🌲Patagonia: Billionaire Owner Just Gave Away His Entire Company

Welcome to The Level Ups. Modern business news for the future business leader (explained in plain-Jane English).

It’s Thursday, and climate activists have never been happier.

• Why did he give away his $3B company?

• Who did he give it to, and how does it work?

• What does this mean for the climate and for business moving forward?

Let’s get into it.

Estimated Reading Time: 2 minutes & 20 seconds.

Yvon Chouinard Donates Patagonia to Fight Climate Change.

He literally gave away the entire company.

No longer the owner, Chouinard - who always felt “queasy” about being a billionaire - had already been looking to make a greater impact.

Patagonia was donating 1% of profits to the cause already. Now it's 100%.

But why do this?

The company’s announcement is clear: “We want Earth to be our only shareholder.”

Chouinard, who’s 83 now, will be fine financially regardless (he’s worth ~$1.2B).

His age that makes me believe it’s in good-faith in this move.

• He knows his children and grandchildren (if he has any) will be fine.

• It’s not like he needs the money.

• A person’s senior years inspire a “f*ck it, let’s do it” attitude.

A Boss Move - But Not A Surprise

Patagonia does have a history of doing the right thing. They sued Donald Trump to protect monuments in Utah, and told people not to buy their jackets (it wasn’t sustainable).

Oddly enough, both of those moves boosted sales. Expect this announcement to do the same.

What makes it a boss move is not just the DGAF attitude about giving away billions.

Yvon does so while other mega-rich business owners give away shares in the company to weasel out of paying taxes.

Would I give away a company worth $3B? No. But I can see why Yvon did it. It’s a boss move and an inspiration.

How Does One Just “Give Away” A Multi-Billion Dollar Company?

Here’s how it works:

• Effective immediately, 100% of Patagonia’s profits (after re-investment in the business) will be transferred to Holdfast Collective. That’s about $100M per year.

• Holdfast Collective also gets 100% of non-voting shares.

• Yvon’s family then created the Patagonia Purpose Trust to protect the company’s values and transferred 100% of Patagonia’s voting shares into it.

• Ryan Gellert will remain as CEO. The company will continue to operate like it did before.

What’s crazy is how the process of creating and transferring those voting shares to the Trust will cost the family $17.5M in “gift taxes.”

What’s Next?

It’s common knowledge that younger audiences make purchases based on values and brands. It’s going more in this direction with each decade.

A few thoughts:

• No company that fake-preaches sustainability will ever compete with Patagonia again.

• Patagonia’s sales will exceed all previous expectations.

• Future environmentally focused companies will rarely do this (if ever).

• But, they will have announcement after announcement about what they do for the environment.

Patagonia proves that the more you talk and act for the environment (even if controversial), the better.

Expect many companies to do the talking but not act right.

Maybe I’m a cynic, but it’s so rare for a company to do something like this that I don’t think it’ll happen again. At least not for another 5-10 years.

That’s what makes this so special.

Congratulations to Yvon, the Chouinard family, and Patagonia for the incredible move.

See you tomorrow!

Darwin

PS - quick correction. In my previous email, I misdescribed EBITDA. The D stands for depreciation, not debt. Sorry about that. Thanks to the readers who pointed that out!