20Product: On Running's CPO on How to Create Emotion Through Product | Why 99% of Products Fail and How to Create Cults Around Products | The Biggest Product Mistakes On Have Made & Lessons Learned with Gérald Marolf

0:00This is 20 Product with me, Harry Stebbings. Now, 20 Product is the monthly show where we sit down with the best CPOs in the world to uncover what it takes to build incredible products and product teams. Now, sometimes I use the show to satiate my own loves and passions, and I love On Running. And so I jumped at the chance to have Gerald Marolf, CPO at On Running, on the show. Gerald oversees the full range of On's shoes, apparel and accessories to make sure they deliver performance, comfort and style so incredible athletes like me can play at our top, top level. Before On, Gerald spent over a decade building consumer brands with collaborators like Microsoft and Ferrari.

0:43This was a phenomenal off-the-cuff discussion. I always want it to be the best show for you. So let me know what I can do to make it better. Harry at 20VC.com But before we dive into the show today, SecureFrame empowers businesses to build trust with customers by simplifying information security and compliance through AI and automation. Thousands of fast-growing businesses, including NASDAQ, AngelList, Doodle, and Coda, trust SecureFrame to expedite their compliance journey for global security and privacy standards, such as SOC2 and ISO 27001, CMMC, NIST standards, and more. Backed by top-tier investors and corporations like Google and Kleiner Perkins, the company is among Forbes' list of the top 100 startup employers for 2024, G2's best software awards for higher satisfaction products, and a recipient of the 2024 Cybersecurity Excellence Awards, something I definitely never got in school myself.

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2:56CodeRabbit has so far reviewed more than 13 million PRs and installed on 2 million repositories used by over 100 ,000 OSS projects. If you want to cut code review time and bugs in half, try a free month at coderabbit.ai with the code 20VC. You have now arrived at your destination. Gerald, I am such a fan of On. I think the product suite that you have today is one of my favorites. I was so keen to make this happen. So thank you so much for joining me today. Thank you for having me, Harry. It's a pleasure to be here. It's a bit of a weird start, but when did you realize you first loved the craft of product?

3:37And what does product and good product mean to you? I think the idea of good product, at least for me, started with something slightly weird, which is perfume. Perfume for me was the unlock in terms of that. Why do you sell something that is just a smell and create a bottle and something around it that people actually crave for it? What was it about that that you found captivating specifically? Well, why do you buy a smell, right? It activates a lot in the human brain and it becomes part of you. But you leave a lot to the consumer when you do fragrances. And you probably leave too much to the consumer because how much they use it, how often, and then you lose the smell of it.

4:23But first things first, I think you mostly fall in love with the product packaging, the bottle, whatever it is. And that was already there, 80s, 90s, before everyone started to create all the beauty and everything behind that. I think the fragrance industry was pioneering basically that. Is perfume any different to other physical product in the way that it's the way that it makes you feel when it's on? Would you not say it's the same for running shoes, for example, the way it makes you feel when you're wearing them? yes and i think that is that is the probably the idea or the red threat even behind it what is nicer about perfume is that it even costs less to make than the actual packaging which which for us is slightly different but every great product you should probably trigger somewhat of that slight discomfort of challenging yourself of is it the right thing for me and not all footwear does that But when it does that, you're already one step ahead in actually falling in love with the product itself.

5:28When you think about falling in love with the product, is that what you mean when you talk about the relationship value with the consumer that you think products should create? Yeah, because it's impossible to engineer because we're all different. How do you stimulate curiosity? Why do you create the button on a gaming console that makes a sound? there's no rationale for that but it triggers something that you can own and that stimulates you in a positive or negative way but it creates some kind of emotion and i think the more you go into commodity product and and footwear i think to some extent is that because we all need to wear shoes every day the harder it gets but also the more exciting it is because that's that's then the true challenge to engineer something where you touch it, you step into it and you're like, huh, OK, there's even a bit more than what I expected.

6:21It's not just the color I choose, but there's something more behind it. That's what we're trying to engineer for. What irrational product decisions do you think you've made that have engineered the most emotion from consumers? And what did you learn? That's a big question. For my time in tech, That was much easier because a user experience that is nonlinear or a digital product that is slightly disturbing creates a lot of energy immediately, but you take way less risk. You take less risk. How do you take less risk with a disturbing UX? Because you can iterate very, very rapidly. I think the moment I switched from non-physical to physical product, I had to completely relearn that.

7:07Once it's in your hands, I cannot change it. I cannot touch it. I cannot just send you another pair of laces. In the morning, why do you choose the pair of shoes you choose? Is it just because you're too lacy to actually tie them up or because the leather you would need to polish or whatever? I cannot change it. I cannot influence it anymore. You let it go way earlier. Whereas if you do a, I don't know, a homepage on bing.com, you might want to hide something and then some people find out and then you can actually emphasize and you have an echo chamber you can work with where when you do physical product, once it's gone, it's gone.

7:46But your question is, it's interesting because it's often at the very start of a brief. And the hardest part is to not lose the thought because you start with the consumer and you start with well here's something where you will step into and you probably would think that it's slightly too soft slightly too comfy for what i want to do or it's not enough of that or oh wow why did they do a 3d logo on a shoe that will fall off tomorrow and so it's it's the smaller parts that have a bigger impact than the hours and days and weeks we spent with a sports science team engineering a foam so that you can do your 5k and not have your back hurting in the evening.

8:32Is simple always better in a product? No, I don't think so. Why? Because simple will result in more storytelling needs and less word of mouth. I think simple is great if you have a trackpad or AirPods, but I'm not sure that simple these days will break through in many cases. Consumer electronics might be different. I don't know. I'm not up to speed there. But for us, I think simple gives you less opportunity to be an expert yourself. It gives you less opportunity to tweak, to learn, to explore, and to also give it its own life. How do you think about the challenge that you have, which is, and this is actually ironic, it's the same for physical and digital products.

9:18A lot of people who wear on running shoes are not running. In actual fact, I hate to say it, they're not moving very much at all. Go to a Knightsbridge cafe and you'll see a lot of on but not much running. There's people who are not power users and there are people who are supreme power users who run a lot and who really stress test them. How do you think about that product balance of selling to both without alienating either? I personally love that by polarity. You probably also have a MacBook Pro in front of you and you have absolutely no clue of the power the machine actually has and could be used for.

9:55And aspiration is one, but then it's also, it's good to have great product, even though you don't use it at its full extent. I don't see any negative to that. Anyone should go and get the greatest cashmere out there if they fancy cashmere. They probably don't need it to stay warm. We really strive for the factors that are not just always straightforward, which is not just style and aesthetics, but it is also to some extent a view on how product ages, what durability means, how colors play with each others, and how it gives you an opportunity to also differentiate yourselves in your everyday lives.

10:37So running and coming from running and having run culture as a base is just a great starting point because we simply can't fuck up you cannot give people a product that they cannot do their half marathon in and then yes we have the reddits where we'll have long debates because i mean this year we launched a four-hour marathon shoe if i would ever run a marathon in below four hours i would probably be dead so so there is an audience who needs different kinds of shoes But the hardcore audience thinks that everything needs to be obviously as tailored to the fastest and most performant. But we're also trying to work even within running towards different audiences.

11:20And then that triggers outside of running also different communities. You said about like style and aesthetics there. It made me think of like consumer preferences. And it made me think of like the Henry Ford, if I listen to my customers, I'll build a faster horse. To what extent do you listen to customers versus show them the way in terms of right product and good product? We listen a lot. We don't always use everything, but we do listen a lot because the company has also been growing at a scale where you also need to find the right kind of balance. And we also need to become much more concise in terms of how we show up, where we show up, as you do this more polar opposite sort of consumers.

12:03And there's an interesting aspect. We just don't have an archive. So that means every other footwear brand will go back in history, right? Now, early 2000s are coming. You see all the A6 that have been there now slowly phasing out again. Salomon has been having a bit of a harder time because the outdoor trend is not there. So now the 2000s, the tech raves, all whatever, whatever it's going to be, they're going to pull out, back out and put on the table if you just go sneaker. and if you don't have that you can listen but it's hard because you cannot pull it out of somewhere so you need to create and then once you're already on that you might just don't want to create within that comfort zone and push it a bit when did you listen to customers when you shouldn't have done and on reflection what did you learn we probably listened to customers when it comes to the space that exists between sports and lifestyle too much.

13:02So a lot of customers have a strong belief that there is a world in whatever we want to call it, hybrids, where you can use them for sports. You can also use them for lifestyle. And there's this persona probably that is a 2010 persona that lives in New York, goes to the gym and then goes and gets their latte and wears the same outfit. Not sure that really still exists. or has ever existed in the way that that's been described. And that it makes sense to have a product that does function and style equally well. I think you have a customer that will go for the most performing running product because of style.

13:45I think you will have people who just purely will go for style and not really care about the performance. But that I want something that really works and yet still looks good, somehow still works or still looks good that middle ground i think that was not the smartest place to operate in does that not contradict the athleisure trend that we have seen be so pervasively successful in the last few years yeah probably does yeah but what brand do you want to be as well. I love having our craziest innovation marathon shoes in Dover Street Market. I think that is much more of a place to be even with your craziest running shoes than being in that in-between space where you make compromises on the product.

14:38And at the same time, you sort of, it's not very clear what you want to do with the product. I think product intent should be much clearer and at leisure always sort of schmoozes a bit with bows what do you mean product intent should be much clearer if i look at what you're doing you don't go in and fish for a reason to do something and even if it's a 200 bucks pair of shoes i don't think we should do that neither even if you just wear it for lifestyle you probably want the best running shoe out there or then you want the true fashion statement but you're not gonna wear your running shoes and then wear them again for a night out and back and forth it might happen but i don't think we should brief that in as a product on the flip side of that though where did you not listen where you should have listened and what did you learn i think the way we're building new sports tennis tennis for example, I think we could have been closer to the consumer earlier in understanding how much appetite there is to upgrade 100 box white tennis sneaker and other brands have done that in a more precise way.

15:57We have now second wave, third wave done a much better job and I think we're getting there, but not everywhere you need to go full just your own way. And I think the Roger is now a fantastic range of products but it was very a very complicated process for us mostly internally to really debate through what is a next generation next level white tennis sneaker how would being closer to customers have changed the product strategy in tennis we probably would have explored different materials earlier whereas i think we took a very conscious decision to make that a vegan product for all the sustainability reasons behind it where then durability is sort of the other side of the equation and we probably didn't go all the way in that process to look at okay if you wear something for two years and it is leather is it still better than something that is a vegan leather alternative but might just not have the same kind of repairability or durability We're pretty stubborn there to make a very good vegan white tennis sneaker that is super lightweight.

17:11To what extent do you think consumers care about the sustainability over price? I wish they would care more. I haven't seen any research where that has been the case. I do have to ask you, you said there about kind of being a little bit quicker maybe. How important is being first? When you think about being first with a vegan leather tennis shoe, Does it matter if you're third? And how important is being first in product? I think it's closely connected to brand awareness. Where we're at right now, it's probably less important to be first. But the ambition to be first helps to attract great talent.

17:48It helps to bring in engineers. It helps to bring in innovators. And it gives you clarity in your roadmap to what you're doing. We very much want to be first in most of the stuff that we do. There might not always be a consumer need for that. But for the type of culture you're building, it's extremely valuable. Being direct. I don't get the tennis strategy. And I know David Alleman pretty well at this stage. I should ask him this as well. But I don't get the tennis strategy. If I think about like market size and the size of On Today being the multi-billion dollar public company today. If you crush tennis, it's just not a needle mover for the business, I don't think, from a pure market size perspective.

18:32How does market size impact product direction? It definitely does. I also think we need to look at tennis more holistically in terms of Roger as an entrepreneur, him having a badge, being in with the product teams every two weeks and what we build as an overall company and how you grow from sort of an international now towards a global company and who you also want to be and who you want to have close. With tennis or with Roger specifically, I think it's also friends of friends. I think that has an incredible power and that has created an athlete mindset for us that strives for excellence. And tennis might not be the last thing we do, but it's been an incredibly important territory to move a brand beyond running, rooted in something that is sports and at the same time have clarity on we can be more than just a running brand.

19:34Would you do tennis if you didn't have Roger? I don't know. That's an interesting one, isn't it? From a product perspective and a market need perspective, your distribution is driving product strategy. No, I think your brand DNA is driving product strategy you think i'm curious roger's your brand dna i think roger is part of our dna roger is part of our understanding and confidence that we have in how we built the brand help me understand that i'm sorry yeah of course by the way i wish he was part of my dna the elegance and charm of this man But like, Roger's bigger than tennis, first things first.

20:16But the way an athlete like him operates in sort of a global environment and strives for everything is possible and gives you also a view on unlocking things that are more true discipline and tenacity than to pure strategy, so to speak, created, I think, a white space for us to think beyond running, running lifestyle and really enable us to open new territories overall. And that is now sort of anchored in the DNA of a sportswear brand that strives to be the most premium sportswear brand on the planet. And the word premium is in there. And he's certainly part of the reasoning why we look at it that way.

21:05Do you worry about longevity of the Roger brand? Yeah. Yeah. I mean, I worry probably about longevity of all of it in a sense of how do you create beyond an athlete's career cultural relevance and how do you make that happen? And then with the Roger brand per se, there is him, there is other things that he will be doing, but there is also a product in the silhouette. Now, does whoever is still alive from Nirvana worry about that they're a T-shirt brand or a band? It's a bit the same thing, right? Do people know Stan Smith? I don't know, but I think there is a lot of work that needs to be done.

21:47If I think about like Nike, I know it's different because there's an ownership difference in terms of Roger being part of the brand, being part of, but like a Michael Jordan, and then suddenly this realization of the need for diversification away from identity of one. I'm just intrigued. Like, are we worried about the concentration of need on Roger and the need to diversify as Roger doesn't play anymore? Yeah, but I think diversification doesn't just purely come from need. It's more appetite. Right. And I think Jordan is interesting because it is at this point pure nostalgia. And we all have loved what the NBA was in the 90s.

22:27And there is a streetwear relevance to it if you do PSG or whatever in terms of football now. But you also engineer that towards a target audience and you hope it trickles over to more mass. For us, I think we're at a very different point where we still have a lot of appetite to even build businesses that we feel that don't exist yet. And with Jordan, I think they have successfully done that. And now it's looking at how a brand ages while the target consumer gets younger and younger. Can I ask you, you mentioned the marathon shoot that you've done, which is awesome. I love this product. I don't run marathons anymore because my knees are, you know, aged and breaking.

23:10gerald but my question is when you look at that do you think you were too slow to marathon running as an entry point when you look at like hoker as a brand that really tackled the long distance market do you think you were too slow to it too slow and maybe a little bit too complicated is probably the most most honest answer i think we tried really hard to be probably overly precise in the product that we do and that means that engineering is slightly slower and you should leave a bit more to the consumer or the runner in that case to make up their minds we're striving for perfection yes but at some point stuff needs to go out and be beyond the pavement so yes to some extent you said they're about kind of precise and at some point it just needs to go out when you get that i'm sure you go through so many versions and so many versions and you pick it up and you pick it up and when do you go ship do you just know like what is that moment well it's it's becoming slightly more formal but in often cases it's a shortcut or a trip to a factory and then you just you spend two days and you finish it off or there's a signal and a couple of individuals who test it and you're like hell yeah let's go but a lot of it is also i think it's a group of individuals, right, that think through things and then have somewhat of an opportunity to agree or disagree.

24:35And then you build a feeling quite rapidly that it now should go. And it doesn't always happen, but when it happens, you're usually on to something really good. What was the most controversial product that you've released in the last few years? And how do you reflect on that? Well, this year, I definitely would say it's that slow marathon running product that rightfully so probably the community didn't get because if you have that ambition why would you want to wear a shoe for the slower runner even if you are that there's a lot of health reasons and you just talked about your knees but that was not thoroughly thought through from a consumer mindset if you go into that marathon build-up other than that i think light Spray is just her latest innovation is just a very interesting piece of an innovation platform that we're building out.

25:29It can be seen as controversial because you make a shoe in three minutes and you don't need any humans. But I think the runway of that is going to be very interesting to watch. What would you have done differently or what are your biggest lessons on product messaging for new products when you reflect on, say, like the marathon shoe, which maybe wasn't communicated as it could have been. I'm not great at marketing, but I just love to have the story being told by others, even if it's unfiltered and not always what you might want to hear. But we can learn a lot from fashion there. I think you put a runaway show out and the jury's out, right?

26:06You're not going to send out a press release look for is the best look that we've ever made. You just don't. You let all the critics basically decide. And I think we could do more of that and just let it out in the wild. The other part I think is on apparel and accessories. We released a fantastic line of soft bags, backpacks and other things. And we sourced with like one of the last Swiss rope makers, some real Swiss rope and all that kind of stuff. Product's really there, but I don't know. We're a footwear company still in many cases. So we had a hard time really telling that story well. You mentioned that we're a footwear company.

26:47Do you think every company needs to have a hero product? It's often something stated that you need to have a hero product. Do you agree with that? we're not a footwear company anymore we we very much are i mean apparel is is growing at a speed that i think we unlocked something there that is going to be very interesting but answering your question probably no not anymore i think that used to be the case but if i think about how people shop these days who they listen to and and also where their share of wallet goes i'm not sure I think it's just a lot of things are changing if you look at beauty as well like we probably had three choices for for how do you call a lip balm and where did you buy that probably at a pharmacy or or whatever now there's probably 600 with all different flavors even smoking has diversified to a level where I'm like okay is there a hero Marlboro product these days I don't even know do you think consumers on that thread are more or less loyal today and I think about this one a lot Because I think with the decline of religion, you see people coalesce around brands more than ever, whether it's Taylor Swift or whether it's on running.

28:02But then you also see people have so many options that they are more promiscuous with their brand selection than ever. And I'm not sure which side of the table I'm on. Me neither. I just love the concept of brand personality. And it's an old concept. But if you give a brand the right characteristics, and for us, a lot of that goes through product, I think that can go a long way in your relationship with the customer. Even these days, even the very young ones. I think there is something to building a brand who has a bit of shape and form where consumers understand who you are as a personality. Does that create loyalty?

28:39Always. Probably not. But it goes beyond just trying to be everything to everyone. Which competitors brand personality do you most respect? In the sportswear space? Yeah. I have a lot of love for brands that have created clarity sort of in consumer mindsets. If you think about Halo Yoga, for example, it is obviously now with gross, it's becoming tough and all the supplements and all of that. I think that is really, really good. And I don't know if that's working commercially, but they're doing their thing. And not all product is great. That's fine. But they have a mission. And they even left yoga in their name, which I find quite bold.

29:24Do you think that's the right decision? I am happy for them that they're still independent and can do probably whatever they want. And yes, they probably should get rid of it. Then there are brands that are fascinating to watch because not everything makes sense, but the product is really good. Asics, as a simple example. What do you mean the brand doesn't make sense? Well, name me an Asics sneaker in its full length of the product name. Just one. I know they've got Nimbus something. Is there gel in there? Is there something else? Is there kinetic? Does it have some numbers as well? what version it's an air force one right or it's an air max 95 i think asics is talking much more true product itself than many other brands that we have in our space and as we've been talking i do kind of like product and i like to also try things and i do feel that they have delivered really well on a lot of their products with a very honest honest way of doing things i agree and we're going to come back to like that quality product and how we think about kind of brand associated i think on the flip side was like the confused brand personality i think like you know respectfully all birds so confused it's like the running shoes that they bring out with the work shoes that they bring and i'm like is this an athletic brand is this a training brand i can't get it i don't think you're going to be an athletic brand for running like i want you to be am i really going to put you on instead of on or nike with all the product testing that you guys have over like all birds no i'm not saying it's just brand yeah i think there's a couple of other brands that will be heading there maybe and i shouldn't probably say their names because they're still on the up but but i i have some brands where i have a hard time understanding where where where they're heading and why totally get that go on give me one i'm fascinated worry but they're they're in the athleisure market like straight up they're like premium athleisure we are for your like i don't upper east side mom who does yoga who wants to look hot and spend a shit ton on a jumper i'm just not convinced totally get that very personal no no i i i get that guys fascinating we we said about asics being like great product but maybe slightly confused brand in certain respects do you agree build great product and they will come the kind of often said moniker i wish i also wish we would be a good example for that but we have a fantastic brand and marketing department who does an incredible job also of bringing elmo on board to say that we launched an extremely soft shoe and it's it's probably super hard i mean there are stuff that i simply just love teenage engineering is one of those brands i don't know if you know them they're like swedish consumer electronics things quite small day spectacular but you have to be really deep into it and then then buy their Bluetooth speaker and you're just going to be blown away.

32:26But then they have great marketing, they have great brand, they have great product, but sometimes it just doesn't, I don't know, maybe it's the category or something else that doesn't scale or maybe you also don't want to because SoundCloud was also a good product, but we were all on Spotify, right? Which was the best product that you've made that didn't do as well as you thought? I think we have created our very first collaboration with Loewe, the Spanish luxury house. We have created a, I would probably say dog walking trail runner. So we changed our core trail running show at the time, which was called Cloud Venture.

33:07And together with Jonathan Anderson, the person I mentioned in the very beginning, He came back from Japan and brought some samples of some shibbery towels, right? The denim fade stuff. And the factories really didn't get it, but we replicated that on a canvas and then created, I think, an incredibly beautiful product that I truly love. Obviously, very early to do very expensive running sneakers at that point, because that was pre-whatever, New Balance, Miu Miu and all of that. It did okay, but I think if I look at that product now, it's one of those things, you know, where Pursuit of Elegance, sort of my, it's an old book, but it's that.

33:50It's 90 % perfect and then you leave the rest to the consumer. Okay, but if we take that as an example, that is a confused brand to me. Alongside a four-hour marathon shoe and performance. What the fuck are you doing doing a partnership with Loewe? The easiest answer is probably total addressable market or capitalism even. Which I agree. And as a venture capitalist, I get. But that's why I'm like, don't do tennis and don't do like, you know, marathon running in four hours. Do athleisure. Almost do Vauri. But isn't the opportunity to disrupt and create as a brand doesn't exist in certain spaces, opening up somewhat of a butterfly effect towards who you can be.