Nike, every mention

Nike (Audio) · Acquired Jul 25, 2023 · 100 mentions

• ▶ 2:50:11 Ben Gilbert Like, 2002 is really when it started to get good again for them.
• ▶ 2:50:25 David Rosenthal Nike can do something for athletes, for the big superstars, that the other companies can't.
• ▶ 2:50:31 Ben Gilbert Oh, and right around the same time, in 2003 is when LeBron came into the NBA and Nike signed him out of high school.
• ▶ 2:50:38 Ben Gilbert Ok, so, 2002, they get Kobe.
• ▶ 2:50:41 Ben Gilbert 2003, they get LeBron.
• ▶ 2:50:43 Ben Gilbert They've cleaned up their image, they're cleaning up their factories, they're cleaning up their supply chain.
• ▶ 2:50:47 Ben Gilbert In 2003, they acquire Converse for three hundred and nine million dollars.
• ▶ 2:50:53 Ben Gilbert They're once foe, and you know, now Nike's in the multi-billion dollar market cap, and Converse is a tiny fraction of that size.
• ▶ 2:51:55 Ben Gilbert So not a lot of people know this guy named Tim Cook's name, but Tim joins Nike's board.
• ▶ 2:52:05 Ben Gilbert He immediately starts helping Nike into understanding how to use digital technology to transform their business.
• ▶ 2:52:12 Ben Gilbert And in 2006, they launched the Nike Plus iPod.
• ▶ 2:52:12 Ben Gilbert And in 2006, they launched the Nike Plus iPod.
• ▶ 2:52:18 Ben Gilbert Which was not a terribly successful product in the market, but man, did it help Nike understand where the puck is going.
• ▶ 2:53:12 Ben Gilbert But as that evolved into the fuel band, and then as the fuel band evolved into apps on your iPhone, Nike started really building a way to have a relationship with their customers
• ▶ 2:53:12 Ben Gilbert But as that evolved into the fuel band, and then as the fuel band evolved into apps on your iPhone, Nike started really building a way to have a relationship with their customers
• ▶ 2:53:37 Ben Gilbert There's really these clear moments in time where the company changed its DNA.
• ▶ 2:53:44 Ben Gilbert It also completely changed their acquisition strategy.
• ▶ 2:53:48 Ben Gilbert Cause up until then, they had been acquiring brands.
• ▶ 2:53:51 Ben Gilbert They bought Converse.
• ▶ 2:53:52 Ben Gilbert They had bought Starter.
• ▶ 2:53:59 Ben Gilbert And I think this sort of aha moment happened where they realized, actually, what we want to be doing is pouring everything into the flywheel of the Nike brands.
• ▶ 2:54:09 Ben Gilbert They divested a bunch of stuff, but they started acquiring capabilities from a bunch of these other companies to help them make this tech migration.
• ▶ 2:54:18 Ben Gilbert It's like a two decade thing where they have these two different strategies that are happening at the same time.
• ▶ 2:54:26 Ben Gilbert And to give you a stat on how impressive that is, across the four mobile apps that Nike operates today, they have five hundred million users a quarter who are now using Nike digital apps.
• ▶ 2:54:41 David Rosenthal Run club, training club, sneakers.
• ▶ 2:54:41 David Rosenthal Run club, training club, sneakers.
• ▶ 2:54:41 David Rosenthal Run club, training club, sneakers.
• ▶ 2:54:44 Ben Gilbert And the Nike mobile store.
• ▶ 2:54:48 Ben Gilbert All sort of started at this moment in time where they realized, A, we should be in technology, and B, we should be making acquisitions, not of other brands, but of technologies that we can integrate to help us extend our brand and…
• ▶ 2:55:03 Ben Gilbert The other thing, and this is a little bit later, this is more of the 2013, 14 era, they pull the trigger on this
• ▶ 2:55:17 Ben Gilbert And Nike started to realize in this new era, this internet era, this global era where you have to be at scale to execute certain strategies, they're gonna be the player at scale that can execute a direct strategy, that can operate Nike.com…
• ▶ 2:55:39 Ben Gilbert They're not all the way there, and I think there's a lot of, like, we'll talk in their sort of bear bull case about where they are in that transition and how successful it will be, but there is this tipping point where a brand becomes the…
• ▶ 2:56:11 Ben Gilbert Nike's basically betting that they're also one of these hero brands that can run that playbook.
• ▶ 2:56:16 David Rosenthal For context, today, Nike is, what, more than twice the size of Adidas?
• ▶ 2:56:33 David Rosenthal Nike, I actually think, is
• ▶ 2:56:35 David Rosenthal Really at the forefront of apparel personalization with what started as Nike ID and now is, I think, called Nike by me, but anybody can make their own Nike shoes in their own colors with their own designs on them.
• ▶ 2:56:35 David Rosenthal Really at the forefront of apparel personalization with what started as Nike ID and now is, I think, called Nike by me, but anybody can make their own Nike shoes in their own colors with their own designs on them.
• ▶ 2:56:49 David Rosenthal To be able to do that at scale with their customer base and produce the standard lines, that requires a level of scale economies that nobody else can really match.
• ▶ 2:57:01 Ben Gilbert Ok, so that's like the 2014 era, where they really start to execute this digital and direct migration.
• ▶ 2:57:35 Ben Gilbert But there became, David, to your point about Jordan and Nike creating culture and participating in cultural movements and changing the way that people move around in the world and having a sneaker as a thing that defines you rather than a…
• ▶ 2:57:56 Ben Gilbert They really have figured out how to reach an audience and tap into their identity in a way that the original Phil Knight track shoe thing never could have dreamed.
• ▶ 2:58:40 David Rosenthal I mean, this is companies like Goat and StockX, and we'll talk about this more in analysis, but Nike has made the, I think, very conscious decision
• ▶ 2:58:55 Ben Gilbert I think they figured out clever ways to make a bunch of money on limited edition sneakers without having to be the marketplace for all the secondary sales.
• ▶ 2:59:04 David Rosenthal The other way that Nike potentially could capture this value would be to massively increase their prices.
• ▶ 2:59:11 David Rosenthal I think this is where Nike is different from the luxury brands that we've covered, the LVMHs,
• ▶ 2:59:29 David Rosenthal Nike sells these incredibly limited edition retro and otherwise sneakers, but they sell them for a 150 bucks, 200 bucks, maybe 300 bucks, like not a lot of money.
• ▶ 2:59:51 David Rosenthal That is a very intentional decision by Nike not to capture that value, and I think the reason they do it is to make all of this work, to make the dream work in a way that is applicable to everybody on the planet and not just Louis…
• ▶ 3:00:11 David Rosenthal And so they're willing to let that
• ▶ 3:00:22 Ben Gilbert I don't think there is anything that I can buy from Nike that costs 500 dollars.
• ▶ 3:00:29 David Rosenthal And yet, Nike absolutely produces many items that are worth way more than 500 dollars.
• ▶ 3:00:38 Ben Gilbert It's not like, oh, I can't buy something from Nike for 10,000 dollars.
• ▶ 3:00:41 Ben Gilbert Like, I really can't think of a single thing I could possibly purchase for them, even for 500.
• ▶ 3:00:46 David Rosenthal The one product that I know of was the Mags, the Back to the Future shoes that they actually produced, but those were for Michael J.
• ▶ 3:01:22 Ben Gilbert They make it up in volume.
• ▶ 3:01:44 Ben Gilbert Just like a luxury brand, they have to market the dream, but their mechanism for capturing value is entirely different.
• ▶ 3:02:03 Ben Gilbert They pulled the trigger on a Wyden and Kennedy ad with Colin Kaepernick about standing for something.
• ▶ 3:02:20 Ben Gilbert They accompanied it with a commercial.
• ▶ 3:02:22 Ben Gilbert It launched online, Kaepernick tweeted it, then they did these big billboards in every major city.
• ▶ 3:02:32 Ben Gilbert Nike executed perfectly on exactly what they were trying to do here.
• ▶ 3:02:37 Ben Gilbert It strikes you emotionally, much like many of the Nike commercials.
• ▶ 3:02:41 Ben Gilbert It was at a particular moment in time where they saw an opportunity to do something that they felt was right and become the center of media conversation for, like, months.
• ▶ 3:02:56 Ben Gilbert And in fact, I know that when they launched this, they actually scrapped their plans for the whole rest of the year for a whole bunch of ad campaigns that were already ready for a different way that they were gonna do the 30th anniversary…
• ▶ 3:03:12 Ben Gilbert This Kaepernick ad struck such an incredible chord, and made a lot of people super angry on the sort of other side of the political aisle of this particular issue that Nike was supporting, that like, it entirely changed Nike's media plan…
• ▶ 3:03:44 Ben Gilbert They would have been just like every other company.
• ▶ 3:04:04 Ben Gilbert I do think this is a good place to open up what is Nike's media strategy.
• ▶ 3:04:08 Ben Gilbert Because it's very clear, especially over the last 20 years, that they pick a social issue that they feel strongly about, and they drive a truck through it in the American media market and say, hey, we want to prioritize this, and we want…
• ▶ 3:04:26 Ben Gilbert And there's a cynical way to take that, which is like, they've done the analysis and they believe that in doing this, they're going to build more love than they're going to piss people off.
• ▶ 3:04:49 Ben Gilbert This is a set of values we feel are right, and we're gonna continue to bet the company on the people that identify with that set of values are a great customer segment for us, and we can grow within it.
• ▶ 3:05:15 David Rosenthal Not an important sport for Nike in terms of shoe sales.
• ▶ 3:05:22 Ben Gilbert He was sitting there on the Nike roster getting paid.
• ▶ 3:05:25 Ben Gilbert There was a bunch of, ah, press about how they were thinking about actually cutting him.
• ▶ 3:05:31 Ben Gilbert This is a huge opportunity for us.
• ▶ 3:05:33 Ben Gilbert But like, it's hard to be a Nike athlete when you're no longer a professional athlete.
• ▶ 3:05:48 Ben Gilbert Despite that going really well for them in 2018, they did just have a whole bunch of other controversies.
• ▶ 3:06:06 Ben Gilbert There was the whole Oregon project.
• ▶ 3:06:09 Ben Gilbert That's their competitive running group with doping and all the alleged abuse going on there.
• ▶ 3:06:14 Ben Gilbert So there's these sort of, like, coming out of 2019, they really did kind of just need to, like, clean things up and right the ship, and it was very fortunate that while all of this was going on, their big competitors were all kind of…
• ▶ 3:06:36 Ben Gilbert A lot of these niche players have done well in growing, but Nike hasn't had a formidable scale competitor.
• ▶ 3:06:49 Ben Gilbert And so Nike has had some of these issues, but has kind of been fine.
• ▶ 3:06:55 Ben Gilbert And after they brought in John Donahoe, they've been able to clean up the organization, reset for the next chapter, execute this shift to a direct and digital strategy.
• ▶ 3:07:05 Ben Gilbert While I think they take a little bit of a breath and say, like, okay, what does Nike in 2030 look like, and how can we make sure that we don't sort of stagnate here?
• ▶ 3:08:06 David Rosenthal Are written all over this company in this episode for me, and this is the clearest thing in my mind that makes this industry and Nike's position and strategy within it so different from, say, an LVMH or a Porsche or any of the others.
• ▶ 3:08:33 David Rosenthal There's Nike, there's Adidas that's half their size, and then the third place player is well less than half of Adidas' size.
• ▶ 3:09:48 Ben Gilbert The primary way that you get someone to be a twenty-year customer of Nike is to go and spend money on the biggest athletes in the world.
• ▶ 3:10:02 Ben Gilbert Nike's acquiring content.
• ▶ 3:10:04 Ben Gilbert Nike is acquiring the LeBrons of the world to be Nike athletes.
• ▶ 3:10:19 David Rosenthal It's not just that Nike is paying LeBron a check every year for a lot of money, like Converse was back in the day.
• ▶ 3:10:44 David Rosenthal I think the issue was what Nike could do for Kobe, and thus what Kobe could participate in, was exponentially higher than even what Adidas could do.
• ▶ 3:11:30 Ben Gilbert I think a lot of Nike's power on a go forward basis is totally the scale economy stuff.
• ▶ 3:11:40 Ben Gilbert And they had lots of counter positioning in the old days, like the whole Jordan thing was a pure counter positioning play.
• ▶ 3:12:03 Ben Gilbert I think Nike
• ▶ 3:12:07 Ben Gilbert First and foremost, what they do is build this incredible brand, sell the dream, support athletes, inspire people,
• ▶ 3:12:43 Ben Gilbert Does Nike really have a brand premium?
• ▶ 3:12:46 David Rosenthal Or is it the athletes that have the brand, and Nike's scale economies let them buy the athletes' brands?
• ▶ 3:12:53 Ben Gilbert As Tren Griffin would put it, wholesale transfer pricing, where actually the athletes are the ones that sort of hold the power, and Nike's happy to pay up for it and pass through all the profit pool to the pinnacle athletes.
• ▶ 3:13:14 Ben Gilbert But let's look at an Air Force One or a Dunk, you know, the Dunk Lows that everyone's wearing right now.
• ▶ 3:13:14 Ben Gilbert But let's look at an Air Force One or a Dunk, you know, the Dunk Lows that everyone's wearing right now.
• ▶ 3:13:20 Ben Gilbert They're not really generating pricing power on that.
• ▶ 3:13:41 David Rosenthal Intentional choice by Nike, but in this category, I do think, yeah, if the dunks cost more than the Adidas Sheltoes,
• ▶ 3:13:41 David Rosenthal Intentional choice by Nike, but in this category, I do think, yeah, if the dunks cost more than the Adidas Sheltoes,