Steven Sashen | The $500 Million Mistake

What separates your ecommerce business from your competitors? A better product helps, of course. But, says Steven Sashen, ecommerce pioneer and co-founder and CEO of Xero Shoes, there’s another element that’s much more important.

It has to do with how you interact with your audience in the age of the nameless, faceless Internet. Steve breaks down his approach, and we also talk about…

  • The wrong question to ask about success and failure
  • A huge red flag to watch for when hiring digital marketing agencies
  • The pre-Web origins of ecommerce
  • How bad shoes are impacting your whole body health
  • And more

Listen now…

Mentioned in This Episode: www.xeroshoes.com

Episode Transcript:

Joris Bryon: Hey, this is Joris of the Ecommerce Excellence podcast and today I’m really excited to talk to Steven Sashen. Steven is the co-founder and CEO of Xero Shoes and, by the way Xero, that’s with an X, so X-E-R-O. Steven started with Xero, I believe about 10 years ago, and he managed to grow the business constantly, about like 80% a year, and that’s quite impressive, so I’m pretty sure we’ll get some very valuable insights today. Hey, Steven, welcome to the Ecommerce Excellence podcast. Really happy to have you here.

Steven Sashen: Thank you, thank you. Well, let’s see if you’re still happy when we’re done.

Joris Bryon: I bet we will. Just to start off, I’d love for you to tell everybody about your background, where did you come from in your career, so that they can understand a little bit more about you and how you got started on Ecommerce and got started with Xero Shoes and how you got to this point?

Steven Sashen: Okay, so where did I come from? All right, I didn’t think I’d have to explain this, but when a mommy loves a daddy very much, then … never tried to go back that far. I’ve been an entrepreneur my whole life, I guess, or more accurately I’ve just never had a job and it never occurred to me to get one, and it didn’t seem like it would end well if I did. So, back in 1992, I invented what became the industry standard word processing software for film and television writers and because I was just interested in finding ways of selling it, I got actively involved in internet marketing before there was practically an internet.

In fact, literally, before there was the internet, now that I think of it. I was selling things at the IRC on Geocities and AOL and CompuServe and Prodigy and then as the internet evolved, I started doing that back in … actually, it’d be ’93 or so, ’94? I was having people write HTML for me while I was doing the design and then I started writing my own HTML and building out websites, so that’s how it all began and I was one of the first guys who figured out SEO back in the days when it was really simple. You’d have a bunch of on-page things like hiding key words and white text on a white background and wrote a few articles and that was all you needed to do, really.

Joris Bryon: Yeah, right.

Steven Sashen: But even that was pretty black hat at the time and so what happened? Let’s see, somewhere along the way, my wife and I ended up being retired for a while. We had done some clever investing and had done some things with some internet businesses that were throwing off some passive income and then in 2009 … I’ll abbreviate this story dramatically, I had this little hobby where I had been making these minimalist sandals. Basically, it’s just a sandal design based on some 10,000-year-old idea and a guy says to me, “I’m writing a book on barefoot running and if you treated this little sandal-making hobby like a business and had a website, I would put you in my book,” and so I rush home and pitch this idea to my wife and I’m thinking how brilliant it is and she tells me that I’m totally wrong and it’s a horrible idea and I shouldn’t do it.

And so, I waited until she went to bed and built a website and it just took off. That was the fun part. And for the first few years, all we were selling was a do-it-yourself sandal-making kit, but what’s evolved over time, is we went from this funky little hippie kind of sandal-making kit company to a full lifestyle brand, where we sell performance and casual shoes and sandals for people who want to do everything from taking a walk to running ultra-marathons. And the fundamental premise of what we do is simple. Your feet are designed to bend and move and flex and feel the world and our shoes let you do that with a nice wide toe-box, low to the ground for balance and agility, super, super flexible and the soles let your feet actually feel things while still giving you the protection that you would like.

Joris Bryon: Great, cool. I mean, 1992?

Steven Sashen: That’s way back when.

Joris Bryon: Yeah, yeah, it’s going to be hard to talk to an Ecommerce entrepreneur with more online experience than you’ve had.

Steven Sashen: Well, in fact, it’s one of my favorite things when people call me and they try to sell me on some marketing project or whatever the hell they have and they clearly have been trained to sell their product to people who don’t really understand internet marketing very well. The number of times where I get to say to someone, “Hey, I’ve been doing this longer than you’ve been alive, so …” you know, that’s very fun to do.

Joris Bryon: Yeah, absolutely, cool. So, maybe just for people who are not really familiar with barefoot shoes, you already touched upon it a little bit, but can you explain why it is so beneficial to wear barefoot shoes?

Steven Sashen: Well, it’s funny … we know humans have been making footwear for about 10,000 years. I’m sure before that, but the earliest recorded piece of footwear that people have found is about 10,000 years old. In the first 9,950 of those years, all footwear looked like what we do. It’s only in the last 50 years that people have come up with padding and motion control and arch support and all these things that I don’t know any better way to describe it other than it’s complete bullshit and I say that for a number of reasons. One, it’s true. And the other is when you ask the people who own these multi-billion dollar footwear brands, where’s the evidence that what they do is in any way beneficial, has it, in any way ever improved performance or reduced injury compared to what people were wearing in the 60s? They have no answer.

And the simplest thing I can say is, again, your feet are designed to bend and move and flex and feel. If you squeeze your toes together, which is what most shoes do, then your feet can’t function naturally. You can’t actually use your arch. If you elevate your heel, it messes with your posture or if you’re running, it messes with your gait and makes it so that you end up landing on your heel with a relatively straight leg which, in addition to putting breaking forces so it slows you down every time you land and you have to re-accelerate with every step, it also sends an impact transient force spike, a giant spike force through your joints and there’s a lot of research that shows that that can cause the osteoarthritis and hip pain and back pain as well. 

Let me actually describe the evolution of it, because it’s kind of fun. So, some guys who were in the same building as Nike, way back when, they were physicians and they said to Bill Bowerman from Nike, “You need to elevate people’s heels with padding because they’ve been wearing higher-heeled walking shoes. Now they need higher-heeled running shoes, otherwise they’re going to have Achilles problems.” And so Bowerman did that. Now, the problem is these doctors have later recanted and said they pulled that idea completely out of their butt and there was no evidence for it, whatsoever, and it was the biggest mistake they ever made. But, here’s what happens when you add padding under your heel. Again, it changes your gait so you end up landing on your heel, that’s part one. And when you do that, your heel is a ball, so it’s unstable. So, suddenly they need to add motion control. And if you land on your heel, by the time your foot comes in contact with the ground fully, your plantar fascia, the bottom of your foot, essentially, is fully extended when it’s trying to contract.

So, think about doing a biceps curl. You’re strongest when your arm is bent at about a 90-degree angle, a little less than that, actually and weakest when it’s fully extended. The same thing with your feet. When your foot is fully extended, it’s weak. When it’s actually using the arch, is when it’s engaged and you can’t engage the arch when you land on your heel and your foot comes down flat. So that’s when they suddenly had to build an arch support to make it so you didn’t have to use your feet. Now, what this means is that this motion control and arch support is keeping your feet from moving naturally. Well, we know that if you keep something from moving, it gets weaker over time. We know that to stay strong, you have to use it naturally.

Now, this weaker over time, for those of us who were relatively young, anything between zero and 80, we didn’t really think about the long-term consequences of weak feet, but I’ll tell you a simple story. My dad, who was in shoes his whole life, that didn’t let his feet move naturally, he was almost 81 years old, shuffled as he walked, tripped, fell down, broke his hip, and died two weeks later.

Joris Bryon: Oh, wow.

Steven Sashen: Now, I’m not saying that if you wear regular running shoes, you’re doing to fall down, break your hip and die, but I will say that, again, tell me some other situation where it makes sense to not use, to immobilize some part of your body, when it’s designed to be used, to be a moving, sensing device that helps you balance, that helps you orient, that helps you move efficiently. It gives you that feedback that you need from the sole of your foot, to do all those things. There’s never been a situation where that makes sense and it doesn’t here, as well.

Joris Bryon: Yeah, it gives you feedback, and they give you your feet back, basically. I’m a big fan of barefoot shoes and I feel a big difference when I have lower back pain and I put on barefoot shoes and I go for a walk. I have considerably less back pain than when I’m wearing regular shoes. So, anyone who has back pain, I can definitely recommend barefoot shoes, but anyway. We’re here to talk also a little bit about your Ecommerce, right? I already mentioned it in the introduction. You’ve consistently grown your Ecommerce over all these years. What do you believe are the main keys to grow in Ecommerce in today’s environment, and I know it has changed a lot and you’ve been around for a long time. But like, today, right now, in your opinion what are the keys to grow in Ecommerce?

Steven Sashen: Oh boy, it’s really simple. It’s find out where people are already talking about what you’re doing or you can get in front of people to what you’re doing and just get in the way, basically. Participate in the conversation. If you’re doing it on social, you want to be providing value to people without necessarily selling and if you’re trying to sell, you just want to get in front of people who are interested in what you’re doing.

Joris Bryon: Mm-hmm (affirmative), good, cool. What do you think makes some people successful and others struggle in Ecommerce?

Steven Sashen: Oh, man. Boy, you know I’m going to answer that question in a weird way. Actually, I’ll just give an answer that people aren’t going to like. There’s no answer to that question. Now, you say, why do I say that? That question is like one of the fundamental things that human beings do with almost every thought they have, is we try to predict and we try to imagine a future where we will have what we think will make us happy and we try to reverse engineer it and see what we need to do to get there, often by looking at other people, who we think have gotten what we’ve gotten and who we think we can imitate. Here’s the problem. The imagined future where we think we’ll be happy? The odds of us being correct, that’s going to give us what we want, is about zero. The odds that it’s actually some reproducible thing is about zero.

We forget how bad we are at predicting how things will make us happy. We forget even more how bad we are at it. And then we also think that we’re magic and special, that if someone else has gotten this thing that we want and they’re not happy? We think, “Well yeah, they didn’t get happy from it, but I will.” If a million people got the thing that you think would make you happy and it didn’t make them any happier than they were before or than you are now, we’d still go, “Yeah, but you know, if I got it …” which is what happens when we hear about lottery winners who aren’t inherently happier and we go, “Yeah, but if I win the lottery,” and then we go and play it. So, similarly, like people sometimes ask me, what do entrepreneurs do you admire and I say, “I don’t really pay attention to entrepreneurs because I’m not whoever they are.” We know there is only one Bill Gates. We know there was only one Steve Jobs. We know there’s only one Richard Branson, because there’s never been someone who’s copied their formula, despite their best efforts to figure out what it is and reproduce it.

Now, there are some things that you can do that are pretty consistent, which is just a variation of everything I’ve just said. Make a product that people like, get it in front of other people, and leverage that by sometimes getting in front of people who get in front of your people. So, you’ll see … and there’s actually one other thing. How do I want to describe this? I’m trying to think of how to say it in the most obnoxious way possible. Because of this thing where we want to buy solutions to often imagined problems … if you’re someone who can morally accept selling a product that 95% of people will never use or that 99% of people will never get the promised benefits from, you can make a lot of money by making those promises. I mean, it’s been true since the first day anyone sold anything. 

It’s just as true online. You can sell a product that’s going to make people lose weight, build muscle, make money or all of these things that we think will make us happy and despite the fact that the odds of it working is fractional, at best, you can make a lot of money selling promises to people. I just find that somewhat reprehensible. 

Joris Bryon: Yeah, and I totally agree. I mean, it’s a very interesting answer to that question. But, when I went to your site and I was going over a few things there, what I really liked about your brand and about the site, in general, is that it feels very personal. I think that’s in line with what you’ve just said. It feels almost like I’m buying from you and your wife directly. You also have the thing on there that says like, “Hello from the owners.” And I’m not sure if it was deliberate or not and I’m guessing it was, based on what you just said. 

Steven Sashen: It was.

Joris Bryon: It feels very genuine, very authentic and it makes you very likable. So, this was intended, I assume, yeah?

Steven Sashen: Well, I wasn’t trying to make myself likable. I don’t even know what that means, but I appreciate it. That’s very kind of you to say that you think we are. I think my wife is. I don’t know about me. We … how do I want to put it? When I first started the business, I really didn’t want to include a lot about us because I wanted to keep it independent so that if anyone was going to buy it, it was really kind of bolt on, they could take it over without having anything attached to it. But what happened, it was really kind of ironic or a little unexpected. I was making videos … back to my comment about the thing you should do is provide content or provide value. I was making videos that basically showed people how to steal my entire business which, by the way, a number of people have done. I showed them where to get the materials to make my sandals, how to make the sandals. I just gave it all away. 

The videos that I made would have me at the very beginning, like for two seconds going, “Hey, I’m Steven Sashen,” and then it would be just ten minutes of my feet and what happened is I’d be in public places and people would recognize me and the way they responded, it made it very clear something that I knew, but I tried to avoid, which is people like relating to people, rather than companies and organizations and things that are not really relatable. 

Joris Bryon: Yes. 

Steven Sashen: Now, there are times where that’s not the case entirely, but look, even with Apple. People are addicted to Apple, but the thing they really were addicted to was Steve Jobs and Apple transcended him, to a certain extent. So, once I saw that that was actually happening, we deliberately made the choice to be very personal and we did it also for one other reason. We … how do I want to put this? For us, customer service is a very important thing, and we know that as the internet has made people more and more anonymous, it has made relationships between brands and their consumers more and more annoying and difficult and consumers think that you’re just a faceless, nameless something who’s trying to screw them. We wanted to make sure they knew there was real people, not just us, but our entire team, real people on the other end of that phone call, the other end of that email and that if they had an issue or a question, they could talk to real people who really cared.

And that was important for us, philosophically. We just decided to … what’s the word … amplify that by making ourselves more present and I also happen to be just an expert in this topic and so I spent a lot of time ranting and raving about it and that’s a piece of the puzzle as well.

Joris Bryon: Mm-hmm (affirmative). Yeah, and I think you’re very successful at giving that impression to visitors on your site. At least, that’s the impression I got when I was going over it. I was like, “Oh, okay, I’d really like to buy from them,” and to be honest, I think that’s also, for me, I don’t really like buying on Amazon because you’re just buying stuff. Just feeling that you’re buying from people who care, who are passionate about the product and who will help you out when you have a problem, that makes all the difference and I think you guys do a great job of that. In terms of your marketing, you don’t do much your marketing in-house, do you? Can you explain a little bit what your philosophy is behind that?

Steven Sashen: Oh, my-oh-my. Well, again, in the early days it was really, really easy. Now it’s gotten more complicated and there are very few people who know how to do any one of the myriad things that are possible, well. So I’ve unmasked a group of people that I’ve either known over the years or met during the many years I’ve been doing this, friends of friends basically, who are really good at what they do. So we have two Facebook advertising teams. We have a Google Platform team. We have someone who manages Amazon. We’ve got, oh gosh, I’m trying to think of it … I’ve got an SEO team. I’ve got a social media team who does a whole bunch of different things. I’ve got someone who … we had someone who we lost, frankly, who was starting to manage Pinterest, which is a whole other universe. It’s a platform most people don’t understand at all.

And then there’s a lot of stuff that I do, as well, still. But the biggest thing that I’m doing is, since I just know the domain of internet marketing, I’m staying on top of everything that my team is doing and I’m feeding ideas at them and finding new things for them to try, so I participate in the conversation. I’m not just hiring people and letting them go. I monitor it carefully and I’m an active participant in the strategy, as well.  But we don’t do it in-house, simply because anybody that I would bring in-house, who doesn’t already have the requisite skillset and, again, there’s no one person who can do everything. So either I’m bringing someone in-house to do what I’m doing, putting together a team and managing it, or if I brought in someone to do a lot of the stuff that I’m currently jobbing out, if they’re smart enough to do everything really well, they’re also smart enough to immediately quit and start a small agency. So, better for me to find people who’ve already quit somewhere else and started a small agency.

Joris Bryon: Yeah. I think that’s an interesting take on that and many people don’t think about it like that, but it makes sense. I mean, if you want to get the best results, that’s probably the best way forward.

Steven Sashen: It’s like when I’m … pardon me for interrupting. When I get approached by agencies and they say, “Hey, we do everything,” and I say to them, “Look, there’s only a few people on the planet who are experts at any one of the nine things that you say you do and you don’t have any of them working for you, so why would I … how can I possibly hire you?” And they never have a good answer for that. 

Joris Bryon: Yeah, makes sense. Now, I mean, you’ve been doing this for a long time. If you were to start over again, what would you do differently?

Steven Sashen: Boy, I’ve never been able to answer that question about anything in my life because if you look back at every decision you made, when you look at it carefully, you were making the decision as best as you could, based on the combination of circumstances and your own beliefs, so I literally can’t imagine that it would have happened differently. There’s two things that I’m not good at. Future hypotheticals and past hypotheticals, so I don’t know.

Joris Bryon: Okay, let’s skip that question then. Maybe something more concrete. But, what’s the biggest mistake that you made or think you made?

Steven Sashen: Well, again, same thing. Everything we did was based on some seemingly rational decision at the time. Look, we’ve lost millions of dollars, or I’ve lost millions of dollars as I’ve made millions of dollars, but I don’t know anyone who hasn’t done that. So, let me see if I can think of a good answer for that. Not … oh, actually here’s one. Not buying every international domain that I could think of prior to appearing on Shark Tank. That was something that never occurred to me to do and as soon as we aired on Shark Tank, a whole bunch of people starting squatting on domains of mine and I had to do various things to get them. 

Actually, related to that … here’s the biggest mistake I ever made. I go to a trade show one day and I see one of my multi-billion-dollar competitors using my trademarks. And I flip out and I call my attorney and he goes, “Well, you don’t know they’re really using them.” “Dude, I’m looking at a million dollar’s worth the artwork on their booth, using my trademark. Trust me, they’re planning a massive campaign using my content.” And he tried to talk me out of it and I said, “Send them a cease and desist letter.” So we sent them a cease and desist and the mistake that I made was that I sent it too quickly. So, by the time … the short version of how this all went down is they eventually were able to pull out and stop using my mark, they sent me a very funny letter saying and kind of whining, “You caused us seven million dollars to stop using this trademark.” And I said, “Well, you could have had the trademark and my entire company for five million, so I don’t really give a crap.”

But, the mistake that I made is if I had waited for two more weeks or if I had waited until they actually had product on the shelves using my trademark, it would have been a lawsuit worth $500 million.

Joris Bryon: Ouch! That’s the ultimate hypothetical.

Steven Sashen: Yeah, that one … well, that was not a hypothetical, that’s a real one.

Joris Bryon: That’s right. That’s a real … wow.

Steven Sashen: And the reason, just for the sake of it is … because for a trademark infringement, you can sue basically for every penny that the infringing party made using the mark times three.

Joris Bryon: Oh, wow. So, pretty sure that’s not going to happen again?

Steven Sashen: No, I’ll wait till it’s too late.

Joris Bryon: Probably. Great. So, Steven, this has been really great and a little philosophical at times. We could probably go on for hours like this, but we’re kind of running out of time and I want to make sure people know how they can find you and know more about you? What’s the best place for people to connect with you?

Steven Sashen: Brunch on a Sunday morning at the Parkway Café in Boulder, but other than that, you can find me at, as you said at the top of our chat, at xeroshoes.com and if your browser decides to do a typo or autocorrect and do xeroshoes, that’ll redirect to us anyway. So, that’s the easiest thing and then there’s contact info there. You can find me that way if you need to find me directly and there’s also … we’re pretty active on social as well, so pretty much @xeroshoes or /xeroshoes, whatever social platform you can think of.

Joris Bryon: Awesome. Thank you so much for being here, Steven. It’s been really great.

Steven Sashen: All right, cheers!