Bob Parsons has a grand plan in new golf equipment company

Bob Parsons has a grand plan in new golf equipment company

Equipment

Bob Parsons has a grand plan in new golf equipment company

SCOTTSDALE, ARIZ. – When a billionaire makes a birdie, everybody claps. Anna Rawson remembered that during a recent round at Scottsdale National Golf Club. The former LPGA professional and model high-fived Bob Parsons after he holed his 10-foot birdie putt on the 17th at Scottsdale National.

Ignoring the 108-degree heat and mid-June sun, Parsons was decked out in black, topped by a hat with the Marine Corps logo. On his follow-through, when his right sleeve tugs up, a tattoo emerges of the Marines’ eagle, globe and anchor emblem and Parsons’ former regiment (26th) and military occupational specialty code, or MOS (0311, for a rifleman). In his left ear, he sports a large black earring with diamonds in the shape of a star.

Parsons, the founder of Internet domain and registrar company GoDaddy, is passionate about golf. He feels at home at Scottsdale National, which he bought in 2013 and plays daily. He carries an 11.5 handicap index, is a fixture on the range and often returns to his nearby house at night to hit balls in a simulator.

That passion doesn’t end with his club or even his own game. Parsons, 64, has started an equipment company with ambition as outsized as its owner’s personality. Parsons Xtreme Golf has challenged its 19 employees to make the best high-end clubs available, regardless of traditional manufacturing practices or cost.

Parsons wants to build the Holy Grail of irons: clubs that look like blades and play like cavity-backs, providing more distance, more forgiveness and exceptional feel. He wants it all, and he’s willing to pay for it. He also believes there are plenty of others willing to pay for it.

Parsons’ quest for perfection won’t come cheaply. Unlike most irons, typically priced at $1,000 or less for an eight-piece set with steel shafts, PXG clubs start at $325 per iron. The company also offers $700 drivers and $500 fairway woods.

“There is a sector of the market that just isn’t being served, and that’s people who have the income to stroke a check for something that will truly make a difference in their game,” Parsons said. “The guys that we sell to, quite often, don’t even ask us what they cost…. Now, granted, that is the smallest segment of the market, but for a start-up like us, it’s still a huge segment and it’s not being served at all.”

Parsons persuaded two former Ping Golf designers to join PXG in north Scottsdale: Mike Nicolette, a former Tour winner, and Brad Schweigert.

Nicolette, 58, met Parsons through a mutual friend at Scottsdale’s Whisper Rock Golf Club, where Parsons also is a member. Nicolette tried to dissuade Parsons from starting an equipment business. When Parsons approached Nicolette with a job offer, Nicolette was reluctant to leave the security of his position at Ping.

“I told him it is really hard and that he’d lose a ton of money,” Nicolette said.

Undeterred, Parsons ultimately convinced Nicolette, Schweigert and others that he is in it for the long haul.

“Bob told me that if he went away tomorrow, PXG has enough funding to go on for a hundred years,” Nicolette said.

For now, while the construction of PXG’s new office space in Scottsdale is being completed, employees work in two large trailers near Scottsdale National’s range. Funding is readily available for research and development. Parsons told his team to buy any equipment necessary, use any materials they wanted and spare no expense in manufacturing. The clubs themselves are built in China from parts constructed in Taiwan and Japan. Parsons also said something the designers probably had never heard: Don’t worry about the price tag.

“Most golf companies, with the exception of Ping, are public companies that are stressed for sales, results and revenue,” Parsons said. “They have to put numbers on the board, and to do that you’ve got to sell to the widest part of the market.”

Parsons isn’t aiming for the fat section of the bell curve. His target audience is all the way to the right, the upper-half of the 1-percenters.

That begs a question: Can anyone build a business selling a $2,600 set of irons? Parsons, with a net worth of $2.2 billion as estimated by Forbes magazine, is more certain of it than one experienced market analyst.

“Mr. Parsons is known by reputation for his wealth,” said Casey Alexander, director of research and a special-situations analyst for Gilford Securities in New York. A low-handicap player, Alexander has covered the golf-equipment industry for decades. “To have enough wealth to be able to say ‘I don’t care about making money,’ is, in my opinion, a necessary precursor for getting into the golf-club equipment business.”

There is a popular belief that the golf industry is a market-share game. If a brand wants growth and increased sales, it must come at the expense of another brand because the market is not growing.

“I have had many, many people come to me and ask me to find investors to invest in their company,” Alexander said. “What I have told them is, if I had an investor come to me with a million dollars who said that he wanted to put it in a golf-club equipment business, I would tell him to put it all in the center of my conference table and light it on fire because the result would be the same, but I would have just saved him five years of his life in frustration and anxiety.”

PXG is only getting started, with clubs available at custom-fitting company Cool Clubs via its 11 U.S. locations and stores in Australia, Japan, Mexico, Canada and England. PXG also plans to make equipment available through other high-end specialty stores.

With deep pockets and a willingness to spend his own money to fund PXG, Parsons can clear hurdles such as developing distribution channels and scaling up to meet demand.

 

There’s also a benevolent side to him: According to his biography on GoDaddy.com, Parsons and his wife, Renee, take part in The Giving Pledge, a program started by Bill and Melinda Gates and Warren Buffett that challenges the wealthy to give at least half of their fortunes to charity. In 2012, The Bob & Renee Parsons Foundation was created to benefit nonprofit organizations. They since have given millions to such causes as Hope for Haiti, Make a Wish Arizona and the Semper Fi Fund.

Parsons won’t cower at the prospect of this business failing. He said he faced far scarier things after he enlisted as a Marine in 1968 and was sent to Vietnam in February 1969.

“My squad was ambushed two or three days before I got there, so I was one of the replacements for the four guys that were killed,” he said. “The guy who had been there the longest, and who was calling the shots, was 19 and had been there three months.”

On his first mission, a squad mate was badly wounded. It made Parsons consider how he would survive 13 months in-country.

“I accepted the fact that I was going to die there, and as soon as I did that, everything got easy,” said Parsons, who received a Purple Heart after being wounded in the legs and left elbow after he stepped on a tripwire that set off an explosive device. “My goal for every day was to be alive for mail call.”

Parsons sold 72 percent of GoDaddy in 2011 for $2.25 billion, retaining 28 percent of the company and a seat on its board of directors. Provocative, racy Super Bowl ads with scantily clad models such as Bar Refaeli and auto racer Danica Patrick helped put GoDaddy on the map.

Parsons is fond of saying, “Bad advertising is like a fat guy at a party. He doesn’t offend anybody and he smiles a lot, but he doesn’t get any action.”

It’s safe to assume PXG ads won’t feature khaki-clad men in sweater vests and visors. PXG hired Rawson as a spokeswoman in June. When asked whether golf fans should be ready for commercials and ads like GoDaddy’s, Parsons replied with a laugh, “I’m back, baby!”

PXG also started a tour staff. Ryan Moore is aboard and began using PXG equipment in January. Rocco Mediate signed with PXG and started using the clubs in April.

Matt Rollins, Ping’s former PGA Tour manager, joined PXG in March. He said the company intends to add players, ideally up to five or six on the PGA and LPGA tours. Rollins said he has been approached by several agents, including some who represent Tour players ranked among the top 25 in the world.

“If we bring in top-50 men and top-50 women, it brings massive validity for the products,” Rollins said.

Parsons doesn’t think PXG will cost established manufacturers many sales, but if agents and players think Parsons will spend big on tour validation, the added competition may force other companies to spend more for impactful players.

Even with splashy ads and tour players swinging his company’s clubs, PXG will never be the biggestselling brand in golf. So, how will Parsons define success?

“What I focus on in business is the product and the customer. The last thing I think about (with my other businesses) is making money, and that’s the way I plan on being with PXG,” Parsons said. “In two or three years, I want people to say that if you want the absolute best, buy PXG.”

BIO: BOB PARSONS
AGE: 64
HANDICAP: 11.5
EDUCATION: Baltimore (accounting, magna cum laude)
OTHER: Founded in 2012, Parsons’ YAM Worldwide is a company whose holdings include a private lending and investment firm, Martz-Parsons advertising agency, commercial real estate and several Harley- Davidson dealerships. Parsons is preparing to open what he claims will be the largest Harley-Davidson dealership in the world in Scottsdale. The two-level, 146,000-square-foot location will be larger than the typical Walmart and have a 20,000-square-foot service center, 87,000 square feet of underground parking and storage, a wedding chapel and a tattoo parlor.

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