Spenser Heaps, Deseret News
Davis Smith, founder and CEO of Cotopaxi, poses for a photo at Cotopaxi's headquarters in Salt Lake City on Wednesday, March 14.

Editor’s note: The following is a transcript of the episode. It's been edited for clarity.

Boyd Matheson: In a day when leadership is clearly lacking, many wonder, how do you create a culture of excellence? How do you create shared rituals that bring organizations and individuals together? Is there really a way to be positive in terms of capitalism? Is there a way to make more than $1 and actually make a difference through business?

Davis Smith, president and CEO of Cotopaxi, joins us on this week's edition of Therefore, What? Therefore, What? is a weekly podcast that breaks down the news while breaking down barriers, challenges you and the status quo, explores timely topics and timeless principles, and leaves you confident to face what's next. I'm Boyd Matheson, opinion editor for the Deseret News, and this is Therefore, What?

We're very pleased today to be joined by Davis Smith, who is the CEO of Cotopaxi, an outdoor gear brand with a social mission at its very core, which is what we love to hear the most. CEO of the Year in 2016, named by Silicon Valley Community Foundation, is a member of the United Nations Foundation's Global Entrepreneurs Council and a host of other things that are very cool that I'm excited to talk about. Davis, thanks for joining us on Therefore, What?

Davis Smith: Yeah, it's my pleasure.

BM: Good to see you. And you have been busy and out there, as always, looking for ways to not only make a dollar but to really make a difference, which I think is always the challenge. I don't think it's that hard to make a dollar, I think it's a big challenge to make a big difference and sustain it over time. Give us a little sense of just Cotopaxi's mission, why is that so central to your success as an organization?

DS: Yeah, you know, every business is looking for a way to build something different, right, you're trying to identify an alpha asset that you have that no one else has that you can really double down on. And for Cotopaxi, that asset is our social mission. And largely because it's so core to who I am, we've talked about this before. But I grew up in the developing world, moved there as a 4-year-old, spent a lot of my adult life back in the developing world, and always knew I had a responsibility and duty to find a way to help others. And so this has been a dream of mine forever. And kind of putting it into action into a business has been just a lot of fun. And it's been a core reason why the business has worked.

BM: So one of the things that I've been thinking about this week, as we get close to Christmas time, I know you have done a lot in terms of work with refugees. And the thing that always comes to my mind is you read the Christmas story, and there's always that passage that I think we often miss, we kind of rush our way to the Nativity where all the good stuff happens. But there's just that little verse that says there was no room for them in the inn. It didn't say there was no room in the inn, it said there was no room for them in the inn. Because I'm certain if they had enough money, or if they had the right status, or if they were from the right town, there would have been room, there's always room.

I mean, you go to the Olympics, you go to the Final Four, and they say everything's sold out — there's always room. But you've chosen to focus and help those refugees, that again, there doesn't seem to be room for them. Tell us what you're doing to make room for them.

DS: Yeah, so when I moved to the U.S. five years ago, I was living in Brazil, within the first month of being here, one of my buddies invited me to a Christmas event. It was around this time of the year, mid-December, and it was around refugees. And to be honest, I'm kind of embarrassed to say, I literally did not know much about refugees at all. Growing up in Latin America, the places I lived just didn't really have refugees in this sense. And at this event, I was just touched to the core by their stories. And I knew I needed to somehow weave them and their stories into our business. And I used to, when we first launched, I'd write these handwritten thank you cards to our customers saying, thank you for placing order. That didn't last very long. To be honest, you know, it didn't scale. But I instantly started looking for another opportunity. I wanted to create that personal touch. And so one of our team members knew how passionate I was about refugees and said, why don't we see if we can get some of the these amazing refugees that have just been resettled to write cards. And it can be their job.

And I loved the idea, the idea of giving these refugees their very first job, right when they're resettled, their first duty is to actually pay back the U.S. government for their flights. They're in debt, the moment they arrive in the United States, they have to pay back the government for flights. And so they need to start working. And a lot of them don't know the language, they're trying to figure out this new country. And so we created this great program in partnership with the IRC, the International Rescue Committee, and we created this job club where these refugees, we've had over 100 refugees go through this program, they write the thank you card in their native language since they're still learning English. And, you know, it's one of the ways we've been able to work with refugees. We've done a number of other really cool programs.

We just actually in the last few weeks, had some wonderful girl refugees that came and spent, we're doing some mentoring group with them. And they spent a day in our office meeting all the different teams and trying to understand what these different career paths were. And there was a refugee from Myanmar that was there. And she said, so do you mean that I could start my own business? And it was like, yes, yes, of course, you can start your own business. And so for her, that was just like, just the idea that she could actually start something of her own was just something she never even dreamed of. So it's really fun.

BM: I think so often, we look at things like how the U.S. in particular interacts with the rest of the world. And often we think of it in terms of giving dollars for programs or for starving kids in Africa, or whatever it may be. And yet really, it's that entrepreneurial spark that you just described, that is really the way if you really want to promote democracy and liberty and freedom around the world. It's not going to be through a government program, it's really going to be through entrepreneurship and learning, isn't it?

DS: Absolutely. I mean, this is something I believe to the core. If you actually look back 200 years, in the year 1820, 94 percent of the world lived in poverty. When I was born in 1978, it was 40 percent of the world lived in extreme poverty, less than $1.90 a day, the equivalent of today's $1.90. When I finished high school it was 20 percent. Last year it was 9 percent. We are eradicating extreme poverty. And this is largely due to capitalism. You know, it's the idea of opening up markets and empowering people to actually be in control of their own destiny instead of government.

Of course, there's imperfections with capitalism. It can be very destructive to the planet, to the environment. And so there need to be protections there. But I agree, I mean, entrepreneurship and, you know, it's something that lifts you. Actually, one of my favorite quotes is by Elder Dieter Uchtdorf. He says, the desire to create is one of the deepest yearnings of the human soul. I believe this. I believe every human, inside of us, we have this desire to create, to build something that didn't exist before. It might be music, it might be art, it might be cooking. might be a business, but it's taking something that didn't exist. And with our own dreams, our own ambition, going and creating it.

BM: Yeah, and everyone does have that desire and being able to provide those opportunities is such a critical part of this whole thing. You mentioned in there the balance with capitalism and the environment and the planet as a whole. I know you've had some unique experiences that have influenced your perception in terms of what is really happening with the planet and whether that's with plastics or whatever it may be, share a little bit of that for us.

DS: Yeah, so I'm an outdoorsman, I love the outdoors and of course, that makes me care about the environment. I'm also a Mormon and that also makes me care a lot about the earth and protecting it. And I love doing survival trips. I think we've maybe even talked a little bit about this in the past, but I love going to a place and bringing just a few things. I'm bringing a machete, I bring a mask and fins, and I bring a spear and I'll go survive for five days on coconuts and fish that I spear and stuff. So it's weird. I don't know why I like it. But I do. So I do this maybe a couple of times a year. And earlier this year I was in a part of Mexico, a very remote part of Mexico, no people anywhere, hours away from people. There's no boats in sight, nothing, just me in the ocean. And when I got to this little remote beach, there's no signs of humans anywhere except plastic. And there's plastic everywhere for 100 miles on this beach. And this wasn't plastic that was dumped there by people in trucks or something. This was plastic that washed up from the ocean. And it was flip-flops, toothbrushes, plastic bottles, bottle caps, and some of this was actually brands, U.S. brands, and it was like, oh my gosh, it is just so sad to see what we're doing to this planet. And these plastics, they never go away. Every piece of plastic that's ever been made by humans still exists on the planet and so that for me was a shocking moment and I wouldn't say I'm a crazy environmentalist. I'm not, but this moment did change me. Whenever I use plastic, so a plastic water bottle or the single use plastics like cutlery when you're at a restaurant or on an airplane? It pains me because it's like I know where this is going to go. So it's something that I'm not sure what the solution is, other than we all need to be aware and we need to look for opportunities to do better.

BM: Yeah, and I love the fact that you pointed out that this is not about any extreme position one way or the other, it's about stewardship.

DS: Exactly. And this isn't right or left. This is something that people are united on, that we do care about our planet and we should be wise in the way that we use the resources of our planet.

BM: So I want to shift gears a little bit and talk just from a business perspective. One of the big things that you're known for at Cotopaxi is just this thriving culture within your organization. And I'm one of those guys who believes that culture just trumps everything else. In the end it eats strategy for breakfast. It, you know, overcomes opportunity or capital or anything else. So describe your vision of the culture within Cotopaxi. How do you develop it? How do you sustain it, especially when you're succeeding?

DS: Yeah, so I had an interesting situation. This is probably a year and a half ago, we were lucky enough to be named by the Deseret News as the No. 1 place to work in Utah. I was proud, you know. Of all the awards you could ever get as an entrepreneur, that's the best. That you created a place for other people to love coming to work every day. And about a month or two after that, one of our early employees came and talked to me. And she said, hey, I just wanted to come talk to you and know, things just aren't the way that used to be. And it's not that same place. And you know, she wasn't as happy as she was early. And my first instinct was to be like, did you not see that we were named the No. 1 place to work. But in reality, you know, it was a wake up call, because I realized this isn't something that you just build. And then it's done. Culture is something that you have to work on every day. And I literally work on it every day.

Every day, I have a tool actually, that I use to measure our culture internally. And how it's moving. And I can actually analyze this data by gender, I can analyze it by tenure in the company, how long or how short you've been there. So if I see that there's a trend where, like, maybe the newer employees are loving it more, and like the older employees maybe aren't, it's like, OK, what do I need to do different? What have we changed? I can do it by department. I can't see an individual's feedback, but I can kind of understand the general trends in the business. And so that's something I measure daily. And frankly, it's the most important job I have as a CEO. I need to create a place where people want to come to work every day, where we can attract and retain the best talent. And so it's something that matters deeply to me. And it's something that I really learned through mistakes in my previous businesses, and I've worked hard in this business from the very, very beginning to find ways to build traditions and rituals around these core values that we identified very early in the business.

BM: I love that. I want to ask you, because you hinted at this, that it's not something that you just do and check off the list as a CEO. It's an ongoing thing. I've always said the most dangerous day in the life of an organization, any organization, business or otherwise, is the day you're successful, it's the day you get the accolades in the paper, it's the day you hit No. 1, because it's so easy to rest on your laurels or to get comfortable. And usually the first thing that goes is the culture. So what do you do in addition to monitoring, which very few leaders today do. They'll look at the spreadsheets with the balance sheet, they look at inventory, they look at a few customers satisfaction surveys, but very few are looking at how do I measure the culture? And then what do I do about that, to sustain that level of excellence over time?

DS: Yeah, so again, I think what this goes back to is this has to be done by design, not by default. You'll have culture no matter what. And you can just let it happen. Or you can actually create it. And it'll evolve over time, which is why it's so important to have these core values. So things can change, but they're always going to rotate around those key pillars, right. And so, you know, with this business, the first thing we did with my founding team, when I had this idea for the business, I flew in from Brazil, other people came, and we met in a cabin here in Utah, some people had never even been to Utah before. We sat down and we talked about what these core values would be. I painted this vision for the type of business and brand I wanted to build, the type of culture. And we didn't talk about our product, or our go to market strategy. We talked about the core values, and then we built traditions and rituals around those that we try to reinforce.

And that means coming back to them constantly and saying, how are we doing with this? You know, do we need to do a better job of incorporating people as one of our core values? Are we focused enough on our own team? And are we thinking about them, like, OK, when you first start, you might not have to even think about, hey, what am I going to do with maternity leave, right? And then all of a sudden, you have a situation where it's like, oh, it's time to think about it. We need to create a policy around this. And how do we build a policy that's going to be as generous as possible, but also that's going to keep in mind that we're a business and we have to operate. So, you know, it's constantly going back to those values, but it's not just putting them on the wall. It's truly about integrating those values into every aspect of the business in the culture.

BM: One last thing I want to hit on this culture piece, because you mentioned it twice. And it's something that I think is vital to any living, breathing, growing, improving organization and that is rituals. Tell us more. What does that mean, in the Cotopaxi world?

DS: Rituals are things that are immovable. And I say that because it's really convenient sometimes to say, OK, I know we've done this, but there's some reason why we can't do anymore. For example, maybe not even the best example. But we have what we call an all hands meeting that we call Academia at Cotopaxi. And it's about learning and developing people. And so every other Friday morning, we get together as a team. And we kind of do an all hands, where everyone's kind of giving quick updates. And then we have a learning session where we teach anything from negotiation skills, like I had this great class at Wharton, where I kind of used that framework, we taught this framework to our team. And then in a couple of weeks we're actually doing a workshop with this professor from Wharton that's going to work us through a negotiation scenario.

So it's creating these traditions that are happening, and rituals that are happening. And there have been times where it's like, hey, it's just really, really busy. Why don't we just skip Academia this next time? We will never skip it. Because if you ever do, it just becomes that much easier to not do it in the future. And it's hard. And I'd say the same rule applies to any organization, not just business. And so, I think of my family, you can either develop your family's culture by design, or by default. And for a long time, mine was done by default. And I had to sit down with my wife and we had to sit down and decide what are the values that we represent? And how do we make sure our kids understand what those are? And how do we build rituals and traditions around these core values in our own family? And it's been transformational for us.

BM: Absolutely. I always joke we had one of our shared rituals in my family, a family of 11 kids, was every Saturday night, 5 o'clock, we all were expected to be at home and we would sit around the counter and we had like the mother of all kitchens, it was like a café counter. And we'd all sit around and my dad would make pancakes. And that was a ritual. And I don't know if you've ever had pancakes in a large group before, you know, they don't come in stacks. One at a time, about 10 minutes apart. But yet, that ritual became so important because it was during that long process of waiting for the next round of pancakes to come that my parents were asking important questions. They were listening, they were sharing insight. And it was one of those rituals that just, it was immovable. And that shared ritual became the substance to move things forward.

So I want to look now at another component to leadership. You've been involved over the past year with a very interesting group of leaders from around the country, young executives. And you've had a very interesting perspective from two presidents, past presidents of the United States, between George Bush and Bill Clinton. Tell us a little bit about that experience. And what did you learn in that process?

DS: Yeah, so a number of years ago, Bill Clinton and George W. Bush decided to work together to create a leadership program. And they called it the Presidential Leadership Scholars, there's about 60 people that are admitted to this program once a year, and you go spend time studying presidents, including those two. But also, George H.W. Bush, I had an opportunity to meet him and Barbara earlier this year, shortly before she passed. Just an amazing experience, an amazing experience to be that close to a president. And, you know, when I moved to the United States as a teenager, I never would have imagined that I'd be able to meet Bill Clinton in person. And then, of course, later on, George W. Bush and George H.W. Bush and I think my biggest takeaway from these three presidents, one thing that they all shared in common, because they're all very different people, different values and different perspectives. But all of them care deeply about people. You know, George H.W. Bush, since he's recently passed, I'll just say he was probably the finest person to ever be president to the United States. He never wanted it to be about him. It was always about celebrating the success of others. If something good happened, he would always push the praise to someone else. And if something bad happened, he would take the hit himself. And that's just rare. We just don't see that very often, especially today. And he was someone that I think all of us just admired deeply. Regardless of our political affiliation, this group is a mix of people from the right and the left and the middle. And you know, one beautiful thing too, is we got to understand these different people. And we learned to love them. This group, we're like family. I mean, we communicate every day. There's probably 100 to 200 text messages daily that are happening. It's really cool. In fact, after our talk tonight, actually, one of them's here in Utah, we're going to get together tonight. So it's a very, very close group. But we are every spectrum of the political spectrum, we're anywhere on there, right? And so, you know, there's one person, one of the most brilliant people in our group, that was very supportive of Donald Trump and other people on the other side were just like, how can that be possible? But as we kind of share our different perspectives, all the sudden, you're like, oh, I understand where you're coming from. And even though I don't agree with you on all these issues, I respect you deeply as a person. And I understand now how a person can support someone, and maybe not necessary agree on everything, but they can be a good person still. Because sometimes we demonize the other side.

BM: One of the things that we're tracking here at the Deseret News, we have an event coming up in January with Bob Woodward and Elder D. Todd Christofferson from The Church of Jesus Christ of Latter-day Saints talking about integrity and trust today. And in our meeting today we were discussing that many people around the country complain about the inability to compromise and come together. And one of the interesting things that came out is that in order for that to happen, if I'm going to compromise with you on something, that has to be based on my trust in your integrity. That you will do what you say you're going to do as part of this negotiation. In your leadership, both in terms of your experience with the presidential folks, but also in terms of business, how have you seen integrity and trust come into play? How has it impacted your business? How has it impacted you as a person?

DS: Yeah, I would say maybe, for me, one of the best examples is my relationship with my business partner at Cotopaxi. I met my business partner in business school. So we were both at the Wharton School together. He's from Germany, from Munich, and moved to the U.S. with his wife. And we just, we instantly hit it off. We both had, you know, some shared passions. He'd been in the German special forces, loved the outdoors and had traveled a lot, been involved in a lot of nonprofit work. And was an entrepreneur. And so we really just hit it off. And, you know, we come from two different worlds and two different religious perspectives. But in the five years we've been working together, we've never had a single argument. And it's not because we see everything perfectly eye to eye. We sometimes see things differently in the business, but there's just a mutual level of trust and love and respect for each other, where I never would say, if you see something differently, oh, you know, it's because you're compromised in some way, or you just don't see this right. It's like, OK, I respect him so much that I'm going to try to understand where he's coming from, because there must be a reason he's seeing this differently than me. But that takes time too, and it takes a little bit of faith in someone else.

BM: Yeah, and a lot of mutual tolerance. All right, as we come down the homestretch today, a couple questions for you. One, I have a baseball collection which we talk about on this show pretty regularly, but the most important autographs that I have on baseballs are not famous baseball players. They're people who have made a difference in my life. So teachers, bosses, coaches, authors. So if you were starting your version of a wall of fame, what's the first autograph you would go get? Who one of the high impact people for you?

DS: Actually before I even answer, because I know who it is, but I, just a little side fun comment: Dale Murphy. I love Dale Murphy. I you know, I grew up in the Caribbean playing baseball. Dale Murphy sent signed balls to my entire team. And I still have this ball. It says "Best wishes, Dale Murphy." And he reached out recently, he's going to come to our office at Cotopaxi in a couple of weeks and I have balls for our teams that he's gonna sign. So this is like, very relevant. But the person I would choose that's not a baseball player would be a man named Steve Gibson. This is a mentor of mine. I read about him, actually, in a Church News article when I was just back from my mission. And he was an entrepreneur, he had sold his business, he was probably around 60 years old. He had, you know, the next 30 years of his life to just go enjoy on a beach if he wanted. And instead, he and his wife went and moved to the Philippines. And they opened up a school teaching entrepreneurship to poor Filipino returned missionaries, teaching them how to get on their feet. And it was so inspiring to me, I cut out this article, I carried it around school for 3 1/2 years at BYU in the front cover my clear face binder. I idolized this guy, I mean, he was just so inspiring to me, not because he was wealthy or was a great entrepreneur. I didn't even think about entrepreneurship at that point in my life. It was really just that this man had identified some talents that he had. And he used those talents to lift others.

And so fast forward, I was finishing school, I actually ran into him, I saw him getting into an elevator on campus. I ran into this elevator, right as it was closing, he was trapped, he had to talk to me. And, you know, he was my inspiration to become an entrepreneur. He encouraged me to go do something, he told me that he saw something in me that I could become an entrepreneur. I've now learned he tells everyone that so I wasn't really special. But he made me go pursue something that he maybe saw in me. And so he's become a great mentor of mine, I still get together with him frequently. And so Steve Gibson would be my signature on my ball.

BM: Davis, as we come down the homestretch, the last segment of this show is Therefore, What? Because it always comes down to what do we do about it? What do we change? What's different? So for our listeners today, they've been listening for the last 25 minutes, what do you hope their Therefore, What is? What do you hope they come away from? What do you hope they do differently, or think differently, or apply differently than they did before they started listening today?

DS: I feel so lucky to be here, all of us are so lucky. I mean, we could have been born somewhere else and our lives would be completely different. We're not here because we're special. Or because we're more deserving or harder working. We just really were blessed and lucky. And I can't help but think every single day that we have a responsibility, every one of us, to look beyond ourselves. And so my hope would be that — it's hard sometimes to do that, right. But my hope would be in this holiday season that we would all do that. In 1997, I was a missionary for The Church of Jesus Christ of Latter-day Saints, and I was in Bolivia, I was in a really remote part of the country, took several days to get there and I talked to my family for the first time in my mission and I was so excited to talk to them. The phone call finished and I just felt depressed. It was like here I am in the middle of nowhere, I don't get to be with my family, and I started feeling sorry for myself. And that afternoon some of the other missionaries had organized for us to go to an orphanage and we went and spent the rest of the day, Christmas Day, with these orphans. I'll tell you what, those feelings of self-pity disappeared pretty quickly. And I'll never forget that Christmas. It was the best Christmas I ever had and I hope that this Christmas season we can all remember that. That we can look for what really matters and look for ways that we can get beyond ourselves.

BM: Davis Smith, CEO of Cotopaxi, social entrepreneur, and one of the most authentic leaders I know. Great lessons, thanks for being with us today.

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