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Podcast: Meet the Marketer - David Kahan, Birkenstock

Insights / 03.01.2019

Red Door /

Marketing is often confused with promotion, but really, it’s about much more than that. Marketing is about knowing and understanding your customer so well, that your product or service fits them and ultimately, sells itself. In short, marketing is about insight above all else. 

In the spirit of those insights, we present our Meet the Marketer series, where we discuss the careers and tactics of marketers behind industry leading brands.  
 
In this episode, we sit down with David Kahan, Chief Executive Officer at Birkenstock Americas – a footwear brand dedicated to crafting quality products and improving the lifestyles of its customers, since 1774.  Much like any heritage brand, Birkenstock’s popularity has come in waves – in the '60s, ’70s, '90s and today, it is once again, acclaimed by outdoors enthusiasts, celebrities, models –and now influencers – alike. This is due in part to a renewed strategy that Kahan has put in place in his time with the company, and a philosophy of maintaining the heritage of the brand, while finding new and innovative ways to create excitement with consumers.
 

 
How did you get your start in the footwear industry?

David: Well, some people in the footwear industry are kind of born in second, third, generation and some people just kind of fall into it. I was a bit of an economics jock in college studying finance, and accounting, and I worked part-time in a Macy's department store and one day, somebody actually tapped me on the shoulder and said, "Hey, we need some help over here in the shoe department." "I was like, the shoe department? You mean, you actually have to help people and go in the back room and do all that... You know, do some heavy lifting?" And I just went in there one day, worked there and God it's been 30-something years, and I never left. So really unique circumstances. But I kinda said I went from working 12 hours a week in the shoe business to working 12 hours a day in the shoe business...
 
Reid: Yeah.
 
David: And I haven't left since.
 
[chuckle]
 
Reid: Well, that's interesting. So, you found your passion for it right out of the gate?
 
David: Yeah, you know, I just really enjoyed helping people and servicing people and talking to people, and once I ended up, I was actually recommended for the executive training, the buying program, so I kinda turned my back on maybe getting a job with one of the big eight or the big six accounting firms and went to New York and started working in retail and then ended up on the wholesale side of the business. I feel like I learned the branding business. When I jumped from Macy's to Nike, I was one of the first people involved in strategic account management at Nike. I eventually ended up running the Reebok brand, I was President of Reebok for North America. When we sold the business, and we were acquired by Adidas or as they say in Europe, Adidas. And then I took over the rock, board brand for them, and since I had experience working for a German heritage brand and a German-based company, Birkenstock came to me and I took this over in 2012-2013 and it's just been an incredible situation since that.

What's the biggest difference between a hertiage brand and one that is much younger?

David: Well, it's interesting, Reid. When I first came to this brand, I was like as a brand person, I was like, "Oh my God, I thought I just came across a diamond, I was like, "Here's a brand that people talk about classics and they're talking about brands that go back to what, 1985 maybe.
 
[laughter]
 
David: This brand goes back 245 years it dates itself back to a small village in Germany where a gentleman named Yohan Birkenstock in 1774, literally hung a shingle outside of his home, that had one word on a shoemaker, and today we still make our shoes in a small village in Germany, except today our shoes, are distributed and the finest retail stores around the world. I think it's just a matter of when you have a brand that's a true heritage brand, you're not only a brand manager, you're a steward, you're a steward of an incredible history, and you're really playing a part in the future of the brand and you don't think as much about the decisions you're making on how they impact that week or that month, you really need to think about the next millennial and leaving the brand in a better place than when you found it. And it just so happened that Birkenstock was one of these brands with incredible heritage but it was basically treated as a bit of an annuity. You'd go into a retail store and there'd be that one lone, Birkenstock style, that everybody knows is probably sitting in the back corner collecting dust.
 
[chuckle]
 
David: But when somebody came in and they were the stereotypical, Birkenstock consumer, they bought it, but it wasn't really marketed, it wasn't really exploded in any way, and we looked at it differently. We thought, "Oh my God, we've got a brand that should be shared with a far broader audience. We were just the first generation, me and my management group in Germany, to really have that awakening. And rather than say, let's evolve or let's have an evolution. We had the incredible bandwidth and the ability to say, instead of an evolution, let's make this a revolution, and that's continuing to this day.
 
Reid: So, you found that they were open to that, the powers that be, those who were there before you, open to making this transition?
 
David: Well, that's why I came here. This was an old family run shoe manufacture, and that's what they were in. They weren't in the business of marketing a consumer product, they were in the business of making fine quality the highest quality handmade shoes in their factories. What happened after they made them was kinda left open for a little bit of discretion. We came in and we looked at what they were doing and said, "Oh my God, it's like you're mining diamonds and then what you do when you bring them out of the ground is, I don't know, we just brought a different level of professionalism of consumer insights and really treating the brand, like it was the diamond that it always has been and it really should be viewed as. And that's really what opened up the brand to such a far broader experience and the incredible success that we've had over what's going to be. We're right now working on Spring of 2020, that's going to be the eighth straight year of this phenomenal brand success, and this is just the foundation.

Reid: That's amazing. So obviously, with the idea of then the diamond you have the thing you are trying to preserve and then you have some variability here. And I know, for example, the mission is "we sell footwear that brings people happiness and satisfaction." Obviously, there's room for interpretation. I think the thing you've talked about preserving is this idea of the footbed. What other things do you feel like are the things you're trying to preserve and what are the things you feel like are open to trends and give you a little bit more variability?
 
David: Well, the beauty of our product is if you think about the car business, you basically have a chassis and then you play Mr. Potato Head on top of it.
 
Reid: Right.
 
David: We have the best chassis in the history of the footwear a business, we have what's called the "footbed," we invented the footbed. It is truly a cork-base bed that moulds to your foot. So where as somebody might go out and buy a orthotic and have it fit to their foot, you wear a pair of Birkenstocks around for a couple of days, it literally becomes a custom-made shoe and the comfort and the experience that you get from wearing it; I'm not being hyperbolic, it is life-changing. And when you have something like that, it gives you a tremendous amount of ability to take that customer to new places with you once they've experienced that. So we can play with different materials. The holy grail is the feel of a Birkenstock in a closed toe shoes, for all the millions of people who wear Birkenstock sandals, why wouldn't they buy a closed toe shoe, or sneaker or boot that has the feel of a Birkenstock? Well, of course they will. We just never made it for them. Now we are, we're making wedges, we're doing things like legwear, even things that are health and wellness-related.
 
David: We've gotten into the natural skin care business and people are loving it because the qualities and the chemicals that are naturally found in cork have tremendous benefits to skin care. In Europe. We're actually doing beds, actual high-end, premium beds and sleep system, so the amount of latitude that we have for the brand is tremendous. However, we will never, ever, ever compromise the DNA of the brand, which is health and wellness, and comfort and quality and heritage and we'll never ever compromise, and this is the key, the brand equity we will never be one of those brands that acts like they're selling out that's just not what Birkenstock is all about.
 
Reid: So again, giving you so many options in this. So maybe then talking about the idea of what you say no to, there's... I'm sure there's no shortage of ideas or things that get presented to you, what are the qualities of then saying no on the heels of what we're also seeing is what's such tremendous success with some of the collabs that you're doing, collaborations that you're doing, right after... Well, this is a podcast we know that this lives in perpetuity.
 
[chuckle]

Reid: Just recently this week a huge collaboration with Valentino and Francis McDormand at the Oscars and how cool that was. There's so much range here. How do you say no to something that's so powerful?

francesmcdormand-birkenstock-oscars2019.jpg

How do you decide what to say “yes” or “no” to?

David: I would say, we say no 10 times for every one yes. Maybe even more than 10 times, to every one yes. Number one is when you say yes, it has to be something that's mutually beneficial and mutually respectful to the brand. For example, a anybody can take your brand or your logo, and do the traditional Brand X Brand collaboration, and we all know that every week there's another brand X brand, brand X brand, brand X brand. And quite frankly most of them are boring, most of them are iterations of things that have been done before.
 
David: We view our business differently. Reid, the key thing is, we like to say we're not in the footwear business we're in the entertainment business, we're not in the shoe business, we're in the show business. The stars of the show just happened to be the shoes. So if you constantly entertain your brand fans and that it's the beauty of this brand. We don't have consumers we don't talk traditional. Like in your opening using the word marketing, we barely even use the word marketing, we never, ever, ever use the term consumers or consumer demographics, like great bands. Do you think the Rolling Stones talk about their fans as consumers? Never. They talk about them as fans. So we act like a great band not just like a great brand, we have fans, we not only have fans, we have stark raving, passionate brand missionaries. This is like the Grateful Dead. It's like Bruce Springsteen. And when you have fans like that, you can either keep doing things that continually entertain them, or you could just sit back and dial it in, and if you dial it in, you lose them. You compromise that connection.
 
David: It's like if you find a great restaurant, and the restaurant blows you away every time and then you start to go there and the meals just get...the chef starts dialing it in and he's okay with you start to get bored and you're going to leave. Even the best restaurant in the world has to keep the energy going and we wake up every single day thinking about how do we be even more engaging and more entertaining and how do we take our brand fans to a place where maybe they don't even know right now where they want to go and it's our place to lead them, and that's the biggest shift in where we're going right now. Once you prove yourself, you can take people to a place they didn't know they wanted to get to. Beatles fans loved for the first two years hearing She Loves You, "Yeah, yeah, yeah," and two minute pop songs.
 
Reid: Right.
 
14:29 David: And then the Beatles came out with Sgt. Peppers Lonely Hearts Club Band and just blew their minds, if they asked their fans what they wanted beforehand, they would have said, "Yeah well, give me, more two-minute pop songs." It's the old, "If Henry Ford asked people what they wanted they would have said, "faster horses" or did Steve Jobs go to people and say, "Can you imagine one day holding in your hand?" People couldn't even imagine it. And that's the way we're looking at ourselves. Not as a traditional footwear provider.
 
Reid: Yeah, I love the brand missionaries thing. That takes fans up a whole new level. People are going to advocate for you. And then the leadership in the followership part, which is really how we have to see brands like this evolve, and how you stay relevant for 245 years, which also then leads into, let's get out of speaking about consumers and all that. Now, where people can buy also as a major part of this equation is that you want them to have access. And famously, you guys said no to Amazon because of issues. What I understand it to be, and I would love to hear from you on this, which is the quality issue -- they weren't getting the right products and that kind of thing, knock-offs and stuff. You guys said "No, this isn't where it's going to happen." Can you elaborate on that, because you are uncompromising about quality, so you feel like that's the foundation component of this, how you say no to somebody like Amazon.

You famously said “no” to Amazon, in that you weren’t going to allow them to sell Birkenstock. Was that an obvious decision?

David: Yeah, you're absolutely right, Reid. What we're really uncompromising in is never compromising the experience of our end-user, our brand fans. And I didn't set out to be an Amazon crusader or to be the poster boy for do the right thing. I think Amazon is an incredible creation. I think the impact on consumerism is dramatic.
 
David: I just think that as the brand steward, going back to what I said originally, my job is to be the steward of a 245-year-old brand and I ultimately had a look at what is the consumer experience, if that is a predominantly significant point of distribution. What happens is your brand becomes transactional. And to me, if I'm selling dog food, or I'm selling Crest toothpaste, or I'm selling Tide detergent or I'm selling milk eggs, and cheese, it's a transactional business. If you're selling a brand where there's an emotional connection, it's something different. We had to hold ourselves up to a higher lens and ultimately the experience of being in the Amazon marketplace and doing business with Amazon directly, was just not consistent with our brand. Not that it's not consistent for any brand, but I think depending on where you are on the spectrum of transactional versus emotional, that's where any brand manager needs to look themselves in the mirror and take a hard look and say, "Am I willing to swallow and deal with something that's not completely consistent because there's a lot of revenue there or am I willing to not compromise? And thankfully, myself and my management in Germany, our co-CEOs Oliver Reichert and Markus Bensberg who represent the shareholders, whose last name is Birkenstock, agreed and have made the global decision that we will just never compromise the brand and that includes not doing business directly with Amazon at this time.
 
Reid: I'm sure that there's pros and cons to different company structures. Do you feel like from that standpoint, that is where a major pro is the fact that the family with this name is still involved in terms of how you steward and protect a brand like this?
 
David: Well, I think there's a big difference when your name is on the outside of the building or your name is on the box or your name is on the product. My last name isn't Birkenstock. I should have been so lucky in my life as to be born a Birkenstock. But when people look at me, I'm the representative of Birkenstock. Anybody who sees me in any room at any industry event, when they see me, they're seeing the brand and that means I have to represent that brand. It's like if you were having lunch with an executive from Coca-Cola, and the server comes over and says, "I'm only pouring Pepsi." Is he getting it or is he saying, "I'll have a glass of water." If you're doing business with the BMW dealership and your sales manager drives up in a Mercedes, is he really believing in the product? We're all in, this is how we manage the business, this is how we manage the brand, this is how the culture of our company exists. And I think it has a pretty dynamic effect in the market place in the universe to be quite broad and esoteric when you have a small group of people that really, really, really live the mission and live the brand.

How do you stay connected to the brand and your customer?

David: As new school as we are, we try to stay very old-school also. I'm sitting here right now talking to you, I'm going to close the office, but 10 feet away from me is a call center, and we've got maybe 30 to 40 people sitting in a call center who quite literally are taking consumer calls all day. And there are some people that are calling up, "Yeah, I was on your website and I have a question about this or that." Some people, "Ah, I bought this, it didn't fit. I need to return it." Some people just call and they want to rap about how much they love Birkenstock. I answer personally myself, no matter how busy I am, I always get, I would say, maybe 5-10 letters from high school kids or even younger, who my teacher asked us to write to our favorite company and blah, blah, blah, and I respond to every single one of them. I mean even the celebrities who wear our product, we don't do the Hollywood gifting, we don't pay a Kardashian $250,000 to put out an Instagram post.
 
David: Every one of our celebrity fans, these celebrities that have their own fans, they're fans of our brand, most of them have my direct number and if there's something they're looking for or they can't find or they just want to talk for an hour about their love of the brand, and they can name every style. I don't even know the shoes in the collection as well. I can name five different celebrities, not to name-drop who, but you know, it's a who's who of Birkenstock wearers, who can give you a litany of the history of the Birkenstock brand and every style in the line. So it's just a hands-on experience.
 
David: Even with our retailers, truth be told, I just got up in front of Nordstrom, in New York City, we did a live event where they had me interviewed on stage and we had models come out and show how to style your Birkenstock and it was live streamed, and it was done in front of maybe 200 people on a live audience. And the reason we did it is because I think to myself on a Sunday afternoon at 3 o'clock, in the Corte Madera store in Marin County, California, somebody is coming in and talking to somebody on the selling floor who then needs to represent our brand one customer at a time, and they need to have the right messaging and they need to share the brand qualities. And again, when we talk about bringing happiness and satisfaction to people, that's ultimately the intention of everything we do. Every action has to be consistent with that.
 
Reid: Yeah, and what it sounds like there is every brand talks about this idea of authenticity or something like that, but so often you see it as the superficial level as an authentic shot or something like that. Where now, what you're talking about is these are people who authentically love and are inspired by this brand, and therefore regardless almost of what they say, it just comes through and because there's the the way they deliver and show their passion for that brand and it's infused into all these different touch points and the retail and in the models, and then certainly it comes from you, I can hear that, obviously. So with all of that then, are there things that you do on a day-to-day basis, or talk about on a day-to-day basis within your four walls that reinforce your perspective? Do you have symbols or things that continue to reinforce this perspective?
 
David: We're big on repeating the message over. You get the jist when you're talking to me, I'm on a soapbox all the time. And everyone in our organization is like that but we're trying not to be preachy, or holier-than-thou. It's just, when you live this, you live this. And to think that we're on a bit of a broader mission, I mean, look, you could put on CNN, you could put on Fox News. We're living in a day and age right now, where what you see, you don't know if it's real or it's fake, and things that you think are real have some degree of falsehood to them and some things that you think are fake have some level of truth. So we're living in a day and age where people don't know what's real. I could tell you one thing: Birkenstock is real. It's as real as it gets. So we have some signs around our building. One says Birkenstock, the island of sanity and a sea of chaos.
 
[chuckle]
 
David: And we believe this, we believe the world around us is a bit of chaos and it's really our place to try to withhold this higher level of how we interact, and how we deal with people and hopefully by doing that, you raise the energy of everybody else. And as long as you do it in a way that's not preachy or holier-than-thou or what's right for us. Look, if it's not right for somebody else, then maybe we're better off not being in partnership with them, and that's very easy. We make those decisions all the time. But if it does align, we go all in with our partners.
 
Reid: What I'm hearing very consistently, is let others be. If Amazon is great, but it just wasn't right for us or let other certain collaborations that may come by, those, they're fine as they are, but not right for us. And then with people who come to you and say, "Look, if you are right for us, if you are passionate about who we are, then, yeah, we're all in, we're here to support you and we've got fantastic products to be a part of your life." So, I can...
 
David: Yeah, I'll give you an example. You mentioned this Valentino collaboration, which is mind-blowing, to think that Birkenstocks were on the stage at the Academy Awards is you couldn't even imagine that, to think that Birkenstocks are displayed in a window on Rodeo Drive, in Beverly Hills is almost beyond the imagination. Well, here's a product that now sold out in the first 24 hours that it was online, that's the benefit of it, but it didn't come about because we sat here and said, "Okay, let's go through demographics, what luxury brand should we coordinate with and maybe if the planets align, somebody might wear it to the Academy Awards." What happened is Frances McDormand has been wearing Birkenstocks for 35 years. If anybody saw the quote she gave the press, she basically expressed a love of the brand, and she's been wearing this brand for a long time. Valentino's been dressing her for quite some time and it was just a crazy idea like, well, how great would it be in a room full of a thousand people who are really uncomfortable in their six-inch heels. How cool would it be if you, you're a bit of a free-spirit, you're iconic, you go to your own beat, you stand for who you are is who you are, you're very consistent with our brand. How cool would that be if you just showed up at the Academy Awards wearing a pair of Birkenstock? And quite frankly, I think I said it half as a joke. Well, six months later, there she was and it blew away every designer brand on the red carpet. So the story from the Oscars is Birkenstock shows up on the red carpet and on the stage. And we didn't do it as a marketing event, we did it purely as something that was completely consistent with the person who got up and did it. It's just so unique, it's such a Birkenstock kinda moment. It's part organic, part engineered, but all very real. And that I think is the big difference right now because if you've been schooled over the last five years on Yeezy this or a Kardashian that, or Trump spinning things or the democrats spinning things, whatever side of the fence you're on, there are only so many things that are real. And I think right now in the world of consumerism, I think people are cocooning. When things were getting too crazy in the world, what happened, everybody got into their homes and Restoration Hardware, and put in the big screen TV.
 
David: Because that's how you kind of felt grounded. I think now, people ground themselves with certain products that they know are real. You'll see more Birkenstocks on women's feet, in an H&M store than any other retailer on the face of the earth. And that's because you're going into H&M, for $100, you're buying 10 different pieces. I'm not sure how... They're good, but I'm not sure how good you feel about buying products that are basically mass-produced, disposable. So what does she do? She spends the money, she saves on all of those H&M products, buys a fine quality pair of Birkenstocks and it becomes the perfect outfit completer to make a statement and say, "Okay, I'm real in my life."
 
Reid: And I would imagine that having such consistent values and having, I think, probably learn them over the history of the company, and that I'm sure that some of those things have evolved over time, and probably can be a little bit hit or miss every once in a while in the span of 245 years, but largely consistent at this point has to be quite liberating, because you know who you are, you know who your friends and fans are. And so as these things show up, you guys can then have some cohesion as a management team, and those who have to execute against these ideas, knowing what's what and how to live up to it. Does this liberate the team in some way by just knowing how well you are, how knowing yourselves as well as you do?
 
David: Oh, absolutely, I mean, Reid, it's liberating, it's inspiring, it's fun. Because rather than come in and go, "Who do we want to be?" Or the typical marketing 101. If we were a car, what kind of car would we be? If we were this, what kind of that would we be? We know exactly who we are and all we think about, and I mean this, quite honestly, all we think about is what products can we develop that bring our end user more happiness and satisfaction? How do we take a bigger share, so to say, of their closet, of their wallet, of their lives so that we can better serve them with quite frankly, a product that has incredible features and benefits. I mean, I like in us to if you go back to the history of Nike and Nike is a great example because they've done it really well. Nike was basically a running shoe company for the first 15 years they were in existence. People forget when they went after Michael Jordan, Michael Jordan said to his agent and David Falk. "Why would I want to sign with a running shoe company?" Well, in Nike's mind, they were a sports and fitness company. If they had a shoe that provided great performance for runners, why wouldn't they take that technology and do the same thing for tennis players, for golfers, for basketball players, for every sport, and that's what they did.
 
David: And that is the place that we're in, and it's liberating to not say, "I'm a running shoe company." When you say, "I'm a sports and fitness company." "I'm in the business of helping people perform to the highest level possible to self-actualize themselves." And if you're in the space we're in where you have a product that has features and benefits with orthopedic benefits to them, well, that gives you the ability to do a lot of different things. Any type of footwear short of the heel to that meets the standards of our footbed meaning closed toe shoes, clogs, wedges, as well as health and wellness products.
 
Reid: Well, that's pretty exciting and inspiring for any of our listeners. And so I think that's such a great place to end this. So David, I greatly appreciate you joining us and inspiring our listeners with what they can do with their own brand. So, thanks for joining us today.
 
David: Thanks so much, Reid. Good catching up.
 
Reid: You too. Take care.

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