Episode 201: Impacting the World Through Product with Davis Smith, Founder and CEO of Cotopaxi

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Early investors, they thought I was, I was crazy. Like, they didn't understand. There's so many great brands in the outdoor industry, and there really are. You know, why does your brand even need to exist? And how do you even— how do you compete against those kind of players?

That's the voice of Davis Smith, founder and CEO of Cotopaxi, the beautiful, colorful travel and outdoor gear that you are likely familiar with. Cotopaxi is on track to becoming one of the biggest outdoor brands in the world, challenging brands like Patagonia and North Face. But there are more differences in Cotopaxi than similarities. Plus, Davis prefers the idea of collaboration over competition. Today, we're honored to have Davis talk with us about that, plus those distinctions. We talk about Cotopaxi's origins and some of those stepping stones that were vital to putting Davis and his team on their success path today. Davis is also a survivalist. So we talk about how that equates to entrepreneurship, plus his thoughts on building a successful team around you, their mission to impact people through the power of product, what supply chain philanthropy means, and the collaborations they have with companies like our friends at Mere and Tevis. And finally, Davis made the news recently by buying his first company back, a rare opportunity to start over, and we unpack that today. Hi friends, I'm Bobby LeHew, Common Skew's Chief Content Officer. Davis is also a keynote speaker at SkewCon in Las Vegas on January 9th. SkuCon is the conference for innovators, explorers, and dreamers in the promotional products industry. Davis will be sharing even more about leading with mission and purpose. SkuCon is the perfect conference to kick off your year because it's high action plus high inspiration. And mostly this year you can involve everyone, your entire team, because SkuCon will be held both in-person and virtual. To learn more and register, visit skucon.com. This episode is brought to you by Common Skew. The work-from-anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more or to begin your free trial now, visit commonscue.com. Now here's my chat with Davis Smith. I just have to say, I conduct a lot of interviews, and in the process, you get to know people both off mic and on. Davis is incredibly authentic, generous, and optimistic, and his care for helping people while creating beautiful products So inspiring. I hope you enjoy this chat. I began by asking Davis to take us back to what sparked the idea for Cotopaxi, which includes the story of a little boy from Peru named Edgar.

A little boy named Edgar in Cusco, Peru, if I got that right, sparked a passion in you that became Cotopaxi. Can you share that story?

Yeah, yeah, I'd be happy to. And Bobby, it's great being with you. Thanks for inviting me to join you.

Glad to have you.

Yeah, I mean, this, this, the story of Edgar is, it's a fascinating one because it started almost exactly 20 years ago. It was in October of 2001. I was a college student and I wanted to do an internship working for a nonprofit. I kind of envisioned myself working in the nonprofit world. I grew up in Latin America and had known my whole life I wanted to find a way to help people. And while I was in Peru, in this beautiful city of Cusco, I met a little boy that was shining shoes, and he approached me as I was sitting on a park bench eating. And, uh, there was just a special connection, and I offered him my food.

I—

it was shocking to me. I don't think I'd ever seen somebody eat like that before, and It touched me and I decided I wanted to find him again that night. And so I saved some of my dinner and I went out and found him in the streets again. And this became a daily ritual for me. A highlight of every single day was finding Edgar, just a little 9-year-old boy on the streets all day, every day. Didn't go to school, wore the same clothes every day. And One night, my last night in Cusco before I left, I found him sleeping on the street close to midnight.

It was cold.

You could see your breath in the air. And I woke him up and he told me that he didn't go home because he was too afraid because he'd— someone had stolen his shoe shining kit. His dad was an alcoholic. His mom depended on him to help feed their family. It was heartbreaking. I gave him the little bit of cash that I had. I didn't have much myself, and I went to bed that night just worried about him. I could hardly sleep. The next day, I got on a bus to leave Cusco, and we went around the main plaza to let some people on and off this bus. I looked out the window and I saw Edgar, and he saw me, and he ran next to this bus waving goodbye to me. And it was on that bus that I made a commitment that I wanted to use my life to help kids like him. And so, you know, I thought of Edgar every day for 20 years. It's been a really meaningful— it's one of those experiences that really shaped me as a young person. And so, yeah, I guess to make a long story short, after 15 years or so, I went back to Peru with the sole purpose of trying to find him.

Oh, really?

Yeah. And, and I did. I found him.

Wow.

Uh, we're in touch, uh, multiple times a week. He's one of the most active Facebook users on the planet, so we're in touch a lot.

And, uh, that's great.

Yeah, we spent time together there, and, uh, I helped— I've been helping him. I helped him over the last few years go through a 3-year program to learn to become a tour guide. And so he's got his own little business now and virtual tours during the pandemic. And now he's, you know, for those that are traveling, he's doing real tours. So it's been a really impactful experience and relationship for me.

Well, it's a beautiful story. I love asking about Edgar because there are so many small stepping stones to a success story that we, as we look back, we're able to put these pieces together. And at the time, you know, we're just in the middle of it and we don't realize that part of the narrative where we're at. And it's such a beautiful part of your story also for, for this community anyways, one of the, one of the interesting aspects about Cotopaxi is that when you started Cotopaxi, you started as a, with a passion to create a people business that sold products, which we'll get to in a minute. But another interesting aspect is that you started with a heavy design focus. So why is design such an incredible passion for you and how important is it to the Cotopaxi brand?

Yeah, I mean, you know, honestly, I'm not a designer. Uh, it wasn't, it's not a talent that I necessarily have. I did take, when I was in high school, my high school actually offered a class called Outdoor Clothing, and I learned how to sew some outdoor clothes. I made some packs and bags and some jackets and other outdoor clothes. And I actually, in high school, I started wearing some of these, some funky shorts that I'd make with these kind of funky color-blocked pockets. And I had a bunch of friends that wanted some. And so, you know, I kind of look back and it's like, oh my gosh, like I wouldn't have connected those dots to my career today. But, you know, when I hired kind of our core team, the 6 people, me and 5 others that I felt I really needed to go build this brand, 3 of them were designers. And I really believe that that was going to be a core reason this brand would work. We need to figure out a way to tell our brand story and our core values through product. And so it's definitely been an interesting part of building this business.

Yeah, I love that because I love how product can reach one person at a time. There's something about your mission, I think, that is reaching one person at a time. In so many different ways. But also entrepreneurs are often miscast as do-it-alone types, but most are really adept at building great teams around them. And so you just mentioned that, that one of the first things you did, you built this team around you. 3 of them were designers. What have you learned in developing leaders that we can apply to our businesses?

I mean, this is something that I've had to learn over the years. I was not, I think, innately good at this. I, you know, maybe humans aren't at first, just takes learning. And, you know, I made some hiring mistakes early in my entrepreneurial ventures and I had to learn about how to hire and how to be really disciplined about who to bring on your team and how to vet them properly. But I think one of the biggest lessons that I've learned about team is that, and I think this is one of the most underutilized tools in leadership, is love. And I love my team. And I tell them that. I tell people I love them. You know, we just had an all-hands meeting a few minutes ago that we wrapped up, and I told my whole team, I love you. I care for you. I want you to succeed. I work for you, not the other way around. That's something that I think we get confused. Sometimes we think leaders are loud and brash and maybe heartless. And, you know, certainly there's some successful leaders out there that we all know about, that we've read about, that are kind of were that way. But I just don't believe in that kind of leadership. So I think you get the best out of people when they know how much you care about them.

Yeah. It's radical today. That's actually quite radical. And just the emotional intelligence behind that and knowing that that's just human basic needs, it's, I think it's That's fantastic. One of the things that I'm curious about too, from a product development standpoint or even your business structure, what gap did you initially see Cotopaxi filling that you had Patagonia, North Face, Columbia? You obviously saw some gaps that were missing. What were those?

Yeah, I did see some gaps. And I think people, early investors, they thought I was crazy. They didn't understand there's so many great brands in the outdoor industry, and there really are. You know, why does your brand even need to exist? And how do you even— how do you compete against those kind of players? And— but the gaps that I saw were, number one, I didn't see a brand that was built around people. I saw lots of brands built around the environment. I love the environment. As an outdoorsman, it's something I want to protect, and we, we think a lot about that with our brand. 94% of all of our products are made of remnant and recycled material. It's something that we care deeply about. But for me, that's table stakes. That's not a competitive advantage anymore. We have to do that. So for me, it was really building a brand around people and humanity. And while there's a lot of outdoor brands that say, okay, we're going to save the planet, they can save the planet.

We're going to save humanity.

You know, you can't just focus on protecting the planet if you're not helping people and the people that especially that have been left behind, that are the first people to be impacted by the way we've destroyed the planet. So That was probably the biggest area of opportunity, and I felt that would resonate with a young consumer, millennial, Gen Z consumer that I felt Patagonia and these other brands, they were kind of this young generation, that was their parent, those were their parents' brands or even their grandparents' brands.

So Cotopaxi, speaking of, you always talk about helping humanity, is part of Pledge 1%, which means you're committed to giving at least 1% of your revenue, if I'm right, towards ending poverty. In your annual impact report released in January, despite 2020 being a crazy crazy and challenging year, you gave nearly $1 million to help 800,000 people, providing malaria treatment for over half a million people, 2.8% of your revenue. What do you say when you mentioned helping humanity and saving humanity? What do you say to entrepreneurs who are running small businesses who also want to invest their resources conscientiously, but also might be strapped for resources? I mean, did you face that? I mean, you obviously faced that early on because it was a beginning part of your mission.

Yeah, I know we did face this and, you know, the first 5 or so years of our business, we gave away all of our profits. We didn't, we had no profits left. We gave away every penny we made and more. So it was a big sacrifice. It was, it was a little scary at times, but I really believed in our purpose and why we needed to exist. And so, yeah, so, you know, last year while we were You know, we faced some big challenges last year like everyone else. We had some big headwinds.

We ended up with a better year than I think most did.

And so we felt it was an opportunity for us to give more than our 1% commitment. And so, you know, we obviously have to balance that with how do we be responsible stewards of this brand that, that's growing and we need to invest, you know, back into the business. But we felt there was an opportunity for us to do a little bit more. And so It was awesome. It felt great, actually.

I think one very instructional part of the way you've built your business is around product design and supply chain philanthropy. And one part of Cotopaxi's mission is this. Can you explain what that phrase means, supply chain philanthropy, and how it helps throughout the supply chain?

Yeah, this is a great question, Bobby. So I think one of the ways, the most obvious way that people think about businesses doing good is giving away profit. It's giving away their money to go help in the world in some way. And that's certainly an important part of it, but for us, it just felt— it would feel disingenuous if we were saying we're going to go help fight poverty if within our own supply chain, the people touching our own product were living in poverty. We needed to make sure that wasn't the case. And so we've invested a lot into our supply chain, making sure that we're using partners that are aligned with our values. We use a number of fair trade factories. We've gone into factories and we don't have anything prescriptive. It's not like we come in and say, okay, you have to do this, you have to do that. We come in and listen and we ask questions and we find opportunities to have an impact in each community. So one of our factories, we invested in building a community garden where the factory workers could take fruits and vegetables back home to their families every night. You know, we have another factory where we started, we empowered the sewers to go design their own bags using remnant materials instead of telling them what to sew, they could be creative themselves.

And so, you know, every factory has unique challenges and unique opportunities.

And so we try to understand those. And it's really amazing the impact you can have on so many people just by working in your supply chain to be more ethical, instead of just driving down price to the half penny, which people do, we're not as concerned about that. It's like, let's pay fair wages, let's pay the factory fair prices for what we're going to make. And if we do this right, we believe that customers will support us. Yeah.

And the buyer today, especially coming through the pandemic, is far more conscientious about supply chain. And we've seen that increase radically over the past, I think, 18 months where folks want to be— they're very interested in supply chain now, whereas you couldn't have that conversation with buyers a couple of years ago even. And now they're just So interested in where is it coming from and who's being impacted. Is it impacting not only our local community, but how far up the supply chain? So it's a great time for this too.

It is, you know, and I love this. I love that this, these conversations are happening.

Yeah.

You know, when I, when I started that first business, the pooltables.com business, very random business, but, uh, I, I would, I never even thought of these things. And yeah, even when I was visiting factories, it just wasn't it wasn't something that anyone had talked about in school or that I heard other businesses talking about. So I've frankly learned a lot over the years, and I'm so glad that the whole world is kind of opening their eyes to this being an important issue.

Yeah. One brilliant example of how you sort of multiply your influence as a brand and your voice as a brand is through your partners in this beautiful summer 2021 camp collection that you released along with our friend Brian Papé with MIR, whom we had here interviewing as well, and how creating these partnerships have really magnified amplify your influence. I just thought it was a fun campaign. We, and those of us that are doing corporate merchandise, can learn from that because here you partner with 3, maybe 4, great brands. I think it was 3 great brands, um, and just, uh, you know, rising tide raises all ships. And that was a great effort. Can you share a little bit behind that story?

Yeah, you know, I, I love collaborating. Uh, you know, when you think business, a lot of times you think of competing and how do you beat your competitor. And some of these people that we collaborate with are you know, they hypothetically competitors, you know, like, we've made our own bottles before, like, they're a competitor for us. But the way I look at it is like, you know what, like, if you can find ways to work together, sometimes 1 1 more than 2. Yeah. So, you know, it makes me happy when we can partner with good people and good brands that care about some of the same things that we care about. And we can, we can create a great product together. And at the end of the day, their customers learn about us, our customers learn about them, and It's a win for everybody. So I love collaborating. We've got a lot more in the works right now.

That's great. And you reach so many more people with an audience. So you would think that you have a limited audience, but really like the Teva is a great example. So the shoes from Teva, by the way, I love. But the Teva is a great example because then you not only are reaching consumers, new consumers, new buyers, but also you're impacting the world because in that particular case, you both are focusing on the Girls and Boys Club of America in your markets and raising somewhere around the goal was $30,000, just that collaboration. So it's kind of fun. I'll bet that adds an element of richness to it for your team too, as you're building this.

Oh, absolutely. Yeah, absolutely. Especially when you can find a local partner, and that's what we're trying to do with these collaborations. A lot of our work is focused on the developing world. That's where, that's where I grew up. It's where so much of, I think, the world's need is. At the same time, we have so much need in our own backyards, and we find these local collaborations give us a little more flexibility to go find a partner that we really believe in here that we can support. That's certainly a really fun element of the collaborations we've done.

Yeah, that's cool. Now, International Rescue Committee, UN Foundation's Nothing But Nets, Mercy Corps— those are just a few that you and the organization support. Are there other charities that are really close to your heart? Are there a few you want to mention here that we can learn about?

Yeah, yeah, there are some. I mean, those are some of my favorites, and they are, they are really doing some remarkable work. One of the organizations that I really love is an organization called the Academy for Creating Enterprise. I learned about it when I was in college. And the man who started it had been a successful entrepreneur and he was about 60 years old or maybe late 50s. And instead of going and retiring and using his money to just kind of go enjoy life, he and his wife moved to the Philippines and they started a school that taught entrepreneurship. They had 25 people at a time that would live in this large home that they bought and they went and lived— he and his wife lived in a small little apartment nearby.. And for 2 months, they would teach them how to start their own businesses. They'd graduate with their own little business and then bring in a new cohort of 25. They now have this program throughout Latin America, the Philippines, and a few other parts of the world. So they're training tens of thousands of people a year and they're changing thousands of lives. And they're empowering people that are smart, that are hardworking, that are ambitious, but just have had no opportunity simply because of where they were born.. And so I'm a big fan of the work they're doing.

I want to step back just a minute and go back to another topic, because I think this is a fascinating part of who you are as a person. One of the most refreshing admissions in the Guy Raz How I Built This episode was you mentioning a lot of self-doubt when you started Cotopaxi and whether or not you could pull this off. Um, what a lot of folks may not know is that you're a survivalist. So you've survived shark-infested waters. You've slept in jungles with jaguars. What's that about? And what, what did you learn about— so what, how does survivalism equate to entrepreneurship? Obviously a lot of heads are nodding that it does equate.

How did you equate survivalism and entrepreneurship? Yeah. I started doing these types of experiences with my dad when I was a kid. And we lived in Latin America and we go float the Amazon River on our self-made raft and fish for piranha. This was crazy behavior. I thought it was normal. I really developed a love for the outdoors and for adventure and for doing hard things. And, you know, I've certainly, you know, I think especially in a time of crisis like last year, I started really recognizing the link between these experiences that I loved having in the outdoors where I'd go survive on an island with no food and, you know, spear my own fish and eat coconuts to survive. It was your ability to respond and prioritize where it was like, okay, when you, when you land on an island and you're like, I have nothing you, you know what you need to focus on first. And it's not like making the most beautiful shelter. It's like any shelter that will give me some coverage is good enough. Now it's time to go get a fire going. And it's time to get some food. And it's time to make sure I have water. So you end up prioritizing things that you need to survive. And I think the same thing happened last year in the pandemic. It was, we have to survive. And so there's a bunch of distractions, but we're going to focus on the very core elements of the things that we have to do. You know, another thing that I've learned, you know, you know, talking about sharks, you know, when you are, when you're hungry, and you spear fish, and all of a sudden, there's a shark that's on top of you wanting that fish, it's very easy to respond in fear. And you have to be very disciplined to respond, to stay strategy focused. And so that was another lesson that I was able to apply last year is stay very focused on our, on our core mission. Our mission was to fight poverty. Our mission was to make the world better. We made that our key focus. And by doing that, people responded in support of our brand. And so I could, I could probably do a whole podcast just on—

I'm sure.

I love it. I love your point about distractions because it is about essentialism really is what it goes back to. And one of the interesting things I took this, I had this question I wanted to ask that just came up about scaling your business because as you grow, because that's about essentialism as well. Like, how do you maintain that intimacy as you're growing? I know you've got big ambitious plans for Cotopaxi, and I'm sure that's a big part of, of your passion is how to maintain that intimacy.

It's got to be tied to that essentialism somehow. Yeah, um, for sure. You know, there's a great book called Essentialism.

I don't know, I—

no, I didn't know that. No. Oh, okay, Bobby, you got to read this book. I do. Yeah, written by Greg McKeown, one of my favorite books that I've read in the last few years. And so I read earlier this year, but yes, like identifying, being able to say no to things. And as a founder, as, as any, anyone in an organization, you have to learn how to say no at times so that you can say yes to the things that matter most. And so for me, as a founder, as a CEO of a brand that really is about giving back and doing good, it'd be really easy to get started getting pulled into all the the little elements of the business that are going to take me away from the focus of making an impact, and pretty soon the impact becomes secondary. I will not let that happen. It is so core to why we— it's the reason we exist. We don't exist to sell backpacks or jackets. We exist to fight extreme poverty, and we make a really amazing, you know, set of gear and colorful, you know, products that we love that allow us to go do good. But that's not, you know, making those products isn't the reason we exist. So Yeah, it's, it's important to stay, to understand, understand your why before anything else.

Yeah. Last question. You recently bought back your first business, pooltables.com, which is a fascinating story, but your mission is probably a little different now than it was when you first bought it. And I read that you had said that now your mission with pooltables.com is to enrich lives through the power of play. Now, with your experience building Cotopaxi, you've got this rare opportunity that none of us hardly ever get. Which is to sort of start over. What would the mature Davis Smith tell the younger Davis Smith starting his first business over again?

Oh, man.

Yeah, this is just the craziest turn of events. I never would have imagined this was going to happen. It was not on my radar. But the man I'd sold the business to, he was retiring, and he found a buyer to buy the business. And he reached out to me, and I had a little bit of equity still in the business. So, and so he was just updating me out of of courtesy and I heard about it and was like, "Gretz, great, you know, good for him.

I found a great buyer.

It's a small public company that was gonna be buying it." And the more I thought about it, I just felt like I had unfinished business. That business I started with the intent of trying to find a way to help people. In fact, all of our passwords, Bobby, in that business were tied to doing good and helping other people, but the business had no social impact. Like I just didn't know how to link the two together. And it just, the more I thought about it, I was like, I know how to do it now. Like, yeah, it's, you know, I sold that business over a decade ago. I didn't know what I was doing in my 20s. I was learning how to become an entrepreneur, and I'm still learning, but like, I have so much more experience now. I just felt like I know exactly what to do with that business. I know how to make it more sustainable. I know how to build the mission into that business, and we're gonna go use that business to go fight poverty alongside Cotopaxi. So I'm, yeah, super, super excited about it. I found a CEO to go run it, and He's really smart. I mean, if, if I had to choose him or me to run the business, I choose him. He's going to do a great job.

So, so yeah, I'm super excited about it. Enrich Lives Through the Power of Play. I love it. Davis, thank you so much. And for those tuning in, join us January 9th in Las Vegas at SKUCon, where you're going to hear Davis talk about this and talk about just this, this compassionate leadership and what they're doing through Cotopaxi and share more of the story there.

But Davis, thanks so much.

Time.

Yeah, thanks Bobby, this was great.

Thanks so much for tuning in to this episode of SKU Cast. Be sure to keep up with our latest content by subscribing to SKU Cast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for listening.

Mm-hmm.