Little Black Stretchy Pants

by Chip Wilson

  When the crew finally moved the inventory over, it was immediately clear the space was too big. We had an empty second floor. I’d chosen to stop selling other brands at our new locale, choosing instead to focus solely on lululemon. I knew it was the right choice, but once we had our products in the new store, it looked distressingly sparse.

  After devoting so much to wholesale production, we had little inventory. At a push, we could only fill half of the main floor store. I knew I wanted the store to feel like a busy “kitchen party,” so I built a huge moving wall on wheels that expanded the store on weekends and shortened the store during the week. We had moveable change rooms so we could add or subtract those for traffic too.

  The familiar elements of today’s lululemon stores didn’t exist in that first street-level location, but it did solidify a deep faith in being able to create something from nothing. It was teamwork for a higher purpose. We brought over our community boards from the old store and made due with bits and pieces of furniture that I’d found at distress sales. By the time we were ready to open the doors, we’d completed a marathon, bare-bones renovation.

  It felt surreal to return from my European business trip and find that the store into which we had poured all our faith, experience, and belief had changed completely.

  My one indulgence was commissioning a massive mural for the outside wall of the store’s building. It depicted a silhouette of Fiona Stang, my first yoga teacher, in Warrior Two pose. I could see it from blocks away as I approached. Lululemon was now a visible player in Kitsilano. This was a new beginning.

  Then, right before Christmas, Westbeach fired me.

  The Firing

  It had been hard coming back to Westbeach. Much harder than I’d thought it would be. I was just starting to understand what it was to be a manager. I was just learning how to align others with a vision effectively.

  As CEO of Westbeach, I had only a few options. I could license the Westbeach brand to a company in Europe or move it into direct vertical retail and get out of wholesale altogether. A vertical retail shift of a wholesaler like Westbeach would have meant two tough, unprofitable years shutting down wholesale and opening stores.

  I would have lost my economy-of-scale production with the loss of wholesale, without enough sales coming from the retail stores. Opening our own stores would cost money we didn’t have. Westbeach needed an entirely different structure—almost a complete reinvention of the company.

  Then there was a move at the ownership level. Westbeach merged with Sims Skateboards. Although Sims was a major force in its own scene, skateboarding was also in a period of decline. If it would survive, Sims, like Westbeach, had to consider mergers and acquisitions. The merger was with Westbeach. The two brands now eliminated a lot of redundant warehousing and administrative processes.

  They also eliminated one of two $100,000 CEO positions. That was me. Merry Christmas.

  It was a weird position in which to find myself. The Superstar Sports fiasco had set lululemon back tens of thousands of dollars in product. Our move to the new store cost another $20,000. Westbeach had just let me go. I had borrowed $200,000 against my house to start lululemon, and I’d borrowed the final $200,000 to keep it afloat. It suddenly seemed like everything was on the verge of falling apart… but it turned out to be the best possible scenario.

  First, Westbeach let me go with a healthy severance package—half of my annual salary. That quick infusion of cash couldn’t have come at a better time.

  Second, I wasn’t the right CEO for Westbeach. Lululemon represented exactly the work environment I wanted, but Westbeach had no money to change, and it was the antithesis of the future I had envisioned.

  Third—and most important—I could now give lululemon my full attention. The $20,000 store move had paid off immediately, and business was growing by the day, particularly as Christmas drew nearer. I could now turn my focus to marketing and possibly, expansion.

  Now that I’d returned, Shannon, who had been the de facto CEO in my absence, was concerned that her days of creative freedom in steering lululemon were over. “I’d been having such a great time,” she says, “enjoying an incredible amount of autonomy… but now the boss was coming back.”

  In my absence, Shannon had done a phenomenal job of maintaining powerful forward momentum in design. The vibe she and Jackie had created and promoted in the store was exactly what I wanted. Plus, I knew it was important for our success that they felt personally invested in the company. Shannon and I made extra money on the side by designing outerwear jackets for another Vancouver company called Aritzia and setting them up with Asian manufacturing.

  I could understand how they felt about my return, so I stressed to Shannon and Jackie that they were still in control of day-to-day operations. I wanted to focus my energies on marketing and growth, not looking over their shoulders in the store, micromanaging everything. I was choosing a leadership style of mentoring and training. My job was to develop people in the culture and get out of their way. I adhered to the principles of Michael E. Gerber’s book, The E Myth: Why Most Businesses Don’t Work and What to Do About It. I developed Operating Principles (see FAQs) and processes that would allow the company to operate without me so I could focus on the future. Because our training and development program was implemented at the beginning, we could grow exponentially faster than other companies. The employees didn’t need adult supervision; they needed empowerment and the opportunity to be great.

  Farewell to Dave

  Now that I had the time to flesh out my ideas, I knew one thing I wanted to prove was our business philosophy. I didn’t want to take shortcuts, but it was all a big risk.

  After our busy Christmas period ended, I wanted to have a serious talk with Dave Halliwell about the partnership issue. Even though he had done a massive amount for the company in my absence, he had never committed to an official partnership. He’d been “thinking about it” for months.

  For both our sakes, I told Dave he had to make his choice by January.

  Luon

  With Christmas right around the corner, lululemon was appearing in several articles about hot gift-giving options. One article mentioned a polar fleece bra Shannon had designed. The bra hit it big that Christmas.

  The bra was a peripheral item in our inventory as our focus was on our Lycra clothing. But, the interest the bra generated was a perfect marketing vehicle for introducing our clothes to new customers. The people who came in the door looking for the fleecy bra inevitably left with one of our signature garments.

  Meanwhile, I felt we’d finally perfected our fabric and trademarked it as something called Luon—a proprietary blend of nylon and Lycra. We trademarked the name for reasons similar to ones held by those who trademarked Gore-Tex and Velcro. Many competitors may use a similar product or invention, but if you’re the first define a category and trademark it, then it builds a moat around the brand, and the name becomes synonymous with the entire industry.

  I sensed lululemon was very, very different in the apparel world and I continually considered how to build a wider and deeper moat that would make future competition difficult.

  In January, as promised, Dave Halliwell and I sat down for a meeting about his future with lululemon. I could tell right away it was a “no.” The decision wasn’t easy on Dave. He told me that although he believed deeply in what we were doing and was more optimistic than ever about the direction the company was going, he was saying no to our partnership.

  I didn’t have to, but I wanted to remunerate Dave for his passion and commitment to our success. In 2001, I paid Dave $60,000 or $5,000 per month over a year. This amount was a fortune for lululemon at the time, but Dave’s work had been a vital part of our success.

  We parted ways on good terms.

  Chapter 15:

  Goals, Culture, and People Development

  Goal Setting

  Many people might now be bored by the concept of goal-setting, but in 1998, it was almost non-exist
ent. There are always those who won’t try goal-setting because they fear the feeling of failure if a goal is not attained. In my view, learning to fail might be the most crucial learning of all. Most people don’t like goal-setting because it makes them responsible for their lives and what they get out of them. Often, people want to dream about their ideal life, and then vote for people they think will give it to them without their actually having to work for it.

  SMART

  As lululemon’s early culture developed, we used the SMART template set out by Brian Tracy in his monumentally great work The Psychology of Achievement12. SMART stands for Specific, Measurable, Attainable, Relevant, and Timely goal-setting.

  Our brains are like computers. Garbage in, garbage out. A goal that is measurable, with a by-when date, is something with which our brains can work. It has the right information for our subconscious computer to work on 24/7, even when we’re asleep or doing something else.

  One fundamental idea is that a goal must be so specific there can be no grey area as to if the goal was met.

  Unfortunately, most goals I see look something like this: I will make my family happier. While a noble idea, as a goal, this cannot be measured and has no date for completion, therefore, it does not adhere to the SMART template.

  Conversely, a workable, SMART-oriented goal looks like this: I will take my family to Europe for ten days by December 31, 2025.

  At lululemon, we developed a template for staff to set out a ten-year vision for their lives, their three top personal values, and eighteen goals. The goal template was split between family, career, and health goals. The goal-setter set two goals each for family, career and health to be attained within three different periods of time: ten years, five years, and one year.

  The goals fed into and were aligned with their vision. In this way, lululemon became a leadership development company disguised as an apparel brand.

  Where I differed from Brian Tracy was in my belief that a person should fail at great goals 50 percent of the time. Failing is a part of life. It is merely a setback and an opportunity to reset the goal with new conditions of satisfaction, and new by-when dates.

  I also believed that the teachings of Landmark combined with vision and goal setting produced an even more powerful synergy.

  I wanted a way to keep the transformational concepts of Landmark alive well after people had taken the course. By combining vision and goal-setting with insights around integrity, choice, and possibility, it created something very tangible and real that people could action in their own lives.

  As I said in my purple shirt story, my past constrained my future. Prior to investing in transformational development, I would set a goal like this: I will be 220 pounds by December 31, 2013. The problem with that goal was 220 pounds was based on the weight of 240 pounds around which I had fluctuated for at least five years. I was setting my goal from what I knew, not from what I didn’t know. If I didn’t know my weight and I researched the optimum weight for my age and height, I would find my goal would be 208 pounds. Setting goals from a vision-based future, unconstrained by my past made my goals audacious.

  Setting goals from my vision-based future also enabled me to create a plan. I first set my ten-year goals based on my vision for my future. Then I asked myself, to be there in ten years, where do I need to be in five years? And if I am there in five years, where would I need to be in one year? This way of goal setting freed me up from the pitfalls of mediocrity; it had me create goals from a desired future as opposed to a future that was going to happen anyway.

  I will share with you my personal vision and goals in the back of this book.

  lululemon’s Culture and Training

  In early 2001, I decided we would take advantage of a relative lull in the higher pace of business to codify lululemon’s core culture and training, which took its inspiration from The Psychology of Achievement13. I only wanted to go to work with people I loved to work with. That was the basis for lululemon’s culture.

  I had listened to The Psychology of Achievement on audio cassette. As soon as I was done listening to each cassette, I passed them along to Shannon and Jackie. They responded positively to Tracy’s teachings. I told them I wanted anyone they hired to hear the same lessons, so Shannon and Jackie gave the cassettes to new hires to take home and digest. That was the very beginning of the lululemon training program.

  I assumed each new lululemon person was already great and all we had to do was catalyze their lives. I believed it was important to train people for their own benefit, not because I was expecting some sort of return. I wanted to develop employees to their full potential and then set them free. They could then choose to work at lululemon or to fulfill other goals. With choice, the ones who stayed were outstanding employees and the ones who left, left happy and always talked well of their time at lululemon.

  It was critical for everyone to attend the Landmark Forum. I had experienced such a positive, transformative impact on my own life that I wanted anyone working with me to have the same access to understanding what a great life looked like. I wanted people around me who were excited to live a long, fun, and fulfilled life.

  Dave Halliwell had been involved with Landmark for a long time. “I was an introduction leader for the Forum,” he says. “Landmark is an intense transformational experience that allows people to embrace breakthroughs in their lives. It’s clear that the relationship between lululemon and Landmark has been fundamental to the company’s success. Like anything so dramatically effective, there are people who love it and people who fear it, but to my mind, there’s no question about its power.”

  I knew if the people who worked at lululemon could communicate using a common language, and if they had the same context for what greatness was, we would build an amazing launchpad for success. I knew if we could build a solid educational platform that could be absorbed in two weeks, our people could grow faster than the company.

  Even with a handful of people, a unique culture was already taking shape. Part of it was the series of audiobooks we shared. These books set the foundation and the context of who we could be. As I look back on everything now, I want to thank the authors of Why We Buy14, Tipping Point15, Pour Your Heart Into It16, Straight from The Gut17, and Built to Last18, among others, for offering the wisdom and insights that helped make lululemon what it was.

  More than that, our development training showed Jackie, Shannon, and the women they’d hired that we were investing in them.

  In a sense, I was exceedingly selfish about people development at lululemon. I wanted to go to work with people I loved, so I was willing to invest in their greatness. I believe when a person is transformed, they become leaders to themselves, then to their family, and then to their community.

  A transformed person loves themselves and has the mental focus to generate a wonderful life. A fulfilled person has so much evidence of success, they automatically want the people around them to be trained in the same way. The leadership of one person automatically begets the leadership of those around them.

  With the development culture, I wanted to be able to send a twenty-three-year-old to another city to run a $10 million store with twenty employees, knowing that twenty-three-year-old would act with integrity, be responsible, creative, and because of this, be well-paid. They would reach their goals, then the company’s goals, and be rewarded for being a leader first to themselves and then to others.

  As foundational lululemon Trainer Jenna Hills puts it, “Something that gets hidden about lululemon is that the company wants its people to have goals way outside of it. Goals that may take them somewhere other than working at lululemon. The way it succeeded was by having people understand they could develop the skills and leadership at lululemon to attain their personal goals outside of the company. Conversely, if this was forgotten, people were consumed by the company and no longer did their best work. Leading by this principle requires strong leadership that is ‘all about people’—leaders who love to get out of
bed to watch their teams grow and flourish in their work and are not focused on company profit.”

  We viewed failure as a positive. When someone failed, and it cost the company $100,000, I asked them if they had learned anything. If they did, I assumed that person was now $100,000 more valuable to the company. We knew we were making mistakes, but we were in daily reinvention mode and we knew mistakes made us stronger.

  Educators and Super Girls

  Lululemon had become something truly unique. This started with the Educators working the floor of the store. They were excited because they were part of the future of how businesses could run. The Educators we hired were living, breathing models of the Kitsilano life. Each morning, our Educators chose to bring happiness into their lives, which, in turn, brought happiness to the lives of those around them.

  I was fascinated by the convergence of the employees’ self-interest and our company vision. As much as I believed our employees were interested in the betterment of the world, I knew that they each had their own personal motivators as well. I wanted to create an incentive-based model that prioritized the employee’s personal life over the company as a new way of driving a profitable business.

  I had engaged a group of dynamic and enthusiastic university-educated women who were contemporaries of the highly-educated customers I knew would pay for technology.

  I wanted Super Girl employees to interact with Super Girl customers. No company had ever put this puzzle together because wholesale apparel was focused on the lowest common denominator. The lowest common denominator was cheap labour with high turnover.

  Everyone in the company created their own vision and goals. Our Educators were so excited about their own lives that they began to spread that sense of living fully in the now to everyone that entered the store. This Super Girl Educator created a sense of belonging; she listened to the commitments of our Guests and partnered with them on the big things they were up to. The relationship between the Educator and the Guests was based on finding the perfect item for the Guests’ specific goal or need.