EP 217 | Unlocking $25 Million: Building Brand DNA with Happ Klopp, Founder of The North Face.

In this episode of Building Billions, I had the incredible opportunity to sit down with a true business legend, Happ Klopp, the founder of The North Face. We dive deep into what it really takes to build a brand that not only stands the test of time but also continues to thrive in a rapidly changing world. Happ shares his remarkable journey of creating one of the most iconic outdoor brands and the leadership principles that guided him along the way.

We also talk about the power of having a clear vision, aligning your team with that vision, and never losing sight of your core values. From scaling companies to billions and navigating the inevitable challenges of growth, Happ and I unpack the strategies that have driven our success. If you’re serious about growing your business and building a lasting legacy, you don’t want to miss this conversation.

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See omnystudio.com/listener for privacy information.

Episode Transcript

S1 (00:00):
Hey, everybody, welcome back to another episode of Building Billions
with Branden Dawson. I have a remarkable guest today. I'm
going to let him introduce himself. And we're going to
talk about the genius behind the entrepreneur that created one
of the biggest brands on this planet, and I'm so
excited to have him on the show today. Introduce yourself.
Tell everybody who you are and what you built.

S2 (00:21):
Well thank you Brandon, it's great to be here. Uh,
I'm Hap Klopp and I built a little company called
The North Face. I started it when I left a
MBA program at Stanford. Uh, a lengthy story, but it
all boiled down to the fact I couldn't work for
anybody else. It was too had too much hubris, and
I had too many ideas that were different than than
the business world. So what I concluded after, if you

(00:43):
can't work for anybody else, what you should do is
start your own business and see if your ideas work.
And and so that's what I did. And for 20
years I ended up running that and I sold that company.
VF now owns it. It's a public company. We started
from scratch. It's a $4 billion company now. And frankly,
we didn't envision billions when we started. We were just

(01:04):
going to have fun and make a better product than
anybody else out there and thought that that would there.
And now I, I, you know, write some books, I
do consulting, I kind of divide up my time at
third and a third, a third a consulting that I
do consulting, advising, investing. I do another third, which is
kind of teaching. And then I do some things which is,

(01:25):
you know, random to make life interesting.

S1 (01:28):
So talk a little bit about when you had the
first because we talk about with, with the entrepreneurs we
work with, we, we talk about the idea. Right. Somewhere
there had to be a spark where someone said, this
is worth pursuing. How did you have and what was
the idea to start The North Face?

S2 (01:45):
A great question. The once I got beyond the fact
that I couldn't work for anybody else, then I said, well,
you know, I've got to start a business. And I
always thought I was going to be a leader. I'd
run a family company. When I was an undergraduate. I
went to Stanford undergraduate. And at that time my father
died and we had a wood products company, and we
made windows and frame, sash and door. We were quite

(02:07):
small relative to the pillows and the and the Anderson
and Weyerhaeuser and whatever. And so I did an analysis
the first year while I was going to school. So
I was running the company, running the going to school,
drinking beer. And, you know, really I figured out we
weren't going to survive, because the only way we're going
to do it is we're going to have to raise

(02:27):
tens of millions of dollars. I was going to have
to move the factory, and I was probably going to
have to fire all the management people I'd known my
whole life, and that was pretty daunting. So I decided
I'd sell the company and I got into the MBA program,
had four jobs. I was running the company, I was
selling the company. I was getting my MBA and drinking
beer and drinking beer. Yeah, that was the only thing

(02:49):
I was good at. But but, you know, having having
done that, I had a taste of running a company.
I developed some knowledge from the MBA and running it,
and so I knew I wanted to run a company.
Then what should I run? Well, I didn't know much
about much. I had spent my whole life in the
outdoors because I was raised in Spokane, Washington. And that's
what you do in your spare time. So I always

(03:11):
believed you should stay in your lane. What you know
is something that you can be better at than somebody else,
not academically, that I'm going to read about it. And
so what I had found, and what I believed, was
that going deep into the wilderness was a really transformational experience.
And I wanted to change the world. And I believed

(03:31):
you could. I believed a business could change the world.
And I believe that a business was obligated to change it.
And the way I wanted to change the world was
to have people go into the wilderness, deep into the wilderness,
and experience that because all of the urban problems that
existed and we had as many then, you know, the 60s. Yeah,
just different. Right. But they're just different, just like we

(03:52):
have right now. But what I knew from personal experience
and Thoreau said it best. He said, wilderness is the
preservation of the earth. But what I knew is, when
you went deep into the wilderness, you forgot about those things,
and you came back to being a better steward of
the earth. You wanted to protect the environment. You wanted
to change it. You were positive in an attitude, not
this negative urban attitude, the sort of thing that we
that I see right now. And so the idea was

(04:15):
to develop a company that would capitalize on people going
deep into the wilderness. So now we come to okay,
so how why what's what's going to be different? What
I knew from personal experience is an inhibitor for people
going deep into the wilderness was the weight of the
gear that they had. They were. So most people would
go to a campsite about 100ft off the road, because

(04:36):
the sleeping bags and tents and things carrying.

S1 (04:38):
Their big pots and pans around. Yeah.

S2 (04:40):
And they wouldn't go deep into the wilderness so they
wouldn't really have that experience. So the, you know, the
North Star was to come up with the lightest weight
gear possible to facilitate people going deep into the wilderness.
So we took materials from the Vietnam War and repurpose
them for camping gear. We took aircraft, aluminum made tent

(05:00):
poles and pack frames. We took, uh, parachute cloth and
made sleeping bags, tents, some funky clothing. And what we
did is lighten the load by about 50% and sent
people into the wilderness. Now, overriding that was my belief
that you needed to make the best product, the product
that would last forever. And towards that end, we put

(05:21):
a lifetime warranty on it as sort of a statement
of what we were doing. And our belief in it
was good for the environment because it never ended up there.
But it also was a statement where we were. But
from my experience in the wilderness, I knew if you
had a product that failed, you could die and so
people would buy the best even if they didn't have

(05:42):
a lot of money. And when I approached financial sources
and whatever, they said, well, you're crazy, you know that
nobody you know, the people you're talking to are tree
huggers and granola lovers. And, you know, they they don't
have enough money.

S1 (05:53):
Isn't that amazing? My experience is just to interject for
the people watching and listening to the show. My experience
is a lot of those educated people that don't have
any real life experience will always tell you all the
reasons something can't work, but then as soon as you
offer for them to go make something work, they opt
not to. Like there's more opinions than there are. Like

(06:13):
people that actually want to go figure out how to
do stuff. How did you weather through as you were
listening to those people sharing your idea? Because this happens
to a lot of entrepreneurs, they give up on their
dream because they had enough people, because they were pulling,
you know, what do you think? And do you think
I should do it? And do you think it'll work?
And they're asking a bunch of people they've never done anything,
or they're asking people who who think that they know

(06:35):
because they're smart or educated, but they've never gone and
built anything, so they don't really know. So how did
you how did you break through the naysayers and just say,
I'm going all in on my idea? Well.

S2 (06:47):
That was a brilliant, brilliant observation, Brandon. I mean, the
the first thing is to go back to what I
was telling you. I'd sort of cut off my my
fallback when I knew I couldn't work for anybody else.
Then I knew I'd better make it work. And no
business is what you think. In the business plan. You know,
you have to do a pivot. You know, when you
observe something and do that. So you have to be

(07:09):
flexible enough to be able to do it. But the
first one was I knew there was no going back.
I had to do it. I mean, there's an old story,
I believe it was in when Napoleon sent his troops
to to England or whatever. He said, you know, burn
the ships, you know, and now you're not going to
come back. That's right. But, you know, so so the
first one was believe I wouldn't do it. The second

(07:29):
thing was to try to figure out, you know, how
you could do something differently than anybody else because the
naysayers are all telling you how the existing thing, you know,
they've read the book and they they can tell you
why that doesn't work. But if you go outside the book,
if you go outside the parameters and you do something
a little bit different than what anybody does, that's how

(07:51):
you really stand out. And you may not be right.
I may not be right on the first one, but
if I keep pivoting and looking, I'll find a niche
that other people don't have. But it's frustrating. As you
may know, if you're trying to raise financing, you'll hear
those same naysayers and they would come up with it.
And and, you know, they tell you all the things predictable.

(08:13):
As I said earlier, you know, you can't have a
lifetime warranty in your product. I was told you'll.

S1 (08:17):
Go out of business.

S2 (08:18):
Yeah. You're ridiculous. You're crazy. Only cost us one and
one half percent of sales, and there was no advertising
campaign that I ever could have done with that one
and one half percent that have the same impact that
it served that. So, you know, so the idea is
once perseverance, maybe a little bit of hubris of believing it.
The third one is making an all in commitment. You
talked about all in. But you make that commitment before

(08:40):
and then you say, okay, I'm not going to lose. Now,
you can't be totally foolish. I mean, there's some ideas.
There's some times when things just don't work and you
need to fold up your tent and leave. And if
you do, that's not the end of the world. We
learn that in Silicon Valley all the time. Steve Jobs
got kicked out of his first job at Apple. Marc
Andreessen at Netscape got kicked out. So it isn't the

(09:02):
end of the world if that happens. But don't just
give up or whatever, but you've got to be 120%
in because you're going to hit tough times. There's always
going to be Black Swan events. You know, people look
at Covid like it's unusual. I couldn't have predicted Covid,
but I can predict there's going to be downs. I've
seen them. I've seen the downs. When you have, you know,
the mortgage meltdown crisis, 2008 or.

S1 (09:24):
2000 bubble in 2001.

S2 (09:26):
Right. And and those are going to happen. And if
you if you're Kleenex, you know, and fold, you're probably
going to lose. So some of it is believing you're
going to win. The second one is maybe looking over
the horizon a little bit to see that these crises
are different. I've got a friend who I don't want
to be lengthy about it, but he started a business

(09:47):
that was in laundry and You know, serving hotels and,
you know, people that need it every single day. Business
is going extremely good. This was in Cleveland until he
was hit with a fire, burned everything down. He owned
the building, you know, and now he's got to fight
with the insurance companies. And, you know, he you have
to deliver laundry every day. So yours down. What happens

(10:08):
day two. And the easy thing would be just to
give up and go work for somebody. You know, he had,
you know, 1 or 2 days talk to his wife said,
you know, we're not going to give up. We can win.
And he was able to come back the way he did.
First of all, he used his contacts. He contacts the
people that had excess capacity in a town 60 miles away. Yeah.

(10:30):
There you go.

S1 (10:30):
Could I figure the problem out?

S2 (10:32):
And then, you know, and we talked about it and
he said, you know what I'm going to do? I
didn't have the most efficient plant for handling things. I
can get new equipment, you know, and the new equipment
would be laid out better than that. And then he
went to his clients that he had, and he told them,
first of all, he weeded out some of the clients
that he kind of wanted to weed out anyway. And
the other is he went in and made them the buddy.
You can help me come back. We're going to do it.

(10:54):
And he actually even talked with him. Well, we may
need to change the terms that have been doing because
you've been paying me in 30 days, but it really
helped me out. And you'd be building our business if
we went to 15. So he turned a problem into
an opportunity. But if you take the mentality that, you
know it's the end of the world, it probably will
be the end of the world.

S1 (11:15):
There's probably a few laundromats that he could still do
the sheets at. Yeah, yeah. For sure. Great. Yeah. You know,
that is that mindset to your point is really super important.
And as you know, as an entrepreneur, operator that rarely
does everything go exactly according to plan. It isn't that
it didn't go to plan. It's what you did to

(11:36):
pivot and to make something else work versus, oh, I'm
so frustrated or upset that this thing didn't work. When
you think, first of all, how did you come up
with the North Face? Like what was the what was
that moment? Because I know as a founder that's had
four companies, I can tell you exactly what I was
doing in the moment when I was like, aha, that
should be the name. So I'm certain that, you know,

(11:58):
the moment it came to you.

S2 (12:00):
Absolutely. And thanks, Brandon. I told you earlier, this thesis,
we wanted people to go deep into the wilderness or whatever.
The way all of these markets, these consumer goods markets
work is kind of a pyramid shape. And at the
top are the influencers and then secondary and whatever. And
everybody in that pyramid knows where they are, and they
look to the people above them. That's why influencers work.

(12:20):
And I'm talking about real influencers, not the Kardashians or whatever,
but people who are in the know well. The people
who were the influencers for the outdoors in the wilderness
were really the climbers and the people doing exotic things.
And at that time, I mean, there was deep mountaineering
where people go to Nepal, but there was rock climbing
and mountain climbing, and a number of people were climbing

(12:42):
in Europe on the Eiger mountain. And there were some
books written about it. There is the Eiger Sanction and whatever. Well,
the north face is the north face of the Eiger mountain.
So we chose a name that for the influencers really
meant something, but at the same time was easily memorized
by anybody else. But it immediately got us in the

(13:04):
eyes of anybody looking at it one on one with
the influencers for the market. Yep.

S1 (13:09):
And so how did that happen? You guys were sitting
around a campfire and someone's like, what do you think
we ought to call this thing? Like, what was the moment?

S2 (13:17):
Well, I told you we had beer and whatever.

S3 (13:20):
Yeah. So it was.

S2 (13:21):
Beer. No, you talk about things, and maybe the first
idea isn't good. Yeah. You always talk about laddering in
business when you when you, you know, you try and
come up with one idea yourself and that one idea,
you know, you just, you know, burrow in on it
and you can't break out of it. And you talk
to somebody else and say, well, you know, if you
just take it over here and you go, oh, no,
that won't work. But if you took it back here

(13:42):
and you start laddering and we were talking about the
fact that we didn't just want another name and we
didn't want another logo. I told the guy is no
damn trees. I don't want trees because we're going to
be bigger than trees. You know, we're talking about building
a brand and the brand is going to stand for
the outdoors. It's not going to stand for trees. But
at the same time, we start talking about we need

(14:02):
something that is exciting and electric. As I said, you know, dangerous.

S3 (14:07):
Yeah.

S2 (14:08):
A few people have been killed on that. You know,
so so it has that edge that really is out there. So,
you know. And so we were going back and forth
and you could come up with the predictable names or, or,
you know, local or local geography. But that had what
seemed exotic at the time because it was Europe. For
those people that knew it was definitely within the.

S1 (14:28):
And what somebody like, you know, um, The North Face,
was it that kind of we.

S2 (14:35):
Were going back and forth? Well, somebody goes, you know,
they were saying, well, you know, we could do Yosemite or,
you know, we could do something around that. And people go,
you know, Yosemite. What does that really mean? It's nice
but you know it isn't there. Well, we do something climbing,
you know. Well, how about Mount Everest? Mount Everest? There's
probably already somebody that's doing that. But that also that that,
you know, that's more aspirational, not being involved. And I

(14:57):
can't remember which one of us started saying, you know. Yeah.

S1 (15:00):
And then a couple more beers later.

S3 (15:01):
Yeah. Somebody's like, what about the North Face? You know,
people getting killed over there, and then all of a
sudden everyone's like, oh yeah.

S1 (15:07):
This is amazing.

S2 (15:08):
But but it's really good when you do that. And frankly,
if you bounce ideas off of other people, I've found
it helps you clarify your own thinking. And even even
if you come up and you had the idea and everything,
it's oftentimes kind of fuzzy. Yeah. And then you bounce
it off somebody else and they say, you got to
be crazy, you know, and and what do you mean?

(15:29):
And then you go back and you go, yeah, it
probably was a little crazy, but I know I can
do it. They just didn't understand, but they didn't understand
because I didn't articulate it very well. And I have to,
you know, refine my story.

S1 (15:40):
Yeah. But I mean, what's what's so good about the
brand is it has everything. It has intrigue, it has danger,
it has beauty, it has accomplishment, it has all that
in the brand. And so you start this. And when
you started this, were you thinking to yourself, this is
so good. I know it's going to be at least,
you know, a couple hundred million dollar company. Or were
you like, I just want to sell enough old World

(16:01):
War Two tents that I can pay my bills and
get to the next level.

S2 (16:04):
It started out with the second one. I mean, first
of all, go back to the fact I couldn't be
employed anywhere else. I needed a business that would generate
enough to have a good lifestyle that allow us to
do what we're going to do. And so, frankly, what
I told myself at the time, and you'll laugh at this,
but remember this a long time ago. But I said, listen,
if I could have a $10 million business that made

(16:25):
$1 million a year, I probably would be okay. And
if I could do things I'm really proud of, I
don't know how large it can be, but that would
be okay. So, you know, that was kind of my
my fallback. And I was saying, if I can make
I didn't want to make the biggest business, I want
to make the best business. And I wanted to make
a business that would endure forever. I believed in a brand.

(16:45):
And because of brands and annuity for future business and
bringing it in. But if I could do it around
things that really stood out. It was great. And I
always believed when I was building a brand. That brand
is not a logo, it's not a tagline, although you
need those so people can see what you're talking about.
A brand is your DNA. It is what you stand for.
It's an.

S1 (17:05):
Expression.

S2 (17:06):
Yeah, it's a qualitative aspects of what you are. You know, the.
And so I distill it down to a few key words.
And those words have to be ones that are applicable
across the entire company. The three words we did at
North Face pretty simply were quality disruption and triple bottom line,
meaning an equal commitment to people, the planet, and profits.

(17:27):
And doing that, that's awesome. And then every time, every
two years, we'd come back and talk about it because
we have new people coming in, and they all had
an interpretation of what The North Face was.

S3 (17:36):
And, well, at some point.

S1 (17:37):
You just get so big. People just think it stands
for this massive outdoor brand and they simplify.

S2 (17:42):
It could be like if you stepped into the company
now and you were just a consumer, you say, well,
it's an apparel brand, you know? And what we need
is another color. And we're saying, no, you need to
adhere to these principles and whatever. So, you know, so
that's what we're doing. But going back to your initial question,
it was we joke about it and there was an
article you know, about. We called it the Scotch principle.

(18:05):
You know, how did you do that? And it was
sort of there. But he said, you know, we were
talking over Scotch. We couldn't afford scotch at the time.

S3 (18:11):
We drank beer. Yes.

S2 (18:12):
Beer. But but, you know, we're talking about, you know,
what do you want to do? Well, the only thing
I know anything about is, is that. And we were
talking and, you know, and after a couple beers, we said, well,
you know, we should really, you know, we should own
the Bay area because that's where we are, you know,
and then a few more, we said, well, you know,
why not own the US? And they're saying, well, you know,
a few more. Well, we like international travel. Why don't
we do that and why why are we going to

(18:32):
limit maybe.

S1 (18:33):
We could go to the mountain and somebody will take
us up there for free.

S3 (18:35):
Yeah. Take some pictures. Yeah.

S2 (18:37):
And we'll think it's great. So, you know and you know,
of course, as we evolved it and saw the opportunity
greater than that, our expectations were there. And having a
Stanford MBA and a lot of my classmates are doing
really big things. You know, I obviously you start thinking,
you know, could you do that? And we're able to
do it, but you have to develop a lot of

(18:57):
different processes and things. I never hired anybody at the
outset because of their business skills. I only hired them
for passion. Passion for two things. One is for the
wilderness and the other one was for basically changing the world.
And if they could do it, I knew I couldn't.

(19:17):
I couldn't educate them, I couldn't train them on passion.
But I had the background from my MBA, from running
the family company. I had the business background, and I
knew I could bring people in, and we'd do that
at our long range planning to educate them. And but
I needed the people who really cared about what they
were doing. And I thought building a team was the

(19:38):
key to doing that. Now, 11 of the people that
were with me early on ended up running other companies
or starting other companies in the outdoor business. So I
think they were right. They probably would have gotten there
on their own. In fact, I'm sure they would have,
but might have taken them ten more years. But I
believed you could build a team, build around a great
brand that then you could really take that and do

(20:00):
something great with it.

S1 (20:01):
That's amazing. And and so at what point after you
started the business, were you sitting there one day and
you were like, huh, I did it, I did it
bigger than I thought. There's a has to be that
moment for you where where a bulb went off and
you were just like, I actually exceeded what I, what

(20:23):
I had thought about somewhere in that cycle.

S2 (20:27):
It must have been sitting in my office when it happened,
because you sense it, you know, obviously you've been there.

S1 (20:32):
I know it, you know, that's why you say you
know this to be true. You can't fake what this
what what, what, what you've done. I've done something on
a limited based on what you've done. But, um, when
you have done it, you cannot fake.

S2 (20:46):
Well, there was an epiphany, and it was a strange one.
You know, we weren't large enough to do sophisticated marketing.
You know, we were doing statistical sampling and things. I
knew about that. But actually, what I'd found is you
don't need to do statistical sampling. You see 100 customers,
and they tell you something.

S3 (21:05):
You know.

S2 (21:05):
80, 20 rule and all those other things. So anyway,
what we had was a warranty card because we had
a lifetime warranty on it. So people sent in their
warranty cards. So we decided we'd use that to get
in touch with the customers. And we sent out one
to about 100 customers. And we said, you know, what
do we make and why do you like it? And
what do you like to see us make? And I
got this one back. That was the epiphany. And it said,

(21:29):
I don't know everything you guys make, but I know
you make good shit.

S3 (21:35):
And.

S1 (21:35):
You need a catalog?

S4 (21:36):
Yeah.

S2 (21:37):
I knew at that point that we had this brand
we're talking about. We had you didn't want to abuse it,
but we had the license to expand and move into
other categories. We had the belief of the consumer, which was,
you know, you don't want to just be selling. You
want people to be coming to you. That's what a
brand's all about. And we were up to that point

(22:01):
in my mind. We were selling. We were always going
out and finding that next customer. I realized at that
point that now customers are going to find us because
of what we stood for, what we did. As I said,
you don't want to abuse it, but that allowed us
to get in some areas. We weren't in skiing at
the outset, but we moved into skiing because there was
a niche about functionality that we did that fit that,

(22:23):
you know, got into some trail running. There was lots
of fractures of the outdoor market that we were doing.
But the epiphany was just when they when I got that,
I said, yep, yep, we've actually accomplished.

S3 (22:35):
Not.

S2 (22:35):
The goals because our goals were every every year. I
was looking two years down the road. So always with
a little dissatisfaction, you know, because I'd already.

S1 (22:43):
You and I are two brothers because I don't care
how much we grow. I'm always a little pissed we
didn't get bigger. Yeah.

S2 (22:49):
And and I knew we could, you know, and and,
you know, and sadly for the entrepreneurs coming in, I
think that's the way entrepreneurism is. Because when you're satisfied,
that's you probably should have sold your company and left or,
you know, because it's time to move on. Because if
you're there, there's somebody out there hungrier, faster, harder who

(23:12):
wants more.

S1 (23:13):
And and statistically, at certain sizes in your business, it's
a handful of people on your team that are seeing
that you're no longer pushing to get to the next level.
And so for them to achieve the things they want
to achieve, they're going to have to leave you to
go do it somewhere else, and you end up losing
your good people that you kind of pushed away just
because you weren't inviting them in to helping you go

(23:34):
to the next level.

S3 (23:35):
Agreed. You know, you always.

S2 (23:37):
Should lose a few people because you're doing so well
and you aren't growing fast enough to encompass everybody. And
the pyramid sort of eliminates some of the good people
you want along there. But when they start leaving in
large quantities, because, as you say, you know, they see
that there's no opportunity for them, uh, or there isn't
the opportunity they dreamed of when they came in. Then

(23:58):
you're saying something about the company, and now it isn't
the end of the world, but you probably should be
selling your company at that point.

S3 (24:04):
Or.

S1 (24:05):
Acknowledging what's happening right and reformulating.

S3 (24:08):
Right.

S2 (24:08):
And or you can size it and try and run
it as a lifestyle company and recognize that you're maybe
narrow it down. I've got one friend who wanted to
have the biggest apparel business in the world, and he
he built it. He was a great operator and had
a great bottom line, but he was burning through people
making all these demands on him. And what he realized was,
you know, I don't really want to manage a lot

(24:30):
of people, but I, you know, want what we're doing.
I'm going to stay at this level just doing most
of the activities, my wife and myself and some others,
and he runs a great business. But it's never going
to be the North Face. It's never going to be that.
But that's okay. But that's what he wanted. But but
he had to right size his thinking. Because if you
think you're going to be there, you hire, you invest,

(24:53):
you bring people in and then it's not justified if
you suddenly there. And one of the things in his
case was he did not like managing people. Yeah, he
wanted to run a business, but he didn't want to
manage people.

S3 (25:05):
And, you know.

S1 (25:06):
It's such an interesting, uh, when people say that because,
you know, uh, in order to have a successful business,
the number one skill set that you actually have to
evolve to, if you're not going to be a one
of the top innovators. Right? Like Steve Jobs is people
skills maybe weren't ranked up there as the best people

(25:27):
person right from from the people that I know that
were around him.

S3 (25:31):
I've got a.

S2 (25:32):
Question for you. What do you think the essential skill
is in any business? As an.

S3 (25:38):
Entrepreneur? Yeah.

S1 (25:39):
So that's a good question. I would say unless you
are such an innovator that your innovation, it doesn't matter
what kind of person you are, it's going to be
your leadership and people skills. Because nothing I've looked at
every business model that there is out there. We did
ten years of research on thousands of businesses. I never

(26:00):
found a business where it was just the owner by themselves.
There's always some component of a lot of people if
you're going to get big.

S2 (26:07):
And there's a technical, I totally agree, and there's a
technical skill in there that people dismiss as not being
particularly there. And I think if you got to be
a great salesman. Yeah, I think you're always selling to everybody.
If you're putting a team together, you're a salesman. I mean,
people when they talk about sales, they say they're selling
to the consumer.

S1 (26:25):
Yeah. So so to your point, I believe when a
founder stops selling, it's because now they're under pressure. Now
they're afraid. Now they're thinking of getting out. They stop
selling because they've lost that belief about what's possible. And
that is the first sign that a business is in trouble.
And it's why people leave. Because when the founder is
no longer excited enough to be selling the proposition, selling

(26:47):
the enthusiasm, selling the opportunity, when they stop talking about that,
there's nobody else in the business that's going to talk
about it. Yep. And then that's the first inclination when
we go in and look at businesses, you just simply
need to listen to. If a business owner comes into us,
we've had 7 billion of businesses come through in the
last five years here. When they come through and you're like,
how's it going? And they're like, oh my God, I

(27:08):
can't get good people. The market's shifting. I'm so frustrated.
You already know they're in decline like it does nothing.
But when they come in and they're like, man, I've
never seen a better business opportunity. You know they're on
the uptick. Well, the problem that most people don't recognize
is the responsibility of the founder, the owner, the leader.
And if a business is 75 million or more, the

(27:28):
CEO's job is to do this. Like your friend could
hire a CEO, but then the CEO needs to be
good at this, you know? And you're operating person might
be good at the technical aspect of operations, but a
CEO has to be the best sales person in the
company because they have to be selling value. And if
they're not selling value, they're not a CEO. And so
to your point, and my partner wrote an awesome book

(27:49):
on this. It's called Sell or Be Sold. And the
whole thesis of the book is all day long. Every
day somebody's selling you or you're selling them, and every
frickin conversation your employees could be selling you on why
it's hard to hit targets. The banks could be selling
you on, why it's hard to give you a loan.
Your vendors could be selling you on, why they need

(28:10):
to increase the prices of your products or services, your
customers selling you on, why they don't want to pay
your price. Somebody's always selling you. So if you're not
intentionally always selling, you're being sold. And that is what
you're saying right now.

S3 (28:23):
Yeah.

S2 (28:23):
And I found it across the board. It's remarkable. But
The as I said, it's an undervalued thing, almost dismissed.

S3 (28:31):
Sometimes people say, oh, I'm not a salesperson.

S2 (28:34):
It's like Willy Loman is a salesman or whatever it
comes in their mind. And the reality is, I think
always are. And there was a quote somewhere, I think
Maya Angelou wrote it, but it's, you know, and facts
have shown that people do not remember what you say.
They remember about a third of it. No matter how
good a presenter you are, like you're incredibly skilled. But

(28:55):
even as that, they only remember at best about a
third and maybe less if you aren't a great orator.
But what they do remember is your passion, and they
remember how committed you are to it. So when you
leave that meeting room and they don't remember that they're
making an assessment and their assessment is, is she or

(29:15):
he going to be there? And when it hits the fan,
when when the black Swan event is there, are they
going to have my back? Are they going to do it?
And if you have sold them probably by your own
commitment and your passion for it. Then you've got a team,
and if they are questioning it when they lead, it
doesn't matter how good your words were or what the

(29:37):
business plan or how it laid out there, you're at risk.

S1 (29:42):
100%. And I think that what what I'm hearing you
say and what I believe we're 1,000% aligned in is,
in fact, I'll make this statement this way. If I
was looking at investing in any business, I'm looking at
the leadership of the business. That's going to be the
first thing I'm looking at. If I was having a
conversation with leadership in a business and anybody on that

(30:06):
leadership team said to me, well, it's not our job
to sell. I would never invest in that business because
if that's the belief at the top, that'll be the
fundamental ignorance or arrogance through the whole system. And and
to me, if I don't find somebody and this is
what you're saying, that transfer of energy, of enthusiasm and enthusiasm, excitement, commitment, um,

(30:28):
the ability to articulate the value proposition and your unique value, uh,
contribution to the marketplace. And and so those things should
make you so excited, should elevate how you communicate and
project the message. And if you're like, no, that's not
my job, man. My job is to then I already

(30:48):
know everybody under you isn't going to do it either.

S3 (30:51):
You cannot hire.

S2 (30:52):
Less than.

S3 (30:52):
You. That's right.

S1 (30:53):
Less than.

S3 (30:54):
You.

S2 (30:54):
Totally agree. You know, I do believe in terms of sales.
The best salesmen are the people who believe what they're doing,
not somebody who's incredibly skilled at.

S3 (31:04):
Convincing and.

S1 (31:05):
Highly compensated.

S3 (31:06):
Yeah. Right. Yeah. You know.

S2 (31:08):
What you find is if they really believe they'll make
it happen, if they don't really believe they're skimming it,
you know? And as long as things are good and
everything's going, they'll probably do okay. But when it doesn't
work and they've got to convince somebody. You talk about
the banker to get you more money or investors that
you need going on If you don't believe in what
you're doing, they sense it in a moment.

S3 (31:28):
And then they bail. Yeah. And you're like, I.

S1 (31:30):
Can't believe they bailed. No. They've been they bailed a
long time ago.

S3 (31:32):
Yeah. Yeah. You just you.

S1 (31:34):
Just made it easy for them to succeed.

S2 (31:36):
Right? Yeah. Yeah.

S1 (31:37):
So when you think about it. So. So 20 years,
you started the business and then grew it and stuff.
And at some point, when did you say to yourself,
it's time to let somebody else kind of take over
the day to day?

S2 (31:49):
Well, there were a couple of things, but I, we
really had the wrong business model. And by that and
it's too lengthy for this podcast. But if we did it,
I think it was pretty entertaining. In the apparel footwear business,
you can only grow 20% a year on internally generated funds.
Anything beyond that, you have to do additional financing and

(32:10):
you could trade back and forth. As we were doing so,
we'd get equity one year and next year maybe it's
debt going back and forth, but we were going 100%
a year and we had a team that loved growing.
Everybody was there. I loved growing there or whatever, but
I my job converted from being this visionary, from being
a person who was loving the outdoors and spending it.

(32:32):
The person who loved in building brand. Somebody who loved
building team members into something really great, into being sort
of a poorly paid investment banker, which is was not
appealing to me. And I went through a round of financing.
I raised $10 million, but that round to some of
the people who've been in say, I want to get out,

(32:54):
you know, you're battling with them, you know, what terms
and who's you know, if you want to get out now,
it makes it hard for me to bring capital in
and all these sort of stories. And so but I
did it and I, you know, my ego was driving
me to do it. But one of my board members
who happened to be one of the heads of Boeing,
brilliant financial guy Clyde Skene, but he came to me
and he said, you know how you've always said when

(33:14):
it wasn't fun anymore, you were going to get out,
and it doesn't look like you really having the fun
that you were having before. You know, your ego is there.
The brand is good. Everybody knows does it, but it
doesn't look like you're having fun. And he was a
good friend of mine. And, you.

S3 (33:28):
Know, over a beer. Yeah.

S2 (33:30):
Yeah, probably.

S3 (33:31):
Or had he gone to Scotch by then?

S2 (33:32):
He drank.

S3 (33:33):
Martinis.

S2 (33:33):
Yeah, but. But you know, when I did it, I
realized I didn't want to do all that fighting. And
I didn't want to be an investment banker. Somebody else
would be better at doing that, better at selling that
than I. And I would rather go back and either
be an entrepreneur again, or get involved with some early
stage companies where some of my skills transferred and I

(33:55):
didn't do it. So, you know, people have often asked me,
you know, was it upsetting to sell the company? In
my case, no, because I, I was in a job
that was becoming less and less of the reason why
I was there.

S3 (34:09):
Yeah.

S1 (34:10):
And this is why I say so. What? So I
was just downstairs explaining to everybody down there that business owners, uh,
most of them are founders, right? Unless they bought somebody's business.
So most businesses in the small business space, they're their founders.
And then and then what they don't realize is that
at 15 to 25 million, they need to become entrepreneurs.

(34:31):
That the telling sign of moving from a founder to
an entrepreneur is when someone finally says, you know what
we need around here to succeed? We need a strategy
because entrepreneurs would never start a business if they didn't
have a strategy, because they'd have targets and they'd know
where they're going to and everything else. And so and
this is all based on the research I did interviewing
all these successful business owners, is that like, when did

(34:51):
you realize you were an entrepreneur? They'd say, well, when
we realized we needed a really good strategy because then
we wouldn't do anything if we didn't have a target
for value, like, like something switches from, I just want
it to work to, why are we doing this? What's
the expected outcome? Okay, that that statistically happens somewhere between
15 and 25 million, but at 75 million, most of

(35:11):
the founders are like, we either sold the business or
we brought in a professional CEO because they didn't want
to become a CEO. And a CEO does the things
you're talking about. It deals with the capital structure. It
deals with the entry and exit exits of shareholders. If
you have them, it deals with the banks. They deal
with value creation. They deal with long term short term
incentive plans for employees. And and they deal with the contracts. And,

(35:34):
you know, it's like a CEO's job is to be
responsible for the overall value creation of an enterprise. Right.
And that is an entirely different job than the founder.
So how big was the business when you finally were like, okay,
I don't want to be the CEO and chairman of
this company and have to deal with all that stuff.

S2 (35:52):
Well, globally it was about 150 million. Yep. Um, you know,
and as I said, globally, because we're probably half of
that in the US a little bit more. And so
some of that was managing. We'd set up a manufacturing
and marketing operation in Scotland for Europe and, and we
had a license arrangement in Japan and Asia. So we
developed that. But uh, it was I, you know.

S3 (36:16):
It was I.

S2 (36:17):
Don't know if it was the right time to do it, but, you.

S3 (36:19):
Know it certainly fit.

S2 (36:21):
Into what we're doing. And and the fact that there's
a $4 billion company, I could not have made it
into a $4 billion company. Not that I don't have
the intellectual bandwidth to do it, but I don't have
the emotional appetite to do it. That's right.

S1 (36:33):
This is an important because I just was downstairs talking
to the group of business owners about on the left
side of the spectrum is intellectual ignorance and arrogance. And
and you can see that you either don't know, but
you're too arrogant to say, I don't know and I
need help. What I see with the successful business owners,
especially the ones we surveyed, is intellectual awareness and curiosity.

(36:54):
So they're like, oh shit, I know, I don't know,
I know, I need good people, I know I need help,
and I'm curious about who I should get it from.
Forces them into asking good questions versus just listening to
bad advice. Right. And and so the entrepreneurs that I
see that are highly successful are very curious and they're
paying attention to what's happening around them. And they recognize, hey,

(37:15):
if I graph or if I chart or if I
look at Stats. I have better intellectual awareness of what's
going on. So who do I need? And I say
I say it at 15 million plus. If you really
want to be successful at 15 million plus if you
really want to be successful, you have to learn to
become an owl. And what do owls say? Who? Who

(37:37):
did the numbers? Who's doing them next? Who double checked them?
Who verified them? Who asked the customer who followed up
with the customer who trained? The guy who trained the
gal who trained the trainers that are training them. Who's
checking to make sure they trained them right. Like like
you become an owl because that's really your job versus
doing the work yourself. Because you can't be the owl
if you're doing the work. And and so I've just
had the pleasure of meeting so many remarkable entrepreneurs. Um, and, and,

(38:02):
you know, it's funny, I was doing a presentation at
one of our conferences and our next guest that was
coming up, speaking at it was Tommy Hilfiger. And so
he was in the back with my partner, and then
he came out, we had 3 or 4000, 4000 people there.
So he was sitting there and my partner asked him
a question. He's like, you know, with all the success
you've had in your mind, what could you have done
differently to be more successful faster? And he told me,

(38:26):
he points at me and he goes, you know, Brandon
was up here and put that chart up there and
that yellow brick road. And I thought to myself, now,
doggone it, if somebody would have shown me the yellow
brick road versus trial and error through everything we ever
had to do, we could have done it faster. You're
a Stanford educated. I'm a high school educated. I get

(38:48):
asked all the time in the university systems, why don't
they teach the, the, the particulars, the, the granules of
how to do it? And I'm like, I have no idea.
Maybe they do. Maybe people just aren't ready to receive
it until they're actually experiencing it. What would you say
would be the difference between what they teach you in universities,

(39:09):
in MBA programs and things like that, versus what you
had to go practically experience on your own? Well, it's a.

S2 (39:15):
Pretty profound question.

S3 (39:16):
Uh.

S2 (39:17):
First of all, I do a masterclass with another person
that I do some teaching with. And the umbrella title
is What You Don't learn with a traditional $200,000 MBA program.

S3 (39:27):
Love it. So you're the.

S1 (39:29):
Perfect person to.

S3 (39:29):
Ask.

S2 (39:30):
And the reality is, some things are done for measurement
at universities, things that you have to do that fit
into a short time frame. Some of the things in
businesses don't fit into 15 weeks that you're trying to
do it. Some other things do not have concrete answers
that you're doing that you have to come up with.
And school is about things that fit into 15 blocks

(39:52):
or 15. And and where you have concrete, discrete answers
with what you're doing. And they're also about getting the
right answer. And there are many answers. You don't distill
it down to one. Yeah. So education is good at
giving you the tools to execute, but not necessarily inspiring
you to be an entrepreneur, to be able to do

(40:15):
it and in fact, I've told people and when I
speak at business schools and whatever, and I've Stanford and
Holt University, where I teach, University of California, I teach
and whatever. But I said, okay, now, you went to
grade school and you were the best, and your parents
told you you need to go to good middle school

(40:36):
because we really want and and so don't screw up.
And so they did really well in middle school and
they went to a good high school. They didn't want
to go to a bad high school. And they scored
really well. And as they were doing, the parents said,
you know, you've got to go to a better university.
So don't, don't, you know, don't fail to whatever. And
so they get into good university and somebody tells them
now you kind of need an MBA or whatever. And

(40:56):
so don't screw up there. And I said, now you
go through all of that and you never wanted to
fail and never wanted to make a mistake, and now
you're going to be an entrepreneur. You're screwed. You're screwed
because it doesn't work that way, and you're going to
be making mistakes three weeks from now. And I said
this whole psychological thing. And and so some of that
about is about always being right, and some of it
is about doing things which are predictable and other ones are,

(41:20):
you know, entrepreneurship at its heart, as I see it
is about, you know, setting a direction, pivoting as needed
when you're there, having perseverance to be able to ride
through the downtimes of which it's always going to be some,
and having the the dream and the audacity to be
able to be able to convey that. I mean, I
don't see any program in any business school on what

(41:42):
we talked about earlier on, on that type of selling.
I mean, there's some not many that teach you how
to sell, you know, what are the rumors of it?
And we talk about, you know, pipelines and all the
things that you get from Oracle or whatever, but that isn't,
you know, the importance of selling what it's doing and
and assessing what your message is. And is the message
true to you? You know, it may be a great message, but,

(42:03):
you know, do you believe it? If you don't believe it,
you know, nobody talks about it in there.

S3 (42:08):
And yeah, I've.

S1 (42:09):
Never been what uh, I think that soundbite that you
just rattled off in the last minute was one of
the best soundbites I've ever heard, where you very succinctly
talked about the dynamic of of being an entrepreneur. And,
and so we talked about the importance of selling. We

(42:31):
both agree that the moment you stop selling, you're in trouble.
And here's, here's here's what I know. I know that
anybody who's listening to this show building billions with my
buddy happy here, I know this. If you're not laying
in bed saying to yourself in your own mind, I

(42:54):
got this thing, I'm going to beat this thing. I'm
going to win at this thing. We're going to dominate
this thing. If you the moment you stop doing that
and you start asking yourself the question, can I really
do it? Is it really the opportunity? Do I really
have what it takes? Do I can't find the right
people and you're now concentrating. You've already given up at
the game, because what I show in the science is

(43:18):
that in the leadership spectrum, it starts with me leadership.
And that means I have to have the resilience every
day to just convince myself, which is self selling, that
we're going to go do it. Because if you give
up on that energy, everyone behind you is giving up
and now you're your weight that you're dragging got that
much heavier. But then you have to be a phenomenal

(43:40):
vision caster because it moves from me with leadership. If
you want to get big to we, you got to
sell everybody else and get them selling, because in order
to get big, it has to move to us, which
is the cultural thing you talked about. It's when everyone
shows up wearing the brand they love what they do.
They want to go get that mountain. They want to
go camp with their gear that they sell because by golly,

(44:02):
that's what we do. That's what we got into it for.
We love this. That's selling. It's all selling. And when
all of a sudden the message lines are no longer
those things and it's about the difficulty and complexity, and
it's about bad people, and it's about hard people, and
it's about missing targets, and it's about financial results. It's
about people mad at you. The business is on a
deterioration run.

S3 (44:23):
As you said that.

S2 (44:23):
It reminded me of one of the things that every
two years we'd have long range planning process because we
wanted to level set everybody on what we were doing.
And the people have been long time would say, you know,
just give me the numbers, you know, we're going to
double or whatever, but we'd spend a disproportionate amount of
time on what the company stood for and what they were.

(44:44):
And because the new people, as I said, you know,
have some interpretation. We all have to be there. At
the end of that meeting, I would always say the
same thing, which was not novel to the people who've
been around before, but it was startling to the people
that just came on board. I said, I hope we're
so clear that some of you leave the company right now.
And is it not because you aren't great? We hired

(45:05):
you because you're great. But if you can't agree with
the ideas we have and you have ideas and there
are a lot of ways to run a business, but
we're only going to be able to run one of them.
So we've set what we're doing. If you can't be
on board with that, we'd rather help you find another
job where you can enjoy yourself and thrive rather than
have you fight us because we aren't going to change,

(45:26):
at least for the two years till the next long
range planning, and more likely because companies don't 180% pivot.
That's what we're going to be for the long term.
And some people left the company. A couple left and
came back and people were happy where they went because
we were going to do it our way now.

S1 (45:45):
Well, you'd rather be half wrong than be everyone else wrong.
Wondering why you didn't trust yourself? Yeah, because if you
don't trust yourself, who else is going to trust you?
This is the thing that this is the burden, the
resilience and the burden the entrepreneur that moves to to
this is founders don't feel that way. Founders are like, hey,

(46:05):
if it works, it's great. It's only when you decide
to be an entrepreneur where you're like, I'm all in
on this thing, and I'm going to drag everyone's ass
on the hill until you migrate to CEO.

S2 (46:15):
Well, you said something earlier in the podcast, which just
relates to it, and that is, you know, you're always
going to hear from people why it can't be done
and entrepreneurs have to be able to, I don't know,
thick skin is the right word, but they have to
be able to live with that. Listen to it with
one ear because there may be some some.

S3 (46:34):
Substance to.

S2 (46:35):
Substance to it, but you're nobody believes an entrepreneur is
going to thrive. And the people who are really bright,
and I've got a few of them, a couple I
can think are dear friends of mine. They would never
be an entrepreneur because they're so good at dissecting how
a company won't work. You know, they've often said, I
want to be just like you. I want to start
a company like that. And then they look at it
and they say, well, you know, when you look at

(46:56):
all these things, it isn't going to work because of this.
At a certain point, you've got to say, you know,
it may not, but I'm going to make it work,
you know, and that's what I'm going to do. And
that's kind of different between the, you know, sort of
the big business mindset where you're filling roles and the
entrepreneurial mindset where you're making these things happen. Or at
least that's my experience.

S1 (47:14):
Oh, you are 1,000% correct. I love this podcast. You're
you know, you built one of the biggest known brands
on the planet. So something to be very proud of.
Your idea that the brand will outlast the people. It
is true because a lot of brands just go away
over time. Your brand is as strong today as it
was probably the first few years of you creating it,

(47:35):
and that's because of the reason you created it the substance,
the the commitment behind it. So congratulations on that. You're
going to be speaking at our nine figure boardroom this weekend. Uh, and,
and I can't wait for us to be in front
of the live audience. We may augment some of this
podcast with, uh, with that as well. And I just
want to tell you from one entrepreneur to another, thank

(47:57):
you for trailblazing the way giving encouragement to people like
me to like, go get it. Fight for it and
for teaching other people because that is a big thing
that's important to you, is teaching other people how to
do it. A lot of my friends that have been
very successful have kind of drifted away playing golf and
going on their boats, but you're committed to teaching others,
which I think is a very valuable resource for people.

(48:17):
And how can they find you to get more information?

S2 (48:20):
Well, I'm on the usual ones. I've got LinkedIn website.
I'm on Instagram, but that's more communication than anything else.
I teach in whatever under a title, a brand title,
The Three Amigos. It allows me flexibility, also work with
people that have different backgrounds, you know, European, South American
electrical engineer, M.A. and whatever, so we can do. It

(48:43):
also gives me a little flexibility in what I'm doing.
So through the Three Amigos, also through Hap Klopp. And
if you look at LinkedIn, you're there. I've written two books.
One is called Conquering the North Face. It's about success.
Another one is called almost, which is about one of
the failures I was involved in a Silicon Valley company
that should have, could have, would have and didn't. And

(49:06):
it's written in a story form. But you can distill
down there's five clear reasons why the company didn't make it.
And I've always advocate, you know, learn on OPM other
people's money and read books like yours. Read others because frankly,
you're still going to figure out ways to screw it up.
But there's no reason to replicate the errors I made

(49:28):
or the errors that you found.

S1 (49:31):
Mitigating the mistakes is the fastest way to success. Yeah.
So okay, two books. We'll put the links in here.
So we're going to put the links on where to
find you conquering the North Face. And almost we'll put
the links in there. Uh, my team order me both
those books. I want the almost book. I'm working on
my second book right now. It should be done by
the end of the year. And it's it's kind of

(49:52):
the operating system that we've created. Um, but I'm storylining it,
and and it'd be curious to see how you storylined almost.
I had an almost in the dental space. I sunk
8 million and then shut it down Um, and so
you learn a lot from those mistakes, and it's probably
more valuable than the stuff you learn that you do.
Well because you won't repeat the things that hurt.

S2 (50:12):
And as I said earlier, one of the things you
learn in Silicon Valley. Fail forward, fail fast, and failing
is not the end of the world. And I've seen
so many companies. You may have seen it in entrepreneurship.
They've failed, but they won't admit it to themselves. How
about just saying hold it either. I don't have the
right model, I don't have.

S1 (50:29):
I didn't get enough financing. It's somebody else's fault.

S3 (50:32):
Yeah. Yeah.

S2 (50:32):
And you learn from it. You gain, you grow, you
come back, you're more resilient. And you know, the greatest
thing that happens with failure, I tell people, is you
learn to no longer fear failure.

S3 (50:44):
Yeah. Because you didn't die.

S2 (50:46):
Now you can set really extraordinary goals. You talk about
ten X and whatever. But one reason people don't set
ten X goals is because they're afraid they're going to fail.

S1 (50:57):
Oh, 1,000%.

S2 (50:58):
And when you eliminate that fear, you may fail along
the way. But fail at the first one. Fail at
the second one, that third one, you're going to absolutely
do it. And Steve Jobs got kicked out of Apple.
He's not a nice guy. Didn't know how to play
well with others, wasn't he wasn't always brilliant. He was
when he went to Pixar. And when he came back,

(51:19):
he'd learned enough about how he played well with others,
that all of his brilliant ideas could be translated into
where they were, but I don't think he would have
been there had he not gone through that failure exercise 100%.

S1 (51:32):
I agree with you. What a great conversation. You and
I are going to have a follow up podcast at
some point, and we're going to get into some of
your other stories that that we didn't have time to
talk about. But thank you for joining me on the show.
Thank you, everybody, for joining me with another show of
building Billions. I hope you enjoyed this episode as much
as I did. Or if you're watching me on YouTube
or you're listening on my podcast, I want you to

(51:52):
like it, share it, and please leave comments. This helps
us figure out what content, what information you'd like to
hear from myself with the guests that I'm interviewing. So
thank you. This is another episode of Building Billions with Brandon.