Yvon Chouinard in Conversation with Lisa Abend

Alright, it's 2018. For the rest of your company, the moment that most business people dream of is at hand. Your staff comes in and says, we have made one billion in profit this year. And how do you respond? You respond, this is the worst day of my life. Why did you say that? And what did you mean by it? Well, first of all, I never even wanted to be a businessman. And, I mean, I should give a little history. I was born in a little French-Canadian town in Maine. Couldn't speak English. Moved to California. Was thrown in public school. And, since then, I've taken a left turn. I learned very early on that I didn't want to play other people's games. I mean, imagine if I wanted to be a basketball player. So, I've always believed that if you invent your own games, you can always be a winner. And, I think, during the prom in high school, I was probably down in the bottom of my mind. I was at the Los Angeles River looking for crawfish to eat. So, I got into mountain climbing. And, I'm a craftsman. I mean, my craft is basically being a blacksmith. And, I decided to make my own tools, climbing tools, because they weren't very good quality. And, pretty soon, friends wanted the same tools. And, pretty soon, I got into having a business. I really didn't want to make any money. I needed just enough money to do my craft. And, that was it. And, as things went on, I got into making clothing and everything. And, we've always had a philosophy of making everything as responsibly as possible. And, as high a quality as possible. Because, we were making life-saving equipment for ourselves. We were our own customer. And, I've hired, everybody we hired was friends, friends of friends. I didn't have anyone with any business degree until just a couple years ago. They're all anthropologists, English majors. But, we're all idealists. And, I communicated the idea, which was not easy, that we were going to make the best stuff in the world. Either the best climbing gear, either the best climbing gear, or the best clothing, outdoor clothing. And, people, you know, when I gave the company away, people came to me and said, well, now that you're retired, what are you going to do? And, I said, first of all, I'm not retired. And, I'm working harder than a long time. And, then, they also, a lot of questions I get. Well, you've taken a lot of risk in business. And, that's why you were successful, right? I tell them, I didn't take any risk in business. And, that's because we created our own industry. Before the specialty outdoor industry, men didn't even wear colorful clothes. I mean, it was layering, for the outdoors, but, you know, for the outdoors was putting a sweatshirt on top of your t-shirt. And, so, again, when you play your own game, you win. And, so, we broke all the rules of business, and made it work. And, I made a commitment that, you know, we were going to make all our decisions based on us being in business for 100 years. Well, we've been in business for 50 well, I've been in business for 70 something years, but, for Patagonia, it's 53 years. So, I've got another 50 years to go. So, I... So, when they told me we hit a billion, I just hung my head, because I knew what was coming. I believe that there's a limit to everything. I accept limits. I accept that I'm going to die. I accept there's a natural size limit for every endeavor. And, what is the natural size for our company? What should it be? And, I don't know, because I've never been there, and I don't have any other companies to look up to. But, I knew there was going to be a lot of problems. And, that's why I was... So... Pretty scared about what was going to come on. Did your fears come to pass? Did what? Did your fears come to pass? Well... We're struggling now, because the specialty outdoor industry has changed. People ride bicycles, but they have motors on them. People are riding waves with jet skis. People are rock climbing on plastic. You know, mountain climbing without danger is not mountain climbing, it's gymnastics. So, sport has really changed a lot. We've become a... A riskless society. And, I think... A lot of young kids are staying indoors, playing with their Game Boys. And, I mean, there's still a few odd people out there. Well, first of all, I don't want to make clothing for a lot of people. I don't want to make pickleball clothes. But, there's still a few odd ducks out there that we look at as our core customer. I live in Jackson Hole in the summer in Wyoming, and my doctor there happened to tell me his son just climbed the nose of El Capitan. This is a thousand-to-ten. This is a thousand-meter vertical rock wall. He did it naked and barefooted at night. And, I said, bravo. And, he didn't spray it all around. He didn't even tell anybody. I had to have his father tell me. And, a couple days later, a couple women climbed the nose so fast, they got down. And, he said, that was fun. Let's do it again. I mean, two ascents of the nose of El Capitan in 24 hours. That's who I want to make clothes for. And, unfortunately, there's not many of those people. When they wear clothes, I'd like to have them wear better than anyone else. Well, you said before that, you know, from the beginning, the goal was never endless growth. And, I know, actually, that you're a big fan of Kate Raworth, who, you may know, is the partner of the opening speaker yesterday, Roman. Yeah. And, you know, that basic idea that, as companies, as an economy, as nations, as people, that we've got to get away from this idea that we're just, that progress means always going up and getting more and more and more. That's something that you've done at Patagonia from the beginning. But, I don't think it's necessarily an inherent mindset. It's a very common mindset in our world today. So, how did you bring along people with you? How did you, I mean, how did you convince them that these were the goals, these were the values you wanted to live? Well, you know, growth is the elephant in the room. And, even if you try to be as responsible as possible in a company, by the time you get around to achieving that, you've doubled your sales. And, you're right back where you started from. And, you know, if, I want to make the best clothing in the world, period. The best outdoor clothing. And, not among the best, but the very best. And, I don't think I can do that, being a multi-billion dollar company. I've seen, well, the outdoor industry in the States is really collapsing. I've seen one of our largest companies hire Kim Kardashian to design a ski line for him. I don't want to do that. And, I don't know, probably some of you have seen Jiro Dreams of Sushi, that little film. That's what I want to do. That's what I want to do. He has, I don't know, eight spots at his table. He's the chef, the owner. He goes to the market, buys the fish himself. When you walk in, he sees whether you're left-handed or right-handed, so he knows which side to put the sushi. He looks to see the size of your mouth, so he'll make the size of the sushi accordingly. That's what I want. That's what I want. I don't want a multi-billion dollar company. And, I don't think I can achieve what I want by being larger. Now, I don't know of any companies around that have purposely limited their growth. There's one club of companies. There's one club of companies that's called the Henokiens around the world that have, each member of this club has been in business at least 200 years. There's an onsen Japanese inn that's been existing since 15-something. In the same location, the same size, everything. They just said, we're not going to grow. We're going to stay the same. Family-owned the whole time. Other companies have started out, like me, being a blacksmith, and now they do machines. And so, some companies have diversified and stayed in business for 200 years. The average lifespan of an American corporation is less than 18 years. So, why is that? And that's because they outgrow what they should be. And, I know a little market in Kyoto that sells pickled plums. That's all they sell. A whole store of pickled plums. They don't do mail-order. They don't do any online ordering. You have to go there and buy your pickled plums. And when you do, they total it up on an abacus, and out you go. I'd much rather be that store than be in a gigantic store that sells everything in the world. So, the challenge is, how do you stay a viable, vibrant company? Offering opportunities to your employees to grow, and still hold your growth back as much as you can. Tell you the truth, I don't know. I'm trying to work that. That's why I'm working so hard right now. Okay. Well, that leads nicely to my next question, because at one point when you and I talked a few months ago, and I asked you, I think, if you saw yourself now as an optimist or a pessimist, you definitely came down on the pessimist side. You said that you feel pessimistic these days. And yet, by your example, by the fact that you are still trying to solve these problems, and that you remain as committed to those core goals, that, to me, suggests that you've found a way to keep engaged and keep focused, despite the pessimism. How is that? How do you do that? Well, you know, when I was born, there were 2,000,500,000 people on earth. 2,000,500,000 people. I mean, that's, that knocks me out. I'm the guy that's 86, by the way, in this room. But, but I'm really stoked about that, because I found that the secret of life is to always be the oldest one in the room. Never hang out with old people. So, I think, I think, first of all, I'm a happy man. I'm a happy man. I'm very pessimistic about global warming, particularly, and I'm doing what I can about it. We're, we're using all our excess profits, which last year was about 77 million that we gave away to environmental causes. Actually, it was, it was over 100 million. I forgot. So, as long as you feel like you're doing something, you don't get depressed. I mean, the cure for depression is action. And, you know, I'd say, there's so many climate deniers on earth. And yet, if, if you accept the fact that, that the climate is changing and that, you know, this is happening, but you're not doing anything about it, you're denying that it's happening. Because we're looking at such a grim future that we all have to do something. Yes. Good. Agreed. Shall we open it to questions from the audience? Let's see. Spencer is here with the mic somewhere. Just raise your hand. Oh, here, Spencer. And we've got a question here. Great. Thanks. Yeah. Hi, thank you so much, Yvonne. My name is Geronimo. I'm a chef and I'm also a culinary consultant helping institutional dining chefs menu more bivalves and seaweed. Specifically, they're the most regenerative ingredients. And recently, I started partnering with Patagonia Provisions to promote those products. So I'm curious, Yvonne, your take on Patagonia expanding into the food space. Well, that's one of the ways that I deal with large companies, diversifying. People are not going to need clothing in the future, as far as I'm concerned. They're going to need to eat. And I'm interested in feeding them things that people haven't thought about eating or that are very low down in the food chain. Actually, if I was going to start a restaurant, here's what I would do. I'd start a bean and rice restaurant. Because I can eat beans and rice every day of my life. That's probably what Renee eats at home. But I would make, I would find some heritage beans that haven't had the fat bread out of them and still have incredible taste. And I would come up with the best recipes you've ever heard of. And it would be the best bean and rice restaurant in the world. And the ingredients cost, what, a dollar or something per person? I mean, nothing. And yet you're feeding them really healthy, nutritious food. But very, very high quality. I wouldn't want to be another bean and rice restaurant. I want to be the best. Okay, good. Is there another question? Oh, we've got some down here. Up front. Down over here. Thank you. You first and then we'll move on. It seems to me that one of the fundamental problems of capitalism, what drives the short-termism, is the way that companies are owned. They're in hock to shareholders, venture capitalists, banks, and so on. And the transition that Patagonia has made towards being a kind of a steward-owned company, shares held in trust, where you say the earth is our only shareholder, seems to me to be so extraordinary and important and a model for others to follow. Because you've shifted how it's owned. It's not just about giving away the excess profits or whatever. It's about the fundamentals of ownership. So can you say something more about what you've learned about making that transition to ownership and how others might do it too, to be owned in different ways? Well, I think it was the best thing I've ever done was give the company away. I mean, I showed up in Forbes magazine as being a billionaire. And that so pissed me off. Because I was like a farmer who has 1 ,000 acres and lives on $50,000 a year. But if he developed his 1,000 acres into housing development, he'd be a multimillionaire, right? So if I had sold a company, I could have gotten $8 or $9 billion for it. Or if I went public. But that would be suicide. It would put the company on a suicide course. And you would have to start selling to department stores. Would have to start selling sunglasses and watches. Because there's a limit to what we really want to do. And so, well, I don't know where I'm going with that. With the ownership decision. How do you see this as a possibility for other companies to adopt the same model? We're approached by other companies all the time. Somebody here yesterday approached me. And we're happy to help anybody. I mean, this is pretty common in Europe. Rolex is a foundation. Leica, Bausch and Lom, they're a foundation. A family foundation. Holy moly. I'm being attacked. It's the king's birthday. Told you guys. We weren't kidding. I think... I hope there's not one for every year. Because he just turned 50 last year. It's probably 21 gun salute. Yeah. How many gun salute does he have? I'm guessing he gets 21. 21. You know, the full measure of salutes. Yeah. Yeah. Should we hang up? Keep going? Well, I've got one story to tell. Okay. Last year I had a guy who's a CEO of a chain of supermarkets in Canada. And he asked me if I would come to their board meeting and talk about greening their supermarket chain. And I said, well, you're not going to like what I say. At Patagonia, we feel that it's our responsibility to check out every single ingredient that go into our clothing. And make sure and accept responsibility for it all the way to the very end. And also how our clothes are. And also how our clothes are sewn in Bangladesh or whatever. It has to be free trade. And in fact, we just gave a million dollars to one of the factories in Taiwan that makes fabric for us to help them switch from coal to natural gas and eventually to electricity. So, I said, let's look at your supermarket. Let's start with salt. Table salt. You need to decide who makes the most responsible, best quality table salt. Salt is salt, right? You put it on your tongue and it all tastes the same. You never say that to a room full of chefs. Yeah, you got that flaky French salt. But anyway, and then let's go to butter. You're responsible for that butter, how it's made. And the beef. Does it come from Brazil where they cut down the rainforest to grow grass for those cows? You have to be responsible for every single product in your supermarket. And he just hung his head. I have not been invited to the board meeting. We have, I thought there was another question right there. Yeah. Me. Thank you. Yvonne, thank you so much for everything you've done with Patagonia. Can you speak up a little? Yes. We live in a world today where 80% of the people are not happy in their jobs. There's a lot of, we're mostly bureaucratic companies around the world. And I love your book, let my people go surfing. I think we should help to have employees be more happy in their jobs. I come from a country, Mexico, where 90% of people don't have the luck of being happy in their jobs. So I would like for you to talk about a little more of how you make your people happy at work. Well, I think by having a common goal is important. You have to be all working together. I mean, when I see everybody who works at noma here and the MAD Conference, they're the happiest people I've ever seen. I mean, it's, well, first of all, don't work for a company that you don't believe in. And if you're going to create a company, I mean, the happiest people I know work at something they really believe in. And they go up to work on the tips of their toes instead of on their heels. And I think that's, I can't tell you how to achieve that, but I think it's just a matter of going around with your eyes open and not kidding yourself and really doing the right thing always. And I found that whenever you have a problem in business, the answer is increase the quality. Always. And if you work for a company that is really focused on quality, then I think you'll be a happy person. I wrote an op-ed piece for the New York Times about a couple years ago. And I talked about quality. And I talked about this guy, [W. Edwards Deming], who went to Japan after World War II. Japan was making junk just like China does after World War II. They were a destroyed nation. And he went there and he convinced them. He was a professor. And wrote books. And wrote books. And he convinced them to focus on quality. And you know, now, everything you buy from Japan is of the highest quality. It really is. He changed an entire nation. And somebody said, you know, the poor can't afford bad quality. My wife and I bought a kitchen knife, a chef knife, 55 years ago. And it's carbon steel. And it's carbon steel, not shitty stainless steel. I know good steel, being a blacksmith. And it's, I sharpen it constantly. It can cut through the softest tomatoes, make perfect slices. And it's going to be around for hundreds of years. One knife. Instead of, you know, this junk that you throw away and replace, throw away, replace. I think the consumer society is, is, is, is, it's got to get around to buying quality and less. And I also said, look, we got to get rid of petroleum, right? Where do we start? Well, let's start with the worst quality petroleum. Like in the tar sands or maybe Nigeria or the Amazon. Let's get rid of that first. And then work on down the line. But I think the key to a lot of things is, or the future. The key to the future is focusing on quality. Okay. We're out of time for questions. I'm sorry, but I'm going to ask one last one. You've already said you're the, the oldest guy in the room. As the oldest guy in the room, what do you dream of for the future? I dream about going fishing. Thank you. That was perfect. Thank you.