Topgolf: the future of golf
Emailed on December 20th 2019 in The Friday Forward
Last night the Malartu team headed out to celebrate another year dedicated to organizing the world's business data. This year's destination was Drive Shack, which for the un-initiated, is basically what you get if a driving range and a bowling alley had a baby.
Drive Shack is more-or-less a copy of Topgolf, which originally introduced the concept in the UK in 2000. In the spirit of curiosity, one of our core values, I dove into the Topgolf model. Here's the breakdown:
Generally, golf is bad business
When Steve and Dave Jolliffe first approached Bain & Company partner, Richard Grogan, about bringing a UK-born golf concept to the US, they were told to "forget it."
Since 2006, there have been more U.S. golf course closures than openings every year.
In the US, golf is the second biggest source of loss for investment capital next to restaurants. But the twin's concept was to turn an immensely frustrating sport into something more fun, and it was starting to work.
The concept was born from the question, "What would happen if we put a chip inside a golf ball to track the distance and accuracy of a shot?" At Topgolf, players take a swing at hitting targets placed over a driving range of artificial turf. They earn points depending on the accuracy and distance achieved for any given target.
Origins
After some promising stats in the UK, like revenue being up 8X and 51% of shots hitting a target, the twins decided they were going to take the concept to the US.
After turning down the pitch in 2003, Grogan was eventually convinced to visit a Top Golf in the UK, where he saw an Indian grandmother in a full sari leading grandchildren down the stairs of a bay to go hit some balls.
“There’s something happening here. I sense a tiger; let’s see if we can find his tail." Grogan purchased the US license for Topgolf and proceeded to open the first US locations in DC, Chicago, and Dallas.
It didn't go well. The DC facility opened in 2005. That year, Grogan would sit on the top deck of his largely empty facility and hit golf balls by himself. The next year wasn’t much better.
Top Golf had a messaging problem, tenants still thought of it as a driving range and not as an experience, essentially the same issue the Joliffe twins had in the UK. After low-tech solutions to messaging, like employees taking to the streets wearing sandwich boards, curiosity began to build and crowds started to gather.
After 6 months of the messaging revamp, the Dallas facility had a three-hour wait to hit balls.
A tiger by the tail
The US Topgolf group would go on to acquire the UK group around 2011 after Erik Anderson of WestRiver investment group bet big on launching a global branding experience.
Facilities got larger, iPhone and Android apps were launched, social media walls were installed to show player rankings, and the company acquired ball tracking technology and online multi-player game companies. Topgolf had successfully transformed from "golf" to "entertainment."
There are now 54 Topgolf locations in the US, 3 in the UK, and 1 in Australia with revenues reportedly over $300 million per year.
More here from Steve Goldberg of Inc. for the complete breakdown
For those wondering: David, Malartu CTO and king of all obscure bar games, took home the win.