The Best Idea Yet - 👣 The Birkenstock Arizona: From Flower Power to Fashion Week | 3

Episode Date: October 29, 2024

The Birkenstock Arizona has adorned famous feet from John Lennon’s to Steve Jobs’ to Barbie’s—but the brand itself is older than America, and has gone through more eras than Taylor Swift (plus, won over just as many haters). From a cobbler’s shop in 18th-century Germany to KendaIl Jenner’s Insta feed, this 250-year old shoe brand has found staying power by embracing both 5-star…and 1-star reviews. Learn how an obsessed family of shoemakers created the most comfortable sandal ever, and how an immigrant dressmaker’s love of Birks helped them conquer the US—and IPO at a $9 billion valuation. Slip on something comfy, and find out why the Birkenstock Arizona is the best idea yet.Follow The Best Idea Yet on the Wondery App or wherever you get your podcasts. You can listen to new episodes early and ad-free on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. Start your free trial by visiting www.wondery.com/links/the-best-idea-yet/ now. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Wondery Plus subscribers can listen to the best idea yet early and ad-free right now. Join Wondery Plus in the Wondery app or on Apple Podcasts. So Nick, I don't think I've ever told you, but do you know that I only go to a concert if it's an outdoor concert? I did not know this about you. The experience is so much better outdoors. In fact, I think the last dozen concerts I've been to were all outdoors. You got to bring your own bug spray, but you know, it works. The acoustics may not be as good as Carnegie Hall, but I got the stars above me. And it's also BYOTB. Bring your own Tommy Bahama beach chat because you're watching the concert in the grass.

But Jack, this isn't about the Tommy Bahama brand, is it? No, that's not the subject of this episode whatsoever. No, because Jack, when you think about outdoor concerts and you think about the OG outdoor concert, what comes to mind? I'm hearing Jimi Hendrix playing the national anthem at some big field in upstate New York. All right, so we're talking Woodstock 1969, not Woodstock 1999. I'm not picturing Limp Bizkit.

No. I'm picturing Janis Joplin. Classic. When you think about all those 1960s kids in headband scarves and fringe vests, has there ever been a generation with such immediately identifiable fashion? I mean, Jack, 1969, that vibe was so potent. And then it came right back to our classmates in the 1990s. It was like Beanie Babies and Bell Bottoms, baby.

Oh, I remember. You got your tie-dye, your peace symbols. You're probably not wearing shoes at all at that concert. But if you are, they have got to be Berks. Birkenstocks, the unofficial footwear of flower power. The psychedelic sandals. Crosby, Stills, Dash, and Birkenstocks. Birkenstocks, the straps, the buckles.

They don't say peace and love. They chant it at a sit-in. But Birkenstocks aren't just a boomer throwback or a 90s comeback. They're also having a zillennial moment right now. Birkenstocks have taken over Paris Fashion Week, the Barbie movie, even Wall Street. In 2023, Birkenstock IPO'd at a $7 billion valuation. Jack, can you sprinkle on a little context, please? That's more than a lift. billion valuation. Jack, can you sprinkle on a little context, please? That's more than a lift. Birkenstocks are on the feet of celebrities from Kendall Jenner to Keanu Reeves,

and they've pulled it all off while being a brand that some people love and some people love to hate. If you want to get a sense of that love, the average Birkenstock owner in the United States owns, get this, four different pairs of Birks. Can you believe that, man? Apparently, I am the average Birkenstock owner. But Nick, as trendy as Birkenstocks are today, it's far less known that this brand started as a family business going back 250 years. Boom! We're talking 1774, a cobbler shop in rural Germany named Birkenstock. So how did a village shoemaker create a footwear empire older than the United States? By embracing one-star reviews, by ignoring the haters, and by starting a brand so obsessed with function over fashion that it became fashion. And they also got an unexpected assist from a 12-inch doll in high heels. More

on that in a bit. Turns out Birkenstocks are about more than just tofu and tie-dye. They also played a key role in the feminist movement, the luxury sector, and even the creation of Apple computers. Yetis, today's episode isn't merely about Birkenstock. It's the origin story of one iconic type of Birk, the Birkenstock Arizona. The classic open-toed model, two wide straps with buckles, a thick cork bottom, and that's about it. The Arizona style or silhouette in shoe speak came out the same year as the Exorcist, but it's still driving growth for the company today at a compound adjusted growth rate of 24%. That's just from the Arizona model. This shoe, it's got style and this shoe has stay in power. Pretty good for a sandal that even the company itself once called funny looking. They may be

funny looking, but Birkenstocks is a story all about being at the right place, San Francisco, at the exact right time. Late 60s, summer love, groovy times, baby, bell-bottom vibes. What do German cobblers, hippies, Wall Street executives, and Barbie all have in common? It sounds like a Halloween party, but what do they have in common, Jack? They're all integral parts of the Birkenstock legend. The Birkenstock is the best idea yet. How exactly? Well, Jack, let's slip into it.

I'm literally slipped into them already. From Wonder and T-Boy, I'm Nick Martel. And I'm Jack Kravici-Kramer. And this is the best idea yet. The untold origin stories of the products you're obsessed with. And the bold risk takers who brought them to life. Our story starts in a modest cobbler shop in Frankfurt, Germany, on the eve of the 20th century.

Frankfurt's a bustling city known for its expert craftsmen, especially shoemakers. So let's zero in on one as he sits on his workbench. Conrad Birkenstock. He's about 24, thin, with a pointy nose, some serious ears, and a mustache that would make Sam Elliott proud. I'm looking at the picture right now, Jack. The mustache is giving Yellowstone main character energy. But Conrad wasn't the first in his family to make shoes. Conrad's great-great-granddaddy,

way back in 1774, claimed the title Cobbler in the ledger of his village church. Ah, the church ledgers. The 18th century LinkedIn. You were networking in those pews, man. From that day on, all the way to Conrad's time a century later, every Birkenstock family member was some kind of shoemaker or married a shoemaker. I get it. They got a shoe fetish. Nothing wrong with that, Jack. No judgments on this pot. But also in that time, there's been an entire industrial revolution. Shoes that were once made by hand are now being mass-produced by factories, cheaply and quickly. Oh, and by the way, when we say cheaply, we mean painfully.

These mass-produced shoes from back in the day, they're rough on the old Tootsie Snake. They're totally flat inside with no arch support. Even worse, there's not even much of a difference between left and right. You just have two shoes, interchangeable. Brutal situation for your back. I mean, after a day on the cobblestones, you needed a chiropractor 300 years ago.

Conrad sees this and believes he has a solution. The surface of your feet aren't flat, so neither should the soles your feet stand on. He wants to cure people's orthopedic ailments with shoes that arch up inside to conform to the shape of your foot. To give your soul a hug from the very bottom of your person. Yep, he is all about the arches. It's a groundbreaking innovation that lets him make shoes that arch up inside too. So Jack, if I hear you right, this guy is the Frankfurt Phil Knight. This guy's the Bavarian Bill Bowerman, baby. Conrad calls his invention a foosbet or a footbed. Although we think foot mattress might be even more accurate. I like foot mattress. If other shoemakers were basically making wooden

bed frames for shoes, Birkenstock was the first to put a mattress inside there. But no matter the name, the key to this foot mattress is it can be inserted into factory made shoes, which solves the whole mass production causing mass back problems thing. For Conrad, bringing these footbeds to the public becomes his new mission. He spends the next 10 years tinkering with different materials for his insole. We're talking rubber, cork, jute, that's a natural fiber, even tar. He's going full Picasso on these footbeds. Constructing and deconstructing, iterating and iterating again. I love this guy. Keep going, man.

He is the Phil Knight of footbeds. In fact, he fixates on this new product so hard, he ignores his old shoemaking business and almost bankrupts the family. All right, no judgments here, but he's putting the footbed before the family, and I'm hoping this pays off, Jack. In 1915, they have to move the business from Frankfurt to 20 miles north to the town of Friedberg. Conrad leaves his wife and his 15-year-old son, Carl, in charge of it while he stays behind to work in the orthopedics department of a Frankfurt hospital.

Jack, pause the pod for a second. Did you say hospital here? Is this guy a doctor too? Was that a side hustle? He is not. But all of Europe is now in the throes of World War I. Every day, injured soldiers are showing up who need foot rehab. So he tries giving them his patented footbed insoles. And his patients love them. So the biggest traction Birkenstocks get early on are in orthotics, footwear, and insoles for people with leg and foot injuries. Not exactly the Birkenstock you imagine today. But what we're saying, Jack, is that Birkenstock's first disruption wasn't to fashion.

It was to medicine. Exactly. But as Conrad tries to establish Birkenstock as a medical equipment supplier, he discovers there's a catch. While his patients are rating these footbed five stars, the World War I era doctors are not. Since Conrad's not a doctor, medical professionals are skeptical that he even knows what he's doing. So to pull off this pivot, Conrad's going to need a secret weapon to convert these skeptics into believers. Luckily, these skeptics into believers. Luckily, he's got one. His eldest son, Carl. Jack, I got a fever,

and the only prescription is more Birkenstock. Carl Birkenstock is the oldest of his siblings, and he's been shadowing his papa, Conrad, since he was 13 years old. But it soon becomes clear that Carl has a talent that his dad's been struggling with. Sales and marketing. Nice surprise. This is Mad Men before Mad Men. Carl is the Don Draper of Deutschland. And when World War I ends, Carl sees that the 4 million wounded soldiers returning home in Germany are just like the ones his dad had helped in a hospital years before.

They're potential customers. Carl goes full madman to market his father's shoe insights. Not with TV ads. Oh yeah, those don't exist yet. He did it with classes. Ooh. He writes up Conrad's collected teachings into a weeks-long in-person seminar that he calls System Birkenstock.

Walking as intended by nature. He invites all the professionals who had given his father's ideas one star. We're talking thousands of shoemakers, orthopedists, and salespeople. And thanks to Carl, this time it works brilliantly. Over 5,000 professionals end up taking this course. System Birkenstock firmly establishes the brand's bona fides among the medical community. It's a way to educate customers, and it's a stroke of marketing genius. Okay, so Jack, what Carl is doing here is nurturing demand. He educated

future customers first so that then he and his family could supply them second. And honestly, I feel like we've talked about nurturing demand before. Like, are you picturing Michelin? The Michelin Tire Company? Or the Michelin Restaurant Guide? Right, because the Michelin Tire Company invented the Michelin Restaurant Guide to get you on the road driving to restaurants

so you'd buy more tires. And it sounds like Carl is doing the same thing at Birkenstock. Yeah. But Carl's next branding move is the most disruptive change to shoes since the lace. To make their footbed insole stand out, they dye it bright blue. I like the blue. For the first time in foot story, a commercial footwear product isn't black, brown, or gray. It's blue. Wow.

Soon, the Birkenstock footbed is being sold all across Europe, from Austria to France, Denmark to Luxembourg, and throughout Scandinavia. But the Birkenstock family mission to improve people's health from the ground up is only just beginning. All right, yetis, get ready. We're going to transport over to the early 1960s as Carl's son, Carl, is at a trade show. I'm sorry, Jack. Pause the pod for one more sec. Carl's son, Carl. Sorry, Nick. Excuse me. Yes, you got it. Carl Birkenstock, the marketing whiz we

talked about who turned the footbeds blue, he's Carl Sr., Carl with a C. His son is also Carl, spelled with a K. Okay. We'll do our best here to keep it organized for you. All right, we got to buy a vowel, but you got this, Jack. Take it away, baby. After the blue footbed's massive success in the 1930s, Carl the father started patenting designs for what he calls the Ideal Shoe. Ah, the Ideal Sh shoe. I like this. It would incorporate all of the system Birkenstock ideals of arch support, cushion, and proper weight distribution. He messes around with these designs for 25 years, but never really cracks it. So when Carl Sr. retires in 1961,

and his son, Carl, Carl with a K, takes over. Yeah, Carl with a K. Carl Sr. feels like his greatest work is still unfinished. But thanks to Carl Jr., the shoemaker, not the burger chain, that is all about to change. The chatter of sales pitches reverberates through the long exhibition hall. The young Carl Birkenstock can barely hear himself think. It's 1963, and he's at the big trade show in Dusseldorf, surrounded by hundreds of shoemakers vying for retailers' attention. For about the thousandth time, Carl fidgets with his display, positioning and repositioning his

hero product on his little stand. It's a sandal with a deep cork insole and a single wide strap near the toes. Here's a picture, if you could describe it. Jack, I'm looking at it right now. It's sort of like a flip-flop, but without the T part. It's kind of like an old-school slide. You know what I'm saying, man? This is like the first Birkenstock where you're like, that is the Birkenstock I know.

This is Carl's new miracle shoe. He calls it the original Birkenstock I know. This is Carl's new miracle shoe. He calls it the original Birkenstock footbed sandal. He's taken design inspiration not just from his dad, but from brutalist post-war European architecture. Buildings that are bare, windowless, ruthless. I'm sorry, this shoe is inspired by maybe the ugliest architecture of our time, Jack. But there's a reason Carl has used this stark, brutal style to inspire his new footbed sandal. I'd love to hear it, Jack. Just like those buildings, this sandal is all about function over fashion. The sandal, with its single strap placed right near the toes, encourages good form when you push off

and transfer the weight from one foot to the other. This isn't some random fashion choice, Nick. It's to tone your calves. You would appreciate that of all people. I have pretty good lacrosse calves. I got them. Because Nick, if you don't grip this sandal with your toes while you're wearing it, the shoe will slip off,

evoking a phenomenon that the Germans refer to as angst reflex or fear reflex. They designed a sandal to make you terrified, basically, that you'd forget to clench your toes. Ah, the Germans. Undefeated at naming weird little feelings. The angst reflex. The streak continues.

Oh, yeah. Oh, and in an almost unheard-of marketing twist with this sandal, the shoes are unisex. Wow. It's not a man's shoe or a woman's shoe. The same silhouette is good for everyone. Why? Because this sandal, Carl believes, exists in its ideal form. It's not utopian,

it's shoe-topian. Nice. And no gender constructs should interfere with that flawless form. In other words, these shoes are tailored for your feet, not your outfit. And frankly, Jack, they probably save a buck not having to have a men's mold and a women's mold. It's probably a money saver. Fair point. Profit puppy. And this focus, it's critical because fashion is cyclical. Fashion changes with the tastes and the trends of each and every generation. But function, function is universal. If it does the job, it's timeless. So Carl is super excited to pitch this shoe to buyers at the trade show. He's not seeing anything like it in the booths all around him. Oh, no, I'm picturing it right now, Jack. I mean, he's probably seeing stiff-looking high heels,

unforgiving ox for its toe-pinching penny loafers. That's not good stuff. They were fashionable, I guess. But Carl shudders at the blisters and joint problems that will come with those patent leather pumps. I mean, Jack, these Birkenstocks guys, they take their posture seriously. So Carl explains all this to every would-be retail buyer that approaches his stall. But one by one, they all walk away shaking their heads. He even overhears someone say the word ugly. So after a full day of rejections, it's clear.

The original footbed sandal, its trade show debut is a flop. All the potential buyers essentially give it one star. One star. The man is devastated. This is generations of work up in smoke. But spoiler alert, if you've learned anything about this family, you know they're totally obsessed with their mission. If you've learned anything about this family, you know they're totally obsessed with their mission. Carl with a K is no different. He's not giving up until the world knows the name Birkenstock.

So, when we left Carl Birkenstock the Younger, he'd just seen his original footbed sandal flop at the trade show. But being a Birkenstock, he soon crafts a turnaround. His father, Carl, and his grandfather, Conrad, had found success for their footbed by converting skeptics in the medical community. Maybe, Carl Jr. figures, he can do the same thing. He reads a book called, and I'm not kidding, How I Made a Fortune in Mail Order. Mail order for dummies. And he writes up a pamphlet on the medical benefits of the footbed sandal and then distributes it in a journal of medicine. Then he sends catalogs to seemingly every podiatrist in Germany. Classic move. Soon, Birkenstock is overwhelmed with requests. Podiatrists and other health pros can't believe how effective

these things are. It's the five-star review phenomenon in full effect. So Jack, Birkenstock was getting one-star reviews at the trade show, but now they're getting five-star reviews from the doctors. So what we're saying is that this shoe is either beloved or it is hated, nothing in between. And honestly, that is a trend you and I have noticed with powerful products. It's better to be passionately loved by a few than kind of liked by many. Like Red Bull, Uggs, Pumpkin Spice Lattes, polarizing brands, they've got big time fans and huge time haters at the same time. So yetis, if you create a product to try to please everyone, you're going to end up with three-star reviews. Nobody's going to love it.

Nobody's going to hate it. But nobody will buy it either. And these passion points will eventually help this functional shoe break out of its healthcare niche and become a global phenomenon. But pulling this off will require three major pivots.

First, they need to make a fashion statement. Second, they need the help of someone outside the family. And third, they need this sandal to come to America. I thought you were going to say, they need how I made a fortune in mail order. It's 1966, and Berliner Margot Fraser has been living in America for 15 years. But now it's vacay time.

So she's on a well-deserved spa trip back to her home country of Germany. But she's having trouble relaxing. Her feet are killing her. And it's a shame, because after 15 years away, she'd been so looking forward to enjoying some nature walks back home. Something Germans love to do. But with this foot pain, she can't do much more than sit and soak for a while. Margot grew up in Berlin in the 1930s and

40s. After watching her country be torn apart by World War II, Margot did what millions of emigrating people did before and after. She sailed across the Atlantic to start a new life with just 25 bucks in her pocket. She eventually married an American and built a successful dressmaking business in Northern California. But Margo suffered from chronic foot pain. She tried everything to cure it, including, get this, standing on a phone book and trying to grab it with her toes. Jack, you know, I heard he needed a disc once.

Does that work, by the way? Asking for a friend. Obviously not. Okay. So finally, she does what all good Germans do, spa day. Yeah. A treat-yourself trip to the Bavarian woods. And with her feet aching, she encounters a pair of sandals that, frankly, aren't much to look at.

A simple sandal with one strap across the toes. The shopkeeper tells her they're good for foot pain. She's skeptical, but at this point, she'll try anything. Of course. So she slips them on, takes a few steps forward, a few steps back. I could get used to this kind of thing. Is that what she's feeling? To her amazement, her toes straighten, her back muscles relax, and her pain fades away.

It's like that scene in The Grinch. Yeah. And The Grinch becomes like a soft, gentle man whose heart blows up, you know? He was wearing Birkenstocks the entire time. In three months, her foot and back problems basically disappear. Whoa. So she's all in on the gospel of Birk, preaching the testament of the footbed. So she and her then-husband send a letter to the company, to Birkenstock.

Yeah. Margo wants to import this brand to the United States. And Carl Birkenstock, he says yes. Actually, I think he said, yeah. Amazing story. I love where we're going with this. But Jack, why does Karl agree? Like, sight unseen, he just lets her run away with this?

Like, does Margot have any experience in shoes? Does she know a converse from a Clark? I mean, if you're going to get into the shoe business, you got to know Louboutin is not a Houboutin. To answer your question, Nick, no. Margot does not know Louboutin from who-boutin. But her husband had been a wholesale importer. And importing experience is key.

Yeah. Did it matter that his expertise was in furniture? Not really. Between Margot's passion and her spouse's know-how, the Birkenstock family said, knock yourself out. So with the family's blessing, Margot receives her first batch of Birkenstocks in the mail, naturally, and sets out to bring this miracle shoe to other obsessed fans like herself. But finding those fans will be harder than she had bargained for. Okay, so Margot has the go-ahead to sell Birkenstocks on behalf of the company. She and her husband are buying a bunch of pairs wholesale,

selling for an initial retail price of $19.95. She leaps into action. Which she can now do comfortably thanks to her Birks. She buys a few pairs to take around with her and show to local retailers near her home in Santa Cruz, California, a sleepy beach town about an hour south of San Francisco. Oh yeah, Jack, Santa Cruz is definitely a Birkenstock vibe. But not back then, apparently, Nick.

Because she runs into some of the same issues Carl and all his predecessors had in Germany. People think these new sandals are ugly. Jack, you've said a lot of nice things about Birkenstock in the last 20 minutes. Ugly seems to be the recurring theme, though. I just want to point that out. One shopkeeper doesn't even stop walking when he sees her. He just brushes by saying, I can't sell something like that at my store.

No way. Another store owner indulges her in a 90-minute sales meeting only to boot her out after without buying a single pair. Keep in mind where and when we are. 1966 is the year Nancy Sinatra debuts her single, These Boots Were Made For Walking. These boots are made for walking. And that's just what they'll do. One of these days these boots are gonna walk all over you.

And the album cover, it shows her wearing bright red, calf-high leather boots. Naturally, boot sales are skyrocketing right now. They got hockey stick growth, they're going Gretzky. And if you aren't wearing go-go's, then you can't sit with us. So maybe it's not the best time to be hocking some short, stubby, brutalist, orthopedic sandals that kind of look like they should be handed out at a hospital. Plus, there's this other issue working against her. they should be handed out at a hospital.

Plus, there's this other issue working against her. Women are expected to wear stylish, dainty, pointy things with names like kitten heels. Real term, real thing. Kitten heels. So the fact that she's a woman selling ugly, unladylike, unisex European shoes to men, oh, and to women at the same time in America, yeah, that sounds like a hard pass back then, Jack. Yeah. Margot's about to give up when her friend tips her off to a new opportunity. The Health

Food Association is hosting the national convention in nearby San Francisco. She doesn't know it yet, but this one natural food convention is going to change everything about Birkenstock's place in the American landscape. On the big day, Margot arranges her merchandise on the red tablecloth and studies the conference goers. Now, keep in mind, this is the co-op crowd. They're all about healthy choices. These Northern Californians, they're buying flax seeds and rolled oats for their organic sweet potato grain bowls.

Then, over there on the convention floor, she spots it. A woman carrying her high heels as she walks around in her stocking feet. She's not wearing her shoes. She's carrying them because this woman is in pain. Margo knows this pain. Now, there's a rule against directly soliciting attendees at this conference, but she can't resist. She beckons the woman over and has her try on some Birkenstocks right there on the floor of the convention hall. Can you slip into these? Let me know what you think. How do those things feel?

The woman buys them over the protests of her husband. And on the last day of the convention, the woman comes back to Margot's red table and buys three more pairs to stock in her store. Later, that woman will actually become her business partner. Margot is feeling some momentum. As a woman under the pressures of fashion and fads,

she understands the appeal of Birkenstock function over fashion better than anyone. This one event, a health food convention in the counterculture capital of America, changes the future of Birkenstocks. Margo launches the American distribution arm of Birkenstock right out of her home. She and her husband have to move the cars out of their garage to accommodate all the shoes that they're shipping. Margo becomes the company's entire ground game,

giving them feedback on what American customers are responding to. Speaking of which, she's the one who suggests that American women won't respond to the shoe's name, which was still the original Birkenstock footbed sandal. It's not a name, that's a paragraph, Jack. The company takes her advice and gives their first single strap sandal a more evocative name. What do they call it, Jack? The Madrid. Oh, the Madrid. I'm getting like a very different vibe when I hear that. Like I'm thinking sun, I'm thinking heat, you know, maybe a glass of Rioja, a plate of tapas. You want the customer imagining their new shoes walking along the

weathered cobblestones of a sun-dappled courtyard. All right, Jack, let's talk a little bit more about timing. If 1966 felt like a bad time to go up against Nancy Sinatra's go-go boots, Northern California at this time turns out to be the exact right place. Birkenstock has been waiting 200 years for this moment. I mean, Jack, the Bay Area, it also happens to be the cradle of 1960s counterculture movement. LSD is legal. The Grateful Dead are playing house parties. San Francisco is

the place to be if you're cool, young, and not like, you know, a servant to the man, man, or der Mensch in Bavarian German. Well put. And San Francisco's historic Haight-Ashbury district becomes ground zero for a mass influx of young people in 1967, which is the so-called Summer of Love. Up to 100,000 out-of-towners descend into the neighborhood's sunny Victorian row homes, looking for free love, free food, and free thinking. And Margot's Birkenstock sandals are just waiting to be discovered on the shelves of the local co-op. So, Yetis, it's now 1973. The hippie movement has faded like so much pot smoke in the breeze.

But Birkenstocks? Uh-huh. They're doing better than ever, just like Margot and Vision. Nice. By now, the shoes are in more than just health food shops. The same shoe store owners who had rejected her for those functional footbeds are now begging for her product. Birkenstocks will eventually end up in Nordstrom's. Jack, that's a classic good news, challenging news scenario

because good, you know, being in a department store is great for discovery, but challenging because it put Birks in competition with the more traditionally fashionable footwear. Yes, and what's happening in the U.S. is also being mirrored in West Germany on the capitalist side of the Berlin Wall. If Birkenstock is going to grow, it's going to need to expand its customer base, including among the fashion conscious. So Carl Birkenstock starts experimenting with some new designs without

getting too far from the original one. The footbed of every Birkenstock stays basically the same, but he adds variety to the upper sandal with different styles and straps. This is a little fashion concept called the 3% rule. Oh, the 3% rule. This is one of Jack's and my favorite concepts. It's actually a phrase coined by the late legendary designer Virgil Abloh. The 3% rule is this. To make something feel fresh, to feel new, to feel intriguing without feeling faddish, you should alter it just 3%. Keep 97% so it's recognizable, but alter 3% to drive interest. So Nick, these new Birkenstock styles,

they follow that recipe for change. A hefty serving of consistency with just a dial-up of novelty. And just like the single strap to Madrid before them, most of the new styles are named for brand-enhancing, cosmopolitan locales that you want to vacation to. Uh, hang on one sec, Jack. Let me grab my passport. There's the Zurich, the Roma, the Athens, and the Oslo. And then, finally, in November 1973, comes a style that will literally change the image of Birkenstock forever. Ooh, Jack, I'm getting dry heat vibes. Can you give me a drumroll, Nick? Oh, of course I can.

The Arizona. When you close your eyes and think of Birkenstock, it's probably this one in your picture. It's got two wide parallel straps with buckles that go across the top of your foot. It's not the chicest variety. Okay, okay. But unlike the Madrid, you don't have to work so hard to keep them on your feet. But Jack, why is the Arizona Birkenstock hitting so hard? Well, one theory is that of all of these styles, the Arizona is the most versatile because in a way,

it's also the most neutral. Other Birkenstock styles, they might seem a little more feminine or a little more masculine, but the Arizona is hitting this Goldilocks right now. It seems to be equally suited to either. It's also possible that the Arizona takes off because it's favored by some high-profile celebrities. John Lennon, Yoko Ono, Harrison Ford from Star Wars, Madonna. Yeah, they're all big Arizona fans. Big Arizona guys.

Nick, this Arizona Birkenstocks sandal even becomes a staple of a certain young computer geek who's starting his own business and likes building keyboards in his Birkenstocks. Perhaps you've heard of him, a Mr. Steve Jobs. Steve Jobs was an Arizona Birkenstocks guy, really? He's known for the black turtleneck. He should be known for the Birkenstocks underneath. So Jack, you're saying no Arizona Birkenstock, no iPhone?

It's so facto. That does compute. I think it works. It checks out. Birks manages to grow even during the yuppified 1980s. By 1990, Margot remains Birkenstock's lone U.S. distributor, and her business has grown exponentially. Operations have long since moved out of Margot's garage into a 74,000 square foot office and warehouse space. She's now importing half a million Birkenstocks a year and distributing them to more than a thousand U.S. retailers. Half a million pairs. Jack, that's a new pair of Birks every year for everyone who was at the first Woodstock. But this is still a tiny fraction of the overall shoe market,

which at this time is nearly a billion pairs of shoes annually. All right. Margot knows they can go bigger. Yes. A lot bigger. Love Margot. Nick, remember the marketing power of that bright blue footbed back in the 1930s? Oh, yeah. The Dr. Scholls before Dr. Scholls.

I love that one. Yep. Margot channels that insight. She encourages her German partners to increase the variety of colors and styles available to consumers. Once capped at just 12, they now have over 125 varieties, including purple, fuchsia, and forest green. Birkenstocks for tasting the full Skittles rainbow and then some. Oh, and Bessie, this is the 3% rule again, isn't it, Jack? Like, keep something fresh by changing just a little 3%. Sometimes you just have to change the color.

That's it. The Stanley Cup mug, if you know, you know. But these new color runs do more than just peak consumers' interest. They also mean more opportunities to partner with designers and to catch the eye of more A-list celebrities. In July 1990, Nick, Kate Moss is photographed for a cover spread on the beach, in a crop top, cigarette in hand, with a pair of white Arizonas on. You're kidding! It kicks off a true fashion frenzy, just in time for the grunge years. Impressively, Birkenstock's high fashion successes don't alienate their core fans,

which by now include third-wave feminists, eco-warriors, and queer communities. Are there hacky jokes about lesbians in the fashion sense? Sure, but these groups don't abandon Birks. They lean in. Wow. All right, so Jack, Birkenstocks had its spotlight in the fashion world. It's become a mainstream shoe brand, and all while holding on to its five-star customers. What is next for these guys?

World domination. Just kidding. Or am I? Because next, Birkenstock experiences a Succession-esque drama, a Barbie bump, and a massive Wall Street IPO. It's now 2013, and Oliver Reichert has his work cut out for him. This man is 6'5", broad-shouldered and red-bearded like a Viking. His eyes have the look of a former war correspondent, which, in fact, is exactly what he is. This guy is unfazed by a crisis. And as the brand new co-CEO, Oliver is in charge of rescuing the splintering Birkenstock empire.

Powerful dude. So Jack, where did Thor, I mean, Oliver Riker come about? Well, Carl Birkenstock retired in 2002. And when he left, he divided the company evenly among his three adult sons. It seemed like a good idea at the time, but in practice... Sounds like succession with less swearing. And more Birkenstocks, too. Oliver comes on as a consultant to untangle the 38 subsidiary companies, and he does so well, he's named co-CEO in 2013. What we're saying here is that for the first time in this company's 250-year history, someone without Birkenstock blood is at the helm of Birkenstock. Jack, that's a huge moment, man.

Oliver takes a page, or a chapter, from Margot's playbook, actually. It goes for design variety without changing the classic footbed, or foot mattress, as we like to call them. True. Soon, Birkenstock is branching out to everything from suede leather sneakers to desert boots. I can picture him. He also pursues high-profile collabs with luxury designers, from Phoebe Philo's Firkenstocks, which are Birkenstocks lined with mink fur, and he also collabs with Manolo Blahnik, Valentino, Jill Sander, and Christian Dior.

A real Beauty and the beast situation. I think you meant to say ugly, Jack, but we can go with casual on that one. I mean, this is hard to do, by the way. Going upscale like that, it's not easy for a brand to pull off, man. They did pull it off, though. And slowly but surely, Birkenstock evolves from so uncool they're actually cool to just cool. Well, that is another concept you and I have loved talking about, Jack. That is the Lindy effect in action, right, man? Yes, it is. It says that the longer something

has been around, the longer it will continue to be around. Yeah, it's like a psychological thing. When people say a product is timeless, they're getting at that Lindy effect. 2020 proves this out too. In this moment of comfort above all, style icons Kendall Jenner and Gigi Hadid reach for classic Arizonas. Yes. And just like that, British Vogue declares Birkenstock

the official sandal of 2020. It was the comfort economy and that is the power of foot fluencers. Oliver's strategy to elevate the Birkenstock brand is a smash success. Yes. In 2021, Oliver convinces Bernard Arnault of LVMH to buy a controlling stake in Birkenstock. Just six weeks later, a private equity firm acquires Birkenstock for around 4 billion euros or a little under 5 billion US dollars. That is a champagne situation. That's

big. Compare that against a brand like Allbirds, whose 2022 revenue is less than 300 million. Match point to Burke's. But Burke's time in the limelight is just beginning, thanks to a featured role in 2023's Barbie movie. Spoiler alert if you still haven't seen the film. A newly human Barbie steps out of a car into the California sunshine. The camera closes in on her feet. Zoom. Wearing pink Birkenstock Arizona sandals. Arizona sandals. One timeless classic wearing another. Oh, and by the way, in real life, Birkenstock really did see a Barbie bump from this movie, didn't they, Jack? Yeah. According to my credit card statement, it's from my family. Because after that premiere of the Barbie movie, Google searches for Birkenstock sandals for women jumped by a whopping 346%.

That's almost quintupling. So now, Jack, I got to ask you, where can Birkenstocks really go higher from here? How about their biggest move yet, Nick? Going public. Cha-ching, cha-ching. IPO day for Birkenstocks really go higher from here? How about their biggest move yet, Nick? Going public. Cha-ching, cha-ching. IPO day for Birkenstock arrives on October 11th, 2023. Ah, yeah. The sun shines down on the jaunty white banner stretched across the columns of the New York Stock Exchange.

It reads Birkenstock since 1774. Oliver Reichardt grins as he rings the opening bell. Clustered around him, Birkenstock executives lift up Arizona Sanders in salute. The Arizona. The IPO ends up raising almost a billion and a half dollars for the company, which actually gets dinged by the financial press as a disappointing IPO. I mean, Jack, look, it wouldn't be a Birkenstock story without one last hurrah from the haters and a little something ugly. Less than a year after the IPO, the stock is up 30% from the IPO price. Not too shabby. 2024 marks Birkenstock's 250th year as a company.

They've gone from 18th century cobbler shop to the Wall Street trading floors of New York City worth $10 billion. Hey, sometimes it's a power walk, not a sprint. So Nick, you've heard the centuries-long saga of Birkenstock. Can you hit me with your takeaways? You want me to whip up the takeaways, Jack? Is that what you're asking for? I got you. All right, here's my takeaway.

Here it is. Here it is. The only reviews you want are five-star and one-star. Five-star ratings, honestly, they mean you're creating a product people love. And that's fantastic, even if it's not for everyone. Sure, some people, they're going to hate it. But your brand strength comes from your super fans, not the haters. Meanwhile, if you try to please everyone, then you just end up with a bland product

that's getting three out of five stars. And no one loves a three star brand. All right, Jack, what about you? What are your takeaways on the story of Birkenstock? There is value in putting function over fashion. Besties, as we like to say, beware of the three Fs of fads. We're talking food, fashion, and fitness. All three are fickle sectors because they're decided on taste, which is subjective. But function solves problems that are more universal and timeless. So while fashion is cyclical, function is forever. The Birkenstock, it may be ugly, but man, is that thing functional. And you can tell this is the winning strategy, Jack,

because of how many other footwear brands have borrowed from Birkenstock's playbook. I mean, how many footwear brands have leaned into the proud, ugly shoes bit? Without Birkenstock, you may have never gotten Tevas, Crocs, Hokas, or Uggs. Birkenstock's walked so that Crocs could run. Beautiful. Jack, time for our favorite part of the show. Let's whip up the best facts yet. Remember the guy Michael Burry from The Big Short? Love that guy. He was played by Christian Bale. Weird banker guy. He's wearing Michael Burry's actual Birkenstocks as he portrays him in the movie. Smells, but hey, it's method acting. You got to go with it, man. You got to do what

works. And even though there've been plenty of famous men in Berks, according to Birkenstock, 72% of their buyers are women. Well, also shockingly, Jack, millennials and boomers each buy about the same number of Birkenstocks. Like each demographic makes up about 30% of Birkenstocks customers, followed by Gen X at 27% and Gen Z down at 12%. But Jack, can you whip us up one more best fact yet that may be the most delightful of all? We mentioned that Steve Jobs, the Apple founder and CEO, was a Birkenstock man. Yes, he was. He got himself a pair of brown suede Arizonas in the 1970s and wore them for about a dozen years. Never lost them. How do we know this?

Because in 2022, those sandals sold for $218,000 at an auction. The imprints of Steve's feet are still visible on that footbed. That's a premium I'd pay. Which is part of the reason for the hefty price tag. Oh, so Jack, would it be fair to say that these Birkenstocks basically founded Apple? The iPhone wouldn't exist without them. Or podcasts. Because the iPod. Without the Arizona,

this show wouldn't exist. It really is the best idea yet. Coming up on the next episode of The best idea yet, it's the Jeep, the thrilling saga of America's first four by four and the only car with a secret handshake. Follow the best idea yet on the Wondery app, Amazon music, or wherever you get your podcasts. You can listen to every episode of the best idea yet early and ad free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey.

The Best Idea Yet is a production of Wondery hosted by me, Nick Martell, and me, Jack Kravica-Kramer. Hey, if there's a product you're obsessed with and you wish you knew the story for, let us know. Drop us a comment with your idea and we'll look into it. But while you are thinking of that idea, you should know that our senior producers are Matt Beagle and Chris Gauthier. Our senior managing producer is Nick Ryan and Taylor Sniffen is our coordinating producer.

Our associate producer is H. Conley. Research by Samuel Fatsinger. This episode was written by Katie Clark Gray. We actually use a bunch of sources in our research. This episode was written by Katie Clark Gray. We actually use a bunch of sources in our research. A few that were particularly helpful for this one. Why Americans Are Obsessed With These Ugly Sandals by Ben Cohen of The Wall Street Journal.

And The Ballad of Birkenstock by Tim Lowe for Bloomberg. Soul Cycle, that's S-O-L-E by Rebecca Mead of The New Yorker. And Catherine Horan's August 2018 piece for The Cut, The Dwarf, The Prince, and The Diamond in the Mountain. Great title. And finally, Birkenstock's own archival materials, including photos and a complete company history and an interactive timeline. It's on their website, birkenstock-group.com. Sound design and mixing by C.J. Drummler. Fact-checking by Molly Artwick. Our music supervisor is Scott Velazquez and Jolina Garcia for Frisson Sing. Our theme song is Scott Velazquez and Jolina Garcia for Freesong Sing. Our theme song is Got That Feeling Again by Black Lock. Executive producers are me, Jack Ravici-Kramer. And me, Nick Martel from Nick and Jack Studios. And Dave Easton,

Jenny Lauer-Beckman, Aaron O'Flaherty, and Marshall Louis for Wondery.