World’s #1 Family Business Feud
You can believe that after almost four decades of working with and around family-owned-businesses, we have seen plenty of surprising, even shocking things. But the details of one particular well known family feud beggar belief.
Please tune in this week as Wayne recounts the famous tale of brothers Adi and Rudi, their successes, intrigues, divisions, and even betrayal. See if you can guess which two rival companies – still very successful today although no longer privately owned - the two brothers spawned. Do you know of a similar closely held business feud? Please share with Wayne at [email protected]
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Logo, Performance Construction Advisors
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Host Wayne Rivers appears in front of a white screen and talks to the camera.
On screen text, Wayne Rivers, Performance Construction Advisors
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WAYNE RIVERS: Hi, this is Wayne Rivers at Performance Construction Advisors, where We Build Better Contractors.
This week I want to talk about the number one family business feud in family business history. I got a lot of this information from a podcast called Stuff You Should Know, but I also did a little research online and backed up some of the facts as they related them. So, there were two brothers, Rudi and Adi. Rudi was born in 1898, Adi in 1900. Adi wanted to be an athlete but wasn't quite at that level. But he did have this concept that athletes doing different things require different footwear in order to perform the best. So, soccer shoes shouldn't be the same as track shoes and track shoes shouldn't be the same as weightlifting shoes and all those kinds of things, which was revolutionary at the time. So, he started up a company in about 1919 in his mother's bathroom of all places. In World War I, he had to take a hiatus from the company because he was drafted as a soldier in the army.
So, as he got back from the army, Rudi joined Adi. So, Rudi, the older brother, Adi, the younger. Adi was the technical guy, the inside guy, Rudi was the sales guy, the outside guy. They made a really good team, and they named their company Gebrüder Dassler Schuhfabrik, and they called it Geda, G-E-D-A. Now, Gebrüder means brothers in German. So that's how proud they were of their family business, their family heritage, their brotherness, they actually put it in the title of their company.
In 1925, they started making soccer shoes and track shoes. They were making about 50 pairs a day. In 1928, a person wearing their shoes won a gold medal for the first time and this caused them to think that in terms of marketing, attaching their shoes to famous athletes was going to lead to more and more sales. It did. In fact, in 1936, Jesse Owens, in that famous Olympics, wore the shoes from the two brothers. Time goes by, World War II breaks out. Now, Adi had been in World War I. In World War II, Rudi gets drafted to go into the army. He was a terrible soldier. He deserted his post all the time. He would come back to the factory. He had a feeling that his brother was trying to force him out. More on that in a minute.
In 1945, the tension breaks out into the public for the first time. There's a legend, nobody seems to know if this story is true or if it's apocryphal, but they're going into a bomb shelter in 1945, and Rudi says, the dirty so-and-so are back. Well, Adi and his wife interpreted that to mean them, as they were coming into the bomb shelter. What Rudi always said was that he was talking about the Allied bombers coming over the dirty. They're coming to bomb us again. Who would like that? But as legend has it, that's the first public rift between the two brothers that everyone could see.
Rudi as a soldier believed that Adi was setting him up, and in fact, that turned out to be true. So, Adi set up his brother to keep him away from the business, to be arrested, both by the German army and also in interred by the Allies. Once the war was over, he actually did that to his own brother to keep him away from the business.
In 1948, they split up, and that was very public. One brother took a factory over here, a river bisected the town, the other brother took a factory over there. The town became known as the town of bent necks. Why? Because when you were meeting people on the street, instead of looking at their eyes or their clothing for some indication of who they might be, everybody looked at their shoes. If you wore one brand of shoes, you were identified with this brother and this factory, another brand of shoes, you were identified with the other brother and that factory. They had separate bars, sports teams, bakeries, grocery stores, separate everything. The town of bent necks. Can you imagine a family business feud spilling out, not just into the broader family, but spilling out into the very city where the brothers operate their businesses?
The feud continued. Pele was the number one soccer player in the world in the sixties and seventies. The two brothers got together, and they agreed that neither would pursue Pele because even though he was the most spectacular player, and him wearing their shoes would've been a great payoff, it would be too expensive and it would've bankrupted either one of the businesses. Well, one of the brothers did, that would be Rudi, did sign up Pele. Pele famously stopped at the very beginning of a World Cup match to tie his shoes so the camera would focus on him and the shoes. It was a big payoff for Rudi's company.
In 1974, Rudi was sick and, on his deathbed, and he wanted to bury the hatchet once for all, and he asked to see his brother, Adi. Adi refused to come to his brother's bedside and Rudi passed. In 1978, Adi passed as well. So, these guys have been gone for a long time. If you didn't already know, the name of the original company is Adidas, the name of Rudi's company is Puma. These companies are still in the top three shoe brands in the world. What's the number one shoe brand in the world? This is a family business lesson. The number one shoe brand in the world is Nike. Why did Adi and Rudi, with their tremendous head start over Nike and Reebok and everybody else, why did they lose their market preeminence? Because they were so focused on their family business feud, the petty things that they were able to do to each other, the town of bent necks, et cetera. They were so focused inwardly; they didn't see this outward threat coming.
So, two things. Number one, keep your eyes up. Keep your focus outward so the competition doesn't pass you by. The second thing, if you find yourself in a toxic situation, don't let it go for... What was this? Almost 30 years between the two brothers. Go ahead and find a way to get yourself into a healthier environment. Whether that means leaving the family company, starting a separate company, whatever it means, get out of that toxic environment and don't become almost a cliche in this sense of what a family business feud looks like.
What tips do you have? We'd like to hear them. Send me an email to [email protected]. This is Wayne Rivers at PCA, where We Build Better Contractors.
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On screen text, Wayne Rivers, Performance Construction Advisors Performance Construction Advisors logo drops into the middle of a blue screen.
