A Converse Conversation

to talk about shoes today. Yes, talking about Converse. I learned a whole lot about this company as we were doing research, and uh boy, howdy, there were a few brink moments in the history of this company. There certainly were. But before we get to those, yeah, I'm going to say that I fell in love with Converse way back when Punky Brewster first came out. So was it like

right around the time she got stuck in that refrigerator? Hey, listen to you, um, but I never owned enough Converse, and I do own a pair currently to be able to wear two mismatched ones, right. I have owned Converse in the past. I remember some some Converse high tops back in the day, but It has been a while since I've owned any but those. Those were very prominent

shoes for a while. But as it turns out, the company has had a pretty rocky history and uh it, once they found their footing, things were going pretty darn well for a while. Not it wasn't on purpose, but it will happen. But as it turns out, there were quite a few times where things could have gone very poorly, and it's actually kind of miraculous that they're still around

in some ways. It is it is. Let's talk about the foul ending of the company, give a quick rundown of its history leading up to the true brink moment, which which will happen a little later in this episode than we typically do, but it's because there was a lot of interesting stuff that happened leading up to I feel like we kind of can't skip the stuff leading

up to it. So to start off, and don't worry, we will not go every single year from the time they started their company in nineteen o eight, but we will hit some key points. So Converse started in nineteen o eight as the Converse Rubbers Shoe Company. It was started in Malden, Massachusetts by Marquis Mills converse. What a name, Yes, Marquis Mills conversation. Well, he was either going to do shoes or General Mills cereals, but no, he he started

off by working in a footwear manufacturing firm. He rose to the level of manager there before he decided to found his own company, and he was able to secure a capital investment of two d fifty thousand dollars. And I went ahead and did the conversion because I was curious, if it's a quarter of a million dollars in nineteen eight, how much would it be in It'd be nearly seven

million dollars today. That's a pretty hefty investment. That is especially since when they started they were only making shoes seasonally, so they were mainly making rubber work shoes and galoshes and winterized rubber sols and things like that, which meant they weren't keeping their company open year round. They weren't keeping their staff year round, right, And then they eventually realized that, hey, if we are able to make more

use out of our facility, then it'll pay itself off faster. Right. It's sort of the same argument that Walt Disney had when he was looking at different places to put the first theme park, the first Disney amusement park, because he wanted to eventually find a place that would be able to be open year round and not just be seasonal, because otherwise, for like half the year, your your investment isn't doing anything. Yeah. So he starts thinking about ways

that perhaps they can diversify, not just do you know, galoshes. Yeah, So they look at other shoes that need rubber souls, and that turns out to be athletic shoes. Yeah. And it's funny because I like that you have here. Netball was one of the types of shoes as sort of a precursor to basketball. Yes, and tennis and football, but I'm not sure if that was soccer soccer American football. There were basketball shoes at the time, but Spalding mainly

had that market. So some people will point to Converse and call it like the first basketball shoe company, which is not entirely accurate. They were not the first, but they would become inextricably paired with basketball, as it turns out, and basketball was starting to gain popularity right around this time. It had only recently been invented. It was a pretty new sport and as it was getting more popular, Converse that he said, you know, we should probably make a

shoe that's specifically tailored for that kind of sport. And so they did a lot of research and in nineteen seventeen they came out with the Converse All Star Basketball shoe. Yeah, that was their famous shoe brand. And the first shoe was very sexy. It was brown with black trim. Yeah. Woa. But but they ended up increasing the options you could have pretty shortly, right, Yes, they did. By the nineteen twenties,

you could also get black, canvas and leather versions. So this would become the first mass produced basketball shoe in North America. Whereas Spalding had been doing these and kind of smaller batches, Converse was getting ready to do them in larger numbers. And it took a little while for the shoes to start getting gaining popularity, but after a while you could say it was a runaway success. Oh goodness, Jonathan. By twenty they were selling about twenty thousand pairs a day.

That's a lot, Yes, that is a lot of shoes. And uh, then we get the famous name Chuck Taylor. Taylor was an actual person. He was He was a famous basketball player, and in he decided he liked the shoes so much that he wanted a job with Converse. It's kind of funny because I've read different stories involving the way he joined the company, and so it's like he wanted to visit this company after trying their shoes. He had played for for teams, storied teams, historic teams

like the Buffalo Germans and the Acron Firestones. Acron Firestones in some of the versions of the story I read, he walked in to complain about how his feet hurt. Interesting, but then the company offered him a job of being a sort of marketing guy in salesman, and he picked up on it. And as it turns out, Chuck Taylor was a heck of a salesman. He would travel around the country hosting basketball clinics and and pushing the shoes. He drove around in a white Cadillac and his trunk

was full of Converse All Stars. And it was kind of neat because he would hold these sort of basketball in x essentially, you know, these almost exhibitions, and they were incredibly popular, so they would get big crowds to watch these pickup games or what appeared to be pickup games, and the whole time he's talking about how the shoes are really helping with performance, and you know, it's kind of one of those things where the implication is, if you want to be a really good player, then you

just need a pair of these shoes, and that's that's what you need to complete your abilities. And that marketing message worked like gangbusters. It did. He also at the time was helping fine tune the shoes so that they had better performance. Now, part of the problem Converse ran into early on the company, not the man, but the company was that it was growing very quickly at this point.

And we've seen this happen a few times with different companies where they grow so fast that they don't build out the support structure two maintain that growth, and it just gets out of control. That was starting to happen to Converse, and in nineteen nine they actually went into bankruptcy. So this could have been our brink moment here that they went bankrupt just a few years after being founded.

At that time, the president of a rival rubber company named Mitchell B. Kaufman, that is, the president, not the name of the rubber company, came in and he took control of Converse since it was bankrupt at that point. But he passed away in nineteen thirty, so one year after he buys the company, he dies, and Albert Wexler was the sort of the executor of the estate, and so he oversaw the care of the company for the time being. So Marquee is out, Wexler's overseeing the company.

Chuck Taylor still very much a part of the company, so much in fact, that in ninety two they added his name to the little support of ankle patch on the high tops, um they're not on the tops, and they put his name around the All Star and they also added eventually Nilot's a year, But I don't think that was an honor of Chuck Taylor. No, But that's where we started referring to Converse shoes as Chuck Taylor. In nineteen thirty three, you had the Stone family move in.

So one of the other elements you're gonna hear a lot about in this podcast is how Converse was traded around a lot like there were a lot of different entities that owned Converse, but one group that owned it for a really long time was the Stone family. It was Joseph, Harry Kay and Dewey D. Stone. They bought the Converse Rubber Company and they would hold onto it for thirty nine years. When they were done, like when they got out of it. It was Joseph's son, Stephen Stone,

who was in charge of the company. And under the Stones, Converse would see its greatest success. It would see its its biggest climb in the domination of the athletic shoe market in the United States, and most of that was due to Chuck Taylor's brilliant marketing, holding those basketball clinics and convincing all those kids you to have a pair

of these shoes. So after the Stones take over Converse in six they come out with a white high top version of the shoe, which became the official Olympic basketball team shoe. It was the first year that basketball was in the Olympics, I believe, and the US team were wearing Converse and they took the gold and the Converse had little red and blue trim on it. So I would imagine that that could not have been a bad marketing at all, being an Olympic winner by our shoes.

And then beyond that, in World War Two, Chuck Taylor served as an Air Force captain, and when he was there, he was coaching basketball for the teams and the troops and pushing the shoes, and so the shoes became the official shoe of the U. S. Armed Forces, official sneaker. And we've talked about in the past how companies were able to to survive by landing lucrative military contracts. Harley

Davidson was like that as well. So then we get the black and white high top in nineteen forty nine, which was one of those shoes that people just associate with Converse. It's one of those that really kind of defined the look. It was really starting to become I guess saying starting to become is the wrong way of putting it. It had established itself as the dominant athletic shoe at that point. Yeah, basketball teams are starting to

incorporate them as a part of the uniform. In seven, there was a low top Oxford version that came out, and by that time Converse had the market share. And then by nineteen sixties and basketball teams were asking for matching colors to their uniforms for their shoes. And then uh in the late sixties you had a pair of things happened, one great and one bad. The great one was that Chuck was invited into the Basketball Hall of Fame for being an ambassador of basketball. But then the

following year, in nineteen sixty nine, he passed away. This is sort of where Converse had hit a peak and then it was going to struggle shortly thereafter. Though we're not quite at the point that I would call the real brink yet. We're still going to get to them now, but we're getting to the decline. This is a good point before we start that precipitous drop, that we take a break and thank our sponsor. Okay, So now we're hitting the nineteen seventies and a lot of rival sneaker

companies are coming out. Running is becoming increasingly more popular, and so all of these other companies are trying to compete with Converse, and they're doing so by making more specialized shoes for running, adding more technology things like pumps and springs and cushions into their shoes. I've got Nike and Nudidas and Puma who are all starting to edge in on Converses market share, and then later you would get another company like Reebok also joining in that. I

remember this era. I remember the era of ridiculous like gimmicks with shoes that were supposed to make things like

high performance shoes. It was a pretty long era. It went well into the eighties, well into the no I remember the pump the pump shoes where you would pump up the air and your shoes to give you that big bounce, and to the point where I was all the kids in school and I was going to school were convinced if you pumped them up enough, you would just explode yourself off into the stratosphere, which I never

actually managed to do. I'm sorry, I'll fly one day. Well, these ridiculously technological shoes were really comfortable, and so people started wearing them also as their casual shoes. And while all these other shoe companies are trying to make the latest and greatest to appeal to all of these runners and in this new market that's growing, Converse she said,

we're going to keep doing what we're doing. Yeah. And meanwhile, you started to see the core audience for Converse, the core customers for Converse, start to drift away from the brand. You started to see basketball players who previously like Converse was the shoe for basketball. You started seeing them branch out and wear different shoes or sign you know, lucrative marketing agreements like Michael Jordan with Air Jordan's Yeah, and so you started seeing the migration away from Converse. Now

Converse did expand their shoeline a little bit. They bought the trademark to Jack Purcell sneakers, which are bad mitten sneakers. They bought them from B. F. Goodrich. And they also, despite the fact that they're starting to lose their market share, we're continuing to try to manufacture. So they opened a manufacturing point in Lumberton, North Carolina, and a distribution center

in Charlotte, North Carolina. And then in nineteen seventy two, the Stone family, who had been holding onto the company for almost forty years, sold Converse. And at that time Converse had three major divisions. They had footwear, which you know we all associated with Converse. They had sporting goods, so this would be stuff beyond shoes, like hockey pucks and some other sporting equipment, a lot of it having you know, rubber components, because again that's how this company

started out. And then the third was industrial products. Like industrial boots, that kind of stuff, which are still technically footwear. Yeah, but it was part under You wouldn't go to like a foot locker and say, can I take a look at your your electricians boots? But yeah, they they had stuff like teeth guards and they had all these other things. So so the new owners of Converse kept that going, and the new owners it was like another company. And

this company was called the Ultra Corporation. So under the Ultra Corporation, Converse was still eating stuff out. In nineteen seventy four, they came out with the one Star, which doesn't have the little circle check Taylor just has a single star on it. And in five, I guess, with all of these sporting goods and industrial products, they came out with a ski boot. And now get ready, folks, because here come some more follow the lady like the

bouncing basketball in and out of brinkdom. Yeah, and hey, do you know who owns Converse today? It's we're getting into that well, but we're not there yet, you know, I mean, as we're going year to year. So in the late seventies, all the competition from these upstart companies like Nike and Puma it's really starting to take its toll. So the company began to sell off some of its assets.

In nineteen seventy nine, the Allied Corporation acquired the Ultra Corporation, so now you had a new grand lord over you. You know, Ultra Corporation was now a subsidiary of Allied Corporation, and so Commerce had new owners again, and they did until nine two. So Converse was actually doing pretty well at that point despite all the competition. They were selling

about twelve million pairs of shoes a year. However, in a d two the executives over at Allied Corporation said, we don't really feel like we belong in the consumer marketplace, so we're gonna cut all of our divisions that make consumer products. That's not where we want to put our focus. Well, that's Converse. You know. Converse is selling shoes to the common man, not to you know, IBM, which would have

been weird anyway. But the computer that wore tennis shoes, Oh my gosh, a Kurt Russell reference a Disney Live action film. If I'm curious if any of our listeners are familiar with the computer that wore tennis shoes, I'm sure at least one will be perhaps, So they decided

to put Converse up for sale. And then you had a group of senior executives who were at Converse, some of whom had come from the ultra corporation side, and they got together and they were able to spin off Converse into its own privately operated entity that was spearheaded by Richard B. Loind and John P. O'Neill. They bought the company for about one hundred million dollars and in eighty three they would take the company public and shares would begin to sell on the NASDAC stock Exchange. In

the early nineteen eighties. Converse ended up investing in an enormous research development lab. They had seventy researchers working in bio mechanical footwear projects. And they even had robots, not just like the idea of like maybe a whole bunch of robots that are just legs with feet wearing Converse shoes, just stomping up and down. Makes me think of Willy Wonka. But anyway, in six a company called inter Co International

acquired Converse, so ownership changes yet again. Standard and Poors was not super impressed with inter Co. They actually had put the company on credit watch, but Converse was still doing well as an independent division of this company. It's just that the parent company's future was what was questionable at that point. Well, they weren't doing that well for very much longer because by Nike and Reebok had taken

the majority of the market share from Converse. All these companies weren't focused on furthering Converse as an athletic and casual shoe brands. Right to them, the it was another asset that they owned, but it wasn't it wasn't their priority exactly. The shoe business was not their primary focus, whereas for these competitors that was their businesses. So they were able to really capitalize on that. Now, Converse did have a brief resurgence in the nineties because even though

they weren't the best basketball shoot anymore. Now they're appealing to like counter culture folks, so like rebels and grunge and punk rockers. Yeah, there's a famous picture of Kurt Cobain wherein his Chuck Taylor's it became sort of a clothing item for a certain section of the population. Yeah, they start coming out in more colors and patterns and materials. We even get a knee high version. I used to want to own a pair of knee high Converse so bad.

I didn't know that such a thing existed. I knew that, so I'm a I'm a Ramones fan, and I knew that. Tommy Ramon at one point was asked about Chuck Taylor because all the Ramones were wearing Converse, and he says, I think he might have been a basketball co true something. All I know is he makes cheap shoes. Well, this, this resurgence got them back to seven percent of the retail shoe market, but only for about ten years. By the two thousands, they were back down to one percent

of the market. Yeah, they were having real issues. There had been a lack of investment in Converse for too long at this point, and so they were trying to play catch up. But they didn't have the resources necessary to really do that because they were behind. They didn't have the budgets for marketing and the budgets to sign

athletes the other shoe companies did. In Magic Johnson, who was signed as a Converse ambassador, actually said quote, Converse as a company is stuck in the sixties and seventies they think the Chuck Taylor days are still here. He kind of at that time ended his career, at least his career with Converse. Yes, there were actually a couple of different problems along with his relationship with the company.

There were times where Converse was preparing litigation because they were saying that he was not living up to his side of the agreement. This was not a great time for the company in in the public relations world. They do try to get back into the basketball shoe arena with a weapon basketball shoe and the H E zero one, which looks more like a traditional sneaker. But at this point they're playing catch up. They're just trying to do what the other companies have been doing for a while.

And then in Interco filed for Chapter eleven protection standard and pores was proven correct, and two years after that, Converse would spin off yet again, and it would try to regain kind of it's it's footing. I didn't mean it, you did, I know you did. So. Converse had been acquired by all these different companies and kind of bought and traded around. But now they decided to acquire a company themselves. They take on Apex One, which puts them

in a lot of debt. And not only that, but Apex itself did not have the best reputation for making orders on time, and so they still had that issue when Converse acquired them. And so not only did the company acquire debt in trying to buy this other company, they acquired the anchor around the neck of Apex where there was they had to figure out, how do we fix this problem that exists in this company we've just acquired.

And so by two thousand, Converse had two hundred and twenty six point two million dollars worth of debt yikes, including in theory a four hundred thousand dollar contract to Dennis Rodman, and they only had two hundred one point one million dollars worth of assets. So if I'm doing my math correctly, they had more debt than they had assets. And they were supposed to do a million dollar financing and they couldn't even make that. Their stock dropped all

the way down to fifty cents. He could buy two shares of Verse for a dollar, which is really sad because at the beginning of it was dollars to share. So this leads to its second bankruptcy. The first one had been way back shortly after its founding back in the late twenties, and now in two thousand one, it

came time to do it again. As a part of their bankruptcy and their restructuring, they handed over all of their u S, sales and marketing of their product to a third party company and decided they were just going to become a licensing company. They were going to license to shoes out and survive on getting those licensing fees. And one of the companies that they wanted to buy

their licensing was Global Brand Marketing, Inc. Who did diesel shoes. Okay, they licensed diesel shoes, so kind of a good idea there. Some people were saying that the reason the timing for the filing for bankruptcy was all about they wanted to make sure that they could handle the creditors right that they didn't want to just close down shop because if they did, they'd still owe the creditors money. They wouldn't

have any protection against that. So this was kind of a long shot for the company to remain, at least in name, still a company and not have creditors come banging on everyone's doors. Yeah, by two into their sales were only up to two five million dollars. Yep. And as I wrote in my notes, and these are puns that I made on purpose, things were looking pretty grim for a company that had its toes stepped on so many times over the years. But the rescue was just

around the corner. And we'll get to that after we take a brief moment to thank our sponsor. All Right, So, second round of bankruptcy for Converse. This time it looks really bad. They're going to make a move to being just a licensor. They're going to license out the Converse brand to any company that can afford to pay the license. They're doing their best to stave off the creditors. They need a night in shining Armor to come to their rescue, and one did in uh, just a couple of years.

But in between that, they still had a couple of other things that they were trying to do just to stay afloat. Yeah, they moved all of their manufacturing to Asia, which shut down their manufacturing plants in the States, in

North Carolina, Texas and also in Mexican. Also in Mexico, they were looking to cut prices or cut costs even to the point where they were shutting down their Mexico manufacturing plant, and they dropped their workforce from hundred people to two hundred people then, and they also sold all their non footwear licensing to another company, one that was in Japan, for somewhere in the twenty million dollar range. And then in two thousand and three we get the

Night in Shining Armor. It's not really armor, it's a night and Shining Nikes. Night and Shining Nikes. They swished right in. Yes, they did very good. Yea. And they bought Converse for three hundred and five million dollars. This is interesting. I mean, converse is annual revenue was one million dollars less than the price that Nike was paying for him, and it was a company that was still obviously dealing with creditors. But Nike saw the value in

that brand. And while you could worry about consolidation when you're talking about two major brands in the athletic shoe space, without Nike, there's pretty much no doubt that Converse would have ceased to exist over at some point. Yes, certainly, certainly because they had enough money to make it through the restructuring and through the bankruptcy, but not necessarily to continue on and regain the ground. But Nike focused on keeping them a casual shoe and a shoe of creative expression.

So instead of appealing to sports enthusiasts, they're trying to appeal to artists and kind of that counterculture that had picked up Converse a while back. Now, they were kind of focusing on a lot of pop culture as well as also a lot of nostalgia, like you know, the sort of thing where every twenty years or so, you see that the younger generations start to adopt stuff from previous generations. Yes, so they were really trading on that

as well. Yeah, they had fashion brands and icons and designers come and make like special edition Converse and very expensive Converse. They even had a high healed option at one point. Wow. And then you get the Connectivity campaign that was launched in two thousand eight. That was another marketing campaign. So, you know, Chuck Taylor's long gone at this point, but this was a real push to kind of regain that place in pop culture and people's minds. Yeah,

and they were really smart about it, choose. So the campaign spread across seventy five countries, and they made sure to use celebrities specific to each global region to help push this marketing campaign. So instead of like using Chuck Taylor over the entire globe, they were trying to keep their spokespeople relevant whoever was seeing the marketing, and it weren't because it caused increased in year year revenue. Yeah,

and these days they're not doing so shabby. Like for a company that was again on the brink of total disaster, Nike was really able to help coax Converse back to new heights, unprecedented heights for the company. By they were making one point for billion dollars in sales. Phenomenal it is, and six of all Americans claimed to have owned or either currently own a pair of Chuck tailors at the time, you would say that they've definitely changed kind of their

marketing approach. Like back in the day, it was all about a basketball shoe, which some people would wear as sort of a casual shoe. Now they're targeting that sort of usual market from the get go. Yeah, not as this is an athletic shoe that you can also just wear around, but that this is a shoe designed for you to wear day to day. But it's a little

nicer than just a an old sneaker. It's a little yeah, it's it's smart, casual, and they were trying to appeal to I guess I would say more of a millennial crowd. Their their marketing idea was brand made for and inspired by artists um and millennials have been known to like more of an experience, more of original things. So if you're going to buy a Converse, the ability to have something unique in this well known brand is appealing. Yeah, and they have had, you know, a couple of more

fumbles throughout the years. Between two thousand and twelve and now. In two thousand fourteen, Nike suit a bunch of companies for making knockoff Converse and stealing their trademark. And in two seventeen they had a drop in sales because they believe the market was oversaturated with shoes. I see a note here out the greatest recording artist of all time

and Converse. I want to hear about this story. Oh so, Miley Cyrus is working with Converse to make a shoe, as they have partnered with many artists, and this one is a black and pink platform Converse shoe. I'll be sporting that by better or I'll be highly disappointed. Jonathan. Listen when when Miley Cyrus comes to the office, because I'm sure she will, she will be impressed. They'll be kicking it in some Miley Cyrus version, Converse, it'll probably

be killing my feet. Better the platforms than the high heels. Yes, I mean I can't heels, do make my never mind? Yeah, I I think platform is better than heels. Yes, that's all we've got on the subject. So we got a bounce. Yeah, nice, Nice. But this was really fascinating because I had never looked into the corporate history of I had no idea that the company had changed hands so many times, and trust me,

I've been there. It says a lot when a company can go through that many changes in management and still maintain a sense of cohesion. It is really hard to do. The fact that Converse was able to survive all of that says a lot about how they were able to create a vision in the minds of the consumer and make good on that to the point where I think a lot of people wouldn't be able to imagine a

world that didn't have conversation. Yeah, I mean I kind of always took it for granted, and just like this is a shoe that's always been around and will always be around and will always be popular. So I think when we look at different stories and we try and kind of put our finger on what was the the key component of that brain story For this one, I

would say that it was really the marketing. It was the fact that Converse was able to sell this idea and back it up, Like, It's not just that they sold an idea, they were able to create a shoe that met expectations of people long enough for them to really establish themselves. Yes, well, that wraps up this episode of The Brink. We're going to be talking about all

sorts of companies in the near future. But if you guys have any specific questions or maybe there's a company or an entrepreneur that you think really merits discussion and a deep dive, then by all means you should reach out to us. Yeah, and you can do so at feedback at the Brink podcast dot show and our website is The Brink Podcast dot Show. You can go there and listen to older episodes and learn all about us,

as well as the other ways to contact us. And we look forward to hearing from you and uh until next time, I have been Jonathan Strickland and I've been aerial casting. Bye.