The world’s biggest and the most popular sportswear company – NIKE . In just 50 years, one man’s dream of better shoes turned into a global corporation worth over a $100 billion.
What did NIKE had that others didn’t? How come NIKE achieved the spot where it is right now??
The year is 1962 and Phil Knight was just graduated from Stanford. Becoming a successful entrepreneur is a difficult task if you don’t have an idea which can make a bigger impact in this world.
He was a distance runner back in the university. In one of his business classes, he wrote in a paper title:
“Can Japanese sports shoes do the same to German sports shoes that Japanese cameras did to the German cameras?”
He was aware of the fact that Japanese cameras replaced German cameras and was pondering if Japanese shoes could do the same to Puma and Adidas which were domineering in America at that time.
He got so conscious of that idea of bringing Japanese shoes to U.S.A.
He could not find much exposure to Japanese shoes, so he decided to contact the Japanese company in order to import the goods in America. But he had zero experience in it.
As a determined man who created NIKE, we all know he actually did it.
In November 1962, he flew over to Japan like a tourist and just started exploring. In a beautiful city of Kobe, he laid his eyes on a shoe store that caught his eyes.
It belonged to the company called Onitsuka Tiger and the shoes they were producing at that time were of very high quality that Phil got tempted to import them to America.
He proposed to the company to let him import the shoes to America and became the distributor. Surprisingly, the company accepted the offer. He received his shipment of 12 pairs of Tiger shoes in 1963 and he started selling them at every running track he could get into.
Obviously, his strategy was not that scalable, so he approached the right person he knew at that time who was his former coach at the University of Oregon, Bill Bowerman. Bill was one of the famous coaches in America at that time. He had in fact trained multiple Olympic Athletes.
He liked the Tiger shoes so much that he wanted to partner up. Thus, in January 1964, Bill and Phil incorporated Blue Ribbon Sports, each investing $500 into it.
They spent all that money on their first order, which at $3.33 a pair, amounted to 300 pairs of shoes.
The shipment came through in April, 1964 and thanks to Bill’s connections it was sold out by July.
In their first year, BRS sold $8,000 worth of shoes and with that money Phil started hiring salesmen for his company.
In 1965, their revenue had increased to $20,000 and pretty soon they opened their very own store in Santa Monica.
But while Phil was handling the business side of the operation, the actual innovation was
coming from Bill.
He was the guy who single-handedly brought jogging to America.
In 1966, he wrote a book about it that sold over a million copies, and of course his company was among the first to start marketing the Tiger shoes for jogging.
Bowerman was all about innovation and with every new shipment from Onitsuka, he’d cut open a few shoes to see how they were made, and he’d always try to improve them, for example adding to the cushion or using more lightweight materials.
He’d constantly sent his notes to Japan requesting changes; he was effectively designing Onitsuka’s shoes for them.
It was one of Bill’s designs that catapulted BRS into the mainstream: the Cortez, as he
called it, became one of the best-selling shoes in 1968, undoubtedly thanks to the 1968 Olympics, held in Mexico.
Thanks to the Cortez, BRS sold $300,000 worth of shoes in 1969.
But they had a big problem: the Cortez was so successful that they couldn’t keep up
with the demand.
Every new shipment they received sold out faster than the one before, but Onitsuka kept sending them at the same glacial pace.
What Onitsuka were actually doing was satisfying their local demand in Japan first and then sending whatever was left to America.
Phil and Bill knew that to expand they would have to evolve beyond being just a simple
distributor. Then they realized that they held all the cards: the Cortez was Bowerman’s design
so as soon as their contract with Onitsuka expired, they were free to start making it for themselves.
Luckily for them, their contract would end in 1972, just before the Olympics in Munich.
Thus, Phil had plenty of time to prepare for his big move.
In 1971, he started working on the branding: his first employee suggested calling the brand Nike, after the Greek goddess of victory.
Then, Phil needed a logo, so he went to a nearby university, snatched the first graphic design student he could find and told her to make him a logo.
For the impressive sum of $35 he got this: the swoosh.
In hindsight, that was money well spent and with his branding now complete, Phil was ready
for the Olympics.
This time, instead of locking himself into exclusive agreements, Phil established a network of subcontractors across Japan.
With production under his control, Phil could finally spread his wings.
You can see in this graph of Nike’s sales exactly when Phil started importing shoes from his Japanese subcontractors, and yes he started before his contract had even expired in 1971.
From then on, the story of Nike became one of growth.
They became the largest sportswear company in America in 1989 on the back of brilliant marketing like the “Just Do It” campaign and by signing rookie athletes that would eventually become famous across the world!!
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