Nike

[Music] fell pretty good welcome home great to be home but I couldn't help but be really pleased to see the Dean wearing a business suit and Nike shoes you know but I think we can all be and we can all be glad that basically I was not the founder of jockey underwear well we'll try and make that a permanent change in the Elevens wardrobe now I felt we know you don't do too many public speaking events and a question a lot of people have asked is what does it take to get Phil Knight up on stage so I thought
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maybe we should share the story of what got you here today now you probably remember that we first crossed paths a couple of months ago just over there make a McDonald Hall you were entering the building when I very politely interrupted you introduce myself we exchanged a couple of pleasantries and then you went on inside about your day now what you're probably less aware of Phil is that I decided to camp outside McDonald Hall for the next 40 minutes watching every possible human exit to the building so that I could find you
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and you know casually bump into you a second time to pitch you this interview it's creepy I know yeah that that's how it happened I'll be honest I was pretty nervous when you did come at that second time it was fight or flight I very nearly walked the other way but there was this voice in my head it just kept saying we'll just do it but really Phil we are so thrilled and excited to have you back on campus and I think I speak for every student here when I say how grateful we are for this incredible business school well thank
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you but you know having stalked me for at least 40 minutes I feel that there should be some payback oh I know that most of you know that Will's mother mags has come all the way from Ireland to be here today and having come such a long way I think you should reveal something about yourself that she doesn't know so I don't know what you're trying to suggest I was a perfect child well did you make your bed this morning I didn't even sleep in my own bed this morning cuz I gave it to my mom that wasn't what
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it sounded like all right now Phil Phil we don't want to make you feel old huh this is payback by the way yeah this could go back and forth a long time that's right but it's been almost 60 years yep since you were here in our shoes an incoming MBA class of 1962 what kind of person was Phil Knight back at the GSB how would you have described yourself yeah I will but I wanted to tell you first about coming back to campus after being gone for a while that you go out 20 years or so and you haven't been back for a while and you
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come back and it's more about just sharing a moment with family and friends it's for a moment you step back in history and remember when you had all the worldwide laying out before you and you decided the things that you were going to find important and it was really the start of you becoming what he ultimately became when I come back for just a moment I always hear the voice of Frank Shallenberger Bob Davis Jim porterfield and I know that sounds sort of corny to educated group but I promise you that
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over half the people in this room when they come back here 20 years from now will have those same feelings you know for me you know it was well yeah that I was the guy that thought an extrovert was the person that stared at other people's shoes that the the it was a time for me to kind of grow and and chase what I was really going to become and so it was really a big transitional period for me in my life and as I say to this day when I come back I still get inspired and lifted up do you've any favorite
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memories from your days back at Stanford oh that no it was just a turning point in general for me that you know my if I was honest I'd say that my undergraduate career was really focused on track and it got to be when I got to be a graduate student that has really focused on what it was I wanted to be and this was just the right school at the right time with the right inspirational professors and it really doesn't get any better than that mm-hmm so you do graduate the GSB in 1962 yep it's the time when Silicon
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Valley isn't even a phrase yet right and you had what you call this crazy idea what was the crazy idea and where did it come about well I took the entrepreneurship class from Frank Shallenberger and basically the project he had a term project where you basically either attached yourself to a company in the area or for the purpose of the paper made up a company and and how it would succeed and even in those days a lot of my classmates were writing about electronics which was certainly beyond me since when I turn on a light
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bulb when I turn on the electric switch the light bulb comes on it's magic for me but my old track coach was always working with shoes and that felt that you know a light lightweight and shoes was something that was neglected by the major manufacturers Adidas and Puma and indeed my senior year Otis Davis won the Pacific Coast Conference championship and a pair of homemade Bowerman shoes which were ounce elated lighter than the other shoes so I kind of put those things together and and said if you were starting a shoe
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factory would you still in Germany and I said it's such a labor-intensive business it makes more sense to start it in Japan Japan being the country that took German cameras didn't and dominated the camera market says could they do the same thing in sports use now it's really the thesis of the paper which ultimately I got caught up in and here we are now you got an A in that paper right I did okay but that mattered if he ridiculed the paper I don't know where we do today well this was a time when entrepreneurship post
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GSB was not just a last travel path it was probably a less celebrated path what gave you the confidence to push ahead well if I didn't know I was gonna have to be an accountant and now that's that's a scary thought no it was no but it was a it was when I wrote the paper it it just stayed in my head and at the time I think the the ratio was the 26 out of 12 27 new companies failed so I knew the odds weren't high but I really began to feel if I could do this that would really be meaningful to me and
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something that I would really have a lot of passion for and about and so that's where it started and away we went now two years in many of your classmates have gone dan more traditional career paths you're back in Oregon you're living in your old room in the family house and you're selling shoes out of the trunk of your car did you ever have dates in those moments and what was it that kept you going well obviously there were a lot of doubts but that I enjoyed what I was doing and I really thought
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that I was bringing a product to the world that was better than the other product and and so I believed and and if you read the book wasn't too long before I had a bunch of other people that believed as well and we just through all the ups and downs and there were plenty of downs that we never stopped believing and so a lot of people say why did you stay with it there were a lot of negative moments and a lot of downturns and and I look back on those days the most fun I ever had in business it was it was that
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every day every Monday you went to work and you knew it mattered what you did including whether you're gonna meet payroll on Friday but it was an exciting time and that that Frank Shallenberger had done a wonderful job of preparing us for you know being an entrepreneur Bob Davis a marketing professor said if you're gonna be an entrepreneur he said every day is a crisis in every Fridays at Jesus crisis it was kind of the way it was now you also talk in your book Sherdog about those early trips to Asia mm-hmm
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so you're 24 years old traveling alone to Japan it's a culture you don't know a language you don't speak to try and broker that first shoe import deal so this was a time before Stanford's global study trip Sergey mixes where did that ability to embrace hustle and uncertainty come from in you well by the time I got there I believed and so that I believed that it was a good idea I believe that if we can I get a cooperative Japanese factory that I could make the idea of work and so yeah that overcame you know when you're
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bidding I'm an entrepreneur and introvert why you basically have to you have to believe you have to overcome the shyness to to take certain chances and I was willing to do that and you know there were a lot of ups and downs but ultimate worked and you know I think at the end of the day you got to believe and and that's what I did have maybe above everything else mm-hmm no as you said the team grew and you weren't alone in this endeavor and I think there's no story of Nike with that of course
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mentioning Bill Bowerman your former track coach at Oregon later US Olympics track coach and of course your co-founder what became Nike you've described yourself as a person who's always needed heroes why was bill a hero to you and what is it you learn from him well he was a very unique person that that he was probably the best track and field coach in world for one thing but he was also at a certain command presence and a certain belief in certain leadership things that the leaders did you know he he said I'm
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not a I'm not a track coach he says I'm a professor of competitive response and he he had a way of having sayings that got your attention and really focused you on attitude his strategy for running the mile was start out and run the first two laps at a very fast pace run the third lap as fast as you can on the fourth lap triple your speed and and they said that you know the Oregon Trail he says the the Cour the the cowards never started in the week died along the way that leaves you and me and that's once again him getting it kind of
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kind of your attitude and is his best one for me it was always do right and fear no man and so he had a big influence on my life certainly the biggest influence other than my parents and if you go back through this sayings and who he was he was always working on attitude this is a man that had seen combat in World War two you know fired a gun and been fired at and he had seen competition that it's its most extreme level and he thought he could his job as a confessor professor of competitive response was to get kids
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ready for young men and young women ultimately to be ready for the the toughest competition they can face so you know he brought to me you know a certain attitude which you can be an introvert and have attitude and so that was sort of me and he had a huge influence on that and and he was a hero of mine in those days and to this day mm-hmm when you first met him you described it as love and fear at first sight right and then there was a little hate that came after that he really kind of believed in hazy that and you had to prove that you
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wanted to be there and so he would make you go through hoops which I did somewhat reluctantly now beyond bill of course you talk with a lot of affection about that core early Nike team and I think you had a name for each other right well yeah we did oh I see you're playing that game now that the first four or five people in the company we wound up calling each other but faces which we don't do that anymore were more professional group now you know our view from the top team we've a similar name for each other actually it's good it's
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healthy but what was it about that early team and that culture that made it so successful well I think first of all they were a bizarre group to say the least each of them in his own way but they were and I hope this showed in a book that they were able very able people that really kind of didn't get along with society in general so it was kind of a perfect fit and they complemented each other in terms of their abilities and then lastly all of them believed it was they they just when we would hit a down period nobody
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thought this is in okay okay we got to get together and find their way out of this one and so it was fun being a foxhole with those guys and and basically it's corny but we loved each other and we were going to go through this come hell or high water and it was a very exciting intense time and it as I say I love those times mm-hmm you fought a lot of crises together yeah for sure in recent years Phil we've seen many high-profile disruptive companies being pressured to rein in what we're seeing is aggressive macho
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win at all costs cultures cultures that have brought these companies so much early success in their life just last year Nike faced some similar accusations and the management team made some pretty decisive changes when you grow from a start-up to a 74,000 person team how do you preserve the best of that winning culture in a more complex diverse global workforce yeah well he touched on a lot of things there that I mean I do think that Becky's culture is a big part of its reasons for success and the culture really was formed in the
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early days by the way the four people plus me and it still exists to this day I'd say a lot of people say well if Phil had a dominant influence on that and he didn't I mean I've often said many times Nike is young and irreverent and I'm neither that but it did it did to use barman's word addict they came within a certain attitude and and it was sort of us that's who we were and the culture has been modified some and which is a good thing and but it's still kind of basically there and I think it's a big
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part of its strength that yeah so I I hope that that culture is is basically in place you know twenty years from now it and and it's one thing it fits with sort of our view then and now about what a brand is you know it doesn't matter how many people hate your brand as long as enough people love it and as long as you have that out you can't be afraid of offending people you can't try and go down in the middle of the road you have to take a stand on something which is ultimately I think why the Kapernick had
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worked mm-hmm well that's let's jump into those athletes so I want to take you back to 1978 Phil you stumble across a shy timid retiring Stanford tennis player by the name of John McEnroe timid I wouldn't say [Laughter] well we got to see a little bit of John in that video but for anyone who doesn't know tennis John is a young fantastic tennis player who's as well known for breaking racquets as he is breaking serve he is everything that the tennis establishment at the time the major majority of the market was not so what
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made him the right ambassador for Nike well the the the story basically we had an agreement with Jimmy Mac Jimmy Connors agent for him to were in high case shoes and he did he warm that will Melton and the agent said as soon as he gets back from Wilmington we'll get it signed well they won one Milton and soon he got back from Europe boy he had summer matches and then came the US Open and he said as soon as we get done with the US Open we'll get this contract signed well they won the US Open and then we got down to sign the contract
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says I don't remember it this way that was Jimmy Connors agent not Jimmy Connors but that was the end of our endorsement with Jimmy Connors and so the next year I think it was that well I went to Wilmington you know looking for the next great hope and there were a bunch of really good American young Americans 18 and under I was looking at the 18 and unders and they had Brian Godfrey who is a great player in Elliot Telstra was a great player and the head of USA tennis was saying those are really great endorsements stay away from that kid
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McEnroe he's too much of a hothead he's playing over on court 14 I went right to Fort 14 and basically that week he was playing the number 16 player in the world filled int and he's 18 years old and hits his first serve in and the chalk flies up and the line judge goes out McEnroe jumps over the net puts his nose this far from the official he says are you sure that call are you very sure that call Wow and I turned to the guys with his this kids not afraid and you know I kind of became a fan of his
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intensity and his competitiveness and his attitude he did lose control sometimes but that well I always remember Frank Deford right of Hindman and Sports Illustrated when he said a big picture of mechanist why isn't this man smiling Beethoven didn't smile much either that's fair a few years later actually several years later you decided to name the executive building at your headquarters in Oregon after John McEnroe what is it you were trying to say to the team at Nike in doing that well we named all the
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buildings after our heroes at the time and you know he was one of them and that just that was where my office was fair enough you're glad to see him back playing well and I that makes me feeling better now let's fast-forward to 1984 you come across another decent basketball players name is Michael Michael Jordan Jordan Michael Jordan that's it now Nike were actually criticized at the time for overpaying for Jordan's signature but of course with hindsight he became more than an athlete he became a two and a half
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billion dollar revenue brand for Nike beyond MJ's greatness what was it that made that brand so successful and so dominant yeah it's it isn't something you can bottle it's been you know truly one of the unique experiences really in all of marketing that obviously he had it all and and we pretty much knew that coming in I mean he was Player of the Year he was handsome he could jumping and that he won the national championship with a winning shot yeah at all but and yeah when we signed him we signed him for more than any rookie had
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been paid before was signing for $250,000 a year and fortune magazine ran a little insert another article says there's no greater indication that Nike has lost its way than the fact that they paid Michael Jordan $250,000 and but that it's but we can't combined it with what we thought was a really good shoe a really distinctive shoe was red and black it wasn't just white or black and of course he wore to great and great performances and then we had the added benefit of David Stern banned it in the
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NBA so he immediately mind what became a good ad says banned in the NBA and every kid in the world one of that and that and it's it hasn't been straight uphill it had a one year where sales actually went down but overall that was the what we got together was really good advertising which reflected his personality which was strong and it's been an unbelievable success that when he quit playing sales of Jordan Brand product over 750 million dollars and this last fiscal year they topped three billion dollars and long
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after he quit planned so as I said to many people imagine how much we'd sell if he'd never played we can only dream Phil its Nikes 55th anniversary next week I believe yeah the company's at record revenue levels and just last year Nike was voted alongside Apple as the favored brand of Millennials and I think there's a few of us in here who might attest to that how does a brand stay so relevant to so many people for so long well it's it's hard work but you have to work at it all the time but I think you
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know our thing obviously it starts with the product the the product is by far most marketing our most important marketing tool and so we're constantly working to improve product and so the kind of the recent upturn is because we've had a really good product pipeline probably the react running shoe is number one on the list but there's been a lot of others and that so that's that's been really important and then you know good advertising is critical to it that you know that the Wieden and
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Kennedy experience has been is in many ways as dramatic as Nikes and it's really been kind of a long slide each other when I first met Dan Wyden I walked into the door of his quote office he had three people besides himself sitting around a card table and he said welcome to widen Kennedy and I just want you to know one thing I hate advertising and he looked at me says well this would be interesting and it has been but it is interesting that you know obviously if I would have said that Procter & Gamble I'd have been
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on they take your 25 million take your $25 advertising budget and go on at the door but they were a small advertising firm and he grew to understand that what I didn't mean was that I hated advertising what I meant was I hate traditional advertising and he found ways to find out who Nike is or who Michael Jordan was and project that to the consumer and not only the Nike you know succeed Wieden and Kennedy now has offices all over the world you know over a thousand employees it has coca-cola as a client as Honda's a client has a lot
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of the world's most famous brands its clients they've been an enormous success and to this day they work really hard at trying to find out you know who it is and who the athlete is and how to project them I know we had Boris Becker the great tennis players and we were trying to get him as an endorsement and Dan Wyden was making the pitch and he says we will find out who you are and project that to the world and Morris says how in the world can you know who I am when I don't know who I am and just said well we'll find out
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well we didn't we didn't make the sale he didn't we didn't get this we didn't sell him but but that is one of the things they've done so the advertising and the product are two of the two the really important things and then keeping the product for us and keeping the advertising fresh and it's an ongoing challenge and we don't always hit it you know a couple years ago we took a little dip and it's a very very competitive business and in every six months is kind of a new life and everybody has to be
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aware that mmm Phil this is a school and a speaker series dedicated to leadership so we want to make sure we we touch on that topic something the MBA one class is challenged with each year is why would someone follow you I think there can be a stereotype of what a CEO should be sometimes we think of them as a natural extrovert around the valley sometimes they can be hero like characters you described yourself as shy introverted someone who identifies with the Bourne however those that's why that's why we
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get on that but but how if those traits helped you as you built Nike well I think you know I mean obviously introverted introverted people have a tendency to listen which I think good leaders do but when I was in school that you know they talked about two different types of leadership they talked about autocratic leadership and Democratic leadership and you know it was only 15 years after World War two and you know they had two of the great autocratic leaders everyone Douglas MacArthur and George Patton and they at the time
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looked on as being very successful that then you have a democratic style leadership which is you know the thing is getting people involved and talking to people and that so I think for it's probably almost impossible for an intro to be an autocratic leader but Internet can be a Democratic leader and the idea of democratic leadership progressed this is the this started to talk use the term collaborative leadership which is really in my view the ultimate and only kind of leadership to this day that in this day
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and age autocratic leader doesn't work it can work for temporarily but it won't work long run and I hope that the people in this in this auditorium today don't get the idea that hero leadership means being autocratic and you know that I mean obviously I think Steve Jobs has looked at is really kind of in this area of one whole world really has been one of the great leaders which I believe he was but I do believe at the end of his career he was beginning to modify his you know natural autocratic style which
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if you will got him fired his first tour around Apple and as he got to go through Apple the second time there was a change in Steve Jobs and you notice that from the commencement speech he gave to to Stanford University and and he hired Tim Cook and he had a lot of give-and-take with Tim Cook and Tim Cook who I know quite well is very much a collaborative leader and and I believe a great collaborative leader so I think that you it just don't equate hero leadership with autocratic leadership the only Thai
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style of leadership that will work in this day and age is collaborative leadership mm-hmm I fell another thing you may know about this group is that we're pretty touchy-feely bunch these days of course in your book you describe business as war without bullets yeah so as you look back in those early days and I keep dealing with those crises we're solve skills tools an entrepreneur like you could really afford back then what type of what type of skills are talking about the softer skills the touchy-feely well I think yeah I mean
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yeah I think that looks you dog obviously I don't come across as a touchy-feely type and neither were any of those top five but there's lots of different ways of communicating and I one of the things I don't like about the politically correct movement is that to me it politically correct has been founded by people that couldn't communicate and they don't want you to communicate very well either because communications really is a kind of an individual thing everybody's a little bit different it's like people
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have different fingerprints they have different personalities they have different emotions and I think the leaders job is to know who his team is and there's different ways to communicate with that team we weren't touchy-feely in the sense that we were always patting each other back and say how we feel but you could say how you doing today son of a didn't mean the same thing and so there's just different ways the different ways to to do they like to do that mm-hmm I think we need to bring that into the chatter on campus these
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days now Phil we we also study a lot here had leaders act in times of crisis Nike and yourself have dealt with several today the Nike brand is stronger than ever but of course in the late 90s Nike did for some time become synonymous with sweatshops and slave wages as you look back how do you feel you handle that crisis what would you do differently and what are you most proud of well the one of the things that that we didn't talk about in Business School when I was here was the media and so I think probably this group is probably
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much more aware of the media but it's it's always there it's more prevalent than it's ever been and they're not always consumed by facts that and so when they when they first charges came at Nike run sweatshops that you know it's a it's a really seductive argument to say this person only makes four dollars a day and Michael Jordan makes you know thirty million dollars a year and Phil Knights worth two billion dollars and and isn't this awful and but our initial reaction was that we don't
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run sweatshops and that you're wrong and I was the CEO at the time and that was my strategy and it was awful it didn't work and so we kind of after about a year that it became clear and so we took another tack which says yeah you can you can criticize the ones but this is what we're going to be and this is how we're going to be a better company over the next ten years and we're going to take these steps each year and you come look at any of our factories anywhere in the world that you want and we've kind of
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been on that path ever since and that's basically working and I do think you know that we have had lots of good comments that don't get much publicity from the media and you know one of the good ones was a member the United Nations says Nikes the gold standard for all apparel companies and how they run their run their factories and it's a constant battle oh because we're always kind of looking for new factories or changing factories and we have most of our shoe factories and our good apparel collectors have been with
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us for 20 or 25 years but economics change at different times so you do change some of them on the periphery so it's a constant battle to live up to the standards we have but we have a whole team at Nike that does that all the time and basically is talking to people on the production line all the time and I do think that our factories are the best in the world right now for conditions and and it's it's a basic truth that great shoes are made by great factories you don't want a you know you know a bad
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factory making your ear the best shoes in the world that feels something else we hear a lot from the media but also occasionally at Stanford is to find and follow your passion and you are perhaps the example of someone who built a business dedicated to something they love which is sports and athletes there's many of us in the room today who I feel are struggling to maybe tie our true passions to a viable business or career what would you say to people like us well I think you know that one thing that is left out is that you got to have
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a niche you got to have a reason to succeed my reason that was that you know Japan could make shoes economically and that but then the rest of it you know fit right and home base for me so and I do think if you're gonna be an entrepreneur it has to be something that you really love because there will be a lot of dark days and as I say we never hesitated in those mark dark days so I I was fortunate enough to find what I thought was a niche to go with my passion and that's that's what you need to bring those two things together but
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when you do you're very very fortunate and take advantage of it mm-hmm all right well look Phil this has been brilliant thus far I know Nike say there is no finish line we do need to finish in about 15 minutes Phil this has been brilliant we're almost gonna let you go not quite yet there's a little tradition we like to do up here on stage and called a lightning round so the idea is I'm gonna ask you a set of either/or questions we want you to answer the one answer that comes first in your mind
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okay you didn't warn me about this you didn't tell me you were gonna mention me I might get back to her all right look because it's a new thing we're gonna start easy and then we'll get harder okay so Jordan or LeBron that's like asking which of your kids do you like better okay you can tell me backstage is fine Rose Bowl or Super Bowl Rose Bowl 340 mile or two hour marathon two hour marathon nice suit or track suit oh man track suit just do it or dream crazy just do it Hawaii or Palm Springs Hawaii Beatles
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the Rolling Stones Beatles that was easy Breaking Bad or The Sopranos who probably Sopranos but that's tough we were told it was tough for you adidas or barefoot barefoot ladies and gentlemen Phil Knight fine [Music] you