Chapter 98 - Running with Purpose: How Brooks Outpaced Goliath Competitors to Lead the Pack
Today’s Chapter is based on the book “Running with Purpose: How Brooks Outpaced Goliath Competitors to Lead the Pack” by Jim Weber, the ex-CEO of Brooks Running Company, a subsidiary of Warren Buffett’s Berkshire Hathaway.
Jim Weber served as the CEO of Brooks Running Company since 2001 till 2024, transforming the brand from a struggling company on the brink of bankruptcy into a billion-dollar leader in performance running. Under his leadership, Brooks focused exclusively on running products, which led to significant growth and innovation, ultimately establishing the brand as a favorite among dedicated runners globally.
Here’s what I have learned:
Solve Your Moat
"In business, I look for economic castles protected by unbreachable 'moats’”
— Warren Buffett
One of the most profound lessons from Jim Weber’s journey at Brooks is the importance of focusing on a specific niche. When Weber took over as CEO in 2001, Brooks was struggling to compete with industry giants like Nike and Adidas. The company was spread too thin, trying to cater to too many categories. Weber made a bold decision: Brooks would focus solely on performance running. This pivot became the foundation of its success.
Weber’s philosophy was clear: you don’t have to be everything to everyone. Instead, you can dominate a smaller, more focused market. Brooks narrowed its focus to performance running, developing products that catered specifically to serious runners. This decision was a game-changer. As he explained, "Going forward, I told them, we would pivot to a running-only brand. Real performance for real runners. Our product would perform for the most discerning runners, earning their trust mile after mile, and our brand would embody the spirit and soul of all who run."
“In footwear, many believe the conventional wisdom that says brands must play in all categories, across myriad price points. They believe that a company can't survive by playing a narrow game. Our contrarian philosophy was to focus only on premium running, turning a narrow focus into a strength.”
— Jim Weber
Weber was inspired by Warren Buffett’s investment philosophy, particularly Buffett’s emphasis on building moats around businesses, as a matter of fact, the concept of a “moat” was central to his strategy. A moat, in business terms, refers to a company’s ability to maintain a competitive advantage over its rivals. Weber explains that “In business, a moat leverages the medieval castle metaphor, describing a business’s competitive advantages that allow it to successfully grow and defend its position with customers profitably against any would-be competitor.”
Weber believed that, “If you are entering a new business with serious competition, you need to prioritize solving for your moat.” For Brooks, the moat problem was solved once they focused on delivering premium products for performance running only. Weber’s decision to focus on a niche market also allowed Brooks to create a distinctive brand identity. Rather than trying to compete with larger, more diversified brands, Brooks leaned toward areas where competitors weren’t focusing on in order to create a brand that stood out in the croweded sportswear market.
“The goal for a brand is not to emulate the competition but to find unaddressed opportunity in between the strengths that your competitors already own.”
— Jim Weber
This focus on a niche not only helped Brooks survive but thrive. By 2010, Brooks had become the fastest-growing brand in running, surpassing Asics in market share in the specialty run channel. As Weber reflects, “I was convinced that Brooks’s opportunity in premium performance run was big. Plus, our Run Happy positioning was novel and unique. Given the size of the category, we had a billion-dollar idea.”
But more importantly, Weber understood that a moat isn't a static defense; it's a dynamic, evolving entity that requires constant reinforcement and innovation. He was consistently trying to find ways to protect Brooks’ moat. This reminds me of the following saying:
"So we think in terms of that moat and the ability to keep its width and its impossibility of being crossed as the primary criterion of a great business. And we tell our managers we want the moat widened every year. That doesn’t necessarily mean the profit will be more this year than it was last year because it won’t be sometimes. However, if the moat is widened every year, the business will do very well. When we see a moat that’s tenuous in any way - it’s just too risky. We don’t know how to evaluate that. And, therefore, we leave it alone. We think that all of our businesses-or virtually all of our businesses-have pretty darned good moats.”
— Warren Buffett
Brooks’s story is a great reminder of the importance of game theory in business. Morton Davis explains that “The theory of games is a theory of decision making. It considers how one should make decisions and to a lesser extent, how one does make them. You make a number of decisions every day. Some involve deep thought, while others are almost automatic. Your decisions are linked to your goals—if you know the consequences of each of your options, the solution is easy. Decide where you want to be and choose the path that takes you there. When you enter an elevator with a particular floor in mind (your goal), you push the button (one of your choices) that corresponds to your floor. Building a bridge involves more complex decisions but, to a competent engineer, is no different in principle.”
As we have learned previously from Bill Gates, game theory is primordial in business. As a matter of fact, for Bill Gates, it wasn’t enough for Microsoft to beat out the competition; he was seeking to eliminate them from the playing field. He realized rather early that killing the competition is the name of the game. There just aren’t as many people later to take you on. In game theory, you improve the probability you are going to win if you have fewer competitors.
Bill Gates understood that to eliminate the competitors, he had to make sure Microsoft products was the standard in the industry. As a matter of fact, Microsoft used the standard-setting strategy to win control of the market in languages and operating systems. This idea of “We Set the Standard” became the company’s motto and Bill Gates’ core business philosophy.
This is a demonstration of how powerful network effect is as company’s moat. Network effect is the phenomenon where a product or service becomes more valuable as more people use it. This is a strong competitive advantage as it makes it harder for competitors to enter the market. If everyone is already using a particular product or service, it can be difficult for a new product or service to gain traction. Using Microsoft Word as an example, users are forced to collaborate and share documents by using Microsoft Word because Microsoft make it the de facto standard program for document creation and sharing.
Execution
“To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.”
— Steve Jobs
Jim Weber’s journey at Brooks underscores the critical nature of execution in achieving business success. As a matter of fact, one of the key leadership principles Weber articulates is the necessity for CEOs to create a credible vision and long-term plan for the company. But more importantly, the CEO has to execute on these ideas. As he puts it, “Vision without Execution Is Hallucination: Dreams and plans are meaningless if they’re not backed by action.”
As such, once Weber identified performance running as Brooks’ niche, it was up to him to make sure that the company execute on this idea. Weber believed that successful companies are those that can execute well across multiple fronts at the same time.
“Execution in business, I learned, is akin to moving a wall of bricks forward, a few at a time, but each in sync or the wall will collapse. The wall is your enterprise, and each brick is a set of key priorities.”
— Jim Weber
In order to achieve success in the performance running market, Jim Weber understood that Brooks’ success would come from focusing on the customer. He was not just interested in selling shoes, he was committed to understanding the needs of its core customer base—self-defined runners—and delivering products that met those needs. As Weber explains, “Our customer focus would be active runners, period. From competitive racers to weekly fitness runners.”
This customer-centric approach was not just about marketing; it was baked into every aspect of the business. Weber writes, “We’re not interested in matching runners to shoes. We want shoes to match runners.” This philosophy led Brooks to invest heavily in product testing and development to ensure that its shoes fit the natural movement of each runner. Brooks developed a wear-testing program that involved tens of thousands of runners providing real-world feedback on every shoe before it hit the market.
“We have a hundred thousand runners in our wear tester database. From prototypes to final sample shoes, we gather feedback through observations, qualitative interviews, and readings from machines, treadmills, on location, and fellow race competitors.”
— Jim Weber
Brooks’ commitment to satisfying its customers was also evident in its focus on injury prevention and performance features. In fact, a survey conducted by Runner’s World at the time found that fit and comfort ranked highest in importance for runners, while price and appearance were less critical. This insight reinforced Brooks’ decision to focus on performance rather than fashion.
This relentless focus on the customer helped Brooks build a loyal following among serious runners. Weber explains that “If the product works, trust follows. But when runners choose to wear and then become loyal to a brand, that’s when you know they’ve moved beyond rational trust into emotional attachment.” The goal for Brooks was not just to sell shoes but to create a brand that runners would connect with on an emotional level. Weber once said, “They wear a specific brand not just because it works, but because it says something to the world about who they are. They might share the brand’s values, or the brand reminds them of the positive emotions triggering why they do what they do.”
“To be a real brand, let alone a loved brand, we needed to stretch beyond a cerebral connection with the customer. I strongly believed that great brands connect with minds and hearts at both a rational and emotional level.”
— Jim Weber
This reminds me of how Bernard Arnault built Louis Vuitton through a strong brand. Arnault, from his early days when he purchased Boussac due to the fact that the failing company owned Christian Dior, understood that even with a huge amount of investment of time and money, it would be difficult to replicate a brand name that is as strong as Dior.
To explain how powerful the name Christian Dior was, Arnault provides an anecdote of the first time he went to New York. When asked by the taxi driver where he came from, he mentioned he was French and asked if the driver knew about France and who was the president. The taxi driver replied that he did not know who was the president but he knows about Christian Dior. This certainly made an impression on Bernard Arnault.
This is eerily similar to what Warren Buffett once said about Wrigley’s and Coca-Cola, “You give me a billion dollars and tell me to go into the chewing gum business and try to make a real dent in Wrigley’s. I can’t do it. That is how I think about businesses. I say to myself, give me a billion dollars and how much can I hurt the guy? Give me $10 billion dollars and how much can I hurt Coca-Cola around the world? I can’t do it.”
Authentic Leadership
"Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.”
— Jack Welch
Another important lesson I have learned from the book is the concept of authentic leadership and the importance of trust in building a successful company. For Weber, leadership is not just about making decisions; it’s about cultivating a culture of trust and collaboration within the organization. He explains that “authentic leadership can be distilled to three key aspects: focus, curiosity, and trust... But through the years I learned that human behavior was behind every number and everything in business. Success requires creating relationships with people, and that means generating trust.“ This mindset not only encourages personal growth but also fosters an environment where team members feel valued and empowered to contribute their best work.
Furthermore, and more importantly, Weber explains that trust doesn’t end with Brooks’ employees; the aspiration is to be a trustable brand to the customers. And to do, it was important for the company to have authentic values that can be spread to the employees and to the customers. As a matter of fact, Weber’s approach to leadership emphasizes the importance of emotional connections with consumers. He believes that a brand’s success hinges on its ability to resonate with like-minded individuals. He states, “If we can express [our values] consistently in everything we do, over time Brooks will resonate with like-minded people.” This strategy has allowed Brooks to cultivate a community of passionate runners who not only support the brand but also advocate for it within their networks.
“At Brooks we aspire to be a trustable brand. It starts with a promise of a positive product experience, but goes much deeper. We are a purpose-driven brand built around the fact that a run will make your day better.”
— Jim Weber
As such, it is clear to say that Brooks’ success is partly due to the strength of its company culture. Weber believed that culture was the ultimate competitive advantage and that a company’s values should be reflected in everything it does. As he once said, “We compete with our culture and values.” And, at the heart of Brooks’ culture was a commitment to integrity, humility, and curiosity. In fact, Weber was deeply influenced by Charlie Munger’s “ABCs” of business decay: arrogance, bureaucracy, and complacency.
“Reminds us regularly to avoid the ABCs of business decay: arrogance, bureaucracy, and complacency. Others with capital and brains will always be competing to breach your moat and take your customers away. Staying humble, remaining curious, and avoiding complacency are essential, especially following great success.”
— Jim Weber
In the end, Weber’s belief in the power of culture is perhaps best summed up in his final leadership principle: “The Ultimate Advantage Is a Strong Culture.” He explains that, “The ultimate moat is a great brand, but protecting that moat requires getting that brand into the head of every runner or potential runner in the world, having them have an expectation about that brand, and then meeting that expectation.”
This concept of building a successful business through prioritizing building trust with customers reminds me of Les Schwab who once said, “People don’t buy tires on price; they buy from someone they trust.” Schwab, through this guiding principle, understood that, to establish long-lasting relationships with his clientele, he had to lead his employees with trust and authenticity. And as such, he knew that he had to treat his store managers as partners rather than mere employees in order to empower them to deliver excellent service to customers. Similarly, he believed that employees in the main office are solely there to support store employees to provide better services to customers.
“The truth is that the success is at the other end... The real job for the office people is to provide motivation, to create programs that make it possible for them [store managers] to be successful.”
— Les Schwab
Beyond the Book
Read "Moats - Competitive Advantage" by Investment Masters Class
Read "Exclusive Interview with Pat Dorsey on Moats" by Manual of Ideas
Read "Mental Model: Game Theory" by Farnam Street
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