Traditionally, the role of business has been to make money and increase returns for shareholders, but a cultural shift may be underway that is driving more companies to make giving back part of their mission as well. This change is being driven by events such as the amplification of existing inequalities during the pandemic, an increase in environmental disasters caused by climate change, and consumers using social media to put greater pressure on brands to take a stand. about social problems.
Instead of putting profit above all else, leaders can also measure value by how their businesses benefit people, communities and the environment. The rise of companies posting work related to environment, society and governance (ESG) and sustainability, as well as the rise of companies earning B Corp certification, illustrate this growing trend. This essential paradigm shift may be key to the sustainability of our workplaces, our country, and our planet.
An example of a leader who uses business as a force for good is businessman Davis Smith, founder of Cotopaxi, an adventure equipment company that uses reused, recycled and responsibly sourced materials. Cotopaxi is a certified B Corporation that fights poverty by allocating a percentage of its income to the Cotopaxi Foundation, and is also a member of 1% For The Planet, committed to donating at least 1% of its annual income to environmental causes.
Smith’s mission to create a company focused on nature, travel and giving back was shaped in large part by his childhood. He was born in Utah, but his father’s work with the Church of Jesus Christ of Latter-day Saints led the family to places like the Dominican Republic, Puerto Rico, and Ecuador (Cotopaxi is named after a volcano in Ecuador near where he lived as a child).
“Growing up in the developing world, I always knew I had a responsibility to find a way to use my life to help others,” says Smith. “My family didn’t have a lot of money by American standards, but compared to the people we lived with, it seemed like we had a lot. I recognized that I had different opportunities not because I was smarter or hardworking or more deserving, but just because of where I was born.”
While in college, Smith read an article about Steve and Bette Gibson, successful entrepreneurs who sold their business and used that money to teach returned missionaries in the Philippines business skills to help lift them out of poverty. A chance encounter with Steve Gibson in an elevator at Brigham Young University, where Smith attended school, gave Smith the opportunity to apply for a job with Gibson’s nonprofit organization. However, Gibson warned that he could have a much bigger impact as an entrepreneur than a nonprofit worker.
So Smith embarked on his entrepreneurial journey right out of college, starting PoolTables.com with his cousin and making $1 million in revenue in his first year alone, but he hadn’t yet figured out how to tie that business to social impact. She went on to get her MBA and co-found another company, Baby.com.br, before leaving that company and founding Cotopaxi in 2014.
“Being an entrepreneur is not easy, and you are certainly not guaranteed success, but I was a bit lucky and built a couple of businesses before starting Cotopaxi that prepared me to be able to build this brand.” Smith says. “It was about finding a way to use capitalism as a force for good in the world.” Here are some lessons from Smith on how to build a business that gives back.
Find an idea you can scale
Smith always loved the outdoors. Growing up, Smith would go on survival trips with his father and his brothers, spear fishing and gathering coconuts to eat. He still goes on backpacking trips with his family. In terms of developing a business idea centered around his passion for the outdoors, he was also looking for a big idea that he could really scale.
“If I wanted to make an impact and be a part of eradicating poverty, I knew I needed to build a business that could be worth a billion dollars or more,” says Smith. “The outdoor category is very big, and frankly, I felt like there was an opportunity to expand it. It was also very exclusive and there was an opportunity to welcome a more diverse outdoor community. And that was one of the visions for this category. and the other part [pertaining to eradicating poverty] is that there may not be an obvious link between the outdoors and poverty, but I felt that people who love the outdoors have experienced something bigger than themselves, and those who have traveled and connected with different people understand by why this is important and our mission”.
Identify where you can have an impact
Smith says that when he started the adventure gear company, he knew he didn’t want to do a one-for-one model, which is giving away one product to someone in need for every product sold. “There are a lot of great companies that do that, and I think that’s wonderful and I don’t want to criticize companies that do good in the world,” says Smith. “But for me, having seen poverty for much of my life and having lived in the developing world, I knew that if we sold a backpack and then gave it to someone, it really wouldn’t change much for them – to continue living. in poverty. What he really wanted to address were the core roots of poverty. So we identified health care, education and livelihood training as the three pillars that we believe are inextricably linked to poverty alleviation. Our efforts are focused on those three pillars.”
Know your core values and put people at the center
Cotopaxi’s core values are people, adventure and innovation. “We knew what our core values were before we sold a single backpack, and we intentionally created rituals and traditions that reinforced these values,” says Smith. “While those rituals and traditions change over time, the core values never change.”
For example, before Cotopaxi switched to remote work during the pandemic, Smith believed that people needed to be together in the office to intentionally build a culture. Now that Cotopaxi is remote, he is a firm believer in remote work. Since people are a core value, he wants to maintain a culture where people feel a sense of purpose and belonging. Cotopaxi adjusted its rituals to fit the new environment, such as having the team go on a virtual walk every other Friday. Later, someone from the team does what he calls a “life saver”, where they present their life story to the entire company. “Maybe they share a childhood where their parents were divorced and they talk about how challenging that was,” says Smith. “They are human and vulnerable in a really amazing way that didn’t happen when we met in the hallways at work. So we’re creating this new level of connectivity between us that didn’t exist before.”
Smith says she has seen how the move to remote work helped the company attract more women and diverse candidates due to flexible hours and the ability to expand geographically where they hired. Additionally, Smith says that having a purpose built into her brand means they are better able to attract and retain talent. For example, she recently had over 3,000 job applications for a graphic designer position. “Recognizing people, building these personal connections, listening and serving together as a team are the kinds of things we think about when we think about culture,” says Ella Smith.
Understand that the purpose is profitable.
Smith believes that purpose and profit are inextricably linked, and the combination of the two is the future of business and capitalism. “If you’re not thinking about the planet in the way you manufacture or manufacture products; if you’re not thinking beyond your own employees; if you’re not thinking about how to improve communities, I think you’re actually going to make less profit,” says Smith.
It took Smith some time to test this theory with Cotopaxi as, like many startups, the company was not profitable in its first five years. They were giving away more money than they were making, which was at odds with their board and some investors, who thought it was time for the business to make money.
“For the last three years we’ve been profitable,” says Smith. “It didn’t happen overnight, but we’re showing that when you do the right thing, and it’s something that’s deeply and authentically intertwined with the brand and the culture, people want to be a part of it. People want to work for you, support you, use your products. The more you can discover how to impact the world for the better, the more profit you can create, allowing you to do more good. It’s this beautiful cycle.”