The Exchanges

Q So Smith, can I, if you're able to share, I don't mean to pry, I'm just intrigued. What do they stand for?

A So I'll talk about a few of them. So S is, is being selfless and it's around creating a culture where we, where we think about others before ourselves. And so, you know, right now it's December 12th. We're planning right now with our family, a visit on Christmas day, uh, December 25th. To go visit an orphanage, and our kids are using the money that they've been saving to go buy some gifts, and it's less about what are we going to get for Christmas, uh, and more about how can we go help others, and so we're always thinking of activities and creating all these rituals and traditions around being selfless. I is, is for intellect. It's this idea that we love learning, and so one thing that I realized this is, you know, years ago before we identified these values, I saw our two girls that they would love Watching this TV show and I'd come home from work and they'd be watching this TV show and I'd be like, why aren't you reading a book instead of watching the show? And I'd say that all the time and it wouldn't change their behavior. It wasn't until we became more intentional and we started creating this traditional, this tradition where on Sunday afternoons, uh, when we got home from church, we'd go into our, into my, uh, into our bedroom and, uh, we had books and we had snacks and blankets and pillows and the whole family, we'd all get together and we'd all read a book for an hour. …

AI assessment note: “S is, is being selfless and it's around creating a culture”

Q Can I ask, I heard that COVID was actually a time when you grew the company to new heights. And during the pandemic, you excelled, new products, new company rituals. What did you do and what worked?

A Yeah, COVID was an interesting time for us. Uh, in some ways it was what allowed us to break out. Although it wasn't interesting, it wasn't the highest growth. Our slowest growth year in the last 10 years was actually 20 20. We grew 40% that year, but, um, we were profitable, significantly profitable, and it was because we tightened our belt in such a big way. Uh, we didn't lay people off, uh, but we all rallied together in a big way. And I just told the team, look, I don't want to do layoffs. I'm going to take a big pay cut. The executive team is going to take a big pay cut. We're going to ask the entire team to take a 10% pay cut for three months and then a five percent pay cut for the rest of the year. Let's all experience a little bit of pain together to save everyone's jobs and let's rally together. And, uh, we doubled down on our social mission. We gave three percent of our revenues that year to impact work. You know, and everyone else would have said, hey, let's not give money this year. Like we don't have the money to give. It's, it's, it's a scary time. We instead, from the, from day one of the pandemic, I committed to our team that we would not waiver on our impact work, and so we rallied together and we innovated. We started selling masks, face masks, which was, uh, outside of the scope of what we normally did, but we sold a lot of them, and it, it really kind of sav…

AI assessment note: “We started selling masks, face masks... and it really kind of saved our business.”

Q I, I, I absolutely agree it does. So you get out of college, and you start, I, I heard this from your investors, selling scuba gear, and then snooker tables. You're like, okay, you're like, cool, entrepreneurial start, but to the tune of six million dollars a year, how did that happen, just? Take me to that.

A Yeah. So, you know, I, I was in college and I met, uh, a man named Steve Gibson. He was this, he was, uh, an adjunct professor at the university, Brigham Young University, where I'd gone to undergrad. He was a successful entrepreneur and had also started. And once he sold his business, he had started a nonprofit in the Philippines. And, uh, I admired this man because he was helping pull people out of poverty. I wanted to work for him. I thought, you know, I'm going to work in the nonprofit world. I'm going to work for this guy. I wanted to expand to Latin America. And I, I had this chance to sit down in his office and talk with him. And he instead convinced me that I shouldn't do that, that I should really, if I wanted to make a difference in the world, that I should become an entrepreneur. So that's kind of this, it totally, totally shifted the way I was thinking about my role in the world and how I could make a difference. And so I started brainstorming ideas. One of the ideas that came to my head was, uh, you know, I started selling dive gear, scuba gear on eBay. Just because I love diving and I had no money, but it was like, hey, if I could maybe buy and sell some dive gear here, maybe I can make enough money to go on a trip and go diving somewhere. And I kind of discovered this platform of eBay, this market, this, this amazing marketplace. Like it was like the invisible ha…

AI assessment note: “I started selling dive gear, scuba gear on eBay. Just because I love diving”

Q Do you just contact, you know, outdoor products, China again?

A You know, I mentioned earlier about if you're going to go start a business, go try to find someone that can help you solve a specific problem. So I knew I needed to start this outdoor brand. So I went on LinkedIn, you know, I was in Brazil at the time. I, I, I just go do these LinkedIn searches for I made a list of like, 20 different brands that I really admired in the outdoor space. And I started doing searches for designers that had worked for these brands. And I found a few designers, a woman that had worked for a number of these brands before that did apparel. This amazing guy that had done a bunch of packs and gear. So CJ Whittaker and Cherie Sanguinetti. And I reached out to them on LinkedIn. I just said, Hey, I want to connect with you. I'm an entrepreneur. I built a few businesses in the past, but I have this vision for building this outdoor brand. That's about fighting poverty. And I'm wondering if you jump on a call with me, we jumped on a Skype call back then this, we had the Skype call and I just kind of sold them on this vision and both of them said I'm in. Uh, so that's how we started. And because they had relationships with factories already, we flew out to these places with the Philippines and other places where we make our product. And, uh, we had relationships already in these because they had relationships. These factories that normally wouldn't have given us…

AI assessment note: “because they had relationships with factories already, we flew out to these places”

Q Can I ask, I heard that COVID was actually a time when you grew the company to new heights. And during the pandemic, you excelled, new products, new company rituals. What did you do and what worked?

A Yeah, COVID was an interesting time for us. Uh, in some ways it was what allowed us to break out. Although it wasn't interesting, it wasn't the highest growth. Our slowest growth year in the last 10 years was actually 20 20. We grew 40% that year, but, um, we were profitable, significantly profitable, and it was because we tightened our belt in such a big way. Uh, we didn't lay people off, uh, but we all rallied together in a big way. And I just told the team, look, I don't want to do layoffs. I'm going to take a big pay cut. The executive team is going to take a big pay cut. We're going to ask the entire team to take a 10% pay cut for three months and then a five percent pay cut for the rest of the year. Let's all experience a little bit of pain together to save everyone's jobs and let's rally together. And, uh, we doubled down on our social mission. We gave three percent of our revenues that year to impact work. You know, and everyone else would have said, hey, let's not give money this year. Like we don't have the money to give. It's, it's, it's a scary time. We instead, from the, from day one of the pandemic, I committed to our team that we would not waiver on our impact work, and so we rallied together and we innovated. We started selling masks, face masks, which was, uh, outside of the scope of what we normally did, but we sold a lot of them, and it, it really kind of sav…

AI assessment note: “We started selling masks, face masks... and it really kind of saved our business.”

Q Because I, I speak to many, you know, billionaires who have philanthropic arms of family offices, and all of them say actually that it's so much harder to give than it is to make, which, you know, sounds like the thing a billionaire would say, um, but, um, how do you think about, like, effective giving, and do you have to own the vertical Of giving entirely to be effective?

A No. In fact, I'd say you shouldn't own the vertical entirely to give effectively. I think you specialize in what you're great at. And as a, as a brand, we specialize in building a great brand and building great product. And, uh, we then identify the world's best, uh, nonprofits, the world, you know, the, the nonprofits that are out in the, in the world fighting poverty, uh, that are focused on the areas that we believe are really critically important education, healthcare, Livelihood training. Those three pillars we believe are inextricably linked to poverty alleviation. We're not going to go start a nonprofit that's go solving, that's solving education challenges for refugee, you know, Venezuelan refugees in, in Ecuador. Um, but we can find a nonprofit that specializes in that, and we can go donate to them and support the work that they have, and we can go help tell their story and the amazing work that they're doing. And so, you know, this is, I've definitely learned a lot of lessons about giving when we first started the business, uh, I was leading our impact work, not because I was an expert, just because, uh, I was passionate about it and we didn't have someone that had more experience. And so I chose a few nonprofits that I cared about to go support. One of them was, uh, was a little orphanage in Bolivia. And, uh, we, uh, what I found out about, about 10 months into the b…

AI assessment note: “No. In fact, I'd say you shouldn't own the vertical entirely to give effectively.”

Q So Smith, can I, if you're able to share, I don't mean to pry, I'm just intrigued. What do they stand for?

A So I'll talk about a few of them. So S is, is being selfless and it's around creating a culture where we, where we think about others before ourselves. And so, you know, right now it's December 12th. We're planning right now with our family, a visit on Christmas day, uh, December 25th. To go visit an orphanage, and our kids are using the money that they've been saving to go buy some gifts, and it's less about what are we going to get for Christmas, uh, and more about how can we go help others, and so we're always thinking of activities and creating all these rituals and traditions around being selfless. I is, is for intellect. It's this idea that we love learning, and so one thing that I realized this is, you know, years ago before we identified these values, I saw our two girls that they would love Watching this TV show and I'd come home from work and they'd be watching this TV show and I'd be like, why aren't you reading a book instead of watching the show? And I'd say that all the time and it wouldn't change their behavior. It wasn't until we became more intentional and we started creating this traditional, this tradition where on Sunday afternoons, uh, when we got home from church, we'd go into our, into my, uh, into our bedroom and, uh, we had books and we had snacks and blankets and pillows and the whole family, we'd all get together and we'd all read a book for an hour. …

AI assessment note: “So S is, is being selfless... I is, is for intellect.”

Q Is there any time when doing the right thing and the business being better are at odds, be it margin optimization, be it letting go of people, whatever that may be. Is there ever a time when doing the right thing and the business are at odds?

A Of, I mean, of course, of course, uh, and I think in the short term, yes, uh, maybe, you know, one quick example, you know, when I was in Brazil, uh, I, uh, was living in Sao Paulo, twenty million people, very busy city. Traffic is crazy. It would take an hour and a half to two hours to commute, uh, eight kilometers, five miles. I wanted to see my family, you know, I had two little girls at home and, uh, I wanted to be a great dad. And so I started, I decided I was going to leave the office at, at, Uh, five, five 30 every single day, which in Brazil was unheard of. You know, most people would work till seven or eight or nine, especially in a startup. It's like, what are you doing leaving at five or five 30? And I actually had one of our investors say, you know, Davis, if you leave at that time, the entire team's going to leave at that time. And I said, you know, I'm great with that. I want these people to go home and balance their family life and this work life. And, uh, you know, in the end, what ended up happening was people did leave when I left. And we also ended up recruiting some of the most amazing female talent in the country because we started having this, a huge number of female executives that heard about this and said, you know what? I want to be a mom too. I have kids at home and I don't want to just work till nine PM. And this is a place that respects families. An…

AI assessment note: “of course, of course, uh, and I think in the short term, yes”

Q Can I ask, does the, and I, I had this beautiful schedule, but it's far too interesting. Does the purpose ever waver? And I ask because every entrepreneur starts off with that gung-ho mission purpose, and sometimes you're just not feeling it. Do you ever not feel that purpose and it wavers?

A You know, I think one of the things I've, uh, I've had since I was a child was a very clear sense of purpose and mission. And so I can honestly say like, that's never wavered. Uh, even from when I started my very first business, that pool table business, all of our passwords were connected to social impact because that was what was in my head. That's what I wanted to do. The business had no social impact. I didn't know how to like meld, like doing good and having a business, but that was my desire. That was the deepest yearning Of my soul was to go find a way to help people. And so over time, it took me about 10 years as an entrepreneur to get there, but I ended up finding a way to, to kind of marry business and purpose in one. And so, yeah, it's, uh, it's something I've always had a very, you know, very clearly in my head of what I wanted to do.

AI assessment note: “I can honestly say like, that's never wavered.”

Q And what did that teach you about partnerships? A lot of founders are obviously co-founders. What did it teach you about partnerships? And what do you advise founders in partnerships today?

A We often hear that you shouldn't start a business with a family member. And, uh, you know, I, I think that's wise advice. Maybe the lesson I learned was, and I did something differently when I started my, the following business, which was instead of just choosing my partner from the beginning and saying, okay, hey, let's go work together. Let's go find something to do together. Instead, I tell entrepreneurs, why don't you go identify your idea? Why don't you go figure out what you want to go build and then go find the best person in the world to go help you solve that problem. It probably is not going to be your cousin. It probably isn't going to be your brother or your best friend. And so, um, that's the advice I'd give is go find the right person that has the right skillset that can help you go solve the problem versus someone that you think you'd really love working with because, um, you know, it can create a lot of pain and especially with a family member. It's like, I can't just walk away. You know, we're, we're related. We have, you know, we have family reunions and I, and I care for him. And so, uh, it creates, it creates a lot of pain. I ended up deciding to leave. I decided to leave Brazil and it was very painful. Our investors had invested a lot of money. At that point, we'd raised around forty million dollars in venture capital.

AI assessment note: “I tell entrepreneurs, why don't you go identify your idea?”

Q Because I, I speak to many, you know, billionaires who have philanthropic arms of family offices, and all of them say actually that it's so much harder to give than it is to make, which, you know, sounds like the thing a billionaire would say, um, but, um, how do you think about, like, effective giving, and do you have to own the vertical Of giving entirely to be effective?

A No. In fact, I'd say you shouldn't own the vertical entirely to give effectively. I think you specialize in what you're great at. And as a, as a brand, we specialize in building a great brand and building great product. And, uh, we then identify the world's best, uh, nonprofits, the world, you know, the, the nonprofits that are out in the, in the world fighting poverty, uh, that are focused on the areas that we believe are really critically important education, healthcare, Livelihood training. Those three pillars we believe are inextricably linked to poverty alleviation. We're not going to go start a nonprofit that's go solving, that's solving education challenges for refugee, you know, Venezuelan refugees in, in Ecuador. Um, but we can find a nonprofit that specializes in that, and we can go donate to them and support the work that they have, and we can go help tell their story and the amazing work that they're doing. And so, you know, this is, I've definitely learned a lot of lessons about giving when we first started the business, uh, I was leading our impact work, not because I was an expert, just because, uh, I was passionate about it and we didn't have someone that had more experience. And so I chose a few nonprofits that I cared about to go support. One of them was, uh, was a little orphanage in Bolivia. And, uh, we, uh, what I found out about, about 10 months into the b…

AI assessment note: “No. In fact, I'd say you shouldn't own the vertical entirely to give effectively.”

Q to you all day. I want to move into a quick fire round. So I say a short statement, having just peppered you with questions about your marriage changing with children, which was entirely on the cards. Uh, I'd love to, I'd love to start with what piece of content would you most recommend someone engaged with today? If they were to pick up anything, video, Movie, book, passage, whatever.

A The content that I've been most into the last, I'd say six months. It's interesting because I wouldn't have said this six months ago. Um, and it's very specific to the role I'm in today. And many people that are gonna listen to this are not religious. And I'd say that's, that's great. The parables of Jesus Christ. Mind melting for me. I've been studying them deeply the last six months. They are so deep. They are so profound. And there's so much meaning in them. That's, that's beyond the surface. And I found like, as I study those parables, that content, this is some of the greatest content that's ever been created in 2000 years. I find so much clarity and so much purpose and understanding of how I can become a better person and why it matters. And so I know this is old. That's old school advice. It's not as exciting as saying, hey, go follow this one podcast or go read this one thing. But, uh, you know, for me, just given in the phase that I'm in right now, I'd say it's been the, some of the best content that's ever been created.

AI assessment note: “The parables of Jesus Christ. Mind melting for me.”

Q Does this mean that you shouldn't raise venture capital? If you shouldn't be chasing wealth, should you be raising venture capital?

A Uh, yeah, you can absolutely raise venture capital. I mean, I think, you know, there's, there's different, uh, there's obviously different ways to build businesses. And, you know, I have the pool table business, which is a longer story there. We sold it. I actually bought it back a few years ago. So I actually own the business still. Uh, the pool table business. It's quite a bit bigger than it was, uh, you know, back when, you know, back when I went to college, when I went to grad school, but, you know, it's a relatively small business compared to Cotopaxi, but, uh, we converted to a benefit corporation and we're using the profits to fight poverty as well. So, uh, you know, I found a lot of, a lot of joy in that. I've had two very different experiences. One business where I, I own outright and, uh, you know, it's bootstrapped. And then another business where we've raised venture capital has grown very, very quickly. And I have all sorts of different pressures, uh, external pressures that don't exist with the pool table business. And so, uh, there's different ways. There's not one way that's right or wrong.

AI assessment note: “yeah, you can absolutely raise venture capital”

Q Is there any time when doing the right thing and the business being better are at odds, be it margin optimization, be it letting go of people, whatever that may be. Is there ever a time when doing the right thing and the business are at odds?

A Of, I mean, of course, of course, uh, and I think in the short term, yes, uh, maybe, you know, one quick example, you know, when I was in Brazil, uh, I, uh, was living in Sao Paulo, twenty million people, very busy city. Traffic is crazy. It would take an hour and a half to two hours to commute, uh, eight kilometers, five miles. I wanted to see my family, you know, I had two little girls at home and, uh, I wanted to be a great dad. And so I started, I decided I was going to leave the office at, at, Uh, five, five 30 every single day, which in Brazil was unheard of. You know, most people would work till seven or eight or nine, especially in a startup. It's like, what are you doing leaving at five or five 30? And I actually had one of our investors say, you know, Davis, if you leave at that time, the entire team's going to leave at that time. And I said, you know, I'm great with that. I want these people to go home and balance their family life and this work life. And, uh, you know, in the end, what ended up happening was people did leave when I left. And we also ended up recruiting some of the most amazing female talent in the country because we started having this, a huge number of female executives that heard about this and said, you know what? I want to be a mom too. I have kids at home and I don't want to just work till nine PM. And this is a place that respects families. An…

AI assessment note: “Of, I mean, of course, of course, uh, and I think in the short term, yes”

Q Tell me, you raised millions in venture funding there. What happened?

A You know, this is a, this is a wild story. So we're in school. We raised like four and a half million dollars based on a PowerPoint. We'd had the success to build off of, of this pool table business, right? And so people saw these two young, you know, ambitious kids that had, you know, gone to great schools and that had built a business previously. We moved down to Brazil. We launched the business and it, it kind of catches fire. I mean, things are going hot. I mean, we grow to like 300 employees in like 18 months. And so it's ends up being kind of a darling of the, the startup story in Brazil. And we were the startup of the year in 2012. A lot of exciting growth and, uh, lots of venture capital. First time we'd raised venture capital, it ends up being a very tragic story, Harry. I mean, it was, uh, my, basically my cousin and I, we were like brothers, closer than brothers. I mean, we did everything together. We lived on the same street in the U S we'd gone to school at the same time. You know, we went to Brazil and started this business together and our relationship fell apart. Honestly, it's like, it's been, It's been over a decade and it's like the saddest thing in my life.

AI assessment note: “we grow to like 300 employees in like 18 months... our relationship fell apart.”

Q Ok, so then we, we decide, you know what, he can run that. How does Cotopaxi come to be? How does like, hey, I'm gonna challenge Patagonia with this new innovative brand?

A You know, I, I'd say this wasn't just something, in some ways it's interesting because it actually happened over like a 36 hour period. And at the same time, it's something that took, it was like a lifetime of experiences building up into this, you know, this culmination experience. I was basically in bed in Brazil and I'm, I'm so unhappy. You know, I'm feeling I'm depressed. I'm, I'm so sad about the loss of this relationship. Um, I'm not happy. And I'm thinking about this desire I've had my entire life to find a way to help others. And I'd made a new year's resolution that year, and I had it on a post-it note in the bathroom on the mirror that I wanted to change somebody's life. And I was feeling so discouraged that I'd spent 10 years as an entrepreneur. I had not yet figured out how to make a difference in the world. I had this goal. It's like, okay, I'm going to make this small goal. Just one person. I don't need to change the world. Just one person. And it'd been like four and a half months and I still hadn't done anything. And I was like, what am I doing with my life? Like, I just don't feel fulfilled. I'm not happy. And, uh, as I laid in bed, I just started having ideas kind of come to my head, um, about what I could do next. Uh, I got out of bed. I sat on the couch all night the next day and the entire following night. So, 36 hours on this couch. And during that period,…

AI assessment note: “during that period... I basically had the entire idea for Cotopaxi.”

Q Was that it here though? Or was it the, the calling? Do you know what I mean?

A You know, I would say it's a little bit of both. Um, you know, they, they kind of coincided simultaneously. This is one of the advantages of having a great board is they help you see blind spots. And I, you know, my board, uh, was so proud of the work that I'd done in building this brand. And at the same time, I was started hearing from board members saying, hey, we think you'd benefit from having a right hand, a company president that had done this before, that had taken a business from a hundred and fifty million in revenue to a billion and a half in revenue. You've never done that, Davis. And they're right. I had never done that. I had no idea how to do that. And so, uh, I started thinking a lot about, okay, what kind of.

AI assessment note: “I would say it's a little bit of both.”

Q question. Do you think Patagonia have lost their roots in terms of that outdoors nature? Now they're the VC parodot, like parody of, you know, corporate jackets and their corporate jackets all over the world. I'm sure a lot of their revenues in corporate jacketing and the like, and it's probably five percent that is outdoors. Do you think they've lost their way? And do you worry about losing yours?

A You know, uh, I don't know that. I don't know if Patagonia has lost their way. I would probably say no. Uh, I don't think they have. Um, I think they've stayed true to their mission. So like incredibly well over decades. And in fact, this last move, I think by Yvonne Chouinard was brilliant, uh, in a way to protect the brand and say, Hey, we don't care about getting the most money out of this business, uh, for me or for shareholders. Uh, I think they've been very true to their mission. Um, you know, the cool thing about Cotopaxi is like our mission has always been about our purpose. It's not about, uh, being the, the top of the mountain, the most hardcore, Uh, outdoor brand. Yes, we make incredible outdoor gear. Um, I, I think the one thing that I'd love to do better though, uh, than what I've seen Patagonia do, uh, and this is coming from someone with deep admiration for Yvonne Chouinard and for Patagonia. I guess if there was a criticism I'd have is why after 40 years was he the only shareholder? I fundamentally disagree with this. Uh, I'm proud that so many of our, we have people that work in our warehouse, uh, that lead our retail store operations that have equity. I just, I believe that wealth needs to be better distributed. And, uh, I actually think it's a win for, for Cotabaxi to, like, I don't want to give the company away to a, to a foundation. I actually want to creat…

AI assessment note: “I don't know if Patagonia has lost their way. I would probably say no.”

Q What do you know now that you wish you'd known when you became a father for the first time? You can call yourself up and say, Hey Davis, you should know this.

A You know, I think, uh, I've gotten better and better at, uh, I kind of look at it as a matrix and it's, uh, you have love and expectations. You have to have so much love, but also high expectations. I need to balance those things. And so I think, um, sometimes as a parent, Uh, you're tempted to just show so much love, but you're, you're not willing to correct. You're not willing to push them to be the very best they can be. Or sometimes as a parent, you're too, you're, you're criticizing, you're too critical of a child, and they don't know that how much you love them. And so I think this constant balance, and I think I'm getting better and better at it, which is like, they have to know how much you adore them, how much you love them. And when they know that, and then you give Instruction on how they can be better. They're a lot more willing to listen to it, especially with teenagers. So that's, uh, that's something I wish I would have better understood, um, you know, as a, as a young parent.

AI assessment note: “that's something I wish I would have better understood, um, you know, as a young parent.”

Q Do you worry about public market valuations of consumer brands just crushing your potential? Like, you know, we mentioned Joey and all birds. Just pure. I love Joey, and I know you do too. A tough ride there. I mean, tough ride across support for all things consumer. Warby Parker, it's not easy either. Do you worry about that?

A Of course. No, of course I worry about it. And I, I think this is the, this is, uh, the challenge of public markets is, you know, Joey is a great example. Albert's, you know, their, uh, you know, their, their peak valuation versus versus where they are today. It's down like 95%, right? Or, or more. But their revenue is still, they have a great company. They have an incredible brand. Joey's done such a beautiful job in building this company and they've got great, great product. And so, um, You know, they've had some challenges and, you know, revenues, I think, maybe shrunk a little bit. I'm not sure, not 95%, but the, the public markets, you know, they're so fickle. And so, um, it, it creates a real challenge to run a business when you're so dependent on what the public markets are valuing the business at. That's where, that's the nice thing about being in the private markets. You know, VCs, PEs, you know, they're, they're not gonna look at your business and devalue the business by that much just because, um, You know, a hiccup in, in, in the business.

AI assessment note: “Of course. No, of course I worry about it.”

Q Okay. So you start buying and selling these snooker tables respectfully. Like how did you have the cash to buy them? How did they get delivered to you?

A I didn't have the cash, um, didn't have the cash, but What we decided to do is when we listed them on eBay, we said, 10 week lead time, custom made, hardwood pool table, 10 weeks. You know, a lot of people probably are like, there's no way I'm waiting 10 weeks, but other people are like, hey, I'm building my house or I have 10 weeks, no big deal. And so enough people were willing to do it where we actually use customers to finance the first inventory. And, uh, then we went to my grandma and, you know, we, my cousin and neither of us came from money. So my grandma, I think she lent us 10,000 dollars. And, uh, then we went to the bank and we got a small, a small business loan, and, you know, I think it was 25,000 dollars, and so we just kind of, you know, pulled together some money from friends and family, and yeah, I just ended up pulling a little, anything we had out of savings to kind of, barred from credit cards, we got credit cards in the mail that was like, you know, that we used to go finance the business, so yeah.

AI assessment note: “we actually use customers to finance the first inventory. And, uh, then we went to my grandma”

Q What was the price on that first round?

A Uh, we raised three million dollars, uh, and had a, so a seven pre, 10 post. Whoa. Yeah. This is back in, uh, 20, uh, 2014. You know, we hadn't sold anything. It was just literally a PowerPoint. And, um, but you know what? People believed in us and Kirsten and those other early investors, they made, they made the right decision. They invested in what ended up becoming a really great brand and a great investment for them. You know, Harry, the interesting thing though, I will say, I don't know, uh, I can't really explain why. Our first major investor, Kirsten Green, Our second major investor, Ellie Wheeler from Great Craft. Our third major investor, Brooke Harley. Our last investor with Bain Capital, Cecilia Chao. There's a trend. Women are leading rounds in our business. I really believe that women better understood and understand purpose in business than men did. And, um, it's not that men didn't invest. We have male investors that believed in us. We've had some amazing, uh, incredible investors that are men, but oftentimes it was women that kind of led and believed first. But yeah, you're right. Many investors, because of our mission and purpose are like, ah, I just don't know that this is right for us.

AI assessment note: “we raised three million dollars, uh, and had a, so a seven pre, 10 post.”

Q Ok, so then we, we decide, you know what, he can run that. How does Cotopaxi come to be? How does like, hey, I'm gonna challenge Patagonia with this new innovative brand?

A You know, I, I'd say this wasn't just something, in some ways it's interesting because it actually happened over like a 36 hour period. And at the same time, it's something that took, it was like a lifetime of experiences building up into this, you know, this culmination experience. I was basically in bed in Brazil and I'm, I'm so unhappy. You know, I'm feeling I'm depressed. I'm, I'm so sad about the loss of this relationship. Um, I'm not happy. And I'm thinking about this desire I've had my entire life to find a way to help others. And I'd made a new year's resolution that year, and I had it on a post-it note in the bathroom on the mirror that I wanted to change somebody's life. And I was feeling so discouraged that I'd spent 10 years as an entrepreneur. I had not yet figured out how to make a difference in the world. I had this goal. It's like, okay, I'm going to make this small goal. Just one person. I don't need to change the world. Just one person. And it'd been like four and a half months and I still hadn't done anything. And I was like, what am I doing with my life? Like, I just don't feel fulfilled. I'm not happy. And, uh, as I laid in bed, I just started having ideas kind of come to my head, um, about what I could do next. Uh, I got out of bed. I sat on the couch all night the next day and the entire following night. So, 36 hours on this couch. And during that period,…

AI assessment note: “during that period... I basically had the entire idea for Cotopaxi”

Q What are the biggest mistakes you see parents made today? You've obviously scaled teams, seen many parents evolve, grow. What do you think the biggest mistakes that you see parents make around you are?

A Honestly, I think, um, time we can't make up for time. I mean, we can, we can go, uh, we can create all the rituals and traditions we want, but if we're not giving our, our children time, um, you can't make up for that. And so I think that's the biggest mistake people make is they think I'm too busy. I'm too busy to go spend the time and I'll go make up for it by taking them on it. I'll take them to, to Disneyland, or I'll take, I'll go buy them something that they want an iPhone or those things will never Make up for lost time with your children, and they grow up so quick. I have, you know, I have four kids, my two oldest daughters are older now, and I have two little boys that are five and eight, and so like, I watched my daughters and how fast they grew, and it's sad to watch how, I miss those, those early days when they were little, and um, so yeah, we have to just, we have to give, we have to give them time.

AI assessment note: “that's the biggest mistake people make is they think I'm too busy.”

Q You said a single brand can't change the world. What does actual brand mean to you? I think we both feel that brand is quite a thrown around and loose term. What does brand mean to you?

A I mean, brand, it really comes down to values and what does, what does, what is, what does it represent? What, what's, what's at the very heart of what you're doing? Why, why the wire behind something? And so for us with Cotopaxi, I always tell people we're not a backpack company. We're not a jacket company. We're not an outdoor brand. We're a movement of showing the business can be a force for good in the world. You know, we stand for fighting and eradicating poverty. And that is, that is the very heart of what every decision we make. And if you go inside the organization, you'll see it every single day. It's like, that's the discussion that we're having is like, how can we, how can we go accomplish this big ambitious mission as a brand?

AI assessment note: “brand, it really comes down to values and what does it represent”

Q Is it bad to chase happiness? I, I heard somewhere. Yeah, I think it was Walter Isaacson say that, you know, Elon Musk's specialty is he doesn't actually ever look for happiness. Um, is it bad to chase happiness?

A I think when you chase happiness, we're oftentimes chasing the wrong thing because just the human nature, we think what brings us happiness is things that don't. We'll never find happiness when we're thinking about our ourselves. And, uh, I found the most happiness when I'm working towards a greater cause. You know, uh, you know, this last six months for me has been some of the greatest joy. Was I scared to leave Cotabaxi? Absolutely. Uh, was I sad to leave? Very sad. I'm still sad. I'm still sad. I love that brand. And I, I was the greatest, uh, professional achievement of my life. And I loved every minute of it. I'm still sad thinking about walking away from that. And at the same time, every minute of my day to, you know, these days is focused on someone else. This is what truly brings joy. Uh, what truly brings, brings happiness. This is the stuff that fills the soul every minute thinking about somebody else. And so, This is where I, you know, at least for me, where I found happiness and, you know, I, I think, ah, I think there's nothing wrong with wanting to be happy. Uh, I just think we need to, we need to remember what actually brings happiness.

AI assessment note: “I think there's nothing wrong with wanting to be happy.”

Q I, I, I absolutely agree it does. So you get out of college, and you start, I, I heard this from your investors, selling scuba gear, and then snooker tables. You're like, okay, you're like, cool, entrepreneurial start, but to the tune of six million dollars a year, how did that happen, just? Take me to that.

A Yeah. So, you know, I, I was in college and I met, uh, a man named Steve Gibson. He was this, he was, uh, an adjunct professor at the university, Brigham Young University, where I'd gone to undergrad. He was a successful entrepreneur and had also started. And once he sold his business, he had started a nonprofit in the Philippines. And, uh, I admired this man because he was helping pull people out of poverty. I wanted to work for him. I thought, you know, I'm going to work in the nonprofit world. I'm going to work for this guy. I wanted to expand to Latin America. And I, I had this chance to sit down in his office and talk with him. And he instead convinced me that I shouldn't do that, that I should really, if I wanted to make a difference in the world, that I should become an entrepreneur. So that's kind of this, it totally, totally shifted the way I was thinking about my role in the world and how I could make a difference. And so I started brainstorming ideas. One of the ideas that came to my head was, uh, you know, I started selling dive gear, scuba gear on eBay. Just because I love diving and I had no money, but it was like, hey, if I could maybe buy and sell some dive gear here, maybe I can make enough money to go on a trip and go diving somewhere. And I kind of discovered this platform of eBay, this market, this, this amazing marketplace. Like it was like the invisible ha…

AI assessment note: “I started selling dive gear, scuba gear on eBay.”

Q funding is a product too, and there's different types of customers. But we, you know, I have a ten-year fund life cycle, and I have a two-year extension. Dude, I have to provide liquidity as my job to my investors, my responsibility. Do you think we are missing funds structures that are much longer term? Because the only ones really are permanent capital vehicles, which is quite a limited supply.

A I believe we are, and only based on the experience I had in the last 12 months. Like, I wanted permanent capital. Uh, and even in the last 12 months since I started that fundraising process, we've think businesses increased 50%. It's like, it would have been a great investment for someone that would have come in and said, hey, we believe you've already been growing on this amazing tear. We believe in your vision and we're committed to a ten-year commitment or a fifteen-year commitment. And it's like, let's go build this together. Let's go build the next billion, multi-billion dollar brand. But very, very few investors are committed Uh, to that kind of timeline. They're all, everything's so short term minded, which is frankly, I mean, this is the world we live in. Everyone is focused on short term versus long term. How do I get happy quickly? Uh, how do I go satisfy this instant desire that I have?

AI assessment note: “I believe we are, and only based on the experience I had”

Q So we, how do you track and measure culture? It's traditionally quite, uh, intangible. How do you track?

A Yeah, uh, there's a number of great tools. One of my favorites is actually a company called Office Vibe. It sends out polls through Slack, which we use Slack, and I measure, uh, Literally every day, I'm, I'm tracking and measuring our culture, and I can try, I can slice the data based on gender, based on tenure in the company, based on all these different metrics. I can look at each department, and I kind of see where there are issues, where there are problems, and I can identify things before they blow up, and so I can start seeing trends. I, I was so intentional about my company culture, and when I came to my family culture, the organization that mattered the most to me I was not following any of those things, and so my wife actually said, we sat down and we created, we identified the values that mattered most to our family, and we put them on our wall, and they actually, they're, they're aligned with the S-M-I-T-H, our last name, Smith. Each one of those stands for something. Our children all know what they stand for. Once a week, we have a meeting with the whole family, a family evening that we have together, and we talk about our goals. We talk about these values. We've created rituals and traditions that have changed our, our family culture. And so I think being a great dad is being intentional.

AI assessment note: “One of my favorites is actually a company called Office Vibe. It sends out polls”

Q Um, can I ask, what do you think entrepreneurs chase today that they shouldn't be chasing?

A Well, it's the wrong focus. I think so many entrepreneurs today, the reason they go start a business and what drives them is like, how much money can I raise so that I can make as much money as possible? And, uh, it's the wrong thing to focus on. I think if you focus instead on, uh, why do you exist? What is your purpose? What can, how, how can you make the world a better place? How can I give them a life-changing experience working with this brand? How can I make sure they're compensated fairly? If you're focused on, on the things that make your team happy and on make an add value to the world, everything else will work out. I think that's where entrepreneurs get it wrong. They spend so much time Focused on things that really are the wrong thing. And it actually, I think it ends up, it ends up hurting them.

AI assessment note: “how much money can I raise so that I can make as much money as possible?”