Shoe Dog

Phil Knight

📚 GENRE: Biographies & Memoirs

📃 PAGES: 400

✅ COMPLETED: September 7, 2020

🧐 RATING: ⭐⭐⭐⭐⭐

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Short Summary

Nike founder and Phil Knight shares the inside story of the company’s early days as a start-up importing Japanese running shoes to its evolution into one of the world’s most iconic, game-changing, and profitable brands. Shoe Dog details the many risks, setbacks, and triumphs that made Nike into what it is today.

Key Takeaways

1️⃣ Japanese Roots — The origins of Nike trace back to Phil Knight’s time selling Japanese running shoes made by a company called Onitsuka out of the back of his car shortly after graduating from the University of Oregon. The company was known as Blue Ribbon at the time. Today, Nike’s annual sales top $30 billion.

2️⃣ The Swoosh — The iconic Nike Swoosh created by Carolyn Davidson for $35 after Knight struck a shoe deal with a Mexican shoe company in 1971. The Swoosh is now one of the most recognizable symbols in the world.

3️⃣ Hustle — There were several times in the early going when Knight nearly lost his company. He built Nike from the ground up by working hard, pushing the limits of his comfort zone, and taking risks. He never stopped chasing his vision, even when faced with significant setbacks and adversity. 

Favorite Quote

"Don’t tell people how to do things, tell them what to do and let them surprise you with their results."

Book Notes 📑

Introduction

  • Phil Knight — The founder and CEO of Nike.
    • Grew up in Oregon. 
    • Attended the University of Oregon, were he ran for the track and field team. 
    • Graduated with an MBA from Stanford University.
  • 1962 — Knight, at 24 years old, thought of the idea of Nike on a run one morning.

Chapter 1

  • Knight’s original shoe company idea came during an entrepreneurship class at the University of Oregon.
    • He did a paper on shoes for a class assignment in 1962.
    • He felt there could be a market for Japanese running shoes in the United States.
    • Being a hard-core runner himself, he knew about shoes.
    • The idea became an obsession for Knight.
    • His paper and presentation didn’t really impress his teacher or classmates at the time. 
  • Knight convinced his dad to let him go to Japan to explore his idea. While he was overseas, Knight wanted to also explore other countries. 
    • His family was skeptical because the Japanese attacked the United States a few years earlier at Pearl Harbor.
  • Knight was somewhat shy and awkward, which made him nervous about pitching his idea in Japan.
  • Knight’s business model involved getting a Japanese shoe company to infiltrate the United States market and undercut Adidas, which was the dominant shoe brand at the time and the one that most athletes wore.
  • Knight’s first meeting with a Japanese shoe company went well and they became partners.
  • Tokyo, Japan — Home to Tsukiji, which used to be the largest fish market in the world.
  • On his trip across the world, Knight stopped in Greece to see the Acropolis of Athens – the birthplace of western civilization.
    • Walking up the steps, he saw the temple of Athena Nike.
      • 25 centuries ago, this temple was home to the Greek god Athena, who was thought to be the bringer of “Nike”, which means “victory.”
      • The temple is called Nike.

Chapter 2

  • After his trip, Knight became an accountant in Oregon while he waited for the Japanese company he partnered with to send him shoes to sell. 

Chapter 3

  • 1964 — Knight finally gets the Japanese shoes. He received 12 pairs.
  • After receiving the Japanese shoes, Knight sent them to his Oregon track coach, Bill Bowerman.
    • Bowerman loved the shoes and made a partnership with Knight (51% Knight, 49% Bowerman)
  • Knight and Bowerman bought 10 cartons of the Japanese shoes.
    • Knight got permission to be the distributor of the Japanese company’s shoes.
      • He sold these shoes out of his trunk every day.
      • He sold them at track meets.
  • Not long after, Knight got screwed over. The Japanese company cut him out and gave exclusive distribution rights to some other guy from New York.
    • Knight went to Japan to confront the company. He was successful. They gave Knight the rights to distribute to the 13 west region states in the United States.

Chapter 4

  • 1965 — Knight became an accountant as he continued to work on Blue Ribbon/Nike.
    • Blue Ribbon was the original name that Knight came up with for his company. In the early days, Nike was known as Blue Ribbon.
  • Bowerman helped the Japanese company design a more American-style running shoe that was designed to suit Americans, who were taller and heavier.
  • Bowerman thought of the slogan “If you have a body, you’re an athlete”, which Nike has used in its commercials.

Chapter 5

  • 1966 — Blue Ribbon opens up its first store in Santa Monica, California.
  • Knight went back to Japan, where he convinced the company to give him exclusive distribution rights for the entire United States.

Chapter 6

  • Knight and Blue Ribbon’s biggest competition was Adidas.
    • Adidas — A German shoe company that had dominated in previous decades.
  • 1967 — Knight set up a few more stores.

Chapter 7

  • Knight quit his accounting job and got a teaching job at Portland State University.
    • This decision was made so that he could have more time to spend on Blue Ribbon.
  • Knight met Penny, his future wife, in the class. She was a student.
    • He invited her to work for Blue Ribbon. She was great.

Chapter 8

  • 1969 — Knight and Penny have a son named Matthew.

Chapter 9

  • Knight went back to Japan to sign a new three-year deal with the Japanese shoe company, which was called Onitsuka. 
    • Onitsuka was always terrible about sending shoes to Knight on time.
  • As Blue Ribbon kept growing, Knight needed loans from banks to keep the company growing.
    • He had already secured a lot of loans and his bank wasn’t allowing any more.
    • He got a big loan from a friend.
    • He negotiated financing with a Japanese trading company, many of which were more flexible with offering loans than United States banks.
  • 1970 — Knight finds out that Onitsuka was thinking of breaking Blue Ribbon’s contract and hiring a different shoe company to distribute in the United States.

Chapter 10

  • 1971 — Knight invites Onitsuka leadership to Oregon to try to resolve any issues.
    • Onitsuka told Knight that Blue Ribbon wasn’t doing well enough.
  • While visiting, Knight found out that Onitsuka was scheduled to meet with 20 other potential distributors. He was hurt.
  • Onitsuka was threatening to leave and Knight’s bank broke ties and wouldn’t lend any more money.
  • 1971 — Knight signed a separate shoe deal with a Mexican company to import soccer shoes. The company was named “Canada.”
    • With the new deal, Knight needed a logo. A friend, Carolyn Davidson, created what is now the iconic swoosh.
      • Davidson was given $35 for the logo at the time.
  • Knight and his team now had to come up with a name for imported soccer shoe. Knight wanted “Dimension 6”, but another employee suggested “Nike.” Everybody else hated “Dimension 6.”
    • The team was up against the deadline. A new name had to be chosen.
      • Knight, reluctantly, chose Nike.
  • Knight raised money for his company through an IPO, selling convertible debentures.
  • 1971 — Notre Dame quarterback in wore Nike shoes. It was one of the first times any high-profile athlete was seen wearing Nike shoes. 
    • The shoes were not high-quality. Knight needed to partner with a company that made better shoes.
  • Knight began looking for other shoe manufacturers in Japan to partner with.
  • To try to make a better shoe with better grip, Bowerman used a waffle iron to mold the bottom of shoes.
    • Bowerman’s waffle iron design would go on to revolutionize the shoe industry and was a big part of Nike’s eventual success.

Chapter 11

  • 1972 — Knight and the team went to the biggest sporting goods show in the country, which was held in Chicago.
    • This is the first time the world was introduced to Nike.
      • It went really well. They sold a lot of shoes.
  • Nike began supplying NBA players on the Portland Trailblazers with shoes.
  • Onitsuka, despite previously threatening to end its contract with Knight, was mad about Knight using other Japanese shoe companies to make new shoes.
    • They claimed there was a breach of contract. This led to the end of Knight and Onitsuka’s partnership.
  • Ending the partnership with Onitsuka was scary for Knight because Onitsuka was the company’s biggest shoe supplier.
    • It was also a catapult. It allowed Knight and Nike to flourish going forward. It allowed Knight and his team to make their own designs and do their own thing.
  • 1972 — Nike handed out shoes to athletes at the 1972 Olympic Trials, which were held in Oregon.
    • Steve Prefontaine competed in trials. He won his race by breaking the United States record. He later went on to finish fourth at the 1972 Olympic Games in Munich. 
      • Prefontaine was an Oregon track phenom. Bowerman was his coach at the University of Oregon.
      • Although he wore Adidas shoes at the time, Knight knew Prefontaine would eventually become one of Nike’s first huge athlete endorsements. 
  • 1972 — Nike’s very first endorsement signing was an elite, up-and-coming tennis player named Ilie Năstase, who was from Romain.
  • 1972 — In the “Civil War” rivalry game between the University of Oregon and Oregon State University football teams, the entire Oregon team wore Nike cleats.
    • Dan Fouts was Oregon’s quarterback at the time. He went on to have a Hall of Fame career with the San Diego Chargers. 

Chapter 12

  • 1973 — Now in his final year at Oregon, Prefontaine was wearing Nike shoes.
    • He was Nike’s second big endorsement deal and really became the face of the company in Nike’s early days.
  • 1973 — Nike actually lost $57,000 for the year in 1972. This was mostly because of the Onitsuka deal fallout.
  • 1973 — Onitsuka sues night and Nike in Japan for breach of contract. Nike won the case in 1974.
  • 1973 — Demand was so high for Nike shoes that Knight and his team had trouble getting shoes out to customers on time. 
    • Demand was for exceeding supply.
    • According to Knight, supply and demand is always the root problem in business.
      • This has been true since the days of the Phoenician traders trying to deliver purple dye to Rome.
        • Purple dye was used to color the clothing of Royals and rich people.
  • 1973 — A dock worker’s strike in slowed Nike’s imports even more.
    • Knight had the idea of instead going to retailers to strike order deals with them up to six months in advance.
      • This would allow Nike to get more credit from banks and allow the company to have more certainty in the delivery process.
        • Essentially, they could plan out the delivery process better and not have to worry as much about small delays.

Chapter 13

  • Nike opened a factory on the East Coast for $250,000 because the Japanese yen was fluctuating and Knight knew they needed to open a factory somewhere else.
  • Famous, legendary tennis player Jimmy Connors was almost signed by Nike.
    • Connors won Wimbledon and the United States Open in Nike shoes. But, after winning, he took a better deal to sign with a different company.

Chapter 14

  • 1975 — Because of Nike’s low cash reserves, the bank of California threw them out. This was very bad. Now Nike was not going to be able to pay all of its creditors and employees. 
    • At the time, Nike had two lines of credit:
      1. $1 million from the bank of California 
      2. $1 million from Nissho, the new Japanese shoe company Nike was working with.
  • The Bank of California also called the FBI because it felt that Nike was committing fraud.
  • Nike desperately needed Nissho to lend another $1 million in credit. Nissho ultimately came through and did lend Nike another $1 million, which essentially saved the company.
    • Nissho also paid off all of Nike’s debt at the Bank of California.
      • The FBI investigation never happened because of this.
  • Nike later found a new bank to work with called the Bank of Oregon.
  • Prefontaine died in a car accident at age 24 1975.
    • He was the United States record holder in pretty much every running event.
    • He was a legendary runner. It was a devastating loss.

Chapter 15

  • 1976 — Nike starts to take off.
    • Bowerman’s “waffle trainer” shoe design was becoming insanely popular for its look and its performance on the track.
      • Knight had the thought that the shoe was so popular that people might start to wear it out in about in their daily lives.
        • So he had the shoe made in blue to match jeans. This skyrocketed the demand for the shoe. Retailers were begging Nike for more of the shoe so they could sell it to customers.
        • Due to an increase in demand, Nike had to find new manufacturing locations.
  • Quote: “Don’t tell people how to do things, tell them what to do and let them surprise you with their results.”
  • 1976 — Nike turns to Taiwan to make new shoe factories.
    • The fluctuation of the yen and rising labor costs in Japan made Japan no longer a feasible place to manufacture shoes.
  • 1976 — The Olympic trials are held in Oregon. Nike shoes dominated the 1976 trials. Three athletes who qualified for the Olympics were wearing Nike shoes.

Chapter 16

  • 1977 — Two scientist guys come to Knight and pitch the idea of shoes with air bubbles inside them to give greater comfort and cushioning in the shoe’s sole. It would be an air sole.
    • At first, Knight hated the idea. Eventually, he put the prototype shoes on and ran 6 miles. He loved them.
    • This type of shoe was completely unprecedented at the time.
  • The University of Oregon’s men’s basketball team decided to wear Nike’ shoes instead of Converse.
    • Converse and Adidas dominated the college basketball market at that point.
    • Nike began to get a ton of college football and basketball players to wear Nike shoes.
  • Nike was beginning to become known for its innovation.
  • Actors in Hollywood began to wear Nike. Farrah Fawcett wore Nike shoes in an episode of Charlie’s Angels.
    • Demand exploded for that particular shoe following the episode’s release. 
  • 1980 — Nike finally goes public with an IPO.
    • This had been debated and turned down so many times by Knight previously.
    • The company was so leveraged with debt, it was finally time to do it.
    • The company issued 20 million class A shares and 30 million class B shares. 
    • Initial shares were priced at $22 per share.
    • Apple went public the same year.
    • $178 million — This is what Knight was worth after Nike went public in 1980. He was the majority shareholder.
      • 2007 — He is now worth over $10 billion.