How Cotopaxi Reached Multi-Millions in Just Over 2 Years by Combining a Developer Mindset with Humility & Storytelling
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I’m writing this post from the Blue Stout headquarters here in beautiful Portland, OR, which is one of our country’s biggest hubs for outdoor recreation activity.
If you’ve been to Portland, you know what I’m talking about… We’ve got hiking, rock climbing, kayaking, skiing, and pretty much anything else you can think of. That’s one of the main reasons I moved here.
And in this episode of the Blue Stout Podcast, I’m interviewing someone who is equally as passionate about the outdoors: Stephan Jacob, co-founder and COO of Cotopaxi.
Cotopaxi is an amazing outdoor gear and apparel brand with a humanitarian purpose, and one of the leading fastest-growing brands in ecommerce.
Lately, I’ve seen Cotopaxi products here in Portland which surprised me, as Portland’s normally the stomping grounds for big brands like The North Face and Patagonia.
But newer brands are beginning to appear. So when I began spotting Cotopaxi out in the wild, I knew they must be doing something right.
Today’s interview will shed some light on what steps Cotopaxi took to solidify their brand and scale to a multi-million run rate in just over 2 years.
Stephan was interesting to interview for many reasons, but one I found very compelling (other than the amazing humanitarian side to Cotpaxi) is that he’s a founder with a computer science background. As we began digging into his business, it became clear to me exactly how his computer science training has affected his approach to scaling his company.
In our interview we get into
- How Cotopaxi grew to multi-millions in revenue and a team of 25 in just a little over 2 years
- Why every division of the Cotopaxi team operates in 1-week sprints
- How Stephan decided to use entrepreneurialism as a “force for good”, and why that resonates with Millennials
- Why he believes people are what make-or-break your company’s success in scaling
- What 2 things he looks for when hiring
- How his engineering mindset has pushed him to leverage smart tools to avoid wasting internal resources
- The power of storytelling, and the advice he has for other growing ecommerce brands trying to utilize storytelling in their brand.
…and so much more! You’ll really learn a lot about how effective systems can be when scaling, and lots of other good growth tips, so let’s get into the interview so you can learn more about Cotopaxi and their effective growth strategy.
From the German Special Forces to Utah
Stephan Jacob, the co-founder and COO of Cotopaxi was born and raised in Germany. As a child he spent time with his Godfather – who was an officer in the German special forces and who also had a son his age – out in the wild doing things his parents couldn’t know about.
Stephan later joined the special forces himself after graduating high school. And it was then he “developed a passion for awesome gear and for being in the wild.”
In college, Jacobs studied computer science and afterward worked for McKinsey, a consulting group for a couple of years.
“[There] I realized I didn’t want to be a consultant or the voice of reason from the outside”, so Stephan decided to head to business school at Wharton. After building a successful multichannel ecommerce business while in school (which he exited in 2013), Stephan teamed up with a friend from school, Davis Smith, to build Cotopaxi.
He and Davis decided they needed to relocate to somewhere with a thriving outdoors community.
They landed in Utah, where they’ve found amazing talent hiring-wise (marketers, developers), the tech and entrepreneurial momentum is nice, and – of course- there’s tons of mountain climbing, skiing, biking and outdoor activity.
As a Pacific-Northwesterner, I feel snubbed…but hey, Utah’s great, too 🙂
Marketing to Millennials Lead Cotopaxi to Multi-Channel Expansion
When Cotopaxi began, Stephan initially looked at it as solely a direct-to-consumer ecommerce-only outdoors brand (what Andy Dunn defines as a digitally native vertical brand, or DNVB).
“Until early 2016, almost 100% of our sales were generated online and through events we hosted”, but Stephan says that their thinking has begun to evolve a bit.
“We are building an outdoor brand that is unique and differentiated by catering towards a very specific demographic in this younger millennial consumer.”
Cotpaxi also realized that they can be much more than just an outdoors direct-to-consumer brand.
Stephan believes “there is room in this space to build the next large-scale outdoor brand with a humanitarian mission – that’s the very core of what we do… We’re an outdoor brand with a social-humanitarian premise at the very core.”
The excitement in growth they’ve seen in the last 6 months, Stephan says, is “due to the fact that Cotopaxi is a purpose-driven organization not focused solely on making money for shareholders, but rather on being a purpose-driven organization that is finding ways to give and do so in a sustainable manner.”
So how is that growth happening? Stephan and team have a very focused strategy.
Organic Growth Beats Paid Any Day: How to Tell the Perfect Story With Products
Stephan says the desire to find ways to give existed prior to even knowing what type of business he and Davis wanted to launch. “It’s been there since Day 0.”
What inspired the co-founders were their own individual, unique experiences with poverty. Davis spent a large portion of his youth in Latin America. Stephan’s wife is Indonesian, so he’s spent time living in Southeast Asia.
Both received a first-hand look at poverty and environments “where the people, for no fault of their own, don’t have access to things that we take for granted: education, safety, shelter, health care. That simply left a mark.”
Stephan has always been excited by the challenge of “building a business as a force for good”, and both he and Davis wanted to make it happen.
Now that Cotopaxi’s alive and running, they implement that philosophy in every element of their business. Stephan says: “We integrate it in everything we do. From everything to the way we support our supply chain and try to empower our sewers and the ‘unsung heroes’ of the outdoor industry to tell their stories and let their creativity shine in our products.”
A perfect example of this is one of Cotopaxi’s most popular products, the Luzon Del Día, a backpack where the sewers are the product designers and creators. The only rules: no two bags can be alike. The designers are in charge of choosing fabric color, thread color, everything.
Stephan says, “It was amazing to see how this changed the dynamic on the floor and it’s a story that really resonates well with our customers.” And the stories are resonating very well.
The Luzon Del Día from Cotopaxi on Vimeo.
Operating in 1 Week Sprints and MVP Iterations Allowed Cotopaxi to Grow
Cotopaxi has seen some pretty incredible growth in a timespan of just 24 months. Stephan says they began as strictly ecommerce with 2 events. (They host a 24-hour adventure race called Questival. More on that later…)
In year two, they had 6 Questivals.
This year, they’ll do 15.
This year Cotopaxi also added in retailers like Nordstrom, REI, and began doing co-branded products for companies like Adobe and Google.
Stephen says, “It’s an amazing way to build the brand, but it adds a lot of operational complexity.”
How do they pull off this type of growth?
Stephan says, “From the get-go, we’re very careful to bring top talent onto the team. The only way to scale this quickly is to bring incredibly talented people on this early, empowering them, and letting them do their job and just give a lot of responsibility early-on […] give up a lot of control early-on and just trust your team to do the right things.”
This strategy has worked incredibly well for Cotopaxi.
“What’s so exciting to me, yes they’re brilliant at what they do, but they also exhibit one thing we’re careful to look for in the hiring process: humility. So, it’s this group of really silent over-achievers. So everybody’s really good at what they do, but nobody takes themselves too seriously.”
In addition to hiring really talented employees, Stephan credits their “developer mindset” for allowing Cotopaxi to scale:
“We take a very iterative, MVP, lean approach to everything that we do. The whole company operates in 1-week sprints, whether that’s our dev team, our marketing team, our ops team, our retail team.
We’re comfortable putting something out there that’s not perfect, that we know is not perfect…but we then let the market tell us what we need to improve and then we just iterate very quickly over it.
That’s our general operating principle – that’s how we structure our work.”
Staying In-House vs. Hiring Third-Party Services / Using Third-Party Apps
When it comes to staying in-house versus hiring outside services or using third-party apps, Stephan says they try to keep as much in-house as possible:
“The team is split pretty evenly across functions. We have 2 devs, 3 marketers, 3 CX people, 2 in ops, and 2 in events. In terms of fulfilment – until very recently – we were working with a 3rd party logistics provider but have since moved that to in-house… Opened up our own warehouse and all of that is done in-house now.”
They do have to work with marketing agencies to help out with things like SEO and affiliate marketing. Since their marketing team is so small, they don’t really have the resources to devote to those initiatives.
Development, on the other hand, is 100% in-house. “We try to keep the core functions where we believe we can add most value in-house.”
Additionally, their whole product development and design team is 100% in house. So, every product they come up with existed first on a piece of paper created by their in-house team.
“We add resources in some areas as we see needs. Our events team, for example, has an army of ‘weekend warriors’ that help us at each event in terms of organizing, coordinating – so in selective areas we do use external resources as well.”
Engineer Thinking Works: What Can We Leverage?
Since I work with engineers on a daily basis here at Blue Stout, I know one thing they’re always thinking about is leverage. They’re always looking for a way to say “OK, what are we doing and how do we define a better set of processes or find a piece of tech that helps us leverage the existing talent that we have to scale up to the next level?”
In terms of using “smart tools” to facilitate internal processes and work, Cotopaxi absolutely leverages technology when it makes sense.
Stephan says, “The whole company is 100% built on lean, cloud-based SaaS products. (Which obviously is easier if you’re a young brand versus an long-established company.) We use systems that have well-documented API’s that will integrate easily into our ecommerce ecosystem. Anything that doesn’t provide for that interconnectivity, we wouldn’t use.”
But tech isn’t always the solution for everything their company needs:
With regard to human resources leveraging technology, isn’t Stephan’s first choice for Cotopaxi:
“It’s sort of a trade-off. Yes, on one hand you obviously need to manage your payroll and that is, oftentimes, your biggest position on your P&L in terms of expense. But I’ve just sort of had the experience that it needs to be a really strong end-of-line partnership for an external provider to generate the same productivity as somebody you have on staff. I think there are exceptions to that rule, but it needs to be a strong, strategic partnership.”
Advice For Other Growing Companies: What’s Worked for Cotopaxi
When I asked Stephan what advice he’d give to other companies who’re looking to grow, his response was true to the humility he looks for in his own employees:
“We still very much consider ourselves to still be in that [growing] position. Yes, we’ve seen some traction, but we still very much feel like we’re in a learning and listening phase. [We’re] absolutely not ‘out of the woods’ in terms of having ‘made it’ in any shape or form. We’re still very much in that mindset of ‘How can we scale?’ ‘How can we grow?’”
So while Cotopaxi is very much still in the learning phase, Stephan shared some great advice about what’s worked for them:
First, Cotopaxi has been so successful at branding due to their perfection of storytelling: “From Day 0 we knew we weren’t going to spend a ton of money on performance marketing with Google and Facebook, etc.
We felt strongly we wanted to empower customers to tell our story versus relying on ads. How can we embed deep stories into our products that our customers would want to tell?”
Stephan and his team were confident that giving their customers a reason to talk about you is a more authentic way to market their products, saying “The organic growth and organic traffic from these stories is far more superior and valuable than any generated by ad campaign.”
The content Cotopaxi develops plays a big piece here, like video (which you saw above with the Luzon Del Día pack) , that tells the product story and brand story.
If you haven’t checked out any of their content, head over to the Cotopaxi site just to get a taste of how powerful their storytelling is.
Secondly, the brand has benefited hugely from Questival, the 24-hour adventure race that they’ve built in to their brand since the first year. Stephan, earlier in our interview, talked about targeting millennials with their products and they storytelling behind them. And Questival is attractive to that demo, too.
He says, “The younger demo would rather invest in experiences versus stuff. Questival exposes them to the values that the brand stands for: doing good, giving back, spending time outside. It’s been a great way to build the brand in an organic and authentic way.”
How You Can Help Stephan & Cotopaxi Use Business for Good
First off: you can buy a product! But to get some deeper insight into the “giving back” mission of Cotopaxi and how Stephan’s trying to “use business for good”, you can read up on Cotopaxi’s efforts with the following links:
- About Cotopaxi’s mission to make an impact
- Who’s received a grant from the 10% of Cotopaxi’s annual profit (Grantees)
- Their factories
- Cotopaxi’s B Corp certification
- Refugee coding
- Their Giving Guide
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