Keep Running: A Company in Search of the Finish Line

Tweet

About 15 years ago, Russell was hawking one of his first inventions, a pillowy exercise device designed to strengthen the lower legs, at a running expo in San Francisco. He started chatting with a runner he met there. Russell had ideas for new shoes, he told her, or at least for shoe inserts. The runner hailed from Boulder and was friends with Abshire, whom she encouraged Russell to meet.

"I looked at it right away, and I knew what it was," Abshire says, recalling the first time he saw Russell's shoe prototype. "He had articulated forms in the forefoot. It seemed like a good idea."

Abshire is known widely as one of the better providers of custom orthotics, the shoe inserts that can help athletes, or even nonathletes, relieve pain caused from foot injuries and biomechanical problems. He started in orthotics as a ski bum in Aspen, fitting boots for customers, a job nobody else in the ski shop wanted. He and his wife relocated to Boulder, in 1988, to open their own orthotics shop, which continues to prosper. Even while he enjoyed success, Abshire searched for a way to expand the business. Was it time to open orthotics shops in other cities? Was orthotics his life's work?

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.

 PREV  1 | 2 | 3 | 4 | 5  NEXT 

Read more:

Sign-up for our Small Business Success Newsletter

Email Address: