Rapid Response: On's 16-year overnight success: Zendaya, Federer, and outrunning competition

0:01We took a conscious decision to embrace a lot of risk and say, hey, it sounds crazy, but crazy is good because the night is always the darkest before dawn. And you can imagine if you build over 16 years from zero to almost a four billion US dollar brand, you have to have a very, very strong execution engine or it will fall apart in that journey. So it's really an opportunity to build a brand that doesn't have to be ultimately the absolute biggest, but is the most premium brand of the future.

0:38That's David Alleman, co-founder and co-CEO of On. On is the bellwether for a new generation of athletic footwear and apparel companies that are posing a significant challenge to the likes of Nike and Adidas. David explains how On is taking advantage of the increased visibility of sports in society, partnering with stars like Zendaya, Roger Federer, and others, and appealing to what he calls the movement class. Whether you've ever slipped on a pair of OnCloud shoes or not, David's insights will inspire you to keep moving, personally and in your business. So let's get to it. I'm Bob Safian, and this is Rapid Response.

1:27I'm Bob Safian. I'm here with David Alliman, the co-founder and co-CEO of On. David, great to sit down with you. Thank you very much for having me, Bob. On has been an amazing growth story, the lead player in sort of a new generation of athletic footwear and apparel companies. Is that how you see On as like the next big global brand? I mean, you started with a unique sole design, which is also the way that Nike started with their Waffle Shoes. What is your plan? I think the plan is to be the most premium global sports brand, really based on innovation, but also on design. At the end, it's about making sure that people are excited about sports, that they love to go out.

2:18I was out running at the Hudson this morning, and it was so inspiring because there's such a big group of runners out there. So I think when you move, whether that's running or something else, something happens to your mind as well. And that's really important for us via our mantra is dream on. And so that encapsulates it. Sometimes I feel like when I go running here in New York, it's a race, even if there's not a race song because there's so many people out running. It's New York pace, right? You have to overtake each other. I mean, the legacy players in this space, they sort of didn't seem to see the competition rising that you're part of.

2:56I mean, Nike's struggling. Adidas seems to be finding its way a little bit. You know, they're sort of the strivers like New Balance and Asics. And then there are other newer players like you, like Hoka, even apparel brands like Tracksmith or Bandit. When you look at that sort of competitive landscape, is there a specific spot that on hold? How do you think about that, where you fit in that ecosystem? When we started in 2010, we saw an opportunity to really innovate with a radical new idea, which was cloud tech. It's not just having a foam, a mattress underneath your foot, but engineering, really engineering the run and changing the feel of running.

3:43So we came always from an innovation space. And I think that's the unique approach that we keep to this day. And I think it also coincides with a radical shift that sports used to be probably when we started still something that you do on the weekend. Now sports and sports lifestyle has moved to the center of society. I think back in the days you had what I would call the leisure class. It's very much about consumption. It's about owning things. But that has changed, hasn't it, over the last 15 years. I think there's a new movement class coming along. Sports has moved to the very center of society.

4:23It's the last life moment. It's what brings people together. And it's a lot more about experience. It's about vitality. It's about longevity. Health is the new wealth. And I think whenever society changed, it has created a big opportunity for absolutely new brands that respond to that to become big. In the field that you're in, there are so many players. They get inspired by each other. They steal each other's ideas. Does it drive you crazy that you have to keep, oh, now someone else is trying to track what we were doing? No, I think that's exciting because then you always have to push yourself to create the next.

5:07If you think about the whole luxury space, the luxury space and the whole scarcity model, high price model has over the last two years probably lost tens of millions of consumers who are looking for something that's more accessible. And that's a huge opportunity for premium products as well. So it's a premium product, but not necessarily a luxury product. Yes, because luxury is defined by limiting access. So scarcity, making it very exclusive. On is defined by innovation. So we want to bring innovation to everyone to give you a better experience. Of course, there's a certain price tag for innovation because we invest so much in creating the next.

5:59So that needs a premium brand that can invest innovation. And so you're not a luxury brand at that end, but you're more a premium brand than some of the legacy players. Yes. I mean, if you think about other areas of business, there was a moment very much defined by New York, in New York actually, when we learned that we can live in lofts and that kitchens moved to the very center of our homes. So home appliances became much more important. And you didn't kind of store your vacuum cleaner anymore in the closet bag, but you hang it on your wall. That created an opportunity for a brand to create something that is at the intersection of innovation, a jet engine in your vacuum cleaner, but also a unique aesthetic.

6:53And so I think it's a great example of a brand that is based on innovation, but reaches millions of consumers. You have these relationships with celebrities. You're plugged in with Zendaya, who's among this year's hottest stars. Roger Federer is a co-entrepreneur at the company. How did those relationships start? A lot has been serendipity. So when Roger posted from Roland Garros on his Insta in an on-shoe, we felt that's an invitation to a date. And so we went on that date and that's how the relationship formed. And then a little bit later, you probably remember that Zendaya had her Challengers movie.

7:40Yes. And it was, of course, about tennis. And one of the characters was pretty much formed after Roger with his on-shoes. And she always had to tie up these on-shoes because we had a special closing mechanism. And she, for her acting partner, was always lacing the shoes. So that's how she got to know on, up close, and personal. And so that started to form this relationship. So it's been very organic for us. With Roger, I understand you went to him and sort of pitched him even though you didn't have money for him. You know, I mean, we felt he first pitched us by putting on on his feet. And he's Swiss, as you are.

8:23And he's Swiss, and Switzerland is a small place, and so we had some common friends. And so we went to a restaurant in the inner city of Zurich. He came in with his baseball cap deep in his face, and we hit it off, and we had a great evening. And he was challenging us. He said, hey, you've been such an amazing innovation player in running, really radically changing the feel of running. Could you change the feel of tennis as well and bring innovation to a tennis shoe as well? And that's what we did. And three months later, we had him at our innovation space, which we call the own labs in Zurich.

8:56Well, and it was a good move on his part, too, because instead of taking money, I understand he took equity. And that has worked out very well for him, given how the company has grown. I think it worked well. We were a seven-year-old company back then. We felt doing the classical model of just giving money to athletes, a classical endorsement model, that's not our way to do it. We always try to innovate on everything, not just on outsource, but also how you do the marketing model. And so we said, hey, instead of us giving you money, why don't you give us money? And that worked out for everyone very well.

9:32Your personal background is not shoe design. This is something you sort of came to, well, I don't know whether it was serendipity for you too. My background has always been in business, but especially in business when it comes to creativity, design, also digital. It was a certain serendipity because a friend of Casper and me, my co-founder, his friend Olivier was a professional triathlete. And at some point, And Casper called me and said, hey, remember Olivier, he had an idea for a shoe. And we said, come on, that's crazy. But then we said, hey, let's try that shoe. And that was on a rainy day in Zurich, somewhere up in the woods.

10:16And he came with the shoe that he had cut his garden hose at the home and glued these garden hose pieces underneath a shaved off shoe just to prove the principle. And we went on a run and it felt amazing. we felt, wow, that's really a different experience. I spent a fair amount of time with the former CEO of Nike, Mark Parker, who started as a shoe designer. Obviously, you didn't start as a shoe designer. You know, it's more brand design, really, that you've been focused on. Is there something different about being a business leader when you're a designer? Do you look at the business in a different way?

10:54Some of the biggest brands have been created at that intersection of innovation and design. If you think about big leaps in the past, so for example, people started to travel at the end of the 19th century. So that was a huge societal shift. And then some brands who had done probably some saddles for horses decided, hey, could we take our technology ladder, sometimes not even ladder, and create luggage that is very, very sturdy, that doesn't allow for moisture of coming in? And could we bring that to a new class? I would call it the travel class. And that created some of the biggest brands that today exist as the leading luxury brands.

11:45and similar things happened later on. So for example, when digital devices grew up from being either in the basement or then under your table and became portable and they became part of your identity because they're portable and you're sitting in the coffee shop with them or you're holding them to your ear, then design became much more important. So it's always that feel also for the consumer between the actual feeling, the sensation, but then also the emotional feeling, how this looks like, what does it say about me? Do I get excited to lace the shoes up and go for a run at the Hudson? It should be a great feel, but it should also be a great emotional feel.

12:29And so I think that created some of the biggest brands. David's reminder of brands that redefine themselves in the face of change. It's instructive in our AI world that new capability and emotional impact should ideally reinforce each other. So what role do Ahn's physical stores play for David's brand? And what prompted him to shake up the company's leadership earlier this year and take over as co-CEO? We'll talk about that and more after the break. Stay with us.

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13:58the Masters of Scale Summit. It's really designed to remind us that we do have agency, agency to lead, agency to design, to build the relationships and the partnerships that empower us and to make the change that we want to see. We program a stage, we curate an audience, we set a schedule that builds in time for these relationships to be made and to grow so that by the time you leave Summit, you are fired out of a cannon, ready to run through walls to do better in the world. with the agency that you actually have. I hope to see you there. Visit mastersofscale.com slash summit.

14:39Hey, listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show because every Friday we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely, from Ford's CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find. Just search Rapid Response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. Before the break, Anz David Alleman talked about the growing opportunity for new sports brands in today's marketplace.

15:25Now he addresses the company's recent leadership shakeup, the role of brick and mortar stores in the digital world, and a crazy new shoe inspired by a YouTube Halloween video. Plus, does sustainability in footwear and apparel really matter? Let's hop back in.

15:46Not everything about On's rise has always gone exactly the way you would want it to. Since going public five years ago, revenue has steadily gone up, past$3 billion in 2025. But the stock price is down quite a bit from its peak. And back in May, you and your co-founder, Casper, stepped into the co-CEO role, sort of shaking up On's leadership. What prompted you to want to take a more hands-on control? When you look at ONS leadership model, we've always operated ON very much as a partnership. So it was several partners from the get-go. I mean, Olivier Casper and I started the company as a partnership of three.

16:31Later on, we were joined by other leaders. At some point, we were a partnership of five. And that was our secret weapon because it gave us an incredible bandwidth to go after very different missions. So some of our partners went very much about operating the engine of the business, the supply chain, making sure that the machine is humming. And it gave us the opportunity to always stay focused on building the next growth engine. So building the next shoe, building apparel, building retail, building a new sport like with Roger in tennis. That's very much what a founder-led organization should do, building the next.

17:13And so in that transition that we had recently, that didn't change. It shifted a little bit priorities. Operating the business and being very precise in the business has become a bigger share of our daily routine. Does it frustrate you that with all the success you're having, like the stock prices, has not necessarily reflected that or the trajectory of that? I think it's just been a reality that there's been quite a bit of volatility in the market. And our way to navigate that is definitely not to resort to discounting, but to make sure that we bring the newest innovation into the sport. You mentioned the word innovation several times, and I know that as businesses get bigger, it can often be harder to implement that innovation, that risk is harder for folks to take.

18:05I wondered whether that was part of the motivation of sort of, you know, as a founder, being in that co-CE role to keep that moving along. It definitely helps. It's always been our role as founders to make sure that we're not just thinking about the moment, but that we're thinking about the next moment. Often people are coming to me and saying, hey, it's incredible how you just exploded. And I'm saying, yes, we've been a 16-year overnight success. Yes. And that's true, not just for the overall business, but it's often true then for the next thing that you add. That's been often four or five years in the making.

18:45I mean, for example, our retail business, our stores is now growing very fast, but actually came here to New York to open the first store at Lafayette Street during COVID in 2021. So that's five years ago. And now you're seeing really expanding and the business growing up with more than 80 stores open. I remember like the folks at Warby Parker, when they first opened stores, it was much more of a branding priority for them than it was an actual sales priority. And they realized, actually, this is great business for you guys. Did it start that way? Was it more like, oh, we're going to we're going to brand ourselves like some other brands have these stores?

19:28Or did you always think like, oh, this is, you know, this is a financial lever to. For us, the primary reason to start stores has been two things. First of all, we wanted to plant the brand in the middle of society. And our city centers still are very much in the middle of society. It probably wasn't so obvious in the middle of the pandemic. But you got better rents then, I guess. Absolutely true. And we continue to believe that after COVID, city centers are coming back. And so we invested very much then in, hey, this is our opportunity to go in. And the second reason has been we were very clear that we want to become a brand that is, as we call it, toe to head.

20:18So we started to invest into apparel. And it's very hard to just do apparel in a shoe wall in one of our partner stores. So I think you have to give it the full expression. Because you can control the environment much more. Yes, we can control the expression. And especially for something like apparel, where you can't just put the shoe on a wall as a freestanding object, but where you have to give it space, that's a huge opportunity for retail as well. And does that then drive the retail sales of the apparel even not in your stores? It does. So, I mean, retail stores lift all boats. So it just gives additional energy to a community in the city.

21:02We also do a lot of runs out of the store. And in that journey, we found out it's a great business as well. But that was not the first thought. It's the outcome of doing all the right things, how you go into retail. There is this race in athletic footwear to use more technology. I mean, Brooks created a special shoe to help Josh Kerr break the record for the mile run. How do you think about tech at on? I saw a video of this light spray machine that you're using for a particular shoe, which is pretty cool.

21:35David Allemann:I think I have a... Here's the shoe. Yes. Often there are 200 pieces going into an upper of a shoe. So it's a very classical manufacturing method with 200 steps until you have a full shoe together. And we had a young designer who had seen a YouTube video of somebody with a hot glue gun spraying a Halloween net. And that was his inspiration. And he said, hey, if somebody can spray a Halloween net, could I use a hot glue gun to spray a shoe as well? And he did that and we had a very scrappy first prototype of that and he reminded us of that shoe where Olivier had put the garden hose pieces. And back then we took a conscious decision to embrace a lot of risk and say, hey, it sounds crazy, but crazy is good because the night is always the darkest before dawn.

22:34And so we said, hey, let's put a few robotics engineers, material scientists, sports scientists around that designer. And so we had a small attack team of five people that then came up with light spray, which is a technology where you have a robotic arm and that robotic arm sprays a small filament in polygonic shapes directly on an outsole. So it's not stitched on, it just melts with the outsole. And it collapses this process of 200 steps into one. This is a shoe that is sprayed by a robotic arm in three minutes. When an idea like this comes to you, I mean, you must get lots of proposals for crazy new, like, how do you decide what you're going to invest in?

23:26We have a whole pipeline process. So probably have at any given point 50, 100 ideas what we could do. And then we have review meetings where we're basically saying, hey, what is good to go and stage gates and decide what goes down the innovation funnel. That's our standard procedure. You connected with this sort of focused customer base of runners. And as you try to expand, you have to reach a broader community beyond that sort of more elite community. How do you test like how far you can go with the brand and sort of what the base is willing to let you do while you allows you to still maintain your credibility with them because you don't want them to move off to the next new hot shoe brand?

24:16No, that's absolutely true. And the athlete for us comes always first. We are operating with the On Athletic Club, one of the largest athlete group in the industry with runners, sprinters. So we have a dedicated team. So that's our core. By the same token, our lens is not running, but it's movement. So we feel movement is more important than ever because it's not just about health and longevity and vitality, topics that are incredibly important, but it's also about what happens to your mind. We feel when you're going out, whether that's now running or training or whether it's tennis or whether it's any or hiking or any other form of movement, something happens to your mind.

25:06You come back probably with either a new idea, a bit more optimistic. And we started in running, but of course, we're expanding in all other sports of movement. I did want to ask you about sustainability in your brand. The Swiss have a very strong reputation for sustainability here in the US. It's kind of become kind of a dormant conversation a little bit. I know you have your clean cloud shirts that are made from carbon emissions. I'm Does being green matter today in the marketplace, in how you sell, or is it a separate consideration? It matters very much to us. I think Switzerland is a bit the pinnacle of an outdoor theme park.

25:56And so we do most of our sports in nature. It's something that we have to preserve. And so on every dimension that we can do to reduce the footprint of on towards the environment is super important. And take a light spray shoe. The shoe upper is because it's not 200 steps going into it, but one step is more than 75 % lower CO2 footprint. Or you mentioned clean cloud. We're actually sucking bad clouds from the air industry emissions, create the base ingredients for foam again to create clean cloud foam. So we do everything that innovation can do to lower the footprint. So you've been on this 16-year overnight success journey.

26:47What's at stake for On right now? The defining decade for On is ahead of us. We've planted so many seeds that are growing up, which is exciting. Our apparel, it's growing more than 50 % year over year. Our digital channels are growing very fast. We're expanding globally, so we're relevant for communities across the globe. We're still the fastest growing brand in our industry of the scaled sports brands. We're also the most premium in terms of margins, the most premium brand. So it's really an opportunity to build a brand that doesn't have to be ultimately the absolute biggest, but is the most premium brand of the future.

27:35Well, David, I have to say this has been a great conversation. Thanks so much for joining me and doing it. Thank you very much for having me. I keep going back to that light spray shoe that David talked about. it was so light in my hand. Kind of crazy. Now, maybe it won't revolutionize shoemaking, who knows, but David's emphasis on rethinking and creativity, that's the threat that any renegade business poses, and it's what even the biggest companies need to embrace, particularly right now. David isn't saying that he's going after the sports giants at Nike and Adidas, but of course, why would he?

28:15That just complicates investor expectations. Still, in his very Swiss way, you can hear his ambition. He may not be at the very front of the pack, but he can see the leaders ahead and he knows the race is long. I'm Bob Safian. Thanks for listening.

28:42Humans will never be more intelligent than AI.