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Details on Industry Insight.
So I trekked down to La Jolla and talked to Fernando about all sorts of topics. He has many interesting things to say about life, business and the action sports industry. So much interesting stuff that I'm going to break our interview into installments and share it with you over time.
First, some background. Fernando and his brother, Santiago, founded the Reef sandal company in 1985. It grew to well over $50 million in revenue (that's an estimate. Fernando would not disclose numbers) and the brothers sold 80 percent of Reef to financial investors in 2002.
VF Corp. bought Reef for $188 million in cash in 2005, according to VF's company filings. The Aguerres sold their remaining 20 percent at that time.
When VF bought Reef, VF reported that Reef logged $75 million in revenue in 2004.
I'd say all of the above definitely qualifies Fernando to share his business wisdom. Here it is:
"It's very, very hard to make money betting on the horse that everybody knows is going to win the race. Most of the times opportunity doesn't rest where everybody is.
Santiago and Fernando Aguerre
"A lot of things we did with Reef were very much contrarian. Looking at the print media in surf mags in the USA, it wasn't much different from the editorial content. It was the same guys, doing the same maneuvers, wearing similar bathing suits, similar wetsuits and the photos taken mostly by the same photographers. I thought, ‘This is like a gay magazine.' Most of the guys' magazines have things that guys like, and most of the guys like girls, but not in the surf mags.
"That's when I thought, ‘These surfing mags in the United States are missing sex.' The last time I checked, sex is an important driver of human beings. All the brands were going in one direction, so we decided to go another. We needed to bring sex into the sport. That's when the Reef Girls came into place. We actually placed the first Reef Girl ad in late 1990.
(There was some initial resistance to the ads, which showed girls wearing thong bikinis lying prone on the beach.) "But I told the editor of one of the mags, if you don't let me run the ad, I will run a black page with white letters inviting readers to buy the other magazine to check out the censored ad. They called me back in 30 minutes to tell the ban on the ad was lifted.
"The girls became part of the Reef DNA. The magazines realized sex was good for revenues and for the publications, and readers told us in thousands and thousands of letters, there were happy, too. So, being a contrarian could bring a huge ROI.
"Most of people who do really well, they are initially called lunatics, reckless. It's just the way mankind moves forward."
"I think there's a lot to be said for having partners, or at least a partner. In my experience, and I've been in a lot of different roads in life, I've always had a partner to team up with. It's very lonely at the top. You have a much higher chance of failure in decisions if you are alone. Some people might not agree, but that's what I've seen.
"The other thing is that when you do it with somebody else, the sharing of the difficulties and the sharing of the rewards are much more fulfilling.
"Say you do something for many years, and it comes to a closing. You're not going to look back and see how much money you made. You are going to look back and see if you had a good life. If after the business is over, you still would like to hang out with your partner, go for dinner, go surfing, go on a trip, then it was the right partner. I think in modern capitalist society we're all inclined to put career and the money-making ability of any job above and ahead of anything else. I think that's a misguided way to approach life."
"Whether it's employees, employers or partners, surround yourself with people you can trust. Not doing that will be just too time consuming, too energy consuming. In the world of personal relationships, feelings are an important motivator. In the world of business, there are more interests involved.
"But I think also in business, you should not just decide based on business interests. Maybe it's because I'm a Latin, and it's the way we were raised, our hearts have always been part of our lives. My brother and I, in 20 years of business, we never did business with anybody we didn't like. You know what, you are going to spend your life with these people, they might as well be nice. People that would be good examples for your kids, that you could say, ‘I'm in business with this guy' and be proud of it."