In the late 90s, at the height of a skateboard boom and economic prosperity, World Industries was the biggest skateboard company in the world.
The creation of several cartoon characters, Flame Boy, Wet Willy and The Devil Man catapulted sales and at the company’s peak in 1998, they sold it for $29 million dollars. Not only were they the first skateboard company ever listed on the stock market, but to this day, it remains one of the biggest sales in skateboarding history.
Wanting to understand how a skateboard company with such a controversial and unconventional background could sell for such an astronomical amount of money, I tracked down the financial head honcho at the time, Scott Drouillard to get some insight. As the CFO of World Industries in the 90s, he gave us an inside look of arguably the most influential and notorious skateboard company of all time.
How much money was World Industries making during the years you worked there? (1996 – 1998)
For the years I was there… I think the gross sales were like $12 million, $18 million, then we hit $25 million, and finally we were approaching $30 million at the time we started to sell majority interest of the company. We were showing a decent amount of profit too and finding lots of ways to reduce cost and overhead while still putting out better quality product.
How did you start working for World Industries and what was their financial situation like?
I came on board in January of 1996 as CFO and had a contract, saying I wanted to get some ownership, and they were open to that. World Industries was basically Steve Rocco, Frank Messman, Rodney Mullen, Marc Mckee and myself. Those 5 really. When I went over there, there was so much to do as CFO, it was just a complete fucking mess.
I came on right when Marc McKee designed the new World Industries logo. Steve loved the Devil Man character and wanted to build the company around it, and it really took off from there. Starting with Devil Man, Flame Boy and then Wet Willy, it was just insane how the logo boards started selling. I mean we had skaters like Kareem Campbell and Daewon Song on World Industries, the biggest names, but the logo boards were still selling at a much higher rate. They were in such high demand that we were able to raise the prices of the logo boards to the same price as our pro boards and we didn’t have to pay any royalties to the riders too. It all really started to take off around that time in 1996. World Industries was going crazy.
Besides the World Industries Devil Man and character boards, what else was a hot seller back then?
Blind jeans were selling better than any other apparel product we had by far. We even sold out of the Blind jeans that were called “Fucked Up” because we had a run of jeans that got ruined in production. Literally, they were fucked up. It was an accidental marketing gimmick, like, “oh, this shipment of jeans is fucked up. Let’s just write fucked up in there.” Even though they were defect, we sold out. People loved them.
Is it true you guys would sometimes flip a coin to make big business decisions?
Yeah, we would literally do that. If we all weren’t sure what to do, we’d do it the “good old fashioned way”. I’m not kidding you. We tossed coins when we were getting sued by the Hells Angels because we did an board of the Devil Man with Hell Angels imagery in it. We had to go to the meeting to see if we could resolve it so Steve Rocco, Rodney Mullen and I all flipped coins. Whoever got the off coin would have to go to the meeting! I was the one that lost though [laughs]. We would bet on almost anything. We had a miniature golf course set up we’d bet shots on. We’d play speed chess too, those guys were so good at chess. We’d bet on speed chess during work often.
Tell me about what it was like working with the infamous Steve Rocco.
Steve was basically a big kid. He loved the challenge of someone being like, “I bet you can’t do this!” That was just the kind of stuff he liked to hear. That’s how he created World Industries, basically, just being told it couldn’t be done. Steve was really the guy who was like, we can all win. He really did really wanna work things out between people despite what everyone says about him being ruthless and backstabbing, he really wasn’t that bad. He’d only do it if you did it to him. If you fucked with him he’s gonna fuck with you. Period.
At the time World Industries also owned the infamous Big Brother magazine, which it sold to Larry Flint in 1997.
Were you involved in the selling of the magazine?
Yeah, that was just a nightmare. World Industries owned 75% of the magazine and Marc McKee personally owned 25%. Basically the magazine was draining World, it was losing money. Those guys were completely out of control. Steve Rocco wanted to cut Big Brother off and basically sink the ship because he was so mad at those guys. But I told him I thought I could sell it and he goes, “yeah right dude! You’re fucking crazy!”
I packaged it together and we ended up selling the magazine – well, losing money on the magazine overall but we got it off our hands. In the sale I also negotiated that we would get things like back covers and front covers, and prime ad space for all of World Industries’ brands for the next 5 years. So we got that off our hands and then we got super cheap ad rates, and then the best positions in the magazine. We ended up selling for $600,000 and running to the bank and cashing the check before they figured out what they had. It was a really huge win.
How did you come up with the $600,000 selling price for Big Brother?
We moved some numbers around and tried to reduce overhead and lower all the costs so Big Brother appeared to break even and had huge potential when you looked at it compared to Transworld and Thrasher or Slap. With projections we could almost show that it broke even without increasing subscriptions, so it had huge potential from the financial standpoint.
We used an accounting firm where one of the guys had an in with Larry Flynt, and at that time Larry Flynt was looking at expanding out of porn too, so it seemed like it would be a good fit.
Fortunately, they were the only ones who expressed interest in Big Brother and who liked it.. They came up with an offer of like $350,000 and I declined. Steve Rocco went crazy on me, screaming, “what the fuck are you doing!!?”
But then Larry Flynt came back with another offer of $600,000, paid over time. Steve brilliantly had the idea to discount it, you know? Get money up front. We’ll take a 10% discount off of the thing if they pay us the whole amount up front instead of over three years. So I told them, you guys pay us $540,000 right now and that’s that. And so we literally went to their bank and cashed the check before they realized what the fuck they were getting into [laughs].
What were some innovations you made at World Industries that changed the skateboard industry?
We made so many changes.. For instance, I made it possible for all our riders to get health insurance and that was unheard of at the time. Nobody else did that in the industry. Steve Rocco created the industry standard of royalties too, giving riders $2 per board if their name was on it.
Another big change was when I got to the company, the whole industry was based on Cash On Delivery [COD] through UPS, or cash up front. Well, we introduced credit across the board, which gave us a big competitive edge. In a very short period of time we extended credit to a lot of the shops and companies who never had credit before. This also helped our sales, and of course our competitors who weren’t as financially stable as us would have to follow suit. It definitely hurt our competitors, it shocked them too because the smaller companies couldn’t afford it or know how to do it. They had to try to hire people like me to try and figure it out.
They had to try to get people who were kind of equal to our business side. When you looked at Frank Messman, Steve Rocco, Rodney Mullen and myself – there was no management group even close to ours. We really were the best in each of our categories. We were also the first company to give our employees stock options before the final decision to sell the company early 1998. We just had a lot of advantages.
Why did you decide to sell World Industries in 1998?
In 1998, World was the #1 brand in the world and Blind was #2. We were just killing it. All of us had invested all of our wealth in this company, and there were three big factors. One, the overall economy and stock market was at a historic high, going off the scale. Two was our industry… Our industry was blowing up! And knowing it goes in cycles, about 10 year cycles, we knew we were really at the explosive peak of it. Lastly, is how we were managing the company. We were hitting home runs like 3 out of 4 times, and you can’t be expected to continue hitting home runs like that forever.
So if the economy goes down, we’re fucked. If the economy is OK but the skateboard industry cycle goes down, we’re fucked. If we just start managing things wrong and start messing up, we’re fucked. So we all decided to market the company for sale. We put it out to everyone, to investment bankers, private equity firms and hundreds of prospective buyers. As it turns out, after all of it, we only got one single offer. One.
They gave us an offer of $29 million dollars for 70% of the company. So we end up doing it and after all the negotiations, loans, contracts, earn-outs and employment contracts, we ended up with millions in our bank accounts in October of 1998.
I remember this vividly, the day of the sale Steve had his Land Rover and it was after hours and for some reason he couldn’t pay to get out of this parking lot. The sign wouldn’t go up. After a while he goes, “fuck it who cares, we’re millionaires!” and then drives right through the wooden stop sign.
”We ended up with millions in our bank accounts in October of 1998″
After you sold World, what did you personally spend most of your money on?
The stupidest stuff in the world. Not only did I have a super nice car, which I didn’t regret buying at that time, but I mean honestly, I was buying almost anything I wanted. If you get a couple million dollars real cash, after taxes, your life changes. I spent over $50,000 taking a month off and going all throughout Europe, all first class. I did things that I felt like even if I became broke in the end, I would never regret spending the money that way. I traveled anywhere I wanted with my wife and daughter.
Every year for a few years after we sold World we’d all get together and celebrate on the night of the sale. I remember when I discovered eBay and I bought swamp land in Florida right off of eBay… It was crazy. I mean just imagine what you would do?
Do you think the skate industry life cycle is just natural, or are there other major factors that come into play?
I think it does go through natural cycles and that may change in amount of years per cycle. But skateboarding is definitely here to stay. Even back then, it used to have a criminal image at some level, but it’s certainly not looked that way anymore. It’s completely normal, the parents are now like, “I’m glad you are doing something productive and skateboarding!”
If skateboarding is bigger than ever and here to stay, why are many companies doing badly?
One of the reasons maybe is because for some reason skateboarding isn’t an obsession like it once was. When we were building World Industries in the mid / late 90s it really became a huge obsession – hardcore skaters and casual skaters were all competing against traditional sports. I also think there were people like us who were making shit fun. There just doesn’t seem that same kind of edge or attraction that really makes people wanna be a part of it anymore. If you’re not making something alluring, cool and fun that you want to represent or be a part of, then you’re done. I mean that’s what branding is about. Why do we wear any brands? It’s because we want to have an identification or affinity with them.
I don’t think there’s that same type of creative excitement now, and partly because after we sold World Industries, lots of other skateboard companies like DC Shoes, began to be bought out by bigger companies too. As a result, the industry started to become full of all these bigger traditional companies that don’t have the same renegade feel to them. The same freedom isn’t there. Things that we did at World get eliminated because there’s so much fear of mainstream repercussions, which I think is what’s going on now. Kids like shit that is against all of that, it represents them.