Yvon Chouinard: The Entrepreneur Who Gave His Company Away

Who should own your company when you leave?

Most owners deal with this question later than they would like. Until then they know two answers: hand over to the children or sell. If the children are not interested and a buyer would probably restructure the business, both answers feel unsatisfying.

In September 2022 an American entrepreneur gave a third answer that made headlines worldwide. Yvon Chouinard, founder of the outdoor outfitter Patagonia, and his family transferred the company to a structure made up of a trust and a nonprofit organization. In U.S. law a trust is a pool of assets managed by trustees according to fixed rules.

The guiding question of this portrait is: what can an owner in the German Mittelstand, the world of owner-managed small and medium-sized companies, take from Chouinard's decision for their own succession? To answer it, I first trace how Chouinard arrived at the decision, then describe what exactly was transferred and what critics object to, and finally draw the line to succession in the Mittelstand. Where I am interpreting, I say so.

Who is Yvon Chouinard?

Yvon Chouinard was born on November 9, 1938, in Lewiston, Maine. In 1947 the family moved to Southern California. As a young man he climbed in Yosemite Valley and was dissatisfied with the gear available for purchase. According to Patagonia's company history, in 1957 he bought a used coal-fired forge, an anvil, and tools, and taught himself blacksmithing.

He forged pitons from hardened steel that could be used more than once. According to the company he managed two an hour, and they sold for 1.50 dollars each. His first customers were climbers like himself. He sold to people whose problem he knew from his own experience.

1. 1957: The forge

   Chouinard buys used blacksmithing equipment and makes pitons, at first for himself and friends.

2. 1965: Chouinard Equipment

   He teams up with the climber and engineer Tom Frost. Together they refine the gear.

3. 1970: Market leader

   According to the company, Chouinard Equipment is the largest supplier of climbing hardware in the United States.

4. 1972: The catalog

   The catalog advises against pitons and introduces aluminum chocks as a replacement.

5. 1973: Patagonia

   The clothing business, which had started with rugby shirts, becomes a brand of its own.

6. 2022: The transfer

   The family hands its shares to the Patagonia Purpose Trust and the Holdfast Collective.

Chouinard has repeatedly described himself as a reluctant businessman. His book "Let My People Go Surfing," published in 2005, carries the subtitle "The Education of a Reluctant Businessman." In his 2022 letter on the transfer he writes that he never wanted to be a businessman and started out as a craftsman.

The 1972 catalog: why did Chouinard advise against his own bestseller?

Around 1970 steel pitons were the most important product of Chouinard Equipment. They had a drawback that Chouinard and Frost saw for themselves on the walls: hammering them in and out repeatedly damaged the rock on popular routes.

The two drew an unusual conclusion. The 1972 catalog opened with a text from the owners urging customers to do without pitons. As a replacement it presented aluminum chocks, which are placed in cracks by hand and removed again. A fourteen-page essay by the climber Doug Robinson explained the technique. By the company's account the piton business collapsed within a few months, and the chocks sold faster than they could be made.

My interpretation: For owners this episode is more instructive than the headlines of 2022. Chouinard did not merely drop a product. He explained to his customers why, and in the same breath offered them the better solution together with instructions. The catalog was a sales document that began with an argument against the company's own revenue. It was credible because the owners climbed themselves and knew the problem.

If you advise your customers against the wrong purchase, you lose one order and gain the reason they will believe you on the next.

How did growth become a problem for Patagonia?

According to the company, the clothing began with a rugby shirt Chouinard brought back from a climbing trip to Scotland in 1970. Friends asked where they could buy one. From 1973 the clothing line carried the name Patagonia. The climbing hardware business filed for Chapter 11 in 1989, the U.S. procedure for reorganization under protection from creditors. Employees acquired the assets and continued the business as Black Diamond Equipment.

In 1991 it was Patagonia's turn. According to the company history, a recession squeezed sales, the bank called in a loan, and the company laid off 20 percent of its workforce. In his book Chouinard describes that year as a turning point: the company had become dependent on growth it could not sustain.

In the years that followed came decisions that shape the brand's image to this day:

• From 1986 Patagonia gave a fixed share to environmental groups, initially ten percent of profits, later one percent of sales.
• In 1994 the company decided to switch its cotton entirely to organic. From 1996, by its own account, that applied to all cotton products.
• In 2002 Chouinard was among the founders of the organization 1% for the Planet, whose members give one percent of their sales to environmental organizations.
• On November 25, 2011, Black Friday, Patagonia ran an ad in the New York Times with the headline "Don't Buy This Jacket" and called on readers to buy only what they need.

My interpretation: You can read these steps as idealism or as very consistent brand management. They are probably both. Something else matters for the ownership question: over decades the company set rules that a new owner could have struck out with the stroke of a pen. The 2022 transfer can be understood as an attempt to prevent exactly that.

The 2022 decision: what exactly did Chouinard transfer?

On September 14, 2022, Patagonia announced the new ownership structure. The Chouinard family transferred all shares to two recipients. All voting shares, which make up two percent of the capital, went to the Patagonia Purpose Trust. According to the company it is meant to protect the company's values and mission, and it decides on the composition of the board and on changes to the charter. All nonvoting shares, 98 percent of the capital, went to the Holdfast Collective, a nonprofit organization for environmental protection and conservation.

Profits that are not reinvested in the company are paid out as a dividend to the Holdfast Collective. In the announcement Patagonia projected roughly 100 million dollars a year, depending on the health of the business. Ryan Gellert remained CEO; the family remained represented on the board and, according to the company, guides the trust.

In his letter Chouinard names the alternatives the family rejected. A sale followed by donating the proceeds would not have ensured that a new owner preserved the values and kept the employees. He calls an IPO a disaster, because listed companies are under pressure to deliver short-term results. Instead of "going public," he writes, you could say "going purpose."

What do critics object to in the Patagonia model?

The sentence with which Patagonia announced the decision said, in essence, that Earth is now the only shareholder. That is a catchy formula and a simplification. The journalist Eamon Barrett pointed out in Fortune magazine that the trust's two percent carry all the voting rights and that the family guides the trust. In his reading the family gave up the profits and not the influence. He also calls the sacrifice remarkable.

A second point concerns how the money is used. According to Patagonia, the Holdfast Collective is an organization under section 501(c)(4) of the U.S. tax code. Such organizations may, besides grants and investments, also advocate politically for their causes. Those who agree with the goals see a strength in that. Those who do not see a corporate treasury permanently funding one political direction.

What does the case mean for succession in owner-managed companies?

You do not have to share Chouinard's goals to take the question behind them seriously: who should own a company when the founder leaves, and to what end? My interpretation: The real achievement of the model lies in separating two questions that usually coincide in a family business. One is who steers. The other is who receives the profit.

In Germany the idea is older than Patagonia. At Bosch, according to the annual report, 94 percent of the capital shares are held by the charitable Robert Bosch Stiftung GmbH, while the majority of the voting rights lies with Robert Bosch Industrietreuhand KG, an industrial trust. For some years a dedicated legal form has also been under discussion under the heading of steward-ownership (Verantwortungseigentum). In March 2026 the Federal Ministry of Justice and the Federal Ministry of Finance presented a framework concept for a "company with locked assets" (Gesellschaft mit gebundenem Vermögen). It is not an enacted law, and some business associations have commented on the concept critically.

The Ownership Test: five questions before any succession solution

• What should still be recognizable about your company in twenty years: name, location, jobs, quality standard?
• Who should steer, and what abilities does that person or body need?
• Who should receive the profit, and how much of it do you and your family actually need?
• Which decisions should be ruled out in future, such as a sale or a relocation?
• Does the company already run without you today, in sales as well as in leadership?

The fifth question decides all the others. Chouinard was able to give up ownership because leadership had long rested with a CEO and a board. A business whose orders depend on the owner can be neither sold well nor inherited well nor placed in a foundation.

What you can do this week

You do not have to set up a foundation to take something from this case. A few small steps bring clarity, no matter how far off your succession still is.

1. Answer the five questions of the Ownership Test in writing, each in two to three sentences.
2. Write down which three things a buyer of your company must never be allowed to change. Those are your values in practical form.
3. Check your incoming orders of the past twelve months to see what share came about without your personal involvement.
4. Talk with your family about who would like to run the company and who would not. Assumptions are more common here than conversations.
5. Arrange a first conversation with your tax adviser about the basic routes before an event forces you to.

Chouinard was 83 at the time of the transfer. The preconditions for it developed over decades: a company with firm rules, leadership alongside the founder, and a clear picture of what the company is supposed to exist for. You can start on those three things today.

In short: what can be carried over is not the American structure but the separation of two questions that usually coincide in a family business, namely who steers and who receives the profit. Whether inheriting, selling, or a purpose-bound structure suits you is shown by your answers to the Ownership Test. Each of these solutions requires that the company can sell and deliver without you.