In 2010, Nike and Adidas dominated the running shoe and apparel market. For years, they’d been making tiny tweaks to foam and design while spending billions on celebrity endorsements. So, new brands had to either compete on being cheaper or find smaller niches to hide in. On Running decided to try a different approach; their idea was so simple that it was easy to ignore. But it now commands a $17+ billion market valuation and has become the fastest-growing running shoe company.
The Setup: Olivier Bernhard, a former professional triathlete and six-time Ironman champion, had a specific problem: existing running shoes were either great at cushioning or energy return, but not both. After retiring from competitive sports, he started tinkering with his old running shoes: he shaved the sole off a pair of Nike sneakers, cut a garden hose apart and glued the rubber elements together. He liked the feel, a shoe that provides cushioning on landing but acts as a springboard on push-off. He then went ahead to pitch this to his former sponsors, and they rejected his ideas. One brand said that if it could have worked, their innovation team could have picked it up long ago, it’s too simple. Others said it was impossible or difficult to put a garden hose in shoes. For someone with the athlete mindset Bernhard considered this rejection a challenge. There may not be room for another running shoe, but there was definitely room for another running sensation.
Building the Team: He was an athlete and knew what he needed in a shoe, but he didn’t know much about business and operations and how to get things running, so he brought in his friends. Caspar Coppetti and David Allemann, both former McKinsey consultants. Their approach was simple too: Ignore the competition, and focus on market expansion not market share. With this they set off to China, to begin obtaining the materials they’d need to build their product. The founders have stayed close to the product since then, especially remaining involved in innovation, design and testing.
An Idea Whose Time Had Come: Victor Hugo once wrote that “nothing is more powerful than an idea whose time has come.” On’s breakthrough came precisely as the athletic footwear industry was undergoing a fundamental shift. The established giants like Nike were retreating from athlete endorsements, reordering their budgets as traditional sports marketing ROI declined and innovation had taken a back seat. This created a perfect storm for On and one they were prepared for.
The Federer Effect: In 2018, Nike had dropped Roger Federer from their roster after decades of partnership. Federer immediately signed an apparel deal with Uniqlo, but he had no shoe contract, meaning he could wear any brand he chose. During one of his trips back home in Switzerland, he noticed his friends wearing this brand called On, he liked them enough to reach out to the founders directly. Federer went to On with a proposition to work as partner, invested an undisclosed amount and got 3% stake of the company.
A Grand Entry into Tennis: The partnership launched with the “Roger” shoe in July 2020, marking On’s entry into tennis. Roger’s partnership with On really focuses on the tennis side of things. The Roger Pro was launched in 2023 while the Roger was a lifestyle tennis shoe, the Roger Pro is a performance tennis shoe. But the real impact came later. Federer’s presence attracted Iga Świątek (the world’s top female tennis player) in 2023, then Ben Shelton, and most recently Zendaya. Each signing built on the previous one’s credibility, a cascade effect that traditional marketing spend couldn’t have bought.
Selective Branding and Community: On skipped the middleman and used direct-to-consumer and flagship stores with strong branding, at premium locations. They also have one of the most unique shoes on the market. You would recognize an On simply by the holes that line up the bottom of their sneakers, before seeing the logo or the little trademark belt that recognizes its Swiss Engineering. On also prioritized having a physical presence in the running community. Not only did they participate in sports events, but they organized track nights and events where athletes could test products and provide feedback. These gatherings now draw thousands in London and Paris and have become one of their strongest marketing engines.
On now trades at a $17.3 billion valuation, with investors willing to pay a premium of 62 times earnings because they expect significant growth. On proved that breakthrough innovation trumps incremental improvement, even in the most saturated markets. Their distinctive CloudTec soles became more recognizable than their logo, and more valuable than anyone imagined when Olivier first glued garden hose pieces to a Nike sole.