Why did Patagonia’s founder give away the company?

Sunday, September 25, 2022

Site Search
Give

Current events

Why did Patagonia’s founder give away the company?

September 21, 2022 - Mark Legg

FILE - A Patagonia store is seen on Jan. 12, 2022, in Pittsburgh. The founder of outdoor gear company Patagonia, long known for environmental activism, said Wednesday, Sept. 14, 2022, that the company is transferring all of its voting shares into a trust “dedicated to fighting the environmental crisis and defending nature.” (AP Photo/Gene J. Puskar, File)

FILE - A Patagonia store is seen on Jan. 12, 2022, in Pittsburgh. The founder of outdoor gear company Patagonia, long known for environmental activism, said Wednesday, Sept. 14, 2022, that the company is transferring all of its voting shares into a trust “dedicated to fighting the environmental crisis and defending nature.” (AP Photo/Gene J. Puskar, File)

FILE - A Patagonia store is seen on Jan. 12, 2022, in Pittsburgh. The founder of outdoor gear company Patagonia, long known for environmental activism, said Wednesday, Sept. 14, 2022, that the company is transferring all of its voting shares into a trust “dedicated to fighting the environmental crisis and defending nature.” (AP Photo/Gene J. Puskar, File)

Very few would feel angry at becoming a billionaire. Very few would be reluctant to head up a company bringing in $100 million a year. Very few would learn blacksmithing to make their own mountain climbing equipment. Very few would live without a computer or cell phone.

Yvon Chouinard is not like most people.

Now eighty-three, Chouinard lives modestly and for the outdoors. His long-lived passions include fly fishing, mountain climbing, falconry, kayaking, and surfing. In fact, he made several notable mountain ascents and personally revolutionized rock and mountain climbing.

He’s also been the begrudging CEO of one of the most successful outdoor clothing brands: Patagonia. Known for its transparency, environmental activism, and movement toward sustainability, Patagonia has become a global phenomenon that defies standard business practices.

And Chouinard gave Patagonia away last week.

He did not receive a tax benefit of any kind—he authentically gifted it away.

So who received this $3 billion company?

According to him, the earth.

Yvon Chouinard’s legacy

Chouinard became passionate about mountain climbing because of his passion for falconry, as it required him to scale cliffs to access the birds. Later on, to fit his unique climbing style and to save money, he learned blacksmithing to make his own climbing gear. Chouinard then sold the gear he made to support his outdoor adventures.

Eventually, he also began selling rugby shirts in the US in the 1970s, a surprisingly well-suited kind of clothing for rock climbing. Building on the success of these two business ventures, he founded Patagonia. It saw immediate and massive success.

Chouinard’s legacy is one of boldness and vision. At key moments, he made radical changes that cut against the grain.

Game-changing business

Early on in his career when he sold climbing equipment, he realized that his footgear caused irreparable damage to mountain faces on popular climbing routes. So, he went back to the drawing board and redesigned a new product that once again revolutionized climbing, but at massive risk to his own company.

Later, Patagonia changed the game by moving to purely organic cotton in the 1990s when it discovered that processing regular cotton left a large environmental footprint. In the short term, their sales dropped 20 percent. In the long term, it helped them grow.

And they’re famous for the New York Times ad they ran on Black Friday that said “Don’t buy this jacket.” They also repair worn-out clothing at no cost to their customers.

Patagonia’s make-or-break decision

At another key turning point, Patagonia started crumbling under the weight of its own success, outpacing its leadership. A high-profile financial advisor counseled the executive team to sell the sinking ship of a company and get out while they could.

Instead, at that critical moment, Chouinard refused to back out and took his executive team on a venture into the mountains. This move seemed insane—in a moment of make or break, the entire leadership team up and left.

After their retreat into nature, they returned enlightened with a strong sense of mission. They reinvented the company from the ground up, based on stronger principles, and radically simplified their business model, all to great success.

Chouinard’s bold decisions throughout his life sacrificed profit and risked everything for higher values.

How Patagonia is unique

Since the 1980s, Patagonia has “tithed” 1 percent of their sales (or 10 percent of their profits, whichever is larger) to environmental causes. In Chouinard’s view, this should become a base minimum for companies as a kind of tax to the earth itself. As such, he helped found the “1% for the Planet” foundation that allows businesses and wealthy individuals to pledge that amount toward protecting the environment.

He wrote a book, Let My People Go Surfing, where he describes his unique way of running Patagonia. If a good swell comes in, he lets his employees go surfing, even if it’s in the middle of the workday. As long as they get their work done, he encourages them to get out into nature.

Of course, no company is without critics.

Patagonia signed a controversial contract with the US military. Some have called the company hypocritical or suspect that it’s all for marketing attention. But it at least appears that, unlike other companies, Patagonia is upfront about its own shortcomings.

The number of initiatives and activities Patagonia supports involving environmental protection would take too long to cover. Needless to say, their company is clearly centered around moving toward sustainability, all inspired by a love of nature (or, if you’re cynical, good marketing).

All of this provides context for Chouinard’s move to give away the company.

Who owns Patagonia now?

Chouinard didn’t just stick the shares of the company into the dirt somewhere in the South American wilderness to make the earth “its only shareholder.” Chouinard created a nonprofit trust organization to run the company called Patagonia Purpose Trust.

He helps oversee the foundation, along with other members of the family and close advisors. So, they donated all of the “voting stock” of the company to that entity, and they donated the rest of the shares to another nonprofit called Holdfast Collective.

What happens now?

Patagonia the company is still a for-profit entity. So, after reinvesting money into the business, whatever money they have left over will go to Holdfast Collective, which will then be distributed toward various environmental causes.

They essentially invented a new way of business, one that preserves the for-profit status to keep the company strong and growing while maintaining its values at any cost.

How are you changing the culture?

Chouinard wants to transform the way business is done across industries. He sticks with the business world, even though he begrudges it, trying to transform it from the inside out. Most companies can’t see over the horizon of short-term profit, often to the detriment of consumers.

In the same way, Christians are called to transform culture. To do this takes action, boldness, and leading by example.

We are not called to be removed from the world, but to live in it, following Jesus wherever we find ourselves. Everyone from Christian pastors to CEOs to grocery stockers needs to remember that God cares about our work. Not only does he care about the job we do, he cares about the way we do it.

Plenty of examples of Christians generously giving and living below their means exist. Plenty of Christians make radical decisions in their workplaces as leaders.

But you have to answer for yourself: How does your relationship with Christ affect your leadership and your work?

Soon, Denison Forum will release “What does the Bible say about work?,” and we hope that it will help you explore the idea of biblical work. For now, consider how you would change if you fearlessly lived by this maxim, “Whatever you do, work heartily, as for the Lord” (Colossians 3:23).

What did you think of this article?

If what you’ve just read inspired, challenged, or encouraged you today, or if you have further questions or general feedback, please share your thoughts with us.

What did you think of today's article?

Name(Required)

Denison Forum Search

Information

Denison Forum
17304 Preston Rd, Suite 1060
Dallas, TX 75252-5618
info@denisonforum.org
214-705-3710

[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]