#297 Yvon Chouinard (Patagonia)

24:57That's smart. And then you teach everything, you know, this is Trader Joe's did this exact same thing. If you listen to the episode, I think it It was 188 of Trader Joe. The main driver was not advertising, say, hey, we're Trader Joe's. You can buy stuff here. There's this thing called the Fearless Flyer, which essentially just goes into deep detail about the things they sell. It's educational informational. And then, therefore, if you're reading, the people that have finished that and read the whole thing, they're going to buy the products. And so you see Patagonia uses that exact same idea here.

25:24Using the capabilities of this new underwear as the basis of a system, we became the first company to teach the outdoor community through essays in our catalog the concept of layering. And very much like Steve Jobs uses his own personal taste to decide what products Apple should manufacture, Yvonne does the same thing with Patagonia. He's like, listen, you cannot wait until you have all the answers before you act. I had faith that the product was good and I knew the market. And that concept, that idea, he repeats throughout the book. Let me read. This is something that comes along later as well.

25:53That's just absolutely fantastic. He says, there are different ways to address a new idea or a project. If you take the conservative scientific route, you study the problem in your head or on paper until you're sure there's no chance of failure. He's not going to do that. However, you have taken so long that the competition has already beaten you to market. The entrepreneurial way is to immediately take a step, and if that feels good, take another. If not, step back. Learn by doing. It is a faster process. And what I love here is this is a feeling you and I have probably both experienced, right?

26:21Where he's a reluctant businessman. He never wanted to start a business. But when you start something and people start loving it, that's like the greatest high in the world, and there's like this excitement around growth, right? the fact that the idea is working and he's experiencing that here. From the mid -1980s to 1990s, our sales grew from $20 million a year to $100 million a year. Melinda, that's his wife and co -founder, and I were not personally any wealthier because we kept the profits in the company, but the growth was exciting. And so one of the ways they kept the profits in the company was by insisting on doing things their own way.

26:55So his wife was like, hey, I know what it's like to have children like we are going to pay for and provide child care in our company so if you're working i think they give uh both maternity and paternity leave and they did this like decades before other people did but then not only that when you come back with your baby like you could be working and it's on site so if you want to come down and like breastfeed or if you want to come down and read a story or take a nap with your son or whatever the case is they do that and they just do it because like no one else was doing at the time they said now a lot of uh their suggestions have actually been like put into law, but they're just like, we're doing this because we believe that it's right and we trust our own judgment.

27:31We opened at Melinda's insistence on on -site childcare center. At the time, it was one of only 120 in the country. Today, there are more than 8 ,000. The presence of children playing in the yard or having lunch with their mothers and fathers in the cafeteria helped keep the company atmosphere more familiar, more familial, more like a family, I can't even pronounce that word, more like a family than a corporation. And so as a result of all this growth, we see one of this is one of my favorite parts of the book. It's like he's really he's been in business for like two decades now. And he's still like, do I actually know?

28:04Do I truly know why I'm doing what I'm doing? And we see that like it takes a lot of self -reflection to realize like, oh, maybe I say I do, but maybe I actually don't. So it says we were growing. The company is growing at a rate that if we sustained it, it would make us a billion dollar company in a decade. To reach that theoretical billion -dollar mark, we would have to begin selling to mass merchants or department stores. This challenged the basic design principles that we had established for ourselves as the maker of the best hardware. Can a company that wants to make the best quality outdoor clothing in the world, remember his North Star is all about not the best at a price point, not one of the best, like the best period, right?

28:40So that's what he's talking about here. Can we actually make the best outdoor clothing in the world be the size of Nike? This is one of my favorite sentences I've never forgotten in the five years since I've read the book the first time. Can a 10 -table, three -star French restaurant retain its third star when it adds 50 tables? Can you have it all? This question haunted me throughout the 1980s as Patagonia evolved. He's also being changed because he's a father. He's got two children, and he's realizing, he's like, oh, wait, he's got a ton of friends that have died in these risk sports. up until this point.

29:18But once he had, he has the company and he has his family. He's like, oh, I should, I have to readjust what I'm doing here. So he's like, I continue to practice my MBA theory of management, management by absence. While I wear tested our clothing and equipment in the most extreme conditions of the Himalayas. In 1981, three friends and I set off an avalanche while trying to climb a 23 ,000 foot high mountain in Tibet. We were carried for 1500 feet and stopped 30 feet from an edge of a 300 -foot vertical cliff. One of my friends died from a broken neck. Another had a broken back. I had a concussion and broken ribs.

29:55I had never had much interest in climbing mountains over 25 ,000 feet, and now with this accident having two young children, my interest waned even more. I was the outside guy, responsible for bringing back new ideas. A company needs someone to go out and get the temperature of the world. So for years, I would come home excited about ideas for products, new markets, or new materials. And so what I realized by reading the book the second time is like this constant repetition of simplify, simplify, simplify, comes because it was a mistake that he made by letting it get complicated. So all this, what I'm describing, he was having it at the exact same time.

30:32And he's like, okay, I need to find out, like, I need to know my why. Like, we're growing too fast. This is getting too complicated. I could build a business that I don't want to be in anymore. And his whole thing is like, I just want to be in Patagonia forever. And not only do I want it to be in forever, it's like I want it to live and survive after I'm dead. He ends the introduction saying, hey, I hope the company is here for another 100 more years after I'm gone. Looking back now, I see that we made all the classic mistakes of a growing company. We failed to provide the proper training for our new company leaders.

30:59And the strain of managing a company with eight autonomous product divisions and three channels of distribution exceeded our management skills. Our organization chart looked like a Sunday crossword puzzle. This is about the pain, right? The pain and the struggle and the sleepless nights and the acid stomachs. The company was restructured five times in five years, and no plan worked better than the last one. And so then he realizes, let's try to get a different perspective. They go and talk to this guy. They hire a consultant. And this is actually funny because he's like, okay, we're going to fly down to Florida.

31:28We're going to see this guy named Dr. Michael Kami, who actually ran strategic planning for IBM and was credited with help turning Harvey Davison around. That's how Yvonne had heard about him. so they fly down and they actually meet him and he's a small man in his 70s with a lot of restless energy and he lives on an enormous yacht and he wears a captain's hat and so he's like okay before i could help you i need to know like why you're in business i told him the history of the company and how i consider myself a craftsman who just happened to grow a successful business i told him i'd always had a dream that when i had enough money i'd sail off to the south seas looking for the perfect wave we told him the reason that we hadn't sold out yet and they got a bunch of like acquisition offers and retired was that we were pessimistic about the fate of the world and felt a responsibility to use our resources to do something about it.

32:14Dr. Kami thought for a while and then said, I think that's bullshit. If you're really serious about giving your money away, you'd sell the company for $100 million, keep a couple million for yourselves, and then you'd put the rest in a foundation. That foundation could then give away $6 or $8 million every year. I then told him I was worried about what would happen to the company if I sold out. And then he said, so maybe you're kidding yourself about why you're in business. It was as if the Zen master, it hit us over the head with a stick. But instead of finding enlightenment, we walked away more confused than ever.

32:42And so this goes on page after page after page. But this is one sentence I double underline because it's essentially what he's searching for. I was still wondering why I was really in business. And the crazy, unexpected, surprising way he finds, in case he finds the answer to like his why, he actually decides to involve the rest of the people in his company. He decides, okay, we need to write down, this is very common. You probably have already done this in your business as well. But you write down, you need the written word on what your philosophy is. What are important to you and what are the cornerstones of your business building philosophy.

33:20So you can share with other people in the company. So that is a very un -Ivonne -like thing to do. And yet he got such great value out of it. Because I think some people hear that, oh, it's really skeptical. How helpful could that be? And so what he does, they start writing it down. He said, well, that's not good enough. Like, we're going to write it down. That's like the first step. That's the least we can do. But then we're going to teach. And we're going to teach. And we're going to teach. And we're going to teach philosophy classes, company philosophy classes, everybody else in the company.

33:47Now, why is that important? Because in teaching his employees, his company philosophy, he learned it himself. And of course, it's in his own unique way. I began to lead week -long employee seminars in these newly written philosophies. I realized now that I was trying to do was to instill in my company at a critical time lessons that I had already learned as an individual, as a climber and a surfer and a kayaker and a fisherman. I had always tried to live my life fairly simply. But remember, he just talked about our freaking organizational structure looks like a Sunday crossword puzzle. Like, how did we let this happen?

34:20Doing wrist sports had taught me another important lesson. Never exceed your limits. You push the envelope and you live for those moments when you're right on the edge, but you do not go over. You have to be true to yourself. The same is true for business. The sooner a company tries to be what it is not, the sooner it tries to have it all, the sooner it will die. It was time to apply a bit of Zen philosophy to our business. And so at these company meetings, this is something I never even would think to do. He says, I did know that we had become unsustainable and that we had to look to the Iroquois.

34:49So the Iroquois Native Americans and their seven generation planning. And so, again, his whole thing is like he looks for the long term and he wants his company to last. So at these meetings, he says, we're going to look to the Iroquois and their seven generational planning and not to corporate America as models of stewardship and sustainability. As part of their decision process, the Iroquois had a person who represented the seventh generation in the future. If Patagonia could survive this crisis, we had to begin to make all of our decisions as though we would be in business for 100 years. Teaching the classes also gave me the real answer to Dr.

35:26Kami's question. I knew, after 35 years, why I was in business. True, I wanted to give money to environmental causes, but even more, I wanted to create in Patagonia a model other businesses could look to in their own searches for environmental stewardship and sustainability, just as our pitons and ice axes were models for other equipment manufacturers. I'm going to interrupt this paragraph because when I got there, it made me think of something I heard Jeff Bezos say one time that I think is absolutely fantastic. I talked about Akio Morita, which is the founder of Sony. I think it's episode 102.

36:00Both Jeff Bezos and Steve Jobs, among a bunch of other entrepreneurs. But both Jeff and Steve are on record about learning from Akio and actually studying his career and using those ideas in building their company, right? Which is the entire thesis of what you and I are doing every week on Founders. So this is Jeff Bezos on what he learned from Akio Morita and how it influenced the building of Amazon. This is what Jeff said. right after World War II, Akia Morita, the guy who founded Sony, made the mission for Sony that they were going to make Japan known for quality. And you have to remember that at this time, this is a time when Japan was known for cheap copycat products.

36:28And Morita didn't say that he was going to make Sony known for quality. He said, we're going to make Japan known for quality. He chose a mission for Sony that was bigger than Sony. Is that not? And now I'm interrupting an interruption to tie this back to what he just said. He's like, he just picked a mission bigger than Patagonia. Let's go back to what Jeff is saying. He chose a mission for Sony that was bigger than Sony. And when we talk about the earth's most customer -centric company, we have a similar idea in mind. We want other companies to look at Amazon and see us as a standard bearer for obsessive focus on the customer as opposed to obsessive focus on the competitor.

37:06Back to where we were in the book, I remembered again how I had become a businessman in the first place, that I had come home from the mountains with ideas spinning in my head on how to improve each piece of clothing and equipment I used. Teaching the classes, I realized how much Patagonia as a business was driven by its high quality standards and classic design principles. Having our philosophies in writing, as well as the shared cultural experience of the classes, played a critical role in our turnaround. And so during this crisis, I think this is the last serious crisis the company had. I don't think they've had another serious crisis like this in the next 25 years.

37:43But what he realizes is like, oh, we have to... The lessons and the learnings and the improvement of our capabilities that came out of this crisis were so important. We have to maintain this... If there's no stress, we're going to create stress. We're going to induce stress. He has this concept I've never heard of before, which is excellent. It's called Yarek. I'm going to read it to you. Before I read it to you, I'm going to tell you... I'm going to quote Yvonne later in the book. and he talks about, he says this at the beginning of the book, he says this towards the end. The lesson to be learned is that evolution, what he calls change, right, does not happen.

38:14Change does not happen without stress and it can happen quickly. Just as doing wrist sports will create stresses that lead to a bettering of oneself, which is why he climbs a mountain, does all the crazy stuff he does in to begin with, right? So should a company constantly stress itself in order to grow. And so he talks about it's the leader's, the founder and the leader's role to create stress even if there isn't. so your company is constantly evolving and changing and growing. He took this concept because when he was like a young boy, he was like 12 years old, 13 years old in California, he was obsessed with falconry.

38:45I didn't even know falconry was a thing before I read this book, to be honest with you. And so he then takes this idea, just like he took an idea from the Iroquois, the Native Americans, and applied it to his business. He's like, oh, I have a lesson from falconry that we can apply to the company. And so I just wrote, I love this concept, YARAK. It is Y -A -R -A -K. And so it says, for the most part, the big problems have been solved and there were no crisis except those that were invented by management to keep the company in Yarak. For the most part, the big problems have been solved and there were no crisis after what we just went through except what was invented by the management to keep the company in Yarak.

39:19What is Yarak? Yarak is a falconry term, meaning when your falcon is super alert, hungry, but not weak and ready to hunt. So Yvonne is telling us, keep your company super alert, hungry, but not weak, and ready to hunt. That is one of my favorite ideas in this entire book, and it was something I missed. I missed the importance of that the first time reading the book. And in a few weeks for episode 300, I'm going to reread James Dyson's autobiography, still the number one book recommendation, the first autobiography he wrote when he was a younger man, when he was like 45, not the one he wrote when he was like 75 or 70.

39:55But what's fascinating to me is that the organization of Yvonne's book is very similar to James, where he'll line out, and some of these sections are specifically titled, like, hey, this is my production philosophy. This is my marketing philosophy. This is my distribution philosophy. This is my financial philosophy. This is why it's so important to not just listen to this podcast about it, but actually read the book and buy the book and use it as a reference. And so this goes back to where I just have to repeat a bunch of things that are really, really important to me. They've stuck out to me for years, something I want to keep in my mind.

40:27It just goes back to quality is number one. Quality, simplicity, long -term thinking, being a misfit, being a pirate. These are very important lessons from the book that I think can be applied in infinite situations. And forever, make the best product is a cornerstone of our business philosophy. Striving to make the best quality product is the reason we got into business in the first place. We are a product -driven company. We are not satisfied making second best clothing. Make the best is a difficult goal. It does not mean among the best or best at the particular price point. It means make the best, period.

40:59I actually have a reminder of that saved on my phone. It's actually a GIF of Jay -Z doing this interview probably 10 years ago. And he says, what am I here for? To be second best? I don't think so. And then Yvonne just has fantastic one -liners. This is one of my favorite lines, one of the best lines in the book. The more you know, the less you need. Talks about the importance of keeping your product line simple. Few of us have the time, patience, or knowledge to order from a 12 -page Chinese restaurant menu or to choose among 50 pairs of seemingly identical skis in a ski shop. People have too many choices these days.

41:31They are tired of constantly having to make decisions, particularly when it takes major effort to make intelligent decisions. Too much choice brings unhappiness. And really what he's saying is part of the value that you're providing is making the decision for the customer. You have the time and the knowledge and the specific knowledge to make intelligent decisions. They do not. They're busy with other things. They're busy with their own work. They're busy with raising their kids. They're busy with their own life. Part of the value that you provide is making the decision for your customer. And I know I've already said this one time, but it is really important to repeat it.

42:03I wrote when I read this the second time, I feel this in my soul. Difference and retention of total control. That is a quote from James Dyson. I feel this in my soul is a quote from me. When I die and go to hell, the devil is going to make me marketing director for a cola company. I'll be in charge of trying to sell a product that no one needs is identical to its competition. It can't be sold on its merits. I'll be competing head on in the Cola Wars on price distribution, advertising and promotion, which would indeed be hell for me. Remember, I'm the kid who couldn't play competitive games. I'd much rather design and sell products so good and so unique that they have no competition.

42:34And so even though Yvonne definitely marches to the beat of his own drummer and is dancing to music, most of us can't even hear. He's still one thing he shares with, oh, I would say everybody that you and I study this podcast is like when you listen to the podcast you read the books it's like these people are going to hold you to unbelievably high standards and so he is not with any kind of excuses reading this book like when i'm on this page and i'm thinking about this and i'm actually like making i'm underlining and i'm taking the notes and i'm like not skipping to the next page and trying to get through the book as quick as possible i'm thinking it's like do i do any of this are there parts of my life whether it's professional personal or otherwise it's like where I am listening to bullshit excuses, where I would be better served having Yvonne's perspective on this than my own.

43:19And this is an example. He just talks about some common examples and excuses that he hears from other companies. He's like, this is not good enough. Your quality level is too low. It is not acceptable. So he says, or you hear something like, I wish I could help you with that, but I wish we could do it, but our insurance policy just won't allow it. And so he's gonna say, he's gonna give me an example of what you'd hear, and then he's gonna say what he would say. So I wish we could do that, but our insurance policy won't allow it. Why not just do it anyways? Or get another insurance policy. Or don't even have insurance.

43:47Get out of the kitchen if you cannot stand the heat. Here's another example. We can't get any more fabric or aluminum or whatever. So substitute another material. Try another mil or 50 or 100 other mils. Try mils in other countries. Call a competitor and find out where they get their fabric. Another example. I've called and called and called and I can't get through. How many times have you really called? Three or four times? Call 20 times. Try an email or a registered letter or catch him at home with a 5 a .m. wake up call. Here's another example of an excuse. I didn't have the time or I've been too busy to answer your letter or to return your call or to write a weekly report or to clean my desk.

44:23Whatever. These are dishonest excuses. What the person really means is that the job didn't get done because it had the lowest priority. And in fact, he may never return your call because he really doesn't want to. People do what they want to do. And lastly, impossible. This is the lamest of the lame excuses. Difficult maybe, or impractical, or too expensive, but rarely is anything impossible. And then another reason I recommend this book so highly is because he just conveys these ideas, and it doesn't take a long time. If he can convey the idea in a sentence or a paragraph, he's going to be able to convey that idea in a sentence or a paragraph and not take an entire chapter.

44:57And so this jumped out at me. This is something I missed the first time, where he's like, oh, high -quality people who he's targeting with his products, right? He's like, high -quality people want specialization. This is going to echo what Johnny Ive learned about Steve Jobs when Steve Jobs came back to Apple in the late 1990s. He says, by carrying a little bit of this and a little bit of that, these stores, meaning his competitors, have evolved into non -specialty stores. That would be okay if your average outdoor store customer had average taste and an average mentality. But we are talking about smart people with money and not much free time.

45:30In most cases, the consumer has far outgrown the capabilities of average outdoor stores to service them. And you can summarize that entire idea with high quality people want specialization. This is a quote from the biography of Johnny Ive that I read back on Founders 1 episode 178. Jobs didn't want to compete in the broader market for personal computers. Yvonne does not want to compete in the broader market for outdoor wear or outdoor activities. He is specialized, right? These companies competed on price, not features or ease of use. Jobs figured theirs was a race to the bottom. Instead, Steve argued there was no reason that well -designed, well -made computers, just like Yvonne is arguing here, that well -designed, well -made clothing couldn't command the same market share and margins as a luxury automobile.

46:17A BMW might get you to where you're going in the same way a Chevy that costs half the price does, but there will always be those who will pay for a better ride in a sexier car. Why not make only first -class products with high margins so that Apple could continue to develop even better first -class products? And then he talks about his marketing philosophy. And I actually realized there's ideas spread over probably 50 different pages that all kind of relate to each other. So I'm going to get into nonfiction marketing in a minute. And really, I think an important part of the nonfiction marketing is that teaching.

46:49Like if you teach the sales, if you focus on teaching your customers, sales will take care of themselves. I mentioned exactly what Trader Joe's did earlier with the Fearless Flyer. They took ideas. In fact, they talked about they took ideas from David Ogilvie like 20 years earlier and just used his ideas in that. Like the more you teach, the more you sell or the more you tell, the more you sell, I think is the Ogilvie quote. So he's talking about the mail order catalog, but he says the mail order catalog has always been our soapbox and enables us to transmit information about Patagonia's philosophies and products directly.

47:20My first principle argues that selling ourselves and our philosophy is equally important to selling the product. So his form of selling there is education. And so they're doing that not only on their own properties, on their website, on their catalogs, in their stores, but then they go and spend money, like enabling other people to teach their customers. Patagonia catalogs have printed field reports. These are brief essays about experiences in the wild by writers and friends. And these are like some famous writers and outdoorsmen. There's like six listed here. And in addition to that, we have commissioned and printed environmental essays and documentaries.

47:54And then you list another six or seven other people as well. He's just like, OK, that is a form of education. You could also argue it's a form of, you know, advertising and public relations. But the education and the teaching comes first. And if you do the education teaching first, then the sales will come naturally. Later on, this is all spread over many, many pages. I did not understand this the first time I read the book. But you see that pop up. And I'm glad I left notes on all these different pages and reread them last night before I sat down to talk to you today. And I was like, oh, shit, there's a pattern I missed.

48:21Our approach to public relations is aggressive. Advertising, as I mentioned, rates dead last as credible source of information. His whole point is just don't advertise. Say, hey, this is what I have. Buy it from me. His point is if you teach, inform, and inspire, and you do so relentlessly, the sales will follow. Teach, inform, and inspire. Do so relentlessly, and the sales will follow. That's an excellent idea. And it ties back to how he opens the marketing philosophy portion of the book. on this is an idea I did not miss the first time and I love it. It's called nonfiction marketing. And I bet everything on this, that people crave authenticity.

48:55We hate this fake shit that companies do. Our branding efforts are simple. Tell people who we are. We don't have to create some fictional character like the Marlboro Man or a fake responsible caring campaign like Chevron's We Agree advertising campaign. Writing fiction is so much more difficult than nonfiction. Fiction requires creativity and imagination. Nonfiction deals with simple truths. Patagonia's image arises directly from our values and passions of its founders and employees. You cannot make it into a formula. In fact, because so much of the image relies on authenticity, a formula would destroy it.

49:29Amen. Without a formula, the only way to sustain an image is to live up to it. Our image is a direct relation of who we are and what we believe. and I would also argue this authenticity, right, is a form of resourcefulness. When they started doing this, they would take like pictures, like, you know, he's producing clothing for God's sake. So you take pictures or you get models, you hire people or in a case where you didn't have any money to be friends and they would just snap a picture. And he's like, yeah, but that's like, it's a staged photo. This doesn't make any sense. And so there's the form of resourcefulness is the fact that humans crave authenticity.

50:02They respond to it. And then they're not necessarily just identifying with the company, but they're like, oh, like they're create your customers. If you have like, if you are actually an authentic brand and company, your customers want to help you. And so the form of resourcefulness, how this all ties together is the fact that like Yvonne had an idea one day. He just popped into his head. He's like, well, we're spending all this money. We're hiring models and we're taking photos and everything. And this doesn't really look good. It's not really authentic. What if we just put a line, they put a line in their catalog and says, we're going to collect photos from our customers of real people doing real things.

50:34We put a notice in our catalog for our customers to capture a Patagoniac. I guess it's a line for the people that love Patagonia, the brand. And we were inundated with photo submissions from our customers and photographers. Photos of real people doing real things that they gave you for free. So that's what I mean about the resourcefulness. I mean, you might have 2 ,000 and he only needs four or five. So you know they're going to be high quality because he gets so much inbound from that. It's free. And your customers want to do that because they're responding to your authenticity and your nonfiction marketing.

51:06so then Yvonne takes his love of simplicity and applies it to his financial philosophy for running the business and he says our mission statement says and this is also going to remind me of something that Steve Jobs said as well our mission statement said nothing about making a profit in fact our family considers our bottom line to be the amount of good that the business has accomplished over the year it's still family business I think he just gave it uh ownership to like a trust I'm not sure if that takes place uh if it already has taken place or if it happens when he dies He says, however, a company needs to be profitable in order to stay in business and to accomplish all its other goals.

51:36And we do consider profit to be a vote of confidence that our customers approve of what we are doing. We have to be profitable because the profit keeps the company in business, right? And he has a funny line here. It's okay to be eccentric. And he knows his ideas on business are eccentric. So he says, it's okay to be eccentric as long as you're rich. Otherwise, you're just crazy. At Patagonia, making a profit is not the goal. But as the Zen master would say, profits happen when you do everything else right. There's this fantastic book called In the Company of Giants. I think it's episode 208 of Founders.

52:07It's printed in 1987. It's like an interview with like 16 technology company founders. And Steve Jobs said in that book, I was taught by some wise people that if you manage the top line of your company, that your customers, your products, your strategy, the bottom line will follow. But if you manage the bottom line of the company, meaning finance first and forget about the rest, you'll eventually hit the wall because you take your eyes off the prize. And so then he ties in the fact that if you have a high quality product and you control your costs, then you can't help but make a profit. Our profits are directly tied to the quality of our work and our product.

52:35A company that doesn't take quality seriously will attempt to maximize profits by cost cutting, increasing sales by creating artificial demand for goods and hammering the rank and file to work harder. Quality, not price, has the highest correlation with business success. That's so important. Let's repeat it twice. Quality, not price, has the highest correlation with business success. companies with high product and service quality reputation have an average return on investment rates 12 times higher than their lower quality and low price competitors. Whenever we are faced with a serious business decision, this is the most important sentence in this entire section in my opinion, whenever we are faced with a serious business decision, the answer almost always is to increase quality.

53:16And to prove the point that repetition is the mother of all learning, he says it again, we never wanted to be a big company. We want to be the best company. and it is easier to try to be the best small company than the best big company. We have to practice self -control. Our goal is to have no debt, which we have achieved. A company with little debt or with cash in the kitty can take advantage of opportunities as they come up or invest in startups without having to go further in debt or find outside investors. That reminded me of what Charlie said when I had, Charlie Munger said when I had dinner with him, he said that him and Warren and Berkshire in general had made a ton of money because they always had cash and they could act fast.

53:52and then just to wrap up this section, this importance of quality, I actually underline this and I text my friend Rob Moore, who's the co -founder of the Human Lab podcast, because I'm always thinking about who are the smartest players on the board and in terms of quality and execution, not only the quality of their product, but also how they think about their business, they're leading in this profession. And I've talked to them enough that it's like, oh, this is clearly how I'm trying to think and this is how they already think. I can imagine any company that wants to make the best product of its kind, being staffed by people who do not care passionately about the product.

54:27Amen. At the top of this page is one of my all -time favorite quotes in general. This could be, if you had to choose a North Star, a quote as a North Star, this is a fantastic one to get the most out of life. A master in the art of living draws no sharp distinction between his work and his play, his labor and his leisure, his mind and his body, his education and his recreation. He hardly knows which is which. He simply pursues his vision of excellence through whatever he's doing and leaves others to determine whether he is working or playing. To himself, he always appears to be doing both. That's how I feel about Yvonne.

54:57I think Yvonne nailed that. And then we go back to this idea, which I absolutely love, is the fact that he gets all these lessons on how to run his business from reading books, and they're not even books about business. So he's reading this book called The Beak of the Finch by this guy named Jonathan Wiener, and it has this idea where it's like a theme throughout the book where he feels change is opportunity, and that if your company isn't undergoing stress, you actually need to induce it because that's how you grow. So he says in his book, Jonathan Wiener talks about an insect that was found preserved in amber.

55:30This specimen is millions of years old and is identical in appearance to that specimen or that species living today. With one big difference, the present day insect has developed the ability to shed its legs and regenerate new ones after touching plants covered with pesticides. The lesson to be learned is that evolution and he puts in parentheses change. The lesson to be learned is that change does not happen without stress and it can happen quickly. You should not see change as a threat, rather as an opportunity to grow and evolve to a higher level. A company needs to constantly stress itself in order to grow.

56:06Our company has always done its best work whenever we had a crisis. When there is no crisis, the wise leader or CEO will invent one, not by crying wolf, but by challenging the employees with a change. If you don't move now, then you might not be able to move when a real crisis happens. Teddy Roosevelt said in Pleasant Peace and Security, how quickly the soul in a man begins to die. And then he reiterates that they're doing so to make the highest quality product, to make a business that lasts over 100 years and to use the resources to fight this global ecological crisis that is that he goes into much detail in the book.

56:42and then there's just this excellent quote that I've never heard before and wait to get to the last line. If you want to die the richest man, then just stay sharp. Keep investing. Don't spend anything. Don't eat any capital. Don't have a good time. Don't get to know yourself. Don't give anything away. Keep it all. Die as rich as you can. But you know what? I heard an expression that puts it well. There's no pocket on that last shirt. And then Yvonne leaves us with some parting advice. Adapt or die. When I look at my business today, I realized one of the biggest challenges I have is combating complacency.

57:16I always say we're running Patagonia as if it's going to be here 100 years from now, but that doesn't mean we have 100 years to get there. Our success and longevity lie in our ability to change quickly. Continuous change and innovation requires maintaining a sense of urgency. This is a tall order, especially in Patagonia, seeming laid back corporate culture. In fact, one of the biggest mandates I have for managers at the company is to instigate change. It is the only way we're going to survive in the long run. It's the same in nature. Nature is constantly evolving, and the ecosystem supports species that adapt either through catastrophic events or through natural selection.

57:49A healthy environment operates with the same need for diversity and variety evident in successful businesses, and that diversity evolves out of a commitment to constant change. Our current landscape is filled with complacency, be it in the corporate world or in the environmental front. Only on the fringes of an ecosystem, those outer rings, do evolution and adaptation occur at a furious pace. The inner center of the system is where the entrenched, non -adapting species die off, same for startups and older businesses, older unchanging businesses, doomed to failure by maintaining the status quo.

58:27Businesses go through the same cycles. Conventional corporations are at the center of the ring and eventually they will die off through either their own misdeeds or catastrophic events such as dismal economic climates or unforeseen competition. Only those businesses operating with a sense of urgency, dancing on the fringe, constantly evolving, open to diversity and new ways of doing things are going to be here 100 years from now. Adapt or die. And that is where I'll leave it for the full story. Highly recommend buying the book. People always ask me to make like a top 10 list, which is so hard to do because I love all the books in general, but all the books that I cover, I would have to imagine if I did ever have like a permanent top 10, I think this book would be in it.

59:17That's how much I recommend. There's just a ton of interesting ideas and prompts for your own thinking in the book. So if you buy the book using the link that's in the show notes on your podcast player. It's also available at founderspodcast .com. You'll be supporting the podcast at the same time. If you want to join my free email newsletter, I'll email you the top 10 highlights from every book that I read. That link is down below. And finally, another way you can support the podcast is by joining Founders Premium, where I make episodes on questions that I receive from subscribers. That link is down below and available at founderspodcast .com, along with everything else.

59:51That is 297 books down, 1 ,000 to go. and I'll talk to you again soon.