Jeff Hakman and Bob McKnight were worried—they couldn't get the trunks quite right. For weeks during the latter half of 1976, the twentysomethings had fumbled with sewing machines in a Spartan shed off 17th Street in Costa Mesa, tasked with getting America ready for Quiksilver, a then-obscure Australian clothing brand known by only the most committed surfers. And now the company's founder, Alan Green, was jetting to Orange County to check on his newborn operation. He asked Hakman and McKnight to meet him at the Quiet Woman, the Corona del Mar pickup joint marked by a pub sign featuring a woman missing her head.
Green was already slurring his words when the two arrived. With three buddies, the Quiksilver founder was "propped up in a booth, surrounded by empty wine bottles," writer Phil Jarratt related two decades later. To Hakman and McKnight, the four Aussies were "all talking gibberish." But after half an hour, the Americans were talking gibberish, too—and an empire was born.
The party that began at the Quiet Woman didn't end there. The six surfers loaded up on beer, tequila and cigarettes; piled into a Lincoln Continental; and headed to Las Vegas. They took turns blasting across the Mojave Desert, daring one another to swerve onto highway berms and even crashing into an exit ramp while doing 90. Days later, when they regained a degree of sobriety back in Orange County, a more businesslike philosophy ensued.
"[Green] was checking us out," Hakman recalls in Jarratt's 1997 tome, Mr. Sunset: The Jeff Hakman Story. "He didn't say much, but I think he was horrified by our business act."
But Green saw something in the two—McKnight, a USC business school graduate, and Hakman, a classic beach bum who knew golden opportunities the moment he saw them—and used the rest of his stay in Southern California to teach the pair how to build the trunks he had invented. In 1976, the best surfers in the world began seeking Quiksilver because they were the best. The combination of Velcro, snaps and a high waistband made them grip hips and stay on, even in the largest waves. Before long, Hawaii-based Americans such as Hakman sported them. Soon, the surf mags were running photo after photo of pros gliding down famous waves such as Banzai Pipeline and Sunset Beach while wearing them—the best advertising imaginable.
From its garage-like space, Quiksilver swelled. Within 10 years, it became the first publicly listed surfwear company; soon after, it opened boutiques in New York, Paris, London and Dubai. And by 2004, it announced annual earnings that exceeded $1 billion. In Orange County, the company became a local powerhouse, gobbling up talented designers, artists, executives—a sand-and-surf Apple with no signs of ebbing. It made Orange County an action-sports-apparel Silicon Valley and undertook acquisitions with the intent of solidifying Quiksilver as a global brand for the good life.
In 2006, the firm reported revenue of $2.5 billion—a company record. But the brand has crashed mightily ever since, leading up to this past Sept. 9, when Quiksilver sought relief in a Delaware bankruptcy court from $826 million in debt owed to more than 30 creditors. According to filings, the company's balance sheet had assets of just $337 million—less than half the total it owed.
Within days, 80 employees at the company's mothership in Huntington Beach were laid off. And last week, Quiksilver representatives started court-ordered mediation with creditors in New York; the company's stock wallows at a fraction of a penny per share on the New York Stock Exchange. It's a once-unthinkable fate for the company that was supposed to surf on forever. And the biggest tragedy? It didn't have to be this way.
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Now marketing director of Quiksilver Europe (legally untouched by its American sister's bankruptcy), Hakman lives in France. He didn't respond to an interview request via longtime friend Duke Boyd, founder of the Hang Ten surf clothing line in the 1960s. And while he doesn't deserve all the credit behind the brand's ascent, surfing observers maintain Hakman is the key to understand the origins of Quiksilver's appeal—and how it ultimately went astray.
"Is he? That's crazy," says Steve Pezman, the former Surfer magazine publisher who today publishes The Surfer's Journal, when told that Hakman remains an executive at Quiksilver Europe. "To me, there's a sort of cynical beauty in that happening. He started [the company] in a shed in Costa Mesa with Bob McKnight, and now he ends up a head of a behemoth Aztec pyramid—sitting in the jungles of Europe, so to speak."
Hakman spent his early years in Redondo Beach and Palos Verdes, but he moved to the North Shore of Oahu by age 12. There, he was a young haole, enduring merciless hazing by locals. Pushed by surfer dad Harry to excel, he was soon impressing everyone on big waves at Makaha and Sunset Beach. By the early 1970s, Hakman was one of the best surfers in the world, bringing a commitment to go all-out for any contest or challenge that earned him cred from his peers. When other pros refused to paddle out in the 1974 Smirnoff contest at Waimea Bay, featuring some of the most intimidating conditions ever seen in contest surfing up to then, Hakman just shrugged. With wave heights topping 35 feet and contest organizers ready to pull the plug, Hakman took second place in the competition.
Two years later, Hakman and McKnight met, although each differs on the details. Quiksilver's official company history says it was in Bali; Hakman recalls February 1976 in Pupukea, Hawaii. Regardless, it was an unlikely duo: McKnight hailed from tony San Marino and had just finished from USC, while Hakman never bothered with higher ed. But the two loved to surf and wanted to make a living from it. Wherever it was they connected, it was McKnight's choice of fashion when they met that sealed the partnership. "This is the key," Hakman recalls saying as he patted the Quiksilver patch on his boardshorts.
After Green returned to Australia, Quiksilver took off. Corporate lore tells of how McKnight had to sell their wares out of a Volkswagen bus and from a garage in Newport Beach that turned into their first headquarters. He took care of the money; Hakman focused on getting free gear to surfers. But two years after the gonzo tear to Vegas, Hakman had discovered new pleasures. He was telling McKnight and co-workers about the need to drive to San Juan Capistrano to discuss advertising with Surfer and Surfing magazines. In truth, he was doing daily runs to Laguna Beach—for quarter or half grams of heroin.
"The [dealer] was into shooting it," Hakman recalls. "It made your stuff last twice as long. . . . Pretty soon, I was shooting heroin and cocaine into my veins every day, and the only time I'd let up and go back to smoking or snorting was when the tracks on my arms got too obvious."
"Either I was naive, or he hid it incredibly well," co-founder McKnight told journalist Rob Buchanan for a 2004 Outside magazine Hakman profile. But the company quickly soured on Hakman's exploits, showing him the door by 1982. He had $3,000 to his name. In 1984, he was living a modest existence as a surf-shop clerk in Queensland, Australia. Then another fortuitous meeting occurred: with surf-film director Harry Hodge, who was primed to launch Quiksilver Europe. There, Hakman went through the same cycle: launched a successful company, then succumbed to heroin's call. He finally got clean in 1990, when co-workers shuttled him to Galsworthy Lodge, an uppercrust rehab facility outside London.
"The same thing that got me addicted definitely made me a good surfer," he told Outside. "You know, once you get a direction, you go and commit."
Hakman's stumble down the alley was no outlier in surfing for his generation. "Surfing as a culture is pretty ill in many ways," Pezman says. "So [Hakman] succumbed to that, and it probably hindered him hugely. But nonetheless, he was able to pull it off—and even live happily ever after."
His 1982 departure from the American company, however, made room for more ruthless business professionals to chart Quiksilver's ascent to near-earth orbit—and its eventual, humiliating plummet.
* * * * *
"For companies, the ostensible product [is] mere filler for the real production: the brand," Canadian activist Naomi Klein writes in No Logo: Taking Aim at the Brand Bullies. "Producing goods [is] only an incidental part of their operations. They [are] able to have their products made for them by contractors, many of them overseas. What these companies [produce are] not things . . . but images of their brands. . . . Their real work lay not in manufacturing, but in marketing."
Klein was talking about classic multinationals in No Logo, although the fashion industry wasn't spared her pen. With its dependence on low-skilled, cheap labor, Klein thought the clothing trade one of the worst offenders—or, as Pezman puts it, "the most whoreish [business] in the world."
After Hakman was pushed out, McKnight put Quiksilver on a track that left behind Newport Beach garages for corporate headquarters, American manufacturing for overseas cheapness. In 1990, they celebrated two landmarks: the signing of surfing superstar Kelly Slater and the launch of its Roxy clothing line for women. More celebrity endorsements, international licensing agreements and marketing campaigns followed, as did revenues. Quiksilver opened retail stores, which pushed mom-and-pop shops out of business. And throughout it all, McKnight kept up his public reputation as a lucky surfer who hit it big, essentially taking Hakman's persona and making it his own. "I'm a non-garmento, non-Wall Street type," he proudly boasted at a 2000 Surf Industry Manufacturers Association event in Cabo San Lucas. Two years later, Surfer declared him the most powerful person in the surfing world.
The Quiksilver machine hummed noiselessly and made handsome profits for McKnight and others—he cracked $1 million in base salary in 2007, two years after McKnight had engineered a $560 million acquisition of ski brand Rossignol and a part share in Cleveland Golf in an effort to branch out. By then, Quiksilver was producing movies, TV shows and books. The company was flying Slater to remote breaks using branded seaplanes. Corporate parties got more and more lavish, and McKnight became a staple of Orange County's society pages. But the execs didn't let much profits trickle down. Of several dozen posts at glassdoor.com, an online discussion site for workers, almost all employees complained about Quiksilver's crappy pay. "One of the most hostile environments I've ever experienced," a former design professional wrote in 2013. "Empathy doesn't exist."
By 2008, according to one executive, fewer than a quarter of surf-product customers actually surfed. That's the same year Quiksilver sold off Rossignol, with total losses in the $400 million range.
"Rossignol, I think, was the thing that killed Quiksilver in itself," Pezman says. "When you try to be all to everyone, you lose the support system. When you de-specialize, you lose your attraction to the specialized markets you had."
Following the Rossignol debacle, Quiksilver began losing its luster. It laid off more than 350 workers across its divisions in 2009 alone. Its share prices tumbled, and while the company reported earnings of $2.01 billion in 2012, the employees who remained were being hammered by management—forced to work late nights while being told they "were lucky to be there at all," according to a former employee who worked there during that time. "Times were tough. But . . . let people go home and see their children."
Quiksilver plowed ahead despite warnings from outside and within. In 2011, Huntington Beach-raised Cori Schumacher was World Women's Longboard Champion. Schumacher had everything to gain by keeping her mouth shut and marching off to Quiksilver's next branded event on Hainan Island, China. But she had followed a string of stories about Quiksilver's operations in the garment factories of Shenzhen, China's "special economic zone" north of Hong Kong. A 2003 New York Times piece chronicled how a factory that churned out garments for Quiksilver and rival Billabong created a "union" to represent workers—and then named the factory manager its head. There was also a comprehensive 2008 report from the New York-based China Labor Watch that documented worker wages of 48 cents per hour with living expenses deducted, leaving almost nothing for workers' savings. With no resources to educate children, the situation ensured "an endless cycle of poverty," according to the report.
For Schumacher, the revelation that Quiksilver's profits were built on exploited workers made only one course of action possible. She boycotted the event and the world surfing tour, forfeiting a chance to repeat as champion. "The surfing community is its own disconnected bubble," she now says about her decision. "Very rarely will somebody stand up and say publicly that something isn't right."
She didn't stop there. The more she thought about Quiksilver and its Roxy clothing, the more bothered she became about the tired drumbeat of images that objectify women, many fellow "team riders" sponsored by Quiksilver. Schumacher gathered more than 20,000 signatures asking Quiksilver and Roxy to tone down the imagery. When she met with corporate brass in 2013, she was stunned by the response.
"I told them how disconnected they had become from what women who surf want," she recalls. "Their response was that they didn't need to listen to female surfers. They didn't think they had their finger on the pulse of women's surfing—they believed they were the pulse of women's surfing."
Then there was Dr. Mark Stranger, a surfer who earned his doctorate in sociology from the University of Tasmania. In 2011, he published Surfing Life: Surface, Subculture and the Commodification of the Sublime. (That same year, McKnight's salary ballooned to $10.2 million, a spike that prompted a shareholder investigation.) The book offers a frank diagnosis of bad decision-making, along with a strong suggestion of imminent doom at Quiksilver. Now hauling tourists around Tasmania aboard two 62-foot sailing yachts, Stranger seems disappointed his work hasn't had more impact. "I'm glad at least someone read the book," he said via email.
Surfing Life is dense, employing the vocabulary of postmodernism and the methods of literary deconstruction, but Stranger's analysis is spot-on. He charted the commodification of surfing by the so-called Big Three—Quiksilver, Billabong and Rip Curl—but warned that it was a tenuous existence that meant any overt stab at the mainstream would "ensure [that surfers] wouldn't be seen dead in bed with one of their T-shirts." And Quiksilver's moves during the 2000s, Strange concluded, "pos[ed] considerable risks for the company" that "threaten[ed] the integrity of the symbolic community—the surfing nation—by alienating it from the tribes, bands and individual surfers for whom these activities are distinct and different subcultural forms."
Tellingly, Quiksilver's own historical time line on its website ends in 2011. In 2013, McKnight stepped down as CEO, staying on as executive chairman until announcing his retirement the following year, though remaining on the board of directors. That year also saw the company go through two rounds of layoffs. The following year, Slater shocked the surf world by leaving Quiksilver, who had sponsored him for nearly 25 years. By the time 2015 arrived, Quiksilver declared bankruptcy—and no one in surfing was surprised. Schumacher recalled getting "a little smirk on my face, a smile," she says, "because I had tried so hard to get them to listen."
* * * * *
Full disclosure: I visited Hakman's and McKnight's Costa Mesa headquarters in 1979 and '80. To my preteen buddies, it was the Quiksilver Warehouse, the place from which we bought flawed boardshorts for cut-rate prices. I recall a pair of trunks with the mountain-and-wave logo sewn on upside-down that I razor-bladed off, then hand-sewed into the correct position. One day, while my best friend Teddy Buckley tried on some trunks, he bumped into Australian professional surfer Mark Richards, who had just captured his first world championship. It was the kind of encounter that just confirmed for us Quiksilver's claim to cool.
By then, we and other surfers had already ditched Hang Ten, the iconic surfwear brand developed by Huntington Beach native Boyd. Boyd was a surf and business genius—he had used his good pal Hakman for Hang Ten ads by the late 1960s. And long before McKnight mythologized his VW bus sales, Boyd passed out shorts around the Huntington Beach Pier to the regulars known as the H.B. Rat Pack. That group's kiss of approval launched Hang Ten toward the top of American surf clothing businesses, but the move from surf shops to department stores after Boyd sold his stake in 1970 forecast its own doom. The label still exists, though not here—it's a clothing brand in China and other Asian countries.
Hang Ten's demise should've been a cautionary tale for Quiksilver, according to Boyd, who now lives in Oahu. "It's pretty much the same case," he deadpans. "You can't take something made for an in-group that has strong roots and give it to people who are not from that field. If you do, you're in trouble."
If history had unfolded a little differently, Boyd might've launched the American branch of Quiksilver himself. He flew to Australia in 1976—at Hakman's urging—to make an early appeal for its license. Boyd endured a session of head games from Green, the Quiksilver founder who toyed with McKnight and Hakman on the trip to Vegas two years later. "He just wanted to pull my leg—like Australians can do," Boyd recalls. "Give me some trouble. Well, it cost me some [airfare] money for that little joke."
One wonders what Quiksilver would've grown into if it had remained in the hands of surfers such as Hakman and Green. On the other hand, one wonders what Hakman and Green might have turned into had they remained to the bitter end—but insiders insist they would've created something better than the company's current fate. "There's nothing worse when you're supposed to be a core brand than to go to Costco and see Quiksilver on one table and containers of mayonnaise next to it," scoffs a former professional surfer who asked that his name not be used to avoid jeopardizing industry ties. "Pretty soon, you've got 70-year-olds walking around in Quiksilver because their wives bought them shirts for $11 each."
McKnight did not respond to a request for comment.
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Asked for his take on the bankruptcy, Stranger says Quiksilver might've avoided collapse had it carefully and strategically planned its move from a surf brand toward "a more generic sports brand. How much of [the bankruptcy] was to do with the board's ignorance of the crucial link with Quiksilver's roots? How much was the result of them simply failing to manage the severing of those ties? I wonder how much [each] had to do with it."
Following the bankruptcy, Quiksilver now must get all moves approved through Oaktree Capital Management, which also has a stake in Billabong. One Oaktree option floated last year was a merger of the two, a marriage that might strike surf-industry stalwarts as sacrilege. But at this point, what else can Quiksilver do?
"The length of stay in the marketplace is based on mirrors and trickery and stuff that a poor surfer has no clue about," says Pezman, who has seen brands come and go for decades. He points out that the newer brands tend to remain as obscure as possible, the better to ensure its surfer cred and survival—the antithesis of Quiksilver.
They "did an incredible job of keeping it going from the 1970s into the '80s, '90s and 2000s," Pezman concludes. "At one point, it seemed like it might defy the arc—but no, it didn't."