Flynits Will Help Nike Take The Lead

It probably doesn't shock you to hear Nike (NKE) is a case study in deceitful advertising. By deceitful, I mean effective. Nike ruthlessly reifies two things:

Superior technology

Superior style

Much of this branding is done through storytelling. Consider the story of Flynit. The story is: A long journey of reflective, scientific inquiry led Nike to "minimalizing" shoes. This is deceitful. First of all, it ignores the fundamental story of Nike getting its start by maximizing, bulkifying shoes--in fact this was emphasized in the minimalist manifesto "Born To Run". In fact, Nike's bulkifying of shoes coincided with a decline in American running.

The real story is that Nike saw the popularity of Vibram Five Fingers (excellent but watch out for the calves) and decided to get in on it. The first step was "Nike Free". This was a halfhearted adoption of the philosophy behind barefoot running. Actually what has made Five Fingers successful is not the premise of freedom, but the function of flexibility.

Nike embraces flexibility but goes a step further with Flynit, emphasizing the lightweight material component, as if the shoe is an ultrasonic test jet. Look, ethos aside, it's going to be a spectacular shoe in merit and in sales. The market has reacted:

I think the market has done a good job of pricing in the shoe and I don't necessarily think it's a great deal for investors in the short-term. I definitely don't think it's a bad deal, either.

Let's consider a long-term question of what this pivot says about Nike's demographic strategy. To me there are two hidden layers to Nike's re-embrace of runners. One, the international demographic, which is of course a growth story, and already runs more than Americans. Two, the pre-established secular story of Americans getting interested in wellness again. Running is one of the most effective cardiovascular workouts. Re-invigorating this healthy activity in the public imagination, Nike just became the shoe version of Subway.

By finally demonstrating full leadership in running, Nike opens a new chapter in its branding casebook. With such a beautiful execution here, in an area where they were the bad guys for so long, I am convinced management will continue leading elsewhere.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.