How Phillip Lim Created a $100 Million Fashion Empire
“Don’t worry, it won’t rain.” The fashion designer Phillip Lim is standing behind his shake-shingle house in Southampton, N.Y., looking at the sky. The clouds are low and heavy, but he’s optimistic that the weather will cooperate. Today, he’s giving me a lesson in stand-up paddleboarding, a hobby he picked up after moving here three years ago and now uses to explore the bay that unfurls from his backyard.
He quickly assesses my experience level—zero—and pairs me with the longer of his two boards. “It’s all about the core,” he instructs. “Once you’ve got your balance and your confidence in check, just set yourself free.”
It’s apt advice coming from Lim, who, at 43, is one of the most successful independent designers in the U.S. He’s gotten to this point by forging his own path. Most big fashion brands run up profits by licensing fragrances, underwear, or home furnishings. Calvin Klein, for example, did $8.2 billion in sales last year, but the amount made from its ready-to-wear runway designs was so small the company considers producing them a marketing expense. But Lim doesn’t license. And at a time when the industry is seeing unprecedented investment—earlier this year, Thom Browne sold a majority stake to Sandbridge Capital; in 2014 Jason Wu sold a controlling interest to InterLuxe, an investment house backed by Lee Equity Partners—Lim and business partner Wen Zhou have built their company one step at a time.
Their goal when starting 3.1 Phillip Lim was to make designer clothing that didn’t cost a fortune, and they’ve been able to achieve that thanks to Zhou’s deep contacts with Chinese manufacturers who can execute Lim’s designs at a reasonable cost. “Everyone thinks we’re this big machine, but the truth is I wasn’t even sure if I wanted to have a company,” he says. “I’m not into being this shrewd business person.”
In the process, the duo created the template for the now-ubiquitous category of “designer sportswear,” says Ken Downing, fashion director of Neiman Marcus. “A lot of people have come forth since then, but they were real pioneers.”
That they’ve done that without selling a majority stake is impressive to industry analysts and insiders—“an incredible achievement,” says Leah Kim, senior vice president of Barneys New York, one of the first retailers to carry Lim’s clothes.
Out on the water, Lim confronts the tide as he paddles farther from shore, encouraging me as I struggle to keep up. The distance between us lengthens as he approaches the middle of the bay, alone between the sea and the sky. “He’s a genuine maverick,” Zhou says. “He is slow and steady, the opposite of fast fashion.”
After our expedition ends we head back to the house, and Lim changes into a casual banded-collar shirt and surf shorts. He sits in one of the Adirondack chairs on the deck and uncorks a bottle of rosé. He tells me about growing up by the beach in Orange County, Calif., the youngest of six children of Chinese immigrants, the son of a professional poker player father and seamstress mother.
He first experimented with fashion after embracing SoCal skate culture and a new music channel called MTV. “I was into expressing myself through clothes,” he says. “I would emulate the look of the band I was into by rummaging through charity shops. It was Flock of Seagulls, Duran Duran, Culture Club, Stray Cats, you name it.”
He earned a degree in home economics from California State University at Long Beach and landed an internship with independent designer Katayone Adeli, known for her expertly tailored basics. (She’s now designing for Helmut Lang.) He was hired full-time soon after.
A surf company backed Lim’s first women’s line, Development, for almost four years. That’s when he encountered Zhou, someone who shared a Chinese immigration story and fashion instinct. But despite critical acclaim, the financiers and Lim parted ways in 2004.
Although they’d only met once, Zhou insisted that Lim come to New York. She bought him a ticket, put him up in her Chelsea guest room, and gave him $750,000 of her own company money to begin. (Her fabric business, Aegis, sourced factories in China that could handle the demands of boutique manufacturing.) Both were 29.
The seamstress’s son got to work, producing 65 pieces in six weeks for his first collection in the fall of 2005. It was an instant smash: Barneys added the line to its stores, and Lim and Zhou did almost $3 million in sales that year. “The purpose was to create a marketplace that didn’t exist,” Lim says. “We’ve always wanted to challenge the system, but to pay it forward and bring joy.”
By the next fall, Lim and Zhou were up to more than $10 million in annual sales, and he won the coveted Council of Fashion Designers of America (CFDA) award for women’s wear designer. The panel praised the ability of this relative newcomer who could so easily reinvent classic looks. He began a menswear line in 2007 and went on to win the CFDA’s highest award for that as well, in 2012.
They’ve since grown the line into an international force, included in 450 locations and 50 countries. Sales overall doubled from 2011 to 2014, and the accessories line, begun in fall of 2011, has nearly tripled since then. The company has 16 freestanding stores around the globe and, this November, will open a new one, in Bal Harbour, Fla., their third in the U.S.
“They really understand the ebb and flow of the business,” says Daniel Peddle, co-founder of the Secret Gallery, a model casting company, who’s worked with Lim for eight years. “They are not constantly chasing trends. You don’t have to be a cool downtown denizen to wear these clothes. You can have a 9-to-5 regular job, and it’s easy to integrate into your existing wardrobe.” Lim’s designs, which run in the $300 range for men’s sweaters and $900 for women’s cross-body bags, are a mix of sportswear staples such as bomber jackets with more fashion-forward pieces for men and women.
This year, he filled his collection with white, crushed linen pants, oversize cardigans, and quilted opaque parkas that pair with cream-colored slacks. “If you want to blend into the crowd, you’re not going to buy what we do,” Lim says. “But if you have a point of view and you appreciate clothes and thoughtfulness, then you choose us.”
Tracy Margolies, chief merchant at Saks Fifth Avenue, says Lim creates contemporary and wearable clothing. “Phillip has mastered the delicate dichotomy of clean-cut silhouettes and exaggerated detail,” she says. “Our customers love them.”
Lim leads me back downstairs when it’s time for lunch, pointing out the crinkled lampshades he made from paper bags and the simple white-on-white palette of his small beach “shack.” The kitchen table is spread with radishes from the farmers market; generous portions of chèvre, brie, and manchego; fresh bread; bowls of berries; and grilled oysters and clams, swimming in a sauce of onions, wine, cream, and cilantro.
Many of Lim’s peers who burst on the scene in the mid-2000s have taken roles at legacy brands: Alexander Wang spent almost three years at Balenciaga after launching his own line in 2007; Jason Wu has been artistic director of women’s wear at Hugo Boss since 2013; Derek Lam did a side stint as Tod’s creative director for nearly six years. But Lim has only done Phillip Lim.
He’s considered selling but only on his terms. “I’m open to an investor,” he says, “but it has to be the right type that realizes we have an amazing story to finish.” In the meantime, he and Zhou have no plans to cash in. “I could make a lot of money selling my name to a bridal line, but I’m interested in making pragmatic clothes,” he says. “I don’t know how to make clothes for a life I don’t live.”
Our conversation turns back to paddleboarding. It’s not hard once you get the hang of it, he says, and it offers more clarity than yoga. There’s the endless sky. The swish-swash of the waves. The meditative way the board skims along the water’s surface.
“It clears my mind, helps me to reprioritize things that I know are coming up. But I don’t have an agenda here. All I think about is my paddleboard time, what’s for dinner, and when I can sit and watch the sunset.”