All hail the legend that is Patagonia founder Yvon Chouinard. He may have just single-handedly saved the idea of business as a force for good.
As he potentially hit the point where many founders look to sell their business and pocket the well earned proceeds, Chouinard looked around and realised none of the options worked for him or the company.
None of the traditional routes available - sale to a trade rival or a VC, a flotation or even an employee-ownership scheme - could guarantee the company would maintain its mission of “being in business to save our home planet”.
A final great act from a great thinker and doer
Always a singular thinker, Chouinard took the decision to create their own option. So he has set up the Patagonia Purpose Trust and the Holdfast Collective. In his simple, elegant and catchy way, Chouinard declares “Earth is our shareholder now”.
Splitting voting and non-voting stock between the two bodies, he will give financial muscle to the Collective, which will be the primary vehicle for investing in schemes and technology that help fight the climate crisis. At the same time, future business decisions are placed under the sole control of the Trust, which means they can guarantee the business will maintain its environmental purpose.
Here then is about as pure a demonstration of the idea of purpose as it is possible to get. And this really feels like a timely intervention. We live in an age when, as Verbal Identity founder Chris West recently explained to Helm members, lots of businesses use the language of purpose, but don’t follow words with deeds.
Helm is a community for the founders of fast-growing scale-ups worth more than £1m. As a club we have long believed that the three strands of people, profit and planet - or business growth, personal growth and better growth, to use our own parlance - are of equal value and importance.
We are long-standing supporters of schemes such as the Better Business Act and Founder’s Pledge. It’s also one reason we were delighted to also become a Certified B Corp earlier this year.
Better business means profit with purpose
Of course a sound business model and a well-run business remain essential. Had Chouinard been a terrible businessman and Patagonia a worthless pile of debt, his gesture would have had little or no impact. There is nothing in the “better business manual” that says it’s not OK to make a profit and grow a business.
Few sensible people are calling for a new Business Act that disregards the needs and desires of shareholders. It’s just a question of balance. Alongside the duty to shareholders, business leaders need to demonstrate they place equal importance on their duties to the surrounding community, employees, customers and suppliers and to society as a whole.
In recent years, lots of businesses have adopted the language of purpose. As they do they often settle into an overly pompous, preachy tone in their direct communications with customers. A trend brilliantly exposed in this column by the Guardian’s Marina Hyde.
Paying back the feel-good dividend
Yvon Chouinard is a near-perfect example of what a well-organised, disciplined and well intentioned founder can achieve. Patagonia has long been hailed as a great company to work for, a happy company. Its customers enjoy a feel-good dividend that comes from supporting a brand genuinely driven by a desire to do good. And the means to see that through.
In his statement announcing the new ownership structure Chouinard wrote “You could say instead of going public, we're going purpose". We wish him, his family, the business, the Trust and the Collective continued success and happiness as they do just that.