Josh Luber The secret sneaker market and why it maters.

Summary

The Air Jordan 3 Black Cement is hailed as a pivotal sneaker in history, launching in 1988 and revolutionizing Nike's marketing. This sneaker not only propelled the Air Jordan brand but also became a cultural icon, influencing future online commerce. The script delves into the sneaker's re-releases, celebrity endorsements, and its role in the $1.2 billion resale market. It highlights the passion of sneakerheads, the data behind the market, and the potential for a regulated 'stock market of things,' where sneakers and other collectibles could be traded like stocks, offering a new dimension to investment and commerce.

Takeaways

• 👟 The Air Jordan 3 Black Cement is considered a pivotal sneaker in history, having a significant impact on Nike's marketing and the sneaker industry as a whole.
• 📈 The sneaker resale market is a $1.2 billion industry, with over 9 million pairs resold in the United States alone in the past 12 months.
• 🌟 Celebrities and collectors alike contribute to the popularity and demand for limited edition sneakers, driving up the resale value.
• 📊 Data analytics play a crucial role in the sneaker market, with platforms analyzing millions of transactions to provide insights into the market's trends.
• 💰 Sneakerheads can track the value of their collections over time, similar to how one would with a stock portfolio, indicating the investment potential of sneakers.
• 🚀 Nike dominates the secondary market, accounting for 96% of all shoes sold, highlighting the brand's influence and control over the market.
• 🔑 Limited supply and distribution strategies are key to Nike's success, creating hype and driving up the value of their sneakers in the resale market.
• 🚨 The unregulated nature of the sneaker resale market can lead to issues with authenticity and price transparency, similar to the challenges faced in the stock market.
• 🌐 The idea of a 'stock market for things' is introduced, suggesting a more regulated and efficient way to buy and sell sneakers and other collectibles.
• 💡 The sneaker market serves as a unique investment opportunity, especially for younger generations who cannot participate in the traditional stock market.

Q & A

What is the significance of the Air Jordan 3 Black Cement in sneaker history?

The Air Jordan 3 Black Cement is considered one of the most important sneakers in history because it was the shoe that started Nike's marketing as we know it, propelled the entire Air Jordan lineage, and possibly saved Nike.

How often has the Air Jordan 3 Black Cement been re-released, and what is the typical response to its release?

The Air Jordan 3 Black Cement has been re-released four times. Each release typically sees the sneakers selling out globally within minutes, with people often camping outside of sneaker stores days before the release.

What is the role of sneakerheads in the sneaker market?

Sneakerheads are a crucial demographic in the sneaker market. They are the tastemakers who drive the hype, marketing, and PR, which in turn helps Nike sell millions of sneakers to a broader audience.

What is the size of the resale sneaker market, and how does it compare to the retail market?

The resale sneaker market is estimated to be worth 1.2 billion dollars, while in the past 12 months, Skechers, the number two footwear brand, had a net income of 209 million dollars, indicating the significant profit made by sneakerheads in the resale market.

How does Nike control the supply and demand dynamics in the sneaker market?

Nike controls the supply and demand dynamics by using limited releases of sneakers and strategic distribution, creating hype and scarcity that drive up the value and desirability of their products.

What is the percentage of Nike's dominance in the secondary sneaker market?

Nike, including the Jordan brand, accounts for 96% of all shoes sold on the secondary market, indicating near complete domination.

How much profit did sneakerheads make selling Nike sneakers in the secondary market last year?

Sneakerheads made approximately 380 million dollars selling Nike sneakers in the secondary market last year.

What is the comparison between the sneaker resale market and the stock market?

The sneaker resale market is unregulated and operates on supply and demand, with no central exchange, unlike the stock market. It thrives on the street and online, with transactions happening in various places, including online platforms and physical stores.

What is the potential for a 'stock market of things' as proposed in the script?

The potential for a 'stock market of things' is to create a more efficient, transparent, and regulated market for buying and selling not just sneakers, but also other collectibles and seasonal items, similar to how stocks are traded on the stock market.

How does the script suggest sneakers could be a democratized investment opportunity?

The script suggests that sneakers could be a democratized investment opportunity because they are accessible to a wide range of people, unlike the stock market which requires a minimum age and financial resources. Sneakers provide a tangible and potentially profitable investment for many.

What is the potential return on investment for sneakers like the Air Jordan 3 Black Cement over time?

The script implies that there is a significant potential return on investment for sneakers like the Air Jordan 3 Black Cement, with the example given that investing in them in 2011 could have doubled the money, outperforming the S&P 500 and Apple's stock growth.

Outlines

00:00

👟 The Impact and Resale Market of Air Jordan 3 Black Cement

The first paragraph discusses the significance of the Air Jordan 3 Black Cement sneaker, highlighting its historical importance since its initial release in 1988. It emphasizes the sneaker's role in shaping Nike's marketing strategies and its impact on the sneaker industry. The paragraph also touches on the sneaker's multiple re-releases and its popularity among celebrities and collectors. It delves into the resale market, mentioning the 2011 re-release's rapid sell-out and the subsequent resale on platforms like eBay at inflated prices. The speaker, a self-proclaimed sneakerhead and strategy consultant, shares insights into the sneaker market's size and the community's passion, leading to the development of a data-driven price guide and analytics platform for sneakers.

05:02

📈 Comparing Sneakers to Stocks and the Role of Nike

The second paragraph draws parallels between the sneaker market and the stock market, focusing on the investment opportunities that sneakers present, especially for younger individuals. It discusses the unregulated nature of the sneaker resale market and the potential risks associated with it, such as violence over coveted releases. The speaker then zeroes in on Nike's dominance in the secondary market, with a 96% share, and how the company's strategy of limited releases and controlled distribution fuels the market. The paragraph also touches on the idea that the resale market is an artificial construct created by Nike to sell more shoes and build brand loyalty, with sneakerheads acting as both consumers and marketers.

10:03

🌐 The Vision for a Regulated Marketplace for Sneakers and Beyond

In the final paragraph, the speaker envisions a regulated marketplace for sneakers, akin to a stock exchange, to bring efficiency, transparency, and authenticity to the buying process. The idea is to create a centralized platform where sneakers, along with other collectibles and marked-down items, can be traded like stocks, with options for complex financial transactions. The speaker argues that such a market could democratize access to investment opportunities and provide a more sophisticated way to engage with the sneaker economy. The paragraph concludes with a hypothetical scenario where investing in sneakers could yield significant returns, drawing a comparison to the potential gains from investing in the stock market.

Keywords

💡Air Jordan 3 Black Cement

The Air Jordan 3 Black Cement is a highly coveted sneaker model that was first released in 1988. It is considered a milestone in sneaker history, credited with propelling the Air Jordan brand and Nike's marketing strategy as we know it today. The video emphasizes its cultural significance, comparing its impact to that of the iPhone in the smartphone industry. The sneaker's re-releases have consistently been met with frenzied consumer demand, exemplifying the power of branding and the emotional connection consumers have with iconic products.

💡Sneakerheads

Sneakerheads are individuals who are passionate about collecting sneakers, often driven by the cultural significance, design, or rarity of the shoes. In the video, sneakerheads are portrayed as a crucial demographic for brands like Nike, acting as tastemakers and influencers within the sneaker community. Their enthusiasm and investment in limited-edition sneakers contribute to the hype and secondary market value, making them an essential part of the sneaker economy.

💡Resale Market

The resale market in the script refers to the secondary trading of sneakers, where limited-edition or highly sought-after models are bought and sold at prices often significantly higher than their retail value. This market is driven by supply and demand dynamics, with sneakerheads often reselling pairs for profit. The video highlights the substantial size of this market, estimating it at $1.2 billion within the United States alone, underscoring the economic impact of the sneaker culture.

💡Supply and Demand

Supply and demand is a fundamental economic concept that influences the price of goods. In the context of the video, Nike is praised for its mastery of creating limited-supply sneakers, which in turn drives up demand and prices in the resale market. This strategy not only boosts the brand's appeal but also creates a lucrative secondary market for sneaker collectors and resellers.

💡Data-Driven Market

The video discusses the importance of data in understanding and predicting trends within the sneaker market. The speaker shares their experience of analyzing millions of transactions to provide real-time analytics on sneaker values. This data-driven approach allows for a more informed understanding of the market, enabling sneakerheads to make strategic decisions about their collections and investments.

💡Investment Opportunity

Sneakers are presented in the video as an alternative investment opportunity, with the potential for significant returns on investment. The analogy is made to the stock market, suggesting that sneakers can be bought and sold like stocks, with the possibility of profiting from price fluctuations. This perspective frames sneaker collecting as not just a hobby but a serious financial endeavor.

💡Nike's Marketing Strategy

Nike's marketing strategy is a central theme in the video, with the company's ability to create hype and demand for its sneakers being key to its success. The video suggests that Nike's control over the supply and distribution of limited-edition sneakers is a deliberate strategy to maintain high demand and resale value, which in turn fuels the broader sneaker market and Nike's retail sales.

💡Authenticity

Authenticity in the context of the video refers to the genuineness of sneakers in the resale market. With the unregulated nature of the market, there is a risk of counterfeit products being sold. The video implies that a more regulated or centralized market could help ensure the authenticity of sneakers, protecting consumers and maintaining the integrity of the market.

💡Stock Market of Things

The concept of a 'Stock Market of Things' is introduced as a potential future for the resale market, where items like sneakers, watches, and other collectibles could be bought and sold in a more regulated and efficient manner, similar to financial markets. This idea suggests a shift towards treating consumer goods as investable assets, with the potential for increased transparency and financial innovation.

💡Hype and PR

Hype and public relations (PR) are mentioned as critical components of Nike's marketing strategy and the sneaker culture at large. The video describes how the anticipation and excitement surrounding new sneaker releases are carefully cultivated through marketing and PR efforts, creating a sense of urgency and exclusivity that drives consumer behavior and market dynamics.

Highlights

The Air Jordan 3 Black Cement is considered one of the most important sneakers in history, first released in 1988.

This sneaker marked the beginning of Nike's modern marketing strategy and helped to save the company.

The Air Jordan 3 Black Cement has been re-released four times and is sought after by celebrities and collectors.

In 2011, the last release of the Jordan 3 Black Cement sold out globally within minutes, with people camping outside stores days in advance.

The resale market for sneakers is a $1.2 billion industry, with over 9 million pairs resold in the US in the past 12 months.

Sneakerheads, or sneaker collectors, are a crucial demographic for brands, acting as tastemakers and influencers.

The speaker, a self-proclaimed sneakerhead, has started three companies and works as a strategy consultant with a focus on sneaker data.

The goal is to develop a price guide using real data to provide a data-driven view of the sneaker market.

Analyzing over 25 million transactions, the speaker provides real-time analytics on thousands of sneakers.

Sneakerheads can track the value of their collection over time, similar to an online brokerage account for stocks.

The resale market is dominated by Nike, which accounts for 96% of all shoes sold on the secondary market.

Sneakerheads made $380 million in profit selling Nikes on the secondary market last year.

Nike uses limited supply and strategic distribution to control the sneaker market and drive demand.

The sneaker market operates on supply and demand, with Nike creating an artificial commodities market.

Sneakerheads drive marketing, hype, PR, and brand cachet, enabling Nike to sell millions of sneakers.

Nike could kill the resale market by releasing more shoes, but it's not in their best interest to do so.

The speaker envisions a stock market for merchandise, where sneakers and other collectibles could be bought and sold like stocks.

Investing in sneakers could offer significant returns, as illustrated by the potential investment in Air Jordan 3 Black Cement.

Transcripts

this is the air jordan 3 black cement

this might be the most important sneaker

in history first released in 1988 this

is the shoe that started Nike marketing

as we know it this is the shoe that

propelled the entire Air Jordan lineage

and perhaps saved nike the air jordan 3

black cement did for sneakers what the

iphone did for phones it's been

re-released four times every celebrity

has been seeing wearing it there's a

site about what to wear with the black

cement it's been right under your nose

for decades and you never look down and

right about now most of you are probably

thinking sneakers yes yes sneakers some

extraordinary things about sneakers and

data and Nike and how they're all

related possibly to the future of all

online commerce in 2011 the last time

that Jordan three black sim are released

at a retail of 160 dollars it sold out

globally in minutes and that's because

people were camped outside of sneaker

stores four days before it went on sale

and just minutes after that thousands of

those pairs were an ebay for two and

three times retail in fact there's over

a thousand pairs on ebay right now four

years later and here's the thing this

happens every single Saturday every week

there's another release or two or three

and every shoe has a story as rich and

compelling as the Jordan three black

cement this is Nike building the

marketplace for sneakerheads people who

collect sneakers and my daughter it's an

I love dad t-shirt for the brand's

sneaker heads are a very important

demographic these are the tastemakers

these are the Apple fanboys because who

else is going to buy a pair of eight

thousand dollar back to the future

sneakers

yeah eight thousand dollars and while

that's obviously the anomaly the resale

sneaker market is definitely not 30

years in the making what started as an

underground culture of a few people who

like sneakers just a bit too much now we

have sneaker addictions and a market

were in the past 12 months there have

been over 9 million pairs of shoes

resoled in the united states alone at a

value of 1.2 billion dollars and that's

a conservative estimate I should know I

am a sneakerhead this is my collection

in the pantheon of great collections

mine doesn't even register I haven't got

250 pairs but trust me I in small time

people have thousands I'm a very typical

37 year old sneaker head I grew up

playing basketball Michael Jordan played

I always wanted air jordans my mother

never buy near Jordans as soon as I got

some money i bought air jordan literally

we all have the exact same story but

here's her mind diverged after starting

three companies i took a job as a

strategy consultant why very quickly

realized that i didn't know the first

thing about data but i learned because i

had to and i liked it so I thought I

wonder if I get all different sneaker

data just to play with from my own

amusement the goal was develop a price

guide a real data-driven view of the

market and four years later we're

analyzing over 25 million transactions

providing real-time analytics on

thousands of sneakers now sneakerheads

check prices while camping out for

releases others have used the data to

validate insurance claims and the top

investment banks in the world now use

resell data to analyze the retail

footwear industry and here's the best

part sneakerheads have sneaker

portfolios

sneakerheads can track the value of

their collection over time compared to

others and have accessed the same

analytics you might your online

brokerage account so sneakerhead Dan

bills his collection and identifies

which 352 are his he can see it's worth

100 $3,000 frankly a modest collection

at the asset level he can see gain loss

by shoe here he's made over six hundred

dollars on one pair I have one of those

so an unregulated 1.2 billion dollar

industry that thrives as much on the

street as it does online and his spawn

fundamental financial services for

sneakers at some point I asked myself

what's really going on in the market and

to comparison started to emerge our

sneakers more like stocks or drugs in

fact one guy emailed to say he thought

his 15 year old son was selling drugs

and later found out he was selling

sneakers and now they use the data to do

it together and that's because sneakers

are an investment opportunity would none

other exists and I don't just mean the

kid selling sneakers headed drugs how

about all kids you have to be 18 to play

the stock market I sold chewing gum in

sixth grade blow pops in ninth grade and

collected baseball cards through high

school but cards are long dead and the

candy market is usually quite local for

a lot of people sneakers no illegal and

accessible investment opportunity a

democratized stock market but also

unregulated which is why the story

you're probably most familiar with is

people killing each other for sneakers

and while that definitely happens and is

tragic it's not near the epidemic some

media would have you believe in fact

it's a very small piece of a much bigger

and better story so sneakers have clear

similarities to both the stock exchange

and the illegal drug trade but perhaps

the most fundamental is the existence of

a central actor someone is making the

rules in the case of sneakers

that someone is Nike let me walk you

through some numbers the resale market

we know is 1.2 billion Nike including

jordan brand accounts for ninety six

percent of all shoes sold on the

secondary market just complete

domination sneakerheads love jordan's

and profit on the secondary market is

about a third that means that sneaker

heads made 380 million dollars selling

Nikes last year let's jump to retail for

a second skechers earlier this year

became the number two footwear brand in

the country surpassing adidas this was a

big deal and in the 12 months ending

june skechers net income was 209 million

dollars that means that Nikes customers

make almost twice as much profit as

their closest competitor that how is

that even possible the sneaker market is

just supply and demand but Nike has

gotten very good at using Supply limited

sneakers and the distribution of those

sneakers to their own benefit so it's

really just supply sneakerheads joke as

long as it's limited and Nike they'll

buy it shoes itself for eight thousand

dollars do so because they're very rare

it's no different than any other

collectible market only this isn't a

market at all it's a false construct

created by Nike ingeniously created by

Nike and the most positive sense to sell

more shoes and in the process has

provided tens of thousands of people

with lifelong passions myself included

if Nike wanted to kill the resale market

they could do so tomorrow all they have

to do is release more shoes but we

certainly don't want them to nor is it

in their best interest that's because

unlike Apple who will sell an iphone to

anyone who wants one nike doesn't make

their money by just selling two hundred

our sneakers they sell millions of shoes

to millions of people for 16 hours and

sneaker heads are the ones that drive

the marketing and the hype and the PR

and the brand cachet and enable Nike to

sell millions

$60 sneakers it's marketing its

marketing the likes of which has never

been seen before this isn't in any

textbook for 15 years Nike has propped

up an artificial commodities market with

a Facebook level hyped IPO every single

weekend try by any foot lacquered 8 a.m.

on a saturday morning and there will be

a line down the street and around the

block and sometimes those kids been

waiting there all week you know those

crazy i phone lines you see on the news

every other year nike lions happen 104

times more often so nike sets the rules

and it do so by controlling supply and

distribution but once a pair leaves a

retail channel it's the Wild West there

are very few if any legal unregulated

markets of this size so Nike is

definitely not the stock exchange in

fact there is no central exchange by

last count there are 48 different online

markets that I know of summer ebay

clones summer mobile markets and then

you have consignment shops in

brick-and-mortar stores and secret

conventions and reseller sites and

Facebook and Instagram and Twitter and

literally anywhere sneakerheads come

into contact with each other shoes will

be bought and sold but that means no

efficiencies no transparency sometimes

not even authenticity can you imagine if

that's how stocks for blood what if the

way to buy a share of apple stock was to

search over 100 places online and off

including every time you walk down the

street just hoping that past someone

wearing some apple stuff never knowing

who had the best price or even if the

stock you were looking at was real that

would surely make you say of course

that's not how we buy stock but what if

that's not how we to buy sneakers either

what if the inverse is true and what if

we could buy sneakers exactly the same

way as we buy stock and what if it

wasn't just sneakers to us any similar

product like watches and handbags and

women's shoes and any collectible any

seasonal item and any marked down item

what if there was a stock market for

merce a stock market of things and not

only could you buy in a much more

educated and efficient manner but you

can engage in all the sophisticated

financial transactions you can with the

stock market shorts and options and

futures and well maybe you see where

this is going maybe you want to invest

in a stock market of things because if

you had invested in a pair of air jordan

3 black cement in 2011 you could either

be wearing them on stage where Vern 162

percent on your money double the SP and

twenty percent more than apple and

that's why we're talking about sneakers

thank you