The ugly duckling: How Crocs overcame mockery to become a billion dollar pop culture phenomenon

One Dollar - that’s the stock price of Crocs in 2008. Investors were busy writing the shoe company off as a passing fad. They had all the right to do so. After all, Crocs had lost more than $185 million dollars that year. A decade later, the so-called fad had solidified itself as a fashion icon & pop culture phenomenon. Between 2008 & 2018, the company sold 700 million pairs of shoes. Since its inception in 2002, the shoe brand has had a polarising effect on the world, with some absolutely loving & others absolutely despising the shoes. The once widely mocked shoe is now adorned by the British royalty! From Prince George to Post Malone, Crocs as a brand has turned on its heels to come back from the brink of bankruptcy and become a multi-billion dollar publicly traded company. Let’s find out how!

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Pedal to the Metal!

In this episode, Bhavjeet and Anirudh talk about some interesting business opportunities in the business of car ownership. Before and after a vehicle purchase, there are a lot of decisions to be made, expenses to be incurred, that can lead to great business opportunities. Check out the different ideas in the episode:

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Launched in 2002 by Lyndon Hanson, George Boedecker Jr. & Scott Seamans, Crocs was originally developed as a boating shoe. The shoe is made out of Croslite, which is a proprietary resin material that has great impact absorption & hence provides great cushioning when turned into a shoe. Furthermore, the material resists odour, inhibits bacterial and fungal growth and is non-toxic. All these properties made it a great material for a boating shoe. The trio introduced the shoe to the world at the Fort Lauderdale Boat Show in Florida, and the 200 pairs that they had produced were all sold. Soon enough the product started garnering attention from non-boating customers. This led the company to showcase Crocs at Shoe Market of the Americas, a prominent footwear exhibition, in March of 2003. The company received interest from major footwear retailers and the sales soon began to climb.

Crocs became immensely popular in a relatively short period of time. In their first year of operations, the company sold 76,000 pairs of shoes, generating $1.2 million in revenue. Just a year later, Crocs sold 649,000 pairs of shoes that translated to $12.3 million in revenue. Two years later, in 2005, the company sold 6 million pairs of shoes, generating a massive $108.8 million in sales! The company went public in 2006, raising over $200 million in its IPO. This was the biggest IPO in the history of the footwear industry in the world! The next year was the most profitable year in the history of the business, raking in more than $168.2 million. Crocs were selling like hot cakes. Everyone from kids & parents to hospital & restaurant workers sought them out for their comfort & functionality. The company’s stock hit an all time high of $68.98 per share. It was one of the hottest stocks that year.

As they say, all good things come to an end. The unparalleled success of Crocs soon began to slow down. By 2008, many began to feel that Crocs was just a passing fad. The company realised that they needed to go beyond just comfort & functionality in order to gain mass appeal. They somehow had to make Crocs fashionable in order to become one of the top footwear brands in the world. In order to do so, the company embarked on an unprecedented growth spree, adding new product lines, distribution channels & markets worldwide. Soon enough, Crocs had expanded into over 5000 SKUs, thus saddling the company with excess inventory. Then came the 2008 financial crisis - overnight, the sales of Crocs plummeted. Crocs lost a whopping $185 million dollars that year! The stock price fell from nearly $69 a year prior to just $1. The unsustainable growth strategy adopted by the company had backfired in a massive way and they had over 2 years of excess inventory at their hands.

Crocs had fallen into a common pitfall for young companies - trying to be all things to all customers. Over the next few years, the company narrowed its focus. They shut down underperforming stores, optimised their distribution network, reduced overhead & cut down their product line by over 80%. They doubled down on their flagship product - the clog. In 2019, clogs accounted for more than 60% of sales. Clogs became extremely relevant as consumer preferences were shifting back to comfort & functionality. Crocs has been pivotal in the rise of athleisure & “ugly fashion” movements that had begun taking roots in 2017. Crocs began to innovate around the clog, turning it into a trendy statement shoe that stood for individuality & self expression. The company took a cue from the hypebeast culture and began collaborating with designers, celebrities & other brands to drop limited edition clogs.

Since 2017, Crocs has released dozens of limited edition clogs in collaboration with the likes of Balenciaga, KFC & the popular rock band Kiss. Some of these limited edition clogs, such as the  ones designed by Post Malone, are now being resold on the sneaker reselling platform StockX for thousands of dollars! This Supreme-esque luxury drop model turned the company’s fortunes and it soon began to gain mainstream appeal. 2019 was a record setting year for the company, as it crossed a billion dollars in revenue for the first time. The company sold a whopping 67 million pairs of shoes worldwide, generating over $1.23 billion in revenue. By December 2019, the stock was up nearly 500% since the beginning of 2017. The company had finally cracked into the world of fashion & Gen Z was obsessed with Crocs. By 2020, the company had become the 12th most popular footwear brand among teens. Some of that success can be attributed to Jibbitz - removable charms that allowed customers to personalise their clogs.

The company has been weathering an economic downturn since 2020 caused by the pandemic followed by the Ukraine crisis. However, the company is in a much stronger position compared to 2008. The company has over $100 million in reserves and a core product that is much more than a show - it is a fashion icon & a pop culture phenomenon! It would be interesting to see where the company goes next after a rollercoaster 20 years of ups and downs.