A (3:14)

Oh, hi, David. Thanks for coming on on.

B (3:17)

Thanks for having me.

A (3:19)

So I was really interested that you decided to cover Patagonia. It's been around for more than 50 years. Most people are probably familiar with its clothing. I wear it all the time. My sons love it. But you, in the intro to your book, that researching Patagonia was an opportunity to test your conviction that business can be a force for good. It's something I think about a lot. Do you still hold that to be true? And if so, what are some of your favorite examples of large businesses that are forces for good outside of Patagonia?

B (3:45)

Yeah, well, I mean, I think the operative word there is can, right? It's not as if every business is a force for good. I think every business, maybe almost every business will set aside cigarette makers and weapons manufacturers has the opportunity to be a force for good in all sorts of different ways, whether it's with their people, in their communities, with the environment, by making great products and services. But what I've discovered in the course of being, you know, a business reporter for more than 20 years now is that few and far between are the companies that actually understand that to be a part of their mission and make a really deliberate, consistent effort to do so. And what are the other examples besides Patagonia? Well, I can rattle off lots of companies that I think have tried over the years, but it's a really select few that I think can claim to have succeeded for as long as Patagonia, imperfect as it is. And so that's why I wrote the book about this company in particular.

A (4:43)

Sure. Tell me some who have tried and failed and some who just a few just rattle off, if you don't mind.

B (4:48)

I mean, I'm thinking of Unilever, which under Paul Pullman went on this big effort to make its supply chain more sustainable, make its products more sustainable. What happened there? They did a lot of good for about 10 years. And then almost the minute Paul Pullman left, a new CEO came in, the board didn't have his back in quite the same way. An activist investor shows up and a lot of those efforts disappear. And I think that shows just how fickle it can be. I'm also thinking of Ed Bastian. You know, Ed Bastian at Delta has done a lot of really good work with his employees. Trying to make that an airline that understands that if you take great care of its people, you're probably going to get great customer service and a great functioning airline. And he's largely succeeded in large part with things like profit sharing, which were unheard of in the airline industry. So I've got lots of examples like that, but very few are the companies that can claim to have been doing it with such deliberate purpose and the same set of values and caring about the same kinds of things for 50 years now.

A (5:52)

Right. Which is usually from the get. I mean, thinking of Costco, for example, that's another one absolute. It's because it's founder led. Really, in some ways, is that correct? I mean, is that pretty much the, in the cases you just mentioned, it's not. But in general, when that happens, it's founder led.

B (6:08)

And I would go a step further. I think having a founder is core to these kind of companies, but I don't think it's enough. I mean, let's talk about a lot of founder led companies in Silicon Valley that have lost their way.

A (6:20)

All of them.

B (6:20)

I think even more important than being founder led is the corporate governance structure. You know, what allowed Patagonia and to make all these iconoclastic decisions for so long is that they never had any external shareholders, they never took a dime of money from anyone else, so they had the freedom to act in accordance with their values, whereas so many other companies have a hard time doing that.

A (6:44)

And in Silicon Valley they shift. I'm thinking of the founders of Google, for example, who have changed rather drastically. And in fact, their entire idea of don't be evil sort of is a joke in and of itself.

B (6:56)

And I'm thinking of Meta. Right. I mean, and just to draw a.

A (6:59)

Contrast, I don't think he was ever nice, but go ahead. I don't think he thought about the good of anybody but himself, but go ahead.

B (7:06)

Well, well, fair, fair, but, but let's, let's get, just get brass tacks because setting aside where someone's morals are and all of these companies are making specific decisions about specific sets of business problems. And one of the things that I found so remarkable here is that time and again Yvon Chouinard and the Patagonia executives were willing to sacrifice growth, sales and profits if it meant acting in accordance with their values. They understood that conventional cotton was environmentally disastrous. They stopped making T shirts with conventional cotton. That meant a massive hit the next year, but they did it anyway. Can you imagine the owner of a social network understanding, for example, that their product was having a negative impact on teenage girls and saying, you know what? We're not gonna do that anymore. That's not the world.

A (7:57)

This has been my unfortunate state in life. I mean, let me. Let me ask you to stick with that just for one second, then we'll get into the Patagonia. Specifically, in your book I'm thinking of recently, you mentioned the tech executives when Tim Cook handed over that statue. Those moments and their excuses when I talked all of them off the record is, well, shareholders, most of them, disdain Trump. I would say mild. That's a mild way of putting it. And have in the past. But very few are willing to anything publicly. I understand that part. But the effusive lengths they go to now to keep whatever. And their idea is shareholder value. Right. I think that's where it sort of sits in that pool of shareholder value.

B (8:38)

Yeah. And listen, this is of real personal interest to me because eight years ago, you may remember, I was the guy here at the New York Times that was really tasked with covering corporate America's response to the first Trump administration. And Every week in 2017, 2018, 2019, I was writing stories about how CEOs, ones we've already discussed on this call, were standing up and saying, this is not the America we believe in. I don't agree with the president. We stand for something else. And now many of those CEOs, eight years later are still in the same jobs, they're still running the same companies. And it's silence, it's crickets. And in fact, as you noted, many of them are showing up and, you know, genuflecting at the feet of the president. What a contrast. Counterpoint, Patagonia. In 2017, Patagonia sued President Trump and his administration over their efforts under Rose Mercario.

A (9:32)

Correct?

B (9:32)

Exactly. Yeah. Rose was the CEO at that point. And even to this day, Patagonia is still one of the few companies that's raising its voice and saying, we don't. We still don't believe in it eight years later. So, I mean, how things have changed.

A (9:46)

So let's talk about how we get here, because there are few. I can't think of many businesses that are speaking up right now. So let's talk about the founder, Yvon Chouinard. Give us a quick overview of his backstory and the Patagonia business model and explain the title Dirtbag Billionaire.

B (10:02)

Well, let me start there, because it's a provocative title, sort of intentionally and dirtbag in the community in which Yvon Chouinard grew up, the climbing Community, the outdoors community. It's like the highest compliment. It's not at all a derogatory term. He refers to himself to this day as a dirtbag. What it means is someone who's so unenamored with materialism, with material possessions that they are content to sleep in the dirt in dirty clothes if it means they're that much closer to their next climb. So when Ivan heard the title of the book, he was actually very pissed off. Not because of the word dirtbag, but because of the word billionaire. Because he never ever wanted to be known as a billionaire. So that's the origins of the title. As for who this guy is and how you get to a worldview like that, you know, he's 86 years old today. So he was born in rural Maine in 1938, grew up not speaking English, moved to Southern California when he was 10 years old, and fell in as a young man, as a teenager with a group of falconers and then with a group of rock climbers. He became a self taught rock climber. We're in like the 50s at this point and he can't even find the gear he needs to start scaling the walls of Yosemite. So he starts making it himself with an anvil he buys from a junkyard. Lo and behold, he's got a knack for design, he's got a knack for craftsmanship. He becomes the finest rock climbing equipment. Carabiners, pitons, chalks, and he starts selling them to his friends and other rock climbers. And all of a sudden, the guy who grew up loathing businessmen, he had this congenital aversion to commerce even as a young man, finds himself running this scrappy little operation. He does that for 10, 15 years or so. And then in 1973, he makes the pivot away from climbing gear towards clothes. And in 1973, Patagonia is born.

A (11:49)

Top ministry.

B (11:50)

I keep going.

A (11:51)

Yes. So if he had a congenital problem with it, he obviously didn't have a congenital. General obviously wanted to sell them to his friends and the climbing community. Correct. That there was a big. He's running up through a hole in the, in the, in the market.

B (12:04)

That's right. There was climbing gear on the market, but it was not particularly well made. Most of it was imported from Europe. And he found that if he made better gear and sold it at a higher price, he could make a living. And it was really at first a lifestyle business. He was just doing this because he needed some money to keep climbing.

A (12:20)

Right. But he, he had to contract with all kinds of factories, et cetera. Right, Correct. He sort of moved it up the stream pretty quickly.

B (12:28)

He did, yeah. And in fact, he went into business with a partner of his, guy named Tom Frost, who actually had an engineering degree from Stanford University. And all of a sudden, you're right. I mean, he starts running a business. But he did. He was never comfortable with it. And I think that's one of the things I discovered. You know, I read every interview he ever gave back to the 60s and 70s, and even then, he was wrestling with the fact that he didn't like being a businessman, but he sort of found himself as one.

A (12:53)

Right. And so the pivot to clothing, what was. Was he didn't find enough jackets. There certainly were other companies that sold these things.

B (13:01)

I think two things happened roughly at the same time. The first is that they started to find the limits of the markets for climbing goods, and they could only sell, frankly, so many carabiners a year. And the company sort of had a momentum of its own. And so with more employees, more expectation to sort of keep growing, which he, again, was not particularly comfortable with, there was this sort of hunt for new markets. At the same time, there were jackets out there, but they weren't particularly well made. They weren't particularly great at keeping people warm. And it was actually in 1968, he had this pivotal trip in the region known as Patagonia in Argentina, where he and his buddies got trapped in an ice cave for 30 days, almost died. And in part, they had such a hard time because their clothes were failing them. And so a few years later, he says, we gotta make clothes that can stand up to the elements on these expeditions we're doing. And that's the origin of Patagonia. And in fact, that's why they called it Patagonia. And indeed, the logo that we all know so well is inspired by that mountain that they climbed in 1968.

A (14:09)

And the. The. The money initially came from sales themselves.

B (14:13)

He bootstrapped this the entire time. They never took funding. They didn't do a friends and family round. It was bootstrapped from the outside, which.

A (14:20)

Is unusual, but is. His early days are reminiscent of these tech billionaires garage stories. Bill Gates and Paul Allen started in a garage. Obviously, the Apple garage story, which Steve Wozniak says is a myth, but I was in the garage of Larry Page and Sergey Brin. It was Susan Wojcicki's garage. Actually, most of these tales, and a lot of them are marketing the idea that a PEZ dispenser started ebay. And it's sort of vaguely accurate, but not really. Chouinard's experience seems to have a lasting impact on the business model. Can you talk about that?

B (14:52)

Yeah. And I'll note, I mean, they even have their own version of the garage. It's this tin shed. Right. In the late 60s, they actually moved to Ventura, California from Burbank, where he was literally working out of his parents backyard in a chicken coop and bought that tin shed. That tin shed is still there today. And I mean, as recently as a couple years ago, Chouinard goes in there every few months and sort of hammers on the anvil just to remember what it was like.

A (15:15)

Hammers on the anvil.

B (15:16)

I know, but this, the origin story, what I would say is that from a very early age there was, you know, it's something you and Brene talked about recently, which is this paradox, this creative tension, the recognition in Chouinard and then among his close friends and executives who formed the core of this team, that there were potentially irreconcilable forces at play here. They were deeply committed to the environment, and yet. Yet they were also making products that took a toll on the environment. They were really interested in running a company that took care of their people. And yet at a certain point, they had to instill a measure of discipline that sort of cramped people's lifestyles. They were really interested in conserving nature and creating money to fund large scale conservation projects. And yet when the environmental activists who they supported trained their gaze on the company itself and their labor practices, it sometimes got really uncomfortable.

A (16:26)

Sure. By making it, you're saying, by making anything. It didn't. It's not really attention. If you're a business, you create brokenness somewhere in the system. Correct?

B (16:34)

Right. Chouinard understood this and looked himself in the mirror. Right. That self awareness is a part of it. And it's a part of this story too. In, I think it was 1993. The Patagonia catalogs are famous. A lot of people have seen him over the years and they would write these sort of highfalutin essays. The first sentence of the 1993, I think, fall catalog essay said, everything we make pollutes. I mean, how about that for a mission statement from a company? That's self awareness. Right.

A (17:02)

But one could say it's, you know, it's virtue signaling. But you also wrote a book about a business icon on the opposite end of the spectrum, CEO Jack Welch, who you said, quote, broke capitalism. Both men have had an influence not just on their companies, but Also on the business world at large. And lots of business leaders compare the two and their impact on corporate culture.

B (17:21)

Well, listen, I think in obvious ways they exist at opposite ends of this spectrum. I'll start perhaps where there are some similarities. Both men over the years professed to be completely obsessed with quality. Jack Welch would say that if division in GE wasn't number one or number two in its industry, he would let it go. He was relentlessly focused, even with things like Six Sigma, on trying to improve processes, make sure reliability, quality was paramount. I would argue in the long term, that fell apart, and that's what I do. In my previous book, the man who Broke Capitalism, Chouinard also, I think, was really obsessed with quality from the beginning and still is to this day. I mean, there are these moments in the book when I describe him still sort of tinkering with products when he's 85 years old, trying to make them better. But Chouinard's understanding of quality evolved. And whereas at the outset it was very much about functionality and durability, over the years, Chouinard's understanding of quality came to encompass things like, are the factories where we're making these clothes taking good care of their workers? And if they're not, then it's not a quality product. Are the second tier factories where we're making the raw materials that are ultimately in our jackets and shells? Are the environmental standards good? Are they polluting the river behind them? And if they are, then the jacket itself is not a quality product. So those differing understandings of quality, I think, are very instructive. And then there's all the rest of it. I mean, Chouinard was never obsessed with growing his market share. Indeed, Patagonia deliberately restrained its growth. Jack Welch wanted to make the most valuable company in the world, and he did. I mean, all to his credit, he.

A (19:13)

Did that Welch did not have a care for the environment or other things. Correct?

B (19:17)

No, the Hudson river can attest to that.

A (19:18)

Yes, exactly. I mean, it was sort of a different version of that. And of course, the Welchians kind of won the game, at least at this point.

B (19:26)

Big time. Big time. I'm under no illusions that we're sort of living in Ivan's world. We're living in Jack Welch's world, and Ivan is the exception. That sort of proves the rule.

A (19:36)

We'll be back in a minute. Support for this show comes from Smartsheet. Did you know there is one human experience more universal than death and taxes? What do you think it is? Take a guess. Okay, I'll tell you it's creativity. I know you're probably thinking, yeah, right, I'm not that creative. Or maybe you're thinking, I am creative, but I have just so much trouble tapping into my creativity. And in that, my friend, you are not alone. Perhaps because there is actually one thing more universally human than death and taxes and creativity. It is distraction. That's where smartsheet comes in. Smartsheet is the work management platform that helps clear clutter, break down barriers, and streamline workflows to allow your creativity to, you know, flow. Its innovative platform lets your team find its rhythm no matter the obstacles. When roadblocks emerge, smartsheet empowers teams to chart a new course, one where innovation thrives. We all have the power to tap into creative flow. We just need some help clearing away distractions. And Smartsheet knows exactly how to do that. Smartsheet work with Flow. Learn more at smartsheet.com Support for On with Kara Swisher comes from LinkedIn. As a small business owner, you don't have the luxury of clocking out early. Your business is on your mind 24 7. So when you're hiring, you need a partner that works just as hard as you do. Do that hiring partner is LinkedIn. Jobs. When you clock out, LinkedIn clocks in. LinkedIn makes it easy to post your job for free, share it with your network and get qualified candidates that you can manage all in one place. LinkedIn's new feature allows you to write job description and quickly get your job in front of the right people. With deep candidate insights, you can either post your job for free or pay to promote in order to receive three times more qualified applicants. Let's face it, at the end of the day, the most important thing for your small business is the quality of candidates. And with LinkedIn you can feel confident that you're getting the best. That's why LinkedIn claims that 72% of small business owners who use LinkedIn find high quality candidates. So find out why more than 2.5 million small businesses use LinkedIn for hiring today. Find your next great hire on LinkedIn. Post your job for free at LinkedIn.com Kara that's LinkedIn.com Cara to post your job for free. Terms and conditions apply. Supply support for this show comes from AT&T. Wireless companies love to make bold claims like how they have the best coverage or how you'll never lose a call on their networks. And yet we've all had the experience of being stuck with spotty service or missing out because we couldn't connect well. One provider actually has the goods to back it all up. AT&T Based on third party metrics, AT&T has the rest beat. While the other guys are busy making claims they can't keep, AT&T is making connections on America's fastest and most reliable wireless network. So no matter if you're out at a concert, a huge sporting event, or out enjoying nature, you can post when you want to post, call when you want to call, and rest easy knowing no matter where you go, ATT has got you covered. When you compare, there's no comparison. AT&T based on RootMetrics United States Root Score Reports 1H 2025 tested with best commercially available smartphones on three national mobile networks across all available network types. Your experiences may vary. Root metrics rankings are not an endorsement of AT&T. The Financial Times called the Book of Warts and all portrayal of Chouinard. You write While Patagonia was in so many ways an extraordinary company, independent, idealistic, successful, generous, it was still fraught with fundamentally irresolvable tens. As you said, unsolvable paradox. Talk about the other paradoxes. You know, the work culture. For example. On one hand they set an early example of work life balance with let my people go surfing mentality. Everyone should be an adventurer. Patagonia is one of the first in the US to get paid maternity leave and support working families with in house childcare. On the other hand, only one Patagonia location is unionized and Chouinard has regularly ignored calls to let employees participate in the company's financial success through stock ownership. Talk a little bit about that because the things that you would naturally that would go along with it to create sort of a co op mentality didn't happen here.

B (24:08)

Yeah, I mean the way I have come to understand this is that Chouinard really cared about nature more than he cared about people. And that truth sort of informs a lot of the decisions you just alluded to, especially on the stock ownership. I mean, and this was a real point of tension among employees over the years, no one went to Patagonia to get rich and people understood sort of the company that they were signing up for. And yet as the company grew more successful, as Chouinard and his family had tens of millions then hundreds of millions of dollars to spend on large scale land conservation and environmental activism, there was a group of employees who said like what about us? They are living large. They don't have private jets, but they have nice homes in Wyoming and Ventura on the ocean. Why is it that we can't just get a bit more. And to that, Chouinard always said he was still a dirtbag in his mind. And there is some TR truth to that, right? I've spent time with him at home. He does not live a fancy life by the measures of most billionaires.

A (25:12)

But why though? Why didn't he want to share them? I mean, it would seem a natural thing if you're in one of these kind of companies.

B (25:16)

Listen, I'm not here to defend it, but my best read on why it is that happened is that he never really was in it for the money himself and so he didn't think other people should be either. Now that's simplistic and I think it ignores a lot of the real life concerns that people might have.

A (25:32)

Because he got the money, right?

B (25:33)

He got more than most, no doubt about it.

A (25:35)

Even if he's not in it, he got it completely. He doesn't care about that. Why not give it to his employees?

B (25:40)

Because he cared about the damn acres in Patagonia more. There's just no other way to explain.

A (25:47)

It because it's an unusual part of a company that's like this not to have those kind of worker sharing, et cetera.

B (25:54)

Yeah, I mean no RSUs, no profit sharing, no ESOP here. I will note though that his wife is a big character in the book and she is even more press shy than he is. But Melinda Chouinard deserves it enormous amount of credit for making Patagonia a place that takes exemplary care of its working mothers, as you noted, has done extraordinary things to elevate female leaders, including Rose, who you mentioned, and over the years has really created a culture that has become an exemplar to other companies and even governments as they try to understand how it is that corporations can support women in the workplace. And Melinda should, should get all the credit for that.

A (26:39)

So in terms of its legacy, Patagonia has consistently worked to improve its climate footprint, given money to environmentalist organizations. As you know, it didn't push other companies to do the same like the alliance for 1% for the planet or unlikely collaboration with Walmart. On the other hand, it's also collaborated with the Pentagon and Patagonia vests become part of the midtown uniform for Wall Street Hedge Fund Bros. And many. I mean I've seen so many Patagonia vests. And of course there's the impact of producing, as you noted, if you have these ethical standards around climate, for example, and product, there are going to be contradictions. Give me an example of what they do on vest or something like just not using that company or what? How far do they go?

B (27:20)

I was asking the same question during the reporting, like, what does this actually mean in practice? It's great to have all these standards. And what really made it clear to me was when I came to learn that, I don't know, when it was maybe 10 or 12 years ago, they set up a new quality standards division for their supply chain. Basically, it's a group of employees who monitor the working conditions and the environmental conditions of their first, second, and third tier factories. And what's so critical is that they are separate from the business unit division, which is to say that if the sportswear apparel says, we need to contract with this company to make, make 200,000 T shirts next year, this other team, if it's a new factory, gets to go in and audit that factory and say, is this factory up to our standards? And if it is not, they just get to say no. And even if the business team says, but we really need that factory for those 200,000 units, that veto power is separate. And the incentive structure is separated from the business line, which creates again, this sort of autonomy for people to not be penalized, not be swayed by the allure of trying to grow the business and cut corners in the process. And so that was one example where it was like, oh, that's actually a real mechanism to ensure quality.

A (28:46)

So give me an example. What? Like they were making, I don't know, fleece hoodies.

B (28:51)

I visited one of these factories that didn't make the cut and then finally did. It's a factory called tdv. They make mostly cotton gear, sweatshirts, T shirts. And several years ago, they put in a pitch to Patagonia. They said, we want to be one of your factories already. At that time, TDB was doing good work. Patagonia went down there. What they found was like, you're doing good work, but your water outflow is a total mess. You're still not taking good care of the community around you. Your labor standards are pretty good, but they could be a whole lot better. Your community relations, sort of the way the factory's showing up in the community was okay, but could be a lot better. And they were growing their own cotton. They were vertically integrated, and some of the stuff in the field was good. It was on the right path, but it could be a lot better. But they found them failing on a whole bunch of measures, even though they were trying to make good progress. They told TDV all this, and they said, we're Going to say no for the time being. TDV went back to work. Two years later, they come back, they go to Patagonia, they say, we've solved xyz, we're still working on this one. And Patagonia says, okay, we'll give you a shot. They put in a small order and they said, as long as you, you keep working on these things, we'll try to keep giving you more business. And they've sort of brought TDV along on this journey. So that's an example of how they try to work with their suppliers to improve things on the ground.

A (30:13)

Why would a lot of these companies care? Like if there's plenty of work with fast fashion or people who don't have those standards?

B (30:21)

Yeah, I mean, listen, I'm not going to sit here and sort of spout morality, but I'll note the most practical one is they get paid more. Patagonia, Patagonia pays more because it understands that it's getting a better product of higher quality, as I noted, product. And they pay that fair trade premium. Patagonia has helped set up all these different groups. The Regenerative Organic Cotton Group, the Sustainable Apparel Coalition, and some of these organizations are actually designed to raise the amount of money that it actually pays its suppliers. So that's one reason. And that's what TDD was after. It was a sort of low margin factory producing commodity goods for all the usual suspects. And several years ago, a new executive, Wanzhou, came in and he said, this is a losing proposition. Let's actually up our standards so we can command the higher premiums. And so far it seems to be working.

A (31:12)

And what is the reaction to other makers of goods who are trying to sort of put out this sort of nature lovin image? Is there anybody who is close to them or someone who is not? For example, I'm wearing a North Face jacket right now.

B (31:25)

Oh boy. Boy. Don't tell Yvonne.

A (31:29)

Well, it was given to me. It was given to me. I wear whatever's given to me.

B (31:32)

Well, just by a point of contrast, did you know that North Face just did a ski line in collaboration with Skims and the Kardashians?

A (31:41)

No.

B (31:42)

Oh, yeah. I mean, that's like. That's completely anathema to what Patagonia is all about. Patagonia.

A (31:48)

Well, they make a good pubic hair thong, but go ahead. I don't know if you know about that.

B (31:52)

Yeah, I. For better or worse, Gara, I do. They sold out two online. Did they? Yeah.

A (31:58)

Yeah.

B (31:59)

All right, I'm gonna, I'm Just gonna move on, move along, folks.

A (32:03)

There will not be a Patagonia pubic.

B (32:05)

Hair thon we were moving along. I try to avoid saying like there is some hierarchy in Patagonia is at the top because as I note in the book, like, they still have tons of problems. They're still microplastics, there's still pfas, they're still working through all sorts of stuff. More, more interesting than like reaching some sort of higher standard that's is recognizing the work and recognizing that it's like, it's the process and it's asking these tough questions over and over again and trying to, you know, orient your decision against those longstanding values and then trying to move forward and make the next hard decision. So are there other companies? Sure. Listen, I'll note that it's easier than ever to greenwash. Like you can tell an environmental story all day long on the Internet and very few people are going to go fact check that. So do they have more competition than ever? Absolutely. Is there real concern inside the company and in the Patagonia board that they are at risk of falling behind in this kind of environment? 1,000%. And then this raises big questions about the future of the company. Right. There's the ownership change and we can talk about sort of how it's structured and what comes next.

A (33:09)

Yeah. So explain what greenwashing is for people who don't know.

B (33:13)

It's trying to tell an environmental story and saying you are super environmentally conscious and friendly and not. And green hushing is just being afraid to even talk about it at all. Even if you're doing some of the work and you sort of care about it, but you're too afraid of President Trump to even talk about it.

A (33:28)

One of my favorites is always BP Beyond Petroleum, which makes me laugh every time I hear it.

B (33:33)

Right.

A (33:34)

Let's talk about the last part of the title of the book. As you said, how he gave it all away. Since Patagonia is a family owned business, or was Chouinard's succession plans have been a matter of speculation for a long time. And in Patagonia fashion, the exit strategy was also unprecedented. Explain what they created to do this. Because living beyond you. I mean, there's a Rupert Murdoch living beyond you and then there's a Chouinard living beyond you.

B (33:58)

So Chouinard for decades has been thinking about what happens to Patagonia after he dies. He's 86 years old now. In 2017, Forbes magazine put him on their list of billionaires for the first time and he Freaked out. Said it was one of the worst days of his life. Started stomping around, furious the office, saying, like, you gotta get me off this list. It took them five years to figure it out, but they finally did. And in 2022, I broke the news that Chouinard and his family had effectively given away their stock to a new set of trusts and organizations. And do you want me to just get a little wonky here for a minute and explain exactly how it worked? Okay. So at the time, in 2022, Chouinard, his wife Melinda and their two children owned 100% of the Patagonia stock. Two percent of the stock was voting shares, 98% was non voting shares. They took the 2% and they put it in a new entity called the Patagonia Purpose Trust, which is a legal entity in California. And they paid $17.5 million for the privilege of putting that 2% into the Patagonia Purpose Trust. The Purpose Trust now sits on top of Patagonia Inc. Which is still a privately held for profit corporation in California. As sort of an additional governance layer, an additional border layer, they took the 98% of the non voting shares and distributed them, donated them to a series of newly created 501c4 corporations called the Holdfast Collective. They did not get a tax benefit, a tax credit for putting them into those because they were 501C4s. And now here's how it works. The Patagonia Purpose Trust with the voting shares, instructs Patagonia Inc. To donate 100% of its profits not reinvested in the company salary, R and D, all that out the door to the Holdfast Collective. And the Holdfast Collective distributes those monies on an ongoing basis and that's about $100 million in profits every year. So that's how it works. Now, that's the structure they came up with.

A (36:01)

And then there's this board that sits on top, made up of just the family or others.

B (36:05)

It's the family and their friends. And this is what that looks like in 10 and 15 years. Anyone's got. Yes.

A (36:11)

Yeah. So what does it mean? Real terms for the Chouinard and his family, his kids aren't going to be living on their Patagonia salaries, I assume. And again, nothing for employees.

B (36:19)

Nothing for employees. And when the news broke three years ago, I was in touch with some of the employees and there was a brief moment of elation for many of them as they sort of understood that there was this grand act of generosity that they were in Some tangential way, a part of. And then for many of them, they were like, well, what about us? And there was a sense of being left behind for many. As for the Chouinard family itself, listen, I don't have access to their financial records. They never opened up their books. What I did do routinely over the course of three years reporting this book was keep asking on the record, off the record, to them, their associates, do they have $100 million socked away somewhere? Do they have $50 million socked away on the record? The answer always was no. Now, do they have some money that's going to sustain this family for the foreseeable future? Yeah, I think so. I don't think their kids or their grandkids have to worry about paying for college 20 years down the road. But I can also tell you that this is not a family that lives lavishly. I spent time with them at their home. We did our own dishes, we cooked our own meals, we made our own beds. There's no help running around this house. These people live pretty simply. And so that's how it all shakes out at of the day. The end. The end.

A (37:38)

So every episode we get a question from an outside expert. Here's yours.

B (37:41)

Hi, I'm Sven Beckert, and I'm a historian of capitalism teaching at Harvard University. I'm about to publish a global history of capitalism during the past millennium, and thus I'm deeply interested in your terrific book. David, I'm curious how you see Patagonia.

A (37:56)

Fit into the history of capitalism.

B (37:58)

It's an outlier, to be sure, but does it, in effect, demonstrate capitalism's unrealized possibilities? Will we have to rewrite the history of capitalism in the light of Patagonia's story?

A (38:08)

And if so, how so? Talk a little bit about this, because not a lot of people are following in their wake. They're following in a more greedy wake, I would say.

B (38:18)

Yeah, yeah, but I love that phrase, the unrealized potential. I mean, that's right where we started the conversation, which is, you know, can. It shows what capitalism can do if. If the people in charge make a certain set of choices. And, Carrie, you know that there's no law in Delaware that says you have to treat workers poorly and maximize profits and shovel dividends.

A (38:42)

There's a mentality.

B (38:43)

There's a mentality, exactly. And so if the mentality changes, if the incentive structures change, then business can show up in a different way in society. We can have a different relationship with it. And I think that's the perfect phrase. The Unrealized potential, but it recognizes that there is still potential.

A (39:09)

Sure. But there is a feeling like during that first, for example, we'll get to the Trump administration in a second, we'll finish up with that. But of like, oh, I have to comment on every horrible thing he does, whether it's gay rights or racism or Charlottesville or whatever. And I think they felt that wasn't their job. And today, even when I was quite critical of their dinner at the White House, which was, like, embarrassing for the rest of their lives, essentially, as far as I was concerned, one of them called me and said, you know, it's easy for you to say. I said, no, it really isn't easy for me to say. It's easy for you to do. So. I'm not sure. I think they're an exception more than the rule, because I think most of people fold. Correct?

B (39:48)

Yeah. Yeah. And that's. That is the truth. And again, I'm not sitting here saying that Patagonia is going to change capitalism overnight. And I. And I'm quick to acknowledge that for all sorts of reasons we've already talked about, no company can snap their fingers and magically be just like Patagonia.

A (40:05)

But why don't they? I'm curious why they don't, because I think a lot of people feel, why are they the. I mean, they are allowed to stay on top because they sell stuff people want. If they didn't, they'd be kicked to the curb. Right, Correct.

B (40:15)

Sure. Also true. Also true.

A (40:17)

Why do you think people covering corporate responsibility don't follow this? What's the biggest pressure?

B (40:24)

I think fear. I think a lot of it's fear. A fear of their shareholders, fear of public blowback, fear of being on the wrong side of a tweet. But I also really encourage people to think sort of beyond the binaries and beyond the grand gestures and get out of this sort of all or nothing mentality. And if I can't be Patagonia, then I can't make any marginal change for good. What I think I show in this book is that the reason we have this idea of what Patagonia is today is because it's been a series, series of 50 years of little decisions. There's no one grand gesture that has defined this company. It's been all these little incremental changes along the way. And that's, I think, where the brand equity comes from. That's where the trust and the integrity comes from. It's not from one guy.

A (41:10)

It's also because one guy can do it. Right. As opposed to many. And that's the problem here. We'll be back in a minute. We all have moments where we could have done better. Like cutting your own hair. Yikes. Or forgetting sunscreen. So now you look like a tomato.

B (41:43)

Ouch.

A (41:44)

Coulda done better. Same goes for where you invest. Level up and invest smarter with Schwab. Get market insights, education and human help when you need it. Learn more@schwab.com Scott we're hitting the road, bringing Pivot Live to the people. Seven cities. Toronto, Boston, New York, dc, Chicago, San Francisco, and la. Of course, you went to Oasis, you went to Beyonce, you saw the rock.

B (42:14)

Remake of wizard of Oz and the Sphere.

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B (42:18)

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A (42:23)

Same people that are organizing our tour, that organized Taylor Swift's tour. They are much more excited about our tour. All right, that's enough, grandpa. It's going to be so good. And we're bringing our brand of whatever we do to the people. And we're excited to meet our fans. We love our fans. For Tickets, head to pivotour.com See you there. If it seems like AI is touching just about every part of your life these days, you aren't imagining things. It's all up in your streaming services. It's all up in your job search, and now it's even in your doctor's office. It can perform exceptionally well, kind of.

B (43:01)

Almost in a superhuman way on these.

A (43:04)

Specific, very challenging codes, complex clinical cases. This week on Explain It To Me When AI Meets Medicine. And I think it can be potentially revolutionary and transformative for people if they.

B (43:15)

Use it in the right way and.

A (43:17)

When it doesn't compute. One in five, around 20% of Americans said that they had turned to a.

B (43:22)

Chatbot for advice that later turned out to be incorrect.

A (43:26)

New episodes Sundays, wherever you get your podcasts. Let me switch gears because you mentioned fear about Patagonia in the context of politics in the Trump administration. Fear is a huge factor in a lot of these behaviors that are happening now. Patagonia's financial restructuring didn't just provide a roadmap. It enabled to give more money to causes Right now. And just over 15 months, the new Hold Fast collective made grants commitments totaling $71 million, including contribution to politics. Is this different from what the company's been doing before in terms of political support?

B (44:07)

Different than what Patagonia was doing?

A (44:09)

Yeah, they were giving. Were they? Are they giving more to politics or have they changed since? It's been the whole fast collective a lot of it was environmental before.

B (44:17)

I would say on an absolute basis, they have given more money directly to political groups, but just because they're giving more money away overall in terms of their political engagement, I think it was really during the Trump administration that the company got much more sharply partisan in its political posture. I mentioned earlier the lawsuit against President Trump, but that was just part of it. I mean, at one point, a designer embroidered on the back of the tags, vote the assholes out, which is a pretty deliberate reference to some.

A (44:50)

I'm just mentioning what this is for people who don't know. In 2017, the company filed a lawsuit against the Trump administration over plans to shrink two national monuments, Utah's Bears Ears and Grand Staircase Escalante. Go ahead. Sorry. Sorry. Go ahead.

B (45:04)

Yeah, so that I think that was a turning point in terms of how overtly partisan they were willing to get. A couple years after that, they pulled their clothing out of the largest retailer that was carrying their material in Wyoming because the owner of the store hosted a fundraiser for Marjorie Taylor Greene. And they said, we don't even want. I think you said earlier in the conversation they can't control who buys their products. And I was like, well, they actually can when they say, you don't get to sell our products. Products anymore because they didn't want to be in business with that person. So that that's continued on an absolute basis. Are they giving more to politics? Yes. But they contend that they are still largely doing this to support candidates who care about the environment and that it hasn't really shifted into full on being sort of a dark money pack for the Democratic Party.

A (45:53)

So this past February, politically speaking, after a slew of billionaires lined up behind Trump at the inauguration, CEO Ryan Gellert wrote an op ed in Time warning about the administration's plans to sell off release 6,640 million acres of public lands to oil, coal and other mining companies. Are they preparing to sue again? Given the increased attacks on national lands during Trump 2.0, it's even worse, correct?

B (46:15)

Yeah. Well, they haven't yet, and I can't tell you what they are or aren't going to do, but so far they haven't. And I think, you know, it's been nine months. And so if there was a case to have been filed that they were going to do, it seems to me that they had the opportunity to do it by this point, but we haven't seen it yet. So, again, I'm not inside the company. I can't tell you if they're about to. But so far they're taking a different tack.

A (46:36)

Are they scared at all? Are they scareder? I guess since they, they were pretty aggressive during the barriers and grand staircase lawsuit.

B (46:45)

Yeah. I asked Ryan Gellert this on stage two weeks ago at the Masters of Scale conference. I was up there with him and Hamdi from Chobani, and we had a conversation about sort of leadership in politically divisive times. And I asked Ryan, I was like, are you scared? Do you think twice? And, and again, I don't want to put words in his mouth, but he acknowledged that. Yeah, of course he's thinking twice before he speaks out. Any individual, any corporate leader, anyone representing an organization or a company can't help, but not in this climate. And so again, I can't say that's why they have or haven't filed a lawsuit. But yes, even Patagonia is keenly aware of this political environment, although it does.

A (47:27)

Certainly give them step up with consumers. Right. I mean, in terms of both the environmental and the political support. Probably helped them keep in their audience. A lot of people could criticize them at the time. And I was like, no, no, they're serving. What's wrong with them serving their audience? That's. Their audience is interested in those things.

B (47:45)

Too, I think among a core group, perhaps. But listen, I can't tell you how many people I know who I wind up talking to about this book who don't know anything about Patagonia's political activities. They just like this stuff because it's well made and it's cool. It's Pat. Pataguchi.

A (47:59)

Pataguchi. I like it. It's very well made. You can also, for people, I don't know, bring back Patagonia stuff to them and they fix it or take it back or different things, which is interesting. Back in the early 2000s and 2010s, there was a lot of talk about corporate responsibility and a lot of pledges and promises were made. Where do we stand now? These chides have obviously shifted. They don't talk about it. They're eliminating dei. They're eliminating everything. Is it just rebranding? They have new names for things. You know, Disney had a new name for, for dei. It's the same name, really, pretty much. But talk a little bit about that. Where do we stand now? And do you see a shift back to it? It just depends on the political winds, presumably.

B (48:41)

Yeah. Listen, I'm loathe to forecast, like, how CEOs are going to be positioning themselves six months from now. I think I would Note a couple things. Number one, you said earlier, and I think you're spot on, CEOs don't want to be commenting on every news cycle. I mean, that's a losing proposition and you're gonna piss one side off and then piss the next side off. And so the companies that I've seen and I've written a lot about this over the last 10 years that have done the best job are those that are very clear about what they care about, their couple issues and chime in when it's relevant and stay out of the rest of it. That may not satisfy every consumer, may not satisfy every employee resource group that wants the company to take a stand, but it seems be the best way for CEOs and leadership teams to sort of find their way through these really hyper partisan pickup thing. You just gotta, you gotta know what you care about and stick to that. But the default in this environment becomes not at all. And it's that amorality I think is really dangerous.

A (49:47)

Agree?

B (49:48)

You know, Agree. Barbara Walter, who wrote How Civil Wars Start, she talks about the importance of the business community speaking up completely in moments of creeping authoritarian. And she contrasts what happened in Brazil where the business community stood up and said it's not okay, and what happened in Hungary where the business community went silent. And those are studies in contrast that I think are very instructive at this moment. And so when business leaders find themselves afraid to speak out right now, I refer them to those examples and ask which path they want to go down.

A (50:23)

No question. I just interviewed Kamala Harris and she said the one thing that surprised me is all the businesses leaders who have said nothing like not, not even slight pushback and in fact giving money this ballroom, they just destroyed part of the White House in order to build, which of course they weren't going to touch it. Of course they, he did, of course, $25 million gifts from some of these companies. It's really, it's astonishing to build this monstrosity, they may need a bigger ballroom, I don't know. But it's really, they're beyond not commenting or not involving themselves. It's something quite different going back to the environment. And some of the biggest perpetrators are these tech companies. And they had been touting for years that they want to get net zero emissions. You recently interviewed the chief sustainability officers at Microsoft and Google and they said they were still committed to that goal. But to be clear, they were set before the AI boom in huge data centers that have massively increased energy needs, which is Sam Alton's Sake. Talking about taking the energy of all the planet for AI, I was like, oh, well, I kind of like my light bulbs. But in January, you called AI a climate conundrum and you wrote that you thought in the long run it could be good for clean energy. Of course, they're all investing in fusion and hydrogen and nuclear, et cetera. They are doing that in order, but that's largely for the bottom line, not because they love trees. Explain what you meant by that and how you're looking at AI's effects on climate change right now.

B (51:47)

Yeah, listen, it's a moment where we can see, see without question that AI is having real implications for the emissions trajectories of the big hyperscaling tech companies, where we can see that they are quite literally willing to keep gas plants and even coal plants online if it means securing reliable power for their data center. And that, you could argue is absolutely hypocritical with all the climate commitments that they have made. Made. And yet, if we take away anything, it's that they are still companies, right? They are still businesses who believe that they are in an existential race to gain market share on a future technology that's going to be absolutely critical. So again, if we understand why companies don't speak out against the president in the same way, just from a business perspective, I can understand why a company like Google or Meta or Amazon is setting aside for perhaps temporarily, perhaps longer term, their climate commitments to go try to win the AI arms race.

A (52:51)

When they started doing this, I'm like, can you just shut up? Because you're not going to keep it if you don't. I was like, I don't believe that you'll keep it. Like, to me, it didn't matter at all their commitments, because they weren't real.

B (53:00)

Yeah, well, I think you're absolutely right to say that, like, commitments are a dangerous game. I think it's also fair to note, as you did, these are companies that have really invested in early stage clean technologies. You could say that's for the. But a lot of these initial power purchase agreements, a lot of these efforts to fund low carbon alternatives and carbon capture, that's not accretive in the short term. They're sort of placing bets that they're helping create a future energy system that is going to be lower emissions.

A (53:32)

They see the need. Exactly. I don't think it's because they want the planet to be better. I think it's like, ugh, we're going to need more energy.

B (53:37)

You're so cynical, Kara.

A (53:38)

I'M sorry, but I've heard them when they did, you know, they tried to get me Google guys to write the don't be evil thing when I was covering them. They're like, can you write our emissions? Like, no, I'm covering you. And I remember when they said, don't be evil, I said, that leaves a lot on the left of that. Like, don't be evil's way down. So you could do a lot of bad things.

B (53:56)

Evil is in the eye of the beholder.

A (53:57)

I know. I was like, how about just like, not things that hurt. This. And they just didn't. They wanted it to be evil so they could do all the terrible things. I am cynical because they. I've had sat in these stupid cocktail parties where they go on and on about people and then they. It was just exhausted. They're exhausted.

B (54:15)

Yeah.

A (54:16)

So when you think about the future, Patagonia did not just change its ownership structure. The company is shifting into the food business, including pushing for a new grain called Kernza as a way to fix environmentally damaging farming. Chouinard has always been an innovator. Getting into food seems a departure. Talk about. It's also a market opportunity. Talk about the potential risks and benefits of shifting gears and what it says. I mean, I need Carinza. Sure, why not? Not like, why not?

B (54:43)

It's fine. But listen, this is a tiny experiment. Let's be clear. It is part of their sort of philosophical efforts to understand how business can and can't show up in the world. Chouinard told me he hopes that 50 years from now, Patagonia is best known as a food company, not an apparel company. I'm not going to take the over on that actually happening. I think that's an absolute long shot for all sorts of reasons.

A (55:07)

Reasons.

B (55:07)

Food system is wildly complex, way more complex in many ways than the apparel business. And so listen, they are out there, they are experimenting. The food business is growing. It's $20 million or so roughly, and it's growing fast. But that's not going to change factory farming in the United States anytime soon. But it does represent his belief to go all the way back to some of the things we talked about at the start of the show, this question of whether business can be a force for good at the highest level. He thinks that no matter how well you make a piece of clothing, it's still extractive. You're still taking things out of the earth. Whereas in food, he sees the path to be regenerative. Right. To see food systems, whether they're Fish and mussels that clean the water. Whether it's crops like Kernza that sequester carbon, he sees the potential to actually try to make the world, the environment, a little better, a little cleaner. And so that's the sort of philosophical project that's animating the food business right now.

A (56:14)

So, last question. Chouinard is not one of the signatories. The famous giving pledge may be not such a bad thing. According to review, 15 years later, the wealth of those billionaires is growing faster than they're giving. A few are still working on it. And may Bill Gates, probably the biggest philanthropist, I would say, announced he wanted to donate virtually all his wealth over the next 20 years. MacKenzie Scott, who's just sort of lacked lapping all of them, has given away $19 billion over the past five years and reportedly cut her shares of Amazon stock by over 40%. But a lot of the money has gone into billionaire philanthropies. Give them tax breaks. I'm thinking of Mark Zuckerberg reducing government tax income and making them richer. I'm thinking again of Mark Zuckerberg. Do you think Patagonia's giving model is one that more founders will or could follow, or will it remain different from everybody else? And how does he think of his legacy going forward? Forward, yeah.

B (57:04)

Yeah. So I think it absolutely is a model that more founders could follow, because it's just about making choices if they have that equity. I think it's a model that a few founders will follow. And I know this because I'm talking to founders who are trying to figure out how they're going to do this. And I also am not at all going to sit here and I tell you, it's the most effective way to. To donate large sums. This is one of the things that was really perplexing about Chouinard's decisions over the years and to this day is that he never maximized for impact. This was never a guy who was sort of looking at the spreadsheets and understanding, well, if I sold the company for $6 billion at that moment, when I had that offer on the table, I could set up an endowment that could spit off $300 million every two years and use that, and that would be more impactful than the solution. He just never thought about things.

A (58:00)

He's not an altruist.

B (58:02)

No. Maybe an ineffective altruist, perhaps, but he knew what he cared about. And those same concerns that he had at the very outset when we were talking about who this guy was in 1973 when Patagonia started. He cared about land conservation. He cared about environmental activism. Those are the things that still animate his decision making today. And so that's why Patagonia is an extra experiment and others may take some parts of it and be inspired and try to mimic it. But I am not sitting here and saying every company and every executive should try to follow in Chouinard's footsteps with high fidelity.

A (58:42)

It seems like he wants Patagonia to be a model for other companies.

B (58:45)

He does. And he has always said that, even more so than the clothes, even more so than the charity. He believes that the company's great greatest contribution is just being a model to show what's possible. You know, an example, to go back to our caller, of the unrealized potential of capitalism.

A (59:08)

And what does he do day to day?

B (59:09)

Right now, all he does is fish. Fish. I chased him all over the world to report this book, and every single day I was with him, we went fishing. That's all he wants to do, fish.

A (59:19)

All right, well, there you have it, David. Thank you so much. It's a really fascinating book.

B (59:24)

Always a pleasure.

A (59:33)

Today's show was produced by Christian Castor Russell, Kateri Yocum, Michelle Eloy, Megan Burney and Kaitlyn Lynch. Nishat Kirwa is Vox Media's executive producer of podcasts. Special thanks to Rosemary Ho. Our engineers are Fernando, architect Ruda and Rick Kwan, and our theme music is by Trackademics. If you're already following the show, go fishing. If not, go put on your pubic hair thong. Go wherever you listen to podcasts, search for on with Kara Swisher and hit follow. Thanks for listening to on with Kara Swisher from Podium Media, New York Magazine, the Vox Media Podcast Network, and us. We'll be back on Monday with more.