Chip Wilson: The brain behind the meteoric rise of Vancouver's yoga juggernaut, Lululemon.
In December 2005, Chip Wilson sold 48 per cent of his interest in Lululemon for $108 million to private equity firms Advent International and Highland Capital Partners, both based in Massachusetts.
So the rumours were true after all.
You have to understand something about rumours…There’s a whole industry of brokers who earn their money by making deals happen. There are maybe 100 of them out there and probably 20 good ones. So the brokers are thinking how much money they could make if they could get Nike or Gap to buy Lululemon. The emails start circulating, a secretary sees it and the next thing you know, it’s a fact.
What’s the driver here? You wanted to cash out or you needed capital to scale up?
This wasn’t done because I needed the cash. And money isn’t a problem for the company either. We have incredible cash flow. The capital was just an exchange to bring in the expertise. There comes a time when you need another layer of skills above you to take things to another level.
Why not just recruit a new CEO?
I could have, but I’m not sure where I would have found that person. I wouldn’t have known [Advent operating partner] Bob Meers, the guy that we’re bringing in. He’s run Reebok, Rockport and Tretorn Shoes, and done a great job at all of them. Plus, I needed a board of directors that could take Lululemon global. Meers will help with that.
He’s based in Boston. How did you lure him here?
He sees us in the same spot that Reebok was in its infancy, and he saw how the company went to No. 1 in the world. He also saw why it didn’t stay there. I think he’s excited about redoing the whole thing and ending up back on top.
How do you do that in a world of Nikes and Reeboks?
Yeah, that’s an issue. Nike is what I would call a competitive company. They’re out to win, win, win. That’s the basis of everything that they do. We’re more into co-operate, co-operate, co-operate. It’s just a different type of thinking.
Co-operate with Nike?
Yeah, we do, believe it or not. When people come to our store and we don’t have a product that’s right, we will send them to Nike. That’s just how we operate. That’s part of who we are.
Part of that ethos has been local manufacturing. How long can that continue?
It’s totally not sustainable. The Canadian government won’t allow any more sewing-machine operators into the country. They don’t see it as an essential job. There are no sewing-machine operators left. If you’re going to grow, you need to go somewhere else to get your manufacturing done.
Now you’re sounding competitive.
Sure. But there are different ways of doing things. If you look at the East Coast way, it’s all about backstabbing and getting underneath the skin of your competitors. If you look out West, at least in the skates or snowboards, it’s all about co-operating with each other. I like that a lot better.
You also seem to like starting companies more than running them.
That’s a possibility. Is it my expertise to build new concepts and then let people run them? Probably. But the world is moving so quickly now that within Lululemon I still have lots of opportunities. I don’t have to start something new.
What’s your role actually going to be?
I’ll be transitioned out. There will be a co-operative CEO job between Bob and myself for the next six months, and then I hope to transition out of that and into product. I can’t compare myself to Bill Gates, but you see how he’s their product guy. The best thing he could do for Microsoft was focus on innovation and not run the day-to-day business. It’s just not his expertise.
Okay, you’re stepping aside, not stepping back.
Both. We’ve just had twins – I’ve got five boys now – so I just want to cut down from 80 hours a week to something more reasonable. But when you’re in your own business, your brain never shuts off. If my boys have a day off school, I want the ability to go spend it with them.
You guys could have a lot of fun days with $108 million.
Well, a fair amount of that gets eaten up in taxes, of course. Not all of it.
Are you going to sail around the world?
I don’t think so. One thing I’m clear about is that if men… I don’t know about women so much, but if men don’t keep their brains active… then they die. And I love the change, I love the excitement of it all. All I’m doing is selling a part of this. And that’s allowing me to bring in the right people, so that what I have left in the company can be successful.
You’re distributing $8 million among your staff.
We’ve done that in the form of backdated options to 2002. Some of them have earned shares, some of them are still vesting, and in December there was quite a big cash payout.
Christmas came early.
We’ve done a lot of charity, and what’s clear to me is the more you give, the richer you become. But you’ve got to give without expecting anything back.