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The Challenges of Starting a Boat Company

Michael Peters

Sightlines - July 2015

Siren Song

Even men of substantial means cannot resist the tempting call of… boatbuilding?

cardboard box

I am always astonished by the incredible number of boat companies in this country. There are literally hundreds of builders, of which most of us could only name 50 if we tried. Certainly a big part of this includes specialized, regional boatbuilders, but a good many companies exist simply as vainglorious hobbies of their owners. The glamour and excitement portrayed by the boat business is too much for these guys to resist. 

At any given time, my office usually has at least one client who is neither a production builder nor an individual looking for a custom boat, but rather is looking to get into the boat business. I refer to this ailment as the “cardboard-box syndrome.” That’s because he’s usually a man of some wealth, who has made his money in a rather mundane, anonymous way, such as making cardboard boxes. Now that he is successful, he wants to rise from obscurity and get into a fun business, where everyone will know his name. With visions of magazine covers and hometown fame in his head, the boat business is always happy to welcome another patsy.

In our first meeting, this client is usually so excited to get started that he holds his checkbook in his hand as he tells me his vision of the perfect boat that the market so desperately needs. (It is usually something really unique, like another triple-engine center console fishing boat.) I haven’t led a perfect life, so in an effort to save my soul, I tell him to put his checkbook away. I then offer counseling sessions, that go like this: Do you love your wife? Do you love your kids? Do you love your house? If you answer yes, then stop dreaming of the boat business, because I can guarantee you that you will surely lose your wife, your kids, and your house before you are done! I warn of the real cost in blood and treasure that others have suffered. If they persist, I then take their money. 

In my very first job in the marine industry I witnessed this disorder. I went to work for Halter Marine shortly after it had purchased Cigarette Racing Team in 1978. At the time, Halter was the largest boat builder in America, with ten shipyards throughout the Gulf and almost 3,000 employees, but Harold Halter suffered in obscurity. The quick fix to boost his ego was to buy Cigarette from Don Aronow. He became the talk of Miami and got to hang out with the coolest dude in the boat industry as part of the deal. After sponsoring several of his own offshore races, he only lost a couple of million when he sold it back to Aronow four years later. 

A few years later we were asked to design a 33-foot express sportfish for an Israeli arms dealer living in Miami. Of course, he didn’t just want a boat for himself, but wanted to start a boat company. He had to maintain a low profile with his day job, so the boat business looked to him like a lot more fun. Thanks to my earlier training at Halter, I could spot his affliction and offered intervention. I advised him that if he simply wanted to spend a lot of money on a boat and get some front-page publicity, we should just build the boat at Rybovich and put in the contract that they could charge him double for everything. That way, he could show off his beautiful boat, have the satisfaction of paying way too much, and still get off cheap compared to starting his own boat company. He didn’t think I was very funny. He lost his ass. 

I have thought a lot of people were naive to get into the boat business. Who remembers Hyundai, Hy-Lite, Maelstrom, Platinum, Shearwater, and Sterling? I do, because they are some of the failures within my portfolio. These men varied from stockbrokers to publishers to boat dealers and arms dealers, and were all successful businessmen in their own fields. But they seemed to just go blank in the presence of boats. The lust for the glamour and fame, which seems to be part of the boat business, displaced the rational minds that made them successful in the first place. 

The siren call never ceases. There will be more.

This article originally appeared in the July 2015 issue of Power & Motoryacht magazine.