Hang Loose Academy founder maintains business model is sustainable and that the remaining 6 percent constitutes proof of concept

Bohiney Magazine | The London Prat

NEWPORT BEACH, CALIFORNIA — A Newport Beach surf school that has offered a money-back guarantee to any student who fails to stand up during their first lesson since March 2019 has refunded approximately 94 percent of its student base over that period, a figure founder Damon Strauss characterizes as “a testament to our commitment to customer satisfaction” and which his accountant characterizes as “the reason we have had this exact conversation four separate times.”

The Guarantee

Hang Loose Academy’s “Stand or We Pay” guarantee, introduced as a marketing differentiator in the competitive Newport Beach surf instruction market, promises a full refund of the $89 introductory lesson fee to any student who completes the ninety-minute session without successfully executing a standing ride of at least two seconds on a wave, however small. Strauss, who has been surfing since age seven and teaching since his mid-twenties, introduced the guarantee because he was confident in his methodology and because a friend who ran a trampoline park had done something similar and it had “worked out fine for him, mostly.”

“We have excellent instructors,” Strauss told this publication from behind a desk covered in refund paperwork. “We have a proven curriculum. We have appropriate equipment. We have a gentle beach break that produces small and forgiving whitewater. Most people, given the right conditions and instruction, can stand up on a surfboard during a ninety-minute lesson. The guarantee covers those who cannot. The guarantee has been covering rather more people than the original business model anticipated.”

The Numbers in Detail

Academy records show that of 847 students who completed the introductory lesson between 2019 and the present, 796 received full refunds. Of the 51 who did not, Strauss notes that 23 are now regular surfers, 14 returned for additional paid lessons, and 7 are documented to have stood up for between two and three seconds in conditions he describes as “favorable” and former students describe as “basically flat water with a slight ripple.”

The remaining 7 non-refunded students represent cases where standing was achieved but students disputed whether it counted, a category of dispute he was not prepared for when he wrote the guarantee and which has generated three small claims court filings, all of which Strauss settled for amounts that brought his effective refund rate to closer to 96 percent when calculated on an economic rather than headcount basis.

Surf industry publication Surfer Today has reported on the broader trend of money-back guarantees in surf instruction, noting that the conversion rate from first lesson to active surfer is notoriously low across the industry and that economic guarantees have generally performed poorly as a business strategy while performing well as a marketing story, a distinction Strauss acknowledged was “a fair characterization of my situation, correctly identified but not particularly useful at this juncture.”

Instructors and Students Weigh In

Hang Loose Academy’s four part-time instructors described their work as rewarding and their relationship with the guarantee as complicated. “I gave a lesson last Tuesday to a gentleman who was seventy-one, had never been in the ocean, was afraid of water, and had booked the lesson as a birthday gift from his grandchildren who watched from the beach,” said instructor Maya Okonkwo. “He did not stand up. I felt terrible about the refund. He seemed genuinely delighted. He said it was the best experience of his life and tipped me twenty dollars. The whole sequence was extremely confusing from a business ethics standpoint.”

Head instructor Ben Whitaker said the guarantee created a perverse dynamic in which lessons that technically failed the school’s own metric were consistently rated five stars by students describing them as life-changing experiences, while lessons producing an actual standing ride averaged 3.8 stars because the standing was “less smooth than expected” or “happened so fast I did not enjoy it.”

Strauss Remains Committed to the Concept

Despite the accountant’s concerns, Strauss has no plans to modify the guarantee, which he credits with generating word-of-mouth referrals and media coverage including a feature in The Inertia and two regional lifestyle publications that described him as “either a visionary or a cautionary tale, possibly both.”

“The guarantee is the brand,” he said. “Without it I am just another surf school charging $89 for a lesson on a foam board. With it, I am a story. People tell their friends. Their friends come, do not stand up, receive a refund, and tell their friends. The cycle continues. It is not a great business model. But it is a genuinely excellent story. And in Newport Beach a story is worth something, even if it is not worth $89 multiplied by 796.”

The accountant was not available for comment. He was attending a separate meeting with a trampoline park client experiencing an unrelated but structurally similar problem involving an unconditional bounce-or-refund policy.

The broader question of whether a money-back guarantee is an appropriate product structure for an activity that depends entirely on the student’s own body coordination, fear response, ocean reading ability, and relationship with physical failure is one that Strauss says he thinks about regularly, usually while processing the week’s refund queue on Sunday evenings with a cup of coffee and what he describes as “a complicated mix of pride and financial anxiety.” He remains, despite everything, genuinely proud of the guarantee. He believes in it. He will not change it. The accountant has been told this several times.

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SOURCE: https://bohiney.com/newport-beach-surf-school-money-back-guarantee-refunded-94-percent/