EVERY SPOKEN WORD
15 min read · 2,725 words- KSKara Swisher
Nike stock is surging following the news late last week that CEO John Donahoe is stepping down. Donahoe's four-year tenure was a rocky one, with Nike losing market share, breaking off relations with key retailers, and, according to some critics, losing its cool factor. Elliot Hill, a Nike veteran, is coming out of retirement, who you apparently know, Scott Galloway, to being the new CEO. You had talked about Nike's woes back in July. You predicted that Donahoe had 12 months to figure it out or he'd be removed. That's a lot, uh, sooner. (laughs) Uh, what do you... Uh, r- Nike shares rose 8% in after-hours trading on Thursday following the news. You also predicted that an activist investor was gonna come in and make some moves. Um, Bill Ackman's Pershing Square, uh, pursed it, purchased three million shares of Nike back in the second quarter, according to recent filings. Um, what do you think? Let me, let me hear your thoughts on him. Elliot Hill, he's a career Nike man. Um, started as an intern.
- SGScott Galloway
Nike was one of my biggest clients at L2, and I love this company. I mean, it's super smart people. I love the brand. I love the unapologist, the unapologetic brand positioning of, "You didn't win silver, you lost gold." I think of Nike as intrinsic to an American ideal of individual performance, and running so hard you throw up. I just, I just (laughs) love the, I love the brand. They've done an amazing job. Now, bringing in a guy who didn't have a background in merchandising, didn't have a background in apparel, didn't have a background in sports, he was basically a consultant, very impressive guy, and then ran a tech platform, was a decision for them to go all-in on tech. And I wanna be clear, I would have made the same decision, and I basically advocated when I was working with Nike for them to go more direct to consumer. What they weren't expecting and I wouldn't have predicted, and it's easy to Monday morning quarterback, so let me say, I would have gotten this wrong, is that retail came surging back much faster post-pandemic than people had expected. And their enormous bet on direct to consumer, at the cost of managing and supporting their third-party retail, backfired on them. In addition, we talked about this, the China chill has affected, infected a lot of these companies, uh, including Nike. And then what people will say that he has to take responsibility for is their product development hasn't been nearly as innovative as Adidas with their vintage line, or Hoka, or... Spun it to Hoka, or On Running, that they've basically been out-merchandised. This guy, I didn't spend a lot of time with him, but he's hugely respected, and it just feels like the right move from a morale standpoint. He's a product guy. He just, he kind of, he's outta central casting. He's one of these guys when I was in meeting with him, he was just sort of would... Was a great listener, and then when he spoke, everybody sort of waited to hear what this guy would say. So, I think it's great they brought back somebody from Nike, a Nike alumni. But the Nike brand and the relationships they have, and the resonance they have, and the distribution, I mean, you just do not wanna bet against this company. I think it's a-
- KSKara Swisher
Right.
- SGScott Galloway
I think it's actually a really good buy right now. Yeah.
- KSKara Swisher
Right. Interesting. You had talked about that. And, you know, the, the, um, Phil Knight is the player here. Like, he liked John.
- SGScott Galloway
Mm-hmm.
- KSKara Swisher
I think he was d- Uh, that's what I understand. I, I like John. I've met him over the years. But, you know, I think he had an audience of one, which was Phil Knight, which was keeping him in power. But at, at some point, you have to... You know, there's a lot more competition in the space. There's a lot more innovation in the space. Um, and y- y- you know, t- like, just like Intel is like, "Wow, this company has sort of lost a step." Um, and it's certainly still, I think, the most important brand in sports. It just is, right? It's not... You know, Intel's got a lot of competition. Nike does too, and there's all kind... Like, whether it... Like, e- like, all the people who bought Nikes are now wearing Hokas, right?
- SGScott Galloway
Mm-hmm.
- KSKara Swisher
'Cause their back hurts. Um, or, or it's some oth- there's a bunch of other brands that younger people-
- SGScott Galloway
On.
- KSKara Swisher
... might be on.
- SGScott Galloway
On stock is like dou- I mean, On has been phenomenal.
- KSKara Swisher
It is. That's the one Zendaya is, is-
- SGScott Galloway
Yup.
- KSKara Swisher
... advertising with. Um, you know, there's a lot of people moving into the space. But, uh, you know, to unseat Nike, it's, it's a mistake-
- SGScott Galloway
Yeah.
- KSKara Swisher
... on Nike's part, right?
- SGScott Galloway
Yup.
- KSKara Swisher
Not to continue to be cool.
- SGScott Galloway
I think it all kind of reverse engineers to a 17-year-old (laughs) who's spending more time on TikTok than watching broadcast television. Nike's weapon, uh, uh, their sword, if you will, uh, for, for, for fighting their wars, was broadcast. They were the best broadcast advertiser in history. But now you have the majority of the customer is now learning about brands from more long tail sources, influencers, Instagram, and sport.
- KSKara Swisher
Yeah.
- SGScott Galloway
They're still really, really strong in sport. But I think their product, uh, just got a little, a little bit stale. I think this is more a product story and maybe supply chain around being faster to market with new product ideas, and maybe reinvesting and showing some more love for their retail partners. I don't think it's a, an endorsement-
- KSKara Swisher
They wandered around with the, with the f- watch stuff. Remember, the exercise watch?
- SGScott Galloway
Oh, the FuelBand?
- KSKara Swisher
Yeah.
- SGScott Galloway
The FuelBand, yeah.
- KSKara Swisher
They wandered around over in digital for a while, which makes sense, but they wandered a little too bad.
- SGScott Galloway
But, but-
- KSKara Swisher
They didn't do a good job.
- SGScott Galloway
For my kids-
Episode duration: 6:32
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