Commentary: How the other shoe dropped, the collapse of one indoor slipper empire

Commentary: How the other shoe dropped, the collapse of one indoor slipper empire

Founder Ankur Shah should perhaps have taken his own advice and put his feet up, says Andrew Hill.

Mahabis slippers.
The company Mahabis, which has been selling indoor slippers, has gone into administration. (Photo: Facebook/Mahabis)

LONDON: Among many marketing gambits, Mahabis, once-ubiquitous purveyor of upmarket slippers, linked up with publisher Penguin last year to pair its comfy footwear with a randomly selected Modern Classic paperback.

Someone may, therefore, have received for Christmas some pricey new slip-ons and Samuel Beckett’s grim tale The End. Unlike the drawn-out fate of Beckett’s narrator, though, Mahabis’ nemesis came suddenly.

In end-December, it was pumping out a self-serving survey “revealing” that people find it hard to relax. As late as Dec 27, its chirpy Twitter account was promising a disappointed customer it would restock its £69 (US$88) a-pair “classic” slippers in the next two or three weeks. Later the same day, the company went into administration.

IT'S NOT OVER YET

It is not over yet for Mahabis. But if no realistic buyers emerge by early next week, 15 members of staff may become unwilling pioneers of the group’s “movement” to encourage more people to take downtime.

Mahabis’ woes have triggered a substantial amount of what you could call Slipper-freude: The hand-rubbing glee of people who, over the four years since its launch, have found it hard to escape the avalanche of online ads its founder Ankur Shah unleashed.

His campaign to “reinvent” indoor footwear and make sure everybody knew about it seemed to be working. The direct-to-consumer pitch drew media interest, including from this newspaper, and the company had sold nearly a million pairs of high-priced slippers. 

In October, Mr Shah told The Times he planned to expand into luggage and watches, to create “the Nike of downtime”.

WHAT HAPPENED?

What went wrong? Mr Shah has gone uncharacteristically quiet. The private company’s financial statements are scant. 

But what looked like a success story is turning into a cautionary tale for entrepreneurs — particularly those stirring a potent mix of social media marketing and direct sales.

READ: If Facebook is so smart, why does it keep selling me slippers? A commentary

Entrepreneurship professor Colin Mason, of Glasgow university’s Adam Smith Business School, bought a pair of Mahabis for his wife for Christmas. (She loves them — luckily, since customers returning merchandise are at the end of a long queue of unsecured creditors.)

He speculates that Mahabis may have become too dependent on data analysis, losing touch with users. Part of Mr Shah’s creation myth was how he more or less googled the opportunity, discovering that far more people were searching online for slippers than for flip-flops, a market already well-served by high-end brands.

TOO COMFORTABLE?

Another possibility is that Mahabis became too comfortable. The founder reinvested the cash he raised from selling an earlier venture. 

But over-funding any small business can lead to inefficiency and blunt the incentive to improve. Anecdotal evidence suggests Mahabis also had a generous returns policy: Good for customer relations, but costly if applied too liberally.

READ: Lessons from the fall of once-mighty bike-sharing giants, a commentary

The sheer speed of Mahabis’ expansion created a further risk. Slippers are not a complex product, but producing and distributing a million pairs worldwide would strain any supply chain.

Prof Mason points out that “the financials of fast-growing companies look almost the same as the financials of failed companies”. Companies that scale up quickly are always vulnerable. Other direct-to-consumer companies, such as Dollar Shave Club (now owned by Unilever), started with a more sustainable subscription model.

With hindsight, Mr Shah’s breezy promise of diversification now looks like a portent. In their 2014 book Scaling Up Excellence, Bob Sutton and Huggy Rao suggest you sometimes have “to force yourself to pause rather than plough ahead”.

Mr Shah should perhaps have taken his own advice and put his feet up, taking time to shore up his early success. The market he identified does exist. A straw poll of colleagues revealed a strong core of satisfied, even enthusiastic, slipper-clad customers among the sceptics.

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NO REINVENTION NEEDED

That said, some products simply do not need reinventing. Mahabis was already phasing out the innovative detachable soles it offered on its early styles for a model that looks more like, well, an old-fashioned slipper.

The greatest problem, though, looks to have been the most obvious one. Maintaining Mahabis’ online presence had become increasingly burdensome. Oddly, it may also be one of its best hopes of survival. Gareth Roberts, of KRE Corporate Recovery, Mahabis’ administrator, says he is “deluged” with inquiries from people who know the brand. “It’s as big a reaction as I’ve come across in all my years of doing administrations,” he told me.

The Mahabis team may yet get a chance to kick off their posh slippers and act on the maxim coined by Samuel Beckett in another story: “Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”

© 2019 The Financial Times Ltd.

Source: Financial Times/sl

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