How Nike Became a 35-Billion-Dollar Brand
The incredible journey of a coach and his former student
Nike has been around since 1964 — this was way before the moon landing. Making billions of dollars selling shoes and sports apparel is not as easy as it sounds. Yes, it’s pretty exciting, but not at all easy.
As of 2020, Nike’s brand worth is valued at $34.8 billion. Nike’s rivals, such as Adidas and Puma are nowhere near this number. Nike’s easy-to-remember Swoosh logo and ‘Just Do It’ slogan simply stands out from the rest.
When a brand has been in business for so long and is still generating billions, it’s worth conducting a case study for. So let’s understand how Nike became a household name and a 35-billion-dollar brand.
Nike Didn’t Start as Nike
The year was 1962. Phil Knight, the co-founder of Nike, had just graduated from Stanford and was ready to take on the world, like most fresh graduates. He used to be a distance runner during his university days. For this reason, he was already an expert in running shoes.
During that time, Adidas and Puma were the go-to stores to get top quality shoes. However, Phil wanted to bring something different to America. So he traveled to Japan to find some high-quality shoes to import.
Without any contacts, he was wandering around Japan until he stumbled upon a shoe store that he found interesting. He decided to arrange a meeting with the owner and negotiate a deal.
Now you might be wondering: “How on Earth can a young university graduate just go to a foreign country and sign a deal without any contacts?”
Well, Phil introduced himself as an American shoe distributor from a company called Blue Ribbon Sports. Just so you know, this name didn’t even exist and Phil made this up instantly. That’s why Nike was first called Blue Ribbon Sports. God knows why Phil chose this name, but it worked.
The lesson here is: You don’t need to wait to come up with a perfect name and design the ideal logo. If you want to start a business, just do it — as Nike says.
Phil and Bill Join Hands to Bring a Revolution
Phil already showed his business acumen and negotiation skills by single-handedly closing an exclusive deal with a Japanese shoe company called Onitsuka Tiger.
But he needed some extra help to scale the business. He didn’t want to be a self-employed shoe importer making $1000 a month. He was extremely ambitious and wanted to build an empire.
So he decided to meet his university’s track and field coach William (Bill) Bowerman. Coach liked Phil’s idea, and together, they incorporated Blue Ribbon Sports in 1964. In that year itself, the company sold their shoes for $6.15 per pair and made nearly $8000 in total.
The next year, their revenue increased to $20,000 — more than double as compared to their 1964 revenue. This motivated Bill and Phil to launch their own store that exclusively sold Blue Ribbon Sports shoes.
Bill Bowerman was a very famous coach and people took his advice seriously. He decided to write a book called Jogging, which sold millions of copies. Of course, part of the reason he wrote this book was to promote his brand — a tactic used to this day by several marketers.
In 1969, Blue Ribbon Sports generated around $300,000 in revenue. The demand was so high, that the company couldn’t keep up with it. Not because they were ill-equipped — it’s just that their Japanese partner, Onitsuka Tiger, was slow with the shipping.
Luckily, Onitsuka Tiger’s contract with Blue Ribbon Sports was only going to last till 1972. This enabled Bill and Phil to take matters into their own hands and speed up the manufacturing. The shoe design that was selling like crazy was Bill’s brainchild, so there was no room for an intellectual property violation.
That’s why Bill started preparing for 1972 a year before. In 1971, Phil renamed the company after a Greek goddess called Nike. He also got a graphic design student to create the famous Swoosh logo — for 35 bucks.
Controversial Marketing Tactics Made Nike a Household Name
After Nike’s contract with Onitsuka Tiger was done, Phil decided to not make the same mistake again. Instead of having one Japan-based supplier, he signed non-exclusive deals with a few subcontractors and had the shoe production completely under his control.
From this point on, there was no turning back. Now Nike had insane marketing budgets to dominate the sport’s shoe industry and overtake well-established competitors like Adidas and Puma.
Sports lovers and fitness enthusiasts resonated with Nike’s motivational ‘Just Do It’ campaign. This was the market segment that was filled with motivated, ambitious people who loved inspirational messages.
“We actually don’t believe in slogans. Instead, what we’ve found to be most effective is inviting people to join us in what we believe in and what we stand for. And what we stand for is to serve and honor athletes.”
— Davide Grasso, Nike’s Former VP of global brand marketing
The company also had enough cash to sign athletes like Cristiano Ronaldo, LeBron James, Tiger Woods, and more. Nike’s strategy of motivating people through advertisements along with celebrity athlete endorsements did the trick for the brand.
As we all know, Nike is also well-known for its controversial ads. In 2016, Colin Kaepernick, an NFL quarterback, was seen kneeling down during the national anthem.
He said, “I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color.”
Later, he was seen in a Nike ad featuring a close-up of his face and the words: “Believe in something. Even if it means sacrificing everything. Just do it.” This ad rekindled the 2016 controversy, and because Nike was involved, some people were enraged at both the company and the former quarterback.
The hashtag #BoycottNike became popular for a while. There were several videos on social media in which some angry people were seen burning Nike shoes and clothing. Even Donald Trump jumped on the bandwagon and tweeted his opinions on the situation.
“Just like the NFL, whose ratings have gone WAY DOWN, Nike is getting absolutely killed with anger and boycotts. I wonder if they had any idea that it would be this way? As far as the NFL is concerned, I just find it hard to watch, and always will, until they stand for the FLAG!” — President Donald Trump
The controversy did backfire, initially. However, it’s said that Nike got millions of dollars worth of free press. It shows that when big brands come into controversies, the end result usually turns out to be profitable.
Final Thoughts
Why did Nike become such a powerful brand? Firstly, Bill Bowerman was a coach and a respected figure in the sports industry. And Phil Knight was a sports enthusiast as well as a young business graduate from Stanford.
One thing that both of them had in common is the passion for running. Passion is the key to success in business. If your main goal is money, you’ll probably quit too early and start doing something else that makes you money — like a job or another business.
However, passion is what keeps you going when things get tough. It keeps you motivated when there’s a financial loss, when your suppliers screw you over, or when your company gets involved in a controversy.
About This Publication
How They Made Money is a publication that’s focused on analyzing how rich individuals exactly generated their income. Feel free to stay in the loop if you want to use this knowledge to reach one step closer to your own financial freedom.
