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Chip Wilson, founder of Lululemon (Part 1)
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Chip Wilson is the founder of Lululemon. And wow, he is a fascinating character. Larger than life, an unconventional visionary, but also stubborn and volatile.
Chip had an uncanny ability to spot the next big thing. Not only did he practically invent the athleisure category with Lululemon, but he had built apparel brands around 2 huge trends before that, skateboarding and snowboarding.
With Lululemon, he was ahead on the yoga trend, and led the company to its IPO just 9 years later.
But Lululemon wasn’t just first in yoga apparel, it was one of the first fully vertically integrated retailers, owning the entire supply chain from manufacturing to retail stores. Chip had an axe to grind against many things, and the wholesale model in retail was just one of them.
Chip’s nonconformist approach would lead to many innovations for Lululemon and would inspire the future era of DTC brands. But it would also lead to him being ousted from his own company.
This first episode covers Chip's childhood, and his early entrepreneurial ventures where he would prove a knack for predicting big cultural shifts and building iconic apparel brands around them.
Transcript
00:00:00
Speaker
Hello and welcome to The Obsession Podcast, where I tell the stories of the world's most prolific people in culture and commerce. I'm your host, Kiri Masters, and today we're stretching into the world of Lululemon, a name synonymous with yoga pants, but a company that's far more than just spandex and downward dogs.
00:00:24
Speaker
You might think you know Lululemon, the ubiquitous logo, the sea of black leggings in your local coffee shop, but the story behind those little black stretchy pants is a masterclass in product innovation, retail disruption, founder obsession, and the complicated power of creating a common enemy.
00:00:49
Speaker
I just finished reading the autobiography of Chip Wilson, who is the founder of Lululemon. And wow, he is a fascinating character, larger than life.
00:01:03
Speaker
unconventional, classic visionary, but also stubborn and volatile. Chip had an uncanny ability to spot the next big thing. Before athleisure was a word, before yoga was mainstream,
00:01:22
Speaker
Chip Wilson was already envisioning a future where technical, athletic wear would break free from the studio and stride confidently onto the streets. But the story of Lululemon isn't just about predicting trends, it's about rewriting the retail rulebook. And while other brands were creating product lines that would satisfy the merchants at department stores, Wilson was pioneering a vertically integrated model that gave Lululemon unprecedented control over its product and brand experience. It's a strategy that's now the gold standard for direct-to-consumer brands, but in the early 2000s, it was retail heresy.
00:02:05
Speaker
And let's talk about that brand. In an era where most athletic wear companies were shouting about performance and competition, Lululemon was whispering about personal growth and community. They weren't just selling clothes, they were selling a lifestyle, complete with free yoga classes and a manifesto printed on their shopping bags.
00:02:27
Speaker
But this is not a straightforward success story. It's also a cautionary tale of what happens when a founder's vision collides with the realities of running a public company. Wilson's journey from yoga-inspired innovator to controversial figure and eventually, our stood founder is a roller coaster of triumphs and missteps that offers valuable lessons, not just for founders, but for any brand builder.
00:02:55
Speaker
Welcome to the Lululemon story, where the path to retail enlightenment is paved with stretchy pants, big ideas, and one founder who couldn't quite stick the landing.
00:03:13
Speaker
So I'm going to start where the book starts, which is why did Chip Wilson write this book? I do recommend this book. It's very interesting. it's so It's very raw. There are long, long stretches of detail around the pretty ah ugly turn of events that occurred after Chip was ousted from Lululemon. And it's supposed to, in in in those sections at least, is supposed to be a cautionary tale for founders of
00:03:46
Speaker
then the downsides of um public equity, of having a board, of IPOs, and you know what to all the gotchas that can occur in those situations. So that is that is interesting. Those sections kind of do get into rant territory. And then the remainder of the book is a classic you know the classic rags to riches.
00:04:13
Speaker
um found a success story, which is also interesting. But from that perspective, there is a real mix between that um narrative and warnings and lessons learned that are really going to be relevant only to a small group of people, that regardless, it is a good read. So in his own words, a couple of things that couple of things at Chip opens the book with.
00:04:39
Speaker
This book is also about missed opportunity. Five years of missed opportunity. I was playing to win while the directors of the company I founded were playing not to lose. There is a big difference.
00:04:52
Speaker
In 2013, just when five years of exponential growth was in its infancy, when the way people dressed was at the precipice of the most significant change in history, Lily Lemon self-imploded. The company went from owning 95% of the Women's Technical Apparel Market in 2011 to 10% in 2018. It is this part of the book from which I hope entrepreneurs will learn.
00:05:21
Speaker
Fairly unique to this story is that Chip Wilson is not afraid to name and shame. There are accusations thrown at specific, named people, left and right, which is unusual. And while I don't doubt the accuracy of his statements. it is It is unusual to see an executive name and shame like this. I think it tells you a lot about his personality and also just how much this company means to him. It is amazing how significant Lulu Lemon continues to be as part of his psyche.
00:06:02
Speaker
It's also emblematic of his modus operandi of creating a common enemy. As you'll see, as I share this story with you, you will see he does this with all of his companies. He identifies the status quo and what's wrong with it or what's changing. And then he pits his brand against it.
00:06:29
Speaker
So the common enemies for Lululemon, there was Coke and Pepsi were named enemies. And this was one of the statements on the original Lululemon Manifesto, which is printed on the side of their shopping bags, specifically said, Coke, Pepsi, and other pops will be known as the cigarettes of the future.
00:06:52
Speaker
Colas are not a substitute for water. Colas are just another cheap drug made to look great by advertising. Wow. So he picks fights very specifically. So the other enemies of Lululemon junk food companies, obviously unhealthy left lifestyle choices like smoking. He never allowed people who were smoking in his stores, which who now is obvious and commonplace, but back in the 80s that was not like it is today. um He also makes a common enemy of the East Coast fashion industry and the traditional fashion media. He complains about how New York fashion magazines always ignored Lily Lemon despite its success.
00:07:40
Speaker
His common enemy is also the traditional retailing model, as you'll see from his early experiences prior to Lululemon, he gets burned by that business model and sees all of the issues with it. And he goes about reinventing the vertical retail model in a way that's going to suit him.
00:08:02
Speaker
He makes a common enemy of fast fashion and disposable clothing culture. He makes a common enemy of corporate boards that are focused on short-term gains. So the way that he goes about villainizing certain people and concepts in this book, you'll see this common thread all throughout. And it can be a very effective marketing tactic to be very strong and vocal about what you're against, not just what you're for. And this also helps him to attract and retain people who really fit in with the culture of Lululemon as well, make it a really attractive place to work for the right people by
00:08:50
Speaker
very clearly spelling out not just who we're for but who we're against. So that's his stated purpose of writing this book as as a cautionary tale. He also mentions later in the book that No one took the time to write the corporate history of Lily Lemon. And by the time he thought of sitting down and doing that, he had no power within the company and it had been overtaken by people who were not supportive of him or the original story and the corporate
00:09:21
Speaker
origin story of Lily Lemon had been written in a way that he didn't feel was accurate. So this is resetting the record, restating some of these common enemies, and drawing some more battle lines, I guess. And there's a cautionary tale to founders.
00:09:40
Speaker
as well. So we'll start with Chip Wilson's childhood. Chip Wilson is Canadian and grows up in a very competitive athletic family. His parents were sort of middle class. He had a number of siblings and they were all involved with swimming and competitive sports. And so his interest in it in athletics and he's a good athlete. His athletic prowess really defined the rest of his life.
00:10:09
Speaker
He was also a natural leader and a tastemaker from very early on. His sister Noelle remembers that Chip would organise games like Prison Tag or Kick the Can every night during the summer. um Kids just gravitated to our house because of him. He was our leader.
00:10:29
Speaker
And then on a trip that he takes to the States, he discovers colourful Speedo swimsuits that are unavailable in Canada, and he convinces his mother to import some so that but he can sell them to his friends and get some for himself. He says, we purchased the suits from the supplier for maybe $13 each, then sold them for double that.
00:10:54
Speaker
They were something no one had ever seen before, something new. Since they weren't available in Canada, their exclusivity gave them an additional appeal. As I had negotiated with my mother, I got my own suit for free. It was a small but powerful success.
00:11:10
Speaker
That experience taught me about importing shipping costs and sales. Because I had been on a couple of age group teens at the national level and was a good swimmer, I also noticed that others started to follow what I wore. I couldn't afford an on-deck tracksuit, so I wore torn, beat-up, loose jeans, and graphic t-shirts.
00:11:31
Speaker
that ensemble was emulated and soon became standard swimmate gear. So we can see here that there are some inherent traits here, some aspects of his personality that are innate and not really learned. This magnetic personality, an ability to lead. He's a natural sort of tastemaker. Other people want to follow him. But there's also some situational things happening here that he learns about managing yourself.
00:12:04
Speaker
And this is the beginnings of his interest in personal development. He says he learns many valuable lessons from competing as an athlete. He says, I wondered if my drive was genetic or if swimming had taught me the rewards of working hard in the present to fulfill a long-term goal.
00:12:24
Speaker
And one of these lessons that he learnt from swimming came via his father. He says, in athletics in 1965, the prevailing theory of how to approach a race was to save your energy until the end and make sure you looked good at the finish line.
00:12:42
Speaker
Let's try something different, my dad said. Why don't you just go full out from the start instead of saving it up and looking good at the finish? If you collapse or start to drown, I'll come get you right away. But instead of thinking it's a hundred meter race, think of it more like it's 25 meters. Just a one length sprint and take it one length at a time and go for it.
00:13:06
Speaker
I went with his theory and ended up breaking a Canadian record, finishing the race eight or nine seconds below my previous time. We had to do the race again the next day because the officials thought it had to be a mistake with the clock, but I did it the same way again and it worked just as well the second time.
00:13:25
Speaker
As I look back at my life now, I realized this event created in me a new way of thinking. I've long noticed how most people never give a hundred percent in their relationships, business, or commitments. Personally, I've always been afraid of failing because I haven't given something a hundred percent. I've been fearful of someday lying on my death bed thinking, God, if I'd just gone for it, would it have been successful?
00:13:54
Speaker
I think I owe this mindset to that one moment at age 10 when my dad gave me his poolside theory. So let's fast forward to Chip as a young man who is working his first office job in Calgary in Canada. Chip and his girlfriend develop an innovative new type of wrap skirt.
00:14:14
Speaker
that women are wearing in California. He can immediately see this design is comfortable and functional, but also fashionable because of their bold prints. And he knows that what's hot in California is kind of a bellwether of what will become fashionable elsewhere. So he gets these shorts made locally in Calgary by a seamstress and his girlfriend set up a um booth on the boardwalk to sell these wrap skirts because his girlfriend loves them and all of her friends love them. So he sets up this boardwalk store.
00:14:51
Speaker
Basically because the department stores, he he tries to sell to the department stores and they don't want to have anything to do with it. They do not get his vision. But um he sets up this boardwalk store. Very successful. People love these wrap skirts.
00:15:09
Speaker
And this is where he says he invents vertical retailing at this point. And he repeats his claim continuously through the book, although I think that claim can be debated as we will cover later on. But this is where he first falls in love with the idea of making your own product and selling your own product without there being a wholesaler or a middleman or a buyer at a store.
00:15:33
Speaker
um So we'll come back to that later on, but this idea is already starting to germinate in his mind in this little side business that he has while he's working a corporate job. And I want to share a slice of his daily life at this point, which gives you some insight into his personality. So this time he's working his corporate job and running the women's wrap skirt stall with his girlfriend. He says,
00:16:01
Speaker
Fortunately, the dome oil tower was across the street from our booth. At the end of the day, I would collect the cash, go by fabric, and take it to the other end of the city to the seamstresses and tailors. I would then go for a 90-minute swim, eat all I could, and go to bed.
00:16:19
Speaker
In the morning, I would wake up early and go for a two-hour bike ride, then go to the other side of the city to pick up finished goods from Josephine and deliver them to the store. I would then skateboard into work in my suit and run a 10k at lunch. Those days of starting a business and training for a triathlon were wonderful and energizing. I loved it all.
00:16:41
Speaker
Matt, this guy has and enough energy for all of us. He's training for a triathlon at the time while he is starting this business. So he eventually takes the success of these women's wrap skirts and opens a store in Calgary in 1982. He wants to expand beyond the women's skirts and creates a reversible men's short which is based off of the surfing style board shot.
00:17:16
Speaker
These are reversible, you can house black on one side and ah and a design on the other. He calls these the barbecue short. And these shorts sell like gangbusters. They're really popular and the store is doing, getting a lot of traffic coming in. But he soon identifies a coming trend on the horizon that's not quite yet mainstream and that is skateboarding. He notices that his store is filling up with teenagers after school every day. He says that skateboarding was starting to experience an explosion in popularity and that by the mid 80s public skateboards had appeared all over North America.
00:17:58
Speaker
This is still kind of an emerging thing but he sees this trend, he sees all these teenagers in the store and so he makes his store skateboarder friendly because he sees a lot of yeah the same benefits of these barbecue shorts that are like longer, they cover the knees, they're a little looser, they are sort of built for, like a surfing short is built for crouching on a surfboard and so the design of it is a little bit different to facilitate that kind of movement. He sees that as being the same kind of features that you want to have in a skateboarding short. So he makes his store skateboarder friendly. He says that he he buys a piranha named Jake and put him in the fish tank and fed him every afternoon at 3.30. And he also installs a skateboarding ramp in the store.
00:18:51
Speaker
So this is bringing that skateboarding crowd in. Things really start taking off. This is a contextual thing. and This is all about being in the right place at the right time. Like we talk about on this podcast a lot, the role of luck.
00:19:07
Speaker
in people's success, being in the right place at the right time, while skateboarding just got really popular. Chip Wilson was there and he created skateboarding apparel. Well, the important thing to know this there is his insight into that trend and his observation of that trend.
00:19:26
Speaker
and all of the factors that were sort of coming to bear at that time. So to help him manage the growth and manage the retail aspect of his business, he brings in two long-time store owners from the Calgary area, two guys that he's known for a while.
00:19:48
Speaker
And they begin, in earnest, creating more ah skateboarding apparel and pursuing more of a traditional wholesale business model once they're sort of at capacity with the store. So they're not just selling West Beach clothing in their own store, they start selling West Beach clothing to department stores.
00:20:13
Speaker
And like everything Chip Wilson does with the prints that he starts, they decide to do things a little bit differently and rail against the status quo. He talks about when he and his partners first go to their big apparel industry trade show in Montreal.
00:20:35
Speaker
He says, during the eighties, booths at East Coast sporting goods conventions were weird. Company booths were run and manned by mail sales reps in suits and ties, smoking cigarettes. All the clothes they were selling would smell like smoke. This was the common culture of East Coast business, and it was not how I wanted to operate. I detested unhealthy people in suits selling athletic products. It all seemed so fake.
00:21:05
Speaker
We showed up at our first trade show in a Volkswagen convertible with surfboards, skateboards, shorts, t-shirts, and flip-flops. We played in speed metal and had fun while we talked business. We had a brand as well as a culture and a way of marketing that nobody else had. Right away, the sporting goods industry sat up and took notice.
00:21:28
Speaker
So you can see here, this is the roots of this common enemy of the East Coast businessman, in a suit, smoking, while pedaling, and not for the class style. So you see here is really put off by this dissonance and something that we'll see time and time again. So this is the the heyday of West Beach, Chip Wilson's first retail company that he's operating with his two business partners. The the skateboarding trend is still
00:22:06
Speaker
going really well when he identifies a new trend on the horizon, which is snowboarding. And snowboarding had been this really underground activity for a long time. A lot of ski resorts actually prohibited snowboarding. They didn't want it getting in the way of the skiers, but the west coast of Canada was actually where some ski resorts actually started allowing skateboarders to go down the slopes.
00:22:37
Speaker
So he sees snowboarding, again, very early on as a someone who is able to spot trends really early. He demonstrates this uncanny ability to predict and get ahead of these trends and gets into snowboarding gear with West Beach, which ends up being very popular. But ultimately West Beach is going to end up being pretty challenging business to operate. So that's where we're going to leave it for this part, first part of the Lululemon story. On the next episode I'm going to cover what happened to West Beach and the birth of Lululemon.
00:23:21
Speaker
So make sure you subscribe to the Obsession podcast so that you get that next part of the story right in your podcast feed. Thank you for listening and I'll see you on the next episode.