And then Geil and the company's marketing manager, Margaret Mackey, suggest we deliver our freshly purified selves to a health-food diner to load up on tempeh burgers and all-natural sodas. We discuss tai chi, the curative powers of papaya, machines that turn brain waves into music, and, only eventually, business.
It's a fitting introduction to the organization's prevailing mood of infinite laid-backness. All of Birkenstock seems to have internalized an interpretation of the company's proximity to the Pacific: nonaggressiveness, even in the face of fierce competition, is the rule.
That casual attitude is attributable to the company's founder and majority (90%) owner. Described in turn as without pretense, unassuming, a possessor of a solid German work ethic, and -- most categorically -- infinitely discreet, Margot Fraser is the operational leader and 64-year-old figurehead of the company. She has an earthy elegance, with her hair perennially swept back in a bun, bifocals hanging around her neck, and a propensity for hand-knit wool sweaters and chunky stone jewelry.
In Fraser's office, centrally located in a sprawl of a building tucked into the hillside along Highway 101, she is open about many issues but determinedly distant about topics she considers private. She won't discuss revenues and profits in detail, although the company shares both with employees. She's warm but remains opaque, apparently not just to outsiders but to her staff as well. In a sentiment echoed by others, Diane Rowe, the company's first director of sales and marketing, tells me, "In some ways, you probably know her as well as I do after five and a half years."
For a long time Fraser led Birkenstock without regard for competition because there was none. Instead of fighting for a share of an established segment, she needed to define a market and create demand. "It took quite a bit of attention in the beginning to explain this shoe," says Fraser in a soft voice. "In Germany people are very conscious of feet and comfort. They have something like 6,000 orthopedic shoe stores. In the United States there are only a thousand."
During the '70s and '80s Fraser's company grew steadily. Independent shoe stores, some licensing the Birkenstock name, formed the core of a network of retailers. Fraser brought them to California several times to meet and share ideas so that if one store ran short of stock it could trade with another. Fraser and Jones took business classes and read books by Peter Drucker and Tom Peters, and each year Fraser wrote a new business plan. Fraser and Jones were business novices, learning as they went along, but so, too, were many of the store owners with whom they were forming business ties and personal friendships.
By 1988 the company had 60 employees and was counting up sales of $8.6 million. Fraser was still concentrating her energy on the product itself, making frequent trips to the German manufacturer to ensure that the sandal styles and colors would appeal to American consumers. Diane Rowe remembers that Birkenstock was "not sales driven" when she joined it, in 1988, as the organization's first sales-and-marketing director. "I lived in the Bay area and worked for another shoe company. I saw this as a brand that people were not really aware of -- a hidden star."
Rowe initiated rudimentary changes: a less funky logo, point-of-sales materials, a public-relations department, and most noticeably, a brighter, yupscale catalog. "Buyers looked at it and said, 'Well, I didn't know Birkenstock looked like this," she says. "They had not seen ordinary, good-looking people wearing Birkenstock shoes. I think the catalog had an enormous impact on retailers and ultimately on consumers as well." She also hired Birkenstock's first real sales force. The new staff members began to tele-market and to travel around the country -- though they hated to call themselves "sales reps," a term with all too aggressive vibes.
With the new marketing push, Birkenstock's name started to appear regularly in the trade press, and demand heated up. "We always knew that we had only so much inventory to give to so many accounts," says Mary Jones. "For a long time we thought we never could sell to the major stores. We didn't think we could supply them, and we wondered if we wanted to 'do that' to our little mom-and-pop stores. But when the demand came, Diane said we had to."
Some of Birkenstock's small accounts bought the company line that the move into department stores and catalog companies would expand their markets, too, by making them beneficiaries of large-store advertising. But many others were anxious and even incensed. They resented the incursion of big competitors that sometimes put them in the position of having to refuse exchanges, for example, to customers who'd ordered ill-fitting shoes from L.L. Bean by mail.
"I'd really dreaded it," says Melanie Grimes, owner of M.J. Feet Inc. in Seattle, one of Birkenstock's largest retailers. For her, though, Birkenstock's expansion has proved neutral. "In some markets I think it's been detrimental, and in some it's been positive," she says. "It really depends on the quality of the retailers and how well they've positioned their businesses."
Three years into the drive that began in 1989, the Birkenstock name was hot and Fraser's company had grown to 145 employees. That's when a supply shortage hit. Fraser thought she had restrained her new distribution commitments until the German manufacturer had the production capacity to fuel her growth, but that company's expansion was hampered by delays. Encouraged by the German government to do business in the East after the Berlin Wall fell, in 1989, the manufacturing company had acquired a factory seven hours away from its headquarters. But training former garment workers to read a leather hide for imperfections and having to wait weeks or even months to get spare parts slowed the 1991 launch of that facility, and much of Fraser's 1992 spring line wasn't delivered until the fall. "It was a miserable time," she says.
