Co-founder of Nike
Started by importing Japanese running shoes out of his car, and spent years one bad month from insolvency.
Photograph: Tom Matthyssens · CC BY-SA 4.0 · Wikimedia Commons
Knight began by importing Onitsuka Tiger running shoes to the United States, selling them at track meets from the boot of his car. The business ran for years on borrowed money, permanently short of cash despite growing sales.
When the Japanese supplier moved to cut him out, he was forced to create his own brand — Nike — and manufacture independently. The relationship he had depended on became the thing that nearly killed the company.
Nike's model was to own the design and the brand and contract out production. That is now unremarkable and was then unusual, and it is what let the company scale on relatively little capital.
His memoir Shoe Dog is unusually candid about the cash-flow terror of the growth years — the part most founder accounts omit.
Nike was growing fast and nearly failed repeatedly because every increase in orders required financing before payment arrived. This is [cash flow and profit] in its purest form, from a company everyone assumes was a straightforward success.
Everything rested on one manufacturer who could and did decide to compete. Single points of failure in supply are the most under-priced risk in a small business.
The shoes were made by others and could have been made by anyone. What could not be copied was what the swoosh came to mean, which is why the marketing spend was never treated as discretionary.
From the 1990s Nike faced sustained, well-documented criticism over conditions in contracted factories, including child labour and unsafe workplaces. The company denied, then deflected, then eventually accepted responsibility and made significant changes to monitoring and disclosure.
The lesson is structural and applies to anyone outsourcing: contracting out production does not contract out responsibility, and the reputational bill arrives whether or not you employed the people directly.