Steve Madden: Steve Madden Steve Madden fell in love with the shoe business in the 1970's, when he sold platform shoes at a neighborhood store in Long Island, New York. That was in high school. About 15 years later, he struck out on his own, designing and selling shoes with a high-end look at affordable prices. As his business – and his ambitions — began to grow, he got involved in a securities fraud scheme and wound up serving two and-a-half years in prison. In 2005, he returned to Steve Madden, where he helped the company grow into a business valued at $3 billion. PLUS, for our postscript "How You Built That," how Chris Dimino turned a school design project into the Keyboard Waffle Iron, which makes waffles in the shape of a computer keyboard.
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Steve Madden: Steve Madden

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Steve Madden: Steve Madden

Steve Madden: Steve Madden

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GUY RAZ, HOST:

Hey, everyone, just want to let you know that we now have fewer than 100 tickets left for the HOW I BUILT THIS summit in October supported by American Express. Don't miss out on your chance to learn from some of the world's most inspiring entrepreneurs. Here's just a partial list of who's coming - Joe Gebbia of Airbnb, Katrina Lake of Stitch Fix, Jenn Hyman of Rent the Runway, Lisa Price of Carol's Daughter, the founders of Method cleaning products, John Zimmer of Lyft, and many, many other entrepreneurs and mentors. You'll also get to meet hundreds of other innovators and builders - people just like you. But there aren't many tickets left, so please do hurry. Go to npr.org/summit to get your tickets, and hope to see you in San Francisco.

(SOUNDBITE OF MUSIC)

STEVE MADDEN: I'm not one of those entrepreneurs that thought he was going to be super successful. You know, I was just trying to survive. And I'm very negative and very pessimistic unlike maybe some of the guys that you've done, you know, the shows with.

RAZ: Yeah, totally. Yeah.

MADDEN: I'm sure they think that, you know, they're going to be...

RAZ: Nothing can get me down kind of, right? Yeah.

MADDEN: ...Nothing can get me down. Me? I think I'm going out of business every other day.

(SOUNDBITE OF MUSIC)

RAZ: From NPR, it's HOW I BUILT THIS, a show about innovators, entrepreneurs, and idealists and the stories behind the movements they built. I'm Guy Raz. And on today's show, how Steve Madden took high-end shoe designs, gave them low-end prices, and turned his name into a $3 billion shoe brand.

(SOUNDBITE OF MUSIC)

RAZ: So when I was a kid, if you wanted to wear brand names and you couldn't afford the prices, you'd go to Mervyn's or Marshalls or Ross, and you'd look for things called irregular items. Maybe it was a pair of Guess Jeans missing a zipper or an Esprit shirt with one arm slightly longer than the other. And it was no big deal because you still got the brand, and you got it at Marshalls prices. But then, starting in the early 1990s, brands like H&M and Zara started to go global. And it meant that all of a sudden, many more people had access to high-fashion designs but at a much lower price.

And this is the wave that Steve Madden not only tapped into but in a lot of ways pioneered, especially when it came to shoes. With Steve Maddens, you could all of a sudden buy a pair of black stilettos for 70 bucks that looked suspiciously like a $900 pair of Manolo Blahniks or a $60 pair of Lego-like heels that were a knockoff of $1,000 Balenciagas. This was the genius of Steve Madden. He managed to carve out a very sweet spot between Nine West and Christian Louboutin.

Now, this approach didn't come without consequences. The world of high fashion is an exclusive club, and Steve Madden is largely unwelcome. And one reason - pedigree. Steve didn't apprentice at one of the great fashion houses. He didn't start out in Milan or Paris. In fact, Steve didn't even study design. And he's also kind of brash and a bit of a loudmouth - so brash, in fact, that he was willing to break the law to get ahead. Steve spent 2 1/2 years in prison for financial crimes. It's an experience that completely changed his life, and we will get there. But long before that, Steve grew up in Long Island, N.Y. He was a scrappy, middle-class, half-Irish, half-Jewish kid.

MADDEN: I was sort of a leader type, charismatic, sort of always pretty similar to the way I am now. I mean, I was, you know, small and had a big mouth and was a little ambitious and a little obnoxious probably.

RAZ: The kind of kid who would get in trouble at school?

MADDEN: Yeah, I always got in trouble. I was always in trouble. I had an attention deficit disorder. I didn't know it then.

RAZ: Yeah.

MADDEN: So...

RAZ: Nobody knew it then.

MADDEN: ...Yeah. That was the '60s, and so they didn't really talk about it then. But I couldn't sit still.

RAZ: Yeah.

MADDEN: In Yiddish, we'd say I had shpilkes.

RAZ: Oh, OK. Right. Yeah.

MADDEN: Yeah.

RAZ: Yeah. So school was not your forte.

MADDEN: No. The only difference is that I was a reader, so - and I loved history. And I used to love to read about the moguls. You know, I was obsessed for some - I was drawn to this thing about Louis B. Mayer and Samuel Goldwyn and these great entrepreneurs that - I mean, at a very young age, you know, I was like drawn to it.

RAZ: Yeah. Why? Why do you think so?

MADDEN: I don't know why. I mean, you know, I was - I guess it was - the intersection of art and commerce, you know, was very interesting to me and still is.

RAZ: And those guys came from nothing, most of them.

MADDEN: Yeah. And they were artists, but they were businessmen, so it was that kind of thing.

RAZ: Yeah. Your dad was in the textile business. Was - just out of curiosity, was your dad entrepreneurial? Did he have that kind of mind?

MADDEN: Yes, my dad was. But, you know, he grew up in the Depression. And, you know, he was very limited and filled with fear because he had seen so much poverty. So his - he sort of capped his upside, if you know what I mean.

RAZ: He was not a risk-taker.

MADDEN: He wasn't a great risk-taker, but he was a smart man. He was a businessman. But it - he never really made the big bucks because he was very safe, which - in a way, I admire him because he stayed in - I mean, it's easy to criticize people like that. You know, but he was - you know, always provided. We weren't the - we were right in the middle. I mean, we weren't, you know, rich or anything, but we weren't the poorest. But it was like, you know, people got a 10-speed bike, and they got Schwinn. I never got a Schwinn.

RAZ: And you wanted to be the kind of person who could buy that stuff one day.

MADDEN: I did. I always did. Yeah, I always wanted to fly first class, you know? Like, I'd be riding in coach (laughter). You know, I was like, get me in the front of this plane, you know, kind of thing.

(SOUNDBITE OF MUSIC)

RAZ: How'd you actually end up working at a shoe store at age 16?

MADDEN: So I worked in a shoe store. I was in high school. You know, the neighborhood sort of cool shoe store. The old - the guy that started the store went to high school with my brother, John.

RAZ: So it was a job. It wasn't like, hey, I want to go work in shoes. It was just a job.

MADDEN: Just sort of fell into it. Yeah. But I fell in love with it right away.

RAZ: What did you fall in love with?

MADDEN: So it's hard to explain. But at that moment, in the shoe business, you know, it was a very exciting time because...

RAZ: This is, like, the early to mid-'70s?

MADDEN: ...Yeah, like '74. Before I even started, platform shoes were very big for men.

RAZ: Really? Oh, right.

MADDEN: It was a really wild time in the shoe business.

RAZ: Right. Right. Right. Yeah.

MADDEN: Big platforms. And so it was just very interesting. You know, I was into it. I was into the creative sort of vibe...

RAZ: Yeah.

MADDEN: ...Of the whole thing.

RAZ: What do you remember about working in that store?

MADDEN: I remember working very hard, very motivated even at a young age.

RAZ: And was that - I mean, when you were there, were you thinking, shoes; this is me; this is my calling? Or was it more like, I like selling stuff?

MADDEN: I love selling stuff.

RAZ: You did.

MADDEN: I do. But I also like creating stuff.

RAZ: Yeah.

MADDEN: And I like creating stuff to sell. It's always been sort of a core sort of philosophy of mine. I've never been like, oh, that's creative, but, you know, nobody wants to buy it. And then on the other hand, you know, just to sell without any kind of creativity is boring to me, too.

RAZ: So you are working. So you're in this store. The store is - by the way, is called Toulouse.

MADDEN: Toulouse, yeah.

RAZ: And what - who was the guy who ran it?

MADDEN: So - yeah, there was this great guy. His name was Lance Rubin. And he - I really - most of what I know I got from this guy.

RAZ: You were 16, and he was in his 30s.

MADDEN: Twenty-seven.

RAZ: Wow. He owned that store at 27?

MADDEN: Yeah. Yeah. And the thing about this guy was so interesting because he was a young man who was successful and creative. And I never saw that. Usually, the people that had - that I thought of as businessmen were like my father.

RAZ: Yeah.

MADDEN: You know, they rode the railroad, and they wore those long coats with the hats like Don Draper. But anyway, Lance came along, and he was this artist, and he designed these shoes. And also, the wholesalers that sold to him would be asking him for input on designs.

RAZ: Oh, wow.

MADDEN: Yeah, because he was an up-and-comer - you know? - like, a young gun.

RAZ: So you are a high school student working at this shoe store. But you have plans to go to college, right? You were going to go to college.

MADDEN: Yeah. I went to the University of Miami in Florida.

RAZ: To study what?

MADDEN: To study golf and sun tans.

RAZ: (Laughter) How'd you do? Did you do well?

MADDEN: I did good. I did well, yeah. I mean, I loved learning, but it was - I was on my own, and it was too much.

RAZ: How long did you last there?

MADDEN: You know, it's a bit of a blur, but I think it was about 18 months.

RAZ: And it wasn't for you.

MADDEN: It wasn't for me. My dad did me the biggest favor by pulling me out of school. When I say pulled me out of school, he refused to pay another 50 cents for me to fool around in college. So I went to work.

RAZ: You went back to Long Island?

MADDEN: I went back to Long Island.

RAZ: And back to a shoe store?

MADDEN: I went to work for - in another shoe store.

RAZ: And shoes because you had experience doing that and you liked it.

MADDEN: That's right. I had the experience, so - it was kind of a famous store in Long Island called Jildor, which most people know in New York.

RAZ: So you are - and there you're also a sales guy, just dealing with customers in the store.

MADDEN: Yeah, I was just a sales guy on the floor.

RAZ: Do - and so you're out of - you're sort of a college dropout. You're working at this shoe store selling shoes. And I don't know. Was your dad or your mom - were they saying, Steve, what are you - you know, you're not going to work at a shoe store your whole life? Did they say that at all, or did they kind of just leave you alone?

MADDEN: There are people that said that to me - guys my own age, you know, making fun of me for working in a shoe store, for sure. You know, my father did not make fun of me. My father recognized that good, hard work was good.

(SOUNDBITE OF MUSIC)

RAZ: So you're working in the shoe store. And I guess at a certain point, you go to the city, to New York City...

MADDEN: Yeah.

RAZ: ...To work at another shoe store.

MADDEN: Well, the guy that owned Toulouse, Lance, opened up a wholesale company called L.J. Simone.

RAZ: And he calls you out of the blue?

MADDEN: Yes. Pretty much, yeah.

RAZ: And he says...

MADDEN: Come to work. Come sell. So that's what I did. It's like a little wholesale company.

RAZ: Yeah.

MADDEN: And what happened was I went to work there. And we blew it up, man.

RAZ: How did you blow it up?

MADDEN: You know, I went to work for them, and it was like, boom, we made a nice company out of it.

RAZ: And he was sourcing his shoes from shoe factories. And then what?

MADDEN: Yeah. He was designing the shoes, and I was selling them.

RAZ: So he would design them, they would be made, and then you would go from door - store to store and...

MADDEN: Yeah. I would sell them. And he taught me how to design shoes.

RAZ: How?

MADDEN: Yeah. Well, you know, there's certain tricks of the trade and knowing what people like and working with different constructions.

RAZ: And it was just the two of you at the beginning?

MADDEN: There was a few guys involved. But, you know, I was one - I was at the beginning, and it got very successful.

RAZ: Who were you selling to?

MADDEN: We'd sell to Macy's and department stores and we sold to the Bootlegger. I don't know if anybody's from Washington - I don't know. Anybody remember the Bootlegger? We sold all over the country.

RAZ: And was that the point where you start to think about maybe doing this for yourself? Or did you think, this is great; I'm going to keep - I'm going to - this is - I'm going to just ride this train?

MADDEN: You know, at some point, I thought about doing it for myself. I was very happy there. You know, but at some point I thought, you know, I could do this.

RAZ: Yeah.

MADDEN: You know?

RAZ: How much revenue were they doing in - when you were working for them, how much money were they making?

MADDEN: I would say they were doing maybe 40 million a year.

RAZ: Wow. So it's big.

MADDEN: Yeah, which is, like, big. You know, they were - yeah, we - maybe something like that, yeah.

RAZ: Yeah. And so what happened? Why did you leave?

MADDEN: You know, I had taken it as far as I could take it. And I just didn't want to have a boss anymore. It was just time.

RAZ: Yeah.

MADDEN: You know, I was ready for me to sort of chart my own course.

RAZ: And you were...

MADDEN: I was like 30.

RAZ: ...You were 30. So you were there for a long time.

MADDEN: Yeah.

RAZ: You were out of your 20s.

MADDEN: I was like 31.

RAZ: And just to be clear, at this point, you are single. You're not married, no kids at that time, right?

MADDEN: Yes, single.

RAZ: And you were probably paid pretty well by Lance. I mean, you were probably making a decent living.

MADDEN: Yeah. I was. I made a lot of money with him, you know, relative to the time.

RAZ: Yeah. And you weren't worried at all about risking all that?

MADDEN: I'm still worried about it.

RAZ: OK, but then you were - you had this really good salary. You had...

MADDEN: Yes. Yes. I'm worried - I was - I'm a worrier, you know? I'm a worrier. So yes. But I just wanted to do it on my own.

RAZ: Yeah.

(SOUNDBITE OF MUSIC)

RAZ: This was also - I mean, it's kind of a wild time, right? I mean, you were drinking heavily. You were...

MADDEN: I was - started using drugs and drinking. I was pretty much pretty inebriated most of my 20s. You know, they say when an alcoholic hits bottom, you know, they keep - there's another level of bottom to go. So, yeah, it was pretty bad.

RAZ: How bad did it get?

MADDEN: Well, you know, I could tell you a lot of stories about it, but basically, I couldn't stop. And, you know, I was embarrassing myself, and it was starting to affect my work. And I had to stop or die.

RAZ: It was that bad?

MADDEN: Yeah. Drugs and drink, yes - cocaine - everything, you know? And I would work, you know? It went - I worked. I'd work, work, work and then get stoned at night.

RAZ: Hammered.

MADDEN: You know, hammered.

RAZ: Because you were working so hard, it was just, like, the thing you did. You just...

MADDEN: Yeah. You thought you deserved it or you could justify it somehow. But, oh, I was a mess. I was a mess.

RAZ: ...When did you - how did you get out of that?

MADDEN: I had some friends, you know, that pointed me towards a place where I could get sober.

RAZ: Did you go to AA, or did you go to a clinic?

MADDEN: I did. I went to AA.

RAZ: And that helped?

MADDEN: It saved my life.

RAZ: Wow.

MADDEN: Yeah.

(SOUNDBITE OF MUSIC)

RAZ: So I'm assuming it was after you recovered that you started Steve Madden.

MADDEN: Yeah. I was sober when I started Steve Madden. I mean, it was just a miracle. You know, I started - I was - got sober, I started this company. And, you know, my life completely changed.

RAZ: And when you started the company, did you have the cash to do it, to launch it?

MADDEN: You know, I scraped together a little money, but basically no.

RAZ: Your own money?

MADDEN: Yeah.

RAZ: And what was the idea? What was the first idea - the idea was to basically do the same thing, design and sell your own shoes?

MADDEN: It was exactly the same idea.

RAZ: And what was your first shoe?

MADDEN: My first shoe was a clog. It was a backless clog that I made.

RAZ: And who did you think would be your customer?

MADDEN: That's a very good question. At the time, you know, I would say it would be my contemporaries. You know, so I was, like, 32, you know?

RAZ: So a 32-year-old woman.

MADDEN: Yeah. I would say because I didn't really think about it. I just wanted to make shoes, you know? It wasn't something that I thought - what happened was I ended up making shoes for the Gen-X customer. Those would be people around 40 today.

RAZ: Yeah.

MADDEN: Right after - I guess that's right after the baby boomers, right?

RAZ: So they were teens at this point.

MADDEN: Yeah.

RAZ: Tweens and teens.

MADDEN: And I discovered this market by accident. There wasn't - they were very ill-served. You know, basically we stepped into that at Steve Madden.

RAZ: And how many did you make?

MADDEN: So, you know, the way it was, you know, we made it - we made some shoes, and, you know, we just got this fabulous reaction, but not from the people I thought I was going to get a reaction from, which were my contemporaries - which was from the younger kids. They were like - the phone was ringing. Like, where do you get that shoe and all that stuff. So we knew that something was going on here. So that's the track that we went on.

RAZ: When you - so when you decided to start Steve Madden, did you have an office, or you were working out of your apartment?

MADDEN: No, I worked in a shoe factory.

RAZ: In a shoe factory. So you found a factory in New York?

MADDEN: In Brooklyn.

RAZ: And you worked with them. And then you made I guess some shoes. And then what did you do? Did you go to your former contacts that you had from...

MADDEN: Yeah. You know, Macy's and - anybody that carried shoes, I sold. And then I would go to the national shows and sell them all over the country.

RAZ: But in that first year, 1990.

MADDEN: Yeah.

RAZ: Like, you would go to shoe stores, and they would take 10 pairs.

MADDEN: You go with your sample case, and you'd lay your shoes out, and people would buy them. And that was it. So what was happening...

RAZ: Yeah.

MADDEN: ...Was the market that I was selling to - everybody in the shoe business walked away from me. The teenagers - you know? - and stuff like that. The young. And it was a different generation, you know? And so they had their own thing, their own music, and their own style, and we just tapped into that whole thing.

RAZ: And this was a market - explain this. This is a market at the time that was essentially abandoned by most shoemakers.

MADDEN: You know, it seems like it. They just abandoned - I mean, Nine West - there was a company called Nine West that was dominating the industry. Of course, there was Nike and Reebok. But nobody was, like, making, like, funky little shoes. It was kind of a throwback to the '70s, you know, from that other era. So I kind of brought that back. And I was just in the right place at the right time.

RAZ: Were they supposed - were they designed to be, like, cool but also affordable, inexpensive?

MADDEN: I've always been sort of democratic with my shoes.

RAZ: Do you remember how many how much revenue you did in the first year?

MADDEN: I probably did - I don't know - 500,000.

RAZ: So it was pretty good? Pretty good first year?

MADDEN: Yeah.

RAZ: And you named it Steve Madden because it seemed like the obvious thing to do.

MADDEN: It seemed like an easy name.

RAZ: Yeah. Yeah. Did you ever think about using, like, a French name or, like, a European-sounding name?

MADDEN: You know, it's funny because it was originally - the first couple of shoes were called Soulier.

RAZ: (Laughter) All right.

MADDEN: It's very good.

RAZ: Like sole, like the...

MADDEN: Yes. It's a French word for slipper. And so, you know, there was some dispute about that brand. Or maybe I just wanted to call it Steve Madden. I can't remember. But I switched it pretty quickly.

RAZ: Because you worked for...

MADDEN: There was one guy that called me up - how dare you? I bought Soulier. I don't want Steve Madden. Who do you think you are?

RAZ: Yeah.

MADDEN: I always - and the guy is - he's still in the shoe business, that guy, and I always torture him when I see him.

RAZ: All right, so you've got this pretty good business going in Year 1. What are you thinking? Are you thinking, OK - I mean, did you have ambitions at that point already to make this into something huge?

MADDEN: So where I'm at is I started the business. And, you know, I'm just not really - don't have much money. I'm just sort of working hand-to-mouth. And a friend of mine who I grew up with went to work for this brokerage firm. And they were raising money for small company.

RAZ: This is Donny (ph) Porush.

MADDEN: Danny Porush.

RAZ: Danny Porush.

MADDEN: Yeah. And, you know, we're going to raise you - we're going to get you - we'll raise you 600 grand, and then we'll get you 6 million.

RAZ: He was working for a brokerage house.

MADDEN: Yep. He worked - he was a senior guy at...

RAZ: And he said to you, hey, you need to expand. Do you need money?

MADDEN: He said, you're really talented. I've known you my whole life. You know, what would you do if you got 600,000?

RAZ: Yeah.

MADDEN: And, you know, 600,000 was like 600 million to me.

RAZ: Yeah.

MADDEN: And then he said, well, not only will I get your 600 grand, but I'm going to get you $6 million when I take you public. And I laughed at him, you know, because I probably had $30,000 in my - to my name.

RAZ: And so of course you're like - what? - 33, 32?

MADDEN: Something like that, yeah.

RAZ: And you're thinking, you can raise me 600,000 bucks?

MADDEN: Correct.

RAZ: Let's do it.

MADDEN: That's right.

RAZ: So he...

MADDEN: Right.

RAZ: So Danny...

MADDEN: Yes.

RAZ: ...Helped you go public?

MADDEN: Yeah. And he helped me go public. And his firm was called Stratton Oakmont.

RAZ: A very famous name for anybody who's seen "The Wolf Of Wall Street."

MADDEN: "The Wolf Of Wall Street," yeah. It was a pretty good movie actually.

(SOUNDBITE OF FILM, "THE WOLF OF WALL STREET")

LEONARDO DICAPRIO: (As Jordan Belfort) My name is Jordan Belfort. The year I turned 26, I made $49 million, which really pissed me off because it was three shy of a million a week.

RAZ: I guess we should explain. Stratton Oakmont was this, like - called a pump-and-dump firm.

MADDEN: Yeah. They used to call them boiler rooms.

RAZ: Right. And they would basically sell...

MADDEN: Yeah.

RAZ: They would sell really crappy companies. They would jack up...

MADDEN: Yes.

RAZ: ...Get the stock price...

MADDEN: Yes.

RAZ: ...Jacked up.

MADDEN: That's true.

RAZ: And then they would sell all the shares and make tons of money...

MADDEN: Yes.

RAZ: ...And people would lose their shirts.

MADDEN: Yes.

RAZ: And so they basically wanted to do this with Steve Madden, right?

MADDEN: They wanted to do it with Steve Madden.

RAZ: So Danny...

MADDEN: I was the perfect guy for them.

RAZ: Because...

MADDEN: Because, you know, I had a company, and it was small, and they could do their thing with it. You know, it fit the profile.

(SOUNDBITE OF FILM, "THE WOLF OF WALL STREET")

JAKE HOFFMAN: (As Steve Madden) Hello. If - for those of you who don't know me, my name's Steve Madden.

UNIDENTIFIED ACTOR #1: (As character) Yeah, we know you are.

UNIDENTIFIED ACTOR #2: (As character) Your name is on the box.

UNIDENTIFIED ACTOR #3: (As character) Get the shoes. Show them the shoes. Show them the shoes.

HOFFMAN: (As Steve Madden) OK. Yes. Anyway, you know, this shoe...

MADDEN: So that scene with me talking in front of the - that was very accurate.

RAZ: We should explain the scene for people who haven't seen it. You go up in front of all these, like, traders in this boiler room.

MADDEN: Yeah, and I started talking about my shoes thinking that they would...

RAZ: They were...

MADDEN: ...Actually be interested. But they really weren't. I was just a piece of - it was just a piece of paper and a piece of meat that they could sell.

(SOUNDBITE OF FILM, "THE WOLF OF WALL STREET")

HOFFMAN: (As Steve Madden) This is the Mary Lou, which is really the shoe that put me on the map. Without it, I wouldn't be here.

UNIDENTIFIED ACTOR #3: (As character) That's a fat-girl shoe.

HOFFMAN: (As Steve Madden) Believe it or not - believe it or not, though, the Mary Lou is actually the same as the Mary Jane, but it's black leather.

(CHEERING)

MADDEN: I want to - just to digress for a moment.

RAZ: Sure.

MADDEN: Because for people listening to this, budding entrepreneurs, I'm not one of those entrepreneurs that thought he was going to be super successful. You know, I was just trying to survive. And I'm very negative and very pessimistic unlike maybe some of the guys that you've done, you know, the shows with.

RAZ: Yeah, totally.

MADDEN: I'm sure they think that, you know, that they're going to be...

RAZ: Nothing can get me down kind of, right? Yeah.

MADDEN: ...Me? I think I'm going out of business every other day.

RAZ: So it - at that time - this is, like, in '93 I guess when you - they took it...

MADDEN: Yeah, '92, '93. So we went public.

RAZ: You went public. And how did the stock do?

MADDEN: Well, they were totally manipulated. The stocks - they went up. And it - you know, it was a pump - it was a classic pump and dump.

RAZ: And...

MADDEN: Only Steve Madden was a real company.

RAZ: Yeah.

MADDEN: So if you kept that stock...

RAZ: You would make a...

MADDEN: ...On that day...

RAZ: Yeah.

MADDEN: ...In 1993 and you owned 10,000 shares - I haven't really done the math, but I think you would be worth...

RAZ: A lot of money today.

MADDEN: ...Millions and millions...

RAZ: Yeah.

MADDEN: ...Of dollars today.

(SOUNDBITE OF MUSIC)

RAZ: So the Stratton sale - the company goes public. Stratton takes you public.

MADDEN: Yeah.

RAZ: All of a sudden, it raises how much money for you?

MADDEN: I think the public offering was about 7 million bucks.

RAZ: Wow. So all of a sudden...

MADDEN: And we used it. I took it, and in very short period of time, from a half a million bucks, I was doing 40 million a year or 50 million a year...

RAZ: And what did that money...

MADDEN: ...Within 36 months.

RAZ: Incredible. So, OK, you get all this cash from the initial public offering.

MADDEN: Yeah.

RAZ: And at that point - I mean, did you ask any questions? I mean, these guys were - they were totally breaking the law.

MADDEN: Yeah.

RAZ: I mean, at that point, they were artificially inflating your stocks. Did you - like, were you suspicious at all about Danny and about Stratton? I mean, did you think, hey, you know, what are these guys doing?

MADDEN: I knew it was too good to be true.

RAZ: Yeah.

MADDEN: I knew it. So, you know, I lied to myself. And I told myself that it was a gray area. You know, the trading in these stocks and the flipping - they would sell me the stocks, and I would sell them back to them.

RAZ: Just Steve Madden stocks or...

MADDEN: No, all the other deals.

RAZ: ...You - so they brought you into other deals?

MADDEN: Other deals. They brought me into other deals. So I lied to myself. You know, everybody's doing it, you know, like that. But I knew in my heart that it was illegal and it was wrong.

RAZ: Was a part of it thrilling that you were getting away with it?

MADDEN: Well, making that much money is certainly thrilling for sure. But I wish that I hadn't done it. And - but, you know, more than wishing I hadn't done it - because that's sort of an empty thing to say - I wish that I didn't feel compelled to do it. I wish that I didn't have that feeling that money was everything because it's not. It's not everything. So I was greedy and foolish.

(SOUNBITE OF MUSIC)

RAZ: Here's what I'm trying to figure out. You are this creative guy.

MADDEN: Yeah.

RAZ: You create shoes. You design shoes.

MADDEN: Yeah.

RAZ: And you've got a really successful and growing business. And then on the side, you're doing this - these weird stock trades that...

MADDEN: Yeah.

RAZ: ...Are shady and...

MADDEN: Slim Shady (laughter).

RAZ: ...Ultimately, illegal.

MADDEN: Yeah.

RAZ: Why would you even do that stuff on the side...

MADDEN: You know, it was just the...

RAZ: ...If you already had the creativity and the business?

MADDEN: I know. Because you just - you know, you just get caught up. You just get caught up in this thing.

RAZ: But at a certain point, it can't be about money. It has to be about fulfillment. And weren't you fulfilled by just the creation of your shoes and seeing your shoes out in the world?

MADDEN: Well, that's a very heavy question, how one gets fulfilled. Well, I'm still grappling with that today, you know? So there are moments where I'm very fulfilled, you know? And there are moments when I'm not. I was raised to think that money was everything. You know, money is the center of the universe. And if that's what your core belief is, you know, you'll do anything. And you'll break the law. You know, it's like a - money's like a drug, you know? And we got in trouble.

(SOUNDBITE OF MUSIC)

RAZ: In just a minute, how Steve Madden pays and pays hard for his crimes, and eventually, how he comes back to the company he started to make it even bigger. Stay with us. I'm Guy Raz, and you're listening to HOW I BUILT THIS from NPR.

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RAZ: Hey, welcome back to HOW I BUILT THIS from NPR.

So it's 2002, and after being implicated in a stock manipulation scheme, Steve Madden goes on trial. He's convicted and sentenced to 3 1/2 years in prison. So in the space of just a few years, he goes from being one of the most famous and successful shoe designers in America to sitting in a prison cell.

What did you think? I mean, did you think, I'm finished? My life is over?

MADDEN: (Laughter) Yeah, pretty much. You know, I thought I was - could have - my goose was cooked. But I did have the sense that I could get through it.

RAZ: Were there people who knew you who didn't like you who were just feeling, like, he got his comeuppance?

MADDEN: Oh, sure. Yeah. I had made such a success in the shoe business, and I was a bit of a rebel. So now people are going, ha, see? That's what happens when you do that.

RAZ: Where did you...

MADDEN: In Florida.

RAZ: You were sent to...

MADDEN: Florida, yeah.

RAZ: ...A minimum security prison?

MADDEN: Yeah - what they call a camp.

RAZ: And what was your living situation like there?

MADDEN: I lived in a barracks. It was like a military barracks.

RAZ: You had your own room?

MADDEN: I lived in a cube (laughter). I lived in a cube and with another guy or two.

RAZ: How did you pass the time?

MADDEN: Well, read a lot, exercised a lot. And I taught some classes when I was there.

RAZ: Did you - when you got there, and you knew that you were going to be there for at least - well, you were there for 31 months, but 41, I think, was your sentence...

MADDEN: Thirty-one months.

RAZ: Thirty-one months.

MADDEN: Yeah.

RAZ: Did you ever get depressed? Did you ever think, I don't know how I'm going to stay here for 31 months?

MADDEN: (Laughter) Yeah. My first night, I looked up at the ceiling, and I said, how the heck am I going to do this? How am I going to get through this?

RAZ: Did it go by faster than you expected?

MADDEN: It seemed like 31 years.

RAZ: Wow.

MADDEN: (Laughter) But I quickly ascertained early on that whining and moaning would not do me any good, and running around saying I was innocent would not do me any good. So I would try to get through this, try to better myself - it sounds corny - but exercise and read and learn and, you know, that kind of thing. And so I did.

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RAZ: When you went to jail, Steve Madden was doing very well, right?

MADDEN: When I went to jail, it was doing well.

RAZ: Were you worried about the brand - that the name, your name, was the brand that...

MADDEN: Well...

RAZ: ...Your...

MADDEN: I had great people working for me. I was really worried about surviving and getting through it.

RAZ: You personally...

MADDEN: Yeah.

RAZ: ...Or the company?

MADDEN: The prison. I was really more focused on getting through that experience.

RAZ: Did you think that you would ever go back to Steve Madden, your - the company you built?

MADDEN: Yeah. Yeah.

RAZ: You did. So you had that horizon...

MADDEN: Yeah, I did.

RAZ: ...To look forward to. Do you think - this is a really weird question, but I'm curious to hear your take on it - if you could trade the time you were in prison for, you know, just continuing on and not having that experience, would you do it? Or do you think that it's - strangely enough, that that time being incarcerated was important for your development as a person?

MADDEN: Yeah, that's exactly right. I'm a very big believer in, you know, destiny and your path and all that corny stuff. I just believe it viscerally. So I'm so grateful for my life after prison. I married a great girl. I had great kids. I don't know that I would have had children had I not gone to prison. So I regret some of my choices - you know, shortcuts that I took or, you know, thinking that money was the most important thing. I regret decisions like that. But I don't regret a day in prison.

RAZ: It's like...

MADDEN: It's an amazing experience. It was very painful. I mean, the only thing I can - I've tried to describe it to people - your heart gets broke every day.

RAZ: Yeah.

MADDEN: When you're in prison, your heart breaks every day. The living in prison part is not as terrible as one might think. But, you know, your heart's breaking because you're not with the people you love. That's the difficult part of prison.

RAZ: It sounds like you became a much more empathetic person when you were there, and you saw people who were unlike you - who did not grow up like you, who came from different backgrounds...

MADDEN: Yeah.

RAZ: ...Who had - who kind of ended up there because of circumstances.

MADDEN: Well, particularly the African-American experience really touched me - and young men dealing drugs, getting huge sentences - unfair drug laws that really were biased against black people. So that was - you know, to see problems in those communities - you know, to talk to young, black men and - it's a very complicated, you know, issue. I mean...

RAZ: Yeah.

MADDEN: You know, I just think - I'll give you an example. This is a little thing, but, you know, when I grew up - I went to grade school in the '60s, right? We learned that Robert E. Lee was a kindly gentleman.

RAZ: Yeah.

MADDEN: He was called a hero. Like, he defended his homeland of Virginia. And that's just complete racism. But we didn't realize it. It's the subtle form of racism. So that's the kind of thing that - you know, those kind of feelings are stuff that came up in prison, you know...

RAZ: Yeah.

MADDEN: ...That kind of thing. I learnt and read more about it.

RAZ: OK. So you - I think you get out in 2005. And do you remember the day that you were released?

MADDEN: You know, that's such a interesting question because I don't, really.

RAZ: Wow.

MADDEN: It was a bit of a blur. I think of it now - I mean, I thought about that day when I was away for so long - what it was going to be like - and I can't remember it now. I really can't. My wife picked me up.

RAZ: And we should mention that, while you were in prison, you fell in love.

MADDEN: Yes. Yeah. And she picked me up.

RAZ: She was an employee of the company.

MADDEN: And we went - I know that we had sushi. And I just can't remember. It was so - it was such a blur, and it was so much coming at me. You know, when you're locked up after 30 months, you know, everything is, like, amazing. Like, a slice of pizza is, like, oh, my God. Like, this is the greatest thing ever.

RAZ: So you're out. You're back in society. You've got your freedom back. How long did it take you to adjust to having control of your own schedule, your day-to-day schedule?

MADDEN: Well, there's a transition period. You go into a halfway house. But I was fortunate because I had a job. And I came right back to work, so it was an amazing time.

RAZ: And what was your position when you came back to your company?

MADDEN: The same position I'm in today, which is the founder, which is the chief cheerleader. We have fabulous people running Steve Madden. I wasn't a great CEO.

RAZ: Why weren't you a great CEO?

MADDEN: You know, I'm just - I'm not detail-oriented, and my talents are suited in other things, you know?

RAZ: Yeah. When did you realize that you were not cut out to be a CEO?

MADDEN: Well, when it's - the business is small, you can kind of be the CEO.

RAZ: Yeah, you know everybody.

MADDEN: So you know everybody. You live and breathe it. And then you could be a CEO because you touch everything. But then a business - you know, once a business gets past a certain point, you know, it's impossible for someone like me to do that job.

RAZ: But when you came back to the company in 2005, I think within four years, Steve Madden hit revenue of over half a billion dollars. So what happened in that time? Like, how did the company grow? What was the strategy that allowed you to grow so much?

MADDEN: So our goal was to, you know, make great shoes. And, you know, I think that that kind of, like, won out at the end of the day. The marketing wasn't super fantastic. It was just great shoes, great prices, great value. And, you know, I think that we just wore everybody out with that. You know, more people were giving us their open-to-buy. And we opened more stores, you know, and thing - and our Internet business exploded.

But the big thing about Steve Madden, I have to say - and I've said this many times - was the people at Steve Madden - is that I've hired so many great people. It starts with recognizing my own limitations. I'm weak at that, so let me get somebody that can do that for me. And, you know, that's really the story. It's people.

RAZ: So you come back to the company, and you - by the way, you had plenty of money at that point. I mean, you could have sold your shares, walked away a very rich man and just kind of - I don't know - done something else or focused on yourself.

MADDEN: Yeah.

RAZ: Why did you want to go back to the company?

MADDEN: Well, actually, it's - that's an eternal - that's a - I grapple with that all the time. So I love the idea of making shoes - and that people want to buy, and I love seeing my shoes being worn. And I just love all of it. And I love making money. Let me be clear about that. I love it. I love the whole thing.

RAZ: Well - because you don't need more of it. So what do you love about it?

MADDEN: Well, OK. That's a good - these are great questions. And I want to ask other entrepreneurs or other people, like, so how do you stay motivated? You know, let's say you've got, you know, a few dollars in the bank, and you know that you - the rent is paid and all of that.

RAZ: Sure.

MADDEN: And so what keeps you going?

RAZ: I once asked Haim Saban a similar question. You know who Haim Saban is, right - the media mogul?

MADDEN: Yes.

RAZ: And, you know, he grew up, like, dirt-poor in Alexandria, Egypt. I mean, he came from literally nothing, right? And I said, you know, what's the big deal? Because he was waiting to sell his company to Disney for - I don't know - you know, more than a billion dollars.

MADDEN: Yeah.

RAZ: And I said, but, you know, why don't you take $500 million when they offered that to you? He said, it wasn't worth that. You know (laughter), I wanted to be a billionaire. And the point he made was that it wasn't about the actual dollar amount. It was - for him, it was a mark. It was like a...

MADDEN: Yeah.

RAZ: It was like a mark. He could say, OK. I've reached this point. And then I can reach this point. And then it's this point. And it's like a demarcation point of success.

MADDEN: Yeah. It's a heavy question. It really is. But, of course, it's a luxury that people with money have to be able to talk about this stuff. You know, there's somebody out there that will listen to this. And, you know, they've got to pay their rent next Friday. And they'll say, well, listen to this idiot talking about it. You know, and I agree with them.

RAZ: No, but it's about...

MADDEN: It does get lost. I know.

RAZ: But it's about human motivation, right? Like...

MADDEN: Yeah. The money is the money. But it's something I think about a great deal because I feel so good - if I have had a great day at work where I'm inspiring and inspired at the same time, it's such an amazing feeling. There's no amount of money that can replicate that.

RAZ: Yeah.

MADDEN: So I guess that's what I want - you know, inspire and be inspired.

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RAZ: Do you - what was the last shoe that you designed, just out of curiosity?

MADDEN: The last shoe I designed was last week.

RAZ: Last week?

MADDEN: It was a sneaker with studs.

RAZ: You designed a shoe last week?

MADDEN: Oh, yeah. Yeah, we have a factory in Long Island City just outside the East River in Manhattan. But I'm always fiddling with shoes and thinking about shoes. Of course, I have a great team that does most of the work, and I take most of the credit now.

RAZ: But, Steve, you don't seem to be super-obsessed over your own personal style. You're - like, you've got the baseball cap thing going. You've got - but you're not wearing, like, designer, like, runway outfits every day.

MADDEN: No. No. I'm (laughter) - I look like a garage mechanic some days...

RAZ: (Laughter).

MADDEN: ...On that runway. Yeah, I wear T-shirts and jeans. I'm very lucky. That's - I don't take that for granted. I'm blessed that I am - the ability to wear a nice, clean T-shirt every day.

RAZ: Did you ever feel like - I don't know, like some of these fashion folks kind of were snobby about you, that they - I don't know - they didn't let you into their club because you weren't from, you know, Milan or didn't go to a art school or...

MADDEN: Yeah.

RAZ: ...Because you wore baseball caps and (laughter), you were, you know, kind of kicking their butts with...

MADDEN: Yeah.

RAZ: ...These sort of shoes that were a fraction of the price? Did they...

MADDEN: Yeah, there's a bit of that. There was a bit of that big-time. It's not so much anymore.

RAZ: Did it used to bug you?

MADDEN: Yeah, it bugged me. It bugged me a lot. You know, I would - or I would go into a high-end department store - like a Barneys, let's say - and they wouldn't carry Steve Madden. They wouldn't dare carry Steve Madden. But all the people working in the store wore Steve Madden. It would just drive me crazy.

RAZ: Yeah.

MADDEN: Yeah. That happened so many times. And still to this day, there's a bit of that going on. It's frustrating.

RAZ: But if you step away from the balcony - like, me looking at this, I would be, like, who cares (laughter)? You crushed them all - like, so big deal.

MADDEN: Well, I once was upset because they put Puff Daddy in the CFDA.

RAZ: The CFDA's a club for what?

MADDEN: CFDA - it's something for designers...

RAZ: ...Fashion. Uh-huh, right.

MADDEN: CFDA, yeah - very, very posh.

RAZ: And?

MADDEN: And they put Puffy in there. And I thought to myself, Puffy? He's not - what does he have to do...

RAZ: Are you in there?

MADDEN: I'm not. They won't let me in.

RAZ: You are - even...

MADDEN: No.

RAZ: ...To this day...

MADDEN: No.

RAZ: They won't let you in. You cannot get into their...

MADDEN: I'm not allowed in the building. So, you know, and they would say, well, you copy, you know, Balenciaga or whatever it is...

RAZ: Yeah.

MADDEN: ...You know, whatever the - you know? And we definitely are aware of expensive shoes that are out there, you know. But Steve Madden...

RAZ: But, I mean, in some ways, a lot of these high-end designers could make the - you could make the case that, you know, the younger crowd will enter the market by buying Steve Madden shoes, and then there's this aspirational to buy Manolo Blahniks.

MADDEN: By the way, I always say it's a gateway drug of shoes - Steve Madden. They're not buying Louboutins and Manolos without starting with Steve Madden. So Manolo should give me tons of love for that. I reach much - many more people than them.

RAZ: Do you think that there will be a point where you are acknowledged by your peers? Is that important to you?

MADDEN: I'm acknowledged by a lot of people - probably too much. You know, young men coming up really know and identify with the struggle and the grind and what I've done. So I think there's a different kind of respect going on - not what I had thought but another kind of respect. And I feel it all the time. You know, I'm walking down the street, people shout out to me and - you know?

RAZ: Yeah.

MADDEN: It's the real thing.

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RAZ: How much of your success do you think is because of your skill and intelligence and hard work, and how much of it is because of luck?

MADDEN: I think a lot of it is luck. I do. I think - my own sort of philosophy is that the window of opportunity opens for you several times in life, for one. And I think the intelligence comes from knowing when that window is open and, you know, being able to jump through that window - Because you could have all the talent in the world, but sometimes, the window is just not open.

(SOUNDBITE OF MUSIC)

RAZ: Besides the - obviously, the stuff that landed you in prison, what - are there mistakes that you made early in the business that you would have done differently, knowing what you know now?

MADDEN: Let me just say that mistakes can be a very good thing.

RAZ: Yeah.

MADDEN: You know, so there were some mistakes that we made, but we did so many great things. And the thing about that is if you start getting gun-shy and start being afraid to make a mistake, you'll never have the brilliant ideas. You'll never have the big ideas. You know, if you just try to hit the safe ones, you know, then you're doomed, I feel like.

RAZ: Yeah.

MADDEN: So you need to make mistakes.

RAZ: Yeah.

MADDEN: You need to make mistakes. You need to goof because if you're not goofing a few times, it means you're not reaching.

(SOUNDBITE OF MUSIC)

RAZ: Steve Madden, founder of Steve Madden shoes. The company's market cap recently hit more than $3 billion - the highest level it's ever reached.

By the way, how many pairs of shoes do you actually own?

MADDEN: I don't own a lot of shoes.

RAZ: What's the fanciest brand you own?

MADDEN: I own Johnston & Murphy.

RAZ: That's the fanciest...

MADDEN: (Laughter).

RAZ: ...Brand you own?

MADDEN: I do. I own Johnston & Murphy shoes. They're the greatest. Yeah, my dad wore them.

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RAZ: And please do stick around because in just a moment, we're going to hear from you about the things you're building.

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RAZ: Hey, thanks so much for sticking around because it's time now for How You Built That. And today's story starts back in 2002 when Chris Dimino was a design student working on a class project.

CHRIS DIMINO: The assignment was to repurpose a typewriter, given that it's now obsolete.

RAZ: So to come up with ideas, Chris bought an old Smith Corona typewriter at a garage sale, brought it home and just kind of stared at it for a while.

DIMINO: Maybe I was a little hungry at the time, but I think just staring at it long enough, it eventually came to me that this looks like a waffle to me.

RAZ: And a few seconds later...

DIMINO: And then I thought, OK, if I use this as the base and have another thing on top, and it would be sort of like an old waffle maker.

RAZ: And there you have it. That was his idea - to make a waffle iron out of typewriter keys instead of the typical cast-iron grid.

DIMINO: So I went to a Salvation Army and picked up this old waffle iron for seven bucks, and then I basically ripped the keys off of the typewriter.

RAZ: OK. Just to explain this a bit, he took the keys off of that old Smith Corona. He used them to make plastic molds, and then he put the molds into the waffle iron so it looked like you could make a waffle in the shape of a keyboard. But this thing was just for show. It looked incredible, but it didn't have a heating element, so it couldn't make anything. Anyway, the story might have ended there, except Chris posted a picture of this on his website.

DIMINO: People started sharing it, and people started emailing me about it.

RAZ: And, like, two years later...

DIMINO: I had 7 million hits on that page in particular.

RAZ: And, of course, a lot of people were asking Chris, where can I buy this thing?

DIMINO: The more that people asked, the more I asked myself, hey, could I do this? It was almost like the universe was like, you're going to make this, and people are going to like it.

RAZ: OK. But this posed a problem - how to make a real waffle iron. Well, for starters, Chris decided to give his original idea a bit of a makeover and go with the computer keyboard instead.

DIMINO: It was basically a standard five rows of keys with, you know, the escape key, a delete key, the space bar.

RAZ: And Chris figured he'd just take that rectangular design and then put it into an existing mold for an electric waffle iron. But then he discovered that most waffles, they're pretty square, and he couldn't find an electric waffle maker that had that long, rectangular base he needed. So then he thought, OK, I'll just make the base myself. But it turns out that wasn't going to work either.

DIMINO: It's a really steep cliff, pricewise, just to get into that game. You have to get certifications and - not to mention just the manufacturing, the tooling. So it totally scared me away from going that way.

RAZ: So then Chris thought, maybe I shouldn't even bother trying to make an electric waffle iron. Maybe I can just do one that sits on the stovetop - no electronics, no plug.

DIMINO: I ended up making one real aluminum version carved out of a block of aluminum - super heavy (laughter), heavy and dense and thick. But I poured batter in, and lo and behold, on the first try, I made a very, very good waffle.

RAZ: And a few weeks later, he launched a Kickstarter campaign, and people were really into it.

DIMINO: And they're, like, oh, my God; finally, you're making it now; I can't believe you're finally making it.

RAZ: Chris raised over $60,000 on Kickstarter. And with that money, he was able to find a factory in China that was willing to make the waffle iron. And, yes, if you look at his video, the thing definitely does make waffles in the shape of a computer keyboard.

DIMINO: I designed this so that, with all the keys there, it sort of has parts that are thick, and then basically, between the keys were thinner. So my hope was that those would be sort of crispy and airy, and then the other parts would be sort of more dense, and you'd find ways to have fun with it with, you know, toppings and putting berries in the keys.

RAZ: Chris calls his product - what else? - the Keyboard Waffle Iron. And over the past three years, he's sold 7,000 of them, mostly on Amazon. But for now, he's still got his day job as a graphic designer.

If you want to find out more about the Keyboard Waffle Iron or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us your story, go to build.npr.org. We love hearing what you're building. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at hibt@npr.org. And if you want to send a tweet, it's @HowIBuiltThis.

Our show was produced this week by Ramtin Arablouei, who also composed the music. Thanks also to Nour Coudsi, Neva Grant, Sanaz Meshkinpour and Jeff Rogers. Our intern is J.C. Howard. I'm Guy Raz, and you've been listening to HOW I BUILT THIS from NPR.

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