How Nike sold its first shoes
marketingexamples.com
marketingexamples.com
It contributes to my belief that there are way too many technical founders working on absolutely horrible ideas that would be able to the foundation for a great company but don't have the skill set to determine what that is. I think after the impending recession when VC money dries up this skill will be in high demand.
Let's not forget Bill Bowerman.
His wife Barbara's waffle iron is in the same league of corporate lore as Hewlett-Packard's one-car garage.
And the reason Nike's address is One Bowerman Way, Beaverton, Oregon.
That legend has always bugged me. If one used a waffle iron to make running shoe soles, the result would not look like a Nike Waffle Trainer. It would look like, well, a waffle. The soles of Nike Waffle Trainers looked like one took a waffle iron and made it out of rubber. IOW, the legendary mold and result would have to be reversed from reality.
I mean, have I been thinking about this wrong for forty years? You can't make a Nike Waffle Trainer from a waffle iron, right?
My understanding is he ruined three waffle irons before he had a workable piece, including the first one which never opened. I'm not sure if that's accurate but it would definitely be consistent with how he "bird-dogged" a problem.
He had been experimenting with rubberized materials before the waffle iron, using it at first to resurface the track at Marist High School in Eugene after making numerous test pads and coated them with different formulations to see which ones worked best over concrete. At the time, running tracks were usually packed clay, cinders, or other "fines". Great for training by the way (fewer impact injuries) but terrible for breaking 4 minute miles or going under 10.00s in the 100m.
He shifted his attention to shoes after spending time in New Zealand with Lydiard. Lydiard was a cobbler of women's shoes and showed Bill how they were made. Bill's philosophy of making shoes lighter and lighter was no joke. He was "Bill Bowerman serious" and firmly believed athletes needed every form of optimization in order to perform their best, including going so far as to measure the weight difference between wet and dry socks over the distance of a marathon, multiplied by the number of times the leg had to lift the foot, in an attempt to understand how athlete energy is allocated during a race.
Many years had passed since the Bowermans moved out of the house where the waffle story happened. Located in the western Oregon town of Coburg (population: 1,000), the house was remote, up on a hill and only accessible by a thin one-lane road. There was no way a garbage truck could reach the property, so they often just buried trash in a pit out back. The long-married couple eventually moved away to Fossil, where Bill died in 1999 and Barbara in 2010. But their son, Tom, lived on the family property in Coburg and decided to expand the carport. Digging alongside the house, he came across a treasure trove of Nike history buried alongside the house. There were crudely cobbled-together shoes, old prototype metal plates, cracking rubber soles, peeling molds, and a rusty old waffle iron. Thanks to the distinctive 1930s design, Reames knew this was the appliance that created the Nike we know today.
The next dry-up will be modest, it might last 12-18 months. The last one lasted a mere 2 to 2 1/2 years and required a rather extreme global recession. The US and globe broadly are drowning in truly enormous amounts of capital yielding nothing or close to nothing. Ten trillion dollars in wealth held in government debt yielding nothing. Tens of trillions more held in other low yielding bonds. There is a lot more real wealth (inflation adjusted) in investor hands today than there was just 20 years ago (at the dotcom bust). That capital is desperate for returns and will remain so. A 1/3 correction in the US stock market would merely set it back to April 2016.
The Fed is now permanently in liquidity mode, primed to rapidly flood the system as needed. They're on twitch notice for the next QE round. This won't change for decades at least, as the Fed must endlessly run debt monetization programs, and always keep rates artificially low, to keep the US Government solvent (5% * $30 trillion = bankrupt US Government).
Pretty much every central bank of consequence is in liquidity flood mode. They're mostly all behaving similarly.
Venture capital will remain ample in such an environment of perma low rates and relatively low inflation.
Ability, skill, will become drastically more valuable over the next ~20 years. Capital will become even easier to access and even more plentiful, if you are competent and or more generally have something to sell. The rich will get richer over the next 20 years and they will always be looking for somewhere to park it. The processes occuring now, including population stagnation in wealthy nations and aggressively advancing automation (robotics, AI, et al.) will push even more wealth to the top (taxes on the rich will rise in some cases to attempt to resolve that, certainly in the US). The returns that a capable individual can generate for capital, will soar in the coming decades. It's going to be an era of rather extreme value-capture amplification for people that have consequential skills; ever greater returns going to ever small groups of people.
With population stagnation and or contraction in much of the developed world (which is only going to get worse), finding enough skilled / talented people will remain the problem, not capital. Simply put, the capital to skilled person ratio in affluent nations will continue to rapidly climb in favor of the skilled persons.
So, what would it take for that future not to happen? Or what should the people that are going to be the most affected do?
So I posted the reply to this service:
Hyperinflation? What if people run from holding USD. Not likely, but who knows what will happen in 20 years time?
Of course it's not a free lunch long-term. The cost will come due in the form of eventual sharper currency debasement, after the earlier stage process of traditional debt monetization by QE or similar (I'd expect some Fed experiments on that front). You could try to run higher inflation on an annual basis to chip away at the debt, or do larger sharper events more rarely. I think the Fed will strongly prefer sharper one-off events of big QEs (for a year or such in a recession context). In recessions, often people pile into such perceived safe investments, which is an opportunity for the Fed to take advantage of.
The US still has plenty of room to play with more traditional QE yet, before it gets to the later stages of the Japan scenario. As do the Eurozone and China. The US can likely hold at least 1.5x its GDP in national debt, probably more like 2x to 2.5x, before it starts to see more serious problems. Japan doesn't have the global reserve currency, and we've seen what they've been able to handle.
Eventually the debt - if it continues to pile up - gets so extreme there is no other option than to do sharper debasement. The recent QE (in both the US and Eurozone in their respective forms) was kicking the can down the road. China is similarly doing a lot of can kicking right now. Eventually no matter what the central banks do the debt problems and interest payments get too large, they suck up too much of a nation's free capital, and they're forced into a more serious currency event.
The Fed has to keep pushing the interest cost per dollar of debt down. That has gradually diminishing potential though, as realistically you can only go so far down. Japan, for the most prominent recent example, found the lower limits of what's possible there. They're a forecast for what the US, Eurozone and China may face.
The Fed is an enabler of bad behavior and I expect they'll continue doing it (some of it is intentional as a prop, some of it is a side effect). They enable the US Govt to borrow money at artificially cheap rates, which increases over-spending by Congress. They enable the military industrial complex and its spending levels (they temporarily keep the US from having to make a choice between social welfare and present high military spending levels). They enable Congress to kick the can down the road on spending, avoiding political-career decision risks. They enable artificially low tax rates (eventually you have to pay for the budget deficits & debt, one way or another), for pretty much everyone. They enable artificially low mortgage rates and other borrowing rates, which pumps up consumer behavior and inflates housing prices.
One of the things that surprises me whenever I read other people's reviews of Shoe Dog is how most don't seem to get the point, revealed by a careful reading between the lines, that Phil Knight is as ruthless, cold blooded, and cunning as any other billionaire entrepreneur out there. Not that I hold this against him; but time and time again in the recounting of how he grew the business, he would reveal these traits. He was however smart enough to conceal this under layers of PR fluff.
Yes, there will be one eventually, but it could be in 2030 or 2040, as far as we all know.
Nike wanted to introduce a shoe during the 1968 Olympics being held at Mexico City. In honour of the location, they initially called it the "Aztec". But Adidas already had a shoe called "Azteca Gold" and naturally threatened to sue. Bowerman asked "Who was the guy who kicked the shit out of the Aztecs?" . Phil replied Cortez and the iconic Nike Cortez was born :-)
Edit: It seems that Bowerman asked the question. Corrected!
How to mistreat your allies (Jeff Johnson)
How to mislead your suppliers and almost lose in court.
Do the marketing methods they used, which is perhaps the impressive part, even work today? Do you show up to track meets with shoes from an unknown brand? I don't think so. Do things that don't scale, but not the exact same things that worked decades ago.
But sometimes I wonder if they no longer work because we live in different (modern) times?
Was it all worth it? Who knows!
Or is it that in 1964, there was no real track shoe at all.
Was coming to a track meet with branded, fashionable shoes in 1964 the equivalent of turning up in 1998 with an awesome animated Flash website?
The Japanese brand Tiger, for one (later becoming Asics). IIRC, though cannot quickly find a reference, it's the brand Phil Knight was selling out of the trunk of his car before starting Nike with Bowerman.
And was it some company honor system that prevented him from starting his own shoe business instead of being the employee? (since he could obviously sell from scratch)
I don't have any idea if a non-compete would be a standard part of the contract in that time.
I'd hazard a guess that Johnson was really great at doing what he did to create Blue Ribbon when he had the backing of an established company behind him, but starting from absolute zero might not have been his cup of tea.
I think that this is true as long as the thing that you are appreciating itself was being done for good and noble purposes, or not in furtherance of a greater evil.
So you can look at something about China, or something about George Washington, or something about Apple/Nike/Google, and recount that history in full appreciation of the magic that went into succeeding in that moment.
I think if every time you say something good about someone/something you’re supposed to disclaim everything terrible, you’ll have a hell of a lot of disclaiming to do.
There’s no reason why brands today couldn’t learn from Nike’s sales/branding story without having to emulate their manufacturing sins.