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The Patagonia vest recession was a phrase that I first heard touted by Scott Galloway to encapsulate the economy in 2022. In most recessions, the first sectors to go under are construction, retailing and manufacturing – blue and pink collar working class people suffer the blunt of lay-offs and site closures due to recession.
The kind of vest thought of when one talks about a Patagonia vest recession. It is called a Better Sweater vest and was popular with media firms, technology companies and investment banks as employee schwag.
What’s a recession?
recession, in economics, a downward trend in the business cycle characterized by a decline in production and employment, which in turn causes the incomes and spending of households to decline.(December 5, 2022) Recession. United Kingdom: Encyclopaedia Britannica
A recession generally isn’t felt uniformly across the economy. It doesn’t affect all households. In the past, the middle class might be affected but not as severely affected as working class people. My Dad had managed to move off the shop floor and into an office job in the shipyard as a planner. He was made redundant because he worked in heavy industry and he was in a minority compared to the thousands of other blue collar workers let go.
Not all businesses experience actual declines in income, for instance accountancy firms, business consultancies and change management firms may find a high demand for their services. However, there is a general expectation about the future being less certain during a recession. This causes businesses to delay making large purchases or investments and possibly look to reduce costs to conserve cash.
In recessions, the output decline can be traced to a reduction in purchases of durable household goods such as computers and washing machines by consumers. This drives a corresponding decline in corporate purchases of machinery and other equipment.
If the companies aren’t already running ‘just-in-time’ there reduction in additions of goods to stocks or inventories. Where ‘just-in-time’ is in place, the client reduces their forecast demand to their supply chain driving a similar effect. The greatest effect is likely on inventory; businesses stop adding to their existing inventories and become more willing to draw on them to fill production orders. Inventory declines thus have a double impact on production volume as it filters through the supply chain like a Mexican wave.
So what happened?
But the Patagonia vest recession was different. A number of things happened:
- Technology stocks and start-ups had been swept up in a decade of irrational exuberance in terms of business values
- Funding suddenly declined for startups. This was partly due to interest rates and a realisation that crypto-currencies weren’t worth what many investors had assumed. This led to a raft of redundancies
- Crypto companies started falling one after the other. Prominent exchange FTX and related investment fund Alameda Research go under with allegations of fraud. Their rival Binance is ensnared in legal issues too
- Cloud software firms suddenly find that their pay-as-you-go model can result in sharp cash flow declines which affect their profits
- Big technology companies had staffed up to meet the COVID-19 related demand, found themselves with an employee overhang. This particularly affected e-tailing and cloud services business. They cut back on staff as they release poor financial results. BUT, the amount of people cut as a percentage was still below the proportion of head count Microsoft would have let go back when it practiced stack ranking. The mainstream media focus on the big numbers rather than the small overall proportion of lay-offs. Secondly those getting made redundant are finding it a reasonable market to get work outside the technology sector
- Activist investors object to what they consider to be more indulgent projects like Meta’s deep investment in the future metaverse, which is a very long term bet
- Meanwhile, services and manufacturing industry kept ramping up to meet supply-chain related challenges and meet latent demand. But had problems getting staff. You have restaurants that open up limited hours due to their problems hiring. Manufacturing businesses have been hoarding staff, because they know how hard it is for them to recruit
- Inflation in the US is starting to come under control as supply chains started to balance out
Of course, all of this doesn’t mean that the Patagonia vest recession won’t bleed on to Main Street, but at the start it looked very different.
The Patagonia vest boom prior to the Patagonia vest recession
To the general public, awareness of the Patagonia vest as an emblematic garment of class came from the press photos taken at the Sun Valley conference hosted by private investment firm Allen & Co. which built up a bit of a reputation in terms of ‘speed dating’ for mergers and acquisitions deals. Media titans like the Murdoch family met Silicon Valley CEOs and Jeff Bezos of Amazon. Telecommunications was represented primarily through the cable TV company executives who attended.
Amazon founder Jeff Bezos decided to buy the Washington Post when he was at Sun Valley. It was also where the Time Warner | AOL merger was cooked up.
Cameras aren’t allowed inside the conference which operates in a Chatham House-style arrangement. So press photographers could only take pictures when people were arriving or leaving the conference centre. Sun Valley sat at the nexus of a media and technology sector boom over almost two decades. The bulk of the media photos showed people walking cropped at the knees or their grotch, which focused readers attention on the tops that they were wearing. And a uniform emerged to the general public. The uniform was the Patagonia vest to deal with the cool early morning and early evenings of Sun Valley. These vests were given out some years by Allen & Co.; but the Patagonia vest has extended itself far beyond Sun Valley.
It became such a cultural touchstone that the Sun Valley conference complete with vests was lampooned in a story arch of Succession.
Why a Patagonia vest recession?
Why is this a Patagonia vest recession rather than a North Face vest recession or a Columbia Sportswear vest recession?
From working with dot com clients to when I worked at Yahoo!, Silicon Valley fashion was bifurcated in nature. The reality of Silicon Valley couture is that many people wore a t-shirt jeans and layers like hoodies. Footwear would vary somewhere between sneakers and trekking sandals.
But the ‘MBA class’ of professional managers tended to wear collared shirts, ‘smart’ jeans or chinos. They may have worn a sleeveless pullover or fleece vest. Their venture capital counterparts who where probably their MBA class colleagues wore a similar uniform, with a bit more of lean towards Ralph Lauren country club friendly shirts or polo shirts.
Corporate branded wear started with bags. I had my share of corporate branded Timbuk 2 bags. Different engineering projects would have celebratory t-shirts for things like hack days. Eventually we started to see branded corporate wear, from the cringeworthy chambray or scratchy polo shirts issued to booth staff at an exhibition to hoodies and fleeces. I knew engineers who bragged about being dressed almost head to toe (sweatshirt material top, t-shirt, boxers and socks) in schwag that they had picked up for free as an anti-fashion statement.
You can see these dual styles in the TV show Silicon Valley. Coming from a creative agency background, I felt more at home in the hoodie wearing crowd.
Secondly, there was a cargo cult amongst try-hards in the early to mid-2000s there was a move towards turtle necks with Silicon Valley types looking suspiciously like architects as they tried to ape Steve Jobs. There has been a similar buzz has surrounded Allbirds sports shoes
The finance sector had its own transformation. Early dot com era west coast-based tech focused investment bank financiers such as Frank Quattrone mirrored the east coast convention of the tailored business suit, usually in grey with a conservative tie and pocket square. This would be paired with a set of brown shoes, usually loafers. You could buy the look at Armani, Barneys or Brooks Brothers depending on your budget.
The 2008 Great Recession hit the finance centre like a shockwave. There was a need to dress down. A few things drove this:
- An Armani suit is an obvious target when you have Occupy Wall Street camped outside your place of work
- Wall Street had to modernise and attract new types of talent and competed against tech firms
- The need to mirror the look of the hedge funds and technology companies that investment bankers wanted to do business with. They already stood out with their east coast vibe, the outfits communicated that ‘actually we’re just like you’ with varying degrees of success
The look has morphed into a relaxed yet sophisticated uniform that drew on preppyness, or the Ivy League look and the country club vibe evoked by Silicon Valley VCs. This resulted in a grey or navy fleece vest paired with a button-down, chino pants, and maybe even leather sneakers. It fitted in with weekend wear in more high class neighbourhoods and didn’t scream privilege in the same way that traditional Wall Street did.
However this became a power validation all of its own, dubbed the “Midtown Uniform” by many for its popularity throughout Midtown Manhattan as the business casual look rolled across the cultural wallpaper of Wall Street.
Patagonia haven’t enjoyed their vests being the punchline of a joke. They are a mission led company that looks to be sustainable and environmentally friendly. They’ve been described as the conscience of the outdoor industry. Patagonia doesn’t want its products sold on Amazon, not because it’s luxurious and exclusive. But because Patagonia believes that Amazon encourages thoughtless consumption and is bad for the environment. Being seen as the uniform of the privileged didn’t go down well. So in April 2019, Patagonia announced that it wouldn’t provided corporate branded clothing to financial institutions or fintech companies, preferring to focus on mission-led environmental businesses instead. Given its iconic status within these sectors, the news was given the kind of coverage that would usually be reserved for an uncharacteristically large drop in the S&P 500 index.
The case against fintech businesses is down to their rapidly expanding energy footprint, which I have covered in depth elsewhere.
While a clear successor to the Patagonia vest hasn’t become apparent yet, there are brands looking to take their crown such as
- Cotopaxi – who are environmentally friendly, but also corporate friendly
- North Face – have been doing some interesting work in more environmentally friendly materials and already well known in the corporate branding space
- SCOTTeVest – famous for being traveller-friendly. It comes with routing for your headphone cables, a plethora of pockets and charging wires. Their CEO called the Patagonia stance PR BS
Secondly, Patagonia decided that it wouldn’t leave long term customers in the lurch, which probably means that your favourite investment bank or big tech firm is safe from the customer purge.
According to Corley Kenna, senior director of global communications at Patagonia, customers and the press had inquired as to “whether we’re leaving ‘bros out in the cold.’” Kenna confirmed again that long-term customers would be grandfathered in.(April 5, 2019) Are Bankers and Venture Capitalists Really Getting Fleeced by Patagonia? United States: New York Times
And those left in the economic cold can still enjoy a Patagonia vest recession. I am thankful that it wasn’t called the Carhartt or Chore coat recession signalling a creative class layoff-led recession.
Starbucks, Airpods, and the Fleece Vest: The Rise of Wall Street’s Greatest Fixture | California Review
Patagonia suggests finance bros aren’t a fit for its fleece vests | Quartz
Patagonia distances itself from tech bros with new branded vest policy | Guardian
Patagonia Is Refusing To Sell Its Iconic Power Vests To Some Financial Firms | Buzzfeed News
The finance bro uniform is officially dead as Patagonia stops adding corporate logos to its ubiquitous fleece vests | Business Insider
How to dress tech bro | Financial Times
I Wore A Fleece Vest To Work To See If I Felt Like A Tech Bro | Buzzfeed News
Patagonia will no longer sell vests with finance firm logos on them | CBS News
Will Patagonia’s New Corporate Gifting Policy Affect the Event Industry? | BizBash
Moguls, Deals And Patagonia Vests: A Look Inside ‘Summer Camp For Billionaires’ | WBUR
Shock, horror: Patagonia bans sale of corporate branded vests to fintech and Wall Street firms | City AM