Episode 194: Phil Graves, Patagonia
Today's guest is Phil Graves, Former Head of Tinshed Ventures at Patagonia.
Phil is an executive and board member with over 15 years of experience in M&A, corporate finance, private equity, and venture capital. He has served as the President of The Johnny Morris Foundation & Chief Sustainability Officer at Bass Pro Shops. Before that, he served as Vice President of Corporate Development at Patagonia. At Patagonia, Phil launched and oversaw Tin Shed Ventures, a $79 million investment fund, Worn Wear, a multi-million dollar eCommerce business, Innovation Works, a breakthrough R&D team, and Regenerative Organic Certification, a holistic standard for food and fiber. Prior to joining the company in 2014, Phil spent a decade at Deloitte and PricewaterhouseCoopers. In addition, he provided financial advisory and investment-related services to clients such as KKR & Co, TPG Capital, Lone Star Investment Advisors, Nike, Walmart, Southwest Airlines, and SunPower.
Phil's perch in the climate industry is unique, and I was looking forward to sitting down with him this week. Phil walks me through his career path, his most recent role as Chief Sustainability Officer at Bass Pro Shops, and his time at Tinshed Ventures. We also discuss the breaking unsustainable consumer patterns, the dirty underbelly of the apparel industry, and the role of policy in a clean future. Phil is a great guest, and this is a must-listen episode for those interested in the intersection of climate and apparel.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded January 13th, 2022
In Today's episode we cover:
Phil climate journey, his career path, and his role as Chief Sustainability Officer at Bass Pro Shops
Comparing Chief Sustainability Officers and Chief Climate Officers
How to create a climate, purpose-driven company and advice Phil has for young entrepreneurs in the space
How Patagonia has been so successful and how the brand balances impact and profit
Breaking unsustainable consumer patterns
How to incentivize consumers to care about climate and incentivize them on a larger scale
Why the apparel industry is so dirty and the aspects that are the biggest offenders within the industry
Whether the apparel companies of Today are the companies of the future
Tin Shed Ventures and the criteria the fund uses to evaluate potential investments
Government incentives and what role they should take to get us to a clean future
Phil's next step in the climate space
Links to topics discussed in this episode:
The Jimmy Morris Conservation Foundation: https://about.basspro.com/conservation/johnny-morris-wow-foundation/
Patagonia Worn Wear: https://wornwear.patagonia.com/
Tin Shed Ventures: https://tinshedventures.com/
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Jason Jacobs: Hey everyone, Jason here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the, My Climate Journey or MCJ as we call it membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education, but they were longing for a peer group as well. So we set up a Slack Community for those people. That's now mushroomed into more than 1300 members.
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Hello everyone. This is Jason Jacobs and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests. To better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Phil Graves. Phil most recently was the chief sustainability officer for Bass Pro Shops up prior to that, he spent many years at Patagonia where he was the vice president of corporate development and managing partner at Tin Shed Ventures, their corporate venture arm, that's invested in more than a dozen environmentally and socially responsible businesses.
I was excited for this discussion because I've been a fanboy of Patagonia for along as an example of a company that's done well while doing good or done well by doing good I should say. We have a great discussion in this episode about what it is that's enabled Patagonia to think different and to set an example in a traditionally dirty industry for so many others to follow by doing better and doing so in a way that builds an enormously successful company in the process.
We also talk about the decisions that Phil's made along the way. Why sustainability and conservation are so important to him? How that manifested? What inspired him to transition from a finance and accounting career to working in a sustainability oriented company and in sustainability oriented roles? And we also talk about the broader theory of change, how to clean up consumer brands, circularity, how consumer behavior fits in? How we go about changing consumer behavior? Is it even realistic to try to change consumer behavior? At any rate it's a great discussion and I hope you enjoy it. Phil, welcome to the show.
Phil Graves: Thanks for having me.
Jason Jacobs: Thanks for coming. We both know Cody, everyone seems to know Cody he's like the Kevin Bacon, uh, of technology and climate change at that intersection. I was so psyched when he introduced us. I, I don't think I've had another chief sustainability officer type of person on the show. And also you spent a number of years at one of my favorite companies on earth, Patagonia, and gosh, there's so many things I wanna ask you. So I'm so grateful that I have the opportunity to do so.
Phil Graves: Oh, wonderful. Looking forward to our time together. And can't wait to dive in.
Jason Jacobs: Well, maybe for starters, Phil, just talk a bit about what you were doing most recently and kinda going back in the way back machine, your personal journey that led you to doing the work that you've been doing.
Phil Graves: So most recent role is chief sustainability officer, as you mentioned for Bass Pro Shops and Cabela's, and for me, it was a great way to connect some things that I'm passionate about. Those being conservation, sustainability, and then ultimately climate. I on the personal journey side grew up hunting and fishing in Texas, studied accounting and finance at Texas A&M University. And the first decade of my career in financial advisory services for consulting firms, Deloitte and PWC, it was very much a traditional path.
So for me, the first decade was principally focused on what most people do. That's you go to college, you learn as much as you can, and then you start your career and your career is about promotions and ideally climbing that figurative corporate ladder. And then if you wanna be a quote, unquote, "good person" outside of work, you will, you work with local nonprofits or your church or give money away.
And so you basically had this fundamental disconnect of the purpose portion of your life with your profession. And I wish I could say that right when I graduated or when I was studying at Texas A&M that combination of purpose and your professional journey were front of mind, but candidly, they weren't, it was very much a journey for me. Where over the course of time, I recognized that if you're at a Deloitte or a Goldman Sachs or a startup, you pour so much of your life into work and that's not a bad thing, but having purpose be apart from that was increasingly troubling in my own life journey.
And so while at Deloitte had the opportunity to transfer from the Dallas practice to the San Francisco Bay Area practice to help rebuild it, we had some folks retire and leave to go to a competitor. And that's where I really got serious about, okay, is there a way to combine my outside interest and climate and regenerative organic agriculture and getting off this irresponsible consumption, train that so many people are on.
And then ideally use my corporate finance investing background in a way that can help make that shift that we need to see in these broader systems. And the timing was sublime because Patagonia was diversifying. They're of course well known for making high quality and durable gear. And at the time this is back in 24 routine, they were getting into regenerative, organic agriculture by starting a food business called Patagonia Provisions. They were doing more films to showcase the importance of wild places and saving the home planet and how we can do that as customers and global citizens.
And then specifically for me, they were getting into venture, which was a little unconventional for them. The founders Yvon and Malinda Chouinard were very leery of making that move. They'd known many friends that started businesses that were purpose driven and ultimately had to take capital to raise money. It was inevitably not like-minded. It was focused on growth, profit ability in the exit.
And I remember talking to the Chouinards and Rose and Malinda was like, "Ah, vulture capitalist. We don't need to do that." And Rose Marcario Patagonia's former CEO and my boss did the heavy lift and that's convincing the Chouinard that we can do it at Patagonia in a different way. We can take the long term approach provide [inaudible 00:07:59] capital focus on these underserved areas.
And that's right at the time that I joined the company. So had the good fortune to work closely with Rose, the Chouinard build 20 million in change, which was the venture capital fund's name at the time we had earmarked 20 million on the corporate balance sheet to fund environmentally and socially responsible startups. So basically finding and funding the next generation of Yvon Chouinard and little seedling Patagonia companies, and then expand.
So over time, my team shifted from solely focused on venture capital and corporate development work to building a Worn Wear e-Commerce business. Patagonia's long known for repairing garments and keeping materials in use. So we actually threw one of our venture capital connections to a company called Trove built our own eCommerce business unit and was one of the swiftest growing and most profitable divisions at Patagonia. And we also went all in on regenerative, organic agriculture and other patch of mine and helped create a certification from scratch called Brock or regenerative organic certified that Patagonia, and some other companies, both in the food space and the textile space with apparel have adopted.
So lot of fun journey. I frankly thought I was gonna be at Patagonia for the long haul. And s- s- so many things have happened over the last 18 months, two years with the virus, Rose stepping down and connecting the dots, being a native Texan. My of time at Patagonia, I grappled with why don't more companies do this? I mean, Patagonia through my training at Deloitte, I look at our financial results and compare 'em to publicly traded peers. And we were crushing 'em upper quartile and growth and profitability, all these metrics that public companies would love to have, and still we were doing some incredible things with fair trade and regenerative organic and things that most companies don't do.
So I'd always in the back of my mind, had this earnest desire to take these learnings, apply them at other companies and show that you can do well financially while doing good. It's a little cliche, but it's absolutely true. And that's when I was approach from Bass Pro Cabela's about transitioning over and applying a lot of these learnings to Bass Pro. And that coupled with the fact that I could go back to my roots and work at a place that is thinking about conservation and bridging the gap.
So often sustainability is a politically divisive issue with green new deal and other things and you conflate environmental and social leanings with other political leanings. And I feel like that's a miss. Conservation sustainability, those should be principles that unite us. We all want clean air, clear water, abundant fish and wildlife for future generations. And so for me, that was enough to make the move.
Jason Jacobs: So there's all these different words flying around. There's sustainability, there's conservation, there's environmentalism, there's decarbonization. Maybe let's just start with sustainability since that was your most recent title, chief sustainability officer. Is chief sustainability officer and chief climate officer are they synonyms in your mind or are they different? And if they're different, how are they different?
Phil Graves: I think ultimately it just comes down to words whether the executive team has titles like sustainability or conservation or chief impact officer another one to put on the pile, those things are fine. They show that we are seeing a shift to environmental and social responsibility or stewardship, which is a good shift to have, but ultimately in my view, the executive team all needs to think about it.
Patagonia did not have a chief sustainability officer. And the reason for that is that the company's mission is we're in business to save the home planet period. And so every function, whether you're head of marketing, head of operations, head of supply chain, you thought about in your chair and your role, how can you save the home planet? And that perspective I think is really important.
So whether a company has a newly mentored chief sustainability officer, chief climate officer, they have to recognize that the business environment we're in now, these things ultimately matter to customers for good reason, and they matter for your business too. So for me, seeing these shifts and titles are a good thing, but ultimately you have to create that shift in mindset of across the organization at all functions and levels. And if you bring in a chief sustainability officer and their only role is to create a glossy impact report and speak on panels or podcast periodically, you're gonna miss out. You're not gonna have that broader shift that needs to happen. So we can tackle some of these intractable environmental problems. Top of the list is climate
Jason Jacobs: Patagonia is so often heralded as like the gold standard of purpose driven companies. And from the outside and you would know f- far better than me, but it seems like it was really built that way from day zero. And one thing that I've heard people wrestle with in the past is that it is so hard to get a new company off the ground and success rates are so low that first you need to survive and plant some roots, and then later you can instill purpose.
And then there's other people that say, "No, no, no, if you're starting out, you need to incorporate it from day zero. And it only gets harder if you don't do it out of the gates." Having spent so many years in Patagonia and that actually most recently at Bass Pro Shops, which probably has a different story in terms of when and how purpose was incorporated, how do you think about that? Is there a rule? is it case by case? What advice would you give to young entrepreneurs that are thinking of starting a brand and haven't even gotten t- to [inaudible 00:13:54] yet on how to think about, about that?
Phil Graves: The earlier the better. If you've already started a business and your years in, I would create a [inaudible 00:14:02] zero today. I mean, it's incredibly important to tie in your greater purpose into your business. You can do that formally through certifications like B Corp, or if you live in a states that has the legal jurisdiction of a benefit corporation or special purpose corporation, you can actually embed within your charter, that greater purpose. And I would get after it right away.
I mean, ultimately if you want to attract and retain the best and brightest talent, you recognize that purpose is a competitive edge for you. People want to work at a place where their job encompasses more than just collecting a paycheck and climbing the corporate ladder. They're hungry for these purpose driven businesses like Patagonia. For example, we had an internship spot on my team for a summer position a few years ago, and we had 5,000 applications for it.
So just think about the fact that you can have truly the pick of the litter. If you go into the lane of doing well while doing good. And it needs to be authentic. So for every company it's different. With Patagonia, it was all about environmental activism and recognizing that our roots go back to Yvon's climbing experience and wanting to protect wild places and rock faces and surf spots.
The companies headquartered about a quarter mile from a great surf spot. So having that connection is a great edge to bring in folks that align with your mission and with Bass Pro Cabela's, hunting, angling, camping, boating, and ultimately for businesses in that space, it's about enjoying and loving and conserving the great outdoors. So there are many common objectives. So I think tree huggers and Turkey hunters have a lot more in common than they probably realize, but find what that purpose is for your business and run after it with gazelle, like intensity.
An analogy I like to think about is how does a gazelle run with a lion chasing after it? And it's very intense. So you need to take that same approach to the purpose side of your business, just like capital raising and with every other function.
Jason Jacobs: You mentioned earlier that you've seen very few other brands following in Patagonia's path. Why do you think that is? And what do you think it is about Patagonia that's enabled them to do so, so successfully not only in terms of the impact that they've had on our having, but all also financially?
Phil Graves: I think it's a long term perspective. And this goes into some of the fundamental problems that we have with capitalism and Wall Street, having a myopic focus on growth and profitability and change over the prior quarters. I think you have to take stock about how does this decision impact our business two years from now, 20 years from now, generations from now. And that long term approach is the approach that Patagonia has taken. The company is rolling into its 50 year anniversary. And Yvon has sold me many times when he makes a decision that is the right call for the environment.
It makes some money over the long term. It may not pencil out short term and, and in an excel model may say, "Ah, this is gonna have a negative impact for next quarter or even next year's financial results." But over the long haul, you recognize that customer loyalty and folks wanting to align their purchase dollars with brands that they admire and respect and they feel like they prize the same things. It ultimately creates a lot of long term values. So I think the biggest thing for entrepreneurs is if you're raising outside capital find like-minded capital. There's a lot of funds that care just as much about environmental and social returns as the financial returns.
So seek them out. And then if they cut checks that don't represent the entirety of the capital you need, they often know other like-minded investment firms that could be part of a syndicate. So you really selective about who you align with on the capital side. Again Malinda Chouinard, I've seen it many times where companies will take outside capital that is not truly aligned. It may sound like it is, but ultimately it's not. And that's one of the easiest ways to drift permission. And one of the most common mistakes that I've seen.
Jason Jacobs: It seems like there's a bit of chicken and egg in terms of our culture of consumption and the fashion cycles and getting those compressed so that sell more clothes or sell more iPhones or whatever it is. And, you know, if that's what the consumers are demanding, then the companies are incentivized to provide it, you know, one to, to satisfy consumer demand and two 'cause it makes them more money. And so if we wanna get out of that cycle, how do we break it?
Phil Graves: I think it all goes back to consumption Jason. You're hitting the nail on the head. So companies are just reacting to what markets and ultimately consumers are desiring. So if you have to have the latest iPhone, Apple's gonna give you the latest iPhone with new gadgets and, and gizmos tied to it. On the apparel side, it's one of the industries where consumption is rampant and it's wreaking havoc on the planet. And you have to recognize that if you wanna buy a new jacket every year, because the cut is slightly different or there's a new color scheme out, you're part of the problem.
And I think for brands building durability into product building timeless design and multi-functionality are important things to do, but ultimately brands and consumers need to align about that shift away from linear models where you use most often fossil fuel, petroleum derived inputs or feed stocks, make a product, use it for a very short period of time and then dispose it in the landfill.
So it's definitely gonna take a shift on the consumer side first and foremost and recognize do I truly need to make this purchase if not opt out? And if you have something that worked really well, need some light repair, don't throw it away, repair it. Some of the coolest products that we made at Patagonia was in the Worn Wear division called ReCrafted, where we took end of life garments that individually were beyond repair, but take the parts that worked, whether it's a zipper, a sleeve, a front panel, a back panel, and we recrafted them into new products and the demand for those products were sky high, every product's unique. And I think that shifted mindset from seeking out the latest, greatest fashion to something that's long term truly needed and repairable is one of the best things that we can do as consumers.
Jason Jacobs: And when you talk about the alignment needed across both brands and consumers and you were just advocating for consumers to shift their mindset. Practically, how do you think we bring that about at large scale ? One, how do we get consumers to care? And two is getting them to care the best way to get them to act?
Phil Graves: I think so. You're gonna have to educate first and foremost. I think a lot of customers don't recognize that they're part of the problem and the food they buy, the clothing to buy, the electronics they buy, all of those things have an impact on climate and they have an impact on natural resources and the problem that we're facing right now with these incredibly complicated environmental problems.
So I think without trying to just point the finger and make somebody feel guilty, you need to educate them about the totality of the decision from the purchases that they're making and bring them along through education storytelling, and then show them alternatives too. I'm a big believer in offering up models that are economically profitable over the long term. They create a product that is a good steward of our resources that we have and it's repairable too. So if you're preaching at folks to not buy without offering up alternative consumption, it's not gonna work.
I'm a big believer in finding problems, offering solutions, and then conveying the benefits to consumers and making those, whether it's water savings or carbon sequestered and help them feel like they're part of the solution. And I think we'll be surprised how quickly people come along. And frankly, we're already seeing that many people are shifting to sustainable purchases and as somebody who's dearly passionate and interested in the space, it's great to see whether it's a vast pro shops, customer or Patagonia customer, the lion share of customers buy sustainable products and half or more of their purchases are trending towards the sustainability category.
Jason Jacobs: I've heard the apparel industry described as a dirty industry. Do you think of it as a dirty industry? And if so, which aspects of the industry are the biggest offenders from your seat?
Phil Graves: I think by and large, yes, Jason, it is a dirty industry and it's not just my opinion. Yvon Chouinard has said everything that we make pollutes. And that's why the company got into the food business because you can actually have regenerative products. So when you purchase them as a consumer, there's a net positive in making that choice. And with apparel industry, we have a long way to go, but I'm really heartened to see the strides that we're making. So in general, to make a garment, you're gonna use a lot of materials, you're gonna use chemistries, dyes, finishes, water repellency in the industry it's called DWR.
It's often made with a PFC chemical, which is a [inaudible 00:23:49] chemistry. And so all these things taken together have a really negative impact on the environment. So technology is gonna be essential to creating the shift that we have to see. A few examples of the startups that we've funded at Tin Shed Ventures in my view are great alternatives to the traditional model. There's a company called Circ based in Danville, Virginia. That has a technology that can take end of life clothing and apply it in a technology that's basically like a large pressure cooker using heat and water. They can separate the individual components, whether it's a cotton or a polyester, and then feed those materials back into the textile supply chain.
So instead of a shirt that's made with Virgin drive polyester that ends up in a landfill or the kind of previous industry gold standard was what Patagonia was doing. And that's taking end of life soda bottles and recycling those into little pellets and making those into garments. But with this model that Circ and Ever New, and some other companies are charging hard after you truly close the loop with apparels. You take end of life, clothing, you break it down and feed that back into the textile supply chain.
So that's a great technological example. I think buying used is a great example. We stood up this one were e-Commerce division. Many other brands have followed suit and the best jacket you can buy for the planet is one that already exists. Even with circ and these other great technologies, they still use some water. There's some transportation, there's some other things that go into it. So if you can find used products or keep the jacket that you have and use longer, that's the best thing that you can do to clean up the apparel industry.
Jason Jacobs: If you had a prediction, when you think about cleaning up the apparel industry, given that Patagonia had this mindset from day zero and so many of the big established brands do not and have been around a long time. And I would imagine, or I guess not imagine since I do have some experience, at least with one of them, but they're pretty set in their ways. And so my question is, as you think about the apparel industry of the future, that is more sustainable, that is more decarbonized. That is more in harmony in the planet. How much of the apparel that we buy in that world comes from the providers of today.
Phil Graves: You're gonna see a shift. I think the majority of benefit corporations are small ultimate size. There's some examples like a Patagonia and Dr. Bronner's and some companies that are hundreds of millions or into the billions of revenue, but they are the vast minority. You see a lot of younger brands up and coming brands that from day zero have said, "Hey, the existing apparel industry is broken. We want to provide an alternative where we use things like for our natural materials using regenerative organic cotton, that sequesters more carbon than conventional cotton."
They're using recycled natural materials into their products. And then for the synthetics, which are also important from a performance standpoint. Using the not only recycled materials, but designing for end of life. So at the end of a product's life, and even after you repair it, at some point, it's gonna reach end of life. Can you break it down and keep those materials flowing back into the textile supply chain?
So in my view, you have a lot of earlier stage brands that are building that into their DNA from day one, I think 10, 20, 30 years from now, those are gonna be the mainstream brands of today. And I hope you can see more mainstream brands making that shift and recognizing that, "Hey, consumers care about this. The days of fashion fashion are in many ways, kind of like the, uh, oil and gas industry they are a thing of the past, there's a systemic shift happening and we need to be on the right side of history here.
Jason Jacobs: To ask a Tin Shed Ventures specific question. You mentioned that the venture arm of Patagonia look to essentially fund mini Patagonia so I'm curious from a criteria area standpoint, what does a mini Patagonia look like?
Phil Graves: You need to have a business model where environmental and social returns are inseparable from profit. I think there's some good that can happen from companies that have a more traditional business model and then give away 1% of revenue or have a matching product donation. And I don't wanna disparage anybody, but I think what we really need is that business model itself, where you can generate revenue and profit alongside environmental and social returns.
And that's what we sought out. It didn't have to be apparel, of course be what deepened the textile supply chain with green chemistries, biodegrade materials companies like Circ that can recycle end of life clothing into new clothing. But we looked beyond that too. We did a lot in renewable energy and took advantage of some investment tax credits that are out there and ultimately made tens of millions of dollars in financial returns from shifting to renewable energy, which helps with our scope to emissions and our overall journey to carbon neutrality.
We focused on water savings technologies. The Western states are often in a drought and it's getting worse and worse with the changes we're seeing in climate. So how can we use water more efficiently? How can we divert waste and use that as a valuable feed stock for a product versus ending up in a [inaudible 00:29:20]? So while the categories we focused on, whereas diverse as regenerative agriculture, water, energy, wastes, and of course apparel, the common theme with all of them is that they have a business model that generates environmental and social good. And we think over the long term, they can do quite well financial.
Jason Jacobs: We talked earlier in the discussion about education and storytelling and inspiration to inspire more leaders to transform their companies. And obviously the inspiration is part of it. But what about the actual tooling? Like how much dashboards, software skill sets expertise, once you have the intent, how hard is it to go from intent to action? And is the ramping up part as hard as the getting inspired in the first place part?
Phil Graves: Love diving into this question, 'cause it's really important. You need to provide a playbook essentially for these entrepreneurs to be successful. 'Cause you have what I've seen is no shortage of authentic and artists entrepreneurs, but they don't know how to build a Patagonia or a Dr. Bronner's a responsible business. So the biggest thing I will coach entrepreneurs on is determining, where your strengths and skills lie, and then surround yourself with complimentary skills.
So let's say you worked at a nonprofit and you really understand a sector and how to empower people that are otherwise disadvantaged or you recognize an environmental problem and you wanna be part of the solution. And I'll give a quick example on Bureo one of our earliest investments from Tin Shed Ventures. The team came together. They had complimentary skills. One was a deep expert in environmental science and wrote reports for companies and governments about the environmental aspects of whatever they are doing.
Another one had a traditional finance background worked for [inaudible 00:31:12] and then the other entrepreneur worked for Boeing as an engineer. So you have a very nice complimentary skillset of environment, finance, engineering and the product development side. So they came together and said, as surfers, they all had a deep love for the ocean. Let's look at how we can be part of a solution. So they did their homework and learn that 10% of all the plastic in the ocean is from the commercial fishing industry as, as fishing waste.
And the solution side is for them to recognize that instead of just picking up plastic on a beach, which really isn't scalable, 'cause you have different types of plastic, different stages of degradation, a lot of cost that go into collecting it. These fishing nets are high volume in a consistent feed stock. They're traditionally a nylon six or an HDPE plastic. And so they quickly determined, "Hey, let's build a business that focuses on this high volume, consistent feed stock. Let's build products from those and then engage in storytelling," again, touching Jason on that importance of storytelling and educating the customers about the problem, how your company's part of the solution and then ultimately manifesting these great benefits.
So for their journey, they started by making sunglasses frames, skateboard decks. Through some coaching we as a team recognize that while these are great, they're also fairly niche products. If you're gonna talk about getting a lot of fishing nets at the end of their lives, out of the ocean, let's look at what really could move the meter for the volume of materials. We then recognize that, "Hey, Patagonia uses nylon six and HDPE." And so for our company, being able to pull that through chemically recycle it, finding a supply chain partner, that's willing to work with us to recycle these end of life fishing net into a suitable component to make into apparel and textiles was a step and then open sourcing it.
You mentioned inspiring others. For us what's most important is not just being first and getting credit, but it's whenever you see other companies adopting it. So when Patagonia launched their trucker hats made from the end of life fishing net, that was a great step. But what I'm most heartened to see is other brands pull through that same material. And it's great for the planet 'cause we keep those materials out of oceans, but more importantly as a an investor too, it's a great outcome because, "Hey look at their total addressable market now it's not just kind of boutique fishing nets into sunglasses or skateboards or just one customer in Patagonia, but you have a giant addressable market for them."
So it's kind of looking at examples like Bureo or Circ finding out where there are problems and then building a team offers complimentary and diverse skill sets and experiences. And I think that's gonna be a recipe for success.
Jason Jacobs: This has gotten my creative juices flowing as you're talking. So I wanna pitch an idea. You talk about Patagonia and its approach, and then you talk about funding these mini Patagonias. What I'm wondering is if you laid out the landscape of different apparel categories or even just kind of physical consumer product categories, and you found some of the biggest offending categories that maybe have business models that are quite wasteful and you don't just do like a buy one, get one with a marketing expense for a green halo or something like that.
But you actually reimagine the business model to more fundamentally clean it up. And like your e-Commerce example is a good one, but I'm wondering if there could be apperals across those product categories and if you could put companies towards solving them, but give them a lot more than capital and actually connect them in a more intertwined way, whether that be through an accelerator program, whether that be through a holding company with different lines of business, I don't necessarily know what the answer is, but have you thought at all about that, like taking what you learned and helping a thousand flowers bloom in a more operationally involved way than just capital?
Phil Graves: Most definitely. I put a lot of thought into that for many years now. And I think that broader ecosystem is one that is slowly coming together. I see a lot of capital that has been sitting on the sidelines, recognizing that, "Hey, it's really important to fund these next generation of entrepreneurs that can solve our worst environmental problems." A lot of what you see in the public markets is the divestiture movement. And so for the impact funds, it's about avoiding investing in certain industries that are extractive or the worst offenders. And while that's a fine step, I think what is even more important is to find more early stage Patagonias more early stage Bureos and Circs and Mango material is a company that can harvest methane, which is one of our worst potent greenhouse gases and turn that into a biodegradable plastic and then create this ecosystem for them to flourish.
So there are some great early stage venture funds like ante capital focused on the apparel space, Closed Loop ventures based in New York, who's focused on making the circular economy even more mainstream, but we need more and more of those examples where ultimately we can have a holding company for good, with different stages of companies. So think of a Berkshire hath who comes together, they allocate capital and deploy it in a way that worked in the first, uh, [inaudible 00:36:36] capitalism 1.0.
What would a similar model look like for a holding company for these companies that are reinventing traditional models, where they look at circularity, where they look at biodegradability and repairing garments. I think that company is gonna be incredibly successful over the course of the next 50 years. And it's gonna take many different investors to come together, many different bright entrepreneurs to come together and just freely share learnings. That's one of the biggest thing that I found is open sourcing technologies, sharing your journey with others. That's a space that is happening. It's been great to see, and I think we're gonna see a bigger systemic shift to that model in the coming years.
Jason Jacobs: We've talked a lot about inspiring and bright eye bushy tail by idealist that are gonna do it different with a clean slate. And that's all great but is there a role also for squeezing the giants with more stick than carrot as it relates to government? Like, do we need that first of all and whether we need it or not, do we want it and what forms should it take?
Phil Graves: That's the biggest thing we can do out of the gate to move the meter. We need more companies like Bureo and they're scaling quickly. But also if you look at the state of the climate crisis and the state of many other environmental problems, we need to make a bigger shift quicker. And working with the Fortune 500 companies that are out there and changing behavior and giving tools for the carrot that would motivate that shift. You're seeing it with investment firms, BlackRock and others are saying, "Hey, we care about ESG. We care about climate and we're gonna hold our investment partners accountable on the corporate side."
You're seeing more pressure, which is a good thing, but I also believe that one of the biggest things that we can do or provide incentives at the government side, the policy side, the fossil fuel industry has had far more incentives globally in the renewable industry, but even with the renewable industry receiving some incentives for, let's say wind and the production tax credit or solar with the investment tax credit that has really helped these technologies scale.
And now they are not only cost competitive, but in many cases cheaper, when you look at the cost of energy coming from wind and solar relative to say coal fired power plants or natural gas fired power plants. So I'm a big believer in offering up incentives that create a reward for good behavior. I think there's certainly a place to consider things like carbon tax, but also we need to be clear-eyed that if you provide a carbon tax to every company, you're ultimately gonna have that tax pass along to consumers through the form of higher goods, inflation, and that's gonna have a disproportionate impact on the poor and other groups that we don't want to be paying more than their fair share on this.
So looking really creatively at market based incentives and tax credits and efficiencies and rewarding good behaviors. So one of the examples that I've been batting around here with a, a friend Mike Kromrey, who's the executive director of the Watershed Committee of the Ozarks is creating a model called buy, protect, sell. I'm a big believer that one of the biggest things that we can do as people is have a deeper connection to land and care about how land is used, whether you're looking at land from a recreational purpose, which is why Patagonia and Bass Pro Shops are in business.
Whether you're looking at land from a farming or ranching perspective, having a deeper connection with land is one of the biggest things that we can do as consumers and as people and, and build those communities. So the concept there is basically find capital that cares about healing, land, sequestering carbon, creating rural jobs. You buy the land that is at risk of development. You then protect it through things like conservation easements, working with the nature Conservancy or local land trust. And then ultimately you create a business model with that land. So you can have entrepreneurs that can come in work with local municipalities for deploying solar array there or engaging in sustainable forestry or regenerative grazing.
All of these things have a great ability to either sequester carbon or shift from fossil fuel, derived energy renewables, and then create a business model where you can rinse and repeat that where the investors will be paid back. There's a long term path to ownership for these entrepreneurs and you have diverse income streams. So they could make money through solar, through sustainably harvesting timber, through regenerative farming and ranching. And ultimately it's reinventing business models. Oftentimes it's going back to a smaller scale and going back to our roots to how we used to operate in this country 100 years ago,
Jason Jacobs: If there were someone that let's say had capital to purchase this land, and they had mission alignment that they wanted to put the land to good use for the climate, but they didn't have the expertise around things like modeling the viability of solar modeling, the economics of solar modeling, how many years it would take to return, what the risk factors are, and then weighing that against sustainable forestry regenerative grazing, and the other things that you mentioned, what skillset would that person need to find to help them with that? And is that a skillset that's prevalent today?
Phil Graves: It's out there, but it's in many different places. So what I just described, I love for the diversity of income streams and every one of those income streams has a positive outcome for the planet. But oftentimes you have solar experts. You have regenerative grazing experts, you have sustainable forestry experts. So bringing those people together, finding some example, case studies, those are one of the things that we're working on now talking with our local utility, talking with organizations that have been pioneers in sustainable forestry, bringing them together, finding entrepreneurs, and then just getting started.
One of the organizations I have long admired and respect is called Mad Agriculture. They are creating a systemic shift to regenerative and organic agriculture, bringing in experts like Gray Brown and many others that have been pioneers in this space. And then showcasing, there is an economically viable model where investors can participate, create this landscape shift from chemical industrial ag to regenerative and organic ag.
And I think over time, as we can supplement that model with things like solar, for example, in Japan, there's a concept called solar sharing where animals and crops can graze or be grown underneath solar panels. It's basically a Pergola with strips where sunlight can come through, solar could be harvested and you create diverse income streams. So as a farmer, you're not relying on 2000 acres of soy to put your kids through college, but you have a diversity of income streams. And I think ultimately bringing all these bright minds together, showing it through case studies like Mad ag is doing and looking at how we can tie in other regenerative sources of incomes will be a great long term model.
Jason Jacobs: And don't share anything you don't wanna share, but what's next for Phil?
Phil Graves: So I've been incredibly fortunate to work along some of the pioneers in this space, folks like Rose Marcario, Yvon Chouinard, worked closely with David Bronner and the Dr. Bronner's team on building this regenerative organic certified seal, which is hitting the market as we speak. And also got to see a lot of different types of changes that can happen to companies with the Bass Pro Shops and Cabela's and looking at how you can not only create a shift to environmental and social good, but ideally do it in a way where it's economically sustainable for the financial results of the company.
So for me, ultimately, where I wanna spend the rest of my career is very similar to what I stated earlier about looking for entrepreneurs that have business models with environmental and social good that's inseparable for profit. So to be continued but excited for the next phase in the journey.
Jason Jacobs: Maybe talk a moment to anyone out there who is maybe where you were before you joined Patagonia, working to climb the ladder, working to feed their family, maybe planning to be philanthropic later, but feeling disjointed between their desire for impact and the fact that it's really not embedded in their day job today. What advice do you have for them?
Phil Graves: Talk to people. For me, one of the biggest things, and frankly, I was just incredibly lucky or seren dip at this timing however you wanna look at it where I was able to transition to a place like Patagonia, but once I had that opportunity, I was very clear eyed knowing that, okay, I have a strength in corporate finance and investing and general business, but I have a personal interest in these other areas, but I frankly do not know enough professionally that I need to.
So I sought earnestly to build my network with experts in things like renewable energy, regenerative ranching, grazing, agriculture. I read a lot. I learned a lot and I bought a lot of people coffee and beer, just to spend time with them and learned from them, try and help them out. I'm a big believer in don't just always seek advice, but try and share some things that you can or help people that can be helpful to you.
And then over the course of time, I think it's a bigger shift that happened for me. So it wasn't necessarily one day where I made a black and white shift as such, but it was just this journey. And that's why I love calling it a climate journey. I've certainly been on a journey myself in terms of this professional progression that I've had, that just seek out folks that are luminaries pioneers in the space, try and get a little bit of their time, try and buy 'em some coffee and try and be helpful to them. See what industry they're in. Do some research, offer that up to them and you'll be surprised how many people are willing to speak with you as part of paying it forward to the next generation.
Jason Jacobs: And on that topic, is there anything in the MCJ community who's listening today can do to be helpful for you?
Phil Graves: Pay it forward to the next gen? I would just underscore that point. So this community is second to none in terms of bright minds that are investors, entrepreneurs that can actually create systemic shifts. But it's really important to recognize that we need to double, triple, quadruple the size of the team. So I would just spend a lot of time saying yes to folks who are asking to learn from your experience collaborate. And then over time, I think we're will ultimately have many, many more examples, like a Patagonia or Bureo or a Circ where companies are all in for the triple bottom line.
Jason Jacobs: Awesome. And anything I didn't ask that I should have or any additional parting words?
Phil Graves: No, really appreciate the time Jason. It was a real treat to get to know you a little bit before we recorded and share the story.
Jason Jacobs: Well, Phil, thank you so much for coming on the show. Can't wait to see where you land and, uh, and wish you every success and hopefully some continued collaboration with the MCJ community in various forms as well.
Phil Graves: Absolutely. Thanks so much, Jason.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co note that is .co not .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter @jjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
