Kenneth “Hap” Klopp: "Focus on Value, Not Price"
In 1968, Kenneth “Hap” Klopp acquired The North Face – then two small stores, one in San Francisco and one in the Old Barn at Stanford – and turned it into a global apparel business that he ran for 20 years. He also became the executive chairman of Cocona, a nanoparticle company that makes fibers, fabrics, and laminates for active apparel companies, and Obscura Digital, a digital communications business. Today, the MBA ’66 graduate of Stanford Graduate School of Business continues his board roles while also mentoring aspiring entrepreneurs. “It’s very inspiring to be around young people,” he says. “Older people don’t have the optimistic curiosity of younger people. I get enthused by the can-do attitude.” He talks with us about the importance of infusing your values into your brand, the virtues of influencer marketing, and the benefits of interdisciplinary design teams.
In 10 words or fewer, what is the big idea behind your business?
To apply technology to a commoditized business and create a new industry. For example: At The North Face, we took materials that the U.S. military used in the Vietnam War and applied them to camping. We lightened the load and created a new backpacking industry.
What is the best advice you’ve ever received?
Dick Salomon, the first chairman at The North Face, told me, “Products have an ever-shortening life cycle but brands last. They carry an enduring message and belief.” Your brand is about you, your culture, and what you stand for. You need to put all of that forward so people can see and feel it. Most companies have goals that are quantitative, but brand is qualitative. It is about how you carry out your business and what you stand for. It is what makes you stand apart in a crowd. A great brand is cohesive. It doesn’t waste time. When you are consistent with your philosophies, it becomes easier to articulate in the marketplace. An established brand gives you a stronger multiple. Brand durability is an annuity.
What was the most difficult lesson you have learned on the job?
The 90/10 rule. I assumed in business that things would be 50/50: I do mine and you do yours. What I learned is that 90% of the responsibility is mine and 10% is theirs. If you think it’s 50/50, you will be let down more often than not.
Another is that people don’t come to work for you or anyone else. They work for themselves. I was naive. I thought people worked for me because I was the boss. I learned they only work for you if you have earned their respect or you have given them a meaningful incentive – not because you gave them instructions.
What advice would you give other entrepreneurs on how to build a great business?
One: Focus on value, not price. At The North Face we wanted to make the best and we assumed there was a market for it. If you’ve ever spent the night in a sleeping bag at 20 below zero and you couldn’t sleep because it was too cold, you would pay $200 more for one that works. We knew that the people who really needed a sleeping bag to work at 20 below would buy ours and they would influence other people. Markets are wide at the bottom and narrow at the top. You need to know who the influencers are in your business. In outdoor gear, it was the mountaineers.
Two: Focus on consumer needs. People buy what they need, not what you sell.
Three: You should have a higher calling, a triple bottom line. Build your team around things that transcend making money.
What inspires you? How do you come up with your best ideas?
The people around me provide new ideas and challenges. You reach a higher point when you work together. The best ideas come about because of friction and interaction between people. If you put engineers together with salespeople, they come up with great solutions. Do you want to sell what you make, or make what you sell? You can’t do one without the other!
I worked with Buckminster Fuller to make tents. He was amazing. He applied a new math to structures and we made a geodesic tent. Stress is equally distributed, and as it gets larger it gets stronger. As Bucky pointed out to me, most things – physical, political, economic – get weaker as they get bigger. But they don’t need to.
What is your greatest achievement?
Hopefully it is still ahead of me. Eleven of the people who worked for me at The North Face went on to run other great companies in our industry, including Mountain Hardwear, Patagonia Japan, and Title Nine. To see them thrive is very gratifying to me.
What do you consider your biggest failure?
I hope my biggest failure is in front of me, too. So far it is my inability to get my latest manuscript published.
What values are important to you in business?
Honesty. Integrity. Optimistic curiosity. Too many people my age talk about why things won’t work.
What impact would you like to have on the world?
I want to make it better. I’d like to encourage other people to take risks and have some of the joy I’ve had in creating a global, iconic enterprise based on doing something with a higher-level purpose.
What was your first paying job?
When I was 10 I hunted gophers to sell their tails to people who made flies for fly fishing. I was an entrepreneur. I couldn’t pronounce it but I loved it. It was freedom!
What is the most valuable thing you took away from your time at Stanford?
I learned that it is not critical to be the smartest person in the room. You can do great things leading teams of people, all of whom might be smarter than you.
What do you think is the greatest innovation in the past decade?
Wearable technology. It is only now becoming visible in actual consumer goods, but the developments going on are amazing. I’m working on this now. Clothing will become biosensor clothing and true environmental controlling devices.