Shoe Dog (33 page)

And by the way, I added, how would you like to work with us?

I signed a contract with his factory in the summer of 1977, which ended our knockoff problem for the moment. More important, it gave us the capacity to shift production in a huge way, if need be.

It also ended once and for all our dependence on Japan.

THE PROBLEMS WERE
never going to stop, I realized, but for the moment we had more momentum than problems. To build on this momentum we rolled out a new ad campaign with a sexy new slogan: “There is no finish line.” It was the idea of our new ad agency and its CEO, John Brown. He'd just opened his own shop in Seattle, and he was young, bright, and of course the opposite of an athlete. That was all we seemed to hire in those days. Besides Johnson and myself, Nike was a haven for the sedentary. Still, nonjock or not, Brown managed to dream up a campaign and a tagline that perfectly captured Nike's philosophy. His ad showed a single runner on a lonely country road, surrounded by tall Douglas firs. Oregon, clearly. The copy read: “Beating the competition is relatively easy. Beating yourself is a never-ending commitment.”

Everyone around me thought the ad was bold, fresh. It didn't focus on the product, but on the spirit behind the product, which was something you never saw in the 1970s. People congratulated me on that ad as if we'd achieved something earth-shattering. I'd shrug. I wasn't being modest. I still didn't believe in the power of advertising. At all. A product, I thought, speaks for itself, or it doesn't. In the end, it's only quality that counts. I couldn't imagine that any ad campaign would ever prove me wrong or change my mind.

Our advertising people, of course, told me I was wrong, wrong, a thousand percent wrong. But again and again I'd ask them: Can you say definitively that people are buying Nikes because of your ad? Can you show it to me in black-and-white numbers?

Silence.

No, they'd say . . . we can't say that
definitively
.

So then it's a little hard to get enthused, I'd say—isn't it?

Silence.

I OFTEN WISHED
I had more time to kick back and debate the niceties of advertising. Our semidaily crises were always bigger and
more pressing than what slogan to print under a picture of our shoes. In the second half of 1977 the crisis was our debenture holders. They were suddenly clamoring for a way to cash in. By far the best way for them to do so would be a public offering, which, we tried to explain to them, was not an option. They didn't want to hear that.

I turned once more to Chuck Robinson. He'd served with distinction as lieutenant commander on a battleship in World War II. He'd built Saudi Arabia's first steel mill. He'd helped negotiate the grain deal with the Soviets. Chuck knew business cold, better than anyone I'd ever met, and I'd been wanting his advice for quite some time. But over the last few years he'd been the number two man under Henry Kissinger at the State Department, and thereby “off-limits” to me, according to Jaqua. Now, with Jimmy Carter newly elected, Chuck was on Wall Street and available once again for consultations. I invited him out to Oregon.

I'll never forget his first day in our office. I caught him up on the developments of the last few years and thanked him for his invaluable counsel about Japanese trading companies. Then I showed him our financial statements. He flipped through them, started to laugh. He couldn't stop laughing. “Compositionally,” he said, “you
are
a Japanese trading company—90 percent debt!”

“I know.”

“You can't live like this,” he said.

“Well . . . I guess that's why you're here.”

As the first order of business, I invited him to be on our board of directors. To my surprise, he agreed. Then I asked his opinion about going public.

He said going public wasn't an option. It was mandatory. I needed to solve this cash flow problem, he said, attack it, wrestle it to the ground, or else I could lose the company. Hearing his assessment was frightening, but necessary.

For the first time ever I saw going public as inevitable, and I couldn't help it, the realization made me sad. Of course we stood to
make a great deal of money. But getting rich had never factored in my decisions, and it mattered even less to the Buttfaces. So when I brought it up at the next meeting and told them what Chuck had said, I didn't ask for another debate. I just put it to a vote.

Hayes was for.

Johnson was against.

Strasser, too. “It'll spoil the culture,” he kept saying, over and over.

Woodell was on the fence.

If there was one thing we all agreed on, however, it was the lack of barriers. Nothing stood in the way of going public. Sales were extraordinary, word of mouth was positive, legal disputes were behind us. We had debt, but for the moment it was manageable. At the start of the 1977 Christmas season, as the brightly colored lights appeared on the houses in my neighborhood, I recall thinking during one of my nightly runs: Everything is about to change. It's just a matter of time.

And then came the letter.

AN UNIMPOSING LITTLE
thing. Standard white envelope. Embossed return address.
U.S. Customs Service, Washington, DC.
I opened it and my hands started to shake. It was a bill. For $25 million.

I read it, and reread it. I couldn't make heads or tails. As best I could determine, the federal government was saying that Nike owed customs duties dating back three years, by virtue of something called the “American Selling Price,” an old duty-assessing method. American Selling—what? I called Strasser into my office and thrust the letter at him. He read it, laughed. “This can't be real,” he said, tugging his beard. “My reaction exactly,” I said.

We passed it back and forth and agreed it had to be a mistake. Because if it was real, if we actually did owe $25 million to the government, we were out of business. Just like that. All this talk of going public had been a colossal waste of time. Everything since 1962 had
been a waste of time. There is no finish line? This right here,
this
is the finish line.

Strasser made a few phone calls and came back to me the next day. This time he wasn't laughing. “It might be real,” he said.

And its origin was sinister. Our American competitors, Converse and Keds, plus a few small factories—in other words, what was left of the American shoe industry—were all behind it. They'd lobbied Washington, in an effort to slow our momentum, and their lobbying had paid off, better than they'd ever dared hope. They'd managed to convince customs officials to effectively hobble us by enforcing this American Selling Price, an archaic law that dated back to the protectionist days, which preceded—some say prompted—the Great Depression.

Essentially the American Selling Price law, or ASP, said that import duties on nylon shoes must be 20 percent of the manufacturing cost of the shoe—unless there's a “similar shoe” manufactured by a competitor in the United States. In which case, the duty must be 20 percent of the competitor's
selling price
. So all our competitors needed to do was make a few shoes in the United States, get them declared “similar,” then price them sky high—and boom. They could send our import duties sky high, too.

And that's just what they did. One dirty little trick, and they'd managed to spike our import duties by 40 percent—­retroactively. Customs was saying we owed them import duties dating back years, to the tune of $25 million. Dirty trick or not, Strasser told me customs wasn't joking around. We owed them $25 million, and they wanted it. Now.

I put my head on my desk. A few years earlier, when my fight had been with Onitsuka, I told myself the problem was rooted in cultural differences. Some part of me, shaped by World War II, wasn't all that surprised to be at odds with a former foe. Now I was in the position of the Japanese, at war with the United States of America. With my own government.

This was one conflict I never imagined, and desperately didn't want, and yet I couldn't duck it. Losing meant annihilation. What the government was demanding, $25 million, was very nearly our sales number for all of 1977. And even if we could somehow give them a year's worth of revenue, we couldn't
continue
to pay import duties that were 40 percent higher.

So there was only one thing to do, I told Strasser with a sigh. “We'll have to fight this with everything we've got.”

I DON'T KNOW
why this crisis hit me harder, mentally, than all the others. I tried to tell myself, over and over, We've been through bad times, we'll get through this.

But this one just felt different.

I tried to talk to Penny about it, but she said I didn't actually talk, I grunted and stared off. “Here comes the wall,” she'd say, exasperated, and a little frightened. I should have told her, That's what men do when they fight. They put up walls. They pull up the drawbridge. They fill in the moat.

But from behind my rising wall I didn't know how. I lost the ability in 1977 to speak. It was either silence or rage with me. Late at night, after talking on the phone with Strasser, or Hayes, or Woodell, or my father, I couldn't see any way out. I could only see myself folding up this business I'd worked so hard to build. So I'd erupt—at the telephone. Instead of hanging up, I'd slam the receiver down, then slam it down again, harder and harder, until it shattered. Several times I beat the living tar out of that telephone.

After I'd done this three times, maybe four, I noticed the repairman from the telephone company eyeing me. He replaced the phone, checked to make sure there was a dial tone, and as he was packing up his tools he said very softly: “This is . . . really . . . immature.”

I nodded.

“You're supposed to be a grown-up,” he said.

I nodded again.

If a phone repairman feels the need to chastise you, I told myself, your behavior probably needs modifying. I made promises to myself that day. I vowed that from then on I'd meditate, count backward, run twelve miles a night, whatever it took to hold it together.

HOLDING IT TOGETHER
wasn't the same thing as being a good father. I'd always promised myself that I'd be a better father to my sons than my father had been to me—meaning I'd give them more explicit approval, more attention. But in late 1977, when I evaluated myself honestly, when I looked at how much time I was spending away from the boys, and how distant I was even when I was home, I gave myself low marks. Going strictly by the numbers, I could only say that I was 10 percent better than my father had been with me.

At least I'm a better provider, I told myself.

And at least I keep telling them their bedtime stories.

Boston, April 1773. Along with scores of angry colonists, protesting the rise of import duties on their beloved tea, Matt and Travis History snuck aboard three ships in Boston Harbor and threw all the tea overboard . . .

The minute their eyes were closed, I would sneak out of the room and settle into my recliner and reach for the phone.
Hey, Dad. Yeah. How you doing? . . . Me? Not so good.

Over the last ten years this had been my nightcap, my salvation. But now, more than ever, I lived for it. I craved things I could only get from my old man, though I'd have been hard-pressed to name them.

Reassurance?

Affirmation?

Comfort?

On December 9, 1977, I got them all, in a burst. Sports, of course, were the cause.

The Houston Rockets were playing the Los Angeles Lakers that night. At the start of the second half, Lakers guard Norm Nixon
missed a jumper, and his teammate Kevin Kunnert, a seven-foot beanpole out of Iowa, fought for the rebound with Houston's Kermit Washington. In the tussle, Washington pulled down Kunnert's shorts, and Kunnert retaliated with an elbow. Washington then socked Kunnert in the head. A fight broke out. As Houston's Rudy Tomjanovich ran over to defend his teammates, Washington turned and threw a devastating haymaker, breaking Tomjanovich's nose, and jaw, and separating his skull and facial bones from his skin. Tomjanovich fell to the floor as if hit with a shotgun blast. His massive body struck the ground with a sickening smack. The sound echoed throughout the upper reaches of the L.A. Forum, and for several seconds Tomjanovich lay there, motionless, in an ever-widening puddle of his own blood.

I hadn't heard anything about it until I talked to my father that night. He was breathless. I was surprised that he'd watched the game, but everyone in Portland was basketball crazy that year, because our Trail Blazers were the defending
NBA
champs. Still, it wasn't the game, per se, that had him breathless. After telling me about the fight, he cried, “Oh, Buck, Buck, it was one of the most incredible things I have ever seen.” Then there was a long pause and he added, “The camera kept zooming in and you could see quite clearly . . . on Tomjanovich's shoes . . . the swoosh! They kept zooming in on
the swoosh
.”

I'd never heard such pride in my father's voice. Sure, Tomjanovich was in a hospital fighting for his life, and sure his facial bones were floating around his head—but Buck Knight's logo was in the national spotlight.

That might have been the night the swoosh became real to my father. Respectable. He didn't actually use the word “proud.” But I hung up the phone feeling as if he had.

It almost makes this all worthwhile, I told myself.

Almost.

SALES HAD BEEN
climbing geometrically, year after year, ever since the first few hundred pairs I sold out of my Valiant. But as we closed out 1977 . . . sales were going berserk. Nearly $70 million. So Penny and I decided to buy a bigger house.

It was a strange thing to do, in the midst of an apocalyptic fight with the government. But I liked the idea of acting
as if
things were going to work out.