Phil Knight, the man who turned ordinary sneakers into a $160-a-pair branded footwear experience, is a businessman right down to his shiny black track shoes. By the way, Phil, what shoes are you wearing?

“These?” Knight says, incredulous that anyone would need to ask. “They’re 360s.”

OK, asking Phil Knight what kind of shoes he’s got on is a bit like wondering what kind of computer Steve Jobs uses at home. The seventy-year-old billionaire cofounder of Nike is whooshing around his Beaverton office in a pair of Air Max 360s, the sneaker that, as anyone on the Nike campus can tell you, features an air-filled sole that cushions heel-to-toe transitions and offers a smooth overall ride—shoes that will set you back three figures unless your name happens to be Phil Knight.

No doubt about it: Phil knows footwear. But on February 5, Knight enters radically different territory as Laika, the Portland animation studio he owns, premieres its first feature-length movie, Coraline. For the supremely calculating Knight, breaking into the movie business is an unnerving journey into the unknown. “The footwear business is risky,” he says with a rueful laugh. “But the movie business? That’s gambling. At Nike, we launch new products, but every six months there’s something different. With animated movies, it’s more like a three-year cycle. So it’s a bigger deal.” Or as Laika CEO Dale Wahl puts it, “This is like taking three years to make one shoe, putting a ton of money into it, and hoping that somebody buys it.”

Not since the days when Knight peddled sneakers out of his green Plymouth Valiant at track meets across the Northwest has he taken such a risk. With Coraline, the fledgling Laika—known as Will Vinton Studios before Knight took over the company in 2003 and ousted founder Will Vinton—enters the highly competitive animation arena alongside powerhouses like Pixar, DreamWorks, Disney, and Sony. Pixar, the industry giant, has been nominated for twenty-five Academy Awards (winning nine) for such box-office smashes as Toy Story, Finding Nemo, and The Incredibles. (In 2006, Disney bought Pixar for $7.4 billion, an amount that’s still a few billion shy of Phil Knight’s total net worth.) “ Coraline is a huge risk,” concedes Henry Selick, the film’s screenwriter and director, who also directed The Nightmare Before Christmas and James and the Giant Peach. “But these days in animation, the safest bet is to take a risk.”

The choice of Coraline as Laika’s first release makes the crapshoot even dicier. The movie employs a painstaking technique known as stop-motion animation—think of the old Gumby TV show, or Vinton’s California Raisins, or The Nightmare Before Christmas_. For a stop-motion production, animators position malleable silicone puppets on miniature sets and then film them one frame at a time, moving the puppets incrementally to simulate motion. Stop-motion is notoriously labor-intensive—_Coraline took three years to make, about twice as long as a typical live-action feature. Adding another layer of complexity, the film was shot entirely in stereoscopic 3-D, a first for a stop-motion animated feature. Stereoscopic 3-D involves shooting the same frame twice, from slightly different perspectives. The dual images are then superimposed upon each other on the movie screen, creating the illusion of depth for viewers wearing 3-D glasses. By the time Coraline was in the can, the film had cost Phil Knight close to $70 million—roughly the equivalent of 437,500 pairs of Nike 360s. 

The story line is also a gamble. A safe debut feature for Laika would have been, say, a story about an impish towheaded boy and his amazing adventures with various furry woodland creatures, all the while accompanied by a wisecracking parrot (voiced by Gilbert Gottfried) that makes timely pop-culture references. Instead, Coraline, based on a best-selling young-adult book by sci-fi and fantasy writer Neil Gaiman, is the somewhat dark tale of a young girl named Coraline who stumbles into a parallel world. The Other World mimics her real life at first but soon begins to take on nightmarish qualities. (Coraline ’s off-kilter look and sensibility can largely be traced to Selick, who brought the story to Laika.) Coraline is something of a misfit in an animated-movie business that lately has raked in millions by padding its features with fart jokes and whimsical toys that spring to life. “Some days I’m very confident about how Coraline will do,” Phil Knight says. “Other days, not so much. It’s a typical entrepreneurial thing. Every day, there are a lot of crises to deal with. We’re just coming to the end of the first chapter with Laika now. I don’t want to underplay that it’s a big deal how well Coraline does. We’ll get the first [box office] numbers on February 8. So keep me away from tall buildings that day.”

Coraline is also a father-and-son story, of Phil and his son Travis, thirty-five. Travis was Coraline ’s lead animator and, as a Laika board member, is being groomed to succeed his father and control the company. Phil and Travis have a curiously symbiotic relationship: Phil wouldn’t have entered the movie business if it weren’t for Travis’s passion for animation, and Travis wouldn’t be a budding studio executive if it weren’t for Phil. Travis may be a billionaire’s son, but he’s roundly respected in his own right. Animation Magazine named him one of its Rising Stars of Animation in 2007, and Selick lauds him as “truly one of the best animators I’ve ever worked with,” saying Travis possesses the coveted combination of technical chops and an innate artistic sensibility, something that cannot be taught.

Father and son are a study in similarities and contrasts. In public, Phil, who is shy, usually wears sunglasses for television interviews and photo sessions, and he seldom talks in paragraphs when a single sentence will do. The few words he does say are chosen carefully, and he values the same quality in others—he’s famous for asking employees to explain their position “in twenty-five words or less.” Travis is more easygoing and open but shares his father’s reluctance to call attention to himself. Coworkers call Travis a regular guy, a description usually delivered with a sense of wonder that someone with his advantages has turned out so normal. Of their prominent shared qualities, the Knights both have piercing Windex-blue eyes and a commitment to work that borders on obsession. For Coraline, Travis put in sixteen-hour workdays; he was usually the first to arrive at the studio and the last to leave—the same sort of single-minded determination that his father showed in turning a tiny athletic-shoe company called Blue Ribbon Sports into a Fortune 500 Goliath named Nike.

“I want to see Laika be a huge success—for selfish reasons, of course—but also for Portland,” Travis tells me. He’s wearing beat-up boots that definitely aren’t Nikes. “I’ve lived in the area most of my life, and it’s a place I love. I think in some ways what Portland is as a city is reflected in what Laika is trying to be as a company. Portland is kind of this odd cross between a progressive urban center and a frontier watering hole. It’s hippies and hillbillies commingling. I think having that dissonance as a backdrop to Laika is fertile ground for creativity.”

If the Knights’ movie gamble pays off, Portland stands to share in the profits. Just as Pixar has turned the San Francisco Bay Area into a viable animation outpost, Laika could well do the same for Portland, a town that already has given the animation world the California Raisins, animator Bill Plympton, Simpsons creator Matt Groening, and Mel Blanc (the voice of Bugs Bunny, Porky Pig, and scores of other cartoon characters).

Yet before the Knights can build their Hollywood-on-the-Willamette, a fickle public will have to pass judgment on Coraline. Building a successful independent animation studio to rival the likes of Pixar and DreamWorks is by no means an Air Jordan slam-dunk. In today’s crushingly competitive movie business, it’s still an open question whether a quirky independent animation studio can be built on a swoosh and a dream.

Every scene in Coraline was staged inside a crummy warehouse in Hillsboro. That’s where Laika’s animation studio is housed, in a sprawling 140,000-square-foot building formerly occupied by a company called Southern Plastic Mold. The old mission statement from the Southern Plastic days remains on one of the walls, exhorting workers to make the company the best darn manufacturer of plastic dies, tools, and jigs the industry has ever seen. In Hillsboro these days, animated movies are the new plastics.

The studio is studiously anonymous. There’s no name on the front door—Laika’s headquarters are located at NW 22nd Avenue and Pettygrove Street in Portland—and the modest reception area offers few clues to the company’s identity besides an illuminated poster for Coraline that announces a 2008 opening. (Production delays pushed back the release to this month, which perhaps was just as well since an earlier opening would have competed with Disney’s Bolt and Universal’s The Tale of Despereaux.) Venture deeper inside the massive warehouse and the space takes on the look of Santa’s workshop, with all the elves obsessively making hand-sculpted puppets and miniature scenery. One storage room is jammed with replacement body parts (under the strain of constant manipulation and hot studio lights, most of the puppets’ body parts have to be replaced regularly): one sliding drawer holds nothing but replacement faces, a disturbing sight for the uninitiated. Metal shelves hold tiny shirts, dresses, and sweaters made of finely knitted cloth and yarn. (One Coraline crew member, Althea Crome, had the sole job of hand-knitting miniature sweaters and clothing for the puppet characters, using knitting needles as thin as human hairs.) During production, nearly 150 sets were spread out in the cavernous warehouse, each a meticulous miniature world in which the animators staged the action. One set was so intricate it featured a floor that collapsed into a spider web into which Coraline tumbles. The two-story set used computer-controlled winches to make the thin wire web collapse in just the right pattern.

At the height of production, about 450 animators, designers, modelers, sketch artists, carpenters, and camera people swarmed through the warehouse, building Coraline frame by frame. Each upraised eyebrow, painted fingernail, and blade of grass in the movie exists in real life, albeit in miniature. The real “actors” are the animators who manipulated the puppets. “It’s exhausting work,” says Travis. “It’s a performance in slow motion that you act through the puppet. You’re burning your fingers on hot glue, you’re cutting your hands on bits of armature wire, you’re crawling through sets and banging your head on pipes. You go home and you feel like you’ve been digging trenches for ten hours. The only reason stop-motion characters have life is because they take it out of someone else. They’re little vampires that suck the life out of the people who work on them.”

Coraline employed thirty-five animators in all, some recruited from Disney and DreamWorks, some lured from England; still others were local recruits. To shoot each scene, animators had to pose the puppets, shoot a single frame of film, stop the camera, carefully change the position of the puppets and scenery to imply motion, and then shoot another frame. To complete one second of finished film, this procedure had to be repeated twenty-four times. “I wouldn’t do what Travis is doing for anything,” says Phil, shaking his head. “I would say to him, ‘How was your day?’ and he would say, ‘Oh, good, I got ten seconds in the can.’ And I’d think, ‘Ten seconds—for a whole day!’ It would drive me crazy.”

Laika is taking advantage of an incentive program offered by the Governor’s Office of Film & Television, which gives studios a 20 percent rebate on Oregon-based goods and services such as set-construction materials, camera and audio equipment, art supplies, hotel rooms, and catering, plus a cash payment of up to 16.2 percent of production personnel wages. Unlike other states’ film programs, the Oregon incentives are cash rebates as opposed to tax credits. For Laika, the Coraline incentives were ultimately worth about $250,000.

Oregon’s one glaring handicap in attracting location shoots for live-action films is its weather. The winter grayness is why many of the films shot here—One Flew Over the Cuckoo’s Nest, Drugstore Cowboy, The Ring—tend to be gloomy. Yet for an animation studio, the weather is irrelevant, making Portland friendly to animation experts from across the country and to the oddball geniuses already in the area. “Portland does have a history of nurturing unusual creative talent,” Travis says. “The music that comes out of here is very distinctive, and filmmakers like Gus Van Sant are off the beaten path. I think we stand a chance to be a creative force in Portland that really does have its own point of view. The city naturally draws a certain kind of person, the sort of person we want as an employee at Laika. You can’t chase Pixar or DreamWorks. We have to be our own thing.”

Within Portland’s animation scene, Laika is, at this point, the only big game in town, though there are smaller shops such as Happy Trails Animation, whose commercial clients have included MTV and the Oregon Coast Aquarium. Between seventy-five and one hundred freelance animators live in the area, some of whom have worked for Will Vinton. Joanna Priestly is a local award-winning independent animator and teacher who worked on Sesame Street and on music videos for Joni Mitchell; she’s also taught at the Art Institute of Portland. Portlander Marilyn Zornado produced animated commercials at Will Vinton Studios and later produced her own animated film, Insect Poetry. Local animator Laura Di Trapani also worked at Vinton and contributed to such music videos as “And She Was” by the Talking Heads and “Boy in the Bubble” by Paul Simon. The Portland chapter of the Association Internationale du Film d’Animation (International Animated Film Association) has sixty-seven members.

The city’s animation community stands to get an even bigger boost if Laika goes through with its planned state-of-the-art feature film complex. Phil Knight already has purchased thirty acres in Tualatin near the I-5/I-205 interchange, about twelve miles south of the Nike campus. He plans to build a four-building animation campus designed by the same architects who laid out Nike’s two-hundred-acre Beaverton headquarters. Knight originally planned to break ground in Tualatin late last year, but construction is on hold. Moving forward depends on whether Laika can secure a development deal with a distribution company to put out the animated films already on its drawing board.

There’s one less project in the works now that Laika has pulled out of Jack and Ben’s Animated Adventure, a long-planned computer-generated feature. After ditching the project in December, the company laid off sixty-five employees (nearly three hundred remain). Animation studios routinely expand and contract their staffs depending on which project goes into full production, but the cancellation may represent a costly false start for Laika. The film was scheduled to be the company’s second film, and Travis was particularly fond of the story. Any new deal will depend, to a large extent, on how well Coraline does at the box office. “I think we’re pretty confident we’ll get some good reviews for the creative work we’ve put into Coraline,” Phil says. “But it’s still a very young company in terms of what it needs to do to become economically viable. We have nine animation projects in various stages of talks. It wouldn’t hurt those talks at all if Coraline did well.”

 Judging from previews, the film will be a technical and aesthetic triumph. It’s a candy-colored animated fantasy loaded with eye-popping visuals and featuring the voices of Dakota Fanning (as Coraline), Teri Hatcher (as Coraline’s mother), and John Hodgman (as Coraline’s father). There’s a dreamy, almost trippy Alice in Wonderland quality to Coraline’s world, packed with kaleidoscopic flower gardens and creepy lurking shadows. There’s also an eccentric Russian acrobat who’s secretly rehearsing a mouse circus, and an entire Other World where all the characters have buttons for eyes.

Still, the Hollywood graveyard is littered with films that looked amazing, broke new technical ground—and then tanked. The recession is only making it harder for an unproven studio to raise development money. Simply producing an animated feature film and getting it into general release puts a studio in a rather elite club. Last year, nearly twenty animated features went into nationwide release. Of those, only four or five were anything close to being major hits, including WALL-E, Kung Fu Panda, and Horton Hears a Who. “Building an animation studio is not an easy road,” says Vinton, who has experienced both success and failure on that score, having built Vinton Studios only to see it go nearly bankrupt. “There are plenty of deep-pocket operations that haven’t quite succeeded. Success is certainly not a foregone conclusion in animation like it is in some businesses where a deep enough pocket can take over the market.”

Among Portland animators, Phil Knight’s dream has stimulated both hope and skepticism. “There are a lot of people coming into Laika who have come from other high-quality studios,” says Teresa Drilling, a Portland animator who worked on Coraline and who previously worked for Vinton Studios. “When I first came to Portland in 1987, everybody in the animation community knew everybody else. It’s really grown up since then. Now, with Laika, even people in the animation community who aren’t interested in mainstream work have a large, stable employer in town.”

Andy Collen, producer and director at Happy Trails Animation, believes the hard work for Laika still lies ahead. “I’m really hoping that Laika works,” he says. “But you can’t run an animation studio like you do a shoe company. Laika’s gone out and hired some big-name animators”—Dan Casey, who heads Laika’s Digital Design Group, was a lead artist for Columbia Pictures’ animated feature Final Fantasy: The Spirits Within; Dan Philips, a vice president and head of production, once headed computer-generated imagery for Walt Disney Feature Animation; Mary Sandell, a Laika producer, was a producer at DreamWorks Animation SKG; Helen Kalafatic, another producer, produced SpongeBob SquarePants for Nickelodeon—“but just because someone worked at Disney doesn’t mean they know how to build a studio.”

Laika isn’t pinning all its hopes on feature films. A separate division, Laika/house, is already profitable, churning out slick animated TV commercials for M&M’s, Ben & Jerry’s, and Coca-Cola. Whether Laika’s feature film studio is here to stay depends largely on how determined Phil Knight is to make it in the movie business.

Coraline brings the Knight family tale full circle. Back when Travis was a teenager, Phil had dreams of his son one day joining him at Nike. But Travis was never interested in the shoe business. New pursuits were a familiar pattern in the family: Phil’s father, William W. Knight, a successful Southern Oregon lawyer and publisher, tried to interest his son in a traditional business career, but Phil chose the riskier path of becoming a sporting-goods entrepreneur. 

For Travis, turning down a job at Nike wasn’t so much rebelling against his father as it was a way to pursue his interest in other things. “From the time I was little, I always had a sketch pad and pencil,” Travis recalls. “I was always drawing. I missed out on having a passion for sports like my father. My brother would be playing Little League, and I would be drawing.”

Phil gently prodded Travis to join him at Nike, but backed off when he saw it wasn’t going to happen. “It never got very far,” Phil says. “It was maybe one conversation.”

Travis, who grew up in Hillsboro, attended Jesuit High School near Beaverton and was a good student. In addition to drawing, he had a passion for music, and as a teenager he began to compose and perform his own rap songs. Improbably, when Travis was seventeen MCA Records offered him a record deal to cut an album to be produced by the Bomb Squad, the team behind the best-selling and influential Public Enemy records. It was unusual, to say the least, for an unknown teen rapper to land such a deal; the fact that this rapper was also a billionaire’s son probably didn’t hurt.

Under the name Chilly Tee, Travis released his first and only rap record, Get Off Mine, in 1993. It included a song called “Just Do It,” a streetwise interpretation of the Nike slogan that described a world never seen before (or since) on a rap record, and another called “Snap Ya Neck to This”:

See, they call me the Tee, in ’86 it was Trav
If you need to get in touch you can catch me on the ave
I got the Nike wears, head to toe with the trim
The BMW I drive is the color of my skin
I’m in it to win it, I got the skills and the status
You wanna know why? My pockets are the fattest
Not takin’ what’s given cause see, I didn’t fit in
Just gimme the mic and a rhythm, that’s how I’m livin’

The market for privileged white rappers singing about the less-than-mean streets of suburban Portland turned out to be predictably small—the record vanished, and Chilly Tee was put on ice for good. Travis recalls his brief career as a playa with some reluctance. “Nobody bought that record,” he says. “I liked making music, but I hated the performing part of it. I think there’s a reason most animators are hidden behind giant curtains. They’re not meant for the spotlight.”

After graduating from Portland State University, Travis interned with Vinton Studios; Will Vinton, a Claymation whiz who grew up in McMinnville, had founded the animation house in the mid-1970s. Travis found a home at Vinton and quickly distinguished himself as an adept artist. “Travis is a good animator,” says Vinton, who today runs a company called Freewill Entertainment that develops, produces, and directs animated productions for film and television. (He’s also worked on TV pilots at Fox Broadcasting and at MTV and a movie script at ABC. Currently he’s writing a movie adaptation of Jack Hightower, the graphic novel he created for Dark Horse Comics. He’s also a teacher at the Art Institute of Portland, where he conducts a class on claymation and stop-motion photography.) “[Travis] kind of found himself when he came to Vinton Studios. He started at the bottom and proved himself to be quite good.”

Pleased that Travis seemed to be thriving at Vinton, Phil Knight stepped in with a $5 million investment in 1998, which gave him 15 percent ownership of the company. Part of that original investment included an agreement that allowed him to assume control of the board of directors if the company began losing significant amounts of money. Four years later, Vinton was on the verge of bankruptcy. Phil put an additional $450,000 into the company and acted on the agreement to assume control in the event of heavy losses. Knight ousted Vinton from his own studio.

Vinton was outraged. In a parting memo, he called Phil’s move “surreal” and “Machiavellian,” and he eventually sued Phil and Vinton Studios’ board of directors, saying he’d been forced out unfairly. (A judge dismissed the suit.) Phil, meanwhile, promoted Travis to a seat on the board even though his son, age twenty-nine, had never been a manager and had only four years’ experience as an animator.

To stamp his own brand on the studio, Phil considered more than a hundred names for the company before settling on Laika. (“Phil likes Ks,” one insider says.) Only later did Phil learn that Laika was the name of the Russian dog sent into orbit aboard Sputnik 2 in 1957, the first living mammal in space. As it turns out, Laika was also the first mammal to die in space—she died during the first hours of the mission, and her remains disintegrated, along with the rest of Sputnik 2, upon reentering Earth’s atmosphere. It’s a measure of Phil’s just-do-it style of decision-making that his studio was named after a dog that crashed and burned.

Phil and Travis were getting their new company off the ground when they received some tragic news. Phil and Penny Knight’s eldest son, Matthew, died of a heart attack at age thirty-four while scuba diving with colleagues in El Salvador. Matthew had been shooting a fundraising video for Christian Children of the World, a Portland nonprofit, and helping acquire two houses for orphanages. He suffered the heart attack while sixty-five feet underwater and died instantly. In December, four years after the accident, Knight and the University of Oregon announced that the university’s new $227 million basketball arena (built with a $100 million contribution from the Knights) would be named Matthew Knight Arena. Beyond honoring their son publicly, the Knights have said little, if anything, about the painful subject of his death.

Several months after the funeral, Phil stepped down as Nike CEO and became chairman of the board, a title he retains. He increased his philanthropic giving, donating not only the $100 million to University of Oregon athletics but also $105 million to Stanford University’s Graduate School of Business and $100 million to the Cancer Institute at Oregon Health & Science University (OHSU). OHSU is renaming its research center the Knight Cancer Institute; Stanford’s new business campus will be called the Knight Management Center.

Nearer to home, Matthew’s death has brought Phil and Travis closer than they’ve ever been. Father and son work together on a shared dream: building an animation studio that produces distinctive, high-quality feature films. Travis’s work on Coraline has given him a newfound appreciation for what his dad had to do to build an upstart athletic footwear business into the world’s largest shoe company. In the end, Travis may prove that we often become our parents, hard as we may try to avoid it. He remembers that when he was a boy his father was “always working”; now Travis finds himself spending long nights and weekends manipulating plastic puppets in a Hillsboro warehouse before going home to his wife and two young children.

“It’s sort of funny, watching Travis’s evolution,” Phil says with a sly smile. “He always felt that he would never let his work be as all-consuming as mine was when he was growing up. And I’m watching it slowly creep up on him.” He laughs. Travis, looking slightly annoyed, says, “Well, you have to find a balance. And that’s hard.” After considering the point, Phil says, “It’s very hard.”

With so much riding on the success of Coraline, Phil briefly considered putting the Nike brand behind the movie, but then decided against it. “We don’t see the tie-in,” he says. “Not on Coraline.” He shoots his son a guilty sideways look, as if to apologize for being so hardheaded. Travis’s expression doesn’t change. The old man isn’t telling him anything he hasn’t heard before.