GERMANY: Business Legends - The spat that begat two empires.

GERMANY: Business Legends - The spat that begat two empires. - The bitter split between the Dassler brothers, Adi and Rudolf, in 1948 laid the ground for the multi-million dollar businesses of training shoe giants Adidas and Puma.

by Rhymer Rigby.
Last Updated: 31 Aug 2010

The bitter split between the Dassler brothers, Adi and Rudolf, in 1948 laid the ground for the multi-million dollar businesses of training shoe giants Adidas and Puma.

Public spats are always a good laugh for the rest of us. They're better if they are between blood relations and even better if they also involve business - and therefore money. So, by these standards, the less-than-amicable split between the Dassler brothers was a pretty good one. Indeed, had it been better documented and involved sex and drugs, someone would doubtless have made a film out of it. As it is, all that is really known about the affair is that, without it, the world of running shoes would be a poorer place: as a direct consequence, the two great trainer houses of Adidas and Puma were founded.

The story begins in the obscure (and difficult to pronounce) German town of Herzogenaurach, just down the road from the rather better known city of Nuremberg. Here, around the turn of the century, a poor seamstress gave birth to two sons, Adolf (Adi) and Rudolf Dassler. By 1920, Adolf had set himself up in business producing footwear and Rudolf joined him four years later. Together they founded the stylish-sounding Gebruder Dassler Schufabrik, a company dedicated to the manufacture of slippers.

Realising even back then that slipper manufacture didn't have much to offer in the way of value-added, they branched out into the infant track shoe and football boot market. The business did well and, in 1936, they scored a notable coup when Jesse Owens won a spectacular four gold medals at the Berlin Olympic Games shod in Dassler brothers' footwear. Unfortunately, the second world war broke out shortly afterwards, throwing Germany into turmoil. But the Dassler venture survived and, after the cessation of hostilities, continued to produce footwear much as before.

Until 1948 that is, when something happened. No one seems to know quite what but, for reasons best known to themselves, the brothers had a pretty serious falling-out. So serious in fact that Gebruder Dassler Schufabrik ceased to exist, the duo stopped talking, and they went their separate ways. Both remained in the trainers business and, perhaps more surprisingly, in Herzogenaurach. Adolf formed a new business that took its title from his nickname and surname: Adi Das. By 1949, the Adidas three stripes had appeared and soon became a strong brand identifier. Rudolf came up with the less snappy title of Puma Dassler.

Amazingly, both Puma and Adidas became enormous international success stories, their shoes gracing the feet of a wealth of major sporting heroes.

Perhaps just as astonishing, given their success, is the depth of the animosity between the brothers. When Rudolf died in 1974, the two had not spoken for 29 years. Adi died in 1978, taking the reason for the rift to the grave.

Upon Adi's death, his son Horst Dassler (who had been running the company's French subsidiary since an argument with his father 18 years previously) returned to Herzogenaurach to take over the helm of the Adidas business.

Horst died in 1987, leaving the business leaderless and, in 1990, the heirs sold it to the now disgraced superspiv Bernard Tapie. Following Tapie's bankruptcy in 1993, the company passed into the hands of a group of investors led by Robert Louis-Dreyfus, former head of Saatchi & Saatchi. Placing an hitherto unseen emphasis on marketing - and aided by a clubster-led revival in the popularity of 1970s 'old skool' designs - Dreyfus is turning the company around. Aside from an early failure to appreciate the importance of celebrity endorsement, the strategy is proving a storming success; the business is now second only to Nike.

Puma's recent history is a little less illustrious although, by any standard other than that of Adidas and Nike, it remains an impressive footwear business. Initially a limited partnership, it became a joint-stock company in 1986 but showed no profits until 1994 and paid no dividends until 1996. Seven years ago, all of its ordinary shares were bought by a Swedish company, Aritmos, and later the same year, Puma International was born, which now provides central control for what it terms 'independent profit centres' and has more recently undergone a substantial reorganisation with a view to becoming one of 'world's most desirable performance' brands by 2002.

So both companies have done pretty well. The two brothers built empires that have served a hip sector and enriched their families and descendants.

As they say, every cloud has a silver lining but, for the curious among us, it's a pity that the secret of that cloud lies in a cemetery in Herzogenaurach.

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