AdminNike is the world’s largest sportswear brand. They earn around a thousand crore rupees every day. World-class athletes like Ronaldo and Rafael Nadal use their products. would you believe that the one who built Nike was a failed athlete himself and started his business by selling shoes in the trunk of his car?
This is the story of Nike’s founder Phil Knight. Phil Knight was born in 1938 in a small town named Portland, America. since childhood, he used to run very fast and his ultimate dream in life was to be a great athlete.
In school and college, he worked hard on his running and won many races. along with running, Phil continued his education, and in 1962 he completed his MBA. He still wanted to continue running but one morning during his practice he faced reality. After dedicating his entire youth to running, he became one of the best athletes in his state but he could not become a national and international level athlete.
Sadly, he was good, but not great. He was twenty-four years old and now there was no scope to get better in athletics. Hence that morning, Phil with a heavy heart accepted that this was the end of his athletic career.
He had failed in his dream of becoming an elite athlete but still, he wanted to do something that would always keep him close to sports. Phil was deeply connected to his running shoes like every runner. That’s why he decided that he would do shoe business.
Starting Up:
Then he remembered that during his MBA, he had studied for several weeks and written a detailed research paper on the business of running shoes In his research he came to know that Japanese camera companies
Due to their improved quality and low price, they disrupted the American camera market. according to his research paper, Japanese shoes could disrupt the USA shoe market similarly. and could overtake Adidas and Puma, the biggest companies of that time.
It was a big risk to start a business based on his college project. but Phil had no other option and he decided that he would import Tiger brand shoes from Japan and sell them in the USA.
Partnership with Tiger Shoes:
Tiger shoes were manufactured by a Japanese company named Onitsuka. So, Phil collected their entire savings and took a flight to Japan.
Finally, he reached Japan and took an appointment from Onitsuka’s office. He was very nervous before the meeting. a boy who was very shy and introverted by nature, set out to partner with a big company. Moreover Onitsuka’s executive.
Asked Phil for the company name at the very beginning of the meeting. Don’t know how, but Phil imagined the blue ribbons in his house. The same blue ribbon that he got for winning many races and he said Blue Ribbon He said he represented a company called Blue Ribbon Sports.
No such company existed back then. but Onitsuka’s executives were happy with the name. meeting progressed and Phil repeated his college project line by line at the end, Onitsuka’s employees were so impressed that they wanted his company Blue Ribbon to sell Tiger shoes in America.
It was a deal! Phil gave them his address and asked them to send some of Tiger’s training shoe samples. There was no limit to Phil’s happiness, he transferred money to Onitsuka for the shoe samples and returned to America and waited for samples. 4 months passed and he didn’t receive any shoes. In response to the letter, Otsuka said that the shoes will arrive soon.
But this did not happen in reality. Phil had not given up hope but he needed a job to survive until shoes arrived. so he took the job of an accountant in a short firm. It had been almost a year since the meeting with Onitsuka.
By then Phil had almost lost hope when a notice came from the customs. there were 12 shoes from Japan. After collecting the shoes, Phil unboxed them and showed them shoes to his college coach Bill Bowman. and told him about his business plan.
THE PARTNERSHIP WITH BOWMAN:
Bowman liked the shoes so much that the very next day he offered Phil to be a 50% partner. Phil was quite surprised with this offer. Bill Bowman throughout his coaching career was obsessed with one thing and that was shoes.
He had been experimenting with shoes for years and had become an expert in shoe design. his full focus was on making the shoes lighter. He would often take away the shoes of his students without asking and would return after tearing the shoes, performing minor modifications for several days.
The athlete’s performance would massively increase after his modifications Bill Bowman was also a genius coach and a natural leader. He was a god-like figure for Phil and the rest of the runners. and today, the same god-like figure wanted to become Phil’s business partner.
It was a no-brainer. They shook hands and now both of them were fifty-fifty partners. The same day Phil wrote a letter to Onitsuka and asked for exclusive distributorship rights to sell the Tiger shoes in Western USA.
Also placed my first order of 300 shoes, for 1000 dollars. This time shoes came on time and Blue Ribbon got exclusive distributorship rights for West USA.
This is what Phil was waiting for. He immediately quit his accounting job so that he can focus completely on business. He stored the shoes in the basement of his parents’ house. This was the office of Blue Ribbon now. It was time to sell shoes now.
Phil requested many sports shops to sell the Tiger shoes. everyone refused to sell Tiger shoes in their shop. Phil didn’t have money to open his shop. So, he came up with an idea. He’d fill the trunk of his car with shoes and started reaching wherever there was an athletic competition.
He spoke to coaches, athletes, and spectators and started presenting his shoes. Phil had tried sales job before but was not successful. This time the response of the customers shocked Phil.
His shoes were selling like hotcakes. He’d been an athlete himself and so, understood athletes’ problems very well. Hence he was easily able to convince customers that Tiger’s shoes were best for them. In just two months he sold the first shipment of 300 shoes. and placed an order of 900 shoes this time.
But his total earning was just 2000 dollars and the total cost of the order was three thousand dollars. so Phil asked for a thousand-dollar loan from the bank for the first time. Looking at the strong business of Blue Ribbon approved the loan and Phil finally had a career that he was enjoying deeply.
He had a trusted partner like Bill Bowman and a product that was selling by itself. In short, Phil was having a great time! But then, there comes a twist in the story.
Tough Times
A wrestling coach wrote a letter to Phil. He claimed that he had just returned from a meeting with Onitsuka in Japan and that Onitsuka had given him rights to be the exclusive distributor for the whole of America Coach ordered Phil to immediately stop Tiger Shoes business. Only two months had passed since Phil started the business.
And was on the verge of closure. He immediately wrote a letter to Onitsuka asking for clarification but there was no response from them. So, Phil decided that he’d go to Japan and confront Onitsuka. During this meeting, Phil made it clear how he had been wronged. He presented his argument for strong sales and explained his plans. The next day he directly met the company owner Mr. Onitsuka. He instantly trusted Phil.
Mr. Onitsuka said that Phil’s passion reminded him of his youth days. and he gave Phil Western USA distributorship again. Phil was relieved but the problems were far from over. Blue Ribbon achieved 8000 dollars in sales after the first year of business.
They hired a salesman named Jeff Johnson to expand in another city. Jeff’s specialty was that he had also been an athlete like Phil. He was extremely passionate about his work. And that’s why sales reached 16,000 dollars in the second year of business. That means it was going to be double but surprisingly this became a big problem for them.
Phil wanted to grow very fast. so, as soon as one shipment is sold out, he’d double or triple the order. They had to reinvest their entire profit for payment of the order and also had to take a loan from the bank.
Basically, after one year of business, Blue Ribbon had incurred a debt of thousands of dollars. Cash flow was negative due to which the bank refused to give him a further loan and suddenly there was no cash to run the business.
Phil had to arrange for the money somehow for Blue Ribbon’s survival. Hence he took up the job of an accountant at PWC. He started investing his entire salary in the business. On the other side, his partner Bill Bowman was working to improve Tiger shoes.
Bowman realized that Americans’ body is longer and heavier in comparison to Japanese. That’s why their shoes should also be different. Bowman tore Tiger shoes too and conducted many experiments. A turning point came when he combined the best features of different Tiger shoes and designed an ultimate distance training shoe for Americans and named the shoes Cortez.
Onitsuka started manufacturing Cortez shoes and the shoes became super successful as soon as they entered the American market.
Due to Phil’s management and Bowman’s shoe design, Tiger Shoes was one of the top shoe brands in the entire America for the next 5 years. Sales touched 1.3 million by 1971 and the business was doubling every year. With this, Phil quit his job and joined Blue Ribbon full-time.
THE FRAUD OF ONITSUKA:
It was going perfectly when a huge blow came from Japan. Seeing the success of Blue Ribbon, Onitsuka felt greedy. they wanted to keep the entire income from Tiger shoes for themselves they gave an ultimatum to Phil that if he didn’t sell 51% of Blue Ribbon’s stake to Onitsuka,
they will give the distributorship of America to someone else. Phil felt quite shocked and hurt! It was a big fraud. Onitsuka had crossed all limits by talking to them about buying Blue Ribbon. and so, Phil took the biggest decision of his life.
Origin of NIKE
Phil gathered his team and told them that this was the moment that we all were waiting for. The time to sell someone else’s brand was over.
Now is the time to create our brand! with this, he broke the partnership with Onitsuka and decided to manufacture shoes of his brand. the first step was to create a new logo. Phil wanted his brand’s logo to awaken a sense of running
Sense of motion and a sense of victory. Plus the logo must fit the side of the shoe. He hired a graphic design student, to design the logo. after a few days, the student showed several designs.
Employees selected a curved logo that looked like a thick check mark. Phil thanked the graphic design student for the help and paid a fee of 35 dollars. After the logo, the next step was to choose the brand name. Many names like Falcon and Dimension 6 were suggested.
But the first salesman of the company, Jeff Johnson told everyone that he saw a very good name in his dreams last night and the name was Nike.
In Greek, the Goddess of Victory is called Nike. That’s why the name was suitable and accepted. after this Phil hired a third-party manufacturer to make shoes. Nike sent them designs and shoe manufacturing started. Finally, Nike brand shoes were launched for the whole world officially on 30 May 1971. But unlike today, no one knew Nike at that time.
Plus brands like Adidas, Puma, and Tiger were big competitors for Nike which were capable of crushing a new brand. That’s why Phil used a strategy for marketing Nike which nobody used in the 1970s. They saw that the runners liked to wear shoes of the same brand that the world’s best athletes wore.
So, Nike got into a deal with the best runner of that time, Steve Prefontaine to promote it at 5000 dollars annually. and Nike became one of the first brands that use athletics brand endorsements as a marketing strategy.
Phil’s second strategy was to strategically select his sales team. nike always chose to hire people for the sales team who were either athletes themselves or were very passionate about athletics.
This meant that the sales team could understand the problems and needs of its customers who were mostly athletes. which ultimately leads to improved quality of product design, sales, and after sale service.
Apart from these two strategies, Phil grew Nike using his experience, old customer base, and taking advantage of Bowman’s shoe design. As a result, Nike became a team of 2700 employees by 1980. had recorded sales of 270 million dollars and had become the USA’s largest athletics company by beating Adidas. Phil finally felt that he had created the strongest athletics brand in the USA. But then a company entered which shook up Nike was it was Reebok.
The Endgame:
Nike’s main focus was always to make it best for sports. Looks and style were never their focus. But in the 1980s a major change came through in fashion trends and athletic shoe taste. People were not happy with just a strong and better-performing shoe.
They wanted shoes that had attractive looks and were stylish along with performance. and Reebok gave the customers just that. eventually, customers started getting disconnected from Nike.
The company suffered losses for the first time and had to lay off employees Reebok surpassed Nike in 1986 as the biggest athletics shoe company. Nike had to do something magical quickly to survive and grow. and for this purpose, Nike chose a magical basketball player.
Michael Jordan As Brand Ambassador:
Michael Jordan was an emerging player then. and Phil knew that he would be a great and legendary player in the future Nike signed Michael Jordan as a brand ambassador.
Nike also launched basketball sneakers called Air Jordan named after Jordan. Earlier, basketball shoes were quite ordinary and boring before Air Jordan.
Air Jordan changed the basketball shoe trend with its bold colors and stylish designs. Air Jordan became the historical shoe that brought sneaker culture to the whole world also, Michael Jordan was also in his phenomenal form then.
Michael promoted the shoes by wearing them during games. along with this Nike also released shoe ads with Michael. Air Jordan, it’s all in the imagination.
This led Air Jordan to emerge as a powerful combination of performance and style. Nike sold 100 million dollars worth of Air Jordan in the first year of launch. and finally overtook Reebok.
Nike never stopped after this success. In the 1990s they expanded globally. They started conquering countries one after the other. Took entry in other sports wear other than shoes and today Nike is the world’s largest sportswear brand with a valuation of around Rs 12 lakh crore.
Phil and Nike’s journey is phenomenal! The most important lesson of this journey is execution.
Phil said in his book Shoe Dog, “let everyone call your idea crazy. Just keep going. Don’t stop.
Don’t even think about stopping until you get there. No matter what anyone says, if you arepassionate about an idea then take calculated risks and execute it.”