Adidas: Sneakers, Hip-Hop and Culture

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Today’s episode and memo are about Adidas. We covered it all. From the company's early ties to the Nazi party, its storied history with the World Cup and Olympics, its influence in hip-hop, Run DMC, Kanye West, and more. I’m joined by friend of the pod, Zack O’Malley Greenburg.

‍You can listen to the episode here or read the highlights below.

What happened after Run DMC - Adidas?

The Run DMC - Adidas collaboration is the original musician-brand partnership. The group’s 1986 song, “My Adidas,” kicked things off. It led to an iconic moment at Run DMC’s tour stop in Madison Square Garden that same year. The Adidas executive in the building witnessed the crowd hold up their Adidas sneakers in the air when “My Adidas” came on. It eventually led to hip-hop’s first $1 million endorsement deal. It’s the type of story that deserves a movie.The deal was groundbreaking, but it took a long time for other artists to benefit from that ground being broken. Adidas didn’t make another move like that for several decades. By the mid-2000s, Adidas was so eager to improve its cultural relevance in North America that it spent $4 billion to acquire Reebok.

How did Adidas, the brand that elevated artist-brand partnerships, get so far removed from the culture soon after?

This is where the context for the Run DMC - Adidas deal matters. This was not a top-down, strategic initiative from the Dassler family that founded the company. “Partner with major hip-hop act to further boost sales” was not in Adidas’ 1986 roadmap. Lyor Cohen, Run DMC’s co-manager at the time, had to convince Adidas’ executive Angelo Anastasio to come to the show at MSG. According to DMC, Anastasio and Adidas knew nothing about hip-hop or the New York rap group. The company had seen a spike in sales but wasn’t sure what to attribute it to. It wasn’t until the concert, and a video for Adidas where the group performed the song and yelled, “Give us a million dollars!” That’s how the deal got made.

The deal was a success, but the infrastructure at Adidas wasn’t there to build on it. The brand with the three stripes was in the middle of an identity crisis.

In 1978, Adidas founder Adolph Dassler passed away. The business was passed on to his wife, Käthe Dassler, who passed away in 1984. The business went to their son, Horst Dassler. The son wanted to take things in a new direction though. While Adolph was more focused on Adidas’ product and innovation, Horst tried to lean more into lifestyle. Here’s a quote from PWC’s Strategy + Business publication:

“In an attempt to stay relevant, Adidas’s new management tried to assert its independence from the past. Most of Dassler’s shoe collection was thrown into storage boxes; some of it was donated to employees and museums. His books of copious notes were packed away.

The strategy pursued in the late 1970s and 1980s, involving an expansion into leisurewear, was a rejection of Adidas’s heritage. The results were mostly poor — not least because the company at that time lacked the capabilities to compete to win in arenas beyond shoes.”

This diversion from the original thesis got more distracted when Horst died of cancer in 1987. That marked three Dassler family deaths in less than a decade. Adidas struggled with leadership, sold the business, and nearly went bankrupt in 1992. Things didn’t get back on track until the mid-1990s with new CEO Robert Louis-Dreyfus (a second cousin of actress Julia Louis-Dreyfus), ex-Nike leaders, and others helping steer the brand back to its heritage.

The focus on company turnaround limited the brand partnerships, especially in North America, until the Reebok acquisition. Despite the Adidas-Reebok challenges, it paved the way for Adidas’ eventual partnership with Kanye West and Yeezy.

‍You can listen to the episode here or read below for more highlights.

Where music fans and product fans differ

As Yeezy sneakers grew in popularity, there was a growing disconnect between the Kanye West music fan and the Kanye West sneaker fan. The music fans loved the old Kanye and some of the newer Kanye. They rocked with Ye’s music from the College Dropout (2004) to The Life of Pablo (2016). **But many struggled to connect after that, especially given Ye’s controversial statements over the years.

But 2016 is when Adidas Yeezy sales were heating up. Yeezy net sales for Adidas grew from $65 million in 2016 to $1 billion in 2021. Sure, there was some overlap between Kanye’s music fans and Yeezy fans, but Yeezys took off with hypebeasts and sneakerheads. The product didn’t just reach a bigger market, but a different market.

The running joke is that the average person who wore Yeezys can’t name three songs off on Late Registration. It’s a reminder that celebrity-brand partnerships aren’t always linear. Just because an artist’s music is popular doesn’t mean that those same fans will buy the product.

This is even more true for Beyonce. When Adidas teamed up with her Ivy Park brand, Adidas thought they had the next Yeezy-level business in the making. The Beyhive is one of the most passionate artist fanbases. Her fans get their passports stamped and go through customs to watch her shows. The Renaissance Tour was a destination event. But that didn’t translate to Ivy Park sales. The partnership didn’t take off.

In February, I surveyed Beyhive members when news broke about Adidas - Ivy Park struggles.

Here’s what a Beyhive member “since the House of Dereon days” said:

”She’s more of an artistic god than an aspirational figure. We know nothing about her day-to-day lifestyle and her icon status benefits from that…Her ability to retain mystery is a rare currency.”

Another fan, Maella from France, said.

“It doesn’t feel like Beyoncé herself would wear the brand to work out…People want to buy an experience, but Ivy Park has yet to deliver the experience.”

It would be an overstep to assume that Beyonce didn’t care as much about Ivy Park. There were rumors about struggles to work with Adidas, which Kanye West also shared on several occasions. But Ye’s concerns were understandably drowned out once his hate speech and anti-Semitism ended the Adidas-Yeezy partnership.

But as Zack Greenburg said in our Adidas episode on Trapital, it’s harder to imagine Beyonce staying up until 2 am to perfect an Ivy Park design, but we can picture Kanye staying up all night to work on a Yeezy design. Meanwhile, we can expect Beyonce to stay up until 2 am to work on her music and touring, especially given the high-level output.The distinction between an artist’s music lovers and non-music product consumers often gets overlooked often in brand partnerships. There’s often too much focus on the vanity metrics (follower counts, trending on socials, and monthly streaming listeners) and not enough focus on the underlying product and how close the circles on that Venn diagram are for both music and non-music product lovers.

In the rest of the Adidas episode, we went more in-depth on:

- Grading Adidas’ history with acquisitions.

- Adidas Superstar popularity in the early 2000s.

- The Dassler founders’ ties to Nazi Germany.

- What’s next for artist-sneaker partnerships?

‍Listen to the episode here.

‍TRANSCRIPT

‍Dan Runcie [00:00:00]:

Alright, we're back with another Deep Dive episode. Zach and I finished our deep dive on Reebok. It was only right to do Adidas. We go from one big Titan to the next.

Zack O Malley [00:00:09]:

Absolutely good to be here.

Dan Runcie [00:00:11]:

Likewise. Thanks for doing this one. I'm glad you convinced me to do this one too, because I know that we're thinking it through, especially with everything going on in the world right now. But you brought up the good point that now's a better time than ever to dive into this story.

Zack O Malley [00:00:24]:

Yeah, I think with something like this, you could either push it back into a less kind of hot button time or kind of dive right in. And really we can explore it through the lens of not only history, but current events and between what's going on in the Middle East and anti Semitism, Islamophobia, everything else that's happening around the know. Stuff that's been buried in the past with Adidas, stuff that's been happening more recently with Kanye. There's just a lot to dig into and it's something I think that's really worth examining and kind of trying to draw some lessons and meaning from it.

Dan Runcie [00:01:00]:

This was fascinating, too, to do the research on, not even so much because of the stuff that comes up, which we're about to get into. But based on the outlet or the source, how much they were willing to share or not share about the past of this company is always fascinating to see what lines they're willing to go through, but we're going to get into it in this episode. And that's a good place to start because this company let's actually start in 1900, because that's when the founder Adolf Dassler was born. He's from Germany, grew up in a German town. By the time he was a teenager, he was very interested in sports, saw that all these athletes were wearing shoes and saw a connection there and wanted to explore that as much as he could, but had to take a stop. When World War I comes around, he enlists in the German Army. As a teenager, he comes back from the army and at this point, Germany's in a post war depression state. The country isn't doing the best.

Dan Runcie [00:01:58]:

So he then leans into the craft that he learns, which is shoe cobling, focuses on that and that then becomes the origin story for the Dassler Brothers shoe factory. And that's between him and then his brother Rudolph, that started in 1924. We're almost at the 100 year anniversary of this, of the company that eventually became Adidas.

Zack O Malley [00:02:19]:

Well, that's right. And I think what's kind of interesting, you don't really think about cleats as being like a big seller or kind of like a founding type of thing, like a prime vehicle for moving shoes. But that's what Adidas was really known for in the early days, and their big innovation was moving toward rubber cleats instead of metal spikes, which obviously still exist but rubber. And so other materials being used for cleats were not so common until Adidas started doing it and actually started selling hundreds of thousands of pairs a year going into the 1920s and 30s. Even outfitted Jesse Owens with these. Rubber cleats when he came to Germany for the 1936 Berlin Olympics, which, of course, was a really important moment in world history as well.

Dan Runcie [00:03:03]:

And that Olympic time is so fascinating because while one of our American heroes here who frankly didn't get enough love from this country, but still his shoes sold, everyone in America was following to go buy the shoes because he won four gold medals in these. But World War II is actually a huge moment for these brothers as well, because as we know, both unfortunately and disgracefully, they were members of the Nazi Party. They joined the Nazi party. They actually paused production at the factory where they were making some of the shoes so that they could build anti take weapons that were used to fight against the Allied tanks. While the US Is buying up the shoes that they assumed to be coming from this factory, they're also building weapons to fight against our country as well. And then additionally us. Troops actually tried to destroy that same factory. But it was Adi Dasler's wife that was trying to convince the soldiers that only shoes were being manufactured there.

Dan Runcie [00:04:05]:

But it was this ironic thing because the soldiers and the people assumed that, okay, this is the product of what Jesse Owens is providing us. But no, they're actually building weapons of mass destruction in that factory. So it was this very bizarre time that really does color where this company was and where the world was at this time.

Zack O Malley [00:04:25]:

Yeah, absolutely. And just layer upon layer of complexity here, right? You had Jesse Owens going into Berlin as a black know, sort of completely ruining Hitler's fantasy of an all know dominated Olympics by winning those four gold medals. But he's, wearing the shoes that were manufactured by these brothers, know were in the Nazi Party and became part of the German war machine then. At the same time, Jesse Owens, of course, at home, is still treated as a second class citizen in the age of segregation in the United States. So it's just so many different layers to this whole thing. And I think that's so important to understand as you kind of look at the way that the history of Adidas kind of unfolds in the coming decades.

Dan Runcie [00:05:10]:

And especially too, because after this, these brothers end up splitting up. It's one of these things where it seems like they were working in lockstep, but they end up splitting up. And for a little bit of context, addie was the one that was focused on product innovation, as you mentioned, the cleats that set the early path for something that I think Adidas continued, which we'll talk about. And the brother was more thinking about okay, what's the next thing? How do we make them work together? So the product did innovation together, but they end up splitting up. There's been certain rumors about this. If you look at some outlets, some say that they had split up because of general irreconcilable differences. You look at other outlets, they said that there was some type of affair with one of their wives or something like that. Other outlets have even said that one of the brothers said that the other one was giving information to the Allied Forces during World War II.

Dan Runcie [00:06:05]:

So who knows actually what happened there? But the more interesting part is that the other brother, Rudolph, goes and starts another apparel and footwear company himself. And that company becomes, you know, also.

Zack O Malley [00:06:17]:

Just for the context. In the post war years, of course, obviously the Allies win, the Nazis are defeated, and in fact, in Know, obviously the Nazi Party is vanquished. But in Germany it becomes illegal to sort of show any support for the Nazi cause or even to display Nazi symbols, stuff like that. And so there's this great sort of like renouncing of Know at the time, immediate past. And yet still you have these two companies that know sort of coming out of that disgraceful past and moving into the future as being two of the biggest shoemakers in the world, right? So as they split up, they go their different ways, but their past still is haunting them. Even Adi, his real name is Adolf, a constant reminder of sort of where Adidas came from. As the war becomes further and further in the rear view mirror, you start to see Adidas and Puma both kind of gravitate toward athletics, the running shoes, the spikes, things like that. But it's more than just about spikes now.

Zack O Malley [00:07:16]:

Athletic shoes, as the century continues, are becoming this multi billion dollar industry. And both these companies are right at the center of it.

Dan Runcie [00:07:24]:

And the sport that becomes the big focus for them, of course, is soccer. Just given how global that is. One of the big moments for Adidas came 1954, they end up outfitting Germany. Germany's fighting against a Hungary team that was seen as the big villain that they wanted to try to beat. And eventually they beat Hungary in the game. Everyone on the team is wearing Adidas sneakers. So that then becomes a big cultural footprint and in many ways sets the tone for this company having such ties to soccer that it continues to this day. Since 1970, Adidas has been the official ball for the World Cup and every World Cup after that.

Dan Runcie [00:08:09]:

This has also been the official ball for the Euro Cup, the Champions League, and so many of the prominent teams and countries that still play soccer today. This brand, probably more than any, is more associated with football and its continued growth.

Zack O Malley [00:08:23]:

Kind of wonder if that's why in some ways Adidas was a little bit slow to come to the place where it was in America things were so dominated by over the years, converse, Nike, Reebok, Adidas kind of had a moment, which we'll get into in the then kind of went away in the 90s. But I do think the rise of soccer in the US. Is a really interesting part of that. And as it became bigger and bigger, like, let's say over the past couple of decades, that does kind of go hand in hand with the rise of Adidas in the United States. Along with Adidas re embracing pop culture.

Dan Runcie [00:08:56]:

And particularly hip hop, there's so much and it's also interesting too, because there's so much history and influence that this company had even before its biggest competitor, Nike, comes into the picture. You look at something like the Pelley pact. I won't get into it too deeply here, but it was this pact between the two brothers about who essentially had the rights to some of the shoes that Pelley was wearing. Famously in that same 1970s World Cup, they ended up making a pact. And we all know when pacts are done, especially between people that don't have the best relationships together, things can kind of go awry. But this was all just one year into when Nike ends up becoming form as a company in 1969. So there's so much history at Footwear, but I think sometimes our time frame can think about things, especially in a US North America way, only thinking about the brands that matter here. This is a company that clearly has roots and things that have just continued to live on with its heritage and legacy over time.

Zack O Malley [00:09:54]:

I mean, in the, you know, let's call it what it is, collusion, or at least that's what it was meant to be, right? The two brothers colluding despite disliking each other to not sign Pele because they didn't want to get into a bidding war because they figured it would basically bankrupt either of their companies because it would go so high. And then at the last minute, Puma comes in and signs them. But I guess their relationship couldn't have gotten any worse. So there you have it.

Dan Runcie [00:10:18]:

Soccer is a big part of it, but they also start to get some popularity within the streets, especially the streets of New York around this time. So this is the even the early 80s, you're seeing the break dancers, you're seeing the b boys, you're seeing the graffiti artists wearing these shoes and wearing them out in public. And this was probably one of the earliest moments where these shoes are not just being a functional thing, which in many ways was always the focus that Adolf Dassler had. But no, these also serve a more leisure and athletic style. And this is something that Adidas clearly had struggled with in terms of its identity. And it's had plenty of highs and lows, which we'll get into. But this was probably the early point of it here. And as we know, with so many things we've talked about in this episode, these are elements of hip hop culture and how that is the origin for so much of how that influences modern day consumerism.

Zack O Malley [00:11:13]:

Yeah, and it's just kind of wild to think about how these teenagers in the Bronx were putting on these shoes, which I don't know if they knew the history. Right? I mean, on the one hand, shoes that were popularized by an American hero, Jesse Owens, which were also made by a family that had been affiliated with the Nazi party. My guess is that it was just like, oh, this is a cool looking shoe, or this is what's know. But what a complex history of a shoe to be deposited into the South Bronx at the dawn of the era of hip hop. And so I think that leads kind of directly whatever reason hip hop is kind of attracted to Adidas. It leads into this look that you see Run DMC. It's the shell toes, it's the Kangols. That's the look.

Zack O Malley [00:11:55]:

And it just becomes sort of this part of the hip hop uniform. And I don't know, what do you think it was that caused that first kind of wave of Adidas to be involved in the culture?

Dan Runcie [00:12:06]:

Yeah, there's something about some of those early, what is now branded as original sneakers that just have such versatility, like the Stan Smiths, the tennis sneakers, or the superstars or the sambas. There's so much in them that clearly have other applicable use cases. And I know that that's something that's core with sneaker culture. Right. Basketball sneakers being worn not to play basketball, but I do think that's something that stuck in with them. And that style is just so timeless and everything. It's something that I know that a lot of other companies probably experienced to some extent. But I do think especially with Adidas, it was just so versatile, so versatile in so many ways, pretty much every original model that they know.

Zack O Malley [00:12:49]:

And I think that that's kind of why the branding within hip hop became even more successful. And you started to see a song like My Adidas that came up organically. I mean, what a great talk about organic, authentic marketing. I mean, these guys were not initially paid to be doing that. And of course, Russell Simmons brings a bunch of Adidas executives to the garden to see Run DMC perform, and he has them hold up. They say, everybody in the audience hold up your Adidas and upco like 15,000 pairs of shell toes. And then they play the song My Adidas. And basically off that, Russell Simmons is able to get Run DMC, that first seven figure endorsement deal in hip hop history to tie up with Adidas.

Zack O Malley [00:13:35]:

And I think that sort of cements not only Adidas status in hip hop, but also sort of hip hop as a commercial force more broadly. We've talked about this in previous episodes, but that's sort of like the template for what hip hop can do for not just corporate America, but the corporate world. This sort of like the most authentic expression of somebody's brand, and I think transcends Adidas, transcends footwear, transcends hip hop. And that moment there was really kind of the beginning of all that.

Dan Runcie [00:14:10]:

It was the first hip hop act, first hip hop group in general, to receive any type of deal to that level. And it’s still something we talk about because of how influential it was. And I think it’s also important too, because of where Adidas was as a company at the time as well, because this was actually a pretty rough time for the company that was leading up to so late 70s. Addie Dassler dies, then his wife and his son take over. Soon after that, unfortunately, the wife passes away, then it’s solely in the son’s hand, and the son wants to take a bit of a different spin on things. The son wants to lean even more into some of the leisure and some of the culture that’s around it. And while it obviously brought great things like this, my Adidas campaign and the endorsement deal that Run DMC got in their exclusive shoe, it also led to a lot of confusion in terms of where things were going and where things looked from that perspective. And it ended up being a tough decade, and we’ll get into how things eventually turned around for them, but this wasn’t exactly the easiest time.

Dan Runcie [00:15:18]:

And I think sometimes you’ll see, sometimes these companies that end up keeping things in house, there’ll be a son or someone like that that takes over. The son wants to stand out themselves from the father in some type of way. They try to do things differently. But for a company like this, despite all of the vile and unfortunate and horrible things that Addie Dassler clearly was pushing as a Nazi and other things, what are the things about this company’s heritage in terms of focusing solely on the shoe product and the innovation that’s there that actually helped it tie back to its roots? So in some ways I almost feel bad for Run DMC, because this could have been a launching pad for so much more to come, for other hip hop artists, for things to be able to be bred with it. But this required Simmons, as you put it, to then go or pull this Adidas executive team to come here, see this, to make sure that they saw it themselves, and it was just treated as a one off thing. It wasn’t something that compounded just given the explosion that hip hop had years and years after this in the late eighty s and early 90s.

Zack O Malley [00:16:25]:

Yeah, and if you kind of think about it from what was to come, who could have known, I guess. But there was a path there for Run DMC to create something like easy, right, to do some kind of actual participation, some kind of royalty, some kind of profit share, whatever to build out that kind of thing. And you had just seen probably it was right around that time that Nike signed Jordan and signed him to a pretty at the time, ridiculous, unheard of deal. Why not make a big splash, try to tie up with Run DMC in a more long term sort of way? But it was such an early phase, I think, for hip hop and the corporate world and I think that just wasn’t really on the table. But I remember in this era I was growing up and my dad always wore Adidas and he had these white with green stripes, low tops. They don’t make them. I think now they’re called the country OGS. And back then they were just country, but they had these sort of like the soles were sort of like they had this cutaway and it almost looked like marzipan that you were walking on marzipan or something.

Zack O Malley [00:17:34]:

And it had this kind of like gum bottom with sort of like a marzipan looking green and white and then the white shoe and then the green three stripes. And I just always kind of thought of them as like I mean, I love my dad, but I always thought of them as kind of like nerdy dad, you know? It was so funny as I got older and Adidas sort of started getting cool again that I thought maybe my dad was onto something. But it also speaks to a lot. My dad’s Jewish, as am I, and his family was largely wiped out in the Holocaust. But the fact that he sort of gravitated to Adidas by, let’s say the late eighty s, I guess that was like 40 years later already. But I think for somebody, my dad who was really kind of aware of that stuff and history and very conscious of what had happened in the past, to be wearing these shoes almost religiously, I think speaks to how Adidas had sort of recovered from its early associations. And now, by the time we’re getting into the early 90s, it’s like Adidas was long gone, his son had died and the management had moved on to something totally different and people had sort of largely forgotten about the company’s past and the association was more with like soccer or Run DMC or whatever the case may be. So although it was a difficult decade from a business perspective, I think it also marked a really significant passage of time from some of the days that Adidas might have wanted people to forget.

Dan Runcie [00:19:22]:

Right? Because this is the moment where things do turn around. 1992, the company almost goes bankrupt and after that, this was around the time when they’re transitioning with leadership. And one of the executives actually brings in two of Nike’s ex business managers. So this was Renee Jaggy, who was the CEO at the time. He brings in two of Nike’s ex business managers to come in. They look through, they look through the Adidas Museum and they have this quote where they say, it only took about five minutes in the museum before I realized that these people had a gold mine in their hands and that they really had no idea what they had, end quote. This is from a marketing dive article where they had interviewed them. And these folks started as consultants, then creatives, and then they became the CEOs of Adidas America to help write the ship with some of the leadership that eventually came that we’ll talk about.

Dan Runcie [00:20:14]:

But this was interesting because you had these ex Nike executives who were coming in and one of their big pushes was that when Nike was rising up and trying to essentially get where Adidas was, they looked at Adidas and its history and its heritage as this North Star that Nike just couldn’t necessarily gravitate towards. And it took Nike time to get there. Obviously they did. But you have the people in Adidas that are looking at it like, oh shit, what the hell do we do right now? So it takes the outsiders coming in to be like, hey, you have this really valuable thing here and you’re not executing on it right now. And then that becomes part of the big shift for them to do two things. One, focus more on the innovation. So really get honed in on the product and Adidas’s performance line, which is still where a majority of their sales come from, but then also tap into the Adidas originals line as well with some of the classic sneakers that we’ll talk about. And then this brings up the new leadership that they have of Robert Louis Dreyfus, who is actually Julia Louis Dreyfus.

Dan Runcie [00:21:18]:

The actress is a second cousin of his and he comes in to be the leader to help write the ship for Adidas.

Zack O Malley [00:21:24]:

And also interestingly, Robert Louis Dreyfus, I believe French citizen. Yes. French citizen. Jewish? Dad. Catholic. Mom. So again, an interesting wrinkle with the sort of history of the company. And it was his buddy, a French soccer team owner who had bought Adidas and then it sort of like went into bankruptcy, but then he kind of pulled it out and anyway was able to sort of really resurrect the business and triple revenues in a matter of years.

Zack O Malley [00:22:00]:

And again, there’s somebody who had a pretty strong connection to soccer into the sporting world, which I think really kind of like solidified Adidas’s sort of image and what it wanted to be in the time as it was kind of rebuilding itself.

Dan Runcie [00:22:16]:

Right? And this too, he made a few changes that I think were big. They started making some strategic acquisitions around this time. They required that brand. Solomon Rockport was also one of actually, no, I’m mistaken. Rockport, I think, came along with the Adidas acquisition. But this was the start of them acquiring other companies that could fit. I believe Taylor made the golf brand had came into the loop around this time and they really leaned into where they felt like they were strongest. And I think this is probably a good time to talk about the originals piece because uncoincidentally, this is when a lot of the Adidas originals came back into style.

Dan Runcie [00:22:54]:

I know you and I were talking before we recorded being around the same age. Adidas superstars were quite popular when we were in high school and you saw them everywhere, I think as well. The Adidas slides were pretty popular as well. Like people having those all the time, the sambas, the indoor soccer sneakers. So it wasn’t just people not wearing basketball sneakers to actually play basketball for fashion. It was all of these other things that I think Adidas was able to lean into and then you’d see them having different colorways and stuff like that. And it was one of these things where even though they didn’t necessarily go out of style, I never felt like they had flooded the market or that these were ever on the racks of TJ Maxx or Marshalls like as we talked about in the Reebok episode. I feel like they timed it right for where culture was, especially with the teenagers and even those in their early twenty s that were buying shoes like that in the late ninety s and early 2000s.

Zack O Malley [00:23:47]:

But in a funny way, I wonder if it’s sort of like the turmoil that the company went through in the early to mid 90s kind of kept it out of the running from a lot of the sort of overproduction that you saw maybe with Reebok. And it was like, really, we talked about this last time, but Reebok and Nike was like Reebok versus know, are you Reebok kid? Are you a Nike kid? And Adidas wasn’t really even in the conversation at that point, at least not in the US. And so much revolved around basketball and Adidas just wasn’t sort of like in it. Adidas could have been in it had they signed Michael Jordan. And there’s all kinds of rumors. Again, the fog of the past, who knows what really happened? But there was a Wall Street Journal article several years ago and basically they interviewed this old Adidas employee, said, yeah, there was some discussion of signing Michael Jordan to Adidas back when he came out of college, but the execs thought he was too short. They only wanted big men. And also, as we talked about before, it turned out that big men just don’t sell sneakers as well for the most part.

Zack O Malley [00:24:59]:

And that might have been just like a really deep miscalculation on the part of Adidas. Also maybe not understanding basketball like they understood soccer, but a missed opportunity. That what might have been. I mean, the whole trajectory of the company obviously would have been different the trajectory of Nike would have been know, the Yeezy thing. Maybe there wouldn’t have been a, you know, Nike would have been in the underdog position, who knows? But I think know, in any case, to your point, adidas didn’t feel like it had been sort of like overproduced by the time we were in high school. Like, let’s say in the early to mid aughts. And so the fact that you would be putting on something that wasn’t on the discount rack if you had sambas or whatever, that was a little more palatable. And I think also, like the 90s, especially coming out of the late ninety s and the shiny suit era, there were like a lot of big flashy sneakers and there was I don’t know, I think sambas were this kind of like understated type of thing and maybe it was like sort of a counterreaction to that.

Zack O Malley [00:26:09]:

And even in that era when you saw like JZ or 50 Cent putting out sneakers, they were kind of understated low tops along those same lines. So I wonder if also just that silhouette was that kind of ballpark of a silhouette was becoming more and more in fashion after the kind of gaudy late 90s era.

Dan Runcie [00:26:34]:

Right? Because most of the popular sneaker companies at that time at least had some basic profile sneaker. Nike had their Air Force One, or if you’re on the West Coast, you had your Cortez, adidas had your Superstars. You also had the sambas and the Stan Smiths Puma also had a similar type of sneaker, wasn’t nearly as popular. Reebok had their classic. So everyone had some version of this that they were trying to sell. I saw them all the time at Foot Locker back when they had the Buy One get one half off deals for back to school specials and stuff like that. But with this, I feel like this was around the time where the Adidas and Nike started to feel like it was more of a thing. Not necessarily in the 90s because as we mentioned, that was probably more Nike and Reebok.

Dan Runcie [00:27:20]:

But I felt like in the 2000s, especially after the acquisition, you started to see more of this. And there are a few interesting quotes here from a few executives that I thought was interesting. Where people felt like if you look at Nike’s mission Statement, it’s more about idolizing the hero and putting that up front and forward versus Adidas is more about the lifestyle and the perception and even how that shifted with how they looked into different marketing spend and where they put stuff where people felt like Adidas. Put more stuff into big advertisements like any of the more popular ones we’ve seen. Whether it’s or actually, I’m sorry, it was Nike that put more stuff into big advertisements. Whether it’s the ones you’ve seen with Colin Kaepernick or Adidas or Serena Williams or Michael Jordan, tiger athletes like that versus Adidas was a bit. More into the big event sponsorships. They favored athletes too, but they’re probably more into the big event things and stuff like that.

Dan Runcie [00:28:15]:

And I’ve thought about that a few times just in the partnerships and even things they’ve done with weedies and brands like that. It does feel like at times they tried to have more of a catch all than trying to build up this individual icon.

Zack O Malley [00:28:29]:

Yeah, I think that’s spot on and I think in a way it was the middle road between what Nike had done and what Reebok had done.

Dan Runcie [00:28:38]:

Right.

Zack O Malley [00:28:38]:

I mean, if you bet big on individuals, that can really pay off, like in the case of Jordan, obviously, but I think also when you put the individual front and center, if you bet on the wrong one, it doesn’t work out so well for you. So with know, having that focus on leagues and advance and things like that, I think created sort of this solid platform for it to continue to make inroads in the US.

Dan Runcie [00:29:07]:

And I think too that the connection to soccer felt a bit more closely tied to the spirit of engineering and innovation and product and focus there that also probably lends itself to just certain perceptions of German technology overall. Whether you look at what they’ve done in car production like Mercedes Benz and BMW and brands like that, I feel like there’s an alignment there where I think that sports like football or basketball maybe seem slight engineering oriented, even though there’s clearly just as much that goes into those things. But they eventually got to those brands later. But the basketball piece has always been interesting because I think it’s an area that they probably struggled with in a lot of ways. Especially I remember in the late 90s, early 2000s, they actually had Kobe Bryant and he had a few sneakers that were exclusive with Adidas. Those sneakers were hideous by the way, but they were what they were. But then he eventually left to go with Nike. And there was also this talk at the time about the Adidas curse that I think became a bit more popular in the late two thousand s and early 2010s with athletes like Tracy McGrady, Derek Rose, Robert Griffin II, high profile athletes are wearing Adidas sneakers and had career altering injuries.

Dan Runcie [00:30:26]:

So I think with certain cultural aspects of sneakers pre Yeezy, it was a bit of a difficult area for them.

Zack O Malley [00:30:34]:

Yeah, I think that makes a ton of sense and maybe explains a little bit why they moved away from some of the sports stars and started pushing a little harder on some of the pop culture individuals that we’re going to get into soon.

Dan Runcie [00:30:52]:

Right. And with that right now, at least from a time frame, we’re talking in the 2000s, we’ve already talked about the Reebok acquisition, at least in the Reebok episode that we did. But I think just for context here, if you haven’t listened to that episode. We can just provide a few high levels of this was essentially Reebok’s opportunity to get the cultural tie in because that’s what they wanted. They wanted to have more cultural Relevancy the same way that Adidas did in the early 2000s with Alan Iris and Shaq Jay Z, 50 Cent, two of the biggest NBA players, two of the biggest rappers. They had them on their roster, and they also had this big sports leagues as well. So it’s a bit ironic that Adidas, the company that had the first ever endorsement deal with a hip hop artist, now is paying $4 billion in order to acquire another company that now has closer ties with them. And essentially, as we know, they gutted the company of its cultural elements and then turned that company into a CrossFit company.

Dan Runcie [00:31:52]:

But I do think that that at least helped Adidas get more traction than it probably had pre acquisition.

Zack O Malley [00:32:00]:

Yeah, I think that maybe Adidas thought that it was buying the JayZ relationship or the 50 Cent relationship or at least something like that. But of course, and we talked about this before, too, but Jay Z was kind of coming in at a weird time having a shoe deal. He was retiring. Right? Are you really going to bet on signing a shoe deal as somebody who’s about to retire? I mean, that’s kind of like a weird strategy. I think that that kind of maybe colored the history of Reebok a little bit, and it made these big bets, but it sort of wasn’t the right moment in some of these careers to be making them. And really all along, Adidas maybe was paying extra to buy into that. But here they had this great heritage with hip hop dating back to Run DMC, and you wonder if they shouldn’t have even bothered with Reebok and just kind of, I don’t know, hired some more Nike consultants and have them dig up some old Run DMC footage and kind of, like, roll with that instead of spending so much money to acquire Reebok. But there it was all along.

Zack O Malley [00:33:18]:

And maybe acquiring Reebok brought in, I don’t know, some of the marketing expertise or maybe some of the infrastructure to sell in that way. I don’t know. But you got to think that there could have been a better way to do it than spending all that money on Reebok.

Dan Runcie [00:33:34]:

Yeah, it’s a deal that they haven’t come out flat and said, we regret doing this deal, but they have said that they acquired the company and realized how much of a mess that they thought it was. And whether it was actually a mess or not, I think is up for debate. But again, it’s just completely different cultures. Going back, Adidas had more of that engineer and focused mentality. I think Reebok was probably set up a bit more like brand agency kind of vibe to be like, okay, yes, let’s spend money to have this big Alan, Iris and Jadakiss commercial to go do this up. Let’s make this black top sub brand to be all connected with that type of culture, and it was just completely different. And I think with that, I did want to talk about I know we’re probably jumping around a little bit, but Reebok, they eventually divested the Reebok brand, but that wasn’t the only brand that they eventually divested. They divested Rockport, Tailormade, CCM, that hockey brand, and so many others.

Dan Runcie [00:34:32]:

And we have to ask, is Adidas good at acquisitions? What’s going on?

Zack O Malley [00:34:38]:

I mean, it seems like not so. You know, in a way, though, it’s like, why should we? I mean, if you have a brand that is that strong and it has that much sort of authenticity, why would you be paying for other brands to sort of bring in rather than just applying your own or bringing on stars from different sports or parts of pop culture? I think it speaks to not knowing quite what to do. Of course, some of it has to do with figuring out market share, and you just want to buy a bunch of market share. That’s one way of doing it. But that seems like more of a bean counter strategy and less a great way of doing business. And I think that Adidas kind of realized that that was the way to go. And I think you see great brands, a lot of great brands don’t make a ton of acquisitions like Apple. Right.

Zack O Malley [00:35:26]:

They just lean on the Apple part. And every now and then there’s a Beats by Dre that comes along and there’s a reason to make it happen. But, yeah, I think Adidas historically has proven to be not all that great acquisitions.

Dan Runcie [00:35:39]:

And now the brands are with ABG, as you had called.

Zack O Malley [00:35:43]:

Yep. Yep, they are.

Dan Runcie [00:35:45]:

All right, so I have the free version here, and it’s going to kick me out in a minute.

Zack O Malley [00:35:50]:

Yeah, unfortunately. Should we turn it off and not again.

Dan Runcie [00:35:53]:

Let’s, um let’s turn it off and then let’s come back on. And then I could just start recording the part two.

Zack O Malley [00:35:59]:

Okay, great. It.

Dan Runcie [00:36:37]:

All right. So Janky, but we’ll get there. I feel like I may have cut you off. And you were going to say more at that point.

Zack O Malley [00:36:51]:

No, I think probably good time to start getting into the easy stuff.

Dan Runcie [00:36:56]:

Yeah, that’s what I was just going to say. We can pick back up here and I could tee you up into easy.

Zack O Malley [00:37:01]:

All right, great. It’s so bright. The sun is reflecting off of this is like in the winter. In the winter, there’s just this building that the sun hits off of and shines right in my face for a half an hour every afternoon. And in the summer, it comes through there. And when in the summer, I can put the shades down, but here it’s sort of like not really anyway. Yeah, but it’s not too bad.

Dan Runcie [00:37:34]:

All right, cool. Yeah. Hopefully I don’t think it should be too much longer here, but yeah, we’ll get into easy generally about the 2010s, ivy park, and then yeah, we can wrap things up from there.

Zack O Malley [00:37:45]:

Okay, great.

Dan Runcie [00:37:46]:

Okay, cool. Yeah. Let me know when you’re goodbye.

Zack O Malley [00:37:59]:

And we are continuing. Very good. Yeah. Okay, let me put my GarageBand back on. Here we go. And we’re continuing. Very good. Yeah.

Dan Runcie [00:38:14]:

Okay. So despite the mixed bag of acquisitions that adidas has had, one of its partnerships actually was probably the best non athlete.

Zack O Malley [00:38:28]:

Yeah. Greatest deal until it mean that’s kind of the only way to put it. Again, pretty successful. It kind of goes back to the beginning of the yeah, greatest deal until it wasn’t that’s kind of the only way to put it. But again, this kind of goes back to the beginning of our conversation about the history of adidas. And this has been, let’s say sports is kind of always their thing, but when you kind of look at where they were in the 2010s, just as the easy deal is about to come into play, adidas is doing well, but it did not have anything that could possibly compete with air Jordan. And who did? I think a lot of times some of the deals that work out the best for entertainers are ones where it’s just such a wild thing that nobody really ever they get such great terms because nobody could ever really expect how well the thing could do. And the thing you’ve seen with puffy and Sarak and certainly with easy and adidas, and the thing that kanye got was a 15% royalty from adidas, a per shoe, which is basically unheard of.

Zack O Malley [00:39:55]:

And that’s like three times more than Michael Jordan’s rumored to get on his shoes from nike. So why did adidas make this kind of wild? It’s because I don’t think anybody thought that it was going to be as big as it was. But also, why not, right? Kanye had been at nike to begin with the air easy, so I remember those early yeezy high tops. They were kind of know, almost a novelty item, like limited edition runs. I think nike paid kanye a few million bucks and made the shoes, and it was a good look for him if he wanted to get more into fashion and things like, you know, I think he always felt that they weren’t really taking him seriously. And he was sitting here watching, like, jay and puff and dre and all these guys sign these incredible deals and become billionaires or close to it. And I think he felt that he could do the same thing. And so he recognized the value of ownership, and so he always insisted on maintaining ownership of the easy brand throughout the nike process and throughout the adidas process.

Zack O Malley [00:41:07]:

And insisting on ownership early with nike meant that he could take the easy brand over to adidas. And so this deal was negotiated. Was it like that? Okay, I should remember that I wrote a cover story on Kanye for Forbes in 2019, and this was like, just as he was kind of coming into the forefront as like a legitimate competitor to Air Jordan. So it’s a little a few years ago, I don’t remember all the days exactly, but yeah, 2013, there you go. He comes over from Nike. Scooter Braun, actually helps negotiate the deal. He’d been co managing Kanye for some period of time. He did a stint as Kanye’s co manager there, and they were able to put together this pretty incredible deal.

Zack O Malley [00:42:07]:

But I guess from the divas’point of like, who would have ever thought that this would be a billion dollar brand? And it’s like, well, even if it were, then why not have a big piece of that? Kanye, meanwhile, feels validated. He finally has this company behind him who’s really giving him ownership. He always had ownership, and they’re really giving him a share of the proceeds, and he kind of pours everything into it. But I just remember when I went out to write the story, I actually wore a pair of Jordans. And I walked into Kanye’s house with these Jordans, and he was like, oh, can you he or somebody who greeted me at the door was like, oh, you need to put on these little cloth booties over your shoes. And I thought at first it was because he didn’t want the Jordan to sort of sully the Adidas household binos because he had these special plaster floors that could only be fixed by a crew that had to be flown in from bruges, and so you couldn’t scuff them. But I remember sitting down with him, and one of the first things he said was like, oh, I always loved the Jordans and those Jordan ones that you’re wearing. That was one of the first sneakers I ever sketched, so I figured it’d be an interesting conversation piece.

Zack O Malley [00:43:40]:

But that was really like his intent was to go after Jordan and to create this sneaker brand that could really kind of compete on that level.

Dan Runcie [00:43:50]:

Right? It was going after Jordan from the sneakers. It was going after Jordan in terms of being one of the richest black men in America. All of these statements and accolades that were really important for Yay at the time. And the timing here is also big too, because this is right at the moment where sneaker culture, especially in the social media era, really becomes what it is with Hype culture. And the sneakers app and drops and making sure that you just perfect that. And Yay learned a lot of this from watching how Jordan did it over the years as well. And it’s that slow, demand building things the exact opposite of what we talked about in the Reebok episode in terms of what they did with the S dots and G units. You build that slowly over time.

Dan Runcie [00:44:32]:

And it really wasn’t until 2018 19, that they start mass producing these things at a level where Kanye is selling enough quantities of these to you do the math. They’re selling billion dollars worth of pairs on this on an annual basis. From revenue perspective. Kanye gets his 50% royalty of that. You apply a multiple to that and then he becomes a billionaire and you’re able to consistently have that there that it’s through. So the timing of this works. And also this is around the time that Adidas is pushing its ultra boost, going back to the technology thing and tapping into that as well. The other thing that I think Adidas did to maximize the allure and the popularity of Yeezy without ruining the oversupply, this is something that a lot of sneaker companies do, but creating the replica looking sneakers that aren’t quite the ones, but are more accessible.

Dan Runcie [00:45:28]:

So they had their whole ad let. I think that’s the name of the product line. But they had their whole ad let version that the sneakers that kind of looked like Yeezys, but were clearly inspired by them, but weren’t. Adidas could sell those at mass quantities for like 50, 60, $70. The same way that Nike could have its sneakers that kind of look like Jordans, but clearly artificial Jordans and stuff. And that in a lot of ways can be where the real money maker could be from a top line perspective, or from a bottom line perspective. And then by the late two thousand and ten s, the articles and the headlines are less about Adidas can’t catch Nike. What happened to Adidas? It’s more, oh shit, look, Adidas is right behind Nike and they’re starting to catch up to them, which is really cool to see.

Zack O Malley [00:46:12]:

Yeah. And in a way it’s sort of like you have your Cadillac and you have your, you know, maybe the Cadillac helps sell the then, you know, eventually people want to trade in their Chevy for the just to have that sort of prestige shoe at the top of the line. It kind of like raises all the other ones as well, I think. Whereas Nike saw Kanye maybe in that way and had these very limited edition drops of the original Yeezys, they never thought it could be sort of a mass produced sort of a thing. And to be fair, no non athlete had ever sold anything in a way that could compete with Jordan. So why would they think that it could scale up in that way? But that mechanic of the limited edition drops, which every year there was Jordan 1234-5678, 910, eleven, et cetera. I personally like the eleven s and the ones the most, but to each their own. There was going to be easy season, there was going to be a different and it was the colorways, I think even more than Jordan, there was the variation of the colorways.

Zack O Malley [00:47:34]:

It was almost more Apple esque, right? You stick to a silhouette, you have fewer distinct product lines, but you have more variation in color and things like that. And that was super successful for Yeezy in bringing it out to be as big as it was. But at the same time, all this stuff has come out now, obviously, in fall of 2022, kind of goes on a series of horrific anti Semitic rants and really forces Adidas’s hand. He says something like, I can say anti Semitic shit, and Adidas still can’t fire, you know, I don’t know what he was thinking because there was a morals clause in his contract. And so they did, they broke up the mean. I guess he was probably thinking, how could Adidas give up over a billion dollars in revenue by calling out this deal? But again, it goes back to the history. When you have a company, any company really, but especially a company with a history of affiliation with the Nazi party, you can’t really be seen condoning anti Semitic rants, you know, no matter no matter who, no matter how well your snakes are selling. I mean, it’s like an existential crisis to be sort of associated with something like that.

Zack O Malley [00:49:08]:

And so, of course, now that that has happened, we’ve started to hear things kind of trickle out that actually this wasn’t just an isolated incident. And there was some story, like many years ago, that Kanye had gone to Germany and seen some prototype of a shoe that he didn’t like and he took a marker and drew a swastika on it and in front of these German executives who were horrified because it’s horrifying. But it’s also illegal, I think, to do in Germany. And so there had to be a lot of smoothing over and sort of assuring that this wasn’t really how Kanye was and all this kind of stuff. So, you know, of course there were other incidents of that ilk that sort of came out of the woodwork that had never really been reported until after his very public blow ups. But despite all the success of Yeezy, the company now finds itself in this very awkward place where it’s sitting on, what is it, something around a billion dollars of inventory. And it can’t really sell it at some huge profit because that doesn’t seem right. But also, you don’t want to sort of let it go to waste either.

Zack O Malley [00:50:29]:

And I think Adidas had started earlier this year, like selling some of the excess inventory. Of course, some of the profits do go to Kanye, but they linked up with foundation for George Floyd’s family and also, I think, the Anti Defamation League. And so a lot of the profits were going to go there, and I think they sold a couple hundred million dollars worth of shoes that now, you know, they’re still kind of stuck in light of what’s been going on in the Middle East and the rise in anti Semitism around the world. They’ve kind of put that on hold know? And again, I think that’s why it’s great that we’re recording this episode now. I mean, it’s, it’s, you know, it’s such a sticky question and it, you know, gets to the root of so many things that we’re looking at in the world right now. I don’t think there are any right answers. I think the only right answer is right now, Kanye is totally toxic and you can’t be selling his shoes. Is it going to be that way all along? The founder of Adidas was a member of the Nazi Party, and people might have bought his shoes like my dad bought his shoes as a, you know, I don’t think anything is forever when it comes to this sort of thing, but I think at least in the present moment, it’s a huge conundrum.

Zack O Malley [00:52:03]:

It’s something that has a deep impact on the bottom line of Adidas as a company. And it speaks to how big that easy deal was, but also the risks to tying up with somebody who frankly, they knew at some point was bringing these risks with him and they kind of continued along with it.

Dan Runcie [00:52:31]:

Right? This is the ultimate version of key person risk. Key person risk is often used to the hypothetical, what if you get hit by a bus? But it’s also what if you say some horrible anti Semitic comments time and time again and then other stuff comes up. And then, now for a company that was doing $17 billion in sales, this product line alone accounted for 12% of that at its peak. Plus all of the derivative shoes that were clearly expired by Yeezy. That didn’t exactly take the Yeezy brand as well, because that’s another ethical question, right? You may not sell those, but what about those lookalike shoes that look like Yeezys? Is it still ethical to sell those? So there’s so many compounding aspects of it. And I know that we’ll get into all of that with Yeezy and even Yeezy Gap and the Origins more because you and I are definitely going to do a full Yeezy breakdown eventually. But I think this is also a good time, at least for the Adidas story. We talked a lot about why this at least worked initially with the rise for Yeezy, but it also didn’t work for all of the people that Adidas tried to partner with as well.

Dan Runcie [00:53:41]:

Because you look at someone like Beyonce and what they tried to do with Ivy Park, that deal, I believe, was 2019. When they initially made that deal of the announcement, they thought that that was going to be another Yeezy level collaboration because of how popular Beyonce was at the time. But as you and I know, because we’ve talked about in past episodes, and now we’re going to break it down here, it didn’t work out that way.

Zack O Malley [00:54:05]:

No, it didn’t. And to me, the reason it didn’t work out is because we live in this era where people can get to know superstars fairly well from afar, right? Or at least whatever that superstar wants to convey to them. But there’s some things that you sort of can’t help but pick up. And I think one of those things is passion and sort of like an authentic obsession with design or sound or something like that. And I think that’s why Beats by Dre works so well, right? Because if you know anything about Dr. Dre, I mean, he’s not the most sort of available celebrity, right? He’s a bit reclusive, but if you know anything about him, you know that he’s obsessed with sound and he’s a perfectionist. I mean, the guy’s only put out a handful of was it three studio albums in his whole career. I think it depends on how you want to anyway, whatever call it three, and Detox is floating around there somewhere, but this guy takes a decade to put out a single solo album.

Zack O Malley [00:55:11]:

So I think that people were very receptive to the idea of him creating a headphone line because they thought, well, if it’s good enough for Dr. Dre, it’s good enough for me. And they sort of trust him to really perfect whatever it is that he’s putting in their ear, whether physically or musically. And I think the same was true for Kanye. People might not have liked Kanye, or they might have found him abrasive or whatever, and all fair points, especially in light of recent events, but the fact is, the guy is obsessed with design and the way things look and feel and texture and all that. He didn’t need to be so focused on fashion and footwear and all this stuff is was one of the most successful recording artists and producers, not just of our generation, but ever. So he clearly was pushing this stuff, the fashion, the footwear, even when he clearly wasn’t making money off of it, he was losing money off of it, but he just really cared about it so much. And I think people can feel that passion and it translates.

Zack O Malley [00:56:31]:

And I guess I just don’t get the sense that Beyonce is sitting there at home at two in the morning ripping up designs for tracksuits and calling Adidas and being like, you need to put a line through that. Maybe not giving her no credit, but I just think I got the sense that Beyonce, she’s touring, she’s making music, she’s about a lot of different things, but I just don’t know that that’s kind of what she’s all about. And in a mean you remember there were some ads that they did with her where I think they tried to with all this Adidas stuff everywhere in her house. Remember that one? It was like the big house that she and Jay have in Bel Air. And it was just like all these different Adidas things. And you’re sort of invited to think that she really is know, all hours, kind of trying to perfect her product line, but I don’t quite it just didn’t quite resonate in that way. So it may be kind of a long answer, but that’s why I think it didn’t work out.

Dan Runcie [00:57:51]:

Yeah. I want to preface what I’m about to say by saying that I’m a Beyonce fan, been to her concerts, always love them. I consider myself a member of the Beehive, but I think you’re absolutely right. I don’t see the same connection there. I told you this in the Reebok episode that we did where that clip of you walking around with Kanye and he has these rows and rows of shoes. I can’t see that same thing happening with Beyonce. One, she’s not going to let you into her house in that type of way. I mean, I know that there was that ad, but that was a bit more created versus I feel like the Yay thing was like, oh yeah, this is what I’m working on right now.

Dan Runcie [00:58:26]:

I don’t see that type of connection. And I also think she comes from a slightly different era of celebrity where she’s essentially someone that rose up as a teen star. And I think that in that type of era you saw a lot of your peers go through very public struggles and things like that. So you especially in the 90s when she’s growing up, she’s been on a record deal for almost 30 years now. You’re going to be more guarded and it’s going to lead yourself to not necessarily being as open the same way that someone like Kanye is much to his fault, but it’s going to lead to some of these more interviews and things like that that don’t necessarily bring out the persona and the personal aspect. I actually did a capital piece talking about this back in February when the news announced that Adidas had dropped the brand and there was a 50% sales decline for Ivy Park and there was a 200 million dollar drop in Adidas’s sales projection because of what happened with the Ivy Park brand. And some people that replied to my email that were members of the Beehive said this is one person that said that she’s been a Beehive member since the House of Darion days. Said she’s more of an artistic god than an aspirational figure.

Dan Runcie [00:59:37]:

We know nothing about her day to day lifestyle and her icon status benefits from that. Her ability to remain a mystery is rare currency. Someone else said it doesn’t feel like Beyonce herself would wear the brand to work out. People want to buy an experience. Ivy park is yet to deliver that experience. So those are some quotes that I’ve thought about since then. I know that those are anecdotal, but I do think that there’s similar things that come from it. And yeah, the same way that you mentioned the 02:00 a.m.

Dan Runcie [01:00:07]:

Piece of.

Zack O Malley [01:00:07]:

It.

Dan Runcie [01:00:07]:

I could imagine Beyonce doing that with her music. I could imagine her touring as well, especially like the Homecoming documentary. How she’s doing? You need to do this. You need to be in this corner. And even her trading blue for the Renaissance tour and stuff like that. Yeah, I just don’t know if it was there. And I think the other slight nuance too, is that Ivy Park had a pretty wide product line, at least when it first came out. You had shoes, you had tops, you had bottoms.

Dan Runcie [01:00:33]:

And I think anytime you have all of those types of things, I think it’s tougher because each of them have different aspects where footwear really is its own category, and it’s tough to kind of be a catch all in that way.

Zack O Malley [01:00:44]:

Yeah. And I think that Beyonce does have this sort of godlike aura around her. And it’s like, does she even need to work out? She just woke up. Like, you sort of don’t get the sense that she does these earthly things like working out. I don’t know. Everything is on a cloud in some kind of divine fantasy land. Obviously, she’s a human being. Of course she does what human beings do.

Zack O Malley [01:01:17]:

But I think that although, like, like one of those readers that you just quoted said, on the one hand, she is this godlike person and we don’t really see what she does, that does sort of allow you to project whatever it is that you want onto her. It does also prevent you from seeing any kind of struggle. You see a little bit of struggle, like maybe in Lemonade and things like that. But really, I think Kanye said it himself. He had a quote. He said, with Jay, you only see the win, you don’t see the struggle. And with me, you see the struggle and the win. I think I’m botching the quote, but it was something like that, and I think it was before the 444 era and the Lemonade era.

Zack O Malley [01:02:04]:

And so you do see the struggle a little bit more of Jay and occasionally of Beyonce. But I do think that Kanye always saw himself as an underdog, and that was always part of his mentality. But I think that also helped sell shoes and just having the struggle, I think that people can identify with. But I do think that people can also understand the dynamics of ownership. Right? And they understand that Kanye owns a piece of this brand. It’s called Yeezy, and he owns a piece of it just as Dre owned Beats By. So I think that the bigger a star is, like, if you were a pop superstar, you can get such big checks to team up with a big company. It’s not really worth necessarily taking a huge risk to get that much ownership.

Zack O Malley [01:03:04]:

But if you were like, let’s say Kanye, when Kanye did his easy deal, he was in sort of a bad place. It was not like they were giving him that much money up front, they were giving him a lot of back end, letting him have ownership, that kind of thing. I think people do identify with that and they would on some level, rather support something that is at least significant, where one of their idols has a significant interest in the business rather than is just getting a check from them. Although, to be fair, I think a lot of people don’t even know that Kanye has anything to do with Eazy. I mean, you see people walking around all over the world and it’s like, do they know that this is Kanye’s shoe or not? I think probably most of them do, but not all of them.

Dan Runcie [01:03:48]:

Yeah, that was always an interesting disconnect where I think maybe even back to the Beyonce point where people assumed that the beehive consumer of Beyonce’s music was going to be the same consumer of Beyonce’s product. And we know for Yeezy it’s slightly different because there were all these memes about online where the active person that buys all of the Yeezys couldn’t name you five songs that came out on the College Dropout album. Do you know what I mean? So it always felt like there was a bit of this cultural disconnect between the Yeezy hype beast fan versus the person that grew up with the old Kanye. So I know that some of this exists there as well. But with this topic though, take it a step back. So we were talking about of course, the rise and fall of Yeezy, the very quick rise and fall of Ivy Park, Adidas collaboration, and then a bit of a I don’t want to say downturn, but a bit of a downward trend for Adidas compared to where things were three, four years ago. And in terms of them being right neck and neck with Nike, and now as we’re about to enter 2024, it’s not so close. So do we think that that’s just these big partnerships not working out in the same type of way? Or do we think that there’s something else going on between why Adidas wasn’t necessarily able to continue the trajectory that it had at the end of the.

Zack O Malley [01:05:13]:

Last you know, I think that a lot of it comes down to the dissolution of the Yeezy deal. But know, don’t forget, even when that was going down, the sales of Yeezys had slowed. I mean, you can’t keep up that kind of insane pace for forever and it was already kind of, I think, reaching a bit of a plateau just as anything would. So I think it would have been easier to see Adidas sort of settling into the one A to Nike’s number one role if it hadn’t been for what happened with Kanye. And now it’s just kind of like but even that would have been a hard place to maintain given Nike’s dominance in the culture. But now instead it sagged a little bit further and kind of still in somewhat of a damage control mode.

Dan Runcie [01:06:13]:

Yeah. And I think there’s other bets that probably don’t get talked about as much that I think were quite popular because with the rise of the late two thousand and ten s, the biggest athlete that Adidas had, if I remember correctly, was likely James Harden. He was huge. And especially in 2018 they have that run where they forced that 73 win. No, not the 73 win, but they forced that Golden State team with Kevin Durant to a game seven. They epically lose it, but they probably came the closest that anyone came to knocking off that team when they had Kevin Durant in their prime. And then four years later, James Harden, now mid thirty s, now third team in three years and it’s a bit or third team in four years and it just doesn’t burn quite the same way. Like let’s say for instance, Adidas would have been able to land Steph Curry instead.

Dan Runcie [01:07:04]:

If those deals happened somewhere around the same time, could we been having a different story where now Adidas is the brand that was connected with them the same way that Under Armour was for an extent. And obviously Under Armour is nowhere close to either of these brands, but there’s some other stuff going on too there that I think some of it was just timely. And yeah, I think to your point, you clearly reach a point from a growth perspective. It could have been interesting to see if Yeezy was really going to be Adidas’s version of Jordan. What was that annual Yeezy season that could at least keep people coming back. And sure, it may not be as big as it was when the Jordan eleven come out, but it’s still an annual billion dollar business plus and it’s unfortunate that didn’t get there, but I have to assume that that is probably part of it. Which I think also leads to one of the other challenges that I know we see where we just haven’t seen as many of these big deals happen in general in recent years. Beyonce was probably the last one that we’ve seen and maybe the tides are starting to turn with a bit of that a bit of the key person risk here.

Zack O Malley [01:08:09]:

Yeah, I think you said right. And it could be like a Kanye type of key person risk. Let’s not forget about Kyrie. I mean that’s kind of and another thing where there have been some hate speech type of issues, none of those issues, obviously with Beyonce, but it just didn’t work. So if you’re shelling out a lot of money for a big celebrity, you never know what they’re going to do. Or they could be as graceful as Beyonce and just somehow it doesn’t work. I think that you might see some of these brands take a breather from making these big commitments or sort of like to go to startup mentality, like more of a spray and pray. Try to pick up some younger or cheaper stars who could create something that might be the next easy or the next whatever it is, but kind of like hitch their wagons or hitch wagons to, I don’t know, metaphor something, get involved earlier on and not have to pay up for some of these big time superstars.

Dan Runcie [01:09:26]:

Agreed. And I think with that we can probably start to close things out. Go to some of these categories here. Dark horse move for Adidas.

Zack O Malley [01:09:36]:

I would say that the dark horse great move is signing up with Pharrell. I think Pharrell does not get nearly enough credit in the footwear space. He makes some great shoes. I have a pair of Adidas low tops. They’re great. And I think in many ways could fill some of the gaps that Kanye left. And Pharrell obviously is a fashion icon and really has his bona fides and has not gotten any kind of Kanye sort of trouble. He seems to be a really reliable person that brands like trust.

Zack O Malley [01:10:15]:

So I do actually think that we’re going to see them kind of press that more. And I do wonder if it’s dark horse move could pay off even more in the I still don’t think those shoes look as good as the Yeezys, unfortunately, but I just can’t wear Yeezys anymore. So there we go.

Dan Runcie [01:10:36]:

Yeah, it would be cool to see if he could do something tapping in with okay, now he’s the men’s director at Louis Vuitton. Do you have some type of Louis Vuitton adidas collab? Virgil had the air sneakers with like what does that look like?

Zack O Malley [01:10:49]:

Oh, that could be, you know, is there a way that a couple years down the line you somehow do a Pharrell x Yeezy and you kind of get some of the stink off of it that way? I don’t know, it’s probably not the time to be contemplating that, but I do think that was a great move and I think that we’re going to see more of that in the future.

Dan Runcie [01:11:12]:

My dark horse move is the continuation with soccer, especially as soccer has just continued to gain more and more popularity, especially in North America over the past decade plus. Adidas is right linked with that. Adidas is they’ve had a partnership with Messi two decades ago. They had the partnership with David Beckham, so they’ve been able to follow along that. And I think as World Cup continues to just grow and grow in terms of its popularity, at least in North America, it’s already been very popular worldwide, but Euro Cup and everything else, adidas is the brand, the signature brand, and I think will continue there from that perspective.

Zack O Malley [01:11:49]:

Yeah, that makes a ton of sense. I mean, when you think of soccer, you think of Adidas. And if you want to be involved in a growth industry, I think soccer, I mean, obviously it’s huge around the world, but in us, it’s only getting bigger and bigger.

Dan Runcie [01:12:03]:

What’s your missed opportunity?

Zack O Malley [01:12:06]:

Michael Jordan. We got into that in the beginning a little bit, but there was an opportunity for Adidas to sign Michael Jordan. And I think people don’t realize, maybe casual observers, how much of a long shot Nike was when Nike did sign Know. There’s no reason that Adidas couldn’t have gone in there and gotten again. You know, they were stuck on this idea that only big men sell shoes or something. And there you have it. So it could have been a really different world with Jordan under Know and all these different things we talked about could have shuffled up in different ways. But yeah, I think that’s a pretty clear one on my end.

Dan Runcie [01:12:45]:

They literally made a whole movie about this.

Zack O Malley [01:12:48]:

Yeah, exactly.

Dan Runcie [01:12:51]:

I could try to be cute and think of a different one, but that is by far the missed opportunity because, like you, it kind of laid things out. It could have changed the trajectory for everything like it did for Nike.

Zack O Malley [01:13:03]:

Absolutely.

Dan Runcie [01:13:04]:

And then who won and lost the most? I think this is another one we probably also agree with.

Zack O Malley [01:13:09]:

Yeah, I mean, it’s maybe a little bit of a boring I mean, Kanye, he won the most. He lost the most. I mean, he became a billionaire. He was briefly the wealthiest entertainer in the know, any genre, or forget music, just like, at all. I mean, he was one of the probably 500 wealthiest people on the planet, and then he just self immolated. I mean, he just completely threw it all away. And clearly he’s not well, but that’s no excuse for hate speech, and I hope he gets the help he needs.

Dan Runcie [01:13:47]:

Yeah, agreed. Yeah, I think it has to be him. It’s really unfortunate how it all went down. And maybe just so we don’t end things. On that note, I’ll also give a shout out to just the whole Adidas Originals line because I think one of the things we talked about with the Nike episode is that not all successful shoe companies have had a signature shoe that you can look at and be like, oh, yeah, that’s their shoe. And Adidas has that. Adidas actually has a few of those, and that’s pretty cool. And I think the fact that that’s another shoe that has still stayed timeless even as it’s gone through ups and downs of popularity, no different than the Air Force One or Timberland boots or Cortez or Dunks or Jordans or things like that, it’s been cool to see that shoe continue to live on.

Zack O Malley [01:14:34]:

Yeah. And just as iconic logos go, the three stripes, it almost doesn’t need to be a specific model, right? You just see the three stripes diagonal on some sneakers and you know what you’re looking at. So I think that’s just a masterstroke of marketing. And we didn’t talk about this, but I think they bought the logo in the middle of the 20th century for like, $1,600 and a couple of bottles of whiskey. Maybe that was the Dark Horse best.

Dan Runcie [01:15:08]:

The fact that they had two logos because they have that in the tree foil as well. Yeah, this is a fun one. Shout out to Adidas. I’m glad that we were able to break this one down and we’ll get to Yeezy eventually. But for anyone listening, if you haven’t listened to the reebok one, check that out and then definitely make sure you stay tuned for that one when we queue it up.

Zack O Malley [01:15:30]:

Thanks so much for having on that.

Dan Runcie [01:15:31]:

Thank you. Bye.

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