The Tanning of America (23 page)

How could I be so sure?

Well, right before I officially left Interscope, where I was still overseeing projects that had been in the works for a while under my auspices, I had done a favor for a friend at Motorola by asking Jay-Z if he wouldn't mind giving them a shout-out. Lo and behold, on
Dynasty,
his very next album release, on the single “I Wanna Love U (Give It 2 Me),” there was the line “
I'm too cold, Motorola, two-way page me
.” When the video was aired, the magic from that one name-check happened instantly. The shared values of the brand—what was one of the coolest phone texting/e-mail and paging devices technology had as yet delivered—and a poet/entrepreneur/icon who stood for all that was real and possible, the coolest and most hopeful path of all, registered overnight with consumers. Sales went through the roof.

With that, I finally decided to go into the advertising world full-time. My mentor at Interscope/Geffen/A&M, Jimmy Iovine, gave me his blessing to go forward with my new endeavors. My attitude was that it would hopefully all work out as long as I could take all the lessons taught to me by the music business and put them to use. For starters, I was going to think of this first big mountain to climb simply as marketing CDs with shoelaces.

F
rom the moment that I sat down to meet with Reebok CEO Paul Fireman in late 2000 and presented him with a fairly blunt assessment of the main challenges facing his brand and what my team and I would propose we do about it, I had a strong hunch that we were going to make marketing history together. Why? Because when I told him my ideas and admitted, “Nobody's ever done this before,” he was sold. That's all Paul wanted to hear.

Clearly, Paul Fireman hadn't built his brand by betting the odds. He not only seemed able to find comfort in the discomfort of doing things differently from the rest of his industry but from the start of doing business with him I learned a lot from how he kept instincts and intellect in balance. Paul also commands a most admirable characteristic of leadership that I have identified as the ability to know what you don't know. Too many seasoned entrepreneurs and executives are more interested in self-validation of what they know than in paying attention to what they don't. Reebok was never run that way. As a result, cultural curiosity and a mission to be relevant—“to make a difference” as the brand puts it—had been part of the company's values from early on. In addition, Paul Fireman's belief in research and his willingness to invest time and money in product development meant that, historically, one of the company's core competencies was superior design.

Our first strategy meeting was at the offices of Reebok, which were eerily quiet at four P.M. as most of the once bustling building had emptied for the day. Not a good sign. Paul and I went over Reebok's history and how it figured in a storied past as epic as the brand battles of Coke versus Pepsi and McDonald's versus Burger King, otherwise known as the Sneaker Wars.

A native of Brockton, Massachusetts, where Reebok's offices were, Paul Fireman had more or less grown up in the sneaker business while working in his family's sporting goods store. After attending Boston University, Paul dropped out in 1975 to take over the store. Then, in 1979, during an overseas business trip to a London trade show, he spotted some interesting European makes of athletic shoes that didn't yet have American distribution. One of them, made by a tiny, three-generation-old British company named J.W. Foster & Sons, was the Reebok line of custom-designed running shoes. Paul and his wife decided to seize the opportunity and borrowed $35,000—putting up their house as collateral—to invest in the company, and, as part of the deal, to become the exclusive North American distributor of Reebok.

Globally, the two most dominant sneakers in those days, Adidas and Puma, were not just brand competitors. The two companies had originally been one and the same, having been founded in the 1920s by the German Dassler family, which had come to a fork in the road when brothers Adolph (Adi) and Rudolph had a falling-out. Parting ways after that, Adi's Adidas and Rudolph's Puma were subsequently run on two sides of a river with their companies locked into a family feud. One brother allegedly accused the other of arranging for Hitler to send him to the front lines during World War II, while the other was said to have retaliated by informing Allied forces that his brother was supporting the Nazis. After the war, their brands survived, and both companies grew rapidly. At the same time there were bizarre accounts of how the Dassler brothers remained with their families in one villa for many years and how villagers were divided by whose company employed them—and were identified by which of the two brands of sneakers they wore! However, by the time Adidas and Puma reached the shores of the United States, both sneaker brands were quickly embraced for their fine design and for their reputed enhancement of sports performance—which both companies marketed by endorsements obtained from a variety of celebrity sports heroes. Although the feud eventually caused most of the next generation of Dasslers to lose ownership in the companies, not much of the infighting was ever known to the American public.

In fact, until Nike started to come on strong in the mid-seventies, Adidas and Puma together accounted for 60 percent of the U.S. sneaker market share—with Adidas controlling most of that. But by the early nineties, Adidas had fallen to less than 3 percent of the American sneaker business, in spite of the nice but brief spike they were given from the Run-DMC relationship. Puma managed to stay alive on the global scene but dwindled almost to nonexistence in the U.S., although it maintained its elite status as the maker of a superior soccer shoe; ultimately, Puma's survival was only possible when it was taken over later by a French company that had also bought Gucci.

This is all to say that in 1980 when Paul Fireman was just getting started, Reebok ought to have been the longest of long shots for even getting on the map. Nike already ruled the roost. When outdoor jogging had suddenly become an American pastime and Adidas didn't see it as something that could last, Nike had ridden that wave almost solo from the midseventies, when they were doing $14 million a year, to the start of the eighties, when the company went public and was taking in a reported $270 million a year as the top-selling sneaker in the U.S.

Then a funny thing happened. Just when Adidas was figuring out how to climb back to the top from second place and compete with Nike's ever-increasing market share, jogging got cold for a minute as skating started to heat up, and, in 1982, as if out of nowhere, an indoor aerobics craze seized the nation. Nike, then immersed in the development and marketing of a sneaker called the Air Force 1—a piece of artwork if you ask any serious footwear scholar—opted not to concern itself with aerobics. Adidas also made no move to take advantage of the aerobics boom and thus missed their chance to capture a rich, emerging group of newly activated sneaker consumers: women. Well, guess what? As Reebok's luck would have it, they had a woman's shoe—white leather oxford style, low-tops, with the brand name in baby-blue lettering and a regal stamp on the side of the shoe showing Britain's Union Jack. Introduced in 1982 as an aerobics sneaker, it was fashionably dubbed the Freestyle.

At almost sixty dollars a pair the price would have seemed excessive even by most of its high-end competitors' standards. Yes, that was a lot for a sneaker—at least from the point of view of those companies mainly targeting male consumers. But for women ready to get their groove on at the gym, in a social and experiential context, the cost only elevated aspiration and status. Very smart. And before long the Sneaker Wars became a battle of innovations and higher costs.

Recently, while catching up with Paul Fireman, I recalled the Freestyle moment in footwear history and asked him to give me a sense of the economic impact. During his first few years with Reebok, he had actually gone into more debt and had initially lost money. “What people today don't realize about the footwear business,” Paul explained, “and what they don't realize about what Nike did, what Reebok did, and originally what Adidas did, is how much was spent on design, development, and research. We spent a ton.” Losing money in the short run, however, gave them an incubation period that would pay the greatest dividends. Paul described the early years as a time when coming up with new product required working three years out. “And what you're looking to create, you don't know. You just needed to get people stimulated to look for new possibilities, create new possibilities, to have conversations for new possibilities.”

Such was the thinking that put Reebok on a path to becoming the number-one-selling sneaker brand of the 1980s. Sure enough, by 1983, women and aerobics catapulted the company into annual sales of $13 million, and by the following year, Paul Fireman and his partners, Pentland Industries, bought Reebok from J. W. Foster & Sons for $2 million. In 1985 that investment was richly rewarded with the $64 million he collected when the company went public. Two years later Reebok was reporting annual revenues of $1.4 billion—beating Nike out on almost every measure.

Many factors were important in that success story. Certainly one of them had to do with a vital aspect of hip-hop culture's love for discovery—for being the first on the block to show up in new kicks that nobody's seen yet and that come with a luxury price tag. To keep the power of that coolness going, as we saw when Reebok wouldn't sell to Modell's until they upgraded their image, takes an incredible level of discipline. Paul Fireman put it this way: “What happens with urban kids in the world is that they are fundamentally creating fashion. They start the trends or they enforce the trends.” Either way, he pointed out, “They're more provocative, more daring, more willing to stand for something. And I think that's an important factor in how fashion goes. Now the problem in urban trends is that if you're not careful, you can allow the urban trend to eat you up alive, because they want to move on quickly.”

My question to Paul, relevant no matter what the decade or the brand battle, was, “How do you stay new? Because if you're not new, you're dead.”

What Reebok learned, not only from watching its competitors but by observing the early battles between clothing designers like Hilfiger and Polo, was, as Paul put it, that you have to avoid going through the system too fast and burning out. When Tommy Hilfiger was the contender going up against the überbrand Polo, “all of a sudden Hilfiger got adopted and pulled by urban culture. If they are pulling you, you're in great shape. But you must resist that pull. The current wants to pull you, but you are fighting the other way.”

Translated into the cautionary tale drawn from the grand love affair between hip-hop and Tommy Hilfiger, that suggests that when you go so far, so fast, so big without pulling it the other way, you're always in danger of killing the golden goose: aspiration. But in Tommy's case the complication in this mix was the baseless rumor that started in 1996 and that had gone viral overnight suggesting he had gone on
The Oprah Winfrey Show
and had said, in effect, that he wished people of color wouldn't wear his clothing line. Beyond a shadow of a doubt it was not true—as Oprah would emphatically insist a decade later, it was “a big fat lie that never happened.” Though Tommy had denied it—and in spite of the fact that he had never gone on the show and that there was no evidence, ever, that he had made the offending statement, and in spite of an extensive PR effort to combat the rumor—it lingered. Why? Partly because his response wasn't big enough, fast enough, or far-reaching enough. But I think it was mostly because of the closeness of the relationship between the Hilfiger brand and the culture that was there from the start, such that even a baseless rumor felt like marital infidelity. Even when you've been told it didn't happen, you can't get the offending image out of your head. Interestingly enough, it wasn't only people of color who backed off the brand. When urban kids pulled back, their white suburban peers followed. The company then lost more generations of mainstream consumers whose mind-set was sophisticated, politically correct, and usually brand-savvy. The street, more and more, was Main Street.

Knowing Tommy as a person and an entrepreneur, I can attest that he would never say or even think anything along those lines. What's more, I watched him rise above the fray with a lot of grace. Things didn't turn out too badly either when he sold his company in 2006 for $1.6 billion or when it was sold again in 2010 for about twice that much. The purchase by Phillips–Van Heusen put Tommy Hilfiger under the same roof as one of the brand's former rivals, Calvin Klein. Strange bedfellows? No longer. The power and pitfalls of the tanning effect could be seen at many of those turns.

What Paul Fireman was learning with Reebok in the mid-eighties was how to stay engaged with urban consumers—showing the love but without being too available. He commented to me, “Nobody wants it when they can have everything. When it goes too far, people want to get rid of it. Now, it may sell a lot of volume but it's no longer driving the show and that's what you don't want to be in. You don't want to be common.” Whether the consumer is urban or suburban, he went on to say, “the fear is that you let the early adopters become multiplied too fast and they take over. You lose your whole purpose for being.” In Paul's estimation, the brand that understood how to be in the current without letting it move them through the system too quickly was Nike.

In other words, other factors in Reebok's 1980s success were lessons learned from how competitors were managing to thrive. To stay on the side of newness, the brand then followed the demure, simple styling of their original aerobics Freestyle with a high-top version that included the signature two Velcro ankle straps and also came in hot, flashy colors like pink, orange, and cobalt blue. These sneakers weren't just must-haves for the gym but gave girls and young women their funky uniform for school, work, parties, hanging out, and completing fashion statements.