Cautionary Tales with Tim Harford - Adidas v Puma: A Battle of Boots and Brothers

Episode Date: June 21, 2024

Adi and Rudi Dassler made sports shoes together - until a feud erupted between them. They set up competing companies, Adidas and Puma, and their bitter rivalry divided the sporting world, their family and even the inhabitants of their home town.  The Dassler clan turned bickering into an art form - even drawing the likes of soccer legend Pele into their dispute. But did the brilliant fires of hatred produce two world-class companies, or was it a needless distraction from the Dasslers' love for their craft?     For a full list of sources, see the show notes at timharford.com. See omnystudio.com/listener for privacy information.

Pushkin The mayor of Herzogenaurach is going to watch a game of soccer. On one foot he wears a shoe made by Adidas, on the other foot a shoe made by Puma. If you didn't know anything about Herzogenaurach, you might assume that the mayor must be unobservant, disorganised, a little absent-minded. Not a bit of it. The mayor of Herzogenaurach chose his footwear carefully. He's a diplomat. He has to be. Herzogenaurach is a small town on the Auerach River in Bavaria, Germany, with a history that traces back a thousand years. Its population? Just 24,000. The old town is picture-postcard

perfect. Cobbled streets and medieval half-timbered buildings, a restored 13th century castle, a Baroque church, ivy climbing up the clock tower, and a fountain. A fountain with a modern statue depicting two groups of children playing a childhood game. Tug of war. Look closely, and you'll see the children on one end of

the rope are in Puma shoes. The other team, Adidas. This small town in Bavaria is home to the headquarters of not one, but two global behemoths of sports apparel. Adidas and Puma between them sell over 30 billion dollars worth of clothes and shoes and equipment every year. For decades, Herzogenaurach has had a Puma side of the river and an Adidas side. A Puma sponsored local soccer team and an Adidas team. Puma families and Adidas families. The town of the lowered gaze, it was called.

Because people in Herzogenaurach would glance down to check the brand of your footwear before deciding how to greet you. The mare grew up in a puma family. As a kid, he says, I had only puma clothes. Wearing adidas would have been unthinkable. Now, as a politician, he wears both brands. Admittedly, not usually one on either foot, but today is a special day. September 21st 2009, United Nations World Peace Day. To mark the occasion, workers from Adidas and Puma are going to play a game of soccer. It would have been impossible 30 years ago, says the mayor. It's not Puma versus Adidas that might be pushing the tentative détente too far. Instead,

each team has players from both companies. One team wears white, the other black. The specially made shirts have the three stripes of Adidas on one sleeve, Puma's leaping cat on the other. We play for peace, the CEO of Puma tells assembled journalists. It's a historical moment, adds the CEO of Adidas. It's the kind of rhetoric usually reserved for peace talks in the Middle East. How did the choice of leisure wear in a small town in Bavaria become such a serious affair? I'm Tim Harford and you're listening to Cautionary Tales. This is a tale about motivation at work, what it can achieve and the strange places it can take us when it goes too far.

The story starts in 1918 with a young man coming home from the First World War, Adolf Dassler, Adi to his friends. Adi's dad was a weaver. His mum washed people's linens in the shed in their yard. But in the hardship of war, not many people could afford to outsource their laundry. Adi returned to Herzegunaurach to find his mother's laundry shed shuttered, and he decided to start his own business there, making shoes. There was plenty of leather to be scavenged from old army kits, helmets and bags no longer needed. Adi collected them, cut them up into strips and stitched them into boots. The electricity kept cutting out, so Addy invented a bicycle-powered device to work the leather.

He got a friend to pedal. Addy had never been trained as a cobbler, but he was a keen athlete, a runner, a high jumper. And he understood how hard it was to find good footwear for sports. The state of the art in running spikes was simply leather soles with nails banged through them. Addy was sure he could do better. He spent hour after hour experimenting with different kinds of spike and studs for soccer. His shoes started to sell and he moved from the shed into a factory.

His older brother joined the business. Rudy Dassler was a sportsman too, nicknamed The Puma. But in other ways, he wasn't like Addy at all. Addy liked to tinker alone at his workbench. Rudy was suave and loud and confident, a natural salesman. By 1933, when Hitler came to power in Germany, the Dassler brothers were employing 70 people. And the Nazis seemed like they might be good for the sports shoe business. In Mein Kampf Hitler dreamed of six million supremely fit athletes, all suffused with a supreme love of the fatherland. Adi and Rudi joined the Nazi party. They put out an advert showing a blonde haired runner. Dassler sport shoes praised by all who try them. Sales started to boom. And the Olympics were coming to Berlin in 1936. Hitler hoped the games would show the

superiority of Aryan athletes. But there was a problem with that hope. And his name was Jesse Owens. A 22-year-old black man, born in Alabama, the son of a sharecropper and the fastest sprinter the world had ever seen. Some in America wanted to boycott the Nazi games, but Jesse was keen to compete. I wanted no part of politics, Jesse later explained. Adi Dassler felt much the same. Sport is my politics, he said. As for the rest, I've really got no interest in it at all. Adi couldn't care less about Aryans winning gold medals – he just wanted to see what

the world's fastest runner thought of his shoes. So Adi finds his way into the Olympic village and seeks out Jesse Owens. He produces a pair of his latest design. They have cushioned heels and angled spikes and they're light, just six ounces. The shoemaker from Bavaria can't easily communicate with the athlete from Alabama, but with smiles and gestures, Addy persuades Jesse to try the shoes and keep them if he likes them. In a stadium clad with swastikas, Jesse Owens lines up for the 100 metre final. He's in the inside lane.

In just a few strides, he powers clear. The runners behind him grimace and strain. But they can't get close. Jesse Owens wins the 100 metres. Then he wins the 200 metres. And the relay. And the long jump. A black man is the star of the Nazi Olympics.

And the television pictures show Jesse wearing his Dassler brothers' shoes, with the two distinctive strips of leather down the side. For the brothers, it's great publicity, but at home, not all is well. Shoemaker Addy and salesman Rudy, and their spouses and children all live in the same big house. And as the 1930s draw to a close, it seems that Rudy is not getting on with Adi's much younger wife. She's sticking her nose into business decisions, he complains. One night, early in the Second World War, the air raid siren sounds.

Rudy and his family are already in the bunker when Adi's family arrive. Rudy hears Adi mutter to his wife, those bastards are here again. The British bombers, Adi insists that he meant, but Rudy won't be persuaded. He's sure Adi meant him. An unforgivable insult. At least that's one story that later gets told about the origins of the brothers falling out. There is another. Adi's away

for three months on military service. Rumour has it that Rudy and Adi's wife start an affair. A misunderstanding? Or a marital infidelity? Whatever the reason, the brothers now can't stand each other. And each becomes convinced that the other is trying to get them off the scene, as the author Barbara Schmidt describes in her book Sneaker Wars. Adi soon gets discharged from the army. He persuades the Nazi bosses that his factory can make useful goods for the war instead of just sports shoes, and the factory can't

run without him. Now Rudy gets called up, and try as he might, he can't talk his way out of it. He's convinced that Adi is pulling some strings to keep him away from their business. In 1945, with the Allies closing in, Rudy tries to slip away in the chaos. But no sooner has he got back home than the Gestapo come and arrest him. After the war finally ends, he turns up again. My brother and his wife were unpleasantly surprised, he said. They had not thought I would return. The war is over, but the recriminations are not.

Soon Rudy is arrested again, this time by the Americans. They seem to think Rudy might have committed war crimes. Rudy is sure he knows who gave them that idea. He spends a year in an internment camp before the Americans decide there's not enough evidence and let him go. Adi is endangered too. A local denazification committee has to decide how enthusiastic a Nazi he was. He stands to lose his business. Adi protests, I wasn't that enthusiastic. He joined the party, he says, only because it might help him to sell sports shoes. He didn't sack workers who opposed the Nazis. He even sheltered the half-Jewish mayor of a nearby town.

No, no, no, Rudy apparently tells the committee, Adi was a much Nazi-er Nazi than that. He had our factory producing parts for Panzer tanks. That wouldn't have happened with me in charge. The committee deliver their verdict. They believe Adi. They class him as a Mitläufer. Literally, a withwalker, as opposed to a frontrunner. A sufficiently unenthusiastic Nazi that they'll allow him to stay in

business. But it's painfully clear that Adi and Rudy can't run that business together any more. Rudy sets up shop on the other side of the river. The Dassler family splits in two. Their mum goes with Rudy, their sister stays with Adi. Their children stop seeing their cousins. The employees are caught up in this family drama. They have to choose a brother. Most of the sales team go with the salesman Rudy. Most of the factory workers stay with a technician, Adi. They need names for their new ventures. Adi decides to portmanteau his name. Adidasler. Adas. But there's another shoe company called Adas, so Adi has to think again. Adidas.

Rudy has the same idea. Rudolph Dasler. Ruda. He soon decides that Ruda's too boring, and his nickname would be much cooler. Puma. The town of Herzogenaurach will never be the same. in a moment. customer trust. Plus, you can streamline security reviews by automating questionnaires and demonstrating your security posture with a customer-facing trust center, all powered by Vanta AI. Over 7,000 global companies like Atlassian, Flow Health, and Quora use Vanta to manage risk and prove security in real time. Get $1,000 off Vanta when you go to vanta.com slash special. That's vanta.com slash special for $1,000 off. Adidas and Puma are both huge global brands. They're so famous that it's easy to lose sight of how astonishing it is that anyone has heard of either of them. Think about the challenge that faced Rudy Dassler and Adi Dassler in 1948. Rudy had just turned 50. Adi was only a couple of years

younger. They'd spent much of the last decade either producing things other than sports shoes such as parts for Panzer tanks, or justifying what they'd done in the war. Rudi had a loyal group of salespeople but nobody making products for them to sell. Adi had the makers but nobody to sell what they made. They were in a small town in Bavaria. In the wake of the war, Germany was a pariah state still banned from international sporting events. Plenty of other companies in other countries were making sports shoes too. With all these challenges, what were the odds that either one of Adidas or Puma would turn

into a multi-billion dollar global business empire? How did they both do it? Academics and management consultants, of course, take a keen interest in this question of why some companies succeed and others don't. One answer has to do with motivated employees. For example, here's the consultancy firm McKinsey. People who find their individual purpose congruent with their jobs tend to get more meaning from their roles,

making them more productive and more likely to outperform their peers. Purpose and meaning make us more productive. But where do we get that sense of purpose and meaning in our work? In 2016, researchers from UK universities decided to try to find out. They interviewed over a hundred people in diverse occupations, from nurses to lawyers to garbage collectors. First, they asked about demotivation. What are some times at work when you've found yourself thinking, what's the point?

People mention things like endless form filling, penny-pinching bosses, and a simple lack of recognition and respect. A stonemason said that's how he feels when his manager can't be bothered to say, good morning. Then they asked, what are some times when you felt a sense of meaning?

Some of the workers talked about moments when they'd put their work in a wider context, pausing to reflect on what it's really all about and how it affects the people around them. The stonemason recalled the end of a project to restore a cathedral, when the scaffolding came down and everyone said, it looks amazing. The stonemason is a real life example of the parable of the three bricklayers, which you'll often find trotted out in articles on finding purpose at work. The parable goes like this. An architect asks three bricklayers, what are you doing?

Laying bricks, says the first bricklayer. Putting up a wall, says the second. The third bricklayer says, I'm building a cathedral. No prizes for guessing which bricklayer the management guru's tellers will be most motivated and doing the best job. People feel purpose at work, it seems, when they're reminded of how their work contributes to a cause that means something to the people they care about. I wonder how much that helps to explain why two companies from a tiny town both did so well. When Rudy and Adi split, every worker had to choose a brother.

And the split was so acrimonious, they must have felt sure that the other brother would never forgive them, or give them a job in future if they needed one. In a small town with two big employers who loathed each other, every single worker at Puma and Adidas must have been desperate to prove they'd made the right choice. It's hard to imagine a workforce more deeply invested in their company's success. In his new base across the Aorak River, Rudy Dassler's new employees are soon putting in 14-hour days, even on a Sunday. They call him father. His wife is Dipumamutta, the on a Sunday. They call him Father. His wife is Die Pumamutter, the Puma mother. We are one family, Rudy booms. He's larger than life and full of bonhomie, sometimes. He gets angry too, as Rolf Herbert Peters describes in his book The Puma Story. In one meeting with staff to discuss a wage rise, he takes off his jacket and snaps, do you want the coat off my back as well?

In 1950, West Germany's soccer team is allowed back into international competition. The players wear whatever boots they want. The team's trainer realises that he's in a position to change that and have them all play in the same boot. That, he thinks, could be worth something. He approaches Rudy with a proposition. How about you pay me a thousand marks a month for my services? In today's terms, a few thousand dollars. Rudy is appalled by the idea. That's not how things are done. I am deeply disappointed in you, he says.

The soccer team's trainer shrugs and goes to see Adi, who sees that he's getting a bargain. At the next soccer world cup, West Germany get to the final. As the match time approaches, the heavens open. The pitch will become a quagmire. But Adidas have just introduced a new model of soccer boot with different types of screw-in studs. The team's trainer calls him over. Adi, studs on. Adi gets the players to unscrew the shorter studs from their boots and put in longer ones.

They'll give more grip in the muddy conditions. As the opposing team slip and slide around, West Germany score the winner. Three goals to two. The trainer insists on bringing Adi into the team's victory photo. The newspapers hail him as the nation's cobbler. Rudy is incensed. Don't people know that Puma have also just introduced boots with screw-on studs.

Rudy and Adi are constantly taking each other to court over who's copied who's idea. Adi jokes that Rudy must look like a Swiss cheese, because he keeps poking him to say, that was my invention. There's espionage. Rudy commissions a new machine for working leather, but he's messed up the specifications. It's no good for sports shoes. He's later amused to find out that Adi ordered an identical machine and also discovered it didn't work. There are dirty tricks. When Germany's star runner wins a big race wearing Puma spikes, the next day's newspapers somehow choose to print an old photo where he's wearing Adidas.

At the 1956 Olympics in Melbourne, the consignment of Puma shoes somehow gets held up in customs, while the Adidas shoes don't. At the Puma headquarters in Herzogenaurach, you'd better not even say Adidas. They're called NG or Nichtgenant – they who must not be named. Rudy quickly understands that he can't afford to be disappointed in people who ask for money to publicise his shoes. It's clearly worth paying for celebrity endorsement. And that now opens up a whole new front in the feud. At this point, the Olympics is still supposed to be strictly amateur. No commercial deals at all. Still by 1960 there's talk of bonuses for winners with the right shoe on. One gold medallist

tries to collect twice, by running his race in Puma, then changing into adidas for the podium. By the 1964 Olympics, things have moved on. Here's an American athlete, describing how it works. Like in James Bond movies, a shoe agent goes into the bathroom and leaves an envelope under the stall and I go in the stall after him. You get an envelope that had six, seven hundred or a couple of thousand dollars in fives and tens. You thought you were rich.

In soccer, the industry takes another step towards the modern day. The star of the 1966 World Cup is a Portuguese player called Eusebio. Pumas sign him up and launch a range of boots with his name on them, the Eusebio King. It's the first time their marketing has switched from buy these boots because they're better, to buy these boots because someone famous wears them. By now Rudy and Adi are getting old. The Dassler family feud has passed down a generation. To Adi's son Horst and Rudy's son Armin. Adi's son Horst is brilliant, charming and a workaholic. He calls his executives at any hour of the night.

One time it's a spouse who answers the phone. Horst comes the voice, you are interfering with my sex life. Rudy's son Armin wanted to study electronics. No way, said Rudy, you're getting into sports shoes. Horsed and Armin are barely on speaking terms. But they do meet to make a gentleman's agreement that neither will compete to sign up Pele, the most famous soccer player of all. A bidding war for Pele would break both companies.

At the 1970 Soccer World Cup, Pele is about to kick off a match when he tells the referee, wait a moment, I need to tie my laces. All around the world, television screens zoom in on Pele bending over to spend several seconds fiddling with his boot. A brand new Pele branded Puma boot. Puma put them on sale for 20% more than the exact same boot without Pele's signature. The Pele boot flies off the shelves. Rudy's son Armin has pulled off a coup. Adi's son Horst is fuming. Cautionary Tales will be back in a moment. As Rudy and Adi fought tooth and nail to build their sports shoe empires, the little town

of Herzogenaurach became more and more divided. Every family had someone who worked for one brother or the other. As they came home with tales about dirty tricks from the enemy, their families became just as invested in their company's success. Remember the mayor of Herzog and Auerach? The one who later turned up to watch soccer in diplomatically mismatched shoes. As a kid, he says, I had only puma clothes, wearing adidas would have been unthinkable. He's not exaggerating. Someone who moved from another town to join one of the companies recalls, He had a restaurant that was a puma restaurant, an Adidas restaurant. If you were working

for the wrong company, you wouldn't be served any food. So it was kind of an odd experience. It wasn't just restauranteurs. There were bakers and butchers who'd serve you only if you had the right brand of shoes on. If you were with Adidas, says one worker, it simply didn't cross your mind to go into a shop that you knew puma workers frequented. Another long-time resident recalls, There was a time when you'd have risked the wrath of colleagues and family if, as an employee of one company, you married an employee of the other.

Still, he reckons, without that intense local rivalry, neither company would have reached such heights. If this is what motivation at work can achieve, no wonder management consultants tell corporate clients that it matters. When I was at college in the mid 1990s, recruiters from big companies like Unilever or Procter and Gamble would invite undergraduates to presentations about what it's like to work for their company and how to apply for a job in their graduate training programme. I went to some of those presentations. At one, a recent graduate explained the project they'd been working on, developing a new brand of ice pop. They'd studded the market to understand the brand positioning of existing ice pops. They'd talked to focus groups of ice

pop consumers to find out what kind of adverts influenced them to buy one ice pop or another. And they'd launched a new ice pop. Much the same as all the other ice pops as a product, but cleverly marketed. It did well. A good percentage of ice pop buyers switched from competitors ice pops to their ice pop. The story was clearly meant to inspire. Apply for a job with our company and you too can get to work on similar projects. The final PowerPoint slide said, You can make a visible difference.

A cynical friend leaned over and whispered in my ear, surely he said, there's a typo that should read, you can make a risible difference. Remember the parable of the three bricklayers? We're supposed to frown at the first bricklayer, the one who said, I'm laying bricks, not, I'm building a cathedral. not, I'm building a cathedral. But the whole parable is built on a lie, which is that everyone gets to work on a cathedral. Put yourself in the position of a bricklayer who isn't building a cathedral, but can only find work building a wall around a parking lot in a nature reserve. What would you say if someone asked you what you were doing?

Maybe the best response is to shrug and say, I'm laying bricks. I do this job for the money. I look for meaning and purpose elsewhere. The alternative is to persuade yourself that what the world desperately needs is a parking lot in a nature reserve. We can find meaning in almost anything if we try hard enough. We can care deeply that people buy one ice pop, not another. We can feel personally fulfilled when we charge 20% more for a soccer boot

because we put Pelé's name on it. when we charge 20% more for a soccer boot because we put Pele's name on it. The consultants McKinsey tell us that when we see our individual purpose in our work, we'll be more productive and outperform our peers. Perhaps so, but if we take our corporate jobs too much to heart, we might end up, metaphorically, living in Herzogenaurach. And I put it to you that Herzogenaurach is not only a risible place, but a dark and disturbing one too. Adi and Rudi Dassler both died in their 70s. They're both buried in Herzogenaurach's small graveyard at opposite ends. Their sons, Horst and Armin, never buried the hatchet.

Adi's son Horst once met Armin's son Frank at a business event. There was no warmly avuncular greeting. The German language has both formal and familiar ways of saying you. Horst used the formal C with me. Frank Dassler remembers. I found that a little strange. Horst and Armin both died young. Cancer. The workaholic Horst tried to hide how ill he was. One colleague was stunned to get a letter from Horst after he'd died. He'd still been firing off business correspondence on his deathbed. In the end, each branch of the family decided to sell up. Puma became a publicly traded company in the 1980s. Adidas a decade later.

They outsourced production to countries where labour was cheap. The two companies' headquarters stayed in Herzogenaurach, but the high-powered employees often moved in from elsewhere. They hadn't grown up with this bitter divide. Slowly the animosity in this small Bavarian town began to fade. In 2004, Rudy's grandson, Frank Dassler, took a job as the head legal counsel for Adidas. A lot of waters flowed under the bridge, said Frank. Others were appalled. Rudy will be spinning in his grave, they said. One long-time Puma employee with a Puma tattoo on his neck told a journalist that Frank's new job was a capital sin. Then in 2009, the CEO of Puma picked up the phone to the CEO of Adidas.

It's peace day coming up, he said. I think it's about time after 60 years to end this feud. How about doing something together? And so two soccer teams emerged from the tunnel. One in black, one in white. Each kit with a Puma logo on one side and Adidas on the other, with the mayor of Hercega Nara watching on, wearing a Puma shoe on one foot and Adidas on the other. It wasn't puma versus adidas to avoid a symbolic result. Instead, it was bosses versus workers. But perhaps the result was symbolic anyway of what happens when employees get their purpose from their work.

The bosses won. It's easy to find corporate life depressing. All the time and energy and ingenuity that goes into pushing one brand of ice pop or sports shoe over another. But sometimes, just sometimes, our work presents a chance to set the cynicism aside. In the late 1960s, Adi Dassler heard about an American high jumper called Dick Fosbury. He'd invented a new technique for doing the high jump, twisting in the air and arching his back over the bar. The Fosbury Flop, people called it, dismissively

at first, until they realised that it worked. Addy by now was an old man, and a wealthy man, the head of a business empire. But back in his youth, remember, he'd been a keen high jumper himself. He hadn't forgotten what it meant to saw over the bar wearing a good pair of shoes. Dick Fosbury had done something which seemed totally original to Adi Dassler. He was captivated. Adi phoned Dick Fosbury up. He wanted to know everything about Fosbury's new technique, so he could think about exactly what design of shoe and spikes might help him to get the best run up and lift off. Then he went into his workshop and made the shoes. He sent them to Fosbury, who wore them at the 1968 Olympics, and won.

It was just amazing, said Fosbury, that this German cobbler would spend hours on spikes just for me. I was extremely grateful and certainly wouldn't dream of accepting cash to wear them. It was a throwback to a more innocent age. The young Addy, after the First World War, inventing shoes that would help him to be a better athlete. Approaching Jesse Owens in the Olympic Village, not to slip him an envelope stuffed with cash, but simply to say, you're the best. Please try my shoes. I hope you

like them. As 67-year-old Adi Dassler sat in front of the television, watching Dick Fosbury leap gold, he must have felt like a stone mason admiring a cathedral. Two wonderful histories of Adidas and Puma are The Puma Story by Rolf Herbert Peters and Sneaker Wars by Barbara Smith. For a full list of our sources, please see the show notes at timharford.com Cautionary Tales is written by me, Tim Harford, with Andrew Wright. It's produced by Alice Fiennes, with support from Marilyn Rust. The sound design and original music is the work of Pascal Wise.

Sarah Nix edited the scripts. It features the voice talents of Ben Crow, Melanie Guthridge, Stella Harford, Gemma Saunders and Rufus Wright. The show also wouldn't have been possible without the work of Jacob Weisberg, Ryan Dilley, Greta Cohn, Letal Mullard, John Schnars, Eric Sandler, Carrie Brody and Christina Sullivan. Cautionary Tales is a production of Pushkin Industries. It's recorded at Wardour Studios in London by Tom Berry. If you like the show, please remember to share, rate and review. Tell your friends. to the Music