Joe Foster: The Story of Reebok

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0:48I'm Guy Kawasaki, and this is Remarkable People. We're on a mission to make you remarkable. Helping me in this episode is Joel Foster. You're about to embark on a journey behind one of the most iconic brands in athletic footwear. Joe and his late brother Jeff launched Reebok in the United Kingdom in 1958. Although it took several decades to break into the U.S. market, Reebok's timing aligned perfectly with the fitness craze and resulted in astounding success. Recently, he released his autobiography called Shoemaker, the untold story of the British family firm that became a global brand. Join us as we lace up our shoes and embark on an extraordinary expedition with Joe Foster.

1:40It is the captivating tale of Reebok's rise to global prominence. I'm Guy Kawasaki. This is Remarkable People. And now, here is the remarkable Joe Foster.

1:59to start off on behalf of the japanese people i want to apologize for your japanese hosts bringing strippers in for the dinner in japan for you and your wife i don't understand what the hell they were thinking i didn't understand either but being a man of the world it didn't worry me but it obviously worried my wife unfortunately you obviously picked that up from the book yes no your wife told me that actually no of course your book is just full of amazing stories so the one obvious question having read about the challenges and trauma of working with your father and your uncle and your brother and all that stuff with side-by-side factories and all that.

2:52So with some hindsight, what's your take on family businesses? Is it something to just completely avoid or it's workable or where are you on family business as a concept? I think as a concept it can work and I also think it can be disaster. I know quite a few people who have family heritage going through their business and a very nice business. But I think we've all heard the statement, rags to riches, back to rags again in three generations. And I think it all depends upon probably how the family grows up, how they come together, and whether they do actually come together. We didn't, as a family, I don't know whether World War II was a bit of a problem for us, but of course I was only five when it started, or I was four when it started, and I was ten when it finished.

3:46So with that period of my growing up, we were quite a disjointed family. Things were all so different. No lights, no education. Schools were taken over. So schooling didn't happen until I was 10. Now, my father grew up through World War I, and he also experienced World War II. So as a family, I don't know whether he just felt burnt out, whether that was it. but again Jeff and I we got on really well and there were just two years between us Jeff was two years older than me whereas my father and uncle there were five years between them so they didn't get on and I think the unfortunate thing with the family unless you can really work together you are not only family you're friends if you're not friends and you can't work with each that I'll live with each other.

4:39I think that's where the problem comes in. But it's a mixture. It really is a mixture. And I know families that don't get on together in business. And let's look at Adi Dassler and Rudy Dassler as an example. Rudy left to set up Puma. Unfortunately, with the Foster family, they just kept feuding. They just kept fighting. They wouldn't separate. So I wouldn't say there's an absolute answer to that. I think it depends very much on the family and very much on the way they have worked together as a family all their lives and if it came to shuff came to push i wouldn't recommend it okay obviously i know the story because i read your book but you know this whole concept that reebok is essentially like the third generation shoe company which is not true of nike can you just give us the gist of starting with grandpa and grandma and how it became Reebok and somebody pumping it up before doing a slam dunk right well yes when I was young both Jeff and myself when we were young and being brought up we didn't know much about grandfather we knew we'd set this company up and JW Foster we knew it was quite well known but we didn't know there was anything famous in there.

6:00We didn't know there was anything that we had to follow. And really what happened is that after World War II, we had national service. And having national service meant that both Jeff and myself had to leave the family business for two years and do our bit with the armed forces. And of course, what happens then is just like probably like going to university. You go away from home, mother's not there to look after you to make the food, to do all the washing and whatever, and your father isn't there to give you discipline. It's a different area altogether. And so when we came back from our two years of national service, we came back and that's when we saw a failing company.

6:43That's when we recognized that father and uncle, because they couldn't get on together and if all you're doing is fighting you're not going to progress but my grandfather 1895 we go back to 1895 and his father was a confectioner but he didn't want to be a confectioner he wanted to be a not so much a shoemaker but a cobbler he wanted to repair shoes of all things and he used to go down to his grandfather and his grandfather about 40 or 50 miles away from where he lived in Nottingham, he repaired cricket boots. And cricket boots had spikes in the bottom. And we're pretty sure that grandfather must have said, why do you have spikes in the bottom?

7:25I'm, again, pretty sure the answer would be to give them grip. And that's where he got his idea from. But we had left Foster's, our family business, we had left our family business. We started as Mercury and it changed to Reebok. We had an episode there. But we knew very little about my grandfather until Reebok became a reasonable-sized company. And we decided, well, we know that grandfather had spiked running shoes. Let's find out about him. So we really got some people involved, and they went through the history, and we managed to dig out all the history. The fact that in 1904, in his spiked shoes, he had three world records.

8:07In 1904, three world records. And by 1908, he had gold medals. And then in the 1920s, this was his Belle Epoque. In the 1920s, we had three famous runners, Harold Abraham, Eric Liddell, and Lord Burley. They all won gold medals in Foster's running shoes at successive Olympics. And they all became immortalized in the film Chariots of Fire. I don't know if you've heard of Chariots of Fire. Oh, yes. It's very famous. In fact, I think the music is more famous probably than the film itself. And so it's history and we had to learn that the hard way. We had to dig for that. We talk about influences today.

8:53My grandfather knew all about influencing. He used to give his shoes way, way back then in the early 20th century to people who would win races. And he knew that that would influence other people. the reason that jdm foster's not here today i guess that really in those days as today sport is fashion sports footwork is fashion and the only way to grow big is not performance it's street so becoming street that made nike made adidas made reebok big companies because as we went street. But in my grandfather's day, had that happened then, who knows? Maybe it would have been a giant of a company, but it didn't go street.

9:38At that point, it was just performance. But he did leave a legacy, an incredible legacy, really. As we learn more about that, we probably had more ambition. Because initially, after leaving our family business, we really just wanted a job. The family business was going to fail, and we needed to carry on working and get a job. So really my father and uncle were quite, they worked together until grandmother died. And when grandmother died, that was disaster. It was real disaster. She kept them together and she was a bit of a firebrand. But me, having been born on my grandfather's birthday, 18 months after he died, she just said, no, he's brought his name with him.

10:26Here's Joe. That's it. So I am the reincarnation. For my grandmother, I was the reincarnation. That was great. I guess I had to continue on with the shoemaking.

10:46I just want my listeners to understand that this J. W. Foster's and Mercury and what became Reebok, when you and your brother did this, it's not like you just sat around designing shoes and sent them off to be made in Asia. You guys were operating the machines, right? You were actually living in the factory. And this is a whole different world than what people think of the shoe business today. Oh, I think you're absolutely right. It probably seems a bit dumb to be living on the premises, but when we're very young, When you're young and we just left the family business, you know, what can go wrong?

11:30Nothing can go wrong. We'll just enjoy ourselves and just enjoy the challenges. So, yes, we didn't have any money. What we had done previous to leaving the foster family business is that Jeff and I went to college. We went to college at night and the evenings. And that was to learn a bit more about making footwear, making shoes. But what we did get was a lot of friends. We became friends with a lot of people who knew the answers to a lot of questions. Where do we get this machine from? Where do we get this material from? How do we do this? What different techniques? And that's what we learned.

12:07We picked up something different. Obviously, working at the family business, we knew how to make running shoes. We knew how to make football boots, rugby boots, soccer boots, whatever. We knew how to make the boots. But the materials, the different techniques, that's what we picked up by going to college. And as I said, more than anything, we made friends so that when we wanted help, we just had to ask a few people. And we got a lot of help to set up our factory. Not in a wonderful new factory, but in an old, derelict brewery. It had been a brewery before we went there. It was quite a shambles.

12:45But yes, we made shoes. And eventually we got to Asia. But we made shoes. And that was good. We were learning how to make shoes and making the footwear. And we got close to our customers. We used to go to events and we used to sell to events. So we got close to our customers and they helped us. If a shoe needed some attention, if it wasn't good, we changed it. So we grew our business. We scaled our business very nicely by learning who our customers were. One of the surprising things in your book to me was that you and your brother, as you just mentioned, went to college. And this was specifically to learn the shoe business, right?

13:26Right. And I was thinking to myself, this guy is a third generation shoemaker. Shouldn't he be teaching in this course? Like, why is he going to college to learn how to make shoes when his grandfather made shoes, his father made shoes, and he's made shoes? I think that what you learn or what we learned on the factory floor was one simple process of how to make this particular type of shoe. What we needed to learn is the different techniques because my grandfather started making hand-sewn shoes. And as a technical term, it's a turn shoe. In other words, they make the shoe inside out and they hand-sew the sole to the upper.

14:09and that's okay that's a genuine technique today they can machine technique that way turn shoe but shoes are made in many different ways and there's board lasting there's slip lasting and all these different techniques come out of being in contact with the shoemaking world and in those days they were just bringing in injection molding so there was no such thing in jdb fosters and injection molding meant buying rather expensive machinery, different techniques again. So we felt we needed to figure out which was the best way that we should go. So going to college, and we not only did that, we got a lot of good friends.

14:55My interpretation of what you said in the book was that it was a breakthrough idea to pay commission to amateur runners for them to sell shoes to their friends. Maybe you were the first multi-level marketer too. So how exactly did that work? Well, when Jeff and I were still working for JW Foster's for my father and uncle, what struck me is that we used to get sales representatives come in to sell us leather to sell different things to us. I used to say to my father, why don't we have salesmen? Because our business is not growing. Why don't we have salesmen that go out, go to the sports stores and sell our product?

15:46This had never happened. The company never had a sales representative, ever. I did suggest to my father that maybe I should try this, but I can't repeat the language that came out from my father. And he said, no. Yes, he can. Go ahead. You can't do that. Now Geoff and myself, we've set up our own company and I decide I should take a bit of my own sort of lessons there and I should go out, go to the sports stores and try to sell our shoes, which I did. And I would go into sports stores all through the UK and most often I'd say, I'm Reebok. And the buyer would say, who's Reebok? And here we are.

16:32Show him some shoes. Nice shoes, those nice. You don't like those. And then he would look up at his shelves and say, look, I've got Dunlop. I've got Adidas. Why do I need Reebok? An important question. He didn't need Reebok. And I soon learned that there were specialist athletic stores, probably only about 15 or 20 throughout the country. So why waste my time going around to all these sports stores that would sell snooker queues, billiard queues. They'd sell all the bits and pieces that a sports store used to sell. Would he sell athletic shoes? No. So my market, I could say, okay, I've got 15 to 20 shops.

17:15But there's a whole country out there. And we used to go to events. We used to go to running events and sell out to the back of the car. That was okay. That was nice. But in the UK, there was the 3As. It's the three A's, the Amateur Athletic Association, have been going for years. The three A's produced a handbook. And in that handbook were 250 names and addresses of every secretary of every club in the country. So it didn't take much figuring out that send a letter to the secretary and offering 15 % off the retail price and if anybody in the club would like to become an agent, he could get the 15%.

18:03My first letter produced 100 agents, which was incredible. All of a sudden, we'd hit something original. I sent a second letter out to those that didn't respond and I think even a third and a fourth. By the end, I had over 200 agents, which, great. Now we'd got our track and field, our runners. We'd got the runners. So we became very close to these guys because we knew somebody in every club in the country. We knew somebody. And that gave us that connection, which was fantastic. But the big sport in the UK was soccer. Soccer was the big and still is the big sport. And by the time Jeff and I had gone into our own business, Adidas.

18:50Adidas had come into the country and they owned that market. it would have cost a fortune to get into the market. That made it difficult. We had in the north of England rugby. Rugby was a small sport really, but just in the north of England we had rugby league and we did the same with rugby league. I got all the rugby league teams. So we were nicely scaling our business. And I suppose we could have been satisfied at that, but really for me we were looking and saying, well, what do we do? do we offer a broader range of sports footwear? Or do we look for a bigger market for our existing range of footwear?

19:30And we have been looking for white space. White space is where can we go where Adidas haven't gone or are not going to go? So we used to move on this white space, which is great. But now this was a puzzle. Where do we go? And I tried to talk to the family and say, look, in America, every college, Every university has coach, and coach is God. And you can go to college on a sports scholarship. They're not just academic. There's a lot of sport goes on, and that's a vast market. Of course, the problem is that the family, the wives and Jeff, and others are saying, well, that's a bit expensive to get across to America.

20:11Hotel bills, flights, whatever. Luck, as it happened, as it happened, luck came our way. I'm reading a magazine called Eurosport. And in this magazine, the British government are actually putting an advert in saying, we want you to export. And we will pay for you for a stand at the NSJ show in Chicago, National Sporting Goods Association of America. We'll pay for your stand. And we'll pay for your return airfare and half of your expenses whilst you're there, your hotels. I got no objection. at that point you can go joe you can go the fact that it was in chicago in february i didn't really take on the board that it was going to be that cold but it was very cold however that was my start in 1968 so in 1968 i am going to america with a friend and okay it was good i learned a lot my friend was in the outdoor business and we were making a very lightweight climbing boot for him we were sharing this stand and the guys were coming up and saying what like your product where'd we get this and i'm saying well england and they're saying is that new england and no not new england england you know across the pond across the border of england Oh, near London.

21:36That's it, near London. Yeah. I realized that nobody wanted to import the product. They wanted to buy it locally. They wanted a distributor. Great. Although that happened, my friend Bob, he did sell some of his climbing boots. I think the outdoor business was more, I would say, more happy to import a product than most of the sports shop retailers. And that was good because we were making that, so we did actually sell some shoes. But this is 1968. And when did I get into America? When did I get there? 1979. We actually broke into the American market in 1979. 11 years. And the difference, though, was that I had six failures.

22:17I can name them all. I think most of them are in the book. I had six failures, trying to push, trying to get into that market. And running was becoming such a big category. It was growing massively. In 1969, Runners World produced a single-page A4 sheet telling people where there were races, who'd won races, what was going on in the athletics world. But by 1975, that magazine was 50, 60 pages, full-color, incredible, telling people where there were 5Ks, 10Ks, half marathons, even marathons. And then it also printed the winners. More than the winners, the runners. It printed, you know, if you came in 100, you could probably read your name in Runner's World.

23:05And so that magazine had grown fantastic, terrific. I mean, 300 million Americans, 10 % now were running. And so that's 30 million out there running, all watching running shoes. Fabulous. And Bob Anderson, who was the editor of Runner's World, he was enjoying life, really enjoying life. And he thought, why don't I tell everybody which is the number one shoe to buy? So he did. And in August of, I think, probably 76, he produced his shoe edition. And, of course, the number one shoe, Nike. Of course it was Nike. Couldn't be anybody else. Certainly wasn't Reebok. But Phil Knight. Phil Knight is importing his shoes from Japan, from Asia.

23:49He's importing his shoes. All of a sudden, the demand, because he was number one, the demand was immense. But could Phil Knight meet that demand? No. He couldn't just turn it up. All of a sudden, millions of shoes are wanted. He couldn't do that. The retailers were going mad because they couldn't get the shoe. People coming in wanting this shoe, nobody could get the shoe. Year after, Bob Anderson, in his wisdom, brings out another shoe as number one. I don't know who it was. Could have been New Balance, Titanic, Brooks. any number out there. Again, it wasn't rebar. Again, the same thing happened.

24:25People wanting the shoe, the shoe is unavailable. The year after, and this is 79 money, the idea was instead of saying who was the number one shoe, we'll change this to star ratings. Star ratings. That was an opportunity. All of a sudden, I'm sure we know the business. We can make a five-star shoe. and I think there was more hope at that time that we could make it rather than say, well, we can make it. However, we made Aztec and we produced Aztec, sent it up for the 79 edition and in February of 79, I'm over there and running now is big. Running is very big. So big that came out, came to the stand and said, we want 20 ,000 pairs of shoes.

25:17okay. Just like that. Just like that, yeah. One bunch of discussion, 20 ,000 per shoot. Right. And they said, we want a better price. And I knew what that meant. That meant we had to go to Asia at that time. But we were not stupid. We knew that if we got five stars, one, we couldn't complete the demand for product, just as the other guys couldn't bring their product in when they're number one. We knew we would need help. And so a friend of mine who worked with Barter, I don't know if you know Barter, but Barter is still the biggest shoemakers in the world, volume wise, although they're really in Latin America and India and Asia.

25:58So the guy there, he was just setting up the sports division, a friend of mine. He said, look, Joe, you get five stars, we'll help you. Great. They could do the shoe at a better price than we could do in our small factory. But I knew that came out, we're not talking about small bits and pieces. They wanted something from Asia. So I had been talking with the agents representatives of the largest shoe manufacturers in South Korea. So I had that covered as well. Okay, that's okay. We've got that covered. We can probably do that. I'll come along and see. We'll talk details and whatever. Towards the end of the show, though, in 1979, Paul Feynman walked onto the stand.

26:37Paul Feynman, And he was running a wholesale outdoors company called Boston Camping. And I got on well with Paul. We could talk, and I could tell from his conversations, he'd been doing this for 10 years, and they were going nowhere. They were just going around in circles, nice, nice business. But it was stationary, and that was it. It was going nowhere. And Paul said, look, Joe, you've got a five-star shoe. I'll be your distributor. Okay, Paul, come on. Have a look at mine. This is it. How's it? Showed him my steak. Yeah, lovely shoe, he said. Great shoe, he said. But it's not five stars, is it?

27:12It will be. I'm so confident. It will be. He said, OK, look, if it gets five stars, yes, I'll be your distributor. But we can't do anything until we know what's happening. This is February. Shoe edition's not out until August. So I take a trip back into America in May, May of 79, and I go along to Detroit to see Kmart. I'm taken into the space where all the buyers are and it's a warehouse. There's over 100 guys there, all buyers of different products, whatever it is. And I'm taken to my guy called Mr. Biasati and we have a nice chat. And yes, we do need 20 ,000 person. Have you got a better price?

27:59I said, we're very near now. We've got some samples and we're really working on that. and I'm sure we can meet your price. He said, okay then, if you can meet the price, come back to me. We'll go from there. I'm looking at this and I'm thinking, look at all these buyers, Kmart. They'll give me two square meters or whatever it is of space and if my sales are not up to the sales they require to make the profit, I'm sure that the$20 ,000 will be my first order and my last order. okay so i take the next flight into boston i'm picked up by paul and i go to see his nice boston camping business this is great i meet his brother-in-law and his head salesman and we get on very well and i'm thinking this is just great this would be fantastic bolt on my business here i'm sure we'll do something with a bolt-on business i go back home the end of july the end of july is when the magazines come out the august magazine comes out and it is last week in july and i phoned paul i said paul please can you go down to the kiosk see if runner's world is out now and see how we did okay okay an hour later he came back he said joe at aztec you got five stars Wow, that was it.

29:21He was just like, all of a sudden, we'd just done something impossible. He got five stars. He said, but also Inca, Inca was a spike track shoe. That got five stars. And Midas, Midas was a racing shoe. That also got five stars. We entered the USA with three five-star shoes. And I knew that was the beginning of our experience in USA. Up next on Remarkable People. And the big lesson there is, okay, don't ever become a shoemaker. Become a marketing man. Because they produced a shoe for the market. A shoemaker would never have done that. If you find our show valuable, please do us a favor and subscribe, rate, and review it.

30:07Even better, forward it to a friend. A big mahalo to you for doing this. Welcome back to Remarkable People with Guy Kawasaki. so what i heard is so far in terms of marketing you guys were the first multi-level marketers and you were the first spammers and you spammed all the secretaries of all the athletic clubs you were way ahead of your time there joe oh thank you for that i don't know whether it was absolute need but we did can I just take you back in history because you were there and I would love to know what the sentiment was like and I'm sorry but I know he wasn't wearing Reeboks but I really want to know walk me through what people thought was this impossible goal of sub four minute mile So was everybody convinced it's not possible?