Shoe Dog - Phil Knight
Phil Knight, Nike's founder and board chairman, comes to "Good Morning America" to share insights from his new book.
With the way that the world is getting smaller and smaller via the accessibility of the internet and readily available information, international business has become drastically easier than what it was like when Phil Knight started down the path that would eventually lead to the creation and success of Nike. With running a business that deals internationally on a day-to-day basis, Film Gear South Africa is constantly having to deal with similar issues that Knight had to encounter with supply chain, cash flow, and employee management.
At the same time, his passion for wanting to win at any cost is extremely inspiring and his willingness to go above and beyond, [even to the point of jumping on the next flight to Japan], is eye-opening. The way that he was able to gamify his business clearly shows how his mind works and taking the harsh reality that he was not going to be a successful professional athlete, but still stay within the sports industry clearly aligns his two passions perfectly.
I would rate this book 4 out of 5 stars simply because it was a bit longer than I think it needed to be, but regardless when listening at 1.5x speed on Audible, no book is too large to handle :)
Update as of June 20 2024
The firm that Knight worked for became part of Coopers & Lybrand who then about 1990 merged with Price Waterhouse to become PWC. So this firm Knight worked for was not really PWC until 1990, so it was a predecessor firm much earlier.
My Notes
Wanted to leave a mark on the world
Didn't want to lose
Wanted life to be: play
Ran track at Oregon but quit after at 24
What if there was a way to feel what an athlete feels all the time, without being an athlete?
Life is a game.
The world is run on crazy ideas
We run because stopping scares the hell out of us.
Part 1
1962 approach dad with the idea
Research paper about shoes at Stanford Biz school
Wanting to pitch a company in Japan
Walk the track before a big race, so a trip around the world might do the trick
Need fathers approval and cash to make that trip to Japan to launch a company
Father was publisher of Oregon journal
Just paid for U of Oregon and Stanford
Liked being admired by others
Fear of inner chaos
26 of 27 companies fail
Father called him Little Buck
A trip around the world would be the trick to not becoming his father
Grandma didn't approve of the trip
Front runners always work the hardest
Companion on the trip to Japan would be friend Carter
September 7, 1962, departure date drive to San Francisco
Went to a liquor store to buy $80 ticket to Hawaii
Hawaii
Selling encyclopedias door to door to make ends meet
Couldn't sell encyclopedias because so shy
Didn't make the high school baseball team taught a lesson. Grieved for two weeks but then mom suggested running track. Realized he could run fast.
Selling security systems for Cornfeld in Hawaii instead
Wasn't a good talker, but could speak the truth and work the numbers
Carter met a girl and wanted to stay in Hawaii
Japan
Father knew some people in Japan and met up with them when the hostel didn't work out
Zen declares that self is a mirage. A bold face lie. To study the self is to forget the self.
Victory is when we forget the self and the opponent and become two halves of one whole
Visited Tokyo stock exchange
Went to the Importer magazine which was run by two GIs in Japan. They loved Japan. Ran for 17 years.
Told them they liked the Tiger shoe.
Key to doing business with the Japanese
Don't be rude or the typical American
They don't react well to the hard sell. Soft negotiations work better.
Showed up at the wrong place for the Tiger meeting
The entire shoe factory was extremely efficient
Leaving the past in the past. The Japanese had just recently tried to kill his uncles, and now he was doing business with them
Scared to answer what company he represents, he remembered his safe place, his home back in Oregon where he had blue ribbons hung on the wall. That was the inspiration for Blue Ribbon Sports
Undercut Adidas in the USA
$50 money order for samples of the Libero shoe
China
Mass poverty in the streets
The man who moves a mountain is the one who begins to move small stones
You are remembered for the rules you break. McCarthur
Africa
Baboons would raid the tour buses
Europe
Without victory, there is no survival
In Greece studied gods.
Nike is the god of victory
Back home in Oregon
still no shoes
Mother thought Phil was more "worldly."
Still needing money, worked for an accounting firm
Told to get your CPA and MBA to keep a certain salary level no matter what job you get
Track Coach Bowerman
Always customized Knight's shoes and believed in him
Oregon's athletic facilities weren't amazing
Coach was god/general
He rigged his mailbox with explosives so the truck driver would hit it
Asked to be 50/50 partner in shoe company
First college coach to emphasize rest
Coached more sub 4-minute mile runners than anyone else
Steady pace for first two laps, fastest pace for lap 3, and triple that pace for the last lap
Parents
Asked father again for money and this time said no
Family first.
Made him repel from his bed thru the window to get ready for a fire
Mother was a track while
Bought the first pair from Phil when he needed the money
The 300 pairs of shoes came quickly this time
Quit accounting job and sold shoes to various runners, coaches, etc
Surprised at selling success.
Mail order success
People would come to the house to get fitted
Happiness can be dangerous. It dulls the senses.
Met up with a friend he used to run with who happened to be selling Adidas shoes and asked him to be a sales person for him and rejected.
Got ordered to stop selling the shoes by guys claiming to be the exclusive North American distributor of Tiger shoes
Flew back to Japan to talk to about the C&D letter
"Just be yourself."
The art of competing is forgetting
Met with a new salesperson as the existing one does work at Onitsuka
Got invited to come to meet head of Onitsuka, Morimoto
Got his area back for one year
Went climbing Mount Fuji and met a woman Sarah
Back home back in Portland
Sarah showed up at his house
She impressed the whole family
Sister became the first part-time employee of Blue Ribbon Shoes
Re offered Jeff Johnson the sales job, and he accepted
Johnson was extremely persistent about writing to Phil
He ended up quitting his day job as a social worker
1965 Johnson became a first full-time employee of Blue Ribbon
Bank
Getting difficulties with bank and too much growth
Didn't have enough equity for the growth
The bank account was always close to zero. He would get a loan, make purchase, pay back loan, double order, do it all over again
At that time, the only real way to get money was going to bank
CPA
Started working for PWC
Learned how companies tick and fail.
Lack of equity is key to failure
Worked with accountant named Hayes who turned numbers into an art
Overweight and unhealthy
one night a week
Bowerman
Bowerman goes to Japan and becomes good friends with Onitsuka people
Used his runners as tests
Got experimental prototypes for his team
Tried to make secret drinks -> Gatorade
Tried to make rubbery running surface -> polyurethane
Wanted to write a book about running
"Business is a war without bullets."
Johnson created a custom insole for a runner to do the Boston marathon, and it is now standard on all track shoes
Business and personal Moved out of the house
Johnson got in a bad car accident on his way to a track meet and got a divorce. Needed to know what the long-term plan was for blue ribbon
Fail fast!
Told Johnson to open the retail shop, and to get an accountant but he didn't need to because he wasn't making huge gross profit
Opened the first store in Santa Monica
Created beautiful space for runners to hang out
Shop = "Sanctuary for runners"
Johnson convinced Knight to visit the shop
Marlboro man was back on shoe game
Needed a sense of community, even if it was a community of 2
Japan
Went to Japan again and there was a new export manager, Kitami
New and improved Onitsuka office
Kitami didn't have much "equity" in the shoes, so Knight was sitting well
Got exclusive three-year agreement for all of the USA
Opening of east coast store
Johnson Went to Boston to open shop
Johnson delivered an ultimatum for a partnership with the company -> fuck him!
Went to meet with Johnson and his father and told them partnership wasn't possible.
Knight didn't have anything to give, so offered a $50 raise
Johnson didn't want to quit, so he agreed to new terms
PwC 1967
Wanted to quit, but couldn't justify paying himself a salary from Blue Ribbon
Quit, and Started teaching accounting
Penelope Parks was a beautiful student in his class. Shy but smart.
"Assets = liabilities + equity" must always be in Balance
Offered Penelope a job because of her hand writing and whits
She quickly did everything she was asked to do
Wanted to be a part of it
She never cashed a paycheck, And neither did well
Went to visit her parents
Went on many dates
2x shy ppl worked well with each other
Came home to Portland
Struggled to get along with her family
They agreed to get married after another trip to Japan
He had a life partner now And didn't like saying goodbye to her
He was in harmony when he was balancing teamwork and alone time
Had teams in Japan and USA
Met up with a salesman who had just lost his house to a tsunami and wanted a new bicycle. Knight sent $50 to Onitsuka for a salesman, and it was returned but stated if he sent to house he could keep the money and knight did. The new partnership was born.
1969 <$300,000 in sales
Rising sales led to new sales people
Before 31st birthday, he was able to pay himself a salary. Quit teaching.
Advertising was the future
Offered a student a graphic design job
Olympics
No one was competing in Tiger shoes
They didn't have any money to pay athletes to wear their shoes
Spy at Onitsuka
He told his employees that he had a spy in the export department
Very common Japanese business practice to have spy in other companies
After Olympics, they came up to visit the HQ
Difficulties at home/Penny
Penny was learning that Phil was helpless around the house because he was spoiled rotten at home
Knight didn't like to loose because of his engrained upbringing
Penny managed to do well one a shoe string budget
Spring 1969 Penny is pregnant
Life is growth. You grow, or you die.
Found a house to purchase For $34,000 and got a loan for the house and put the company as down payment.
Every sale counted!
Found pleasure in small tasks
Office hunting
Their success was so dependent upon the spirit and working next to an insurance company wouldn't help that.
Corporate vibe could help with the bank and appear more professional
Waddell was to become head of operations
Chapter 10 fulfilment issues
Onitsuka was fulfilling all local orders first and then the exports.
As a result, shipments were late, incorrect, and ultimately embarrassing
Chapter 14 The Lawsuit
Blue Ribbon wins lawsuit
$400,000 loss granted.
Attorney Strausser became first in-house consul for blue ribbon
Yen became unstable
Considered taking production elsewhere
Company was actually in dire financial state
Jimmy conners tennis player. Sponsored athlete
Win Wimbledon and us open
Agent refused deal
1975 pay Nisho first. Financial issues
Growing faster than typical growth company
Grow or die
Always pushing bankers to the brink
Ran up $1mil in debt with Nisho
Have to clean out all other accounts to pay
Need payments from large retailers
Just need to get through this payment, then cash flow would be fine
You are remembered for the rules you break
Pay checks had bounced to employees
Approached suppliers for loans because without blue ribbon other companies would go out of business
Bank froze their accounts
Companies and banks live on float
Tried to convince Nisho that to pay them their $1mil they needed to pay their creditors and borrow and additional $1mil to pay them their $1 mil
FBI got involved with the bankruptcy and potential fraud charges
They couldn't take the house, but everything else
Always had answers to things, but not this time
As a result of the cash flow problems, creditors seeking their money turned into creditors seeking out the people that owed blue ribbon
Some of those companies paid out, and some were also in financial problems
Nisho wasn't that worried about the money. Sumaraki hid invoices because he liked Nike
Nisho offered to pay off all debts to creditors/banks
Part 2 1975
Still no banks
Got a bank in Minnesota to give $1mil in credit
Campbell. President of the bank of California. Called and told that Preet athlete was dead via car accident
Sony was the role model company
Didn't want ever to go public but needed more money
Bowerman wanted out
Started making the waffle trainer in blue and it was a huge success
Changed the name to Nike
Had to turn to Tawain to increase production
The best way to reinforce your knowledge of a subject is to share it
Korea and Taiwan are best shoe manufacturers
Going public was the best way to sustain growth
Trusting employees worked two ways by empowering them and liked the culture. Two-way loyalty.
Management style wouldn't have worked for people who wanted to be constantly guided.
Let employees make their own mistakes which is how Phil liked things
"Buttface" turned into nickname for all the extremely loyal employees
Matthew (son) never understood and was resented to Phil
1977 Frank Rudy
Figured out a way to inject air into running shoe
Shoe technology and design hadn't changed much since they were invented, so introducing air shoes seemed ridiculous
Strausser was originally hired for his legal mind, but soon did he realize his true talent was negotiating
Honest tactic
Sign college basketball coaches
Got a ton of coaches on board
Did the same with football coaches
Press release Iona was misprinted as Iowa
Got Nikes into Hollywood films and TVs
"Imitation is flattery but knock off is theft. "
Threatened the knock off factories with lawsuits, unless they wanted to help with producing more Nikes
A product speaks for itself, or it doesn't. Marketing doesn't mean a thing.
Must go public to solve the cash flow problem
Bill for $25mill for customs duties owed
American selling price law. If there are competitions that sell locally, 20% duties applicable for importing
Fortune favours the brave. Bought new house.
Sons didn't want anything to do with Nike
1978 Strausser's battle
The tailwind Don't try and put too many inventions into one shoe
1980 meeting with Chang to do Chinese production
Became An embassy to china
Tried to turn American selling price on their side to use as the new import standard
Filed anti-trust against competitors
Didn't want to settle at all
Issue two classes of stock
Way to keep control by selling single voting shares in one class, and board member shares to others
Settled on $9mil to customs
Chinese strip down on the train to stay cool
China gov negotiated all sponsorship deals
Chinese Olympic team wore American shoes
First American shoemaker in 25 years to do biz in china
Biz = helping others better their lives
Public offerings don't always succeed
Create a prospectus
Phil Knight personally own 46% of shares to ensure there was one person in charge
The cowards never started, and the weak died along the way.
Hayes sometimes drank too much
Wanted $22/share and so was Apple at the time
Offered $21.50 and insisted on $22/share
2007 Nike today
No longer CEO, but chairman
HQ is situated on a college campus
All phone numbers end in 6453 around the world, which spells Nike
Taking a chance on people, that's what it's all about
Athletes all love Phil
Matthew, the son, dropped out of college and started working with a charity in El Salvador. Went deep diving at 150ft and passed away
You measure yourself by the people who measure themselves by you
Bowerman went to work for Adidas
Nike is the world standard for factories
The Girl Effect organization
Tried to raise wages but national governments didn't agree
International trade always benefits both countries
Business is war without business
Although students are smarter these days, they tend to be more pessimistic
Give away $100mil each year
Building new Bball stadium at Oregon
"Mothers are our first coaches."
What's on your bucket list?
Regret not spending time with sons
Seek a calling, not a job or career
The bigger you get, the bigger the bullseye on your back
Knowing when to give up is genius
Giving up isn't the same thing as stopping
The power of luck
The harder you work, the better your luck