Loading summary
A
Wondering. It's November 2007 in Manhattan. New York Times journalist Louise Storey is talking on the phone with a scientist at an Illinois based lab. The Times recently got a tip that Lululemon, a popular athletic apparel company, might not be telling the whole truth about the materials used to make one of its athletic wear lines. So they sent a sample of Lululemon's fabric to a lab for testing. The sample is part of the company's new Vita C line, which it claims is made with 24% seaweed fiber. The tags on all Vita C products tout the health benefits of wearing seaweed fibers, claiming it can relieve stress and decrease inflammation. But when Story speaks with the scientist, she learns what's actually in the fabric. You sure there are no traces of seaweed in the clothing whatsoever? It's possible there are trace amounts of seaweed, but if so, well, they're too small to detect. Story feels the familiar jolt of knowing she has a scoop. Lululemon may not be telling the truth about what's in their clothing. She knows her article will generate buzz too, because lately Lululemon has been taking the women's athletic wear space by storm. The Canadian company is less than a decade old, but it already has around 60 locations and is planning a rapid expansion throughout North America. People love the brand and are willing to shell out big bucks for high quality materials. These Fidasi shirts retail for around $60. But these lab results directly dispute the company's claims. Hey, listen, if you claim magic in your product, someone's gonna check behind the curtain. Lululemon said its shirts had seaweed. Turns out they didn't. One weak claim can undo 10 strong ones. Customers will forgive a high price if they trust the story. But a single busted promise makes them wonder what else you're hiding. Before you launch a bold claim, ask yourself this question. Can I prove this in one sentence? If not, better rewrite the label before regulators do it for you. The article goes live on November 14, and it creates an immediate firestorm. The company's stock sinks, and soon the Canadian government will look into the yoga giant's alleged claims for Lululemon. This will be the start of a series of public blunders. Despite their cultivation of soothing, meditation inspired vibes, the company can't seem to escape chaos through scandal after scandal. Investors will have to ask how devoted is their cult like following? And how much chaos are even the most loyal customers willing to put up with? So you just realized your business needed to hire someone yesterday? How can you find amazing candidates fast, easy, Just use Indeed. See, when it comes to hiring, Indeed is all you need. Stop struggling to get your job post seen on other job sites. Indeed's Sponsor Jobs help you stand out and hire fast. With Sponsor Jobs, your post jumps to the top of the page for your relevant candidates so you can reach the people you want faster. And that makes a huge difference. According to Indeed data, Sponsored Jobs posted directly on Indeed have 45% more applications than non sponsored jobs. Plus with Indeed sponsored Jobs, there aren't any monthly subscriptions, no long term contracts. You only pay for results. How fast is Indeed? Well, in the minute I've been talking with you. 23 hires were made on Indeed, according to Indeed Data Worldwide. Look, there's no need to wait any longer. You can speed up your hiring right now with Indeed. And listeners of Business wars will get a $75 sponsored job credit to get your jobs more visibility. That's@ Indeed.comBW just go to Indeed.comBW right now and support our show by saying you heard about Indeed right here on business wars. That's indeed.combw terms and conditions apply. Hiring Indeed is all you need. This message is brought to you by Apple Card. So you left your wallet in the car, or was it at home? No need to panic. With your iPhone you can tap to pay using Apple Card with Apple Pay and earn unlimited daily cash back when you do. Apple Card is ready when you need it, subject to credit approval. Apple Card issued by Goldman Sachs Bank USA Salt Lake City Branch terms and more at applecard.com From Wondery I'm David Brown and this is Business Wars. These days, yoga is a big business, a 215 billion dollar industry with over 300 million practitioners worldwide and countless clothing brands devoted to dressing them. But when Lululemon entered the market in the late 90s, athletic apparel for yoga didn't exist. Lululemon founder Chip Wilson discovered a customer base no one had tapped into, young, financially stable women who were getting into yoga and wellness. As yoga and meditation grew increasingly popular across North America, Wilson designed women's athletic wear, prioritizing quality and comfortable and charging high prices. With a cornered market, Lululemon rapidly expanded, developing a devoted following and going up against industry giants like Nike and Adidas. Lululemon revolutionized its industry, literally inventing yoga pants and proving that there is a market in women's athletic wear. But as the company grows and competition increases, Wilson will struggle to maintain control. And as he continually leads the company into scandal, Lululemon will have to contend with how much their Founder is holding them back. This is episode one, Child's Pose. It's 1998 in Kitsilano, a picturesque seaside neighborhood in Vancouver, Canada. Kitsilano is filled with organic shops and outdoorsy athletic types who are drawn here by the beaches and nearby mountains. Chip Wilson is walking down the street looking out at those mountains. Recently, he's been feeling a little lost. Back in the late 70s, when Wilson was just 25, he founded a company called west beach that sold clothing to surfers, skateboarders and snowboarders. He had a feeling that the market was about to take off. And he was right. In the decades that followed, cool west coast style skate clothes became all the rage, and Wilson rode the wave. West beach grew rapidly across Canada and the U.S. it was one of the first companies to ever make apparel specifically for snowboarding, allowing it to expand into other markets where the sport was popular, especially in Japan. But while the brand was popular, it wasn't profitable. In time, the company started to struggle. West beach had a wholesale model. Rather than selling directly to customers, it produced huge quantities of clothes and sold them to stores that would then sell them to customers. It's a hard way to make money, given how expensive the clothing was to produce. And west beach was constantly swimming in, in and out of debt. So when a bigger snowboarding company offered to buy west beach last year, Wilson said yes. He pocketed around $800,000 from the deal. Wilson's now a 42 year old single dad with two sons. He's feeling listless, unsure of what's next. And on top of that, he's dealing with debilitating back pain. Wilson has always been extremely active, but the decades he spent participating in every kind of sport imaginable, from racing and triathlons to skateboarding to wrestling, well, it's all catching up to him. As he strolls, he sees an advertisement for a yoga class stapled to a telephone pole. Wilson doesn't know what yoga is, but at this point, he'll try anything. He decides to check it out. He doesn't know it yet, but this yoga class is about to change his life. It's 1998 in Kitsilano, and Chip Wilson has just arrived at his first ever yoga class. Now, when you hear the words yoga class, a specific image probably comes to mind. Perhaps it's a quiet room with gentle music playing in the background. Maybe there's a plan in the corner, mirrors on the wall, people clad in spandex. But the situation in 1998 was very, very different. This yoga class is taking Place in the corner of a busy gym. As Wilson and the five other attendees roll out their mats, people are running on treadmills and lifting weights all around them. Not exactly a relaxing environment. Welcome. Please make yourself comfortable. Wilson smiles at the yoga instructor, a young blonde woman. Thanks. To fully understand this scene, we have to remember that 30 years ago, the culture around yoga that we're familiar with didn't really exist. Yoga is an ancient spiritual practice developed over 5,000 years ago in Northern India. Through a combination of breathing, meditation and postures or poses, it aims to boost both physical and mental well being. But in the late 90s, yoga hasn't fully caught on in the west yet. Though its popularity is slowly growing, it's still mostly seen as a fringe New Age practice popular with hippies. Wilson immediately notices that he's an outlier. Everyone else here is a woman under 30. But as he follows the instructor through a series of poses meant to increase strength and flexibility, he realizes that he feels incredible. Wilson quickly falls in love with yoga. He appreciates the way it eases his back pain and calms his nerves. He has a similar hunch to the one he had about surf clothes so many years back. He predicts yoga's popularity is about to explode. He's right. Within a month, the class grows from six to 30 students. And Wilson senses a business opportunity. In the following months. As Wilson keeps attending the same yoga class, he starts paying attention to what the other yogis are wearing. People mostly wear regular gym clothes, which at the time meant loose cotton shirts and running shorts or sweatpants. The only person wearing anything different is the instructor, a young woman named Fiona Stang. She's wearing tight fitting clothes, a line made from Lycra. One day after class, Wilson approaches Fiona with a bit of an odd question. Hey, what are those clothes you're wearing? Sorry. I used to work for an athletic wear company, so I'm just curious about what's out there for yogis. Most instructors I know wear this stuff. It's a line of dancewear. Is it comfortable? Not really. It's fine for dancing, but it's not ideal for the kind of movement yoga requires. She explains that this kind of clothing is extremely tight and restrictive, almost like a second skin. The result is that it doesn't work for everyone and isn't comfortable in certain poses. Plus, the fabric is so thin that it becomes transparent when stretched too far. Now, let's hold up for just a second here. You know, it's hard to leave the house without seeing yoga pants these days, but Just a couple of decades ago, yoga pants as we know them did not exist. There was skin tight dance clothing. There was athletic clothing, dominated by brands like Nike, Reebok and Adidas. Think of loose short shorts, windbreakers, tracksuits, that sort of thing. But there was nothing in between, and certainly nothing that catered to the kind of woman Wilson viewed as his new target audience. You know, the smartest product ideas often come straight from watching people improvise. Yogis were stretching dancewear past its limits, basically waving a flag that said, design something better. Incumbents in the space often miss this sort of thing because they're busy defending what already sells. Entrepreneurs can win the day by noticing the hacks and building what actually fits. The lesson here, don't chase the biggest audience. Chase the clearest need. I mean, if customers are already hacking their clothes, their apps, or their gear, well, they've done half the R and D for you already. So Wilson spends the next little while embarking on research, peppering Fiona with questions about what her dream yoga clothes would look like. Because to Wilson, well, it's clear that there's a giant gap in a market that he can fill and grow. After spending two decades marketing towards teen boys at West Beach, Wilson is now discovering a new kind of customer. Young, financially stable women. He notices that more and more women are graduating from university and climbing the corporate ladder. Instead of immediately settling down and starting families, they're also spending more time on activities like yoga. And they have the disposable income to spend on quality clothing. Wilson thinks women in his target audience would be willing to spend three times the market price for his clothing, especially if the pants he creates are high quality, comfortable, and stylish enough to wear outside of yoga class. Say, out for coffee on your way home. Wilson envisions pants. They're tight, but stretchy enough that they don't restrict movement. And there's one unusual design element he's firm on. From the beginning, he wants the seams to be on the outside of the yoga pants. It's an unusual decision. Seams are almost always placed inside for aesthetic reasons, so they're not visible. But from his years of running and racing in triathlons, Wilson knows that inside seams are a recipe for chafing. Wilson spends six months testing out different fabrics for yoga pants before he lands on the right one. A mix of Lycra and nylon he'll eventually trademark as Luan. It stretches without becoming transparent and moves flexibly with the body. He then spends $80,000 on two fancy sewing machines to build some prototypes. While he has lots of ideas, concepts, and sketches, he really wants input from an actual woman. So he brings on Amanda Dunsmore, a designer he worked with at West Beach. In Wilson's apartment, he and Dunsmore host 10 focus groups with different women to refine the designs and the branding. They all love the yoga pants, but hate the name Wilson is leaning towards. He wants to call the company Athletically Hip. It's a nod toward Tragically Hip, a band that's immensely popular in Canada, but not well known internationally. Hey, what's this one? A focus group participant points to one of the names on Wilson's long list of options. Lululemon. Oh, Lululemon. I like that there's a scent. Among the group, Lululemon is the clear favorite. Finally, Wilson has a product. He has a logo and a name. Lululemon Athletica. It's March of 1999 in Kitsilano, in a nondescript building just a few blocks up from the beach. Today, Wilson is introducing Lululemon to the world. He's standing behind a counter in a store stocked with yoga pants and a few other items he's designed, like shorts and workout tops. But it's very, very quiet. Wilson was adamant that the first stores should be close to his favorite beach. He wants customers to associate Lululemon with the open air and scenic views. But while the location is great, the actual space isn't. It's on the second floor, and without a street level storefront, few people who walk by even notice it. Most people who do stop in are part of the small local yoga community. He gets more people into the store by convincing his old yoga instructor, Fiona to start hosting her classes in the space. It's a win win. Fiona has studio space away from the busy gym, and yogis are introduced to Lululemon's athletic wear. You know, what do they say in real estate? Location is everything. A store on the wrong floor is a secret. A store that hosts classes, that's a stage. People came to Lululemon for yoga and left as customers. Retail is most powerful when it feels like a community, not a transaction staff. Who can explain why the seams face out or why the fabric feels different? That's worth more than most billboards. Think of the store as part classroom, part clubhouse. If customers learn something, they're also a whole lot more likely to, you know, buy something. Soon after, Wilson also starts running a few ads around Vancouver. But it's still not enough. The only way for Lululemon to survive is is to move to a better location. And the opportunity presents itself eight months later. In November 2000, a ground level storefront right across the street from their current location becomes available. The budget is too tight to hire professionals, so Wilson and his small staff renovate the space themselves. The one thing Wilson splurges on is a giant mural of a woman doing yoga on the wall outside, visible from several blocks away. The new location opens in time for Christmas, and it's about to change the athletic wear industry forever. Ready or Not Yep, the holidays are coming and I'll be honest, I love having friends and family over. But I don't love realizing at the last minute that my serving pieces look like they've been through 12 dinner parties or that the guest room is more college dorm chic than holiday cozy. Know what I mean? Well, that's where Wayfair comes in. We just ordered some new serving plates, a new wreath for the door, a set of crisp new sheets, and suddenly the house feels just about guest ready. Even better, it didn't feel like a chore, it felt fun. But I've been here before, I'll be honest. My secret the Wayfair App What I love most is how Wayfair has literally everything you need. That's no exaggeration. I was surprised to find high quality cookware that's perfect for hosting those big family dinners. And let me tell you something, delivery was a breeze. Free and fast, even for the larger items. Whether you're looking to spruce up your kids rooms with festive touches or need new bedding for the guest room, Wayfair's got you covered. From Christmas trees and wreaths to inflatables for the yard, they're truly a one stop shop for holiday prep. And the best part? There's something for every style and every budget. I can't wait to tackle more of my holiday home goals with Wayfair. It just makes getting ready for the season so much easier. Leaving more time to enjoy with the family. That's what it's all about. Get organized, refreshed and ready for the holidays. For way less, head to Wayfair.com right now to shop all things home. That's W A Y F A I R.com Wayfair Every style, every Home when planning for your future, you want someone with a history of keeping their word year after year. For nearly 160 years, Pacific Life has been a trusted name in the industry. But that isn't just a number. It's experience that matters. It's 160 years of promises held, helping generations retire with confidence, protect their loved ones, and plan for whatever comes next. Whether you're looking for life insurance, employee benefits, or retirement income solutions, when your future is on the line, you want history on your side. And believe me, Pacific Life has been there, always there through changing times, always focused on your needs, ready to secure your tomorrow. Ask a financial professional how Pacific Life can help you feel prepared for what's next. Pacific Life Insurance Co. Omaha, Nebraska and in New York, Pacific Life & Annuity, Phoenix, Arizona. Because with Pacific Life, you're not just planning for the future, you're partnering with trusted experience. It's December of 2000, just weeks after Lululemon moved into their new brick and mortar location, and it's busy. Customers are buzzing through the store, asking employees countless questions about yoga and athletic wear. People are shopping for the holidays, and multiple major newspapers included Lululemon items in their gift guides. Even people who walk in without knowing anything about yoga leave excited about it. That's intentional. Wilson calls his salespeople educators, and their main mission is to provide preach about yoga and the way Lululemon's clothing is designed. They emphasize features that other brands lack, like proprietary fabric and flat seams. Lululemon also opens an online shop with delivery available throughout British Columbia's Lower Mainland. In the year that follows, Lululemon explodes at the old location. Lululemon's biggest day sales wise was $2,000. Now even their slowest days have revenues multiple times that. The demand is wild, and customers and journalists alike are interested in this reinvented athletic wear. But as Wilson does more and more publicity, he also starts saying things that are controversial given how small the company is. There isn't a board or any official oversight yet, no one to keep him in check. He tells journalists that he chose the name Lululemon because for Japanese speakers, quote, l is not in their vocabulary. It's a tough pronunciation for them. So I thought, next time I have a company, I'll make a name with three L's and see if I can get three times the money. It's kind of exotic for them, end quote. Then he adds that he thinks it's funny to watch Japanese people try to say Lululemon. Around this time, he also notices Nike getting flack for its child labor practices, which Wilson says he thinks is ridiculous. He says publicly that the way he sees it, it's a good thing children are given the opportunity to work. In an attempt to get ahead of similar accusations at his own company, he runs an ad in a yoga magazine that features features him in a diaper at a sewing machine with the text, we believe in child labor. Cringe. Still, the brand continues to grow. Wilson's strange, offensive comments aren't hurting it, likely because Lululemon isn't big enough for anyone to notice what its founder has to say. In interviews. And without any real blowback, Wilson sets his sights on expansion. It's October 2002 in downtown Vancouver. On this cold fall morning, 40 people have gathered in robes and loose clothing at a busy city intersection, and they're about to get naked. All at once, the group sheds their layers and stands facing the traffic. Some of them wear masks to hide their faces, but everything else is on display. Lululemon now has a handful of locations across Canada in cities like Toronto and Calgary. And today, it's continuing its expansion closer to home, opening its second Vancouver location and advertising it with a stunt that Wilson is convinced will make headlines in newspaper ads. Wilson has promised to give 30 lucky people free Lululemon gear of their choosing, so long as they show up without anything on and stand outside for 30 seconds. The naked crowd rushes into the store, taking their time to shop through the aisles completely in the nude, filling their arms with outfits, ringing in at around $200 each. Yes, it's a strange promotional tactic, but it works. It makes headlines across Canada and even crosses the border reaching cnn. Wilson's philosophy still seems to be that all publicity is good publicity. And for now, he might be right. You know, publicity stunts are a little like energy drinks. They give you a quick jolt, but you can count on a crash, too. Flashy tactics can be cheaper than ads, but they also stick your brand with a reputation you might not want once you're bigger. A good gut check. Ask yourself this Would you be proud to see this headline when you got 500 stores? And if the joke needs an explanation to prove it isn't offensive, well, it's probably not a good joke. Provocation can put you on the map early on, but as you grow, customers expect steadier hands. Every stunt is really a rehearsal for how people will think about you in the long term. It's August of 2003, five years after Lululemon was founded, and today the company is taking a big step forward as it opens its first stateside store in Santa Monica, California. It now has five Canadian stores, with plans to open more in both the US And Canada. Analysts think it's doing for yoga what Gap did for jeans and Nike did for running. But Lululemon's success means that bigger brands want in on the action. As more women start sporting Lululemon's trademark black yoga pants in and out of the gym, competitors like Nike start considering expanding into yoga clothing. Soon, companies like Costco start selling cheap knockoffs of Lululemon's yoga pants that copy their design and logo. In September of 2003, Lululemon files a lawsuit against one of the knockoff companies. The case fizzles out, but it's a sign of what's to come. Lululemon helped create the athleisure trend. Question is, can it hold to. It's 2005 on the grouse Grind, a famous hiking trail in North Vancouver. Wilson is here with a potential private equity partner, trying to see if they might be a good fit for Lululemon. Wilson looks the man up and down, eyeing his dress shoes and work pants. Not a great sign. And on the hour long walk up the mountain, Wilson notices his hiking partner groan. Hey, all good? Yeah, I mean, I mean, it's beautiful and all, but this couldn't have been a regular meeting. Come on. It's a gorgeous walk up a mountain, not a root canal. And hey, if you want in on Lululemon, you also have to be interested in its culture. We want to work with people who actually understand the brand. Recently, big companies have been expressing interest in buying or investing in Lululemon, including Victoria's Secret and the gap, which offered $200 million for a full buyout. At this point, Lululemon is worth around $225 million. But Wilson is frustrated. Given Lululemon's immense growth potential, he thinks the Gap should have offered at least $500 million. The deal didn't go anywhere, so Wilson started looking into private equity options in order to vet private investors. He brings them on this hour long hiker, making sure they can keep up. Because while Lululemon might be a company to Wilson, it's also part of a lifestyle. One that prizes being outside and connecting with your body more than sitting in an office. In the end, no one is too turned off by the hike. All eight potential investors put in offers. Wilson makes his decision based on vibes and personality, choosing a personal private equity firm that offers $108 million in exchange for 48% of the company. Wilson maintains majority ownership, and he's happy with the outcome. Still, as the company grows, he starts feeling like he's a little in over his head. He started this company because he was passionate about designing activewear and tapping into a new market. But now, at 50, he wants to focus on spending more time with his family. And besides, he doesn't think he has the expertise to head a company generating $100 million in sales annually. He realizes he might not be the best CEO for Lululemon anymore, and soon he'll let someone else take the helm. Let's pause on this for just a moment. A founder's job is to see the future. An operator's job is to make it repeatable. Wilson saw the yoga wave coming, but even he Knew scaling a 100 million dollar company wasn't his forte. Sometimes the hardest move is stepping aside before the cracks start to show. Founders might want to try this. Write down what you think must never change. Things like your culture, your product soul. Then let the pros handle the rest. Founders who plan the handoff stay relevant. Founders who cling too long risk breaking what they build. Sometimes the bravest leadership move is letting someone else take the reins. In December of 2005, Lululemon announces that Wilson is preparing to step down as CEO. His replacement will be Robert Mears, the former CEO of Reebok. Wilson tells the public that Mears has the know how to expand Lululemon into a global company. He can shape Lululemon into an American giant in a way that Wilson couldn't do alone. For now, they're taking the transition slowly. And even when that transition does happen, Wilson will stay at Lululemon in another, smaller role. Market analysts and experts think it's a great call. It's a big step towards preparing Lululemon for an eventual ipo. But loosening the reins on a company you founded is easier said. You hear it all the time on business wars. The battles between brands, the bold moves, the breakthroughs. But behind every winning business, there's something less talked about. Great IT. That's where ManageEngine comes in. ManageEngine offers a comprehensive suite of AI powered IT management solutions that give you complete control over your IT operations. Your employees can collaborate securely, your IT admins can easily monitor and manage devices, and you get full visibility of your data hygiene. ManageEngine also integrates well with most popular IT software programs out there. So if you're a growing business or an organization looking for enterprise grade IT management and cybersecurity solutions, visit manageengine.com to take control of your IT. That's www.manage. when Netflix pivoted from DVDs to streaming, or when Amazon expanded beyond books, those transformations came from leaders who kept questioning their own strategies. Hey, have you met Claude? If you're looking to challenge your own thinking about a business problem or discover new ideas. Claude can be your Go to AI thinking partner Instead of delivering quick answers, Claude works through complex decisions with you. Take market expansion planning beyond identifying new territories, Claude helps teams explore things like regulatory landscapes and competitive dynamics. It's the kind of deep analysis that reveals additional opportunities. Claude researches across hundreds of sources in just minutes to deliver accurate, comprehensive analyses for technical teams. Claude code automates complex coding work, and through the Claude API, development teams can integrate Claude's reasoning capabilities directly into their existing systems and workflows. The companies featured on Business wars succeeded through continuous strategic questioning, not easy answers. Whether teams are analyzing supply chain vulnerabilities, exploring new business models, or debugging critical systems. Or Claude can become your AI collaborator in working through complexity until breakthrough insights emerge. Check out Claude for yourself for free at Claude AI Businesswars and see why the world's best problem solvers choose Claude as their thinking partner. It's July of 2007 at the NASDAQ market in Times Square. It's a big day for Lululemon. Wilson is ringing the bell this morning, officially turning Lululemon into a publicly traded company. At this point, there are 59 Lululemon stores 38 of them are in Canada, 17 in the US and four are in Japan and Australia. If this IPO is successful, it'll be a step closer to the vision the newly appointed CEO, Robert Mears, has for the company. While Lulu's success has been very Canadian, he wants to expand their American footprint. His plan is to double the number of stores in the next two years, adding another 60 locations, mostly in the U.S. the IPO turns out to be a bigger success than anyone could have hoped, raising almost $328 million, well above predictions. It's a huge success, especially for a company that doesn't have a huge presence in the States yet. As part of the IPO, Wilson sold 12% of his own shares, pocketing nearly $123 million while retaining a 38% stake. Lululemon also performs exceptionally on the Toronto Stock Exchange, leading some to view it as one of the most successful IPOs in Canadian history. It's November 2007, just four months after Lululemon's wildly successful IPO. Lululemon is riding high. They're on track to open 10 more stores by the end of the year. Women are wearing their yoga pants everywhere, and while there are knockoffs out there, devoted fans insist nothing comes close to the original Lululemon. Even though their pants cost around $100, Lululemon feels untouchable but then a bomb drops. The New York Times publishes an article revealing that there's no evidence of seaweed in the Vita C line. In the article, Wilson says he can't dispute the journalist's claims, though he says anyone who tries on a Vita C shirt will be able to feel the difference. Lululemon has justified its high prices because of the quality and uniqueness of their materials additions like charcoal, bamboo, and seaweed. Their labels claim some of these materials have associated health benefits. Like that wearing seaweed fibers reduces stress and provides detoxifying benefits. Canadian regulators immediately hop on the case. In Canada, it's illegal to misrepresent the contents of fabric and to advertise unsubstantiated health claims. And while Lululemon publicly defends itself in a press release, they quietly agree to remove all health claims from their products and scrap the Vita C line to please the feds. Lululemon's Stock tumbles by 8% as the story turns into an international scandal. But it quickly rebounds, and within a few weeks, the whole story is barely a blip. You know, it seems like at this point, Lululemon has enough of a devoted following to be scandal proof. That's the benefit of being first in your market. Consumers develop a strong sense of loyalty. But if you keep pushing boundaries, the limits of that loyalty will keep getting tested. In 2007, Lululemon's revenue is around $275 million, an 86% jump from what it earned in 2006. As these new numbers come out, so does an announcement. Lululemon is once again getting a new CEO, replacing Robert Mears with a Starbucks executive named Christine Day. Mears wants to retire, and he says he thinks Lululemon deserves a woman as CEO. Shares rise following the announcement. As Lululemon continues to grow, so does the yoga and athletic wear industry it created. Remember how the Gap tried to acquire Lululemon a few years back before the ipo? Well, they still want in on this market. And in 2008, they buy an American sportswear brand called Athleta for $150 million. It's one of the many companies stepping into the women's active apparel sector, which is now worth $31 billion in the US with Lululemon's jump in revenue, the company is at the top of an increasingly competitive market. But as Christine Day takes the helm, she'll clash with its founder, Chip Wilson. It's 2013, five years after Christine Day was appointed ST CEO. She's applied lessons from her role at Starbucks, including giving managers at each store more of a say in how to operate day to day operations. She also places an emphasis on customer input. She reads product reviews, listens to feedback, working to quickly fix issues or implement changes that Lululemon's customers demand. And she's on an aggressive expansion mission, opening new Stories stores in as many new locations as possible. Her approach has been a success. In five years, Day has more than quadrupled Lululemon's revenue and tripled its store footprint. In 2011, Lululemon's net revenues breached $1 billion for the first time, and in 2012 they rose to $1.4 billion. The company now has 211 stores, all in North America and Australia. They ended up closing their Japanese stores, finding there wasn't enough of a market there. You'd think Wilson would be thrilled. The company he created has turned into an industry giant, but Day and Wilson keep bumping heads. Wilson is frustrated that Day is more focused on numbers than maintaining company culture, one that prizes community yoga and a clear brand above the bottom line. Meanwhile, Day feels like she's just doing her job, making Lululemon into a company strong enough to keep succeeding. They struggle to work together, and that tension is made all the more apparent when they're faced with a scandal. Well, simply put, some customers have noticed that their workouts are looking a little more like a peep show, saying that Lululemon's pants are skinned, see through, leaving little to the imagination. In March of 2013, Lululemon recalls a significant portion of their black yoga pants after accusations that they're too sheer. Customers are offered full refunds or exchanges for the recalled pants. Customers don't pay $100 for yoga pants. They pay for the promise of comfort and that they won't split or show through. That's why a see through pants scandal cost billions overnight. Here's an idea. Don't think of quality control as overhead. Think of it as one of the smartest marketing spends you'll ever make. Take your hero product and stress test it the way your customer will bend, sweat, stretch, do it all over again and again and again. If you fail in the lab and not in the store, you win in the long run. Or you can gamble on the quality. As Lululemon discovered, that's one heck of a bet to lose. The recall, which affects about 17% of their entire inventory, results in a loss of roughly $2 billion in market value and $67 million in revenue loss. It's a huge blunder, especially considering that part of Lululemon's original mission was to eliminate the issue of sheer yoga pants. The sheerness was caused by quality control issues with their proprietary Luan fabric and a failure to test how it would perform when stretched. The way Wilson sees it, his life work is quote, undone in an instant. Wilson is on sabbatical when the recall happens, but he immediately returns to Vancouver, where he and Day meet privately. In Wilson's version, he tells Day she's a terrible CEO, bringing her to tears. Two months later, after five successful years at the company, Day announces her resignation. As Day exits and Lululemon searches for a new CEO, the company is torn in two directions between a founder who wants to stay in control and maintain his vision and a path that prioritizes growth above all. But as Lululemon tries to recover from this latest scandal, Wilson will only make matters worse, raising questions about whether or not he should still have a place in the company or if he should be forced out from Wondery. This is episode one of How Lululemon Won Athleisure or Business Wars. A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical revolution research. I'm your host David Brown. Our story was written by Gabrielle Drollet, Sound design by Josh Morales. Our lead sound engineer is Kyle Randall. Fact checking by Will Taplin. Voice acting by Chloe Elmore. Our producer is Tristan Donovan of Yellow Ant. Our managing producer is Desi Blalock. Our senior producer is Emily Frost. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer, Beckman and Marshall Louie or wondering.
B
It's your man, Nick Cannon and I'm here to bring you my new podcast, Nick Cannon at Night. I've heard y' all been needing some advice in the love department, so who better to help than yours truly? Nah, I'm serious. Every week I'm bringing out some of my celebrity friends and the best experts in the business to answer your most intimate relationship questions. Having problems with your man? We got you catching feelings for your sneaky link. Let's make sure it's the real deal first. Ready to bring toys into the bedroom? Let's talk about it. Consider this a non judgment zone to ask your questions when it comes to sex and modern dating in relationships, friendships, situationships and everything in between. It's gonna be sexy, freaky, messy and you know what? You'll just have to watch the show. So don't be shy, join the conversation and head over to YouTube to watch Nick Cannon at night or subscribe on the Wondery app or wherever you get your podcast. Want to watch episodes early and ad free? Join Wondery right now.
Original air date: October 22, 2025
Host: David Brown
The episode dives deep into the origin and meteoric rise of Lululemon, the company that sparked the modern athleisure movement and revolutionized yoga apparel. It explores founder Chip Wilson’s pivotal moments, Lululemon’s inventive strategies to tap into an overlooked market of young, active women, and the company’s journey through scandals, explosive growth, and the tension between visionary leadership and scalable business operations. The story unfolds with dramatizations and sharp business lessons, tracing how Lululemon became the icon of yoga wear and a case study in retail disruption.
Employees are “educators” rather than just salespeople, focused on informing customers about yoga and product features.
Quote: “Retail is most powerful when it feels like a community, not a transaction... Think of the store as part classroom, part clubhouse.” — David Brown ([23:45])
[28:00] Lululemon moves to a better location, sales explode, and national buzz grows.
[34:55] PR stunts, including a naked giveaway for a new store opening, cement Lululemon’s attention-grabbing, irreverent image.
Recognizing his own limits, Wilson brings in Reebok’s former CEO Robert Mears as Lululemon grows past $100 million in sales.
Quote: “A founder’s job is to see the future. An operator’s job is to make it repeatable.” — David Brown ([45:12])
On claims and trust:
“One weak claim can undo 10 strong ones. Customers will forgive a high price if they trust the story. But a single busted promise makes them wonder what else you’re hiding.” — David Brown ([03:45])
On product-market fit:
“Don’t chase the biggest audience. Chase the clearest need. If customers are already hacking their clothes, their apps, or their gear, well, they’ve done half the R & D for you already.” — David Brown ([18:30])
On building community:
“Retail is most powerful when it feels like a community, not a transaction.” — David Brown ([23:45])
On controversial marketing:
“[If] the joke needs an explanation... it’s probably not a good joke. Provocation can put you on the map early on, but as you grow, customers expect steadier hands.” — David Brown ([35:42])
On founder transitions:
“A founder’s job is to see the future. An operator’s job is to make it repeatable.” — David Brown ([45:12])
On quality control:
“Don’t think of quality control as overhead. Think of it as one of the smartest marketing spends you’ll ever make.” — David Brown ([01:04:12])
| Segment | Timestamp | |-----------------------------------------------|-------------| | The seaweed scandal scene | 00:01 – 04:30| | Wilson’s first yoga experience | 10:10 – 14:00| | Design and prototyping of yoga pants | 15:30 – 19:30| | Early stores and brand community | 20:00 – 23:45| | Controversial remarks and ads | 31:30 – 33:30| | Naked PR stunt and media buzz | 34:55 – 37:00| | U.S. expansion and copycats appear | 38:00 – 41:00| | Wilson’s private equity “hiking interviews” | 42:50 – 45:12| | IPO and U.S. push | 49:00 – 51:30| | Seaweed/Vita C scandal fallout | 53:10 – 56:00| | Christine Day’s operational leadership | 57:20 – 59:50| | See-through pants recall and fallout | 01:01:15 – 01:04:30| | Day’s departure | 01:06:00 |
The episode is lively and insightful, blending dramatization with sharp business commentary. David Brown’s narration is witty and direct, often distilling lessons for entrepreneurs and business leaders. There’s candor about the brand’s missteps (“Cringe…”), and the storytelling captures both the triumphs and follies of fast-growing companies.
This episode charts Lululemon’s unlikely road from obscure Vancouver startup to athleisure titan, highlighting how visionary insight, tactical risk-taking, and sometimes reckless leadership fueled its ascent—and nearly tripped it up. It sets up the ongoing saga of Lululemon’s culture clashes, competition, and quest to stay on top even as scandals threaten the brand’s devoted following.