Nike, Tiffany and The 3% Rule
PLUS: TikTok for text, Roger Federer's $1B empire.
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Today, we’re talking about the psychology behind Nike’s shoe collaboration with Tiffany & Co.
Also this week:
TikTok for text
How Roger Federer made $1B
And some really dumb memes (including Google Calendar)
Nike and Tiffany & Co. recently collaborated on some splashy products.
The key drop was a $400 pair of black Air Force One shoes with the Nike check in the iconic Tiffany Blue color. Based on 27 minutes of Twitter scrolling, the general vibe on the collaboration seems to be meh, uninspired or lazy (I wouldn’t buy the shoe but I am seriously considering the $250 silver cleaning toothbrush).
On the one hand, LVMH-owned Tiffany took a $100 shoe and changed the color of a check then quadrupled the price. On the other hand, there’s actually not a lot of room to maneuver when you have two such iconic brands.
The rationale behind the shoe’s minimal change is best explained by Virgil Abloh, the late streetwear designer who founded the Off-White brand and was artistic director of menswear for Louis Vuitton. Abloh famously did a line of Nike collaborations where he took well-known shoes (eg. Air Jordan I) and made slight changes (some text here, an accessory there).
For a 2018 Harvard lecture, Abloh explained that Nike “products were so good” and “so perfectly put together” that he only wanted to make slight edits. He wanted to “recognize the shoe he already had” but with a personal touch.
Abloh called this the 3% approach (or The 3% Rule): you alter a product or idea by only 3% to create something totally new. Why does the approach work? Human's desire two competing things: familiarity (to give us comfort) and novelty (to fulfill our curiosity).
Whatever you think of Abloh’s work — or the Tiffany x Nike collab — the psychology behind the 3% rule is very sound.
In a piece for The Atlantic, Derek Thompson relays the story of French Industrial Designer Raymond Loewy, who was a master of combining familiarity and novelty.
Working in the mid-20th century, Loewy’s firm created some of the most iconic designs in American culture including logos (Shell, Exxon, TWA, BP, Greyhound), consumer products (Coca-Cola vending machine, Lucky Strike box), and vehicles (Air Force One nose, Studebaker Avanti). In 1950, Cosmopolitan Magazine wrote that Loewy had “probably affected the daily life of more Americans than any man of his time.”
The Frenchman’s design philosophy was summed up by 4 letters — MAYA (bold mine):
“Loewy had an uncanny sense of how to make things fashionable. He believed that consumers are torn between two opposing forces: neophilia, a curiosity about new things; and neophobia, a fear of anything too new. As a result, they gravitate to products that are bold, but instantly comprehensible. Loewy called his grand theory “Most Advanced Yet Acceptable”—maya. He said to sell something surprising, make it familiar; and to sell something familiar, make it surprising.”
The preference for familiarity and tendency to gravitate towards things we see more often is known as the “mere exposure effect”. Evolutionarily, this makes sense: humans are cautious around new sights and sounds because they might be dangerous (but become more comfortable if the supposed threat turns out to be harmless upon repeated exposure). Thompson says that the “mere exposure effect” is one of the “sturdiest findings in modern psychology”.
However, there are limits to how much we want to see the same thing (Marvel and Star Wars reboots). But a small change can provide the novelty humans also crave (fine, I’ll watch if there’s a random Samuel L. Jackson cameo).
Thompson cites two other examples of familiarity meeting novelty:
The Spotify team found that the custom Discover playlists they created for users — which started as a way to recommend you entirely new songs — performed best when it included tracks you had previously heard (Spotify stumbled on this after a bug mixed up people’s Discover playlist with songs that they had previously listened to)
Harvard and Northwestern researchers studied how the US’ National Institute of Health (NIH) assessed research submissions. They found that the NIH gave the worst ratings to papers with “the most novel proposals” whereas the best-performing papers only made slightly new discoveries. The conclusion: there is an “optimal newness” for ideas (I don’t know if optimal newness is 3% but you get the point).
With cultural icons as famous as Nike and Tiffany, it doesn’t make a lot of sense to veer too far from the familiar aesthetics. Why throw away decades of built-up brand equity, mind-share and marketing spend?
My favorite example of a long-lasting cultural phenomenon that saw the slight editing of an idea is Absolut Vodka.
In 1979, the Swedish liquor brand — which was 100 years old at the time — broke into the very-crowded American vodka market. While vodka brands typically competed on purity of taste, ad agency TBWA advised Absolut to market itself on the aesthetics of its bottle (designed as a 19th-century Swedish pharmacy vial).
When the print-only campaign started in 1981, Absolut sold 20,000 cases of the vodka. Over the next 25 years, Absolut Vodka ran ~1500 ads that all riffed on the silhouette of the bottle’s design. You’ve definitely seen the ads, which play on geography, celebrations and cultural phenomenons (it’s just the word “Absolut” and another word representing the visual idea).
By the time the ad campaign ended in 2006, Absolut was selling 4.5m bottles a year and responsible for ~50% of imported vodka bottles in the US. Absolut went from unknown to dominant with a simple idea...repeated 1500 times (it also helped that Absolut was owned by Sweden’s state alcohol maker with a huge marketing budget but — as someone who lived in Asia and saw many national champions fail to break out globally — I can assure you that money is not enough).
Again, the brain seeks familiarity. And if you can mix in novel repetition, it’s a potent combination. As Napoleon Hill said "Any idea, plan, or purpose may be placed in the mind through repetition of thought.” Or in marketing speak: the rule of 7 states that a prospect must see a brand at least 7x before making a buying decision.
In an essay, Abloh further expounds on the 3% rule and why you only have to slightly innovate an existing project to create a new one:
3 % is applicable across practices and fields, different media, eras of our history. Our future.
A series of 3%’s brings the classics to modernity. Connects icons to burgeoning talent.
3% is packaging, 3% is marketing.
3% is a single sneaker with Nike, executed 50 different ways.
The 3% ideology has its advantages. It recalls an eye-to-emotion-connection in the brain and adds an alternate voice. 3% expands our world view, without pushing our zones of comfort to the brink.
We’re-exposed to “new”, but not eccentric or disconcerting.
Of course, Abloh has critics that call his approach unoriginal or borderline plagiarism. Abloh addresses this charge with a related concept: "Readymade", the idea that people should build on what already exists. He cautions against the instinct to create stuff from scratch. You should build on the aesthetic of a mentor (whether dead or alive). Odd are, these mentors did the same:
“It’s important to recognize where we’re at in the lineage of art movements. I’m sure in your [design] class, you’re trying to challenge yourself to invent something new. To be so like avant-garde. The thing I’ve figured out through working is that we exist off the backs of many other things in iterations before us. So once you think about us as a collective, you then realize that we’re all tracking towards the same direction”
I agree with this take. Obviously, I’m not saying plagiarize or “take inspiration without credit.” I’m saying that unless you’re a creative genius that can truly muster original masterpieces out of thin air (David Bowie, Jimi Hendrix or — my fave — Guy Fieri), the approach of building on top of what works makes sense.
There’s a reason why the Hero’s Journey for film and same “Four Chords” for hit music keep on resonating decade after decade.
Find something that inspires you. Add your perspective. Add your twist. Add your 3% (I know one of you jokers is going to take this article and change 3% of the words and post it as your own as a counterpoint…but you know what I mean).
With the 3% rule context, the Nike and Tiffany collab makes a ton of sense.
The best criticism against the Nike X Tiffany collab I saw came from another streetwear legend, Bobby Hundreds: he said it was a missed business opportunity by Tiffany, which should have done a jewelry collaboration and introduced an “entirely different demographic to their core competency…imagine if more sneaker-heads get into jewelry.”
Tiffany should definitely consider a jewelry collaboration with Nike. And if they do it, I have a good guess at what %-age change will be made to the original item.
Bearly AI Update
I wanted to shoutout any international users of Bearly AI, the AI-powered research app I’m building (check out geographic distribution of users below). One of the most frequent product requests is for translation services. We just need to figure out which languages to do first. If this sounds like something you want, please shoot an email (and also try the app for free if you haven’t).
Links and Memes
TikTok for Text: The Instagram founders (Kevin Systrom and Mike Krieger) just launched Artifact. Th app uses AI to recommend articles to read and people are calling it “TikTok for Text”. Technicaly, China already has a TikTok for text — it’s called Toutiao and is owned by Bytedance (TikTok’s parent company). My buddy Turner Novak has a great breakdown of the Chinese app and how its recommendation algorithm laid the groundwork for TikTok.
Turner says of Artifact, “I do think Artifact's core concept is a smart idea. The space appears crowded, and they won't have any of the same tailwinds as Toutiao. To start, they'll need to find a core content format that no one else has nailed yet alongside an early distribution hack to quickly get readers on board.”
The Instagram guys obviously are beasts but I think Artifact is a bit in no-man’s land. The app currently serves up articles from mainstream publishers (Flipboard is a pretty depressing comparison). There are plans for user-generated content but Twitter dominates short-form text and has the network effect (disclaimer: I’m addicted to the app and enjoy making dumb memes for it) while Substack is cornering long-form (with a solid app, too).
This Hacker News comment also brings up a good point about AI-powered reading suggestions:
Purely algorithmic feeds work for TikTok because people want to shut their brains off when they use the app. It's like a drink after work. Copy-pasting that logic to longform text misses the differences in the mediums, and how people interact with them. When I'm reading, I'm trying to be thoughtful, not titillated. And part of being thoughtful is consciously choosing what to read.
One might say that sites like reddit and hacker news are just archaic versions of the same recommendation engine, but the friction is actually an important feature, and keeps the experience from devolving into lowest common denominator clickbait.
How Roger Federer made $1B: Joe at Huddle Up has a great breakdown of Federer’s business empire. Three things stood out:
Federer’s early sponsorships were underwhelming because his father repped him and didn’t understand the sports business
The bulk of Federer’s fortune is from two deals: 1) in 2018, he left Nike for Uniqlo (a 10-year $300m deal which — crucially — did not include a retirement clause, meaning he could retire the next day and still get paid); and 2) he became the face of Swiss shoe company On Running in exchange for 3% equity (when On went public in 2021, that stake was worth $300m)
Federer is just a good dude…having given away tens of millions of dollars to support child education causes in Africa
PS. I just queued up David Foster Wallace’s iconic profile on Federer titled “Federer as Religious Experience” as my long read for this weekend.
How to judge character: Music historian Ted Gioia dropped a piece called “My 8 Best Techniques for Evaluating Character”. It’s quite the read. And the first technique is one I’ve heard many people say:
Forget what [people] say, instead look at who they marry (“A person’s choice of a spouse—or if they aren’t married, their closest lifelong partner—is much more revealing than anything they say or do in public. This choice tells you about their own innermost longings, expectations, and needs.”). Other good ones include “See how they treat service workers” and “If they cheat at small things, they will cheat at big things”.
Other good ones include “see how they treat service workers and “if they cheat at small things, they will cheat at the big things.” My secret question for judging character: Can you give me your favorite Tobias quote from Arrested Development? (if they don’t have one, I’m immediately suspect).
…and here are some wild tweets.
Netflix implemented a new policy to stop password sharing: every 31 days, your account has to log into its home network or it gets blocked (good luck to travellers). Obviously, people are not happy:
Last week, there was a big scandal around AI porn. For the uninitiated, porn has been the early use case for basically every media-related technology ever (cave drawings, clay tablets, printing press, camera, film, home video, Cable TV, internet etc). So, it’s not surprising that the explosion of AI-powered tools for images and videos will lead to some gnarly questions.
The most recent one: a popular male Twitch streamer was busted on live video looking at AI-generated porn of popular female Twitch streamers. After giving a very suspect excuse of why he was looking at the materials, he gave a cringe apology with his wife in the background. We’ve had a “deep fake porn” problem before but the democratization of these tools will take it to a whole ‘nother level. Pirate Wires has good coverage on the story and some philosophical implications:
In the previous email, we talked about the latest meme template going viral: consumer apps with a twist. I think we officially have a winner of the template (solid combination of familiarity and novelty right here).
The 3% rule is underrated. Can see many successful indie businesses doing well from just doing that. Same reason why we have 10 different brands of orange juice in the supermarket!
Great issue, especially generous… thanks.