The Ugly Shoe Crocs Innovation story. The other day, my son and I bought a pair of Crocs shoes as a couple, and the bottom of my old pair had holes in it, which doesn’t mean they’re weak, it just means I loved them and wore them hard.
Whether I’m walking to work, working, going out, or traveling, Crocs seem to be the first thing I put on my feet. The funny thing is, my son is a Crocs lover, even wearing them to soccer. How did Crocs make us rich, and so many of us?
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Crocs Shoes made by friends who wanted to hang out in Florida
Crocs was founded in 2002 by Lyndon Hens, Joby Bedecker, and Scott Simmons from Boulder, Colorado. Coming from Colorado, where nothing but mountains existed, they lived in Florida and loved surfing. They’d play every day, but realized that their shoes were too uncomfortable to wear in the ocean. So, like any good older brothers, they thought it would be nice to have holes in their shoes to allow water to drain out, and that’s how they created the Crocs. You know, the ugly shoes with 13 giant holes.
But why the name Crocs? It was because we wanted the brand to be like a powerful crocodile, both in the water and out of the water. And indeed, Crocs have a tough, long-wearing, durable image.
It’s funny, the early members of Crocs targeted people who play in the water, which seems obvious, but if you’re a water shoe, the demand is really small. In fact, Crocs went viral because service workers who work long hours on their feet tried them and found them comfortable.
Three wacky surfers started Crocs, but it was Ron Snyder who really turned it into a business. He was the head of international operations at Plantronics, a wireless earphone company, and he came to Crocs in 2004 to do some management consulting, and then he signed a sales deal with Foot Locker in 2004, and he became CEO in 2005. Through Foot Locker, Crocs took off across the U.S., and that’s how we became the most highly valued footwear company on the NASDAQ in 2006, just four years after we launched. We surpassed $100 million in sales in four years, and our annual revenue growth was over 800%.
The Strategy of Crocs Innovation
The mission of Crocs was to provide the best comfort, enjoyment, and innovation for every foot in the world. It was focused on the value of comfort, which is something that gives real satisfaction, more than anything else.
We focused on the aesthetics of the shoe, the product itself rather than the design, so the basic design hasn’t changed over time. It’s been called ‘comfortable but ugly’, but now it’s embraced as a cool statement.
What sets Crocs apart is the unique material. It’s called Crocslite, and it’s made from a polyurethane-based synthetic resin. Ron Snyder, Crocs’ father, bought Foam Creations, the company that invented the material, and filed patents to prevent other companies from using it. (He’s a savvy guy.)
What’s unique about the material is that it flexes with body temperature, so the shoe changes to fit the shape of your foot as you wear it. It automatically adapts the fit to each individual. Plus, the material supports the pressure of your body weight, so there’s less muscle fatigue. In tests, it’s 60% less fatiguing than regular shoes, which is why people who stand on their feet for long periods of time love it.
The power of a simple production process
The great thing about Crocs is that we simplified the production process as much as possible and kept it simple. The idea was to be comfortable and functional, so there was no sewing or gluing like other shoes, just injection and slip-on. This allowed us to create economies of scale by increasing speed and productivity while reducing unit costs. This was also possible because Ron Snyder was a supply chain expert who understood the core of what Crocs was all about.
In addition, the company was able to respond quickly to national markets by manufacturing, warehousing, and distributing at the same time as production at each country’s production base. The company grew, but it also fell into a trap. By 2013, Crocs was a dinosaur with $1.2 billion in annual revenue, but its sleek, amphibious alligator image was fading: $1.2 billion in revenue and only $10 million in operating income. It was a lightning rod.
In 2015, CEO Greg Rivat, who had worked in the footwear industry for more than a decade, came to the pitcher’s mound. When he took over, one of the first things he did was clean up the business and get back to basics.
Top picks from Zivits acquisition Crocs
The Schmelzers in the US decorated their children’s Crocs with buttons and jewelry, and people loved it so much that they started their own accessories company for Crocs called Jibbits. It created a new ancillary market, just like the iPhone created a peripheral accessories market. New reliever Greg Ribat bets on the potential of Jibbits, and Crocs buys the company.
This transformed Crocs from a shoe synonymous with ugliness to a shoe with personality that you can customize to make it your own. Not only that, but people willingly share their Crocs on social media. The 2030 MZ is no exception to this trend: people love Crocs because they’re functional, practical, and allow you to show off your personality.
As this form took shape, various other collaborations centered around Jibbitz. Because of the simplicity of the design, it was a natural fit to collaborate with others.
Crocs to collaborate with Justin Bieber and Saiyi on merchandise
In 2015, Prince George, son of Britain’s Prince William and Kate Middleton, was spotted by the paparazzi wearing Crocs. Justin Bieber and Ariana Grande featured Crocs on their Instagrams, and collaborations began in earnest, including with high fashion brands such as Balenciaga, who named them one of the 50 shoes that changed the world.
We give back. We’ve found new ways to give back, like donating to healthcare workers suffering from the pandemic, because they’re comfortable shoes that you can wear for a long time. I used to wear Crocs in the operating room… I love them… I’m a smart doctor… I used to wear them because they’re easy to put on and take off without socks.
Crocs became so popular during the pandemic that its stock price soared to $180 per share. It dipped back down to $50 in the middle of last year, but it’s been creeping back up and is now in the $120 range. Crocs has a market cap of $7.8 billion (about $10 trillion). That’s slightly lower than PayPal ($8 billion) and similar to the market capitalization of BMW or Volkswagen. It’s about 2.5 times the market capitalization of U.S.-listed Coupang ($3.15 billion).
The scary part is that Crocs is still growing like crazy. From $1.38 billion in revenue in 2020 to $2.3 billion in 2021, a growth of 67%, and $3.5 billion in 2022, a growth of about 53%.
Isn’t it amazing to think that a boring, ugly shoe is actually the result of a tremendous amount of back-to-basics innovation? That concludes the Crocs innovation story.
