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Losing a deal at Nordstrom helped this shoemaker become a millionaire

Australian entrepreneur Jodie Fox was tired of walking out of shoe stores feeling frustrated. "You'd come home saying, 'They ran out of my size' or 'They didn't have the color I needed,' so I thought, let's solve this," she says.

Her inspired fix: Shoes of Prey, a mass-customization, on-demand online retailer that within days can produce, say, a size 3 extra-wide pointy pump with zebra stripes if you need it — and at a rack price that has traditional shoe brands pivoting heel to catch up.

Founded in 2009 in Sydney but now based in Los Angeles, the company has logged more than 6 million customer shoe designs on an alluring web interface that makes bespoke footwear as simple as ordering a pizza online.

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Shoes of Prey has raised $26 million in funding, with backers including Khosla Ventures, Bonobos CEO Andy Dunn and TechCrunch founder Michael Arrington. Manufacturing is done in a dedicated factory that the brand opened in China in 2014. Shoes are typically delivered within two weeks.

"The whole approach is less dictatorial than traditional shoe brands that tell you, 'This is what you're wearing this fashion season,'" says early investor Elaine Stead of Blue Sky Funds. "Instead, it's 'Tell us exactly which shoe you want when you want it and we'll make it for you."

Shoes of Prey co-founders Jodie and Michael Fox.  To date, their Los Angeles-based mass-customization online shoe retailer has logged more than 6 million customer shoe designs.
Photographer | CNBC
Shoes of Prey co-founders Jodie and Michael Fox. To date, their Los Angeles-based mass-customization online shoe retailer has logged more than 6 million customer shoe designs.

Fox, whose background is in law and advertising, co-founded the company with two former Google execs, including then-husband Mike Fox, who is still CEO, and ex-Googler Mike Knapp, who was CTO and managed the Shoes of Prey engineering team. In January he left the company to pursue a new start-up.

None of the three had shoe-industry experience. "When you're pioneering a space, you tend to figure out by doing," says Jodie Fox. "We test the things we think might work, and when they don't, we adapt and move on with that much more understanding."

One hard lesson came in 2016 after a much-ballyhooed brick-and-mortar partnership with Nordstrom came to an end. For nearly a year, six Nordstrom locations had been featuring Shoes of Prey in-store design studios, a deal that had been viewed as an important step forward for the brand.

While Nordstrom continues to have a stake in Shoes of Prey as part of a $15.5 million funding round and sells the company's shoes online, the pullback forced a change of focus for the start-up.

"When you're pioneering a space, you tend to figure out by doing." -Jodie Fox, co-founder of Shoes of Prey

"My absolute respect goes out to anyone running a retail store, because of the complexities," Fox says. Returning to online sales exclusively "freed us up to focus on our core channel," she says.

The company will need to continue finding ways to set itself apart, analysts say. "There are so many footwear companies, so you really need every advantage to get customer attention," says Beth Goldstein, an industry analyst for fashion footwear and accessories at NPD group. And while 25 percent of footwear dollar sales are generated online, and mass customization is increasingly popular, Goldstein says, "it's been hard for any one company that combines both to jump out with consumers."

Fox says the secret is "to zig when everybody else is zagging." To that end, Shoes of Prey officially announced its one-week express production capability in May as part of an ongoing plan to shrink the gap between order and delivery. The hope, she says, is to one day make the shoe-customization process almost instantaneous.

In fact, Fox has a vision all worked out, with 3D-printing technology that is almost up to the task. "I believe in a near future where in your wardrobe you've got a screen or hologram that says, 'Good morning, what shoes would you like today?'" she says.

"By connecting to your calendar, the local weather and other data — like what you've worn recently and what everyone else is wearing at today's meeting — your device will find shoes that match, and a shoe will print out while you have a shower."

— By David Hochman, special to CNBC.com

Correction: This story has been updated to reflect that Shoes of Prey officially announced its one-week express production capability in May.