Little Black Stretchy Pants Page 7
Discovering Vancouver
From Toronto, I moved to Vancouver to live with Scott and Richard. They were living in a run-down five-suite mansion on Point Grey Road. The street runs along the beaches on the south side of English Bay and has since become one of the most expensive housing markets in the world.
While living there, I would wake up every morning to see a blue sky, freighters moving on the ocean, and snow-capped mountains I could almost touch. You could surf, ski, and sail, all in the same day. It was—and is—spectacular. One morning, while waking up to that view, I made a goal to own a house on the beach in Vancouver by the age of fifty.
Despite the Westbeach partnership’s many early challenges, I was in love with Vancouver already, and relocating there was one of the best moves I ever made, both professionally and personally.
We had stores in Calgary and Toronto. Stores in Seattle, Innsbruck, and Whistler would follow a few years later. Each store had three or four people working in it, and each store made a little over a million dollars a year. This was good revenue, but never enough to lift us out of debt created by the cash-flow-poor wholesaling model.
A Married Life
Most of my friends had been married for almost ten years. The seventies were a different era—most people got married before age twenty-four. My married friends had all had kids shortly after tying the knot. There I was, in my early thirties, still single, and living a different lifestyle. I’d started to subconsciously feel like I was missing out on the family aspect of life.
Finally, at thirty-three, I met and married a wonderful woman with whom I was meant to have two beautiful boys.
The New Flagship Store
Around that same time, a much bigger retail location became available just across the street from Westbeach’s first store on West 4th Avenue. It was a financial stretch for Scott, Richard, and me to make the move, but with the extra space came a lot of opportunity.
Thinking back to the big skateboard ramp at my house in Calgary, I realized we could install the same in our store. It would only strengthen our position at the forefront of skateboarding culture in Canada. Almost right away, the ramp became an integral part of the culture of the store.
Having the ramp at the bigger West 4th store helped Westbeach become the biggest distributor of skateboards in Canada. This was not something I’d ever foreseen when I’d sold wrap shorts from a booth on the 8th Avenue Mall, but I’d paid attention to the trends, to what was coming a few years down the line, and as a result, this was how we’d evolved.
West 4th was a perfect location for selling skateboards because Kitsilano had a surfing community. Skateboarding gave surfers a way to surf on land, so to speak, all year round.
It was easy for Westbeach, then, because for the most part, skate was the same customer as surf. We prepared and filled orders in the basement of that pink house and shipped them all over Canada.
Our position at the front of Canada’s skateboard scene stayed unchallenged until Powell Peralta—a company founded by George Powell and Stacy Peralta of, Lords of Dogtown fame—came in with their enormously successful Bones Brigade branding. The Bones Brigade was a professional skateboarding team, formed in 1978, featuring the likes of Tony Hawk. After their popularity hit its peak in 1988, if there wasn’t a skull-and-crossbones on your skateboards, you just couldn’t sell them.
We quickly lost our hard-good skateboard business to Powell Peralta, as did other competitors, but it was good while it lasted.
Taking Vertical Further
Having the bigger location on West 4th also allowed us to bring Westbeach’s production fully in-house. This was all part of an even larger vertical retail model I had imagined. I questioned why we shouldn’t take vertical top to bottom.
There was no roadmap and no one from whom to learn. Intuitively, I’d come to understand how big an economic advantage we could have if we could make vertical retail and in-house production work. We would miss all the middleman markups and supply a better-quality product at a better price. This thought became my mantra as my business acumen developed.
I knew we had to achieve economy-of-scale production. Instead of making four hundred units of a particular item, we had to increase production to two thousand or more. That required buying all our own fabric, trim, zippers, snaps (sometimes not covering these costs upfront, and learning from those mistakes), learning how to inventory it all, and bringing in payroll and labour to make it all happen.
This was learning by doing, and it gave me a deep—if not formal—sense of how manufacturing and production work for a brand. To this day, that unique experience has given me the ability to walk into a retail store and within about fifteen seconds, sense what kind of sales, volume, and turnover the store is doing, and how happy the employees are. It’s almost second nature for me, but the insight was hard-earned over my years at Westbeach.
Even after we’d centred Westbeach in Vancouver, I kept using Josephine Terratiano as a producer, but ultimately, we had to reconsider production. Vancouver had a large Asian immigrant community, which meant access to a high number of skilled, low-cost seamstresses and tailors, plus better connections with factories overseas.
Breaking the production relationship with Josephine was hard. She’d become like a mother. I’ve never been very good at keeping up relationships, and I’m not the best communicator, but I never forget people either.
Years later, after my personal fortunes had changed, I sent Josephine a shoebox with $10,000 cash in it and two first-class tickets to Italy. I didn’t say who it was from—and apparently, I didn’t need to. Not long after I’d sent her the shoebox, I “anonymously” received a tin of the same homemade biscotti I’d loved eating at Josephine’s house many years before.
Chapter 7:
The Rise of Snowboarding
Becoming a Father
After I’d sold my house in Calgary, my wife and I used the money from that sale to buy a large three-suite house in Kitsilano with a partner.
Our first child, John James (JJ) Wilson, was born in 1988 at St Paul’s Hospital in downtown Vancouver. I can’t imagine the experience of becoming a parent is much different for anyone else than it was for me. It was completely life-altering, but some of it came naturally. Despite their financial challenges, my parents had been very good to me, my sister and brother. They’d set examples that had prepared me to love this moment.
Having JJ also made me realize I couldn’t take the same risks for myself anymore. I had to think about my family, provide for and take care of them. It was on me to make sure there was food in the fridge, clothes on everyone’s back, and the mortgage was paid.
It might seem like this meant being around my family more, but, in practice, I was around less. I poured myself into my business, knowing this was the means of securing my family’s future. Then, just a few months after JJ was born, we received the great news that we had a second son, Brett, on the way.
There was room for improvement in many areas of my life, but this wasn’t a bad time. I was very happy to be a father. Real estate was on the rise in Vancouver, so the house we’d bought was gaining value, which took off some of the financial pressure.
Westbeach was at least breaking even. The three partners—Scott, Richard, and me—had agreed to increase the salaries we got from the company, from about $30,000 each to $60,000, mainly so Scott and Richard could prove enough income to pay mortgages and buy houses.
Continued Struggles
The partnership dynamic between Scott, Richard, and me was okay, but we were three partners with no CEO. That meant three, often separate, visions and three leadership styles. Westbeach was a good company, but not a great company, and for the moment, the three of us had no concept of what great was. For a long time, we’d believed our business would “get better next year,” and that we’d finally surpass that break-even point.
At the same time, I’d realized we were at a crossroads. Although still popular and widespread, I felt skate
boarding as a consumer trend would peak and decline, just like surfing had.
We knew our four vertical stores made a profit, and our wholesale was a losing proposition, but we were stuck. We needed the wholesale orders to have economy-of-scale production, but wholesale sucked up so much free cash while we were waiting for payments we couldn’t shift over to opening more stores.
We couldn’t lower our prices in our stores because we had to support the pricing we gave our wholesalers. This foreshadowed the dilemma of future wholesalers who would fail because vertical businesses could perform so much better without middlemen.
We brought in a man named Marco Allinot as a minor partner to assist with retail operations.
Marco was a great guy. He was super diligent and very smart. His job was to run our stores, and, as such, he was closely involved with our customers and saw what they saw at the retail level. Quickly after coming aboard, Marco proposed tripling the store inventory, so customers would buy six times more. We discovered that customers would return more often because they could almost always find a new or different item. It was a stretch, but we made it work, and sure enough, sales began to pop.
I would use this same strategy later when I was setting up lululemon stores.
Dropping American Brands
We decided to drop the American brands we’d been carrying since the formation of our partnership.
This idea was Richard’s, and it was a great one. American brands were sucking up cash flow, and Westbeach clothing had better profit than they did. American brands had super marketing power behind them, and for a long time, they helped to get kids into our stores so we could sell them Westbeach-branded clothing.
Carrying these brands had given Westbeach a certain amount of validity. But the import costs, high to begin with, had become even more prohibitive, especially with the American dollar 30 percent higher than ours.
At the same time, we’d become better and better at our own manufacturing. We were making our products in Canada. Since we didn’t have to pay import duty on our stuff, we invested that money in quality. We had something special—a very distinct product, at a better price, and of higher quality than the better-known American brands.
I also had an idea that changed the way we approached the athletic market. I knew hard goods, like surfboards and skateboards, gave us validity, but it was obvious all the profit was in clothing. I could see the “extreme” athletic market was 95 percent men, and the owners of sporting goods stores were 100 percent men.
Because men were more engineering driven, the men who owned sports stores owned them because they loved hard goods. Clothing was an add-on they did not understand, and so, it was a small percentage of what they carried. I understood it in the opposite way. We carried just enough hard goods to be authentic, but we rearranged our store to be 10 percent hard goods and 90 percent apparel.
Still, dropping American brands and focusing on our own improved in-house production wasn’t enough. If we were going to survive, we needed to evolve. We needed to get ahead of the next trend. And that next trend, I believed, was snowboarding.
The Rise of Snowboarding
My ability to predict the rise of snowboarding came from a few different sources.
One source was a man named Ken Achenbach, described by TransWorld as “the father of Canadian snowboarding.”2 Back in the early eighties, Ken had founded The Snoboard Shop in Calgary, where he acted as the Canadian distributor for Burton and Sims snowboards. He also experimented with selling skateboard decks, which made him a competitor in Westbeach’s early days.
I’d been intrigued by the snowboarding scene, but the market was tiny. Through my failures with triathlon clothing in 1980 and beach volleyball in 1986, I’d learned there was no point doing anything until there were enough customers to make it worthwhile, and in 1983 and 1984, snowboarding just wasn’t at that point.
It didn’t help that snowboarding was banned in most ski resorts back then. In Canada, the only place you could snowboard was at Sunshine Village in Banff, Alberta. Snowboarding was scary for older skiers.
Skiers couldn’t understand this obscure sport. It looked dangerous to them, sort of the way an older person looked at skateboarders coasting down the sidewalk. Many people skiing the mountains in the eighties were people who could afford it—gray-haired, conservative, fifty-somethings. They did not want to see something new take over their mountains.
Personally, I’d been snowboarding since 1983, and I loved it. Every Christmas, a group of friends and I would charter a helicopter to take us up to the peak in Canmore, Alberta, then we would snowboard down the powder-rich slopes. I understood the attraction of the sport.
My brother Brett also inspired me to give snowboarding more serious consideration. After moving to Colorado several years before, Brett had pursued an entrepreneurial career of his own. As I’d founded Westbeach, Brett had founded the original snowboard clothing company, called Wave Rave, in Boulder, Colorado in 1986. Brett immediately connected himself with the Red Hot Chili Peppers at an early snowboard event (I would go on to have the Chili Peppers at my wife’s fortieth birthday party in our backyard in 2013—an unbelievable experience!).
“Chip and I intersected at a lot of trade shows,” says Brett. “We’d typically meet up in Europe and in Japan. We were essentially competitors, but I don’t think either of us felt like we were stomping on each other’s territory because the market was so big.”
Brett had come up for my wedding in August 1988, and, as he recalls, “I brought my snowboard and gear because you could go up to the glacier at Whistler and snowboard in the summer. That’s when I told Chip, ‘Look, this snowboarding thing is going to take off. You guys should definitely start making outerwear.’”
Meanwhile, more skiing locations were opening to snowboarding, as resorts realized it was time to think seriously about the additional revenue snowboarding could generate. As I’d seen with surfwear and skateboarding, trends that could move into the street—a.k.a. the mainstream—were where I wanted to put my efforts.
A trend’s move into the street presented the opportunity to do a lot of business. For instance, if I’d just sold surf shorts to the world’s four thousand or so surfers (or slightly larger number of hard-core skateboarders), there would have been no business in that—not on any profitable scale. But, I’d been able to sell sport-inspired streetwear to people who wanted to emulate the sports they admired, if not actually participate in them.
These fringe customers who wanted to look the part were called “posers.” The posers’ purchasing power allowed core companies to produce enough quantity to bring prices down and quickly increase production volume.
There wasn’t a lot of technology in surf or skate apparel. After my earlier experiments with triathlon gear, the idea of technical, functional apparel was still evolving in my brain. As snowboarding took hold, I saw how essential it was for people to have the right gear. Variable conditions on a big mountain can kill you if you’re not dressed correctly.
By 1988, I believed it was the right time to get into snowboarding. My brother’s Wave Rave snowboard clothing was amazing, and I could sense snowboarding would hit its critical mass in five years.
I went to my partners and the rest of the staff at Westbeach and told them my idea. Westbeach would refocus as a snowboard apparel company. There was little interest. (I would later have the same thing happen at lululemon when I proposed mindfulness, technical streetwear, and owning our own manufacturing).
“Around 1988, there was a big change in Westbeach,” Scott Sibley remembers. “This change was something I have to give Chip credit for. He got us out of surfing before its decline and into skateboarding on its upswing, and back out, and into snowboarding right at its beginning.
“We were all partially resistant to make the jump into snowboarding. Sometimes Chip seemed to abandon ideas that still had legs, but I trusted his instincts. There were many people in the company—newer, younger people—that d
idn’t trust him at all. I think this was frustrating for him. It’s difficult not calling your own shots and having to work with the opinions of the twenty or so people that worked for Westbeach at that time.”
Despite the resistance, I stuck to my instincts and pushed hard to bring the rest of the company around. I saw snowboarding as a winter sport, something, that unlike surfing or skateboarding, we didn’t have to become California posers to do. With the summer Whistler glacier as the global hub for snowboarders, I knew that Vancouver was the perfect location to be the best in the world in snowboarding. In addition, we would be solidly authentic. That was very important.
Skateboarding now had four hundred competitors and was becoming a commodity product. My instincts told me it was a market that would soon be in decline, which meant we had to do something. Because I had the power to do so, I renamed the company from Westbeach Surf to Westbeach Snowboard. I knew this would, in effect, force naysayers in the company to get on board (no pun intended) or leave.
To prepare for the upcoming winter season, we designed a line of loose-fitting outerwear. We made perhaps four hundred pairs of overall-style pants, eight hundred non-overall pants, one thousand pullover tops (pullovers were massively popular in the eighties), and other assorted items, including branded t-shirts.
The garments had no stretch, and there was nothing initially technical about them, but the anti-ski looseness of our garments allowed layering and breathability.
We didn’t have the means to make this apparel in-house, so we outsourced it to garment manufacturers in Vancouver. We made the first line as cheaply as we could, which made it affordable to the fourteen-year-olds who made up the biggest snowboard demographic.
The immediate effect of rebranding was a tripling of our business. We had surf and skate apparel to sell in the spring/summer, but for the first time, we also had a line of products to sell through the eight months of fall/winter. Westbeach was one of three companies in the world specifically making snowboard apparel.