Back In The Running
Jim Van Dine, president of Hoka One One, discusses why the “oversized” running brand is not the next flash in the pan—it’s just getting started.
Jim Van Dine couldn’t be any happier. And for a person who has had a whole lot to smile about over the course of his 30-year-plus industry career, that’s worth noting. For those keeping track, Van Dine entered on the ground floor in the early ’80s, when Reebok zoomed from annual sales of $3 million to $1 billion in just five years. He later presided over Keen, which ranks as the fastest growing brand in the shortest time period to hit $100 million in yearly sales. And now he’s at the helm of Hoka One One, a division of Deckers Outdoor, where all signs point to the brand having the legs to hit $100 million in sales in a similarly narrow time frame. Van Dine believes it has the potential to become much, much bigger. “We’ll at least triple our sales this year, with growth of somewhere between 300 and 400 percent,” he says. He notes that Hoka is hitting benchmark growth rates similar to Keen’s in its early years. In fact, just before Deckers Outdoor acquired the brand in March 2013, Van Dine was asked by CEO Angel Martinez to analyze Hoka’s potential. (Van Dine was managing the company’s Tsubo and Ahnu brands at the time.) Van Dine’s conclusion: There was a “95 percent chance we can get this business over $100 million in five years.”
Meteoric growth potential aside, what makes Van Dine particularly happy is how his career has come full circle with the Hoka opportunity. He got into the shoe business because of running. After college, Van Dine was attempting to qualify for the U.S. national track team. As fate would have it, Martinez was a fellow running club member. Van Dine needed to find a way to support himself, and Martinez helped him land a part-time job at a running specialty store in central California. Martinez and his family would soon open their own store, Island City Sports in nearby Alameda, and bring Van Dine in as a partner to manage the business. “One thing led to another and here I am, still in the shoe business,” he laughs.
Van Dine is happy to find himself once again involved in the sport he so dearly loves. Managing Hoka includes sponsoring elite runners, attending track events around the world and bringing to market breakthrough running shoe technologies that enable runners of all types, sizes and levels of ability to take part in the sport. None of it feels like “work” to him. It’s all a labor of love. And having become an astute historian of the athletic footwear business after decades spent on the front lines in nearly all capacities (store manager, buyer, tech rep, promotions manager, sales rep, marketing director and president, to cite a few), Van Dine relishes the opportunity to channel his experience into growing a running brand from its infancy into a potential major athletic brand poised to expand into other categories. Beginning in Fall ’15, Hoka will add hiking and walking styles. This time around, Van Dine fully appreciates the opportunity and what the entire process represents. Third time’s a charm, you might say.
Van Dine firmly believes that Hoka is not just another running shoe brand, i.e. a tweak on a midsole cushioning technology with some snazzy uppers and new logo. In his opinion, Hoka represents a technological breakthrough and a real point of differentiation in the marketplace. He likens its uniqueness to what Reebok and Keen brought to the table during their respective launches. “Hoka looks different, feels different and it performs differently,” he states. And lest you assume Hoka’s oversized midsole design is part of the current backlash against minimalist running shoes, Van Dine says, “There’s a lot more that goes into our shoes than just an oversized midsole. The geometry is quite different than any other shoe. Our rocker profile is very different as well, which encourages a rolling motion of the foot that, again, offers a very different feel that many claim is providing them an advantage in running.”
Without revealing proprietary details, Van Dine likes to paraphrase Hoka co-creator Jean-Luc Diard’s response to the question, “Who are the fastest male runners in the world?” The answer lies in Hoka shoes’ unique design. Diard, in a thick French accent, says: “Is it the Kenyans? No. Is it the Ethiopians? No. On a flat course, it will always be the wheelchair athletes. The wheel is the most efficient design, and Hoka attempts to best recreate that wheel-type efficiency.”
Van Dine says Diard and co-creator Nicolas Mermoud built a running shoe from scratch. “Jean-Luc didn’t try to improve upon existing running shoes. Rather his approach was that there was no such thing as a running shoe, and he set out to invent one,” he says. Diard, a former CEO of Salomon, is a product development guru. (While at Salomon his team introduced parabolic skis, which were a game-changer in that industy, and he also worked on the development of inline skates.) “He’s not just a shoe guy, he’s a product engineering guy,” Van Dine offers. Diard brought in former team members to help with Hoka, most notably Christophe Aubonnet, who holds an advanced degree in biomechanics and the distinction of having been on two French national teams (skiing and kayaking). “The team worked with athletes much like they did when they were in the ski industry, where they did test runs, and afterwards they would literally carve the midsole and change the geometry on the lateral, medial and undersides,” Van Dine explains. “They experimented with a bunch of different densities of foams and different aspects of the rocker profile. Ultimately, after three years of testing, they came out with their first shoe.”
Now, a mere five years later, Hoka has new owners, new and highly experienced management, a broader and updated collection, an enviable team of sponsored athletes and numerous marketing iniatives, and, perhaps most important, that magic buzz as “the next big thing” in running. In many respects, Hoka’s timing is perfect. Few predicted the rapid demise of minimal, which opens the door for an alternative. Few foresaw the rebirth of the running specialty channel, which presents tremendous opportunity for new brands and ideas to get in front of consumers. In fact, Hoka’s arrival comes at a time when an armada of boutique-sized running brands have gained acceptance at retail. It’s a far cry from the days when the market was dominated by a handful of behemoths. “Unless you were one of the top seven brands, you didn’t stand much of a chance of getting your brand placed in a running specialty store,” he says. “But minimal changed that. Retailers opened their minds up to the product innovation that they believed minimal represented. I think that, as much as anything, has been a benefit to Hoka getting started.”
Getting started is exactly how Van Dine describes Hoka’s place in the market right now. And he is confident that it’s on the launching pad, ready for liftoff. “I think Hoka can be a very significant brand in the multiple hundreds of millions and, perhaps, beyond that. By the time it hits $1 billion, I’ll probably be dead, or at least retired,” he says with a laugh. Kidding aside, Van Dine believes he and his team are more prepared than ever to lead a brand into the big leagues. “The lessons that Angel and I have learned from our collective past at Reebok, Keen and Ugg have prepared us well for managing Hoka’s significant growth potential,” he says.
You have experienced some epic runs in your career. Is it you or are you just blessed with incredibly fortunate career timing?
I’d like to say it’s a little bit of both. Certainly, luck has had a lot to do with it. I was lucky to be at Reebok in the very early days when we were smaller than Hoka and even Ahnu. It was an incredible experience, but that would become almost the norm for me.
Can Reebok’s early growth be replicated in today’s athletic market?
I don’t think it’s possible to grow at quite that pace because there were a number of factors that led to Reebok’s explosive growth. First, the cultural explosion that aerobics represented and the fact that Reebok was unquestionably the leader in that market. Second, the success of our aerobics instructor program, which I consider to be perhaps the best grassroots-marketing program ever. By late 1985, when the program was only two years old, we had about 50,000 members in the Reebok Aerobic Instructors Alliance wearing our shoes in front of millions of aerobic participants every day. Third, Reebok’s growth was exploding at the same time Foot Locker’s growth was exploding. We dovetailed each other nicely. Plus, there were a number of years that Foot Locker didn’t sell Nike—that’s a little bit of footwear history not too many people know or remember. So we had a lack of competition from Nike in the fastest-growing market segment in the largest retailer in the country and our brand was burning hot. All those factors combined to create that five-year run to $1 billion in sales. Is that replicable in today’s age? Probably not.
Interesting, but Hoka possesses some similar brand traits, correct?
One of the ways that Hoka is similar is that it’s a true product differentiation. When Reebok came out with the aerobic shoes, we made nylon and garment leather versions. Today, virtually all shoes are made of the latter. But then it was a true differentiation in the product. Similarly, Hoka looks and feels different, and it also performs differently. Unlike Reebok, however, Hoka represents a technology breakthrough, whereas Reebok’s were style and category breakthroughs. That is a critical aspect, as Hoka has entered the largest and most competitive category of footwear in the world, competing against multi-billion-dollar brands. Hoka has to possess that quality. Our product is technologically different in terms of feel and benefits, which are quickly experiential. You put them on and you know that something is very different about our shoes instantly.
Which is what, exactly?
First off, a lot of people think Hoka and say maximal, which is not a term we use. It suggests that we are a response to minimal when that is not the case. The fact is our founders, Jean-Luc Diard and Nicolas Mermoud, started to work on this design in 2006, which pre-dates the minimal trend.
If someone describes Hoka as maximal they would be incorrect?
I think there are a number of brands now making shoes with larger midsoles than they have been of late, and they seem to be suggesting that they will provide Hoka-like benefits. But if all they are doing is making a bigger midsole, then they are only imitating one aspect of our shoes, because there’s a lot more that goes into them than that.
What do you say to skeptics who view maximal as the makings of another bubble?
First of all, anybody who has done what I have done—which is having sold thousands of pairs of running shoes one pair at a time to thousands of different runners—knows that there is no panacea when it comes to a running shoe. There are runners of all types who will benefit from all different types of geometry and different types of footwear. I would never say we’re the only good shoe. That’s crazy. However, I think that the percentage of people that would benefit from minimal is in the distinct minority. I say this mostly from personal experience as a runner and a retailer. And, for the record, minimal is not really a new concept—it’s all we ran in during the ’70s because that’s all there really was. Track spikes, for example, are minimal. But when cushioning increased with the advent of compression-molded EVA in the early ’80s, it provided a distinct advantage over previous models. In addition, most experienced runners would say that there are very few people who could effectively train in track spikes every day. That’s why, as long-time runners, Angel and I kind of scoffed at the minimal trend. Not that it doesn’t work for some people—like runners who are natural forefoot strikers—but our belief is that it’s a distinct minority.
In our recent Spring ’15 running preview, the gist was that brands are shifting into neutral cushioning designs. Minimal seems like a taboo word right now.
I agree. Some of the recent Leisure Trends studies show neutral cushioning is the largest growing segment in the running category, and specifically models with inherent stability. Whether intentional or not, that’s a tip of the cap to Hoka, because that’s how we’ve always described our shoes: neutral with inherent stability.
How do you think consumers view Hoka?
First of all, I think the vast majority of running consumers have yet to be made aware of Hoka. But those who are aware see it as a shoe that provides more cushioning and more perceived protection. A buyer who used to buy equipment told me he was drawn to Hoka immediately because it’s one of those products where the consumer can see the intended benefit right away. “Oh, I get it. Look at all that cushioning.”
That’s what I believe drew consumers initially to minimal. It was an aesthetic differentiation that was in step with a less-is-more movement across all categories thanks, in part, to the recession. People were downsized and they were downsizing everything.
It’s just that Nike was smart enough to ride it as a fashion wave without throwing its Air cushioning premise under the bus.
Of course. Nike didn’t get to what it has become by being foolish.
Keen provided a similar instant visual “aha” reaction for consumers.
Absolutely. The fact is brands that have experienced explosive growth have, almost without exception, had some type of visually arresting quality to them. Reebok’s aerobic shoes didn’t look like any other shoe. Teva, Keen, Ugg, Dr. Martens, Vibram FiveFingers—these were all shoes that when they hit the market consumers said, “Wow, that’s different.”
While you are really just getting started, what do you think is Hoka’s long-term potential?
My main responsibility is to make sure that this brand has no ceiling on it. That it’s a brand for all runners, not just ultra-runners and that it’s not just oversized by the way. As I mentioned, there are shoes of various dimensions that work for various types of runners. What we call ultra-sized is what’s bringing us to the party, but we already make track spikes for Leo Manzano. Basically, my job is to make sure Hoka is not a niche or a fad, that we’re accepted as true performance footwear for runners of all levels, including ultra runners, elite track athletes, everyday runners and off-the-couch joggers.
Your experience is a big part of the success formula, but without the product you’ve got nothing really, right?
It’s got to be about the product, believe me. We couldn’t just take any nondescript shoe and turn it into gold. And what makes this a little more difficult than Reebok or Keen is the competition Hoka is up against and being sold in a variety of trade channels, be it sporting goods, athletic specialty, run specialty, etc. Fortunately, run specialty has enjoyed a revival over the last 15 years after almost dying in the ’90s. You can now have a pretty substantial-sized business within just that channel. Not enough to compete on the grand stage, but enough to gain a threshold volume to potentially become a player later on.
Why do you think run specialty has re-emerged to this level?
Several things have contributed to the channel’s revival. First, the second running boom, which is actually bigger and longer lasting than the first boom, which began in the mid ’70s. Second, the fact that Foot Locker really converted into an athletic fashion retailer and stopped catering to athletes. That combination forged an opportunity for run specialty to re-emerge. Third, the running boom is driven more by women, which in part has been the outcome of Title IX. When I ran track in high school, there wasn’t even a girls team. Now, cross-country is the single most popular high school sport based on participation. It’s a no-cut sport, and boys and girls are on the same team, so it’s become much more social. And for girls who grow up running, it becomes a normal part of their fitness routines into adulthood.
Tell me about Hoka’s category expansion plans.
Right now, our focus is on what I would describe as forward-motion sports (running, walking and hiking), not side to side. But we may get into lateral-motion sports down the road. Fortunately, we have the advantage of having Diard, one of the great product mavens in the athletic world, on our team. He has just signed a contract extension with our company, and he is up for any challenge. He’s kind of our not-so-secret weapon. We rely upon him for innovation and advanced concepts. It’s not always a smooth process, as we’ve got him working on projects at his base in France and we’ve got a team here working on things as well. They work together, but they do some things differently and separately. It’s an alchemy that is working because we are coming up with some really great and innovative product.
What does Deckers Outdoor bring to Hoka?
Several things. Angel’s support and guidance is vital in that he completely gets running. He was an All-American cross-country runner, he loves the sport, he understands the business and he knows what it takes to compete in this space. Angel and our board agree with my view that, at this point in time, we should not be concerned with bottom-line contribution from Hoka. That would be foolish. We want to drive market share and topline growth, and thankfully we’ve got another little brand called Ugg that does very well contributing to the company’s top and bottom lines. Whether Hoka makes $2 million or loses $2 million in a given year at this early stage is neither here nor there in the greater scheme of things. So being a part of Deckers lets us invest in top line and market share growth. It has led to us spending almost as much money in marketing this year as we made in revenue last year.
I believe that without Deckers’ involvement, Hoka would not have made it as a brand. At the time we made the purchase, the U.S. business was being run by a distributor based in Canada that had no real experience in running a footwear brand whatsoever, and it certainly didn’t have the capital resources that needed to be invested. I viewed a potential Hoka acquisition with some urgency in that I believed the window of opportunity opened by minimal was shutting rapidly. And that would probably close the window of retailers being open to new concepts. In addition, a major investment in marketing was needed immediately, and the product needed to be updated and made more commercial for the U.S. market as soon as possible. Overall, I felt a real urgency and, fortunately, Angel agreed. To that end, Angel and I have worked effectively over the years. While we’re different in many ways, the way we think about business is remarkably similar. I can finish his sentences in this regard, because we’ve been doing this for so long together and, even when we worked apart, we remained close friends. So it wasn’t really that hard to convince him. He basically said, “You’re right, let’s do it.” Boom. And that’s another way we’re similar: We are very decisive and we’re not risk-averse.
Are there any pitfalls that you know to avoid this time around?
Sure. I think you learn more from your mistakes than from your successes, and I’ve made lots of mistakes. For example, I think I’ve improved upon my management style, being a bit more collaborative. While I’m very decisive and I’ll make decisions quickly, they are never uninformed decisions. I’ll give you one example: Our Hoka Think Tank conferences (there have been three to date) bring in key running specialty retailers, coaches, athletes, outside marketing experts and members of the media to our headquarters, where we lay out our plan and solicit feedback. We basically open up the tent flaps and ask, “What do you think?” We’ve gotten great feedback and even changed course on occasion.
A big difference with the Hoka launch as opposed to the Reebok and Keen era is the overwhelming presence of the Internet. Is it generally a plus or a negative in getting a brand like this off the ground?
Overall, I believe it’s a positive. We live in the information age, and social media involves sharing stories. In that respect, the experience for Hoka has been very positive. Certainly social media is becoming a much more critical aspect of our marketing strategy than maybe even two years ago. For example, we are now developing a social media calendar that dovetails with all our other marketing events. As for the e-commerce aspect, I also think it’s an advantage, but it does present some challenges. Being in control of your distribution is one of the most important aspects in developing a footwear brand. That was a mistake I witnessed at Reebok; it became far too dependent on lower- and moderate-tier retailers and, as a result, lacked credibility within the specialty tier. Ultimately, that was the largest part of its downfall.
Anything particularly special about this run as opposed to your previous ones?
Yes. 1. It’s a running brand, and I’m a runner. I get to be involved directly once again in the sport I love. This weekend, for example, I’m going to Glasgow to attend a Diamond League track meet. That’s a professional responsibility. [Laughs.] 2. The experience that Angel, the others on our team and I have accumulated over the years allows us to avoid making some of the same mistakes we’ve made in the past. 3. At this point in my life, I’m able to enjoy the experience more. I understand how special it is and I appreciate it more. Angel and I have both said the same thing: It seems like our whole careers have led to this point.
What do you love most about your job?
I love the fact that I’m a runner with a running brand. By the way, that experience Angel and I—as well as members of our team—have is very important. Retailers see that “these guys get it.” We’re runners. We also used to run a running store and we understand some of their plight. That authenticity is a real advantage for us, and it makes it real enjoyable as well. I’m not enjoying managing Hoka because it’s a shoe brand; I’m enjoying it because it’s about running and running shoes. That also helps with our marketing and working with our athletes. After the event we sponsored for Angel’s son, we chatted with a lot of the runners. It got back to us that they said, basically, “That’s never happened before.” A president and CEO hanging out with the athletes after a meet and talking knowledgeably about training programs, how to peak for races and events—all kinds of things. That authenticity helps give Hoka a lot more credibility.