Patagonia CEO: 'There's No Way I Should Make One Decision Based On Quarterly Results'
Patagonia is different from most retailers.
The outdoors outfitter has a habit of telling customers not to buy its products.
On Black Friday last year, the company had an "anti-Black Friday" event, encouraging people to get their gear repaired instead of buying new stuff.
At the head is CEO Rose Marcario, who spent 15 years in finance before making the jump to Patagonia.
Profits have tripled since she joined as CFO in 2008.
We talked with Marcario about how Patagonia promotes the social and environmental good — while also making profits.
Here's an edited version of that conversation.
Business Insider: You spent 15 years in corporate finance. How and why did you land at Patagonia?
Rose Marcario: I had not ever had the experience of having my values really well integrated into my work.
I worked in private equity. I got to this place where I had this really successful career by any measure, but it still felt empty; it didn't feel whole. I wasn't able to express these other parts of myself that I care about. I do care about nature and the outdoors and my community of fellow employees.
Fate brought me to the door of [Patagonia founder] Yvon Chouinard.
I had heard a lot about Patagonia over the years. I was skeptical that it was all really true — like the not giving profit primacy over everything else, like delivering the best product, and not doing environmental harm.
What I came to understand is that all of that was way true and more.
BI: As in what?
RM: Most businesses make decisions in the vacuum of profit. Having grown up in finance, I say this with some gravity because I've experienced it.
If you're making decisions based on meeting your earnings-per-share number and not about the long-term health of your company, its employees, the environment, and the community you're operating in, then you're probably making a decision that isn't good for the long term.
I think a lot of companies operate that way, especially if you look at the public market, which is so driven by quarterly reporting.
I'm running a private business. There's no way I should make one decision based on quarterly results. I think that the whole system is built around metrics and a process that is not healthy for people and the planet.
BI: How is Patagonia different?
RM: Yvon developed the model, which was keeping his company private, keeping control of his decision-making in that way, and being able to take risks. You would never be able to take such risks with a public company.
I mean, we made a documentary about tearing down deadbeat dams. There is no public company that would have financed that movie.
BI: One of the most remarkable parts of your bio is how you helped Patagonia triple its annual profits after taking over as CFO in 2008. How did you accomplish that feat?
RM: Part of what our management team and I did was take a company that's been around for 41 years and build the infrastructure and systems and processes and get the people in place to really scale the business in a responsible way.
To do it in a way that we feel is aligned with our values, which include having still pretty limited distribution, creating the best product, and continuing to make innovation in the supply chain.
BI: What are some of those innovations?
RM: We did a lot of work to create a plant-based wetsuit based on a rubber plant in Arizona. Neoprene and other materials in wetsuits use a lot of petroleum, and they don't biodegrade. I can't imagine any other company making the R&D investment.
Another example of that would be our Argentine merino wool program. This is responsibly produced wool, wool that's also restoring the grassland. These are things that are part of our DNA. I think our customers appreciate that.
BI: Patagonia is known for having ridiculous levels of customer loyalty. Why do people identify so much with the company?
RM: People identify with it in terms of quality. They appreciate the care, the tinkering, the fine-tuning adjustments we make on every product. It's the kind of product that someone can go into extreme conditions with. It has to be the best.
People identify with the care of the environment. We've got to take care of our nest. People recognize Patagonia as a company that's going to keep asking deep questions about our supply chain, the impact we're having in the world, and looking at business through a more holistic lens other than profit. Profit is important; if it wasn't, you wouldn't be talking to me. But profit isn't the only measure of success.
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