Stephan Jacob is the Founder of Cotopaxi, a company that creates innovative outdoor products and experiences that fund sustainable poverty relief, move people to do good, and inspire adventure.
In this episode you’ll learn how he runs in-person 24-hour events to market his company's vision and brand.
In this episode, we discuss:
- How to attract smart people to your team.
- What is a "public benefit corporation" and how it can help your business.
- How to prepare to launch your own in-person events.
Listen to Shopify Masters below…
Felix: Today, I’m joined by Stephan Jacob from Cotopaxi.com, that’s C-O-T-O-P-A-X-I.com. Cotopaxi creates innovative outdoor products and experiences that fund sustainable poverty relief, move people to do good, and inspire adventure. It was started in 2014, and based out of Salt Lake City, Utah. Welcome, Stephan.
Stephan: Thanks, Felix. Thanks so much for having me. Great to be a part of the community.
Felix: It’s definitely exciting to have you on. Tell us a little bit more about your brand, your story. What are some of the most popular products that you sell?
Stephan: Yeah, sure, I’m happy to. We’re, as you said, an outdoor gear brand. We design and manufacture outdoor apparel, tents, sleeping bags, backpacks, both technical and lifestyle. We started about two years ago, based here out of Salt Lake. I’m looking out of my window, and I have the mountains in my back yard. That’s really why we chose to be here in a place where there’s a very active outdoor community, and are really fortunate with regard to access to talent and just people who really love the products and use the products that we make on a very regular basis.
Some of our most popular products, there’s one which is called the Luzon Del Dia, which is a very minimalist day hiking pack, but it has a really cool, rich back story. That’s performing really, really well. On the apparel side, the basic mantra that we live by is sort of this warmth without weight concept. We have a lot of different pieces that keep you nice and warm, insulate you well, but you don’t feel like you have to rip them off your body the moment you step inside.
There’s one product in particular, the Kusa jacket, which we actually use llama fleece, llama fur, as an insulator. That’s doing really well, and now with the spring coming, we just launched a new running jacket called the Paray, which is an ultra, ultra lightweight jacket that packs into a tiny pocket, that is off to a great start.
Stephan: I did not. I’m originally from Germany. I was born and raised in Munich, close to the Alps. Ever since I was a little toddler, my godfather, who was an officer in the German special forces, took me and his son, who was my age, out into the mountains, doing crazy, wild things. That’s how I grew up, and always loved the outdoors.
I joined the special forces after graduating from high school myself, and just always as a consumer, loved that industry and just always have been a gear head at heart. I did a computer science tech background in college, and sold my soul for a couple years to McKinsey, a consulting company, strategy consulting firm, and loved that experience, but also realized that I just didn’t want to be a consultant for the rest of my life.
I went to business school at Wharton, where I met my co-founder here with Cotopaxi, and started a business out of school which was also an e-commerce business that was essentially a discovery platform for small independent apparel and accessories designers. It was an on-line channel concept. We had several stores, and then obviously our e-commerce base.
We ran that for a couple years, and just really a super-valuable experience that I benefit from every day now, with the second go-round with Cotopaxi. I exited that in 2013, and then I teamed up with Davis, my co-founder, who also is a very experienced entrepreneur, and we started this one here.
Felix: Very cool, so outdoor apparel is obviously very different than just T-shirts or designs on clothing, because there’s probably a lot more technology involved with outdoor apparel.
Stephan: That’s correct.
Felix: Because you didn’t necessarily have this background in it, how did you overcome that or work with it?
Stephan: I think this is a general learning, as an entrepreneur, you will never have all the skills required to build a business and to make it successful. I think the first step is to recognize, “Hey, I’m not an experienced outdoor apparel designer and developer.” That’s step one, having that realization. Step two is, “How do we fix that?” It’s by bringing in incredibly talented people who do have that skill set, and who share the same core values of what you want your organization to be. At the same time, bring in people who can fill those gaps.
That’s exactly, both Davis and myself, we did not have that background. We were e-commerce entrepreneurs, and had experience scaling and building businesses, but did not have the product background besides loving outdoor products ourselves as consumers, but not from a design and development perspective.
Our co-founder, his name is CJ Whittaker, he is from the industry. He has been working with Gregory and Black Diamond for 12 years before joining Cotopaxi, and designed some of their most award-winning gear during that decade. He’s sort of the brains behind the product, in our product vision and strategy.
Part of the founding team was also another person, Cheri, who is our director of apparel, who is an incredibly experienced and skilled visionary when it comes to outdoor apparel and sleeping bags, et cetera. All our soft goods are under her direction, and then hard goods under C.J.’s.
We essentially brought people on board, made them part of the team early on, that would enable us to come up with truly innovative, amazing products from the get-go.
Felix: Yeah, I think that’s a great point about how you need to recognize what you’re good at, what you’re not good at, then fill in those gaps by hiring the right people or part of the right people from the beginning. I guess this kind of leads to the next question which is, that was an obvious thought, because I think a lot of people are stuck in this space, but let’s say that you’ve come to this realization that you need to do this. Now, the next kind of big hurdle is how do you find and attract these smart people that, because they’re so smart, because they’re so talented, they could work anywhere? They could work for a more established brand, or [inaudible 00:07:43], or are looking to work with them, or maybe start their own business. How do you attract the people, when they have so many options and you were just a small player at the time?
Stephan: It’s a great question, and a real challenge. How do you build a team when really all you have to sell is a vision? I think we were able to convince the team that has come together, and every single day that’s one of the main reasons why I’m excited and so grateful to work on this project, and build this company, is the people who have made those leaps of faith, and have moved, often times.
In Cheri’s case, she was in Portland or close, in Bend, Oregon, and moved to [inaudible 00:08:32] River, and moved here to Salt Lake City. We have people who moved from California, from the East Coast, and from various places in phenomenal positions often times, and making sort of the jump and transition to join a very small start-up in the early stages.
I think ultimately what it came down to is, we have a very, very big vision. We truly believe that we can build the next large-scale million-dollar outdoor brand. That’s obviously highly aspirational. Who knows if that will really materialize? I think we were able to formulate early on the potential and the sort of wide space that we see in the outdoor industry, which in general is a very crowded space. There are a gazillion brands, and you could say the last thing the world needs is another outdoor brand.
We really feel that there is, if you look at the big players, they’ve been around for a very long time, whether that’s a Patagonia, a North Face, Columbia, et cetera. Those companies were built like 30, 40, 50 years ago. Some have done a better job than others sort of staying relevant and staying in tune with this younger millennial demographic that has been on the rise for several years now, as a consumer base.
We really felt that there was a white space there, where we could build a brand that is specifically designed around the desires and aesthetic and taste preferences of that younger consumer. I think that’s one, just to showcase that, “Hey, we have the potential to build something great, to build something amazing here as a business,” and it has the legs to scale.
I think the second thing that has been very, really differentiating from a talent acquisition perspective has been the fact that we’ve, from the get-go, said “We want this organization to be about more than just maximizing value for our shareholders.” We’re incorporated as a public benefit corporation. What that means is that in our articles of incorporation it is stated that our reason to exist is not just to make money, but it is to have a measurable positive impact on the world.
That’s very vague, but in our case how we sort of make that concrete is that all of our products raise money for various humanitarian causes in three main areas of health and education and livelihood. While we have concrete metrics that we track and hold our nonprofit partners accountable to, it puts a purpose behind the organization. We truly look at ways to disrupt not just the way … Not just with taking a portion of our profits and giving it to these various humanitarian causes that have a real impact in these communities, but really along the entire value chain, how can we make a difference? How can we do things differently?
One example would be the pack that I’d mentioned before, the Luzon Del Dia, which is a pack where the only instruction we gave to the sewers at our factory in the Philippines was, “The only rule is, no two bags can be alike. Other than that, you decide what thread color to use. You decide what panel color to use on X, Y and Z. You’re the designer, essentially.” We empowered these unsung heroes of the outdoor industry, the people who actually make the stuff, to truly be creative.
It was incredible to observe the dynamic on the sewing floor, what that did when we sort of gave them the power to truly be creative themselves, and create these packs based on their own mood, their own input, their own sort of cultural norms. The result is a very colorful, amazing product where every single one is unique. There are no two packs that are alike.
We’re going one step further now in the area, where we started teaching development and design skills on the factory level, to basically push these skills into the work force and help them grow as individuals and professionals. I think that has made a huge difference in terms of how people feel about joining a company like Cotopaxi, as opposed to other opportunities in the market.
It’s not just about a paycheck. It’s not just about making a career, but it’s about really making a difference, working on something that’s much, much bigger than any single one of us. I think that’s been a huge plus. We’ve had, on our first week after we lost … Our first month after we launched, the first four weeks, we had over 400 unsolicited job applications, just from people who were intrigued by what we were trying to do and just said, “I want to be a part of that.” I think the fact that we’re a purpose-driven organization has been a big, big plus when it came to talent acquisition and talent retention.
Felix: A lot of great things you said there that I want to definitely talk about; the public benefit corporation, and how you empower the manufacturers. Before we get to the base of that, what do you do on a daily basis? Let’s say, on a daily basis, what are some things that are on your to-do list or on your checklist that helps you, or that lets you help the company focus on the vision?
Stephan: We very recently rolled out a fairly holistic goal-setting program based on OKR, objective key results framework, which was initially introduced by John Doerr at Google, and has been spreading pretty wildly in the start-up community and sort of the larger tech community.
Felix: What does that stand for, you said OQR?
Stephan: OKR, and it stands for objective key results. You’re basically saying, “What are my objectives, goals if you will, typically on a, in our case, quarterly basis?” You define three to five key results which ideally should be measurable and attainable, sort of like a smart principle of goal-setting, slightly adapted, but in essence that’s what it is.
In the initial phase, we rolled that out with our revenue goals, and then you basically break them down in sort of the overall company goal, and then it breaks down to sub-team goals, and then you can break it even further down to individual goals. I think that was one step, as we grew as a team, and we’re still a very small company with just 23 full-time employees, but that was one way to break down that bigger vision of what we’re trying to achieve, into very concrete, actionable steps for the individual sub-team, and then every individual employee.
I think another big thing is just to live that vision as a leadership team, so for example Davis, my co-founder, he was in Istanbul just last week at the World Humanitarian … The United Nations’ World Humanitarian Summit. We’re very active individually in various refugee rescue efforts, where we work with the refugee community here in Utah, and over 60,000 refugees. With my engineering team, I launched a program there together with our chief impact officer, Lindsey, where we teach coding and computer science to refugee youth as a means to get access to very well-paying job opportunities, without the need for expensive college educations.
These little things, where we try to individually live by those values that we want to inspire others to live by, and take very concrete, publicly visible steps to be these thought leaders, and show people how they can make a difference. It’s not just saying, “Hey, we have a social mission as an organization, and X percent of our sales goes to nonprofit X, Y, Z.” I think it needs to be deeper and more authentic than that.
I think that alone is great, but for us we really said, “We want to do more than that, and really show that you can do well as a business, but also do good at the same time.” To be a real model individually, be role models in the community, to do that. It’s like little things throughout our entire value chain, where we try to bring that to light.
One example is, every customer that orders and then receives a package from us will receive a hand-written thank-you card. Initially, we wrote those cards ourselves, but that wasn’t very scalable. We started again working with our refugee youth committee here, and we set up a program where they basically write these cards for us. It’s a paying job, often times the first paying job they have in the country.
In addition, we do these job readiness training programs, where we coach them on resume/interview training, good habits, financial responsibility, various skills, just members of a team will teach a workshop on a Saturday morning. It’s a super-rich, amazing story that that handwritten thank-you card basically tells. It’s little things like that, where we really try to bring the for-good aspect and integrate that into everything that we do as a company.
Felix: You’re living the vision, just through kind of leading by example, and then the planning that you’re doing with those OKRs, so I think it makes a lot of sense that you need to live that vision, and you should be doing that from the very beginning of your business. When it comes to things like planning with the OKRs, did you do this from the very beginning, or does it make sense, or does it only become a necessity later when you’re more than a few people on the team?
Stephan: Yeah, I think it is definitely … We did not do that from the beginning. I think even our size of the company, it’s early. Normally, many organizations will roll something like this out when they’re 50, 60, 70, 80-plus employees, just because it becomes really, really hard to create that alignment and sort of make transparent how every individual is contributing to the bigger or larger vision for a company.
Yeah, we did it relatively early. I don’t think you necessarily need something as formalized in the first year or two. I think you do need to constantly talk about why you’re doing what you’re doing, the “why” of the organization at large, and every single individual and their contribution. That is important, to surface from day zero, so that you bring people on board who share that “why,” who understand, what are we trying to achieve? What is the end goal for this?
I think that is important, and whether that is through all-hands meetings, where you talk about that as the leader or CEO, it’s like the C-level, you talk about that vision and sort of break it down for everybody in the team, like how they can contribute. I think that is important, from the early day, because it’s hard to bring that to life, like two years into your journey, if it hasn’t been part of the conversation for two years. I think that’s important from day zero, but I don’t think it has to be as formalized as any goal-setting system with hierarchies and all that kind of stuff.
Felix: Yeah, and even based on what you were saying before about you might attract the wrong type of people too, if you’re not talking about the vision and really injecting that vision from the beginning, because then you might bring the people who are not a fan of that vision. Is it just like, when you're sending e-mails, having hallway conversations, these meetings, are you just always trying to find ways to inject the vision, inject the “why” into the conversation?
Stephan: Yeah, that’s correct. We have, in our case we call it [inaudible 00:21:31] at Cotopaxi, so every two weeks we have an all-hands meeting where we first do like a round-robin type update from every single employee in the company, what they’re working on right now and challenges that they may face.
Then, the second half of that meeting is typically like a teaching moment of sorts, and there can either be a guest speaker that somehow reinforces the vision and what we’re trying to achieve, so we have … In our case, we’re trying to build a large-scale outdoor company that does and inspires … Does good, and inspires others to do the same. We had people who summited Everest talk during that hour. We had people who launched an organization that was trying to rebuild schools in West Africa. We had a former CIA agent who talked about the refugee crisis and the situation in Syria, and just the atrocities that are happening there. We had one of our impact employees talk about his experience as a peace-keeper in South Sudan; various types of teaching moments, where we basically reinforce and bring stories to life that highlight why we’re trying to do what we’re doing.
Felix: Makes sense. Let’s talk about the public benefit corporation. Tell us a little bit more about that. How do you … Maybe we’ll start with, what is the benefit or maybe are there examples of times where the public benefit corporation has come in handy?
Stephan: I think it’s important to distinguish between two concepts in that context. There is the legal entity or type, which is a PBC, public benefit corporation, that’s comparable to a C-Corp or an S-Sorp or, in terms of being an entity, a legal entity here in the U.S. It’s a relatively new entity type that hasn’t been around for a long time, but I that is a reflection of the desire of founders and entrepreneurs, the desire and the recognition that as a company, you have a responsibility to not exclusively your shareholders, but also to other stakeholders, communities, et cetera.
That’s what we are. We incorporated as a public benefit corporation from the get-go, against the advice of our legal counsel, because it was so new. You know, lawyers always see all the risks and warn you about them, so the advice was against us saying that, “You might have difficulty raising money if you’re a PBC.”
We did it anyways, because we felt very strongly about that. We’re the first public benefit corporation to incorporate as such, and then raise venture money. It has never been a disadvantage, quite frankly, so I think the concern that was expressed, we never felt it, has never come up as an issue in our fund-raising conversations, but that’s essentially one part of the construct, is the legal entity public benefit corporation. As I said, the biggest difference is that in your articles of incorporation, it’s basically prescribed that you exist not exclusively to maximize shareholder value.
There are some implications from a fiduciary duty perspective. Our shareholders cannot come after us with a claim that we are not maximizing shareholder value, and are doing these things with nonprofits, giving sales and profits away, which if you’re a regular corporation, theoretically there is a risk of that happening. You’re really, as an executive of a C-Corporation, your only job from a pure fiduciary duty perspective is to maximize the value for your shareholders.
That’s sort of the legal aspect of it. Besides that, there’s a certification which is called a benefit corp, or B-Corp certification. That is literally a certification like many others that are out there in the market, that so says and shows that you abide by best practices with regard to pursuing sort of a healthy, sustainable business from a non-profitability perspective, but then also an environmental and a people perspective, so this triple bottom line concept.
Any legal entity, no matter what legal entity you are, you can be certified as a B-Corp. We are both. We started out as being only a public benefit corporation, as a legal entity, but then last year we also were certified as a B-Corp. We’re both now, and just really excited to be part of that community of entrepreneurs who feel that business is about more than just making money, and business can actually be used as a force for good, and a very sustainable force for good. That’s the whole concept and idea behind that.
Felix: Does it mean that you’re allowed to or you are protected if you make decisions that might solely benefit, let’s say, the manufacturers that you work with, that absolve you from the fiduciary duty to maximize profit for your shareholders?
Stephan: Yeah, that’s correct. I’m not an attorney, so I think there is a … In theory, that’s correct. I think you’re not absolved from the responsibility of an executive to your investors to make the business work. If you only … If you make decisions that sort of are to the detriment of the organization, and are risking the success of the organization, you’ll get axed no matter what.
It doesn’t protect you from making unsound business decisions, but it does mean that you have a better, a stronger position to justify why you’re making certain decisions that have maybe a more longer-term impact on the strength of the brand, and for sure on the strength of your supply chain, for example.
I think it just balances and sets expectations, from the get-go basically, any investor that we talk to we signal, “Hey, yes, we’re building a large, profitable brand, but we’re doing it with a purpose of impacting as many people as we can, through our various humanitarian efforts.” I think it just balances that discussion, or infuses a certain clarity with regard to, what is the real “why” again of the organization? Why are we doing what we’re doing? It does not absolve you from having to build a successful business, because that’s ultimately what makes an enterprising organization or a business different from a nonprofit, is that it self-funds, at scale, once you reach profitability. I think it doesn’t change that dynamic. That pressure to get to profitability is there, whether you’re a PBC or a C-Corp or an S-Corp or any other legal entity, for that matter.
Felix: It makes a lot of sense. What kinds of companies or entrepreneurs should look into following the footsteps, following your footsteps, by trading in a public benefit corporation?
Stephan: I don’t think there is a specific industry or type of company and vertical that is particularly suited for a public benefit corporation. I think anybody can choose that entity type, if they feel strongly that the reason that they go into the business is not exclusively to make money for themselves, or the people or fund them.
That’s really the whole idea, is to be at the forefront of a movement, of inspiring other entrepreneurs to follow suit, and recognize that there are many examples. We’re not the first ones to do this. There are many, many other examples; Warby Parker, Tom’s, Patagonia is a public benefit corporation.
I think we’re just really grateful to be part of a growing community of companies and entrepreneurs that are going that path, but I don’t think that there is any limit to who can or should not be a benefit corp. I think one thing that is important though, and we get that question a lot when we speak at universities and student groups, that it’s hard enough to start a business. It’s hard enough to get to profitability. Many companies never get to that point.
I think you need to be very clear about that, and that needs to be at the forefront of what you’re trying to achieve. Ultimately, you will fall short with all the impact that you want to have, if you can’t make the business work, all of that is mute. I think that’s just very important, that entrepreneurs, especially when you’re a first-time entrepreneur and it’s so difficult to get a business off the ground, especially the first time around, make sure you focus on that. If you feel really strongly that you have something that’s unique and sustainable and with a great product market fit, and you feel very strongly about a social cause, or your organization having a positive impact, that’s great, wonderful. Please do it, but please make sure that the business fundamentals are strong enough to sustain that.
Felix: Makes sense; it’s the idea that you can’t help others if you can’t help yourself first.
Makes sense, so for anyone out there that wants to become a public benefit corp, what’s the process like?
Stephan: Basically, the incorporation is very similar. If you from the get-go start as a corp, it’s very similar to any other entity type. In our case, we’re a Delaware PBC, but no matter where you are, obviously the rules and regulations are different. I think the best advice there is to work with an attorney to guide you through that process, and that differs from state to state. I do not have any experience in terms of converting from being some other entity type to a benefit corp.
That’s again the sort of question; you don’t have to be. You could also start by saying, “Hey, no matter what entity I am, I at least want to get certified as a B-Corp.” That’s perfectly acceptable and great. That’s completely independent from the entity type.
Felix: Makes sense. I want to talk about what you were saying earlier about empowering these manufacturers, these people that I think you said in the Philippines that were working for you. When you were telling me, I was just thinking in my head that a lot of entrepreneurs I have spoken to on the podcasts or off the podcasts would be very nervous about doing what you guys did, where you are empowering these manufacturers to make these decisions.
A lot of times I hear stories about how they worked with a manufacturer, they were not there telling them exactly what to do and exactly how to do things, and everything falls apart and doesn’t end up with the products that they want. How did you come … Did you have those fears, and how did you come to make this decision?
Stephan: I think we’re very fortunate with our product team. They’ve had a lot of experience in their respective fields, whether that’s patent, manufacturing, or apparel. In the case of the factory in the Philippines, C.J. has been working with that factory for many years, and had a very strong relationship, a trust relationship. I think it was a little easier to take that leap of faith to say, “Hey, we know how incredibly talented these people are, and we want to give them a chance to really show that,” and have seen how skilled they are as artisans, and as makers.
Yeah, that’s sort of the basis from which we made that decision, with that knowledge. It turned out amazingly well. I think if you work with a factory for the very first time, and you don’t have that understanding and trust, I think it’s a little more difficult. I think it’s probably also a good idea to start out, in our case, we did manufacture several batches of this product, where we did give them a full tech pack, where everything was exactly specified, like you normally would in a manufacturing process.
We knew that they had gone through that process, and then we sort of gave them the free reins to design themselves. I think it was A, strong pre-existing relationships that were established over a longer period of time, and B, the fact that they had experience with the product, so it wasn’t the first time that they were making this specific product. I think that helps, to de-risk an approach like that.
Felix: For sure, so what would you say is the biggest or has been the biggest benefit to the company, by having this initiative to let the factories design the products?
Stephan: Yeah, I think from day zero we said that we were not going to build this company by spending hundreds of thousands and millions of dollars on performance marketing, on Google and Facebook and whatnot. Instead, we want to find ways to empower our customers to tell our story, and to give them a reason, and a product that’s amazing enough for them to want to talk about it, and has enough of a rich back story that they want to talk about it, and show others.
I think the Del Dia does exactly that. It has this very deep and rich back story that perfectly encapsulates who we are as a brand, and why we’re different from others. I think that’s been the biggest benefit, that it really gives people a reason to chat to their friends about the cool pack. It’s also super colorful, so you stand out when you wear it.
That, to me, has been the biggest benefit besides the fact that we’re having a real impact in our supply chain, and are having happier workers and all that. I think from a pure reach and marketing perspective, that’s been the biggest one, the story-telling that comes with a product like that.
Felix: How do you get the customers to tell your story? Let’s say someone’s shopping on your site, they bought a product, and they don’t look anywhere else on your site, which I guess is a rare occurrence, but let’s say they get the product. Are you sending them educational material about the brand, about the people behind the brand that are in the factories? How are you getting them the story in the first place, for them to spread to their friends and family?
Stephan: Sure, yeah, so I think there is sort of the pre-purchase education. There’s the post-purchase education. Pre-purchases, a lot of that happens on the PDP, obviously, where we do believe in video. If you go on the PDP for the Luzon Del Dia, you see a video that basically tells the story of that product. You’re in the factory. You see C.J. working with the people there, and having them talk about their experience of putting this product together. I think that’s been very helpful to get that message across.
[inaudible 00:37:36], yes, we put hang tags on all products, but it’s a little harder in a two-dimensional hang tag to really communicate the awesomeness of the product, so we put little cues on the product itself. For example, on the Del Dia, if you open up the front zip pocket, there’s a sticker that says “one of one,” to basically signal, you have a unique product, and that is directly linked to the back story of how it was made.
It’s not an easy task, but I think we firmly believe in video as a powerful tool to do that on line. The other aspect is that we firmly believe in in-person experiences, where we expose people to the values that our brand stands for, face-to-face. We’ve launched an event series called the Questival, where we do that. We basically bring, it’s a 24-hour outdoor adventure race where we bring people together, do a lot of product education, story-telling, and expose them to products over a 24-hour period as they are racing across our city and completing various tasks. It’s both what we do on line, information that we attach to the product, and then in-person product education and storytelling.
Felix: Yeah, let’s talk about the Questival. This is like, I think you’ve labelled it as an adventure race. Tell us a little bit more about, how did you begin to organize something like this? A lot of entrepreneurs out there that are listening, I think they are attracted to starting an on-line business because they don’t have to put together in-person events. Obviously, there’s a lot of benefit to this about what you guys are doing, by going to trade shows, by networking, by just getting out there, out from behind the computer, outside the office, and actually meeting your customers. Tell us a little bit more about how you got started to create an event series like this.
Stephan: It was really born out of the same sort of mantra, we cannot buy traffic. That’s not to say we don’t do performance marketing, we do. We do do re-targeting, and PPC and affiliates and all that, but it’s complementary to the organic brand-building. To this day, 82, 84 percent of our traffic is organic, and only 15 percent or so is paid.
That was sort of the general belief when we started the brand, that we wanted to find a way to get in front of customers in an authentic manner, where we could tell our story, where we could engage with them, and it’s just really hard to do that on line.
That sort of was the impetus for the Questival. Initially, we just thought it would be our launch event. That’s how we wanted to get the word out on day zero, April 11 of 2014. We put together this event with the same team that also basically put together the whole product of e-commerce backing and all that. It was a lot of work. Man, that first … The last four weeks before launching, which is really the time that we had to organize this event and roll it out, we just didn’t sleep. It was crazy, but that’s how it is. That’s just the early days of starting a business, they’re just like that, and you look back at them with very fond memories.
We were essentially launching a product brand. We were launching it on line, but then we also organized this event which on the first year, we had 1,500 people sign up to it. We promoted it on mainly college campuses. Our logo is a llama, and so we rented llamas at that point. We own two llamas now, so we’re one of the few e-commerce companies to have a livestock line item on our balance sheet, because of those two llamas, but back then we didn’t.
We rented them, and just showed up on college campuses with those llamas, and started talking to people about Cotopaxi, and this event that was coming up. Normally, when you’re on campus, you’re trying to hand out flyers or promote a brand, you get kicked off by campus security within minutes. Those llamas, man, they really delivered. They’re so weird, that we had campus police take selfies with the llama, and letting us walk around and chat with people, and people wanted to hear what we had to say.
It was just a great way to get the word out, and get people excited about the first Questival, which as I’d mentioned, is a 24-hour outdoor adventure race. We put a list of 300 tasks together, that people can choose from. They work in teams. There’s a big kickoff party on Friday afternoon, where we have vendors, some of our nonprofit partners, and people can start completing challenges right there.
We built an app that basically guides them through the experience, and they snap a picture whenever they complete a challenge, and upload that to social media. It was an incredible experience. We had, that first day, the first 24 hours of our launch, we had over 30,000 social media posts of people completing challenges and pushing them to Facebook and Twitter, or trending on Twitter here in Utah. It was just an incredible way to get the brand out there.
We felt … At the same time, people who participated, they buy a ticket, and they get a backpack in return. We see product at the same time as really exposing people through the challenge list, to what we stand for as a brand. You can pick from challenges such as build a fire without matches, like outdoorsy, survival-type challenges, various hikes and outdoor activities, mountain biking, whatnot.
There are also humanitarian do-good challenges, where we have clean up a park, or volunteer at a food bank or a homeless shelter, et cetera. It was just an amazing way to expose people to who we were, who Cotopaxi and what Cotopaxi stood for, and the results were incredible in terms of really creating these evangelists for the brand, that really felt strongly about Cotopaxi and wanted to promote it and talk about it on line and with their friends. It was an amazing, amazing experience for us.
That has then led to rolling it out into a full event series, where we did, the first year we did six events in Salt Lake, in San Francisco, Seattle, Denver, Portland and Las Vegas. This year, we have close to 15, for the first time on the East Coast, Boston, New York, as well as Chicago, San Diego, and we’re going back to all the cities where we were in before.
It’s really become a part of the brand, and people recognize us for it. You’re absolutely right, it is a lot of work. Putting these events together is not easy, and so it takes a lot of effort and can cost a lot of money if you’re not careful. It has worked really well for us, but I think, and I strongly encourage other entrepreneurs to think through, “What is the …?” Not do a Questival, right? It works great because we’re an outdoor gear brand, but think through, “What could be … What could I come up with in terms of physical experiences, that let me build a genuine relationship with a customer base, and a customer base that I can then go back to and poll and get feedback from and listen to?”
I think that’s the mandate. What is sort of the equivalent for other brands in terms of physical, in-person experiences? We’ve definitely found that to be a great, great way to enter a new city and really get the word out in a very genuine and unique way.
Felix: Yeah, that’s awesome. I had no idea that this was a part of your company from the very beginning. You did this once to launch, obviously a ton of work; what did you see, or what did you experience, that made you guys say, “Let’s do this again, and do this multiple times”?
Stephan: Sure, yeah, so I think there’s some hard data that is very encouraging in terms of, the people who participate in these events, they purchase a ticket so we can trace back just through the e-mail address how they are then performing as customers. We see a higher average order value, higher lifetime revenue, and so it’s a very valuable core of customers, which kind of makes sense. They’ve been exposed to the brand in a very intense, almost cathartic experience, during those 24 hours.
Felix: It’s really as immersive as you can get, going through these events.
Stephan: Exactly, and so we built in this, on the app, there is, you log your challenges but then there is also a feed, which is like a “hot or not” feed, where you see the submissions of all the other teams, and you can basically vote on the other teams. We see at every event a couple of million interactions with the brand. The last Salt Lake event, we had 3,000 participants and I think 2.6 million swipes with the app over the 24 hours, so just a very engaging experience. These cores of customers are incredibly valuable from a product customer perspective, and it’s just an amazing way to get people to talk about the brand, again, non-intrusive, non-advertising type manner.
That’s really what made us feel so strongly about this, and roll out more. We’re constantly monitoring. We’re constantly tweaking and iterating the event, to make sure it still delivers on that initial idea of exposing new, incremental customers to the brand. So far, it’s been a really amazing way to get the word out. People purchase a ticket, so these events are typically profitable once they reach a certain scale. The cost per acquisition for these customers is actually negative, so it’s a pretty interesting venue.
Felix: Yeah, that’s amazing, so what, if anything, went wrong during the first in-person event? Just for anyone else out there that’s thinking about doing something like this, what are some things to look out for that maybe you didn’t expect to happen?
Stephan: Yeah, I think for one, it takes a lot of time and effort to pull this off. We had all hands on deck for several weeks to make this happen, in addition to launching the business, which in and of itself is a feat. I think that’s one thing to look out for. Make sure you don’t let any of the other balls that you have in the air drop, because you’re trying to pull off an event.
I think the other thing is too, we had a very specific problem if you will with our initial event, where now all the voting and judging of the teams … There are winners, right? The teams who accrue the most points over the 24-hour period, they get a big prize. It’s like a travel … Last year’s winners, they went to the Questival world championship tour, which just happened four weeks ago down in South America. The winning teams from each city raced against each other from Belize to Panama, and basically did a Questival down there with humanitarian projects on the way, and just various cool adventures.
It’s a big-ticket premium, and people were really excited about it. Now, all the judging is done by the participants themselves, but for the first event we actually pick the winners, like we, Cotopaxi, by looking at their content and how many points they had accrued and whatnot, and filtering out for any inconsistencies and whatnot.
Man, that was a big uproar, because people accused us of rigging it, and not being fair. That’s just a … If you do some type of a race, and then just be very clear about how does … What are the rules? Who’s enforcing them? Who’s picking the winners? Just try to extract yourself as much as possible from that whole process, because otherwise you may take the blame of not being [inaudible 00:50:40].
Felix: Makes sense. How do you … You did this once, for the launch. How did you guys prepare to scale something like this up, to have multiple events every year?
Stephan: Ultimately, it’s a matter of … Similar to the product discussion we had, we are not events people. We had never done this before. We pulled the first one off, and it went really well, but man, it was so much work. In order to scale it, again, we recognized that we needed somebody who had done this before. We brought on board our VP of events, Seth, who is one of the founders of the Color Run.
Felix: Oh, cool.
Stephan: You may or may not be familiar with it. It’s basically these races, these 5Ks, where you start with a white T-shirt, and then they throw chalk at you at various stations, so you end up with this crazy color everywhere, and people are super happy. It’s not timed. It’s about, again, the experience of doing a 5K, as opposed to the time with which you complete the race.
He was one of the original founders. They had millions of racers over the last couple years, so very experienced event professional, and he basically oversees all our Questival events now, with an event director, Flip. It was that recognition of, “We cannot do this alone. We need some help,” and we brought somebody on board who could do that for us.
Felix: Makes sense. For anyone out there that’s thinking about going down the same path, do you have any recommendations on how they can get started if they’re a very small company, with a very, very limited budget, and they’re just trying to dip their toes into, trying to launch in-person events, to connect with the community, to build these relationships with customers?
Stephan: Yeah, I think my recommendation would be to just try something really small. Invite people, and we still do a lot of that stuff as well, invite people to come to your office, and have just a get-together there. We had barbecues at our office, where we had people just show up. We threw some burgers on the grill, and we talked about product and showed them new prototypes and got feedback.
We organized hikes, where people just come, meet us at our office, we’ll go on a hike together with the founders. We have all kinds of people that come together and just spend time together and chat and really get an understanding of what matters to them when they purchase and think about outdoor gear.
None of these take nearly the capital or the time and effort to organize as a 1,500-people event, but I think it’s a great way to get started and to get a sense for, “How could this work?” Then, maybe you do something at just a small venue, without big permitting or anything like that, but just basically start small, just like you would with any … Sort of this idea of a lean start-up methodology, which I’m sure a lot of your listeners are familiar with.
I think the same applies to events. You start with sort of your MVP, and then you iterate, iterate, iterate, and learn along the way. I think for events, it’s the same thing. Start small, and then continue to grow it from there.
Felix: Makes sense. What are some goals for the remainder of this year? What are some goals you have for Cotopaxi?
Stephan: 2016 is an amazing year for us. It’s the first time that we’re actually opening up the company to wholesale, so we’ve received so many inbound requests over the first 14, 15 months of the business, of retailers saying, asking us if they could sell our product. We started to pursue that in earnest this year, so we’ll be in REI starting in the fall, and various specialty retailers in the Pacific Northwest and other places. That’s an exciting development, wholesale.
We’re moving our office. We outgrew a very small space here in Salt Lake, and are actually moving to a downtown location and are opening a retail store, which we’re really excited about, first foray into retail. Those are sort of the big, strategic projects for us this year, obviously besides scaling and continuing to grow our e-commerce base, as physical retail, our own store, and wholesale.
We’re very much in our infancy. Two years is nothing in the lifetime of a brand, so we’re still very much in listening and learning mode, but are seeing some really encouraging early signs and signals from the market. I’m really pumped to meet a lot of our customers face-to-face in our physical retail space. That’s really the big, strategic projects that are on the docket for us.
Felix: Awesome, very exciting times for you guys. Thanks so much, Stephan. Cotopaxi.com is the Web site. Again, it’s C-O-T-O-P-A-X-I.com. That’s where you can also find links to the Questival, the in-person events that they run. Anywhere else you recommend the listeners check out if they want to follow along with what you guys are up to?
Stephan: We’re really active on all social media channels. Anders runs out social media, and he’s done an incredible job. Recently, SnapChat has become a big thing for us, so follow us there, or follow us on Facebook, or on Instagram. By all means, please reach out. If you’re ever in Utah, come stop by our office. It will be in downtown Salt Lake, so we’re always excited to chat with other entrepreneurs, and just exchange notes.
Felix: Awesome, definitely check out their YouTube channel, too. You guys have a lot of great videos on there. I was watching some earlier, I think, very great, high-quality videos, especially if you want to learn more about what the Questival is like, there’s a lot of shoots or videos and documents in that.
Thanks again for your time, Stephan. I’ve really enjoyed talking to you.
Stephan: Yeah, same. Thanks, Felix, so glad to be part of the community, thank you.
Felix: Thanks for listening to Shopify Masters, the e-commerce marketing podcast for ambitious entrepreneurs. To start your store today, visit Shopify/com/masters to claim your extended 30-day free trial.