The Seeds of our Undoing

“When you’re going through Hell, keep going.” Winston Churchill.”

“The potential for catastrophic outcome is a hallmark of complex systems. It is impossible to eliminate the potential for such catastrophic failure; the potential for such failure is always present by the system’s own nature. Post-hoc evaluation and cause attribution is almost always wrong.” (Source 9).

In 2002, AND 1 was growing at a very rapid rate and poised to reach $1 Billion dollars or more in sales. We felt unstoppable. We still had only 2–3 shoes in footlocker each season. Footwear could easily have been over a billion dollars in sales on its own. Why didn’t we get there? As the quote at the top of this section says, it’s always difficult — in fact likely impossible to point to the true causes of why a complex system fails. And start-up ventures most definitely are very complex systems. However, I want to point to a few things that at least contributed to our failure.

In 1999, AND 1 raised a Series A round of Venture Capital. It was a debt round, and we used the proceeds to pay out to the senior partners. Five of the original founders were now multi-millionaires. The corporate culture changed overnight. None of us had to work to pay the rent. The next tier of talented stars wanted to know when they would get their money. The family atmosphere we had always had was in trouble.

We also decided to launch HOOPSTV at this time, a dot.com start-up that was to be the internet destination for basketball players in an era prior to large amounts of video content on-line. Seth went off to run this and Jay became the acting head of AND 1.

Seventeen million dollars would be raised for this, AND 1 would invest a million or so, and Seth and a core team of talented people would invest 2 years trying to build this venture — before running into the dot.com bust.

This divided our senior management team further, and created more resentment — as the two core companies had ‘sibling rivalry.’

I remained in charge of Footwear, but my time in Asia, combined with getting older and having money were changing me. I had become a very diligent student of Buddhism, eastern philosophy, yoga and meditation. I had traveled to retreats with people like Thich Nhat Hanh, B. Alan Wallace (former translator to the Dalai Lama), Lama Surya Das, and even attended some group teachings with the Dalai Lama. I was going to Kripalu and Esalen and visiting the countries and places in which these spiritual traditions had evolved.

And I was beginning to question my core identity and life purpose. The two women running our Taiwan office, Katty and Julie and my partner Jay was my most frequent sounding board in these areas.

The spectator-buyer is meant to envy herself as she will become if she buys the product. She is meant to imagine herself transformed by the product into an object of envy for others, an envy which will then justify her loving herself. One could put this another way : the publicity images steals her love of herself as she is, and offers it back to her for the price of the product. (P. 128)” John Berger, Ways of Seeing.

Jay had been the ‘giving’ heart of AND 1 from our inception. He and Seth had both believed that business had an obligation to give back to the community, but Jay had led AND 1’s mission to find the best causes (mostly inner city education) to give this money to. He had led these programs, and pushed for AND 1 to take some more public stances on things like paying athletes.

And living in Asia five to six months a year was also doing its part. The people I worked with and had as friends over there were kinder, more sharing, had stronger and larger communities and extended families and were, on average, much more self-less than any group of people I had ever known. They also retained an innocence overall and genuineness that I responded to. Finally, I was travelling back into America’s inner cities 8–10 times a year and interacting with hundreds of people there.

I could no longer escape the feeling that I was making ‘fishing lures’ for kids who really needed education and ‘better role models’, and neighborhoods that needed more and higher quality food and life choices. These kids could be great mathematicians and programmers and they had amazing work ethics — putting in their ten thousand hours chasing a sports dream.

These realizations, simple though they are, forced me to question the ‘American’ parts of my identity and chosen business profession.

Then, on September 21, 1999 Taiwan was struck with a series of massive earthquakes — the largest of which was a 7.6. Two thousand four hundred people were killed, and 11 thousand injured and billions of dollars in property damage.

I was living in Taiwan. The building I was in, a hotel on which I was staying on the 24th floor, swayed — moving by feet. The water pipes in the ceiling burst. The TV fell and shattered. I spent three nights in a public park living outside, while Taiwan was shook by a series of powerful aftershocks.

I donated $200,000 to help children orphaned in the earthquake. The local Taiwanese office donated another $200,000, and AND 1 matched the donation.

On January 1st of 2000, I met Yani, the woman who would become my wife (and mother of our two daughters). I was attending a yoga class in Taiwan after Jay and his wife had introduced me to yoga in the US. Yani was teaching. It was the first class she ever taught, and was the first class I ever went to on my own.

We became friends and then more, and I wanted to spend more time with her. For the first time in my life, I began to question why I was working so hard.

Then, on September 11, 2001, America’s World Trade Centers were attacked by terrorists. Nearly 3,000 people were killed and another 6,000 wounded.

I led my team from Taiwan the best I could, as they tried to call back stateside and find out if their loved ones were okay (they were).

A few weeks after this, a person who worked for me and was loved by all — JB Jouthe, was killed flying home from Taiwan. JB was loved by everyone at AND 1, and remains one of the most positive people I had ever meet. He would work 10 hour days, and then go to the gym and then go to play late night hockey games. When asked how he remained so functional on 3–4 hours of sleep a night, he would say that he would “sleep when he died.” He and I had just agreed that he would be moving full-time to Taiwan to run development and allow me to travel less, and he was incredibly excited.

Meanwhile, the footwear division I was leading was now generating over $200 million dollars in annual sales. Our staff was fifteen people in Taiwan overseeing samples and production in China, five or so core footwear designers and a handful of people working in engineering and product testing and support.

We were about 3–4 top designers short of having the team we needed. I had failed as a manager to recruit and train top designers to Philadelphia. Nike and adidas were both based in Portland and Reebok was based in Boston. No footwear designer wanted to relocate.

The AND 1 office also needed me around more in Philadelphia. Seth was off leading HoopsTV and Bart and Jay were amazing business people, but were not as plugged in to the core basketball culture and product heart of AND 1 as both Seth and I.

I wanted to open a Portland satellite office, but had failed to convince my partners that it was the only way to attract top footwear talent. And so, as so often happens, one of my greatest strengths had turned into one of my greatest weaknesses.

I put my head down and worked harder. At one point during this, I no longer had any address. For a period of about 2–3 years, I lived out of suitcases kept in hotels around the world.

I would track trends and visit fashion shows in Italy and Europe and travel to major global markets, then create a design brief, meet with the designers somewhere ‘cool’ in the world, get the initial designs, fly to Taiwan and get the samples, fly to the major 5–6 cities in America and show the samples to hundreds of consumers, fly to meet our lead Sales partner (Ray) at the top 3–5 accounts to preview the line, meet with the designers again, fly back to Taiwan and resample.

It was a completely unsustainable life, and I had cut myself off from my college friends and social support networks.

But there was a reason I was spending so much time in Taiwan. For the first time in my life, I was in love. Yani was (and remains) the best friend I have ever had. And I was scared that if I moved back to the US, I would lose her. I was young, and not ready to commit — but also not ready to leave her.

This led to me crossing 12 time zones every 4–6 weeks for a period of 5–6 years. This began to impact my sleep and digestive cycles and take its toll on my health.

To add to this, AND 1 had had a phenomenal ‘success’ with the launch of our ‘slip on shoes.’ This new category of ‘basketball lifestyle’ product, along with the mix-tape launch had led to over $60MM in sales in one year. Only, that wasn’t sustainable.

Every other company in the world had jumped in and launched their own ‘slip ons’, and retailers had overbought the category. Within 18 months it collapsed. That means, where we once had shown rapid and accelerating year-over-year growth for every year of AND 1’s existence, we no longer did.

Momentum and ‘heat’ and perception is as important for brands and start-ups as it is for A-list Hollywood stars.

At this point, the luster was starting to come off AND 1 for other and for me. I was unhappy, and — for the first time since launching AND 1 — unfulfilled.

I had a dream or vision at this point for two projects for AND 1 that felt really important to me. The first was called Project Hope. We had Kevin Garnett under contract at this point in time and he was one of the best players in the NBA. I wanted to launch a line of marquee shoes with him as the lead endorser. I wanted to have him stand up on Christmas Day and announce that AND 1 was giving 100% of the profits from these shoes to support inner city education, and to challenge every other brand to match.

I felt this was a no-brainer for us. I was certain that it would generate huge press and PR and brand goodwill — and that the marketing ‘lift’ would be much larger than the actual dollars given away, it was also the morally right thing to do (to me at the time at least). AND 1 had grown out of inner city fashion trends and an inner city dominated sport. We owed these communities.

I couldn’t sell this vision to a majority of my partners. I had a second, bigger vision — for something called ‘Karma.’ I wanted us to launch a collection of T-shirts using the art of local, indigenous artists from developing nations around the world. I wanted to give 100% of all profits from these sales back to those communities.

I also couldn’t sell this to a majority of my partners. The reasons for this are much clearer in hindsight. We were still struggling with HoopsTV and the aftermath of re-integrating the two companies top talent. Seth and Jay were still wrestling with their roles post-integration and Bart was dealing with the strain of a rapidly growing organization that he knew was fighting major battles to stay together.

This was likely seen as a complete loss of focus. There was large internal debate as to whether or not postgame was a mistake, and this was way outside the box.

But, I had been deeply moved by the spiritual philosophies of the East, and my ego was very large from the success of AND 1 — and I believed I could make a positive and immediate dent in the world.

I also lacked the maturity and patience for internal lobbying or delayed gratification on these goals.

For the first time in my life, I began to care about money. I began to get jealous that the fruits of AND 1 were not split evenly, and began to feel that I deserved more.

And then, the stress and work and disappointment at having been said no to, and the pressure — pressure I didn’t even know I felt — and my own inabilities to adequately staff and build out the systems to scale at this pace, they all caught up to me. I stopped sleeping and then got very sick, losing 30 pounds in 2 weeks with a viral infection picked up in rural Vietnam, and becoming emotionally unhinged.

I took a leave of absence from AND 1 that was supposed to be temporary at first, only a leave from which I would never return. I did try to return 1 year later, but at that point my partners (rightly perhaps) felt I would be more of a distraction than a plus.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s