Two Years Later, the PXG Effect Continues to Spread

We’re coming up on three years since MyGolfSpy coined the phrase The PXG Effect as an attempt to encapsulate the upstart brands’ impact on the golf industry. Admittedly, part prognostication and part evidentiary sampling, it certainly appears a paradigm is shifting. It’s been nearly four years since the company launched, and somewhere between accident and intention, PXG has become a different type of family business while altering the standards by which the industry evaluates golf luxury.

It’s nothing if not a bold proclamation, but entirely befitting of what started as the insatiable curiosity of billionaire and admitted golf nut, Bob Parsons.

PERSONA

Any conversation about PXG’s identity starts and ends with Parsons, its founder and financier. Parsons’ business success can be traced to a singular focus on patient excellence, even if his approach often might seem non-traditional. Those who claim he’s a boisterous billionaire who refuses to pay much attention to critics are correct. For better or worse, Parsons doesn’t answer to anyone, and while he’s not opposed to alternative viewpoints – especially when they’re accompanied by alternative solutions – final decisions are made by a committee of one. Those who look beyond the bluster and recognize his generosity, drive for excellence, and humble integrity are every bit as correct. Like anyone else, it’s impossible to encapsulate who Parsons is in strictly binary terms. To paraphrase a quote from Sarah Silverman, people aren’t just one thing.

PXG is a fundamentally different equipment company because Parsons’ priorities are fundamentally different from his competitors’. As such, the execution of PXG the golf brand is going to be different, and Parsons isn’t going to be pigeon-holed by convention. “I really don’t know what a golf executive is…I wasn’t an internet exec…wasn’t a powersports exec and again, I’m not a golf exec,” Parsons told MyGolfSpy. When forced to use the industry-standard adjectives to describe Parsons and his approach to the golf business, None of the Above is the one that most often applies.

From day one, PXG has been a reflection of Bob Parsons, and as it evolves, his fingerprints continue to leave indelible marks. Some love it, others loathe it – and my hunch is just as many don’t understand it.

Parsons the Marine and Parsons the business magnate are inseparable. On the verge of failing to graduate high school, Parsons and two buddies joined the Marines at the height of the Vietnam war. There, Parsons formed a deep understanding of what it meant to operate with honor, courage, commitment and a single-minded focus on the task at hand. It’s not over-selling it to say that the Marine Corps changed Parsons life. “Everything I’ve ever accomplished I owe to the Marine Corps,” says Parsons. It’s one of several reasons he donates $10+ Million annually to the Semper Fi Foundation. Beyond the club naming nomenclature and limited-edition Darkness 26 products (Parsons served in the 26th Marine Corps Regiment), it’s the Marine Corps values of honor, courage, and commitment which provides the philosophical underpinnings for PXG. It’s the team that drives the processes which ultimately make the difference. “At the end of the day, it’s the people that matter, says Parsons. We’re a family first.”

FAMILY

With the notable exception of PING, golf companies have largely become corporations or enterprises within corporations. Brands like Hogan and Callaway no longer have a direct link to their founders, and though one could argue Miura is an exception, the more it expands, the less it feels like a small family run operation.

Behind Parsons’ sometimes gruff exterior is a fiercely loyal man who understands that trust, particularly with his most demanding clientele, is a two-way street. “If somebody (touring professionals) is willing to play my equipment and stake their career on it,” says Parsons, “the least I can do is help them any way I can.”

Case in point; LGPA staffer, Gerina Piller took a year off from competitive golf after her son, Ajeo James (AJ), born in April of last year. “I’ve never considered writing maternity leave into a contract, and truthfully I was a little scared to tell Mr. Parsons. He can be a little intimidating,” Pillar told MyGolfSpy. True to his word, Parsons asked Gerina a single question “What do you need from us?” Last season, Parsons paid Piller her full contract, though she didn’t play a single event.

Billy Horschel signed on with PXG in 2016. Unbeknownst to the outside world, his wife, Brittney, was struggling with alcoholism and entered a treatment facility that summer. It was a tremendously challenging time for the young family as Billy took time away from professional golf to tend to obviously more important matters. Again, Mr. Parsons had a single concern – and it had nothing to do with golf. “Billy, what do you need from me?” With Parsons, the answers always seem to go beyond contractual obligations, because that’s how families take care of one another.

These stories and countless others stand in stark contrast to the perception of Parsons of an arrogant and greedy billionaire gouging golfers for every cent he possibly can. Parsons takes care of his people. It’s core to who he is, and it’s a theme that repeats itself in his unwavering support of LPGA players and women’s collegiate programs. Much of what happens behind the scenes with Bob Parsons isn’t out of obligation. Doing the right thing never requires justification.

Zach Johnson hesitates to use the term “contract” at all when discussing his status with PXG. “It’s a brand and a relationship first and foremost,” says Johson. Certainly, money is a part of the equation, but Johnson credits PXG’s technology with prolonging his career and ability to compete against the best players in the world. “I’m 42 and flying bunkers I couldn’t carry five years ago.” Headlong critics can’t seem to get past the fact Johnson hasn’t won an event since 2015 (prior to his switch to PXG). Apologies to Vince Lombardi, but winning actually isn’t everything – and when used as the exclusive criterion for success, can be a false metric. The PGA Tour is in the midst of a youth movement. Players ages 25 and under accounted for 10 wins on tour in 2018 and 18 wins during the 2017 season. Even so, Johnson points to 18 top-25 finishes in 2018 as validation that PXG gives Johnson a leg up on Father Time.

Another player told me, “I feel fortunate to have all of my sponsors. They’re all great, but PXG is special.” Part of what makes PXG rare is Parsons’ hands-on approach. He regularly checks in with all of his players to offer congratulations, a couple of words of encouragement, or just to see how the spouse and kids are doing. “It’s not something I’ve ever experienced before – and it’s pretty cool.”

Player after player remarks how “PXG is different…it really does feel like a family…” And this isn’t boilerplate, lip-service, kiss-ass commentary from young players looking to fit in. It’s every bit as authentic as Parsons’ unmistakable “Hey brother!” greeting. “

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ONGOING MARKET IMPACT

As with his employees and tour staff, when it comes the retail side of the business, Parsons doesn’t march to the beat of his own drummer; he rewrites the music.

So when conventional golf circles labeled PXG as a fad from minute one, it was both an assessment without evidence and a catch-22. Authentic luxury develops over time, whereas technologies are quantifiable – they can be tested and proven. True innovation, however, is a process, and when a company is less than four-years-old, every success is short-term. Fads, like economic recessions, can only be defined when looking in the rearview mirror and though I’m sure critics would welcome some schadenfreude, both empirical and subjective evidence seems to suggest that PXG is having more of an impact than anyone thought likely.

Consider that in June of 2015, PXG hadn’t sold a single club. It now has 12 international distributors and a footprint in 44 countries. According to the Golf Datatech U.S. Market Summary, August 2018, PXG 0311 Irons are the number one selling irons model based on On-Course sales (dollars) over the past three years. That’s the kind of one-off, cherry-picked stat that just about every brand has used at one time or another to oversell itself, and a single point in time doesn’t always paint the complete picture. That said, given the marketplace dominance of the Big 5, that PXG has managed to escape the Other category, the golf equipment industry’s equivalent of also-rans, it borders on remarkable.

Here, it’s important to note that Mr. Parsons is adamant that PXG, while positioned as a luxury brand, is an affordable luxury. When Yeti hit the market, it did so at ten-times the going rate for an average cooler ($300 vs. $30). In comparison, PXG’s GEN2 metalwoods sit 10%-20% above the industry average with its irons are roughly twice as expensive as category-equivalent offerings from the major OEMs. For PXG, elevated prices are a vital part of its formula.

Studies performed by Stanford and CalTech examined a similar dynamic and found compelling results. Chiefly, consumers consistently rated a more expensive bottle of wine higher than the exact same bottle at a lower price – and functional MRI tests showed evidence the participants enjoyed drinking it more as well. Subjects given two placebo pain killer pills – both of which were fake – were subjected to a series of shocks. Those who consumed the more expensive pill experienced greater pain reduction.

That is to say, in a very real sense, price can alter performance. It’s part of the reason Parsons attracts a number of customers who know the clubs are expensive but, according to Parsons, “never ask the price. They buy three sets and hop back on their private jets.” PXG has become the favored brand of athletes, entertainers, and the business elite whose passion for golf is exceeded only by the elasticity of their bank accounts.

When the first generation 0311 irons hit the market in 2015, the notion of paying $350-$400 per iron, particularly for a brand without a history of excellence (or any history for that matter) to leverage, sent critics into a frenzy. Other than a few niche Japanese brands, golf manufacturers traditionally stay well away from overly ambitious price points and so it wasn’t particularly surprising that the industry went into full knee-jerk response mode, reducing otherwise rational and intelligent people to statements such as “They’re just over-priced PINGs”, “Parsons has no idea what he’s doing”, “What have you said yes to? Those are terrible.”

And those were the thoughts of executives and industry veterans from the biggest OEMs in the game.

Even Matt Rollins, PXG’s Director of Tour Operations, whom previously held the same position at PING, was chided by a close colleague who said, “I hope you know what you’re doing because by the end of the year (2015) you won’t have a job.” At that point, the PXG tour staff consisted of a single player, Ryan Moore, who bagged a set of 03x prototypes to start the 2015 season. For those on the outside, PXG seemed to be a company with a cloudy future at best. Clarity came by way of a string of PGA and LPGA signings (Zach Johnson, Billy Horschel and Lydia Ko among others), bringing the total number of PXG Troops (Parsons term for his professional tour staff) to twelve. Unlike other upstart brands that have appeared from nowhere, and disappeared just as quickly, PXG shows no signs of fading.

Critics often fail to see the entire context of a situation, focusing exclusively on what appears obvious to them. Bob Parsons has the unique ability to change the context because he sees potential where myopic naysayers simply don’t. Detractors focused on lists of reasons why PXG would fail while never considering that Parsons wouldn’t have entered the market if he hadn’t already figured out how to succeed.

Each season, Matt Rollins greets his friend during the unofficial tour start in January with the same warm, slightly caustic smile and a bold “Well, I still have a job” declaration. Touché.

The reality was Parsons put the industry on notice waving with one hand and flipping the bird with the other as if to say – I’m glad you’re paying attention to what we’re doing, but don’t expect the same in return. Perspective is everything, so whether Parsons is viewed as an arrogant 1-percenter or a confident businessman is often simply a matter of the viewing angle.

Taken at face value, there’s seemingly little unique in the PXG offerings. The caviler will argue the hollow-body iron concept predates the PXG 0311 by several decades, if not more. It’s a fair statement, however; it fails to acknowledge how the 0311 matched an idea with patent-worthy modern technology that fundamentally changed the industry. Specifically, that 0311 spawned a new and distinct class of irons that melds ball speeds and the distance of game-improvement irons with the aesthetic, feel, and workability demanded by professionals and competitive amateurs.

Because any truly effective technology is sure to be mimicked, it’s what other OEMs have done in response which cements PXG’s credibility as an equipment maker and validates its intellectual property. The same OEMs which initially dismissed PXG couldn’t pivot fast enough once it became clear PXG had figured out to reach a segment of the market that some of its competitors begrudgingly acknowledge they hadn’t realized existed.

Consider the competitive response since the 0311’s unofficial birth date (June 1st, 2015), all of which incorporate some, most, or perhaps a bit too much of PXG’s signature blueprint.

Titleist threw every R&D trick it had at the experimental C16 concept series which debuted in April 2016. Callaway’s Epic Pro irons (2017) tested the premium market at $250/club. JDM stalwarts Miura and EPON, forced to compete on something more than status and mystique, rebuilt significant portions of their iron lineups because of the impact PXG’s emergence had on their bottom lines.

And then there’s TaylorMade…

To no small degree, golf equipment is a copycat industry, but TaylorMade stepped a little close to the fire with the release of its P790 irons in 2017. PXG, and more specifically, Bob Parsons, felt a line, in fact, several, had been crossed. The ensuing legal battle officially ended in a tie with the language of the agreement reading “each company will have specified rights to make club products under patent cross-licenses.”

The court of public opinion, however, is a different beast. Some felt in filing suit, PXG affirmed critics who believed TaylorMade’s technology was the equal of PXG’s at a significantly lower price. Others understood Parsons’ need to protect his signature iron technology and along with it, PXG’s elite status.

If either side fully capitulated, we may never know. What can’t be argued, however, is which technology hit the market first – the same way no one needed a court to figure out Vanilla Ice ripped off David Bowie and Queen.

3 months into 2019, it’s hard to find an OEM without a Forged Distance iron holding a marquee position in the line-up. Prior to 2015, you’d be hard-pressed to find any.

Today, PXG is an established player with a global presence, but equipment alone doesn’t constitute a brand as a luxury.

STATUS

Luxury often appeals to the pathos inspiring adjectives like refined, superior, and timeless. And while companies have to sell something, luxury purchases are often rooted in brand identity as much as the products themselves. That isn’t some stark revelation for most, but in the North American centric golf industry, it’s a space unique to PXG.

Mainline US brands (Callaway, Titleist, Ping, TaylorMade, Cobra) control roughly 90% of the retail market, but gravity, working as it does, makes it an onerous task for any brand to elevate itself to luxury status when it’s already firmly entrenched in the mainstream. It’s one thing to declare your everyman’s brand premium, it’s quite another to convince the market to take you at your word. Upward mobility is particularly challenging in golf given that manufacturers routinely present their mainstream products as being born from revolutionary thinking and offering breakthrough technology. Lines like the Titleist Concept and Callaway Epic (irons, and Star driver) open the door to uncomfortable questions. Is what’s on the shelf at a big box retailer near you the best of anything, or are brands holding back on the good stuff for the guys willing to pay more for it?

How does a mainstream brand enter the premium space without diminishing mainstream products which by definition, can’t be quite as premium? It’s a question PXG doesn’t have to answer because it was always conceived to be a luxury brand. It does, however, face a different sort of challenge. As it works to garner more attention from, and its prices trending closer to the mainstream, it’s reasonable to wonder if PXG will be able to maintain the line between luxury and accessibility that its identity depends on – especially if continuous growth is part of the plan.

To no small degree, the clarity necessary to maintain that distinction relies on PXG’s ability to continue blurring the line between product and experience.

A lesson no doubt learned from his other business, Parsons understands that PXG is selling a service every bit as much as it is a product, and as such, buying PXG is meant to be an experience. The goal is white glove treatment at every interaction, whether it be via a brand agnostic fitter like Cool Clubs, Club Champion, or PXG’s team of field reps who facilitate demo day events at green grass accounts and private clubs throughout the year. PXG seeks to differentiate itself by offering a higher level of service to all of its customers. Since nothing is held back from the clubs, spending more won’t get you a better product, but it will get you a different kind of experience.

For those with larger appetites and deeper pockets, PXG offers the PXG Experience and PXG Ultimate experience – both of which are high-dollar destination fittings and fall under the “if you balk at spending $400/club, this one ain’t for you” category. If you’re good paying a premium for access to Scottsdale National Golf Club, first-class travel, accommodations, dining and some on-course face time with Mr. Parsons, it’s something unrivaled in the industry.

And they say money can’t buy happiness.

Expansion

Last year, PXG opened its first retail location in a rather nondescript building in an even less distinct business park area just northwest of downtown Chicago, in the well-to-do suburb of Northbrook, IL. It has two fitting bays, a putting green and a full complement of soft goods and accessories, though the external appearance isn’t what one would expect given Parsons’ penchant for striking proclamations and commercials which read like tweets sent out in ALL CAPS.

But again, that’s exactly the point. PXG isn’t the pair of shoes you buy because it caught your eye in the lucky size 30% off section. It’s something golfers seek out, typically with an intent to purchase and without expectation of a discount. PXG isn’t a bargain-based operation. Like the equipment, the softgoods and accessories offer commensurate luxury at premium price points, though Parsons understands not everyone wanting to rep the brand is interested in $150 polos and $450 cart bags. More moderately priced items ($25 ball markers/divot tools, $35 New Era brand hats) create multiple points of entry.

Add to that the recently announced PXG Japan, a joint venture between Parsons and Japanese real estate magnate Yuji Nishimura (Director of Classic Group). Says Parsons, “The forming of PXG Japan is an ideal way to manage and grow the PXG brand in Japan in an authentic way.” True to form, PXG selects business partners cut from a similar cloth, so to speak, and the Classic Group certainly fits the profile. It owns and manages high-end golf clubs, hotels, and practice facilities throughout Japan, including the Hanna Country Club, which sits adjacent to PXG Osaka.

A first-of-its-kind driving range concept with three state-of-the-art fitting studios, a dedicated retail space, and 141 hitting bays; the 1.4 million square foot PXG Osaka is, according to Parsons, “a beacon of the quality, innovation, and performance we plan to deliver with every effort in Japan.”

Some brands want to sell; others motivate consumers to buy. It’s likely PXG’s continued success will be a function of maximizing the latter while dripping in enough of the former – a balance which may present a new challenge for Parsons. The fact of the matter is that PXG isn’t the first to try its hand at self-contained retail. Callaway tried it, TaylorMade tried it too. Neither had any long-term impact. Why should PXG be any different? The answer may depend on Parsons’ ability to push his boutique brand to the edge of mainstream, without falling into it.

Icebergs and Influencer Culture

For as far has PXG has come in less than 4 years, “we’re only just discovering the tip of the iceberg” says PXG’s Chief Product Officer Brad Schweigert. Its 0311 GEN1 irons revolutionized the players distance category of irons and opened up new price points across the industry and PXG believes its GEN2 irons are measurably better in every way. One has to wonder what could possibly be next? Though they haven’t received the same attention, PXG’s line of milled wedges is an industry first and sets an incomparable standard for spec tolerance and replication. Production costs put this type of product out of reach for most every mainline OEM, but because costs don’t present the same barrier for PXG, nothing is off the table. Its GEN2 metalwoods are a technological step forward, and while the ruling bodies have set firm boundaries around driver design, PXG, like everyone else, will continue to push the limits.

Continued technological advancement is imperative, but so too is the manner in which PXG messages both its current and prospective audiences. It’s a weighty topic and one worthy of further dialogue, but should social influencers become a larger part of the marketing and branding approach – and given that said influencers are nearly the polar opposite of the primary circles in which PXG has established itself as a luxury brand – how will PXG continue to broaden appeal without diluting its status? With celebrities (and I am using that term loosely) like Larry the Cable Guy and others gravitating toward PXG (Larry tweeted his affinity for his PXG clubs at the AT&T Pebble Beach Pro-AM), how does it successfully operate in what’s becoming more of an influencer culture?

I doubt Mr. Parsons ever entertained the notion that PXG would become a symbol of frat-boy opulence, yet PXG the brand (arguably the logo), not the golf equipment, is gaining some degree of cult status with the 18-22 contingent solely because of its identity, and because there isn’t another brand like it. Within this context, PXG represents something modern and expensive – or to use more context appropriate lexicon – It’s lit Fam. Totally Gucci, and Hundo P. 

It’s unlikely gaining that type of following was part of the original plan for the PXG brand, but the willingness to embrace it suggests an ability to adapt to changing conditions and reach unexpectedly broadening audiences.

PXG doesn’t attend trade shows, and yet at this year’s PGA Merchandise show, PXG’s presence was felt. The number of attendees sporting PXG warez served as evidence that PXG the brand, has the reach and social cache. Additionally, there’s a quantifiable and growing fervor for PXG soft goods in Korea and Japan which, if past is prologue, can take on a life and status all its own – if it hasn’t done so already.

PXG is thriving, in part because it never needed to. Or more correctly, because it was born out of a question, the answer to which was never meant to be assessed by typical industry metrics.

Thus far, the answers have enraged critics and found favor with a clientele no other OEM would take the risk to discover. Cynics seem to resonate with the all too common refrain that any hint of elitism is incongruent with “growing the game.” Others have entirely bought-in but refuse to take a more critical look at PXG to explore what chinks exist in its armor.

PXG has inspired legions of fans and fanboys, detractors and haters. They exist, polarized, in seemingly equal numbers, which is almost certainly how Bob Parsons likes it. Mediocrity eventually becomes marginalized, and it’s when people stop talking that there’s cause for concern.

In Parsons’ world, there are no failures – just a variety of steps toward success. Though he’s quick to dismiss any notion of a specific blueprint for PXG, he’s always had a vision – one which is probably much bigger and brighter than whatever you’re picturing. During the grand opening of the Chicago store, Parsons declared, “Hopefully this is the first of many, but I haven’t even started thinking where a second one would go.”

Regardless, PXG is rewriting the rubric for a modern golf luxury. Period.