BROOMFIELD — As visionaries, Steven Sashen and Lena Phoenix may well be remembered for introducing a minimalist running shoe and turning that idea into an incredibly successful idea — minimalist footwear for all occasions. As entrepreneurs, the husband-and-wife team may be long remembered for not listening to business experts on a reality television show.
Because this week, their business, Feel The World LLC, will be going directly to the people for funding the Xero Shoes brand through new equity-crowdfunding provisions enacted by the JOBS Act of 2012 and implemented in 2015. Essentially, the provision allows startup companies to sell equity stock to a broad range of investors, instead of only the “accredited investors,” or wealthy people who could be solicited under previous U.S. Securities and Exchange Commission rules.
“It opens up an investment opportunity for thousands of our customers,” said Sashen, the CEO and co-owner with his wife, Lena.
“Lena and I both like the idea of the democratization of capital — not just for rich old accredited investors. Our company has been primarily built by word of mouth, and now we can open up our company to our customers.”
The Form 1-A filing was made Jan. 30 with the U.S. Securities and Exchange Commission under Regulation A+. This regulation allows companies to offer securities to the public, but with more-limited disclosure requirements than would be typical for publicly reporting companies. Sashen said he expected that the filing would be qualified by the SEC by March 9, and the stock would be offered short thereafter.
The company had tripled its revenues over to a two-year period to $851,573 in 2013, when the owners earned a coveted spot on Shark Tank. But the millionaire-based celebrity execs seemed unanimously to agree that the couple had overpriced the business, which was nothing more than “a piece of rubber and string.”
Shark investor Kevin O’Leary was the only one to offer Xero Shoes a deal, proposing a $400,000 investment for 50 percent of the business, when the owners had originally proposed $800,000 for 8 percent. Sashen said turning down that offer wasn’t difficult, nor was turning down other offers in intervening years where the money was OK but the situation wasn’t.
“We’ve had a few offers, though no one that we wanted to work with yet,” he said. However, “for the last two years, we’ve outsold our supply. We ran out of product before we ran out of year.”
The equity crowdsources could pump $3 million into the company that now has a total valuation of $28.5 million, making turning down the Shark deal and other intervening offers seem mighty smart right now. Since that offer, revenues grew to $772,000 in 2014, $1.53 million in 2015 and $2.7 million in 2016, and the owners are anticipating revenues of $7 million in 2017 and $21.4 million in 2018.
The first product was a running sandal based up the sandals made from used tires that Sashen said a Tarahumara running team use to compete in the Leadville 100, but since then, the company has developed a variety of products for running, hiking, walking and casual wear. Xero shoes also introduced its first line of closed-toe running/fitness shoes the first week of March.
Though the products are diverse, they also stick to the main theme of Xero Shoes, which are incredibly lightweight and flat-soled. Sashen noted that the closed-toe shoe weighs less than seven and a half ounces in a men’s size 9, which is only an ounce and a half more than the same-sized sandal.
“We’re building a line that pretty much encompasses everything people want to do except perhaps sleep — and I say perhaps, just in case,” Sashen said.