Dec 22, 2023 · 1h 10m · news
Dave Powers: The Meteoric Rise of Hoka Running | E1098 · 20VC with Harry Stebbings
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In this in-depth interview, Deckers Brands President and CEO Dave Powers discusses the strategic scaling, brand protection, and market positioning of Hoka and Ugg, alongside his philosophies on corporate culture, disciplined resource allocation, and leadership.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 29.7% of the talking time here. How this is scored →
Harry as informed peer 3.3 Guest teaching 3.5 Guest disagreement 1.3 Harry pushing back 3.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:47 Dave defends corporate culture against Harry's cynicism
Dave firmly pushes back on Harry's assertion that corporate culture is just PR fluff, arguing that Deckers maintains a kind environment while ruthlessly winning.
Hardest push from Harry ▶ 52:24 Harry rejects Dave's DTC collapse thesisHarry directly refuses Dave's explanation that DTC brands fail due to marketing spend rollbacks, arguing that if products were truly good, organic word-of-mouth would sustain growth.
Biggest teaching moment ▶ 48:00 Dave explains why apparel companies fail at tech M&AWhen Harry suggests buying Strava, Dave educates him on the historical failures of footwear companies acquiring tech platforms, citing Under Armour and Lululemon as cautionary examples.
Harry holds his own ▶ 40:52 Harry quotes Bernard Arnault on luxury marginsHarry demonstrates deep business acumen by referencing Bernard Arnault's insight on luxury pricing power to interrogate how Deckers preserves brand exclusivity.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Dave's Early Interests and Career Journey | 1 | 1 | 0 | 0 | Harry opens with warm rapport, asking Dave about his childhood ambitions and early career across Gap, Timberland, and Converse. Dave shares personal backstory in an easygoing, conversational tone without any friction. | |
| Consumer Obsession and Lessons from Converse | 3 | 2 | 1 | 5 | Harry pushes back on corporate culture talk, asserting that he prefers winning and grind over soft cultural statements. Dave politely clarifies that Deckers balances a kind culture with intense competitive drive. | |
| The Acquisition and Early Strategy of Hoka | 2 | 3 | 1 | 2 | Dave details the early acquisition of Hoka and how ultra-marathon runners validated the shoe despite its odd initial appearance. Harry asks whether the growth trajectory was smooth or step-function. | |
| Managing Supply, Demand, and Wholesale Growth | 3 | 5 | 2 | 5 | Harry challenges Dave on why chasing pure growth numbers is harmful if it gets shoes on feet. Dave educates Harry on how over-supplying wholesale channels leads to markdowns that permanently damage brand equity. | |
| Challenges of Retail Partnerships and Storytelling | 3 | 3 | 1 | 2 | Dave explains wholesale storytelling standards and how Hoka protects its presentation in multi-brand retail. Harry questions how Hoka retains core runners as mass-market adoption takes over. | |
| International Expansion and the Global Playbook | 2 | 4 | 0 | 2 | Harry brings up a question from investor Maha Ibrahim regarding Asian expansion strategies. Dave outlines Deckers' playbook of winning run-specialty channels and top local marathoners before expanding distribution. | |
| Competition with On Running and Everyday Performance | 4 | 3 | 2 | 3 | Harry references his interview with On Running's founder and mocks the past barefoot running trend. Dave explains how modern super-foams and carbon plates are revolutionizing performance footwear. | |
| Strategic Competition with On and Global Market Potential | 3 | 4 | 2 | 3 | Harry asks directly how Dave plans to beat On Running. Dave reframes the competitive landscape, emphasizing that both brands are taking share from massive legacy incumbents like Nike and Adidas. | |
| The Niche Origins and Oprah Inflection Point of UGG | 4 | 3 | 0 | 2 | Harry brings historical M&A facts, noting Deckers bought UGG for $14.6 million in 1995, and asks if all iconic brands start in hyper-specific niches. Dave agrees, citing Teva, Birkenstock, and Crocs as parallel examples. | |
| Aesthetic Polarization and UGG's Market Slowdown | 3 | 4 | 1 | 3 | Harry presses Dave on where UGG went off track in London a decade ago. Dave candidly acknowledges that over-distribution ruined the brand's specialness and turned it into an off-price commodity. | |
| Pulling Back Supply to Reclaim Brand Prestige | 3 | 5 | 1 | 3 | Dave describes intentionally pulling back inventory and sacrificing top-line revenue growth to restore brand prestige and profit margins. Harry inquires how leadership keeps morale high during revenue retrenchment. | |
| Aspirational Brand Control vs. Ubiquity and Decline | 5 | 3 | 1 | 2 | Harry quotes Bernard Arnault on luxury pricing power and asks how brands avoid becoming ubiquitous commodities like Gap or Abercrombie. Dave explains how discount sales signal brand decay. | |
| Brand Decline, Immortality, and Protecting Legacy | 4 | 4 | 2 | 4 | Harry presses Dave on why Deckers isn't acquiring more brands or divesting smaller ones. Dave explains that organic growth delivers superior financial returns over debt-funded M&A traps. | |
| The Pitfalls of Acquiring Technology Companies | 4 | 6 | 2 | 3 | Harry proposes that Deckers acquire software communities like Strava. Dave schools Harry on why footwear companies fail when trying to run tech companies, citing Under Armour and Lululemon. | |
| Analyzing the Flaws in the Pure DTC Model | 4 | 4 | 3 | 6 | Harry explicitly rejects Dave's explanation of DTC company failures, arguing that if products were actually good, word-of-mouth would sustain them. Dave defends his thesis on customer acquisition economics. | |
| Shoe Durability, Repeat Usage, and Hoka's Loyalty Program | 5 | 2 | 1 | 2 | Harry demonstrates domain knowledge regarding running shoe mileage limits (300 miles) and high repeat purchase frequency. Dave notes that high replacement frequency makes running shoes a lucrative business. | |
| The Best and Worst Decisions of Dave's CEO Tenure | 3 | 4 | 1 | 3 | Harry asks Dave for his best and worst capital allocation choices as CEO. Dave shares how reallocating funds away from smaller brands was his best move, while overbuilding Asian corporate infrastructure was his worst. | |
| Talent Attraction, Retention, and Corporate Culture | 4 | 3 | 2 | 3 | Harry shares his own tactic of offering small, frequent promotions to retain talent. Dave reflects on growing up in conservative New England and how family expectations shaped his view of career achievement. | |
| Reflections on Fatherhood and Career Balance | 3 | 4 | 2 | 4 | Harry presents his uncompromising, self-centered killer instinct for work, questioning whether parenthood weakens competitive drive. Dave explains how balancing family priorities reshaped his perspective. | |
| Quick Fire: Dinner with Bono and Best Life Advice | 2 | 2 | 1 | 2 | In the quickfire round, Dave selects Gap as the company he would fix for a day, cites Nike as Hoka's main target, and humorously notes that a cold beer helps him de-stress. |
Statements from this episode (45)
Hoka grew from a $1.1M acquisition in 2012 to $1.4B revenue in 2023
“Hoka Shoes was bought for 1.1 million in 2012. Now it's doing 1.4 billion dollars in revenue in 2023.”
Powers: Direct-to-consumer models struggle when marketing spend is cut to yield profit
“The DDC model is hard to keep sustained because you're spending so much on marketing. The minute you pull that marketing away to make profit, Your sales line drops.”
Powers: Brand decline happens quickly, stranding inventory planned for growth
“It's quick. It catches you off guard, and the worst thing is you have all the inventory planned for growth, and all of a sudden it slows down, and that's when you're in real trouble.”
Powers: Timberland Required All Non-Footwear Products to Match Original Boot Standards
“Every product we make is a boot, whether it's a jacket or a backpack or a pair of jeans. And What he meant was everything has to have the same qualities as our original boot that the company was founded on. It's durable. It's quality. It's, you know, a high le…”
Dave Powers: Removing a bad culture fit takes 6 to 12 months
“It takes, you know, six to 12 months, but usually what happens is kind of organ rejection. It's not me identifying somebody. It's the, you know, it's the company and the employee saying, hey, this person is just not, you know, able to work the way we work. The…”
Powers: Hoka had to pull back inventory and close accounts early on
“We actually went through a period early on where we had a lot of markdown inventory in the channel. We were selling off price to people, and it was because we were trying to chase a growth number. So fortunately, we recognized that early on, and we pulled back…”
Powers: Direct-to-consumer is Deckers' most profitable channel
“Our DDC channel is our most profitable channel, right? Margin and profit.”
Powers: Hoka rejects more wholesale retail accounts than it accepts
“We say no to more, you know, more accounts than we say yes to.”
Powers: Uncontrolled retail distribution damaged the UGG brand long-term
“We got in a lot of trouble back in the days with UGG because we just sold our basic product to everybody and just let them do what they wanted with it. And that worked for a while, but then it really hurt the brand.”
Dave Powers: 2023 UTMB and Ironman Champions Both Competed in Hoka
“The winner of the ultra marathon, the UTMB at the ultra marathon, but the ultra trail Montblanc and Chamonix, you know, the winner of that race was wearing Hoka. And two weeks later, the winner of the Ironman championships in Nice was wearing Hoka.”
Powers: Hoka will never market directly to mass-market casual consumers
“We're not going to market mass market to the casual consumer out there. That's not who we are. We are performance brand through and through.”
Dave Powers: Hoka succeeded in US by dominating run specialty first
“That was our success in the U S is really kill it in the run specialty channel and the core outdoor channel. And then you can move out beyond that.”
Powers: Most late-stage Ironman finishers wear Hoka shoes
“From 11 to midnight at the Ironman championships where the last finishers are coming in, you know, some of them have disabilities, some of them are 70 plus and older, and most of those people are wearing Hoka.”
Powers: Nike Free's barefoot running trend created injury-causing footwear
“You know, and it was, you know, Nike went there with the Nike Free and started making this, you know, lower profile product and everybody just followed suit. So next thing you know, you have a whole industry of, you know, running brands that are creating produ…”
Dave Powers: Performance footwear will see next-level super sneakers over 5-10 years
“So I think you're going to start seeing, you know, really next level super sneakers. I mean, look at the one Adidas just launched, you know, it's meant to be worn once one marathon and then it's no good. Right. But people are breaking records in it. So it's, w…”
Dave Powers: Running shoe brand loyalty is shifting as consumers try disruptors
“Well, traditionally, they're very loyal, you know, and it's hard to get a consumer that was running in ASICs for 10 years or Saucony for 10 years to switch brands. I think that's changing dramatically. I think people are open to trying different brands now. An…”
Dave Powers compares Hoka's customer brand fandom to Patagonia
“It's, I always liken this brand to Patagonia, you know, and I, maybe I'm personalizing that, but I always just was obsessed with Patagonia and wanted more of their product and their brand. I think people feel that way about Hoka.”
Dave Powers: Hoka and On hold small global market shares with huge upside
“Between the two of us, our market shares are still relatively small globally. There's so, so much potential for both brands to do incredibly well.”
Dave Powers: Oprah's endorsement triggered 5 years of intense UGG demand
“At that time, yes. Oh yeah. I mean, they were chasing business. It was a freight strain, and they were just trying to keep up for a good five years.”
Dave Powers: UGG has grown into a $2 billion-plus brand
“And so we've been able to tap into those two insights to build what we are now, a two billion dollar plus brand.”
Powers: Rebuilding UGG's market positioning in Europe took five years
“And we lost the specialness of the brand, and it took us five years in the UK and Europe to get that back.”
Deckers told Wall Street in 2016 it would prioritize profitability over revenue
“We told the street we're going to pull back on revenue growth, but we're going to improve our profit profile.”
Powers: High employee turnover was necessary for UGG's 2016 turnaround
“We had a lot of turnover at that time, which I think, you know, was probably the right thing to do. Definitely the right thing to do.”
Powers: UGG increased customer purchase frequency to 2-3 times annually
“Traditionally, it would buy one boot every two and a half years, right? The classic boot. And now we have people buying two or three times a year because they're buying different products.”
Dave Powers: Sustainable brand success requires an iconic hero product
“They just allow you to do so many things because of the scale, the volume, the margin, the consistency of the business. If you don't have that, it's really hard to run a successful, you know, sustainable business.”
Dave Powers: High pricing protects luxury brands from over-ubiquity
“Luxury in a way has its own built-in defense mechanism where there's a certain type of consumer That can afford that product. And they're the ones that are wearing it around town, you know, and where it's where you're seeing it. So it kind of stays up in that …”
Dave Powers: Abercrombie and Gap lost equity when over-distribution made them ubiquitous
“And so I think when you start looking at Abercrombie and American Eagle and, you know, even gap at that time, It was the hot new thing until it wasn't. When it wasn't, it's because it was showing up on everybody all over the place. It became ubiquitous. There …”
Powers: Young brands risk being short-lived without legacy archives to rely on
“I think it's really the legacy brands, you know, newer brands, they don't have that longevity or the history, the archives that a lot of these luxury brands do, and they can reach back to their history as a way to go forward. If you're a young brand and you do…”
Powers: Deckers can organically add billions in revenue over five years
“We feel we have a path where we could, you know, Add billions onto our revenue today over the next five years organically, which is the best way to grow a business because it's built in.”
Deckers is actively seeking a buyer for Sanuk
“We just announced that we're going to you'll look for a buyer for one of our brands to nook.”
Powers: Teva offers higher global awareness and margins than potential acquisitions
“And honestly, when we looked at Teva and compared to all these, you know, these brands that we could have potentially purchased, Teva has the best global awareness. It has the best margins.”
Dave Powers: Strava founders had no ambition to be acquired
“You know, I had conversations with the founders there a couple of times not in that context, but just getting to know them and, you know, our brands partnering. And, you know, I know for them, they had really, I don't think they had any ambitions of being acqu…”
Dave Powers: Deckers prefers tech partnerships over major acquisitions
“We're not a technology company. You know, you've seen folks like Under Armour and Lululemon acquire technologies. It's hard to do and keep it going and do it right. And I think we're better off just partnering with brands like that versus making major acquisit…”
Powers: Deckers operates at an 18% operating profit margin
“You know, the good news is we have very healthy profit margins. You know, we're in 18 Percent operating profit.”
Powers: Footwear margins average 10-12%, while Crocs achieves high twenties
“Above 10% is, is healthy, probably average 10 to 12. And, you know, so you have folks out there like Crocs, which is, you know, high twenties.”
Powers: Hoka delivers Deckers' highest initial margin, followed by UGG
“Initial margin is Hoka. But UGG is a close second. I mean, they're both very, very healthy in the industry.”
Powers: Brands built on Instagram impulse buys cannot survive long-term
“Great product, great brand, meaningful to consumers will outlast the marketing spend. If your brand and your product is interesting for a moment because you saw it on Instagram feed and you clicked through and you bought it, and then you kind of forget about i…”
Powers: Hoka customers buy two to three pairs per year
“When we used to sell UGG Once every two or three years, a 160 dollar price point. Now we're selling Hoka two to three times a year at a 160 dollars set price point.”
Powers: Deckers is developing a loyalty and auto-delivery program for Hoka
“And we need the loyalty program that you can get automatic deliveries or the next big launch earlier or special treatment as a loyalty member. And that's something we're working on.”
Powers: Deckers avoids consumer-facing corporate branding, focusing Deckers name on investors
“Well, you know, we're holding company for the brands, right? We're not expecting or trying to get consumers to know Deckers. That's not our goal. We want investors to know Deckers, and they do, but we're not pushing the Decker's name to consumers.”
Dave Powers: Deckers' best decision was reallocating capital to Hoka and Ugg in 2016
“You know, what myself and the finance leaders at the time did in 16 and 17 would say, actually, no, you don't all need that money. These two things need that money. And we're going to reset. That was the biggest reallocation success that we had.”
Powers: Frequent promotions can obscure an unfulfilling work environment
“I mean, I've been that consumer. I mean, I've been that employee in the past where I, you know, my early days at Gap, I was getting promoted quite often. That was the culture we were growing. For me, it fogged the fact that I hated the work environment. And I …”
Powers: Gap's business has severely degraded over the past 20 years
“I actually think the gap. I would love to go back to the gap because it's just, it's such a shame to see how bad that business has become over the last 20 years.”