Feb 24, 2020 · 54m · how-i-built-this
Lululemon Athletica: Chip Wilson (2018)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, host Guy Raz interviews entrepreneur Chip Wilson about pioneering the global athleisure movement with Lululemon Athletica, navigating explosive direct-to-consumer retail growth, and facing corporate governance battles that ultimately led to his ouster.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 36.3% of the talking time here. How this is scored →
Guy as informed peer 2.1 Guest teaching 2.4 Guest disagreement 0.6 Guy pushing back 1.0
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 44:10 Challenging Raz's framing of the Bloomberg remark
Wilson explicitly interrupts and rejects Raz's summary of what he supposedly said, stating that Raz's version is what people mistakenly heard rather than what he actually uttered.
Hardest push from Guy ▶ 41:31 Confronting the sheer pants controversyRaz refuses to gloss over Wilson's ouster, explicitly bringing up the elephant in the room regarding the transparent yoga pants and Wilson's controversial body comments.
Biggest teaching moment ▶ 13:28 The wholesale vs. direct retail unit economics lessonWilson walks Raz through the counterintuitive math of losing money in wholesale while making huge margins in company-owned retail to explain his scaling strategy.
Guy holds their own ▶ 44:10 Raz cites Wilson's exact quote on women's bodiesWhen Wilson attempts to soften his past remarks about pants sizing, Raz intervenes directly by quoting his exact televised words back to him.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Announcement: Live Shows in Seattle and San Francisco | 0 | 0 | 0 | 0 | Introductory monologue and promotional announcement for upcoming live shows with a short teaser clip. | |
| Early Life, Sewing Roots, and Fabric Efficiency | 2 | 2 | 0 | 0 | Guy Raz establishes the cultural rise of athleisure and asks Wilson about learning garment construction and fabric efficiency from his mother. | |
| Working the Alaska Pipeline and Setting Life Goals | 2 | 2 | 0 | 1 | Wilson recounts his earnings on the Alaska pipeline and making barbecue shorts in Calgary, while Raz playfully ribs him about Calgary's short summer season. | |
| Building West Beach and Snowboard Apparel Challenges | 2 | 4 | 0 | 1 | Wilson breaks down the operational mathematics of retail margins versus wholesale losses during the early West Beach snowboard apparel days. | |
| The Snowboarding Market Collapse and Selling West Beach | 2 | 3 | 0 | 0 | Wilson explains the market forces that forced the sale of West Beach and how noticing three separate yoga cues triggered his next entrepreneurial leap. | |
| Engineering Anti-Chafe Yoga Apparel and Opening Studios | 2 | 4 | 0 | 1 | Wilson describes identifying the emerging demographic of professional athletic women and investing heavily in specialized flat-seam machines to prevent chafing. | |
| Naming Lululemon and Partnering with Shannon Gray | 2 | 3 | 0 | 0 | Wilson explains the naming rationale behind Lululemon targeting Japanese perceptions of Western brands and how hiring Shannon Gray stabilized product design. | |
| Overcoming Bankruptcy, Grassroots Growth, and Naked PR | 2 | 2 | 0 | 1 | Wilson shares stories of near-bankruptcy, discrete logo placement, and their famous naked customer store opening promotion. | |
| Global Retail Expansion and Private Equity Investment | 2 | 2 | 0 | 1 | Wilson reflects on selling part of the company to private equity to reduce personal risk and shifting into the chief innovation role. | |
| The 2007 IPO, Lost Board Control, and Growth | 2 | 2 | 1 | 1 | Wilson recounts how institutional investors and advisors diluted his board control ahead of and following the 2007 IPO. | |
| The Sheer Pants Scandal, Controversial Remarks, and Ouster | 5 | 4 | 6 | 6 | Raz directly confronts Wilson regarding the 2013 sheer pants scandal and his infamous comments; Wilson pushes back on Raz's phrasing and clarifies his intent while admitting poor word choice. | |
| Life After Lululemon, Family Priorities, and Luck | 2 | 1 | 0 | 0 | Wilson reflects on moving on from Lululemon and coaching youth football, followed by the concluding 'How You Built That' segment featuring Kate Westervelt's MomBox. |
Statements from this episode (18)
Guy Raz: Lululemon Is Worth Over $14 Billion
“The brand he built out of his house in Vancouver is now worth more than fourteen billion dollars.”
Chip Wilson: Small Fabric-Cutting Efficiencies Save Thousands in Apparel Production
“Once I got into big production and you'd lay 50 to a hundred layers of fabric down, When you can save even five, six, seven inches of fabric it can mean thousands of dollars.”
Wilson: Mall Stand Made $1,000 Daily Selling Shorts Versus $120 at Oil Job
“In a day we'd make like a thousand dollars a day selling the shorts, and I was making like a 120 dollars at the oil company, so it wasn't tough to figure out the math of that.”
Wilson: Snowboard clothing commanded 4x to 5x the price of surf and skate apparel
“Snowboard clothing was four or five times the price of surf and skate t-shirts and shorts.”
Wilson: West Beach wholesale lost $1M annually while retail made $1M
“My wholesale business was losing a million dollars a year, and then I had these two retail stores that were making a million dollars a year.”
Wilson Sold First Company Days Before Missing Payroll Entirely On Brand Value
“We sold to a public company out of Salem, Oregon, Moral Snowboards, and you know, we quite honestly could not make payroll on Friday, and we sold Wednesday based on brand value only.”
Chip Wilson: Walked away with $800,000 post-tax from West Beach sale
“I walked away with a million, and after tax, 800,000, and then you've gotta, you know, I had paid myself probably 30 to 40,000 dollars for 18 years.”
Wilson follows a 'three times' rule before acting on new trends
“I have always believed in this three times thing, so when I see something three times, and I move really quickly.”
Wilson claims he was likely the only person pursuing non-mountain technical apparel
“I was probably the only person in the world thinking about Technical clothing outside of mountain clothing.”
Wilson Claims Nike Did Not Understand Apparel Because Their Shorts Caused Chafing
“Well, Nike was a shoe company, so I know they didn't really understand clothing either, because even in their running shorts, they had these open seams in between their legs, and I'd run five K and I'd totally rash.”
Wilson: Bought four $40k flat-seam sewing machines in Japan for Lululemon
“I went to Japan. I'd heard about these machines that were 40,000 dollars a piece, which was Huge at the time, and I, ah, bought four of them.”
Wilson: Lululemon's logo is a stylized 'A' from 'Athletically Hip'
“The logo actually came from Athletically Hip. So it was a stylized A from the athletic.”
Wilson: Shannon Gray became Lululemon CEO within two weeks of being hired
“I hired this woman who Shannon Gray was her name. The first person I'd ever seen that had a design portfolio with using stretch clothing, and within about two weeks, I, after hiring her, I left her in charge of Lou Lemon as the CEO for a year, and I went back …”
Lululemon Used Cheap Back-Alley Pop-Ups To Seed Markets Before Building Stores
“So we would go into every city in the future, set up a store in a back alley or in a side street and develop our market, invite yoga instructors in before we spent, you know, 600 to a million dollars on a store.”
Lululemon Tripled Competitor Margins By Controlling Both Manufacturing And Retail
“Nobody in the world had, was owning manufacturing right to the retail store. I mean, I was taking triple the profit of most people.”
Wilson: Intended to sell 30% of Lululemon, but sold 48%
“You know, I really only want to sell 30% of the stock to the private equity guys, but I ended up selling 48.”
Wilson Claims Bankers Push Founders To Sell Shares To Dilute Their Power
“But the reality of it is, is all these were techniques to have kind of an owner-founder dissipate and kind of move into the background and not have the power, so to speak, to control a board.”
Wilson Blames Infamous Lululemon Pilling On Customers Sizing Down For Shapewear
“Women were coming into the store and not wanting Lululemon for athletics. They were coming in looking for it to shape their bodies. But the sewing technique and the fabric wasn't meant for it. So what they were doing is buying two to four sizes smaller than wh…”