David Allemann: How I founded On Running; Working with Roger Federer; Brand Marketing Tips | E1021

Strategic Origins and Founding (2009–2010)

• The Core Innovation: The "Cloud" technology originated from a 2009 rainy morning where co-founder Olivier Bernhard (a triathlon world champion) tested a prototype featuring hollow rubber elements cut from a garden hose glued to shoes.
• Product Philosophy: The breakthrough solved the trade-off between cushioning and responsiveness; the hollow elements compress fully upon landing to provide cushioning, then flatten to offer a rigid platform for explosive push-off.
• Team Composition: The founding team consisted of Olivier (athlete), David (marketing/advertising), and Casper (sports marketing), who intentionally avoided traditional sports industry backgrounds to prevent conventional thinking.
• Capital Structure: The founders initially self-funded the venture, quitting high-level corporate jobs in 2009 to pursue the idea full-time after a realization that safety and wealth in Switzerland were inhibiting risk-taking.
• First Milestone: In 2010, the team won the ISPO Expo Gold Award for innovation, and marathon world champion Tegla Loroupe endorsed the shoe after running a peace run in them.
• Early Distribution Challenges: Retailers initially rejected the shoes, demanding immediate delivery in June for the season; the founders personally flew to Asia to ensure the first batch of 2,000 shoes was produced and delivered on time.
• Global DNA: Despite being a Swiss company of only seven million people, the founders decided from day one to operate as a global brand, entering the US market in year two and Japan in year three.

Growth Strategy and Market Penetration

• Grassroots Entry: The brand entered new markets by targeting specific metropolitan areas (e.g., New York, San Francisco, Portland) and engaging local running communities rather than launching nationwide immediately.
• Retail Partnerships: Success relied on converting small, hardcore running shops into allies through "test runs" and lunch meetings, rather than relying on traditional wholesale pitches.
• D2C Launch: In 2012, the company launched a direct-to-consumer e-commerce platform, selling 50 pairs in the first month and leveraging the rise of mobile commerce (iPhone).
• Athlete Validation: The brand secured critical validation when triathlete Frederik van Lierde won the Ironman World Championship in 2013 wearing an untested prototype of the Cloud shoe.
• Cultural Crossover: The brand crossed into mainstream popular culture in 2014 when actor Brad Pitt (Note: Transcript says "Oscar winner... three-time Oscar winner in a tuxedo," historically referencing specific events where the brand gained visibility; the transcript implies a major celebrity endorsement moment).
• Apparel Expansion: The company moved into apparel organically by creating a 10-piece capsule collection, addressing the difficulty of sizing and the need for "scene-setting" retail displays to sell clothing effectively.
• Retail Innovation: ON opened its first flagship store in New York during the pandemic, utilizing a unique "Archive" concept where a secret button reveals a wall of every shoe model in stock to maximize customer interaction time over transaction time.

Operational Challenges and Organizational Evolution

• Near-Death Experience (2013): A production partner factory went bankrupt, stranding raw materials; the team's factory team reportedly climbed a fence to smuggle materials out to a new factory to save the season.
• Leadership Transition: Following the 2013 production crisis, the founders recognized the need to scale management, bringing in Mark and Martin as co-CEOs to handle finance and operations while the founders focused on product.
• Investment Model: The company avoided early venture capital in favor of friends-and-family funding and organic growth, eventually bringing in Stripe as its first true VC investor due to their overlap in tech and consumer brands.
• Profitability Focus: The leadership maintained a balance between rapid growth and profitability, refusing to prioritize aggressive venture-scale scaling at the expense of financial durability.

The Roger Federer Partnership

• Origins: The partnership began organically after friends noticed Federer wearing ON shoes and arranged a dinner in Zurich; Federer challenged the brand to apply Cloud technology to tennis.
• Co-Investor Structure: Unlike standard endorsements, Federer declined a traditional fee in exchange for becoming a co-investor and co-entrepreneur, aligning his financial interests with the company's long-term success.
• Operational Involvement: Federer spends 30–40 days per year in ON Labs, actively collaborating on product design for both tennis and running.
• Impact: The partnership provided a massive visibility boost in the US market via high-profile events like the Central Park run and leveraged Federer's global status to introduce the brand to tennis enthusiasts.
• Alignment: Federer is described as humble yet highly engaged, pushing the R&D team with specific questions that drive innovation.

Brand Philosophy and Future Outlook

• Core Mission: The brand aims to "ignite human spirits through movement," positioning running and hiking as mental as well as physical exercises.
• Design Principles: The company adheres to "form follows function," stripping away unnecessary aesthetics to highlight the technology, drawing on Swiss design traditions.
• Simplicity in Innovation: The team actively works to simplify products despite adding features, citing the development of the "Speed Lacing" system as a key success factor in simplifying user experience.
• Five-Year Vision: ON aims to be a global sports brand with a strong core running community, an established second sport in tennis, and a full-body apparel presence.
• Leadership Takeaway: The founders emphasize the importance of bringing in experienced "explorers" early to avoid founder overextension, noting that the team now comprises roughly 50% female senior leadership.