Birkenstock is trading below its IPO price at ~$5.8B. Yet L Catterton has already realized $3B+ and still holds roughly 50% against a ~$4.8B entry.

The timeline: in February 2021, L Catterton, alongside Bernard Arnault's family holding, bought the majority of the 247-year-old German shoemaker from the sixth generation of the founding family at a reported €4B. October 2023: Birkenstock lists on the NYSE at roughly $8.6B. Headline valuation nearly doubled in 30 months. Then, every 6–12 months since, L Catterton has launched major secondary block sales, including last week's $1B sale, executed with the stock near an all-time low.

Here's the part that confuses people: the business is performing. Birkenstock just beat quarterly estimates. Growth in every region. Margins intact at ~60%. Revenue up 50% since listing. By any operating measure, the thesis worked.

But every block sale puts supply on the tape, and the stock falls 4–5% on each offering announcement. The public market has become L Catterton's liquidity provider, absorbing billions of shares from a seller who knows more about the asset than any buyer.

The IPO was the price discovery event. Everything since is L Catterton answering the liquidity question on its own schedule, and a PE fund with a ~7-year holding period has to answer it, whatever the tape says. The shareholders complaining about the overhang are experiencing the strategy working as designed, just from the other side of the trade.

Typically when a scaled brand doing $3.5B+ in sales reports 21.6% revenue growth and record 65.4% gross margins, the market celebrates. On's stock fell 22% in a single day, hitting a two-year low.

The trigger was a single line: Americas wholesale grew 4.8% against expectations of ~13%. Management's explanation was unusually direct, they preferred to protect full-price integrity over feeding a heavily promotional US retail market. In other words, they chose margin over volume, on purpose, and told you so.

The market wanted the volume. Everything else in the print says the premium strategy is working. Average selling prices have climbed from $145 to $170. DTC hit a record 45.7% of sales. Zendaya's collection has pulled the under-34 cohort to a third of the customer base. And that 65% gross margin sits closer to Hermès (71%) and Prada (80%) than to Nike (~40%) or Adidas (~51%). On is quietly running luxury economics inside a sneaker company, the same move we flagged with Onitsuka Tiger a few issues back.

I've written before that On is the clearest case of discipline being mistaken for distress. Declining wholesale growth in a promotional market is what discipline looks like on a spreadsheet, and it's indistinguishable from weakening demand to an analyst who only has the spreadsheet. On has to prove which one it is over the next several quarters.

The open question: does On own the premium end of what I'd call the Movement Class, where wellness is the new status symbol and $170 shoes are a badge, or does it keep butting up against weak full-price everyday-running sell-through in the US?

Remember Shein? In 2022 it was the hottest company in retail, valued near ~$100B, more than Zara's parent and H&M combined. It just launched its IPO in Hong Kong at $27B.

Be fair about what Shein built. It genuinely changed apparel manufacturing: test batches of 100–200 units across thousands of new SKUs daily, algorithmic demand-reading, a Guangzhou supplier network turning trends into inventory in days. The speed was real. The consumer proposition was real. (And regular readers will recall Shein was the buyer of Everlane's remains, the fast-fashion machine absorbing the DTC darling.)

But was the margin structure real? Shein's model shipped individual parcels directly from China to consumers under the US de minimis exemption, the $800 duty-free threshold for small packages. While Zara and H&M paid duties on bulk imports, Shein's parcels flew in structurally untaxed.

Then Washington closed the exemption in 2025, and the numbers answered the question: revenue growth of 20.7% in 2024 became 8% in 2025, then 1.1% in Q1 2026. US revenue down 14.3%. A swing from a $395M quarterly profit to a $99M loss.

Layer on the listing odyssey, NYSE stalled amid supply-chain scrutiny, London collapsed when Chinese regulators wouldn't approve prospectus language, and Shein arrives in Hong Kong at ~0.7x sales while Zara trades at 4.6x.

Joe Welstead has a question he thinks every founder should be forced to answer before they launch anything: why should people care?

Not why the product is good. Not why the formulation is superior. Why should a stranger scrolling past your brand stop and give a damn. Most founders can't answer it so Joe drew up the four-part framework he and his co-founder Jack actually used to launch their second brand, Dirt.

One: Product differentiation. Is the product genuinely different, and can someone see that difference in two seconds?

Two: Demand signals, micro and macro. Years before Oshun, health hackers were mixing watermelon juice and salt. Almost nobody would actually do that, but it showed interest. Meanwhile Google searches for electrolytes were climbing. Small weird behaviors plus rising search curves. That's the signal stack.

Three: Competitive advantage, beyond the product. Your sourcing. Your ability to produce content. Your copy. Your network. The product is one card. What's in the rest of your hand?

Four: Demand response versus demand generation. Are you responding to demand that already exists, or creating it from scratch? Nine out of ten households have olive oil in the pantry, that's why Dirt is a demand-response play. Generating demand from zero is the most expensive thing in consumer.

Great product, no demand, no signals, no edge? It's going to be brutally hard. Joe's push is that you have to be brutally honest about this before you start, not after you've spent your savings finding out.

Joe joined me for round two this week, still just two co-founders, still profitable, mid-seven figures and growing, and the whole conversation is this level of clear.

🎧 Watch on YouTube, listen on Spotify.

Bottled water is the ultimate pure-play test of brand strategy, because the product literally cannot differentiate. Every dollar of premium is brand. And the category has now run five successive answers to "why should people care", each one a snapshot of what the consumer valued in that decade.

V1 / Competing on Source (1990s). The "where is it from" story. Evian (French Alps), Fiji (aquifer), Voss (Norway) won on origin and provenance. Geography as luxury.

V2 / Competing on Function (2010s). What's added. Smartwater, LIFEWTR, Essentia, and Core turned electrolytes and high-pH alkaline into daily status symbols. Water as a wellness product.

V3 / Competing on Packaging (late 2010s). Sustainability as the entire premise. Boxed Water and PATH's refillable aluminum proved the container could carry the brand.

V4 / Competing on Entertainment (2020s). Liquid Death brought heavy-metal irreverence ("Murder Your Thirst") to plain water and built a multi-billion-dollar brand out of a Science Inc. incubation, branding applied to the quietest category on the shelf.

V5 / Competing on Purity (today). What's not in it. Loonen is positioning around zero microplastics, zero PFAS, chemical-free glass — with 300+ third-party lab tests behind a QR code on the bottle. Notice the shift: the MAHA-era consumer doesn't want a story added to their water. They want proof of what was removed.

For America's #1 beverage by volume, yes, bigger than soda, a ~$50B retail category, this is the cleanest map I know of how consumer values migrate.

Quick ask: on a scale of too short to too long, where did this issue land? One word is fine, hit reply. I read every one.

Email: [email protected]
LinkedIn: linkedin.com/in/fanbi/