Air Jordans: The shoe that made sneakers a status symbol

In April, the investment firm Cowen sent a note to clients titled “Sneakers as an alternative asset class.” In it, the authors argued that sneakers now have the characteristics of products people invest in aside from conventional stocks and bonds. They earn “[illiquidity premiums]( They provide portfolio diversification. They have “favorable risk reward characteristics.” They look dope. In short, sneakers—really a small subset of them released in limited quantities—are now one of the rare consumer goods that can hold or even grow in value, and you can credit that turn of events in large part to Air Jordans. Jordans elevated sneakers into status symbols and established the sneaker resale market, which was the real focus of Cowen’s note. The firm estimated its current value at $2 billion in North America and growing quickly in Europe and China. StockX, a consumer-goods marketplace that began with sneakers and is predicated on Cowen’s theory, [just became Wall Street’s latest unicorn](. It’s a market built on hype and obsession, and Jordans have been fueling it for decades. 🐦 [Tweet this!]( 🌐 [View this email on the web]( [Quartz Obsession] Air Jordans June 28, 2019 The game changer --------------------------------------------------------------- In April, the investment firm Cowen sent a note to clients titled “Sneakers as an alternative asset class.” In it, the authors argued that sneakers now have the characteristics of products people invest in aside from conventional stocks and bonds. They earn “[illiquidity premiums]( They provide portfolio diversification. They have “favorable risk reward characteristics.” They look dope. In short, sneakers—really a small subset of them released in limited quantities—are now one of the rare consumer goods that can hold or even grow in value, and you can credit that turn of events in large part to Air Jordans. Jordans elevated sneakers into status symbols and established the sneaker resale market, which was the real focus of Cowen’s note. The firm estimated its current value at $2 billion in North America and growing quickly in Europe and China. StockX, a consumer-goods marketplace that began with sneakers and is predicated on Cowen’s theory, [just became Wall Street’s latest unicorn](. It’s a market built on hype and obsession, and Jordans have been fueling it for decades. 🐦 [Tweet this!]( 🌐 [View this email on the web]( Nike By the digits 400: Percent increase in Nike’s sales in the five years after it introduced Air Jordans, according to a 2013 paper by Samsung Economic Research Institute [33:]( Number the Air Jordan series has reached so far. (The Jordan XXXIV is reportedly slated for release in late 2019.) 2: Jordan Brand’s current rank in US athletic footwear sales, based on NPD Group data, trailing only its parent company, Nike [$65:]( Price of the Air Jordan 1 in 1985 ($158 in 2019 dollars) [$1,000:]( Average sale price on resale platform StockX for the Air Jordan 1, made in collaboration with rapper Travis Scott, that Nike released in May [$11,000:]( Amount paid on StockX in March for a pair of extremely rare Jordan IV Retro Wahlburgers, first released last year [$104,765:]( Winning bid in a 2013 auction for the Jordan XIIs that Jordan wore in his famed “flu game” during the 1997 NBA finals [$1.9 billion:]( Michael Jordan’s estimated net worth as of June 2019 Giphy Origin story Jumpman takes flight --------------------------------------------------------------- In 1984, the year Nike signed Michael Jordan, its profits were plunging. At the turn of the decade, it missed the rise of aerobics—[which made Reebok a major brand]( a shift away from running styles. In search of a marquee player in basketball, Nike landed on the promising rookie from University of North Carolina, and started thinking up a sneaker for its new star. Basketball shoes were plain then. [All-white with a logo]( was standard. Nike wanted something different, so designer Peter Moore came up with a leather high-top in striking red and black—the colors of Jordan’s NBA team, the Chicago Bulls. (Jordan was a hard sell, an Adidas fan who called the colorway [“the devil’s colors,”]( but his parents brought him around on Nike’s generous deal.) When Jordan stepped onto the hardwood, his shoes didn’t look like anything else. The NBA, however, claimed that the shoe, which had no white in it, didn’t match the Bulls’ jersey, and banned it. In a genius marketing move, Nike had Jordan keep wearing the shoes, and paid the $5,000 fine every time he did. It was “pure advertising gold, infusing both Jordan and his sneakers with the aura of rebellion,” wrote historian Elizabeth Semmelhack in Out of the Box: The Rise of Sneaker Culture. Nike even made the ban the center of its first commercial for Air Jordans. (As told in the documentary Unbanned: The Legend of AJ1, it seems likely that Jordan was actually wearing a red-and-black mock-up of a different shoe at the time of the ban, called the [Nike Air Ship]( because Nike was still waiting for the Air Jordan to be produced.) Jordan turned out to be even more talented than his college career predicted. When Nike released the shoes to the public in 1985, people went crazy for them. By November 1986, the [New York Times reported]( that Nike had sold more than 2 million pairs, and raked in $100 million across Jordan shoes and clothing. Sneakers had been status symbols during their early days in the mid-to-late 19th century as posh footwear for lawn tennis, and [regained some status in the 1970s]( as they entered fashion. But Jordans raised them to a new level, and turned Nike’s business around. Quotable “My immediate reaction was ‘Air Jordan? Like an airline for that Middle Eastern country?’” —Peter Moore, designer of the Air Jordan 1, in Rodrigo Corral’s 2017 book Sneakers AP Photo/David Zalubowski Pop quiz Which was the first Jordan sneaker designed by now-Nike legend Tinker Hatfield? Jordan 3Jordan 2Jordan 4Jordan 9 Correct. Correct! Hatfield, then an architect who mostly did interior design at Nike, submitted a design to a company-wide contest. Incorrect. Sorry, but your sneakerhead IQ still needs work. If your inbox doesn’t support this quiz, find the solution at bottom of email. Econ 101 Why Jordans became so valuable --------------------------------------------------------------- As sneaker culture took off [in the 1980s and 1990s]( people—mostly men—started to seek out older, rare shoes that were prized as collectibles. Jordans fueled the hard-to-find style trade that sprung up, thanks in part to a decision Nike made that would help lay the foundation for today’s resale market. Just like other markets, sneaker resale is based on supply and demand. It runs on limited releases that sell out quickly and become hard to get. Nike was a pioneer of this type of distribution. It made the unusual move of serializing the Jordan line, introducing new models rather than sticking to one style. Over time, models that were popular on release would become hard to get, but still sought after. Then, in 1994, just after Michael Jordan’s first retirement, Nike fed the appetite for scarce sneakers by doing a limited re-release of the Jordan 1, 2, and 3. “This success was followed by many other retros, as re-releases were known, and soon other companies were reissuing their signature models as well,” Semmelhack wrote. It became evident that companies could keep selling sneakers, even to the same customers, by continuously putting out limited numbers of new and old styles. Today, new shoes drop every week and sneakerheads scramble to buy them. Many would-be buyers end up empty handed. A lot of those who succeed list the shoes on the secondary market for a markup over the retail price. Jordans remain a major share of these. StockX, the largest sneaker resale platform, says that in the first half of 2019, Jordans accounted for 39% of what users spent on the site. In a [2015 TED Talk]( one of the site’s co-founders explained the importance of the brand to his industry. [Read the Quartz Obsession on the Birkin bag, another fashion-forward investment.]( Charted Have a friend who would enjoy our Obsession with Air Jordans? [ [Forward link to a friend](mailto:?subject=Thought you'd enjoy.&body=Read this Quartz Obsession email – to the email – Giphy Brief history [1917:]( As demand for basketball sneakers grows, Converse Rubber Shoe Company introduces the All Star. [1946:]( The first-ever NBA game takes place between the Toronto Huskies and New York Knickerbockers. [1965:]( Adidas breaks into the US basketball market with the Pro Model, a hightop made of leather rather than canvas, and introduces the low-cut Superstar four years later. [1972:]( Blue Ribbon Sports, established in 1964 as a distributor of Onitsuka Tiger sneakers, renames itself Nike to begin selling its own shoes. [1973:]( Hip-hop is born in New York City; Puma reworks an existing shoe for Walt “Clyde” Frazier, naming it the Clyde; Nike launches its Blazer basketball shoe. [1983:]( The blockbuster movie Flashdance introduces mainstream America to b-boy culture, which along with rap is instrumental in making basketball sneakers part of fashion. [1985:]( The Air Jordan 1 releases to unprecedented demand for an athletic shoe. [1986:]( Run DMC releases “My Adidas,” and Adidas signs them to the first million-dollar endorsement deal for a rap group. [1987:]( Director Spike Lee shoots his first of a series of commercials for Air Jordans. Along the way he coins the tagline “It’s gotta be the shoes!” [1989:]( Nike regains the top position in US sneaker sales, overtaking Reebok. It hasn’t relinquished the lead since. [1995:]( Ebay launches, giving sneakerheads a place to buy and sell online. [1997:]( Nike turns Jordan Brand into its own subsidiary brand. [2009:]( The first SneakerCon takes place in New York, drawing thousands of sneaker fanatics. [2017:]( Michael Jordan is dubbed the highest-paid athlete of all time. Fun fact! In last year’s Spider-Man: Into the Spider-Verse, the hero, Miles Morales, wears Jordan 1s. Watch this! How to maintain your investment --------------------------------------------------------------- The fixation with sneakers runs so deep, it’s spawned a genre of content focused solely on how to keep them clean. Giphy Poll Would you consider Jordans an investment product? [Click here to vote]( Absolutely. Can’t wait until I can start trading Jordan futures.They’re getting there, but I’ll keep my money in Birkin bags for now.I’d sooner stash my money under the mattress. 💬let's talk! In yesterday’s poll about the [Hayflick limit]( 44% of you said you would not want to extend your lifespan because you would be lonely without your friends, 31% of said that you would do anything to evade death, and 25% of said you’re fine with your own longevity but would like your pet to live forever. Lucky Whiskers. 🤔 [What did you think of today’s email?](mailto:obsession%2Bfeedback@qz.com?cc=&subject=Thoughts%20about%20the%20Hayflick%20Limit&body=) 💡 [What should we obsess over next?](mailto:obsession%2Bideas@qz.com?cc=&subject=Obsess%20over%20this%20next.&body=) [🎲 Show me a random Obsession]( Today’s email was written by [Marc Bain]( edited by [Annaliese Griffin]( and produced by [Luiz Romero](. The correct answer to the quiz is Jordan 3. Enjoying the Quartz Obsession? [Send this link]( to a friend! Want to advertise in the Quartz Obsession? Send us an email at ads@qz.com. Not enjoying it? No worries. [Click here]( to unsubscribe. Quartz | 675 Avenue of the Americas, 4th Fl | New York, NY 10011 | United States [Share this email](