Lessons - The CEO Who Took Reebok From $13M to $3.5B in Sales | Bob Meers - Fmr CEO of Reebok & Lululemon

In this lessons episode, explorer-wise sustainability has evolved from a brand preference into a core business advantage. Discover how shifting consumer expectations are reshaping product design and purchasing decisions. Understand how strong brands justify premium pricing while scaling responsibly and uncover why embracing innovation early creates a lasting competitive edge. Say you're a business leader and what you're trying to do is you're trying to effectively tap into this movement but also make a part of your core business. So it's not just a nice to have but it's actually integral in how you build out your processes and you build your product and you communicate with your customer. So for example, for a better for all, you focus on sustainability as a key component of your business. How do you do that effectively? Well, I mean, first of all, with sustainability, you don't have to look very far. You've got the tip of the spear being the Gen Z population that is 88% of them, according to McKenzie, just think companies are bowing smoke in terms of their trying to ease their way into sustainability or trying to use solutions that already exist that really are not sustainable. You've got 40% of that same population would make decisions on what companies they purchase and what companies they support based on that company's commitment to the climate, commitment to the planet and commitment to sustainability. That to me is a business opportunity. And when you look at what companies are pushing, they're pushing old solutions. There is no recycling. Let's be candid. There's 5% or less of recycled product goes into recycling. And then the recycling process in terms of sorting is so labor intensive that even a smaller portion of that gets recycled. People are tired of single use. They really want reusable, but not reusable forever. They're looking for reusable to they want to get rid of it. But when they want to get rid of it, they want it to disappear in a reasonable amount of time. And then they look, what's this product made of? Am I depleting the planet's natural resources? So from my standpoint in terms of whether you're talking to an entrepreneur, why fight it? Consumer who has actually influenced the generation above them, the generation below them, and actually is leading it is making a demand that is not going to go away. Do you think they get out of the way and make it happen? Do you think people fight it because they're concerned about it's complicated, it's expensive, like all the regular pushback, like this is already difficult for me to figure out. I'm just trying to build the basic business. I don't have to add layers of complexity onto it. Just to play a devil's advocate, what are the reasons why somebody wouldn't do this? What availability? I know we took a look when we first started the business packaging. Packaging is sitting right there, but now you're the product, now you're the item that you tear away to get at the product you bought. Now what do you do with it? The ideal thing is to have the product disappear in a reasonable amount of time. But what we chose to do with better quality, we make a cup. We make a variety of cups because one, it's universal, they used all over the world. Number two, they normally use in a celebratory way either with a cup of coffee or a cold ring or a dull beverage. And it's big, so there's a big opportunity. I was thinking I was looking last week or recently at just the red cup. They're producing 7.4 billion a year, units a year. I mean, they think to myself, if you can just take a percentage of that business, you're going to have an impact on the planet. Not take them away from it, just have an impact. So why would a company go against it? I've run into this myself. This will be a rebar story. So we had enormous success bringing out a line of shoes designed for aerobics. And we expanded around those items with soft garment leather white product. And they were very, very successful. Your success becomes your anchor because you're so busy filling the demand, you're not innovating behind that demand. And more importantly, you're not coming with the car of the future. And so consequently, we peaked, we started to go down, and then we needed to come out with something that fit consumer demand. So we came out with the pump. And the consumer was saying, loud and clear, no differently than sustainability. I want a product that gives me more support. I want a product that gives me protection. I want a product that gives me custom fit. I go back to my days with the Porsche guy. And I take a look at the pump shoe. And I say, does that shoe give you support protection and custom fit? And is it unique enough looking that doesn't look like everything on the market? And that thing saved Reback's butt. So I look at companies, why are they resisting it? Candidly, it might be because they don't have time to look at something or it's not readily available in what they're doing. Or even worse than that, that we're going to require them retooling. And I would say it's more expensive not to change than it is to change. And that's not a euphemism. I've been in the seat where you held on and turn the lights out on the industry. And that is not a fun thing to do. That's expensive. You know, one thing that you've done very well across again, all the companies is, and you mentioned this briefly at the beginning, it's never been a race to the bottom. You focus on building a product that can command a price point in the market that allows you to create the best possible product. And that gives you margin to allow you to conduct business in a different way. So if, for example, a sustainability focus company, say, the product is in this cheap. I'm assuming that the cogs on that product is slightly more than a non-sustainable product. But you've built brands that support that business model effectively so that you can charge for a product that's a little bit more expensive to make or produce. Even, and I don't even know, I could be incorrect. It could be totally the same and happy to talk about conversation. But the point I'm making is, as somebody who's done this repeatedly, how do you build that brand that allows for that price point in the market, that allows for buyers to be okay spending a premium premium amount of money on whatever you're selling? Well, I'm going to, I'm going to have to answer on both sides of my mouth. Go for it. I think to answer your, I think to answer your question and your short answer is, who influences the buyer? How do you influence the influencer so that you get your trend setter, putting the product, taking the product, you get the early adopter, taking the product, you get the general population to get the product and the pyramid builds? And so you're always looking for, do I influence through my yoga instructor? Do I influence through my coach? Do I influence through my school? Do I influence through my team? But how do I influence somebody? The other one is coming out of the other side of my mouth. You can't price this product based on cost because you look at the tech industry. They've taught us anything with the Amazon and you take a look at Tesla. You've got a price to where you get, you can get the volume, you can get the efficiency, you can get the raw material cost down, and you get the accesses to cross at some time in reasonable future. But you're pricing the product at a slight premium, not an obscene premium. And you keep your operating expenses at variable expense rather than fixed. So you've got to, you've got to look at what business am I in? We've chosen to be in the design development and marketing business. Now what we look for, do we have experts in source in material? Do we have experts in manufacturing? Do we have experts in social media and marketing and advertising and promotion that we can access so that our expenses are variable and we don't make them fixed until we actually have the top line revenue and margins to be able to support the company. So I'm not, I would advise people, don't bury a company in fixed expenses that are not your core business. And, and, and walk me through because we've, you know, we've spoken about all the benefits of sustainability and they're, they're, they're quite obvious and even from a business lens, it seems like it's, it's a, it's a no brainer. But there's obviously challenges or like, like significant challenges outside of just access. So what are some other challenges that you experienced in, in better for all that maybe you wouldn't have experienced in, in any of the other businesses that you've worked in? Well, everything, I would, I would have to say that I am a newbie, I'm a newbie to sustainability. I, we, our lead product is a woman, they Reagan Kelly. She has converted me. She is non-compromising. She studies the business. She lives her breathes and sleeps and eats and drinks it and, and convinced me that, you know, this is the way we want to go. We don't want to be what people tear off to get or what they buy. We want to be what they buy. And so now, what are we, what are we have to do? We had to find a material, but, but all the manufacturers who in the only way to make money in manufacturing is keep your machines producing product. We had to find somebody who was willing to experiment with a material that didn't operate like plastic, that required a different mold, that, that, you know, you couldn't jam in there. We didn't even know if we could make it. And so we had to find a manufacturer that was as committed to sustainability as we were and give us the time to experiment. I think as a couple of years. And we refused to put in fillers. We refused to put in any kind of contaminant. And we refused to put in anything that would contaminate the release of the product from the from the mold. And, you know, candidly, it took us a couple of years to get about 70% there. And then we were able to really get the attention. So we were able to get the attention of a material called pH pH. And that is a product that is made from fermented vegetable oil. And it was made for 20 years ago by a Japanese company called Conoco. It's fabulous. It has a great range of heat tolerance. It's pure. It can compost commercially, at home, it composts in the water, it composts in a landfill. It was just what we needed to do. The factory that bought that now we work with is Westfield Tech Tech. And Westfield has 18 factories around the United States. So we now are in a position where we can have the capacity of the material and the capacity of the manufacturer. I don't want to say we begged, but it came close. I think you have to take us seriously. And in thank God they looked at it and they said, you know, women asked our company, our customers have been asking for 10 years for something like this. We'll give you the ability to refine this. And damn it, we'll pull it off. And now we can make a product that people would be proud to put on the shelf. Reuse, discard, no matter where they discard it. And it'll disappear in a maximum six months. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.