John Galt Does Yoga?
While lululemon athletica's (NAS: LULU) new "Who is John Galt?" shopping bags may be delighting Freshman English teachers across the nation, some of the yoga clothier's customers aren't so pleased. Was quoting controversial author Ayn Rand a stupid decision? Well, some pundits have said so, but it's not such a strange move for this iconoclastic company.
Comments on lululemon's website ranged from the supportive ("this philosophy is why LULU has such great products and is such a great company") to the incredulous ("Is this some of kind of joke? For a company that sells products like yours to associate itself with Ayn Rand is astonishing."). Other commenters promised to boycott the clothing chain, claiming the bag's call, a reference to the protagonist of Ayn Rand's novel Atlas Shrugged, is antithetical to the spirit of yoga. Rand is known for her philosophy of Objectivism, which states that individuals should live for their self-interest above all else.
Businesses generally avoid wearing politics on their sleeve. Nike pitchman Michael Jordan famously refused to endorse a Democrat in a tight Senate election, reportedly saying, "Republicans buy shoes, too." On the other hand, plenty of CEOs and corporations give money to political parties and causes. Domino's Pizza Founder Tom Monaghan has been a big contributor to pro-life group Operation Rescue, but you didn't see anything about it on Domino's pizza boxes.
The difference with lululemon is that ideology is baked into the company; it's selling a lifestyle along with the exercise clothes. Its manifesto -- just the fact that it has one says a lot - reads like a manual for self-empowerment and leading a more fulfilling life. Goal-setting is a major part of employee culture, and some job openings even require submitting a goal sheet along with a resume.
The company explains the connection to Rand's book on its website, stating that it was fundamental to founder Chip Wilson's quest to "elevate the world from mediocrity to greatness" -- a phrase the company uses in its mission statement. So it's really not surprising the company sees an overlap with Rand's teaching.
In fact, lululemon has made similar moves in the past, as have its "brand cousins" Whole Foods (NAS: WFM) , Starbucks (NAS: SBUX) , and Apple (NAS: AAPL) . These four companies often occupy neighboring real estate, cater to a similar customer base, and foster a culture of aspiration and greatness because their founders held visions beyond making a profit. These visions have lent themselves to eccentricities before.
Who but Apple would imply that its hourly-wage retail employees are geniuses? Who but Steve Jobs would want the wires inside a computer to match the company's logo? Starbucks CEO Howard Schultz made news recently when he asked fellow CEOs to stop making political contributions and called on his own customers to each donate $5 to a job-creation fund. Earlier, Whole Foods CEO John Mackey proved he wasn't afraid of risking his company's image when he published an op-ed in The Wall Street Journal promoting a free-market alternative for health-care reform.
Apple, Starbucks, and Whole Foods have all survived whatever blunders its critics have accused it of, and they continue to prosper. The question for lululemon, then, will be whether it's crossed the line with this move. Alienating your customer base is never wise, and though it can be argued that the John Galt bag is aligned with the company's philosophy, that doesn't mean lululemon's customers all feel the same way.
The apparel seller has had its share of detractors in the past. Despite its cultish following, critics have accused it of commercializing an anti-materialistic practice to sell high-end merchandise. Like its brand cousins, though, lululemon has thrived in spite of controversy, and all four of these companies have outperformed the S&P since lululemon's IPO in 2007.
Source: Google Finance.
As those returns help to indicate, this kind of risk-taking can be dangerous, but also it seems to be a hallmark of the kind of bold vision that develops a loyal customer base. The founders of these four companies get something that most don't -- standing for something counts -- and they have shown that they are unafraid to take the risks to prove it. Though it may mean ruffling some feathers in the short run, in the end, I'd rather stand with a CEO whose beliefs are guided by more than just making profits. Great businesses aren't built on margins alone.
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At the time this article was published Fool contributorJeremy Bowmanowns shares of Nike. He holds no other position in any of the companies mentioned here, though he looks great in yoga pants. The Motley Fool owns shares of lululemon athletica, Apple, Starbucks, Whole Foods Market, and Domino's Pizza.Motley Fool newsletter serviceshave recommended buying shares of lululemon athletica, Apple, Starbucks, Whole Foods Market, and Nike. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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