is something you have to grit your way through."

"Right now, we need that last tranche of capital to push us to profitability," he adds. The target is $400,000.

"The second challenge: We own all of our equipment outright. We're proud of that fact. What we will need will be bodies. Personnel. It's always a challenge finding high-quality people who have the skills to put out a high-quality product. . . . Much like a high-end furniture manufacturer, it's that final touch and diligence."

Opportunities: KOTA's new $1,299 electric longboards. They have a top speed north of 20 miles per hour and typically can cover 15 miles on a two-hour charge.

The concept stemmed from a customer request, says Maloney. "I was a bit reluctant," he remembers. "I'm a bit of a purist." Whereas most electric skateboard manufacturers are focused on the latest and greatest motors, KOTA's emphasize the board. "The performance of the board still comes from the styling of the deck," says Maloney.

As electric motors are commoditized, he adds, consumer choice "goes to value, performance, and brand. That goes to us." The retail price is "undercutting the market by $300," as competitors’ boards typically sell for $1,600 to $3,000.

"We've sold a significant number of these things and it's not slowing down," says Maloney. "Our product manager jokes, 'By this time next year, I think we'll be an electric skateboard company.' But first things first: We have to drive the brand to profitability with our existing products in 2018. This year is the tipping point."

He also sees plenty of co-branding targets in Colorado's booming craft brewing and distilling industries. "There's a direct overlap between the clientele in a taproom and the demographic that will longboard," he says. "We do tap handles for some [craft breweries] out of waste wood."

Needs: "We have to secure a stable, long-term manufacturing environment," says Maloney. "We cannot move this company every two to three years. It will be the kiss of death." It follows that he is exploring the possibility of KOTA buying its current factory in Ruby Hill. "We have a beautiful showroom and retail environment. We have a scalable manufacturing space. We can co-locate our offices here."

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