global tour, he’ll be wearing and selling pairs of flip flops he designed in partnership with the Raleigh company with proceeds benefiting the Kokua Hawaii Foundation (He’ll be promoting when he sings in Cary May 21st). It’s the first partnership of its kind for Feelgoodz, which has a mission is to become the next major global shoe brand.
It’s still early—Feelgoodz will sell $2.8 million in shoes this year. But sales are projected to jump to $8 million in 2015. In 2011, the year Saad and Berner joined forces, sales were $400,000.
Saad is confident they’ll meet the large goal. Conversations have begun with Nordstrom and REI, and there are distributors around the world-selling the sustainably-made footwear to department stores, boutiques and e-commerce sites. Feelgoodz won’t be a one-trick pony with flip-flops—there’s also a five-year product development pipeline in the works. Flats came out last year. There are wedges and sandals on the way, and this year the company hopes to sell 50,000 soft socks handmade by women in Guatemala.
“All it takes is landing an REI or something like that,” Saad says. “With what we’ve got happening internationally, I’d be surprised if we didn’t hit our goal.”
Hard times, important lessons
But the journey hasn’t been all serendipity. The group has had to learn some hard lessons along the way.
Saad’s first came during college when then mentor, now investor Dave Rendall refused to work with Saad’s dysfunctional student startup team. “What builds companies is teamwork,” says Rendall, a former telecom executive and entrepreneur, “And he wasn’t getting along with the team.”
It took persistence to keep Rendall around, and a promise to always work with a team in any future venture.
A couple years after graduation, Saad joined a business incubator program that Rendall hosts weekly at Hope Church in North Raleigh. Saad had already started another business but was inspired by TOMS Shoes’ buy one-give one business model. He’d had a plan to design the most comfortable, sustainable but fashionable flip-flops possible. He called the company Kinder Soles, and Rendall, though initially skeptical, became his principal shareholder.
More than a year later, with some sales and distribution, Saad had his chance to form a team. He met Berner, who in 2008 had launched a natural rubber flip flop called Feelgoodz, and Lizzie McTighe, a former Quiksilver shoe designer (she became a partner). Kinder Soles and Feelgoodz merged in 2011 and began aggressive growth into 300 Whole Foods Markets stores (they’ll sell 90,000 pairs in the stores this year) and 150 U.S. boutiques (including its own Feelgoodz store on Wilmington Street in downtown Raleigh). But Rendall remembers coaching them through some pretty difficult times.
“I haven’t met a more disparate group of people in my life,” he remembers thinking. He wouldn’t invest any more money in the company, but he agreed to help, as long as they’d listen.
His biggest piece of advice, was to parse out the responsibilities to take advantage of each other’s strengths. Today, Berner handles all sales and marketing, Saad the finances and business development, and McTighe is in charge of everything creative. They’ve recently hired a president to take over operations.
“Now we truly have all the pieces in place to make this one of the biggest companies in flip-flops in the world,” Rendall says.
Time to market and grow.
Marketing was also a challenge. The flip-flops were eco-friendly, comfortable and they were manufactured ethically, but it was hard to communicate all three. They eventually decided on a ‘farm-to-foot’ message, focusing on the time they invest in the people who make the products.
The rubber flops are made in Thailand and Guatemala; the leather Kinderz in Pakistan and soft socks in Guatemala and Vietnam. And Feelgoodz helps set up the organizational structure of some factories, builds websites for the groups of craftspeople and provides them skills to bring in more business. It’s also certified as a B Corporation, a designation for companies that commit to impacting the world positively in every aspect of business.
“We’re investing in these communities to help them build industry, because they’ve been taken advantage of. They are really highly skilled workers but don’t have the resources to take care of themselves,” Saad says. Today, hang tags on the products tell the stories and bear the signatures of the women who made them.
Growth, in general, was a tough thing to plan. Feelgoodz had built international business organically, but it was hard to be sure the messaging was uniform across borders. So the company pulled back last year to develop a turnkey process for distributors in other countries. The Feelgoodz wholesale website (designed by the local agency Atlantic BT) can now be duplicated in any nation, so the team maintains control of all orders and sales.
A new partnership with the Guatemalan government, and a plan to expand across South America will boost international sales again this year. Large retail chains around the world have already begun to order or sell the products, Saad says.
Other growth plans including boosting online sales from 5 percent of total sales today to at least 20 percent. And Saad would like to open additional stores in markets like South Florida, Austin, Texas, Huntington Beach, Cal. and Hawaii (They’re high-margin and “can move a tremendous amount of product,” he says). They recently hired a New York public relations contactor. She’ll help make the company’s first real marketing push. Employees now total 17 in Raleigh; and 25 contractors around the world.
The power of a devoted mentor
But one typical startup concern that Saad has been blessed to avoid is money. Saad used the company’s profits to pay off all other investors besides Rendall. And when Feelgoodz ran out of cash, Rendall agreed to put up his own fortune as collateral for a $2.2 million bank loan.
“They had to learn how to deal with the bankers and all that,” Rendall says. “I wanted them to learn every aspect of the business.”
In 2011, Rendall promised the team three years and then, “You’re on your own.” He’d turn 80 in 2014.
But when this year came along, he was just too excited to retire. He’s convinced Feelgoodz has the best supply chain management system. The partners understand the manufacturing process in countries around the world. And they’re people who don’t know they can’t succeed.
“It’s a global vision,” Rendall says. “It’s an amazing business story of a group of people who changed their goal every year as they succeeded or as trials came.”