by Chip Wilson
If we were going to get any money out of this business, we needed to sell. We’d already had talks with Morrow, but those discussions had failed when Morrow decided to make their own apparel line.
Fortunately for us, the Morrow clothing brand was
not successful.
Negotiating with Morrow
As Westbeach was a proven brand in the global snowboard apparel market, Morrow came back to the table. Unbeknownst to Morrow, we were desperate. It was a Monday, and by that Friday we wouldn’t be able to make payroll. We knew Morrow was operating without a chief financial officer. At this point, I’d had Westbeach for almost eighteen years, earning an average of $40,000 per year.
On Wednesday, Morrow bought Westbeach for $15 million, based purely on brand value. The value of the brand would be a lesson in what cannot be measured before someone else is willing to pay.
The sale of Westbeach to Morrow had come with specific strings attached—primarily the requirement for me to work for Morrow and to relocate to their headquarters in Salem, Oregon.
Because I love to learn, I was excited to observe what happened to a company’s culture when it merged with another.
In my tenure at Morrow, I’d had one good idea. It was a yoga graphic t-shirt that the Japanese snowboarders loved. From the inspiration of the t-shirt, the next Japanese snowboard contest started with a yoga warm-up—on snowboards.
Unfortunately, my twelve-month obligation to Morrow in 1997 lasted only eight months. Morrow had spent their last $15 million buying Westbeach, and my job in future business development ended when I suggested the company pivot from snowboard hardware and apparel into mountain biking.
My 18-Year MBA
I was officially unemployed. After Mercantile and the banks took their share, and after our original debts were covered, each partner took home about $1 million (or $800,000 after taxes). For as long as I could remember, I’d been grinding it out, working long hours, constantly travelling. Having this new financial cushion was an indescribable relief. For the first time in a very long time, I could breathe.
Westbeach had zero profit. Our two vertical retail stores made a million dollars a year while our international wholesale business lost a million dollars in the same span of time. Inside of this was a lesson worth billions: the idea of a purely vertical retail model, a principle that would be key to my next business venture. Insights like this are why I’ve come to think of my Westbeach years as my “eighteen-year MBA.” It was an education that would prove far more valuable than the $800,000 I walked away with.
Coming out of university, I knew nothing about the production of fabric, how to open stores or form partnership agreements. I knew nothing about selling or collecting money. I was inexperienced in the business of business. I knew nothing of financing, deals, and transactions. I was also a terrible negotiator. In fact, in many ways, I wanted to be a Phys-ed teacher, like my dad.
More than anything else, I wanted to help people achieve their full potential.
Chapter 1:
From California to Calgary
The American Dream
If I look back at the earliest parts of my life, there are certain themes from day one that shaped me and steered me toward the companies I developed. This is true for everyone, I’m sure, but for me, those themes were my grandparents’ approach to business, my parents’ tough financial circumstances, my dual Canadian-American citizenship (I was born in L.A. and raised in Alberta), and, perhaps, most of all, my involvement in athletics.
My dad, Dennis Wilson, was Calgary’s Athlete of the Year in 1952 when he was eighteen. He played both hockey and football—the two big sports in Calgary in those days. Dad joined the farm team for the Chicago Blackhawks which soon folded due to team finances. In 1954, he went to Brigham Young University in Utah to play football.
My mom, Mary Ruth Noel, hailed from San Diego. She was a gymnast growing up and became the first female lifeguard at the Plunge Pool in Mission Beach, San Diego. When she was old enough to go to college, as the family story goes, her father, James Noel was worried about Communist infiltration in California universities (this was the 1950s!), so he was eager for his daughter to go to university somewhere quieter. Like Utah.
So, there they were—my parents-to-be—probably the only two non-Mormons at BYU. She was nineteen, and he was twenty-one. Since I was born in April 1955, I can only imagine mom and dad had known each other for all of ten or eleven minutes before certain things happened.
My parents had a shotgun wedding in San Diego, mom’s hometown. From there they moved to Orange County, near a new development called Disneyland.
It didn’t take long for our little family to get bigger. My sister Noel was born in 1957, and my brother Brett was born in 1960.
I’ll offer a few memories to set the scene. Nuclear emergency drills were performed monthly at our elementary school. Despite the fears of a third world war, kids could roam freely. Neighbourhoods had a naturally-occurring block watch from house to house and family to family.
All adults smoked and drank (my parents, in fact, both smoked and drank all through my mother’s pregnancies). This was an era best depicted today by the show Mad Men. A show which so accurately reflects the culture of 1960s New York advertisers who were themselves creating the image of the ideal life at the time.
Money was often short in our house. My dad wasn’t playing football anymore—he was working on a teaching degree. To make ends meet he also drove a UPS delivery truck from L.A. to San Diego and back most nights. This was in addition to attending classes during the day. Only a person in their mid-twenties can keep a pace like that.
My mom, meanwhile, was the stay-at-home parent. She was made to be at a sewing machine, and from early on in my life I got to know about patterns, fabric, and clothing design through watching and helping her work.
As a young boy, I wasn’t interested in sewing as a skill, because learning it properly was too time-consuming. But if I wanted to spend time with my mom, I had to spend it in the sewing room while she was working. The room was dominated by a large working table and shelves on which she stored fabric and patterns. She had all these paper Butterick patterns with pictures on the front. She would lay the pattern flat, cut it out, pin it onto the fabric, and from there use it to do the sewing and stitching.
I vividly remember watching my mom as she carefully adjusted the pattern to get full use of the fabric with no waste and without destroying the integrity of the garment.
With Westbeach and later with lululemon, I would see twenty to fifty layers of fabric being cut in a stack with an industrial laser cutter, meaning that every square inch cost thousands of dollars. By implementing my mom’s tricks, and by understanding the real basics of sewing and patterning, the costs—expensive as they were—were kept to a minimum.
When my dad finished his teaching degree a few years later, he and my mom moved to Calgary. Calgary was dad’s hometown, so he was happy to return to the place he knew best. My mom wanted to put distance between herself and her parents. My maternal grandmother, also named Mary, was a very dominant person, and my mom had a rebellious streak. A move to Canada was her way out.
I was five when we relocated to Calgary and became landed immigrants.
We weren’t wealthy, but we still had a good time growing up in a suburban neighbourhood. As my sister, Noel remembers, “Chip would organize games like Prison Tag or Kick the Can every night during the summer. Kids just gravitated to our house because of him. He was our leader.”
Mom continued to stay at home, and Dad got a job teaching physical education and drove a taxi at night to make the mortgage payments.
James and Mary
Even after the move to Calgary, I returned most summers to California to visit my mother’s parents. I didn’t know it at the time, but my grandparents would both play key roles in my life as an entrepreneur.
My grandparents were both from the Midwest but kept in touch with each other when my grandpa mov
ed to California. Once there, he asked my grandma to come out to the coast and marry him. She accepted. They moved to San Diego, where they opened a furniture business. Their business specialized in selling furniture to and then repurchasing it from US Marines in the area around Ocean Beach.
Part of the success of their business was due to my grandfather’s personality. He’d always had a personal style that appealed to his community, and it wasn’t long after he and my grandmother had moved to San Diego that he was serving as head of the Kiwanis Club and became deputy mayor. People loved to visit him and get caught up on all the local gossip.
My grandmother, meanwhile, did the selling. Grandma was a hard-nosed businesswoman through and through. She had a very strong personality; some people might even say she was overbearing, but I never thought so. She just knew what she wanted in life and was passionate about getting it. And even though she’d trained as a nurse, she’d also studied sales closely for a long time.
In those days, Dale Carnegie’s famous book How to Win Friends and Influence People was a popular reference for aspiring business people. When I was older, my mom told me she thought that she would never have been born if the birth control pill had existed when my grandmother was a young woman.
This wasn’t a comment on their relationship, it was just to say my grandmother was a fiercely independent, smart, determined woman. She likely would have put business first in her life had she grown up in different times.
Once their furniture business was well-established, my grandparents diversified their interests. They bought apartments throughout San Diego. My grandparents had also invested in mutual funds.
As a kid of nine or ten, my grandparents invested for me in the same funds in which they had their money. I remember watching and being excited as those stocks kept climbing.
And then, in August of 1966, there was a massive computer fraud of a multi-level marketing company, one of the very first of its kind. My grandparents were among the victims of the fraud, lost their house, and had to move into a trailer park east of San Diego, where the property taxes were much lower.
It was tough, but a great part about being an American is that big reward comes with big risk. In interviews I’ve heard or read with Americans, even poor Americans accept income disparity for the ability to risk for a big reward. To rebuild some of what they’d lost, my grandmother took her born business skills into multi-level marketing. She was the perfect person for it.
My grandfather, meanwhile, spent a lot more time with me and my sister and brother whenever we were down there visiting. He’d help us look for skis and took us to the beach. He also took us to the hospital where he was getting chemotherapy treatments. He had been diagnosed with prostate cancer right around the time they’d lost their mutual funds.
In retrospect, I understand now he was spending all the time he could with us because grandpa knew he had little time left. He died in 1967 at the age of sixty-five. He’d lived only 24,000 days.
Outside of the business they ran and their investments in mutual funds, my grandparents also provided a significant source of stability through my childhood. This was especially true as my parents’ relationship became more and more strained.
While my grandfather was still living, I saw that he and my grandmother were two people who were in love and who worked together every day. There wasn’t one thing they did separately, through thick and thin alike. That was the life I knew I wanted to have. Having a woman in my life who embodied the same partnership qualities as my grandmother would someday be my perfect match.
Hard Times in Calgary
In Calgary throughout the 1960s, times were tough for my parents. Money was still short much of the time, and I don’t think my mother had known what she was getting herself into when she agreed to move to Calgary.
For one thing, she’d had no idea how bitterly cold the winters would be. She’d grown up with the fresh fruits and vegetables for which California has always been famous, but Alberta in the fifties and sixties was solely a meat-and-potatoes kind of place. The complete lack of fresh produce appalled her and made her question what she’d done.
My parents were in their early twenties when they’d met—the unplanned pregnancy had really almost forced them to come together. They tried to make it work, but they were never very good at communicating with each other.
Added to that shaky foundation were constant financial pressures and three young children. My dad once told me the most important thing on his mind on the day of his wedding was how to throw a football accurately. That put their relationship into perspective for me.
Despite the struggles of survival mode, we received a fantastic amount of love. My parents’ theory of raising us was that by age six we should be able to take the bus downtown and return on our own.
We had a lot of freedom in our house since any spare time my parents had was mostly taken up with trying to earn a few extra dollars—the rule was to do what you wanted and make it to bed on your own time. But, because we were all competitive swimmers, we automatically knew we needed to get to bed early, so we could make six o’clock practise the next morning. This was one aspect of the self-sufficiency I learned early on.
Competitive Swimming
Noel, Brett, and I had all been swimming for as long as I could remember. My siblings and I had access to a swimming pool every summer as my mother had worked as a lifeguard in San Diego, and my dad had a summer director job at a Kiwanis camp for underprivileged kids. That was our introduction to swimming.
“Our parents would get up every morning in the wee hours and take us three kids to swim practice. Yes, even in the freezing cold winters,” says Noel. “Chip was very motivated and embraced the swimming. He was at the top. I even think he held Canadian records in most events, if not all. I, on the other hand, did not really enjoy swimming and would’ve easily quit. But Chip was dedicated and pushed all of us to the same standard. That being said, I achieved my own Canadian record and received a swimming scholarship to Lamar University in Texas.”
It worked for my parents, too—given their relentless schedules, it was good for them to find something with which to occupy us. Our family life soon revolved around seven or eight practises a week and meets on the weekends. Everything was swimming.
Swimming was also a great activity for us because it was affordable. All you needed was a bathing suit and a pair of goggles, and you were good to go. Despite that, I managed to find something I so desperately wanted but couldn’t afford—the perfect swimsuit. The only swimsuits available in Calgary at the time were made by Speedo, and they were all solid colours. In fact, when Speedo introduced simple stripes on their suits, it took the swimming scene by storm.
One day when I was eleven or twelve, I saw a suit at a swim meet that was totally different. The material was a colourful flower pattern. I wanted it immediately.
I asked the kid wearing it where he’d gotten the suit. “Texas,” he replied.
I’d become used to not being able to afford the clothes I wanted, but I was determined to get that suit. My mom considered it, and I suggested to her that if I liked the style of the suit, then maybe other kids would like the style, too. If we ordered a bunch and sold them, I told her, then we could make a small profit and use the money to cover the cost of my suit.
We brought in the bathing suits, and they sold like crazy. We’d purchased the suits from the supplier for maybe thirteen dollars, then sold them for double that. They were something no one had ever seen before—something new. Since they weren’t available in Canada, their exclusivity gave them an additional appeal. As I had negotiated with my mother, I got my own suit for free. It was a small but powerful success.
That experience taught me about importing, shipping costs, and sales. Because I had been on a couple of age-group teams at the national level and was a good swimmer, I also noticed that others started to follow what I wore. I couldn’t afford an on-deck tracksuit, so I wore torn, beat-up, loose jeans and graph
ic t-shirts. That ensemble was emulated and soon became standard swim meet gear. Nike later realized the power of tastemaker athletes and changed the sports business model with sponsorships.
The 100-Metre Backstroke
I believe every person has ten moments or decisions in their life that stay with them and affect who they become. For me, one of these moments happened at a swim meet when I was ten. Although I had a naturally athletic build, I was a very mediocre swimmer overall. I hadn’t done anything spectacular in my age-group.
Anyway, at this swim meet, just as I was getting ready for the 100-metre backstroke, my dad came over to me and said, “Chip, I’ve got this theory…”
It wasn’t unusual to hear this—my dad had many theories about vitamins, nutrition, and athletics, long before the wellness movement became popular. My dad also believed pain was all in the mind. As such, the mind could learn to control that pain and harness it to train and compete.
In athletics in 1965, the prevailing theory of how to approach a race was to save your energy until the end and make sure you looked good at the finish line. “Let’s try something different,” my dad said. “Why don’t you just go full out from the start, instead of saving it up and looking good at the finish? If you collapse or start to drown, I’ll come and get you right away, but instead of thinking it’s a 100-metre race, think of it more like it’s 25 metres. Just a one-length sprint and take it one length at a time and go for it.”
I went with his theory and ended up breaking a Canadian record, finishing the race eight or nine seconds below my previous time. We had to do the race again the next day because the officials thought it had been a mistake with the clock, but I did it the same way again, and it worked just as well the second time.
As I look back at my life now, I realize this event focused in me a new way of thinking. I’ve long noticed how most people never give 100 percent in their relationships, business, or commitments. Personally, I’ve always been afraid of failing because I haven’t given something 100 percent. I’ve been fearful of someday lying on my deathbed, thinking, “God, if I’d just gone for it, would it have been successful?” I think I owe this mindset to that one moment at age ten when my dad gave me his “poolside theory.”
