0:00:01.573,0:00:06.426 This is the Air Jordan 3 Black Cement. 0:00:07.355,0:00:10.722 This might be the most[br]important sneaker in history. 0:00:11.325,0:00:13.127 First released in 1988, 0:00:13.136,0:00:16.457 this is the shoe that started[br]Nike marketing as we know it. 0:00:17.269,0:00:20.920 This is the shoe that propelled[br]the entire Air Jordan lineage, 0:00:20.920,0:00:22.888 and perhaps saved Nike. 0:00:23.237,0:00:27.695 The Air Jordan 3 Black Cement did for[br]sneakers what the iPhone did for phones. 0:00:28.275,0:00:30.295 It's been rereleased four times. 0:00:30.620,0:00:32.756 Every celebrity's been seen wearing it. 0:00:33.105,0:00:35.753 There's a site about what to wear[br]with the Black Cement, 0:00:35.753,0:00:38.385 it's been right under[br]your nose for decades 0:00:38.385,0:00:40.367 and you never looked down. 0:00:40.877,0:00:42.667 And right about now, 0:00:42.667,0:00:46.090 most of you are probably[br]thinking, sneakers? 0:00:46.090,0:00:47.358 [WTF? SNEAKERS?] 0:00:47.358,0:00:48.520 (Laughter) 0:00:48.520,0:00:49.531 Yes. 0:00:49.531,0:00:51.481 Yes, sneakers. 0:00:52.113,0:00:55.712 Some extraordinary things[br]about sneakers, 0:00:55.712,0:00:57.325 and data, 0:00:57.325,0:00:58.824 and Nike, 0:00:58.824,0:01:03.053 and how they're all related, possibly,[br]to the future of all online commerce. 0:01:03.467,0:01:07.866 In 2011, the last time[br]the Jordan 3 Black Cement was released, 0:01:07.866,0:01:10.103 at a retail of $160 dollars, 0:01:10.103,0:01:12.646 it sold out globally in minutes. 0:01:12.646,0:01:15.311 And that's because people[br]were camped outside of sneaker stores 0:01:15.311,0:01:17.238 for days before it went on sale. 0:01:17.699,0:01:19.167 And just minutes after that, 0:01:19.167,0:01:22.702 thousands of those pairs were on eBay[br]for two and three times retail. 0:01:23.086,0:01:27.604 In fact, there's over 1,000 pairs on eBay[br]right now, four years later. 0:01:28.574,0:01:29.954 But here's the thing, 0:01:29.954,0:01:33.370 this happens every single Saturday. 0:01:33.860,0:01:36.340 Every week there's another[br]release --or two or three, 0:01:36.340,0:01:38.709 and every shoe has a story 0:01:38.709,0:01:41.639 as rich and compelling[br]as the Jordan 3 Black Cement. 0:01:42.171,0:01:46.375 This is Nike building[br]the marketplace for Sneakerheads, 0:01:46.375,0:01:50.349 people who collect sneakers, 0:01:50.349,0:01:51.621 and my daughter. 0:01:51.621,0:01:53.570 (Laughter) 0:01:53.570,0:01:56.221 That's an "I love Dad" tee shirt. 0:01:56.544,0:01:59.737 For the brands, Sneakerheads are[br]a very important demographic. 0:01:59.737,0:02:01.385 These are the tastemakers, 0:02:01.385,0:02:03.676 these are the Apple fanboys -- 0:02:03.676,0:02:08.269 because who else is going to buy a pair of[br]8,000 dollar Back to the Future sneakers? 0:02:08.904,0:02:10.765 (Laughter) 0:02:10.765,0:02:12.842 Yeah, 8,000 dollars. 0:02:13.664,0:02:16.039 And while that's obviously the anomaly, 0:02:16.039,0:02:18.798 the resell sneaker market[br]is definitely not. 9:59:59.000,9:59:59.000 30 years in the making, 9:59:59.000,9:59:59.000 what started as an underground culture 9:59:59.000,9:59:59.000 of a few people who like sneakers[br]just a bit too much, 9:59:59.000,9:59:59.000 (Laugther) 9:59:59.000,9:59:59.000 Now we have sneaker addictions. 9:59:59.000,9:59:59.000 In a market where in the past 12 months, 9:59:59.000,9:59:59.000 there have been over[br]nine million pairs of shoes 9:59:59.000,9:59:59.000 in the United States alone, 9:59:59.000,9:59:59.000 at a value of 1.2 billion dollars, 9:59:59.000,9:59:59.000 and that's the conservative estimate -- 9:59:59.000,9:59:59.000 I should know, I am sneakerhead,[br]this is my collection. 9:59:59.000,9:59:59.000 In the pantheon on great collections,[br]mine doesn't even register. 9:59:59.000,9:59:59.000 I have about 250 pairs,[br]but trust me, I am small-time. 9:59:59.000,9:59:59.000 People have thousands. 9:59:59.000,9:59:59.000 I'm a very typical[br]37-year-old sneakerhead. 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 I grew up playing basketball[br]when Michael Jordan played, 9:59:59.000,9:59:59.000 I always wanted Air Jordans, 9:59:59.000,9:59:59.000 my mother would never buy me Air Jordans, 9:59:59.000,9:59:59.000 as soon as I got some money[br]I bought Air Jordans -- 9:59:59.000,9:59:59.000 literally we all have[br]the exact same story. 9:59:59.000,9:59:59.000 But here's where mine diverged. 9:59:59.000,9:59:59.000 After starting three companies,[br]I took a job as a strategy consultant. 9:59:59.000,9:59:59.000 What I very quickly realized is that[br]I didn't know the first thing about data. 9:59:59.000,9:59:59.000 But I learned -- because I had to, 9:59:59.000,9:59:59.000 and I liked it. 9:59:59.000,9:59:59.000 So I thought, I wonder if I could[br]get a hold of some sneaker data, 9:59:59.000,9:59:59.000 just to play with for my own amusement. 9:59:59.000,9:59:59.000 The goal was to develop a price guide, 9:59:59.000,9:59:59.000 a real data-driven view of the market. 9:59:59.000,9:59:59.000 And four years later, 9:59:59.000,9:59:59.000 we're analyzing over[br]25 million transactions, 9:59:59.000,9:59:59.000 providing real-time analytics[br]on thousands of sneakers. 9:59:59.000,9:59:59.000 Now, sneakerheads check prices[br]while camping out for releases. 9:59:59.000,9:59:59.000 Others have used the data[br]to validate insurance claims. 9:59:59.000,9:59:59.000 And the top investment banks in the world 9:59:59.000,9:59:59.000 now use resell data to analyze[br]the retail footwear industry. 9:59:59.000,9:59:59.000 And here's the best part. 9:59:59.000,9:59:59.000 Sneakerheads have sneaker portfolios. 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 Sneakerheads can track[br]the value of their collection over time, 9:59:59.000,9:59:59.000 compare it to others, 9:59:59.000,9:59:59.000 and have access to the same[br]analytics you might 9:59:59.000,9:59:59.000 for your online brokerage account. 9:59:59.000,9:59:59.000 So sneakerhead Dan builds his collection,[br]and identifies which 352 are his, 9:59:59.000,9:59:59.000 he can see it's worth $103,000 -- 9:59:59.000,9:59:59.000 frankly, a modest collection. 9:59:59.000,9:59:59.000 At the asset level,[br]he can see Gain/Loss by shoe, 9:59:59.000,9:59:59.000 here he's made of $600 on one pair. 9:59:59.000,9:59:59.000 I have one of those. 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 So an unregulated[br]1.2 billion dollar industry 9:59:59.000,9:59:59.000 that thrives as much on the street[br]as it does online, 9:59:59.000,9:59:59.000 and it spawned fundamental[br]financial services for sneakers. 9:59:59.000,9:59:59.000 At some point, I asked myself[br]what's really going on in the market, 9:59:59.000,9:59:59.000 and two comparisons[br]started to emerge. 9:59:59.000,9:59:59.000 Are sneakers more like stocks or drugs? 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 In fact, one guy emailed to say[br]his 15-year-old son was selling drugs, 9:59:59.000,9:59:59.000 and later found out[br]he was selling sneakers. 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 And now they use the data[br]to do it together. 9:59:59.000,9:59:59.000 And that's because sneakers 9:59:59.000,9:59:59.000 are an investment opportunity[br]where none other exist. 9:59:59.000,9:59:59.000 And I don't just mean the kids that[br]are selling sneakers instead of drugs. 9:59:59.000,9:59:59.000 How about all kids? 9:59:59.000,9:59:59.000 You have to be 18[br]to play the stock market. 9:59:59.000,9:59:59.000 I sold chewing gum in sixth grade,[br]blow pops in ninth grade, 9:59:59.000,9:59:59.000 and collected baseball cards[br]through high school. 9:59:59.000,9:59:59.000 The cards are long dead, 9:59:59.000,9:59:59.000 and the candy market's[br]usually quite local. 9:59:59.000,9:59:59.000 For a lot of people, sneakers are a legal[br]and accessible investment opportunity, 9:59:59.000,9:59:59.000 a democratized stock market. 9:59:59.000,9:59:59.000 But also, unregulated, 9:59:59.000,9:59:59.000 which is why the story[br]you're probably most familiar with 9:59:59.000,9:59:59.000 is people killing each other for sneakers. 9:59:59.000,9:59:59.000 And while that definitely happens[br]and it's tragic, 9:59:59.000,9:59:59.000 it's not nearly the epidemic some media[br]would have you believe. 9:59:59.000,9:59:59.000 In fact it's a very small piece[br]of a much bigger and better story. 9:59:59.000,9:59:59.000 So sneakers have similarities 9:59:59.000,9:59:59.000 to both the stock exchange and[br]the illegal drug trade, 9:59:59.000,9:59:59.000 but perhaps the most fundamental[br]is the existence of a central actor. 9:59:59.000,9:59:59.000 Someone is making the rules. 9:59:59.000,9:59:59.000 In the case of sneakers[br]that someone is Nike. 9:59:59.000,9:59:59.000 Let me walk you through some numbers. 9:59:59.000,9:59:59.000 The resell market we know is 1.2 billion. 9:59:59.000,9:59:59.000 Nike, including Jordan brand,[br] 9:59:59.000,9:59:59.000 accounts for 96 percent of all shoes[br]sold on the secondary market. 9:59:59.000,9:59:59.000 Just complete domination. 9:59:59.000,9:59:59.000 Sneakerheads love Jordans. 9:59:59.000,9:59:59.000 And profit on the secondary market[br]is about one third. 9:59:59.000,9:59:59.000 That means that sneakerheads 9:59:59.000,9:59:59.000 made 380,000,000 dollars [br]selling Nikes last year. 9:59:59.000,9:59:59.000 Let's jump to retail for a second. 9:59:59.000,9:59:59.000 Skechers, earlier this year, became the[br]number two footwear brand in the country, 9:59:59.000,9:59:59.000 surpassing Adidas --[br]this was a big deal. 9:59:59.000,9:59:59.000 12 months ending June, 9:59:59.000,9:59:59.000 Skechers net income[br]was 209,000,000 dollars. 9:59:59.000,9:59:59.000 That means that Nike's customers 9:59:59.000,9:59:59.000 make almost twice as much profit[br]as their closest competitor. 9:59:59.000,9:59:59.000 That ... 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 How's that even possible? 9:59:59.000,9:59:59.000 The sneaker market[br]is just supply and demand, 9:59:59.000,9:59:59.000 but Nike's gotten very good[br]at using supply -- limited sneakers, 9:59:59.000,9:59:59.000 and the distribution of those sneakers[br]to their own benefit. 9:59:59.000,9:59:59.000 So it's really just supply. 9:59:59.000,9:59:59.000 Sneakerheads joke that as long[br]as it's limited and Nike, they'll buy it. 9:59:59.000,9:59:59.000 Shoes that sell for 8,000 dollars do so[br]because they're very rare. 9:59:59.000,9:59:59.000 It's no different than any other[br]collectible market, 9:59:59.000,9:59:59.000 only this isn't a market at all. 9:59:59.000,9:59:59.000 It's a false construct created by Nike -- 9:59:59.000,9:59:59.000 ingeniously created by Nike, in the most[br]positive sense, to sell more shoes. 9:59:59.000,9:59:59.000 And in the process it provided tens[br]of thousands of people 9:59:59.000,9:59:59.000 it provided tens of thousands of people[br]with life-long passions, myself included. 9:59:59.000,9:59:59.000 If Nike wanted to kill the resell market,[br]they could do it tomorrow, 9:59:59.000,9:59:59.000 all they have to do is release more shoes,[br]but we certainly don't want them to, 9:59:59.000,9:59:59.000 nor is it in their best interest. 9:59:59.000,9:59:59.000 That's because unlike Apple, who will sell[br]an iPhone to anyone who wants one, 9:59:59.000,9:59:59.000 Nike doesn't make their money[br]by just selling 200 dollar sneakers. 9:59:59.000,9:59:59.000 They sell millions of shoes to millions[br]of people for 60 dollars. 9:59:59.000,9:59:59.000 And sneakerheads are the ones[br]who drive the marketing, 9:59:59.000,9:59:59.000 and the hype, and the PR[br]and the grand cachet, 9:59:59.000,9:59:59.000 and enable Nike to sell millions[br]of 60 dollar sneakers. 9:59:59.000,9:59:59.000 It's marketing. 9:59:59.000,9:59:59.000 It's marketing in the likes to which[br]has never been seen before, 9:59:59.000,9:59:59.000 this isn't in any text book. 9:59:59.000,9:59:59.000 For 15 years Nike had propped up[br]an artificial commodities market, 9:59:59.000,9:59:59.000 with a Facebook-level hyped IPO[br]every single weekend. 9:59:59.000,9:59:59.000 Drive by any Footlocker at 8am[br]on a Saturday morning, 9:59:59.000,9:59:59.000 and there will be a line down the street[br]and around the block, 9:59:59.000,9:59:59.000 and sometimes those kids[br]have been waiting there all week. 9:59:59.000,9:59:59.000 You know those crazy iPhone lines[br]you see on the news every other year? 9:59:59.000,9:59:59.000 Nike lines happen 104 times more often. 9:59:59.000,9:59:59.000 So Nike sets the rules. 9:59:59.000,9:59:59.000 And they do so by controlling[br]supply and distribution. 9:59:59.000,9:59:59.000 But once a pair leaves the retail channel,[br]it's the wild west. 9:59:59.000,9:59:59.000 There are very few, if any,[br]legal unregulated markets of this size. 9:59:59.000,9:59:59.000 So Nike is definitely[br]not the stock exchange, 9:59:59.000,9:59:59.000 in fact, there is not central exchange. 9:59:59.000,9:59:59.000 By last count, there were 48 different[br]online markets that I know of, 9:59:59.000,9:59:59.000 some are eBay clones, some[br]are mobile markets, 9:59:59.000,9:59:59.000 and then you have consignment shops[br]and brick-and-mortar stores, 9:59:59.000,9:59:59.000 and sneaker conventions,[br]and reseller sites, 9:59:59.000,9:59:59.000 and Facebook, and Instagram, and Twitter, 9:59:59.000,9:59:59.000 literally anywhere sneakerheads[br]come into contact with each other, 9:59:59.000,9:59:59.000 shoes will be bought and sold. 9:59:59.000,9:59:59.000 But that means no efficiencies,[br]no transparency, 9:59:59.000,9:59:59.000 sometimes not even authenticity. 9:59:59.000,9:59:59.000 Can you imagine if that's[br]how stocks were bought? 9:59:59.000,9:59:59.000 What if the way to buy a share[br]of Apple stock 9:59:59.000,9:59:59.000 was to search over 100 places[br]online and off, 9:59:59.000,9:59:59.000 including every time[br]you walk down the street 9:59:59.000,9:59:59.000 just hoping to pass someone[br]just wearing some Apple stock? 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 Never knowing who had the best price, 9:59:59.000,9:59:59.000 or even if the stock[br]you were looking at was real. 9:59:59.000,9:59:59.000 That would surely make you say, 9:59:59.000,9:59:59.000 [WTF?] 9:59:59.000,9:59:59.000 Of course that's not how we buy stock. 9:59:59.000,9:59:59.000 But what if that's not how[br]we need to buy sneakers either? 9:59:59.000,9:59:59.000 What if the inverse is true, 9:59:59.000,9:59:59.000 and what if we could buy sneakers[br]exactly the same way as we buy stock? 9:59:59.000,9:59:59.000 And what if it wasn't just sneakers, 9:59:59.000,9:59:59.000 it was any similar product like watches[br]and handbags and womens' shoes, 9:59:59.000,9:59:59.000 and any collectible, any seasonal item,[br]and any markdown item? 9:59:59.000,9:59:59.000 What if there was[br]a stock market for commerce? 9:59:59.000,9:59:59.000 A stock market of things. 9:59:59.000,9:59:59.000 And not only could you buy in much more[br]educated and efficient manner, 9:59:59.000,9:59:59.000 but you could engage in all[br] 9:59:59.000,9:59:59.000 the sophisticated financial transactions[br]you can with the stock market. 9:59:59.000,9:59:59.000 Shorts, and options, and futures, 9:59:59.000,9:59:59.000 and well, maybe you see[br]where this is going. 9:59:59.000,9:59:59.000 Maybe you want to invest[br]in a stock market of things. 9:59:59.000,9:59:59.000 Because if you had invested in pair[br]of Air Jordan 3 Black Cement in 2011, 9:59:59.000,9:59:59.000 you could either be wearing them onstage, 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 or have earned 162 percent on your money. 9:59:59.000,9:59:59.000 Double the S&P and 20 percent[br]more than Apple. 9:59:59.000,9:59:59.000 (Laughter) 9:59:59.000,9:59:59.000 And that's why[br]we're talking about sneakers. 9:59:59.000,9:59:59.000 Thank you. 9:59:59.000,9:59:59.000 (Applause)