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Running in Recycled Shoes · What's Your Problem?

0:15
Speaker 1: Pushkin. In two thousand and eight, Casper Cappetti got a
0:22
Speaker 1: call from an old friend, a former triathlete, who had
0:25
Speaker 1: made a prototype for a new kind of running shoe.
0:28
Speaker 1: He called me and said, Casper, I co invented this
0:32
Speaker 1: running technology. Can you help me bring it to market?
0:36
Speaker 1: And I said absolutely not. Are you crazy? Are you
0:39
Speaker 1: out of your mind? You will not stand a chance
0:43
Speaker 1: against the A six and Nikes of this world. Casper
0:46
Speaker 1: had a PhD in economics. He was working as a
0:48
Speaker 1: consultant at McKinsey, which is to say he knew how
0:51
Speaker 1: to evaluate his friend's business idea. I mean it was
0:54
Speaker 1: probably just the most stupid idea that I've ever heard.
0:56
Speaker 1: You know that, literally the market is littered with running
1:00
Speaker 1: shoe companies that didn't make it. Casper was impressed by
1:04
Speaker 1: the shoe that his friend had invented. It looked different
1:06
Speaker 1: than other shoes had these like padded cylinder is running
1:09
Speaker 1: across the soul, and the runners who tried it really
1:12
Speaker 1: seem to like it. But come on, a new running
1:15
Speaker 1: shoe company. Really, from first having the thought of, hey
1:21
Speaker 1: could be turned this into a company, until actually starting it.
1:25
Speaker 1: It took us more than two years and it wasn't
1:27
Speaker 1: up and down basically mustering up the courage. I'm kind
1:31
Speaker 1: of like, oh no, let's go back into our golden
1:34
Speaker 1: cage and comfort zone. And then Ah had this feeling
1:38
Speaker 1: of oh no, we should have tried it until we
1:40
Speaker 1: finally jumped. You know, you have to take the plunge
1:43
Speaker 1: at some point, and I'm glad you did. The company
1:45
Speaker 1: they started was called on o N. It went public
1:49
Speaker 1: last year and it's now worth around seven billion dollars.
1:57
Speaker 1: I'm Jacob Goldstein, and this is what's your problem. My
2:00
Speaker 1: guest today is Casper Competti, co founder of on. Casper's
2:04
Speaker 1: problem is this, how can you sell tens of millions
2:07
Speaker 1: of shoes a year and then take them all back
2:09
Speaker 1: and turn them into new shoots. We'll get to that
2:13
Speaker 1: problem later in the show, but first I wanted to
2:16
Speaker 1: talk to Casper about that first problem. How you start
2:19
Speaker 1: a running shoe company to compete against these multinational giants
2:22
Speaker 1: that seem to have the market locked up. One of
2:25
Speaker 1: Tasper and his co founder's first decisions was this, they'd
2:28
Speaker 1: compete by making their shoes more expensive than almost everything
2:32
Speaker 1: else on the market. So, look, when you're based in
2:35
Speaker 1: Switzerland and you're you're founding a company with an innovation. Basically,
2:41
Speaker 1: the only strategy that's available to you is a premium
2:44
Speaker 1: strategy like that sounds fancy Switzerland plus innovation, that sounds
2:49
Speaker 1: expensive to me. You know, we have one of you
2:52
Speaker 1: know that we have the highest tellers in the world,
2:54
Speaker 1: a very high cost space and it's innovation driven. And
2:57
Speaker 1: we looked at the marketplace and then we saw that
3:00
Speaker 1: about thirty percent of the volume and about half of
3:04
Speaker 1: the revenue is generated by runners that really care about
3:09
Speaker 1: their equipment and they're willing to spend thirty forty fifty
3:12
Speaker 1: bucks more to stay away from injury. And that's that's
3:16
Speaker 1: the mark that we went after. So you decide you're
3:18
Speaker 1: going to go after the runners, you have another choice
3:21
Speaker 1: to make. Right, this is twenty ten when you launched
3:24
Speaker 1: I believe, is that right? That's correct? Yeah, So that's
3:27
Speaker 1: a moment when lots of companies are starting to sell
3:32
Speaker 1: straight to consumers, to not go through retail stores like
3:36
Speaker 1: clothing brands traditionally have, but rather just sell on the internet, right,
3:39
Speaker 1: which does seem more efficient, But you don't do that.
3:43
Speaker 1: Not only are you are you selling your shoes more
3:44
Speaker 1: expensively you're not gonna when you launch, you don't really
3:48
Speaker 1: say okay, let's take advantage of this new directed consumer channel,
3:51
Speaker 1: right Why we of course asked that same question at
3:54
Speaker 1: that time. What we felt, and I think it was
3:58
Speaker 1: validated later on, was to really break through with runners,
4:04
Speaker 1: you need the validation of the technology. And there's two
4:07
Speaker 1: ways of validating. You can either work with athletes and
4:11
Speaker 1: win a ton of races, and or you can be
4:15
Speaker 1: with the run specialty stores. So you know, the run
4:19
Speaker 1: specialty stores are typically owned by a former college run
4:22
Speaker 1: or a professional runner that you know, works closer with
4:25
Speaker 1: the community, becomes a destination, you know, the running stores.
4:30
Speaker 1: You know, it's not like they were waiting for us.
4:32
Speaker 1: And what we did is we sent these influential store
4:36
Speaker 1: owners a pair of test shoes. Then I would call
4:40
Speaker 1: them a week or two later and say, hey, did
4:42
Speaker 1: you have a run. How do you like them? And
4:44
Speaker 1: they were like, oh, all these weird looking shoes, No,
4:47
Speaker 1: I never put them on, and please don't call me again.
4:51
Speaker 1: So we realized that I wasn't working, so we said, well,
4:55
Speaker 1: how can we get them to try to shoes? And
4:57
Speaker 1: basically we had to force them, and so I would
4:59
Speaker 1: call them and say, hey, I'm going to be in Hamburggram,
5:02
Speaker 1: I'm going to be in Boston next week, and do
5:05
Speaker 1: you have time to go for a run. And all
5:07
Speaker 1: these you know, they're all former run and they still
5:10
Speaker 1: run probably most days, and running can be lonely, so
5:13
Speaker 1: they said, hey, yeah, sure, you know why not? And
5:16
Speaker 1: you know, I actually had no plans already to be
5:19
Speaker 1: in Boston or Hamburg, but I booked a fly tacket,
5:22
Speaker 1: flew there and brought a test too, And you know,
5:25
Speaker 1: these they're all nice guys and a lot of them
5:28
Speaker 1: are now close friends, so they couldn't turn me down.
5:31
Speaker 1: And I said, hey, well do you mind slipping these
5:33
Speaker 1: on for the run. And typically after a forty minute
5:37
Speaker 1: or our workout, they would be like, hey, this was
5:40
Speaker 1: a good pace and my legs, you know, feel actually
5:43
Speaker 1: pretty fresh. Tell me about the technology. That's how the
5:46
Speaker 1: conversation started. There's a moment I've read about that's interesting
5:49
Speaker 1: to me, where where you start getting into foot locker.
5:53
Speaker 1: But then, if I understand it correctly, you sort of
5:56
Speaker 1: sell into too many foot lockers. You kind of over
6:00
Speaker 1: expand a little bit in terms of where your shoes
6:02
Speaker 1: are available. Tell me about that so at the time,
6:05
Speaker 1: Footlocker started a run specialty format called run by foot
6:09
Speaker 1: Locker and basically we and we worked with those three
6:12
Speaker 1: stores that they had, and then they were summing through
6:16
Speaker 1: like crazy, and then they asked us to put on
6:19
Speaker 1: into twenty foot Locker stores. That was a bit a
6:22
Speaker 1: bit of a risk when we it was basically it
6:26
Speaker 1: was off strategy at the time. And so we said, well, okay,
6:28
Speaker 1: we can do twenty twenty doors. And we ended up
6:32
Speaker 1: being in Times Squares and and and we had tremendous success.
6:35
Speaker 1: So we have a window displayed in Times Squares and
6:39
Speaker 1: people were emailing me, Hey, you guys made it, You're
6:41
Speaker 1: in New York and so on. And then they expanded
6:44
Speaker 1: to eighty stores and that was too much. Basically, the
6:48
Speaker 1: same twenty stores that sold on well, they continued to
6:52
Speaker 1: sell well and everybody else, you know, in the Midwest
6:54
Speaker 1: for example, nobody was waiting for this weird Swiss brand.
6:58
Speaker 1: And we walked away with um, yeah, with definitely a
7:03
Speaker 1: learning that we were still holding on to this day.
7:06
Speaker 1: And what was the lesson there? Yeah, you basically, if
7:09
Speaker 1: you want to be premium, um, you always want to
7:12
Speaker 1: keep supply below demand, you know, you always want to
7:15
Speaker 1: have scarcity because nothing builds his hire like scarcity. Huh um,
7:21
Speaker 1: So you basically want to sell like slightly fewer shoes
7:26
Speaker 1: than you could. Is that that sort of the obstable
7:28
Speaker 1: to you? You know, that's you know, that's that's the
7:31
Speaker 1: story of our lives really ever since we started on. Basically,
7:35
Speaker 1: you know, we've been growing about eighty five percent on
7:38
Speaker 1: average every year, but we're always you know, we could
7:43
Speaker 1: we could have grown much faster, and so we're we're
7:45
Speaker 1: always kind of you know, threatening the needle, and we
7:48
Speaker 1: always have to say no, and we have to you know,
7:51
Speaker 1: like even sometimes I am too late, you know, I
7:54
Speaker 1: want to get a really cool shoe that we launched
7:56
Speaker 1: and they're sold out. Well, is part of that. I
7:59
Speaker 1: mean there is a fashion element to shoes obviously, right.
8:05
Speaker 1: People don't call it fashion, they call it uh streetwear, right,
8:09
Speaker 1: or you know people talk about being sneakerheads, but it's fashion, right,
8:13
Speaker 1: and that seems like a classic fashion, especially high end
8:17
Speaker 1: fashion strategy. Yeah. Absolutely, you know, we have a lot
8:20
Speaker 1: of hate relationship with fashion. When we started on, we
8:24
Speaker 1: had I mean, you are fashioned, right, thank your fashion,
8:29
Speaker 1: Thank you. Let's talk about it specifically, right, so you
8:31
Speaker 1: get into like Bloomingdale's and Nordstrom, which is like the
8:35
Speaker 1: opposite of the little running shop. Right, it's people buying
8:39
Speaker 1: fancy clothes. And it happens to be the case that
8:42
Speaker 1: over the sort of two thousand teens. Right as you're
8:44
Speaker 1: growing as a company at leisure is this growing segment
8:48
Speaker 1: where like rich people are buying expensive workout clothes and
8:51
Speaker 1: not working out in them, right, like Lululemon being the
8:54
Speaker 1: classic version there. But it seems like that's part of
8:56
Speaker 1: what you're riding right. Absolutely. Look, in the beginning, it
9:01
Speaker 1: boughted the heck out of us when somebody wore our
9:03
Speaker 1: high tech performance products with teens in the street. At
9:07
Speaker 1: some point we almost said, all you know, if you
9:09
Speaker 1: read one of Aaron's in the street, Uh, well we
9:13
Speaker 1: can do better, and we started designing for that market. Specifically.
9:17
Speaker 1: One place where the street where piece comes in is
9:21
Speaker 1: in your work with Roger Federer. Weirdly, so maybe we
9:24
Speaker 1: could talk about that now, Like, tell me, tell me
9:27
Speaker 1: how you came to work with Federer. Certainly the most
9:30
Speaker 1: famous Swiss athlete now maybe the most famous Swiss person
9:35
Speaker 1: now I can't think of another more famous. Definitely the
9:37
Speaker 1: most famous Swiss person. Um. Look, Switzerland's a small place,
9:42
Speaker 1: so he's basically my neighbor talking aside. Um. Um, you know,
9:46
Speaker 1: when when when Roger was done with his previous partner, Um,
9:51
Speaker 1: he he had you know, basically had to wear something
9:54
Speaker 1: and in Switzerland at the time its previous partner meaning
9:57
Speaker 1: meaning it was nice. Yeah. Yeah, so he had I
10:00
Speaker 1: think he worked. He played in Nikes for over twenty
10:04
Speaker 1: years of his career, and all of a sudden pictures
10:07
Speaker 1: started popping up in you know, with Roger wearing on
10:10
Speaker 1: and so we reached out and said, look, Roger, we're
10:13
Speaker 1: happy to send you the latest greatest so we don't
10:15
Speaker 1: have to go and buy them in the store. And
10:18
Speaker 1: at some point we get a phone call from his
10:20
Speaker 1: agent and it said he said, well, Roger's just landing,
10:23
Speaker 1: coming back from a tournament. He has twenty minutes to
10:26
Speaker 1: meet you guys a year round and we said sure,
10:29
Speaker 1: and he came and we ended up talking for more
10:33
Speaker 1: than two hours. Um. And at one point we said, Roger,
10:37
Speaker 1: we really have to go back to work. Um. But
10:40
Speaker 1: what came out of that is true, that that is well,
10:44
Speaker 1: you know, we did it very politely, but we can
10:46
Speaker 1: you know. Um. Shortly after he reached back down and said, hey,
10:50
Speaker 1: let's go for dinner, and from that a conversation started,
10:55
Speaker 1: um could be getting involved. And of course the only
10:59
Speaker 1: thing that that he had experienced with and frankly most
11:02
Speaker 1: of the the athletes, was just an endorsement deal sponsorship
11:07
Speaker 1: which for which for Federer would be tens of millions
11:10
Speaker 1: of dollars, right, presumably more money than your little running
11:13
Speaker 1: company had. Right, there's no way you're going to be
11:15
Speaker 1: able to sign him to an endorsement deal. You can't apply,
11:18
Speaker 1: you know, Um, it could be a couple tens of
11:21
Speaker 1: millions of dollars per year for for a regular sponsorship
11:26
Speaker 1: deal with him. So um. So basically, you know, we
11:30
Speaker 1: came to the conclusion that we can't afford to pay him. Um.
11:34
Speaker 1: He's the much bigger brand than On was at the time,
11:36
Speaker 1: but he could pay us. And so he became an
11:39
Speaker 1: investor and we literally made the shortest ever agreement I
11:44
Speaker 1: think ever done in the history of sports, where it's
11:47
Speaker 1: basically said, look, there are no regulations on either side.
11:51
Speaker 1: He's an investor, um, and you know, if if we
11:55
Speaker 1: have fun together, we're going to make this thing big
11:58
Speaker 1: and out of that came a beautiful line of lifestyle products,
12:02
Speaker 1: as you were. And then as as his compact came nearer,
12:06
Speaker 1: against the advice of his medical and trade any trainers staff,
12:11
Speaker 1: he said, look, I want to comback. I have a
12:13
Speaker 1: new knee. I want to come back in a new shoe.
12:16
Speaker 1: And so in like record time, literally like four or
12:18
Speaker 1: five months, we developed the professional tennis shoe that he
12:22
Speaker 1: then wore in his comeback, and he put his whole
12:25
Speaker 1: experience into that into that shoe. So that shoe, if
12:29
Speaker 1: I understand correctly, like if I go back to your
12:31
Speaker 1: running shoes, those you started with the most hardcore runners
12:35
Speaker 1: people at running stores. But the federal shoe you did
12:38
Speaker 1: not go for like the hardcore tennis uh community. Right.
12:43
Speaker 1: You debuted it at a at a streetwear store in Manhattan,
12:47
Speaker 1: is that right? Yeah? So look, the you know, the
12:51
Speaker 1: white tennis sneaker is one of the beloved lifestyle silhouettes,
12:56
Speaker 1: like you know in in in many languages is actually
12:59
Speaker 1: sneakers called tennis, yeah, tennis shoes. And then when I
13:03
Speaker 1: was a kid with the tennis shoes anyway, Yeah, and
13:06
Speaker 1: I mean in a way this sort of speaks to
13:08
Speaker 1: that arc of going from just being like a hardcore
13:12
Speaker 1: runners only running shoe to being kind of a fashion shoe, right.
13:16
Speaker 1: I mean, Federa is wearing it, so obviously it's a
13:18
Speaker 1: legit tennis shoe. But also your sell people are lined
13:20
Speaker 1: up around the block in Manhattan and it's cost two
13:23
Speaker 1: hundred dollars and then it sells for twice that on
13:25
Speaker 1: the secondary market. This is like a sneakerhead fashioned shoe. Yeah. Absolutely,
13:31
Speaker 1: still to come. The next big problem for Casper and
13:34
Speaker 1: on how to take back all the shoes they sell
13:37
Speaker 1: tens of millions of pairs a year and turn them
13:40
Speaker 1: into new shoes. That's the end of the ads. Now
13:51
Speaker 1: we're going back to the show. Let's talk about your
13:54
Speaker 1: subscription shoe. You launched a subscription shoe last year. Tell
13:58
Speaker 1: me about that business. Yeah, so ninety nine percent of
14:02
Speaker 1: the Sporting Coots products are made from crude oil? Is true?
14:07
Speaker 1: If shoes also our shoes shoes ex peril anything, you know,
14:12
Speaker 1: and most basically esther stick of one kind of past. Yeah. Shoot,
14:16
Speaker 1: running shoes are plastic. All the foam, all that, this,
14:19
Speaker 1: all that that, it's it's plastic. Running shoes are plastic,
14:21
Speaker 1: and plastic is crude. Oil. It sucks, and so you know,
14:26
Speaker 1: and what's verse is, you know, you go through a
14:28
Speaker 1: pair of running shoes maybe four times a year, two
14:31
Speaker 1: times a year depends how often. It depends on how
14:34
Speaker 1: much you run, right, I feel like what is the
14:35
Speaker 1: median runner? About about twice a year? Right? About twice? Yes, exactly.
14:40
Speaker 1: So you know, then then people throw them away and
14:44
Speaker 1: in the US they will land end up in the
14:46
Speaker 1: land fillings with some there they're burnt. But it's not
14:49
Speaker 1: a it's not a sustainable business model by any means.
14:52
Speaker 1: So we said, hey, let's change that. And um, we
14:55
Speaker 1: looked into two things. First of all, we want to
14:57
Speaker 1: move away from petrol based raw materials UM. And so
15:01
Speaker 1: this particular model that you're speaking about, which we call cyclone,
15:06
Speaker 1: is made from beans castor beans that you know, we're
15:09
Speaker 1: cultivated back in the seventies when the energy oil crisis
15:14
Speaker 1: was active and you could actually make petrol from it.
15:17
Speaker 1: And the other thing was how can we make our
15:19
Speaker 1: product circlar So, how can we design a product but
15:23
Speaker 1: it's a parable footwear that you know you can use,
15:27
Speaker 1: but then you can easily take back, take apart and
15:30
Speaker 1: make a new product out And so with Cyclone. We
15:34
Speaker 1: did that, but then we realized and we were not
15:36
Speaker 1: the first company. There maybe two or the others that
15:39
Speaker 1: have designed circlear running shoes, but we're the first ones
15:43
Speaker 1: to take circularity series. In terms of that, we said, hey,
15:46
Speaker 1: we want these products back, and then you know, we
15:49
Speaker 1: came up with this idea, let's not sell this product,
15:53
Speaker 1: let's only make it available by subscription, so running as
15:56
Speaker 1: a service. Similar how you're watching movies now on Netflix
15:59
Speaker 1: and you no longer own the movie. Well, this has
16:02
Speaker 1: been a tremendous hit with consumers and we're just at
16:08
Speaker 1: the end of the first six month cycle and guess
16:12
Speaker 1: what we have received back over eighty percent off the shoes.
16:17
Speaker 1: That in terms of recycling rates is unprecedented. And that's
16:21
Speaker 1: before we even go out and threaten them with penalties
16:24
Speaker 1: and charge stack credit card. Just just people are well,
16:28
Speaker 1: certainly the people who sign up first are going to
16:30
Speaker 1: be the most likely to be good about it. Right,
16:32
Speaker 1: there are the people who are most excited by the model.
16:34
Speaker 1: So that's definitely what we hoped for. You, right, how
16:38
Speaker 1: much does it cost? And what do you get if
16:39
Speaker 1: you if I sign up for shoes as a service,
16:42
Speaker 1: So you pay a thirty dollar a month subscription fee, okay,
16:47
Speaker 1: and you get two maybe three pairs of running shoes
16:51
Speaker 1: a year, depending on how often you run. But the
16:54
Speaker 1: default is basically so thirty bucks a month is like
16:57
Speaker 1: three hundred and sixty bucks a year. Yeah, so two
17:01
Speaker 1: times one hundred eighty bucks, like you know, a high
17:03
Speaker 1: end running shoe, plus you do you do good for
17:06
Speaker 1: the planet. How often am I allowed to get new
17:09
Speaker 1: shoes if I'm paying three hundred and sixty basically as
17:12
Speaker 1: often as you as you'd like. You know, if you're
17:14
Speaker 1: if you're doing you know that the shoes will last
17:16
Speaker 1: you about five five miles typical standard running shoe, rightning, Yeah,
17:23
Speaker 1: I noticed that this subscription shoe is all white, bright white,
17:27
Speaker 1: which I thought might be sort of clever. I don't
17:31
Speaker 1: know if it's marketing at some level. It's like, oh,
17:34
Speaker 1: if your shoe gets dirty and you want really white shoes,
17:37
Speaker 1: which is like a thing now right, good news, just
17:41
Speaker 1: ask us, we'll send you a new bright white pear. Well,
17:45
Speaker 1: this this particular case, you know that that's purely for
17:49
Speaker 1: recycling reasons, you know, because if you mix colors and
17:52
Speaker 1: you have red, green and blue pears, you know, the
17:55
Speaker 1: next one will be brown. That's not that's not a
17:58
Speaker 1: very popular color. So you know, by keeping them white,
18:01
Speaker 1: not only do we save a ton of water because
18:03
Speaker 1: we don't have to die the fabrics, but it's also
18:06
Speaker 1: much easier to recycle. But you know, cyclone is interesting
18:10
Speaker 1: because it's our our laboratory for experimentation, and we learned
18:17
Speaker 1: not only to make a shoe out of your pere pieces.
18:20
Speaker 1: You know, your average running shoe maybe is made out
18:23
Speaker 1: of one hundred different pieces. Cyclone is made out of
18:25
Speaker 1: about five. I know that not all recycling is that
18:30
Speaker 1: it is actually more efficient than making things from raw materials.
18:34
Speaker 1: Kind of depends on what's being recycled and how in
18:37
Speaker 1: this instance is it more efficient it's better? Is it
18:42
Speaker 1: a smaller carbon footprint? Yeah, when you look at you know,
18:45
Speaker 1: you look at carbon or waste of water will save anywhere,
18:49
Speaker 1: you know, over the lifespan of a cyclone, so you know,
18:52
Speaker 1: this is about eight cycles that you know, the material
18:55
Speaker 1: stays in the loop, we will save about eighty percent
18:59
Speaker 1: of the waste, about the fifty percent of the carbon footprint,
19:05
Speaker 1: about seventy percent of water used. So it's it's it's
19:09
Speaker 1: very very substantial so we're talking about the subscription business,
19:12
Speaker 1: and clearly you just started it and it's sort of
19:16
Speaker 1: in the experimental phase. How much of your business do
19:18
Speaker 1: you think it's going to be in whatever timeframe you want,
19:22
Speaker 1: five years. The truth of the matter is, we don't know.
19:25
Speaker 1: This is an experiment and we're learning. I frankly don't
19:31
Speaker 1: think that subscription is going to be a huge thing
19:34
Speaker 1: in sports because consumers want choice and we've looked at
19:39
Speaker 1: rolling all these choices into a subscription model and it
19:42
Speaker 1: just makes things very, very messy and complicated. But for
19:47
Speaker 1: right now, for what it's worth, I think to actually
19:52
Speaker 1: have very high return rates in terms of recycling rates.
19:57
Speaker 1: It's a good tool and maybe it has its place.
20:00
Speaker 1: We only started this thing about six or seven months ago,
20:03
Speaker 1: so we're still learning. If you get to ten percent
20:06
Speaker 1: of our business, I think it's going to be a
20:07
Speaker 1: big number. I'm I guess a little disappointed in some
20:11
Speaker 1: at some level that that it's not going to be bigger.
20:14
Speaker 1: That you don't think it's going to be bigger. I mean,
20:17
Speaker 1: I mean a it would make a tidy end to
20:18
Speaker 1: the interview. So that's of course important to me. But
20:21
Speaker 1: but also, like you know, I like the efficiency piece,
20:23
Speaker 1: I will say I also, I have been buying basically
20:27
Speaker 1: the same pair of Nikes every six months for ten
20:30
Speaker 1: years or something, and you know, I always just buy
20:33
Speaker 1: last year's model because it's cheaper um. But you know,
20:37
Speaker 1: if they had a subscription model that was what I
20:40
Speaker 1: pay now or a little less, I would do it
20:42
Speaker 1: just because it's essentially what I'm doing already. I don't
20:45
Speaker 1: know what to do with my old shoes. Why do
20:47
Speaker 1: you think it's not going to be bigger? Why do
20:49
Speaker 1: you think it's only going to be you know, ten percent?
20:51
Speaker 1: If it's really successful, let me let me rephrase that.
20:54
Speaker 1: You know the this is I don't want you to
20:56
Speaker 1: rephrase it. I don't don't revise your estimate based on
21:00
Speaker 1: my sentiment. It just tell me why you think what
21:02
Speaker 1: you think. Look, as I said earlier, this is an
21:05
Speaker 1: experiment at scale and we're learning u And if it
21:09
Speaker 1: turns out that people really love the subscription model, I mean,
21:13
Speaker 1: that would be a really positive outcome. And we're going
21:16
Speaker 1: to have to figure out the whole circularity piece, because
21:19
Speaker 1: we have publicly committed to bringing everyon product back by
21:24
Speaker 1: the end of the decade. If it's not going to
21:27
Speaker 1: be a subscription, Like, what's it going to be? What
21:31
Speaker 1: are your other options? It's probably going to be a
21:33
Speaker 1: combination of things. So right now, for in the subscription program,
21:37
Speaker 1: we're using mail basically FedEx a ups to bring it
21:42
Speaker 1: back fast forward three or four years. You'll be able
21:45
Speaker 1: to bring back your running shoes in basically where you
21:50
Speaker 1: bought them, similarly like you'd do it with other products.
21:53
Speaker 1: Because you know, this business model that our industry works on,
21:58
Speaker 1: taking crude oil out of the earth and then throwing
22:00
Speaker 1: it away is just not sustainable, bitter, you know, neither
22:04
Speaker 1: for the planet nor economically. I mean, I feel like
22:07
Speaker 1: the economics of it clearly work now. And if you
22:11
Speaker 1: really wanted it to change, what you would want is
22:14
Speaker 1: to impose a price on throwing it away, right, Make
22:17
Speaker 1: it more expensive to throw it away, make it cheaper
22:19
Speaker 1: to return it to the company, or make that price
22:23
Speaker 1: embedded in the price of the shoe when you buy
22:25
Speaker 1: it at retail. Right, Like that's what we've done with cans, Right,
22:28
Speaker 1: there's a deposit that sort of embeds that price in
22:31
Speaker 1: the retail price and makes it worth collecting and returning. Right,
22:36
Speaker 1: do you see any sort of top down price changes
22:40
Speaker 1: like that is that something absolutely seems more Euish than
22:44
Speaker 1: American Ish. Just just wait, look, plastics is in you smoking? Um,
22:51
Speaker 1: you know the you know and you're in the plastics business.
22:54
Speaker 1: This is absolutely or Jr. Saying that, Hey, yeah, it's
22:57
Speaker 1: well we stay the heads at that back in the day,
23:02
Speaker 1: you know, choking aside. Um. You know, similar to how
23:05
Speaker 1: oil fuel is taxed, Um, there will be a tax
23:11
Speaker 1: on on plastic and there will be a will be
23:15
Speaker 1: mandatory eventually to recycle plastics like it is with other
23:19
Speaker 1: things that you mentioned. Um, whether that is five years
23:22
Speaker 1: out or ten years out of fifty years out, it's
23:25
Speaker 1: definitely the right thing to do. Once that comes into play,
23:29
Speaker 1: it will they definitely make economic sense to be a
23:31
Speaker 1: first mover. Um. And you know in an on product
23:35
Speaker 1: to day there maybe four or five dollars worth of
23:39
Speaker 1: of of plastics that we can recuperate. And in this way,
23:45
Speaker 1: We'll be back in a minute with a Swiss and
23:48
Speaker 1: running shoe themed lightning round. Now let's get back to
23:58
Speaker 1: what's your problem. I want to finish with a lightning
24:01
Speaker 1: round a bunch of all right quick questions. What's the
24:04
Speaker 1: first pair of shoes you had that you remember Adidas
24:08
Speaker 1: is with a really nice velcro. Oh, the velcro, It's
24:12
Speaker 1: makes so much sense velcro. Why do you think velcro
24:15
Speaker 1: didn't like? Yeah? Is it? Is it actually worse? Like
24:19
Speaker 1: you from your sort of shoe science knowledge, is velcro
24:22
Speaker 1: a worse closure than laces? Laces are remarkably persistent technology. Well,
24:26
Speaker 1: the laces allow you to really finally adjust. Um, you
24:30
Speaker 1: know how how how tight the shoe is in different
24:32
Speaker 1: parts of the of the upper But velcrois is a
24:36
Speaker 1: very nice technology. Um, what situation is too formal to
24:40
Speaker 1: wear sneakers? None? Meeting the Pope? No? Absolutely, I did
24:48
Speaker 1: them our IPO in sneakers and a pair of shorts.
24:51
Speaker 1: So of course you did the IPO in snea because
24:53
Speaker 1: that's marketing. Okay, getting married, getting married sneakers to get married? Absolutely,
24:59
Speaker 1: I actually got married barefoot. Well that that's a hippie
25:02
Speaker 1: classic of respect. That Um, okay, let's do some quick
25:07
Speaker 1: Switzerland comparisons. Um Greer or Emmental Greer, Eiger or Matterhorn.
25:14
Speaker 1: I must say the Matterhorn is very spectacular. Stad Or
25:19
Speaker 1: Samrits Samorets. That's where I live. So you worked at
25:23
Speaker 1: the consultancy McKinsey before you started on and I'm surious
25:28
Speaker 1: if you think McKinsey is overrated or underrated. I think
25:33
Speaker 1: it's overrated. I feel probably mentioned consultants are are overused
25:39
Speaker 1: and companies should do things more with their own staff.
25:43
Speaker 1: We're definitely trying that. Is there something you learned as
25:45
Speaker 1: a consultant that you have found useful running a company? Oh,
25:48
Speaker 1: many things at McKinsey. When you when you are in
25:51
Speaker 1: a new assignment, you always talk to people that have
25:55
Speaker 1: done something in that space before, so you're you're not
25:58
Speaker 1: afraid to show that you have no clue about even
26:02
Speaker 1: though though you can. Empaid a lot of money to
26:03
Speaker 1: consult in a company, and that's something that we have
26:06
Speaker 1: applied it on heavily, you know, like we're able to it.
26:09
Speaker 1: As a startup entrepreneur, you have access to a lot
26:12
Speaker 1: of people that they're just helping you because they feel
26:15
Speaker 1: for you, because they've been in the same situation. What's
26:18
Speaker 1: your second favorite brand of running shoes? Well, I'll have
26:21
Speaker 1: to pass on that one. Passport. Capetti is the co
26:30
Speaker 1: founder of on. Today's show was produced by Edith Russolo.
26:34
Speaker 1: It was edited by Sarah Knicks and Robert Smith and
26:37
Speaker 1: engineered by Amanda ka Wong. I'm Jacob Goldstein. You can
26:41
Speaker 1: find me on Twitter at Jacob Goldstein, or you can
26:44
Speaker 1: email us at problem at Kushkin dot FM. We'll be
26:48
Speaker 1: back next week with another episode of What's Your Problem