Ethan, we spent some time looking at your company’s social media accounts and your customers put real thought and time into their posts about Diamondback’s products at work, and I think that says a lot about what you do and the products you sell.
More than 70 percent of our business is direct to customers and part of our mission statement is to have customers who love to buy from us. We believe that takes more than just providing a great product. We want the entire experience a customer has, from when they encounter our website to when they open the box with their product, to be clear, easy and give them peace of mind in what they are purchasing.
Additionally, if they ever do have a problem with one of our covers, we don’t want their service experience to reflect the same – I think we all know what that feels like. We hope to develop lifelong relationships with our customers and that all starts with the very first experience.
We provide a great customer service experience by hiring employees who really care about our customers and aren’t motivated to minimize costs when servicing them. The goal of our customer service department isn’t to save money at all turns; it’s to make the customer happy. The old adage is true, you can’t please everyone, and we still have customers that are unhappy from time to time. But we aim to fix any mistakes and ensure they love what they bought.
What’s your background with motorsports, the outdoors, and truck culture, Ethan? I think your customers see themselves in you and your staff.
Me and my co-founder Matt Chverchko are outdoorsmen however, Matt is what I would describe as obsessed with hunting and all things outside. We’re not necessarily from a ‘truck culture’ as many people might imagine – I mean guys who love big tires, lift kits and do ‘trick out’ their trucks. We have things to do: hunting, fishing, working, riding, etc., and we see our trucks and our covers as tools to help us be ready for anything. DiamondBack truck covers aren’t designed for looks – although most customers love the look. They are designed to lock your stuff more securely than any other cover and then be used to haul or carry anything a customer needs or wants. That’s what we wanted for our own use and that’s what we designed.
Speaking of design, how did your move to the Moshannon Valley Regional Park in Philipsburg work out for you and your team of 55-plus? I understand that you’ve really invested at every stage in this from-scratch and totally modern development.
The move was executed about as efficiently as we could have hoped. It was an incredible undertaking to move the entire production facility, as well as cleaning up and rehabbing some of our old rented facility. We were able to mobilize almost our whole staff to tackle the projects and many hands make light work. Our plant manager Pat Hanlon and production supervisor Paul Craig did an incredible job organizing and managing everyone. All-in-all we had the entire task completed and were making covers in the new facility in about one week.
Was it sheer growth that motivated the move, Ethan?
The decision to build our own facility was partially motivated by growth and partially motivated by our desire to provide our employees with a completely different work environment experience.
DiamondBack sets annual goals for four different bottom lines. ‘Financial’ is of course one, but we also target initiatives under our ‘environmental bottom line,’ by which we mean both the environment in which we work as well as our impact. We also set goals for ‘internal/employee impact’ and ‘social/customer impact.’ The new facility was motivated by goals in all four of these categories.
Financially speaking, we simply needed more efficiency and capacity. We’ve been one of the fastest growing companies for many years now and we needed the ability to ship more product in shorter time frames. Environmentally, we wanted to completely change the work conditions for our employees. Our old facility was dark, with low ceilings, lots of walls, and very little air flow. It felt like an old manufacturing building – because it was. Our new facility has 30-foot ceilings, windows for natural light and no partitions on the production floor. When we open up the giant roll up receiving doors, it almost feels like you’re working outdoors. From the ‘internal/employee impact’ side, we designed elements like a giant break room with large TVs, a couch and an industrial kitchen. The space is designed for employees to reserve it for personal parties if they want. And lastly, from ‘social/customer impact’ side, we focused on developing elements that would allow us to host customers and show them the process of making the covers. We have large windows from the second-floor office out over the production floor.
All-in-all, the decision to build was motivated more by other factors than by growth. We could have gone to multiple shifts in our last building and saved tons of money in the short term. But we believe this new building communicates to employees and customers, our desire to build a company that matches our products in terms of quality and durability.
But your growth is impressive nonetheless and growth has to start somewhere, right? How did it all come together for Diamondback Truck Covers?
That’s true. We’re growing steadily at, I’d say, more than 23 percent every year since the recession.
It all started when Matt and I were engineering students at Penn State University back in 2002. We conceived everything as part of an assignment. The original product, around which the company was built, was a truck cover that would seal and lock the bed of a pickup truck, while also providing the ability to haul on top. In May 2003, DiamondBack was incorporated, and we began redesigning and refining our product.
Starting out, the company pursued a business model used by almost every other manufacturer in the industry. This model included developing large warehouse distributor customers who would sell to truck accessory dealers, who then in turn would sell and service the retail customer at locations around the US and Canada.
From 2003-2007, the company grew quickly using this model however, the financial margins afforded by the model did not produce any profit. Over this time, outside investment was needed to grow and the company brought in money from friends and family – as well as investments from the Ben Franklin Technology Partners, the Garber Fund from PSU, and occasionally traditional bank financing.
In 2008, the company had secured a direct relationship with General Motors to provide the locking truck cover for the HUMMER pickup truck. Additionally, the company had just obtained national distribution through multiple distributors and had strong sales with commercial fleet vehicles. Then the financial crisis of 2008-2009 hit the industry.
During the recession, truck sales fell by over 50 percent in three years and the industry suffered near catastrophic change. DiamondBack watched as all the pillars of its current business model cracked and eventually fell apart.
As we realized that declining truck sales would decrease our unit sales growth potential, we pivoted away from the industry standard model of distribution to a more direct approach to sales. This was a business model that Matt and I – as well as key employees – preferred to pursue for the long term.
From 2009-2011, the company moved completely away from national distributors – who were, historically, our biggest customers – and sold directly to dealers and retail customers. From 2012-2015, we successfully navigated this ‘channel pivot’ and today we obtain around 70 percent of our business directly from retail customers. The ‘direct to consumer’ business model has allowed DiamondBack to build lasting relationships with our customers while producing sustainable financial margins.
To weather the storm of the recession, that’s impressive. I mean, changing your business model, taking that leap – you must have a lot of faith in your product, Ethan. How have your truck covers evolved over the years?
DiamondBack truck covers are in a constant state of evolution because we’re always seeking ways to make improvements on an already great, steady product. We’ve made improvements by lowering the weight of the cover while increasing its strength. We’ve improved our locking system, our hinge and weather seal designs, and our top coatings as well. The covers shipping today are the best quality covers we’ve ever made and we have ongoing plans to improve even more.
I don’t think it’s a stretch to say that many truck owners and lovers are skeptical at first glance of many accessories, even ones that come with a lifetime warranty. What makes your product so reliable and so revered?
Jamie, it’s design and simplicity. The covers are designed to handle immense top loads. In fact, we’ve never had a DiamondBack HD cover broken by anything put on top of it. If you drastically overload it, the truck itself will break at some point but the cover won’t. One time a customer who was stuck in mud while off-road in Canada used one of his DiamondBack panels to shove under his tire for traction.
After he got out, he slid the panel back on the cover and relocked it down, good as new.
The other parts of the cover like our locking system, for example, are just designed to be simple. We use a dead bolt style locking system that pushes steel rods under the bed of the truck. This doesn’t have quite the refined automotive styling with specially designed brackets or latches as some of our competitors, but it’s rugged and hard to break.
Our covers have always outlasted the trucks they’ve been on. By offering a lifetime warranty, we’re really just telling customers about that fact. They will last you as long as you own your truck, or we’ll fix or replace it.
The truck culture I was referring to earlier is the one that’s undeniably ‘Made in the USA’ and embraced by hardworking, fun-loving people around the world – as you suggested. It must mean so much to you and your customers to see that label on the DiamondBack product.
For sure. But building a manufacturing company that can provide high value to customers and good, stable wages to employees is an incredible challenge when making products in the USA. The low cost of labor and materials from overseas markets is a reality that any business has to face. Ultimately DiamondBack found it was unable to pursue the traditional manufacturing model of three-step distribution and be able to achieve our goals.
We believe strongly that for manufacturing to succeed in the USA, companies have to innovate. For us, this took the form of innovating our business model to be mostly direct to consumer. Creating individual invoices, packing slips, shipping bills, and managing tens of thousands of individual customers is a challenge most manufacturers don’t want to embrace. We found that it was the key to building a brand that would continue to be made in the USA.
Additionally, customers who wish to keep jobs in the USA will often need to make buying choices that reflect that desire. This can sometimes result in higher priced products which many customers do not want to pay. Our industry is fortunate in that our customers, mostly hard-working American truck owners, have a great desire to buy from US-based companies.
You’ve navigated a solid and popular product through one of the biggest storms in modern economic history, came out stronger from the storm, and you’re business plan is consumer and employee centric before anything else – and it works. What does the future hold for DiamondBack?
Today, DiamondBack’s vision is one of long-term stability, growth, and profit generation for its employees, the founders and investors. Our mission is to continue to build one of the best manufacturing companies in Pennsylvania, one that employees love to work for and customers love to buy from. By using the internet to find, connect, and communicate with new customers through Facebook, Twitter – that reminds me to encourage people to check out #DiamondBackReady where customers can also submit and add to the album of photos you asked about earlier, DiamondBack is building lifetime value and a brand that customers trust and purchase from again and again as they replace their trucks. The company is committed to pioneering a new kind of direct-to-consumer manufacturing, which allows for high wages and high profits through connecting directly with their end users.
I’ve got to say that while the classroom to corporation is a good story – and we like to tell it – that the company today is where it is because of the absolutely incredible team of employees we have. I’m sure many people say that, but we seriously have one of the best teams of people I’ve been around. They love the company, they love DiamondBack. They work with a passion and determination that exceeds just working for a paycheck. Myself and Matt at this point, are largely along for the ride with our employees as we all together see where the DiamondBack ship will take us.
by David MacDonald