Now that we’d gotten past our bank crisis,

1976
Now that we’d gotten past our bank crisis, now that I was reasonably sure
of not going to jail, I could go back to asking the deep questions. What are
we trying to build here? What kind of company do we want to be?
Like most companies, we had role models. Sony, for instance. Sony was
the Apple of its day. Profitable, innovative, efficient—and it treated its
workers well. When pressed, I often said I wanted to be like Sony. At root,
however, I still aimed and hoped for something bigger, and vaguer.
I would search my mind and heart and the only thing I could come up
with was this word—“winning.” It wasn’t much, but it was far, far better
than the alternative. Whatever happened, I just didn’t want to lose. Losing
was death. Blue Ribbon was my third child, my business child, as Sumeragi
said, and I simply couldn’t bear the idea of it dying. It has to live, I told
myself. It just has to. That’s all I know.
Several times, in those first months of 1976, I huddled with Hayes and
Woodell and Strasser, and over sandwiches and sodas we’d kick around this
question of ultimate goals. This question of winning and losing. Money
wasn’t our aim, we agreed. Money wasn’t our end game. But whatever our
aim or end, money was the only means to get there. More money than we
had on hand.
Nissho was loaning us millions, and that relationship felt sound, solidified
by the recent crisis. Best partners you’ll ever have. Chuck Robinson had been
right. But to keep up with demand, to continue growing, we needed millions
more. Our new bank was loaning us money, which was good, but because
they were a small bank we’d already reached their legal limit. At some point
in those 1976 Woodell-Strasser-Hayes discussions we started to talk about
the most logical arithmetical solution, which was also the most difficult one
emotionally.
Going public.
On one level, of course, the idea made perfect sense. Going public would
generate a ton of money in a flash. But it would also be highly perilous,
because going public often meant losing control. It could mean working for
someone else, suddenly being answerable to stockholders, hundreds or
maybe thousands of strangers, many of whom would be large investment
firms.
Going public could turn us overnight into the thing we loathed, the thing
we’d spent our lives running from.
For me there was an added consideration, a semantic one. Defined by
shyness, intensely private, I found that phrase itself off-putting: going public.
No thank you.
And yet, during my nightly run, I’d sometimes ask myself, Hasn’t your
life been a kind of search for connection? Running for Bowerman,
backpacking around the world, starting a company, marrying Penny,
assembling this band of brothers at Blue Ribbon’s core—hasn’t it all been
about, one way or another, going public?
In the end, however, I decided, we decided, going public wasn’t right. It’s
just not for us, I said, and we said. No way. Never.
Meeting adjourned.
So we set about casting for other ways to raise money.
One way found us. First State Bank asked us to apply for a million-dollar
loan, which the U.S. Small Business Administration would then guarantee. It
was a loophole, a way for a small bank to gently expand its credit line,
because their guaranteed-loan limits were greater than their direct-loan
limits. So we did it, mainly to make their life easier.
As is always the case, the process turned out to be more complicated than
it first appeared. First State Bank and the Small Business Administration
required that Bowerman and I, as majority shareholders, both personally
guarantee the loan. We’d done that at First National and at Bank of
California, so I didn’t see a problem. I was in hock up to my neck, what was
one more guarantee?
Bowerman, however, balked. Retired, living on a fixed income, dispirited
after the traumas of the last few years, and greatly weakened by the death of
Pre, he didn’t want any more risk. He feared losing his mountain.
Rather than give his personal guarantee, he offered to give me two-thirds
of his stake in Blue Ribbon, at a discounted price. He was bowing out.
I didn’t want this. Never mind that I didn’t have the money to buy his
stake, I didn’t want to lose the cornerstone of my company, the anchor of my
psyche. But Bowerman was adamant, and I knew better than to argue. So we
both went to Jaqua and asked him to help broker the deal. Jaqua was still
Bowerman’s best friend, but I’d come to think of him as a close friend, too. I
still trusted him completely.
Let’s not fully dissolve the partnership, I said to him. Though I
reluctantly agreed to buy Bowerman’s stake (low payments, spread over five
years), I begged him to retain a percentage, stay on as a vice president and
member of our small board.
Deal, he said. We all shook hands.
WHILE WE WERE busy moving around stakes and dollars, the dollar itself
was hemorrhaging value. It was all at once in a death spiral against the
Japanese yen. Coupled with rising Japanese labor rates, this was now the
most imminent threat to our existence. We’d increased and diversified
sources of production, we’d added new factories in New England and Puerto
Rico, but we were still doing nearly all our manufacturing in volatile Japan,
mostly at Nippon Rubber. A sudden, crippling shortage of supply was a real
possibility. Especially given the spike in demand for Bowerman’s waffle
trainer.
With its unique outer sole, and its pillowy midsole cushion, and its belowmarket price ($24.95), the waffle trainer was continuing to capture the
popular imagination like no previous shoe. It didn’t just feel different, or fit
different—it looked different. Radically so. Bright red upper, fat white
swoosh—it was a revolution in aesthetics. Its look was drawing hundreds of
thousands of new customers into the Nike fold, and its performance was
sealing their loyalty. It had better traction and cushioning than anything on
the market.
Watching that shoe evolve in 1976 from popular accessory to cultural
artifact, I had a thought. People might start wearing this thing to class.
And the office.
And the grocery store.
And throughout their everyday lives.
It was a rather grandiose idea. Adidas had had limited success converting
athletic shoes to everyday wear, with the Stan Smith tennis shoe and the
Country running shoe. But neither was nearly as distinctive, or popular, as
the waffle trainer. So I ordered our factories to start making the waffle
trainer in blue, which would go better with jeans, and that’s when it really
took off.
We couldn’t make enough. Retailers and sales reps were on their knees,
pleading for all the waffle trainers we could ship. The soaring pair counts
were transforming our company, not to mention the industry. We were
seeing numbers that redefined our long-term goals, because they gave us
something we’d always lacked—an identity. More than a brand, Nike was
now becoming a household word, to such an extent that we would have to
change the company name. Blue Ribbon, we decided, had run its course. We
would have to incorporate as Nike, Inc.
And for this newly named entity to stay vibrant, to keep growing, to
survive the declining dollar, we’d need as always to ramp up production.
Sales reps on their knees—that wasn’t sustainable. We’d need to find more
manufacturing hubs, outside Japan. Our existing factories in America and
Puerto Rico would help, but they weren’t nearly enough. Too old, too few,
too expensive. So in the spring of 1976 it was finally time to turn to Taiwan.
For our point man in Taiwan I looked to Jim Gorman, a valued
employee, long known for his almost fanatical loyalty to Nike. Raised in a
series of foster homes, Gorman seemed to find in Nike the family he’d never
had, and thus he was always a good sport, always a team player. It was
Gorman, for instance, who’d drawn the unpleasant task of driving Kitami to
the airport, back in 1972, after that final showdown in Jaqua’s conference
room. And he did it without complaint. It was Gorman who’d taken over the
Eugene store from Woodell, the toughest of acts to follow. It was Gorman
who wore subpar Nike spikes in the 1972 Olympic Trials. In every instance,
Gorman had done a fine job and never uttered a sour word. He seemed the
perfect candidate to take on the latest mission impossible—Taiwan. But first
I’d need to give him a crash course on Asia. So I scheduled a trip, just the
two of us.
On the flight overseas Gorman proved to be an avid student, a virtual
sponge. He grilled me about my experiences, my opinions, my reading, and
wrote down every word I said. I felt as if I was back in school, teaching at
Portland State, and I liked it. I remembered that the best way to reinforce
your knowledge of a subject is to share it, so we both benefited from my
transferring everything I knew about Japan, Korea, China, and Taiwan to
Gorman’s brain.
Shoe producers, I told him, are abandoning Japan en masse. And they’re
all landing in two places. Korea and Taiwan. Both countries specialize in
low-priced footwear, but Korea has elected to go with a few giant factories,
whereas Taiwan is building a hundred smaller ones. So that’s why we’re
choosing Taiwan: Our demand is too high, our volume too low, for the
biggest factories. And in smaller factories we’ll have the dominant position.
We’ll be in charge.
Of course, the tougher challenge was to get any factory we chose to
upgrade its quality.
And then there was the constant threat of political instability. President
Chiang Kai-shek had just died, I told Gorman, and after twenty-five years in
command he was leaving a nasty power vacuum.
For good measure, you always needed to account for Taiwan’s ancient
tensions with China.
On and on I talked as we sailed over the Pacific. While taking copious
notes, Gorman also came up with new, fresh ideas, which gave me new
insights, things to think about. Stepping off the plane in Taichung, our first
stop, I was delighted. This guy was intense, energetic, eager to get started. I
was proud to be his mentor.
Good choice, I told myself.
By the time we reached the hotel, however, Gorman was wilting.
Taichung looked and smelled like the far end of the galaxy. A vast
megalopolis of smoking factories, and thousands of people per square foot, it
was unlike anything I’d ever seen, and I’d been all over Asia, so of course it
overwhelmed poor Gorman. I saw in his eyes that typical first-timer’s
reaction to Asia, that look of alienation and circuit overload. He looked
exactly like Penny when she met me in Japan.
Steady, I told him. Take it one day, one factory, at a time. Follow your
mentor’s lead.
Over the next week we visited and toured about two dozen factories. Most
were bad. Dark, dirty, with workers going through the motions, heads
bowed, vacant looks in their eyes. Just outside Taichung, however, in the
small town of Douliou, we found a factory that showed promise. It was
called Feng Tay, and it was managed by a young man named C. H. Wong.
Small, but clean, it had a positive vibe, as did Wong, a shoe dog who lived
for his workplace. And in it. When we noticed that one small room off the
factory floor was off-limits, I asked what was in there. Home, he said. “That
is where my wife and I and our three kids live.”
I was reminded of Johnson. I decided to make Feng Tay the cornerstone
of our Taiwan effort.
When we weren’t touring factories, Gorman and I were being feted by
factory owners. They stuffed us with local delicacies, some of which were
actually cooked, and plied us with something called a Mao tai, which was a
mai tai, but apparently with shoe cream instead of rum. Jet-lagged, Gorman
and I both had lost our tolerance. After two Mao tais we were potted. We
tried to slow down, but our hosts kept raising their glasses.
To Nike!
To America!
At the final dinner of our Taichung visit Gorman repeatedly excused
himself and ran to the men’s room, to splash cold water on his face. Every
time he left the table I got rid of my Mao tai by pouring it into his water
glass. Each time he returned from the men’s room there was another toast,
and Gorman thought he was playing it safe by raising his water glass.
To our American friends!
To our Taiwanese friends!
After another huge gulp of spiked water, Gorman looked at me, panicstricken. “I think I’m going to pass out,” he said.
“Have some more water,” I said.
“Tastes funny.”
“Nah.”
Despite offloading my booze onto Gorman, I was woozy when I got back
to my room. I had trouble getting ready for bed. I had trouble finding the
bed. I fell asleep while brushing my teeth. Midbrush.
I woke sometime later and tried to find my extra contact lenses. I found
them. Then dropped them on the floor.
There was a knock. Gorman. He walked in and asked me something
about our next day’s itinerary. He found me on my hands and knees,
searching for my contact lenses in a pool of my own sick.
“Phil, you okay?”
“Follow your mentor’s lead,” I mumbled.
THAT MORNING WE flew to Taipei, the capital, and toured a couple more
factories. In the evening we strolled Xinsheng South Road, with its dozens of
shrines and temples, churches and mosques. The Road to Heaven, locals
called it. Indeed, I told Gorman, Xinsheng means “New Life.” When we
returned to our hotel I got a strange and unexpected phone call. Jerry Hsieh
—pronounced Shay—was “paying his respects.”
I’d met Hsieh before. In one of the shoe factories I’d visited the year
before. He was working for Mitsubishi and the great Jonas Senter. He’d
impressed me with his intensity and work ethic. And youth. Unlike all the
other shoe dogs I’d met, he was young, twentysomething, and looked much
younger. Like an overgrown toddler.
He said he’d heard we were in the country. Then, like a CIA operative, he
added: “I know why you are here . . .”
He invited us to visit him in his office, an invitation that seemed to
indicate he was now working for himself, not Mitsubishi.
I wrote down Hsieh’s office address and grabbed Gorman. The concierge
at our hotel drew us a map—which proved useless. Hsieh’s office was in an
unmapped part of the city. The worst part. Gorman and I walked down a
series of unmarked lanes, up a series of unnumbered alleys. Do you see a
street sign? I can barely see the street.
We must have gotten lost a dozen times. Finally, there it was. A stout
building of old red brick. Inside we found a precarious staircase. The
handrail came off in our hands as we walked up to the third floor, and each
stone step had a deep indentation, from contact with a million shoes.
“Enter!” Hsieh shouted when we knocked. We found him sitting in the
middle of a room that looked like the nest of a giant rat. Everywhere we
looked were shoes, and more shoes, and piles of shoe pieces—soles and laces
and tongues. Hsieh jumped to his feet, cleared a space for us to sit. He
offered us tea. Then, while the water boiled, he began educating us. Did you
know that every country in the world has many many customs and superstitions
about shoes? He grabbed a shoe from a shelf, held it before our faces. Did you
know that in China, when man marries woman, they throw red shoes on the roof to
make sure all goes well on wedding night? He rotated the shoe in the scant
daylight that managed to fight through the grime on his windows. He told
us which factory it came from, why he thought it was well made, how it
could have been made better. Did you know that in many countries, when
someone starts on a journey, it’s actually good luck to throw a shoe at them? He
grabbed another shoe, extended it like Hamlet holding Yorick’s skull. He
identified its provenance, told us why it was poorly made, why it would soon
fall apart, then tossed it aside with disdain. The difference from one shoe to
another, he said, nine times out of ten, is the factory. Forget design, forget
color, forget all the other things that go into a shoe, it’s all about factories.
I listened closely, and took notes, like Gorman on the plane, though the
whole time I was thinking: It’s a performance. He’s putting on a show, trying
to sell us. He doesn’t realize that we need him more than he needs us.
Now Hsieh went into his pitch. He told us that in exchange for a small
fee he’d gladly connect us with the very best factories in Taiwan.
This had the potential to be big. We could use someone on the ground,
to pave our way, to make introductions, to help Gorman acclimate. An Asian
Giampietro. We haggled over commission per pair, for a few minutes, but it
was a friendly haggling. Then we shook hands.
Deal? Deal.
We sat down again and drew up an agreement to establish a Taiwan-‐
based subcompany. What to call it? I didn’t want to use Nike. If we ever
wanted to do business in the People’s Republic of China, we couldn’t be
associated with China’s sworn enemy. It was a faint hope, at best, an
impossible dream. But still. So I picked Athena. The Greek goddess who
brings nike. Athena Corp. And thus I preserved the unmapped, unnumbered
Road to Heaven. Or a shoe dog’s idea of heaven.
A country with two billion feet.
I SENT GORMAN home ahead of me. Before leaving Asia, I told him, I
needed to make one quick stop in Manila. Personal errand, I said vaguely.
I went to Manila to visit a shoe factory, a very good one. Then, closing an
old loop, I spent the night in MacArthur’s suite.
You are remembered for the rules you break.
Maybe.
Maybe not.
IT WAS THE Bicentennial Year, that strange moment in America’s cultural
history, that 365-day lollapalooza of self-examination and civics lessons and
seminightly fireworks. From January 1 to December 31 of that year, you
couldn’t change the channel without hitting upon a movie or documentary
about George Washington or Ben Franklin or Lexington and Concord. And
invariably, embedded in the patriotic programming, there would be yet
another “Bicentennial Minute,” a public service announcement in which
Dick Van Dyke or Lucille Ball or Gabe Kaplan would recount some episode
that took place on this date during the Revolutionary era. One night it might
be Jessica Tandy talking about the felling of the Liberty Tree. The next
night it might be President Gerald Ford exhorting all Americans to “keep
the Spirit of ’76 alive.” It was all somewhat corny, a little bit sentimental—
and immensely moving. The yearlong swell of patriotism brought out an
already strong love of country in me. Tall ships sailing into New York
Harbor, recitations of the Bill of Rights and Declaration of Independence,
fervent talk of liberty and justice—it all refreshed my gratitude about being
an American. And being free. And not being in jail.
AT THE 1976 Olympic Trials, held again that June in Eugene, Nike had a
chance, a fantastic chance, to make a good show. We’d never had that
chance with Tiger, whose spikes weren’t top caliber. We’d never had that
chance with the first generation of Nike products. Now, at last, we had our
own stuff, and it was really good: top-quality marathon shoes and spikes. We
were buzzing with excitement as we left Portland. Finally, we said, we’re
going to have a Nike-shod runner make an Olympic team.

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