Little Black Stretchy Pants by Chip Wilson

This book is a memoir so doesn't have clean cut themes. Potentially valuable lessons bolded below.

• 18 year MBA from selling west beach. From this experience, he valued learnings about the vertical retail model more than the $1M he walked away with. ($40k/yr salary) noted that the relief from the financial security was indescribable.

• serendipity early on about pipeline and earning subsequent $600k at 19

• knowing you can achieve what you thought was impossible is one of the most significant things you can derive from athletic activity

• would target the less than famous snowboarders, promote them in trans world magazine so they could get picked up by the big boys, arrange transport, photos and the like

• would use focus groups for product dev. Bring in your favorite piece of apparel. also asking open ended questions that allowed them to converse with each other. What didn’t work with other products or retail experience.

Chip is thinking about how to save his demographic 45 mins each day by not needing to change because they’re in his pants.

A key purpose of the retail stores was to educate his customers on why the product was 3x as expensive. He hired post graduate staff to do this. By using vertical retail, he was able to pay staff ~30% more than they could earn elsewhere. For a manager I could pay double a public school teachers salary.

Working Super girls defined Lululemon - they referred to other brands - chip hears real conversations about how authentic the brand is

A few years after $4M sales, they hired production person from Nike. Found Nike had dedicated resources to figuring out Lulu because they were connecting with women. Reaching female market in a way that Nike didn’t have the culture. United in opinion their product was better.

He paid for core people to do Landmark forum on integrity and shit.

There was a tribe and cultural distinction that this was not a product company. Entrenched social structure, and that created vitality. Stores were decrrnalizes. Kept their smart people active.

On pricing: couldn’t afford to make their product cheap. Three tiered pricing not an option. Decided to make 16 pairs of pants that all looked different (high rise, low rise, crop, long, loose fitting). In this way we appealed to the woman who appreciated quality and was willing to spend 90-100 on a pair of pants. She would recognize she was buying the best in the world and would want to buy ten of the variations we were offering instead of one of this and that from different brands. This set lululemon apart as a category killer. Chapter 27 11:24

Sold yoga mats for cost. Then a slight profit but not enough to make it economical for anyone else to enter the market. Part of his strategy to build a moat around their success. Store sales and profit jumped even though they weren’t making $ off them. Dumpster dived a competitor

Unique headbands from scraps became one of lululemon a best selling items.

No competition.

Vertical retail

Luon

Free hemming

Unique designs

Flat seams

And more

He was a new dad when trying to figure out what to do about all the growth. Knew being present as a father would be important. Selling to PE. Chapter 28

People told him he would have trouble building from 10 to 50. It went fine. People said he would have trouble 200-1b. Probably would have been fine. Wishes he had stood up for himself more in those deals. Talks about conflict of interest in aggressive closing for a business and how lulu actually had all the power. Their nit picking was all posturing. Be aware outside expertise has possible COI.

I hadn’t operated a company of 100m in sales. I trusted PE to provide guidance I asked for and hold my hand. I had made survival driven decisions but never wealth driven. By selling to PE, I was motivated to develop an idea, a concept that was solid in its foundation into a global phenomena to elevate the world. To go from essentially owning nothing to having 100m in my pocket gave me one thing above all else. An easier nights sleep. My kids would be taken care of. Fam Still had the Great Depression mentality and lifestyle didn’t change.

Chip Wilson has a lot of information about taking on selling to private equity particularly about going public, chapter 29

Wished he had dual class shares. Under armor and Nike did this. Chip didn’t. Regrets this.

Chip attributes a TON to his development program, landmark and more.

Chop had 50% stake in his manu.

Chip wanted to buy best supplier for Lulu. His previous stake in channel something had afforded him speedy alignment with market needs + mutual incentive to perform well.

Integrity fell apart at the C suite when Christy went AWOL re: John Gault bags…”wildcard” founder…

Saw mindfulness as another possible moat. Be the brand that brings mindfulness to the west. A strong brand creates demand and allows for higher price premiums. Wanted to do 10min guided meditation on all stores before opening.

“The day before something is a breakthrough, it’s a crazy idea. If an idea could be quantified, it would already have been done. No one wants change. Change is hard. But change is the only constant. Today the rate of change is faster than ever.”

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