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On Wednesday, October 22, Tesla released its third-quarter earnings with a side of begging from CEO Elon Musk. The report and subsequent investors’ call was pretty standard. Tesla announced $28.1 billion in revenue, a 12% increase year-over-year (YOY) from $25.2 billion. A majority of Teslas revenue came, unsurprisingly, from automotive sales, which grew 6% YOY to $21.2 billion. Quarter three was the last push for U.S. customers to buy Tesla vehicles before the federal EV tax credit expired. However, it wasnt enough. Tesla failed to meet Wall Streets predicted $26.4 billion in total revenue, according to consensus estimates cited by CNBC. Its reported earnings per share also failed to make the mark, reaching 50 cents adjusted instead of the estimated 54 cents. Teslas net income fell 37% YOY to $1.37 billion and its operating income dropped 40% to $1.6 billion. The company blamed the latter on greater operating expensesdue to AI and other R&D projectsalong with increased deliveries and each vehicle costing more overall, thanks to factors like higher tariffs. Tesla shares (Nasdaq:TSLA) were down roughly 4% in premarket trading on Thursday. The stock price is up 15.74% year to date, slightly underperforming the Nasdaq Composite’s growth of 17.94%. Musk wants more control as he focuses on robots AI was one of the main topics of conversation in Teslas earnings call, while Musk also focused on robotaxis and his plan for Optimus humanoid robots. The call ended with a plea from Musk and CFO Vaibhav Taneja. On November 6, investors will vote on a $1 trillion compensation package for Muskwhich would be contingent on the company hitting certain milestones. Notably, the extra income would be in the form of Tesla shares, providing Musk with greater control over the company. “[There] needs to be enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane,” Musk said. He then took aim at proxy firms Institutional Shareholder Services (ISS) and Glass Lewis, both of which are encouraging investors to vote against the new package. I just don’t feel comfortable building a robot army here and then being ousted because of some recommendations from ISS and Glass Lewis, who have no freaking clue, Musk stated. I mean, those guys are corporate terrorists.
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E-Commerce
In the midst of a federal government shutdown, the U.S. government’s gross national debt surpassed $38 trillion Wednesday, a record number that highlights the accelerating accumulation of debt on America’s balance sheet.It’s also the fastest accumulation of a trillion dollars in debt outside of the COVID-19 pandemic the U.S. hit $37 trillion in gross national debt in August this year.The $38 trillion update is found in the latest Treasury Department report, which logs the nation’s daily finances.Kent Smetters of the University of Pennsylvania’s Penn Wharton Budget Model, who served in President George W. Bush’s Treasury Department, told The Associated Press that a growing debt load over time leads ultimately to higher inflation, eroding Americans’ purchasing power.The Government Accountability Office outlines some of the impacts of rising government debt on Americans including higher borrowing costs for things like mortgages and cars, lower wages from businesses having less money available to invest, and more expensive goods and services.“I think a lot of people want to know that their kids and grandkids are going to be in good, decent shape in the future that they will be able to afford a house,” Smetters said. “That additional inflation compounds” and erodes consumers’ purchasing power, he said, making it less possible for future generations to achieve home ownership goals.The Trump administration says its policies are helping to slow government spending and will shrink the nation’s massive deficit. A new analysis by Treasury Department officials states that from April to September, the cumulative deficit totaled $468 billion. In a post on X Wednesday, Treasury Secretary Scott Bessent said that’s the lowest reading since 2019.“During his first eight months in office, President Trump has reduced the deficit by $350 billion compared to the same period in 2024 by cutting spending and boosting revenue,” White House spokesman Kush Desai said in a statement, adding that the administration would pursue robust economic growth, lower inflation, tariff revenue, lower borrowing costs and cuts to waste, fraud and abuse.The Joint Economic Committee estimates that the total national debt has grown by $69,713.82 per second for the past year.Michael Peterson, chair and CEO of the Peter G. Peterson Foundation, said in a statement that “reaching $38 trillion in debt during a government shutdown is the latest troubling sign that lawmakers are not meeting their basic fiscal duties.”“Along with increasing debt, you get higher interest costs, which are now the fastest growing part of the budget,” Peterson added. “We spent $4 trillion on interest over the last decade, but will spend $14 trillion in the next ten years. Interest costs crowd out important public and private investments in our future, harming the economy for every American.”The U.S. hit $34 trillion in debt in January 2024, $35 trillion in July 2024 and $36 trillion in November 2024. Fatima Hussein, Associated Press
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E-Commerce
Theres not a more fairy-tale story in business. Nike CEO Elliott Hill began as an intern. Worked about every job imaginable at the company. Was passed up as a fave for the CEO role in 2020 when John Donahoe was brought in from Bain. And then, finding himself retired, and charter member of a silver fox baseball league in Austin, the swoosh boomeranged in from the clouds and Hill hitched a ride back to Beaverton. Now, after a year at the helm, Hills still dealing with Nikes COVID hangover, brought about (at least in part) by Donahoe, who bolstered profits by selling waves of retro sneakers to people at home, all while reorganizing the core innovation team structure that had made Nike successful for decades. When Hill showed up in 2024, Nike revenue was down 10% yoy. This year, its down 9.8%, and Trumps tariffs took a $1.5 billion bite out of Nikes net profits. One point five billion, fires off Hills tongue as we sit together in the swank office at the top of Nikes Lebron James Innovation Center in Beaverton, ORa number I dont feel a need to say aloud thats clearly been imprinted in his psyche. Following a year of Hills media quarantine, I was invited alongside a small group of global journalists to get a peek at what Hill has up his sleeveand let me be honest in admitting that it felt a little strange to be back so soon. I was just at Nike in March 2024 profiling Donahoes swansong when I wrote our Spring cover story. The campus was a little dead back then; and more than one executive seemed to be biting their tongue. Keep in mind, most of Nike leadership is a collection of people whove been there for decades (often 20 and 30 years). They have an earned ownership of Nikes POV, like a family sharing kitchen cabinets. And I dont think its just the endless buffets of salmon and vegan lox Nike plowed on the press talking: Campus did feel more energized. Interviews felt less guarded. But more so, Nikes new product lines are genuinely more exciting than about anything thats come out of Nike for years. Nike didnt invite us here for a casual photo opp; it is quite intentionally seeding its own turnaround narrative. The company has something to prove to fans and shareholders alikenamely, that it can still innovate. But its making a strong case that it can. From its Project Amplify exoskeleton-in-a-shoe, to Nike Mind brain-hacking footwear, to a new inflatable jacket called Project Milano, to recycled fabrics known as Aero-FIT that are 2x more breathable, every big new idea out of Nike looks more promising than another Dunk colorway. Here are my four big takeaways on what is going on at Nike, and where the company is going next. [Photo: Nike] Elliott Hill seems like the guy for this moment Elliott Hills job is to get Nike growing again. (And you can read my full Q&A with Hill here.) But as Hill put it to me, not all one percents of revenue are created equal. And accomplishing just 1% growth for Nike, which is $500,000,000 by the way, means it has to essentially launch the equivalent of a new company every year. Will Nikes onslaught of new innovation help achieve this revenue growth? On that he hedges a bit. The lowest hanging fruit is still simply spreading the Nike gospel farther across the world. (Thats my sacrilege not his.) Elliott Hill [Photo: Nike] Sport exists in every country, and we’re doing business in almost 190 countries. And . . . we’re not meeting our full potential in some of these countries, says Hill, citing southeast Asia and Malaysia in particular. We have tremendous opportunity to still grow there, when we run our offense. Keep in mind Hills earliest duties at the company involved hopping on the phone and pitching Nike products to shops, building its retailer network. The same network that Donahoe torched thousands of small retailer relationships by pivoting the company to direct-to-consumer. Hills job has been a lot like the task ahead of whichever president follows Trumpreinstituting dismantled systems just to get the machine running again. Hill has been repairing retailer relationships. Hes relaunched marketing under Just Do It. And hes also rewound the entire innovation engine of the company back to its old structure. Donahoe blew up about 40 years of Nike hierarchies when he reorganized all product development under Mens, Womens, and Kids. Hill put these teams back into sports like running and basketball. Look, I talked to Hill for all of 17 minutes. He really feels like some platonic ideal of a Nike executive, with a penchant for slapping you in the knee when he makes a point. Theres a sort of wake up, stay focused energy to him. Execs on Hills payroll have called him more trusting and unflinchingly supportive. Ive gotten to meet, and re-meet, a lot of Nike execs and designers over the last decade. And truly, they all have a new bounce in their step. But I also appreciated how Jannett Nichol, a 32-year Nike veteran who is VP, Apparel & Advanced Digital Creation Studio Innovation, threw lukearm water on my question: Was all of the new product I was seeing the result of Hill taking charge with a more aggressive innovation strategy? I mean, I think Elliot coming on has been fantastic. There’s no denying what he brings to the company . . . he’s always been that personality type, she says. But the work was in flight. And it was going to happen, whether it was Elliot or not. [Photo: Nike] The truth Nike wont tell you: Its a wellness company One of Hills best decisions was promoting Matt Nurse to become Nikes chief science officer. Nurse is a researcher who runs Nikes big athlete testing facility, the Nike Sports Research Lab. (For some reason, whenever Im there, Nike has hired these fitness models to demonstrate sports, and the soccer players, seemingly carved from marble, always have their shirts off. Doesnt Nike sell shirts? NIKE DO YOU NEED ME TO LEND YOU A SHIRT?!?) Anyway, Nurse has always seen Nike as something more than shoes. And thats important for Nike. Sneakers are increasingly commoditized. Even Nikes marathon-busting Vaporfly shoes were quickly copied by the entire footwear industry. Nurse has to juggle a somewhat complicated narrative that underlies Nike. They are inspired by the elite athlete, and their dialogues with these superhumans is intimate and ongoingas evidenced when chief innovation officer Tony Bignell swiped through his own text message thread with Eliud Kipchoge to pull up a picture. But their other message is that, um, also, well if you have a body youre an athlete! Nikes marketing and business model has a lot of ways to grow in this regard, and I think Nurses team sits at the fulcrum in making that work. [Photo: Nike] One of Nurses pet projects is the launch of Nike Mind, two new neurophysiological shoes that poke into your feet to measurably calm down your brain. I compare Nike Mind to Nintendos Brain Age moment, when with a single app, it expanded its premise and addressable market from gamers to anyone concerned about aging. [Photo: Nike] It starts with these shoes that essentially force mindfulness by connecting pressure points on your foot to textures on the ground. 22 foam nodes stick through the outsole, angling and resonating shapes and sensations straight into your foot. Theyre funky to walk in. You can feel blades of grass, even trough socks. They increase alpha waves in your brain, just like meditation, though Nurse admits they dont reach the point of “meditation shoe. Cognitive neuroscience, and the way products and spaces measurably affect us, is the cutting edge of design right now. Two decades of worldwide academic research are just begging to be commercialized. And these Mind shoes are just a taste of what that could be as Nike neurosciences the hell out of the rest of your body. [Image: Nike] You can imagine where we’re headed, says Nurse. You start thinking about tapping into [our] sensory systems. The foot is one area . . . youve got a whole body . . . this whole canvas. He points out that we have all sorts of emotional states that we might want to activate, other than calm. Another area where Nike is inherently thinking outside sport is in its Project Amplify exoskeleton, or a robotic Achilles tendon that clips onto the back of a shoe. Cognitive neuroscience, and the way products and spaces measurably affect us, is the cutting edge of design right now. Project Amplify isnt built for Lebron. Vaporfly broke marathoning with 4% energy return. Project Amplify will offer something more like a 20% boost in energy when it debuts mid-ish next year. At launch, Nike imagines a similar market to people who bought e-bikesathletes who want to adventure further, faster. But in my opinion, so much energy amplification offers a new opportunity for Nike to shift the narrative from just being faster to being more able-bodiedsomething that will resonate with the aging population in particular. [Photo: Nike] Thats not Be Like Mike stuff! But Nike has the potential to be the first and most aggressive to democratize the exoskeleton as a slip-on shoe, or an ebike for your feet as the company is positioning it. If all Amplify does is help you hike or run another few miles, its a failure. This is a training tool. A rehab tool. A healthcare tool. A way to keep boomers (and every generation that comes after them) walking consistently and healthily through their lives, not necessarily to dunk, but to buy groceries. [Image: Nike] Nurse gets this but is treading carefully. “Maybe you just need to get around the city, he muses. We got you. It’s okay. You’re still moving. We’re going to help you. The Apple Watch is now a $17 billion business for Apple and all it does is display texts and track some health metrics. Apple found a way to appeal to athletes and people worried about a fall. Nike needs to master that same balance to grow. Quite simply: The global footwear industry is worth somewhere around $150 billion. The global wellness industry is worth $6.3 trillion. Hills revenue answer exists everywhere off the track, court, or pitch. [Photo: Nike] One of Nikes most important investments is architecture Nike has invested about $1 billion in new architecture since 2017, and following my four visits over the last 14 years, I cant begin to emphasize how important these investments were. [Photo: Nike] With apologies to buildings named after Mia Hamm and Tiger Woods, so much of HQ feels like an office park stuck in the 90s. Meanwhile four new buildingsincluding the Lebron James Innovation Center (one giant staircase, designed to look fast, where athletes sweat in rooms straight out of Dragon Ball Z and a lot of the designers work) and the Serena building (a million square feet of undulating offices with a stunning events space on the roof)are both a pleasure to be in, and bring a sense of possibility. These are modernist marvels set to a backdrop of Oregon forest. They exemplify the mix of nature and technology. Nike convincingly claims they have the best facilities to measure human performance on the planet, and they will become increasingly important as tools for Nikes teams to break out of their own silos. The Lebron building, for instance, is off limits for most Nike employees to visit, given the sensitivity of the designs inside. But Nikes new head of innovation, Tony Binell, has worked to shift development spaces up a level, and open the first flooran atrium celebrating Lebrons first 30,000 points thats ensconced by many meeting roomsto all 3,500 people on Nikes product creation teams, so that people who work on different sports can share ideas and mingle. That’s how you get some of that sharing we sort of missed because I can’t be bothered to walk across campus, you know? says Binell. But actually, [it should be like] That shoelace is cool! We could use that shoelace!’ [Photo: Nike] Nike ACG gets even hauter To grow its business, one thing Nike wants to do is expand its brandsand Hill told me hes even open to acquiring the right companies to do so. But the entire technical and trail-inspired outdoor industry, ranging from The North Face to ArcTeryx, is one of its fastest growing categories in sport, worth around $130 billion a year by Nikes estimation. And as it happens, Nike has had a very respected, slightly underground (for Nike) label called ACG that plays in this space. ACG puts out some of the most experimental, hypebeastiest drops each year. And Nike is about to put it front-and-center on the podium at the Milan Winter Olympics. (RIP EVERYONE WHO LIKED ACG AS A PERSONALITY TRAIT.) Their new Air Milano jacket reinterprets Nike Air as a haute, inflatable winter jacket. Its computationally quilted baffling catches the light in a captivating way. (Youd never know that pattern is actually an abstraction of the ACG logo.) And a handheld inflater puffs the jacket up in about 10 seconds, creating insulation on demand. This coat is wild. Absurd. Beautiful. I love it. [Image: Nike] It also feels high-end. Nike intends to relaunch ACG around this moment, making the sub brand the pinnacle expression for an athlete, with the reemergence of ACG in a new premium way, according to Nichol. “[Its the] most technical garment we’ve ever made that’s not going to space, Nichol says. In other words, its going to be expensive. Consider: this probably means that Nike is selling air for more than down. Thats a somewhat wild possibility to comprehend! The ultimate margins are likely appealing on a balance sheet. But I do also worry that if Nike stays too premium with this tech, it’ll get Sketchersed or Sheined to death before it can own the space. When I mention to Nichol that the jacket felt like it would make a great sleeping bag or tent, I asked, does stuff like that make sense for Nike? I think through the lens of ACG it fits perfectly, she says. Nike simply cannot look new while looking so old Nike hit its low point in 2023 with the release of Ben Afflecks Air. A company that was about to get trounced for doing nothing more than rereleasing old shoes gave the whole company the Argo treatment. How do you ruin Michael Jordan? By making his story look old instead of timeless. Look, Nike Air is from 1978. That shit is almost 50 years old. The last incredible, mainstream tech release was its Flyknit material in 2012. And the truth is, Nikes launched its last category-busting product almost a decade ago now, with its Alphafly shoes that returned 4% of someones stride and literally broke long distance running. This was 2017lifetimes agopre COVID and ChatGPT. And lets be very honest: In this moment of massive technological advancement, consumers are naturally developing higher expectations as to what constitutes a breakthrough. Nobody beyond the most advanced athletes are interested in 4% margins anymore. This is the moment to reinvent how we live. Nike has made billions off of its classic IPs, remixed with new colorways and design sensibilities. But its hard to see the sheer scale of modern collab culture as anything but late stage capitalism. Every designer I know is lamenting the thirst of the social/product feed. And through that lens, Nikes days of selling fancy foams feel numbered. But erase a few bad news cycles, and I challenge you to name a company more exciting than Nike right now in terms of sheer potential. Consider that Nike is a UX company that doesnt really make software, and a technology company that doesnt touch phones. It builds products for the human bodythings to make us move faster, more comfortably, and more joyfully. Im excited about Nike because slip-on exoskeletons and brain-activating apparel introduce the possibility to reshape our day-to-day lives. But most of all, Im hopeful that Nike seems to be recognizing that its potential is so much greater than what we stereotypically think of as footwear and apparelof that 1970s brown Argo filter fogging over the swoosh. Nikes new tagline, born from its EVP and chief innovation, design & product officer, Phil McCartney, is Make epic shit. The remit really is both that hard and that simple.
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E-Commerce
I don’t know how Henri Cartier-Bresson would have reacted to Leica replacing the optical viewfinder on his camera with an artificial display. Perhaps the French photographer and cofounder of Magnum Photos wouldn’t have cared one bit about it. Or maybe hea profound humanistwould have disliked the idea of it almost as much as I do. Cartier-Bresson once famously said that his Leica became the extension of [his] eye, prowling the streets all day, feeling very strung up and ready to pounce, determined to trap lifeto preserve life in the act of living. Thats a little harder to accomplish with Leicas new camera. Today, Leica is launching the M EV1. Its the first M camera with a digital viewfinder, meaning the Ms most distinct assetits beautiful optical viewfinderis no more. Henri Cartier-Bresson during the 1968 Paris riots.[Photo: Alain Nogues/Sygma/Sygma/Getty Images] What is the new Leica M EV1? Before we get to the new camera, it’s important to understand what came before. For the last seven decades, the soul of the Leica M has been its optical rangefinder viewfinder. For those not obsessed with cameras, this is a beautiful, entirely mechanical system of mirrors and prisms. When you look through it, you see the world directly, as if through a window, but with a ghostly double image in the center. To focus, you turn a ring on the lens, and this second image moves. When it perfectly overlaps with the main image, your subject is in focus. It’s a method that is precise, completely free of electronic lag, and creates a unique, unfiltered connection to the world. This system, first pioneered by Leica, made the M camera the tool that defined 20th-century photojournalism. Its compact, quiet, and discreet nature allowed photographers like Robert Capa to get closer to their subjects than ever before, capturing history as it unfolded without intrusion. The M was more than a camera; it was a philosophy of seeing, demanding a manual, deliberate approach that became synonymous with the craft of photography itself. At first glance, the M EV1 is undeniably an M. It has the same satisfying density, the same minimalist silhouette carved from magnesium and aluminum. But then you notice the changes. The front is cleaner, almost sterile, without its iconic rangefinder windows. The top plate is also different; the traditional ISO dial is gone, sacrificed to make room for the new electronic viewfinder’s housing. The camera is also noticeably lighter46 grams less than its rangefinder cousins, a direct result of removing the complex optical and mechanical guts of the rangefinder system. Inside, the M EV1 is built on the same foundation as the stellar M11 series. It uses the same 60-megapixel full-frame BSI CMOS sensor, a chip renowned for its incredible detail, 15 stops of dynamic range, and superb performance in low light. That sensor is paired with the company’s Maestro III processor. The company says that this combination makes the camera extremely responsive and quick. The camera also includes 64GB of internal memory, a practical feature for anyone who has ever filled a memory card at a critical moment. And then theres the entire raison dtre for this camera: the electronic viewfinder (EVF). It’s a high-resolution, 5.76-million-dot screen, which, according to Leicas claims, offers a “what you see is what you get” experience. It is, like I said, a fundamental departure from the rangefinder’s optical approximation. [Photo: Leica] The Eye of Sauron For the first time in an M, the photographer doesnt see real reality. It doesnt see kids crying, running from a napalm strike in Vietnam. It doesnt see Muhammad Alis fist. It doesnt see a sailor kissing a nurse in New Yorks Time Square. Or any of the photos taken with rangefinders that have arguably defined the 20th century. Út, Hoepker, or Eisenstaedt wouldnt have seen those scenes through their own eyes but through the filter of a display that, rather than reality itself, shows a direct feed from the sensor, showing exactly how the final image will look in terms of exposure, depth of field, and color. Not the world, but the final photograph. While showing me the new camera, Nathan Kellum-Pathe, Trade Marketing Product Communications manager at Leica USA, admitted that taking this step was a significant topic of discussion within the company. A decision that was ultimately justified by looking at the brand’s history and its current strategic goals. Read that as sell more cameras to a new public who want an easier-to-use experience. He also noted that there was historical precedent, as not every M had a rangefinder inside of it. He believes it is a good time to do it, pointing at the 70th anniversary of the M system as the right moment to show the market that Leica is open to changing what the M is defined by. This will likely rankle purists like myself (Im writing this under embargo, so there are no public reactions at this time). Kellum-Pathe insisted that the Leica M EV1 doesnt mean they were going to kill the traditional M. We’ve had 70 years of the M with the rangefinder, he says. “We will continue to have the M with the rangefinder. [Photo: Leica] [Image: Leica] [Photo: Leica] Kellum-Pathe points out that a digital viewfinder has practical advantages. It makes using wide-angle or telephoto lenses much easier, as the EVF shows the lens’s true field of view, unlike a traditional rangefinder, which is limited in its perspective. It also makes focusing with fast, shallow-depth-of-field lenses like Leica’s own Noctilux much simpler, thanks to digital tools like focus peaking (which highlights sharp areas in color) and magnification. Even the frame-line selector lever on the front of the camera has been repurposed into a customizable function button to toggle these aids without taking your eye from the viewfinder. And heck, for photographers who wear glasses, a built-in diopter adjustment wheel is a nice convenience compared to the screw-on lenses required for optical viewfinders. Its all really cool. But it is an artificial pixel wall between a photographers retina and the real world. A screen is a layer of interpretation of reality, no matter how technologically good it can be. It is not a keyhole to the real world, as the optical rangefinder is. The direct human connection to the moment gets lost. In the middle of this AI clusterfrak, the last thing I need is for yet another analog instrument to become digital. But I get it. According to Kellum-Pathe, this move is a direct response to customer demand. The market has asked for it for quite some time, he told me, explaining that many love the idea of the compact M body and its legendary lenses but are intimidated by the steep learning curve of the manual rangefinder system. The M EV1 is designed to be a bridge. It creates a new, third pillar in the M lineup, sitting alongside the analog and digital rangefinder models, offering an easier entry point into the Leica ecosystem, he argues. Next Gen Leica Priced at $8,995, the camera is also about $850 less than its rangefinder sibling, a price difference Kellum-Pathe is the result of eliminating the very object that forever defined the M: The complexity of the hand-assembled optical mechanics versus a digital panel. Much like cars getting rid of analog controls in the name of a money savings and alleged consumer demand, Leica is betting that this new model will attract a new generation of users without taking away from the purists who will always have the traditional M waiting for them. “For those who prefer the rangefinder experience, thats never going to go away,” he insists. Well, good. I sure hope so. And yes, of course the M EV1 will be a better camera for most people in most situations. The EVF is technically superior, more accurate, and more versatile than the 70-year-old optical rangefinder system it replaces. It makes the famously demanding process of shooting with an M camera significantly more accessible. It will probably sell like crazy (or as crazy as a $9K gadget can sell). The analog Leica M6 [Photo: Leica] But again, I just can’t shake the feeling that it misses the very essence of what makes the M the M. A magic that was never about technical perfection. It was about the direct, visceral connection between the photographer’s eye and the world, viewed through a bright, clear pane of glass. The rangefinder, with all its quirks and limitations, forces a different kind of seeing. Its an active, mental process of aligning frames and focusing patches, a collaboration between mind and machine. Its a peephole, not a television screen. Looking through the M EV1’s brilliant little display, as sharp and clear as it is, will always feel like watching a broadcast of reality rather than witnessing it. The digital aids, while useful, add another layer of interpretation, of noise, of things to distract you. I think of Robert Capa on the beaches of Normandy and his vision narrowed to a small, glowing rectangle in a digital viewfinder with the chaos raging around him. And I keep coming to the idea that, while the new Leica M EV 1 is probably a perfect digital camera, while it may look and click like a regular Leica M, it will never have, by definition, the same take a look through the magic hole and let’s see what comes at the end of this je ne sais quoi. And for sure, it will never be the extension of Cartier-Bresson or anyone else’s eye.
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E-Commerce
Elliott Hill spent his entire career at Nike. But he spent a full year as its CEO before giving his first media interview in the role. In mid-October, the company invited a select group of global journalists to Beaverton, Oregon, to see the latest in Nike innovations. We tried a slew of ambitious products that will hit the market over the next year plus: mind-altering footwear, exoskeleton sneakers, and a jacket that inflates to keep you warm. And a few of us got to speak with Hill. Hill is the third Nike CEO Ive interviewed for Fast Company. Hes not as introspective or soft-spoken as the design leader Mark Parker. Hes not as unapologetic or headstrong as the bean counter John Donahoe. Truth be told, after our brief chat, Im still wrapping my head around who he is. But something about his mannerquick speech, a lean-forward posture, and a penchant for hitting you in the knee to make a pointthat makes it hard to avoid the obvious sports metaphor. As he discusses reshaping his team and fixing Nikes culture, Hill sounds a lot like Nikes head coach. For a full tour of Nike, dont miss my deep dive on the 48 hours I spent on campus. Below are my most pressing questions since Hill took over the company last year. And if theres any single takeaway, its that Hill doesnt like talking about structure (despite deeply restructuring the company to drive innovation again). Instead, he wants to talk about wholesalers, sport, culture, expanding the brand, and the greater possibilities lying ahead, as the company works under a new mantra developed by his new chief innovation, design, and product officer, Phil McCartney: Make epic shit. The interview has been edited for length and clarity. I think this is my fourth trip to Nike over the past 13 years. I would say, though, the energy feels really good on campus right nowwhether thats staged or not! By the way, that’s not by accident, right? If I may respond to that, I know that wasn’t really a question, it was a statement. But one of the first things that I, and we as a leadership team, wanted to do was to win back the locker room. You had to get back to a strong sense of purpose and culture. Because ultimatelyand it’s not just Nike, I think it’s any businessI’m a firm believer that if you have the best strategy in place and the right structure and the processes but you don’t have the right culture, you’re not going to have the success that you expect, and certainly won’t meet your full potential. So I’m glad that you at least see it and feel it. We’ve put a lot of time, energy, and effort into it. Culture is a nebulous term. It is. It’s one of those words like love, which means a little bit too much, and it means something different to everyone you talk to. No question, it does. We’re close to 80,000 employees, which is why I think its important to try to define the type of culture that we want and expect. And we’ve spent a lot of time doing that . . . through how we communicate, through all employee meetings, through written communication, and just how you show up day to day. We have a book. I don’t know if you’ve seen our maxims; it’s what we believe in. There are five maxims. And then each of those maxims has three to four actions. What can I and we collectively do to help bring those maxims to life? And I know it sounds, again, pretty textbook, but if you live them and breathe them, it does start to come to life and help to define what you want the culture to be. And, more importantly, you start to see it come to life. I am curious about structure. You completely restructured development teams when you returned to Nike. And they look like they did before [John] Donahoe, right? It seems like it’s a rewind to that structure, which was clearly proven at Nike for a long time. Is your plan fundamentally different than that? Here’s what I would say: I’m a big believer in having clarity of purpose and strategy, and then that drives structure and processes. All of them have to work together to help deliver the type of results that we want to try to drive. And so the first thing we wanted to do is get back to strategy. Why do we exist? And our sense of purpose is that We exist to serve the athlete. It’s about inspiration and innovation. For all 8 billion consumers in the world, if you have a body, you’re an athlete. And the whole idea is, if we can invite consumers, more and more athletes, into the world of sport, fitness, and lifestyle, we grow the overall marketplace. So that really anchors in sport. Then we said, Okay, what [is] important? We’re a consumer products company. People buy stuff from us. So we have to have the most beautiful, innovative, and coveted product, first and foremost. And then weve got to tell emotional, inspiring stories. And finally, weve got to pay it off in a marketplace where consumers shop. Not everybody shops Nikedirect.com or Nike digital commerce. And so that was the fourth action. We had lost how we connected with consumers down in cities that create influence. And again, whether it was cultural icons in those cities or sports icons, we lost some of that connectivity. So those are the actions we put in place. And then you started to think, Oh, how do you do that across Mens, Womens, Kids [introduced by Donahoe], and its kind of hard to do! So we then decided, lets shift. Let’s take the $45 billion-plus of revenue, and let’s break it down by brand: Nike, Jordan, Converse. What are the sports that are most important? Let’s [have] small, cross-functional teams with a general manager who are empowered to run and move at the speed of the consumer. This is what Im sayingthats classic Nike structure, no? You organized the company by sport rather than the Mens, Womens, Kids teams that Donahoe adopted. Yeah thats classic Nike structure. But what is different is, the whole idea is it makes us more responsive with consumers and athletes, and more competitive. Let me just say, when I reported the last feature, when Donahoe was here, the criticism I heard from people internally at Nike was We left the structure that works. Its not about structure! Everybody keeps going back to it. What is it [really] about? It’s about sports. Its Nike running. Its Nike basketball. It’s Nike training. It’s Nike football, soccer. Because the consumers who play those sports are very different. There are some who cross over, but the elite consumer who runs, or the everyday runner, could be very diferent than the elite footballer, soccer player, and/or the everyday soccer player. So they want and need different things from us, from a product perspective and a storytelling perspective. And oh, by the way, the competition in both of those sports is very different as well. So being structured by sport gives you the sharpness and crispness on the athlete or consumer that we’re serving, but it also gives us a sharpness and crispness against the competitive set as well. And you empower [these teams]. You let them run. Okay, what has changed then? First of all, what I have done is flatten my organization, so I have 15 direct reports now; 11 of them are new roles. I’m really excited about the talent that we have in the roles from the experience that they bring, the depth of knowledge in the industry, people from outside the industry who joined usthat helps round us out. So Im excited about my leadership structure. The challenge that I’ve given that structure is two things: It’s pretty simple, individually and collectively. Individually, each one of us should be inspiring and aspirational. People should look up and be inspired by and aspire to be us, individually and collectively. That’s our challenge as a leadership team. What then is differentand I’ll just jump into product: We have three brand presidents, and we have one leader over innovation, design, footwear, apparel, and accessory. The craft of making product that cuts across all three brands will enable us to leverage what I believe is one of our strongest core competencies, and that’s product management. If we choose to add other brands, we can do that, so that then sets us up for the future. Once we get the machine running, generating the cash and the revenue that we all expect, it allows us then to leverage some of our core competencies for the future. You just touched on something that’s been on my mind, which is this idea of Nike being such a big brand. Wall Street or analysts can criticize Nike’s growth, but it’s a gargantuan company. It is profitable, right? And it’s touching a lot of the world all the time. I guess my my curiosity is and not all one percents of revenue are created equal! There’s a quote for you. Think about that. You know, no one really thinks about it: 1% of growth for us is $400 million to $500 million. Thats a company. We grow the size of a company annually! Scaling a company your size is daunting. You bring up this possibility of introducing different brands. I wonder if there can be a sort of monolithic brand like Nike, or even two or three others like Jordan and Converse. I feel like you need even more sub brands to reach more people. I think that might be a part of the conversation, and it’s our responsibility to set the structure up and our capabilities up, that if we choose to do that, we can do thatwe can use the balance sheet to go acquire brands if we choose to. Here’s what I would say: I still think there’s tremendous opportunity in the core of our business. I didnt even mean acquire. I meant spin off. Of course. Spin off and create. And we have some that we’re already starting to see, Nike ACG being one of them, going after the outdoor industry that I think is roughly $130 billion total addressable market, going at it through trail. Very unique Nike way and point of view. Skims is another interesting opportunity. But even beyond that, we believe there’s tremendous growth still in the core. Because if you think about sport, it exists in every country, and we’re doing business in almost 190 countries. When we get down to countries, we’re not meeting our full potential. In some of these countries, we haven’t been able to make the investments that we believe we need to make to inspire and attract the consumers in those countries as a truly global company. I could go through the list: Southeast Asia is a tremendous opportunity for us. Pick a country there, whether Malaysia, Indoyou pick it. We have tremendous opportunity to still grow there, when we run our offense, and we’re still in the process of getting our offense in place. Not only from a product creation perspective, but out into the marketplace, where we truly connect with consumers. And the last thing I’d say, the sports industry is growing 3% to 5% a year. It’s about growing the overall marketplace versus getting worried about market share. And when we grow the marketplace, I like our chances of growing. Its a pretty intellectual sort of conversation, but I’ve seen it work, and I believe in it. When Trumps tariffs were announced, I remember being like, Does Nike have to pull a lot of manufacturing out of Vietnam? Obviously, we learned in the last quarter how much tariffs are cutting into profit. Its significant. $1.5 billion. How are you responding to that right now? And how much is that affecting your strategy? Is it worth shifting manufacturing internationally? Can you even get ahead of tariffs, given the changing rules week to week, given that a lot of other countries are being affected with really high tariffs, too? [Its] clearly making an impact. We talked about how we’ll offset it. The good news is we do have a sourcing base that we’ve built up over 50 years. Its global, and it’s expansive, and we’re pulling each of the levers to try to offset the tariffs at a super high level, working with our manufacturing partners to share in some of those costs, our retail partners. And then ultimately we have to, as a company, share in some of that. Were looking for efficiencies here, inside of our business and our own P and L to help offset that. So that’s what we’re doing, short term. Longer termyou know, we can build factories anywhere. Setting up a factory and building lines, we know how to do. The challenge is, in our industry, we have tens of thousands of materials. Yeah, exactly that. It’s the supply chain. Its the material sourcing that is the bottleneck. And so that is what we’re working on right now. The simple idea there, conceptually, is to go: Well, just make fewer materials. But then you change choice, and you put designers and innovators and creatives in a box. That’s what we’re working through right now. Were trying to figure out, Okay, can we, should we, and where should our manufacturing base be for the future? And it’s definitely something that’s top of mind. Near term, I’m just telling our team, let a few of us deal with that, and you control what you can control. And that gets back to making beautiful products and telling stories and making sure our brand looks the way it should look at retail. Because that’s how we drive sell-through. So control what you control. Let a few of us deal with the tacticaland it is some tacticalmoves that we have to make around tariffs while also thinking strategically about what does the supply chain of the future look like? I haven’t checked out your new Project Amplify powered footwear yet, but I’m anxious to. I’ve used a couple of exoskeletons. I’m really bullish on these assistive technologies. And I’m curious: How key is that more electronic, or mechanical, innovation to Nike’s innovation pipeline of the future? Is it a really big growth category for you? We’ve yet to put a number on it in terms of growth. We’re still working through what webelieve it can be. We do think it’s, without question, a big part of positioning our brand as an innovative thought leader thats willing to think outside the box. I think the biggest [idea] we keep using as an example . . . If you look at the sales of mountain bikes versus e-bikesif you look at the growth curvemountain bike growth has slowed. And then e-bikes are [growing] because people want to go further faster. We think theres an insight there. How big [Nike exoskeletons] will become, I think the consumer is ultimately going to decide.
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