How Phil Knight built Nike into one of the biggest brands in the world and became a billionaire

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Christian Petersen/Getty Images

Over the past 51 years, Nike cofounder Phil Knight built the company from an idea he had in grad school into one of the biggest companies in the world.

With a net worth of $21.6 billion, he’s also one of the world’s richest self-made billionaires.

Knight might be stepping down as the brand’s longtime chairman this year, but his legacy will live on.

Here’s a look back at how Knight’s marketing prowess and relentless spirit have driven Nike from a selling a single running shoe to being synonymous with athletic gear.


Phil Knight was born on February 24, 1938. He ran track at the University of Oregon and graduated in 1959 with a degree in journalism. After serving in the Army for a year, he went back to school to earn his MBA from Stanford’s Graduate School of Business.

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Nike founder Phil Knight speaks to the crowd before the Oregon Ducks-USC Trojans game at the grand opening of the Matthew Knight Arena on January 13, 2011, in Eugene, Oregon.
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Jonathan Ferrey/Getty Images

Source: Stanford


Knight first came up with the idea for Blue Ribbon Sports — the company that later became Nike — during his time at Stanford. He teamed up with his college track coach from Oregon, Bill Bowerman, and they each put in $500 to get the company off the ground.

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Nike cofounder Bill Bowerman, inventing.
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Nike

Source: Complex


BRS’ strategy was to import Japanese sneakers called Onitsuka Tigers and sell them at higher price points in the US, making a profit on the markup. When Bowerman came up his own design for what became the brand’s signature rubber-waffled sole in 1971, BRS stayed in the Asian market and got the shoes produced there for much cheaper than competitors like Adidas, which operated out of Germany.

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A pair of Onitsuka Tigers.
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55Laney69/Flickr

Source: Complex, The Oregonian


When the company officially rebranded as Nike in 1971, several well-known athletes were prominently sporting the shoes, helping double profits annually. Knight and Bowerman’s connections to the running community and focus on producing a high-quality product made Nike the top choice for professional athletes.

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Nike still uses celebrity athletes, like Kobe Bryant, to sell products today.
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REUTERS/Lucy Nicholson

Source: Harvard Business Review


The company released the Nike Cortez in 1972 in tandem with the 1972 Olympics in Munich, and Knight ensured the shoes became a top choice of Olympic athletes. The Cortezes came in a variety of colors and debuted Nike’s now ubiquitous “swoosh” logo, making them one of the first sneakers that appealed as much to fashion as to function.

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The Nike Cortez.
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Bonnaf/Flickr

Source: The Atlantic


Nike grew quickly throughout the ’70s and early ’80s, and its revenue jumped from $28.7 million in 1973 to $867 million by 1983.

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A display in the Nike store in Santa Monica, California, September 25, 2013.
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REUTERS/Lucy Nicholson

Source: ESPN


The company launched the now ubiquitous Air Force 1 model in 1982. It was the first shoe to feature Nike Air, a pocket of air in the heel that provided additional cushioning and support to basketball players. It went on to become one of the most popular sneakers ever, and millions of pairs are still sold every year.

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A pair of modern Air Force 1s.
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Dave Austria/Flickr

Source: The New York Times


One of Knight’s biggest accomplishments was signing Michael Jordan for an endorsement deal and launching Air Jordan, now one of the most successful sneaker franchises of all time. Nike courted Jordan in 1985, when he was a college basketball all-star on his way to the NBA. He signed a five-year contract for $500,000 a year, an unheard of number at the time.

Source: ESPN


Air Jordans hit stores for $65 a piece in March 1985, and by May the company had sold $70 million worth of Jordans, earning more than $100 million in revenue from the shoe by the end of the year.

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Zach Lanoue for Sneaker Museum

Source: ESPN


But when Nike’s sales began collapsing in the mid-1980s, Knight knew the company needed to make a major shift in its thinking. It was then that he realized although Nike was marketing to top athletes, the majority of its customers were average citizens, most of whom didn’t even use the shoes for sports.

Source: Harvard Business Review


Knight altered Nike from a product-oriented company to a marketing-oriented one. He began appealing to the everyday customer, eventually turning around sales around. By the end of 1991, it had regained its footing, with sales totaling over $3 billion. “The most important thing we do is market the product,” Knight told the Harvard Business Review in 1992. “Marketing knits the whole organization together. The design elements and functional characteristics of the product itself are just part of the overall marketing process.”

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Nike

Source: Harvard Business Review


Knight’s marketing genius stemmed from the fact that he didn’t focus on just selling shoes; he always made it about something more. At an industry conference in the mid-1970s, he pointed out an important distinction of his marketing scheme: He proclaimed he wasn’t in the shoe business — rather, he was in the entertainment business.

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Phil Knight in 1995.
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Jamie Squire/Getty Images

Source: ESPN


In the ’90s, Nike faced another obstacle: The company had garnered a reputation for using sweatshops and unfair labor practices. Customers began boycotting the brand and protesting outside of its stores, creating a widespread distaste for Nike that lasted nearly a decade.

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Workers pack shoes at a Nike factory in Tangerang in the West Java province of Indonesia. By raising wages and being more transparent about labor practices, Nike has been able to cultivate a better image.
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Reuters

Source: Business Insider


Sales dropped so low that, by 1998, Nike was forced to start laying off staff. Once again, Knight — who was CEO at the time — stepped in and made drastic changes to save the brand. He owned up to the company’s dismal reputation, raised the minimum wage it paid workers, improved oversight of labor practices, and made sure factories had clean air. Public perception began to turn around, and Nike found itself back on top.

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Phil Knight at the Basketball Hall of Fame Enshrinement Ceremony at Symphony Hall on September 7, 2012 in Springfield, Massachusetts.
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Jim Rogash/Getty Images

Source: Business Insider


The brand has stayed a powerhouse since. It controls a whopping 62% of athletic-footwear brand share in the US, and its annual revenue tops $30 billion.

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Nike

Sources: Business Insider, Forbes


Knight himself isn’t doing too poorly either: He’s worth a reported $21.6 billion and owns two private jets, a 2013 Gulfstream G650 and 1999 Gulfstream G-V.

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Christian Petersen/Getty Images

Source: Wealth-X


After 51 years devoted to Nike, the 77-year-old Knight announced his plans to step down as chairman last month. He hasn’t given up the reins yet, but Nike said that it hopes to name Knight’s replacement by 2016.

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Frederick M. Brown/Getty Images

Source: Forbes