How On Built a $2 Billion Athletic Footwear Empire: Insights from How I Built This

In this episode of How I Built This, Guy Raz interviews Olivier Bernhard and Caspar Coppetti, co-founders of On, a Swiss athletic shoe brand that has become a global sensation. From a garden hose prototype to a $2 billion company, discover the innovative journey behind On's success.

Key Takeaways:

1. Innovation from Unlikely Inspirations: Olivier Bernhard’s idea for On shoes originated from a unique prototype with pieces of garden hose attached to the sole of a Nike shoe. This unconventional start laid the foundation for On's distinctive cushioned sole technology, which became a key differentiator in the market.

2. Commitment to the Cause: The founders' agreement to fully commit to On was crucial. They stipulated that any founder taking another job or side hustle would forfeit their shares, ensuring total dedication to the venture. This commitment was vital to their rapid growth and success.

3. Overcoming Initial Skepticism: Despite initial rejections from major brands like Nike and Adidas, the founders' belief in their product drove them to persevere. Their persistence paid off when they eventually gained traction through direct engagement with runners and retailers.

4. Strategic Branding and Design: The transition from the initial name GNL (Glide and Lock) to On was part of a strategic branding effort. The unique design and functionality of On shoes, characterized by their cloud-like cushioning, set them apart and attracted a loyal customer base.

5. Rapid Market Expansion: Understanding the limitations of the Swiss market, On's founders immediately targeted six international markets. This bold strategy helped establish a global presence and secure significant early sales orders, which facilitated further growth.

Detailed Insights and Practical Advice:

Practical Advice for Entrepreneurs:

Identify Underserved Markets: On's founders identified a gap in the market for innovative running shoes that catered to both performance and design. Entrepreneurs should look for areas with little competition to establish a strong market presence.

Offer Low-Cost Entry: Lowering the barrier to entry for potential partners can attract a broader range of entrepreneurs. On started with a small production run and focused on direct engagement with potential customers to build a strong initial user base.

Ensure High Margins: Maintaining high-profit margins is essential for sustainability and profitability. On's premium pricing strategy aligned with their high-quality product offering, which helped sustain their business model.

Build a Strong Distribution Network: Creating an efficient supply chain supports scalability and maintains product quality. On leveraged international distributors and direct retail engagements to expand their reach quickly.

Detailed Insights and Practical Advice:

Commitment to Innovation and Excellence: Olivier Bernhard and Caspar Coppetti emphasized the importance of innovation and excellence in every aspect of their business. They were committed to creating a product that was not only unique but also superior in performance. This dedication drove them to continuously refine their designs and seek out the best materials and manufacturing processes.

Strategic Market Entry: From the beginning, On's founders understood that they needed to think globally. They targeted key international markets right from the start, which allowed them to scale quickly and build a strong brand presence. This approach also helped them mitigate the risks associated with focusing on a single market.

Building a Strong Team: Olivier and Caspar recognized the importance of building a strong team with complementary skills. Olivier's experience as a professional triathlete provided valuable insights into the needs of serious runners, while Caspar's background in marketing and branding helped create a compelling brand narrative. They also brought in David Allemann, who had extensive experience in marketing, to strengthen their team further.

Leveraging Awards and Recognition: Winning the ISPO award early in their journey was a significant milestone for On. This recognition helped them gain credibility and attract the attention of retailers and distributors. It also provided valuable PR opportunities, which helped them build brand awareness and generate early sales.

Customer-Centric Approach: On's founders placed a strong emphasis on understanding and meeting the needs of their customers. They actively sought feedback from runners and used this input to refine their designs and improve their products. This customer-centric approach helped them build a loyal following and establish a strong reputation in the market.

Resilience in the Face of Challenges: On's journey was not without its challenges. They faced initial skepticism from major brands and had to navigate the complexities of manufacturing and distribution. However, their resilience and determination helped them overcome these obstacles and continue to grow and innovate.

Focus on Premium Quality: From the outset, On positioned itself as a premium brand. They focused on delivering high-quality products that offered superior performance and innovative design. This focus on quality helped them differentiate themselves from competitors and attract a discerning customer base willing to pay a premium for their products.

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