Nike, every mention

Nike (Audio) · Acquired Jul 25, 2023 · 100 mentions

• ▶ 1:49:19 David Rosenthal But the actual butterfly flaps its wings, hugely important outcome of this for the Nike journey.
• ▶ 1:49:33 David Rosenthal Coming into Phil Knight and the Nike orbit.
• ▶ 1:49:41 David Rosenthal Strasser was the junior attorney at the Portland law firm that was working on the Nike case.
• ▶ 1:50:07 David Rosenthal You know, everybody else at Nike at the time, they're all former runners.
• ▶ 1:50:25 David Rosenthal He gets the nickname within Nike of Rolling Thunder.
• ▶ 1:51:05 David Rosenthal They paid him 10,000 dollars to wear Nike tennis shoes.
• ▶ 1:51:36 David Rosenthal And then Nike is showing up on nationally televised broadcasts every single night.
• ▶ 1:51:55 David Rosenthal Strasser hires Sonny Vaccaro to come in and build the college basketball program for Nike, and this is another just equally
• ▶ 1:52:07 David Rosenthal So Strasser gets Sonny to go around the country and sign up coaches of the big basketball schools to become Nike coaches.
• ▶ 1:52:18 David Rosenthal Now, there's nothing preventing the coaches at schools from being consultants, advisors, running Nike clinics.
• ▶ 1:52:53 David Rosenthal They get legendary coach Jimmy V at Iona to sign up to be committed to being Nike coaches and their teams.
• ▶ 1:52:59 David Rosenthal Wearing Nike.
• ▶ 1:53:11 David Rosenthal Nike is commercializing the purity of college athletics.
• ▶ 1:53:26 David Rosenthal Is one of the colleges that Nike has signed up, not Iona.
• ▶ 1:53:38 David Rosenthal Instead of being pissed off that he was included in this shameful article with the Post, he calls up Nike
• ▶ 1:53:52 David Rosenthal and he becomes a big Nike coach.
• ▶ 1:54:04 David Rosenthal Now, selling football cleats is never a big business for Nike, but college football is huge.
• ▶ 1:54:46 David Rosenthal So, one thing that's worth mentioning, this is sort of obvious, but didn't click for me until really getting pretty deep in the research here for Nike.
• ▶ 1:54:58 David Rosenthal So Nike, Adidas, you know, Reebok, they sponsor lots of sports, but running, basketball, and tennis are the only sports that matter, because those are the only shoes that normal people can wear.
• ▶ 1:55:19 David Rosenthal Even to this day, all the marketing, all the athletes, everything you see on TV of Nike and the other athletics companies, it's not about getting you to buy the shoes that that athlete is wearing.
• ▶ 1:55:33 David Rosenthal It's about getting you to buy Nike.
• ▶ 1:56:40 David Rosenthal Strasser alone architected this grand strategy, or even, I'm not really sure that Phil or anybody at Nike understood this at this time, but certainly Strasser executes this in just an incredible way.
• ▶ 1:57:42 David Rosenthal It was 1976 when they officially changed the actual name of the company to Nike.
• ▶ 1:59:24 David Rosenthal Rudy gets between 10 to 20 cent royalty for each pair of air sole technology shoes that Nike sells.
• ▶ 1:59:30 David Rosenthal Eventually Nike would just buy Rudy's company, and Rudy would become an employee of Nike.
• ▶ 1:59:51 David Rosenthal There are all these new employees there who are just kind of taking for granted that Nike is winning.
• ▶ 2:00:05 David Rosenthal He Xeroxes, he copies this memo, and pastes it up on the walls all around the office of Nike.
• ▶ 2:00:27 Ben Gilbert Here is the document that Phil Knight wrote articulating Nike's principles.
• ▶ 2:00:38 Ben Gilbert Two, Nike's principles.
• ▶ 2:00:42 Ben Gilbert When this was written, it was actually still Blue Ribbon Sports, so that it was not yet the Nike corporation.
• ▶ 2:00:54 Ben Gilbert That was never the Nike swoosh.
• ▶ 2:01:19 Ben Gilbert So, not Nike Inc., not the swoosh.
• ▶ 2:04:32 David Rosenthal Nike principles, according to Rob Strasser in 1977.
• ▶ 2:05:53 Ben Gilbert I read these differently than I used to read them, because when I didn't know Nike's journey, I sort of would just read them and be like, yeah, that's awesome, or like, wow, that's so pithy, I can't believe their official corporate values…
• ▶ 2:06:05 Ben Gilbert No, this is stream of consciousness, all from Rob Strasser, all into the typewriter, and like, some of them are things that Nike would never say today because it shows the trade-offs inherent in their business.
• ▶ 2:06:36 Ben Gilbert Like, this is a foreshadow of Rob Strasser hating the bureaucracy at Nike after its IPO that we'll talk about in a second.
• ▶ 2:06:51 Ben Gilbert So there's, like, so much in here that when you really start to know the company's history and story and the headspace that he was in when he punched this out, it reads entirely differently to me than I sort of used to just read it as a,…
• ▶ 2:07:14 Ben Gilbert The one that is still in Nike's maxims today that they distribute to employees that is
• ▶ 2:07:27 Ben Gilbert Okay, so we're approaching 1980, they're about to go public, and they are entirely a running shoe company.
• ▶ 2:07:33 Ben Gilbert Still no sign of the Nike that they are today, where they have apparel, where they're diversified across a zillion sports, and from their revenue, they're basically a running shoe company that makes shoes for men.
• ▶ 2:07:46 David Rosenthal So, Nike IPOs, the second week of December in 1980, the same week as Apple.
• ▶ 2:08:21 David Rosenthal As Nike got bigger, he just didn't want to be a major listed shareholder in a highly visible public company.
• ▶ 2:08:34 David Rosenthal So when they went public, after the IPO, Phil owned 46% of the company and was overnight one of the richest people in America.
• ▶ 2:09:10 David Rosenthal Huge fall from grace that is about to happen for Nike, basically right after they go public.
• ▶ 2:10:06 David Rosenthal Early Nike did so many things right, but they made one critical mistake.
• ▶ 2:10:43 David Rosenthal And Nike absolutely refused to see that, and refused to do aerobics, like, on principle.
• ▶ 2:10:52 Ben Gilbert I mean, in 1980, Reebok USA is founded, and by 1988, Reebok eclipses Nike in sales.
• ▶ 2:11:02 Ben Gilbert And it's not like Nike fell out of favor in running, and it's not like people who were running stopped running, but Nike had ridden the running boom at this insane growth rate of running, and even if running continued, its growth rate was…
• ▶ 2:11:53 David Rosenthal They developed a business plan to cash in on the aerobics fad, and they made a shoe that, in Nike's principled opinion, sucked, but it went really great with leg warmers, you know?
• ▶ 2:12:09 David Rosenthal It was everything that Nike was not.
• ▶ 2:12:12 David Rosenthal And their rise, like you said, Ben, was even steeper and faster than Nike's.
• ▶ 2:12:36 Ben Gilbert They raised one smaller pipe later in their history, but the company was basically built on debt financing and this twenty-two million in the bank from IPO.
• ▶ 2:12:55 Ben Gilbert They've got half the running market and this dominant brand where they just steamrolled the competition to get into all these sports deals, but right at the same time as the aerobics boom is coming up, Adidas is becoming a very real…
• ▶ 2:13:39 David Rosenthal So, interestingly, financially, there only are a couple quarters where Nike's revenue declines.
• ▶ 2:13:52 David Rosenthal Retailers had to commit six plus months in advance to their orders, and yeah, Nike was able to at least maintain revenue through a lot of this, but the actual underlying dynamics of the business are ugly at this point in time.
• ▶ 2:14:16 David Rosenthal Phil Knight actually wrote in the letter to shareholders that year, 1984, like George Orwell predicted, was not a good year for Nike.
• ▶ 2:14:29 David Rosenthal But, 1984 was also the seed of something pretty incredible that would make everything that happened before in Nike look like child's play, and that would be a young kid from North Carolina, Michael Jordan, who walks in the door.
• ▶ 2:14:49 David Rosenthal This is such a fun time to do the Nike episode because the movie Air just came out, which really is like a fun kind of summer blockbuster movie.
• ▶ 2:15:07 David Rosenthal Michael Jordan saved Nike.
• ▶ 2:16:06 David Rosenthal The big important thing from Michael Jordan, the Air Jordan one, and then everything it became in the Jordan brand is that it didn't just save Nike.
• ▶ 2:16:52 Ben Gilbert So, Nike takes a chance.
• ▶ 2:17:24 Ben Gilbert He was not as big and as physical as a lot of the guys dominating the NBA at the time, and so doing a big deal with Jordan really was more of a gamble for Nike than they would do with really any athlete today.
• ▶ 2:17:43 David Rosenthal Nike, like we just said, their back's against the wall.
• ▶ 2:17:46 David Rosenthal They need to do something to save the company.
• ▶ 2:19:02 David Rosenthal Nike says, we are gonna make you a signature shoe, and then you are gonna participate in the upside from that.
• ▶ 2:19:12 David Rosenthal Nike wanted it that way.
• ▶ 2:19:31 Ben Gilbert Like, Nike had frickin' nothing to lose.
• ▶ 2:19:41 Ben Gilbert Of course, Nike, it turns out, it was a big paycheck that they cut Jordan for years and years and years.
• ▶ 2:19:45 Ben Gilbert But Nike was truly doing something here that their competitors could not, and it was smart.
• ▶ 2:20:00 David Rosenthal Also in the deal, the previous year, Nike had sold 400,000 pairs of Nike basketball shoes.
• ▶ 2:20:17 David Rosenthal Everything in the Nike basketball line.
• ▶ 2:20:33 David Rosenthal It's about the swoosh, and it's about the halo effect and the lifting up of the whole company's sales.
• ▶ 2:20:54 David Rosenthal So, Nike also guarantees a minimum ad spend to promote the Jordan line.
• ▶ 2:21:01 David Rosenthal They also give Jordan stock options in the company.
• ▶ 2:21:05 David Rosenthal This is a hell of a deal, and it's smart for Nike.
• ▶ 2:21:27 Ben Gilbert Is there any scenario where Jordan has any downside, or is all of the downside owned by Nike?
• ▶ 2:21:34 David Rosenthal No, it's all owned by Nike, because there's the minimum guaranteed payment.
• ▶ 2:21:49 David Rosenthal Jordan didn't want to work with Nike.
• ▶ 2:21:51 David Rosenthal Nike was for the second-rate pro players.
• ▶ 2:22:11 Ben Gilbert And so to put a finer point on this here, Jordan didn't wanna be Nike's partner, so he basically wasn't, and they backed up the truck for him.
• ▶ 2:22:41 David Rosenthal So, Jordan actually takes the deal and shops it to Adidas afterwards, and he's like, I really don't want to go with Nike.
• ▶ 2:22:55 David Rosenthal We could give you a 100,000 dollars a year, you know, and uh, and so reluctantly Jordan goes with Nike.
• ▶ 2:23:47 David Rosenthal So it's about 15% of Nike's entire revenue for the whole year.
• ▶ 2:24:13 David Rosenthal That's 6.3 million dollars that Jordan got from Nike in 1985.
• ▶ 2:24:26 Ben Gilbert So he made the exact same amount from the Nike deal in his first year.
• ▶ 2:25:23 David Rosenthal So there was some protection for Nike.
• ▶ 2:25:53 David Rosenthal He said, Phil Knight and Nike have made me into a dream.
• ▶ 2:26:58 David Rosenthal LeBron knew exactly what he was getting into when he signed with Nike out of high school and went to the NBA, but like,
• ▶ 2:27:17 Ben Gilbert Nike, this is, I think, the first time they really flex their ability to recognize an opportunity for an incredible marketing moment.
• ▶ 2:27:30 Ben Gilbert Jordan starts wearing, in preseason and in warmups, some modified airships, cuz Nike's actually not done making the Air Jordan One yet.
• ▶ 2:28:37 Ben Gilbert And this gives Nike this incredible opportunity to make a marketing moment out of it.
• ▶ 2:28:59 Ben Gilbert Over an 82 game season, and facing possible ejection, it's a big tab for Nike, and it's a big problem for Jordan.
• ▶ 2:30:18 Ben Gilbert Between Nike and the NBA, or Nike and Michael Jordan, because the fine was never levied.
• ▶ 2:30:22 Ben Gilbert It was a threat that then Nike made the Air Jordan ones before anything could be enforced.
• ▶ 2:30:34 David Rosenthal The thing that's so great though, Nike, right?
• ▶ 2:31:01 David Rosenthal Nike sold one hundred and twenty six million dollars worth of Air Jordan one shoes and merchandise in the first year.
• ▶ 2:31:10 David Rosenthal Another fact that gets put out there is that Nike sold a hundred and fifty million dollars of Air Jordan shoes and merchandise during the first three years.
• ▶ 2:31:31 David Rosenthal Nike needed that first year of the Jordan deal to be a huge hit.
• ▶ 2:31:36 David Rosenthal So they stuffed the channel.
• ▶ 2:31:37 David Rosenthal They pushed so much product on retailers and through the futures program and whatnot that that's how they hit the hundred and twenty six million dollars in sales.