Silicon Valley develops a $300 million foot fetish
When Danny Rimer learned that an online sneaker marketplace called GOAT was looking for investors to help expand its business selling must-have Nike Air Jordans and Adidas Yeezy, he suggested that his firm, Index Ventures, lead a $60 million round.
“It had become quite clear the sneaker market was really taking off and these guys had come up with a way to make it easy to browse and buy and sell sneakers,” says Rimer, whose firm closed the round last week, bringing GOAT’s funding total to $97.6 million. “It very quickly became a phenomenon.”
Index is just the latest firm to develop a fetish for the $65 billion footwear industry. While apparel sales are struggling overall, the sneaker market is thriving thanks to robust and enduring demand for limitededition kicks and fashion sneakers. Plus it’s a category Amazon.com hasn’t devoured yet.
In three years, venture capitalists have thrown $300 million-plus at more than 20 footwear startups, which promise to make shopping for shoes online easier — and to root out fakes in a category long plagued by counterfeiting. The money pushing these products into Facebook feeds and on Pinterest boards comes from storied Silicon Valley firms like Kleiner Perkins Caufield & Byers and celebrities Mark Wahlberg and Will Smith. From Hollywood to Sand Hill Road, everyone is betting on feet.
Rothy’s in San Francisco sells $125 flats made from discarded plastic water bottles, offering comfort to the eco-conscious. Luxury-craving layabouts can opt for $140 suede slippers with leopard print tassels from Birdies. Techies who want a hint of style that won’t overwhelm the casual workplace are snatching up wool sneakers from Allbirds. Stance is targeting “punks and poets” who consider socks the latest vehicles for hipster self-expression.
Men, growing as fashionobsessed as their female counterparts, are the main target. Neckties are languishing in closets due to casual creep in the workplace; smartphones have made watches unnecessary. Socks and shoes are the final frontier for dudes itching to accessorize. U.S. sport leisure shoe sales, a category that includes comfy, work-appropriate sneakers, surged 17 percent in 2017 to $9.6 billion, according to NPD Group.
GOAT, which stands for Greatest of All Time and says it gets 15 million visits a month, is a marketplace selling new and used sneakers, mostly musthaves from Nike and Adidas. All shoes are inspected at facilities in Culver City (Los Angeles County) and Secaucus, N.J. GOAT takes a 12.4 percent commission on each sale, with the average order about $300.
The site has 7 million members who have filled out profiles including their tastes and shoe size. In addition to raising $30 million, GOAT announced it is acquiring sneaker consignment shop Flight Club, which has physical stores in New York and Los Angeles. Combined annual sales are in the hundreds of millions, CEO Eddy Lu says.