50 Books each year

Chapter 1, Shoe Dog, Phil Knight

June 24, 2020 Mijndert Burger Season 1 Episode 1
50 Books each year
Chapter 1, Shoe Dog, Phil Knight
Chapters
50 Books each year
Chapter 1, Shoe Dog, Phil Knight
Jun 24, 2020 Season 1 Episode 1
Mijndert Burger

In the first chapter of the podcast 50 Books each year I am so happy to start with a very inspirational story. Phil Knight is the CEO en Co-founder of Nike. Phil takes us with him during every high and low that his company has had. If you want the real story about entrepreneurship, money, deals and personal issues then this chapter is one to listen to. Or just buy the book! Contact me on info@50bookseachyear.com or on twitter @50_books

Show Notes Transcript

In the first chapter of the podcast 50 Books each year I am so happy to start with a very inspirational story. Phil Knight is the CEO en Co-founder of Nike. Phil takes us with him during every high and low that his company has had. If you want the real story about entrepreneurship, money, deals and personal issues then this chapter is one to listen to. Or just buy the book! Contact me on info@50bookseachyear.com or on twitter @50_books

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Here we go.

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Hello, and welcome to 50 books each year, the podcast show where we read 50 books each year, so you don't have to. This is your host Mijndert Burger as and we are off. Welcome to the first chapter of 50 books each year, the focus where I'll be reading 50 books each year, and the first book that I'll be reviewing is shoot up by Phil Knights. And shootout is a memoir by the creator of Nike. Now, I know that everybody who listens to the podcast knows about Nike. You either wear Nike, you've heard of the brand of Nike. You've seen it on the television on an athlete. You have either award yourself to the gym or just as your leisure wear. Nike is one of the world's most famous fashion brands daris shoe brands, actually that turns fashion brand. And this brand was created by Phil Knight. Now Phil Knight is born on the 24th of February 1938, which makes him currently today 82 year olds. And according to Wikipedia, his net worth today may

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2020

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is 38.9 billion US dollar

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amazing. So

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this book shoe dog is about how Phil Knight because he was not born in a rich family. This book is about how Phil Knight became

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a billionaire.

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So let's start off with the blurb. And for you For you guys who don't know what the blurb is. The blurb is the summary of the book, which is trying to make you buy the book and in this case On the backside of the book, and the blurb goes like this and I quote, fresh out of business school Phil made borrowed $50 from his father and launched the company with one simple mission to import high quality low cost running shoes from Japan, selling the shoes from the booth of his Plymouth valiant Knight gross $8,000. The first year in 1963, and today Nikes annual sales stop $30 billion and the swoosh is more than a logo. Well,

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I know that for a lot of people,

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they have set a goal to be rich in life. And if you want to know how Phil Knight was able to make $30 billion in revenue sales and his current network of 38 billion

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out of $50

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then you should either listen to this podcast and what The review is about or you should buy the book and read it yourself.

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The book

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is 383 pages and I've read it in five days. Now normally I would read somewhere about 60 pages a day. That is a bit of the goal that I set myself. But this book was so interesting that I read it in five days. Now, what I like about this book is that Phil is not instagramming himself. And with that, I mean he's not painting a picture perfect story. He's taking us honest on a journey with the ups the downs, the nitty gritty, the good Tibet's the moments that he would love, lose Nike, the moments that he had successes, and also the terrible moments where he loses one of his children, children, the death of his son, Matthew. So if you want to hear about how Phil Knight's came about his billions, then you should definitely hear the rest of this podcast. And before we go on with the show, I'd like to make a request. If you like the show the podcast 50 bucks each year, or if you'd like to subject reading and reviewing one book each week, then please leave a review in the comment section of iTunes, Spotify, or any of the other providers that you are listening to. Since we are a new podcast show, the algorithm is not get set for us, and every review will help out the show a lot to get more visibility. So thank you for considering that. And without further ado, the second part of the show.

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And now, back to the show.

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Yes, let's get on with the business. Let's review the book and let's start with how it got started. It is 1962 when Phil was attending Stanford University In this year, Bill is following a class about entrepreneurship. And for diskless, he has to write an essay about his future job,

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his future business.

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And why Phil makes this next comparison? I don't know. Please ask him if you know him, or feel if you are listening, send a tweet to 50 underscore books at twitter. But Phil makes the comparison that back then in 1962, Japanese cameras were dominating the market. And he thought to himself, why not Japanese shoes? Yeah, I don't know to comparison. Don't ask me Don't blame me. But Phil made it in his book, and also in his essay. And Phil wrote in his essay that the Japanese shoes were the next best thing. And well presented that to his peers. He was confronted with a stare. No reaction, no applause nobody was enthusiastic. That was the start of Phil's plan for Nike.

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Ending is

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University at Stanford feel thought to himself, I am not ready to start a business yet. I want to see more of the world. I want to travel the world. But Phil had 1500 dollars in his pocket from jobs and selling his car. And for his world trip he needed 2500. So he was short one, Grant, and fail went to his debt. Phil went to his dad who was a publisher for a newspaper in Oregon, and asked him to lend the money. He asked him to lend a grant $1,000 to go on a worldwide trip. Now, Phil was not stupid, even back then, because Phil pitched this to his father and confronted him with the argument that this was going to be good for his development. And also he would combine these three Way to trip to Japan to pitch his idea to Japanese manufacturers. Well, his father was not enthusiasts stick right away. And you can imagine a couple of reasons why. But somehow Phil had already had got good salesman qualities. He pitched it to his father and his father gave in his father Leonard him to $1,000. And Phil was able to go on this worldwide trip. And during this trip, Phil went to Japan as well. And he made an appointment with Anita suka. And I'm so sorry if I pronounce this name incorrectly because I'm not Japanese, but he made an appointment with onizuka and wanted to pitch his essay dare his idea to sell shoes, and that is what he did. He travelled to Japan, made an appointment and found himself in the boardroom with The CEO and with the senior managers of onizuka and was pitching his idea. And when the meeting is starting, he is confronted with the first question. Which company are you, representing Mr. Knight?

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Now, Phil had prepared his trip

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to the tee.

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Almost. Phil had read about Japanese customs that the word Chi meant respect and bowing is a form of chi. even knew that to work tycoon, American tycoon to work tycoon came from the Japanese tycoon and that meant Warlock art. So Phil was prepared, he thought, but when confronted with the question, what's the name of your company? Phil had no answer. He did not think about the name of a company yet and in his book, He describes it as the following. And I quote, adrenalin surging through my blood. I felt the flight response, the longing to run in height, which made me think of the safest place in the world. My parents house. The house had been built decades before by people of means people with much more money that my parents and dusty architects had included servant quarters at the back of the house. And these quarters were my bathroom. Which I filled with baseball carts, record albums, posters, and all things holy. I'd also covered one wall with my blue ribbons from track. The one thing in my life of which I was unabashedly proud of, and so, Blue Ribbon. I blurred it, gentlemen, I represent Blue Ribbon sports of Portland,

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Oregon, and quote

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Yes,

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can you imagine a situation like that

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you

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As a 24 year old going abroad and in 1962 Travelling is not that common as it is these days

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going abroad

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to a country, Japan on the other side of the world, being able to score an appointment with a manufacturer of shoes, going into the meeting, and then not having an answer on the name of the company, and then just blurring up blurting out Blue Ribbon sports. I can only imagine what Phil has felt during the seconds of his life. But somehow Phil is able to score the trust of the Japanese senior managers and they make a deal they say you have to pay $50 and we will send you 12 simple shoes to the United States. Phil takes this deal and then has to go to his father again because Phil doesn't have D $50. That is requested. He's messaging His Father, please wire $50 to an itsuka. So I can have my 12 sample shoes. So it is 1964 and 12 pairs of shoe arrive.

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Wait what? 1964?

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Yes, it takes one year 12 months one year for 12 simple shoes to arrive in the United States of America at film nights his house. So you can only imagine what emotions Phil might went through in that year. He might have even thought that he would be working in a supermarket at one point, I don't know. But finally 1964 and 12 simple shoes arrive at Phil Knights house and went to two of those shoes. He makes the decision to send them to his coach Bill Bauer met Bill Bowman is a coach at the University of Oregon, and is the coach of Phil Knight bill Bowerman coaches to track team of Do University and later on also the United States Olympic team. And why does Phil send two pairs of shoes to his coach? Because a, it is an inspiration to him. He helps his coach in high regards.

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Be

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bill was also somewhat of a shoe inventor, because bill was stealing shoes from students from the locker room, altering them, putting them back, and then tracking how they would perform when running. And of course, sometimes at work, sometimes it didn't work and you got a lot of listeners, but Phil had high regard for Bill Bowerman and he sends two pair of shoes to him to get his review, because his review means a lot. And with that review, Phil will be able to make a judgement on whether or not to continue with this deal. We're known itsuka and to a surprise Bill Bowerman orders a dozen of shoes from him. And not only that, in the same sentence that bill is giving him I want to order a dozen pair of shoes. He's also saying I want in on the deal. Now you're 25 by 1025 26 maybe. And your coach your inspiration not only puts in an order of 12 pairs of shoes, but also

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says to you

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can I be you know in the deal

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now, that must have been amazing fulfil night if you only realise if your inspiration your idol, once in on a deal with you. You must be over the moon, and so was Phil Knight. So he was about to shake the hand of Bill Bowerman and then pulls back because he's smart enough, and he's asking bill, what kind of deal you're proposing. Now any beginning, bill says 5050. And of course, Phil response bit response with, but then you also are responsible for half of the cost of the company. And they make an agreement and an agreement by mouth is of course, legally binding as well,

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but

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they make an appointment to go to Bill bowerbirds house later on. And to run over the details again. Bill went to the house of Bill BARROWMAN. He found that he had legal assistance of a lawyer. So he was suddenly in a meeting with two grown up men. One of them is a lawyer, and the other one is his idol. Now the wife will bill Bowman is looking at him like, boy, you're going to be devoured by these two adult men. But this is not true. Phil was prepared and the offer that came to the table was actually that bill Bowerman wanted to 49% of the company and feel could have 51 because bill was not interested in leading the company. He was interested in taking the backseat inventing the shoes, and he wanted to feel nice to have operational control of the company.

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Now, Phil was, of course

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over the moon. And with the money that bill Bowerman was able to invest in the company, he could order his shoes from onizuka. And in the first year that they were selling shoes, and would they actually have to say Phil Knight because Phil Knight was setting the shoes, according to the blurb on the inside of the book from the back of his car.

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And he made $8,000.

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Now, if $50 can get you 12 pairs of shoes, then selling for $8,000 that's a lot of shoes that you're able to sell from the back of your car.

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Now I don't know about you

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But if someone would say to me Do you want a pair of shoes, and he walks to his car and opens the back of his car and is going to show me a pair, I will not be interested. But I guess 1964 was a different time there was no internet Of course there were no internet stores. So I guess back then, it was normal to sell from the back of your car. But Phil made $8,000 in the first

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year

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of his company. And of course, it's still not called Nike it is Blue Ribbon sports. But he made $8,000 anyway, that means that you are a very good salesman, if you are able to do that from the back of your car. Now, this is an accomplishment of course in 1964. But Phil In the same year, also has this first low and the low is that when he was selling the $8,000 of shoes, he got a letter from what he calls a mobile Man, and this mo Borel ban is claiming that he has the right for the entire United States to sell on itsuka

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shoes.

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Now, Phil is devastated when he receives this letter. He is devastated. And of course, you and I would be too, because you're starting your company, you've waited one year for 12 pairs of shoes. You get even a deal partner, you're able to invest the shoes come your way and you're able to sell for $8,000 from the back of your car. And then some guy sent you some letter claiming that the entire United States is his legal right. Phil is devastated. And he tries to get in contact with itsuka. But there's no response. And Phil does the only thing that he could do. He books a flight and goes to Japan again. And once he's in Japan, he lets onizuka know I am in Japan. I want a meeting And the Japanese people, they were impressed, I guess, because the next day, he got an appointment. And when he walked into the appointment, he found the senior managers all sitting there. Now Phil describes this situation as that he received a lot less Chi, the respect. But he was in the meeting anyway. But halfway in the meeting, everybody stood up. And then the CEO funny suka comes in the big big bust of this $20 million company walks in and joins the meeting. Now in this meeting with the CEO, the CEO confesses to feel that he reminds him of when he was young. And then he they make a deal. They make a deal. That's the Marlboro Man can have the entire United States for wrestling shoes. The East Coast for track shoes And the western states, the 13 western states go to Phil Knight. Now how is it Phil Knight able to arrange this and that is pure by being a good salesman. He sold for $8,000

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in the first year,

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and he was able to convince the CEO that he could sell even more in the next year with these investments. And the CEO believed him. He believed the numbers that Phil Knight was able to generate, and he believed that Phil Knight was able to generate a lot more in the future. And boy was the CEO of an itsuka. Right. Now let's fast forward a little bit in the book and let's go to the year 1970. And in 1970, Blue Ribbon sports is selling for $600,000 Yes indeed, in 1964, he was selling for 8000 and in 1970 This number has gone up to $600,000 and this is amazing if you can double your sales every year and go to $600,000 in sales that is amazing. But of course this kind of growth can only come with growing pain and Phil knows this better than anyone else because Phil had a motto and d'amato will feel was life his growth grow or die. So every dollar that Phil got from the bank or or from other investors feel invested in his company and he spent it on shoes. Now, if you are spending all of your money, then that means you have no cash enhance. And this can go well because you are paying all your bills, you're paying your whole stuff. But if something comes up and you have no cash at hand, you are in trouble. And this is what happened to Phil in 1970. Because he had a loan at the bank for $1 million. And in this year, the bank cuts him off, because Phil requested the loan to go to $1.2 million. And the bank says no. suddenly feel finds himself short. And with a gap of $200,000 while still needing to pay his stuff, his investments, everything he wants to do with Blue Ribbon sports.

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So

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you can imagine the stress that Phil is going through at this point, because how to continue and at this moment on itsuka send him a message that one of his shipments is ready and they want to receive the $20,000 data shipment is worth and Phil doesn't have the money. He has the assets because he has sales of $600,000 As always shoes and he cannot pay on itsuka and shoes, shoes are actually the thing that he wants from them. So he needs to send them money. So Phil has a problem, he needs to pay this $20,000 so he goes to his accountant and he asked the question, do we have any cash anywhere and in 1970 Phil already has some stores in the country. So he requests his accountant, find me the cash, find me money and they are not able to do that. Or at least not enough. And this is of course very bad because if you are not able to make your payments, then your supplier might cut you short as well. And if they stop selling you to shoes, you are out of business. Because when itsuka was the only supplier for Phil Knight back then and it this time, one of Phil's employees Mr. Woodville comes to his office.

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And I would like to quote

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with no one nowhere else to turn with no other options. I was sitting at my desk one day staring out the window. Woodward knocked. He rolled into the office Close the door. He said he and his parents wanted to loan me $5,000 and they wanted no no for an answer. They also wouldn't tolerate any mention of interest. In fact, they wouldn't even formalise the loan with any sort of paper. He was going to Los Angeles to see Bork. But while he was gone, he said I should drive to his house and collect a check from his parents. days later, I did something beyond imagining something I didn't think myself capable of doing. I drove to the woodlands house and asked for the check. I knew the woodwinds weren't well off. I know Debt were their son's medical bills. They were scuffing more than I. This $5,000 was a life savings. And I knew that.

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But I was wrong.

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His parents had a little bit more. And they asked me if I needed that too.

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And I said, Yes.

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And they gave me their last $3,000 draining their savings. 200 how I wished I could put that cheque in my desk drawer and not cash it,

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but I couldn't, I wouldn't.

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On my way out the door, I stopped and asked them, Why are you doing this? Because what was mother set? If you can't trust the company, your son is working for that. Who can you trust?

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Wow.

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When I read this quote,

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I was stunned.

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Because Can you imagine yourself in these COVID times with a lot of companies instead difficulties

25:01
that you would be

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so good in your heart that you would invest your savings to save your company or the company where your son works. I don't think a lot of people would do that. And the woods that

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day gave fill

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their $8,000 and didn't even formalise it into a paper they didn't want interest. They want nothing of that. Now that amazes me. If you're doing this, then you're so good at heart and you have so much trust in this person Phil Knights

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there's no other explanation for that.

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But with this $8,000 Phil was able to pay part of the on itsuka order that he had made, and his accountants found the $12,000 devils needed as well. So together with the eight Thousand that was the $20,000 that was needed and the on itsuka order could continue. Now continuing the year, entering 1971

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on itsuka

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threatens Blue Ribbon sports on sales.

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Wait, what? Yes.

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Did company Blue Ribbon sports that's doubling their sales every year is being threatened by his supplier that they are not selling enough. Now, I said in 1970, they had $600,000 in sales in 1971. They had $1.3 million in sales. And only suka is threatening them to pull out of the deal because they are not selling enough. Now if they pull out of the deal, Phil has no shoes left and his company Goes belly up. And that was it. And feel resourceful as always

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thinks of how to solve this.

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And of course, this doesn't go overnight, and he talks about many nights staring at the ceiling of his house. But at one point, he is reminded of Japanese company and investment company called issue. An issue is a $100 billion company. And Phil knows that day have an issue with on itsuka. On itsuka was disrespectful to an issue, and an issue has a lot of money. So Phil turns to them and he goes to the company, he goes to Japan and pitches again in Japan and wins. He wins the trust of an issue. Issue, even takes second place

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to his banks

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to the ones that are turning into money. And issue is also giving him context with other factories in Japan. So now Phil has two suppliers. Phil is still on itsuka with Blue Ribbon sports. And he has now has his deal with an issue an essay his deal with an issue, because at this time, there's no name yet for his new company. Because he cannot use blue ribbon sports because Blue Ribbon sports has to deal with on itsuka. Now I don't know the legal obligations that you have with a contract, but he couldn't use the name Blue Ribbon sports. So they have many, many, many sessions at their office in Oregon, about what to call the new company. And the new company is actually the name the Nike name is actually being found in the last last year. last minutes because and I quote boutwell wheeled into the office and says times up. I rub my eyes and he said, I know what's it going to be? I don't know. My head was splitting. By now the names had all run together into one male mind melting glob Falcon Ben Galvin dimension six. There is one more suggestion would we'll set from who Johnson phoned first thing this morning and he said apparently a name came to him in a dream last night. I rolled my eyes so dream. He is serious. We will set

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he is always serious.

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He says he said both upright in bed in the middle of the night and saw the name before him. What is it? I asked bracing myself? He says Nike huh? Nike spell it for me. Ik e Nike will set and I wrote it on a legal yellow Pat. It is the Greek goddess of victory Do you Acropolis depends on the tempo. I thought back briefly,

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fleetingly.

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We are out of time I set, Nike, Falcon or dimension six. Everybody hates dimension six everybody would bug me

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would walk around.

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It's your call. He left me I made doodles on my pet I made lists, cross them off. Tick tock tick tock tick tock. I needed to telex the name to the factory now. I hated making decisions in a hurry and that's all I seem to do in those days. I look to the ceiling and gave myself two more minutes to mow over the different options. Then walk down the hall to the telex machine, as said before it gave myself three more minutes. Reluctantly, I punched out the message The name of the new brand is

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and we now all know it is Nike.

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There you go.

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The company that is having an annual sales of more than $30 billion. The name of this company is a last minute decision is a last minute decision and it came to a dream of one of the employees. And that is the company that Phil Knight has had

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Nike.

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Now, this amazes me so much. And it also reminds me about the story about the swoosh I won't go into the story about the swoosh. But Phil didn't believe in marketing back then. Back then Phil didn't believe in marketing so much that they didn't have a logo for the company. And he paid a student $35 to design a logo that he didn't want and that is the famous swoosh Can you imagine the famous billion dollar company logo the swoosh was paid for, for $35. It amazes me still the name of the company in the last minute, the logo, only costing $35.

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Phil

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was a great businessman, but also had a little bit of luck here and there. Now, we are only halfway through the book. And I don't want to spoil the rest of the book for you. Because in the rest of the book, you will find out that Phil had

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trouble with the government.

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The government's the United States of America wanted his money.

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Phil goes into

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the death of his son Matthew, and how that impacted him and his wife and the rest of the family. And Phil also goes into how he approaches his Athletes right now, the athletes that he sponsors and how we've used them. You can read all these great stories in the book, shoe dog from Phil Knights. I read this book in a couple of days. And I was crying one or two times, I have to admit that I cried one of two times. This book shows you how entrepreneurship can go from zero to 100. If you work hard if you have a vision, and you have a little bit of luck. So if you're looking for some inspiration for your job from your business, or you just want a good story to read before you go to bed, shoe dog by Phil Knight, definitely has my endorsement. Now, I want to thank you. I want to thank you for listening to the first podcast of 50 books each year. You can contact me on 50 underscore books on Twitter. Please leave a review on iTunes on Spotify and with that set, subscribe to the podcast. 50 bucks each year, go to www dot 50 books each year.com for all of our social media channels and join the story

Transcribed by https://otter.ai