Yvon walks the talk--Owner Gives Patagonia Away

[markojp]

OMG, there's been a change. I'm sure Y.C. couldn't have thought this through. Patagonia's doomed!

( )

 

[Tricia]

Patagonia Billionaire Who Gave Up Company Skirts $700 Million Tax Hit

Founder Yvon Chouinard structured the transfer of his firm in a way that keeps control within the family and avoids taxes.

www.bloomberg.com

 

[pais alto]

Patagonia Billionaire Who Gave Up Company Skirts $700 Million Tax Hit

Founder Yvon Chouinard structured the transfer of his firm in a way that keeps control within the family and avoids taxes.

www.bloomberg.com

He also avoided $2.3 billion in after-taxes profit (as well as any further income from the company) - shrewd. Too bad they'll still owe something like $17 million in gift tax.

I am personally avoiding a $700M tax bill by not developing and selling a $3 billion company.

 

[Eric@ict]

Did you really think Yvon was still running the company in his 80s?

Still was involved and gave direction, but not day to day operations. No.

 

[Eric@ict]

Not picking you out particulalry but this is a new thing (or relatively new given most social enterprises are kinda fledgling or small scale). We are trained by capitalist consumer society to think all profit is good, growth of a business is necessary etc etc.

Just doing a thought experiment on this - could an ultimate objective of the trust not be to take over the world in outdoor apparel then gradually put itself out of business by making products that are so durable re-usable etc that people don't have to keep consuming? i.e. turn endless demand for growth to something else good for the planet.

I understand that Patagucci were already heading that way by deliberately not pursuing all growth in the NA market.

Even the crowd here, if they are honest could probably live without 1 or 2 new shells
(I know all a bit awkward when part of the raison d'etre of this site is to sell us on new bright and shiny things, which curmudgeon though I am I'm not immune to either).

Way way way better than selling to some PE guys who'd have leveraged it to death, milked its brand while cost controlling its way to lower quality and then IPO'd it - Not that Chouinard would have ever gone that way.

I didnt take it as such. All good. I think Yvon was without a doubt a true capitalist, but he viewed the stakeholder different. He understood the connection of his product to the outdoors. So to ensure organic growth, promised to protect the environment where his product was used. This started a number of years ago. He also saw his end users as hero's for the environment and the connection was easy from there. Make environmental protection a company ethos and measure the support from his customer base. It resonated well and it was part of his core value. Doing what he did looks good on paper, reads well and keeps the company on people's tongue and relevant in the marketplace. It drives free advertising and additional growth. If you enjoy the outdoors, then its easy to follow thru and purchase. This move though, I think will change the company and not in a good way if you are happy with the current direction. Time will tell...

 

[SBrown]

I think a key part of it is that Chouinard needed some sort of scheme to keep it going the way they wanted it to go after he hung it up. Guy’s 83, he can’t run it forever, the kids don’t want it, and if he sold it…well, who knows what would happen.

Nothing lasts forever.

Like what Jean Meyer did with the St B before he died.

 

[Tricia]

He also avoided $2.3 billion in after-taxes profit (as well as any further income from the company) - shrewd. Too bad they'll still owe something like $17 million in gift tax.

I am personally avoiding a $700M tax bill by not developing and selling a $3 billion company.

I was merely adding a piece of news that came up in my feed about this topic that hadn't been posted.

 

[pais alto]

I was merely adding a piece of news that came up in my feed about this topic that hadn't been posted.

I didn’t mean you, I was addressing the (sensationalist) article’s approach. Bloomberg should know better than to headline it like that. But I didn‘t mean to criticize you at all.

 

[Tricia]

I didn’t mean you, I was addressing the (sensationalist) article’s approach. Bloomberg should know better than to headline it like that. But I didn‘t mean to criticize you at all.

And I really should have posted a comment about the link but we had limited internet as we were traveling from Bozeman to Park City when I put that link up.

 

[Wilhelmson]

So funny that people can’t just be happy about something for once.

 

[markojp]

So funny that people can’t just be happy about something for once.

Fear grips fiercely.

 

[mdf]

So funny that people can’t just be happy about something for once.

It is not really surprising that the mainstream business press finds his actions puzzling. It does not fit in their worldview.

 

[Tricia]

Like what Jean Meyer did with the St B before he died.

We were talking with @BS Slarver about this topic.
How many family businesses make it past the second generation in this day and age?
Gone are the days of 3rd, 4th or 5th generation family run business.
Multi-Billion dollar companies or small mom and pop....offspring have their own interests and seem to be following in grandpa's foot steps only in the manner of forging their own path, not in taking over the family business.

 

[jclee]

I think Yvon was without a doubt a true capitalist, but he viewed the stakeholder different. He understood the connection of his product to the outdoors. So to ensure organic growth, promised to protect the environment where his product was used. This started a number of years ago. He also saw his end users as hero's for the environment and the connection was easy from there. Make environmental protection a company ethos and measure the support from his customer base. It resonated well and it was part of his core value. Doing what he did looks good on paper, reads well and keeps the company on people's tongue and relevant in the marketplace. It drives free advertising and additional growth. If you enjoy the outdoors, then its easy to follow thru and purchase. This move though, I think will change the company and not in a good way if you are happy with the current direction. Time will tell...

So you thought their previous environmental messaging was all just marketing PR. Well, I guess Yvon proved you wrong right there.
As to the future direction of the company, nobody knows. But I bet it will fare better than if it was sold to some hedge-funder who will trash the brand by outsourcing to the lowest bidder, squeezing the employees, monetizing all the assets and hollowing out the donations to environmental causes.

 

[Tricia]

So you thought their previous environmental messaging was all just marketing PR. Well, I guess Yvon proved you wrong right there.
As to the future direction of the company, nobody knows. But I bet it will fare better than if it was sold to some hedge-funder who will trash the brand by outsourcing to the lowest bidder, squeezing the employees, monetizing all the assets and hollowing out the donations to environmental causes.

I don't read @Eric@ict 's comment in that manner.
I read it as:
When you're making a product that speaks to the environment, it makes good business sense to forge a business model that goes hand in hand with the customer base.
This doesn't mean that it was "just marketing" but it also doesn't mean that it wasn't good marketing.

There is a fine line between making a point that being environmentally conscious makes good sense and being seen as a marketing ploy.
I firmly believe that Patagonia's leadership was true to that ethos.

By handing the business over to another entity, you may be changing the direction for no other reasons that someone else's ethos may be similar but treated very differently.

 

[Eric@ict]

So you thought their previous environmental messaging was all just marketing PR. Well, I guess Yvon proved you wrong right there.
As to the future direction of the company, nobody knows. But I bet it will fare better than if it was sold to some hedge-funder who will trash the brand by outsourcing to the lowest bidder, squeezing the employees, monetizing all the assets and hollowing out the donations to environmental causes.

you misunderstood what I wrote. @Tricia is correct in my view.