Patagonia, From the Ground Up


Highlighting the excellence from: the June 2010 issue of Entrepreneur, Jennifer Wang

While the rest of retail was tanking, Yvon Chouinard’s outdoor clothing and gear company was having its best two years ever. Here’s why.

Patagonia gear isn’t cheap or trendy (deliberately, anyway). Instead, the brand is thriving by maintaining its integrity, says Marshal Cohen, chief industry analyst with NPD Group, a market research firm. “They’ve become the Rolls-Royce of their product category,” he says. “When people were stepping back, and the industry became copycat, Chouinard didn’t sell out, lower prices and dilute the brand–because sometimes, the less you do, the more provocative and true of a leader you are.”

“I want to send a message that it’s good business to make a great product, and do it with the least amount of damage to the planet. If Patagonia wasn’t profitable or successful, we’d be an environmental organization.”

The recession didn’t touch Patagonia. Why?

Well, I think the key to surviving a conservative economy is quality. The No. 1 reason is that in a recession, consumers stop being silly. Instead of buying fashion, they’ll pay more for a multifunctional product that will last a long time. They’ll buy one jacket from us that works for skiing and on top of a suit in a rainstorm. Another reason is that we’re out of debt. We can extend credit to our wholesale accounts that are hurting and can’t get loans. These accounts are kicking out the little brands that they thought would be fun to put in in favor of the stuff they know will sell, from a company that will deliver.

Did people think you were crazy?

Oh, yeah. They’d see all this money lying on the ground and go, “Why don’t you pick it up?” But I believe there is a certain right size for every endeavor, whether it’s a business or even a religion. You exceed that after awhile, and then you’re no longer valid. I’m always questioning what the right size is for our company.

What makes you proud?

1 percent for the Planet–it’s the organization I started with [Blue Ribbon Flies founder] Craig Mathews. Businesses sign up to give 1 percent of their revenue to environmental causes, and we’re adding more than a company a day. We have bigger companies like Clif Bar and New Belgium Brewing, but a lot of the members are small businesses, so it’s pretty cool. And when we discover we’re doing something bad [such as using industrially grown cotton], we let other companies know that this is a bad practice. If companies like Nike or Gap ask us how to get organic T-shirt blanks, we can tell them a great mill. But we had to discover all this ourselves because none of that information was available before we started. Right now, we’re trying to convince zipper companies to make teeth out of polyester or nylon synths, which can be recycled infinitely. Then we can take a jacket and melt the whole thing down back to its original polymer to make more jackets.

Why do you compare yourself–and entrepreneurs in general–to juvenile delinquents?

Yeah, I think entrepreneurs are like juvenile delinquents who say, “This sucks. I’ll do it my own way.” I’m an innovator because I see things and think I can make it better. So I try it. That’s what entrepreneurs do.

How do you know if you’re making the right move?

It’s a lot of gut instinct. If you study something to death, if you wait for the customer to tell you what he wants, you’re going to be too late, especially for an entrepreneurial company. That comes from Henry Ford: Customers didn’t want a Model T, they wanted a faster horse.

So that’s all there is to it? Stick to what feels right?

Well, you need to start out right. It’s about hiring really smart and self-motivated people who want to work for you, and then leaving them alone. Young entrepreneurs should realize you can break the rules and still make it work–and work better. It’s a real advantage to break the rules now, because business as usual doesn’t apply anymore.

How do you get independent people going in the same direction?

Through consensus. You can’t order them around, so don’t even bother trying. When the surf comes in, all the surfers are out of here. But I’ve never seen an instance when anyone’s taken advantage.

What’s your main role?

I’m the company philosopher. I redirect things when I see opportunities. Sometimes I have to force it because it’s not an entrepreneurial company anymore.

Like when?

We were traditionally an alpine company, so when I wanted to start our swim and surf lines, the whole company was trying to reject it. It took us years to inculcate our surf business. But customers do want bikinis with the Patagonia label, and we’ve expanded successfully into these different fields. And we’re very attractive to Gen Y and younger people because they have brains and are demanding products from responsible companies. They’re concerned about the future of the planet.

Have you thought about teaching?

I was offered a fellowship at Yale to teach a class in business philosophy–with my high school education in auto mechanics.

So you didn’t take it.

No. There’s no surfing in New Haven.

Categories: Excellence

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