Business Wars

In 2015, Kanye West turned his back on Nike, an all out battle in the ongoing war for sneaker supremacy. Nike and Adidas are two multinational companies worth billions in an industry estimated to be valued at $220 Billion by 2020 (which is double the GDP of Ukraine) but that begs the question - Why are companies sinking so much money into mesh and rubber for your feet? In this series of Business Wars, we'll find out. This is Episode 1 of a 7-part series on the brutal business battle between Nike and Adidas.

Rudi and Adi Dassler started the “Dassler Business” in the 1920s in their parent’s garage, recycling materials from WWI military gear and uniforms. They got a pair of their track spikes on an athlete named Jesse Owens at the 1936 Olympics and the company took off… until WWII. The war may have been over for Germany, but the rivalry between Adi and Rudi was just heating up. Rudi left to start his own company, Puma, and Adi created Adidas. 50 years later, with a waffle iron and inventory from Onitsuka Tiger, Phil Knight and Bill Bowerman start tinkering with some shoes in Bowerman’s kitchen. The waffle iron didn’t last long, but the shoes did.

As long as there have been professional sports, there have been professional athletes, willing to accept money to wear certain brands, but the biggest endorsement deals were only made possible by a mid-20th century invention: the television. Fans realized they could tune in to see their favorite athletes almost any day of the week. Brands realized they just got hundreds of walking billboards showing the capabilities of their athletic gear in action… and it’s a race to see who can reach the world’s best athletes first.

Every new Nike employee gets a list of principles that serves as the company’s philosophy. One: Our business is change. Two: We’re on offense, all the time. With those principles Nike sprinted from $29 million in revenue in 1973 to more than $850 million by 1983. But the biggest boost for Nike was an up and coming athlete. Like Jesse Owens fifty years before, a young Michael Jordan would carry a fledgling shoe brand to new heights.

Nike, the late starter struck gold with its “Just Do It” campaign. Launched in 1988, the shoe giant finally had a tagline as good as its shoes. Meanwhile, Adidas, the brand that started and found success long before Nike was even a dream, finds itself as the underdog. The American offices feel like a startup, and is passed between the hands of former Nike execs and European businessmen. What does it take to go from a million-dollar company to a billion-dollar company? Adidas has to find out, and fast.

The rivalry between Nike and Adidas has been intense for decades, but always respectful. But with intensity comes… defectors. Just three at the beginning, who set out to create a “Disneyland for designers.” And it worked. For the first time in a long time, the Swoosh was outperformed by three little white stripes. But it’s not all bad. The constant competition drove both companies to produce better shoes, better apparel, and have made each other better businesses. As the sneaker wars enter a new era, who will come out on top? Time will tell, but if Phil Knight knows anything at all, it’ll be the company who isn’t afraid to fail.

Today we talked to Liz Dolan, former Nike CMO, and David Meltzer, sports marketing guru and agent about this vicious war. If you loved them here, you’ll love their podcasts even more. Liz co-hosts Safe For Work, a show that answers your burning business questions and provides the advice you need to keep your office drama-free, and Satellite Sisters, where she got to sit down with Phil Knight and talk about Nike with the man himself. You can listen to that interview here. You can hear David on his show, The Playbook, talking to Tony Hawk, Gary Vaynerchuk, Reggie Bush, and more of sports biggest names.