Cotopaxi, an Outdoor Apparel Company Designed for Doing Good

(Bloomberg) -- When Cotopaxi, an adventure gear and apparel company based in Salt Lake City, launched three years ago, founder and Chief Executive Officer Davis Smith decided to get creative. “We bought two llamas on Craigslist and brought them to a bunch of college campuses around Utah,” he says. “Hundreds of students took selfies, so we had 30,000 social media posts by the end of that first day.” Though the strategy sounds like something dreamed up on the fly, the idea for a socially minded, sustainable outdoor brand was something Smith had been working on for a decade.

The son of a civil engineer, the Utah native had spent most of his childhood living in some of the most impoverished countries in Central America and South America: Bolivia, the Dominican Republic, Ecuador, Peru. “I remember being four years old and seeing kids younger than me on the side of the streets, completely naked, ” he says. “I felt that I had a responsibility to give back from an early age.”

As an undergraduate he spent time in Brazil, where he saw how he could make a difference simply by giving away his lunch or spare change. It was around that time that he committed to “the idea of building a brand around giving back,” Smith explains. And though the company gives back 2 percent of its annual revenue, the charitable ethos extends as well to its sustainably sourced materials and factories in the developing world that are known for fair wages, working conditions, and maternity care. “I'm not talking just part of the profits, but in terms of everything we do—the manufacturing process, even the delivery.”

After spending a couple of years back in Bolivia, Smith moved his family to Utah and tapped a friend from Wharton Business School, Stephan Jacob, to be his co-founder. Cotopaxi's e-commerce site (there's now also a brick-and-mortar store on the first floor of the company's Salt Lake City headquarters) initially launched with backpacks and water bottles. Over the past three years, it has added jackets, dopp kits, organic wool sweaters, and technical tees, tripling profits annually and expanding the team from six to 60.

Working with a factory in the Philippines to make Cotopaxi's signature fluorescent, color-block nylon windbreakers and bags, Smith was inspired by the vivid textiles of South America. In order to reduce the waste that comes with manufacturing them, he launched the Del Dia Collection, a series of fanny packs designed by factory workers, who use leftover scraps to make each one-of-a-kind piece.

Direct partnerships with farmers in Bolivia led to the release of the Libre sweater, a unisex, raglan-cut crew neck made entirely by village weavers from locally sourced llama fibers. Inspired by the sweater's success, Cotopaxi will this month add llama wool socks in collaboration with the powerhouse outdoor brand Wigwam Mills Inc. And though a lot of the pieces look like they could last double the time, the warranty for all of Cotopaxi's products is 61 years, the average lifespan of a person in the underdeveloped world. “Just a reminder to people that that's the case,” says Smith, “and that we need to do something about it.”

In addition to giving back through the manufacturing process, each year the team selects a set of grantees to receive 2 percent of the company's revenue. This year's focus is on the International Rescue Committee in the Middle East and Europe.

More targeted local philanthropy also happens via the Questival, a 24-hour adventure race in which teams of two to six people compete for prizes in fitness and teambuilding challenges. The event has become integral to the brand's identity. The first took place in 2014 in Utah; this year, 60 will occur around the U.S. Each, Smith says, raises about $5,000 for charity from donations and merchandise sales. An app designed in-house allows teams to customize their own obstacle races while getting points for what Davis calls “flash mobs of service.” A recent challenge involved power-clearing litter from a river trail. (Non-monetary challenges are a big part of the experience.)

As for the two llamas—Coto and Paxi—that kicked off the whole adventure, they're living on a farm near the house Smith shares with his wife and three kids. “Once in a while, they'll come to one of our events,” he says. “I think we're one of the only venture-backed companies that have llamas on their balance sheet.”

To contact the author of this story: Antonina Jedrzejczak in New York at antonina.wiktoria@gmail.com.

To contact the editor responsible for this story: James Gaddy at jgaddy@bloomberg.net.