Entrepreneurs

How Phil Knight turned a dream into a $25 billion fortune

He began his career like most ordinary college grads: no money, no clear direction and what looked like a lifetime at a desk job as an accountant. What transpired instead was one of the greatest stories of American entrepreneurship and a $100 billion sportswear giant. This is the story of Nike Co-founder Phil Knight, who turned his crazy idea into reality. The 78-year-old is telling the story behind Nike for the first time in his new memoir, "Shoe Dog."

The idea for the athletic apparel giant "came from running track at Hayward Field in Oregon and out of the classroom at Stanford business school," Knight said.

A self-described "average mid-distance runner" on the track team, Phil "Buck" Knight watched as his track coach at University of Oregon, Bill Bowerman, tinkered with athletes' running shoes and the immediate impact it made on their performance.

Combine that with a paper he wrote at Stanford on why shoes should be manufactured out of Japan (instead of Germany), where the labor was cheaper, and his crazy idea was born.

First called Blue Ribbon Sports, Knight's business began on a whim, when he convinced a group of Japanese businessmen to export their popular Tiger sneakers to the United States and grant him exclusivity in selling them. After selling Tigers out of the trunk of his car, Knight saw the demand was there.

So he ordered more sneakers from Japan. And more. Until he had to hire additional people to keep up with the growing demand.

It wasn't always a smooth ride. Knight's shipments from Japan were rarely on time, and he frequently faced major financing problems. Despite Knight doubling his sales constantly, banks were reluctant to provide the loans needed, and two banks ultimately dropped him as a customer.

When trouble began with the Japanese company over their exclusivity agreement, Knight was forced to break from the factory. Blue Ribbon Sports was essentially starting over. Knight and his 45 employees at the time had to find new factories to produce their shoes, and even create a new name for the company.

Knight originally wanted to call the company "Dimension Six," something he was teased about later on. "Just think where we'd be if I picked that name," he said.

"When Jeff Johnson came up with Nike, I didn't know if I liked it too much, but it's better than the other names. It turned out pretty good," he added.

After years of strong growth but with struggles to stay in the black, Knight and his team decided in December of 1980 to finally take Nike public. "We were concerned about losing control," said Knight, who added that ultimately, it was one of the best things the company ever did.

Immediately, Knight's ownership in shares made him worth $178 million. Today, Forbes estimates his net worth at more than $25 billion, making him the 24th richest person in the United States.

Nike has more than $30 billion in sales, it represents the top athletes in the world and it has achieved a truly global footprint.

Knight's advice to other entrepreneurs? "Be prepared for a lot of hardship and unexpected setbacks. For me, there was nothing that I would have rather done."

In June, Knight is handing the baton to Nike CEO Mark Parker, who will take over as chairman of the board.

"I'm excited about the future of Nike," Knight said. "I think a great growth period lies ahead."