tv The David Rubenstein Show Peer to Peer Conversations Bloomberg July 1, 2017 11:30pm-12:01am EDT
♪ david: what would you say this skill set was you brought, great intellect, great drive, great leadership? phil: all of that. david: let's talk about golf. phil: tiger woods, you could see coming from way back. david: michael jordan, if i wore those shoes -- phil: you might. david: when you give a $400 million gift, you write a check? is it hard to do that? phil: yes. -- >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok.
just leave it this way. alright. ♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? i have worn your shoes for many years, but finally get a chance to talk about them. when you first started the company in 1962, you knew nothing about shoe design. you did not know a lot about management, and you did not have any money. so today, the company is worth roughly $100 billion, revenues of $30 billion, 62,000 employees. did you ever imagine when you first started this company in the 1960's that it would be what it became? phil: sometimes i would get that question and i would say, we are exactly on plan. [laughter] phil: with you i can't be a smart --
david: i wasn't the first to ask that question? -- phil: it was a rise that nobody could see. when we started out, total sales were about $2 billion, now we are $9 billion. we took advantage of the running boom which became a jogging boom which became a fitness boom. david: would you say it benefited from being a marketing company or a technology company or a combination of both? phil: i have said we are a marketing company and product is our most important marketing tool. david: what would you say this skill set wasyou brought, great intellect, great drive, great leadership? phil: all of that. [laughter] david: in equal amounts?
phil: if there is one thing, i have been pretty good at evaluating people. that was one of the things i wanted to get through and i hope did come through in the book, how viable those early partners were, my teammates. they were terrific. david: speaking of that book, here it is. shoe dog, i must confess i did not know what a shoe dog was. phil: in 25 words or less, it is somebody who really loves shoes, and that was me. i was a runner. all you really care about are the shoes, so that became important to me, and has been with me ever since. david: you are from oregon, and i read the first fossil of a shoe that ever existed is 9000 years old, and it was, came from oregon, do you take that as a special sign to start the
company in oregon? phil: i have not thought about it that way, but i would take it. david: your father was a newspaper editor, and he told you he would not hire you. why wouldn't he hire you? phil: he knew me pretty well. the journal, which he was publisher of, he wouldn't hire me so i went across the street to the oregonian and got in and worked there for three summers. david: in high school, you are an athlete and ran, but where you a superstar athlete, average athlete, or what would you say? phil: i was a little better than average, but certainly not a superstar. david: you got a scholarship to go to to the university of oregon? phil: no, i did not. i was a walk on, or run on. david: your best time was 4.13.
suppose i told you you could either built nike or run a 3.56 mile? phil: i will take nike. david: ok. phil: but i did pause. [laughter] david: you lettered in three years, and after which you went into the army, after a year in the army, you served in the reserves for a number of years. you went to stanford. how did you pick stanford for a business goal? phil: it was and is a good school. i got admitted.
david: there was a class on entrepreneurship? phil: the professor was a dynamic professor and inspirational professor, and he had me write a term paper and you were supposed to attach yourself to a small business in the bay area or make up a small business, and he said, make sure you write about something you know, so most of my classmates wrote about some electronics project, which was beyond me, but i remembered my old track coach and i was one of the guinea pigs, so i was aware of the process, and it did not make sense to me at the time that running shoes should be made in germany, which were dominating world markets, so i said they should be made in japan and japan can do to german shoes with they did to german cameras. i worked pretty hard on the paper, and the professor liked it. david: did you get an a on it? phil: i did. david: despite this great paper, no shoe company hired you, and then you didn't have the silicon
valley venture capital world, so you went back home and became an accountant, is that right? is that exciting for you to be an accountant? phil: no, i didn't ever plan to be an accountant for 50 years. i talked to a lot of people about what i should do and i was kind of a finance major at stanford and they said you should get your cpa certificate. that will put a floor under your earnings comes of that's what i did. david: you went by yourself on a trip around the world? phil: i started out with another guy, but then he got waylaid by a girl in hawaii. i went on alone. david: when you were in japan, did you not stop in to see a shoe manufacturer? phil: that was part of the idea inspired by the paper that are wrote that i would call on japanese shoe manufacture to see about importing their shoes in to the united states.
i called on one and they were enthusiastic, so it began. david: you started shipping shoes to a company called blue ribbon? where did blue ribbon come from? phil: first place. david: so they started shipping you shoes. your job is to sell the shoes. you had a green valeant and you would put them in the trunk and go around the track meets and sell the shoes, is that what you did? phil: that's what i did. david: you had no vision of building a great global company. phil: i thought it was the start and we could be bigger. nobody expected it to be as big as it is. david: at some point they began to be competitive with you, so you begin to build your own company called nike, and you needed a symbol and somebody came up with this swoosh. you paid $35 for that? phil: it was a graphics arts student, and she's spent 17.5 hours on that.
david: so $35, that's pretty good. phil: it did have a happy ending. when we went public we gave her 500 shares of stock and it is worth over $1 million right now. david: did you actually design the shoes yourself or were you the person who figured out what the shoes were going to look like? phil: we were in a hurry. they asked john kennedy how he became a hero, he said it is easy. they sank my boat. they gave us an ultimatum. sell your company for 50% of
book value. change to the distributor no matter what this says. that gave us an idea that we may be better change manufacturers, so we were in a hurry. the first shoes were in an office in japan over the course of the weekend. david: if you have better shoes, can you run faster, or it does not make that much difference? phil: i think shoes are key. we still believe it makes a difference. if you tried to run a mile and a pair of dress shoes, you will not run as fast as you do in four ounce cleats. in the old days, we had a lot of canvas upper training shoes. you go out for a six mile run and you come back in your feet were bloody, so it matters. david: the dominant companies were adidas and puma. phil: they didn't worry too much about us until it was too late.
we kind of snuck up on them. david: and basketball, you have someone named michael jordan, who you've heard of, right? phil: when we started making shoes, we made them really dramatic. we ran a big ad that said banned in the nba, and every kid wanted the shoes then. [laughter] david: when you wear his shoes, do you jump higher. i wouldn't jump higher? phil: you might. david: i might go get some. ♪
it, worked at it. he had worn adidas his whole life, but he was right there in eugene, and we had a small office in eugene, and the guy who ran the office became his brother practically and ultimately convinced him to switch to nike, and he was our first roll prominent track and field athlete. david: you win after others. you have to pay them to use your shoes or they just like it so much they use your shoes? phil: they just like it so much. david: really? phil: no. [laughter] phil: they demand an endorsement fee from us or whoever. the one that comes to mind is michael johnson at the 1996 olympics in atlanta, the gold shoes which lifted us significantly. david: you made those shoes? early on, john mcenroe, he would from time to time loses temper, and with that reflect poorly on your shoe?
this image was a great tennis player, but sometimes he would lose control, some people might say, and that did not bother you, or did it help sales? phil: the latter. david: oh, it did? phil: he had a bad temper. arnold palmer had a bad temper too, but he would keep it in control. you could see him standing there ready to lose it. john went over here he was arnold palmer who did not keep it in control, but he was probably the most exciting player of his era. in private, he was a perfect gentleman, but so intense that it would get away from him sometimes. he lost his temper a lot, but when he played bjorn borg, he never lost his temper once. david: i never really knew john mcenroe as a tennis player, but when i practice law, the office next to mine was held by man
named john mcenroe senior, and he always said his son was a high school tennis player, but then i finally realized he was not exaggerating. [laughter] david: let's talk about golf. a man named tiger woods came along and you signed him up relatively early in his professional career, so was that hard to convince him to do this? phil: tiger woods, you could see him coming from way back, three u.s. amateurs in a six-year span from the time he was 15 to 20, so he would play occasionally in the portland area and we would always invite him and his father out to lunch, so we were working on that for three years before we sign him. david: when you signed him up, he wears your shoes exclusively, but then you begin to make golf equipment as well, so you make golf balls and golf equipment,
but now you are out of that business. is that because you want to focus on shoes and not other types of equipment? phil: it is a fairly simple equation. we lost money for 20 years and we realize next year would not be any different. david: so you got out of that. phil: you are doing casual wear as well, the aerobics effort, casual wear. you have decided to make athletic shoes into a casual shoes, did that work as well? david: sportswear, shoes and clothing is still a significant part of our business. david: you now try to design shoes for people who are wearing them casually, so you like it when people are wearing suits and your shoes as well? phil: they look great. david: do you wear anything
other than nike shoes? phil: no. david: you wear a tuxedo or something and you wear nike shoes? phil: black nike shoes. david: in basketball, you have somebody named michael jordan, a basketball player, you've heard of, right? heard off him. david: was it hard to sign him up, and why was his shoes so successful, the most successful shoe ever in the athletic world? phil: it was hard to sign him up because everyone wanted him. we won that war. david: was it on your personality? phil: clearly. david: not money, just personality? phil: we offered pretty good. we had a lot of good players. we did not have great players, and we thought he had the chance to be that he was obvious he way better than we could have imagined, but when he started wearing shoes, we made them dramatic, red, black, and he was a very exciting player. he was quick, shot, jump,
handsome, spoke well, and the shoe was distinctive looking and david stirred did as a huge -- david stern did us a huge favor. he banned them in the nba. and so we ran a big ad that said "banned in the nba" and every kid wanted the shoe. [laughter] david: michael jordan has not played for more than a decade and yet the shoe is still your best-selling basketball shoe. why is that? phil: we were selling $700 million worth of jordan products when he retired. it has now become a brand and we are selling over $3 billion, but some kids don't even know who he was. they know he is all-time great, but some kids don't even know who he was. it went from an endorsement into a brand. david: when you wear his shoes, do you jump higher? if i wore the shoes, i would not jump higher, right? phil: you might. david: i will go get some. when you realize you can't take -- when did you realize you can't take it with you and it is better to give it away?
one of the biggest philanthropists. when did you realize you just can't take it with you and it is better to give it away? at what point do you say i have to do something with this other than hold onto it? phil: it was fairly late in the process because i always thought was going to disappear. i often said if this is a dream, don't wake me. as the years went on, it seemed more real, so as i got older, i said to me can take it with you, but i wanted to focus on three-four main charities. david: to the university of oregon, you have given a couple of hundred million dollars related to athletics, but $500 million recently for a science center, so why so generous? phil: basically, i have to laugh because two of the great entrepreneurs, bill gates and steve jobs, basically dropped out of college when they were
freshmen, and my story is exact opposite. the company nike is the result two universities, the university -- the result of two universities, the university of oregon and stanford, so i tried to give back to those two schools. the other which means a lot to hsu, which has an outstanding leader in their cancer research area. david: the oregon science health university, you gave them $500 million dollars for cancer research. phil: some of it has been given in stock and some paid out over several years. david: you have two sons, one died tragically in the scuba diving accident.
how have you tried to memorialize him in that way? phil: he was a big sports fan, so gave some money to the university of oregon for the new basketball arena, which was named after him. david: today, what is left for you to accomplish and what haven't you accomplished? phil: i look back and am happy particular round the philanthropy and what i've been able to do, but i take my time to think about those things and i'm feeling good about things right now. david: do consult with your wife on things like that? phil: absolutely, she has final approval. david: where did you meet your wife? phil: she was one of my students. david: she was a good student? phil: she was a better student than i was. david: it is unrealistic to make these kinds of products in the
united states, shoes and those kinds of things? phil: it is as we speak, but manufactured technology is changing very rapidly, so 5-10 -- the manufacturing technology is changing very rapidly, so 5-10 years, there will be shoe manufacturing in the united states, which is good news. the bad news is there will be a -- there won't be a lot of jobs. it will be very automated. david: he never actually hurt -- you were a runner. you never actually hurt your knee so much, you don't have artificial knees or hips, so how did you avoid those problems by running so much and not having damage your body, you were just a graceful runner, or the shoes? -- or good shoes? much i did not put too strain on the knees because i don't have very much muscle mass, so i was lucky that way. i still get out and walk. when i was out for one of my runs, i was passed by a woman and a baby carriage and realized
that maybe i should quit trying to run and just walk. david: the athletes you have met, you have been involved with some of the most famous athletes, tiger woods, john mcenroe, steve prefontaine, michael jordan among others, are any of them that stand out to you as role models for youth, or do think all of them are, and which of them have you develop the closest personal relationship with? phil: they are all of that bit different. was john mcenroe a role model? yeah, kind of, but a lot of people would disagree with that. which one stands out more than the other -- i really do look at the mess my children, and who is your favorite child, you can't say that. david: does tiger woods give you golf tips, or you don't play golf? phil: i do, badly. he tried to give me a tip, but it didn't work. david: the high point of your career was when nike went public or the success it currently has? what would you say is the most
favorite memory you have? phil: i look at nike as my work of art, and the whole painting is what matters. david: let's talk finally about leadership. leadership is not clear to people, whether you are born with it or become a leader by education. what you think makes a great leader? phil: they come in all shapes and sizes, don't they? hollywood, tall, handsome, strong-jawed, but a lot of times just the opposite. first of all, they have to want it, but they come in all shapes and sizes. david: now you are famous for wearing sunglasses, and i appreciate you not wearing them for this interview. is that because you are shy by nature or you don't want people to see you?
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