Deep within the labyrinthine layers of Wieden+Kennedy's Pearl District headquarters is the secret responsible for the company's three-decade run of screaming creative success.

It's a record that is the envy of every madman in the ad game. A run that extends from the 1989 Nike "It's Gotta Be the Shoes" spots directed by Spike Lee and reaches all the way to this year's Levi's jeans campaign, which manages to use Walt Whitman's voice to sell denims.

It's a stretch that has seen Wieden+Kennedy become one of the largest privately held ad agencies on the planet, with annual billings of more than $2 billion—which probably translates to a yearly net revenue of $150 million.

And the firm draws hosannas for its balance of art and commerce.

"Wieden+Kennedy has done better than anybody else for longer than anybody else," says Randall Rothenberg, a former New York Times reporter who wrote a book about the firm. "It's one of the very few agencies in the business that still fully controls its own destiny."

So what makes Wieden+Kennedy tick?

Some believe it's the way in which employees are encouraged never to leave the building, a six-story atrium-topped fortress that offers plenty to entice the mostly young designers—regular afternoon rock concerts, an indoor basketball court-cum-yoga studio, an espresso shop, free Cokes in the machines, napping rooms, an annual pie-baking contest, legendarily mood-altered parties, stacks of special-edition Nike high-tops wheeled through the halls.

"It's a megalopolis," says Jerry Ketel, creative director of competing agency Leopold Ketel & Partners. "There are people at Wieden+Kennedy who don't know what's going on in the city because they're in the building 14 hours a day."

But it's not the soda or the shoes that keep workers coming back.

The spirit of the place can be found on the fourth floor, tucked behind the recycled-timber auditorium. There, a full-wall mural reveals the agency's algorithm. It's made out of 100,000 clear plastic pushpins, arranged to create a swirling slogan:

"Fail Harder."

Wieden+Kennedy might be about to do just that.

In a sound booth deep inside Wieden+Kennedy's office, Becky Stark is engaged in the company's newest experiment.

"Califunya!" she recites in her high-pitched, blissed-out chirp. "Brought to you by…these trees. They are breathing. Breathe to grow."

The image on the booth's television monitor switches from a grove of conifers to a honeybee flitting through petals. Stark begins again.

"Califunya! Brought to you by…bees. They suck on flowers."

Stark's voice fades into a song-and-dance number performed on swings suspended by flowering vines—part of Califunya!, an online variety show premiering Dec. 15. "It's weird," she says later. "It's turning into The Lawrence Welk Show on acid."

This is Wieden+Kennedy+Entertainment. Housed in two former storage rooms on the second floor, the WKE project has a budget of a half-million dollars—less than a quarter of what's spent to make a single 30-second Nike commercial—and a full-time staff of five. Until last week, many people in the building didn't know what the new project was.

Launched Tuesday, Dec. 1, at , WKE is an online video and radio station, producing its own original series. It features Stark's variety show Califunya!, a documentary on Portland's music scene called Don't Move Here and cameo performances by trendy artists from Miranda July to the Decemberists.

ARTIST IN RESIDENCE: Aaron Rose. IMAGE: Shayla Hason

What it lacks is a business model. The project turns upside down the calculation that guides most advertising production: Instead of doing work at the behest of clients, WKE will make an entertainment product and hope it becomes popular enough that clients will clamor to underwrite it.

This is nearly unprecedented at the agency.

"We don't know if it'll be funded next year," says Aaron Rose, WKE's creative director. "Nobody fucking knows who we are."

At age 40, Aaron Rose maintains the accoutrements of a much younger show-hopper: a jaunty fedora, a Marlboro Reds habit, and a rose tattooed on his neck. Two decades ago, he ran the Alleged Gallery, a fixture of New York City's Lower East Side arts scene. A year ago, he had a character on Gossip Girl named after him—a conceited, vacuous artist. ("That's an ex-girlfriend of mine who was writing on the show," he explains. "She was fucking with me.") He moved to L.A. in 2001 and broke into the movies, making a 2007 documentary, Beautiful Losers, about street art and underground hip-hop.

At the same time, he was moonlighting as a commercial director for Nike and had made a name for himself at the Wieden+Kennedy office. "We were all big fans of Beautiful Losers, " says Janice Grube, a singer-songwriter who still gigs for the electronic musician Peaches, and works at Wieden+Kennedy as an account executive and creative assistant.

Early this year, Grube asked Rose to take over what had become a stalled project: W+K Radio, an Internet radio station in which employees and freelancers at the firm's seven offices around the world took turns curating playlists, and Grube invited Portland musicians like MEGA*CHURCH and Deelay Ceelay for live sets. The station never found an audience—on a good day, it topped out at 1,000 listeners.

Grube's pitch to Rose: Take over W+K Radio and transform it into an online media channel that would produce video webisodes and radio programs. Because Wieden+Kennedy already had production facilities, he could film and edit shows for a small amount of money—about $5,000 per series. "There are a million projects sitting on a shelf somewhere," Rose says. Here, he could pull those projects down. He agreed to a six-month contract in June.

Rose set up shop in offices on Wieden+Kennedy's second floor, tucked behind the basketball court. Until W+K Radio began last year, these rooms were used for storage. Nobody wanted this space, because the ceilings were so low—barely 10 feet high. One WKE employee dubbed it the "Being John Malkovich floor." The name stuck.

He brought in Stark, a Los Angeles new-folk singer who had already shot much of Califunya! last year with Miranda July in L.A. He hired Portland experimental-film wunderkind Matt McCormick to shoot a documentary series, Fail Harder, about W+K12, the firm's yearlong advertising school. Rose himself began filming D.I.Y. America, an ambitious—maybe too ambitious—attempt to define the underground-art and skateboarding scene, using interviews with Tony Hawk and Jason Lee. He and Grube even erected a flashing-lights set for How To!, a brief, Michel Gondry-influenced infomercial in which guests explain how to wax a mustache or boil water.

(Not every idea flew: The concept was pitched of a soap opera set inside Wieden+Kennedy headquarters, says Grube, "and that was just killed.")

Rose's documentary Don't Move Here, with its footage of basement shows by White Fang, is about the commotion of Portland's music scene.

It's nothing this city hasn't seen before. But it's catnip for a generation that sees Portland as a creative Shangri-La. And it's actually pretty good.

But the show that defines WKE is Califunya! Becky Stark's bee-sponsored show is, depending on your mood, either antagonistically twee or disarmingly gentle. With an accordion soundtrack by Jenny Conlee of the Decemberists, the show features sketch comedy without jokes, as Stark and her cohorts hang curtains, hold tea parties, and discuss good reasons to be happy.

Obviously, a lot of people are going to hate this.

"I know that regardless of what we do, there will be people that hate it," Rose says. "When we launched the teaser for Don't Move Here, the [online] negative comments were out of control. 'Wieden+Kennedy is selling out the scene!' Every scene is like that. People like to keep their scenes close.

"My dream scenario," says Rose, "is that the weird floor that nobody cares about with those weird people doing what they love could be the thing that catapults the agency into the 21st century. Or it could die on the vine. We don't know."

These aren't exactly the times when corporate America is taking big risks. And Wieden+Kennedy has not been immune to the recession. In 2008, the agency lost Starbucks as a high-profile client, and this summer also lost its $70 million Heineken beer account. Clients come and go, of course: During that same time period, Wieden+Kennedy scored accounts for Nokia and Delta Airlines. And the firm has avoided layoffs. But across the ad world, media buys—the purchasing of television and print spots, long the lifeblood of the business—are shrinking as advertisers watch the disintegration of both mediums and the rise of Internet sites, where nobody's sure how advertising will work. ﻿

"The entire industry's in a lot of upheaval," says WKE executive creative director Mark Fitzloff. "Marketers are looking for different ways to reach people. While overall marketing budgets are holding strong, TV advertising budgets are down."

Rose is more blunt. "The ad world is really suffering," he says. "Even an agency the size of Wieden+Kennedy. None of the brands have any money."

So as excited as many within the walls of Wieden+Kennedy are about Rose and Grube's project—a number of them agree that the venture has exactly the sort of ingenuity they want to define them—WKE faces a simple, looming question that might once have been deferred: Who's going to pay for this?

"Until we figure out a way to give WKE some sort of revenue source," Grube says, "I'm not sure how much more the company will feel comfortable investing in the project. There was definitely pulling on the purse strings. We've cut every corner. I'm sure 10 years ago there would be no hesitation."

WKE's directors hope to lure sponsors within a year. That's if the project even lasts that long. The 2010 budget for WKE has not been approved by the company, and it's far from a sure thing.

"I hope that it doesn't end up a dead link in a year," says Rose, whose contract with WKE ends Jan. 1. "I would really hope that it could pay for itself."

What does Dan Wieden think? In interviews, he is enthusiastically vague.

"We're in a place where we don't need permission to do this, so we're just hauling ass," he tells WW. "It'll be a shot of adrenaline."

But does he think the WKE project be funded in 2010? "Do you think you will?" he replies to the reporter. "Where it succeeds, it will get funding. It's that amoeba kind of thing. Where it gets traction, it moves."

But Wieden has kept himself at a remove from WKE.

THE MAN: Dan Wieden, judging pies. IMAGE: Mark Lundgren

"In terms of input from him, he's been almost completely hands-off," Rose says. "So I don't know that he doesn't have our back, but he doesn't come down and look at it every day. He's a ghost."

Wieden, now 64, remains the sole autocrat at his namesake company. (Co-founder David Kennedy retired in 1993.) His distinctive goatee now turned white but his conversation still riddled with obscenity, Wieden is present everywhere in the offices—literally, since life-size cutouts of the boss are scattered throughout the building. ("It can be a little creepy," Grube admits, "'cause you'll see him out of the corner of your eye and you're not sure if it's really him.") He is a revered figure; the kids at Caldera, his camp for at-risk youth in Sisters, call him "Papa Bear," and that sobriquet seems to define how his employees feel about him as well.

"What Dan Wieden reminded me of, more than anything," says author Rothenberg, "was my and your most favorite high-school teacher. Your favorite high-school teacher knew how to push your buttons to get the best stuff out of you. That is Dan."

Former W+K'er John Boiler, who now runs his own agency in Los Angeles, remembers Wieden giving this speech "to a mostly drunken and drugged-out crowd" at the company's 10-year anniversary party in 1992: "I think you people just needed somebody to get the fuck out of your way."

Wieden got out of Janice Grube's way last fall, when she pitched the idea of resurrecting the dormant WKE. "He didn't even know how much it would cost," she says. "He was just, 'Fuck yeah.'"

The company's entertainment wing had its genesis in 1996, when Warner Brothers turned some Nike ads featuring Michael Jordan playing basketball against Bugs Bunny into a Christmas-blockbuster movie, Space Jam. The firm launched WKE in 2001, with company vet Bill Davenport at the helm. But aside from Nike providing seed money for several documentaries and a frustrating attempt at a Broadway musical, as well as the firm itself funding a book called The Dogs of Portland, the project fizzled. (A record label at the firm's Tokyo branch had more success.) "I haven't seen much come of it," admits a former employee.

Meanwhile, the agency continued to funnel its artistic ambitions into its ads. It hired directors from Jean-Luc Godard to David Fincher. And regardless of the product being shilled, a Wieden+Kennedy television spot is now instantly recognizable. It isn't a jingle or a joke—it's an event, a happening, a rally. Whether it's Pittsburgh Steelers safety Troy Polamalu running wind sprints up stadium stairs for Nike or shirtless teenagers splashing in the moonlight for Levi's as the voice of Walt Whitman speaks, the montages have a lyrical grandeur. All ads are designed to create worlds you want to live in, but Wieden+Kennedy's best work makes you want to associate yourself with the artistry of the commercial itself: If they make something this inspiring, they must make a good sneaker. The art is the pitch.

Wieden+Kennedy made its bones by making ads seem heroically large. But that was on television, while the tiny WKE project is on the Internet. And the Internet is different—because it's much, much bigger.

The WKE site's launch has been delayed at least three times. "We've been saying we're launching Sept. 1, Oct. 1, Nov. 1," says Grube. The most recent premiere date was Monday, Nov. 30. It was scuttled again.

The WKE site is being marketed like an online television network. Rose is using online social networking, as well as indie-cred magazines such as Paper, in hopes of sparking a viral phenomenon like the Will Ferrell videos at or—a more apt analogy—Vice magazine's snarky Williamsburg video blogging at

"We're not going to promote WKE at all," he says. "We're going to promote the shows, the way a network would. The way ABC would promote their shows."

But online, there are a lot of shows.

"A casual search—and I'm just talking video here—and you'll find hundreds, thousands, maybe millions of sponsored communications that range from the brilliant to the unbelievably terrible," says Rothenberg. "It's a complete cacophony. How do you get noticed in that environment? As a prerequisite, you've got to be really great."

For the first time, Wieden+Kennedy has to make a name explicitly for itself, not just its clients.

"That was part of [the idea], to start branding ourselves as an agency," Grube says. "I think we wanted to start branding ourselves as cultural curators—people who like art and culture."

(This doesn't even begin to address the very thorny question of whether people will be suspicious of art coming from a company whose ultimate goal is to move Nike sneakers and Diet Coke. This is something the WKE team has some strong opinions about. "The idea of branded entertainment goes back to the early days of TV," Rose says. "Some people may think that's evil, but I think that's a lot more honest. Is Target any more evil than 20th Century Fox or Paramount?")

Rothenberg says it's a steep challenge: "But shit, don't you think the degree of difficulty was high when radio passed into TV? If I'm Wieden, I'd argue that this is exactly what you need as a recruiting tool, a retention tool, a training tool. If you think of this as a kind of communications laboratory within an advertising agency…not a bad idea."

This type of gamble—especially when it's inexpensive—is usually condoned by Wieden+Kennedy as at best innovative and at worst the kind of harmless tinkering that gives the place a good name. But with money tight?

Rose isn't sure what the boss will decide. "I like it because nobody knows what the hell is going on," he says. "And that's a really exciting place for a creative person to be existing. Who knows? Maybe we all get fucked in the end."

The future of WKE hinges on how unwavering the company is in its "Fail Harder" mantra.

Former employee John Boiler says Dan Wieden often instructed his employees with a saltier version of that aphorism.

"You're not of any use to me until you fuck up three times," Wieden reportedly says. "Just don't fuck up four."

CORRECTION: Janice Grube now serves as the Content Director of WKE, and is no longer an account executive with the firm. She does not gig for Peaches. Radio Sloan, another founder of W+K Radio, played with Peaches. WW Regrets the errors.