Chapter 30


Group 2Back to the Beginning


One media blunder - that’s all it took. One media blunder and a lifetime of dedication to health, fun, longevity and women was out the window. With that one 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, have a website or any kind of social media presence at that time. I was ignorant of how to use social media tools to connect directly with the Super Girl unencumbered by the filter of traditional media or the lululemon PR machine being directed by Christine. 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 one silver lining of the Bloomberg interview was the discovery that women wanted athletic compression tights to shape their bodies. I communicated this idea to David Mussafer at the board level. 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 other foundational design change created from this awakening was that lululemon started making the high-rise pant to mimic the girdle, and tummy tucking functionality of Spanx. It was easy to see that as lululemon’s core market increased from a fit 22-year-old to a 35-year-old over the course of our 15 years in business, a high rise gave women the confidence to wear the pant in public. As a merchandiser of many styles of pants, lululemon had been making only high rise and was clearly missing at least one critical low-rise style. I knew this because I would see super fit women like spin instructors rolling down their waistbands because the doubling of fabric when bending over at the waist was too hot and unfunctional.

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 put six internal lululemon staff to work to create a statistically-heavy report (numbers and statistics being the Board’s first language) about how I had become a detriment to the company.

Although I’d been caught off-guard by Christine’s presentation, I didn’t immediately feel threatened. I believed 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.

In all lululemon’s branding and design, in everything we did, our focus was virtually one person: The Super Girl. In my opinion, there was no need 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 32-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 portrayed 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 of was that 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 reinvestment 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 had to put up with but wished 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. But 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 went mainstream. Store managers were no longer in control of their window creativity 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 asked to leave or quit, and the institutional knowledge and intelligence of the company dropped significantly.

As one would see in many Netflix shows, the bad guys had to offer up a scapegoat to the public to throw the scent off their incompetence. The directors knew that because they had stopped reinvesting in the company and the competition was hot on our heels, there would be hard years ahead. The directors needed to show the public that I was the reason behind the next terrible 5 years so that they could survive and make themselves look good.