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Big venture built on a little shoe accessory

After Sheri Schmelzer and her three daughters went looking for something to do on a slow summer day, her husband, Rich, saw a business opportunity. Jibbitz has since taken off.
/ Source: CNBC

Three years ago, on a summer afternoon in Boulder, Colo., Sheri Schmelzer was just trying to keep her three kids entertained.

They were sitting at the kitchen table, looking for something to do. At the time, Crocs, a brand of lightweight plastic shoes, was the latest fashion craze sweeping her kids' age group. Schmelzer’s daughter Lexi had a sewing kit that included a collection of silk flowers. 

“And I just picked up one of the Croc shoes and I started sticking these silk flowers in it,” said Schmelzer.  “And (Lexi) just was saying, "Mommy, I love that.’ And then Jules started — and even Riley, who was 3 at the time, my son.  And here we were, just sticking all this stuff in the holes of the Croc shoes."

By the time her husband, Rich, got home from work Sheri and the three girls had accessorized their footwear.

“You could just see this little light bulb go off over his head,” she said. “He's like, 'Wow.'"

“The light bulb for me was, ‘Geez, everybody that's got a pair of Crocs, 13 holes per shoe…’ I think that there might be something there,” said Rich Schmelzer.

So Rich filed for a patent, calling the invention Jibbitz — a variation of his wife's nickname, Flibbity-Jibbets. The couple sent their pint-sized sales team to tout their new creation at school.

They came home the first day with orders, saidRich.

A month later, the Schmelzers brought Jibbitz to the masses. And the masses came.

“We launched the Web site Aug. 9, our wedding anniversary, for sentimental reasons," said Sheri.  “And I think, like two days later, we were featured on a local news station, as a cool new product. And after that, the orders started flying in. I woke up the next morning and there were like, you know, 100, 200 orders — I can't remember.  And I was freaking out.”

The Schmelzers knew they were on to something, but they had a moment of pause before they jumped in with both feet.

“He and I went and sat in the gazebo, and we seriously had this talk,” said Sheri. “It's like, 'Are we going to do this?  Are we going to commit ourselves to this, financially, with three kids and college funds?'"

The answer they came up with, she said, “was 100 percent yes.”

Then came an amazing stroke of luck, when a neighbor saw Lexi at the local pool, decked out in dressed-up Crocs.

“She was just walking by,” said Sheri. “And somebody walked up to her and said, ‘What do you have in your Crocs?’  And she said, ‘They're Jibbitz, and my mom makes them.’" 

That somebody turned out to be none other than the founder of Crocs shoes — Duke Hansen.

“So, he handed Lexi his business card and said, ‘Why don't you have your mom call me?’" said Sheri. “And so she came home from the pool with this business card.  It was very shocking.”

“And we called,” said Rich.

Eighteen months after the first hole was filled, Crocs acquired Jibbitz.  Rich stayed on as CEO and Sheri as chief design officer. The Schmelzers were paid $10 million up front and $10 million more when they hit their sales goals. 

The college funds are now paid off,” said Rich. “You know, we started this with the intent of paying them off. So they're now paid off. And then a little, maybe, for the weddings.”

Priced at $3 and under, Sheri's original designs remain the top sellers. Jibbitz now has licensing agreements with Disney Marvel Comics and Major League Baseball.

“I like the Disney ones,” said Julian Schmelzer.

“Me too,” said Riley Schmelzer. “I like the 'High School Musical.' And Harry Potter.”

The product, born only to amuse Sheri Schmlezer's kids, is about to celebrate a huge milestone. After less than three years in business, Rich and Sheri are about to sell their one hundred millionth Jibbitz.

“Last year, I wore Jibbitz so much and gave them to all my friends so much that they were banned for a little bit,” said Lexi.  “Everybody wore them so much and were fiddling so much that they were banned. It was very disappointing.”

Through it all, said Sheri, “never once was it not fun."

“Even if I was up at 2:00 or 3:00 in the morning, I was so excited about it,” she said. “So passionate about what we were doing. I think it worked out well.”