Patagonia’s Go-to-Market Strategy as a Startup
Patagonia logo from www.patagonia.com
Synopsis — Today, virtually every company worth its salt is focused on sustainability, culture, and brand authenticity, but Patagonia’s founder, Yvon Chouinard, has been living these tenets from inception. In fact, he’s been as hardcore of an outdoorsman as one can find beginning with his childhood in Los Angeles. After establishing a successful climbing hardware company, Chouinard pivoted into clothing and created Patagonia. The entire book is worth reading, but the following excerpts from Chouinard’s autobiography, Let My People Go Surfing: The Education of a Reluctant Businessman, details how one of the world’s most environmentally conscious brands got off of the ground.
Market — What was happening in the world that created the business opportunity?
By 1970 Chouinard Equipment had become the largest supplier of climbing hardware in the United States. It had also started down the path to becoming an environmental villain. The popularity of climbing, though growing steadily, remained concentrated on the same well-tried routes in leading areas such as El Dorado Canyon near Boulder, the Shawangunks in New York, and Yosemite Valley. The repeated hammering of hard steel pitons, during both placement and removal in the same fragile cracks, was severely disfiguring the rock. After an ascent of the Nose route on El Capitan, which had been pristine a few summers earlier, I came home disgusted with the degradation I had seen. Frost and I decided we would phase out of the piton business. This was to be the first big environmental step we were to take over the years. Pitons were the mainstay of our business, but we were destroying the very rocks we loved.
As we began to make more and more clothes (wool Chamonix guide sweaters, classic Mediterranean sailor shirts, canvas pants and shirts, and a technical line of rainwear — a predecessor to Gore-Tex — called Foamback), we needed to find a name for our clothing line. Chouinard was suggested at first. We already had a good image; why start from scratch? We had two reasons against it. First, we didn’t want to dilute the image of Chouinard Equipment as a tool company by making clothing under that label. Second, we didn’t want our clothes to be associated only with mountain climbing; we had a vision of a greater future than that. The name Patagonia soon came up in our discussions. To most people, especially then, Patagonia was a name like Timbuktu or Shangri-La — far-off, interesting, not quite on the map. Patagonia brings to mind, as we once wrote in a catalog introduction, “romantic visions of glaciers tumbling into fjords, jagged windswept peaks, gauchos and condors.” Our intent was to make clothing for those rugged southern Andes/Cape Horn conditions. It’s been a good name for us, and it can be pronounced in every language.
Product/Service — What was their unique value proposition?
Then came my first idea for clothing. In the late sixties, after crag climbing in the Peak District in England, I stopped by an old Lancashire mill that contained the last machine left in the world that still made a tough, superheavy corduroy cloth. The mill dated back to the Industrial Revolution, when it had been water-powered. Back then, before denim, workmen’s pants used to be made of corduroy because its tufted wales protected the woven backing from abrasion and cuts. I thought this durable cloth would be great for climbing. Ordering up some fabric, I had some knickers and double-seated shorts made. They sold well to our climbing friends, so I ordered some more.
Whenever we needed more corduroy, seven old men had to come out of retirement to crank up their machine at the mill. They warned us that when the hundreds of knife blades that cut the corduroy’s wales got dull, it would be too expensive to sharpen them, and that would be the end of their machine. As it turned out, we sold these knickers and shorts in small but steady numbers for ten years before the knives finally dulled and the loom was retired.
The next idea I had for clothing was the one that really took off. In the late sixties men did not wear bright, colorful clothes. “Active sportswear” consisted of your basic gray sweatshirt and pants, and the standard issue for climbing in Yosemite was tan cutoff chinos and white dress shirts bought from the thrift store. Then, on a winter climbing trip to Scotland in 1970, I bought myself a regulation team rugby shirt to wear, thinking it would make a great shirt for rock climbing. Overbuilt to withstand the rigors of rugby, it had a collar that would keep the hardware slings from cutting into my neck. The basic color was blue, with two red and one yellow center stripe across the chest. Back in the States I wore it around climbing, and all my friends asked where they could get one.
We ordered a few shirts from Umbro, in England, and they sold straight off. We couldn’t keep them in stock. Soon we began ordering shirts from New Zealand and Argentina as well. I began to see clothing as a way to help support the marginally profitable hardware business. At the time we had about 75 percent of the climbing hardware market, but we still weren’t making much of a profit.
By 1972 we had taken over the abandoned meatpacking plant next door and begun to renovate its old offices as a retail store. We had added to our line polyurethane-coated rain cagoules and bivouac sacks from Scotland, boiled wool gloves and mittens from Austria, and hand-knit reversible “schizo” hats from Boulder. Plus Tom Frost had come up with some backpack designs, so we soon were running a full-on sewing operation in the loft above the old abattoir.
In the loft one day I decided to make myself a pair of bomber shorts, with a double seat that formed enormous back pockets. I made the patterns and cut the cloth. My foreman, Choong ok Sunwoo’s bride, Young Sun, sewed them up out of number ten canvas duck, the fabric used for lawn furniture. To get the thread through, she had to use a walking foot machine, the one we used for sewing leather accessory patches on our packs. When she finished, she placed them on the table and laughed at the way they “stood up” all by themselves. But after hard use and about ten or twenty washings they were broken in and pretty comfortable. They soon became our second big clothing seller. We still make Stand Up Shorts, but out of softer material.
Multifunctional technical clothing became our new focus once we survived our first major cash-flow crisis (by finally securing a line of revolving credit with a bank). Our first technical product had been the Foamback jacket, an advance over the polyurethane rainwear of the time, which condensed badly on the inside. We applied a thin layer of foam and a scrim to the inside of the nylon shell, which added warmth and reduced condensation. The design work led us to tackle the larger problem of how to dress for the high mountains, where unpredictable weather can be life-threatening. At a time when the entire mountaineering community relied on the traditional, moisture-absorbing layers of cotton, wool, and down, we looked elsewhere for inspiration — and protection. We decided that a staple of North Atlantic fishermen, the synthetic pile sweater, would make an ideal mountain sweater because it insulated well without absorbing moisture.
Improving pile was a gradual process. We worked closely with Malden to develop first a soft bunting fabric, an imitation wool that pilled less, and eventually Synchilla, an even softer double-faced fabric that did not pill at all. With Synchilla, we learned an important lesson in business. While Malden Mills’ easier access to financial capital made many of the innovations possible, the fabric would never have been developed if we had not actively shaped the research and development process. From that point forward, we began to make significant investments in our own research and design departments. Our fabric lab and our fabric development departments, in particular, became the envy of the industry. Mills were eager to work with us on developing projects, because they knew that if Patagonia helped them, the developed fabric would likely be a better one.
In the early 1980s, we made another important shift. At a time when all outdoor products were tan, forest green, or, at the most colorful, rust, we drenched the Patagonia line in vivid color. We introduced cobalt, teal, French red, mango, seafoam, and iced mocha. Patagonia clothing, still rugged, moved beyond bland-looking to blasphemous. And it worked. The rest of the industry spent the better part of a decade catching up.
The runaway popularity of bold colors and the growing appeal of technical fabrics like Synchilla created a dramatic shift in our fortunes. The Patagonia label had now become as much of a fad as the rugby shirt, and our popularity extended well beyond the outdoor community to fashion consumers. Although we devoted most of our selling efforts and catalog space to explaining the technical merits of layered clothing for hard-core enthusiasts, the best-selling pieces were our least technical: Baggies beach shorts and shelled Synchilla bomber-style jackets. From the mid-1980s to 1990, sales grew from $20 million to $100 million.
Niche — What market segment provided their first customers?
Early on, Patagonia designed its products for its employees and their friends, the most ardent of outdoor enthusiasts. Still to this day, the company sets out to serve a very specific customer profile, which helps it stay on course.
Are We Designing for Our Core Customer? All our customers are not equal in our eyes. There are indeed some we favor more than others. These are our core customers, those for whom we actually design our clothes. To understand this more clearly, we can look at our customers as if they existed in a series of concentric circles. In the center, or core circle, are our intended customers. These people are the dirtbaggers who, in most cases, have trouble even affording our clothes. A couple of specific examples will help.
Audrey Sutherland was an amazing Hawaiian grandmother. Her life revolved around long inflatable kayak trips — solo. She’s logged more than eight thousand miles along the coasts of Alaska and British Columbia, seventy-seven hundred of which were solo, and thousands more miles in the Greek isles, Scotland, and Hawaii. About paddling these trips alone she said, “You become so much more part of the natural world around you; you’re communicating as if you were a rock or bush or a fish. You become part of the elements.” Audrey’s other advice: “Don’t spend money on gear. Spend it on airplane tickets.” Even in her eighties she continued to do serious trips in the North Pacific. Audrey died in 2015.
Steve House is an internationally acclaimed alpinist who among his list of accomplishments did a first ascent with Vince Anderson of the Rupal Face on Nanga Parbat in Pakistan. He has written several books, the last of which defines the training needed to accomplish the level of alpinism that he pursues. Our climbing, surfing, fishing, and trail running ambassadors and the hundreds of professionals on our Pro Purchase Program (which provides our product at a preferred rate to exceptional athletes and working outdoor professionals) are among the best in the world at what they do. They are the innovators, and their actions define the state of the art in their fields.
Founders — What was special about this team?
9 examples of what made Chouinard unique, all before he created Patagonia.
Before the other kids in my neighborhood were even allowed to cross the street on their own, I was bicycling seven or eight miles to reach a lake on a private golf course, where I hid in the willows away from the guards and fished for bluegills and bass. Later on I discovered the urban wilds of Griffith Park and the Los Angeles River, where I spent every day after school gigging frogs, trapping crawdads, and hunting cottontails with my bow and arrow.
2. History class was an opportunity for me to practice holding my breath, so that on weekends I could free-dive deeper to catch the abundant abalone and lobster off the Malibu coast.
3. It was the most formative time of my life. When a fifteen-year-old has to trap a wild goshawk, stay up all night with her until the bird finally develops enough trust to fall asleep on his fist, and then train the proud bird using only positive reinforcement, well, the Zen master would have to ask, “Just who is getting trained here?”
4. We thought it (climbing) was the greatest sport ever, and we kept practicing, improving, and innovating. We made our own leather-padded rappelling clothes so we could go faster and faster. One of my earliest near-death experiences happened when I tried to do a superlong overhanging body rappel by tying three ropes together. When I got to the first knot it caught on some slings around my neck. Because the manila ropes were so heavy I couldn’t pull them up to pass the knot. I hung on these all scissored up for more than an hour. Just as I was about to let go and fall to my death, the knot passed and I reached the ground where my body went into convulsions.
5. This would be my first actual roped climb, but I just faked it and pushed ahead, even when they asked me to lead the most difficult pitch — a wet, slimy crack. They handed me pitons and a hammer I had no idea how to use, but I figured it out and managed anyway. After that trip I returned to the Tetons every summer to climb for three months. Looking back now on those early attempts at climbing, I sometimes think it’s a miracle I survived.
6. During school holidays I would go with friends down to the wilds of Baja and the coastal mainland of Mexico to surf, driving the ’39 Chevy I’d bought for fifteen dollars…I soon realized that if I was going to spend the rest of my life drinking bad water and eating out of the street vendors and bazaars of the developing world, I’d better get used to it. Developing a natural immunity to the turista and giardia is not an easy passage, but if you refuse to take Flagyl and antibiotics and don’t drink iodine-treated or chlorinated water, the immunity gradually happens.
7. For the next few years I worked on my equipment in the winter months, spent April to July on the walls of Yosemite, headed out of the heat of summer for the high mountains of Wyoming, Canada, and the Alps and then back to Yosemite in the fall until the snow fell in November. During these times I supported myself selling the equipment from the back of my car. The profits were slim, though. For weeks at a time I’d live on fifty cents to a dollar a day.
8. In 1958, Ken Weeks, my climbing partner, and I were climbing in the Bugaboos in Canada and were starving for protein, so we started eating ground squirrels.
9. In Yosemite we called ourselves the Valley Cong. We hid out from the rangers in nooks and crannies behind Camp 4 when we overstayed the two-week camping limit. We took special pride in the fact that climbing rocks and icefalls had no economic value in society. We were rebels from the consumer culture. Politicians and businessmen were “greaseballs,” and corporations were the source of all evil. The natural world was our home. Our heroes were the European climbers Gaston Rebuffat, Riccardo Cassin, and Hermann Buhl. We were like the wild species living on the edge of an ecosystem — adaptable, resilient, and tough.
After founding Patagonia:
I continued 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 and South America.
It took fifteen years to write the first edition of this book because it took that long to prove to ourselves that we can break the rules of traditional business and make it not just work but work even better, especially for a company that wants to be here for the next one hundred years.
