Founders - #109 Adi Dassler (Adidas)

Episode Date: February 3, 2020

What I learned from reading Sneaker Wars: The Enemy Brothers Who Founded Adidas and Puma and The Family Feud That Forever Changed The Business of Sports by Barbara Smit.---Subscribe to listen to Founders Premium — Subscribers can listen to Ask Me Anything (AMA) episodes and every bonus episode. ---This story begins at a time in history when money and sports were still two separate worlds [0:01]A family business struggling to survive / drafted into WWI / Adi Dassler’s EXTREME resourcefulness and personality / [3:15]Early distribution and marketing of sports shoes [10:06]The Dassler Brothers were opposites: Adi was the quiet craftsman with soul in the game. Rudolf was ostentatious and loud. [12:46]The chronicle and biography of Adi Dassler: A story about someone obsessed with making high quality products [14:00]Was Adi Dassler a Nazi? / My experience with the totalitarianism of the Castro regime / tearing up thinking of having to risk the lives of your children [24:30]Adi Dassler reminds me of Henry Royce [29:30]The difficulties of building a business during World War II [32:15]Adi starting over at the age of 46 / How the Adidas stripes came about [38:15]Athletes start requesting bribes to wear Adidas / How the payoffs happened [46:00]Breaking into a new market was a slow, labor intensive process [50:45]While Adidas and Puma are distracted fighting each other, opportunity opens up for Phil Knight and Nike / pursue your crazy idea / famous last words: “it’s just a toy”, “jogging isn’t a real sport”, “Nike is not a threat because we have more demand than we could service” [55:05]If you have a business that makes you miserable, somewhere along the line you lost the plot. [1:06:45]—“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

At a time when money and sports were still two separate worlds, the most admired athletes and soccer players enjoyed dropping by in the small Bavarian town for a chat with Adi Dassler, the ingenious German cobbler behind Adidas. On the other side of the small river that runs through the town, the guests were just as impressive. Just after the war, Rudolf Dassler had walked over after a blazing fight with his brother Adi and set up Puma, a competing brand. Their feud shaped the modern sports business, giving rise to corruption and ever-increasing financial stakes. For several decades, the bickering Dassler brothers ruled over the sports business from their medieval village.

Their shoes featured in nearly all the emblematic pictures of sports history. The Distracted by their own devious rivalry, the two Dastler cousins ignored the rise of the hard-hitting American upstart. Once it had thrashed Adidas and Puma in the United States, Nike set out to capture the European sports business. Okay, so that's an excerpt from the beginning of the book, from the book that I read this week and the one I'm going to talk to you about today, which is Sneaker Wars, the enemy brothers who founded Adidas and Puma and the family feud that forever changed the business of sports. And it was written by Barbara Smith. The reason I started with that excerpt, I'm still not sure what I'm going to name this podcast because most of what I personally enjoyed and what I want to focus on is Adi Dassler.

But there's a lot of just interesting things about the family. So I have a feeling like the podcast will just be called The Dassler Family because there is a bunch of notes and highlights I have regarding how they ran their business that it feels interesting. But the reason I bring that up is because this book, I'm going to read a couple of like, you know, the blurbs on the front and back cover. It was not at all when I picked that up and started reading it I had one image in my mind of what I thought I was gonna learn like this Specifically the found the founding of Adidas and Buma and it there's just so much More to this book. So it says, um, this is from The Washington Post. It says

Smith gets behind the business proposals marketing marketing plans, and constant dollar signs to focus on the human aspects of how these warring brands succeeded and why they faded. That's also why I wanted to, I'm going to talk a lot about, not a lot, but a good amount about Nike as well

and the role that Phil Knight and Nike played in that. It is that human component that makes sneaker wars read like a modern cautionary tale for those apt to turn big business into the most dangerous of sports. And in the beginning, it says, this is from the Wall Street Journal, it says, A book you'll read at a sprint. An anecdote-rich history of competition, commercialism, and corruption.

So that gives you a good idea. We're going to learn a lot more than just about the two individuals behind Adidas and Puma. Before I get there, though, I want to start with the early life, the family business before Adidas and Puma of the Dosser family, how they had to deal with World War I. And then I'm going to focus, I'm going to immediately get into after that, Adi's resourcefulness and his personality um he's by far my favorite character in the entire book all right so let's let's jump to we're gonna be in the 19 well this is right this is actually right before uh well I'll just read it to you this is right right before world war one and then we're gonna jump right after it So it says when it was established in the 1920s,

the brother's shoe business put an end to their family's many years in the weaving industry. Okay. So let me stop right there. They were Adi and Rudolph were partners. We're going to call that their family business, the, the, the Dossler brother's shoe company. Eventually they're going to split up. That's why the title says there's a huge family feud. And the two companies that come out of the Dassler Brothers shoe company, it has a different name. It's in German. There's no way I can even pronounce it,

is Adidas and Puma. Before we get there, we have to understand what's taking place in their lives. So it says, it put an end to their family families many years in the weaving industry. Their father, Christoph was the last in a long line of Dassler weavers. Now remember I said, or the author said at the beginning of the book, they're ruling the sports shoe business from a medieval village. And so you have multiple generations of the Dassler families that were, uh, weavers. And this is coming to an end right at the time when Adi's essentially becoming an adult. Okay. So it says, yet the industrial revolution made Kristoff's skills obsolete, prompting him to switch to shoe production. His wife, Paulina, this is Adi's mother, complimented her husband's meager earnings by setting up a laundry at the back of their

house. This is important. Aided by her daughter, so the mother and the daughter would clean the clothes, right? And it says the clean wash was then delivered around the town by her three boys. You have Fritz, Rudolph, and Adolf. Adolf is Adi. Known around town as the laundry boys. Okay, that little meager laundry room

in the back of the house is also where Adi's going to start his shoe company. Okay, so it says, and I'm going to go back a little bit in history. It says, in August 1914, the two eldest Dassler boys, Fritz and Rudolf, were drawn into the war. They were among the thousands of Germans who believed they would be back in a matter of months, but who would spend four long years away from their home in the muddy trenches. Just months before the end of the war, Adi turned 17 and he's drafted. So he has to go to the front. The war ends when the, when the Dazzler brothers returned, the three hardened men found their mother's laundry empty. In the post-war misery, there weren't many who could afford to have their

clothes washed by somebody else. So this is he's seeing an opportunity here. My father's not a weaver anymore. The family business, the meager family business that we have is out of business. Like we have to find ways to support ourselves. So it says Adi rapidly made up his mind. He would build up his small his own small shoe production unit right there in the former laundering shed. Now, this is where we're going to get into the amount of resourcefulness and this is part of uh what i admire most about adi first

of all like i'm going to repeat this over and over again he he has soul in the game he is completely focused on making the highest quality product he can make where his brother is more about making money right and i'll go into more detail on that in a little bit but it's also like you have to respect his resourcefulness and what i meant by this is really inspiring is because post-world war one germany like there's there's no materials there's a lot of poverty um there's not even that much electricity which is where and so we're going to see how the hell do you start the company that becomes Adidas in these conditions. So he says, Adi spent many days scouring the countryside, picking up all sorts of army utensils left behind by retreating soldiers.

He scavenged for any debris that could be remotely useful and hauled it back to his workshop. Strips of leather could be cut from army helmets and bread pouches to be recycled as shoe soles. Torn parachutes and army haversacks were more useful for slippers. To make up for the lack of electricity, Adi came up with an equally clever device. Among his early inventions was a leather trimmer affixed to a bicycle frame, which his friends, it says friends, this is actually his first employee, would pedal to get the band turning. The ingenious young man built up his trade with sturdy shoes that could be expected to last for several years. So that's how they generated their own power. And there's

actually, I found a picture online of this. You it's it's a bicycle frame with a bunch of straps and they're literally getting electricity by by turning the pedals um so he's doing this for several years and he just that's that's another thing you just have to understand about audi he's very meticulous uh very methodical and he's completely focused on um on quality and i'll get into more uh detail about why he was like that. Because one thing you want to know about him is he considered himself an athlete. So he was obsessed with sports. He liked running. He liked soccer.

He did all these things. And he did this for his entire life. And so he just had a bunch of ideas. Like, you know what? The shoes and the stuff we're using, they could be better. And I can make them better. I can learn the skills necessary to make them better and he did so it says three now we need to talk about rudolph though three years into his venture in 1923 rudolph stepped in the partnership between the two brothers worked smoothly at the beginning right even with their

contrasting personalities not much of a talker oddy relished the time spent in his workshop. Rudolf, however, was loud and extroverted, and he was better equipped to head up the company's sales efforts. In fact, the Dasslers could hardly have picked a worse time to get their business going. The war victors had seized most of Germany's resources, and millions of Germans were suffering from unemployment and hunger. So again, everybody's out of work. People are dying from hunger in some cases. His father just got rendered obsolete. They don't have electricity.

They don't have resources. Adi didn't care. He just focused on his goal and kept step moving forward one step at a time. I think that's an extremely important lesson from his life. So he starts, he's creating shoes and, you know, they start very, very slowly. You know, they might be 10 shoes a day, 20 shoes a day, stuff like that. And then eventually they have, he finds a distribution channel, a very valuable distribution channel. And so he started sending his shoes to the German sports clubs. He says, by sending offers to sports clubs, the Dastlers raked in growing orders.

They chiefly sold spikes and soccer boots. The breakthrough for the yearly company came when the coach of the German Olympic track and field team had heard about the spikes made by the sports enthusiasts. So it has the name of the business. I can't pronounce it. So we're going to call it the Dassler Brothers Shoe Company. Now, here's there's a lot. I mean, they're in Germany.

Think about where we're at in human history, in time, in geographic location. They're in Germany in between World War I and World War II. If you've studied any history, you know what's occurring, what phenomenon is occurring here. The rise of Nazism. Okay, so I'm going to talk a lot about that because I wanted to answer the question, like, were these people Nazis or not? All right, so it says, for the Dessler Brothers shoe company, Nazism was a formidable stimulant. Hitler's stooges implemented their theories with haste,

and one of the most urgent tasks they set for themselves was to promote German sports. So they had this theory that they're, you know, they had this ridiculous theory about, you know, we are a supreme Aryan race, and, you know, Hitler wanted to prove it through acts of physical achievement. Well, the shoe company is making shoes for, for, they're making the best sports shoes. And so of course they're going to like their business is going to benefit from this, uh, this, this ideology. so um okay i'm a little conflicted in this part of the book what i'm about to read you're not the nazis in part but i mean obviously i hold the same opinion you do that's

ridiculous um i love adi's dedication to craftsmanship he has soul in the game i'm going to say that over and over again i believe my personal belief is like if every company we interacted with or every organization that we had to deal with in our day-to-day lives were led by people with soul in the game, our lives would all be easier. They'd be better. We'd enjoy it more. So Adi has that, but he also is not the best business person. And one thing that we've learned from all the founders and all the books that we analyze on this podcast is,

to quote Steve Jobs, you have to watch your nickels. You have to build a great product, but you also have got to embrace, you have to run the business in a profitable and intelligent manner. So it says, The opposite characters of the two brothers were causing increasingly frequent rifts. Rudolph, who drove the company's skyrocketing sales, rolled his eyes at Adi's obsessive tinkering. So they're both wrong here is my point here.

They're both not complete. He regularly lost patience with his brother's aloofness. So that's Rudolph getting mad at Adi because he was aloof when it came to business matters. As for Adi, he became increasingly disturbed by his older brother's somewhat ostentatious, loud manner. They're just not suited to be business partners. Which is, in talent-wise, you could argue they were. But you have to like and get along with the people that that you work with and they just didn't um okay so i want to jump to

something else here i'm going to put the book down for a minute because um again we talk about books are original links they lead us from one idea and one person to another right but there is so much more this book is more about like the history of puma and adidas and it goes now i want to focus more on audi right so i was so intrigued by i didn't know who he was before i picked up the book i never even thought about him i didn't know he existed so i i went and i found there's like online you see um like the dossler family and the adidas company has like their own history of record and like you can read it. Right. And so I want to pull out, I read a bunch of that. I took some notes, pulled out some,

some highlights and I want to put the book down and do that. And what I thought of, I don't know, there's a, there's a documentary on Netflix. It's, it's like, it's about Bill Gates. It's like inside of Bill's mind or something like that. I don't even know what it's called but in the in the documentary was interesting because it's uh, It talks about like bills for like he's a ferocious reader like he and he says something that I thought was kind of a dare It the documentary is something that I personally thought was ridiculous. They're like he reads 275 pages an hour. I Don't read like Bill Gates. I'm not like my goal is not to read the most books ever It's like to actually think about. I'm not like, my goal is not to read the most books ever. It's like to actually think about what I'm learning and reading.

So, you know, I put the book down for a while and started doing additional research. And then I go back to it. I think that's the better way to use, like books are tools. They're not like something like, I don't want to just gorge through. I don't know. I'd be shocked if Bill Gates could actually retain all that. I highly doubt that he actually can. So I want to jump to the chronicle and biography of Adi and Kathy Dosser.

That's going to be his wife. And just pull out some stuff that I want to tell you right up front because I wish I had known this before I read the book because this brief outline I'm going to give you, it helped me understand him more as a person and I think putting this at the front is going to help you understand him and the entire Dossler family as we move through this all right so it says Adi Dossler himself was an accomplished and active athlete he was also a precise observer he recognized that the athletes of each discipline lack specialized shoes. Now that statement, this is now the norm, right? But understanding the impact Adi had on the world of sports and business is,

in his day, it was not. This is an innovation that he's largely credited for. So he says, in his eyes, this was a disadvantage. This was his concept. If an athlete wore shoes optimized for their specific sport, it would certainly result in improved performance. That statement to us today is completely obvious. A hundred years ago, it wasn't, though. In Adi, I woke the idea that would guide his life and revolutionize sport. The sporting world needed specialized, dedicated, professional shoes for each specific discipline. So, this whole idea like there's undoubtedly areas

in life now that the same thing is present today that they could benefit from some kind of specification whether it's equipment software whatever it is there's a business opportunity and just taking it a step further and improving that and that business opportunity is present 100 years ago it's present today it will be present 100 years in the future that's not going to change so it says after the first world war germany was mired in economic depression and conditions did not favor the successful founding of a company i mean some of this is going to be repetitive because it's also covered in the book but i think it's important uh where during the time of crisis would the material for his shoes come from and who would buy them to earn a living he repaired shoes

for the citizens of this town he lived in and to begin the production of sports sports shoes He used various material materials originally made for military use. I already told you that So it says after the war not only were raw materials in short supply But the electrical service in Germany was also inadequate Adi possessed an innovative spirit with belts He rigged a leather milling machine to a bicycle mounted to wooden beams, and the first employee worked the pedals to power the machine. So I love that idea. It says, during long hours of detailed work and refinement,

Adi continued to develop his shoe models and even tested them himself. Talks about his personality here. Adi was a quiet, focused inventor. There's going to be a lot about audi when i was reading that reminded me of henry force excuse me henry force henry royce one of the co-founders of rolls royce if you haven't listened to the podcast i did on him it's essential to anybody that cares about building quality products it is on uh think founders number 81. there is just a ton of similarities between these two people.

So it says, now we're going to get into the beginning of his company. It says, in the first two financially difficult years, a dozen workers produced about 50 pairs of shoes per day. They were making mostly soccer shoes and then track shoes. Together, they survived the economically challenging times, and in 1926, demand increased significantly. They had outgrown the family washroom, so Adi and Rudolph decided to take over unused production space. At the second location, now this is amazing because at the end of the book, I think they're saying Adidas is

producing like 200,000 pairs of shoes a day, right? It was the very beginning. They're producing 50. I think even before this this they're producing 10 But now we see if it start in the washroom This is what I can do now They have a small factory and they're gonna start making about 100 pairs of shoes It says at the second location they installed more machinery and increase the staff to 25 people They produced 100 shoes a day Now here's a huge increase to their business

is the fact that they took advantage of centralized attention on sporting events, especially the Olympics. And this is an example that had a huge impact on their business. Remember, Adi has this theory. He's like, I'm pretty sure you can get better results if I make specialized shoes for what you're doing. And so he's also an athlete, speaks to athletes. They understand each other. So he's able to convince them to try out his shoes. This happens in the 1928 Summer Olympics.

He says he was determined to use this world stage to prove that top athletes with proper shoes could run faster, jump higher, and win more. Adi gave the German distance runner Lena Rodke a pair of shoes he had developed. She won the race and became the new world record holder. So a ton of people are paying attention to what's happening. What do you think is going to be the end result if somebody breaks a new world record? They're going to want to know who that person is and what equipment they use. With her gold medal, she confirmed Adi's theory and the whole world witnessed it. Higher, faster, further was possible with shoes from the Dosslers.

Isn't that crazy? Like in our world, it's like, of course. Like that's the point I was trying to make earlier. There's a ton of things that people in the future, studying the time we're actually living in now, are going to look back and be like, of course. Like how did you guys not understand that? That phenomenon, you know, occurs constantly.

And to us, it's just funny. It's like, of course, if you had specialized equipment, like you would do better. And so the idea that Adi was the first person to actually act on this and then build a business around it is fascinating to me. Another thing about Adi that I really, really, really respect, he was obsessed. He's always learning. And this is something like the entire point.

Why does this podcast exist? For that exact reason. The idea that you should just graduate from school and you stop learning is silly silly these people are terrible that do that adi was not one of those people he says in 1932 his business already booming he's already having success that's what he does he decides to attend a shoot the shoe technical school in um it's a town called like permacens probably pronouncing that wrong and it was known as a shoe town. So at the school and in this town, Adi deepened his knowledge of shoe making business techniques and model building. Okay.

So when I read that part, there's a bunch of things that pop up in my mind that are related to all these other books that I've read and analyzed, right? Not many people know. This is something Jeff Bezos would have done. The very early days of Amazon, there's like a handful of Amazon employees. He leaves Seattle, drives, I forgot how many hours, to take, he paid for and took a four-day course on book selling. You got to have the humbleness to understand that you can learn from everybody.

You know what I mean? Like Jeff Bezos is not, Jeff Bezos then is obviously not the person he is today he had to learn to become that person like that's amazing to me that he's like yeah you know like my business up and running but like i can i i always want to learn more that's why like people like jeff bezos sam walton these people went to school on everybody i just think that's so like it's such an obviously good idea that it perplexes me why more people don't do that Now so that's the first thing I thought of and then the second thing I thought of I was like, okay So oddies paying to go to he already has a

Probably the most successful shoe business in Germany at the time, right? So he pays he's like I can learn more though Like isn't that that there's like a level of like humbleness there like he's already the best he's like I can learn more though. Like, isn't that, there's like a level of like humbleness there. Like he's already the best, but he's like, I can get better. But then the second thing is like, there's a shoe town, right? And that made me think of Enzo Ferrari. I think it was back in Founders number 97 or 98. I think it was 97. I did two, but I'm pretty sure this is a 97.

But he talks about like, you know, Enzo Ferrari Ferrari is one of history's greatest obsessives, right? He had this fanatical, singular, maniacal focus on building race cars. And he talked about it that, like, it was also a product of where he lived in that small town. I think it was, I pronounce it Modena. I think it's Modena. But he says, this is a quote from Enzo Ferrari. It is my opinion that there are innate gifts that are a peculiarity of certain regions and that transferred into industry, these propensities may at time acquire an exceptional importance. In Modena, where I was born and set up my own factory there is a species of psychosis for

racing cars that is a hell of a statement a species of psychosis for racing cars so undoubtedly according to enzo he was a benefit him and his company were benefact benefactors i think that's what i'm looking for of this special psychosis i think this is also present in you know there's a ton of industries that that are even it's weird because i'm like a huge proponent of remote work and i just think like the like clearly to me the future of remote work is clearly like distributed right um and that we're i think that's a major shift that we happen to be living through just like christoph dassler was living through you know the shift of Dassler was living through, you know, the shift of being rendered obsolete, like, of weaving or whatever, but there is undoubtedly, like,

geographical locations today all across the planet that specialize in certain things, and so that, I guess, is what Audi benefited from, that's what Enzo Ferrari benefited from, I just think it's an interesting thing, you know it's just one paragraph that i was reading and it spawned so many other um other thoughts all right now i get to the point i was like what is up with the nazi shit man like what are you doing here um like how and again like we're looking in the past like we're not living in that culture or anything else that obviously doesn't excuse it but it's just like it's so obvious to us today. That is a terrible, horrible idea. How is that even possible?

So I wanted to dig into that. I was like, I need to know what you guys thought. Well, let me read this part, and then I'm going to tell you where it's also hard to understand. I grew up in America, right? We don't live in a totalitarian regime like Nazi Germany. But I've told you this on the podcast before, my father was born in Cuba before Castro. My family, my grandfather and my father and my grandmother had to flee Cuba because of Fidel's totalitarianism. I met a ton, a ton of Cubans when I was growing up that literally got on rafts and sacrificed, that risked the lives of themselves.

I'm going to get, ooh, I got to calm down here. Okay, let's try this again. I've met a ton of Cubans who sacrificed the lives of themselves and their children and put them on rafts. Could you imagine risk? Like what conditions do you have to be living under to risk the lives of your children like that? That's insane. But one thing I learned from that experience was when you talk to them, there's no way to act in a totalitarian regime like that. There's no way to accurately gauge, except through their actions, I guess, how people feel about that because they're forced to lie. You can't go.

Like, you could back then. I don't even know if it's probably still the same today. But, like, you could not publicly criticize the cash regime they'd kill you so it's really hard to see like okay the Cubans are having this done to them how many of them actually support Fidel and the cat and the Castro family or how many of them are forced to and doing so like they're basically lying about it to to um to protect their lives i i guess there is one way to see how they they feel about it because there's been hundreds of thousands of people that risked the lives of their family and caught on makeshift rafts and just took off into the ocean okay i wasn't expecting to talk about, but it's important for this part of the story because you don't really know in those regimes who actually supports him and who doesn't.

So let's get back into Adi. All right, it says, shortly after the National Socialist Germans Workers Party ascended to political power in 1933, Adi and his brother Rudolf felt pressure to join the National Workers Party. It was a requirement if they wanted to remain in business. And foremost among the motivating factors for that decision was their obligation to maintain job security for more than 100 employees. To refuse party membership would have negatively impacted the business and jeopardized the workforce. So the equivalent that I understood in my experience,

to actively seek out, and this happened to people in my father's side of the family, this happened to them. That's why I'm so freaking emotional about this. But it says, to refuse party membership would have negatively impacted the business and jeopardized the workforce. To do that in Cuba, you would have either been jailed or killed. So that's why I'm trying to understand what is taking place in the Dosser family at this time.

So it says, Adi was unimpressed by the so-called movement and was never politically active. To him, it was athletic competition that mattered most. His sole purpose was to support athletes, regardless of political affiliation, religious faith, or ethnicity. And he winds up doing this. He winds up hiding Jewish people. Like, the reason I don't think he was, like,

believed in Hitler and what Hitler was trying to do is because, like, his actions, like, even if he said, okay, I'm a part of the Nazi, like, you know, I fill out the paperwork, I'm part of their organization, his actions, I think that's, okay, I'm a part of the Nazi, like, you know, I fill out the paperwork. I'm part of their organization. His actions, I think that's, again, we talk about this all the time in the podcast. Like you learn a lot more about people from their actions and their words. He's hiding Jewish people.

He's like, if he gets caught, he could die for that. But he also does something where he makes shoes for Jesse Owens. So this is what happens. He says, his sole purpose was to support athletes regardless of political affiliation, religious faith, or ethnicity. The fact that he outfitted the African-American Jesse Owens with Dastler shoes at the 1936 Olympics under the scrutiny and displeasure of national socialist leadership

gave testament to his political disinterest. Okay. So I'm going to go away from that and go back to this idea I have where he just reminds me a lot of Henry Royce, my admiration for the fact that he had stolen his game, and then I want to learn more about his personality before we go back to the book. He painstakingly studied the motions and mechanics of athletes. At the age of more than 50, as he had always had, Adi practiced numerous sports disciplines simply to obtain insight needed to deliver the perfect shoe technology to the athlete. He wanted to completely understand the practical needs of the athlete

and believed that was only possible if he was familiar with the demands of each discipline through personal experience. David Ogilvie has a line. He says, the good ones just know more. And Adi was one of those people. He says, using this knowledge, he developed shoes for track and field athletes, football players, tennis players, skiers, boxers, basketball players, bowlers, fencers, and many more. Adi didn't just do things differently. He did them for the first time. Throughout the sporting world, they spoke of his innovations.

I think he wound up collecting something like 700 patents in his life, which would put him, out of all the people we studied in the podcast, number two. Thomas Edison being number one, Adi being number two, and Edwin Land being number three. In discussions with athletes, Adi's introverted manner fell away. He spoke their language because he saw himself as an athlete. He listened to their concerns and in the process of finding a solution, spared no expense to address the needs of the athlete. His contemporaries described him as ambitious, creative, and tireless.

When sporting events were being broadcast, he sat before the television with great concentration, precisely observing the movement of the sportsman's feet. There exist many handwritten notes spanning his adult years that bear witness to Addy's passion for detail because notepads were always on hand throughout the home, so he could jot down his thoughts and ideas at every hour of the day. And then more, just, how could you not like this guy? How could you not like? And I, as much as I admire him,

I equally dis-admire, that's not a word. Not, I dislike his brother and you'll see why. I'll get there in a minute. Adi Dozzler remained modest. He never sought the spotlight and seldom gave interviews. He was more interested in tinkering with new inventions, developing new ideas and putting them to practical use. Throughout this creative process, he approached his work in a precise, earnest, structured, and always creative manner.

Okay, that was one hell of a tangent. Let me go back to the book. Let's talk a little bit more about the difficulties of building this business in World War II. This is before the brothers separate. So it says, the war would trouble for the factory because it was subjected to tight regulations of the regime. This is the Hitler regime. It was decided that the factory would not be shuttered. This is the government making that but its production was sharply curtailed so we just hit some highlights here due to rampant shortages the company scraped uh scraped by to make the required pairs of shoes and it even ran short of staff allied bombs virtually erased entire towns from germany's map the people in

the town they're in shivered in their cellars when an incessant stream of bombers flew over to destroy large parts of neighboring towns. While Adi was clearly regarded as the linchpin of the company, his brother strove to impose himself as the company's leader. So he's very egotistical. We just went through, like, Adi's much more modest. He's just focused on craftsmanship. His, uh, could be incredibly harsh and mean. He rejected his sister's pleas. This is this anytime I'm induced, there's a pattern. If you listen to a bunch of these episodes, the, anytime I'm induced to a state of rage by what I'm reading usually has to be with adults, mistreatment of children. I, I, I have no, like, there's no slack in my life for people that, that, that are crappy to children. Like the children are like the best versions of humans ever.

And somewhere along the line, they get corrupted into, you know, less likable adults. And so one of Rudolph's sisters is she's got young kids. And right now, Germany, you know, there's people fighting. There were 14, 15, 16. It's happened in World War I too. Some of the people lied. Some people, they knew the age and they were still sent over. But her sister's like, please employ my sons at the factory so they don't have to go into the war because the factory is going to be requisitioned.

What's the word I'm looking for? The factory starts making shoes for the war effort and other things, right? And Rudolph bluntly rejected his sister's pleas, saying there was enough family problems at the company. And so his sister says he could be incredibly harsh and mean. These two sons never return from war. This is the beginning of the end of their relationship. Adolf, that's Adi's full name, by the way.

Adolf's early release from military duties caused further skirmishes in the family. The decision identified the younger of the Dosser brothers as the most indispensable half of their leadership duo, which deeply irked Rudolph. So this is the government saying, you're so important to the factory that you have to stay there, so you're not going to fight in the war, right? But Rudolph had to fight. Rudolph regarded this as an unbearable injustice and was certain that his brother had plotted to have him sent away. More effects of running the business during and after World War II, the U.S. eventually shows up at their front door to the factory.

He says, this part blew my mind. U.S. tanks halted in front of the Dosler factory. They were pondering the destruction of the building when a young woman stepped out. The 28-year-old Kathy Dosler, that's Adi's wife, bravely walked towards the soldiers and pleaded with them to leave the factory intact. All the people in there wanted to do was make sports shoes, she explained. So they wind up, she actually convinces them. They leave the factory away, but then they need a place for their soldiers to stay.

Right next to the factory was the family house. So what also complicated the relationships of the Dosser family is they all lived in a giant house with wives and kids and everything else. So they wind up leaving the factory alone, but they are now a bunch of soldiers overtake the Dosser family home.

Rudolf, during this time, is like going back and forth, and he eventually is like, he tries to run away from, he's like a deserter because he realizes like the war is over. Like I'm not going to die. Like it's clear that we haven't given up yet, but the Allies are going to win. So he winds up getting caught from doing this, and he almost dies. So this was crazy too. It says the local Gestapo chiefs rounded up some of the inmates

and instructed guards to bring them to – there's a word I don't have, I think it's Dachau. It's a famous concentration camp. So Rudolph is being sent to – eventually being sent to this concentration camp. He says the 26 men were to walk the 200 miles to the concentration camp in chains attached two by two. The driver who was supervising the march, his name was Ludwig Muller,

was instructed by a local officer of the SS to shoot the prisoners. Rudolph is one of these prisoners. Muller ignored the command and led the prisoners farther south, but they never reached Dachau. The convoy was intercepted by Americans, and Mueller gladly let the prisoners walk back to their homes. Okay, so when he gets back, he's convinced that his brother set him up, and he thinks he was betrayed.

And this is when they break up. So his return caused ugly scenes as the two brothers and this is when they break up. So his return caused ugly scenes. As the two brothers and their wives attempted to clear up what had happened during the war, the rows, meaning fights, were particularly explosive between Rudolph, who became obsessed with his brother's supposed betrayals. To make matters worse, the two couples were still living under the same roof. Okay, so this leads to their inevitable separation. It says, the separation between the two brothers

was completed in April 1948. It paved the way for the registration of two separate companies. The youngest of the brothers then contracted his name, Adi, and his last name, Das,

and that's where you get Adidas from. A-D-I, his first name, D-A-S, the first name, Adi's last name. Rudolph took on

another suggestion and it ended uh winds up being changed to Puma which we know. Okay this is how they split the staff, how Adi has to start over at the age of 46, and then the way the adidas logo came about which I thought was interesting. Rudolph was joined by nearly all of the staff's administrative and sales staff, but since all of the technical staff had picked Adolf's side, I don't know why the author calls him Adi the whole time and starts reverting to Adolf. So I don't want to convince you. I'm going to change all these to Adi. He says, but since all the technical staff had picked

Adi's side, Rudolph's men didn't have anything to sell. Conversely, Adi quickly restarted production, but lacked any sales force to speak of. In his late 40s, Adi Dassler had to crank up his business yet again. So it says, stripes had long been used to strengthen the sizes of their shoes, but most of the time they weren't visible. This is really fascinating. They weren't visible because they were made out of the same leather as the rest. So they were just functional. They were not for design, right? This made it hard for Dassler's to back up their claim that some of the outstanding athletes had been wearing their spikes. On most pictures, even experts weren't able to tell which brand of spikes the runners had on their feet. But Adi Dosler figured

that if the stripes were painted white, they could be used to make his spikes stand out from afar. Three stripes easily spotted from a distance that would cleanly distinguish Adidas from competing brands of shoes. Now, I mentioned earlier, I admire Adi. I don't admire Rudolph. So I want to go into a little bit about the different way the two brothers operated their company. Adi was still most at ease behind his desk, pointing over technical drawings. The only thing, he was very like quiet, you know, kind of hands off.

The only thing that Adi did not tolerate were sloppiness and ignorance. If Adi felt that somebody was not completely up to scratch, the poor guy was out. The same went for anybody who spoke up at meetings for the sake of it. He did not like people to just talk for the sake of talking. Adi just didn't have the time for these kind of people. Rudolph ruled over his company more brazenly. He would burst into meetings with resounding laughter, brimming with enthusiasm. Nothing wrong with that per se, but there's usually a dark side to people like that.

When his mood swung, however, which occurred quickly and recurrently, the employees soon became aware of it. Rudolph made his presence felt loudly under any circumstances, cheering one minute and booming with anger the next. So I just couldn't work in an environment where I was being yelled at. That's just not going to happen. And so that's kind of the environment Rudolph has. He's kind of like, you know, rolling over things with an iron fist. You know, some people are fine with that. You know, adults should be free to make their own personal decision. But it was like, I thought about that when I was reading the book on Thomas Watson, just the way he would talk to his employees just made me cringe uh okay so i need to introduce you to

another main character in the book it's horst dosler horst dosler is the only son of oddy he's going to uh rudolph's going to have some uh sons that work in the business as well and this this multi-generational feud continues so So, Audie and Rudolph are going to, you know, never really reconcile. They'll talk a little bit, but they, you know, they never maintain that relationship. They both die with the relationship in tatters.

Same thing for their sons, right? This is a lot of, like, the good in the book is focusing on Audie's craftsmanship. The bad is, like, the ridiculous personal nonsense that these people were not mature enough to overcome. And they wind up opening this giant door and in comes this super passionate, super smart Phil Knight. And when you're distracted and you're fighting,

you're not going to succeed against somebody that's completely focused. And I'm going to talk more about that too because there's a lot of examples of that in the book, which I just absolutely loved. All right. So I want to introduce you to horst first and talk about he's got some good ideas for for marketing though on the weekends horse was often dragged along with

oddy for lengthy runs in the forest the young man relished the shared sports activities which gave him time to forge silent bonds with his father it's a quote from horst my father wasn't exactly bubbly in terms of conversation. His words tended to be pragmatic. And unfortunately, Horst is his personality just is not odd. He winds up disowning his son before he dies. So I'll tell you that now. And Horst is also, I'm pretty sure he was a giant cokehead. I'm almost positive. The author never comes out and says it, but there's, I mean, there is a,

they talk about, you know, going to parties with giant bowls of white powder, but I'll tell you more about his personality. He's not like Adi at all. That doesn't mean he doesn't have skills. He didn't add value to Adidas. He was, in large part, Adi didn't give a, he didn't care about growing um, growing for the sake of growth. He was wanting to make the best products. Horse is really the one that fuels that growth.

Um, and also, you know, they, they over-leveraged themselves later on. The company has to sell, the family has to sell it later. But, um, but horse was an extreme character. All right. So it's, um, so he sends, there's, uh, some, I don't know if it's the Olympics, it's some kind of, yeah, it's the Olympics, I think, in Melbourne, Australia. So Horst goes over there and he immediately starts making his own decisions. He says, the young Dastler Hare demonstrated skills that could not be acquired anywhere. Instead of selling Adidas shoes, Horst would hand them out for free. And people did not like that. Remember, at this time, too, sports as we think of it today is

this gigantic multi probably what it's gotta be multi is it multi-trillion i know like globally it's gotta be right um this huge industry it was not like that at this time there was still money being changed hands but it was all like on the blow it's all corrupted and the book goes into a lot of detail about that so giving away things for free and doing it, these were unique ideas then, right? Horst convinced that the gifts would be a smart investment. He couldn't think of any better publicity for his business than a throng of athletes hitting the tape in three-stripe shoes.

Free shoes actually paid off. When the medals were counted, Horst Dassler proudly informed his parents that more than 70 of them had been won in Adidas. The athletes had received their free Adidas spikes with such eagerness that the brand seemed ubiquitous at the Melbourne Games. That's a smart move, right? The snapshots of many finishes were dotted with Melbourne spikes

yielding unbeatable publicity for Adidas. That's a real good idea. When these pictures came out, all of a sudden, a lot of retailers became interested. So he's opening up distribution channels. There's nothing wrong with what he's doing here. I'm going to go back and forth. I'm not going to spend that much time on Rudolph and Puma. I'm going to tell you more about, well, this is the note I left myself,

is Rudolph the Death Spot. He constantly belittled Armin. This is his son. So Horst is Adi's son. Armin is Rudolph's son. He constantly belittled Armin, often in public. Armin pleaded with his father to let him leave and study electronics, but Rudolph wouldn't hear of it. Armin was to learn the tricks of the shoe business as soon as he left college. This was all the more

appalling since Rudolph displayed apparently unjustified indulgence towards his second son. His second son's name is Gerd. Gerd was born 10 years after Armin. By openly favoring Gerd, he stimulated an aggressive and sometimes unhealthy form of competition between his two sons. The disputes crushed Rudolf's wife. Once a joyous and courageous woman, his wife crumbled on the relationship with her despotic husband he's just a first of all he can't run the company to save his life uh makes a bunch of dumb ass decisions and then you know making your kids compete like what are you doing what are you doing and then being like making your wife like having such a like a iron fist at your wife you don't have a relationship at that point i hate people like this

um oh this is funny so i'm gonna get a little bit into like where is where does this idea of like mixing money sports and business come from and a german sprinter is gonna learn while he's in america that's funny part, that you can get paid for this this didn't happen in German before this and Adidas initially refuses eventually they pay off, they engage in the corruption Horst may be

one of the most corrupt people in the business of sports ever I would argue Adidas refuses initially but basically the exact opposite like he has the exact opposite. Like, he has the exact opposite viewpoint of his father, okay? So this is this German sprinter.

He spent some time in the United States. His name's Harry. That might be his last name. Harry had learned that performers deserve to be rewarded financially. Harry appreciated this part of the American ethos and firmly intended to apply it to his own athletic career. Harry bluntly inquired what Adidas would be prepared to offer to his commitment. So this is really surprising because Adi, he did it for the love of the game. He's like, no, I built these shoes for you because they're the best shoes.

They're going to help you perform better. So he gets mad. He's like, Doss I built these shoes for you because they're the best shoes. They're going to help you perform better. So he gets mad. He's like, Dossler angrily refuses. Adi Dossler was still convinced that Harry would have forgotten about the money nonsense and that he would turn up in his Adidas spikes. He was utterly dismayed, therefore, when the German sprinter emerged from the tunnel in a pair of Pumas. So Adi's not going to pay him off. Rudolph will.

The sprinter's choice was at least partly motivated by a thick brown envelope now this is how payoffs happen especially with olympic athletes that were you know they were supposed to be amateurs so uh there's an american sprinter and he shares what was taking place around this time in history the american sprinter recalled precisely how it was done i remember i remember it it was like in in the James Bond or mystery movies. A shoe agent would go into the bathroom and leave an envelope under the stall. I would go into the stall after him. You'd get an envelope that had $700 or a couple thousand dollars in it and you thought you were rich. Okay, so this is something, you know, horse would engage in with frantic coke head like energy um the guy didn't sleep he worked all the

time was extremely paranoid uh i mean just if you list if if you were to list his personality traits and you google what are the side effects of cocaine like they match up almost exact uh again the author never says that but i there's have there's if you read the book i think you would arrive at the same conclusion um so he's got also he's got interesting ideas he was very much more hands-on he wants to becoming like a prototypical sports agent almost he starts a bunch of other companies because he has the outgoing you know party kind of personality the exact opposite of his father so he has this idea of the revolving dinner ploy he does have some good ideas in the sense that like businesses made up of

relationships and certain businesses definitely are, but it's also like a very superficial transactional level. Like he dies really early at like 51 from cancer. And like two days before he's dying, he's like writing notes to people, but he even says like he's, he was at the end of his life. He says he's personally unhappy.

He's estranged from his wife and his two kids because he worked 24 7 um and he had very few friends he had like an unbelievable like he knew thousands of people but very few real friends and that's just like that's like that's not that's a sad way to fear your life to come to an end like that's just not i don't know anyways i'll get there in a little bit uh so now we're once he spotted an opening horse bulldozed ahead ignoring obstacles he prodded his aids into immediate action so one thing you know i do admire about him he was driven and he understood that you know success in some parts in to some degree is a function of speed and so he went fast uh he was racing at 200 miles an hour and we were puffing behind struggling to keep up although contracts didn't stipulate that employees work on saturdays the office was usually full that day horst worked

hardest of all a workaholic by any standards he always looked for ways to exploit his time as efficiently as possible so this is what this what happens we see this a lot you over optimize in one part of your life and you know your time is finite so that means you're going to you're making a conscious decision maybe it's not even conscious but you are making a decision whether you know, your time is finite. So that means you're going to, you're making a conscious decision. Maybe it's not even conscious, but you are making a decision whether you know it or not, that you're going to make sacrifices in other areas. My point, the reason I bring this up so much, because it happens in these books all the time. They do that. Maybe they don't even mean to do it. And then they regret it later. It's, we have to learn that. We're probably, if that happens to them, they're humans just like we are, We might feel the same way. So that's why I keep bringing it up.

So it says one of his most bizarre ploys was known as the revolving dinner. Three groups of people would be set up in separate rooms. Horse would have drinks with one group, sit at the table. Then as planned, he would be called away for an urgent meeting. He would then move on to the next group, eat an appetizer, then be called away. And then on to the next group, eat an appetizer, then be called away, and then on to the next group for dessert. At the end of the evening, all of those guests would feel they had dined with Horst Dassler. Now, this part surprised me.

Like, why are you doing this? Breaking into new countries and new markets at this time was a very slow, labor-intensive process. Again, I don't think Adi even cared about this. But Horst wanted, you know, Ad Adidas to be this giant global company. So it says, At the beginning, Adidas received only piecemeal orders from French clubs and athletes. But Horse Dazzler picked resourceful players, the kind who would scour the country on match days

to hand out Adidas boots and spend many more hours cultivating friendships at the bar. So they were doing this on an individual basis. I'm going to infect one person on the team, and that person is going to spread my product to other areas of the team. Extra rounds were bought for photographers that they promised to shoot close-ups of Adidas boots. So he starts developing this huge network.

This is going to very, very reminiscent of the tactics we discussed on the podcast about Mike Ovitz, the person that founded the agency CAA. Horst taught his employees to hook sports people by weaving together personal relationships. So this is, we're going to see his personality. Were you in the locker rooms with them, Horst snapped? Do you know their names or their wives? Did you have lunch with them beforehand?

Well then, what did you expect? Such attention were perfectly in line with Horst Dazzler's motto, business is about relationships. Now, just like Horst took Adidas to new levels, so did Armin, which is, you know, his cousin, his counterpart. It says the relationship between Rudolph and his eldest son had always been strained. It deteriorated further when Armin, having become more self-assured, began to question his father's conservative methods watching horst harmon armin acknowledged that the sports world was undergoing rapid changes and unless he was able to allowed to steer puma in the right direction the company would be entirely left out so armin sees a huge opportunity he thinks that this is you know post-world war ii

he's like you have this giant growing market in the United States. Like, we need to go over there. Armen discreetly exploited openings to sell Puma products in the United States. He had already been sent out there by his father shortly after the war, and his visit had made a strong impression on him. He saw Puma would be at a huge advantage if it managed to make its mark in that country. So both of the cousins are doing essentially the same thing. They're expanding their business against the wishes of their family.

Okay. So there's a bunch of details in that. I'm going to skip over, but it says, Horst had attained an altogether different stature. No longer was he the affable young German with a handful of spikes. Instead, he had turned into a respected entrepreneur, the international face of Adidas. Horst was seizing control of his parents' brand. Okay, so this is the contrasting, now it's going to lead to a falling out with his father. The contrasting attitudes led to rancorous discussions between Horst and his parents, but he staunchly refused to be held back by their conservative ways. And they just weren't ready. They really didn't have an interest in doing that. They were fine just running it as a family business.

Horst effectively resolved to compete against his parents, and this is where we see unbelievable levels of duplicity on his part. He starts competitors that they don't know about. He funnels money that was meant for the growth of Adidas to other personal projects. He eventually builds a web of offshore companies all over the globe that are so complex, he doesn't even know what's making money, what's not. Again, this is very like, I said it, he acts like a cokehead.

And so the way he's running the business, you know, his father's very upset. And his father's in his 70s at this time. So it says, Adi watched the business with an increasing detachment. Now in his early 70s, he was tired of the relentless complaints from his managers, his wife, and his daughters. So, you know, they have horses running, you know, international expansion of Adidas. The family, including the daughters, are focused on the German aspect of the business. And they're just,

they're not, they start fighting within each other. And so not only are they internally fighting within Adidas, they're also like paying attention to puma because of the the family feud that happened you know 30 years earlier and what's going to happen you just open you have to focus just open this giant door and here comes phil knight um if you haven't listened to the podcast i did on phil knight his book shoe dog is one of the best books on entrepreneurship ever've ever read. It's Founders Podcast number 10. But more than that, I really think that the opening of that podcast is probably one of the best, if not the best opening of any Founders episode. Because it's like, it's this inner monologue. I think Phil Knight's something like 24 years old at the time. And you know, just like everybody else goes through this, like,

what am I going to do with my life? Like, you know, especially that age you have this huge uncertainty Like everybody goes through that and you know, he's like he's on the run. He's just goes in a monologue He's like what if I just pursue my crazy idea and that that decision, you know led to Nike is remarkable. Anyways, alright, so says another contender that threatened to upset the almighty Dosslers at the Munich Olympics was a small American company called Blue Ribbon Sports. Obviously, that's Phil Knight's company before he changed the name to Nike. It had been set up by Philip Knight, a lanky middle-distance runner and graduate of Stanford Business School.

Then known as Buck, Knight had always run an Adidas, but he thought it outrageous that American students should be more or less condemned to buy expensive German spikes in his Stanford paper he outlined a business plan to launch a competing brand so this is a question that launches Nike or what eventually comes like II can Japanese sports shoes due to German sports shoes what Japanese cameras did to German cameras he asked. I love the idea of picking out insights from other industries and applying it to saying, hey, that idea worked over in one industry. It'll probably work in this one.

There's a number of examples in history where that's successful. It's a really good framework, mental model, whatever you want to call it. All right, so I'm going to skip ahead in the book, and I'll go back in time, but I want to stay on this Nike thing. Okay, so now we're jumping ahead, in the book, and I'll go back in time, but I want to stay on this Nike thing, okay? So now we're jumping ahead, I don't know, maybe a decade. I think Adi's already dead, and Rudolph is already dead now. But anyways, I want to talk about how Adidas opens the door for Nike with its incompetence.

And there's a lot taking place in this section. The idea that they're dismissive about Nike's new technology. They call it a toy. How many times have people discounted new inventions? And they say, oh, it's a toy. A ton. The fact that Nike propelled

what at the time was a new sport known as jogging. They were very dismissive. Oh, it's not a real sport. And the fact that Nike's not a threat because, you know, we're a much larger company. Yeah, but Nike's growing faster. And you're not. You're shrinking. Eventually, you're going to intersect. All right, so let's go there. So one of the brand representatives in the United States for Adidas, he notices Nike's exploding.

So he goes back to Germany. He's trying to tell them. He's like, hey, you guys need to check this out. He says, he figured that Adidas technicians would be interested, but the response was invariably dismissive. The waffle, the waffle shoe, the running shoe designed by former coach Bill Bowerman, this is Phil Knight's partner, in his kitchen provoked outright hilarity. They inspected the sample as if it was a piece of dirt. They pulled at it and then they threw it they thought it was a big joke these lunatics who designed shoes with a waffle iron

yet the dirt and so uh it says um they they didn't see the nike as a problem because they had so adidas had so much demand that they couldn't keep up with them right so like you they'd have suppliers united states they'd place demand that they couldn't keep up with them. They'd have suppliers in the United States. They'd place an order. They wouldn't get their order for a year. And so they're like, Nike's no threat. We have more business we can keep up with. Yeah, but you're not delivering the business on time.

What do you think? Everybody's just going to wait around a year to get your shoes? So it says, yet the dearth of Adidas supplies played strongly into the hands of Nike. In the exploding american market retailers became so weary of the haphazard adidas deliveries that they could not afford to turn down an alternative alternative brand that is to push its advantage and then nike takes advantage of that they're like oh okay check this out this is really smart to push its advantage nike introduced a shrewd mechanism known as futures in other other words, they shifted some of the financial risk

to their retailers, the people that wanted their product. In return, the retailers who took part in futures would obtain a sizable rebate on their orders and could rest assured that they would actually obtain the goods. In a market driven by wild demand, this was an unbeatable argument. So you could have a shoe that no one knew existed.

And then overnight, maybe like a soccer or a tennis player could win the Wimbledon or whatever. And then you have 100,000 orders the next day. That's what they're talking about. And so what they did is like, hey, if you give us the money early and you commit to buying X amount of Nikes, we'll first of all guarantee

that we get it to you on time and two, we'll give you a discount. And so Nike would take the money from the retailers, give it to their manufacturers in asia and essentially have the retailers uh um uh finance the growth that's exact opposite of what was happening with adidas adidas owned a lot of their factories um and that's why and they had a a crappy logistics pro uh system so it says um with the jogging boom in the 70s n Nike's advances turned into a tidal wave. At the forefront of the movement, Bill Bowerman led many thousands of otherwise unathletic

Americans on daily jogs. And this newly formed army of leisurely runners turned to Nike and mask. Or a mask, sorry, not mask. Now, the smart technique by businesses, we've seen this applied other ways, like what is your product used for? Don't focus on selling your product. Focus on growing what it's used for. Lululemon did this beautifully in the last decade and a half. They didn't try to sell you athleisure,

whatever it's called. They grew the sport of yoga or the practice of yoga, whatever you want to call it. And then, hey, if you're into yoga, you're going to come buy my clothes. Hey, if you're in jogging, you're going to buy Nikes. Brilliant. The German technicians dismiss the trend by contending that jogging is not a sport. You don't get to decide what other people are interested in. This is the opinion of their founder. It says, and I wrote focus in caps with exclamation points.

Horst Dassler was equally guilty of aloofness when it came, he's running the company full force right now. Adi is dead at this point. Horst Dassler was equally guilty of aloofness when it came to Nike. Absorbed by his sports marketing and broadcasting rights business, he's running other businesses and Adidas at the same time. You're not going to beat somebody that's running only one business. You have to focus. He didn't display much concern about the Nike issue. He eventually agreed to meet Phil Knight. So they go to a trade show. He winds up meeting him. He says, but he's got a big mouth because he's probably on drugs. The Nike men couldn't believe what they had just heard.

Horse Dazzler had let it slip that a strong Adidas shoe sold about 100,000 pairs each year in the United States. Blue Ribbon was selling roughly the same amount of waffle trainers a month. So again, appearances, outside appearances can be deceiving. Nike didn't have that information. At the time, Adidas is doing more in overall sales. They're selling more shoes in different countries. They're selling clothing, doing all this other stuff. But they're like, ooh, wait a minute.

We're onto something. You're only selling 100,000. Your best shoe is selling 100,000 a year? While this new invention that we made and all the other smart tactical decisions we did, we're doing that in a month. At that point, you know, game, set, match. You've already won.

The other person just doesn't even know it. And that's inevitable. A few short years after this, Adidas has to be sold. They start losing tons of money. Horst is, again, I told you, he's got a lot of good ideas, but he's got more bad ideas than good ideas and he was not good. They're like, you know, I've read some people Like he was a genius businessman. Uh No, I disagree. I disagree

Fervently, he was not a genius businessman his father. He built on the innovations of his father his father I don't when I'm not calling a genius businessman, but he built high quality products. And it's this focus on like this expansion and this distraction, all this stuff. It's like, you had a good business here and you ruined it. That's my point. Like this happens a lot and we do it. It's like self-inflicted. I don't know. It's so beneficial reading these books because you realize a lot of times what not to do. And that's very powerful. And both families are guilty of this. I'm going to go back in time.

We're going to see how Adi and Horst were never on the same page. And then we're going to see Rudolph and Armin. It's funny how you ever see two groups of people or two people you might know that hate each other and you happen to be friends with both or whatever the case is. And you can extrapolate this out onto tribes that fight each other and you happen to be friends with both or whatever the case is and some you can extrapolate this out onto like you know tribes that fight each other um whether sports teams whatever you're like you people don't even see you're way more similar than you think so we see that in the relationships with their sons uh so he gets really mad because horse starts making um adidas clothing and adi just wanted to make the best shoes so says and

he's yelling at this time horse you won't you won't spare me anything, he burst out indignantly. Sure enough, you have done well for us, but bathing suits? Never. Have you gone completely mad? Never under the Adidas brand. Adidas is about shoes, and swimmers don't wear any. At the receiving end of these furious tirades, Horst Dazzler retained his cool.

It didn't matter, he replied calmly. If his parents refused to launch swimwear under the Adidas brand, he would launch it under a brand called Arena. This is all these side businesses he makes, but the problem is he's taking resources away from Adidas to funnel a side business. It was an escape route that would enable him to develop his business without his family's consent. Okay, so that's what's happening at this time in the, I was going to say the Dazzler family, but both Dazzler families and the Adidas family compared to the Puma family. So let me go back to Rudolph because he's about to die, right?

So it says, unbeknownst to many other family members, Adolf and, or Adi and Rudolph had met up several times. They had, you know, at least four lengthy discussions over the years uh i think they were both in their early 70s when this was happening i wouldn't reconciliation no but they did talk uh the night of rudolph's death the chaplain i guess is from the church placed a call to to adi but adi declined across the river and embraced his brother one last time but he conveyed his forgiveness rudolph uh passed away thereafter. Now, with the death of his father, Armin, his son, could run the company as he pleased without interference from his bullying father. This marked the beginning of a remarkable run for Puma, with sales multiplying five-fold in 10 years.

Yet, Armin still couldn't measure up with his cousin Horst, who was warming his way into the most influential spheres of the sports business. This to me becomes like, you know, starts selling a promotion, sponsorship, excuse me, you know, just growing the brand. But I want to fast forward because this is the author where she's like, you know, it's a remarkable run. Yes, remarkable in the sense of like, yes, they did more in sales, but a lot of that was unprofitable growth. And so eventually Puma, it's, they, they, they sell stocks and the bank takes it over. They lose the family business.

And before I read you this part, this section, because I'm going to jump ahead of the time, and then go backwards, right? Because I'm trying to organize it by the Puma side and the Adidas side. But when I'm reading this section and you have families, it starts with two brothers fighting each other, then their family, then them fighting the descendants of each family, then internally both. Like everybody is fighting over work. And my thought was like, entrepreneurship should be a force for good. If you have a business that makes you miserable

somewhere along the line, you lost the plot. You took something, one of the greatest inventions in human history. And one of the best things that we as a species have created, and you turned it into from a huge asset for your family to a disastrous liability. So skipping ahead. When his father, this is now Armin. Armin lost control of Puma. And so it says, he crashes on the couch in a state of utter despair.

He had returned from a meeting at Deutsche Bank. The banker said that they were preparing to remove him from the company. You have lost your business, he was apparently told. This was a devastating blow for Armin, who had dedicated his life to Puma. He had weathered the humiliations inflicted by his cousin and worked relentlessly to make sure that Puma could continue to compete. It was hard for him to comprehend how anonymous bankers could take his family heirloom away from him. From them on, as his wife saw it, Armin would never be the same again. A few short later, he dies. It was no longer a family-owned business, and it seemed that the new proprietors could I want to spend the rest of the time talking about Adi. loss of his company. Put it this way, his widow said. He didn't fight.

All right, so I want to spend the rest of the time talking about Adi. We're going to go back in time. Adi's still alive. He never stopped inventing and improving, right? To the day he died. And I learned a bunch of stuff, like Muhammad Ali. Adi personally made Muhammad Ali's shoes, boots, I guess they're called boxing boots or whatever the case is. Like he'd listen to what they needed. And it was fascinating, even like he's running, you know, he owns this giant company. He's still working on an individual level to understand the needs of his customers. And Muhammad Ali was his customer. It's fabulous. And there's just one sentence in the book that just made me smile,

because it talks about the level of Adi's craftsmanship when it comes to, he built such a high quality product that communists would be forced to ignore their capitalistic origins. So it says, Adidas was of such undeniably superior quality that the east germans were prepared to turn a blind eye to its capitalistic origins that is fantastic um more about adi

well right well you know what there's something else the benefit like i don't want to spend too much time on horst because i find him in general to be a distasteful human being. But there is something, he did teach me something that, you know, another example of books at Original Links. He got really into, you know, sports marketing business, whatever you want to call it. And he introduced me to Mark McCormack. I never even heard of him before.

But he says, Horst Dazzler could not fail to observe the rise of professional sports agents. He was right about these things. Who made their money by seeking lucrative sports endorsements for for media friendly athletes so horse would do that he organized a company doing that he says the instigator of this business was mark mccormack an american lawyer who launched his agency in the 1960s on the back of a handshake with golfer arnold palmer mccormack soon turned into the rainmaker of the sports marketing business and his company, IMG, into a sprawling sports and entertainment group. So I've heard of IMG before. I wasn't familiar with McCormack. He wrote a bunch of books. I just ordered some. So he'll

probably turn up in a future episode of Founders. But I want to go back to Adi. So right before his dad dies, Horace shares with his friends or his close colleagues, whatever you want to call them, he says he shared his sadness and showed them long, bitter letters in which Adi disowned his son. So it got so bad between them that, you know, their relationship was never the same. I think right before he died, they might have, you know, reconciled somewhat, but, you know, but it's too late. So I want to talk to you more about what's fascinating to me is this level of focus Adi had that he maintained his entire life. It says, Adi continued to walk around with his notepad and to tinker in his workshop. The obsession that drove him perpetually to seek improvements for his shoes never faded. Over five decades, he registered

nearly 700 patents to his name. In his 70s, Adi Dassler continued to shy away from the honors that were bestowed upon him. When strangers turned up at his gates, hoping to catch a glimpse of Adi Dassler, he turned them away unceremoniously. This is somebody talking about something they observed. One day, he was walking his dog in the compound when someone called to the fence asking for Adi Dossler. Adi just shrugged. I don't know, he told the visitors. I'm the gardener. He clad in his three-stripe sweatpants. He tended to look the part. Adi once confessed to his friend that he didn't have a clue how many factories Adidas owned, and frankly, he didn't care.

By 1978, the company he founded in his mother's washroom employed nearly 3,000 people in Germany alone. About 180,000 pairs of three-stripe shoes were produced daily. By then, Adi had been advised to slow down. He had been gently told after a medical checkup that he should cut back on soccer and tennis, which he still regularly played. On August 18, 1978, he was felled by a stroke and passed away at the age of 78. The Dassler family followed his strict instructions to keep pompous speech makers and other intruders at bay to make sure the funeral would remain private. And I'm going to leave the story there. If you want the full story, I'd recommend reading the book, Sneaker Wars, the enemy brothers who founded Adidas and Puma and the family feud that forever changed the business of sports. If you want to read the book and support the podcast at the same

time, I have a few Amazon affiliate links. They're in the show notes on your podcast player, or you could just go to founderspodcast.com. If you buy the book using one of those links, Amazon sends me a small percentage of sale and no additional costing. Thank you very much for the support and I'll talk to you next week.