From the December 2011 issue of Entrepreneur

Tracey Canaday grabs a snowboard from several propped haphazardly against the wall of a large, cluttered office in the headquarters of Never Summer Industries, located in the shadow of the Rockies just a few miles north of downtown Denver. He lays it on a table so the contours at its base are visible. This, Canaday says, "is the most innovative board we've ever built."

The "we" includes Canaday's brother Tim, along with the rest of the 70 employees of snowboard, ski and skateboard creator Never Summer. The board is the 20th anniversary edition, all-mountain freestyle Proto CT--the product of four years of shredding convention and reinventing the design of a snowboard.

Back in January 2008, the Canaday brothers had just returned from a trade show promoting next season's snowboards. But right when they got back, Tim, who heads up Never Summer's R&D, hit on the perfect "rocker and camber" design--combining the traditional convex-shaped (camber) base with a concave (rocker) one--making a board that was easier and more fun to ride. And like two riders laying fresh tracks on a sick first run, they went big. Really big.

They scrapped the original lineup, and in a matter of months introduced an entirely new selection of rocker and camber boards for the 2008-2009 season. At first, distributors balked, but by the time the first snowstorms rolled in, it was clear Never Summer was on the leading edge of a revolution.

Tracey Canaday
Tracey Canaday of Never Summer

"It was a huge risk, but we felt it was the right decision," says the bearded, ruggedly fit, gum-chewing Tracey, sporting a black Never Summer baseball cap and T-shirt. "Especially in action sports, you have to keep pushing it, and our approach to business is to go for it and see what happens."

Priced at $540, the Proto CT boasts a "carbonium" laminate top sheet displaying a splash of rainbow-bright color around Never Summer's phoenix logo and a slew of innovative technical features: a superlight wood core, the "vario power grip" sidecut for better edge control and a signature dampening system that keeps the ride smooth when bombing down double blacks.

And of course, it's rocker and camber--like a "McDonald's Golden Arch popping a wheelie," a rival builder was quoted as saying. The board, flat in the center, curves upward to where the binding mounts end, giving beginners more control as they switch from toe to heelside (read: less faceplanting), while the camber areas allow for better stability and power for veterans attempting ollies and other gnarly tricks.

Never SummerThe design was unique enough for Never Summer to secure an official U.S. patent for the rocker-camber design, sparking a brief spat with Mervin Manufacturing, a Seattle-based competitor owned by Quiksilver that produces hundreds of board models through the Lib Tech, Gnu and Roxy brands. Mervin execs claimed they had been producing rocker-camber design since the 1980s. Canaday, however, says there won't be a big push to pursue licensing fees, and that he plans on allocating a portion of money collected to charities.

Since then, the rest of the industry has followed suit, with every major brand offering some type of rocker-camber, also known as reverse camber, board. In fact, 45 percent of all new boards sold in 2010 were reverse camber, says Kelly Davis, director of research at SnowSports Industries America, a trade association in McLean, Va. "Never Summer is a very agile brand," she says. "The founders are good at connecting with customers, but they also can change more quickly because they run one of the handful of remaining snowboard factories in the United States."

In other words, despite industry giants like Vermont-based Burton Snowboards having far larger market share, Never Summer still has an advantage because manufacturing products overseas makes it difficult for their competitors to react as swiftly to changing consumer tastes.

Marc Wierenga, marketing director for Signal Snowboards, which operates a small factory out of Huntington Beach, Calif., that has sold out of inventory the last few years, believes smaller brands have done well in the recent recession because they are able to cater to a pickier, early adopting audience. Slower response rates on the part of larger brands may account for the overall slide in snowboarding sales--down more than 300,000 units over the last four years--even though the overall snow-sports industry was valued at $3.3 billion in 2010, and snowboarding enjoyed its highest rate of participation ever. "Those companies might be taking a hit because retailers are looking for something fresh," he says, "but we have core customers who still want specialized products, so we actually grew."

As for Never Summer, tipping off the rocker-camber trend triggered a major turning point for the business. After 15 years of steady growth and carefully crafting a reputation as a premium, if less well known, U.S.-based snowboard manufacturer, the company's fortunes suddenly exploded. Revenue has doubled each of the past three years, to just under $10 million. Last May, after 13 years at their current location, Canaday expanded total office space by 15 percent. And to accommodate increased demand, the factory now operates two full-time shifts, with the 2010 product tally clocking in at 22,000 snowboards; 12,000 skateboards; 6,000 skis for local, partner ski companies including Icelantic, Fat-ypus, High Society and Rocky Mountain Underground; plus about 2,000 promotional items for mainstream brands like Coors.

Carving Out a Niche
It all started, appropriately enough, in a garage. The brothers, who lived in Fort Collins, launched Swift Snowboards with their friend Scott Rolfs out of their home in 1983, a year after they were introduced to the sport. Tim Canaday, just 14 at the time, and four years Tracey's junior, built the first snowboard in his wood shop class. "Tracey and Scott were figuring out the business, and I was good at building things, so I gave them advice on how to build a mold that I just learned from my shop teacher," he says.

Tim Canaday of Never Summer
Tim Canaday of Never Summer

The industry was still nascent then­--more of a backcountry sport where boards, made simply of wood, evoked rocker-shape sleds and bore names like "the snurfer" and "the flying yellow banana." There were no industry standards yet, and no demand, so they eventually shuttered Swift and moved to California. "It didn't look like it was going anywhere, so we decided, 'Let's go learn how to surf,'" Tim jokes.

Fast-forward seven years. The landscape of snowboarding had completely changed, given its official recognition as a sport in 1985. A growing number of ski resorts were finally letting boarders on the slopes, so snowboards had begun to resemble wide, cambered skis, with fiberglass and carbon composites designed to move on groomed snow.

"A bunch of business articles came out around then about this new sport, and we thought it was an opportunity that had potential, and having the little bit of experience with Swift made it more appetizing," Tim says. At the time, snowboarding was becoming mainstream, and a lot of new brands entered the fray. Quite a few produced boards made in the same factories, with the only difference being the graphics and name stamp. (Many disappeared by the late '90s, either through lack of sales or consolidation.)

Stepping In
Even with $3.3 billion worth of opportunity, carving out success in the snow-sports industry requires some finesse. Here are three tips for avoiding gaperdom from Mike Martin, associate professor and director of the Ski and Snowboard Business program at Colorado Mountain College in Steamboat Springs, Colo.:

Network. "The industry is tightknit, and a lot of times success depends on who you know," Martin says. For example, retailers often are reluctant to try new products from unknown business owners, so it's a good idea to work first at a company you admire to see how it functions and gain access to industry players.

Learn the business. There's the fun part, with branding and graphics and design, but if you're pushing a new product, it's all about where the rubber meets the road. You need to find a good manufacturer and source materials from different parts of the world--and distribute inventory on time. Figure that stuff out.

Be original. Make sure you've got something new to offer, whether it's a philosophy or great customer service or even a completely new product. "Sometimes people try to focus on marketing because they have the same thing everybody else has," he says. "Those are the companies that disappear within the first five years."

The time was ripe, it seemed, for another try, so the Canadays moved back to Colorado, rented out a space in the Summit Snowboards factory in Silverton and started tinkering with decks. In 1991, Never Summer was born.

The first couple years followed the classic script of entrepreneurial persistence--running up credit card debt just to keep things going, getting small loan injections of $10,000 to $20,000 from friends and family, driving door to door in a Honda Civic pushing sample snowboards. "I went to the notable shops, and some guys were into it, but most were like, "Who rides for you?' and 'How are you gonna compete?'" Tracey says. "We didn't have money and we didn't know anybody in the industry, so we had to have something truly different to offer."

That something was--and still is--a premium product. Never Summer offers a three-year warranty for snowboards handcrafted and manufactured in the U.S., and has established a reputation for building durable, "bomb-proof" boards. "In the beginning, one of the avenues that we took was to make snowboards more durable than what existed on the market," Tim says. "That was an easier way to separate ourselves." Since the fledgling company didn't have money to spend on athletes or the hype machine (even now, Never Summer spends just 2 percent of revenue on marketing, whereas some competitors dedicate up to 10 percent), they had to rely on creating a product that sold itself.

In 1993, they moved to Denver to be closer to their suppliers and opened their own factory. Never Summer has called the city home ever since. The clanging heart of Never Summer is a 19,000-square-foot factory brimming with noisy, industrious energy, piles of plywood, racks of steel molds and the constant hiss and recoil of machinery compressing layers of plastic and fiberglass into hundreds of ski and snowboard decks every day.

The factory, Tracey explains, is critical to Never Summer's success. Finding a manufacturer in China was a cheaper option in the beginning, but keeping things local allows for complete control over the production process, and that means never worrying about shipping issues, or even the impact of a weaker U.S. dollar in a depressed economy. Moreover, with so few domestic factories, it ensures at least one part of the business will always be in demand. Right now, roughly 15 percent of the company's total revenue comes from partnerships with local ski brands. "We can help start a ski brand with 100 units, so we're constantly turning away business," he says.

Never Summer also has diversified 10 percent of its business into longboards (a type of longer skateboard that resembles a snowboard), providing a year-round revenue stream and a wider customer base. In addition, the company is partnering with retail chain B.C. Surf & Sport to expand its branded fashion line.

Tracey concedes that the manufacturing component isn't always possible for companies, at least at first, but stresses that product quality should still trump graphics and a stable of high-profile team riders. "I've seen companies that would come up and have huge ads placed in all the magazines, and they would have a big marketing push that required a ton of money. They'd get traction with shops, but they would be gone in two years because they didn't have the product," he says.

Never Summer, on the other hand, has been a favorite for going on two decades, even at shops with incredibly selective shelf space. Emage, an almost painfully hip skate and snowboard lifestyle shop in downtown Denver, stocks only two snowboard brands--Never Summer and Capita--and co-owner Brandt Wisenbaker says it's all about how good the product is. "We only pick boards we love to ride," he says.

'Not sold everywhere'
There's one more thing. In a sport where the most memorable moments are often encapsulated in a few glorious seconds of airtime or flash-in-the-pan fashion trends, Never Summer's staying power has a lot to do with an absolute attention to "clean distribution"--Tracey Canaday's way of describing how the company keeps demand high and retailers happy, even as it continues to expand. "We're not sold everywhere," he says proudly.

A big part of that is protecting the dealers. "When we started seeing some success and getting sales outside of Colorado, we really wanted to protect our dealers," Tim Canaday says, adding that dealers and distributors are chosen carefully (with a soft spot for places where owners work the floor).

They Got the Look
Companies helping snowboarding enthusiasts outfit for the slopes

Frends This Encinitas, Calif.-based company strives to be the most "technologically advanced headphone company on Earth." Founded by pro snowboarders three years ago, Frends has already expanded to a second office in Europe. Its headphones are field-tested and built to hit the mountains.

Snowbunny Snowbunny makes cute, quality snowboarding gear just for girls. This 6-year-old company started in the founder's living room with a line of goggles and has since relocated to an office in Oregon. It's also added performance-driven snowboards and stylish clothing to its product line.

Holden Portland, Ore.-based Holden, founded by professional snowboarder Mikey LeBlanc, is committed to creating "eco-friendlier" snow and sportswear. The company uses recycled materials and even introduced waterproof, breathable hemp fabric. Holden has worked with Vans and recently gained Ben Pruess, former global vice president of Adidas Originals, as its CEO.

Arbor Since 1995, California-based Arbor has created quality snowboards, skateboards and apparel using sustainable materials to reduce its environmental impact. By helping restore forests in the Hawaiian islands, the company offsets more carbon emissions than it produces. But Arbor can't save the planet alone, so a minimum of 5 percent of annual profits are donated to groups that protect and restore the environment. --Katie Rossomano

"They have had the opportunity to grow out of shops like us, but they've chosen to stick with us," says Katie Patterson, owner of Aspect Board Shop in Bend, Ore. She has just one employee (and was herself a store employee for 10 years before buying the business in 2009). For her, Never Summer is the best brand to work with because she doesn't share products with big-box stores like Dick's Sporting Goods or REI, which have massive sales on remaining boards after a certain date. "I can't compete with 70 percent off, but because we're the only store around to carry Never Summer, people will drive a couple hundred miles to us."

Mike Martin, head of the Ski and Snowboard Business program at Colorado Mountain College in Steamboat Springs, adds, "They stand behind their products, so retailers are comfortable working with them, even in a tight credit market."

The Canadays have kept banks out of the business--and because the company has avoided debt, the money that might have been paid as interest is used to help out its 350 or so official dealers in the States, who can take advantage of large discounts by prepaying 60 days or more before orders ship. Never Summer uses Shopatron, too, a service that redirects orders through the official website to allow the nearest independent retailer to fulfill them.

"They protect retailers like nobody in the business," says John George, owner of Mountain Wave snowboard and ski shop in Breckenridge, Colo., which has sold Never Summer boards for 18 years. "I was the very first shop they opened with, and those guys have always cut off production at the right time, even when demand is humongous and they have hundreds of retailers knocking on their doors on a daily basis who want to sell their boards."

Indeed, Ken Raspen, general manager of Shoreline, a board shop near Lake Tahoe, Nev., which has been in the business for 26 years, says overproduction has been one of the major problems in the industry because it drives down overall value. Never Summer, however, is "the right size," having to work to meet demand.

The flipside, of course, is that Never Summer has such a great turnover rate that it's harder for younger snowboard companies to score shelf space. "We're rooting for the underdogs, and we try to give them opportunities," Raspin says. "They're all good, but Never Summer just sets the bar."

Still, ask Tracey Canaday if it's possible to innovate, and his answer is a resounding yes. "Over the years, I saw many brands of snowboards, even if they were small, using the Burton model of sponsoring and getting high-profile team riders," he says. "But that won't work for everyone, so you should make your product your leverage, and be creative when it comes to finding a niche."

And there's always room for improvement. Tim thinks of it as a challenge to make the product better each year, using input from team riders and being creative with shapes and materials. "We have a reputation of having great boards and I don't want that to get stagnant," he says. "I want Never Summer to be seen as one of the top innovators in the industry."

The next big step, adds Tracey, is to work on efficiencies that will help achieve better margins per unit: "We've grown so quickly that we've been throwing labor at demand, but we can really improve our bottom line with more managed growth--but we'll always keep pursuing new patents, new designs, new innovations."