Why Being Private Is New Balance's Secret Weapon

0:02 What if one of the biggest advantages a brand can have is time? New Balance is one of the few major sports brands that is privately held. What does that mean? They don't have to answer to the public shareholders every quarter. And it gives the company and their leadership something most brands don't have, the ability to play the long game. But being private doesn't automatically make a company patience. And patience doesn't automatically make a brand successful.

0:32 So the real question is what did New Balance do with that freedom? I sat down with Complex associate editor Matt Wely, New Balance CMO and brand president Chris Davis and Kith founder, CEO and creative director Ronnie Fee. To find out more, I'm Linda Bof and you're listening to a different take. >> >> I believe that New Balance has exercised patience through their journey, consistency and and discipline. Not easy things in in a in a company trying to, you know, produce a great product and and make some money along the way. Do you think being private has helped that?

1:22 I think that having a family still own a company like this, you're not as beholden to all the shareholders and you're not chasing trends, they've been able to like stick true to their tradition and where I think that if they were a publicly traded company, people would have forced them to change and do new trends or like obviously they're, you know, hopping on some of the trends like mule sneakers are popular. New Balance will make a mule. But I think that maybe if they aren't independently owned, number one, I think that those made in USA factories go away long time ago. Hey, these things are too expensive. They're not adding to our bottom line. And it's and it's always the people who aren't in it for the long run cuz they're just like transactional employees and they make a decision that like shifts what the company means. But if you have the family owning it, they're like, "No, we're gonna own these things." And I feel like they have a lot of pride in owning these made in USA factories.

2:26 >> Chris, just start a bit broader, if you will, and talk about where athlete marketing fits into the overall New Balance business strategy. >> In the early 90s and 2000s, we were the brand that was endorsed by no one. That was our mantra. We were reinvesting our research and development dollars into making superior products for runners. And that was the game plan. And as time progressed, we realized that there was a ceiling to that. And we knew that we had to enter the sports marketing landscape, but we had to do so on our own terms.

3:00 and doing it the New Balance way with a challenger brand mentality. Part of our growth strategy was not only entering the new sport categories but connecting with the culture of those sports and that's a very big difference. So when we talk about basketball, world football, tennis, baseball, skate, American football, all of those categories have business plans. They're they're 10year business plans. And this goes back to being having the luxury of being a privately owned organization.

3:32 Our goal in those categories is not to make money right away. It's to break even around year seven or eight and then start making money 9, year 9, 10, 11. But we immediately have to enter those categories with credibility, authenticity, and the right products for the culture of the sport. But long-term thinking only matters if you're willing to make choices that prove it. For New Balance, one of those choices was manufacturing. The company continued investing in made in the USA and made in the UK production even when those products were more complicated and expensive to make in those markets. And then there's another place where patients became visible, their collabs. Because a great collaboration isn't really about pulling two logos onto a single sneaker. It's about whether two points of view have something to say to each other. Ronnie Fee has been working with New Balance for nearly 15 years and his story gives us a very different way of understanding what makes these partnerships work.

4:48 Ronnie has been proclaimed to be the person who the sneakerverse would not exist without. You have been there in some ways not just from the beginning but overseeing and and a big part of what I think has been a transformation of the New Balance brand. Tell me a little bit of the origin story. >> My first experience with New Balance was a little bit over 31 years ago when I started working for a chain of shoe stores in New York called David Z. And I worked there for 15 years.

5:22 >> >> I had the pleasure of selling New Balance product to basically to New York City locals and to tourists who were shopping the stores. But near New York City was I believe the city that helped evolve and take New Balance for the walking and running company that it was and helped turn it into lifestyle. There are more than a few cities that have helped do that for the brand. Obviously, I think the UK was big in that and the DMV, but New York City, I think, was the epicenter of that where there was a combination of so many different cultures that were coming in and adopting what was a an underground kind of movement outside of running and walking that started wearing the brand.

6:08 So it started really for me in 1995 and then I got to see the evolution of the brand really expand and take lifestyle a lot more seriously throughout the years between then and now. There has to be an emotional tie and a passion for the reason of working on anything. And New Balance is is such an important part of my history. And I believe that everything you really are passionate about and things you fall in love with between the ages of 13 and 18 are the same things you'd love for the rest of your life. Listen to what Ronnie is describing. Not a marketing campaign, not a product launch, a relationship, a shared history, a knowledge of the product that goes back years. And that's important because the most successful New Balance collabs don't feel like someone was brought in to make the brand cooler. They feel like the brand found someone who already understood something about it and gave that person room to add something new.

7:15 It's a very rewarding feeling when you have a global business and you're able to speak in a universal language that is product and have people respected on that level. that's probably the most rewarding part of my job. And for New for New Balance, they've been great partners in helping that be the case globally. You know what I mean? It's like they've been a brand that have also grown exponentially globally. So we're growing at different rates I would say for sure, but at the same time we're speaking to the same consumer on the highest level. I think that the partnership has been really incredible because it's mutually beneficial for both, but also what we built separately is special to look at, but what we built together is kind of like a business in its own.

8:12 >> Collaborations create a fascinating tension because one of the easiest ways to make a product desirable is to make it hard to get. Let's face it, scarcity creates urgency. Urgency creates conversation and conversation can create hype. But New Balance's approach is more complicated than simply making fewer shoes because according to the company, scarcity isn't supposed to be the point.

8:44 One of the examples like in the past few years that was like a real surprise that you want to talk about like the scarcity model that kind of like changes footwear was they had done the high fashion collaboration with Miumu for women and I'm you know even if you don't know what that shoe looks like in your head you know the average consumer it's like you know that brown low top with the two different tone laces on it and those shoes are like over a,500 $2,000 and you know, you see women in Soho wearing them, but every other brand has like knocked off that version of that shoe where you're just like, I know what that shoe looks like, even if I don't know it's a mium shoe.

9:25 So, I feel like that scarcity of like introducing something like that that's cool and desirable does have like almost like a down river effect where it kind of like shifts the market. Joe Fresh Goods. He had this model called the 960, which is like one of New Balance's most popular models. He was posted, reposting a video of a girl who bought a fake pair online, and she posted on her TikTok, and everyone's like, "Oh, these shoes are so great. Where do I get them?" And they're not even like a real pair. He's gone up to like vendors, you know, where everyone's selling bootleg goods and just seen tables of his bootleg shoes.

10:02 You know, for the longest time, there really wasn't fake New Balance sneakers. And I feel like that's a good barometer of how popular your products are cuz I know brands do get upset with fake products. But if a Louis Vuitton bag wasn't so desirable, then you wouldn't go down a canal street and see tables of them, you know, on on the side of the street. So you must be doing something right at this point. Even if the things are so scarce, that's what makes them desirable. New Balance being able to find a way in in that market even though it probably upsets people internally, I think is a good sign of like that the brand has like really crossed over to mainstream culture.

10:43 >> We don't necessarily believe to have scarcity for scarcity's sake. You know, a lot of our collaborations are made in USA and made in UK products and those products are extremely complicated to make. and when we're working with a brand like Laura Piana who had never done a collaboration before in their history, they have a certain level of excellence that they would like to realize in their products and our made in USA factories have had certain capabilities. Now, when you take Laura Panda leathers and cashmere and you're trying to make them an in an athletic footwear manufacturing facility that's focused on craftsmanship for athletics, you know, those are two worlds of luxury and athletics colliding that have never collided before. So, to actually make these products is extremely complicated and we were only able to make a certain amount of pairs, which wasn't scarcity for scarcity's sake. It was scarcity due to the craft, the time, the care that that that that was taken with K.

11:45 We've done a a ton of made in USA collaborations partially because Ronnie understands that craft. He's been to the factories. and he knows that our associates and and craftsmen and craftsmen across New England take such care and pride in that product. Now, those products, we're not able to produce 20 30,000 pairs of them. So when there's five or 10,000 pairs, that's how much we were able to make because the design process and the architectural process lended itself to that. I do believe scarcity is important. but I also believe that collaborations aren't about revenue generation. They're about perspective.

12:25 They're about values communication. They're about storytelling and their avenues to create a halo effect for your overarching brand. Having a a clear distinct point of view remains, I think the most important part of a brand's success, let alone the partnerships that a brand has. So if we didn't have that, how important would the partnership look on the New Balance side to work with us if we didn't have such an important and unique point of view? And that's where the private company story comes full circle. Being private may have given New Balance the freedom to wait, but waiting alone doesn't create culture. The thing that made the waiting worthwhile was having a strong point of view and being disciplined enough to constantly protect it. And now New Balance may have a new problem. It's no longer trying to become culturally relevant. It already is. The question is, can it stay that way? I'm Linda Bof and you're listening to a different take.