What is a B Corp, and what it costs to actually mean it: Stephan Jacob of Cotopaxi

Ask what is a B Corp and most people conflate two different things. Stephan Jacob separates them cleanly, and then describes what it took to earn one while the company was still losing money.

Jacob is co-founder and COO of Cotopaxi, the outdoor brand competing with Patagonia and The North Face, which did $100 million in revenue in 2022. It is a certified B Corporation, a member of 1% for the Planet, and donates a share of revenue to poverty alleviation through the Cotopaxi Foundation. The motto is gear for good. There have also, at points, been llamas on the balance sheet.

Two exits, then the company they always meant to build

Jacob and his co-founder Davis met at Wharton, where Jacob took a dual degree combining an MBA with a master's in international studies focused on Latin America. They spent two years deliberately avoiding campus recruiters and surrounding themselves with people serious about starting companies.

Their master's thesis, researched partly in the Philippines, was on microentrepreneurship as a route out of poverty. That subject matter turns out to be the seed of everything that followed.

But they did not start Cotopaxi together out of school. Both raised venture money while still studying and built separate businesses, Davis in Brazil and Jacob in Philadelphia, and both exited around the same time in 2013. They reconnected at an alumni event in New York, and the following Friday Jacob flew to Utah.

His framing of why entrepreneurs do this at all is one of the better lines in the episode. People have an innate desire to create, and some do it through art or music, while entrepreneurs do it by building businesses, products and teams.

What made this the third attempt different was the deliberate combination of that impulse with giving back.

The experience that made it non-negotiable

Jacob's motivation is personal and specific.

His wife is half Indonesian, and both of them grew up in Germany. After college she moved to Indonesia to connect with that side of her heritage, and he went with her, working for a nonprofit dedicated to eliminating child labor across the Indonesian archipelago.

His account of what that did to him is worth reading in full, but the core of it is this: it held a mirror up to the fact that by pure luck of where he was born, education, safety and opportunity were simply given. He did not have to think about them.

And the observation that follows is the one that built the company. Those children and their families had no lesser aspirations. They were simply born in a hard place.

Cotopaxi exists because opportunity is not distributed equally, and the founders wanted to use the durability of a profitable business as the vehicle for doing something about it.

Don't just teach them to fish, teach them to sell the fish

The microentrepreneurship research still shapes how Cotopaxi gives.

The organization they studied had an unusual success rate: people completing the training went on to sustain businesses for years in places with few opportunities. Some built water bottling stations or food carts. One grew from very small beginnings into a travel agency operating across the Philippines.

Their mantra extended the familiar one. Do not just teach someone to fish, teach them to sell the fish, because that is what closes the loop into something self-sustaining. The supporting guidance was practical and small: keep proper books, do not consume your own supplies, practice fiscal discipline.

That philosophy shows up in Cotopaxi's grantmaking today, which runs across health, education and livelihoods, with the livelihoods pillar, creating income for communities, still central. The approach Jacob describes is helping people help themselves, intervening at the right moment, and letting community need drive the design.

Michael reads the 2021 numbers into the record: nearly 1.5 million people reached directly through poverty alleviation programs, 63,300 workers assisted across the supply chain, 67,000 malaria treatments benefiting over 400,000 families, nearly 90,000 refugees assisted in Ecuador and Venezuela, and education sponsored for more than 24,000 children.

Jacob's immediate response is to redirect the credit to the internal impact team and to the partner organizations doing the work on the ground, naming Escuela Nueva and the International Rescue Committee among them.

Brand and culture as the same thing

Jacob's framing is that brand and internal culture are two sides of one coin, and the mission is what makes Cotopaxi's talent story work.

People have joined from large organizations with strong careers ahead of them, and the pattern continued through 18 months of building out a leadership team for the next stage of growth. He treats that as a genuine advantage in acquisition and retention.

The obligation it creates is the part he takes seriously. With greenwashing and ESG scepticism widespread, and consumers now expecting this as a baseline, the company has to make it real.

That means examining their own negative externalities honestly. They have been climate neutral for two consecutive years, and Jacob names specific problems in his own category: microplastics from fleece, and the coatings used in rainwear. His position is that these are real, and the responsibility is to minimize and offset them rather than pretend otherwise.

His summary of how the company treats this internally is the standard worth borrowing: impact is held to the same rigor as marketing, distribution or supply chain, not run as a side project.

He also thinks it built a moat, precisely because it is hard to copy something that is woven through the whole organization.

Turning factory scrap into the signature product

The best operations story here started with a question asked while walking through a supplier's campus.

Cotopaxi's packs are made in a factory in the Philippines. Walking through, the founders saw warehouses full of small rolls of fabric and asked what they were. The answer: leftovers from bulk production runs, with no obvious use, periodically purged to landfill or burned.

Nothing was wrong with the material. There was simply not enough of any one roll for a full production run.

The idea that came out of it inverted how the factory worked. Normally sewers execute a precise specification telling them exactly which fabric goes where. Cotopaxi gave them the patterns and let them decide, cutting whatever material was on hand and choosing how to assemble each pack.

Jacob's description of the effect is the part I find most interesting. It upleveled their creativity and made them the designer on the floor.

The results compound in every direction. Excess fabric is used rather than dumped. Because the factory considers it waste, Cotopaxi pays cents on the dollar, so the gross margin is genuinely attractive. And because no two packs combine the same thread colors, zipper pulls and fabric panels, every unit is one of a kind.

The operational difficulty is real and worth noting. No third party logistics provider or warehouse management system supports this. Each unique pack has to be individually photographed and uploaded, with a custom backend that lets a customer choose a specific one and have exactly that item picked and packed.

His conclusion is about mindset: this is the advantage of having no preconceived notions about how things must be done, plus partners willing to build with you.

There is a second motivation underneath it. Most products we buy are a black box, with almost no visibility into the people who made them. Cotopaxi wanted to celebrate those people by profiling them and elevating their contribution.

Benefit corporation and B Corp are not the same thing

Jacob's primer is the clearest I have heard, and the distinction matters.

A benefit corporation is a legal entity type, like an S corp or C corp, now available in most US states. Cotopaxi incorporated in Delaware because Utah did not yet have the legislation, though it does now and Cotopaxi helped get it passed.

What it does is write into the articles of incorporation that the company exists to have a positive measurable impact on the world. Jacob is candid that this is a broad statement. Its practical function is protecting the management team from a shareholder suing over failure to maximize shareholder value exclusively. The company exists to do good as well as make money, and he adds that the two are not necessarily in conflict.

B Corp certification is separate and independent of your legal structure. It is a third party certification run by B Lab, assessed through a stringent and time-consuming evaluation of how you actually operate against environmental and social criteria.

Cotopaxi is both.

On the growth in certifications, Jacob is positive. More companies certifying means more organizations accepting that they answer to stakeholders beyond the narrow shareholder model.

The greenwashing question, answered generously

Michael raises a genuinely difficult case: a certified B Corp facing allegations about supplier wages and single-use packaging, apparently credited for pursuing a solution it has not yet delivered.

Jacob's answer is more interesting than a defense or a condemnation.

He starts with his own company's history. When Cotopaxi first certified, there were no egregious supply chain problems, but did they have full visibility into tier two and tier three suppliers, down to where zipper pulls came from? No, they did not.

So his position is that certification does not mean you have arrived. It means you care enough to be measured. There is economic benefit to that now, but nobody is obliged to do it.

His preference for engagement over activism is stated plainly. Cotopaxi has had internal discussions about taking aggressive stances and shutting down conversations, and does not believe in it. The alternative is dialogue, partnership, applauding a first step and then pushing for the second, rather than tearing companies down for what they have not yet fixed.

The line that stays with me: it is a snapshot, and what matters is the trajectory more than the snapshot.

He balances it with the necessary caveat that the community and consumers do have to hold each other accountable, while arguing that bad actors are the minority and most organizations making the effort are genuine.

The catch-up you pay for later

Cotopaxi is smaller than its visibility suggests. Unaided awareness sits around 10 or 11% in North America, meaning roughly 90% of people have never heard of them nine years in, which Jacob frames as both slightly deflating and the entire growth opportunity.

What he is proudest of is consistency. He and Davis recently reread the deck used to raise their seed round from Forerunner Ventures, written before a single product had sold, and found that the slide describing what kind of business they wanted to be would still stand up in an investor meeting today. Grantmaking, supply chain approach, local volunteering, all of it.

The evidence that it resonates is a net promoter score that has hovered around 80 for years. A small tribe, but a devoted one.

The honest half is about what they neglected. In the early years the focus was entirely on the customer: ship the product, make it right. Financial reporting cleanliness, systems integration and data flow were not the priority.

The bill arrived as step function catch-up. Underinvestment in data and financial integrity required bringing in an experienced CFO and building a data team. Product development ran on a tiny team producing the entire range for six or seven years before being properly built out.

The current one is physical and vivid. They outgrew their distribution center six months earlier and are playing Tetris, with product in a third party warehouse and storage trailers absorbing the overflow. Everything slowed down, and they had to reduce the maximum speed setting on the forklifts so they could navigate aisles packed too tightly.

His framing is that the business outpacing back-office systems is natural rather than a failure, and that at 90% year over year growth you cannot afford to learn everything as an organization, so some expertise has to be bought in. Should some of those hires have come a year or two earlier? Probably, and that is the reality of a resource-constrained startup.

Communicating a complicated commitment

Cotopaxi built its impact program on corporate giving best practice, and Jacob is candid that this produced complexity.

Explaining how grantees are chosen, how agreements are structured and how reporting works takes far longer than a one-for-one donation model would. He acknowledges the tradeoff directly: the simple model is easier to communicate and much less likely to meet the actual needs of a specific community.

So the answer is repetition across many channels rather than one clever message. The impact team presents at every monthly all-hands, which the company calls all Llamas. There are dedicated sessions featuring guest speakers or grantees, including a recent one with the Boys and Girls Club of San Francisco. Volunteering is localized and encouraged, including efforts organized by a member of the distribution center team who cares about it. And the annual impact report holds the company to outcomes rather than activities.

His conclusion is that there is no single answer, only many overlapping efforts and a lot of communication aimed at making impact tangible.

Bringing in the adults, and keeping your ego out of it

Cotopaxi's founding CEO moved to chairman and is serving a three year mission in Brazil. The decision to bring in Damien Huang, former CEO of Eddie Bauer with earlier stints at Patagonia and The North Face, was made well before that.

Jacob's explanation of why starts from something founders rarely say out loud. Being an entrepreneur can be lonely, and staying the right person for your role over time takes deliberate work. In a corporate environment there is an HR function running training, plus mentors and a pool of colleagues to learn from. In a startup, there is not.

So the practice from early on was honesty about what they did and did not know, and filling the gaps with people they could learn from. That is the same instinct that produced a chief impact officer as one of their first senior hires, someone who had previously run the Silicon Valley Community Foundation and the Salesforce Foundation.

A growth investment from Bain Capital reset expectations again. Standards for governance and clean operations are materially higher than three years earlier, which requires everyone to stretch. Jacob's view is that this is how you grow, and that ten years in he feels as hungry as he did at the start because of it.

Then he addresses the part Michael is circling. Bringing in the adults is a natural progression, and as a founder you have to be all right with it and not let ego obstruct it. He cites Ryan Holiday's Ego Is the Enemy as apt.

His method is unsentimental. Think through what is genuinely best for your own development, for the business and for the team, and then keep the feelings that creep up in check rather than acting on them.

Llamas on the balance sheet

The answer to Michael's standing question is the origin story of the brand's presence.

The llama is Cotopaxi's logo and mascot, and the founders were determined to reach people in person rather than only through advertising. So they created the Questival, a 24 hour outdoor adventure race guided by a deliberately rudimentary app offering 300 challenges. Some outdoor, like climbing a specific mountain. Some charitable, like cleaning a park or volunteering at a shelter. Some quirky, like taking a selfie with a llama.

To promote it, they bought llamas off a local classifieds site for a few hundred dollars. Which meant that for the first couple of years the business carried a livestock line on its balance sheet, depreciated over a five year useful life.

They fitted the llamas with colorful packs and took them onto university campuses across Utah.

The insight is genuinely funny and genuinely instructive. A brand handing out flyers on campus gets shut down by security immediately. Campus security had no standard operating procedure for llamas, so they were left alone for hours. Everyone who walked past asked what was happening, which bought ten or fifteen seconds to explain the company and the event. Security took selfies with the llamas.

The launch event, on 11 April 2014, drew close to 4,500 people, queuing around the block. People had made their own shirts and hats, after the creative director released the logo publicly so teams could make their own gear. One person spray painted the logo onto the hood of his car.

Jacob describes video from a Salt Lake event with thousands of people in a square being sworn in to do good before starting their 24 hours.

The question he ends on is the right one for any company that grew up: how do you keep that alive rather than becoming anonymous.

The 5 things I took away from this conversation

1. Ask what the pile in the corner is. The entire repurpose line came from noticing warehouse shelves of leftover fabric and asking a question. Cheap input, real sustainability story, and a product nobody can copy exactly. That question is available in most supply chains and almost nobody asks it.

2. Let the people closest to the work make the decision. Handing sewers the patterns and letting them design each pack is the operational heart of it. It solved a materials problem and upgraded a job at the same time, which is a better outcome than either alone.

3. Certification is a starting line, not a finish. Jacob's honesty about not having tier two and tier three visibility when Cotopaxi first certified is what makes his generosity toward other companies credible. Judging on trajectory rather than snapshot is both fairer and more likely to produce change.

4. Growth outruns the back office, and the bill compounds. Financial systems, data, product development and distribution all had to be caught up in step functions. His admission that the right hires should have come a year or two earlier is the most useful thing a founder can tell another founder.

5. Bringing in the adults is a decision you have to actively make. Cotopaxi installed an experienced CEO and raised its own governance bar deliberately, and Jacob names ego as the thing to manage rather than pretending it does not arise. That candor is rarer than the decision itself.

FAQ

What is a B Corp, and how is it different from a benefit corporation? A benefit corporation is a legal entity type, available in most US states, which writes into the articles of incorporation that the company exists to create positive measurable impact. Its practical effect is protecting management from shareholder claims about not maximizing shareholder value exclusively. B Corp certification is separate: an independent third party assessment by B Lab of how the business actually operates. A company can be either, or both.

What do B Corp companies have to demonstrate? Certification requires passing a stringent and time-consuming evaluation across environmental and social criteria, with transparent disclosure of how the business operates. Jacob is clear it does not mean a company has solved everything, using his own example of lacking full visibility into second and third tier suppliers at the time Cotopaxi first certified.

How do you make sustainability more than marketing? By holding it to the same operational rigor as any other function, and by being explicit about your own negative externalities. Cotopaxi has been climate neutral for two years running while openly naming the problems in its own products, including microplastics in fleece and coatings used in rainwear.

How can a company scale while keeping its founding mission intact? Jacob's evidence is that the seed pitch deck's commitments still hold nine years later. What made that possible was building the giving commitment into the cost structure before profitability, hiring senior expertise for impact as early as for any other function, and giving impact the same internal communication cadence as every other topic.

What breaks first when a business grows 90% year over year? The back office. At Cotopaxi it was financial reporting and data integrity, then product development capacity, then physical distribution, to the point of slowing forklifts to navigate an overstuffed warehouse. Jacob's view is that this is natural, and that some expertise has to be hired in rather than learned, ideally earlier than feels comfortable.

Also mentioned

• Cotopaxi, its Del Día repurpose program and the Cotopaxi Foundation
• B Lab, which runs B Corp certification, and 1% for the Planet
• Escuela Nueva and the International Rescue Committee, field partners behind the impact numbers
• Forerunner Ventures and Kirsten Green, Cotopaxi's earliest backer, and later growth investment from Bain Capital
• Ego Is the Enemy by Ryan Holiday, Jacob's reference for founders handing over control
• The Questival, Cotopaxi's 24 hour adventure race, and the llamas that promoted it

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Stephan Jacob on Between Two COO's

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