The Exchanges

Q what the A-plus case looks like for Brooke five years from now? And I'm sure you do lots of three-year, five-year planning, so you can think about this. And then I want to know, rather than just saying, what's the failure case? I, I think a more interesting question is, What is the riskiest part of your business right now, where if that thing goes wrong, everything else can crumble?

A Two questions. So the first one, the A case, we just created a, you know, a North Star 10 year vision for Brooks. It's global for sure. People are running all around the world. As the middle class grows, people invest in their fitness, and running is always making the cut there. So it's booming in Asia. You know, we're growing now really rapidly in, in, um, Europe. So we want to build a global, global brand, um, and that's work to do in the next 10 years. So we see an opportunity for sixty million customers, Sixty million uniques up from maybe fifteen million today, four bagger, and four billion in revenue. That's the big opportunity we see right now, and it's still a premium brand, positioned to the enthusiast, really uniquely positioned against all the big platforms. The A-plus case in five years is 20 to 30% growth every year annually, and that's what we've been doing the last two, three years, um, and a lot of that's gonna have to come internationally, but Um, but, but if we get a B and grow 15%, we're actually fine with that too, because we're not rushing for the exit. So we're excited. We think we see it. Um, we're gonna have to compete for it, but we have a, we have a complete playbook right now in our view. So what keeps us, um, what keeps us from being successful? I've experienced it. Single points of failure, right? We launched a DC, which we had to do to get in the m…

AI assessment note: “The A-plus case in five years is 20 to 30% growth every year annually”

Q So revenue is going like this intentionally. You're the fourth CEO. So at this point is the team. How do you get the team on board? These crazy decisions you're making when they're like three other people came in here and tried to turn this thing around and didn't.

A You know, I think from a leadership standpoint, um, the real puzzle in that first year was gaining trust from everybody that mattered. Um, B of A was our bank, kind of a lost cause, we had to replace them. They just weren't gonna buy it. But Whitney invested, that was key, and we kept them with us all the way through. The leadership team took time, you know, and it was, you had, you had to deliver sort of on outcomes, but here's what we did. Six weeks in, we redid the plan, took profits down. The plan was millions of dollars. They didn't have a prayer to hit that. We took profit down, but it was a profit plan. They hadn't made a bonus in four years, and we went after cash flow, and that was shrinking the mix. We hit our plan that year, and people got a bonus. And we hit the plan that we'd sent nine months earlier. I spent really eight weeks intensively looking at it, but I think we knew what we were seeing, and we generated ten million of cash that first nine months. That's how much we shrunk the balance sheet with focus. And here was the key though. You have to, you have to do horizon one, horizon two, horizon three, right? You've got to, you've got to solve it all. So I had 10 things to do. The board said, oh my god, you're crazy. Pick four. No, you don't understand. We, we had to get the adrenaline right, um, because that shoe was critical for us, and we had to, we had to re…

AI assessment note: “you had to deliver sort of on outcomes, but here's what we did”

Q you're going to shed every other product that you sell, and you're kind of going to piss off a lot of your channel, because, you know, what sells really well at these big box stores, those are your barbecue shoes. So can you take us to like one or two of the key moments of the hard part of the decision to drop product lines that weren't about frequent runners?

A Yeah, I think that the key to Brooks is that we knew We are going to have to build the brand at the runner level. Literally a pair of feet at the time. And the retailers, so many retailers told me, Jim, we are not going to build your brand. We'll try it. We'll test it. We were tested at Dick's Sporting Goods, and I'm not kidding for 10 years. 20 stores, 80 stores, 20 stores, 80 stores, 20. So, so you have to build the flywheel in these franchise products. That's how running works. The, the best-selling running shoes continue to be the best-selling running shoes year after year. For as long as they sustain it all around the world. We have two of the best selling shoes now in the United States, the Ghost and the Adrenaline. Um, they're the two top shoes in the performance running category. So, so when we go to retail, uh, biggest customer is Big Five. It's a fine, you know, sort of mid-price sporting goods retailer on the West Coast. We were doing ten million of sixty million of revenue with them at 30 dollar shoes. My first meeting with them is we love Brooks. We see a great future for you.

AI assessment note: “We were doing ten million of sixty million of revenue with them at 30 dollar shoes.”

Q Could you just tell us a little bit about that? What is the book?

A So the book is Running With Purpose, and Brooks has been a fabulous journey, and I'm, I'm a person that believes in life, ah, the journey is to be, you know, just cherished and, and enjoyed, because the finish lines are fleeting, and we all want goals, we all want finish lines, but you gotta enjoy the journey along the way, and I think we're all creatures of our journey, so, Brooks has been through a lot. And it's a David and Goliath story, it's a turnaround story, It's a purpose-driven, culture-driven brand story. It's a focus, um, niche, challenger brand story in an industry like so many that's dominated by platforms, one really, really fabulous platform, and so we've navigated that. We built, we're building a really cool brand with lots of runway yet for growth, and, ah, and it's a great business, too, and, and so I wanted to tell that story because if you're not a runner, We haven't marketed to you. I mean, we are so focused. Every nickel has gone to people that are putting one foot in front of another, but the story continues, and I wanted to tell it.

AI assessment note: “So the book is Running With Purpose, and Brooks has been a fabulous journey”

Q At least one of them was a completely free product, I think, right?

A Oh man, they don't make money. Yeah, so, and, and Under Armour is trying to sort through that now, right? They, they're starting to shrink. So is Adidas. So those tools are really powerful for data, but how do you monetize it? And so we haven't gone there yet, but we're building, we're building a Brooks Run Club. Finally, we've, we've launched. It's not a loyalty program, but it's a zealot. We want to engage our zealots. We want to engage our, our true believers, and the data piece of that is going to be key. We want to come up the kinetic chain And, and find a sensor system and a, and a data capture system that can get to your biomechanics as you're running, because what happens is, if you run a marathon, your gate in the last five to 10 miles really degrades, and that's where injuries happen. So, so we, we're doing a lot of, we have a lot of partnerships, and we're really trying to figure out how we get good runner data in real life, um, not just in the lab. In the lab, We can test everything, but we want to get out in the wild.

AI assessment note: “Oh man, they don't make money. Yeah”

Q So I think around this point you're doing one 61 seventy million in revenue. Business has grown nicely, you're profitable. Um, there's a fun story from 20 12 that I'd like you to tell. You've always been somewhat of a scrappy company, uh, doing more with less than anyone else. Can you share the story of when you personally got kicked out of the U.S. track and field Olympic trials?

A So, I think in, in real life, digital is digital, but in real life marketing, um, we activate, right? A lot of the running shops do runs out of their stores, and they're involved with the five K's, and, you know, we're bringing energy and, and positivity to that, really trying to make it fun for other people, and many that are running for the first time. And then there's the sport, which is so fun, um, to be at, whether it's the Olympic trials for the marathon, Or the Olympic trials, which is often at, at Hayward Field down in Eugene. Um, and the challenge there for all the brands is we rent a house, we bring in all of our partners and VIPs, we run, ah, group runs out of the house every morning, we bring in a chef, and we watch these incredibly athletes, athletes compete for Team USA. It always happens in June. Olympics are, you know, July, August. And, and it's just a fabulous event.

AI assessment note: “And then there's the sport, which is so fun, um, to be at”