#51: How Customer Obsession Built a Sneaker Empire with Art Juedes & Rick Gering, Co-Founders of Eastbay

In 87, say, well, you know, we're not going to sell air product to mail order anymore. That was 40% of our business. This was a real threat. So this one we had to respond to. It was addition by subtraction. You lose 40% of your business. How are you going to make that up? You had to make it up with anything else that we could find that our customer, a young high school athlete, would buy. The companies didn't do anything wrong. They've become massive companies. When you get that big, you can't focus on everything. We found that the people were just so interested in getting a selection that they normally just hadn't seen seen. And it gave us the confidence to keep growing larger. Hi, I'm Nick Hague and welcome to the World's Greatest Business Thinkers podcast. The sneaker industry is a one billion dollar business and a global obsession that started in the pages of a catalog called East Bay. This is the story behind the catalogue that changed sports culture forever. It's about two friends, $4,000 worth of track shoes, and a single idea to sell the best shoes in the world directly to athletes. What started with a few pairs of track shoes in the back of a car became East Bay, the most iconic athletic catalogue ever created. This is a fabulous story that happened before the Internet, before e commerce and before sneaker culture exploded. This is a story about two guys born two days apart, became two small town entrepreneurs who built a revolutionary mail order business that reached millions of athletes. You will absolutely love this conversation today and if you do, I'd really appreciate it if you can subscribe wherever you listen or watch, so you'll never miss another episode again. Welcome to the World's Greatest Business Thinkers podcast, guys. Thanks, Nick. Thanks for having us. Looking forward to it. Good to be here. Delighted to have you both. For the listeners, for those of the viewers on the YouTube channel, then the book behind me, the Story of East Bay is the book of East Bay is what we're going to be talking about. And, well, the story that we've got. It starts with you two. You've known each other since day one. You were born two days apart, June 1952, I think it was in the book and growing up together in, in Warsaw, Wisconsin. But I want to jump to the start of your business career in 1979, as sometimes in business you need to go with the flow. Of course you do. You have a bit of luck along the way and that's how your journey in business started with a chance meeting at a 10k race in Milwaukee didn't it, Rick? So you were, you were a runner. You runners or were runners and. But yourself, Rick, you had this vision to sell running shoes direct to athletes. Do you want to pick up the story from there? Well, there almost wasn't a story because we, we were, we were on the verge of saying, this just isn't going to work because we, we were really struggling. We're actually, we're at our wit's end trying to figure out how we would get product, how we would get shoes, because we, we had no money. You know, we were in a small town. So there weren't a lot of connections before the Internet. There just wasn't a lot of ability to communicate and develop some relationships. And there were three of us that originally were going to go into it. And I had called Art to maybe be the fourth, because he was the one that really, I think, would have made it work. And one of the guys who was a national marathon champion, whose name is Dave Elger, he decided at the last minute that he was going to pull out and pursue his career in exercise physiology and coaching. And so he, he pulled out. And about a week later, he went back to his hometown in Milwaukee to run a road race. And, you know, he's a national marathon champion. So he gets to the front of, he gets, he's in the front of the line. He's in the first wave. And he starts as you do in any race. You start talking to the people next to you and, you know, telling them how you're going to kick their butt and, you know, you're no good and I'm the best in the world and all those kinds of things, and starts talking to a gentleman by the name of Dave Hill. And it just happens by chance that Dave Hill owned the only running. Only store in Milwaukee, and it was called East Bay Running Stores, probably might have been the second only running store in the state of Wisconsin. I think there was one in Madison a little that's opened a little earlier. But so this was a, you know, running only stores was a new thing with the running boom. And so anyway, he, he owned the store and said, well, tell the guys, let's give me a call and let's, let's get together. So we did. The other gentleman who was going to be a partner with us, Don Trebatusky, he's the one who owned the Gremlin, carried the shoes for the first couple of months. He and I drove down to Milwaukee and I had called Art prior to that, and Art said, well, I can't make the meeting. You know, just let me know what happened and, you know, we'll go from there. Because he wasn't sure that he was. He was. He was in the middle of a great coaching and teaching career, and he really was pretty happy doing what he was doing. So Don and I drove down, and we got a parking spot. And as usual with Art, he always gets great parking spots. We're walking into East Bay running store, and here I see. Here's his car parked in front. I said, holy, you know, sh I t or whatever. And by seeing his car, it just. It exploded the possibility that this chance meeting might turn into something. Because he was the one that I was hoping would. Would come along with us and join in on the party. And it made all the difference to see his car there. So we got talking to Dave, and he liked us, and we liked him. So Dave Hill took another chance on us to say, I'll help you get going. And he did. And that's how it started. So it was, you know, it was a number of chances all put together by people who didn't really know what the end game was going to be. They were just willing to do it. And then when Art shows up, that's. That's the big kicker because we left that day, we took that first step, and we were in business. What I found funny, Art, is that, you know, so you weren't going to go. And then you did turn up at this meeting, but you'd spent yours and your wife's life savings, $4,000 at the time, to buy these 108 pairs of running shoes. But, you know, none of you taken a single business course. You just, you know, you believed in what you were doing, so you took this chance. And this is a story of different chances that you took. But was there a. Was there a single moment, I suppose, or first sale moment, that made you look at Rick and each other and say, well, you know, we may have something here. It was. It was. It was more serendipity. It was like, yeah, this is kind of cool. Let's give her a shot. I was living down north or south of Milwaukee, teaching down there, and my wife said, yeah, let's do this. So we made the step. Yeah. Yeah. But you weren't interested in the first. Like. Like, I suppose, like Rick says, you. You had a good job, didn't you? And. And it was your wife that did persuade you to. To do that. Yes. That was very lucky. Our wives have been very, very helpful with everything we've done. That's for sure. Yeah. Good support group. I mean, I think what I love about this story is it shows. It shows with any business, doesn't it, that you, you know, you have a business plan, but it needs to change and evolve as. As things work or, or don't work necessarily. And, you know, in the first instance, you were taking orders to foot clinics. You know, you thought that you'd take orders and deliver it a later date. But what I really found funny, and I could imagine it, is these, these kids that you were selling to that once they'd seen these running shoes, they. And they tried them on, they didn't want to take them off, so you had to sell them there. And then the business model needed to pivot, didn't it? Yeah. Our first sale was. Became our second business plan. So Rick. Rick was there with that. And like you said, they were going to sell shoes and take orders for the shoes and then deliver them later, have them delivered, and then go on to the next place. But once the kids tried the shoes on, they weren't giving them up. They were selling right there. So we realized that the business plan out, we had, our idea was to just add a fit inventory and then send shoes later. That plan was out the door. The kids, we realized the kids, they couldn't wait to get the shoes, how much they loved the new. You know, we were showing them track spikes and running shoes a lot of them had never seen before, and this was in college, and they weren't giving them up. So I think the second business plan right away was we needed inventory. And I think that's what we. As we grew, we realized that inventory was going to be very important for us. Yeah. Yeah. One of the things I've enjoyed most about building this podcast is that it's opened up conversations I would never have had otherwise. However, I knew that if the podcast was going to go properly, the best ideas had to travel beyond the episode itself and reach the right people on other platforms like LinkedIn. That was the reason I started working with Triangle. They've helped me use LinkedIn properly, sharing my ideas with founders, CEOs, marketeers, investors, and business leaders before they even listen to an episode. 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Well, I'm speaking to you both. I know you're in in Florida and Rick, you're in Wisconsin, but you started the business in small town in Wisconsin. And starting a national mail order business from there is certainly, you know, maybe some may see as unconventional. What do you think were the biggest advantages and disadvantages of building your company outside of a major city? Well, I think one of the biggest one and I think the thing that we carry, that we started with and carried over through our entire time at East Bay was there weren't a lot of other distractions. So we really could focus on the athlete, we could focus on our customer and listen and learn and figure out what makes what's important to them and how we can develop a relationship with them. And in a larger town, I think there's so much more noise that even the athletes get distracted a little bit. You know, growing up in Wasa, it was just a sports rich town and the whole central part of the state just really strong athletic interest. And so the kids were excited to get shoes that they hadn't seen before and they didn't have a lot of other distractions. So there were other stores that they could buy them, but nobody had the kind of selection and most importantly, nobody went directly to them. I think that was the big thing that we actually did different than any other retail store is go directly to the kids. Yeah. And you had all your contacts, the local running coaches, of course, that were opening the doors to your marketplace, weren't you? Yeah. But even the small town just shaped our whole attitude of how we treated people. And customer service was a big deal to us. And one of the things that we're really proud of is that over the years that, and I think it carried on even after we left with all the, you know, as the computers came on board and everything else and the growth of the company and the crazy Wisconsin winters. We never missed a day of shipping, never missed a single Day. And you see companies today that are always having software updates and we can't ship right away. And next day air is next day air from the day they ship it, but it's two days after you order it. We shipped everything that we got in. The orders that we got in. By 3 o', clock, we got out the same day. And I think Art and I are both really proud of the fact that the team just worked like crazy and we never missed a day of shipping. We early, I mean, even early on, in snowstorms, we literally drove product to the UPS warehouse because the trucks weren't coming out and wouldn't be out in time so that we could get product out that day. So it was. There's some advantages in being in a small town, that's for sure. I think people from a small town just. You treat other people the way you'd like to be treated. And I think later when you start talking to people from all over the United States on the phone and you're, you know, this is. Mail order doesn't exist. And they're kind of, they're very leery. And I think just the people from WASA really helped put them at ease with mail. Yeah. And I think. Sorry, go ahead. I think the receptiveness of the people because, you know, again, you're in the middle of Wisconsin, in the middle of the country, and the coast certainly get products sooner and get more of the product. So the people were, because we were in the center part of the state, they were just so interested in getting a selection that they normally just hadn't seen. And it gave us the confidence to keep growing larger and branching out to more and more states because we're, you know, we found that the same thing was happening. So people wanted selection. Yeah, yeah, I totally get it. I mean, you have this loyal work ethic within the communities, as you say, zero distractions from where you were based. But I think that customer service piece comes through, shining through. You were focused on the customer and your operations. And I think that was the main thing that came through. You were giving kids something that they couldn't get in rural and remote areas, unlike in major cities maybe where they could access some, some of this in shops. You were opening up their eyes to a whole new world that they didn't know existed. And that's what really excited the marketplace around East Bay. Your East Bay's growth, it exploded in, in the late 80s and, and into the 90s. So I'm interested. What was the biggest inflection point was it. When you took a gamble on Air Jordan or later on in, in the 80s, 89, I think you. You lost Nightcare and then decided to experiment with private label apparel and broaden into other areas. So which do you think was the biggest, if you like, catalyst for growth of East Bay? So for catalyst of growth, there was one that we decided to do, and that was the Nike Air that we. We went all in on. If that, that line didn't sell, we were. We were toast. But it was a great seismic shift for East Bay at that time. As you read the book, we also came out with the first color catalog. So we're going from, you know, suddenly you're showing in a catalog the Air Dunks and the Nike Air Jordans and the Jordans and team colors of white, orange, white, green, white, maroon that I bet you are really hard to find nowadays because they only made that one year. So we, yeah, it was a tremendous change for us. We went from East Bay running store to. After that, we dropped the running store and became just East Bay because we became much bigger in other sports. Also. The Jordan was a seismic shift in the shoe, the footwear industry. Before that, I think everyone looked at athletic footwear as part of equipment. And after that, I think athletic footwear became part of your identity. So that was big. Now, the second seismic shift, and we had so many shifts, really, at East Bay going through it. But the second one, you talk about losing Nike Air. So 87, 88, they come in, in 87 and say, well, you know, we're not going to sell Air product to mail order anymore. And mail order being so new, they just, they didn't know what to do with it. It was, you know, kind of the wild west. Everyone was just building do, making it up. So they did that, but that was 40% of our business. Wow. So this was a big seismic shift for us because this is when you decide to do it. But this one was decided for us. So this one we had to respond to. This was a real threat. And we just. It was a. It was addition by subtraction. You lose 40% of your business. You have this challenge. How are you going to make that up? And you're not going to make it up with a few products. The few Nike Air products you had maybe 20, 25 shoes, but you had to make it up with anything else that we could find that we thought our customer, a young high school athlete, would buy. So we started doing more baseball gloves, tennis. We did more tennis. We did a lot of starter jackets, team Wear a lot of NBA jerseys, NFL, anything we could find. So in that first year, we lost 40% of our business when we lost Nike in 88. But we made it up in one year by adding all these different things. The problem we had with it, as we found after a few years, by adding odd stuff, you weren't making more money. So that was. We were, we were growing. We kept growing at 40%, but we weren't growing the bottom line because we were growing so much inventory in that. So I love the fact that you were so customer centric. You even, you know, you were stocking pole. I think you had, you know, a few pole vaults, for example, never made money. You know, trying to ship a pole vault, I can imagine, to an end customer. I'm not sure how that would, that would. Yeah, I mean, you, you were very customer centric. And I, I love, I also love the story that you, you tell in the book about Shaquille o' Neal and when he's signed to, to Reebok, you had a contract with them with Reebok to sell the Shack Attack brand and the Pump with that new Pump technology. And he, Shaq was so excited to meet you guys because, you know, he'd, he'd grown up buying from East Bay since he was a kid. And, and, and I think. Did he say you were the only ones that stock size 22, size 22 trainers? You know, he was wedded to, to the brand of Espace. But, you know, you'd grown this, this fan club, if you like, just through being very customer centric in the first instance. Shaq was very important, us getting Nike back later. So when we got Nike back about five years later, we. We became the exclusive Nike Air dealer for mail order. But Shaq went to Nike and he was wearing all Reebok stuff because that's, well, that's what he had, you know, for his size. And he just, he wanted to make a statement to Nike that, you know, you better up your game, I think. But at Nike and both Nike and Reebok, they asked Shaq, where'd you get these, you know, the shirts and that? They said, well, I got them from East Bay. No one else would have that size. So it really first of all helped us get, you know, really close with Reebok when they signed Shaq. But I think it also kind of showed Nike that says, you know, if these guys are wearing. All these guys are wearing stuff from East Bay, maybe we should see if there's some synergies there again. Yeah. So we owe him a lot. Yeah, you were, you were really in the thick of it. During this growing brand competition between all the trainer brand, you know, Nike, Reebok, Adidas in the 80s and 90s. How, how did you manage these critical supplier relationships? Did you have a strategy for hot products that were in extremely short supply or how did you go about that? Well, early on, and probably mostly for our, our career there, the supply wasn't that short. That really came in the, in the mid 2000s. But early on, you know, this was the golden era we think of the athletic industry. There were so many firsts. The first Jordan, the first Griffey shoe, the first Bo Jackson shoe. And this was this, this is the start of the, of the, the sneaker wars. And that we were lucky because that's why we got open had, had we tried to open a store in, in the year 2000 after the Internet was there and the computers, we probably wouldn't have because we had, we didn't have any capital, we didn't have any backing. You know, the idea would the companies are going to go direct themselves. But as Art said earlier, inventory was critical to us, especially being under capitalized. And in those early years when everybody was vying to see who's number one and who's number two and who's number three, they had extra inventory because they were opening as many stores as they thought were feasible. And so we got caught up in that rush, but they had extra inventory. And so when we would most of most of the, because we were focusing on the athletes. So most of the companies had team banks. So shoes that they thought were real athletic shoes, kids that were on teams. So team basketball shoes, wrestling, track and field, soccer, all of it, they had extra inventory. So as we were again, as I said, undercapitalized, we devised a system that we would go out and we knew how many schools we were going to, so we knew about how many we were selling every week. So we would order shoes every day and bring in extra shoes because they gave us 30 days dating. So they using the company's inventory, they really allowed us to build our inventory on their money and their shoes. And that was one of the big deals because I think the retailers and the manufacturers sometimes butt heads a lot. Nike wants every retail store to make sure that everyone thinks that Nike's the best brand. And Reebok wants the same thing, Adidas. And it can't happen. Every store is different and you need to have selection and that's so you run that tightrope between they love us because we're doing team sales, which is what's driving their whole industry. But they didn't like us because we didn't favor anybody. And I think maybe we'll get into it later in the conversation, but that's one of the things that really set us apart, is that we didn't push anything on anyone. We provided selection and gave the power of purchasing to the customer. They could choose whatever they wanted because we showed everything in every size. And most retailers can't afford to do that kind of thing. But it endeared us to the. To the manufacturers. But it also created headaches because retailers were complaining that mail order was taking. Taking their business. So it was a tightrope. And like you say, you know, you did first. So I think it's. I'm right in saying that you. You tried and tested different things, and you gave Kevin Plank, the founder of Under Armour, his first leg up in business is as you were Under Armour's first customer, weren't you? So you. These different things to. You weren't wedded to just one or two brands? No, I. I mean, you know, part of what our goal was to develop a relationship with the athletes and the kids. And so they all wanted variety because all the kids think differently. They think somebody thinks they look better in a black T shirt, and other people think they look better in a gray T shirt, or I want to wear an Air Jordan or I want to wear a pump. So everybody's got their own taste and their own identity, and not every store can provide that. And we did. So we were honored and thrilled that Kevin would come to us early in his career because he had a great product and he was doing something different than anybody else was. And we were thrilled to be an early customer of his, that's for sure. Yeah. And we let you know, new products come in all the time. And they'd come to East Bay. Things like the strength shoe. It'd be hard to sell that in a. In a retail store, but we sold a lot of that when Kevin came in. Yeah, we always kind of joked that. So the buyer brought Rick and I up to Rick and I to see the product. And I. I looked at us. I hate this stuff. He says, kevin's go, what do you mean you hate it? I says, it's a great product. I love the name. Why didn't we think of it? So that's. That's it. We said, yeah, well, we're carrying this stuff, so. Yeah. Yeah. You developed this. Or East Bay developed this. Legendary, almost cult like following amongst young athletes. But, but also when the sneaker wars kicked in, sneaker heads themselves. How intentional were you in building this brand community? Was it driven by the catalog's voice, the product selection or something else? We didn't really, I don't think we ever looked at it. This is such a good question. I don't know that Art and I have really ever talked about this, but I don't think we ever looked at building a community. I think we tried to be the vehicle because all the kids, there was such a demand for product. I mean ESPN was first out and so kids could see their product on tv, could see cool product on TV all the time. You know, the, the music culture was changing, Run DMC and, and, and you know, people everywhere were starting to wear athletic shoes. So everybody had their own, there was a pent up demand and everybody had their own tastes. We just provided them a vehicle to see what was out there. Because one of the things that we found out when, when the first Air Jordans came out, it was the first time that, that for us that it was really exposed. The kids started talking to each other and so they built the community because half the kids loved the Air Jordans and the other half hated the Air Jordans. And so there was just a lot more discussion between kids of what's cool, what isn't cool, what I have to have, what I wished I had. So the catalog, we were always very intentional with the catalog and it was designed around just showing all the, as much product as we could get our hands on and giving the athletes. And fortunately the sneaker heads kind of were in the same place. There are sneakerheads who are also athletes, but the sneakerheads are also the fashion forward people and they were looking for product too. So when you're able to send a catalog every month and it's something that you can draw on and keep and take to school and keep it in bed, there's lasting power to it. And it just created an avenue that kids could compare things and talk to each other about. And that's where the community developed. And when you get a, when you know, when you, when you get the actual customers building the community, it just builds longevity and it really made a difference. Yeah, yeah, I, yeah, the brand, I can see it was built on the catalogs allure, wasn't it? And, but also the reliability of the experience. Like you say, you know, you never were late on any shipping, you know, within two days they could have that product in, in their hands. And I think over time, you've had everyone on the COVID LeBron, Kobe, Allen Iverson. I loved it when Steph Curry said that. He, he knew he'd really made it when he made the COVID of Eastman. So that's strong words coming from, from someone like him. It certainly is. I also, I also get it as well, because you say when you speaking to Nike and, and the likes, they were really interested in that mailing list, weren't they? But that was your defensive moat against competition because no one else had that, that had been built up over the years. And, and you, you mention it again in the book. Getting mail as a kid was so special. And I, I still remember it. You know, I, in fact, I am. My parents used to think that I wanted to be an airline pilot because I used to write off when I was younger to the, to alter the airlines. I don't know how I got wind of it, but I, I, I got, I found out that if you wrote to them and said that you're interested, they'd send something in return. And, you know, whether it was a sick bag or whether it was a model of a plane, either way, it didn't matter. It was just nice getting something, something through the Post. And, you know, in a strange kind of way, in this digital world we're in, I think we've, we've gone role reversal and, you know, we don't get things in the post anymore, do we? Not anything you want. Yeah, good point. Yeah. I think, you know, as we talked about it, we had a number of competitive advantages over the retailers. And one is, you know, we were shipping from one location so we could have all our inventory in one place. We didn't have it spread across 2,000 stores. One store may be out of it, you know, the company had it, but the store that the person walks into, you know, doesn't have it. And we went directly to the customer. I think that made such a difference. They didn't have to, they didn't have to go anywhere. It was convenient. It had their name on it. Not a lot of things at this time in our history had the kid's name on something that came to the house. So that was one of the calling cards and being able just to keep it. You could look at the catalog when you wanted to. If you didn't want to look at it that day, it could look at it the next day or two weeks from then. And we kept sending them catalogs every month. So it became something that you hold on to and that really Helps, you know, a competitive advantage. You're in their face all the time if they're saving it where a retailer, you know, you just, you can't do that. You got to look at a. Listen to it on the radio back then because there wasn't an Internet, so you had to listen to it on the radio or you had to see it in a newspaper. And it just doesn't have the same feel that a catalog coming to your house with your name on it has. Our list was very valued by the, by the vendors, by Nike and Reebok in that because you have to realize we had started with zero names of high school athletes, ended up with 7 million. So before we left, it was. Got got larger after that. That was where we were the only ones that have that type of list. And yeah, and we just developed it. You know, as you talked about having a white and green shoe team colors in that kids would call for white and green and say, well, our local dealer says they're not, you know, no one makes that type of shoe. Isn't. Isn't made. And we'd say, we'll get it to you in three days. So that's how you, that's how you made the customers. Yeah. Well, I love the definition in the book where you, you talk about what makes a good entrepreneur succeed. And you, you state that you need to be clueless enough and just delusional enough to believe that any idea you, you have, you can make it work. And I think, you know, I just love this definition. In fact, I was, I was talking to Art before this. I'm, I'm in the process of setting up a new clothing brand designed specifically for Paddle called Mill Club. And we've had a. There's a lot of competition out there, of course, but we know we've got a fabulous product and we believe in it. So we'll, we'll see where it can go. But I mean, every brand needs to start somewhere. Even Phil Knight had to start somewhere with Nike, didn't he? So that's a little bit of delusional. How'd you come up with the name? That is a great name. Well, Mill Club, I live in an area called Mill Brow, and I'm speaking to you also from Manchester. And this was the home the cotton industry. In fact, 90 of the world's cotton came from Manchester in the, the late 1800s. We. It was known as Cottonopolis. So the, the mills, there's lots of mills in and around the area. So, and, and a bit like you've built, you know, the. The community, if you like, through the catalog. Then we want to build a community around the. The game itself as well. So that's why we. We've gone down the work the road of branding it Mill club. So that's coming later on this year. So we. Good for you. Good for you. We just need a channel like ebay had. Yeah, well, and the list made all the difference. I mean, nobody had a. Again, kids weren't used to getting anything in the mail because you didn't give out your information. You weren't using a credit card to buy anything back then. So the list became really valuable. And nowadays we probably would even have a younger list. Our list was mostly 12 to 24, but the way youth sports are going, we probably could be down to 4 to 24. It's amazing how youth sports has just taken over. Yeah, yeah. And of course, everything evolves. And as you say, you know, we're in different times now. Well, even in the late 90s, you launched East Bay.com and so this transition from mail order through to the Internet, I'm interested. Did you see the Internet as a threat to the catalog or this massive new opportunity? And was it a problem in the first instance managing both channels? Well, really we just looked at the Internet as being just another channel to get athletic footwear to kids. But one of the things that we had thought about, particularly when in our dealings with the different companies, we really thought they would really go direct to the athlete. And I think they've tried to do that now in the 2000 and 20s, which, you know, they've had problems. They've had some problems with that, which has surprises us. I mean, I think that was one of the things we looked at as one of the big threats to East Bay also when we went public, and this is back in 95, so we were really looking at the Internet before that. And we talk to some of the analysts that interviewed us to buy stock and we were talking about the Internet and you know, the possibilities there. No one asked about the Internet Internet at that time, 1995, none of them cared about it. These were the guys that. The experts of the market. So things changed very quickly after 2000. Yeah, yeah, we were lucky. We had a great software company that we worked with and we were the. Because we went on the Internet, but we didn't have real time inventory and nobody did. But we were the second people in the country, second company in the country to have real time inventory on the Internet. Because I think we understood that Kids want access and if they can get on when they find new, fun things, they're going to play with the Internet and we better be there ready for them. But it was fairly gradual. I shouldn't say gradual, but we were prepared for the catalog to die because we knew the advantages that the Internet provided. But. So we carried on as the catalog carried on as long as it could, but the Internet just made access so much easier. Yeah, I, I was a massive basketball fan in the 90s. And I love the fact that Chris Webber, who was a player that I loved, said you were the Internet, even before the Internet. And we know that, you know, kids doom scroll over their phone. But I too used to spend hours looking at catalogs, dreaming of what I could have, even though it, you know, might not have even bought anything from it. That's, that's the way it was. It was powerful, wasn't it? Well, you drove us out of business by not buying from us, huh? You single handedly shut it down. Thanks. Thanks a lot. I. Well, I'm speaking to you from the UK and you know, I'm gutted that we never had East Bay as I know it made it to Japan, didn't it? And Australia. But I, I never saw an actual East Bay catalog in, in my hands. So yeah, I would have loved that as a kid. In 19, in 1997, you sold East Bay to F.W. woolworth Co. Later to Footlocker. What were your thoughts around that decision after so many years of independence? Was it about securing the brand's future? A personal exit or a new challenge? Was it? Or something else? It was a really tough decision. A really tough decision. And there were pluses and minuses on both sides. And the Internet just really made a difference with accessibility. And we saw that and I think we really felt strongly that with the Internet, the industry and customers were changing in a way that how we were doing business and with our lack of capitalization and everything else in small town, that there were really some opportunities to have somebody bigger come along who could take what East Bay was doing and expand upon it and make it even better. And it helped knowing that our team was spectacular. I mean, we were pumping out catalogs. We had a major catalog every month. We had sale catalogs every three months. We had a couple other specialty catalogs and coaches catalogs that were going out. When we first got going with Nike again, Phil Knight told us it took six months for them just to get the okay to use a picture. He couldn't believe how quickly we were pumping out catalogs. And so we felt that we had the team that could really keep going into the future, but it was getting more than Art and I, we didn't have the capital to keep it going. And ultimately there were some opportunities that we could have gone into to either be more of a magazine and charge subscriptions. We could have opened retail stores. Those would have been really great, I think, short term possibilities. And then you never know what goes after that. I mean, you look how we started, we jumped in without really knowing what the end game might be. And we were at that same inflection point of, you know, maybe if we go down these paths, who knows what will happen? But we thought, and maybe Art can add something to it, but we just thought that it was best for East Bay. Well, we, you, you know, you read the book, so you, you know what happened. So we, we just simply couldn't decide and, and we had to make a decision and so we did. You can find out how we did it in the book, but. Well, I think, Art, you need to tell the listeners how you did actually decide, because I sold my business and, but I didn't do it on a flip of a coin, so. Oh, darn, you gave it away. I was gonna say you have to read the book for that. And it sounds a little frivolous to do that, but there were so many good reasons, actually. And Rick had one of the big things Rick was pushing. We need to open more. Maybe if we opened a lot of other stores in different areas. And then when Footlocker came calling, it was like, well, these guys have a lot of stores. This, this, this, this is, you know, goes right with that. So, yeah, there were, there were so many things on either side. Obviously, if either one of us would have decided, yeah, we don't really like how the coin came out. We, we would have not gone with it. So we thought it was the best possible decision. And I think looking back, it probably was. So. Yeah, well, I think it was a similar story when I sold my business. It was still a family business at the time. And my father, he didn't necessarily want to sell. He, you know, he preferred to carry on as we were, but he didn't definitely didn't want to answer to shareholders, and so he, he exited the business. But I, I, I wanted to attack the US Market at a quicker pace than we were doing organically, and that's why we look to do it. But we, we didn't flip a coin, but, and we, we did decide as, as board members, it's not easy. And things do change when you're part of a corporate world. And I really did laugh out loud when you said that. I'm not sure if it was both of you thinking this, but the worst part about selling was the fact you needed to wear pants and not shorts to your quarterly board meeting. So that was the hard part. Yes, especially for Rick. Well, I know you two used to be, you know, the company was built on running, so you're running fanatics. And I. I'd use the analogy that building and running a company together for many years is. Is definitely like running a marathon. What's the one principle or practice that either of you, you know, kept your partnership healthy, productive, resilient through all the ups and downs over the years? How did you. How did you keep it going? Well, I think for us, it was trust that we always trusted that we each had each other's the best in mind for the company and the best in mind for each other. And like I said before we were on the air, we would compromise a lot. We weren't. So we didn't take ourselves so seriously that think we were. We knew everything. So we would compromise a lot between each other and also listening to our customers, we would change things that they felt need to be changed, and we'd work with it. What do you think, Rick? No, absolutely. I mean, I think we were constantly willing to learn and open to learn and open to hear new ideas. I mean, we had, what were we, 35 million before we even had job descriptions and a budget. You know, so everybody at East Bay knew they had a voice and knew that if they saw a better way to do something, that we were more than willing to listen to it. And so when you trust each other like this and, you know, you work with other people to make decisions, I think even the people that work there knew that even though Art and I politely argued that, that it only meant good things for the company because we were taking everybody's opinions and really trying to figure out what is best for East Bay. Yeah, and you do it on a run. You know, you get out of the office, you get some fresh air, you get. You get your blood flowing a little bit, and you get some distractions that help you realize that this isn't life and death. You know, it's not like losing a child or raising a child or anything else. It's just a company and, you know, you do the best you can and. And enjoy the company along the way. Yeah, well, today's market is very different with the Sneaker and athletic. Yes. Much larger. Yeah. How if you were to start East Bay tomorrow in, you know what, would you do anything different? Would you, would you do it all the same again? Or is there any, any learnings that you've taken from your years in business? I don't think anything we could have done different to had a better outcome. You have to make so many decisions. I mean, looking back, back at the book now, from hindsight, you realize you were doing so many first. You were basically inventing a lot of things. You were, you were flying this airplane and building at the same time. And if we would have made a different decision, it probably would have crashed. So I mean, every decision we made had to be almost all right. So I don't think we could go back and really make much of a different decision on anything. But I think a lot, and along those lines, I think a lot of it is still the same. You got to know why you're doing what you're doing, and you have to focus on your customers and be willing to not think that you know everything. So you got to listen, you got to learn. I think those are some of the things that just stay the same. And you have to trust your, you have to trust yourself, you have to believe in yourself and you have to trust the people that you have working with you. So I think a lot of the core things are the same. It's the tools that are different now. There's different analytics. There's, you know, there's video, you know, still haven't seen a, a website with a lot of great video in it trying to sell product. And there's nothing better than watching somebody drill a ball from, from, from. Make the goalie fake right or you fake right and the goalie goes right and you can use your other foot to kick left. And it just. There's so many fun things that you could see and, and make visible to help sell product. But the core things are still the same, I think. Yeah. Yeah. Well, and I think just from what you said there, you know, fun, you know, making sure that fun is, is, is core to what you do. Yeah, you got to believe in what you do. You guys chased a better shoe for the runner in the first instance, but that belief and that focus, it, it does, it cuts through everything, doesn't it? To make it a success. To finish, I've got my usual questions I ask all my guests. So firstly is a question from my last guest who was Will Godara, who was the co owner of the number one restaurant in the world 11 Madison Park. And also the author of the international bestseller Unreasonable Hospitality. So Will asks, what's happening in the sneaker world right now is fascinating to me, especially when there's new entrants in the marketplace. My question to the guys is what did the likes of Nike, Reebok and Adidas do wrong that allowed the door to open for the likes of ALM to take their market share? Well, I can start because you'll, you'll have good comments along with it. You know, it's a scale thing. The companies didn't do anything wrong. They become massive companies and they, they dominate the world. And when you get that big, you can't focus on everything the way you did when you were smaller. And so it's almost like a piece of pie and you can just take a little nibble off the crust. And that's not that on is just a little nibble, but hoka and an if you can find some things that make a difference on came out and they had a new technology and it was a visible technology. You could see it, you could understand it and when you put the shoes on, you could feel it. And so if anything, the brands maybe there's so many people that they have to listen to. There are people that just slip through the cracks and those people that do find something else that they think somebody's talking to them, somebody's giving them a head up, giving them access to something that they don't see somewhere else. But I don't know that you really can say the athletic companies did anything wrong because they're still pumping out great product and art can maybe comment on this. When we were starting up the early years, the sneaker wars, it was all about Even though the 70% of the people, the Nikes of the world and Adidas and Reeboks, they were using the athlete to get people to buy casual shoes, to buy athletic, casual shoes. And it wasn't until all the color shoes came out, the air forces and the dunks and the Air Jordans, where the 70% that they weren't focusing on started buying the shoes. And that's when the sneaker heads really became big and drove the athletic companies to spend more time on the sneaker heads than they were spending on, on the athletes. But that's where they made their money. That's where they, you know, they didn't say that they were talking about athletes, athletes, athletes, but they, they knew they were making their money on the 70% of the population that doesn't play sports. That Wants to look like they play sports or wants to wear what great people have, what great athletes wear. And so they finally got to the point where they were saying, yeah, we can concentrate on the 70% because they're buying athletic shoes now. They're buying high end athletic shoes as casual. And how could you not as a public company go where the big business is, you know, so I don't know that you could say they did anything wrong. They just, that scale just creates opportunity for other people to come in with a better mousetrap. Definitely. Yeah. I mean, I mean we're talking about east bay in the 90s. Compared to that where athletic footwear was that size, they were probably 10, 15 billion and now it's 140 billion dollar. So it's just, it's just such a much bigger pie. Yeah. So there, there's crumbs left over for a lot of people to start. Plus actually entry into the business is, I would think was, is easier. You could actually make one shoe now if you wanted to. Back then, if you want to make a shoe, a different shoe, you probably have to buy 25,000 pair from a company. Now as a company you could probably do it for 10,000 easily or maybe even less. Yeah. And pre sell it on the Internet. Yeah, absolutely. Next, a couple of questions from the listeners. Firstly from Guy Powell, he's in Chicago and who asks, looking at the entrepreneurial landscape today with its instant scale, social media and AI, what's the one piece of your 1980s Wisconsin startup mindset that you believe is more important now than ever? Listen to the customer. Yeah, I mean I think it's the things that we just mentioned before. Yep. There's a list of things and I don't know that, I don't know that you can pick one because you got to do them all. And we were lucky enough, I think that we were good at doing them all. Yeah. Secondly, from Tom Green in San Diego who asks if you could go back to 1980 and give your younger selves one piece of business advice, what would it be? Wow. So if we knew anything about business, it would have said don't do this. I mean, quite frankly, we went to 16 years of college between us and never took a business course. If you have a good idea, get it going and follow your instinct. Rick, do you want to add to that? I think you have to be open to things and I think you have to be willing to learn. But I think the biggest thing that got us going, like I said early on that Art showed up, it's that confidence to take that first step. Just like you with your new company. You took the step. You know, you can have all kinds of ideas, but if you aren't willing and aren't to take that first step, nothing ever happens. Yeah. Okay, so you've just imparted your business advice there. What's the best piece of business advice you've ever been given? You've rubbed shoulders with the likes of Phil Knight and people like that. So have you ever had a words of wisdom from anyone that you. You'd like to impart? I like Phil Knights. So when. When we worked hard to get Nike back and we did, and then after he went public, Phil, you know, didn't. We were pretty small to him, but he. I think he kind of liked us because we started the same way. The back. Back of our cars go into our track shoes. He just came over and said, now, isn't this better than suing each other? Yeah, that's the only lawsuit we've been in. So, yeah, it was good advice from him. Yeah. No, absolutely. Who would you like me to reach out to? You've seen the list of guests I've had on the show. Who would you like to hear on the World's Greatest Business Thinkers podcast in the future? I'll speak. We're kind of jaded, but because we were all about access. With the kinds of questions that you ask in your background, it just seems that you could have two, three, four people and do more panel kind of things where you get an entrepreneur, you get a seasoned CEO, you get a marketing person, you get a like Adrian, you get somebody who understands the psychology of thinking and making decisions and put them all together and put them in. Put them on one podcast and really present so many different avenues to anybody listening, so many different ideas to somebody listening, and let them pick and choose what they like and what makes sense to them, because that's just coming from our background. We would like to see access. We would like to see great. We would like to see a bunch of great ideas all at one time so you can pick and choose. Well, that's in the pipeline, actually, Rick. So I'm glad you said that. You're doing more of that. Yeah. You've had such a great case. You got one right. Good job, Rick. I gotta write that down. What time is it? What's the date? Just stay tuned, subscribe, and stay tuned. And it'll be coming your way. You're right. Finally, my next guest is. Is Adrienne Adami. She's a Sought after, well being expert thought leader. And she's been named as one of the the top 25 black entrepreneurs to watch. Her latest book is called Decisions that Matter. What question would you like to ask to Adrian? When I speak to her next week, It would be nice to know how she would think about decisions. How she would think about decisions where the outcome is unknown. Like, when we started, we had no idea where this could go or might go, but we had to make a decision. And some of them based on chance and people trusting. But when you get in those kind of situations, how do you, how do you make decisions when you don't know what the outcome might be? Yeah, it's a great question. And I know she covers off lots of different topics in her book. That's behind me. So. Because I will, about a month ago, I, I read multiple books at a time. So I'm reading Will's book because both our sons were in the, were in the food industry and. Yeah. So I just, I'm probably about what, only 100 pages in or something. But it's cool that you had him on. And now Adrian, she's going to be a great guest. Yeah. Good for you. Yeah, she is. Yeah. And Will's. Yep. Will's podcast is coming up shortly and that's a fantastic conversation, so you will love that. Have you talked to Danny Meyer ever? I haven't because Danny Meyer, no. But Danny Meyer kind of comes from the same place where Will is coming from. He had his book out quite a number of years ago, but it's kind of a similar concept of hospitality, both to your customer, but as importantly to your staff and how you build those relationships. And our son said that Will's really a great. Nice. I don't want to say a step up, but Will is a nice second edition of what Danny kind of started and with a little bit more recent thoughts and theories and ideas. Well, I'll reach out. I'll reach out to Danny as well, Larry. Well, I mean, he's got Shake Shack. He's got a great story behind what he did too. So. Yeah, no, well, your story is, I think, the absolute blueprint of what visionary entrepreneurship looks like and shows hard work, driving passion can accomplish. You started your mail order business from your basement. There was no Silicon Valley venture capital and no fancy connections. Just a deep understanding of the niche community, the runners that you were targeting. And I think it's such a fabulous. Read your book. It's a master class in partnership, scaling a physical business into the digital age and building A culture with your customers and your employees. So listeners, you do need to go out and buy this book. It's not only a fabulous book, but I should point out that all the profits from the book will go to charity support children's cancer. And I'm a chair of a trustee of a local charity called Oliver's Dragons that gives back to children and families that have been affected by cancer. So I know how harrowing it can be and what a great cause this is. So listeners definitely go out and buy this. I think Art Rick, the website is it that people should go to? Book of east bay.com yep. Bookofispay.com and we have our prologue on. As we started in business going directly to the customer, we put our prologue on so you don't have to buy the book to see if you want to buy the book. You can read our prologue and see if it interests you enough to go ahead and buy the book. Well, if you go and look at the prologue then you will definitely want to buy the book because it's a fascinating story and we've talked about for nearly an hour today. But there's so much more that we could have uncovered in that story. So thank you both guys for, for coming on the show. Good luck with the book and yeah, it's, it's a fabulous read. And thanks for sharing the East Bay story with, with the world and putting it down in paper because otherwise, you know, it would have may have got lost some of those fabulous stories along the way. Well, thanks Nick. Thanks for having us. So here are my three key learnings from speaking to Art and Rick about building the brand of East Bay. Firstly, it's the power of deep a deep, authentic partnership. The two of them may not have always agreed on every decision, but they, they built a way of working with each other. They have the defined roles. The number one foundation, however, for their success I think has to be trust. What was fascinating is that they didn't even have job titles or a business plan even when the business was at $35 million in size. Sometimes in business you need to take a calculator gamble. But they always backed each other and this led to decades of growth when they finally sold out to Footlocker. Second, I think was the importance of understanding their customer and being customer centric. They were speaking to the customer from day one at their trackside foot clinic so they understood the athletes. As time passed, this understanding transferred to what the kids were looking for with regards to their sneakers for leisure wear and their route to market was the world famous catalogue. But then this started to change. To be online, through their website, through their channels. They built a community that felt seen and heard that nobody else in the market was doing. And that was the differentiator for East Bay. And thirdly, I think it's the resilience to evolve while staying true to your core. They navigated the shift from mail order to the Internet, from a running niche to a sneaker empire through basketball. And they rode the wave of the sneaker wars. Even when Nike took away the Air Jordan range from them, that accounted for 40% of their business. They, they pivoted and started expanding into other products and other ranges. And all while maintaining that essential credibility of being able to get the best products to the people as quick as they could. Finally, part of that. I love the story of how they won back the full Nike range. When they sent hundreds of catalogs to different addresses in Beaverton with Shaq's Reebok boot adorned on the front cover. It certainly caught Nike's attention and they couldn't ignore it anymore that they knew that East Bay was a channel to market they needed to be in in order to compete with the competition. So they, they got the full Nike Air range back into the catalog. It's a great story and, and I think to finish it off, I just love the strap line that they encourage kids to, to dream big and dream often. Next up is Adrienne Nadani. She's talking about her new book, Decisions that Matter. How to make decisions in a world of endless choices. I hope you can join me then. Until then,