Davis Smith G11 WG11 and Stephan Jacob G11 WG11 are the men behind Cotopaxi, a young direct-to-consumer brand in Cottonwood Heights, Utah, which sells backpacks, water bottles, outerwear and other outdoor accessories (not the world’s highest active volcano, after which the company is named). Each transaction is linked to a specific humanitarian action. Water bottles pay for six months of clean water. Each backpack sponsors educational opportunities for a child in a different part of the world.
Cotopaxi originated on a trip to Peru over a decade ago, when Smith and his wife met and helped feed a child named Edgar. The young couple committed to each other that they would find a way to sustainably help kids like Edgar. After 10 years working as an entrepreneur (PoolTables.com, Baby.com.br and Dinda.com.br), Smith decided it was time to fulfill that commitment. He ran into Jacob, who had just exited his own e-commerce business, Kembrel.com, at a Lauder Institute reunion. They realized they had to work together on this project, and Cotopaxi was born.
The business’ social component is built on personal relationships with charities. Cotopaxi works primarily with smaller, international organizations that have low overhead and focus on education and health care. This assures consumers that their purchases are yielding direct funding to the people who need it. And they are able to assess and measure the social impact for every transaction they make.
While many social enterprises operate on the “buy one, give one” concept, Smith and Jacob have tweaked the model to better achieve sustainable economic development in the communities they work with. Each customer also receives a follow-up from Cotopaxi on the cause he or she supported, which builds good will and repeat customers.
“Sustainability doesn’t just mean for us as a giver, but also to operate in a way that doesn’t disrupt local economies, that isn’t a short-term fix,” says Jacob. “We are cautious to choose partners who have a philosophy of empowering long-term development.” Smith and Jacob do not claim to be experts in social giving. “There are incredible nonprofits that are changing the lives of people living in extreme poverty,” says Smith. “Our goal is to extend sustainable financial support to facilitate their incredible work.”
It seems to be working. According to Jacob, product return rates are less than 1 percent, and repeat purchase probability is already as high as 20 percent after the first order. After launching early in 2014, Cotopaxi received about 400 unsolicited job applications in just a few weeks.
Cotopaxi has also found success with a unique marketing strategy: huge 24-hour adventure races called Questivals. For the inaugural event in April 2014, nearly 5,000 people in teams of five donned Cotopaxi backpacks while completing a list of 200 challenges, ranging from athletic activities like mountain biking to quirky options like taking a selfie with a llama. The Questival generated 30,000 posts on social media during the 24-hour window, and Cotopaxi gave away three humanitarian trips to winning teams.
Smith and Jacob plan to scale up their Questivals with 30 events across the country in the next year. They are building brand awareness, creating new products with the consumer feedback they’ve received and forging new philanthropic partnerships.
“We are business people who believe that businesses can be a force for good, and we’re going to do the very best we can,” says Smith. “We are all so fortunate, and we have a responsibility as business leaders to give back and make the world a better place.”
—Paul Richards C10