Deep dive into Cotapaxi's growth from $55m to $160m in 2 years

To dive into Cotapaxi, we definitely have to start with the founder, Davis Smith. We often hear of mission driven brands, or brands that want to make a ‘difference’. I usually throw my eyes to heaven and say to myself - don’t they all. But, in researching this piece, I have to say that Cotapaxi is different, because the genesis is different.

Davis was brought up in a Mormon household, and he refers a lot to his upbringing in interviews. His Dad was at one stage a volunteer bishop and Davis gives some insight on LinkedIn:

“Dads are amazing. When I was nineteen, I moved to Bolivia for two years to serve as a missionary. My dad, unbeknownst to me, started working nights doing construction projects, framing, hanging sheetrock, and roofing. He was a volunteer bishop at the time, on top of his full-time job, but he started saving up money to surprise me with a small car when I got home. It brings me to tears thinking that every day I was walking down dusty streets of Bolivia my dad was pounding nails into the night for me. For years, every day I drove that car I was filled with love and gratitude for my dad.”

Mormons have a strong sense of community that stems from their doctrine and history. Davis has obviously leant a lot on this during his career which, as well as founding Cotapaxi, has involved founding other eCommerce brands like baby.com.br and pooltables.com, as well as sitting on UN Foundation councils. One could say that he was perfectly positioned to set up a mission first brand - and he did.

Cotapaxi’s mission statement is:

Adventure inspires us to see the world and make it better. That's why we create responsibly made outdoor gear that brings performance, color, and joy to all, and helps us build a movement to support communities around the world. 

Their slogan is ‘Gear for Good’. They also tout ‘TO ACHIEVE OUR MISSION, WE DEDICATE AT LEAST 1% OF OUR REVENUE TO NONPROFITS THAT HELP COMMUNITIES EXPERIENCING POVERTY.’

Before we get into the company - one more fact. Last year, Cotopaxi assisted (directly and indirectly) over 477,000 people living in poverty around the world. This year, after a decade as Cotopaxi founder and CEO, Smith decided to move to Brazil to lead another mission for The Church of Jesus Christ of Latter-day Saints, all as he continues to serve in an active role at Cotopaxi as Chairman, and an ambassador for the company’s global impact work. But not as CEO.

OK. My first exposure to the brand was when I was in Salt Lake City for the Outdoor Retailer show, about seven years ago. I wandered into a small colorful backpack store, which had a funny name. After checking it out for a while, I did what I tend to do and Googled it. That’s when I first learnt about the Andean volcano that shares its name and this outdoors brand that made backpacks from waste pieces of material. Then, I was hooked. In fact, to this day their Del Dia collection of backpacks and bags is made from 100% repurposed fabric and has unique color schemes. Factory workers in the Philippines work with remnants of fabric, which encourages them to be creative with the color combinations for each bag.

The company was incorporated as a B(enefit) Corporation from the start, despite the advice of lawyers and would-be investors, because it was deemed instrumental by Davis. And this was all part of the grand plan. Davis didn’t start a brand so much as a movement.

Davis’ medium page has an interesting article from 2015 (link below if you want to read the whole thing):

“Our investors were pouring over site data related to our new experiential marketing event, Questival, a 24-hour outdoor challenge and scavenger hunt. The numbers looked promising in terms of turning Questival participants into Cotopaxi customers. Customer lifetime value, average order value, and repeat purchase probability were all way up, sometimes as much as 20–30%. The conversion on our Questival site was more than four times higher than a typical e-commerce conversion rate. Put simply, it looked like we had blueprinted a way to get customers to pay us to be acquired.

When we found ourselves launching a new direct-to-consumer outdoor brand in a highly saturated market, we knew we needed to build our brand in a way that had never been done before.”

So, here we have a founder with a genuine mission, but also with a good entrepreneurial nous. Ideas without strategy and tactics remain ideas. And that’s what resonated.

“If someone had pitched me some outdoor gear company, even with a great product, I don’t know that that would have gotten me over the line,” says Kirsten Green, founder and managing partner of Forerunner Ventures, and the first venture capitalist to invest in Cotopaxi, in 2014. “But Davis had such a perfect vision of what he wanted to bring to life. It wasn’t about selling a jacket, it was about creating a movement.”

That movement is accelerating: Cotopaxi, which has been profitable for the past four years, did $160 million in revenue in 2023, up from $105m in 2022 and $55 million three years ago. The up-start has 12 stores in the United States so far and three in Japan, and plans to open seven more in the US this year—with a publicly stated plan to operate 50 total over the next few years, and of course to keep growing its ecommerce business. What’s more, Cotopaxi now employs about 350 people worldwide, and Smith says each new open job listing gets several thousand applicants, which he believes is at least partially due to Cotopaxi’s underlying mission to help people, both in and out of the company. Not bad for a new player in a crowded market. But the mission, or movement, was the secret sauce, Not relying on Google or Meta ads.

Where to in the future for Cotapaxi? Davis has stated that he wants it to become a billion dollar brand. And it could be. Although we do see these brands arrive at nine figures, but scaling into the billion field is a different challenge. Especially as buying market share would go against the movement ethos. So it may ne a little more steady over the next few years. But it’s also interesting to see that there hasn’t been any kind of a post covid slump. Quite the opposite.

All in all I think this brand is a glowing example of what’s possible without Google and Meta ads. And it’s refreshing. Can it be replicated by everyone? Absolutely not. That’s what makes it different. But can elements be transferred? You bet. At CRUA we’ve been thinking about this a lot. We’re fundamentally a crowdfunded company so this is important. Making a difference. We simply wouldn’t be here without community, but we’re far from a movement. So far.

In crowdfunding terms, I think BrewDog’s early days were very much movement driven. I’ll be writing about them soon. Not quite outdoors, so it’s in our Token Crowd newsletter. Feel free to sign-up here. 

And, if you’re move into following the development of a new camping jacket, you can sign-up here. This is a new product that we are launching in October this year, so the process may be of interest.

The ‘cons’ of going D2C with an outdoors brand

I’ve been asked a lot recently if I would commit fully to D2C again if I were to start CRUA from scratch. The answer is probably, as I did try retail and they weren’t interested to the degree we’d require. The truth is not too many big box or local outdoor retailers have the interest or the space to pitch large insulated tents. So that decision was made for me. BUT…I would be a lot smarter.

Firstly, as above, I think that the modern sustainable D2C business is as much about brand as product. As a product guy, that hurts me to say. Think Liquid Death, Cotapaxi (above), GymShark, Chubbies, AllBirds, Warby Parker, Dollar Shave Club….. the list goes. Nothing earth shattering by way of innovation, but brilliant brand work, primarily D2C at the start. Their mission is evident, and people want to be part of that movement. Simple.

I have written before that a lot of people in eCommerce are techies and data scientists, not sales people. So that’s the role of the brand and the management. Don’t lose the wood from the trees by getting bogged down in data and big content creation bills. It can cause paralysis through analysis. Make sure to focus on first principles. Product and brand. That’s where the equity is. Lots of agencies will only be too willing to take your money, with promises of riches. If I get one email from such agencies daily, I get twenty. If it was that easy, eCommerce streets would be paved with gold. They are not.

But it does give you a great opportunity to focus on the customer, and using feedback. That’s gold dust at least. There is a reason that Amazon so carefully manages the customer relationships. And it pays dividends. So, eCommerce is a must, especially in this age, and especially since brick and mortar is finding it tough in many quarters. But don’t expect to throw up a Shopify Store, turn on ads and bingo. If only… The exact steps I would take are a bit detailed for here. But perhaps a different chapter. Let me know in the poll here.

This leads to our last question for today:

Is Amazon only a viable option for outdoors brands?

This is a really interesting proposition, which we touched on before. Firstly, let me define. Amazon only is a slight misnomer. What I mean is all sales efforts aimed at Amazon. That is marketing, shop design, content focus, sales efforts etc.

This is a really interesting concept. The idea is that Amazon takes care of the top of the funnel for you. And you work with the platform to push customers through the funnel. And they have recently launched some retargeting tools into Beta, which will hopefully make this easier. There certainly are Amazon first businesses and brands. It’s something we’re really taking a careful look at. Interestingly, brand is now becoming more important on Amazon, with the evolution of Storefronts and A+ content. This is a big plus. There is a really interesting Forbes article by Jon Elder that goes through some basic ins and outs, albeit a couple of years old. It’s worth a read, link below. Note the time factor. Amazon is an animal all of its own, and many organizations have actual teams of people working on their Amazon accounts. So if you’re in, you’ll need help from experts. And this expertise generally is not cheap.

Some of the tools such as the ones mentioned, and abandoned cart targeting, are definitely helping further. And Amazon obviously knows that. We’ve heard how it’s being used as a review source and search engine by people shopping with intent. So it makes sense in lots of ways. But I do believe you’ll need a USP, and a solid strategy. There are thousands of sellers in your space. How can you stand out?!?

I can plan a deep dive here too, if it would add value. Please vote below.

Links referenced above FYI:

interesting article from 2015: https://davismsmith.medium.com/approaching-zero-how-llamas-and-an-international-scavenger-hunt-are-paving-the-way-to-0-customer-f0d91be150a4

2023 Impact Report: https://www.cotopaxi.com/pages/our-impact?utm_campaign=April2024_ImpactReport&utm_content=Press_Release&utm_medium=referral&utm_source=OPR

Amazon: https://www.forbes.com/sites/jillgriffin/2021/09/20/building-a-10-million-brand-on-amazon/