In 2009, Kanye West launched his Yeezy shoe line with Nike. The partnership produced some limited-edition hits but West soon became dissatisfied—Nike would not give him a royalty on his shoes. He jumped ship to Adidas in 2013 as a result, in return for what Forbes reported was a “unprecedented 15% royalty on wholesale,” plus marketing fees. Michael Jordan, with his Nike-powered Air Jordan line, apparently earns around only 5%. (There is no way to verify Kanye’s actual royalty but it makes sense that Adidas, with less scale than Nike, would woo him with a higher-than-average royalty while Nike was only paying him as a celebrity.)  

The first Adidas-Yeezy shoe launched in early 2015, along with an apparel line that followed in the fall of the same year. Initially, inventory was limited, with less than 10,000 pairs of each style produced. Given Adidas’ marketing muscle and Kanye’s celebrity status—his use of social media itself has, interestingly, been on-and-off for years—early styles sold out in a matter of minutes and just as quickly appeared on eBay and other secondhand sites for vastly inflated sums. This drove the Yeezy business for the first few years, but as it released more styles—likely driven by Kanye’s voracious appetite to create—it produced more inventory. This meant scaling up to 40,000 units per style in 2016, with some drops selling out quickly while others lingered. While the footwear business was taking off, Adidas stopped supporting Yeezy apparel soon after launch, likely given the very high costs yet low quality of the products and therefore very weak demand. Undeterred, Kanye spun the apparel operation out on his own and has been building it independently since then.  

Fast forward to 2019 and Forbes reports that Adidas-Yeezy is expected to earn $1.5 billion in 2019 revenue in its fourth full year of business, while Air Jordan does around $3 billion in annual sales but launched in 1984. There are many questions about the figure Forbes provided—the $1.5 billion could be a combination of Adidas Yeezy revenue and total Yeezy retail sales from third-party retailers such as Foot Locker and Finish Line. Some also doubt the figure is even true, and that the real number is well below $1 billion.  

Either way, Adidas has sold hundreds of millions of dollars of Yeezy shoes in just a few years while Air Jordan took much longer to accomplish the same feat (the exact timing is unknown). Sure, a significant amount has changed since 1984, but the speed at which Yeezy has grown is worthwhile. 

The more important difference, however, is that Kanye “owns” Yeezy while Jordan does not “own” Air Jordan. Brand ownership is a hot topic among celebrity-driven brands, but the term “own” is deceiving. As you read about in The Kylie Kronicles, while Kylie Jenner owns 100% of Kylie Cosmetics the brand, she controls none of the infrastructure to create, manufacture and deliver the brand’s products. Therefore, she owns 100% of her brand, which is really just her name, but the company itself is worth a fraction of the price of a consumer brand of her scale that owns its back-end and front-end infrastructure. Kanye’s ownership of Yeezy falls into the same category. The simplest proof of the value Adidas and Nike bring to Kanye and Jordan, respectively, is that they can claim 85 cents of every dollar of Yeezy shoes sold and 95 cents of every dollar of Air Jordans sold.  

While Kanye jumped ship from Nike to Adidas and took Yeezy as the brand name with him, all he owned and brought with him was the name. This is valuable, but it’s a far cry from owning a full-stack consumer brand. Yeezy-Adidas has succeeded on a much larger scale than Yeezy-Nike, but Yeezy is not—and should not be—a brand that can be sold to a buyer.  

While Kylie has been trying to sell Kylie Cosmetics to Coty, given its slowing sales and non-existant infrastructure, the best path forward for Kanye is to continue investing in the Adidas partnership and likely take home tens if not hundreds of millions of dollars a year in royalties for the foreseeable future. This will vastly outperform whatever Kylie is trying to earn from selling her first brand, which might produce a mediocre and singular liquidity event, given she does not have much to sell. Kanye, without much of a social media presence, also needs to rely on Adidas much more to market the brand. 

But at the same time, Kanye and Adidas need to recognize the growth ceiling on Yeezy, since the limited drops are a huge part of the brand’s desirability. Getting too greedy, which some people believe has already happened, will tank the entire brand over time. 

Kanye, so far, has made a series of powerful deals that give him what he wants—creative freedom and money—without going through the arduous process of trying to compete with Adidas on the back-end. He should talk to his sister-in-law about the best way to build a lasting brand in the celebrity-driven consumer goods space: know what you don’t know, find a partner who has what you don’t, and build it in a way that it can thrive for as long as possible. Even so, both of them could benefit from slowing down and growing more methodically rather than recklessly. That is how real brands are built, with or without a celebrity at the helm.