Arena Show Part II: Brooks Running (with CEO Jim Weber)
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So have you gone running yet in your custom acquired ghost fourteenth?

Dude, the ghosts are amazing. They are the best sneaker I have ever knowed barna hands down. I used to have a genna. Rentals are also great, but I literally wear them like all day, every day.

But David, those shoes are only for active runners. You're misusing the point of the guests. Well.

with a baby, I I am literally wearing a baby walking the hills of inform six co. I'm burnt more calories than I did when I was running every day.

It's true. It's just a slow run at who got.

True, got. Easy, you with you.

with you see me down, say state.

Welcome to season and ten, episode eight, the arena show and by pitch book of acquired the podcast about great technology companies in the stories and play books behind them. I'm been gilbert and am, the co founder and managing director of seattle based e pioneer square labs in our venture fund, psl ventures.

And i'm David rose all and I am an Angel investor today. Back common efforts go. But man, man, what a special day that was in seattle.

That was, and we are your hosts. We're gna go right here into the onstage introduction of jim and the brook story. So I don't want to give too much exposition here except to say that if you've been sort of thinking, Brooks, is this like shoe brand, and what can take people possibly learn from one hundred year old shoe company prepared to have your mind blow and jims one of the most dynamic guests that we've ever had on acquired.

And I just got so many comments leaving the arena, just absolutely floored with all the great takeaway and lessons and the people rode down from jim. So make sure you enjoy that. okay? Listeners, now is a great time to tell you about long time friend of the show service now.

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Definitely was an investment advice last episode. And uh without further a do onto our conversation with jim weber, the C. E, O. Of Brooks running all right now for our final act of the evening. We have a very fun local story that we've been dying to tell.

Brooks running, 爱你。 So I think a lot of people apply familiar with this brand, especially in seattle, especially if you are running. But the story of this is absolutely unbelievable and extremely untold until now.

So when the CEO jim weaver took the home in two thousand and two, the company was losing five million dollars a year. IT was thirty million dollars in debt. IT was a week away from missing payroll.

And the board was like having weekly meetings to figure out how to make payroll. IT was a business of pretty motor size. IT was a sixty million dollar revenue business. And when we talk about this revenue number, you know it's not sass numbers like there's extremely real costs and making shoes, so you can imagine not make in a tone of money while actually losing five million dollars year.

So that business has been around for like ninety years, and it's all all sorts of products at every Price point to Frankly, a pretty random set of consumers in every category, not just running. So enter jim. Jim came in and bet the company exclusively on serving active runners as a segment, and he cut all other business lines over the last twenty years.

He's grown the business to over a billion dollars in revenue, billion with a bee and well over a billion, and is thriving and thrive even through the pandemic. So along the way, Brooks was acquired by berger halfway and warn buffer personally elevated Brooks and ym to make the company a direct report to him. Jim is a leader of visionary and a fighter, not only growing the business over the last twenty years, but personally fighting and beating cancer. Please welcome, jim ever.

Thank so .

much too.

Here we go. This is great. What a show.

So jm, we figure you have a lot of footwear ready.

And I saw six more pears tonight.

And this morning, thank you for hosting the run we have and acquired hot for you and required bag with .

margins in IT from the acquired family .

best of .

tim bag at the company.

We hope to see this in the trail heads store starting in twenty twenty three.

I love the goal. That's the first gold trim. We've got an an accessories banks. It's great to be here.

Well, my my first question in the way that I want to just tea this off, I mentioned it's untold story until now I heard you just launched a book. So congratulations on that.

Thank you. Thank you 哦。

Could you just tell us a little bit about that?

What is the book? So the book is running with purpose, and Brooks has been a fabulous journey, and i'm a person that believes in life. The journey is to be just cherished and enjoyed because the finish lines are fleeting.

And we all want goals. We all won't finish lines, but you ve got to enjoy the journey on the way. And I think we're all creatures of our journey.

So Brooks has been through a lot, and it's a David and glass story. It's a turnaround story. It's a purpose driven, culture driven brand story.

It's a focus niche chAllenger brand story in an industry like so many that dominated by platforms, one really, really fabulous platform. And so we've navigated that. We will we're building a really cool brand with lots of runway yet for growth and and it's a great business, too.

And so I wanted to tell that story because if you're not a runner, we haven't marketed to you. I mean, we are so focused, every nickle has gone to people that are putting one foot in front of another. But the story continues. And I wanted to great is.

well, David, I got to read advanced copy of IT. And then I actually just released the audio book when IT dropped earlier this week, actually, that you narrated, which is very fun to hear your voice while I was running on the burk by your office, listening to your voice. IT was a very, very real experience.

I want to go all the way back. I'm going to play David's role in this one. Let's go all the way back to when you first encountered Brooks in one thousand hundred and ninety eight, talk to us about how you came to the company and where the company was at at that point.

Yeah, so I I had I had a really fun career. I've became a consumer products person after some banking pilsbury ema corporate development strategy, got to run a brand i've always wanted in a business. And I ended up following an exact to the common company. So I started, became an outdoor sporting its guy.

This is like camping and camping.

But they owned a whole bunch of different businesses. And I so badly wanted to run a business, a little division they had down in phoenix hit the wall, just almost fraud in the counting and everything else. And I came back from a swapping, and I told my boss, I want to go run.

That put me in, coach, put me in around. That turned IT around, sold IT went appeared to another cold division of brian water sports. It's in our backyard here in redmond, washington, a brand.

And and I ran that for several years, turned around and profitable. They sold IT. There's a pattern here.

And then you know I went on to sim sports, a snowman company, and you we turn that around, and I ended up changing hands. And so there I was, and I joined the board at Brooks. I joined the board at not less, which was formally both flex.

And I did some banking work, midden market MMA marketing companies to investors. But on the board at Brooks, I had an inside view of what was happening there. In a good friend of mine, Helen rocky, i'd run IT successfully in the nineties, but SHE left.

IT was owned by jj witney capital, really a top notch for my money. Middle M A. from.

Private, actually, from. And they bought IT. But the partners had left Helen, the CEO had left Brooks.

And IT started to go sideways. New partners that would need all new management. They went through three CEO.

And and so and you were on the board, the hole I was on the board. So I had a look inside and and IT was a crisis weekly. You guys have experiences this weekly board calls on fridays.

The bank is not going to fund. They want more capital. IT is IT was exciting, as they say.

So after a couple of months, we did a lot of work. I saw an opportunity and I jumped in. And I love running businesses.

I love solving the puzzles. But by that time, and I started tell the book, I really wanted to play the long game. I wanted to build a brand.

And you know the time I love your industry, the market running is the biggest category in all. Sporting gets. It's the biggest category.

And athletic foot, where IT always hasn't. It's about a thirty billion dollar category globally, a part in football. So all we had to do is give to, you know, and we could survive.

And we've just kept at IT by design because I just decided I want to play the long game and build a brands, build value. And so that's why i'm still there. I'm a weird duck, but i've got i've got four owners and i've played through each one and kept that opportunity out there for the next owner. And so we went .

at that moment there. I mean, been mentioned you did a little this, a little that it's like deadline and winds where i've got a collection of hair nets and name tags like were making foobar. What was Brooks at that point time?

Every brand in athletic fort a peril plays the whole athletic directors preview, right? You're in every sport and and what no one understood that I found out later is that the mindset in our industry literally came from owning a factory. When you had to shoot factory, you had to keep IT busy all year long and keep the people in played. So you went from baseball plates to restful shoes to bowling shoes to running shoes to fit. You had to make everything and business developed that way.

and you had to view IT as, like, the product you made was like a factory that made shoes.

And so most of IT we were losing money on, and that was the secret, right? So we had good, Better, best thirty dollar shoes, eighty dollar shoes and then performance running shoes that really started at that point about one hundred dollars. And then we had court shoes and family foot where we called on barbecue shoes and longer shoes because that's what you did in.

And and all of IT was very low margin. All of IT was tanging up a mentor and cash and the retailers, we're ambivalent about IT because we were never eight or nine and everything a brand was not strong. And so but when we made the decision to burn the boats on everything, but performance running, the industry had never seen that before. And and most people thought we were crazy that we wouldn't survive.

And so you'd came in a CEO, I think in two thousand two, maybe late two thousand one.

but April two thousand one. okay.

Was Whitney looking for you to do the thing that you had done several times in your career before, which was just get the business to profitability? Or do they have a notion that you at an ink that you could build a big, powerful brand here and actually build a tremendous growth business?

By this time, I understood what they needed, and i'd talked about a little bit of my book. I D run three, and I was a little bit smarter. Fortunately, they had to liquid fy.

There was no question about they were going to sell. And the employees knew that I was just coming in there to sell this thing. They had a pull on how long i'd last, but I rode on my board, one of my favorite coats from Benjamin israeli.

The secret to discuss is constancy of purpose. I wanted to create value. I want to to build a brand.

So I decided when I walked in, I was going to play through witney. I was going to get them a good outcome. But I was gone to stay in place through IT.

I thought we would get another private actually, player. We didn't. But so the witney partners, Peter kashmir pavano, never figured the meetings.

They said, this thing is, it's kind of a mess. We didn't know what we bought. You have to pick a path and go might take five years.

We're going to do in a Brooks darkest hour they wrote to check and recapitalized IT cramdown, but they wrote a check. And that's when I came in. And so they were fantastic partners for books, and we got them liquid.

The pitch I made to our team is what I believe is that companies with issues get sold. Companies with the opportunity attracted investors. And now I said we're going to have to park cars in the parking that were going to attract some, but that's the mindset we had.

We were going to sell the future, not just sell the current. right? yeah. yeah.

And so if i'm remembering, right, witney put in seven million dollars .

to recapitalize IT.

I think that's the last time Brooks has taken outside capital.

absolutely. So we saw a higher margin business and we benchmark against all the public companies where asset light. It's really elementary receivals business. And there's a reason we only have one store at our headquarters, and we think it's it's an advantage for us right now in the development of our brand.

But if you have high margins and good flow through Operating profits and the teens in your incremental obviously, capital, you you can flow cash growing twenty, thirty, forty percent. We haven't needed a dollar of capital sense two thousand one. Wow.

that's incredible.

That's why that's why warned buffet, like.

This you said cash to .

omaha around a return tangible net assets has spent over fifty percent for the .

last fifteen years. wow. wow.

Fifty percent annually. Wow, on average net tangible assets. What you say that's .

a good business.

Can you just .

walk us through like what is how do the economics of Brooks work?

You know, here was the insight that we saw. And man monopoles are great. Network affects are great. Plat, all those things are great. And what I signed, Brooks, there was a book that was meaningful to me when I was at pilsbury. The pimps principles in one of the highest ri businesses were lower Price point consumer able items.

If you're buying a boeing jet or a six hundred dollar weight board that never wears out or an eight hundred dollar gogol's driver, you that's a discerning purchase. And the margin's and equipment tend to be lower, but the title less golf ball is consumable for me anyway. And running shoes, a frequent runner.

a frequent .

runner will put twenty to thirty miles a week. We'll go through two point six pairs issues a year. So there's the stickiness, right? If you can earn a frequent runner that the shoe is really important, it's a piece of equipment for them. You can you don't have to resell m every time you've got some stickiness there and you start to build customer customer loyal and you .

your average selling Price for a pair shoes today is hundred and fifty thousand.

six hundred and thirty .

times two point six yeah per year. And a loyal Brooks customer stays with you for maybe you know we had .

to earn there's no guarantee they're curiously is lots of new innovation and they'll try some different things. But when you're training for a marathon, one of my favorite stats for our brand is show count at marathon's because gets a piece of equipment and if and you don't want to be injured, you want to have a good experience. So we boston just happen incredible ways. We're always the number one or two two on course.

Do you have people at the big marathon's counting?

It's so good. High speed cameras, no high speed cameras. A I, they link IT to the bib.

They know exactly what you twenty thousand people are running on. The model is so cool. So housing marathon on eight thousand, six thousand.

Marathons twelve thousand. Half number one shoe in the half. Brooks number two shoe in the full. There is a little brand down in portland organ. They were number. We are on their heels, but that show count is a true test because that's that's the frequent runner and it's a piece of gear in that. So that's the leading edge for us is to earn that customer and and have their confidence.

David's doing the thing that I Normally do and jump ahead and try and like unpacked the business as IT is today. Let's go back to the story. So two thousand, two, three, six, let's talk about this era.

You've made this bet where you're going to shed every other product that you sell and you're coming in a piss off a lot of your channel because you know what, cells really well at these big box stores. Those are your barbecue shoes. So can you take us to like wonder two with the key moments of the hard part of the decision to drop product lines that weren't about frequent runners?

Yeah, I think the key to Brooks is that we knew we are going to have to build the brand at the runner level, literally a purify of the time. And the retailers so many retailers told me, jim, we are not going to build your brand, will try IT. We'll test IT.

We were test to at the exporting goods. And i'm not kidding. For ten years, twenty stores, eighty stores, twenty stories, eight stores, twenty. So you have to build the fly whalin, these franchise products. That's how running works.

The best selling running shoes continue to be the best selling running shoes you're after your for as long as they sustain IT all around the world, we have two the best selling shoes now in the united states, the ghost in the drennen, there are the two top shoes in the performance running category. So so when we go to retail biggest customers, big five is a fine, you sort of mid Price sporting its retailer. Or on the west coast, we are doing ten million of sixty million of revenue with them at thirty dollars shoes, my first meeting with them. As we love Brooks, we see a great future for you.

So one, six of all your revenue dy was coming from there.

They saw an opportunity at one hundred and ninety nine. I was losing money at thirty books. I couldn't run fast enough from that meeting because we laughed and we generated five million of cashed by getting the mentor of IT so that those were easy decisions to leave those retailers. And then we had to build IT in the especially run community internet pro e commerce, huge part of our business now.

And so then they didn't want to sell your hundred dollars shoes. They want to to sell twenty.

thirty one. I see they .

had .

family athletic, where at this .

moment in time, where was this in the running as a sport like marathon's be what they are today, where they on that journey.

they were on that journey. This this was what we did at Brooks. I think we were the first one to identify that the real business was in trainers.

IT wasn't in racing shoes. IT wasn't in Spikes. IT wasn't in marathon racing ing shoes.

The businesses in the trainers, we don't sponsor college programs. They're kind owned and wrapped up. A lot of the college athletes that race in the big brands train in Brooks. The business is trainers.

So when we came in, you, I think Brooks had had we were humble and we were getting the business that we could and we had shoes that we're really more back of the pack people. They weren't the fast people, their support shoes and motion control shoes, people that needed functional footwear. And we ve moved ourselves to the middle in the front.

We're trying to serve every runner. The insight was this. The sport is the soul of running right track and fill across country road racing.

The olympics now trail and ultra, but the business is people that are investing in themselves, fitness and health awareness. There's no other sport that has that dynamic where where there's IT goes from a sport to pursuit of, of investing in yourself. And we've always positioned right the middle that we're basically about you and you're run.

We're not about the podium. We're not about the tape in our sport. Unlike basketball, everybody knows all the kids especially know what steff kerry plays in.

Most people don't remember who won the olympic marathon and and even more over what should they were with. And the truth that matter is, you know, everybody's unique. The shoe really matters.

And you all know if it's comfortable, if it's working or it's not in the frequent runners where they do. So that's the insight, I think, are the only brand that is consistently executed against that. Every product we make starts with your biomechanics and your habitual joint motion and what your needs are in world centrally different, where the only brand that begins there. And we've done that .

for twenty years now, you mention that other company in in order.

And I tried out to say computor names, right? IT just end that you say name that which .

is an amazing company down there, great company. But literally their name is, is the Green card for Victory. And where you're talking about here is incredibly counter position to that in a way that Victory really can't mean just investing in yourself regardless of where you finish.

One person breaks the take yeah forty thousand people run new york marathon. We'll take the thirty nine thousand nine .

hundred and nine nine.

They want to have their day. You they're .

investing .

in themselves. They want have we we're celebrating every one of those people first five k running around the block that's here. Run, right?

That's what we do. IT was really clarifying, reading your book and understanding that brook's brand is about performance. But IT is not serious. And I think that was an interesting clarification for me because I run and I take my performance seriously and I ve selected a very specific motion control Brooks shoe to do that. But I don't need you to be a very serious sort of like Victory oriented brand because i've never once thought or maybe I will win the seattle rock and roll marathon like that .

is never bad, is still, you know, I think I think really what IT relates to, and this is I think what Brooks got before any other brand is we have we are sweating product. I think we invest more in R N D A focused running meta ics manner than any other company. And we don't have as much money as many of them still, but it's so focused in the clinical work we do and the materials work we do.

We engineer materials just for the motion of running in all the all the engineering. That is what has to do and respond in between gates and all of that. So that's the key.

But I think our brand positioning um I didn't create IT IT was sort of there when I came in, but it's brilliant for this reason. It's approached you know the unserious sss is basically trying to take the pretention and and i'm not worthy. I'm not a runner out of our sport and so many of our our retail running shops have done a fantastic job of that.

First of all, i'm old enough to remember title nine in the seventies equalized college sport funding for men and women. If you weren't addressing women in the last forty years in sporting goods, you're gone. I mean, we doubled the business and women have driven the sport since the mid nineties.

So approach ability, I think, was super key. And and Brooks is a very inclusive brand. It's you and you're run and all are worthy. But the product here's the other thing that's so interesting about our sport is maybe in some sports, the pinna equipment absolutely needs to be available to the pinacle athlete. Maybe that's in golf and certainly for a two hour marathon, everything has to be clicking.

But what's interesting at our sport, the person that really needs the best football and the best run bra and all of that are the people that are just beginning because the injury potential for those people is really high, and that's where the right to. So there's that's another element of our our category that's pretty unique. So I I would say that the seriousness of our of our brand is is all about in welcoming and including everyone, no matter if you're just starting or you're twenty of marathon.

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So you walk away from one sixty or revenue. I think you walk away from more than that. It's not like he went from sixty to fifty IT went like significantly .

lower foot lock ker. We are doing sixty dollar amuse theyd order eighty thousand. They change the product twice.

They get IT down to sixty thousand, and then they cancellable. And we had done twenty thousand elementary. That was a quick decision too. We just quit doing all that that make up business that was retailer driven him.

So revenue is going like this intentionally. You're the fourth CEO. So at this point is the team. How do you get the team on board and these crazy decisions you're making when they're like three other people came in here and try to turn this thing .

around and didn't you know? I think from a leadership standpoint, the real puzzle in that first year was gaining trust from everybody that mattered. Bf a, was our bank kind of a lost cause.

We had to replace them. They just we're gonna IT, but whitten invested. That was key and we kept them with a solar way through the leadership team, took time IT was had to deliver sort of our outcomes.

But here's what we did. Six weeks in, we redid the plan, took profits down. The plan was millions of dollars there and have a prayer to hit that.

We took profit down, but IT was a profit plan. They had made a bonus in four years and we went after cash flow and that was shrinking the mix. We had a plan that you're in, people got a bonus.

We hit the plan that we've sent nine months early. I spent really eight weeks intensively looking at IT, but I think we knew what we are seeing and we generate a ten million of cash that first nine months. That's how much we shrunk the baLance sheet with focus.

And here was the key, though, you have, you have to do arizon. One horizon on and two horizon three, you got to solve at all. So I had ten things to do the board that all, my god, you're crazy picked for.

No, you don't understand. We had to get the adrenalin and right, because that too was critical for us, and we had we had to refine that shoe in two thousand and one for two thousand and two. And and we got IT right.

The fourth of june in was incredibly baLance shoe, had a multisensory stability technology and IT super baLanced in asic started to not deliver and we ran, man, we afraid one color eighteen months cycles save the company. But we had, we had to finish that shoe in. No one to deliver on o two.

which you get like a micon .

ductor company, got A I think some of these books that everything is complicated, every is competitive, but it's like moving a wall of bricks forward. And you're got to get know as I think as a city, you ve got to move IT all forward.

So when stump things are spooning behind, you got to get those up and you have to deliver the whole business model and you have to do IT sequentially over seasons in our business because if you come to market with with a hoom product line, you're going to shrink that year and you got the late times in foot are it's not the car business, but it's more like the car business than the t shirt business. There's tooling on everything, twelve zed men, twelve sizes, women's winds, colors, IT. Scaling these things in the factor is a lot of tooling. There's a lot of takes a half a million to a million bucks to bring one style to market, a lot of tooling and inventory. Yeah.

it's a different in the software business.

Don't ask me about my text tag. It's where does that every now and then. And IT doesn't go well.

The world is actually pretty great.

It's where we're competing with digital engagement in our industry and and we're doing really well with IT. We've taught ourselves that in runner focus, but we I think we're executing on the digital side with runners as well as anybody as you are also .

in a pretty good town to build a recruit .

different talent. There's a lot of talent here, and they have a lot of opportunities now too. So okay.

So let fast for a couple years. So you nail IT with the address nal. And four, you're starting you're profitable now the business is looking Better. You get the liquidity event that you're looking for and you're sold to rust athletic. What was IT like communicating to the team we're joining rustle.

So you guys were in this business and and i've been button sold a few time, bought things too. We we we knew we were going to have to sell. So we were prepared and we thought for sure I was going to be another private equity firm.

We're going to get another kick up the can, and that's what I was absolutely mentally prepared for. So the bankers come in, we do the manager presentation and we're going to practice on a strategic there weren't many there. We're going to practice russia athletic. Everyone doesn't form up. Funder got completely fell in over IT.

So if although you have, you know Y C S growth program that you could then go practice .

and they ended up we negotiated our independence. I pitched us where the crazy uncle out in seattle. We're really different to leave us alone, which they did.

But yeah you know so for them, we had negotiated our independence because we knew where we were going. We saw the opportunity. We had great.

We fly, we are going. We really did. And at that point, we were continue to pursue growth. So they would have been crazy not to just let us keep going. And and I would do that then with the next owner as well.

So two more years, pass business continues to grow. Russell gets bought by first of the loom, and fruit was already known by bircher. Right, right. It's right. So what's IT like now being a subsidiary of a of for your health way, but two levels down?

yeah. I mean, IT was really interesting. I in one sense, you i'd gone to school and warm through his letters and and I had internship in the eighties that he had put a business out out of its misery in a competitive battle in a two newspaper town and went to one buffo and ah the buffo evening news and there was a black hole in calls media baLance sheet and I what what happened there and warn oh my gosh plays to win signals.

He will never, ever, ever, ever quit. Five million dollars of losses, investing in newsroom, investing in quality, goes to the morning, fight to the death. Don't do that with foreign FTP because he never quits.

So they made a bracket decision. They closed IT down. His profits went from negative five to ten million every year since. And I was just, wow, who is this guy right?

Was before my brothers that that that .

was in his early days. And he was just the way he talked about brands and in the moat around the brand, I hadn't I hadn't seen that before. Competitive strategy, right? I loved IT, so i've gone to school on him.

So once we ve got a part of fruit at that, okay, this is good because charlie warn are going to understand what we're doing. A Brooks were small, and so we started to get some letters and your numbers are good and we got notes from the board, but fruit of the loom and books. We're just completely different companies. Six packs of men's briefs at walmart.

Yeah, that's not the ports like .

a local running store distribution strategy.

innovation was mighty .

more friend power rangers anyway.

But long time company, they bought IT for Russell athletic comparable. They bought IT for, you know, the walmart business and and they're good at that. So again, they left to alone.

We hadn't negotiate that IT wasn't given. They actually on paper, they were going to move us to bullen Green and what to kill Brooks and I was paying you because we were possibly going to get sold. So actually talk to some super smart people.

Some of this town and warrant basically said, i'm not going to get involved. It's up to fruit and and I thought there was a good chance they to sell IT because I would have loved to have LED an independent play there. But we waited IT out.

We took a sort of right to the edge of saying, you've got to commit, Brooks, we've got a IT. You've got to commit and they did. And then two years later, warn plus out.

So but we had an negotiated independence from them. And I again, you know, I could have laughed at opportunities to leave. I didn't want to leave.

We saw great opportunity, oh, eight or nine, just as that was going on. Obviously, great recession. We tripled the business from two thousand nine to twenty fourteen. And I I knew we had some good things going so but that was that was a really critical moment because they might have moved IT to bullen Green, which they did everything else. And many of those those brands wilted and I went, have lost a lot of talent and wouldn't I wouldn't have run IT in their business model.

You get to retain your independence there, but you're not really independent. You're still within Russell with this within fruit. At some point, you get the on the phone call from Warren. And can you talk us through that?

yeah. So we had put in you we had good incentive programs and we try to keep people there and and put some stickiness in with some long term programs to just get people focused on building that triple. So fruit was sort of consulting all their stuff.

And they had they had bought Russell for about a billion dollars with internal capital, and they were about to go and restructure that. So you warn, had we had started to sell shoes, the annual meeting, omaha, this is like charlie warn you fifty years ago, I love this event. Now that arena was full, but that will be the case.

You guys fifty years to compare huge, but you, we are selling shoes there. And I sent more and a note and great, next you'll sell more. Good job, you know, here in great things you guys to do. And well and by the way, if you're ever Normal come, I will go have a stake.

Well, some of the one you don't say, I just happen to be an about two weeks later, i've that and I knew he would love what we are building, the unique, it's distinctive, trying to be that brand, that and where, you know, we're really developing something with focus. He couldn't figure out why the big guys weren't squashing us. And we spent three hours that one phone called Doris clothed. We had a meal. But you just get his undivided attention, his brains just so focus to love's business.

And and I did most of the talking because I thought he's going to fall off with this business and six months later, um he so here's the start of the story is IT was the december when mark zuker berg was preparing to take facebook public and there was a wall street journal article for the new I don't know if his twenty two or twenty three that a Young CEO of a public company and one of the lines in there he was going to trade in his a dea's slides for a pair of Brooks and gentleman I don't know why I was in there but warm thought circulate, said jim, this is great. We just need a couple million more. So two weeks later, we did.

Did you send suck a pair? Oh, yes. And he was in he was in Brooks for a while. So but two weeks later, and with my family down in the desert, and I think I was out of blackberry, but it's two thousand eleven, I didn't have my my voice mails coming into my phone. So I was checking email every day.

But I wasn't I didn't check voice meal yeah so I get back at my doubt my office january second. I'm in early. I like to start the new year, especially early seventy.

I'm in the red light on the phone is blinking. Pick IT out, answered. And jim, this is warn.

I got an idea. Give me a call. Was five days old. Oh, g.

this is like to the story of warrant during the financial crisis about lemon that he could .

visit the real completely. He founded like a year two later. So when you like, pick up the phone, dial the number.

Hello, he answers his own phone. It's incredible. This is jim.

Sorry, warn. I was at boba, bob. I said, well, here's the idea. Know you guys are doing well, your focus on shoes, your premium fruit, really has to focus on a peril. I'm thinkin about spinning you out and setting up a standalone subsidy.

And you know you guys what chess keep doing, what you're doing? And I just think that makes sense. And I said, you know, warn, I think that's a good idea.

I have .

and and I gave an update on our previous year. We had a great year and he said that's great because from here and now i'm to take all the credit for your success. But IT is you as a platform to do what we want to do and build our brand there.

They so no, that revenue growth and profitability, selling at margin, double digit growth is all about building brand, and that's really what we've been doing and really wanted to do. So we just have a sink on the opportunity that we have with this brand. And now it's been twelve years.

That's the true reason i'm still there because we're competing a really, really big competitive category. And the margins I think i'm successor are not fat. They're thin. And so executing against that with confidence and support, being able to work through you. A lot of the uncontrolled ers in a category see a huge advantage for us.

So i'm going to keep us going through the story. And like i've on many previous episodes, I like you're marking sort of a number along the way to track. So I think around this point, you're doing one sixty one seventy million in revenue and businesses grow nicely, your profitable.

Um there's a fun story from twenty twelve that i'd like you to tell. You've always been somewhat of a scrappy company doing more with less than anyone else. Can you share the story of when you personally got kicked out of the U. S. Track and field olympic trials?

So I think in in real life digital, digital, but in real life marketing, we activate right a lot of the winning shops do runs out of their stores and they're involved with the five case. and. We're bringing energy and and positivity of that, really trying to make IT fun for all the people in many that are running for the first time.

And then there's the sport which is so fun um to be at, whether it's the olympic trials for the marathon or the olympic trials which is often at hayward field down in your gene and the chAllenge there for all the brands as we went to house, we bring in all of our partners and vips. We run group runs out of the house every morning. We bring in a shaft and we watch these incredibly athletes.

Athletes compete for team USA. IT always happens in june. Olympics are july, August. It's just the fabulous event.

And then the backdrop is the largest brand in our space, nike science, a twenty seven year marketing agreement with the governing body of our sport, USA track and field, who does a twenty seven year deal? I mean, come on, it's a twenty seven year deal. And then, of course, you see your organ is a nike university in more ways than one.

And so they wrap IT up, right? The whole thing has got smash wrap around everything, right? I think the yellow lines on the highway or schools.

So we we wanted to celebrate the athletes where we have athletes. And there we invest in the sport. And we don't invest like they do, but we invest in athletes and they're inspiring and so on over all the brands do.

So you know what can you do? You can do a lot. Um but we decided we did we check with the fa, their rights are open.

Nobody said you can't fly a plane and we put a run happy banner on an airplane and we just flew IT around that stadium all day on friday. They got mad and we did IT again on saturday and they started, tell us, you ve got to take the plane down. why? Well, because you can't do girl and marketing.

Yeah, but we checked, it's all, you know, the f is fine. It's all good. That's the sky. And were hearing on the athletes you can you got to take that thing down, get that thing out of the sky.

And so overnight, coming into sunday, the final day we had, we checked with some of the track and feel officials, they basically said, screw, you should just fly IT. And we checked again with the F. A, A.

And so we flew IT and they came up. We bought tickets for all of our guests with about eighty people there. We didn't get him free and come to add some of those, but we bought all these and they said, all right, you guys, i'll have to leave.

And we, why? No, you'll have to leave. So we laugh.

Our guests and three of us went down to talk about IT and why are you asking to leave? You didn't do you didn't take IT that. We asked you to take IT down.

And nike was all sitting rape behm. So well, there's nothing against doing that, don't we checked with everyone will read the back your ticket. This ticket is a license that can be revoked at any time.

So you're just kicking us out. Yeah, we're just kicking me out. Get out.

And is all was a huge mistake for them because this story has lived on in the industry forever and we had some of the best running shop people in in the country there with us. They were our guess. And so everybody knew about IT.

They kicked me out ahead of marketing and ahead of sports marketing. IT was is interesting anyway that. We were at the bar, we had bears and we watched on TV.

Well, if if we were, if David and I were on zoom with you, we would be getting ready to enter like our number two and try and talk about every year all the way through tonight. I want to focus on how you came through the pandemic. And some of the unique ways that you early realize running actually was going to be something that people started focusing more time on and you were able to kind of lean into this new behavior. Talk to us about march twenty twenty and how you pay attention to what was changing.

Yeah, couple of big advantage. Es first was literally an obsession on runners participation links to unit sales in volume, right? So no other brand has that clarity because most of the products in the athletic football industry don't ever go for a run or play basketball or really even go to the gym.

S it's casual family lifestyle, foot were and nothing wrong with that. Those some of those businesses are great, but we we had an advantage because ninety percent of our products went through a retailer that's a problem. Europe pe retail shut down in one week and then all of retail rolls through north america.

And by the end, march, not a store was really open and that's a problem. Cash cycle throws, oh my god, nobody knew was happening, right? We didn't know how lethal this virus was, how transmissible and so on over.

And so IT was White nuckles time. And we were there with everybody else. Everybody could write a book on that. But here's what we did is we saw phases because we'd seen during the recession running is a bit recession resistant.

We saw that. I'm thinking about that.

It's because it's cheap and it's convenient. All is right.

It's like the healthy alcohol during .

the session decision. Thank you. But we were not an essential business and in marijuana and alcohol words, so figure that out.

So but during the great recession, fifty percent unemployment in italy and spain under the age of thirty running took off double digit growth after the great recession. So we've seen that before. And IT turned out to be covered friendly, right? You you now know the story.

I was in social distinction. Friendly outdoors, walking, hiking, running, all made the cut. But nobody knew that we had a hypothesis.

We created this frame, how we thought running would recover. And so here's what we did. First of all, strove data magic right every day after the the corn tine shutdowns, straw activity is growing.

And they were sharing that. Then you what we did, we have forty in the us. Alone, forty five field marketing people. We put them in parks, high traffic running parks at four pm. Every afternoon, and they counted runners.

And guess what, IT was growing every day, and then we watched digital sales, and we have visibility on eighty five percent of our retail cell. And so digital went from thirty percent of all of our products going through a website of somebody's hours or other partners. IT went to eighty percent by the by the end of April.

And in may, we sold more in may twenty twenty, almost all three digital than we did in may. In the all channels running made the cut. We grew twenty seven percent in twenty twenty in that that code year.

But we saw this was the key because of our customer obsession in our ability to work. Multichannel was a big antares in that time because we can move inventory around and and make that happen immensity if IT isn't really cancel IT. So but but multi channel was a big advantage.

The other was focused on the runner. Um we turned our supply chain on at least six to twelve weeks before anybody else did because if you were if you were a broad based retailer, there was no clarity. And when the customer was coming back and for a lifestyle product, nobody know nobody went outside for a year.

So the fact that you exclusively made performance running or that gave you the confidence to flip IT back on because if you're making all kinds of stuff in your factory and you're pushing all kinds of stuff to retail channels, most of IT is not going to sell. So you can't actually open.

That's right. The party footwear inventory is life and death. You've got a management tory, well, because if you have too much, you you ruin the next cycle of of online product.

So inventories is really critical, but we managed and played that cycle really well. We grew twenty seven percent in twenty twenty. We grew thirty one percent and twenty one, and we won't been up forty of tough for supply chain. So what you do in revenue last year.

so what you end up doing in revenue last year.

one point one three billion, one billion, one three. wow. Facts, a billion. Our industry, our industry, the billion dollar club is actually a verified club.

There's probably maybe two maybe two dozen global and chinese chinese brands are there now, but it's a great clu B2Be in. And what makes us unique is its all premium, full Price, full margin product. Most of the other brands have good, Better, best. And those are retailed driven merchandizing strategies. They are not really consumer of in strategy.

So Normally we talk about seven powers as we drift into analysis here, your burger business.

So we're going to talk .

about motes, what is brook's mode and how do you think about defending the castle now that you have what you've build know .

we think a lot about IT. I think there's also something i'd add to that part of the mode can be business model, right? Business models can be really powerful. And one of the things you can do as a company um to create a defensive mote structures is is business model execution at scale.

So we now are executing retail partnerships with the best retailers for running gear to runners at super jack and gillan, seattle fleet feet running down and I think mental al park, obviously, you some of the Better sporting good players and outdoor from ri to dig sporting goods where their number one brand, we've earned that over twenty years. And we have deep, broad partnership programs with them. Digital marketing, consumer you runners are digitally savi.

They're obviously all over the web. They started their shopping experience, their where we reach them in active evaluation mode. Once you start looking to choose if you don't see our ad, I don't know how we missed you.

We've we're spending a lot of money at runners now maybe maybe more money at at people who run in active evaluation for running shoes than in the other bread. Very focused. That's not easy to do in our industry at scale.

And then but I would say this is our mode. And I think one ability fit, feeling right. There's a lot of good shoes out there.

It's actually not easy to make a great shoe. And Anthony felt he made a joke about shoes vaccine ines are tough. They are complicated.

It's not like making shoes. We need a lot of that. But you know the refinement that goes into mile and making mile twenty six acceptable, these are is really big.

So so no, I think great product is not as common as IT as you might think. And the people on the inside, the frequent is no. So I think product you will always got to lead with product.

That's the first brand experience is product experience. So so I think we do some hard things. We build great product consistently year in your out IT fits and IT rides well.

And then what we do on the retail side in partnering and activating in real life, running and and selling shoes in real life events and all the like, we do that Better than anybody else. Service them, deliver on time complete. And then the digital piece were excited about that. I mean, we're you we're still just getting started there, but we're really focused .

yeah about and the amount of data that you're able to see from that, what is what does the digital side of running in the future look like for broke them for the industry.

I think it's interesting because quantified self in those tools have benefited tious and and they're out there and the apple watch is is a damn grade product, right? So what's interesting about that is both underarm and I have spent hundreds of millions of dollars on digital lab, and I think they've really .

struggled to my keeper er and made my run.

But I so I wanted to buy everyone of those in warn, wanted me to do the multiple on you. But and there was no visit. So let's just say it's hard to do. At least one of them was .

completely free product, I think, right?

Oh my, they don't make money. yeah. So and under m is trying to sort through that now, right? They are starting drink. So as a did as so those tools are really powerful for data, but how do you monitise IT? And so we haven't gone there yet, but we're building we're building our books run club.

Finally, we we've launched its not a loyalty program, but it's as we want engage our saloons, we want engage our our true believer s and the data piece of that is gonna key. We want to come up the connected chain and and find a sensor system and a data capture system that can get to your biomechanics as you're running because what happens is if you run a marathon, you're gate in the last five to ten miles really degrades and that's where injuries happened. So so we we're doing a lot. We have a lot of partnerships, and we're really trying to figure how we get good runner data in real life, not just in the lab. In the lab, we can test everything, but we want to get out in the wild.

Do you think you need to do what the other folks in order again have done and build me the whole consumer experience yourself? Or is that a partnership?

We're going to build IT and we're onna partner too. So you I looked nike plus, a fantastic ecosystem IT just is i'd love to have an ecosystem like that, but we're still you we're still selling more runners than they are. We keep you became the number one running shoe brand in the united states in the last twelve months, last twenty one to five percent year in performance one.

So so we we know where the battles are. And I think one of those powers as we make money on that. So the digital space, there is a lot of circuses there. We'd love to have IT.

We're gona work on IT. We want to think our long time friend of the show, vantine, the leading trust management platform, venta, of course, automates your security reviews and compliance efforts. So frameworks like soc two, I saw twenty seven o one gdpr and hypo complaints in modeling ing vent to takes care of these otherwise incredibly time and resort training efforts for your organza and makes them fast and simple.

Yeah, fanta is the perfect example of the quote that we talk about all the time here and acquired jeff basis, this idea that the company should only focus on what actually makes your beer. Taste Better. I E spend your time and resources only on what's actually gonna, move the needle for your product in your customers and outsource everything else that doesn't. Every company needs compliance and trust with their vendors and customers. IT plays a major role in enabling revenue because customers and partners demand IT, but yet IT add zero flavor to your actual product that IT takes .

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And perhaps most importantly, your security reviews are now real time instead of static, so you can monitor and share with your customers and partners to give them added confidence.

So whether you are start up or a large enterprise and your company is ready to automate compliance and streamline security, like vantage seven thousand customers around the globe and go back to making your beer taste Better, head on over to vantage outcomes losh required and just tell them that then.

And David sent you, and thanks to friend of the show, Christina vantine, CEO all acquired listeners get a thousand dollars of free credit vantage com slash acquired I have two more areas I want to ask you about um the first is grading and then the last as a personal topic so can you paint for me what the a plus case looks like for brook five years from now? And i'm sure you do lots of three and year five, five year planning think about. And then I want to know rather than just saying what's the failure case, I think a more interesting question is what is the riskiest part of your business right now where if that thing goes wrong, everything else can crumble?

Two questions. So the first one, the a case we just created a north star tenure vision for Brooks. It's global for sure.

People are running all around the world as the middle class grow, as people invest in their fitness. And running is always making the cut there. So it's booming in asia, and we're growing now really rapidly in europe.

So we want to build a global, global brand, and that's work to do in the next ten years. So we see an opportunity for sixty million customers, sixty million unique, up from maybe fifteen million today, four begger and four billion in revenue. That's the big opportunity we see right now, is still a premium brand position to the enthusiasts really uniquely positioned against all the big platforms.

The a plus case in five years is twenty to thirty percent growth every year annually, and that's what we've been doing the last two, three years. A lot of that's going have to come into actually. But but if we get A B and grow fifteen percent, we're actually fine with that too because we're not rushing for the exit.

So we're excited. We think we see IT. We're unable to compete for IT, but we have we have a complete playbook right now.

Yeah our so what keeps us what keeps us from being successful? I've experienced IT single points of failure, right? We launched to dc, which we had to do to get the middle, the country .

distribution center.

distribution center. And despite the twenty.

sixteen, twenty nine, twenty and IT .

didn't work. And so we disappointed customers for three to six months. IT was awful and we never have done that.

We execute well. And now in vietnam, the whole industry on performance is really focused. Their principles.

I think the big guy has sixty percent of their foot or are coming out of band. Um the south was shut down last two, three, july, August, september. Forty five percent of my factories didn't make a shoe for three months.

So we grew twenty, thirty, thirty one percent last year. We are forty three percent coming into that, that product tissue. And and now we experienced now, now we believe we're getting back on the curve, but what we've learned is know what is resilience and the duality look like.

And supply chain, you ve got diverse y risk. You now we're seeing at our size that we're at Operationally. There's real risk there.

So you we're thinking long and hard about that. We're working hard at IT. But those of the things that are disrupting us right .

now covets still alive.

yeah. alright. IT. One closing topic. You battled and survived and beat cancer while building this incredible business. How was that changed your perspective on leading on the way you spend your days and on life broadly?

Let's close IT on a White for cancer. Let's talk about cancer. So that's the take way for these wonderful people.

So, you know, I didn't expect IT came out of nowhere. unlucky. Know you? How did this happen? And soft cancer, I just felt awful.

And a my running worst running experiences I had and I got the diagnosis, chemo, radiation, surgery, complications in the surgery, another surgery. And but but the good news is i'm cancer free. I think it's gone.

I think it's out of my body. The bad news is i'm i'm even slower and i'm kind of a Frankenstein in my systems, but IT works, everything works. Um so I think what I learned from that though is that you you're you go to the web.

I got every time I have a friend or a family, me, it's cancer. Go to the web and you look at IT, understand IT and what the treatments are. And they always give you a five year survival rate.

My five year survival rate was twenty percent one in five. And my five years is this november. Someone is kick.

It's, but but I think what what I quickly figured out, and I talked IT through with my family and and obviously with with war, and Frankly, is that I decided that I was doing exactly what I want to be doing. I love what i'm doing. I've got family.

I've got active lifestyle. I've got this fabulous brand and company that i'm a part of in a team. I just love IT.

I I don't know what else I do, which is a problem. But so I decided I didn't want to live. I didn't want to live in fear.

I didn't want to live everyday thinking about what I had to lose. I had a lot to lose, and I didn't want to be bitter about why me, you know, I just said, I want to. So in everything I can at any given day, I want to be a CEO.

I want to be a dad. I want to be a husband and I want to be a pop. I ve had four grand is.

So that was IT. And I think for me, that was really powerful because I don't want to be that cancer guy. And they brought IT up.

They brought up. But it's just done. I think I I am glad to talk about that.

I don't hide IT and and i've learned a lot, but I I want to enjoy the things in life I really enjoy. So that's what I learned. But I think everybody y's different.

And you do find out companies when you hit chAllenges, you learn what you're really all about. And I think it's the same for people, of course. And and so I feel really lucky because i'm doing what I want to do.

And cancer is in the real miro. So good. So great.

Well, I know jim do not want us to end on that note, but I think that's.

Let's go for run. Thank you .

so much. Has been so wonderful. Thank you for making this whole day a great experience and special for us from .

you came .

on the room this morning. That was super fun. yes.

Alright, im, thank you .

so much, guys. Preciate IT.

thank thank you. You can forget quite very.

Well, listeners, that was our oriental show were so pumped ticket to share IT with you for all those of you who can't travel to seattle and that was unreasonably sure. Notice, I think IT was a month or so but boy did the folks at, uh, a pitch book and everyone else who helped us make this happen. Brooks running with the run the morning before .

the show pack mario on shoe y combatted. I just there was got so much love, so many of our past guess just came in to come to the show. IT was so.

so cool that was great. Hang with chi and john bag. And so listeners hopefully will be able to do something like this in the future.

And and have you there, I think we to do the chase center next.

bring the csco. That's really the option.

Where do we go from here, right? That's the only logical place.

IT felt like picture weekend for acquired pod casters. And we would never, you know, the profess that we are at the same scale. But IT IT definitely felt like I had an energy of, uh, to quote cyp to of were all gonna make IT I don't know. I got all the warm and fuzzy from get to hang out with everyone.

You are just the best.

I also think, David, of the like thousand people in the arena, I think you and I personally got to talk with about five hundred, like we were on a mission to make sure to meet as many people as .

possible before the show, after the show, at the after party. That was so cool. A man, they have so much fun.

And everybody who kim is getting an N F T, A custom acquired proof of attendance. N F T, thanks to acquired head of special projects and kim and the sona foundation. So for those of you who came show IT off when you get your cool animating, well, I won't give a way too much. But yes, your proof attention. N, F, T.

yes, so fun. Well.

with that, we would love if you want to come and a chat with us, acquired data FM slash slack. You can find your next job at acquired dt F M slash jobs. I think that's all we have to say listeners next time.

next time. Easy, you with a, you with a, you who got to.