Author: Phil Knight
Shoe Dog A Memoir by the Creator of Nike Phil Knight 2016
About the book Shoe Dog A Memoir by the Creator of Nike
Nike founder Phil Knight tells the story of Nike’s evolution from startup to one of the world’s most iconic brands. After graduating from business school, he borrowed $50 from his father and started a company that bought inexpensive Japanese sneakers and sold them in the US. In 1963, he traded them from the open trunk of a car. Today, annual sales reach $30 billion. Nike is an instantly recognizable brand anywhere in the world. But its creator remains a mysterious figure. In his book, he details the risks he faced in creating his offspring, crushing failures, intrigues of competitors and bankers, as well as brilliant triumphs. He recalls his first employees, who before his eyes turned into a close-knit team that created a legendary brand.
about the author Phil Knight
Phil Knight is the founder and chairman of Nike. I have been involved in athletics since childhood. Personal best at an average distance of 1.6 km – 4 m 10 s. He played for the track and field team of the University of Oregon. Then, after graduating from the Stanford Business School, he began selling Japanese sports shoes in the United States and founded the future global brand. In 2019, he was ranked 21st in the list of the richest people in the world according to Forbes with a fortune of $ 37.6 billion. Owner of the film company Laika.
Phil Knight is a living legend not only in the world of business, but also in the world of sports. Founding NIKE in 1964, he built Nike into a leader in sportswear over the decades. Today, NIKE has a market capitalization of $109 billion.
Prior to the publication of this book, little was known about Phil Knight – he rarely gave interviews and appeared in newspaper headlines mainly due to his generous donations. Therefore, Phil Knight’s autobiography was a real discovery.
The story of Phil Knight is not the story of the most talented salesman, marketer, designer, or financier who, through his talent, was able to build a great company. This is the story of an unsuccessful athlete (by his own definition) who believed in his Crazy Idea and did not back down a step in its implementation.
After reading this summary, you will learn how one of the most famous companies in the world was born and what business lessons its founding father learned for himself: why you should not quit a permanent job by starting your own business, where to find effective employees and how sometimes you need to be able to give up.
Part one 1962–1975
1.1. The world moves forward only thanks to Crazy Ideas – ideas that seem impossible, but thanks to the perseverance of their followers, are realized and, accordingly, change reality. The whole history is a succession of the triumph of seemingly insane ideas.
Running is a great image of a Crazy Idea. Running is painful, the physical sensations in the process are not the most pleasant, and the health benefits are not too obvious. But despite everything, running is fun – the process of running becomes its goal, you yourself determine where to start and when to stop. Similarly , the implementation of a Crazy Idea can be unbearably difficult, but this path is joy and pleasure. It is the long journey of building a great company that brings happiness, not the company itself, money and fame.
Phil Knight had his Crazy Idea of selling inexpensive Japanese running shoes during his freshman year at Stanford University. Phil Knight, a professional runner, was convinced that popularizing running among non-athletes would make the world a better place (in the 1960s, running was far from being as popular as it is now, and was considered an eccentric hobby).
After graduating from university, Phil Knight returned to his native Oregon and turned to his parents (his father was a respectable publisher) with a request to sponsor a trip abroad to implement the Crazy Idea. At that time, 90% of Americans had never been on board an aircraft, the memories of the brutal war with Japan were still fresh, so Phil’s idea seemed crazy and dangerous to many. In 1962, Phil Knight left for a year-long trip, during which he visited Japan, where he signed the first contract with the Japanese company Onitsuka for the supply of Tiger brand sports shoes. Phil Knight had to wait about a year for the first batch of shoes.
1.2. You can implement Crazy Ideas only by breaking the rules. Playing by someone else’s rules will never succeed. The hardest thing is to go against your family and society, which expect certain things from you. But you should never cross the line separating rebellion from dishonesty. In business, this line is often not obvious – the same actions can be interpreted either as entrepreneurialism or as fraud.
“You are remembered by the rules you broke” – this saying of General Douglas MacArthur became Phil Knight’s favorite quote, and he repeatedly put it into practice. To get his first contract with Onitsuka, Phil Knight made up his own company (Blue Ribbon Sports) on the fly and assured that the company already sells shoes in the US.
Four years later, when Onitsuka contemplated giving exclusive distribution rights to a bigger player, Phil Knight lied that Blue Ribbon Sports already had offices on the US West Coast and got a long-awaited contract.
The existence of the company depended on the relationship with Onitsuka, therefore, after learning a few years later that Onitsuka was looking for another distributor, Phil Knight stole documents confirming this fact from the portfolio of an Onitsuka representative. At that moment, he realized that he had crossed a line that he should not have crossed.
1.3. At the initial stages, it is important to find a mentor and a partner who will not only help with advice, but also be able to become the face of the company. This is especially important when promoting specialized products – it is difficult to enter closed communities, for example, athletes, without having support.
In addition, if the founder is young, it is more difficult for him to gain respect and trust from older counterparties, so a senior partner can help build trust.
The second person after his father, whom Phil Knight turned to for help, was his former running coach, the legendary Bill Bowerman, who raised generations of Olympic runners. Boverman not only invested in the future dig, but also played a key role in developing the shoe’s unique design. He helped hire employees among former athletes, was an unspoken brand ambassador, attracted suppliers, bankers and customers with his reputation and experience. Broverman later wrote a book about running that became a bestseller and started a “running epidemic” in the United States.
1.4. Not everyone is born a sales genius, but if you believe that the product or service you are selling is really worthwhile, then selling becomes surprisingly easy. Faith in a Crazy Idea helps you overcome your limitations.
Phil Knight admits he’s hardly a natural born salesman. He started out selling encyclopedias in Hawaii and wasn’t very successful at it. But Phil Knight found it surprisingly easy to sell athletic shoes because he believed that running changed lives for the better, and the shoes he sells are the best for that purpose. Since selling the first batch of sneakers, he has managed to at least double sales every year.
1.5. Many stories of successful entrepreneurs highlight their sheer dedication and willingness to take significant risks, such as mortgaging an apartment or quitting a promising job. However, the degree of “sacrifice” of the entrepreneur does not correlate with his subsequent success. On the contrary, it is important to diversify risks – permanent work can provide the financial cushion that an entrepreneur needs and allows you to stay afloat longer. You don’t have to sacrifice everything to be successful.
Phil Knight didn’t quit his full-time job after founding Blue Ribbon Sports. He continued to work as an auditor, selling sneakers on the weekends. When sales increased significantly, he took a job teaching accounting so that he could have more time for business. And he finally quit only when the company’s staff already consisted of 40 people.
1.6. While competition is good in many ways, you can’t build a great company just by thinking about how to beat the competition. The art of sports competition is the art of not noticing your opponents and focusing on your own result, the art of forgetting your limitations.
At the Mexico City Olympics, Adidas and Puma (created by two rival brothers) were so obsessed with competition that they ended up hurting each other by artificially inflating advertising budgets. In his book, Phil Knight repeatedly mentions competitors (Adidas, first of all, at that time the absolute leader in sportswear and shoes), but emphasizes that he never suffered from an obsession to overtake them. You need to be able to look beyond your competitors, and not behind them.
1.7. Aspiring entrepreneurs are often characterized by the desire to control every little thing – many see this as the reason for the success of companies such as Apple. In a start-up company with a small number of employees, it is easy for the founder to keep abreast of what is happening and make all decisions alone. Some manage to significantly grow the company, while maintaining a rigid centralized management system. Despite some advantages (for example, reducing the risk of fraud on the part of management, the accumulation of expertise in one center), this method of management makes the company extremely dependent on the personality of one leader, his abilities and talents.
The opposite approach – to give employees complete freedom of action and determine only the general direction – unlocks their potential, allows the company to respond faster to market changes and grow.
At the same time, an extremely important mission remains for the CEO – in times of crisis, it is he who is responsible for raising the morale of the company. At this moment, he must be close to the employees and infect them with his enthusiasm.
From the very beginning of the company, Phil Knight demonstrated a rather unique management style, implying minimal control on his part. The CEO of a young company simply ignored the letters of his only employee, increasing his sales plan from time to time. Phil Knight rarely praised and encouraged his colleagues (his most flattering praise was “not bad”). At the same time, the founder of NIKE was aware of the shortcomings of his management style – he wanted to be more down to earth, more structured, to pay more attention to employees, but over time, Phil Knight came to the conclusion that his leadership style allowed employees to show independence and reveal their creative and managerial potential. Phil Knight “turned on” only in really difficult moments, when the company was teetering on the verge of collapse and everyone gave up.
1.8. Great ideas may not seem like great ideas right away, so it’s important to try out the idea and give it time to catch on , rather than brushing aside any developments that don’t cause immediate excitement.
Anyone can come up with a brilliant idea, so you need to involve all employees in the creative process , and it will cost less than attracting a creative agency.
Our own ideas often seem better to us than they really are, so it’s important to bring them up for discussion with colleagues and have the courage to drop your idea if the majority thinks it’s no good.
In 1971, Blue Ribbon Sports began developing their own brand. All employees of the company offered their ideas for the name, and one of them had a dream about the Greek goddess of victory Nike (pronounced NAY-KI). Phil Knight did not like the name at first, he insisted on his own idea – Dimension Six, but gave in under pressure from colleagues. The famous NIKE logo (it has a name – swoosh) was designed by an art student for only $ 35, and also at first seemed like a pass option, and not a brilliant creative solution that would become recognizable around the world.
1.9. The fear of making a mistake paralyzes the athlete – he begins to think only about how to avoid it, and ceases to focus on the goal. Mistakes should not be feared – on the contrary, one should strive to make a mistake as quickly as possible. This approach, firstly, develops tolerance for experimentation and the inevitable mistakes in this process, and secondly, it allows the company to move at a faster pace without wasting time calculating the safest paths.
In 1972, at a trade show in Chicago, NIKE was preparing to officially introduce its new brand. But upon unpacking the boxes, Phil Knight and his team found shoes of terrible quality that seemed impossible to present to salespeople. The team already wanted to cancel the introduction of the brand, but Phil Knight convinced his colleagues that they should try to sell this batch as quickly as possible, and if they succeed, then the better quality batches will be much easier to sell. As a result, the resellers liked the logo and the brand, they believed that the quality would improve, and they gave NIKE the first supply orders.
1.10. The spouse / wife must fully share the interests, be ready for sacrifices and cover the “family rear” in the constant absence of the second half. Feeling guilty towards family members is an essential companion of an entrepreneur, so it is especially important to feel the support of a partner.
Phil Knight met his wife Penelope at the University of Portland, where he was a professor and she was a student. Phil Knight invited a talented student to work for Blue Ribbon Sports. A year later, the couple got married. Penelope and Phil Knight have been married for 50 years, together they have experienced financial difficulties, sudden wealth (after the company’s IPO, Phil Knight’s fortune was $ 176 million) and the sudden death of his son Matthew (he died while diving in 2004).
Part two (1976–1980)
2.1. Employees are a key asset for every company, and for a young firm, hiring mistakes can be fatal. But how to minimize the probability of errors in the selection of candidates? Instead of relying on instinct, hire employees from professions that have high entry requirements – for example, to qualify, you must pass a specialized test.
The rapid growth of NIKE required a constant influx of new employees. With the filing of Phil Knight, the company hired for any position, mainly lawyers and accountants. Phil Knight argued that the former can definitely speak, and the latter can count, while the skills of, for example, a marketing manager cannot be checked before he starts working. Both lawyers and accountants pass complex tests to obtain accreditation, which already proves the presence of intelligence and ability to work – the basic qualities necessary for work.
2.2. Each member of the top management team influences the future of the company. A top manager must have initiative, the ability to make decisions independently, loyalty to the company and faith in its success. At the same time, good relations between members of the top management team are not at all necessary – managers may not get along, but at the same time interact effectively within their areas of responsibility.
The NIKE leadership team was highly atypical. Phil Knight complained that looking at the top managers of NIKE, you never understand that they run a sports company. Only two were avid athletes – Phil Knight himself and “employee number 1” Jeff Johnson. Two more were obese (Del Hayes, the company’s first CFO, who was turned down as a partner at PwC due to being overweight and having a drinking problem, and Rob Strasser, NIKE’s first lawyer, later chief marketing officer). Future COO Bob Woodell, “employee number 4,” sold running shoes for years while confined to a wheelchair. Jeff Johnson and Bob Woodell, the founding fathers of NIKE, hated each other, which didn’t stop them from working side by side for years. Harvard Business School professors attributed NIKE’s success to the uniqueness of its top team,
2.3. Do not rely on competitors to ignore the sudden appearance of a new player and not try to stop him. However, their methods may be far from a reasonable commercial struggle. The response should be just as aggressive and furious, but sometimes you need to be able to retreat with minimal losses, and not try to win at any cost. Never giving up is bad advice for entrepreneurs. Sometimes you need to be able to give up, but not stop.
In 1977, NIKE’s sales soared (from $14 million to $70 million), spurring rivals Converse and Keds to take advantage of a loophole in the law to set the US Customs Service against the ambitious newcomer. NIKE received a $25 million bill for additional import duties. For two years NIKE struggled with the bureaucratic machine. The case only moved forward when NIKE made a video about a small Oregon company trying to cope with the greed of the state, and filed a countersuit against competitors. Despite protesting vehemently against any payout, Phil Knight had to relent and pay $9 million as the IPO was approaching and the litigation could damage the company’s reputation.
2.4. Any innovative product is the result of hard work and constant experimentation. It is necessary to bring new technologies to the market in the “feedback” mode, finding out the opinion of consumers at each stage of development, gradually improving the product. Do not try to immediately release the “most innovative product”, putting all the latest developments into it.
In the early stages of its development, NIKE owes its unique design and comfort to its co-founder Bill Boverman. Trainer, self-taught inventor, Boverman tested his developments on athletes, which allowed him to receive feedback directly from future consumers.
In 1978, NIKE launched the Tailwind sneaker model on the market, combining 12 innovative developments at once (Boverman had nothing to do with them). The launch was accompanied by a massive advertising campaign, but a week later, customers began to return the sneakers to the store – the shoes fell apart due to small inaccuracies in the design. The failure of Tailwind was an important lesson for the company to thoroughly test innovations with consumers and not release too technologically complex and untested products.
2.5. A growing company requires a constant infusion of funds. In most cases, it is not possible to grow aggressively and generate profits at the same time. Not all financial partners are ready to share the risks of a growing business, preferring more conservative and gradual development models. It is important to agree with the financial partner on a common understanding of goals and time horizons.
Since 1962, Blue Ribbon Sports/NIKE has doubled its sales every year. The scheme was simple – the bank took out a loan to purchase a consignment of goods, when the consignment was sold, the loan was repaid and a new one, twice as large, was taken to purchase a twice as large consignment of goods. Creditor banks did not like this approach of the company – they were interested in profitability, not business growth. Venture capital financing was just beginning to emerge at that time. In 1975 Bank of California closed all NIKE accounts and filed a complaint with the FBI. A Japanese trading company came to the rescue and bought out NIKE’s debts, believing that, despite poor reporting, NIKE had a great future.
2.6. A large company needs a large number of talented managers. Attracting from the external market is expensive (attracting an external employee costs at least a third more than promoting an internal one) and risky, since not all newcomers will be able to adapt to the corporate culture. It is much more efficient, cheaper, and safer to educate your own leaders by investing in employee training.
NIKE grew rapidly (22,000 employees by 2000). Phil Knight worried that the company was critically short of talented managers. During his annual trip to Japan, he voiced his concerns to a Japanese partner. In response, he pointed to the bamboo growing in the garden and remarked absently that next year this bamboo would be a few meters higher. Phil Knight realized that the only way to solve his problem was to educate future leaders within the company.
For Phil Knight, NIKE is not just a company or a money-making machine. Phil Knight did not build a business, but carried the idea that sports make the world a better place. And despite seemingly insurmountable obstacles, he managed to bring this idea to life for millions of athletes and NIKE customers around the world. On the way to success, he learned several important lessons for the entrepreneur.
• You need to find your Crazy Idea and try to implement it.
• It is not necessary to have the natural talents of an entrepreneur – an idea can inspire any feat and give confidence.
• It is impossible to win by playing by the rules. In business, you need to show healthy rebellion.
• It is not necessary to rush headlong into your own business – you can combine your favorite business with work in order to have a financial pillow.
• Keep an eye on your competitors, but don’t be obsessed with chasing them.
• Give your employees only common goals and let them surprise you.
• Don’t be afraid to make a mistake, be afraid to make it too late or too slowly.
• Don’t waste money on expensive creative agencies, the best ideas are in the minds of your employees.
• Don’t rely on gut instinct when hiring employees – they must have proven skills and abilities.
• Test innovations with your customers and don’t pack too many innovations into one product.
• Fight fiercely for your interests, but know when to retreat with the least loss.
• Decide what is more important to you – profit and good relations with the bank or company growth.
• Invest in the development of your employees.