Building North Face – A Billion Dollar Sustainable Company

Going Green host Dylan Welch had the opportunity to sit down with the legendary founder of North Face, Hap Klopp on a recent podcast episode. Hap talks about how he left corporate America to start his own company, a sustainable clothing company, and how he scaled it up to be worth billions of dollars. Check out this episode and listen to Hap’s experience building North Face – a billion dollar sustainable company.

Please note, this is the direct transcribed text of the podcast episode. To listen to the full episode, follow the links below.

Dylan Welch
Hey everyone. Thanks for tuning into another episode of going green. One of the guests I am most excited to have on this show, the founder and former CEO of North based here’s company, also author, professor doing amazing things. So without further ado, Hap thank you for being here on the show today.

Hap Klopp
Nice to be here.

Dylan Welch
So, uh, we’re not too far away. We’re on zoom right now, but that’s okay. Um, let’s start at the beginning. How did you get involved in the North face company?

Hap Klopp
Well, I couldn’t work for anybody else after I left Stanford with an MBA and I, we had run a family company during my undergraduate and graduate time because my father died. And so I ended up running a wood products company, made windows frame session door, and I concluded that we weren’t competitive. Didn’t see where I was going to be successful is going to have to raise a lot of money if I wanted to grow it and have to move the factory probably changed the management. Since I’ve known those people, my whole life, I thought maybe a better thing would be to sell the company.

So I ended up doing that and then, uh, finished my MBA and I was expecting somebody to want to hire me because I had all these great ideas that were different than anybody else was doing, which is, I always think brilliant. I’d run a company out of Stanford MBA, and nobody offered me that opportunity. So I thought about working for a large company and looking around for an opportunity while I was there. I didn’t feel really good about that because that was sort of like being 80% into the company. And I always believe you’ve got to take on a job. You should do it 120% of that 80%. And, but since nobody had offered it, I interviewed with a lot of consumer goods companies and I found a strong disagreement with many of the practices of the large companies.

Uh, first one is I believe, sort of in planned obsolescence. And I didn’t believe in planned obsolescence. I thought it was crazy. It was one where women are paid half of what men were paid. And one where there was a lot of restrictions on who you’d hire, whether it was immigrants or, uh, that were kept from the outside or whether it was a gay or lesbian or whatever. Uh, they wouldn’t hire those. Now it’s suck. What you need is the best people. What you need is to treat everybody equity. What you need is, is to have an environmental stash. You have a great company. So anyway, I’m interviewing people not getting good feedback and I up, uh, going to Proctor and gamble and Procter and gamble invited man, fabulous company, doing all these wonderful things. I had a great training program for product management. Well, uh, I got there at Cincinnati.

That’s not exactly Silicon Valley in terms of the pace of what we’re doing. And I had an interview an eight hour interview, eight hours, eight different people an hour each. And the first one was with the HR department and he asked me, he said, is your name hap or is it Kenneth? Cause I say both on your CV. And I said, well, it could be either one, but most of my friends call me hap. They said, well, when you work here, it’ll be Kenneth because nicknames don’t give via gravitas that you need to manage older people and you would be doing that and I’m going, Oh my gosh. You know? And he said, and you know, of course you need to wear a white shirt and a tie. Well, that pissed me off. I mean, I was wearing a white shirt and a tie, but there’s no productivity analysis that will show you white shirts, get you any more productivity.

So I realized I’m in the wrong place. And then he asked that question. That’s always been all question, always laid out there where he said, you know, if you were to join our organization, he looks up as if communing with God. If you were to join our organization, where do you envision? You would be in five years and knowing I’m out of there. I said, well, if I are, and I would like to underscore it, if I, uh, to join it, I would expect to be president of the Procter and gamble in five years. But that means passing you in five minutes. And I don’t think that’s any big deal. That was, they actually offered me a job, but it was a great interview when he was saying is what it was like there. And then I could decide where I was going to be lots of times in interviews, they ask you, what do you want

And then they tell you, that’s what it is. And then osmotically over time. It dawns on you that it was all bullshit. You know, that is what it is at all. And this person gave me the opportunity to look at it. And I realized that because I didn’t fit into the system the way it was. And I couldn’t do that. What appealed to me more and it had an entrepreneurial bent, but to start a company of my own, where I could put in my own idiosyncratic ideas, which frankly at that time were a lot less in the mainstream than you have now. And, and believed in a triple bottom line business, which is an equal commitment to profits, to the planet and to people. And, uh, we used a couple of key words as we developed a disruption quality, but we had a lifetime warranty on our product, which I thought was a great message

Every financial person in the world said it was crazy. But what I believed is most environmental message that you can have is a product that never goes to landfill even better than recycled. And I also believed it was a statement about where our company stood. That would be a good marketing position. It was one in terms of our products, because we were inventing products that never been there. We basically revolutionized the camping business by super lightweight materials in doing that were going to have much more expensive product. However, uh, if it lasts a lifetime, then the cost per use is probably not as high. So it helped us from that, that marketing message. And then the environmental standpoint, what we were trying to do is figure out how we could sell environmentalist, because this is a time not dissimilar to where we are now with a lot of turmoil in the cities and a lot of dissatisfaction with what’s going on.

I’m not just talking about the pandemic, but whether it’s homeless issue, whether it has to do to gun rights issue, whether it has with the marginalization of blacks, black lives matter and an awful lot of negativity, income, inequality, all those things going on. Well at that time, the predominant, uh, dissatisfaction was with the Vietnam war, but also it was Berkeley. We’re starting there. The free speech movement where people felt they should speak up, antiwar, uh, efforts were out there. And a lot of people said, you know, there’s gotta be a better way and want to go to the wilderness. And Thoreau had something that he said that I really hung on to the whole time were developing it, which was in wildernesses, the preservation of the earth. And we really believed it. And so what we believe we would do, what I believe we would do at North face has changed the world by facilitating people, going to the wilderness and in doing that, they would have an appreciation for the wilderness and appreciation for earth.

And I have appreciation for how to live life, not have that planned obsolescence. I disliked elsewhere and whatever. And it’s yeah, we called it an environmental that time. Now it’s maybe protection of the planet. But, uh, I was worried to be very honest. I was worried about being too preachy about it. It’s what we stood for, what we believe. But we were afraid that we get resistance. If we just stood up and said, we’re an environmental company, you know, the earth first, or that, you know, everybody’s going to say, everybody talked about tree huggers and granola people and whatever. And, and they would block you before they heard what you’re doing. So we came up with a novel approach, uh, to be able to say, we’re an environmentalist, which we thought was not going to be offensive. If you had a sense of humor, you would understand it recreated a negative award and it was called the ice nine award.

And Ice-Nine came from Kurt. Vonnegut’s writing in the cat’s cradle about the scientist had this wonderful invention that was going to convert all of the water in the world into ice. Of course it was destroying the world, but it was such a great invention had to go there. So in his honor, we created the ice nine award, and each year we would award it to the most environmentally destructive individual or organization in the world. One year we gave it to the U S Congress and got all sorts of nasty letters from Congresswoman and AIDS and things. But what we were doing was positioning ourselves in the environmental world. If you had, if you knew Vonnegut and had a sense of humor, you’d see it was a little bit tongue in cheek, what we’re doing. But on the flip side, we were making a statement by coming in from, from the upper side. Anyway, that was a lengthy introduction, but we started it out of business school cause I couldn’t work anywhere else. And we started it because my ideas didn’t fend anywhere else. And then we just sort of hung on. And as an entrepreneur, does you take a while and hopefully you collect a community around you of likeminded and soul,

Dylan Welch
You touched on some amazing stuff. I wish I could talk to you all day because I could. But, um, you touched on some really key things. One is the entrepreneurial side of you, which basically is like, I don’t want to work for anyone else because if I work for someone else, they’re going to put a limit to what I can achieve. And we have a lot of, I’m a business owner myself, and I felt the exact same way when I went into, you know, a job right out of college. And that’s why I started my own business. And another thing you touched on is the tree hugger sort of that terminology. And I think what’s most important is when you can combine your entrepreneurial side with a business that’s successful.

And it also gives back to the earth in one way or another, that’s kind of that combination that really takes it to another level because the naysayers and the people who don’t like the term tree hugger, as soon as you start showing them the profits you’re making and the growth that you’re having and the expansion that’s going on, that kind of shuts them up a little bit, you know, and they can be like, Oh, okay.

Maybe there is something behind this. Um, and that’s really the entire idea behind going green is it’s, you’re able to be successful, provide for your family, make money, grow a business that also gives back. And I think you’re the epitome of that. So it’s so cool hearing that. Um, my next question is what was that kind of tipping point where you, you got the company up and running, it’s going, and then you start to realize, Oh man, like this is taking off, this is exploding. This is big. Like, what was that moment where it sort of went from, you know, a small business to that national and international brand that every single person on the planet knows, like, what was that moment like? Was there one moment for you?

Hap Klopp
I don’t know. There was, although, as you said there, you know, there’s a lot of stairsteps along the way. I often describe brand and I don’t believe brand is marketing. I don’t believe as a logo. I don’t believe it is a tagline brand is your DNA. And if you understand what your DNA is, and then persistently consistently represent that with every stakeholder in the world, every touch point, whoever it is you’re dealing with over time, like coral, you will build this beautiful thing. You don’t see it change daily, but at a certain point, it gets to this inflection point where it’s just so unique and so beautiful. There’s nothing like it. And that’s what you’re trying to do with the brand. You’re trying to build something psychotic. And so every step we did along the way, let us that to do that. And we started out in the backpacking field and we, uh, we grew beyond that into skiing world.

We had extreme skiers and then we started becoming secondary users, use an old variety of ways. Ultimately it ended up in the marketplace of, of, uh, fashion. However, we never chased that markets when that market came to us. But the, probably the pivotal point, I think, where I kind of knew that we had the latitude and the permission of the market to be what we wanted to be. It was when I did this, this small survey, I sent it out, statistically probably not valid, but basically trying to find out because we had a lot of products. I was trying to find out which products do you like and why, and what, what is it that we’re doing? So we do more of it, pretty simple, right? So we got one answer back that just convinced me that we were there and the answer was, I don’t know what you make, but you make good shit.

And at that point I kind of felt like, okay, we had the permission. We, we couldn’t abuse it, but we had the permission to go ahead. And all the things that we’d done in terms of environmental, in terms of making a breakthrough products, in terms of innovation, the disruption we were doing in the market place kind of came together with that. And, and, uh, you know, going to what you were saying earlier, it’s great when you can combine what you love with making a profit. But from our standpoint, we never really, uh, cared that much about how much profit we made. We just wanted to make enough so that we could have a very good, sustainable, healthy growing business. Now we were doubling every year, so that implied bringing lots of new people in and lots of challenges as we went along. But you know, when they sold the company was only a couple hundred million and it, today it’s owned by the VF corporation and they’re almost 3 billion in sales.

We didn’t envision 3 billion nor were we sending that as a target. We’re going to be one of the unicorns. I mean, the term doesn’t exist then except with the animals. But, uh, you know, we’ve said is we’re going to make the best product and we’re going to be responsible and we’re going to be happy when people do it, we’re gonna make a product that lasts forever. So our customers come back and say, you know, I like you. I like what you’re doing that to us was a company that we could be proud of. It would be proud of our products. We could be proud of our stance. Uh, we did things socially that others didn’t do. We spoke 14 languages and our factory at all times, as I said, we paid women the same as men. We hired people irrespective of where they came from or what their attitudes were or their sexual persuasion, because we put together the best team that you could possibly have

We felt good about that. And then we got behind causes. The Vietnam war issue was one. So we gave a thousand tents, which is a big deal for us at that time. Even a thousand tends to people that marched across the country and the, the March for peace. Uh, we were the first corporation that behind the AIDS awareness, because initially it was thought to be homophobic disease. Hence there was a stigma and nobody was addressing it, which was ridiculous. So we decided a macho company like our own getting behind it was good. And then we kept hammering on the environmental thing, whether it was sending an expedition to Mount Everest that had the goal to bring back more trash than it took up, which was unusual in that world or whether it was making a product that lasted forever or whether it was our own practices and recycling, all of the things were good. And so we became, because of all those things that we’re talking about, we became an employer of choice. Everybody talks about, Oh, where are you going to find your people? It’s tough. Do they have to pay a whole lot? What we said is we’re growing healthy company, doing the right thing. And people were stumbling over themselves to find us so they could work with us

Dylan Welch
That’s amazing, honestly, like that’s something I strive to hopefully achieve with my business. And I’m sure there’s a lot of entrepreneurs and business owners watching this right now that want to do the same thing. What’s one piece of advice that you could give to an up and coming business owner, entrepreneur, who wants to do what you did, which is build a company that’s also sustainable environmentally friendly.

Hap Klopp
Well, the first thing is your open Pandora’s box. When you say, what can I do? Or what could I advise that, you know, after many years, as you can see from my gray hair, I developed a lot of thoughts about that, but, but the first one is think big, but start small. Don’t try to boil the ocean. As the old business term is, don’t try to change everything from the outset. Don’t try to raise $500 million to do something because that will distract you. If your mission stay true to your core and understand what you’re going to do. So understand your DNA. Uh, I, when I do consulting, which I do with companies, I ask them to come up with the three words that represented their DNA and apply it to every aspect of your business. And then every year, keep ratifying that you’re doing that.

So, you know what you stand for then think what your big goal is. We thought we were going to change the world by taking people to the wilderness. We, we created products that could be replicated anywhere in the world. Like pants could be replicated at a low cost that could solve the world housing problem. We were just solving a mountaineering problems, but you could solve it with that because the designs were so unique. And so we had the big dream, but we did it step by step. And Jeff Bezos had a great quote and you’d think with Amazon, they’d have all the money in the world, but he said, whenever you start a project, use the two pizza rule. And by that, he said, your project at the outset should be so small that the team could be fed with two pizzas. If it’s any larger than that group, you’re too large, you’ve invested too much in it

And part of the reason of that is, and it goes back to advice is you shouldn’t be afraid of failing because a, of is experimentation. And when you’re trying it, particularly if you’re novel and new and trying to do something, if you invest everything in that, and you won’t change, you can’t pivot, but usually you have to pivot. And so the idea is start small, make some failures. Don’t, don’t worry about it. Discard what doesn’t work, move on to what works. There’s the Silicon Valley way of, of thinking called design thinking, David Kelly D developed those. It’s basically about being empathetic with the customers, really listening to the customers, rapid ideation, mock up things with duct tape and whatever, to get a first sample of what you’re doing. Find out if it works, throw the things away that they don’t want keep on with the things that they do want and doing that you don’t commit yourself to a path that a huge investment, huge promise. It allows you to, to move in concert with the world around you. It allows you to actually respond to what people want rather than just what you think. And you can be more, more flexible, but you also probably more successful.

Dylan Welch
That’s great information. I’m speaking personally, we filmed an episode of going green and Peru last November. And we were in Cusco getting ready to go to Machu Picchu. And it was a little bit colder than I thought it was going to be. So exactly. Cause I’m from San Diego, I think everywhere is just, you know, tee shirt, shorts, weather. And I went down to the center square. Um, I bought a North face that kept me warm the entire trip and, uh, and it was great. And I still have it. It’s one of my favorite jackets I own to this day. Um, so thank you again so much for coming on. We’ll have to have you on again, because there’s just so much to talk about. You’re the epitome of, you know, going green in every sense of the word for this show, at least. Um, and I know I draw a lot of inspiration from you. I’m sure a lot of others do. So. Um, where can we find your book? Cause that’s something I want to go and purchase right after this.

Hap Klopp
There’s two of them in there. They’re both on Amazon. You can pick them up. Uh, one is called conquering the North face. That’s about success, all of his storytelling about stories and people, some of it humorous, some of it, uh, I think empathetic with the world. And then a second one is called almost, it was about a company that should have succeeded and failed and, and embedded in it, or a lot of reasons why companies failed or entrepreneurs. So you can kind of find them there and I’m on LinkedIn. If people want to reach me there. Uh, and I’m around. As I said, I, uh, I teach, I lecture, I speak around the globe on almost any topic, but, uh, particularly about, uh, leadership, about branding, about, uh, quality, about strategy, about how something can be for the future. And this is a time where a lot of people are worried what’s going to happen.

It’s going to be the greatest opportunities you ever saw coming out of this pandemic. But entrepreneurs are probably the one they’re going to capitalize on it. Maybe because they don’t have any fear or maybe because they are so driven to succeed and they’re not paralyzed by the world around them. So hopefully they, uh, some of the great businesses that type of you’re trying to encourage will either start or will it flourish, uh, after this, when we do come out inevitably as, as they do out of any crisis we’ve faced. Yeah.

Dylan Welch
Well, thank you so much again for coming up. Thank you. Look forward to staying in touch and to all of the listeners and viewers out there. Thanks so much for tuning in to going green. Be sure to get those books, I’m going to purchase both right after this and stay tuned and we’ll see you next week with another episode of going green. Thank you.

Listen to the full episode of Going Green with Hap Klopp on Apple or Spotify