by Chip Wilson
The situation did not improve and, ultimately, Christine tendered her resignation to the Board in June at the time of the first-quarter conference call with financial analysts.
“This was a personal decision of mine51,” was Christine’s own brief statement about her resignation (a few months later, in an interview with Fortune, Christine said she left lululemon because her vision, whatever it was, didn’t match mine, and that I loved disruption and clash52).
Christine committed to stay on until the Board found a successor, but this would prove difficult since she’d also put word out on the street that I was a challenging person to work with.
In its present form, I knew lululemon could not take advantage of the next two years, which would likely see the most dramatic lift in athletic apparel sales in history. The company did not have the succession pipeline in place, and it had not made the investment in infrastructure.
Innovation Revisited
When we were living in Australia, Shannon had developed a couple of design ideas, based on a fabric called technical cashmere. The concept of this fabric was to design clothing that felt like cashmere but performed like athletic apparel.
Shannon and I had both found ourselves preferring to wear softer fabrics when we were not working out. Shannon’s dream was to put cashmere-based fabric into a hot washing machine and dryer without shrinkage or visible pilling for everyday wear. We wanted to wear clothing that felt luxurious but could endure the same five-year quality standards we developed for athletic apparel.
This could have supported an exciting new lululemon extension and was the exact innovation the company needed. Lululemon had had no innovation since 2010, and competition was taking a toll. In August 2013, via correspondence with Deanne Schweitzer (VP Design and Creation), Shannon offered lululemon her technical cashmere fabric. A revolutionary innovation like that could add $2 billion alone to the stock value.
The only major concern Shannon had was that design might accept the fabric from her—only to have the Directors or the CEO scrap it and shelve it. Shannon thought she’d better cover herself, and in her correspondence with Deanne, she said she wanted to reserve the right to use the fabric if lululemon wasn’t going to.
New Designs Not Welcome
It was October before Shannon received a reply from Christine. She thanked Shannon for assisting lululemon’s product design on a “volunteer basis.” She then went to say that Shannon’s continued work with Cirqq Designs (the company Shannon had incorporated to protect her intellectual property) could lead to a conflict of interest with lululemon.
“We do not feel it is appropriate for you to continue your volunteer work with lululemon and we hereby confirm the termination of any such arrangement,” Christine added.53
So, not only did Christine not want innovation or the new fabric or designs, but she was also effectively firing Shannon from her volunteer position. If that wasn’t bad enough, it appeared there was a thinly-veiled threat about the usage of designs or any of lululemon’s intellectual properties. Given that Christine had resigned months prior, it was frustrating that she still had this kind of control.
A week later, Shannon crafted a response, with input from our lawyers. She expressed regret that anything she was doing could be construed as a conflict of interest.
Shannon also emphasized how—in addition to her volunteering in design—she had offered to give lululemon the right to use Cirqq’s new fabric, without any cost or obligation. An offer which Christine turned down.
“Our family has the most to gain from any benefit that I can give to lululemon,” Shannon added, “and the most to lose by anything I could do to hurt it.”54
In Shannon’s own words: “That whole time was quite emotional because there were people in the business that were so great, and still wanted the business to be great, and I think people were really excited when Chip came back to help. I think we were sad because it was a shift in the business. A shift away from the culture and people were disappointed. They were disappointed that lululemon had this mark against it in terms of the quality.”
Not the Only Wilsons
Shannon and I weren’t the only Wilsons to find ourselves no longer welcome. My son JJ was affected as well. In 2012, JJ had been hired in marketing at a menswear company called Wings + Horns. This had been a dream job for him, and it had also allowed him to build an identity of his own. “I loved my job at Wings + Horns,” JJ recalls. “I’d created something for myself separate from lululemon and the Wilson family name.”
Not long after starting this dream job, JJ was asked to come back to lululemon to work on the Men’s Design team. Lululemon’s ethos had emanated from our earliest connections with yoga.
The original male yogis were often small and slight. As lululemon had been using women’s fabrics, the style and feel were slightly effeminate. In 2008, we broke out of this mould. We were confident men’s apparel was the next big business we knew we could get to the $1 billion in sales mark by 2011.
Because our Head of Product wasn’t familiar with the men’s market, she didn’t know how to build the foundation for exponential growth. I maintained lululemon’s men’s business needed to become ultra-masculine. I had asked the Head of Brand to focus on professional ice hockey and rugby teams as our new focus. We needed to align the men’s market with sports we knew well and in which we could be authentic. I asked for a design head from a West Coast surf, mountain or snowboard company as our head of men’s product. Somebody that understood men and would drive masculinity at all levels.
Instead, the Head of Product had hired a fashion-focused men’s design director from New York. That was the opposite of what was needed. The result was a product that was too fashion-oriented and not technical enough. It didn’t capture the attention of that ultra-masculine market, and as a result, lululemon lost five years of brand growth.
This was the state of the men’s design team when JJ was asked to come aboard. It was difficult for him to say no to this opportunity, and he accepted—out of loyalty to the company.
As JJ says: “I had left my dream job to go back to lululemon, a company I would have done anything for, to only a year later be told by HR that, ‘You, as a member of the Wilson family, are no longer allowed to be a part of this.’”
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51 Shaw, Hollie. “Lululemon Shares Plunge as CEO Christine Day to Step Down.” Financial Post, 10 June 2013, business.financialpost.com/news/retail-marketing/lululemon-chief-christine-day-to-step-down.
52 “Ex-Lululemon CEO on Why She Left the Company.” Fortune, Fortune, fortune.com/2014/12/03/lululemon-ceo/.
53 Author’s personal records, October 16, 2013, correspondence from Christine Day to Shannon Wilson
54 Author’s personal records, October 23, 2013, correspondence from Shannon Wilson to Christine Day
Chapter 29:
The Interview
A Mindfulness Concept
With Shannon and I both removed again from the day-to-day management of lululemon, we at least had more time to focus on launching a new initiative based on one-minute mindfulness exercises. Shannon and I sought to develop a free digital platform offering training to individuals, schools, and companies. We were wealthy, creative people with no creative outlet, and we wanted to do something more for the world.
A Bloomberg interview was set for November 5, 2013, at their New York studio. The show was Street Smart, a business analysis and commentary program. The anchor was Trish Regan, an experienced journalist who’d appeared on CNBC, CBS, and Fox, among others.
As was expected, the interview on November 5, 2013, started with Trish Regan asking us to define mindfulness.
Then came the switch.
“I want to segue into another story,” Trish said. “You’re the founder [of lululemon], you’re a former designer… what’s going on with the pants?”55
My initial response was to focus on the unique challenges of producing a technical fabric. “When you p
ush technology,” I replied, “something’s going to happen every now and then.”56
Trish pressed a little harder, asking me about complaints of pilling on the fabric.
My reply: “There has always been pilling. The thing is that women will wear seatbelts that don’t work, or they’ll wear a purse that doesn’t work, or quite frankly some women’s bodies just actually don’t work for it.”
Trish: “They don’t work for the pant?”
Me: “No, they don’t work for some women’s bodies.”57
I knew from working in the stores that something about our perfect fit hadn’t been working and I couldn’t put my finger on it. I didn’t say that in the moment, but after the social media backlash from this comment, I had an “aha” moment.
Women had been buying our Luon pants not just for athletics, but as a compression garment to mould their bodies, like Spanx. But lululemon pants, and Luon fabric, specifically, were designed for athletic use, not compression.
Women wanted to reframe their bodies while also training and sweating to improve their bodies. I could sense something was happening to the integrity of the pant, but the real information was emerging slowly and only after women had owned the pants for six months or more.
So, when asked why lululemon pants pill, I considered my market research. I looked at every person’s body and clothing and have for as far back as I can remember. I have a lifetime of gathered data.
I hear fabric crinkle. I feel other people’s bad quality clothing, and I feel sorry for people wearing stiff, uncomfortable fabric. I smell the odour from polyester fabrics. I cringe at poorly-worn bras or hiked-up pants or plumber’s butt. I know the correlation between every athlete’s body and the millimetre of fabric required to make every type of fabric work.
I calculate the exact perfect athletic garment for each body, and then I correlate it to the average, so I can make and sell the greatest quantity to the most people. I cross-reference the cost of fabric per body, and I determine if there are enough consumers of that body-type to design a style and make enough pieces to make money. I assess the cost of marketing to each segment group, of which there are 40 billion permutations and combinations.
With the pilling, what I eventually discovered was that some women were buying the pants two to four sizes smaller than necessary, with body-shaping in mind. The pants still looked great, but there was more stress being put on the fabric and seams than what we’d designed it for. If enough stress is placed on any object, fractures will occur.
When Trish Regan tried to pigeonhole our exchange by saying, “Interesting, not every woman can wear a lululemon yoga pant,” I immediately replied, “No, I think they can. I just think it’s how you use it.”58 I thought this clarified my remarks.
Shannon and I left the studio feeling good. It wasn’t until the next morning that I knew there was real trouble. Bloomberg’s editors had spliced and diced the footage into something out of reality TV. What was simple had been made fake and scandalous.
From the Bloomberg moment on, nothing would be the same. My comments were the antithesis of everything I stood for, and of everything the women of lululemon and I had built. The ramifications for the company, for my family and for everyone involved were catastrophic.
I made a mistake, and I was going to pay heavily for it.
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55 http://www.mrmediatraining.com/2013/11/12/lululemon-founder-to-women-your-thighs-are-too-fat/. Accessed August 21, 2018.
56 Ibid.
57 Ibid.
58 Ibid.
Chapter 30:
Post-Truth
Sensationalism
One media blunder. That’s all it took. One media blunder and a lifetime of dedication to women was out the window. With those words and that sound bite, I was ruined. I chose the words that I did, and in doing so, I’d created an opportunity for the CEO and the Board to shift the conversation away from their part in the quality issue and over to the “wildcard founder” who was sinking the ship.
I didn’t know what to do. I didn’t blog, or have a website, or have any kind of social media presence. I was ignorant of how to use social media tools to talk directly to the Super Girl without the filter of traditional media or the lululemon PR machine directed by Christine. I had not changed with the world and what was happening was eye-opening. As Ayn Rand said, “I can ignore reality, but I cannot ignore the consequences of ignoring reality.”
A new game was being played, and I was unknowingly sitting in the stands.
The silver lining of the Bloomberg interview was in the discovering the distinction that women wanted athletic compression tights that would also body shape. I communicated this idea to David Mussafer. The lululemon product team did superb work and perfected a new fabric. They densified the fabric thread count and stitches per inch on seams. In my opinion, this solved the pilling issue and allowed women to buy their true size.
The Board Meeting
The December 2013 quarterly Board meeting took place in Vancouver at our head office. Even though I’d gone through my usual routine of setting the agenda, it was only at the beginning of the meeting that I saw an item had been added—some kind of report put forward by Christine Day about the Bloomberg interview. It was a last-minute addition, written in under the Other Business category. I wasn’t sure what to make of it, but I knew it couldn’t be good.
The meeting was called to order. We went through the routine items, and then came this Bloomberg report. Christine had worked hard on it. She’d brought in an outside consultant (at a cost of $30,000 to $40,000) and six internal lululemon staff to create a statistically-heavy report (numbers and statistics being the Board’s first language) about how I was a detriment to the company.
Although I’d been caught off-guard by Christine’s presentation, I didn’t immediately feel threatened. I felt like the Board was smart enough to see through what she was doing. When the presentation was finished, and I finally had an opportunity to respond, I asked them how they’d conducted their statistical analysis, what kind of people they’d surveyed to conclude I was a detriment to the company. The answer from Christine and her outside consultant was that they’d surveyed a broad group of demographics across North America. A few thousand people in total.
Right away I saw this as a major flaw. In all lululemon’s branding and design, in everything we did, our focus was virtually one person: The Super Girl. So, there was no need at all to ask a broad group of demographics about what they thought.
“You’re telling me,” I said, “that you’re actually surveying people who may not even like our company or even care about our products, and you’re having them drive the decision-making process for that thirty-two-year-old customer?”
I intended this as a rhetorical question, to demonstrate the problems in the analysis.
Not that it mattered. This was the end of 2013, a time when social media was coming into its own. The Directors used online comments as the way to run the business, and Christine had her opportunity to prove I was who she wanted me to be. The outcome of the meeting was the decision to remove me as chairman. Michael Casey would take my place.
As the vote unfolded, I didn’t know what to say. All I could think was the Board was making a bad decision based on bad information. We were a brand product company, and the person they were replacing me with as chairman was someone who feared reinvesting and bold decisions and had failed at maintaining CEO oversight.
This was a recipe for disaster. Was this what they wanted to do? I guess they wanted to get me out of the picture, and they needed an “official” way in which to do it.
The Bloomberg interview gave the Board the ability to reframe me as the weird uncle that the family must put up with but wishes it didn’t have to. Reframing me in public provided a diversion for poor governance, poor quality, and declining stock value.
Despite the previous disagreements we’d had, I thought when it came down to it, the Board would react in
the same way the Super Girl did and think, “This is one sentence out of hundreds of interviews this guy has done; one line taken way out of context.”
“The way lululemon handled Chip’s Bloomberg interview was deplorable,” says Jenna Hills. “Or better put, the way the company didn’t handle the uproar was. We didn’t stand for him. I certainly didn’t say or do enough. Fear won that battle, and it put a lid on the potential of leaders all over the world. Suddenly, there was an intolerance for making mistakes. Not to mention that it gave rise for all the haters to hate.”
I didn’t get angry or emotional at that meeting. I knew if I got emotional it would not help me. In some ways, I was perplexed. Something had happened, and I didn’t understand what it was. I also felt powerless and sad. Sad for the shareholders, but more so for the employees.
After the meeting was over, I went home, and I talked to Shannon.
Lululemon’s official statement was that I had resigned as Chairman of the Board.
It was at this time that the history and culture of lululemon were whitewashed. Store managers were no longer in control of their windows for fear of social media backlash. The full Manifesto was eliminated from the website, and the story of how the company was named became a liability. The transformational leaders created out of our development program were too vocal and too strong to fit into a company now run by fear. Many great employees were exited or quit, and the intellectual knowledge of the company dropped significantly.
Chapter 31:
The Next CEO
The Search for the Replacement
As of mid-January 2014, traffic and sales trends were decelerating meaningfully. Operating lululemon with nobody from Vancouver on the Board or management is like running Brooks Brothers from an Ashram in Big Sur. That’s how I felt as we were looking for Christine Day’s replacement. The Board was under immense pressure to announce a new CEO. They had failed at their number-one job of ensuring succession, but at this moment, that was beside the point.
