Who woulda think that the behemoth that is Nike would start out out of the trunk of a car?

(And btw, if you could respond to the poll at the bottom of today’s edition, we sure would appreciate it. Thanks!)

When a young Phil Knight was in business school at Stanford in the early 1960s, he wrote a fairly radical graduation thesis.

He prosed that the U.S. sneaker market could be disrupted by importing high-quality, low-cost Japanese running shoes—similar to how Japanese car manufacturers were beginning to challenge American automakers.

His professors scoffed.

But (and as you may have experienced yourself) when an entrepreneur gets a good idea, it won’t leave them alone.

Such is what happened to Knight.

Risk #1: His First Bold Bet

Upon graduation, he borrowed $50 from his father and flew to Japan.

He didn’t have a company, nor any contacts, nor any experience. He was armed with nothing more than an idea and unquestioned belief in himself.

In Tokyo, Knight found a Japanese company called Tiger that was was making running shoes (Knight had been a standout runner at the University of Oregon.)

Knight literally knocked on the door unannounced and pitched himself as an American distributor for a small sneaker company (that didn’t even yet exist) that he called Blue Ribbon Sports.

Somehow, it worked.

Knight secured a deal to import and sell Tiger running shoes in the U.S.

Risk #2: Selling Sneakers Out of His Car

Knight started out literally selling Tiger shoes out of the trunk of his car.

He worked a day job as an accountant to keep himself afloat and ran his Blue Ribbon Sports as a side hustle with razor thin margins.

For years, Blue Ribbon Sports didn’t make money.

Even so, Knight kept reinvesting every dollar back into the company. At one point, he was living off $18,000 a year while ordering millions of dollars in shoes.

Risk #3: Breaking Away

Nike might not exist if Knight hadn’t made another daring move in 1971.

After years of selling Tiger shoes, he learned that Tiger was likely planning to cut him out and go direct to U.S. retailers itself.

But instead of backing down, Knight secretly started to create his own brand on the side.

With no manufacturing experience, no factory, and no clear plan, he worked with his former college track coach, Bill Bowerman, to design a brand and a new kind of running shoe.

Risk #4: Betting It All on Waffles

Knight and Bowerman knew that they needed something unique if Nike was ever going to take off. Bowerman loved tinkering with sneaker designs for his team, but their breakthrough came from the craziest of places.

One weekend morning, Bowerman’s wife made him some waffles.

Bowerman looked at the waffle pattern and eureka!

He took the waffle iron, ran down to his basement workshop, poured some polyurethane into it, and ended up with a waffle-shaped, absorbent sole that would change sports forever.

It turned out that a sneaker equipped with the waffle-soled gripped the track better and was easier on the feet.

Boweman and Knight bet their future on this radical, crazy shoe.

That shoe became the Nike Cortez, and it launched a new brand that replaced Blue Ribbon Sports:

Nike (named after the Greek goddess of victory.)

Risk #5: Betting Big on Endorsements

Nike slowly grew, but lagged far behind the giants of Adidas and Puma.

But in the early ‘80s, Nike decided to double down on a mostly unproven marketing tactic.

It had had some success signing tennis players to endorsement deals, netting Nike some good publicity in the process.

In 1984, an exec at Nike had another bold idea: They should sign a young, unproven NBA rookie to a massive endorsement deal.

A guy named Michael Jordan.

Jordan was all set to sign with Adidas when Nike went all full-court press on him.

And that was crazy because Nike was barely in the basketball business at the time. But Knight offered MJ a deal he couldn’t refuse—and designed a custom shoe just for him.

Another big bet paid off as the Air Jordan 1 sold $126 million in its first year and changed Nike forever.

No, All Risks Didn’t Pay Off

Knight’s willingness to bet big also led to some stumbles.

In the early years, Nike was constantly on the edge of bankruptcy, relying on bank loans and stretching suppliers to the limit. A bad deal with the U.S. government almost wiped them out. Legal battles with competitors drained cash.

But every time he hit a wall, Knight went for it. He borrowed more. He fought harder. He refused to quit. He innovated.

And eventually, it worked.

The Goddess of Victory Indeed.

The Takeaway

Needless to say, Phil Knight is a unique character. A brilliant, visionary entrepreneur with an appetite for big, bold bets and a crafty innovater. The good news for the rest of us is that entrepreneurship typically does not require that sort of wild risk-taking. Indeed, the best entrepreneurs look to mitigate risk, going for smart, prudent risks instead.

But either way, risk and innovation are indeed key to the game.

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Steal This Strategy

📖 Book – Shoe Dog: Phil Knight’s fantastic memoir is a masterclass in risk-taking, resilience, and entrepreneurial grit.

🎥 Video – The Rise of Nike: A short, interesting video that looks at the highs and lows of Nike’’s growth.

🎬 Movie: Air: Ben Affleck and Matt Damon’s great movie about the signing of Michael Jordan by Nike.

🛠️ Tool – Nike’s Design Your Own Shoe: Experiment with risk-taking in design on your own. Create your own custom sneaker.

About Steve

Steve Strauss is the best-selling author of The Small Business Bible (and 17 other books), Inc.’s small business columnist, a lawyer (non-practicing), and an entrepreneur. He sold his last venture, TheSelfEmployed.com to Mark Cuban & Zen Business. Need a ghostwriter or a newsletter for your business? Contact Steve!