A one-off action sports event organized during the 2001 Dubai Shopping Festival proved to be the spark that started Shahriar Khodjasteh’s entrepreneurial adventure. Soon after the event, the future president of Dubai Desert Extreme (DDE) noticed a niche in the market – action adventure sports like skateboarding and biking weren’t being catered to. With a little help from his parents – who run a furniture and furnishings outlet – the first DDE outlet was formed on Jumeirah Beach Road. The 20 square meter outlet stocked skateboarding and biking apparel, gradually gaining more top retail brands until opening an outlet in Mall of the Emirates in 2005.
Family ties still stand firm for Khodjasteh, whose mother helped pay the rent on his first store; “We are an entrepreneurial family, so I was there [in Dubai] to help my father, and even when we opened the store my brother was the one that ran everything up until the June of last year,” he said.
The adventure sports entrepreneur gives credit to his father for the success of the brand. “I went to the University of Mansour Khodjasteh – my father – he is an exceptional business man and has created empires from nothing,” he said.“I was lucky enough that I was beside him, and he always pulled me in with him to learn first-hand: I think it’s better than any theoretical university process.”
Networking also played a role in expanding the retail side of DDE. Khodjasteh attended the world skateboarding championships in Germany one year, meeting “skateboarding legends” Tony Hawk, Steve Caballero, Mike Vallely and Tony Magnusson. Chatting with these industry leaders led to DDE stocking products from each of the respective companies. “We started bringing Osiris Shoes from Tony Magnusson’s company and we started bringing Tony Hawk skateboards from Tony Hawk’s company,” he said.
DDE now has three divisions: action sports (skate, surf, snow, BMX biking); lifestyle (clothing and swimwear); and bike sports; representing some of the world’s biggest labels. With the outlet opening in Mall of the Emirates, DDE had a strong focus on retail. Today, however, it has diversified into distribution as well. This has come hand-in-hand with an aggressive expansion plan. “We grew 41% on the last financial year, and we’re looking to grow by 70% in the next financial year,” Khodjasteh said.
When the company started up, the skateboarding industry was almost non-existent, with a “handful of guys”, a group of between 10 and 20, taking part in the sport in Dubai. A holistic approach served DDE well, however, as it grew the business through building skate parks, sponsoring young skaters, publishing in-house magazines and building web forums. “Basically we built the whole infrastructure or the whole foundation for the sports to grow, and in turn also the brand and the business,” the entrepreneur continued.
Challenges for the company have proved finding and retaining talent (the company is “growing faster” than it can be financed) as well as the credit crunch of 2008. “Whilst we’ve grown the last two or three years, the first part of the recession was extremely difficult for us because retail revenues dropped by more than 50% in some areas,” he said. A third challenge has been the seasonality of the company’s sports, as well as a lack of interest in the beginning – DDE effectively grew in a sector that didn’t previously exist. However, Khodjasteh credited the RTA, the Dubai Sports Council and the UAE’s Cycling Federation for the infrastructure they’re now building. “There is a great opportunity for growth, but at the same time your marketing costs are more, your development costs are more because you are developing not just the brands but an industry,” he explained.
Having started with a salary of AED2,500 in 2001, DDE now represents the world’s biggest action sports brands. So what is Khodjasteh’s advice for other entrepreneurs? “Make sure you have a proper business plan, a proper financial plan and a good structure for corporate governance,” he advised. “It’s good to have a board of directors so that you can make decisions collectively and also what is very important is building relationships with a bank or banks…you are basically long-term partners.” While it depends on the type of business you run, everything you do needs to be considered a “good partnership” from your suppliers to all stakeholders, he added. Another aspect to think about, “which I think works well for us, is transparency,” he said.
“I tell my staff that we are here to make a difference, to make our mark; we are not here for the norm, we are here to strive for number one. And I think that gives everyone a goal and that is extremely important.”