In Russell's designs, Abshire saw an innovation. And innovation is a cornerstone of the athletic-shoe industry (as are, to be honest, bold claims and language). Running shoes are essentially simple instruments, a layering of rubber treads and foam padding below nylon uppers. To distinguish one fundamentally identical shoe from another, companies continually roll out fresh models with insoles that "breathe" or cushioning systems that can tell the difference between walking and a running stride, or at least are claimed to. Ever since Nike (NYSE:NKE) established itself 36 years ago with a revolutionary tread molded on a waffle iron, the innovation arms race has escalated. The pair of Nikes I bought most recently sends running data straight to an iPod. Newton's innovation is described on the company's website:
Action: When you forefoot-strike with a Newton running shoe, the actuator lugs stretch a membrane as they are pushed from the outer sole into the chambers of the mid-sole. This replaces the foam/air/gel used in the outer and mid-sole of traditional running shoes.
Reaction: As you begin to push off after striking, the membrane returns to its original shape, pushing the actuators out from the mid-sole and returning the energy into forward propulsion.
Abshire was so sold on Russell's designs that he persuaded the landlord of his orthotics shop, Lee, to make what was supposed to be a simple, one-time investment. The initial goal was not to start a running-shoe company but just to make a bit of money.
Lee is a prominent Boulder developer, an owner of the Colorado Building, and also a longtime runner. He first started jogging to kill time while waiting for his daughter to finish figure skating practice. The running gave him a way to organize his day. He proceeded to run 15 marathons, including Boston three times. In exchange for an ownership stake in the fledgling company -- he is now the president; Abshire is the VP -- Lee gave Abshire a check for $100,000 to cover start-up costs.
"The original idea was just to sell the technology to Nike or Adidas or somebody," says Lee. "They'd pay us a licensing fee, we'd get a quick, clean return on our money, and we'd be done with it."
Things didn't work out as planned. No one at any of the big shoe companies wanted the technology. Abshire says representatives from Adidas met with the partners for more than a year before Adidas stopped returning calls. The president of Saucony, he recalls, turned down an alliance, saying the offered technology was too complicated and expensive to mass produce.
"That could have been it," Abshire allows. "Jerry could have said, 'Danny, your time is a write-off, and Brian, your time is a write-off, and my money is a write-off, and let's just part ways.' I think it was just this sheer determination that we knew we had something, and if other people weren't willing to take it and do it right and build it, we weren't going to give it up. We just weren't that kind of people. We don't give up."
Where are the small running-shoe companies? The running-shoe business is worth about $4 billion a year in America, but it's rough on niche players. New companies rise, and established athletic-shoe companies try to find a place as well, but most of them struggle, and many of them fade away. The money flows to a shrinking handful of companies. It's been that way for 20 years. Now the people at Newton are betting that changes in manufacturing and marketing, almost all brought about by the Internet, have made it possible for a small brand to thrive.
To explain how he and Lee could contemplate building a shoe on their own, Abshire likes to talk about the carpet in his new office. If he wanted to get a custom-made welcome mat with the red-and-yellow Newton logo woven into the fibers, all he would have to do is e-mail an image of the logo to a factory in North Carolina. A carpet could be sewn, shipped to Boulder, and installed by the front door of the Newton offices in as little as three days.
"Could you do that 10 years ago?" Abshire asks. "Could you do that even five years ago? Three years ago?"
After making a few calls and poking around the Internet, Abshire found a consultant in Portland, Oregon, who used to work for Adidas, and who was able to link up Abshire, Russell, and Lee with freelance shoe designers. The first design realized, the Bri-tek, was blue and clunky, with an exaggerated heel and forefoot and only blank space beneath the wearer's arch. The trio put up a website, featuring a link where people could order the shoe. That website can still be found online. There's the blue shoe spinning and an endorsement from Paula Newby-Fraser, a triathlete. There's discussion of the technology, of energy returns and motion. But Bri-tek had no marketing to speak of, and so few people showed interest in the product that the shoe died stillborn. Anyone who placed an advance order received a refund.
"I had to ask myself, Do I stop now, or do I go a little further in?" Lee recalls. "That decision was probably made about 24 times in the past 12 years. It was always a business decision, but emotion started getting into it. I was looking at the technology and saying, 'This is good; this works. Why are we the only ones that can see it?' "
Lee and Abshire decided to continue, but only after jettisoning Russell. They bought out the inventor and killed the Bri-tek name. Russell kept his patents, and he anticipated licensing fees when the new shoes, whatever they were called, went into production. But Lee eventually persuaded Russell to sell the patents, too, claiming it was the only way the company could go forward profitably. In exchange for his patents, Russell was given a five-year consultant's contract, and his name remains on the Who We Are page of the Newton website.
