Little Black Stretchy Pants Page 5
The name, Westbeach, was derived from my subconscious need to get back to the West Coast. My childhood on Ocean Beach in San Diego had imprinted a feeling in me that I was trying to recreate in the prairie city of Calgary.
The Triathlon
Throughout the same period, in the spring and summer of 1980, I had become interested in triathlons.
There were a few ways I’d come across the idea of doing a triathlon. As a competitive swimmer, the 2.4-mile swim was easy, since that was the distance swimmers swam to warm up for a workout. I’d also recently taken up cycling, as I found the act of pulling up with foot cages on the pedals fixed the back injuries I’d sustained from playing football. So, I was already regularly doing two of the three main exercises that compose a triathlon.
I was also looking for a new physical challenge. Through swimming I’d come to believe my mind had ultimate power over my body—but what about something I hadn’t tried? Something like the Ironman? The first Ironman was held in Hawaii in 1978. Since so few people had done it, there was really no context, no collective understanding of what it demanded. I may as well have said I wanted to run across the Gobi Desert.
However, I believed if I could do an Ironman at fifty pounds heavier than average, I could train my brain that anything is possible. Knowing you can achieve what seems impossible is one of the most significant things someone can derive from athletic activity.
No one had figured out how to make clothing for triathletes. The average time to complete a short triathlon was a couple of hours. For the Ironman, it was about nine to ten hours, or, thirteen hours in my case. Either way, it was a lot of time. Transitioning out of salt water, if the seams inside an athlete’s apparel were off a little bit, or if there was any rubbing or chafing, it would be a pain more painful than the race itself.
I spent a little time and money designing a Lycra garment with the seams moved away from the inner thighs and from under the arms. The result was a pair of shorts with a look, feel, and function that had never before existed. I was excited by the technical achievement of these shorts. This design appealed to me in a far more creative way than the wrap shorts we’d made for Westbeach since those wrap shorts didn’t solve a functional problem of any kind.
Unfortunately, I was eight years ahead of the mainstream popularity of the triathlon movement. There just weren’t enough people participating in the sport to make the demand worthwhile—not yet, anyway. I sold the shorts wholesale to a few cycling shops, but the experiment went no further.
Still, I couldn’t ignore that deep-seated, creative satisfaction I’d felt from designing and producing a high-quality, technical garment. This was a passion that would drive me with Westbeach when we eventually moved on from surfing to skateboarding and then to snowboarding gear, and it would move to the forefront with lululemon, still two decades away.
The First Season in Business
At last, Cindy and I opened our booth when spring arrived. It didn’t take long to see how high the demand was. The incredible thing about the first season at the booth was seeing how people actually wanted to buy our product. It excited them.
Fortunately, the Dome Oil Tower was across the street from our booth. At the end of the day, I would collect the cash, go buy fabric and take it to the other end of the city to the seamstresses and tailors. I would then go for a ninety-minute swim, eat all I could, and go to bed. In the morning, I would wake up early and go for a two-hour bike ride, then go to the other side of the city to pick up finished goods from Josephine and deliver them to the store. I would then skateboard into work in my suit and run a 10k at lunch.
Those days of starting a business and training for a triathlon were wonderful and energizing. I loved it all.
Chapter 4:
Lessons Learned
Discovering Vertical Retail
Before our first season, many people told me I was making a huge mistake by opening my own lemonade-stand-store—as modest as it was—in the outdoor 8th Avenue Mall. I kept hearing that the clothing business was tough. But, to me, it seemed simple. I bought the fabric, I oversaw the production of the garments, I brought them to the booth, and when Cindy wasn’t available, I did the selling myself.
What I didn’t realize at the time is that I was inventing vertical retailing.
Because I had my own stores, my margins (something about which I was just learning) must have been huge, but there was no vertical model with which to compare it. The whole process seemed so simple. I got paid every day instead of waiting for wholesale payments to come sixty days after shipping.
However, I still had a wide variety of costs to deal with on my own. The booth and the labour, for starters, but also the production.
My economics degree finally came to some use. I knew a profitable business would need critical mass and economy-of-scale production. Unless I could make a minimum of five hundred to two thousand units of a style at a time, I couldn’t get the production price low enough to resell and make a profit. It didn’t matter if I made any money because I knew I was in it for the long-run. I needed to learn everything about business I didn’t yet know. In life, there’s no performance without action.
The Bank is in a Lot of Trouble
In 1980, at the end of our first summer, Cindy went off to university (she was studying architecture at the University of British Columbia), and I closed the booth for winter and planned for the next season. We’d made a little money, about $5,500, that season.
I needed to buy about $20,000 of fabric for next season’s production. I was continuing to loan money from my oil job to Westbeach, and I knew that if I spent all my money on fabric, it would leave me unable to pay our sewing costs—one of Westbeach’s first production challenges.
In search of a solution, I went to Josephine Terratiano and asked her to do the sewing over the winter, with a promise to pay her come the following summer once that inventory sold. This was a big thing to ask. It hinged on authenticity, trust, and the sense of family I’d developed with Josephine—the personal aspects of a business relationship that can’t always be captured by formal agreements.
However, it was also advantageous for Josephine because I could purchase double the fabric and she got to sew twice as much as I otherwise would’ve been able to buy, which meant she was due twice as much money when the time came to pay her. Ultimately, it was beneficial for both parties.
Meanwhile, as we moved through fall and into winter, I continued at Dome. Here I was sitting up in the Dome Tower on the thirtieth floor, working on multi-million-dollar contracts, with the little Westbeach booth closed for the winter. Dome was a good job, but I stayed mindful of my goal to leave the company and be working for myself by age thirty, and the longer-range goal of retiring by forty.
Suddenly, in a flash, I saw my future life if I stayed at Dome. I would become a VP, I would be married, move to the suburbs, have a couple of kids, retire at sixty, become a serious cyclist, and then die. I said to myself, “Great, Chip, that’s one life, and there is no point in living it again. Let’s live a new life.” I believed I had just gained 15,000 days of life.
My mother, having been a child of the Depression, was anxious. “When Chip went into business for himself, I was scared,” she says. “I mean, I was scared for him because I didn’t know where it would lead, but it taught me a lot of things. Going from the petroleum industry into the clothing business is a huge hurdle.”
My dad puts it more bluntly: “I think Chip was kind of bored at Dome. I think he knew it wasn’t the direction he wanted to go.”
With Westbeach, I was always learning and challenged because I was encountering a brand-new situation every day of my life. I never knew what would happen next or what I would learn. Whereas, with being in business for someone else (in my case, Dome), there was always that fixed progression through the ranks, through the years, until you reach a prescribed end.
Dome Petroleum ended up as the largest bankruptcy in Canadian history. It was a company
built on a deck of cards. I was a fortunate beneficiary as I spent two-and-a-half years with Dome when the company was in exponential growth and two-and-a-half years when the company was in bankruptcy, working under bank protection.
I promised myself I never wanted to owe banks money and be under their control. However, I loved a quote that came from the circumstances: “If you owe the bank $2 million and you can’t pay up, you are in a lot of trouble. If you owe the bank $20 billion and you can’t pay up, the bank is in a lot of trouble.”
The Second Season in Business
As we moved into the spring of 1981, Westbeach underwent a small expansion. I added another lemonade-stand booth in Calgary and an outlet in Edmonton. The Edmonton location was a ski shop (this was the advent of the pop-up store concept we would later perfect at lululemon). The ski shop closed during summertime, which made it ideal for a seasonal retail venture like Westbeach.
That summer, having a booth only allowed customers to buy our stuff, not try it on. If we were going to continue to grow, we would need a store with change rooms. The demand was there. Westbeach was growing. We hadn’t yet reached our critical production mass, but I had no doubt we had created something that didn’t otherwise exist.
My partner, however, did not share this belief.
As the summer of 1981 ended, I said goodbye to Cindy as she headed back to school. We were about to embark on another year of a long-distance relationship. In those days, there was no email or internet to keep us connected. Long-distance phone calls were expensive, which made you constantly consider how much time you could afford to talk, and snail mail, even then, seemed slow and archaic.
The conditions were there for Cindy and me to grow in different directions, and we ended both our personal and business relationships. Separating the business part was messy; Cindy had not been involved in the accounting and didn’t understand that Westbeach was worth negative $20,000 due to a personal loan I had provided.
The Third Season in Business
Despite the painful breakup with Cindy, my faith in the demand for Westbeach remained unshaken. I still believed I could be the best in the world at something. I was seeing a West Coast way of life manifesting itself into an athletic style far different from that of Europe or the East Coast. This style could be described as the hoody look and is the genesis of the apparel worn by Silicon Valley techies. Still, the term lifestyle clothing had not yet been coined. Neither had the word extreme in the context of describing extreme sports.
Then, in the summer of 1982, I finally moved Westbeach into an actual storefront. The shop was formerly a 1970s upscale hippie store called, The Strawberry Experiment, a well-known downtown Calgary retail location 40-feet from where my booth had been. The previous store owner had poured a lot of money into the place, adding a glass floor over a fish tank, strobe lights, and shag carpeting—the works. I worked hard to enhance the unique, retro vibe of the place, to give customers a feeling they wouldn’t get in other clothing stores.
On a trip to Mexico City, I had gone into a discount store selling beautiful clothing. I bought $5,000 worth of clothing, brought it back to Calgary, and it sold out immediately. I went back again and bought $15,000 worth and turned it around with the same results. When I went back a third time, the store had shut down. Little did I know at the time, but I was buying Guess clothing when the brand was near its genesis and had huge brand pull. Guess was unavailable in Canada or the US, and women shoppers knew something I didn’t. It was a great driver of people into our fledgling store.
I also hired two women, Kathy and Cathy, to cover the sales and management of the store. I’d met Kathy and Cathy when they were working at Calgary’s first cappuccino café, a place called Bagels & Buns. It was on 17th Avenue, below the spot where my dad’s family had lived in the 1940s.
I would go to this café every Saturday and Sunday to read newspapers and get the only cappuccino in town. As I watched the efficiency of Kathy and Cathy behind the counter, they struck me as some of the most amazing workers I’d ever seen. Highly responsible, smart, motivated, and great with customers.
Kathy and Cathy were exactly the people I wanted in Westbeach’s new store. As a learning experience, hiring them gave me my first brush with interviewing, training, and developing employees. I had no training myself, and I could only pass on the little I knew of my business philosophy. There were no books to read from which to learn how to do vertical retailing. Wholesale was a much “safer” option to address overhead and many other operating costs.
One of these wholesale deals was with Scott Sibley, the guy I’d become friends with during my first few months at Dome. A year or so earlier, Scott had left Dome to start a business in Vancouver with a man named Richard Mellon.
“I followed my passion and headed out to the West Coast to get into the sailboat business,” Scott explains.
Unfortunately for Scott and Richard, the small sailboat business at the time was going through a downturn. The market for parts was drying up. “To get some cash rolling through the company,” says Scott, “we looked at adding soft goods. That was where Chip came in. We arranged it so he would send us a bunch of inventory—shorts and t-shirts—on consignment. With this new focus of soft goods, we changed the name of the store to California BC.”
There was a huge demand for Westbeach apparel in Vancouver, and soon, California BC became my biggest wholesale customer.
The Shift in Men’s Apparel
In 1982, there was about to be a major shift in men’s apparel. This would take Westbeach to the next level. Standard men’s shorts were tight, with a short inseam—no more than three inches. If you had a dime in the pocket of those shorts, someone could read the date through the fabric.
Meanwhile, I’d been making baggy shorts for myself, with a nine- or ten-inch inseam. For a man of my size, I preferred semi-loose, longer shorts, of the kind I’d seen on businessmen in Bermuda during my global travel. I’d also seen how Australian surf-inspired shorts and hoodies were emerging as casual clothing in California.
Then, by the early eighties, Quiksilver (who were making surf wear for actual surfers), made shorts with a small waist and a large bum and thigh ratio, which mirrored the physical build surfers tended to have from squatting. This was functional apparel, built for an athletic requirement.
Because shorts designed specifically for an athletic body looked so good, girls everywhere wanted their boyfriends to wear the same shorts. As with other trends, I sensed what was happening on the West Coast would make its way to the rest of the world. There was an opportunity here for me if I could figure out how to take advantage of it.
My first attempt came when I was visiting the Quiksilver warehouse in California. The general manager showed me some unsellable inventory of men’s pants they’d brought in from Australia. The pants were made with wild patterned fabric that was popular in Australia, but for which Americans were too conservative.
I offered to buy a thousand pants for a dollar apiece. The Quiksilver GM accepted this offer, happy enough just to get rid of the pants. I shipped the pants back to Canada and had them cut into long shorts, then priced them at $45 each. They had the look of the surf-shorts I thought would soon take over. Sure enough, the shorts sold out in a week.
Reversible Shorts
The fast-selling Quiksilver pants-turned-shorts proved that a market existed for long, colourful shorts. I created a new design by adopting Quiksilver’s fit, which included a very low rise in the front and a high rise in the back. The low front rise meant the fabric wouldn’t double over when crouching and the high back meant no plumber’s butt. It was a massive innovation in athletic apparel. These modifications worked perfectly, but the next hurdle was finding Hawaiian-type patterned fabric to offset the old look of solid colours. I couldn’t afford to buy the right fabric, not in the 2,000- or 3,000-metre volumes I needed to make money. If I couldn’t buy the fabric, I had to think of an alternative.
As I considered the problem, I t
hought about my mother. Along with all the other sewing she did, she’d also always been good at quilting. This, I realized, was the solution. I went around to all the discount fabric stores, bought up all the discounted, brightly-coloured end rolls of fabric I could find, cut them into squares, and had the seamstress quilt them together.
“When Chip was a kid he used to help me put my quilts together, and he’d come into the sewing room, but I never thought those moments we had would turn into a career,” my mother remembers.
The quilted fabrics gave me the crazy, bright look I wanted—but the shorts lacked stability since they were put together using multiple small pieces of material. The solution to this problem was to create a black cotton underlay.
As an unexpected side effect, the black underlay not only solved the stability problem, it also made the shorts reversible. You could have the wild patterns on one side, or you could turn them inside-out and have a pair of plain black shorts, all in one garment. This thinking was the genesis of how I looked at all future designs. I discovered that when a consumer understood a garment was reversible, they subconsciously recognized them as two-for-one and halved the price in their mind.
Finally, I designed the shorts to be big enough to fit me. From a functional, technical standpoint, I hated the skin-tightness of the men’s shorts in style at the time. I wanted something in which I could move much more freely. I wanted to create an anti-ball-crushing garment (I perfected this with lululemon’s menswear).
As Josephine Terratiano says, in her heavy Italian accent, “Every time Chip came here, he had so many crazy ideas. He kept saying, ‘Josephine, I have to have something different because young people, they go crazy and they spend money.’ We used to make reversible shorts, $100 each. He said, Maybe some people they cannot buy these shorts ‘cause they can’t spend money but the young people, they go crazy.’”