Rumors about the acquisition of Five Ten by the Adidas Group for $25 million announced on Nov. 3, 2011, started long before the ink was dry on the deal. Knowing how serious Adidas was about its entry into the outdoor market, SNEWS tracked down the deal's linchpins to help bring the details into focus.
Adidas officials said they saw potential in Five Ten, both in innovation (with the climbing shoe brand’s Stealth Rubber technology) and its position in the outdoor industry as a key influencer (a position Adidas is looking to grow as it continues its relaunch of the Adidas Outdoor line). For Five Ten, the Redlands, Calif.-based company needed increased financial backing and access to more resources to grow.
Fresh off the early November announcement, the two main players in the deal – Adidas senior vice president Rolf Reinschmidt and Five Ten’s founder and CEO Charles Cole – checked in with SNEWS to talk about how the relationship between the David and Goliath brands came about and where it’s heading in the future (photo, above, celebrating the deal's close: Cole in red sweater, Reinschmidt looking over his shoulder).
SNEWS: Rolf, how did this all get started? What specifically attracted Adidas to Five Ten?
Rolf Reinschmidt: I first met Charles Cole at the Outdoor Retailer show this last January. We met at the Naked Fish (a Japanese bistro in Salt Lake City). I think they were surprised that I’m not what they expected an Adidas guy to be like. We had fun, and I called them two weeks later, as I’d really liked their vision. We were loosely talking about a design cooperation. But the more I thought about it, I realized it was the perfect fit. Five Ten is athlete driven, and athletes are the focus of everything Adidas does. We are very serious about Adidas Outdoor and our role in the outdoor industry (Ed. note:Click here to read a September 2010 SNEWS story on the U.S. market entry), and Five Ten’s vision really makes sense. I called Charles, somewhat afraid that I was overstepping the bounds of our relationship, but expressed my thoughts – that Five Ten could be part of us. There was a 5-second pause – it seemed like forever. Then Charles said, “Rolf, I need to tell you something. There have been other people who have tried to buy us. But you were the only one that we have found interesting. Adidas is the athlete's friend – and your suggestion makes a lot of sense. Let’s talk.” There is a lot of work to be done, but we can help to release the growth potential of Five Ten. The limits they have had are very normal for a small company – we have assets from Adidas that are a good compliment.
SNEWS: Charles, what made now the right time for Five Ten to sell to a company like Adidas?
Charles Cole: Of all of the people I’d met in 27 years business, they were the only ones who seemed to understand that the needs of the athletes come first—and that philosophy goes all the way back to Adidas founder, Adi Dassler. It was not a tough decision in the end, it just took 27 years to find the perfect partner.
SNEWS: So what’s your future with Five Ten? Adidas stated that the $25 million deal is contingent on “certain performance measures” within the next three years. Can you elaborate?
Charles Cole: I have several friends who have been in this same position, and they’ve advised me as to how liberating and invigorating it can be. For many, many years, I designed, tested and developed every one of Five Ten’s shoes. And I was the head of our creative/advertising/marketing team. I’ve never given up on these tasks, but as the company grew, I’ve had to spend more time with logistics, and less time with the creative. It’s exciting to get back to the jobs I love the most. My new title is founder/president—but the reality is that in addition to working on new Stealth formulas, I’ll be spearheading shoe design and advertising/branding, as well as leading the company into a very exciting future. The $25 million dollar deal is cash, and there is potentially a larger sum based on certain performance measures. I have a three-year contract, and (afterward) I plan on ... Occupying Yosemite.
SNEWS: Rolf, what will be Stealth Rubber’s role with Adidas footwear?
Rolf Reinschmidt: Of course Adidas will use Stealth Rubber in our product line. It is great technology—really amazing. There is so much upside potential. But it is a question of time. Right now, our No. 1 priority is to give Five Ten all the resources they need. But we are very excited about Stealth Rubber and other Five Ten technologies for the Adidas Outdoor portfolio going into the future.
SNEWS: And what do you see as Five Ten’s greatest area for potential growth?
Rolf Reinschmidt: The cachet and meaning that Five Ten has to young outdoor athletes – what we call the Next Generation athletes – is something that is remarkable, something that Adidas as a brand can learn from. When I agreed to lead Adidas Outdoor division, I had a couple of criteria. I wanted to have fun, and to build something. Outdoor is an area of great growth potential. Adidas Outdoor, as a brand, wants to talk to young consumers. And Five Ten has done an amazing job of remaining credible and committed to this audience. Five Ten has experience where we do not, with rock climbing, mountain biking and great adventure sports like high line slack lining, wing suit flying and BASE jumping.
SNEWS: Charles, what’s the greatest asset that you think Five Ten brings to Adidas?
Charles Cole: It gives Adidas a fast-growing brand with an authenticity second to none. With Five Ten, Adidas has a solid foothold in the worldwide outdoor market. Five Ten is authentic to its core – we are staffed with people who are totally passionate about the sports we cover. Other brands are worried about an aging demographic. Our brand resonates with lifelong athletes and young athletes who need our shoes, kneepads and other tools to pursue their adventures. We are bringing our craziness to the table, they are bringing their professional expertise and both are needed in a great brand.
SNEWS: And finally, to both of you, what’s the future of Five Ten in its home in Redlands, Calif.?
Charles Cole: Adidas will support Five Ten with back office operations. But our Five Ten team will remain the same. We will definitely be hiring – both in Europe and in the United States.
Rolf Reinschmidt: We will bring in logistical support, but Five Ten will remain absolutely independent. It is funny, the immediate activity on the blogs after we made the announcement was quite telling. Of course, rumors were flying. Some customers were ordering favorite shoes by the dozens, in fear they’d be discontinued, and Five Ten had a boggling number of orders for Stealth resole kits. But the outcome of this is that there won’t be those shortages. Five Ten will be able to fill demand for its high-friction footwear and will have the time to do what they do best.