Decision & Positioning #008 A Once-in-a-Lifetime Backpack

Hi everyone, good morning!

Cotopaxi Background

This is an outdoor leisure sports brand founded in 2014, using a llama as its trademark. In 2021, it successfully raised $45 million (approximately 1.8 billion Taiwan dollars) as Series C funding. By 2022, it had become a company with 350 employees and annual revenue of $100 million, with over 40% annual growth. This company's most famous product line is a unique backpack series—backpacks you can only buy once in a lifetime.

If it were simply custom backpacks, there would be nothing special about that. But this company, from its very first day, wanted to be a profitable enterprise that solves poverty and supports community development.

Founder's Key Decision #1 - Use Mission to Find Like-Minded People, Even When Rejected 100 Times

To get Cotopaxi started in 2014, founder David needed to raise funds. At that time, David first approached his lawyer friend for fundraising advice. His lawyer friend seriously told him: "When you're fundraising, don't mention that your business is for charity, and don't mention that your business will donate a certain percentage of revenue to charitable work. No investor will be interested in investing in a business that starts donating money before it's even profitable. You can transform the company after getting it on track."

David completely agreed with his lawyer friend's thinking because every investor invests to earn high returns and wouldn't want to invest in a company that might decide to pursue charitable missions as its vocation from the beginning. But David believed he wanted to create an enterprise with this as its mission, and he didn't want to hide anything.

So he took this plan (the company exists to solve world poverty as its mission, and the company will donate income for charitable purposes) to various investors to explain his plan.

Just as David's lawyer friend predicted, no investors were interested in such a company. David was rejected over 100 times. Several months later, an investor finally became interested. His requirement was that he was willing to invest $1 million, but only if David could find other investors totaling $2 million in investment.

So David approached many friends and family, past business partners—over 20 people to participate in the investment. Finally, they launched Cotopaxi with nearly $3 million in seed funding.

David mentioned this process in an interview: "I was rejected every day. It was painful, very painful."

(I imagine if I were full of enthusiasm interviewing at various companies of interest and experienced 100 rejections, unable to get hired anywhere, that frustration would be enormous... I might even be living off my parents by then...)

David also searched LinkedIn for partners essential to developing an outdoor sports brand, including product designers and outdoor equipment designers who had worked at major outdoor sports brands. From day one, he explained the brand's purpose, meaning, and values to attract like-minded partners.

David firmly believed that before discussing products, before discussing market entry strategies, when work partners have strong core values from the beginning, that ultimately drives results. Because core values ultimately shape organizational culture, culture ultimately shapes and determines every employee's and the company's behavior, and ultimately these behaviors determine employee and company results.

Founder's Key Decision #2 - Recreating the Supply Chain

1. Unique Bags [Del Día]

Cotopaxi didn't have its own factory from the beginning. To ensure overall product quality, Cotopaxi found Philippine factories used by other major brands through various connections. When the founder visited the factory, he saw that other major brands, in order to cut fabric pieces of the same size, specifications, and shape to make backpacks and other products, created large amounts of waste fabric scraps.

When David saw these fabric scraps, he thought: "These are good materials that shouldn't be carelessly discarded." So he made a decision to ask local factory seamstresses to use these fabric scraps to create unique backpacks.

These seamstresses had worked at this factory for an average of 11.5 years. They were remarkable craftsmen and artists, but they had never had a voice in the creative process. They had never been given the freedom to make their own choices. They were simply told what to sew and how to sew—that's what they had to do.

So David told them: "Hey, we want to give you creative control. You can choose any materials you want, any colors. There's only one rule: don't make identical bags."

Thus Cotopaxi created the Del Día backpack series. This program not only helps keep good materials from going to landfills but also allows factory seamstresses to express creativity, resulting in completely unique backpacks.

2. Alpaca Wool Series

Another example is Cotopaxi's alpaca wool series. Cotopaxi uses natural insulating fiber from alpacas raised in some of the most remote areas of Bolivia's high desert Altiplano. Alpaca wool is hollow, lightweight, self-insulating, and hypoallergenic.

Cotopaxi works closely with local communities to protect alpaca farming traditions and create market access for rural smallholder farmers who usually earn less than $100 per year (yes, per year). Cotopaxi's alpaca wool sweaters became the most popular sweaters in Kickstarter history (similar to Taiwan's Zeczec crowdfunding platform).

3. Other Initiatives

Reflection

A famous tech investor once said:

David's ambition was enormous. He wanted to create a profitable enterprise that would not only be profitable but exist for charitable purposes from day one. Past companies only started giving back to society when they began making money or making big money (rather than giving back to society, it's more like tax deductions).

In one interview, David excitedly mentioned: "We are doing good and we do well."

This is an exciting story because it shows me a different mode of capitalist operation. When founded on day one for charity and sustainability, it doesn't mean you can only rely on others' charitable donations to exist. You can recreate the supply chain through capitalism, making every link in the supply chain humane while also allowing for creativity.

Purchasing consumers can also vote for the future they want through their purchases. When they're willing to buy sustainable products, they're undoubtedly supporting enterprises committed to sustainability and fighting poverty.

I've always felt that "to be rich, one must be heartless," and while this saying still has some truth, it may also limit our imagination. Although money and capitalism have brought much destruction to the world, exploited the poor, and created class conflicts, if we become good animal trainers, perhaps we can also bring warmth to this broken world through capitalism.