A more compassionate capitalism, with Cotopaxi's Davis Smith

Executive overview

Davis Smith built Cotopaxi, an outdoor gear brand that donates 1% of all revenue to fighting poverty, while scaling to $150M in revenue. His approach demonstrates that conscious capitalism—balancing profit with purpose—can attract better talent, reduce marketing costs, and ultimately drive higher profitability. The company operates as a certified B Corp, incorporating social impact from day one rather than bolting it on later.

When you do business the right way, the costs savings and benefits compound back into greater profitability and impact.

The early lesson: efficiency before scale

Davis's first venture was a baby e-commerce business in Brazil that grew to $20M in revenue but accelerated losses because he prioritized growth over profitability. He scaled without building efficient operations first—a one-degree misalignment at the foundation became twenty degrees off at scale. The experience taught him that validation and efficiency must come before aggressive growth.

Finding the right co-founder

When starting a business, it's tempting to partner with close friends or family. Davis learned it's better to: find the right problem first, then recruit a co-founder who can solve it. Choose based on complementary skills and mission alignment, not familiarity. This prevented repeating the relationship damage from his first venture.

The 36-hour vision sprint

After years of struggling in Brazil, Davis spent 36 hours writing down an entire business vision for Cotopaxi: colorful backpacks, using remnant fabric, powered by a social mission to eradicate extreme poverty. He describes it as divine inspiration. He had no outdoor industry background and most investors rejected the idea ("We already have Patagonia"), but he had unwavering conviction. Early believers like Kirsten Green from Forerunner Ventures invested in his vision before he'd sold a single backpack.

Building the founding team on purpose

Davis recruited industry experts—award-winning designers from outdoors companies—via LinkedIn rather than his personal network. Five people met in a mountain cabin in Utah where he shared the vision. His childhood love of adventure (camping, backpacking, traveling with his explorer father) merged with his passion for social good.

The brand origin story

The name Cotopaxi comes from a snow-capped volcano in Ecuador where Davis attended school and camped with his father. The llama mascot originated from a childhood camping trip at the volcano's base, where llamas walked through their campsite—a magical moment for an 11-year-old. Llamas, always in herds and never alone, symbolize togetherness and community.

Launch with experiential marketing

Instead of traditional advertising, Cotopaxi launched by buying llamas and visiting college campuses, announcing a 24-hour adventure race (scavenger hunt style). Participants formed teams, did outdoor activities or community service for points, and received Cotopaxi backpacks. This single event generated 30,000 social media posts in 24 hours and reached 5,000 people wearing the product at the launch celebration. The brand lived through participants' experiences before they'd bought anything.

Funding and early growth

Davis met with ~1,000 investors total over his career and faced significant rejection. His missionary experience (knocking on doors, facing rejection) prepared him to absorb it without losing conviction. Early investors included Kirsten Green, Warby Parker founders, Harry's founders, Andy Dunn from Bonobos, and friends from business school. They invested in his vision, not a proven business model.

Impact as core business strategy

Cotopaxi committed to donating 1% of all revenue to fight poverty—even in years when the company wasn't profitable, meaning the 1% commitment sometimes exceeded profits. Davis initially oversaw impact work personally, but a hired chief impact officer (from Salesforce) challenged his ad-hoc approach: she questioned his orphanage donations, asking how he measured impact and verified results. This led Cotopaxi to hire a chief impact officer before a CMO, prioritizing impact rigor over marketing spend. The board questioned the investment, but Davis insisted: "If we don't get this right, nothing else matters."

The B Corp decision

In 2014, Davis wanted to incorporate as a benefit corporation (a legal structure aligning profit with purpose), but his attorney advised against it—no venture-backed company had done it. Warby Parker had converted after launch, but starting as one seemed risky to investors. Davis ignored the advice: his conviction that the right investors would align with his values overrode the risk.

Why capitalism works better when done right

Conscious capitalism isn't just moral—it's economically superior. Benefits include: attracting and retaining talent that competitors can't, generating word-of-mouth marketing that reduces customer acquisition costs, and sourcing materials (using 5M backpacks from leftover/remnant fabric from other outdoor brands) at lower cost with lighter environmental impact. Doing business the right way saves downstream costs and compounds into higher long-term profitability.

Stepping back from the CEO role

After building Cotopaxi to ~$150M revenue, Davis recognized other leaders were better suited to scale it further. His church asked him and his family to lead a three-year mission in Brazil—a calling that aligned with his deepest values. The decision was hard but easy: he stepped down as CEO while remaining on the board. He's mentoring young missionaries and planning future involvement, likely as executive chair, rather than full-time CEO.

Leadership in values-driven transition

When replacing himself, Davis prioritized: (1) alignment with company values and mission understanding, (2) relevant experience taking businesses from Cotopaxi's scale to much larger. He kept his role as a visionary on the mission side while bringing in more experienced operational leadership. He publicly shared the search on social media, staying involved in finding the right person.

Inspiring other leaders to build consciously

Davis's approach to spreading conscious capitalism is through example, not evangelism. He speaks on stages about what Cotopaxi represents, rarely discussing product. This resonates because humans are inherently good and want to do good—they often just need examples. CEOs have approached him for advice on weaving purpose into their business. The key: find something you're genuinely passionate about and integrate it authentically into how you build, rather than adding it later as a compliance layer.