He now trades shoes for photos with the photographer, Dana Abrams, who has done shoots for a number of national accounts. "One of these days I'm going to give him a bill, and he'll fall over," says Abrams wearily.
* * *
L.A. Story, Part II. Stuck in traffic somewhere in Beverly Hills, Balle is getting impatient. He wonders out loud if he should take the first or second left up ahead, depending on how many cars are waiting to turn at each light. As he turns at the first light McCormack scans the street, which looks vaguely familiar, and says, "Is my new apartment somewhere around here?"
The life -- beyond shoes -- of these just-thirty-somethings is Rebels and restaurants. They eat out a lot, and from the conversation it's unclear if they even own pots and pans. (McCormack does have a cat.) Balle lives in the guest house of a woman in Beverly Hills, where the rent is low. He had a lease on a condominium in Santa Monica and to break it spun a sob story to the landlord about how a relative had died back in Israel and he had to go home.
* * *
Scenes from a mall. It's midday in the mall at Beverly Hills, and sunlight filtering through the roof throws a gauzy air over the scene of shoppers drifting across hard, polished floors. Balle and McCormack dip into a branch of Brooks' Shoes for Kids, a local chain of children's shoe stores, to see what the competition is peddling. Clear-plastic sandals (called "jellies"), they note, are all but spent after three years of ascending popularity and declining margins. So, too, are red-patent-leather boots. Balle and McCormack have already blown those items out of their warehouse.
The store is quiet, but another shoe store directly across the hall with big "Sale" signs in the window is bustling. "Look how busy they are," Balle remarks. "They just knock other people off."
As they pass a women's clothing store Balle instructs, "Kellee, see the colors. Very soft." This is a preview of the coming colors in shoes: airy yellows, greens, and oranges. They now stroll past another shoe store.
"This company knocked us off completely," says Balle. "One for one." He shrugs.
McCormack is more exercised. "They took our high top and low top. Sick, huh?" Balle adds: "This company went to our factory. They said the production was going to a local store. They bought the shoes and diverted them to the United States." He immediately cut that factory off.
This little stroll through the mall encapsulates the challenge for an upstart like Rebels. On one hand, Balle and McCormack need to nurture and protect the small accounts like Brooks'. It was the little guys who gave them their early breaks, after all. But they must also heed the siren song of bigger accounts that can assure them of volume and growth. Making matters even stickier, they must avoid getting squashed when the department stores and discounters collide.
Department stores hate discounters because they knock off hot-selling products and undercut them on price. That message is conveyed in code to vendors like Rebels. Says Balle: "They don't say, 'Don't sell to them.' They say, 'We don't like your distribution.' " Translation: If you sell to discounters, we'll cut you off at the knees.
Rebels fears discounters, too, because if the company doesn't do business with them, then they'll just knock off Rebels' shoes. "Discounters only want you because you're in the good stores," says Balle. "But you need to commit to a certain amount of production, and discounters help you meet the minimum."
For now he has sworn off dealing with discounters. When they call, Balle's end of the conversation usually goes something like this: "So when do you want the shoes? One month? Oh, too bad. My factory's backed up. Maybe I can get them for you in four months."
* * *
"We can't go wild." Rebels is now hot, and more partner wanna-bes are circling. Steve Vianest, who owns a shoe store in Boca Raton, says, "We'll try to do a Rebels 'concept' store. We'll sell accessories and the shoes. I'll be involved with that."
Balle's not so sure. "We have to focus right now on the shoes," he says. "We can't go wild." The Gap invited Balle and McCormack up to San Francisco to talk. Balle was wary. "Big companies find a way to bypass their suppliers," he explains.
But then, after the big $100,000 weekend with Nordstrom's in Chicago, Balle allows himself to dream a little. This year's volume is three times greater than last year's. With a sales rep in Chicago, he could quickly turn that into a $1-million territory. "I see us going to $20 million, $50 million even," Balle offers.
Balle, the entrepreneur who barters for black-and-white photos, is now talking about putting in a $50,000 state-of-the-art inventory-management system. He rationalizes that by saying the software could support $100 million in sales. As the numbers get bigger the shoes seem to matter less.
Balle acknowledges that. "This is first and foremost a business," he says. "Profit and loss. The bottom line. I'm not just a kid who loves shoes."
* * *
The shoe. After a late dinner at a Chinese restaurant, Balle and McCormack stroll around Rodeo Drive, scanning the gleaming storefront windows for signs of fashion spring. More oranges, yellows, and limes. Flowers and animal prints, trends Rebels has already picked up, look like hot motifs. The street is oddly dead, more like a midwestern town where people have to get up early and go to work in the morning.
Steve Vianest says, "There are a lot of monsters in the shoe business." Balle, whom he counts as a fresh face, is not one. Roger Brooks, owner of Brooks' Shoes for Kids, once invited Balle and McCormack to his house for dinner. Recalls McCormack: "He told us, 'I like you people. I trust you.' "
Balle had noted earlier: "Many people have told us, 'You have an item that sells well. You're so young. Get out when you can.' " Right now that doesn't register with him. He might as well stop breathing.
Balle and McCormack now turn a corner off Rodeo Drive and stare into one more shop window. This one is dark and lifeless, but one can readily see a large banner announcing a sale, blaring distress. On sale are shoes unceremoniously displayed on floor-to-ceiling metal racks.
They're Palladiums.
* * *
Senior writer Ed Welles can be reached at ed.welles@inc.com
