How I Built A $7 Billion Shoe Company Called On | Founder Effect

i like the idea i like the feel but i didn't like the look so much right with the pieces of garden hoses all included on a shoe you're not gonna make your business if anyone could see the potential in a running shoe with garden hose attached to the soles it's olivier bernhardt the six-time iron man and two-time world champion triathlete spent decades training at the highest levels of competition but after leaving the sport a friend of a friend reached out with a bizarre contraption when it comes to running shoes the usual suspects like nike brooks and a6 are tried and true but when roger federer decided to invest in on the running world took notice sales were up 77 over 2020 and on is expecting to generate over 763 million dollars in sales by the end of this year the three numbers to look out for in this story are 1 000 the amount olivier took home after winning his first professional race 150 000 his annual salary at the height of his earnings and 746 million the amount on raised and its ipo in just 11 years the upstart shoe company went from zero dollars to evaluation over seven billion here's how a world champion triathlete landed roger federer on their way to creating one of the fastest growing shoe companies in the world for cnbc make it i'm nate skidd this is founder effect olivier grew up this close to the poverty line on his family farm on the swiss countryside far from the urban city centers and the cool shoe stores found inside of them so you could call them in some ways entrepreneurs but not so much in in that kind of business driven so not so much no i think i just got the athletes spirit or athletes gene in my blood running and i think that got me really started in the early 80s he became enthralled with endurance athletes competing in a new sport called triathlons that combined three of his favorite activities but he wasn't the fastest sprinter the most adept biker or the strongest swimmer he was on the other hand exceptional at enduring their physical tolls but turning his passion for triathlons into a living was a long hard road olivia was stuck in a cycle i still remember that i had to collect some prize money every race i did in europe in order to pay the next flight right so if i didn't make any prize money i had to skip a race his first real payout came at the age of 21 finishing first place in a marathon in tucson arizona and i won 1500 us dollars and the box of powerballs and it was like christmas and the easter and everything in one day i couldn't believe it but after paying his brother back for the entrance fee olivier took home one thousand dollars and so began a two-decade career culminating in two world championships and six ironman titles so how do you go from you know like an aspiring athlete to a three-time world champion you know often i see the same thing pretty similar in business uh don't think too much about you know what's on top i mean just take step by step and you know enjoy the levels you reach at the height of his earnings as a professional triathlete olivier was bringing in about 150 000 a year by the time he turned 35 he knew his career was entering its final stage in 2006 at the age of 37 and after having three kids he entered his last professional race so when you're kind of wrapping up your career you know it sounds like some people have a hard time kind of letting go of that competition um and the training how did you make that transition how did you make that move i mean it wasn't a clear cut i mean yes ending the career was a clear cut but you know training so many hours and as a long-distance athlete you spend a long time on a bike and also running you know out and over right sometimes in the tucson along a dry creek and and i always was thinking you know about not only another running shoe but another running feel how could i place another running sensation in a running shoe after retiring olivia founded a coaching company and even had 100 athletes in his camp but he just couldn't shake the idea of coming up with a better running shoe oh i don't believe so much in luck in life i think it was just you know it was something that needed to happen that a friend of mine you know then now a friend of mine but an engineer siri called me and said look i have an idea uh i want to put it on your shoe on your existing shoe that's pretty much that ugly looking you know old nike shoe uh pegasus and he put on something that looked like over actually pieces of a rubber hose you know what i said i'm not gonna run in these right but then finally i i ran in in that sample and and it struck me it was something i never felt before and there was so much of that sensation i felt like whoa this is really helping they want us to to show what what running is all about olivier says the difference was the way the rubber hose not only padded vertical movement but assisted horizontally as well now olivia might know a good running shoe when he sees one but he isn't a numbers guy so he brought in two partners who knew each other from their time at mckinsey if anyone could help olivier turn his crazy shoe idea into a profitable business it was casper capeti and david allemand in 2010 the trio launched on out of an office in zurich so how did you bring the team together what was that like i realized soon i'm not gonna you know be the businessman or one man show they can actually pull this off and i realized that i'm probably not the numbers guy i love numbers but they're bad the guys out there i love design but i've not studied design i love marketing but i'm not the market here so i reached out to casper who used to be my agent uh at a certain point of my professional career as a triathlete and he then brought david on board who was his best friend in his career olivia wouldn't say how much but each person invested the same amount in the startup and i think that was really the fair point to start right in 2010 just three years after hanging up his cleats on was born but now they had real skin in the game and it was time to act fast dave flew straight to china to begin working on a manufacturing process we had to be super quick i mean we knew you know we can't lose much time and we won't lose i mean every uh half year you know we lose or every two months we lose is costing us only money so we had to be very quick in six months they took on from an idea to a prototype its first production order was for ten thousand sneakers the company generated about a hundred thousand dollars in revenue that first year but those early shoes were squeaky and not exactly aesthetically pleasing so they came up with another prototype this one called the cloud racer in 2013 the on team headed to munich for ispo the largest sports year exhibition in europe expectations were low but on a whim they entered the cloud racer into a competition for the gold award they beat out over 300 competitors at the exhibition this was a big deal for such a small company and that was a neat push and needed push at the very start because i remember casper and i driving to to munich from zurich it's a three hour drive with the car we said let's make a promise you know we only gonna sign three countries it's switzerland germany and austria no others because we you know we need to focus our energy and we sat in the car three days later and of course it was 19 countries that same day on received an order for 2 000 pairs of cloud racer sneakers the only problem the shoes didn't exist do you know how you guys employed your cash at the beginning i think in shoe business or in many cyclical cyclical uh companies like our business it's it's it's the risk that you actually have to pay the product before it's even produced right even us being a startup they wanted to see the money before they even would start suing you know producing outsoles and then you know you pay maybe half of it and then the other half as soon as it's on the boat and you only get the money once not only once the the products actually sold to the end consumer then you may have to have another like 60 90 days until you have any money on the bank account the team was cash poor but received an infusion from four angel investors olivier would not disclose that amount so what did your expansion look like was there you know like you land these 19 countries which is fine but like you still have to sell shoes you know you not only have to convince the end consumer but even more the retailer and the retailer you know he has a reputation or she has a reputation on the line not only at the beginning we would go to retailers and make a presentation like all other brands would do right and then we were just unhappy and with the results you know they didn't buy in and they not at the end they would not say you know give me the order form and i order 50 or 100 jews they often said oh i think about it and we all know what that means right probably not or not now not yet right and we said why don't we go wrong with them and then what happened and we realized that really after one or two times we did it they started asking questions they said oh i actually like the landing why is that landing so soft and why is actually then but why is it so rigid in the forefoot and how come so propulsive at the very end when you push off so it was much easier to answer the questions they had about our technology instead of trying to sell them out technology and that really made them the turnaround so i really love the idea of like let's stop talking about what this thing can do and let me just like show you it sounds so much better it's honest right it's the honest way of the it's not me trying to sell things right something it's it's really you tell me if you like it or you don't and then if you like it you probably want to know more right on's brand of experiential marketing was effective in 2013 the team was only 10 members strong then in 2014 ons running shoes were worn by nikola spirig who took home the silver medal in the triathlete during the rio olympics i mean it's mind-blowing it's not only that you see even only seeing people competing in the issues is something else right but then if you see that athletes go for medals at the olympics is something else truly that was too super emotional then they noticed an instagram post by roger federer who was wearing a pair of on sneakers so like any good marketer they sent him a gift package it didn't take long before they were having dinner together and talking shoes so like how does roger come into your life like how does that even happen you know the funny thing and i know still talking about it it might sound a bit arrogant but it wasn't us finding author he found us i mean come on i mean you know would be there as a young swiss running shoe company to sponsor what so that's not going to happen we wouldn't have the funds so we wouldn't even think about that right so it was him reaching out to us and saying uh maybe there's a way we can pop up and he whenever you know like you know he was never in the room saying could it be a sponsorship he knew that we were too small and it's not our sport but he wanted to become a partner and what was your reaction to be very honest we were a little afraid at the beginning you know is this even too big for our brain you know is he his name is like you know i mean everyone knows roster doesn't now become you know roster owns on a side of you know everything else he's doing and watch was always aware and he always wanted to be very careful that this is not the case in 2019 federer invested an undisclosed summon on and is currently designing a customized shoe for grass clay and hard courts he came in the office maybe the second time he visited all the into the lab and he said my aim is to build the best tennis shoe ever the pandemic has been good for the shoe company in march of 2020 sales stopped in their tracks but by the end of the year they were tripled the sales volume from 2019 and the world took notice on went public on september 15 2021 and raised 746 million dollars with a valuation of 7.3 billion so you know why make the decision to go public like how did that come about if you want to play in the big league you know and with us in europe you would call it the champions league like in soccer right then you want to compare you know and fairly compare to leaders nike brooks and you know all these big guys when he comes in terms of financials you you you know you have to play the same rules and i think that's one of the reasons we we've grown up and we think that we want to be comparable to these companies because we want to keep growing and another important thing is is governance you know we have a dual chair construction that we actually can secure our majority and so we can steer the company the the five of us and that's super important you know as you grow and have your financial rounds you you might lose maturity and regain that back through that dual share class and that's an important thing and then last and maybe that's even the most important thing is we have huge dreams we have dreams how to make more olympians in track on the road and to make these streams come through we need resources right we need financial we need funds and yeah the ipo is like a big atm machine right where you can then go and get this money so it's maybe a couple you know most important reasons why ipo and now the company has over a thousand employees and sells shoes in more than 60 countries with north america making up its biggest market with about 40 percent of its business you know i've only written down one note this entire interview and i want to bring it back to like the very beginning of this interview you said don't look at the top look at what's right in front of you like can you walk through that philosophy for me i remember one of the first talks when i got to know david you know casper i knew from being my agent for a long time but david mentioned okay let's do it you know and let's think about the business plan and who were gonna attack i said no we're not gonna attack we are competing but we're not gonna attack it's not you know a confronting sport we are at the same starting line and we are small we are slow you know and we don't hit any numbers for the big guys right now we should just try to make the best product on the planet