Mahabis collapse should give other firms pause for thought

Comment: The high-end slipper firm was a successful disruptor, but sometimes it’s best to stick to what you know, writes Chris Blackhurst

Mahabis espoused a lifestyle concept of relaxation - but might be guilty of trying to do too much (Mahabis)

For my birthday, just gone, my eldest son bought me a pair of slippers. I know, I could have taken it as the final proof yet of reaching advanced age, along with a girth that refuses to diminish, growing bunions, and a golf swing that shortens and slows with each passing year.

But these are dead trendy slippers. Mahabis. The brand that keeps popping up every time I go on social media. The cool-looking ones, with the yellow soles that are far removed from the traditional image of slippers as great clumping, velvet or sheepskin embarrassments.

They’re super-smart, putting modern materials together with sleek design. They’re light and comfy, and, whoever conceived them, thoughtfully created. So, there’s a neat elastic bit behind the heel that ensures they’re kept in place.

Then, I read, that Mahabis has gone into administration. No sooner did I unwrap my gift, it seems, than the firm stopped selling, as KRE Corporate Recovery was called in.

“We have, for the moment, ceased trading as the administrators take over the business. During the four years since we launched, we sold nearly a million pairs of slippers to customers in over 100 countries; we are all desperately disappointed at this outcome,” said Mahabis on its website.

It’s too early to say what, exactly, sent it crashing. But, whatever the precise reason, Mahabis was not in a position to shrug it off, to regroup and to recover. This suggests an underlying fragility – one that should give others pause for thought.

Ankur Shah, the 37-year-old founder of the London company, was a poster boy for the use of online marketing, for taking an ages-old product, giving it a current twist, and for selling it direct to the consumer. His minimalist approach, using clever, cheeky marketing made something regarded as ultimately boring actually appear sexy and up to the minute.

He even had a patter aimed squarely at millennials. He wanted to build the “Nike of downtime”, his Mahabis were “slippers reinvented”, they were for people who worked from home, who did not want to change their footwear when they ran an errand so they could continue to wear slippers that did not, well, look like slippers.

His own story appealed to a generation weaned on Dragon’s Den, spotting a niche and going for it. He was a criminal barrister, who previously enjoyed success with a social media advertising company that he sold to the credit checker Experian. Then, he researched what was trending on social media and found that “slippers” was right up there. But he didn’t set out to make any old slipper. He wanted to be responsible for the “world’s favourite slipper”, and he accompanied his new product with a philosophy that touched a nerve. He launched his “Manifesto” of relaxation, encouraging people to work less. They included his own staff, who worked a four-day week, and were told they could “work from anywhere and at any time”. Production was contracted out to a company in Portugal, and the 20-strong Mahabis team focused mainly on online marketing and after-sales.

In an interview, Shah maintained Mahabis was on track for sales of “well over £20m” in its third year of existence.

All impressive stuff. Mahabis was part of a pack of tech-savvy disruptors, along with the likes of Harry’s razors, Casper mattresses, and Warby Parker spectacles, that were bypassing retailers, to sell their products direct to consumers via social media. The fact that Mahabis sold for £69 a pair, far more than slippers found in stores such as Marks & Spencer and Debenhams, was regarded as evidence of their difference. These weren’t ordinary slippers, these were Mahabis.

So why the weakness? Well, even social media marketing does not come cheap – and certainly not at the level Mahabis indulged in, to the point where its adverts were impossible to avoid. According to Companies House filings, at the end of June 2017, Mahabis had debts of £2.6m. The company had no other investors, apart from Shah.

And, stripping away the guff, they are just slippers. Nice slippers, but slippers nonetheless. Expensive ones, compared to the rest – at a price that might be a stretch too far for those folk used to paying a third of that for indoor shoes they don’t take particular pride in, and are happy for them to become tatty and worn.

Then there’s the nature of Shah himself. I don’t know him, but he comes across in interviews, perhaps more so than in reality, as someone who cannot settle, who is always striving for the next thing, like many in his millennial target audience in fact. You can take this personal creed too far, beginning to believe in your own genius and infallibility. Sure enough, Mahabis was expanding into other areas, selling “loungewear” pants and sweaters, jackets, backpacks and watches – all part of its lifestyle, “downtime reinvented”, mission.

Once you go down this road – and only four years in, don’t forget – the seeds of potential disaster are being sown. You’re in danger of spreading yourself too thinly, of running up costs, of taking on greater competition. Being a disruptor in a single market is one thing, being a disruptor across several – now that is going some. Neither is there much connection between them. There’s a reason why Rolex, Swatch, Timex sell only watches.

Mahabi did sell only slippers. And very good, they are too. Whether it does again remains to be seen.

Chris Blackhurst is a former editor of The Independent, and now director of C|T|F Partners, the campaigns, strategic, crisis and reputational communications advisory firm