The Bulgarian Duo Leading an Indoor Rock Climbing Revolution

The unlikely story of how two friends created the world’s biggest climbing wall company in Europe’s poorest country.

The Bulgarian village of Letnitsa (population 2,547) is a cluster of red-roof-tiled homes in a rural stretch of countryside in the Danube River valley, between the Balkan Mountains and the Romanian border. It’s a two-and-a-half-hour drive east from Sofia along a two-lane highway lined with monotone Soviet-era apartment buildings and sunflower fields. As the poorest and most corrupt member of the European Union, Bulgaria is still struggling to shed its communist past as it transitions to a market economy. A small town here is an unlikely place to manufacture walls for that most First World of sports: indoor rock climbing.

“I tend to consider myself as more clever than the others,” says Ivaylo Penchev, before leading a tour of his factory, on Letnitsa’s western edge. He and Metin Musov founded Walltopia in 1998 and have since turned it into the largest builder of climbing walls in the world. They’ve assembled more than 2.5 million square feet of them in more than 50 countries. That’s enough to cover all of the office space in the Empire State Building. They’ve surpassed older, more established companies riding the surge in interest in climbing by taking advantage of Bulgaria’s cheap labor and Penchev’s ego.

Ivaylo Penchev
Penchev at Boulderland, Walltopia’s Sofia gym.

“All the time, I knew that we will succeed,” he says, circling a crew of 12 workers who are applying fiberglass to a 38-foot-long stretch of plywood ribbing. Resting on a support of rusty metal pipes, it will become a climbing structure bound for a gym in Wichita. “It was a matter of building a few climbing gyms, having people feel happy afterward, and then they would spread the word.”

Penchev, 45, had pulled up moments earlier in his immaculate 2014 silver S-Class Mercedes, just shy of 12:30 p.m., when a buzzer signaled the end of lunch. Dozens of men in blue overalls and sweat-stained T-shirts stamped out their cigarettes and went inside to weld together long, square-shaped ducts, then cut thin birch panels and smother them in layers of glue and quartz sand.

When Penchev was here earlier in the summer, he was in disguise for the Eastern European version of Undercover Boss, hiding behind a brown wig, spectacles, and a bushy mustache. “I looked like a getting-old redneck rocker-loser type,” Penchev recalls. “People were very supportive, and they were convincing me that I am quite good in what I am doing. Obviously everyone is watching too much American movies, and political correctness spreads out even on the Balkan Peninsula.”

As they walk the factory floor, Penchev and Musov crack jokes in Bulgarian amid the clamor of power tools and the stench of polyester resin, marveling at their latest creations, headed for Austria, Russia, and Dubai.

The pair, who met in high school while climbing at their local crag, both grew up poor before the collapse of communism. Musov never went to college; Penchev says he didn’t eat in restaurants until his mid-20s. Musov, who has a mop of unruly brown hair and short, bowed legs, now oversees the 250-worker factory in Letnitsa. He drives a white BMW X6. Penchev, who speaks English and Russian in addition to Bulgarian, spends as much time flying around the world for meetings as he does at the company’s headquarters in Sofia. He recently added an arrest-me-red Lamborghini to his car collection. On this humid September afternoon, he sports a casual, big-city polish: jeans, Adidas sneakers, and a fitted, pale pink polo. His head shines—he’s shaved it bare every morning since he started going bald almost two decades ago—and his hands are soft. The trademark calluses of the climber he once was were lost long ago to typing on a laptop and glad-handing.

Walltopia, which employs about 650 people, is building two factories that will double its capacity. New capital from a first round of outside investment has valued the company at $70 million. Walltopia agreed this month to take a stake in Momentum, a small gym chain out of Salt Lake City, to help it expand nationwide. “It’s very smart for them to be on both sides of this business: making the walls as the supplier but also profiting in getting people into the gyms,” says Peter Mortimer, a climber and filmmaker. “They’re going to help grow the industry, and they’re going to profit from it. It’s like Budweiser opening a bar.”

On a trip to China last year, Penchev struck a deal to build as many as 50 climbing structures over the next five years. “Asia is booming,” he says. “It’s the future—so vivid, so alive.” But the U.S. remains the company’s most important market, where climbing gyms are opening almost every week. Of the 43 new gyms in 2015, Walltopia is behind 13. Climbing gyms will total almost 400 by 2015’s end, up 11 percent from the previous year, according to the Climbing Business Journal. Demand could support a thousand more, Penchev says.

Few are as high-profile as Sender One, in Santa Ana, Calif., which is joining with Walltopia to open its second location next year in Los Angeles. Sender One is co-owned by Chris Sharma, a climbing icon who was among the first generation of climbers to get their start in gyms. For Walltopia it’s like building golf courses with Rory McIlroy—they’re re-creating the arches and cracks and overhangs that Sharma’s scaled around the globe.

“Our industry is at the end of infancy and the beginning of puberty, but as we know, the main activity in that period is masturbation,” Penchev says. “For some, the real sex is close, or maybe even started. But the real orgy is about to come.”

A customer at the Walltopia gym in Sofia climbs during the late afternoon.

Rock climbers used to be self-described dirtbags, living out of their cars, traveling in search of the perfect crag, but now the sport has gone mass market, attracting weekend warriors from New York to Los Angeles. In January, when Tommy Caldwell and Kevin Jorgeson ascended a smooth 3,000-foot sea of vertical granite in Yosemite National Park, the New York Times chronicled what felt like every fingertip hold.

In the 1970s climbers were countercultural outlaws; now a professional can earn a six-figure salary and travel the globe on the dime of sponsors like Adidas. The story of climbing’s rise is entwined with the boom in indoor gyms, which offer beginners—“gumbies”—a relatively controlled environment in which to leave the ground. And central to the story of gyms is the evolution of their artificial walls, whose cost can range from $150,000 to more than $1 million.

Rock walls used to be constructed entirely on site, with steel bones that had to be welded, covered in plywood, and overlaid by hand with concrete. Each wall, a lumpy, dark knockoff of real rock, took months to make. For 25 years or so following the opening of the first commercial climbing gym in 1987, in Seattle, that was OK. The main builders and users of these facilities were enthusiasts looking for a place to train when bad weather kept them from venturing outside. They were “small underground s---holes,” in Penchev’s telling.

The walls in today’s airy gyms form a modern tableau of bright colors, with combinations of flat panels, sharp angles, and wavy 3D curves. Popularized by Walltopia, this aesthetic has become the new standard.

“We call it the money shot,” Jeff Pedersen says. “When you walk into a gym, how amazing does it look? Is it inspiring? Does it make you want to go tell 10 of your friends?” Pedersen, a climber, founded Utah’s Momentum climbing gym chain in 2007. “That sense of excitement and color and brightness and wonder in your facility with these Walltopia products would have been impossible with hand-troweling concrete onto your wall.”

Walltopia prefabricates the panels in Letnitsa, packs the components into shipping containers, and sends a crew of burly Bulgarian men to assemble the pieces like an Erector set at their destination. Because the walls can be dismantled and reused, banks accept them as collateral. The company’s team of 70 architects and engineers designs each wall to fit the client’s vision.

Gym owners say the new style makes it easier to maximize wall space, allows for better route-setting, and is cheaper to maintain. But the industry’s growth is about more than just walls. More and more gyms are adding amenities such as yoga, Wi-Fi, juice bars, and retail to keep people coming back. And they’re now able to attract a following of climbers in places far from any core scene. Pat Enright left a career in finance in 2003 to open MetroRock in Boston. “In 2003 the concept of opening a climbing gym in order to make profits for an investor was a foreign concept,” says Enright, who’s building his fourth gym, in Brooklyn, N.Y. Promising investors a 20 percent return, he’s been approached by buyout firms. “Climbing gyms produce something which most exercise companies or facilities do not,” he says. “They have a culture.”

Penchev
Penchev at the Walltopia R&D office in Sofia.

Penchev describes himself as a serial entrepreneur driven by anxiety and a desire to overcompensate for reasons both physical—he stands just shy of 5 feet 7 inches—and cultural. “Bulgaria was ruled by the Ottoman Empire for 500 years,” he says. “We were deprived of most of our rights, so we lived like slaves. So this is not in our genes but in part of our culture: to accept being inferior.”

Commercial Climbing Gyms in the U.S.

Penchev was studying for a master’s degree in theoretical physics when he quit to start the company, and he’s as comfortable discussing the intricacies of a pulley system with engineers as he is weighing the potential of a new Russian gym with investors. He tells colleagues in meetings that they’re “idiots” who should “go back to kindergarten,” and posts signs throughout headquarters exhorting employees to work like kucheta, which is Bulgarian for “dogs.” Patent is a dirty word: “I don’t want to make business putting barriers in front of the others,” Penchev says. Workers are fined the equivalent of $5 if they arrive even one second past 8 a.m. more than twice a month.

Yet he has a devoted workforce. Earlier this year, Boryana Levterova left her job in Toronto advising Fortune 500 companies for Boston Consulting Group to become his assistant. He prefers to promote from within: Levterova just took over the rollout of Walltopia’s newest product line, the Rollglider. It’s like a metal zip line that can snake through trees, or even around a mall; riders speed down it hanging in a harness.

Penchev gives associates time and freedom to develop products, and then a financial stake. Employees have come up with rope courses (Ropetopia) and cave installations for fake spelunking (Rocktopia). The company also owns and operates a gym in Sofia to test and show off products. Altogether, the Walltopia Group says it will post $26 million in revenue in 2015 and make a profit of $7.5 million.

In the mid-’90s, when Musov first had the idea for Walltopia, a 13-year-old French company named Entre-Prises led the global market for climbing walls with an early version of small, prefabricated panels. Using a windfall Penchev had earned co-founding a plastic bag company, he and Musov expanded on the French concept and automated much of the manufacturing process, investing in computerized cutting machines that eliminated some labor costs. They developed a wall coating that repels black marks otherwise left by the sticky rubber-soled shoes climbers wear to give them traction. And they kept all production in Bulgaria, which has the cheapest labor costs in the EU. They also benefit from corporate and personal income taxes held flat at 10 percent.

By 2005, Walltopia had become a dominant brand in Europe, but Penchev still hadn’t cracked the U.S., a fragmented market where manufacturers including Rockwerx in Massachusetts and Eldorado in Colorado competed with local, independent crews to build walls for the handful of gyms opening each year. “Americans thought Bulgaria was the end of the world,” Penchev says. “We might as well have been based in Mozambique or Angola.”

Momentum’s Pedersen became Walltopia’s first American client after meeting Penchev at a Salt Lake City convention for outdoor-goods retailers in 2005. Pedersen had been unable to find a wallmaker willing to alter its manufacturing processes to replicate his vision. “I remember getting that cold shoulder from the other companies, and walking down the aisle and seeing this guy who’s bald like me, short like me, and dressed in a funny white suit,” Pedersen recalls of Penchev. “He was very proud of his product, which was mostly triangles and very interesting geometric shapes. We didn’t want that—we wanted smooth curves. But immediately I could tell he was open to new ideas.”

Walltopia's construction factory
A worker at the Walltopia construction factory. For more on how Walltopia builds its walls, check out our full photo essay.

It didn’t start well. First, Walltopia sent over the wrong panels; then shipping containers got held up in customs, delaying the gym’s opening by months. Pedersen grew frustrated. “But there was never any finger-pointing, there was only problem-solving,” he says. “If they don’t have the current technology to do it, they’ll invent the technology. That’s what I love about Walltopia. I just don’t see any other company out there thinking that way.” Momentum, which has worked exclusively with Walltopia since, opened its second and third gyms last year.

To woo Sharma and his Sender One co-owner Wesley Chu, Walltopia flew them in business class to tour the factory in Letnitsa, work one-on-one with designers, and drink rakija (a brandylike Bulgarian specialty) to excess in Sofia nightclubs with Penchev. “The sense we get from Walltopia is that they want to win,” Chu says.

In addition to investing in gym chains, Penchev sees growth in acquiring competing manufacturers. He and Musov already own two-thirds of Composite X, also in Letnitsa, which makes the holds climbers use to hang on to walls and recently introduced translucent versions for one of Penchev’s latest innovations, a wall embedded with LED lights. He’s about to launch what he says may be the industry’s next big shift: a portfolio of standardized, mix-and-match wall parts that would eliminate the need to customize according to a facility’s size and shape, making it cheaper and faster to open a gym.

Penchev is also positioning Walltopia for a world beyond the boom in commercial climbing gyms, which drives about two-thirds of the company’s business. Some of the fastest-growing subsidiaries are more oriented toward amusement and entertainment, such as climbing-based activity parks for children. Called Funtopia, they’re already a hot seller in malls in Asia and the Middle East. Penchev now spends about a third of his time on his newest company unrelated to climbing, Auxionize. It’s an online auction site where suppliers of everything from office chairs to construction contracts compete to offer the lowest price.

The night before visiting the factory in September, Penchev takes a seat on the thick mats climbers use to break their falls in between climbs at Walltopia’s gym in Sofia. Filming the episode of Undercover Boss drove home what he cites as the company’s biggest stumble: It should have started building its two newest factories earlier. In Letnitsa, “people are exhausted, the factory never stops. We work at full capacity all the time,” he says. “But these are good problems. I do not complain.”

For a behind-the-scenes look at Walltopia's Letnitsa factory, check out our photo essay.