You know you have a great idea when you start having competitors copy you. Well, Dr. Scholl’s copied the foot bed from Birkenstock.
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients, so here’s one of those.
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Dave Young:
Welcome back to the Empire Builders Podcast. Dave Young, here with Stephen Semple. And today, man, today is the day, man. Dude, we’re going to rap about Birkenstocks. It’s the crunchy granola shoe from the seventies. That’s what I think of with Birkenstocks, and I want to like Birkenstocks. I tried them on many times in my life and I don’t know that I could get through the learning curve or whatever it is. They just didn’t. Anyway, I’m anxious to hear the story, because I think we’re headed to Europe.
Stephen Semple:
So the average, so people who own Birkenstocks on average own Fortair.
Dave Young:
Yeah, I get it.
Stephen Semple:
In 2023, Birkenstock went public.
Dave Young:
Oh, did they?
Stephen Semple:
At a $7 billion valuation.
Dave Young:
Dang. Why? Why would they need to?
Stephen Semple:
A lot of times, I think when things like this happen, it’s to free up money for the family.
Dave Young:
Yeah, they’re cashing out.
Stephen Semple:
It’s the give ability for key employees to have ownership. Often, there’s a lot of reasons for doing an IPO, and in future, we’re going to do one on Jacuzzi where it’ll really highlight that really well because it’s a crazy story.
Dave Young:
Cool. Well, take me back to the beginning of Birkenstock, man.
Stephen Semple:
Yeah. The model that Birkenstock is really known for is that classic one with the strap and whatnot.
Dave Young:
Yeah.
Stephen Semple:
And it’s called the Arizona. And it has been growing, sales on the Arizona have been growing like 24% a year. It just
Dave Young:
Just year over year?
Stephen Semple:
It’s just growing, and growing, and growing, and growing year over year. But Birkenstock is a really old company. It was founded in 1774 by Johann.
Dave Young:
Well, that’s pretty old.
Stephen Semple:
Yeah, Johann Adam Birkenstock in Germany. And the original idea was to create shoes that gave support and contour to the foot. And in 1896, the Fußbett, which is footbed, was designed. And by 1925, Birkenstocks were being sold all over Europe. And in 1966 is when they were brought to America. And literally the first documented mention of Birkenstock was basically March 25th, 1774 as a vassal and shoemaker in some local church archives is where it was first mentioned.
Dave Young:
Wow.
Stephen Semple:
Right. I mean, holy crap. We’re talking generation, after generation, after generation of master shoemakers or part-time shoemakers, all called Birkenstock. This is a business that’s gone from Birkenstock to Birkenstock to Birkenstock to Birkenstock.
Dave Young:
Wow.
Stephen Semple:
It’s been really quite incredible.
Dave Young:
That is amazing. Yeah.
Stephen Semple:
Yeah. And so basically where they really had their big breakthrough was following World War I, because shoes were now starting to be mass-produced. It started to become cheap. But here’s the crazy thing is the early mass-produced shoes, there were no arch support. And in a lot of cases there was not even a left or right.
Dave Young:
Yeah.
Stephen Semple:
And so this is when they created this whole idea of a footbed being able to be put in the shoe to create better comfort and whatnot. And following World War I, we also had a lot of people who were returning from the war injured.
Dave Young:
Yeah.
Stephen Semple:
And this was a therapeutic insole that could be put into the shoes. And because of that, they had a lot of success in orthopedic circles with insoles and these being considered healthy. And really the real interesting inventor was Conrad Birkenstock, who really leaned into doing this. And in fact, they were one of the first creators of being able to do this with plastics.
Dave Young:
Okay.
Stephen Semple:
Yeah.
Dave Young:
I’m completely unaware of all this because all I think of is the sandal that’s basically the compressed cork.
Stephen Semple:
Yeah.
Dave Young:
With the little outline for the big toe, and I guess some other contour.
Stephen Semple:
Yeah. Well, they had even developed cork insole, and then in 1902, the first fully plastic flexible insole, they had developed that in 1902.
Dave Young:
Wow. Okay.
Stephen Semple:
Yeah. And then they started making shoes on this last, with this insole that they would call health footwear. They were really ahead of the game in terms of making these flexible insoles and in some shoes with this type of footbed in it. And in 1925, Conrad registered Fußbett, in other words, footbed as a trademark.
Dave Young:
Oh, wow. Okay.
Stephen Semple:
And by 1920, they were supplying them in Austria, France, all over Europe. And one of the things that they did that’s really interesting is then they started to make them appear different, to make them stand out, they started making them in blue.
Dave Young:
Okay.
Stephen Semple:
Which went on to be copied by Dr. Scholl. If you take a look at a lot of the foot beds you buy, they’re blue.
Dave Young:
Yeah, yeah.
Stephen Semple:
That was knocking off Birkenstock.
Dave Young:
Oh, wow. You don’t think about things like that.
Stephen Semple:
Yeah.
Dave Young:
Okay.
Stephen Semple:
Yeah, so it’s 1945, it’s now Karl Birkenstock, the son of Carl Birkenstock. Carl with a C rather than Karl with a K, is continuing to pursue this idea of healthy footwear. And he wanted to make an ideal shoe that was suitable for mass production. And he started to do this. And one of the things that they realized was they were having all of this success in the orthopedic area, and they decided to create what they called the original Birkenstock footbed sandal. So in 1963 is kind of when they came out with the sandal.
Dave Young:
And that’s the one that I think of when I think of Birkenstock. Yeah.
Stephen Semple:
Yeah. And they were still pretty small because in 1970, they were still only like 57 employees in 1970. So really, this is where things really take off. They create this one week course called the System Birkenstock, and they invite people, they reach out essentially. So they were having all of this success in the orthopedic area, but there were people in the space that didn’t like them.
Dave Young:
No.
Stephen Semple:
So here’s what they did. They created this one week course, and they invited all the people who didn’t like them to take the course.
Dave Young:
Okay.
Stephen Semple:
And they managed to convince 5,000 professionals over a period of time that weren’t using them and didn’t like them to do the course, so they purposely reached out to their detractors.
Dave Young:
That’s cool.
Stephen Semple:
And said, Hey, let’s try to convert you. And when they managed to get into the US was Margot Frazier, who is a German-American dressmaker who lives in Santa Cruz, was traveling back to Germany to visit a spa in Bavaria because she was having all these foot problems.
Dave Young:
Okay.
Stephen Semple:
It was primarily ideas that were being created by tight shoes. And she was pointed out the Birkenstocks.
Dave Young:
Okay.
Stephen Semple:
And she tried them on, this changed her life. Now, it also turned out she’s in California in 1966 during the hippie movement, she starts bringing these shoes.
Dave Young:
Well, there it is.
Stephen Semple:
There it is. She starts bringing these shoes from Germany to California because of her enthusiasm for how comfortable they are. But you know what? There were still a lot of barriers. Because, people are like, this is an ugly shoe.
Dave Young:
Yeah.
Stephen Semple:
Because Birkenstocks, personally, I find them an ugly shoe.
Dave Young:
They are. Yeah. I can’t argue with that.
Stephen Semple:
Yeah. A lot of shoe stores rejected these sandals because of the appearance. But you know what? The people who wear them, love them.
Dave Young:
Yeah.
Stephen Semple:
And they’ve grown, and they’ve grown, and they’ve grown, and they’ve grown. And today they’re a $7 billion empire built on this idea of a more comfortable shoe.
Dave Young:
That’s pretty amazing. I mean, that’s a lot of sandals. That’s a lot of shoes.
Stephen Semple:
It’s a lot of shoes. And when you sit there and think about the history or they went back, and I also like you didn’t realize that they started with footbeds.
Dave Young:
Yeah. Or that they started so long ago.
Stephen Semple:
Yes.
Dave Young:
And it’s pretty amazing. So what do you think is going to happen now that they’re a publicly traded company? Stay tuned, we’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Empire Builders Ad]
Dave Young:
Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.
So what do you thinks going to happen now that they’re a publicly traded company.
Stephen Semple:
You know, that’s always a challenge because one of the things I didn’t look into is what’s the structure of the company? In other words, how much of the voting rights do the Birkenstock family have?
Dave Young:
Sure.
Stephen Semple:
I should have looked at that. I should have looked at that. That would be interesting. Because, sometimes when these family businesses go public, the family retains the majority of the voting rights, and so therefore, they’re still able to continue to really drive the business. In other cases, when the owners sell, they end up in a minority position. And often when they’re in a minority position, it’s not long until they’re pushed out of the business.
Dave Young:
Yeah, yeah.
Stephen Semple:
It’s a hard call. And it would be sad, because this has been in the family for so long, it would be sad if that occurred. But the nature of the business changes when it gets public.
Dave Young:
It really does.
Stephen Semple:
Because there’s now a board and there’s people that you have to respond to, and suddenly there’s a whole pile of people around you who care about the stock price. Like it’s one thing for you to go, Hey, I don’t really care about the stock price, but there’ll be other people who do.
Dave Young:
Yeah, absolutely. Absolutely.
Stephen Semple:
It’s not always a bad thing. It’s often a bad thing. And really what it’s going to boil down to is how does the family manage that?
Dave Young:
Good point. Good point.
Stephen Semple:
Now, the other reason sometimes for it to go public is there’s no one in the family who wants to stay involved.
Dave Young:
Carry on. Yeah.
Stephen Semple:
So sometimes the reason why these things go frankly a different direction is that while a family’s involved and has got a board seat and whatnot, they’re not really interested and motivated in staying involved. Does Birkenstock have the DNA that the Ford family have.
Dave Young:
Right.
Stephen Semple:
Where the Ford family still is very, very, very involved in Ford? Or is it more like the DNA of the Heinz family where we’re really not involved.
Dave Young:
And we wanted to take the fruits of the success of this company and go live our lives, yeah.
Stephen Semple:
And only time we’ll tell, what is the family DNA at this juncture around that?
Dave Young:
Yeah.
Stephen Semple:
I would like to think that the DNA, is the Birkenstocks are going to continue to remain involved in Birkenstock, but only time will tell.
Dave Young:
So personal question, Steven, have you ever worn them?
Stephen Semple:
Yes.
Dave Young:
Do you have a pair?
Stephen Semple:
I do not have a pair. I’ve tried them on the odd time.
Dave Young:
They really are not, I wouldn’t call them a cult brand, but they have their core group of people that love them and.
Stephen Semple:
Oh, yeah. The people who wear them, love them and find them unbelievably comfortable.
Dave Young:
Yeah.
Stephen Semple:
And I sometimes wonder, is it one of those ones where when you first put them on, it doesn’t have the comfort until your feet get used to that type of feel.
Dave Young:
Yeah.
Stephen Semple:
And then once you get used to that type of feel, it might be one of those things that nothing else has the same comfort.
Dave Young:
Yeah, I’m sure that’s a part of it. And I’m sure there are plenty of people that just can’t get past the look of them, right?
Stephen Semple:
Yes.
Dave Young:
There’s a certain shape, there’s a certain outline, and you’re seeing a little bit more of that. I know with my particular feet, I like a wide foot bed. There’s something about a Birkenstock that I like, but the foot bed itself, the bottom of it has always been the problem for me. And maybe it is just not spending the time to get used to it.
Stephen Semple:
Yeah.
Dave Young:
Maybe you and I should have a Birkenstock challenge, where we each get a pair and we see who can wear them the longest.
Stephen Semple:
Well, and here’s the interesting thing, Birkenstock also in terms of its acceptance, because it’s no longer a hippie brand.
Dave Young:
Yeah.
Stephen Semple:
The other thing is me growing up, if you wore Birkenstocks, you were a hippie.
Dave Young:
Yeah.
Stephen Semple:
And so there’s a part of me, quite frankly, self-identification, a part of me that has a hard time getting past that. But look, Birkenstock was worn by Barbie in the Barbie movie.
Dave Young:
Yeah.
Stephen Semple:
And by the way, that was not a paid product placement that was out in there.
Dave Young:
That was a choice.
Stephen Semple:
That was a choice. And Birkenstock, since that have actually started appearing in fashion shows, like Paris Runway fashion shows. So they have broken away from, it’s just this niche brand.
Dave Young:
They’re getting past some barriers. Yeah.
Stephen Semple:
They are getting past some barriers and having this wider acceptance in Hollywood and in fashion. But I do have to admit, Dave, because of my age and because of my upbringing, there’s a part of me that still identifies them with the [inaudible 00:15:41].
Dave Young:
I hear you and I understand. And I never thought I’d have a ponytail for the same reason. I still can’t explain it to myself. It hasn’t been my whole life.
Stephen Semple:
Right.
Dave Young:
But yeah, you either like them because you like them or you like them because you like what they’ve always meant, and either way is fine.
Stephen Semple:
Yes. And it is interesting how certain things in society, the meaning of them will change. It’s like Birkenstocks are no longer just for hippies. A tattoo is now socially acceptable.
Dave Young:
Oh, yeah.
Stephen Semple:
Where again, if you were in certain professions when I was early in my career, if you had a tattoo, you would never be able to show it.
Dave Young:
Yeah.
Stephen Semple:
Because, You would just not be hired.
Dave Young:
Yeah.
Stephen Semple:
Beards have changed. It used to be if you had a beard, you were in a biker gang and rebellious. Where today it’s just, you’re just someone who has a beard, right?
Dave Young:
Yeah, yeah.
Stephen Semple:
It is interesting how these things do change their meaning over time. But the Barbie movie was actually a massive breakthrough for them in terms of sale.
Dave Young:
For Birkenstock. Cool.
Stephen Semple:
For Birkenstock.
Dave Young:
I can imagine, right?
Stephen Semple:
Oh, yeah it was.
Dave Young:
Because it makes it okay for Barbie fans.
Stephen Semple:
Yeah. Makes it okay for Barbie fans.
Dave Young:
Yeah.
Stephen Semple:
And they were fun. But I was really surprised when I was researching this, that it was not a product placement, it was a choice.
Dave Young:
Yeah, that is interesting.
Stephen Semple:
Yeah. Which was pretty cool. Which also goes to show you sometimes it’s these unanticipated, unplanned things that happen that can really blow up a brand.
Dave Young:
Well, okay, here’s my pledge to Birkenstock. The next time I’m in a store that sells Birkenstocks, I’m going to try them on again. And in my mind I’m going to say, well, what would it feel like if I wore these for a week? Because I’m not going to order them online. I’m not willing to make that commitment.
Stephen Semple:
Yep.
Dave Young:
But I will try them on again.
Stephen Semple:
So you see, the podcast will increase them potentially by sale of one.
Dave Young:
And this isn’t even, us talking about Birkenstock in this podcast is not product placement either.
Stephen Semple:
That’s true.
Dave Young:
We’re not making our bank from big shoe.
Stephen Semple:
All right, man. Good luck with the Birks.
Dave Young:
Hey, thanks man. Good talking to you, Steven.
Stephen Semple:
Peace and rock on.
Dave Young:
Rock on.
Stephen Semple:
See you Dave.
Dave Young:
Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app, and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire building session, you can do it at empirebuildingprogram.com.
