The On Running Swiss Engineering Story
In 2010, Olivier Bernhard glued pieces of garden hose to the bottom of his running shoes. The former professional
In 2010, Olivier Bernhard glued pieces of garden hose to the bottom of his running shoes. The former professional triathlete wanted cushioning that absorbed impact on landing but locked firm for push-off. That crude prototype became CloudTec, the patented technology behind On Running. By 2024, the company generated $2.6 billion in revenue and tripled its net profit to $242 million. On Running Swiss engineering turned hose clippings into a brand that now competes directly with Nike and Adidas.
From Garden Hose to CloudTec
Olivier Bernhard competed as a duathlon and Ironman champion. Existing running shoes frustrated him. They either provided cushioning or responsiveness, rarely both. He experimented with materials until cutting sections of garden hose produced the sensation he wanted. The hollow tubes compressed when his foot struck ground, then locked solid for the next stride.
Bernhard partnered with David Allemann and Caspar Coppetti in Zurich. Neither came from footwear. Allemann had business experience. Coppetti brought design sensibility. The trio founded On in 2010, applying the precision and attention to detail that defines Swiss manufacturing. They engineered hollow foam pods to replace the garden hose, each compressing and locking based on impact force. They patented the system as CloudTec and launched the Cloud shoe.
On bootstrapped initially, then raised capital strategically. The company reached profitability by 2014, just four years after launch. On focused on specialty running stores rather than mass retailers. It grew through word of mouth among serious runners instead of expensive marketing campaigns. The On Running Swiss engineering philosophy extended beyond products into business operations.
Roger Federer Changes Everything
When Roger Federer’s Nike contract ended in 2019, he researched potential partners. He discovered On through Swiss connections and tested the shoes himself. The CloudTec technology impressed him. More importantly, the founders’ disciplined approach to building the company aligned with his values.
Federer didn’t sign a standard endorsement deal. He became an investor, acquiring approximately 3% of the company. He spent time in Zurich offices working with founders and designers on product development. The Roger Pro tennis shoe launched in 2021 with Federer influencing every detail. The Roger collection of lifestyle shoes followed, bringing performance technology into everyday wear.
Federer’s involvement opened markets. The global profile attracted attention in the United States and Asia where On had limited presence. His perfectionism reinforced the brand’s commitment to quality. His business acumen helped navigate expansion. The partnership proved mutually beneficial. Federer gained an authentic role in a growing company. On gained credibility and visibility that would have taken years to build. Federer’s stake grew to approximately $200 million as the company’s valuation increased.
Going Public and Accelerating Growth
On went public on the New York Stock Exchange in September 2021. Shares priced at $24 and opened at $35.40, jumping 50%. The company’s valuation reached $6.5 billion. The IPO provided capital to accelerate initiatives already underway.
On expanded its direct-to-consumer channel aggressively. The website attracted 230 million visitors in 2023, up 63% year-over-year. DTC sales grew from 36.4% of revenue to 40.3% by 2024, generating higher margins than wholesale. The company opened nearly 50 owned stores by 2024, each designed to showcase the technology through interactive displays.
Wholesale continued growing despite the DTC focus. On maintained selective distribution through premium retailers rather than chasing volume through discount chains. Third-party sales increased 22.8% in 2024.
Product Innovation Continues
On Running Swiss engineering manifests in continuous innovation. The Cloudboom Strike LS launched for the 2024 Olympics with LightSpray technology. A robot deposits synthetic material to create the upper, reducing components from 150 parts to seven. The shoe weighs 6 ounces and enables on-demand manufacturing with minimal waste.
The Cloudmonster became the flagship everyday trainer with double-layered CloudTec pods for maximum cushioning. The exaggerated sole design drove lifestyle adoption beyond serious runners. On expanded into trail, tennis, and training categories, each maintaining CloudTec adapted for specific uses.
Apparel became strategic. On surpassed 100 million Swiss francs in apparel sales by 2024. The category grew faster than footwear as the brand leveraged its premium positioning into workout clothes and casual wear.
The Numbers Validate The Strategy
On’s 2024 financial results proved the approach worked. Net sales reached 2.32 billion Swiss francs, up 29.4% from 2023. Fourth quarter alone grew 35.7%. Net profit jumped 204.5% to 242.3 million Swiss francs, more than tripling from the prior year.
Regional performance showed balanced expansion. Asia-Pacific led with 84.5% growth. Americas increased over 25%. Europe grew 18.2%. Direct-to-consumer sales increased 40.3%. Wholesale grew 22.8%. Gross margins reached 60.6%.
On’s stock price doubled in 2024 while Nike shares fell 29% and Adidas gained 21%. The company projects at least 27% revenue growth in 2025, targeting 2.94 billion Swiss francs.
What Makes It Work
Several strategic choices differentiate On. First, the company prioritizes technology over marketing. CloudTec delivers measurable performance benefits runners notice immediately. The cloud pods became iconic because they represent genuine innovation.
Second, On maintains premium positioning consistently. Shoes cost $140 to $200, comparable to or higher than Nike and Adidas premium lines. The pricing signals quality and funds continued innovation.
Third, the brand grew through authentic athlete endorsement. Professional runners adopted On because the shoes performed. Federer brought visibility but the product foundation already existed. Recently, On signed tennis star Iga Świątek and American Ben Shelton, continuing the pattern.
Fourth, On controlled expansion pace. The company reached profitability in year four. It maintained selective retail partnerships. It pursued measured DTC expansion. Strategic rather than opportunistic growth.
Fifth, sustainability became integral. LightSpray technology reduces waste. The company targets reduced carbon footprint across operations. Premium customers increasingly value environmental responsibility.
The Competition Responds
On’s success forced incumbents to adapt. Nike launched new cushioning systems. Adidas emphasized running heritage. Hoka grew aggressively in similar categories. Brooks, New Balance, and Asics defended specialty store relationships.
The competitive response validates On’s position. When Nike reacts to a 15-year-old Swiss startup, the startup has disrupted the market. On holds 40% of the Swiss running shoe market and 10% in Germany. In the United States, On accounts for 6.6% of the performance running category. Globally, On holds 2% of athletic footwear market share. Those numbers represent remarkable penetration for a brand competing against companies with 50-year head starts.
What’s Next
On Running Swiss engineering continues evolving. The Cloud 6 update launches in 2025. The Cloudsurfer 2 released in early 2025 with refined geometry. The product pipeline includes innovations in materials and manufacturing.
The brand targets further apparel expansion. Athletic apparel offers higher margins than footwear. On invested heavily in design to make apparel a meaningful revenue contributor beyond the current 100 million Swiss franc base.
Retail expansion continues with owned stores in strategic markets. International markets offer significant growth opportunity. On barely penetrated China, India, and South America. Asia-Pacific posted 84.5% growth in 2024, suggesting strong demand once On establishes distribution.
The challenge is maintaining On Running Swiss engineering principles while scaling. Precision and quality become harder to preserve as organizations grow and quarterly pressure intensifies. So far, the company navigates that tension successfully. Revenue growth exceeds 25% annually. Profitability expands. Product innovation continues. Whether On sustains this performance for another 15 years remains uncertain. But the first 15 years demonstrate what Swiss engineering discipline applied to athletic footwear can achieve.
Sources:
- On Holding AG – 2024 Annual Report (Form 20-F)
- On Holding AG – Q3 2024 Earnings Report
- On Holding AG – 2023 Annual Results
- SEC Form F-1 Registration Statement
- Runner’s World – Roger Federer Joins On as Investor
- Fox Business – On Running IPO
