Nike’s 36-Year Quest for the Transparent Sole

The company has reimagined its signature air cushioning technology for the $190 VaporMax. Will going foam-free help it fend off Adidas?

Photographer: Meredith Jenks for Bloomberg Businessweek; Set Designer: Jojo Li; Grooming: Angela Di Carlo 

A pair of platinum-colored Nike running shoes seem to levitate above a pedestal in the middle of a circular room. The left and right sneakers point outward, each poised at 45 degrees. Spotlights give them an ethereal glow and, here and there, illuminate strands of silvery suspension filament strung from the ceiling in a “V.” The walls, floor, ceiling, and pedestal are all white, save for a deep blue circle painted above. Were a choir to file in and begin singing hallelujahs, it wouldn’t seem out of place. Instead, there is Brett Holts, Nike Inc.’s vice president for running footwear, surrounded by about a dozen reporters and photographers.

We are in Steve Prefontaine Hall, a glass-roofed exhibition space at Nike’s headquarters in Beaverton, Ore., on a rainy morning in February. Geese honk on a pond outside. Holts is holding a shoe identical to the ones dangling beside him: the VaporMax, whose distinguishing feature is a sole resembling bubble wrap. There’s no foam, no rubber—just clear, tubular, thermoplastic polyurethane (TPU) bags filled with air (nitrogen, to be precise). “This innovation is going to take us a big leap forward in the marketplace with runners,” Holts says. Figuring out how to make the VaporMax took seven years, he explains.

Back when Nike started on the shoe, the company dominated the American sneaker market so thoroughly that its rivals seemed to have surrendered. Others sold shoes, but only Nike sold cool. With LeBron James and Michael Jordan, a brand man since 1984, under contract, the company set the trends in basketball shoes, and basketball set the trends in the broader market. In 2010, according to Sporting Goods Intelligence Inc., Nike accounted for 40 percent of the U.S. athletic footwear market; five years later the number was 46 percent.

Recently, though, Nike’s rivals have reawakened. James now competes for the NBA spotlight with Stephen Curry, the reigning league MVP, who jumped from Nike to Under Armour Inc. in 2013, helping to triple the upstart brand’s annual footwear sales in three years. And even Jordan can’t command the buzz of hip-hop artist Kanye West and his signature Adidas shoe, the Yeezy, which has supplanted the Air Jordan as the prime status symbol among sneakerheads. West had been Nike’s biggest non-athlete endorser until he left in 2013, citing Adidas’s willingness to pay him royalties Nike wouldn’t. By the time his first Adidas shoe came out, in February 2015, consumers were also flocking to the company’s classic Stan Smith and Superstar low-tops and its new Boost running line. The following year, Adidas AG’s U.S. footwear market share increased almost 83 percent, according to NPD Group Inc.

While Nike still holds about half the market, big retailers such as Foot Locker Inc. and Dick’s Sporting Goods Inc. are devoting more rack space to Adidas, and investors have started to sour on Nike. After rising more than fivefold in the prior decade, the company’s share price fell 19 percent last year, making it the worst performer of the 30 stocks in the Dow Jones industrial average.

In the fall of 2015, Nike told the world it would get to $50 billion in annual sales by 2020, which would mean growing about 10 percent per year. At the time, it looked like the company might just pull off the rare feat of being both huge and fast-growing. A year and a half later, Nike’s strengths—its relentless focus on athletic performance and its size, with more than 70,000 employees worldwide—have begun to look like potential liabilities in a fast-moving, fashion-driven market. In December, Nike reported a 4 percent decline in North American orders, its first dip since the 2009 recession. The next quarter, orders dropped an additional 9 percent. “Adidas did a great job,” says Sam Poser, a footwear analyst at Susquehanna Financial Group LLLP. “But Nike was complacent.”

VaporMax soles.
Source: Nike

If Nike is feeling the pressure, it’s hard to tell in Beaverton. Holts, like everyone else the company makes available during a daylong press tour in advance of the March VaporMax release, speaks with breezy confidence. “If a serious runner wants to buy this and use it as their primary running shoe, that is what this thing is designed, developed, and engineered to do,” he says. “But if it’s somebody who wants to wear it as more of an expression, that’s fine, too.” Holts is echoing the words of Chief Executive Officer Mark Parker, who spoke about the shoe a few months earlier on an earnings call. “It’s a great example of an innovation that stands at the intersection of high-tech, pure function, and aesthetic beauty,” Parker said. “We expect big things from [it] in running, and we have an ambitious road map to bring it to life through other sports.”

If all goes according to plan, the VaporMax will recall past glories like the Air Max, seizing back momentum from Adidas and reaffirming the swoosh as the premier logo on the rack. This is Nike’s chosen way forward: Do more of what it’s always done.

“Unlock” is a favorite word at Nike. It falls from employees’ lips almost as freely as “performance” and “innovation,” often in noun form—as in, “That was a big unlock for us.” The argot reflects the slightly cultish atmosphere in Beaverton, where every building is named for a different Nike athlete. But it also speaks to how the brand develops products. Shoes begin as riddles. With VaporMax, the riddle was how to make Nike’s signature cushioning technology, the air bag, the only layer between foot and ground.

Air bags are Nike’s only made-in-the-USA sneaker components. They’re manufactured at two facilities, one in St. Charles, Mo., the other just outside the main campus in Beaverton. At the Oregon facility, we surrender our phones and put on safety glasses for a tour guided by Lalit Monteiro, head of Nike’s air manufacturing innovation team. “We are the only company in the world that can make a bag that can stand the repeated stress of the foot and retain air,” he says, holding a sheet of clear TPU the size of a place mat. TPU is one of the wonders of modern manufacturing—a moldable plastic with the elasticity of rubber, used in everything from toothbrushes to drive belts. Nike’s version consists of 70 layers, alternately rigid and flexible, each roughly as thick as two human hairs.

Some 1,300 people work in Nike’s two U.S. plants, but only a few dozen workers are visible as we walk the floor of the 180,000-square-foot Beaverton facility. Mostly we watch machines as they mold, melt, press, cut, inflate, and grind plastic. In one room, dozens of devices pound on finished air bags with pistons. Twelve hours of this testing, Monteiro tells us, is equivalent to 400 miles of running.

The VaporMax production line begins with two huge reels that unspool plastic into a bus-length machine that heats and vacuum-molds them. From there, the process is literally under wraps—Nike has taped paper over the clear plastic glass on the sides of the machine.

Nike’s air bag factory in Beaverton.
Source: Nike

Air has been with Nike since an aerospace engineer named Frank Rudy brought the idea to the company’s co-founder, Phil Knight, in 1977. Rudy had been tinkering with inflatable inserts for his wife’s ski boots and realized they might also work in sneakers. In his memoir, Shoe Dog, Knight describes sliding the demo inserts into his sneakers and going for a 6-mile run. They made for “one heck of a ride,” he writes. He agreed to pay Rudy somewhere from 10¢ to 20¢ for every shoe sold with the technology.

At its archives not far from the factory, Nike has a display timeline of its running shoes, starting with the nylon-and-rubber Tigers that Knight began importing from Japan in 1964. Air’s evolution starts with a photograph of an early Frank Rudy air bag. In 1978, Nike released its first air bag shoe, the Tailwind. It was a minor fiasco—bits of metal from the silver paint on the uppers would seep into the fabric and shred it from within. Still, runners liked the feel, and the Tailwind helped Nike establish a reputation for ambitious engineering.

Commercial success came in 1987, with the Air Max, which featured a cutout in the foam heel to display the air bag. The windows proved to be a masterstroke—the shoes explained themselves and looked like nothing else on the market. Air Max helped Nike beat back a surging Reebok and made Parker, who helped develop the shoe, a rising star.

Over time, Nike became expert in the physics and manufacture of durable sacks of inert gas; it now holds several hundred patents for air-cushioning tech. But it took decades for the company to unlock the foamless air bag sole. A prototype for a shoe with this feature, produced by Parker’s team in 1981, sits in a windowless room on the third floor of the Mia Hamm building, where we’re herded after lunch. Mia Hamm is the largest building on campus, home to Nike’s sports research lab and its Innovation Kitchen, a skunkworks for the shoes of the future.

John Hoke, Nike’s vice president for global design, puts on white gloves before picking up the old shoe. Its translucent polyurethane sole, vacuum-molded to resemble a honeycomb, has yellowed over the years. “These are six-sided,” Hoke says, pointing to the busted air bags. They cracked underfoot, he explains, because the straight edges would pinch and buckle.

The prototype was gathering dust somewhere when Nike decided to try again. This time, says Kathy Gomez, vice president for innovation, who’s seated to Hoke’s left, the company went through 15 rounds of prototypes. One problem was figuring out how best to attach air bags to the upper without a layer of foam. The eventual solution was a lip around the top edges of the shoe’s two air bags—a “swept pinch,” she calls it—where the uppers could be fused with glue. “It might seem simple and easy,” she says, “but simple and easy things are sometimes hard to create.”

The Nike-sponsored attempt to run a sub-two-hour marathon in Vaporfly shoes in Monza, Italy.
Photographer: Chiara Goia for Bloomberg Businessweek

Nike is proud of its meticulous craft, the way it worries every detail of a shoe and follows grand visions. This process is time-consuming, however, which can be a problem in a fashion-driven industry. During the seven years it took to get the VaporMax to market, trends came and went and came anew. Yet Nike hopes the shoe will again make it a trendsetter in running, the biggest sneaker category by volume (largely because running shoes are also walking-around shoes).

VaporMax shoes first hit the market as a limited release in February: laceless versions co-branded with the Japanese fashion label Commes des Garçons. They now resell for as much as $950. The first mass-market iteration went on sale on March 26, the 30th anniversary of the original Air Max. So far, each new color has sold out in a matter of days—a testament to the shoe’s popularity, but also to Nike setting supply low to create buzz.

With their bulbous, see-through soles and $190 price tag, the VaporMax are meant to be conspicuous. “Visible technology has been one of the cornerstones of the industry to get the consumer to spend a little bit more,” says Matt Powell, a sports industry analyst at NPD Group. The runner’s space-age look, though, could lessen its appeal as casual wear. “This shoe is a bit polarizing, and that’s what we wanted,” says Holts, the Nike designer. “We want to push people into a new space.”

For the past few years, customers have been going for classic sneakers and cushy-soled low-tops that look good with skinny jeans—designs at which Adidas excels. Two of the German brand’s oldest models, in particular, have fueled its success: the Stan Smith, a simple leather tennis shoe named in 1971 for that year’s U.S. Open singles winner; and the rubber-toed Superstar, which was the top-selling shoe in the U.S. last year, according to NPD Group. Adidas stoked demand for the Stan Smith by not shipping any in 2012 and 2013. The tactic worked beautifully. In 2015 it sold 8 million pairs, almost a fifth the number it sold in the previous four decades combined.

During the Stan Smith hiatus, Adidas released its first Boost running shoe, with a midsole made of fused polyurethane foam beads developed by BASF SE. The sole’s bouncy feel and distinctive look, akin to chunks ripped from a Styrofoam cooler, won over runners and sneakerheads alike, and Adidas began adding models and colors. At the moment, the company can’t make the sneakers fast enough—it forecasts tight supply until 2019, as it works with BASF to churn out more soles.

Adidas’s hot streak is partly a matter of luck; trends have shifted its way. But the company has influenced those trends. Before the Kanye collaboration, it had paid almost no attention to sneakerheads, who will line up around the block for limited releases. As of 2014, according to market tracker StockX, Adidas accounted for just 1 percent of the collector resale market. Yeezys, which now fetch as much as $6,000 a pair at resale, and limited Boost releases have changed things to the extent that, last year, Adidas held 30 percent of the secondary market.

The brand’s rise has come almost entirely at the expense of Nike and its subsidiary, Jordan, which together fell from 96 percent to 67 percent of the secondary market in the same span. Some of this decline is the result of Nike’s own tactics: In the past few years, it has quietly loosened the supply of its limited releases in an effort to squeeze out resellers. The larger batches mean more sales for Nike, but they also alienate key consumers, who don’t like their exclusive club to be open to just anybody.

How much these collectors matter is a point of debate in the industry, because limited releases account for only a sliver of the market. But the investment bank Piper Jaffray Cos. is among those who see collector tastes as a bellwether. The bank’s analysts track the Instagram feed of Sneaker News, the go-to website for sneakerheads, to see which brands are most prevalent. In 2013, Adidas featured in 7 percent of the site’s Instagram posts. Last year it rose to 30 percent. Nike fell from 52 percent to 33 percent in the same period.

Photographer: Meredith Jenks for Bloomberg Businessweek; Set Designer: Jojo Li; Grooming: Angela Di Carlo 

As part of its renewed focus on the fashion crowd, Adidas has been competing for design talent. The company moved its new creative director, Paul Gaudio, from Germany to its U.S. headquarters in Portland, Ore., in 2014, and it has since gone on a hiring spree in Nike’s hometown, adding 120 jobs last year. Gaudio has also begun seeding so-called creator farms across the country. The first was opened in Brooklyn, N.Y., in 2016, led by three top designers who’d been lured away from Nike. An email sent by one of the trio, recovered during a $10 million lawsuit Nike filed claiming they’d broken their contracts, read, “They [Adidas] need us bad and for us to influence other people to come.” (The parties settled for undisclosed terms in 2015.)

Nike as the incumbent battling the insurgent Adidas is an historical role reversal. When Knight began selling Tigers on the infield grass at track meets for $7 a pair, Adidas ruled the industry. “That one German company had dominated the shoe market for a couple decades,” Knight writes in his memoir, “and they possessed all the arrogance of unchallenged dominance.”

As Nike became the market leader, it took on the features of a behemoth. Five ex-employees who didn’t want to speak publicly about their former workplace say the famously freewheeling culture Knight established has morphed into a cumbersome bureaucracy. They describe the evolution of Nike’s mostly flat organizational chart—known internally as “the matrix”—from a vehicle for collaboration and collective ownership to one for excessive meetings and fuzzy decision-making. The result is projects that take twice as long as they should. “We’re confident in the investments we’ve made to be more responsive and get even closer to consumers,” Nike said in a statement.

The company knows, in other words, that it needs to get faster. On an earnings call in March, Parker promised to cut Nike’s average product lead times from six months to three. The company says it will do this by pushing select projects through its “express lane” process, part of a strategy called 2x Speed. The aim of 2x is to innovate faster and respond more quickly to market feedback: If a model doesn’t sell, cut it. If it does, pile on with lots of variations.

To put it in other sporting terms, Nike wants to hit more singles while it looks for the next home run. An early example is last fall’s LunarCharge, one of the first shoes to come through the express lane. Nike says sales of the $110 “lifestyle” sneaker, which uses an existing sole platform and looks not unlike a Boost runner, have been strong. “They are fixing it,” Susquehanna’s Poser says. “They are not waiting for God to come off the mountain.”

Spectators at the race in Monza.
Photographer: Chiara Goia for Bloomberg Businessweek

Express lanes notwithstanding, Nike is sticking with the proposition that fashion should follow from performance. On a shelf in the basement of the Mia Hamm building sit a half-dozen life-size replicas of human feet. Matt Nurse, the head of Nike’s sports research lab, grabs one and hands it to me. “That’s Sharapova,” he says, referring to Maria, the Russian tennis pro. “Here is Ronaldinho. We’ve got Pau Gasol. That’s LeBron.” The scanner Nike used to assemble this collection is on the floor below. The company keeps digital files on tens of thousands of feet, from elite athletes’ to everyday runners’. A 3D printer spits out the models used to customize shoes for the former and adjusts designs for the latter.

Nurse, a tall, 46-year-old blond who bears a strong resemblance to Golden State Warriors coach Steve Kerr, runs a staff of about 60 scientists and researchers. About half hold doctorates in biomechanics, physiology, or biology. Nurse and his lab are part of what you pay for when you buy a pair of Nikes. Along with the foot scanner and 3D printer, the lab is equipped with force plates in the floor sensitive enough to detect heartbeats, a basketball court loaded with motion-detection cameras, and climate-controlled chambers where robots test apparel for extreme-weather durability.

Nurse sits three steps below Parker in Nike’s matrix, alongside the heads of footwear innovation, apparel innovation, digital innovation, and “space,” which experiments with new lines of business and production modes. These teams don’t set out to create a running shoe for fall. They begin with broad topics: recovery, perhaps, or stability. “We try to define the playgrounds,” Nurse says. Designers and researchers study and tinker, then resurface with their best ideas, some of which Nike funnels into a process with checkpoints and deadlines.

When the method works well, the company touches millions of feet and changes the vocabulary of shoes. Flyknit, Nike’s new method for making uppers, started with Jay Meschter, now head of the company’s Innovation Kitchen, hacking sewing machines so they could weave high-strength threads in loops that would wrap the foot like sandal straps. His work dovetailed with research Nurse was doing into how to contain feet with minimal material, and the two paired up to assemble a prototype in 2007. A finished version, branded Flywire, came out the following year. By 2012 the idea had evolved into Flyknit—uppers that fit and feel like socks. Shoes with the technology have since crossed a billion dollars in sales. “It’s not innovation until somebody buys it,” Nurse says.

A decade after Meschter started taking apart sewing machines, Nike is hoping VaporMax will be its next big hit. We finally take a trial run in the afternoon in Beaverton, gathering first on the basketball court at the Bo Jackson Fitness Center. Evan Jager, who won a silver medal in the 3,000-meter steeplechase at the 2016 Rio Olympics, stands before us, tall and wiry, his long blond locks tucked into a flat-billed baseball cap. When he first tried a VaporMax prototype four years ago, he says, he hated them. They stabbed the outside of his forefoot with every stride. “What are you doing?” he remembers asking the designers. “Running shoes are already good.” Several iterations later, he likes them.

After a brief warmup, Jager leads us out to the Michael Johnson Track, where a drizzle falls on the red rubber and surrounding evergreen woods. It’s hard to know what I would feel without the hours of promotion, the top-of-the-line loaner rain shell, the Olympian running alongside. With all that, it feels like one heck of a ride—like I would jog more often if my strides always felt this springy. The run is an elaborate, personal demonstration of Nike’s basic marketing strategy: Give normal people a taste of how it feels to be elite.

Pacers wear Nike shoes at the award ceremony for Breaking2.
Photographer: Chiara Goia for Bloomberg Businessweek

A couple of months after my soggy half-mile, Nike stages a much grander spectacle. On May 6 three of its sponsored runners—Eliud Kipchoge of Kenya, Lelisa Desisa of Ethiopia, and Zersenay Tadese of Eritrea—circle a Formula One track in Monza, Italy, with the aim of completing a sub-two-hour marathon. This would be almost three minutes below the world record of 2:02:57, set by Kenya’s Dennis Kimetto in Berlin in 2014. The race, dubbed Breaking2, is vintage Nike. Since Knight co-founded the company, it has paired its conviction that it can build faster, better running shoes with brash marketing ploys.

The three runners start out just before dawn, before an estimated online audience of 13.1 million. They’re paced by a Tesla Model S and a phalanx of six other runners. A laser mounted on the Tesla projects a green line on the track to mark the target speed. Every two laps a new batch of pace runners replaces the old in a carefully choreographed exchange. Their presence, and the hydration being delivered to the Nike athletes by moped, means the results won’t be certified as official by the International Association of Athletics Federations. Still, Nike touts the attempt as a potential breakthrough on the order of Roger Bannister’s 1954 sub-four-minute mile.

The three runners wear custom versions of a new marathon shoe called the Vaporfly, which will go on sale in June for $250. Although they carry the Vapor branding, they look and feel nothing like the VaporMax. The uppers are baby blue, with a big swoosh running almost from the base of the toe to the heel. The midsoles are wedges of a new, proprietary foam, more than an inch thick at the heel, sandwiching a thin carbon-​fiber plate that’s sloped like a ladle. Two months before the race, the New York Times ran a story asking whether these springlike plates are tantamount to cheating. The pair Nike let me try on did feel unlike anything I’d ever worn—it was as though I was being propelled downhill with every step.

Still, the shoe isn’t enough for the Breaking2 runners. Desisa falls off the pace after about 11 miles, finishing with a time of 2:14:10. Tadese starts to lag a couple of miles later, finishing at 2:06:51. Kipchoge comes closest, finishing in two hours and 25 seconds. It’s faster than anyone has ever run a marathon, sure, but it’s not as fast as Nike wanted. 

—With Kyle Stock and Matt Townsend