How I Think

the $8 billion garden hose

Published 5 months ago • 1 min read

Hey so I found this $8 billion business that battles Nike and Adidas.

The founder used a garden hose for an early edge.

Then tennis star Roger Federer blew up the brand.

Here’s how On Running disrupted the crowded footwear category:

In 2010, a 6x Swiss Ironman athlete grabbed a garden hose.

And he realized the shape could offer cloud-like cushioning.

He grabbed glue and hacked together the first version of “On Cloud” running shoes.

Today, On does over $1 billion in yearly sales and worth $8 billion.

Here are 3 contrarian ways they got there:

1) Just Build It Better

Most new companies are terrified of competition.

But what did On Running think of Nike, Adidas and Puma?

"I always felt there wasn’t room for another running shoe. But there was for a different running feel.”

The founders never worried about competition.

Because they had a unique insight:

Every legacy company tried to maximize performance.

No one cared about cushioning or comfort.

So On built CloudTec to delight a customer’s feet without destroying performance.

In 2010, their first model won an ISPO award as an outstanding sports product.

It’s stupidly simple. But On proves you can win with by building a better product that delights customers.

Other examples:

  • Apple did smartphones better than Palm Pilot
  • Southwest Airlines did low cost US flights better
  • Google did search better than Yahoo

2) Dominate a “Small” Market

Every runner needs shoes.

So how is that a small market?

On stayed laser-focused on Switzerland.

And today owns 60% of the Swiss market.

This follows Sam Altman's framework for tech startups:

“Find a small market in which you can get a monopoly and then quickly expand.”

Swiss runners have a natural bias to buy from a local brand especially for a superior product.

Today, the United States is the largest market for On. But the momentum from monopolizing a smaller market was an early unfair advantage.

3) Distribution Jet Fuel

In 2019, Roger Federer emailed the founders:

Can we get dinner?”

A few weeks later, Federer became a co-entrepreneur and investor.

One year later, sales 3x'ed.

The future of brand partnerships is not a 5 minute ad read. It's 5 year relationships backed with equity.

The proof:

And Roger Federer with On.

Today, Federer reportedly owns 3% worth almost $250 million.

Go crush the week,

Chris Hladczuk

How I Think

Read more from How I Think

hey team, it's chris hladczuk back in your inbox. this idea has been rattling around in my brain for awhile so I needed to share it with you. Egoless Execution You need crazy confidence to start a company. You spend countless hours pitching people on the vision. You believe a secret about the world no one understands yet. Plenty of people say you're crazy. You must have an ego to endure constant rejection. A big enough ego to believe you're right and everyone else is wrong. A big enough ego...

12 days ago • 1 min read

Hey Team, it's your boy Chris Hladczuk back in your inbox. (if you missed it, I raised $2.5M + am assembling the avengers. If you know a savage engineer with startup experience who loves mobile, reply here! I'll pay you $5,000 if I hire them.) Okay so safe ideas are really risky. Safe ideas = consensus stuff that the random dude at the company holiday party immediately agrees with Examples: Work at Goldman Sachs for 2 years - it's "risky" to quit after 1 year Go to business school - it's...

26 days ago • 1 min read

Why would a billionaire bring a date to a furniture store? Unless it's Restoration Hardware (RH). This is the Disneyland of Furniture. Here's how the $4 billion brand exploded👇 Back in 1979, Stephen Gordon has a problem. Why can’t you buy good, affordable furniture? He started Restoration Hardware (RH) to solve it. But 44 years later, RH is way different: Today, it's a luxury home goods brand with restaurants, coffee shops, and hotels. And they do over $3 billion in sales. The secret sauce to...

4 months ago • 1 min read
Share this post