April 22, 2025 • 39 mins
Hap Klopp, visionary founder of The North Face, shares his remarkable journey transforming a small retail operation into a $4 billion global brand while navigating significant business setbacks along the way. His insights on brand building, crisis management, and learning from failure offer a masterclass in entrepreneurial resilience that applies to business challenges in any era.
• Building The North Face from 14 people into a global brand focused on value rather than price
• Creating products that last forever with a lifetime warranty, keeping items out of landfills
• Understanding that a brand is "what you stand for" not just logos or taglines
• Turning a catastrophic roof collapse into a company-wide bonding experience
• Navigating the Silicon Valley startup world after selling The North Face
• Learning from a failed venture in portable power systems despite having strong technology
• Embracing failure as "the secret sauce" that creates more learning than success
• Recognizing that Environmental, Social and Governance (ESG) will drive business for the next 20 years
• Advice that you don't have to be perfect—you just need to outrun the competition
• Churchill's enduring wisdom: "Never give up, never, ever give up"
Head over to terrielfossum.com to pick up your free gifts and resources to help you break through your comfort zone and reach the pinnacle of success in every area of your life.
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Episode Transcript
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Speaker 1 (00:03):
If you've been stuck in fear, self-doubt, your past
failures and you're ready tobreak through your comfort zones
to finally reach the pinnacleof success in every area of your
life, then this podcast is foryou.
Here's your host, Terry LFossum.
Speaker 2 (00:26):
Hey, this is Terry L Fossum, and welcome back to the
Comeback Chronicles podcast.
My guest today.
Because I do so much around theworld in some of the harshest
environments around.
My guest today has a lot of mymoney, because my guest today is
Hap Klopp, the visionaryfounder and former CEO of the
North Face, where he transformeda small retail operation into a
(00:50):
global leader in outdoorapparel and equipment.
Now, beyond the North Face, hefounded HK Consulting, advising
startups and multinationalcorporations alike.
He's an accomplished author andeducator.
Hap has penned several books onleadership and entrepreneurship,
including Conquering the NorthFace, An Adventure in Leadership
(01:11):
, One of my favorites, Almost 12Electric Months, Chasing a
Silicon Valley Dream and theComplete Idiot's Guide to
Business Management.
He also lectures at prestigiousinstitutions, sharing his
insight on brand building andevolving digital landscape, and
it's a pleasure to have somebodythat I consider a friend of
(01:33):
mine on the show today.
Thanks so much for joining me.
I appreciate it Very good tosee you again.
Yeah, absolutely so.
You just got through travelingin Greece and various places
around there, having a greattime, which, by God, you deserve
to do.
You've worked hard for it.
Let's talk about the buildup ofthe North Face.
When you started, it was just acouple of little retail outlets
(01:55):
, right.
Speaker 3 (01:56):
That's correct.
We started with 14 people andit's a little hard to believe.
Today, I'm no longer directlyinvolved in it, I've sold it and
VF Corporation owns it.
It's a public company, but it'sa $4 billion company.
But when you start with 14people, you don't think about
billions, you don't think abouthundreds of millions.
You think about survival,probably more than anything.
Speaker 2 (02:18):
Well, that's true, and of course, this podcast is
all about Comeback Chroniclesand we're going to talk about
that.
But that's what a lot of peopledon't understand that the
successful people they see, theyweren't always there.
They were praying for survivaland that's what you were hoping
for at that point, right.
Speaker 3 (02:34):
Well, I think you're always, as an entrepreneur, on
this razor's edge betweenchanging the world and failure.
Sometimes it's not evenday-to-day, sometimes it's hour
day to day, sometimes it's hourto hour.
Speaker 2 (02:47):
Yeah, yeah, it really is.
It's important for people toknow that, if you're feeling
that way, you're on the rightpath, because that's the way all
of us have felt or still feelat times, or everything.
Now you are also focused,though, on providing good
products, products that actuallyworked, that were affordable
(03:09):
for not just the elite people.
Is that right?
Speaker 3 (03:12):
That's correct.
I always believed in makingvalue rather than price.
Value could be interpreted in alot of ways, but the North Face
, when we launched it, was anoutdoor company.
We made sleeping bags and tentsand packs and a little bit of
clothing.
Now today it's primarilyclothing, but it was all around
the same thing of making aproduct, one that would last
(03:34):
forever.
I believed that the way you'regoing to change the world and I
had that as an objective was toget people to go deep into the
wilderness when they went thereI mean, thoreau came up with
that quote in the wilderness isthe preservation of earth.
But when you go out there andyou know it from your own
activities and things you'vedone all the urban problems and
we have a few today, if anybodyhasn't noticed but all the urban
(03:56):
problems really go away andyou're focused on some true
values and things that reallyenergize you.
True values and things thatreally energize you.
The pain point that I saw wasthe equipment that people had
was too heavy and too fragileand as somebody who went deep
into the wilderness myself, Iknew you had to make a product
that didn't fail.
You know we always joked aboutdo you want to buy a secondhand
(04:20):
climbing rope?
Don't think so.
We made a product that lastedand we put a lifetime warranty
on it, and that served a lot ofthings.
One it told the customers wherewe're positioned for somebody
who is going to put their lifeon the line, maybe by going out.
You know, most of the time lifeisn't on the line, but it could
be when you're out there.
Speaker 2 (04:39):
Often it is you bet.
Speaker 3 (04:41):
If it never fails, you're okay.
And then the other one, ofcourse, is I believed in the
environment, and if your productnever fails, it never ends up
in a landfill.
So all of that came together.
So the idea was to make a greatproduct to facilitate people to
enjoy nature.
Speaker 2 (04:55):
And I could not agree with you more on so many counts
of what you just said, not theleast of which is getting out
into the outdoors.
And I want to encourageeverybody, even if you're
thinking, well, I don't do that,do that, do that.
Get out there, because, justlike Hap said, it's amazing what
happens.
Because all the things thatseem to be important when you
get out there, no, you know,shelter is important, water is
(05:17):
important, food is important,safety is important, but
politics is not, and so manythings are not important out
there.
The things that are driving youcrazy right now just don't
matter when you're staring intowilderness TV, as we call a
campfire, you know.
Speaker 3 (05:33):
Absolutely, absolutely.
You couldn't have said itbetter, terry.
Speaker 2 (05:36):
But one of the things I also teach people is because
they wonder how I do those sortof things.
You got to have good gear andthat's the bottom line.
You'll enjoy yourself and I canget kids out there.
I work with the scoutingprogram a lot and I can get kids
out there as long as they'recomfortable.
It's all down to good gear.
So thank you for everything youdid with that right there.
I really appreciate it.
Speaker 3 (05:58):
Well, it was self-serving.
I wanted to get myself outthere too.
Speaker 2 (06:03):
Well, I remember and we're kind of going back a bit,
but I remember when Gore-Texstarted, just to be a thing at
that point, and of course youguys were some of the leaders in
Gore-Tex at that point.
Speaker 3 (06:13):
Yeah, we were one of the first to bring it to market.
It was a great partnership withthem and it really created a
new product category.
Our idea was always to createdisruption, to create something
new, not to make something alittle bit better than it was
before.
We wanted to build a brand.
That was my goal.
Brand building was something Ibelieve that was an annuity for
the future.
But brand is not a tagline,it's not a logo.
(06:36):
Although you have all of those,A brand is what you stand for.
It's like coral.
Speaker 2 (06:41):
Love that.
Speaker 3 (06:42):
Coral grows and grows .
You don't see it changing dayto day.
But if you have guidelines andrules and adhere to them, all
along it changes and changes andat some inflection point it is
unlike anything else Also quitebeautiful, but when it's unlike
anything else, that's what youwant when you're building a
company and the reality is youdon't want to make the best
(07:06):
product, you want to make theonly product.
If you don't have the product,then that's what happens you
bring people back to you.
So the idea was to have thoserules that were in place.
And our rules were notquantitative, they were about
qualitative.
They were about what we stoodfor and that's what I believe a
great brand is about.
And we were about quality.
(07:26):
We were about triple bottomline an equal commitment to the
profits, to the people, to theplanet, to be able to do that.
And we were about disruption.
And when we did all of thosethings and we did them
consistently across the entirecompany we were omni,
omnichannel from day one.
That means we sold in our ownstores, first in the catalog,
(07:47):
then e-commerce, and then wesold to other people.
We were wherever the peopleneeded to be and we wanted the
image to be the same wherever wewere.
Speaker 2 (07:55):
I absolutely love that that it's about what you
stand for, and it should becompletely unique.
I think that's important.
We're a little off the ComebackChronicles topic, but it's
critical for everybody that'sthinking about business any
entrepreneur out there tounderstand.
It's all about what you standfor, Not just from the customer
standpoint, but from youremployee standpoint as well.
(08:17):
People will do only so much forX dollars an hour, but they
will die for a cause, and if youwant to bring everybody
inspired to take action aboveand beyond what they would, you
got to stand for something, andthat's one of the many things
I've loved about your conceptsand, of course, the North Face.
Speaker 3 (08:35):
Well, the other part, which does tie more directly to
the comeback issue, is thatwhat you need to do is center
yourself.
If you're chasing the customer,if you're chasing the fad, if
you're the flavor of the month,if you're reacting to the
uncertainties in the environmenttoday tariffs how do you
respond to that?
Then you're lost.
But if you have that and yousay, well, this is what we stand
(08:58):
for, and those things maychange and they're going to
buffet us around and some aregoing to be good and some are
going to be horrible, but thereality is we know where we
stand when we come back to it.
That's where it's there and ifyour brand is that, so the brand
(09:19):
isn't what graphic designers do, although that's wonderful and
I love good graphic design butthat's only a representation of
what you stand for.
Speaker 2 (09:28):
Absolutely love that, really, really do.
So you built things up.
Things are going amazing forthe North Face and you reached
the world with it.
Let's talk about 12 electricmonths chasing a Silicon Valley
dream, because that was thechallenging time.
Speaker 3 (09:48):
For sure.
I mean, there were challengingtimes at North Face too.
We had a roof collapse and wewere closed down for a bit and
we didn't know how we were goingto deliver product, because we
came in and fried the computersand the fire department would
let us get in to get any of theequipment or get anything.
And we didn't know how we werein to get any of the equipment
or get anything.
We didn't know how to get in,but it actually turned out to be
(10:10):
a great bonding experience forthe entire team.
But it required a real changein philosophy, because I was a
for a while in terms ofmanagement philosophy, because I
was a big believer in collegialmanagement, was a big believer
in collegial management,basically soliciting input from
everybody, trying to have groupmaking decisions.
(10:30):
When you're in a crisis, youcan't do that, and you know.
So I had to become autocratic.
We had to say we're going to dothis and this and this, you're
going to do this, you're goingto do that.
Some people went out and gotthe orders back from the
customers.
Some other people dealt withthe insurance company.
Some other people at night werea SWAT team going in to get
product.
I had to change that style ofmanagement, and not that I was
(10:51):
going to do it forever, butduring the crisis I did that,
and so it was good training.
For when I moved on, I sold theNorth Face and I set up a
consulting company, an advisingcompany, investing in some
companies, and the one that thebook almost is about was a
company that made portable powersystems.
Basically, it started out withlithium ion batteries and then
(11:14):
it also had lots of patent workgoing along with fuel cells, and
fuel cells were the promise forthe future, but the reality was
when they asked me to come inand help them out were the
promise for the future, but thereality was when they asked me
to come in and help them out, Ithink they wanted me to find
money more than anything else.
It was could have, would have,should have company.
It had some of the bestengineers from Stanford, from
Cal, from Vanderbilt.
(11:35):
The CEO was an admiral in theNavy.
We had the head of themechanical engineering
department at Stanford on theboard and they had millions of
dollars that they'd raised.
But they pretty well gonethrough that and called Arctica
and so when I came in I said,listen, what we've got to do
effectively is create sometraction, because innovation is
(12:00):
not equal to invention.
Innovation is equal toinvention plus commercialization
.
Speaker 2 (12:05):
You got to prove a concept.
Speaker 3 (12:07):
So the fuel cell, which had all this promise, also
was not ready for prime time.
It was too expensive.
The form factor was larger thanthe lithium-ion battery one we
did.
On top of that, it was veryvolatile, so you couldn't fly it
on airplanes yet the DOT had-.
Speaker 2 (12:24):
And tell everybody what you mean by fuel cell.
Speaker 3 (12:27):
A fuel cell is a way to generate electrical power,
and you do it basically by usinga couple of disparate materials
, not that differentconceptually than lithium-ion
battery, but you have twodifferent materials and those
materials, when they interact,give off energy and give off
electricity.
This was a way to miniaturizeit in the future, utilizing all
(12:50):
sorts of technological things,and they had a lot of patents
about it.
But so my thinking was, givingmy background, we could put this
into jackets, or we couldcombine with somebody to put
them in jackets, start with thislithium ion battery pack and
then, when we'd solve some ofthe problems, like being able to
fly it, the fact that the fuelwas only coming from Russia and
(13:12):
it was limited in terms ofquantity, the fact that it was
very larger in size, we couldgravitate down that roadway.
And that was a plan.
And they were thinking Unicorn,you know this billion-dollar
company.
I said well, you know beforeyou're a unicorn, you actually
got to do something.
I said okay let's start with thelithium-ion battery.
(13:33):
And we did.
It wasn't a unicorn, but thefirst year the sales team I
brought in got $12 million insales.
The second year we had $25million in sales.
So we were doing okay, but weweren't a unicorn.
Well, all was going great,except it didn't.
What happened there?
(13:54):
I won't go into all the depth onit, but the first problem that
the company had was a clashbetween me and the CEO.
He had worked as an admiral inthe government.
He believed top-downdecision-making was the only way
to work.
You know, when you're anadmiral, you make all the
decisions.
Nobody questions you.
The second thing is he neverworried about budgets because
(14:14):
the government, when you're inthe military, you spend it.
In fact, you spend it all,because if you don't, you won't
get the money the next year.
Right right On top of that,he'd never looked at this idea
that innovation is anythingother than an invention.
So we had this clash.
I brought in some people whowere selling these products and
he wanted sort of an engineeringmentality and I said listen,
(14:36):
we've got to get together.
I said I prefer my idea, youhave your idea, but we've got to
get together because smallcompanies can't have a variety
of cultures, you don't survive.
Well, he would never do that.
He finally had a meeting, buthe said the engineers have to be
in the afternoon and the salesand marketing have to be in the
morning.
I knew we were in bad shape, so, anyway, we went ahead and we
got to a point where he thoughteverything was going great
(15:01):
because we had a visit fromApple.
And he said we're going to sellby the end of the year for 50
to a hundred million dollars.
And I said well, dick, I don'tthink that's going to happen.
I said you know?
I said the first reason isthese things don't happen
overnight.
So the second thing is, at thattime Steve Jobs was alive and I
said Steve hasn't visited thecompany and Steve makes all the
decisions, so he isn't hear.
(15:21):
We're not at the finish line,we're far from it.
Right, we have no proof ofconcept.
You know they're interested inthe fuel cell.
They're not very interested inlithium ion battery because they
think maybe they can put it insome of their other products,
but we haven't proved it canwork.
And he said but they havehundreds of billions of dollars
in the bank.
And I said more reason to notbuy us Right, rounding air
(15:43):
whenever they could do it.
Well, he was absolutelyconvinced that you know they
were going to buy us.
So he started spending like adrunken sailor which you know
because he was an admiral hecould be he didn't drink that
much, to be honest but anyway,we were $2 million overspent.
We owed $2 million and had nomoney in the bank.
(16:03):
And so the landlord came in andsaid I'm going to close you
down.
Dick wasn't in there, but Icalled Dick and I said we've got
to do something.
We got to raise a little bit ofmoney, so I don't want to
dilute because we're going tosell.
It's just taking away from ours.
And I said well, we won't bearound if they put a padlock on
the door.
It's kind of a bad look ifApple comes up here, bad luck on
the door.
And he said well, I don't wantto dilute.
(16:24):
And I said listen, we've got toget some money.
If we raise enough money, wecan have a runway till the end
of the year.
And one of two things is goingto happen Either we're going to
sell, like you think, which isgreat, or we'll have time for a
sophisticated fundraise, becauseit takes six months to do a
fundraise.
So he said okay and I saidlet's, let's get everybody
(16:46):
together, dick and everybodyelse, and figure out how much
money we need to keep peoplehappy.
I said we can't get $2 million,but if we get enough we can
keep a happy, and then we havethis roadmap.
Well, everybody got together.
We understood that $147,000would be enough.
Now we needed more than that.
So I went out quickly and intwo weeks I raised $700,000,
(17:10):
which is 147 plus what we'redoing.
That would get us to the end ofthe year for sure.
Well, the money came in onWednesday and on Thursday
morning I went in and I lookedat the computer and our bank
balance was $46.
Speaker 2 (17:25):
Oh geez.
Speaker 3 (17:26):
And so I went to the CFO.
I said what happened?
And he said, well, I had tospend it.
And I said, you know, we saidwe had a plan.
And he said, well, the CEO saidI had to spend it.
Oh no, I said the CEO is partof the plan.
And he said and I said, youknow, on top of that, we don't
have any money to pay payrolltomorrow.
(17:47):
And he said, well, I left80,000 in.
I said, well, I'll go check itout, but banks don't make cares
like that.
I went there.
I came back I said there's80,000, that there's three
checks, that kind of total80,000, but you know they aren't
in the check register.
And he said, well, maybe hewrote them and didn't tell me.
And I said you're CFO and hedidn't tell you.
And I said but listen, it'simpossible that the money came
(18:11):
in yesterday, that you wrote thechecks, you mailed them, people
got them and they took them tothe bank.
Those checks were written twoweeks ago before I raised the
money and you never told me.
And I used all my credibilityon your behalf, oh no.
So anyway, long story short, mymailing list got a lot shorter.
(18:32):
And I had to leave the companyand they bobbled along for a
while, got a couple of contracts, but they ultimately folded.
Speaker 1 (18:42):
Oh no.
Speaker 3 (18:43):
It was in Silicon Valley and, as you and I talked
about prior to the podcast, oneof the things in Silicon Valley
is it's okay to fail Now.
Failure doesn't necessarilymean you go bankrupt.
Failure means you maybe don'thit your goals, maybe you have
to sell out a low price, but inSilicon Valley, if you learn
from your failure, you can go on.
Everybody in the company hasjobs, some of them now working
(19:06):
at Apple, a couple of them areteaching, a couple of them are
working at Facebook and others.
In Silicon Valley, failure isthe secret sauce, because
failure is accepted if you learn.
And if you look at all of thesegreat names in Silicon Valley,
all of them failed.
You look at Steve Jobs.
You look at Jack Dorsey atTwitter.
(19:27):
You look at Mark Andreessen hewas at Netscape.
You look at these people.
They all were kicked out oftheir business at the beginning
because of differing reasons,and yet they came back.
They were funded, they grew Imean jobs.
Everybody knows what Apple didafter he came back and Jack
Dorsey left.
Twitter came back, actuallyhelped do Twitter, but he also
(19:49):
founded some other SiliconValley companies.
Mark Andreessen runs thebiggest or one of the biggest
venture capital firms.
Andreessen Horowitz.
The nature of it is that itwasn't the end of the road.
It didn't have to happen andwhen I wrote the book about it I
wrote it as a cautionary tale.
Hopefully it was enjoyable.
It was not written.
(20:10):
The seven habits of whatever.
It's written as a story and yousee the reasons why that
company failed.
I wrote it so that people lesspeople would fail.
Hopefully they would just enjoyit.
They could either read it forthe learning aspect or they
could see this ridiculousdynamic of the train heading to
there.
Anyway, I don't like the answerto your question, jerry, but it
(20:33):
was a learning experience.
Speaker 2 (20:34):
Well, it was and it always is if you get through it
Was a learning experience.
Well, it was and it always isif you get through it.
But at the time it doesn't feellike it.
At the time it's got to hurt.
You had to be pissed.
I mean, what were your emotionsyou were going through when
there's no money left, we can'teven make payroll?
I was promised something.
(20:55):
This is my reputation, myreputation line.
There had to be some emotiongoing on then.
Speaker 3 (21:01):
Well, I wasn't quiet about it All right share, share
come on share.
But if you read the book, you'llalso get it, because a lot is
about the emotion and how peoplereacted to all of those things
that were in there.
But the reality is I mean,first of all, I think we're all
competitive and we would like tosucceed.
(21:22):
When you have a clear path to avery nice success of what
you're going to do, to have thatend up on the rocks is more
than frustrating.
I mean, it isn't like, oh okay,I just care, you're invested in
it.
I was invested in it.
It was my reputation.
But I went out to some peopleand I told them what the plan
was and then I felt like I wasstabbed in the back.
(21:44):
And you know, being stabbed inthe back is one thing.
You know I'm big, okay, I cando that.
But being stabbed in the backwhen, in fact, it hurt some of
the people in the company peopleI brought in to do that that
hurt a lot.
One it hurt the investors thatI came in and hurt my reputation
.
One also it was one of those.
(22:05):
When I looked at it, it wasridiculous because we had a plan
that we were working.
As I said, we'd got $25 millionworth of orders in, which is
nothing to sneeze at.
I mean, as I said, it's not aunicorn, but that would give us
a latitude to be able to grow.
So when you have a plan and youhave people come in and you put
(22:25):
your reputation on the line andyou commit yourself to doing it
I was taking my time away frommy other consulting activities
because it was a full-timeadvisory role to be able to do
it that hurts, and you know.
You know, and you know you'regoing to bounce back.
I mean, I had other things onthe outside, but many of the
people I brought in this is liketheir first job or whatever,
(22:47):
and so you know they're going.
You know listen, I left a gooduniversity to do this and you
know it's hurting them and whenthe people around you get hurt,
you feel it.
You can't be isolated from itand that's one of the problems
of running a company is very fewsuccessful people I've seen
(23:07):
running companies are detached.
Speaker 2 (23:12):
Right right.
Speaker 3 (23:14):
They're involved, it's their emotion, it's their
idea, it's their money, it'stheir dream, and so when it,
hits their baby when it hits therocks, it's personal yeah.
Speaker 2 (23:27):
Yeah, and how do people come back from that?
How did you come back from it?
How did you help other peoplecome back from it?
How would you help thelisteners to come back from that
?
Because some of them that arelistening are going through it
right now or certainly will.
Speaker 3 (23:41):
Well, I mean, first of all, I went and had a beer.
Let's call it like it is.
Yeah, I mean you might as well,and you go.
What's going on?
The second one is I did default.
In my own case I had success,and it wasn't my only rodeo that
I was working on, but I knewabout many of these people in
Silicon Valley.
I'd read about them, Ireflected on them, and so I
(24:02):
brought some of the peopletogether and said listen, you
know, this one went down, butthis is not unusual.
This is just us.
I mean, it seems unusual to usbut it's not unusual.
If we've learned from it, if welearn from these points, we can
go out and market that tosomebody else and people will
(24:22):
like it, and I can tell you Nowmarket what Market?
Speaker 2 (24:26):
the fact that they failed and learn from it is what
you're saying, right.
Speaker 3 (24:29):
Yeah, I talked with one of the partners in Sequoia,
a big capital venture capitalfirm, and I asked what do you
think about the failure?
And he said love it.
He said we probably wouldn'tinvest in a firm unless some of
the people in the management hadsome failure, because you learn
more from failure than you dofrom success.
(24:50):
Success you attribute to genius, hard work, a little bit of
luck and timing or whatever.
When you fail, you can't sleep.
You're thinking, well, howcould I have done it differently
?
What did I do wrong?
All of that is a learning.
I mean, there's a great quotefrom Thomas Edison who tried a
number of times to make thelight bulb work.
(25:11):
He got a patent it was aboutincandescent bulbs, but the
filament was wrong.
So he took all the table ofelements and kept testing and
testing until he found tungsten,the right one.
But his comment was I've neverfailed, I've just found 10,000
ways.
Something didn't work.
And that's really the attitudeyou have to have.
But if you learn from that, ifyou learn that we have to have a
(25:32):
team, if you learn that youconstantly have to have cash in
the bank, if you learn that whatyou have to do is have a plan B
when plan A doesn't work,because never have I seen and
I've seen a lot because I havean MBA from Stanford I advise, I
consult.
I've seen a lot of businessplans and I can say never have I
(25:54):
seen the business actually playout like the original business
plan, right, right.
That doesn't mean that all ofthem cratered, but almost all of
them had to pivot, narroweddown, not as grand as they want,
changed, all those things.
You have to be ready to do that.
Speaker 2 (26:12):
We say the same thing in the military All strategies
are great till the first bulletflies and then they're all out
the window, just like that.
But I think it's great thatpeople hear that and understand
that you know what your plan.
You need to have a plan.
You need to be working thatplan, but also understand that
plan probably isn't going towork, so be ready to shift that
plan.
(26:32):
It's okay, that's what we do.
I want to also go back and thisis a fantastic direction but I
also want to go back to thechallenges you said you had at
the North Face, because you saidsomething I thought was
fantastic that you had all ofthat fighting going on, but it
was a bonding experience, as itturned out.
Now that's important for peopleto hear.
(26:54):
Why was it a bonding experience?
Too many times people explode,they hate each other, the
company dies and bad thingshappen.
Why was that a bondingexperience?
Speaker 3 (27:04):
Well, if you think about it, and we weren't devoid
from it, but we had grown somuch.
We were growing 100% a year,150% a year, and so we ended up
we were in two or threebuildings and we had silos.
We had marketing, we had salesoperation, manufacturing or
whatever, and we had silos.
We had marketing, we had salesoperation, manufacturing or
whatever, and over time, there'sa general tendency for people
(27:26):
to stay with their silo.
If they go out for a beer afterwork or whatever, it's not the
whole company doing it, it's anindividual one, sure, and it's
the people in the other buildingor the people on the second
floor, like they're different.
And we had some of that.
We didn't have a lot of it.
We kept working to try toovercome it, but inevitably, you
have people who are almost morededicated to their task than
(27:49):
they are to the company, andwhen we had this crisis,
everybody had to focus on thefact that we had to make the
company survive, and so we had acommon goal of the company
surviving.
We had different roles in that,but it was very clear.
Now, in reality, we had thatsame situation when we were
(28:10):
talking about how are we goingto grow 150% a year.
How's the sales going to bringit in?
But there wasn't the tension,there wasn't the pressure, there
wasn't the immediacy of whatyou're going to do, there wasn't
the uncertainty.
And for people to all put theirbacks against that same wall
results in a camaraderie thatpeople think that we were
(28:32):
fighting an enemy.
It wasn't a competitor, itwasn't a new design, it wasn't
just the clock we were workingagainst.
It was the survival of thecompany and in doing that,
people were allocated duties.
Everybody was reporting inevery day.
We had to do that and eventhough I had to shift to this
sort of dogmatic managementstyle, they were willing to do
(28:56):
that, even though they saw me asmore of a delegator in the way
I managed, because they saw wewere there and we kept telling
them we were going to do it.
Now the reality was at theoutset.
When it happened, I'm sure afew people thought this is the
end of our business.
When the roof collapsed, howare we going to do it?
It was just the time we weresupposed to deliver to everybody
(29:17):
at the beginning of the season.
And we couldn't even get productout of there.
People didn't know what we'redoing.
Well, when we talked about itand we solved it I mean we did a
mix of a number of things wewent to the insurance company
for money and of course theybattled back because, frankly,
when they tell you you havebusiness interruption insurance,
(29:37):
it doesn't oftentimes work outquite that way.
And the insurance company knowsthat you're under pressure, so
they think you'll take a lowballpayment.
Right, you don't want to dothat.
But if you don't have that,then you need more money.
If you bought more materials,the vendors didn't have
materials for us.
But we said, listen, we're agood customer.
(29:58):
We had this problem.
The vendors didn't havematerials for us, but we said,
listen, we're a good customer.
We had this problem.
We had somebody go to thecustomers and calling on the
customers and that was oursalesman.
We said we didn't tell them wedidn't have their orders because
the computers had been fried,because at that time we just had
a central computer, didn't?
Speaker 2 (30:13):
have it, oh geez yeah .
Speaker 3 (30:14):
Yeah.
And so what we said is we sentyou a confirmation.
Would you send that copy backto us?
And so we were hand planningwhat we were doing there.
So the salesmen are doingsomething.
We had SWAT teams of people whoworked in the factories going
in either getting equipment outor getting the product out that
they could get.
We had other people buying newmaterials.
(30:36):
We were convincing people.
You don't need all of thatorder right away.
So we did a glitch of whatwe're doing.
But everybody was workingtowards that common goal of how
do we survive?
And we get there when we did,you know, and on all of these
fronts finances, talking withthe bank, telling the bank don't
worry, the insurance company isgoing to do it, you just need
(30:57):
to load us more money so we canbuy product.
You know, we're telling thevendors, we're going to be
telling the customers one thing,but we're all had a shared goal
and a shared goal.
If you can do that, it'swonderful to do it anytime in a
business and I would advocate it.
But if it's in a crisis and youdo it and you come out at the
end, you're stronger than youwere going in.
Speaker 2 (31:19):
And I think that's absolutely critical.
You had everybody workingtowards a share goal.
Everybody wasn't fightingagainst each other.
They weren't the enemy.
The other team wasn't the enemy, but rather, like you said,
there was an enemy and youneeded to work together to
conquer that enemy.
That enemy in this case was thefailure of the company, but you
got them all working togetherand all leadership is
situational.
So you shifting over to that.
That leadership style makesperfect sense.
(31:40):
So you've got consulting goingon.
I know you're speaking atseveral universities.
What is the biggest topic thatyou like to share with people
today, with entrepreneursespecially today, to help them
on their journey?
Speaker 3 (31:55):
Well, I believe and this is not proven, but I
believe that you always have abetter chance if you catch the
megatrends that exist out there,rather than create something
that's like anything else orcreate something that copies
what people were successful withfive years ago.
If you know what the future isgoing to be and you make that,
(32:17):
then you don't have to beperfect.
You get the tailwinds and theyhelp you out.
I believe price, particularlyin consumer goods price, has
been the big driver for the lastfew years 50 years or so A
result, I believe, of a lack ofinformation that existed out
there.
If people realize that theimpact of the climate, the labor
abuses that happen with some ofthese products, when you ship
(32:39):
in the things from a distance,or whatever, they might have
made different decisions, butthey didn't know that and so
they were making the bestdecisions they had.
At the time.
We developed online tools to doprice comparisons.
So if you don't have a lot ofinformation about what makes the
product different or what makesthe process of it different,
you probably default to price.
(33:00):
Well, now we have new tools.
We have cameras that show whathappens everywhere.
We have blockchain, whichverifies anything, the way it
happens.
We have the internet that showsyou what's happening.
People have information aboutwhat's happened to the plastics
in the ocean, about climatechange, about labor abuses in
(33:20):
foreign countries, and we have anew generation of people coming
in Gen Z and Alpha.
Those are people that have tolive with the planet we have and
they care about it a lot.
So you have a group of peoplecoming in that really care about
the planet and what they'redoing.
You have information now totell you, inform you better
(33:41):
about what you buy and whatimpact that's going to have as a
result, and it's called ESG.
It's about environment,sustainability and governance.
That, I believe, is going to bethe driver for the next 20
years or so.
That's a primary thing If youhave it at your back.
So how you run your business,your governance, how you treat
people ethically, how you treatyour customers or whatever about
(34:03):
sustainability like North Face,we had a lifetime warranty on
our product.
That's going to be big goingforward when you talk about the
environment the idea that you,in fact, are giving something
back in doing that.
So what I would say is look atyour product or your service.
Look at how that's going to beimpacting sustainability,
(34:24):
environment governance, so thatyou, your brand, is built around
those characteristics.
And when you do that, if youhave the tailwinds behind you,
you don't have to be perfect,and I think that's the biggest
thing, that out of all of that,actually fantastic stuff.
Speaker 2 (34:44):
But you don't have to be perfect.
You'll find the tailwind andjust do it.
Ready fire, aim, almost notready, aim fire.
Just get out there and startmaking something happen.
Is that about right?
Speaker 3 (34:56):
Yeah, there's an old joke and I'm sure you've heard
it, but I'll share it withBecause.
Speaker 2 (35:00):
I'm an old guy.
Speaker 3 (35:02):
And it's about two guys that are walking in the
wilderness and they're walkingalong a path and suddenly they
hear this crash and out of thewoods comes a bear.
And one person sits down andstarts putting on their sneakers
, getting ready to run, and theother one says what are you
doing?
He said you can't outrun thebear.
(35:24):
He said I don't have to outrunthe bear, I just have to outrun
you.
And that's kind of the way itis in business.
You know you don't have to beperfect.
If you're good enough and thecompetition isn't doing it, if
the competition isn't embracingESG and you are, the market's
going to recognize you andthat's good enough to succeed
the market's going to recognizeyou and that's good enough to
succeed.
Speaker 2 (35:42):
Yeah, absolutely, and it's it.
It's about just get out thereand run man, get out there and
run you.
And I love many things aboutwhat you said, but you don't
necessarily have to be the best,you don't have to be the
smartest, you don't have tomaybe even have the perfect idea
or even maybe the best idea,but run, get out there and run
For sure.
Speaker 3 (36:01):
That's well said.
Speaker 2 (36:02):
So we're running out of time and I appreciate your
time.
What would you like to leavepeople with who are on their
journey and they're goingthrough the challenges that you
went through as you werebuilding these companies and
continue to build thesecompanies.
What would you like to leavethem with these?
Speaker 3 (36:19):
companies and continue to build these
companies.
What would you like to leavethem with?
Well, there's a great quotefrom Winston Churchill, and he
was, you know he.
After the war they actuallykicked him out of his government
in England and you know, herehe was.
He'd done all these thingswhich caused great success, and
they no longer wanted him andthey brought him back to his I
(36:42):
think it was prep school andthey had him speak and they
asked him to give the speech andhe did.
It was in just three sentences.
He said never give up, never,ever give up, never give up.
That doesn't mean that you don'tpivot and change, but what it
(37:02):
means is, when it all hits thefan, don't just fold.
If you battle, you can battlethrough it.
And if you see the better day,if you can just see over the
hill, if you can see, maybe Ihave to change, but I'm going to
win.
I'm not going to, as you said,I'm going to continue running.
I'm not just going to foldbecause it's difficult times,
(37:23):
because every one of us andevery one of your listeners is
going to encounter difficulttimes in their business.
I don't care what business itis.
I mean, we look at them from adistance and we say you know
Microsoft, it must have all beeneasy.
Well, read some of Bill Gates'books, or whatever you look at
it.
I mean, it's all easy when youlook at it in the big view, but
(37:50):
it's a sawtooth edge as you growa company and when you have
those downs, persevere.
Speaker 2 (37:54):
That's fantastic, and I think that's not just in
business but in all of life, inrelationships, in every aspect
of your being Never give up.
Well, hap, thank you so muchfor joining me.
I really appreciate it.
My friend, we'll look forwardto talking with you again very
soon.
And, for everybody listening,take what you learned here,
re-listen to this again, sharethis and do exactly what Hap
(38:17):
said Run, run, run.
Never give up, no matter what,and you can have your own
Comeback Chronicle.
Speaker 1 (38:27):
So that's it for today's episode of the Comeback
Chronicles.
Head on over to Apple Podcastsor wherever you listen, and
subscribe to the show.
If you're ready to get overyour fears, self-doubts and past
failures and break through yourcomfort zone to reach the
pinnacle of success in everyarea of your life, head over to
terrielfawesomecom to pick upyour free gifts and so much more
(38:51):
.
We'll see you next week on theComeback Chronicles podcast.
You.
If you've been stuck in fear, self-doubt, your past
failures and you're ready tobreak through your comfort zones
to finally reach the pinnacleof success in every area of your
life, then this podcast is foryou.
Here's your host, Terry LFossum.
Speaker 2 (00:26):
Hey, this is Terry L Fossum, and welcome back to the
Comeback Chronicles podcast.
My guest today.
Because I do so much around theworld in some of the harshest
environments around.
My guest today has a lot of mymoney, because my guest today is
Hap Klopp, the visionaryfounder and former CEO of the
North Face, where he transformeda small retail operation into a
(00:50):
global leader in outdoorapparel and equipment.
Now, beyond the North Face, hefounded HK Consulting, advising
startups and multinationalcorporations alike.
He's an accomplished author andeducator.
Hap has penned several books onleadership and entrepreneurship,
including Conquering the NorthFace, An Adventure in Leadership
(01:11):
, One of my favorites, Almost 12Electric Months, Chasing a
Silicon Valley Dream and theComplete Idiot's Guide to
Business Management.
He also lectures at prestigiousinstitutions, sharing his
insight on brand building andevolving digital landscape, and
it's a pleasure to have somebodythat I consider a friend of
(01:33):
mine on the show today.
Thanks so much for joining me.
I appreciate it Very good tosee you again.
Yeah, absolutely so.
You just got through travelingin Greece and various places
around there, having a greattime, which, by God, you deserve
to do.
You've worked hard for it.
Let's talk about the buildup ofthe North Face.
When you started, it was just acouple of little retail outlets
(01:55):
, right.
Speaker 3 (01:56):
That's correct.
We started with 14 people andit's a little hard to believe.
Today, I'm no longer directlyinvolved in it, I've sold it and
VF Corporation owns it.
It's a public company, but it'sa $4 billion company.
But when you start with 14people, you don't think about
billions, you don't think abouthundreds of millions.
You think about survival,probably more than anything.
Speaker 2 (02:18):
Well, that's true, and of course, this podcast is
all about Comeback Chroniclesand we're going to talk about
that.
But that's what a lot of peopledon't understand that the
successful people they see, theyweren't always there.
They were praying for survivaland that's what you were hoping
for at that point, right.
Speaker 3 (02:34):
Well, I think you're always, as an entrepreneur, on
this razor's edge betweenchanging the world and failure.
Sometimes it's not evenday-to-day, sometimes it's hour
day to day, sometimes it's hourto hour.
Speaker 2 (02:47):
Yeah, yeah, it really is.
It's important for people toknow that, if you're feeling
that way, you're on the rightpath, because that's the way all
of us have felt or still feelat times, or everything.
Now you are also focused,though, on providing good
products, products that actuallyworked, that were affordable
(03:09):
for not just the elite people.
Is that right?
Speaker 3 (03:12):
That's correct.
I always believed in makingvalue rather than price.
Value could be interpreted in alot of ways, but the North Face
, when we launched it, was anoutdoor company.
We made sleeping bags and tentsand packs and a little bit of
clothing.
Now today it's primarilyclothing, but it was all around
the same thing of making aproduct, one that would last
(03:34):
forever.
I believed that the way you'regoing to change the world and I
had that as an objective was toget people to go deep into the
wilderness when they went thereI mean, thoreau came up with
that quote in the wilderness isthe preservation of earth.
But when you go out there andyou know it from your own
activities and things you'vedone all the urban problems and
we have a few today, if anybodyhasn't noticed but all the urban
(03:56):
problems really go away andyou're focused on some true
values and things that reallyenergize you.
True values and things thatreally energize you.
The pain point that I saw wasthe equipment that people had
was too heavy and too fragileand as somebody who went deep
into the wilderness myself, Iknew you had to make a product
that didn't fail.
You know we always joked aboutdo you want to buy a secondhand
(04:20):
climbing rope?
Don't think so.
We made a product that lastedand we put a lifetime warranty
on it, and that served a lot ofthings.
One it told the customers wherewe're positioned for somebody
who is going to put their lifeon the line, maybe by going out.
You know, most of the time lifeisn't on the line, but it could
be when you're out there.
Speaker 2 (04:39):
Often it is you bet.
Speaker 3 (04:41):
If it never fails, you're okay.
And then the other one, ofcourse, is I believed in the
environment, and if your productnever fails, it never ends up
in a landfill.
So all of that came together.
So the idea was to make a greatproduct to facilitate people to
enjoy nature.
Speaker 2 (04:55):
And I could not agree with you more on so many counts
of what you just said, not theleast of which is getting out
into the outdoors.
And I want to encourageeverybody, even if you're
thinking, well, I don't do that,do that, do that.
Get out there, because, justlike Hap said, it's amazing what
happens.
Because all the things thatseem to be important when you
get out there, no, you know,shelter is important, water is
(05:17):
important, food is important,safety is important, but
politics is not, and so manythings are not important out
there.
The things that are driving youcrazy right now just don't
matter when you're staring intowilderness TV, as we call a
campfire, you know.
Speaker 3 (05:33):
Absolutely, absolutely.
You couldn't have said itbetter, terry.
Speaker 2 (05:36):
But one of the things I also teach people is because
they wonder how I do those sortof things.
You got to have good gear andthat's the bottom line.
You'll enjoy yourself and I canget kids out there.
I work with the scoutingprogram a lot and I can get kids
out there as long as they'recomfortable.
It's all down to good gear.
So thank you for everything youdid with that right there.
I really appreciate it.
Speaker 3 (05:58):
Well, it was self-serving.
I wanted to get myself outthere too.
Speaker 2 (06:03):
Well, I remember and we're kind of going back a bit,
but I remember when Gore-Texstarted, just to be a thing at
that point, and of course youguys were some of the leaders in
Gore-Tex at that point.
Speaker 3 (06:13):
Yeah, we were one of the first to bring it to market.
It was a great partnership withthem and it really created a
new product category.
Our idea was always to createdisruption, to create something
new, not to make something alittle bit better than it was
before.
We wanted to build a brand.
That was my goal.
Brand building was something Ibelieve that was an annuity for
the future.
But brand is not a tagline,it's not a logo.
(06:36):
Although you have all of those,A brand is what you stand for.
It's like coral.
Speaker 2 (06:41):
Love that.
Speaker 3 (06:42):
Coral grows and grows .
You don't see it changing dayto day.
But if you have guidelines andrules and adhere to them, all
along it changes and changes andat some inflection point it is
unlike anything else Also quitebeautiful, but when it's unlike
anything else, that's what youwant when you're building a
company and the reality is youdon't want to make the best
(07:06):
product, you want to make theonly product.
If you don't have the product,then that's what happens you
bring people back to you.
So the idea was to have thoserules that were in place.
And our rules were notquantitative, they were about
qualitative.
They were about what we stoodfor and that's what I believe a
great brand is about.
And we were about quality.
(07:26):
We were about triple bottomline an equal commitment to the
profits, to the people, to theplanet, to be able to do that.
And we were about disruption.
And when we did all of thosethings and we did them
consistently across the entirecompany we were omni,
omnichannel from day one.
That means we sold in our ownstores, first in the catalog,
(07:47):
then e-commerce, and then wesold to other people.
We were wherever the peopleneeded to be and we wanted the
image to be the same wherever wewere.
Speaker 2 (07:55):
I absolutely love that that it's about what you
stand for, and it should becompletely unique.
I think that's important.
We're a little off the ComebackChronicles topic, but it's
critical for everybody that'sthinking about business any
entrepreneur out there tounderstand.
It's all about what you standfor, Not just from the customer
standpoint, but from youremployee standpoint as well.
(08:17):
People will do only so much forX dollars an hour, but they
will die for a cause, and if youwant to bring everybody
inspired to take action aboveand beyond what they would, you
got to stand for something, andthat's one of the many things
I've loved about your conceptsand, of course, the North Face.
Speaker 3 (08:35):
Well, the other part, which does tie more directly to
the comeback issue, is thatwhat you need to do is center
yourself.
If you're chasing the customer,if you're chasing the fad, if
you're the flavor of the month,if you're reacting to the
uncertainties in the environmenttoday tariffs how do you
respond to that?
Then you're lost.
But if you have that and yousay, well, this is what we stand
(08:58):
for, and those things maychange and they're going to
buffet us around and some aregoing to be good and some are
going to be horrible, but thereality is we know where we
stand when we come back to it.
That's where it's there and ifyour brand is that, so the brand
(09:19):
isn't what graphic designers do, although that's wonderful and
I love good graphic design butthat's only a representation of
what you stand for.
Speaker 2 (09:28):
Absolutely love that, really, really do.
So you built things up.
Things are going amazing forthe North Face and you reached
the world with it.
Let's talk about 12 electricmonths chasing a Silicon Valley
dream, because that was thechallenging time.
Speaker 3 (09:48):
For sure.
I mean, there were challengingtimes at North Face too.
We had a roof collapse and wewere closed down for a bit and
we didn't know how we were goingto deliver product, because we
came in and fried the computersand the fire department would
let us get in to get any of theequipment or get anything.
And we didn't know how we werein to get any of the equipment
or get anything.
We didn't know how to get in,but it actually turned out to be
(10:10):
a great bonding experience forthe entire team.
But it required a real changein philosophy, because I was a
for a while in terms ofmanagement philosophy, because I
was a big believer in collegialmanagement, was a big believer
in collegial management,basically soliciting input from
everybody, trying to have groupmaking decisions.
(10:30):
When you're in a crisis, youcan't do that, and you know.
So I had to become autocratic.
We had to say we're going to dothis and this and this, you're
going to do this, you're goingto do that.
Some people went out and gotthe orders back from the
customers.
Some other people dealt withthe insurance company.
Some other people at night werea SWAT team going in to get
product.
I had to change that style ofmanagement, and not that I was
(10:51):
going to do it forever, butduring the crisis I did that,
and so it was good training.
For when I moved on, I sold theNorth Face and I set up a
consulting company, an advisingcompany, investing in some
companies, and the one that thebook almost is about was a
company that made portable powersystems.
Basically, it started out withlithium ion batteries and then
(11:14):
it also had lots of patent workgoing along with fuel cells, and
fuel cells were the promise forthe future, but the reality was
when they asked me to come inand help them out were the
promise for the future, but thereality was when they asked me
to come in and help them out, Ithink they wanted me to find
money more than anything else.
It was could have, would have,should have company.
It had some of the bestengineers from Stanford, from
Cal, from Vanderbilt.
(11:35):
The CEO was an admiral in theNavy.
We had the head of themechanical engineering
department at Stanford on theboard and they had millions of
dollars that they'd raised.
But they pretty well gonethrough that and called Arctica
and so when I came in I said,listen, what we've got to do
effectively is create sometraction, because innovation is
(12:00):
not equal to invention.
Innovation is equal toinvention plus commercialization
.
Speaker 2 (12:05):
You got to prove a concept.
Speaker 3 (12:07):
So the fuel cell, which had all this promise, also
was not ready for prime time.
It was too expensive.
The form factor was larger thanthe lithium-ion battery one we
did.
On top of that, it was veryvolatile, so you couldn't fly it
on airplanes yet the DOT had-.
Speaker 2 (12:24):
And tell everybody what you mean by fuel cell.
Speaker 3 (12:27):
A fuel cell is a way to generate electrical power,
and you do it basically by usinga couple of disparate materials
, not that differentconceptually than lithium-ion
battery, but you have twodifferent materials and those
materials, when they interact,give off energy and give off
electricity.
This was a way to miniaturizeit in the future, utilizing all
(12:50):
sorts of technological things,and they had a lot of patents
about it.
But so my thinking was, givingmy background, we could put this
into jackets, or we couldcombine with somebody to put
them in jackets, start with thislithium ion battery pack and
then, when we'd solve some ofthe problems, like being able to
fly it, the fact that the fuelwas only coming from Russia and
(13:12):
it was limited in terms ofquantity, the fact that it was
very larger in size, we couldgravitate down that roadway.
And that was a plan.
And they were thinking Unicorn,you know this billion-dollar
company.
I said well, you know beforeyou're a unicorn, you actually
got to do something.
I said okay let's start with thelithium-ion battery.
(13:33):
And we did.
It wasn't a unicorn, but thefirst year the sales team I
brought in got $12 million insales.
The second year we had $25million in sales.
So we were doing okay, but weweren't a unicorn.
Well, all was going great,except it didn't.
What happened there?
(13:54):
I won't go into all the depth onit, but the first problem that
the company had was a clashbetween me and the CEO.
He had worked as an admiral inthe government.
He believed top-downdecision-making was the only way
to work.
You know, when you're anadmiral, you make all the
decisions.
Nobody questions you.
The second thing is he neverworried about budgets because
(14:14):
the government, when you're inthe military, you spend it.
In fact, you spend it all,because if you don't, you won't
get the money the next year.
Right right On top of that,he'd never looked at this idea
that innovation is anythingother than an invention.
So we had this clash.
I brought in some people whowere selling these products and
he wanted sort of an engineeringmentality and I said listen,
(14:36):
we've got to get together.
I said I prefer my idea, youhave your idea, but we've got to
get together because smallcompanies can't have a variety
of cultures, you don't survive.
Well, he would never do that.
He finally had a meeting, buthe said the engineers have to be
in the afternoon and the salesand marketing have to be in the
morning.
I knew we were in bad shape, so, anyway, we went ahead and we
got to a point where he thoughteverything was going great
(15:01):
because we had a visit fromApple.
And he said we're going to sellby the end of the year for 50
to a hundred million dollars.
And I said well, dick, I don'tthink that's going to happen.
I said you know?
I said the first reason isthese things don't happen
overnight.
So the second thing is, at thattime Steve Jobs was alive and I
said Steve hasn't visited thecompany and Steve makes all the
decisions, so he isn't hear.
(15:21):
We're not at the finish line,we're far from it.
Right, we have no proof ofconcept.
You know they're interested inthe fuel cell.
They're not very interested inlithium ion battery because they
think maybe they can put it insome of their other products,
but we haven't proved it canwork.
And he said but they havehundreds of billions of dollars
in the bank.
And I said more reason to notbuy us Right, rounding air
(15:43):
whenever they could do it.
Well, he was absolutelyconvinced that you know they
were going to buy us.
So he started spending like adrunken sailor which you know
because he was an admiral hecould be he didn't drink that
much, to be honest but anyway,we were $2 million overspent.
We owed $2 million and had nomoney in the bank.
(16:03):
And so the landlord came in andsaid I'm going to close you
down.
Dick wasn't in there, but Icalled Dick and I said we've got
to do something.
We got to raise a little bit ofmoney, so I don't want to
dilute because we're going tosell.
It's just taking away from ours.
And I said well, we won't bearound if they put a padlock on
the door.
It's kind of a bad look ifApple comes up here, bad luck on
the door.
And he said well, I don't wantto dilute.
(16:24):
And I said listen, we've got toget some money.
If we raise enough money, wecan have a runway till the end
of the year.
And one of two things is goingto happen Either we're going to
sell, like you think, which isgreat, or we'll have time for a
sophisticated fundraise, becauseit takes six months to do a
fundraise.
So he said okay and I saidlet's, let's get everybody
(16:46):
together, dick and everybodyelse, and figure out how much
money we need to keep peoplehappy.
I said we can't get $2 million,but if we get enough we can
keep a happy, and then we havethis roadmap.
Well, everybody got together.
We understood that $147,000would be enough.
Now we needed more than that.
So I went out quickly and intwo weeks I raised $700,000,
(17:10):
which is 147 plus what we'redoing.
That would get us to the end ofthe year for sure.
Well, the money came in onWednesday and on Thursday
morning I went in and I lookedat the computer and our bank
balance was $46.
Speaker 2 (17:25):
Oh geez.
Speaker 3 (17:26):
And so I went to the CFO.
I said what happened?
And he said, well, I had tospend it.
And I said, you know, we saidwe had a plan.
And he said, well, the CEO saidI had to spend it.
Oh no, I said the CEO is partof the plan.
And he said and I said, youknow, on top of that, we don't
have any money to pay payrolltomorrow.
(17:47):
And he said, well, I left80,000 in.
I said, well, I'll go check itout, but banks don't make cares
like that.
I went there.
I came back I said there's80,000, that there's three
checks, that kind of total80,000, but you know they aren't
in the check register.
And he said, well, maybe hewrote them and didn't tell me.
And I said you're CFO and hedidn't tell you.
And I said but listen, it'simpossible that the money came
(18:11):
in yesterday, that you wrote thechecks, you mailed them, people
got them and they took them tothe bank.
Those checks were written twoweeks ago before I raised the
money and you never told me.
And I used all my credibilityon your behalf, oh no.
So anyway, long story short, mymailing list got a lot shorter.
(18:32):
And I had to leave the companyand they bobbled along for a
while, got a couple of contracts, but they ultimately folded.
Speaker 1 (18:42):
Oh no.
Speaker 3 (18:43):
It was in Silicon Valley and, as you and I talked
about prior to the podcast, oneof the things in Silicon Valley
is it's okay to fail Now.
Failure doesn't necessarilymean you go bankrupt.
Failure means you maybe don'thit your goals, maybe you have
to sell out a low price, but inSilicon Valley, if you learn
from your failure, you can go on.
Everybody in the company hasjobs, some of them now working
(19:06):
at Apple, a couple of them areteaching, a couple of them are
working at Facebook and others.
In Silicon Valley, failure isthe secret sauce, because
failure is accepted if you learn.
And if you look at all of thesegreat names in Silicon Valley,
all of them failed.
You look at Steve Jobs.
You look at Jack Dorsey atTwitter.
(19:27):
You look at Mark Andreessen hewas at Netscape.
You look at these people.
They all were kicked out oftheir business at the beginning
because of differing reasons,and yet they came back.
They were funded, they grew Imean jobs.
Everybody knows what Apple didafter he came back and Jack
Dorsey left.
Twitter came back, actuallyhelped do Twitter, but he also
(19:49):
founded some other SiliconValley companies.
Mark Andreessen runs thebiggest or one of the biggest
venture capital firms.
Andreessen Horowitz.
The nature of it is that itwasn't the end of the road.
It didn't have to happen andwhen I wrote the book about it I
wrote it as a cautionary tale.
Hopefully it was enjoyable.
It was not written.
(20:10):
The seven habits of whatever.
It's written as a story and yousee the reasons why that
company failed.
I wrote it so that people lesspeople would fail.
Hopefully they would just enjoyit.
They could either read it forthe learning aspect or they
could see this ridiculousdynamic of the train heading to
there.
Anyway, I don't like the answerto your question, jerry, but it
(20:33):
was a learning experience.
Speaker 2 (20:34):
Well, it was and it always is if you get through it
Was a learning experience.
Well, it was and it always isif you get through it.
But at the time it doesn't feellike it.
At the time it's got to hurt.
You had to be pissed.
I mean, what were your emotionsyou were going through when
there's no money left, we can'teven make payroll?
I was promised something.
(20:55):
This is my reputation, myreputation line.
There had to be some emotiongoing on then.
Speaker 3 (21:01):
Well, I wasn't quiet about it All right share, share
come on share.
But if you read the book, you'llalso get it, because a lot is
about the emotion and how peoplereacted to all of those things
that were in there.
But the reality is I mean,first of all, I think we're all
competitive and we would like tosucceed.
(21:22):
When you have a clear path to avery nice success of what
you're going to do, to have thatend up on the rocks is more
than frustrating.
I mean, it isn't like, oh okay,I just care, you're invested in
it.
I was invested in it.
It was my reputation.
But I went out to some peopleand I told them what the plan
was and then I felt like I wasstabbed in the back.
(21:44):
And you know, being stabbed inthe back is one thing.
You know I'm big, okay, I cando that.
But being stabbed in the backwhen, in fact, it hurt some of
the people in the company peopleI brought in to do that that
hurt a lot.
One it hurt the investors thatI came in and hurt my reputation
.
One also it was one of those.
(22:05):
When I looked at it, it wasridiculous because we had a plan
that we were working.
As I said, we'd got $25 millionworth of orders in, which is
nothing to sneeze at.
I mean, as I said, it's not aunicorn, but that would give us
a latitude to be able to grow.
So when you have a plan and youhave people come in and you put
(22:25):
your reputation on the line andyou commit yourself to doing it
I was taking my time away frommy other consulting activities
because it was a full-timeadvisory role to be able to do
it that hurts, and you know.
You know, and you know you'regoing to bounce back.
I mean, I had other things onthe outside, but many of the
people I brought in this is liketheir first job or whatever,
(22:47):
and so you know they're going.
You know listen, I left a gooduniversity to do this and you
know it's hurting them and whenthe people around you get hurt,
you feel it.
You can't be isolated from itand that's one of the problems
of running a company is very fewsuccessful people I've seen
(23:07):
running companies are detached.
Speaker 2 (23:12):
Right right.
Speaker 3 (23:14):
They're involved, it's their emotion, it's their
idea, it's their money, it'stheir dream, and so when it,
hits their baby when it hits therocks, it's personal yeah.
Speaker 2 (23:27):
Yeah, and how do people come back from that?
How did you come back from it?
How did you help other peoplecome back from it?
How would you help thelisteners to come back from that
?
Because some of them that arelistening are going through it
right now or certainly will.
Speaker 3 (23:41):
Well, I mean, first of all, I went and had a beer.
Let's call it like it is.
Yeah, I mean you might as well,and you go.
What's going on?
The second one is I did default.
In my own case I had success,and it wasn't my only rodeo that
I was working on, but I knewabout many of these people in
Silicon Valley.
I'd read about them, Ireflected on them, and so I
(24:02):
brought some of the peopletogether and said listen, you
know, this one went down, butthis is not unusual.
This is just us.
I mean, it seems unusual to usbut it's not unusual.
If we've learned from it, if welearn from these points, we can
go out and market that tosomebody else and people will
(24:22):
like it, and I can tell you Nowmarket what Market?
Speaker 2 (24:26):
the fact that they failed and learn from it is what
you're saying, right.
Speaker 3 (24:29):
Yeah, I talked with one of the partners in Sequoia,
a big capital venture capitalfirm, and I asked what do you
think about the failure?
And he said love it.
He said we probably wouldn'tinvest in a firm unless some of
the people in the management hadsome failure, because you learn
more from failure than you dofrom success.
(24:50):
Success you attribute to genius, hard work, a little bit of
luck and timing or whatever.
When you fail, you can't sleep.
You're thinking, well, howcould I have done it differently
?
What did I do wrong?
All of that is a learning.
I mean, there's a great quotefrom Thomas Edison who tried a
number of times to make thelight bulb work.
(25:11):
He got a patent it was aboutincandescent bulbs, but the
filament was wrong.
So he took all the table ofelements and kept testing and
testing until he found tungsten,the right one.
But his comment was I've neverfailed, I've just found 10,000
ways.
Something didn't work.
And that's really the attitudeyou have to have.
But if you learn from that, ifyou learn that we have to have a
(25:32):
team, if you learn that youconstantly have to have cash in
the bank, if you learn that whatyou have to do is have a plan B
when plan A doesn't work,because never have I seen and
I've seen a lot because I havean MBA from Stanford I advise, I
consult.
I've seen a lot of businessplans and I can say never have I
(25:54):
seen the business actually playout like the original business
plan, right, right.
That doesn't mean that all ofthem cratered, but almost all of
them had to pivot, narroweddown, not as grand as they want,
changed, all those things.
You have to be ready to do that.
Speaker 2 (26:12):
We say the same thing in the military All strategies
are great till the first bulletflies and then they're all out
the window, just like that.
But I think it's great thatpeople hear that and understand
that you know what your plan.
You need to have a plan.
You need to be working thatplan, but also understand that
plan probably isn't going towork, so be ready to shift that
plan.
(26:32):
It's okay, that's what we do.
I want to also go back and thisis a fantastic direction but I
also want to go back to thechallenges you said you had at
the North Face, because you saidsomething I thought was
fantastic that you had all ofthat fighting going on, but it
was a bonding experience, as itturned out.
Now that's important for peopleto hear.
(26:54):
Why was it a bonding experience?
Too many times people explode,they hate each other, the
company dies and bad thingshappen.
Why was that a bondingexperience?
Speaker 3 (27:04):
Well, if you think about it, and we weren't devoid
from it, but we had grown somuch.
We were growing 100% a year,150% a year, and so we ended up
we were in two or threebuildings and we had silos.
We had marketing, we had salesoperation, manufacturing or
whatever, and we had silos.
We had marketing, we had salesoperation, manufacturing or
whatever, and over time, there'sa general tendency for people
(27:26):
to stay with their silo.
If they go out for a beer afterwork or whatever, it's not the
whole company doing it, it's anindividual one, sure, and it's
the people in the other buildingor the people on the second
floor, like they're different.
And we had some of that.
We didn't have a lot of it.
We kept working to try toovercome it, but inevitably, you
have people who are almost morededicated to their task than
(27:49):
they are to the company, andwhen we had this crisis,
everybody had to focus on thefact that we had to make the
company survive, and so we had acommon goal of the company
surviving.
We had different roles in that,but it was very clear.
Now, in reality, we had thatsame situation when we were
(28:10):
talking about how are we goingto grow 150% a year.
How's the sales going to bringit in?
But there wasn't the tension,there wasn't the pressure, there
wasn't the immediacy of whatyou're going to do, there wasn't
the uncertainty.
And for people to all put theirbacks against that same wall
results in a camaraderie thatpeople think that we were
(28:32):
fighting an enemy.
It wasn't a competitor, itwasn't a new design, it wasn't
just the clock we were workingagainst.
It was the survival of thecompany and in doing that,
people were allocated duties.
Everybody was reporting inevery day.
We had to do that and eventhough I had to shift to this
sort of dogmatic managementstyle, they were willing to do
(28:56):
that, even though they saw me asmore of a delegator in the way
I managed, because they saw wewere there and we kept telling
them we were going to do it.
Now the reality was at theoutset.
When it happened, I'm sure afew people thought this is the
end of our business.
When the roof collapsed, howare we going to do it?
It was just the time we weresupposed to deliver to everybody
(29:17):
at the beginning of the season.
And we couldn't even get productout of there.
People didn't know what we'redoing.
Well, when we talked about itand we solved it I mean we did a
mix of a number of things wewent to the insurance company
for money and of course theybattled back because, frankly,
when they tell you you havebusiness interruption insurance,
(29:37):
it doesn't oftentimes work outquite that way.
And the insurance company knowsthat you're under pressure, so
they think you'll take a lowballpayment.
Right, you don't want to dothat.
But if you don't have that,then you need more money.
If you bought more materials,the vendors didn't have
materials for us.
But we said, listen, we're agood customer.
(29:58):
We had this problem.
The vendors didn't havematerials for us, but we said,
listen, we're a good customer.
We had this problem.
We had somebody go to thecustomers and calling on the
customers and that was oursalesman.
We said we didn't tell them wedidn't have their orders because
the computers had been fried,because at that time we just had
a central computer, didn't?
Speaker 2 (30:13):
have it, oh geez yeah .
Speaker 3 (30:14):
Yeah.
And so what we said is we sentyou a confirmation.
Would you send that copy backto us?
And so we were hand planningwhat we were doing there.
So the salesmen are doingsomething.
We had SWAT teams of people whoworked in the factories going
in either getting equipment outor getting the product out that
they could get.
We had other people buying newmaterials.
(30:36):
We were convincing people.
You don't need all of thatorder right away.
So we did a glitch of whatwe're doing.
But everybody was workingtowards that common goal of how
do we survive?
And we get there when we did,you know, and on all of these
fronts finances, talking withthe bank, telling the bank don't
worry, the insurance company isgoing to do it, you just need
(30:57):
to load us more money so we canbuy product.
You know, we're telling thevendors, we're going to be
telling the customers one thing,but we're all had a shared goal
and a shared goal.
If you can do that, it'swonderful to do it anytime in a
business and I would advocate it.
But if it's in a crisis and youdo it and you come out at the
end, you're stronger than youwere going in.
Speaker 2 (31:19):
And I think that's absolutely critical.
You had everybody workingtowards a share goal.
Everybody wasn't fightingagainst each other.
They weren't the enemy.
The other team wasn't the enemy, but rather, like you said,
there was an enemy and youneeded to work together to
conquer that enemy.
That enemy in this case was thefailure of the company, but you
got them all working togetherand all leadership is
situational.
So you shifting over to that.
That leadership style makesperfect sense.
(31:40):
So you've got consulting goingon.
I know you're speaking atseveral universities.
What is the biggest topic thatyou like to share with people
today, with entrepreneursespecially today, to help them
on their journey?
Speaker 3 (31:55):
Well, I believe and this is not proven, but I
believe that you always have abetter chance if you catch the
megatrends that exist out there,rather than create something
that's like anything else orcreate something that copies
what people were successful withfive years ago.
If you know what the future isgoing to be and you make that,
(32:17):
then you don't have to beperfect.
You get the tailwinds and theyhelp you out.
I believe price, particularlyin consumer goods price, has
been the big driver for the lastfew years 50 years or so A
result, I believe, of a lack ofinformation that existed out
there.
If people realize that theimpact of the climate, the labor
abuses that happen with some ofthese products, when you ship
(32:39):
in the things from a distance,or whatever, they might have
made different decisions, butthey didn't know that and so
they were making the bestdecisions they had.
At the time.
We developed online tools to doprice comparisons.
So if you don't have a lot ofinformation about what makes the
product different or what makesthe process of it different,
you probably default to price.
(33:00):
Well, now we have new tools.
We have cameras that show whathappens everywhere.
We have blockchain, whichverifies anything, the way it
happens.
We have the internet that showsyou what's happening.
People have information aboutwhat's happened to the plastics
in the ocean, about climatechange, about labor abuses in
(33:20):
foreign countries, and we have anew generation of people coming
in Gen Z and Alpha.
Those are people that have tolive with the planet we have and
they care about it a lot.
So you have a group of peoplecoming in that really care about
the planet and what they'redoing.
You have information now totell you, inform you better
(33:41):
about what you buy and whatimpact that's going to have as a
result, and it's called ESG.
It's about environment,sustainability and governance.
That, I believe, is going to bethe driver for the next 20
years or so.
That's a primary thing If youhave it at your back.
So how you run your business,your governance, how you treat
people ethically, how you treatyour customers or whatever about
(34:03):
sustainability like North Face,we had a lifetime warranty on
our product.
That's going to be big goingforward when you talk about the
environment the idea that you,in fact, are giving something
back in doing that.
So what I would say is look atyour product or your service.
Look at how that's going to beimpacting sustainability,
(34:24):
environment governance, so thatyou, your brand, is built around
those characteristics.
And when you do that, if youhave the tailwinds behind you,
you don't have to be perfect,and I think that's the biggest
thing, that out of all of that,actually fantastic stuff.
Speaker 2 (34:44):
But you don't have to be perfect.
You'll find the tailwind andjust do it.
Ready fire, aim, almost notready, aim fire.
Just get out there and startmaking something happen.
Is that about right?
Speaker 3 (34:56):
Yeah, there's an old joke and I'm sure you've heard
it, but I'll share it withBecause.
Speaker 2 (35:00):
I'm an old guy.
Speaker 3 (35:02):
And it's about two guys that are walking in the
wilderness and they're walkingalong a path and suddenly they
hear this crash and out of thewoods comes a bear.
And one person sits down andstarts putting on their sneakers
, getting ready to run, and theother one says what are you
doing?
He said you can't outrun thebear.
(35:24):
He said I don't have to outrunthe bear, I just have to outrun
you.
And that's kind of the way itis in business.
You know you don't have to beperfect.
If you're good enough and thecompetition isn't doing it, if
the competition isn't embracingESG and you are, the market's
going to recognize you andthat's good enough to succeed
the market's going to recognizeyou and that's good enough to
succeed.
Speaker 2 (35:42):
Yeah, absolutely, and it's it.
It's about just get out thereand run man, get out there and
run you.
And I love many things aboutwhat you said, but you don't
necessarily have to be the best,you don't have to be the
smartest, you don't have tomaybe even have the perfect idea
or even maybe the best idea,but run, get out there and run
For sure.
Speaker 3 (36:01):
That's well said.
Speaker 2 (36:02):
So we're running out of time and I appreciate your
time.
What would you like to leavepeople with who are on their
journey and they're goingthrough the challenges that you
went through as you werebuilding these companies and
continue to build thesecompanies.
What would you like to leavethem with these?
Speaker 3 (36:19):
companies and continue to build these
companies.
What would you like to leavethem with?
Well, there's a great quotefrom Winston Churchill, and he
was, you know he.
After the war they actuallykicked him out of his government
in England and you know, herehe was.
He'd done all these thingswhich caused great success, and
they no longer wanted him andthey brought him back to his I
(36:42):
think it was prep school andthey had him speak and they
asked him to give the speech andhe did.
It was in just three sentences.
He said never give up, never,ever give up, never give up.
That doesn't mean that you don'tpivot and change, but what it
(37:02):
means is, when it all hits thefan, don't just fold.
If you battle, you can battlethrough it.
And if you see the better day,if you can just see over the
hill, if you can see, maybe Ihave to change, but I'm going to
win.
I'm not going to, as you said,I'm going to continue running.
I'm not just going to foldbecause it's difficult times,
(37:23):
because every one of us andevery one of your listeners is
going to encounter difficulttimes in their business.
I don't care what business itis.
I mean, we look at them from adistance and we say you know
Microsoft, it must have all beeneasy.
Well, read some of Bill Gates'books, or whatever you look at
it.
I mean, it's all easy when youlook at it in the big view, but
(37:50):
it's a sawtooth edge as you growa company and when you have
those downs, persevere.
Speaker 2 (37:54):
That's fantastic, and I think that's not just in
business but in all of life, inrelationships, in every aspect
of your being Never give up.
Well, hap, thank you so muchfor joining me.
I really appreciate it.
My friend, we'll look forwardto talking with you again very
soon.
And, for everybody listening,take what you learned here,
re-listen to this again, sharethis and do exactly what Hap
(38:17):
said Run, run, run.
Never give up, no matter what,and you can have your own
Comeback Chronicle.
Speaker 1 (38:27):
So that's it for today's episode of the Comeback
Chronicles.
Head on over to Apple Podcastsor wherever you listen, and
subscribe to the show.
If you're ready to get overyour fears, self-doubts and past
failures and break through yourcomfort zone to reach the
pinnacle of success in everyarea of your life, head over to
terrielfawesomecom to pick upyour free gifts and so much more
(38:51):
.
We'll see you next week on theComeback Chronicles podcast.
You.
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