(FORTUNE Small Business) – Jake Burton Carpenter has one of the best jobs in America. Last year he spent 113 days riding his snowboard and still had time to run his company. Luckily for Carpenter, his passion is his business: He runs Burton Snowboards, the Burlington, Vt., company that makes snowboards, boots, and clothing. He also promotes that same passion in his employees by encouraging them to hit the slopes after a fresh snowfall. So far it's worked: Burton controls roughly one third of the U.S. snowboarding market, currently seven million riders strong. Life wasn't always so easy for Carpenter. When he started Burton in 1977, all he knew was that he was burned out on skiing but liked sliding down small hills in his backyard on a homemade slat of wood. Armed with a modest inheritance from his grandmother and no woodworking skills, Carpenter started sawing and bending boards into shape. Over the years he had to face down naysayers who predicted that snowboarding would never be more than a fad and resort owners who didn't want to open their slopes to "shredders." But today he's seen as the father of one of the country's hottest sports, and the market keeps growing. Here's the story of the man who put snowboarding on the map, and who continues to be its loudest and proudest advocate. --Brian Dumaine

"Snow has always appealed to me. Growing up on Long Island, I remember snow represented no school, and that was a super-positive thing. When I was 7, my father and mother took us up to Vermont to go skiing, and I really took to it. Also, since I lived near the ocean, surfing was always something that appealed to me. But my parents would never get me a surfboard, and I didn't have the money to buy one myself. The closest thing I could afford was a toy called the snurfer, a very rudimentary snowboard that came out in the mid-1960s and cost, like, $10. I was about 13 or 14 at the time, and it was so cool for me, because here was this thing that was like surfing but cheaper. And I was good at it because I loved it.

The snurfer had cult status. They sold hundreds of thousands of them, but it was never marketed as anything more than a toy. I envisioned it as a sport. When I snurfed with friends, we modified the boards to enhance performance. And from the time I was 14 until I graduated from college, I always thought I could turn my snurfing hobby into a business. It's not as if I had a definite plan or goal, but I always felt that there was an opportunity there.

In the mid-1970s, when I was still a senior at New York University, I went to work for Victor Niederhoffer, who ran a well-known and successful hedge fund that sold privately owned companies to big corporations. I don't think the term 'investment bank' even existed at the time. This was more like a glorified business broker.

I was really in over my head. Victor was an incredibly bright, capable guy. But it was sort of sink or swim, and I was fresh out of college--where I hadn't taken a single business course. I was working crazy hours. And I had a feeling of futility. I wasn't loving it. I felt a little lost.

But I got to talk to the entrepreneurs whose businesses we were selling. I was amazed that they didn't intimidate me. I remember talking to guys who had a waterbed company that was doing five million bucks and thinking, 'This isn't any tougher than the lawn-mowing business I started in high school.' So those two things--my unhappiness and the thought that I could start my own company--began bubbling together.

Then, in December 1977, things came to a boiling point. I made a move that upset Victor. We ran an ad in the Wall Street Journal, and the Journal screwed up the copy. And I told them, 'Well, we're getting a free ad.' I was tough about it. So then the Journal called Victor and said, 'This kid's been kind of tough on us.' And Victor reamed me out. That incident was the straw that broke the camel's back. I decided I was going to leave. But I don't want to dis Victor or that place, because I learned a lot there, and he was so great to me. And he gave me money when I left to help me get started.

So I'd left that job, and I wasn't happy. There was a real void in my life. I needed to do something different. I knew I wanted to work for myself. I figured, Okay, it's December. It's the beginning of winter, the perfect time to start a manufacturing company. I didn't do any market research; I didn't talk to any competitors. I just bought a little saber saw and started making boards in my apartment. I didn't know what I was doing; I'd been a loser in shop class. And Christmas was three weeks away--I had no idea that dealers ordered their stuff in March, that merchandise was shipped in September.

Once I realized I'd missed the Christmas selling season, I decided to start over. I'd saved up some money from my high school landscaping business, and I'd inherited about $120,000 when my grandmother had died a few years earlier. But I ended up, you know, burning a lot more of that than I anticipated. I ended up being ultimately about 100 grand in the hole a couple of years later.

I started making prototypes. I got an opportunity to housesit for some people in Stratton, Vt., because they had a couple of German shepherds and horses that needed to be taken care of. And I did a lot of woodworking and a lot of prototype making in their barn. I had a pin router; it was the first machine I bought. On two occasions I fired boards through a wall. If either of them had hit me, I'd have been cut in half. I just had no clue what I was doing. But I made over 100 prototypes.

After a while I moved into a little commercial space in Londonderry. An electrician had a showroom that he didn't need, so he had all his stuff in the back, and we were in the front. I'm sure the local Vermonters thought I was some front for a drug operation or something.

I had pretty high expectations. I thought the whole thing would happen pretty quickly. And I didn't do any market research or make any kind of business plan. I just figured, 'Well, if I make 50 boards a day, I could make a good living. I could make, like, 100 grand a year or something,' which at that time was huge money. So for most of 1978, I worked on the development of a production board. I wasn't ready to deliver my first board until mid-December. Not that I had any orders. I had one order, I think, from one shop. And he canceled it because I didn't deliver on time.

But I still believed this could be a business. At first I didn't see snowboards being ridden on ski slopes. Skiing was expensive, lift tickets cost $20. I saw snowboarding as a backyard-type thing, sort of like cross-country skiing combined with sledding. I wanted to hit between those age groups--not the over-40 cross-country-skiing set, not the younger kid on a flexible flier, but sledding for a teenager.

So, undeterred, I tooled up to make 50 boards a day. But I made three big mistakes. One, obviously, was being undercapitalized. Fortunately, I had access to more capital, but if all I'd had was 20 grand, I wouldn't be here right now. Even so, $120,000 was barely enough. The second mistake was that I overestimated my sales potential. I worked out a scale that I needed to operate on to get rich. I figured if I could make 50 boards a day, I'd have it made. So I hired two relatives and a friend to help ramp up production. But hiring people close to you is another huge mistake. The downside can be so much more severe than just losing an employee. You can lose friendships and family relationships.

Anyway, after making all these boards, I'd load up the station wagon and drive off. Then I'd come back five days later, and the station wagon would still be three-quarters full. That winter I sold 300 boards, just six days' production. I was in debt, and it was a disaster. I was focused on making the boards at a reasonable price--I had a pretty good understanding of my costs--but I overestimated the sales. The demand just wasn't there.

My third mistake was that I completely missed the market. I thought, 'Okay, I'm 23 years old. I'm burned out on skiing. My market is people like me.' But it turned out that 23-year-olds had no interest in it. My market was 15-year-olds--which is how old I was when I got my first snurfer--and for them, $88, the price of the first board, was too much.

So the next winter I figured that to get costs down, I'd make a $45 board that didn't have bindings on it, which I called the Backyard. I had to fire my friend and relatives. Aside from some part-time high school kids, I was on my own. And it was interesting, because the Backyard never really sold much. But it brought just enough money in the door that it probably meant the difference between death and survival. Meanwhile, I kept traveling around New England with the more expensive boards stuffed into my station wagon, going to one ski shop after another. I was a pretty decent boarder, and I'd demonstrate how the board worked. Once people saw me on the board, they said, 'Wow, this is worth 88 bucks.'

And then in the early 1980s the business started to take off. I can remember the point at which I really felt like, you know, well, all right. It was 1980, and I can remember shipping our 700th board, and I thought, 'This is starting to happen.' I still had to go down to New York and bartend to earn money that next summer. But I think that that was the point when emotionally I turned the corner.

It's amazing that I was able to tough it out that long. Perseverance is incredibly important when you're starting a business. I think the biggest step was just gaining confidence. I started this thing for pretty materialistic reasons. You know, I thought, 'Well, I can make a great living and blah, blah, blah.' But then when I really bottomed out--when I started having a lot of sleepless nights--what became much more important than anything else was pride. I wanted to demonstrate to my friends in particular, and to all those people I had worked for in New York, that I'd made the right decision.

In 1984 my confidence and perseverance started to pay off. I got my first big break--we broke into ski resorts. Stratton Mountain was the first to come through for us. Paul Johnston, who was Stratton's manager at the time, let us ride with their ski patrol one day. So we went and we did okay. And he said, 'Well, we've got to have a board meeting to discuss this.' He got back to us and said, 'Well, you know, nobody thinks you should be on the mountain.' Then he added, 'But nobody's got a good reason. So I'm going to give you a shot. But you've got to police it. If you screw up, you're out.'

So we certified people. You had to be certified to get on the mountain. It's not as if skiers aren't dangerous; you have novice skiers running into you all the time. But we snowboarders had to be squeaky clean.

And once we got on the hill, the resorts were great to us, because they understood the passion people had for this product. On the first day of the season, 50% of their customers would be snowboarders, even though in those days boarders represented only 1% or 2% of their ticket sales overall. Or if there was a rain storm, all the snowboarders still came, and none of the skiers did. They loved to see customers who would stick with them through thick and thin.

After Stratton, other mountains started allowing snowboarding, and the industry took off. We were growing on average about 100% a year. But success also meant that a lot of other small snowboard manufacturers were starting up. Fortunately, the only people really equipped to compete with us, the big ski companies, were very close-minded. They just didn't take snowboarding seriously. And that's one thing I learned from watching them: When you see some guy in a crazy contraption, you'd better not laugh. They laughed at me, but they're not laughing anymore.

That left us with most of the market, and we still have about a third of the market today, because we don't have much moneyed competition. The pure snowboarding companies don't have a lot of money, don't have real R&D, don't have great operations. And the ski companies, who are very well financed, don't really understand the sport, and they don't have the focus. We've got the focus that the little guys have, we've been around the sport, we understand the image. We have roundtables with pro riders who help us design our boards and keep us ahead of the market. And we've got all the tech, R&D, financing, and operational know-how of the big guys. And that's why we've been successful."