Wednesday, January 28, 2009

George Boedecker, Scott Seamans, and Duke Hanson

De gustibus non est disputandum. Keep that in mind as I introduce today's Heroes of Capitalism.
Besides the mouth, little speaks more for a person than their shoes. Is that person in the cubicle next to you right out of college or several years into the job? Look at their shoes. How hip of a hipster is your bike messenger? Look at his shoes. And when you see someone wearing a pair of Crocs, chances are their feet are quite comfortable.

George Boedecker, Scott Seamans, and Duke Hanson, like many of our heroes, were at the confluence of a great idea and good luck when their company's shoes caught on with the general public. Also a common theme: the idea wasn't theirs. The trio were reportedly on a trip in 2002 when Seamans praised his pair of non-slip, synthetic boat shoes. The shoes were produced by an little-known Canadian company with a proprietary formula for lightweight, non-plastic foam resin. The three entrepreneurs figured the product was under-marketed and proposed to distribute the shoes under the name of "Crocs." In 2004 they bought rights to the formula and started producing the shoes en masse. What they hoped would appeal to a niche market caught on in the northwest, east coast, and eventually across the country.

There are other heroes to this story. The founders of Crocs likely found themselves overwhelmed by their success when they asked an old college friend and successful businessman, Ron Snyder, to be their CEO. Snyder saw the global marketing potential and introduced a manufacturing presence in Europe and Asia, leading the company to a ten-fold increase in sales. He also purchased an Italian shoe designer to give the company a boost where it is criticized most. More recently, Crocs inspired Sheri and Rich Schmelzer to create a business in accessories for the shoes, which they called Jibbitz. Jibbitz are colorful plugs that fill the characteristic holes in Crocs shoes. One year later, the Schmelzers sold Jibbitz to the shoemaker for $10 million.

All of these heroes profited off the ideas of others. I'm not embarrassed to admit that's what much of capitalism is about. Sometimes a person with a new idea can profit from it; more often the information needed to do so is diffuse or capital scarce. But let's not forget the plausible dozens of other, failed shoe ideas that entrepreneurs have likely tried to market. A healthy capitalism not only rewards those who create what people want; it snuffs out the weak ideas. While I may not be a fan of the appearance of Crocs, I admire them as a testament to the power of capitalism to offer people what they want.

CNNMoney.com
Slate
Crocs website
CNNMoney.com on Jibbitz
Jibbitz website

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