While Kim worked as COO of Up With People, a nonprofit that she describes as "the singing Peace Corps," Coup found sourcing agents and helped develop GoLite's first 12-item product line, which the company introduced at the 1999 Outdoor Retailer Show. Soon GoLite was growing steadily enough that Kim could leave her singers and go to work with Coup. Using their own money and some from Coup's father, a Boston-based attorney and GoLite's silent partner, the couple invested heavily, both in making products that would stand up to the scrutiny of zealous backpackers and on marketing that would make GoLite a household name among performance athletes. Among other things, they sponsored athletes, including the Team GoLite/Timberland adventure racing team, a co-marketing effort dreamed up by Kim and Timberland's Jay Steere, who served together on the board of the outdoor industry's trade association.
Still, progress came in fits and starts. For the first few years, traditional gear makers dismissed them. Then those same competitors began introducing ultralightweight products of their own. This didn't surprise Coup, who believed GoLite had to get big fast if it was going to survive once The North Face and Patagonia and Marmot and a host of other well-capitalized competitors caught on. "In a consolidating culture," Coup says, "you either get critical mass fairly early, or you're dead."
By 2005, Coup and Kim had invested more than $13 million of family money, and some 600 specialty shops were carrying GoLite products. But the company, which consisted of a handful of business-savvy athletes operating out of Spartan cubicles in an anonymous industrial park, had barely been able to crack the behemoth outdoor retailers--a tiny 6 percent of GoLite's U.S. sales were coming from REI, virtually nothing from EMS. And annual revenue was still well below $15 million. In an investment banking book that Kim and Coup wrote in early 2006 with the help of banker David Goldblum of Denver's Goldblum Lentz & Co., they underlined the following sentence: "The company needs fuel!"
Small, rapidly growing companies tend to hit this stage sooner or later. Whenever it happens, it brings what can feel like a shortlist of unappealing options: sell a stake in your company to a private equity group or to a VC, usually for a less than ideal valuation; borrow like crazy, if you can find a bank willing to lend to you; slow down your growth so that you don't outrun your available finances, a strategy that can spell death in a competitive market; or sell the company outright, often a painful choice for entrepreneurs like Kim and Coup who just aren't ready to give up their baby.
For years, the foundation of Timberland's success had been the yellow work boot that Jeffrey Swartz's grandfather, Nathan Swartz, had created. Some of that success had arrived unexpectedly. Not only did tradespeople and farmers take to Timberland's boot, but starting in the mid-'80s, city kids had begun to adopt "Timbos" as an accouterment for baggy jeans. Not surprisingly, this unanticipated but explosive growth market left Timberland execs a little uneasy; they hadn't intended to be in the fashion business, and they knew that at some point their boots would cease to be cool. That's why Swartz went to Boulder and why the company decided, along with other portfolio-building strategies, to go after the outdoor performance business--the market for footwear, apparel, and gear for athletes who like to hike, run river rapids, and run on forested trails 10,000 feet up.
But when it came to selling shoes and boots to extreme athletes, the Timberland execs were novices pitted against far more experienced competitors. REI women's sock and footwear buyer Denise Friend, a 34-year veteran with the 90-store outdoor chain, has bought almost nothing from Timberland in recent years. And that's a big deal because REI is the elephant in the market, buying well over $100 million worth of shoes and socks annually. "Other people have really raised the bar for performance footwear," Friend says, referring to brands such as Salomon, Vasque, and Montrail. "I don't believe that Timberland has kept up."
It would become part of Ken Pucker's job to solve that problem, in part by going after some of those brands Jeff Swartz had never heard of. Pucker had been fresh out of business school when he got a job at the consulting firm Bain and Co. He lasted nine days before the company laid him off. In spite of his brief tenure, he absorbed one statistic that governs much of what he does today: The majority of acquisitions destroy value. Despite an abundance of natural enthusiasm, he likes to move carefully. Timberland's first acquisition was SmartWool, a profitable Steamboat Springs, Colorado, sock maker with some $40 million in revenue. The company's soft merino wool ski and biking socks had made SmartWool a big name in the sports specialty stores that Timberland hoped to crack. At first, Timberland simply licensed the SmartWool socks for use as lining in a new set of washable shoes called Power Loungers. But Timberland isn't wild about licensing deals. That's because they expire and because, if the product succeeds, the company with the asset--in this case, the sock--has the leverage. Ultimately, in November 2005, Timberland bought SmartWool for $82 million, double the company's annual revenue.
While Pucker was looking for acquisition targets, Timberland was also attempting to build its brand portfolio by inventing new products internally. For example, the company invested well into seven figures to build a new brand of "amphibious" shoes for water sports enthusiasts that it dubbed Mion (pronounced my own). It also turned loose a burly engineer named Doug Clark, an ebullient man with a shock of curly graying hair and a booming voice who was in charge of Timberland's multimillion-dollar Invention Factory.
