The unique challenges of running Patagonia: CEO Ryan Gellert talks consumerism, climate, and navigating a change in ownership

As CEO of outdoor clothing retailer Patagonia, Ryan Gellert is faced with a unique set of challenges: As a staunch defender of the environment, how do you strike a balance between making and selling products when you’re telling people to buy less? How do you maintain the level of expertise needed to run a global business committed to tackling some of the world’s greatest challenges? And how do you manage a company when the founders are experimenting with a whole new form of ownership?

The latter refers to a shift in the company’s ownership model, co-developed by Gellert. News of the change caused a seismic stir for Patagonia in September when the company’s founder and his family announced the transfer of ownership of the $3 billion company to the Patagonia Purpose Trust and nonprofit organization, the Holdfast Collective. Since then, Ryan has been devoting time to internal Q&A sessions to ensure a company-wide understanding of what that will mean for each employee.

It’s not surprising that the Patagonia CEO would take such care to boost the comfort level of his employees. This is a company that embeds its values in almost every move they make, from closing on election day to ensure that their employees have the opportunity to vote, to starting new business ventures like the regenerative food marketplace, Patagonia Provisions, to help move the needle towards a healthier environment.?

In the latest This is Working , Ryan sat down to talk to me about the role of business in solving the climate crisis; why on Black Friday — we recorded this conversation just prior to the biggest shopping day of the year — the company sells consumers on the idea of product repair instead of purchases; and how the experience of having the least amount of expertise of anybody in the room can make you a better leader.

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To start, I asked Ryan for his take on the state of the economy and what he’s seeing from a retail perspective. Here are some edited highlights of our conversation:

“It's really interesting when we think about the last couple of years, the whole economy sort of ground to a halt for a minute and then it seemed like it was turbocharged.?

“What we're feeling now is, I think, the leading edge of a recession. We're seeing continual headwinds in ecommerce. Retail continues to perform pretty well. And then with our wholesale accounts who are committing to orders pretty far in front, we're just seeing a lot of slowing down, and particularly in our industry, the outdoor space. I think hard goods, people have just loaded up on those in the last couple of years. So in short, we're seeing things slow down and that's how we're managing the business in response.

“We start bringing down our forecasts. We adjust our cost structure where we can. We continue to be very focused on investing in the things that we believe are critically important, and that's innovation in product, and that's in minimizing the footprint of our business. Those things we’re gonna work really hard to protect. There are other areas, whether it be marketing or elsewhere, we've gotta look to just kind of slow the pace down a bit.”

What are you seeing globally? How does this differ in other countries, if at all?

“I'm just really concerned about the next 12 to 24 months, is Europe. You know, inflation there is higher in many countries than it is here in the US. It's been awfully high here. And as we head into winter, the energy crisis, the cost of and the availability of, is a real concern for our people and our communities there.”?

How did the recent changes to Patagonia’s ownership model come to be and how will the new model work?

“Anybody that knows Yvon Chouinard, who is the founder and former owner of Patagonia, knows that he's a pretty reluctant businessman. And so you’d probably would find it as no surprise that for decades he's really asked himself the question, you know, what's the end game with Patagonia for me, for my family? Do we sell it at some point? Do we take it public? Do we do some version of an equity transformation to put the money to work??

And I think that they've thought about that off and on for decades and over the last couple of years it became very clear that this was now the time for them to answer this question. It was a real tension between wanting to use the business and its resources and its value to fight the climate ecological crisis right now in much more meaningful ways than we've been able to. And also, I think, still believing that the business can be a model for a different version of a business within a capitalist system.?

Anybody that knows Yvon Chouinard, who is the founder and former owner of Patagonia, knows that he's a pretty reluctant businessman. And so you’d probably would find it as no surprise that for decades he's asked himself the question, ‘what's the end game with Patagonia for me, for my family?’

So if you sell part, if you sell all of it, if you take it public, can you have it both ways? And so we explored the full range of options and ultimately what we distilled our list of desires down to is, ‘How can we run, continue to run an independent Patagonia with the values that the Chouinards have embedded within it, and also use much more money right now to fight the climate ecological crisis?’

“And so what we did was create a new structure. It is pretty complicated when you get down into all the sort of details of it, but I think the concept's really simple. We created a purpose trust which governs the purpose of the business so it decides who's on the board and it can remove anybody from the board.

“In essence, in addition to our benefit corporation commitments, B Corp commitments that are codified in our articles, we now have this other mechanism to ensure that anybody that is leading the company, and that's the board of directors, that's the CEO and others, are staying true to the mission of Patagonia. So that's the first piece of this. The second piece is a collective of 501(c)(4)s that will receive dividends annually of the profits of the company and they will put that money to work fighting the climate ecological crisis.?

“So in simple form, we've created two entities. One to make sure we stay on track, the other to put the money to work. And we have the opportunity now to continue to run this business according to our values, which is all we've ever wanted to do. And is, what I would argue, is the biggest impact that Patagonia can have.”?

How does it change how the company operates, if at all??

”One of the things I've been really focused on since September 14th is getting in front of every one of our 3,600 people around the world and having Q & A sessions because on September 14th we rolled this out to our employees and provided a lot of context and information. And then we knew there were gonna be a lot of questions that came up. And one of those that was going to be top of mind was the question you asked, ‘What does this mean for me? How does this change my job?’

I like to think of it as, you know, mentally, the job remains very much the same as it has been before. In your heart, I hope that people feel differently about what they do in some ways, perhaps big and perhaps small for others. But I think what we've really done, and this is the piece that I hope continues to resonate more and more as we operationalize this with and for our people, is that we have now tied our financial value really directly to our values. And I think that's really what we've accomplished with this new structure.”?

Does it change at all how you hire or who you're able to hire??

“It's created a lot of interest in careers at Patagonia, and so I think in a marketplace that's been very competitive, we have had a lot more interest in every position that we've posted. So I certainly think we've seen that. As far as, you know, the kind of people that we want to bring into the organization, again, I don't think this changes that. What we've always been looking for are, No. 1, of course, people who can do the job for which we're seeking to fill. And No. 2, people that just demonstrate kind of an intellectual curiosity and an interest in being part of something bigger than themselves and really contributing to that. And so, you know, one of the questions I always find most important, and it may sound really simple, but I don't think it is, particularly with senior roles, is ‘Why Patagonia?’ And if the answers are about living and working in Southern California or leaving a job that they feel like they've gone as far in as they care to go, those aren't real compelling answers and reasons for why you want to be a part of this thing that we do.”?

What are some of the questions that you're asking when you’re hiring??

“For me, the most important question is, ‘Why this opportunity at Patagonia?’ And I try to keep that question deliberately open-ended. But I think in the first 30 seconds, I think you get a really clear sense of what's brought the two of us together in this conversation. You know, I think about a senior IT role that we were desperate to fill about 18 months ago and we ended up keeping that role open for about, I don't know, I think over a year. And it was pretty painful for us to run with that role open for that long. But we met candidate after candidate that had just impeccable CVs as far as their work experience. But really were struggling to articulate why is this the opportunity that I'm really passionate about? And so we kept that role open until we found the right person.”

When the ownership announcement was made, your chairman said, “This is not woke capitalism. It's the future of business.” I was surprised to see that term “woke capitalism.” Can you talk about what that means?

“I don't know what the hell that term means. I mean, it gets thrown around a lot. I don't know that it even existed before, say, 24 months ago. And we get this leveled at us all the time. If it's woke capitalism to care deeply about your people, care deeply about the planet we live on, use your business, your voice, work with your people, create opportunities for people to be engaged and use your financial resources to have an impact on the things that, that you feel are most important to all of us, then I guess we're a woke group of capitalists, but I think it's a pretty hollow term.?

?If it's woke capitalism to care deeply about your people, care deeply about the planet we live on, use your business, your voice, work with your people, create opportunities for people to be engaged and use your financial resources to have an impact on the things that, that you feel are most important to all of us, then I guess we're a woke group of capitalists, but I think it's a pretty hollow term.?

“I think what our place in the world is, and I say this with great humility, I don't think that we're going to be able to change this all by ourselves. It's quite clear that we won't. But what's unique about Patagonia is not that we might be in a position to give a hundred million dollars away.

“It's not the eco innovation that we've pioneered and open sourced over our 49 year history. It's not any single thing that we have done. I think instead it's just modeling a different version of a business operating unapologetically as a for-profit business and being able to operate from the business sector. We're not a government. We're not an NGO. We're a for-profit business. And being able to model a different path forward. I think that's the biggest impact we've had in our 49 year history.?

And I think the more important question as we near our 50 year anniversary and we look at the world we live in, and we project out into the future what our biggest concerns are, what the biggest opportunities are, I think it's still the same thing. It's continuing to model what I'd like to believe is a more progressive version of business in a world that desperately needs that.”

Are you getting people coming to you saying, ‘How can I copy this model for my company?’?

“Yeah, we are. And, you know, there's different ways, different levels of commitment that companies can make. And I recognize that each of them, certainly the model we've put in place, is not a realistic alternative or option for a lot of businesses, public companies in particular.

“But I think the structure we've put in place and the fact that we're very intentional in talking about it, I think is intended to do a couple of things. One is just to expand the possibility in the conversation about what can be done. I think it is really kind of front-staged the topic of what is the responsibility of business and what are the opportunities for business to participate in bigger and more impactful ways. The reality as I see it is this, we are living at the leading edge of the climate ecological crisis. I think it's an existential threat to us as humans. It's one of our own creation and I think we have moved past the point of no return on saying, ‘Well, this is a government issue to solve it.’ Governments have proven incapable of doing that. Individual citizens through individual actions will never be capable of doing that.?

“And so I think what we need is all the tools available. So that's government doing what it was founded to do, solve the biggest problems that we face. It's individuals taking accountability through the role of, as part of civil society, and also in their individual decisions, including their buying decisions, and it's companies stepping up and taking a greater amount of responsibility for the impact that we have in the world. I think that's the only way that we'll be able to solve the issues that we've created.”?

How is Patagonia Provisions, a business venture that offers responsibly sourced food products, making an impact on the environment?

“The reason that we started a food business, and it's a small business compared to the bigger apparel and equipment business, but the reason we started a food business is because we believe exactly as was stated: it's not just the diet, but it's the way that the agricultural sector works, in our opinion. We look at supply chains that are broken in our clothing, our apparel and equipment business, and we say, ‘How can we make them less broken?’ But I think we've really struggled to find ways, with a couple of rare exceptions, where you can actually take a supply chain and make it a part of the solution within apparel and equipment.

We look at supply chains that are broken in our clothing, our apparel and equipment business, and we say, ‘How can we make them less broken?’ But I think we've really struggled to find ways, with a couple of rare exceptions, where you can actually take a supply chain and make it a part of the solution within apparel and equipment. In food that's really different.?

“In food that's really different. Regenerative organic agriculture is an opportunity to actually create healthy topsoil and in the process sequester atmospheric carbon. And so that's the reason that we are participating in this space. That's the reason that we co-founded with Dr. Bronner's and the Rodale Institute , the Regenerative Organic Alliance . That's the reason that we're pioneering regenerative organic cotton for our apparel supply chain in India, in Peru, and that's the reason that we started our provisions business.?

So to answer the question directly, we're at an inflection point with the provisions business, really rethinking some of the things that have worked, some of the things that haven't worked, and asking ourselves how do we scale the solutions that we're feeling most passionate about? And one of the ones amongst many that we really feel we're onto something is kernza, which is a long root alternative to wheat and other, you know, more widely used grains in the human diet. And so we've pioneered the use of kernza in beer, for instance, and also in some other food products. And so that's something that we're gonna continue to push on.”

There is so much required of you as CEO of a company like Patagonia. How do you stay on top of everything and divvy up your day?

”The short answer is two things, imperfectly and with a lot of passion.?

“These are topics, I just have an insatiable sort of appetite to understand. They're just so unbelievably interesting. I think that the answer to the question though, honestly, is being surrounded by incredibly smart and passionate people. And so on every topic that we engage in we've got expertise buried within the organization, and they are also leaning on and working with people outside of the organization. That's where our best ideas come from. That's what ultimately I'm able to sort of get distilled and explained to me often by people much smarter than myself internally and externally.?

“For me, personally, I just find all of this incredibly fascinating. I think the tension for me personally is making sure that I'm really focused on the business. And it's not just the financial performance of the business and the strategies of the business. I think in the last couple of years, it's increasingly been the need to really ensure that we're taking care of our people, and that comes in a variety of ways, including in communication and just spending a lot of time in two way conversation with all of our people, one-on-one, small groups, large town halls and otherwise, and doing as much of that as possible in person, which has also been particularly challenging in the last couple of years.

“How do I spend my day? I try to get going early and I generally go pretty late and, you know, keep this thing going kind of seven days a week, and just moving. But it's pretty all over the place as far as the topics. Yesterday it was a three hour call with the government of Albania working on this national park that we're seeking to create around. It would be Europe's first free flowing river national park around the Vjosa that goes from the border of Greece across Albania to the Adriatic Sea. And then immediately from there going into interviews with candidates and then into board discussions on a host of other topics. And so it is a lot of sort of nimbleness intellectually, but that's the best part of the job.”

What does your international business experience bring to you in this current role? And do you recommend leaving your country of origin as a way to be better at business?

“I’ve done that twice in my career. I spent five years living and working in China with a former company, and then I spent six years, as you mentioned, based in Amsterdam, but looking after a portfolio that was across Europe, Middle East, and Africa. And I think both those experiences were some of the most transformational of my career. In both of those experiences, I was kind of in GM roles and so I had broad responsibility.?

"The two things that I took away from those experiences, both of which I think are really foundationally important in this role:

"One is, is just seeing the world, seeing the business that you're a part of, seeing the industry, seeing the sports that you're a part of through a different lens from a different part of the world and through other people's eyes. In the case of the experience with Patagonia and being in Europe, that also included seeing a broad set of issues and topics around sustainability, the climate ecological crisis, through the prism of other cultures. And I thought that was really valuable, understanding that I think the tempo, as imperfect as it is in fighting the climate ecological crisis, is probably being set in Europe, not here in America or North America.

“The other lesson that I learned that I really believe has been foundationally important for me is when you're operating, and I'll use Europe as an example, if you're walking into a room with your leadership team and you are having conversations on distribution strategies across the European continent, by definition, I will never know as much or have as much experience as my head of sales, who is a European. Or on people and cultures issues, same statement or on marketing issues, same statement, or on operational issues.?

You've gotta get pretty comfortable very quickly in being having the least amount of expertise of anybody in the room arguably, on almost every single topic you're talking about. And I think it brings a certain amount of humility. It also requires constantly asking yourself, ‘Where do I add value?’ You know, ‘What is my role in this setting?’

“And so, you've gotta get pretty comfortable very quickly in having the least amount of expertise of anybody in the room arguably, on almost every single topic you're talking about. And I think it brings a certain amount of humility. I think it requires a certain amount of humility. It also requires constantly asking yourself, ‘Where do I add value?’ You know, ‘What is my role in this setting?’ And I think first and foremost, it's creating culture and contributing to that, creating a space where all of our people can build culture. I think it means finding the best ideas and championing them and moving them forward. And I think ultimately, and this is a never ending job, it means really creating a sense of team. And a team in my opinion, has never been about a collection of talent. A team is a team. It's a team, it’s people coming together with a shared vision and sacrificing and flexing for that vision, even their own interests.”?

Were you always good at that kind of humility?

“I'm a pretty introverted and humble person I'd like to think. Sometimes people describe me as confident which always seems really dissonant with how I feel about myself. But I don't think that part of it's been difficult. I think I've learned a lot about how to manifest that in a leadership role where you're actually adding value and pushing things forward. But finding that balance between being decisive and providing leadership where you feel it's needed and also stepping back and allowing that to come up in other ways. So I think I'm as imperfect as anybody at that.”?

What is your approach to marketing?

“We don't really think about marketing in a very traditional sense. We don't do a lot of paid advertising.

“What we seek to talk about are our values and how they manifest themselves in the business or in product. We try to talk a lot about the performance aspects of product coupled with, kind of, the footprint innovation that we work really hard to institutionalize in everything that we do. And we also spend a lot of our time, money, voice, and otherwise, just kind of front staging the work of partners and grantees that we have relationships with.?

[Creating new product] really is in conflict with our concerns around growth and our concerns around making too much product and putting too much product in the world. So that's one of those many contradictions that we wrestle with often here at Patagonia.

“It's always this, you know, we're for profit business and we've gotta figure out how to cover all of our costs to do the work that we do. I think that there is a real need for us to continue to make product that people want and provide service that people appreciate and respect. And at the same time, that really is in conflict with our concerns around growth and our concerns around making too much product and putting too much product in the world. So that's one of those many contradictions that we wrestle with often here at Patagonia.”?

So how do you try to reconcile that? What are those discussions like?

“It is a contradiction. We haven't found that answer. I think what we have found is a set of values and what we have invested in consistently are ways to bring those values to life.

“And so it's not just about saying, ‘These are the things that are important to us.’ It's, ‘And these are the ways that we're investing in that.’ And so when I think about Black Friday and, sort of, other days that have names now that follow that, from Friday to Sunday that weekend, our focus is going to be on doing rpair events and repairing product, but also teaching our community and customers to do product repair themselves from Friday to Sunday.

"And then on the Monday that follows, we're gonna be focused, we're actually doing our first ever sale on wornwear.com, which is the sale of secondhand product. So product will be available at roughly, probably 70% or so below its original full price. And this is again, secondhand product. And then on that Tuesday, we're gonna front stage all the work that our grantees are doing and create awareness and opportunities for people to participate through skilled volunteering on Patagonia Action Works and petitioning and showing up at events and other things in that space. And so that's really how we're thinking about this upcoming period of time. And those are examples of the kind of programs that we continue to invest in.?

“Repair is something that has been a foundational part of Patagonia for decades. We've got over a hundred people at our Reno Repair Center working full-time on product repair and we've got a big footprint in Japan and another big footprint in Europe and other parts of the world where we have a business. And so that's an example of something, it's not just an idea or a story, but it's a scaled part of our business. And in that example, it's a call center.”?

How are you approaching the opening of new stores in this slowing environment?

“I think in Europe, we could benefit from a few more stores and in some markets we actually have a pretty small retail footprint. So regardless of the fact that this is a tightening marketplace, we'll continue to make investments there.

“We'll probably be a bit more conservative here in the US. Ultimately, we're just conservative with our footprint of retail stores. We want every store to be kind of a gift to the local community. We really prioritize unique spaces with unique histories, removing more material often than adding. And where we use materials, flooring and others, we local source recycled and refurbished materials. That's a big part of our strategy. But as a result of all that, every retail store that we operate anywhere around the world's pretty unique. We have a set of values again here on kind of how we think about retail but we don't have a playbook on how we open retail stores. And as a result, we've got a pretty small global retail footprint.”?

Is there something you tell people when they're starting off, when they try to figure out how to have a path like you've had?

“I have to give a disclaimer, anytime I'm offering career advice, I did a four year degree, then I did a master's degree, an MBA in business. And the first real job I had was working in a warehouse at a company called Black Diamond Equipment in Salt Lake City and I did that for probably five or six dollars an hour because I really wanted to work in the climbing industry. I grew up in Florida where I wasn't really a surfer myself, I surf a bit, but my brother was an inspiring professional surfer and people I grew up around were really passionate about it. And what I saw were a bunch of people who were able to forge careers tied to their passion and that always really had an impact on me. And so when I started rock climbing, I was dead set on trying to do the same because I felt like that was a sport I was gonna spend the rest of my life doing.

“So, first job I had was working in a warehouse. Not sure I would suggest that everybody do exactly the same, but I think what I have always really tried to do, and I do think this is pretty good advice, find things that you're passionate about and be relentless in pursuing those things. And learn it every step along the way.

Some of the best learnings I had professionally were waiting tables. I was pretty introverted and quiet and forcing myself to engage with people that look like they had done pretty well in life and were pretty successful, pushing me to the edge of my comfort zone and taught me probably as much as almost any professional experience I've had.

“Prior to working at Black Diamond, probably some of the best learnings I had professionally were waiting tables. I was pretty introverted and quiet and forcing myself to engage with people that look like they had done pretty well in life and were pretty successful, pushing me to the edge of my comfort zone and taught me probably as much as almost any professional experience I've had.

“But I think it's just really absorbing as many lessons as you can at everything you do. Figure out what you're really passionate about and pursue it with the kind of passion that it deserves if you're really, really serious about wanting to create not just a career for yourself that provides for yourself and your family, but something that you just love getting out of bed every day and doing.”