Powered by RedCircle
This episode memo was brought to you by Bevel.
To quote the legend Mariah Carey, “It’s tiiiiiime.” The holiday season is here and my friends at Bevel have something special for Trapital readers.The company that brought you the iconic Bevel blade is now offering a 20% discount on all of its devices for its pre-holiday sale. The promotion ends on November 19.
I’ve been a fan of Bevel from the beginning. I bought my older brother the razor as a holiday gift a few years ago and he still has it today. Their quality products are the secret to keeping you looking on point all holiday season long
This limited time offer ends Sunday 11/19! Beat the holiday rush and get your Bevel device here.
Today’s episode and memo is about Reebok. The company rose to power in the 80s, aligned it self with hip-hop culture, had exclusive deals with all the sports leagues, but Reebok had a less-than-stellar fall from grace.
I broke it all down with Zack O’Malley Greenburg. This was our first pod we recorded in person! You can listen to the episode here or read our highlights below.
Selling a product vs selling a vision
From 1983 to 1989, Reebok’s annual sales grew from $12.8 million to $1.82 billion. Thanks to shoes like the Freestyle and The Dunk, Reebok overtook Nike in sales and planted its flag in the sneaker wars.
The Boston-based company focused on selling sneakers and did its job well. Joe Foster, Reebok’s founder, never had dreams of taking over the world. He wanted to “tackle the athletics market and break into the U.S.” Paul Fireman, Reebok’s CEO from 1979 to 2006, had a similar perspective. Here’s what he shared in a 2021 interview with Retail Dive:
“I didn’t have any giant ambitions. I just had the ambition to find a business that I could get into and make it something of my own and be entrepreneurial… If I could build it up, I would build it up to a place where I could make a good living, and take a vacation once in a while. That was all my ambition was at the time.”
The company’s vision was grounded. Reebok’s goal was to sell a product and optimize how it sold that product. Meanwhile, Nike had a much bigger goal: sell a lifestyle.
From Michael Jordan to Serena Williams to Tiger Woods, Nike was known for celebrating its stars. The company increased its total addressable market by convincing the everyday person that they were athletes too. Nike is world-class in brand and marketing, they just happen to sell athletic apparel.
It’s like the great Seth Godin quote:
“If Nike opened a hotel, you’d have a pretty good guess about what it would be like. But if Hyatt announced that they were going to start making shoes, you would have no idea whatsoever what those shoes would be like.”
Reebok isn’t quite Hyatt in this scenario, but Reebok’s hotel would have had several makeovers over the years.
That 1980s Reebok hotel would look like a Jazzercise class. The 90s Reebok Hotel would look like a scene out of a movie starring Shaquille O’Neal. The early 2000s Reebok hotel may look like the set of BET’s 106 & Park. And by the mid-2010s, the Reebok hotel lobby would look like a CrossFit gym.
Despite the brief moments when Reebok surpassed Nike, the Reebok executives knew it was short-lived. Nike was playing a different game.
You can listen to the full episode here or read below for more highlights.
Reebok’s wins in the early 2000s
In 2001, Reebok’s two flagship athletes and NBA MVPs, Allen Iverson and Shaq, faced off in the NBA Finals. They were full-time basketball players and part-time rappers. Shaq’s Reebok shoes had a strong following, but big men rarely sell as many shoes as a flashy guard like Iverson could.
AI embodied Reebok’s crossover between sports and hip-hop. His Sixers uniform was the third-most popular jersey at the NBA Store from 1998 to 2008 (behind Michael Jordan and Kobe Bryant). He was on the cover of the first few NBA 2K video games. Reebok even sold Allen Iverson football jerseys due to the popularity of his high school highlight clips.
Iverson’s Reebok A5s flew off the shelves with an iconic commercial with Jadakiss. Reebok and AI leaned into hip-hop, agreed to a lifetime deal, and ran it back with the A6.
In 2002, Reebok tried to sign LeBron James but lost the bid to Nike. With a budget to spend and eager plans to grow, Reebok turned to artists to sell shoes instead.
Reebok’s current CEO Todd Krinsky talked about this in a 2018 interview with Digital Trends:
“We had this infamous meeting at the boardroom where the chairman of the brand was saying, ‘We have to get more relevant. If it’s not basketball, and it’s music, tell me who,’” Krinsky added. “I said to him, ‘There’s definitely one guy but it’s going to be hard to get him.’ He was like, ‘Who?’ Then I said, ‘Jay-Z.’”
Reebok soon had the two biggest hip-hop stars in the world, Jay-Z and 50 Cent, with their own sneakers, the S. Dots and G-Units, respectively. The shoes came out the gate hot, boosted Reebok’s U.S. footwear sales by 17%, but the momentum couldn’t last.
Once the shoes took off, Reebok flooded the market. Here’s a quote from sneaker analyst Matt Powell in Retail Dive:
“With the S. Carter, Reebok dropped an initial 500 pairs, then 5,000 when those sold out, then 50,000, according to Powell.
“So the 50,000 pairs were sold out, and then they said ‘Whoa boy, that worked. Let’s make half a million pairs.’ And the shoe ended up at T.J. Maxx because there was just way more product than the consumer could digest,” Powell said. “You think about [the Jordan Brand], a $3.6 billion brand. But they built a $3.6 billion brand by selling out all the time, by never meeting demand. And it took them 35 years to do that.”
It was another sign of how differently Reebok and Nike operated. By this point, Reebok was already in talks with Adidas on its future. Being acquired by a competitor was an informal “concession” for Reebok in the sneaker wars, but the outcome was even more unfortunate.
a failed acquisition and struggles along the way
In 2006, Adidas acquired Reebok for $3.8 billion. Adidas had a global footprint but wanted to expand in North America where Reebok was stronger. The intended vision was for both brands to thrive, but the cultural clash was hard to ignore.
Adidas has an engineering-inspired, process-oriented approach to business. It was the complete opposite of Reebok’s upstart mentality.
At the time of the acquisition, Steve Stoute, who worked on several brand collaborations, said this to The New York Times:
“Treat the Adidas and Reebok brands separately… There’s a potential problem if consumers see the lines as being blurred, so you have to treat them as standalone.”
Adidas did treat the brands separately, but they did that by gutting Reebok for all of its cultural cache and transferring that to Adidas. Reebok went from being synonymous with hip-hop to being synonymous with CrossFit.
Sure, CrossFit was an emerging opportunity in the early 2010s that made sense for Adidas to pursue in some form. But to do that, Adidas stripped Reebok of what made the brand unique.
Let’s imagine that Apple acquired A24 for its great content and cultural cache. But then Apple folded the A24 ‘brand’ into Apple TV, then pivoted A24’s component parts to focus on anime and compete with Crunchyroll. That’s what happened to Reebok.
Despite some partnership attempts with hip-hop in the 2010s with Kendrick Lamar, Rick Ross, Future, and Cardi B, it wasn’t enough to bring Reebok back to its glory days.
Listen to the rest of the episode for more on:
– Reebok’s sale to ABG
– How Shaq now owns part of Reebok through ABG
– Jay Z’s Rucker Park team that inspired his S Dot sneakers
– Missed opportunities for Reebok
Zack O Malley [00:00:00]:
All right, today we have a deep dive on Reebok and its influence in music. I’m joined by my guy, Zach O’Malley. Greenberg. And this is the first one that you and I are doing in person.
Dan Runcie [00:00:09]:
Yeah, I love this. We should make a habit of it. We’ll meet up in Texas or something every month, you know, in the middle.
Zack O Malley [00:00:15]:
Yeah, we’ll just have a Dallas show that we post up and yeah, let’s just make it Austin.
Dan Runcie [00:00:20]:
Let’s do Austin.
Zack O Malley [00:00:21]:
Austin. Yeah. That’s a lot better. I’m glad you’re excited to do Reebok, because this is a company that has had an interesting journey in music and its influence there. We’ve both, respectively, talked a lot about fashion products and their influence and combinations in sports and music, too. And I feel like Reebok is one of those brands that we saw the rise, we saw the fall. And in many ways, those are the interesting stories to dig into.
Dan Runcie [00:00:47]:
Yeah. And I think it’s kind of wild. I mean, when you look back at it, Reebok, there was a minute there in the 90s when it was going head to head with Nike. I mean, they were very much on the same footing, at least in my recollection. As a kid, you were kind of either a Reebok kid or a Nike kid or something. And I feel like Adidas wasn’t really even in the conversation in the way that it is today. And I think when you look at what happened subsequently, so much of it had to do with how those different brands operated in the music world. And that had such a great effect on their respective footwear businesses, which just goes to show the power of music.
Dan Runcie [00:01:21]:
And, of course, hip hop specifically, as we always talk about.
Zack O Malley [00:01:24]:
Yeah. Thinking about growing up as well. It felt like Nike and Reebok on equal footing. I mean, the numbers proved it. In 1989, Reebok was actually ahead of Nike in terms of sales, but you felt it in terms of what people wore, too. Did you have Reeboks growing up?
Dan Runcie [00:01:39]:
No, I was always a Nike kid. I remember I had this nanny who was super cool. She was valley girl from, I think, Menlo Park. And she always had these crisp, white freestyles and I just remember with the little British flag on them. And so I sort of always associated that with the cool, but I don’t know, a different kind of cool. And I think, in a way, it wasn’t necessarily linked in my mind to sports or culture or anything. It was sort of like, I don’t know, she seemed hopelessly cool and fashionable to me as a little kid, and I was more sort of into the sport side of things. And Nike was really big in sports.
Dan Runcie [00:02:20]:
I was big into Jordan, stuff like that. And so I guess maybe I saw that being kind of a dividing line of where I put my allegiances or my preferences. So that was late eighty s. And then as the 90s went on, I just remember Reebok becoming bigger and bigger. And when you would go to the shoe store to try on your next big pair of shoes, it’s like they’d bring out the Reeboks and the Nikes. And I was always kind of like, oh, I’m a Nike kid. I want the Jordans, or, I want the Penny Hardaways. Those were like, I think, really underrated a couple of pretty great ones there.
Dan Runcie [00:02:55]:
We could do a whole episode of that, maybe. But yeah, it really was toe toe. What kind of kid were you growing up?
Zack O Malley [00:03:01]:
I definitely wanted Nikes more. I think I probably got Reeboks more often. I would say I had the pumps at one point, and we’ll talk about those. But I’m glad you mentioned the freestyles, because I think that shoe was actually a game changer for Reebok. This was a company 1980, 312 million dollars in sales. It wasn’t necessarily booming, but by the end of 1989, $1.7 billion in sales, and it had exceeded what Nike was doing that same year. And in redoing a lot of the research for this, there were two shoes that really made the difference. There the freestyle.
Zack O Malley [00:03:36]:
And that was part of their whole thing, where one of the executives saw that his wife was in some aerobics class. In an aerobics class, everyone was either wearing running sneakers or no sneakers at all. So he’s like, okay, we need something that taps in here. So it was really cool to see how they tapped into the women’s footwear market. And then several years later, the pump comes out. They have Dominique, they have D Brown, who wore those shoes iconically at the 1991 Dunk contest. So you’re seeing Reebok get more involved with the culture, too. But then there were also some challenges, I think, that Reebok started to have in the 90s, around the time that it felt like still relevant.
Zack O Malley [00:04:14]:
But the Dream Team challenge was one of the things where the Reebok team had got this official bid to be the official logo partner and be the official jersey for the awards ceremony and the awards jersey that they won. But of course, Michael Jordan, as you mentioned earlier, famously, a Nike athlete. There was all these stipulations there, and they pretty much ended that. So the players wore the Reebok stuff, but they covered the logo. So I feel like that, in some ways, was almost a signal of where things could eventually go for Reebok, because they still had plenty of highs in the course. They signed Shaq 1992. He’s one of the biggest stars. You see that guy everywhere, movies and rap albums and stuff like that.
Zack O Malley [00:04:59]:
But, yeah, it ended up being a tougher decade than people probably would have thought it was.
Dan Runcie [00:05:05]:
Yeah, I mean, going from kind of coming out of nowhere to being toe to toe with Nikes, to getting a little bit tougher than people thought. I mean, it was quite a whirlwind. But that moment with michael jordan, I thought it was so jordan. Right. I mean, the fact that I think his solution to it was to wrap himself in the american flag, and what an elegant solution that is. Nobody’s going to sort of complain about it’s a bad look for reebok to criticize him for wrapping himself in the american flag or something like that. But talk about a great business know, a way of kind of slipping out of some controversy. I think that’s another underrated, brilliant business move by jordan.
Zack O Malley [00:05:51]:
Reebok got the isaiah thomas a dream team.
Dan Runcie [00:05:56]:
Zack O Malley [00:05:56]:
It’s funny to think back, because I think for me, there was definitely a turning point once alan iverson came into the picture with nike. So they signed him in 1996. And while shaq was popular, one of the things that you had heard over the years and about selling sneakers is that they felt like big men don’t necessarily sell shoes. They felt like the shoes are more so structured for them to have the sturdiness of them doing these post moves and stuff like that in your average kid that’s in the driveway. They’re trying to replicate what someone like alan Iverson’s trying to do. They’re trying to replicate all of these things. But alan iverson, of course, in a lot of ways, became the embodiment of hip hop culture, at least for the NBA. And I think reebok eventually did lean into a lot of that.
Zack O Malley [00:06:43]:
But as you were talking about before we started recording, it’s almost like reebok was a little bit late to that perspective, just compared to where some of the other brands were.
Dan Runcie [00:06:51]:
Totally. And I think you’re right. I mean, the thing about big men don’t sell shoes. It’s not they don’t sell shoes at all. But I think it’s kind of that kids want to fly, right? And that’s what know, especially through jordan kind of had the monopoly on air, right? Nike, air jordan, you want to be in the air, you want to be flying. I mean, I remember being a little kid, I would try on these new shoes, these nikes, and they had the little air bubbles. And I was telling my parents, like, see, it makes me fly. It makes me jump higher.
Dan Runcie [00:07:22]:
It’s like, it doesn’t make you jump higher. That’s ridiculous. But the marketing was so great on it, and I think it was because nike aligned itself to basketball players who could fly, basically. And reebok, maybe, at least at first with shaq, was more around the big men. But, like, you know, there are the wilkins, so, you know, there were some people who could fly in there, too. I think maybe nike just did a better job of selling the flight aspect than reebok did.
Zack O Malley [00:07:51]:
I think nike did a better job of selling in like one of the things that people have often said about nike is that this is a company that excels at marketing. They are selling you marketing. They happen to sell you these products that line up with the marketing. But marketing is what they’ve done so well. I’m thinking about Tiger Woods, Michael Jordan, Serena, all these athletes that they’ve built up in that way. And while I do think that Reebok had some aspects of that, in a lot of ways, the leadership from the company, at least from some of the research I’ve done, was a bit more focused on how do we make this company do this thing that it does well in terms of selling shoes. So the vision was almost constrained to a fault in terms of trying to optimize being a good apparel company versus that. Nike kind of had this bigger, loftier, big, hairy, ambitious goal that kept it grounded.
Zack O Malley [00:08:45]:
And even, in a way, one of the things that stuck out. One of the CEOs at the time, I think his last name was Fireman he said something to the extent of even though they were beating Nike, they felt like it wasn’t going to be for long because they were focused on trying to just operate a successful apparel company from their Boston, Massachusetts headquarters. And Nike’s trying to take over the world.
Dan Runcie [00:09:06]:
Yeah, and maybe you could kind of look at it like the focus was how do we sell shoes? And Nike was sort of, how do we tell a story? And maybe in some cases, how do we sell shoes? I mean, that gets you to sell more shoes. Right. But in the long term, how do we tell the story? How do we make you fly? That’s how you win in the long term. And having that imagination and I think it’s kind of what you did with the names that you had on board. Right. It wasn’t necessarily who you had, although having Michael Jordan, that’s kind of hard to beat. But how do you tell the story of those athletes that you have? And specifically, how do you connect it more and more to hip hop, which was becoming already one of the dominant aspects of global culture? And I think as the years went on, reebok tried, but it was almost a little bit too late. But that didn’t mean that they didn’t do some interesting and experimental things.
Zack O Malley [00:10:10]:
Yeah, I think some of the stuff they did made sense. And I almost feel like AI benefited from it a bit more than maybe Shaq did. I feel like Shaq, in a lot of ways, you think of all the other stuff, whether it’s Shazam or his rap albums or Steel or all the other things that he did. But I think they really tried with Alan Iverson. And this is where you saw folks like Steve Stout getting involved and they had this sub aspect or I don’t want to call it a sub brand, but one of, I guess, their Air equivalent was blacktop. So they had blacktop as their subbrand, which was supposed to be a little bit more street ball and that mentality which they feel like AI captured a bit more. And then the sneakers and then AI leaned into it himself with his personality and just him himself being a rapper too. But then the commercials that stick out, they had commercials for the AI and the A Six.
Zack O Malley [00:11:01]:
Do you remember those?
Dan Runcie [00:11:02]:
Oh, vaguely, in the back of my mind, yeah. How did they go?
Zack O Malley [00:11:06]:
So the A Five one, that was with AI and Jadicus, so the two of them had a rap song that essentially was like into the commercial. And you saw AI, it was black and white. It was pretty cool. And then they did another one with this shoe that dropped the next year. But that A Five one was huge because that’s the one that launched 2001. And then after that, AI gets his lifetime deal that he ends up getting from Reebok. And I think it worked really well for him because I still haven’t seen NBA basketball player outside of Jordan have a shoe that felt like it really had its own moment the way that Reebok did with Alan Iverson.
Dan Runcie [00:11:47]:
Yeah, that’s a really good point. And I guess what’s surprising to me is that it didn’t manage to carry through in the same mean, I guess, what stopped it from having the same long standing impact that Jordan had on Nike? I mean, obviously talking about way different scale, but did they not lean into that? Know, I don’t know.
Zack O Malley [00:12:09]:
Sometimes I was thinking about this before we recorded and this is obviously a tough part just given Alan Iverson and his career. But I think a lot of us know that he’s someone that his career also peaked in a lot of ways 2000, 2001. He has that NBA finals run. He wins MVP. While the a five and a six commercials are happening. And at least in my high school, that jersey went platinum. You saw that AI jersey everywhere. The sneakers were really popular, too, at the time.
Zack O Malley [00:12:38]:
But AI someone that by the time he was in his early mid 30s, he was a bit of a journeyman in the NBA. He was traded. He had a few good years with the Denver Nuggets but by the time he was with the Pistons and the Memphis Grizzlies, it was tough. And we also know that AI had some alcohol problems and things were always a bit challenging for him. And I feel like because he took so many hits from being this hip hop forward and someone that leaned more into what they would say, quote unquote, urban culture with the tattoos and the braids, people almost made him seem much more of like a pariah in some ways. And not only did he take the hits for that, I think we never saw AI become like a mogul in the way that jordan has. And I think even in the conversations you and I have had with Jay Z, what you continue to do after the impact you make helps your legacy live on in a lot of ways. The fact that Jay Z has just continued to go up and up and up helps all the stuff that we talk about from him during the Rockefeller Records days.
Zack O Malley [00:13:39]:
The fact that Jordan just continued, know, be a billionaire and buy and sell the Charlote Hornets helps the Jordan brand live on in a way that I mean, we’ll get to what Alan Iverson is doing now, but I wonder how much of that also hurt Reebok to some extent.
Dan Runcie [00:13:54]:
I mean, I would almost wonder if you could compare it to sort of you could like an AI and Jordan to DMX and like at their know, they were just as high and you could argue that at DMX’s peak he was even a little hotter than Jay Z ever was at his hottest. I don’t know. I mean, it’s hard to argue that AI was ever above Jordan or even really on that plane. But in that early aughts kind of.
Zack O Malley [00:14:25]:
Crossed him over, though.
Dan Runcie [00:14:26]:
Zack O Malley [00:14:28]:
I do think what made AI special though, is that he tapped into an aspect of black culture and being yourself and making people feel seen in a way that Jordan didn’t. Jordan was very much a product of the 90s idealized black man. Not necessarily in a bad way, but I think that AI was more unapologetic about who he was and he took a lot of hits for that. But I do feel like he resonated with people that Jordan never did.
Dan Runcie [00:14:59]:
Yeah, and I think that kind of goes back to the DMX versus Jay Z analogy. Right. There was something maybe more viscerally appealing about AI or about DMX that could really connect in a way that Jordan or Jay Z couldn’t. Where they might seem like a little more aloof because all they did was DJ Khaled, but but really all they did was win, it seemed. And it was harder to relate to that. And if you were looking at sort of the DMX or the Iverson side of things, it was like the underdog. You really had to fight for every little bit of success. And so there was a way of relishing the success a little bit more, even if it seemed kind of more fleeting.
Dan Runcie [00:15:37]:
And then that was a really important moment in time, but sort of burned so brightly that it maybe couldn’t sustain over the long term quite at that intensity.
Zack O Malley [00:15:48]:
Right. It was so close to the sun that it was just tough to maintain. Yeah, that’s a good comparison. Yeah, that’s definitely a good one. I think this also led into an interesting era for Reebok too, because certain things do start to go their way to some extent. 2002, they get this big contract with the NFL to then be the lead jersey sponsor for them. They also get one with the NBA and they end up getting one with the NHL too. And that’s huge because you have tens of millions of people that watch sports on a regular basis, especially in the early two thousand s and pew.
Zack O Malley [00:16:23]:
You get to see your logo every time Peyton Manning or Tom Brady are throwing or every time that Shaq and Kobe are playing basketball. That’s huge for them. But they also ended up in a little bit of a crossroads because 2002, LeBron James is a high school senior. Everyone’s trying to court this guy. He of course ends up going with Nike and then Reebok’s like oh shit, okay, what do we do here? We feel like we missed out on a generational talent and then that then starts the pivot for them to lead more into hip hop and seeing that as an opportunity to make these athletes, people, not these athletes, but to make these stars people that we can build shoes around the same way we do with athletes.
Dan Runcie [00:17:04]:
Yeah, and I think a perfect example of that is what they did with Jay Z. And there’s a whole chapter of this in my book Empire State of Mind where I talk about his Rucker Park basketball team. And so for those who don’t know the Rucker is sort of this legendary street ball tournament that happens in upper Manhattan every summer. And back in the day it used to be that various drug lords in the area would field teams of top street ballers and they would get a couple of NBA players to come in and it was just this pride thing, bragging rights and whatever. And then over time it evolved more into like hip hop stars would come and have a team. And so in this particular year, 2003, Jay Z comes in. He has his team and his big rival is Fat Joe and he’s got his Terror squad team. But what Jay Z does is he decides to put everything together.
Dan Runcie [00:17:54]:
It’s 2003. He’s got his retirement album coming out, the Black Album. And he’s just got this new sneaker deal with Reebok, the S Carter sneaker. And you may recall it’s sort of classic like plain kind of know white sneaker, low top. And so he calls his Rucker Park team the S Carter Team. He gets this bus emblazoned with the S Carter sneaker logo. And then every night, once a week or whatever when they had the games they meet at the 40 40 Club which just opened and they get on the bus and they go up to The Rucker and they do their thing. And so part of the crew in those days Jay Z had just started dating Beyonce.
Dan Runcie [00:18:38]:
Puffy was hanging around. LeBron had become budies with Jay Z, although he uh, just been signed by Nike. He was getting into this Reebok bus, right? And then Jay Z recruited all these NBA players. I think he had Tracy McGrady. He had Eddie Curry, Lamar Odom. I think. Like Jamal Crawford played Sebastian Telfair. And then he had ultimately LeBron was like, maybe going to play.
Dan Runcie [00:19:05]:
It was not clear. Maybe he’s going to play in the final game. And then for the final game, it ended up being the showdown with Jay Z’s team versus Fat Joe’s team. And Fat Joe had like and, you know, all these kind of rugged NBA players. And Shaq was in town. He was going to be like the secret weapon. And Fabfit Freddie had filmed one of the S Carter commercials. And so he’s filming this whole documentary about the Rucker Park team and the day they’re supposed to go up and play the final game.
Dan Runcie [00:19:35]:
The lights just go out. And it was the great blackout of 2003. So they had to cancel the game and they rescheduled it. But Jay Z had his thing all tightly scheduled and the next day he flew off to Europe with Beyonce on this big trip. And then he had to be back within a week in order to do the VMAs or something and then go on she was going on tour and so he missed the rescheduled game. They never played. They technically forfeited there’s a Fat Joe line about this. My players didn’t even have to play to win the championship or something like, you know but anyway, long way of saying this is all an outgrowth of the reebok partnership that Jay Z had.
Dan Runcie [00:20:18]:
And it did phenomenally well. I mean, the ESTAC Carter sneaker was the fastest selling sneaker that they had so far. I think it sold out like the first 10,000 pairs in seconds and half a million over that summer. And they had some really interesting promotions. Like when they first put it on sale, it was a few months before the Black Album came out. But they had a CD with all these tracks from the Black Album or like snippets of it. It’s like a brilliant rollout, great for Jay Z, all this cross marketing and everything. So that did really I guess, you know, what I wonder is sort of why didn’t that turn into something more long lasting, right? Why did that not whatever name any other successful shoe or anything else Jay Z seems to touch, seems to turn to gold.
Dan Runcie [00:21:08]:
Why didn’t this last in that way?
Zack O Malley [00:21:11]:
Yeah, I think the other thing that’s crazy about that moment, too, is that you have the S dots and then you also have the G Units not too far after that. And 2003 is such a big year for both of them. You got The Black Album. As you mentioned, G Unit has their Beg for Mercy album, which comes out a couple of months before that. And in Stunt 101, Lloyd Biggs has a line where he shouts out the G Unit sneakers and he’s pointing to them. So this is the moment, they have two of the biggest artists and groups that are doing everything. Everything’s exploding. And when I looked into this, I saw a few things that stuck out.
Zack O Malley [00:21:44]:
So there’s this sneaker analyst, Matthew Powell. I actually reached out to him for an article a while back. I wouldn’t be surprised if you probably connected with him at some point, too, and he had a few thoughts on why this didn’t take off. His first thought was on supply and demand issue and that he felt that they flooded the market with the shoes. 5000 ended up selling great. Let’s make it 50,000 50,000. Sell great, let’s make it 500,000. So they were able to maximize it from that perspective, but they didn’t quite capture the aspect of leaving people anticipating for the shoe.
Zack O Malley [00:22:23]:
And this is something that Nike had perfected in a lot of ways with Jordan. And unfortunately, some of that limited scarcity has led to people having violent incidents over these shoes. But on the other side, it is something that always kept the alert going. So they had the successful shoe, but before long they had all of these quantities that they were making. So the shoe, because it was so accessible, then they had too many of them. Then you see the shoes on sale at these secondary reseller outlets like TJ. Maxx and Marshall’s and stuff like that. And once your stuff is there, it’s not cool anymore.
Zack O Malley [00:22:58]:
From that perspective, it’s no different than a brand like, you know, when Zoo York first came out, everyone thought it was cool or Ed Hardy. But then the moment passes, they flood the market, and then all those things are you can buy them at Marshall’s. Right? So I think that was one reason that Matt Powell had shared, and then the other reason, this one I’m still thinking about. But they felt like it was a little bit early in terms of Hype culture and just where demand was and stuff like that. I still think that Jordan and that brand had showed how they were able to maintain that. So I’m not quite buying that reason. But I do think the first one is legit.
Dan Runcie [00:23:32]:
Yeah. And I think right, I mean, every year that a Jordan came out, it’s, oh, it’s the Jordan Eleven. The Jordan Eleven s are great, but every year I have a cousin who would go out and buy the Jordans. Every year the new ones came out, even the ugly ones. There are a lot of ugly ones. There are like a lot of bad Jordans out there, by the way. But it doesn’t matter. It was an event.
Dan Runcie [00:23:53]:
People had to line up and do it, and it was just a thing, I think, the beginning of the Hype culture. We’re going to have a limited edition drop. We got to go do this. And I liken it. To a band that underplays. I remember when Bruno Mars first started blowing up they deliberately a lot of bands do this, but deliberately underplayed like 500 seat venues, thousand cap type of things, when they could have been doing Amphitheaters 4000 and maybe selling like 90% or 95%, making more money. But they underplayed. They did these tours early on.
Dan Runcie [00:24:30]:
Maybe there wasn’t really more than one album worth of stuff to sing. So it’s like, cool, we’ll do this, we’ll have a couple of openers or something, and we’ll build up demand, and then the next tour you go straight to arenas. And I think that’s the way to do it. That’s what I think Yeezy ultimately did to become as huge as it was. I mean, like we were saying earlier, reebok was maybe too focused on selling shoes instead of telling the story. I would also add it was a weird time to be getting on the Jay Z train. He was about to know, and he was about to go become an executive, which is really cool and was great for him, but also not like the thing that people want to go and buy a shoe. Like, oh, I want to have the sneaker that the dude in the corner office wears.
Dan Runcie [00:25:19]:
Like, I don’t know about that. I think you want to wear the shoe that somebody wears who’s playing basketball or know, at the forefront of fashion or something like that. You don’t want the old guy sneaker. And that’s kind of what it was. And Jay Z was transitioning into that, know, and he himself, if you think about his career, I divide it into old JayZ, new Jay Z, which is, you know, not as stark, let’s say, as Kanye, old Kanye, new Kanye, but I put the dividing line around 2003. And that’s when he shifted from this kind of nonstop shock and awe approach album every year, flooding the market, much like Reebok, to the more of the scarcity model, not putting out an album every year, maybe not even putting out an album every two years. Now it’s like five years between albums, something like that, but doing more exclusive stuff. Champagne, cognac, whatever.
Dan Runcie [00:26:17]:
And he had already realized that he was kind of going to go in that direction, but Reebok was still sort of paying him and promoting his shoes in the old way. And so I think there was a bit of a disconnect there. And again, that’s why even though it sold really well, there wasn’t going to be that kind of longevity. I think also, if you start out with a shoe that is kind of boring, maybe people buy it at first because it’s new and different. I think he was the first non athlete that they gave a shoe deal to. So that’s that’s cool. But when you start out with a boring, like, how are you going to really revise it every year to be new and different? Like, when Jordan came out, the silhouette, I mean, the colors, everything, it was really. Different.
Dan Runcie [00:27:01]:
Right? And so although you could see a through line, through all the Jordans, much like you could see in the design of a Porsche 911 or something, they’re all different, but you can see the baseline of a silhouette. There’s something exciting there. And when it starts exciting, starts out exciting, you can more easily go to other exciting places. When it starts boring, you can’t just sort of completely redo it. I mean, you could, but it becomes something else. And it really felt like a one off shoe. So unless you become the Adidas samba or something like that, that’s just a staple that everybody wears all the know, you’re not going to have that evergreen demand. And I think probably that’s what went wrong for Jay Z.
Dan Runcie [00:27:47]:
It’s interesting to look at the S Carter sneaker that Reebok put out and compare it to the G unit. Very similar, I think, both very boring shoes, and they both have that little script on it with the G unit or S Carter logo. I think that’s part of it. Even though you had I think Jay Z and 50 Cent were touring together that summer, and you had all those stuff coming together, but it was like, where’s it going to go from there? It just wasn’t like, that interesting, a shoe. And I guess the last thing is it didn’t say either of their most well known names on the shoe. Right. It didn’t say JayZ. It didn’t say 50 cent.
Zack O Malley [00:28:26]:
Dan Runcie [00:28:26]:
And I wonder if that somehow capped it. I mean, it’s weird. I don’t know. It somehow feels like a little corny for a shoe to say JayZ or 50 Cent on it in a way that it doesn’t for it to say Michael Jordan or LeBron James. So I don’t know, but I wonder if that somehow kind of capped the potential in one way or another in the long term, even though they both did well and sold like hotcakes in the beginning.
Zack O Malley [00:28:51]:
Yeah, I think the point that you also made about just, like, Reebok’s mentality about selling shoes versus Nikes, about telling a story, could help capture a lot of this, right? Because if you’re focused on selling units and you’re counting beans, you’re like, okay, well, these beans work out great. Let me go push more of them as opposed to thinking more broadly about it. Yeah, that’s a really good point. And the thing is, in terms of the other artists, it’s like they did so much to try to capture it, right? You had the best rapper alive who was about to retire. You had the hottest rapper in the world at 50 Cent. And then they tried to reach into all these other demos, too. You had Lupe Fiasco, so you had the backpack rap covered. You had Daddy Yankee, so they were trying to lean into the Latino and reggae tone market.
Zack O Malley [00:29:36]:
And they had Pharrell as well, so they were leaning a bit more into just everything he was doing. This was right around the time that he had Billionaire Boys Club. So to Reebok’s credit, they definitely tried to cover the yeah, I mean, for the reasons that we discussed, things just didn’t quite click there. And this is actually interesting timing because this is around the time that Adidas comes into play. So the official Adidas transaction, it actually happens in 2006, but the deal first gets announced in 2005. But the executives say that they’ve been talking about it for a couple of years now. And part of the attraction that Adidas had to Reebok was all the stuff that we’re saying. Reebok had the cultural influence in North America, a market that Adidas wasn’t as strong in.
Zack O Malley [00:30:22]:
Adidas was very strong everywhere in the world. Just given everything they’ve done with soccer and soccer’s global footprint, there even some aspects of running as well. But Reebok in many ways wasn’t as strong as that. So that, in principle, was the thought of why they wanted to acquire, but unfortunately, it didn’t quite turn out that way.
Dan Runcie [00:30:45]:
It is ironic, right, that Adidas, which is so steeped in the history of hip hop, going back to my Adidas and Run DMC and all that, the first endorsement deal given to a hip hop act by a sneaker brand, a million dollars. And was it in the mid 80s? It’s kind of wild that Adidas, I guess, went through a period of dormancy in the United States, at least, and that it felt like perhaps acquiring reebok might help boost its prospects in hip hop. And with the youth. Market and things like you know, I guess to go back to the Jay Z and DMX analogy, in prior episodes, we’ve talked about how them putting out two albums within a year, both within a year, helped Def Jam fetch a higher premium. I wonder if you kind of looked at the numbers. Did Jay Z and $0.50 Shoes also help juice the number that Reebok got? It when Adidas eventually came in, and maybe there was a momentum there that could have been sustained if Reebok had stayed independent. I do think that Adidas thought like, oh, we can have these two brands kind of compete with each other in a healthy way. But I think ultimately Reebok got kind of crowded out and maybe some of the juice that they had, whatever juice they had from JayZ and 50 Cent, which we’re talking about, maybe it was doomed to be temporary.
Dan Runcie [00:32:17]:
Maybe it was less about sort of the nature of the juice and more about what happened on a corporate level afterward.
Zack O Malley [00:32:24]:
Right. And I think that there was also a big cultural clash too, that we realized, because even though Reebok had the cultural piece in North America that Adidas didn’t have, adidas wanted that. But when Adidas actually acquired the company, they themselves said that, oh, wow, one of these executives said that this is a mess. This is a complete mess. We thought it was going to be very different. And this is something that I’ve heard before, when people enter businesses that are more culture forward, people say it about music as well. I’ve heard it as well, especially around even with we did the Apple episode recently and some of the things that were said about like Jimmy Ivine’s tenure and how people that are trying to work with endorsement deals or partnerships with talent or figures, companies that are much more engineering oriented and rigid. From that perspective, they often see it as overspending and overzealous.
Zack O Malley [00:33:18]:
Like, why would you do this? Almost in the same way that I think a lot of the Apple music and the Apple team were a bit like, okay, Drake is good, but why are you paying him $19 million? Almost in the same way, they may have been like, okay, why are you paying 50 cent in G unit this amount? Why do we have these rollouts? Why do you have all these products that you’re now trying to then sell to second resellers? And these are the people that you’re leading your pitch deck with to tell me that you want to buy the product. There were even criticisms about them releasing too many of the Allen Iverson sneakers over the years, and people feeling like those were too accessible. So I think that there were some challenges there. They ended up acquiring the company for $3.8 billion, which wasn’t too much of a premium over what their sales were at the time. I think they did have over $3 billion in annual sales, but at least from a valuation perspective, from what we saw, it was a 34% premium. So they felt like they paid a lot for the company. And I remember at the time, there was a New York Times article. They interviewed Steve Stout.
Zack O Malley [00:34:16]:
Steve Stout had worked with AI and Jadakiss and a few others on a lot of those campaigns. And one of his precautions was, you have to treat these as two separate brands, otherwise this won’t work. And unfortunately, I feel like that kind of rang true with how things played out in terms of where Reebok’s brand went after this acquisition and where Adidas’s brand went after this.
Dan Runcie [00:34:39]:
Totally. And I think it speaks volumes to know it’s not too soon after well, I guess it is several years down the line. But you see the Yeezy partnership and how that worked in ways that the Reebok deal did not, and how Adidas was able to make more off of this brand that they created with Ye, basically from scratch. I know that he had had some issues with Nike before and stuff like that, but had they had, let’s say, not had to pay $3.8 billion to make that happen in the beginning, and I know in the end it cost them a lot of money. But in terms of the way it fell apart. But building that brand in the beginning, I think was a lot cheaper than anything any close to what I had to pay for Reebok.
Zack O Malley [00:35:31]:
Yeah, it’s crazy. I mean, one of the things that sticks out is that Adidas became the brand that now has the cultural influence. Right. They of course, had the deal with Ye, which I mean, second to Jordan has been the most successful shoe celebrity partnership that we’ve ever seen. Unfortunately, we all know where that is now. But they also had the stuff with Pusha T, they also had stuff with certain artists, and they’re also now combining with or not combining, but we see them partner with a lot of the NBA stars as well. They had the whole era of Tracy McGrady and TMAC and even Robert Griffin II, and people that were just popular, like in the late ninety s, the late two thousand s, and the early two thousand and ten s. And then Reebok didn’t have any of those.
Zack O Malley [00:36:16]:
What they did was they turned Reebok somehow in some way into a fitness brand. What about what Reebok was positioned and where you wanted it for? Turn it into a fitness brand? That’s essentially what it is. In 2011, they had this partnership with CrossFit, which made sense. I mean, CrossFit was definitely popular at the time, but why would you do it that way? But essentially, yeah, they gutted all the cultural parts and adapted them into Adidas itself.
Dan Runcie [00:36:44]:
Yeah. So good for Adidas, not so good for Reebok. And then it kind of begs the question, why didn’t they just kind of go head on into culture a little more directly instead of buying this, what became an albatross, right.
Zack O Malley [00:36:58]:
And he could have done it for cheaper than $4 billion.
Dan Runcie [00:37:01]:
Zack O Malley [00:37:03]:
It’s fascinating. I mean, I think that the other thing that this made me think of too. And I know we talked a little about this before, as we’re not at least the way that Adidas made it seem. It’s almost as if, like, a brand couldn’t live under this sub brand. Like they couldn’t have the two brands really live under each other. But we saw Nike able to do this. Nike was able to have Jordan be a sub brand under Nike, but still be successful. But the way Adidas and Reebok had it, it was like the two brands were competing against each other.
Zack O Malley [00:37:35]:
And the way that they framed it was they almost wanted internal competition. Like the same way you and I have talked about how Lucian and Universal Music Group doesn’t mind that Interscope and Def Jam and Republic are competing against each other to some extent, but it didn’t quite work out that way. It was like they’re negotiating against themselves in a way, and that just didn’t work out for the brand.
Dan Runcie [00:37:57]:
Yeah. And I think with Nike and Jordan, it just comes down to the Jordan brand is so tied up in this one person, right? It has such a distinct identity and lineage, and the shoes have this clear silhouette, and you know what it is. And Nike didn’t try to compete too hard against that particular thing because how could it, right? I mean, Jordan had such a identifiable lane and legacy and all that. And I think that Reebok didn’t have quite as clear an identity and Adidas didn’t have quite as clear an identity in the States anyway, and they got all mixed up. And I think that’s kind of a recipe for disaster and maybe something that Adidas learned from ultimately. And that’s kind of if you look at what happened with Yeezy, it was more of the Jordan style deal, right, where it’s very tied up with one person. The shoes don’t look anything like the other shoes, really. And you’re not competing with yourself.
Dan Runcie [00:38:52]:
I’m sure there’s some cannibalization, but you’re not really going head to head in this murky kind of way. I guess I do see sometimes I wonder when you see the Jordan logo on jerseys, that’s interesting to me. That does seem to be Nike competing with itself. And I guess there are certain sports where it makes more sense for it to be the why, why? Why was Derek Jeter a Jordan Brand guy and not just a Nike guy?
Zack O Malley [00:39:24]:
That’s sort of weird, right? Or like Michigan football, the had, they were a Jordan team. And yeah, it’s like I imagine that there is some light competition that happens, but never anything that seems like it’s going to cannibalize the business. Right. Like we talked earlier about LeBron going to Nike. LeBron could have been pitched by Jordan for all we know, because we know Carmelo Anthony was a Nike guy or was a Jordan Brand person and went with them, but it could have been part of the whole, okay, LeBron being a chosen one and already kind of foreseeing not wanting to be under that. Like, who knows? But I’m sure that there’s some natural aspect where, whether it’s Chris Paul or others who chose Jordan Brand, they could have also been pitched by Nike as well. But again, that’s like light competition compared to some of these other internal things that structurally seemed it’s one thing to go one athlete versus another, and Jordan sneakers have a clear, distinct look and feel, and I think that probably helps with it, too. But I think that Adidas probably struggled with that to some extent, because even if you look at basketball, I believe at the time they had Tracy McGrady and Kevin Garnett as probably the most two prominent, like, early mid 2000s Adidas stars.
Zack O Malley [00:40:35]:
But then you still had AI and you had Shaq as the Reebok stars. So how do you line that up? I don’t know if that necessarily was as thought out the way that it was on the Nike side.
Dan Runcie [00:40:47]:
Yeah. And it’s fascinating how Shaq comes back into the picture for Reebok in the wake of the ABG acquisition.
Zack O Malley [00:40:55]:
Right, yeah. Actually, before we get there, I do want to talk a little bit about and ask you about the 2010s, because that was an interesting part, because I feel like with Reebok, there was this moment where they went back. To try to get a bunch of these rappers right, like they had the partnership with Kendrick, rick Ross future eventually cardi B. I think they brought Missy Elliott back on. So before the eventual sale happens, they had tried to get back in the mix with, you know, Rick Ross is shouting out Reebok and songs and stuff. But again, it just didn’t quite click the way that they thought it was going to.
Dan Runcie [00:41:36]:
It felt like too little, too late. Right. And by that point, even getting into hip hop in the early aughts with Jay Z and 50 Cent, that might have been too late for Reebok. When, let’s say Adidas, even though it may have been sort of dormant as a big brand in hip hop and culture in America, it had this heritage with Run DMC and going way back into the history of hip hop. And Jordan, although not overtly hip hop, embodied a lot of elements of hip hop culture. And the shoes, obviously, were such a stylistic element that had been adopted. I wonder if the fact that all these artists came on but kind of late, and it wasn’t in the DNA as much, it didn’t feel quite as authentic. I mean, I wonder if that made it just a little bit like it never was going to work.
Dan Runcie [00:42:35]:
I do think, though, there’s some fascinating little tidbits in there. That the Kendrick Shoe. I think it was the Reebok shoe. He had one red and one blue in each pair. And it was sort of like uniting Bloods and Crips. And that’s like a wild, awesome thing to do. I mean, what a great plan. But again, maybe too little, too late.
Dan Runcie [00:42:55]:
And one wonders if something like that had happened earlier, what the trajectory would have looked like for Reebok.
Zack O Malley [00:42:59]:
Yeah, because I think what those deals felt like, they felt more like straight up endorsements and less like this broader vision. I think what made the Yeezy stand out is that there was such an identifiable connection. You could see Kanye making this. Like, many of the people listening to this have seen the clip of you at Kanye’s house, and he literally has rows and dozens of designs, and he’s pointing you and showing them like, oh, hey, yeah, I was thinking about this one, I was thinking about that one. And none of those artists that I mentioned that partnered with Reebok, I can imagine them doing that with their Reebok shoes. I just can’t, because it seemed more like a straight up endorsement as opposed to this broader vision. And I think that’s one of the reasons why Yeezy worked so well. We saw Kanye struggling to try to get into fashion, know, feeding these people in the back of limousines and all these ridiculous stuff, interning with Virgil at Fendi and stuff like that.
Zack O Malley [00:43:57]:
So we saw the journey and there was an actual tie in where the other ones felt like, yeah, it’s cool to see Reebok in the mix, but it felt more like a check.
Dan Runcie [00:44:04]:
Yeah. And I think Rick Ross and Cardi B have been pretty open about in know, they will take the know he has made and lost a lot of money, but you never got the sense that he was doing it for the money, right? Like, he was always losing money because he was spending so much on trying to perfect whatever it was that he was doing, including the shoes. And he had the Yeezys with Nike first, and those were not like big money makers for him, but it laid the groundwork, right? And you could see him obsessing over that. And just like when I was out there in California with him, you could see him looking at those shoes. Every single one of them was a child of his. I mean, it was like that level of passion and intensity and perfectionism and god, that seems like a lot to put on a child, but maybe on a shoe it’s fine.
Zack O Malley [00:44:59]:
Yeah, that really rang true and I think worked with him in the product and yeah, you’re right. We know that Cardi B and Rick Ross, it’s like, yeah, pay me the money and I’ll do the thing. Whether it’s a feature and feature can be anything, whether it’s showing up for an event or doing this. And yeah, it all works out. All these people make good money. But it’s interesting because obviously, as this continues, the 2010s go on, reebok is kind of doing its thing. It’s clearly middling along as Adidas is continuing to rise, and Adidas had a really strong 2010s, thanks to Yay and thanks to the ultra boost and some of the other things they did. But by the time the pandemic comes around, reebok is now looking to sell and there’s a few things in the mix.
Zack O Malley [00:45:44]:
We saw a few entertainers getting involved. Master P, I talked to him on my podcast a couple years back when he was interested in the deal, and Shaq was one of the ones involved as well. And it’s interesting with Shaq and yeah, now I’d love to tap a little bit into him because he’s such an interesting figure in all of this, because it’s now 30 plus years that he’s had some affiliation with this brand but also just doing well in business.
Dan Runcie [00:46:08]:
Yeah. I mean, so ABG, who came in and bought Reebok, they’re an immense licensing business, one of the biggest in the country, in the world, probably, but they started out their founder was, know, basically resuscitating dormant brands. That was his idea. And he started out mainly with at least in the current iteration of ABG with celebrity brands. So ABG still owns pieces of various celebrity estates. Marilyn monroe, elvis presley, muhammad ali, in some cases, most of the estate. And it was all about sort of taking something dormant, or like let’s say a brand that was not producing any more content. To put it one way.
Dan Runcie [00:46:53]:
I don’t like that word usually. But if you’re dead, you’re probably not producing content unless somebody’s producing it for you and finding the essence of it, right? Like something that could be marketable. So with marilyn monroe, it was chanel number five. She wore chanel number five. And so that was a great deal they could do for the marilyn monroe estate and the expertise that he gained. Jamie salter, his name, the head of ABG in sort of reviving these celebrity estates or extending them. He also applied to dormant brands. So he’s got, I think, airwalk and nautica and all these other, I mean, the list goes on.
Dan Runcie [00:47:33]:
Basically, if you imagine yourself in a mall in 1995 and you think about the brands that are floating around, ABG owns like half of them, right? And it’s a licensing deal, right? They get them produced, they put the name on, they do the marketing, and that’s that, and it’s a great freaking business. And they are in business with shaq. So some time ago, they paid, I think, like several hundred million dollars to shaq, much of it in ABG stock, to own something like half of the shaq brand. So that basically ABG gets paid when shaq gets paid. And I think that’s part of the reason why you see him out in so many commercials. He’s got a really strong team kind of pushing that out. But he also got because he had such a big amount of ABG stock that came back to him, I think he might be the largest individual shareholder besides jamie salter, the founder. He’s very invested in sort of being a part of these brands that they have in their portfolio.
Dan Runcie [00:48:31]:
So you see him pop up at sports illustrated stuff that’s another ABG brand. You see him with various titles at reebok, right? That’s an ABG brand. He is making himself wealthier as he makes these portfolio companies know. I think it’s a pretty unique deal, but I think also just goes to show shaq as sort of like an underrated businessman making moves. And of course, I think the deal does not include his DJ business and some of the other stuff that he does on the side, which was maybe part of the reason you see him out on the road, spinning on the decks there. But it does incentivize him to get really behind something like reebok, which he does have this historical connection to. So it’s kind of funny how it comes full circle.
Zack O Malley [00:49:26]:
That’s the fascinating thing about him, because you hear about the google deal, you hear about some of the other things that he’s been involved with. But this deal, which may be one of the most lucrative that he’s involved with, doesn’t get discussed as much. And I think it’s because a lot of people just don’t understand ABG’s business and even his involvement with the business. And even though Shaq himself was rumored to be involved with this group, with him and Master P and Baron Davis that were part of the buying group that was trying to directly get the Reebok brand, he ended up with so much stake in the Reebok brand as well through the ABG.
Dan Runcie [00:50:00]:
Yeah, I think part of the reason people don’t talk about ABG that much is because it know by nature, like a background operator type of thing, it’s not a brand in itself, it owns brands. And I think that’s kind of by design, it’s the brands that get the shine and not ABG. But if you know, you know. And now you see sort of like how Shaq is connected to all these dots together.
Zack O Malley [00:50:26]:
And with that, Reebok does fit within that house in a lot of ways. You mentioned several other brands. Reebok is one of those brands. So I’m interested to see how the brand’s likeness and how things like that do get to be both beneficial for ABG, but how they get to continue the brand on. And one of the things we’ve seen at least this past year, I think it was only a couple months ago, but they announced that both Shaq and Alan Iverson, the two most famous NBA partnerships that they’ve had, are now both executives for Reebok’s basketball operations, which is pretty cool to see.
Dan Runcie [00:51:04]:
Yeah, that’s great. And again, brings it full circle, makes it feel more know. And Check really does have a piece of the company, therefore, of, you know, it doesn’t feel quite as much like the Rick Ross or Cardi B money grab type of situation.
Zack O Malley [00:51:21]:
Yeah, agreed. I think that it’s probably a good point to talk about just some of the missed opportunities. But I wonder yeah. Is it missed opportunities as much or just things that kind of like we’re talking about this conversation reebok was just late to the game with?
Dan Runcie [00:51:36]:
Yeah, I think it had a lot of great ideas and it just didn’t execute them soon enough. And it might have been a different story if the JayZ deal had happened a few years earlier or if the 50 Cent deal had happened around his first album. But it never really works that way. Right. You’re not going to give 50 cent. Nobody thought that 50 Cent well, I don’t know. Maybe Dr. Dre and Eminem thought but I don’t know that you could have predicted that 50 cent would have been as successful as he would be with get Richard Die trying and the heat that he would bring in time to have his shoe lined up for that.
Dan Runcie [00:52:10]:
And it is really hard to sync apparel and remember Michael Jackson had a sneaker and it didn’t do very well. I think part of it was know well, it was kind of funny looking, but they were trying to sync it up with the release of whatever album it was. I think it was bad. And he kept pushing back and pushing back and then the sneakers came out before the album because they were on this production schedule that was detached and it didn’t have the juice going at the same time. And so you can’t really predict when somebody is going to be super hot at their peak where they might move the most sneakers. Not that 50 Cent and JayZ did move a lot of sneakers, because they did, but I guess you can’t kind of spin up a whole bunch of sneakers quite fast enough to take advantage of a really hot album cycle. But I think, yeah, if Reebok had gotten in a little earlier, things might have looked different. If they’d gotten into hip hop a little bit earlier.
Zack O Malley [00:53:08]:
Yeah, I think that definitely could have happened. I also think time back to the whole leadership thing, I get it. Not everyone needs to try to build the next billion dollar brand that’s going to take over the world. But even though Reebok was quite successful at what it was doing in the 80s, if you’re trying to get into the games of having your logo on the Dream Team, you’re trying to get exclusive partnerships with the NFL and the NBA and keep those. You then need to be in the business of selling the broader vision of this brand, making sure that everyone buys into the marketing the way that Nike was clearly able to and the way that Adidas has leaned into especially the past 1215 years or so. How could they have done that? So even though the leadership necessarily wasn’t as focused on that, I do think that was a bit of a missed opportunity.
Dan Runcie [00:53:59]:
Yeah, we talk about advertising, paid versus earned, right? There was a lot of paid and how do you get to the like that’s? I think how you have longevity and I think that’s where ultimately there was not enough. And as we talked about, maybe Reebok was on the right track before the Adidas deal. Maybe it would have kept gaining market share back to the point where it could have been competing like it was in the early ninety s a little bit more, but I guess we’ll never know.
Zack O Malley [00:54:27]:
Yeah. And I think in terms of what Adidas could have done differently, I think we talked about that they could have gotten into culture without paying $4 billion for this company that they essentially gutted. I think we agree there. But in terms of a dark horse moment, is there anything that Reebok doesn’t get enough credit for that you think they should?
Dan Runcie [00:54:46]:
Dark horse moment? I think Reebok does get some credit for the pumps, but it kind of has remained. Like a bit of a novelty item. I know they brought them back here and there in one way or the other, but I don’t remember in Austin Powers there’s that scene where he’s trying to understand what the world was in the he’s like, pumping up the shoe and he gets really excited. He’s pumping, pump it up, and then eventually bursts all over his face. That kind of encapsulates the power of that shoe. It was representative of an entire decade. He didn’t pull out a Jordan shoe. And I guess there’s not the slapstick element there.
Dan Runcie [00:55:28]:
But I think that the pumps were so freaking iconic, people maybe don’t give that enough credit, but you could also see that as a missed opportunity because they weren’t able to parlay that into a long term thing. Maybe it’s just too gimmicky.
Zack O Malley [00:55:45]:
Right. A true lasting brand. I think that similarly, they did get a bunch of earned media over the years from different artists and different people that lean into this. Bruce Sprigsteen had worn the sneakers in one of his 80s music videos. Sybil shepherd had worn some Adidas sneakers. I think it was the freestyles she wore to like, the 1985 Emmys or something like that. Juvenile had shouted out them in the song ha. There was another song, maybe it was off a ghetto warfare or another hot boy song that shouted out Reeboks.
Zack O Malley [00:56:19]:
There was clearly points where in the people were leaning into the brand, they eventually did lean into having these direct partnerships in 2003. But I remember there was this quote where they said they’re not trying to get celebrities to buy their shoes and stuff, but they had the pull. There was some earned media and interest there. And I’m not saying that you needed to have a civil shepherd shoe, to be clear, but whatever that could have been, I think could have been cool. I know I probably framed that more as a missed opportunity the way I described it, but I do think that the dark horse aspect of it was that, yeah, there was some of this.
Dan Runcie [00:56:54]:
Yeah, yeah, absolutely.
Zack O Malley [00:56:55]:
And then who won the most or.
Dan Runcie [00:56:57]:
Lost the ah, I’m going to go with a weird one here. Maybe I’m gonna say Jay Z won the most I don’t know if he won the most, but let’s just go with this for a second. The s carter sneaker. He got paid, whatever. It didn’t become a long lasting thing. However, he turned the sneaker into this thing called the S. Carter Academy, which was sponsored by Reebok. And it know, if you remember the S.
Dan Runcie [00:57:24]:
Carter Academy, you got like, I don’t know, some endorsement deal, maybe some free shoes, but you would flash the rock sign when you scored a touchdown or a dunk or something like that. Talk about earned media. But it’s earned media for Jay Z. It’s not earned media for Reebok. And then that kind of went away. But then all these athletes who were in the S Carter Academy then became clients for Roc Nation Sports. I think des, Bryant, maybe Jamal Crawford. And I think some bigger names.
Dan Runcie [00:57:57]:
And at any case, it put him on the footing to end Know, buying a piece of the nets, then parlaying that into Rock Nation Sports, now parlaying Roc Nation Sports really into this seat at the table with the NFL. And as I think I said before, I think he’s going to parlay that into owning an NFL team someday or maybe something even better than that, I don’t know. But whatever it was, just as Know was kind of like paying Jay Z to get more a foothold in hip hop and in culture. Jay Z was using Reebok to get a foothold in sports. And I think that win that has become such a big part of his portfolio these days. To get paid to do that. I would say maybe secretly he was somebody among those who won the most from Reebok in the end.
Zack O Malley [00:58:52]:
That’s solid. Yeah, I didn’t think about that connection, but that makes a lot of sense. The one I have, and I’ll combine them one and lost the most. I think it’s Alan Iverson. I think he won the most because by him choosing a brand like Reebok where he was the flagship person and they were trying to see what they could do, I think it worked out really well for them. I even think in the early 2000s how they were able to have Alan Iverson footballer jerseys that were being sold because of how popular his high school football highlights had been, and just the stories about him needing to having the opportunity to choose one or the other that worked out really well for them. And just the economics of having a lifetime deal and some of the back end stuff from that deal. It’s crazy.
Zack O Malley [00:59:31]:
And just what he’s able to get, assuming that he carries on and lives into his fifty S and sixty S to be able to capture that is huge. So I think that was really cool to see. I do say lost though, because part of the aspect of why I think that some of these brands and companies can live on is because the people attached to them continue to grow too. Jordan brand continues to grow in its Relevancy and by extension Nike, because Jordan has just continued to ascend as a figure since he retired from the NBA 20 years ago. Now from team ownership to then selling a team billionaire in his own right, always being involved with stuff in AI, it wasn’t necessarily that way. We knew that he’s had problems with alcohol over the years. I think as we talked about earlier, he definitely took some licks from being so forward and being authentic about who he was as a black man in this country and what tapped into him, that those things combined. I don’t think he was able to necessarily reach those heights.
Zack O Malley [01:00:28]:
So it is unfortunate, but could the Band have been in a different position if someone like Alan Iverson was able to be a mogul in his own right the same way that MJ was? It could have people looked at Reebok a little bit differently, even from a loftier perspective. So that’s one thing that I do think about. But yeah, both won the most and lost the most.
Dan Runcie [01:00:48]:
Yeah, I like that one. Yeah. The double edged sword. No, that makes a ton of yeah.
Zack O Malley [01:00:53]:
But yeah, with that. Anything else before we close things out? Reebok?
Dan Runcie [01:00:56]:
No, I think we nailed it. It was great to do it in person for maybe maybe the first of many. I don’t know.
Zack O Malley [01:01:02]:
I know. I think a regular when either of us are, like, visiting each other’s towns, we’ll try to line things up.
Dan Runcie [01:01:08]:
Zack O Malley [01:01:09]:
Yeah. This is good, but thanks, man. I’m already excited for the Adidas one, too.
Dan Runcie [01:01:12]:
Oh, yeah. Can we? All right.
Zack O Malley [01:01:14]:
Awesome. Good stuff.
Dan Runcie [01:01:16]:
Zack O Malley [01:01:16]:
Perfect. All right. A few minutes later, but hopefully you’re still okay. And I’m going to try to see once they get us the files, we’ll see, but I’m going to try to see if we can get them for next week. Great. So this is your friend’s dissertation.