CEO, Brooks Running Company
I came into Brooks with the conviction that to build something you have to look beyond the investor cycle.
Jim Weber, the CEO of Brooks Running Company, has decided to dress like Captain Kirk. Today is Friday, which means it’s group run day at Brooks’ headquarters, and the customer service department is hosting. They chose a theme—science fiction—and invited everyone. Weber pulls his yellow Star Trek shirt over his head, dons his black pants, and picks up his phaser before joining the group: fellow Star Trek characters, Darth Vader, and a handful of Martians milling about, ready to run.
Weber, who has run for more than 30 years, usually runs alone. He runs to move his legs and to let his mind wander. But today is a different day, and Weber is always game for something fun. The crowd of Trekkies and Martians heads out the door onto a busy street and down two blocks to the Burke-Gilman Trail, a 30-mile ribbon of pavement that threads through greater Seattle. Then, they disperse in opposite directions on the running path for a half hour of company-encouraged fun and exercise.
Some of the faster employees run around the top of Lake Union and into the Fremont neighborhood, past the site where workers are busy constructing Brooks' future home—a big, new ultra-green office building. This is the part in the story when Weber will tell you how he wasn’t ever supposed to build a building.
“I started out as a banker, and the chief credit officer, this old curmudgeon, was teaching credit school to these young bankers and he said the one thing you have to watch out for is if your client ever builds a building,” says Weber. “Call the loan and run because they’ll invariably lose focus on their business. So I’ve never built a building, but our developer came to us and found this unique spot right on the Burke-Gilman Trail, looking across Lake Union at downtown Seattle.”
It is not just his willingness to wear a Star Trek costume or construct a building against conventional wisdom; Jim Weber does a lot of things other CEOs would not. But it might be precisely this willingness to take risks and follow his own internal compass that’s the key to his formidable success. For the last 12 years, Weber has steered the ship at Brooks Running Company, a Seattle-based company that makes performance running shoes as well as apparel and accessories. Since he took over in 2001, when Brooks was nearly bankrupt, the company has grown every year, with compound growth of 18 percent between 2000 and 2012. In 2013, sales are projected to near half a billion dollars.
Now, Brooks is the leading brand in the specialty run footwear market with 29 percent market share. It is an astounding accomplishment, and, just over the last couple of years, magazine features and television hosts have lauded the company for the seemingly overnight turnaround. A closer look, however, reveals that Brooks’ success is not a fluke or an overnight sensation. It’s the product of a long, steady march steered by a leader who thinks in the long term and who is not even close to done.
Jim Weber grew up in St. Paul, Minn., and, in his uniform of dark jeans, polo shirt, and colorful Brooks sneakers, exudes an unpretentious Midwest charm. Built like a hockey player, he is stocky and strong-jawed, with a crop of blonde hair, wire-rim spectacles, and an easy smile. He is a solid guy, the type of person you want on your team. He’s strong and competitive, and there’s nothing he loves more than to play the game.
When Weber stepped to the helm at Brooks in 2001, its forecast wasn’t favorable. Brooks sold a wide range of inexpensive athletic family footwear—“barbecue shoes,” Weber calls them. Competing against giants like Asics, Nike, and Adidas, Brooks was dead last in every product category. They were nearly bankrupt and had churned through three CEOs in the previous two years. When Weber stepped in, the employees started a pool to see who could predict how quickly the ailing company would scare him off, too. But Weber didn’t leave. Instead, he quietly went to work implementing an outrageous idea: Shrink the business.
“My friends thought I was crazy and even one of our biggest customers at that time said, ‘You know, this isn’t going to work, Jim. We like Brooks but what you’re doing isn’t going to work because the category is just too small,’” says Weber. “But I knew it would. This was an effort to stand for something.”
Brooks discontinued half of its products, slashed sales almost in half, pulled shoes from the discount stores, and jettisoned their biggest customer at the time, Big 5 Sporting Goods. Weber’s plan was to stop being mediocre at a lot of things and instead become very, very good at one thing: making premium running shoes. Weber didn’t want to build a brand on aspirational athletic achievement with splashy ads featuring elite athletes breaking the tape or kissing trophies, just like his competitors. He saw that most runners—maybe 98 percent—are more like him. They aren’t out there to win the Boston Marathon. They’re out there for a thousand other reasons: to stay strong, get fast, lose weight, have fun, clear the mind, raise money for charity. Brooks would build a brand on superior technology. They would make running shoes for runners.
Making a passable athletic shoe isn’t terribly difficult, but making a great running shoe is a complicated science. For the first few years of Weber’s tenure, Brooks didn’t put a lot of effort into marketing and instead funneled energy into product development. He hired in-house engineers and built a lab space so insights could be shared in real time across departments. Then Brooks worked with specialty retailers so they could fit runners with the best possible shoes for their gaits. Soon, the quality of the shoes started to speak for itself, and Brooks’ sneakers began showing up on feet all over, from bike paths to the country’s most prestigious marathons. By 2008, sales rose to $189 million.
“It’s an amazing story of how he’s brought the company up from the ashes to be the leading running shoe brand in specialty retail,” says Kusum Ailawadi, the Charles Jordan 1911 TU’12 Professor of Marketing at Tuck, whose Managing the Marketing Channel course Weber has frequently visited. “He made this huge decision to cut down the product line and get the brand out of the discount stores. It was very much a decision about what the brand stands for and what channel it should be sold in.”
One thing Weber knows is that nothing great is built in only a few years. In seventh grade, in St. Paul, Weber wrote a paper about careers. Even back then, he knew exactly what he wanted to be: an NHL hockey player. He also knew that the likelihood of that was slim, and his second choice was to run a business. He loved the idea of building something great. In that paper, he wrote about the structures of companies, what each role does, and how someone gets to be president. He discovered that you need to get an MBA, so, at age 12, he planned to get one.
After graduating from the University of Minnesota, Weber worked as a banking officer at Norwest Bank Minneapolis and as an associate at Norwest Venture Capital. By the time he did go to business school, enrolling in Tuck in 1984, he knew he wanted it to be an inflection point in his career. “I loved Tuck,” he says. “If I could get paid to go to class every day at Tuck, I might still be there. It was so energized, and the people and classmates and learning environment were amazing.”
In the mid-‘80s, Tuck was one of the few business schools that emphasized group work, which, Weber said, was a challenge and a remarkable education in executing complicated ideas as a team. Tuck—specifically Professor John Shank’s class—was also where he learned to have a point of view.
“When I tell this Brooks story, often people say, ‘Wow, that was so risky what you guys did. You got rid of all this stuff and did one thing.’ No one else had ever done that,” says Weber. “I continue to have a lot of conviction that in business, oftentimes the riskiest thing you can do is look like your competitors. That came right out of John Shank’s class: I can still hear him: ‘You’re standing in the middle of the river and the water is up to your neck!’ ‘The only things in the middle of the road are dead skunks and yellow lines!’. You have to have a point of view—as a person, as a leader, as an employee, but certainly as a brand.”
Weber had always been interested in leadership. He was president of his high school class and his fraternity in college, and at Tuck he started to learn more deeply about leadership in business. But it was arguably between years at business school, when he started to discover and devour the letters of Warren Buffett, that he began to understand not only how to be a leader but what kind of leader he wanted to be. From Buffett, he learned that anyone can cut prices and sell a cheap product, but the challenge is building a business to last—a business that has not only great brand strength and loyal customers but high returns on capital as well.
Later, Weber worked at the Pillsbury Company, and one of his assignments was working as the assistant to the CEO, Bill Spoor, during a major restructuring effort. This time, he learned something different but also valuable: what he didn’t want to be. With more than 30 businesses, Pillsbury had delivered consistent quarters of earnings growth, but they had underinvested in their brands and eventually started to lose market share. In some cases, they had taken quality out of the products, and customers had noticed.
“Everybody loves double-digit sales growth every quarter,” says Weber, “but if you deliver it by cutting investment and not building a brand, shame on you. It hit me to the core. So I came into Brooks with the conviction that to build something you have to look beyond the investor cycle.”
In 2009, after the great recession hit, Brooks’ sales flattened. “It wasn’t fun,” says Weber, but it was motivating. Running is typically a recession-resistant activity, and the steady increase in participation in running hadn’t abated because of the markets. Weber saw a giant opportunity to spring ahead. He didn’t just want Brooks to be a good company, he wanted Brooks to lead the performance run category.
Brooks had built a reputation on shoes that fit and worked well even if, self-admittedly, they didn’t always look great. In 2009, they decided to continue their lab research while incorporating more direct runner insight and ramping up investment. Brooks poured resources into research and development; expanded the team, which today numbers over 500; and partnered with the Rock ‘n’ Roll Marathon Series, which now garners half a million entries every year.
At the same time, participation in running, the biggest sector of the sporting goods market, mushroomed from 31.4 million runners in 2000 to more than 51 million in 2012. And magazines like Sports Illustrated have recently heralded the second great running boom—a boom defined by its inclusiveness, made from “completers” rather than “competers.” These are exactly the runners Brooks has sold shoes to all along, and the company’s results have been staggering: Between 2009 and 2012, sales jumped from a flat $191 million to $409 million.
In 2012, Warren Buffett himself recognized the potential in Brooks, which was then a subsidiary of Fruit of the Loom, owned by Berkshire Hathaway, and he personally established Brooks as a standalone company. Now, Weber reports directly to Buffett, one of the business leaders he admires most. He has never felt more trust from someone he’s working for, and he has also never felt more responsibility.
Next year Brooks turns 100 years old, and it has never been healthier or fitter. Weber and his employees are excited about the future. This summer, Brooks released a raft of research supporting a radical idea in the running industry: Every runner has a unique habitual joint motion, and instead of trying to correct their form, shoes should help runners move in their natural stride. Brooks expects the research to do everything from help inform product development across the industry to change the way stores sell shoes to runners. It has also helped cement Brooks’ reputation as a leader in research. As a compliment to Stride Signature, in August the company announced its newest product, the Transcend, a highly technical shoe with special materials that adapt to runners’ individual gaits. It will hit shelves in February but has already made a strong impression with retailers across the globe.
Next summer, Brooks will move into its splashy new home, a 120,000-square-foot space that they believe will serve as an energy-giving trailhead location on the Burke-Gilman Trail. Constructed with the latest ideas in green building, the design will reduce water and energy use by more than 75 percent in comparison to other buildings, and energy monitoring will encourage employees to reduce consumption. Sustainability isn’t just lip service, says Weber. Running is an outdoor sport and runners expect Brooks to care about the planet. The building is designed to be a visible brand statement and will include Brooks’ first concept retail store.
Now, the challenge is how to grow quickly—this year, the company will hire 130 new employees—without losing integrity. For Weber, it all comes down to values. Which is why, on a hot Saturday afternoon in August, he takes the time to sit in the temporary Brooks’ headquarters, near the pingpong tables and foosball games, to talk about why cultural values are more important than strategy. But Weber probably doesn’t have to explain values to anyone who knows him because he embodies them himself.
“Jim personally represents that culture,” says Charlotte Guyman, a director at Berkshire Hathaway and a member of Brooks’ board of advisors. “He really loves to win—the guy’s a very high achiever—but he doesn’t have the ego that handcuffs a lot of people who want to win. He has created a team culture that’s an amazing balance between competitiveness and joyousness.” No one strikes that balance better than Weber. “I often tell people I have the best job in Seattle, I have the best job of anyone in the Tuck class of ’86, I have the best job in this industry,” says Weber. “I’m just having a blast.” It’s a statement that might be hard to take seriously coming from any other CEO, but Jim Weber is not every other CEO.
Watching his eyes blaze like the seventh grader who always wanted to run a business, it’s impossible not to believe him.
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