Once again, I’m embarrassed to admit a bias I’ve had for years. I’m not sure exactly when it started, but it may have been when Nike started selling clothing with their name on it — and it wasn’t cheap clothing. My reaction was, “I’m not going to pay to advertise for those guys!” And from that and other observations, I developed a negative attitude about what I perceived as arrogance, to the point where I’ve boycotted Nike shoes and clothing for decades.
I just finished reading the Nike story as chronicled by its founder, Phil Knight, in his book, Shoe Dog. I know what you skeptics are thinking: “He fell for the story.” Well, maybe I did, but I’ve read a lot of books like this, and I would suggest most tend to eulogize the founder/CEO, and even have a tendency to rewrite history. This book surprised me. If anything, Phil Knight seems to understate his personal impact on Nike and instead praises many others for their unique contributions.
Because many of us have observed Nike from its humble beginnings to its current $134 billion market cap, we might draw the conclusion that “it just happened.” Many of you have started your own businesses or have been involved from the beginning, and I found this to be a very real, at times painful, success story. It reminded me of practice units that I was involved in creating and building. Many years later, newer team members had no idea how difficult our journey had been. So, I could relate to Knight.
Some fun facts/stories:
- Knight ran cross country at the University of Oregon for the famous Coach Bill Bowerman — who was Knight’s first business partner, the primary shoe innovator, and a close mentor until his death in 1999.
- One of Knight’s colleagues came up with the name Nike, in honor of the Greek goddess of speed, strength, and victory. Knight didn’t care for it, but had no other option to offer.
- The famous Nike Swoosh was designed by a young artist at Portland State University for $35.
- Knight is an introvert who loves his alone time.
- Knight is a CPA who, while teaching accounting at Portland State University, met his wife, Penny, a student. The couple recently celebrated their 50th wedding anniversary.
- Due to shoe endorsements, Knight has developed close, personal relationships with many of the greatest athletes of the past five decades.
- Unlike many other company founders, Knight avoided going public (and cashing out) for years.
- Knight reported: “Often the problems confronting us were grave, complex, and seemingly insurmountable; and yet we were always laughing.” (Editorial comment: This was my exact experience working with my former partners, Ken Kunkel and Bruce Berend, in the ’70s and ’80s — and those are some fond memories.)
Here’s a sampling of some of the major obstacles Knight and his team had to overcome in a span of almost 20 years:
- While Nike had significant profitable growth almost every year, the bad news is that this increased growth and expansion required more inventory, so Nike was always cash poor. Sound familiar?
- In the early years, Nike Tigers from the Onitsuka shoe company, based in Japan, were the primary shoe sold. Nike was the exclusive distributor for the western U.S. At one point, Onitsuka informed Knight that they were going to change to one U.S. distributor, and it wasn’t going to be Nike. Knight asked, “Why not Nike?” to which Onitsuka answered, “You do not have an East Coast presence.” Knight replied, “Yes, we do.” Instead of losing their primary shoe source, Nike became the company’s exclusive distributor in the U.S. Sound familiar? Just like many of you would do in similar circumstances, Nike quickly opened an East Coast office.
- To avoid dependency on one source, Nike designed a new shoe and identified a new supplier in Japan. Onitsuka discovered the plan, immediately terminated their agreement with Nike, and filed a lawsuit that went to a full trial. Sound familiar? I know a number of you have spent a lot of money on lawyers defending yourself from unfair, baseless lawsuits.
- On occasion, athletes whom Nike had under contract would appear in a competitor’s shoes (including at the Olympics) because they were offered more money. Sound familiar?
- One of the greatest runners in modern history, Steve Prefontaine — who wore Nike shoes exclusively — died at age 24. Sound familiar?
- As Nike grew and cash continued to be tight, the company’s primary bank of over 10 years fired Nike and froze their accounts without warning. Sound familiar? It gets worse. The bank suspected fraud, so they notified the FBI. Yeah, more wasted time and money.
If you ever feel these same types of pains, you might want to grab a copy of Phil Knight’s book. I promise you’ll be encouraged.