Pod Insights How I Built This with Guy Raz Lululemon Athletica: Chip Wilson (2018) About this episode After noticing more and more people sign up for yoga in the late 1990s, Chip Wilson bet everything on an athletic apparel company aimed toward young professional women. What started as a small pop-up store in Vancouver eventually became the multibillion-dollar brand Lululemon Athletica, spawning a new fashion trend and forever changing what women wear at the gym. PLUS in our post-script "How You Built That," we check back with Kate Westervelt who took an overwhelming experience and turned it into a gift box for new moms--filled with essential items women need to recover from childbirth
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Guy Raz? Hey, so really quick, I want to remind you about two incredible live shows coming up, one in Seattle and the other one in San Francisco. On Thursday, March 26, I'll be at Ben Arroyo Hall in Seattle, talking to the founders of Sub Pop, Jonathan Poneman and Bruce Pavitt. They founded the iconic indie label behind artists like Nirvana, Fleet Foxes, Sound garden, and many, many others. And the very next day, on March 27, I'll be in San Francisco, talking with Ken Grossman, founder of Sierra Nevada Brewing Company, a hugely important part of the microbrewing revolution in the United States. That's happening at the Sydney Goldstein Theater in San Francisco.
0:39 Guy Raz? For more information on either of these shows or to get your tickets, please head to nprpresents.org. And I hope to see you there. As for today's show, Chip Wilson is definitely the kind of entrepreneur who is very attentive to trends. And when he was living in Vancouver in the late 1990s, the trend he noticed was yoga. It seemed like everyone was getting into it, particularly women. So the story of Lululemon is a classic case of seeing an opportunity and just seizing on it. Right place, right time. But along the way, Chip also ran into some major problems, some of which he caused himself. It first ran in June of 2018. It's a super interesting story. Hope you enjoy it.
1:23 Guy Raz? Here it is. People were just naked in front of the store?
1:29 Speaker 01 Well, they showed up in their trench coats. And, you know, we went out when we went to open the store. I went out with my wife and put my arm around her. And then we said, thanks for coming. And everyone dropped their trench coats and went running into the store.
1:52 Guy Raz? From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on today's show, how Chip Wilson turned workout clothes into a fashion statement and, along the way, built a breakout brand worth billions.
2:21 Guy Raz? So it used to be that the clothes you wore to the gym were like the absolute worst clothes you owned. You know, the ratty old t-shirt you got for free at some event, sweatpants with your high school logo, you know, the kind of short shorts Dr. J would have worn on the basketball court. Anyway, most of this apparel was cotton-based. It was baggy. It didn't look so great. And honestly, nobody really cared. You had one job to do, which was to sweat at the gym. But at some point in the past 10 or 15 years, all of that changed. Because suddenly, the clothes you wore to work out were also the clothes you could wear to the grocery store or at a restaurant, or even at work.
3:05 Guy Raz? So for better or worse, people were wearing their gym clothes outside of the gym on purpose. And this trend, it was called athleisure. And Chip Wilson, he was one of its pioneers. The brand he built out of his house in Vancouver is now worth more than $14 billion. Now, before I go on, let me just address the elephant in the room. Chip has said some things that are, well, how do I put this? Rude and boorish. He's put his foot in his mouth on several occasions. He's embarrassed the company. And you will hear about some of that later on in the show. But he's also an open book and open to getting grilled all about his life. He's not a cautious, media-trained, soundbites guy,
3:49 Guy Raz? which is in part what makes him interesting. Because that's sort of how Chip grew up, without any pretension. Middle-class kid in Calgary, Canada. Chip was athletic. He played hockey and football. His dad taught phys ed at the local high school. And his mom was a seamstress.
4:08 Speaker 01 She lived for it. It's where her total passion was. She tried to make clothing for the kids, but of course, we didn't, we'd never liked what she made for us. But, you know, if I wanted to spend time with my mom, it had to be at her foot in the sewing room.
4:23 Guy Raz? So did you learn how to sew like from an early age?
4:27 Speaker 01 Yeah, I can definitely sew. But more so, I think it was working with the butter rick patterns and watching my mom lay them down on the fabric and then, and then how she moved them and twisted them in order to save fabric. And I only say how important that is because once I got into big production and you'd lay 50 to 100 layers of fabric down, when you can save even five, six, seven inches of fabric, it can mean thousands of dollars.
4:52 Guy Raz? Now, before Chip would go on to sew and design clothes for a living, he actually got his first real job at an oil company, working a grueling but incredibly lucrative job on the Alaska oil pipeline for almost two years. How much did you walk away with? How much cash?
5:11 Speaker 01 Well, interesting, in today's dollars, probably about 600,000.
5:15 Guy Raz? What?
5:15 Speaker 01 And I think back then it was about 175,000 American.
5:19 Guy Raz? That was...
5:19 Speaker 01 It was amazing.
5:20 Guy Raz? Amazing. You were like 19. You were just given this cash and that's simply because there was all of this money to work on the Alaska oil pipeline, I guess.
5:29 Speaker 01 Right. And, you know, but I gave, you know, I traded my life in for money. I mean, there was no girls, there was, you know, nothing there except for, you know, your work. So I always wonder, you know, if everyone got that opportunity, would they have made the same thing out of it I did?
5:45 Guy Raz? That's pretty good. You're 18 or 19 or 20 with a bunch of cash. So what did you, what'd you do with the money?
5:52 Speaker 01 Well, I'd always had three goals in Alaska. One of them was to own my own house by the age of 20, to be in my own business by the age of 30 and retired by 40. And retirement, meaning that I was doing exactly what I wanted to do. So, so I did, I bought a house and then I finished up my degree and I worked for an oil company.
6:13 Guy Raz? And this is an oil company back in Calgary, right? Because you moved back there at some point, I guess.
6:18 Speaker 01 Right.
6:19 Guy Raz? And I guess in like the late 70s, right? Pretty much around the time you graduate college or you start to make...
6:29 Guy Raz? Shorts, like baggy shorts for men?
6:32 Speaker 01 Yeah, because I didn't, you know, have to get what it was like at that time. Men wore very short shorts that were very, very tight. You know, you only have to look at movies from the, from the late seventies to get that kind of picture. And, uh, and they made a lot of sense to me because I had very big legs and I was, I think because I was working out three times a day, I was always in a constant sweat. And the idea of wearing shorts full time was very appealing to me.
7:01 Guy Raz? Yeah. And, and so you, and, and these were like flower printed, like loud Hawaiian, like, I don't know if you've been to Trader Joe's, like those shirts, like that's what the shorts looked like?
7:10 Speaker 01 Yeah, exactly. But you know, you have to see it in a context that there was nothing like that before. Everything else was that air of brown, rust, off color, okra, yellow, like solid colors. There was no brightness in the world at all that time. So that was a radical look. So I, I started, um, because I couldn't get loud flowered prints in 2000 meters, which is kind of what a person needs to go into business. I started doing what my mom did. She quilted fabric. So I would get masses of different types of patterns of fabric and then I would, uh, cut them into squares and then I would quilt them. And then in order to keep the stability of that, I put a backing on it, a black fabric.
7:53 Speaker 01 And then I realized I had reversible shorts. So normally where they long and baggy and reversible, they just really revolutionized shorts. So, and then the skateboarders started taking them on because it kind of covered their knees.
8:06 Guy Raz? Well, how did they even know about them? Did you start to sell them somewhere?
8:10 Speaker 01 Well, I mean, that's the invention of, uh, of vertical retailing because I made about 300 pairs of the shorts up in 1980 and I went to the big department stores here in Canada and they would have nothing to do with them. So I had my first inventory problem. So I thought, well, what am I going to do? So I basically set up a lemonade stand for the shorts and, uh,
8:31 Guy Raz? Where? In, in Calgary?
8:33 Speaker 01 In the downtown mall in Calgary. And I had a partner, girlfriend at the time, and so we did that together. And, you know, we, you know, we'd lay all these shorts out and in a day we'd make like a thousand dollars a day selling the shorts. And I was making like a hundred and twenty dollars at the oil company. So it wasn't tough to figure out the math of that.
8:54 Guy Raz? And what, these were not swimming shorts. These were just like, what, like, who would wear these shorts? What would you be doing while wearing these shorts?
9:01 Speaker 01 Well, these particular shorts, you know, I couldn't really, it was tough in the oil business of conservative Calgary where people wear Prada suits and cowboy boots to sell them on loud, baggy shorts. And so I originally called them barbecue shorts because I needed to give, men needed an excuse to wear them. I knew they wanted to wear them. But as, you know, a couple of years went on, that's, again, that's when the skateboarding market took over from the surf market and the young boys, you know, like 10 to 18 started wearing them.
9:34 Guy Raz? So this is, this is 1980. You've got barbecue shorts. By the way, the barbecue season in Calgary has to be fairly short, like a couple of weeks.
9:43 Speaker 01 Yeah, yeah. Forty days max.
9:46 Guy Raz? Forty days. You've got forty days to wear these shorts in Calgary. I mean, not a brilliant marketing move, but it worked. People were like, all right, barbecue. And so 1980 and then, but it's the same time you were still working for this oil company on the side or you were doing this on the side and working for, and how long before you quit the oil company?
10:05 Speaker 01 Well, I had my goal of quitting, being in my own business by 30. So I worked through a little company for five years and quit on my birthday.
10:12 Guy Raz? Your 30th birthday.
10:13 Speaker 01 Exactly.
10:16 Guy Raz? Did you create a brand around, around the barbecue shorts?
10:19 Speaker 01 Yeah, I, I called it West Beach, which at the time was, I think it's probably from being in San Diego when I was young and probably the incredible feeling I had from living on the beach every day.
10:31 Guy Raz? When you were a little kid?
10:32 Speaker 01 Yeah, when I was a little kid and I, being in Calgary, I always wanted to get back to the beach. I always wanted to get back to the West Coast. I think that's where I felt best. So that was the brand I built up around it.
10:42 Guy Raz? And who, and so initially your customers were in Calgary, but how did you get the word out around Canada and beyond?
10:50 Speaker 01 Well, I went to, Canada was pretty easy because you know that I got into it almost a decade before anybody else, I think, but, uh, and so I could slowly kind of move across like that. We opened up a store in Toronto, but then I went to a trade show in Singapore, uh, and then another one in Munich. And so, you know, when a person kind of comes out with something that's so different like that, that, you know, there's a lot of interest in it. And then I had this sense, looking five years in the future, that skateboarding and surf markets were going to be huge.
11:24 Guy Raz? And, and by the sort of that time, the mid to late eighties, what were you selling?
11:31 Speaker 01 Well, I mean, the beautiful thing is I, when I formed a partnership with my two guys in Vancouver, I moved to Vancouver. And then in, I'd say eighties, well, starting in eighty-three in Calgary, I'd started to do snowboarding and I could see snowboarding coming and snowboarding was going to be way bigger than, uh, surf or skate. And I didn't care about the boards and the boots and the bindings because for me that was low margin hard goods, where I knew all the money was to be made in the clothing, especially for us because it would take up the other eight months of the year, which we weren't really selling very much. And, uh, snowboard clothing was four or five times the price of surf and skate t-shirts and shorts.
12:14 Guy Raz? And who was designing the apparel that West Beach was selling?
12:18 Speaker 01 Well, I was. That was my thing. And I, you know, if I look back at it now, I mean, I never had any money for clothing when I was young. I probably had a genetic desire for, you know, kind of ideas that I had. I think part of it was, you know, my size and I think part of it was I wanted athletic clothing that actually fit me. So I think that was driven through both those.
12:41 Guy Raz? Where are you making the stuff, by the way? Where's the clothing being made at that point?
12:44 Speaker 01 Well, I'm making it in Calgary. I found some Italian couture designers that were Um, you know, again, just like my mother, they were at home and they weren't working and they were amazing. So we set up a factory, um, and so if you can imagine, almost everybody else in the apparel industry, I think everybody else basically made clothing and then wholesaled it to somebody else.
13:07 Guy Raz? Right.
13:08 Speaker 01 Not only was I doing my own manufacturing, but I owned my own stores. So I was basically taking the profit of two middlemen out of the business. But, you know, the big revenue part of the business was in wholesale, but my wholesale business was losing a million dollars a year. And then I had these two retail stores that were making a million dollars a year.
13:28 Guy Raz? Wait, wait, explain, explain this to me because you had these retail stores and, and they were doing well, but you, you also had a wholesale business which was losing money?
13:37 Speaker 01 Well, it was a quandary because I needed the volume from wholesale to get to economy of scale production to bring my prices down. And because my prices were down, my retail stores could make so much money, but I couldn't really make any money in wholesale because, um, if I made something for $20, then I would have to sell it to Dick's Sporting Goods for 40, and then they would sell it for 80. Where in my own retail stores, then I was beginning, putting it in there for 20 and making $80. So there was a $60 profit in there. And so I kept thinking to myself, how can I get to economy of scale production? And that was the, you know, the, the big, big driver.
14:21 Guy Raz? And were you, uh, were, I mean, what was your vision? Did you think this is gonna, we're gonna take on, we're gonna be the biggest snowboard apparel company in the world?
14:29 Speaker 01 Sure. I mean, in, in a, Japan had just exploded. So was about 30% of all snowboarders' business. And, uh, the drive to grow and to grow fast, knowing that what I'd seen in Surf and Skate where it started off with three companies, went to 500 and then went down to three again. I knew the same thing was how it gonna happen in snowboarding. So when's the right time to get in? What's the right time to build? What's the right time to invest and when to get out was all's In the back of my mind and sure enough, you know, probably in ninety six or so, the Japanese yen started to collapse. So we're starting to think that snowboarding wasn't the cool thing to do anymore.
15:12 Speaker 01 And so the market was changing drastically and we still weren't making any money. Because we were just reinvesting just to keep on top of the competition.
15:22 Guy Raz? So you decide to sell.
15:24 Speaker 01 Well, yes, we and we sold to a public company out of Salem, Oregon, Moral Snowboards. And, you know, we quite honestly could not make payroll on Friday and we sold Wednesday based on brand value only.
15:41 Guy Raz? Wow, you probably walked away with a good chunk of cash.
15:44 Speaker 01 Well, I had partners and I had banks and I had private equity in there at that time. So I walked away with a million and after tax eight hundred thousand and then you've got to, you know, I had paid myself probably thirty to forty thousand dollars for eighteen years.
16:01 Guy Raz? Wow, you did now. Well, yeah, you didn't walk away with a whole lot.
16:04 Speaker 01 No, I needed a car and I needed to buy a house of some sort, which was the best thing I ever did, living in Vancouver.
16:11 Guy Raz? Okay, so, okay, so here you are in your early forties and like, I mean, what were you gonna do?
16:17 Speaker 01 Well, actually, my goal was to be financially independent by forty, so I failed in that goal. And, you know, was thinking about what I wanted to do and and then I and I had this thing, I have always believed in this three times thing. So when I see something three times and I move and I move really quickly. So I'd seen a, I'd seen an article in the paper about yoga, I'd seen a poster on a, you know, telephone post with a little rip off about the yoga class. And then I overheard a conversation in a coffee shop about yoga and I went, wow. So I I went to this yoga class, you know, it went from about six to thirty people in thirty days.
16:57 Speaker 01 I was the only guy in the class and it's in a gym and, you know, of course, I'm always noticing athletic bodies and clothing and how it fits. I mean, I'm really a big data guy around, you know, I look at everybody top to bottom and I analyze it. And at the time, the fashion of gyms was to wear your very worst clothing.
17:22 Speaker 01 And mostly because probably 90% of people in gyms were men. And, you know, you knew you were going to sweat in it. You were going to get ugly in it. And you just wanted to throw it in the wash afterwards. So, nobody thought about athletic clothing being nice.
17:37 Guy Raz? So, just to get inside your head here, you're in this yoga class and you are observing what everyone's wearing. You must have been thinking already, I have a business idea. When did you start to add two and two and say, wait a minute, I can make this, this type of clothing? Like, how do you go from one yoga class to that thought? Was it instant? Did it take a week? Did it take a month?
18:00 Speaker 01 Well, I wasn't doing anything. And I think I was looking for what my life was going to be. And so, what I saw in yoga was exactly the same thing I saw in surf, skate, snowboarding. So, like I said, it went from six to 30 people in 30 days. And I extrapolated out to five years away. And I went, this is going to be substantial. Now, I didn't think it was going to be as big as surf, skate, or snowboarding. And I had really no idea at the time, it would be 100 times bigger.
18:33 Guy Raz? It's a big deal, right? This is like, you're spotting a trend, like, pretty early in 1997. And, and you probably can't fully explain why you were able to see that trend. But it was just this, like, intrinsic feeling you had. You just, some, a part of you just knew that this was going to be a thing?
18:53 Speaker 01 Yep. Again, I was extrapolating. But you also have to get, I was probably the only person in the world thinking about technical clothing outside of mountain clothing. So, you know, the, the real question in my mind is, do I use this? Or do I just say, you know, I called, I called my 18 years at West Beach, my 18-year MBA. And so, you know, do I just leave all that information behind? Or do I say, you know, I've got something here and it's, and it's worth using?
19:28 Guy Raz? After the break, how Chip Wilson eventually used that 18-year MBA to graduate to an even bigger business, a business that would change the athletic apparel industry forever. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.
19:57 Guy Raz? Hey, welcome back to How I Built This from NPR. So after attending his first yoga class in Vancouver in the late 1990s, Chip Wilson had this idea for his next clothing company. But it actually took him a while before he acted on it.
20:11 Speaker 01 Yeah, I had to read an article in the paper one day that told me that 60% of the graduates at a university were women in 1998. And I went, wow, you know, something really, really big is going to come out of this. And that is, we're going to end up with a market that's never occurred before. And that is a 22 to 35-year-old, single, professional, well-traveled, stylish, athletic woman who kind of owns her own condo. And that's so, you know, I kind of put these things together. And I think that it just reinforced that this market was there and ready for something
20:55 Speaker 01 big, especially in athletic clothing.
20:57 Guy Raz? So what did you do? Did you run back from that yoga class and go back to your house or wherever you were living and start to sketch out ideas?
21:07 Speaker 01 Yeah, there was a little bit of that. And I talked to, of course, Fiona Stang, who was my yoga instructor, who had kind of dropped out of the New York financial world to become a yoga instructor in Vancouver. And like I did in surf, skate, and snowboarding, I started to use her as a sounding board and as a creative source. Because unlike surf, skate, and snowboarding, where I was a boy and I could fit in the clothing. I knew exactly what was going on. I obviously wasn't a woman. And I could see that yoga at that time, anyway, was 99% women. And if I was going to do this and I was going to transfer my knowledge of what I'd learned in snowboarding, Lycra stretch pants into yoga, then I needed some advice.
21:51 Guy Raz? All right, so you had some money to play with from the sale of your other company. And you knew how to sew, of course, and you knew how to source material. So what was your first move in starting the business?
22:03 Speaker 01 Well, one of my big issues in life has always been about rashing of clothing. And I could never really believe that, well, Nike was a shoe company. So I know they didn't really understand clothing either because even in their running shorts, they had these open seams in between their legs. And I'd run 5K and I'd totally rash. So for me, it was like solving athletic problems. I went to Japan. I'd heard about these machines that were $40,000 apiece, which was huge at the time. And I bought four of them.
22:36 Guy Raz? A machine to do what?
22:38 Speaker 01 They were flat seams. So it was the first time you could put two pieces of fabric together and the machine would flat seam the fabrics together and then cut off any excess fabric so that there was nothing flapping around on the inside.
22:52 Guy Raz? So the idea was to basically make athletic wear that would eliminate rashes?
22:58 Speaker 01 Yes. And when I was running 10Ks or triathlons, the rashing was the thing that was always the pain point of what I'd call high-level athletics. And again, because I became a fabric scientist of sorts, I could bring in the wicking, the moisture wicking, I could bring in the anti-stink, I could make it thick enough where it would smooth over a girl's body so she could feel comfortable wearing it, you know, getting up in the morning, putting it on at work and then walking down to the yoga class and then walking home.
23:32 Guy Raz? And was the idea to just make athletic gear or yoga clothes? Or was it to make fashionable apparel?
23:41 Speaker 01 Well, I think I was just, you know, the right person to be putting, like I said, the two together. And my drive and what differentiated Lou Lemon from everybody else is I came at it from function and then put fashion into it.
23:56 Guy Raz? All right, let's do a reality check here for a sec. It's 98. You don't have a lot of money. You took a pretty big bet, like you pretty much bet everything you had.
24:07 Speaker 01 Right.
24:08 Guy Raz? Why? Why were you so confident this was going to work?
24:12 Speaker 01 I think because when I started to do my first design meetings with these 10 groups of 10 women, and we had like five or six samples, and they touched the fabric and they put it on, it was the first time that really a synthetic fabric felt like cotton. There was nothing like it. It was just nothing like it. So I think that, looking in the eyes of the consumer, I could tell that this was something that was going to be unbelievable.
24:42 Guy Raz? All right, so you bet everything on this. And then you open a store, right?
24:48 Speaker 01 Yeah, but I can only get a store on the second floor in the right area, on the right street in Vancouver, which has probably got more athletic stores than any place in the world because of the type of environment we have. But it's really hard to get people up to the top floor. So the only way I figure out how to do it is to combine my business with Fiona Stang, my yoga teachers. And I had all my clothing on rolling racks, and we'd move it all out to the side and have yoga classes there early in the morning and then at night. That would bring women into yoga, but also see what our clothing was, and then it kind of moved from there.
25:26 Guy Raz? So your first store was essentially a yoga studio with a boutique inside?
25:32 Speaker 01 Correct.
25:34 Guy Raz? Okay, so you have this company, which you decide to call Lululemon. By the way, where did that name come from?
25:44 Speaker 01 Yeah, I probably get asked this once a day. And so when I had West Beach, I had bought a skateboard brand called Homeless. And with Homeless, I started to sell that to the Europeans and the Japanese.
26:01 Speaker 01 And it started to occur to me that the five big trading companies in Japan were making North American brand name clothing. In other words, they would come up with their own brand name in order to deliver that to the Japanese customer. But Japanese, those big trading companies would never come up with a name with an L on it because it doesn't exist in the Japanese language. And so what I got was that the young kids could see through that and they went, a name with an L in it is more authentic, North American. It's not like a Japanese knockoff, so it had real value to them. So I started to go, oh, that's really a neat idea. So I, over the next couple of years, I just started doing alliterations in my mind and with Ls.
26:45 Speaker 01 But it was a pretty risky name at the time because Lemon was really connected with really bad quality Detroit cars.
26:52 Guy Raz? Yeah, right, a lemon, yeah.
26:54 Speaker 01 But I actually came up with about 20 names and 20 logos.
26:57 Guy Raz? What were some of the other names?
26:59 Speaker 01 Well, the only one I can remember right now is called athletically hip. So.
27:04 Guy Raz? Ugh. What a horrible name.
27:08 Speaker 01 Well, that's what the girls thought too, because I had 10 focus groups of 10 people and I had them vote on the names and the logos and they came up with the name Lou Lemon. But the logo actually came from athletically hip. So it was a stylized A from the athletic.
27:25 Guy Raz? So here's a question for you, because I'm curious. I'm a, as you know, a man like you. And you are selling a product primarily to women in a, you know, sport that yoga or an exercise that you weren't really an expert in. You were not like some yogi guru. You weren't, you're a big guy. You're like a football player type of guy. And yet you were trying to create a market and sell a product to, to young women. How did you do it? Did you sort of step back and, and have other women kind of sell the product for you?
28:08 Speaker 01 Yeah, I mean, I had, in between West Beach and Lululemon, I'd really decided that I only wanted to work with people I love to work with. And so I was really determined to develop people, to train them, to mentor them, and then get out of the way. And as I was running out of my money for my second time, I had taken another $200,000 loan.
28:32 Guy Raz? Wait, because the first time you ran out of money, you were running West Beach, right?
28:36 Speaker 01 Right. And I got, West Beach, my old company, moved back from Salem to Vancouver, and they asked me to run it. And it was like a gift out of heaven, because I was, we were really low on money. We were, I didn't want to advertise. I wanted word of mouth of the quality of our clothing to be the branding niche, because I really did believe in the tipping point, and it had to come from people. It couldn't come from advertising. So I was, again, another incredibly lucky thing, I hired this woman who, Shannon Gray was her name, the first person I'd ever seen that had a design portfolio without using stretch
29:16 Speaker 01 clothing. And within about two weeks, I, after hiring her, I left her in charge of Lululemon as the CEO for a year, and I went back and ran West Beach.
29:26 Guy Raz? And that's how you were able to make some cash?
29:28 Speaker 01 That's how I was able to make more cash, exactly.
29:31 Guy Raz? So you, and so we should foreshadow, there's a foreshadowing here, that Shannon eventually becomes your wife. You're now married to Shannon, she's your wife. So you, so Lululemon like really launches in 98, in this neighborhood in Vancouver. And does it take off right away? Is it just like insane, or was it a slow burn?
29:51 Speaker 01 It was very slow burn. And then it was so slow that even when I left for, to run West Beach, we were running out of money. I had a lot of inventory, because I needed to make at least 500 to 600 of every of our six styles in order to get the price down. So I fell into the trap of wholesaling. And so I... I made a big deal to wholesale to a sporting goods company in Vancouver and I shipped to them and they immediately went bankrupt. So that really took the company to the very edge. We had no money to pay payroll again. I was only a couple of weeks away from the end of it.
30:31 Speaker 01 We had just decided to move across the street from our second floor into a store on the main floor on Fourth Avenue at $10 a square foot because it was an old, beat up electronics store. And then another thing from heaven came and it was they fired me at West Beach. Well, and I used that loosely, but they combined with Sim Skateboards and the CEO of Sim Skateboards became the CEO. So they, they let me go with a severance fee of $50,000. And if it wasn't for that $50,000, we never would have been able to finish our store.
31:06 Guy Raz? Wow.
31:06 Speaker 01 Just before Christmas time.
31:08 Guy Raz? This is in 2000?
31:10 Speaker 01 Yeah, this is in 2000. And even though we had this great yoga pant and tops, Shannon had designed this polar fleece bra, which got into the newspaper and brought everybody into the store. And of course, while they were there, they, they mostly bought the yoga pants because they could, you know, we were in a position then to educate people on the technical features of our pant. And once we had somebody in them, they, they were a customer for life.
31:36 Guy Raz? And if you were taking a yoga class in Vancouver at that time, presumably you would have seen the label because the label was like right on the outside of the waist band, right?
31:47 Speaker 01 Yeah, I put it there because I was very clear that I, that I, I didn't want big logoing. And I thought that somebody should look in the mirror and not see any logos. And I definitely didn't like logos on the left breast because I looked at it as being kind of corporate logoing. You know, it's always there on the left chest. So I, I decided I wanted the logo small. I wanted it to be discreet and in a place that nobody could see.
32:15 Guy Raz? So you, I guess around 2002, you opened your first store outside of Vancouver. This is in Toronto, or Toronto, as they say in Toronto.
32:23 Speaker 01 Yeah, so we had, in my second floor, you know, in Vancouver was a really a pop-up store and then, you know, where people had to really look and find it. We did the same thing in Toronto almost a year before we opened the store there. And it was, we got a way of developing the marketplace, which became a Lululemon business model. So we would go into every city in the future, set up a store in a back alley or in a side street, and develop our market, invite yoga instructors in before we spent, you know, 600 to a million dollars on a store. And, you know, again, created word of mouth, which was, you know, my favorite type of marketing is break-even marketing, because I never had any money for marketing, so that was a given.
33:05 Guy Raz? Well, you did, I mean, you guys did some, some stunts, right? Like, when you opened your shop in Vancouver, you said the first 30 people who show up naked get a free outfit.
33:14 Speaker 01 Well, it was worse than that. I actually put my first ad in as anyone that shows up gets a free outfit. And then I realized it was in Vancouver and I was going to get every person in the whole city would show up naked, so I couldn't really do that. So I had to put another ad in a week later saying the first 30.
33:29 Guy Raz? And did that happen?
33:30 Speaker 01 Oh, yeah, and it created global media. Everybody showed up. There was TV trucks all up and down the street and...
33:38 Guy Raz? People were just naked in front of the store?
33:41 Speaker 01 Well, they showed up. It was an October morning. It was, you probably never heard this about Vancouver, it was overcast and drizzly. You know, they all showed up in their trench coats and, and then, you know, we went out, when we went to open the store, I went out with my wife and put my arm around her and then we, we said, "Thanks for coming," and everyone dropped their trench coats and went running into the store.
34:04 Guy Raz? This is, and like, nobody, nobody was arrested? Because like, this is not normally allowed in most cities.
34:10 Speaker 01 Well, especially in 2002, but I think it's, it's part of the culture here and there's lots of nude beaches, so I don't think it was, I don't think it was out of the realm for, for Vancouverites. I'm very proud of our city and our police for, for, you know, stepping back and, you know, just observing.
34:29 Guy Raz? So around 2002, Glulemon really starts to grow. Like 2003, you opened your first store in the US in Santa Monica, which obviously you chose that because that was sort of, right, the center of the Goga culture in the US, I guess.
34:43 Speaker 01 Yeah, I think probably the big thing that happened after we opened up Toronto and the second store in Vancouver is, you know, I asked my lovely wife to marry me. She said yes, and so it was April 20th, Saturday, when we were to get married, and I'm working in the store. And really, I became almost a traffic cop because the number of people coming in the store was something that I would never seen before. I think it went from a $10,000 Saturday to a $30,000 Saturday.
35:13 Guy Raz? So, obviously, like, you've got a store in Toronto, you've got one in Santa Monica, and then I guess your next stop was Melbourne, Australia. You're growing fast.
35:23 Speaker 01 Mm-hmm.
35:24 Guy Raz? But you still, I'm assuming you didn't have enough cash flow to really scale the business at that point?
35:32 Speaker 01 Well, only after that, we started making a lot of money. And I don't just don't mean a little bit of money, I mean a lot of money. I mean, you have to understand that, again, that nobody in the world was owning manufacturing right to the retail store. I mean, I was taking triple the profit of most people.
35:55 Guy Raz? But I mean, I guess it was 2005 that you went out and sought outside investors who then, because at that point, you'd owned 100% of the company. So you sold, I guess, about half of the company and then stepped down as a CEO. Why did you do that? Was that the only way you could, like, you could expand and scale?
36:15 Speaker 01 No, no. I mean, because I had built retail stores around the world, I'd done global manufacturing. I mean, honest to God, I could have done it all. But even though it was making so much money, I'd never taken any money out. My wife and I, neither of us came from money, and we were always scared. You know, we were scared that an earthquake would hit, or, you know, like, this seems really good, but is it true? Is it happening? We'd have to pinch ourselves every morning.
36:42 Guy Raz? Yeah.
36:43 Speaker 01 And then, and I wanted advisors. I wanted people around me that could make sure that I wasn't going to run into roadblocks.
36:50 Guy Raz? Okay, so you've sold about half the company to private investors. A new CEO comes in. You stay on as chairman. And then I guess you become like Chief Innovation Officer at this point, right?
37:04 Speaker 01 Right. And it allowed me to sit in the middle of the design department, which is my love is innovation and quality and athletics. So I mean, that's where I really flourished. And I hadn't developed as a chairman. I didn't understand public boards. I didn't understand how to act or be. I mean, I think people think, oh, you know, I ended up with a lot of money. You know, Chip Wilson's a businessman, but nothing really could have been further from the truth. Just a passionate product guy.
37:36 Guy Raz? So it's interesting because even though you are still the biggest shareholder, you all of a sudden had outside investors who came in and had their ideas for how this company should be run. So I have to imagine, starting in 2005, even though you're no longer CEO, there was some tension that begins.
37:57 Speaker 01 Well, yes. I think my mistake happened when I was at West Beach and I brought in private equity. We had a board of directors, but they had no vested interest. They were there to help us out and they were wonderful. So I had this context of my mind that bringing in private equity and having a group of like really great advisors with me, where we're all on the same page and moving in the same direction, was going to be another wonderful experience.
38:26 Guy Raz? Yeah.
38:27 Speaker 01 But it wasn't. You know, it's my own fault. I mean, the private equity, they're there to make money for their investors. And I had a very long-term vision for Lew Lemon and they had quite a short-term vision for Lew Lemon. So we went, we ended up going public way too quickly.
38:46 Guy Raz? Right, but when you guys went public, like in 2007, this was a hot stock.
38:50 Speaker 01 Right, yeah.
38:52 Guy Raz? And you actually sold a chunk of stock pretty early on, right?
38:56 Speaker 01 Yeah, you know, again, you know, I had advisors that were just giving me advice that was good for them and not necessarily for me. You know, I really only wanted to sell 30% of the stock to the private equity guys, but I ended up selling 48, so I lost control of the board seats and I didn't know how to negotiate for them. So that is important because as we go public then, you know, the advice I got was, hey, Chip, you should sell more of your shares into the marketplace because the more shares that are out there, the more, the more the institutional investors will be able to get a good chunk of it and be able to hold it for a long time. But the reality of it is, is all these were techniques to have kind of an owner, founder dissipate and kind of move into the background and not
39:41 Speaker 01 have the power, so to speak, to control a board. And that's really what I lost and it's, it's my own fault and, but that's what I ended up with.
39:52 Guy Raz? But this company just like went, took off, right? I mean, through the early 2000s and to the 2000s and then it just, it was on fire, right? I mean, Lululemon was, was everywhere and was, is today, but I mean, that despite the challenges that you faced, it did explode in growth. You gotta admit that, right?
40:16 Speaker 01 Oh, it was unbelievable. I mean, we, you know, okay, so things happened to me, big deal. I mean, definitely, I probably have a long-term vision for my family and I had a long-term vision for Lululemon and, you know, and those things never kind of work out perfectly, but all in all, I mean, you'd have to admit that what occurred and what has happened has made me incredibly happy and incredibly wealthy.
40:40 Guy Raz? So in 2011, Lululemon, you land on the list of Canada's billionaires, which I mean, means you achieved your goal, financial security and more.
40:53 Guy Raz? Was that like a marker for you? Was that important for you? Or did you, did you think, did you not really care?
41:00 Speaker 01 I could, I really didn't care because I, again, my drives were family and my, my absolute passion for athletic clothing. And I think my wife and I, again, we're just always so scared of losing it all. You know, like we could still go to, you know, the store and only buy one tube of toothpaste. You know, we couldn't like, we couldn't see ourselves buying three, you know, to save time.
41:27 Guy Raz? Yeah.
41:27 Speaker 01 I could do it in my business, but I couldn't do it at home.
41:31 Guy Raz? All right, so let's address the one elephant that everyone I say, you know, Chip Wilson's gonna be on the show, everyone says, that guy, didn't he once say, and this is, this is the, let's just give the outlines of the story. 2013, Lululemon has to recall certain pants because there were concerns that they were too sheer, that they were see-through. And in an interview you gave, offhand, you said, you know, look, some of these pants just don't look good on all women's bodies. It's something to that effect. And this caused an enormous uproar. Like essentially, the interpretation of it was that you were saying overweight women shouldn't wear Lululemon pants. What happened? What's your take on, on what happened?
42:13 Speaker 01 Well, I think you have to go back and to the end of 212. I mean, I was quite frustrated with, with the board. I think that, you know, the board and I didn't see eye to eye on how the company was being run, so. And then there was everything, kind of, I said would happen, did happen. There was a huge quality issue. So I went on this program on, I think it was NBC.
42:39 Guy Raz? I think it was Bloomberg.
42:40 Speaker 01 Bloomberg, yes.
42:40 Guy Raz? Bloomberg, yeah.
42:41 Speaker 01 Thank you. And I did know from working in the stores that there was definitely something happening to our clothing. And I didn't know what. Anyway, the question was really about the pilling. And I said, well, what I always said-
42:56 Guy Raz? Like pilling in the, when friction happens, the fabric pills?
43:00 Speaker 01 Right.
43:00 Guy Raz? Right, okay.
43:01 Speaker 01 What was, you know, you've done that interview with Blakely on Spanx. So suddenly, women were coming into the store and not wanting Lululemon for athletics. They were coming in looking for it to shape their bodies.
43:21 Speaker 01 But the sewing technique and the fabric wasn't meant for it. So what they were doing is buying two to four sizes smaller than what their size was in order to get out of the garment what it wasn't made for. So when you stretch anything to a limit and then it, you sit on a wooden bench or something like that, then pilling occurs to a greater extent. So anyway, that, but I didn't know that till afterwards. I hadn't really put two to two together. I didn't realize what a big issue it was.
44:00 Speaker 01 And the words that I said were not all women, I think something all, all women belong in every pair of Lululemon pants.
44:09 Guy Raz? You said, quite, you said, quite frankly, some women's bodies just don't, just actually don't work for.
44:14 Speaker 01 Yeah, yeah. Which is a lot different than what you said.
44:17 Guy Raz? Which is that a lot of people thought you said that overweight women shouldn't wear Lululemon pants.
44:23 Speaker 01 Yeah, I mean, what you said is what I think people hear, which is a lot different than what I said, just so we're there.
44:29 Guy Raz? Did you, um, did you get depressed?
44:33 Speaker 01 Yeah, I'd have to say I was because, you know, then they, the board took me off as chairman because they felt like I wasn't the right front man for the company anymore. And I was a liability to Lululemon. I mean, this is, you know, after 30 years of doing, you know, thousands of public interviews and, you know, I say one thing and, and suddenly I'm, I'm a liability.
44:58 Guy Raz? So what, I mean, so how did you kind of, I don't know, did you, did you think about that? I mean, I take your point that you feel like you were misunderstood and that that wasn't your intention, but whatever happened, that's what came out and that was how it was interpreted. And did you have some time to reflect on it and to think, that was just, I'm just, that was just dumb?
45:19 Speaker 01 Well, it was a poor choice of words.
45:23 Speaker 01 It was absolutely devastating to me. It was devastating to my family. I mean, people would come up to my wife and go, how can you be with a man like that that would say that type of thing? But more so it was the antithesis of everything I had built, you know, with woman and for woman for Lululemon. It was the very opposite. But, um,
45:47 Speaker 01 Yes, it was, it was, if I could take it back, I certainly would.
45:55 Guy Raz? Is it, is it strange, I've asked this question of other founders, Chip, is it strange to build a company, put your blood, sweat and tears in something that people don't pay attention to for a long time, and then all of a sudden, everyone jumps on it when it starts to take off, you know, right, success has a million fathers and failure is an orphan, right? So, all of a sudden, and your company, this thing you built, your idea, the name, the product, and then you're no longer in control. Is that, is that weird?
46:23 Speaker 01 Yeah, you know, my vision for Lululemon and what it could have been, it is not everything that I think it can be, and, you know, life is all about how you handle setbacks, and I think Lululemon still, I'm the, I'm the most informed cheerleader, and I think it has, you know, a great future still.
46:43 Guy Raz? Do you have another, do you have another business in you?
46:46 Speaker 01 Well, what I learned is that when I left Lululemon, you know, even though it was maybe $2 billion in sales at the time, my, my brain was on Lululemon being $7, $8 billion. And I'd worked so hard building a company like by brick by brick, that it was, I don't think I can go back and, and be a starter of a company at the age 62 anymore. And I've probably got too good a life to want to do that again. And my, my absolute favorite thing I do is my, I've got 12-year-olds, twin boys, and I'm coaching flag football. And nothing could be more fun.
47:27 Guy Raz? Yeah.
47:28 Speaker 01 Nothing could be more fun.
47:30 Guy Raz? Chip, you've heard the show before.
47:34 Guy Raz? How much of your success is because of your intelligence and work, and how much of it is because you were really lucky?
47:42 Speaker 01 I think I was pure passion for athletic, technical product, and I would have worked 18 hours a day for the rest of my life for no money. Now, I think what happened is I got lucky because my drive and passion met a world that wanted what I wanted, and that was the lucky part.
48:11 Guy Raz? That's Chip Wilson, founder of Lululemon. Last year, the company made over $3.5 billion. Chip hasn't been with Lululemon since 2015, but he's been staying pretty busy as the executive director of his family's holding company called Hold It All Incorporated.
48:40 Guy Raz? Hey, thanks for sticking around because it's time now for How You Built That. And today, we're checking back on a story that ran about a year ago, but started in 2016, right outside of Boston, with Kate Westervelt.
48:51 Speaker 02 Waddling around Target.
48:53 Guy Raz? Waddling around Target because she'd just been released from the hospital where she'd given birth to a 9 and 1/2 pound baby boy. So Kate was sore, and she had stitches, and she wasn't really up for a Target run. Now, the thing you should know about Kate is that she's kind of a planner. So she'd already fully stocked her nursery with everything she thought the baby would need: diapers, and wipes, and clothing. But she didn't really give much thought to the things that she might need after her baby was born.
49:25 Speaker 02 The nurses walked in with things like mesh underwear and these ginormous pads.
49:30 Guy Raz? Plus ice packs and a squeeze bottle to help keep her stitches clean. All stuff she needed for her recovery. But stuff Kate didn't have at home. So on the way home from the hospital, while her husband and new baby waited in the car, she went shopping, and she felt kind of clueless.
49:50 Speaker 02 I got a bunch of different breastfeeding aids, you know, organic pads, synthetic pads, whatever I could get my hands on, because I was just desperate and in dire need of any help and all help, and I knew I wouldn't be able to get to the store again in the next couple of days.
50:05 Guy Raz? Kate left the store totally overwhelmed, but she also left with an idea.
50:11 Speaker 02 We live in a convenience economy. We get razors delivered, groceries delivered, everything is delivered. How are we not providing this convenience? For new moms who need it the most.
50:21 Guy Raz? And as soon as she got back in the car, Kate thought,
50:25 Speaker 02 I'm gonna go build this thing.
50:26 Guy Raz? She meant a box filled with products a new mom would need, a box delivered right to her door. She kept thinking about this idea during her leave. So after she went back to her nine to five job, Kate decided to start working on it at night.
50:42 Speaker 02 I would order various products, then I would test them all.
50:46 Guy Raz? Maternity pads, creams, protein bars, herbal supplements. Kate tried more than 400 products over the course of a year. And eventually, she settled on a set of 10 items to go into her first boxes. And the one product her test moms really liked? An ice pack.
51:03 Speaker 02 At the hospital, they give you just bags of ice and they sort of stick them in your underwear and say, good luck.
51:09 Guy Raz? So Kate found the perfect ice pack, sized and shaped, so new moms could walk around. But there were some women who told her, you know, this ice pack is great, but...
51:19 Speaker 02 I ended up with a C-section and what I really needed was a heating pad to place on my belly or some sort of oil for my scar and my incision line.
51:29 Guy Raz? So Kate decided, hey, maybe I should curate a C-section recovery box. She went on to put up a website and build a social media following on Facebook and Instagram.
51:39 Speaker 02 60% of moms mom source across the internet. And so moms started to talk about this box.
51:47 Guy Raz? And in January of 2018, nearly two years after her frustrating Target run, Kate sold her first box. It was designed to look just like a present.
51:57 Speaker 02 It's pink and glossy. And we sort of thought, you know, let's put a handle on this box because it makes it feel like a special arrival, like a special trunk filled with self-care items.
52:08 Guy Raz? In her first year, Kate actually sold almost 500 boxes, all assembled and packed in a room above her garage. Since we last spoke to her, Kate hit six figures in revenue and is out of debt. Not only that, but she's now on contract with some pretty big companies to send her box as a gift to their employees. Kind of like a congratulations for becoming a new parent, but much more useful than flowers or a card.
52:34 Guy Raz? Kate Westervelt's business is called Mom Box. And if you want to find out more about it or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at [email protected] . And if you want to send a tweet, it's at howibuiltthis or at Guy Raz. Our show was produced this week by Janey West, with music composed by Ramtin Arablouei. Thanks also to Sequoia Carrillo, Candace Lim, Julia Carney, Neve Grant, and Jeff Rogers. Our intern is Raini Toll. I'm Guy Raz, and you've been listening to How I Built This.
53:27 Guy Raz? This is NPR.
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