WEBVTT - Running in Recycled Shoes 0:00:15.316 --> 0:00:22.636 Pushkin. In two thousand and eight, Casper Cappetti got a 0:00:22.636 --> 0:00:25.196 call from an old friend, a former triathlete, who had 0:00:25.196 --> 0:00:27.796 made a prototype for a new kind of running shoe. 0:00:28.756 --> 0:00:32.196 He called me and said, Casper, I co invented this 0:00:32.316 --> 0:00:36.076 running technology. Can you help me bring it to market? 0:00:36.396 --> 0:00:39.436 And I said absolutely not. Are you crazy? Are you 0:00:39.516 --> 0:00:42.996 out of your mind? You will not stand a chance 0:00:43.076 --> 0:00:46.436 against the A six and Nikes of this world. Casper 0:00:46.476 --> 0:00:48.556 had a PhD in economics. He was working as a 0:00:48.596 --> 0:00:51.476 consultant at McKinsey, which is to say he knew how 0:00:51.516 --> 0:00:54.276 to evaluate his friend's business idea. I mean it was 0:00:54.276 --> 0:00:56.396 probably just the most stupid idea that I've ever heard. 0:00:56.996 --> 0:01:00.916 You know that, literally the market is littered with running 0:01:00.956 --> 0:01:04.276 shoe companies that didn't make it. Casper was impressed by 0:01:04.276 --> 0:01:06.876 the shoe that his friend had invented. It looked different 0:01:06.876 --> 0:01:09.996 than other shoes had these like padded cylinder is running 0:01:09.996 --> 0:01:12.596 across the soul, and the runners who tried it really 0:01:12.636 --> 0:01:15.476 seem to like it. But come on, a new running 0:01:15.476 --> 0:01:21.076 shoe company. Really, from first having the thought of, hey 0:01:21.196 --> 0:01:25.236 could be turned this into a company, until actually starting it. 0:01:25.236 --> 0:01:27.516 It took us more than two years and it wasn't 0:01:27.596 --> 0:01:31.836 up and down basically mustering up the courage. I'm kind 0:01:31.876 --> 0:01:34.636 of like, oh no, let's go back into our golden 0:01:34.676 --> 0:01:38.316 cage and comfort zone. And then Ah had this feeling 0:01:38.316 --> 0:01:40.596 of oh no, we should have tried it until we 0:01:40.636 --> 0:01:43.076 finally jumped. You know, you have to take the plunge 0:01:43.076 --> 0:01:45.876 at some point, and I'm glad you did. The company 0:01:45.916 --> 0:01:49.636 they started was called on o N. It went public 0:01:49.716 --> 0:01:52.716 last year and it's now worth around seven billion dollars. 0:01:57.556 --> 0:02:00.036 I'm Jacob Goldstein, and this is what's your problem. My 0:02:00.116 --> 0:02:04.196 guest today is Casper Competti, co founder of on. Casper's 0:02:04.196 --> 0:02:07.396 problem is this, how can you sell tens of millions 0:02:07.396 --> 0:02:09.876 of shoes a year and then take them all back 0:02:09.996 --> 0:02:13.956 and turn them into new shoots. We'll get to that 0:02:13.996 --> 0:02:16.236 problem later in the show, but first I wanted to 0:02:16.276 --> 0:02:19.196 talk to Casper about that first problem. How you start 0:02:19.236 --> 0:02:22.836 a running shoe company to compete against these multinational giants 0:02:22.876 --> 0:02:25.356 that seem to have the market locked up. One of 0:02:25.396 --> 0:02:28.596 Tasper and his co founder's first decisions was this, they'd 0:02:28.596 --> 0:02:32.796 compete by making their shoes more expensive than almost everything 0:02:32.796 --> 0:02:35.716 else on the market. So, look, when you're based in 0:02:35.756 --> 0:02:41.036 Switzerland and you're you're founding a company with an innovation. Basically, 0:02:41.076 --> 0:02:44.436 the only strategy that's available to you is a premium 0:02:44.476 --> 0:02:49.476 strategy like that sounds fancy Switzerland plus innovation, that sounds 0:02:49.516 --> 0:02:52.036 expensive to me. You know, we have one of you 0:02:52.076 --> 0:02:54.036 know that we have the highest tellers in the world, 0:02:54.036 --> 0:02:57.236 a very high cost space and it's innovation driven. And 0:02:57.316 --> 0:02:59.756 we looked at the marketplace and then we saw that 0:03:00.676 --> 0:03:04.236 about thirty percent of the volume and about half of 0:03:04.396 --> 0:03:08.996 the revenue is generated by runners that really care about 0:03:09.116 --> 0:03:12.716 their equipment and they're willing to spend thirty forty fifty 0:03:12.716 --> 0:03:16.076 bucks more to stay away from injury. And that's that's 0:03:16.116 --> 0:03:18.996 the mark that we went after. So you decide you're 0:03:18.996 --> 0:03:21.516 going to go after the runners, you have another choice 0:03:21.516 --> 0:03:24.276 to make. Right, this is twenty ten when you launched 0:03:24.276 --> 0:03:27.676 I believe, is that right? That's correct? Yeah, So that's 0:03:27.676 --> 0:03:32.196 a moment when lots of companies are starting to sell 0:03:32.356 --> 0:03:36.236 straight to consumers, to not go through retail stores like 0:03:36.636 --> 0:03:39.636 clothing brands traditionally have, but rather just sell on the internet, right, 0:03:39.676 --> 0:03:42.996 which does seem more efficient, But you don't do that. 0:03:43.156 --> 0:03:44.836 Not only are you are you selling your shoes more 0:03:44.876 --> 0:03:48.076 expensively you're not gonna when you launch, you don't really 0:03:48.116 --> 0:03:50.996 say okay, let's take advantage of this new directed consumer channel, 0:03:51.076 --> 0:03:54.876 right Why we of course asked that same question at 0:03:54.876 --> 0:03:58.836 that time. What we felt, and I think it was 0:03:58.916 --> 0:04:04.796 validated later on, was to really break through with runners, 0:04:04.836 --> 0:04:07.956 you need the validation of the technology. And there's two 0:04:07.956 --> 0:04:11.836 ways of validating. You can either work with athletes and 0:04:11.916 --> 0:04:15.556 win a ton of races, and or you can be 0:04:15.716 --> 0:04:19.076 with the run specialty stores. So you know, the run 0:04:19.156 --> 0:04:22.236 specialty stores are typically owned by a former college run 0:04:22.316 --> 0:04:25.516 or a professional runner that you know, works closer with 0:04:25.596 --> 0:04:29.996 the community, becomes a destination, you know, the running stores. 0:04:30.076 --> 0:04:32.116 You know, it's not like they were waiting for us. 0:04:32.276 --> 0:04:36.676 And what we did is we sent these influential store 0:04:36.716 --> 0:04:40.556 owners a pair of test shoes. Then I would call 0:04:40.596 --> 0:04:42.436 them a week or two later and say, hey, did 0:04:42.436 --> 0:04:44.516 you have a run. How do you like them? And 0:04:44.556 --> 0:04:47.556 they were like, oh, all these weird looking shoes, No, 0:04:47.676 --> 0:04:50.396 I never put them on, and please don't call me again. 0:04:51.236 --> 0:04:55.196 So we realized that I wasn't working, so we said, well, 0:04:55.196 --> 0:04:56.996 how can we get them to try to shoes? And 0:04:57.356 --> 0:04:59.956 basically we had to force them, and so I would 0:04:59.996 --> 0:05:02.716 call them and say, hey, I'm going to be in Hamburggram, 0:05:02.716 --> 0:05:05.596 I'm going to be in Boston next week, and do 0:05:05.596 --> 0:05:07.716 you have time to go for a run. And all 0:05:07.716 --> 0:05:10.196 these you know, they're all former run and they still 0:05:10.276 --> 0:05:13.196 run probably most days, and running can be lonely, so 0:05:13.236 --> 0:05:15.876 they said, hey, yeah, sure, you know why not? And 0:05:16.516 --> 0:05:19.076 you know, I actually had no plans already to be 0:05:19.156 --> 0:05:21.716 in Boston or Hamburg, but I booked a fly tacket, 0:05:22.356 --> 0:05:25.716 flew there and brought a test too, And you know, 0:05:25.756 --> 0:05:28.676 these they're all nice guys and a lot of them 0:05:28.716 --> 0:05:31.436 are now close friends, so they couldn't turn me down. 0:05:31.436 --> 0:05:33.836 And I said, hey, well do you mind slipping these 0:05:33.836 --> 0:05:37.076 on for the run. And typically after a forty minute 0:05:37.156 --> 0:05:40.876 or our workout, they would be like, hey, this was 0:05:40.916 --> 0:05:43.836 a good pace and my legs, you know, feel actually 0:05:43.876 --> 0:05:46.556 pretty fresh. Tell me about the technology. That's how the 0:05:46.596 --> 0:05:49.836 conversation started. There's a moment I've read about that's interesting 0:05:49.876 --> 0:05:53.396 to me, where where you start getting into foot locker. 0:05:53.996 --> 0:05:56.396 But then, if I understand it correctly, you sort of 0:05:56.676 --> 0:05:59.396 sell into too many foot lockers. You kind of over 0:06:00.196 --> 0:06:02.596 expand a little bit in terms of where your shoes 0:06:02.636 --> 0:06:05.436 are available. Tell me about that so at the time, 0:06:05.516 --> 0:06:09.356 Footlocker started a run specialty format called run by foot 0:06:09.396 --> 0:06:12.596 Locker and basically we and we worked with those three 0:06:12.636 --> 0:06:16.276 stores that they had, and then they were summing through 0:06:16.356 --> 0:06:18.916 like crazy, and then they asked us to put on 0:06:19.076 --> 0:06:22.556 into twenty foot Locker stores. That was a bit a 0:06:22.556 --> 0:06:26.316 bit of a risk when we it was basically it 0:06:26.356 --> 0:06:28.796 was off strategy at the time. And so we said, well, okay, 0:06:28.796 --> 0:06:32.036 we can do twenty twenty doors. And we ended up 0:06:32.076 --> 0:06:35.596 being in Times Squares and and and we had tremendous success. 0:06:35.636 --> 0:06:38.676 So we have a window displayed in Times Squares and 0:06:39.316 --> 0:06:41.956 people were emailing me, Hey, you guys made it, You're 0:06:41.996 --> 0:06:44.956 in New York and so on. And then they expanded 0:06:44.996 --> 0:06:48.196 to eighty stores and that was too much. Basically, the 0:06:48.276 --> 0:06:51.996 same twenty stores that sold on well, they continued to 0:06:52.036 --> 0:06:54.436 sell well and everybody else, you know, in the Midwest 0:06:54.476 --> 0:06:57.636 for example, nobody was waiting for this weird Swiss brand. 0:06:58.196 --> 0:07:03.116 And we walked away with um, yeah, with definitely a 0:07:03.236 --> 0:07:05.596 learning that we were still holding on to this day. 0:07:06.036 --> 0:07:09.196 And what was the lesson there? Yeah, you basically, if 0:07:09.236 --> 0:07:12.196 you want to be premium, um, you always want to 0:07:12.276 --> 0:07:15.196 keep supply below demand, you know, you always want to 0:07:15.236 --> 0:07:20.836 have scarcity because nothing builds his hire like scarcity. Huh um, 0:07:21.796 --> 0:07:26.116 So you basically want to sell like slightly fewer shoes 0:07:26.156 --> 0:07:28.476 than you could. Is that that sort of the obstable 0:07:28.516 --> 0:07:30.956 to you? You know, that's you know, that's that's the 0:07:31.036 --> 0:07:34.716 story of our lives really ever since we started on. Basically, 0:07:35.116 --> 0:07:38.756 you know, we've been growing about eighty five percent on 0:07:38.796 --> 0:07:42.956 average every year, but we're always you know, we could 0:07:43.036 --> 0:07:45.676 we could have grown much faster, and so we're we're 0:07:45.716 --> 0:07:48.356 always kind of you know, threatening the needle, and we 0:07:48.396 --> 0:07:51.196 always have to say no, and we have to you know, 0:07:51.236 --> 0:07:53.516 like even sometimes I am too late, you know, I 0:07:54.076 --> 0:07:56.476 want to get a really cool shoe that we launched 0:07:56.516 --> 0:07:59.676 and they're sold out. Well, is part of that. I 0:07:59.716 --> 0:08:05.596 mean there is a fashion element to shoes obviously, right. 0:08:05.596 --> 0:08:09.796 People don't call it fashion, they call it uh streetwear, right, 0:08:09.996 --> 0:08:13.316 or you know people talk about being sneakerheads, but it's fashion, right, 0:08:13.356 --> 0:08:17.036 and that seems like a classic fashion, especially high end 0:08:17.076 --> 0:08:20.956 fashion strategy. Yeah. Absolutely, you know, we have a lot 0:08:20.996 --> 0:08:24.876 of hate relationship with fashion. When we started on, we 0:08:24.956 --> 0:08:28.276 had I mean, you are fashioned, right, thank your fashion, 0:08:29.076 --> 0:08:31.556 Thank you. Let's talk about it specifically, right, so you 0:08:31.596 --> 0:08:35.236 get into like Bloomingdale's and Nordstrom, which is like the 0:08:35.276 --> 0:08:39.276 opposite of the little running shop. Right, it's people buying 0:08:39.436 --> 0:08:42.156 fancy clothes. And it happens to be the case that 0:08:42.236 --> 0:08:44.356 over the sort of two thousand teens. Right as you're 0:08:44.996 --> 0:08:48.276 growing as a company at leisure is this growing segment 0:08:48.316 --> 0:08:51.676 where like rich people are buying expensive workout clothes and 0:08:51.796 --> 0:08:54.276 not working out in them, right, like Lululemon being the 0:08:54.316 --> 0:08:56.716 classic version there. But it seems like that's part of 0:08:56.716 --> 0:09:00.956 what you're riding right. Absolutely. Look, in the beginning, it 0:09:01.036 --> 0:09:03.356 boughted the heck out of us when somebody wore our 0:09:03.436 --> 0:09:07.436 high tech performance products with teens in the street. At 0:09:07.476 --> 0:09:09.516 some point we almost said, all you know, if you 0:09:09.636 --> 0:09:13.396 read one of Aaron's in the street, Uh, well we 0:09:13.436 --> 0:09:17.356 can do better, and we started designing for that market. Specifically. 0:09:17.876 --> 0:09:20.596 One place where the street where piece comes in is 0:09:21.276 --> 0:09:24.876 in your work with Roger Federer. Weirdly, so maybe we 0:09:24.916 --> 0:09:27.356 could talk about that now, Like, tell me, tell me 0:09:27.396 --> 0:09:30.396 how you came to work with Federer. Certainly the most 0:09:30.396 --> 0:09:35.436 famous Swiss athlete now maybe the most famous Swiss person 0:09:35.516 --> 0:09:37.956 now I can't think of another more famous. Definitely the 0:09:37.996 --> 0:09:42.196 most famous Swiss person. Um. Look, Switzerland's a small place, 0:09:42.236 --> 0:09:46.716 so he's basically my neighbor talking aside. Um. Um, you know, 0:09:46.756 --> 0:09:50.996 when when when Roger was done with his previous partner, Um, 0:09:51.076 --> 0:09:54.716 he he had you know, basically had to wear something 0:09:54.836 --> 0:09:57.356 and in Switzerland at the time its previous partner meaning 0:09:57.516 --> 0:10:00.116 meaning it was nice. Yeah. Yeah, so he had I 0:10:00.116 --> 0:10:03.996 think he worked. He played in Nikes for over twenty 0:10:04.076 --> 0:10:07.076 years of his career, and all of a sudden pictures 0:10:07.076 --> 0:10:10.276 started popping up in you know, with Roger wearing on 0:10:10.676 --> 0:10:13.596 and so we reached out and said, look, Roger, we're 0:10:13.596 --> 0:10:15.636 happy to send you the latest greatest so we don't 0:10:15.676 --> 0:10:18.036 have to go and buy them in the store. And 0:10:18.076 --> 0:10:20.396 at some point we get a phone call from his 0:10:20.516 --> 0:10:23.676 agent and it said he said, well, Roger's just landing, 0:10:23.796 --> 0:10:26.676 coming back from a tournament. He has twenty minutes to 0:10:26.716 --> 0:10:29.156 meet you guys a year round and we said sure, 0:10:29.876 --> 0:10:33.316 and he came and we ended up talking for more 0:10:33.316 --> 0:10:37.396 than two hours. Um. And at one point we said, Roger, 0:10:37.436 --> 0:10:40.396 we really have to go back to work. Um. But 0:10:40.636 --> 0:10:44.956 what came out of that is true, that that is well, 0:10:44.956 --> 0:10:46.756 you know, we did it very politely, but we can 0:10:46.876 --> 0:10:50.436 you know. Um. Shortly after he reached back down and said, hey, 0:10:50.476 --> 0:10:54.916 let's go for dinner, and from that a conversation started, 0:10:55.796 --> 0:10:59.076 um could be getting involved. And of course the only 0:10:59.116 --> 0:11:02.116 thing that that he had experienced with and frankly most 0:11:02.156 --> 0:11:06.836 of the the athletes, was just an endorsement deal sponsorship 0:11:07.076 --> 0:11:10.556 which for which for Federer would be tens of millions 0:11:10.556 --> 0:11:13.836 of dollars, right, presumably more money than your little running 0:11:13.876 --> 0:11:15.716 company had. Right, there's no way you're going to be 0:11:15.756 --> 0:11:18.116 able to sign him to an endorsement deal. You can't apply, 0:11:18.556 --> 0:11:21.676 you know, Um, it could be a couple tens of 0:11:21.756 --> 0:11:26.236 millions of dollars per year for for a regular sponsorship 0:11:26.276 --> 0:11:30.036 deal with him. So um. So basically, you know, we 0:11:30.156 --> 0:11:33.916 came to the conclusion that we can't afford to pay him. Um. 0:11:34.116 --> 0:11:36.436 He's the much bigger brand than On was at the time, 0:11:36.916 --> 0:11:39.316 but he could pay us. And so he became an 0:11:39.316 --> 0:11:44.116 investor and we literally made the shortest ever agreement I 0:11:44.196 --> 0:11:47.596 think ever done in the history of sports, where it's 0:11:47.636 --> 0:11:51.356 basically said, look, there are no regulations on either side. 0:11:51.676 --> 0:11:55.316 He's an investor, um, and you know, if if we 0:11:55.436 --> 0:11:57.716 have fun together, we're going to make this thing big 0:11:58.236 --> 0:12:02.516 and out of that came a beautiful line of lifestyle products, 0:12:02.596 --> 0:12:05.956 as you were. And then as as his compact came nearer, 0:12:06.996 --> 0:12:10.196 against the advice of his medical and trade any trainers staff, 0:12:11.116 --> 0:12:13.516 he said, look, I want to comback. I have a 0:12:13.516 --> 0:12:15.916 new knee. I want to come back in a new shoe. 0:12:16.316 --> 0:12:18.796 And so in like record time, literally like four or 0:12:18.796 --> 0:12:22.836 five months, we developed the professional tennis shoe that he 0:12:22.916 --> 0:12:25.876 then wore in his comeback, and he put his whole 0:12:25.916 --> 0:12:29.596 experience into that into that shoe. So that shoe, if 0:12:29.636 --> 0:12:31.556 I understand correctly, like if I go back to your 0:12:31.596 --> 0:12:35.636 running shoes, those you started with the most hardcore runners 0:12:35.676 --> 0:12:38.436 people at running stores. But the federal shoe you did 0:12:38.476 --> 0:12:42.956 not go for like the hardcore tennis uh community. Right. 0:12:43.036 --> 0:12:47.356 You debuted it at a at a streetwear store in Manhattan, 0:12:47.516 --> 0:12:51.076 is that right? Yeah? So look, the you know, the 0:12:51.356 --> 0:12:56.396 white tennis sneaker is one of the beloved lifestyle silhouettes, 0:12:56.836 --> 0:12:59.756 like you know in in in many languages is actually 0:12:59.836 --> 0:13:03.156 sneakers called tennis, yeah, tennis shoes. And then when I 0:13:03.196 --> 0:13:05.956 was a kid with the tennis shoes anyway, Yeah, and 0:13:06.356 --> 0:13:08.676 I mean in a way this sort of speaks to 0:13:08.756 --> 0:13:11.556 that arc of going from just being like a hardcore 0:13:12.436 --> 0:13:16.316 runners only running shoe to being kind of a fashion shoe, right. 0:13:16.316 --> 0:13:18.236 I mean, Federa is wearing it, so obviously it's a 0:13:18.316 --> 0:13:20.876 legit tennis shoe. But also your sell people are lined 0:13:20.916 --> 0:13:23.276 up around the block in Manhattan and it's cost two 0:13:23.356 --> 0:13:25.716 hundred dollars and then it sells for twice that on 0:13:25.756 --> 0:13:30.036 the secondary market. This is like a sneakerhead fashioned shoe. Yeah. Absolutely, 0:13:31.996 --> 0:13:34.836 still to come. The next big problem for Casper and 0:13:34.996 --> 0:13:37.556 on how to take back all the shoes they sell 0:13:37.916 --> 0:13:40.676 tens of millions of pairs a year and turn them 0:13:40.716 --> 0:13:51.956 into new shoes. That's the end of the ads. Now 0:13:51.956 --> 0:13:54.396 we're going back to the show. Let's talk about your 0:13:54.436 --> 0:13:58.556 subscription shoe. You launched a subscription shoe last year. Tell 0:13:58.596 --> 0:14:02.796 me about that business. Yeah, so ninety nine percent of 0:14:02.916 --> 0:14:07.156 the Sporting Coots products are made from crude oil? Is true? 0:14:07.156 --> 0:14:12.276 If shoes also our shoes shoes ex peril anything, you know, 0:14:12.356 --> 0:14:16.596 and most basically esther stick of one kind of past. Yeah. Shoot, 0:14:16.676 --> 0:14:18.996 running shoes are plastic. All the foam, all that, this, 0:14:19.196 --> 0:14:21.996 all that that, it's it's plastic. Running shoes are plastic, 0:14:21.996 --> 0:14:26.636 and plastic is crude. Oil. It sucks, and so you know, 0:14:26.676 --> 0:14:28.836 and what's verse is, you know, you go through a 0:14:28.876 --> 0:14:31.916 pair of running shoes maybe four times a year, two 0:14:31.956 --> 0:14:34.116 times a year depends how often. It depends on how 0:14:34.196 --> 0:14:35.516 much you run, right, I feel like what is the 0:14:35.556 --> 0:14:40.036 median runner? About about twice a year? Right? About twice? Yes, exactly. 0:14:40.836 --> 0:14:44.276 So you know, then then people throw them away and 0:14:44.436 --> 0:14:46.396 in the US they will land end up in the 0:14:46.516 --> 0:14:49.836 land fillings with some there they're burnt. But it's not 0:14:49.916 --> 0:14:52.396 a it's not a sustainable business model by any means. 0:14:52.436 --> 0:14:54.996 So we said, hey, let's change that. And um, we 0:14:55.116 --> 0:14:57.316 looked into two things. First of all, we want to 0:14:57.316 --> 0:15:01.556 move away from petrol based raw materials UM. And so 0:15:01.636 --> 0:15:05.636 this particular model that you're speaking about, which we call cyclone, 0:15:06.276 --> 0:15:09.716 is made from beans castor beans that you know, we're 0:15:09.756 --> 0:15:14.036 cultivated back in the seventies when the energy oil crisis 0:15:14.196 --> 0:15:16.476 was active and you could actually make petrol from it. 0:15:17.196 --> 0:15:19.796 And the other thing was how can we make our 0:15:19.836 --> 0:15:23.516 product circlar So, how can we design a product but 0:15:23.716 --> 0:15:27.636 it's a parable footwear that you know you can use, 0:15:27.716 --> 0:15:30.876 but then you can easily take back, take apart and 0:15:30.996 --> 0:15:34.556 make a new product out And so with Cyclone. We 0:15:34.596 --> 0:15:36.676 did that, but then we realized and we were not 0:15:36.716 --> 0:15:39.556 the first company. There maybe two or the others that 0:15:39.636 --> 0:15:43.276 have designed circlear running shoes, but we're the first ones 0:15:43.316 --> 0:15:46.196 to take circularity series. In terms of that, we said, hey, 0:15:46.716 --> 0:15:49.956 we want these products back, and then you know, we 0:15:49.996 --> 0:15:53.036 came up with this idea, let's not sell this product, 0:15:53.116 --> 0:15:56.236 let's only make it available by subscription, so running as 0:15:56.276 --> 0:15:59.796 a service. Similar how you're watching movies now on Netflix 0:15:59.876 --> 0:16:02.676 and you no longer own the movie. Well, this has 0:16:02.716 --> 0:16:08.036 been a tremendous hit with consumers and we're just at 0:16:08.156 --> 0:16:12.636 the end of the first six month cycle and guess 0:16:12.676 --> 0:16:16.396 what we have received back over eighty percent off the shoes. 0:16:17.276 --> 0:16:21.236 That in terms of recycling rates is unprecedented. And that's 0:16:21.276 --> 0:16:24.676 before we even go out and threaten them with penalties 0:16:24.716 --> 0:16:28.156 and charge stack credit card. Just just people are well, 0:16:28.196 --> 0:16:30.156 certainly the people who sign up first are going to 0:16:30.236 --> 0:16:32.756 be the most likely to be good about it. Right, 0:16:32.796 --> 0:16:34.636 there are the people who are most excited by the model. 0:16:34.676 --> 0:16:38.156 So that's definitely what we hoped for. You, right, how 0:16:38.236 --> 0:16:39.956 much does it cost? And what do you get if 0:16:39.996 --> 0:16:42.676 you if I sign up for shoes as a service, 0:16:42.796 --> 0:16:47.556 So you pay a thirty dollar a month subscription fee, okay, 0:16:47.676 --> 0:16:51.636 and you get two maybe three pairs of running shoes 0:16:51.676 --> 0:16:54.276 a year, depending on how often you run. But the 0:16:54.356 --> 0:16:56.996 default is basically so thirty bucks a month is like 0:16:57.156 --> 0:17:01.076 three hundred and sixty bucks a year. Yeah, so two 0:17:01.116 --> 0:17:03.116 times one hundred eighty bucks, like you know, a high 0:17:03.196 --> 0:17:06.716 end running shoe, plus you do you do good for 0:17:06.916 --> 0:17:09.676 the planet. How often am I allowed to get new 0:17:09.716 --> 0:17:12.036 shoes if I'm paying three hundred and sixty basically as 0:17:12.036 --> 0:17:14.716 often as you as you'd like. You know, if you're 0:17:14.756 --> 0:17:16.796 if you're doing you know that the shoes will last 0:17:16.876 --> 0:17:22.676 you about five five miles typical standard running shoe, rightning, Yeah, 0:17:23.156 --> 0:17:27.356 I noticed that this subscription shoe is all white, bright white, 0:17:27.836 --> 0:17:31.556 which I thought might be sort of clever. I don't 0:17:31.556 --> 0:17:34.196 know if it's marketing at some level. It's like, oh, 0:17:34.276 --> 0:17:37.316 if your shoe gets dirty and you want really white shoes, 0:17:37.476 --> 0:17:41.076 which is like a thing now right, good news, just 0:17:41.156 --> 0:17:44.756 ask us, we'll send you a new bright white pear. Well, 0:17:45.916 --> 0:17:48.836 this this particular case, you know that that's purely for 0:17:49.036 --> 0:17:52.356 recycling reasons, you know, because if you mix colors and 0:17:52.436 --> 0:17:55.916 you have red, green and blue pears, you know, the 0:17:55.996 --> 0:17:58.796 next one will be brown. That's not that's not a 0:17:58.876 --> 0:18:01.316 very popular color. So you know, by keeping them white, 0:18:01.556 --> 0:18:03.636 not only do we save a ton of water because 0:18:03.636 --> 0:18:06.836 we don't have to die the fabrics, but it's also 0:18:06.916 --> 0:18:10.276 much easier to recycle. But you know, cyclone is interesting 0:18:10.316 --> 0:18:16.156 because it's our our laboratory for experimentation, and we learned 0:18:17.156 --> 0:18:20.436 not only to make a shoe out of your pere pieces. 0:18:20.476 --> 0:18:23.516 You know, your average running shoe maybe is made out 0:18:23.516 --> 0:18:25.796 of one hundred different pieces. Cyclone is made out of 0:18:25.836 --> 0:18:29.796 about five. I know that not all recycling is that 0:18:30.076 --> 0:18:34.276 it is actually more efficient than making things from raw materials. 0:18:34.556 --> 0:18:37.876 Kind of depends on what's being recycled and how in 0:18:37.916 --> 0:18:42.356 this instance is it more efficient it's better? Is it 0:18:42.396 --> 0:18:45.276 a smaller carbon footprint? Yeah, when you look at you know, 0:18:45.356 --> 0:18:49.156 you look at carbon or waste of water will save anywhere, 0:18:49.156 --> 0:18:52.076 you know, over the lifespan of a cyclone, so you know, 0:18:52.196 --> 0:18:55.076 this is about eight cycles that you know, the material 0:18:55.156 --> 0:18:59.516 stays in the loop, we will save about eighty percent 0:18:59.556 --> 0:19:03.556 of the waste, about the fifty percent of the carbon footprint, 0:19:05.116 --> 0:19:09.316 about seventy percent of water used. So it's it's it's 0:19:09.396 --> 0:19:12.836 very very substantial so we're talking about the subscription business, 0:19:12.916 --> 0:19:16.076 and clearly you just started it and it's sort of 0:19:16.076 --> 0:19:18.836 in the experimental phase. How much of your business do 0:19:18.876 --> 0:19:21.996 you think it's going to be in whatever timeframe you want, 0:19:22.036 --> 0:19:24.876 five years. The truth of the matter is, we don't know. 0:19:25.876 --> 0:19:31.516 This is an experiment and we're learning. I frankly don't 0:19:31.556 --> 0:19:34.396 think that subscription is going to be a huge thing 0:19:34.476 --> 0:19:38.916 in sports because consumers want choice and we've looked at 0:19:39.396 --> 0:19:42.236 rolling all these choices into a subscription model and it 0:19:42.316 --> 0:19:47.116 just makes things very, very messy and complicated. But for 0:19:47.996 --> 0:19:51.116 right now, for what it's worth, I think to actually 0:19:52.516 --> 0:19:57.036 have very high return rates in terms of recycling rates. 0:19:57.956 --> 0:19:59.996 It's a good tool and maybe it has its place. 0:20:00.876 --> 0:20:03.596 We only started this thing about six or seven months ago, 0:20:03.676 --> 0:20:06.476 so we're still learning. If you get to ten percent 0:20:06.516 --> 0:20:07.996 of our business, I think it's going to be a 0:20:07.996 --> 0:20:11.556 big number. I'm I guess a little disappointed in some 0:20:11.836 --> 0:20:14.676 at some level that that it's not going to be bigger. 0:20:14.716 --> 0:20:16.716 That you don't think it's going to be bigger. I mean, 0:20:17.036 --> 0:20:18.716 I mean a it would make a tidy end to 0:20:18.756 --> 0:20:21.236 the interview. So that's of course important to me. But 0:20:21.236 --> 0:20:23.676 but also, like you know, I like the efficiency piece, 0:20:23.836 --> 0:20:27.076 I will say I also, I have been buying basically 0:20:27.116 --> 0:20:30.476 the same pair of Nikes every six months for ten 0:20:30.556 --> 0:20:33.076 years or something, and you know, I always just buy 0:20:33.156 --> 0:20:37.356 last year's model because it's cheaper um. But you know, 0:20:37.396 --> 0:20:40.516 if they had a subscription model that was what I 0:20:40.596 --> 0:20:42.636 pay now or a little less, I would do it 0:20:42.676 --> 0:20:45.316 just because it's essentially what I'm doing already. I don't 0:20:45.356 --> 0:20:47.596 know what to do with my old shoes. Why do 0:20:47.636 --> 0:20:49.396 you think it's not going to be bigger? Why do 0:20:49.396 --> 0:20:51.476 you think it's only going to be you know, ten percent? 0:20:51.476 --> 0:20:53.916 If it's really successful, let me let me rephrase that. 0:20:54.036 --> 0:20:56.796 You know the this is I don't want you to 0:20:56.836 --> 0:21:00.116 rephrase it. I don't don't revise your estimate based on 0:21:00.196 --> 0:21:02.076 my sentiment. It just tell me why you think what 0:21:02.156 --> 0:21:05.116 you think. Look, as I said earlier, this is an 0:21:05.116 --> 0:21:09.356 experiment at scale and we're learning u And if it 0:21:09.396 --> 0:21:13.356 turns out that people really love the subscription model, I mean, 0:21:13.396 --> 0:21:16.556 that would be a really positive outcome. And we're going 0:21:16.596 --> 0:21:19.276 to have to figure out the whole circularity piece, because 0:21:19.316 --> 0:21:23.996 we have publicly committed to bringing everyon product back by 0:21:24.036 --> 0:21:27.116 the end of the decade. If it's not going to 0:21:27.156 --> 0:21:31.076 be a subscription, Like, what's it going to be? What 0:21:31.156 --> 0:21:33.116 are your other options? It's probably going to be a 0:21:33.116 --> 0:21:37.196 combination of things. So right now, for in the subscription program, 0:21:37.396 --> 0:21:42.156 we're using mail basically FedEx a ups to bring it 0:21:42.196 --> 0:21:45.676 back fast forward three or four years. You'll be able 0:21:45.716 --> 0:21:50.156 to bring back your running shoes in basically where you 0:21:50.196 --> 0:21:53.076 bought them, similarly like you'd do it with other products. 0:21:53.556 --> 0:21:57.156 Because you know, this business model that our industry works on, 0:21:58.036 --> 0:22:00.516 taking crude oil out of the earth and then throwing 0:22:00.556 --> 0:22:04.036 it away is just not sustainable, bitter, you know, neither 0:22:04.156 --> 0:22:07.876 for the planet nor economically. I mean, I feel like 0:22:07.916 --> 0:22:11.876 the economics of it clearly work now. And if you 0:22:11.956 --> 0:22:14.196 really wanted it to change, what you would want is 0:22:14.276 --> 0:22:17.556 to impose a price on throwing it away, right, Make 0:22:17.556 --> 0:22:19.636 it more expensive to throw it away, make it cheaper 0:22:19.676 --> 0:22:23.396 to return it to the company, or make that price 0:22:23.516 --> 0:22:25.756 embedded in the price of the shoe when you buy 0:22:25.796 --> 0:22:28.316 it at retail. Right, Like that's what we've done with cans, Right, 0:22:28.356 --> 0:22:31.396 there's a deposit that sort of embeds that price in 0:22:31.436 --> 0:22:35.756 the retail price and makes it worth collecting and returning. Right, 0:22:36.076 --> 0:22:40.316 do you see any sort of top down price changes 0:22:40.396 --> 0:22:43.916 like that is that something absolutely seems more Euish than 0:22:44.236 --> 0:22:51.836 American Ish. Just just wait, look, plastics is in you smoking? Um, 0:22:51.876 --> 0:22:54.556 you know the you know and you're in the plastics business. 0:22:54.636 --> 0:22:57.636 This is absolutely or Jr. Saying that, Hey, yeah, it's 0:22:57.716 --> 0:23:02.116 well we stay the heads at that back in the day, 0:23:02.116 --> 0:23:05.236