Interview of Michael Fox, Founder of Shoes of Prey

Michael Fox is the Founder of Shoes of Prey, a website that allows you to custom design your own women shoes from a wide range of materials, color and styles and then order to get them made.

In this interview, Michael talks about how a hobby was transformed into a business, how a 17 years old video blogger helped quadruple the sales on Shoes of Prey website and how they ingeniously structure the business so that there is a minimum capital and overhead cost.

Michael was calling in from Australia and was on his way to the airport when we did this interview. Thank you for your dedication to do this interview with me, Michael.

If you have any questions or suggestions for Michael or myself, please leave a comment here.

Here is the interview:

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Stay wonderful!

Here is the full text transcript:

Giang Biscan: Hi there, it’s Giang Biscan from AsAble.com, I have with me today Michael Fox, he is from Australia. He is the founder of Shoes of Prey. Michael, how are you?

Michael Fox: Good thanks, Giang, yourself?

Giang Biscan: Please tell us a little bit what Shoes of Prey is about?

Michael Fox: Yes, so Shoes of Prey is a website that allows you to custom design your own women shoes, so you go to the website, we built a shoe design tool on the site where you can design a pair of peep toe, ballet flat, gladiator heels, whatever you like. You can sort of select the toes, the back, the leather, the colors. Design some shoes, and then you can place an order with us and then we’ll make them for you and ship them to you.

Giang Biscan: This sounds like a lot of fun. So you really put the power into the women to do whatever they dream of. How did this idea come about?

Michael Fox: Yes, so three of us started this business: Myself, Mike Knapp and Jodie Fox. So Mike and I were working at Google together and we’ve always sort of brainstorming different ideas. We wanted to do a startup together. We sort of decided we wanted to do something in the online retail space. And my wife Jodie, when we’ve done holidays to Europe, she has always made us booked flights from Australia stopping over in Asia for 12 to 24hr so that we can run out of the airport. There are shops in Asia where you can design shoes and ordered them.

And then each of the trips she did that, she got more orders from her friends each time wanting her to design shoes for her and send them back to Australia. So two and two came together. Mike and I want to do something with the online retail, and Jodie was designing shoes quite regularly, so we figure this could make a great business idea. So three of us decide to do it.

Giang Biscan: It’s a hobby that turns into a business which is great. So in term of operation, how do you do this. You have people that could be ordering from America or could be from anywhere in the world, right?

Michael Fox: Yes so I think now only about 30 to 40% of our sales are in Australia. The rest are overseas. About 30% from the US and about 20-30% from Europe. And then the shoes are made. We have 2 workshops in China that we use to make shoes. We spent a lot of time travelling around figuring out suppliers that could custom-made really good quality shoes. Most shoe manufacturers that you talk to want a minimum order of a thousand of each style and each color but obviously we just want to order one. So it’s a little bit tricky finding supplier who would custom made shoes for us. And then the next step to find sppliers that can make really really good shoes. But we found 2 workshops in China that can do a great job.

Giang Biscan: The response so far, what has the response been when people actually receive the products from the drawing that they created?

Michael Fox: It’s been amazing actually. We literally get between 10 to 20% of our customers when they receive the shoes went out of their way to send us an email to say thanks and how happy they are with the shoes which I think is a great response rate from people who we are not asking them for testimonials but they just gave them to us unprompted, which is fantastic. And then when we contacted some of the other customers to see what they thought of their shoes, they also have been very happy with them. So the response has been fantastic. I guess women, as you would expect, love to design their own shoes and they’re really appreciative when we make them and send to them. Especially because the shoes are of great quality.

Giang Biscan: How long has the site been on?

Michael Fox: We launched the site just over 6 months ago, in October last year, so it’s been 6 months now.

Giang Biscan: And can you talk about revenue?

Michael Fox: I shouldn’t give the exact figure but we’re tracking nicely ahead of our target. We had a 12 month plan where we want to get to by the 12 month mark to make sure that it’s a viable business that we should continue working on it. And we are not far off from getting our 12 months target at the 6 months in which is very exciting.

Giang Biscan: Are you at the point of profitable yet?

Michael Fox: Sorry? Oh profitable, yes. Yes, we are. The sort of 12 month target we wanted to hit, we sort of base that on being profitable and being able to pay Mike, Jodie and I a reasonable salary. So we are definitely at the point of profitable and not too far of being able to pay three of us a salary, which is great.

Giang Biscan: That is great. And do you have any angel investors behind you?

Michael Fox: No, we bootstrap everything. We actually funded it ourselves. Mike, Jodie and I, we all met about 7 or 8 years ago in law school so we’ve all been friends for a while. We mucked around with different startup ideas together prior to doing Shoes of Prey. Few years ago, Mark and I have gone to Google together, and Jodie has gone to work with an advertising agency. And we’ve thought that we may want to do something startup full time down the track.

We all agreed that we would put money in the bank over the next few years and make sure we save enough that we can put $50,000 into a business and not need to draw a salary for 2 years so we won’t be under pressure that way either. So we set it up enough to be in that position and that’s how we funded the business so far.

Giang Biscan: The website looks really well done. I think it looks beautiful, very luxury. Who built the site?

Michael Fox: Yes, so Mike Knapp, he built the website and he built the shoe designer. He’s a software engineer. He worked at few different products at Google, probably Google Reader for most of his time there. Yes so he is a very good programmer and a good designer so he put it all together.

It’s a pretty tricky website to put together so we figure it’s more trouble than it’s worth to outsource it. It was good that Michael was able to put it together.

Giang Biscan: And how long did that take him?

Michael Fox: Took him a bit over 6 months. Let me think. He left Google in May and we launch in August. So about 5 to 6 months… It’s a tricky job we set for him but he did it.

Giang Biscan: And I assume before that you guys already gone out and how long did it take you to find the people that built the shoes?

Michael Fox: We did a couple of trips through Europe and Asia to try and find the shoes maker but probably… Let’s see. We originally had the idea in Dec 2008. And we were set up with our supplier in April 2009 so good 5 months of talking to different suppliers. Still working at our full time jobs at the time so it was like taking holidays and weekends and that sort of things. Weekends to make phone calls, evening to make phone calls. Then a couple of 2 weeks holidays here and there to meet suppliers overseas.

Giang Biscan: And is there any other preparation and market research that you did before the site launch?

Michael Fox: Nothing formal. I guess we talked to a lot of people. People starting business are often concerned and that thought went through our minds too. If you have a good idea, should you talk about it or will people steal it. But we took the approach of talking about our idea to as many people as we can. The pros far out weight the cons. If anybody tries to take the idea then that’s OK, it comes down to how well you executed it so we talked to literally hundreds of our friends and families and anyone who listened to us about our idea to get people’s feedback about weather people would want to design their own shoes online and the responses were overwhelmingly positive so we figured that the idea was good.

Then we did some beta testing to get an idea of how it would work, things like how the designer should work, how sizing, getting people shoe sizes would work, and on pricing and the testing happens over a period of about 4 to 5 months while Mike finished up the website, that’s what Jodie and I were working on.

Giang Biscan: So right now what are your overheads? Do you have an office?

Michael Fox: Yes, it’s not too bad. So I guess the traditional retail business the 2 big capital costs are buying stocks and setting stores and we don’t have either of those costs because we manufacture the shoes to order so we don’t hold stocks. And obviously we have an online store so it’s just the cost of building that which is Mike’s time.

We have an office in China near where the workshop makes the shoes and we have Vanessa, an employee based in China who takes care of quality control and all of our shipping. And she’s based in the office in China, so… On top of that we do a lot of travels, so we spend a lot of time traveling between Sydney and China so there are those costs as well. But we got the business from start to launch from $40,000 to $50,000, and then expenses outside of our time. And since then the overheads are quite low so it didn’t take that long to the point where our revenue covering all of our cost.

Giang Biscan: So you actually source your own materials for these people that build the shoes?

Michael Fox: Yeah, we do, we have gone and sort the leathers and materials and then we passed those over to the workshops then they use them to make the shoes. Which is great because it lets us pick what is seasons and post those into the site.

Giang Biscan: So you do actually have an inventory cost there even though it’s not the whole entire product but you do have the raw material inventory cost?

Michael Fox: So we actually structure it so that we source the material then the workshops actually buy them and keep them in stock because sometimes they use it for other shoes as well. So we don’t actually pay for it until we order the shoes. So if there is a new material that the workshop has never used before, we’ll find it then we show them where to buy it exactly and then they just order it from leather suppliers as it is needed.

Giang Biscan: That’s a sweet deal. Very good deal.

Michael Fox: Yes, that means we pay a little bit more for the shoes when we order them but it means we don’t have to inventory them. And they have a good relationship with a lot of leather suppliers so they can order it directly as the leather is needed.

Giang Biscan: Great. The reason I asked about your site, I notice that it’s very well done, not just the look of it but for example, a media kit, I don’t typically find that in a startup website. You really thought out everything.

Michael Fox: One of the piece of the logic behind the media kit… well the idea behind the business was to we wanted to find a product that is a bit unique and different and has a good PR story to it and a good words of mouth. With all these twitter and Facebook and all these social media tools, if people find a product they like, it’s so easy for them to share it with friends and spread the words about the product. So we thought designing your own shoes fit in with that. So PR and words of mouth are 2 key parts of our marketing strategy so making sure we have a media kit up there was a key piece of that. If media come to our site and want to write about us, we want to make it as easy as possible for them to do that so they can stay enthused about our product and want to write about us.

Giang Biscan: Right, and then another thing that was interesting was a traffic event that I sort of eluded to in the earlier post that you managed to increase traffic to literally half of million unique users to the site over a couple of days. So for those people who were not familiar with the event would you please talk about that from the beginning?

Michael Fox: Yes, so we were trying to think of creative ways to spread the words about our website and Mike was having a look on YouTube and having a look at video bloggers on YouTube who are popular, and then he came across juicystar07. She’s a 17 years old, just turned 17, video blogger in the US. I think she has about 200,000 subscribers to her YouTube channel. She’s about the 60th most subscribed person on YouTube. She started a couple of years ago doing how-to makeup videos, how to put on highlighters and get different looks with your make up and she built up a massive followings on YouTube.

And recently on YouTube she started to blog about different fashion product on YouTube so Mike saw this and thought why don’t we get in touch with her and send her some shoes and then see if she wants to do a post about them. So we wrote to her and so yes she is only 17 but her agent wrote back so she’s obviously doing very well.

So her agent wrote back and basically said yes you can send Blair some shoes and if she likes them she will do a post, but to do the post, she charges a fee but she will only do the post and charge a fee if she likes your product in the first place. We were fine with that, so we sent her the shoes. She likes them and agrees to do a post. So we pay her the fee and then she did a really post talking about the shoes and she took people through designing a shoe then she designed a pair of shoes herself.

And then we ran a competition with her, so we say that if your viewers want to design shoes then you can pick a winner and we can make a pair of shoes to one of your viewers. So she did that and the responses to that were just incredible. Yes and that video has over 500,000 viewers now and the day it was launched it was the 3rd most viewed YouTube worldwide for that day. So a huge amount of traffic.

And the branding that goes from it has been amazing. So with the competition, the idea was a viewer comes to our site, design a pair of shoes, then go back to the YouTube video, describing the shoes that they design and describe an event that they would wear them to. So it’s brilliant those that have gone and do that. And so people come and engage with our brands and then come back and talk about it on YouTube and I think it’s just over 95,000 entries into the competition now. Which is just unbelievable. I can’t think of any other media where you would get half of million viewers converting into 100,000 people who have gone engaged so closely with that brand. And that has been just phenomena for our site in term of traffic and brand awareness.

The only thing that didn’t quite work out was her target audience is 13 to 17 years old girls learning about make-ups. So they are not our target audience. So initially from the video, the sales weren’t that high, because for young girls, we price a little bit high for them and the shoes that they are buying.

But what happened since then is they have told their older sisters and their mothers and they have pledged about us and put us on Facebook and other people are now watching the video on YouTube and our sales have pretty much quadruple in the last month since the video went buzzed. A good portion of that we can put down to the viral effect of that video which is fantastic.

Giang Biscan: That’s amazing, so even though you didn’t quite get the target audience but you still get the viral effect of it.

Michael Fox: Yes, and one of the things about 13 to 17yo females, they are good for us in term of they have time on their hands, and the time on our site has gone up dramatically because they love to hang around on our site and designing shoes. And they are the people that are on Facebook and twitter all the time and they are the people that talk about our product and spread the words. So although we don’t sell to 13 to 17 years old, we love them anyway. They are great.

Giang Biscan: That’s excellent. So who is your target audience?

Michael Fox: It’s been interesting. We originally thought it would be sort of the 25 to 35, maybe 45 years old female who are very fashion conscious, read a lot of fashion magazine so they know what’s hot in the season and normally would spend a lot of time shopping for the perfect pair of shoes. So we can offer our service and they can design the perfect pair of shoes.

We thought that would be our target audience and that is a significant portion of our sales but also a big part of our sales is 40 to 60 years old women who are in similar situation except that they are a bit older and have more experience and they have much clearer ideas about the types of shoes that they like, so they are a lot more discerning with their shoes which our site is perfect for because you can design whatever shoes you want. And maybe they get to the point where their children have left home so they have a higher disposable income. And so our price point, they are fine with that as well.

Giang Biscan: So now that you have done that particular experience. How are you going to differently from now on in term of your marketing strategy? .

Michael Fox: So we definitely are going to talk more to bloggers and video bloggers. We’ve just launched our own YouTube channel. We want to engage with people that are on YouTube who can help to spread the words about our business. So we are doing a lot more videos ourselves, talking about great shoes that are designing on our sites, and what’s hot in the seasons and… So I think video content is going to be a much bigger part of our marketing strategy after seeing the success of the YouTube video.

Giang Biscan: And then another thing is you said you have 3 of you and someone in China, are there any other people, like advisers or other people that are involved with the company?

Michael Fox: Not formally but I love meeting other people who are starting businesses and reading entrepreneurial blogs and listening to other interviews like the ones that you are doing now with other entrepreneurs. And we spend a lot of time in Sydney catching up with other fellow entrepreneurs and learning from them. And also got some older and experienced mentors as well. So few people in Australia who have launched, ran and sold successful businesses. So I catch up with a few people that are like that and they are fantastic just to bounce ideas of and looking through the business and what we are doing and we get great ideas and feedbacks from them. So no one formally but a lot of informal feedbacks and advices.

Giang Biscan: It’s interesting that you went and work for Google, and it seems you guys already set in your mind that some day you will be out doing your own things, yet you get to work in a company that many people dream to work in. What does it feel like to leave?

Michael Fox: It was a tough decision to leave. I love working there. So when Mike and I went to work there. Mike went there first and he was there for 4 years then I followed him and I was there for 2 and half years. When we went to work for Google, I guess we weren’t very sure if we will go down on the entrepreneurial path. We thought that it’s something that we would like to do but at the same time working at a company like Google, fantastic experience and we thought maybe we could well have a long career there.

So we talked through all of that and we thought probably 50/50 that we want to do the entrepreneurial thing or work for a company like Google and so we thought that was still worth saving up. So we thought if we save up the money, we can either start a business or have a house deposit so it was kind of a win-win situation either way. Working for Google is really fantastic, learned a lot and met a lot of fantastic people who are now mentors who help us with the business informally. It was a great place to learn more about online marketing as well. Really helpful to have worked there to now running a business.

Giang Biscan: Great, so what’s ahead for you guys?

Michael Fox: So I think there is so much more we want to do with Shoes of Prey. We are working on some new styles at the moment. So Jodie and I just got back from China 2 weeks ago and we are adding some silk, we imported some silk from Italy to be able to do wedding shoes a little bit more. Wedding shoes is a good market for us. So they will be up on the site either today or tomorrow. Ankle boots are in the season, so we have a range of ankle boot design features that we have elements to put on the sites in a few weeks time.

Then of course there is potential to branch out to other products. Potentially handbags. Obviously it’s nice to be able to design your own handbags. So we may do that. We’ve also got a lot of men asking if we’ll do men shoes. I’d like to have fitted men shoes as well so I can wear our products. So things like that.

We sort of have in mind we like to do this for, in my mind at the moment anyway, a 5 years plan for this business and maybe this will turn out to be a longer period of time but the thing we are sort of learning from doing this business is sourcing products in China and shipping and those sort of things that are good skills and I like the online retail space so potentially other products down the track. Maybe other online retail ideas. But trying to focus on Shoes of Prey though because it’s a good idea and it’s fun.

Giang Biscan: What about immediately in the next few months?

Michael Fox: Yes, so the new shoes design. And actually we are partnering with a company in Japan. I’m sure a lot of people would know it’s a very different market. Obviously the language is very different. And different culturally. And while we are based in Australia and we have success selling to US and European countries, Japan is a much tougher market so someone based in a different country. So we found a really good company in Japan who we are working with to launch Shoes of Prey there so that should be launched in a month time which is very exciting.

Beyond that we are thinking of some other countries too. Russia is another difficult one. We have a lot of interests from people in Russia but most of Russian online retailers don’t accept a credit card. People don’t really use much credit card for online shopping in Russia. So we’ll probably partner with someone over there because it’s a very different online market for retails as well. So going overseas and helping spreading the business over there is something that we will be working over the next few months.

Giang Biscan: I have a question that comes in from the audience. The question is “The word prey means an animal hunted or seized for food. Out of curiosity, how does this translate with your vegan/ vegetarian clientele?”. So this question came from somebody I happened to know. She is very vibrant and has a great sense of humor so you don’t have to take this as a criticism but more as a fun twist.

Michael Fox: It’s a great question and actually one we have been asked before in a similar vain and I guess it has some sense of seriousness to it but also some sense of humor. I guess we didn’t consider that when we came up with the word prey. I guess the idea behind the brand name Shoes of Prey, we have an insight into the consumers is that women dress for other women and when you are a woman and walking down the street and see another woman in a beautiful pair of shoes, it brings out that predator instinct, sort of “oh where did she get those shoes” and “can I knock her over and steal those shoes”. So we want to get that predator instinct out in the brand name. And that’s how we came up with the name Birds of prey, and then Shoes of prey. So we haven’t meant for it to be an actual animal.

On the topic of vegan shoes actually it’s something that we would really like to do. Personally I like to offer. Since we launched, we sort of have customers who said I’d love to buy your shoes but I’m a vegan and if you can do a vegan range I’d love to buy shoes from you. So it’s actually something that we are working on at the moment. And we are trying to source some vegan material.

It’s a little difficult to do because all of the traditional suppliers, the best material to make shoes in are all leathers and skins. So it’s easy enough to find non leather material, all the cheap shoes on the market are made from non leather man made materials but the quality is really poor. So the challenge for us is to find really good material that are vegan. Stella McCartney is doing a really good job for it with a range of vegan shoes so it’s obviously can be done. So we are hoping that by the end of the year we can add a range of vegan materials to the site and give people the option to order vegan shoes.

Giang Biscan: Great. Thank you. Thank you so much for coming on today. I really appreciate it. I know you’re running to the airport, and in the mean while calling all the way from Australia. So really appreciate that.

Michael Fox: No, anytime, happy to have a chat.