Kings of the Hill

Another way to reach consumers is through the rental market, since neophyte snowboarders usually rent equipment first. Satisfied renters will often buy what they've rented, says Anderson, and rental shops have been receptive to the Autolock because it's easier to adjust than traditional bindings and has a lower profile, so it takes up less storage space.

But with their relatively modest resources, Anderson and Sand aren't going to establish Switch as the standard setter on the strength of their consumer ads and educational videos alone. They need help, and to get it they've focused on other players in the same industry: the companies that make the boots.

High-Speed Lift
Anderson and Sand decided to follow the example set by one of their major competitors. When bicycle-component maker Shimano introduced an integrated shoe-and-pedal clip-in system, in 1990, it licensed the shoe technology to makers of bike shoes around the world. Thus, retailers and consumers got a choice in shoes, but all their choices worked with the Shimano pedal. The Switch founders reasoned they could do the same with their boot-and-binding system.

Switch has already licensed its technology to seven established boot manufacturers, including Vans, a fast riser in the snowboard-boot industry. Switch receives a $5,000 licensing fee, plus a $1 royalty on each pair of boots, but Anderson doesn't see licensing as a big revenue generator. It even cuts into the sales of Switch's own Flexible boot line. But Switch had become a boot maker only out of necessity. "No boot manufacturer would sign on with us when we started," Anderson says. He points again to the Shimano analogy. "By licensing their technology, Shimano lost a lot of shoe sales, but that was offset incredibly by the increase in their pedal sales." The boot manufacturers' reps are "out there talking up our bindings," he says. Furthermore, Switch figures it can piggyback onto the boot makers' print and broadcast ads. Vans, for instance, featured the Autolock binding in one of its TV spots. "And that's just the beginning," crows Anderson.

Not just an add-on, the licensing strategy has become crucial to Switch. If the company doesn't partner with enough boot makers, Anderson reasons, Autolock won't become one of the standards. As a small niche player, Switch wouldn't be able to produce enough bindings to support its licensed partners. "So it's all tied in together," Anderson explains. "Once we achieve the critical mass, everything will work out. Until then, everything is a bit awkward."
Eventually, Anderson says, the choice of boots, not the binding, will drive the consumer's purchasing decision. "Right now, because the technology is new, the binding is driving the sales," he says. "But the same was true at first for Shimano. Now that the pedal is the standard, bike riders choose a shoe first." So Switch is trying to identify existing and upcoming snowboarding niches and sign on boot partners that address them. For example, since freestyle snowboarders take their inspiration from skateboarding, Switch has signed up Duffs, a prominent skateboard-shoe manufacturer that recently expanded into the snowboard-boot market. But the Duffs name means nothing to the veteran skier who crosses over into snowboarding, so Switch is trying to attract familiar names there, too. "If we could sign up a Rossignol or a Nordica, it would mean a lot to the crossovers," says Anderson. So far, he adds, 8 of his top 10 prospective boot partners across the niche spectrum have indicated that they'll work with Switch for the upcoming season.

Step-in bindings may represent the future of snowboarding, but neither shop owners nor veteran 'boarders are jumping into them as quickly as Anderson might like. Many dealers, he complains, are waiting to see what the big names offer before deciding what to stock. And many 'boarders are happy with the traditional strap-ins, which they say offer the right amounts of hold and flexibility. During the Autolock's 1995-1996 inaugural season, many riders touted the enhanced convenience, but some said the boots didn't offer the same support as the strap-ins. Anderson and Sand believe that improved boot design, through the combined efforts of Switch and its licensed partners, will help assuage customers' reluctance.

Moguls on Moguls
Promoting a new boot-binding system is not entirely a domestic matter. The Switch binding currently sells in 18 countries, including several in Europe as well as New Zealand, Australia, and Japan. It was in Japan, in fact, that the company's first sale took place. In December 1994 Anderson and Guerrero took their prototype boot and binding there. "We knew the importance of that market," Anderson explains. But more important to Switch than the sale itself was the fact that Japanese distributors, eager to sign on with potentially big players, were willing to pay 50% of their order value up front, with the balance on a letter of credit. Anderson and Guerrero landed a $700,000 order for 3,500 units, which Anderson says came close to funding Switch's operation the whole of the following year.

Switch further reduced its working-capital needs by outsourcing the manufacture of its bindings. Outsourcing saved the company from having to purchase capital equipment. In addition, the contract manufacturers buy their own raw materials and provide finished products to Switch on a net-30-day basis. Switch chief financial officer Dan Adams, a Stanford M.B.A. with seven years' experience in production management, joined the company in February 1996. He says the manufacturers that Switch uses aren't necessarily the least expensive. "But terms are more important to Switch right now than price," he says.

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