Shoes of Prey raised $29.5M on custom shoes — mass-market buyers just wanted trends

Shoes of Prey, launched in 2009 by former husband and wife Michael and Jodie Fox with Mike Knapp, let shoppers design their own shoes online and have them made in weeks. It became one of Australia's highest-profile start-ups, raising $US29.5 million (about $41.7 million) from Blue Sky Alternative Investments, US fund Greycroft Partners, Blackbird Ventures, Khosla Ventures, Atlassian co-founder Mike Cannon-Brookes — and Nordstrom, which opened Shoes of Prey design centres inside its stores.

The bet failed on the mass market. Co-founder Michael Fox)s farewell post explained: mass-market customers follow celebrities and influencers and want to wear the same styles — 'they don't want to invest time in creating a product themselves), and choice triggers decision paralysis that lowers conversion. A pivot to 'Cinderella) customers needing sizes outside standard ranges, plus short-run contract manufacturing for other brands, could not save it.

The company paused its website in August 2018 and entered liquidation on 11 March 2019, with FTI Consulting appointed. At its peak it employed about 60 people; all jobs ended at the pause. Creditors were owed about $30,000 — mostly customers holding gift cards — while investors, whose stakes are not creditor claims, were told not to expect recovery: Blackbird put its eventual loss at under 1 per cent of fund value.

$US29.5 million raised in total went to zero for investors including Blue Sky, Greycroft, Blackbird, Khosla Ventures, Mike Cannon-Brookes and Nordstrom

The core product asked mass-market customers to do design work that trends-driven shoppers never wanted to do.

Choice paralysis cut conversion exactly where the model needed volume to justify made-to-order manufacturing.

Pivots — non-standard sizes, contract manufacturing — chased smaller revenue pools instead of fixing the core funnel.

Nordstrom)s in-store design centres tied the brand to physical retail costs just as funding tightened.

Customisation is a niche promise: mass-market buyers want the style they saw on Instagram, and every extra decision you ask them to make lowers conversion.

Liquidators Kelly Trenfield and John Park of FTI Consulting said the company)s main remaining assets were intellectual property such as customer lists; a well-placed source said Blue Sky)s investors were unlikely to recover any capital, while Blackbird staged its capital prudently enough to limit the loss.