Authors: Phil Knight
Several clusters of investors now began private conversations while I was trying to talk. They were pointing at this troubling numberâ$57,000âand repeating it, over and over. At some point I mentioned that Anne Caris, a young runner, had just made the cover of
Sports Illustrated
wearing Nikes.
We're breaking through, people!
No one heard. No one cared. They cared only about the bottom line. Not even
the
bottom line, but
their
bottom line.
I came to the end of my presentation. I asked if anyone had a question. Thirty hands went up. “I'm very disappointed in this,” said one older man, rising to his feet. “Any more questions?” Twenty-nine hands went up. Another man called out, “I'm not
happy
.”
I said I sympathized. My sympathy only served to annoy them.
They had every right. They'd put their confidence in Bowerman and me, and we'd failed. We never could have anticipated Tiger's betrayal, but nonetheless, these people were hurting, I saw it in their faces, and I needed to take responsibility. To make it right. I decided it was only fair to offer them a concession.
Their stock had a conversion rate, which went up every year. In
the first year the rate was $1.00 a share, in the second year it was $1.50, and so on. In light of all this bad news, I told them, I'll keep the conversion rate the same for the full five years you own your stock.
They were placated, mildly. But I left Eugene that day knowing they had a low opinion of me, and Nike. I also left thinking I'd never, ever,
ever
take this company public. If thirty people could cause this kind of acid stomach, I couldn't imagine being answerable to thousands of stockholders.
We were better off financing through Nissho and the bank.
THAT IS, IF
there was anything to finance. As feared, Onitsuka had filed suit against us in Japan. So now we had to file quickly against them in the United States, for breach of contract and trademark infringement.
I put the case in the hands of Cousin Houser. It wasn't a tough call. There was the trust factor, of course. Kinship, blood, so on. Also, there was the confidence factor. Though he was only two years older, Cousin Houser seemed vastly more mature. He carried himself with remarkable assurance. Especially before a judge and jury. His father had been a salesman, and a good one, and Cousin Houser learned from him how to sell his client.
Better yet, he was a tenacious competitor. When we were kids Cousin Houser and I used to play vicious, marathon games of badminton in his backyard. One summer we played exactly 116 games. Why 116? Because Cousin Houser beat me 115 straight times. I refused to quit until I'd won. And he had no trouble understanding my position.
But the main reason I chose Cousin Houser was poverty. I had no money for legal fees, and Cousin Houser talked his firm into taking my case on contingency.
Much of 1973 was spent in Cousin Houser's office, reading doc
uments, reviewing memos, cringing at my own words and actions. My memo about hiring a spyâthe court would take a dim view of this, Cousin Houser warned. And my “borrowing” Kitami's folder from his briefcase? How could a judge view that as anything but theft? MacArthur came to mind.
You are remembered for the rules you break.
I contemplated hiding these painful facts from the court. In the end, however, there was only one thing to do. Play it straight. It was the smart thing, the right thing. I'd simply have to hope the court would see the stealing of Kitami's folder as a kind of self-defense.
When I wasn't with Cousin Houser, studying the case, I was being studied. In other words, deposed. For all my belief that business was war without bullets, I'd never felt the full fury of conference-Âroom combat until I found myself at a table surrounded by five lawyers. They tried everything to get me to say I'd violated my contract with Onitsuka. They tried trick questions, hostile questions, squirrelly questions, loaded questions. When questions didn't work, they twisted my answers. A deposition is strenuous for anyone, but for a shy person it's an ordeal. Badgered, baited, harassed, mocked, I was a shell of myself by the end. My condition was worsened by the sense that I hadn't done very wellâa sense Cousin Houser reluctantly confirmed.
At the close of those difficult days, it was my nightly six-mile run that saved my life. And then it was my brief time with Matthew and Penny that preserved my sanity. I'd always try to find the time and energy to tell Matthew his bedtime story.
Thomas Jefferson was toiling to write the Declaration of Independence,
you see, struggling to find the words, when little Matt History brought him a new quill pen and the words seemed to magically flow . . .
Matthew almost always laughed at my bedtime stories. He had a liquid laugh, which I loved to hear, because at other times he could be moody, sullen. Cause for concern. He'd been very late learning to talk, and now he was showing a worrisome rebellious streak. I
blamed myself. If I were home more, I told myself, he'd be less rebellious.
Bowerman spent quite a bit of time with Matthew, and he told me not to worry. I like his spirit, he said. The world needs more rebels.
That spring, Penny and I had the added worry of how our little rebel would handle a sibling. She was pregnant again. Secretly, I wondered more about how
we
were going to handle it. By the end of 1973, I thought, it's very possible I'll have two kids and no job.
AFTER TURNING OUT
the light next to Matthew's bed, I'd usually go and sit in the living room with Penny. We'd talk about the day. Which meant the looming trial. Growing up, Penny had watched several of her father's trials, and it gave her an avid fondness for courtroom drama. She never missed a legal show on
TV
.
Perry Mason
was her favorite, and I sometimes called her Della Street, after Mason's intrepid secretary. I kidded her about her enthusiasm, but I also fed off it.
The final act of every evening was my phone call to my father. Time for my own bedtime story. By then he'd left the newspaper, and in his retirement he had loads of time to research old cases and precedents, to spin out arguments that might be useful to Cousin Houser. His involvement, plus his sense of fair play, plus his bedrock belief in the rightness of Blue Ribbon's cause, was restorative.
It was always the same. My father would ask about Matthew and Penny, and then I'd ask about Mom, and then he'd tell me what he'd found in the law books. I'd take careful notes on a yellow legal pad. Before signing off he'd always say that he liked our chances.
We're going to win, Buck.
That magical pronoun, “we”âhe'd always use it, and it would always make me feel better. It's possible that we were never closer, maybe because our relationship had been reduced to
its primal essence. He was my dad, I was his son, and I was in the fight of my life.
Looking back, I see that something else was going on. My trial was providing my father with a healthier outlet for his inner chaos. My legal troubles, my nightly phone calls, were keeping him on high alert, and at home. There were fewer late nights at the bar of the club.
“I'M BRINGING SOMEONE
else onto the team,” Cousin Houser told me one day. “Young lawyer. Rob Strasser. You'll like him.”
He was fresh out of
UC
Berkeley School of Law, Cousin Houser said, and he didn't know a damn thing. Yet. But Cousin Houser had an instinct about the kid. Thought he showed tremendous promise. Plus, Strasser had a personality that was sure to mesh with our company. “The moment Strasser read our brief,” Cousin Houser told me, “he saw this case as a holy crusade.”
Well, I liked the sound of that. So the next time I was at Cousin Houser's firm I walked down the hall and poked my head into the office of this Strasser fellow. He wasn't there. The office was pitch-dark. Shades drawn, lights off. I turned to leave. Then I heard . . . Hello? I turned back. Somewhere within the darkness, behind a big walnut desk, a shape moved. The shape grew, a mountain rising from a dark sea.
It slid toward me. Now I saw the rough contours of a man. Six-three, 280 pounds, with an extra helping of shoulders. And fire-log arms. This was one part Sasquatch, one part Snuffleupagus, though somehow light on his feet. He minced toward me and thrust one of his fire logs in my direction. I reached, we shook.
Now I could make out the faceâbrick red, covered by a full strawberry-blond beardâand glazed with sweat. (Hence the darkness. He required dimly lit, cool spaces. He also couldn't bear wearing a suit.) Everything about this man was different from me, from everyone I knew, and yet I felt a strange, instant kinship.
He said that he was thrilled to be working on my case. Honored. He believed that Blue Ribbon had been the victim of a terrible injustice. Kinship became love. “Yes,” I said. “Yes, we have.”
DAYS LATER STRASSER
came out to Tigard for a meeting. Penny was in the office at the time and when Strasser glimpsed her walking down a hall his eyes bulged. He tugged on his beard. “My God!” he said. “Was that Penny Parks?!”
“She's Penny Knight now,” I said.
“She dated my best friend!”
“Small world.”
“Smaller when you're my size.”
Over the coming days and weeks Strasser and I discovered more and more ways our lives and psyches intersected. He was a native Oregonian, and proud of it, in that typical, truculent way. He'd grown up with a bug about Seattle, and San Francisco, and all the nearby places that outsiders saw as our betters. His geographical inferiority complex was exacerbated by his ungainly size, and homeliness. He'd always feared that he wouldn't find his place in the world, that he was doomed to be an outcast. I got that. He compensated, at times, by being loud, and profane, but mostly he kept his mouth shut and downplayed his intelligence, rather than risk alienating people. I got that, too.
Intelligence like Strasser's, however, couldn't be hidden for long. He was one of the greatest thinkers I ever met. Debater, negotiator, talker, seekerâhis mind was always whirring, trying to understand. And to conquer. He saw life as a battle and found confirmation for this view in books. Like me, he read compulsively about war.
Also, like me, he lived and died with the local teams. Especially the Ducks. We had a huge laugh over the fact that Oregon's basketball coach that year was Dick Harter, while the football coach was still Dick Enright. The popular cheer at Oregon State games was:
“If you can't get your Dick Enright, get your Dick Harter!” After we stopped laughing, Strasser started up again. I was amazed by the pitch of his laughter. High, giggly, twee, it was startling from a man his size.
More than anything else we bonded over fathers. Strasser was the son of a successful businessman, and he, too, feared that he'd never live up to his old man's expectations. His father, however, was an exceptionally hard case. Strasser told me many stories. One stayed with me. When Strasser was seventeen his parents went away for the weekend, and Strasser seized the moment to throw a party. It turned into a riot. Neighbors called the police, and just as the patrol cars arrived, so did Strasser's parents. They'd come home early from their trip. Strasser told me that his father looked aroundâhouse in shambles, son in handcuffsâand coldly told the cops, “Take him away.”
I asked Strasser early on how he gauged our chances against Onitsuka. He said we were going to win. He said it straight out, no hesitation, as if I'd asked him what he'd had for breakfast. He said it the way a sports fan would talk about “next year,” with uncompromising faith. He said it the way my father said it every night, and there and then I decided that Strasser was one of the chosen, one of the brethren. Like Johnson and Woodell and Hayes. Like Bowerman and Hollister and Pre. He was Blue Ribbon, through and through.
WHEN I WASN'T
obsessing about the trial, I was fixated on sales. Every day I'd get a telex from our warehouses with a “pair count,” meaning the exact number of pairs shipped that day to all customersâÂschools, retailers, coaches, individual mail-order clients. On general accounting principles, a pair shipped was a pair sold, so the daily pair count determined my mood, my digestion, my blood pressure, because it largely determined the fate of Blue Ribbon. If we didn't “sell through,” sell all the shoes in our most recent order, and
quickly convert that product into cash, we'd be in big trouble. The daily pair count told me if we were on our way to selling through.
“So,” I'd say to Woodell on a typical morning, “Massachusetts is good, Eugene looks goodâwhat happened in Memphis?”
“Ice storm,” he might say. Or: “Truck broke down.”
He had a superb talent for underplaying the bad, and underplaying the good, for simply being in the moment. For instance, after the dummy reversal, Woodell occupied an office that was hardly deluxe. It sat on the top floor of an old shoe factory, and a water tower directly overhead was caked with a century's worth of pigeon poop. Plus, the ceiling beams were gapped, and the building shook every time the die cutters stamped out the uppers. In other words, throughout the day a steady rain of pigeon poop would fall on Woodell's hair, shoulders, desktop. But Woodell would simply dust himself off, casually clear his desk with the side of his hand, and continue with his work.
He also kept a piece of company stationery carefully draped over his coffee cup at all times, to ensure it was only cream in his joe.
I tried often to copy Woodell's Zen monk demeanor. Most days, however, it was beyond me. I boiled with frustration, knowing that our pair count could have been so much higher if not for our constant problems with supply. People were crying out for our shoes, but we just couldn't get them out on time. We'd traded Onitsuka's capricious delays for a new set of delays, caused by demand. The factories and Nissho were doing their jobs, we were now getting what we ordered, on time and intact, but the booming marketplace created new pressures, making it harder and harder to correctly allocate what we got.