Patagonia: How Values Create Value

Image credit: Dave Dugdale / CC BY-SA 2.0

Patagonia is something of a unicorn in the corporate world. Both literally (in business terms at least), in that it’s a private company valued at around $1 billion, but also in the rare animal it represents among its competitors. The brand embodies perfectly what economist John Kay refers to as ‘obliquity’. That is, achieving fame and fortune not by chasing profit, but through the pursuit of genuine interests and passions. Success, in other words, comes as something of an afterthought, and often via highly unorthodox business practices. Had Kay not done so, Patagonia might well have written the book on the subject.

Like many of history’s great companies, Patagonia grew out of the obsessions of its founder, Yvon Chouinard. He started mountain climbing in 1953 when he was 15 and would go on to scale peaks from Yosemite to Yellowstone to the Andes mountains in the region that would share the name of his future outfit. 

Yvon Chouinard and fellow climbers
Yvon Chouinard (centre left) along with fellow climbers T.M. Herbert, Royal Robbins, and Tom Frost
Image credit: Tom Frost / CC BY-SA 3.0

But before Patagonia rolled around, Yvon started a climbing gear venture called Chouinard Equipment when he was just 19 years old. Unsatisfied with the equipment he could get his hands on at the time, Chouinard bought a disused coal forge and taught himself blacksmithing. He started making steel pitons (the spikes that climbers hammer into rockface) and sold them for $1.50 each out the back of his car as he travelled around, climbing and surfing as he went.

Young Yvon Chouinard
Image credit: Peter Stevens / CC BY 2.0

By 1970, with the help of Chouinard’s business partner and fellow climber Tom Frost, Chouinard Equipment had become the biggest supplier of climbing equipment in the United States. But its founder was unhappy. Their pitons were causing substantial damage to rock faces, disfiguring the very thing most valued by any climber. So, in a move that might well have pulled the rug out from under his livelihood, Chouinard stopped producing his signature product and instead worked on developing a more environmentally sound alternative. It worked they created light-weight aluminium chocks that could be wedged into existing crevices. Within months of their release, these had replaced pitons as the climbing tool of choice. It was the first time that the company that would become Patagonia put environmental concerns before profit only to achieve greater success. It’s a move that set the tone for their entire business strategy to this day.

1970 is also when clothing first enters the picture. On a climbing trip in Scotland, Chouinard bought a regulation rugby shirt and found that the same rugged construction that was made to take a beating on the rugby field worked perfectly for the rigours of climbing. The collar was particularly useful as it stopped slings from cutting into one’s neck. When his friends back in the States eagerly asked where they could get some, Chouinard started making his own to keep up with demand. 

Clothes were initially intended to supplement the hardware business, but within two years Patagonia’s clothing line had grown to include cagoules, gloves, hand-knit reversible beanies, and more. Soon they started working with synthetic materials that could provide insulation while climbing without absorbing as much cotton as wool did, which is what birthed their iconic fleeces. They pioneered a range of synthetic alternatives that taught outdoors people to layer more efficiently and (by the time the 1980s rolled around) add some flashy colours to their formerly drab and austere get-up.

Man wearing a blue Patagonia jacket
Image credit: Matt Gross on Unsplash

All things were coming up Patagonia. During the ’80s, the company went through a period of rapid expansion that ranked them among the fastest growing private companies around. But, when a recession hit in 1991, Chouinard had to lay off 20 percent of his workforce to keep the business afloat. It was a pivotal moment that had a lasting impact on how the business is run. From then on, Patagonia would insist on thinking small, staying private, and focussing on their core customers. 

It gelled with their environmental priorities too. The list of Patagonia’s climate-focussed concerns is seemingly endless. Since 1986, they’ve donated 10% of profits, or 1% of sales (whichever is biggest) to grassroots environmental initiatives. They’ve sourced only organic cotton since 1996 and use recycled materials across their product range. 2012 saw the launch of their Worn Wear initiative, which allowed customers to trade in their old Patagonia, either having it repaired or used to make future products in exchange for credit. The list goes on and on. 

Man wearing an orange Patagonia jacket
Image credit: Jay Miller on Unsplash

Even a recent surge in their public profile hasn’t changed things. As Patagonia has become unprecedentedly fashionable over the last few years, the brand itself seems unperturbed. Apparently keeping in mind the lessons they learnt long ago, there have been no attendant high-profile collaborations, no surge in numerous and novel garments. Instead, the company’s California headquarters continues to refer to fashion as ‘the F word’. Which means, if you’re dying to get your hands on a pair of Baggies, you might have to wait a while. It’s OK, though all the more time to take a walk or catch a wave.

* This post may contain affiliate links. If you buy something using them, we get a small percentage of the sale at no cost to you. More info at our affiliate policy.