Shoe Dog

1. Passion and Perseverance: The Founding of Blue Ribbon and Nike

"There is no finish line."

A runner's mindset. Phil Knight's journey began with a passion for running and a desire to create better shoes. As a former track athlete at the University of Oregon, he understood the needs of runners firsthand. This passion drove him to start Blue Ribbon Sports, importing Japanese running shoes, which eventually evolved into Nike.

Overcoming obstacles. The early years were filled with challenges, from securing financing to maintaining relationships with suppliers. Knight's persistence in the face of adversity was crucial to the company's survival and growth. He often had to make quick decisions and take significant risks, such as mortgaging his house to pay for inventory.

Key early decisions:

• Partnering with his former coach, Bill Bowerman
• Traveling to Japan to secure distribution rights for Tiger shoes
• Constantly reinvesting profits into the business

2. Overcoming Financial Struggles and Building Resilience

"Fear of failure, I thought, will never be our downfall as a company."

Creative financing. Throughout Nike's early years, cash flow was a constant challenge. Knight and his team had to be incredibly resourceful in finding ways to finance their growth.

Building credit relationships. The company's relationship with banks was often strained, but Knight worked tirelessly to maintain and expand their credit lines. He also developed crucial relationships with Japanese trading companies like Nissho, which provided additional financing options.

Financial strategies:

• Consistently paying Nissho first to maintain their support
• Using personal assets as collateral for loans
• Implementing the "Futures" program to secure advance orders from retailers

3. The Power of a Strong Team and Company Culture

"Don't tell people how to do things, tell them what to do and let them surprise you with their results."

The Buttfaces. Knight assembled a team of passionate and talented individuals, many of whom were former athletes or had a deep connection to sports. This group, which he affectionately called "the Buttfaces," formed the core of Nike's early leadership.

Fostering innovation. The company culture encouraged risk-taking and unconventional thinking. Knight gave his employees significant autonomy, allowing them to take ownership of their work and contribute creative solutions to problems.

Key team members:

• Jeff Johnson: First full-time employee and passionate salesman
• Bob Woodell: Operations expert who overcame personal tragedy
• Rob Strasser: Legal mind turned marketing genius

4. Innovation and Product Development as Driving Forces

"Shoe dogs were people who devoted themselves wholly to the making, selling, buying, or designing of shoes."

Continuous improvement. Nike's success was built on a foundation of constant innovation in shoe design and manufacturing. Bill Bowerman, Knight's former coach and co-founder, was relentless in his pursuit of better running shoes.

Embracing new technologies. The company was always on the lookout for new materials and manufacturing techniques that could give their shoes an edge. This led to breakthrough products like the Cortez and the waffle trainer.

Key innovations:

• The waffle sole, inspired by Bowerman's experiments with a waffle iron
• Air-sole technology, developed in partnership with aerospace engineer Frank Rudy
• Constant refinement of shoe designs based on athlete feedback

5. Navigating International Business and Manufacturing Challenges

"I'd always known that supply and demand was the root problem in business."

Shifting production. As the company grew, Knight had to navigate the complexities of international manufacturing. This involved moving production from Japan to other countries like Taiwan and South Korea as costs and currency fluctuations made Japanese production less viable.

Cultural challenges. Doing business across cultures presented numerous challenges, from communication issues to understanding different business practices. Knight had to learn to adapt quickly and build strong relationships with foreign partners.

Key international milestones:

• Establishing relationships with factories in Taiwan and South Korea
• Exploring production possibilities in China
• Dealing with currency fluctuations and changing labor costs

6. Marketing and Branding Strategies in the Early Days of Nike

"Don't tell people how to do things, tell them what to do and let them surprise you with their results."

Organic growth. In the early years, Nike's marketing was largely word-of-mouth, driven by the quality of their products and the enthusiasm of runners who wore them.

Building brand identity. The Nike swoosh, designed by Carolyn Davidson for just $35, became one of the most recognizable logos in the world. Knight and his team focused on creating a brand that represented more than just shoes – it embodied a spirit of athleticism and determination.

Marketing strategies:

• Athlete endorsements, starting with runners and expanding to other sports
• Innovative print ads that focused on the spirit of athletics rather than just product features
• Guerrilla marketing tactics at running events and college campuses

7. Legal Battles and Government Regulations: Fighting for Survival

"There is no way, not in my lifetime or yours, that customs is going to see things our way."

Customs battle. One of the most significant challenges Nike faced was a $25 million bill from U.S. Customs, based on an arcane law called the American Selling Price. This threatened to bankrupt the company and required years of legal battles to resolve.

Creative solutions. Knight and his team had to think outside the box to fight this battle, including lobbying politicians, filing lawsuits, and even creating a new shoe line specifically to challenge the customs valuation method.

Key strategies in the customs battle:

• Hiring dedicated legal counsel to fight the case
• Lobbying politicians for support
• Filing an antitrust lawsuit against competitors and government agencies
• Creating the One Line shoe to challenge customs valuation methods

8. The Importance of Athlete Endorsements and Relationships

"I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in."

Building credibility. From the beginning, Knight understood the importance of having top athletes wear and endorse Nike shoes. This started with runners but quickly expanded to other sports.

Personal connections. Knight and his team worked hard to build personal relationships with athletes, understanding their needs and incorporating their feedback into product development.

Key athlete relationships:

• Steve Prefontaine: Iconic runner who became the face of Nike in the 1970s
• John McEnroe: Helped establish Nike in the tennis market
• College coaches: Building relationships with top college programs to get Nike shoes on athletes' feet

9. Personal Sacrifices and the Cost of Building a Business

"I was willing to devote my life to winning. I had no choice."

Work-life balance. Knight's single-minded focus on building Nike often came at the expense of his personal life and relationships. He missed significant time with his family and struggled to connect with his children.

Physical and emotional toll. The stress of running the business, particularly during times of financial crisis or legal battles, took a significant toll on Knight's health and well-being.

Personal challenges:

• Strained relationship with his sons, particularly his older son Matthew
• Constant stress and anxiety over the company's finances and legal issues
• Limited time for personal interests or relaxation

10. Adapting to Growth and Maintaining Company Identity

"I wanted to build something that was my own, something I could point to and say: I made that."

Scaling challenges. As Nike grew from a small import business to a global brand, Knight and his team had to adapt their management style and company structure while trying to maintain the entrepreneurial spirit that had driven their early success.

Going public. The decision to take Nike public was a difficult one for Knight, who feared losing control of the company he had built. However, it was necessary to secure the capital needed for continued growth.

Key growth milestones:

• Expanding from running shoes to other sports and casual wear
• Opening Nike-owned retail stores
• Developing a global supply chain and distribution network
• Creating a two-tiered stock structure to maintain founder control while going public

Last updated: September 5, 2024