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Brand Patagonia: A Founders Story And Strategy

Brand Patagonia: A Founders Story And Strategy

In April 2017, the authors of Legacy In The Making visited me at Patagonia’s headquarters, in Ventura, California, to talk about the legacy I’m building as the founder of Patagonia. We talked about a lot of things, some of which I’d never spoken about before. Afterward, when they asked me if I’d share some of those insights and stories in the foreword to their book and I made it clear: I never wanted to be a conventional businessman. I liked climbing rocks, not corporate ladders.

“Exactly,” they responded. “That’s why we asked you.”

It’s true. I never set out to be a businessman. Over the years, I’ve learned a lot about business with Chouinard Equipment and Patagonia, the two outdoor outfitters I founded. But I’m a creature of the 1960s. I never liked authority. I was a rock climber. Back when I started climbing at the age of 19, the gear was poor quality. The pitons—the metal spikes you drive into cracks—were made of soft iron and were designed to be used once and left in place. The attitude back then was about dominating the mountains, conquering them and leaving all your gear behind to make it easier for the next party. I didn’t share that attitude. I had a different ambition.

I wanted to climb without leaving a trace so that the next party and every party after that could experience the climb as I had—in its natural state. To do that, I needed a new kind of piton that you could remove and reuse over and over as you ascended. Since nothing like that existed at the time, I decided to design it myself. I bought an old coal-fired forge from a junkyard, built a small shop in my parents’ backyard, taught myself how to blacksmith, and began making my own high-quality reusable pitons. They were the first of their kind, designed for a new style of climbing. I called my fledgling company Chouinard Equipment.

Initially, I was just a craftsman making climbing gear for myself and my friends. But I happened to be pretty good at it, and pretty soon I was selling gear to friends of friends out of the back of my car (whenever I wasn’t surfing or climbing, that is). That evolved into making better crampons—the metal spikes on climbing boots—and better ice axes. With climbing, the better the tool, the better your chance of coming home in one piece. The quality of the materials and design—how the tool actually functioned in the field—was everything. People noticed, and by 1970 Chouinard Equipment had become the largest supplier of climbing equipment in the United States.

At that time, we were on the cutting edge of climbing. Some of the climbs we were doing in Yosemite National Park were harder than any rock climbs ever done in the world. Being on the cutting edge meant that we were not following the market. We weren’t waiting for customers to tell us what to make. For example, when I started coming out with new tools for ice climbing, people had no idea how to use them, and so I began writing a book about it. The Austrians and Germans had different techniques than the French and the Scottish. I ran around the world and studied all the different techniques so that I could bring everything together in one unified method.

In 1970, on my way home from climbing in Scotland, I bought a rugby shirt—a blue one with yellow and red stripes. Functionally, I thought it would be a great climbing shirt. It had a tough collar so that the gear slings wouldn’t cut your neck and rubber buttons that wouldn’t rip off. At that time, American sportswear was basically gray sweatpants and sweatshirts. That was it. There was no colored sportswear for men. Yet all of a sudden, here I was, wearing this really colorful shirt, and people were saying, “Wow, where’d you get that?” That was when we decided to start selling our own.

Our colors got pretty outrageous, but they also served a function. When you spend days suspended on a “big wall” climb or weeks stormbound in a tent, it’s tough on your psyche. You want colorful clothes just for your own mental health.

We sold a lot of those rugby shirts. By 1973, we had launched a new brand, Patagonia, to focus on our growing clothing business. Unlike Chouinard Equipment (which we eventually sold to a group of employees who launched a brand called Black Diamond), we knew nothing about the established clothing industry when we started Patagonia. Zero. Conventional fashion designers take a mannequin, wrap cloth around it, pin it here and there, and create a dress. But our background was in designing lifesaving climbing gear, not fashion, and so we looked at clothes as tools.

Before we designed any new piece of clothing—whether it was an alpine jacket, a pair of socks, or a bikini—we always started by asking about function. What problem were we trying to solve? How would the product be used, not just worn? Which features would it need, and which would it not need? It’s like Antoine de Saint-Exupéry said: “A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away.” In retrospect, I think that is our biggest contribution to the clothing business: treating clothes as tools and applying the principles of industrial design.

When you approach products as tools that serve a function, it forces you to pare things down to their essence. Just look around. Complexity is easy. The world is full of complex, disposable junk. Simplifying things, though—designing quality tools that last—now, that’s hard.

More than 60 years after I forged that first removable piton, we still approach everything we make just as I did in the beginning— as a simple, functional tool. The best tool for whatever your ambition is. As my ambition was to make better gear for the things I loved to do, my companies were the tools I used to achieve that ambition. But as your ambitions evolve, as mine would before long, so must your tools.

Finding Our Way Back To The Real Patagonia

As the years have passed and Patagonia has grown, so have the brand’s responsibilities. These days, we behave as if we want to be in business a hundred years from now. This is reflected in our mission statement: “Make the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.” The mission statement is a tool, too. Like a compass, its function is to orient our brand culture and keep it moving in the right direction. But Patagonia didn’t always work this way.

In the early years, I ran the business like every other company. Just running it for the sake of getting larger and larger, doing everything that normal companies do. By the 1980s, we were taking off: opening new dealers, developing our own retail stores, and growing about 50 percent a year. You can’t grow like that for very long before you end up in financial trouble. It’s just impossible.

In 1990, the American economy went into recession. After years of growing just for the sake of growing, our sales suddenly hit a wall. The banks got into financial trouble, and so did we. We couldn’t borrow enough money to cover inventory, and we nearly lost the business. For the first time in our history, we had to lay people off—20 percent of our entire staff. Those people were like family, and the impact on our brand culture was a wake-up call. After we had been preoccupied with growth for years, our brand was adrift. Not only did we have to reassess our growth plans, we had to reassess who we were and who we wanted to be.

That was when I took our key managers—about 10 or 12 of us—and we all went down to Argentina, to the real Patagonia. We hiked around, sat down, and asked ourselves why we were in business and what we expected to get out of this. We asked each person why he or she was working for us. Though my ambition had always been to build the best tools, it was during this trip that we discussed our values:

• Make the highest-quality products.
• Consider the environmental impact of everything we do.
• Engage and support our communities.
• Contribute a portion of our sales to philanthropy.

No one said a word about profit.

Once we had collected everyone’s thoughts, we established our brand values by consensus. I’ve always believed in making decisions by consensus as opposed to compromise. Compromise is what the government does. Compromise never solves a problem. Compromise leaves both sides feeling cheated. Consensus is how Native American tribes historically made decisions, and it was the chief ’s job to build consensus. That’s been my role: to set the general direction we’re going in and to get our employees to buy in.

After we got back from our trip to Patagonia, I started leading weeklong seminars to teach our employees about the values that would guide our brand culture moving forward. I wanted everyone to be empowered to make day-to-day decisions that were based on those values rather than always waiting for instructions from the boss. Years later, in 2005, I published everything—my ambition, our history, our growth crisis, our values—in Let My People Go Surfing: The Education of a Reluctant Businessman. Like those recyclable pitons, I didn’t publish the book to get rich. I did it because as a reluctant businessman, I had learned an important lesson about business: Regardless of what you sell, your business itself—including your culture and your values—is your product. If we could inspire more values-based businesses, our society and environment would be a lot better off.

Let My People Go Surfing is still selling all over the world. They teach it in high schools, and it’s been printed in 9 or 10 languages—all because people see the Patagonia brand as a different model. We’re not alone in our beliefs. Brands with long-term ambitions and strong values-driven cultures are increasingly demonstrating that profits and purpose aren’t mutually exclusive.

Lasting Brands Move People, Not Just Goods

I’ve always been an advocate for social and environmental causes, but I don’t like being on the front lines. I get too frustrated. Instead, I’ve learned how to use business to effect change. We follow our beliefs, our customers follow us, and positive change tends to follow that. People who believe in what we’re doing gravitate to our message. They become our advocates. That’s why our marketing philosophy is so simple: We tell people who we are and what we do. That’s it. Fiction is so much more difficult to write than nonfiction.

For us, marketing isn’t about moving goods. It’s about moving people. For example, in 2011 we ran a print ad on Black Friday that said, “Don’t buy this jacket.” We sold so many of those jackets! That wasn’t the intent. The intent was to encourage people to reflect on what they buy and to buy only what they need. The best thing you can do for the environment as far as clothing goes is to buy the very best quality, use it as long as possible, and keep it out of the landfill. Repair it. Reuse it. Recycle it.

That Black Friday campaign forced us to make a pact with our customers: If you buy one of our jackets, we’ll repair it forever. If you outgrow it or stop using it, we’ll help you sell it to somebody else. Eventually we’ll take it back and melt it down into more jackets. It forced us to build the largest garment repair facility in North America. In fact, we have a truck that goes around to colleges and teaches kids how to sew buttons on. We’ll repair any of their clothes, not just ours. We practice business this way because our customers are our loyal sales force, and they pay far more attention to good deeds than to lofty words.

For our 2016 Black Friday campaign, we decided to give all the revenue away to environmental causes. Not just the profits. All of our revenue that day. As a result, our sales quadrupled, from $2.5 million the previous year to over $10 million for Black Friday 2016. We gave away all $10 million—in addition to the $9 million contribution we made that same year in line with our annual commitment to contribute 1 percent of our sales to charity. Philanthropic campaigns like this don’t cut into our sales. In fact, 60 percent of our customers from these campaigns are new. Just think about how much it costs most companies to get new customers. The social media aspect of this campaign cost us nothing. We let the word out, and in turn, our customers helped spread the word for us.

At the end of the year, we measure success by how much good we’ve done and what impact we’re having on society, not by profit. Honestly, if you ask me how much money we’ve made in the last year, I would have to look it up. I know that we are extremely profitable. I also believe in karma. Karma and profits coexist here because every time we’ve made a decision in service of doing good, our customers have noticed. And when our customers get behind us, more good things follow.

Write Your Own Rules, Don’t Master Someone Else’s

I know it’s unorthodox to be guided by both karma and profits, but that’s just one of many ways we break the rules of business these days. I think of Patagonia less as a conventional brand selling products than as an experiment, an evolving means of using business to solve social problems.

If you look around and see who’s working here, we all have degrees in subjects such as anthropology, zoology, and English. Only a few of us actually have degrees in business. We’re all learning how to run a business by asking lots of questions and approaching things as beginners. We’re successful because we have the confidence to write our own rules rather than master someone else’s.

Maybe that’s why we’re comfortable being a guinea pig and trying new things. We’re making healthy food and producing films about society’s impact on the natural world. We’re even thinking about starting an immersive nature school for kids. As unconventional as these programs may sound, all of them are firmly rooted in our ambitions and values. Ultimately, the next generation won’t care about nature if they don’t think they’re part of it. So while our values haven’t changed, the way we choose to express those values to new generations of customers is always evolving.

At Patagonia, it’s not that we’re just looking for ways to stand out for the sake of standing out. We behave differently because our ambitions are different. We also measure success differently—on the basis of long-term contributions, not short-term profits. When you chase short-term profits, you either keep doing what you already know will work or copy what someone else is doing. We don’t do that. When we stand out, it’s because we’ve found a new way to express our long-term ambitions.

In the mid-1990s, for example, we took a stand against chemically intensive cotton and began making all of our clothes with organic cotton. It was a challenge, and a lot of our manufacturing partners walked away from us, but we learned by doing and ultimately developed our own private cotton supply chain. Most people aren’t willing to jump right in like that. But that’s the way I like to deal with everything. Most people want to figure things out to the nth degree before they ever take a step. In the end, they won’t even take that step because it feels too unfamiliar. Not me. I immediately jump in and see how it feels. That’s how I know we’re on the cutting edge—when we step outside conventions and lead the market rather than follow it. This approach takes vision and perseverance, but it keeps us in a category of our own. As the saying goes, “First they ignore you, then they ridicule you, then they fight you, and then you win.”

I was on a panel during the recent recession, and it was all surf industry CEOs and people like that. We all talked about our businesses, and I talked about how much effort we put into cleaning up our supply chain and trying not to cause unnecessary harm. One of the CEOs from one of the largest surf companies told me his company had been making a few organic cotton ball caps and T-shirts before the recession but had cut back when the economy slowed down.

I said, “How are your sales?” He said, “Well, we’re down about 25 percent.” Patagonia was up 30 percent. That company ultimately filed for bankruptcy. Today the surf industry is on the rocks, but we’re doing great because we’re riding our own wave.

The Secret To Lasting Is To Keep Playing Your Own Game

I’ve been in business for over 60 years. I’ve survived bad times. I’ve thrived in good times. I believe the secret to lasting is never sitting still. Some people see change as a threat. They hate it. I thrive on it, as does every ecosystem as well as every business that cares about its legacy in the making. I’m not talking about change for the sake of change. I’m talking about evolving and adapting as if you intend on being here a hundred years from now; it’s about never losing sight of where you came from or what inspired you in the first place.

Although we try to run Patagonia as if it’s going to be here a hundred years from now, I tell my employees that doesn’t mean we have a hundred years to get there. Continuous change requires a sense of urgency. That’s why my job these days is to combat complacency and instigate change. There’s a falconry term—yarak—that means super-alert, hungry, and ready to hunt. Along with our other leaders, one of my responsibilities is to keep the company in yarak.

The best way I keep us from sitting still is by using what I’ve learned to educate and inspire the next generation of leaders, which includes the following:

• Have an ambition to develop better tools.
• Growth can be toxic, though culture can be a tonic.
• Move people, not just products.
Be distinct in everything we do.
• Evolve and change to remain unique.
• Long-term values can guide quick decision-making every day.

As the authors of this book say, “The making of a legacy is personal, behavioral, influential, unconventional, and perpetual.” These lessons don’t expire, and through education they can transcend generations. So I share my story—as I have here—to pass my legacy forward for others to carry on.

The business world talks about the importance of long-term thinking in a short-term world. It’s true, though it’s never easy. Conventional business will fight you every step of the way. Long-term investments in programs such as our brand’s employee childcare center and our pollution standards always look negative on our financial ledger. But because we think long-term, we know we have responsibilities beyond our conventional bottom line. So do you. So does every great brand leader.

You may already believe that your culture is your product, not what you sell. You may also believe, like me, that companies shouldn’t exist simply to be sold for a profit and broken apart. Of course, this isn’t how conventional business works. Conventional business treats companies like fatted calves to be auctioned to the highest bidder in the shortest amount of time. It’s the American way. It starts when we’re young, when they say, “Okay, kids, line up on the starting line and let’s see who can run the fastest! Now line up over here, kids, and let’s see who can jump the highest!” That way of thinking produces one superhero and a bunch of losers. But, I wanted to do something different. I always have.

Growing up, I was as good as anybody at baseball and football and other sports. But when it came time to line up and perform for a crowd, I couldn’t do it. So I’ve been a climber, a kayaker, a falconer, a Telemark skier, a spear fisherman—all noncompetitive sports. All individual pursuits where your only competition is how high you set your personal ambitions.

That’s my advice to you as you build your legacy in the making: Invent your own game. Ask yourself what you hope to get out of this life, let that enduring ambition guide you, and if the right tools don’t exist to accomplish it, design your own tools. Be the only person who does what you do the way you do it. That way, you will always be the winner.

~Yvon Chouinard, Founder of Patagonia

Contributed to Branding Strategy Insider by: Marc Miller and Lucas Conley with the permission of McGraw-Hill. Excerpted and adapted from Legacy in the Making: Building a Long-Term Brand to Stand Out in a Short-Term World

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