Will Code for Shoes: This week Paul Ford and Rich Ziade sit down with product designer Matthew Famularo to talk about sneaker appreciation, manufactured scarcity, and the billion-dollar second-hand digital marketplace.
Paul Ford At MoMA, of course. Yeah.
MF And it came with MoMA socks [Paul says, “Oh yeah” groaning] and so that —
PF Now we’re going.
Rich Ziade I would — I would kill to be in that room with that mood board.
RZ And the MoMA guy shows up. “Dial it back. Dial it back.”
MF “Why is there — why is there stitching on the side? [Rich laughs] That’s not the color of the rest of the stitching?”
RZ “I can’t put this next to this orb Bluetooth — ”
PF “Guys, we’re not — ”
RZ “ — speaker [laughs].”
PF Here’s what I — here’s what I hear in my head: “Guys, we’re not The Whitney.” [Boisterous laughter]
PF Ok. C’mon.
RZ Just everybody brings their bullshit to this meeting.
PF Yeah. No. “What is this some Rauschenberg nonsense?! I don’t — this — it’s not.” I don’t know.
RZ “Are you serious about that color? I don’t know.”
PF “I liked it. I liked directly linear a lot better.”
RZ Yeah. Yeah. Let’s — let’s stay below Houseton, can we? [Laughs]
MF Let’s stay below Houseton [music fades in, plays alone for 16 seconds, ramps down].
RZ Matthew is uh one of the numerous talented designers here at Postlight.
PF Matthew is one of the angels of design.
RZ Like those baby angels like coming out of the clouds —
PF Oh yeah and they sit on top of the TV.
RZ — out of the clouds in paintings [music fades out].
PF — in little ceramic figurines. That’s you. That’s how I see you.
RZ Alright. Leave the guy alone.
MF I like that. I like that.
RZ So, we should do this more. Just gonna say that right now.
PF Well we have a group of people who are very into things.
PF They’re into — not like physical things but they have the stuff that they really care about and get obsessed about.
RZ Which I love.
PF Yeah I mean we all have that.
RZ I love talking to people about the stuff they obsess over.
PF I mean this was always my fantasy starting the company: I love any group of obsessives is always really entertaining on a day to day basis. So first of all, Matthew, you’re a very good designer for us, you’re very practical, very hardworking but you’re also super into sneakers but really sneaker culture, right?
MF Yeah. Yeah. It’s a — it’s a really interesting world that — that I kind of fell into.
PF See, the aesthetic and beauty of shoewear like isn’t really your thing.
MF I enjoy them. I also really dislike a lot of shoes that — that a lot of people love.
MF I shouldn’t be saying this but like some — you know Jordan’s, a lot of the Jordans are real ugly. A lot of the shoes that Nike comes out with, a lot of the shoes that Adidas come out with I’m . . . relatively disinterested in. Part of it is cultural surrounding, the kind of context to these — to these items. Who are they coming from? Are they a collaboration with someone? That is really interesting to me.
PF The collaboration with someone. Break that down.
MF So I mean you all have heard of — of The Yeezy, Kanye West’s shoe.
PF Ok so Kanye West has a sneaker line.
PF Who — who makes Kanye West’s sneakers?
MF So Adidas makes Kanye West’s sneakers.
PF Ok. So one day Kanye West and Adidas say down, had coffee, Kanye said a lot of really terrible things —
MF A lot of really terrible things.
PF And then — and then Adidas went, “Great! Uh well we have lots of factories in China. So why don’t we do this?”
PF Or I don’t know China but Malaysia or whatever.
RZ By the way, it wasn’t even a meeting. They just a heard a noise out the window and they went and looked and it was Kanye —
MF Yeah yeah yeah. It was him and Dominic Anzal waiting for a cronut and yelling.
PF That’s right. And they’re like, “Well, “Jesus Walks” is a good song. So that’s — ”
MF Right. Like maybe a shoe comes out of that, too.
PF “We better get in there before Puma.”
MF Um but to — to backtrack a little bit, actually, there was a Louis Vuitton collaboration that he did. He did a sneaker with Louis Vuitton and then he did, I think, three sneakers with Nike. And then wound up with Adidas.
PF Ok. So he has a lot of aesthetic input [yes]. But and then they handle — I’m sure pushback [yup] and then there’s manufacturing [yup] and distribution. And then so like let’s assume, let’s like the part where they make the sneaker out. The distribution part is the part that we’re talking about, right? Like that’s the — what is — the drop?
MF The drop — [chuckles] the drop. Sure.
PF So there’s a lot of sneakers in a room somewhere [yes] and then there’s this announcement that there’s gonna be a drop. First of all [right], how’s the announcement come out?
MF It depends. It depends. So The Yeezy announcements in particular were — some of them were at retail Adidas locations. They would change the imagery on the — on the windows to say Yeezys are coming out in April.
PF That’s sort of a classic retail model.
MF Right. Uh sometimes you’ll have a website or a section of Nikes show up and it’ll be, you know, adidas.com/yeezy or /kanye and that will update with a new date.
PF And social media is picking up on it —
MF Yeah. Twitter, right right right.
PF “I’m excited about the new Yeezys,” and —
RZ So somebody’s scanning that page constantly.
RZ And there’s like people looking for differences in the page —
MF Oh absolutely!
RZ — as little bits get published.
PF Now we need to actually break down real quick before we even get to that part. These things have — So sneakers cost — What’s a pair of Yeezys cost at the Adidas store?
MF 220 dollars.
PF Ok so I go into the Adidas store and I give them my — my credit and they’re like, “Cool. Here’s your sneakers. They’re 220.” And then apparently they can be worth tons more later.
MF So you would think that that’s how it works, right?
MF You would assume that it’s maybe that easy, right? That easy for Yeezy? They’re making a bunch of shoes and people are going and buying them and supply is meeting demand more or less. The reality is, especially with the Yeezys, 220 dollar shoes, the first seven or eight of those shoes, maybe more, were very difficult to get.
MF And so a 220 dollar shoe, part of this multi billion dollar industry of sneakers winds up being sold because the supply is soooo incredibly limited and the demand is so high.
PF And it’s so — it’s forced to be limited. Like they created scarcity.
MF Oh of course. Right right right. I mean Nike —
PF Cuz Adidas could make a billion sneakers.
MF They could make a billion sneakers. Absolutely.
PF Um ok so there’s all these models. You’re — you go in the store, you buy them, if you’re lucky, maybe you lined up.
PF Then — so there’s this huge market — So I’m guessing they — they increase in value after, some of them?
PF Like significantly?
MF Yeah. Some of them — so those original pairs go for anywhere from 1500 to 2000.
PF Alright so if I could get ten pairs of Yeezys and it’s the right ones, I — I made like 20 grand.
PF So if I could get a hundred pairs, I just made 200 grand [yeah], all for the cost of going in with a credit card [right] and getting — So —
RZ It’s like — it’s like Bitcoin for your feet.
PF Or, or also ticket scalping. Right? [Right] Like if I could just get this thing.
RZ There’s — there’s scarcity.
PF Yeah there’s — so there’s a scarcity here and it’s also like see what’s interesting here is it’s a relatively cheap that there’s lots of see like 10,000’s a lot of something [right] like it didn’t cost them a lot to make it, it’s not hard to buy if you’re exactly in the right place at the right time and then it could go up significantly in value just like that.
PF Ok. So now there’s like a giant technological ecosystem around buying sneakers for this reason, right?
MF Right. These releases have happened both in store and online. So the, you know, in store is a — is a hard — a hard thing to game more or less, in so far as you know only know so many people that can come and stand in line with you.
PF And I’m guessing you can’t — you can only buy one or two pairs.
MF Right. Generally releases like this they only allow you to buy one pair.
PF Ok .
MF So people — I mean people show up with their parents or their siblings or their, you know, estranged family members, or friends to buy more.
PF And they’ll camp out and —
MF Right. Well will camp out.
RZ Wait, wait. They will camp out?
MF People will camp out. Yeah.
RZ For sneakers?
MF Yeah. Overnight. Days. It’s like — it’s like Apple products. It’s like when the iPhone comes out.
RZ Mm hmm. Mm hmm.
PF Except in this case it could appreciate in value.
MF Right! Absolutely!
PF When was the first like . . . big, crazy drop of sneakers where everyone got — like when did people start to see like, “Oh my god this is how it’s going”?
MF That’s — that’s super hard to answer both because I came into this uh later than a lot of people but also because it has been going on for a while. I mean since Nike’s been making Jordans people have been lining up for Jordans.
PF So like from the 80s. Air Jordans, I remember they were like [yeah] that was the first time. Ok [right] and then now there’s like — I see Supreme as kind of the new version of whatever the hell is happening.
MF Right right. So Supreme started as a skateboarding company [ok] in New York. And somehow between when they started and had a skate team and made items for that skate team, made skateboards as skateboard companies do [sure]. T-shirts, et cetera.
PF A sticker that said Supreme on it.
MF A sticker that said Supreme on it that was a total rip off of Barbara Krueger [mm hmm]. That somehow turned into people are realizing Supreme is a thing, people in New York are realizing Supreme is a thing and going and trying to buy things and they’re selling out of things.
PF Ok. So red, italicized, san serif type and here we go.
MF Right. Exactly. And so as more people started to realize it was a thing and purchase it and it — it gained ground as a cool skateboarding company but also they make pieces of clothing and I like what they look like and they’re releasing them and I can go buy them. That somehow spun into what it is now where people are going on the website every week when they do a new release and just flooding the website with browser sessions trying to get these items that they’re then going to sell for two, three, four times the price.
RZ I think — I think what you have here is . . . a business and I think I — I don’t know the history of why — how sneakers took the leap from functional to cultural, right? I think, and I could be completely wrong, I think Dr. J, Julius Erving [mm hmm], the basketball player and Larry Bird. I think Converse early days said, “We’re gonna make a Larry Bird and Dr. J sneaker.”
PF And there’s kind of a larger trend of like athletes going from cool hometowns celebrities to global mega superstars where everything affiliated with them — like when Steph Curry came out with his sneaker and everybody made fun of it, I don’t follow basketball or sneakers but that was big news. Like I just like [yeah] it came into my world.
RZ But that — then it’s fully baked at that point, right? [Right] You’re not wearing a sneaker to go play basketball in the school yard. You can. But it was really — it became fashion, it became —
PF Except that those look like nurse sneakers. Like it was pretty intense what happened.
MF They’re pretty bad.
PF The other thing, before we even get to the bots, right? There is a website called StockX.
PF That you showed us once where you can just —
MF I did.
PF You can go on and — and there’s like a whole — it’s like the Adidas Price Index is there.
MF Yeah so StockX is really interesting because it’s — it’s kind of two things in one. It is —
RZ stockx —
RZ — dot com.
MF Dot com.
RZ Mm hmm.
MF StockX is a marketplace originally for sneakers, now for sneakers and certain clothing. So Supreme, things like that. And watches. And they exist to facilitate the — the selling and buying of sneakers. And so much like a consignment shop, I have a pair of Yeezys. I wanna sell them. I haven’t worn them. And I wanna make sure that I don’t get scammed.
PF Mm hmm.
MF I can go on Ebay and sell them and deal with someone claiming that they’re fake which is the whole other thing. I don’t wanna deal with that.
PF But if I’m a dedicated sneaker consumer.
PF This — this — a lot my concerns [yes] are addressed by StockX —
PF — as a kind of like — as a platform.
MF Because they have a large facility of people checking every single sneaker that comes in.
PF Have you sold stuff?
MF On StockX?
PF Mm hmm.
MF I have sold stuff StockX.
PF Is it — how was the experience of selling stuff on StockX? What did you do? Did you like mail something somewhere and it goes into sneaker escrow? Like what happens?
MF Yeah. Yeah yeah. So you put your price, the price that you wanna sell the sneaker for, and if an ask meets a — a — an offer, they automatically facilitate that transaction. So you get a notification. It says, “Your sneaker’s been purchased. Here’s a shipping label.” The shoes go to Detroit which is where their facility is.
RZ They go to StockX first.
MF They go to — they go to StockX first.
MF So this whole transaction is four days.
MF Which is a big part of their — of their marketing is like —
PF You’re gonna get your sneakers.
MF Yeah. You’re gonna get your sneakers and I’m gonna get my money.
MF So the second those — those shoes show up at StockX, they take them, out of the box, they check them, they do their authentication process, and if they’re real, they wind up going to the person who purchased them. The second that they get authenticated you get your money. Um —
PF Now the shoes that you sold, did you ever wear them?
PF Ok so you — did you buy them as an investment or just buy them and never wear them?
MF I bought them as a test to see if I could get through this wild system [ok] that was this adidas.com Yeezy waiting room —
PF Did you buy Yeezys? What’d you buy?
MF I did.
MF They were — it was about a year ago — it was — it was beginning of 2017 and this was a — a — touted to be the most limited of this model of the Yeezy.
PF Which one? Which model?
MF It was the — it was the Zebra.
MF Was — it was what it was called. A very ugly shoe. The V2 350.
PF So how did you get your Yeezy Zebras?
MF I sat on adidas.com at 10 am on the day that they released. Sitting in a waiting.
PF Now we’re finally getting there. First of all, what is a waiting room?
MF Ok. So a waiting room uh uh specifically in the context of adidas.com, effectively you go to the URL where the shoe is being sold. So I go to adidas.com/yeezy . . . at the time that it is being released and they put you in a waiting room.
RZ In a cue?
MF Yeah, in a cue and it says, “Hey! We’re releasing shoes. Wait here. Don’t refresh.”
RZ It’s like concert tickets.
MF Yeah. And if you get through, you’ll be able to select your size, and you’ll be able to check out and you’ll get your shoe.
RZ Got it.
MF So I sat there of course, a couple of devices.
RZ Wait you’re in the waiting room, 10 am?
RZ When did they say that, you know, the shoe doctor will see you now.
MF It may have been noon.
RZ So a couple of hours. You’re sitting there.
MF It’s a little bit. I just sat there and kind of let them sit and — cuz they’re reloading by themselves, I just let them sit. And then finally got through and — and this was a — a very interesting experiment because this was the most limited shoe of at — at that point of that release, of that model.
MF So they were 220 dollars and I sold them for a lot more than that. Cuz they weren’t worth that much to me.
PF C’mon. C’mon. How much money did you make?
MF More than that.
PF Did you make —
RZ He doesn’t wanna share.
PF Well can I ask did you make a thousand dollars on the shoes?
MF I made more than that.
PF No kidding. Alright so for a couple of hours of sitting there, looking at your computer, which you’d be doing anyway, let’s be honest.
MF Yeah [Rich laughs].
PF You — you made a thousand dollars.
PF Ok. Through StockX.
PF How long did you have the shoes before you sold them?
MF Maybe two days.
RZ Ah this was a transaction. This is a pure transaction.
PF Wooooow. Ok. Alright.
MF Oh I knew — I knew [music fades in]. I knew that I was gonna sell them [music plays alone for six seconds, ramps down].
PF [Ad spot] Hey, Rich?
RZ Yes, Paul.
PF [Music fades out] Matthew doesn’t just come on this podcast and talk about sneakers, he’s also a product designer here at Postlight. Matthew, what do you do all day?
MF I work with clients to solve problems with software uh specifically through design.
PF And might I add that you do it very elegantly [thank you] for clients including the Autobahn Society.
RZ Mm hmm. Beautiful app.
PF Yeah. It’s a great app. Check that out.
PF Give it a good review on iTunes.
RZ And that’s part of the Postlight solution.
PF That’s right!
RZ Oh [stammers under breath] capital S sad.
PF Let’s move on from this marketing part but guys, you know, people out there listening, friends out there listening. People sometimes forget that we’re more than a podcast when they don’t know us [yeah] so I just wanna emphasize: this is a real company where people like Matthew do real work to make real things. You can download and use our products.
PF So don’t forget that while you’re enjoying the free content that we shoot into your eyeballs and brains [RZ snickers] I feel [music fades back in] that’s important. Let’s get back to the podcast [music plays alone for eight seconds] [end ad spot]. Ok so you were just like, “Alright I’m gonna play the game [music fades out] and see if I can win.”
PF And then you — it actually — you won.
PF Ok. So now the reason we started having this conversation or one of the reasons was that somebody was telling me about this and you were like, “Oh yeah there’s a whole world of bots.”
MF There’s — there’s a lot to it.
MF Uh so because of — of this. Again, it’s a multi billion dollar industry. Sneakers.
PF Well now you’ve just described.
RZ It’s a marketplace.
MF [Stammers] Because of this multi billion dollar industry and supply that doesn’t meet with demand, there’s now a billion dollar secondary market that StockX is participating in. That eBay is participating in. That people are — are using platforms to sell sneakers. They’re selling —
PF Well there’s a low cost of entry, it’s connected to street culture [yup]. Like there’s a whole — there’s an element of hustle to it.
RZ A lot adds up.
PF And I mean there’s a key thing you just described which is the big — you’ve got this marketplace over here, you’ve got this waiting room here, you can automate this. Or you could theoretically.
MF Absolutely. So there are a lot of different kinds of sneaker bots that — that you can get and it depends on the shoes that you’re looking for. Are you looking for Nikes? Are you looking for Adidas? Some bots do all of them. Some bots only do websites that use Shopify. Some bots only work on — on jailbroken iPhones because they work on — on the Nike sneakers app. So you have to understand what you’re looking for and then dependent on that, there are a number of options available. A lot of these are downloaded and run on your computer. And effectively most of these bots are automating the checkout process but they’re also acting as page monitors and they’re also sometimes automating or farming out Captcha. Some of them are run on servers. Some of them are — are using basically headless browsers and proxies depending on the location of — of where this is coming out.
PF So sort of everything you can do [yeah] with the web has ended up in sneaker bot development territory.
PF Ok. And so but you buy them you said?
MF Yeah you have to buy them and they are also limited and difficult to buy and so there are also bots for bots.
PF Alright. Wait wait wait.
RZ Well you’ve got the web changing . . . constantly.
RZ And those — those bots have to continue to —
PF But wait they’re limit — like they’ll only sell you 500 bots?
MF They’ll release licenses for the bots but very sparingly. To both avoid the bot not working, right? Because [right] the more people who have it the less shoes you can get.
PF Alright interesting so I’m gonna sell you guys this expensive bought but I’m only gonna sell 500 copies so that you know that not everybody can get in there are you’re gonna continue to win.
PF Oh my god.
RZ It also signals out to Adidas, you know, oh my god there’s like 11 million of these, we gotta change the code.
PF That is true.
PF So you wanna —
RZ So you can break a bot very easily.
PF — keep the signal quiet.
PF What’s it cost to buy a bot?
MF So there are — there are some open source ones [mm hmm] which are free. They generally range in the hundreds . . . if you’re buying them straight from whoever makes them.
PF A couple hundred bucks — -
MF A couple hundred bucks.
PF I put in my credit card, I get a bot.
MF Let’s say I want a bot and I can’t get it and I really want a shoe that’s coming out. Some people rent their bots.
MF For a few hundred dollars. Some people sell their bots for thousands of dollars.
PF Mm hmm.
MF So there are options.
PF Not this is the same as online advertising, it’s just ground up around sneakers.
MF Yeah. Yeah. The whole internet is sneakers.
PF Oh my god. Wow!
RZ I think we should . . . we should step back a second and ask why this value has been created. There’s a lot of scarcity in the world. Right? I mean sneakers have always been interesting but why has a marketplace with a lot of money flowing through it even been created. I have a theory . . . we actually did another podcast on this: we are now exposed to I’ll just call them digital objects . . . more than types of physical objects, in fact. There was a day — I used to go to Blockbuster Video. Do you know what Blockbuster Video is? Paul does.
MF Yeah, of course.
RZ Ok. It’s to rent movies. When Rambo III came out, you — if you didn’t know the guy at Blockbuster who put one aside for you —
PF Like for months.
RZ It was a whole process to just get the rental, right? And that scarcity was based on the physical object. They just — the — the means weren’t there to just blast the thing out to millions of people. And I think what you have today, right? Is between the, let’s call it the album digital object, or the film digital object, or the TV show digital object is that that the notion of scarcity is exploded, right? Netflix will just pour content over your head until you drown in it. And so there’s — there’s no, the — the perceived value is gone around the thing. And I think what this is is almost, in a way, a reaction to it because you actually have this thing you can cherish in a weird way because not everyone has it. There’s just you know for a fact because of the marketplace that there’s just not a lot of them.
PF When it ties into that fundamental like, “I wanna look cool in front of my friends.”
RZ And there’s that! And there’s that angle to it, right?
PF That aspect of — that sort of raw, capitalist consumption part of street culture got really into the brains of cool, rich, young kids [mm hmm] [yup] who are like, “Oh yeah $1500 for a cool pair of sneakers! That’s no big deal. I’m a DJ [right] and my parents are funding [Rich laughs] you know the next [right] 30 years of my college education.”
RZ Right, right.
MF Which must have been who purchased those $1600 Yeezys from me.
RZ Do you think they’re wearing ‘em?
MF I think so.
RZ The buyer is wearing ‘em?
MF I think so.
RZ Or is the buyer selling?
MF I hope so.
RZ I don’t know, man. I — I could see not . . .
MF Putting it on the wall.
RZ No. Just they’re thinking about it as an asset that will increase in value.
PF “Can I sell this for $3000 dollars?”
MF Can I tell you all what happened with the market for that specific shoe shortly after it was purchased for me for $1600 dollars?
RZ That was my next question anyway!
MF They released a ton more of ‘em.
PF Oh so you moved fast with your two day window.
MF Yeah, I mean it was — it was not immediately, it was maybe a few months later but they flooded the market with a ton of them. And now they — you can buy them for slightly above retail.
PF See I think, too, it’s not such a big market that serious like giant players are really deeply invested in it.
RZ No, no, it’s not.
PF So it stays kind of ground level and even the fact that there is this whole sneaker culture and the bots and so on becomes part of the mystique like the — the marketplace is now connected to the big public, branding event.
PF And that’s really interesting cuz well you know — cuz Adidas knows all of this, right?
PF They have Google too.
PF And so they’re seeing this growing marketplace as feeding into their overall like big brand efforts.
PF And so it’s like — you know Matthew at some level is pulling off the digital strategy around perceived value in the Adidas and Yeezy brand for them.
PF By getting into the waiting room, doing this, doing — doing the resale.
RZ Yeah um but the thing is the interest is the — I mean one of the key points is demographically you’ve got teenagers who fully understand that everything’s disposable. Everything. My Instagram, my Snapchat.
PF This is one of the few things that remains truly cool.
RZ And! Rare.
PF But at the same time like the Yeezy shoes are almost — they’re like the chain smokers of sneakers, right? Like it gets really detailed with like artists collaborating and — and like — like what would be an obscure sneaker that we would never have heard of?
RZ Like a third rate like forward for —
PF No, I don’t think it’s that. I think there’s like weird collaborations that people do, right?
PF And then there’s like you can only get it at one store in the Lower East Side.
RZ Yeah. No, that’s —
MF There was a — there was a sneaker recently tangential to — to Kanye West. One of his cohort named Virgil Abloh who collaborated with Nike to release this collection, originally called The Ten because it was ten different sneakers with Nike which spawned into a number of other collaborations with Nike outside of that specific ten shoes. And then he was — he was the named the uh creative director of Louis Vuitton. So those have — those have increased in value since but there was one of uh one of the shoes that came shortly after that with Nike . . . uh was a shoe that was a collaboration between Virgil and Nike and MoMA, the Museum of Modern Art —
MF And you could only get it at MoMA.
PF At MoMA. Of course, yeah.
MF And it came with MoMA socks.
PF Oh yeah now we’re going —
PF Ok so there is — are there like . . . indie sneaker manufacturers? LIke we talked a lot about like Nike, Adidas, you know, but like is that a scene too?
MF To an extent. But it’s — it’s definitely not, people just don’t have the resources to — to, you know, if something —
PF Making 10,000 sneakers is hard.
MF Yeah. Yeah. There was a guy in the late nineties or the early 2000s who made this, it was called the Air Menthol.
MF He realized that the Newport Mark was very similar to the Nike swoosh.
PF Uh huh.
RZ Oh! [Paul laughs]
MF And made a shoe —
PF That’s cool.
MF With that — that mark on it. That sort of upside down swoosh on the side, called them the Air Menthol, made, I think, maybe 200 pairs. He made — he had — he made them himself.
RZ Oh this has gotta be —
PF It’s a big middle finger to everybody.
MF Yeah, yeah.
PF It’s cool. Yeah.
MF Nike thought it was funny. Newport, their — their parent company hated it.
RZ Tobacco’s angry.
MF And sued him.
PF Tobacco can’t mess with anything athletic. They get real scared.
PF And tobacco’s just stressed out constantly. So, wait, I wanna buy this shoe today. How much?
MF Oh, you can’t. You can’t. I mean it’s — they pop up on eBay every now and then for thousands of dollars.
MF He doesn’t even have a pair. Part of his — part of his settlement was he cannot have a pair of the shoes.
RZ Oh wow.
PF Oh ok. So it ends up in a kind of like Shepard Fairey like obey giant thing.
RZ You know what’s more valuable than what I call manufactured scarcity? Like Adidas consciously decided to make 5,000 and it creates scarcity is unintentional scarcity. When you didn’t plan it. Do you guys know what the Paul Newman Rolex is?
RZ So [stammers] Paul Newman was into race cars. And Rolex approached him, it’s like, “You know what? We’re, you know, gold and diamonds. We wanna enter this sort of sports lifestyle outdoors things,” and they pulled ’em in, it became part of the branding and there were magazine ads and whatnot.
PF Was Rolex Rolex at that point?
RZ Rolex is Rolex.
PF Ok so.
RZ And it kinda flopped, right? So it didn’t do well because people didn’t associate those — for whatever reason it just wasn’t a huge success and so years later when it came back out and it’s this kind of different Rolex, it’s got a white face, black sort of circles on it, it’s a different look. And now, today, it actually turned out to be years ahead of its time. So they decide, I don’t know who decides, I don’t know who — oh it’s a family member actually, decides to put his watch up. This is a Rolex that he owned. Like it was his. He wore it. And it goes up I think Sotheby’s or Christie’s. Do you know how much this thing went for? Again: unintentional scarcity.
MF How much was it — how much was it retail?
RZ The watch?!?
MF Yeah. When it first came out.
RZ Probably a couple —
MF Seven? [Crosstalk]
RZ With inflation maybe eight dollars [laughs].
PF Yeah, it was probably a like a couple hundred bucks.
RZ Probably a few hundred bucks.
RZ Maybe a thousand dollars or something. Yeah.
MF Ok. I’m gonna guess 100,000 dollars.
RZ It went for 19 million dollars. Yeah.
PF You see watches are very spec — like watches are rich people catnip [laughter].
RZ It really is. It really is but the — just to be clear there is — this is an absolute outlier. There is no — nothing, it’s actually . . . I think from a — from a just a general auction history thing it was just so far out of bounds of anything like it. And I think it’s just because there’s one. There’s a Paul Newman Rolex.
PF And well you wanna be the incredibly rich person who has that.
RZ And there’s like a little bit of his DNA on it and shit he was handsome. It’s just a whole —
PF It’s just cool.
PF Cuz if you buy that you become Paul Newman. It’s how —
MF Maybe the Paul Newman Rolex will also make me handsome.
PF It’s the magic of infinite money.
RZ Is somebody putting that on? I don’t know who.
PF Oh! A Russian oligarch is putting that on, on his boat.
RZ I gotta find out who put it on.
MF Wait, he’s putting it on himself or on the boat?
PF [Laughing] It’s actually on the prow.
RZ I just think it’s cool that there this appreciation for the thing that there isn’t endless amounts of.
MF Well, right. There’s a — there’s a — there’s a — there’s a separation between how widespread it can be on social media. You can see photos of the show everywhere.
MF But you walk out into Manhattan — Manhattan’s a bad example because we have a lot of people who have that stuff here [yeah] but you go to Ohio and you’re not gonna see that.
PF Well also we’re in a weird place because our — the distribution points for this incredibly unique IP there’s multiple ways. Like if you’re living in — in Cleveland you don’t get to participate in many big sneaker culture moments.
MF Right. Nike’s sneaker app has a geofenced functionality. It’s a — it’s a sort of release called The Stash. And it checks your device’s location and it gives you a gyroscopic view at something on the phone and you have to figure out physically where there at is.
RZ Mm hmm.
MF And you show up there and they have a Bluetooth beacon . . . and proximity to that Bluetooth beacon allows you to purchase that shoe. On the phone.
PF While we’re having our kids play Pokemon Go, we’re training them to be [yes] sneaker drop consumers.
MF Yes . . .
RZ I wanna close it with this question, I’ll pose it to both of you. This has happened with sn — I mean sneakers drove technology here. Watches are kinda weird cuz they’re — they’re too high end. I don’t think you’re gonna see that same kind of —
PF Watches are equivalent to like art. There’s a lot of crappy art and then there’s really expensive fine pieces.
RZ Yeah like the craft behind it and whatnot. What other thing can fuel something like this? Album LPs had this kinda vibe.
RZ And — and that’s gone because everything’s littered everywhere.
PF Well I mean I think but it’s that, right? It’s like where could you create scarcity where there is the demand? So sneakers is one way [yeah], music releases, I mean, you know, people put things on cassette still. So it’s — it’s — it’s creating an environment in which scarcity is possible.
RZ Live music maybe.
PF Oh that’s still really big.
RZ What if a film came out sort of this, you know, unknown director and — and puts the money into it. It will only be shown a thousand times.
PF No, that happens. There’s a art film of dudes petting their cats in downtown saying, “She’s a talker!” And no one can see it. It’s like 80 dudes petting their cat saying, “She’s a talker.”
RZ What do you mean no one can see it?
PF It’s — it’s been shown like once or twice. It ended up online for like five minutes. It has been erased from the internet.
RZ And by design?
PF Yeah, yeah.
RZ That is the goal —
PF That’s the strategy.
RZ — is I’m gonna let you experience this and you’ll never experience it again.
MF There was — there was the Wu-Tang album that Martin Shkreli purchased.
PF That’s right.
MF That no one could listen to.
MF You had to purchase it for a million dollars.
PF We find, as a species, we find scarcity I think it’s really exciting [right] and I think it’s because we’re like, “I want it!” [Yeah] We like having access to everything [right] and then we get really excited about rich people having access to things we don’t and then we’re like, “Why don’t I have it?”
MF Right and me having access to the thing puts me closer to the rich people.
PF Right and then you’re playing with that as a person who’s like investigating this culture because you have access — you had easy access to get the sneaker. You’re like, “A couple hours,” then you get a little money out of it.
RZ Not just a couple of hours, you have to have the smarts like and understand how the game works. There’s that part, too, right?
PF Sure. But it’s interesting for you it’s a form of play. I mean it’s great that you made some money but it like that’s not. It wasn’t life changing money for you.
MF Yeah. Right. And — and just to be clear, though, the — the goal overall for sneakers with me is to — is to obtain the ones that I want and to — and to have them. I enjoy certain sneakers.
PF So this is a good point.
PF So you like sneakers?
RZ You wanna wear ‘em.
MF I like sneakers and I wanna wear them. I really am not in the business of purchasing them and selling them.
PF Well then that’s my last question for you: what’s your favorite shoe right now?
MF That’s a great question. Unsurprising to anyone who may hear this who is at all aware of — of this collaboration or this, you know, sneaker culture right now, I really do like the collaborations that Virgil Abloh has done with Nike. The Ten and the more recent uh shoes. There are some Jordan ones in uh a colour that they call the UNC, after the university. And they’re like a white and light blue shoe but they’ve just been butchered by his — by his aesthetic but they’re very cool looking. So those are coming out at some point.
PF What are you wearing — what are you wearing right now?
MF Uh I am wearing Nike Air Max ‘98s.
PF Are they comfortable? [Music fades in]
MF They’re very comfortable.
RZ Paul’s trying to be practical. That’s not what this is about —
MF They’re almost —
RZ — what this is about, Paul [laughs].
PF Alright, Rich, good show!
RZ That was fascinating, actually.
PF I love that we hire people who are into stuff that is bigger than the stuff they do here. It’s — it’s broader.
RZ Well exactly it’s also — it’s also uh there’s a passion behind it.
PF You don’t — you don’t find talent in people who don’t also have one or two of these things going.
RZ Well the energy’s gotta go somewhere, right?
PF You gotta think about something.
PF It’s a way to see and understand the world. Like sneakers aren’t just footwear, they’re also a marketplace, a way to understand capitalism, design —
PF Like I love that part of it.
RZ No, it’s not just that, just the way it forced tech. Tech just can’t help but infect a thing.
PF It’s also — it’s a good reminder not to dismiss things, right? Like —
PF This is a big ass world.
RZ It really is.
PF Alright well thank you to Matthew for coming on and uh you guys all know what to do: email@example.com, send us an email.
RZ Say hi.
PF Bye [music ramps up, plays alone for five seconds, fades out to end].