Ah, Adidas, the brand of choice for slavs across the world.
It's kind of ironic once you realize that the brand was started by a German guy named
Adolf, but hey, that's life.
What'll surprise you even more is the fact that Puma was started by the same family.
That's why, this week on Behind the Business, we'll be looking at the dramatic history
of Germany's premiere sportswear brand, Adidas.
Our story starts in the early 1920's, in the quiet Bavarian town of Herzogenaurach.
The town was a shoemaker's delight, and many of its former textile mills had been
converted into shoe workshops.
In fact, out of the town's 3500 residents, there were 112 cobblers.
One of them was 20-year-old Adolf "Adi" Dassler, the poor son of a shoemaker and a
laundry worker.
His family was too poor to give him a formal education and so he had to follow in his father's
footsteps by making shoes.
The years after World War 1, however, were some of the harshest in recent memory, and
it was hard to make a living as a cobbler.
Adi couldn't even afford a dedicated working area, and so had to do his business from the
back of his mother's laundry.
Electricity was so unreliable that Adi had to power his machines by hooking them up to
his bike and pedalling.
The materials for the shoes themselves were also expensive.
To make ends meet, Adi had to scavenge leftover military equipment from the war.
He repurposed everything he could get his hands on, from military uniforms to sacks
and vehicle tires.
Adi's first products were bedroom slippers, with rubber soles made from tires.
As an ardent sports fan, however, Adi had always wanted to make sporting shoes.
He experimented by adding small metal cleats and spikes to his footwear in the hopes of
creating something sports-worthy.
Just as Adi was starting to making a name for himself, he was joined by his brother
Rudolf in 1924.
Rudolf was two years older and had formal education, which made him the star of the
family.
He was also more experienced, having previously worked at a porcelain factory and a leather
enterprise in Nuremberg.
Rudolf was a charismatic, extroverted salesperson who was very successful in making good deals
and getting customers.
The two Dassler brothers made great partners and together they started a joint enterprise
called "die Gebrüder Dassler Schuhfabrik".
With Adi handling production and Rudi doing the marketing, their business became very
efficient.
By 1926, their sports shoes had become popular enough to allow the Dasslers to finally move
out of their mother's laundry and to build an actual workshop.
Adi and Rudolf's father joined them at this new location and together with about a dozen
other employees, the brothers were now capable of producing up to 100 pairs of shoes every
day.
Adi was eager to expand beyond Bavaria, and to this end he took it upon himself to visit
every major sporting event he could find to get athletes to try out his footwear.
His efforts paid off and in the 1928 Olympics in Amsterdam, Dassler shoes graced the feet
of many top German athletes.
Adi's shoes appeared again in the 1932 Olympics in Los Angeles, this time worn by sprinter
Arthur Jonath.
Arthur managed to win several medals, proving that the Dassler's shoes were worthy of
even the best athletes.
This Olympic success gave the brand great recognition, and so Adi decided that, for
the 1936 Olympics, he'd want to sponsor nothing less than a gold-medalist.
Adi packed his best shoes and personally drove to the Olympic Village in Berlin, where he
talked to the American runner Jesse Owens a few days before the Olympics.
It's a mystery how, but Adi managed to convince Owens to wear his shoes in the competition.
When Owens ended up winning four gold medals, Adi was beyond ecstatic.
The Dassler brand continued its stellar performance in the 1930s, and to gain the government's
support Adi and Rudolf ended up joining the Nazi Party.
Unfortunately for them though, that other Adolf decided to invade Poland, and once the
war got underway demand for civilian goods plummeted.
By December 1943 Germany was starting to lose on the Eastern Front and in desperation it
began repurposing the few civilian enterprises left, among which was the Dassler business.
Their shoe factory ended up producing anti-tank weapons - the much feared "panzerschrecks".
In April 1945, however, Herzogenaurach received a healthy dose of liberty in the form of the
advancing American troops.
The Americans initially wanted to destroy the Dassler factory, but Adi's wife somehow
managed to convince the soldiers that they actually just wanted to make shoes.
Eventually, the Americans stationed near the town became one of the company's first international
clients, especially once they heard of Dassler's link to Jesse Owens.
Despite their business surviving relatively intact, World War 2 devastated the German
economy and the Dasslers had to go back to scavenging old war materials.
Sometimes workers didn't even get paid in currency, but rather through barter with items
like firewood or yarn.
Most serious of all, however, was the immense personal schism that ocurred between Adi and
Rudolf.
While the exact reason for their falling out remains a mystery, the most prominent theory
is that Rudolf thought Adi had informed on him during the war, which eventually landed
Rudolf in an Allied POW camp for several years.
Whatever the cause, World War 2 ended up causing irreversible damage to the Dasslers' relationship
and in 1948 Rudolf left the family business.
He took a large part of the workforce with him, and assumed control of what was supposed
to be a new factory building.
Thus, he founded Puma and vowed to never speak to Adi again.
The rivalry spread to the town itself, and to this day citizens of Herzogenaurach are
known as "Bent Necks" for their tendency to crane their necks to look at what shoes
other people are wearing.
The supporters of the two brands became very territorial, since each enterprise was situated
on opposite sides of the river.
Depending on their allegiance, workers claimed various bars, restaurants, and even schools.
Adi renamed his share of the enterprise to Adidas and focused on technical innovations
and sponsorships.
He would end up revolutionizing shoe designs for a variety of sports while giving away
his best creations to star athletes and Olympians.
Adidas made their big break in the US during the 1950's, and over time their fame trickled
down from professional sports into everyday life.
Puma was also doing well, but the Dassler brothers continued to hate each other with
a passion.
Their feud would haunt them to their graves, and today each brother is buried at an opposite
side of the Herzogenaurach cemetery.
Adi died in 1978, and that's when Adidas finally started to lose some of its steam.
They lost ground in North America to upstarts like Nike and Reebok, and in 1989 they were
forced into bankruptcy after losing nearly $80 million.
Ownership of the company passed through several French businessmen until 1993, when Robert
Louis-Dreyfus managed to restore the brand by moving production to Asia.
Under his guidance, Adidas staged a dramatic reappearance in the US in the late 1990's,
despite stiff competition.
Since then, their sales have been steadily rising and they've acquired several other
brands, most notably Reebok in 2005.
Recently they've taken notice of the growing role of technology in sports and in 2015 they
made a landmark acquisition by buying the fitness tech company Runtastic for $240 million.
Despite the fair amount of twists and turns in their rise to fortune, Adidas has definitely
secured its place as one of the great German enterprises of the modern age.
Thanks for watching and a big thank you to all our supporters on Patreon.
If you want to vote on which company we do next or if you'd like early access to our
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follow.
In case you missed it it, do check out our previous video on the history of the Trump
family business, from its origin in rural Germany to its rise as a billion dollar real
estate empire.
You can also check out the full Behind the Business playlist, in case you'd like to
see some of our older videos.
Once again, thanks a lot for watching, and as always: stay smart.
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