New Balance Athletic Shoe, Inc. - New Ownership in the 1970s

New Ownership in the 1970s

A 1964 graduate of Middlebury College, Davis was 28 years old when he acquired New Balance in 1972. Academically, Davis's interests were in biology and chemistry, but he only pursued these disciplines tangentially as a professional. His chief interests were in marketing and sales, and he learned these skills while working as a sales representative for a high-technology medical electronics company. After two successful years in sales, Davis was promoted to sales manager, but he did not linger long in his new position. By the beginning of the 1970s Davis was ready to fulfill his next dream: owning and managing his own business. A friend of Davis's suggested that he talk to Paul Kidd, who wanted to retire and sell his company, New Balance Shoes. Davis talked with Kidd and spent some time investigating the company by canvassing New Balance's small band of customers. His findings piqued his interest. "I felt that leisure-time products would be a high-growth market," Davis remembered, recalling his thoughts prior to purchasing the company, "and I found that New Balance had a good product. After running in them myself, I was very impressed with the shoe. I got the same reaction from other runners. The company had relied entirely on word-of-mouth advertising and I was confident that with some marketing, sales could be expanded substantially." Using his savings and money obtained from a long-term bank loan, Davis bought New Balance in 1972 for $100,000, the same amount the company was collecting in sales per year.

When Davis acquired New Balance, the company employed five workers who worked in a Watertown, Massachusetts, garage producing approximately 30 pairs of Tracksters per day. Davis was intent on dramatically magnifying the scale of the company's operations, but first he needed to establish a nationwide sales distribution system to support such growth, and he spent much of his first year establishing a network of geographically based sales representatives. After doing this, forces beyond Davis's control swept the company toward prolific growth, making his tenure of ownership overwhelmingly successful soon after he took control. The era of recreational jogging exploded with widespread excitement in 1973 and 1974, as vast multitudes took to the streets and parks and began logging miles in earnest. In a matter of months, running was transformed from an activity that attracted only serious racers and physical fitness enthusiasts into major leisure-time activity. The timing of Davis's acquisition had proved superb. Amid the sweeping passion for running appeared a collection of new magazines that catered to the jogging enthusiast, one of which was Runner's World, which in 1975 published its first annual supplement that rated the leading running shoes. In the first issue, New Balance placed third, an encouraging result in itself, but the following year, in October 1976, the New Balance 320 was judged to be the best running shoe in the world, with two other New Balance entries placing third and seventh. The notoriety received from being billed as the best tied New Balance to a rocket; at company headquarters in Watertown the telephone did not stop ringing with urgent requests for the New Balance 320. "Our biggest problem," Davis noted, "was getting enough of them out the door."