Editor's note: This tour of small businesses across the country highlights the imagination, diversity, and resilience of American enterprise.
"First of all, this product has a sexy look," says Daniel Feldman.
We're sitting in Feldman's modest corner office in the Brooklyn headquarters of Profoot, the distant runner-up to Dr. Scholl's in the foot-care market. Before us stands a mock drugstore shelf unit that holds a few dozen shoe inserts of various colors and shapes. Feldman is talking about the Triad Orthotic, an insole nestled behind molded clear plastic attached to a blazing yellow and green package. Like a space-age toothbrush or neon tennis shoe, the Triad looks vaguely aerodynamic, with two shades of cushioning that swirl around one another to delineate the parts of the foot bed. For an insole, it is indeed a little sexy.
Profoot introduced the Triad 15 years ago, and it remains among the company's top five sellers. "We were an afterthought in the category when the Triad came out," says Feldman, Profoot's president and the son of founder and CEO Len Feldman. "We were the first to put the word 'orthotic' in the mass-market set, and we were the first to create a product that looked and felt like that." The company sold 2 million pairs in the first year--to Feldman's knowledge, it was the first time that a non-Dr. Scholl's product was No. 1 in a foot-care subcategory. By year two, Scholl's had a very, very close knockoff. "Then the word 'orthotics' started appearing on all kinds of stuff," says Feldman.
Back up. What, exactly, is an orthotic insole? Well, that doesn't really matter. "It's any product that controls motion and the position of the foot in the shoe," Feldman says. "Truthfully, almost anything can be considered an orthotic. We were just not calling them that."
It's a refreshingly honest answer. And it does nothing to diminish the revolutionary nature of the product. Back then, the Triad's hourglass shape was as newfangled as the name, and so was the configuration of the materials that went into it. "We did something really strange," Feldman says. "It had this figure-eight covering that was made of an amazing cushioning material called Poron that shoe companies typically used under the foot's stress areas--the ball of the foot or the heel. We took it and put it everywhere it wasn't supposed to go, so it allowed the pressure areas to collapse onto a softer foam and kept everything else afloat."
Profoot owes its existence to unconventional products, and its future depends on relentless innovation. "Dr. Scholl's is now owned by Bayer, which is something like an $80 billion company," explains Feldman. Profoot, by contrast, generates less than $50 million in annual revenue, although it turns a profit every year. "It just wouldn't be a very sensible strategy to go head-to-head with them," says Feldman. "I'm sure our entire company is their pencil budget."
"But we also have tremendous advantages," says Feldman. "We can move much more quickly and come out with a product before their lawyers have figured out whether they can do this or that."
Often, Dr. Scholl's may not even want to do this or that. Ideas the giant company deems too small to pursue--"interstitial," as Feldman describes them--look like great opportunities to Profoot. "There are plenty of $5 million or $6 million angles we can occupy," says Feldman, who runs the company day-to-day but consults his dad often. And when one of those interstitial products hits big--like the Triad Orthotic--Profoot can nudge the whole category in a new direction.
"Dr. Scholl's is the 800-pound gorilla, but they are by no stretch the best," says Rob Sobel, president of the Pedorthic Footcare Association. "That leaves a lot of room for Profoot and others to find niches--and they do a better job."
"Guess what? We're in the pillow business!"
In effect, Profoot has built a healthy business in a category dominated by a single giant by trying not to compete with it. How it has done that is a story that goes back more than 40 years, to a humble living room in the Bay Ridge section of Brooklyn, New York, when Daniel Feldman was all of 2 years old.
If you've seen Saturday Night Fever, you know something about Bay Ridge. A city within a city within a larger city, it's a teeming New York neighborhood a world away from Manhattan. Immigrant groups have long found upward mobility here before resettling in sexier parts of the city or in the Long Island suburbs (but not before marbleizing the facades of their row houses). "There's something about Bay Ridge. It's a culture of making it," says Feldman.
In the early 1970s, Leonard Feldman was a Bay Ridge chiropractor with a practice on the first floor of his home. Like many in this profession, he sold products to patients. A so-called "detail man" who represented chiropractic suppliers would drop by the house and show off the latest pads and braces. One day, a detail man brought a new kind of contoured neck pillow and asked Len to relay any feedback he got from patients.
Len had a patient in mind. After a couple of weeks, she reported that the pillow was helpful but too small, and that the piping around the edge was uncomfortable. Len called his Uncle Irving, whose wife ran a small cut-and-sew operation nearby, and ordered a new pillow built to spec. When the detail man returned and asked how things had gone, Len pulled out his new-and-improved pillow and lobbed a price he knew would undercut the existing one. (Never mind that he had no idea if he could deliver on that number.)
The detail man ordered 50 pillows on the spot. Len called Uncle Irv with the good news: "Guess what? We're in the pillow business!"
Len, 79, tells this story in the booming, blunt way people tawk in his native borough. The detail man "would come back every three or four weeks and buy 50 more pillows. And then another detail man heard about it, and he came and bought 50." At an orthopedic supply show, a dealer asked Len about the size of a minimum order. "I wanted to scare him, so I said 250!" says Len. "And he bought 250, and we were off to the races. We ended up selling more than a million of that pillow."
Daniel Feldman, fit and fashionable at 45, can't help laughing at his dad's antics. "The man is insufferable," he says. "He's an idea guy, and he sees a business angle in everything. Its just ideas, ideas, boom boom boom. You make a good cookie, he'll tell you to hang out a sign." As young Daniel toddled around the house, Len and Irv converted the living room into a fulfillment center, where they'd stuff pillows, jam them into plastic bags, and box them up. About a year in, a rep from a mail-order catalog that sold the pillows asked Len what other products he made.
"Well, anything really," he answered. "What do you need?"
The rep said they were having a hard time getting enough of an over-the-door exercise device: essentially a pulley system for body-weight lifts. Could Len produce something like that?
That product led to others. Soon, Len found himself devising a new shoe insole for the catalog. He knew a guy named Hugo in Brooklyn who'd invented a kind of foam that Chrysler was using in dashboards. Why not slide it into a shoe? It was his second big hit.
In time, the chiropractic business took a back seat, then dissolved entirely. The partnership with Irv dissolved too, as Len's expanding ambitions and bold promises exceeded Irv's appetite for risk. A couple of other partners joined the operation and remain involved today.
Two lessons emerged from those early years. The first was that Len Feldman and foot-care products were a perfect fit. The category became his most fertile ground for big sellers. The second lesson: "Dad learned that he is in the 'yes' business," Feldman says. "The answer is always 'Yes,' OK? Get the sale. Get the deal. You're clever enough that you will figure out how to make money off it and make supply. That's been the theme for us to this day."
"Guess what? We're in the foot-care business!"
Across the street from the Profoot office, a machine has just created half of a 3-foot-diameter disco ball. This is what happens after decades in the "yes" business. In addition to Profoot, the Feldman family owns a controlling stake in three other businesses that share the same warren of small buildings just off the Brooklyn waterfront. One, Decorative Novelty, creates party supplies like this disco ball. Another, iCommunicator, makes a device that transcribes spoken English into sign language on a computer screen. A third, Professional Products Research (PPR), makes gadgets and gifts for catalogs. It is what remains of Len's original living-room operation.
Another family business, started in 1980 and later sold, was Dr. Leonard's, a mail-order catalog for health care contraptions. One day, while on a field trip to a few drugstores, Len realized that most of the successful foot-care products he'd been selling through Dr. Leonard's were not available elsewhere at retail. "Guess what? We're going into the foot-care business!" he told his partners back at the office. And Profoot was born.
Profoot innovated not just materials but also the look and packaging of products, based on the mail-order catalog industry's obsession with novelty. "When we first got into the category, a lot of the products were brown and green and black," Feldman recalls. "Often, instead of seeing the product, you'd see packaging with a picture of a guy in a hard hat or a woman in a business suit." By contrast, the Feldmans created colorful, interesting-looking products and showed them off in contoured blister packs. "'Let the product be the star,' is what my father would always say."
The language on the packages was catchy and results-oriented, meant to draw in browsers. "It's not crazy or hyperbolic, but a little more..." Feldman pauses to find the right word "..salesman-y." He cites as an example one early success called the Super Sport ("Makes you super comfortable!"). "Everything else at the time was just called 'arch support,' or 'ball-of-foot cushion,'" says Feldman.
Feldman came on in 1994, when Profoot was emerging as a unified brand rather than a collection of one-off products built around the old catalog model. He had long dreamed of a career in standup comedy. (His two sisters did go into show business: One is a successful sitcom screenwriter and the other a Broadway playwright.) But he'd watched every detail of the family business unfold and always knew he'd be part of it. "It was fun and exciting to grow up around that," says Feldman. "And I idolized my dad."
"We became this two-headed monster, developing products one after another," says Feldman. "If we grew by just 12 percent one year, we'd be like, 'Shit, gotta do better!' Twenty percent the next year? OK, back on track."
Creating a broader footprint
Profoot today owns nearly 10 percent of a $900 million market, and employs just under 100 people. About six years ago, growth suddenly stopped. The recession was partly to blame. But Feldman worried more about consolidation in the drugstore business, which is now dominated by a few enormous national chains. For Profoot, that means less obvious opportunity to diversify and more pressure to make low-margin private-label products for the chains. "That's my biggest worry," Feldman says: "The possibility that the category becomes nothing but Dr. Scholl's and private label, and the little brands get squeezed out."
Profoot has dabbled in private label but is also seeking better, less conventional opportunities. John Vayianos, vice president of sales since Profoot's inception, is pursuing partners in surprising places: for example, selling to a company that distributes items to offshore oil rigs. "Cruise ships, airlines, restaurants, hospitals, schools--every one of these industries has distributors that you can find if you look for them," Vayianos says. "And Scholl's just doesn't look at some of those opportunities."
The company has also created two sub-brands: one that sells new products like anti-fungal ointments and bruise creams (corporate foot-care buyers often cover the first-aid aisle as well, so why not hit them up twice?) and another that sells female-focused shoe inserts to discount retailers such as Marshalls.
Growth has picked up since 2013. Last year's sales grew 14 percent, and Feldman expects similar results this year. "I think right now we are clearly the best minds in this category," Feldman says. Alluding to Dr. Scholl's being acquired twice in seven years, he adds, "I don't know how much institutional knowledge is left at the leading brand right now."
Overall, Feldman is bullish. "We have no debt, we have never borrowed a dime, we have more product ideas than we know how to process," he says.
Yes, but can Profoot ever be more than a distant second? Feldman's answer, predictably, is yes. "I don't see any reason why we can't be the leading brand," he says. "You have to have big goals."