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Sean Allen Fenn

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You’re Remembered for the Rules You Break. Methods of Prosperity newsletter no. 70. Phil Knight (continued). TL;DR In 1969, Phil Knight left his teaching job to focus on Blue Ribbon Sports. By 1972 they launched the Nike shoe at a trade show. Despite imperfections in the product, it sold well. Blue Ribbon had a reputation for telling the truth. Their relationship soured with Onitsuka, their Japanese supplier. When Blue Ribbon launched Nike, Onitsuka ended their contract, claiming damages. Phil pushed for independence. He recognized the opportunity to launch Nike. His company secured credit to survive, but struggled to maintain liquidity. In 1975, Blue Ribbon faced a severe cash shortfall, resulting in bounced paychecks. Desperate, they took a loan from a local box company, to cover payroll. It was the same vendor which depended on Blue Ribbon to stay in business. That’s when the Bank of California severed ties. Phil couldn’t pay the $1 million he owed to his equity partner, Nissho. He asked ...
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The Origin of Nike’s Swoosh Methods of Prosperity newsletter no. 69. Phil Knight (continued). TL;DR Kidami, Onitsuka’s export manager, wasn’t satisfied with Blue Ribbon. He visited Phil in Portland. Phil discovered that Onitsuka was looking for new US distributors. Phil’s bank cancelled him. Phil made a deal with a Japanese trading company named Nissho Iwai. He gave away no equity. Phil found a factory in Guadalajara to import a new brand of athletic shoe. He hired Carolyn Davidson, a graphic design student at Portland State University. She designed the “swoosh” that would become recognizable. Jeff Johnson came up with the Nike name. Not depending on only Nissho for funding, Blue Ribbon raised capital through debentures. The shoes manufactured in Guadalajara fell apart. Phil found a more reliable manufacturer in Tokyo. While visiting Japan, he paid a visit to Onitsuka, who didn’t know about his deal with Nissho. It was the beginning of the Nike brand. To be continued...
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Multitasking is for the Unfocused Methods of Prosperity no.68 Phil Knight (continued) TL;DR Creating a successful business demands significant focus and energy. Phil Knight prioritized Blue Ribbon Sports. He worked at Price Waterhouse until it took up too much time and energy. Phil transitioned to teaching accounting to focus more on his business. Blue Ribbon Sports needed to take market share from Adidas and Puma. Blue Ribbon hired competitive athletes as salesmen. Sponsoring athletes helped Blue Ribbon gain market share. Inconsistent deliveries from Onitsuka held up sales and debt repayments. Phil’s banker demanded cash reserves. Blue Ribbon needed liquidity. Phil attempted to take the company public to solve these problems. That didn’t work. Phil raised funds from family and friends. He explored Japanese trading companies for financial support. Phil was considering a deal with a Japanese trading company named Nissho Iwai. That’s when he discovered Onitsuka was seeking a new US distributor.
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It’s Not A Lie If Your Word Comes True Methods of Prosperity no. 67. Phil Knight (cont.) TL;DR Johnson had been attracting the Marlboro Man’s customers on the East Coast. Johnson had done all the ground work. No one promoted Tigers like he did. Now the Marlboro Man placed an ad in Track & Field News. Johnson and Phil devised a plan to cut him off. Phil flew to Japan to secure exclusive US distribution rights for Onitsuka shoes. He stretched the truth about having an East Coast office. This led to Blue Ribbon securing a three-year contract and ordering 5,000 shoes. Phil hired someone to take over for Johnson at the Santa Monica store. Johnson agreed to move to Boston to oversee East Coast operations. Before moving, he demanded a partnership and higher pay. Phil Knight and Bill Bowerman refused to give him equity. He settled for a small raise. In 1967, Blue Ribbon expanded further. They hired new employees and opened a second retail store. They developed the Cortez shoe, a direct competitor to Adidas...
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Return of the Marlboro Man. Methods of Prosperity newsletter no.66. Phil Knight (cont). TL;DR Phil Knight faced significant challenges in growing his shoe business, Blue Ribbon. His company lacked equity, relying on bank credit. His banker, Bob Wallace, was reluctant to extend Blue Ribbon’s credit. Wallace considered Knight too high-risk. In 1965, Knight worked his day job at Price Waterhouse. He served in the US Army Reserves. This was on top of getting Blue Ribbon off the ground. Bill Bowerman, Knight’s partner, met with their Japanese supplier, Onitsuka. Still slow to deliver, Onitsuka was unresponsive to his innovative shoe designs. Meanwhile, Jeff Johnson, another key figure, worked on marketing and customer relations. Johnson received no encouragement from Knight. Are you aware of archetypes? It’s relevant to suggest that Knight, Bowerman, and Johnson embody certain archetypes. Knight being the Commander. Bowerman as the nurturing Coach. Johnson could be the persistent, unlucky lucky...
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There’s No Business Like Shoe Business Methods of Prosperity newsletter no. 65. Phil Knight (cont.) TL;DR There was too much work for Phil Knight to do alone. He hired his sister part time. He needed more 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 than his day job could provide. 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. To be continued...
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Methods of Prosperity 63 Newsletter examining the methods used by historical figures to accumulate wealth. 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
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