What if business leaders are looking at the risk of CEO activism exactly backwards? What if publicly advocating for gun control while marketing an IPO was not an enormous and unnecessary risk, but a differentiator in a crowded market?
Last week, the storied Levi Strauss & Co. completed its second IPO, selling US$623.3 million of shares, valuing the company at US$6.6 billion. The stock promptly climbed by more than a third in its first two days of trading.
A small or sometimes overlooked footnote of the successful return to the stock market is that through the months leading up to the IPO, during the marketing period, and when the shares were being priced, Chip Bergh, Levi’s CEO, was speaking out about gun control.
.@Levis has made big investments in the gun violence prevention movement after coming out strong for gun safety in 2018. How has that impacted their business? CEO Chip Bergh says “That quarter and the ensuing quarter, our business grew double digits.” 💪 https://t.co/2kUBmp7mN9
— Everytown (@Everytown) March 22, 2019
In September, Bergh wrote a piece for Fortune, (also posted to Levi’s site), announcing a US$1 million fund for activists trying to end gun violence, the formation of Everytown Business Leaders for Gun Safety, together with Michael Bloomberg, and actions and money to support employee initiatives.
He wrote at the time:
“As president and CEO of a values-driven company that’s known the world over as a pioneer of the American West and one of the great symbols of American freedom, I take the responsibility of speaking up on the important issues of our day very seriously. We can’t take on every issue. But as business leaders with power in the public and political arenas, we simply cannot stand by silently when it comes to the issues that threaten the very fabric of the communities where we live and work. While taking a stand can be unpopular with some, doing nothing is no longer an option.”
It wasn’t the first time Bergh had spoken up about guns. In 2016, he wrote an open letter asking people to stop bringing guns into Levi’s stores, after a customer shot himself accidentally while trying on a pair of jeans. More than two years later, that LinkedIn post is still attracting comments from both supporters and people referring to themselves as “ex-customers.”
For example: “Why a struggling company would voluntarily alienate half its customer base is a mystery to me. Maybe you can explain it in bankruptcy court.” Far from being bankrupt, 2018 sales rose 14% to US$5.6 billion.
By the time Levi’s shares became available, people knew what Bergh was about. Investors knew he was outspoken about guns despite the fact it has nothing to do with the clothing business. And he didn’t hide his intentions in the IPO prospectus:
“Finally, it means using our influence as a successful business with global reach and powerful brands to advocate for social good and to give back to our communities.”
Bergh is using his personal influence and platform as a CEO. He was one of just four signatories of a CEO letter to Congress supporting H.R. 8, The Bipartisan Background Checks Act of 2019, to require background checks on all U.S. gun sales. He signed that letter just a month before shares began trading, in what would have been a “quiet period.” Such quiet periods don’t prevent CEOs from talking about outside issues, but most companies treat quiet periods as reason for the C-suite to stay completely silent.
So why was Bergh able to get away with it? Why did he feel comfortable taking what most CEOs saw as too big of a risk to sign at all, right before the IPO?
The first time a CEO speaks up on an issue, it feels like a huge risk – to the brand, to your personal reputation, to sales. Bergh, though, has been on the record about this fight for more than two years. Over time, his actions have been part of the brand. Most customers who were likely to bail on Levi’s (or set their jeans on fire à la Nike) already have a different brand on their behinds. The customers that expect CEOs to speak out, use their platform, are more loyal.
The lesson Bergh is teaching here, is that while CEO activism feels risky in the beginning, the marginal risk likely falls with time, and people come to understand it is part of the brand, take it or leave it.
While it’s a sample size of one, it’s an interesting case study for CEOs weighing their own options on speaking up. And frankly makes the CEOs who were afraid to sign the letter to Congress look a little weak.