We have all heard about Phil Knight, the founder of Nike. He is a prominent philanthropist and American business icon. Today, in 2018, if you look him up, his net worth is listed at $30 billion. Phil Knight is one of the richest people in the country, even the world.
I just wrote a post about billionaires, and how I feel about them. This is very timely, and I suggest you read it before you move on here. Referenced within that post is yet another post about Vilifying Billionaires, which also has meaning in the context of this book review.
We have our preconceived ideas about billionaires and business icons. In this memoir of his life and the creation of Nike, Phil Knight tells his story in such a captivating manner that I felt like I was there with him in the early days. Shoe Dog is not about a shoe company, or a man creating a shoe company from scratch.
It’s about starting and growing a business, building the American dream. Everyone dreams of not working for “the man,” but being “the man.” Everyone dreams about starting a business, being one’s own boss, being independent, and of course, becoming wealthy in the process.
The bleak, frightening, brutal reality, however, is that 90% of all startups fail. Here are the main reasons why:
There is something universal about a business: you have a payroll. It does not seem like a big thing when you start a business, but it hits you very, very quickly. Every two weeks you have to write paychecks for your employees, and then another set of checks for payroll taxes for the federal and state governments. In the 25 years I have been in business, there have been 650 payroll days. Every. Other. Friday. Payroll day comes, relentlessly. It comes even when your sales are down and you’re not making a profit. It comes when your biggest customer holds up a major payment. It comes after you had a major equipment breakdown and you needed additional cash to get it fixed. Payroll day comes, whether you have money in the bank, or not. And when you don’t have money in the bank, you have no choice but put some there. You first take all the money you have personally and put it there. You take cash advances on your credit cards. You borrow. And you have major, major stress. Every. Two. Weeks.
There are two kinds of people in this world: Those who are responsible for payroll, and those who are not. Phil Knight was responsible for payroll, and he did what he had to do to keep his company moving forward. Every step of the way, he knew that he was just one financial mishap away from total, catastrophic failure. When you run out of cash, you go out of business. See the chart above: 29% of businesses run out of cash.
And then there are problems. Problems with suppliers. Problems with the government and regulations. Problems with employees. Problems with product quality. Problems with market demand. The problems don’t care that you are stressing out over cash for payroll. Problems keep haunting you on Christmas Day or during Thanksgiving dinner. Problems keep you up at night.
Shoe Dog guides the reader through Phil Knight’s journey of creating Nike from scratch and growing it to a world-wide leader in athletic shoes. Anyone who ever even remotely thought about starting a business needs to read Shoe Dog.
After that, you come and tell me why Phil Knight didn’t “deserve” to be a billionaire.
Hey, go ahead! Start a shoe company. It’s easy, right?
