How Nike remains the best apparel brand for decades
The top marketing tools from the leading sports brand
Hello there,
I love the idea of tackling the local challenges and Mt St. Helens is my favorite nearby mountain.
I’ve climbed to the summit a handful of times, but the intimidating Loowit Trail, which circumnavigates the mountain, has remained undone for years.
But not forever! Last weekend my friend Eric and I defied the poor weather forecast and took our slightly undertrained out on an adventure.
We started at 7am, encountered rain, fog, then sun, and lastly clouds hugging trees that condensed on the leaves and dripped on us as we passed underneath. The last few miles featured wet feet and high spirits.
We ran the full 31 mile loop plus an extra 4 miles to get to-from our car. Five stars! (Out of three?) I’m riding high this week, even if walking slow with sore legs and joints.
What did I realize?
Sometimes the best advice is to just keep running (and snacking. Always be snacking).
The Nike Recipe for Growth: 10% Each Year
A few weeks ago I listened to a four hour podcast about Nike and their success. Now I won’t lie and say the time flew by, but I gathered some fascinating tidbits to share.
The biggest lessons from Nike’s history relate to their incredibly effective marketing, but also the smart partnership choices. This started back when the business went by the name Blue Ribbon Sports.
Phil Knight began his shoe business by re-selling imported goods from Japan. And the business didn’t take off until he brought along a partner. When he approached the famous track coach Bill Bowerman they reached a surprising deal.
Bowerman agrees to join Blue Ribbon Sports if he could own 49% of the company, carving quite a big chunk of ownership away from Phil Knight. But without much deliberating Knight makes one of his best decisions and says yes.
This turns out to be a brilliant strategic decision. Why? Because Phil Knight starts by traveling to track meets and running events to sell his shoes, and everyone recognizes Bill Bowerman’s name.
He has infinitely more to gain by owning 51% of Bowerman’s company than 100% of a business no one cares about.
The same thing happens when they approach Michael Jordan with their shoe deal. It happened differently from how it’s portrayed in the film Air. (Fun film though, I endorse it!)
Nike pitched Jordan on 5% of the profit from shoe sales. At this point Nike had no traction in basketball, so it made far more sense to own 95% of the Air Jordan brand than 100% of a basketball brand no one paid attention to.
To this day Nike brings in twice as much revenue as Adidas, who has twice as much revenue is the next biggest brand. They absolutely dominate, and continue to grow 10% year over year.
Perfect results count - not a perfect process
To reach the largest audience, Nike frequently broke the rules.
In 1984 with the launch of Air Jordan, they released an ad for the black and red shoes declaring them “Banned in the NBA.” And that shoe sold like garlic bread (trending in the 80’s!) and in year one they brought in $134 million in revenue.
For context, this means Jordan earned $7 million from shoe sales, meanwhile his NBA contract was $7 million over 5 years!
Focus on the highest value sports
There are only a few sports that translate easily to shoes we can wear around town.
That’s why Nike mainly emphasizes running, basketball, and tennis. And if they make an ad about Colin Kaepernick that pisses off a lot of football fans? That’s ok! Because it’s the amateurs in other sports that mainly buy their shoes and apparel.
Combine terrific products with amazing marketing
An interviewer asked Phil Knight if he considers Nike a product company or a marketing company. Here’s his answer:
“We are a marketing company, and the product is the most important marketing tool”
But there’s a counterargument that the athletes are actually the most important marketing tool. People see the athletes and want the brands they use. And that’s why Nike continues to sign all the biggest NBA players.
One of my favorite lines from JB Strasser’s leadership lessons at Nike: “If we do the right things we'll make money damn near automatic.”
Worthy & Remarkable
The product I keep think someone needs to invent has arrived - an inflatable crash pad that stores in 1/10th the size of a full foam pad - Sick Sequence Pad on Kickstarter.
The footage from an ultramarathon race in Italy makes me want to drop everything to visit this incredible landscape, featuring my old friend Hilary Gerardi.
Very Cool Footage of JT Lehman running super fast around Mt St. Helens - he no longer has the record but daaaang! (And obviously that’s what I looked like… not!)
For some European climbers venturing further abroad than you’d expect, check out this film on Rakccham - bouldering in India with Bernd Zangerl.
The Title pretty much says it all - hilarious - Amateur Cat Tries Bouldering for The First Time.
One Thing from Me
The idea bouncing around in my head lately relates to working style. I’ve been following the author David Epstein, who’s book Range changed my perspective on specializiation. And he writes brilliantly, but makes it a point to slow down his process.
Here’s what he says:
“I very rarely have a problem with not being able to work quickly enough, but I consistently have a problem with not being able to work slowly enough.'“
How can you go slower in the coming days or weeks?
Unhurriedly,
Jono
PS - this is terrific; Yo-yo Ma pays the cello in the Great Smoky Mountains.