People who have a lot of money often talk about how they plan to do good things with all of that money. For example, hundreds of billionaires have signed the Giving Pledge, a promise to give away the bulk of their fortune to charitable causes while they're still living. With a few notable exceptions, most of them still give away a relatively small percentage of their overall wealth each year.
Then, there's Yvon Chouinard, the now former billionaire founder of Patagonia. I say former because on Wednesday, in a story that was first reported by David Gelles in The New York Times, Chouinard says he has given away the company.
The privately held company posted an open letter from Chouinard on its website, explaining the move. While the entire thing is worth the read, the first seven words say it all:
I never wanted to be a businessman. I started as a craftsman, making climbing gear for my friends and myself, then got into apparel. As we began to witness the extent of global warming and ecological destruction, and our own contribution to it, Patagonia committed to using our company to change the way business was done.
First of all, there's something brutally honest about those first seven words. You don't usually hear that from business owners. It's certainly not the thing you expect to hear from someone who started and built an incredibly successful brand.
The thing is, a lot of stories start that way; they just never end with the founder giving away the company. A lot of founders will tell you they started a business not because they wanted to run a business but because they had an idea they wanted to bring into the world. They saw a need and had a creative solution no one else had ever tried.
Along the way, maybe they were successful. Maybe they're able to sell lots of whatever they make and hire lots of people to share it with the rest of the world. In that case, they turned their idea into something big. Maybe they're even able to sell it to a much larger company for a huge payout. That is the American Dream, right?
Somewhere along the way, however, it's easy to forget about whatever it was you cared about when you first started. It's easy to get caught up in growth and hiring and customers and supply chain and OKRs and KPIs. It's easy to get caught up in success, especially when success means money. Money changes things--it just does.
In Chouinard's case, however, it wasn't about building a business. "If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way," he wrote.
That's the thing they cared about when they started, and that never changed. Patagonia has always been about a purpose over profit. In fact, the reason it cared about profit at all is that all of the things it valued require money. And so, Chouinard and his family started trying to figure out a way for the company to live up to its purpose.
"One option was to sell Patagonia and donate all the money," he wrote. "But we couldn't be sure a new owner would maintain our values or keep our team of people around the world employed."
The simple answer is that Chouinard wanted to be sure the company would continue to benefit the causes that the family cares about--especially climate change and protecting the planet. The solution is that he gave the whole thing away.
Here's how it works: 100% of the company's voting stock transfers to the Patagonia Purpose Trust, created to protect the company's values; and 100% of the nonvoting stock had been given to the Holdfast Collective, a nonprofit dedicated to fighting the environmental crisis and defending nature. The funding will come from Patagonia: Each year, the money we make after reinvesting in the business will be distributed as a dividend to help fight the crisis.
That amounts to around $100 million a year, according to the Times. Neither Chouinard nor anyone in his family will take any profit from the company at all, and they can't change their mind. The arrangement is irrevocable.
"I didn't want to be a businessman," Chouinard told Times. "Now I could die tomorrow and the company is going to continue doing the right thing for the next 50 years, and I don't have to be around."
I actually think it's an incredibly valuable lesson. A lot of leaders should start thinking about what their company will look like when they're gone, and whether it will continue to live up to whatever it is you say you value.
If you say you believe something is important, you should act like it. Doing the right thing is as good a place as any to start.