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shoedog

(click title to buy the book)

Shoe Dog, Nike co-founder Phil Knight’s memoir about the company’s evolution into a sports powerhouse, is an excellent read. At a time when fly-by-night entrepreneurs dispense textbook wisdom about their experiences in distilled tweets and Facebook posts, the memoir is refreshing because it packs in a wide scope.

Knight is an old-school entrepreneur, who worked hard to create a market for running shoes in the United States. Nike is his life’s work.

As such, the book is as much about the messy process that is entrepreneurship (or, indeed, life) as it is about Knight’s flawed personality (minus Instagram filters and cheery Facebook updates). In the latter point especially, the book is a revelation because Knight mostly flew under the radar until the company seriously began challenging leader Adidas during the later 1970s.

Nike started life in 1962 as Blue Ribbon sports company. Knight started the company based on a paper that he presented during his final year at Stanford’s business school. He refers to it as his Crazy Idea.

The basic thrust of his presentation was to import running shoes from Japan, which had plenty of cheap labor and was rebuilding its society after the destruction of World War II. “Being a business buff, I knew that Japanese cameras had made deep cuts into the camera market, which had been dominated by Germans. Thus, I argued in my paper that Japanese running shoes might do the same thing,” Knight writes. (Adidas, a German company, was the leader in sports shoes at that time).
On a round-the-world trip after graduation, Knight contacted Onitsuka, makers of Tiger shoes in Japan, and placed an order for their Limber Up brand (the others, as Knight dryly notes, were called Sprint Up and Throw Up) for fifty dollars. Those twelve pairs of shoes took almost a year to make their way to his home in in Portland, Oregon. By then, he had taken up a job working as an accountant at Price Waterhouse Cooper and was seriously considering “blowing his brains out.”

After the shoes arrived, however, Knight stocked them in the boot of his car and sold them to school track clubs on weekends. He plowed his salary into the new business while staying in the servant quarters of his parents home. Later, he changed jobs to work as an associate faculty at Portland State University so that he could devote more time to Blue Ribbon.

The story of Nike’s growth is not only about Knight’s hard work. It is about a good mix of luck and a great team.

Early on, Knight found a business partner in Bob Bowerman, a legendary running coach from the University of Oregon. Bowerman’s contacts and expertise in designing shoes (according to Knight, Bowerman came up with the idea of a waffle iron sole) helped Nike gain credibility in the market.

He also collected a colorful cast of characters around him as his team. There was his first employee. Jeff Johnson graduated from Stanford with a degree in anthropology and was employed as a social worker and selling shoes for Adidas, when he met Knight. Johnson, who was passionate about running, switched to selling Blue Ribbon’s Tiger Shoes after meeting Knight. He frequently wrote long and detailed letters to Nike about pretty much everything, from sales conditions to requests for raises. Knight never responded to them (including the one asking for a raise). But Johnson became an invaluable member of the Nike team. Even as Knight focused on Oregon, he established a business for Tiger shoes outside its home state.

Bob Woodell, Nike’s first Chief Operations Officer, was another unique character. He was a long jump champion who sold Nike shoes from a wheelchair after an accident. In Knight’s telling, the motley group of people had a uniting passion for sports and running, in particular.

There are a couple of reasons I liked the book.

First, it is an interesting look at the dynamics of entrepreneurship minus the sophisticated ecosystem in place today. Nike started life in 1962, when the infrastructure available to most entrepreneurs today, from venture capital to research firms and institutional financing, was absent. It was a different era in more ways than one. The information explosion that is the Internet had not yet occurred: Knight went around with a book on Japanese etiquette and culture to learn more about the people he was dealing with. It was also a period during which stable employment was prized over radical ideas (especially in Oregon). Knight’s father, who bankrolled his son for the first few months, reflected this ethos with his obsession for respectability. He withdrew funding for Blue Ribbon after a couple of months.

Knight switched to a line of credit from a local bank to keep his cash flow going. Even rising sales, however, failed to assuage his bankers who yanked funding from Blue Ribbon in 1972. That, and Onitsuka’s attempt to break free from Blue Ribbon’s distributorship, led to Knight striking out on his own with a new company called Nike. This time around, Knight obtained financing from a Japanese trading company. He had already laid the groundwork for this company behind Onitsuka’s back and tested a couple of shoes in the market. But he started Nike with a different set of suppliers.

For entrepreneurs, aspiring or otherwise, this is a fascinating look at a bootstrapped business from another age.

The second reason I liked the book was Knight’s honesty about his journey. This book is unlike other entrepreneurship stories that I have read (or covered as a journalist). Written in a simple and readable language, it eschews the dry, knowing tone of an entrepreneur’s voice and cultivates a raconteur’s voice. Knight’s sense of humor further lifts the narrative.

For example, the account of his first meeting at Onitsuka Ltd., makers of Tiger shoes, is hilarious. He was 24-years-old then. The interesting thing about this meeting is that it took place at a time when running was not part of the national consciousness in the United States. It was referred to as “jogging” and shoes made for the activity were rudimentary. There was little thought given to foot dynamics and individual running styles. Still Knight blurted out that the market for running shoes was worth $1 billion. (Today’s entrepreneurs have an armada of facts and anecdotes to convince you about the viability and market of their product.)

In his book, Knight claims to be a shy man who can focus on only one thing at a time. Yet he was not afraid to battle it out in business. He makes frequent references to and quotes successful Generals in his book. (His favorite quote is General MacArthur’s quote about breaking rules). He employed a similar strategy in his business, when he stole a folder containing a list of alternative distributors for Onitsuka’s shoes. He also employed a spy at Onitsuka to report back to him. Knight narrates these incidents in a matter-of-fact way. His attempts at justifying his behavior are half-hearted. For example, he claims that it is common in Japanese companies to spy on each other.

Nike was a medium-sized company then. As the company’s business and factories grew, Knight got a bitter taste of his own medicine when the media accused him of colluding with a dictator to employ people in sweatshop factories. Knight devotes just a page to the controversy accusing the media of cherry-picking instances to make a generic case. (But the media is still on his case!).

Knight’s description of his family life are also marked by honesty. He admits to imitating his father’s uncommunicative stance while parenting his two sons. One of them, Matthew Knight, died of a heart attack while scuba diving in 2005. Knight describes him as a difficult child, a rebel. The reader gets a sense that Knight feels responsible for his rebelliousness.

The book also has a couple of flaws.

Knight does not really devote much time or words to the shoe business. It would have been interesting to know a bit more about the dynamics of the business and how Nike’s arrival made a difference. There was a time when Adidas was the dominant player in the business. What did Nike do (or didn’t do) that helped it overtake Adidas? Similarly, how did Reebok manage to overtake Nike during the 1980s?

Based on his comments about advertising in the book, Knight seems to be skeptical about the power of advertising to sway consumer choices. And yet, Nike’s branding is a critical part of its success. From the swoosh logo to the company’s choice of representatives from Michael Jordan to 1970s runner Steve Prefontaine (who died in 1975 at the age of 24) to the tagline of “Just Do It” have all helped its shoes connect with customers and drive sales. In later interviews, Knight spoke at length about the Nike brand. But he refuses to credit Nike’s success to its brand.

That said, the book is an excellent and, even, exhilarating read. It is the story of an entrepreneur looking back at his life. In an age, when there is a profusion of bite-sized wisdom about life and “disruption” from 20-somethings barely out of college, the book is a good reminder that life (and entrepreneurship) is a complicated journey and that the disruptor is also disrupted in the process of disruption.