Case spotlight: Stepping Out of Lockdown: Launching a Footwear Brand During a Pandemic

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This case was featured in the December 2023 issue of Connect.

Who – the protagonist

Brazilians Marina and Ricardo Larroudé.

What?

The New York-based husband and wife duo created the Larroudé shoe brand during the COVID-19 pandemic in early 2020 after they were laid off by their employers. Marina was a General Manager for a Brazilian shoe brand and Ricardo held the same role in a senior care services firm.

Marina felt that there was an aspirational gap between good-quality and haute-couture/designer shoes and that people were willing to buy high-end footwear but with a ‘fashion week’ touch.

They knew they couldn’t compete with brands such as Zara, whose low margins depended on large-scale production and sales. They decided to aim at a price point of roughly US$300 a pair.

Larroudé shoes
Source: www.larroude.com

Why?

The business made a positive start in December 2020, as 200 pairs were sold via its website and another 300 pairs to fashion retailers including Revolve and Shopbop.

However, January 2021 sales slipped, with February falling even further, down more than two thirds from December’s level.

Marina was convinced that her contacts in the fashion industry would be helpful and effective in promoting the brand, thus improving sales quickly. But Ricardo remained sceptical about the speed of their growth. He was also concerned with the upfront costs of manufacturing and storage, and the risk of another February flop.

When?

Marina and Ricardo needed to decide on their future plans in early March 2021.

Where?

The shoes were manufactured in a factory near Sapiranga in Brazil’s southernmost state, Rio Grande do Sul, with this particular area known for its large shoe-manufacturing industry.

The boxes of shoes were then distributed throughout the US from a warehouse Marina and Ricardo found on Long Island.

Key quote

“Everyone deserves one nice item that doesn’t break the bank. We can provide high-quality handmade shoes at intermediate prices – much lower than Jimmy Choos or Manolo Blahniks at $800 a pair, but higher than Steve Maddens or Cole Haans.”
Marina Larroudé, Co-founder and CCO

What next?

Marina was staring glumly at all the crossings out on the proposed boots order for the autumn collection. Ricardo wanted to cut her suggestions by nearly half.

Marina wondered if he was right to be cautious. Had their initial reception been a fad? Was this opportunity as attractive as they had assumed a few shorts months prior? Should she push back or accept her husband’s cuts?

AUTHOR PERSPECTIVE 

On the reasons for writing the case…

Claudia said: “When Elisa flaunted her boots one day in early 2021 at FGV, she mentioned that they were from Larroudé, a company which her brother and sister-in-law had just launched in New York City. A Brazilian couple starting a footwear venture at the peak of the COVID-19 pandemic gave me the idea of writing a case and I asked Elisa if she thought the founders would be willing to share their story. Knowing John’s expertise in case writing and his focus on entrepreneurship made the next step to invite him to join the team very straightforward.

John said: “I had been looking to develop a new short caselet with which to teach my seven domains framework for assessing entrepreneurial opportunities. The Larroudé story seemed like it would not only fit the bill, but be especially provocative, given the COVID-19 timing.”

On the case writing challenges…

Elisa explained: “The challenges were mostly geographical, with John in London, Claudia and I in São Paulo, and the company in New York. Actually, though, those challenges were minimal thanks to Zoom. The highlight was the complete and total candour and openness we received from Marina and Ricardo. They told us everything we wanted to know, as well as some additional details we might not have known to ask for.”

Marina Larroudé.
Larroudé co-founder, Marina Larroudé. Source: www.larroude.com

On teaching the case…

John said: “The case ‘sings and dances’ every time we teach it. I recently taught the case to a group of entrepreneurs in Puerto Rico. The next day, one of the participants brought to class a pair of Larroudé shoes that she’d bought from a store in Italy several months earlier. Her unveiling of the beautiful and thoughtful packaging (inside a beautiful box, each shoe came in a protective cloth bag so it would not get scratched!) added another dimension to the already compelling story.”

On how students react to the case…

Claudia, Elisa and John explained: “As is the norm for any decision-focussed case, students are split over the question of whether or not the venture is likely to be successful, and they disagree about what to do about the order for the new assortment for autumn 2022 that Ricardo wanted to cut sharply. That makes for a vigorous and engaging discussion. They all agree, however, that the four-person founding team is extremely well-suited to launch this particular venture. They learn that the team matters.

“Students find the case to be a real eye-opener. They are intrigued by the inventive manner with which Ricardo secured the money necessary to fund the company’s astonishing growth: winning wholesale clients that pay in advance, thereby financing not only their own orders but the direct-to-consumer (DTC) business, too. A big surprise is also revealed in the PowerPoint epilogue which is always exciting.”

On case writing tips…

The team commented: “Writing a good case always begins with sourcing great case material in which there’s a clear decision to be made, for which there’s evidence to consider, and about which the answer is debatable. It should also provide an opportunity to teach a useful tool or framework (the ‘theory’) and apply it to a real-world setting.

“A good case should have colourful characters, in this case a woman having relevant experience and connections in the New York fashion industry and her husband and his career experience in the private equity world. And, importantly, in writing entrepreneurship cases, where the going gets difficult, reflect how challenging the entrepreneurial journey invariably is. We don’t need entrepreneurship cases that falsely portray a company’s glide path that heads straight for the moon!

“With those ingredients in place, the rest is easy. Give your readers a rich narrative that makes them curious, centred on a dilemma or issue without a ‘correct’ answer, thereby provoking an engaging classroom discussion. Also, gather an abundance of contextual information and facts for your case, then be frugal when deciding what to include.”

Final word…

The trio concluded: “Working in a harmonious team is very important, and that's just what we had here: the process of writing, editing, discussing, applying, and revising our case went very smoothly. If, at some point, Larroudé raises a material round of equity from investors, we hope to write a B case that we can use to teach valuation in entrepreneurial settings. Stay tuned!”

THE CASE 

The case

Who – the protagonist

Brazilians Marina and Ricardo Larroudé.

What?

The New York-based husband and wife duo created the Larroudé shoe brand during the COVID-19 pandemic in early 2020 after they were laid off by their employers. Marina was a General Manager for a Brazilian shoe brand and Ricardo held the same role in a senior care services firm.

Marina felt that there was an aspirational gap between good-quality and haute-couture/designer shoes and that people were willing to buy high-end footwear but with a ‘fashion week’ touch.

They knew they couldn’t compete with brands such as Zara, whose low margins depended on large-scale production and sales. They decided to aim at a price point of roughly US$300 a pair.

Larroudé shoes
Source: www.larroude.com

Why?

The business made a positive start in December 2020, as 200 pairs were sold via its website and another 300 pairs to fashion retailers including Revolve and Shopbop.

However, January 2021 sales slipped, with February falling even further, down more than two thirds from December’s level.

Marina was convinced that her contacts in the fashion industry would be helpful and effective in promoting the brand, thus improving sales quickly. But Ricardo remained sceptical about the speed of their growth. He was also concerned with the upfront costs of manufacturing and storage, and the risk of another February flop.

When?

Marina and Ricardo needed to decide on their future plans in early March 2021.

Where?

The shoes were manufactured in a factory near Sapiranga in Brazil’s southernmost state, Rio Grande do Sul, with this particular area known for its large shoe-manufacturing industry.

The boxes of shoes were then distributed throughout the US from a warehouse Marina and Ricardo found on Long Island.

Key quote

“Everyone deserves one nice item that doesn’t break the bank. We can provide high-quality handmade shoes at intermediate prices – much lower than Jimmy Choos or Manolo Blahniks at $800 a pair, but higher than Steve Maddens or Cole Haans.”
Marina Larroudé, Co-founder and CCO

What next?

Marina was staring glumly at all the crossings out on the proposed boots order for the autumn collection. Ricardo wanted to cut her suggestions by nearly half.

Marina wondered if he was right to be cautious. Had their initial reception been a fad? Was this opportunity as attractive as they had assumed a few shorts months prior? Should she push back or accept her husband’s cuts?

AUTHOR PERSPECTIVE 

Author perspective

On the reasons for writing the case…

Claudia said: “When Elisa flaunted her boots one day in early 2021 at FGV, she mentioned that they were from Larroudé, a company which her brother and sister-in-law had just launched in New York City. A Brazilian couple starting a footwear venture at the peak of the COVID-19 pandemic gave me the idea of writing a case and I asked Elisa if she thought the founders would be willing to share their story. Knowing John’s expertise in case writing and his focus on entrepreneurship made the next step to invite him to join the team very straightforward.

John said: “I had been looking to develop a new short caselet with which to teach my seven domains framework for assessing entrepreneurial opportunities. The Larroudé story seemed like it would not only fit the bill, but be especially provocative, given the COVID-19 timing.”

On the case writing challenges…

Elisa explained: “The challenges were mostly geographical, with John in London, Claudia and I in São Paulo, and the company in New York. Actually, though, those challenges were minimal thanks to Zoom. The highlight was the complete and total candour and openness we received from Marina and Ricardo. They told us everything we wanted to know, as well as some additional details we might not have known to ask for.”

Marina Larroudé.
Larroudé co-founder, Marina Larroudé. Source: www.larroude.com

On teaching the case…

John said: “The case ‘sings and dances’ every time we teach it. I recently taught the case to a group of entrepreneurs in Puerto Rico. The next day, one of the participants brought to class a pair of Larroudé shoes that she’d bought from a store in Italy several months earlier. Her unveiling of the beautiful and thoughtful packaging (inside a beautiful box, each shoe came in a protective cloth bag so it would not get scratched!) added another dimension to the already compelling story.”

On how students react to the case…

Claudia, Elisa and John explained: “As is the norm for any decision-focussed case, students are split over the question of whether or not the venture is likely to be successful, and they disagree about what to do about the order for the new assortment for autumn 2022 that Ricardo wanted to cut sharply. That makes for a vigorous and engaging discussion. They all agree, however, that the four-person founding team is extremely well-suited to launch this particular venture. They learn that the team matters.

“Students find the case to be a real eye-opener. They are intrigued by the inventive manner with which Ricardo secured the money necessary to fund the company’s astonishing growth: winning wholesale clients that pay in advance, thereby financing not only their own orders but the direct-to-consumer (DTC) business, too. A big surprise is also revealed in the PowerPoint epilogue which is always exciting.”

On case writing tips…

The team commented: “Writing a good case always begins with sourcing great case material in which there’s a clear decision to be made, for which there’s evidence to consider, and about which the answer is debatable. It should also provide an opportunity to teach a useful tool or framework (the ‘theory’) and apply it to a real-world setting.

“A good case should have colourful characters, in this case a woman having relevant experience and connections in the New York fashion industry and her husband and his career experience in the private equity world. And, importantly, in writing entrepreneurship cases, where the going gets difficult, reflect how challenging the entrepreneurial journey invariably is. We don’t need entrepreneurship cases that falsely portray a company’s glide path that heads straight for the moon!

“With those ingredients in place, the rest is easy. Give your readers a rich narrative that makes them curious, centred on a dilemma or issue without a ‘correct’ answer, thereby provoking an engaging classroom discussion. Also, gather an abundance of contextual information and facts for your case, then be frugal when deciding what to include.”

Final word…

The trio concluded: “Working in a harmonious team is very important, and that's just what we had here: the process of writing, editing, discussing, applying, and revising our case went very smoothly. If, at some point, Larroudé raises a material round of equity from investors, we hope to write a B case that we can use to teach valuation in entrepreneurial settings. Stay tuned!”

THE CASE 

The authors

John Mullins
Associate Professor of Management Practice in Marketing and Entrepreneurship

The protagonists

Read the case

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INSTRUCTOR PRESENTATION MATERIAL - Reference no. 823-0078-8B
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