The accidental $250B trampoline park company

When I looked at the list of upcoming guests for this month and I saw that we had someone who ran a trampoline business I said, “Trampoline?”

It turns out this is a story of a guy who created something in the real world that works like businesses have always worked, except much bigger. And that’s why my team wanted me to interview him. They said, “Wait until you see the numbers, Andrew. It’s a pretty impressive business here.”

Today’s guest is Jeff Platt. He is the founder of Sky Zone, a chain of family entertainment centers that are trampoline based.

 
Jeff Platt

Jeff Platt

Sky Zone

Jeff Platt is the founder of Sky Zone, a chain of family entertainment centers.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview mostly software, frankly, tech startups, mostly software entrepreneurs about how they built their businesses.

And so when I looked at the list of upcoming guests for this month and I saw that we had someone who ran a trampoline business I said, “Trampoline? Is it like an Airbnb trampoline where people rent out space on their trampolines at home and would got to the share economy angle?” No, my team said, “No.” I said, “Is it like all these line-bikes that I see around the city where you can just go jump on a trampoline and use your app to act?” No. It turns out this is a story of a guy who created something in the real world that works like businesses have always worked, except much bigger. And that really is why my team wanted me to interview him. They said, “Wait until you see the numbers, Andrew, on this. Do you think trampoline is just like fun and games? It’s a pretty impressive business here.”

And so I looked at it and, boy, I cannot wait to find out more about this. The guest’s name is Jeff Platt. He is the founder of Sky Zone. Sky Zone is a chain of family entertainment centers that are trampoline based. I know they’ve got a little more than trampolines in there but mostly it has trampolines. Right, Jeff?

Jeff: You’ve got it right.

Andrew: Cool. And this whole thing is sponsored by two fantastic companies. The first will host your website right. It’s called HostGator. And the second will help you hire your next phenomenal mind-blowing developer.

Jeff, I’ve got right here on my screen a headline from CNBC. It says, “This 31 year old is making millions from trampolines.” How many millions are you making from trampolines?

Jeff: We’re a private company so we don’t like to talk too much about that. But I can tell we’ve got millions of people every year that jump at our parks. So it’s a good business, it’s a fun business that a lot of people get to experience.

Andrew: 2016, they estimated your revenues were about a $250 billion a year, is that right? Is that crazy?

Jeff: That’s not too crazy, I can say. That’s about right.

Andrew: All right. I’m glad to at least here that. You told our producer, Dete [SP], you gave our producer numbers, but you told him numbers like how many socks were bought, which is still mind-blowing. Do you remember what number you gave him for how many socks were bought in your place?

Jeff: Yeah, it was probably somewhere around 15 million, I would assume, somewhere in that area.

Andrew: Per year?

Jeff: Per year.

Andrew: Per year. And so how does it work. Somebody comes into a trampoline place, one of Sky Zone locations, pays per, what?

Jeff: We’re a pay to play activity, so the average person is coming for 60 or 90 minutes to jump around, play, have a good time, play a game of dodge ball, slam dunk a basketball, get through a warrior course, a lot of different activities.

Andrew: Birthdays, that type of thing is really big, but dropping in is totally fine.

Jeff: Yeah, drop ins are totally fine. Similar to a traditional bowling alley, you can have an event there, you can just drop in and play group outings and such.

Andrew: Everyone talks about your age. How old are you? What? Thirty two now? Thirty three?

Jeff: Thirty three.

Andrew: Thirty three. But this whole thing started when you were, how old?

Jeff: At the time I was about 21. I started it with my father and right out of college I jumped right into it. I learned on the job quickly.

Andrew: What was he trying to do? He was the one who got into trampolines, right? What was his vision? Where did he want it to go?

Jeff: My father’s sort of that classic entrepreneur. And he likes doing something that no one has ever done before. Probably I think he likes when someone says he can’t do something or, “There’s no way you will [crosstalk 00:03:30].

Andrew: Like, what? Before we get into this, what kind of things did he want to do growing up that you saw him that seem crazy to the rest of the world?

Jeff: I didn’t get to see him growing up that much so I just saw him as an entrepreneur saying, particularly with our business, he has original vision for it was actually to start a new sport. It was not to be in the business of family entertainment. He saw an opportunity to say, “We’re going to start a new professional sport.” And people don’t just start sports, you know, you don’t do that. Unless, you know, ESPN is your business partner or you’ve got hundreds of millions of dollars behind you, which he had neither. But, again . . .

Andrew: So he was a sport that he wanted to create. I heard it was some combination of four traditional sports and Quidditch, which is the game from Harry Potter.

Jeff: Yeah, that’s pretty much exactly right. The only difference being that the playing surface instead of grass or a hard court for basketball or ice for hockey was going to be all trampolines. So you’re going to have a sort of the checking of hockey, the scoring of basketball, passing of football, it was going to be a full contact sport but played on trampoline so you could jump in the air. You could play the game on a flat surface or 5, 10, 15 feet in the air.

Andrew: And Jeff, was he trying to appeal to athletes and charge them for the space to do this and to get them into teams or was he trying to make this for an audience and that’s where the revenue was going to be?

Jeff: No, he was trying to make it for an audience. You know, he saw this one day competing with the NFL or with baseball or, you know, hockey which is why it was a crazy, crazy vision.

Andrew: And he did it in Vegas, did it work out?

Jeff: He did it in Vegas. He hosted a live game in front of an audience, about 3,000 people purchased tickets over one weekend. And I’ll never forget after that, after the event we all kind of looked at him and said, “So, what’s next?” And he said, “I don’t know. You know, I have no idea.” So like most early stage entrepreneurs they’re trying to get through the weekend, they’re not really figuring out what’s like going to happen in the next couple of years. And so from there . . .

Andrew: You know what? Before we continue with our business side . . . sorry, and I know we’ve got a little bit of a lag so it seems like I’m talking over you. I’m rude but not that rude.

But give me a sense of who your dad was. You say you didn’t see him much growing up. What was he doing? What kind of businesses? I want to get to know you and your dad a little bit so that I see why you ended up on this chase.

Jeff: Yeah. So my father owned his own business before. He was a scrap metal dealer. Totally different business from what he was in with Sky Zone. And he had a small company, he had about 10 employees and he was buying and trading scrap metal all day. And so he was an entrepreneur in that sense, just in a totally different industry.

And he was a pretty involved father in my early years, pushing sports and school and all the things parents normally push on you to do as a kid.

Andrew: And so you though, what were you like growing up?

Jeff: I was outgoing, I was pretty easy to deal with because I had an older brother who I got to see all of the ways not to be.

Andrew: What do you mean? What was he like?

Jeff: He was one that liked to push and challenge my parents and stretch the boundaries. So I was a pretty easy going kid. I didn’t get into too much trouble. You know, I was lucky to go to some good schools and I grew up in L.A. and had a lot of fun as a kid. I was that typical kid that play a lot of sports.

Andrew: And the period of your life where you didn’t get to see your dad, what was he doing at that point? It seems like your teenage years, right?

Jeff: Yeah, in my early teenage years he ran into some business struggle with his previous business, he got very tied up in sort of worked for a couple of years. And there was sort of a small gap of where work took over a bit of his life. And fortunately that gap, that period of his life came and went relatively quickly and so he got back into being a close father and son relationship we’d had one when I was much younger.

Andrew: The Huffington Post, I think it was, said that he spent $2 million to build this facility in Vegas, does that sound right?

Jeff: Yeah, the initial raise that we, that he really did for the launching of the sport, was about $2 million. And burned through it relatively quickly. And that sport never really took off. So the business that we’re in today was a complete accident on how it came about.

Andrew: Because next door was, what?

Jeff: Next door happened to be a skate park from our R&D center where we did some training with athletes. And literally out of a need to make payroll the next week because the company was almost bankrupt, he started charging the kids that were coming to this building that we’re really going to that building to skate to look, they would look inside the window and they’d see this massive trampoline structure. And he let them jump around.

But one day when they came in he said to them, “Look, you can jump today but it’s $8.” And they had no problem paying. And so they asked, when they left they said, “Does this mean we get to bring our friends tomorrow?” He said, “Sure, but it’s $8.”

And so the next day, you know, he was in business as a trampoline park operator.

Andrew: And just like that he shifted gears, didn’t look back, didn’t mourn the past business or did he think he could run them both.

Jeff: Well, I shouldn’t say he couldn’t, he definitely mourned the death of the sport. There’s no question about that. And to this day he’s still sort of talks about that sport one day being. But, yeah, he totally pivoted which you got to give the guy credit for because most entrepreneurs they’ve set out on some vision and path, they’re not necessarily sure how they’re going to get there but they have a vision and they do whatever it takes to get there much to their own demise, sometimes. So he fortunately was wise enough to pivot and take a left turn in it, it worked out.

Andrew: And then the next thing he . . . and I guess at that point you jumped in, right? You were helping out?

Jeff: Yeah, I was always sort of helping in the background of the business. My entry into the business on a full time basis came about 18 months after our first location was open and operating. And I came in and opened the second location in St. Louis, Missouri.

Andrew: Why St. Louis?

Jeff: I was in college there at the time. I was a business school student undergrad at WashU. And I proposed the idea to him about opening a park in St. Louis. And the primary reason for it was twofold. One, I was there so I could run it. And two, Las Vegas was, and is, I should say, a pretty crazy city and everyone thinks that if you have a business that works in Vegas, it does not mean that it’s representative of the rest of the country. So St. Louis was that city that that was representative of the rest of the country and if we could prove the business model worked in St. Louis, then we could prove it worked anywhere.

Andrew: Was this starting to work? Were you making enough money from people coming in?

Jeff: Yeah, we were a little nervous about whether the business would take off there or not. But our second month of operation in St. Louis we had generated more revenue than we had ever generated in any given month in our previous 20 months in Las Vegas. So it took off incredibly well, well beyond our expectations. It sort of exploded right in front of us.

Andrew: Why? Why did it go so well in St. Louis?

Jeff: Mainly because of word of mouth. We’ve got some great PR when we first opened. It was a very new to the world product, no one had ever opened a trampoline park before. So this was something totally new. And, you know, social media is starting to take off a little bit there and, you know, people sort of using Facebook as a platform for sharing. And because it was just a novel idea. It was being talked a lot about.

Andrew: Where you guys stoking that up? I’ll be honest, the reason that we got you on as a guest is your PR company contacted us and we said, “You know what? Yeah, let’s do it.” Were you that savvy back then that you knew that you should hire a PR agency that there were people there helping you?

Jeff: No, I don’t think I’m that savvy today. I think we got lucky. But we did hire a PR firm because, really, we didn’t have a lot of money for advertising and we had a family friend who knew a PR agency in St. Louis that we could hire for $15,000 a month. And we just thought, you know, what can they do for us. And they ended up getting us on the front page of The St. Louis Post-Dispatch.

And so that really sort of, you know, introduced us to St. Louis a in a unique way and never looked back from that.

Andrew: Why did you even think of creating a second one? Why did you think this would work? Because you’re a business school student, you didn’t just want to have a trampoline place that worked in one or two cities, you saw a vision, what did you see that I wouldn’t, frankly, wouldn’t have known? Even in retrospect it’s shocking to me.

Jeff: I was actually enticed by it because I took a business school class about starting a new business, the whole concept of the class was start a new business and you’re going to present a business plan to a local group of investors. And they are the ones that really encouraged me to do this in St. Louis. And the reason they said, this wasn’t my vision, this was more theirs, they just said, “Look, there’s a lack of entertainment options for kids in this city and there are a lot of kids. And so you should do this here.” And it kind of stuck with me.

And that’s what really sort of pushed me to say, “Yeah, I’ll give it a try.” And I really wasn’t intending on working for the business at the time. But one thing led to another, a train just started rolling down the tracks. And before I knew it was like 12 months later we were opening our doors to the general public and all of a sudden I was the general manager of the trampoline park. So it just sort of all happened and came together.

Andrew: And part of it is because of a tragedy in your family, right?

Jeff: Yeah, well, so about five weeks after we opened our doors, keeping in mind at the time it was a small business, we had these two locations, my mother got diagnosed with ovarian cancer and she was 49 at the time. She was told that she had about four years to live. So my father at the time pretty much looked at me and said, “Look, I’ve got to take care of your mom. The business is in your hands. So figure it out. Good luck.” And it was a small business at the time.

So, you know, but I was also 22 years old, fresh out of college, I had no idea what I was doing and there certainly wasn’t a manual on how to run a trampoline park. So it was a lot of learning on the fly. And as I say, it’s was the best and the worst thing that happened to me. Obviously the worst because she was diagnosed with a terrible disease which ended up losing a battle to. The best and trying to find a positive in everything I was sort of thrown into the fire to figure it all out.

Andre: What’s it like to talk about this situation? It’s clearly a pivotal moment in your story. People want to know your story, especially the origin story, so they ask you about it. I don’t know you. We talked for like 15 minutes. What’s it like to talk to me and other people about this tragedy in your family?

Jeff: It’s life. You know, it is what it is. I’m a big believer in the fact that there are certain things you cannot control in life and you cannot harp on those things and try and change the outcomes. They are what they are. They happened. And you just got to figure out a way to move on. I never want to be that person that, you know, doesn’t do something because of a tragedy that happened in my life or used things like that as an excuse. Can’t control of them.

Andrew: But, does it feel like, “Hey, who is this asshole, Andrew, bringing this up? It’s like a personal thing, it’s out there, let’s just move on”? You don’t feel that way.

Jeff: Well, we’re only 15 minutes and I don’t think you’re an asshole yet. See where the hour goes.

Andrew: We’ll see. All right.

So then once you figured it out, at that point, did you go back to business school teachers, did you go back to your mentors, to someone and say, “Let’s plan this out. What if this could be something big?”

Jeff: Yeah, at that time we were trying to figure out, you know, what the hell are we going to do with this business? Because I certainly didn’t have the experience to grow this and even see at the time what it could become. So I did have a very close family friend who had grown many businesses before who merely ended up serving yet at the time was just a family friend but he really ended up as a mentor to me that helped me sort of map out, you know, what this could become. And I’ll never forget, I wish I could find this old spreadsheet we created.

And the closest comparable what immediately did was he said, “Well, what’s it like industry?” And he just said, “Bowling.” You know, and we looked at bowling and said, “Well, how many bowling alleys are there in the country and what’s the average revenue of a bowling alley.” And, you know, so that was the first start of what could the market potential be for something like this. Yeah.

Andrew: Why do you want to do that? Why do you want to find comparable businesses to compare it to?

Jeff: Well, I think the idea is simple, you’ve got to kind of map out what can you become, how big can your business be, how can you dream really, really big.

Andrew:Oh, I see. Is this a big thing or is it a pogo stick? If it’s a pogo stick, that’s a whole . . . got it. And so you were trying to figure out how big it could be but then was it also, what’s our model? Because in the bowling business there isn’t a big franchisor or there isn’t an individual owner. It’s the bowling balls, I think, right? That are the biggest businesses.

Jeff: Yeah, there isn’t in the bowling space. But what we were really after is, what’s market size? Can you open 20 of these things or can you have open up, you know, 2,000 of them? And how much demand could there be for a new entertainment concept? And more importantly, why is bowling doing well or why are they not doing well.

And so we were just looking at general market conditions. It wasn’t until three or four years later that we had the idea to franchise. And franchising as an industry in itself that you can draw many comparables to. But franchising didn’t come until much later.

Andrew: And at that point it was just you saying, “Hey, there.” How many bowling alleys were there in the U.S. at the time?

Jeff: 3,000 or 4,000.

Andrew: 3,000 or 4,000. So you said, “Maybe we can create 3,000 or 4,000. But, you know what? Bowling used to have TV coverage, kids grew up with it, so let’s just say half. So we have at least 2,000, maybe 1,000 different locations. This thing has like or has potential. Let’s tap into it.”

And so at that point, did you say, “Where do we go? How do we open up more locations?”

Jeff: Yeah, we began to look at how could we expand and grow, getting capital from a bank, that wasn’t possible.

Andrew: Because?

Jeff: Because business concept was so new and novel that they didn’t know what it was, they heard trampoline parks and they said, “What the hell is that?” They didn’t know. So we had to raise more money internally from friends and family. And because capital became hard to raise it triggered the idea of franchising really because, one, capital was hard to come by, and two, we received a lot of interest actually from some TV coverage that we received from people saying, “I want to open one of these things in my town.” And that triggered the idea of, “Why don’t we franchise this business? It’s going to be a great way to grow and get scale quickly without having large access to capital.”

Andrew: Franchising’s big benefits are management that really cares because they’re fully invested in this and financing. Am I right about that? Is there anything else?

Jeff: Yeah, it allows you to scale quickly. It is not capitally intensive to begin to franchise. So you can scale very quickly. And as you said, you do get management that cares because they’re signing their 401k’s, their savings, their homes over to a bank to get financing, so.

And with that caring becomes people that truly want to make the business better. So there are a lot of benefits of franchising. And there’s a lot of hardship to franchising. Franchising is not easy by any means.

Andrew: And the downside of it is, you lose a lot of control.

Jeff: Yeah, I think any franchisor that says, “Oh, we’ve got a franchise agreement. You know, we’ve got a lot of control as a result to that.” Is kidding themselves.

You know, you do have some controls but nobody responds well when you tell them what they have to do, whether they’re your employee or whether they’re a franchisee. So they’re truly a business partner. And you’re giving up an element of control so you got to make sure you’re selecting people that franchise with that you respect and could have a good business relationship with.

Andrew: All right, I just wrote down an obvious question that at this point we can ask it, but I’m wondering what you would’ve thought of it back then.

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All right. Here’s a question, why shouldn’t they just copy you? They read the articles, you weren’t a huge company, just copy it, put it in locally and go, “Hey, guess what we’re doing?”

Jeff: It’s a good question. Many listen to that and many ask that question. And many said, “That’s exactly what I’m going to do it.” So we’ve got, you know, 200 locations globally now and there are about 800 trampoline parks globally. So this has become an industry that generates well over a billion dollars in sales. We’re about 25% of it. And we actually just recently partnered up with two people that used to be our competitors, two brands that used to be our competitors which gave us even more scale now. But there are a lot of competition. It’s a space that’s been growing pretty rapidly.

Andrew: But I mean in like the burger fast food business, they have a lot to offer, they have a special recipe but they also have the brand name, they have the advertising budget, etc., were you offering any of that?

Jeff: What did they have in the early days though? Nothing. The recipes were a piece of equipment, there was no . . .

Andrew: The process, I guess. I saw, “The Founder,” the movie, it was the process.

Jeff: You saw some process. But they didn’t have much. And you never do when you’re first just starting out. What we had was we had a little bit of scale, we had a handful of locations and we had such a new novel idea that it wasn’t easy for somebody to go build a bunch of trampolines put together. You couldn’t go to a manufacturer and say, “I’d like to order one trampoline cord, please.” That was a new to the world product.

So, you know, imagine a grill for hamburger not existing before or just like in “The Founder” the milkshake. You know, the mixture that he had to create. You know, we had to create our product. So it gave us some runway for quite a bit of time.

Andrew: How many locations did you have before you franchised?

Jeff: Only three. We only had three locations when we started franchising.

Andrew: Where was the third one?

Jeff: Sacramento, California.

Andrew: Okay. And was there a reason for Sacramento too?

Jeff: Yeah, it was just a unique real estate opportunity that came upon us and we took advantage of it. And that was really the only reason why.

Andrew: To buy it, coupled?

Jeff: Yeah, we bought, we ended up buying a building there and coupled to the fact it was back to the west coast. My parents both lived in Los Angeles. So it just kind of the stars aligned. And we decided to do it.

Andrew: Are you the type of systemized person who, I remember going into a burger chain near my house growing up, and on the piece of paper when I took the burger off, there was a circle and in a circle it said, “Put burger here.” And I realize, “,Oh every time I go to McDonald’s or anywhere else’s there’s always a circle in the design.” Somebody had to think through a process and say, “Exactly, here’s how we implement that process.” Are you that kind of person?

Jeff: No, I hate process.

Andrew: You do?

Jeff: Process to me like frustrates me.

Andrew: So how’d you end up [doing 00:25:23] such a business?

Jeff: Processes kill me.

Andre: Okay.

Jeff: You know, recognizing that in a franchise you need process I hired a great COO who knows processes and knows how to scale processes. I’m not a process guy. This is not my thing. I don’t like processes. They’re inevitable, you need them. But sometimes they . . .

Andrew: How do you know you need them? People who aren’t process oriented think that people who are process oriented are a little too square.

Jeff: Because I just learned to listen to people who had grown businesses around me. They said, “Look, systems and processes are things you need to scale.” You know, and I just trusted that advice. But I’m not one to sit down and create a process. I mean, I like evolution and change. I like things constant moving. You know, that’s me, that’s what gets me going. So, but I recognize you need those things. And so I put much smarter people than me in charge of doing it.

Andrew: How do you have so many family members and friends who are in business who would understand all this stuff?

Jeff: I don’t know. You know, I think that’s part of, you know, maybe growing up in L.A., you’re surrounded by successful people who’ve been there and done that. I went to a good private school in Los Angeles and, you know, I had friends whose parents had a lot of success in their lives. That’s just luck. You know, it’s just luck, wasn’t anything I did.

Andrew: I’m trying to figure out who the COO was by looking up LinkedIn as we’re talking. And I can’t tell . . .

Jeff: Glenn Lord.

Andrew: What is it? Glenn Lord.

Jeff: Yeah. So, Glenn we hired about . . .

Andrew: So, I thought that, but Glenn Lord seems to say that he was just from 2014 as the COO.

Jeff: Yeah, we hired him about five years ago when we were in the earlier days of franchising. We had been franchising at the time for about four years and we had no systems and processes. So we had franchises open, we probably had about 35 locations but all 35 locations ran very differently. Franchise owners had the ability to kind of run their park how they want, there was no systemization to anything, there was no consistency to anything.

So Glenn came in and said, “You know, we’ve got to get things under control here if we’re ever going to scale rapidly.” So he helped a lot with that.

Andrew: So this was 2013, got it. That’s why. I was just looking at his LinkedIn profile and yours, trying to understand it. You started the company in 2006 and it wasn’t until that far into it that you finally got a COO.

Jeff: Yeah.

Andrew: And was there someone on the ground who was managing, who was doing all that stuff for you until then?

Jeff: Yeah, you know, we would do the classic thing, take general managers from parks, take employees from parks, move them up to general managers, general managers move them up into regional roles. It was all promoting from within and from the sort of individuals that had been there in the early days, taking on a new job.

Andrew: And look at this guy’s background, dude. I mean, he was V.P. operations at Jamba Juice. He was Vice President Operations at After Hours Formalwear. He was Vice President Operations at EXPRESS, the store. He was, before you guys, most recently, Pinkberry Ventures, he was international business operations.

So you basically said, “Here’s a guy who’s done this. He’s been at multiple locations, he’s proven he could do it. Let’s go with him.”

Jeff: Yeah. He knew retail, he knew scale, he knew franchising, he knew multi-unit. And his last job before us, which was in particular of interest, was Pinkberry where he opened a lot of international locations for them. And we were really starting to sort of ramp up our international growth which is a different animal than growing in the U.S. So he had good relevant experience for what we wanted.

Andrew: You know, that reminds me when I brought up franchising you said, “That’s a whole other beast in itself. There are all these issues.” I didn’t follow up and ask you what issues, what issues are we talking about in the early days?

Jeff: I think, you know, well, for one, we’re talking about systems and processes. If you don’t have systems and processes in the early days of franchising, it’s almost as if you are allowing your franchise owners to take control of their business in a way that you don’t want them to. You want consistency in a lot of things. And if you don’t establish those processes upfront, you know, reigning a franchise owner in and back is very challenging. We deal with that every single day. And the greatest and the worst, the greatest thing about franchising and also the most challenging thing about franchising is you have 200 CEOs. And anyone who runs a business knows how challenging it could be to have 200 CEOs.

But as I said earlier, the benefit of that is you get ideas and innovation from them that you probably wouldn’t get from the $50,000 a year general manager.

Andrew: Like what? The egg McMuffin famously came from a franchisee and then that Ray Kroc had.

Jeff: Yeah, yeah. And people, you know, franchise owners are in their market every day. So they’re looking constantly at what their competition is doing or what other businesses are doing and bringing ideas to the table. A good example, one of our franchise owners actually is a general manager of one of our franchise owners, but our franchise owner really spearheaded it. He brought us the idea of doing an afterhours blacklight event. And it became sort of a club type theme, Fridays and Saturdays from 10 to midnight. And, you know, it is now our singular most popular activity inside of any of our parks. Or socks, the 50 million pairs of socks was an idea that came from one of our regional V.P. who’s we used to do bowling shoes with, essentially the same concept, trampoline shoes. And he said, “We got to get rid of this shoes. They stink.”

Andrew: Because you would rent them out.

Jeff: We rent them.

Andrew: Ah.

Jeff: So he said, “Let’s go with socks, you get rid of the smell, you give people something to take home, it’s merchandise, it’s recurring revenue.” And we said, “This is brilliant. It’s a win for us, it’s a win for the customer. This is a fantastic idea.” So innovation happens not at the top, I think it starts at the bottom, so.

Andrew: What’s your process for getting this all organized and see what works and judging it and share the information with everyone else?

Jeff: Well, that starts with creating a culture that people actually when they come up with an idea they feel comfortable enough or they’re encouraged enough to want to speak up about it which is not easy. And we struggle with that every single day.

But when you are able to build that, which you can usually build it through recognition. You know, if you can recognize people that do great work or come up with great ideas, others are encouraged to do so. So we have people submit ideas to us all the time. And when they do we will usually allocate some budget to that idea depending on what the idea is and the potential of that idea. And we test. We test a lot. We throw a lot against the wall. And we’ll test in different markets, at different parks, at different locations. And depending on the success of that test, we’re going to scale it to a few more locations and if that works, then we’re going to scale it all over the place.

But the key to the whole thing is getting people to raise their hand and say, “Hey, I think I’ve got a winner.” Here’s something [crosstalk 00:32:15]

Andrew: And so, what’s your process if I were working for one of your locations and said, “Glow in the dark T-shirts, man, they wear him here and then they go out to clubs and they’re basically promoting us.” What do I do? How do I bring it to you?

Jeff: Well, I’m going to tell you the process we have and I’m going to tell you what actually happens. The process we have is, we have a simple form that people fill out. And we’ve got one for simple ideas and it’s called One Big Idea. And they fill out a form and they submit it to our office.

We’ve got one that has to do with bigger ideas or require bigger capital investments, that require people to fill out a little bit more lengthy of a form. And say what is it and what’s the cost, and why do they want to test it, and what’s the business case.

Here’s a reality. No one fills up freaking forms. Okay? So we have those for documentation because we need them and want them. But the thing that people do is they simply pick up their phone and they call.

Andrew: And they’ll just call you.

Jeff: They’ll call me, they’ll call somebody on our field team. They’ll call the person that they are most comfortable talking with, where they feel a sense of security that they’re not going to be laughed at for an idea. Because that is what most people fear, is that someone’s going to say, “That’s a dumb idea.”

And so they’re going to call, most of the time. And they’re going to talk it through. But getting them to make that phone call it’s not easy. It’s hard. But that’s just [crosstalk 00:33:28].

Andrew: So, what do you do to get that? Because I’m like that even with my audience. I want them to tell me when there’s an issue, I want them to call me out if I screw something up. But it’s hard.

Jeff: Yeah, it is. But, you know, I think it starts with recognition. If you recognize people for are doing good work or for coming up with ideas and you give them the credit, it will show other people that, “Hey, you know what? Maybe I can come up with something too.” Or that this is a company that recognizes people that are innovative and think outside the box. And I think that’s what it starts with.

I had someone in our office come to me as an example, about three months ago, and said, “Hey, I want to film a video. I want to bring glitter. I want to bring trampolines. I want to put it on a rooftop. I want to get a production company and we’re going to make a 90 second video with glitter and sunshine in downtown L.A. on top of a roof and we’re going to get people flipping and doing crazy things and scuba blah, blah, all over social media.” This person had no experience whatsoever in filming. None, zero. Had never produced a video. And she came to me and said, “I need $4,500 to do it. I’ve got a friend who’s got a production company. Can I do it?” Sure.

Why not? Because I think it is going viral, because I think it sends a message that when people think of creative ideas, which I thought her idea was creative, because glitter and trampolines were relevant at the time, you got to encourage them to do it. And, you know, it’s more of a message it sends by letting people do stuff like that and then the result you’re hoping for and allows [crosstalk 00:34:48].

Andrew: And how does everyone know that you guys are doing that?

Jeff: Because of course, that person’s going to brag about it. You know, they’ll say, “I’ve got $4,500 . . . ”

Andrew: But there’s no internal website or Slack group or something like that. They just talk about it.

Jeff: No. We use Slack, but we don’t do it to promote things like this. This person just talked about it. She went out and she bragged about it. She made a really cool video and she showed people, people said, “How do you get that?” “Well, I proposed the idea and, you know, it organically happened.” We don’t want to advertise necessarily that we’re doing these things that loses authenticity in a way.

Andrew: You know what? Every time I search for your locations, I end up with your competitors, I just type in Sky Zone indoor trampoline park into Yelp and then they send me to your competitors. Are you guys in San Francisco?

Jeff: No, we do that purposely. No we do not have a location in San Francisco, you’re probably looking at a House of Air, I would imagine.

Andrew: House of Air is one, but then there are bunch of places that are called Sky High something, Sky High Sports. And then they also take me to a Rockin’ Jumping Dublin.

Jeff: We are merging our brand with Rockin’ Jump.

Andrew: Really? You bought them?

Jeff: Well, where we were acquired by a private equity firm that also owns them and another competitor of ours. So they’re now merging all the brands together.

Andrew: The rolling up trampoline places.

Jeff: Yeah, consolidation. It’s time to have it.

Andrew: Why’d you sell it?

Jeff: Well, a couple of reasons. One, I felt like it was time for our original partners to realize a return on their investment. They had been very supportive of the business for many, many years. And I was happy and proud to see that they were seeing a good exit. Two, the competitive landscape was pretty aggressive out there. And so we were trying to make a decision of, do we want to bring on private equity capital for growth and fight against our competition or do we want to marry up with some of our competition?

And the notion of marrying up with our competition, which a couple years ago I would’ve said, “I would never do that.” Seemed to really intriguing and gave us all, and by all I mean our company, their brands, our franchise owners, the best chance and opportunity to win. Because leveraging our size and scale even more now became a real possibility. So private equity was always sort of the same thing we wanted to do, but the time to partner up with these guys made a lot of sense for us.

And we now got 300 parks globally. We are about nine times bigger than our closest competitor. I mean, we’ve got serious scale.

Andrew: You took it to 195 franchise locations across the U.S. than they had at Rockin’, I think, 300 facilities, is that right? Or at least CircusTrix had 300 facilities and then they merge you two?

Jeff: We are 300 combined now. So we’ve got about 200 ourselves, Rockin’ Jump has 50, and the CircusTrix has about 50.

Andrew: I see how, okay. I’m looking at the acquisition document. How much did you sell for?

Jeff: Andrew. Good try, buddy.

Andrew: And you’re still working there, why?

Jeff: Yeah, well, look I’m fully invested. So, you know, I’m an investor back in the business. I rolled over equity.

Andrew: But you have equity in this new business.

Jeff: Oh, yeah, of course. I’m doubled down. I’m all in this. This wasn’t about me getting out. This was about our other partners getting out and capital for growth and paving new waters.

Andrew: You know, here’s the thing that stands out for me on the newswire about this, they acquired Sky Zone LLC and Sky Zone Franchise Group LLC, why two different companies?

Jeff: Just the way we set up the structure of the business early on. No good reason why. Just a corporate structure that lawyers probably wanted to create more companies to add more legal fees.

Andrew: Okay. I imagine there was more reason to it than that. Do you remember what it was? Like, did the franchise business need to be owned by . . .

Jeff: Really the real reason it was, was Sky Zone LLC owned their trademarks, Sky Zone Franchise group was the entity that we started franchising. We kept it separate. And there’s no reason other than that. It was just separate entities.

Andrew: All right. Let me talk about my second spot and then I want to come back and ask you about how you got customers, and apparently one of the things that worked for you was this thing with Randy Couture, the MMA guy, right?

Jeff: Mm-hmm. That’s right.

Andrew: All right. The second sponsor, I imagine is not super relevant to you, it’s Toptal. My audience, audience of entrepreneurs, all they care about is, first is, “Where do I get my idea?” And then once they get their idea and things are growing it’s, “How do I hire more developers?”

Well, if you’re out there listening to me and you’re trying to hire more developers you could do what so many other businesses do, which is place ads everywhere, ask your friends, ask your friends of friends, tell your people that are going to give them a bounty if they hire the right developer. And the reason that people do this is because the right developer can make or break your business. How many entrepreneurs do you know who built great businesses and said it’s because of the CTO? That’s right. Who is it? Instagram had, I think, six people when they were acquired because they had such a phenomenal developer chops.

And so if you’re out there looking for the best of the best, you can’t spend a lot of time looking over and over. What you want to do is go to the people who have attracted the best of the best. And they attracted it largely because they have a reputation for having a tough, challenging test for developers and the best developers want to be challenged, they take the test, they end up at these guys database and ready for you to hire if you’re looking to hire.

So I’m going to give you a URL where if you want to talk to somebody and find out whether hiring from Toptal is right for you, you can get on a call with them. And if you are finally ready to pull the trigger and hire from Toptal, they’re going to give you 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period of up to 2 weeks. That URL is toptal.com/mixergy. That’s top as in top of your head, tal as in talent. T-O-P-T-A-L.com/mixergy.

I feel like you’ve got a lot going on. You’re very social, you’re chatting and texting as we’re talking. I’m totally fine with it. I’m trying to get a sense of you. Like you know what I noticed about you? Before we even started, most people are anxious, like, “What the fuck am I do? Who is this guy Andrew? I got to now do this interview? What’s he going to ask me?” You did this. Before we started recording, looked over on the side, you’re like waving somebody, totally chill, totally had. Are you an extrovert?

Jeff: Yeah, you could probably say that.

Andrew: Always. Like, are there people in the room with you right now?

Jeff: No, I’m sitting in like a barren office that I just stole from somebody because I’m traveling. So, no. There’s nobody around me.

Andrew: At one of your locations.

Jeff: No, in one of the office buildings for CircusTrix in Provo, Utah.

Andrew: Okay. All right. Talk to me a little bit about how you ended up getting people, beyond the word of mouth in the early articles, there was some action that you guys took to get you there, what was it?

Jeff: Yeah, we, again, got lucky. Randy Couture, who was a UFC fighter, he was a heavyweight champion sort of like the Muhammad Ali of the UFC, used to train at one of our Las Vegas locations way back in the day. And before one of his fights they were doing an all access sort of a TV show on how he trains and he asked us if he could film himself training at Sky Zone. And they filmed a video of him, it’s probably 2:30 minutes. It had nothing to do with Sky Zone. I’m not even sure, I think they mentioned our name once or twice. But it was more about him training and jumping on trampolines and it went sort of all over TV domestically and even internationally.

And so that was the first time that we had some real serious international coverage that we got a lot of people interested. All those people that initially inquired about a franchise, mainly saw that show.
And today, you know, we live in a world of Instagrammable of all moments, you know, people want to do things that make them look good doing them. And you look good jumping into a foam pit. You look good going through a warrior course. You look good jumping and falling on your face. So, you know, one of our new partners, CircusTrix, the founder of the company said that you know we create photo studios inside of our parks and that’s I think he’s dead on right. So social media plays a big role in what gets the word out about us.

Andrew: How do I find that? If I’m on Instagram, what am I searching for? Just Sky Zone?

Jeff: Yeah, just search the #SkyZone. You’ll see a lot of different posts. Let’s see if we go on there, I don’t know how many hundreds of thousands are.

Andrew: 403,684 posts with Sky Zone.

Jeff: And not all these you could see. Some of these are just of the sky.

Andrew: Oh, yeah, yeah, I see.

Jeff: But as you scroll you’ll see.

Andrew: And some of them are you. Yeah, I see one with a kid jumping up and whoever took the photo cut a midair. I see another one of somebody posting a video. I see. I see how this works. This seems like a basketball player flying through the air.

Jeff: Yeah, we do a lot of things, a lot of different things in our parks. We like to make you feel sort of present and in the moment and active and sweaty and what more than anything, just having fun and playing.

Andrew: One of the challenges you told our producer was this three year project, invested millions into it and then you said it turned out to be a POS, a piece of shit. What was it?

Jeff: That’s what it was. It was a POS, it was a piece of shit.

Andrew: What was this supposed to be?

Jeff: It was supposed to be a POS. It was supposed to be a point of sale.

Andrew: Oh, point of sale.

Jeff: I like the way that you said that. I’ve got to adopt that. But it was supposed to be a point of sale but it turned out to be a piece of shit.

Andrew: So you had to shut the entire thing down. Talk to me, what was?

Jeff: Yeah, look, that was like the classic example of do what your core businesses do not venture outside of your core business. We were attempting to, in a way, become a technology company. We saw an opportunity to make our point of sale system better. And it was really not even being about a point of sale, it was about, you know, integrating wearable technology and mobile apps [through sharing 00:45:01] that we needed a new POS. And there was nothing in the market that fit our need at the time.

And with how fast technology evolves, three years later there was something on the market that was somewhat consistent with our needs. Some of us, you can see I’m talking to someone over there, casually.

And we were we are millions of dollars into the project. And, you know, it was just obvious that it just wasn’t going to work. So I had to go explain to our board. I said, “You know, this project we’ve been working on, it’s time to throw it out.”

Andrew: You were trying to do, I’m looking at an article here about it, you compete with local attractions, they say like movie theaters and Dave and Busters, and so it’s important for you to capture your audience’s attention by dressing them differently so you want to know every single person who came in a little bit about them, had they been to any of your other locations, who were they, social media information, that kind of thing too?

Jeff: Yeah, and even more importantly, what do they do when they’re inside of our parks? I want to know if someone spends some time playing dodge ball, I want to know if they’re spending time on a warrior course. You know, I want to know what it is that they like inside and then be able to communicate with them about those things. So if someone’s avid dodge ball player I want to talk about dodge ball tournaments.

Andrew: And the way you would know where they were going is you’re going to put something on their body that as they moved around that you would keep track of where they are.

Jeff: Yeah, a wearable device, RFID, pretty simple, pretty simple stuff. And we failed miserably at it. And it was a good lesson. It hurt. It stung. But, you know, failure is inevitable. I guess you just try and mitigate how many times you do it.

Andrew: And the reason that you didn’t do this, that it didn’t work out it’s because it wasn’t your core competence, but what was it that if you could go back in time and still do this what could you do differently to make it work?

Jeff: I don’t think we architected out clearly enough what it was that we were trying to achieve. We just sort of jumped right into the project. And we should have mapped out exactly what it was we were trying to achieve and spent really more time upfront. Like anything, project changes and evolves, and that’s okay. But this one we just didn’t. We were not careful upfront about sort of articulating what it is that we were trying to build. And there’s too much up here.

Andrew: I see. It was too much in your head, I see. Got it.

Jeff: Yeah.

Andrew: And then you finally close this thing down and you find software that does it largely this now.

Jeff: We found some software that we’re currently testing right now, that will come close to it but not quite there, it’ll still require some development but not nearly at the scale we were doing before. So we’re in the process of sort of playing around with some stuff right now and upfront.

Andrew: What about Undercover Boss, you were on CNBC, I feel like one of your talents is getting press, getting attention, am I right?

Jeff: Yeah, our PR firm does good work.

Andrew: It’s just the PR firm. It’s just because, frankly, dude, I talked to a lot of PR firms, I usually try to stay away from them. They’re not very helpful. It’s not that, is it?

Jeff: I don’t know, it’s a fun business, it’s a cool concept.

Andrew: That’s what it is.

Jeff: I’m beyond, you know, people these days seem to like young CEOs, you know, so. But it’s a different idea. It’s different, it’s novel and people like novelty.

Andrew: You do take good photos too, I’m looking at one here on Forbes. You’ve got to dodge balls in your hand, it looks like you’re about to strike a kid down or something with the dodge balls up into the air.

Jeff: I probably was.

Andrew: Take them down.

Jeff: That’s work.

Andrew: Finally we asked you what book would you recommend and you said, “Hey, you know what? Amazon’s 14 Leadership Principles is not a book but it’s something that I took away a lot of lessons from.” Right? What you learned from that?

Jeff: So, you know, one of the things that I like about Amazon is their constant evolution and change. Also, the thing that really sticks with me and we were having a core value conversation earlier today is the notion of just sort of radical transparency. I think that too often we try and sugarcoat things in life, especially in the workplace. And, you know, we are not transparent enough with ourselves or with our teams. And I think you got to create a culture where people have no problem looking at you and saying, “That’s the dumbest idea I’ve ever heard.” I don’t care if you’re the CEO or if you are the CEO’s assistant or if you’re the head of marketing or if you’re the most junior person on the marketing team. You know, you need radical transparency. And they seem to done a pretty decent job of creating a culture like that and failing fast, which is important.

And the other thing I think is you’re never going to have all the data to make the perfect decision. So, you know, sometimes you just have to use imperfect data and just go and make a decision and see what happens. Fail fast but just do something.

Andrew: Have you guys done that? Articulated your list of principles of what you stand for?

Jeff: Yeah, we are actually in the process of redoing it, which is why we were discussing it earlier today but we’re in the process of sort of redoing our entire core values.

Andrew: How do you do it?

Jeff: We sat in a room with a group of people, we wrote down some concepts and then we sat and we distributed those concepts to about 50 team members. And we said, “Give us your concepts and tell us what you think about these concepts.” That list of about 10 became 30. We went back to the drawing board, whittled that down even more, sent the concepts back out to team members and said, “What do you think about these?” Got feedback and now we’re handed them off to a copywriter.

So it’s something it’s been a cleaver process that the people all throughout the company have sort of helped us do. They’re not my core values.

Andrew: Why not just use what worked before?

Jeff: Who knows if they work before? I think like anything, certain things evolve and change. And, you know, core values, you want to, you know, you can’t have like the core value of the year. But ours have been in place for about seven years now. We just felt it was time to adopt and change them once.

Andrew: All right. Amazon’s list is available on amazon.jobs/principles. And your website now, is it one brand now for all the businesses?

Jeff: Not yet. Not yet. Just one.

Andrew: Not yet.

Jeff: Not yet, soon.

Andrew: But if anyone wants to go check you out?

Jeff: skyzone.com.

Andrew: skyzone.com, not Yelp. Yelp will send you over to lots of different places.

Jeff:Yeah, don’t go to Yelp.

Andrew:And finally the two sponsors who made this interview possible the first will host your website right, it’s called hostgator.com/mixergy. And the second will help you hire your next phenomenal developer, or maybe someone to architect your software. If you guys site to ever take another stab at the software, talk to the people at Toptal, toptal.com/mixergy.

All right, thanks so much for doing this interview and congrats.

Jeff: Appreciate it, man. Good chatting with you.

Andrew: Cool. Bye.

Jeff: Thanks.

Andrew:Bye, everyone.


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