Saturday, September 17, 2011

Paintball: Sherman vs Marx - Guest Post by Doug Brown

There was one last economic force yet to play out in paintball. Market consolidation. When Brass Eagle went public a lot of what I called “hot money” sat up and noticed. I have since learned that the term “hot money”  was already taken, but I still use it because I don’t care to get into the distinctions between private equity, venture capital, growth capital, and a bazillion other names for companies with more money than they know what to do with. The first of these companies was Summit Partners. They didn’t buy Tippmann (they pointed that out to me once) they just gave Mr. Tippmann a bunch money and run his company (whatever dude). Imperial Capital bought Procaps (and later merged it with ZAP). Angelo Gordon bought what was left of NPS and PMI and re-named it Kee Action Sports. That’s a lot of market consolidation. The interesting part is when it happened. Tippmann 2004. Procaps 2005. KEE 2006. I think this would be a good point to put the chart back up.

There were other forces at work of course. Politically, paintball was dominated by a group of people that didn’t want anything to do with guns, the military, or camouflage. This was a grave, grave error on our part. There was a game lurking in Japan called airsoft. It has always been my contention that airsoft never would have gotten off the island of Japan if the powers that be in paintball hadn’t been so dead set against embracing the people who, like me, grew up “playing army”.  The angriest I think I ever got at work was when a magazine informed me they weren’t going to run my ad because the players were wearing camouflage. Naked girls were OK. Camo was not. We took the fundamental core of paintball, the weekend back yard paintball player and said… "We don’t want you”. We called them “outlaws”. I could rant for hours on this subject but suffice it to say that economics don’t operate in a vacuum; there are other forces at work. Politics is always involved.

Let’s talk about Sherman and Marx for a minute. I’m not talking about William and Groucho.  I’m talking about John and Karl.  Back in the late 1800 some guys named Carnegie, Mellon, Duke, Vanderbilt, Morgan, Schwab, and Rockefeller were tear-assing around America making so much money they made Bill Gates look poor. Senator John Sherman (Rep-Ohio) wrote the Sherman Anti-trust Act to keep them from owning everything. Imagine that, a Republican restricting free trade? It wasn’t a new idea, just one that was needed. America had finally come to the conclusion that monopolies, duopolies, cartels, trust, etc. were a bad thing and competition was a good thing. The premise was simple, business always seeks a monopoly because that is the most efficient way of making money. We (the government) aren’t going to let them because the more diverse the market is, the more competitive it is, the better it is for our citizens. About the same time a guy named Karl Marx was dying in relative obscurity and definable poverty in London, England. But Karl had written something called the Communist Manifesto, and among the intellectual elite who could see the 10 year old children working 14 hours days, women working sweat shops, and men slaving  at backbreaking labor to fuel the fires of the industrial revolution… Karl’s clap trap babblings held some appeal. If you click on the link and scroll to the bottom of the page you get the talking points. Centralization and monopolies. The Russians picked up on the idea in 1922 and the Chinese in 1949. Long story short, after killing about 100 million people and an untold number of economic catastrophes, central planning was debunked as a valid economic management tool for governments. Even the Chinese started using capitalism (well… kind of).
What is the difference between a monopoly and central planning? Not much. Both are very susceptible to the guy at the top doing something stupid. A market that is diversified and contains hundreds of competitors might not be very efficient, but it’s not susceptible to a few guys at the top doing something stupid. Remember that the next time you hear somebody say “efficient” when he’s talking about a market. Market efficiencies are what lead people to do dumb things like ignore small fields and dealers while giving a few million dollars to the 1000 guys who have a chance of winning a professional tournament who are denigrating your core market because the “terrorist” image is not going to help them get a TV contract. Small fields and stores can grow up to be large fields and stores. Not everybody who wants to play this game has the ability, or even the desire, to be a professional. Most of us just want to have fun. Most of us don’t play on a regulation field either. 70% of the people who have played paintball never played a single game on a commercial field. The vast, vast majority of them just wanted to play Army.

Fortunately for the politically correct crowd and the hot money that bought into what they were selling, there were some guys working in places like Oklahoma D-Day, SpecOps, RAP4, and OpsGear. They played paintball the way they wanted too. The new guys at Tippmann didn’t get hurt as bad as the others because they never bought into the tournament scene. The other guys learned quick enough. Even Youngblood is making camo stuff these days.  Hopefully we can all remember Sherman going forward. Speedball brought millions upon millions of players into the sport. The desire to “play Army” did too. I suspect some new ways of playing are just around the corner. It’s all good… until they start telling you their way is the only way.

Somewhere a few thousand words ago I promised I would talk about more regulation for paintball. Before I do though, I’m going to offer a solution for the world economy. There is an old saying; “ A sure sign of genius is finding someone who agrees with you.” I stumbled on an article titled Infinite Debt by Thomas Geoghegan a few months back and was immediately convinced he was the smartest guy on the planet. For those that don’t want to click on the link, the premise is simple. Usury is wrong. If loansharking is illegal for the Mafia, it ought to be illegal for the banks.  For those that do click on the link… yes, Geoghegan is a left wing, union loving, Democrat. But that doesn’t mean he is wrong. Reagan was right... even though he was a Democrat and a union president once upon a time. We need to get over this attitude that because we disagree with something a person says, that everything they say is wrong. We’re all wrong about something.  I have no political persuasion. My interests lay in solving problems. If $14.3 trillion in US debt is a problem what do you call an unregulated market trading $600 trillion in derivatives?  What is the difference between a few guys owning everything and a few guys who everybody owes money too? Not much. Or as Mr. Geoghegan friend points out “the only reason they were making cars was so they could make loans.” The guys trying to scare you with Marx are the guys you need to be afraid of. You need to be reminding them of Sherman.

I only have one regulation for paintball. In addition to 300 fps and 15 bps I think we need to add: You are only allowed to take a maximum of X number paintballs on the field. Somebody besides me can solve for X. The number doesn’t matter that much. 400? 600? 800? Pick a number. It would make the game fair. It would make the game more fun. It would make the game more affordable. Think about it. My idea is no more valid than yours. There are tons of other ideas out there already.  Pumps & PistolsGravity League, and Mag Fed only are just a few. The market is always looking to solve the problem and always does. In paintball’s case the problem is more. Remember?

(Connor: Sorry Doug, I couldn't resist)

Connor's note:
Doug Brown is the owner of Psiworx Solutions, makers of the best (in my opinion) remote line on the market, the Proconnect 3. As you've probably surmised from some of his writings, he's also been behind the scenes of some other very important paintball companies in past capacities, and is without a doubt one of the official unofficial members of paintball's Old Guard. He's a busy man and I'm definitely in his debt for him taking the time to write this series of articles. As always, disseminate and share as much as you like of the content as long as it's properly attributed. 


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