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Old 03-22-2005, 11:11 PM
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MasterCraft's X Man: An Interview with CEO John Dorton

Article courtesy of WakeWorld

Since wakeboarding began, MasterCraft has been one of the most influential companies in the industry. They've gotten that way via relentless product innovation and continued investment in the sponsorship of some of the biggest events and best athletes in our sport. MasterCraft's 2003 introduction of the latest generation X-Star shook the industry and continues to be one of the most talked about moments in wakeboarding history.
Leading the charge for MasterCraft is their top dog, John Dorton. Since joining the company seven years ago, Dorton has been a major factor in their success. WakeWorld recently had the opportunity to talk with John about some of MasterCraft's recent developments, past accomplishments and plans for the future.

WW: How did you get into the boating business and end up at your current position?
JD: That's an interesting question. I had a boat even before I had a car as a kid. I just loved everything about water sports, from fishing to skiing. I had a little blue body board that I would get dragged around on. It was like a precursor to wakeboarding, but way before the Skurfer.
Then I got to college at University of Tennessee and found out there was a waterski club. That was kind of cool, so I went out and they had orange and white metal flake MasterCrafts. That was the neatest boat I'd ever seen. This would have been about 1979 or '80…at least a 1980 model. So I joined the ski club and started skiing competitively at the college level. We were never a powerhouse, but I would redirect my classes just so I was able to maximize my ski time.

I just fell in love with MasterCraft at that point as well as waterskiing, so I set my sights firmly on MasterCraft at that time. I actually wrote a term paper on where do you want to be in five years. I wanted to be the marketing director of MasterCraft.

WW: Is that what you were studying, marketing?
JD: Yes, marketing major. I missed the five-year mark, but kind of overshot my career goal once I got here.

I kept looking at the position whenever it was open, sent the former president resumes, but there's not a lot of turnover here. I get the same types of letters now from college kids and I try to answer each of them directly because it took me something like 13 years, no 16 years, to get here. Well, thirteen after I graduated and sixteen years after I started thinking about it.

So I happened to see an ad in the paper of all things. That was back in Knoxville. At the time I was involved in a very successful career in the home fitness industry, but I still had my heart set on MasterCraft. So I came back and saw an ad for a marketing director, which shocked me that they would go to the local paper. So I fixed up a resume, really ran it through Pagemaker, Photoshopped my name in behind the wake of the boat and…just went all out. I got nervous that maybe the mail carriers would lose it or something, so I actually sent two.

Anyways, short story long, I got an interview. My first interview was six and a half hours long, so that's probably a pretty good sign. My second interview was four hours and I said, "Look, I'm the guy. So to hit this thing running right now, why don't you just let me write you a marketing plan before you even hire me? That way you'll know what kind of guy you're getting and none of us will be wasting our time going forward."

So I did and there were about 11 initiatives, 10 of which are still vital to the business today. One of them was launching into the wakeboard market and from that we started the X Series. Another piece was to reposition the MariStars against the I/O units that are out there today. So we did that and a few other related initiatives as well.

So I got the job and did that for about a year and a half and they were doing a CEO search at the time. I really didn't know I was a candidate. I started to warm up to the idea, but, at that time, we were owned by Meridian Sports out of New York. The chairman came in one day and said he was going to announce the new President and I was as surprised as everyone else.

I was kind of kidding with my wife because there was some talk that it was going to be me around and I said to my wife, "Okay, if I call you up and say 'Geronimo'," because that was our password, "then that means I got it." So I called her, because they gave me like 15 minutes to transition from marketing director to CEO, and said "Geronimo" and she'd forgotten the password. It was sort of that far off her radar even. I said, "No really. Geronimo!" She goes, "No, serious." And I go, "No, I'm serious!" and started right away.

I think it's having a passion. When I was marketing director, to me marketing is everything about your business. So I got in and was rolling fiberglass, trying to understand the finances, how they handled the floor plan, trying to understand loading and what the delivery of the boat was like, trying to understand the dealers' perspective. So in doing that, to create better marketing, in a round about way I educated myself to be a CEO.

That's seven years ago or so and looking back now, I've come a long way. I knew I didn't know all that much back then about running a business. The market was right, the product was right and it's just been a good opportunity to grow with the industry and grow with this company.

WW: So what do you do on a day-to-day basis now?
JD: In my capacity, really my purpose is to set the vision and make sure it is executed. I've got certain governance responsibilities such as overseeing budgets, expenditures and things like that. So I set the vision. There is a vision statement company wide, which touches every part of the business. I'm always putting product first and continue to do so. So I'm very involved in the day-to-day product development.

I keep a keen eye on all the other functions: departments, sales, marketing, purchasing, parts department and certainly manufacturing. I look at efficiency reports, financials for the day, continue to maintain good relationships between myself, the bank, investors or whoever else.

WW: Of all that, what is your favorite part of your job?
JD: Product development. As a matter of fact, today I'm going to go out and ski. It's about 72 degrees air temp. We're lucky. The water temp is probably in the 40's, which is pretty cold for us, but we got a new boat that comes out in early 06' and the wake's just exciting on it. It's not even a direct drive. It's a V drive, but the ski wake looks phenomenal. So I'm going to get out and ski it. I love doing that.

I certainly don't have all the answers. Fortunately, we got a tremendous team that does. But I like to oversee and make sure we have the right products coming out in the right measure and that we're pushing as much as we can and taking cues from styling and performance that are beyond our industry.

I spent a lot of time at the Detroit auto show studying the fashion trends, color trends, things like that because we have a very high-end customer to delight with our boats. A lot of our boat prices now are in excess of some of the luxury cars and so it's a very discerning buyer and we want to make sure we're giving them all that they want to get excited about making a purchase like that.

We've also got to be true to the performance of the product. So the 190 and 197 have to be world-class water ski boats, and we define that as having current world records. Not only being able to pull the Wade Coxes and Andy Mapples of the world, but also Girls I and Girls II and some of the junior skiers because some of them need a very soft wake all the way across.

The X-Stars have to be the ultimate wakeboard boat and every generation of the X-Star will be that. There was a fairly big shift between the last X-Star, which was originally the 205V, and this current X-Star. That's because this sport evolved more with people doing bigger boats, taking a bigger crowd out. They were looking for a more extreme wake than the earlier wakeboard boats gave. So whatever the definition of the next generation ultimate wakeboard boat, that's what the new X-Star will be whenever we come out with the next one.

WW: I heard that MasterCraft is employee owned. What does that mean?
JD: Actually, it's not employee owned. Actually, no one in our industry is fully employee-owned. [Editor's note: several wake boat companies are fully management/employee owned.] What it is, is there are twenty or so senior managers and managers that had an opportunity to invest in the company the last time we had a venture partner and they're also reinvested this time with a new venture partner. So there are twenty or so people with equity in the business.

WW: So there are twenty or so employees with equity plus a financial backer?
JD: Exactly.

WW: Recapitalization of MasterCraft was recently announced by U.S. equity partners. Could you explain what that is about?
JD: Sure. Well, let's go back a little bit further. Like I said, when I got here the company was owned by MacAndrews Forbes, which at one point owned Coleman lanterns, tents, camping supplies, coolers, etc. They had the notion to buy some other companies and bought Boston Whaler and Skeeter, O'Brien and some other water sports companies and were going to go public. They did and the company wasn't well managed back then, so at that point they delisted and became private again and then the holding company began to sell off the other companies. They sold Boston Whaler to Brunswick and Skeeter to Yamaha.

Management was very excited about this business and the opportunity here and we wanted to be able to buy MasterCraft because we had product going in the right way. We had dealer and consumer excitement back and things were going along pretty good when the parent company announced that they were going to do that. At the time, there were three or four major conglomerates looking to buy this business. Management didn't have enough cash in the bank to buy the company without some help, so we brought in an equity partner at that time called Pouschine Cook.

WW: And when was this?
JD: It closed in 2000. Pouschine Cook is a company that invests in pieces of businesses and they only keep those pieces for anywhere from two to five years. So they had a great investment in MasterCraft and we had a great relationship with them, but it was time for them to move on. Management still was very excited about this business and the growth. We're all young, in our early forties in sort of the prime of our careers, so we very much wanted to maintain MasterCraft as we had set out to do back in the late 90's, to turn the business around and grow very successfully.

So we needed a partner to share in that vision who believed in the brand and MasterCraft's management team. Because the value of the company had grown such that management was still unable to do a freestanding buyout of the Pouschine Cook shares, we hired a company to help do a search and what they found was that about 81 major investors in the country had a real interest in MasterCraft and the management team. So we used them to pare that down to a smaller number and we finally got down to where we had just a handful of contenders. Then management chose the one we liked the best and Pouschine Cook felt very comfortable with that choice. That's how U.S. Equities became involved in this business.

WW: So this is a longer-term partnership than the previous one?
JD: Yes, partnering with U.S. Equity will help us run a smarter business. I'm sure you've kept up with some of the big acquisitions like conglomerates such as Brunswick and Genmar and all that they're doing. At some point in the not to distant future that's going to be a threat to many independent boat builders who are under-capitalized and can't keep up with those guys. So we've got a huge pool of capital available to us allowing us to do what we need to be competitive.

Even though most of those conglomerates don't have wakeboard boats, we all buy from the same vendors and there is the chance at some point they may buy some of those vendors up and then we're left without windshields or towers or what have you. So we have the ability, ourselves, to go out and either build those products or go out and purchase companies like that as well. I believe their long-term goal is to be the 800-pound Gorilla in the industry and make it harder for the small builders to compete. And I think with this pool of capital we now have, we'll have the ability to do that. Look for MasterCraft to be around for a long time.

WW: In relation to the last ten years of growth, how is the wake boat business growing now?
JD: It really didn't exist prior to about '96. Then it really kicked in about '98 and '99. So wakeboard boats, and the X Series specifically, continue to grow at a significant pace. I'd say in our business something like 10 to 15 percent a year. Some of the ways we're doing that is we have some bigger boats like the 280 and X-80. We generated a lot of new excitement when we brought out the new X-Star. We got a lot of people out of their old MasterCrafts and other brands and into this X-Star because there's nothing else like it. It's a bit like the [Hummer] H2.

As a matter of fact, when it came out, I had an H2 and an X-Star and was pulling it to an owners' function in Atlanta. I had one of the first H2's ever built and I was used to it getting a lot of attention, but this time I noticed everybody looking at the boat rather than the truck, which made me happy because I don't make any money off the truck and I want everybody to be excited about the boat.

So we've seen a lot of growth there and, just recently, we've gotten into the salt water business. There are plenty of people out there who like to wakeboard in coastal communities, so now we have a product that withstands that environment.

WW: So you've seen no leveling off of growth?
JD: No, I don't believe so. I am on the Water Sports Industry Association and the board companies believe that there is growth over the next five years. Their periscope goes up about five years. Beyond that, they just don't know yet.

WW: What kinds of trends do you see developing in the wake boat business?
JD: We've seen the trend towards higher end boats. We've seen very high-end buyers, typically parents with kids in the 11 to 18 year range. The parents are high-income and are excited to have a sport that they and their kids can enjoy. We're also seeing a lot of crossover into wakesurfing now. I think sometimes that is easier for the parents to get out and do. It's less stressful on their bodies.

WW: How is MasterCraft catering to the wakesurfing market?
JD: Certainly before we release a boat, we make sure the wakesurf wake is right as well. We've got wakesurfer racks on our towers. In some cases, we've reconfigured the ballast system to accommodate a great wake for that. I don't know when or if we'll come out with a wakesurf boat specifically, but it may very well happen. The good news is that all of our X Series models make good wakesurf wakes as well.

WW: Have the lawsuits related to carbon monoxide poisoning affected the way you do business?
JD: No. There were a couple of cases that we were involved in and in both of those we were awarded summary judgments. So they never actually went to trial. Effectively what the judgment said was that that [teak surfing] is an inappropriate, dangerous activity and that the operator should have known better. We've been warning people on our boats and in our owner's manuals for a long time not to be on or near that swim platform with the engine running. We warn them at the helm station, we warn them at the transom. There are all kinds of things that could be an issue there such as prop strike and what have you.

It's a society that likes to litigate and what we saw was sort of a crop of opportunistic attorneys seeking people who had been harmed in a water sport activity trying to take advantage of that. They were also trying to piggyback onto the carbon monoxide houseboat issue, which is very, very different.

WW: Has MasterCraft looked into the possibility of alternative fuels that might be more efficient or cleaner?
JD: Yes, in fact we're one of the first companies to have sponsored this Westwind initiative that General Motors and others have taken on where we're trying to catalize our engines. We started that back in the late 90's, which is interesting because the lawyers get a hold of the media and paint their picture that boat companies aren't investing in new technologies. The reality was, MasterCraft led the way in looking for new technologies. We believe the technology will exist in the not too distant future to put catalyst on marine engines.

WW: Meaning a type of catalytic converter similar to what cars use?
JD: Exactly, which greatly reduces CO exhaust. Now, if we had electric engines, I still wouldn't ever want to see us in any way condone platform dragging. That was part of the problem with wakesurfing in the beginning. People called the other teak surfing and that was confusing with wakesurfing. Obviously they are very different activities, but still, even with a total elimination of CO, you wouldn't want anyone platform dragging.

WW: Because of the obvious prop danger?
JD: Yes, prop strike and it's just not healthy for the driver to not be able to see the participant back there, which they couldn't because of the transom.

WW: Have you been doing any work with alternative fuels such as diesel or even electric?
JD: Yes we have. Not electric. We have looked at fuel cell. The automotive guys are so far behind on that. We've worked closely with General Motors on various future power sources. We have right of first refusal on several programs that will be made available to the automotive industry in '08, which we should have about a year after that, provided they work. Many of these are great notions that may or may not work in the watersports environment.

WW: What about the use of a multi-speed transmission that would perhaps allow for a smaller sized engine?
JD: Yeah, we've looked at that as well and the difference there is the propeller. You would need a variable-pitched propeller. That's sort of your weak link. If you switch your transmission and are spinning the same propeller, you'll either have a poor hole shot or reduced top end efficiency. So it's a little more complicated than it sounds. Also, we're looking at other drivetrain alternatives and propulsion alternatives that might make some sense.

WW: Like Z-drive alternatives?
JD: No. This is something that's radically different, something nobody's seen. What it allows us to do is push bigger boats with smaller engines.

WW: Other companies have introduced low-cost V drives for wakeboarding. Does MasterCraft have any plans to do so?
JD: We're looking at that market. We have never targeted the low-end entry level of the market and it's showing some growth right now. That's one of the reasons I think a lot of people would rather have a used MasterCraft then a new price leader type boat.

I came out of the fitness industry and we were very much on the high-end side of the fitness industry too because we saw that the low end turned a lot of people off. The people who got into a low-end product often had less than anticipated experiences and quality and they potentially abandoned the sport.

We're very much focused on building the best boat we can and ours are really built more on value so you pay more up front and you get more back on the back end. We're pretty happy in that position right now and feel that's where our consumers expect us to be. That's where we stand with it right now.

WW: You've got some unique marketing campaigns that point people to specialized websites such as ThePerfectWake.com, TeamXStar.com and XMarksTheWake.com. What is MasterCraft trying to accomplish with this approach?
JD: Well, we're trying to interface with our consumer a little more deeply then just having them scan through a magazine. So we like to bring them in, capture their attention and give them something enjoyable, as well as informative, about the product. Again, form a better relationship with them. Through some of that, we have an opportunity to capture their names and correspond with them, inform them on things like product information all the way to tournaments, special offers and things like that.

WW: MasterCraft has one of the strongest wake teams out there. How important do you feel the athletes are when it comes to selling your boats?
JD: I think they are a critical component for a couple reasons. One, we've been a huge supporter of the sport since day one. I would say we've put on more wakeboard tournaments than any other company, including the top name tournaments like the X Games, the Pro Tour and the Wakeboard World Cup. We believe in supporting the athletes so they can go out and perfect the sport, push the limits of the sport and grow the sport by attracting kids and teenagers and adults and so forth into it. We think that is important, so we want to give them the opportunity to make a living in this industry.

Also, Parks Bonifay and Zane Schwenk have been very beneficial in developing product for us over the last several years, Parks in particular with the X-Star. Zane is the one who came up with the idea first to do the V drive 205. He and I were sitting there watching a Cypress Gardens show and he said, "Hey, you ever thought of doing that in a V drive configuration." That was in about '97 or '98 that he mentioned it. We cobbled one up and, sure enough, it worked! That's been a high volume boat for us.

So we've used them and we've also used Tara Hamilton and Maeghan Major. It's a group I really love. I'm happy for what they do for the sport and what they mean to MasterCraft. That's why we feature them in brochures and ads and continue to build their star power.

WW: Not only that, but I saw World Champion Andrew Adkison out there selling boats at the boat show this past weekend.
JD: That's right. He's a great kid. Relatively new to the team and he's just the heat. That's another note too, is that we continue to seek athletes that are not only tops in their sport and are top influencers to the sport, but that also have appeal to kids with their parents. Just generally good people are what we look for.

WW: MasterCraft also sponsors the Supercross? Why does a boat company sponsor Motocross?
JD: You know, we went to several Supercross events just as spectators and we started saying, "I bet there's more wakeboarders here than would be at a wakeboard tournament." So we got together with Clear Channel and, sure enough, we found out that that was true. They did a survey. There is about 46,000 on average a weekend that see these events and we just got into it. We have a dealer out in Southern California and he's a motocross racer and he got into it and tipped us off to it.

There is a lot of crossover in the sport. I started wakeboarding in about '96 and through that wakeboarding association I've sort of gotten into motocross personally myself. Myself and my son race and so we see the crossover. In most cases, a lot of these motocross families are families looking to do something with their kids, which is the same appeal that watersports has. We believe that we both get a lot of exposure on the website with Clear Channel and also at the events. The dealers even get to go in and set up a booth, so you've got more like 70,000 or so people every weekend walking around in the pits looking at our products and we're the only boat in town.

WW: Out of all your boats, which one is your best seller and why?
JD: It's the X-Star purely based on units. I just think there is nothing else like it. It's a great boat, great size. 22 Feet is just about the right size. It holds a lot of people and is comfortable. That boat was built purely for the wakeboard wake. We didn't compromise anything on the wake. We gave up a little top end speed with it for other boats that size and that's only because we didn't want to interfere with the wake at all.

Some other ones that do well are the X-30, a big boat, just redesigned it for this year. It's just now hitting boat shows and it's even a little bit bigger. It's roughly the same dimension, but they were able to go in and pick up a little more interior space and some new styling on it as well.

And then the X-2 remains a strong favorite. We talked earlier about the price point boats and our X-2 is very competitive in pricing with most of those price point boats. It's a little bit more, but the quality construction and all makes it a better value. So that's another reason why that boat is so strong for us.

WW: The X-2, of course, is what used to be called the X-Star?
JD: Correct.

WW: When will a new version of the X-2 be coming out?
JD: Pretty soon. We've been working on a new version to replace that and it will be within the next couple model years.

WW: It seems like no matter what factory ballast is available on a boat, serious boarders will always want to add more. Is there a limit to how much boat manufacturers can make available? Is there some kind of liability issue there?
JD: Yeah, there is. We make sure that we're very open with the Coast Guard as to how our boats are used. We make sure we design to their recommended levels, especially with the X-Star. That X-Star unweighted is more wake than a lot of boats fully weighted, so we continue to seek ways to create greater wakes without weighting the boat.

WW: Okay, tell us the next big thing we'll see from MasterCraft?
JD: (Laughs) I can't tell ya, but rest assured it will be something big. Some good examples from this year, not only have we led the way in styling, but the technology this year with our digital throttle system, I think that is a critical step towards this whole integrated smart boat concept.

WW: What is a digital throttle?
JD: Well, all airplanes and nearly all cars have it now. The throttle speaks to the engine with set frequency signals, so it's an immediate response, very smooth response. They're not linked together by a clumsy cable as in the past. With that in our upgraded engines, you'll get free wakeboard cruise control by having the digital throttle system upgrade. It's something I think is really nice.

WW: Is it available on all models?
JD: It's available on all of our multi-port, MCX engines.

WW: Is there anything else you'd like to tell our readers?
JD: I would like to thank them for their support. It's interesting. We're the biggest company by far in terms of dollar volume and there's always rumors about MasterCraft out there. That's just what you get when you lead. You're going to get a lot of those and I would invite readers, anytime threads or rumors pop up, that they would ask us directly. I've looked through the site over the years just to see what people are talking about and it's amazing some of the rumors that get started and how off base they are.

The reality is, this company is run by the management team and is very involved with our employees. We have a great time at what we do. We're one of the very few companies, the only one this size, where the management team is out boarding. When we are done building boats and running the company, we head out to the water. We're right on a lake. I live around the corner on the lake. I can go to work in my boat; jump in my X-Star and go to work. I come home and pull my kids and my kids pull me. We live the lifestyle and I think that's important to understand the market and to be able to drive the market.

Some of the other companies are more concerned about playing with their Harley Davidsons and whatever else and that's fine if you run a motorcycle company, but we believe we ought to be out on the water. So we get wet during the season four to six times a week. It's called the lunch club. We have a cafeteria here so we slide out and a couple three of us each get a set in and be back up here for lunch and right back to running the business. It's certainly a blessing that we're able to get out and do that, which is why we love our jobs so much. I think it's rare to find companies that live their business.
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