I'm balancing on my head, and I don't think I've ever been more relaxed. I am one of about 30 women who have assumed similarly vertical positions early on a Sunday morning in a yoga studio on New York's Upper East Side. Tibetan chants and dimmed lights block out the city's chaos just beyond the door. Motivational quotes painted on the walls -- jealousy works the opposite way you want it to! -- seep into my consciousness.
Seconds after our petite Indian yogi leads us through our final "ommm," piercing lights flicker on. People roll in tables of merchandise like stagehands between acts of a play, converting our urban ashram into a retail temple. The women gathered at Lululemon Athletica -- the Mecca of yoga lifestyle gear -- know the drill. The free class is over, and they lunge toward the register to retrieve their 15% off coupons, still catching their breath from their last downward dog. One woman already has three $52 Alluring tank tops in hand. "If you want to be successful in this industry," says Christine Day, Lululemon's CEO, "it's about being authentic."
A cult following is the most coveted accessory in retail, and Lululemon's is even more lustworthy than its Velocity Gym Bag. It wasn't built on the work of some Jobs-ian swami, however, but on the sources of Lulu founder and chairman Chip Wilson's own spiritual awakening. Wilson has mixed a heady self-actualizing cocktail from equal parts Landmark Forum (seminars based on the philosophy of Werner Erhard), the books of motivational business guru Brian Tracy, and Oprah-endorsed best seller The Secret, by Rhonda Byrne. He is now hard at work formalizing them in a Lululemon "internal constitution."
"It's the first time I've heard of anyone almost directly using the techniques of cults and applying them to their business," says Douglas Atkin, author of The Culting of Brands. Drawing on those techniques, and with virtually zero advertising, Lululemon has converted the most popular yoga teachers from Beverly Hills to Boston (and their students) into a devoted -- and self-propagating -- clientele. In a little more than 10 years, Lululemon has grown from a single storefront on the surf side of Vancouver, British Columbia, to a public company with more than 100 outlets and $340 million in annual revenue. "I have not been able to find any company that compares with what they do," says Suzanne Price, a retail analyst with ThinkEquity, who points to Lululemon stores ringing up $1,800 in sales per square foot, compared with only $600 for retailers such as J.Crew and Abercrombie & Fitch.
Wilson claims he didn't start Lululemon merely to sell $90 leggings, but also to help his customers limber up for their journey to self-esteem and empowerment. As he writes in the "Chip's Musings" section of the company Web site, "The law of attraction" -- the central tenet of The Secret, that visualizing goals is the key to attaining them -- "is the fundamental law that Lululemon was built on from its 1998 inception." He goes on to explain the company's meta-mission: "Our vision is 'to elevate the world from mediocrity to greatness,' and we are growing so we can train more people and spread the word of The Secret -- which to us at Lululemon is not so secret."
In the early days, Wilson learned quickly that a meditative bent can be a liability on the sales floor. "When we first started, we hired nothing but yogis," he tells me. "But it didn't work because they were too slow. So we started hiring runners who like yoga. They're more on the ball, more type A." Lululemon now arms its employees, or "educators," with a "learning library" that includes Steven Covey's The Seven Habits of Highly Effective People and Tracy's The Phoenix Seminar on the Psychology of Achievement. To celebrate their first anniversary on staff, educators are rewarded with Landmark Forum seminars. "We feel like Landmark is a tool," says Day, a 20-year Starbucks veteran who has attended Landmark training. "It's created a culture of accountability."
On its Web site, Lululemon says the training program has been "such a success that the Lululemon people have created a life for themselves that most people could only dream of." That would certainly apply to Wilson, whose net worth is reportedly close to $370 million. His inner voice urged him to dump almost 7 million shares when Lululemon held its U.S. IPO in the summer of 2007, earning him more than $100 million [Editor's Note: He is still the largest shareholder, with 35%.]
Not everyone has enjoyed the same rewards, financial or spiritual. "I didn't see it as eye-opening at all," says Andrew Kumar, of the training program. Kumar quit his $10-an-hour educator job in January and says the company required him to listen to four Brian Tracy audiobooks during his free time and post his personal, professional, and health goals on his store wall for public view. "They are so methodical and wanted to know so much about me," he says.
The occasional skeptic hasn't blunted Lululemon's own self-actualization skills, which are highly effective indeed. As much as a year before it opens in a new market (the company rolled out in Boston, Philadelphia, and East Hampton, New York, in 2008), it sends missionaries to attend every yoga and exercise class they can find, sniffing out and befriending the most influential instructors. "Equinox [the gym] was a big reconnaissance mission for us," says Liz Eustace, Lululemon's northeast regional community manager. "It's a little bit like a relationship. You go on a couple of dates and then decide if you want to actually commit." Before the 2006 New York debut, educators filtered through more than 500 classes to find the chosen yogis. They then invited them to an unmarked walk-up in the Garment District -- accessed with a password and a secret knock -- where they could buy the latest Sanctuary Hoodies and Flow Y sports bras.
Once a store opens, Lululemon formalizes the relationship with its yoga-instructor "ambassadors," now about 900 strong. The ambassadors get free swag plus a billboard-size portrait in their local Lululemon, which helps them expand their clientele. They then complete the karmic exchange by driving clients back to the retailer. "Not only has it helped me build my business," says Leila Cunningham, a Pilates instructor in Hermosa Beach, California, who was courted by Lulu staffers, "but we started becoming friends, hanging out, going to parties. They've become part of the community." Ambassadors hold free weekly classes in the stores, which are meticulously designed to feel like homespun local boutiques, not cookie-cutter outlets from a public company competing against Nike. ("It's designed to be a little bit messy," Day says of the stores' calculated nonchalance.) Comments from customers -- who can monitor progress toward their life goals through a Lulu micro Web site -- are scribbled on chalkboards outside the dressing rooms, then funneled back to HQ every two weeks.
Lululemon's own goals, meanwhile, include expansion -- to swimming, triathlons, and running. Running and swimming may not have yoga's built-in guru network, but Lululemon knows how to woo the unconverted. "When I went to Beijing last summer," says Tim Crowley, an Olympic triathlon trainer and now a Lululemon ambassador, "it outfitted me with stuff. It was phenomenal." Chalk up another victory for the law of attraction. "Your job is pretty easy when you are authentic with people," says Eric Petersen, Lululemon's community director. "They realize you don't have some sneaky agenda."
Editor's note: An earlier version of this story incorrectly described the originating principles of the Landmark Forum, which is based on the philosophy of Werner Erhard.