Stephan Jacob, Cotopaxi COO on $100M Brand Building

Michael Koenig: Hello and welcome to Between Two COOs, where phenomenal chief operating officers come to share their knowledge, advice, and at the very end, a crazy story. I'm your host, Michael Koenig, and our guest today is Stefan Jacob, co-founder and chief operating officer of Cotopaxi, the company whose outdoor gear has made both hiking trails and city streets more colorful. While also catching Patagonia and The North Face flat-footed. Cotopaxi has ESG or environmental, social and governance baked into its core as a certified B Corporation that donates a percentage of its revenue to fight poverty through the Cotopaxi Foundation. And with $100 million in revenue in 2022, that's a fair chunk of change. It's also a member of the 1% for Planet, which means it's pledged to donate 1% of its revenue to environmental causes. There's clearly some muscle behind their motto of gear for good. And as a bonus, they've got a couple of llamas on staff. So Stefan, welcome, welcome. Thanks for being here.

Stephan Jacob: Awesome, Michael. Thanks for having me. Excited for the conversation.

Michael Koenig: So give us the origin story. How did you and your co-founder Davis come to create Cotopaxi?

Stephan Jacob: Yeah. So Davis and I, we've, we've known each other for almost 12 years at this point, have worked together for 9 of those years. We both met at Wharton at business school, and I did a dual degree, a Wharton MBA and a Master in International Studies with a focus on Latin America. And as part of the program, you know, traveled extensively together, spent time in Argentina, in Spain, and then, you know, spent the 2 years at school resisting the temptations of recruiters on campus and instead surrounded ourselves with people who were really serious about entrepreneurship, about using, you know, the time at school to start, you know, their next business. And, you know, quickly found out that we, you know, we had a lot of shared values around the type of entrepreneur that we wanted to be, the type of businesses that we wanted to build. And so during, you know, those, you know, 2 years became close friends and did our master thesis together on, you know, using microentrepreneurship as a means to help people break out of a cycle of poverty and travel together in the Philippines. And, you know, created a strong bond, but we didn't start Cotopaxi out of school, right? We both went on to raise venture money while at school and started our own businesses. Davis went to Brazil, start baby.com.br. And I, you know, started a business, Cambrelle, in Philadelphia. And, you know, we both executed and, you know, grew these businesses over a couple of years and then happened to exit around the same time in 2013. Davis was coming back from Brazil, had already started, you know, thinking through like what was next for him. Cotopaxi was already in the back of his mind, a direct-to-consumer outdoor brand with a deep humanitarian social cause at its root. And we connected at a reunion event for the Lauder Institute in New York and That was over a weekend, and then I think the following Friday I flew out to Utah to check it out because it was just such a compelling proposition to work together with Davis, which we had talked about for many years, and the stars just aligned from a timing perspective. And, you know, we both love being entrepreneurs, building teams, building product. I think we as human beings have an innate desire to create. And some people do that through art, others do it through music, and I think as entrepreneurs we do it, you know, through building businesses, right? And product and teams. And so, you know, since this was the second go-around for me, the third one for him, you know, we felt really strongly that we wanted to find a way to combine that desire to create with the desire to give back. Davis had his experiences growing up in South America, being exposed to poverty and misery. In my case, my wife is half Indonesian and we both grew up in Germany, but after college she decided to connect with that part of her heritage and move to Indonesia, and I joined her there and worked for a nonprofit organization that was dedicated to the elimination of child labor on the Indonesian archipelago. And that experience just left a mark, right, in terms of showcasing, holding a mirror in front of my eyes, showcasing that I've been really lucky by the pure luck of the draw of having been born in Western Europe that I didn't have to worry about education or safety or, you know, opportunities for growth and income. It was just a given, right, where I grew up. And that just left a mark, you know, these kids and their families, they had no lesser aspirations. They were simply born in a hard place. And so Cotopaxi was born out of the desire to do something about that, right? That opportunity is not distributed equally. And again, Davis had very similar experiences in South America. And so that's at the core, right? That's what we wanted to find a way to use the amazing power and sustainability of a profit-driven venture to do good, to sustainably, in our case, alleviate poverty during our lifetime. And use Cotopaxi as a vehicle to do that and encourage others, our employees, our suppliers, other entrepreneurs to sort of join us in that movement. And that was at the very core of when we started. It's still at the very core of who we are today.

Michael Koenig: You talked about a compelling proposition. There certainly is one there. You also mentioned microentrepreneurship. I was wondering, can you go a little bit more into detail about that microentrepreneurship and how it goes towards fighting poverty, um, and then, you know, further just how that ends up baked into your operations.

Stephan Jacob: Yeah, yeah. So the, the organization that we were researching and, and, um, and trying to understand why they were as successful as they were, uh, they had tremendous success rate in terms of entrepreneurs going through their training program and then genuinely finding ways to sustain the businesses that they created in the aftermath and during, you know, the program and sustain them for years and, you know, creating a livelihood in environments where they didn't have, you know, big opportunities before. So these were entrepreneurs who would build a water bottling station, who would build, you know, food businesses, food cart, or, you know, small, you know, food vendors. But then there were other entrepreneurs who started really small and made it big into, you know, a nationwide, across the Philippines, travel agency, for example. And so the program, you know, lived by the mantra— and you've heard this, right? Like, don't give somebody a fish, teach them to fish. They sort of took it one step further and said, don't just teach them the fish, but teach them how to sell the fish. That's what ultimately creates that full, you know, 360 cycle of sustainability. And with very smart, you know, small snippets of, you know, of guidance around, you know, how to maintain your proper books, don't consume your own supplies, and, you know, practice fiscal discipline, etc., etc. Really, really smart. Very applicable with, again, tremendous success. And so, yeah, that's, I think, a model entrepreneurship, you know, is a really, really interesting model of, again, self-sustaining, empowering people to pull themselves out with, you know, a little bit of support. And obviously there's a whole tremendous debate in the development community around, you know, what's the right approach of sustainable, you know, community development. And This notion of helping people to help themselves and supporting at the right moment, having these right interventions in a very community needs-driven manner is something that we take to heart to this day at Cotopaxi in terms of how we decide our grants, who we work with, right? And the organizations that we partner with. Livelihoods, it's still one of our core pillars, right? Our grantmaking is based around health, education and livelihoods, right? So the livelihoods pillar, creating income dollars for communities, is still at the very core of our impact program and then I think is informed by these early experiences.

Michael Koenig: Yeah, let's put some numbers behind that impact that we're talking about. In 2021 alone, the Codepoxi Foundation aided nearly, and I'm going to read this off here, 1.5 million people directly through poverty alleviation programs. They assisted 63,300 workers across your supply chain provided 67,000 malaria treatments benefiting over 400,000 families, assisted nearly 90,000 refugees in Ecuador and Venezuela, and sponsored education for more than 24,000 children. I mean, these are real numbers with real impact. Tell us about that. What is the impact that it has on your team, on your culture, on your overall mission of showing up to work every day?

Stephan Jacob: Yeah, yeah. And, you know, the full credit of these numbers belongs, A, to our impact team here at Code Epoxy, but B, to the amazing partners in the field, right? We are a partner to them and they make the magic happen on the ground, right? The amazing organizations that we work with, whether that's Escuela Nueva or the IRC or, you know, the various other organizations that are truly on the ground. So full credit to our partners on the ground here. It goes back to who we are as a brand, right? Brand and internal culture are really two sides of the same coin. And so being an impact, mission-driven organization is so core to, you know, who we are as Cotopaxi, to who we attract, the type of talent that we attract, right? We have people who have joined us, you know, in the early days who came from large organization who had great careers ahead of them in those organizations who made that jump and decided to join Cotopaxi. And the same holds true over these last 18 months as we were building out our leadership team, right, for this next stage of growth. We've seen that, that same, you know, movement of people who just truly believe in the mission, who have come on board to make a difference in a, you know, smaller, very agile, high-growth environment., you know, who genuinely believe in what we do. And I think it is a tremendous advantage from a talent acquisition and retention perspective, right, to be, to have that at the, you know, at the core of, you know, who we are. It is important. It also comes with a lot of responsibility and accountability towards our team to truly deliver, right? Like there's a lot of talk around, you know, greenwashing and ESG, question marks, right? It's become an expectation from consumers. And I think as an organization, we need to make sure that it is real, it is genuine, right? And that we actively across the board execute according to these principles, right, that we have defined of genuinely doing good internally with our team, treating people right, and obviously evaluating our entire value chain, right, to minimize the negative externalities everything from, you know, we've been climate neutral for 2 years in a row now, very cautiously evaluating, right, the outdoor industry, some of the products that we make, whether that is fleece with regard to microplastics, whether that is, you know, in rainwear with regard to some of the, you know, DWR coatings. There are negative externalities, that's real, right, and I think we need to be responsible there and act in a way that minimizes those and offsets them where possible. And at the same time, you know, this brand is built around people, right? Making sure that we genuinely identify, you know, communities in need and partner again with organizations on the ground to help, you know, put communities on a different trajectory of development. And so, yeah, this is, this is core. Our team, has high expectations for us to execute with excellence, with the same level of excellence and sort of executional focus on our impact initiatives as on everything else, right? The way we built our marketing, the way we operate our distribution, supply chain, etc. Impact is treated with the same rigor at Cotopaxi as all these other disciplines. And so it is, yeah, very, very core to who we are as a brand, and I think it has helped to build a strategic moat around the brand. There's no question it's hard to replicate, I think, because it's so tightly interwoven into the DNA of the organization, right? So there's definitely advantages there, but at the same time, it's something that we need to, as we scale, pay very, very close attention to, to make sure that we stay true and genuine with regard to those efforts.

Michael Koenig: Since you brought up brand, let's kind of take a step back. It takes some guts to take on behemoths like Patagonia and The North Face. And, uh, I'd love to get into supply chain at some point, but you haven't made it easy for yourselves either. You use repurposed, recycled, and responsibly sourced materials for all of your products. I don't imagine that there's a manual on how to do that. Tell us about those decisions, how you learn to do it. But then I also want to touch on that brand thing. I mean, so much of what you talked about in terms of brand and the brand loyalty and setting yourselves apart and having that moat, there's a lot riding on developing that in order to take on the competition. So very, very interested in all of that.

Stephan Jacob: Yeah, for sure. It's been an iterative process, right, in terms of learning how to do this right, you know. Neither Davis nor I had any idea of how to run a corporate philanthropy program the right way, right? It's easy. We had the desire to give money away, you know, beyond the profit that we made, right? We were not profitable for the first couple of years of the business, as most startups are. And yet we made that hard commitment, right, that we want to make these grants and built that into our cost structure. And so we brought on— we surrounded ourselves with amazing talent from the get-go, right? One of our first senior hires was a Chief Impact Officer, somebody who had run Silicon Valley Community Foundation and Salesforce Foundation. And so just again, bringing amazing talent on to help us structure these programs in the right way. And that holds true, you know, to this day with our recent hires around, you know, Damien Huang, who's, you know, former CEO of Eddie Bauer, who's joined us as President. Grace Sunic, who has come over from Chobani as Head of Impact and People, and many others. Brad Hedranega, who was the Chief Marketing Officer for General Mills. And so, you know, for us, that's a big part, right? Being open to learn, being open to understand what we don't know, and then act on it by bringing, you know, that expertise in-house. And then to iterate, you mentioned our repurpose program. Was a discovery as we were sourcing product. Our packs are made in an amazing factory in the Philippines. We walk across this, the factory campus there, and see big warehouses full of small rolls of fabric. So we asked the team, "What is this? What are these, like, piles and piles of material that you have sitting here?" And they say, "Oh, that's everything that's left over from bulk production runs." and we don't really know what to do with it, so it just sits on the shelves. On a regular basis, we purge it. We either, you know, it goes into a landfill or gets burned or whatever. So we said, ah, isn't there a better way to do something with that material? There's nothing wrong with the material except that it's small rolls, right? Not enough for a full bulk run. So that was the origin, the nucleus of the idea to, you know, reuse all of that excess fabric by empowering the sewers on the floor, right? They Usually they execute on a very well-specified tech pack that shows exactly, okay, this fabric goes here and then this blue fabric goes here and then et cetera, et cetera. And they just execute on that. We turned that around and said, well, why don't you decide? We, you know, give you the patterns, right? You can cut up whatever material you have on hand and then you decide how to put that pack together, right? Basically upleveling their creativity. They become the designer on the floor and creating these really colorful, amazing packs that Cotopaxi is known for.— we use up all of— not all of that, right? It would be nice if we had completely cleaned up the supply chain, but we haven't, right? We're working on that. We use up excess fabric. We prevent that from going into a landfill. And to go full 360, right? It's in the eyes of the factory, this is trash. So gross margin is actually really, really attractive, right? Because we pay cents on the dollar, you know, for that type of material. And so, you know, that— and at the same time, it creates this amazing, like, story of sustainability for our customers. It's unique, one for one. There are no two packs that are exactly alike because there are so many combinations from thread color over zipper pulls over, you know, the different fabric panels. That is just a beautiful example of, you know, approaching a problem that we discovered in the supply chain with humility and with creativity and to do things a little differently. And then built the backend around that, right, working with our factory, obviously, from a production perspective, and then built the backend, technical backend, at Cotopaxi that customers can actually choose, right? When you go to our site and you look at our choice program, you can refresh the page and it will like give you all these different options. So each of those packs, because they're unique, are individually photographed by our team and then uploaded to the site with sort of a backend system that allows us to pick and pack exactly the product that the customer chooses, right? So it's, um, yeah, you know, it's just a beautiful, you know, success story. There was no playbook, right? No 3PL system, no WMS system supports this type of of approach, no factory floor that, you know, from the get-go will necessarily support that. But we— I think that's the advantage of, you know, having no preconceived notions of how things have to be done and being willing to challenge them, right? And then obviously working with strong partners that are able to, you know, help execute on that. And so we've been really fortunate, right, to work with amazing partners on the supply chain side and then obviously, you know, building a team that is excited about those types of opportunities to do things a little differently. Under the goal set, right, of sustainability, environmental and human and social sustainability.

Michael Koenig: That's wild. And it kind of brings a whole different spin on direct-to-consumer, right? We're not talking about a distribution model when I say that, like Dollar Shave or whatever other direct-to-consumers we think about. This is direct relationships between the consumer and the person who's actually making the product. I'm having a tough time thinking about another example of that, just period.

Stephan Jacob: Yeah. Yeah. That, that was part of the, the thought process here, right? Like all the products we consume on a daily basis, it's kind of a black box, right? Like you order them on Amazon and sure, you might see, oh, this came outta China or this came, you know, was made in the US or, you know, whatever. But there's very little, you know, visibility for the human beings behind that, right? And so, yes, that was part of the rationale, like, is there a way for us to celebrate these sort of unsung heroes in our supply chain by elevating them, by profiling them, and giving them a chance to sort of, again, uplevel, right, like their value contribution and then, you know, tell that story to our consumers.

Michael Koenig: And when you think about scale too, if someone were to say to you, hey, we want to do one-of-a-kind products, but we're going to do it at scale, that's quite challenging there. It's almost like an oxymoron. And you guys have, have figured out how to do it. Let's take a step back. Cotopexi is a B Corp. To start, for those listeners that might not be familiar with B Corporations, can you give us a primer?

Stephan Jacob: Sure, I think it's important there are two concepts to distinguish. There is the benefit corp, which is a legal entity similar to an S corp or a C corp, right? And most states here in the US at this point have passed legislation to be able to register as a B corp, or benefit corporation rather. We did that in Delaware, Utah at the time where, you know, the Cotopaxi is based, didn't have benefit corporation legislation yet. They do now. And we were involved in getting that on the books. But that's sort of like step one. And what that does, it basically just says in our articles of incorporation, it is prescribed that we exist to have a positive measurable impact on the world. Now that's a pretty broad concept. And it doesn't— it's not much more specific than that, but it basically protects us as the management team as the executive team from a shareholder coming after us for not exclusively maximizing shareholder value, right? We exist to do good and not just to make money. The two are not necessarily at odds, right? But it's basically— that's sort of the legal part, right, of benefit corporation. And then there is B Corp. B Corp certification is independent from the, you know, what, you know, legal entity you are. It is an independent third-party certification run by B Labs. That in a very stringent and time-consuming process evaluates how you operate as a business around environmental, social sustainability criteria. And we've been— so we're both, we're a benefit corporation legally, and we're also a certified B Corp, have been for many years now. And so, you know, for us, there's a lot of discussion and debate around, you know, ESG these days in general, and also with regard to B Corp. The movement, the organization, the number of corporations that have become certified over the last few years has increased drastically, which from our perspective, that's a great thing. The community is growing. It means more organizations are embracing the notion that they need to look out for stakeholders beyond sort of the traditional Chicago School of Thought thought, Milton Friedman school of thought, traditional stakeholders. And so I'll leave it at that. But that's sort of like the general notion, right? It's a certification that requires businesses to showcase very transparently how they operate, and then evaluates them along criteria and awards points for, you know, sustainable operations.

Michael Koenig: You all have been a B Corp for quite some time, and it is baked into your DNA. We've already talked about that, right? You all talk the talk, you walk the walk. We have megacorps, megacorporations that are starting to get on board with it too. And certainly, as you mentioned, the more the better, right? It becomes fuel for the movement. One that's noteworthy is Nespresso, which is a subsidiary of Nestlé. And what's interesting is that they're a B Corp certified through B Labs, but they're grappling with allegations around poverty-level wages for their farmers and having a massive negative environmental impact through all of their single-use pods, which just end up in the trash. And it seems like they were awarded a B Corp status just by the fact that they're pushing to develop a biodegradable solution, but they haven't achieved it yet, let alone brought it to market. I mean, this seems like a controversial one that could lead to, I mean, some questionable or an erosion of legitimacy for that governing body, B Corp, B Labs. I mean, what are your thoughts as a company that rightfully is a B Corp and has been so for a long time to kind of see that development?

Stephan Jacob: Yeah, yeah, no, it's, it's a great, a great question. We applaud any and all organizations that are genuinely pushing and, and holding themselves accountable to external standards, uh, to do better, right, along environmental sustainability, social sustainability. Becoming certified as a B Corp, if I compare where we are today, we've been a B Corp for many years, becoming certified, when we first, you know, were certified several years ago, if I look at how we were operating at the time, there were no egregious, you know, supply chain issues, child labor, or anything like that. But did we have full visibility and transparency on tier 2, tier 3, right, like where our zipper pulls are coming from? No, we didn't, right. And, and so I don't think that the, the act of getting certified per se means that you're at the pinnacle of sustainability and there's nothing that you can do better and differently. To me, getting involved with this community means that you care for whatever reason. There is economic benefit to that at this point, yes, that is true. But nevertheless, you wouldn't have to do that, right? And so we, again, we applaud and welcome anybody, whether it's B Corp or other bodies, but just any effort to critically evaluate how businesses operate and then commit publicly to doing better. And of course you can argue, well, is the timeframe fast enough, right? Is Nespresso doing enough to figure out how to move away from plastic pods? I don't know, I don't have the insights there, right, to evaluate the speed with which they commit to that. That said, I think what's the alternative, right? Them not doing it and them like, you know, not, you know, trying to do better? I don't know, right? So, you know, Cotopaxi, we're optimists by nature, so you're never going to hear me say a bad word about anybody who's trying to operate, you know, better, including a large multinational conglomerate. And, you know, if anything, and we've had a lot of these discussions around You know, taking an activist stand, taking an aggressive stance against certain issues, closing doors, shutting down conversations. We just don't believe in that, right? We believe in seeking dialogue, in seeking partnership, in applauding efforts that people are making and encouraging it. Okay, let's double down. Great, you made the first step, you got certified. Now let's double down on that., right? And partnering with consumers and with other businesses to continue and accelerate that as opposed to tearing them down for what they're not yet doing right, right? So I think that's how we try to operate because again, we're not perfect, right? Yes, we try our very, very best and we get better every single year, but there's still so many things that we can do better. And so again, we welcome anybody who's joining us on that movement. And, um, and, and for me, again, it's a snapshot, and what matters is the trajectory on which you move, less than that snapshot in time.

Michael Koenig: I love that everything's iterative, and so long as you're signing up, you're signing on to pursue that and develop in the right capacity. And so the more the merrier in that case. I love that view.

Stephan Jacob: Right. And I think as a, as a community, right, like we do need to hold each other accountable. And I think the consumer does that too, right? Like you, there are bad actors, yes, but I think it's the minority. I don't think that most organizations that, you know, make an effort are doing so only to have a, you know, CSR initiative, right, that they can like publish in their, their annual report. I think most organizations genuinely you know, try and they may, you know, it may take some time for momentum to evolve and, you know, leadership, especially in, you know, larger mature organization leadership to come on board. But yeah, I think that again, taking that first step of saying, hey, we are willing to let somebody look under the COVID we're willing to publicly acknowledge, right, where we're at,, and then commit to a path forward. That's better than the alternative in my mind.

Michael Koenig: Absolutely. Let's talk about growing and scaling. You've been in the COO seat for the entire history of the company. You've had an unobstructed view. How have you gone about building that scale? You talked about bringing in great people. What have you learned that you'd wish you'd known sooner? And what are you all doing right? Like, this is a thriving, successful business with people who adore your brand, adore your products. I mean, you all are doing a lot of things right.

Stephan Jacob: Yeah. Yes, we're, we're in a, in a, in a great spot. You know, Cotopaxi is still in the grand scheme of things a tiny organization, right, in terms of reach and revenue. From an awareness perspective, you know, we're at around 10, 11%, right, in unaided awareness, meaning if you just walk up to somebody on the street, and this is for North America, internationally probably even lower the number, 90% of folks have never heard of us, right, which in a way can be disheartening 9 years in. On the other hand, that means growth, right? That means like opportunity for growth. So we're happy with where we're at. The one thing I'm most proud of is how true we were able to stay to our mission, to our, you know, we were reviewing, this is a couple of months back, Davis and I were looking at the pitch deck that we used to raise our seed round, right? So this was before we had sold a single piece of product. We raised money from Forerunner Ventures. Kirsten Green was one of our, like, earliest believers, and we're grateful to her and the team, you know, to this day. So when we pitched her, right, we were looking at the slides that we were using for that, and we had outlined, right, like, what kind of business do we wanna be, right? What do we wanna stand for? The impact that we wanted to have, and that's the thing I'm most proud of. That slide, you could plug into an investor discussion today, and it would still hold, right?, right, in terms of, you know, our grant giving, the way we wanted to manage our supply chain, volunteerism locally here, and just having this like really apparatus, right, and you'd mentioned some of the impact numbers that we were able to achieve last year, so super proud of that. That's not to say that we can't do better, but super proud of that. And I think that has laid the foundation, right, that genuineness, that authenticity for some of the growth that we've seen, the people who who do know, right, about Cotopaxi and engage with us, who, you know, may own a piece of Cotopaxi gear, they really love us, right? If you look at our NPS, that hovers around 80, has for years. So, the people who know, that tribe, right, it's a small tribe, but they really, really love us. And I think that's what we're building on, right? Like, how do we create more awareness more broadly, let more people know about the brand while staying laser-focused, both from a product perspective, product quality, sustainability perspective, innovation, and from an impact perspective, that we don't lose, you know, who we are as a brand. So those are the things I think that we've done right. What can we do better? I think, you know, back of the house in the early days, you focus on the customer, right? You figure out how to ship product, you figure out how to make it right for the customer and don't look at efficiencies, don't look at, okay, is your financial reporting as clean as it needs to be? Are all your like SaaS systems, is data flowing the way it should flow? Are you making the very best decisions, et cetera, right? And I think there were step functions of catch-up, right, that we had to play, right? Where we underinvested into our data and financial integrity, right? So brought in a CFO who had a lot of experience who could help us build that out. Brought in a data team to help us build that out and to get us back on track. We underinvested into our, you know, product development team for a long time. It was a tiny team churning out all the products that you saw for the first like 5, 6, 7 years of the business, and fixed that over the last 2 years to really build out both product design development and just help, you know, uplevel that team for the growing assortment that they're supporting. Distribution is one that we're looking at right now. We outgrew our distribution center about 6 months ago and are playing playing Tetris right now, right, of bringing product in and out. We have some products sitting in a 3PL, we have a gazillion storage trailers because we simply ran out of space, right? And it's super efficient, everything slowed down, we had to like reduce the max speed setting on our forklifts so that they could like navigate through the aisles that are super packed. And so it's those like, you know, not call them failures, right, but like just natural that the business outpaces the back of the house, you know, processes and systems, and you need to like catch up to that. Bringing in amazing talent obviously is a key factor in that, right? At the director, VP, and executive level to really help bring in that expertise when you're growing. You know, last year we grew 90% year over year. You can't afford, right, to sort of like learn as an organization. Some of that expertise needs to come from the outside. And so, We've definitely learned our lessons there on, you know, should we have made that hire a year or two earlier? Yeah, we probably should have, right? But that's, you know, just the reality of balancing a resource-constrained environment that is a startup with the needs to support the growth. So yeah, there's lots to learn for us still. There's lots to, you know, change and fix and uplevel, but it's been a fun journey for sure.

Michael Koenig: Yeah, and you said failures. I mean, these are growing pains. These are premium problems, we like to say. Premium problems to have. In terms of the values that you talked about, sticking that slide into a pitch deck today, and it's still holding true. How do you communicate those values to the company, especially when part of your workforce is remote, part is handling, you know, all of the logistics. How do you unify that employee experience when the work experience itself is quite different?

Stephan Jacob: Yeah, yeah, it is an interesting challenge, right? We made a conscious choice to build out our Impact Program based on best practices with regard to, you know, corporate giving. And that has unfortunately led to a fairly complex program, right? Like to sort of explain how we choose our grantees and how these agreements are structured and, you know, ensuring like the reporting afterwards, et cetera, et cetera. It takes both consumer-facing and internally, it takes a lot longer to explain that than, you know, we give a backpack for every backpack we sell, right? Like much more simple, model, but most likely won't meet the exact needs of community X, Y, and

Michael Koenig: Your co-founder Davis, who we've talked about quite a bit, has transitioned out of the CEO role to chairman of the board. And you have a new CEO that you mentioned, Damien Huang, the former CEO of Eddie Bauer. There's no question that you and Davis share a special bond, not just at as CEO, COO, but also co-founders. What's this transition been like?

Stephan Jacob: Yes, Davis has announced his departure. He will serve a 3-year mission for the church, his faith. He's a member of the Church of Jesus Christ of Latter-day Saints, and will serve a 3-year mission in Brazil. The transition to bring in Damien, that decision was, we actually made much before Davis received that, that calling. Damien has been with us for a good 8 months now, and, um, and, and it was sort of a recognition, you know, as entrepreneurs it can be lonely, right? Um, and to push for growth and ensuring that, you know, we are the best versions of ourselves over time and are the right person in our respective roles over time takes dedicated effort, right? You know, in a more corporate environment, you have, you know, an HR department that will run trainings, and you have mentors, and you have, you know, just a, you know, a pool of talent to draw from, to learn from. And, you know, as startup entrepreneurs, you don't. And so that was a conscious decision early on to A, be very honest with ourselves, what we know and what we don't, and then to fill those areas with amazing talent, to surround ourselves with amazing talents that we can learn from, and that the organization will benefit from, from a growth perspective. And I think Damien, you know, is a team member that is doing exactly that, right? He's bringing a level of maturity to the organization, a level of accountability towards, you know, genuine scale, while being very respectful of the roots of, you know, what made Cotopaxi special, right? And the sort of like value system and embracing that, doubling down on that, um, but at the same time, you know, bringing in you know, all obviously the expertise that he's had, not just from Eddie Bauer, but from Patagonia and The North Face. And there, you know, obviously a slew of other hires that are doing the same thing for us. And so it's been a genuinely, you know, I can say that it's been a net, net, net positive experience, right? It stretches us all. Success looks differently, right? We brought on a growth investor about a year and a half ago with Bain Capital. That sort of reset the clock in terms of what success looks like. And a lot of these, you know, senior hires are part of that, you know, effort. The level of accountability is higher, right? The standards of, you know, what good governance looks like, what, you know, clean operations looks like is very different now than it was 3 years ago. And that means we all need to stretch, right, to live up to that, you know, higher level of expectations. But that's how you grow, right? And I think that that's how you, you know, what is so satisfying, even like 10 years in, I feel as hungry about success and about, you know, growing and scaling this business and the impact that we can have as I did on day zero, right? And it's because of that impetus, right, from, you know, these new folks that have come on. So yeah, great, great relationship. Damien, I think, has brought a tremendous amount of strategic accountability to us as a team. Very, very smart, very product-minded person, ran product for The North Face. That's sort of his forte. And from a distribution channel perspective, very balanced perspective, very data-driven, while at the same time just being an amazingly good guy, right? Like, he fits right in with regard to we want Cotopaxi to be a career highlight. No matter how long you're with us, we want you to like look back and say, man, this was just an amazing place. I grew, I learned, and I was surrounded by incredible people that I loved, you know, working with on a daily basis. And I think he personifies that along with, again, the many other leaders that have come on. So, It's been a really, really positive experience. The flip side to that is, right, and maybe that's where your question was hinting at, is obviously that's a natural progression in many businesses, right? That you bring in the adults at some point, right? And as a founder, I think there is, you, yeah, need to be okay with that, right? And, you know, cannot let your ego stand in the way of that, right? Ryan Holiday wrote Ego Is the Enemy. I don't know if you read that book. I think very spot on for this type of situation where if you think through like what's in the best interest of me personally, right, from a professional development perspective, from a like what's best for the business perspective and for the rest of the team, it's being okay with having these strong voices come on, with having that like these new standards set, you know, that you need to adjust to. And so that's been, again, a very conscious decision to go down that route and to sort of keep those feelings that may creep up in check and say like, hey, this is not helpful, so let's not go there, right?

Michael Koenig: Yeah, it's always fascinating to see how teams develop, especially with companies as they scale, right? And have all these inflection points where it's, You know, I'm sure you've seen the startup graph of excitement and then despair and then growth and then, you know, and you and this escape trajectory. And so to, to map that to how talent comes in and how you level up and how you, you mentioned bringing the adults is, is always interesting to see and, and track. We started talking about recording this episode months ago. It's my fault that it's taking so long, but Ever since we first started talking, I've been traveling around the US and Canada quite a bit, and I have seen people rocking Cotopaxi gear everywhere I've gone, including in the middle of nowhere in Alaska. And I actually started taking pictures of Cotopaxi in the wild, and I was going to send them to you, but then there were too many. My question here is like, what is that like for you as the co-founder and COO to walk around and see your gear on people?

Stephan Jacob: Yeah, it's, it still gives me a kick, right? I mean, obviously there's, certain centers, Utah, California, New York, right, like the big airports, yeah, you see a lot of our product these days, but especially when it's in a more random remote place, right, it's really fun and I still love, you know, those encounters. We often, both Davis and I, will just walk up to somebody, right, like we had, we were in Seoul one of our suppliers, their headquarters is there. And we're walking through the streets. This was a couple years ago. So, you know, we were maybe 5 years in or so. And this guy in front of us is wearing one of our, I think it was a fanny pack. And so we just walk up to him and say like, "Hey dude, like tell us your story. Like how did you come end up with our product?" And obviously then disclosing, right? Yeah, we're the founders, et cetera. And it often leads to these like wonderful encounters of people who tell the brand story, how they discovered the brand, what they like, what they don't, product feedback. And so, yeah, I think hopefully we'll never lose that sort of touch with our consumers that we feel we don't want to or can't have these conversations anymore. It is really, really special. And I think that's one of the benefits of physical product. There are lots of downsides in terms of inventory, working capital, all of that, right? But the benefit is you see your product in the wild, right? You don't have that with a SaaS product, right? You see it in the wild, there's a human being, right, that allows you to sort of build that moment of connection. And especially since Cotopaxi, again, is this like strong values-driven brand. So if you carry our product, oftentimes, I'm not saying like it says who you are as a person necessarily, but there are these tribal moments, right, like of people in the know about the brand. And so that's really special. I really, really enjoy and cherish those, those encounters still.

Michael Koenig: And it's made easier by the fact that Cotopaxi gear is so bright and vibrant and multicolored. So you can really spot those pretty easily. Okay. It's time for my last and favorite question. We've all had those moments as COO where we've seen something just completely off the wall and thought, I never thought I'd see that. Do you have one that you can share with us? I'm sure there are plenty you can't, but if there's one that you can, love to hear about it.

Stephan Jacob: Yeah, I mean, there's a lot of just like fun and great memories from the earliest days, right? I think, you know, we, as you know, our logo is the llama, right? As our logo and our mascot. And we felt really strongly that we needed to find a way to connect with our consumers in person. In person, as opposed to just running ads on Facebook and Google and, you know, whatever. TikTok wasn't around at the time. But, um, so we came up with this idea of the, the Questival, which is this 24-hour outdoor adventure race. Uh, we built a mobile app, super rudimentary, simple mobile app that basically guided people through the experience. They had a list of 300 challenges to choose from, everything from, you know, the challenges would expose them to who we were as a brand, right? So everything from outdoor challenges, hike mountain XY

Michael Koenig: I don't remember exactly.

Stephan Jacob: Okay. And, uh, and so we take these llamas and we, we show up we created packs, very colorful packs, that we would mount on the llamas, and we go to local college campuses, right, here in Utah, BYU, University of Utah, Utah State University, et cetera. And it turns out that campus— normally when you try to, as a brand, as a company, you go on campus, you try to hand out flyers, right, you get shut down immediately, right, by campus security. But it turns out they did not at the time, they might today, At the time, they didn't have a standard operating procedure on how to deal with llamas on campus. So they let us do our thing. We were there for hours. And of course, everybody who walks by is like, "What is happening here? Why are there llamas here?" And it gave us these 10, 15-second moments of telling people about what we were doing, what Cotopaxi was all about, there's this event coming up, here's a flyer, et cetera. We had security taking selfies with the llamas, right? It was just a super fun, organic way of building brand in the early days. And then when event day came, we just couldn't believe it, right? We had people would line up around the block to participate, you know, for the kickoff of the event. We had people who had made their own like t-shirts and hats with Codepoxy logo on it. Our, you know, creative director had in the preparation for the event had made our logo public and said, hey, like if you want to for the event, right, for your team, gear, you can like make your own Cotopaxi gear. And people had, we had the guy who had spray painted the Cotopaxi logo on the hood of his car. And so it was just like this amazing moment on our launch day, right? To see, we had close to 4,500 people show up, to see that enthusiasm for the brand that, you know, on day zero, it just left a mark. We're like, huh, we're onto something here. Like, you know, this notion around building this brand around people, which was a big part of, you know, the launch message as well, is resonating and people are showing up, they're excited about it. And so, yeah, it was like really, really encouraging. And, you know, for the first couple of years we ran these events, you know, all over the country and seeing that level of enthusiasm, you know, in our customer base and having again these like amazing moments. There's this great, you know, video of one of our Salt Lake events, 4,000 people in this gigantic square and we're swearing them in to do good, right? So you have 5,000, 20-year-olds all wearing our packs screaming, "Do good, do good together," right? As they launch into their 24-hour experience. So I think it's those human interactions in the early years that were just really, really special and something that we're now thinking through. How do we keep that alive, right? How do we not become, you know, move away from that and become this anonymous, you know, organization? And so, yeah, Again, face-to-face interactions have been really, really special.

Michael Koenig: That's amazing. The enthusiasm for someone to paint a llama on the car is remarkable. It's like stunning. And then I'm also thinking that most campuses now have a llama rule, right?

Stephan Jacob: They might at this point. I don't know if this still works. Yeah.

Michael Koenig: I mean, I, I'm actually trying to think about that with, with a security guard or campus police being like, radioing in and being like, there's a llama. What do I do? And they're like, what do you mean? There's a lot. There's an actual llama here. Like, like an animal. Yeah, there's an animal. What do I do? I don't know what to do. All right, I guess I'll take a selfie. Like, that to me is hilarious. Well, look, thanks for sharing that and congrats on all the success to you and the team. It's a, it's a massive effort and I love what you all are doing. I've started buying Kodapoxi gear. It's stood up to Alaskan weather, which was great. Thank you so much for joining us, and thank you all for listening. Uh, Stefan, where can people go to keep up with you and Kodapoxi?

Stephan Jacob: Just kodapoxi.com, right? We're on all the social platforms. So yeah, just reach out. If you're— if you happen to be in Utah, stop by, um, at our stores. So we're several stores across, you know, the Intermountain West in Denver and San Francisco, Seattle, etc. So we always love people reaching out and engaging with us. So please don't hesitate. And, you know, stay connected to the brand that way.