The Education of a Reluctant Businessman with Yvon Chouinard

- [Male Voice] I can assure you that what you will observe is a vast wasteland. (background noise drowns out other sound) (instrumental pop music) - [Male Voice] And uncorrupted communication. (instrumental pop music) - No young kid growing up ever dreams of someday becoming a businessman.

He wants to be a fireman, a sponsored athlete or a forest ranger. The Lee Iacoccas, Donald Trumps, and Jack Welches of the business world are heroes to no one except other businessmen with similar values. I wanted to be a fur trapper when I grew up.

So that's what I'm gonna talk about tonight, the kind of odyssey of wanting to be a fur trapper to becoming a garmento (laughs). I was born in a little French Canadian town in Maine, and when I was seven years old, the whole family, the six of us, got into our automobile with everything we owned and moved to Burbank, California. And I couldn't speak English, and I was put in school right away, 'cause it was the law, and I stayed in school for about three days and I ran away from school.

And so when I was young I could play baseball, and throw a football as well as anybody, but when it came time to do an actual game, I always fumbled the ball, and I soon learned that team sports and stuff was not my thing. And I spent my early childhood in the hills above Griffith Park there in San Fernando Valley and high school days hopping freights around the country. So I've kind of taken a different path, and spent a lot of days in the jails.

(laughs) But in those days it was illegal not to have a job. It was called wandering about aimlessly with no apparent means of support. (audience laughing) And it was a crime, so anyway, one of my favorite quotes about entrepreneurs is if you wanna understand the entrepreneur, study the juvenile delinquent.

(audience laughing) 'Cause they're saying, this sucks. (laughs) And I'm gonna do it my own way. So when I was about 12 or so, I got in with a bunch of falconers, in the San Fernando Valley, some older men who didn't mind taking in a bunch of young guys and teaching 'em falconry, and one of the first lessons I learned that kind of carried with me my whole life, I've been kind of a student of Zen philosophy, not religion or anything, just philosophy, most of my life, and when a 12 year old kid has to go out and trap a wild goshawk and then put him on his fist and hold him on there with jesses and the hawk baits off over and over again, you put him back on, and you stay up with him all night, until he finally falls asleep on your fist early in the morning, and that's a real quick way of building trust, well the Zen master would have to ask, who is getting trained here?

(audience laughing) Well, climbing the hawks' nests kind of led to climbing for its own sake, and when I was 16 years old, I drove my old '40 Ford that I overhauled in auto shop class to Wyoming, and I climbed Gannet Peak, the highest peak in Wyoming. That was the first mountain I climbed, and I got pretty hooked, and I spent the summer in Jackson Hole and kind of learned to rock climb, and in those days if you're climbing with Converse tennis shoes and my first rope I stole from the telephone company. It was an old manila rope.

But the pitons in those days, you know those spikes you drive in the cracks, were made in Europe, and they were made of soft steel, and they were meant to be used just once. The Europeans' attitude was to conquer them, you conquer mountains, you know? The conquest of Everest, this kind of stuff, and they felt like well, you do a first ascent of a route, and you leave all the pitons in place, and it makes it easier for the second group.

Well, we were kind of brought up with reading John Muir and Thoreau and Emerson and we had an attitude that you go into the mountains but you don't leave any trace of having been there, so when I was, I guess about 18 or something, I went out and I bought myself a forge and an anvil and some hammers and a book on blacksmithing. I taught myself how to blacksmith, and I started making pitons out of hard steel, out of just bar stock of hard steel. And made 'em for myself, and then they worked so good, because you could put 'em in and take 'em out repeatedly, and then I made some for friends that I was climbing with, and then friends of friends wanted some, so then I started selling 'em.

I could make two an hour, and I started selling 'em for a dollar and a half each. Doesn't sound like much money, but you gotta remember that pitons, the European pitons were selling for 15 cents each, so it was 10 times the price, but by that time we were doing state of the art rock climbs, and you had to have my pitons if you wanted to do those climbs. You couldn't get up those climbs, and pretty soon we're starting to do multi day climbs on big walls in Yosemite, like El Capitan where you spend 10 days up there, and you couldn't possibly carry enough pitons to do the climb, so we'd just carry like 40 or so pitons and use 'em over and over again, and so I'm selling these things out of the back of my car, and I'm working, my shop was in Burbank, but I was surfing already at that time.

I started surfing in 1955 I think in Malibu, and I'd had everything portable, so I'd go down to the beach like County Line and stuff and I'd carry my 138 pound anvil down to the beach (laughs), and I'd work on the beach and get hot and sweaty, and then I'd go in and surf, and in those days you were wishing people would come by and go surfing with ya. (laughs) Believe it or not. (laughs) So anyway, I never, ever, wanted to be a businessman, 'cause those were the days when you thought businessmen were grease balls and that was the last thing you wanted to be, but I just happened to be a craftsman that every time I came back from the mountains, I had more ideas for how to improve various equipments, and I don't consider myself an inventor at all.

I'm an innovator, and I look at any piece of industrial design or something and I just happen to see ways of how to make it better, so that's how I got trapped into being a businessman. The problem is, I wasn't making any money doing this, because I was just too idealistic. I mean, I'd spend thousands of dollars in making some tooling and dies and stuff like that that you're supposed to amortize over three years, and in three months I'd have a new idea on how to improve it, so I was kind of knocking myself off.

But you can't make any money doing that, but on a climbing trip to Scotland, in the winter of, it must have been about mid 60's, I bought myself a rugby shirt, and I thought, oh, this would make a great climbing shirt, because it had a really tough material. It had a collar. In those days we used to love Off with Cracks.

I mean nobody does Off with Cracks anymore. (laughs) But it really shreds your clothes and stuff. Anyway, it had a collar, so the gears things wouldn't cut into your neck, and it was real colorful.

It was blue and yellow and red, and in those days active sportswear for men was gray sweatpants and sweatshirts. That was it. Men did not wear colorful clothes, so I started wearing this and climbing and all my friends are going, wow, where'd you get that?

That's really a great looking shirt. (audience laughing) So being a natural entrepreneur the lights came on and I started importing a few, and sure enough they sold like crazy, and then one of my early products was a pair of shorts. I had an idea for a really tough pair of shorts, double seated, and so I made the pattern, and my Korean friend, Yung Sun Sun Wu, in fact, she's sitting right here, did the sewing, and we made them out of a chair duck, canvas duck that was so heavy she had to use a walking foot machine that you use for sewing quarter inch thick leather, and anyway she sewed 'em up, and she put them down on the table, and they stood straight up.

(audience laughing) And she was laughing, so anyway that was the beginning of our stand up shorts. You might say they were hand forged shorts. Anyway, I got into making more and more clothing for climbing, and business was taking off, but it really took off when I saw my friend Doug Tompkins, who started Esprit, and he was wearing a Fila wool sweater, but it was brushed, and it was real fuzzy, and I thought, wow, that thing would make a great thing for climbing and stuff, if it was made out of synthetic.

It would dry a lot more quickly. So my wife went down to the Cal Market in LA where, it's the garment area, and she looked around and found some fake fur, and you know the kind of? And she bought some and it was the stuff that you use in Kansas for covering your toilet seats (laughs).

Real chic stuff. (laughs) So we made up a jacket, and sure enough, you could fall into a river in the winter and take the thing off and shake it and all the water would come out and you'd put it back on, and it would save your life. Well, that piled jacket evolved into Synchilla, which was a much more sophisticated version, and then all of a sudden the sales just took off like crazy, because up till them I was selling stuff strictly to climbers, hard core dirt bags.

(audience laughing) And now you got all these New Yorkers buying this thing to wear in their Gold Edition Jeep Cherokee to drive to their Connecticut home. (audience laughing) So (laughs) kind of in the mid eighties we were growing the business 40, 50% a year, and it was just taking off, and so we were growing the business by all the traditional ways. We were opening new dealers, wholesale accounts, and we were buying mailing lists for people who didn't request a catalog but we'd send 'em one anyway.

We opened up our own retail stores, and it was just going lickety split, and in 1989, we had ramped up to do another 50% increase in business, and we had bought all the inventory, and hired tons of people, and then in 1990, a recession hit, and instead of growing 50%, we only grew 20%, but we were so strung out by growing that quickly every year that we had not cash reserves, and at the same time our bank was going belly up itself, and wouldn't give us any more money. My accountant introduced me to the mafia. (laughs) Who wanted 28% interest.

(audience laughing) I mean that's how desperate we were. Almost lost the business, and I had to lay off 20% of our workforce, which is the worst thing I've ever had to go through in my life, because a lot of these people were friends, and it was absolutely my fault, and I swore I'd never ever wanna be in that situation again, but we had to do it to save the company, and I realized that my company had become part of the problem. I was completely unsustainable.

And I was doing everything the way you're supposed to in America, grow like crazy, and so I took 10 of the top people in the company, and we all, even though we couldn't hardly afford it, we all went down to the real Patagonia down in Argentina, and we walked around in the wilderness for, we had to walk for about a week or 10 days, and we'd walk for half an hour and then we'd all sit down in a circle, in a really nice place, and then we'd say, okay, why are we in business anyway? I mean none of us ever wanted to be in business. Not one had a business degree, and we were all there for completely different reasons than your normal business, and so we had to communicate what that was.

And so we started writing down what our values were, and one of the important things is that we wanted to make the best quality product. I mean we were coming from a background of making life saving equipment, making the best climbing equipment in the world, and we wanted to do the same thing with clothing. It was really important that we were a product driven company, and that our product was not stock.

Our product was not the company that was gonna be sold someday, but our product was these tools and this clothing. And we were gonna put that in the front of the wedge and the whole rest of the company was gonna follow the product. So that was really important for us.

We didn't wanna compromise on that, and then secondly, but, my chief designer at the time said, we can make the best quality climbing hardware. We can't make the best clothes. I said, well why not?

Well, the best shirt is a Giorgio Armani handwoven Italian fabric, and the buttons are hand sewn, and it's an impeccable thing. It's a work of art, and it costs 300 dollars, minimum. If we started making stuff like that, we'd be out of business.

Well I said, what happens if you throw that in a washing machine? Oh, well, you can't do that. It's gotta be dry cleaned.

I mean, it'll shrink. It'll fall apart. I said, that's not very good quality.

(audience laughing) So part of this book is defining what we mean by quality in clothing. We had to figure out what is quality, and what is quality for our customers and for ourselves? Because we were our own customers.

And then the next thing we wanted was flex time. We wanted to be able to take off a month or two and go on an expedition, and do that two or three times a year or more. (audience laughing) So that's the name of the book.

That's where I got the name for the book, 'cause we've had a company policy that one of the lessons of surfing or powder skiing or any of those kind of sports is that you don't go surfing next Tuesday at 2 o'clock. 'Cause you may show up there and it's flat, or blown out, and you're a loser. (audience laughing) So we have a company policy that when the surf comes up, everybody drops their work that is a serious surfer and they go surfing.

(audience cheering) You just gotta be careful you don't have 100% of your employees surfers. (laughs) So that means you gotta hire very responsible people, and then let 'em get their work done, whenever they feel like. (audience laughing) As long as it doesn't impact other people and the work gets done.

I don't care when they work. The next thing is we wanted to learn the distinction between work, play, and family. Most people drag their asses to work and they can hardly wait for the weekend and be with their family and do their sports and stuff, so we wanted to blur that whole distinction.

In fact, for awhile there we were having young mothers come to work with the baby, the newborn baby, and babies in a box on their desk. (audience laughing) Cardboard box. So we didn't wanna leave our family and disappear for eight hours a day, and plus I've always had a very high percentage of women working at Patagonia.

We probably have I think 79% or something right now, and they're in high level positions, and didn't wanna lose 'em when they got pregnant, so my wife started a childcare center, on site childcare center, which is one of the first ones ever in America. (audience applauding) So the other thing is we wanted to be surrounded by friends, so we wanted to hire friends, friends of friends, and we wanted to hire passionate outdoor people, or people who had a passion for something. You know the high school kid that sits there and watches television for six hours a day, with kind of a drool coming out of the side of his mouth and their brain is more dead than when they're sleeping.

There's no hope for those kind of people. I'd much rather get a young criminal or something. (audience cheering) So yeah, we wanted to be surrounded by friends, and so we wanted to hire these kind of people and then teach 'em business, rather than hire business people and then try to instill a passion for the outdoors.

So at the same time, I kind of, when I came back, I started writing a philosophy of business, from those values, and that's what this book is about. It's a philosophical book on different aspects of business, and I read about 50 books on, I figured, I woke up one day and I realized, okay, I am a businessman, and it looks like this is gonna be my life's work. I better figure out what I'm doing.

(audience laughing) So I went out and read about 50 books on business, a lot of books on Japanese management style, which is totally different than the US. I figured they had a lot to teach us. Scandinavian style of management, I mean all kinds of stuff, just to educate myself, because I knew that we couldn't do it the usual way, and that, plus for me the only enjoyable part of business or the most enjoyable part of the business, since I'm kind of a contrarian is breaking the rules, and then making it work.

I mean that's why it's taken me 15 years to write this book 'cause I didn't wanna write a book and then go out of business, go bankrupt right away. (audience laughing) I had to make sure it works. And so then I took 15 people at a time, and we spent a week, or five days, going to different areas up in the hills in the Los Padres and stuff, and doing the same thing.

Instead of talking about our values, we started talking about a philosophy of business, and I was teaching everybody in the company these philosophies, and I didn't trust anybody else to do it. I figured it just had to come from me. I didn't want it diluted, and I did that with every single person in the company.

And now we have over a thousand employees worldwide, and that's one reason why I wrote this book. I'm getting burned out on this stuff. (audience laughing) Well when I was saying that we had become unsustainable, about the same time I started seeing a lot more devastation of the natural world, traveling around in Africa, where I'd been there 10 or 20 years before, and I started seeing how badly things were going, and in this country, you go try to fish a stream that used to have lots of fish, and now it's just a sewer.

And I started thinking about another part to our mission statement. Our original mission statement was make the best quality product, and we always felt that something is perfected not when you can't add anything more to it, but when you can't take anything away. And it's kind of the difference between an old fashioned Cadillac, that was so butt ugly that they had to put all kinds of chrome breasts on it and stuff, you know?

Compared to a Ferrari in those days, it didn't have any chrome on it. I mean, it was just those beautiful lines, and so that's always been our philosophy, but then I thought we needed another part to our mission statement, because really getting concerned about the natural world, and I was very concerned about never having a company that was unsustainable again, so we added in the second part, which says cause no unnecessary harm, and it doesn't say cause no harm, because there's no way you can ever manufacture a product without causing harm. And according to the second law of thermodynamics, entropy, you basically end up with probably more waste than you end up with in the final product.

There's no such thing as sustainability. There's a beginning and end to everything, as any Buddhist will tell ya. And the only sustainability that I know if, the only thing that comes close to sustainability is probably hunting and gathering on a very small scale.

The only economic activity is probably organically grown agriculture, 'cause the energy comes from the sun, and the sun is free, but everything else causes an incredible amount of waste and pollution, but climbing in Yosemite taught me an important lesson, another Zen lesson, that what's important is not the end goal, like in Zen archery, you don't focus on the target. You spend years learning how to do all the different movements and shooting an arrow, until finally you perfect all the movements that then you can hit the bullseye with your eyes closed. And climbing in Yosemite, you do a 10 day climb on El Capitan and you get to the top, and guess what?

There's nothing there. (audience laughing) It's just flat up there. So what's important is how you climb.

And if you compromise the process, I think compromise is the work of the devil. Somehow we've, in government particularly, they love compromise. Compromise is Solomon cutting the baby in half and giving half a baby to each mother, who's worrying over whose baby it was.

So (laughs) I don't know how I got carried away on that one. (audience laughing) (laughs) I always felt that a responsible farmer leaves the land in better shape than when he received it. The forester doesn't just clear cut and then plant a monocrop, but takes just what's needed to keep the forest healthy and then leaves trees for the next generation, and then a responsible government makes its decisions on the society being here at least seven generations into the future, instead of one or two years.

But somehow business is exempt from that responsibility. American style of business is you're supposed to grow this business as fast as you possibly can. You don't have to make a profit.

You just show lots of growth, so that you can have an IPO, sell a bunch of stock to some suckers, and then you retire to seize your world and play golf the rest of your life. Well, I don't believe that is right. I always felt that if the farmer has this responsibility, well so do I, as an owner of a company.

And so we decided to put our company in a path to where we would be here a hundred years from now, so all the decisions made are for the long term, which means we can't grow 15% a year, because one time at an all company meeting I started putting a one and a bunch of zeroes on butcher paper all around the room, and I said, this is how big we're gonna be if we continue growing at 40% a year for the next 40 years. It was a bazillion dollars. I mean, it was so ridiculous you can't believe it, and so we decided to grow at a natural growth, so natural growth means that when the customer tells you that they're frustrated in buying your stuff.

They just got the catalog and you're already sold out, that you need to make more, but we don't advertise on inner city buses to try to get gang kids to buy our black down jackets instead of Timerland or North Face. The reason we got in the trouble in the first place is that with this Synchilla we were selling stuff to people who wanted it but didn't need it. Whenever you're in that situation, you're a victim of the economy.

The economy is gonna go up and down, and you're gonna go up and down like a yo yo, and particular if you really follow the fashion trends, and then you're really in a scary situation. So we made a lot of decisions then to try to be here a hundred years from now, and from then on, we controlled our growth, and we put ourselves, I mean you could call it a path towards sustainability. It's the process towards sustainability that counts, and we also accepted the fact that you can't have it all.

And very few businesses will accept that. We turn away business all the time. I mean, our advertising budget is one half of one percent of sales, which is nothing in our kind of business.

We want people to come to us. We want to have loyal customers who tell their friends, and then if we grow 3%, 4% a year, we can be very profitable at that, and that's fine. I could call Nordstrom's tomorrow and probably get a five million dollar order out of them or something like that, but that would put us on a suicide course.

I've always believed that there's a proper size for any endeavor, and I think there's a proper size for my company. I use kind of a metaphor to show for what we were trying to do, which is make the best product and stuff, imagine a little French restaurant that spends 10 years in getting their first Michelin star, another 10 years to get their second, and then 25 years, they've been in business, they finally get their third Michelin star, and they're one of the 10 best restaurants in the world, and then they say, okay, we've made it, so now let's put in 50 tables. Well there are no three star French restaurants with 50 tables.

It's impossible. In Japan, the very best restaurants in Japan like in Kyoto, it costs you $450, $500 to eat there. The size is dictated by the fact that the chef is the owner, 'cause you can't hire a chef.

Only the owner has the passion to really have one of these great restaurants, and the size of the restaurant has to be so that the chef is cooking and is waiting on the customer at the same time, so he has to see his customers right there, so they're tiny. They're very small. So for what we wanna do, for our values, we can't have a large company.

We have to start hiring more and more MBAs, which we don't wanna do. Anyway, we got out of the crisis, and we've been doing pretty well ever since. In fact, the other value that we wanted to have was to get out of debt.

I didn't wanna ever deal with bankers again, and we're pretty close to that right now, but the last philosophy that I kind of wrote was fairly recently, and it's our environmental philosophy, and I think it applies to a business, or to individuals. You can think of it as something that you could do yourself, because if you're an alcoholic, you have to confront yourself and say, I am an alcoholic before anything happens to stop drinking. I mean, we just admit that we're polluters.

We're using up non renewable resources, and we're making consumer products, and we're part of the problem. So we're trying to be on the process of minimizing the damage we do, and we have a five step program for doing that. The number one is to lead an examined life.

I think most of the damage caused to the environment and to nature is caused unintentionally, and it's just from all of us just blundering along not questioning what we do. If you wanna feed your family healthy food, you gotta know where it comes from, right? You can't just go to the supermarket and buy vegetables.

I mean, the tomatoes might come from Mexico, where they still use DDT, or we're still using all kinds of different pesticides on our vegetables here, so you gotta know. Sometimes you gotta know the farmer, or you gotta, so it's the same thing if you wanna kind of clean up your act, you gotta lead an examined life, and for us in the clothing business, this means asking a lot of questions. Toyota has a management technique that they use to solve problems.

If our government used this technique, you'd see a big difference, but they say government is not interested in solving problems. It just rearranges them and. (audience laughing) So okay, so we started an environmental assessment program, and we hired some people to start asking these questions.

So one of the first questions we asked is of all the fibers used in making clothing, which are the most damaging, and which are the least damaging? Well there's no books on this stuff, and it takes a long time to find some answers, but finally we find out that, of all the fibers, at first we thought, oh, it's gotta be synthetics. That stuff is, I mean they were made out of petroleum and stuff.

But we find out that the most damaging fiber by far is 100% pure cotton. Those beautiful little cotton balls on babies' skins that you see in ads, that's the worst. In fact, it probably uses more petroleum than making synthetics, because all our agriculture uses petroleum.

I have a fact in the book here that I got out of National Geographic. It takes eight barrels of petroleum to produce one cow (laughs). So anyway, the reason industrially grown cotton is so bad is that it uses 25% of the world's pesticides and insecticides, and only occupies 3% of the world's farmland.

And some of these chemicals are so toxic that they cost $500 a gallon, and in some areas of the world, they spray the fields as much as 20 times in the season, so I took a little trip to the Central Valley, the San Joaquin Valley here and went to some cotton fields, and boy it was an education. It was a real eye opener. I mean they're killing fields.

There's nothing out there that's alive. There's no birds, there's no insects. There's no weeds.

There's just these little canals of toxic water, and the cancer rate's 10 times normal. There's crop dusters flying over right over the workers, doesn't matter. And there's no outlet to that San Joaquin Valley.

There's no river that goes to the ocean, so all of that flows out into lower areas and creates these huge ponds, like Kesterson. You've probably heard of that. And then they hire these guys to sit on lawn chairs with shotguns and keep the water fowl from landing, so that they don't have chicks with three beaks and four legs and stuff like that.

And I came back and I said okay, (laughs) I don't wanna be in business. I didn't wanna be in business in the first place, but I really don't wanna be in business if I have to use industrially grown cotton, and cotton was 20% of our sales, and I said I don't care. I'm not gonna do this.

It's kind of like you have a company, you're one of the best employers in America, you're hiring people and you give 'em great benefits, but you're making landmines. But you're making great landmines, the highest quality landmines. (audience laughing) And you go to Cambodia and you see all these people walking around with one arm, one leg, and you see the results of your landmines, and so, so I gave the company two years to get out of making anything out of industrially grown cotton, and you don't just call your fabric supplier, you say oh, you know, that 10,000 yards of shirting I ordered last week, switch that to organically grown.

(laughs) A few companies had tried using organic cotton. Esprit tried it, Vanity Fair tried it, but what they did is they tried a little separate line, and they figured that well, if this takes off, then we'll grow it, and if it doesn't, we got our regular business going, so they weren't really committed like I was. I just told the company, that's it.

Either we make this work, or we're never gonna use cotton again. And so it mobilized the entire company, and I've never seen the company do better work. And they were all, everybody went to the Central Valley.

They all saw this, they came back, they were all absolutely committed, and we started talking to organic farmers and sometimes cosigning their loans so that they could get a loan from the bank 'cause the bank wouldn't loan 'em any money if they grew organically. We had to go to find a gin that would process our cotton, 'cause the gin separates the seed from the cotton ball, and these gins are just dripping with cotton seed oil, and the oil is where all the chemicals are concentrated. One of the chemicals is Agent Orange, 'cause they use that to defoliate the plants so the mechanical pickers can pick.

Well anyway, cotton seed oil is not regulated by the FDA. Somehow they've got it so that they don't have to worry about that. And check out your chips someday.

If there's any cottonseed oil in there, don't eat it, and then they feed the cottonseeds, after they press the oil out to the cattle, so you're getting that in your beef, anyway, we can't run. (audience laughing) (laughs) (audience applauding) We can't very well run our organic cotton through this gin without convincing the guy to clean it first, and then we get to the spinner who makes the yarn and stuff, makes the fiber, and he doesn't wanna deal with us, because our stuff is coming in with seeds and stems and sticks, little pieces of leaves, because we didn't use defoliant. The farmer had to do it in a natural way, kind of starve the plant for water, just at the right time of the year and stuff, so I can tell you that it wasn't easy switching over, but we did it, and we found a few good partners, and we convinced 'em that this was gonna be the future, and we made it work, and.

(audience applauding) But that's only one question. We're supposed to ask five questions. So then we said okay, well what are we gonna do, how about the dyes that you use for dying cotton?

I mean, we never had to worry about this, 'cause we just call a fabric supplier, and he'd come with a big book, and we'd look at all these different prints and fabrics and say, oh yeah, give me this, give me that. So how about dyes? So we tried to find out if these dyes are toxic.

Well nobody wants to tell you, and nobody even knows. The people making the dyes haven't even asked the question. Well finally we find out, yeah, this stuff's toxic, but there's a company in West Germany that makes cotton dyes that are non toxic, except one color is toxic, so okay, so we don't do that color.

Okay, that's two questions. Well, where are they gonna dye this stuff? Is a big outfall going into a river from the dye house?

So we sent somebody over to Portugal, 'cause we're gonna make flannel shirts out of 'em, so they go there and sure enough, here's all these dye houses on this river that goes into Porto in Portugal, huge river, big outfall pipes going right into the river. But the last dye house down at the mouth of the river can't use the water 'cause it's jet black, so they bought all this fancy machinery to clean the water so they can use it, so they clean it, and then they dye their stuff, and then they run it back through the machinery again, and it comes out pure into the river. So there you go.

Now we got a choice. Education leaves you choices. The uneducated person has no choices.

He's gotta go through life like this. So anyway, so then one more question, well what's gonna happen to this cotton clothing when the customer is all done with it? I mean, we should be responsible for that product all the way from birth till death, and beyond.

I feel a company should be responsible not only for the product, but for how the product is made. And so cotton, when you're done with it, if you bought a pair of bell bottom pants, and suddenly they're out of fashion, you throw 'em away, right? Or you give them to Salvation Army and then 15 years later it comes back into fashion, and people are rushing to buy 'em again, so that was a problem, so we were absolutely committed to not putting fashion into our sportswear.

If the collar points are five inches long, well we don't make 'em five inches. We do 'em three inches, so that they're never in fashion, never out of fashion. (audience laughing) And the difference between a Hawaiian shirt that you can buy at a vintage Hawaiian shirt store for $300 and one that's 50 cents at the Salvation Army, they're both Hawaiian shirts, but one is classic.

One never goes out of style, and the patterns line up, and there's a big difference between the two, so we realized that the most important thing we could do is to try to make the clothes last as long as possible. And not go in and out of fashion, because we're responsible for 'em, but I can tell ya one thing that's just happened very recently, that is really exciting, it's the most exciting thing that's happened in the company in a long time, we've partnered with a Japanese mill that's just spent 100 million dollars in a recycling plant, where they're gonna recycle polyester. Now we've been making 40 different products, all our fleece and stuff, made out of recycled soda pop bottles, but when you're done with those products, and they're all worn out, you throw them away, but now we're telling our customers that when you're done with your Capilene underwear which is polyester, you bring it back to us and wash it first.

(audience laughing) Especially the thongs (laughs). And then we're gonna bundle that stuff up, and we're gonna send it back to Japan, and all the ships going back to Japan are empty anyway. (audience laughing) So the shipping rates are really low.

We've calculated all the energy usage, and it's gonna go to this plant, and they're gonna melt this stuff down, and take it to it's original polymer, and then make fiber, and then we're gonna make more underwear out of it, so we're gonna complete the circle, what Bill McDonough calls cradle to cradle, and it's never been done with clothing, and we're starting with our Capilene underwear, and we're gonna be eventually doing it with all our polyester, and we just designed a pair of surf trunks that instead of nylon, it's polyester, with a view towards a couple years from now we'll be able to do the same thing with that. We're making one shell that's all polyester, and we're working with another factory that's gonna do the same thing with nylon 6, so we're used to recycling aluminum cans, and making more aluminum cans. When you buy an automobile, 95% of the steel in that automobile comes from another automobile, and so now we're gonna do it with clothing, and right now probably the least damaging clothes you can buy are fiber that you can make clothes out of is probably hemp, but I can see that soon it'll probably be polyester, and nylon 6, because in the process, we only lose 5% of the material, and it only takes 20% of the energy to make a new product from the old product, then if you made petroleum.

So anyway, I hope we're not all wearing these red leisure polyester suits someday, but. (audience laughing) So anyway, the second part of my five steps is to clean up your act. After you've educated yourself, then act on it.

And then the third part is we're always gonna be polluters, and we're always gonna be consumers. We're not citizens anymore. We're consumers.

It's not the government that wants or oil companies that wanted to drill in the Arctic National Wildlife Refuge. It's us. We're the ones.

And so, we're never gonna be perfect, so we gotta do some penance, so that's where we take 1% of our sales, it's not 1% of profits. It's 1% of our total sales, and we give that away to organizations that are doing some good. Since the mid 80's we've given away about 22 million dollars, and what we do is.

(audience applauding) Well that's a lot of your money. (laughs) Thank you. (audience laughing) What we do with it is we give it away to environmental causes, and people ask us why we don't give to social causes.

Well, I think if you start asking the five questions with any cause, with any problem in the world, you'll get down to the real cause is an environmental cause, whether it's the hurricane in New Orleans or poverty in Africa and genocide, it's all, if you ask enough questions, it gets down to us destroying our planet, and government is not interested in causes. They're interested in working on symptoms. One out of eight women in this room are gonna get breast cancer, and that's up from one in forty in World War II, so you can't tell me it's genetics.

It has to have some environmental cause, and yet I've found out in writing this book that only 3% of the monies that go to breast cancer research go to trying to find environmental causes of breast cancer. All the rest goes to finding cures. Well, (laughs) your average house has 5,000 toxic chemicals, most of which haven't been tested to see if they give you cancer.

There's only been under a thousand chemicals that have been tested to see if they give you cancer. So you can give money to breast cancer research, but give it to organizations that are working on stopping the use of these pesticides and these toxic chemicals. (audience applauding) So of the powerful forces in our society, whether it's federal government and state government, local governments, there's one that's more powerful than any of them, and that's civil democracy, and that's who we give our money to, is 30,000 activist organizations working on environmental causes in America.

Think about this country was started, a bunch of activists dumped some tea in Boston Harbor. People say, well Lincoln freed the slaves. Well, Lincoln just wanted to keep the Union together, really.

The slaves were being encourage to flee the South through the Underground Railroad funded by Northern philanthropists, a bunch of activists. And on Civil Rights legislation, it wasn't Johnson. It was Rosa Parks, a senior citizen, refused to get off a bus, and little black kids refused to go to segregated schools.

Women's suffrage, Vietnam, (laughs) a bunch of activists got us out of that stupid war, so I really believe in civil democracy, and in fact one of the lessons of nature that is really important for me is nature loves diversity. It's always trying to make new species, it hates monoculture. It hates a monocrop.

It just loves its diversity, and why not solve all our problems with hundreds of thousands of little NGOs, Non Government Organizations around that are doing good work, instead of just bloated bureaucracies and stuff?