Authors: Phil Knight
“Lemans?” I said.
“Pardon?”
“What?”
He led me like an invalid down a long hall and into a small room. There, behind a curtain, was my wife, exhausted, radiant, her face bright red. Her arms were wrapped around a quilted white blanket decorated with blue baby carriages. I pushed back a corner of the blanket to reveal a head the size of a ripe grapefruit, a white stocking cap perched on top. My boy. He looked like a traveler. Which, of course, he was. He'd just begun his own trip around the world.
I leaned down, kissed Penny's cheek. I pushed away her damp hair. “You're a champion,” I whispered. She squinted, uncertain. She thought I was talking to the baby.
She handed me my son. I cradled him in my arms. He was so alive, but so delicate, so helpless. The feeling was wondrous, different from all other feelings, though familiar, too.
Please don't let me drop him.
At Blue Ribbon I spent so much time talking about quality control, about craftsmanship, about deliveryâbut this, I realized,
this
was the real thing. “We made this,” I said to Penny. We.
Made
. This.
She nodded, then lay back. I handed the baby to the nurse and told Penny to sleep. I floated out of the hospital and down to the car. I felt a sudden and overpowering need to see my father, a hunger for my father. I drove to his newspaper, parked several blocks away. I wanted to walk. The rain had stopped. The air was cool and damp. I ducked into a cigar store. I pictured myself handing my father a big fat robusto and saying, “Hiya, Grandpa!”
Coming out of the store, the wooden cigar box under my arm, I bumped straight into Keith Forman, a former runner at Oregon. “Keith!” I cried. “Heya, Buck,” he said. I grabbed him by the lapels and shouted, “It's a boy!” He leaned away, confused. He thought I was drunk. There wasn't time to explain. I kept walking.
Forman had been on the famous Oregon team that set the world record in the four-mile relay. As a runner, as an accountant, I always
remembered their stunning time: 16:08.9. A star on Bowerman's 1962 national championship team, Forman had also been the fifth American ever to break the four-minute mile. And to think, I told myself, only hours ago I'd thought
those things
made a champion.
FALL. THE WOOLEN
skies of November settled in low. I wore heavy sweaters, and sat by the fireplace, and did a sort of self-inventory. I was all stocked up on gratitude. Penny and my new son, whom we'd named Matthew, were healthy. Bork and Woodell and Johnson were happy. Sales continued to rise.
Then came the mail. A letter from Bork. After returning from Mexico City, he was suffering some sort of mental Montezuma's Revenge. He had problems with me, he told me in the letter. He didn't like my management style, he didn't like my vision for the company, he didn't like what I was paying him. He didn't understand why I took weeks to answer his letters, and sometimes didn't answer at all. He had ideas about shoe design, and he didn't like how they were being ignored. After several pages of all this he demanded immediate changes, plus a raise.
My second mutiny. This one, however, was more complicated than Johnson's. I spent several days drafting my reply. I agreed to raise his salary, slightly, and then I pulled rank. I reminded Bork that in any company there could only be one boss, and sadly for him the boss of Blue Ribbon was Buck Knight. I told him if he wasn't happy with me or my management style, he should know that quitting and being fired were both viable options.
As with my “spy memo,” I suffered instant writer's remorse. The moment I dropped it in the mail I realized that Bork was a valuable part of the team, that I didn't want to lose him, that I couldn't afford to lose him. I dispatched our new operations manager, Woodell, to Los Angeles, to patch things up.
Woodell took Bork to lunch and tried to explain that I wasn't
sleeping much, with a new baby and all. Also, Woodell told him, I was feeling tremendous stress after the visit from Kitami and Mr. Onitsuka. Woodell joked about my unique management style, telling Bork that everyone bitched about it, everyone pulled their hair out about my nonresponses to their memos and letters.
In all Woodell spent a few days with Bork, smoothing his feathers, going over the operation. He discovered that Bork was stressed, too. Though the retail store was thriving, the back room, which had basically become our national warehouse, was in shambles. Boxes everywhere, invoices and papers stacked to the ceiling. Bork couldn't keep pace.
When Woodell returned he gave me the picture. “I think Bork's back in the fold,” he said, “but we need to relieve him of that warehouse. We need to transfer all warehouse operations up here.” Moreover, he added, we needed to hire Woodell's mother to run it. She'd worked for years in the warehouse at Jantzen, the legendary Oregon outfitter, so it wasn't nepotism, he said. Ma Woodell was perfect for the job.
I wasn't sure I cared. If Woodell was good with it, I was good with it. Plus, the way I saw it: The more Woodells the better.
1970
I
had to fly to Japan again, and this time two weeks before Christmas. I didn't like leaving Penny alone with Matthew, especially around the holidays, but it couldn't be avoided. I needed to sign a new deal with Onitsuka. Or not. Kitami was keeping me in suspense. He wouldn't tell me his thoughts about renewing me until I arrived.
YET AGAIN I
found myself at a conference table surrounded by Onitsuka executives. This time, Mr. Onitsuka didn't make his trademark late entrance, nor did he absent himself pointedly. He was there from the start, presiding.
He opened the meeting by saying that he intended to renew Blue Ribbon for another three years. I smiled for the first time in weeks. Then I pressed my advantage. I asked for a longer deal. Yes, 1973 seemed light-years away, but it would be here in a blink. I needed more time and security. My bankers needed more. “Five years?” I said.
Mr. Onitsuka smiled. “Three.”
He then gave a strange speech. Notwithstanding several years of sluggish worldwide sales, he said, plus some strategic missteps, the outlook was rosy for Onitsuka. Through cost-cutting and reorganization his company had regained its edge. Sales for the upcoming fiscal year were expected to top $22 million, a good portion of which
would come from the United States. A recent survey showed that 70Â percent of all American runners owned a pair of Tigers.
I knew that. Maybe I'd had a little something to do with that, I wanted to say. That's why I wanted a longer contract.
But Mr. Onitsuka said that one major reason for Onitsuka's solid numbers was . . . Kitami. He looked down the table, bestowed a fatherly smile on Kitami. Therefore, Mr. Onitsuka said, Kitami was being promoted. Henceforth he'd be the company's operations manager. He'd now be Onitsuka's Woodell, though I remember thinking that I wouldn't trade one Woodell for a thousand Kitamis.
With a bow of my head I congratulated Mr. Onitsuka on his company's good fortune. I turned and bowed my head at Kitami, congratulating him on his promotion. But when I raised my head and made eye contact with Kitami I saw in his gaze something cold. Something that stayed with me for days.
We drew up the agreement. It was four or five paragraphs, a flimsy thing. The thought crossed my mind that it should be more substantive, and that it would be nice to have a lawyer vet it. But there wasn't time. We all signed it, then moved on to other topics.
I WAS RELIEVED
to have a new contract, but I returned to Oregon feeling troubled, anxious, more so than at any time in the last eight years. Sure, my briefcase held a guarantee that Onitsuka would supply me with shoes for the next three yearsâbut why were they refusing to extend beyond three? More to the point, the extension was misleading. Onitsuka was guaranteeing me a supply, but their supply was chronically, dangerously late. About which they still had a maddeningly blasé attitude.
Little more days.
With Wallace continually acting more like a loan shark than a banker, a little more days could mean disaster.
And when the shipments from Onitsuka did finally arrive? They often contained the wrong number of shoes. Often the wrong sizes.
Sometimes the wrong models. This kind of disarray clogged our warehouse and rankled our sales reps. Before I left Japan Mr. Onitsuka and Kitami assured me that they were building new state-of-the-art factories. Delivery problems would soon be a thing of the past, they said. I was skeptical, but there was nothing I could do. I was at their mercy.
Johnson, meanwhile, was losing his mind. His letters, once mumbly with angst, were becoming shrill with hysteria. The main problem was Bowerman's Cortez, he said. It was simply too popular. We'd gotten people hooked on the thing, turned them into full-blown Cortez addicts, and now we couldn't meet the demand, which created anger and resentment up and down the supply chain.
“God, we are really screwing our customers,” Johnson wrote. “Happiness is a boatload of Cortez; reality is a boatload of Bostons with steel wool uppers, tongues made out of old razor blades, sizes 6 to 6½.”
He was exaggerating, but not much. It happened all the time. I'd secure a loan from Wallace, then hang fire waiting for Onitsuka to send the shoes, and when the boat finally docked it wouldn't contain any Cortezes. Six weeks later, we'd get too many Cortezes, and by then it was too late.
Why? It couldn't just be Onitsuka's decrepit factories, we all agreed, and sure enough Woodell eventually figured out that Onitsuka was satisfying its local customers in Japan
first
, then worrying about foreign exports. Terribly unfair, but again what could I do? I had no leverage.
Even if Onitsuka's new factories ended all delivery problems, even if every shipment of shoes hit the water right on time, with all the correct quantities of size 10s, and no size 5s, I'd still face problems with Wallace. Bigger orders would require bigger loans, and bigger loans would be harder to pay off, and in 1970 Wallace was telling me that he wasn't interested in playing that game anymore.
I recall one day, sitting in Wallace's office. Both he and White were working me over pretty good. Wallace seemed to be enjoying
himself, though White kept giving me looks that said, “Sorry, pal, this is my job.” As always I politely took the abuse they dished out, playing the role of meek small business owner. Long on contrition, short on credit. I knew the role backward and forward, but I remember feeling that at any moment I might cut loose a bloodcurdling scream. Here I'd built this dynamic company, from nothing, and by all measures it was a beastâsales doubling every year, like clockworkâand this was the thanks I got? Two bankers treating me like a deadbeat?
White, trying to cool things off, said a few nominal things in support of Blue Ribbon. I watched his words have no effect whatsoever on Wallace. I took a breath, started to speak, then stopped. I didn't trust my voice. I just sat up straighter and hugged myself. This was my new nervous tic, my new habit. Rubber bands were no longer cutting it. Whenever I felt stressed, whenever I wanted to choke someone, I'd wrap my arms good and tight around my torso. That day the habit was more pronounced. I must have looked as if I was practicing some exotic yoga pose I'd learned in Thailand.
At issue was more than the old philosophical disagreement about growth. Blue Ribbon was approaching six hundred thousand dollars in sales, and that day I'd gone in to ask for a loan of $1.2 million, a number that had symbolic meaning for Wallace. It was the first time I'd broken the million-dollar barrier. In his mind this was like the four-minute mile. Very few people were meant to break it. He was weary of this whole thing, he said, weary of me. For the umpteenth time he explained that he lived on cash balances, and for the umpteenth time I suggested ever so politely that if my sales and earnings were going up, up, up, Wallace should be happy to have my business.
Wallace rapped his pen on the table. My credit was maxed out, he said. Officially, irrevocably, immediately. He wasn't authorizing one more cent until I put some cash in my account and left it there.
Meanwhile, henceforth, he'd be imposing strict sales quotas for me to meet. Miss one quota, he said, by even one day, and, well . . . He didn't finish the sentence. His voice trailed off, and I was left to fill the silence with worst-case scenarios.
I turned to White, who gave me a look.
What can I do, pal?
DAYS LATER WOODELL
showed me a telex from Onitsuka. The big spring shipment was ready to hit the water and they wanted twenty thousand dollars. Great, we said. For once they're shipping the shoes on time.
Just one hitch. We didn't have twenty thousand dollars. And it was clear I couldn't go to Wallace. I couldn't ask Wallace for change of a five.
So I telexed Onitsuka and asked them to hold the shoes, please, until we brought in some more revenue from our sales force. “Please don't think we are in financial difficulty,” I wrote. It wasn't a lie, per se. As I told Bowerman, we weren't broke, we just had no money. Lots of assets, no cash. We simply needed more time. Now it was my turn to say:
Little more days.
While awaiting Onitsuka's response, I realized that there was only one way to solve this cash flow problem once and for all. A small public offering. If we could sell 30 percent of Blue Ribbon, at two bucks a share, we could raise three hundred thousand dollars overnight.
The timing for such an offering seemed ideal. In 1970 the first-ever venture capital firms were starting to sprout up. The whole concept of venture capital was being invented before our eyes, though the idea of what constituted a sound investment for venture capitalists wasn't very broad. Most of the new venture capital firms were in Northern California, so they were mainly attracted to high-tech and electronics companies. Silicon Valley, almost exclusively. Since most of those companies had futuristic-sounding names, I formed
a holding company for Blue Ribbon and gave it a name designed to attract tech-happy investors: Sports-Tek Inc.
Woodell and I sent out fliers advertising the offering, then sat back and braced for the clamorous response.
Silence.
A month passed.
Deafening silence.
No one phoned. Not one person.
That is, almost no one. We did manage to sell three hundred shares, at one dollar per.
To Woodell and his mother.
Ultimately we withdrew the offering. It was a humiliation, and in its wake I had many heated conversations with myself. I blamed the shaky economy. I blamed Vietnam. But first and foremost I blamed myself. I'd overvalued Blue Ribbon. I'd overvalued my life's work.
More than once, over my first cup of coffee in the morning, or while trying to fall asleep at night, I'd tell myself: Maybe I'm a fool? Maybe this whole damn shoe thing is a fool's errand?
Maybe, I thought.
Maybe.
I SCRAPED TOGETHER
the twenty thousand dollars from our receivables, paid off the bank, and took delivery of the order from Onitsuka. Another sigh of relief. Followed by a tightening in the chest. What would I do the next time? And the next?
I needed cash. That summer was unusually warm. Languorous days of golden sunshine, clear blue skies, the world a paradise. It all seemed to mock me and my mood. If 1967 had been the Summer of Love, 1970 was the Summer of Liquidity, and I had none. I spent most of every day thinking about liquidity, talking about liquidity, looking to the heavens and pleading for liquidity. My kingdom for liquidity. An even more loathsome word than “equity.”
Eventually I did what I didn't want to do, what I'd vowed never to do. I put the touch on anybody with ears. Friends, family, casual acquaintances. I even went with my hand out to former teammates, guys I'd sweated and trained and raced alongside. Including my former archrival, Grelle.
I'd heard that Grelle had inherited a pile from his grandmother. On top of that, he was involved in all sorts of lucrative business ventures. He worked as a salesman for two grocery store chains, while selling caps and gowns to graduates on the side, and both ventures were said to be humming along. He also owned a great big chunk of land at Lake Arrowhead, someone said, and lived there in a rambling house. The man was born to win. (He was even still running competitively, one year away from becoming the best in the world.)
There was an all-comers road race in Portland that summer, and Penny and I invited a group of people to the house afterward, for a cocktail party. I made sure to invite Grelle, then waited for just the right moment. When everyone was rested, a couple of beers to the good, I asked Grelle for a word in private. I took him into my den and made my pitch short and sweet. New company, cash flow problems, considerable upside, yadda yadda. He was gracious, courteous, and smiled pleasantly. “I'm just not interested, Buck.”
With nowhere else to turn, with no other options, I was sitting at my desk one day, staring out the window. Woodell knocked. He rolled into the office, closed the door. He said he and his parents wanted to loan me five thousand dollars, and they wouldn't take no for an answer. They also wouldn't tolerate any mention of interest. In fact they wouldn't even formalize the loan with any sort of papers. He was going to Los Angeles to see Bork, but while he was gone, he said, I should drive to his house and collect the check from his folks.
Days later I did something beyond imagining, something I didn't think myself capable of doing. I drove to Woodell's house and asked for the check.
I knew the Woodells weren't well off. I knew that, with their son's
medical bills, they were scuffling more than I. This five thousand dollars was their life savings. I knew that.
But I was wrong. His parents had a little bit more, and they asked if I needed that, too. And I said yes. And they gave me their last three thousand dollars, draining their savings down to zero.
How I wished I could put that check in my desk drawer and not cash it. But I couldn't. I wouldn't.
On my way out the door I stopped. I asked them: “Why are you doing this?”
“Because,” Woodell's mother said, “if you can't trust the company your son is working for, then who can you trust?”
PENNY WAS CONTINUING
to find creative ways of stretching her twenty-five-dollar grocery allowance, which meant fifty kinds of beef Stroganoff, which meant my weight ballooned. By the middle of 1970 I was around 190, an all-time high. One morning, getting dressed for work, I put on one of my baggier suits and it wasn't baggy. Standing before the mirror I said to my reflection: “Uh-oh.”
But it was more than the Stroganoff. Somehow, I'd gotten out of the running habit. Blue Ribbon, marriage, fatherhoodâÂthere was never time. Also, I'd felt burned out. Though I'd loved running for Bowerman, I'd hated it, too. The same thing happens to all kinds of college athletes. Years of training and competing at a high level take their toll. You need a rest. But now the rest was over. I needed to get back out there. I didn't want to be the fat, flabby, sedentary head of a running-shoe company.