Start Your Own Shoe Business, No Experience Necessary

What makes you happy? That’s a trick question. This newsletter is not about happiness. It’s about how to become a billionaire. The irony is that, doing what makes you happy can make you a billionaire. For Phil Knight, the co-founder of Nike, wealth and success is a byproduct of chasing after your bliss.

Nike was co-founded by Phil Knight and his track coach, Bill Bowerman, on January 25, 1964. The original name of the company was Blue Ribbon Sports. They rebranded to Nike, Inc. on May 30, 1971, named after the Greek goddess of victory.

“You ask, what is our aim? I can answer in one word. It is victory. Victory at all costs. Victory in spite of terror. Victory however long and hard the road may be. For without victory, there is no survival.”

– Winston Churchill

Last week on Methods of Prosperity.

Donald Trump, a billionaire and former U.S. President, is running for re-election in 2024. We study billionaires like Trump to understand their strategies, particularly their deal-making skills. Trump’s family history traces back to Friedrich Trump. a German immigrant who laid the foundation for the Trump real estate empire. Donald Trump was born June 14, 1946. His father sent him to New York Military Academy to instill discipline. Donald later studied at Fordham University and the Wharton School. He began his real estate career with his father’s company, focusing on distressed assets. He later formed the Trump Organization and showed a knack for personal branding.

Trump’s notable deals include revamping the Commodore Hotel into the Grand Hyatt. As well as developing Trump Tower, and purchasing Mar-a-Lago. His ventures extended to owning an airline, a football team. He renovating Central Park’s Wollman Rink. Trump’s aggressive tactics and legal battles shaped his business reputation.

Trump went through his share of bankruptcies and personal scandals. This included a high-profile divorce and significant debt. Trump rebounded from a negative net worth of over $900 million in personal debts. He first sought political office in 2000. Trump became the 45th U.S. President in 2016. Trump demonstrates a strong belief in himself. He shows a tendency to bend reality to fit his goals. Trump’s mindset gives him an advantage in both business and politics.

Part 63. Phil Knight

You can find this week’s TL;DR here.

Key Lessons:

• Make work and play the same thing.

• Quit your day job responsibly.

• Follow your own obsession.

• Make it up as you go along.

• It’s not sales if you believe.

• Use leverage.

• Travel.

Now there’s a collectible version of this newsletter! Methods of Prosperity newsletter number 26 is available to collect as of August 23, 2024. If you’re so inclined you can permanently own it!

Phil Knight was born on February 24, 1938, in Portland, Oregon. His father, William (Bill) Knight was a lawyer before he became a newspaper publisher. His father called him Buck. His mother, Lota (Hatfield) Knight is a homemaker. She would be among the first to order a pair of his running shoes.

Phil excelled as a middle-distance runner at Cleveland High School. He continued to pursue his passion at the University of Oregon. Bill Bowerman was Phil’s track coach at the University of Oregon. He was legendary as a track and field coach. He became Phil’s business partner in January 1964. Knight secured distribution rights for Tiger shoes from Onitsuka Co. in Japan.

Out of college, he convinced his father to send him on a trip around the world. Phil had a crazy idea. It started as a term paper. Phil wrote a term paper at Stanford Graduate school of Business. It was about the potential of importing Japanese sports shoes. Only two decades earlier, America was at war with Japan. Now, America was importing great products from Japan. Phil became obsessed with selling high-quality, low-cost running shoes from Japan in America.

On that trip, he landed in Hawaii with a friend. He got a job selling encyclopedias door to door. There was no passion or glory in that job. Since he had an MBA, he figured, he may as well sell securities. So he got a job at a boiler room. This is a high-pressure sales office. These businesses use aggressive tactics to convince people to buy low-value investments. He did not enjoy that job either.

Here’s a psychological thing about ambitious entrepreneurs who want to be billionaires. We don’t like working for other people. We don’t have a problem selling things. But without belief in the product or service, it will not go well. It’s not selling if you believe in it. Besides, the point is not to sell, it’s to help a buyer make a decision. This is my opinion.

So, at 24 years old, how did Phil Night secure a distribution deal with a Japanese shoe maker? After living in Hawaii for a few months, he went ahead to Japan. His father had a few friends working at the United Press International (UPI). They directed him to the brand of Japanese shoe he wanted to import. It was a brand named Onitsuka Tiger. The Onitsuka Tiger is a brand of shoes that is now owned by ASICS.

Phil managed to get a meeting with Onitsuka. When the Japanese executives asked him what company he represented, Phil made up a name on the spot. In that moment, he recalled his blue ribbons from winning running events. Blue Ribbon Sports. That was his company name.

“Gentlemen,” Knight said to the executives. “I represent Blue Ribbon Sports of Portland, Oregon.”

Knight understood the American shoe market at the time. Adidas and Puma, German shoes, made up most of the sales in the U.S. He pitched the Onitsuka executives.

“If Onitsuka can penetrate the market ...if Onitsuka can get its Tigers into American stores, and price them to undercut Adidas…it could be a hugely profitable venture.”

Ken Miyazaki was one of the executives. He reassured Knight: “We’ve been thinking [a] long time about [the] American market.” They agreed to send him samples in exchange for $50. The shoes wouldn’t arrive before the end of that year.

Miyazaki later left the company.

Phil Knight continued his trip around the world. He visited the Acropolis of Athens. There he noticed the temple of Athena Nike, goddess of victory. That name would inspire his shoes, but it wouldn’t be for several years. Phil didn’t think of using that name. It would be someone else.

When he returned home, and the shoes had not yet arrived, he decided to get an accounting job. He earned a CPA from Portland State. Phil still dreamed of running shoes and traveling around the world. His shoes arrived at the end of 1963. That’s when he showed them to Bill Bowerman. Bill Bowerman partnered with Phil Knight on Tiger running shoes in January 1964. Instead of purchasing a pair of shoes, Bowerman offered to become a partner, going in 49/51.

The first order of Tigers was 300 pairs. Phil asked his father for another $500, which his father was hesitant to give. Showing her support, his mother ordered a pair for herself. That persuaded his father to go ahead and front the payment.

Phil sold Tigers at track meets out of the back of his car up and down the West Coast. Orders came in fast and plentiful. Notice that Phil believed in his product. It wasn’t a job. Although he didn’t quit his day job for a while. He quit his job as an accountant in 1969. That’s when he went all-in on Blue Ribbon Sports.

Phil’s father stopped lending him money, but did guarantee a loan for his next big order of $3,000. To grow the business, Phil had to use debt. That would make his bankers uncomfortable. Banks wanted Blue Ribbon Sports to have more equity than debt on their balance sheet. During this era, unlimited upside wasn’t enough.

Phil thought his company was the only American distributor. Dealing with one Japanese supplier was about to become more difficult. A mysterious competitor was about to steal Blue Ribbon’s contract with with Onitsuka.

To be continued.

I like you,

– Sean Allen Fenn

Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Your feedback is welcome. For more information about the author, please visit seanallenfenn.com/faq.