Ex-basketball star thought Nike and Adidas weren't doing enough for Black people—so he built a $30 million competitor

Lanny Smith wants someone to challenge sportswear giants like Nike, Adidas and Reebok — so much that he's trying to do it himself.

Smith, 38, is the founder and CEO of Actively Black, the sportswear company he launched in 2020 in the wake of George Floyd's death. At the time, plenty of big companies were issuing statements condemning racism while pledging to promote diversity and invest in Black communities.

The promises rang somewhat hollow for Smith, a former University of Houston basketball star who saw the $170 billion industry as reliant on the Black community's culture, influence and consumer dollars. Rather than lobbying for change within multibillion-dollar giants, Smith wanted to try beating them at their own game.

"A lot of these sports apparel brands have profited off of Black talent," Smith tells CNBC Make It, referring to numerous endorsement deals with superstar Black athletes. "[The companies] have profited off of the consumerism from the Black community. And I felt like they hadn't adequately reinvested back into the Black community."

Today, Actively Black is a multimillion-dollar brand, reportedly valued at $30 million in 2021. It brought in $5.6 million in revenue last year while promoting a rotating cast of Black designers and reinvesting 10% of sales into organizations supporting social justice, mental health and physical health in U.S. Black communities.

The company recently collaborated with Disney on "Black Panther"-themed clothing, and made Nigeria's official uniforms at the 2022 Winter Olympics. NBA star Stephen Curry was spotted wearing an Actively Black hoodie during a press conference last year, shortly after former President Barack Obama sported a watch the brand collaborated on.

But it's all a drop in the bucket, compared to the billions of dollars brought in each year by the likes of Nike and Adidas — meaning Smith's commitment to making a lasting impact on the Black community is a work in progress.

"I took the mindset that it was time for us to stop asking for a seat at the table. And we were going to build our own table," Smith says.

'We can have a real impact'

Actively Black's roots go back to 2009, when a knee injury derailed Smith's NBA dreams — just one month after he'd signed a contract with the Sacramento Kings.

Laid up in bed from surgery, Smith decided to reinvent himself as an entrepreneur. His idea: Nike-style sports apparel adorned with faith-based messages instead of the usual motivational taglines. Active Faith Sports found an audience online, and quickly grew due partially to backing from pro athletes like Curry.

When 2020 came around, Smith already knew he could build a financially stable brand around the experiences of a specific community. Using the brand to reinvest directly into that community, however, was new for him.

He proudly points to the $500,000-plus his company donated last year to programs like the Dr. Huey P. Newton Foundation, The Liberation Fund, Black Kids Code, Our Own and Families United.

"My thought process is, if we're donating at this type of percentage, what happens when we are the multibillion-dollar brand and we're donating that type of money back into our communities?" Smith says. "We can have a real impact."

Eight-figure annual donations would dwarf recent promises from Nike, which in 2020 pledged $140 million in total over a decade to organizations supporting Black communities, and Adidas, which similarly committed $120 million over a four-year period. (Nike and Adidas didn't immediately respond to CNBC Make It's requests for comment.)

But money isn't philanthropy's only form. Actively Black's support of Black creators highlights another area of deficiency for some of the industry's giants, Smith says.

"Giving opportunities to Black talent, Black photographers, Black videographers, Black designers, Black marketers," Smith says. "Giving these opportunities, even for employment and for talent, that they may not get in other places is very important."

Even Nike 'had to start somewhere'

Becoming a million-dollar brand was one thing. Getting annual revenue into the billions is another.

Ironically, Smith cites Nike's backstory as inspiration: Co-founder Phil Knight started out selling sneakers from his trunk at high school track meets, and was once an unknown outsider trying to infiltrate an industry led by Adidas and Converse.

"[Nike is] a huge machine," Smith says. "But it had to start somewhere."

In sportswear, the big bucks don't come from pro athletes wearing your gear off the court or field. They come from endorsement deals with established stars, who wear your apparel while competing in front of millions on TV.

It's a tough market to crack, which is why Actively Black's current active athletes all compete at the collegiate level. Those deals can help support young, Black athletes, like University of North Carolina women's basketball star Deja Kelly, while pairing Actively Black with potential future stars, Smith says.

"As this brand grows, some of these athletes are going to grow up with the brand," he says. "And then when it's time for them to sign [endorsement deals at the pro level], we will at least have a seat at the table as an option for them."

In the meantime, customers are still buying Actively Black's clothing — and buying into what the brand represents, Smith says. The feedback he's gotten has been "absolutely amazing," he adds, especially around the idea of high-quality products marketed with images featuring "darker-skin models, melanated models."

"People see themselves in these advertisements, they see something that represents them and they see something that they haven't seen before," he says. "And so when they're seeing it, they're going and they're buying it."

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