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Today’s edition was a fun one to write. Most of what we have written so far in our deep dives have been in tech. Today, it’s Phil Knight, of Nike. Which is an incredible story to tell. If you’ve not read Shoe Dog, it might be the greatest business biography of all-time.

But the story is of a company, and a founder, that we can all take a lot of inspiration from. After I finish writing this I’m off to celebrate the wedding of my buddy Santi, who I work with at Athyna, who is an avid reader of this very newsletter. Anyway, that’s it from me. Enjoy the story of Phil and Nike!

LEADER DEEP DIVE 🕵🏻

Phil Knight - Co-Founder at Nike

Philip Hampson Knight (born February 24, 1938) is an American billionaire business magnate who is the co-founder and chairman emeritus of Nike, Inc., a global sports equipment and apparel company. He was previously its chairman and CEO.

In December 2023, Forbes estimated his net worth at $45 billion. He is also the owner of the stop motion film production company, Laika. However Knight is most famous for creating one of the greatest debates in the history—is it pronounced Nike or Nike-E?

Today, we’ll take a deep dive into the story of one of the most loved brands in the world and a founder who was so determined to make it work that his drive and passion transformed the sports industry forever. Let’s explore the journey of Phil Knight and the rise of Nike, from humble beginnings, to global powerhouse.

Early Knighthood

This competitive drive was also what drove him to sport. In Phil’s case it was running. And running for the famed Oregon track and field program, at University of Oregon. He was part of the track and field club under famed coach Bill Bowerman during this time. Bill with whom he would later co-found Nike.

Phil was a relatively high performer at U-of-O, his personal best middle distance time was 1 mile in 4 minutes, 13 seconds, and on the education side he earned bis business degree in 1959 in just three short years.

Bowerman, Blue Ribbon & Onitsuka

Once Phil finished school he enlisted in the Army, serving 12 months of military duty before shipping himself off to Stanford Graduate School of Business. It was at Stanford he would go on to produced a paper, "Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras?", effectively foretelling what was to come next.

_{*Yes, these are the yellow shoes + jumpsuit combo made famous by Uma Thurman in Kill Bill.}

Phil was so enamoured with the quality of the Japanese shoe design he called Mr. Onitsuka himself, who agreed to meet with him. By the end of the meeting, Knight had secured Tiger distribution rights for the western United States.

Once he was home from Japan in 1964, the 26-year-old Phil started pushing Tigers from the back of his green Plymouth Valiant at track meets across the Pacific Northwest. Seeking validation, and maybe a new client, Phil sent the Tiger shoes to his old track coach Bill Bowerman. To his surprise, not only did Bowerman, who he respected greatly, like the show, he liked them so much he asked to join the business.

On January 25, 1964, with a cash injection of just $1,200, Phil and his old running coach shook hands and went into business together. The birth date of would be that of Blue Ribbon Sports, the distribution company that would go on to become the Nike we know and love today.

Taking on the Tigers

The partnership between Blue Ribbon and Onitsuka started strong. Knight and Bowerman were distributing Onitsuka Tiger shoes all across the US. And the shoe was growing in popularity for their innovative design and quality.

As the demand grew though, so did the ambitions of Knight and Bowerman. They dreamed of not only distributing shoes but creating their own. A brand that they believed could revolutionise the athletic footwear market.

Tensions began to simmered beneath the surface. The rumour was that Onitsuka was planning to sever ties with Blue Ribbon. They wanted to replace them with new distributors to cover the growing U.S. market. Feeling cornered and betrayed, Knight and Bowerman decided to do what all good ambitious founders do—take matters into their own hands.

In a totally risky move, the duo started developing its own line of shoes. Bowerman's expertise in track and field and his relentless pursuit of innovation, meant they designed shoes that were not only high-performance, but also stylish. The same thing Nike is know for to this day.

The breaking point came when BRS accused Onitsuka of major breach of contract. This lead to a legal battle that would determine the future of both companies. In the end though, Blue Ribbon would emerged victorious. This was the official end of the partnership with Japan.

The birth of Nike & the ‘Waffle Sole’

After the dustup with Mr Onitsula and his Tigers, Knight and Bowerman, wanted to distance themselves from Onitsuka. This meant a new brand—name, logo and all. Phil had his favourite: ‘Dimension Six,’ which he thought had a futuristic and innovative ring to it. Luckily his colleagues hated it.

Fellow running geek and first employee of Blue Ribbon, Jeff Johnson, proposed a name that came to him in a dream: Nike, for the Greek winged goddess of victory. Nike. Hmm, that has a nice ring to it the team agreed. Then and there, on the date of May 30, 1971, Blue Ribbon became Nike.

Next was a new logo. Carolyn Davidson, a graphic design student at Portland State University, was given $35 to to design something new. Something that Phil said “needed to convey motion and speed.” Davidson presented a number of designs. One design, a curved checkmark dubbed a ‘swoosh’ won out. Knight begrudgingly accepted the swoosh for no other reason than because they need a logo quickly.

The most famous logo-mark in the world today. Seen on the feet of one in three people you cross by in the street, cost $35. And was created by a graphic design student. Incredible.

That same year is when Bowerman, Nike’s own mad scientist, created the first sneaker soles with a ‘waffle’ grip, quite literally cooking them in a waffle iron.

Nike sold $3.2 million worth of shoes in 1972 with their patented ‘waffe sole,’ and its profits doubled each of the next 10 years. Nike passed Adidas to become the industry leader in the United States in 1980, the year it went public.

‘Sometimes I dream, that he is me…’

The year is 1984, and a 21-year old Michael Jordan, the third pick of the NBA draft is about to don the hardwood wearing his very own black and red Air Jordan 1s. Sounds normal today, but this was far from normal in more ways than one.

Firstly, it was Nike’s first ever signature sneaker. A massive bet for an unknown rookie of Wilmington, North Carolina. Secondly, they were breaking the NBA uniform policy. At this point in time in the NBA, you had to be vanilla. You needed to wear shoes that matched their team's uniforms and contained a significant amount of white.

The NBA told Nike that if Jordan wore his black and red kicks, he would be fined $5,000 each time he stepped foot onto on the court. Instead of conforming, Nike decided to embrace the controversy. They paid the fines on Jordan's behalf and used the story as a powerful marketing tool.

_{*Whether or not the NBA actually fined Jordan is still disputed today.}

What happened next was a surprise even to Phil, Nike, and even Sonny Vacaro, the ardent Jordan supporter who push Nike to sponsor the young superstar. Jordan would win the Rookie of the Year, and go on to be looked at as the greatest to ever do it. But the same can be said for his shoes.

Powered by Jordan dual three-peat championship and huge cultural appeal, the Air Jordans sold so well that in 1997 Jordan Brand was officially founded in 1997 as a subsidiary of Nike. In 2023, the Jordan Brand generated $6.6 billion in revenue, which was 12.8% of Nike's total revenue of $51.2 billion for the same year.

Nike would successful run the Jordan playbook of finding the hottest stars, set to dominate their sport, over and over and over again. Ronaldo, Serena, Rafa, LeBron. All Nike.

Another of their most successful athlete partnerships was penned in 1996, with a 20 year golfing phenom by the name of Tiger Woods. A partnership that spanned 27 years, and actually just came to a close earlier this year.

Nike, were really some of the earliest influencer marketers. Through Phil, their creative team, and their athletes, created an allure—similar to the allure of Apple—that they still hold today.

Nike is cool and all the cool kids wear Nike.  

"Phil understands the symbolic power and attractiveness of sports," says A. Michael Spence, dean of the Stanford Graduate School of Business and a Nike board member. "And he helped build that connection in our culture.”

Setbacks and controversy

For all their successes, Phil and Nike and have been without their fair share of controversy. In a positive sense, they have always been able to leverage some controversies into positives, case in point, the Air Jordan 1s colorway controversy. But there have also been a multitude of controversies that have really made people stair down at their feet and think ‘why.’

Good controversy

• Colin Kaepernick campaign (2018). Nike's decision to feature Colin Kaepernick in its ‘Just Do It’ campaign drew both praise and criticism. Sure, it sparked a backlash from some consumers, but it also resonated strongly with it’s younger, more progressive audience. Nike saw a spike in sales and was able to demonstrate a commitment to social issues.

• Nike's environmental and sustainability initiatives. Over the years, Nike has introduced a number initiatives to improve its environmental impact. Their ‘Move to Zero’ campaign for example, aimed at achieving zero carbon and zero waste. These efforts have been positively received overall, and have turned a negative overall sentiment of the brand into a somewhat positive one.

Bad controversy

• Sweatshop labor and poor working conditions (1990s-2000s). Nike has been though a number of controversies large and small over the decades but never more so than when it faced severe criticism for using sweatshop labor in countries like Indonesia and Vietnam.
  
  Reports showed poor working conditions, low wages, and child labor. This lead to global protests and damaging Nike's brand reputation.

The most damming of all was the 1997 Life magazine article by Sydney Schanberg titled: Six Cents an Hour, in which the author travelled to Northern Pakistan to see some of the reported practices first hand.

“It’s an age old practice,” Nike spokeswoman Donna Gibb would say in response to the piece.

“And the process of change is going to take time. Too often well-intentioned human rights groups can cause dramatic negative effects if they scare companies into stopping production and the kids are thrown out onto the street.”

Although the reporting through the 90’s and early 2000’s was jarring, Nike has worked hard since to improve conditions and overall transparency in its supply chain.

Still ‘doing it’ - Nike Today

Nike introduced its ‘Just do it’ slogan in a commercial featuring 80-year-old runner Walt Stack in the year 1988. Nike today, is living that slogan, and is as culturally relevant as any time in the past.

The NFT and web3 craze is be one of the best examples of a bunch of snake oil salesman being fooled by smoke and mirrors in the last century but Nike were at the head of the innovation. In December 2021, Nike acquired RTFKT Studios, a leading brand that leverages cutting-edge innovation to deliver next-generation collectibles that merge culture and gaming.

Nike also established a strong presence in the metaverse. This included creating virtual environments where users can interact with Nike products, participate in virtual events, and even purchase virtual goods. Nike’s total NFT revenue was recently said to be $185M dollars, with the next best brand, Dolce & Gabba, at a paltry $25M.

Whether or not you believe in the future of the Metaverse, the value of NFTs or the general shit-show at the fuck factory that seems to be web3, what this shows is Nike is willing to innovate. It refuses to be left behind.

This is a legacy built behind a waffle iron that Phil Knight and Bill Bowerman used to revolutionise running shoes, and it's still pushing boundaries with every step today.

Phil-osophy

You don’t create a category leading brand without incredible leadership. Which is interesting considering some of the ways Phil lead throughout his long career. For example, Nike had a few part-time sales reps working across the country. One of them, Jeff Johnson, kept sending letters about all sorts of matters. Phil rarely replied.

This is not what they teach you in business school. But you cannot deny that it worked. Let’s take a quick stroll further into the mind of Phil Knight in his own words.

Playbook, how Nike grew

Be an innovator

From the waffle iron, to the metaverse, to power-lacing sneakers, Nike have pushed the boundaries. From its inception, the company sought to develop cutting-edge athletic footwear and apparel.

The introduction of Nike Air technology in 1979 is one game-changing example. Developed by aerospace engineer Frank Rudy, this innovation meant embedding air-filled bags in the soles of shoes to provide cushioning and support to athletes.

Market masterfully

Nike, put simply are one the short list of the greatest advertisers in history. Do a quick Google of ‘greatest advertising campaigns in history’ and you will see the swoosh alongside the like of Apple’s groundbreaking 1984 campaign, De Beers’ a diamond is forever and Red Bull sending Felix Baumgartner skydiving from outer space.

Not only have they been able to come out with some of the great campaign thematics of all time, but they have built a brand that athletes and celebrities want to be a part of.

Expansion and diversification

Nike's origins lie in athletic footwear, but the company has diversified into apparel, equipment, accessories and more. Today Nike is not only synonymous with running and ball sports, but also skateboarding, golf and more. This expansion has been crucial to Nike sustaining its growth long term.

But it’s not only diversifying it’s offering—Nike is geographically diverse—with approximately 59% of the company's total revenue came from outside the United States in 2022. And Nike's acquisition strategy has also played a role in its growth.

_{*What the heck is ‘Greater China’ anyway?}

In 2003, Nike acquired Converse, the iconic footwear brand known for its Chuck Taylor All-Stars. This acquisition meant Nike could diversify its portfolio and reach new customer. Similarly, the acquisition of Hurley in 2002 and the purchase of Umbro in 2008 (later sold in 2012) expanded Nike's presence in the action sports and soccer markets, respectively.

Adapt as necessary

Nike’s knack for adapting to market trends and embracing digital transformation has played an important role in their success. They’ve used tech to enhance customer experiences, streamline operations, and drive innovation.

This evolved into the Nike Training Club and Nike Run Club apps, offering personalised training plans and community features.

Lately, Nike’s all-in on digital transformation through its direct-to-consumer strategy. They’ve poured resources into e-commerce and mobile apps, letting customers shop online to snag exclusive products. The pandemic sped this up, making digital sales a big part of Nike’s revenue. With data analytics and AI, Nike’s nailed personalised marketing and boosted customer engagement.

Protect the value of the brand

The value of Nike lies in its brand. The name, the swoosh, the athletes. But more than anything, it lies in the feeling Nike gives you. The love you subconsciously hold for it. Because of this, Nike works hard to protect the brand. What does protecting the brand look like today: sustainability.

The ‘Move to Zero’ campaign, launched in 2019, underscores this. Move to Zero is Nike's commitment to achieving zero carbon emissions and zero waste. To achieve this goal, Nike has built new and innovative materials and manufacturing processes, like their Flyknit technology, that reduces waste by using a single piece of fabric for the shoe's upper. The company has also increased the use of recycled materials in its products and packaging.

But Nike's sustainability efforts go beyond just product innovation. The company has new initiatives to improve labor practices and working conditions in its supply chain. Nike's transparency reports and partnerships with organisations like the Fair Labor Association reflect its commitment to ethical and responsible business practices.

Without measures like this, the brand would atrophy. And if the brand atrophies, so does revenue and so does Nike overall. This is of the utmost importance for Nike to remain relevent today.

Legacy

Phil Knight, born and bred in rural Portland, Oregon, was a larger-than-life figure. A passionate entrepreneur who worked his way from a lowly shoe salesman to a major shareholder in one of the greatest businesses in modern history. And he did it through passion, resilience, and drive.

Phil’s reign at the top of Nike is not without fault. The business practices employed through Asia being the biggest stain on his resume. But in Phil’s defence; he did not build the system; he simply took part in it.

The thing that matters is how he responded, and Nike have responded by aiming to be leaders in global manufacturing and outsourcing.

Overall, this is the story about a man who took on the world and won. Even if he wasn’t perfect, his legacy is one of enduring impact and transformative innovation.

Fun facts

• Voice history. The ‘Just Do It’ slogan, beyond its cool origin, was first voiced over by none other than actor Shia LaBeouf in a Nike ad.

• Most expensive sneakers. A pair of solid gold OVO x Air Jordans was valued at over $2 million.

• Ben Affleck playing Phil. Hollywood A-Lister Ben Affleck played Phil in a very well put together 2023 film called Air, documenting the Nike and Air Jordan story.

• Nike’s Moon Shoe. One of the first Nike shoes ever made was nicknamed the ‘Moon Shoe’ because of its waffle sole that left tracks similar to those on the moon. Only 12 pairs were ever made.

• MBA thesis insight. The idea that sparked Nike was actually from Phil Knight’s MBA thesis, where he argued that shoes from Japanese factories could compete with German brands.

• Nike Air technology. Nike’s Air technology was inspired by aerospace engineering and features pockets of pressurised air within the shoe's midsole.

Extra reading

• High-Performance Marketing: An Interview with Nike’s Phil Knight - August, 1992

• Shoe Dog, Phil Knight - April, 2016

• The Best Nike Ads Of All Time - July 12, 2023

• A Statistical Analysis of Nike’s Rise to the Top of the Sporting Industry, Investing.com - April, 2024

And that’s it! Hope you enjoyed the story of Phil Night and Nike.

BRAIN FOOD 🧠 

I recently read this eye-opening piece by Becoming Minimalist called The Prosperity Paradox. It explores how we often think more money will make us happier, but in reality, it just shifts our expectations higher.

If you're a curious person, or have though about this before, this is a must-read. It's a quick, thought-provoking dive into our complex relationship with money.

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TOOLS WE USE 🛠️

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