How An NBA Ban Fueled Our Business
One afternoon last October, Adam Goldston met with his twin brother, Ryan, in their company's Beverly Hills, California offices to draw up marketing plans. Back then, their sporting goods start-up, Athletic Propulsion Labs, faced a problem. It only sold one product.
It was a basketball sneaker that the brothers branded as the Concept 1. The shoe came in two color schemes—green and black or green, white, and black. Priced at $300, it cost more than three times a basketball shoe's average price, according to data from the National Sporting Goods Association. But, as clinical tests had proven, the sneaker could elevate the average athlete's vertical leap by one to three inches because of a compression-force technology that the brothers—former USC basketball players—spent four years inventing.
Since the sneaker's debut in March 2010, APL had sold a couple thousand of the shoes. They wanted to expand brand awareness and the market for the shoe, and so, they found themselves brainstorming marketing ideas in Adam's office.
They'd hoped the NBA would approve the shoe for on-court use, and had met with league officials back in July. They wouldn't hear anything back from the league, until an NBA executive called Adam that afternoon: the NBA had decided not to allow players to wear APL's shoes, the official told Adam on the phone. It would give them an "undue advantage," according to an NBA statement released the next day.
The phone call lasted less than two minutes. Adam hung up, and then filled his brother in on the conversation. At first, the two were shocked, Adam says—their shoes were one of the only products in history to receive an NBA ban. And then, after a couple minutes, wide grins spread over their faces.
"This was going to be the biggest thing for us…We didn't even have any marketing made up then," he says. "We knew we had to embrace it because no one else had ever had this opportunity."
The next day, the NBA publicly announced the ban. Life for the Goldstons turned crazy shortly after. News outlets—everything from ESPN to The New York Times—picked up the story. APL's website crashed that day, and it took eight hours and eight new servers to get it back online. The twins could soon only manage five hours or so of sleep each night, Ryan says.
This attention was intense, but profitable as well. APL sold more shoes each day than in the previous months combined. (The Goldstons declined to provide revenue or sales figures.) APL experienced growth that would've taken years—and a great deal of investment—in a matter of days. "You know in The Incredible Hulk when he gets hit with the gamma rays?" Adam says. "This was our gamma ray shot."
Yet this brought fresh complications to APL: How should the brothers manage the company's Bruce Banner-sized growing pains?
First, the Goldstons switched APL's ad tagline from "Stop Dreaming. Jump Higher." to the more direct "Banned by the NBA." To this day, the company website background consists of that later phrase repeated over and over. They also had t-shirts made with the tagline in several different designs.
It was immediately apparent though that APL's brand could significantly extend beyond t-shirts. The brothers took meetings with a number of TV and film studios that wanted the rights to their story. One network proposed making a reality show about APL's newfound success: Who needs Snooki or Sammi when you have two handsome (twin!) brothers and their anti-establishment kicks? The Goldstons declined.
Had they agreed to the show, they would've jeopardized the brand's integrity, says Columbia University marketing professor Don Sexton. The network would have been in it for the ratings, and for reality shows to get popular, their characters need to be embarrassing, dramatic, or flawed. Preferably a bit of all three. And while these attributes make for good TV, Sexton says, it's hardly the image a serious business owner should cultivate.
Since October 2010, APL has added another sneaker, the Concours, to its product line. It too uses the compression-force technology. The Goldstons dropped the price on the shoes, and the Concept 1 now costs $150. All shoes are marketed under the same, "Banned by the NBA," tagline. Just how long can they ride this wave? Coast too long with it, and APL risks getting viewed as a one-hit wonder, says Joe Pine, founder of Strategic Horizons, a marketing agency. "And I assume with the word 'labs' in their name, they want people to think that you're changing," Pine says.
To accomplish this, they might use testimonials of schoolyard players or college coaches. Nike has certainly done this—notably producing a TV spot with Duke University's venerable head coach, Mike Krzyzewski. Or perhaps they could use comparative tests against well-known brands. "It seems APL's main challenge at the moment is to develop a broader, more mainstream marketing position," says Sexton. "While being banned by the NBA was very effective for building awareness, in the long run they need to move from being a novelty to being a solid and well-respected shoe brand."
Of course, it's the well-known brands that have boxed APL into a bit of a corner. APL could expand its products beyond its compression-force line toward more traditional shoes. This, however, would take them into direct competition with Nike and the other basketball shoe giants. To enter into a marketing battle with them could spell disaster.
The brothers have invested all revenue back into the company, they say. They dream of an innovative company—but one that's solely derivative of their dream. Outside financing might ease APL's immediate need to expand, and possibly take on its much larger competition. Tim Draper, a VC and founder of Draper Fisher Jurvetson, wears APL's shoes when he plays basketball with his son, and once sent a note complementing the shoes. Draper is a family friend of sorts—he invested in a company started by the Goldstons' father, Mark. So the idea of receiving outside financing isn't out of the question. It would, however, open APL up to other interests—those of their investors.
No one knows the challenge the brothers face better than their father. He realizes they must continually crank out disruptive, game-changing goods or attempt to go mainstream. As Reebok's former chief marketing officer, he knows exactly what his sons would face. For now, he's advised them to stick with what's gotten them this far.
And that's what they've done. In the spring, APL plans to release a running sneaker that also uses the compression-force technology. Just as the Concept 1 made you jump higher, this shoe will make you run faster by increasing your gait-speed with each step. It's the product of more than a year's work at APL.
The running shoe allows APL to enter a new market. Teenage boys dream of jumping higher. But even soccer moms go for a run. Basketball-equipment sales will reach around $261 million this year. Compare that to exercise goods, which will bring in five times that in 2011, according to National Sporting Goods Association data. This means the running shoe allows APL to not only enter a new market, but one with a greater customer base.
So the Goldstons envision a field of kids playing kickball in APL shoes, and their mothers standing by, also in a pair? Sort of. Right now, they're more focused on the Olympics. No, not for playing in the games—they were, after all, only walk-ons for the USC team. They would just die if the Olympic Committee banned their running shoes, just like the NBA. Wait, really?
"Got to set your goals high, right?" Mark says.
Why not. While an Olympic ban wouldn't be historic—another shoe company, Spira, faced a similar situation for its kicks during the 2008 Beijing Olympics—it would certainly make for good marketing. Again.