"I have known no wise people who didn't read all the time — none, zero." – Charlie Munger

Shoe Dog

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Shoe Dog is the story of Nike told by its founder Phil Knight.  There have been many books written on Nike, but Knight has historically avoided the press and this is the first time that he has gone public with his side of the story.  Each chapter covers a year in the company’s history from the founding of the company after Knight graduated from Stanford Business school to the company’s IPO in 1980.

Knight was a runner at the University of Portland under the legendary coach Bill Bowerman and first thought of the idea for Nike during a project at Stanford.  He saw what the Japanese manufacturers had done to the camera market in the U.S. and believed there was a similar opportunity within track shoes to compete against industry heavyweights Adidas and Puma.  Nike was originally a distributor (Blue Ribbon) for the Tiger brand, which was owned by Onitsuka (now Asics) and started the Nike brand due to issues with Onitsuka.

The book is a page turner and provides several helpful lessons on entrepreneurship and building a brand.  My takeaways on the why the company was so successful:

  • Knight surrounded himself with people that were running junkies and this allowed the company to be a product leader and conduct highly effective grass roots marketing
    • Bowerman was a 49% partner in Nike and track legend (coached several Olympic teams) and gave the brand credibility with consumers and Japanese manufacturers. He was also a running science expert – he had tinkered with an early version of Gatorade and rubber track materials and was constantly innovating shoe designs for Nike.
    • In addition to Bowerman, many of the early employees were runners from Oregon or similar circles, including Jeff Johnson, the company’s first salesmen. Jeff was product and customer obsessed – he kept databases of early customers, wrote to them to collect feedback and provided constant feedback to Phil on the products.  Jeff and other sales members traveled to track meets and signed up college sponsorships to establish he brand.
  • Knight had extreme perseverance to make the company successful and Nike was his way to make a mark on the world. “Whatever comes, just don’t stop.”  This perseverance was channeled through the rest of the organization.

The company’s connection to athletes continues to be a pillar of its success and Knight writes about how much Nike has meant to Tiger Woods, Lebron James, Michael Jordan and others.  Knight has a personal relationship with these athletes – Tiger Woods was one of the first people to call Knight after his son died tragically.  In June of 2016, Knight stepped down as Nike’s Chairman and was succeeded by Mark Parker, Nike’s President and CEO since 2016.  Knight will remain involved with the company as Chairman Emeritus.

Notable Quotes (From Phil Knight)

  • I had an aching sense that our time is short, shorter than we ever know, short as morning run, and I wanted mine to be meaningful.  And purposeful.  And creative.  And important.  Above all…different.  I wanted to leave a mark on the world.  I wanted to win.
  • Let everyone else call your idea crazy…just keep going.  Don’t stop. Don’t even think about stopping until you get there, and don’t give much thought to where “there” is. Whatever comes, just don’t stop.
  • I was following a path that felt like my path and though I wasn’t sure where it would lead, I was ready to find out
  • “Blue Ribbon was my third child, my business child, as Sumeragi said, and I simply couldn’t bear the idea of it dying.  It has to live, I told myself.  It just has to.  That’s all I know”
  • “We wanted, as all great businesses do, to create, to contribute and we dared to say so aloud.  When you make something, when you improve something, when you deliver something, when you add some new thing or service to the lives of strangers, making them happier or healthier or safer or better and when you do it all crisply and efficiently, smartly, the way everything should be done but so seldom is – you’re participating more fully in the whole grand human drama.  More than simply alive, you’re helping others to live more fully and if that’s business, all right, call me a businessman”
  • “Somebody may beat me – but they’re going to have to bleed to do it” – Steve Prefontaine

Key Takeaways

  • The initial idea for Nike was a project at Stanford and he did not receive a lot of encouragement from his peers or his father to pursue the idea
  • He worked on Nike while keeping his day job – worked at PWC in accounting and when he needed more time, he taught accounting at Portland State
  • Nike’s success and ability to overcome issues were often due to the strength of its products and passion of its employees
  • Knight had incredible perseverance and a true passion for building the company – he wanted to make his mark and was enjoying it


  • In 1963, as he was distributing shoes for Onitsuka under the Tiger brand and a distributor on the east coast claimed to have the exclusive rights – he flew to Japan and won Onitsuka over with fairness and passion – Blue Ribbon had good sales and Bowerman and Onituska gave them rights to west coast
  • Blue Ribbon was sued by Onitsuka for breach of contract for starting the Nike brand – judge thought Nike had stronger character than Onituska executives and Nike won
  • Bank of California pulled their line when they bounced checks and accused them of fraud – Nissho (Japanese trading company) saved them because partners like Knight and his ambition
  • US Customs (pushed by competitors) tried to fine Nike for $20mm – with support of Oregon senators, they were able to force US customs to settle for $9mm

History of Nike

  • 1962
    • Idea for Nike was a paper at Stanford – the thesis was that Japanese shows might cut into U.S market like the camera
    • Went on a trip to travel the world after graduating from Stanford – if he wanted to lave his mark on the world, he had to get out and see it first
    • During his trip, he traveled to Tokyo and met two former GIs that introduced him to a shoe factory – on the spot in a meeting with Japanese executives he came up with the name Blue Ribbon Sports for credibility – Tiger shoe company
    • Also during his trip, he got inspiration in Greece at the Parthenon
  • 1963
    • After his trip, he went back to school to get an accounting degree
    • He shared the idea of the Tiger shoes with his former track coach at Oregon – Bowerman, who was obsessed with shoes
    • He formed a partnership with Bowerman – 49/51
    • His father was not initially supportive of the idea – “how long do you think you’re going to keep jackassing around with these shoes” – while his mom was very supportive (she was one of the first customers)
    • Initial sales of the Tigers were from Knight’s trunk at track meets
    • After struggling with encyclopedia sales and mutual fund sales, Knight turned out to eb really good with selling shoes – it was his passion, so it came naturally
    • His initial capital came from his dad and Bowerman and the 2nd shipment was supported by a loan from the First National Bank of Oregon
    • In 1963, hit a rough patch as he was distributing shoes for Onitsuka under the Tiger brand and a distributor on the east coast claimed to have the exclusive rights – he flew to Japan and won Onitsuka over with fairness and passion – Blue Ribbon had good sales and Bowerman and Onitsuka gave them rights to west coast
    • His first employee was his sister
  • 1965
    • Had significant cash constraints – there were only two banks in town and he had hit his limits, so he want to work for PWC to earn cash
    • He was also serving in the Army reserves at night
    • At PWC, he learned a lot about how small businesses work
    • Founder of Onitsuka (now Asics) got the idea for running show while eating octopus sushi
    • Bowerman was critical to the company’s success and was a constant product tinkerer – he tested an early version of Gatorade out on his runners and an early version of rubber track materials
  • 1966
    • He learned an early lesson on leadership through reading and interactive with first employee (Jeff Johnson) – don’t say too much or micromanage and people will respond
    • His early heros were Churchill, Kennedy and Tolstoy
    • Johnson, his first salesman was a freak about customers – he kept a database of customers and would keep in touch with them at all times
    • First retail store was at 3107 Pico Boulevard in Santa Monica
    • 40K in sales in 1966 and 84K in 1967
    • He was very bold with the Japanese suppliers – when he asked for exclusive distribution rights, they said he needed an east coast – he lied and said they already had one and that they would take a 20K order – he signed a three year contract and then figured out the details after
  • 1967
    • Most of his first employees were referrals from Oregon/Bowerman
    • He continued to work at PWC to pay the bills
  • 1968
    • He craved focus and ended up quitting PWC to teach at Portland State so he had more time
    • His first employees were crazy passionate – they were not even cashing their first paychecks
    • He married Peggy, one of his first employees and a student that he was teaching at Portland State
    • $100K in sales
  • 1969
    • $300K in sales
    • He pledged his house for an inventory loan
  • 1970
    • He tried to raise VC money – called the company Sports-Tek and failed
  • 1971
    • He was about to be cutoff by his Japanese supplier, so he started looking at building their own brand during the transition – tried in football shoes, which he thought would not violate the terms of his contract with Onitsuka, which was for track shoes in the U.S.
    • Artist at Portland State came up with Nike logo – wanted something that stood for motion – paid her $35 for the logo – Phil did not like it as much as his team.  Johnson came up with the name Nike – it came during a dream – the Greek goddess of victory as he noticed that all memorable brands were short and had a K or X (Clorox, Kleenex, etc.)
    • Took on convertible debt in June of 1971 for $200K
    • Shoe dogs are people that devoted themselves wholly to the making, selling, buying or designing of shoes
    • An executive from Onitsuka had offended Nike’s relationships with First National Bank and First National closed their doors to Nike
    • Found a Japenese trading company that would lend them money and introduce to other manufacturers
    • Continued to innovate on the product with Bowerman – he developed the waffle/grid shoe (with inspiration from a waffle iron), which was revolutionary
    • $1.3mm of sales
  • 1972
    • They introduced the Nike brand at a trade show and the entire order was botched (they had just found new suppliers), they thought it would ruin them, but they ended up selling extremely well – they had built trust with the sales reps for innovation
    • When they lost Onitsuka as a supplier, it was a huge blow to the moral of the company, but Knight positioned it as a positive with employees – it was the first time they could control their own brand
    • First endorsement was Illie Nastase – Nasty for $10K – Romanian Tennis Player
  • 1973
    • Huge win when they signed up Prefontaine (Pre), a legendary U.S. track runner, who would later die tragically at a young age
    • Continued to struggle with cash constraints even with $4.8mm of sales
    • There was a negative feedback loop with poor supply – a late shipment would result in poor sales, poor sales would result in less credit and less credit meant later inventory shipments
    • Came up with a special program – large retailers would give them nonrefundable orders six months in advance in exchange for discounts and because they had such great products, retailers agreed
    • Got into a nasty legal battle with Onitsuka – accused Nike of breaking the original agreement by selling the Nike brand
  • 1974
    • Ultimately won the case against Onitsuka – judge sided with Nike because the untruthfulness of Onitsuka during the trial
    • $8mm in sales
    • In the 1970’s yen switched to unpegged, so had to find alternative suppliers – bought an old factory in MA from the Exeter shoe company
  • 1975
    • Most series obstacle the company faced – they were running very close on their line with Bank of California and their checks started to bounce – Bank of California accused them of fraud and called the FBI in – Nissho (Japanese trading company) saved them
    • Senior executive at Nissho valued Nike’s as a partner – “There are worse things than ambition” and saw through the issues
  • 1976
    • Started to see huge growth – Nike brand expanded beyond athletes – people started to wear them with blue jeans
    • Expanded supply chain to Taiwan – shoes were leaving Japan for Taiwan and Korea
    • Adidas and Puma dominated the industry – founded by two german brothers
    • Built a core team of executives: Strasser as legal counsel (had helped them in the Onitsuka case), Johnson, Woodell and Hayes (accountant from PWC)
  • 1977
    • In the late 1970’s, they started to pursue the college market – made an “Advisory Board” of coaches
    • Phil was always very skeptical of marketing
    • Got into a major battle with the U.S. Customs – their competitors had lobbied for the application of an esoteric law from the depression ad said Nike owed them $20mm retroactively
  • 1978
    • $140mm of sales by 1979
    • They had several product blow-ups and morale was suffering –
  • 1979
    • When the company moved offices – all 300 employees came in on the weekend and packed up their belongings into their own cars
    • Was able to push off the customs office with the help from Oregon senators – settled for $9mm
  • 1980
    • IPO in 1980 – two classes of shares – 50mm shares – 2mm class B shares would be sold to public – IPO was at $20 per share
  • Closing
    • Has an extremely close relationship with Nike athletes
      • Used to stay at MJs house and was invited to his fathers funeral
      • Tiger Woods was first one to call Phil the day his son died tragically
      • Lebron has been a huge fan of Phil
    • Strasser ended up going to work for Adidas – a huge betrayal for Phil and he never forgave him
    • Knights given away $100mm per year and will give away most of it

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By BoardofBooks
"I have known no wise people who didn't read all the time — none, zero." – Charlie Munger

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