Nike executive Ann Hebert abruptly left the company following our report about her son operating a business reselling sneakers and using a credit card in her name https://t.co/gBOoXaZHSq— Businessweek (@BW) March 1, 2021
Joe Hebert, a 19-year-old Portlander dropped out of University of Oregon to work on the sneaker resale business. Hebert coordinated a “cook group,” a private channel of sneakerheads who use automated scripts, or “bots,” and insider information to gain an advantage in securing limited-release sneakers at point of release. Employing his cook group to purchase $132,000 worth of Yeezy sneakers flipping them for hundreds of thousands dollars. This purchase was made with an American Express card that belongs to his mom, who happens to be Ann Hebert, an executive at Nike for 25 years, who’d been in charge of Nike’s push to sell directly to consumers.
Hebert plugged his cook group, which cost $50 per month to join, as a way to invest in yourself. "I'm totally willing to dump literally all of my money into a shoe. I'm not gonna go home with an L."
The sneaker game is akin to traditional finance terms: flipping sneakers is now arbitrage. Bundling lower-tier “bricks” into tranches. If sneakers were stocks, Hebert was a trader, and his mom worked on the New York Stock Exchange. There are previous examples of Nike suing former employees for “insider trading” and if sneakers were regulated financial instruments, he’d likely be under investigation by the Securities and Exchange Commission.
The scandal has been such among sneaker heads, because ever since the 00’s, when sneakers started to soar, they have been calling out these behaviors, prompting even mainstream outlets to pick this story.
The archetype of a reseller according to many in the sneaker community is of a kid that's privileged, whose parents have money, and are able to kind of jump in this just to make money and not really participate in the culture. Originally considered a blight in the community, since they have always been around, but since sneakers made it into pop culture and mainstream, resellers have grown, contributing to the artificial scarcity created and controlled by the sneaker companies themselves.
“This is the Supreme model of keeping things super limited on the supply side.” said Nick Engvall, sneaker creator and consultant, who’s been in the industry for 15 years. Part of the reason that this really bubbled up and became a huge issue is because of pictures of Hebert posing on social media buying shoes that just aren't available anywhere, and the quantities that you would never see without having a very close connection to the company or direct access to when and where these products are going to be available.
Originally a Nike spokesperson insisted that Hebert made the necessary disclosures about her son’s business, West Coast Streetwear, in 2018. However, she has resigned from Nike days after the article was published, abruptly leaving the company following the reports about her son operating a business reselling sneakers and using a credit card in her name.