The Business of Air Max | EP 287 | The Hustle Daily Show Podcast

Key Takeaways

[Music] all right it's a big week for Nike a big week for Air Max so I thought we'd bring on a special guest to the show today our great colleague Draya who manages media growth and distribution for podcasts YouTube and creators here at hubs.media who I also believe is wearing a pair of Air Max right now and who is well I don't know what what would you call yourself a sneakerhead oh man Jake I'm so glad to be here you know Sneakerhead I don't know if I've earned that term yet I would call myself a sneaker Enthusiast I think that's probably a little safer and and just for all of you out there listening I'm currently taking offers to join seedless still talking to you New Balance Nike Puma Reebok Saucony A6 Adidas and Skechers honestly if you got some heat send them my way 6.5 men's okay so try out Sunday is Air Max day I've been seeing the words Air Max a lot this week but just for some context some other places I've been seeing this Nike urn earnings dropped on Monday third quarter revenues 12.4 billion up 14 year over year exactly you're gonna love this CEO John Donahoe said something very poetic in his remarks I thought it was a slam poetry event not an earnings call he said you may have heard us say before that running is the heart of Nike basketball is the soul and then he separately mentioned a product franchise that's a multi-billion Dollar business in its own right Air Max and my first thought was he totally missed the opportunity to refer to Air Max as the lungs of Nike right 100 Air Max is definitely the the multi-billion Dollar business within Nike but I also kind of feel like Jordan brand has like a pretty significant stake in that full full Nike brand body so pretty interesting yeah and another thing I thought you'd love was also this week the same day I believe footlock our CEO Mary Dylan came into work in gold Air Max 97s to an announce a new partnership between Footlocker and Nike I was reading Footlocker around 68 percent of their merchandise came from Nike in 2021 they're trying to reduce that but still maintain a good relationship with Nike yeah they're closing down like 400 of their Mall shops that actually makes total sense to me though because I think they're probably going to focus a little bit more on the boutique not to mention you know back in 2019 they made an investment of about 100 million dollars in Goat which is like a sneaker reseller site so I think that they're planning ahead I think they've got their their head in the game and they know what direction they need to go in to maintain relevancy and continue to build that growth for sure so long story short I'm seeing Air Max I'm seeing Nike everywhere this week can you help me set the scene a little bit just a little more on what Air Max day is what does Nike do to make this day special and and lucrative to how are they activating customers what do fans do to celebrate what do you do to celebrate if you do all right think of Air Max day as like a Global birthday party celebrating the birth of Tinker Hatfield's creation of the Air Max one right so back on March 26 1987 Tinker Hatfield introduced The Air Max One as we know the design of that sneaker was really to kind of emulate the the Paris pompadu Center and to kind of show that you know this design was from the inside out it was one of the first shoes that had the bubble on the outside which is always super dope and loves to kind of see that type of inspiration Air Max a is a Nike holiday it brings Global fans together we typically just talk all things sneakers Rock our favorite Air Max and of course talk that sneaker talk you know Nike has always been a Savage when it comes to breathing sneaker culture into life so they're running pop-up events all over the world I'm talking Shanghai London Brooklyn you name it they are out here they've done everything from dropping oversized temporary sneaker box venues into cities like I'm talking like imagine a sneaker box being dropped in the middle of Boston so big that you could have a thousand people in it shopping like the latest drop like they're so Innovative when it comes to their experiential is so so dope they've also made short films about The Air Max I think they just dropped one and they even used to give people the opportunity to kind of put their own spin on the shoes by using Nike ID which is awesome every year they do a drop a few drops I'm not gonna lie this year I'm in it for the 86 big bubble it's gonna be hard to get it though it's like the way that they release sneakers is they will release some to some retailers right so like if you know which retailers are releasing you can definitely wait in line for those if not you can definitely try to hit on the sneakers app but if there's anybody out there listening like me I've never hit on the sneakers app like no shade to Nike but like I have tried every single time and I've never ever hit so I might try again this year I might try the history of Air Max was it's really fascinating to me and I want to just dive into it a bit deeper and it's a long history you mentioned the Air Max once it even goes back further about a decade 1977 you have this NASA aerospace engineer Frank Rudy trying to build inflatable inserts for his wife's ski boots so Innovative so Innovative and a nice husband and he sees that he you know he realizes maybe this could work for sneakers too he brings them to Nike CEO Phil Knight who sticks them and some sneakers goes for a six mile run long story short they end up with the deal Signed Sealed Delivered 10 to 20 cents a pair go to Rudy not bad and then you had the the air Tailwind as 1979 really the first shoe that they used the gas filled pouch in successful with Runners but you know the coolest part of the shoe the airbag can't even see it that's right can't see it to the naked eye there's no difference between that and shoe from Adidas so you have that and then like you said tanker Hatfield comes in sees the pompadou center in France uses it as inspiration all of its inner workings its pipe electrical air ducts all exposed very artsy good for Instagram and in 1987 Air Max One is released you could see the air unit cut out in the heel rest is history totally totally so crazy I mean can we just go back to that part where he paid Rudy 10 to 20 cents per pair like how could how can we get back to that that's the reason that's the real question here I know we got to think of our own kind of sneaker Innovation that we got to bring to Phil Knight's desk absolutely I actually just uh I just bought shoe dog latest book that I bought I'm only like in the first chapter kind of reading about how Phil Knight would like wake up really really early and like go on these like really long runs in the dark super super inspirational that would not be me but really cool timing here the background of where Phil Knight's head was at back in the day a lot of these inspirational stories wow that's amazing but never be me but that's amazing I think another interesting aspect of this whole story is the business impact that Air Max has on Nike they've said that right like I mentioned in the earnings call it's a multi-billion Dollar business growing double digits they said but they've never really gone into more detail than that right I think one interesting place that that I was able to gather some more interesting details about Air Max and their sales has been stockx which is for those who don't know it's a major sneaker reselling platform it hit 40 million lifetime trades in 2022 so it's really quite popular and over the years they've put out some interesting data on Air Max shoes on their platform so between 2016 and 2020 the market share of Air Max or the percentage of dollars spent on all sneakers on stockx that went to Air Max Rose by 800 percent so strong growth on the platform crazy crazy and between 2019 and 2020 the average Air Max shoe on stockx across all styles appreciated by 28 percent in value so not investment advice but Air Max is beating inflation so you want to know where to put your money maybe it should be an Air Max sneakers yeah I know Jacob when we talk about asset classes a lot of times people don't think of sneakers as asset classes but there's an entire world out there where you know you do have these collectors and you do have people that are able to get these sneakers and hold them until they do become extremely lucrative so obviously we're talking about Air Max day to day but when you look at other sneakers such as you know some of the Jordan Ones even like the Jordan dior's you know those are going for over ten thousand dollars if you look at the original Red Lobster the I think the the lowest ask on those right now are like sixty five thousand dollars on stockx something along those lines but people have made full careers off of being able to buy and sell sneakers so they're a true true asset class and I think stockx is definitely one of those places that's that's kind of democratizing if you will the way that we like kind of buy and sell sneakers I mean of course they've got their fees built in and you know you are going to pay a lot more than you would pay retail if you are using stockx but you know it's it's just one of those things pretty interesting though yeah yeah and it is interesting I've seen some data obviously I think the maybe the second half of the teens and early pandemic it really boomed as an asset class I saw some recent data saying it maybe slowed down a bit still is very large and growing overall I was also looking Google search data has shown that relative search interest in Air Max sneakers as a Google search is past its peak which kind of peaked a few years back and my question I think for you is you know the CEO made a point also in earnings to say they're they're now focusing on making new Air Max styles for Gen Z has the Air Max bubble popped are they seeing some slow down or is it sturdier than ever and is the future really bright what are you thinking about this I think the Air Max bubble isn't like any other bubble right like it's different than other industries that are driven by macro economic factors like say the housing bubble the Air Max bubble is really driven by the culture right so the culture is always evolving and there's also a sense of nostalgia so you know if you're a sneaker sniffer like me you know exactly what I'm talking about people are blocking their calendars at work right now to try to hit on the sneakers app release for Air Max day the interesting thing you know when you're thinking about trying to make a shoe for a certain generation it seems like a pretty tall order I mean right like are you are you gen Z like would you call yourself for sure yeah all right cool so it's like how can someone generalize an entire generation and assume that gen Z will conform to a specific Style just because a brand is saying that it should doesn't mean that the generation is actually going to you know I'm the oldest of five so I'm a full Millennial out here but all my siblings are gen Z and they're the opposite of Conformity they're focused on individualism and they're betting against the expectation that they'll do what brands and companies assume they're the new version of rebellion so I don't know I mean it's interesting that Nike's exciting to kind of make a silhouette for a generation Because unless they've consulted with the generation which I'm sure they've done some research yeah it'd be interesting to kind of see what they think about that when I look at Air Max sneakers and I actually think this is one of the great aspects of the franchise at large I'm looking at the the ones that you can just go to the store go online and easily buy mostly for athletic wear athletic purposes the reason I think that's so great is because and why Nike's been so successful here's they've built the Air Max brand into so many styles and price points serves such a wide population everyone from people like me who just want a good sneaker to run around and to people who want to you know as a statement as a piece of art and I think that's really cool for me I'm definitely more of an Air Max Jordan 1 Jordan 4 lover maybe because like they remind me a lot of the sneakers I wore back when I was growing up or the ones that I wanted when I was growing up but I'm literally surrounded by sneakers right now like it's definitely time for me to get a bigger house I can't like I've got to expand here like I don't have enough space but you know I as I mentioned as long as Nike continues to consult their consumers on what they love and what they don't I think they'll continue to report those record profits some of the supply chain issues are out of their control some of the purchasing habits are also out of their control but if there's one thing I do know about sneaker heads it's that they'll do whatever it takes to get that Grail and I think Nike knows that too all right well to end off I want to know end of the day what is so special about Air Max for you so to be honest for me I think it comes back to that original thing sad when he designed the Air Max One like the fact that he was able to take that inspiration from the inside out aesthetic of the pompidou center to create a shoe to show its inner workings like that was really really cool to me like I feel like there aren't many sneakers that have inspiration like of that level where you see something like that and you're like okay I want to produce that I want to make that tangible I want to show what the inside looks like on the outside the thought process behind that is definitely one of my favorite things also some really cool fun facts about the far outs uh no two pair are like all of the denims used on the sneakers are entirely different so that was a really big thing that was glossed over and all of the descriptions that you may have read all of the materials used on the shoes were inspired by Jimi hendrix's attire and the symbols on the toe box were inspired by the symbols on the OG Woodstock tickets he also told me that the original Dr aeronimus who painted the Volkswagen light bus Inspire the packaging loved it so naturally he has a pair too he has got to be the flyest 90 year old out there I'm sure if you look closely at the packaging above the concepts license plate you'll see the name haronimus replaced with osramimus and Oz is a fool for that one on the packaging no one even knew that it was there until it was printed like he's crazy the packaging is as meticulous as a sneaker though the far out is all about that 60 Summer of Love energy and even though I wasn't around at the time I'd say most of the time my energy definitely matches that Vibe damn point went nuts on those even the laces are psychedelic I keep the Velvet bright pink ones in mine at all times so that's that's how I'm rocking them there you go you heard it here first six and a half men's six and a Half Men all right