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The Color Of Success
Portfolio, Sep 1, 2006
Lyndon “Duke” Hanson smiled as he remembered the spring 2004 visit to CU’s senior advertising class.
The co-founder of Crocs was telling the students about his company’s funky boat shoe.
“We were just becoming a recognized company,” Hanson said. “We hadn’t done any advertising or marketing…the students thought we were crazy, and they had to do a semester-long project on Crocs.
Little did the students know that they were about to work on a footwear phenomenon.
Actor Jack Nicholson was pictured this summer walking in St. Tropez, France, wearing Crocs Shoes. The Today Show, New York Times, Washingtong Post, USA Today, and dozens of other major newspapers have done stories on the spa shoe turned boat shoe turned cultural icon.
“It became the nation’s comfort shoe,” Hanson explained.
Crocs got started when Scott Seamans, a long time friend, showed Hanson and high school buddy, George Boedecker, the waterproof spa shoe he had found. The shoe resisted bacteria and fungus, and Seamans reasoned that by adding a strap to the back they would sell it as a boat or beach shoe.
“All three of us have the entrepreneurial spirit,” Hanson said. Boedecker’s experience at Domino’s Pizza and Quiznos brough cost-control discipline and a customer-centric attitude, as wel las start-up capital.
Hanson had experience marketing computer hardware and knew what was required to build a company from working at both successful and failed small companies.
The friends rented a small office and started selling at boat shows and industry trade shows. The shoes were an immediate hit.
“I ran day-to-day operations,” Hanson said. “During the day, I would answer the phones and handle to required paperwork to set up the business entity wherever we were doing business. After dinner, I’d come back and enter orders until I fell asleep in my chair.”
As the 16-Hour days began to wear on Hanson, he made the comany’s first office hire, Tegan Sarbaugh, a CU alumna.
When Hanson met with the advertising class in 2004, he saw it as “an opportunity to talk about our product and relate to one of our target markets. Only about a third had heard of Crocs, and only one had a pair.”
The students conducted market research and developed advertising campaigns targeting specific audiences, such as children, teens, and adults. They generated two thick binders of research and mock ups of four ad campaigns.
“one of the advertising agencies we hired used a hybrid of what the sudents came up with,” Hanson said. Crocs adapted an image the students developed, Crocs shoes on popsicle sticks, as a trade show sign promoting the shoes for kids.
“We still use the research to help defend our position in the market,” Hanson said. “I learned from the students and teh research. And I think theylearned from me the enthusiasm and drive for what we’re doing.”
If four years, Crocs has grown to 1,250 empolyees in nine countries. Its sales have grown from $1 million to $12 million to $108 million last year.
“Our sales have been rapidly increasing every year,” Hanson noted. To help cope, Hanson has drawn on the skills and knowledge he acquired in the Leeds MBA program.
“The MBA made me a much better generalist,” Hanson said. “I understand business from an accounting perspective, from a marketing perspective, even from a human resources perspective. There isn’t a job at this company that I haven’t done over the course of four years.”
Growth has brought other challenges. The company just moved its headquarters to a new building in Niwot and implemented its first enterprise resource planning (ERP) software system.
The founders’ sense of social responsibility has led the company to look for ways to repurpose old shoes and trim manufacturing waste. As a part of that effort, Crocs turned to Leeds faculty member Jim Marlatt and a team of his business student consultants to find a use for shoes with minor flaws that cannot be sold. Marlatt’s team found Brothers Brother Foundation to distribute the shoes to people in need around the world, so shoes from Crocs have gone to hurricane and tsunami victims and many third world countries around the globe.
Hanson said Crocs is making sure that sales do not rely solely on being a fashion trend. It has expanded its product line to 21 styles of shoes in 23 colors, and has targeted specialized markets, including:
- Special shoes for diabetics and those who need orthotics, and professionals who are on their feet all day in the medical field.
- The technology industry where a single company migh need 400,000 pairs of shoes for use in clean rooms.
- Licensing agreements with universities after a successful pilot of black and gold Crocs shoes bearing the CU logo.
- Licensing agreements with corporations such as Disney
- Other products besides footwear, including knee pads and kneelers for gardeners, which Crocs already offers.
Hanson is obviously excited about the new possibilities. He can only hope he underestimates the market as much as he did with the original shoe.
“When we wrote the first business plan,” Hanson said, “I figured we had 18 months to make necessary market impact. Four years later, our original Beach model still hasn’t reached maturity.”
-Doug Nogami
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