“I stole this from his briefcase,” I said.
“You did what?” Woodell said.
He started to act appalled, but he was just as curious as I was about the folder’s contents. Together we opened it and laid it on his desk and found that it contained, among other things, a list of eighteen athletic shoe distributors across the United States and a schedule of appointments with half of them. —From Shoe Dog by Phil Knight, 2016
Phil Knight was a bean counter turned aspiring entrepreneur. In the mid-1960s, he kept his day job as an accountant while steadily building his company, Blue Ribbon, which was distributing shoes made by a Japanese manufacturing company called Onitsuka.
As a track athlete in his college years, Knight had an extensive network of former athletes who were passionate about running and willing to support his start-up business. The partnership wasvaluable to Onitsuka as well, because Knight’s former track coach, Bill Bowerman, had been tinkering with his athletes’ shoe designs for years, passing on knowledge and modifying the shoes to become lighter and faster for races, making them more appealing in the marketplace.
In 1970, Phil Knight snatched a folder from his unknowing partner’s briefcase. He wanted to confirm that Onitsuka was, in fact, breaking a three-year contract that they had signed just months earlier for exclusive rights for his company, Blue Ribbon, to distribute their Tiger line of shoes in the United States.
For seven years they had been a faithful distributor and had poured their own intellectual property into Onitsuka, in the form of a half-century of running knowledge from Bill Bowerman, the University of Oregon’s legendary track coach. Knight’s team had introduced the budding running shoe company to America.
Towards the end of the 1960s, Tiger shoes had become so popular in the U.S., breaking sales records and changing the face of the industry, that the Japanese manufacturer wanted a bigger piece of the pie. They greedily yearned to see if there were other distributors in the United States who could sell more of their product.
Admittedly, this was not the most ethical way to find out if Knight’s Japanese manufacturer was a common Judas, but he did confirm his fears and found himself empowered to make moves away from the traitorous business relationship.
His team decided to part ways with Onitsuka and break out on their own, with more vertical integration of their company, from the design and manufacturing, to the sales and distribution.
A few short weeks later, his team was on the hunt for other manufacturers in Mexico, Canada, and Japan who could produce the highly desired footwear that they had been distributing with increasing success. At the end of the day, Tiger really was their product because it was created from Knight’s and Bowerman’s intellectual property garnered from years of obsessive tinkering.
After much deliberation, they came up with the iconic swoosh logo and, using the namesake for the goddess of victory, and christened their new company, “Nike.”
The rest was history.
Years later, Michael Jordan and his Air Jordan line helped Nike become the powerhouse global brand that it is today. Nike broke $50 billion dollars in revenue in 2022 and is considered the most popular shoe brand in the United States. “Just do it” was the slogan that inspired a generation, and the iconic brand continues to be clad by the most famous sports stars today, including Lebron James and Christiano Ronaldo.
Would any of this have happened if Knight had just followed the rules and never snatched that folder?
In his book Shoe Dog, Phil Knight repeats the anthem, “You are remembered for the rules you break,” coined by General MacArthur in World War I.
By degree, Phil Knight was an accountant, a bean counter, a rule-follower. But occasionally he found the courage to break some rules on his 50-year conquest to build one of the most recognizable brands in the world.
How common is it for entrepreneurs to bend and break the rules to get ahead?
Besides Knight, some other notable juggernauts have also broken the rules in the budding stages of their companies.
Travis Kalanick of Uber, creator of the largest taxi service in history, ignored licensing requirements in major US cities to deploy his fleets of drivers in order to support the demand for their app.
Brian Chesky of Airbnb, now hosting more rooms than any major hotel chain in the world, started by taking customers from Craigslist, so they had something to offer their first customers.
The Sons of Liberty were founded in 1765 by Samuel Adams and John Hancock to rise up against the laws that the British Empire was trying to enforce in the newly established 13 colonies. Their rallying cry was “No taxation without representation,” and they protested the British government by dumping an entire shipment of tea into the Boston Harbor in the infamousBoston Tea Party, ultimately provoking the beginning of the Revolutionary War and later, the founding of the United States of America as we know it.
I don’t think we should find it very surprising that Americans have a long history of breaking rules. We were founded by a bunch of revolutionists, fleeing a powerful, oppressive empire. It’s in our blood.
Do some of these renegade entrepreneurs take it too far? Yes, of course, they do. Sam Bankman-Fried and Elizabeth Holmes come to mind. Obviously, it’s not a good idea to commit fraud and lie to investors to steal their money.
Where’s the line? I really have no idea. But good judgment can play a part.
What I do know is rules were created by men and women; therefore, we have the ability to recreate and bend those rules to the changing times. As an entrepreneur, it has been proven time and time again that your ability to walk this fine line and to mold the world to your vision will help speed up your success.
But I think one big question needs to be asked to test if the rule-breaking is warranted—Is this for the greater good? (i.e., Will this lead to serving more customers, faster?)
I started my entrepreneurial journey by selling alarm systems door to door for three years across the country. The second company I worked for, Pinnacle Security, employed the same strategy as Uber, asking for forgiveness, not for permission.
In the summer of 2009, our little office of 25 sales reps sold around three thousand alarm systems in the state of New Jersey and in Dallas, Texas—grossing almost $11 million in revenue. While we were selling door to door in New Jersey for a month, police officers and othercity officials booted us out of 40 different municipalities (called “boroughs”). More than once a day, we were forced to find new territory to sell in.
The company had made the decision that pulling permits to sell in each of the small boroughs was going to be too cumbersome and slow. Sometimes we went through the motions, but many of the municipalities advised us that receiving the permit to sell would take in excess of a month.By the time the ink was dry on our applications in most places in New Jersey, we weren’t even in the state anymore. We had moved on to Texas. But we had already sold and installed roughly$4 million of the $11 million of alarm systems we generated during that summer.
Multiply that activity times the 30-plus offices the company had nationwide. Pinnacle Security sold for a cool $70 million to a private equity group a few short years later. Who says you need to follow the rules to make millions in America?
Let’s frame this example through the lens of “Was this for the greater good?”
I could argue that in that time period, in the middle of the Great Recession, we were absolutely serving the greater good by making sure we sold and installed security systems into as many houses as we possibly could across the country. We probably saved countless lives, by deterring criminals from vulnerable houses that they otherwise would have entered by force, endangering the lives of the families sleeping inside.
What about Uber? Did Travis Kalanick have the greater good in mind when he ignored the licensing requirements for his fleet of taxis in New York and San Francisco?
Twenty years ago, do you remember how long it took to get a yellow cab when you called them? I remember routinely waiting 45 minutes to two hours for a cab during college, if they even showed up at all. The downright entitlement that these drivers had in their taxi unions gavethem no incentives to provide better service.
The first time I used an Uber was after a night out in Dallas in January 2011. A few of my friendsand I were waiting outside a bar, somewhere in downtown Dallas, freezing our butts off, and it didn’t seem like our taxicab was anywhere close to showing up. The youngest and most tech-savvy of the group, John, proposed we try this new app service called “Uber.” The rest of us cussed and slurred our doubts at John. To our surprise, the Uber showed up within ten minutes.It was a black SUV, big enough to fit all of us, and the driver was courteous and polite. Incredible, I thought. I was soon to become a loyal customer of this new service.
So, I would argue—yes, absolutely, Uber provides an invaluable service to millions, boosting thequality of many lives, customers, and employees alike.
Let’s go back to Phil Knight and the example of Nike. Was he acting with the greater good in mind?
Knight learned, shortly after the briefcase incident, that his company, Blue Ribbon, was in danger of a hostile takeover, and the Japanese company that was meeting with other distributors was doing so in order to gain leverage in that takeover. Everything they had toiled for over the previous seven years would have been wasted, had he not made the moves he did.He was absolutely acting with the greater good in mind, knowing he was building a lasting brandthat continues to inspire kids around the world.
You could argue that if he never would have stolen that folder from the briefcase, in an alternative universe, we’d all be wearing Japanese “Tiger” shoes. Millions of American kids
would never have had their lives touched and inspired by the likes of our sports heroes like Steve Prefontaine, Michael Jordan, and Tiger Woods. Nor would Knight have been able to donate over a billion dollars to the University of Oregon for cancer research and in support of their athletic program.
Most of us are taught, from the time we are school-aged, to paint within the lines of life. To follow the rules and not make mistakes. “Go to school, study hard, get a good job, and live happily ever after.”
Always working within the guidelines of modern civilization, trying to appease our parents, teachers, and bosses, is itself incredibly frustrating and stressful. I’d like to empower you to leapout of your comfort zone imposed by the constraints of society by giving you permission to break some rules.
In my opinion, the rebel DNA is inherent in the minds of all successful entrepreneurs. The healthy discontent we have pushes us to break the rules in order to disrupt and innovate and make the world a better place. As long as we can apply some common-sense judgment to our decision-making, entrepreneurs should continue to break some rules in order to promote our vision to the world.
So, what rule are you going to break to better our world today?
