SHOE DOG - a story retold
1. The Story Behind Nike - and the People Who Refused to Give Up
There are business success stories that inspire you.
And then there are stories that make you wonder how the business ever survived long enough to become successful.
SHOE DOG, Phil Knight's memoir of building what eventually became Nike, belongs firmly in the second category.
What struck me most while reading the book was not the eventual success of Nike.
It was the incredible uncertainty that preceded it.
2. Summary:
Reading Shoe Dog, I saw Nike’s journey as a hurdle race—each obstacle followed by another: supplier constraints, reluctant banks, competitors disrupting its supply chain, and finally a staggering $25 million customs-duty claim that threatened to finish the company. Yet Nike kept clearing one hurdle after another.
Here is the story:
Fresh out of business school, Knight believed that good-quality running shoes could be imported from Japan and sold in America at an affordable price.
In 1963, Knight visited Japan, found his way to Onitsuka, the Japanese company that manufactured Tiger running shoes. He persuaded them to consider him as their American distributor - Blue Ribbon Sports, a company formed by Knight with Legendary Coach Bill Bowerman.
His first shipment consisted of just 12 pairs of Tiger shoes. When the market gave Knight cold shoulder, he put the shoes in the trunk of his car and went directly to track meets and sold shoes. His next order, in 1964, was for 300 pairs, followed by another order for 900 pairs the same year.
3. Fail Fast - Knight moto used to be, " If I have to fail, I will rather fail quickly so that I would have enough time/years to implement the lessons learnt."
4. THE PEOPLE WHO BECAME THE BEDROCK
Phil Knight may have been the founder, but he did not build Blue Ribbon alone.
One of the most remarkable characters was Jeff Johnson, his Stanford pal whom he met by chance.
Johnson became Blue Ribbon's first full-time employee in 1964. He was extraordinarily enthusiastic. He spoke to customers, sold shoes, and became face of the company, and eventually opened the company's first retail store in Santa Monica in 1966.
There were times when Knight himself doubted whether Blue Ribbon had a future, given erratic supplies from Onitsuka, and cash crunch right at the beginning.
He decided to get a real job, something safe to fall back upon when every thing goes bust. He joined Price Waterhouse (PWC) as Accountant, and allowed business be run through Johnson.
Nonetheless, by the end of 1964, Blue Ribbon had generated about $8,000 in sales. The following years brought growth, but also an increasingly serious cash-flow problem. The faster the company grew, the more money it needed.
And this is where the story becomes particularly fascinating.
Then came Bob Woodell and Geoff Hollister, and both eventually becoming full-time members of the growing team.
Woodell, despite being paralysed from the waist down following an accident, became one of Knight's most trusted colleagues, after Johnson, and opened the company's second retail store in 1967.
And then there was Delbert Hayes, Knight's former colleague at Price Waterhouse., who eventually joined Blue Ribbon and became an important member of the team.
5. Johnson, Woodell and Hayes were not merely employees. They became the bedrock around Phil Knight.
Together, they formed something much more powerful than a conventional management team.
The company clocked a sales of $150,000 in 1968 and sales of $300,000 in 1969 and continued to stay on track as it was doubling sales for the fifth consecutive year.
That was the time when Knight needed to be with the company on full time basis. He quit PWC, and joined as Asstt. Professor at Portland State University, as it relatively gave him more free time to look into company's growth opportunities as against at PWC.
Looking back, I feel this is one of the most beautiful aspects of the story.
5. This is an amazing fact, and a testimony of the enviable trust Knight had in his team, that while he continued to work with PWC for almost 6 years and with Portland University for 2-3 years, and yet managed his venture so well from outside for almost a decade.
6. Whenever Knight's confidence weakened, the Team reassured and their optimism rather rubbed positively on Knight. The Team will say:
"Keep going. We are not finished yet."
Then came one of the most touching episodes in the book.
Bob Woodell's family offered Knight $5,000.
In one of the worst moments, Knight approached Woodell's parents and asked a loan of $5,000. Knight asked them, " Will you trust me with this money?" While giving money to Knight, Woodell's mother said, " If you can't trust the company your son is working for, then who can you trust."
Their faith in Blue Ribbon—and in their son—was greater than their fear of losing the money.
For me, this is one of the moments that gives Shoe Dog its soul.
A company is ultimately not just its balance sheet.
7. Sometimes it is the faith that other people place in you when your own confidence is wavering.
WHEN YOUR SUPPLIER BECOMES YOUR THREAT
Blue Ribbon's entire business, initially, depended upon Onitsuka.
Onitsuka, however, began considering other American distributors.
Imagine building a business almost entirely around one supplier, and then discovering that the supplier is quietly looking for someone else to distribute its products.
For Knight, this was not merely a commercial disagreement. It was an existential threat.
And this is where Shoe Dog becomes much more than a business story.
It becomes a story about trust, betrayal and survival.
The Onitsuka dispute eventually became a full-scale legal battle; each filing a compensation claim on other, and Onitsuka ultimately agreed to a settlement of $400,000.
Knight had survived another existential threat.
8. Knight had learned an important lesson. He could not build his future entirely around someone else's brand.
But there was still one more formidable enemy waiting:
The U.S. Government - Customs.
$25 MILLION — OR THE END?
In 1979, competitors lobbied and got some rule amended retroactively, and U.S. Customs presented Nike with a staggering $25 million claim. This wasn't less than a tsunami, and a real threat to survival of the company.
For a company that was still fighting for financial survival, this could have been fatal.
Knight refused to simply surrender. He fought on several fronts, politically, legally and commercially..
Eventually, the government entered settlement discussions.
9. Nike agreed to pay $9 million rather than the $25 million being demanded. It was an important lesson in strategic leadership, to settle an issue instead of continuing to fight.
So, the worst moment in the growth story of NIKE ended, setting it free to again start looking for stars and unbounded sky.
AND THEN CAME THE JAPANESE FRIEND
Perhaps one of the most remarkable episodes in the entire story came when the banks finally lost patience with Blue Ribbon.
Knight was staring at a financial catastrophe.
In between came Nissho Iwai, the Japanese Trading company that had developed a relationship with Blue Ribbon in 1971. They took a business call, and paid off Blue Ribbon’s bank debt in full, besides taking ownership to meet their future financial needs too.
10.. Cosmic intervention - Nissho Iwai became their Financial Savior.
FROM SURVIVAL TO NIKE
The company eventually escaped the shadows of Onitsuka, established its own manufacturing relationships, built the Nike brand and introduced the Swoosh to the world.
And then came another extraordinary milestone.
On December 2, 1980, Nike went public.
WHAT STAYS WITH ME
What stays with me after reading Shoe Dog is not the Swoosh.
11. It is the uncertainty they all lived through, with HOPE in their hearts.
There were so many moments when Phil Knight could have thought of walking away.
Perhaps because, somewhere inside him, he knew that he was building something that mattered to him more than security.
But there is another lesson I find equally powerful.
12. It is a story about belief. It became Nike because, again and again, when everything seemed to be going wrong, somebody chose not to quit.
Today, Nike is one of the most admired and envied names in the global sports and athletic world.
But perhaps the greatest lesson lies not in where Nike is today.
It lies in remembering how close it once came to not being there at all.
13. Sometimes, the difference between an idea that dies and an idea that changes the world is simply this:
Great entrepreneurs rarely build great companies alone. They build them with people who believe in the dream before the world believes in it.
That, to me, is the real story of Shoe Dog.
14. When you believe in your dream, there will be moments when circumstances will make you doubt yourself. There will be setbacks, financial pressures, disappointments, betrayals and people who tell you that it cannot be done.
But before you decide to quit, ask yourself whether you have stayed long enough.
15. Nike's greatest asset in those early years was not money, but a stubborn refusal to quit.
Perhaps that is why the story of Nike resonates far beyond the world of shoes.
16. Sometimes, the difference between an idea that dies and an idea that changes the world is simply this:
Someone stayed with it a little longer.