“Fight not to win, but to avoid losing. That is a surefire losing strategy.” writes Phil Knight in his memoir Shoe Dog.
Good day, my readers! 🫡
This is Career Geek here. On this week’s episode of career spotlight, I present to you Phil Knight. 👏
Phil Knight's journey from a humble college athlete to the visionary architect behind Nike is a remarkable story of ambition and resilience.
From the early days of importing Japanese running shoes to establishing a dominant global sports brand, Phil's relentless spirit and innovative mindset are evident throughout his career.
Today, I proudly present you 4 important lessons that we can all learn from Phil.
Sit back and enjoy! 🙂
What to expect 🔎
Early Beginnings - Phil runs track under legendary track coach, Bill Bowerman.
The Origins of Nike - Phil partners with Bill to sell imported Japanese shoes.
Run Fast or Die - Phil has to constantly finance all his inventory from very conservative banks. Until he finds an incredible partner in Nissho Iwai.
The Jordan Brand - Nike signs Michael Jordan. They do something with Jordan that has never been done in the industry.
Lessons you will learn 📚
We all feel lost at some point. Just keep going, don’t stop.
Forget your limits, doubts, pain and past. When it's not possible to forget, you must negotiate with it.
The drive to survive is what separates the successful from those who fail to rise.
Have the courage to be different.
Early Beginnings
Born in 1938, Phil Knight was the son of Bill Knight, a respected lawyer and newspaper publisher in Portland.
Like his father, Phil enrolled at the University of Oregon in 1955, where he pursued a degree in journalism.
Phil was not the extroverted type. He certainly was not the type to command a room with the force of a Genghis Khan. Yet beneath this quiet exterior, he harbored tremendous drive and grit.
Phil was a long-distance runner at Oregon. He ran under Bill Bowerman – arguably the most successful track coach in American history.
Bill coaches the first American sub four-minute miler. He ends up coaching several Olympic teams. He turns the University of Oregon into the most prestigious track program in America.
Bill is a legend in American track and field history. Period.
Phil was not the best runner at Oregon. In fact, he never stood a chance. There were too many talented runners under Bill at Oregon.
Yet, Phil persisted. He was determined to keep running competitively throughout his years in Oregon. This speaks a lot about his personality. The determination. The drive. The undying spirit.
Years after, Phil graduates from Oregon. He joins the Army and completes a year of active duty. He then attends Stanford and graduates with an MBA.
Not bad, huh?
Still, he felt lost.
Phil writes in his autobiography “Shoe Dog”:
I wanted to be successful. 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.
Every runner knows this. You run and run, mile after mile, and you never quite know why. You tell yourself that you are running toward some goal, chasing some rush, but really you run because the alternative, stopping, scares you to death.
I told myself, let everyone else call your idea crazy, just keep going, don't stop. Don't even think about stopping until you get there. Whatever comes, just don't stop. That's the precocious, prescient, urgent advice I managed to give myself out of the blue and somehow managed to take. Half a century later, I believe it's the best advice, maybe the only advice any of us should ever give.
Lesson 📚
We all feel lost at some point. Just keep going, don’t stop.
The Origins of Nike
Brief Timeline:
1938 – Phil Knight is born.
1955 – Phil attends University of Oregon. He runs track for Oregon.
1962 – Phil attends an entrepreneurship class at Stanford where he conceptualizes his idea for Nike.
1964 – Phil establishes Blue Ribbon Sports with Bob Bowerman, his college track coach.
1971 – Blue Ribbon Sports becomes Nike.
1980 – Nike IPOs
1984 – Nike signs Michael Jordan. Jordan becomes a cultural phenomenon and reshapes Nike’s trajectory.
2003 – Michael Jordan retires. Nike earns $700m that year from the Jordan brand.
2024 – The Jordan brand lives on. It earns $6.6 billion annually (13% of Nike’s total revenues).
In 1962, Phil was pursuing his MBA at Stanford. He attended an entrepreneurship class.
That’s when he started studying the idea of importing Japanese sports shoes to compete with German brands.
He observes that high-end professional cameras had traditionally been the domain of the Germans.
Leica was the most famous camera brand. At this point in time in the 50s and 60s, the Japanese are starting to enter the market.
Nikon was the big Japanese entrant. Fuji, Ricoh. They made great cameras, and they undercut Leica on prices by a huge amount.
In his research paper, Phil proposed that Japanese shoe manufacturers could likewise produce high-quality, low-cost running shoes that could disrupt the market dominated by European companies like Adidas and Puma.
Phil had his idea at a time when running was more of a competitive thing. Something that athletes do. Not the common folks. The running craze or the fitness craze hadn't really started yet.
He says:
The art of competing I learned from track was the art of forgetting.
You must forget your limits. You must forget your doubts, your pain, your past.
You must forget that internal voice screaming, begging, not one more step.
And when it's not possible to forget it, you must negotiate with it.
Phil went ahead to pursue his idea. After graduating from Stanford, he flew to Japan to meet shoe manufacturers and visit factories.
He gets an agreement from Onitsuka (now under Asics) to send samples of the Tiger shoes back home to Oregon.
Once Phil was back home, he sent a few pairs of Tiger shoes to his former track coach, Bill Bowerman, at the University of Oregon.
Bill was impressed with the quality of the shoes and offered to be Phil's business partner, contributing his expertise in product design.
In 1964, Phil Knight and Bill Bowerman formed a partnership, officially establishing Blue Ribbon Sports (which would eventually become Nike).
To finance their first order of 300 shoes, Phil secured a loan from his father.
Lesson 📚
Forget your limits, doubts, pain and past. When it's not possible to forget, you must negotiate with it.
Run Fast or Die
Back in those days, bank financing was hard to secure. Especially for a start-up like Phil’s.
Phil was a young entrepreneur without experience. Running was not seen as a big market. Nobody ran except competitive athletes.
Phil’s financing model was extremely aggressive and risky. Phil was purchasing all his shoe inventory with loans secured from the bank.
He didn’t keep any cash on hand. Every dollar he had went into inventory.
He had very small margin of error.
If the shipment from Japan was delayed, had defects or they didn’t manage to sell enough shoes, they would struggle to pay interests on their loans.
Failure to pay interests in a timely manner would mean bankruptcy.
Back then, there weren’t many banks in Oregon. There certainly weren’t many banks that was willing to extend credit to start-ups.
The absence of a robust venture capital scene also impacted Blue Ribbon's growth prospects. There were no venture capitalists eager to invest in disruptive ideas. There was no Sequoia Capital or Kleiner Perkins.
Phil could only approach traditional banks that were often risk-averse and conservative in their lending practices.
The journey Phil had to go through to survive is incredible.
He did always manage to get the loans he needed but it was painstakingly through various means. Using his father’s reputation etc.
There were plenty of other companies that had a 100% debt-to-asset ratio, maxed out their available credit, failed to pay interests and went out of business.
Nike almost does but survives each time.
In 1971, Phil’s struggles coincided with a time when Japanese trading companies was starting to set up shop in America.
There was one Nissho Iwai that was starting up in Oregon. Nissho is $100 billion revenue company.
What are Trading Companies:
In the 1960s, trading companies played an important role in facilitating international trade.
They acted as intermediaries between buyers and sellers.
They provided financing and helped connect companies with suppliers and markets around the world.
Other prominent trading companies in the 1960s include Mitsubishi, Mitsui & Co. and Sumitomo Corporation.
Phil meets with one of the officers at Nissho Iwai who would go on to become an incredible personal relationship for Nike and for Phil. A guy named Tom Sumeragi.
He offers to finance all of Nike’s inventory in a meeting in the branch office in Portland.
Phil signs a deal with Nissho Iwai. The terms of the deal were:
(1) Nissho would finance all Blue Ribbon's financing needs. They'll do that at market interest rates.
Nissho was a $100 billion revenue company. They could finance way more than any of the Oregon banks could do.
(2) Nissho will help Blue Ribbon set up direct manufacturing relationships in Japan.
(3) In exchange for all that, Nissho gets a 4% royalty on every shoe that Blue Ribbon sells, which ultimately ends up being a great relationship.
That's on top of the financing. Nike already owes interest on borrowing the money, but now Nike additionally owes a 4% royalty.
Demanding terms but this was the moment that Nike can finally take a deep breath and say yes, the business ahead is still hard but at least we have a real financing partner that has agreed to work with us.
Lesson 📚
The drive to survive is what separates the successful from those who fail to rise.
The Jordan Brand
Through the late 70s, revenues just doubled year over year over year.
Nike goes from $14 million in sales, to $29 million in sales, to $71 million in sales, finishing out in 1979 with $150 million in sales.
Approaching the 1980, Nike goes public. They IPO the second week of December in 1980, the same week as Apple.
The market cap of the IPO was about $400 million. Apple, for comparison's sake, was $1.8 billion.
Though, by the early 80s, running and jogging is out, and aerobics are in. Nike absolutely refuses to do aerobics.
In 1980, Reebok USA is founded. By 1988, Reebok eclipses Nike in sales at well over a billion dollars.
Nike really did need to start looking elsewhere.
In 1984, something incredible happened that would make everything before in Nike’s history look like child's play.
It would be a young kid from North Carolina, Michael Jordan.
Michael Jordan saves Nike.
From Michael Jordan, the Air Jordan 1, the Jordan Brand and everything it became, it didn't just save Nike. It changed the world.
Though in the first few years of the partnership, Jordan was not very keen on working with Nike. Jordan wanted Adidas.
He felt Nike was for second rate pro players. He didn’t like the Air Jordan shoes. They were not good for playing basketball. They were super stiff. They were hard to break in. They didn't fit his style right.
Nike tried to fix all these problems. They used soft leather that doesn't need to be broken in. They did a mid-cut height to balance the support required without the weight of a high top.
But here’s the main thing that moved the needle.
It was the Jordan Jumpman logo on the tongue of the shoe. No Nike swoosh. Only the Jordan Jumpman logo.
This was a massive commitment from Nike to develop the Jordan sub-brand as a standalone.
The Jordan brand would become its own sub segment within Nike. It would have its own shoes, clothes, colors, logo and advertising.
No other sporting company did that. Not Adidas. Not Reebok.
Jordan was sold. Nike was different. He commits to Nike.
The collaboration was a massive success. The Jordan brand becomes a cultural phenomenon.
Jordan brand sales go up and up. Over the years, it does $200, $300, $400, $500 million in sales.
In 2003, Michael Jordan retires. It did $700 million dollars that year.
Today, long after his retirement, the brand’s still doing $6.6 billion – contributing to 13% of Nike’s total revenues.
Lesson 📚
Have the courage to be different.
Ladies and gentlemen, there you have it. Phil Knight.
Thank you so much for reading up to this point. I thoroughly enjoyed learning about Phil & Nike.
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Take care and till next time! 🫡