Steve and Dave Jolliffee realized that driving ranges lacked feedback. Golfers need feedback to improve, so they created a way to get feedback.
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, but well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
[Seaside Plumbing Ad]
Dave Young:
Welcome back to the Empire Builders Podcast. I’m Dave Young. I’m sitting here with Stephen Semple. Well, actually, I’m not sitting here with him. I see him. He’s on the screen.
Stephen Semple:
We’re virtually together. Virtually.
Dave Young:
This is an international podcast.
Stephen Semple:
It is, actually. It is actually very good.
Dave Young:
By the way, I know I think the He-Man episode has dropped.
Stephen Semple:
Yeah. Yeah.
Dave Young:
The artwork that Matt Burns or whoever did it for that one.
Stephen Semple:
Yes. Matthew did it.
Dave Young:
Yeah, that was great. He sent me that.
Stephen Semple:
Actually, the one that I really like was the one that he did for PT Barnum. I thought that that was fun, where you’re the guy hocking the tickets.
Dave Young:
I haven’t seen that either. He sent them all to me. For some reason, he sent that one to me. I should probably subscribe to this podcast and listen to it. Anywho, Steve. So, Stephen whispered in my ear the topic that we’re going to cover today, and it’s actually one that I sent him.
Stephen Semple:
You actually whispered in my ear.
Dave Young:
Yeah, I did. I kind of did. I was surprised that you were ready to do it. And it’s the story of Rose Blumpkin and Nebraska Furniture Mart. She’s one of my local heroes back in my home state in Nebraska.
Stephen Semple:
Sorry, that’s not the one we’re going to be talking about.
Dave Young:
Oh, sure.
Stephen Semple:
You sent me another idea. That one, I’m going to do, but I don’t have all the research on it.
Dave Young:
Okay. So we have to start all over.
Stephen Semple:
No, or we could just keep going with this, Topgolf.
Dave Young:
Oh, right. Yeah.
Stephen Semple:
You also sent me… You want to just keep going with this?
Dave Young:
So now people know that we’re going to talk about Rose Blumkin at some point.
Stephen Semple:
Yes. Yeah, sure.
Dave Young:
That’s a cool story. You just want to make me look as scatterbrained as I really am. So, Topgolf.
Stephen Semple:
Authenticity. We’re just going for authenticity here.
Dave Young:
Yeah. So, Topgolf. I just thought we were talking about this other thing that I sent you. So yeah, I’d love to talk about Topgolf. So both of these businesses, since we’re not talking about Rose Blumpkins, I’ve been to each of them one time.
Stephen Semple:
Okay.
Dave Young:
My experience level is X equals one. Sample equals one size.
Stephen Semple:
Okay.
Dave Young:
But I saw the story about Topgolf or it was a video, wasn’t it?
Stephen Semple:
It was a video that you sent me. Yeah. Yeah. Yeah. It was super interesting and so much so that I ended up, as soon as it was done that night I had some time. I did a bunch of research, wrote it up and said, “We’re going to cover it,” because it’s a very interesting story.
Dave Young:
To me, if you want the TLDR version of it, the guys that started Topgolf thought they were in the golf business.
Stephen Semple:
Yes.
Dave Young:
No, they weren’t.
Stephen Semple:
No, they weren’t.
Dave Young:
They had no idea what business they were in.
Stephen Semple:
And this is the reason why I wanted to talk about this. So this is an idea, Dave, that you suggested to me. And when I looked into the history, there’s a couple of twists in this that I thought were super interesting that every business could learn from. And yeah, the story of this is that they didn’t really understand what business they were in.
And when they found out what business they were in, they became super successful. And then the company that bought them lost sight of what business they were in and failed. It’s this crazy thing. So before we get into that, I want to hear about your experience at Topgolf because you went there and you’re not a golfer.
Dave Young:
No, I’m trying to think of who we went… It was a work thing I think.
Stephen Semple:
Perfect.
Dave Young:
And that’s typical, right? It was a bunch of us from work. It was actually a super hot day here in Austin, but they have giant fans blowing on you.
Stephen Semple:
Yeah.
Dave Young:
They’re the kind of business where, I don’t know. There’s lots going on and they’re pulling money out of your pocket all different directions. Right?
Stephen Semple:
At their heart, they’re a driving range. And it was started. The first Topgolf was built in Watford, England in 2000 by two brothers, Steve and Dave Jolffi. And these guys were golfers, tinkers, problem solvers, but they were not backed by big money. They were not from the golf industry and they were not tech guys. They were just two guys went to a driving range and saw a problem.
Dave Young:
Yeah. They’re like, “I don’t know where my ball went.” Right?
Stephen Semple:
Right. Start off with the problem of golf lacks feedback. So when you go to the driving range, you’re practicing, yet you don’t know how far the ball went, how straight it went, nothing, no feedback.
Dave Young:
Yeah.
Stephen Semple:
So over the course of three years, they played around and figured out how to embed a chip inside the golf ball. Remember, this is pre 2000, pre iPhone, pre all of that. The whole idea of something being able to track the speed of something really new, right?
Dave Young:
Yeah.
Stephen Semple:
You got to remember that. So the goal was to track every shot. The other thing they needed to figure out was targets that could take impact and speed and a system that translate this and the scores and make it durable enough to do it outdoors. So, 2000, Watford, England, it was ahead of its time. It was kind of cool and no one cared.
Dave Young:
Sure.
Stephen Semple:
Traditional golfers didn’t see the point. Non-golfers were not drawn in. It was not quite a sport. It was not quite entertainment. It stood for nothing. Being different does not equate into being desired. Being cool doesn’t equate into being desired.
So they had to ask themselves this question. Why is this not catching on? So here’s what they did. They reimagined the entire environment and experience. They created covered base, so the weather didn’t matter. They put in lounge style seating, driving range. You can kind of all sit together.
Dave Young:
You could go with your friends. Yeah.
Stephen Semple:
Make it social. They put food and drink in. So people stayed longer. They put music in energy. It now became fun. Suddenly, it was a place to hang out. It was a night out. People came in groups. Non-golfers like Dave Young came.
Dave Young:
That’s right. And so you think about a driving range and it’s like going fishing. That’s interesting. It’s solitary. It’s, I’m going to go hit a bucket of balls. And usually what that means is I’m not necessarily working on my game, I’m just going to get inside my own head and process and think.
And if you just do that on a park bench, people think you’re stalking. It reminds me of Thomas Edison. He used to walk down to the end of a pier near his office and sit on a bench with a fishing pole and he never had a hook on it. He would just sit there with a fishing pole and people would leave him alone because he’s fishing.
Stephen Semple:
Because he’s fishing. That’s interesting.
Dave Young:
Versus if you go stand on the end of a pier without a fishing pole and you’re standing there for hours, people will start to wonder what you’re thinking about, what’s your plan there. So driving range versus going with a bunch of friends to a “driving range,” two different things.
Stephen Semple:
Well, and here’s the other thing is a non-golfer doesn’t want to go out on a golf course because that’s hit the ball six inches, hit the ball. But to a driving range, sure, because it doesn’t matter. It doesn’t go anywhere you sit down, the next person hits.
Dave Young:
Yeah. It’s just a new version of putt-putt, right?
Stephen Semple:
Exactly. So this created this environment where you didn’t really need to know how to swing the club to have a good time. It turned a driving range into a social outing. It became entertainment, not sport. So enter Eric Anderson from West River Group, private equity company.
Eric came across this idea and thought it was perfect for the US market. They invested a bunch of money in the company, took it to a new level with high-end restaurants and bars. And then in 2005, they opened a location in Texas. And it was a crazy hit. When it opened, there was hours long lineup. It was nuts.
By 2010, it was a cultural phenomena. It was a hit with millennials. And this is a big deal because in 2010, golf is in a decline and it’s not attracting a younger audience. So suddenly, you’ve got this driving range, which is attracting all these people and it’s attracting millennials. In an October of 2020, during the pandemic, Callaway who had been actually an early investor in this, Callaway announces they’re purchasing the remaining 86% for $2 billion.
Dave Young:
And so here’s the thing, Callaway’s in the golf business.
Stephen Semple:
Hold that thought.
Dave Young:
Yeah.
Stephen Semple:
Hold that thought. Hold that thought. Yeah. No, seriously, hold it because yes, you’re right. Callaway’s in the golf business and Callaway’s looking at this and going, oh my God-
Dave Young:
Here’s the future of golf.
Stephen Semple:
… the group that we’re trying to attract. Here’s the future of golf. Not only did they buy Topgolf, they rebranded Callaway to Topgolf Callaway. And initially, there was a bump in sales of Callaway stuff because they had to also supply the clubs and the balls to these venues. And they were expanding the venues like-
Dave Young:
Why would they have any other clubs?
Stephen Semple:
Right. And they were expanding the venues like crazy. And they launched new products like quantum drivers and Chrome tour balls, things that were fun, right? Fun. Because they would put those fun things into the driving range, into the Topgolf driving range, and people would love it. So they thought this would be a fun thing to take to a golf course.
Dave Young:
But?
Stephen Semple:
Here’s the core problem.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Using Stories To Sell]
Dave Young:
Let’s pick up our story where we left off and trust me you haven’t missed a thing.
Stephen Semple:
Here’s the core problem. Callaway’s in the sports business and this was an entertainment venue.
Dave Young:
That’s right. That’s right. Just because I went to Topgolf once doesn’t mean I ever went back to a driving range. I used to golf. I used to golf.
Stephen Semple:
Right.
Dave Young:
And a driving range was always… It was a good introverted experience, but I wasn’t any good at golf. And I bowled for a while too, and I quit both sports the same year because my average was the same in both.
Stephen Semple:
So the bowling average was pretty good.
Dave Young:
You think about that, right? Low hundreds in both sports is no good.
Stephen Semple:
So the interesting thing, because again, initially, the numbers looked good, they launched all this stuff. It looked great, but beneath the surface, the synergy was actually a financial illusion because the core problem is Topgolf was an entertainment business. Topgolf was a restaurant and a bar with a driving range attached. Topgolf was not a driving range with a bar attached.
Dave Young:
I wouldn’t even-
Stephen Semple:
Millennials who came out… Yeah. The people who came out and swung a club, it did not convert into people going to the golf course and buying Callaway equipment.
Dave Young:
I think it’s a stretch calling it a driving range. I think it’s-
Stephen Semple:
Fair enough.
Dave Young:
It’s an electronic game that you use golf clubs and golf balls to try to score and win and play.
Stephen Semple:
Fair enough.
Dave Young:
I don’t think anybody… Well, maybe people-
Stephen Semple:
Would I’ve not been to one. I only saw pictures of it.
Dave Young:
Maybe people that go to Topgolf will go to a driving range to practice. I don’t know. I don’t know. The problem Callaway had was they weren’t converting people into actually going to a golf course.
Stephen Semple:
Correct.
Dave Young:
And buying golf clubs.
Stephen Semple:
Right, because they saw the business wrong. And what ended up happening, the business started actually declining because even the changes that they started making to the facility was through the eyes of a golfer and this being a sport, not this being entertainment. Now what ended up happening is when it all spun apart, Callaway ended up offloading the business to Leonard Green and Partners for basically a billion dollars. So they lost it.
Dave Young:
They lost a bit of dough.
Stephen Semple:
Well, they lost a billion on the purchase. And in addition, they had invested a ton of money in building these things out. This was a huge loss for Callaway.
Dave Young:
And so the thing that they misread was thinking that this was the future of golf and we’re going to sell a lot of clubs because of this. We’re going to sell a lot of clubs, all the things that we manufacture for the golf world. And I think of the golf world, and I think of almost like a white shoe law firm. I don’t think the people that spend big, big money playing golf or spending big, big money on Topgolf or vice versa.
Stephen Semple:
Well, there may be-
Dave Young:
If you’re a scratch golfer, you could go to Topgolf and clean up on your friends.
Stephen Semple:
Well, what I’m going to say is people who are already golfing would go to Topgolf because it’s fun. People who aren’t golfers who go to Topgolf are not going to suddenly become golfers. And that’s what Callaway thought was going to happen. All golfers will go to Topgolf, but not all Topgolf people will become golfers. And what I find that’s so interesting about this-
Dave Young:
Golf was the entry point for Topgolf, but Topgolf turns out is not the entry point for golf.
Stephen Semple:
Great.
Dave Young:
Yeah.
Stephen Semple:
So the thing I find that’s really interesting about this, Steve and Dave, the founders, initially failed and became successful when they changed how they looked at the business and said, “This is an entertainment business. This is not a golf business.” Then Callaway buys it thinking it’s a golf business, not an entertainment business, and the whole thing spun apart.
And I sit there and I go, “This is where understanding a history of a company is so important.” If Callaway had asked Dave and Steve one question, “What was the insight you had that made this successful?” And they said, “This is not about golf, this is about entertainment.” And if they’d listened to it, the outcome of this would have been really different. The DNA of the business was that lesson that was then ignored by the acquirers.
Dave Young:
It was Margarita’s and hot wings.
Stephen Semple:
Yes.
Dave Young:
It was hanging with your friends. It was a different version of a pool hall. It was a different version of a bowling alley or-
Stephen Semple:
It’s a different version of David Busters.
Dave Young:
Yeah.
Stephen Semple:
Yes. It’s a different version of all those things. That is the environment in which they were operating.
Dave Young:
And I think if you take it just even at a slightly deeper level, it’s an extroverted golf experience.
Stephen Semple:
Yes. Yes.
Dave Young:
There are many, many golfers who golf to get away from everyone.
Stephen Semple:
Yes.
Dave Young:
Right? There are some that golf to be with their buddies or for business purposes or whatever. But I know so many people that will golf by themselves early in the morning. You couldn’t drag them into a Topgolf because just loud rock and roll and-
Stephen Semple:
Here’s where you could drag them into a Topgolf if you said, “Hey, let’s do a corporate retreat. Let’s do a team building thing. Let’s do something.” Because your choice is this. You can go to a restaurant, you can go to a bar or you can go to this thing where you do something together as a group of people. And frankly, that ended up being a lot of the Topgolf business was that exactly.
Dave Young:
Oh, sure. It might’ve been Julie’s work. I don’t think it was Wizard Academy. We thought about doing a Christmas party at Topgolf and then we just decided that’s too much money on stuff that none of us really like anyway. But it’s an outing.
Stephen Semple:
Right. But it’s an outing and it’s say you had an office where half the people were golfers and half weren’t. It was a way better outing than going to a golf course because everyone would now have fun.
Dave Young:
Yeah.
Stephen Semple:
So here’s the lesson. I want to leave our listeners with a lesson here because here’s what I think it is. If your business is struggling a little bit, sometimes you have to really understand what is your business. Jewelers who sell engagement rings are not in the diamond business. They’re in the connection, love, commitment business.
If you are in the marriage business, you’re in the commitment business, you’re in the love business, you’re not in the sparkly diamond business. And to me, this was the most interesting example of looking at it going… And one could say, “Well, sports entertainment, kind of the same.” No, they aren’t. They live in different places in the human mind and are thought about differently.
And when you’re considering doing something are in completely different worlds and you need to understand the business you’re in. Because that was the only thing that changed. The only thing that changed was that discovery that made them successful and the loss of that discovery that blew them apart was that one thing.
Dave Young:
And I think they’re still doing well, right?
Stephen Semple:
Oh, they’re actually doing well because the private equity company that bought them, guess what they knew?
Dave Young:
Entertainment.
Stephen Semple:
Like bought it from Callaway. What freaking business they were in.
Dave Young:
The two guys that invented it, right? A casino group would have been a better purchaser than Callaway.
Stephen Semple:
Well, yes. And if you actually take a look at-
Dave Young:
Callaway never should have bought it because they didn’t-
Stephen Semple:
Callaway should never bought it. And the company that bought it actually has a lot of entertainment businesses. So it’s going to do great.
Dave Young:
So the two guys that founded it, how much that Callaway money they walk away with?
Stephen Semple:
I was never able to figure out how much of the Callaway money that they walked away with other than they did very, very well and went on to invest in some other businesses.
Dave Young:
They’re doing fine. They’re doing fine.
Stephen Semple:
They’re doing fine.
Dave Young:
They’re living a good life.
Stephen Semple:
Rumors have it because I wasn’t able to find exact numbers, but rumor has it that… Because remember, they got two payouts. Payout number one was a private equity company bought them. I was never able to find out for how much. They still had ownership in the Callaway. Rumor has it that they walked away with a billion, something like that.
Dave Young:
I’d split a billion with you, Stephen.
Stephen Semple:
Yeah, there you go. That there’s some walking around cash. Yep.
Dave Young:
All right. I got an idea for us. All right. Are you in? Just say if you’re in, because this is a new business idea.
Stephen Semple:
Okay. There we go.
Dave Young:
Top bowling. You throw a bowling ball as far as you can and try to hit a target.
Stephen Semple:
Yeah. You know what? The targets would have to be really close.
Dave Young:
Yeah. There’s margaritas, there’s hot wings, burritos.
Stephen Semple:
Yeah. Alcohol and throwing bowling balls. I don’t know if should go together.
Dave Young:
I’m just saying. Live targets. Wait, that’s not a good idea. Well, next time you’re in Austin, maybe you and I should pop on over to Topgolf and have some hot wings.
Stephen Semple:
Done. Let’s do it.
Dave Young:
All right.
Stephen Semple:
Let’s do it. Awesome.
Dave Young:
Thanks for telling the story at Topgolf. I look forward to hearing what I have to say about Nebraska Furniture Mark at some point.
Stephen Semple:
All right. Awesome.
Dave Young:
Thanks, Stephen.
Stephen Semple:
Thanks, David.
Dave Young:
Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big, fat, juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute Empire Building session, you can do it at empirebuildingprogram.com.
