Just Do It

From Blue Ribbon to Global Icon - Phil Knights Memoirs

For many, the mere mention of Nike conjures images of iconic athletes like Michael Jordan and Tiger Woods, leaving an indelible mark on the world of sports and celebrity culture. Yet, behind the glitz and glamour lies a riveting tale of Nike's journey. They were preceded by decades of sleepless nights and wonderful ingenuity by the original flag bearers of Blue Ribbon (What Nike became). From the second I picked up Shoe Dog by Phil Knight, the Nike owner I devoured it. This book had absolutely everything and it read like fiction from the first word to the last. Cross-culture wars, spies, double cross shenanigans, mail bombs, all-star athletes endorsements, as well as personal, candid, and funny. Very, very funny! This is the story of a shy Oregonian who spotted something in a magazine, and let his mind do what minds are best at doing. Being curious.

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

- Shunryu Suzuki

It all began in 1962 with a research paper about shoes. Phil Knight had seen in a magazine that the Japanese had cut into the camera market dominated by the Germans and thought, as you naturally would, that the Japanese might be able to do the same with shoes. The idea continued to infatuate him even after his classmates and friends shunned the idea. He considered going to Japan, finding a factory that made shoes and pitching his crazy idea, how they’d devour it. So obvious, so simple he said. He also had the idea that if he wanted to live this crazy idea he needed to understand the world. Different cultures, language, food, drink, ideas! So, with his tail between his legs, he pitched his crazy idea to his dad for approval, but mainly for his money. “Okay Buck, Okay”.

The year is 1962 and 90% of Americans had never been on a plane. In fact, most had travelled less than 100 miles away from where they lived and here was a man with an idea who at 24 had never smoked a cigarette, taken a drug, been with a girl or done anything rebellious was about to jump on a plane to fly to the other side of the world, to a place that only 20 years ago was locked in a brutal war with his home country.

He was joined by his old Stanford classmate Carter who instantly agreed with Bucks' detailed itinerary. The first stop was a one-way ticket to Hawaii. They instantly fell in love, ditched the plan and got jobs. Selling encyclopedias. Buck was awful so he leaned on his education and went into selling mutual funds. He thought it was ok but the day came when he knew the time was right to continue the plan. The only problem was Carter was in love and didn’t want to leave. Stick or twist.

There are moments in life when you look back and realise that it could have all been different. When you look back at such moments you pray that you think you made the right decision. I remember being given my start date to begin Royal Marines Commando training but I’d also taken out some insurance on myself. I’d had an interview at the company my best mate was working for. I thought I’d blown it but days before I was supposed to travel down to Lympstone to begin training, I’d had a call from his boss offering me a job. I can’t remember if it was an easy decision or not but I couldn’t help but draw parallels with that pivotal decision I had to make with what I was reading here. Two best friends, the potential to see it out together, fun, familiar, comfortable or to throw the dice. To walk into the unknown, the unfamiliar, the uncomfortable. Twist.

Phil found himself in Tokyo and after a bleak first night bunkering down in a post-war battered industrial estate, his dad had arranged for him to meet some friends who hooked him up with some former American GIs who were running a magazine called Import. After he told them his idea and after they’d clued him up on Japanese negotiation do’s and don’ts he ran back to the hotel, packed up everything he had and headed to Kobe. Onitsuka, the maker of Tiger shoes his destination.

Phil suddenly found himself in a factory board room surrounded by Japanese men all wanting to hear what company he was from. Of course, there was no company. None whatsoever. After a couple of deep breaths and racing thoughts the words ‘Blue Ribbon’ blurted from his mouth after a wall in his bedroom that he unashamedly put all his track achievements on. This. This was what Nike would become.

The man who moves a mountain begins by carrying away small stones

-Confucius

Before heading home Phil globe trotted around the world. He went to Hong Kong, Bangkok, Vietnam, Manilla, Calcutta, Kathmandu, Bombay, Kenya, Cairo, Jerusalem, Istanbul, Rome, Florence, Milan, Venice, Paris, London, Munich, Berlin, Vienna, and Greece. It is here that he stood at the Temple of Athena Nike. The goddess of Victory. At home, months passed and the promised shoes from Onitsuka had still not arrived so Buck decided he needed a job. He became an accountant and was as miserable as ever. “Dear Carter, Did you ever leave Shangri-La? I’m an accountant now and giving some thought to blowing my brains out”.

In early 1964 they arrived and it was instant love. They were his Blue Ribbons he’d dreamed of. He sent two pairs to his old Coach Bill Bowerman. The only man more obsessed about what people ran in than Phil Knight. It’s clear from Phil’s own words in the book how much he loved Bowerman. He wanted to impress him. He respected him and wanted him to respect him too. A man who rigged his mailbox with a bomb to ward off a driver who kept screeching past his quiet, idyllic, mountaintop home and knocking over his mailbox. Your truck only gets blown up by a mailbox bomb once though for you to get the message.

Bowerman was impressed with the Tiger shoes and after the two went for a hamburger Bowerman said he wanted in on the deal. 50/50. Some time after that it changed to 49/51 in favour of Buck after contemplation from Bowerman.

Just as life was going all rosy Blue Ribbon’s first bombshell had landed. After being promised by the Onitsuka team in Japan that Blue Ribbon had exclusive rights to sell their shoes in America it became known to Buck that a man on the East Coast was also selling shoes and had also been given exclusive rights. A potential legal battle was neigh. And this guy was also a bit of a celebrity being an original Marlboro man model and high school wrestling coach. Great.

Back in those days, there weren’t mobile phones and email and after sending a letter without a response the next logical thing, at least to Phil Knight was to go back to Japan for a showdown. Buck called the Onitsuka headquarters and demanded a meeting which was refused but countered with tea at his hotel. He was invited back the next day to the headquarters where the main man himself Mr Onitsuka would be and decide Blue Ribbon’s fate. After some deliberation, Onitsuka drew comparisons between his younger self and this Western man sitting in front of him. Blue Ribbon would be granted 13 western states exclusivity for one year. It was time to celebrate. It was time to climb Mount Fuji.

On the ascent up Mount Fuji Buck met a girl and after spending two days with her it was time for them to go their separate ways. Phil left a lofty note saying that if she was ever in his neck of the woods she should stop by and say hello. A few weeks later she was sitting in his parents’ house. Surprise! They were infatuated with each other but then came the bombshell that Sarah’s parents didn’t approve of Phil. The romance cooled off and eventually the love letters too. Phil phoned Sarah to confirm what he already knew. It was over. With a final dagger, ‘You’re just not sophisticated enough for me’. Ha! Imagine.

In 65 Phil needed to get a job as Blue Ribbon was effectively negative cash flow. He would buy shoes with what he had, sell those shoes and buy more shoes each time more than the last but only as much as the bank would lend him. Using his accountancy skills this is where he got into the knucks and crannies of what made companies work or not. How they survived or didn’t. All signs were pointing to disaster for Blue Ribbon.

1966 saw Blue Ribbon’s first shop opening in Santa Monica, headed by Johnson, a man he knew from old track days. A man he loved and hated at the same time. A man he relied on but wished he didn’t have to in those early years. As the year was drawing a close one of Johnson’s many letters to Phil informed him that the Marlboro man was back selling shoes and advertising them in newspapers. Johnson told Phil that this time he had to crush the Marlboro man once and for all. Phil headed out to Japan to see his old ally from Onitsuka, Morimoto, but when he arrived he wasn’t there. He’d moved on. This time it was a new kid on the block called Kitami who would decide Blue Ribbon’s fate. After an impassioned plea from Buck to Kitami, begging, ordering him to grant Blue Ribbon exclusive U.S rights once and for all Kitami was concerned that they needed someone bigger than Blue Ribbon, more established. After all, Blue Ribbon didn’t even have offices on the East Coast yet. Or did they? Just like the first visit to Japan when Phil invented a company on the spot this time it was time to invent an East Coast office and just like that, Blue Ribbon had 3 years exclusive rights. To think what you could get away with back in the days before smartphones and the internet.

By 1967 Blue Ribbon had 4 full-time employees, a West Coast store in Santa Monica, an East Coast ‘store’ in Boston and a new office space back home. Life was good. By 68 the time had come for another job change. Bye, Bye accountancy and hello teaching. Phil had decided to teach accountancy at Portland State. It is here that a timid woman named Penelope ‘Penny’ Parks would enter into Buck’s life forever. Penny was a whizz kid and after accepting a job from Phil to help out with his ‘little shoe company’ the two quickly became fond of each other and fell in love. A marriage proposal soon ensued. Phil had to go back to Japan to negotiate once again but this time it all seemed rather easy. Kitami was more self-assured of himself and more warm of Phil. He was even invited to Onitsuka’s annual picnic. It was here that Phil would meet Fujimoto, a man who would have a life-altering partnership with.

In 69 Phil decided it was time to quit his teaching job and go full time at Blue Ribbon. Fearing Kitami wasn’t who he appeared to be Phil devised a plan that would later turn out to be a monumental moment in the history of Blue Ribbon. Phil Knight hired Fujimoto as a spy! Not only did he hire an insider to pass over information about Onitsuka’s moves and motives he also informed the whole of his Blue Ribbon staff during a memo he was doing it and why he was doing it.

By 1970 Buck and Penny had brought a child into the world named Matthew. Another trip to Japan had also secured 3-year exclusive rights to sell Onitsuka shoes in the U.S. A huge victory for Blue Ribbon. But, just like years before when it’s all going so well you often don’t see what’s coming and this time the nightmares were coming from his bank manager. His bank manager, Wallace, practically hated Phil from the first minute he met him. An old dog with a dogmatic view of accountancy that cash was king and growth was to be avoided. Begrudgingly he time and again gave Blue Ribbon what they wanted and time and again, year in and year out Blue Ribbon would double its revenue but when Phil went and asked for $1.2 million, the first time he’d hit the million mark that was the straw that broke the camels back. No, thank you said Wallace. You either put cash in the bank or you’re not getting a penny. This is the first time that Phil considered making Blue Ribbon public. After sending out some feelers to investors they were left humiliated with practically nobody interested and withdrew the offering. I can only imagine the pain those people felt in the years to come!

By the end of 1970 and fed up with his bank manager making him feel like a bum, Phil had seen an article in a magazine about Japanese Trading companies that were booming. Ironically, one was right across the road from his old bank. Nissho Iwai. After a brief introduction, they immediately offered what Blue Ribbon was asking for. A massive win and moment for the company. Good news seems to always follow bad news in the early years of Blue Ribbon however and once again Phil had heard that Onitsuka were breaking their promise of exclusive rights. However this time, his spy Fujimoto confirmed it was worse than that. They were looking to sever ties with Blue Ribbon for good just 3 months after granting them an exclusive 3-year deal.

In 71, fearing being cut off from his distributor Blue Ribbon went on the charm offensive and invited Kitami over to the U.S for a visit where they would wine and dine him and treat him like royalty. By the time he’d be leaving, he’d have no doubt in his mind who he wanted to sell his shoes in America. The trip started well but went quickly downhill when Kitami went on a rant to the bank manager demanding to know why he wouldn’t give Blue Ribbon more cash. Shook, they next moved to Blue Ribbons offices where Phil was trying to re-compose himself to talk through with Kitami about what had just happened however it was Kitami who went on another rant. This time at Phil. At Blue Ribbon. Sales were disappointing (doubling every year) but Kitami wanted more. Some people wanted more. He would not elaborate but when he asked to go to the toilets the briefcase he’d been carrying around and opening and closing, shoving papers in Phil’s face when cursing the sales of Blue Ribbon was left alone on the table. The temptation was too much and Phil decided to take the papers from inside the briefcase. Not his proudest moment. Kitami excused himself back to his hotel and when he left Phil and Woodell went through the papers. Onitsuka was looking at 18 potential new distributors. An absolute slap in the face. After sliding the documents back into the briefcase the next day Kitami had another move up his sleeve. He offered to buy Blue Ribbon’s controlling stake. If the first bit of betrayal hit like a slap in the face this hit like a train. Unsure what to say Kitami reminded Phil that if he said no, he would have no choice but to move to superior distributors.

Just as the dust was settling from the Kitami storm their bank and bank manager, Wallace had had enough. They were cutting ties with them with immediate effect. Ending the year with sales of $1.3 million the bank was severing ties with their cash cow and Blue Ribbon was on the brink of going out of business. After another flirt with Nissho, Blue Ribbon needed to secure another factory for when it inevitably went south with Onitsuka. He headed to Mexico and agreed to distribute a football boot. Not entirely a breach of contract with Onitsuka. The new boot needed a new company with a new company logo and it was Carolyn Davidson who for $35 would create one of the most iconic brands in the world. Ever. And as the story goes Johnson had a revelation in a dream he’d had when they were all trying to figure out the new company name. There were mumbles in the office, some weren’t sure, and some liked it. As the clock ticked down time was running out. The Mexican factory needed a name to finish the order and send out the boots. It’s at this moment, hurried and unsure that Phil Knight decided on Nike. The goddess of victory. The rest is history.

The Mexican factory wasn’t quite up to scratch and Phil needed more factories to hedge his bets so his bank, Nissho set him up with a contact to go touring Japanese factories. Upon entering Nippon Rubber, a gigantic shoe factory Phil liked what he saw and ordered some samples. They were pretty good and unlike when he was struggling to choose a name for his new company he had no problem naming his new shoes. The Boston, The Wimbledon, The Marathon, The Finland, The Cortez. Iconic Nike shoes that are still adorned and collected today.

It was dark when I walked out of the office building, into the crowded Tokyo street. A feeling came over me, unlike anything I’d ever experienced. I felt spent, but proud. I felt drained, but exhilarated. I felt everything I ever hoped to feel after a day’s work. I felt like an artist, a creator.

After a shoe convention in Chicago where the world first saw Nike shoes news travelled fast to Japan and Kitami. He immediately hijacked Phil one day, bursting into his office and demanded for him to explain this betrayal. Rehearsed, Phil casually said that he was hedging his bets in case Onitsuka did what they threatened to do and throw Blue Ribbon into the trash. And they did. After they found out they were selling Nikes in their California store Kitami severed the umbilical cord.

The end of 72 saw the Munich Olympics where masked gunmen took hostage and killed 11 people including Israeli athletes. Soon after this Bowerman would quit coaching for good after being reprimanded for his decision to call the Marines in for help after a fleeing athlete hammered on his door begging for help.

You are remembered for the rules you break.

In 1973 Kitami and Onitsuka filed a lawsuit against Blue Ribbon in Japan for their perceived breach of contract. Blue Ribbon abruptly counter-sued in an American court. Between the prep for the legal battle, the shoe industry was practically grinding to a halt. Towards the end of the year, with a legal battle that could send them into oblivion and the supply and demand constraints of the shoe industry Penny and Phil brought another little boy into the world named, Travis.

April 14th 1974 was the day the Battle Royal with Onitsuka began and in the book, it reads as exciting as the classic court case film ‘A Few Good Men’. Buck didn’t exactly do himself proud when on the stand and Bowerman had decided to ‘wing it’ out of contempt for the whole debacle. Ultimately though, the judge had one thing and one thing only to go off. As he described, this is a case of he said, he said so ultimately all I have to go off is who do I believe. The fact that Phil had said he had hired a spy and had deliberately stolen documents from Kitami would prove decisive. To the whole of Blue Ribbons’ exasperation when on the stand Kitami had said he needed to use a translator. Not only could he speak perfect English but he, on more than one occasion corrected the translator in perfect English. He also lied about the 18 distributors he had lined up and it was his personal assistant Iwano who would tell the courtroom Onitsuka’s true ambition. Lying in court is bad enough but lying in a courthouse to a judge who goes by ‘James the Just’ was never going to go down well. The court ruled in Blue Ribbons’ favour.

The truth, who’d have known it?

By 1975, and after being laughed at by shoe factories around North America they decided to rent out a run-down old factory in Exeter, New Hampshire. Blue Ribbon had always lived ‘on the float’ but in spring 75 they were staring into the abyss. They owed Nissho a million bucks. A million bucks they didn’t exactly have. They were short $75,000. After some contemplation, they decided to drain all of their bank accounts and pay Nissho. And so they did. Not long after this, the factory workers’ cheques bounced and they barged into Johnsons’ office like an angry mob. Hoping help was on the other side of the telephone he got nothing but more confusion. To pay the factory workers their wage, which Blue Ribbon now didn’t have they lent $5,000 from a local company that made the boxes for their shoes and just like a Mafia Don adorned by local followers they handed out crisp $100 bills to the workers.

With the dust settling on that debacle Phil found himself in a conference room at Bank of California who, like Wallace before told him that they were severing ties with them. Worse, they were freezing their accounts as well. Now Nissho wouldn’t be getting their payment either. Nobody would be getting anything. Like a naughty schoolboy, Phil sat in the Nissho conference room and explained the situation to Tadayuki ‘ice man’ Ito and his friend Sumeragi. He explained that the bank had cut them off and frozen their assets and that they wouldn’t be getting anything. Phil never got on friendly terms with Ito but after lighting a cigarette he calmly took a puff, looked into Phils’ eyes and said ‘They should not have done that’. But before he was going to help he wanted to see Blue Ribbons books.

Ito and Sumeragi arrived at Blue Ribbon’s conference room and started to go through their books. The mood was sombre and there was a moment that Phil had been dreading. The moment was the realisation from Ito that he had been a sucker. The factory in Exeter was financed directly and secretly using Nissho’s money. When the penny dropped and Ito found out what Phil had done Phil feared it was over. “Really”? Ito said.

It was past midnight when they left and 9 am sharp when they arrived back the next day. Sumeragi asked Phil for a word outside and said that this may be worse than you think. Unsure how it possibly could be, Sumeragi told Phil that he sometimes held onto invoices because he believed he was helping Blue Ribbon by delaying them. Mortified, Phil and Sumeragi went and told Ito who was appalled. Sumeragi let out a passionate plea about how he loved Blue Ribbon and its people but Ito was cold and dumbfounded. Slowly, Ito came around.

“There are worse things in life than ambition.”

By 77 Nikes were everywhere. They were worn by NBA players, football players, tennis players, Olympians and even Hollywood stars. They were turning over tens of millions of dollars leading up to 1980 but as ever at Blue Ribbon/Nike, trouble was never far away. Converse, Keds and some other shoe companies had gotten fed up with Nike’s success and resorted to underhand tactics to try to nullify their growth. The American Selling Price law said that the import fee on nylon shoes was 20% of the manufacturing cost unless there is a ‘similar’ shoe in the United States in which case, the fee would be 20% of that shoe. You can see how easy this law is to manipulate. Make a shoe in the U.S. that looks like a Nike and price it ridiculously high. This is exactly what they did and on that rainy day Phil opened the letter, customs were after Nike for $25 million! At first, he thought it was a mistake but the realisation that this wasn’t going away bulldozed all the previous problems Blue Ribbon/Nike had faced and instead built a skyscraper of a problem. Nike was going toe to toe not with Japan, an old foe but with the United States of America and they weren’t for being pushed around.

Nike tried everything. They tried lobbying Washington, sent troops to customs to try and win them over and even wrote a volume about the ASP and how unfair it was. The man behind all of this, the man who would decide Nikes’ fate was a feeble ‘Bereau-Kraken’ as Phil would describe him. He almost seemed to take it personally, like it was Nike who owed him the money. They did have one card left to play. A meeting with Oregon Senator Mark O. Hatfield. Blue Ribbon and Nike had been built by men from Oregon. They looked after their own and the Senator cut straight to the point after some small talk and asked how he could help. There had been many times Blue Ribbon and Nike had gone to war, gone to negotiate, gone to beg but they were unprepared for someone willing to help them. “We’ll have to get back to you,” they said. Imagine the confusion from the Senator!! Nike decided to go on the offensive and take their fate into their own hands. They produced a shoe, the One Line for dirt cheap and priced it just as cheap. This was now to be the new customs fee. This was the jab. Then they threw a left hook. A TV commercial about a little Oregon company who just wanted to sell shoes. Speaking of patriotism and justice! Then the haymaker, a $25 million antitrust suit in the U.S. District Court for the Southern District of New York.

Immediately they wanted settlement talks.

By 1980 Nike was trying to break China. They had a man named Chang who would help them. They also realised that they needed to fix their cash flow problem once and for all and it was in this year that an enlightened moment happened. Chuck, an advisor proposed going public but with a Class A share as well as a Class B share. That way they could turbocharge their growth and Phil could still retain control of the company. At the year’s first Buttface, they put it to a vote. It was unanimous. They were going public but first, they needed to settle with the government.

“Lead me from the unreal to the real.”

$9 million was the figure. An unfair sum but the government couldn’t walk away without saving face and this was the price to pay. Phil signed the cheque.

An eventful trip to China would culminate in the signing with two factories. The first American shoe company to do business with China in over 25 years.

The public offering of Nike was on the horizon and the whole team was touring the United States for investors. There were to be 50 million shares, 30 million left in reserves and 2 million class B’s. Phil would retain 46% and insider ownership would be 56%. The only thing to settle on now was the price. Negotiations ensued and the haggling commenced. $20? No, retorted Phil, $22 is our number. The next day, $21.50? Again, they were not going to budge from $22 and if Wall Street didn’t come to their senses Phil was ready to walk away. They hung up the phone and waited. And waited! Have they gone too far? What’s 50 cents a share? It’s the toil, blood, sweat and tears of the previous 18 years and this wasn’t a negotiation Phil was going to back down from. The phone rang,

Hello?

Gentlemen, we have a deal.

And just like that Phil Knight went from barely being able to scrape 2 cents together to being worth $178 million.

In the decades since its IPO, Nike has grown into a behemoth of a company. It’s a sporting legend, worn by legends, in every sport, from every country around the world. It’s front and centre at any Olympic games, at any final, on every street corner. To think what Nike has become, to think of all it overcame to get there is staggering. It’s even more staggering when you reduce it to its inception. One man, reading a magazine about cameras allowed himself to think big, to dream. I wonder if he ever knew how big that dream would turn out. I think he did.

“The man who moves mountains begins by carrying small stones.”