The Outdoor Clothing Brand Writing "Doing Good" into Their Budget
What started with a chance encounter between future Cotopaxi founders, Stephan Jacob and Davis Smith, on the streets of Peru, has evolved into a socially minded clothing and lifestyle brand with the motto, “Gear for Good.”
While many businesses incorporate philanthropy in their mission, or in some cases, marketing strategies, Cotopaxi have doing good written into their bottom line. “Before we knew what products we would make, we wanted to incorporate impact in a solid, bulletproof, non-disruptive way,” Jacob says.
Instead of the “buy one, give one” model many social enterprises operate on, Cotopaxi dedicates two percent of all sales to philanthropic grants, in the hope to foster sustainable and self-sufficient development in the communities they work with. And they’re relentless in their vetting of community partners. “It's very easy to want to do good, and it’s very easy to screw it up,” Jacob says. “We want to ensure the money directly improves lives of our beneficiaries.”
Each Cotopaxi product has a transparent humanitarian impact: water bottles raising money for clean drinking water, or Jacket insulation providing income for Bolivian llama farmers, for example. One of their recent iterations is no different. Each item in Cotopaxi’s Del Día collection is hand-sewn out of scrap materials by artisans in the Philippines. Along with the direct economic opportunity, each maker is empowered to choose their own styles and colorways, with no two pieces ever the same.
Here, Jacob elaborates on Del Día, the Cotopaxi mission, and lessons he’s learned along the way.
What problem were you trying to solve for with Del Día?
We recognize that supply chain is a major lever where change is made. We saw two major issues in the production of high-end outdoors products: one is that it’s extremely wasteful. There are whole sections of warehouses that are full of waste materials. Product sits there forever, or just goes into a landfill.
Second, these sewers in the Philippines are artisans. They’re highly skillful and very good at what they do. Yet, in all of the products we use, a lot of people don't have that mindfulness and that awareness that there’s a person behind it. They think, “maybe a machine made it—I don’t know, I don’t really care.” And we wanted to connect consumers with the unsung people who were making their products—the heroes on the production floor.
What kind of guidance did you give your sewers?
It’s a simple daypack, but with lots of panels, pockets, and straps, so there are hundreds of thousands of combinations for a buckle! The only instruction we gave was that no two packs can be alike. We said, “you let your creativity shine and however you’re feeling that day—you can show that in the pack.”
The results have been absolutely incredible. We’re using exclusively scrap material and it creates a dynamic on the floor where, instead of following a pattern and making that over and over again, our artisans are the one-stop designers and creative team.
What ripple effect have you seen from handing over creative control to Del Día sewers?
It’s created this enormous enrichment and empowerment, and a real conversation starter. We hear this from our customers all the time on social media: “so many people are commenting on my pack because it really stands out.” So they, as consumers, can tell a rich story from that. It’s an example of how we can use our supply chain to make a really awesome product that gets our brand out there.
How far do you think that ripple can travel?
Frankly, we’re only scratching the surface with this model. There are tons and tons of excess fabric in the supply chain. We’re not worried about running out of scrap materials.
We do believe that we can take the impact on the ground much further. This product was a great example that proved that these sewers are amazing artisans, incredibly skilled, and we want to take advantage of that even more.
How are you thinking about impacting these artisans beyond the skill sets they already possess?
We're setting up a trial at our factory where our creative team is teaching the use of Adobe Illustrator and Photoshop and other tools they use in the design process to give these skills to the sewers, which will obviously lead to better income. It’s a trial right now but we’re really trying to find ways to add value on the ground, and transfer these skills that will enable a better lifetime income and livelihood.
There’s much more we think we can do on that front to work with communities that are underdeveloped and underserved. With the Kusa jacket, for example, we work with Bolivian farmers and use the llama fleece they’re shearing off their animals for insulation. In that way, we’re shifting value creation to these farmers and these sewers to have more of the creativity and ownership back at the farms.
You designate 2% of revenue for grants. Why did you settle on that model of social impact?
We started the company on the premise that we wanted to find a way to make a difference. My co-founders and I, we had built multi-channel commerce businesses before. While it's really satisfying to build a brand and execute that in the market—you often feel like something’s missing. So for Cotopaxi, before we knew what products we would make, we wanted to incorporate impact in a solid, bulletproof, non-disruptive way. That takes the form of grant making where 2% of our sales go into philanthropy. We’re also active in volunteering in various initiatives locally, and we hold a boot-camp where we teach coding to refugees.
On an operational level, that must be tough. How are you organizing and executing this vision?
One of our first senior hires was Lindsey Kneuven, who’s our Chief Impact Officer. She’s one of the most brilliant philanthropic minds in the world. The model was very much based on Lindsey’s expertise and true, sustainable best practices in corporate philanthropic giving. It's very easy to want to do good and it’s very easy to screw it up. We’re careful to work with the right partners. Even those who have the best intentions can easily disrupt local economies if they don’t follow best practices. They’ll have impact that’s very short-lived.
How do you choose your community partners and beneficiaries?
We have very strict rules and a vetting process to find who’s proven to provide impact in the areas we work in, whether that’s under-5 child mortality, or our other issue areas. The nonprofits we work with must show they have measurable impact and improved development indicators. We’re almost agnostic to location—we have partners all over Asia, South America, Africa, and the Middle East—but we’re very, very rigorous in selecting nonprofits.
Who are your personal heroes, mentors, and inspires in the world of impact?
In our space, Patagonia has been around for 40+ years and Yvon [Chouinard] is an incredible human being. Very early on, he made this a conscious decision to build the business around the environment, and embed that into everything they do. That’s a big inspiration and we can firmly believe that we can build the next Patagonia for this younger generation. More personally, there are some incredible entrepreneurs whom I admire and try to surround myself with.
There are also other small organizations that are pursuing a similar intent and we’re excited to see that more entrepreneurs recognize that it’s about more than making money for yourself or your shareholders. Industry does have a role and business does have a role in changing the world for the better.
How did your first business influence your work at Cotopaxi?
Everything's new and it's a little scary. You have a boss, an HR person, and various mentors in a corporate environment. All that's different as an entrepreneur so it can be very lonely and you need to build up a support network by bringing on advisors and mentors who can help you through that. Different types of mentors can be helpful; I think it’s super crucial to have someone who’s a few years ahead of you, is really close to your situation and remembers the emotional ups and downs and can help you through them. It’s also important to have someone who’s much more senior, much wiser and has seen it all. Maybe they’re at the end of their career and have the distance to give you the 30,000 feet type feedback and advice.
In what ways would you consider yourself a misfit?
Ask my mom that question because she’d probably have a better answer!
If you look at my resume, it’s pretty straightforward. I was raised in a conservative little Bavarian town. I did well in school, went into the German Special Forces, McKinsey & Co. for a few years, and then went to business school.
But my maternal grandfather, the real Misfit, was this incredible guy who, without a college education, built this insane career with a German pharmaceutical company. After World War II, lots of German companies were expropriated and lost everything, so he made a career from rebuilding those assets all around the world. Traveling around the world was really unusual in post-war Germany.
He inspired me to be a more globally minded, conscious person. He was very giving and believed in sharing what you have with others. That was his sort of mindset or mantra, and it made me want to leave that little Bavarian town and live in Australia, Asia, and now the U.S.
In that sense, I try to take advantage of the many privileges I enjoyed growing up—in a safe environment with a great education—and find ways to give. That’s what, on a day-to-day basis, motivates not just me but everyone we bring on board. It’s very much a shared value. We stand up for what we believe in, and find ways to help people who were born in a really hard place.