In 1998, 14 years before he cashed out his millions and disappeared, Roger Adams escaped to the ocean.
He hated his job as a clinical psychologist. His 21-year marriage was coming to an end. And the only place he could find happiness was on vacation in Huntington Beach, California, where he could drift into reverie and dream of happier times.
Adams’ parents owned a skating rink, and he’d been skating since he was a baby. That’s no exaggeration: At 9 months old, Adams landed in the Guinness Book of World Records as the youngest person to roller skate. In Huntington Beach, he sat and watched kids fly by on rollerblades, the latest evolution of the wheels he grew up with. Suddenly, a lightbulb went off. “I had the idea of a shoe that could roll on command by just shifting your body weight,” Adams explained in an interview with MSNBC in 2004. “It was like a flash; the hair stood up on the back of my neck.”
Immediately, Adams grabbed an old pair of Nikes, cut a hole in the heel using a hot butter knife, and inserted a rod and skateboard wheel bearing. It was a rough prototype, but with the help of some kids in the neighborhood and an angel investment from his cousin, Adams tinkered and tested his way to a prototype he could pitch to existing footwear companies.
Unfortunately no one would bite. Not even Skechers. So Adams decided to do it himself.
Just two years after his eureka moment, Adams had a $2.4 million investment from a venture capital group called Capital Southwest, and a company called Heeling Sports Limited. There was just one problem: As a clinical psychologist, Adams had no experience running a company, let alone operating in the footwear or skating industries. If Capital Southwest wanted to get the shoe-skate hybrids manufactured, marketed and shipped to stores across the country soon, they’d need someone who knew both the shoe and skate industries inside and out.
“It was around May 2000 that Pat Hambrin of Capital Southwest flew out and met me in Boston,” Mike Staffaroni recalls. “I’d just left Rollerblade after five years there, starting in research and development and ending up as global brand manager. Before that, I worked at Keds and Converse, so I had experience in both footwear and skate industries, because that’s what Heelys was.”
Staffaroni would eventually be brought on as CEO, but it would take some negotiating for the two parties to agree to terms. “At that point, the company had money, which — don’t get me wrong — is very useful,” Staffaroni tells me. “They had a functional prototype, but it lacked any finesse. It was lopsided, heavy and clunky looking. And they had come up with the name Heelys and a logo which everyone seemed to like.” Still, the future CEO couldn’t bring himself to buy in.
“They wanted me to work for Roger as the COO, but Roger was too emotional, and he didn’t understand the business,” Stafarroni says. “This was an unknown, untested and somewhat unusual product, but they had really, really lofty expectations for how popular Heelys would be.”
Stafarroni knew what it took to launch a new brand within a company: a two- to three-year ramp-up, selling 30,000, then 200,000, then 500,000 pairs, he says. But Adams expected Heelys to take off a lot faster. “Their initial projections were doing 70 million sales in the first year,” Staffaroni laughs. “I tried to pull them back to Earth with a dose of reality and gave them my own projection. In 2001, we might do 8 or 9 million sales.”
Still, something about the product kept him around. “I worked in product dev for Rollerblade, where I saw a lot of ideas come through related to wheels under foot, so I was coming into it thinking I’d seen everything,” he says. “It just seems counterintuitive to be able to skate on a single wheel. But this thing worked.”
Starting in July 2000, Staffaroni agreed to consult for Heelys for six months as they prepared for a launch. And what better place to unveil a new piece of wheeled footwear than the bi-annual Action Sports Retailer Trade Show in San Diego? “That was the show at the time for anything board sports and athletic footwear,” Staffaroni tells me. “And the skateboard market was really emerging at the time, so it was a hot show, well attended, lots of great ideas about anything related to skate or surf, anything with wheels.”
‘I Realized This Thing Had Legs’
Sitting at a booth made from card tables and a couple signs, Staffaroni and sales rep Gary Golden armed themselves with printed out Excel sheets and credit forms, anything to make it “at least look like we were in business and ready to go.” They hoped by the end of the convention they’d leave with a few sales scribbled down.
But when the pair enlisted a couple skaters to demonstrate the Heelys prototypes, the entire convention took notice. Similar to Staffaroni himself, actually seeing Heelys in motion got people to buy in. “It has a stealth nature to it that grabs people’s attention: It looks like a normal shoe, but you can lift your toe and roll. So there was the wow factor that comes with it.”
After the demo, the Heelys booth was flooded with orders, which was encouraging — especially because they had time to work out the kinks in the prototype. “We were planning a spring 2001 launch, which is typical for [the September] show. And given the response, we took the forecast up to 12 million sales.”
Capital Southwest, however, had other plans. With Christmas right around the corner, they figured it’d be a lost opportunity to not have Heelys in stores for the holiday rush. In order to do so, Heelys would have to rush the manufacturing and ship as many pairs of shoes as they could while still being cost-effective, then find retailers that’d actually buy in. “Gary was working Journeys, the mall-based retailers. Luckily, they agreed to give us a test and sell Heelys at about 20 of their stores,” Staffaroni says. “We sent them off and held our breath.”
Once the holiday was over, Staffaroni got a call from Journeys CMO Pete Hick, asking how many pairs of Heelys they had left in the warehouse. “I say, ‘Oh, I don’t know, maybe a few thousand pairs,’ and he says, ‘We’ll take them.’ That was a good sign.”
Staffaroni was finally in. “I realized the thing had some legs, and the response from the consumer and retailers were good. So Heelys came back to me with the salary I originally asked for, equity in the company and that I’d be CEO. They said, ‘Roger will report to you, but you have to come to Texas,’” he says. “So that was the deal, and I took it.”
Despite launching early with limited advertising and inventory, Heelys sales tripled every month following that Christmas as hype around the wheeled shoes exploded. That same month, Wired deemed Heelys the “next step in personal mobility,” that would allow “teens, urban commuters and warehouse fulfillment monkeys to transition instantly from ordinary walking to a speedy, long-stepping roll.”
Staffaroni saw the natural interest in Heelys and used it to his advantage. By relying heavily on word-of-mouth and guerilla marketing, he was able to mold Heelys into an exclusive item. “We did a lot of guerilla marketing by sending skaters out to stores, skate parks and busy areas to skate around and try to attract the attention of passersby,” he explains. Staffaroni also enlisted the guerilla marketers to go online and post on skate-oriented forums and chat rooms about Heelys.
Kids seeing other kids suddenly get up and wheel away at the mall, or talking about them online, was much more intriguing than being inundated with commercials on Cartoon Network. To that end, Heelys wouldn’t have an ad on television until 2005.
Ushering in New Sales
Beyond the guerrilla marketing, however, it might’ve seemed like Heelys was blowing out their marketing budget by getting shoes into mass media and on the feet of celebrities — none bigger than Usher, who showed off his pair of Heelys in the music video for his chart-topping single, “U Don’t Have to Call,” and again during his performance at that year’s Grammys.
“We had very little to do with that,” Staffaroni laughs. “His personal shopper bought the shoe at Nordstrom. I knew who he was, but I didn’t realize the magnitude of his celebrity. Everything he did was quadruple platinum, and he was a clean-cut guy,” Staffaroni says.
As brands do, Heelys reached out to Usher to “tell him how fantastic it was and thank him,” Staffaroni says. “Then we asked if we could do something more formal: an Usher signature shoe where he’d get royalties and could be a sort of Heelys pitch man.”
Unfortunately, every time the Heelys team tried to reach out, they would be blocked by Usher’s manager, who also happened to be his mom. “We weren’t able to make much progress because we just couldn’t get to him. And if we did, a neighbor of his mom would be screening things and say, ‘Look, here’s how it works, Usher is going on tour, and for a million dollars you can buy a sign that goes on the side of his bus,’” Staffaroni recalls. “So that was about it. We continued to make a couple shoes that we thought he would like, which we’d then send to him. Otherwise, it was a short-lived partnership, if you want to even call it that.”
On a Roll
In 2002, the wheeled shoes did, however, make an appearance in Spy Kids 2, just because Daryl Sabara, the actor who played Juni Cortez, happened to like them. “He’d wear them to the set and roll around, and eventually they found their way into the film,” Staffaroni says. “They weren’t really an integral part of the storyline, but they got onto the screen. So that was good.”
Aided by the celebrity appearances, Heelys continued to skyrocket in popularity without making much of a dent in their marketing budget. To that end, they went from 20 Journeys locations to being sold in “40 to 50 to 100 stores, and by the second quarter we were in all 700-ish of [Journeys] stores, which was a pretty fast ramp-up,” Staffaroni explains. “We ended up finishing the first year with about $21 million in sales and about half a million sold. So it was a good year, a good start.”
For the next five years, Heelys continued its upward trajectory without looking back. “We made a profit in the first quarter in 2001 and every quarter after that for as long as I was with the company,” Staffaroni says. In 2002, Heelys bought Soaps, the popular shoes with grind plates in the bottom.
According to a filing with the SEC, in 2003 Heelys saw a gross profit of $6.6 million in 2003, $6.8 million in 2004 and $15 million in 2005. In the first nine months of 2006, 3.9 million pairs of Heelys sold in 50 countries for a gross profit of $40.5 million, trailing only Vans for market share in retail-sales dollars for skateboard-related footwear brands.
Heelys also finally launched a series of TV commercials, and the intention was clear: They wanted in on the robust skating culture of the early aughts.
Within Heelys, the question was no longer whether kids would take to them, but how to capitalize on such massive success. The answer was to go public and use the additional capital to expand further. In December 2006, the stock market responded with a massive valuation. “When I look back on my Heelys experience, it was seven great years and six really difficult months,” Staffaroni says. “That was the beginning of the six months.”
Laced With Poison
No longer could Heelys enjoy their stockpiles of cash and grow at their own pace. Their exponential growth brought them a massive valuation, and Capital Southwest took notice. “Suddenly we had a market cap of a billion dollars, so Capital Southwest decided they needed to get more involved in the business even though they didn’t understand our business, nor did they understand consumer products,” Staffaroni says. As Heelys leadership entered some turbulence, Roger Adams pocketed the $26.3 million he gained from the IPO and reportedly disappeared.
Meanwhile, public sentiment around the shoes began to sour. After years of declaring Heelys the “next big thing in footwear,” they now focused on the injuries piling up. Not to mention, the massive amount of kids who bought them in the early aughts, now in their teens, associated the shoes with little kids. “It was a combination of kids getting hurt, and just the ways fads go,” says Joshua Hurst, CEO of Hurst Digital, the marketing company Heelys would eventually enlist for help in 2008.
“You’ve got a bucket of kids of a certain age who for four to five years all grab onto it because it’s so new and so cool, they all want it for Christmas,” Hurst explains. With so many kids in Heelys, “of course people start getting hurt, then parents start getting tired of buying them for kids, plus they were a little expensive — they just had everything against them.”
Staffaroni downplays the injuries as a reason Heelys tanked in popularity. “We did a lot of studies demonstrating the relative safety of Heelys,” he tells me. “Parents are worried about their kids’ safety, of course, but there’s also an accepted amount of risk whether it’s football or skateboarding — and Heelys was ranked somewhere around bowling in terms of risk of ending up in a hospital room.”
But Hurst argues otherwise. “The injuries were a big deal: Malls banned them, schools banned them, you couldn’t wear them,” he says. “They were just getting sued left and right, so they had to change their market a bit, because they would sell a pair of shoes [and] get sued for a pair of shoes.”
“It started to become clear in 2007 that selling 5 to 6 million pairs of wheeled shoes in the U.S. every year isn’t sustainable, because kids aren’t coming back for a second pair,” Staffaroni says. “Still, we were getting really strong brand recognition as we sold more pairs, so the only way to grow was acquiring smaller companies, expanding internationally and stretching the brand to sell stuff that wasn’t just shoes with wheels.”
Unfortunately, Staffaroni says the board didn’t understand why they should stretch the brand when they were still selling millions of shoes. “They’d say, ‘Why wouldn’t we just keep selling them? We’re making a lot of money!’ In hindsight I wish we’d done a better job and a more focused effort at building the brand and not allowing it to become just an item.”
In an effort to expand sales, Staffaroni says the board pushed to sell beyond the original market. “They believed that we were selling ourselves short by not marketing to everyone, not just kids but teens, adults, parents, grandmas, grandpas, everyone should be a target for Heelys,” he tells me. “Historically, it’s never worked that way, because it loses the aspirational component. No self-respecting 14-year-old boy is going to want the product if there’s a 6-year-old girl wearing them in the ads.”
Twelve years later, Staffaroni thinks this was the beginning of the end. “I still believe it was a flawed strategy,” he says. Five months after Heelys stock soared upon going public, its value plummeted 50 percent in a single day and continued falling from there. Analysts declared the fad over. Staffaroni sold his stock and left Heelys in 2008, and Roger Adams followed shortly thereafter, cashing out the rest of his 4.7 million shares for $10.6 million.
Tom Hansen, who was previously president of TM Advertising, took the helm as CEO in August 2009 and tried to steer the company back on track by adding new products like the Heelys Nano Board to raise awareness. “We didn’t know where the hell they were going with it, and neither did they — it was just kinda like, ‘Let’s keep putting some advertiser dollars in and see if new products will raise some awareness and help them bounce back,’” Hurst recalls. “But they could never quite bring the interest back like they wanted to. Nothing could do as well as the original shoe.”
In 2012, after losing millions year after year, Heelys sold its operations to a private equity firm for $13.9 million in cash — four years after Skechers offered to buy the company for $142.8 million.
Today, Roger Adams’ invention is still around and still operating under the name Heelys, but the inventor himself is long gone. The beach bum entrepreneur finally got the escape he craved in 1998. Without an online presence or any recent interviews to show, Adams whereabouts are a mystery. Staffaroni can only guess where his former partner has been.
“We had a strained relationship for most of that time there, so I haven’t been in touch with Roger. But last I heard, he’s managing the patent and noodling around with some other ideas, living happily ever after out in Lake Tahoe. He’s got a lot of dough, that’s for sure.”