Founders - #186 Phil Knight (Nike)

Starting point is 00:00:00 I was up before the others, before the birds, before the sun. I drank a cup of coffee, wolfed down a piece of toast, put on my shorts and sweatshirt, and laced up my running shoes. Then I slipped quietly out the back door. I stretched my legs, my hamstrings, my lower back, and groaned as I took the first few steps down the cool road into the fog. Why is it always so hard to get started? There were no cars, no people, no signs of life. I was all alone, the world to myself. That foggy morning, that momentous morning in 1962, I had recently blazed my own trail, back home after seven long years away. It was strange being home again, strange being lashed again by the daily rains. Stranger still was living again with my

Starting point is 00:00:53 parents and twin sisters, sleeping in my childhood bed. Late at night, I'd lie on my back, staring at my college textbooks, my high school trophies, and blue ribbons, thinking, this is me? Still? On paper, I thought, I'm an adult. I graduated from a good college, University of Oregon, earned a master's from a top business school, Stanford, survived a year-long hitch in the U.S. Army. My resume said I was a learned, accomplished soldier, a 24-year-old man in full. So why, I wondered, why do I still feel like a kid? I would have found it difficult to say what or who exactly I was or I might become. Like all of my friends, I wanted to be successful. Unlike my friends, I didn't know what that meant. Money? Maybe. Wife? Kids? House? Sure, if I was lucky. These were the goals I was taught to aspire to, and part of me did aspire to them instinctively. But deep down, I was searching for something else.

Starting point is 00:02:01 Something more. I had an aching sense that our time is short, shorter than we ever know, short as a morning run, and I wanted mine to be meaningful, and purposeful, and creative, and important, above all, different. I wanted to leave a mark on the world. I wanted to win. No, no, that's not right. I simply didn't want to lose. And then it happened. As my heart began to thump, as my lungs expanded like the wings of a bird, as the trees turned to greenish blurs, I saw it all before me. Exactly what I wanted my life to be.

Starting point is 00:02:44 Play. Yes, I thought. That's it. That's the word. The secret of happiness, I'd always suspected, the essence of beauty or truth or all that we ever need to know of either, lay somewhere in that moment when the ball is in midair, when both boxers sense the approach of the bell, when the runner's near the finish line and the crowd rises as one. There's a kind of exuberant clarity in that pulsing half second before winning and losing are decided. I wanted that, whatever that was, to be my life. My daily life. At different times I'd fantasized about becoming a great novelist, a great journalist, a great statesman. But the ultimate dream was always to be a great athlete.

Starting point is 00:03:33 Sadly, fate had made me good, not great. I'd run a track at Oregon, and I'd distinguish myself. But that was that, the end. Now, as I began to clip off one brisk sixth mile after another, I asked myself, what if there was a way, without being an athlete, to feel what athletes feel? To play all the time instead of working? Or else to enjoy work so much that it becomes essentially the same thing. The world was so overrun with war and pain and misery. The daily grind was so exhausting and often unjust. Maybe the only answer I thought was to find some prodigious, improbable dream that seemed worthy, that seemed

Starting point is 00:04:20 fun, that seemed a good fit, and chase it with an athlete's single-minded dedication and purpose. Like it or not, life is a game. Whoever denies that truth, whoever simply refuses to play, gets left on the sidelines. And I didn't want that. More than anything, that was the thing I did not want. Which led, as always, to my crazy idea. Maybe, I thought. Just maybe I need to take one more look at my crazy idea. Maybe my crazy idea just might work? Maybe. No. No, I thought. Running faster, faster. Running as if I were chasing someone and being chased all at the same time. It will work. By God, I'll make it work. No maybes about it. I was suddenly smiling, almost laughing, drenched in sweat, moving as gracefully and effortlessly as I ever had. I saw my crazy idea shining up ahead, and it didn't look all that crazy.

Starting point is 00:05:27 It didn't even look like an idea. It looked like a place. It looked like a person, or some life force that existed long before I did, separate from me, but also a part of me, waiting for me, but also hiding from me. That might sound a little high-flown, a little crazy, but that's how I felt back then. At 24, I did have a crazy idea. And somehow, despite being dizzy with existential angst, and fears about the future, and doubts about myself, as all young men and women in their mid-20s are, I did decide that the world is made up of crazy ideas. History is one long processional of crazy ideas. The things I love most, books, sports, democracy, free enterprise, started as crazy ideas. So that morning in 1962, I told myself, let everyone else blue, and somehow managed to take.

Starting point is 00:06:47 Half a century later, I believe it's the best advice, maybe the only advice, any of us should ever give. That was an excerpt from the book that I'm going to talk to you about today, which is Shoe Dog, a memoir by the creator of Nike, and it was written by Phil Knight. So I originally read this book about four years ago. It was Founders number 10, one of the first books I've ever read for this project. And it's one of my favorite books. It's an absolute fantastic book. And I believe that great books should be reread. They stay the same, but you change. And so now I thought, you know, approaching almost 200 biographies read for this podcast, I should go back and see how the insights in this book have changed given how much I've read since then. And I want to place it into, I want to, I would make

Starting point is 00:07:31 the argument that it's the perfect biography. So there's a lot of ways you can think about different books that we've talked about. So I always say, if people ask me, okay, what's the most inspiring biography? I would say that's the autobiography of the founder of Hyundai. The book is called Born of This Land, My Life Story. That's founders number 117. Chung Ju-young goes from being so poor that he has to eat tree bark to being the richest person in Korea. And I think reading that book and realizing how much he had to endure and go through to succeed gives you strength in your own life. I would say the most insightful biography I've read so far would be The Everything Store. That's founders number 179 and founders number 17.

Starting point is 00:08:11 That has probably the most insights per page out of every other book that I've read so far for the podcast. And then if you were to ask me, okay, if I can only read one of the biographies, which one would it be? I would say, okay, read James Dyson's autobiography, Against the Odds. That's founders number 25. It's a book about determination, perseverance, and stubbornness. It's 250 pages about the value of those traits or applying the value of applying those traits rather to your life's work. But the reason I think the book that I hold in my hand is the perfect biography is because it starts in media res. It moves in chronological order.

Starting point is 00:08:48 Every single chapter covers one year. There's no wasted time on ancestors or any of the parts that you want when you read a biography you want to skip over. There's not too much detail. And it's all about the struggle. It starts with the crazy idea and then it stops at the IPO, the last chapters, him writing as a 75, 76 year old man, all about his life's regrets. And to read this book is to really have a 15 or 20 hour one-sided conversation with one of the greatest entrepreneurs of history. So hopefully as I go through the book today, I'll convince you if you haven't already

Starting point is 00:09:21 read it to read it. And if you have read it, to encourage you to reread it. It's definitely worth it. Let me start 1962. This is the definition of what he kept referring to in the introduction about his crazy idea. And it's the fact that his crazy idea is met with indifference. It was one of my final classes, a seminar on entrepreneurship. I'd written a research paper about shoes, and the paper had evolved from a run-of-the-mill assignment to an all-out obsession. Being a runner, I knew something about running shoes. Being a business buff, I knew that Japanese cameras had made deep cuts into the camera market,

Starting point is 00:09:55 which had once been dominated by Germans. Thus, I argued in my paper that Japanese running shoes might do the same thing. The idea interested me, then inspired me, then captivated me. It seemed so obvious, so simple, so potentially huge. I'd spent weeks and weeks on this paper. I'd moved into the library, devoured everything I could find about importing and exporting, about starting a company. I'd given a formal presentation of the paper to my classmates who reacted with boredom. Not one asked a single question. They greeted my passion and intensity

Starting point is 00:10:36 with sighs and vacant stares. The professor thought my crazy idea had merit. He gave me an A, but that was that. At least that was supposed to be that. I had never really stopped thinking about that paper. So two thoughts popped to mind when I read that. First one was that at least he got an A. If you remember, somewhere back in the 150s, I covered the biography of Fred Smith, the founder of FedEx.

Starting point is 00:11:06 His company also started as a term paper and he got a C. But the second thing I thought of was one of my favorite ideas that I learned from Edwin Land, the founder of Polaroid. I've done, I don't even, what, five books, five or six books on Edwin Land. I've probably done five or six podcasts on him. But anyways, he said something that was very interesting. And he says, the test of an invention is the power of an inventor to push it through in the face of staunch, not opposition, but indifference in society. And a way to reduce the thought or the main point behind Edwin Land's quote is that indifference is your enemy. And we saw the same thing in the presentation that Phil's giving. They didn't hate the idea. They just didn't care about it at all so he goes for that run that changes his life in 1962 he's okay i'm going to pursue the crazy idea he doesn't have a lot of money so he's got

Starting point is 00:11:55 to get uh he's got to get some money he has this idea he's like i'm going to go around the world i'm going to do a trip around the world while i'm on this trip around the world i want to stop in japan try to convince some Japanese shoe manufacturers to let me resell their products. So that is Nike. He doesn't start out with the idea of Nike. The first, his company is called Blue Ribbon. And for the first, I don't know, 10 years, we'll get to it today, of the company's life, he was reselling. No, it was less than 10 years, maybe seven or eight, But he's reselling other people's shoes. And there's a lot of lessons on the dangers of building a business that you don't control,

Starting point is 00:12:29 which has been a main theme throughout the study of the history of entrepreneurship that you and I are doing, right? So he's talking to his dad. And something that his relationship with his dad reminds me of something we learned from Warren Buffett. So the description of his dad right here, He says he also worshipped another secret deity, respectability. He had a beautiful house, beautiful wife, obedient kids. My father enjoyed having these things. But what he really cherished was his friends and neighbors knowing that he had them. He liked being admired. He liked being he liked doing a vigorous. This is such a great. Phil Wright was a fantastic writer. He's still alive, so is.

Starting point is 00:13:09 He liked doing a vigorous backstroke each day in the mainstream. That's a great sentence. Going around the world on a lark, therefore, would simply make no sense to him. It wasn't done. Certainly not by the respectable sons of respectable men. So it was really interesting. There's also data in this book that I wasn't aware of. He said the time he's taking the trip i think 90 he said 90 of americans had never been on an airplane he said the vast majority of people at this point lived and died they were born lived their entire lives and died within 100 miles of where they were born so this idea was like i'm

Starting point is 00:13:41 gonna you know stop at 50 different countries and do all this thing. It seemed rather bizarre, especially to his father, who was really conventional. But the reason I highlight this point, the reason I'm bringing this to your attention, is the fact that he actually encourages his son to go, which is not what Phil expected. He says he said that he had always regretted not traveling more when he was young. And so the note I left myself on this page is that the outer scorecard leads to regrets. And that's this idea that we learned from Warren Buffett, where he compares and contrasts in his biographies, the ones I've read so far for the podcast, the difference between his father and his mother. His mother was a terrible person. She scared him. She had an outer scorecard. She was very much like Phil's dad. Now, Phil and

Starting point is 00:14:27 his dad wind up becoming closer later on in life. So they actually fixed their relationship. I don't think Warren ever fixed his relationship with his mother. But the same thing is like, what will other people think of us? What will other people think of this decision I'm making? Warren's hero was his father. His father had an inner scorecard. Warren obviously has an inner scorecard. I would say most of the people that were studying on the podcast have inner scorecards, which means they decide what is the best decision for my life. And they'll go to like a retirement home and one of the the most common regrets for people that are close to the end of their life is like i wished i lived a life more authentic to myself people that have outer scorecards are they they they're going to be filled with regrets they do not live an authentic life phil knight definitely lived as we'll see today he's a crazy person he definitely lived an authentic life. So his father actually agrees to

Starting point is 00:15:25 do this, to let him go and to give him a little money to do this. So Phil now needs a traveling partner. And he picks most of the people that he knows are athletes because he ran track at Oregon. And that's just his friend group. And so he picks, he recruits this one of her sons named Carter. And there's a great line in the book that I'm going to read to you in a minute, but I left myself on this page so we can all learn a lot from Carter. Carter wasn't your typical jock. He read books, good books, and he was easy to talk to and easy not to talk to. Equally important qualities and a friend and essential and a travel companion.

Starting point is 00:16:03 So he goes to pitch Carter on his ideas. He's like, you know, we're going to go to Tokyo, Cairo, Istanbul, Athens, Jordan. I'm not going to list. There's like 50 countries, for God's sake. But Carter had a really interesting reaction. He laughed in my face when I laid out all the list of places I wanted to see. Mortified, I looked down and began to make apologies. Then Carter, still laughing, said, what a swell idea, Buck. I should tell you, everybody calls Phil Buck. His dad calls him,

Starting point is 00:16:31 that's his nickname. So everybody calls him Buck. I looked up. He wasn't laughing at me. He was laughing with joy, with glee. He was impressed. It took balls to put together an itinerary like that, he said. Balls. He wanted in. Days later, he got the okay from his parents. And this is one of my favorite sentences in the book. Carter never did mess around. See an open shot, take it. That was Carter.

Starting point is 00:16:57 I told myself there was much I could learn from a guy like that as we circled the earth. So the first stop on their trip is Hawaii. They like it so much they decide to stay which is really surprising it's like okay we're gonna go see these places first place we get oh my god this is amazing they rent like a like a little apartment by the beach they wind up getting jobs uh they'd sell encyclopedias door-to-door they wind up selling uh like investments over the phone doing all this other stuff. But eventually feels like, all right, I need to go like we need to like move on with this trip. We can't just stay here. And Carter decides not to continue the trip because he met a girl.

Starting point is 00:17:33 And so now we see Phil is sitting on the beach. He's depressed. And this is the no life myself is keep going. Don't stop. That's the main theme of the book. And that's where I think is one of the main benefit of reading this book is because we see Nike now widely successful, great products, great marketing, you know, multiple. I don't even know what their market cap is. Hundreds of billions of dollars. And yet this book tells us the struggles that Phil had to endure to build a company. And that that advice that he said at the very beginning, keep going, don't stop. It might be the only advice looking back 50

Starting point is 00:18:09 years later that we should ever give. And we see that you have to have control of your mind, though. It's going to play mind games with you, right? So he's saying, the last thing I wanted to do was pack up and return to Oregon, but I couldn't see traveling around the world alone. Go home, a faint inner voice told me. Get a normal job. Be a normal person. Then I heard another faint voice, equally emphatic. No, don't go home. Keep going. Don't stop. So he continues on the trip alone. He goes to Japan, starts meeting with shoe manufacturers. And one of the great things about reading the book is that Phil is very well read and he's constantly learning from every experience, even if it's an abstraction, and then applying it to his own life's journey. And so he's sitting there, he's studying the environment in Japan, winds up reading some about the philosophy, learning from Buddhism and Shinto and all this this other stuff so I'm just going to read a couple sentences to you I marveled at the concept of

Starting point is 00:19:08 Kensho which was enlightenment that comes in a flash a blinding pop I like that I wanted that but first I needed to change my whole approach I was a linear thinker and according to Zen linear thinking is nothing but a delusion, one of the many that is keeping us unhappy. Reality is nonlinear, Zen says. No future, no past, all is now. And I just like that idea, all is now. Can't change the past, it's gone. The future is not here yet. All we have is now. It's one way to tame your mind, I think. So now we see the inner monologue as he goes to what he considers like the biggest meeting of his life. Remember, he's only 24 years old at the time.

Starting point is 00:19:52 So he's got to convince a shoe factory in Japan to supply him shoes. And let me read my note to you before I read this section because it's really interesting what he, even at the very beginning, he always was focused on his goal. And if it meant some levels of discomfort, he didn even at the very beginning, he was just, he always was focused on his goal. And if it meant some levels of discomfort, he didn't really care about that. So it says the satisfaction of achievement is worth the pain endured to get there. Uh, stand for seven hours in a crowded train, question mark, sleep on a mat in a dingy motel, question mark, whatever. I'm unbothered. These are things that he had to do before he gets to this meeting. And he says, everything depended on my rising to this occasion. Everything. If I didn't, if I muff this, I'd be doomed to spend the rest of my day selling encyclopedias

Starting point is 00:20:32 or mutual funds or some other junk I didn't really care about. I'd be a disappointment to my parents, my school, my hometown, myself. I want to pull out something from the meeting. They wind up agreeing to supply him. It takes him like a year before something from the meeting. They wind up agreeing to supply him. It takes them like a year before he gets the shoes. But I thought it was really fascinating because they asked him, they're like, yeah, we want to sell to the United States. Remember, this is shortly after World War II. Japan's in shambles. The book goes into more detail about that. But they asked him, you know, how big do you think this market is? And this is just a reminder, the markets are almost always bigger than you think they are.

Starting point is 00:21:06 They asked me how big I thought the American shoe market was, how big it could be. And I told him, ultimately, it could be as big as $1 billion. I think Nike sold $24 billion. So that's just one company in one year in 2019. Sold $24 billion worth of just shoes, not all the other stuff they sell, too. So it's just really interesting to me. Another thing on the next page, which I love, is he's constantly studying great figures of history. Right. And he'll constantly quote like maxims or aphorisms that he learned from them.

Starting point is 00:21:37 And he'll repeat them throughout the book as it like come to like some kind of crossroad and then lean back on some knowledge that he learned. And he always puts in italics. But he said he's quoting. come to like some kind of crossroad and then lean back on some knowledge uh that he learned and it he always puts in italics but he said um he's he's quoting actually let me pause there he's quoting confucius and it's really about building nike but he complied with so many things he says confucius says the man who moves a mountain begins by carrying away small stones so he secures a contract he's a static he winds up going now he's going to continue the rest of his trip. He's going all over the world. I think he's in the Philippines at this time. But one of the person he studied and constantly reference is General MacArthur. It's funny that I'm talking to you about this today because I just started. I would say it's Dan Carlin. His podcast, Hardcore History, has definitely influenced me a lot. But I was listening last night. I was listening to his episode Supernova in the East, part six. And he winds up referencing last night.

Starting point is 00:22:36 I got to the part where he talks about General MacArthur and Dan was saying, like, this guy's just a crazy person. That he would talk about himself in third person, like extremely talented, but extremely just a crazy person. I guess there's no other way to put it like that. And so he's talking about what he learned, that the fact that he didn't lack for confidence, that he was a brilliant tactician. He's a master motivator. So it continues on and on. But there's a saying that MacArthur said that Phil constantly references as he's building Nike. He says, of course, he was deeply flawed, but he knew that. You were remembered, he said,

Starting point is 00:23:11 for the rules you break. And that's a line he'll constantly reference throughout the story of building Nike. You're remembered for the rules you break. He's moving on. Now he's in, he's standing in front of a 600-year-old Buddha statue. And again, I just want to bring to your attention the constant wondering about his purpose in life. What is my life going to be? The fact that he does not have the answers like everybody. He does not have the answers. He's just wondering about it constantly. Standing before its face, I asked it, why am I here? What is my purpose? I waited. Nothing.

Starting point is 00:23:50 Or else the silence was my answer. And so just a few more examples of these thoughts that he's having. He actually journaled his entire trip around the world, which is why he knows what he was thinking. He talks about regretting, and I'll get to that more later, regretting not doing the same as he was building the company because he says everything like you you have these thoughts that you've we are living through them they're so impactful at the time you're like there's no way i'm gonna forget it you're gonna forget it write it down document it it would be advice from phil knight um so at this point he's talking about work and craft and life's purpose and he says why was we work i so hard i thought and yet the first century rabbi, not even going to try to pronounce this guy's name, said our work is the holiest part of us.

Starting point is 00:24:30 All are proud of their craft. God speaks of his work. How much more should man? Another thought for you this time he's in Italy. And this really is going to echo because a large part of what drove Phil Knight was his hatred for Adidas. And at the time, Adidas is a much larger company. And so in this, he's standing in front of the statue of David. And really, this is a metaphor for how he saw Nike's fight against Goliath, which would be Adidas. I stood before David, shocked at the anger in his eyes. Goliath never had a chance. And this continued. These are not all on the same page. This goes on for a while.

Starting point is 00:25:12 It was really fascinating how he drew these parallels from great people in history and applied it to his own journey. Now he's in France. I was thinking all the while of Patton. Don't tell people how to do things. Tell them what to do and let them surprise you with their results. That sentence right there, he repeats over and over again. That is Phil Knight's management style. Don't tell people what to do. Excuse me. Don't tell people how to do things. Tell them what to do and let them surprise you with the results. Now he's in England. I conjured up the great Churchill. You ask, what is our aim? I can answer in one word it is victory victory at all costs victory in the spite of all terror victory without victory there is no survival so he's back home

Starting point is 00:25:55 he's got a job as an accountant and I guess I should say Nike took blue ribbon which is going to turn into Nike took five years before he could work on it full time, which is crazy. But again, here we find him again, wondering about his life. My other consolation was lunch. He hates his job so much that he looks forward to his lunch day or his lunch break each day at noon and walk down the street to a local travel agency and stand in front of the posters in the window. Switzerland, Tahiti, Moscow, Bali. I'd grab a brochure and leaf through it while eating a peanut butter and jelly sandwich on a bench in the park. I'd ask the pigeons, can you believe it was only a year ago that I was surfing Waikiki?

Starting point is 00:26:38 And then he starts talking about his inner monologue. Are the best moments of my life behind me? Was the trip around the world my peak? That is how I spent 1963, quizzing pigeons and writing letters. Dear Carter, did you ever leave Hawaii? I'm an accountant now and giving some thought to blowing my brains out. Okay, so eventually these shoes arrive. Now we're moved on to 1964. Phil Knight is the main character of the book. There's two, there's a series of other supporting characters. The first one, the second most important character in the book is Bill Bowerman. He's the legendary track coach, his track coach, and the co-founder of Nike. I did an entire podcast based on a book I read from Bill Bowerman. That is Founders

Starting point is 00:27:20 number 153 if you haven't listened to it. No objectivity here. I love this man, and you're going to see why. And Phil loved him too. I sent two pairs to my old track coach at Oregon, Bill Bowerman. I did so without a second thought. Since it was Bowerman, I got to pause here. There is, to be really clear, there is no Nike without Bowerman. Since it was Bowerman who first made me think, really think, about what people put on their feet. Bowerman was a genius coach, a master motivator, a natural leader of young men,

Starting point is 00:27:51 and there was one piece of gear he deemed crucial to their development, shoes. He was obsessed with how human beings are shot. Bowerman was constantly sneaking into our lockers and stealing our footwear. He'd spend days tearing them apart, stitching them back up, then hand them back with some minor modification, which made us either run like deer or bleed. Regardless of the results, he never stopped. He was determined. He always had some new design, some new scheme to make our shoes sleeker, softer, lighter. Especially lighter. And this is a really, really important point.

Starting point is 00:28:31 One ounce sliced off a pair of shoes, he said, is equivalent to 55 pounds over one mile. Lightness, Bowerman believed, directly translated to less burden, which meant more energy, which meant meant more speed and speed equaled winning bowerman didn't like to lose i got it from him thus lightness was his constant goal so i'm going to interrupt myself i have no idea why these things pop into my mind as i read as i like certain things pop into my mind as i read but this this whole obsession that Bowerman has with lightness, lightness as a way to achieve his end goal, which is speed. It is very, it reminded me of, of Ernest Shackleton in that fantastic book, Endurance, because he had that same obsession. Let me read this quote from Endurance, from studying the outcome of past expeditions. And

Starting point is 00:29:20 I think this applies to not only track, only to in the case in in in in um ernest shackleton's case of being an explorer but i think it applies we've seen this over and over again the best founders in the world are obsessed with speed uh from studying the outcome of past expeditions do you believe that those that burden themselves with equipment to meet every contingency had fared much worse than those that had sacrificed total preparedness for speed. So Shackleton saying, I studied the outcome of past expeditions. Optimized for speed over being totally prepared. Speed first.

Starting point is 00:29:57 Bowerman's optimizing for lightness, which helps him achieve speed. All right, let me go back to Bowerman. It is possible that everything, this is so important. It is possible that everything I did in those days was motivated by some deep yearning to impress. All right, let me go back to let me go back to Bowerman. man who gave it less often frugality carried over to every part of the coach's makeup he weighed and hoarded words of praise like uncut diamonds this is exactly what knight does as well he says he thinks part he thinks that might have been like he was trying to copy bowerman where even when somebody did something great he just had a hard time praising people. Going back to Bowerman. I loved Bowerman and feared him. And neither of these impulses, neither of these initial impulses ever went away. So I'm not going to cover it. There's, if you listen to the podcast I did on

Starting point is 00:30:58 the founder of Four Seasons, man, you get to the part where his son dies i just lost i can't i couldn't read that i had to pause and stop because you just think about the devastation that he had to endure so there's a part where the same thing happens um to phil knight i'm not going to cover it his son dies in a scuba diving accident when he's 30 years old and i don't want to start crying on every podcast i mean i have kids so immediately you put yourself in that um in their shoes but anyways the part where he talks about I loved him and feared him and never went away when Bowerman dies Bowerman dies in 1999 and Phil talks about his reaction and he talks about like he had to just heaving and sobbing. And he talks about how athletes, you'll see them like they have to cover their head with towels.

Starting point is 00:31:48 He went to the same way. He had a deep love and respect and fear of Bill Bowerman. I would say outside of his family, Bill Bowerman is probably the most important person in his life ever. Sometimes the fear was less, but this is why you also have to love this guy. Books take you on an emotional rollercoaster, man. Now I'm going to laugh. Sometimes the fear was less, sometimes more. Sometimes it went right down to my shoes,

Starting point is 00:32:13 which he'd probably cobbled with his bare hands. Love and fear. So he talks about, I'm going to skip over a little bit. He talks about he's comparing and contrasting his love and fear of both his father and bill bowerman and he's going to tell us where where bowerman differs a little bit from his own father bowerman didn't give a damn for respectability he possessed a prehistoric strain of maleness a blend of grit and integrity and calcified stubbornness that today is all but extinct. He was a war hero too. Of course he was. The most famous track coach in America, Bowerman, never considered himself a

Starting point is 00:32:55 track coach. He detested being called coach. He thought of track as a means to an end. He called him, this is so fascinating because it's going to relate to so many other ideas we've learned, right? He called himself a professor of competitive responses and his job as he saw it and often described it was to get you ready for struggles and competitions that lay ahead far beyond Oregon. Okay, before I get back into Bowerman, there's a couple of things happening here that I want to tell you. First, this idea we've seen over and over again, how the people that are usually the best at what they do think of themselves as teachers. Warren Buffett is a teacher disguised as an investor. Sol Price, founders number 107, who I would argue is the single most influential retailer to every live.

Starting point is 00:33:44 His ideas were used by the founders of Home Depot, founder of Costco. Founders number 107, who I would argue is the single most influential retailer to ever live. His ideas were used by the founders of Home Depot, founder of Costco. In fact, Jim Sinegal wrote the introduction to that book. That's founders number 107. Jeff Bezos, Sam Walton. Sam Walton says he stole ideas from everybody. Sol Price was the person I stole the most ideas from. Anyways, he said something I never forgot. He says, you train an animal, you teach a person. And so he saw his job as running his company as just

Starting point is 00:34:09 teaching his employees. And we're seeing Bowerman say the same thing where he's like, I'm not a coach, I'm a professor. And think about what Phil just said here, the idea that, hey, my job is not just to have you run track. I'm getting you ready for the struggles and competitions that lay far ahead of Oregon. There's a quote in that book that he did on Founders Number 153. It's called The Story of Oregon's, I think it's called Men of Oregon, The Story of Oregon's Legendary Coach Bill Bowerman and Nike's co-founder. But anyways, it's a quote from Phil Knight. And he says, if you ask where Nike came from, it's going to relate exactly what he just said here.

Starting point is 00:34:49 If you ask where Nike came from, I would say it came from a kid who had a world-class shock administered at age 17 by Bill Bauerman. Not simply the shock, but the way to respond. He attached such honor to not giving up, to doing my utmost. Most kids did not have that adjustment of standards, that introduction to true reality. All right, so back to this book. Despite this lofty mission or perhaps because of it, the facilities at Oregon were spartan. Dank wooden walls, lockers that hadn't been painted in decades. The lockers had no door, just slats to separate your stuff from the next guys.

Starting point is 00:35:26 We hung our clothes on rusty nails. We sometimes ran without socks. Complaining never crossed our minds. We saw our coach as a general, to be obeyed quickly and blindly. In my mind, he was patent with a stopwatch. That is, when he wasn't a god. Like all ancient gods, Bowerman lived on a mountaintop. His majestic ranch sat at the peak high above campus, and when reposing on his private Olympus, he could be vengeful as the gods. One story brought this fact pointedly home. There was a truck driver who often dared to disturb the peace of Bowerman Mountain. He took turns too fast and frequently knocked over Bowerman's mailbox. Bowerman scolded the trucker, threatened to punch him in the nose, but the trucker paid no heed. So Bowerman rigged the mailbox with explosives.

Starting point is 00:36:17 Next time the trucker knocked it over, boom! When the smoke cleared, the trucker found his truck in pieces, its tires reduced to ribbons. He never again touched Bowerman's mailbox. And so now he's driving up to Bowerman Mountain. And this is where they wind up becoming partners. He said, I pulled up to Bowerman's stone fortress and marveled. Bowerman had built it with his bare hands. I wondered how on earth he managed all that backbreaking labor by himself.

Starting point is 00:36:48 The man who moves a mountain begins by carrying away small stones. So there's that quote again. He says, next page, I mulled over Bowerman's eccentric personality, which carried over to everything he did. He always went against the grain. Always. For example, he was the first college coach in America to emphasize rest, to place as much value on recovery as on work. But when he worked you, brother, he worked you. Bowerman's strategy for running the mile was simple. Set a fast pace for

Starting point is 00:37:20 the first two laps, run the third as hard as you can, then triple your speed on the fourth. There was a zen-like quality to the strategy because it was impossible. And yet it worked. Bowerman coached more sub four minute milers than anybody ever. Okay, so his partnership with Bowerman is secured. It's go time. He winds up getting a contract. The company he is reselling shoes for, the shoe is called Tiger. The company is called Anasuka. And they give him exclusive, he's an exclusive distributor of Tiger shoes in the western United States. And his dad, this is where if he listened to the advice that his dad's about to give him, it would cost him $50 billion. He hadn't sent me to Oregon and Stanford to become a door-to-door shoe salesman, he said, jackassing around. That's what he called it. Buck, he said, how long do you think you're going to keep jackassing around with these shoes? I shrugged.

Starting point is 00:38:26 I don't know, Dad. And so while he's having this conversation with his dad, his mom is overhearing and it's not going well. Later in his life, he dedicates a building because at the point he's writing this book, he's giving away like $100 million a year. He's giving away to colleges and all kinds of charities. But he dedicates a building and the plaque at the entrance says mothers are our first coaches. And I think this what happens next is part of the inspiration for that. I shouldn't have been too surprised by my mother's next move when my father accused me of jackassing around. Casually, she opened her purse and took out seven dollars. I'd like to purchase one pair, please, she said, loud enough for him to hear.

Starting point is 00:39:07 And so he talks about the fact that not only she buys them, but she wears them proudly. It never failed to move me, the sight of her standing at the stove or the kitchen sink, cooking dinner or washing dishes in a pair of Japanese running shoes, size six. So now I want to tell you about his early sales strategy, selling them out of his trunk. So you go to where your customers are, and then he has this idea that belief is irresistible, which is fantastic. My sales strategy was simple, and I thought rather brilliant.

Starting point is 00:39:35 After being rejected by a couple of sporting goods stores, they would say, what is the world? The world does not need another track shoe. I drove all over the Pacific Northwest to various track meets. Between races, I'd chat up the coaches, the runners, the fans, and show them my wares. The response was always the same. I couldn't write orders fast enough. Driving back to Portland, I'd puzzle over my sudden success at selling.

Starting point is 00:39:59 I'd been unable to sell encyclopedias, and I'd despise it to boot. I'd been slightly better at selling mutual funds, but I felt dead inside. So why was selling shoes so different? Because I realized it wasn't selling. I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place. And I believed these shoes were better to run in. People sensing my belief wanted some of that belief for themselves.

Starting point is 00:40:33 Belief, I decided. Belief is irresistible. Okay, so he's excited. He's got a partner. He's got a bank. He's got a product. Then he gets a letter in the mail and it's a letter from another guy on the East Coast saying, hey, he sent him a cease and desist letter saying, hey, I have a contract with Onitsuka. Stop selling the shoes. And he's like, what is going on here? And this is this like the very first of many warning signs that if something's important to your business, you have to control it. That's a main lesson that we've learned by studying the history of entrepreneurship. He's at the whims of his manufacturer, right, which is going to take him multiple years to get out from underneath this. And it winds up they try to screw him over, which winds up also counterintuitively being the best thing that ever happened to him. But he gets this letter and he thinks everything is over.

Starting point is 00:41:20 And another main theme of this book is the idea of the entrepreneurial emotional roller coaster. Marc Andreessen has a quote that I think just nails it. And at the time, he's running a startup with his partner, Ben Horowitz. And he talks to Ben. He's like, you know what the best thing about startups is? And Ben's like, what? And this sentence is perfect. The best thing about startups, you only ever experience two emotions, euphoria and terror.

Starting point is 00:41:47 And I find that a lack of sleep enhances them both. So we're going to see constantly as we go through this book, these alternating states of euphoria and terror and nothing in between. So now we're in the terror part. Got this letter. Now he's depressed. I went into a deep funk. I became such a grouch, such poor company that my girlfriend dumped me. Each night I'd sit with my family at dinner, moving my food around on my plate. Then I'd sit with my father staring at the TV. Buck, my father said, you look like someone hit you in the back of the head with a two by four. Snap out of it. But I couldn't. So he takes the drastic step of flying back to Japan and trying to get some resolution of this. The art of competing I learned from track was the art of forgetting. And I now reminded myself of that fact.

Starting point is 00:42:31 You must forget your limits. You must forget your doubts, your pain, your past. You must forget that internal voice screaming, begging, not one more step. And when it's not possible to forget it, you must negotiate with it. Yes, you raise some excellent points, but let's keep going anyway. See how he repeats that? Keep going. Don't stop. Over and over again. Whatever you do, don't stop. I told myself that I needed to summon that old skill quickly or lose. And I could not bear the thought of losing. So he's in the hotel in Japan the night before his meeting and we see more terror. Now there's going to be terror followed immediately by euphoria. Now pay attention to this part because the same experience.

Starting point is 00:43:16 It's interesting how perspective is so important. The same experience he's having he can't enjoy because this is unresolved. Once this is resolved, he has that same experience and it's just the most wonderful thing ever another fitful night i got up several times went to the window i watched the ships in the bay beautiful place i thought too bad all the beauty is beyond me the world is without beauty when you lose and i was about to lose big time so he winds up going the next day meeting meeting with the actual owner, Mr. Onosuka himself. He's a very passionate person, just like Phil is. Without preamble, he launched into a long, passionate monologue. Some time ago, he said he had a vision, a wondrous glimpse of the future.

Starting point is 00:43:58 Everyone in the world will wear athletic shoes all the time. He's saying this in 1960, what year are we in? 1964. Everyone in the world will wear athletic shoes all the time he's saying this in 1960 what year are we in 1964 um everyone in the world wore athletic shoes all the time and they wind up having a connection he says you remind me of myself when i am young he said softly um he gives then he gives the punchline of the meeting is yes all right you can have all the western states now we see terror followed by euphoria i ran all the way back to my hotel halfway there i started skipping then leaping through the air like a dancer i stopped at a railing and looked out on the bay none of its beauty was lost on me now so he decides before he leaves he's going to climb mount fuji this is one of my favorite quotes in the book uh he's reading the guidebook on mount

Starting point is 00:44:41 fuji uh there are many ways down the mountain, according to my guidebook, but only one way up. Life lesson in that, I thought. And another life lesson from the same experience. Unlike the climb up, the climb down took no effort and no time. Okay, so now I got to... This is the third most important character in the book after Bowerman and Knight, and that is full-time employee number one. He's going to start off as part-time employee number two, and he's going to be full-time

Starting point is 00:45:14 employee number one. And that's Jeff Johnson, probably the greatest full-time, first full-time employee you could ever have. He was absolutely obsessed with running. They knew each other. I think they were on the same track team. They went to bumping into each other at a track meet when Phil's trying to sell his shoes. And eventually he offers, he's like, hey, do you want to come work for me? So he says he wrote right back. He wrote back right away, accepting the offer. And then the

Starting point is 00:45:41 letters didn't stop. On the contrary, they increased. In length and number. At first they were two pages, then four, then eight. At first they came every few days. Then they came faster and faster, tumbling almost daily through the mail slot like a waterfall. And I wondered what in God's name I had done in hiring this guy. I liked his energy, of course, and it was hard to fault his enthusiasm. But I began to worry that he might have too much of each. With the 20th letter, or the 25th, I began to worry that the man might

Starting point is 00:46:11 be unhinged. I wondered if he was ever going to run out of things he urgently needed to tell me, or ask me. I wondered if he was ever going to run out of stamps. Every time a thought crossed Johnson's mind, seemingly, he wrote it down and stuck it in an envelope. He wrote to tell me how many tigers he'd sold that week. He's extremely good at what he does, though. He wrote to tell me how many tigers he'd sold that day. He wrote to tell me who warned tigers at which high school meet and what place they finished. He wrote to suggest that we open a new retail store in Los Angeles.

Starting point is 00:46:39 He wrote to tell me that he was considering placing ads in running magazines and what did I think. He wrote to inform me that he had placed those ads in running magazines and the response was good. He wrote to ask me why I hadn't answered any of his previous letters. He wrote to plead for encouragement. He wrote to complain that I hadn't responded to the previous plea for encouragement. I always meant to answer Johnson's letters, but before I got around to it, there was always another one waiting. He wrote to say that he quit his job. He'd always hated it. He wrote again that now he understood himself and his destiny. Social work wasn't it. He was put on this earth to fix people's problems. Excuse me, he wasn't put on this earth to fix people's problems. He preferred to focus on their feet. And this is the most

Starting point is 00:47:19 important part of this entire section that I'm reading to. In his heart of hearts, Johnson believed that runners are God's chosen, that running done right in the correct spirit and with the proper form is a mystical exercise, no less than meditation or prayer. And thus he felt called to help runners reach their nirvana. I'm going to pause in the middle of this. What did we learn from Jeff Bezos? You can be a missionary or a mercenary, and you can hire missionaries or mercenaries. Always pick the missionaries. Johnson is a missionary.

Starting point is 00:47:54 I've been around runners much of my life, but this kind of dewy romanticism was something I'd never encountered before. Not even Bowerman was as pious about the sport as Blue Ribbon's part-time employee number two, part-time employee number one is his sister, Phil Knight's sister, hoping I was like answering letters and admin work. In fact, in 1965, this was really surprising to me. In fact, in 1965, running wasn't even a sport. It wasn't popular. It wasn't unpopular. It just was. To go out for

Starting point is 00:48:23 a three-mile run was something weirdos did, presumably to burn off manic energy. Running for pleasure, running for exercise, running for endorphins, running to live better and longer, these things were unheard of at the time. People often went out of their way to mock runners. Drivers would, this is so crazy to me, drivers would slow down and honk their horns. Get a horse, they'd yell, throwing a beer or soda at the runner's head. Johnson had been drenched by many a Pepsi. He wanted to change all this. Above all, Johnson wanted to make a living doing it, which was next to impossible in 1965. In me, in Blue Ribbon, he thought he saw a way. I did everything I could to discourage Johnson

Starting point is 00:49:04 from thinking like this. At every turn, I'd try to dampen his enthusiasm for me and my company. Besides not writing back, I never phoned, never visited, never invited him to Oregon. I also never missed an opportunity to tell him the unvarnished truth. Though our growth has been good, I owe the bank $11,000. Cash flow is negative. He wrote back immediately asking if he could work for me full time. I shook my head. I tell the man Blue Ribbon is sinking like the Titanic, and he responds by begging for a berth in first class.

Starting point is 00:49:36 So in the late summer of 1965, I wrote and accepted Johnson's offer to become the first full-time employee of Blue Ribbon. So let's go back to Phil Knight's main asset this time. And this fact that you have Bowerman running all these experiments, completely obsessed with how people are shod. He's sending, Bowerman's taking notes on the Tigers and sending them to Japan. And sometimes they don't respond. And so it says, Bowerman wasn't me. He didn't take rejection at heart. Like Johnson, when his letters went unanswered bond bowerman

Starting point is 00:50:05 simply wrote more nor did he flag in his experiments he continued to tear apart tigers continued to use the young man on his track team as lab mice bowerman would note how the arches held up how the soles gripped the cylinders how the toes pinched in the instep then he'd airmail his notes and findings to j. He then handed these experimental shoes so they would do some updates and then he'd use them again. The updated product line, he would test it with his runners at Oregon. He then handed these experimental shoes out to all his runners who used them to crush the competition. I once asked him how he fit everything into a 24 hour day coaching, traveling, experimenting, raising a family. He grunted as if to say it's nothing. Then he told me on top of all everything else, he was also writing a book about jogging.

Starting point is 00:50:56 He said gruffly. So Phil's like, who the hell is going to read a book about jogging? Wines are selling over a million copies. So the next thing i want to tell you is really interesting this is on he's his the influence of historical figures on his management style i look back back now and wonder if i was truly being myself or if i was emulating bowerman or my father or both or was i adopting their man of few words demeanor was i maybe modeling all the men I admired? At the time, I was reading everything I could get my hands on about generals, samurai, along with the biographies of my three main heroes, Churchill, Kennedy, and Tolstoy. I had no love of violence, but I was fascinated by leadership, or lack thereof, under extreme conditions. War is the most extreme of conditions.

Starting point is 00:51:44 Business has its warlike parallels. Someone once said that business is war without the bullets, and I tended to agree. I wasn't that unique. Throughout history, men have looked to the warrior for a model of Hemingway's cardinal virtue, which he's going to call pressurized grace. So grace under pressure. One lesson I took from all my homeschooling about heroes was that they didn't say much. None was a blabbermouth, none micromanaged. Don't tell people how to do things. Tell them what to do and let them surprise you with their results. He's going to apply this to what his management of Johnson. So I didn't answer Johnson and I didn't pester

Starting point is 00:52:20 him. Having told him what to do, I hoped that he would surprise me and he would definitely surprise him. One of the ideas, we just went through this. Cesar Ritz, August Escoffier did what Johnson's doing here and so did Izzy Sharp, founder of Four Seasons. This is just freshness on my mind.

Starting point is 00:52:38 This idea that you constantly keep a catalog of customer behavior. This is what Johnson's doing. Each new customer got his own index card, and each index card contained the customer's personal information, shoe size, and shoe preferences. This database enabled Johnson to keep in touch with all of his customers at all times and to keep them all feeling special. He sent them Christmas cards. He sent them birthday cards. He sent them notes of congratulations after they completed a big race or marathon.

Starting point is 00:53:02 Whenever I got a letter from Johnson, I knew it was one of the dozens he'd carried down to the mailbox that day. He had hundreds and hundreds and hundreds of customer correspondence all along the spectrum of humanity, from high school track stars to octogenarian weekend joggers. Many, upon pulling yet another Johnson letter from their mailboxes, must have thought the same thing I did. Where does the guy find the time? Most wrote him back.

Starting point is 00:53:23 They'd tell him about their lives, their troubles, their injuries, and Johnson would lavishly console, sympathize, and advise, especially about injuries. Few in the 1960s knew the first thing about running injuries or sports injuries in general, and so Johnson's letters were often filled with information that was impossible to find anywhere else. Johnson then began aggregating customer feedback,

Starting point is 00:53:42 using it to create new design sketches. One man, for instance, complained that Tiger's didn't have enough cushion. He wanted to run the Boston Marathon, but didn't think the shoe would last for 26 miles. So this is the level of detail. Really, this is the main point of just like how if you love what you do, you're going to care. Not only are you going to care about it more than anybody else, it's hard for people to compete with you, but you're going to be obsessed with the details. So Johnson hired a local cobbler to graph rubber shoes from a pair of shower shoes into a pair of Nike, or excuse me, Nike, into a pair of Tiger flats. Voila! Johnson's Frankenstein flat had space age, full length, midsole cushioning,

Starting point is 00:54:17 which is today standard, but at the time didn't exist. Johnson's customer posted a personal best in Boston. So Johnson winds up convincing Phil to open the very first showroom. He runs, Johnson runs it in Santa Monica. And this section is going to remind me about a quote from Steve Jobs, which I'll get to in one second. In all the world, there had never been such a sanctuary for runners. A place that didn't just sell them shoes, but celebrated them and their shoes. Johnson, the aspiring cult leader of runners, finally had his church.

Starting point is 00:54:49 Services were Monday through Saturday, 9 to 6. There's a great speech that's available on YouTube. It's Steve Jobs right after he came back to Apple in 1997, and he's unveiling Here's to the Crazy Ones. He's talking about how marketing is communication how you need a it's a busy world we have a limited time to tell people what to tell people like what the important thing is is about us and our company right and he talks about the greatest marketing company of all time is nike's like they don't even their ads don't talk about their product they celebrate great athletes so he says nike's ads don't talk about their products they celebrate

Starting point is 00:55:23 great athletes we are going to do the same. And so in that ad, they celebrate great people, Einstein, Dylan, Martin Luther King, John Lennon, Thomas Edison, Muhammad Ali, just on and on. There's a bunch of people in there. So I just love that idea that Steve noticed what Nike was doing, noted how effective it was, and then adopted that same idea for his company. I'm fast forwarding the story. His contract's up up he wants to see if they'll renew it again he's constantly thought the whole book he's constantly worried that he's building on top of sand is the way i would think about it because he does not have the control um that his contract would not be renewed and then so he has to fake it till he makes it they're like well we don't know if we're going to give you the contract like we the east coast is really

Starting point is 00:56:04 important you don't have offices there he's like yes do. He didn't. So he winds up getting offices there. But basically, he just faked it till he made it. I walked back into the hotel and rights for the United States. He gave me a three-year contract. I tried to be nonchalant as I signed the papers and placed an order for 5,000 more shoes, which would cost $20,000 I didn't have. They said they'd ship them to my East Coast office, which I also didn't have, and I promised them I would wire them the exact address. I think an important takeaway from the book is just how tenuous the early days of nike was and i would say probably the early days of any company five years into the company still has no money uh the witchers brought the check and i told woodle he's so he's had a there's another person that was a track star wound up having a freak accident winds up getting paralyzed uh he's in a wheelchair he's to be one of the first employees of

Starting point is 00:57:05 Nike, one of the most important employees of Nike. So they're having like lunch or something, or maybe breakfast. And this is like their job interview. The check came and I told Woodo gladly that lunch was on me. I pulled out my wallet and found it was empty. I asked Blue Ribbon's full-time employee number four if he could float me just till payday. So around this time, Bowman is doing all kinds of innovations in shoes, some of which are patentable. That comes later. But they wind up wanting to name a shoe the Aztec.

Starting point is 00:57:36 And because they try to name the shoe, Adidas has something called like the Azteca Gold. So Adidas sues them. And this is, you know, Adidas is one of the main motivating factors in Phil Knight's drive. He hated the fact that they were bigger and better and could kick him around. But I just want to read the story because Bowerman's hilarious. I was aggravated.

Starting point is 00:57:58 I drove up to the mountain to Bowerman's house to talk it over. We sat on the porch looking down at the river. He took off his ball cap, put it on again, rubbed his face. Who was that guy that kicked the shit out of the Aztecs, he asked. Cortez, I said. He grunted. Okay, let's call the shoe Cortez. I was developing an unhealthy contempt for Adidas.

Starting point is 00:58:16 Or maybe it was healthy. That one German company had dominated the shoe market for a couple of decades and they possessed all the arrogance of unchallenged dominance. So I actually covered, on Founders number 10 109 it's a book called sneaker wars it's about the enemy brothers so that one brother founded adidas the other brother founded puma and they hated each other i didn't really like the the brother that that founded puma but i thought the founder of adidas adi dosler he's an obsessive he's a genius he is worth time studying for sure and part of that infighting caused the family infighting that distracted Adidas and actually opened the lane

Starting point is 00:58:54 for Phil Knight and Nike to occupy which is a lot of lessons in there too so if you're interested the book's interesting but you can also listen to the podcast of course it's possible they weren't arrogant at all and that to motivate myself I needed to see them as a monster in any event i despised them i was tired of looking up every day and seeing them far far ahead i couldn't bear the thought that it was my that it was my fate to do so forever being legally checked by them irritated me to no end it also drove me hard so around this time they wound up getting their first office he had been running things out of his parents house then he got an apartment and ran things out of there and he's okay now we're gonna have our first office i love reading descriptions of companies first offices it

Starting point is 00:59:33 wasn't much a plain old workspace with high ceilings and high windows several of which were broken meaning the room was a constant brisk 50 degrees right next door was a rock was a tavern the pink bucket and every day at 4 p.m promptly the jukebox would kick in the walls were so thin you could hear the first record drop and feel every thumping note thereafter but the rent was cheap we couldn't we couldn't afford to fix the broken glass uh we couldn't afford to fix the broken glass in the windows so on really cold days we just wore sweaters and then i love what he says here because he realizes he is a crazy person as i gradually move my inventory out of my apartment into my new office the thought crossed my mind that it might make more sense just to give up the apartment altogether just move into

Starting point is 01:00:20 the office since i'd basically be living there anyway. When I wasn't at Price Waterhouse, this is where he's an accountant, making the rent, I'd be at Blue Ribbon and vice versa. I could shower at the gym. But I told myself that living in your office is the act of a crazy person. And then I got a letter from Johnson saying that he was living in his new office. Okay, so let me give you, there's a lot happening on this page. Let me give you an update to what his schedule is like. This is now five years into the company. I was putting in six days a week at Price Waterhouse, spending early mornings and late nights and all weekends and vacations at Blue Ribbon. No friends, no exercise, no social life, and wholly content.

Starting point is 01:01:02 My life was out of balance, sure, but I didn't care. In fact, I wanted even more imbalance or a different kind of imbalance. I wanted to dedicate every minute of every day to blue ribbon. I'd never been. OK, so let me I'm going to read the whole section. I'll finish reading it and I'll tell you my my interpretation. I'd never I've never been a multitasker and I didn't see any reason to start now. I wanted to be present always. I wanted to focus constantly on the one task that really mattered. If my life was to be all work and no play, I wanted my work to be play. I wanted to quit Pricewaterhouse. Not that I hated it. It just wasn't me. I wanted what everyone wants to be me full-time but it wasn't possible blue

Starting point is 01:01:48 ribbon simply couldn't support me though the company was on track to double sales for a fifth straight year it still couldn't justify a salary for its co-founder so i decided to compromise find a different day job one that would pay my bills, but require fewer hours, leaving me more time to my passion. This is when he decides to become a, instead of being an accountant, to teach accounting at, I think, Portland State University. So before I move on to the next page, I'll just read my notes to you. So many lessons in just a few paragraphs. Find what you love to do and no one can keep up. And I always think of the way to find that is, this is a quote from

Starting point is 01:02:25 Naval Ravikant. And he says, what feels like play to you, but looks like work to others. Another note, no multitasking, focus on the most important task. And the end goal should be to be yourself full time, which I love that sentence. I want what everyone wants to be me full time, which I love that sentence. I want it what everyone wants to be me full time. So he tells his dad this decision and we're going to see, you know, he's different between inner scorecard and outer scorecard. He stared. I'm sorry. This is his boss first. His boss and his dad react the same way. So he tells him I'm quitting. He stared. I'd gone off script way off. Why the hell would you do something like that i then told my father uh he was pretty pissed i was still jackassing around with shoes he said teaching at portland state was downright disrespectful disrespectful what am i going to tell my friends so out outer scorecard this is this is how phil about this. I was following a path that felt like my path.

Starting point is 01:03:26 And though I wasn't sure where it would lead, I was ready to find out. Inner scorecard. And he's constantly comparing and contrasting the way he felt with the way outsiders did. To outsiders, nothing he's doing is making sense. But this company was his soul. I confess that Blue Rib ribbon was tenuous the whole thing might go bust any day but i still couldn't see myself doing anything else my little shoe company was a living breathing thing which i had created from nothing i breathed life into it

Starting point is 01:03:57 nurtured it through illness brought it back several times from the dead and now i wanted needed to see it stand on its own feet and go out into the world. I told her, he's on a date talking about this, I told her flat out I didn't want to work for someone else. I wanted to build something that was my own. Something I could point to and say I made that. It was the only way I saw to make life meaningful. Skipping ahead. So I was wrong. I think I said it took five years before he could work on a full time. Seven years.

Starting point is 01:04:29 It was seven years. Rising sales enabled. This is 1969. Rising sales enabled me to hire more and more reps. Most were ex-runners and eccentrics, as only ex-runners can be. But when it came to selling, they were all business. This is also important, too, because all the people he was hiring, he's not paying a salary. It's all commissioned salesmen. Because they were. This is also important too, because all the people he's hiring, he's not paying a salary. It's all commissioned salesmen. This is not very different. It made me think of, we did that book on Bill Gates, the early days of Microsoft. A lot of people would

Starting point is 01:04:53 be surprised. The first 30 employees of Microsoft, 28 programmers, one secretary and Bill. And Bill spent almost all his time on sales. So it's almost like we have Phil doing everything here, and then he's got a bunch of people selling the product. Because they were inspired by what they were trying to do, and because they worked solely on commission, they were burning up the roads, hitting every high school and college track meet within a thousand mile radius. And their extraordinary efforts were boosting our numbers even more. I decided that Blue Ribbon was now doing well enough to justify a salary for its founder. Right before my 31st birthday, I made the bold move. So he quits his teaching job and I went full time at my company. And just pause and think about that.

Starting point is 01:05:34 How many people would have given up before that? He's spending every free minute, he's working full time, every free minute he has on his business for seven years before he can work on it full time. That's amazing and inspiring. All right, let's go to inside of his personality. He's a loner and an introvert that's obsessed with making his company survive. And he's super competitive. So he's talking about he got married, his wife's understanding who he is. She was learning that I spent a fair portion of each day lost in my own thoughts, tumbling down mental wormholes, trying to solve some problem or construct some plan. I often didn't hear what she said, and if I did hear, I didn't remember it minutes later. She was learning that I was absent-minded, that I would drive to the grocery store and come home

Starting point is 01:06:18 empty-handed without the one item she asked me to buy because all the way there and all the way back I'd been puzzling over the latest bank crisis or the most recent shipping delay. She was learning that I didn't like to lose at anything. That losing for me was a special form of agony. I was determined to win. And around this time, even though he just started working there full time, I'm not skipping over anything. He is riddled with self-doubt and again, oscillating back between euphoria and terror. And this is going to work. Oh my God, this is the stupidest thing ever. Oh my God, this is the best idea ever. No, I'm really crazy. It's this entrepreneurial, emotional rollercoaster that is present in all these biographies. They all have periods of this

Starting point is 01:07:02 intense, intense self-doubt. Was it even feasible to run a startup company while starting a family? Should I go back to accounting or teaching or something more stable? Leaning back every night in my recliner, I would stare at the ceiling. I tried to settle myself. I told myself, life is growth. You grow or you die. And so why is he going crazy at this particular moment because the bank is about to cut him off he has to put up his house as collateral an also interesting point that i think is really instructive on human nature is the things that we work hardest for things that we desire the most things that we're looking to sacrifice the most for are also the things that we get the most

Starting point is 01:07:45 joy from. And this is just great writing. This is what I mentioned earlier about documenting your life, that you'll think you remember everything, but you won't. So he says, fantastic, fantastic writing here. I struggle to remember. I close my eyes and think back. But so many precious moments from those nights are gone forever. Numberless conversations, breathless laughing fits, declarations, revelations, confidences. They've all fallen into the sofa cushions of time. I remember only that we always sat up half the night cataloging the past, mapping out the future. I remember that we took turns describing what our little company was and what it might be and what it must never be. How I wish on just one of those nights I'd had a tape recorder or kept a journal.

Starting point is 01:08:35 So now we go back to another thing that just keeps repeating over and over again. Every few years his contract's up. He's got to figure out, okay, am I going to get the contract? Am I not? I've built up this entire company, but I'm still selling other people's products. And so this is euphoria at a contract renewal followed by terror. I was relieved to have a new contract, but I returned to Oregon feeling troubled, anxious, more so at any time in the last eight years. Sure, my briefcase had held or held a grantee that Onisuka would supply me with shoes for the next three years.

Starting point is 01:09:06 But why were they refusing to extend beyond three? I was skeptical, but there was nothing I could do. I was at their mercy. I had no leverage. And so getting fired, which is essentially what they do, what he what happens, they're trying to cancel his contract and sign contracts with other retailers. Winds up being, he doesn't know this time, forces him to go all in on Nike, which is one of the best things that ever happened to him. Reminds me of the famous Steve Jobs commencement address. He says, I didn't see it then, but it turned out getting fired from Apple was the best thing that could have ever happened to me. Phil Knight and Steve Jobs are going to have the same experience or a similar experience. I guess he didn't get fired from the company. Phil didn't get fired from the company he founded.

Starting point is 01:09:52 The entire history, early history of Nike, he never has enough money. His MO is any money we have, buy more shoes because the demand for shoes is always larger than the supply we have. So we're not and the banks hated this. There's no venture capital at the time for companies like his. And so they're constantly saying, no, leave the cash in the bank account. He's like, I'm not leaving the cash in the bank account. And so he would lose banks and he got cut off several times. So at this point, banks are not lending him any money. Investors are not interested. And so he tries to do a small IPO and no one buys. And so now we have more mind games. Ultimately, we withdrew the offering. It was hum interested. And so he tries to do a small IPO and no one buys. And so now we have more mind games. Ultimately, we withdrew the offering. It was humiliation. And in its wake, I had many heated

Starting point is 01:10:30 conversations with myself. I blame the shaky economy. I blame Vietnam. But first and foremost, I blame myself. I'd overvalued Blue Ribbon. I'd overvalued my life's work. More than once over my first cup of coffee in the morning, or maybe while I was trying to fall asleep at night, I'd tell myself, this is the mind games. This is so important. Maybe I'm a fool. Maybe this whole damn shoe thing is a fool's errand. Maybe, I thought. Maybe. So he winds up scrounging some money together. But here, more mind games. Another sigh of relief, followed by a tightening in the chest. What would I do the next time?

Starting point is 01:11:13 And the next, I needed cash. I spent most of every day thinking about liquidity, talking about liquidity, looking to the heavens and pleading for liquidity. And this is where he feels is one of his lowest moments. One of his fourth employee, Woodle, comes in, knows his boss is just distraught, worried he's going to go out of business. And again, this is something that happens. I know I'm repeating myself, but it's so important. If you read the book, you'll know.

Starting point is 01:11:40 Dozens, hundreds of times, he's just convinced that it's all going to end. And he's just ratt that it's all going to end. And he's just rattled with nerves and sick and just, there is a lot of struggle in building the foundation of Nike. With nowhere else to turn, with no other options, I was sitting at my desk one day staring out the window. Woodle came in. He said that his parents wanted to loan me $5,000 and they wouldn't take no for an answer. He said I should drive to his house and collect the check from his folks. Days later, I did something beyond imagining, something I didn't think myself capable of doing. I drove to Woodles' house and asked for the check. I knew the Woodles weren't well off.

Starting point is 01:12:17 I knew that with their son's medical bills, they were scuffling about more than I was. This $5,000 was their life savings. I knew that, but I was wrong. His parents had a little bit more and they asked if I needed that too. And I said, yes. And they gave me their last $3,000, draining their savings down to zero. How I wished I could put that check in my desk drawer and not cash it. But I couldn't. I wouldn't. On the way out the door, I stopped and I asked them, Why are you doing this? Because, Wardle's mother said,

Starting point is 01:12:56 If you can't trust the company your son is working for, then who can you trust? Keep going, I told myself. Don't stop. So he's embarrassed, he's devastated, but he's got to do everything he can for his company to survive. There's a happy ending in that story that $8,000 on the day of the IPO makes the Woodles $1.6 million. So his distributor comes and meets him in Oregonregon winds up lecturing about how bad his sales are which isn't true he's they're growing rapidly but he's using as an excuse to break the contract and to go for the distributors he gets up and goes to the bathroom the distributor and phil knight

Starting point is 01:13:37 does something he never thought he would do he steals documents out of his briefcase so he says i had the strangest thought i had volunteered with with the Boy Scouts, and now I was stealing documents from another man's briefcase. I was headed down a dark path, no telling where it might lead. So they wind up, the guy leaves, him and Woodle conference together, and they see the evidence in black and white. So he said, I held up the folder. I stole this from his briefcase. You did what? Woodle said.

Starting point is 01:14:05 He started to act appalled, but then he was just as curious as I was about the folder's contents. Together, we opened it and laid it on the desk and found that it contained a list of 18 athletic shoe distributors across the United States and a schedule of appointments with half of them. So there it was in black and white. I was outraged, of course, but mostly hurt. For seven years, we devoted ourselves to Tiger Shoes. We introduced them to America. We reinvented the line. Bowerman and Johnson had shown them how to make a better shoe,

Starting point is 01:14:33 and their designs were now foundational, setting sales records, changing the face of the industry. And this is how we were being repaid. And so a lot of things are happening at the same time. So his wholesaler is trying to replace him. His bank has just terminated his account. And he's now back to, what am I going to do now? The company, my company, born from nothing and now finishing 1971 with sales of $1.3 million, was on life support. So at this point, there's a lot of these companies that are popping up on the west coast of the United States

Starting point is 01:15:11 called Japanese trading companies, and they're willing to extend credit. They understand the manufacturing base of Japan. They understand his sales. So they wind up saving his ass. Without this Japanese trading company, there would be no Nike. And he talks about that later on in the book as well. So before this falling out with his manufacturer, he decides they're going around and trying to make their own shoe, which this is what they're eventually going to call Nike.

Starting point is 01:15:36 And I just want to bring to your attention that when they picked the name, I thought it was fascinating. I told you a few weeks ago Four Seasons was almost called Thunderbird, I think. So Nike was almost called Falcon. And then our Dimension 6, terrible names. Woodrow wheeled into my office. Time's up, he said. I rubbed my eyes. I know. What's it going to be?

Starting point is 01:15:56 I don't know. There is one more suggestion. From who? Johnson phoned first thing this morning. Of course, it's Johnson. And apparently a new name came to him in a dream last night. He says he sat upright in bed in the middle of the night and saw the name before him. What is it?

Starting point is 01:16:13 Nike. Huh? Nike. I wrote it on a yellow legal pad. The Greek goddess of victory. I like that Nike was the goddess of victory. What's more important, I thought, than know. I find that very, very fascinating. So they need money. They're they're getting some money.

Starting point is 01:16:48 They have a new bank. There's a little bit of credit there. They have the Japanese trading company. They're sitting second on their loan. So essentially like endorsing the loans for them, which is really helpful and loaning the money. And so they try to do this thing called a debenture. And really, it's good that they're raising a little bit of money here um because he fights wanting to he mentions it maybe a dozen times in the book that he didn't want ipo that he

Starting point is 01:17:12 had ipo but uh this is really on the fact that if you can find true friendship it's one of life's greatest joys we announced in june 1971 that blue river will be offering 200 000 shares of debentures at one dollar per and this time the shares sold fast. One of the first to buy was my friend Kale who didn't hesitate to cut a check for $10,000. Buck he said I was there at the start and I'll be there at the bitter end. And this is a little bit about where the name of the book comes from and a reminder that passion can make anything interesting. Shoe dogs were people who devoted themselves wholly to the making, selling, buying, or designing of shoes. Lifers used the phrase cheerfully to describe other lifers, men and women who had toiled so long and so hard in the shoe trade

Starting point is 01:17:53 that they thought and talked about nothing else. It was an all-consuming mania, a recognizable psychological disorder to care so much about insoles and outsoles, linings and welts, rivets and vamps. But I understood. The average person takes 7,500 steps a day, 274 million steps over the course of a long life, the equivalent of six times around the globe. Shoe dogs, it seemed to me, simply wanted to be part of that journey. Shoes were their way of connecting with humanity. What better way of connecting, shoe dogs thought, than by refining the hinge that joins each person to the world's surface.

Starting point is 01:18:36 And again, that's just fantastic writing. And more fantastic writing describing all of the... Bowerman is doing countless different experiments. He invents the waffle trainer, starts getting all these patents. And this is a description of how important he was to Nike. I look back over the decades and see him toiling in his workshop, Mrs. Bowerman carefully helping, and I get goosebumps. He was Edison in Menlo Park, Da Vinci in Florence,

Starting point is 01:19:01 Tesla in Wardenclyffe, divinely inspired. I wonder if he knew, if he had any clue, that he was the Daedalus of sneakers and he was making history, remaking an industry, transforming the way athletes would run and stop and jump for generations. I wonder if he could conceive in that moment all that he'd done and all that would follow. I know I couldn't. And that idea that he says the Daedalus of sneakers, I had to look that up. In Greek mythology, Daedalus was a skillful architect

Starting point is 01:19:31 and craftsman seen as a symbol of wisdom, knowledge, and power. And so they wind up getting cut off by the manufacturer. They sue their manufacturer in the United States. The manufacturer sues them in Japan. And really, this might be my favorite part of the book. Might be. It's the birth of Nike. And what he does here is just, it's just perfect. So he's calling an all hands meeting and he says,

Starting point is 01:19:57 there were about 30 people there. I expected to be nervous. They expected me to be nervous. On any different day, under any other circumstances, I would have been. For some reason, however, I felt weirdly at peace. I laid out the situation we faced. We've come, folks, to a crossroads. Yesterday, our main supplier cut us off. I let that sink in. I watched everyone's jaw drop. We're completely on our own. We're set adrift. We have this new line, Nike, and that's all we've got. I looked down at the table. Everyone was sinking, slumping. I looked at Johnson. He was staring at the papers before him, and there was something in his face, some quality I had never seen there before. Surrender.

Starting point is 01:20:46 Like everyone else in the room, he was giving up. The nation's economy was in the tank. A recession was underway. Gas lines. Political gridlock. Rising unemployment. Nixon being Nixon. Vietnam.

Starting point is 01:20:58 It seemed like the end times. Everyone in the room had already been worrying about how they were going to make rent, pay their light bill. And now this. I cleared my throat. So in other words, what I'm trying to say is we've got them right where we want them. Johnson lifted his eyes. Everyone around the table lifted their eyes. They sat up straighter.

Starting point is 01:21:23 This is the moment we've been waiting for. Our moment. No more selling someone else's brand. No one working for someone else. They've been holding us back for years. Their late deliveries, their mixed up orders, their refusal to hear and implement our design ideas. Who among us isn't sick of dealing with all that? It's time we faced facts. If we're going to succeed or fail, we should do it on our own terms, with our own ideas, our own brand. We posted 2 million in sales last year, none of which had anything to do with the manufacturer. That number was a testament to our own ingenuity and hard work. Let's not look at this as a crisis. Let's look at this as our

Starting point is 01:22:02 liberation, our independence day. Yes, it's going to be tough. I won't lie to you. We're definitely going to war, but we know the terrain. And that's one reason I feel in my heart, this is a war we can win. And if we win it, when we win it, I see great things for us on the other side of victory. We're still alive, people. We are still alive. To start Nike, one of the first athletes they actually endorsed is this guy named Pree. He held all the records.

Starting point is 01:22:35 He winds up dying in a car accident when he was 24 years old. And at the time of his death, he held almost every single record in his sport. And he's watching him run and he's drawing lessons from a race that he's going to apply to his own company. So he says, no matter the sport, no matter the human endeavor, total effort will win people's hearts. Pre reached down. He found another level. We saw him do it. He opened up a yard lead, then two, and then five. I saw the person in second grimace. He knew that he could not,

Starting point is 01:23:13 would not catch Pre. I told myself, don't forget this. Do not forget. I told myself there was much to be learned from such a display of passion, whether you were running a mile or a company. I knew that race was going to be a part of me, would forever be a part of me. In our coming battles, we would be like pre. We compete as if our lives depended on it. Because they did. And that reminded me of this line from this random YouTube video that I heard one time that I never forgot. And I don't even know who the speaker is, but he says, find out what it is you want and go after it as if your life depends on it.

Starting point is 01:23:49 Why? Because it does. And we're seeing that manifested in Pree and in Phil Knight here. There's this huge lawsuit. It could bankrupt the company, obviously, if they find out that he violated the contract. Winds up winning the lawsuit, but we're not there yet. The lawsuit is killing him, but at the same time, it's bringing him closer to his father. So he says, by the end of 1973, I thought it was very possible I'd have two kids and no job. Remember, he says, I know I've said this a lot, I'm sorry, but I have to repeat that because he repeats it over and over again in the

Starting point is 01:24:20 book. It was a decade and a half of doubt. The final act of every evening was my phone call to my father. In his retirement, he had loads of time to research old cases, to spin out arguments that we might be useful. His involvement, plus his sense of fair play, plus his bedrock belief in the rightness of Blue Ribbon's cause was restorative. He'd tell me what he found in the law books. I would take careful notes. Before signing off, he'd always say that he liked our chances. We're going to win, Buck. That magical pronoun, we, he'd always use it and it would always make me feel better. It is possible that we were never closer, maybe because our relationship had been reduced to its primal essence. He was my dad. I was his son. And I was in the fight of my life. And so even while this

Starting point is 01:25:08 lawsuit's going on, he's still got to run a company that is always short on cash. Nike's going to be short on cash to hold IPOs. And this is something that's going to be familiar to any entrepreneur. His mood is determined by sales. I was fixated on sales. Every day, I would get a telex from our warehouses with a pair count, which is the pair count is the exact number of pairs shipped that day. And for their purposes, a shipped pair was a sold pair, okay? I ran over my own point here. A pair shipped was a pair sold.

Starting point is 01:25:40 So the daily pair count determined my mood, my digestion, my blood pressure, because it largely determined the fate of Blue Ribbon. If we sell all the shoes in our most recent order and we quickly convert that product into cash, excuse me, if we did not sell all of the shoes in our most recent order and quickly convert that product into cash, we'd be in big trouble. Our problems could tip us into bankruptcy.

Starting point is 01:25:57 We were leveraged to the hilt. And like most people who live from paycheck to paycheck, we were walking on the edge of a precipice. When a shipment of shoes was late, our pair count plummeted. When our pair count plummeted, we weren't able to generate enough revenue to repay the bank and the trading company on time. When we couldn't repay them on time, we couldn't borrow more. When we couldn't borrow more, we were late placing our next order. Round and round and round it went.

Starting point is 01:26:24 Our sales for 1973 rose to 50% to 4.8 million, a number that staggered me the first time I saw it on a piece of paper. Wasn't it only yesterday that we had done $8,000? That makes it even worse, is that his sales are growing by 50% every year for like the first seven or eight years. he still can't he's still worried and still on the precipice of going bankrupt he does not have enough money late at night i'd sit with penny this is his wife and she'd ask me what are we going to do if blue ribbon went under what was the plan and for the umpteenth time i'd reassure her with optimistic words that i didn't wholly believe then he comes up with this is actually he comes up with an idea that winds up helping a lot.

Starting point is 01:27:05 And it accounts for, I think right before the IPO, like 80% of their sales. Then that fall, I had an idea. Why not go to all of our biggest retailers and tell them that if they signed commitments, if they'd give us large and non-refundable orders six months in advance, we'd give them hefty discounts up to 7%. So they went to people like Nordstrom, Athletes Foot, all kinds of other people. I was persuasive because I was desperate. A few retailers signed on. The program started to gain traction. And then, like I said, many years later, I think it was like something like 80% of their sales were done at this discounted rate,

Starting point is 01:27:44 which gave them a lot more money up front. So they wind up winning the case. They settle out. later, I think it was like something 80% of their sales were done at this discounted rate, which gave them a lot more money up front. So they wind up winning the case. They settle out. The judge, I think it's like a $400,000. I want to say it's $400,000 judgment. His attorney gets half of that. So he's talking to his attorney. He says, I asked him what he was going to do with all that loot. I forget what he said. With ours, Blue Ribbon, which they're still called Blue Ribbon. I don't think they renamed themselves until right before the IPO. But they're only selling Nike at this time. With ours, Blue Ribbon would simply leverage the bank into greater borrowing. More shoes on the water.

Starting point is 01:28:17 And that is Phil Knight in one paragraph. This entire book. Sell more shoes. That's his M.O. He's constantly reinvesting every single dollar he has into getting more shoes and then selling them so he winds up recruiting one of he liked one of the attorneys that worked on his case so much he recruited him to be the first in-house counsel and he's talking to them about being one of us and really his description his pitch to to

Starting point is 01:28:42 to recruit this guy is really set tells us how he views himself and Nike, which is why I'm reading it to you. You're one of us, I said. One of us. He knew what those words meant. We were the kind of people who simply couldn't put up with corporate nonsense. We were the kind of people who wanted our work to be play, but meaningful play. We were trying to slay Goliath. At heart, he was an utter David. So he's talking about the guys recruiting as a David. So are we. We're

Starting point is 01:29:11 trying to create a brand, I said, but also a culture. We were fighting against conformity, against boringness, against drudgery. More than a product, we were trying to sell an idea, a spirit. I don't, the clerk at the rental car company declined my credit card. Talk about deadbeat. I couldn't bring myself to look Kale in the eye. Here we were, a dozen years out of Stanford, and while he was an eminently successful businessman, I was still struggling to keep my head above water. He had known I was struggling, but now he knew exactly how much so think about that he is he's 10 years into his business it's still tenuous he's still running out of money all the time he's 36 years old phil knight is 36 years old when this is happening and that's important for

Starting point is 01:30:17 two reasons one it's just another illustration that most people would have given up by now and two you still have time you still have time and there there's a few pages later, there's two stories, each on the next page next to each other. And really the summary is we're in over our heads, so let's go faster. They're trying to run their own factory. What do I know about running a factory? I'd been completely over my head. I laughed and laughed. Over your head, I said. Over your head. We're all in over our heads. Way over. And so he's talking to Johnson and Johnson agrees to run the factory. He says he knew. He said he knew that when it came to Blue Ribbon, each of us were willing to do whatever was necessary to win. And if whatever was necessary fell out of our expertise, he was

Starting point is 01:30:59 willing to try and willing to learn. And then so that's the we're in our heads part. This is the let's go faster part. The bank was always pressing us to slow down. We responded in 1974 by mashing the accelerator. We were on pace for $8 million in sales and nothing, but nothing was going to stop us from hitting that number. In defiance of the bank, we made deals with more stores and opened several more stores of our own and continue to sign celebrity athlete endorsers we couldn't afford. And do you remember how he kept several examples of the book where he's like, what's my purpose? What am I doing?

Starting point is 01:31:33 Constantly wondering about his life. He applies that same line of questioning and thinking and philosophizing to the company. So he's like, what is our purpose? I could go back to asking the deep question. What are we trying to build here? What kind of company do we want to be? Like most companies, we had role models. Sony, for instance. Sony was the Apple of its day. Profitable, innovative, efficient, and it treated its workers well. This is interesting because Akio Morita, I read his autobiography, Made in Japan,

Starting point is 01:32:01 it's founders number 102. But now he did influence Phil Knight, but he influenced Steve Jobs and Jeff Bezos. Both of them talk about what they learned from Akio Morita and Sony. I would search my mind and heart with the only thing I could come up with was this word, winning. It wasn't much, but it was far, far better than the alternative. Whatever happened, I just didn't want to lose. Losing was death. Blue Ribbon was my third child. I simply couldn't bear the idea of it dying. It has to live, I told myself. It just has to. That's all I know. And so we're getting closer to the IPO.

Starting point is 01:32:35 But I want to go back to this idea that it was the hardest thing I ever did. And yet it was the best time of my life. So they have these conferences where like the thing is like Phil Knight and a lot of the people that he started a company with, they go off and try to strategize, right? So it says, I can see myself so clearly. Remember, he's remembering this 40 years after it happened. I can see myself so clearly at the head of a conference table, shouting, being shouted at, laughing until my voice was gone. The problems confronting us were grave, complex, seemingly insurmountable, made more so by the fact that we were separated from each other by 3,000 miles at a time when communication was an easier instant.

Starting point is 01:33:12 And yet we were always laughing. Sometimes I'd look around the table and feel overcome by emotion, camaraderie, loyalty, gratitude, even love. Surely love. But I also remember feeling shocked that these were the men I'd assembled. These were the founding fathers of a multi-billion dollar company that sold athletic shoes. A paralyzed guy, two morbidly obese guys, and a chain-smoking guy. And yet, in the midst of these intense discussions, in the middle of one of the most trying years in the company's history, those meetings were nothing but a joy. Of all the hours Meyer. I did his autobiography back in in the somewhere in the 20s. But he learned from Stanley Marcus, Neiman Marcus.

Starting point is 01:34:12 And he talks about business is just problems. And then I brought that I took that idea, that thought and combined it with if you think that business is just problems, then that means companies, at least successful ones. And companies are just effective problem-solving machines. And I think that's a great way to think about it. Phil says, the problems are never going to stop, I realize. There is no finish line. So he talks about one of their first campaigns, and this is exactly what Steve was talking about,

Starting point is 01:34:36 the fact that they don't mention their products in their ads. They talk about great athletics, right, or athletes. They managed to dream up a tagline that perfectly captured Nike's philosophy. His ad showed a single runner on a lonely country road. The copy read, beating the competition is relatively easy. Beating yourself is a never-ending commitment. That's fantastic. Beating the competition is relatively easy. Beating yourself is a never-ending commitment. Everyone around me thought the ad was bold and fresh. It didn't focus on the product, but on the spirit behind the product. So there's one line that made me think. He says, well, let me read it to you and I'll tell you

Starting point is 01:35:16 what it made me think of. Obsessives were the only ones for the job, the only ones for me. So Phil hides his intelligence, but he's definitely super smart. But I think more important than his intelligence is the fact that he is super, super determined. And I was listening to Paul Graham, the founder of Y Combinator, talk one time. And the video is on YouTube. I think it's called Y Combinator Podcast, a conversation with Paul Graham, if I'm not mistaken. But he was asked the question, like, what is more important in overall success, like, of a company, for the founders? Is it more important to be determined or smart? And his answer to this was fascinating. It turns out it is much more important to be determined than smart. If you imagine this hypothetical person that is 100 out of 100 for smart and 100 out of 100 for determination and then you start taking away determination it doesn't take very long until you have this ineffectual but brilliant person whereas if you take someone who is super determined and you take away smartness eventually

Starting point is 01:36:17 you get to a guy who owns a lot of taxidermy medallions or a trash hauling business but he's still rich and super determined is exactly how I would describe Phil Knight. And we're edging closer to the IPO, which is the end of the book. And this is just perfect. I redefined winning, expanded it beyond my original definition of not losing, of merely staying alive. That was no longer enough to sustain me or my company. We wanted, as all great businesses do, to create, to contribute, and we dared to say so aloud. When you make something, when you improve something, when you deliver something, when you add some new thing or service to the lives of strangers, making them happier or healthier or safer or better,

Starting point is 01:37:02 and when you do it all crisply and efficiently, smartly, the way everything should be done but so seldom is, you're participating more fully in the whole grand human drama. More than simply alive, you're helping others to live more fully. And if that's business, all right, call me a businessman. Maybe it'll grow on me. So they realize there's no more putting up the IPO, that we're always going to be a constant, precarious financial position. Interesting enough, which always blows my mind, I knew this, I learned this when I read the book the first time, but being reminded of it always blows my mind. Apple and Nike IPO'd on the same week. How crazy is that? But I want to talk about what was really interesting. And this is how he felt after the IPO. And again, more and more great

Starting point is 01:37:53 writing. This is the night of the IPO. It happened early in the day. Now he's at night. And then we're going to go into the next morning. For a long time, we lay in the dark. It wasn't over. Far from it. The first part, I told myself, is behind us. But it's only the first part. I asked myself, what are you feeling? It wasn't joy. It wasn't relief. If I felt anything, it was regret? Good God, I thought.

Starting point is 01:38:25 Yes, regret. Because I honestly wished I could do it all over again. I fell asleep for a few hours. When I woke up, it was cold and rainy. I went to the window. The world was the same as it had been the day before. As it had always been. Nothing had changed. Le least of all me.

Starting point is 01:38:47 And yet I was worth $178 million. I showered, ate breakfast, drove to work. I was at my desk before anyone else. So one of the benefits of reading biography and autobiography is the fact that, yeah, we're going to get a lot of ideas. There's no I mean, he worked on Nike for 40 years. It's impossible not to come up with good ideas from that. Right. But I would argue more important than the good ideas that we copy from these founders and these people live remarkable lives is avoiding the regrets they have. And if it's not more valuable, it's just as valuable. And some regrets you just have to learn to deal with because there's no way to avoid them. So what I want to close on is the fact

Starting point is 01:39:29 that the book ends, the last chapter is him at the age of his book, right? So the IPO ends. Now let's fast forward 35 years in his life. He's in his seventies and he's going through taking inventory of his life, which is so, so valuable because there's a lot of knowledge in the regrets at the end of a life. And so what happens is he's coming up with like, what do I want? Like, what's ahead of me? What's on? He would just watch this movie, The Bucket List, and he talks about it a lot, actually. And he couldn't come up with like what he wanted to do. And the book ends with him getting the idea to write the book. And again, just fantastic writing. And here's where we'll close. I think about the few things I want to do. It's not so much things I want to do as things I'd

Starting point is 01:40:11 like to say and maybe unsay. It might be nice to tell the story of Nike. Everyone else has told the story or tried to, but they always get half the facts, if that, and none of the spirit. I might start the story, or end it, with regrets. The hundreds, maybe thousands of bad decisions. Of course, above all, I regret not spending more time with my sons. Maybe if I had, I could have solved the encrypted code of Matthew Knight. And yet I know that this regret clashes with my secret regret, that I can't do it all over again. God, how I wish I could relive the whole thing. Short of that, I'd like to share the experience, the ups and downs, so that some young man or woman somewhere going through the same

Starting point is 01:41:01 trials and ordeals might be inspired or comforted or warned. Some young entrepreneur maybe, some athlete or painter or novelist might press on. It's all the same drive, the same dream. It would be nice to help them avoid the typical discouragements. I'd tell them to hit pause. Think long and hard about how they want to spend their time and with whom they want to spend it for the next 40 years. I'd tell men and women in their mid-20s not to settle for a job or a profession or even a career. Seek a calling. Even if you don't know what that means, seek it. If you're following your calling, the fatigue will be easier to bear. The disappointments will be fuel. The highs will be like nothing

Starting point is 01:41:52 you've ever felt. I'd like to warn the best of them, the iconoclasts, the innovators, the rebels, that they will always have bullseyes on their backs. The better they get, the bigger the bullseye. It's not one man's opinion. It's the law of nature. Entrepreneurs have always been outgunned, outnumbered. They've always fought uphill. And those who urge entrepreneurs to never give up? Charlatans. Sometimes you have to give up. Sometimes knowing when to give up, when to try something else is genius. Giving up doesn't mean stopping. Don't ever stop. And that is where I'll leave it. For the full story, read the book. If you want to buy the book using the link that's in the show notes on your podcast player, you'll be supporting the podcast at the same time.

Starting point is 01:42:47 That is 186 books down, 1,000 to go, and I'll talk to you again soon.

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Founders - #186 Phil Knight (Nike)

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