How I Did It: Margot Fraser

Margot Fraser, the founder of Birkenstock, USA, recalls 40 years of peace, love, and clunky sandals

From: Inc. Magazine, June 2009 | By: Margot Fraser, as told to Leigh Buchanan

The origins of Birkenstocks can be traced to 18th-century Germany. In 1966, Margot Fraser tried on a pair of the sandals while visiting a Bavarian spa; their contoured foot bed relieved the pain in her toes. She would spend four decades as sole U.S. distributor for Birkenstocks. Today, Birkenstock USA, a $50 million company based in Novato, California, sells through large retailers and some of the same health-food stores that were the sandals' early champions. Fraser, 80, looks back on her long career of snatching victory from the agony of the feet.

I was an only child in Berlin during the Hitler years. My father was a broker for agricultural commodities. My parents opposed the regime and taught me it was dangerous to tell people what you truly believe. That knowledge was a large burden to place on a small child.

When I was 14, I went to a school that taught dressmaking. But my father saw the end coming. He managed to get us out of Berlin six months before the war was over. He got a job in a village near Bremen. We had two rooms in a farmer's house. I made dresses for the farmers' wives and daughters in exchange for eggs and butter.

After the liberation, I studied dress design at art school. I had heard it was next to impossible to go to America, but Canada was still accepting immigrants with jobs lined up. In the waiting room at the Canadian consulate, I read in a newspaper that the president of the German Club in Toronto was a ladies' tailor. I wrote to him and said, "Maybe you could help me find a job." Lo and behold, he wrote back, saying, "I can promise you work for about four months."

In Canada, I gave up on custom clothing when I realized you could get a nice dress at a store for $50. Instead, I applied for a designer's job at a clothing manufacturer. They gave me a sketch and said, "Can you make a pattern for this?" I did, and they hired me.

My first husband was an importer. We moved to the San Francisco area. We were interested in natural health, and in 1966 we went on a tour of German health spas and manufacturers of supplements and vitamins. At one of the spas, I first saw the Birkenstock sandal. During the war, we didn't have good shoes, and so I had foot problems. The yoga teacher at this spa showed me her shoes. She said, "This is what you should have. It's made of cork. It's flexible. You exercise your foot while you walk." Two months later, I said to my husband, "Look. My toes have straightened out." He said, "Yes, they really have. Maybe these are an item we should sell."

We wrote to the manufacturer of Birkenstocks in Germany and asked if we could distribute the shoes. He wrote back and said, "We'll give you a try." It was clear that the shoes would be my project. I went to the little shoe store in town -- just walked in off the street -- and showed the guy the sandals. He said, "Oh, no. No one would ever buy anything like that." My husband knew a store in Berkeley where the owner was European. This man was very polite. He spent an hour and a half explaining why no one would ever buy anything like that.

A friend suggested we exhibit at a convention of health-food stores. On the first day, a woman named June Embury walked up in her nylons, carrying her shoes. She bought a pair of sandals against the objections of her husband. On the last day of the fair, she came back and said, "I think you really have something here. I will buy three more pairs, all in my size. If I can't sell them, I will keep them." After the fair, 20 to 30 health-food stores were selling Birkenstocks.

In 1969, my marriage was falling apart. I left my husband and the business and supported myself making dresses. Then, my husband left the country. A manager stayed behind to liquidate the business. About a year later, several health-food-store owners called me and said, "These sandals are beginning to sell now, and we can't get any. Why don't you take it on?"

I didn't have any money. I couldn't even get a Chevron card. So June and Howard Embury became my partners. They were able to get a $6,000 line of credit, because they had their own health-food store in San Rafael, California. We established Birkenstock USA above the store.

That first year, we took in $125,000 and sold 10,000 pairs. People had started to find out about Birkenstocks, and the new generation adopted them as an emblem. In 1973, shoe store owners came to us and said, "I see people walking out of health-food stores with shoeboxes under their arms. Maybe I should try this." Inexperienced young people opened their own little retail outlets. We had over 200 Birkenstock stores around the country. The owners were zealots, and they helped us spread the word.

The relationship to the German manufacturer holds this company together. I always considered myself the buyer for my customers here in the United States. But the Germans thought of me as the salesperson for the stuff they made. We had different ideas about styles. For the first 10 years, I had trouble getting them to put color into the product. At one time, purple suede was big here. But in Germany, they didn't want to make purple suede. Mr. Birkenstock would say, "I really don't understand the American market. But" -- and then he would lean forward and point at me -- "it can't be that different than it is in Germany." A woman I knew on the factory floor made sure I got the purple sandals.

We had a 30-day payment clause instead of 60 days, like most shoe companies. And we gave a 5 percent discount if you paid immediately. People said, "That's way too high a percentage." But the 5 percent was calculated into the price, so those who took more than 10 days paid a premium.

From the late '70s to the early '80s, we were doubling sales every year. But after Ronald Reagan, there was this dress-for-success idea. People thought, This will be the end of Birkenstock. We had a year or two of no growth. But Birkenstock turned out not to be a fad.

We had a very generous pension plan. One year I couldn't fund it, so I gave shares instead. By the mid-'90s, employees owned 10 percent of the business. Later, I sold another 30 percent to them. Then, in 2002, I sold the entire business to the employees and retired as CEO but stayed on as chairman. In 2007, the Germans bought Birkenstock USA from the employees' trust.

One thing I learned during the war years is not to put too much emphasis on ownership. What you own could be gone tomorrow, and you are left with that terrible feeling of loss.

I walk a great deal, and I still wear Birkenstocks. For someone my age, my feet are fine.