Patagonia and founder Yvon Chouinard have long been in business by doing it right. Its famous 2011 Black Friday Advertisement The “Don’t Buy This Jacket” customer guide has helped sell tons of jackets. When the company sued the then president Donald Trump in 2017 to protect national monuments in Utah, business boom again. “[The Black Friday ad] Not a way to sell more products, though of course that jacket sold like crazy.” he said in a 2018 GQ interview. “It’s a kind of Zen. You do the right thing and good things happen.” Now, Patagonia’s founder of fly fishing, rock climbing, and whitewater kayaking is giving away his entire stake (and family) in the company he built, follow The New York Times, to ensure that its profits will continue to go to good causes.
The decision comes after a two-year process that saw Chouinard appear on the Forbes billionaires list. “I was listed as a billionaire by Forbes magazine, which really pissed me off,” he told Times. He began looking for avenues to relieve the company responsible for his assets. This started what became known as the Chacabuco Project, which involved a fishing hole in Chile (and also the name of one of Patagonia’s backpacks).
Chouinard and Patagonia explored all their options, according to a statement made by the company. Sell the company may have exposed Patagonia to a new set of owners who may not have been such radical thinkers. The team considered taking the company public, but Chouinard didn’t trust the free market to create a company of moral character. “I have no respect for the stock market at all,” he said Times. “Once you went public, you lost control of the company and you had to maximize shareholder return, and then you became one of these irresponsible companies.” Chouinard’s children also rejected the idea of inheriting the company and becoming the new billionaire. Somewhere, Cousin Greg was stuttering and stuttering.
In the end, the brand and its founder found a somewhat complicated solution. The Chouinard family block of voting shares (2% of the total shares) will be donated to a new vehicle called the Patagonia Purpose Trust. The trust is expressly established for this purpose and consists of a group of family members and “their closest advisors”, Times details. The group will continue to play a role through major corporate decisions and will oversee the donation of its profits to organizations fighting the climate crisis. The rest of the Chouinard family will go to the newly created Holdfast Collective, a nonprofit that “will use every dollar received to fight the environmental crisis, protect nature and biodiversity learning as well as supporting communities to grow as quickly as possible”.
The bottom line is that the Chouinards, by selling their company, are ensuring that Patagonia’s profits – “the money we made after reinvesting in the business,” as the brand claims – will be used. used to combat climate change. The Times pegs this profit at almost $100 million annually. While Holdfast Collective is brand new, it has been expected to be “a key player in climate philanthropy” simply relying on the power of these donations, according to the company. Times.
It seems safe to predict that this move will once again bring huge revenue to Patagonia from customers who want to support well-run companies. But even the most cynical onlookers — who may have tried to undo previous efforts as savvy marketing — should struggle to find fault with Chouinards’ actions. The Times Carefully lay out how the family will not receive any tax benefits from these actions, and will in fact pay $17.5 million in taxes on the donated shares. This is the exact opposite of extremely wealthy business owners who seek to avoid paying taxes by giving away shares in their companies. But Chouinard has always grown by doing things his own way.