Lululemon founder on past controversy, new family business

Only on "CBS This Morning," the founder of Lululemon opens up about the brand he built -- and the controversy that followed.

Chip Wilson launched Lululemon in 1998, making the yoga pant a wardrobe staple. The trend helped power $41 billion in activewear sales in the last year. But Wilson's comments to a reporter about women's bodies stretched the limits of some customers' patience, and he was demonized in the media and withdrew from the public eye.

CBS News correspondent Jan Crawford reports that Wilson called that time personally devastating -- not only for him, but his family and company. Now, with his wife and son at his side, he's re-engaged with his new company, Kit and Ace, that he says will revolutionize the retail industry again.

Kit and Ace is a new brand with a one-of-a-kind fabric the company believes will change the way we dress and live. It's an audacious claim, but this family has done it before.

"We love coming to work and partnering and feeding off each other's creativity," Wilson said.

Wilson's wife Shannon was lead designer. They turned the yoga pant into a multi-billion dollar industry.

"I always say Lululemon sort of was my third parent in a way," said Wilson's son, JJ, who founded Kit and Ace with Shannon.

The concept: Combining function with fashion using a high-end, washable fabric that Shannon developed called "technical cashmere."

"That was the trick in creating the recipe, was being able to retain the incredible soft, luxurious feel of cashmere, and then adding the benefits of stretch and recovery and wash and dry," Shannon said.

Kit and Ace is built on the success of Lululemon. From a small design studio in 1998 in Vancouver, the company created a new segment in retail -- workout clothes worn casually in everyday life.

"My lawyer when I went to register the name Lululemon, and I told him what I was doing, he said, 'Yeah, like, yoga will work,'" Wilson recalled.

Not only did yoga work, it made Wilson a billionaire.

"I have my own ideas, my own drive, and I never really agree with other people," Wilson said. "I don't think it's possible to be creating a future that would otherwise not have existed without being controversial."

But those qualities that fueled his success also caused trouble. Wilson clashed with the board and stepped back from the company.

The board asked him to return to help Lululemon through a crisis: see-through yoga pants. Then in a six-minute interview two years ago, this edited soundbite rewrote the Chip Wilson story:

"Some women's bodies just actually don't work for it... It's, you know, really about the rubbing through the thighs. How much pressure is there," Wilson said on Bloomberg TV.

Wilson's point was that women were buying Lululemon leggings too small which compromised the design, and later in the same interview, he emphasized all women can wear the pants.

But that's not what people heard.

"My words were wrong," Wilson said.

"You can see how women would hear like the clip of that and you know, we're sensitive about our thighs and be like, 'This is terrible what he's saying,'" Crawford said.

"Certainly. I've probably built one of the most successful women's companies in the world. I don't think there's any way I could've like built that with that kind of support behind me from those people if I had been the kind of person that didn't understand women, but I obviously I didn't. I didn't. I didn't," Wilson said, smiling.

After the interview, Wilson recorded an apology for company employees.

"I'm really sad. I'm sad for the repercussions of my actions," he said in the video.

It was posted on Facebook and triggered a new round of criticism that he didn't apologize to customers.

"Did you feel like you should apologize to the women?" Crawford asked Wilson.

"Deep in my heart I was never-- I knew that was never my intent to make them feel bad. I still didn't really have a real grasp on how what I said, how it affected them. I didn't really understand it. I mean, now I definitely get it," Wilson responded.

"Would you want to apologize?" Crawford asked.

"I think I have to because I said it. I'm responsible for what comes out of my mouth. And if that's what was interpreted than I fully apologize. Yeah. I'm sorry," Wilson said.

When all was said and done Wilson said Lululemon lost $6 billion in market share. Wilson said it was devastating.

"It really hurt for a while for sure," he said.

"It is sad seeing him hurt. I don't like to see that at all. But you know what? Chip is probably one of the most resilient people I know," Shannon said.

Wilson went back to work. With his family, he opened the first Kit and Ace store last year. They say the new fabric, technical cashmere, is ideal for a busy lifestyle.

"It's really was about looking at how people were living these full-contact lives and how we could actually save them a little bit of time not having to take what was seemingly so precious to the dry cleaners every time they wanted to wear it," JJ described.

For Wilson, Kit and Ace is more than a way to make money. It's a chance to try again with the people who stood by him.

"I can't think of anything more rewarding at the end of my life then having been with family, and being able to hold and kiss and mentor and trade ideas and feed off each other. What more would a person want?" Wilson said.

Like the Lululemon yoga pants, these clothes aren't cheap -- the basic t-shirt with the technical cashmere is about $80. But there is a market and they are fully engaged. They now have 58 stores worldwide with plans for many more.