The Rise of Nike: How the Brand Became a Retail Giant
When people hear success stories, they often imagine the people and companies involved were always at the top. In truth, a lot of steps are taken — usually some in the wrong direction — before a company or person achieves success.
For most people, Nike is an icon in the world of athletic shoes and fitness apparel. It may even be difficult to remember a time when Nike wasn’t at the top. However, it took the company 60 years to become the behemoth industry leader it is today. Let’s take a look at how the brand became a retail giant.
The Meeting of Minds
In the 1960s, two innovative minds came together when University of Oregon student Phil Knight ran track and field under the guidance of Coach Bill Bowerman. Bowerman was continually trying to provide better shoes for his runners, using the skills he learned from a local cobbler to tweak existing shoes.
A Radical Thought Emerges
After graduating from the University of Oregon, Knight went on to earn an MBA at Stanford University. During his time there, he wrote a paper focusing on the manufacture of running shoes. He asserted that running shoes should be produced in Japan instead of Germany, where most were made at the time.
The Beginning of an Empire
In 1962, after graduating with his MBA, Knight took a trip to Japan that turned out to be a rather lucrative journey. Before returning to the United States, he met with Onitsuka Tiger shoe company and made a deal to export Japan’s Tiger shoes and sell them in the U.S.
Humble Beginnings in the Trunk of a Car
In the beginning, Blue Ribbon Sports wasn’t a large enterprise, but Knight and Bowerman were determined to make their venture a success. That determination led Knight to start selling shoes out of his car, but it wasn’t necessary for long.
The Tiger Cortez Was Created
In 1965, Coach Bowerman came up with a new design for runners that provided support, soft sponge rubber in the toe area and at the top of the heel, a cushioned innersole, a firm rubber outsole and hard rubber in the middle of the heel. The design was intended to provide great support and comfort and is still in use today.
A Lawsuit Changes the Path of Blue Ribbon Sports
Unfortunately, the relationship between Blue Ribbon and Onitsuka Tiger hit a sour note when Tiger began selling its own version of the hit shoe. Tiger named the shoe "Nike" and used it as a way to break free from its contract with Blue Ribbon. In 1971, a judge decided that both companies could continue to sell their versions of the shoes.
Acquiring a Logo on the Cheap
After deciding to rebrand to Nike, Phil Knight paid a Portland State University design student to create some sketches for a logo. Carolyn Davis created the well-known swoosh design, and Knight chose it from an assortment of ideas. Unaware of how popular the design would grow, Davis only charged Knight $35 for the logo.
A Breakfast Fiasco
Would you believe Coach Bowerman's breakfast led to Nike's next big thing? He had been searching for a way to provide more traction. As he ate a waffle his wife cooked for him one morning, the grooves in the waffle ignited a spark of inspiration. He added melted urethane to the waffle iron to create an inverted waffle design.
The Frenzy of the Initial Public Offering
Coach Bowerman didn’t let the waffle iron mishap hold him back. He performed his next experiment with urethane, some non-stick spray and a new waffle iron. The end result led to the creation of another big money maker for Nike. The "Waffle Trainer" took Nike up another notch, and the company continued to grow at a consistent pace.
A Nasty Endorsement Deal
In 1972, Ilie Nastase, a Romanian tennis player, became the first athlete to sign an endorsement contract with Nike. He was known for his talent on the tennis court, but that wasn’t the end of the story. His official nickname was "the Bucharest Buffoon," but most people just called him "Nasty."
Catching a Tailwind
In 1978, "Air" technology first arrived on the scene in the new Tailwind shoe. The technology was invented by former NASA engineer M. Frank Rudy and used a version of an aerospace technique referred to as "blow rubber molding." This technique — previously used for astronaut helmets — was adapted to create pouches for the midsole of the Tailwind shoe.
Coaxing a Reluctant Michael Jordan
Ilie Nastase was just the first of many celebrity endorsements acquired by Nike. The company set its sights on Michael Jordan, even before his first NBA season in 1984. (Yes, he was that good.) Jordan had his eye on an endorsement deal with Adidas and had never even worn a pair of Nikes.
Cashing in on Some Royalties
The endorsement contract turned out to be a wise choice for both Nike and Michael Jordan. The potential Nike saw in Jordan was dead-on, and the Air Jordan line made more than $100 million before 1985 came to a close. More than three decades later, the shoe line still rakes in huge profits for Nike.
The Revolutionary Nike Air Max 87
On March 26, 1987, Nike introduced the first Air Max shoe. It broke the mold as the first shoe to actually let you see the Air cushioning unit in the heel. It also had Air units that were three times larger than previous Air designs. Strangely, the shoe is known as both the Air Max 1 and the Air Max 87.
Just Do It: The Famous Slogan's Strange Inspiration
Nike's famous "Just Do It" slogan first showed up in an ad campaign in 1988. However, the inspiration — and it’s an odd one — occurred more than a decade earlier. Gary Gilmore, a career criminal, murdered two men in robberies. He was convicted in 1976 of first-degree murder and sentenced to death by firing squad.
A Dying Man's Final Words
Regardless of his reasons for choosing not to fight, Gilmore spoke his last words — "Let's do it" — in January 1977 just before being put to death by firing squad. Nike changed these three simple words to "Just Do It" and has used the slogan ever since.
Bo Knows All About Perfect Timing
The 1989 Midsummer Classic saw the introduction of the "Bo Knows" campaign, a marketing ploy to promote Nike's cross-training shoes. Bo Jackson was the first athlete of modern times to play both professional football and baseball. Nike hoped for good results and got an incredible surprise that night.
Welcome to NikeTown
In 1990, Nike set up its world headquarters in Beaverton, Oregon. By November, the first NikeTown store opened in downtown Portland — the city where the company originally began. It took little time for the store to achieve high sales and earn awards for its retail design and business acumen.
Facing Down Some Dark Accusations
In the midst of all the company highs, a heart wrenching low hit the company when activist Jeff Ballinger published an unflattering report in 1991. The report called Nike out for the mistreatment of workers in its Indonesian factories. The accusations included miserably low wages of 14 cents per hour, child labor and indoor pollution, among other things.
A Tiger Won’t Change His Stripes
In 1996, Tiger Woods signed his first endorsement contract with Nike — a five-year contract totaling $40 million. In 2001, he signed his second five-year contract, which totaled $60 million more than the first. He extended his contract term to seven years at the next renewal in 2006, and his 2013 contract was worth $200 million.
A Manufacturing Overhaul
After hordes of protests, negative attention and demands for Michael Jordan and other stars to denounce Nike, the company initiated plans to make some changes in its manufacturing plants. A reasonable minimum age was established for factory workers, and OSHA's clean air standards were implemented overseas.
Saying Goodbye to a Legendary Innovator
In December 1999, Bill Bowerman passed away at the age of 88 after living a long, eventful life filled with brilliant innovations. As the track-and-field coach at the University of Oregon for 24 years, he coached 19 Olympians and 44 All-Americans during his career.
Nike Goes Surfing
In 2002, Nike dove into a new market when the company bought Hurley, a Southern California surfwear company. Nike's desire to expand into surfing, skating and snowboarding came to life through this acquisition. The deal also gave former owner Bob Hurley the chance to live his dream of taking Hurley global.
Capitalizing on More Basketball Endorsements
Lebron James made a significant career move when he signed a lifetime contract with Nike in 2015. The deal will reportedly make James more than $1 billion by the time he is 64. Not bad for a business-savvy superstar who has already made hundreds of millions in other ventures.
Acquisition of a Classic Competitor
Remember classic Converse high tops? You probably have a pair in your closet right now. In 2003, Nike spent $305 million to purchase Converse, an American icon that had suffered dropping sales in recent years. By 2016, sales for the brand had skyrocketed to $2 billion, with almost 20% growth in sales every year.
Phil Knight’s New Career Moves
After a long and fulfilling career, Phil Knight chose to step down as Nike's CEO and president in 2004. William D. Perez took on Knight's former responsibilities, while Knight served as chairman of the board for an additional 11 years.
The Celebrity Endorsements Continue
In 2008, professional baseball player Derek Jeter signed a Nike endorsement contract worth $100 million. The contract paid Jeter $10 million per year for 10 years. He also had other sponsors, such as Gillette and Avon.
Scoring a Uniform Touchdown
The year 2012 marked another big move on Nike's part. The National Football League (NFL) signed a contract making Nike the NFL's official uniform provider, replacing chief competitor Reebok. Nike provided all 32 NFL teams with uniforms, footwear, gloves and sideline apparel for a period of eight years.
Establishing a Uniform Monopoly
In June 2015, Nike continued its uniform contract takeover. The NBA signed an eight-year deal with Nike, kicking competitor Adidas to the sidelines. Nike produced both on-court uniforms and other apparel — all with the iconic Nike swoosh on them.
A Risky Endorsement
Perhaps Nike learned that negative attention sometimes pays off, thanks to endorsements from beleaguered stars like Tiger Woods and Kobe Bryant. More recently, the company chose to renew an endorsement deal with Colin Kaepernick, even though his national anthem protests essentially tanked his NFL career.