Can Nike Gets Its "Cool Factor" Back? | Pivot

Kara Swisher 0:00 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

Kara Swisher 0:30 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.

Scott Galloway 0:51 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

Scott Galloway 1:21 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

Scott Galloway 1:51 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

Scott Galloway 2:21 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.

Scott Galloway 2:51 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-

Kara Swisher 3:02 Right.

Scott Galloway 3:02 I think it's actually a really good buy right now. Yeah.

Kara Swisher 3:04 Right. Interesting. You had talked about that. And, you know, the, the, um, Phil Knight is the player here. Like, he liked John.

Scott Galloway 3:11 Mm-hmm.

Kara Swisher 3:11 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

Kara Swisher 3:41 does too, and there's all kind... Like, whether it... Like, e- like, all the people who bought Nikes are now wearing Hokas, right?

Scott Galloway 3:47 Mm-hmm.

Kara Swisher 3:47 'Cause their back hurts. Um, or, or it's some oth- there's a bunch of other brands that younger people-

Scott Galloway 3:52 On.

Kara Swisher 3:52 ... might be on.

Scott Galloway 3:52 On stock is like dou- I mean, On has been phenomenal.

Kara Swisher 3:54 It is. That's the one Zendaya is, is-

Scott Galloway 3:56 Yup.

Kara Swisher 3:56 ... 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-

Scott Galloway 4:04 Yeah.

Kara Swisher 4:04 ... on Nike's part, right?

Scott Galloway 4:06 Yup.

Kara Swisher 4:06 Not to continue to be cool.

Scott Galloway 4:07 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.

Kara Swisher 4:32 Yeah.

Scott Galloway 4:32 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-

Kara Swisher 4:49 They wandered around with the, with the f- watch stuff. Remember, the exercise watch?

Scott Galloway 4:53 Oh, the FuelBand?

Kara Swisher 4:55 Yeah.

Scott Galloway 4:55 The FuelBand, yeah.

Kara Swisher 4:55 They wandered around over in digital for a while, which makes sense, but they wandered a little too bad.

Scott Galloway 5:00 But, but-

Kara Swisher 5:00 They didn't do a good job.

Scott Galloway 5:01 For my kids-

Kara Swisher 5:03 ... across... Yeah.

Scott Galloway 5:03 I'm sorry. Go ahead.

Kara Swisher 5:04 Well, I'm just saying, I, I think they wandered in areas that weren't, didn't, weren't really big and made a big deal of them. And the stores, they, you know, they're huge stores, but they've closed a bunch of them, actually. Inter- they have a big one in San Francisco, big, couple of big ones in New York, but they closed the DC one here, for example. Um, but the thing is, you know what I'm wearing right now? Like, at least four pieces of Nike right now. Shoes, pants.

Scott Galloway 5:25 Well, that's the problem with the brand, Kara. (laughs) I mean, no offense, but when 62-year-old podcasters wearing Nike, that means it's-

Kara Swisher 5:31 I know.

Scott Galloway 5:31 ... all over. (laughs)

Kara Swisher 5:31 But Alex liked it for a while, but now he's, you know, he's, he has a boy. He still loves Nike, I have to say. He was a Nike man, and he still is. I have a lot of-

Scott Galloway 5:39 My kids, I have two teenage boys who are basically their market. And one wears New Balance, and the other wears, uh, the other wears Nike and Adidas. And it used to be just all Nike all the time.

Kara Swisher 5:51 Yeah.

Scott Galloway 5:51 And New Balance has made a comeback, which, uh, no one was predicting.

Kara Swisher 5:54 Yeah.

Scott Galloway 5:55 Um, but this is a... It's almost like a bit of a fashion market, if you will.

Kara Swisher 5:59 Yeah. Yep. Absolutely. But you know what? I am cool, Scott. So I don't know what... You understand that.

Scott Galloway 6:04 Yeah.

Kara Swisher 6:04 I am cool.

Scott Galloway 6:04 Uh, that's what you're focused on, right?

Kara Swisher 6:06 I'm super fucking cool.

Scott Galloway 6:06 That's what you're focused on.

Kara Swisher 6:08 I'm, I lo- I do like Nike clothes. I, they were better. But, um, although I just bought Uniqlo some, some joggers that were fantastic, and shirts. They were fantastic. Uniqlo makes really great stuff. I'm wearing Uniqlo underwear right now, just in case you're interested.

Scott Galloway 6:22 (laughs) Wow.

Kara Swisher 6:23 Um, and they're, they're lovely. They, they're very refreshing. I like them too.

Scott Galloway 6:26 And there goes our Uniqlo sponsorship.