The Success and Deceit of Nike: A Critique of Shoe Dog

The success story of Nike is one for the ages, which Phil Knight brilliantly details in his memoir Shoe Dog. Exceptionally written, the story of Knight’s tumultuous journey is captivating, with anticipation being built with every close call. Warren Buffet has praised Shoe Dog as “The best book I read last year… Phil is a gifted storyteller.” The Literary Edit called it, “A brilliant book that I would recommend to absolutely anyone, Shoe Dog is a stunning exploration of the power of persistence, of hard work, of dreams and of opportunity. Inspiring, insightful and stirring, I will remember the story for a long time.” While I agree that this story is one that will forever stick with me, the book and the reviews which surround it ignore a significant aspect of Nike’s success. In the end, hard work and motivation, reinforced by chance opportunities, privilege, and deceit, are what enabled this company to reach the heights we know it for today, illuminating the exclusivity of the American dream.

The story begins with a young Phil Knight, fresh out of Stanford business school and without a direction to go in. With a desire to pursue what he calls a ‘Crazy Idea’, he decides to book a trip around the world to visit the planet’s most sacred places, “…experience what the Chinese call Tao, the Greeks call Logos, the Hindus call Jñāna, the Buddhists call Dharma” (p.10). The plan for this trip included a stop in Japan, where Knight planned to pursue a business concept he ideated in one of his final graduate classes– importing high-quality, low-cost Japanese sports shoes to sell in the American market.

Despite having saved some money from prior work experiences (around $1,500), integral to facilitating this life-changing trip was a charitable deposit from Knight’s father. This initial deposit was $1,000– adjusted for inflation, this amount is equivalent to just shy of $10,000 in 2022 terms. While this was incredibly generous and arguably a form of support that any parent would provide if capable, it puts forth an understanding of the socioeconomic state of the Knight family that is contradictory to what is painted by the author’s narrative. Citing his father as having a “solid job that paid for all the basic comforts” (p.11), the sheer ability of his family to pay for this trip after having spent thousands of dollars on Phil’s undergraduate and masters degrees proves his father had a job that paid for much more than the “basic comforts.” Most families are financially strapped to put their children through higher education, with the family bank closing after graduation. However, this was not the reality for Phil Knight, explaining his privileged behavior and confident willingness to make financial commitments that were not feasible for him.

Emboldened by the confidence that any financial bind would be resolved by his father, Phil Knight is motivated to make a series of questionable decisions. Upon his arrival in Japan, Knight facilitated a meeting with shoe manufacturer Onitsuka. During this meeting, Knight acted in a ‘fake it till you make it’ manner, deceiving the executives by claiming to be in charge of a national distribution company called Blue Ribbon Sports of Portland, Oregon. After successfully convincing the executives of this lie, Knight ordered samples of their shoes with the promise of later distributing them in the US. To pay for this sample order, Phil sent a letter to his father nearly demanding money, writing, “Dear Dad: Urgent. Please wire fifty dollars right away to Onitsuka Corp of Kobe” (p.31). This $50 would equal just shy of $500 in 2022 terms. This act, while unaffordable by many individuals pursuing the American Dream, was vital to the founding of Nike. However, the author fails to acknowledge both the confidence his family’s resources gave him and this fortunate position as being unrealistic for most entrepreneurs pursuing similar successes.

The comfort that comes with familial financial stability is both a blessing and a curse, as exhibited by the behavior of Phil Knight. As is consistently repeated throughout the book, Knight adopted a ‘fail fast’ mentality for the entire period Nike was a privately held company. His reasoning was that if he could fail fast enough, he would still have enough time to apply what he learned and try again. Although, trying again inherently means having a leg to stand on if all else fails. Unfortunately, this is not a reality for most; Many individuals from less well-endowed backgrounds cannot afford to fail fast because they cannot afford to try again. Whether that be due to a lack of financial resources or a feeling of defeat from failure, most people cannot afford a second chance. Those who pursue the American Dream are seeking promises of opportunity and financial stability, meaning they often come from a place where one of those is not present. Whether that be an immigrant trying to gain citizenship or an American from a low socioeconomic area, affording a retry is not a possibility. This background likely causes them to be more risk-averse than someone who has the ability to try again. Knight seemingly doesn’t understand his position of privilege when boasting about his pursuit of the path most avoided– failure.

While the idea of failing fast has grown in popularity, with many founders motivated by success stories such as Phil Knight, it presents more issues than benefits if applied incorrectly. In writing for Forbes, Dan Pontefract discusses the recent emergence of “fail fast” in startup culture with the addition of “fail often.” Pontefract cites this mentality as creating a culture of “people aiming for the short-term, living in a world of frenetic bedlam. Instead of calmly and intelligently iterating, employees race to complete something (failing) while racing to the next objective as quickly as possible (failing, but quicker.)” (Forbes). As addressed by Pontefract and exhibited by Knight, this mentality often comes at the expense of critical thinking and wise decision-making. Rather than thinking about failure on a macro level, as was the case with Phil Knight, Pontefract puts forth a focus on the micro level; Utilizing small failures (mistakes) to direct our future actions, tweaking and reiterating as necessary (Forbes). When utilized as a form of constructive criticism, failing fast can be beneficial to a company as it relates to mostly inconsequential decisions, but it becomes a risk when influential decisions are made with this mindset.

In the case of Phil Knight, fail fast manifested as a dangerous disregard for the financial health of the company. Motivated by this mentality, Knight obsessively pursued rapid growth. Proudly citing a doubling of sales year after year since the very beginning, he continually ignores the financial advice of multiple experts: the company’s bank advisor, as well as a respected coworker at the financial firm where Knight worked, both advised against the path Knight was taking his company on. However, the recommended idea of slow growth, which is widely considered vital to a young company’s survival, inherently goes against failing fast. Thus, Knight couldn’t be stopped, and he continued to expand Nike at an alarming rate.

The problem with rapid growth that raises cause for concern is the issue of cash flow– when a company like Nike is constantly doubling the size of its product orders, they are paying with promised, intangible money. Requiring loans to pay the manufacturer, Knight planned to use the revenue from the incoming product to pay the bank back. While taking out loans for orders, with each one growing in magnitude from the last, the volatility of the company’s financial state required an insurer to back the loan, which was always Phil’s father. This ensured the success of Nike by enabling them to continue moving products, but the established financial state of the Knight family is a resource that most pursuing the American Dream do not have at their disposal. With promises of equal opportunity attracting immigrants from all over the world to the Land of the Free, their experience is likely very different than Phil Knight’s when attempting to take out a loan from the bank. In this way, the barriers to entry in achieving the American Dream are significantly higher depending on your background and where you are from.

Despite this position of privilege working to ensure Nike’s success, Phil’s behavior left his company in a constant state of near-bankruptcy. Contrary to this insecure state, Phil continued to expand his staff, putting the welfare of all Nike employees at risk. While Knight would be relatively okay had everything failed fast, given his position, the same cannot be assumed for those he employed. In addition to a blatant disregard for the financial welfare of his later employees, Knight exhibited a distinct lack of consideration for the way he treated the earliest, most dedicated members of his team. Ignoring their communications, forcing resent-filled cross-country moves, and placing them in situations that required them to act against their morals– the founder of Nike was so blindly motivated by his desire to fail fast that he spent little time considering the potential consequences of his actions. Emerging in every reckless decision he made was confidence, often unwarranted, that enabled Phil to choose courses of action avoided by the risk-averse.

Failing fast requires confidence, which Knight consistently displayed, even in moments when it might have been reasonable for him to feel insecure. And certainly, being able to manufacture and project confidence is useful in business, as Amy Cuddy argues in her TED Talk, Your body language may shape who you are, wherein confident body language alters other’s perception, and your own feelings, of self-confidence. By employing nonverbal expressions of power and confidence, such as opening up, taking up space, and expanding, individuals can express a confident demeanor, subsequently leading to an actual increase in self-confidence. Phil Knight, whose confidence was partly enabled by his privilege, takes this ‘fake it till you make it’ mentality a step further, beyond that which is promoted by Amy Cuddy, in the wrong direction. Knight hardly employs this confidence in the manner in which it is recommended. Rather, he chooses to fake it in a deceitful manner, faking a reality until it hopefully becomes true. While this allowed him to succeed with Nike, it is a harmful practice– the effects of which can be felt by all those who surround him in business.

From the very beginning, Nike was founded on deceit and a ‘fake it till you make it’ mentality. Starting with the lie told to Onitsuka executives in Kobe, Japan about owning his nonexistent company, Knight’s ‘fail fast’ motivated recklessness caused him to mislead many. In the book, Phil Knight recounts his frustration and desperation when he was dropped by two separate banks and reported to the FBI for fraud because of Nike’s financial irresponsibility. However, they were saved by a Japanese trading company, Nissho, who bailed them out of their million-dollar unpaid loan from the Bank of California. This was despite Nike owing Nissho an additional million dollars. In terms of today’s money, that is equivalent to just over $6,000,000 each, or $12,000,000 owed in total. This risk taken by Nissho executives is later cited as being motivated by a belief that the company will succeed. However, despite this vouch of confidence, Nike proceeded to deceive Nissho and misuse the loaned money. While millions in debt, they formed their own factory within the US and altered financial reports to hide this secret. It wasn’t until Phil Knight made the reckless decision to drain the bank accounts of all Nike stores, causing dozens of employee paychecks to bounce, that they were forced to ask Nissho for additional funds and unveil this deceit. In a stroke of pure luck, the decision to create their factory was beneficial, and Nissho was forgiving.

At multiple points that could’ve been make or break for the company’s future, luck and perceived honesty are cited as being the reasons for their fortune. During a pivotal court case against their scorned manufacturer, the judge decided to rule on Nike’s behalf, citing their honesty as making them trustworthy. Similarly, when presenting their own line of Nike shoes for the first time, the salesmen placed orders because they had always understood the guys at Nike to be “straight shooters.” However, Phil Knight’s behavior proved that this couldn’t be farther from the truth. The reason for their success despite deceit isn’t due to luck– it can be largely attributed to the founders being a group of white men in the USA during the 1960s and 1970s. If it wasn’t the financial privilege of the Knight family or the successful deception of, and perceived honesty by, key players, their “luck” was likely due to their positionality. Given the context that Nike was founded, it is objectively unlikely that Phil Knight would’ve achieved this American Dream had he been a woman or a person of color.

Rooted in hope and the belief that anyone can achieve success, the American Dream is considered to be one of the great freedoms that come with living in the USA. Promises of opportunity and wealth, regardless of race, gender, or socioeconomic class, are often supported by anecdotal evidence, such as the story of Phil Knight. However, the harsh reality is the American Dream has been both officially and unofficially reserved for those who are white and male. While not impossible for anyone who doesn’t fall into either of those classifications, the chances of success decrease rapidly the farther you deviate from them. What’s even more, the notion of the American Dream results in a belief that only an individual can be blamed for their failure because, supposedly, it is possible for anyone to achieve success (University World News). This blame is despite the many historical events that have shaped our society today, continuing to place people of color and women at a greater disadvantage. For example, it wasn’t until the 1960s that women gained the right to open a bank account, and in 1974 the Equal Credit Opportunity Act was passed, prohibiting credit discrimination based on gender, race, color, religion, national origin, marital status, or age (One Advisory Partners). If Phil Knight had been anything other than a white male when initially founding Nike in 1964, he would have faced an entirely different set of challenges. The utilization of Nike’s founding story as proof of this Dream inadvertently serves as proof of this bias as well. Phil Knight’s position as an educated and affluent white male set him up for success before he even conceived his Crazy Idea. This aspect of his success, while not entirely attributable to it, is vastly unregarded throughout Shoe Dog.

From its conception to when it was listed as a publicly traded company, the story of Nike holds many lessons to be learned from. Phil Knight’s recounting of this journey is exceptionally written, and akin to almost all reviews of this book, I highly recommend that everyone read it. While my critiques largely focus on the lack of acknowledgment of the author’s position of privilege, the book does not make many attempts to paint a narrative that says otherwise. At times dumbed down to, I’m assuming, seem more humble than the reality, Knight’s positionality is not entirely regarded for the exclusive privilege it was. Regardless, immense amounts of hard work and dedication went into building this company, motivated by a sheer passion held by all of the founding members. If not for the lessons to be learned, this book should be read for the great story that it is.