While sneakers were built for movement and hustle, the $17.5 billion US sneaker market is bloated. In 2015, just five companies accounted for 80% of all worldwide sneaker sales, an eye-watering oligopoly somewhere between “Gilded Age railroads” and “dictator’s favorite nephews.”
This 80% share isn’t dentist’s toothpaste – whether or not 4 out of 5 wearers acutally prefer those brands, their unchecked market control means that for many, they’re the only shoes on the shelf. The worst part? About half of that $17.5 billion is just paying for the shelf itself. Because who needs to invest in the shoe when it’s the only shoe in town.
For an underdog outside that privileged establishment, just competing with those five big brands requires a lot more than pluck and grit. To build a great sneaker brand in the shadow of giants, you need full-on disruption. Greats CEO Ryan Babenzien sat down with industry-disrupting retailer MR PORTER to discuss how Greats is leading industry change, starting quite literally feet first. The full interview is below:
When former Puma and K-Swiss executive (and Soho House New York member) Ryan Babenzien founded his sneaker brand, Greats, it was because he saw a clear niche within the direct-to-consumer market. ‘At that point, Warby Parker was probably the most successful and well-known, followed by Everlane. I started wondering why I wasn’t doing the same thing for sneakers.’
Last month, we welcomed Babenzien to Soho House Chicago, where he joined MRPORTER US Editor Dan Rookwood for the latest edition of our MR PORTER On Style series. ‘It’s been wonderful to see how a startup brand like Greats disrupts things in what is a very competitive market that’s dominated by Nike and Adidas,’ Rookwood said.
PLUS: Greats and Robin Hood, New York’s largest poverty fighting organization, have teamed up to create a limited-edition sneaker collaboration. Together they are giving Soho House members an opportunity to purchase a pair for $179, prior to the offical release on 15 May; all proceeds will go directly to Robin Hood. And for every pair you purchase, another will go to a New York City neighbor in need. Scroll to the bottom of the page for more details.
And here, Babenzien shares his advice for aspiring entrepreneurs looking to break into the direct-to-consumer market.
1. Have faith in your idea first and foremost
‘The success rate of startups is disastrously low. If you’re going to found a company, you have to fully commit to the belief that this can be a huge business and disrupt the incumbents. But if you aren’t willing to put 100% of your passion into it (which often means sacrificing any semblance of a nice, cushy lifestyle), you’ll likely fail. I was that passionate. Or insane enough. I’m not sure which one is right, but I was willing to take the leap.’
Babenzien speaks to MR PORTER US Editor Dan Rookwood
2. Capitalize on the uncomfortable
‘Over the years I’ve become friendly with Max Levchin, one of the founders of PayPal. He’s founded three multibillion dollar companies, and has done quite well for himself. He once said to me, “A lot of founders say they’re going to save up money before taking the leap and starting their own business. But if you get to $100,000 in savings, you’re too comfortable with life to ever take a risk, and that business will fail because of it.” I think he was right.’
3. Go ‘digitally-native’
‘We first started on the Internet and then expanded the brand from there. We felt by doing direct to consumer online first, we could gain traction with our audience sooner, and get greater control of our brand. It also helped us learn what our customer was going to be like, how they behave, and then grow on top of that. We’ll open our first Greats store in Manhattan in late summer, and we’ve since started selling our shoes on MR PORTER, too. But the bulk of our business is and will always be direct-to-consumer.’
4. Live online, but don’t forget about a sense of place
‘When I founded Greats, Brooklyn had become the cultural campus of the world. And it’s been that way since the turn of the century; Brooklyn’s always been a huge part of America’s heritage. That means something not just from a style standpoint, but also from an art, food, and all things cultural perspective. And I was willing to move from Santa Monica, which is where I’d lived since college, to make that bet.
Since then, Brooklyn has really become part of our DNA as a brand. You know, if you go to Japan right now they have magazines dedicated to “Brooklyn style,” which are comprised solely of street shots of the way people dress there. It’s a large borough with lots of cool things going on, and that’s where we chose to hang our hat.’
The sold-out GREATS x MR PORTER Royale High.
5. Choose quality above all
‘We only work with factories that have the highest level of compliance when it comes to labor laws. That being said, half of our stuff is made in Italy. The other half is made in Asia, and soon much of that will be made in the Dominican Republic. And what that really means is we go to the best factories in the world for the style of shoe we’re trying to make. Italy is known to produce, bar none, best luxury sneakers in the world, so we went there. If you want to do an athletic-looking style that emulates a running shoe, you go to Asia. And if you want to do hand-stitching, Dominican Republic has some of the best hand-stitchers in the world. We go where the product is made well, and that’s our first filter.’
6. Be wise about who you choose to collaborate with
‘We try to work with things, people, brands and companies that we think are 1) the best at what they do, and 2) extremely relevant. There’ve been a few reports saying influencer marketing is dead (or about to die). And I think that’s bullshit. I think people are influential. Digital ads are not. That’s my theory on that; and I’ll continue to spend a lot of money proving that theory.
We are leaning heavily into influencer marketing. You know, Kevin Durant has bought six pairs of sneakers from us, custom made, all size 18. You can’t pay somebody an endorsement deal enough to get that to happen. That’s just luck, right? Like we didn’t know Kevin Durant. I didn’t know Marshawn Lynch. I didn’t know the creative director of United Arrows of Japan. Those things just happened.’
7. Stay close to market trends
‘Our model allows us to be very on top of any movements in terms of trend. In general, silhouettes are going to change. When pant legs continue to get wider, the height of a sneaker is also gonna go up. When we put that shoe into the market is the critical part, and that’s our competitive advantage. And by being able to stay very close to the market and not have to sell 18 months out, 12 months out, or even 10 months out, we’re able to design, develop and produce in five months. That’s a big advantage.’
GREATS X ROBIN HOOD
Because Robin Hood covers 100% of all administrative costs, every dollar donated goes out the door to help New Yorkers most in need. When Babenzien chose to partner with Robin Hood on an exclusive design collaboration, he identified Robin Hood as the only choice for NYC. He saw in the organization the embodiment of his keys to success.
He recognized Robin Hood’s tireless efforts to provide education, healthcare, food, shelter and other vital services to better the lives of all New Yorkers. Robin Hood is committed to helping the 1.8 million New Yorkers living in poverty. Nearly 30 years after its inception, they stand as the biggest player and impact driver in philanthropy.
Thank you to MR PORTER and Dan Rookwood for making this conversation possible.