How I Built The North Face From Nothing

“Water came racing in. The roof caved in. Our computers were fried. We had zero access to our own information.”

Imagine you’ve spent years building an iconic brand, only to have a literal "Black Swan" event wipe out your entire operation overnight. Most founders would have folded. Hap Klopp, the legendary founder of The North Face, did something else: He went skiing.

In this episode of Mork Unfiltered, I sit down with the man who didn’t just build a jacket company—he built a global movement. Hap takes us behind the scenes of the 1960s outdoor revolution, explaining why he turned down a safe corporate life to solve a personal "pain point": the fact that gear back then was heavy enough to kill you.

We dive deep into the "Dark Day" when his warehouse roof collapsed, and how he used that disaster to forge a culture so strong it became the company’s DNA. Hap’s take on leadership is a reality check for the AI age: systems can be copied, but your culture and your "vision" are the only things that are truly un-hackable. If you’ve ever felt the weight of burnout or the fear of a failing pivot, this conversation is your roadmap back to purpose.

Episode Chapters:
[0:00] The Day the Roof Fell In: How Hap handled a total business wipeout (and why he went skiing instead of panicking).

[5:10] Escaping the 60s "Urban Chaos": Why the wilderness was the only cure for the social turmoil of 1968.

[11:35] People Don't Follow People: The secret to building a vision that transcends the founder.

[18:22] The "Anti-Burnout" Secret: Why having a deeper purpose makes 16-hour days feel like a choice, not a sacrifice.

[24:15] Possibility Thinking: How to run a meeting where "No" is a forbidden word.

[31:40] Crisis as a Super-Power: The step-by-step "SWAT team" strategy used to save The North Face from bankruptcy.

[42:10] The Lonely CEO: How to find a network that tells you the truth when your world is falling apart.

[50:30] Sidelined by the Board: The moment Hap told his investors, "Fire me if you want, but I’m right."

[1:00:00] Lightning Round: Hap’s dinner guest from history and his #1 advice for the next generation.

#Resilience #TheNorthFace #LeadershipLessons #Entrepreneurship #BusinessCulture #HapKlopp #MorkUnfiltered

Transcript

SPEAKER_01 0:00

Water came racing in, the roof caved in, water went into the computers, it fried the computers, we don't have access to any information.

SPEAKER_00 0:07

People don't follow people, they follow visions. What can you share with the audience about what it took to get through that?

SPEAKER_01 0:14

Well, I knew I couldn't work for anybody else. If you're building your business on purpose, uh it's a lot harder to burn out.

SPEAKER_00 0:20

When you are under that kind of pressure day in, day out, how the hell do you stay grounded? Welcome back to Morgue Unfiltered, folks. Your warehouse roof has just collapsed. You've lost every order, every computer, and every shred of customer data. The fire department won't let you in your warehouse, and shipping of all your products and services starts tomorrow. So what do you do? Well, if you're North Face founder half klop, you go skiing. Seriously, he went skiing. And the decision, that's the whole point of today's episode and of this lesson. Today we're going to get into leadership, resilience, culture, and what it means to build something that really actually means something from the man who did it before all of this was cool. This is Morgan Filtered. And this is the story of the North Face founder, Hap Clark. Hap, welcome to the show. Thanks for being here today, man. Thank you, Patrick. You say it better than I.

SPEAKER_01 1:21

I'll just listen to you.

SPEAKER_00 1:24

Well, that would be that would be a really boring monologue. So I'm glad you're able to join us. And, you know, you have a fascinating uh story. It was so great to connect with you, you know, on California a couple of months ago. Uh, you know, and I want to start today's episode by by going kind of way back to the beginning. Take us back a little bit to 1968. You know, when you decided to embark on this journey to build the North Face, um, what were you what were you kind of searching for in your life at that point when you decided to start this company?

SPEAKER_01 1:55

Well, I knew I couldn't work for anybody else. Uh, because that's a great place to start. Too much hubris, and I had a lot of idiosyncratic ideas that I developed uh as I was growing up about how a business should be run. And frankly, when I went around and looked at businesses and interviewed in them, uh, I wasn't seeing what I wanted. I'd run a family company for a while. My father died while I was in college at Stanford. So I'd had some experience running a business. I sold it uh because we weren't going to survive if we didn't change a lot. And also it didn't have many of the things that I wanted. But when I went out and was looking in the in the world, I wasn't seeing that. And so if you can't work for anybody else, uh probably the only thing you can do is develop something of your own. And that my feeling was to do it around something that I knew. I'd grown up in the outdoors for a long time. I believed that a company could do good and should do good, and I believed a particular good that would really transform the world was one that had affected me my whole life, and that was going to the outdoors. And I I found that when I was in the outdoors, I had uh an entirely different perspective than what you saw in the cities. At the time we started it, things were pretty tumultuous, uh, not so similar to where we are now, but that was the 60s when you had uh Bobby Kennedy and and Martin Luther King killed, and you had the Black Panther movement, you had uh Vietnam War, on and on and on. But those were all urban problems. And the moment that I got out into the wilderness, I wasn't thinking about those. And I I thought that if I could build a business around helping people have that transformational experience, going to the outdoors, uh, it would be worthwhile. I didn't know if it was going to be a large company, but I wasn't dedicated to making the biggest. I just thought I could make the best company, a company that really did have values, and we could stand for those values.

SPEAKER_00 3:52

It's interesting because it sounds almost when you describe it that you almost felt like you had a calling. Why why was why was doing something like that, you know, kind of tying nature to people, making an impact in people's lives? Why was why was that so important to you?

SPEAKER_01 4:08

Well, uh I if you feel it, uh, which I experienced, I knew that I knew something good. I it was, you know, I had the that that cat smile when it captured the canary. I I knew it was something worthwhile. And I thought that I I thought I would be in business, and uh but I didn't want to be in the traditional business. I had my Stanford MBA and I knew what that was about, and to me that wasn't fulfilling. It wasn't doing everything you could, but uh some of the fulfillment I saw was out there. So calling is probably a good definition, but uh beyond that it was an understanding that uh I could share some things and build a business that uh that had something of substance underneath it. And I wasn't interested in the throwaway world uh because when you're in outdoors, you you experience the fact that you don't want a throwaway world. And and so what I could see was sustainability was really critical. I could see the protection of the environment was really critical, and that and I could see the people that would do that uh were the people oftentimes the ones that would go deep into the wilderness. So my my thesis, my uh that I was adopting, the one that I the problem I was trying to solve was how do you get people deep into the wilderness to experience what I did? And the the simple issue was the products were way too heavy. A few people really physically fit, primarily men, but if you're really physically fit, you could go out and experience it. But uh, for it to be something that a lot of people would do, you had to have lightweight gear that was really trustworthy.

SPEAKER_00 5:52

How much of that pain point did you experience personally? How did how did you come to like see and experience that pain point?

SPEAKER_01 5:59

Well, uh as I was growing up, uh grew up in Spokane, Washington, and and around there, that's what you did. You went to the outdoors and whatever. And the gear was uh that we wore uh and carried was very heavy. Using canvas duck for backpacks, there was uh Trapper Nelson packs that were out there, the sleeping bags were 15 to 20 pounds, and and uh then you had food that you were going to carry. So if you had and the tents were generally pretty heavy, they were almost canvas and they were out there. So when I went to places and around here, I went to Canada and went to Glacier Park and and places like that, uh it it was a real challenge to get off the the beaten path to go 20 miles or 30 miles. And there, of course, were the intrepid ones that were really expeditionary people. I was not that, I was a little just doing it for more uh a lifestyle than anything else. But I could see that I that not everybody was going to be my age, not everybody was going to be as fit as I was. I participated in athletics the whole time when I was in school, and and so I it it was easy for me to do a lot of things, but I didn't see a business built around everybody having to be a college or a high school athlete and being of that age bracket.

SPEAKER_00 7:20

How how important do you think it is as an entrepreneur to work on something that not only solves a relevant business problem, like like you said in this case, you know, the weight of the gear was like was a major issue. And I can see that especially being an issue more for women rather than men, uh, although it affects everybody. But how how important is that for entrepreneurs to pick not just something that addresses a relevant pain point and could be a business, but also something that like has, you know, is connected to a deeper sense of self, a deeper sense of who you are or what gives you meaning in your life?

SPEAKER_01 7:54

Well, uh a persistent problem that people have in business is burnout. Right. Uh and uh if you've got a purpose, if you're building your business on purpose, uh it's a lot harder to burn out. You're gonna have challenges, you're gonna have that sawtooth edge of one day you're up and the next day you're down, and you know, the environment's hitting you and others. But the reality is you have to have something that drives you beyond that. And if it's and if you look at many of the professions and many of the people that make money, they aren't very satisfied with it. And and and so I th I I think if you have that, it helps. It doesn't solve everything, but it's certainly uh a great assistance.

SPEAKER_00 8:39

It's very interesting that you say that because I remember at one point, you know, there was a young entrepreneur, the creator of Roblox. I don't know how familiar you are with Roblox or if you've got grandkids that play with Roblox, but my my daughter's very into the into Roblox. You know, she spends hours on her iPad building like houses and all sorts of crazy things, and it's just a really immersive experience. And I remember he sold his company for several billion dollars. And I remember him putting a post on X very publicly about how depressed and how unhappy he was following the sale. Um, and you know, most people see an entrepreneur have a successful exit like that, and they're like, Well, if you've made billions, you should you must automatically be good. Right. And and for him, it seemed that, you know, that this the sale of that company not only brought you know too much wealth too quickly, but almost kind of robbed him of his sense of identity. When you hear something like that, you know, especially as somebody who also teaches entrepreneurship, what what's your take on that path?

SPEAKER_01 9:42

Well, it it makes a lot of sense to me. It really resonates. Uh first of all, if you were building something like that, uh uh probably your goal wasn't to make a lot of money. Right. That was sort of a byproduct of it. And so and and most people, as you were saying, would look at it from a distance and say, well, they made a lot of money, so they must have met their goal. But that wasn't why they were doing it. And so if you're uh leaving that and you're leaving your purpose uh and don't have another way to pivot to something else, uh you the the fact that he made money is not very satisfying. So so it it definitely makes sense. And I I would presume that uh looking at Roblox from uh a little bit of a distance, it was probably a a an interest that he had in terms of building, in terms of of structure, in terms of something like that. And if he didn't immediately have another place to go with that idea, then he probably would be uh would be struggling for it. But I I I think purpose makes the hard work a lot easier. And bus building a business is hard work. I I used to get in the office at five in the morning and I'd work you know fifteen, sixteen-hour days and and sometimes six and seven days a week, and and uh yet it didn't seem to me like it was a sacrifice. Right. But if I was just pursuing it for money, it probably would have rather quickly, not quickly, but over time, become a burden, become something that might burn me out.

SPEAKER_00 11:21

You you talk a lot, you know, in your book, you talk a lot about the importance of culture, right? And and you talk a lot about the importance of of culture over systems. Um why do you think, particularly in today's day and age, why do you think so many companies get this wrong?

SPEAKER_01 11:37

Well, as I look forward and look at AI and how that's gonna impact things, I think it's really gonna be wrong. Because most of the systems and things like that can all be replicated by a machine. Now, if you look backward a little bit, that w didn't exist except I spot it as being somewhat transitional. And that uh people don't follow people, they follow visions, and they follow and they don't give their heart to a company unless it's the culture. They don't give it to the systems, they don't give it to the procedures. You need all of that. You need it for efficiency and optimization and those things, but that isn't why people are drawn to the jobs that they have. And what I was interested in building, and I would advocate uh for others that uh want to do something uh that is really meaningful, iconic, if you will, is to have something which transcends just building an optimized company. Uh and and candidly, the arguments we used to have inside the North Face were esoteric at times, but we're talking about would you make it the best product or would you make a better product? Now, if you made a b you made a better product, you could really optimize it, you could get efficiencies and whatever. And if you want to make the best product, suddenly you're introducing a new material or an idea that had never been done before. It's going to create chaos, it isn't going to give you the certainty that you have out there. We created a culture around the best in which we gave up some optimization, we gave up some of that uh total refinement that you would have towards the excitement of something new. There's a gr that great quote from uh that I heard, which is whatever you can do or believe you can, begin it. Because boldness has genius and power and magic in it. And and part of that culture is about that. I think it was Gertrude that that gave that quote, but part of the that culture of being that is uh what I tell people it's you know entrepreneurism is not a stage of business, it's a style. And when you talk about building that culture, that our culture is around that entrepreneurial style. And that allowed a reinvention of what we were doing all the time, which we made it constantly interesting for everybody, constantly challenging for everybody, uh but it it gave something that drove us beyond that. And when the systems fail, as they always do because of external reasons or because of growth or because of the reinvention you have to do in the company, that culture is still there if you build it, and that's what helped you get through through those transitions.

SPEAKER_02 14:31

Yeah.

SPEAKER_01 14:32

And then kind of the final thing I'd say about that, and and maybe it was implied and everything else I was saying, is businesses go through good times and bad. And systems help you in both of those, but it doesn't solve the mental aspect of your business of dealing with things when you're down or things have gone your against you, or there's a black swan event out there. Yeah. You hadn't anticipated. Culture is what sustained you, in my view, through those periods.

SPEAKER_00 15:03

That's a very interesting point, right? It's almost kind of like I I was thinking about this a lot. You know, I've been thinking about this a lot lately because I was I was invited to give uh the closing keynote at the FinTech Americas conference, which was in Miami a couple of weeks ago. And one of the big themes at that conference was around AI and transformation, unsurprisingly, right? And and and you know, the majority of the attendees in the conference were were mostly banking executives and banking people. Uh, then there were some fintech people and there was a lot of vendors trying to sell all of the stuff, right, for the predictably. But but one of the biggest questions was, you know, we're we're going through this era now where AI is changing everything, right? And it's having an impact on everything. And the the biggest challenge is not just that it's having an impact, but it's the speed and the depth at which it's having an impact. And and people are really wrestling with this. And they're really thinking about, well, how do we energize the organization and get people to step out of their comfort zones in cultures which have been historically very risk-averse and conservative, right? I mean, banking is by nature risk averse, right? It's all about managing money. What would you tell people who you know are in a situation where they have to make transformation and they have to either pivot or adjust the culture? As a leader, how do you do that?

SPEAKER_01 16:21

Is it's a challenge. And and you you highlighted the thing, it's the speed of the change, which is so dramatic, which is making the problems now. You look at the Industrial Revolution when it came about, it was as dramatic as what we're seeing right now, but it was probably over 40 or 50 years that it was supposed. And even when the even when the computer came in, it really probably took it 20 years before all of its impacts were really felt and the dislocations that were there. So some individuals could not change the way they did things or didn't have to change, companies didn't have to change. Now you're talking about things that can happen in a year, two years, three years, in some cases months. Yeah. I always try to use stories or things from the outside that maybe you can translate inside, try to find uh examples in nature, examples in society or biology to explain to people that these things are gonna happen and point out that change is inevitable, and so that it's a positive, not a negative. Uh and you try to do it. We used to joke at our companies that you know if you have to learn to ski, otherwise the avalanche is going to catch you. Uh it's that sort of thing. But I what I tell people now is accept the fact that change is part of what you're going to do. That's what we found in Silicon Valley. Uh they seem to embrace it. Understand that failure is not the end. Failure could be the start of something really good. The the lifetime of a lot of businesses, in fact, all businesses on average, if you look at it, is shrinking. It's shrinking dramatically over the last 50 or 75 years. That's before AI. And AI is just to accelerate that. So uh in many cases, no matter how good you are, you're you're going to fail. And failure might not be the company going bankrupt, but it might be that you have to totally pivot or you close down your division and a new division pops up, or the product that you're relying on is out there. So, one, adopt a mindset that change is inevitable and that change is positive. Two, look at that from a standpoint of what personally you want. Do you want to do the same thing for 25 years? Or do you want to do something new? What what's really going to energize you?

unknown 18:44

Right.

SPEAKER_01 18:44

Again, going to the term we talk about burnout. Part of burnout is been there, done that. Right. And and if if you instead of looking at the threat of all this change, look at it from an optimistic standpoint, what does it mean? That's great. And and the other one may be the the if you look at AI as a challenge, the skills that are going to be drawn on are more interesting. Right. Uh when you start talking about the concept of pattern recognition, or you start talking about the idea of ethics, or you start talking about the the concepts uh that you're dealing with in terms of of leadership, evaluation, uh judgment, all those things. That that can be a lot more interesting than uh trying to use uh uh Excel spreadsheet.

SPEAKER_00 19:39

Yeah. What what you know everybody seems to want their employees today to be more accountable, more proactive, trying new things, making experiments, right? Use Cloud Cowork, use Cloud Code, try all these new things. It's one thing to want that to happen in your organization, right? And then it's quite another to have a culture that allows that. So, you know, given what you you know practiced and preached at the North Face, what can you know, what can senior leaders, you know, particularly CEOs, right? Who ultimately are like, you know, on the pedestal uh, you know, in Morse corporations, what what can CEOs do to kind of like promote a culture of experimentation where people are not just willing to go out and try really hard things or new things, but are also willing to fail. What can they practically do to encourage that?

SPEAKER_01 20:31

Well, there's three or four things that we did at North Face, and I think they're still valid and and could be used. One was we had something we called possibility thinking.

unknown 20:41

Okay.

SPEAKER_01 20:42

And that was at the first 15 minutes of any meeting, we wouldn't allow anybody to say no to any idea. Uh and the reason is the people that are maybe junior are the ones with heretical ideas, and they may not work in the real world, but they may be the seeds of something that will be good. And so, and and you can latter oftentimes. I will say something to you, Patrick, and you say, well, it doesn't really work. Uh, but if you if you did this and added to it, and then you come back to me and I say, well, yeah, if we did that, maybe we could build it and you can do that. So you need to create an environment where people could do it. The second thing is you have to look at all of the uh the rewards and the KPIs and such in your company and make sure they're aligned with taking risk. Gotcha. If if if if there's great penalties for uh failing, yeah, people will set very modest goals and they'll stay within the comfort zone.

SPEAKER_02 21:48

Yeah.

SPEAKER_01 21:49

If if the rewards go to the people that are doing things, taking risk, and maybe it's sometimes even failing, then you start building that culture around it. So we would we would Reward that. And we would reward people that would do things in a different fashion by doing it. Not just the people who hit their goals, but the people there. Then the the third thing, which we were really adamant about, I was really adamant about, is you've got to give responsibility with accountability. Lots of times people insert accountability into the company, but it's kind of hap clopp's goals imposed on you, Patrick. Right. And and one, you didn't buy off on them. You didn't have any feeling in developing them. And so uh you you're almost waiting for it to go wrong, so you can say, I told you so, Hap, you know what you're doing. And but people are much more accountable when they are part of making the decision of what they're going to do. So we always did it. Develop long-range planning every two years, and everybody would come up with their ideas, and then we'd have to refine it, so we had uh a level set of everybody pursuing that same thing and be able to do that. But once they put their their name to it, and it's not just putting their name to a number, uh which might be you know what our sales are going to be or what our cost is going to be or use, but it's about how we're going to treat people, or maybe it's how about we're going to innovate or how how we're going to expand globally. If those people put that idea in themselves, then when you come back to them and say, well, you know, we're we're measuring it. You said your goal was to have satisfied employees and we have a turnover rate that seems to reflect something to the contrary. Right. Well, you got accountability. Show me what you're doing.

SPEAKER_00 23:48

Yeah, it's interesting. I mean, from when I hear you speak, it sounds like you're saying that when we're setting goals, right, that the goal setting process to some extent has to be not just top-down, which is what a lot of organizations do, right? It's the big vision. Here's the, you know, here's the ebidon number for the year kind of thing and revenue number, but it's also bottoms up, right? It's it's basically having the people down below say, okay, well, what are your ideas to drive the business and what do you think we should do? And then and then when they say, well, you know, I I do think I can 3x my numbers, then all of a sudden you've got buy-in, right? How how do you how do you get people to commit? You know, how how do you because you know one of the things I in I don't know if you've read the the stuff by Patrick Lancioni, right? He No, I have not. He's got a fantastic book called The Five Dysfunctions of a Team. Um and and in the five dysfunctions of a team, he basically says that, you know, it's he thinks of it like a pyramid, and he says at the bottom of the pyramid is trust, right? And he says if you don't have trust, you can't have conflict. And if you can't have conflict, you can't have commitment, and if you can't have commitment, you can't have accountability, and if you can't have accountability, you can't have results. Which I found a very it's a very interesting framework, right?

SPEAKER_02 25:02

Yeah, for sure.

SPEAKER_00 25:03

How how true is that in your experience? And how do you build an organization where you get those people to come up with their own goals and then you get that commitment? How do you do that?

SPEAKER_01 25:15

You you start out small rather than large. First of all, as an organization, you can't turn over the the keys to the whole company uh and then say are you going to succeed or not? Because you you you can't afford that risk, so you put all sorts of clamps and things on people and you're you're looking over the shoulder all the time and you're micromanaging and whatever. And and people, when they're allowed to make decisions, become more accountable for them. Right. And so what I would do is if I brought somebody new on board, I would give them a certain responsibility for that area. Now we would monitor it. We had very thorough uh financial measures and uh KPIs and things. So there was a way it wouldn't be just arbitrary, where we'd at the end of six months, we'd say, Well, I don't think you did very well. And they said, Well, I think I did great. You know, you we go in and say, This is what happened was that you know, you said you were gonna accomplish this. Did you do that? So uh and you give them a small enough portion so that if they totally screwed it up, which nobody totally screws up anything, it still isn't gonna take the company down. We used to call it drilling below the water line for the ship. And but if they are good, then you give them more authority, more responsibility, uh, and uh a chance to do more. So right from the get-go, you're giving them a chance to set up some of their own goals, set up what they say they're going to do, then you give them a measurement system to show them how they're gonna do it, and hopefully you work with them to establish a measurement system. But the reality is they may or may not be skilled enough in setting up those measurement systems. KPI is a term that's oftentimes used that's a little narrow because that's more reflective, I think, of specific numbers. But um help have them go through and say, okay, how are we gonna measure it? And that's a question you maybe ask when you're giving this uh accountability to somebody, and they say, well, you know, we you we want to be the happiest country in the world. And what's the metric? Yeah, yeah, yeah. That's great. Okay. I love it. Now now tell me how how we're gonna measure it. And and if if they agree not only on what they say they're gonna do, but on how it's gonna measure it, now you've got a good step along the way. Right. And then then what you do is ratify the behavior that accomplishes something and help them overcome the places where they fall short.

SPEAKER_02 27:54

Right.

SPEAKER_01 27:55

And you know, some people just fall too short that you can't uh unfortunately keep them around because your goal is only partly to make them great. Part of your goal is also to make the company healthy. So not everybody can be converted into a hundred percent performer. And I think it may have to do with attitude more than skills, but but at a certain point the company's better with addition by subtraction if they can't make it, but only do that after you've given them a fair shot.

SPEAKER_00 28:25

Yeah, yeah, absolutely. Absolutely. I I I I wanna I want to switch now to something, you know, which which comes across in in your book and your story, uh, which is really kind of like this this this theme of kind of like, you know, persistence or resilience or dealing with challenges and failures, right? And I remember, you know, in our conversation when when we met and since subsequently went when we had that call, you know, you talked about one of the more difficult times that the North Face where you guys had a major crisis, I think in one of your factories or your warehouses. I I was wondering if you could kind of like recap a little bit that incident. But more than just recapping it, you know, what can you share with the audience about what it took to get through that?

SPEAKER_01 29:10

Well I'll try to be succinct about it, but when you have these memorable things, it's difficult to be succinct. You remember a lot of a lot of, and I wouldn't describe it as nuance, nuance to be. But we had uh I'd spent about six months raising capital for the company, uh, had never gone anywhere else and finally, finally accomplished bringing equity in for that was going to serve the next two years or so. And uh I went off on a uh trip with my family to go skiing, and uh the the morning before we went out in the hill, I got a call saying, Are you sitting down? And I said, Well, yes, that's an ever good question. Here it comes. And they said, Well, the roof fell in. And I said, Well, are you talking literally or figuratively? He said, No, literally. Uh what happened is uh big rainstorm, uh water collected on the roof. Apparently the gutters were jammed in some way, it was so heavy that glue lamb beams all burst, water came racing in, the roof caved in, water went into the computers, it fried the computers, we don't have access to any information, we don't know what orders we have, we don't know any of that. On top of it, the fire department will let us go in to get any of the the uh equipment or let us get any of the inventory that's in there. Uh and that inventory we need to ship because we're right at the start of the shipping season, and uh uh we're gonna have to remake some of it, but we don't know what we have to remake and and whatever. And so uh there we were. I mean we're leveraged uh to be able to do things. How are how are we gonna solve it was our problem. I mean, the first thing I did was go skiing for the rest of the day. I hadn't skied yet. I might as well get one day in and uh also get my head clear. I couldn't have made it back anyway, but then got the team together and say, okay, we're gonna solve it. And uh the first thing is that we went from what was traditionally a sort of collegial atmosphere uh in the company uh and collegial management style to one where I was very autocratic and and uh I had to step in because we didn't have time for uh for talking. We had to act, and that works better in autocratic systems. The second thing was a delegation and assignment of specific responsibility. Uh the behind that, the plus is giving people something to do takes them out of that uh analysis, paralysis, out of that paralysis that comes from from fear or that or an analysis of not doing what they're doing. I've constantly saying, we're gonna solve it. Now you solve this segment, you solve that segment. And so with respect to the orders, what we did was went up to the University of California, got some computer science people to come down to try to go through the computers to see what they could dig up in terms of everything from orders to uh the workflow that we're working on. Simultaneously, I asked the salesman to go out and tell people we were we're not going to deliver everything on time, but you don't need it really, do you? We can deliver it over time and and tell us what you need. And also, could you send the orders back that we sent us confirmation so we can double check to make sure we're doing that? So we were quietly alerting them at the same time getting that information. We put SWAT teams together that night, went into the factory and got the products out that we could get out and assessed what the work was going to be. Then uh financial people and I went to the bank and said, we need to borrow a little bit of money uh to tie this over. No worry, it's gonna be paid by the insurance company. We just need to do that. And then with the money in hand, we went to the vendors and said, you're gonna have to put us in front of the queue on fabric because we had this uh breakdown and we're your best customer, uh, you know, we're quality, we've always paid on time. Uh you you've got to give us inventory at the top and we'll pay you right away. We have the bank all lined up. And then simultaneously I worked with our insurance agent. It wasn't a company, we had an agent in between and had them work with us to try to work with the insurance company to get a fair settlement, because insurance companies oftentimes use those crises to get you to accept something far less than what you'd accept. So we're telling the bank the insurance company is going to cover it, but the insurance company hasn't insured us. We're telling our customers we're gonna take care of you, but we don't yet have the solution to it. But we allocated the team with specific activities so they would have action. We broke it down into what we were doing, and then we pivoted to a new plan. Our original plan was to deliver everything on time at the beginning of the of the season to be able to accomplish it. And in the back of my mind, although it was pretty far back because crisis management was at the top of my mind, but was how do we turn this into a uh a bonding and learning effort. And uh by having a common enemy, uh, which happened to be the the crisis we were dealing with, it brought a lot of people together. Right. And and it broke down some of the silo thinking in our company, where the marketing was different than the finance was different than the operations and the manufacturing. Everybody was together working against a a common issue. So we were hoping for that, and we came out of that because we succeeded, and everybody felt that they were had played an integral part in solving it, were able to do that.

SPEAKER_00 34:55

It sounds like you actually took advantage of the crisis somewhat to even strengthen the culture even further.

SPEAKER_01 35:01

Aaron Ross Powell Uh Yes, and and I think you always should. And first of all, I think you always should be thinking about the need to strengthen the culture. Right. Uh and so every opportunity that you come by to do that, some of it could be a lot more positive than responding to a crisis. Uh for example, when we shot our catalogs, we s used it for two purposes. The first one was we always used our own people as models. Right. And that that allowed us to one show our people, two, it allowed people to go out. We would go on on uh various trips, we called them scams, but each year we we we would take a group of people from across the company and have them go to I did one down the Zambezi where we went down there, another one was going to Nepal and climbing, another one Switzerland, a couple times to New Zealand. But a bunch of people could use the gear. Uh we'd have people across the company working together who normally didn't, and they've found people, oh yeah, they're they're not so bad. They aren't as nearly as dull as I thought, or they're not nearly as as flippant as I thought. And so we we were using that activity as a way to get everybody together. And again, at the end of the year, when we announced the results of the year, rather than just doing a flyer, we had a party and we put it in our factory and we moved all of the machines away, and we allowed the people to because we spoke 14 languages all the time, so we allowed the people to bring food from their culture, and and then we'd allowed them to be the entertainment we would do that. So we were announcing what the results were and complimenting everybody, but they felt a part of it, and then we allowed them to bring themselves into it. So it was another case of always thinking about not only what do you need to do, but how can you build the culture, how can you ratify the culture that exists there, and how can you reward it.

SPEAKER_00 37:05

Right. And you know, what one of the things that's very interesting is, you know, whether it's whether it's a startup, it's your own company, or it's companies going through a transformation. You know, I think I saw some shocking statistics from McKinsey the other day that said that 70% of corporate transformations fail. Right. 70% on average. That that's historically what their data tells them. And the other piece of data that I found interesting at this conference that I was at is they said, you know, 80% of companies across the Fortune 500 have implemented, you know, uh artificial intelligence efforts, but only 6% have seen any kind of meaningful impact. Right. And so kind of between the need to kind of like keep going when you're a startup entrepreneur and there's no end in sight sometimes, or whether you're in a large corporation trying to do a gigantic pivot and you know keep all the rails on while you're going around the racetrack, you know, the the conclusion that I seem to draw from people is that it's not so much that transformations or starting a business is hard to do, it's hard to start. The conclusion seems to be that it's hard to finish. Right. And so I'm wondering kind of like in your case, I mean, your business, you know, this was back in the 90s where there was not the credit facilities that there is today, there was not private equity, there was not venture capital, there was not the lines of credit. You know, when you were going through all these challenges, you know, and and and you know, I read Shoe Dog, you know, about Phil's company, and and and I I came across a lot of similarities to what you guys were facing. When you are under that kind of pressure day in, day out, how the hell do you stay grounded? How do you get through all that? You know, have a beer after work.

SPEAKER_01 38:46

Or a couple. Or a couple, yeah. You know, and and I'm joking a bit, but there there's some of that. One, you gotta you gotta step away sometimes from the the treadmill uh to be able to have perspective. If you don't do that, it can it can grind you down. And there there's some rituals you have, but I think beyond that, it's one, the network you have. And I I would advocate to some people in today's world, uh, become part of uh EO if you're an entrepreneur, or or YPO if you're there. So you're talking to other people that are sharing similar problems, but you you it's difficult to tell your own employees you've got a crisis coming up. That that's kind of self-reinforcing the problem that you have sometimes. You like to be open with them, but you only to a certain degree. But and if you have a network, you can talk with them and they can help share their ideas. I had a couple of people on my board uh that I used as sounding boards that were not necessarily heavily involved from an investment standpoint, so they weren't biased from from that standpoint uh and to be able to serve it. Uh the second thing is that you need to have a personal structure. In my case, I had a very supportive wife and and family, and I have some close friends who uh who can call bullshit when it's bullshit and also also uh will give you a perspective of maybe about what's important and what isn't. And and and I think that's important. I think that in my own case, uh uh going to the outdoors was very important. Uh that was a place uh the whole thesis for the company was the outdoors was transformational and uh you quoting throw in wilderness is the preservation of the earth, and I really saw that as an answer. But if you went there, you you you forget about everything that's happening. Now, that was my choice. I think some people could do it in meditation, some other people could do it in music, some other people could do it in another thing. But if you're really in it, and and in fact, today if you go to a climbing gym, and that's not necessarily being an outdoor person necessarily, but the concentration you have to exert as you're just climbing up that wall uh is pretty good because you're not thinking about anything else. Right. So so if you can have some of those things are physical activities that you can go to and immerse yourself in it, if you can have networks around you to be able to do it, if you have people that uh care about you irrespective of of what the business accomplishes, all those things can help you. Because uh and and I'm not surprised by the number you say, although as I project that forward with the AI, that's pretty scary because everybody's got to go through a transformation. And if 70% are gonna fail, uh that's uh that's gonna be a lot of pain and a lot of jobs lost and and whatever. But but the reality is uh people tend to think uh that businesses are around forever, that ideas are on forever. Everything's shrinking. Uh the life of a product uh is much shorter than it used to be. It's almost laughable to have a patent life being 17 years or whatever because i you're already four years into it before it's issued. Yeah. Then and something else is coming up, and and so if you're relying on that, if you're the codec or whatever, uh you just keep going ahead with what you're doing. So uh I always always tried to sort of cannibalize ourselves with what we were doing, cannibalize in our case with better product. Right. Uh and by doing that it was good. I love putting quotes on the walls of the company, and and one I had that uh that came strangely enough came from Rudyard Kipling, which was in the Mary Gloucester, which had nothing to do with business, but is that they copied all they could copy, but they couldn't copy our minds, so they left them sweating and stealing a year and a half behind. And it really tied to our philosophy. We didn't invest a lot in patents, partly because uh patents are short, but also patents are only as good as the amount of money you can afford to put behind them to be able to do it. And we sort of concluded that if we put the same amount of money into innovation that we might have spent on lawyers, it'd be much more positive and probably and probably healthier for our long-term growth.

SPEAKER_00 43:23

Yeah, for sure. I mean, it sounds like your path to resilience was kind of a combination of one, you know, outdoor physicality, having these rituals, getting out, getting outside, you know, being in nature. And on the other hand, it sounds like you actively cultivated a very healthy network. You had people that you could go to and ask for help. Because I think, you know, one of the biggest things that I hear about entrepreneurs, and you know, I've been an entrepreneur as well, I've suffered from this as well, is it's just it's just lonely as hell. It's like you, you know, when you're when you're running your company and it doesn't matter how big the company is, and the bigger it is. Sometimes the lonelier you feel because you can't necessarily relate to people. So I think what you said about, you know, Young President's organization or the entrepreneurs organization, EO, you know, being a member of something like that where you can share your challenges and not just feel like you're carrying the weight of the world on your own, that can that can really help a lot to alleviate some of the pressure.

SPEAKER_01 44:22

Well said. I totally agree. And I think you need it, just to emphasize that. I mean, it's not just something you and I are talking about. It it is as I said, it's inevitable. You're going to have highs and you're going to have lows. Yeah. And and when you're the uh at the top, whether it's CEO or whether it's a C-suite, when you're at the top, you either ride up and down that crest, and then the whole company rides up and down that crest, or you have to see over the horizon. And if you're really doing well, you need to be looking over the horizon. Right. And you're if you're in the doldrums, you need to look over the horizon because you've got to level the company out to be able to act as everything is going uh going to be. And then you in some cases make it happen.

SPEAKER_00 45:11

Right. You know, increasingly one of the things that we're seeing happen, this is becoming like, you know, just the norm in Silicon Valley, particularly where you know the pressure to build some of these AI companies is so intense and things are moving so quickly. You see more and more founders and you see more and more leading executives, you know, have have uh an external executive coach. And I was just thinking, what are your thoughts on that?

SPEAKER_01 45:32

I think it's great if you've got the right person. Right. But but it's if and if is probably two-part. Are you open to them? And it doesn't work if you're not gonna listen to anybody. Right. And uh yeah, I've advised companies, I do some consulting and whatever. And the at the outset, I'm this optimist that says, oh, this is gonna work. And then in a few of the cases, I'm gonna go, it isn't gonna work. Let's just agree. You know, I'm gonna save you some money. I'm gonna give you some advice that you will take, and that's get rid of me. Because you because you don't you don't want to listen to anybody else. And that's one part. The other part is it's somebody that can relate to you, and maybe it's intellectual bandwidth, or maybe it's somebody that understands that you're a complex personality, your whole life is not in your company, and they they're able to help you navigate that that you're dealing with. Uh maybe it's somebody who's who's been there and done that. Maybe they ended up, I had one person that was on my board who was a good advisor to me. He lost $63 million in one evening because of something out of his control, something the government did. And yet he thrived and got through that. So when I was telling him about some of my small problems that we were dealing with, which to me were Herculean, you know, he said, come on, let's let's step back, let's look at. And and you know, if if they can do that, because they understand that maybe one of the things you're worried about is are is everything going to tip over and all the people I'm responsible for within the company, within my whole circle, uh, it's it all's on my shoulders. Uh, if you can have that person that you believe in that that can walk the walk and talk the talk, then it's pretty good. But I I think that's very good. I think that uh sometimes uh uh the individuals uh can't relate and then you shouldn't have them.

SPEAKER_00 47:40

Right. Right, exactly. There there's a moment in your book, uh, which I found awesome, and it's kind of like you're you're in this conversation with your board and it seems like they're trying to sideline you. And you come out and you tell them something like, if you guys want to fire me, just go ahead. Yeah, yeah. Take us back to that moment uh a little bit. What was happening? What was going through your head? And more importantly, you know, when you have built something that was as hard to do as you do, and you get into a situation like that with your board where you're almost being signed by your own company, how the hell did you get through that?

SPEAKER_01 48:16

Well, no, I not elegantly, but I made it. The uh the the first thing is that I was trying to build a long-term company. I recognized the value of a brand, and very few people did. Fortunately, I had one person on the board, uh Dick Solomon, and he'd built L'Anfant Charles Otherwitz and Yves Salerant and Videl Sassoon and others. And so uh he he knew the value of a brand. He didn't know the outdoors, but he knew that. But there you know, building a brand is it's like a choral building. You know, it's it grows very slowly, changes imperceptibly, uh, but at some point it is incredibly beautiful and incredibly unlike anything else. And that's really what you want in business, but only does that if you continue to follow the same rules persistently and consistently over time. That's what you're doing with the business. Well, the there's other people that said, you know, why don't why don't you just make a profit right now? Why don't you why don't you forget all that stuff and just do it right now? So I always had this vision of what we were building for the longer term. And I do believe one of the reasons the North Face is where it is now is because the DNA that we put in there was there. And brands are your DNA. They're not your product, they're not a logo, they're not a tagline. But as you're doing it, you've got this battle when you're saying, okay, intellectually, I can understand what you're saying. As a board, you're saying, you know, we need to focus more on profits right now at the expense of the future. And I'm going, but the expense of the future is the expense of the whole company. And so you have to really sit back there. But uh when you're doing it, you have the personal emotional reaction when somebody's speaking there. One, they're saying you're wrong in what they're doing, or two, they're threatening you with with what they're doing. And and a usual role that many investors use or boards use is threat. And oftentimes it's subtly applied, like, you know, you know, if you can't do it our way, you're you're gone, with or whatever. And if if you don't have real values underneath it, then you probably cave. And but if you realize, listen, I'm right with what I want. If you don't want that as a group, and if you have the uh the either the votes or the investment control to be able to do it, then it is your call. But I'm still going to stand by what I believe is good for the long-term health of the company. And but you have to know where you're going uh to be able to make that sort of stand, to put up with it, and and realize that you aren't defined by that. We we talk about and and I think you've heard me say it before, Patrick, but in Silicon Valley, one of the great things is the embracing of failure.

SPEAKER_02 51:12

Yeah.

SPEAKER_01 51:13

And and almost all of the great success stories were people that got kicked out of their companies, whether it was Steve Jobs or Mark Andreessen, Jack Dorsey, uh, you know, and I go on and on and on. And yet not only did they not fail, they thrived in the future. And they thrived because the environment supports that, but they also learned as a result of it. Uh but they knew it wasn't the end. Right. And and here in Silicon Valley, you know, bankers will back you up and and investors will join you because failure isn't the end. Lots of people don't understand that. So when you're threatened with a company, they you're you're only not only threatened in terms of the dream you might have, but your whole value, your existence, you're gone. And if you in intuitively know that failure isn't the end, then and if failure is imposed by somebody on the outside, you can kind of say, the hell with you. I'm gonna do it my way. And if you if you don't want me here and you have the votes, then I'm out, right? Right. That's that's the way it works. But you better listen to me because I'm telling you what's good for the business and understand what's good for the business.

SPEAKER_00 52:28

Yeah, I mean, it's like I remember they were interviewing Kobe Bryant um a few years ago, and they were saying, you know, what is it that drives you most? Is it the, you know, this drive to win or is it the fear of losing? Yeah. And his answer was textbook Kobe, which was, what drives me is the learning in the journey. I don't care about winning or losing. It's what am I going to learn out of this? And you get more out of failing, unfortunately, than you do out of success. Yeah. Right? We don't we don't have all these case studies that are always talking about success stories. We have a lot of case studies where we talk about failures, right? What not to do. And it's it sounds like that was something that you probably internalized and made part of the culture at the North Face.

SPEAKER_01 53:12

It was. And I think some of it came from my active involvement in sport for a long time. Yeah. Uh the I I'm attracted to people who've been in sporting activities because there's won and loss there, and nobody's won them all. Even the ones that are getting the great scholarships and going on to be pro-athletes, they have some losses and wins, and they have to learn to be resilient in those times and learn from them.

SPEAKER_02 53:37

Yeah.

SPEAKER_01 53:38

And and uh it's it was something that we brought in a lot of people who participated in athletics, not always uh competitive team athletics, some a lot of individual athletics, but if you're a climber, you've you've got to learn that you aren't going to do anything. If you're a mountaineer, you've got to learn that even though you the mountain was the goal, sometimes you've got to turn away because your life will be ended because you didn't listen.

SPEAKER_00 54:06

Yeah. Yeah, absolutely. Absolutely. I mean, look, you you know, you've seen obviously now countless generations of leaders, right? Over the decades that you've been both, you know, a leader yourself building the North Face, and then you know, you've been on boards, you've been consulting, you've worked with some of the top companies in the United States, in the world. Um, you know, when you look at the generation of leaders from one generation to the next, what are the patterns that you see over and over that determine the leaders that can really go the distance? I mean, to your point about resilience, right? And being able to go the distance, what are the what are the patterns that you see that determine whether a leader ultimately is going to be able to go the distance?

SPEAKER_01 54:48

Well one is do they have a vision?

SPEAKER_00 54:50

Right. So going back to purpose.

SPEAKER_01 54:52

Right. If if they don't have that purpose, it's going to be difficult for them to go there. It is easy to compromise or it's easy to get burned out. Right. A second thing is that they actually believe in their people. Now, every company I've ever advised at the outset tells me I've got the best people in the industry. And if you're consulting with two or three companies of the same industry, that axiomatically it's not possible. But but you know, it's it's it sounds good, and they think you're motivating everybody by saying you have the best people in the world. Uh nobody has the best people, but you may have the best team. That's a lot different. Uh you may not have the brightest people, but you may have the hardest working. Or you may not, and and so if you can really, really love your team and love the way it is and make corrections when it when it doesn't work, uh, make corrections to move people out, as difficult as uh that may be, that's very helpful. I think that you also have to have routines, going back to what we talked about before, that take you outside of your company. So your whole world isn't there. If your whole world is is inside your company, then it it gets challenged. The black swan event sweeps you away, or or you know, internal bickering or fighting, or what a a competitor does uh troubles you, somebody steals your IP and and you know you you just go around the bend. If you have some of those outside either ways to go, whether it's going to the wilderness or or taking your mind off the job, if you've got friends you can go to who can advise you, if you've got a family support structure that's behind you, all of those things allow you to navigate those choppy waters.

SPEAKER_00 56:52

What have you seen that leaders consciously do to cultivate the resilience to get through choppy waters? Is there something that you've seen the best people like actively go out and do to actually strengthen their resilience muscle, so to speak?

SPEAKER_01 57:08

That beer I told you about, or wine, or whatever your favorite spirit is, but I mean the reality is step back from the crisis. Right. Step back you you can't do it. There there's a lot of uh physical things that have been demonstrated talking about the if you stimulate like a frog's muscle continuously, the the kick gets less and less and less. If you if you draw away from it and then stimulate it with an electrical prod or whatever, it comes back to what it was. And that's so you've got to step away from it. You've got to be able to step away from it to be able to do things, to be able to have perspective. I think the the second thing that you have to do is practice pivoting in your thinking. If you can't pivot in your thinking, you're probably gonna hit a a a brick wall in today's world because products die so rapidly, uh so ideas have to change, companies have to change, markets have to change. And those those people who can teach themselves to change, that's part of resilience. Right. And and if if you can't do that, if you're so uncomfortable with change, then then you aren't going to be able to bounce back. Or you've defined yourself by one product or one by one market or whatever, you're not going to do that.

SPEAKER_02 58:34

Yeah.

SPEAKER_01 58:35

And and so step away at times. Uh just step away from things. You can go out. I mean, uh you can go to a movie if that's what your thing is. You could uh have a have an activity. Most of the people that uh I I've seen who are good CEOs have activities other than their companies. You wouldn't think it.

SPEAKER_02 58:58

Yeah.

SPEAKER_01 58:58

But but they have something they're into, and it could be uh collecting uh scales and weights and measures or something, or they're they study uh uh history and cultures, or they're into the symphony or the opera or whatever. If if if you can do that, one it gives you perspective, and usually there's an overlap between the various things you do, but it but it allows you to look at things differently.

SPEAKER_00 59:27

Absolutely. Absolutely. Hop, this has been um really awesome. I have so many more questions I could ask you. I think I'd have to invite you again because like A, you've got more books, and B, I've got a lot more questions. But you know, I'm conscious that we're coming up to the top of the hour, respectful of your time. Uh, I'm gonna wrap up real quick with our three like lightning round questions. I ask them to uh every person who comes on the show. They're kind of quick and quirky, very short answer, very quick question. So uh we'll dive into that and then do a wrap up. Um our first question for you today is if you could have any superpower, what would it be? Well, I th I think I've got an edge on it, and that's storytelling. Okay. Cool. Storytelling. I love that. I love I'm a huge storyteller and a brain guy, so you you you gotta be convinced on that one. Second question if you could have dinner with anybody in history, alive or dead, who would you choose?

SPEAKER_01 1:00:25

I think one of the transcendentalists, probably Thoreau. Okay. Uh and I would be asking him in today's world, how do all of those observations you talked about apply? Because I think there's a uh a trans some transition between nature and nature systems and and society and the way businesses evolve. And I'd love to have their take on it, particularly because there's so many years in the past and have them step into the forward.

SPEAKER_00 1:00:54

Absolutely. Absolutely. And lastly, and this one I think goes back to your purpose and why you started the North Phase. Uh I th I think that was something so valuable in your book. Um, if you could give one piece of advice to a young person trying to build a career that gives them meaning and purpose, what would you tell them?

SPEAKER_01 1:01:16

Look at what you believe in. It's your own DNA. Uh what do you think about at night when you can't go to sleep, or you wake up in the middle of the night, or get up early because you have to do it, and maybe you have to do it before your work, but that is what you really care about, and then codify that into a business. Have the audacity to believe in yourself. And if you don't start out with the idea you're going to make the biggest world or biggest business in the world, but start out with the idea you're going to make the best business around what you believe in, and then you'll see how large it is, and you'll exit when it's the right time.

SPEAKER_00 1:01:58

This is great. This has been awesome. I really appreciate your time, your insights, your wisdom, your willingness to share. More importantly, I think, you know, the work that you're doing now as a professor, as a mentor, uh, as a consultant, as an advisor. Uh, we need a lot more people uh like that in this world. And we also need a lot more people who are reaching out and asking for your advice and for your help and for your insights. You know, what stands most out uh about this conversation for me and about your story is, you know, your fundamental your fundamental belief in that, you know, business is about people, it's about culture, it's about energy, it's about purpose uh and leadership that inspires. I think that's that's a particularly important message uh in a world which is so metrics driven uh and so money driven, you know, sadly in many and many ways. So for everyone out there listening to today's episode, um, if this conversation, if Hap Story resonated, make sure that you subscribe to the channel, like, drop us a comment, ask a question, and more importantly, you know, share this with somebody who's also navigating, you know, their own challenges and maybe building a business. And I hope this serves to inspire you to live a life of meaning and purpose, to build a business that makes a difference. This has been another episode of Mork Unfiltered. This has been an awesome conversation with Hop Klopp. We will see you next time. Peace and see you in the next episode. Thank you so much. Thanks again, Hap. Thank you, Patrick.