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Doug Barry is a Senior International Trade Specialist in the Trade Information Center, U.S. Commercial Service within the International Trade Administration.
Shane Cooper is president of DeFeet International, a maker of cycling and other socks in Charlotte, North Carolina. He’s a client of the Charlotte Export Assistance Center. Over the years and despite substantial adversity, he has built the business that now includes distributors in 35 countries. I chatted with him during his trip to Washington to receive the Presidential “E” Award for excellence in exporting.
Barry: Tell us what you make and how DeFeet started. Where did you get the idea?
Gerd Klose, Managing Director of DeFeet’s distributor in Germany Lynn Moretz, VP International Sales and Shane Cooper, founder of DeFeet display their products during the Eurobike show in Friedrichshafen, Germany. (Photo DeFeet)
Cooper: My wife and I were bike racers back in the early ’90s. And in the summertime, she was supplementing her income by racing bikes as an amateur and I was spending her supplemental income as an amateur on my bike racing. And my father was a sock knitting machine technician and sold the parts. And so I grew up in the sock industry. And I was a cyclist. One day, I decided to make socks to pay for my racing. It just kind of happened from there. We made the world’s best sock for cycling and that was 20 years ago.
Barry: Is that a pair of your socks on your feet?
Cooper: Absolutely. This is the Peloton, made of merino wool. And if you notice, there’s a group of cyclists. And the yellow jersey’s right there. And “peloton” is a group of cyclists.
Barry: Tell us your biggest challenge in going international. You had this great background and created the product. But very few U.S. businesses go outside the country looking for customers.
Cooper: It happened by chance. We created product that world-class cyclists were taking over to Europe. And we had this product on their feet. So there was a desire from the customer before we had international distribution. And so our brand grew from there. Cycling in Europe is tremendous in size, similar to American baseball and football. I was struggling myself, not being a true businessman. And I met this wonderful man, Lynn Moretz, who came into our company and became my mentor and helped us capitalize on this desire that we had created as a brand into a real business. And so Lynn was able to take it into these countries and give structure behind the madness that I had created.
Barry: Your product was transported by your U.S. customers and introduced to potential international buyers to where it really became a process and a strategy.
Copper: Yeah, process and strategy, pricing structures, the advent of the Internet and what was going to play there and how it was going to actually work and these international customers over the course of the last 20 years were coming to our website, finding the product and going, “where can I get it”? They would see it on the best riders in the world. And they’re asking where they could get it. I was too busy paying attention to R&D and the product to really focus on that. And then Lynn came in and provided that structure to actually make it happen.
Barry: What in your mind was the biggest challenge that you overcame and that your collaborator overcame in that area?
Cooper: Well, unfortunately the year that my collaborator, Lynn Moretz, came to DeFeet, we burned down. We lost everything we had – 2001, October, right after 9/11. And so we had nine months of no production.
Barry: That would be a crushing thing to happen for most people. How did you manage to rise from the ashes, as it were?
Cooper: I would like to say that I cut my hair off and used that to rebuild the building. But I think the hair came off in the process somewhere. We had insurance that covered the building, the equipment and the contents. And then we had insurance for business loss, income loss, which turned into a court battle for three years.
Barry: What happened next?
Cooper: And so when we finally got the check, we had to pay taxes out of that money because it’s business income. So for seven years – the first nine years of our business, we were profitable every year and growing organically. The banks loved us – or the banks hated us because we actually paid the loans off too early. We had seven years where we made no money after the fire. We became profitable again and started winning the business back. OK, keep this in mind. It’s 2008. We’re profitable that year just in time for the worst economic downturn in world history that we know about, other than the Depression. And the fortunate thing is that these bicycles were being pulled out of the garage and people were putting tires on it and commuting. And it made the bicycle shops flush with cash. The dollar was going crazy with the euro. So all of a sudden, after seven years of struggling, we made it through. And now, we’re four years in with profits again.
Barry: Did international expansion save you?
Cooper: If we didn’t have our international business, gosh, I don’t think we would have made it.
Barry: So you and your wife are pretty persistent. Do you think that persistence is a useful skill to have in the international marketplace?
Cooper: I think persistence is something that you have to have to be in business in any country. In my opinion, it may come from the bike racing that we did that hardened us and toughened us up. And we’re not quitters. We could have shut our plant down and moved it to Asia and had socks made over there. But we decided to stay put. We never missed a pay period with our employees. And we buy local yarn and boxes. So even though we’re only 38 employees now, the benefit is pretty widespread when we buy locally.
Barry: Why not outsource to China? Wouldn’t it be cheaper in the long run?
Cooper: Cheaper – that’s a good word. I prefer the word value. And what we prefer to use that word value is for long-lasting goodness, affordable price and a sock that’s going to last 10 years. I don’t like the homogenization of other sock brands making their product in the same plant that I’m making mine in and all of a sudden my trade secrets are gone. I don’t like the environmental issue. I don’t like the lead in the toys, the drywall issues with radioactive materials and the lunch boxes with the toxic waste in them. You hit a nerve there. And so American-made to me is control. It’s American jobs. It’s quality, and mostly it’s value.
Barry: And when did the U.S. Department of Commerce and the U.S. Commercial Service in particular come into the story?
Cooper: Anytime we have a question about a tariff, or when we’re dealing with Australia and we’re not sure what to do, or a new free trade (agreement), or some new idea comes up, we call the (Export Assistance Center) office in Charlotte. Then there are international textile agreements and an understanding of how the sock is structured with what material and where the fibers come from and what category it fits in. You guys have been a great help there. You’ve got to remember, I was a dumb bike racer, a bad one at that. I wasn’t a businessman.
Barry: Have you learned things from your customers in Europe that you’ve been able to apply to your products that have helped you sell other places?
Cooper: We get input from the word’s best riders. Paolo Bettini, the Italian national champion, Olympic champion – sat down with me and we had a translator on what he needed in a sock. We then listened to him and made that sock available to the public. So we used the world’s best cyclists to develop the sock, like astronauts, and then we took it to their fan base.
Barry: Is it a trade secret or can you tell us what he told you?
Cooper: That is a trade secret.
Barry: Can you share some advice with us for other companies that are thinking about exporting?
Cooper: My advice is figure out what your strengths are. Use every available government agency’s help as well to really make your life a lot easier. If you don’t have the skills or time to so the international, hire someone who can do it.
