Authors: Phil Knight
Also, there was no such thing as venture capital. An aspiring young entrepreneur had very few places to turn, and those places were all guarded by risk-averse gatekeepers with zero imagination. In other words, bankers. Wallace was the rule, not the exception.
To make everything more difficult, Onitsuka was always late shipping my shoes, which meant less time to sell, which meant less time to make enough money to cover my loan. When I complained, Onitsuka didn't answer. When they did answer, they failed to appreciate my quandary. Time and again I'd send them a frantic telex, inquiring about the whereabouts of the latest shipment, and in response I'd typically get a telex that was maddeningly obtuse.
Little more days.
It was like dialing 911 and hearing someone on the other end yawn.
Given all these problems, given Blue Ribbon's cloudy future, I decided that I'd better get a real job, something safe to fall back on when everything went bust. At the same moment Johnson devoted himself exclusively to Blue Ribbon, I decided to branch out.
By now I'd passed all four parts of the CPA exam. So I mailed my test results and résumé to several local firms, interviewed with three or four, and got hired by Price Waterhouse. Like it or not, I was officially and irrevocably a card-carrying bean counter. My tax returns for that year wouldn't list my occupation as self-employed,
or business owner, or entrepreneur. They would identify me as Philip H. Knight, Accountant.
MOST DAYS I
didn't mind. For starters, I invested a healthy portion of my paycheck into Blue Ribbon's account at the bank, padding my precious equity, boosting the company's cash balance. Also, unlike Lybrand, the Portland branch of Price Waterhouse was a midsized firm. It had some thirty accountants on staff, compared to Lybrand's four, which made it a better fit for me.
The work suited me better, too. Price Waterhouse boasted a great variety of clients, a mix of interesting start-ups and established companies, all selling everything imaginableâlumber, water, power, food. While auditing these companies, digging into their guts, taking them apart and putting them back together, I was also learning how they survived, or didn't. How they sold things, or didn't. How they got into trouble, how they got out. I took careful notes about what made companies tick, what made them fail.
Again and again I learned that lack of equity was a leading cause of failure.
The accountants worked in teams, generally, and the A Team was headed by Delbert J. Hayes, the best accountant in the office, and by far its most flamboyant character. Six foot two, three hundred pounds, most of it stuffed sausage-like into an exceedingly inexpensive polyester suit, Hayes possessed great talent, great wit, great passionâand great appetites. Nothing gave him more pleasure than laying waste to a hoagie and a bottle of vodka, unless it was doing both while studying a spreadsheet. And he had a comparable hunger for smoke. Rain or shine he needed smoke running through his lungs and nasal passages. He chuffed through at least two packs a day.
I'd met other accountants who knew numbers, who had a way with numbers, but Hayes was to the numbers born. In a column of
otherwise unspectacular fours and nines and twos, he could discern the raw elements of Beauty. He looked at numbers the way the poet looks at clouds, the way the geologist looks at rocks. He could draw from them rhapsodic song, demotic truths.
And uncanny predictions. Hayes could use numbers to tell the future.
Day after day I watched Hayes do something I'd never thought possible: He made accounting an art. Which meant he, and I, and all of us, were artists. It was a wonderful thought, an ennobling thought, one that would have never occurred to me.
Intellectually I always knew that numbers were beautiful. On some level I understood that numbers represented a secret code, that behind every row of numbers lay ethereal Platonic forms. My accounting classes had taught me that, sort of. As had sports. Running track gives you a fierce respect for numbers, because you
are
what your numbers say you are, nothing more, nothing less. If I posted a bad time in a race, there might have been reasonsâinjury, fatigue, broken heartâbut no one cared. My numbers, in the end, were all that anyone would remember. I'd lived this reality, but Hayes the artist made me feel it.
Alas, I came to fear that Hayes was the tragic kind of artist, the self-sabotaging, van Gogh kind. He undercut himself at the firm, every day, by dressing badly, slouching badly, behaving badly. He also had an array of phobiasâheights, snakes, bugs, confined spacesâwhich could be off-putting to his bosses and colleagues.
But he was most phobic about diets. Price Waterhouse would have made Hayes a partner, without hesitation, despite all his many vices, but the firm couldn't overlook his weight. It wasn't going to tolerate a three-hundred-pound partner. More than likely it was this unhappy fact that made Hayes eat so much in the first place. Whatever the reason, he ate a lot.
By 1965 he drank as much as he ate, which is saying a lot. And he
refused to drink alone. Come quitting time, he'd insist that all his junior accountants join him.
He talked like he drank, nonstop, and some of the other accountants called him Uncle Remus. But I never did. I never rolled my eyes at Hayes's stem-winders. Each story contained some gem of wisdom about businessâwhat made companies work, what the ledgers of a company really
meant
. Thus, many nights, I'd voluntarily, even eagerly, enter some Portland dive and match Hayes round for round, shot for shot. In the morning I'd wake feeling sicker than I had in that hammock in Calcutta, and it would take all my self-discipline to be of any use to Price Waterhouse.
It didn't help that, when I wasn't a foot soldier in Hayes's Army, I was still serving in the Reserves. (A seven-year commitment.) Tuesday nights, from seven to ten, I had to throw a switch in my brain and become First Lieutenant Knight. My unit was composed of longshoremen, and we were often stationed in the warehouse district, a few football fields away from where I picked up my shipments from Onitsuka. Most nights my men and I would load and unload ships, maintain jeeps and trucks. Many nights we'd do PTâphysical training. Push-ups, pull-ups, sit-ups, running. I remember one night I led my company on a four-mile run. I needed to sweat out the booze from a Hayes binge, so I set a killing pace, and steadily increased it, grinding myself and the men to dust. After, I overheard one panting soldier tell another: “I was listening real close as Lieutenant Knight counted cadence. I never once heard that man take a deep breath!”
It was perhaps my only triumph of 1965.
SOME TUESDAY NIGHTS
in the Reserves were set aside for classroom time. Instructors would talk to us about military strategy, which I found riveting. The instructors would often begin class by dissecting some long-ago, famous battle. But invariably they would drift off topic,
onto Vietnam. The conflict was getting hotter. The United States was being drawn toward it, inexorably, as if by a giant magnet. One instructor told us to get our personal lives in order, kiss our wives and girlfriends good-bye. We were going to be “in the shitâreal soon.”
I had grown to hate that war. Not simply because I felt it was wrong. I also felt it was stupid, wasteful. I hated stupidity. I hated waste. Above all,
that
war, more than other wars, seemed to be run along the same principles as my bank. Fight not to win, but to avoid losing. A surefire losing strategy.
My fellow soldiers felt the same way. Is it any wonder that, the moment we were dismissed, we marched double-time to the nearest bar?
Between the Reserves and Hayes, I wasn't sure my liver was going to see 1966.
NOW AND THEN
Hayes would hit the road, visit clients across Oregon, and I frequently found myself part of his traveling medicine show. Of all his junior accountants, I might have been his favorite, but especially when he traveled.
I liked Hayes, a lot, but I was alarmed to discover that when on the road he
really
let his hair down. And as always he expected his cohorts to do the same. It was never enough to just drink with Hayes. He demanded that you match him drop for drop. He counted drinks as carefully as he counted credits and debits. He said often that he believed in teamwork, and if you were on his team, by God you'd better
finish that damn drink
.
Half a century later my stomach rolls when I recall touring with Hayes around Albany, Oregon, doing a job for Wah Chung Exotic Metals. Each night, after crunching the numbers, we'd hit a little dive on the edge of town and close it down. I also recall, dimly, blurred days in Walla Walla, doing a job for Birds Eye, followed by nightcaps at the City Club. Walla Walla was a dry town, but bars got around the law by calling themselves “clubs.” Membership in the City Club
was one dollar, and Hayes was a member in good Âstandingâuntil I misbehaved and got us kicked out. I don't remember what I did, but I'm sure it was awful. I'm equally sure I couldn't help myself. By then my blood was 50 percent gin.
I vaguely remember throwing up all over Hayes's car. I vaguely remember him very sweetly and patiently telling me to clean it up. What I remember vividly is that Hayes grew red in the face, righteously indignant on my behalf, even though I was clearly in the wrong, and resigned his membership in the City Club. Such loyalty, such unreasonable and unwarranted fealtyâthat might have been the moment I fell in love with Hayes. I looked up to the man when he saw something deeper in numbers, but I loved him when he saw something special in me.
On one of those road trips, in one of our boozy late-night conversations, I told Hayes about Blue Ribbon. He saw promise in it. He also saw doom. The numbers, he said, didn't lie. “Starting a new company,” he said, “in this economy? And a shoe company? With zero cash balance?” He slouched and shook his big fuzzy head.
On the other hand, he said, I had one thing in my favor. Bowerman. A legend for a partnerâthat was one asset for which it was impossible to assign a number.
PLUS, MY ASSET
was rising in value. Bowerman had gone to Japan for the 1964 Olympics, to support the members of the U.S. track-and-field team he'd coached. (Two of his runners, Bill Dellinger and Harry Jerome, medaled.) And after the Games, Bowerman had switched hats and become an ambassador for Blue Ribbon. He and Mrs. BowermanâÂwhose Christmas Club account had provided the initial five hundred dollars Bowerman gave me to form our partnershipâvisited Onitsuka and charmed everyone in the building.
They were given a royal welcome, a VIP tour of the factory, and
Morimoto even introduced them to Mr. Onitsuka. The two old lions, of course, bonded. Both, after all, were built from the same last, shaped by the same war. Both still approached everyday life as a battle. Mr. Onitsuka, however, had the particular tenacity of the defeated, which impressed Bowerman. Mr. Onitsuka told Bowerman about founding his shoe company in the ruins of Japan, when all the big cities were still smoldering from American bombs. He'd built his first lasts, for a line of basketball shoes, by pouring hot wax from Buddhist candles over his own feet. Though the basketball shoes didn't sell, Mr. Onitsuka didn't give up. He simply switched to running shoes, and the rest was shoe history. Every Japanese runner in the 1964 Games, Bowerman told me, was wearing Tigers.
Mr. Onitsuka also told Bowerman that the inspiration for the unique soles on Tigers had come to him while eating sushi. Looking down at his wooden platter, at the underside of an octopus's leg, he thought a similar suction cup might work on the sole of a runner's flat. Bowerman filed that away. Inspiration, he learned, can come from quotidian things. Things you might eat. Or find lying around the house.
Now back in Oregon, Bowerman was happily corresponding with his new friend, Mr. Onitsuka, and with the entire production team at the Onitsuka factory. He was sending them bunches of ideas and modifications of their products. Though all people are the same under the skin, Bowerman had come to believe that all feet are not created equal. Americans have different bodies than Japanese doâÂlonger, heavierâand Americans therefore need different shoes. After dissecting a dozen pairs of Tigers, Bowerman saw how they could be tailored to cater to American customers. To that end, he had a slew of notes, sketches, designs, all of which he was firing off to Japan.
Sadly, he was discovering, as I had, that no matter how well you got along in person with the team at Onitsuka, things were different once you were back on your side of the Pacific. Most of Bowerman's letters went unanswered. When there was an answer, it was cryptic,
or curtly dismissive. It pained me at times to think the Japanese were treating Bowerman the way I was treating Johnson.
But Bowerman wasn't me. He didn't take rejection to heart. Like Johnson, when his letters went unanswered, Bowerman simply wrote more. With more underlined words, more exclamation marks.
Nor did he flag in his experiments. He continued to tear apart Tigers, continued to use the young men on his track teams as lab mice. During the autumn track season of 1965, every race had two results for Bowerman. There was the performance of his runners, and there was the performance of their shoes. Bowerman would note how the arches held up, how the soles gripped the cinders, how the toes pinched and the instep flexed. Then he'd airmail his notes and findings to Japan.
Eventually he broke through. Onitsuka made prototypes that conformed to Bowerman's vision of a more American shoe. Soft inner sole, more arch support, heel wedge to reduce stress on the Achilles tendonâthey sent the prototype to Bowerman and he went wild for it. He asked for more. He then handed these experimental shoes out to all his runners, who used them to crush the competition.
A little success always went to Bowerman's head, in the best way. Around this time he was also testing sports elixirs, magic potions and powders to give his runners more energy and stamina. When I was on his team he'd talked about the importance of replacing an athlete's salt and electrolytes. He'd forced me and others to choke down a potion he'd invented, a vile goo of mushed bananas, lemonade, tea, honey, and several unnamed ingredients. Now, while tinkering with shoes, he was also monkeying with his sports drink recipe, making it taste worse and work better. It wasn't until years later that I realized Bowerman was trying to invent Gatorade.