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Conversations with the smartest people in the golf business to get the inside stories and strategies driving the business of golf forward. Hosted by former PGA Tour player Roberto Castro.
Transcript
[00:00:05] Roberto: All right. Welcome back to the course record show, quick nine. We are joined by Kris Hart. Kris runs innovation at the PGA of America. I've gotten to know Kris the last few years. He's one of the people I enjoy having a beer or a cup of coffee with most in the golf industry. Kris, you had a startup.
You brought it into the PGA of America. It was acquired by the PGA of America, and now you lead innovation for them. Do I have that right? You, uh, you do. Thank you. So, am I right or am I wrong? That there's a dedicated fund for innovation at the PGA of America EP Golf Ventures. And you are basically a one man shark tank for the golf industry.
Is that, do you get pitches like every day, every week? How does it work? It's, you're, you're, you're spot on. It's a, it's a pitch a day, um, in a great way. We get a lot of volume, a lot of deal flow, a lot of inbound. Also do a bunch of outbound for, for things that we're, we're looking at. But, um, yeah. PGF America, um.
[00:01:08] Kris: You know, I can't take credit for it. My predecessor had set up a, a fund, you know, with a leisure park. And so we actually have a golf centric venture fund. Um, our goal is to make three to four bets a year. We've been doing it about three years. We've made 10 investments outta the fund and, uh, said no, hundreds and hundreds and hundreds of times.
[00:01:27] Roberto: That's amazing. So I. People ask me, you know, it's gotta be cool to be in the golf industry, in the sports industry. And I, I mean it a hundred percent is, but I tell them, you know, nobody starts a roofing company as a vanity project. Or nobody starts a, you know, disaster remediation. Like, you know what a real business is In a lot of industries, golf is a little different right there.
It's. A passion. It's not a hobby. Like it's a complete, I call it a sickness sometimes. And there's a lot of folks who kind of made their money, right? They, they have capital available, they have some time available. So I mean, is your first line of defense or your first criteria, like, is this supposed to be a business?
Is this supposed to be a hobby? Like it's kind of unique in that you have to sift through that. Is that true? It is true. It's a, as a, it's like a really good point. Um, I think about it from the investment side, but also like jobs. Yeah. It's interesting to get people like, oh, I wanna get a job in the golf trains.
[00:02:22] Kris: Like, I love golf. It's like, okay, well there's a lot of people that love golf. That's not gonna make you a great employee. Um, and in the same way from the investment standpoint. Yeah. It's, it's number one, like this is a venture fund and money that we are investing for a financial return as. Number one.
[00:02:40] Roberto: Yeah. You know, our investment creator as we're looking at is, is financial return. How it affects the industry, uh, how it affects the game. And, and for us, selfishly, how it affects the PGA members. Is it gonna, you know, help make our PGA members lives better? Um, yeah. So, you know, it's, it's, it's, it's, it's a tough process, but, um, you asked like, how does it start?
[00:03:02] Kris: Yeah. It's like, is this a business? Or is this just, you know, fun and a passion project? Yeah, that's, I get probably 1% of the inbound you do. But you know, we, um. With CapTech, you know, we help TGL kind of go from uh, five slides to ESPN and so we get some inbound too. I have an idea. Can you help? Right. Yeah.
[00:03:23] Roberto: And some of them are real businesses that I think are really, really compelling and some of them are literally just an idea. So it's tough to, uh, it's tough to figure it out. So lemme ask you about, you said there's about 10 investments in the, in the innovation fund. Um, I know two, I think. East side golf and sports box ai.
Do I have those two, right? Are those two of the 10? Yep. Two of the 10. So I just wanna ask you, one seems very consumer focused to me. You know, like strong consumer brand sports box ai, high tech, more focused on coaching and, and a little bit more of that B two, B2C platform. Like what do you think, like what have you seen get the most traction in today's golf industry?
Because it's a totally different industry than it was five years ago. Yes, it's interesting. So, I mean, our investments are all across the board from a, you know, you mentioned Sports Box, east side, you know, we have a, uh, a mobile golf simulator. We have a simulator technology that incorporates into, you know, every simulator.
[00:04:17] Kris: So the off course space is something interesting to us. Uh, we invested in a, a pool company that does, you know, free, free to play and, uh, paid. Pools, so golf pools. Okay. Um, we, uh, it's called Splash Sports. We invested in, um, uh, a company called The Realist, which is in the golf memorabilia space, invested in a plant-based tablewares company.
Um, which is like kinda creative. Why would the heck would you do that? And just, you know, we look at the, you know, where, where the industry is going and using sustainable products and, you know, being, um, uh, you know, forced to do that through governmental regulations. So, um, invested in pro shop, you many of, you know, like, um, you know, a.
New, uh, new media company, you know, that, you know, I guess most notably has done like full swing on Netflix. So kind of all across the board in many different, you know, aspects, um, of the industry. And, you know, we look for things that are opportunistic, um, that we could really help the business. You know, we want to be, you know, active investors in these business and help them grow.
Um, and one thing, like I was proud of, like when we, you know, we run the Ryder crop in the PGA championship. You know, we activated seven of our portfolio companies at the Bethpage Ryder Cup. Wow. So actually being able to, to believe in it, to use it and work with them, you know, hands on versus just, Hey, you, you make a passive investment and you know, hope, hope the investment pays off.
[00:05:42] Roberto: Yeah. That's really cool. When you're evaluating the. The opportunities or you're getting pitched? Um, I, I read somewhere like, you have to ask yourself, is this founder a force of nature? Like, you know, in the startup world, um, that's one metric. Do you, do you agree or disagree with that, or is it more the concept or the product that, that draws you in?
[00:06:04] Kris: Um, not just the founder, but the team is really important. Okay. I think it's, I think if, if you look at the team and, um, you know, because I was a founder, right? Yeah. Went through it and you kind of get it like it sucks. It's hard. And like I can actually relate and say, hey, like, hey man, like I know it's hard.
Like what are you going through? Relate to them personally and like you build that rapport. So you do look at the team and in entrepreneurship, like it's tough. Like it really is if you, you know, the stats aren't great of how many businesses fail versus how many succeed. And, uh, so the team is, is really important.
Um, but you did say like, the product's important too. So does, if they have something that's like patentable, they're the only people in the world that could do it. And is it protectable and like, you know, unique ip, that's also interesting. Not that it's if they have the wrong team, but the right patent like that could be sold in valuable for the, to the right team.
[00:06:57] Roberto: Right. It's a, it is a combination of both and it's tough, right? Making, making investments. It's not, it's not a perfect science. Like yes, you can run models, but you gotta have some belief because, I mean, I've seen you see so many decks in the, you know, the numbers. Everybody knows, especially a three year projections kind of bs, right?
Yeah. What is one, um, so I asked a friend of mine who's in the. In the CAA world, uh, what's a, like a property and he is on the licensing side, like what surprised you as a, as a smash hit? And his answer was Savannah Bananas. He was like, I, I, I just didn't see it. And it's been so successful, right? It brings so much like joy to people and, and like what's an example for you in the golf industry of something that you may have said like, Hmm, I'm not sure, but it's really, really taken off.
[00:07:47] Kris: I think, you know, a good example. Um, I mean, they raised a lot of money recently, but good, good golf and like that, everything in YouTube, golf and what it is. Um, you know, it's not, I I wasn't early on watching, you know, it's interesting because a lot of these guys film at my club here in Texas and they live here.
[00:08:05] Roberto: Yeah. And I'm like, oh yeah, that's right. What are these guys doing? And it's like, uh, you know, they're all based here and they're just filming like, oh, it's kind of cool. Whatever. But the most surprising thing to me is like, I go to the high school kids at ARE club. I try to play with some of the better high school kids and just work with them.
[00:08:19] Kris: And I'm like, who do you guys, like, who's your, who's your, your, uh, your person on tour? And they're like, ah, you know, grant Horvat? I'm like, huh. It's like those are their mentors. It's like, it's a different world than I grew up in. Not that like I don't get it, but it's just, it's just a different mentality and world and I'm surprised how great of a business that they've built and like they should be really proud, like they're real businesses versus.
Hey, it's a fun pet project, you know, making movies on, uh, YouTube. Yeah, that's a great answer. I mean, they're sponsoring a PGA tour event, right? I mean that's, look at the other list of PGA tour sponsors you're talking about. Exactly. The global Fortune 500, maybe fortune hundred and good, good golf. So that's, that's a very impressive, um.
[00:09:05] Roberto: Connected to the PG of America, the member, like, is that a big selling point? Right? If like, if they can get in the ecosystem, how do you balance, like pushing things onto your 28,000 members, the things you invest in, and more authentically just presenting it to them and like you said, being a, you know, an accelerator for your investments, but without crossing that line.
[00:09:26] Kris: Yeah, it's a, it's, it's a good, it's a good question because you. Everybody knows if you're just selling something and pushing it, like, well why are you, are you making money on this? Or, what's the right, do you believe in it yourself? Do you use it? Right? So I think one of the things that actually, you know, we have the distinct advantage, um, because of our partnership here with Omni and PGA Frisco and the City, we can activate a number of innovative products on our campus and actually say like, Hey, do we believe in this?
Would we use this? Let's test it. Yeah. You know, we own PJA golf club in Florida and three courses there so we can actually a, you know, actively test products and make sure we feel really good about 'em before we push them companies. Uh, are okay with it. They don't like the, hey, we wanna test and see. They want, they want you to pay and use it and then just talk about it and like push, like our speed may not, PGA speed may not be entrepreneur speed.
Um, but we have that advantage, which is great. And we also, you know, just have really good relationships with a lot of other courses and um, you know, I try to. Stay really close with some of the best courses around the country, on all different levels of private resort, public, um, management groups, and stay really close to like, Hey, what are you, what are you seeing?
What are you using? What's working? Is it investible? Are they raising? So like I try to, you get a lot of insight and inspiration there too. Yeah. That's really cool. I mean, I. It's just an incredible asset to have 28,000 members who are interacting with golfers every single day. Right? Like whether you're an OEM, you're Callaway.
[00:10:58] Roberto: Your Titleist, whether you're a retailer, the Superstore, all they're trying to do is get engagement with a golfer. And the people who have it every day are the 28,000 PGA of America members. It's over 30,000. 30,000. It's yes, but it's just like the level of. Of interaction, right? It, it's, mm-hmm. It's off the charts.
It's off. I mean, my interaction with an OEM or with a retailer or with an apparel company is 1% of what it is with the golf pro at my club or at the course that I play at, or where I take my kids to get lessons, like it's so impactful. And it's such a real asset for the, for the PGA of America and for the whole industry.
So, yeah. Very cool. We're fortunate and you know, that's, it's important, like for us and our members, I think that when I think about companies too, like people say that, oh, you got 30,000 plus members. It's like, yes, we do, but you're only going after either the private market or. You know, the public or the resort, like, you can't get everybody based on like what your product is.
[00:11:54] Kris: And that's, that's always a, I feel like I have to kind of walk down some of those tough conversations with entrepreneurs. I'm like, Hey, your market's not that big. Like what you're putting in your, your slides, right? Like, let's haircut that three times and this is your true tam. Yeah, that's actually really good info.
[00:12:10] Roberto: That's the flip side of something I repeat over and over. There are a myriad of reasons to play golf. Right. Some people play for performance, some play for social, some play 'cause they like to gamble with their buddies. Um, some like the exercise and, and they're using very different products and services.
And I think that's great insight about the, you know, total addressable market. You're only reaching, uh, a certain number of those depending on what, what goods or services you offer. That's great advice. Mm-hmm. Kris, I can't thank you enough. Course record, show. Quick nine. Kris Hart runs innovation at the PGA of America.
Um, I, I think it's really cool what you guys are doing and I, I love when we get to catch up and I, I hear about the latest investments or, you know, kind of proof of concepts you you're seeing out there. It's really, really compelling. Thanks a lot for joining. Awesome. Thanks Roberto. All right.