An interview with Steven Sashen, one of the fastest Masters sprinters in the United States, and CEO of one of the fastest growing companies in America.
WHAT DO YOUR INSTINCTS SAY?
“I have a lot of opinions about what will and won’t work, but I don’t care what I think.”
This quote from Steven Sashen, CEO of Feel the world, Inc., may sound strange, especially since his guidance has placed the company on Inc.’s 5000 list every year for the past six years. This is an honor only five in 10,000 businesses manage to earn just once. With 283% growth over a three-year period, no one would be faulted in believing that Sashen’s theories and intuitions are at the heart of Xero Shoes' success.
Sashen even attributes all of his good fortune to luck. He felt lucky when he met his primary business partner and future spouse, via a chance meeting at a friend’s party. He felt lucky when he discovered his future product officer, via a chance meeting while walking his dog. He felt lucky when his company gained massive attention, via two appearances on Shark Tank. Not one to discredit luck, as I have seen the role it plays in everyone’s lives, I realized that once the armor of gratitude and humility are stripped away, it was Sashen’s dedication to testing, analysis, and hard number crunching that enabled his business to survive and thrive in a realm dominated by names like Nike, Adidas, and Reebok. This strict adherence to empirical evidence, hard math, and realistic, reasonable scrutiny have enabled Sashen to make all the right decisions with a concept, manpower, finance, and marketing.
DOES ANYONE WANT THIS?
A common characteristic among entrepreneurs, and most creative people for that matter, is holding their creations in incredibly high regard. This is understandable. When people put a lot of time, energy, and passion into something, they often view it as their baby. Sashen says that there are a lot of ugly babies out there, unfortunately. Any business or product must justify its existence beyond the love held by its creator. Emotion must be removed from the equation. As Lena Phoenix, President of Xero Shoes said,
“There’s no reason for another shoe company on the planet, there’s more than enough, unless what you’re doing changes people’s lives.”
It is clear that their business passes this test. Sashen and his team took their shoes onto the show, “Shark Tank”. Despite turning down an offer, the exposure catapulted the company to new heights, with 270,000 concurrent visitors on their site the night the show aired, and 3 months' worth of sales in the following week. Utilizing natural movement technology and a 5,000-mile sole warranty, 40% of business is comprised of returning customers. With their shoes adorning the feet of big names like Billie Eilish and countless professional athletes, Sashen ensured that their product had the demand to grow. As their Chief Product Officer, Dennis Driscoll stated,
“Xero Shoes are genuine, legitimate. We don’t need to create ways to differentiate our product… it actually IS different!”
This was a man who worked at the highest levels at Crocs, Converse, and Doc Martens. The product was so good that Driscoll came out of retirement to join Sashen’s team. Xero Shoes is where it is today, simply because Sashen looked at the facts, and determined that he and his team were offering something of value and not just another ugly baby that only they loved.
WHO DO I NEED?
Speaking of teams, in a sense, the Xero Shoes’ team was formed over a decade before the company started, when Lena Phoenix allowed Steven Sashen to be her friend after three years of ignoring him. The husband-and-wife team is the central pillar at Xero Shoes. It would’ve been easy for Sashen to confuse personal with professional compatibility. Afterall, there are countless examples of businesses being destroyed or hindered by personal relationships. The team’s success can be attributed to logical accountability.
A rational assessment of their skills and goals proved they could run a company, with her strength in operations and finance, and his in product and marketing. Ideas and proposals must pass a rigorous analysis of the numbers, regardless of feelings. When Phoenix expressed a desire to optimize all the company’s purchases, the team’s analysis determined that it wasn’t feasible. The existence of stores like Ross and TJ Maxx was one piece of evidence used to show that not even the largest companies can manage this. His approach to the team and their ideas have kept the right people in place, to pursue the best courses of action.
WHAT’S THE BOTTOM LINE?
As Sashen says,
“Once you have something, it’s all about the numbers. How much money you need to spend, when you need to pay it back, and what return it will get you. Every situation is different. You can make a ton of money and still go out of business by not understanding cash flow and terms.”
It was Lena Phoenix’s attention to the math which navigated Xero Shoes through very turbulent, financial waters. One example is what they call the February problem. Inventory needs to be paid when it leaves port, so the cost hits in January, but sales can’t be made until the material is received, usually in late February. Another problem is finding capital when the COVID upheaval in the markets caused many sources of debt financing to stop offering those financial products. Managing inventory is a consistent challenge, with many unknowns in the anticipated demand and supply chain issues. Too much caution for a successful shoe could lead to delays and angry customers. Too little caution and the warehouse is filled with shoes that didn’t sell. A longshoreman strike could postpone critical deliveries.
These limitations are the main reason Sashen views his annual growth as a failure, despite being very impressive. If he had the people and resources to achieve everything on his list, the growth percentage would easily be in the triple digits. To see this kind of potential and continue to exercise the necessary restraint to avoid overloading his people and materials available is a tremendous feat of logic overcoming passion. It would be almost irresistible to chase that level of growth beyond the means to support it.
IS ALL PUBLICITY GOOD?
The final area where Sashen’s coherent approach has yielded success is in marketing. This is very impressive, as his passion and background are in marketing. One could see him being particularly vulnerable to losing focus or defaulting to lucrative approaches from his past, but his dedication to thorough examination has kept Xero Shoes on the right track. In his words,
“You’ve got to be willing to experiment properly. How quickly and cheaply can I find out if this marketing is feasible? You can only control how much money you’re willing to risk.”
If someone says they need $10,000 or a 12-month contract before any results can be reached, this is the wrong person for the job. A newer approach that many companies engage in is partnering with podcasters and gamers. These entities can garner millions of views or subscriptions and seem like a surefire way to generate sales. Sashen insisted on doing the math, often at the people proposing these different partnerships. In one example, he determined that purchasing ad space on a podcast required one out of every five listeners to make a purchase in order for the deal to be worthwhile.
The odds of this were incredibly low.
After talking with other advertisers on the podcast, he discovered that none of them generated a profit from the deal. A personal friend, who is a professional gamer, confirmed that despite his massive audience, he doesn’t generate profits for his sponsors. There are times businesses only care about traffic and not sales. They could be trying to build a brand, where gains are made elsewhere. Their marketing team could be receiving specific guidance that is contradictory to the goals of other departments in the company. A business could be working on getting acquired and simply want views above all else. Sashen showed that his math worked
better for Xero Shoes than the perception of exposure or the acceptance of best practices used by other businesses.
NUMBERS DON’T LIE.
With his final words of wisdom, Sashen said,
“Test everything. People have opinions. Testing is the true way to figure things out. Being wrong cheaply is best.”
In every realm of his business, he has ensured that logic prevails over emotion. Testing prevails over old data. Analysis prevails over intuition. What works today, may not work tomorrow. By removing subjectivity from business decisions, often times a single path makes itself known, and Xero Shoes has successfully walked that path while avoiding all the trips and slips that come with unguided feelings and assumptions.