Nike’s Origin Story
“Just do it” is one of the most iconic trademarks in the world, and when paired with the classic “swoosh” logo, the two symbols invariably draw to mind the image of Nike. Nike, Inc. is the most valuable sports business in the world, with over 44,000 employees worldwide and a brand worth valued at almost twenty billion dollars, but everything started with a shoestring budget and a garage innovation. The company that now dominates athletic footwear, apparel, equipment, and accessories started off as Blue Ribbon Sports, with a thousand dollars of startup funding and an idea for running shoes inspired by a waffle iron. Join us today, with a special Wednesday edition of Garage Greatness, as we explore how Nike rose to multinational domination from a modest start at the University of Oregon track.
In less than 45 years, Nike has become a household name around the world. The company’s beginnings, however, were under the name Blue Ribbon Sports, a company founded by Phil Knight, a track athlete at the University of Oregon and the current Chairman of Nike, and his track coach, Bill Bowerman. Bowerman had an obsession with running shoes, and found the current options offered by German companies like Adidas and Puma had the highest quality on the market. He wanted to find a way to make lighter shoes that gave track athletes a leg up on the opposition, but years of frequent home experiments still had not
Long before making the innovative discovery that would change the running shoe forever, Bowerman coached Knight on the track. Both men had a deep-seated love for sports, and wanted to find profitable jobs pursuing their passion, so when Knight was given a semester-long project planning a small business as part of his MBA, he looked first to running shoes. To beat the German shoes on the market, he knew that his theoretical company would need to offer high quality but low cost alternatives, and the only people currently making such a shoe were companies in Japan that did very little international business.
In 1963, while visiting Japan as part of a world tour, Knight scheduled an interview with Tiger, a subsidiary of the Onitsuka Company, a company that manufactured the kind of shoe he had previously researched for his project. In perhaps a staggering display of business acumen and quick thinking, Knight successfully bluffed that he was representing a larger American company named Blue Ribbon Sports, a name which he invented on the spot, and that his company was interested in distributing Tiger shoes in America. The Tiger executively liked his pitch so much that they agreed to his proposition, and within a couple of hours, Knight had created a company out of thin air.
After buying a shipment of Tiger shoes on the spot, Knight returned to America to pursue his passion, partnering with his old teacher, Bill Bowerman. Both men put $500 towards the new company, and although Bowerman continued to coach at the University of Oregon, his heart was now invested in solving the problem of the light-weight running shoe. Knight stores the shoes in his garage and sells them out of his trunk at track meets. In their first year of operation, 1964, Blue Ribbon Sports brings home a respectable $8,000.
In 1968, Bowerman’s first design, the Cortez, is released to great acclaim. The Cortez heralds a new age of running shoes, and now Blue Ribbon Sports is increasingly dominating both men’s lives – in 1969, Knight finally quit his day job as an account, and company sales reach $800,000.
1972 marked the company’s conversion to a new, more marketable name – Nike. The name was suggested by an employee, and evokes the Greek goddess of victory by the same name. The classic “swoosh” logo was designed by Carolyn Davidson, a student at Portland State University, a job for which she was paid $35.
One Sunday morning in the same year, while observing his wife making waffles, Bowerman had an idea. Bowerman took the waffle iron out into the garage and poured urethane rubber onto it, which ruined the iron but started something much greater. After seeing the waffle pattern set in the rubber, Bowerman began to pursue the idea of making an athletic shoe with a waffle pattern on the bottom, both to increase traction and to decrease the weight of the shoe, without having to thin the bottom. This idea is still widely used today and gave Nike a huge boost over their competition, raising the company to their current dominating status. That very year, the Olympic trials came to Oregon, and Nike offered to give their shoes to any of the competing marathon runners that would wear them. Two of their new salesmen did very well in the race, and Nike used that proof to skyrocket into $2 million in sales that year. By 1979, Nike would control half of the total U.S. running shoe market.
Knight had avoided using traditional advertising for Nike, allowing the products to speak for themselves, but by 1982 he wanted to bring Nike to international audiences, a decision that would require bringing in an advertising agency. The small Portland firm he decided to work with, Weiden & Kennedy, engineered one of the best advertising strategies of all time, launching Nike into superstardom. Widen & Kennedy were also responsible for the company’s now famous slogan, Just Do It, as well as the company strategy of using high-profile athletic sponsorships as their primary advertising.
In the 1980s, Nike began to lose sales to Reebok International when they failed to provide products for the growing trend of aerobics and when they overlooked the market for women, two areas that Reebok dominated. Even a major 1985 sponsorship with Michael Jordan promoting the now iconic Air Jordans couldn’t pull the company ahead of Reebok in total sales of athletic shoes, although the “His Airness” ads, filmed by Spike Lee and featuring the rising star of the Chicago Bulls, Jordan himself, went on to launch Nike as a fashion icon in addition to a sporting powerhouse. With the addition of specially designed shoes and apparel for women, Nike rose back to the top of the market.
In the early 1990s, Nike was earning $2 billion a year. By 1995, they had branched out into every sport’s apparel, and sales were nearing $5 billion. Now, ten years later, Nike is still at the forefront of the sporting world, with annual sales of more than $25 billion. Rising to this height from such a simple beginning may seem like a miracle, and neither Knight nor the late Bowerman would deny that they had a bit of good fortune getting to the top, but in the end their smart decision making and love for the game propelled the co-founders to the top of the industry. From lowly beginnings selling shoes out of a trunk and pouring rubber into waffle irons, Knight and Bowerman took over the world of sports apparel, and Nike has become a worldwide phenomenon under their leadership.
We hope that you learned about how Nike came to be from humble beginnings in this edition of Garage Greatness. Next time, we’ll talk about Dyson, the bagless vacuum cleaners invented by a UK engineer named James Dyson. Dyson was frustrated with his clogged Hoover and wanted to find a better design, based on the cyclones he saw at a local sawmill. Read all about Dyson’s story next time, with Garage Greatness!