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Editor’s Note: This story is part of Bloomberg Businessweek’s occasional series on the world of startups. The series focuses on MBAs and undergraduate business students who developed their ideas or launched their businesses while still in school and the many ways their schools helped them get their new ventures off the ground. For a look at some business students trying to build their own businesses, check out our slide show.
Oct. 19, 2010, could have been the day of reckoning for aspiring entrepreneur Ryan Goldston.
On that day, the National Basketball Assn. banned its players from wearing sneakers made by Goldston’s company, Athletic Propulsion Labs (APL). The reason: the shoes gave players an "unfair competitive advantage." It was the first time in the league’s 64-year history that a shoe had been banned for that reason.
Game over for the young company, right? Not exactly. After the NBA’s banishment, consumer demand for the shoes soared. APL, which is in Los Angeles, sold more pairs of its Concept 1 sneaker during each of the seven days following the NBA’s announcement than it had during the entire month before. To help face the unanticipated boom, Goldston channeled lessons he picked up at USC’s (Marshall Undergraduate Business Profile). "I learned to be comfortable with the unknown while at school," Goldston says, "and to trust that if you have something special, just go with it." That something special for APL was the technology to make players jump higher.
Goldston and his twin brother Adam grew up around sneakers. In the early ’90s, their father, an executive at the L.A. Gear shoe company, brought home a test pair of the L.A. Lights sneakers for the boys to try out. Originally, the shoes lit up from the back with every step, but after the twins complained they couldn’t see the lights on their own shoes, the design was changed and the lights were moved to inside the side of the shoes’ soles. Although Goldston and his brother may not have been the chief designers of the ubiquitous light-ups, the experience triggered an interest in the development of athletic apparel.
Growing up, the brothers were strong athletes, both playing varsity basketball in high school. Their one flaw was lack of height. "We weren’t the tallest guys in the world, so we were always looking for ways to jump higher," Goldston says. Using their family history with sneakers as a starting point, they began to sketch out a plan for a basketball shoe that would increase their vertical leap.
When Goldston enrolled at USC as a freshman in 2005, he had two goals: to study business at Marshall and play basketball for the Trojans. But an ankle injury during the summer after his sophomore year quickly put an end to his sports career. With hoop dreams no longer an option, Goldston began to spend more time on making the basketball shoe a reality.
His first business course was an introduction to entrepreneurship. He entered the classroom with his idea and the desire to start a company while earning school credit and receiving guidance from a staff of successful entrepreneurs. One of those entrepreneurs was Marshall dean James Ellis, former president and chief executive of Porsche Design and owner and partner in six other companies. "Ryan understood they needed something that differentiated their product from anybody else," Ellis says. "More importantly, he focused on that something even through false starts with suppliers and designs. He was always willing to learn from his mistakes."
Goldston and brother Adam, a sociology major at USC, spent the next few years at school balancing coursework, a strict daily workout regimen (once an athlete, always an athlete, according to Goldston), and the demands of building a product that relies on an entirely new technology. They drew from their experiences as competitive basketball players and began researching how to increase vertical leap. The brothers knew they needed to focus on the front of the shoe—an area untouched by big brand sneakers already on the market. They worked with a product development engineer with more than 20 patents under his belt until they created a shoe that, when tested on normal college students, gave an average of more than 3 inches of increased height instantly over competing brands.
Once the brothers developed the technology—called the "Load N’ Launch" propulsion device—that fit in the less-than-10mm of space in the front of the sole, they filed patents and trademarks in more than 40 countries. "We approached our startup the way a big company would approach it," Goldston says. "We knew we had something special."
Although developing a product while being a full-time student was a challenge, Goldston appreciated the "healthy dose of skepticism" he received from his peers and professors. "Imagine a 21-year-old kid telling you he has the first shoe to make you jump higher," Goldston says. "In the end the skeptics forced me to dig deep and really do the research and prepare for what was in store."
The company was formed in March 2009, a few months before graduation, and although starting a company while in school was difficult, so was competing with brand recognition and customer loyalty to such companies as Nike and Adidas. "We wanted to get the message out there, but we wanted our dollars to go not to marketing but to research and development," Goldston says.
APL took a grassroots approach to marketing, working with sneaker-focused magazines and niche blogs that resonated with basketball enthusiasts. To maintain exclusivity, Goldston kept the price point at $300 and sold the shoes only through the APL website.
When the NBA banned the product, the marketing campaign ramped up, and the increased press coverage forced Goldston to consider going more mainstream. Several major retailers approached them for distribution, but Goldston learned from business school not to saturate the market. "Our goal was to create a luxury brand, so at this point we had to be strategic on where we’d sell," Goldston says.
At the one-year anniversary, APL lowered the price of the Concept 1 shoes to $195, and sales increased substantially. While the majority of color options remain exclusive to the APL website, including the signature neon green-and-black color scheme, the shoes are now available in about 55 select Foot Locker, Modell’s, and Hibbett Sporting Goods stores in a limited selection of colors.
Since the company’s launch, APL has sold "thousands and thousands of pairs," Goldston says, with millions in revenue. APL is currently working on creating a running shoe set to be released early next year that will help runners move faster, and Goldston is again channeling the lessons he learned at Marshall to handle any challenges. He says: "I’m recognizing that a running community is different than a basketball community, thinking about those lessons learned at Marshall all over again."
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