4.3.4a A letter from Yvon Chouinard

Giving Patagonia away is the best business decision I’ve ever made.

 

Photo: Patagonia

 

I’ve always said I never wanted to be a businessman, but if I had to run a company, it was going to be on my own terms. You could say that philosophy was key to giving the business away.

This would be unthinkable at a company solely focused on dollars and cents. When the only role a company’s leadership has is making money, we know how the story ends. Shareholders put pressure on corporate leaders to bloat the company’s stock prices. The principals cash in, the company is sold off, absorbed or becomes a shell of itself. It’s all too common now. When Patagonia was founded in 1973, the average lifespan of an American company on the S&P 500 was around 30 years. Today, it’s less than 18, and the downward trend shows no sign of stopping.

The pursuit of short-term profit and mindless consumption are destroying the planet. Corporate leadership and ownership can play a part in turning that around.

Patagonia is not a perfect company by any means, but the fear of getting things wrong in the process has never stopped us from trying to get things right in the end. Any company claiming to be purpose driven needs leaders – including owners – to buy into whatever that purpose may be. Without top-to-bottom support, forget about it. The moment purpose becomes unprofitable is the moment we see just how important corporate leadership is in keeping it alive.

The responsible route is often not the fastest or most profitable option. It is rarely the easy way. We are still figuring things out ourselves, and I’ve been working more than I ever have before.

I’m getting back to my roots, working on product quality and design, but the stakes feel higher. To prove that a company does not have to sell its soul to succeed, we have to keep succeeding. To help save places like the Vjosa River in Albania, we have to make money. If we want to continue helping grassroots activists fighting the Pebble Mines and protecting the Okefenokees of the world, we have to be profitable. If we want to inspire change in the business world with our practices and products, we can’t just be scraping by making low-quality junk. But that is the responsibility of a company that behaves in an examined way. It’s something everyone in the organization has to commit to, or the intention dies on the vine.

I spent years thinking about how Patagonia could continue after I’m not around. My adult children understandably had no interest in the burden of running a company, and all the other options had pretty serious drawbacks. Selling the business and giving away the profits? There was no guarantee the new owners would commit to our values and purpose for as long as the company existed. We thought about going public, but there aren’t any public companies that I admire. Offering the company to employees might have been an option, but that would have left out employees outside the U.S., and a lot of employee-owned businesses end up incurring huge debt.

So what do you do when there is no good answer to such a simple but vital question? You come up with something new. In September 2022, my family and I transferred the voting stock of the company to a purpose trust to ensure that Patagonia’s founding values would stay intact beyond our lifetimes.

The rest of the stock was transferred to a new nonprofit called the Holdfast Collective that uses the profits not reinvested into the company to fight the climate and ecological crisis. We created a new ownership model that enshrined Patagonia’s values and devoted its value to saving our home planet.

It falls on every Patagonia employee to support our purpose in their own way. Each team and individual finds ways to contribute, and together the company improves. Just as the Zen approach to archery focuses not on the bullseye but on each individual movement before releasing the arrow, we identify our targets then turn all focus to the process. While profit is tied to our impact and influence, it is not the goal. As a Zen master might say, it is the natural outcome if we manage to do everything else right.

 

Yvon Chouinard, founder Patagonia