Late Fall 2005
I had always avoided thinking of myself as a businessman. I was a climber, a surfer, a kayaker, a skier and a blacksmith. We simply enjoyed making good tools and functional clothes that we, and our friends, wanted. My wife, Malinda, and I owned only a beat-up Ford van and a heavily mortgaged, soon-to-be-condemned cabin on the beach. And now, in 1975, we had a heavily leveraged company with employees with families of their own, all depending on us.
After pondering our responsibilities and financial liabilities, it dawned on me one day that I was a businessman, and would probably continue to be one for a long time. It was clear that in order to survive at this game we had to get serious. But I also knew that I would never be happy playing by the normal rules of business. If I had to be a businessman, I was going to do it on my terms.
Work had to be enjoyable on a daily basis. We all had to come to work on the balls of our feet, going up the stairs two steps at a time. We needed to be surrounded by friends who could dress whatever way they wanted, even barefoot. We needed to have flex time to surf the waves when they were good, or ski the powder after a big snowstorm, or stay home and take care of a sick child. We needed to blur that distinction between work and play and family.
From the mid-1980s to 1990, sales at Patagonia grew from $20 million to $100 million. Malinda and I were not personally any wealthier, as we kept the profits in the company. In many ways the growth was exciting. We were never bored. New employees, including those in the lowest-paid positions in retail stores or the warehouse, could rise rapidly to better-paying jobs. For a few positions we conducted searches – and we could claim our pick of the litter within both the apparel and outdoor industries. But most of the new employees we hired came through a well-rooted and fast-growing grapevine.
Despite our own growth at Patagonia, we were able, in many ways, to keep alive our cultural values. We still came to work on the balls of our feet. People ran or surfed at lunch, or played volleyball in the sandpit at the back of the building.
In growing the business, however, we had nearly outgrown our natural niche, the specialty outdoor market. By the late 1980s the company was expanding at a rate that, if sustained, would have made us a billion-dollar company in a decade.
Can you have it all? The question haunted me as Patagonia evolved. Another problem would come to haunt me more – the deterioration of the natural world. I saw that deterioration first with my own eyes, when I returned to climb or surf or fish in places I knew, like Nepal, Africa or Polynesia, and saw what had happened in the few years since I’d last been there.
In Africa, forests and grassland were disappearing as the population grew. Global warming was melting glaciers that had been part of the continent’s climbing history. The emergence of AIDS and Ebola coincided with the clear-cutting of forests and the wholesale pursuit of bush meat, such as infected chimpanzees.
On a kayaking trip to the Russian Far East, before the collapse of the old Soviet Union, I found that the Russians had destroyed much of their country trying to keep up with the U.S. in their arms race.
Closer to home, I saw the relentless paving over of Southern California’s remaining coastline and hillsides. In Wyoming, where I spent summers for 30 years, I saw fewer wild animals each year, caught smaller fish, and suffered through weeks of debilitating, record-setting 90-degree heat. But most environmental devastation the eye doesn’t see. I learned more by reading about the rapid loss of topsoil and groundwater, about the clear-cutting of tropical forests and the growing list of endangered plant and animal and bird species, and of people in the once pristine Arctic who are now being warned not to eat the local mammals and fish because of toxins from industrial nations.
At the same time, at Patagonia, we slowly became aware that uphill battles fought by small, dedicated groups of people to save patches of habitat could yield significant results. We began to make regular donations to smaller groups working to save or restore habitat, rather than giving the money to large NGOs with big staffs, overheads and corporate connections. In 1986, we committed to donate 10 percent of profits each year to these groups. We later upped the ante to 1 percent of sales, or 10 percent of pre-tax profits, whichever was greater. We have kept to that commitment every year, boom or bust.
We also realized that in addition to addressing these external crises, we had to look within the company and reduce our own role as a corporate polluter. We began recycling paper waste in 1984 and conducted an intensive search for a source of paper with a higher percentage of recycled content for our catalog. In 1990, we were the first catalog in the U.S. to use recycled paper. In that first year, switching to recycled paper saved 3,500,000 kilowatt hours of electricity, 6,000,000 gallons of water, kept 52,000 pounds of pollutants out of the air and 1,560 cubic yards of solid waste out of landfills, and it prevented 14,500 trees from being felled. We also researched and pioneered the use of recycled, reused and less toxic materials in our construction and remodeling projects. We worked with Wellman and Malden Mills to develop recycled polyester for use in our PCR® Synchilla fleece.
All the while we continued to grow. We experienced so much success on so many fronts during the late 1980s that we began to believe the expansion would never end. And we planned to just keep going.
Then, in 1991, after all those years of 30 percent to 50 percent compound annual growth and trying to have it all, Patagonia hit the wall. The United States had entered a recession, and the growth we had always planned on, and bought inventory for, stopped.
The crisis soon deepened. Our primary lender was itself in financial trouble, and it sharply reduced our credit line. To bring our borrowing within the new limits we had to drastically reduce spending.
Our own company had exceeded its resources and limitations; we had become dependent, like the world economy, on growth we could not sustain. But as a small company, we couldn’t ignore the problem and wish it away. We were forced to rethink our priorities and institute new practices. We had to start breaking the rules.
I took a dozen of our top managers to Argentina, to the windswept mountains of the real Patagonia, for a walkabout. In the course of roaming around those wild lands, we asked ourselves why we were in business and what kind of business we wanted Patagonia to be. A billion-dollar company? Okay, but not if it meant we had to make products we couldn’t be proud of. And we discussed what we could do to help stem the environmental harm we caused as a company. We talked about the values we had in common, and the shared culture that had brought everyone to Patagonia, Inc., and not another company.
We knew that uncontrolled growth put at risk the values that had made the company succeed so far. Those values couldn’t be expressed in a how-to operations manual offering pat answers. We needed philosophical and inspirational guides to make sure we always asked the right questions and found the right answers.
While our managers debated what steps to take to address the sales and cash-flow crisis, I began to lead week-long employee seminars in what we called Philosophies. We’d take a busload at a time to places like Yosemite or the Marin Headlands above San Francisco, camp out, and gather under the trees to talk. The goal was to teach every employee in the company our business and environmental ethics and values.
I realize now that what I was trying to do was to instill in my company, at a critical time, lessons that I had already learned as an individual – and as a climber, surfer, kayaker and fly fisherman. I had always tried to live my life fairly simply and by 1991, knowing what I knew about the state of the environment, I had begun to eat lower on the food chain and reduce my consumption of material goods. Doing risk sports had taught me another important lesson: never exceed your limits. You push the envelope and you live for those moments when you’re right on the edge, but you don’t go over. You have to be true to yourself; you have to know your strengths and limitations and live within your means. The same is true for a business. The sooner a company tries to be what it is not, the sooner it tries to “have it all,” the sooner it will die.
Reprinted by arrangement with The Penguin Press, a member of Penguin Group (USA) Inc., from Let My People Go Surfing: The Education of a Reluctant Businessman. Copyright © Yvon Chouinard, 2005. Publication date: October 10, 2005.