Now and then, somebody decides to wake us up by going against the tide. This time, the founder of a multibillion-dollar company decided to give it away. I’m talking about Patagonia, a California-based company and the manufacturer of outdoor apparel such as fleece jackets, ski pants and plaid shirts.
The company has a cult following among people sensitive about environmental and socially conscious corporate behaviour. With sales at about $1 billion per annum, its products are not cheap and they come with a story about the organic cotton, how material is recycled and reused. Its catalogs are expensively produced and can serve as discussion material for courses on the environment.
Now, Yvon Chouinard and his family, 50 years after the founding of the company, decided against taking the firm public or selling it. Either routes would have generated them a lot of money. They are instead transferring the ownership to two organisations. One, the Patagonia Purpose Trust, will own 2 per cent and all the voting stock and run the company. The other, a non-profit called the Holdfast Collective, will own the remaining 98 per cent and receive all the profits, about $100 million a year, which will be devoted to fight climate change and protect undeveloped land around the earth. A company that takes its role in society seriously.
We all know wine to be that snooty drink that the sophisticated prefer. The sommelier will first pour a bit into your glass for you to swirl around, sniff at the bouquet, savour the body and decide if that’s what you want. Well, all this comes at a high price and good wines are usually upwards of $20 a bottle.
Fred Franzia, a Californian who passed away recently, decided that a bottle should not cost more that $10. As a matter of fact, he priced them much less and produced the Charles Shaw label that was sold exclusively at the grocery chain Trader Joe and at $1.99 a bottle. The nick name was ‘Two buck Chuck.’ Cheap wines were around even earlier, but by giving it a serious name, putting it in a bottle and selling it just like the others, he made low-priced wines respectable. An early ‘bottom of the pyramid’ marketer.
We have room in this column to talk about a third against-the-tider. CEO compensation is always hitting the roof. Just when you think this is it, the roof is raised further! But a few CEOs have thought that they should do something about it, perhaps too few. Many years ago, when Ben & Jerry’s, the quirky ice-cream maker came into existence in 1978, the two founders Ben and Jerry had several policies to guide the hippie company, one of which was that the CEO would not be paid more than five times the lowest paid employee. Pathbreaking, however, this was given up in 1994 when Ben Cohen retired and they could not find a suitable replacement at the salary they were offering.
Dan Price, the CEO of Gravity Payments, a Seattle payment processing company, garnered a lot of attention when he announced a few years ago that everyone in his 100-strong company was going to earn at least $70,000 and even reduced his over a million salary to that level so he could give others a raise. That shook things up! Unfortunately, the more recent news about Price is that he has left the company due to charges of assault and reckless driving. Are there any other CEOs out there ready to take up the mantle and hold the priceline?
The corporate world is so conventional that you would have to search hard for these deviants. Wouldn’t it be nice if these convention challengers do turn the tide instead of remaining a footnote in the steady march of convention?
The writer is an emeritus professor at Suffolk University, Boston