he is no longer a billionaire

he is no longer a billionaire

The founder of Patagonia announced on Wednesday that he would say goodbye to his company. A look back at Yvon Chouinard’s extraordinary journey.

Posted at 7:00 am

david gelles
The New York Times

Half a century after founding the outdoor clothing manufacturer Patagonia, Yvon Chouinard, the eccentric mountaineer who became a billionaire in spite of himself thanks to his unconventional approach to capitalism, sold his company.

Instead of selling the company or taking it public, Yvon Chouinard, his wife and their two adult children transferred their Patagonia property, valued at around $3 billion, to a specialized trust and non-profit organization. They were created to preserve the company’s independence and ensure that all of its profits (about $100 million a year) are used to combat climate change and protect unused land around the world.

The unusual move comes at a time when billionaires and corporations are under increasing scrutiny, with their talk of making the world a better place often overshadowed by their contribution to the problems they say they want to solve.

Mr. Chouinard’s abandonment of the family fortune is consistent with his longstanding disregard for business standards and his lifelong love of protecting 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,” Chouinard, 83, of Lewiston, Maine, said in an interview.

We will donate as much money as possible to people who are actively working to save this planet.

Yvon Chouinard

Patagonia will continue to operate as a private, for-profit company based in Ventura, California, selling more than $1 billion worth of ski jackets, hats and pants each year.


A Patagonia store at the company’s headquarters in Ventura, California in 2018

But the Chouinards, who controlled Patagonia until last month, no longer own the company.

The cost of principles

In August, the family irrevocably transferred all of the company’s voting shares, or 2% of all shares, to a new entity called the Patagonia Purpose Trust.

This trust, which will be supervised by the relatives and their closest advisers, is intended to ensure that Patagonia fulfills its commitment to operate a socially responsible company and distribute its profits. Because the Chouinards donated their shares to a trust, the family will pay approximately $17.5 million in taxes on this donation.

The Chouinards then donated the remaining 98% of Patagonia, or their common shares, to a newly created nonprofit called Holdfast Collective, which will now receive all company profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4) organization, allowing it to make unlimited political contributions, the family did not receive any tax benefits for their donation.

“It cost them dearly, but it was a cost they were willing to incur to ensure this company stayed true to its principles,” said Dan Mosley, a partner at BDT & Co, a commercial bank that works with very wealthy people. Warren included. Buffett, and who helped Patagonia design the company’s new financial structure.

And they didn’t get a charitable deduction for it. There is not the slightest tax advantage here.

Dan Mosley, a partner at BDT & Co.

Barre Seid, a Republican donor, is the only other example in recent memory of a wealthy businessman donating his business to philanthropic and political causes. But Barre Seid took a different approach by donating 100% of his electronics business to a nonprofit, making a huge personal tax gain by donating $1.6 billion to fund conservative causes, including efforts to prevent action. about climate change.

a unique story

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

Patagonia has already donated $50 million to the Holdfast Collective and plans to donate another $100 million this year, making the new organization a major force in the field of climate philanthropy.

Mosley said the story is unlike any he has seen in his career. “In my 30-plus years of estate planning, what the Chouinard family has done is truly remarkable,” she said.

It is an irrevocable commitment. They can’t take it off anymore and they don’t want to take it off anymore.

Dan Mosley, a partner at BDT & Co.

For Mr. Chouinard, it was even simpler; this offered a satisfactory solution to the issue of succession planning.

“I didn’t know what to do with the business because I never wanted a business,” he said from his home in Jackson, Wyoming. I didn’t want to be a businessman. Now I could die tomorrow, the company will continue to do the right thing for the next 50 years and I don’t need to be here. »

“It Might Actually Work”

In a way, the dispossession of Patagonia is not very surprising coming from Chouinard.

As a pioneer of rock climbing in California’s Yosemite Valley in the 1960s, Mr. Chouinard lived out of his car and ate battered 5-cent cans of cat food.

To this day, he still wears tattered old clothes, drives a beat-up Subaru, and divides his time between modest houses in Ventura and Jackson. Mr. Chouinard does not have a computer or a cell phone.

Patagonia, founded by Mr. Chouinard in 1973, has grown into a company that reflects 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 babysitting, and became famous for discouraging consumers from buying its products. An advertisement for Patagonia in the New York Times on Black Friday that said, “Don’t buy that jacket. »

For decades, the company has donated 1% of its sales primarily to environmental activists working in the field. And in recent years, the company has become more politically active, even going so far as to sue the Trump administration in an effort to protect Bears Ears National Monument.


Bears Ears National Monument stickers at Patagonia headquarters in Ventura, California in 2018

However, as Patagonia’s sales soared, Chouinard’s net worth continued to rise, creating an awkward situation for a misfit who abhors excess wealth.

in the magazine Forbes, I was on the billionaires list, which really pissed me off a lot. I don’t have a billion dollars in the bank. I don’t drive a Lexus.

Yvon Chouinard

The classification Forbesthen the COVID-19 pandemic helped set in motion a process that has been taking place for the last two years and ultimately led to the Chouinards selling their business.

In mid-2020, Chouinard began telling his closest advisers, including Ryan Gellert, the company’s CEO, that if they couldn’t come up with a good solution, he was ready to sell the company.

“One day he said to me, ‘Ryan, I swear if you don’t start taking action, I’m going to get the magazine’s billionaires list. Fortune and start calling people without being asked,” Gellert said. At that moment we understood that he was serious. »

The ideal solution

Now that the future of the Patagonia property is clear, the company will have to realize its grand ambitions of running a profitable business while fighting climate change.

Some experts warn that without the financial involvement of the Chouinard family in Patagonia, the company and related entities could lose sight of their purpose. Although the children are still employed by Patagonia and the Chouinards have enough to live comfortably, the company will no longer distribute profits to the family.

“What makes capitalism successful is that there is a drive to succeed,” said Ted Clark, executive director of the Center for Family Businesses at Northeastern University.

If you remove all financial incentives, the family will have essentially no interest in it, other than nostalgia for the good old days.

Ted Clark, Executive Director of the Center for Family Businesses at Northeastern University

As for how the Holdfast Collective will distribute profits from Patagonia, Chouinard said much of the focus will be on nature-based climate solutions, such as preserving wild lands. As a 501(c)(4) organization, the Holdfast Collective will also be able to leverage Patagonia’s experience in funding grassroots activists, but will also be able to lobby and donate to political campaigns.

For the Chouinards, this answers the question of what will become of Patagonia after its founder’s death, ensuring that company profits will be used to protect the planet.

“I am relieved to have put my life in order,” Mr. Chouinard said. For us, it was the ideal solution. »

This article was originally published in the New York Times.

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