That spring, it was obvious to Knight that the conclusion reached in his graduate paper had been confirmed: The market for athletic shoes was strong and growing stronger. He went back to Japan and secured the distribution rights for Tiger shoes for all of North America. At the same time, he placed a large order and instructed Onitsuka to ship it to New York as proof of his intention to distribute on the East Coast. "This was very interesting," Johnson says, "because we didn't have anybody on the East Coast. When Knight got back he told me about the distribution rights and almost as an afterthought he said, 'You know, Jeff, we'd better do something about that order going to New York."
That summer, Johnson opened the company's first East Coast store in a small, rented house behind a funeral parlor in Wellesley, Mass., and started shippling shoes in cartons that once contained embalming fluid.
By 1969, only five years after Knight and Bowerman had sealed their partnereship, sales reached $300,000. Knight quit his job to manage the thriving business full time. Blue Ribbon Sports now had 20 employees, an office, and a warehouse in Beaverton, Oreg., and two retail outlets, one on each side of the country. More important, a flock of independent retailers had been won over to the Blue Ribbon cause, and Tiger shoes began showing up in sporting goods stores, shoe stores, nd department stores across the country.
Then, in 1972, only three years later, the company faced ruin. Blue Ribbon's success had not gone unnoticed by Onitsuka in Japan. "You could say they got a little greedy," Knight says. Onitsuka set up five regional distributors in the United States, an act that deprived Blue Ribbon of its exclusive distributorship and threatened to eliminate 90% of its roughly $3-million sales base. They also told Knight that they wouldn't be doing any more business together unless they could buy 51% of Blue Ribbon at book value."We wanted to keep going," says Knight. "We would've sold them 50% because there was enough business for everybody. But they wanted it all and we weren't about to give it to them."
Knight was angry and sued Onitsuka. The suit produced three and a half years of litigation and ultimately a hefty settlement to Blue Ribbon for damages. But Jeff Johnson recalls another feeling loose at the time. "It was panic," he says. "I was frantic. It looked like it was all over."
The rift between Blue Ribbon and Onitsuka couldn't have occurred at a worse time. Bowerman had just been appointed head track and field coach for the U.S. Olympic team, and the track trials, to be held in Eugene, were only months away. The company could lose the marketing chance of a lifetime.
Knight, Johnson, and Bowerman may have been frantic, but they loved it. It was a scene they had played out on the track many times. Only 50 yards to go, a runner edges ahead of you, and you wonder what you have left. But the training and practice pay off, and you start your kick for the finish line. "One day," Johnson recalls, "Knight came in and said this problem was really a great opportunity. He said we would simply put out our own line of shoes, under a new name."
Knight hurried to Japan and struck an agreement with Nissho-Iwai Corp., the sixth-largest Japanese trading company, in which they agreed to find shoe manufacturers in the Far East and provide financing and export-import services to Blue Ribbon Sports. Blue Ribbon, the original corporate entity, would distribute the new shoes. Knight gave Nissho-Iwai a design for a new track shoe. On the sides of the uppers was a trademark that today accounts for roughly 35% of all athletic shoes sold in the United States, the largest market share of any company in the business, according to Knight. The symbol suggested speed and looked like a rounded lightning bolt. It became known as the "swoosh" sign, after the sound a basketball makes as it passes cleanly through the mesh without touching the rim.
Three months later, Johnson, who was still on the East Coast, got a call from company headquarters in Oregon. "The Japanese are making the boxes for the shoes," the caller said frantically, "and we can't decide on a name. We need one by morning. Got any ideas?" After a night of fitful dreaming, Johnson wrote down a name on a pad of paper near his bed -- "Nike." In 1978, the company formally adopted this brand name as its corporate name.
The first shipment of Nikes were air expressed from the Far East just in time for the Olympic trials. Knight convinced several runners to wear the new shoes. In the marathon trials, four of the top seven finishers wore Nikes. By convincing marathoners to wear Nikes, Knight firmly established the company's "word-of-foot" advertising policy. "It was clear to me," Knight says "that to see name athletes wearing Nike shoes was more convincing than anything we could say about them."
Unfortunately, it was a lot easier to get athletes to wear Nikes than it was to sell them to retailers. The company had done such an effective job marketing Tiger shoes that stores were reluctant to change lines. That year -- 1972 -- was the only year that the company lost money. In 1973, the company countered the sales block by opening 4 company-owned "Athletic Department" retail stores in key cities across the country and soon pushed the number up to 12. But it still needed something dramatic, a new shoe, perhaps, something that would make retailers sit up and take notice. Once again, a Bowerman technological breakthrough was pressed into service.
