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Jump Man: How Sky Zone Went From Failed Extreme Sport To A $300 Million Business

Jeff Platt, Sky Zone CEO

Robert Gallagher

Jeff Platt, CEO of Sky Zone, jumps at a company outlet in Gardena, CA. (Photo by Robert Gallagher for Forbes)

Wearing a tight black V-neck T-shirt and mid-top sneakers, Jeff Platt, 32, glides his Tesla to a stop, snaps off his sunglasses and enters his 30,000-square-foot kingdom: a warehouse near Los Angeles outfitted corner-to-corner with trampolines. Employees in orange shirts emblazoned with the name Sky Zone tend to the jousting arena and dodgeball court. Opening time is approaching, and hundreds of kids—most between 6 and 17—will soon arrive to bounce in anarchy.

Platt, Sky Zone's CEO, has run the company since he was 22. On his watch, the chain of trampoline parks has grown from an oddball concept with two locations into a franchised business with 176 parks in six countries. Twenty-five million people will visit this year, generating more than $300 million in sales. Last year, Sky Zone corporate's revenues were $50 million, with a 20% profit margin.

In a room typically reserved for children's birthday parties, Platt shoehorns his action-figure physique into a picnic-table seat and explains the master plan. "We want to create a world where everyone plays every day," he says earnestly.

But while Sky Zone has created its own industry, its ascent has attracted competition. Rivals now operate roughly 75% of the 600-plus domestic trampoline parks. One, CircusTrix, has millions of dollars in venture capital and runs more than 80 locations under an array of brand names.

Fighting to stay ahead of such threats, Platt's marketing team is working to engage teenagers by enlisting YouTube influencers and generating buzz on Snapchat. New technologies, like a wearable gadget that will track activity on obstacle courses and in dodgeball matches, are part of a strategy to gamify all aspects of the Sky Zone experience.

As Platt leaves the party room, the warehouse echoes with the sounds of screaming kids. He grins: "This is fun."

Jeff Platt

Robert Gallagher

Jeff Platt took the reins of Sky Zone at age 22. The company now has more than 170 franchises around the world. (Photo by Robert Gallagher for Forbes)

Sky Zone did not get off to a promising start. At the turn of the millennium, Rick Platt, Jeff's father, had closed his scrap metal company in L.A. and was looking for a new venture. Opportunity came at one of his son's high school volleyball games, where he heard an idea for a sport played on trampolines in which athletes would attempt to jump through a suspended hoop while holding a ball.

He scouted a location in Las Vegas, then spent a year building a facility and another recruiting athletes. He used funds invested by family friends, who insisted he not tell anyone they had given him the money, lest they look insane. The "sport," called Sky Zone, was a massive flop. Platt quickly abandoned the concept and opened his trampolines to the public.

His initial customers were kids from a nearby skate park who paid eight dollars apiece. In his first month in business, in 2004, 1,000 people paid for admission. The second, 2,000. Then Platt aired a TV commercial, and in month three 10,000 people showed up. "It was like, 'Oh my God, we have revenue,' " Jeff recalls. In the first year, revenue totaled almost $1 million.

Jeff, at the time a college student in St. Louis, decided to pitch the business in an entrepreneurship course he was taking. As part of the class, he met with local investors. To his surprise, they liked the concept and suggested he build a location in St. Louis to see if it would work outside of Vegas. Platt initially hesitated, then dived in. Armed with $600,000 from family friends, granted under the condition that he remain in St. Louis and manage the operation, he opened the second Sky Zone in 2006, soon after his graduation. The location generated $220,000 in its first month. "It blew our expectations out of the water," he says.

Then, just six weeks after the grand opening, Jeff's mother, Jan, was diagnosed with ovarian cancer. His father backed away from the company to care for her, leaving Jeff, at 22, in charge. Rick Platt never resumed a day-to-day role, even after Jan passed away in 2009, though he retains a board seat.

As his father stepped back, Jeff immersed himself in Sky Zone, running birthday parties and managing teenage employees. "I had no idea what I was doing," he says. "It was learning on the fly. All of my buddies were at Goldman Sachs or lawyers or going to business school. And I was the GM of some indoor entertainment park."

But the parks were succeeding. In 2008, two years after opening in St. Louis, he moved to Sacramento to launch the company's third outlet. Four months later, he returned to Los Angeles, where he had grown up, and approached his dad with a plan to start franchising. They concluded it would be the fastest way to grow. "We had a big list of people that had inquired already about franchising," Jeff says.

By 2010, the first franchise was up and running, and within three years, dozens more had opened across the country. The model was simple: Each franchisee pays $40,000 to $60,000 in up-front costs and 6% of gross sales, plus an additional 2% to a national marketing fund. Owners also agree to buy merchandise and much of the in-store equipment from Sky Zone corporate. With the average store bringing in more than $2 million in annual sales, there have been few complaints directed at headquarters, which is affectionately referred to as the "Home Zone." "They're very collaborative and transparent," says Caroline Irving, a franchisee with four parks in Canada.

Today Platt's empire is based in a gray office building in L.A.'s financial district, where he shares a floor with an animal talent agency and a modeling school. The office has the kinds of perks more often seen at a tech startup: free food, videogames and a liquor cart. "It's interesting to work at a company like this that's more freewheeling," says chief marketing officer Josh Cole, whose team produces an annual dodgeball tournament that draws thousands of competitors. The event, complete with play-by-play announcers and TV-quality video production, gets exposure on ESPN and Snapchat.

Those marketing plays are vital in a domestic landscape increasingly saturated with competitors, many with similar names (SkyWalk, Sky High Sports, Aerozone). The global prospects are equally challenging, as rivals have established footholds in Europe, Australia and Asia. "In the next three years we hope to have taken indoor extreme sports to every continent," says CircusTrix CEO Case Lawrence, whose company has raised over $30 million in venture capital.

Platt says he has passed on multiple buyout inquiries, though he acknowledges the temptation of cashing out. For now he'll keep evangelizing about playtime. "We created a billion-dollar industry from scratch," he says. "There's a lot left to accomplish."

Follow Noah on Twitter @Noah_Kirsch

 

 

https://www.forbes.com/sites/noahkirsch/2017/06/20/jump-man-how-sky-zone-went-from-failed-extreme-sport-to-a-300-million-business/#39c8d3ae7a90

 

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