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  1. #1
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    Yvon walks the talk

    https://www.nytimes.com/2022/09/14/c...chouinard.html

    Billionaire No More: Patagonia Founder Gives Away the Company

    By David Gelles
    Gelles writes about the intersection of climate and the corporate world and has covered Patagonia for nearly a decade.
    Sept. 14, 2022

    A half century after founding the outdoor apparel maker Patagonia, Yvon Chouinard, the eccentric rock climber who became a reluctant billionaire with his unconventional spin on capitalism, has given the company away.

    Rather than selling the company or taking it public, Mr. Chouinard, his wife and two adult children have transferred their ownership of Patagonia, valued at about $3 billion, to a specially designed set of trusts and nonprofit organizations. They were created to preserve the company’s independence and ensure that all of its profits — some $100 million a year — are used to combat climate change and protect undeveloped land around the globe.

    The unusual move comes at a moment of growing scrutiny for billionaires and corporations, whose rhetoric about making the world a better place is often overshadowed by their contributions to the very problems they claim to want to solve.
    At the same time, Mr. Chouinard’s relinquishment of the family fortune is in keeping with his longstanding disregard for business norms, and his lifelong love for the environment.

    “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,” Mr. Chouinard, 83, said in an exclusive interview. “We are going to give away the maximum amount of money to people who are actively working on saving this planet.”

    Patagonia will continue to operate as a private, for-profit corporation based in Ventura, Calif., selling more than $1 billion worth of jackets, hats and ski pants each year. But the Chouinards, who controlled Patagonia until last month, no longer own the company.

    In August, the family irrevocably transferred all the company’s voting stock, equivalent to 2 percent of the overall shares, into a newly established entity known as the Patagonia Purpose Trust.

    The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits. Because the Chouinards donated their shares to a trust, the family will pay about $17.5 million in taxes on the gift.
    ImageThe interior of a Patagonia store with women and men’s clothes hanging as a woman shops in the distance.

    The Chouinard family irrevocably transferred all the company’s voting stock into a newly established entity known as the Patagonia Purpose Trust in August.

    The Chouinards then donated the other 98 percent of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation.

    “There was a meaningful cost to them doing it, but it was cost they were willing to bear to ensure that this company stays true to their principles,” said Dan Mosley, a partner at BDT & Co., a merchant bank that works with ultrawealthy individuals including Warren Buffett, and who helped Patagonia design the new structure. “And they didn’t get a charitable deduction for it. There is no tax benefit here whatsoever.”

    That differs from the choice made by Barre Seid, a Republican donor who recently gave 100 percent of his electronics manufacturing company to a nonprofit organization shortly before the company was sold, reaping an enormous personal tax windfall and making a $1.6 billion gift to fund conservative fights over abortion rights, climate change and more.

    By giving away the bulk of their assets during their lifetime, the Chouinards — Yvon, his wife Malinda, and their two children, Fletcher and Claire, who are both in their 40s — have established themselves as among the most charitable families in the country.

    High stakes. A new scientific assessment suggests that failure to limit global warming to the targets set by international accords will most likely set off several climate “tipping points,” thresholds passed which effects of climate change, from the thawing of Arctic permafrost to the loss of coral reefs, would probably become irreversible.

    “This family is a way outlier when you consider that most billionaires give only a tiny fraction of their net worth away every year,” said David Callahan, founder of the website Inside Philanthropy.

    “Even those who have signed the Giving Pledge don’t give away that much, and tend to get richer every year,” Mr. Callahan added, referring to the commitment by hundreds of billionaires to give away the bulk of their fortunes.

    Patagonia has already donated $50 million to the Holdfast Collective, and expects to contribute another $100 million this year, making the new organization a major player in climate philanthropy.

    Mr. Mosley said the story was unlike any other he had seen in his career. “In my 30 plus years of estate planning, what the Chouinard family has done is really remarkable,” he said. “It’s irrevocably committed. They can’t take it back out again, and they don’t want to ever take it back out again.”

    For Mr. Chouinard, it was even simpler than that, providing a satisfactory resolution to the matter of succession planning.

    “I didn’t know what to do with the company because I didn’t ever want a company,” he said from his home in Jackson, Wyo. “I didn’t want to be a businessman. 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.”

    ‘This might actually work’

    In some ways, the forfeiture of Patagonia is not terribly surprising coming from Mr. Chouinard.

    As a pioneering rock climber in California’s Yosemite Valley in the 1960s, Mr. Chouinard lived out of his car and ate damaged cans of cat food that he bought for five cents apiece.

    Even today, he wears raggedy old clothes, drives a beat up Subaru and splits his time between modest homes in Ventura and Jackson, Wyo. Mr. Chouinard does not own a computer or a cellphone.

    Patagonia, which Mr. Chouinard founded in 1973, became a company that reflected his own idealistic priorities, as well as those of his wife. The company was an early adopter of everything from organic cotton to on-site child care, and famously discouraged consumers from buying its products, with an advertisement on Black Friday in The New York Times that read, “Don’t Buy This Jacket.”

    The company has given away 1 percent of its sales for decades, mostly to grass roots environmental activists. And in recent years, the company has become more politically active, going so far as to sue the Trump administration in a bid to protect the Bears Ears National Monument.

    Yet as Patagonia’s sales soared, Mr. Chouinard’s own net worth continued to climb, creating an uncomfortable conundrum for an outsider who abhors excessive wealth.

    “I was in Forbes magazine listed as a billionaire, which really, really pissed me off,” he said. “I don’t have $1 billion in the bank. I don’t drive Lexuses.”

    The Forbes ranking, and then the Covid-19 pandemic, helped set in motion a process that would unfold over the past two years, and ultimately lead to the Chouinards giving away the company.

    In mid-2020, Mr. Chouinard began telling his closest advisers, including Ryan Gellert, the company’s chief executive, that if they couldn’t find a good alternative, he was prepared to sell the company.

    “One day he said to me, ‘Ryan, I swear to God, if you guys don’t start moving on this, I’m going to go get the Fortune magazine list of billionaires and start cold calling people,’” Mr. Gellert said. “At that point we realized he was serious.”
    To be continued…

  2. #2
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    just saw that
    good for him

  3. #3
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    The rest of the story.
    Using the code name Project Chacabuco, a reference to a fishing spot in Chile, a small group of Patagonia lawyers and board members began working on possibilities.

    Over the next several months, the group explored a range of options, including selling part or all of the company, turning Patagonia into a cooperative with the employees as owners, becoming a nonprofit, and even using a special purpose acquisition company, or SPAC.

    “We kind of turned over every stone, but there just weren’t really any good options that could accomplish their goals,” said Hilary Dessouky, Patagonia’s general counsel.

    The easiest paths, selling the company or taking it public, would have given Mr. Chouinard ample financial resources to fund conservation initiatives. That was the strategy pursued by his best friend, Doug Tompkins, founder of the clothing companies Esprit and The North Face.

    But Mr. Chouinard had no faith that Patagonia would be able to prioritize things like worker well-being and funding climate action as a public company.

    “I don’t respect the stock market at all,” he said. “Once you’re public, you’ve lost control over the company, and you have to maximize profits for the shareholder, and then you become one of these irresponsible companies.”
    They also considered simply leaving the company to Fletcher and Claire. But even that option didn’t work, because the children didn’t want the company.

    “It was important to them that they were not seen as the financial beneficiaries,” Mr. Gellert said. “They felt very strongly about it. I know it can sound flippant, but they really embody this notion that every billionaire is a policy failure.”

    Finally, the legal team and board members landed on a solution.

    In December, at a daylong meeting in the hills above Ventura, the entire team came together for the first time since the pandemic began. Meeting outside, surrounded by oak trees and avocado orchards, all four Chouinards, along with their team of advisers, agreed to move ahead.

    “We still had a million and one things to figure out, but it started to feel like this might actually work,” Mr. Gellert said.

    By giving away the bulk of their assets during their lifetime, the Chouinards have established themselves as among the most charitable families in the country. Yvon Chouinard filmed an announcement for his employees at home in Wyoming. Credit...Natalie Behring for The New York Times

    Now that the future of Patagonia’s ownership is clear, the company will have to make good on its lofty ambitions to simultaneously run a profitable corporation while tackling climate change.

    Some experts caution that without the Chouinard family having a financial stake in Patagonia, the company and the related entities could lose their focus. While the children remain on Patagonia’s payroll and the elder Chouinards have enough to live comfortably on, the company will no longer be distributing any profits to the family.
    “What makes capitalism so successful is that there’s motivation to succeed,” said Ted Clark, executive director of the Northeastern University Center for Family Business. “If you take all the financial incentives away, the family will have essentially no more interest in it except a longing for the good old days.

    As for how the Holdfast Collective will distribute Patagonia’s profits, Mr. Chouinard said much of the focus will be on nature-based climate solutions such as preserving wild lands. And as a 501(c)(4), the Holdfast Collective will also be able to build on Patagonia’s history of funding grass roots activists but it could also lobby and donate to political campaigns.

    For the Chouinards, it resolves the question of what will happen to Patagonia after its founder is gone, ensuring that the company’s profits will be put to work protecting the planet.

    “I feel a big relief that I’ve put my life in order,” Mr. Chouinard said. “For us, this was the ideal solution.”
    That guy…. FKNA awesome.

  4. #4
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    Legend

  5. #5
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    I like that. “Every billionaire is a policy failure”.
    Don’t worry Yvon, I have never bought a Patagonia product - LOL, but maybe I now should?

    Massive props if this works out.

  6. #6
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    Very interesting...will also be interesting how it turns out. Wonder what the employees think.

    I work for a single owner (no family) private company and have always wondered about the succession plan. Seems these are the typical ones:"the group explored a range of options, including selling part or all of the company, turning Patagonia into a cooperative with the employees as owners, becoming a nonprofit, and even using a special purpose acquisition company, or SPAC."

  7. #7
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    Wow.

    I’ve been trying to find my copy of “let my people surf”
    It’s an interesting business book. My kids are into business and finance now and I want them to see the kind side of business.
    This is beyond kind.

  8. #8
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    I'm mean this as admirably as possible but the term I've always thought of in relation to Yvon is "contrarian son of a bitch" and I feel like he'd agree. The only way I could think higher of him is if he'd just stop evangelizing about tenkara fishing.

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    Quote Originally Posted by John_B View Post
    …The only way I could think higher of him is if he'd just stop evangelizing about tenkara fishing.
    Heh. +1.

  10. #10
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    Admirable in every sense of the word.

  11. #11
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    If only bill gates was this kind.

  12. #12
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    Quote Originally Posted by John_B View Post
    Yvon is "contrarian son of a bitch"
    That's what I like and respect most about him. While we're on the topic, Some Stories is a great coffee table book for an outdoorsy person.

  13. #13
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    Quote Originally Posted by Core Shot View Post
    If only bill gates was this kind.
    Gates has given a bunch of his fortune away

  14. #14
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    Quote Originally Posted by BCMtnHound View Post
    I like that. “Every billionaire is a policy failure”.
    I've always said, you have to be a bit of an asshole to become a billionaire.

    This quote could be a bumper sticker though.

  15. #15
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    Explains that. Tried to get a human on Patagonia chat to discuss a garment repair. Message was all employees at some sort of team meeting 9/14/2022. Try again tomorrow.

    Interesting exit strategy.
    I have been in this State for 30 years and I am willing to admit that I am part of the problem.

    "Happiest years of my life were earning < $8.00 and hour, collecting unemployment every spring and fall, no car, no debt and no responsibilities. 1984-1990 Park City UT"

  16. #16
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    As if donating a $3 billion company isn’t admirable enough, he managed to raise two children who similarly seem to be okay with it, if not advocates. Bravo.

  17. #17
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    So they placed Patagucci into a trust they control? This is revolutionary rich guy behavior?

    I find it very noble however their continued commitment to donate over 100 million per year to environmental initiatives. No other company I know of comes close. Regardless of ownership structure that is amazing and the real story.
    Live Free or Die

  18. #18
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    Yvon walks the talk

    This is great. Yvon is a legend, and certainly shows a path to success that doesn’t involve screwing everyone over along the way.

    Quote Originally Posted by oldnew_guy View Post
    As if donating a $3 billion company isn’t admirable enough, he managed to raise two children who similarly seem to be okay with it, if not advocates. Bravo.
    This too

  19. #19
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    Quote Originally Posted by Core Shot View Post
    If only bill gates was this kind.
    The Gates Foundation spent $6.67B last year alone

    https://www.gatesfoundation.org/abou...al-report-2021

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    Once gates donates his landholdings to sustainable Native American farming I will retract my statement. Fuck Gates.

    Yvon is the hero. May his last days be blessed.
    And may his sons have some small crumbs of wealth and also participation in this new venture.

  21. #21
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    Quote Originally Posted by oldnew_guy View Post
    As if donating a $3 billion company isn’t admirable enough, he managed to raise two children who similarly seem to be okay with it, if not advocates. Bravo.
    Am i naive to think he has money that isn’t the company? And that his kids are likely ok for money too?
    Like millions, right?

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    Absolutely incredible. I hope more billionaires follow suit.

  23. #23
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    Quote Originally Posted by ::: ::: View Post
    Am i naive to think he has money that isn’t the company? And that his kids are likely ok for money too?
    Like millions, right?
    Plenty for all of them. And the Bill and Melinda Gates Foundation gives out more than Yvon pisses in a decade. No personal opinions on each of them presented, just the numbers.
    Is it radix panax notoginseng? - splat

  24. #24
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    I just don't think people fully understand how much money a billion dollars is, and how unnecessary the money is once you get past the tens or hundreds of millions point. That Patagonia is such an outlier says more about the other companies than it does about Patagonia.

  25. #25
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    Quote Originally Posted by BCMtnHound View Post
    I like that. “Every billionaire is a policy failure”.
    Don’t worry Yvon, I have never bought a Patagonia product - LOL, but maybe I now should?

    Massive props if this works out.
    I'll go one further. Every billionaire is a moral failure. It's not just policy, it's a deep down moral issue, both individual and collective.

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