Roger Federer-Backed Shoe Brand On Takes A Big Swing At Tennis

Hi everybody, I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now is Forbes' sports money reporter, Matt Craig. Matt, thanks for coming on. Thank you, as always for having me. Of course, you wrote about the Swiss running shoe brand on this week. And at the U.S. Open, though, the company was involved in what you could describe as a misstep. Tell us about it. Well, of course. On running shoes, they've gone from a startup company to a $10 billion public company in just a little over 10 years. So we're talking about a very, very successful brand. But they've always done one thing extremely well, and that's make shoes that people love to run in. Diving into another sport category is tough, especially in the case of tennis. That shoe requires something very different than a running shoe. Just if you think about the pattern of movement, a running shoe is just very straight line, straight head. Tennis is 360 degrees. So the requirements of a tennis shoe are very different, and on learning that, whenever they brought on Roger Federer as an investor in 2019 and tried to make a tennis shoe, they realized it was going to be a lot harder than they thought. So in their particular case, they made a shoe with Roger Federer. It was the perfect shoe for him, everything to his specifications. And then when Roger Federer retired, they went out and signed two new professional tennis players, both of who are promising, but both of who move very differently than Roger Federer. So I think what you're referring to is with Iga Svantec, the number one women's tennis player in the world. She signed a multi-million dollar deal with ON to wear all their products. And yet, more than six months after signing that contract, she's still not wearing the on tennis shoes to play her matches in. And for a company that's invested heavily in her, I know that's a little bit of a disappointment. How detrimental is this for a brand to have an ambassador of her stature in the sport come out in a competing brand? Well, I guess it just depends on how long this goes. I think right now, it's not that detrimental because it's such a new tennis product and this deal is still six months old. In the case of Federer, for example, he signed on as an investor in 2019 and he didn't debut his original on Roger Pro shoe until 2021. So that was two years. If we're looking up in two years and Iga Svantec is still not comfortable wearing the on tennis shoe, that would be detrimental. That would certainly be a problem. Right now, it's not. So it's really just about what I personally think is, you know, this is the last major of the year. They'll have a little bit of extra time here in the winter and hopefully by next year's Australian Open, you know, she's in an on shoe. And that's when I think, you know, I think people will forgive. People will forgive. But I guess it just depends on how long it goes on. You characterize on in your report as a scrappy startup. And now the brand is a $10 billion public company. So can you walk us through its really meteoric rise? Sure. So, you know, there's three guys in Switzerland and they have an idea for a running shoe. They come out with it in 2011 or I guess the first year doesn't come out to 2012. And really by the next year, a gold medalist at the 2012 Olympics is a Swiss athlete is running in that shoe. And that would talk about an endorsement. I mean, if you think about what we just said about Iga Svantec, this was a brand new brand at that point. And they got the endorsement of a Swiss Olympian. So from there, you know, they grew as a private company and they IPO in 2021 and have really only grown since then. I mean, six straight quarters of record breaking revenue for them. They're growing on a 40 percent clip. I mean, I think last quarter was like a 60 percent growth in sales. So they're growing like crazy. I think we've seen a trend across the industry for brands like this. Lululemon has grown tremendously in recent years. The Decker's brand, which is overseeing the Hoka running shoes, also is growing like crazy. So brands like this are doing very well. But in the case of On, they have the ambitions of becoming, you know, like a Nike, like an Adidas, a cross sport sportswear brand. And that's where I think this tennis experiment needs to work. Let's talk about that a little more, because I've seen on people, you know, running errands in those shoes, people running recreationally in those shoes. But why did they see this opportunity to make a tennis shoe? Yeah, for sure. So, you know, they their ethos has always been performance first from this very start. It was we're going to make the very best running shoe possible. And initially, when they're a private company, especially, they were selling directly to, you know, avid, avid runners, either professional runners or, you know, people who are running 100 miles a week for fun. Some people think that's fun, Brittany. I don't know. Not me. I'm running a marathon, so I kind of think it's fun. OK, OK, sure. So where their sales really took off and where they really, really grew as a company is when these elite performance running shoes started being adopted by people to do everyday things. And that's that was kind of like a trend that they didn't. I guess they weren't the only ones responsible for it. It was kind of happening anyways, but they were certainly a big part of it. And one of the sources I talked to the story was like, yeah, I went to Disneyland. Everyone at Disneyland is wearing on running shoes. You know, none of these people are running marathons, but everyone's wearing on. So that's really how the company, in my opinion, went to the next level. And they saw a similar opportunity in tennis. I mean, if you think about I think of like the Stan Smith Adidas shoes or Reebok has, you know, club C shoes. Those used to be tennis shoes that are now just worn for lifestyle. Really, the Lacoste brand, that's the entire story of their company. Right. They're founded by a legendary tennis player. And now, you know, they have some tennis stuff. But really, realistically, that's just a lifestyle company. So the on folks saw that tennis have the same opportunity for elite performance, carrying over into lifestyle, carrying over into the much bigger market. And I think that's why they they went after tennis. That plus once they signed up Roger Federer, the greatest or one of the greatest tennis players of all time, that certainly gives them another leg into the into the industry. So Federer's wearing the shoe as of now. Gosh, Vyontek is not. What are people in the industry saying? Is this a good tennis shoe as of now? Well, I can speak for, you know, I play some tennis out here and maybe my friends talk about gear and equipment all the time. And some of the people that have tried the shoe don't really love it. But I found it very interesting that, you know, I talked to this one expert, this guy who's a foot doctor who is also now a tennis player. And he was saying that the reasons why it was such a perfect shoe for Roger Federer are probably the reasons why we, you know, average recreational players don't love it and maybe why Vyontek doesn't love it, too, because anyone who remembers watching Roger Federer play knows that he just kind of gracefully just glided across the court. I mean, it was almost like, you know, he's never sweating. He certainly was never sliding. He just kind of like, you know, appeared wherever the ball was. That's not how we play recreationally. And even in the case of Vyontek, who's a great mover, she slides into every single shot. So that, again, is a requires a very different kind of shoe than what Roger Federer used. So in this and on admits this, they made that shoe specifically for Roger Federer for him to make. And then they just decided to put it out because it's a signature shoe and Roger Federer's a big name. And they certainly weren't expecting him to deal with the health issues and retire in 2022, thought maybe he had a few more years. So this particular shoe, I think it works very well for a certain kind of player, you know, who's not someone that's sliding around a lot. And it also works very well for someone who has many pairs to replace it because it wears out very quickly. I know that both anecdotally from people I know and then also, again, the expert I talked to said that that you wear the shoe three, four times. It really, really wears down as a very flat tread. So most of the shoes touching the ground at all times, which means it gives you great, you know, great grip and great feel on the court. But after three uses, if it's worn out and you don't have an infinite supply of shoes like Roger Federer has, you know, that two hundred dollar pair of shoes may not be worth it for for casual players. You mentioned earlier in the conversation that on really wants to be a powerhouse brand. Can you talk a little bit about what on's revenue is looking like? Do you think it has the potential to reach those brands like Nike and Adidas? Well, it's it's much smaller than those brands now. I mean, you know, that's certainly the ambition. But if you think about this is on's first move into a different category. If you think about like Nike, you know, there's Nike products for every sport under the sun. You know what I mean? This company is just did their first billion dollar year in sales last year. This year they raised their guidance for two billion dollars in sales. Great. Nike, forty seven billion dollars in revenue. So we're still talking about a small company. They're still growing at the rate that you might expect for a successful small company. They still have a ways to go for sure. Even Adidas, I think, is around twenty four billion revenue. But what I think is exciting is that, you know, if they have such a positive brand image, people think very highly of on, you know, and if they're able to carry that over into a new sport, tennis and have that, you know, excellence where they're associated with, you know, the players that they they sign up and then also just having a great product that everyone loves and they do it successfully once, who's to say they can't go into a different sport and do it again and do it again and grow to that level? I just think that at this point in their history, again, they're only 10 year old or 12 year old company. They they still have a ways to go for sure. Let's talk about that brand image a little bit more. They signed on to superstar ambassadors. We already talked about beyond tech a little bit, but can you talk about Ben Shelton? Yeah, so one thing that I wish I had been able to get into the story is the on CEO saying that when he sees Ben Shelton, he thinks of a basketball player playing tennis, which I actually think is kind of like the perfect description of him for anyone that's seen him play. He's like six foot four. He's really like muscly for a tennis player and he wears sleeveless shirts and he's very aggressive player, huge serve. He loves to get the crowd fired up. He's a little bit of a showman. And the other thing with him is beyond tech is like they seem like, you know, great. Yeah, I guess I can say kids because they're 20 and 22 years old. You know, they have their heads on straight. I don't think either one of them is any trouble ever. So I think they're perfect ambassadors for the brands. Not only that, but they're, you know, they're young and they're successful. Beyond Tech's won four majors. Ben Shelton has been a pro for like less than a year and has gone from unranked to top 40 in the world. So they signed up, you know, awesome, awesome ambassadors. Now they got to hope that those players pan out into, you know, legends of the sport like Roger Federer, ideally. I do think that they will look to sign additional players. I think they kind of like hinted that at me without saying it officially. And they're not going to sign up, you know, 100 players like I think, you know, Nike and Adidas have, I don't know, 100, but several dozen players on tour on will try to be selective. You know, that's something that I think sets them apart. But I think they'll sign on others. But I think that they definitely had a great start signing up. Two fan favorites in the case of Shelton, especially social media star, you know, really likable, always smiling. I think, you know, and he's been a walking billboard for them ever since he signed that deal with them. He's wearing their products. He's talking them up all the time. So so far, so good on that. Let's talk about Ant's future a bit. You've noted that their goal is to blur the lines between sports and lifestyle. How exactly is it going to do that? Sure, so, again, they hope for just an adoption, much like the running shoes where, you know, people decide to wear their tennis shoes around each day. I think that, like, I don't know. I don't know that I would have said that it was realistic that a running shoe would do that five, 10 years ago. So maybe it is. But I think it's unrealistic that people would wear, you know, the performance tennis shoe in their daily life. But one thing they did do with Roger Federer is they came out with a kind of like hybrid tennis lifestyle shoe. I would even call it just more of a lifestyle shoe that looks like their tennis shoe called like the Roger Clubhouse. And that shoe, you know, if if it becomes popular, that's the kind of shoe that can sell more than a performance top of the line tennis shoe. Next year in early twenty twenty four spring twenty twenty four, they're going to start releasing tennis apparel that could do really well, I think not only for tennis players, but anyone who likes to work out, anyone who likes the on running shoes. I think they're counting on tennis to beef up their apparel across all categories and those sales. But ultimately, you know, there is kind of a tennis aesthetic, I'll call it, you know, that I think aligns with the types of people who already like, you know, two hundred dollar pairs of running shoes. And I think that I think that the on brand can successfully market to the same audience, you know, for for additional products this way, because I guess just just to say, like you need one new pair of running shoes every I don't know, you're running a marathon, you tell me, but, you know, every six months, a year, maybe a year and a half. Whereas, you know, if you have additional products that you can sell to the same customer, that that seems like a business to me. We're talking new apparel, potential new ambassadors. Is there anything else that is in on future that you would like to know? I think right now they want to get back to their original ethos of performance first. So I think the next thing you're going to see is this kind of like shoe for the everyday player called the Roger Clubhouse Pro, which I told you the Roger Clubhouse was a lifestyle shoe. The Roger Pro is the performance shoe. So they're kind of going for, you know, a halfway in between sort of thing next to appeal to, again, you know, the more casual recreational players who still want to play tennis in the shoe. So I think that's like kind of a nice bridge. And then next year they'll have the Roger Pro 2, which they say is what Ben Shelton's wearing. I think what Ben Shelton is wearing during this US Open is something a little bit more custom. But I think that that's what's coming next for them is they want to get back to a performance first image, I guess, or philosophy. And then from there, they can build out the lifestyle stuff, like I said, with the apparel. But I think we will know if Iga Svantek shows up to the Australian Open in January and she's wearing on shoes, I think that that will be that will be a huge signifier. Well, we will definitely keep our eye out. Matt Craig, thanks for your reporting. Thank you, Brittany.