After half a century of leading the pack at Nike, "there is a finish line in sight" for Phil Knight, says the Financial Times. The former middle-distance runner, who founded the sports shoe and clothing giant with his athletics coach, Bill Bowerman, in 1964, is stepping down as chairman. Starting with just $1,200 in the bank, Knight, 77, is worth some $24bn, having built "one of the greatest success stories in the history of North American business", notes Forbes. Knight didn't just sell shoes, he reinvented branding (see below).
Part of the pull of the Nike story, for the innumerable business students who pore over its history, is that it hasn't been an easy jog. Nike lost its footing badly in the 1980s, following a disastrous foray into casual shoes, says the Harvard Business Review. And while the company broke new ground becoming one of the first big US corporations to outsource manufacturing to Asia, its reputation was felled in the mid-1990s by revelations that many Nike products were made in sweatshops using child labour. By his own admission, Knight could never be called an exuberant entrepreneur. Rarely without his sunglasses, he is as "low profile as Nike is famous", says the FT, and admits to shyness. "For me, an extrovert was a person who stared at other people's shoes," he recently observed of his early days in business. He prefers action to talk. Indeed, his whole career "has been the embodiment" of the "just do it" motto.
Raised in Portland, Oregon, the son of a lawyer turned publisher, Knight had early hopes of becoming a newspaperman and took a degree in journalism at the University of Oregon. An "indifferent student", he joined the university's track team, but failed to excel as a runner either, says Stanford Magazine. That made him "the ideal human guinea pig" for the team's legendary coach, Bill Bowerman, who was endlessly tinkering with running shoes. Knight's breakthrough came while he was studying for an MBA at Stanford. He created the blueprint for what became Nike in a class assignment. His plan was to "do to German sports shoes" (then considered world-beaters) "what Japanese cameras did to German cameras".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In 1964, Knight and Bowerman founded Nike's forerunner, Blue Ribbon Sports. Originally focused on importing Japanese "Adidas knock-offs" called Tigers, which Bowerman sold out of the back of his car, they were soon making their own shoes. Bowerman famously used his wife's waffle iron to improve the grip on the sneakers' soles. In 1971 the firm became Nike, after the Greek winged goddess of victory, and paid $35 to commission the "swoosh" logo. The brand came to prominence a year later at the Munich Olympics, caught the imagination of a public just embarking on a jogging craze, and never looked back. It floated in 1980. Knight once observed that the worst thing he could imagine was to sit his grandchildren on his knee and have them ask him "What's a Nike?".
Not much sign of that happening yet.
How Nike reinvented branding
Nike built its reputation as a specialist maker of running shoes, says Geraldine Willigan in the Harvard Business Review. The focus, says Knight, was to make the best shoes possible and get them "on the feet of runners". Despite a reputation as "the consummate marketer", Nike only came to understand the importance of marketing "late in its life", when it was already a $1bn company. The catalyst was a slump in the early 1980s. A change of direction saw Nike ally with individual sports stars with attitude, starting in 1984 with basketball player Michael Jordan. Before long, John McEnroe and Tiger Woods were on the books. Nike continued to pioneer high-tech trainers, but the emphasis had changed. "We used to think that everything started in the lab," says Knight. "Now we realise that everything spins off the consumer."
Knight once proclaimed that "he wasn't in the shoe business, he was in the entertainment business", say Marc Bain and Shelly Banjo in Quartz. That drove "some of the most memorable slogans and advertising campaigns in history". He was never afraid of courting controversy: the famous "just do it" campaign of 1988 featuring 80-year-old runner Walt Stack was originally inspired by the last words of serial killer Gary Gilmore, who was executed by firing squad in 1977.
Nike became "a cultural icon" because "Knight... captured the zeitgeist of US pop culture and married it to sports", says Jackie Krentzman in Stanford Magazine. "He found a way to harness society's worship of heroes and predilection for rebellious figures." In doing so, "he turned athletic footwear into fashion", says Megan Garber in The Atlantic. It's because of Knight that Kanye West has a signature shoe, Dior, Gucci and Chanel have all sent their own sneakers down the runway, and trainers have "solidified their status as status symbols, and even collectors' items". He is the father of "sneakerhead culture".
