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Hey! Tough week for the employees at streaming services. Spotify laid off 17% of its staff, Tidal laid off 10%, and Spotify let go of its CFO, Paul Vogel. It’s not too surprising. The pandemic is over, interest rates are up, and the tech sector has adjusted accordingly. Layoffs are never fun though. To help, I posted on LinkedIn and Twitter for companies hiring to post their roles so impacted employees can find them. So please consider that a resource!

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.

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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:

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:

Another fan, Maella from France, said.

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?

Hope you enjoyed this memo. If so, please share. Forward this email to someone who should read it. Text it to a friend. Drop the link in the group chat.

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