5 Lessons Learned from Shoe Dog: A Memoir By the Creator of Nike. A business book recommendation.
Shoe Dog is Phil Knight’s memoir about the rise of the Nike shoe company. It is one of my favorite memoirs and makes my list of the Top 10 books I recommend.
There are many significant stories in Shoe Dog, and Phil is a highly skilled writer. But in this Shoe Dog book review, I’m sharing 5 business lessons you can learn from reading this book.
1. Cashflow is vital to the health of your business.
Phil would order $8000 worth of sneakers. Then he’d head to the bank to take out a loan for $8000. Phil and his one salesman would sell the shoes, pay off the bank loan, and because of the demand for the sneakers, Phil would double the size of the next order, returning to the bank for a $16,000 loan.
This drove the bankers crazy because they didn’t like seeing empty bank accounts. All the money Phil earned went right back out the door in the form of new shoe orders. They had no equity.
And because the shoe manufacturer was often late in shipping orders, that left Phil a tiny window of time in which to receive the shoes, sell them, and pay off the bank loan.
Because of the precarious cash flow, there were times Phil’s credit cards were declined. On one occasion, when the company had grown larger, they didn’t meet payroll—because they didn’t have the cash to cover the payroll checks. In 1971, one bank actually fired Phil. They told him they would no longer cover his loans. And at that point, Nike was doing $1.3 million dollars in sales!
The cash flow issues continued until Nike went public in 1980. In fact, cash flow was the primary reason they went public. It was the only way to continue to grow the business.
2. Getting a job to support your dream isn’t the worst thing in the world.
Because of Nike’s uncertain financial position, Phil decided he should take a job as a CPA with Price Waterhouse (way before PW became Price Waterhouse Cooper). He hated not working on Blue Ribbon (the original name for Nike) full time but he turned that time to his advantage.
Phil used the opportunity to funnel much of his paycheck into Nike’s bank account, making the cash balance a bit higher. He also used the opportunity to study the clients of Price Waterhouse. He learned how the businesses worked and what things caused them to fail.
Guess what the leading cause of failure was — lack of equity. See lesson #1.
3. Learning Never Stops
Phil was always reading and learning. He talks about the books he read, how he applied what he learned. How the travel he did sparked new ideas. He mentions studying the people with whom he did business, the cultures, how things worked in other countries. All of this helped him grow Nike into the business it is.
4. Fail Fast
“If Blue Ribbon [the original name for Nike] went bust, I’d have no money, and I’d be crushed. But I’d also have some valuable wisdom, which I could apply to the next business. Wisdom seemed an intangible asset, but an asset all the same, one that justified the risk…But my hope was that when I failed, if I failed, I’d fail quickly, so I’d have enough time, enough years, to implement all the hard-won lessons. I wasn’t much for setting goals, but this goal kept flashing through my mind every day, until it became my internal chant: Fail fast.”
Yes, you might fail, but you can take what you’ve learned and turn that information into an asset. And the sooner you fail, the earlier you can try again.
5. You Need to Believe
Why was Phil so successful at selling running shoes? He’d failed in his attempts to sell encyclopedias. He didn’t do much better at selling mutual funds. What was different about selling shoes?
The difference was his belief in running.
“I believed that if people got out and ran a few miles every day, the world would be a better place and I believed these shoes were better to run in. People, sensing my belief, wanted some of that belief for themselves…Belief is irresistible.”
That’s what I hope to convey to you. A belief that reading and books will help you get where you want to go in life.
Final Thoughts on Shoe Dog by Phil Knight
Shoe Dog is a fantastic read for all new and aspiring entrepreneurs. There’s no shortage of books about the good side of business. The money you can make, the freedom you can create. But there are few honest tales about the struggles you’ll face in the growth stage. And you need to understand, there will be struggles.
I recommend you invest in a copy of Shoe Dog. This is a memoir you can come back to whenever the going gets tough. Order your copy of Shoe Dog today.