When German shoe and apparel behemoth Adidas announced plans to acquire Canton, Mass.-based Reebok International last month for $3.8 billion, industry analysts projected that similar deals would follow. How else could other shoe companies compete against the augmented Adidas and Nike, the nation's biggest seller of athletic footwear and apparel?

But Jim Davis, whose New Balance Athletic Shoe headquarters in Brighton, Mass., lies just miles away from Paul Fireman's Reebok compound, doesn't even consider his crosstown rival a competitor. "Their shoes are more about lifestyle," he says. "Our end consumer is not the same."

That's because Davis' customers are less interested in trends and more concerned with performance. New Balance buyers are more often heavy-set, middle-aged joggers in need of shoes in a variety of widths. Since founding New Balance in 1972--on the day of the Boston Marathon--Davis and his shoe designers have equipped elite and everyday athletes with the best-fitting running shoe available. It's a strategy that propelled Davis onto the Forbes 400 with a net worth of $1.6 billion. New Balance's $1.5 billion in annual sales make it the third-largest athletic shoemaker in the country.

Unlike Nike (nyse: NKE - news - people ) and Reebok (nyse: RBK - news - people ), New Balance avoids expensive endorsement deals with rappers and star athletes. The company instead spends money designing new footwear. Davis' next target: outfitting whole teams, from junior varsity high school squads to the pros. In spring 2004, the company acquired Warrior Lacrosse to aggressively enter the sports team business, "a huge opportunity," Davis says. Baseball, softball, football and lacrosse all require a range of widths and functions.

Why not combine these strengths with companies like Puma or Sketchers, whose sneakers for the fashion-savvy attract customers who may not have even heard of New Balance? Acquiring bigger brands means inheriting another culture, Davis says, adding he is not interested in disrupting two organizations. "I expect our friends from Germany and Canton to run into that problem.".