Return of the Marlboro Man

In last week’s Methods of Prosperity, there was too much work for Phil Knight to do alone. He hired his sister part time. He needed help. He’d given a pair of Tigers to an acquaintance named Jeff Johnson. They knew each other from track meets. Jeff had sold shoes for Adidas. Now he worked as a social worker. Jeff started a family and needed to earn more cash. Phil offered Jeff a commission sales job to sell Tiger shoes. Enthusiastic about selling the shoes, Jeff suggested expanding the business. Phil warned him about the company’s financial struggles and negative cash flow. Jeff persisted. He became Blue Ribbon’s first full-time employee. Phil’s bank thought Blue Ribbon was growing too fast. It was a vicious cycle of debt and short supply. He needed equity.

Part 66. Phil Knight (continued)

You can find this week’s TL;DR here.

Key Lessons:

• Surround yourself with people better than you.

• You might be on the brink of failure.

• Recognize personality archetypes.

• Work-life balance is a myth.

• Don’t micromanage.

• Let your team cook.

Now there’s a collectible version of this newsletter! Methods of Prosperity newsletter number 29 is available to collect as of September 13, 2024. If you’re so inclined you can permanently own it!

Lack of equity. It was the leading cause of failed businesses. Phil knight recognized that while working as an accountant, going through their books. Phil relied on his bank for lines of credit for his shoe business. As soon as he paid off his debt from the previous order, he required double for the next order. His supplier, Onitsuka, was slow to deliver. It was a perpetuating cycle. His banker didn’t like it.

His banker’s name was Bob Wallace. Wallace wanted to be bank president but hated extending Phil Knight’s credit. He feared that Knight was too high risk for the bank. First National Bank was the only bank in town willing to do business with with Phil. The other bank, US National Bank had already turned him down. One downturn and Blue Ribbon would be out of business.

The year was 1965. Phil Knight was working as a full-time accountant for a day job. It was a firm named Price Waterhouse. During that time Phil was serving in the US Army Reserves as First Lieutenant. The Vietnam war was looming.

Meanwhile, Bill Bowerman travelled to Japan to coach the Olympics team. During that trip, he met with Onitsuka. Bowerman submitted his innovations to Onitsuka. They were not implemented. He sent letters to Onitsuka like Johnson sent letters to Phil. Onitsuka was unresponsive. Bowerman experimented with shoe designs for his athletes. Onitsuka relented and made prototypes of Bowerman’s designs. Bowerman also concocted sports elixirs with electrolytes. He was trying to invent Gatorade. He was trying to invent Polyurethane. He was also writing a book about jogging. Everyone is an athlete, Bowerman believed. If you have a body, you’re an athlete.

Speaking of generalizations, what most people don’t realize is that we rely on archetypes. Let me explain. Think about George Costanza in Seinfeld. Barney Fife in the Andy Griffith Show. Wile E. Coyote in Looney Tunes. These are archetypes. The unlucky lucky stock character. They have bad luck. Most of the time it’s self-inflicted and hilarious.

Carl Jung was a famous psychiatrist. He’s known for his theory of the collective unconscious. This theory involves universal patterns of thought and behavior known as archetypes. These personality archetypes are part of the collective unconscious. We share certain symbolic images and themes across cultures. These are recognizable patterns inherited by all humans.

For reference, Methods of Prosperity number 25 is about Ray Dalio. Consider the following:

This concept may be applicable. Phil Knight, Bill Bowerman, and Jeff Johnson could fit this example. They each represent archetypes. We can understand how archetypes relate to our situation. Why? So we can relate to others.

Phil Knight could be the Commander archetype. Commanders tend to be more directive than participative in their leadership style. They prefer to lead through setting and applying high standards. Their leadership style isn’t emotional and interpersonal.

Bowerman is the archetypical coach. Coaches regard self-growth, development and learning as a cornerstone of life. It’s a daily practice. They teach and model these as aspirations for others. They tend to be both demanding and caring, humble and resilient.

Johnson could be the lucky unlucky archetype. He was persistent and detail oriented. He sent Phil detailed correspondence explaining and showing his ideas for advertising. He lamented that Phil wasn’t responding to his letters. Johnson never let Phil’s silence discourage him. On the contrary. It motivated him. He recognized that Phil was not a manager.

Phil never responded with encouraging words. Phil wanted to emulate leaders like Winston Churchill, Shoguns and Samurai warriors. His heroes never talked too much or micromanaged. He felt it was better not to tell people how to do things, but tell them what to do. Let them surprise you with their results.

Johnson produced results. He orchestrated elaborate customer profiles and service. Customers corresponded with him. He became very involved in their lives. He served as their consultant for running injuries, which was likely a liability. He served a niche. Information which pertained to jogging injuries wasn’t available anywhere else.

Johnson aggregated customer feedback on Tiger shoes and innovative designs. Johnson hired a local cobbler to modify running shoes, providing needed cushioning. This was in addition to Bowerman’s modifications. Being between these two mad geniuses overwhelmed Phil.

Remember the Marlboro Man? 13 US states held Blue Ribbon’s territory. Johnson had customers outside of that territory. That included the East Coast. It was Marlboro country. The Marlboro man hadn’t been interfering, so Johnson didn’t think it was a problem selling to his customers. Phil didn’t press the issue. He didn’t tell Jeff Johnson anything.

Phil moved headquarters out of his parents’ basement and into his own place. Then he started receiving mail from Jeff. He wrote to say that he’d divorced from his wife and was living alone. Then he wrote to say he’d been in a car accident. He was in bad shape. Still, he was in good cheer. He was still filling orders and shipping shoes.

Now dealing with medical bills, alimony and child support, Jeff Johnson needed to be sure. What were the long term prospects of Blue Ribbon? How did Phil see the future?

Blue Ribbon, Phil replied, would turn into a sporting goods company. They’d have offices on the West coast and, one day, in Japan. Far fetched, but worth shooting for. If Blue Ribbon failed, it would fail fast. He could always start another business.

Phil challenged Jeff. If he could sell 3,250 pairs of Tigers by the end of June 1966, he would authorize him to open the retail store. Jeff pulled it off. By the end of June he’d sold 3,250 pairs of Tigers. He recovered from his injuries. Now, he held Phil to his end of the bargain.

Before Labor Day, he opened a small retail store at 3107 Pico Blvd in Santa Monica. Johnson turned the store into a community space for runners. It was the first of its kind, a sanctuary for runners. Johnson became like a cult leader for them.

Phil was working full time at Price Waterhouse, serving with the Reserves for 14 hours each month. Blue Ribbon took up his nights and weekends. He was running on fumes. That’s when Johnson reported troubling news. He discovered through one of his customers that they had competition. The Marlboro Man was back.

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.