- | 5:30 pm
Nike should have never killed its NFTs
After acquiring its virtual sneaker label RTFKT in 2021, Nike is now calling it quits on one of its most promising innovations.
What a difference a year can make. After amassing $185.3 million in NFT sales revenue in 2023, within three years of operation, Nike is rolling up its virtual sneaker label, RTFKT (pronounced “artifact”). What was once seen as a step into the future for the sneaker giant will soon be a chapter from its past and a cautionary tale for brands that aspire to innovate.
For some, the decision to sunset the venture is a no-brainer. Web 3 has slowed and Nike’s acquisition of the digital fashion business in December 2021 happened at a time when non-fungible tokens, augmented reality, and virtual reality were the closest bet to be the next big thing. ChatGPT didn’t make its debut until almost a year later, so AI wasn’t as pervasive or pronounced as we now know it to be.
Furthermore, Nike’s financial standing was in a much stronger position then, as was its now ousted CEO, John Donahoe, who oversaw the acquisition and later stepped down from his role at the brand due to poor sales performance (ironically attributed to a lack of innovation).
That’s the part that has many of us so stunned. RTFKT was a breathtaking technical accomplishment. But more than that, it was a glimpse of the future for Nike and, quite possibly, the future of branding for the fashion category more broadly.
But Nike’s story isn’t altogether unique. Every corporation does this in moments of sorrow. A few disappointing quarters and leaders tend to cut bait on whatever’s seemingly not “working”—today. This is standard procedure for corporate America. However, the short-term forces of today’s performance metrics often undercut what could be for tomorrow’s successes.
That’s the complicated reality of brand innovation: It operates on a different timeline than business operations. Brand innovations require a long-term time horizon, and the pressures of quarterly results and Wall Street expectations subsequently restrict the kind of time investment necessary to incubate breakthrough ideas. What a shame.
As in the erasure of RTFKT, this phenomenon is more than simply tidying the house; it’s a big, fat strategic error. Here’s why.
Imagine we are sitting on the subway. Someone plunks down beside us. We notice they are wearing a pair of futuristic-looking sneakers (they are, in fact, Nike Cryptokicks IRL).
Hmm. Interesting. But in a world that is crazy for sneaker culture, perhaps not exceptional. Then we look again.
This brand marque is moving. The clouds behind the swoosh are sailing. The person beside us is wearing shoes with news.
In the blink of an eye, the art of the “branding possible” has expanded.
Or consider the RTFKT x Nike AR Genesis hoodie. Fashion tech journalist Maghan McDowell called it a “physical-plus-digital wearable” in Vogue Business.
Imagine this on the subway. A guy is waiting to get off at the next stop. It’s our stop, too. So we can’t help noticing as he hits the platform that his hoodie suddenly blossoms. It’s got wings.
Both the shoes and the hoodie come with a near field communication (NFC) chip. This means that when we are in the presence of Cryptokicks sneakers or the Genesis hoodie, our AR glasses can see what they say.
This augmented reality is really going to augment reality. There will be lots of clouds and wings. And a profusion of additional meanings and messages. Branding will change beyond recognition.
“Not so fast,” we hear you say. “AR glasses are a bust and, in any case, years away.”
Not so fast yourself. These technologies already exist, thanks to Meta and Google. Admittedly, they aren’t great, but technically we are there. Perhaps what they’re missing is a complement—a peanut butter to their jelly—to make the technologies feel more meaningful. Perhaps the only thing missing is time. The future has caught up to RTFKT—just as Nike abandoned ship!
BACK TO THE SUBWAY
There, across the aisle, we see a guy writing furiously. New York City births another poet. Except in this case, our AR glasses and his Nike-RTFKT hoodie let us see the feverish creativity firsthand, as it is rendered on the exterior of the poet’s jacket. There he is writing, striking, spitting, striking. A virtuoso lyricist in the works? And for once in the history of the city, we are there, watching as culture emerges.
Whew. As if New York City is not hyperstimulating enough—now we get to see some of the frenetic activity out of which the city springs. Backstage is now front-and-center stage. AR glasses multiply the surfaces on which the artists can express themselves. And, of course, they will. NYC is the original “content under pressure.” It fills almost instantaneously with wings and things.
We remember when Kevin Slavin created Area/Code and started building real-world games using location-aware technologies. One of his games allowed us to use a phone to track the monster tracking us. That was 2005. We’ve been waiting for the world to catch up ever since.
Now it has.
Recently, Karen X. Cheng, a video director in San Francisco, made an augmented reality dress. When someone points a camera at the dress, an Instagram filter shows the beating heart within. Red carpets and award shows will never be the same.
THE BRANDING QUESTION
So what does this mean for branding?
We hold this truth to be incontrovertible: Brands matter in exact proportion to the content they contribute to culture.
RTFKT gave us a new glimpse of branding and marketing, one in which brands stop merely talking and taking, and start giving.
This technology creates a new medium for the branding message. It gives content creators a new way to take their work public. It gives marketers a new opportunity to express their creativity. Now we can make sneakers, hoodies, dresses, and entire cities sing with meaning. The difference for branding is big. Too often, pre-RTFKT, the brand was desperate for attention. Now it can be the master of the cultural moment.
So go ahead, refuse this opportunity. Ignore the chance to make brands a vital source of cultural production simply because it doesn’t happen at the speed of the Street. Just keep giving us “bang the drum” branding and see what “the kids” think of you then. Perhaps the biggest issue for Nike—like much of corporate America—isn’t a lack of innovation as much as a lack of patience and curiosity.
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