The Incredible Patagonia Backstory
Last year, after reading my writing on responsible leadership, Patagonia executives reached out to ask if I’d look at Yvon Chouinard’s new book, The Future of the Responsible Company. I thought it was excellent. We need more leaders with Chouinard’s guts and more companies with Patagonia’s constancy of purpose. I ended up reading his other two books as well and writing about it in Forbes. Full article below.
Originally published in Forbes, December 12, 2023
How Patagonia Became The Most Reputable Brand In The United States
Patagonia founder Yvon Chouinard didn’t give a damn what anyone else thought he should be doing. He had an irrepressible sense of adventure, a tireless curiosity to find a better way, an unwavering moral conviction to do what was right, and a selfless humility that made the whole package work.
As Patagonia celebrates its fiftieth anniversary, ranking as the most reputable brand in the US, Chouinard and Vincent Stanley, the company’s Director of Philosophy, have written a new book, The Future of the Responsible Company: What We’ve Learned from Patagonia’s First 50 Years. It’s an update to the book they wrote on the fortieth anniversary incorporating dramatic shifts that have taken place in the world and at Patagonia over the past ten years.
One significant change was a 2018 rewrite of their purpose, making it unequivocal: We’re in business to save our home planet. A second was Chouinard and his family putting their money where their mouth is. Rather than take the company public, they gifted 100% of their $3B fortune to the Patagonia Purpose Trust and Holdfast Collective to fund their deep commitment to the planet in perpetuity.
I didn’t know the details of Patagonia’s history until I read this book. It led me to read several other books about the company. As someone who studies and consults on leadership, and has written on the topic of making stakeholder capitalism a reality, the reading left me deeply inspired. We need more leaders with Chouinard’s guts and more companies with Patagonia’s constancy of purpose. The following are some of the stories and insights I found most compelling from the readings and a recent conversation with Vincent Stanley.
Climbing Clean
Yvon Chouinard’s first test of environmental stewardship came years before he founded Patagonia. An avid rock climber, he was unhappy with current pitons on the market (iron spikes used to secure rope), so he bought a forge from a junkyard in 1957 and learned how to make his own. His chrome-molybdenum steel pitons were stiffer and stronger than their European counterparts and better suited for removal and reuse. The climbing community loved them. A few years later Chouinard Equipment was born in a shed in Burbank, CA. By 1970 it was the largest supplier of climbing hardware in the United States. However, that same year, Chouinard realized he had a problem. On an ascent up the Nose route of El Capitan he noticed the increasing damage pitons were doing to the rock as climbing gained popularity. Disgusted, he needed to find an alternative to pitons, yet at 70% of his business they were keeping him afloat.
Chouinard and his business partner, Tom Frost, made what would become a legendary decision to shift away from pitons. It foreshadowed many other decisions Chouinard would make over the next fifty years, each with a similar pattern: Come to grips with damage you’re doing, set bright lines about how you’ll shift your business to reduce that damage, then force yourself to innovate inside new constraints. In this case, the innovation was newly designed aluminum chocks that left the rock unaltered or “clean”. Crude versions of chocks had been around for years but were less known and trusted than pitons. To build trust in his new chocks, Chouinard used them to successfully climb the Nose route of El Capitan again. By 1972 the chock business was booming, pitons sales had become marginal, and he had redefined modern climbing.
Launching Patagonia
In the early 1970s Chouinard started selling climbing clothing for purely practical reasons. In those years climbers were still wearing sweats, cutoff chinos, and dress shirts, none of which were durable. On a trip to Scotland, he found corduroy fabric which made excellent abrasion-resistant pants, so he ordered some of it. He also found rugby shirts that were tough and had collars that kept his gear from cutting his neck, so he ordered some of those too. He soon opened a retail store in an abandoned meatpacking plant next to his office selling a variety of items he discovered on his travels. This gave Chouinard an idea: The higher-margin clothing business could support the lower-margin equipment business, which at the time was only earning a 1% profit. In 1973 this idea became Patagonia.
The textile industry in 2023 is recognized as one of the worst polluters on the planet, but in the early 1970s this problem wasn’t as clear as it is now. Back then environmental issues were largely considered the government’s responsibility. As long as businesses stuck to regulations, they didn’t think too much about the impact of their operations. While Patagonia did fight for environmental causes for the first fifteen years of its existence, it paid little attention to its own environmental footprint. That changed in 1988 when a faulty ventilation system in their Boston store forever transformed how they viewed their responsibility as a business.
The Cotton Lesson
Unbeknownst to the company, formaldehyde was being added to their cotton fabric at the mill to prevent shrinkage and wrinkling. The faulty ventilation system spread the off-gassed formaldehyde into the store, poisoning employees. The easy solution would have been to fix the ventilation, but Patagonia chose to see the incident as a larger wakeup call. Like the earlier shift away from pitons, they followed the same protocol: Come to grips with the damage, change your business, and innovate inside new constraints.
Stanley refers to this as “The Cotton Lesson.” Beyond the formaldehyde, Patagonia realized it knew little about where its products came from and how they were made, which was a problem. They decided to put their employees on a bus, 40 at a time, to see the conventional cotton fields in California’s Central Valley.
“The moment our bus pulled off Highway 99 you could smell the organophosphates,” Stanley recalled in a recent conversation, “which was a nerve gas developed in WWII, used in cotton fields to kill all living organisms. It smelled awful. There were no worms or other life in the soil.” The field trips left a stomach-churning, unforgettable impression on the employees. A company-commissioned study found that cotton wasn’t much more natural than nylon due to the heavy use of chemicals in its production.
At that point, there were no regulations against using conventional cotton and no customers asking for organic cotton. Patagonia didn’t care. They made the decision to stop using conventional cotton. It was another bright line they wouldn’t cross. That decision made the business more difficult for a for a few years as organic cotton was harder to source and tougher to spin. Margins shrank and growth slowed. Working with suppliers, they eventually innovated around those challenges. Now, decades later, they are moving to regenerative organic cotton which, beyond avoiding chemicals, decreases water use and tillage. This has created additional constraints that Patagonia is currently innovating to get around.
Freedom Inside Constraints
“In many ways the magic of Patagonia comes from the constraints we place on ourselves which are grounded in our deep sense of responsibility to do right by the environment and society,” Stanley told me. “We can't go to the Fashion Institute of Technology library and choose from 5,000 fabrics for the spring line. We have a couple hundred we can choose from. And we can't go to 1,000 factories to find the best price. We have less than a hundred that can deal with the problems we raise. We get to know these limited options very well. The constraints make us more resourceful.”
Ironically, the constraints also create a sense of freedom. With boundaries and rules set, Patagonia gives employees latitude to be creative on how to play the game and improve performance. “We have a deep middle management culture,” Stanley reflected. “Yvon didn’t like running the business day-to-day and was away for six months of the year anyway. People got used to figuring things out on their own. That sense of agency remains all these years later. People speak up and find a way to do what’s right. It goes beyond our product teams and touches all corners of the company.”
Stanley shared a recent example. In 2018 a finance team was looking for a new warehouse site on the East Coast. After visiting a variety of undeveloped plots of land, the team decided they couldn’t take any of them. Virgin development didn’t fit with the ethos of Patagonia. They ended up finding an abandoned coal mine in Wilkes Barre, PA and made a deal to use that land with an NGO that was reclaiming it. While the deal was more complex than developing virgin land, it fit with the company’s values. “No one told the finance team they had to do that,” Stanley said. “They never even spoke to the tree huggers in the company about it. It was just built into our culture. They knew no one would complain about the several month construction delay because it was the right decision.” The new warehouse now sits on 22 levels of abandoned mine shafts.
Patagonia’s Most Important Product
Reading Stanley and Chouinard’s book makes you realize Patagonia’s most important product isn’t a piton or pullover, it’s an unflinching sense of purpose they’ve stuck to for decades. Much of its success can be traced back to Chouinard’s uncompromising leadership since Day One. Whereas many companies espouse a set of values only to sacrifice them under the pressure of quarterly returns, Patagonia has religiously stuck to theirs for the last half century, come what may. Quality, integrity, sustainability, and justice were never negotiable.
Stanley and Chouinard will be the first to tell you Patagonia isn’t perfect. Despite making tremendous progress, there’s a lot more work to do. Many of the mills they use are still fired by coal. Thirteen percent of the clothes they sell are still produced in non-Fair-Trade factories, and their fleece microfibers still end up in our water supply. Patagonia has no interest in greenwashing their efforts to make the company look good. They just want to continue finding ways to responsibly support our planet and its communities within a capitalistic system that has too often neglected both.
It stands to reason US consumers see them as the most reputable brand in the country.