Nike (Audio)

1. BGBen Gilbert0:00

   Listeners, you should know David and I were texting before this, debating, do we change this thing around? Do we play with this? Should we reorganize this section? And he texted me, "Let's just do it." So in the honor of bad jokes by David Rosenthal, here we go.

2. SPSpeaker0:15

   Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?

3. BGBen Gilbert0:32

   Welcome to season thirteen, episode one of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

4. DRDavid Rosenthal0:41

   I'm David Rosenthal.

5. BGBen Gilbert0:43

   And we are your hosts. There's an age-old question in business: What is more important, a great product or great marketing? Well, today, we have literally the perfect case study in that very question in Nike. Does breakthrough innovation drive that business, or is their core competency really around their profound advertisements and their sponsorship deals with athletes and teams, or their probably best-in-the-world brand positioning? To understand it, we have to examine Nike's entire sixty-year history, of course, because this is Acquired.

6. DRDavid Rosenthal1:18

   And because Shoe Dog is so good.

7. BGBen Gilbert1:20

   It's amazing. You've got to start at the beginning. So really, the question is, what makes this company the single largest apparel business in the world today, outside of luxury, of course, and how is it possible to be a shoe company that does over fifty billion dollars in revenue when they technically don't make a single shoe? So you may think you know Nike from the movie Air or Shoe Dog, but what hasn't been told is how those old stories tie to the gigantic shift in strategy that Nike is really in the middle of right now. Well, LPs, we got to thank you for voting for this episode. David and I have had it sort of in our episode backlog for two, three years, and when we put it up for a vote, the overwhelming majority of you selected this as our next episode. So if you also want to vote for future episodes and become an Acquired LP, that is acquired.fm/lp. If you want an update every time we drop a new episode so you don't miss it, you can sign up at acquired.fm/email, and we'll be dropping little Easter eggs and hints in those emails to tease about what the next episode is gonna be. So that's acquired.fm/email. Don't miss a new episode. And lastly, make sure you check out ACQ2, our second show, where we interview people who are building their companies today, available in any podcast player. And without further ado, listeners, as always, this show is not investment advice. Dave and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only. David Rosenthal, what is that stack of books on your desk?

8. DRDavid Rosenthal2:53

   Oh, my God, I think Amazon owes a thank you note to Acquired LPs-

9. BGBen Gilbert2:56

   [laughing]

10. DRDavid Rosenthal2:56

    -because I bought every Nike book out there. I mean, my six-foot-long desk is covered in Nike books. So fun to read all of them.

11. BGBen Gilbert3:05

    I thought there was just Shoe Dog. I didn't realize there was the literally over a dozen that you and I collectively read.

12. DRDavid Rosenthal3:11

    There are so many of them. I read thousands of pages, but there are three books that all basically tell more or less the same story that we weave together to come up with our core Acquired Nike story here today. And I bring it up because it's actually pretty important what these three books are. The first, of course, is Shoe Dog, the GOAT business memoir of all time. The second is a book called Just Do It, that was written by the journalist Donald Katz. Ben, do you know who Donald Katz is?

13. BGBen Gilbert3:43

    Ooh, I do not.

14. DRDavid Rosenthal3:45

    So Don, after he wrote this book, and I think he wrote one or two other books, he had quite the career change. He went on to found the company Audible.

15. BGBen Gilbert3:56

    Oh, really?

16. DRDavid Rosenthal3:57

    Isn't that crazy?

17. BGBen Gilbert3:58

    It's kind of cool that that was founded by a journalist.

18. DRDavid Rosenthal4:00

    Yeah, just wild. So he wrote kind of the canonical third-party journalist take on Nike. And then the third book is a book called Swoosh, which I bet most people have not read, but kind of like Taste of Luxury, I think people who are really in the know in the footwear industry have read this book. It was written by one J.B. Strasser and her sister, Laurie Becklund. J.B. Strasser is Julie Strasser, who was the wife of Rob Strasser. Now, Rob, if you've seen the movie Air, the character played by Jason Bateman is Rob Strasser, Nike's legendary first head of marketing. An item, among many, that is not discussed in the movie is that Rob, shortly after signing Jordan, had an enormous fight with Phil Knight, left the company with Peter Moore, who was the designer behind Jordans, and ended up joining Adidas as CEO of Adidas America just a few short years later.

19. BGBen Gilbert5:05

    It's like an incredible betrayal.

20. DRDavid Rosenthal5:07

    This is like a Judas-level betrayal. I mean, to say he was persona non grata around Nike is, uh, understatement of the century. And here's this book that was written in real time by his wife as this was all happening. Incredible.

21. BGBen Gilbert5:21

    Yeah. So Strasser, we'll get into his contributions, but he is probably second only to Phil Knight in willing Nike into existence.

22. DRDavid Rosenthal5:30

    We start, however, with the Shoe Dog story, the origin of Blue Ribbon Sports, and actually a little bit before Shoe Dog starts, in July 1948, when one Bill Bowerman becomes the head track coach at the University of Oregon. Now, Bill was a legendary figure, in addition to being Nike's co-founder, along with Phil Knight. I mean, kind of the only way to describe him is he was like a descendant of the survivors of the Oregon Trail.... the cowards never started, and the weak died along the way, was one of his favorite sayings. [chuckles]

23. BGBen Gilbert6:06

    Yes.

24. DRDavid Rosenthal6:07

    So Bill's dad was the governor of Oregon, and Bill fought in World War II as a major, and he actually negotiated, at the end of the war, the stand down of a German battalion. He's also such a character. He lived in a remote mountaintop in the Oregon [chuckles] mountains, and the mail delivery people who would come up to his home kept knocking over his mailbox with their trucks, so he rigs the mailbox with explosives [chuckles] to blow up the truck the next time it happens, and he literally blew up the truck. I mean, the stuff you could get away with in the, the '50s.

25. BGBen Gilbert6:44

    They do not make them like that anymore.

26. DRDavid Rosenthal6:46

    No, they do not. So when Bill comes home after the war, he first coaches high school, and then he becomes the head track coach at the University of Oregon. He takes this background and character that he has, and he becomes maybe arguably the most successful track coach in American history. So I believe Bill coaches the first American sub four-minute milers. He ends up coaching several Olympic teams. He definitely turns the University of Oregon into the most prestigious track program in America. You know, he's a national celebrity, which is pretty crazy for Oregon in the 1940s, 1950s.

27. BGBen Gilbert7:27

    Right.

28. DRDavid Rosenthal7:28

    So a few years into Bowerman's tenure as head coach, he recruits a pretty talented middle distance runner, freshman from Portland, nearby, one Phil Knight. Now, Phil also has some interesting Oregon roots. He's the son of Bill Knight, who is another well-known University of Oregon alum. He was a former lawyer in Portland, and he's the publisher of the Oregon Journal Newspaper. Phil follows in his dad's footsteps. He majors in journalism at Oregon, and he runs for Bowerman, and I would say Phil is okay as a runner.

29. BGBen Gilbert8:05

    Well, it's interesting, Phil Knight would describe himself in his prime as an okay runner because he was running with the best collegiate runners in the world, coached by Bill Bowerman, who barely gave Phil Knight the time of day. I get the sense he was not a man of many words and certainly almost no words of encouragement other than, "Run faster." And so you've got Phil Knight, the guy runs a four-minute, 13-second mile and is convinced he's okay.

30. DRDavid Rosenthal8:34

    This is exactly what I was gonna say. I think at any other school, Phil would have been a star. This isn't really in Shoe Dog, but I know Phil's personality from reading so much about him over the past couple weeks. I think he probably went to Oregon in part because he wasn't gonna be a star there. I mean, he is, I think, the most introverted CEO that we have ever covered on Acquired. I mean, Rockefeller was pretty introverted, but he looks like Elon Musk compared to Phil Knight.

Episode duration: 4:03:28