Yvon Chouinard: A $3 billion giveaway

Summary

Episode Summary: Yvon Chouinard: A $3 Billion Giveaway

Introduction In this episode of Good Bad Billionaire, hosts Simon Jack and Zing Seng delve into the life and legacy of Yvon Chouinard, the founder of the outdoor apparel company Patagonia. Known for his unconventional approach to business and his staunch environmentalism, Chouinard's journey from a passionate climber to a reluctant billionaire offers a compelling narrative about wealth, responsibility, and personal philosophy.

Early Life and Passion for the Outdoors Yvon Chouinard was born in 1938 in Maine to a French Canadian family. His early years were marked by a deep connection to nature, despite facing challenges such as bullying at school for his atypical interests and name. At the age of 14, Chouinard discovered falconry, which ignited his passion for climbing and outdoor adventures. By 16, he had already undertaken significant personal projects, including driving a rebuilt 1940 Ford a thousand miles to Wyoming for a solo climbing attempt on Wyoming's tallest mountain ([04:08] Zing Seng).

Founding Patagonia Chouinard's entrepreneurial spirit was evident early on. After high school, he worked as a private investigator for the eccentric billionaire Howard Hughes, a role that combined his love for adventure with hands-on experience in a unique work environment. At 18, Chouinard taught himself blacksmithing to create better climbing equipment, leading to the establishment of Chouinard Equipment in 1957. His innovative pitons, made from stronger materials, gained popularity among climbers and set the stage for his future business endeavors ([06:26] Simon Jack).

In 1973, together with his wife Melinda Panoya, Chouinard launched Patagonia, a standalone clothing line named after the remote and wild region of South America. The name was chosen to evoke a sense of adventure and environmental beauty, significantly contributing to the brand's identity and success ([15:23] Simon Jack).

Growth and Business Philosophy Throughout the 1970s and 1980s, Patagonia experienced steady growth, expanding its product line beyond climbing gear to include versatile outdoor clothing. A pivotal moment came in 1972 when Chouinard and his partner Tom Frost developed the hexentric piton, a reusable climbing tool that minimized environmental impact. This innovation aligned Patagonia with the principles of "clean climbing," emphasizing sustainability—a theme that would define the company's ethos ([13:54] Zing Seng).

Under the leadership of CEO Chris McDivitt, Patagonia's catalog became more than just a product list; it was a lifestyle magazine promoting outdoor adventures and environmental consciousness. This strategic move helped Patagonia grow rapidly, reaching $800 million in revenues by 2017 and earning Chouinard a spot on Forbes' billionaire list ([21:09] Simon Jack).

Crisis and Reorganization Despite its success, Patagonia faced significant challenges. In 1989, Chouinard Equipment filed for Chapter 11 bankruptcy due to lawsuits over safety warnings, leading to its rebranding as Black Diamond Equipment. Patagonia continued to expand internationally, but rapid growth led to organizational chaos. The U.S. recession in 1991 exacerbated cash flow problems, resulting in layoffs and a major restructuring effort led by business consultant Dr. Michael Cammie ([22:34] Michael Lewis).

Chouinard's commitment to environmentalism remained unwavering. In 1984, Patagonia pledged to donate 10% of its pre-tax profits to grassroots environmental organizations, a policy that reinforced the company's mission and set a precedent for corporate responsibility ([28:14] Zing Seng).

Becoming a Billionaire and Reluctance By 2017, Patagonia's valuation soared, leading Forbes to list Chouinard as a billionaire. However, true to his "reluctant billionaire" persona, Chouinard expressed discomfort with this label, emphasizing that his wealth was not a personal goal but a means to support his environmental causes ([35:07] Zing Seng).

The $3 Billion Giveaway In a groundbreaking move in 2022, Yvon Chouinard donated Patagonia to a charitable trust and a nonprofit organization. The Patagonia Purpose Trust holds voting stock to maintain family oversight, while the Hold Fast Collective receives non-voting stock, directing all profits towards combating climate change. This strategic transfer ensures that Patagonia's dedication to environmental sustainability continues indefinitely, with profits amounting to approximately $100 million annually supporting various ecological initiatives ([36:29] Simon Jack).

Judgment: Good, Bad, or Just Another Billionaire Simon and Zing evaluate Yvon Chouinard across several categories:

• Wealth: Chouinard transitioned from humble beginnings to becoming a billionaire, though he ultimately redistributes his wealth to environmental causes. They rated his wealth impact as a 4 (Simon) and 8 (Zing), reflecting the significant transformation yet his modest personal lifestyle.

• Villainy: Despite some ethical challenges, such as issues in the supply chain and allegations of greenwashing, Chouinard's commitment to environmentalism and his decision to donate his company place him firmly on the "good" side. They awarded him a 1 (Simon) and 2 (Zing) in villainy, acknowledging minor setbacks but recognizing his overall positive impact.

• Power: Chouinard wields considerable influence through Patagonia's innovative practices and his advocacy for sustainable business models. While not overtly political, his actions inspire widespread corporate shifts towards environmental responsibility. Ratings were 5 (Simon) and 7 (Zing).

• Legacy: Patagonia's enduring legacy as a pioneer in sustainable business and environmental activism secures Chouinard's place as a transformational figure in modern capitalism. They gave him a 7 (Simon) and 8 (Zing) for his lasting contributions.

Conclusion Yvon Chouinard embodies the quintessential "good billionaire," using his wealth and influence to drive meaningful environmental change. His humble lifestyle, innovative business practices, and philanthropic dedication set him apart from the typical billionaire narrative. By redefining success and responsibility, Chouinard has positioned Patagonia as a model for sustainable capitalism, inspiring future generations to prioritize the planet alongside profit.

As Simon Jack aptly concludes, "Yvon Chouinard, you are a good billionaire," celebrating a life dedicated to climbing, surfing, and safeguarding the environment.

Notable Quotes:

• Chouinard on Patagonia's Growth: “We're growing, I don't know, between 10 and 20% every year. And it's because I think a lot of the millennium generation really care about the future. They know we're destroying the planet and they're voting with their dollars.” ([01:08] Simon Jack)

• Chouinard on Being a Businessman: “I've been a businessman for almost 60 years. It's as difficult for me to say those words as it is for someone to admit being an alcoholic or a lawyer.” ([02:20] Zing Seng)

• On Legacy: “Hopefully this will influence a new form of capitalism that doesn't end up with just a few rich people and a bunch of poor people.” ([43:48] Simon Jack)

Upcoming Episodes The next episode will feature Ma Yun, better known as Jack Ma, the founder of Alibaba, exploring his rise to prominence and impact on the global marketplace.

Produced by Hannah Hufford and Louise Morris, with additional support from Tamsin Curry and edited by James Cook, Good Bad Billionaire is a BBC Studios production for BBC World Service. New episodes are released every Monday.

Transcript

[Simon Jack]

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[Michael Lewis]

Hey there, it's Michael Lewis, author of Going Infinite Moneyball, the Blind side and Liars Poker. On the latest season of my podcast, against the Rules, I'm exploring what it means to be a sports fan in America and what the rise of sports betting is doing to our teams, our states and ourselves. Join me and listen to against the Rules on America's number one podcast network, iHeartradio. Open your free iHeart app and search against the Rules. Listen to against the rules on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts.

[Simon Jack]

Welcome to Good Bad, Billionaire from the BBC World Service. Every episode, we pick a billionaire and find out how they made their money.

[Zing Seng]

Then we judge them. Are they good, bad, or just another billionaire?

[Simon Jack]

I'm Simon Jack. I'm the BBC's business editor.

[Zing Seng]

And I'm Zing Seng. I'm a journalist, author and podcaster.

[Simon Jack]

And this week we have the reluctant billionaire.

[Zing Seng]

Yes. Who'd much rather be surfing or climbing than making money.

[Simon Jack]

His name is Yvonne Chouinard, and he founded a clothing brand called Patagonia. Listen to him introducing himself here. The outdoor industry is not very healthy right now. It seems that young people are just sitting at home playing with their electronic devices. But what we're doing, we're doing fantastic Patagonia. I mean, we're growing, I don't know, between 10 and 20% every year. And it's because I think a lot of the millennium generation really care about the future. They know we're destroying the planet and they're voting with their dollars. So everything that we do as a company to be more responsible turns out to be good for the business. Yvonne became a billionaire businessman in 2017, the year that was recorded.

[Zing Seng]

Funny how so many entrepreneurs think that doing good for the environment also means doing good for business.

[Simon Jack]

Yeah, we'll talk about that a lot, I'm sure, about profit with purpose. He's 85. He made his fortune, as we say, with the outdoor apparel company Patagonia, which he founded with his wife in 1973.

[Zing Seng]

And to give you an idea of just how much it's worth, it sells $1 billion worth of outdoor clothing every year. That's a lot of fleeces.

[Simon Jack]

Yeah. Yvonne became a billionair the year that clip you just heard was recorded. But he prefers to be known as, and we haven't had this before, he prefers to be known as a dirtbag. Being a dirtbag, he says, is a matter of philosophy, not personal wealth. I'm an existential dirtbag. Oh, that's so kind of not a teenage dirtbag.

[Zing Seng]

Not a teenage dirtbag. But that is so kind of skater slash surfing lingo.

[Simon Jack]

Yeah, yeah. In fact, he hates the term businessman. He said, I've been a businessman for almost 60 years. It's as difficult for me to say those words as it is for someone to admit being an alcoholic or a lawyer.

[Zing Seng]

You have to give it to him. He does have a sense of humor. He titled his autobiography Let My People Go the Education of a Reluctant Businessman, which has been really useful as a source for this episode.

[Simon Jack]

But he said he was horrified to be seen as a billionaire and kind of goes against our theory that all our billionaires have this relentless drive for success.

[Zing Seng]

Yeah. In this episode, we'll try to figure out if you really can be a reluctant billionaire or if that's just pr.

[Simon Jack]

In fact, spoiler alert, he's actually not a billionaire anymore. And we'll find out why.

[Zing Seng]

Yes. So he was worth $1.2 billion in 2022, but now he's off the list. And we'll tell the story of why he gave away his $3 billion company to a charitable trust and why he now says Earth is our only shareholder.

[Simon Jack]

We might even discuss his first job, which was a private investigator for an eccentric billionaire, Howard Hughes. We'll get to that later, but let's go back to the beginning.

[Zing Seng]

I mean, this really is a tale. So, Yvonne Chouinard was born in the US in 1938 to a French Canadian family.

[Simon Jack]

He spent his early years in Maine. That's on the east coast of the United States, in his mother's hometown. By the way, she was called Yvonne as well, although spelled differently, with two n's and an e on the end. Unlike our Yvonne, in a large community of French Canadians, his dad was a.

[Zing Seng]

Labourer who'd actually dropped out in third grade. But when Yvonne was 7, his mother moved the entire family west to Burbank, California, to help his father's asthma.

[Simon Jack]

Well, that came as a bit of a shock to young Yvonne. Until then, he'd been taught only French in school. He couldn't even speak English.

[Zing Seng]

He was also quite a small boy. Kids made fun of what they saw as a woman's name, and he became a loner, preferring to be outdoors, trapping insects, frogs, hunting rabbits in the city's parks and golf courses.

[Simon Jack]

As well as being unpopular, he wasn't a great student. He got D's in school. He spent classes practicing, holding his breath for when he went free diving on the weekends. This is an outdoor kid.

[Zing Seng]

Yeah, he sounds a little bit like the tale of the Lost boys, right?

[Simon Jack]

Yeah.

[Zing Seng]

He found his escape at the age of 14 when he joined a falconry because to help track these birds, one of the members taught him to climb. And he was instantly hooked.

[Simon Jack]

Yeah. And he found his community there. He found his squad within the climbing fraternity. A group of them would hop on freight trains to various cliffs with ropes stolen from the phone companies. It's like sort of Tom Sawyer. This doesn't know what Huckleberry Finn.

[Zing Seng]

It really does. I mean, at 16, he ended up driving a 1940 Ford, which he'd actually rebuilt himself in mechanics class. He drove it a thousand miles to Wyoming for a climb. He made his first summer attempt solo on an unclimbed route up the tallest mountain in Wyoming.

[Simon Jack]

There's a different risk appetite in this era.

[Zing Seng]

I mean. Yeah, I mean, imagine your 16 year old driving all the way to Wyoming.

[Simon Jack]

Yeah. So after graduating high school, his first job, as I mentioned before, was as a private detective because his older brother ran an agency and one of his main clients was the eccentric Hollywood mogul, Howard Hughes. You may have seen the film about him, the aviator, starring Leonardo DiCaprio.

[Zing Seng]

And at the time, Howard Hughes was one of the richest people in the world. He was actually a billionaire back when that was a really, really big feat.

[Simon Jack]

Eccentric is probably an understatement. He was a germaphobe. One of Yvonne's jobs was following around his style at girlfriends, guarding his yacht to keep it germ free and hiding him from people who were trying to serve him court papers. But of course, he spent all his spare time climbing and surfing.

[Zing Seng]

And he was quite an innovator. So at the age of 18, he bought a secondhand coal forge to teach himself blacksmithing so he could make his own climbing pitons. These are, in case you don't know, the metal pegs hammered into rocks to secure ropes so you can climb up.

[Simon Jack]

Yeah. The European pitons were expensive and they broke if you tried to remove them. So you needed loads of these pitons for big climbs.

[Zing Seng]

So Yvonne crafted a stronger one from the blade of a harvester.

[Simon Jack]

And he began selling these new chrome steel pitons. $1.50. European pitons were cheaper at just $0.20 each, but Yvons were the better deal as they could be reused over and over again. And that sustainable reusing thing is kind of a theme, Right, Right, exactly.

[Zing Seng]

And it's interesting how, despite the fact he calls himself a reluctant businessman, he wanted to make money off this invention.

[Simon Jack]

Yeah. I don't know whether he was in it for the money or whether he just was trying to make enough money just so he could go back off climbing and surfing. I don't think he was building a business empire. Anyway, he set about making a stronger carabiner. And that's one of those metal loops with the spring loaded gate for climbing ropes, those things you clip on. And he borrowed $825 from his father to buy a more sophisticated forge for more complex blacksmithing. And that was quite a lot of money for the time. It was two months average wages back in 1957.

[Zing Seng]

And in a very funny echo of a proto startup garage, he set up the shop for that Smith in the chicken coop behind his parents house. You'd hope. He probably cleaned it out before he started using it. But for the next few years he spent his winters forging this equipment and his summers climbing in Yosemite national park and selling the equipment out of the back of his car.

[Simon Jack]

It's a classic surfer dude thing, isn't it? I get my cash together and then take off in the summer. And it was the 1950s and 60s where a golden age was surfing. And also for climbing. Several prized ascents, you know, route up mountains were completed for the first time during that period.

[Zing Seng]

And Yvonne was benefiting off word of mouth because people were coming to buy this homemade equipment. And the stronger pitons in turn helped climbers make even bigger ascents.

[Simon Jack]

Yeah, his early business wasn't making much money. He often lived on less than a dollar a day. That's around US$10 today. He ate dented cans of cat food. Really Supplemented with squirrel and porcupines. They hunted with an ice ax. I'm not sure about this. I'd like it to be true, but I don't want a little bit of embellishment.

[Zing Seng]

It definitely sounds like slightly more exotic meats than you would probably want to eat at the time.

[Simon Jack]

He camped outside. He claims he didn't buy a tent until he was 40.

[Zing Seng]

He would also hide from park rangers when he overstayed the two week limit which was imposed by national parks and was still hopping freight trains to get to places. This behavior incidentally, actually landed him in jail for 18 days.

[Simon Jack]

But he's not nostalgic for this period. And just again, I've talked to a lot of tech billionaires and they get kind of moist eyed and misty about the time when there was just the two of them. They had one phone, you know, they were all sleeping on the floor in office. He Gets nostalgic for this period and admits he was a product of his time.

[Zing Seng]

Yeah. Interestingly, he describes it as the cheap fossil age, where he could, quote, get a car for $20, gas for 25 cents a gallon. Camping was free, and you could get a part time job anywhere. The land was fat and we took full advantage of it.

[Simon Jack]

Oh, the good old days. But in 19, in 1962, he was drafted to the army and spent two years in Korea.

[Zing Seng]

And he actually tried to get out of it. He tried to fail the physical by drinking a bottle of soy sauce, hoping it would raise his blood pressure, but he just vomited it up and passed the test anyway.

[Simon Jack]

You know, I once got out of an exam at university by deliberately eating a handful of soap and then managing to get back to my desk and then throwing up. And I was then given a pass and saying, you've got to go to the doctor. So I relate to this.

[Zing Seng]

Yeah, maybe. Maybe Yvonne should have swallowed some soap instead.

[Simon Jack]

Yeah. Well, once overseas, he often defied his superior and would skive off going climbing with local Koreans in the mountains around Seoul.

[Zing Seng]

In his autobiography, he says he, quote, hastily married a local Burbank girl before being shipped off to Korea and then came home to a failed marriage. He doesn't actually mention this girl's name, so, I mean, I think it's pretty safe to say she wasn't the love of his life.

[Simon Jack]

Okay, so, once home from Korea, he was part of a celebrated climbing team who were the first to get up a wall on El Capitan that's a very famous mountain in Yosemite national park, then thought of one of the most difficult climbs.

[Zing Seng]

And that climb was only made possible thanks to a Neil Piton he'd made from an aircraft alloy material he'd designed with an aeronautical engineer named Tom Frost. So even though he's a climbing fan, he's actually also helping to break records.

[Simon Jack]

Yeah, he is. So in 1965, Yvonne and Tom and Tom's wife Doreen go into business.

[Zing Seng]

Together they set up Schwinna Equipment out of an abandoned slaughterhouse in Ventura, which is in a beach town in California that has very good surfing.

[Simon Jack]

It's getting more glamorous. His first business was in a chicken coop, this one in an abandoned slaughterhouse. But they were redesigning and improving climb equipment to make it stronger, lighter and more functional.

[Zing Seng]

And they were inspired by the design principles of a French aviator, Antoine de Saint Exupery, who revered refinement and simplicity.

[Simon Jack]

Anne wrote a fabulous book called the Little Prince, which is a really famous, kind of. It feels like a kid's book, but it's kind of got a real sort of adult moral to it.

[Zing Seng]

I was wondering if this was the same Antoine. Yeah, it is.

[Simon Jack]

He was the pilot. But there was a more prosaic reason for improving the quality of this equipment. As Yvonne explained, because if a tool failed, it could kill someone. And since we were our own best customers, there was a good chance it would be us.

[Zing Seng]

So he was kind of invested in making this work.

[Simon Jack]

Yeah. And he had as well as this skill for design. Yvonne seems to have been canny at spotting climbing and surfing friends who could help his business.

[Zing Seng]

Many of the friends he hired were, in his words, content to work only until they had enough money to go off themselves and climb. But he could also spot real talent. So a guy called Roger McDivitt was a surfer, but most importantly, an economics graduate.

[Simon Jack]

So Roger joins the blacksmith shop, but soon spotting ways to save money. So Yvonne moved him to the retail operations.

[Zing Seng]

And this is a really fun kind of business move. Roger roughed up the pitons so he could export them to the uk. A scrap metal to avoid customs tax. And then in the uk, a friend would clean them up and sell them on to customers.

[Simon Jack]

Yeah, quite a trick, that. So by 1970, they were the largest supplier of climbing equipment in the us. I don't know how big that market is, but they were the biggest player in it with 75% of the market.

[Zing Seng]

But they were also only making 1% profit. They were leading the market because no one else was interested in that low of a profit margin.

[Simon Jack]

But any money that was made was shared between them just to pay themselves for the hours they work. And Yvonne said none of us saw the business as an end in itself. It was just a way to pay the bills so we could go off on climbing trips.

[Zing Seng]

I mean, this is really quite different in attitude from most of our billionaires.

[Simon Jack]

People want to have a vision and want to change the world. This is just a job to get enough money to go and do something else that you enjoy more.

[Zing Seng]

You know what it reminds me of? It really reminds me of, you know, that backpacker mentality where you take a job in a hostel, you're making it to spend it.

[Simon Jack]

Yeah. But we know from his early adventures in climbing that he was a risk taker in common with a lot of entrepreneurs. And he was about to make a big gamble on one of their key products.

[Zing Seng]

Pitons made 70% of their business. But after climbing a famous part of El Capitan called the Nose, he Noticed how much damage the pitons were doing to the rock because there were more people climbing than ever before.

[Simon Jack]

So he made the decision to stop selling them and worked with Tom Frost, his partner, on an alternative.

[Zing Seng]

And in 1972, they cracked it. They patented what is called the hex centric. And it's a hexagonal piece of aluminium that you can wedge into the cracks and then remove without damaging the rock.

[Simon Jack]

They introduced them in their catalog with a 14 page clean climbing manifesto. And the catalogue bit of this is important, as we'll see.

[Zing Seng]

Yes. I mean, this is very much in the days before online shopping, for sure.

[Simon Jack]

And older climbers were a bit initially resistant. They soon caught on and now they're pretty standard in climbing with pitons, the old fashioned pegs you hammer in, rarely used.

[Zing Seng]

But this is not a story about climbing equipment, because the big turning point was when they decided to branch out into clothing.

[Simon Jack]

Yeah. Back in the 1960s, sportswear or sports leisure didn't really exist beyond sweatpants, which were too thin for climbing. So most climbers wore cut off chinos or old dress shirts.

[Zing Seng]

I kind of like this image of a climber going up El Capitan in a dress shirt.

[Simon Jack]

Yes. On a climbing trip a few years earlier, Yvonne had bought a rugby in Scotland and was impressed by the strong collar, big thick collar they had that withstood wear and tear from the climbing ropes.

[Zing Seng]

Climbing friends started asking about the rugby shirt and he started importing and selling them, which would sell out quickly.

[Simon Jack]

And he soon realized that clothing had much higher profit margins than the hardware they were selling.

[Zing Seng]

So he imported and sold more items he'd sourced during his travels climbing, including Scottish rain cuckoos, Austrian boiled wool gloves, a corduroy fabric for climbing shorts from the last mill still making it in Lancashire, England.

[Simon Jack]

Fascinating. It's around this time he meets an art student working as a maid at Yosemite Lodge called Melinda Panoya. He becomes smitten with Melinda when he sees her deal with a group of aggressive littering men by ripping off their license plate and turning them over to the ranger.

[Zing Seng]

Must have been love at first sight. They married in 1970 and she starts helping out with the business.

[Simon Jack]

In 1973, Yvonne and Melinda launched their standalone clothing line and they called it Patagonia. After Yvonne's visit to the region. It sort of straddles Argentina and Chile because they, they thought the word sounded like a wondrous, far flung and almost mythical place. And I have to say, it is a brilliant name. Do you think when you get down there to places Like Tierra del Fuego in that area. A lot of people say it's the last stop before you go to Antarctica.

[Zing Seng]

Right.

[Simon Jack]

Truly wild place. I'm convinced 99% of the success of this company is because of that name.

[Zing Seng]

Well, I mean, put it this way, I don't know if they'd been that successful if they kept to the same name as their hardware company, which was Chouinard Equipment.

[Simon Jack]

Yeah. On Patagonia's website today, they answer the question, why not Schwina? We already had a good image going. We're well known in climbing circles. Why start from scratch? And they said we had two reasons against it. First, we didn't want to dilute the image of Schwina as a tool making company by making clothing under that label. And second, we didn't want our clothes to be associated only with mountain climbing.

[Zing Seng]

So there was good business sense behind it. And actually they also encountered good timing because Patagonia opened in a boom time for outdoor recreation.

[Simon Jack]

Yeah. Camping in the the US have become much more popular since the Second World War thanks to improvements in highways, public camping grounds. From 4 million campers in 1950, there are 11 million in 1960. So that market has nearly tripled within a decade.

[Zing Seng]

And don't forget, this is also the 60s. So the counterculture then saw more people seeking outdoor alternative lifestyles.

[Simon Jack]

Yeah. Well, to sit around the campfire.

[Zing Seng]

Sit around the campfire. Sitting around the campfire with a guitar, singing the tunes.

[Simon Jack]

Yes. And in 1968, a book came out called the Complete Walker by Colin Fletcher that was kind of seen as sparking what became the entire backpacking industry as we know it today.

[Zing Seng]

All this meant that outdoor clothing brand Patagonia grew steadily throughout the 1970s. And in 1979, Roger McDevitt's younger sister Chris was made CEO.

[Simon Jack]

Now, this is a classic hire. She was a 28 year old skier who'd worked at the company from the start but had zero business experience. So she called up presidents of banks and asked for free advice. When she admitted she had no experience, they, they agreed to help.

[Zing Seng]

Chris has actually said Yvonne didn't want to run the company. He wanted to climb and surf in those things. So he gave me the company saying, in effect, here's Patagonia, here's Chouinard Equipment. Do with them what you will, I'm going climbing.

[Simon Jack]

So at the moment, his reluctant credentials look pretty solid, I would reckon his reluctant billionaire credentials. He had a financial manager called Steve Peterson who joined the company and sort of got the finances into Shape. He said, yvonne has no respect for banking and accounting people, people who wear coats and ties. It's almost a loathing, but that stuff is part of business. It's almost like hating your left arm.

[Zing Seng]

I'm not gonna lie. He sounds sort of like a nightmare to work with.

[Simon Jack]

Oh, my God.

[Zing Seng]

Imagine sending an email. I mean, emails didn't exist. I mean, what, they're sending a fax, walking down the corridor to knock on your boss's door and seeing a sign, sorry, I'm out surfing.

[Simon Jack]

Yeah. So, mirroring Schwinar equipment, Patagonia's usp, its unique selling point, was innovating technical products for specialist activity.

[Zing Seng]

In the early 80s, they were developing and trademarking new fabrics like a synthetic fleece, a synthetic base layer, because at the time, people were still using cotton, which absorbs sweat and then makes you feel very cold.

[Simon Jack]

Everyone knows what a base layer means these days, but I remember when, you know, growing up in the 70s, I'd never heard of a base layer.

[Zing Seng]

And this is interesting because instead of using the usual kind of earthy tones of brown, they introduce bright colors with names like seafoam and garnet red. And actually, if you look online at resellers who specialize in kind of vintage clothing, a lot of them do sell those brightly colored Patagonia fleeces and jackets. They're quite iconic now.

[Simon Jack]

Yeah. It's interesting that, isn't it? Going from those earth tones, which I'm guessing came out of military kind of use, you wanted to blend in with the scenery. You didn't want to stand out. This was kind of a lifestyle statement.

[Zing Seng]

Yeah. Much more kind of individualist and saying, you know, look at me. I've got style. And actually, you know, these colorful fleeces became the trademark. And some of those are now collector's items, by the way, if you have one from the 80s or your parents have one, some of them now fetch a grand.

[Simon Jack]

Yeah. And it was the catalogue. Remember we talked about that original Climbing catalog? It was the Patagonia catalog, which was the key tool for selling the Patagonia brand. And it wasn't just a list of products and equipment. It was glossy. It was. Was selling a whole lifestyle.

[Zing Seng]

Yeah. It was more like a magazine than anything else. And, you know, today we're really used to being sold a lifestyle over a product, but Patagonia was actually kind of a pioneer for deciding to show what you could do in the clothes over the clothes themselves. So you could flick through maybe five or more pages before you ever saw a product.

[Simon Jack]

And that was the doing of chief executive Chris McDivitt. She had hired an art director to prioritize things like that documentary photograph, beautiful empty landscapes, real climbers doing real climbing.

[Zing Seng]

And it also included essays about expeditions, about environmentalism, you know, and they weren't afraid to get esoteric. So they gave two pages to an essay inspired by the 19th century French writer Flaubert, arguing that in nature, colors are not all muted.

[Simon Jack]

And those images, those early images, are now considered pretty iconic. There's a famous photo which captures a baby midair above a big canyon thrown by a hiking mother to her hiking father. Take the kids on the road. Get out there.

[Zing Seng]

Yeah. And you can actually still see the photo on the Patagonia website. And when we say baby, we really do mean baby. She is swaddled in clothes like she can't walk.

[Simon Jack]

The catalogue helped make Patagonia an aspirational brand as well as a respected specialist label. So it's ticking a lot of boxes.

[Zing Seng]

And all this meant that Patagonia sales were going absolutely gangbusters. In just three years, sales grew from 7 million to 14 million to 20 million by 1984.

[Simon Jack]

It's a private company, so it's hard to know the exact profits and debts because they're not publicly available. But only Yvonne and his wife Melinda had shares in the business. He said they were not personally any wealthier because we kept the profit in the company.

[Zing Seng]

But he also said that by 1984, I'd made enough money so I wouldn't have to work for the rest of my life.

[Simon Jack]

So how much money would you need? I suppose it means I can live this standard living that I have now and have enough money to maintain that. So it'll be a different number for everyone, I reckon.

[Zing Seng]

I mean, how much money could you live on if you could just stick something in a bank and live off the compound interest?

[Simon Jack]

Okay, so if you put a million dollars in a bank account at the current U.S. interest rate, that would get you $50,000 a year. So you could live on that?

[Zing Seng]

Oh, I could live that easy.

[Simon Jack]

But it's safe to say for Yvonne Schwinar that in his mid-40s and without seeming to try very hard at this, Yvonne is a millionaire, but not always.

[Zing Seng]

Smooth sailing. He's about to hit not one, but.

[Simon Jack]

Two major crises in his route from a million to a billion.

[Michael Lewis]

Hey there, it's Michael Lewis, author of Going Infinite Moneyball, the Blind side and Liars Poker. On the latest season of my podcast, against the Rules, I'm exploring what it means to Be a sports fan in America and what the rise of sports betting is doing to our teams, our states and ourselves. Join me and listen to against the Rules on America's number one podcast network, Network iHeart. Open your free iHeart app and search against the Rules. Listen to against the rules on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts.

[Zing Seng]

So while Patagonia is doing well, the climbing equipment company side of things to Anni Equipment is not doing so great. It was actually hit by lawsuits.

[Simon Jack]

Several of them complained the company provided improper safety warnings with its gear. Now, these were settled out of court, but the company's insurance Premiums went up 2000% in one year.

[Zing Seng]

Yvonne worried that this could negatively affect the profits of Patagonia. So Shawna Equipment filed for Chapter 11 bankruptcy in 1989.

[Simon Jack]

And that's a form of bankruptcy which you can elect to put the company in to protect you from its creditors. A lot of companies come out of Chapter 11 bankruptcy once they've put their affairs in order, but Schwinar Equipment did not. The staff bought the company's assets, moved it to Salt Lake City and rebranded that company's Black diamond equipment, which still trades today.

[Zing Seng]

So now Patagonia is Yvonne's sole business and it is ready to go on a massive expansion program.

[Simon Jack]

It opened lots of new US Stores and started expanding internationally, opening stores in Chamonix in France, very famous kind of skiing, rock climbing place, and also Tokyo.

[Zing Seng]

And they were growing their product line well beyond rock climbing into more and more sports. So the catalogue now featured 375 different styles, maybe some unnecessarily specific. I mean, they sold volleyball shorts, which at the time probably seemed slightly unnecessary.

[Simon Jack]

You can't play volleyball. You haven't got your volleyball shorts on.

[Zing Seng]

You don't really hear that very often at the Olympics, do you?

[Simon Jack]

No. But to encourage an entrepreneurial spirit, they divided this big product line into eight divisions and hired eight people, or czars, if you like, to run each division. Each czar was responsible for the product development, marketing, quality control, et cetera. Now, this reminds me of one of our French billionaires.

[Zing Seng]

Yes, LVMH's head honcho Bernard Arnault, because.

[Simon Jack]

He basically had a sprawling empire and he wanted to give people ownership of their own divisions of it and had exactly that kind of setup, Right?

[Zing Seng]

Yeah. So every single fashion brand under the LVMH umbrella is basically run sort of like how it sounds like. Patagonia was run by as a kind of fiefdom Onto its own.

[Simon Jack]

Yeah, and it worked. By 19, it was predicting 40% growth. And that is, you know, for a mature business, that's pretty amazing. So he set about hiring another 100 people and expanded into another part of their still their offices, the old slaughterhouse.

[Zing Seng]

I like how they're remaining loyal to the slaughterhouse. No fancy campus.

[Simon Jack]

Slaughterhouse 5 is now Slaughterhouse Hundreds.

[Zing Seng]

Yvonne said had we kept growing at that rate, we would have been a $1 billion company in no time at all.

[Simon Jack]

But the staff were starting to feel the strain of this quick expansion. Happens a lot in business. Companies grow very, very quickly, and you either get burned out or you start losing control of the business a little bit. The staff felt the strain, and one former manager said one day we'd be learning how to do business the Japanese way. Six months later, be onto something entirely different. And it ended up confusing the employees.

[Zing Seng]

Yvonne actually later admitted that organizational charts looked like a Sunday crossword puzzle and were issued almost as frequently.

[Simon Jack]

Yeah, and like I say, this is not unusual when businesses are growing very quickly. People are just saying, do this and do that. Lose a sense of strategy.

[Zing Seng]

So in 1991, something else happened. The US entered recession, and this had a huge impact on patagonia.

[Simon Jack]

Yeah, the 40% growth they had planned and expected didn't happen. They managed 20% growth in the middle of recession. That's pretty good. But the shortfall left them with a lot of inventory in the warehouse and too many staff. Then the bank cut Patagonia's credit line. A credit line is basically an overdraft facility that you can draw upon when you like or loans in a recession. Sometimes banks will make things worse by de risking their loan portfolio and cutting credit lines. But that can have the effect of exacerbating and making the problem worse.

[Zing Seng]

And that actually caused huge cash flow problems in Patagonia, which all came to a head in July of that year when the company had to come up with $2.5 million to meet a loan payment.

[Simon Jack]

So they had a fire sale. They sold clothes below cost to claw back some cash. Staff were calling friends, family, acquaintances to try anything they could to raise some extra cash.

[Zing Seng]

They shut down offices and sales showrooms to save cash. But ultimately, it was the large staff overheads that could have the biggest impact.

[Simon Jack]

So for the first time in the company's history, they started laying off staff. 120 people at that time, 20% of the workforce. And Yvonne described that moment as the darkest day in the company's history.

[Zing Seng]

But Yvonne also saw a silver lining to that dark day, he felt that this was the perfect opportunity to approach the business a little differently.

[Simon Jack]

Yeah. Months before the recession hit, Yvonne and his managers flown out to Miami to meet with a business consultant called Dr. Michael Cammie on his yacht.

[Zing Seng]

So Dr. Michael Cammie was kind of a legendary figure. He was the chief strategic planner for IBM, a huge tech company. And he turned around Harley Davidson's fortunes when it was a failing motorcycle brand.

[Simon Jack]

Yeah, they were seeking advice on how to manage the various divisions. But Cammy asked Yvonne why he was in business at all.

[Zing Seng]

And Yvonne replied he was in business to give money to environmental causes.

[Simon Jack]

And that was a founding principle for him because Yvonne's respect for environmentalism. He had this kind of leave no trait attitude, like leave somewhere exactly as you found it before. And this has been part of his business since he was replacing the pitons in the 1960s.

[Zing Seng]

Yeah, remember that clean Climbing manifesto? Yvonne made this commitment to be more than just about, you know, words. Back in 1984, Patagonia actually pledged to tithe 10% of their pre tax profits to grassroots environmental organizations.

[Simon Jack]

And he took it pretty seriously. He hired three business managers to help the company achieve more growth. The theory being the more money they make paid, the more you could give away to help save the planet.

[Zing Seng]

And this actually has echoes of one of our previous billionaires, the FTX founder, Sam Bankman Fried.

[Simon Jack]

Yeah, who basically was the poster child for something called effective altruism, which is the more money you make, the more money you can funnel. It was really in vogue. Peak effective altruism was around the time when Sam Bankman Fried was conquering all before him.

[Zing Seng]

Yeah, riding high. Of course now he's currently in jail on charges of fraud.

[Simon Jack]

Let's get back to that yacht in Miami.

[Zing Seng]

Yeah, so on that yacht, when Yvonne said he was in business to give money to the environment, Dr. Kami actually called him out on this and swore at him and said you could sell the company, start a foundation and give away a lot more money than you do now.

[Simon Jack]

So after the recession and all those layoffs, Yvonne had a rethink and went back to that moment.

[Zing Seng]

He took his managers, I mean these managers get to go to some crazy places. He took them on a trip to the mountains of the real Patagonia to try to answer the question, why were they, or more specifically he in business?

[Simon Jack]

So they decided to form the first board of directors. They got this trailblazing ecological activist gerrymander. The New York Times called him the patriarch of the anti globalization movement to write a mission statement for the company.

[Zing Seng]

And it opened with the words, all decisions of the company are made in the context of the environmental crisis.

[Simon Jack]

Yvonne now had the answer to Dr. Kami's question. He explained, true, I wanted to give money to environmental causes, but even more I wanted to create in Patagonia a model for other businesses that they could look to in their own searches for environmental stewardship and sustainability.

[Zing Seng]

And he put money behind this commitment. So back in 1984, Patagonia pledged to tithe 10% of their pre tax profits to grassroots environmental organizations.

[Simon Jack]

Yeah, tithing originally a kind of religious kind of thing where the congregation would tithe 10% of their earnings towards the church. Back in the middle ages, it wasn't as if people weren't debating about climate, but applying that lens to corporate activity had not quite matured at that point.

[Zing Seng]

So do you think that at the time Patagonia came up with all this stuff, people in the business mode was have been looking at it and thinking, God, you guys are insane.

[Simon Jack]

Well, I think they would have been skeptical about it, but I think it's a quite a good fit for a brand like Patagonia. In a way, they were the poster child for this. They were the trailblazers. And fortunately for them, esg, as we know today, fits quite well with Patagonia's general brand and the stuff that they do.

[Zing Seng]

So the company started bringing that kind of ethos into its product. So in 1993, for instance, they were the first outdoor company to produce a fleece made from 80% recycled bottles.

[Simon Jack]

In nineteen nineteen ninety four they moved to 100% organic cotton. And that was a big gamble because at that point organic cotton was 50 to 100% more expensive. And a fifth of Patagonia's line was made from cotton. So it's going to be a big increase in the materials they're using.

[Zing Seng]

And Yvonne could be hardline about it. He actually gave staff 18 months to make the switch over or they'd never use cotton again. But customers responded well and the sales went up 25%.

[Simon Jack]

In fact, Patagonia established an organic cotton industry for other companies. Patagonia buyers coach Gap, for example, Nike, on how to make the switch.

[Zing Seng]

And so as the demand for organic cotton grew, the price fell, which led to more demand and so on. Nike was soon the biggest buyer of organic cotton and continues to be one of the top five buyers in the world.

[Simon Jack]

And Yvonne said, I have to show corporations that they can make more money being responsible and efficient.

[Zing Seng]

And it wasn't just through the product that he was trying to influence other brands because by the early 2000s, Yvon encouraged businesses to join. The idea of this tithing thing.

[Simon Jack]

Yeah. Along with friend and angling businessman Craig Matthews, he set up the 1% for the planet scheme to encourage businesses to give 1% of gross sales to support environmental awareness and work.

[Zing Seng]

As of 2024, over 5,200 businesses have actually signed up to this scheme and $635 million has gone to environmental causes. Tithe was originally 10% and they're only giving 1%.

[Simon Jack]

Just a little detail, just a little nitpick. But anyway, Patagonia became synonymous with environmentalism. It actually contributed to their success on Black Friday, that's traditionally a huge day for sale shopping in the U.S. it's that Friday after Thanksgiving when everyone's got a day of holiday but the shops are all open. Patagonia famously printed a full page ad in the New York Times encouraging customers to not buy its products.

[Zing Seng]

Funnily enough, the ad actually boosted sales. The company still saw it as a win in educating customers, but, you know, the bottom line still benefited.

[Simon Jack]

Their ad actually said, don't buy this jacket. Casey Sheehan said custom were willing to pay high prices for their clothing because they knew Patagonia inflicted less damage on the environment than other clothing makers. So basically, by wearing Patagonia, you are doing a major bit of virtue signalling.

[Zing Seng]

And interestingly, you talk about virtue signalling. Rather ironically, the Patagonia vest has become a kind of staple for Tech Bros. In Silicon Valley.

[Simon Jack]

Yeah. Who are experts at virtue signaling. Yvonne had learned from his previous mistakes. After the 2008 financial crash happened, they actually weathered the storm without any layoffs. So they're obviously running a leaner, more organized.

[Zing Seng]

And in fact, the financial crisis might have actually helped Patagonia because experts said that many Americans turned to outdoor recreation as a cheaper alternative to foreign travel.

[Simon Jack]

I do remember this period, Sometime between the 90s and the noughties, when the idea of fulfilling vacation was to sort of go up a mountain and what have you. There was something that changed in people's idea of what they wanted to do with their leisure time.

[Zing Seng]

Yeah. Outdoorsiness. Rather than just lying by a pool drinking cocktails.

[Simon Jack]

Yeah. All this meant that Patagonia was doing great. So it tripled its Prof. Between 2008 and 2012. It continued through the 2000 and tens. And in 2017, revenues hit $800 million.

[Zing Seng]

All this meant that in that same year, age 78, Yvonne made the Forbes billionaire list with a net worth of $1 billion and this is because Forbes.

[Simon Jack]

Had valued Patagonia at a multiple of revenues. And that is how publicly traded competitors like Columbia Sportswear, for example, they used that, you know, how much is Columbia worth on those revenues? This got revenues of 800 million. Let's apply the same multiple to it to come up with a value for the whole company.

[Zing Seng]

Right. So it's at this point that Yvonne is officially a billionaire. However, Forbes describes him as being a reluctant member of the club, with one spokeswoman for Patagonia saying, we strongly oppose being included on this list.

[Simon Jack]

In fact, Yvonne himself later said, I was in Forbes magazine listed as a billionaire. And this made him very angry. He said, I don't have a billion dollars in the bank. I don't drive Lexuses.

[Zing Seng]

It's funny that his idea of a billionaire car is a Lexus.

[Simon Jack]

Yeah, really? That's actually pretty cheap for a billionaire, I would say.

[Zing Seng]

It's actually quite telling.

[Simon Jack]

Yeah.

[Zing Seng]

Because I. Some people would hear what Yvonne is saying and say, oh, if this guy doesn't have a billion dollars in his bank account, why do we call him a billionaire in the first place?

[Simon Jack]

Yeah, I hear that argument, but I think it's wrong. I think that you wouldn't say that Elon Musk, for example, is worth only as much as he's got in his current account. You would say he's worth how much of a company that he actually owns, and that's in the tens of billions. So I think that he may not like it, Yvonne, but I'm afraid his net worth does include his stake in the company, whether it's in his bank account or not. So too bad you are a billionaire, or you were then.

[Zing Seng]

But the inclusion on this billionaire list actually made Yvonne have another rethink about the future of his company.

[Simon Jack]

So in 2022, he gave it away.

[Zing Seng]

I mean, this is incredible, right? In a message to staff and customers, he said, instead of going public, you could say, we're going purpose.

[Simon Jack]

So rather than selling shares in the company doing the ipo, which we've come across so often in this series, he said, we're not going public, we're going purpose. So he gave it all away and split it up in kind of an interesting way. So all its voting stock, the votes that actually have control of the company, which is about 2% of the total, go into a charitable trust, the Patagonia Purpose Trust, which would be overseen by the family, and the other 98%, or the non voting stock to a newly established nonprofit called the Hold Fast Collective, which would get Patagonia's profit and then use the funds to fight climate change.

[Zing Seng]

He says that the profits donated to the climate causes will amount to around $100 million a year, depending on the health of the company. Interestingly, the brand's website states earth is now our only shareholder.

[Simon Jack]

So quite a story. I think that the fact he's given it all away means when he said I'm a reluctant billionaire, I think we have to take him at his word.

[Zing Seng]

Yeah. I think he has proven that he is very reluctant. So reluctant, in fact, that he gave away the company.

[Simon Jack]

Yeah. But wanted to harness its earning potential for the causes that were so important to him. So we now have to judge him and we do this on a number of categories. Wealth, villainy, and we rate them between 0 and 10. And we always start with wealth.

[Zing Seng]

So hard to know how much money he has left. Forbes says that he maybe has just under 100 million, but he's definitely off the list.

[Simon Jack]

When questioned by a journalist whether he could be a dirtbag, remember that he wanted to be a dirtbag existentially and a multimillionaire. He being a dirtbag is a matter of philosophy, not personal wealth. I'm an existential dirtbag.

[Zing Seng]

I mean, I'd love to hear the song written about that. He also, it's important to say, doesn't flash to cash. Today he still drives a beaten up Subaru with a surfboard strapped to the roof. And he only has two homes, one in Ventura, California, the surf town where he's lived since the 1960s.

[Simon Jack]

This is one of the few things I've ever had in common with one of our billionaires. I also have a beaten up Subaru.

[Zing Seng]

There you go. So much in common. You're almost on the billionaire's list.

[Simon Jack]

He's in a pod. So unwell. I mean, he's rich in other ways.

[Zing Seng]

I'm sure that's how he'd look at it.

[Simon Jack]

He's not a billionaire. He's got under $100 million. But when we've done this and we've had other ones like Whitney Wolf heard, who's also less than a billion. So we have to judge them at their richest. I think at his richest, he owned most of a company worth about $3 billion. But that is still pretty entry level billionaire, certainly not the top of the tree as the ones we discussed.

[Zing Seng]

And I think he gets points knocked off for the beaten up Subaru. And I find it very telling that his idea of a billionaire car is a Lexus.

[Simon Jack]

Yeah, okay. It's a one on wealth from me.

[Zing Seng]

I think it's a one for me. I think he'd be pleased with that.

[Simon Jack]

I think he'd be pleased with that swap.

[Zing Seng]

I like it.

[Simon Jack]

Definitely rags to riches. How far has he come in his journey?

[Zing Seng]

He's come really far. When you think about it, he's come.

[Simon Jack]

A long way and then gone straight back again. In a way, hasn't he? It's been a kind of round trip from being an outdoor nerdy kid who was unpopular at school but found community in a bunch of climbing friends, doing jobs just as long as he could until he got enough money to go off climbing. In a way, he hasn't strayed too far from that ethos.

[Zing Seng]

No.

[Simon Jack]

In terms of riches, clearly he's gone from having next to nothing. You know, dad was a laborer, Right. And he was not a great student to being worth the best part of $3 billion. So it's a big journey.

[Zing Seng]

I do keep thinking about the fact that at one point he was living off cat food.

[Simon Jack]

Yes.

[Zing Seng]

So I have to rate him quite highly for this. I think even though he's sort of gone back to his beginnings.

[Simon Jack]

Okay, yeah, I'm gonna give him a four for rags to riches.

[Zing Seng]

I would give him. I'd give him double that. I give him an 8 out of 10.

[Simon Jack]

Okay.

[Zing Seng]

For me, maybe it's the cat food that's so symbolic of where he started off, but it really reminds me of Oprah's rag doll made from rags.

[Simon Jack]

For all we know, he still eats.

[Zing Seng]

Cat food, and maybe he just likes the taste.

[Simon Jack]

Wow. So eight from you, four from me. That is the biggest differing of minds we've had, I think, in the entire series.

[Zing Seng]

No, that goes on for a new record, I think.

[Simon Jack]

Okay, villainy. So, I mean, he looks like one of the nicest guys we've ever covered here. He's given it all to a nonprofit organization to work on environmental causes. But as a brand, there have been some questions over Patagonia's ethical credentials.

[Zing Seng]

Yeah, in 2011, they actually discovered modern slavery in their supply chain. But then they partnered with an NGO to implement changes in its supply chain to support secure. To secure fairer working conditions. This didn't quite take, though, because in 2023, a report by an investigative website called Follow the Money stated that Patagonia produces some of its clothing in a Sri Lankan factory where the clothing of other fast fashion brands are made, which potentially means that employees are working under the same bad conditions.

[Simon Jack]

It's an interesting one, this, because supply chains are so global, these days and so diverse that quite a lot of companies, either knowingly or not knowingly, have found themselves caught up in modern slavery debate. A lot of people say when you've got lots of different suppliers, it's quite difficult to audit your entire supply chain to make sure nothing's creeping in like that. Others saying that's. That's nonsense. You just have to, you know, you should be visiting your factories all the time to see what's going on there.

[Zing Seng]

And you should be putting investment into doing that, especially if it's part of your brand. And Patagonia said, we are working with suppliers and labor experts to devise and test strategies that will allow the plant to pay its workers more. This is complex. We are trying to figure out together with our suppliers.

[Simon Jack]

Yeah. This is all part of a phenomenon that some people call green washing. People applying environmental credentials to their products. In 2015, Greenpeace accused Patagonia, along with some other brands, of using toxic chemicals in their materials.

[Zing Seng]

Patagonia now says it's switched to materials whose by products, in their words, break down faster with less potential toxicity, but hasn't acknowledged this is a temporary solution. That is not good enough. But it's the best option we've found so far.

[Simon Jack]

Yeah. And as we've discussed, can you make a billion. Reluctance, reluctantly is then not a single ruthless bone in his body. Remember, when push came to shove in 1991, he made some huge layoffs. He did say it was the worst day in his life, though.

[Zing Seng]

Yeah. And you know, from what people like Chris McDivitt, the CEO, and the financial manager, Steve Peterson, said, all Yvonne wanted to do was actually climb and left them to run the company. So in a way, he's kind of washed his hands of it.

[Simon Jack]

Yeah. And also with charitable stuff, you often get some tax breaks along with that. When he gave his company away in 2022, it was reported that he got no tax benefits. But a few months later, Bloomb reported that the deal is structured in ways that let him and his family keep control of Patagonia while shielding them from tax bills that could have totaled hundreds of millions of dollars.

[Zing Seng]

A Patagonia spokeswoman said there was never an ask from the Schwina family that we avoid taxes when structuring the transaction.

[Simon Jack]

So it looks like he's not making a ton of money out of this. So I'm going to say villainy scores pretty low on this. I would say two.

[Zing Seng]

Yeah.

[Simon Jack]

Even one, actually.

[Zing Seng]

I would add, actually say probably one out of 10 for me.

[Simon Jack]

Yeah. Okay. One out of 10 on villainy philanthropy. In 2017, he said he'd given away, over the years, more than $80 million to environmental causes. And of course, he gave away his $3 billion company with all future profits helping fight climate change.

[Zing Seng]

Yeah. I mean, he also said, hopefully this will influence a new form of capitalism that doesn't end up with just a few rich people and a bunch of poor people. We are going to give away the maximum amount of money to people who are actively working on saving this planet. So pretty lofty.

[Simon Jack]

Yeah. And he's going to score high, isn't it? Remember Chuck Feeney, who gave away all his money for educational causes, various charities? I think we gave Chuck Feeney 10. This has got to be right up there because he's created something which is a philanthropic engine, theoretically forever. The family keeps control, if you like, of the voting of what happens. But all the money goes into a nonprofit organization which dishes out money from environmental causes. This could go on for decades. So I'm to give him a 10?

[Zing Seng]

I think I'm going to give him a 10 as well. I mean, assuming Patagonia will be around for a long time, that's a lot of money going to environmental causes.

[Simon Jack]

Okay. One of our very rare tens there power. This is. We can measure this in a bunch of ways. What we often say, if you picked up the phone to the President of the United States or, I don't know, ahead of state of a big country, would they take the call? Not sure. He passed this test.

[Zing Seng]

Interestingly, he has explicitly put money where his mouth is politically. He gave $750,000 to lobby Barack Obama's government to create protected nature.

[Simon Jack]

I think before that check was handed over, he would have probably taken the call.

[Zing Seng]

Oh, 100%. Yeah.

[Simon Jack]

So in power, he's clearly a very strong advocate for environmentalism, sustainability, and has put his money where his mouth is. And I think that being importantly inspirational figure for people in that movement. So I don't think he's got much political power per se, but I'm going to give him a five.

[Zing Seng]

Oh, I think I would actually rate him slightly higher on this, because when you think about the power and influence that a brand like Patagonia has had in fashion, you know, getting someone like Nike to switch to using more organic cotton, creating that demand in the market, I think if, you know, other brands, especially, you know, outdoor brands, look to Patagonia and say, oh, Patagonia is doing this, maybe we should think about doing that too. That is a form of power, too.

[Simon Jack]

And also they Basically established that you can actually make more money and be more successful by being more responsible and using things like organic cotton rather than cheaper materials. So, yeah, you. You got a good point. I'm sticking at five, though.

[Zing Seng]

Okay. I'm going to give him a seven out of 10.

[Simon Jack]

Okay. And then legacy. What have they left behind? Maybe it's worth remembering that quote he gave when he announced he was giving money away. Hopefully this will influence a new form of capitalism that doesn't end up with a few rich people and a bunch of poor people.

[Zing Seng]

Wow. I mean, I feel like some people listening to this will immediately say, why does it have to be capitalism at all?

[Simon Jack]

Yeah. He's not a lone voice in doing this. Patagonia is not the only company that ever decided that we need a new form of capitalism, but you could argue they were in the vanguard of esg, the mindset, and were a real exemplar in that. So I think legacy, I think they were a very important part of a movement which has gained strength over the last decade. Maybe it's like, fading just a tiny bit right now, but I would say legacy, seven.

[Zing Seng]

I mean, you say it's fading, at least in corporate circles now, but I would think that in the long term, that legacy is going to be really secure because if anything, the urgency of, you know, having to save the only home we've got, as he puts it, is only growing. So I would be more generous. So maybe, you know, an 8 out of 10. You know, I think. I think in the future, brands and companies will look at Patagonia as an example of a business that made the correct cause very early on when it came to ecological issues.

[Simon Jack]

Yeah, okay. Yeah, that's a good. A good argument. So you're going what, eight?

[Zing Seng]

Eight.

[Simon Jack]

Okay, I'm going seven. And then we just got to decide. This one, I think, is pretty easy. Is he good, bad, or just another billionaire?

[Zing Seng]

I mean, if we said he was bad, we'd have lost our marbles, right?

[Simon Jack]

I think so. Everyone would be totally within their right to ignore anything we said ever again and write off anything we've already said to D. He's a good billionaire.

[Zing Seng]

I mean, he's probably. Probably one of the easiest cases of a good billionaire we've covered on this show.

[Simon Jack]

Okay. Yvonne Schwinar, you are a good billionaire.

[Zing Seng]

And I hope wherever you are, you're still surfing and climbing.

[Simon Jack]

Yeah.

[Zing Seng]

So who do we have next episode?

[Simon Jack]

Someone called Ma Yun, better known as Alibaba founder Jack Ma.

[Zing Seng]

The guy who said open sesame to the Chinese marketplace and the person who.

[Simon Jack]

I met once before, I knew who they were, and little did I know he was going to become the richest man in all of Asia. Good Bad Billionaire was produced by Hannah Hufford and Louise Morris, with additional production support from Tamsin Curry. James Cook is the editor and it's a BBC Studios production for BBC World Service.

[Michael Lewis]

Hey there, it's Michael Lewis, author of Going Infinite Moneyball, the Blind side and Liars Poker. On the latest season of my podcast, against the Rules, I'm exploring what it means to be a sports fan in America and what the rise of sports betting is doing to our teams, our states and ourselves. Join me and listen to against the rules on America's number one podcast network, iHeart. Open your free iHeart app and search against the Rules. Listen to against the rules on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts.