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Published on:

27th Sep 2024

Nike's CEO Shakeup: What It Means for Sneaker Culture

John Donahoe, former CEO of Nike, resigned last week with Elliott Hill to take over. Nike has been seen an uncool brand over the last year, but will this change in CEO get that back to their perceived legendary status?

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Transcript
Matt Fraitzen:

Nike has changed its CEO and stock prices have soared.

Matt Fraitzen:

Does it really matter?

Matt Fraitzen:

And what does it mean for the future?

Matt Fraitzen:

We're going to discuss it this time on fire footwear.

Matt Fraitzen:

Welcome back to Fire Footwear, everybody.

Matt Fraitzen:

As always, this is your host, Matt Fraitzen.

Matt Fraitzen:

I hope that this finds you well, and I want to thank you for coming back to this podcast.

Matt Fraitzen:

Over the last couple of weeks, we've seen a little bit of a surge in new listeners and new consumers of the content.

Matt Fraitzen:

So I'm always flattered by that, always humbled by that.

Matt Fraitzen:

So thank you very, very much.

Matt Fraitzen:

And also at the top, I should mention I was able to record with some new friends, this time from Canada, the in kicks we trust podcast.

Matt Fraitzen:

They were good guys.

Matt Fraitzen:

Trevor and Kevin were really gracious to have me on their platform.

Matt Fraitzen:

I had a great time.

Matt Fraitzen:

So hopefully that will be coming out soon.

Matt Fraitzen:

But always support the people who support me.

Matt Fraitzen:

Go to them on whatever podcast app that you use and type in in kicks.

Matt Fraitzen:

K I x we trust and hit follow, because honestly, we all need to support each other in the sneaker community.

Matt Fraitzen:

So Nike has changed their CEO.

Matt Fraitzen:

It was announced last week that John Donohoe was stepping down as Nike CEO and he was going to be replaced.

Matt Fraitzen:

And I think a lot of people felt a certain way in the sneaker world.

Matt Fraitzen:

But I wanted to talk about it a little bit because I think what has happened recently, and I think this happens because I believe that sneaker people, people like us, I think we kind of assume that companies like Nike, Adidas, Puma, all of those sneaker companies that are giving us the heat that we're constantly picking up, I think we assume that they exist to placate sneaker culture.

Matt Fraitzen:

this whenever air came out in:

Matt Fraitzen:

And so Nike is one of those companies that I think falls into this category.

Matt Fraitzen:

And I honestly think they fall into this category more so than others.

Matt Fraitzen:

The reason being is because sneaker culture is so big now, but Nike does so much more than just make sneakers for sneaker culture.

Matt Fraitzen:

They didn't start out that way, and they certainly don't just do that.

Matt Fraitzen:

They do a lot of things.

Matt Fraitzen:

They provide athletic apparel, athletic gear for so many professional teams, the US Olympic team.

Matt Fraitzen:

They are an international brand that does so, so much.

Matt Fraitzen:

And so when the CEO gets changed over, I think it's obvious that a lot of people are missing the point that it's not just about what does it mean for sneaker culture.

Matt Fraitzen:

It means for a lot of different things.

Matt Fraitzen:

But I also think that there is sort of this unfair narrative going around sneaker culture about John Donohoe's leadership and about his time there.

Matt Fraitzen:

Because once again, there is this disconnect between what people think and what is actually the truth.

Matt Fraitzen:

And there are highs and lows to his leadership.

Matt Fraitzen:

And I think that it's only fair that we kind of go over some of those because many people are taking a Victory laugh thinking that this means that the company is going to be cool again.

Matt Fraitzen:

Let's be clear.

Matt Fraitzen:

John Donohoe is not in that position to keep Nike cool necessarily.

Matt Fraitzen:

He's there to make sure that a certain amount of people make a lot of money.

Matt Fraitzen:

That's himself included.

Matt Fraitzen:

And so the CEO is incentivized to go in there and basically make sure that the bottom line continues to creep up and up.

Matt Fraitzen:

And sometimes that comes at the disservice of your consumer.

Matt Fraitzen:

y saying his tenure went from:

Matt Fraitzen:

el like when you say the year:

Matt Fraitzen:

And that's because that was the pandemic.

Matt Fraitzen:

It was a really difficult time for a lot of people, but it also served as a really high profile time for sneakers in general because the pandemic, one of the things that it did outside of obviously spreading the coronavirus.

Matt Fraitzen:

But the other thing that it did was it made it feel as if resources were scarce.

Matt Fraitzen:

First of all, time with our loved ones was scarce because we weren't leaving the house, at least most of the time.

Matt Fraitzen:

Toilet paper was scarce because people were just going to the stores and almost stealing it at some point.

Matt Fraitzen:

And sneakers became something that people gravitated toward because of the last dance documentary.

Matt Fraitzen:

And because of that, obviously, prices went up.

Matt Fraitzen:

But there were a lot of high profile sneaker releases in that four year period.

Matt Fraitzen:

And you also have to remember, right before that period happened, Kobe Bryant passed away.

Matt Fraitzen:

So obviously there's a lot there.

Matt Fraitzen:

Off white.

Matt Fraitzen:

Off White was something that was huge prior to the pandemic.

Matt Fraitzen:

Abloh suddenly passes away in:

Matt Fraitzen:

And so you see all of these things happening that make it a little bit difficult for sneaker culture because a lot of their quote unquote cash cows have now left this earth.

Matt Fraitzen:

And so they have to figure out a path forward.

Matt Fraitzen:

And we saw even off white have a little bit of an imprint with the 50 dunk collection.

Matt Fraitzen:

And we saw the dunk low panda have its moment in the sun.

Matt Fraitzen:

Now, it's something that you can easily get, but at the height of the pandemic, at the height of resale, it was something people were going to the replica market for.

Matt Fraitzen:

It was that popular.

Matt Fraitzen:

Of course, you saw a lot of classics come back over the years.

Matt Fraitzen:

The Air Max 90 bacon.

Matt Fraitzen:

You saw a ton of Kobe's comeback.

Matt Fraitzen:

The partnership between Kobe and Nike was reinvigorated.

Matt Fraitzen:

Vanessa Bryant bringing it back.

Matt Fraitzen:

And so for a lot of people, there was a lot of good shoes to be had.

Matt Fraitzen:

And over the years, though, up until very recently, resale prices went from the highest they've ever been to almost back down to what they were pre pandemic.

Matt Fraitzen:

For some shoes, it's not the truth.

Matt Fraitzen:

Obviously, Kobe's are going to continue to sell because of his legacy.

Matt Fraitzen:

He's no longer here.

Matt Fraitzen:

So a lot of people want a piece of that legacy.

Matt Fraitzen:

But there has been a lot to be had in that time period.

Matt Fraitzen:

And I think people kind of forget that because the oversaturation makes us forget that.

Matt Fraitzen:

There has been a lot of heat, a lot of retros, a lot of really quality releases.

Matt Fraitzen:

Resurgence of new people like Amma moneyer on the scene.

Matt Fraitzen:

And I think that a lot of that has caused sneaker culture to be in a really good place today.

Matt Fraitzen:

But if you also look at some of the business decisions, we're talking direct to consumer strategy now, this one, in some ways, I think that it's good because I think you want to have a direct line to your customer.

Matt Fraitzen:

Obviously, if you're creating a business, you want to be able to be seen giving the product to your customer.

Matt Fraitzen:

And when you have middlemen, when you have businesses that are in the middle, it can make it so that costs are a little bit bloated because you're obviously giving it to another company who then you have to figure out percentages and things of that nature.

Matt Fraitzen:

But also a lot of those brands, we're talking foot locker.

Matt Fraitzen:

A lot of those brands had a nostalgic pull to a lot of people in the culture.

Matt Fraitzen:

I remember being a young kid and going into foot locker all the time because it was the sneaker store that was in the mall that I went to.

Matt Fraitzen:

That's where I saw my first Reebok pump.

Matt Fraitzen:

That's where I saw a lot of shoes that I really wanted that my mom just wouldn't get me.

Matt Fraitzen:

So I have memories there.

Matt Fraitzen:

And a lot of people, that was their accessibility.

Matt Fraitzen:

It was an access point to be able to get shoes, because going online now, there are so many people going after these shoes on release day that it's very difficult.

Matt Fraitzen:

I did an episode about sneakers and how there's so many people going after every single hype release that people don't realize that it's all about numbers.

Matt Fraitzen:

It's just too many people going out for shoe that they just did not make enough supply of.

Matt Fraitzen:

And really they can't make enough of a supply of it.

Matt Fraitzen:

So while going direct to consumer obviously was meant to build direct relationships with its consumer, I think it did put a strain on traditional retail partnerships that really, again, in the sneaker market specifically, had a very high level of nostalgia and people wanted to go there.

Matt Fraitzen:

So while they were trying to, again, make it more direct, I think what they did was take away some access points for people.

Matt Fraitzen:

Also in this timeframe, Nike was focused on sustainability initiatives and we're talking about reducing their carbon footprint.

Matt Fraitzen:

And that's when they started to get into a lot of the things like the Nike space hippie line, and they started using recycled materials.

Matt Fraitzen:

You started seeing the refurbished line, using the recycled boxes, things like that.

Matt Fraitzen:

I mean, there's something to be said about that long term for the company, but a lot of people didn't see how it translated to sneakers.

Matt Fraitzen:

And I think a lot of people felt like refurbished shoes or sustainable materials made it feel like sneakers were less than what we normally would get.

Matt Fraitzen:

And honestly, as a culture, we're already pretty critical about what kind of materials are used, the kind of quality we get, the QC, stitching, glue, stains, all that stuff.

Matt Fraitzen:

So while the idea of sustainability as a company is a good thing, I think it fail to translate to a quality product, at least in the perception of sneaker culture.

Matt Fraitzen:

And then, of course, Nike has been known for technological innovations throughout its entirety.

Matt Fraitzen:

And while maybe they are a little bit behind when it comes to certain innovations in design, I think when it comes to technological advances, they are still kind of in that space of being near the top.

Matt Fraitzen:

And one of the things that stands out to me is the Nike go fly ease.

Matt Fraitzen:

Now, the fly ease hasn't really caught on as this mainstream shoe that people are wearing, but I think that the idea behind it of making it a lot easier, a hands free shoe designed for accessibility, I think that is a great, great thing.

Matt Fraitzen:

And I do believe that we need to be thinking about people in the culture and just people who are wearing shoes in general, who maybe don't have the, the privilege of having two arms or the privilege of being able to tie their shoes.

Matt Fraitzen:

And so I think that was something that happened in that time period that was a really great thing.

Matt Fraitzen:

Of course they were trying to hit on the NFT market which had this moment but has kind of come down to earth.

Matt Fraitzen:

And so they started making sneaker nFts and things like that.

Matt Fraitzen:

All of that was really a fad.

Matt Fraitzen:

But I think that kind of summarizes the highs.

Matt Fraitzen:

And obviously I didn't hit all of them.

Matt Fraitzen:

But Nike wasn't exactly dormant during this time period.

Matt Fraitzen:

Unfortunately though, you are judged a lot of times by what did you do for me lately?

Matt Fraitzen:

And that's where the lows come in.

Matt Fraitzen:

So let's talk about some of these supply chain disruptions.

Matt Fraitzen:

Covid-19 I talked about resources being scarce and that really was a reality for so many people and honestly so many things.

Matt Fraitzen:

And we're talking about factory related shutdowns in Southeast Asia due to the Covid-19 pandemic.

Matt Fraitzen:

And we saw a shortage of so many materials, so many things that really caused supply chain issues to where this direct to consumer idea was even halted further because they couldn't get shoes out.

Matt Fraitzen:

And so while there was a perceived lack of resources across the world, in many places there was a lack of resources and there was disruptions in getting the products to their consumer because even if you go direct to consumer you still have to have an avenue to get it to your consumer.

Matt Fraitzen:

You still have to have an avenue to get the material source, the materials.

Matt Fraitzen:

And I think that was something that happened during the pandemic that Nike really had a hard time with.

Matt Fraitzen:

They weren't the only ones, but obviously it made people feel as if they weren't as high priority for Nike in terms of sneaker culture.

Matt Fraitzen:

And then of course you get this direct to consumer strategy, which is something that I said was both a pro and a con.

Matt Fraitzen:

And they certainly were aggressive in pushing this out.

Matt Fraitzen:

And I honestly believe that one of the things that happened is obviously they took away access points, they obviously took away nostalgia.

Matt Fraitzen:

But I think that Nike's aggressiveness and trying to push this so hard and pushing out so many retailers that had been so critical in making Nike the brand that they are today.

Matt Fraitzen:

I honestly believe that it created so much tension in the wholesale market, it contributed to some product availability and consistencies.

Matt Fraitzen:

And I think people kind of felt like Nike was doing this and they weren't doing it with us in mind.

Matt Fraitzen:

They really weren't doing it with the consumer in mind, because on its surface, when you cancel out the foot lockers and the foot actions and the east bays and so forth, what you've done now is you've basically made it known that these companies don't matter, these stores don't matter.

Matt Fraitzen:

And so for a lot of people, that perception gets put on them and they think, well, I don't matter because that's where I would go or that's where I would shop for shoes.

Matt Fraitzen:

And so I think it made Nike feel or seem a little bit ruthless, a little bit lethal in their approach because they're trying to push them out as hard as possible.

Matt Fraitzen:

And I think all of these came down to you also had some labor practices and criticisms about how they would go about that.

Matt Fraitzen:

And despite efforts to kind of improve some of them, they continued to face criticism for working conditions in overseas factories.

Matt Fraitzen:

And we're talking about factories that were affected by the pandemic.

Matt Fraitzen:

Vietnam, Indonesia, I talked about supply chain issues.

Matt Fraitzen:

And obviously all of that comes together for Nike to have a hard time of it, even though resale prices were going up, I think behind the lines, behind the scenes at Nike, they were having a tough time.

Matt Fraitzen:

And all of this comes down to the lowest of the lows.

Matt Fraitzen:

This is the low that almost every single person I've talked to has actually pointed to directly as to why John Donahoe's time was a failure and it was Nike stock performance.

Matt Fraitzen:

I should note that during the height of the pandemic, when the stock market here in the United States crashed all the way down almost to rock bottom, I became a stockholder of Nike because the stock dropped so much, I was able to get in at a really good entry point.

Matt Fraitzen:

And over the course of the pandemic, while I was sitting here internally complaining about resale prices and about the lack of availability for shoes, my Nike stock was going up like crazy.

Matt Fraitzen:

And it had peaked at a price that was almost double what I paid for it.

Matt Fraitzen:

And now you're looking at it where it's barely over what I paid for it.

Matt Fraitzen:

And unfortunately for us sneakerheads and the sneaker community, as much as we want to think that Nike, Adidas, Puma, Asics, new balance, that they're all out for us, out for the culture, they're out for the bottom line.

Matt Fraitzen:

And when you're a publicly traded company, your stock performance is the metric that everybody sees.

Matt Fraitzen:

And so when you see that stock price continue to go down, continue to go down when they are trying to have shoes more available, but they're not selling out the stock price continues to go down.

Matt Fraitzen:

This is unfortunately a direct reflection on your CEO.

Matt Fraitzen:

And for John Donohoe, that was the last straw to see it go down to pandemic levels.

Matt Fraitzen:

Think about that, folks.

Matt Fraitzen:

When the stock market in the United States crashed so hard that so many stocks were so available and so down, for Nike to go back to those levels, that was a different time in this country.

Matt Fraitzen:

That was such an unstable time.

Matt Fraitzen:

And normally the stock market crashes that hard because of really catastrophic events, events that really can't be foreseen.

Matt Fraitzen:

Think about:

Matt Fraitzen:

And you just can't have that.

Matt Fraitzen:

The CEO gets paid a lot of money and they get paid a lot of money to make other people a lot of money.

Matt Fraitzen:

And so when your stock price falls by almost 50%, the board of directors is just not going to sit for that.

Matt Fraitzen:

Because those people, that's their livelihood on the line.

Matt Fraitzen:

And yes, they make a ton of money regardless of what the stock price is for nike.

Matt Fraitzen:

So I'm not sitting here saying that you should feel bad for them or that I personally have sympathy for them.

Matt Fraitzen:

What I am saying though is when it comes down to it, your company has to perform.

Matt Fraitzen:

And if it's not performing, you, the CEO, are the one that is going to get fired.

Matt Fraitzen:

And so they have now moved on to Elliot Hill.

Matt Fraitzen:

Now Elliot Hill has had an extensive tenure at Nike.

Matt Fraitzen:

has been at the company since:

Matt Fraitzen:

He played a crucial role in expanding Nike's presence in North America and in Europe.

Matt Fraitzen:

And that's really big because Nike obviously being the global brand that they are, they needed touch points to be able to do that.

Matt Fraitzen:

From:

Matt Fraitzen:

And that's where I think the sneaker community feels like maybe Nike is lacking these days in that consumer engagement.

Matt Fraitzen:

Because a lot of people want to feel like Nike is listening to their complaints and listening to what they want and in some ways they are.

Matt Fraitzen:

In some ways they are not.

Matt Fraitzen:

billion in annual revenue by:

Matt Fraitzen:

So the company was doing really well by the time that John Donahoe became the CEO.

Matt Fraitzen:

So it's not as if Nike was hurting and all of a sudden John Donohoe made it worse.

Matt Fraitzen:

It's just these things ebb and flow.

Matt Fraitzen:

He has been key to the leadership and global expansion, like I mentioned, instrumental in driving Nike's global expansion endeavors, especially in emerging markets.

Matt Fraitzen:

And they built localized strategies that deepen consumer loyalty across regions.

Matt Fraitzen:

And while I think that this is true across the board, I think that there are some people who feel that Nike has not been loyal to them.

Matt Fraitzen:

And so you're not seeing that.

Matt Fraitzen:

cally come back in October of:

Matt Fraitzen:

It's his first time in the top leadership role and he's going to be tasked with navigating the next phase.

Matt Fraitzen:

And that's why I ask you, what does it mean for the future?

Matt Fraitzen:

Well, the first thing that you see is that Nike has decided to take back and delay the Jordan one reimagined black toe.

Matt Fraitzen:

I think that's a sign of things to come because I think what they saw was, hey, wait a minute, we have the black cement threes coming out and now we're going to put this piece of history.

Matt Fraitzen:

I think they're going to spread things out of.

Matt Fraitzen:

I was reading the other day on sole Savvy's website that they're now going to be stopping production or pushing back production of a lot of shoes.

Matt Fraitzen:

They're going to be producing less.

Matt Fraitzen:

They're going to make it seem as if there is less to be had.

Matt Fraitzen:

They're trying to drive up hype.

Matt Fraitzen:

And as much as we all hate that, it's what is going to keep sneakers alive.

Matt Fraitzen:

Resell, at some point in hype is going to have to buoy this market.

Matt Fraitzen:

And I think that people are disappointed with that because right now is the best time for sneakers because almost everything is available.

Matt Fraitzen:

But that means that there's no hype.

Matt Fraitzen:

That means that there's nothing to sustain it into the future.

Matt Fraitzen:

And I think that Elliot Hill is going to look at this and he is going to try to get Nike back on the map.

Matt Fraitzen:

They are perceived as being not cool right now and they just cannot have that.

Matt Fraitzen:

Nike needs to get back.

Matt Fraitzen:

They need to grow their stock, they need to make more money, and they're going to do that off the backs of athletes and they're going to do that off the backs of sneaker culture.

Matt Fraitzen:

Before we get to the end of the episode, though, as always, I have a release of the week for you.

Matt Fraitzen:

Release of the week where I like to give you a shoe that catches my eye.

Matt Fraitzen:

It's not always hype.

Matt Fraitzen:

Sometimes it is.

Matt Fraitzen:

It's just something that I want you to know about.

Matt Fraitzen:

,:

Matt Fraitzen:

The Air Max 95, as I said, is one of those if you know, you know, kind of silhouettes.

Matt Fraitzen:

If you grew up with it, if you grew up wearing it, you know how fire it is.

Matt Fraitzen:

Maybe if you haven't seen it before, maybe if you're not familiar with it.

Matt Fraitzen:

It doesn't seem like it's something that fits in today's aesthetic, today's society.

Matt Fraitzen:

But this rosen shoe with two different shoes, with the colors that it has, that muted, earthy palette, I think it's actually beautiful.

Matt Fraitzen:

It's really awesome.

Matt Fraitzen:

I won't be going out for it because I've copped enough this year.

Matt Fraitzen:

I see a lot of hype for it.

Matt Fraitzen:

I see a lot of people talking about it.

Matt Fraitzen:

The thing is, though, this is not going to be like a hyped release in the same way that you'd see a Travis Scott.

Matt Fraitzen:

This is just a very beautiful shoe, at least from the pictures.

Matt Fraitzen:

It's part of the city pack and I think it's just a great, great addition to the Air Max 95 lineup.

Matt Fraitzen:

We've seen some awesome ones with that Toronto release a couple of weeks ago.

Matt Fraitzen:

So we got two fire air Max 95s right in a row.

Matt Fraitzen:

And I believe that that is your time to cop one.

Matt Fraitzen:

If you do not have one, and it is a beautiful one, it's perfect for fall.

Matt Fraitzen:

It's perfect for.

Matt Fraitzen:

Honestly, it's perfect for any time.

Matt Fraitzen:

So if you need an Air Max 95 in your collection, that is the time.

Matt Fraitzen:

Do you, as sneaker culture care about CEO's and do you think that this changeover is going to make things better for the culture or do you think it just doesn't matter?

Matt Fraitzen:

I would love to know.

Matt Fraitzen:

Call the fire footwear hotline.

Matt Fraitzen:

Give me a sneaker story.

Matt Fraitzen:

Give me your opinion.

Matt Fraitzen:

I'd love to play it on a future episode.

Matt Fraitzen:

And that is for your us callers.

Matt Fraitzen:

-:

Matt Fraitzen:

I love to hear from all the people who are part of sneaker culture.

Matt Fraitzen:

You can find me on Instagram.

Matt Fraitzen:

The handle is I rfootwearpod.

Matt Fraitzen:

If you want to see reels, you want to see videos, you can find me on TikTok you can find me on YouTube.

Matt Fraitzen:

Fire footwear sneakers talk with Matt freights what you would search if you go to YouTube.

Matt Fraitzen:

I'm just shy of:

Matt Fraitzen:

Please hit like please hit subscribe.

Matt Fraitzen:

It would mean the world to me because I'm trying to do some different things out there.

Matt Fraitzen:

Hope this finds everybody well, fam, I hope this finds everybody safe.

Matt Fraitzen:

And as always, I will talk to you next time.

Matt Fraitzen:

This is fire footwear.

Matt Fraitzen:

The opinions and viewpoints expressed on fire footwear are those of Matt freights and his guest, and not necessarily those of the Matti Ice media network.

Matt Fraitzen:

Fire footwear is exclusively owned by Matt Freights and is brought to you by the Matti Ice Media Network.

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About the Podcast

Fire Footwear: Sneakers Talk (with Matt Frates)
Exploring the People and Stories Behind Sneaker Culture
Step into the world of sneakers with host Matt Frates. Each week, we unravel the unique stories behind the sneakers and the culture. From iconic designs to influential figures, discover fresh perspectives and in-depth discussions on the sneakers that shape our world. If you live for sneaker talk and crave insightful takes, this is your go-to podcast. This podcast is brought to you by the Matty Ice Media Network.

Presented by the Matty Ice Media Network.

Matty Ice Media Network: https://www.mattyicemedia.com
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