SHOE DOG – A MEMOIR BY THE CREATOR OF NIKE – PHIL KNIGHT | 2022 APRIL

Shoes, there are so many different types of them, which is to use to protect our feet when we are walking. There is the sole that is used to support our feet and the cover that is used to protect. But in this case, the author is referring to athlete shoes taking part in different competitions.

I have always been using the shoes to compare with the brassieres. There is the wide scope of the functions, different purposes, aesthetically, different materials, designers, but end of the day the comfort is the most important. They come in different designs, colors, and sizes.

I read the book half-heartedly, assuming I knew the story already. But soon I found out that I was far from knowing it. I dug deeper into the book. Phil, his father called him Buck, started young and at the age of 24, and it was in 1962, he conceived a crazy idea. At that time he graduated with an MBA from Stanford Business School, spent a year in the U.S. Army, and he decided to see the world. It was in June 1962, he packed one suitcase and a backpack, he travelled through the following cities: Hawaii, Tokyo, Hong Kong, Rangoon, Calcutta, Bombay, Saigon, Kathmandu, Cairo, Istanbul, Athens, Jordan, Jerusalem, Nairobi, Rome, Paris, Vienna, West Berlin, East Berlin, Munich, and London. His understanding of all these cultures, especially the philosophic parts, was surreal to me. But anyway, since I have decided to read through Phil Knight’s memoir, I decided not to argue but to take in everything. I even went further to take note on everything and promised to go back and explore them deeper and look for some benefits.

The highlight of his trip took place on his second stop in Japan, after spending six months in Honolulu, and his “crazy idea” was to visit a company in Kobe known as Onitsuka where they produced the Tiger, a high-skill sports shoes. I was taken in by the way he described: each time a shoe was molded, the metal last would fall to the floor with a silvery tinkle, a melodic CLING-CLONG, which continued like a cobbler’s concerto. Those were the exact words he used. It also reminded me in my early days in 1970 when I joined my brother-in-law’s shoe factory in Hong Kong, the same work process and the aluminum shoe lasts were used. Those sounds were very familiar to me.

During that trip, he told the Japanese the company’s name was Blue Ribbon Company and bought $50 worth of samples and asked them to ship to his home address in Portland, Oregon, and he continued his trip. I was totally taken in by his trip in all those exotic places and again the philosophic descriptions immersed me completely. Reading this part of the book was like taking a gourmet feast.

This line which I recorded, came repeatedly in the book, that I have noted:
“Don’t tell people how to do things, tell them what to do and let them surprise you with their results.”

 It was February 24, 1963, on his twenty-fifth birthday he returned home with hair to his shoulder and beard of three inches. The trip took him eight months in total. But it took him in total 14 months to receive the parcel with 12 pairs of shoes in creamy white to arrive from Onitsuka. The first two pairs went to Bill Bowerman, a coach, who used to tear running shoes apart, and improved them with softer, lighter and sleeker. That resulted Bill Bowerman to be his fifty-one/forty-nine partner.

First order to Onitsuka was 300 pairs of Tigers, each at $3.33 for a thousand dollars and asked for exclusive distributor of Tiger shoes in the western US. In April 1964 shipment arrived and started to sell from the trunk of Valiant in race tracks, and soon mail-order business also started. Through word of mouth and it was sold at $6.95 a pair, in three months it was sold out.

The next order of 900 pairs drawn the attention of a certain Manhasset, a high school wrestling coach, who wrote him a letter to tell him to order the shoes from him. He approached Onitsuka but without reply, and he decided to return to Japan. He came home with a contract of thirteen western states for one year and spent $35,000 for the order.

The First National Bank of Oregon, who provided a bank loan from Phil’s father’s letter of guarantee was unhappy because the company, Blue Ribbon, was at the rate of growth which was faster than its equity.  

Bowerman went to Japan for the Japan Olympics in 1964 and met with Onitsuka, the owner of Tiger and the two treated with each other with respect. Bowerman continued to tear the shoes apart and tried to improve the running shoes with its soles. He believed that the body structure of the American athletes were different from the Japanese. As a result, Onitsuka started to make prototypes that conformed to Bowerman’s vision of a more American shoe.

When came to the time to renew the contract, and because of the lack of response, Phil decided to travel to Japan again. This time he met Kitami, which brought him a lot of troubles afterwards.

What Phil experienced from betrayals, lies, extreme impoliteness, even treacherous, were something very annoying for a startup business.

I continued to read also the banking relationship with First National Bank of Oregon which was still after their complain for the debt and equity ratio. The many times Blue Ribbon was at the edge of the cliff, but Phil continued the course of the company. Phil was very resilient, although like all entrepreneurs, he continued to shoot from his hips for more options.    

Phil continued to divide his time working for Price Waterhouse as an accountant, and stayed up in late nights, weekends and vacations at Blue Ribbon. The company hired staff to run the daily business for selling the shoes.

In 1968, Phil married Penny whom he met in the class that he was teaching. The following year, the first son, Matthew, was born.

Business with Onitsuka entered into a three-year contract in 1970, but shipments were late with wrong numbers of shoes, wrong sizes and even wrong models. But Phil found that he was at Onitsuka’s mercy. Although the business grew from year to year, the bank was still breathing down his neck. On the other hand, Onitsuka wouldn’t ship anything until the payment for the shipment was made.

In 1971 when Kitami visited Blue Ribbon he asked to see the First National Bank and the meeting ended with Kitami pounding on the table with his fist and protested the bank for not extending more credit to Blue Ribbon. He even suggested that it would be better for Blue Ribbon not to do business with the First National Bank. During the same trip he followed his meeting in the company of Blue Ribbon, he threatened Phil that Onitsuka was unhappy with the volume of the business that they brought in. That trip was no longer a secret that Kitami was visiting other states and looked for vendors.

Phil already started to ask for the finance of another Japanese company, Nissho Iwai, but Onitsuka was reluctant to go near there as he was afraid that they would come to know his business structure and would add difficulties to him.

When Kitami returned from his visit from the other states he asked Phil candidly to sell his company to Onitsuka. When asked about the contract Kitami ignored the question totally. I found myself totally at awe for what I read for what Phil continued to experience from the Japanese for their shrewdness and treacherous which were no way to treat any business partners. Then what followed with the First National Bank quitting from Blue Ribbon, Phil started to introduce the Nike from Nippon Rubber, a subsidiary from Bridgestone Tire Co. This resulted the termination of business with Onitsuka and each took a separate way with the Japanese took one of his staff and began their U.S. operation. This even developed into a litigation started by Onitsuka which ended their losing of the case and was ordered to pay the Blue Ribbon for $400,000.

Entered in 1975 was a new era for Phil and this time he could focus on his own brand—Nike with the swoosh, but the cash was still very tight.  

This sports shoe industry is deeply associated with the Olympics, and all the related sports events of the colleges. What the athletes are wearing are very important and the TV stations who are covering the events would focus on the finishing lines for what those athletes were wearing. The big brands like Adidas, Puma and Converse would sign up those famous athletes and asked them to represent their brands. With startups like Nike at that time, Phil would have to look for the money to find those athletes and asked them to present themselves at the race courses or at the games.  

Not only that, but it was also in Hollywood. Giving the shoes to stars and have them appeared in the shoes would assure success. The shoes would bear the name of the stars and they would go to the cheerleaders at UCLA and USC would definitely create the craze. 

Soon Nike found itself followed Adidas and Puma into the clothes, and it was not only the sports shoes, but also shirts, pants, and also other gears. Manufacturing was no longer restricted to Japan or Central American countries, but also Taiwan and Korea, and finally China was added.

To solve the cash problem of the company, which the company had changed from Blue Ribbon to Nike, the only way out was to go for the initial public offering. The day chosen for the offering was December 2, 1980. The price was set for $22 per share and of the total of 50 million shares, in class A and B, 2 million shares were sold to the public.

Coming to an end of the book, Nike made the success in the shoe industry and I believed that the fame brought them under the attack of operating the sweatshop. But before Nike stepped into those “rented factory”, the situation could be worse. Improvements and work ethics were introduced, but if you want to pick on anything, you can always.

I know very little about rubber shoe-making but I believed that the glue where the upper-cover of the shoes have to bond with the rubber soles, a kind of glue would have to use and heated by bonding. The fumes can be chocking, also can be toxic and cancer-causing. Nike invented a water-based bonding agent that can eliminate the carcinogens. This has been shared among industry players. This reminds about the safety devices as invented by Mercedes Benz that they share them among the automobile manufacturers unconditionally.

Phil spent a large portion of his life in trying to make ends meet. He is giving away $100 million a year now and planned to give away most of what’s left. This is what I call divine.