David Gelles is an award-winning correspondent for the New York Times. He currently writes for the climate desk and previously wrote for the business section and was the “Corner Office” columnist. In his more than 20 years as a reporter, he has also written for the Financial Times, Forbes, and the Miami Herald.
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Patagonia, the California-based apparel company, is well-known for its environmental activism, progressive human resources policies, and extensive efforts to clean up its supply chain. Behind the entire operation sat founder, rock climber, blacksmith, and adventurer Yvon Chouinard. While many companies pursue expansion at all costs, Chouinard intentionally limited Patagonia’s growth, deliberately trying to strike a balance between creating a profitable enterprise and being a good corporate citizen. Whereas most founders look to retain control and maximize their own earnings, Chouinard trailblazed a truly remarkable alternative path. This company and this CEO did just about everything different from the status quo, and yet somehow still came out ahead.
Below, David shares five key insights from his new book, Dirtbag Billionaire: How Yvon Chouinard Built Patagonia, Made a Fortune, and Gave It All Away. Listen to the audio version—read by David himself—below, or in the Next Big Idea App.
1. Quality matters.
When Chouinard was a boy, his father, who was a jack-of-all-trades handyman, taught him the importance of quality. His father told him that if you buy a tool, buy the absolute best one you can afford. That way, you can have it for the rest of your life. That’s much better than buying a cheap one, having it break, and then replacing it over and over again. Chouinard took that lesson to heart. Everything he made at Patagonia was built to last.
Over the years, Chouinard came to understand that quality was about more than durability. It was also about the materials used in a product, the environmental impact of the manufacturing process, and the working conditions of the people toiling away in its factories. All of those things, Chouinard decided, were part of building a quality product.
Now, Patagonia has not always succeeded at this. There are plenty of examples of products that didn’t work out and materials that didn’t perform as expected. But at the end of the day, Patagonia’s holistic understanding of quality has been an integral part of its enduring success.
2. Create the world you want.
From the moment that Chouinard started Patagonia, he made it the kind of company that he himself would want to work for. He hired his friends and created an environment where people were free to be themselves. Famously, when the waves were high in Ventura, California, he let his people put their work down and go surfing.
Patagonia was also very early in creating a corporate culture where women had the support they needed. It was among the first companies to offer on-site childcare. Over the years, it’s gone above and beyond in taking care of new mothers who work at the company. To this day, Patagonia offers nursing mothers who need to travel for work a stipend so that they can travel with a companion who can look after the baby while they take their meetings.
“Patagonia was also very early in creating a corporate culture where women had the support they needed.”
With his philanthropy, Chouinard also did the same kind of thing: spending his money on projects that were working to create the kind of world he wanted to live in. He spent a huge part of his fortune buying up land in South America and conserving it, part of a grand project to create a new series of national parks. He also spent a huge amount of his money funding grassroots environmental activists—the kind of people on the front lines of fights over dam development or mining projects. He invested in and created the kinds of projects that were helping build a world he wanted to be a part of.
3. Credentials don’t really matter.
Chouinard was never a good student. He got straight Ds for a while in grade school and then never graduated from college. Instead, he got his education in nature. He would do things like figure out how to improve his rock-climbing gear or, on long expeditions into the backcountry, he would figure out how to improve Patagonia’s clothing. These trips often kept him away from the office for months at a time. He called it his MBA: not a Master’s of Business Administration, but his Management By Absence.
Most of Patagonia’s other successful leaders also came from similarly unconventional backgrounds. One of the CEOs started as an intern at the company, packing boxes, and worked her way up to the top, ultimately running the company for 20 years. When Chouinard first gave her the top job, she knew nothing about running a company. She had to figure it out on the fly.
In the few rare instances when Patagonia did try to bring in a traditional business leader (like an experienced CEO from a different company), the body almost always rejected the organ. These professional managers with conventional leadership chops were never able to fit in. For Patagonia, more important than credentials were things like a good instinct, the ability to forge trusting relationships, and hustle.
4. Money isn’t everything.
Early in his career, Chouinard came to a critical insight. The small metal spikes he was making, which represented the lion’s share of his business at the time, were damaging the rock walls that he and his friends were climbing. He couldn’t accept that and decided to immediately stop making them.
This was an incredibly risky move. There was no obvious replacement, and he was jeopardizing his entire business, but he knew it was the right thing to do. In time, he invented new products for holding ropes to the rock wall that substituted for those metal spikes that were damaging the granite. This decision was an early indication that Chouinard cared about more than money. He wasn’t afraid to put the lion’s share of his business on the line.
“There was no obvious replacement, and he was jeopardizing his entire business, but he knew it was the right thing to do.”
A few decades later, a similar situation transpired. At this point, Patagonia was making most of its money from clothing, but then discovered that the conventional cotton they were using was toxic. It had tons of formaldehyde in it, and it was making its own employees sick. Chouinard decided that he would no longer use conventional cotton and resolved to switch to organic cotton, which didn’t have those toxic chemicals. But at the time, there was no supply chain for organic cotton, and cutting back on the conventional cotton was going to seriously jeopardize sales and profits. Once again, Chouinard didn’t think twice. He decided that they would do it, and although it took several years and profits fell for some time, the company was ultimately able to make the switch. In the end, he helped create a new, bigger market for organic cotton.
Finally, in the twilight of his career, Chouinard made a truly remarkable decision. He gave away the company using a complex new structure of entities and trusts. He donated the entirety of Patagonia’s equity, setting up a situation where all future profits from the company would be used to support environmental causes. There was no initial public offering, no great cash out. He and his family didn’t take the money and go buy homes, planes, or yachts. Instead, he declared that Earth was now the company’s only shareholder.
5. Contradictions are okay.
Patagonia isn’t perfect, and neither is Chouinard. As a boss, he could be a micromanager at times, aloof at others, and he cycled through executives, often changing his mind on a whim and sowing chaos at his own company. He could be mercurial, indecisive, and elitist. He’s intensely private, has no patience for small talk, and is pessimistic in his old age.
As for Patagonia, the company is riddled with contradictions. It’s a for-profit company that makes clothes people might want but don’t really need. It strives to take good care of its employees but pays low-wage workers in the developing world to spend long hot days in loud factories. It aspires to save the planet, but Patagonia uses fossil fuels that contribute to climate change and toxic materials that pollute the environment it’s trying to protect. This is a company that celebrates feats of extreme athleticism but makes most of its money selling T-shirts to city-slickers.
Patagonia’s own leaders are keenly aware of the hypocrisy embedded in their work. The fact that they are contributing to the same problems that they are trying to solve drives them mad, but it also pushes them to find solutions to seemingly intractable problems. Their failings are both a source of agony and inspiration. They channel this frustration with their own imperfections into a drive for constant improvement. I’ve been a reporter covering corporate America for a long time, and I can tell you that the self-critical business is a rare beast. This company’s inconsistencies and its efforts to wrestle with competing priorities are a central part of its success.
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