Innovation is one of those buzzwords that most companies use for their newest product or service. But the real innovators are the startups that disrupt an industry, take the accepted way of business and find a cheaper, simpler solution that the market comes to accept as a new norm.
When Freedom Boat Club launched in 1989, the goal wasn’t to disrupt the industry but to offer an alternative to boat ownership. For its first two decades, the model was hardly groundbreaking, though it quickly found a home among experienced boaters in southwest Florida who wanted to avoid the usual ownership hassles — time and money — while still having access to the water.
Chief executive John Giglio, who started with the company in 2004 in operations, can credit the Great Recession for his ownership of the company and its growth. The previous owners — real estate investors from Cincinnati — wanted out in 2009 as the downturn decimated the boating industry, but they could find no buyers.
Giglio and his partner made an offer, contingent on financing, but were turned down at more than 30 banks. “Everyone loved the business model, but when it got to the underwriters and they saw boating, they said forget it,” he says.
At a Christmas party in 2010, Giglio was referred to a bank in Tampa, Fla., that had been bailed out by the Obama Administration. “It had funds that it had to lend under the terms of the bailout, so suddenly we had money,” Giglio says.
The new owners also had a sudden rush of new members who had been stung by the same shortage of credit to buy new boats. Giglio and his partner reinvented the business model, adding safety and educational training for members, providing more access to the boats for an improved member experience and delivering better support to franchisees.
“We gave our franchisees the tools they needed to be successful,” Giglio says. “We also only wanted like-minded franchise owners who loved boating as much as we did, so we eliminated club owners who weren’t in it for the right reasons.”
The sharing economy provided the company’s next growth spurt, with Freedom transitioning from 35 locations in 2011 to its current 171. Last year, it added 23 locations; it now has 25,000 members. “The peer-to-peer sharing model has brought an incredible amount of awareness to our company,” Giglio says. “We were different from the boat-sharing sites that seemed to pop up everywhere. Like them, we weren’t considered mainstream. But we had a proven business model.”
The club model is now becoming nearly as mainstream as traditional boat sales. That seems particularly evident with Groupe Beneteau and Brunswick Corp. launching their own membership programs.
Our judges tapped Freedom Boat Club — the first or second pick on most of their shortlists — as the most innovative company because the business model shows no signs of slowing. Several judges remarked that the once-plucky startup, which now has revenues of more than $10 million, exemplifies the spirt of these awards. The company was also the only entry this year to be nominated by someone entirely unrelated to its business.
We believe Freedom checks all the boxes for millennials and others who love boating but don’t have the time or money for ownership. Plus, it allows newbies to try the sport in a structured, safe environment and decide whether they want to continue boating. “We’re bringing people into the industry at a younger age,” Giglio notes.
The company also continues to adapt and apply its business model as a disruptor in other fields, moving beyond boats into recreational vehicles and launching a houseboat program called Overblue. Most important, it has transferred the boat-club model to Europe, partnering with Jeanneau in five dealerships across the south of France. “We’re also seeing interest in Spain, Portugal, the U.K. and Italy,” Giglio says. “Some of the prospects are Jeanneau dealers, but we’ve also been approached by a big marina group in France. There are no signs at all that it’s going to slow down.”
Freedom is also a large buyer of boats. Of its fleet of 2,020 boats, 900 were new last year. Giglio quips about wanting to make Freedom the “garage for boats” that people may want to use but not own.
“We truly believe boating is an ecosystem, and it’s one that we want to propagate in many locations,” he says, adding that the Freedom business model will continue to be reinvented as it expands.
“I’m not thinking short-term,” Giglio says.
In this video from IBEX 2018, Freedom Boat Club CEO John Giglio talks about his company’s rapid growth and future plans with Soundings Trade Only editor-in-chief Michael Verdon. Freedom Boat Club earned Soundings Trade Only’s first annual Top 10 Innovative Companies award.
This article originally appeared in the November 2018 issue.