Shoe Dog by Phil Knight (Part 1)

A memoir by the Creator of Nike

In the beginner’s mind there are many possibilities, but in the expert’s mind there are few. – Shunryu Suzuki

Dawn. I was in Oregon and it was my birthplace. It was 1962. I was 24 and had a good degree and a masters from Stanford. However, oddly, I still felt like a kid. I wanted to be successful but didn’t know how. Life was there to be experienced. Time is finite and I wanted my life to meaningful and purposeful. I wanted my life to be about Play. Sadly, I was not a good athlete. I needed a great dream and direction in life. Life is a game. The world, to me, should be made up of crazy ideas. Running was one of my favorite activities. It gave me a lot of satisfaction. I told myself not to stop at all.

What if there were a way, without being an athlete, to feel what athletes feel? To play all the time, instead of working? Or else to enjoy work so much that it becomes essentially the same thing. – Phil Knight

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. – Phil Knight

Year 1962. I told my dad about my idea. I wrote a research paper on shoes. I spent a lot of time exploring this idea. Many didn’t believe in my idea. I was in Stanford then. The idea was to manufacture shoes in Japan. Travelling was always my goal and I wanted to see the world. As such, I sought my dad’s approval. Things were looking bleak as my dad didn’t have a lot of cash to spare. Starting a business was too risky as 26 of 27 new companies will fail. My dad was a down to earth guy who wouldn’t travel excessively. We often talked about sports. I was called Buck when I was young. My grandma was resentful of the Japanese and didn’t support my trip. My grandma was known as Mom Hatfield. The public hated Japan after the WWII. My twin sisters were Jeanne and Joanne. Both my parents gave me consent. I spent a lot of time researching. I wanted my friend, Carter, to join me on the trip. Thankfully he agreed to it too. Our first stop was Waikiki Beach in Hawaii. We decided to stay in Hawaii for longer than necessary and we sold encyclopedias to make some cash. However, I had trouble selling them. I realized that selling things wasn’t that easy after all. My mom encouraged me to run and I realized I was good at that. I met Bernard Cornfeld, who headed Investors Overseas Services. I sold Dreyfus Funds. I was doing rather well back then. Carter found a girl he liked and didn’t want to travel with me. I took a leap of faith and decided to travel alone. Travelling alone seemed very daunting. Many of the buildings in Japan were damaged from the war. Thankfully my dad knew people in Tokyo who could show me around. I wanted to discover the Zen style of life. I learnt to forget the Self. After my visit to the Tokyo Stock Exchange, I realized that I didn’t see money as being that important. I was getting in touch with my spiritual self. Climbing Mount Fuji was a mystical experience and I longed to climb it. My friends gave me advice on not to be pushy when dealing business with the Japanese. The Japanese don’t have a direct way of saying things. I agreed to meet the shoe makers, Onitsuka. Ken Miyazaki gave me a tour of the shoe factory. I was extremely nervous when talking to those executives. My plan was to bring Onitsuka shoes to America. They asked me many questions about US culture and the market for shoes etc. I was working for Blue Ribbon then. They agreed and struck a deal with me. Later on, I visited Hong Kong and toured the top of Victoria Peak. I also visited Manila and Philippines. Along the trip, I stopped by Bangkok and Vietnam. I even had time to visit the Himalayas. In addition, my trip covered Egypt and India. Some of the other places I covered were Istanbul and Jerusalem. After more than 6 months, I was finally home and couldn’t wait to share my travels with my family.

Year 1963. The shoes from Onitsuka hadn’t arrived. I saw the world and was enlightened by my experience. I needed a way to try and make more money. I knew Mr Don Frisbee, CEO of Pacific Power & Light. I needed a job badly. He advised me to get my CPA and then after that an MBA so as to secure a decent level of earnings. I worked in an accounting firm for a while. But the work was too hectic for me to enjoy it, even though I was learning. Work would have to take centre-stage in my life. This was how I spent 1963.

Year 1964. I received 12 pairs of beautiful shoes from Japan. Bill Bowerman was my old track coach at Oregon and thought shoes meant everything to an athlete. He was always finding ways to improve how a shoe wore. Running shoes had to be light and springy. He was willing to experiment with new materials. I knew the Japanese were willing to improve their shoes. I knew I needed to please Bowerman. I loved that the man was fearless. He didn’t care about whether others respected him. He exhibited a strong level of hard work and grit and was a war hero. Facilities at Oregon were Spartan, to say the least. He was a guy you didn’t want to mess with. He often pushed me to be my best on the track. Surprisingly, he wanted to get hold of the Japanese shoes as well. The plan was to enter the business 50-50. His lawyer arranged for the paperwork to be completed. Bowerman was a guy who always went against the grain. However, he was an excellent coach. We met Jacqua and his wife. In the end the deal was 51 to 49, in my favour. I wanted to be the exclusive distributor of Onitsuka shoes in the US. Both my parents grew up in poor conditions. To them, family was paramount. My mum was a very strong-willed woman. Nevertheless, I knew she loved me deeply. My father lent me $1,000 to buy the 300 pairs of shoes from Japan. Mr Miyazaki allowed me to be the distributor for Onitsuka. My sales strategy was to sell them at track meets. The sales were tremendous. I realized I could sell them because I believed deeply in the product too. Sports was the way to make the world a better place. Soon, I ventured into a mail order business. The demand was overwhelming. I sold at the shoes at more than twice the price I bought them. My dad gave me $3000 more to buy more shoes. I hired salesman to help me with selling. I met Jeff Johnson, a sprinter, one day. Life was good but he didn’t want to be my salesman. A coach claimed that I was poaching as he had the exclusive American distributorship rights. This was to be a legal battle. He was Mr Manhasset. I needed to talk to Onitsuka management about this. I flew down to Japan again to settle things once and for all. I knew that I needed to stay calm and not be emotional. Competition was about forgetting your limits. Mr Miyazaki no longer worked for Onitsuka. Instead, I got an appointment with Mr Morimoto, his replacement. After the meeting, he promised to get back to me. The next day, I met the founder of the company, Mr Onitsuka. The Marlboro Man would sell his wrestling shoes nationwide, but limit track shoes sales to the East Coast. This deal would last for a year, before being subjected to review. I finally climbed Mount Fuji after all the drama that happened. I met Sarah from my climb. Sarah was with her boyfriend. It was difficult getting to the summit. The Japanese often climbed the mountains. I had no plans to see Sarah again. Sarah called me a few weeks later and decided to take up my offer. For two weeks, she lived in my parents guestroom. Happiness is a how, not a what. Sarah loved me. Her parents somehow didn’t approve of me and I found that really disappointing. Later, Sarah mentioned that she didn’t find me to be sophisticated enough and was dumping me. I cried and was disappointed. I hired my sister Jeanne to work part time for Blue Ribbon.

Year 1965. Jeff Johnson liked the shoes I gave him. He wanted to be a sales rep. He was very energetic. However, he kept writing to me and I found it to be irritating. He seemed incredibly needy. Later on, he wanted to quit his day job. Back in the day, running was not popular. Johnson wanted to do it full time, although I discouraged him from doing so. However, later, I hired him as the first full time employee of the company. The banks thought my sales rate was growing too fast and it was questionable. However, my cash balances were not growing as fast. The banker wanted me to re-invest profits into the company. My banker was Harry White and his boss was Bob Wallace. Wallace was a difficult man to deal with. Back then, venture capital didn’t exist. By then, I passed my CPA exams. The money I earned in my day job would be reinvested in the business. I learnt that a lack of equity would cause companies to fail. To me, numbers were beautiful. I was also involved in the military and enjoyed my days then. Hayes was a crazy colleague who loved to drink and make others drink with him. Bowerman visited Japan too and saw Mr Onitsuka. Although Bowerman tried to suggest ideas for Onitsuka to implement, they fell on deaf ears. However, after much persistence, Onitsuka made prototypes for the American market. Bowerman also tried to invent Gatorade for athletes and always occupied himself with the latest products. He was also writing a book about jogging.

Running for pleasure, running for exercise, running for endorphins, running to live better and longer – these things were unheard of. – Phil Knight

Running track gives you a fierce respect for numbers, because you are what your numbers say you are, nothing more, nothing less. – Phil Knight

Year 1966. Bowerman didn’t seem to need any sleep. Johnson continued writing to me. However, I continued to ignore his letters. Johnson was extremely hardworking and treated customers well. He was putting in so much effort. He even sought customer feedback on the Tiger shoes. I rented a space to store shoes and to work from. One day, Johnson was involved in a tragic accident and his skull was shattered. I contemplated starting my next business. If there is something I learnt from life, it would be to fail fast. Thankfully, Johnson recovered. After he hit his sales target, we opened our first retail store. One day, I received news that a coach was trying to buy Tigers from another source. It was the Marlboro man. He was trying to poach business. How should we deal with the Marlboro man? I knew I needed to go to Japan. Thankfully, my boss agreed. There was a new manager in Japan, he was Kitami. I told him about Blue Ribbon’s sales figures and our new store and emphasized that we wanted to be the exclusive US distributor for Tiger shoes. Later, he said he wanted a bigger distributor. He mentioned that he would consider my proposal.

Year 1967. I hired someone else. I wanted to replace Johnson. I asked John Bork, a high school track coach. I didn’t break the news well to Johnson. He was freaked out and pissed. We wanted to expand to Boston and New York. Johnson was not willing to travel outside of California. I regretted the way I ignored Johnson in the past. He gave me an ultimatum and wanted a pay rise. Bowerman wasn’t keen to keep him as he wanted a stake in our company. I met up with Johnson and his dad. Finally, Johnson agreed to stay with a $50 raise but with no equity. Johnson would be on the East Coast . Geoff Hollister wanted to join too. He would be number 3. Bob Woodell would be number 4. The issue with him was that he couldn’t walk and was on a wheelchair. He looked sad and ill. He would work in our second retail store. Aztec, the new shoes, would be born. Adidas tried to sue us for copying their name. They were unchallenged for a long time. I despised them and felt that I could beat them. Bowerman was great at inspiring people. His book made running seem very cool indeed. Woodell was managing his stall well and with good energy. I wanted to live in my office and give up my apartment since I was spending so much time there anyway.

Year 1968. I was working 6 day weeks and I had no social life. I wanted to leave audit, but Blue Ribbon was not sustainable. I applied for a teaching job at a university, where the hours were more humane and better. My exit was sad and difficult. Teaching was tough as some students were not receptive. I tried the Socratic method of teaching, which was to ask a lot of questions. Miss Penelope Parks was a quiet student in class, who didn’t participate. However, she achieved excellent grades during the exam. I tried to offer her a job at my company. She agreed to work for me part time and did the work well. She did everything we told her to. Woodell thoroughly enjoyed having her around and she made him happy. She didn’t cash in her paychecks. I wanted to go out with her. She agreed to it. We visited the Oregon zoo and my trip to Calcutta. At that time, I was still uncertain about Blue Ribbon. She seemed to be impressed by me so far. We had our second date soon. Her family was poor and there were 5 siblings in total. I knew she preferred security over insecurity. She was a shy girl. Later, I met her parents at her home. Our relationship deepened over time. Her house was very messy and chaotic. Finally, I got her parents’ consent for me to take her to Sacramento for the weekend. I introduced her to Bowerman and the other runners. We were planning to get married. She was now my partner. I flew to Japan to talk business again. He liked my designs once again. I was now part of a team in Japan and it felt good. Penny and I got married in September 1968. It was only been a year once I first knew her.

I wanted to build something that was my own, something I could point to and say: I made that. It was the only way I saw to make life meaningful. – Phil Knight

Year 1969. Sales was continuously improving. Our sales force was increasing. I was now justified a salary. I was 31 already. Now, I was working full time at the company. Now, I needed some advertising. I needed advertising to promote my company. In general, I was more a pessimist than optimist. Puma and Adidas were not at their best behaviour. I was beginning to have doubts about Kitami. I tried to buy someone at Onitsuka. He would be a spy to Kitami. It was normal in their culture to hire a spy. Later, Kitami came to visit my office in the US. Penny learnt that I was forgetful and misplaced things. Penny was an excellent cook and spent the money I gave her wisely indeed. My father started believing in my business now. Penny discovered that she was pregnant and we were overjoyed. We planned to get a new house which was bigger. She continued to work for Blue Ribbon. Woodell never lost his composure. We really managed to get along well. We needed a bigger office. Penny treated him very well too. She was about to conceive soon. She gave birth to a cute boy. We made the baby. My new son was named Matthew. An employee tried to do mutiny. However, this time I reminded him that I was the boss. Bork reminded me that the back room, our warehouse, was in shambles.

Year 1970. I flew to Japan again. I needed to sign a new deal. He wanted to renew us for 3 more years. Sales were up to $22 million. Kitami would be promoted to company’s operations manager. I signed the agreement. Onitsuka was always late in shipping products. However, there was nothing I could do. Bowerman’s Cortez was becoming too popular and we couldn’t meet their demand. The bankers also didn’t treat me with much respect. My banker wanted to see larger cash balances before they would increase my loan amount. I was thinking of a mini public offering in order to raise cash. All of our cash was tied up in shoes and assets. 1970s were the era where venture capitalists were formed. My holding company would be ‘Sports-Tek Inc’. There was little demand for our shares. We withdrew the offering in the end. I was always thinking about how to improve my liquidity position. I invited Grelle over for a party and made my pitch to it. However, he was not interested. Woodell’s family was also kind enough to lend me $5,000 and didn’t ask for interest. I felt burned out and tired. I challenged Grelle to a running race. Steve Perfontaine appeared on the cover of Sports Illustrated. He was an excellent runner with a great reputation. Later, I decided to approach Bank of Tokyo for funding instead. I met a guy named Cam Murakami and we struck a deal. Was Onitsuka plotting to break my deal by approaching other distributors? I was pissed and considered inviting Kitami to remind him of what Blue Ribbon could do.

Year 1971. Kitami accepted my invite and came to Portland. We gave him and his assistant a time of their lives. Kitami was angry and shouted at White, my banker. White was pissed and jumped out. Kitami mentioned that my sales were disappointing. I peeped at Kitami’s folder and saw 18 other shoe distributors in the US. He was relentless. We had done so much for Onitsuka and that was the way he was treating Blue Ribbon? I met Kitami for cocktails. Bowerman was drunk that evening, which was very unlike him. My consultants advised me to stick with Onitsuka for the time being. We had to stick to the devil because we relied on them for business. Kitami wanted me to sell Blue Ribbons to him. If I didn’t accept, he would approach stronger distributors. First National didn’t want to do business with us anymore. White told me to find another bank. I talked to everyone, and knew that I needed help desperately. Sumeragi approached me, saying he wanted to introduce quality shoe manufacturers in Japan. I always tried my best to spend time with my son, Matthew. If my relationship with Kitami cannot be salvaged, what hope was there left? I needed to find a replacement for Onitsuka. I arranged a meeting in Mexico, in a factory called Canada. I signed a contract with them. This would not violate my contract. I got Carolyn Davidson to help design a logo for the shoes. We looked through her designs. It had to signal ‘motion’. The logo we chose looked something like a wing. We kept debating on the name of the shoes. We wanted ‘Falcon’; ‘Bengal’; ‘Dimension Six?’ My head my splitting and we couldn’t come up with a good enough name. Johnson came up with ‘Nike’. It was the Greek goddess of victory. It was good because it sounded short and easy to remember. Anyway, our company’s motto was to be victorious. My relationship with Nissho was going well. He kept giving me cash. I wanted a public offering where I sold convertible debentures instead of stock. This was 1971 and the shares sold fast. Canada, the factory, was a letdown because the shoe couldn’t take the cold. Sumeragi promised to help me find new factories. He introduced me to Senter, a shoe dog. Sole was a guy Sumeragi hired. I met Chuck, CEO of Marcona Mining, for advice. Sole was nice and knew factories which could make shoes for Nike. We agreed to go to Japan to look at them. Sole Jr went instead as Sole was ill. Sole Jr was very rude towards the Japanese and it was embarrassing. The samples provided to me looked very good indeed. Now, I had to think of names for the different models. The tennis one would be Wimbledon. The basketball one would be the Blazer. The running ones would be Cortez, Marathon and Obori. Penny joined me in Japan. She had a panic attack and leg cramps. Now, I had to tell Onitsuka about my new business plans. Bowerman, in the meantime, kept trying to improve the sole of the shoes.

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

Year 1972. Everything depended on Chicago. Nissho was our future, not Onisuka. Onitsuka didn’t know about it yet. Nippon Rubber first wave of shoes were not the best too. I was pissed and wanted to give up. However, I knew that I needed to pull together and work hard. We did better at the show than expected. Kitami was angry and approached me. Kitami managed to spy on our storeroom and saw all the Nikes there. Kitami brought his lawyer the next time we met. Jaquua was on our side and threatened to sue if Tiger wanted to cut us off the deal. Bowerman was Kitami’s secret consultant. I broke the news to our employees and told them we had to rely on Nike now. These were certainly trying times for our company. I felt that we could win big time. Everyone left in a good mood. Pre was a great runner from Oregon and we all rooted for him. We were thinking of marketing Nike shoes for him during races. Sports can certainly empower people and give them a sense of victory. The fans also can take part in the sport. It’s not so much about winning, but trying your best. Sales of Nike kept improving. Israeli terrorist kills a few athletes at the Olympic village in 1972 and shocked the world. Nastase was a tennis player who wore Nike but started winning tournaments. We wanted to sign a deal with him. We had a celebrity athlete endorser and I was elated.

It’s time we faced facts: If we’re going to succeed, or fail, we should do so on our own terms, with our own ideas – our own brand…Let’s not look at this as a crisis. Let’s look at this as our liberation. – Phil Knight

shoedog

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