Entrepreneurs

This 31-year-old CEO is making millions from trampolines

Life can be like jumping on a trampoline — you're not always sure where you'll land.

Sky Zone planned to be one kind of business, but necessity forced it to morph into something else.

It was also supposed to be run by one man, but his 21-year-old son had to take over when the family matriarch received a fatal diagnosis.

"I was completely thrown into the fire to try and figure things out on my own," said Jeff Platt.

Fortunately, he bounced back. Literally.

Sky Zone is a chain of 140 trampoline parks in five countries. Inside the parks are a series of wall-to-wall trampoline courts, where you can jump or play games like basketball and dodgeball. There's a workout area — jumping burns up to 1,000 calories an hour — and a foam pit people dive into. Kids come for birthday parties during the day, and adults can jump by black light at night. Most of the parks are franchised, and total revenues last year were $240 million.

"I feel like when you're jumping, you're totally present in the moment, you're thinking about nothing else in the outside world," said Platt, who is CEO. "You just completely come alive."

Idea #1

Jeff Platt, Sky Zone CEO
CNBC
Jeff Platt, Sky Zone CEO

Platt's father, Rick, started Sky Zone in 2002 with plans to begin a new professional trampoline sport: "a combination of the traditional four sports with quidditch," said the son, referring to the fictional game played while flying on brooms in the "Harry Potter" books.

The Platts raised $2.5 million dollars from friends and family and opened the first park in 2004 in Las Vegas. They fielded teams and even held a championship.

But no one understood the new sport, so they couldn't get any traction. "We quickly realized that if you're going to start a professional sport, you probably need ESPN as your partner and hundreds of millions of dollars behind you," said Platt.


Idea #2

Sky Zone was running out of money. Then someone at their R&D center in Vegas came up with an idea. Skateboarders outside their facility would often come in and jump for free. "One day when they knocked on the door, we said they could jump, but we told them it was $8," Platt said. When the kids balked, "We said, 'Well, we're in business now.'"

The kids paid, and the next day they came back with friends.

The family soon realized this was the way to make Sky Zone successful, and Jeff Platt credits his father with being smart enough to see it. "It's always hard for an entrepreneur to take what is their original vision and switch directions, or accept the fact that whatever that original idea was is not working."

The 21-year-old CEO

Jeff Platt became CEO of Sky Zone at the age of 21.
CNBC
Jeff Platt became CEO of Sky Zone at the age of 21.

Platt said just as the company was starting to grow, "The best thing and the worst thing happened to me." He had opened Sky Zone's second store in 2006, choosing St. Louis. That's where he attended college and attracted the interest of local investors when he presented a class paper on the company.

Five weeks after the St. Louis location opened, Platt's mother was diagnosed with cancer. She would not survive. "My dad, rightfully so, said, 'I've got to go take care of your mom, good luck.'" Suddenly the 21-year-old kid was running the company.

Platt threw himself into the work, learning every detail of the business. "I always felt like because it was a family business, I had to work extra hard to prove that I deserved to be in the position." He did every single job. "I got to clean up the vomit when it would be on the floor and not in the trash can." Even so, the new CEO loved it. "It was a blast."

Ten years later, Jeff Platt is 31 years old and a veteran CEO. He was also the youngest CEO to ever appear on "Undercover Boss," where he got an earful from employees.

Here are some lessons learned along the way.


Trust your team

"I learned over time that if you're ever really going to truly scale or grow a business, you must delegate to your team, you must empower your team, you must let them make decisions," Platt said.

Pay now or pay later

"Who you need for the next six months is very different from who you need in two years." Platt suggests start-ups pay more for talent in the beginning, even though that's expensive. "The cost of hiring someone right now, training them, and then in six or 12 months later having to get rid of them because they can't scale, that's way more costly."


Know your customer

Woman jumps on trampoline at Sky Zone.
Source: Skyzone
Woman jumps on trampoline at Sky Zone.

As Sky Zone has expanded outside the United States, it's learned to tailor parks to meet cultural norms. In Saudi Arabia, for example, some Sky Zones segregate jumping areas between "men" and "families." In Australia, they've created performance trampolines where customers can run up a wall. "They're an 'extreme' culture," said Platt of the Aussies. "They're extremely athletic." Up next? "We're actually under construction now in India."

Success is breeding copycats. "There are over 600 trampoline parks in 16 different countries around the world," said Platt. "It is a real industry now. It generates over $1 billion in revenue." Of course, a business like this comes with high liability insurance premiums, which equal nearly three percent of revenues. Accidents happen, but Platt said no one has died jumping at Sky Zone. "There's risk, that's why they call it risk management, not risk elimination," he said.


The old idea is back but better

As for the original idea of launching a new professional trampoline sport? It's back, except with a sport everyone knows: dodgeball. "Everybody knows dodgeball, everybody loves dodgeball," said Platt. Sky Zone has started an international trampoline dodgeball league. Fox Sports aired some recent championships, with sponsors like Pepsi.

"We actually did the whole business backwards," Platt says of the way Sky Zone started. Fortunately, he helped turn the enterprise around. Sitting in his stocking feet preparing to jump, Platt remembered the reaction of his peers back when he took over the family business. "A lot of my friends at the time were going and working for companies or investment banks or Goldman Sachs or becoming lawyers. They were looking at me like I was crazy as a general manager of a trampoline park. I never imagined it would be like this, but it was fun, and it turned out OK."