Driving back to Salt Lake last week after a visit to the headquarters of Icon Health & Fitness Inc. here, I tried to calculate the odds of a couple of Utah State University students starting up a little business that would eventually find its way onto the Forbes list of the nation's 500 largest private companies (363rd) with annual sales approaching $1 billion.
The first analogy that came to mind was me taking my 17.6 golf handicap to Augusta National and walking away with the fabled green jacket awarded to the Masters champion. The second was the Jazz going to the NBA championship and beating the Chicago Bulls in four straight . . . with Stockton and Malone both out with the flu.Sucker bets all, even at a million to one. But while Knudson for sure won't be teeing it up in Georgia next April and the Jazz probably won't be tipping it off against Michael Jordan and company in June, Scott R. Watterson, Icon's chairman and chief executive officer, and Gary E. Stevenson, president and chief operating officer, are proof that the oddsmakers sometimes get it wrong.
It's possible that you have never heard of Icon, even though it is the world's largest manufacturer of home fitness equipment - treadmills, riding machines, home gyms, stair steppers, barbells and such - employs some 4,500 people, will log sales of some $800 million at the end of its fiscal year May 31 and owns more than 40 percent of the North American home fitness market. Icon maintains a pretty low profile in Utah.
But I'd be surprised if you are unfamiliar with some of Icon's brand names: Weslo, ProForm, Image, Weider, CrossWalk, CardioGlide, Legend and JumpKing. Remember the guy in the TV commercial who takes the idea for a flip-open cellular phone to create a treadmill that folds up vertically? Yep, it's a ProForm Space Saver, an Icon innovation.
The Icon story is one of those unlikely Horatio Alger tales that makes entrepreneurship seem deceptively easy. Watterson and Stevenson were business students at USU back in the '70s. Both had served LDS missions in Asia: Watterson in Taiwan and Stevenson in Japan. They had one other thing in common: They were both looking for summer jobs.
"It was go to work for the Logan City Water Department or start a business," laughs Watterson. "We chose the latter."
Using their Asian connections, they started importing home furnishing items from the Pacific Rim. With the energy crisis in high gear back then, they eventually found that wood stoves were a good seller and they began to specialize in that niche.
But the wood stove business was strictly a foul-weather friend; when spring rolled around, their dealers disappeared. It was clear they needed something to sell during the warmer months, and since the fitness craze was starting to take off . . . .
Get the picture? It's all about trends, says Stevenson. Figure out the next trend and then jump on board and ride it for all it's worth. "The Arab oil embargo created the wood stove industry, and the aging baby boomers created the growth in health and fitness." Simple, huh?
In 1977, they formed a new little company they called Weslo Inc. Its first product was mini-trampolines used for jogging in place. (I have one that I bought back in the early '80s. Currently, it's home for a family of spiders up in the rafters of my garage.)
From mini-tramps they moved into exercise bikes, then treadmills and eventually a wide array of exercise gear. Their philosophy was - and still is - to constantly upgrade existing products, create new ones and focus on providing good value for the money. In 1987, they acquired the ProForm brand of exercise gear.
If having the right product is important, marketing is even more so in the hotly competitive fitness products industry. Icon covers all the segments, placing its Weslo brand in discount and warehouse chain stores; ProForm goes to the middle market of sporting goods retailers; and Image is its high-end label sold in specialty fitness stores.
In addition to Weslo, ProForm and Image, Icon offers a broad line of Weider strength training equipment and accessories. The company also builds private-label products for major retailers such as Sears.
Their success did not go unnoticed by brothers Ben and Joe Weider, whose firm, Weider Health & Fitness Inc., based in Woodland Hills, Calif., acquired Weslo and ProForm in 1988.
That relationship lasted until November 1994, when Bain Capital Inc., a Boston-based investment group, bought a controlling interest in Weslo and ProForm in a deal totaling $450 million. Watterson and Stevenson were named to the top executive positions - they and other managers participated in the buyout - and the companies were combined into a new entity: Icon Health & Fitness Inc.
Watterson and Stevenson had been considering taking the company public but decided that Bain's recapitalization plan made more sense.
Today, Icon's main operations are in the 400,000 square feet of manufacturing and headquarters space located at 1500 South 1000 West in Logan. It has other Utah manufacturing and distribution facilities in Smithfield and in the Clearfield Freeport Center. Out of state, it builds products in Denver and in Garland, Texas. Overseas operations are in England, France and Italy.
Icon currently owns 78 U.S. patents and has another 43 pending. It recently completed a grueling two-year qualifying process to register under the ISO 9001 Series, the first major fitness manufacturer to earn the quality ranking. It has received awards of merit from WalMart and Sears and recently won the 1996 Small Business Association Entreprenurial Success Award for the state of Utah and will now compete for national SBA honors.
Icon sells directly to the public as well as to retail dealers and has been a strong contender in the growing television "infomercial" arena. An infomercial for the Crosswalk dual-action treadmill won a national award for "Best Storymercial" in 1993 and has led to others featuring such celebrities as Peggy Fleming, Roger Stau-bach, George Brett, Olympia Cory Everson and others touting Icon products.
Their success secret? Watterson and Stevenson credit luck, timing and the ability to anticipate and follow trends. But they give the major credit to their employees, many of them USU students just as they once were.
"The work ethic among Utahns is absolutely our No. 1 most valuable asset," said Watterson. "That's the real difference between us and our competitors."
*****
ADDITIONAL INFORMATION
Icon: Evolution and current status.
1977: Weslo founded by USU business students Scott Watterson and Gary Stevenson.
1987: ProForm brand acquired.
1988: Weider and WeiderCare brands acquired.
Fiscal 1996 sales: "Chasing $800 million."
Annual growth: 20 percent in sales and earnings.
Share of North American fitness market: 40 percent.
Innovations: CrossWalk, world's first dual-action treadmill; Cross Trainer, electronic personal trainer; Space Saver treadmill.
Facilities: Two million square feet of space in Logan, Smithfield and Clearfield, Utah; Denver; Garland, Texas; France, Italy and England.
Markets: United States, Canada, Mexico, Europe, Expansion planned into South America and Asia.
Business philosophy: "First in fitness."