San Diego Union Tribune - Sanuk Founder Jeff Kelly Innovator Puts Best Foot Forward

INNOVATOR PUT BEST FOOT FORWARD – Jeff Kelley, Sanuk Founder

San Diego Union-Tribune, The (CA)
September 13, 2011
Section: Business
Page: C-1
INNOVATOR PUT BEST FOOT FORWARD
Founder of shoe company blended equal parts function and fun

SHELBY STANGER SPECIAL TO THE U-T

Inner tubes, carpet and yoga mats aren’t exactly the ingredients you’d think could help build a multimillion-dollar shoe company.

But Del Mar local Jeff Kelley isn’t your ordinary entrepreneur.

Kelley, an avid surfer and the founder of Sanuk — a footwear firm known for shoes that fit like sandals and for its humorous advertising — wanted to build a company that made people smile.

“Most of my life has revolved around surfing and working in the surf industry,” said Kelley, who started Sanuk in 1998 out of his garage. But Kelley, whose shoes are worn by celebs like Brad Pitt and Halle Berry, “wanted to create something a little different and fun.”

OK — and profitable.

There are four Sanuk stores in the country, including one at “the Happiest Place on Earth” in Downtown Disney, and about 50 around the world. In San Diego, there’s a giant Sanuk billboard along southbound Interstate 5 north of the airport that features the company’s new “Beer Cozy” sandal. (The ad features an oversized beer belly that’s blown up next to a cushy sandal.)

In June, Kelley sold his company to shoe giant Deckers Outdoor Corp., which also owns shoe brands Teva and UGG, for a cool $120 million.

Starting without wax

A surfer who has worked in the action-sports world for most of his life, Kelley got his start in the early ’80s, designing deck pads that helped surfers stick to their boards without the use of surf wax.

After using a different product that gave him a severe rash, Kelley invented a formula that wouldn’t create a sandpaper-like effect with skin contact.

Using EVA, the same material used in flip-flops, and an adhesive he helped invent with tape company 3M, Kelley founded Trac-Top in 1986.

Two years later, he put an arch bar for his feet on the deck pads, and earned his first patent. “That was a game changer for me, because I learned that you can create something from scratch, and if you believe in it and market it properly, you can do anything,” said Kelley, who now has seven patents under his belt.

Vertical sales

A few years after he started Trac-Top, the founders of Reef (the Carlsbad shoe company now owned by VF Corp.) called Kelley to help them run sales. At the time, in the early ’90s, sandals were sold in baskets on the floor. Searching for sizes always made shop floors a mess and inventory restocking a constant challenge.

Kelley invented a way to hang the sandals, designing a treelike rack influenced by greeting-card holders that held cards vertically in wire pockets.

“It was like magic,” said Kelley, who says that since more than 60 percent of all sales of flip-flops are made on impulse, the results doubled sales immediately.

Wanting to eventually create his own sandal company, Kelley started tinkering in his garage again in 1998, designing sandals from materials like indoor-outdoor carpet, inner tubes and yoga mats.

He partnered with attorney Ian Kessler, hired a few sales reps he’d worked with in the past, and within a few years grew Sanuk into a competitor of brands like Reef and Vans.

Shoes that fit like sandals

His a-ha moment with Sanuk, came, though, after surfing.

Early one morning in 2006, Kelley ran the Swamis stairs in his New Balance running shoes. That afternoon, he returned to surf, rerunning those same stairs with surfboard in hand, but this time barefoot.

“The efficiency of being able to use all the muscles in my feet as opposed to isolating them in shoes was night and day,” said Kelley. “It was so much more comfortable on my entire body.”

Going back to his garage once again, he took a deconstructed shoe upper and built it over a sandal footbed, the same effect as having a comfortable mattress put directly on the floor rather than over a hard piece of wood.

The result, the Sidewalk Surfer, a shoe that not only fits like a sandal, but also hangs on the wall at retail, is now Sanuk’s best-selling product and retails for about $65. Its other sandals average around $35.

The product has created a whole new category for footwear manufacturers, and it’s also one of the key styles that helped Sanuk get noticed by Deckers.

Taking things up a notch

“We were at a point of growth where I wanted to take the brand to another level,” said Kelley, noting that Deckers was his first choice to sell to.

Since the acquisition, you’d think Kelley would be off surfing exotic waves.

While he has managed to buy a beach house in Del Mar that he’s refitted with items like lamps made from surfboards, chairs designed by acupuncturists and a stainless-steel shark that hangs from the roof, Kelley is still designing.

“I am working hard to help Deckers understand Sanuk’s vision,” said Kelley, who still oversees the brand direction and design for Sanuk. “We’ve spread our message of fun domestically. The whole idea now is to take that message of fun and take it global.”

SANUK SHOE/SANDAL COMPANY FOUNDER JEFF KELLEYKelley’s advice on starting a business

Motivation: “Follow your passion and don’t let anyone tell you it won’t work. It’s better to try and fail than always wonder what if.”

Getting startup money: “Contact the crew at Connect to pitch their group for funding.”

How to stand out: “Do something nobody else is doing, and never compete on price.”

Building your team: “Only choose people who are passionate about the position. I will take passion over education 100 percent of the time.”

About Jeff Kelley

Favorite surfboard and shape: Surf Prescription by DOC with a Pendoflex tail

Favorite local hangout: The beach at 19th Street in Del Mar — with a glass of red wine at sunset

Goofyfoot or regular? Goofy for sure

Favorite book: “Green Eggs and Ham” by Dr. Seuss

Naming his company: He picked Sanuk because it means “fun” in Thai and because he could register it globally.

Currently on iPod: “Chronic Beats, an Instrumental Tribute to Dr. Dre.” Also, Lemon Jelly, Bugge Wesseltoft, Willie Nelson, Dean Brody and Al Green.

First job: Dishwasher at a coffee shop

Hometown: Huntington BeachTimeline

1986: Jeff Kelley founds Trac-Top, a surfboard deck-grip company, in his garage.

1991: Joins Reef Sandals Co. and creates a wire rack that increases sales more than 50 percent in first year.

1997-98: Kelley’s attorney, Ian Kessler, who was working for San Diego’s Baker & McKenzie, leaves the practice to join forces with him to create Sanuk.

1998: Introduces the Fur-Real, an indoor-outdoor carpet sandal that is promoted as “trailer trash” because it represented the lawn in a trailer park.

2006: After running beach-access stairs in shoes in the morning and then barefoot after surfing, he has an epiphany. Knowing that sandals have a flexible construction and would provide the natural motion of barefoot, he creates the Sidewalk Surfer.

May 2011: Deckers Outdoor purchases Sanuk for $120 million. Kelley still oversees design and brand image.

Shelby Stanger is a San Diego-based freelance writer.

Inner tubes, carpet and yoga mats aren’t exactly the ingredients you’d think could help build a multimillion-dollar shoe company.

But Del Mar local Jeff Kelley isn’t your ordinary entrepreneur.

Kelley, an avid surfer and the founder of Sanuk