👟 The Story Behind Crocs

Issue 25 - Business Stories

Crocs is a very recognizable brand sold in almost 100 countries. Today in 2023, Crocs are worth seven-and-a-half billion dollars! They have released many new designs since the originals, and are ridiculously successful, but it wasn’t always this way. In this article, we’ll take a deep dive into the story of Crocs!

The Beginnings

Linden Hansen, Scott Seamans, and George Boedecker were the three co-founders of Crocs. In 2002 Lyndon Hansen was having a tough time in his life. He had been separated from his wife, lost his job in computer hardware, his mother had just passed away from cancer, and the icing on the cake is that he was now sleeping on his friend’s couch. Scott was a successful inventor who made a lot of money by developing and patenting his inventions. He was already semi-retired at the age of forty-eight. George was also a talented person. He had a rocky childhood, but started a lawn mowing business, then became a star athletic student, went on to own more than 100 Dominos’s Pizza Franchises, and became an execute at Quiznos (sandwich food chain)

George and Scott saw that they needed to help their friend Lindon to try and help him escape his troubles, so they set up a boat trip around the Caribbean area. While on this sailing trip, Scott request his two friends to try on a pair of shoes with holes in them made out of a rubber-like material. They were made from by a company called “Foam Creations” from Quebec. The shoes actually weren’t made of rubber though, but from a special resin that was odor, water, and slip resistant. It was also molded nicely to fit a foot in. The only issue Scott saw in the design was that there wasn’t a backstrap. Scott made a couple of prototypes, and he was interested in distributing this new version of the shoes in the United States, which is why he showed it to George and Linden. However the problem was that the two friends thought the shoes were very ugly, but Scott persuaded them to try the shoes on. Immediately George and Linden liked the shoes a lot, so much so that they decided to go into business with Scott. They named the company “Crocs” because Crocodiles can survive on both land and water.

Going to Business

The three founders immediately went to work to find a way to sell their new Canadian Shoes in the U.S. Linden worked on the development aspect, Scott worked on the products, and George put some of his own money into the company as initial funding. They opened their first shop in Boulder Colorado, but they headed to a Florida Boat Show in 2002, because they knew the shoes worked well by the water. They set up a booth and started throwing pairs of Crocs at people passing by, and whenever someone called the shoes ugly, the founders just told them to try them on. They sold about 200 pairs at this show.

Critics thought of Crocs as a company that wouldn’t last very long, however, Crocs was growing at a very steady pace. Critics also thought that Crocs were a passing trend, but it was actually starting to trend. Crocs sold around 76,000 pairs in 2003. Also, between 2005 and 2006, their revenue climbed North of 200 percent! A good business decision Crocs made was to buy the company “Foam Creations” from before so they would have rights to the “Crosslite” material that Crocs were made out of. Another good decision that made Crocs successful was its distribution strategy. Instead of retailers having to buy shoes in large quantities and discount the ones they didn’t sell, Crocs allowed them to place an order for as little as twenty-four shoes, and restock from there.

In 2006 crocs had its IPO which was 239 million dollars which ranked it as the highest IPO for footwear. This also put the company’s market value at a little higher than one billion dollars.

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Conflict

On May 24, 2006, George Boedecker stepped down as the CEO of Crocs, although it was unclear why. However, two days later all the details were put out: George Boedecker made an unusual call to his brother-in-law that he was going to cut his throat. After the phone call, George allegedly showed up in his brother-in-law’s office threatening to fight him. There are many reports of George actually having this crazy behavior in and out of the office. After more of these sorts of incidents, George was removed from the Crocs board of directors.

Reviving (more or less)

Ron Snyder was appointed as the new CEO of Crocs. Interestingly, he was the old friend of Linden who let him sleep on his couch. Ron is credited for taking Crocs to the next level. When he first started, there were only 2 models of the Crocs shoe, but he increased this count all the way to 250. He also made some great business decisions like acquiring Jibbitz which allows customers to customize their crocs by putting little charms on the shoe. He also secured deals with Disney and the NBA.

It seemed like Crocs was headed for the moon until the financial crisis of the late 2010s. Crocs announced it would be receiving a decreased revenue and they had to lay off some employees. In the midst of all this a company called “Collect LLC” made accusations that Crocs violated a patented filed in 1999 for a material similar to Croc’s Crosslite. Other manufacturers also claimed that Crocs were just look-alikes of an Italian Shoe that existed well before Crocs did and apparently, Scott knew about this. With all these problems, it sent Croc’s stock price tumbling down.

From 2008 to 2018 Crocs were described as “treading water” because of their rapid expansion and excessive inventory. But all of a sudden, they started doing well. Famous models and celebrities had been spotted wearing Crocs. What’s interesting is that Crocs has also tried so many different types of shoe models that weren’t as ugly in the hopes of getting more customers, but they realized that their real charm was that they were so polarizing. Crocs began to push out a message of “acceptance, individuality, and creativity”. The company tried to position it as that people who wear Crocs have a cool carefree attitude of not worrying about what other people think of them.

In 2020, Crocs had the best year ever in the history of the company. Since the world shut down in 2020, a desire for comfort seemed very necessary and it was prioritized over style. It also helped that Crocs closed down some of their retail shops switching to e-commerce solutions. In 2021 Crocs reported a record-high revenue number of 2.3 billion dollars. Of course for every fashion brand, there is always a question if their product is still relevant, and I think that’s a big YES for Crocs here in 2023!

Thanks for reading this week’s article, and I hope that you uncovered some new information on the business story of Crocs. Thanks again and I’ll talk to you next week!

—Luke Rapaka

Sources for this article were MagnatesMedia on YouTube and also different websites for other details