Little Black Stretchy Pants

by Chip Wilson

  Still, I knew that few men in Calgary, as conservative as they were, would buy wildly coloured surf shorts, so I rebranded them as BBQ shorts. I felt confident the regular guy just needed the right excuse to buy something that was usually out of his comfort zone. From this lesson, I learned that the naming of a product is a critical piece of sales success.

  And that summer of 1982, people did go crazy for this new line of barbecue shorts.

  These long, loose, anti-ball-crushing fit shorts gave all men a clothing option they’d never had before. People were buying the shorts as quickly as I could make them, often four or five pairs at a time. They were, I realized, purchasing the shorts not just for themselves, but to send to friends and relatives all over the world, who couldn’t get them anywhere else.

  At last, I was the best in the world at something.

  Chapter 5:

  The Shift

  Skateboarding

  Westbeach’s original customers had been women interested in the wrap shorts. I’d expanded the women’s styles, but my female customers had been overtaken by twenty-five- to forty-year-old men demanding the reversible barbecue shorts.

  There was about to be another shift.

  I had begun to experience how the Westbeach store was virtually empty during the day. Lunch hour would be busy when business people came, but otherwise, little happened… until three thirty every afternoon, when the store filled up with kids. Young boys, mostly between twelve and sixteen. They weren’t just coming in to look. They were buying.

  Barbecue shorts had turned into skateboard shorts.

  Back in the mid-seventies, skateboarding had experienced an explosion in popularity. As with surfing, the skateboarding boom traced its roots to southern California. Some of this history is portrayed in the 2005 film, Lords of Dogtown, based on real-life skateboard figures Stacy Peralta, Jay Adams, and Tony Alva.

  By the mid-eighties, public skateparks had appeared all over North America. This coincided with skaters building their own ramps in their backyards, and using whatever public spaces (steps, railings, and numerous other things) they could find. At the time, smaller skateboard companies, owned by skaters themselves, were cropping up and on the leading edge of this dynamic new trend.

  As with surfing, the unique physical demands and range of motion in skateboarding required baggy, loose-fitting garments—better yet if they hung long enough to cover and protect the knees. Of course, the low front rise and high back rise worked the same for skate as it did for surf. It was bringing those boys into my store.

  It did not take me long to realize that this was my new customer base. I adjusted the store to match. I bought a piranha named Jake, put him in the fish tank, and fed him every afternoon at three thirty. Jake was aggressive and grew quickly. I also bought a Commodore 64. You couldn’t do much with it—input an address (which was useful as a mailing database for me) and execute a few simple commands—but it was something the kids loved and gravitated toward as soon as they came in the store.

  As Westbeach was the only surf and skate store operating in Canada, to supplement my own inventory, I became the distributor or licensee of surf and skate brands from the US. This included apparel made by Gordon & Smith, Santa Cruz, Stüssy, and Billabong, among others.

  Outside the store, I took measures to ensure I had a close connection with the skateboarding scene. There were not yet any public skateparks in Calgary, so I invited the local skateboarders to build a ramp in the backyard of my ramshackle house.

  The ramp went up quickly, and just as quickly got lots of use. It got so much use—at all hours, no less—that I finally chained it at night so I could sleep and sent out mailers with its hours of operation (this is where the address database in the Commodore 64 came in handy).

  All these efforts to position Westbeach and myself at the front of the skateboarding scene were working. Westbeach made around $90,000 in 1983, exponentially more than its first few seasons.

  Still, of that $90,000, perhaps $30,000 went into labour and production, and another $30,000 went into wages and leases. Financially, the brand was not yet at a critical mass, especially since I was mainly just selling in my own stores. To maintain its position at the front of the market, Westbeach would need to grow and evolve further. At some point, competitors and imitators were bound to appear.

  On Integrity

  The year 1983 was also marked by two important lessons in integrity. The first had to do with a car. As a young entrepreneur, I was trying to make ends meet wherever I could. I got rid of my Mercedes and replaced it with a used Volkswagen station wagon.

  The station wagon would’ve been the perfect vehicle for what I needed, but it soon became apparent I had been sold a lemon. Exhaust fumes were coming up into the car. I either had to always drive with the windows down—not ideal in Calgary winters—or suffer a terrible headache. I realized I had to get rid of the car. So, I sold it. And I said nothing about the exhaust fumes to the man who bought it.

  A week or two later the man called me. He said I’d known about the problem when I sold him the car, but I hadn’t told him and had let him buy it anyway. He said I wasn’t a very good person. It hurt me, but he was right. I didn’t take the car back or refund him his money.

  Part of this was because I was in survival mode with my business. But, part of it was because I justified my actions—somebody had done it to me (the person from who I’d originally bought the car), so I turned around and did it to somebody else. After the man on the phone told me I wasn’t a very good person, I decided I never again wanted to be in a position where someone could say that about me or call my integrity into question.

  This leads me to the second lesson. Not long after that incident with the car, I was in the Westbeach store, and I saw $200 in twenties on the ground. I picked it up, put it in my pocket, and looked around. There was nobody in my store just then, and $200 was a lot of money.

  A little while later, I was sitting with the owner of an outdoor restaurant next door to Westbeach. During our conversation, a young woman came up to us, in semi-panic-mode, and told us she’d lost $200 somewhere around here. I asked her what denominations the money was in. She told me it was in twenty-dollar-bills. So, I pulled the $200 out of my pocket and gave it back to her.

  She was relieved to have her money back. Maybe that was her month’s rent. Then she went on her way. It felt good to help her out, but what was important to me at that moment was looking in the restaurant owner’s eyes and knowing he saw in me a person of integrity—a person he could trust.

  Those were two of the great teachings of my life.

  Smoking in the Store

  Another lesson I learned in the early days of Westbeach was in brand-building. I decided I would let no one into the store who was smoking.

  You must understand how radical this was in the early 80s. For most people, it was like telling them not to breathe oxygen. Shoppers would scream and yell and swear and promise they would never bring their business to me.

  I was determined to stand my ground. Even with the little evidence we had then, I felt sure smoking was making people sick. It seemed filthy and was not something I wanted to have associated with the youth and athleticism of my brand.

  I could tell that by making enemies of the people I didn’t want to wear my product, that it created a stronger group of loyalists who wanted to back a brand that stood for their health and a better future. This idea would be the foundational genesis of how to build a West Coast brand.

  The Ironman

  As Westbeach transitioned to a skating brand, I was still training intensively. My training was of a deeply personal nature. I’d always been a one-girl guy, and when Cindy broke off our relationship (and cleaned out the joint Westbeach account), I was devastated. My focused athletic activity and daily runner’s high gave me an escape from all those feelings of heartbreak. To suppress my misery, I decided to do the Ironman.

  My training also confirmed for me something I’d learned
a couple of years earlier—my true passion was athletic clothing and technical apparel. Our clothing at Westbeach was flying off the shelves, which was terrific, but I still felt somewhat unfulfilled. I felt the Westbeach clothing was more about fashion than performing a specific function.

  The 1983 Ironman was held on October 22nd in Kailua-Kona. There was no prequalifying for the Ironman in 1983. For most people, it was their first time at an event of this length.

  I was a fire hydrant in a race of greyhounds that year (a few years later, I would win the Clydesdale division of the Vancouver Triathlon). Later, I would joke about having had the opportunity to meet everyone on the Ironman—during the swim I’d been one the first out of the water, then everyone said hello as they passed me through the bike ride. I met many of those who had passed me while I was on the run because I ate ferociously on the bike ride. Many runners fell over from lack of nutrition.

  After I crossed the finish line, I got a milkshake then went for a massage. At that moment, I swore I’d never do something like the Ironman again. I would run 10ks, and I would take up squash and mountain biking, but I knew my body wasn’t meant for long distance.

  Chapter 6:

  The Next Level

  Farewell to Dome

  On April 25, 1985—my thirtieth birthday—I accomplished a goal I’d set for myself several years earlier. I quit my job at Dome Petroleum. From here on out, I intended to only work for myself. That left one more goal to achieve: retirement by age forty.

  If retirement by age forty was going to happen, I would need to take Westbeach to the next level. Over the last year, the evolution from surf to skateboard had only become more pronounced. It was obvious to me that skateboarding, like surfing, would be a billion-dollar industry over the next five years. What was less clear, was what I needed to do to capitalize on that evolution.

  One of my main challenges was still producing five hundred to two thousand of each style to bring my costs down to make a profit. I was doing small wholesale consignments at various locations across North America, including Hamill’s Surf Shop in San Diego, and Scott Sibley and Richard Mellon’s store in Vancouver, but I still couldn’t achieve the right volume for anything bigger.

  An example of this scaling challenge came at a trade show I attended in Singapore in 1986. Buyers from a big Japanese department store came by my booth and knew my reversible, long, quilted shorts were a product differentiator. But, from talking to me, these buyers knew I couldn’t deliver what they wanted, namely product volume in the millions. We could not work out a deal, so instead, those same buyers went back to Japan and immediately trademarked the name Westbeach. The ramifications of not controlling my trade name would show up again soon.

  Partnering with Scott and Richard

  I began to consider partnering. If I didn’t partner, once the skateboarding trend broke into the mainstream, someone with more money and more expertise would run me over. As it happened, Scott and Richard had been placing increasingly large orders of clothing to put in their store. By the summer of 1985, the three of us talked about joining forces.

  In a partnership, an aspiring entrepreneur can learn how a different combination of skill sets need to come together to make the business work. You need a designer/creative and visionary, you need someone with a good sense of structure and accounting, and you need someone who’s a people person, a genuine lover of people, to handle sales. It’s almost impossible to find all these skills in one person.

  This blend of expertise was something I saw in a partnership with Scott and Richard. Scott was gifted at sales and people. Richard was creative at heart, but he was also much older than our target demographic, which by default saw him handle the books and the business end of things. I was the manufacturer, product developer, and designer.

  As we got the partnership discussions underway, I quickly learned how many aspects of expanding a business were beyond my experience. Richard knew about payables, receivables and how to invoice properly. I didn’t understand payment terms and financing.

  Previously if someone sent me an invoice, I’d pay them in five days, even though I had thirty days before it was due. Had I been doing things the way Richard did, I could have used the money in the twenty-five days between the date I paid the invoice and the date it was due. Richard also knew a lot about setting up warehouses and shipping channels. I would never have known how to do this on my own.

  They’d both recognized the clothing I supplied had more momentum and better profit than sailing equipment. They carried Westbeach clothing, and the other labels I distributed. By partnering, they could avoid my markup. Together, we thought we could position ourselves to be the leaders of the coming surfing and skateboarding trend.

  In September 1985, I sold 66 percent of my business to Richard and Scott, making our merger official. Westbeach was now, truly, a West Coast company. Initially, our company grew quickly, which included changes in the way it was modelled.

  “It started growing from a vertical retail model to a wholesale model,” Scott remembers. “Whereas Chip’s focus was on going to California to fill his own stores full of stuff, our new focus became importing and wholesaling into Canadian stores. Surfwear was growing like crazy.”

  Later that fall, we attended our first apparel industry trade show together in Montreal. During the eighties, booths at East Coast sporting goods conventions were weird. Company booths were run and manned by male 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.

  We showed up at our first trade show in a Volkswagen convertible with surfboards, skateboards, shorts, t-shirts, and flip-flops. We played speed metal and had fun while we talked business. We had a brand, and a culture and a way of marketing that nobody else did. Right away, the sporting goods industry sat up and took notice.

  For the next several years, trade shows a few times a year—not just in Montreal but in places like Japan, Las Vegas, and Munich—would be a fact of life. The purpose of attending these trade shows was to keep securing wholesale deals for our brand.

  This was well before I understood the power of vertical retail. Since I was still trying to reach effective economy-of-scale production, even after the partnership was formalized, wholesale deals seemed the best way to increase production quantities quickly.

  Although that first tradeshow was fun and felt good—a positive sign for the beginning of our partnership—I did not understand how financially constrained we were about to find ourselves. For starters, Westbeach was already in debt.

  Debt and Credit

  When I’d entered the partnership, it was critically important to me to be debt-free. I didn’t want a bank telling me how to run my business. I took the last of my nest egg and paid off everything I owed before I entered the partnership with Richard and Scott.

  I didn’t realize my two new partners were coming to the table with debts from their earlier business, Windlift Design. That debt came with them. Right off the bat, the company owed money, with interest, to my new partner Richard.

  The trouble wasn’t just the payments and the lack of capital for growing the business—it was the drain on mental energy caused by the debt. I felt like 40 to 50 percent of our conversations revolved around money, where we could get it, and how we could operate without it. I wondered how much more creative we could have been if we’d been able to take our focus away from soul-crushing conversations.

  Westbeach would continue to struggle with being in the red for the next several years. One way to address our money concerns was to secure a line of credit. Credit would play a significant role in how we operated, particularly with the California companies whose wares we were licensed to sell in Canada.

  Unfortunately, this debt would define much of our time at Westbeach for the next ten years. We were always
fighting the clock and near the end of our line of credit.

  Testing Toronto

  Meanwhile, we were also attempting to build a broader geographical presence. The Westbeach flagship store was in Vancouver, but I relocated to Toronto from Calgary. We thought we’d need a solid foothold out east since that’s where 70 percent of the population lived.

  To cover my own costs, I kept my house in Calgary, using it entirely as an income property, while I lived in the dungeon of doom—the unfinished dank basement of the Toronto store—to save money. The Beach was a highly incestuous neighbourhood, but the community took me under its wing, and I loved everyone I met.

  Quickly, it became apparent that the vast majority of sales at our Toronto store were to the neighbourhood’s emerging beach volleyball scene. With our struggles to find financing, we couldn’t pursue the growth we’d intended for our East Coast presence.

  We felt continuous pressure to adopt a wholesale model. As Scott says, “In the early days, it was recognized that if you wanted your company to get bigger, you’ve got to go wholesale. You can’t go to the bank and finance retail. The banks hated retail because there was no proof of vertical retailing.” I imagine early e-commerce companies had the same issue.

  “With unlimited money, you could open up a bunch of retail stores,” Scott adds, “but even then, it’s riskier to do so. It worked well for lululemon, which is why it went the way it did. He grew it like that and was accepted by banks because lululemon proved the vertical model could make more money with less risk. But in the Westbeach days, we didn’t have access to the resources that would make the vertical retail model possible.”

  By 1987, we knew it didn’t make sense for me to stay in Toronto. My being there wasn’t working for Westbeach, kind of like a strained long-distance relationship. We sold the Westbeach retail location to a Toronto beach volley designer named Fred Koops, who would go on to found Overkill.