For Chip Wilson, adversity helped seed success.
Wilson founded Lululemon Athletica (LULU) in 1998 and built it into a leading designer and retailer of cool yoga and athletic apparel for women and men.
Prior to that, Wilson helped found his first company, Westbeach, in 1979 to design and sell clothing to the surf, skate and snowboard market.
When he and his partners brought in private equity money in the early 1990s, Wilson found himself pushed out of his CEO spot.
But still on his feet.
"I was hurt and I had a lot of ego around it," Wilson, 57, told IBD. "I got some lawyers for a bit, but at the end of the day the new CEO organized the company as he should have. He knew a lot more than I did then about general business and organization. If it wasn't for that, we wouldn't have been able to sell the company for the money we did, which let me start Lululemon."
Lesson Learned
When Lululemon reached revenue of $100 million in the mid-2000s, Wilson saw that to run a company of that size he needed to bring in people who had more expertise in certain areas than he did. "It didn't have to be about me," he said.
Wilson's vision and decisions have paid off. For fiscal 2011, Lululemon had sales of $1 billion.
With profit rolling in double and triple digits for 11 straight quarters, Lulu shares followed suit with a 3,637% sprint from March 2009 to this past May.
"One of my philosophies is I could be right or I could be (successful)," Wilson said. "I could have my ego around being the CEO or the head guy, but I knew that wouldn't serve me. So really a big part of success is sometimes just getting out of the way once the base has been set."
Seven years after leaving the CEO post, Wilson is the company's chairman of the board and no longer involved in daily operations.
When he started Lululemon, he began by throwing out everything that didn't work at Westbeach while keeping everything that did.
He realized that to maximize his vision for Lululemon, it needed to be a vertical retailer — one that designs, manufactures or manages that process through partners, then sells its finished products out of their retail locations.
The wholesale business didn't work for what Wilson wanted: complete control of his brand.
Clear Aim
"Everything from pricing to quality of product to the salespeople has to revolve around who the target market is and how they relate to the brand," Wilson said. "My job is to best serve my customers' lives."
Wilson and the company are devoted to promoting a healthy lifestyle. The firm's manifesto, found at Lululemon.com, offers 31 tips from Wilson on improving health and life. Among them:
"If (Lululemon) can produce products to keep people active and stress-free, we believe the world will become a much better place."
Its 174 stores in fiscal 2011 averaged $2,004 sales per square foot, a company record. Ernst & Young, the accounting firm, was so impressed with Lululemon in 2004, it named Wilson its Canadian Entrepreneur of the Year.
Can-Do
"Once Chip has his vision of the future he is relentless," said Deanne Schweitzer, Lululemon's vice president of design, who has worked with Wilson since 2000. "He has a sense of urgency and a 'do it now' attitude.
"Chip created functional, technical clothes that performed in yoga or anything sweaty and looked good. One example of that is by combining technology with proper fabrics, Lululemon has clothing that minimizes odors produced by sweat. You went to coffee or shopping after class and did not need to change. He created this market."
Wilson said: "I don't think in quantitative terms over a short period of time. I think of the big picture over a long period of time. Every decision that's made is for a 100-year period. So there's no short-term."
Brett Conrad, Wilson's brother with a different surname and the former president of Lululemon Athletica USA division, said Wilson believes people "typically really underestimate what you can achieve in 10 years."
Wilson built a top company and became a billionaire in less time.
In keeping with No. 12 on the Lululemon Manifesto — "friends are more important than money" — Wilson strives toward philanthropy. Among his causes is the charity he and his wife, Shannon, started called Imagine1Day. Its goal is to bring primary education to 80% of children in Ethiopia by 2020.
"I love people and I'm out for everyone to be successful," he said.
Shannon Wilson was once a competitive swimmer and used that know-how as a lead designer for Lululemon. Chip Wilson says she's been instrumental in the company's growth and his.
"We have one of those marriages that's a great partnership," he said. "There's nothing that happens that I don't run by Shannon."
Now a resident of Vancouver, Dennis Wilson was born in Southern California before landing his nickname. He developed into a top swimmer and solid football player.
Then and now, "Chip says to always have goals. Get up in the morning and know what your goals are," said Conrad, now general partner for Longboard Capital Advisors, a money management firm in Santa Monica, Calif.
Wilson in Lululemon's manifesto: "Write down your short- and long-term goals four times a year. Two personal, two business and two health goals for the next one, five and 10 years. Goal-setting triggers your subconscious computer."
Wilson's parents were college athletes. His father became a physical education teacher, and his mother inspired her son through her interest in making clothes.
He stitched together those influences in starting his first company and Lululemon. "My mother liked to sew, so I got to see how patterns and fabrics and clothing were put together," he said. "I was an athlete, but I found clothing not working for athletics. Lots of rashes, lots of bad seams, lots of poorly made clothing with no stretch to it."
In time, Wilson designed technical athletic fabrics. Then he discovered yoga in Vancouver and became an enthusiastic practitioner.
Lululemon was born. Why the name? As he sold his Homeless apparel brand, targeted at skateboarders, to Japanese businessmen in the mid-1990s, he found they gave top worth to the title's L and its Western tilt. So when he sought a tag for his new athletic firm, he figured Lululemon with its three L's would give him positive benefits.
Hear Hear
"One of Chip's great attributes is he's a great listener," said Susanne Conrad, Brett's wife and president of Igolu, which provides leadership training to Lululemon. "The entire company is built on listening to what people want and need to make their life better."
Christine Day, who succeeded Bob Meers as Lululemon's CEO in 2008, lauds the hands-on Wilson: "Work in your stores. Be there on the front lines and watch how your guest and employees interact. No amount of customer research is a substitute for being there."
