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Summary: Nike Going Public: The Story Behind Shoe Dog

The Story of “Nike: Going Public” recounts the journey of sports industry titan Nike as it transitioned from a private to a public company, an important move to rescue the business. Navigating the hurdles of going public was no easy task, as this narrative unveils the trials faced by Phil Knight, Nike’s CEO, and his eventual triumph.

Introduction: A Crazy Idea

It’s 1962, and a young, fresh graduate from Stanford Business School is brimming with an unusual idea that he can’t shake off. He’s envisaged importing high-quality running shoes to America, crafted by a Japanese company, Onitsuka Tiger. Buying these shoes to sell in the US was a concept that was met with skepticism from everyone around him, including his professors, his peers, and his own father. Still, undeterred by the naysayers, he chooses to pursue his vision. And so, fueled by an undying commitment, he boards a plane to Japan, where he will present his bold proposition to an audience of seasoned Japanese businessmen.

As much to his surprise as it is to others, it turns out to be a success, and Onitsuka agrees to send him 300 pairs of shoes to jumpstart his venture.

With that, the first leg of this young entrepreneur’s journey is initiated, and in the months that follow, he finds himself selling Japanese shoes straight from the trunk of his car. This is the story of Phil Knight, and the birth of what would become one of the largest global brands, Nike.

Nike is an amazing company, with an incredible origin story, but that story isn’t our focus here. In this chapter, we want to focus on the moment when Nike became a publicly owned company.

We want to spotlight the risks, the rewards and the unique strategy Phil Knight used to overcome his fear of losing control of the company. So, if you’ve ever weighed the pros and cons of taking your company public with an IPO, and wondered about how that might affect your core business values, or even just what an IPO is, stay tuned.

Summary: Nike Going Public - The Story Behind Shoe Dog

Going Public

Now, before we get more into IPOs, let’s take a look at what triggered Nike’s decision to go public.

Like any other successful entrepreneurial journey, this one, too, was not devoid of challenges.

Along the path of growth and expansion, Nike had to face significant lawsuits that threatened its very existence. The first came from Onitsuka in 1973, the Japanese running-shoe company that gave Nike its start, alleging a breach of contract. However, they fought back, eventually winning the lawsuit in their favor. The second major legal challenge came from the American government in 1997. With the uncovering of an obscure customs law called the American Selling Price Law, Nike’s competitors sicked the US government on Nike. They were facing a $25 million lawsuit for the alleged customs violations.

Ultimately, Nike settled the claim for $9 million. Deciding that it would be better to settle than to fight the government tooth and nail. At least this way they could retain some of its goodwill.

Between the government’s lawsuit and Phil Knight not being able to get any more loans from the bank, the only way to survive was to take Nike public with an initial public offering.

What is an IPO

IPO stands for Initial Public Offering (IPO), and it refers to the process by which a private corporation offers its shares to the public in a new stock issuance for the first time. This allows the company to raise equity capital from public investors, marking a transition from a private to a public entity.

Before an IPO, a company is typically considered private, with a limited number of shareholders that may include early investors like founders, family, and friends, along with professional investors such as venture capitalists or angel investors. You can generate enough capital that way, but it can be relatively limited. What the IPO does is allow the company to raise a significant amount of money, providing the opportunity for growth and expansion. It also increases transparency and listing credibility, which can help the company secure better terms when seeking borrowed funds.

After the IPO, shares of the company are traded freely in the open market, and the previously owned private-share ownership converts to public ownership. This allows for millions of public investors to purchase shares in the company and contribute to its equity. The money raised from the IPO goes directly to the company, and any early private investors who opt to sell their shares.

However, going public also comes with significant costs and responsibilities. Public companies are required to disclose important and sometimes sensitive information, and there are ongoing costs associated with legal and banking services. Additionally, the company becomes accountable to a larger group of public shareholders.

So that’s what an IPO is. Overall, though, while it can provide a company with capital for future growth and an opportunity for early investors to realize their investments, it’s important to understand that they can also be risky investments.

A Clever Move

Now, back to the story of Nike. At the time of the IPO, Nike was a private company with very few owners. Two to be exact: Phil Knight and Bill Bowerman.

At the time, Bowerman was the most famous track coach in America. He joined Nike in its infancy, when Knight was selling the shoes out of his trunk. However, Bowerman wanted Knight to retain operational control of the company, so they ended up splitting the company 51 percent to Knight and 49 percent to Bowerman.

One of Phil Knight’s major concerns about going public was about what would happen if they had to relinquish some of that control. Not just control of the operations but the ethos of the company.

He didn’t want Nike to become another faceless corporation with a board of directors only motivated by short-term profits. So they came up with a unique company-share structure. There would be two classes of shares: class A and class B. Class A shareholders would elect 9 of the company’s 12 board members. Class B shareholders would elect the remaining 3 board members.

According to investopedia, the Knight family owns 97 percent of the class A shares and therefore has effective control over the company, even though the majority of the company is publicly owned and traded.

Remember: Nike was facing a $25 million government lawsuit before it decided to go public. By making it a publicly owned and traded company, with an initial trading price between $18 and $22, Nike made millions of dollars, which likely saved the company.

Preserving the Core and Scaling New Heights

In spite of the inevitable challenges, what remained constant in the company’s journey was its commitment to preserve the core values that defined it. They believed that work should be both playful and meaningful, and that one must always strive to avoid a passive life that just seemed to slip by. The motto “Grow or Die” was deeply ingrained in their business strategy, with all profits invested straight back into the business to fuel its growth.

Even after taking Nike public through an initial public offering, the company managed to maintain its unique ethos and ethics, thanks to innovative strategies and an unwavering commitment to its integrity. Today, the company prides itself on this integrity, attributing much of its worldwide success to its adherence to these values. Through it all, the company’s journey has shown that the true power of a brand lies in staying true to its beliefs, showing unwavering commitment to its ideas, and constantly striving to deliver on its promises.

Maintaining the core values and culture of a company, while in the stage of rapid growth, is a challenge, to say the least. The early Nike team’s awareness of the risks that come with growth and shared ownership helped them to split the pie while keeping a large influence on what really makes a company successful – its culture.

But Nike isn’t the first company to be put in the position of having to think about how to preserve core values, and grow. In the summary Masters of Scale, author Ried Hoffman describes a similar scenario facing another global brand, Netflix, and how they successfully navigated the challenge.

Here’s an excerpt:

“So as soon as funding is in place, you can start scaling up – right?

Not quite. Instead, make strategic use of that beginning phase when you have a small, loyal – even fanatical – group of users. Find your early superfans and hypercritics, and take time to learn from their passionate feedback. Figure out what your guardrails are, what you’ll tolerate, and who to schmooze – including industry bigwigs and government agencies. Once you scale up, it will be tough to dig this deep or change course.

Honest, detailed feedback can guide you to the essence of who you really are as a business. And being in touch with that core will help you with your next task: developing your company culture.

The key message here is: Fostering the right company culture is critical to scaling your startup.

Netflix employees seem to have an enviable gig. They have no set working hours or vacation policy; Netflix assumes that the kind of people they hire don’t need nine-to-five restrictions. Vacations are encouraged with the view that creative thinkers will come back even more inspired. The company makes it clear that they’re a team – albeit a competitive, driven one.

Clearly, this mentality is working for the streaming giant, but that’s no accident. The environment and its creative payoffs are a result of a very deliberate process of creating culture – more than 100 slides worth. Netflix’s Culture Deck is accessible to anyone on the internet; take a look for yourself!

Developing this clarity at the very beginning is crucial. Once a culture has established itself, it’s difficult to undo or change. Figure out what your core values are as well as how you’ll treat your employees and customers. Write a manifesto if you need to. Then, hire people who buy into the culture you’ve envisioned, because it will have a ripple effect: when you hire one person, you also get their network.

This doesn’t mean you should hire a homogenous group, though – it’s important to commit to meaningful diversity. Just as a diverse set of people can appreciate the same set of core values, so can your early investors. So choose investors the same way you’d consider cofounders! That’s how much of an impact they’ll have.

When done right, culture can synergize the environment of a growing startup. It can raise morale and feed back into a loop where employees work even harder – which in turn causes the business to do better and attract more customers.”

Netflix’s unorthodox approach to forming a company culture that fosters creativity and innovation without imposing rigid rules is yet another example showing how scaling a company while preserving its core values is indeed possible, if you master the right skills.


This has been the story of how Nike saved itself by going public. It’s not just a story though; it’s a lesson.

In the course of starting or leading any venture, a leader is bound to come across challenges that require them to bring in outside help. A savvy leader needs to know how to take that outside help and influence, without losing sight of the vision they have for the company.

This comes down to a leader who knows their values and fosters a company culture that makes them come alive.


Entrepreneurship, Management, Leadership

Alex Lim is a certified book reviewer and editor with over 10 years of experience in the publishing industry. He has reviewed hundreds of books for reputable magazines and websites, such as The New York Times, The Guardian, and Goodreads. Alex has a master’s degree in comparative literature from Harvard University and a PhD in literary criticism from Oxford University. He is also the author of several acclaimed books on literary theory and analysis, such as The Art of Reading and How to Write a Book Review. Alex lives in London, England with his wife and two children. You can contact him at [email protected] or follow him on Website | Twitter | Facebook

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