Life Isn't One Big Transaction

Lululemon and Monster Energy would like a word. What we put out there, we don't always have to get back in return. It is about more than money.

“We believe in self–empowerment, positive inner–development and living a life of possibility. A Lululemon career is more than what you do today; it’s what you’re going to do tomorrow.”

The people motto of Lululemon. Seems like it is working.

The stock has gone up over 104.02% in the past five years, outpacing the S&P 500, and the brand has infiltrated every part of our life. We wear lululemon at work, in the gym, in the hospital, and pretty much everywhere else. They have normalized spending $78 on a shirt, $98 on yoga pants, and $158 on shoes. Compared to Nike, we are looking at much steeper prices. You go into a Nike store and the marketing is seemingly dominated by the world’s best athletes, but not the same can be said for Lulu. They have a few high-profile athletes but the signage with models is mainly dominated by the common people, including someone you might just know. Local ambassadors, leaders in your community, dominate the branding efforts. Peep their corporate ambassador page, it says it all.

What makes us wonder how Lululemon does it? High prices and limited celebrity endorsement?

Put simply, it is not all about money.

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There was a nice thread on Twitter that broke down their culture and it began to all make sense. 

To summarize, the store managers were viewed as CEOs of the store and given the freedom to spend money in ways they deemed to be best. They owned the P&L. Autonomy? People love that. The manager then funneled down the ownership to everyone in the store, no matter the level of your job. Everyone felt extreme ownership of the brand, products, and sales. Employees were also given the ability to experiment, were responsible for anything breaking, and were pretty much given all responsibility for the store and brand.

It doesn’t stop there. 

Employees at this particular store were given other things: 

• 10 comped workout classes a week

• Taught everything about the product (materials, quality, etc.) helping them to truly understand what they are selling and why.

• Given up to an 80% discount on items

• Landmark courses were paid for

• Taught how to write a 10-year vision. A quick aside, the framework they use is apparently wonderful per multiple people. 

• Onboarding focused on building a growth mindset rather than contributing to the bottom line.

• Personal development books

• A custom one-week workshop before entering the store. 

• And with your goals that were part of the vision, you would hang your one, five, and 10-year goals for everyone to see and everyone celebrated when of course, those goals were hit.

This wasn’t particular to this specific store either. People in the comments mentioned how other stores operated in a similar manner.

The store was not a store, it was a community space. Weekly run clubs, community events, and engagement with local fitness studios were common. The beauty of this is it doesn’t explicitly focus on the bottom line but it undoubtedly helps it.

Through the bonds built in the community, Lululemon employees built real friendships and partnerships with the employees and members of the local fitness studios or run clubs. The people at those studios and clubs are exactly Lululemon’s target market. You now have employees wearing Lululemon clothes, probably the employee’s whole wardrobe at this point since they get them on an extreme discount, and they are walking billboards in a place, local fitness studios, that is full of the target demographic. They know the brand well and when someone inevitably asks an employee about their clothes, they are passionate and well-equipped to “promote” the brand. It is a beautiful thing. 

Not everything in life is about money and Lululemon is walking proof of it. It turns out that to make money you don’t need to extract every dollar out of every aspect of your business. Instead, if you focus on the inputs, the outputs take care of themselves. Life is not one big transaction.

They allowed the employees autonomy and freedom to operate as they pleased. The autonomy fused into pride and ownership, which helped Lululemon to be a stronger brand than ever before and the bottom line took care of itself. Less monetary focus and more people focus works. It is people centric and not shareholder centric.

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Another side of the successful story of not being fixated on shareholder return is instead remaining product centric. It has worked out quite well for the best-performing stock over the last 30 years. Amazon? No. Nvidia? No. Apple? No. Monster Beverage Corp.? Yes.

$10,000 invested in the IPO of Monster on 8/18/1995 would be worth a cool $22 million. Who needs a 9-5 when you can just invest in Monster’s stock? In 2006, CEO Rodney Sacks is quoted saying,

“The stockholders are not our target, I’m not trying to persuade a 60-year-old fund manager [to buy shares].”

More focus lies on the operations and the product and less focus on the returns to their shareholders. The irony of this is the focus on the product and operations will ultimately be what is best for shareholders. You make a better product, you then sell more units of your product, and when you sell more product, you, hopefully, make more money. Trying to operate a company to appease some shareholders is probably not what is best for your company. 

Everything shouldn’t be done with a fixation on the bottom line and just getting money, money, and more money. However, we slowly shift that way more each day. Everything in our lives is becoming monetized and gamified.

Dave & Busters is allowing you to now bet on arcade games as if you weren’t already “betting on it” when you put your money in a claw machine thinking you could get something out. Sports betting has evolved into not only betting on the result of a game but you can bet on the outcome of a single play. No longer can you just bet on the winner, but now you can bet on who scores the first basket in an NBA game and by what method whether it be a layup, dunk, etc. For eons, weight loss apps have tried to incentivize losing weight through games. Every aspect of our lives grows increasingly digital and with that, our lives have become increasingly monetized. It doesn’t need to be this way. Not everything in life is about money, Mr. Krabs.

Image courtesy of Reddit.

It is becoming increasingly contrarian to go against the grain and instead view people not as dollar signs but as souls. There is a reason why Lululemon and Monster continue to outperform the broader indices, but this is not just a phenomenon in the business world. It is in everyday life. 

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We mostly live in a meritocracy where our jobs are based on our talents and achievements. We must be assertive and advertise ourselves to the world. Commitment is a scarce resource because FOMO infiltrates our society and convinces us to leave all options open. If we do commit, we better benefit from it because there is a cost to committing to a single mission or love. If we aren’t sure about deeply committing to something, we will scrape by on just enough talent and commitment because what we get in, we better get out.

In these moments, we revolve everything around getting back to even for what we have put out into this world. It is what we are led to believe we should do. We like to view everything as money, money, money. The supply should always match the demand. What we pay for, we better get back in return. This shows you how to get to the top but it doesn’t show you why you are doing it. It convinces you that what you are putting out into the world, you should always get back. It is less about doing a favor around the house and now expecting someone to do something for me, assisting a coworker and then expecting them to cover for me, or calling the Uber last time so next time someone should call it for me. 

I think if you do things and expect nothing in return you will eventually get “repaid” in some capacity. Imagine how much commitments or relationships would change if we went from thinking “how can this person make my life better” to “how can I make this person’s life better”. It is not about squeezing every dollar out of every person. 

Not to be remiss, it is incredibly important for the relationship to have a balance. One way to toxicity is to have one person give and the other to take.

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However, I find that when you help others, they will often help you. Reciprocity is the fancy word that people use to describe this phenomenon. Lululemon helped their employees in many ways and that undoubtedly helped the financials of the company.

By helping to make someone else’s life better there’s a good chance it will make your life better too. It is not always about a give and take. It is about focusing on what you can control, the giving, and realizing the take will figure itself out and probably eventually even itself out. Keith Ferrazzi talks about it in Never Eat Alone,

“Later in life as I rubbed shoulders with business leaders, store owners, politicians, and movers and shakers of all stripes, I started to gain a sense of how our country’s most successful people reach out to others, and how they invite those people’s help in accomplishing their goals. I learned that real networking was about finding ways to make other people more successful. It was about working hard to give more than you get. And I came to believe that there was a litany of tough-minded principles that made this softhearted philosophy possible.”

Each person is not a money-making machine to exploit, but a mystery to get to the bottom of. A person to see on a deeper level. A person to believe in and hopefully, invest in, whether externally or internally. If you invest in the people around you, it is a sure way to end up with a strong return on investment. Money comes as the unintended side-effect of one’s dedication to a cause greater than oneself. Money makes the world go round but money shouldn’t make your life go round. It might not seem that way at first, but just ask Lululemon and Monster how that worked out for them.

Appreciate you reading.

-Scantron