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BCBUsinEss.Ca nOVEmBER 2018 BCBusiness 45 vertical retailing. I laugh at it and go, We didn't even know what we had [at what became Westbeach] when I made those three or four hundred pairs of shorts and I went to sell them at the Bay and Eaton's at the time and they wouldn't have anything to do with them. And so, classic business, you have an inventory problem. Usually you'd sell them on discount, but nobody knew what the product was. And so by setting up what I call a lem- onade stand and selling it, I was actually designing and manufacturing, so I had the manufacturing margin, then I had the gen- eral pro•t margin from selling it, then I had the retail margin. So I had these three pro•t centres that were usually split between three di erent companies, and suddenly I had them all together. It seemed like such an unbelievably easy way to make money. But we didn't know what we had. We knew that every •ve years, we'd look at it and go, Oh, God, our retail stores make so much more money than our wholesale busi- ness. But the going thing was that everyone does wholesale; that's where all the money was. But you had to be global to make that happen, or be on a big, big scale. But selling Westbeach and going, God, these two retail stores make a million dollars and this inter- national wholesale business loses a million dollars—there was a golden nugget in there. You identified the ideal Lululemon cus- tomer, the Super Girls, and held focus groups so they could help create your product. Companies say they listen to their customers, but how many of them really do? I'd say close to none. In retrospect, the power in companies happens so much with the buyer, who's incentivized on a one-year bonus system. So the drive to buy what they sold last year and do little bit better is phe- nomenal. Because •nance in a bigger com- pany gets so much power, and they're the ones setting up the bonus system for the buyer. And so there's nothing to break out of that system, unless you have a design-driven company, where the designer has the last say on what gets produced, not the numbers person. Otherwise you become the Gap. You write that you "refused to allow algorithms or metrics to run Lulu- lemon." What do you say to business- people who believe data is king? It's not king; it's more like the next step down. If we were a fully digital world, how would we •nd the information that we see by actually engaging with the customers when they're buying? Because when a per- son comes in looking for particular shade of purple and we don't have that purple, it doesn't show up on metrics anywhere. When they're looking for a size 9 but we only sell size 8‰10, there's nowhere in big data that those numbers show up. So you can't actually drive the future. Because the people who are asking those questions, by their eyes or their body language, they're telling you something about the future. And it just doesn't show up in numbers. At Lululemon stores, you succeeded partly by breaking several rules of retail—rarely answering the phone, for example, so you could focus on in- person customers. What can other businesses learn from that? That which matters the least should never give way to that which matters the most. What I noticed in the 32-year-old Super Girl who came into the store was that the most important thing for her was time. She cal- culated every minute that she was in the store against what else she could be doing, or against her salary. So when she couldn't get what she wanted in a speedy way, then it's actually costing her money, and she was adding her time onto whatever she was pay- ing for the garment. A lot of people look at retailing as cutting expenses on every level they can, where I looked at where do I need to increase expenses to lower her time in-store getting exactly what she wants, because she sees more value in that. What's one thing that every entre- preneur should know about money? There's the business of the business, which makes money. And then there's the busi- ness of governance and "inance, which makes money. These are two entirely dif- ferent things. And the entrepreneur, before they take on money from the people who make money from •nance, they've got to GLORy DAys (Clockwise from left) Chip Wilson at the first Lululemon store, in Vancouver's Kitsilano, in 1999; Christmas lineup at the West 4th Avenue location in 2001; Wilson's new book The entrepreneur, before they take on money from the people who make money from finance, they've got to understand they need a hell of a lot of education before they sign a deal to make the bridge between the two " "

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