50 years in business and he decides to donate his company to the planet?
Patagonia is a brand specializing in the design and sale of outdoor sports apparel and equipment, sold worldwide, with an annual revenue of 1.5 billion US dollars. The founder, Yvon Chouinard, was born in the United States. He loves rock climbing, and he improved the traditional disposable pitons. He accidentally became a hit in the rock climbing industry and started his business.
Yvon has not let go of his enthusiasm for outdoor activities since he started running the company. He is still rock climbing and surfing everywhere. He is often not in the company and encourages employees to go out more. On the other hand, Yvon also encourages customers to “don’t” buy their own new products as much as possible, and buy second-hand products at online auctions. Such an atypical management philosophy makes Patagonia an iconic brand in the industry.
However, in September of this year (2022), the 83-year-old founder Yvon suddenly announced on the official website that he would give up all equity in the company in the future, and declared that “the earth is the only shareholder of Patagonia”. What’s going on?
Make a product that you can’t put it down, and create a value that is 10 times higher than traditional products
In the United States in the 1950s, there were not many people engaged in outdoor activities, and the market for related supplies was not large. Most of the equipment came from Europe, and the quality was not satisfactory. emotion.
At that time, rock climbing used a kind of “disposable” pitons. These pitons could not be pulled out from the rock, and hundreds of pitons were used for one rock climbing, which not only hurt the wallet, but also harmed the environment. .
Yvon believes that there should not be so many traces of human beings left in nature. Therefore, he started looking for equipment, buying materials, and researched for a while in a small factory near his home, and successfully created a reusable piton.
At first, Yvon didn’t expect to use this invention to make money. These handmade pitons, which can only be produced a few times an hour, are only for his own use. However, when his fellow rock climbers saw this genesis invention in the rock climbing world and immediately rushed to place an order with him, he realized that he had inadvertently opened up a potential market.
Therefore, when Yvon went rock climbing, he would put some extra pitons in the trunk and sell them to his colleagues to subsidize the travel expenses. In 1957, he decided to establish Chouinard Equipment, a company specializing in rock climbing equipment, to operate as an enterprise; compared with the traditional European pitons, which cost $0.15 each, Yvon’s improved pitons can be sold for $1.50, which is 10 times more expensive. The volume is growing every year, and in its heyday it took more than 80% of the market share.
Behind the success is Yvon’s original motivation: “No one can make something that satisfies me, so I do it myself.”
Bring inspiration back to the office by encouraging employees to go out and have fun at work
In 1972, Yvon expanded his business scope and established Patagonia clothing brand, selling functional clothing for outdoor activities.
If you go to Patagonia’s office building during normal working hours, you may be surprised to find that there are no people there, because the employees may have gone to the nearby beach to surf or go hiking with a group. The employees are not there, and the boss is often not there!
Before starting the company, Yvon had never taken any business or management courses, but through reading and observation, he created a unique management method called “Managing By Absence”.
Under the absence management system, the company allows employees to decide their own commute time and freely choose what they want to do most at the moment. For surfing enthusiasts, the tide, wind direction, and wave height are just right, and the weather is hard to come by. After this village, there is no such shop. And Patagonia’s employees all know that Yvon often talks about a sentence: “Work can be done at any time, but not every day has good weather.”
Yvon believes that for outdoor sporting goods companies, if employees stay in the office all day instead of going to the mountains and seas in person, and spend their time on the sports they love, they have no chance to know what products are “satisfactory even for themselves”. It’s in the company’s best interest to encourage employees to find inspiration in it.
But it is worth mentioning that absent management does not mean unlimited “indulgence”, but also attaches importance to “responsibility”. Therefore, when looking for employees, we attach great importance to whether the interviewer has the two characteristics of “loving outdoor sports” and “being able to complete work independently”. Patagonia’s rigorous selection process has left some positions vacant for as long as a year, but because of the emphasis on cultural fit, the employee turnover rate over the years has been only 4%.
The best way to let employees agree with the company’s vision: to experience the meaning of their work in person
In late 1980, Patagonia opened a new location in Boston. Three days after the opening, employees began to feel unwell and asked for sick leave. After the company hired an environmental engineer to investigate, it was found that the cotton clothes stored in the basement would emit formaldehyde, and the poor ventilation design of the building led to health problems for employees.
The accident led Patagonia to hire a research institute to analyze the 4 main fibers used in the product: cotton, wool, polyester and nylon, and concluded that cotton is the most problematic because of the large amount of pesticides and chemical fertilizers used to grow it , After harvesting, a large amount of organic solvents should be used to clean it.
Therefore, Patagonia decided in 1994 to switch its entire sportswear line (about 1/3 of its business) to organic cotton within a year and a half, but this change caused a backlash from suppliers and employees: In order to deal with organic cotton, spinning Spinning mills have to remove most of the chemical treatment steps in the traditional cotton production line, and their own designers have to abandon the previous design drawings and redesign products according to the characteristics of organic cotton. The marketing unit is even more worried that the use of organic cotton will increase the cost by 40% , competitors benefit from this.
In order to appease the backlash of employees, Patagonia began to take employees to the San Joaquin Valley (San Joaquin Valley), California’s main cotton producing area, by bus, first visiting traditional cotton farms, and then visiting organic cotton farms.
In traditional cotton farms, they will smell the pungent smell of pesticides, and there are no birds near the fields, and no one wants to stay on the farm for a long time; Sit down for a picnic and turn up the soil to see the rich ecology inside.
After visiting the cotton farm, the employees agreed with the company’s decision: “Although it is difficult to switch to organic cotton, it may cause troubles for operations in the short term, but we will work hard to do the right thing.”
The transformation of organic cotton has greatly reduced Patagonia’s products from the original 166 styles to less than 70. Although it took several years, with the concerted efforts of the company, the sales volume and gross profit margin were still pulled back to the original level.
Advertise “Don’t buy my products!” and advocate “slow fashion” to make the environment sustainable
But more specifically, why would a company tell customers, “Don’t buy our brand new product”? Compared with the “fast fashion” brand that encouraged consumption recently, the “slow fashion” advocated by Yvon seems quite abrupt.
Patagonia and eBay jointly launched the “Common Threads Initiative” program to establish a sales channel for their own second-hand goods, and at the same time encourage customers to buy these affordable second-hand goods on the eBay platform.
The motivation behind the “Common Threads Initiative” is that Yvon, who loves nature, in order to realize the concept of protecting the environment, reminds consumers to examine whether the things they want to throw away have a chance to be repaired and reused, or resold to others in need. If it doesn’t work then recycle.
Yvon believes that everyone should fulfill their responsibility to protect the environment in various ways. Patagonia has clothing repair centers throughout North America to help customers repair every Patagonia product. If the customer really wants to throw it away, Patagonia will help resell it; if the product is broken and cannot be repaired or resold, Patagonia will help recycle it and let the valuable parts of the product such as fibers and zippers be taken out , and then used in other products.
“We will always let the product you buy find its right place”, and the cooperation between eBay and Patagonia hopes to introduce a new consumption model in the retail market – to make the product more durable and extend its life cycle. Yvon said.
In addition to its commitment to products, Patagonia has launched the “1% for the Planet” campaign since 1985, calling on all companies to use 1% of sales to protect and restore the natural environment. Patagonia itself, of course, takes the lead, donating 1% of its revenue to grassroots environmental organizations.
Wave your hand without taking a cloud, donate your company, commit to environmental protection
In 2022, 83-year-old Yvon contemplates the future of Patagonia and the planet, and once again has a revolutionary idea.
He doesn’t plan to pass the company on to his two 40-something kids, who have been with the company for years. After fully communicating with his wife and children, he decided to “donate” the entire company.
The 4 people donated the equity worth about US$3 billion in their hands to the two units of “Patagonia Purpose Trust” and the non-profit organization “Holdfast Collective” respectively, and set strict terms to ensure that all the company’s future operating funds will be deducted. Profits go to fighting the climate crisis and protecting untapped land around the world. The four members of this family not only donated their father’s life’s hard work, but also paid a tax of 17.5 million US dollars for this huge donation!
At that time, Yvon started his brand road inadvertently, and has grown into a company with an annual revenue of over 100 million US dollars. The rare thing is that Yvon has not forgotten his original intention and continues to enjoy the fun of outdoor sports. He also learned that he needs to do his best to protect the environment because of his love of outdoor sports. Therefore, the next time someone tells you that hobbies cannot be eaten, please remember that this hobby of rock climbing not only allows Yvon to worry about food and clothing, but also contributes to the sustainable development of this world.