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Utopian Vision

Evan Schwartz, president of Aetrex, on building a company to benefit the entire industry

Evan Schwartz, president of Aetrex

Evan Schwartz may or may not be a Trekkie, but he does have a Spock-like interest in science and medicine. Specifically, his interests lie in ways to live a longer and healthier life. He’s currently reading Outlive by Peter Attia, MD, and is inspired by the great work many scientists and doctors are doing on the brain, cellular makeup, sleep, diet, and exercise. In fact, Schwartz believes younger generations have a realistic chance to live very long and healthy lives.

So, what’s this “live long and prosper” sentiment got to do with being president of Aetrex? For starters, the Vulcan blessing could serve as a tagline for the 77-year-old, third-generation-run, family-owned, Teaneck, NJ–based company. That’s because Aetrex is uniquely built for longevity. Since Evan and his brother Larry (CEO) took the day-to-day reins in the mid-’90s—and soon after were joined by their brother Matt (chief revenue officer)—the foot-health-driven company has evolved into what now spans two thriving divisions: footwear as well as technology and orthotics (T&O). The latter is led by the company’s state-of-the-art Albert 2 Pro foot scanning devices. The divisions serve as a multi-pronged lifeline for retailers: The scanners draw traffic and address various foot-related ailments, recommending Aetrex orthotics, which contributes to add-on sales that bolster bottom lines. The scanners also recommend proper-fitting shoes from a retailer’s entire selection of brands. Everybody potentially wins. Taken as a whole, Aetrex is an intelligent design run by three close-knit brothers whose relentless curiosity and ability to evolve make the company, in many ways, forever young.

For many execs, a business that’s been on a solid growth trajectory for 20-plus years would be more than enough. But the Schwartzes are embarking on a much more grandiose vision of longevity—one that extends to the viability of the entire footwear industry. This next level utopian thinking involves data. Namely, the 40 million foot scans (and counting) that Aetrex possesses. Schwartz says that exclusive information, housed in its portal, can help all manufacturers make better footwear, which he believes will result in happier, repeat customers. Again, everybody wins.

“Data is king, and we can provide a ton of it to brands,” Schwartz says. “We have 21 years worth of consumer information about feet, fit, function, brand preference, etc. It can help design better lasts and better-fitting footwear. We want to help everybody make better shoes, which we believe will result in a case of a rising tide lifts all boats.”

Aetrex is already partnering with several manufacturers and has donated a scanner to Detroit’s Pensole Lewis College of Business and Design. The Schwartz brothers met with Dr. D’Wayne Edwards, the school’s founder and former designer, last fall and instantly connected on what the Albert 2 Pro and its data could bring to students. “They can learn so much about different foot types and design better,” Schwartz says. “We can learn so much from each other, and we expect to do great things together going forward.”

Aetrex’s aim here is not exclusively altruistic. The preference is that Aetrex be the brand consumers buy following an in-store foot scan, be the purchase shoes or orthotics or both. The data portal is another revenue stream for the company. Still, Schwartz believes the potential industry-wide benefits dwarf those Aetrex will reap. “If we can look back and say we made our industry better, that’d be incredible,” he says. “That’s what we’re shooting for, which is pretty powerful and could be extremely rewarding.”

Is this all pie-in-the-sky thinking? It’s a fair question. Historically, getting direct competitors in footwear to exchange pleasantries, let alone partner to make their product better, is unheard of. Can one, for example, envision Nike ever offering such a service to Adidas? But this is where the Schwartz brothers’ unique standing in the industry comes into play. They are considered the “nice guys” in both retail and wholesale. Their enthusiasm for the business is infectious, and their willingness to share ideas is unprecedented. “We’ve had multiple competitors meet with our teams to learn about what we do and how they might be able to run their warehouse or websites differently,” Schwartz offers. “We open our doors to anybody who wants to come meet with us.”

The openness, Schwartz believes, creates opportunity. One never knows where such meetings might lead. For Aetrex, they often become partnerships that turn into friendships. “We travel socially with some of our retail partners, and we attend concerts with some competitors,” he says. “Life’s too short. If you’re successful, we’ll be successful. There’s enough shelf space for a lot of us to be successful.” Perhaps this utopian business philosophy ties to Schwartz’s interest in longevity. “We’re in it for the long term,” he says. “We only want to be good partners and make our industry healthier and stronger.”

It’s already been quite a run for Aetrex, and Schwartz believes there is plenty more runway ahead. Not too shabby for someone who, as a kid, wanted to become an orthopedic surgeon. He changed course when he started working for a small company during high school that made coagulators to treat hemorrhoids, then worked in his father’s foot care factory during his college years. “Turns out I loved business operations—improving efficiencies, and making something I can sell,” he says. Particularly, Schwartz loves making products that make a difference in people’s lives. “We make shoes with great comfort features and orthotics that genuinely help people,” he says. “I love that. I also love continually building something bigger and better off of that concept.”

What makes Aetrex so unique?

Platform and product diversity. There is no other footwear company like us. While we face competitors in footwear, orthotics, and a few in scanning, nobody does all three, and none do two vertically. That uniqueness is intertwined in our DNA. It’s also the key to our longevity. It makes us resilient and nimble, enabling us to muscle through difficult times and be successful. And looking into the future, we believe that success will continue, led by the tech space. The team we have in place, the AI engines we’re working on, and knowing that we’re never going to stop developing adds up to endless opportunities to grow our business—and to benefit many others.

The data portal seems utopian in concept. Would you agree?

We believe we can make the industry a better experience all around. And by doing so, the consumer wins, whether it’s our brand or another, and whether it’s purchased in a store or online. Whatever and wherever it ends up being, we want to help provide the best consumer experience, and that’s by better fit and function, which reduces returns, making the likelihood of a consumer to come back to that brand and store greater. We want to do that together.

Direct competitors, even? Yes. I was at an IR Show recently and someone asked why we’d let competitors into our doors. I said, “Why wouldn’t we?” We’re not hiding anything. We’ve welcomed plenty of competitors into our technology, orthotics, and footwear divisions for meetings. You just never know where that might lead. I believe most people are decent. Also, we spend a lot of time at work, so we might as well have more fun working with people we enjoy. It just makes it more enjoyable.

How’s the reception been to the data portal so far?

On the retail side of scanning, we were told no for years, but it’s since become essential. It’s an amazing technology that offers a great consumer experience and generates additional revenue through orthotic and footwear sales. It also reduces returns as well as captures the most amount of data. And now our scanners work in all kinds of retail environments, as we invested in new technologies during Covid. So, it’s a lot easier to get yeses from retailers. On the brand side, data is hugely important, as consumers are more aware than ever about fit, function, and wanting to feel good. Brands can’t get away with doing the same old, same old anymore. They can no longer be complacent and assume consumers are going to come back to them. Getting the product right is critical. So, we’re finding brands are receptive to putting our scanners into their flagships and innovation labs, and accessing our data through our 3D Fit platform. It’s been a lot of work to get here, but our overriding mission is that consumers buy great products, and not just from Aetrex. We’ll be thrilled if everybody starts doing it better.

What sort of growth potential does the data portal have?

It could be huge. Our goal, in three to five years, is to be working with most retailers and brands with our software technologies to make the industry that much better. At the same time, our footwear brand is actually leading the way and growing tremendously. Knock on wood, if that continues, it can become a very powerful brand.

Did you envision all this when you first joined the family business?

No. But Larry and I were determined to do something fun and unique. Matt brings the same qualities. So, I knew that would help us grow a great business, whatever that turned out to be. But if you asked me in 1994 whether I’d soon be building websites for footwear retailers and then, a few years later, making scanning devices that now includes our data portal, I’d have said no way. I can barely imagine what’s coming next, because it all moves so fast. Our tech capabilities change so rapidly. I mean, when I started, we were making like 10 pairs of shoes a day and things like tongue pads and heel grips for other brands. So, the ’90s are a bit of a blur because we were in the office all the time. It’s a family business, and we took it very seriously. Fortunately, we’d been studying feet our whole lives, as our dad has been a great teacher of foot care and proper alignment in shoes and orthotics. We believed we could build off that knowledge by making better products under our own brand name. That shift happened in the first couple of years, and it’s been full steam ahead ever since.

How much has Aetrex grown since you arrived and how much do envision it growing in the future?

Without counting our Apex medical division, which we sold in 2015, we’re about 25 times the size. Our goal, within the next five years, is to be two to three times our current size. We think there’s a lot of opportunity in all areas of our business. Plus, our tech capabilities insulate us from the normal ebbs and flows of the footwear business. Tech is seasonless. Of course, you never know what might arise—like a pandemic. Fortunately, we grew through that despite the many challenges we faced.

How so?

The pandemic forced us to hunker down and focus on our business. We quickly realized that we needed to answer the needs of consumers who started to demand better. Many became more active, and they want products that are healthier for them. They want to have better experiences. That means better fit and improved comfort and performance in their shoes. Aetrex offers both product and technology that helps answer all this at a time when consumers rightfully demand it.

Is Aetrex still dealing with supply chain issues?

It’s gotten significantly better. Everything is now on time, freight costs are down, and our spring season is going gangbusters. Last fall, however, some of our deliveries were months late and freight costs were through the roof. Fortunately, we have great relationships with our factories. We never had delays from that side; it was always the freight companies. For example, on the tech side, it was hard to get cameras, which delayed the launch of our Albert 2 Pro scanner. Components that used to take weeks took six to 12 months to deliver. But we muscled through.

I hear a lot of concern about high inventories now.

I’d be lying if we hadn’t had some tough conversations with some great retailers about inventory. Fall came in late, and people are over inventoried. Plus, consumer demand is down overall. Fortunately for us, our spring line is performing well, which I think will help us going into this fall. I also believe consumer demand will be better than expected, and there will be a scramble for inventory. I believe this is the last piece of a messy two years.

Why, exactly, are you optimistic?

While everyone I speak with is trepidatious amid high inventories, inflation, and general negative consumer sentiment, the consumer is still out there shopping. I believe inventories will eventually shake out and everybody is going to head into Spring ’24 feeling good. I said this in a meeting about a year ago and I’m sticking to it. It hasn’t been the year everyone has hoped for as we were coming off high consumer demand and the money flowed into the market thanks to the government, but I don’t believe it’ll be as scary as some people think.

What is your outlook for the rest of this year for Aetrex, specifically?

I’m relatively bullish. We’re having a good spring and our fall projections are good, not great. But we’re prepared for great, because we’re running our business without a ton of debt and we have inventory. I think we’ll end the year in good shape on the footwear side. The T&O side has a lot of stuff in the pipeline and I think fall will be ok. The silver lining of our industry is everyone needs shoes, and it’s multiple pairs for different occasions. So, while consumers may pull back at times time, at some point they’ll always shop for footwear again. Previous downturns in the economy saw, for example, men go to the repair shop instead of buying new a new pair, but in the long run, they come back to buy new shoes. You might have to take it on the chin for a bit and tighten up your business, but those who survive will come out of it stronger. If you provide a great in-store experience, consumers will come back. If you make products that are unique, fit well, and perform, they’ll come back. But you can’t be complacent in any way, because then they won’t come back.

How much are you involved in the line building process?

While we have great design and product development teams that make my life really easy, I still like being in those meetings as much as possible. I try not to push my way, but I just love the development process. I love being in our factories. I just love making stuff. I get a kick out of all it, from start to finish. The ability to see something through from concept to design to development to commercialization to sell-in to sell-though, and do it all relatively quickly is incredible to me. It involves so many hands and processes, and yet shoes are relatively inexpensive. Even up to $200, that’s pretty cheap when you think about all that goes into making that product.

Shoes may be undervalued, but are they underappreciated as well?

To some extent. But I’m hearing more and more how much shoes matter to people regarding function and comfort. People want to be active and comfortable. They are smarter at making informed choices. We have to back up what we say and make. It’s really great to be a part of this conversation.

Do you and your brothers sleep much?

No. Although, some of that is self-inflicted, because we love to have fun. We blow off steam because we take our jobs very seriously. While I don’t have any desire to retire, that’s when I’ll sleep.

It helps that you three get along so well, which is not always the case in family-owned businesses.

We’re lucky in that we get along amazingly. We hang out together outside of work. We travel together. We work together on everything, and any arguments we might have are over nuances. But we never let work bleed into our personal lives. We have the same goals, and we’re always striving to be better.

What do you love most about your job?

I love so much of it. I love the people I work with. I’m sure you hear this all the time, but I’m so fortunate to work with great people, and I love building great teams. I also love making widgets that are beneficial to people. For example, you can look inside a shoe and see the secret sauce is an Aetrex orthotic that makes a shoe better and, by extension, that person happier and healthier. Similarly, our scanners drive customers into stores, and that feels really good, too. We sell authentic products. It’s a great feeling.

Off the Cuff

What are you reading? Outlive by Peter Attia, MD. It’s a fascinating take on the science behind living a longer, healthier life. I’m also reading Bono’s Surrender: 40 Songs, One Story, which is also fascinating.

What was the last series you watched? Shrinking and The Last of Us. I always watch two series at once. I like something lighthearted and something darker.

What might people be surprised to know about you? I’m a music snob. I definitely know I’m right on what’s good or bad. (Laughs) I’m also one of the last few people who cares about the album as an art form. Music just puts me in my happy place, and my brother Matt (Aetrex’s chief revenue officer) and I are obsessed. Every day we talk about new releases. We’ve never shaken out of our 14-year-old selves when it comes to music.

What was the best piece of business advice you ever received? Never be complacent and always be curious. Being curious is only a positive, especially in our industry. Our company is so very different, and I think it’s based on that curiosity.

Who is your most coveted dinner guest? Over the years I’ve wanted to sit down with various world leaders. But I’m pretty much turned off by all of them currently. Now I just want to have a few cocktails with Keith Richards.

What is your favorite word? Platypus, which is a nod to my niece. She just applied it to everything. It goes back like 20 years. It’s a soft spot that our family has for just a silly-sounding word.

What is your least favorite word? I have a love-hate relationship for zoom and hybrid. Also, I hate irregardless because there is no such word. I hear it all the time and it drives me crazy.

What did you want to be when you grew up? When I was really young, I wanted to be a garbage man because I had to give my pacifier to that man and I always wanted it back. That was short-lived. Then I wanted to be an orthopedic surgeon.

What was your first-ever paying job? At 15 I stocked produce at a small grocery near my school. I made just over $2 an hour, so that too was short-lived.

First concert and best concert? Technically, my parents took me to see Sister Sledge. Maybe they were into “We are Family,” which is very apropos of my family. But I count my first as U2 in May of ’87 during the Joshua Tree tour. I also saw Nirvana in a high school auditorium, which was pretty special. My all-time favorite, though, is Bruce Springsteen at MetLife Stadium on Aug. 30, 2016. David Kahan (CEO of Birkenstock Americas), my brother Larry (CEO of Aetrex), and I stood in the pit against the stage as the band played 34 songs for over four hours. Our heads were exploding by the set list. We were like kids.

What is your motto? Be yourself, be the best you can be, and if you make a mistake, learn from it. Also, have the humility to let others do the same.

What is your favorite hometown memory? I grew up in Woodcliff Lake, NJ, and it’s of playing in the neighborhood and nearby woods. I have amazing memories of that innocent time, as well as the not-so-innocent Dazed and Confused times. If I narrow it further, it’s the memories of my brothers and me riding our bikes to our local record store to buy the latest album or cassette. That store, Music Merchant, somehow still exists.

The July 2024 Issue

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