If You Want to Build the Next Patagonia, Here's What Not to Do: 'We Realized We Were Turning Everybody Off' Fifty years in, the leaders of the lauded outdoor apparel brand have are sharing lessons in responsible business — which they say is just plain good business — for up-and-coming entrepreneurs.
This story appears in the November 2023 issue of Entrepreneur. Subscribe »
Is your business "making the world a better place"?
It's become a business cliché, because everyone wants to feel good about making money. But if your company didn't start out with an altruistic mission, it can often feel like the incentives are out of whack. But don't write yourself off just yet, says Patagonia's director of philosophy, Vincent Stanley. He wants you to know that even the most celebrated philanthropic business didn't start out that way. "Patagonia was meant to be an easy-to-milk cash cow," he says. "Not a risk-taking, environment-obsessed, navel-gazing company."
Stanley has been with the outdoor apparel brand since 1973, when his uncle, Yvon Chouinard, started it as an offshoot to support his real venture, making rock- climbing equipment. But as Patagonia grew, Stanley says there were "a handful of moments that stunned us into consciousness." One such moment was their discovery that cotton — "what we thought was a natural and therefore virtuous fiber" — was actually the most toxic material to grow. That and other stories are detailed in a new book, The Future of the Responsible Company: What We've Learned from Patagonia's First 50 Years.
Patagonia is now a $1 billion-plus business — a cash cow, after all — and Chouinard has been dubbed the business world's "philosopher king" (though he prefers "existential dirtbag"). Last year, he made good on his claim of never wanting to be a billionaire when he forfeited his family's ownership of the company to a nonprofit trust that would ensure all future proceeds go toward combating climate change. "Earth is now our only shareholder," Chouinard said.
But for all the philosophizing that goes on at Patagonia, this new book is not an idealistic screed. It's a practical blueprint for companies committed to examining their impact. It recommends that responsible businesses assess their impact on "five key stakeholders": owners/shareholders, workers, customers, the community, and nature as a whole. It includes extensive checklists to help business owners take stock of their impact on each of these stakeholders, and just enough philosophy to get readers in the existential dirtbag mindset. Here, Stanley talks about responsible thinking, and why reducing the harm your business causes often creates even more business opportunities.
There's a great line in the book: "Are (or were) you a juvenile delinquent? Great. You have the personality of an entrepreneur. Read all the checklists and go do something that makes you proud." Do you have any other advice for entrepreneurs who want to start or run a responsible business?
Most people who start businesses have something they care about a lot. To be more responsible, make the connection between the purpose of your business and its different stakeholders. Is there some effect your business has on your community or the environment that you're not proud of? Go there first, rather than thinking abstractly: What's the most serious thing going on in the world that I should be doing something about? Look at the problems your own business creates.
You also talk about the 80/20 rule: "If 20% of your products (or services) generate 80% of your sales, analyzing those products will gauge the lion's share of your impact."
For us it's more like a 90/10 rule. The bulk of our environmental impact comes from the materials we use. But we still look at everything else we do, even if it doesn't have as much impact, because it reduces harm. And it also creates opportunities for business.
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Your uncle has said, "Every time I do the right thing, I make money." It's the idea that altruistic constraints can lead to innovation. But I think people have a hard time believing that until it happens for them.
That's exactly right. I mean, that's what happened with us. We made the switch to organic cotton and took a hit on margins and sales for a while. But then it proved successful, and we started looking at other things. Our wetsuits relied on a really destructive limestone process. We asked, "Is there another way to make them?" We came up with a much better alternative that caused less harm and delivered the same performance. So when everybody on the team starts thinking, What if we did this instead of that? it opens up the imagination, and the more that happens, the less you're compromising between being successful and doing the right thing.
And quality is important to maintain — in order to be successful while doing the right thing.
Absolutely. In the early 2000s, we made a line of rain shells that were much more environmentally beneficial. But they were stiff and noisy when you walked, and they didn't keep you dry! We realized all we were doing was turning everybody off of environmentally responsible rainwear. I'm not buying a rain jacket to save the earth. I'm buying it to keep me dry. But if it keeps me dry and solves problems that other rainwear doesn't, I'll go with that.
Patagonia has also been transparent about problems you haven't solved yet — even acknowledging that not buying your clothes might be a better solution.
Yes. A little over a decade ago, on Black Friday, we put out this ad in The New York Times that said, "DON'T BUY THIS JACKET." The jacket pictured was the highest recycled content we knew how to make at the time, and it would last 10 to 15 years, at which point you could send it back to us to be recycled. But it still generated a lot of scrap waste, and its manufacturing required a lot of water, and it created greenhouse gases many times its weight. So we were trying to say, "Listen, because we don't really know how to make anything that doesn't take more from the planet than we're repaying, you should be thoughtful about what you buy, even from us."
In 2018, Patagonia changed its mission statement from, "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis," to, "We're in business to save our home planet." Is this the kind of shift you think all businesses should make?
I think it's difficult. One reason we felt we could change the mission statement was because we'd gotten into the food business in a small way, with regenerative organic agriculture. This is more than not using chemicals — it's crop rotation and companion planting and minimal tillage, things that actually build topsoil much faster than nature can. So you're giving back more than you're taking. But we can't do much of that yet in the clothing business. We're all still stumped. So if there's no way to create a product or service that does positive good, at minimum, I think we should all be reducing harm, and cleaning up our act. If there's a problem common to your industry, it's up to you to work on it.
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