Forbes Magazine article

[MarkMcJizzy]

 

 

In Pictures: The Most Treacherous Mountain Peaks

 

Mark Gunlogson

 

 

 

 

 

 

Mountain Madness lost two owners to climbing disasters. Its new chief wants this struggling outfit to finally shape up.

Mark Gunlogson, president and owner of Seattle adventure travel operator Mountain Madness, is exasperated. He has just learned that Chinese authorities are ruining this year's climbing season on Mount Everest by banning access. The Chinese cite overcrowding on the peak and "environmental pressures." Gunlogson knows it has more to do with politics: Climbers participating in the Olympic torch relay for the 2008 Beijing Games are on their way to the summit, and China doesn't want the mountain to attract pro-Tibetan protesters. Mountain Madness has three climbers, who paid $59,000 each, stuck at base camp on Everest. The refunds would be noticeable in a company with $2.1 million in annual revenue.

 

Mountain Madness is best known for its excursions for fearless rock and ice climbers. Sometimes a little too fearless. Gunlogson, 46, is the 24-year-old company's third owner. He took it over last fall, a year after then owner Christine Boskoff, 39, died while climbing in China. (Her body was recovered last September.) Gunlogson joined Mountain Madness as a guide in 1994, when it was headed by Scott Fischer, the company founder, who died on an Everest excursion in 1996. The new owner no longer makes ambitious climbs. He wants to stick around long enough to turn this troubled enterprise into a thriving business.

 

Overhauling this company means alienating some longtime fans as it adds more trips for novice trekkers. Fischer, a charismatic outdoorsman and popular climber, ran the outfit like a club. Clients were usually macho friends or fans who wanted to climb the world's tallest peaks with him as their guide. When Fischer and seven others died while climbing Everest, Mountain Madness and two other guide companies were sharply criticized for their hubris, in Jon Krakauer's 1997 book Into Thin Air.

 

Boskoff, a climber and former Lockheed Martin (nyse: LMT - news - people ) electrical engineer, took over the nearly bankrupt company the year after Fischer's death. She balked at the $250,000 asking price and eventually got it for no more than the assumption of its $100,000 in debt. "Christine took over a sinking ship," recalls Gunlogson, who gave up guiding to join the company's office as Boskoff's right-hand guy.

 

It was hard to break out of the clubhouse mentality. Mountain Madness didn't have a budget. There were few marketing materials and little cash. The duo initially tried to save money by having a climbing friend who was an accountant come in to look over their books. They compensated him with free guided trips. In 2002 Gunlogson finally hired a full-time bookkeeper after some costly accounting errors.

 

Boskoff became something of an absentee owner as she took more climbing trips. Gunlogson, who by then had a 15% stake in the company, expanded its offerings. Custom trips were created as a way to boost profits by attracting more well-to-do clients. A custom 12-day trek-and-climb to Peru's Cordillera Blanca for four people might cost $4,000 per person. A typical 14-day trip for as many as a dozen travelers goes for $3,000 a head.

 

Last year 40% of the company's 200 excursions to 18 countries were custom trips, which make up 15% of its revenue. Sure, these trips have critics who say they attract inexperienced rich folk who want to "buy their way" up mountains, says David Jones, a climber and Seattle venture consultant who is a Mountain Madness investor. Even so, in 2005 they helped the company turn its first small profit, on sales of just under $2 million.

 

Although the Everest debacle made the company attractive to thrill seekers--Gunlogson says one in ten queries still comes from people who learned about the company from reading the Krakauer book-- he wanted to shore up Mountain Madness' reputation.

 

Until then guide training was "a joke, basically just a weekend of camping," says Gunlogson, who helped overhaul the program for guides. They now must pass an advanced wilderness first-aid course as well as be proficient in technical rescue and evacuation.

 

The climbing world was stunned when Boskoff and a companion died in an avalanche while scouting for new routes for the company near the China-Tibet border in 2006. Gunlogson was given the first shot at buying the company from Boskoff's estate, per an agreement Boskoff and Gunlogson struck in 2003. He jumped at the chance, buying it with money from a home-equity loan. He won't say how much.

 

The company's net margin was only 4% in 2007. Gunlogson aims to boost profits by raising prices for trips by as much as 10%. "We're actually behind market rates," he says. A 14-day climbing trip to Russia's Mount Elbrus offered by rival American Alpine Institute, of Bellingham, Wash., costs $5,150. Mountain Madness charges $4,400.

 

Gunlogson also plans to increase its offerings of more relaxed (and more profitable) excursions, such as treks up Washington's Mount Baker and to Patagonia. These easier outings are 25% of the business today and should grow to 50%, Gunlogson says. There will be more short treks in North America, where one-third of its clients want to climb and hike, particularly given unstable situations in places like Kenya and Nepal.

 

Under Fischer trips to Mount Kilimanjaro in Tanzania made up 60% of the company's revenue; today they make up 30%. Gunlogson has come around to the view that clients "don't care about a celebrity guide," he says, referring to Fischer and Boskoff. "They care if they're having a good experience."

 

Mountain Madness lost a bid for a permit to guide trips up Washington's Mount Rainier, where more than 10,000 summit seekers a year shell out $1,000 each for a guided climb. Two of its rivals got the contract, in part because of their solid financials and their proposal for cleaning up after hikers and guides. He now plans to create "feeder programs for other trips" to help novices get addicted to climbing--and to Mountain Madness. He's pushing a new concept called "the Gateway Program," which encourages trekkers to sign up to tackle a series of mountains. Each trip is more challenging than the one before.

 

Having alternate routes makes good business sense. The more challenging mountains may become less accessible if environmentalists have their say. They complain that guiding companies damage mountains with too much foot traffic and leave behind debris like oxygen canisters. Some parks are imposing $25,000 garbage deposits on guide companies.

 

Gunlogson says he sees an opportunity to clean up the best-known company in adventure climbing: "I think this will work itself out."

 

[gertlush]

Interesting article, looks like a tough way to make a living. I wonder if a big company like Intrawest would ever buy an outfit like that. They could tie it into their resorts. Maybe the liability is a bit much though.

[Stefan]

The duo initially tried to save money by having a climbing friend who was an accountant come in to look over their books. They compensated him with free guided trips. In 2002 Gunlogson finally hired a full-time bookkeeper after some costly accounting errors.

 

Interesting information. I was that accountant. Nobody ever told me of any errors I committed after I left. It would have been nice to be told instead of reading from a 3rd person account. I told Christine I was no expert on tax matters and have somebody handle all tax matters and could not do them. She told me to do the best I could and she would evaluate my work.

 

I took over from the old accountants, and Christine had informed me the old accountants had taken some money--I never checked into it.

 

I left becuase I couldn't do the free work any more. Too much time.

 

It was also at that time Washington State had implemented a new law for travel agencies where they had to put money into escrow before a trip went. This was to protect the customer with the cash when a company would go under bankruptcy. Kind of like what the credit card company did with Frontier Airlines recently. Anyway, I expressed this concern to Christine, and she told me to keep a lid on it.

 

I also got only one trip out of working there for just over 5 years. A good trip...but one trip.

 

Mark is a good guy. I wish him the best of luck with the omen of ownership that looms over that company.