Why we will never tire of collaborations

0:02Why do brands collaborate with each other? what differentiates a good collaboration from a bad one. Here we reach collaboration fatigue. And what's next for collaborations? Today, we reveal how to elevate collaborations from tactics to strategies. We put collaborations in context of IT, world building, fandoms, and brands' cultural expansion and market growth. Welcome to Season 2 of Hitmakers, the show that tracks how culture moves margin, multiples, and market cap.

0:40Hi, Lee. Hey, Anna. How are you doing? I'm good. How about yourself? Good. Are you traveling at all this week? Not this week. How about yourself? I was. And then with all the TSA stuff, I immediately can't. Oh, no. Did you get WhatsApp? Not yet. I mean, I canceled everything because I just didn't want to spend seven hours at the airport, three hours in line and everything. So most of my week's been trying to reschedule a bunch of stuff and travel. That's smart. I was flying from Miami earlier on Saturday. And they told us, oh, it's going to be two hours. We were ready to board, in line, all of it.

1:20And they were going to be like, oh, it's going to be like two hours. It can be longer. It can be shorter. 20 minutes later, we were on the plane. They were like, found another route. Because they were like, oh, at LaGuardia, they don't have anyone to kind of track your plane. But it was like, fine. So we were only like an hour. And that doesn't freak you out that there's no one tracking your plane at LaGuardia? But they found some because they found the alternative route. So that's what I'm telling you. Of course, I mean, they wouldn't let. Well, I see all these Instagrams of people who are like, it's three hours in line to get through security, three hours to board the plane and then three hours sitting on the tarmac before you take off like there was this one guy who was saying there was like 30 the the pilot came on and said there were 30 planes ahead of them before they took off so it's like i don't even if you got off quickly i don't even want to like risk the chance that i'm in one of those nine hour at the airport you know what i guess like we were extremely lucky because then we took and like we landed la guardia i I don't know.

2:24Like, I don't want to bore. But there was no one. Like, literally, LaGuardia was empty. It was Saturday night. Decent time. I don't know. It was like 9.30. No one. I never got home quicker. Yeah. I don't want to jinx it now, but it sounds like there was like one outlier. Wow. So, okay, anyway, what else? Yeah. Well, look, before we get into the market move stuff, we're talking about collaborations today. So why don't you share with everyone why we were so excited for this to be the topic today? For me, the most exciting part about collaborations is that they're calculated business tests. I want to put them in the context of intellectual property.

3:07And for brands, their intellectual property is their logos, their stories, their brand codes, their aesthetics. So the way to give all those elements, legs and scale, is to enrich them by sort of recombining them with other brands. It's almost like evolution. It's actually literally an evolution because you put your brand codes, you recombine them with another brand's brand codes. And that gives you, especially in brands in mature markets, where everything is commodified, where your customers are bored. I mean, how many unique t-shirts can you have? How many Gap t-shirts can you have? How many, let's go to CPG, Dunkin' Donuts, coffee cups can you have?

4:03It's a must, kind of having collaborations because it creates that scarcity, that uniqueness. And that's the way to achieve scale at aggregation of niches as scale. You can achieve scale where no two people have the same thing. Not literally, but you create artificial scarcity through collaboration. So everyone wears or drinks the same brand, but no two people have the same thing. So what excites you about collaborations? So the thing that I've always thought was really interesting was this idea of like there are financial markets, there are consumer markets, but there's also cultural markets.

4:50And so all three of those markets sit next to each other like they're adjacent to each other and influence each other, but they're distinct things with distinct dynamics. I mean, obviously, financial markets are their own thing, and that's the stock market. And there's certain things that you do there to increase the value of a stock that isn't necessarily creating consumer value, but it creates enterprise value. At the same time, there are things done in the consumer markets in terms of differentiating product, creating features, and so on that makes a product more competitive in the consumer markets, but not necessarily the financial markets.

5:24But then the cultural markets, I think this is like the least understood because it's ambiguous and it's not tracked in any way. And I think that's the sort of crux of our conversations and what we're excited about. But the cultural markets are where symbolic value is developed, where cultural value is developed and things take on higher order meaning. Now, luxury brands are the ones who've really understood cultural markets, and we talk a lot about that. But the thing that I love about collaborations is it's a way of moving something that's in the consumer market, a competitive product that's differentiated, that's built differently, craft is different, features are different, and then moving it into the cultural market and allowing that product to compete better there because of the symbolic and cultural value that's built on top of it.

6:09And so I think a lot of people look at collaborations as just marketing stunts and marketing tactics. But it's actually, and this is what we'll be talking about, it's actually a way of making consumer products extremely valuable in the cultural markets. And so that's what I was excited to kind of dig into and unpack for everyone listening today. Amazing. So let's dive into it. But first, market moves. Okay, so as everyone knows, Market Moves is where we take a look at what's been happening over the last couple weeks in the cultural markets and what the actions are happening and what are the financial benefits of that.

6:48So, first up, NVIDIA. NVIDIA crossed$5 trillion in market cap this week, now exceeding the combined value of AMD, Arm Holdings, ASML, Broadcom, Intel, Lamb Research, Micron, Qualcomm, and Taiwan Semiconductor. NVIDIA's valuation is bigger than the entire S &P sectors, including utilities and consumer staples. But this isn't fundamentals driven. It's psychological. We're watching the social construction of value, pure crowd dynamics around AI narrative. Market history shows the biggest moves are rarely economic. They're behavioral. The beauty sector is showing resilience. As Estee Lauder reported a 3 % organic growth to$3.46 billion quarterly, swinging to$47 million profit from$156 million loss year over year.

7:39Pooj is up 6.1 % to$1.3 billion. Now, this is a classic counter-cycle behavior as the lipstick effect is playing out as consumers trade down to affordable luxuries and a tightening economy. As you probably heard, Starbucks launched a$29 barista cup, a glass tumbler shaped like a teddy bear in a green beanie, with deliberate scarcity. That sparked nationwide frenzy. Secondary market pricing hit$1 ,000, which constitutes a 30x markup. Direct revenue impact was minimal, but the strategy generated billions and earned media impressions and drove critical holiday traffic. This quarter, Adidas reported a record Q3 revenues of$6.6 billion in October, upgrading its 2025 outlook after pivoting from a celebrity hype-driven strategy post-Yeezy to a performance culture focus.

8:32The company focused on running and football credibility with products like the Adios Pro Evo 2 and Adios Pro 4 winning major marathons. Performance revenue surged 17 % currency neutral, outpacing lifestyle, proving technical excellence and athletic victories now drive high margin growth in the saturated footwear market, successfully replacing limited edition drops while rebuilding brand reputation. The strategy has demonstrably worked to raise the company's revenue ceiling and repair the brand's cultural reputation. Liberty Media's Q3 earnings included consolidated MotoGP results following its July acquisition.

9:11reporting$169 million in quarterly revenue from the property. This is a classic multiple expansion play, applying the proven F1 transformation model to elevate visibility, attract premium global sponsors, and scale the high-margin subscription business. The strategy positions MotoGP for significant valuation uplift within the Liberty Live Group portfolio. Meanwhile, LVMH and Caring are exiting accessible luxury positions. LVMH is exploring divesting its 50 % Fenty Beauty stake while Caring completed its beauty division sale to L 'Oreal. This is a pure margin defense strategy, which means shedding lower margin ventures ahead of an anticipated downturn to concentrate on core categories.

9:56Fashion and leather goods delivers 37 % EBIT margins at LVMH. And finally, the LA Times reported that horror films now represent 20 % of this year's top 20 global grocers. Warner Brothers Discovery capitalized on this trend during earnings announcements, announcing Gremlins 3 for November 2027 release. This solidifies the franchise as a key 10 pole alongside its successful animated series. The genre is also dominating awards season. Michael B. Jordan is generating Best Actor buzz for Sinners, while Amy Madigan is a Best Supporting Actress frontrunner for Weapons. Horror is delivering what most people thought it couldn't, both commercial returns and prestige.

10:37So, Ana, what's the last horror film you saw? Oh, that's a great question. You know why? Because I get really scared. I mean, even in this age, I really, I don't know, I love horror movies, but also don't. What about you? I do not like horror movies. Really? Like, I just, I don't know. There's just, it's like the whole Saw series. Like, I don't want to watch that. Oh, yeah, but Saw. I saw Sinners, loved Sinners. It's really, but it's not really a fault. Like, you know, it's not really scary. So, you know. Well, like, I think, like, Sinners and Get Out and things like that. Or even the first Drew Detective.

11:17I think those are, like, existential thrillers, existential horror films. Like, those I can get behind. Because it's more, like, psychological and atmospheric. but like the blood and gore ones like so not my thing and i know like in many ways like you kind of say like the blood and gore things are like actually comedies i've heard people interpret them that way but it's like none of that is relaxing to me none of that is interesting like i actually prefer like if where is feeling like over the least when you see like oh what you know like they say psychologically is sociologically what horror movies because you relive the fears through the characters, so that's a release for you.

11:59Everything you are afraid of, it's projected, so you don't need to repress those feelings because you see them projected on a screen so you can relive through the fears of the characters. So you would rather repress that. I mean, I'm sure there's some schadenfreude stuff built into that where you see people get what they deserve within the horror film, and that's sort of like an emotional release in some way. Well, you see, like every age, Michel Foucault said every age gets the madness it deserves. So, you know, like we get villains that we, like AI. You know how like Mission Impossible 37, or I think it's eight, like Ethan is battling AI?

12:43Yeah, yeah, yeah. So it's kind of like the horror movies now are like weapons. I do want to see weapons. So I'm going to now, this is a major spoiler, there is a witch. So you know how, like, Wall Street Journal... You just ruined it for everyone who was going to watch it because of the Oscar buzz. Well, you know what? Good thing this podcast is on the long tail, and so you didn't ruin that many. Well, I didn't say who it was, except that she's nominated for the Oscar. No, she's not. Anyway, the point is, there is always something in the zeitgeist that horror movies capture and build a narrative around so we can, there is sort of a collective release of fears through horror movies.

13:27I did like a lot, speaking of witches, the movie, Dave Eggers' movie, which was set up in like 16th century in New England, protest the community. So there are, if the story is good, you can really enjoy, but it doesn't mean like a horror movie. I think the genre has become much more diversified than before. I did see Frankenstein. What? Like, I don't recommend it. Oh, no. I thought it was going to be good. No, I did too. Because I loved Guillermo del Toro. I loved Devil's Backbone and Pan's Labyrinth. But that's like 20 years ago. Yeah. His Spanish movies, especially Devil's Backbone. That's a real horror movie without trying to be a horror movie.

14:11And this one, I don't know. It's kind of like, you know, like a schoolboy writing. like, you know, can you do like, if Frankenstein had a heart, what would he think? It's not very much yours. Yeah, I mean, his stuff is always so beautiful. But you know, Jacob Elrod is very handsome as Frankenstein. And in real life. So maybe that's the only reason to say it. Just mute everything and just watch and listen to our podcast while you watch it. And then you'll have like visuals for it. Maybe that's the direction. Anyway, so let's use that as a transition into talking about collaborations. Fashion collaborations.

14:44That's a great segue. Thank you very much. Okay, so let's talk about the topic today and get into collaborations in fashion. In 2024, H &M marked 20 years of designer collaborations. But long before that, Elsa Schiaparelli was remixing fashion with surrealism, featuring artists like Salvador Dali on her gowns. Supreme picked it up in the 90s, and Marc Jacobs amplified it at Louis Vuitton in the early 2000s. More than a Renaissance skill set, collaborations are a business necessity. New Balance dropped a Rosalia collection. Grace Wells Bonner brought Adidas back into cultural relevance. And McDonald's teamed up with Travis Scott and Palace.

15:21Erewhon co-branded with Balenciaga. In a world of commodified products, collaborations create cultural scarcity. It turns economic value into symbolic value and makes people reconsider brands they've long ignored. So, Ada, sounds like collaborations have to be a core part of any fashion brand. It does. And I love that you kicked it off with that because that also leads to collaboration's fatigue in a sense that a lot of people are like, oh, no, not another collaboration. And I do agree with that sentiment, but that's only if you think about collaboration as a tactic. if you think about collaboration strategically as a part of a brand's operating system and i don't want to use that colloquially as a marketing lingo but literally saying hey if you have this intellectual property that the brand has and you have part of your brand strategy is to create content it's to kind of see what kind of what do you have any maskers do you have any brand codes In that sense, collaboration is part of that core tool set, skill set that you as a chief brand officer, chief marketing officer has.

16:38That's one of your most valuable assets. And you do need to use that because that is literally a blueprint for your brand survival. At the beginning of this episode, we talked about that being your gene pool for your evolutionary survival. So if you cannot contribute to culture with your gene pool, you're going to end as like trinocephals or whatever that doesn't exist, you know, like one of those extinct dinosaurs. So that is exactly, collaborations are a way for brands to contribute to cultural conversation. So let's say you're Dunkin' Donuts, let's say you're Uniqlo, what we mentioned before, or Gap.

17:26So the more out of left field that you can do, like, you know, like you have, how were Neanderthals created? This is not where I thought the conversation was going to go, but keep going. Listen, listen, listen. Okay, let's forget about the other. A little paleontology with your collaboration methodology. There is a rhyme. Again, Michel Foucault. Every age gets madness in the years. So then fish jumped from sea to the swimming. And you know, like only the ones who developed legs. Whatever viewers we had, we just lost. We just lost. We just lost. Thanks, Ana. We just slipped further down the long tail.

18:12So to the one viewer who's still listening to us. Hey, you know what? I'll just tell you this. And this is, again. Send your feedback to Ana, not me. Yes. No, keep going. Keep going. I'm listening. Well, it's God's honest truth. And honestly, Lee, you're going to be sorry because I do. I do. All right. Are the heavens going to open up and the light of knowledge is going to descend upon me from Ana? With the fish metaphor? Yeah. Go ahead. It is. When you look at Erwan and Balenciaga collaboration, Erwan is a luxury food market store. I was there two weekends ago. It was Saturday morning, and I did buy one of their smoothies.

18:57It was excellent. It was$19, and you didn't pay$19 for a smoothie. You pay$19 to see Bad Bunny, Orlando Bloom, Lia Cabede, and as we talked in the last episode, a number of extremely cool people in 45 minutes that you're there. So that's number one. That's what they sell. Balenciaga under Demna sells similar things, sells clothes to those people. So everyone is in LA and everyone makes sense only in LA because it's intersection of wellness, of fashion, of that laid back, health obsessed lifestyle. Well, Balenciaga said, if we are going to go to LA, that's who we need to partner with. So it means our gene pool, our fifth gene pool, needs to combine with the local gene pool in order to create something new that the locals are going to recognize as their own.

20:02Otherwise, if you come, like stranger comes to town, do you know what happens when in narratives when stranger comes to town? Stranger never gets out of town. Oh, is that what happens? I've never thought about that. The stranger doesn't leave the town? You know how in stories there is either hero goes on a journey, hero's journey, or stranger comes to town. Hero comes back from a journey, but stranger never leaves the town. Okay, so we'll save narrative archetypes for another conversation because I'll actually relive that. In fact, we can connect it to the horror of the movie film. Seattle did an extremely smart thing coming to LA, but by collaborating with someone who is local.

20:43So when you think about collaborations strategically in terms of your own intellectual property, you always think, what do I want to achieve in terms of what is the next evolutionary step for my brand that I'm doing this? It's never just like, oh, who are we going to collaborate? Either you amplify your brand, you complement your brand or diversify your brand. Got it. So then a bad collaboration would be something that doesn't fall into one of those three buckets. I don't think there is such a thing as a bad collaboration. I just think there are collaborations that didn't meet their brand and business objectives.

21:21You know what I mean? Like, you never know in advance if collaborate, like, you can say, oh, the collaboration, like, I wouldn't recommend collaboration between, say, a Gap and Doen. Both are California brands. is doing an audience gonna buy gap probably not because they're like california rich california mommies what is in there for them but maybe and but then you have gap and sandy liang oh that's a little bit better anna sui you know like they're bringing anna sui back to life there is you know a little bit of edginess to that so that audience may be a little bit more mass you know like you need to kind of think like who is it for and how is it going to be marketed at the end of the day you know?

22:04Yeah. So really, it's less about who you collaborate with in the collaboration, and it's more about like, what is the cultural product? And then what niche are you making it relevant to? Because in a way, I guess what you're saying is you could make any collaboration relevant as long as you are focusing it on the right niche. Absolutely. It's about the marketing, because five years ago, I said, oh, good collaborations are art, great collaborations are kitsch back then culture was all about irony and and and and taking things with the wing and not taking things seriously so having kitsch is something that is purposefully not the real thing so when you take collaborations that are out there like i remember using heron preston and i think Colgate toothpaste.

23:00Like the wilder, the more out there collaboration was, the better it was because more unexpected it was, the more it poked fun at the reality. You're not supposed to take it seriously. But since then, collaborations evolved on the most basic level, reaching a different audience and exposing your brand to the audience that would not normally consider your brand. But I don't think that's even that. You're not going to get that audience. Like, even if they, for a minute, send Iliang and Gap, they're going to buy that. They're not going to necessarily consider. Look at Yeezy and Gap. They had a completely separate side.

23:41There was zero overlap. Like, no matter where it went, how it ended, and all of that, you have people buy that, and they never come back. The same with H &M. You know, you go and you buy the latest drop and you just don't buy any of the main things. But at least you bought that. So for a minute, you went to that site. Well, look, I think the, I mean, just in that example that you gave of like, you know, people buy the collaboration. If you plan it wrong, people just buy the collaboration and then don't transfer to the core. But I think that's like Glenn Martins and H &M, that's what's going on now or that just happened.

24:26Yeah. They're going to buy that because they love Glenn Martins, not because they love H &M or Zara collaborations. You know, you're not going to like the latest one, 50 years of Zara or the one that like with Sidney Crafts or Stephen Meisel. You're going to buy that because it's a little bit better quality and it's a little bit better design. You're going to buy that. you're not a Zara shopper necessarily. But there may be those who are, and you're going to upsell them on that. Well, and maybe, you know, in those, it's not trying to bring in new shoppers, though it happens with the collaboration.

25:06They'll purchase the specific collaboration. Maybe it's a way of, like, lifting the perception of Zara in the eyes of people who already shop at Zara, for example. Oh, I think that's what I mean. I think those are seeing that's giving them halo. Those are seeing, oh, look what those guys are doing. They're having those more expensive. So I'm going to stretch a bit more and I'm going to treat myself or like, look what Zara is doing. It's making my$5 t-shirt more valuable or making it worth more. It's not for us for just buying collaborate or just paying attention. I totally agree. At the same time, it's keeping Zara in cultural zeitgeist or H &M or something because you get news and people are seeing news.

25:51And for whatever reason, they're like, oh, Zara is doing cool things, you know, and you don't you can't explain why you think that Zara is cool. And that's immediately immediately gives cultural currency. And you don't know why. When are you going to need those chips? Yeah, yeah, exactly. It enhances and builds the fashion credibility of Zara for people who are at that price point and shop at Zara. So they continue shopping at Zara. So you got to do these kind of like stretch surprising collaborations to as a way beyond just marketing to kind of build those associations for your core, your core base.

26:29I'm glad you brought up marketing because for me, it's like if traditional advertising on TV, print or blah, blah, doesn't work and hasn't worked for so many years, decades, you need to do those things. Because it is saying, how are you going to stay inside guys? How are you going to be present if you can't advertise on TV? Because again, brands that advertise like Old Navy, you see those TV spots and so on. you advertise to that audience who is buying. Zara is doing the same thing. You advertise to the audience who is buying you with Sydney Craft or so on. And you ask the question, so why are they spending so much money on Kaya Gerber or Stephen Meisel and that audience may not even know?

27:13Well, it's the same purpose that advertising once used to be like amazing, telling amazing stories for you to buy Coke or Pepsi or so on. Well, so to go back to that kind of triad, triptych framework that I kind of laid out at the beginning, consumer markets, financial markets, and cultural markets. I often think that a lot of the paid advertising is drifting towards really being a focus on consumer markets, making people aware, talking about product features, creating salience so when people are in the market, they think of it. But that's not really building pricing power. It's not really building preference.

27:49It's not really building share of mind in many ways or share of cultural conversation. That's what you have to do in the cultural markets. And so by doing collaborations, it takes your product or at least takes your brand and makes it relevant to the cultural markets so that you build that symbolic value. So you build that what would loosely be called brand heat around your company and being part of the cultural conversation in some way. And so anyway, the collaborations feels much more focused on that than in a completely separate almost product and marketing strategy than like traditional paid media, which is more consumer markets.

28:28Absolutely. And I think this is a great way to slide into collaborations in sports, because in many ways, sports at this time is where the cultural action is, them being one of the very few cultural events that gather still that mass audience that we used to have across different cultural verticals like entertainment and fashion and film and so on. And so why don't we go into that? So this past week, following the Los Angeles Dodgers World Series victory, Major League Baseball and the merchandiser partner Fanatics co-created limited edition championship collection with Japanese contemporary artist Akashi Murakami.

29:17The cultural product was a line of high-end streetswear, hoodies, T-shirts and accessories that fused the Dodgers traditional championship insignia in colors with Murakami's iconic multicolored smiling flowers and Japanese katakana characters. The product was scarce and exclusive, leading to immediate sellouts and massive queues at pop-up locations. I personally really love this because like, I mean, I grew up playing baseball like as a kid and stuff and into my teens and like just the thought of the art world and the fashion world and baseball merging together was such a strange concept. Because baseball is, in many ways, a Victorian sport.