Killer Profits In Velcro Valley

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These explosive growth rates cause companies to confront the recurring Velcro Valley conundrum: What starts out as a couple of bros silk-screening T shirts and writing invoices on brown paper bags can quickly grow into a multimillion-dollar business. When that happens, it gets a little harder to take the afternoon off to go surfing. "If you want to grow," says Danny Kwok of Quiksilver, "you gotta give away a little bit of your life-style."

Down the street from Quiksilver, Woolcott says he is not interested in growing if it means sacrificing any portion of the life-style, which includes taking off whenever he wants on a surfing safari or snowboarding trip. "Getting bigger is totally secondary," he says. "I don't want to put pressure on what we're doing. I don't even think about getting Quiksilver big." Woolcott's office is festooned with Sex Pistols posters and Volcom's mission statement: YOUTH AGAINST THE ESTABLISHMENT.

His demeanor, as venerably core as it is, is somewhat belied by a business degree and a P&G-like; devotion to building his brand. Volcom advertises in all the leading niche sports magazines, and Woolcott further infuses his brand with coreness by sponsoring--for as much as $100,000 a year--alternative-sports stars such as skateboarder Rune Glifberg and snowboarder Terje Haakonsen. As a result, Volcom commands almost universal respect throughout the bro-brah network, as Kwok calls Velcro Valley's web of business connections.

Among the challenges for companies seeking to grow: eliminating shrinkage (inventory theft), endemic to this industry, and moving manufacturing offshore to provide enough supply to satisfy retailers. "We're interested in companies that can keep up with our growth," says Timothy Harmon, 46, president of Pacific Sunwear, a 342-store national chain specializing in board-sports attire. "A lot of smaller companies aren't sophisticated enough to source overseas."

Companies such as Quiksilver, which now trades on the N.Y.S.E., have proved that it's possible to grow up and thrive. Others, such as Mossimo, show that you can grow up and screw up too. For Volcom, the business plan does not go much further than staying core--and respecting that stone. "I'm living the life that I always dreamed of living," says Woolcott. "Nobody's getting rich. Nobody owns a house. But I know that low tide is in about 45 minutes, and I'm gonna go surfing." At 10 a.m. on a Thursday, that's core.