#418 Phil Knight: Founder of Nike

Phil Knight's post-college quest for purpose and his 'crazy idea'

At 24, Phil Knight returned to Oregon after graduating from the University of Oregon and Stanford Business School, and serving a year in the army. Despite his accomplished resume, he felt like a kid, struggling to define himself. He desired more than conventional success like money, a wife, and a house; he wanted a life that was meaningful, purposeful, creative, and above all, different, driven by an "aching sense that our time is short."

Knight realized he didn't just want to win, but fundamentally, he didn't want to lose. He saw an analogy in the "exuberant clarity" athletes experience in the critical moments before winning or losing. This insight sparked his "crazy idea": to find a prodigious, improbable dream that felt fun and worthy, and then chase it with an athlete's single-minded dedication, making work feel like play.

He believed the world was full of war, pain, and an exhausting daily grind, and that the only answer was to pursue a dream that aligned with this playful yet dedicated approach. Convinced that life is a game one must play, Knight decided that his "crazy idea" would work. He committed to pursuing it relentlessly, drawing inspiration from history's many "crazy ideas" like books, sports, and democracy, and resolved to never stop, no matter what.

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's Japanese Shoe Idea Faced Parental Disapproval

Phil Knight's initial entrepreneurial concept for Japanese running shoes emerged from a Stanford entrepreneurship paper. Inspired by Japanese cameras disrupting German dominance, he theorized that Japanese running shoes could similarly challenge established brands like Adidas. Despite weeks of intense research and a formal presentation, his classmates reacted with

formal boredom

not asking a single question.

Knight's father, who highly valued respectability, actively discouraged his son's venture. He wanted Phil to pursue a more traditional and respected career, criticizing him for

My dad also worshipped another secret deity, respectability.

Bill Bowerman: The Inventor, Coach, and Partner

Bill Bowerman, the coach at Oregon, had a profound influence on Phil Knight, constantly modifying his runners' footwear. He would tear shoes apart and stitch them back together with minor changes, aiming to make them sleeker, softer, and especially lighter. Bowerman's precise calculation showed that one ounce removed from a pair of shoes was equivalent to 55 pounds saved over one mile, a belief that lightness directly translated to speed and winning.

Bowerman was a demanding figure, instilling a ruthless competitive drive in Knight, who both loved and feared him. He rarely offered praise, hoarding words like "uncut diamonds." Bowerman saw himself not as a track coach but as a "professor of competitive responses," preparing athletes for struggles far beyond Oregon, often in spartan facilities reflective of his own frugal nature.

His eccentric personality was evident in everything he did, including once rigging a mailbox with explosives after a truck driver repeatedly knocked it over, destroying the truck in the process. Despite his unconventional methods, Bowerman was highly effective, coaching more sub-four-minute milers than anyone. This unique genius led him to propose a 50-50 partnership with Phil Knight for their shoe venture, a pivotal moment in business history.

One ounce sliced off a pair of shoes, he said, is equivalent to fifty five pounds over one mile.

Phil Knight Launches Blue Ribbon Selling Shoes from His Car Trunk Despite Family Disapproval

Phil Knight faced a stark contrast in early support for his new venture, Blue Ribbon. While Bill Bowerman encouraged him to pursue the idea, Knight's father was highly disapproving, calling his efforts "jackassing around" and questioning how long he would continue. His mother, however, offered profound symbolic support by purchasing the first pair of Japanese running shoes with seven dollars and wearing them around the house.

Knight started Blue Ribbon, importing Japanese running shoes, for the first seven or eight years before it became Nike. He initially distributed the shoes himself, selling them out of the trunk of his car at various track meets across the Pacific Northwest. He found unexpected success, often unable to write orders fast enough, despite his previous failures selling encyclopedias and mutual funds.

Knight realized his success wasn't due to conventional selling but to his profound belief in running and his product. He felt that if people ran a few miles daily, the world would improve, and he believed his shoes facilitated this. This conviction was irresistible to customers, who sensed his belief and wanted to share in it, leading to organic word-of-mouth growth for Blue Ribbon.

The early days of Blue Ribbon were marked by scrappiness and underfunding. Knight juggled a full-time job with his entrepreneurial efforts, taking seven years before he could afford to work for his own company full-time. He even leveraged his Army Reservist duty, using military transport to travel to California and expand his sales reach, where he hired his second part-time employee, Jeff Johnson.

Because I realized it wasn't selling, I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in. People sensing my belief wanted some of that belief for themselves. Belief is irresistible.

Phil Knight's Competitive Drive and Jeff Johnson's Unwavering Dedication

Phil Knight possessed an intense, almost insane competitive drive, finding losing utterly intolerable. His hatred of defeat was so profound that it led him to believe "the world is without beauty when you lose," a sentiment reinforced by biographies of other athletes who note Knight's competitive nature rivaled even Michael Jordan's.

This drive was mirrored by Jeff Johnson, Blue Ribbon's second employee, whose passion for running and the company was relentless. Johnson meticulously documented every sale, tracked which high school runners wore Tigers, and constantly wrote letters to Knight, offering suggestions and pleading for encouragement.

Johnson viewed running not just as a sport, but as a mystical exercise akin to meditation, believing runners were "God's chosen people." In 1965, when running was often mocked and runners were harassed, Johnson was driven to change this perception, to build a community, and help runners achieve their "nirvana."

Despite Knight's repeated attempts to discourage Johnson due to Blue Ribbon's precarious financial state—including revealing an $11,000 bank debt and negative cash flow—Johnson's dedication never wavered. He responded to Knight's stark financial truth by immediately asking if he could work for the company full-time.

The world is without beauty when you lose.

Bill Bowerman's 'Jogging' Book Expanded the Market While Phil Knight Refined His Leadership Through Reading History

Bill Bowerman significantly expanded the market for running products by authoring the book 'Jogging,' which sold millions of copies. At a time when running was largely considered an activity for elite athletes, Bowerman championed the idea that 'everyone's an athlete' if they have a body, making running accessible and popular for a wider audience.

Phil Knight initially doubted Bowerman's idea, thinking 'Who in the heck would wanna read a book about jogging?' This skepticism highlights a dynamic within the company where bold ideas could come from unexpected places and even face internal resistance before proving successful.

Knight's management approach was distinct; he was quiet, reserved, and notably did not offer words of encouragement to his team, viewing himself as the opposite of a micromanager. This hands-off style was an intentional part of his leadership philosophy.

Beyond his direct management, Knight was a ferocious reader, particularly of history, military history, and biographies of figures like Churchill, Kennedy, and Tolstoy. He was fascinated by 'leadership under extreme conditions,' drawing parallels between business and war without bullets to inform his strategic thinking.

I thought my old coach had popped a screw. Who in the heck would wanna read a book about jogging?

Jeff Johnson's Customer Obsession and the First Runner's Sanctuary

Jeff Johnson, an early Blue Ribbon employee, demonstrated extreme dedication by working seven days a week to sell shoes and meticulously build a customer database. In the mid-1960s, he kept index cards for each customer, noting personal information, shoe sizes, and preferences, which allowed him to maintain personalized contact.

Johnson leveraged this data to foster deep customer relationships, sending birthday cards, Christmas cards, and congratulatory notes after big races. He even made personal visits, looking up customers in new cities and sometimes having dinner with their families, illustrating an unparalleled commitment to making customers feel special.

Driven by his vision, Johnson relentlessly pressed Phil Knight for a dedicated store. After meeting challenging sales targets, Johnson opened the first Blue Ribbon retail space. He designed it as a "sanctuary for runners," equipping it with comfortable chairs and shelves of running books from his own library.

This unique store was more than a sales point; it was a community hub that celebrated runners and their passion. It represented a crucial shift in marketing for Nike, focusing on building a devoted community and providing an experience that resonated deeply with its customers.

In all of the world, there had never been such a sanctuary for runners, a place that didn't just sell them shoes, but celebrated them.

Phil Knight's Unhealthy Contempt for Adidas and Quest for Full-Time Commitment

Phil Knight developed an intense, almost "unhealthy contempt" for Adidas, the dominant shoe company of its time. He saw them as an arrogant monster, a perception that served as a potent motivator, driving his ruthless competitive spirit to overcome their established lead.

Despite Blue Ribbon's growth, Knight was still working as an accountant six days a week, dedicating all other available time to his burgeoning company. He craved an even greater "imbalance" in his life, wishing to commit every minute to Blue Ribbon and focus solely on the task that truly mattered to him.

To achieve more dedication to Blue Ribbon, Knight strategically took a less demanding job as an assistant professor at Portland State University, despite his father's disapproval. This move allowed him to earn a salary while freeing up significant time to nurture his "third child," the company he passionately believed had to survive.

Finally, in 1969, just before his 31st birthday, Phil Knight made the pivotal decision to quit his teaching job and dedicate himself full-time to Blue Ribbon. The company could at last justify an $18,000 salary for its founder, fulfilling his deep-seated desire to build something of his own and find meaning through his work.

I was developing an unhealthy contempt for Adidas, or maybe it was healthy, that one German company had dominated the shoe market for a couple of decades and they possessed all the air of unchallenged dominance.

Phil Knight Navigates Chronic Undercapitalization Through Personal Sacrifices and Employee Loyalty

Phil Knight's single-minded devotion to Blue Ribbon led to significant personal sacrifices, including signing over his house as collateral to secure necessary loans. Despite the company's rapid growth, he consistently battled severe financial strain and an inability to secure traditional funding. His wife observed his constant preoccupation, often driving to the store and returning empty-handed, consumed by the company's fate.

Blue Ribbon faced chronic undercapitalization, leading to ongoing conflicts with bankers like Wallace, who eventually refused any further credit, declaring Knight's credit maxed out. Even as sales doubled and the company grew into "a beast," banks remained unwilling to provide the necessary capital, forcing Knight into increasingly desperate measures to keep the business afloat.

Amid these financial struggles, an extraordinary act of loyalty emerged. An early employee, Woodall, along with his parents, offered Knight their entire $8,000 life savings. This was a particularly poignant gesture given Woodall's own medical bills (due to a paralyzing accident) and his family's limited means, yet they insisted on providing the funds without formal documentation.

When asked why they would make such a sacrifice, Woodall's mother simply stated, "If you can't trust the company your son is working for, then who can you trust?" This profound trust paid off; six years later, when Nike IPO'd, Knight converted the loan into stock, making that $8,000 investment worth $1.6 million, a testament to the power of unwavering belief.

If you can't trust the company your son is working for, then who can you trust?

Onitsuka's Betrayal Forces Blue Ribbon to Secretly Create Nike

Phil Knight's shoe supplier, Onitsuka, double-crossed Blue Ribbon, secretly planning to break their contract and partner with other distributors in the lucrative American market. This betrayal left Knight outraged and hurt, especially after seven years of building the TigerShoes brand in the U.S. and contributing to their design improvements through Bill Bowerman's innovations.

Facing an imminent cut-off, Knight was forced into a high-stakes tightrope act. He had to conceal his knowledge of Onitsuka's plans while urgently developing Blue Ribbon's own shoe brand. This period involved intense strategic planning, as Knight worked through critical questions about managing the inevitable breakup, scaring off new distributors, and finding alternative manufacturing sources, including factories in Central America.

During this covert operation, the name 'Nike' was conceived by Jeff Johnson, who dreamt of the Greek goddess of victory. Despite the immense stress, Knight experienced a profound sense of purpose and fulfillment while designing and naming the first Nike models. This creative process made him feel like an artist and creator, confirming his true path.

Eventually, Onitsuka discovered Nike and severed ties with Blue Ribbon prematurely. This pivotal moment forced Knight to inform his employees that they were entirely on their own, with their new Nike line as their sole hope for survival. This marked a crucial turning point, cementing Nike's independent future.

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. I felt like a creator.

Phil Knight Rallies Employees and Innovates Financing After Onitsuka Severance

After Onitsuka abruptly cut off their supply, leaving employees demoralized and facing an economic recession, Phil Knight reframed the crisis as an opportunity. He delivered an impassioned "Independence Day" speech, declaring their liberation from Onitsuka's constraints and rallying his team to view the challenge as a war they could win, emphasizing their survival depended on their relentless fight.

Knight's personal competitive drive was a core component of Nike's early ethos. He recounts playing 116 badminton games against his cousin, refusing to quit until he finally won one match. This intense commitment to victory permeated the company, fueling their determination to compete as if their lives depended on it, a mindset crucial for navigating their constant financial struggles before the IPO.

Despite continuous financial problems, including being leveraged to the hilt and relying on Japanese trading companies like Nisho and the Bank of California for financing, Knight devised a critical strategy. He approached major retailers such as Nordstroms, Kinney's, and Athlete's Foot for "ironclad commitments" for future orders. This innovation provided Nike with longer lead times, fewer shipments, and improved cash flow, simultaneously allowing them to secure more credit from their lenders.

Let's not look at this as a crisis, let's look at this as our liberation, our Independence Day.

Phil Knight's 'Grow or Die' Strategy Led to Near Collapse and Survival

To gain greater control over product quality and the supply chain, Nike began acquiring bankrupt factories, including one in the northeast of America. This move prompted Phil Knight's frequent observation that he and his employees were constantly "in over their heads" as they navigated uncharted business territory.

Knight rigidly adhered to a "grow or die" philosophy, refusing to reduce inventory orders despite the immense strain on cash reserves. He believed demand consistently outstripped supply and routinely pushed his bankers to the brink, barely making payments for large shoe orders and other monthly bills, only to empty accounts again to pay suppliers like Nisho.

This aggressive strategy resulted in Nike bouncing paychecks and ultimately being cut off by its primary bank. The company was saved from collapse when a Japanese trading company, after reviewing Nike's books, extended crucial credit, noting that "there are worse things than ambition" when recognizing Knight's drive.

Knight identified with runner Steve Prefontaine's competitive spirit, applying the mantra, "Somebody may beat me, but they're gonna have to bleed to do it," to his business challenges. He viewed Blue Ribbon (Nike) as his "business child" that had to survive, driven by a singular focus on "winning."

Grow or die, that's what I believed, no matter the situation.

Phil Knight's Hesitant Choice to IPO Nike and the Heavy Price of His Dedication

Phil Knight initially hesitated to take Nike public, disliking the idea of "going public" due to his private nature and fear of losing control. Despite these reservations, he eventually recognized that an IPO was the only way to secure the necessary capital for sustained growth, driven by a deep conviction that "Nike cannot die." He saw it as crucial for the company's survival against all odds.

Knight's unwavering focus on Nike came at a significant personal cost, particularly the sacrifice of time with his two sons during their childhood. He felt intense guilt over his absence, which his children openly questioned. His son Matthew, in response to his father's dedication to work, even declared he would never wear Nikes.

The decision to go public was ultimately forced upon Knight by Nike's critical financial state. A mentor, Chuck, reviewed the company's books and confirmed that an IPO was not optional but mandatory to address severe debt and cash flow issues, preventing the potential collapse of the company. This stark reality solidified Knight's path despite his internal conflicts.

Nike cannot die. I cannot lose, it has to exist.

Phil Knight redefines business as a grand human drama of creation and contribution

Phil Knight reflected that his work at Nike felt like much more than just "business." He likened the relentless pursuit of profits to the human body making blood: it's a basic, necessary process that enables higher functions but isn't the ultimate mission or purpose of existence. For Knight, business operations were merely the means to achieve more profound aims.

By the late 1970s, Knight explicitly redefined his concept of winning. It evolved beyond merely "not losing" or simply ensuring the company's survival. He recognized that for Nike to truly thrive and for him to remain engaged, the company needed a higher purpose: to create and to contribute in significant ways.

This expanded definition of business involved participating in a "grand human drama." It meant making, improving, or delivering products and services that genuinely add value to the lives of strangers, making them happier, healthier, or safer. When executed efficiently, this process transcends basic commerce and actively helps others live more fully.

For some, I realized, business is the all-out pursuit of profits, period, full stop. But for us, business was no more about making money than being human. Human is about making blood.

Phil Knight Reflects on the IPO's Aftermath and Offers Enduring Wisdom for a Calling

After Nike's IPO, Phil Knight found himself feeling not joy or relief, but regret. Despite becoming worth over a hundred and seventy-eight million dollars, he wished he could relive the entire journey, realizing that externally and internally, nothing had fundamentally changed for him. He reflects on the bittersweet experience of building Nike, grappling with a secret desire to do it all over again while also regretting not spending more time with his sons.

Looking back on his career, Knight offers profound advice for young men and women. He urges them to resist settling for just a job or career, and instead to actively seek a calling. He suggests that if one is truly following their calling, the inevitable fatigue will be easier to manage, disappointments will become fuel for progress, and the highs achieved will be unlike anything else they've experienced.

Knight also warns innovators and rebels that they will consistently face scrutiny and opposition, likening it to having a bullseye on their backs that only grows larger with success. He challenges the common mantra of 'never give up,' calling those who preach it charlatans. Instead, he argues that knowing when to pivot or 'give up' on a specific approach or path, and then trying something new, can be a sign of genius, emphasizing that giving up a method does not mean stopping the pursuit of a goal entirely.

Sometimes knowing when to give up, when to try something else, is genius. Giving up doesn't mean stopping.