Biography Edition: Phil Knight's Nike Empire

I stretched my legs , my hamstrings , my lower back and groaned as I took the first few bulky steps down the cool road into the fog . Why is it always so hard to get started ? There were no cars , no people , no signs of life . I was all alone , the world to myself .

I recently read the book Shoe Dog by Phil Knight , which is an autobiography or memoir of Phil Knight starting Nike , and this was a very beautifully written book . I really enjoyed reading it and I think it's probably the best written biography that I've read so far this year .

And it had a lot of great lessons as well , you know , starting from having a crazy idea to believing in that idea , getting the right people in your organization , innovating and iterating over product , never stopping . There's so many ups and downs in this book . It was crazy .

And another lesson is owning your production process , owning that piece of your business and not outsourcing it . So let's jump into the book . So just a brief background on Phil Knight . He was born in 1938 . He founded Nike and Nike has very humble beginnings and now is a $150 billion organization . Beginnings and now is a $150 billion organization .

And he grew up in Oregon and he was interested in sports , especially running . He ran track in high school and college and his track coach , bill Bowerman , experimented with his shoes . And Bill Bowerman was like a . He actually coached the Olympics . He was like one of the most famous track coaches ever .

And one of the things he did while Phil was in college running is that his track coach would actually experiment with his shoes , so he would like cut things out of the shoes , add extra cushioning , make it lighter , and did all this tinkering with his shoes with the goal of making folks run faster . And so this was kind of the seed for Phil .

Later on , and when he goes to Stanford , he ends up writing a paper that we'll get to here in a second . But there's a period after he gets out of college that he's not quite sure what to do with himself . Here's a couple of quotes from the book .

On paper , I thought I'm an adult , graduated from a good college , university of Oregon , earned a master's from a top business school , stanford , survived a year-long hitch in the US Army , fort Lewis and Fort Eustace . My resume said I was learned , accomplished soldier , a 24-year-old man in full . So why , I wondered , why , do I still feel like a kid ?

Here's another quote . I have found it difficult to say what or who exactly I was or might become . Like all my friends , I wanted to be successful . Unlike my friends , I didn't know what that meant Money , maybe , wife , kids , house , sure , if I was lucky . These were the goals I was taught to aspire to , and part of me did aspire to them instinctively .

But deep down , I was searching for something else , something more . I had an aching sense that our time is short , shorter than we know , short as a morning run and I wanted mine to be meaningful and purposeful and creative and important .

Above all , different , lack of direction , but also yearning to do something more than the standard things that we hear we should do . And that might be , I know that's . I have a similar experience , you know , coming out of high school , I didn't have much direction .

I wanted to do something kind of different , also had military background , but I think a lot of entrepreneurs have this kind of , you know , searching to do something a little different .

And so when he went to Stanford , he ended up coming up with the idea of Nike , which he didn't know what the name would be , and the name actually didn't come until a lot later . But here's a quote from the book . It was one of my final classes , a seminar on entrepreneurship .

I'd written a research paper about shoes , and the paper had evolved from a run-of-the-mill assignment to an all-out obsession . Being a runner , I knew something about running shoes . Being a business buff , I knew that Japanese cameras had made deep cuts into the camera market , which had once been dominated by Germans .

Thus I argued in my paper that Japanese running shoes might do the same thing . The idea interested me , then inspired me , then captivated me . It seemed obvious , so simple , so potentially huge . So this is kind of funny . He writes this paper in college , he ends up getting an A on it and it just kind of consumes him .

And this is very similar to the FedEx founder . He wrote a paper in college about his idea for FedEx , basically , and I think he only got a C . So at least Phil here gets an A on his paper . And so he graduated from Stanford and he's has this kind of lack of direction . He's not sure what he wants to do .

He wants to do something different and he ends up just traveling the world to many different countries . People didn't travel much beyond their town , their hometown , but he really wants to do it .

He convinces his dad to give him some money to go travel around the world , and one of the stops included a stop to Japan to find one of these Japanese shoemakers and convince them to allow him to be a reseller in the United States .

So he ends up finding this Japanese shoemaker , onitsuka , and goes in there with a business suit on and basically convinces them for them to be a reseller . They're very receptive to the idea , they're really excited , and so that was basically what started Blue Ribbon . Now he didn't call it Nike right out the gate , he calls it Blue Ribbon .

And he goes back to the United States and he ends up partnering with his former coach , bill Bowerman . Here's a few quotes from the book on Bill Bowerman . I loved Bowerman and feared him , and neither of these initial impulses ever went away .

Another quote here it's possible that everything I did in those days was motivated by some deep yearning to impress , to please Bowerman . Besides my father , there was no man whose approval I craved more , and besides my father there was no man who gave it less often . Frugality carried over to every part of the coach's makeup .

He weighed in hoarded words of praise like uncut diamonds . And here's another quote from the book . The most famous track coach in America , bowerman , never considered himself a track coach . He detested being called coach .

He called himself a professor of competitive responses , and his job , as he saw it and often described it , was to get you ready for the struggles and competitions that lay ahead . And here's another quote from the book . Like all ancient gods , bowerman lived on a mountaintop .

His majestic ranch sat on a high peak above the campus , and when reposing on his private Olympus he could be as vengeful as the gods . One story told to me by a teammate brought this fact pointedly home . Apparently there was a truck driver that often dared to disturb the peace on Bowerman Mountain .

He took turns too fast and frequently knocked over Bowerman's mailbox . Bowerman scolded the driver and threatened to punch him in the nose and so forth , but the driver paid no heed . He drove as he pleased day after day , so Bowerman rigged the mailbox with explosives . Next time the driver knocked it over .

Boom , when the smoke cleared , the driver found his truck in pieces , its tires reduced to ribbons . He never again touched Bowerman's mailbox .

So Bowerman is a pretty strong character in this book and also of Phil Knight's life , and pretty much if there was no Bill Bowerman there would be no Nike , because again , bill Bowerman kind of gave him that seed when he was his coach at Oregon by kind of manipulating his shoes , trying to get them to run faster .

And so Phil Knight partners with Bill Bowerman , and here's a quote from the book . I had a venerable partner , a legitimate bank and a product that was selling itself . I was on a roll . So he's basically selling these Onitsuka shoes , which they're called tigers . He sells these tigers out of the trunk of his car , basically , and he does this for a long time .

I don't think he actually works full-time in Blue Ribbon . For the next seven years he's not able to work full-time and so he's working as an accountant . But he does make some hires .

He hires someone called Jeff Johnson , who becomes the first full-time employee eventually , who becomes the first full-time employee eventually , and Jeff Johnson becomes obsessed with Blue Ribbon and the shoes .

And he hires Jeff Johnson and he works in a different town and Jeff Johnson is writing him letters all the time to keep Phil updated on what's going on with him , and so I'm going to read you some quotes here , because this is hilarious .

He wrote back right away accepting the offer . And then the letters didn't stop . On the contrary , they increased in length and number . At first they were two pages , then four , then eight . At first they came every few days , then they came faster and faster , tumbling almost daily through the mail like a waterfall .

Each one was the same return address PO Box 492 , south Beach , california . Until I wondered what in God's name I'd done hiring this guy . I liked his energy , of course . It was hard not to fault his enthusiasm , but I began to worry that he might have too much of each . With the 20th letter or the 25th , I began to worry that the man might be unhinged .

I wondered why everything was so breathless . I wondered if he was ever going to run out of things to urgently need to tell me or ask me . I wondered if he was ever going to run out of stamps . Every time I thought , every time I thought crossed Johnson's mind , seemingly . He wrote it down and stuck it in an envelope .

He wrote to tell me how many tigers he'd sold that week he wrote to tell me how many tigers he'd sold that day . He wrote to tell me who'd worn the tigers at which high school meet and in what place they finished . He wrote to tell me who'd warn the Tigers , at which high school meet and in what place they finished .

He wrote to say that he wanted to expand his sales territory beyond California to include Arizona and possibly New Mexico . He wrote to suggest that we open a retail store in Los Angeles . He wrote to tell me that he was considering placing ads in running magazines . And what did I think ?

He wrote to inform me that he placed those ads in running magazines , and the responses were good . He wrote to ask why I hadn't answered any of his previous letters . He wrote to plead for encouragement . He wrote to complain that I hadn't responded to his previous plea for encouragement his previous plea for encouragement . So this is hilarious .

It reminds me of what Jeff Bezos says about hiring and he says look for missionaries , not mercenaries . So Jeff Johnson is clearly a missionary . He deeply believes in what they're doing at Blue Ribbon and he you know Phil Knight doesn't have to worry about Jeff Johnson because he's just killing it on his own . Despite this , blue Ribbon is having a lot of issues .

So , like I said , phil Knight can't work full-time at Blue Ribbon because they can't support him to work there full-time . So he's still working as an accountant and Blue Ribbon is they're getting a lot of sales , but they're they're having a lot of liquidity issues .

They don't have enough cash to to sometimes to meet payroll and Phil Knight's , you know , basically taking any money that they are getting and reinvesting it to grow sales . He's really focused on growing sales .

And then another problem that's coming up with Onitsuka , because they there's begins to be signs that they want to get another resell , another reseller in the U S and at this point you know blue ribbon is completely dependent on Onitsuka for the shoes , like that's their whole business model is to just resell Onitsuka shoes and so they're just , you know , basically a

sales force to sell that product . Now they are providing , like Bill Bowerman is providing , feedback on how to improve the shoes . Then they're sending notes back to Japan to say , hey , do this and do this . So they're giving that feedback and guidance to make the shoe better .

But the bottom line is that Onosuka owns the production and the quality and the product that Blue Ribbon is selling , that Blue Ribbon is selling , and so at a certain point Onosuka basically is looking for other sellers in the US and basically Blue Ribbon loses the contract to be the sole distributor in the US .

And so this is actually a blessing in disguise , because this forces Blue Ribbon to actually get their own production process , their own factories and start producing their own product . But of course this is , you know , initially not seen as a very good thing . So he has to break this to his team , and I'll read this quote here out of the book .

I looked down the table Everyone was sinking , slumping forward . I looked at Johnson . He was staring at papers before him and there was something in his handsome face , some quality I'd never seen there before Surrender . Like everyone else in the room , he was giving up .

And there was something in his handsome face , some quality I'd never seen there before Surrender . Like everyone else in the room , he was giving up . The nation's economy was in the tank . A recession was underway , gas lines , political gridlock , rising unemployment , nixon being Nixon , vietnam , it seemed like the end times .

Everyone in the room had already been worrying about how they were going to make the rent , pay the light bill . Now this , I cleared my throat . So , in other words I said , I cleared my throat again , pushed aside my yellow legal pad . What I'm trying to say is we've got them right where we want them . Johnson lifted his eyes .

Everyone around the table lifted their eyes . They sat up straighter . This is the moment I said . This is the moment we've been waiting for , our moment no more selling someone else's brand , no more working for someone else .

Onitsuka has been holding us down for years their late deliveries , their mixed up orders , their refusal to hear and implement our design ideas . Who among us isn't sick of dealing with all that ? It's time we face facts . If we're going to succeed or fail , we should do so on our own terms , with our own ideas , our own brand .

We posted 2 million in sales last year , none of which had anything to do with Onitsuka . That number was a testament to our ingenuity and hard work . Let's not look at this as a crisis . Let's look at it as our liberation , our independence day . Yes , it's going to be rough . I won't lie to you .

We're definitely going to war people , but we know the terrain , we know our way around Japan now , and that's one reason I feel in my heart this is a war we can win and if we win it , when we win it , I see great things for us on the other side of victory . We are still alive , people . We are still alive .

So he takes that pretty distressing thing and turns it around into a positive thing and this whole book is like a roller coaster ride . I mean , there was a quote from Mark Andreessen on entrepreneurship . He said you only ever experienced two emotions euphoria and terror . And I find that lack of sleep enhances them both .

And this , this book , exactly encapsulates that quote . Like there are so many ups and downs so they lose on Natsuka . They have a bunch of liquidity issues , they're they're having trouble like meeting payroll and this . This is going on for years and years . Like I said before , phil Knight couldn't be a full-time employee until seven years in .

He was still working as an accountant , but they were still having these issues ongoing and lawsuits and just a bunch of ups and downs . And so they end up moving forward , getting their own factories . This is when they turn into Nike . They rebrand to Nike and create the famous swoosh logo , which they paid a designer like two bucks an hour to come up with .

So they paid like 30 bucks to get the design or something like that . They ended up giving that designer some stock options and that person is now a millionaire . But it's just funny . Some stock options and that person is now a millionaire , but it's just funny . It's such an iconic brand icon that only cost him like $30 to create .

So I think there's a lot of key lessons out of this book . One of them is the crazy idea that he believed in and a lot of people didn't . Nobody kind of took this idea seriously . He made a lot of sense on his reasons and it fit his experience background like perfectly and he believed himself and he went for that idea and he didn't stop , you know .

So I think that's if you have that crazy idea , that makes a lot of sense , but maybe you don't have a lot of belief around you . You know it was . So I think that's if you have that crazy idea , that makes a lot of sense , but maybe you don't have a lot of belief around you . You know , trust yourself .

The second lesson , I think , is he really surrounded himself with great people . He had a great team , jeff Johnson being the example I gave .

He was just a completely passionate for Blue Ribbon and Nike , and that's the kind of people you want to surround yourself with is people who are passionate about your business , because that just makes things way easier , and this is said over and over again in the biographies we're looking at , like Steve Jobs , brad Jacobs , sam Walton , rockefeller .

You need to find the people in your organization . Surround yourself with those people who are passionate about your business , who are A players . Lesson number three is the product .

So he's constantly innovating and adding , cushioning and subtracting weight from these shoes to make them better and better and to out-compete Adidas at the time , and I think that's something that we should really take as a lesson .

We should always be improving the service that we're providing , making it better and better and better and better , and just iterating on the service that we're providing to so that we're so good that people can't ignore us , right ? And then number four is don't stop . So , like I had mentioned , there's so many downs , ups and downs in this book .

You know , with liquidity issues , we just don't have enough cash .

He doesn't have shoes to sell because his suppliers going around him and he's kicked out of a couple of banks that don't want to be his bank anymore , but he is always moving forward and never stopping and I think that's a huge testament , and this is over decades like he's running into these issues and he's persevering .

So I think that's a huge lesson to take as well .

And then I think the last one , a key lesson that I took from this book is that you got to own your core business operation . You can't be . You have to have control . You can't outsource . In this case he was outsourcing his main product was shoes to Onosuka and that ended up coming back to bite him .

Of course , they overcame it and they produced their own shoes , but that was quite a significant emotional event .

So I think the lesson here is we really need to control the quality and the experience that we give to our customers , ideally from the beginning , to avoid any issues where you're trapped working with a particular subcontractor or whatever the case may be . But you got to own the core of your service that you're providing . But I highly recommend this book .

It was very beautifully written and it was very entertaining as well . It was an easy read even though it was a little long . It was very engaging and it was almost read almost read like it was a fiction book even though it was , you know , a memoir . So highly recommend it , and with that I will see you next week .