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Utah Business

Davis Smith, Cotopaxi founder shares his story as a 3x founder in this month's edition of the Founder Series.

How Davis Smith founded Cotopaxi and built one of the most recognizable outdoor brands

The Founder Series is a monthly column by and about Utah founders and how they got to where they are today. Click here to read past articles in the series.

My earliest childhood memories involve seeing people living in some of the most extreme poverty imaginable―I was born in Utah but moved to the Dominican Republic when I was four years old for my father’s job as a contractor for the Church of Jesus Christ of Latter-day Saints. 

We lived there for a few years, before moving to Puerto Rico and then to Ecuador. While my family was far from wealthy, I always felt incredibly fortunate because it seemed we had so much in comparison to so many around us. I remember seeing children that were completely naked on the sides of the street and I remember trying to reconcile why my life was so different from theirs. 

Those experiences outside of the US really shaped me and shaped how I felt about the world, what responsibilities I had, and what I needed to do with my own life. As I entered college, I began exploring a number of different career paths, but at the core of my exploration was always the desire to do something that would help others. While at Brigham Young University, I read a local newspaper article written about Steve and Bette Gibson, a successful entrepreneur and his educator wife who sold their business, moved to the Philippines, and began teaching entrepreneurship skills to help others lift themselves out of poverty.

I was so inspired by the Gibsons’ story, not because they were wealthy or successful entrepreneurs, but because they had found a way to use their respective talents to help others out of poverty. I cut out the article from the newspaper, put it in the front of my clear-faced school binder, and began searching for paths that would allow me to do something similar. 

A few years later, as I was finishing undergrad, I ended up randomly seeing Steve Gibson getting into an elevator at school, so I ran down the hallway and jumped in with him. He had no choice but to talk to me, and kindly invited me to meet with him a few weeks later. I wanted to convince him to expand his nonprofit to Latin America and to allow me to help him do it, and I spent lots of time crafting my pitch. 

He didn’t go for it, and instead encouraged me to become an entrepreneur myself because he felt that would be the best way for me to make a difference in the world. That conversation with Gibson inspired me to explore entrepreneurship to fulfill what I saw as my life’s mission to help others. 

Davis Smith, Cotopaxi founder shares his story as a 3x founder in this month's edition of the Founder Series.

Building (two) family businesses 

After graduating from BYU in 2003, my cousin Kimball Thomas and I began exploring how we might be able to start a business together. I began buying and selling used scuba gear on eBay and found that I could make a few extra bucks using this new marketplace that seemed to perfectly match supply and demand. 

Through a random conversation with a friend who worked at eBay, I ultimately came up with the idea of creating our own brand of pool tables which we could manufacture in China and sell on eBay. Using free internet from an AOL disk I got in the mail, I began tracking via spreadsheet what every pool table listing on eBay sold for. 

Within days, I had a pretty good sense of what a pool table would sell for and what I could manufacture one for. At the time, it seemed obvious that there was an opportunity to sell pool tables via a direct-to-consumer method online, so we borrowed about $20,000 from anyone who would give it to us―a few college friends, our grandmother, etc.―and placed our first order of pool tables. 

The business turned a profit almost instantly―we did $1 million in revenue our first year in business. We then opened a brick-and-mortar store in Salt Lake City and expanded to a number of other cities along the East Coast. Eventually my parents and in-laws mortgaged their homes to help us further finance our inventory. By 2008, we were pulling in about $6 million in revenue and had about 25 employees. 

Despite the early success of our business, something was missing―we needed a deeper purpose and something felt empty without it. All our device passwords referred to helping others, but I didn’t know how to tie this business to a social mission. Kimball and I always dreamed about going to business school, and now the timing finally felt right. 

We both had bigger ambitions and felt if we didn’t go back to school then, we might never do it. We were fortunate to be admitted to our dream schools, and Kimball went to Harvard while I went to Wharton to pursue a dual master’s degree―an MBA and an MA in international studies, focused on Latin America. 

We ran while going to school, but eventually sold it to a gentleman who owned about a dozen small e-commerce businesses. Like the Spanish explorers of old, we “burned our ship” so that we’d be 100 percent focused on our future project―hopefully something bigger, more exciting, and more fulfilling.

While in business school, a number of my closest friends from Brazil began telling me about how difficult and expensive it was to buy baby products in Brazil. I had a friend, another Wharton alum, who had started and sold it to Amazon for half a billion dollars, so the idea just clicked… what if we started an e-commerce retailer of baby products in Brazil? 

Within six months we had raised $4.3 million (while in school), bought the domain, and started flying down to Brazil on weekends between classes. After graduation, Kimball and I moved our families to Brazil, started learning Portuguese, and began building our business. 

Building a business in Brazil turned out to be much more challenging than in the US. Corruption was commonplace and we were committed to doing things right; not paying bribes and paying our taxes, which turned out to be very rare and incredibly challenging. It took us six months to get a business license due to the local bureaucracies. grew extremely fast. Within months of our company’s inception, we had one of Brazil’s best-known celebrities, Angelica join our team as our “CMO: Chief Mommy Officer. 18 months later we raised over $40 million and had 300 employees. 

The extreme growth strained the business and my relationship with Kimball. We had different ideas of what the business should look like and very different leadership styles. I remember receiving feedback from him that I needed to be better at holding people accountable if I wanted to be a successful leader. He was right―and this is something I’ve had to work on a lot since―but my relationship with Kimball eventually became too strained, and I decided that the business didn’t need us both. I eventually made the very painful decision to walk away. That professional and personal break-up with Kimball continues to be one of the most painful, sad moments of my life. 

The whole experience ended up being a huge lesson in leadership for me; how to correctly build teams and bring in experts. Looking back now, I would tell anyone else in a similar situation to first focus on identifying an opportunity before building your team or finding your co-founder. Once you have your idea, then find the people needed to bring it to life. Identify experts that can help you tackle the big problem you’re trying to solve. Those early team members likely won’t be your family member or closest friend. 

Davis Smith, Cotopaxi founder shares his story as a 3x founder in this month's edition of the Founder Series.

Founding Cotopaxi 

I made the decision to leave without a specific plan in mind, but I knew without a doubt that I wanted to use my talents to help people. I began exploring ideas around social impact―should I start a nonprofit like Steve Gibson? Should I go teach entrepreneurship at a university? 

I wasn’t sure I had it in me to start something new again. It seemed overwhelming and I was scared. What if I started something again and it failed? What would my friends and family say about me? I thought that maybe the only reason I’d seen success was because of my partnership with Kimball, who was incredibly bright and charismatic. 

One sleepless night, I laid in bed pondering how I might “change somebody’s life.” It was my ambitious New Year’s resolution, but I hadn’t yet figured out how to do it―it was one more thing that added to my discouragement in early 2013. 

As I laid in bed one night, a few ideas came to my mind. I rolled over and typed the ideas into my phone with the hope that it would allow me to go to sleep and I could pick up on those ideas in the morning. But the ideas kept coming, and I eventually got out of bed, went out to my living room, and sat on the couch with my computer. I ended up spending the next 36 hours―the entire night, the next day, and the following night―on the couch working on my idea.

During that time, I experienced something I’d never experienced before, I felt completely inspired and directed. The business model was clear: I needed to build an outdoor brand that used its profits to sustainably alleviate poverty. I came up with the name Cotopaxi (named after the volcano near my childhood home in Quito, Ecuador), our slogan Gear for Good, the llama in our logo, and the early concept for what would be later known as the Questival race.

I’d always had a love of the outdoors, and I believed there was an opportunity to build a brand for a younger generation who shared my passion for helping people and making the world a better place. I wanted to prove that capitalism could be done better. Suddenly, the fear and hesitancy I had felt about starting something new began to dissipate. Don’t get me wrong, I was still afraid―I continued to worry about failure and what people might think of me if my business didn’t succeed―but I had found a new confidence that this was the path I was intended to be on. 

Davis Smith, Cotopaxi founder shares his story as a 3x founder in this month's edition of the Founder Series.

It was almost as if everything I had done before this had simply been in preparation for Cotopaxi.   

I finally had the “idea” behind my next project, but now I needed the team members to make it happen because I knew I couldn’t do this on my own. Committed to building a team of world-class experts, I started reaching out to potential teammates through LinkedIn and Skype, sharing my vision of what this brand needed to stand for, of the opportunity to help fight extreme poverty, and to create a brand that could change capitalism. 

Fortunately, people like CJ Whitaker, Sam Ricks, Cheri Sanguinetti, and Jordan Allgood believed in that vision and took the risk to help me get Cotopaxi started. One of my earliest strokes of luck (before selling a single product) was getting Stephan Jacob to join our team. He was a business school classmate who had just sold his first business and was on the hunt for his next project. 

Stephan and I had done our thesis work together in the Philippines studying Steve Gibson’s entrepreneurship school, so we shared a passion for entrepreneurship and also for social impact. Within 24 hours of talking, he committed to drop everything and move from Germany to Salt Lake City to build the company with me. Having Stephan as my teammate is one of the greatest gifts I’ve received as a founder.  

Now we needed to find funding. I first decided to pitch impact investors that might be more open to invest in a B-Corp committed to giving away money long before we ever made any. I was instantly rejected by every impact investor I met with―they couldn’t understand how I could be raising money equipped with only an idea and a PowerPoint, they wanted to see a long history of traction. They also didn’t understand how I was going to have impact if I wasn’t building the business in India or on the African continent. 

With no other options, I decided to go pitch venture capitalists. After a lot of rejection, I eventually found an investor, Kirsten Green (the prolific Silicon Valley investor behind Warby Parker, Bonobos, Dollar Shave Club, and Birch Box) who believed in our vision and committed to lead our $3 million seed round. A couple local Utah VC’s, Kickstart Fund, and Peterson Ventures also joined the round. 

“You only launch once,” was a piece of advice constantly echoing in my mind during those early days. I had developed a friendship with the founders of Warby Parker while we were students in business school and one of them had given me this advice when I told him about my plans for Cotopaxi. I had already been playing around with the idea of using an adventure scavenger race, mimicking a race I had created while I was at Wharton where sixty classmates of mine raced in teams from Belize to Panama, crossing every border by foot and completing challenges along the way: helping a local entrepreneur, supporting a small business, picking up litter in a city center, sandboarding down a volcano in Nicaragua, surfing in El Salvador, and completing hundreds of other challenges. I knew that “experiences” rather than “things” would connect our brand with our target customer for Cotopaxi, so the Questival was born to help launch the brand. 

Davis Smith, Cotopaxi founder shares his story as a 3x founder in this month's edition of the Founder Series.

To market the launch idea, we bought two llamas through online classifieds and named them Coto and Paxi. We took Coto and Paxi onto college campuses around Utah and while students took selfies with our llamas, we told them about the Questival and about this new outdoor brand called Cotopaxi. Two weeks later we had 5,000 people show up to the Questival and we had 30,000 social media posts of people wearing our backpacks, spending time in the outdoors, and giving back in their communities. The Cotopaxi brand was launched on Instagram via Questival, and we didn’t have to pay any influencers for it―our event participants became our greatest evangelists and influencers. 

While Cotopaxi has been an unexpected success over the last seven years, I am most proud of how we’ve kept people at the forefront of everything that we do, just how it was intended from the beginning. Every year we embed our impact work deeper into the brand and business, from donating to nonprofits focused on education, healthcare, and livelihood training, to also remaining committed to driving an impact throughout our supply chain. 

For example, we have a factory where we’ve built a community garden so that workers can bring fresh fruits and vegetables back home. We have a free trade factory partner where workers get paid an extra $2 per hour and the funds are then spent at the discretion of a committee of employees―so far they’ve used the money for English classes and computers for their children. We work with refugees in Salt Lake City where we’ve created a Job Club together with the IRC to support refugees to get their first job at Cotopaxi upon resettlement. When you buy a Cotopaxi product, you’re contributing to real impact around the world. 

Lastly, our product is made differently than any other outdoor brand. Last year, 94 percent of our products sold were made of remnant, recycled, or responsibly made material (what we call the “three R’s). You likely identify Cotopaxi as the company with the bright-colored jackets and bags, but most of those materials were leftover materials from other outdoor brands who share our factories. We’re committed to 100 percent of our products hitting one of the “three R’s” by the end of 2022. 

Looking forward

My hope for Cotopaxi is to change the way we see capitalism and business. It would be nice to become the next iconic outdoor brand, but selling outdoor gear is simply a means to an end. My goal isn’t to sell great outdoor gear, it’s to fight extreme poverty. We exist to do good, and we sell some of the best outdoor gear around in order to fund our impact work, not the other way around. We’re building a global brand because the values of our brand resonate with people across the world―because doing good is a core value that speaks to all of us, no matter which language we speak or the color of our skin. 

My personal mission to “Do Good” extends beyond Cotopaxi. In a full-circle development, I recently bought back, more than a decade after selling it, and I’m converting it into a Benefit Corporation. The new entity is called Games For Good, and we are extending beyond the billiards space and into home recreation and other games that bring family and friends together.

We’ll be using profits from Games for Good to support poverty alleviation while building the most sustainable product in our industry. Though I plan to hire a CEO to manage and scale the business, I’ll sit on the board and influence the vision of the company. It’s a special moment as I get a second chance to make my first business what I’d always hoped it would be: A business that positively impacts the world. 

Davis Smith, Cotopaxi founder shares his story as a 3x founder in this month's edition of the Founder Series.

Davis Smith is the founder of Cotopaxi.