Tuesday, October 4, 2016

Shoe Dog

I've felt like I've been in a book reading slump lately, as few of the titles I've read this year have captivated me. That slump was busted in a big way with two of my most recent reads, one of which is Shoe Dog by the creator of Nike.

The book describes the early years of Nike, when things were very uncertain (i.e. it is very heavy on supply issues from Japan and very light on the demand issues of Michael Jordan and other celebrities). Knight takes us year by year as Nike slowly builds itself up from nothing (Knight sold his first shoes out of his parents' house, where he lived) into the dominant company we know today.

So many things in the book surprised me, demonstrating how little I know about Nike. For example, founder Phil Knight was not some jock (as I would have expected) but rather a scrawny kid who loved books. His main partner who helped him build the business barely had enough space for a bed in his place, as he had books and shoes strewn everywhere. Ever since I read that Charlie Munger quote about not knowing any wise people who didn't read all the time, I see the evidence for it everywhere. (Confirmation bias?)

Another thing that shocked me was Knight's view towards marketing: he saw it as fairly useless. I think of Nike as purely a marketing company, but maybe it evolved into this or maybe I'm totally wrong. Knight is a product guy who appeared to belittle the marketing guys. He believed the product would speak for itself, and so early Nike was all about improving shoe design to improve performance (primarily for running, which was one of Knight's hobbies).

It's also amazing how close Nike was to failing before it really took off. Even though the company was profitable pretty much every year even early on, it was growing so fast that working capital growth almost caused the company to default on its bank debt. At least once, Nike's payroll cheques bounced!

Unfortunately, one thing that wasn't surprising were the actions of the larger companies like Adidas and Puma in trying to stall Nike's growth. Of course, this story was told from Nike's perspective so one has to consider the source, but the accusations are all too familiar. Nike was hit with duties retroactively and a bunch of legal work that large companies use to keep their smaller competitors at bay.

I highly recommend Shoe Dog: A Memoir by the Creator of Nike to anyone interested in business!

1 comment:

ShadowStock said...

Loved the book Shoe dog! My decision to read was based on patrick o'shaughnessy’s recommended reading list. http://investorfieldguide.com/

Additional personal value were the real stories of the great long distance runners and how they impacted the company.