Oct 17, 2013
by Eric Peterson
Boulder's global running-shoe upstart changed the way we run. Jerry Lee and Newton hope to change the business altogether and MFG in the US.
Newton Running was born out a concept for running in a more natural fashion
CEO Jerry Lee moved from Illinois to Colorado and began working with Bill Reynolds of W.W. Reynolds to develop real estate in the late 1970s. In 1996, Danny Abshire and Brian Russell approached the duo with an idea.
"They knew Bill and I were passionate runners," says Lee. "Their pitch was: No running shoes provided enough protection from the impact of your strides. The best runners in the world in Africa run on soft surfaces."
Abshire and Russell's "trampoline-like" concept took the dominant heel of most running shoes and moved a lot of the protection to the mid-foot and ball.
Most running shoes "encourage you to land on your heel," explains Lee. "We want to encourage you to run as if you had no shoes on. You run on the balls of your feet -- that's how nature wants you to run. Our shoes enable that"
With a prototype in hand, the foursome founded Newton Running and worked to hone the technology, acquiring over 20 patents in the U.S. and elsewhere over the course of a decade.
"The idea was to license it to a big shoe company," says Lee. But no such deal materialized. "Once we perfected [the mid-foot protection], we knew we had little chance of getting any big shoe company to pay attention to us."
So Lee and company looked to manufacture Newton shoes themselves. First they looked domestically. "We gave it a hard, long try," says Lee. The task proved impossible. "We ended up turning to Asia, where almost every shoe is manufactured."
They had 50,000 pairs manufactured and focused on the Ironman market in 2006, selling the shoes one pair at a time at official Ironman events.
"We had to convince people we were for real," says Lee. "We convinced them with our technology."
After catching on with Ironman triathletes -- Lee says now upwards of one in four wear Newtons -- the next target was specialty-running stores in 2008. Today Newton sells 22 styles of shoes through 600 stores in the U.S. and another 650 stores outside of the country. Volume has jumped by 1,500 percent in seven years, to about 750,000 pairs in 2012.
Lee says the growth has been underpinned by education and social media. "In the early days, we brought with us not only the product but education on how people should run," he says. "And I don't think we'd be here today if it weren't for the Internet."
The mainstream market has followed Newton's lead. "Today every major shoe company has what they call a 'natural running shoe,'" says Lee. "We kind of changed the running world."
Newton currently manufactures at two shoe factories in Indonesia and China. Lee says he'd like to bring at least some of the company's manufacturing to the U.S. The plan: to make parts in Asia and assemble a premium line of shoes domestically.
"We're extremely excited about our innovative updates and developments we're coming out with in 2014," says Lee. "We have a lot of things we can do with our technology. It's what we call tunable."
Challenges: "The challenge is to manufacture overseas," says Lee. "It's extremely difficult. Not only are you so far away, you speak a different language and have a different culture."
There's another high price associated with manufacturing in Asia, he adds. "What people don't realize is a little company like us pays over $1 million in import duties." Extrapolating to billions for major shoemakers, Lee says, "I think all of those import duties should go to promote manufacturing in the United States. It's being paid by people like ourselves who would love to manufacture in the U.S."
Opportunities: Lee points to the mainstream running market. Noting that the Ironman market is less than 1 million athletes, Lee says, "We're now moving toward the running world, which in the U.S. is 30 million people." But don't look for Newtons at general-purpose sporting-good stores. "We want our messaging and sales to go through the specialty running retailers."
Needs: "We don't need capital," says Lee. "We're always looking for high quality people, but we have a fantastic staff. My biggest need is the ability to build our product in North America."