SuperCat-Powerboats-(A)

9-806-102REV:FEBRUARY22,2007________________________________________________________________________________________________________________ProfessorJamesHeskettpreparedthiscase.HBScasesaredevelopedsolelyasthebasisforclassdiscussion.Certaindetailshavebeendisguised.Casesarenotintendedtoserveasendorsements,sourcesofprimarydata,orillustrationsofeffectiveorineffectivemanagement.Copyright©2006PresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.JAMESHESKETTSuperCatPowerboats(A)RyanKratzlookedfirstatGaryWellsandthenathisfather.Hecouldn’tbelievewhathehadjustheard.Theeventsofthepastfewweeksflashedacrosshismind.BarelyfourmonthshadpassedsincehislastfinalexamattheHarvardBusinessSchoolandhisfirstintroductiontoGary’sbusiness.Andhequicklythoughttohimself,“Maybeithadallbeentoogoodtobetrue.”AccordingtoKratz:LikeeveryoneelseatHBS,Iwentthroughtherecruitingprocessduringthewinterof2005.IhadanoffertogobackasanexecutivetoacommercialrealestateappraisalbusinessinNewYorkCitywhereIhadhadagreatsummerexperience.ButImadeacontactwithanHBSalumwhoisCEOofahighlysuccessfulcommercialrealestatedevelopmentandservicescompanyinMinneapolis.Wediscussedemploymentpossibilitiesforsevenmonths,andheultimatelymademeagreatofferwithanopportunitytolearnthebusiness.IpushedalljobdecisionsbackuntilIfinallydecidedinApriltogobacktotheMidwesttostartworkonJuly24.AftermylastfinalexaminthefirstweekofMay,Iwentbacktomyfamily’shomeinDecorah,Iowa,tohangaround,preparetomovetoMinneapolis,andplanforcommencementandapost-graduationtriptoEuropetoattendacoupleofweddingsofsectionmates.Asitturnsout,thefamilywasinthemarketforanewboat.GrowinguponthelakesofMinnesota,IhadbeenaroundboatssinceIwasthree.SoIstartedgatheringinformationfromtheInternetaboutboatmakersandboats.Forseveralyears,Ihadheardaboutalow-key,low-profilecustomboatmanufacturerbasedrighthereinIowa.IdidsomeresearchtolocatethecompanyandlearneditwasrunbyaguynamedGaryWells,whohadacompany,ProfileCustomPowerboats,downinRayville,Iowa,about35milessouthofwheremyfamilylived.WhenIwenttohiswebsite,IfoundsomeprettyimpressiveinformationaboutGaryandhisboats.Overaperiodofperhaps25years,hehadbuiltandsoldabout550fiberglassboats.Hislatestpowerboatmodelsrangedfrom26to38feet,allcustomfinishedwithelaboratefittings,capableofspeedsuptoabout120milesperhour.Thethingthatreallydistinguishedhisboatsfromotherspeedboatswasthetrulycustomizednatureoftheboats.Withthereputationhehadbuiltandhisabilitytocustomizetheboats,hewasabletosellthemfor$150,000to$450,000.[SeeExhibit1forphotosofProfilecustompowerboats.]SomyDadandIdecidedtodrivedowntoseehisboatsonMonday,May17.Theplacewasn’tallthateasytofind,eveninatownof2,100.Therewasnosignanywhere,nodirections,andabarelyreadablenameonthemailbox.Nothavingphonedinadvance,whenwegottherewefoundthatGarywasoutdeliveringaboat.Buthiswife,Debbie,showedusaroundthroughwhatlookedlikeaglorifiedbarnthathadbeenexpandedseveraltimes.We806-102SuperCatPowerboats(A)2sawfiveorsixboatsinvariousstagesofconstruction.Theydidn’thaveashowroom,buttherewasasmallofficeareawithwallsthatwerelinedwithdozensofpicturesandarticlesonProfilePowerboats,whichhadbeenreviewedwithcriticalacclaimbyboatingcriticsandtheindustrypress.Afterthetour,Debbietoldus,“GarywillbebackonThursday.”OnthedrivedowntoRayvilleonMay20,Ryanandhisfatherspeculatedonthenatureofthebusinesstheyhadvisitedearlierintheweekandwhetherthiswassomethingtheymightbeinterestedingettinginvolvedin.AccordingtoRyan:Wedidn’tevenknowifProfilewouldbeforsale.Itwasakindofgame.Mydad,whoisaserialentrepreneur,wascurrentlyharvestingalandfillandwastedisposalbusiness.Itwaslatestage,andhewasonthehuntforgoodopportunitiesrelativelyclosetohomethatcouldbegrownsubstantially,yetdidn’twanttocommit100%ofhistimetoanyendeavor.Iwastheopposite.AlthoughIhadacceptedmyrealestatepositionandwasexcitedaboutit,IwasalwaysonthehuntforthenextentrepreneurialdealtowhichIcouldcommitmytimeandeffort.Ihadalreadybeeninvolvedinacoupleofventures.MyfirstbusinesswasoneIformedbetweenhighschoolandcollege,paintinggarbagedumpstersforWasteManagementonanexclusivecontractinnorthernMinnesotaduringthesummer.IcalledmycompanyReceptacleRemediationSpecialists.TheamountofmoneyImadewouldrivalagoodstartingsalaryforanHBSgrad.Nobodyseemedtowanttodothatkindofwork,andit’sabusinessthatstillrepresentsagreatopportunityforsomeone,evenonanationalbasis.WhileatBabsonCollege,Istartedacompany,CompleteConsulting,thatisstillinbusinessdevelopingcustomizeddatabasesandwebsites,especiallyforrealestatemultiple-listingservices.OnmyHBSapplicationwhereitasksabouttheapplicant’saspirations,Iwasclearthatmyinterestswereinbuildingacollectionoffourorfivebusinessesatvariouslife-cyclestates,eitherthroughstart-uporacquisition,harvestingthe