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Authors: Phil Knight

BOOK: Shoe Dog
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And if tight suits and the specter of hypocrisy weren't enough incentive, another motivation soon came along.

Shortly after that all-comers race, after Grelle refused me the loan, he and I went for a private run. Four miles in, I saw Grelle looking back at me sadly as I huffed and puffed to keep up. It was one thing to have him refuse me money, it was another to have him give me pity. He knew
I was embarrassed, so he challenged me. “This fall,” he said, “let's you and me race—one mile. I'll give you a full minute handicap, and if you beat me I'll pay you a buck for every second of difference in our times.”

I trained hard that summer. I got into the habit of running six miles every night after work. In no time I was back in shape, my weight down to 160. And when the day of the big race came—with Woodell on the stopwatch—I took thirty-six dollars from Grelle. (The victory was made all the sweeter the following week when Grelle jumped into an all-comers meet and ran 4:07.) As I drove home that day I felt immensely proud. Keep going, I told myself. Don't stop.

AT ALMOST THE
halfway mark of the year—June 15, 1970—I pulled my
Sports Illustrated
from my mailbox and got a shock. On the cover was a Man of Oregon. And not just any Man of Oregon, but perhaps the greatest of all time, greater even than Grelle. His name was Steve Prefontaine, and the photo showed him sprinting up the side of Olympus, aka Bowerman Mountain.

The article inside described Pre as an astonishing, once-a-­generation phenom. He'd already made a big splash in high school, setting a national record (8:41) at two miles, but now, in his first year at Oregon, running two miles, he'd beaten Gerry Lindgren, who'd previously been considered unbeatable. And he'd beaten him by 27 seconds. Pre posted 8:40.0, third-fastest time in the nation that year. He'd also run three miles in 13:12.8, which in 1970 was faster than anyone, anywhere, on earth.

Bowerman told the writer from
Sports Illustrated
that Pre was the fastest middle-distance runner alive. I'd never heard such unbridled enthusiasm from my stolid coach. In the days ahead, in other articles I clipped, Bowerman was even more effusive, calling Pre “the best runner I've ever had.” Bowerman's assistant, Bill Dellinger, said Pre's secret weapon was his confidence, which was as freakish as his lung capacity. “Usually,” Dellinger said, “it takes our guys twelve years to
build confidence in themselves, and here's a young man who has the right attitude naturally.”

Yes, I thought. Confidence. More than equity, more than liquidity, that's what a man needs.

I wished I had more. I wished I could borrow some. But confidence was cash. You had to have some to get some. And people were loath to give it to you.

Another revelation came that summer via another magazine. Flipping through
Fortune
I spotted a story about my former boss in Hawaii. In the years since I'd worked for Bernie Cornfeld and his Investors Overseas Services, he'd become even richer. He'd abandoned Dreyfus Funds and begun selling shares in his own mutual funds, along with gold mines, real estate, and sundry other things. He'd built an empire, and as all empires eventually do it was now crumbling. I was so startled by news of his downfall that I dazedly turned the page and happened on another article, a fairly dry analysis of Japan's newfound economic power. Twenty-five years after Hiroshima, the article said, Japan was reborn. The world's third-largest economy, it was taking aggressive steps to become even larger, to consolidate its position and extend its reach. Besides simply outthinking and outworking other countries, Japan was adopting ruthless trade policies. The article then sketched the main vehicle for these trade policies, Japan's hyper-aggressive
sosa shoga
.

Trading companies.

It's hard to say exactly what those first Japanese trading companies were. Sometimes they were importers, scouring the globe and acquiring raw materials for companies that didn't have the means to do so. Other times they were exporters, representing those same companies overseas. Sometimes they were private banks, providing all kinds of companies with easy terms of credit. Other times they were an arm of the Japanese government.

I filed away all this information. For a few days. And the next time I went down to First National, the next time Wallace made me
feel like a bum, I walked out and saw the sign for Bank of Tokyo. I'd seen that sign a hundred times before, of course, but now it meant something different. Huge pieces of the puzzle fell into place. Dizzy, I walked directly across the street, straight into the Bank of Tokyo, and presented myself to the woman at the front desk. I said I owned a shoe company, which was importing shoes from Japan, and I wanted to speak with someone about doing a deal. Like the madam of a brothel, the woman instantly and discreetly led me to a back room. And left me.

After two minutes a man walked in and sat down very quietly at the table. He waited. I waited. He continued waiting. Finally I spoke. “I have a company,” I said. “Yes?” he said. “A shoe company,” I said. “Yes?” he said. I opened my briefcase. “These are my financial statements. I'm in a terrible bind. I need credit. I just read an article in
Fortune
about Japanese trading companies, and the article said these companies are looser with credit—and, well, do you know of any such companies that you might introduce me to?”

The man smiled. He'd read the same article. He said it just so happened that Japan's sixth-largest trading company had an office right above our heads, on the top floor of that building. All the major Japanese trading companies had offices in Portland, he said, but this particular one, Nissho Iwai, was the only one in Portland with its own commodities department. “It's a $100 billion company,” the banker said, eyes widening. “Oh, boy,” I said. “Please wait,” he said. He left the room.

Minutes later he returned with an executive from Nissho Iwai. His name was Cam Murakami. We shook hands and chatted, strictly hypothetically, about the possibility of Nissho financing my future imports. I was intrigued. He was quite intrigued. He offered me a deal on the spot, and extended his hand, but I couldn't shake it. Not yet. First I had to clear it with Onitsuka.

I sent a wire that day to Kitami, asking if he'd have any objections to my doing side business with Nissho. Days passed. Weeks.
With Onitsuka, silence meant something. No news was bad news, no news was good news—but no news was always some sort of news.

WHILE WAITING TO
hear back, I got a troubling call. A shoe distributor on the East Coast said he'd been approached by Onitsuka about becoming its new U.S. distributor. I made him say it again, slower. He did. He said he wasn't trying to make me angry. Nor was he trying to help me out or give me a heads-up. He just wanted to know the status of my deal.

I began to shake. My heart was pounding. Months after signing a new contract with me, Onitsuka was plotting to break it? Had they been spooked when I was late taking delivery of the spring shipment? Had Kitami simply decided he didn't care for me?

My only hope was that this distributor on the East Coast was lying. Or mistaken. Maybe he'd misunderstood Onitsuka. Maybe it was a language thing?

I wrote to Fujimoto. I said I hoped he was still enjoying the bicycle I bought him. (Subtle.) I asked him to find out anything he could.

He wrote back right away. The distributor was telling the truth. Onitsuka was considering a clean break with Blue Ribbon, and Kitami was in touch with several distributors in the United States. There was no firm plan to break my contract, Fujimoto added, but candidates were being vetted and scouted.

I tried to focus on the good. There was no firm plan. This meant there was still hope. I could still restore Onitsuka's faith, change Kitami's mind. I would just need to remind Kitami of what Blue Ribbon was, and who I was. Which would mean inviting him to the United States for a friendly visit.

1971

“G
uess who's coming to dinner,” Woodell said.

He wheeled into my office and handed me the telex. Ki-tami had accepted my invitation. He was coming to Portland to spend a few days. Then he was going to make a wider tour of the United States, for reasons he declined to share. “Visiting other potential distributors,” I said to Woodell. He nodded.

It was March 1971. We vowed that Kitami was going to have the time of his life, that he would return home feeling love in his heart for America, Oregon, Blue Ribbon—and me. When we were done with him he'd be incapable of doing business with anyone else. And so, we agreed, the visit should close on a high note, with a gala dinner at the home of our prize asset—Bowerman.

IN MOUNTING THIS
charm offensive, naturally I enlisted Penny. Together we met Kitami's flight, and together we whisked him straight to the Oregon coast, to her parents' oceanfront cottage, where we'd spent our wedding night.

Kitami had a companion with him, a sort of bag carrier, personal assistant, amanuensis, named Hiraku Iwano. He was just a kid, naïve, innocent, in his early twenties, and Penny had him eating out of her hand before we hit Sunset Highway.

We both slaved to give the two men an idyllic Pacific Northwest
weekend. We sat on the porch with them and breathed in the sea air. We took them for long walks on the beach. We fed them world-class salmon and poured them glass after glass of good French wine. We tried to focus most of our attention on Kitami, but both Penny and I found it easier to talk to Iwano, who read books and seemed guileless. Kitami seemed like a man who was importing guile by the boatload.

Monday, bright and early, I drove Kitami back to Portland, to First National Bank. Just as I was determined to charm him on this trip, I thought that he could be helpful in charming Wallace, that he could vouch for Blue Ribbon and make credit easier to get.

White met us in the lobby and walked us into a conference room. I looked around. “Where's Wallace?” I asked. “Ah,” White said, “he won't be able to join us today.”

What? That was the whole point of visiting the bank. I wanted Wallace to hear Kitami's ringing endorsement. Oh well, I thought—good cop will just have to relay the endorsement to bad cop.

I said a few preliminary words, expressed confidence that Kitami could bolster First National's faith in Blue Ribbon, then turned the floor over to Kitami, who scowled and did the one thing guaranteed to make my life harder. “Why do you not give my friends more
money
?” he said to White.

“W-w-what?” White said.

“Why do you refuse to extend credit to Blue Ribbon?” Kitami said, pounding his fist on the table.

“Well now—” White said.

Kitami cut him off. “What kind of bank is this? I do not understand! Maybe Blue Ribbon would be better off without you!”

White turned white. I tried to jump in. I tried to rephrase what Kitami was saying, tried to blame the language barrier, but the meeting was over. White stormed out, and I stared in astonishment at Kitami, who was wearing an expression that said, Job well done.

I DROVE KITAMI
to our new offices in Tigard and showed him around, introduced him to the gang. I was fighting hard to maintain my composure, to remain pleasant, to block out all thoughts about what had just happened. I was afraid that at any second I might lose it. But when I settled Kitami into a chair across from my desk, it was he who lost it—at me. “Blue Ribbon sales are disappointing!” he said. “You should be doing much better.”

Stunned, I said that our sales were doubling every year. Not good enough, he snapped. “Should be triple some people say,” he said. “What people?” I asked. “Never mind,” he said.

He took a folder from his briefcase, flipped it open, read it, snapped it shut. He repeated that he didn't like our numbers, that he didn't think we were doing enough. He opened the folder again, shut it again, shoved it back into his briefcase. I tried to defend myself, but he waved his hand in disgust. Back and forth we went, for quite a while, civil but tense.

After nearly an hour of this he stood and asked to use the men's room. Down the hall, I said.

The moment he was out of sight I jumped from behind my desk. I opened his briefcase and rummaged through and took out what looked like the folder he'd been referring to. I slid it under my desk blotter, then jumped behind my desk and put my elbows on the blotter.

Waiting for Kitami to return, I had the strangest thought. I recalled all the times I'd volunteered with the Boy Scouts, all the times I'd sat on Eagle Scout review boards, handing out merit badges for honor and integrity. Two or three weekends a year I'd question pink-cheeked boys about their probity, their honesty, and now I was stealing documents from another man's briefcase? I was headed down a dark path. No telling where it might lead. Wherever, there was no getting around one immediate consequence of my actions. I'd have to recuse myself from the next review board.

How I longed to study the contents of that folder, and photocopy every scrap of paper in it, and go over it all with Woodell. But
Kitami was soon back. I let him resume scolding me about sluggish numbers, let him talk himself out, and when he stopped I summed up my position. Calmly I said that Blue Ribbon might increase its sales if we could order more shoes, and we might order more shoes if we had more financing, and our bank might give us more financing if we had more security, meaning a longer contract with Onitsuka. Again he waved his hand. “Excuses,” he said.

I raised the idea of funding our orders through a Japanese trading company, like Nissho Iwai, as I'd mentioned in my wire months before. “Baah,” he said, “trading companies. They send money first—men later. Take over! Work way into your company, then take over.”

Translation: Onitsuka was only manufacturing a quarter of its own shoes, subcontracting the other three-quarters. Kitami was afraid that Nissho would find Onitsuka's network of factories, then go right around Onitsuka and become a manufacturer and put Onitsuka out of business.

Kitami stood. He needed to go back to his hotel, he said, have a rest. I said I'd have someone drive him, and I'd meet him for a cocktail later at his hotel bar.

The instant he was gone I went and found Woodell and told him what had happened. I held up the folder. “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.

So there it was. In black and white. Some people say. The “some people” damning Blue Ribbon, poisoning Kitami against us, were our competitors. And he was on his way to visit them. Kill one Marlboro Man, twenty more rise up to take his place.

I was outraged, of course. But mostly hurt. For seven years we'd devoted ourselves to Tiger shoes. We'd introduced them to America,
we'd reinvented the line. Bowerman and Johnson had shown Onitsuka how to make a better shoe, and their designs were now foundational, setting sales records, changing the face of the industry—and this was how we were repaid? “And now,” I said to Woodell, “I have to go meet this Judas for cocktails.”

First I went for a six-mile run. I don't know when I've run harder, or been less present in my body. With each stride I yelled at the trees, screamed at the cobwebs hanging in the branches. It helped. By the time I'd showered and dressed and driven to meet Kitami at his hotel, I was almost serene. Or maybe I was in shock. What Kitami said during that hour together, what I said—no memory. The next thing I remember is this. The following morning, when Kitami came to the office, Woodell and I ran a sort of shell game. While someone whisked Kitami into the coffee room, Woodell blocked the door to my office with his wheelchair and I slid the folder back into the briefcase.

ON THE LAST
day of Kitami's visit, hours before the big dinner party, I hurried down to Eugene to confer with Bowerman and his lawyer, Jaqua. I left Penny to drive Kitami down later in the day, thinking: What's the worst that could happen?

Cut to Penny, hair disheveled, dress smeared with grease, pulling up to Bowerman's house. As she stumbled out of the car I thought for a moment that Kitami had attacked her, but she took me aside and explained that they'd had a flat. “That son of a bitch,” she whispered, “
stayed in the car—on the highway—and let me fix the tire all by mysel
f
!

I steered her inside. We both needed something strong to drink.

This wasn't a simple matter, however. Mrs. Bowerman, a devout Christian Scientist, didn't normally allow alcohol in her home. She was making an exception on this special night, but she'd asked me ahead of time to please be sure that everyone behaved and no one overdid it. So, though my wife and I both needed a stiff one, I was forced to make it a small one.

Mrs. Bowerman now gathered us all in the living room. “In honor of our distinguished guests,” she announced, “tonight we are serving . . . mai tais!”

Applause.

Kitami and I still had at least one thing in common. We both liked mai tais. Very much. Something about them reminded each of us of Hawaii, that wonderful layover between the West Coast and Japan, where you could unwind before going back into the long workdays. Still, he and I stopped at one that evening. Mindful of Mrs. Bowerman, so did everyone else. Everyone but Bowerman. He'd never been much of a drinker, and he'd certainly never tasted a mai tai before, and we all watched in dread and dismay as the drinks took effect. And then some. Something about that tangy combination of curaçao and lime juice, pineapple and rum, hit Bowerman right on the screws. After two mai tais he was a different person.

As he tried to fix his third mai tai he bellowed, “We're out of ice!” No one answered. So he answered himself. “No problem.” He marched out to the garage, to the large meat freezer, and grabbed a bag of frozen blueberries. He tore it open, scattering blueberries everywhere. He then tossed a huge handful of frozen blueberries into his drink. “Tastes better this way,” he announced, returning to the living room. Now he walked around the room, slopping handfuls of frozen blueberries into everyone's glass.

Sitting, he began to tell a story, which seemed in highly questionable taste. It built to a crescendo I feared we'd all remember for years to come. That is, if we could understand the crescendo. Bowerman's words, normally so crisp, so precise, were growing squishy around the edges.

Mrs. Bowerman glared at me. But what could I do? I shrugged my shoulders and thought: You married him. And then I thought: Oh, wait, so did I.

Back when the Bowermans attended the 1964 Olympics in Japan, Mrs. Bowerman had fallen in love with nashi pears, which are like
small green apples, only sweeter. They don't grow in the United States, so she smuggled a few seeds home in her purse and planted them in her garden. Every few years, she told Kitami, when the nashis bloomed, they refreshed her love of all things Japanese. He seemed quite beguiled by this story. “Och!” Bowerman said, exasperated. “Japples!”

I put a hand over my eyes.

Finally came the moment when I thought the party might spin out of control, when I wondered if we might actually need to call the cops. I looked across the room and spotted Jaqua, sitting beside his wife, glaring at Kitami. I knew that Jaqua had been a fighter pilot in the war, that his wingman, one of his closest friends, had been shot out of the sky by a Japanese Zero. In fact Jaqua and his wife had named their first child after that dead wingman, and I suddenly regretted telling Jaqua about Kitami's Folder of Betrayal. I perceived something bubbling inside Jaqua, and rising to his throat, and I sensed the real possibility that Bowerman's lawyer and best friend and neighbor might stand and march across the room and sock Kitami in the jaw.

The one person who seemed to be having an uncomplicatedly wonderful time was Kitami. Gone was the angry Kitami from the bank. Gone was the scolding Kitami from my office. Talking, laughing, slapping his knee, he was so personable that I wondered what might have happened if I'd given him a mai tai before driving him over to First National.

Late in the evening he spotted something across the room—a guitar. It belonged to one of Bowerman's three sons. Kitami walked over, picked it up, and began to finger the strings. Then strum them. He carried the guitar to a short flight of steps that led from the Bowermans' sunken living room to their dining room and, standing on the top step, started to play. And sing.

All heads turned. Conversation ceased. It was a country-western song, of some sort, but Kitami performed it like a traditional Japanese folk song. He sounded like Buck Owens on a koto harp. Then
without any segue he switched to “O Sole Mio.” I recall thinking: Is he really singing “O Sole Mio”?

He sang it louder.
O sole mio, sta nfronte a te! O sole, o sole mio, sta nfronte a te!

A Japanese businessman, strumming a Western guitar, singing an Italian ballad, in the voice of an Irish tenor. It was surreal, then a few miles past surreal, and it didn't stop. I'd never known there were so many verses to “O Sole Mio.” I'd never known a roomful of active, restless Oregonians could sit so still and quiet for so long. When he set down the guitar, we all tried not to make eye contact with each other as we gave him a big hand. I clapped and clapped and it all made sense. For Kitami, this trip to the United States—the visit to the bank, the meetings with me, the dinner with the Bowermans—­wasn't about Blue Ribbon. Nor was it about Onitsuka. Like everything else, it was all about Kitami.

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