Founder's Remorse

Billionaire Chip Wilson, Lululemon’s creator and largest individual shareholder, is also its loudest critic. All the current management team can do is shrug.

- Abram Brown

Sitting in a shaded cafe in a cobble-stoned neighborhood in Vancouver, Chip Wilson, the founder of Lululemon Athletica, laments the fate of the company he created. “There’s no innovation,” he says with a sigh, ripping apart a croissant. “Innovation is something that changes the way people are dressing. People get the word ‘innovation’ mixed up with incremental change. The two are entirely different things.”

This coffee shop is Wilson’s private Elba. In 2013, after a 30% drop in Lululemon’s stock that coincided with a series of public embarrassments, including a massive product recall and benighted comments about women’s bodies, the company sent Wilson into exile. In stepped a new chief executive, Laurent Potdevin, then the president of Toms Shoes, who quickly changed Lululemon’s management team, product lineup and expansion strategy. In two years he lifted sales by almost 30%, to $2.1 billion, sending the stock to $55 a share, up from a June 2014 nadir of $37. But profits are virtually flat, and the stock is way down from its peak of $82 in 2013. It’s been lurching along all fall, losing more than a quarter of its value since September.

All of which gives ammunition to the ousted founder, who retains a big enough stake (15%) to remain relevant and exhibits a trait shared by most people who have started something good: the inability to let go of his baby.

Wilson has it bad. As he bicycles atop a leopard-print seat along the Vancouver waterfront, he notices a passing jogger. “That’s Lululemon—those pants.” He spots a second person. “And those shorts.” Then a third. “And that backpack.”