Shoe Dog (36 page)

We went down the hall and bumped into Woodell, whom I'd recently called back from the East Coast. Chang reached down, shook Woodell's hand. “Skiing accident?” he said.

“What?” Woodell said.

“When you getting out of that chair?” Chang asked.

“Never, you dumb shit.”

I sighed. “Well,” I told Chang, “there's nowhere to go from here but up.”

1980

W
e all gathered in the conference room and Chang gave us his bio. He was born in Shanghai, and raised in opulence. His grandfather was the third-largest soy sauce manufacturer in northern China, and his father had been the third-highest-­ranking member of the Chinese Ministry of Foreign Affairs. When Chang was a teenager, however, the revolution came. The Changs fled to the United States, to Los Angeles, where Chang attended Hollywood High. He often thought he'd go back, and his parents did also. They kept in close touch with friends and family in China, and his mother remained extremely close with Soong Ching-ling, the godmother of the revolution.

In the meantime Chang attended Princeton, and studied architecture, and moved to New York. He landed a job at a good architectural firm, where he worked on the Levittown project. Then he set up his own firm. He was making decent money, doing good work, but bored stiff. He wasn't having any fun, and he didn't feel he was accomplishing anything real.

One day a Princeton friend complained about being unable to get a visa for Shanghai. Chang helped his friend get the visa, and helped him set up appointments with business contacts, and found that he enjoyed it. Being an emissary, a go-between, was a better use of his time and talents.

Even with his help, Chang cautioned, getting into China was
extremely difficult. The process was laborious. “You can't just apply for permission to visit China,” he said. “You have to formally request that the Chinese government invite you. Bureaucracy doesn't begin to describe it.”

I closed my eyes and pictured, somewhere on the other side of the world, a Chinese version of the bureau-kraken.

I also thought of the ex-GIs who'd explained Japanese business practices to me when I was twenty-four. I'd followed their advice, to the letter, and never regretted it. So, under Chang's direction, we put together a written presentation.

It was long. It was almost as long as
Werschkul on American Selling Price, Volume I
. We, too, had it bound.

Often we asked each other: Is anyone actually going to read this thing?

Oh well, we said. This is how Chang says it's done.

We sent it off to Beijing without hope.

AT THE FIRST
Buttface of 1980 I announced that, though we'd gained the upper hand with the Feds, it might go on forever if we didn't do something bold, something outrageous. “I've given this a lot of thought,” I said, “and I think what we need to do is . . . ­American Selling Price
ourselves
.”

The Buttfaces laughed.

Then they stopped laughing and looked at each other.

We spent the rest of the weekend kicking it around. Was it possible? Nah, it couldn't be. Could we? Oh, no way. But . . . maybe?

We decided to give it a try. We launched a new shoe, a running shoe with nylon uppers, and called it One Line. It was a knockoff, dirt cheap, with a simple logo, and we manufactured it in Saco, at Hayes's ancient factory. We priced it low, just above cost. Now customs officials would have to use this “competitor” shoe as a new reference point in deciding our import duty.

That was the jab. That was just to get their attention. Then we threw the left hook. We produced a
TV
commercial telling the story of a little company in Oregon, fighting the big bad government. It opened on a runner doing his lonely road work, as a deep voice extolled the ideals of patriotism, liberty, the American way. And fighting tyranny. It got people pretty fired up.

Then we threw the haymaker. On February 29, 1980, we filed a $25 million antitrust suit in the U.S. District Court for the Southern District of New York, alleging that our competitors, and assorted rubber companies, through underhanded business practices, had conspired to take us out.

We sat back, waited. We knew it wouldn't take long, and indeed it didn't. The bureau-kraken cracked up. He threatened to go nuclear, whatever that meant. It didn't matter. He didn't matter. His bosses, and his bosses' bosses, didn't want this fight anymore. Our competitors, and their accomplices in the government, realized that they'd underestimated our will.

Immediately they initiated settlement talks.

DAY IN, DAY
out, our lawyers would phone. From some government office, some blue-chip law firm, some conference room on the East Coast, meeting with the other side, they'd tell me the latest settlement offer being floated, and I'd reject it out of hand.

One day the lawyers said we could settle the whole thing, with no fuss, no courtroom drama, for the tidy sum of $20 million.

Not a chance, I said.

Another day they phoned and said we could settle for $15 million.

Don't make me laugh, I said.

As the number crept lower, I had several heated conversations with Hayes, and Strasser, and my father. They wanted me to settle, be done with this. “What's your ideal number?” they'd ask. Zero, I'd say.

I didn't want to pay one penny. Even one penny would be unfair.

But Jaqua, and Cousin Houser, and Chuck, who were all consulting on the case, sat me down one day and explained that the government needed something to save face. They couldn't walk away from this fight with nothing. As negotiations ground to a halt, I met one-on-one with Chuck. He reminded me that until this fight was behind us, we couldn't think about going public, and if we didn't go public we continued to risk losing everything.

I became petulant. I moaned about fairness. I talked about holding out. I said maybe I didn't
want
to go public—ever. Yet again I expressed my fear that going public would change Nike, ruin it, by turning over control to others. What would happen to the culture of Oregon Track, for instance, if it was subject to shareholder votes or corporate raider demands? We'd gotten a little taste of that scenario with the small group of debenture holders. Scaling up and letting in
thousands
of shareholders—it would be a thousand times worse. Above all, I couldn't bear the thought of one titan buying up shares, becoming a behemoth on the board. “I don't want to lose control,” I said to Chuck. “That's my greatest fear.”

“Well . . . there might be a way to go public without losing any control,” he said.

“What?”

“You could issue two classes of stock—class A and class B. The public would get class Bs, which would carry one vote per share. The founders and inner circle, and your convertible debenture holders, would get class As, which would entitle them to name three-­quarters of the board of directors. In other words, you raise enormous sums of money, turbocharge your growth, but ensure that you keep control.”

I looked at him, dumbstruck. “Can we really do that?”

“It's not easy. But the
New York Times
and the
Washington Post
and a couple of others have done it. I think you can do it.”

Maybe it wasn't satori, or
kensho
, but it was instant enlightenment.
In a flash. The breakthrough I'd been seeking for years. “Chuck,” I said, “that sounds like . . . the answer.”

At the next Buttface I explained the concept of class A and class B, and everyone had the same reaction. At long last. But I cautioned the Buttfaces: Whether or not this was the solution, we needed to do something, right now, fix our cash flow problem once and for all, because our window was closing. I could suddenly see a recession on the horizon. Six months, a year at the max. If we waited, tried to go public then, the market would give us far less than we were worth.

I asked for a show of hands. Going public . . . all in favor?

It was unanimous.

The moment we resolved our longstanding cold war with our competitors and the Feds, we would initiate a public offering.

THE SPRING FLOWERS
were up by the time our lawyers and government officials had settled on a number: $9 million. It still sounded way too high, but everyone told me to pay it. Take the deal, they kept saying. I spent an hour staring out my window, mulling. The flowers and the calendar said it was spring, but that day the clouds were eye-level, dishwater gray, and the wind was cold.

I groaned. I grabbed the phone and dialed Werschkul, who had taken the role of lead negotiator. “Let's do it.”

I told Carole Fields to cut the check. She brought it to me for my signature. We looked at each other and of course we were both thinking about the time I'd written that check for $1 million, which I couldn't cover. Now I was writing a check for $9 million, and there was no way it was going to bounce. I looked at the signature line. “Nine million,” I whispered. I could still remember selling my 1960
MG
with racing tires and a twin cam for eleven hundred dollars. Like yesterday.
Lead me from the unreal to the real.

THE LETTER ARRIVED
at the start of summer. The Chinese government requests the pleasure of a visit . . .

I spent a month deciding who would go. It has to be the A Team, I thought, so I sat with a yellow legal pad in my lap, making lists of names, scratching them out, making new lists.

Chang, of course.

Strasser, naturally.

Hayes, surely.

I notified everyone who was going on the trip to get their papers and passports and affairs in order. Then I spent the days leading up to our departure reading, cramming on Chinese history. The Boxer Rebellion. The Great Wall. Opium Wars. Ming dynasty. Confucius. Mao.

And darned if I was going to be the only student. I made a syllabus for all members of our traveling party.

In July 1980 we boarded a plane. Beijing, here we come. But first, Tokyo. I thought it would be a good idea to stop there along the way. Just to check in. Sales were starting to grow again in the Japanese market. Also, Japan would be a nice way to ease everyone into China, which was going to be a challenge for all of us. Baby steps. Penny and Gorman—­I'd learned my lesson.

Twelve hours later, walking the streets of Tokyo, alone, my mind kept spinning back to 1962. My Crazy Idea. Now I was back, on the verge of taking that idea into a mammoth new market. I thought of Marco Polo. I thought of Confucius. But I also thought of all the games I'd seen through the years—football, basketball, baseball—when one team had a big lead in the final seconds, or innings, and relaxed. Or tightened. And therefore lost.

I told myself to stop looking back, keep my gaze forward.

We ate a few wonderful Japanese dinners, and visited a few old friends, and after two or three days, rested and ready, we were all set to go. Our flight to Beijing was the next morning.

We had one last meal together in the Ginza, washed down with
several cocktails, and everyone turned in early. I took a hot shower, phoned home, and poured myself into bed. A few hours later I woke to frantic knocking. I looked at the clock on the nightstand. Two a.m. “Who's there?”

“David Chang! Let me in!”

I went to the door and found Chang looking very un-Chang. Rumpled, harried, regimental tie askew. “Hayes isn't going!” he said.

“What are you talking about?”

“Hayes is downstairs in the bar and he says he can't do it, he cannot get on that plane.”

“Why not?”

“He's having some kind of panic attack.”

“Yes. He has phobias.”

“What kind of phobias?”

“He has . . . all the phobias.”

I started to get dressed, to go down to the bar. Then I remembered who it was we were dealing with. “Go to bed,” I said to Chang. “Hayes will be there in the morning.”

“But—”

“He'll be there.”

First thing in the morning, dull-eyed, deathly pale, Hayes was standing in the lobby.

Of course, he made sure to pack enough “medicine” for his next attack. Hours later, going through customs in Beijing, I heard behind me a great commotion. The room was bare, with plywood partitions, and on the other side of one partition several Chinese officers were shouting. I went around the partition and found two officers, agitated, pointing at Hayes and his open suitcase.

I walked over. Strasser and Chang walked over. Lying atop Hayes's giant underwear were twelve quarts of vodka.

No one said anything for the longest time. Then Hayes heaved a sigh.

“That's for me,” he said. “You guys are on your own.”

OVER THE NEXT
twelve days we traveled all over China, in the company of government handlers. They took us to Tiananmen Square and made sure we stopped a long time in front of the giant portrait of Chairman Mao, who had died four years earlier. They took us to the Forbidden City. They took us to the Ming tombs. We were fascinated, of course, and curious—too curious. We made our handlers excruciatingly uncomfortable with all our questions.

At one stop I looked around and saw hundreds of people in Mao suits and flimsy black shoes, which seemed made of construction paper. But a few children were wearing canvas sneakers. That gave me hope.

What we wanted to see, of course, were factories. Our handlers reluctantly agreed. They took us by train to remote towns, far from Beijing, where we saw vast and terrifying industrial complexes, small metropolises of factories, each one more outdated than the last. Old, rusted, decrepit, these factories made Hayes's ancient Saco ruin look state-of-the-art.

Above all, they were filthy. A shoe would roll off the assembly line with a stain, a swath of grime, and nothing would be done. There was no overarching sense of cleanliness, no real quality control. When we pointed out a defective shoe, the officials running the factories would shrug and say: “Perfectly functional.”

Never mind aesthetics. The Chinese didn't see why the nylon or canvas in a pair of shoes needed to be the same shade in the left shoe and the right. It was common practice for a left shoe to be light blue and a right shoe to be dark blue.

We met with scores of factory officials, and local politicians, and assorted dignitaries. We were toasted, feted, queried, monitored, talked at, and almost always welcomed warmly. We ate pounds of sea urchin and roasted duck, and at many stops we were treated to thousand-­year-old eggs. I could taste every one of those thousand years.