How Cotopaxi CEO Davis Smith Built A Business That Creates Impact

How Cotopaxi CEO Davis Smith Built A Business That Creates Impact

I had the opportunity to interview Cotopaxi CEO Davis Smith for The CEO.com Show. Throughout my career, Smith has been a source of inspiration and insight into how capitalism can be used for good.

Smith's mission in life is to alleviate poverty. He strives to achieve this goal through Cotopaxi, a premium outdoor gear and apparel brand he founded in 2014.

You can watch the full interview on YouTube (please subscribe to our channel). You can also listen to the full interview by subscribing to The CEO.com Show on whatever podcast platform you use.

The transcript of the interview is published below.


Clint Betts:

Davis, I want to talk to you about building a business for good, and in particular, doing capitalism for good. I'm sure you've read ... Is it John Mackey, the Whole Foods CEO ... Conscious Capitalism. He wrote a book that ... whenever I think of that book, I think of you, actually. You're like the first entrepreneur that comes to my mind as someone who believes in the power of capitalism to do good. And you've set up Cotopaxi as a benefit corporation. What does it mean to you to build a business for good?

Davis Smith:

Yeah. You know, for me this has been a journey. It's been a journey of figuring out what is the purpose of business. If you have a desire to do good in the world, how do you integrate that desire together with a business? And that wasn't obvious for me. I spent over 10 years building two other businesses before I kind of figured this out, and I'm still figuring it out, to be fair, but for me, it's really about ... I guess to answer your question, it's really about integrating these two things seamlessly.

With my very first business ... I had an e-commerce business site that I started out of school ... I had these desires to find a way to make the world better. I'd grown up in Latin America, I'd seen poverty most of my life, and I recognized how fortunate I was. Even though I didn't come from a wealthy family at all, I had so much more than so many other people around the world, and I knew that I wanted to do something, I just didn't know how to integrate it into a business, and honestly, it was discouraging a little bit at times.

There were years where I was like, "Man, am I ever going to be able to feel fulfilled?" And I loved being an entrepreneur. I loved creating and building, but there was like something missing, and it wasn't until I started Cotopaxi that I realized how wonderful it is to integrate those two things and not just have it as a CSR kind of program where after the fact you kind of think about okay, yeah, we've made a lot of money so we better think of how we give this back.

It was integrated into our business from day one—before we'd ever made a dollar, we had a plan of how we were going to have an impact in the world, and we've integrated it into our supply chain, into our giving strategy, into the way we make our product. Every little piece of the business is tied back to that mission and purpose, and it's wonderful. And I want more entrepreneurs to experience what I'm experiencing because it feels that good.

Clint Betts:

You said it's tied even into how you make your products. How is that? How do you do that?

Davis Smith:

Yeah, so I'd say the first thing that you have to do ... We had to set core values and build this purpose into the very fabric of our business and brand, and when we did that and we empowered our employees to make decisions that would further that mission, that's where really we started seeing this great work happen. Because honestly, I'm not capable of doing that on my own as a CEO.

I don't design all the product. I'm not a designer or a product developer. And so I really needed our team to feel empowered to go make those decisions. And so once we did that and our team started thinking differently about how we make product ... and a lot of our product team, for example, they'd worked for a lot of other great brands: Nike and Columbia and Black Diamond and Patagonia and these other fantastic companies.

Once they started realizing, "Wow, I'm empowered to go do something totally different than I was able to do under these previous brands," they are brilliant. I mean they're coming up with these great processes, and one example is probably when you think of Cotopaxi, anyone that knows the brand, you think of these crazy color-blocking, really funky bags. Well, those bags were designed by sewers in our factory, and they were given creative choice and creative power to go choose colors and materials that they wanted.

The only rule we gave them was to make no bag alike. And we used remnant material from leftovers, from these other brands that use our same factory, to go make the product. And so all a sudden we had this product that really stood out in the marketplace that told our story, a story of empowerment, to these employees, these factory workers—these artisans, these craftsmen, that never had a voice in the creative process before.

And last year, 2020, 94% of our product at Cotopaxi was made of remnant or recycled material. This is crazy. I mean we've changed the way that an outdoor brand can be built. And we did it in a way that was better for the planet, that was better for the people involved in the brand, from the supply chain to our own employees to the customer, and those are really fun challenges to go tackle.

Clint Betts:

What decision did you make first? Did you make the decision to create an outdoor brand, an outdoor company, or did you make the decision to create a company that, at its core, was about doing good and giving back? Which came first for you?

Davis Smith:

It was the mission, came first. And that wasn't the case with my first two businesses. My other businesses, I wanted to do something entrepreneurial, I came up with an idea. This one was very different. I was living in Brazil when I had the idea for Cotopaxi, and I had actually made a New Year's resolution that year. This was in 2013. We had a family meeting. Very beginning of the year we all set New Year's resolutions, and my New Year's resolution was that I wanted to change somebody's life.

And my wife always makes fun of me, because I think goals, you're supposed to have smart goals, right? Like they're supposed specific and measurable and attainable. I can't remember the whole thing, but apparently, I'm not a good goal setter, because I don't follow that rule. But that was my goal. I wanted to change somebody's life. And so I had it on a Post-it note on my mirror in my bathroom, and every day brushing your teeth I was like seeing this goal.

Fast forward a few months. It's May and I'm kind of feeling discouraged at this moment, honestly, for a number of reasons; things that were going on in my business life there in Brazil, this business that I was building. Brazil's a very challenging place. My whole life I'd dreamed of going and having this social impact, and I'm in Brazil, this region of the world that I grew up in, and I'm seeing poverty all over the place, and I'm feeling just unfulfilled.

Like what am I doing? I'm not accomplishing this life mission that I had. And I was lying in bed at night ... This was on May 5th in 2013, and I was lying in bed thinking about this desire I had, and that I'd been thinking about for much of my life, and kind of thinking, “Why is it so hard to figure out how to go do good, but I need to be able to provide for my family too. Like, how do I do this?"

And as I was lying in bed, I started having some ideas that came to my mind. And I rolled over and I typed them into my phone, thinking that I could go back to sleep, and these ideas just kept coming and my mind was just racing. And I'm sure, Clint, you've had these kind of experiences. I think it's not atypical. Entrepreneurs sometimes ... your mind just never stops. But I ended up going out and onto the couch and I brought my computer and I just started brain dumping all these ideas that were coming to my head.

I honestly had never experienced something quite like this before, and I don't know that I ever will again. I felt completely inspired. The entire business model came to my head. Building an outdoor brand that could inspire people to do good with us, that would connect people with the world. The name, Cotopaxi, our slogan, "Gear for Good," the early idea for the Questival, this 24-hour adventure race that we do; all those ideas came to me within a 36-hour period.

I spent that entire night on the couch, the entire next day, and the entire following night, and I was just like ... I was in the flow like I was in the zone. Nothing could distract me. I knew what I needed to do, and it was a really beautiful experience, and I knew the reason that this business existed was to fight poverty. And that was my biggest motivation.

And yes, we sell backpacks. Yes, we sell jackets and outerwear. That's not why we exist. We do that so that we can fund poverty alleviation so that we can go fight poverty. So that's our reason for existing.

Clint Betts:

When I hear you describe that, it sounds like a spiritual experience. Like you've got to have some faith in 2013 spending 36 hours feeling like ... I mean honestly, to use words that maybe you're not supposed to use in business, sounds like you're divinely inspired in that moment. That doesn't sound like a typical business strategy jam session.

Davis Smith:

No. It was so atypical, right? It was not a strategy jam session, for sure. And for me, it was a spiritual experience. I don't know how else to describe it. That's what it was. I went from these feelings of discouragement and feeling frustrated that I hadn't figured things out, and questioning like was I even on the right path, to 48 hours later feeling like this was all part of the plan.

Like I needed all these experiences that I'd had in the past to build up to this one moment where I was able and capable of going and executing on this idea that I couldn't have executed on 10 years ago or 5 years ago. I needed all those experiences, and honestly it gave me confidence and faith that ... I'm someone that does believe in God.

I recognize not everyone does, but whether it's the universe or whatever, I believe that God knew what I wanted, and I didn't know how to get there, but he did. And I was building experiences that prepared me and allowed me to go have this impact that I've been able to have with Cotopaxi.

Clint Betts:

Well, your previous two companies, you've touched on them a bit here. I want to go a little bit deeper on them to set up the journey of Cotopaxi and kind of ... well, like you said, like a lot of the things you learned from these first two companies that brought you to Cotopaxi. The first one you did was PoolTables.com, right?

Davis Smith:

Yeah. Very random business.

Clint Betts:

Well, I want to talk about PoolTables.com because it's fascinating because you're not that into pool, as I understand it, and you didn't know anything about building pool tables.

Davis Smith:

Yes. I knew nothing about pool tables. I didn't even know there was slate underneath the felt of a pool table, which is kind of Pool Tables 101. I didn't know anything about business. I majored in international studies. I was really passionate about culture and politics and international relations and all those things, and this wasn't like an obvious path for me. But a mentor of mine, a philanthropist, he told me if I wanted to go make a difference in the world that I should think about entrepreneurship.

And so I was honestly just desperate to do something. I wanted to do something that could maybe put me on this path that would allow me to go make a difference in the world. And randomly I had a friend, a buddy of mine that worked for eBay, and one evening we were just chatting and I was asking him, “Who's on eBay? What do they sell?” I was starting to dabble with eBay a little bit. I was like, "Who are some of the biggest sellers on there?"

And he mentioned electronics. There's someone who sells a lot of electronics and there's other people that sell jewelry, and he just happened to mention, "You know, there are even people that ... there's people selling pool tables on eBay." And for who knows why, but in my head it just clicked, and it was like, "I could do that." I'd studied international studies. I'd studied a lot about China and this rise of China as a manufacturer.

This was in the early 2000s, 2004, and so I thought I could do that. So I went home and I got one of those AOL discs that you get in the mail for free internet, dial-up internet. Put that in my computer, got my free internet, and I Googled "pool table factory China." And I found some factories that made pool tables, and started following on eBay all these listings of other people selling pool tables.

After a week or two, I had a spreadsheet that just documented every pool table that sold, what it sold for. I knew what I could buy them for in China. My cousin and I ended up creating our own brand called Spencer Marston. Marston's my middle name. Spencer's my cousin's middle name. And so we created our own brand and started selling on eBay, and then started our own little website and eventually started opening up stores around the US.

But we did a million in sales our first year, which is ... Two dumb college students, like it was pretty mind-blowing. And there were definitely some hiccups along the way. I mean we almost ran out of money a bunch of times. I had my parents and my in-laws mortgage their homes to finance this business, but in the end, it worked, and it we became the largest retailer of pool tables in the US.

It's a very small, very, very small industry, that's not very sexy, so it wasn't really that impressive, but it was such a great learning experience for me as a young entrepreneur.

Clint Betts:

Well, the fascinating thing ... There are so many fascinating things about that story and building PoolTables.com. The craziest one is that you just put on a spreadsheet all of these manufacturers in China who made pool tables and you just assumed that would work. Did you go to China and know anything about it? Like how does that work?

Davis Smith:

Yeah, so my cousin and I, we did. We actually did like a test listing where we created an eBay listing, and we just said, "solid hardwood custom-made pool table." We put a picture of a pool table that we got from one of these manufacturers, and we just did a test to see if it would sell, and it sold. And it was like… It sold for enough where there's actually a business opportunity here.

As soon as that listing sold, we bought tickets to fly to China, and we basically used all of the money that we had to buy tickets to go to China. We went to a couple little factories and it was a very eye-opening experience. The first factory went to was not what we expected, and very, very unsophisticated. And we were pretty freaked out and we thought we'd blown our money and this wasn't going to work and we ended up having a second factory we were going to go visit that was out in a more rural part of China, and we were like, "We are in trouble."

And we even debated canceling the rest of the trip, but this guy ended up showing up at our hotel to pick us up in this chauffeured Mercedes-Benz, which was like, “What? What world are we in?” We felt like businessmen. It was like, "Wow, this is real." And they took us out to this factory and it was like, "Wow, this factory is pretty good, and I think they could actually make our product."

And that's how it all got started. We didn't speak a lick of Chinese and certainly a lot of mistakes along the way, along that journey of growth, but it was just ... I look back and it was like what an amazing experience we had as young 20-somethings figuring out a supply chain and how to sell online and how to build a team and make tons of people mistakes, but it was just such a great training ground as an entrepreneur.

Clint Betts:

How did you get the domain PoolTables.com?

Davis Smith:

Yeah, so that was a process. That didn't happen immediately. It wasn't like the domain was still available in 2004. We started the business as Billiards Express, and I think within 48 hours of launching our listing on eBay that said Billiards Express, we got contacted by a company called Billiards Express in like Ohio or something. And they're like, "Hey, you're using our name."

And it was like oh. We knew nothing. We didn't even think to like ... I guess we had to look at that first. So yeah, we shortened it to Billiard Ex, E-X. And Billiard Ex was the name that we used for a few years, but it was problematic because people, including my own mother, would misspell it as billiards, plural, with an “s”, and then "Ex", so it actually said "billiard sex."

Like that's not an ideal name, and so we quickly started realizing that we need to start figuring out a better name for this business. And we came across this generic domain that was available for sale, and so we struck a deal with the owner of the domain. It was a lot of money, but this is actually a great story, Clint. This is the wonderful thing about entrepreneurship; it's about figuring out how to do something with no resources.

And so what we did, we didn't have the money to pay for this domain, so we actually negotiated a deal with the seller for over several years we'd make monthly payments. And we just figured look, if we switch to this domain and then we start seeing great traction and it's worth it, we'll keep paying for it. If it doesn't, we'll stop paying for it, he gets the domain back, and it was a test worth having.

But what we saw is as soon as we got this domain, organic traffic skyrocketed. All a sudden it was a much better business, and it was worth paying for that domain. And so we just paid for it month by month and we didn't have to have all the money upfront and it ended up being a great story for us.

Clint Betts:

Well to cap off that story, just recently you relaunched PoolTables.com. What was your motivation behind that?

Davis Smith:

Yes. So this is the craziest part of this whole story now. I mean, I sold that business over 10 years ago, you know? My cousin and I went to business school. Kimball went to Harvard, I went to Wharton. We were ready to not be the pool table guys anymore. We wanted to go swing for the fences with some new idea, and we sold the business to a guy that owned a bunch of different e-commerce domains and businesses, and for over 10 years he ran the business and earlier this year he reached out and said, "Hey, I'm selling the business. I've got a buyer. It's a publicly-traded that is interested in buying it and this is the deal, the terms ... " And I looked at it and at first I was like, "That's great. Good for them." And I still had some ownership in the business. We didn't sell all of our equity, and so there's a little upside there. And it was like, okay, that's great. But the more I started thinking about it and I started looking at the business, the business was ...

It's a small business. It's low eight figures in revenue, but it was the same business we'd sold to him. Like the website literally looks worse than it did in 2010. The business ... They had done nothing with it, and this guy had so many little businesses he was just letting them kind of run. The business was just running itself. And I looked at it and I thought "Man, there's so much opportunity."

Like I know what to do with this business now that I didn't know how to do it in my 20s, but now I have all these experiences. I want to go build this. And more importantly, I had built that business with the dream of having an impact and I didn't know how to do it. All of our passwords in the PoolTables.com business were tied to social impact, even though we had no social impact.

It was just what was in my head all the time. And so it was like there's an opportunity here to go convert this business to a benefit corporation. So I bought the business last week, I converted it to a benefit corporation, and we are going to go use this business now to go fight poverty and to go tackle some big things that I'm really passionate about. And I'm going to hire a CEO.

I'm on the hunt right now. I've got some really sharp candidates I'm looking at, and yeah. I think with a great leader, we have an opportunity to go scale this business, to grow it, and have a meaningful impact in the world. So I'm super excited about it.

Clint Betts:

That's incredible. What a full-circle story, to be able to come back to the first business and turn that one into one that does good and is a benefit corporation. It's unbelievable.

Davis Smith:

Yeah, it's a fun one. And it never crossed my mind. I never would have imagined that I was going to buy it, and frankly, I bought it for a lot more than I sold it for, so I hope I don't regret the decision. But I won't. I mean I really believe in the business. It's stable. It's resilient, it's lasted over two different recessions. It's been profitable for 17 straight years. It's a good little business, and I'm really excited to see what we can do with it.

Clint Betts:

That's incredible. And then the second business that you started was based in Brazil, as you mentioned. It was like the largest baby online e-commerce company in Brazil, if I'm not mistaken.

Davis Smith:

That's right, yeah. So it was a business called baby.com.br. Everything in Brazil is .com.br. We used some of the lessons that we learned from buying the generic domain for pool tables to do the same thing with the baby.com.br domain. And we raised some venture capital while we were in school. We'd never raised venture capital before, but my cousin and I were both in business school and we started building a network and gaining some new experiences.

And so we went and rolled the dice with pitching the business to a bunch of VCs and we got people that believed in it, and we ended up graduating and then moving down to Brazil to build this e-commerce business focused on selling baby products to moms in Brazil. Large, emerging economy. 200 million people.

Not every family has a car or two cars, so a brand-new mom might have to take a bus or something to go shopping for baby products in a big city like São Paolo like or Rio, they're just ... massive traffic. So it was a big deal. It was not easy for new moms to go shopping for the products they needed for their children, and so by building an e-commerce business, we thought we could solve a big problem, and there's a lot more babies in the world than there are pool tables, so we thought this could be a lot more scalable.

Clint Betts:

And it was. This is the thing like it was very successful, and as you ... You started talking about 2013 and being in Brazil, and I assume at the time you were running baby.com.br when you had this moment, this 36 hours of inspiration of what you wanted Cotopaxi to be. What had you leave this very successful e-commerce business to do this?

I mean that really is fascinating, and I wonder if it ties back to a story you've told me ... and I think about it often actually ... which is like this service project you went on with your wife when you were in college. Is that kind of the beginning of that? Maybe you could share that story.

Davis Smith:

Yeah, yeah. I'd be happy to share that story, but maybe before I do, I'll just maybe explain the Brazil situation. It was an interesting time. When I had that idea for Cotopaxi, I was still a co-CEO of the baby business in Brazil with my cousin, and honestly, I was pretty unhappy. My cousin and I have obviously known each other our whole lives and we love building businesses together and we shared a lot in common, but for one reason or another, our relationship started to sour.

And I don't put the blame on him. I think sometimes people are just different, and working that closely together over that many years is just really hard. And I was really unhappy and feeling like I needed something. I needed a change. And at the same time, the business was doing some really interesting things. I'm talking about May 2013. In February of 2013, so just a few months earlier, we'd just raised a really large... almost $18 million round, and the business was 18 months old.

So we had 300 employees. It was growing really quickly. At the same time, there were challenges. We were starting to see Brazil was very complicated, and the business that we'd built while it was growing quickly was far from profitable. And at that time there was still a lot of optimism around what we were building. I mean we were in some ways one of the darling stories of Brazil venture capital and start-ups, but when I moved back to start Cotopaxi, my cousin stayed there to build that business, and shortly after I moved back to the US, Brazil's economy hit a major wall and huge, huge problems.

There's just a lot of corruption there. The exchange rate just all a sudden skyrocketed. The Brazilian real became worth a lot less money, and there were some very unique challenges. And ultimately, that business ended up failing, which is a really depressing part of the story. But I think it's important to share that, and the reason I do is because it's really easy to focus on everything that's going well and that's gone well, but not everything in my life has gone perfectly.

There have been some really, really painful moments, and some really hard challenges as an entrepreneur, and some heartbreaking outcomes, you know?

Clint Betts:

Yeah.

Davis Smith:

So I think that's maybe just an important part of the story to share, that maybe when you and I first met, that story hadn't evolved yet. When I left Brazil, when you and I first met, it was just a few months after I moved here, and that story was still an exciting story, and I think over time it became less exciting.

Clint Betts:

Well, how did that hit you when you found out this second company I started with my cousin, it's not going to be a success story? It's going to be more of a lesson that I've learned, which you can say now, but that's not how ... when you experience that stuff real-time you don't expect, like, "This is going to be a really great lesson."

Davis Smith:

Yeah, no. It's really, really depressing, and you feel embarrassed, right? Especially we had all these investors. I mean we'd raised a lot of venture capital. We'd raised over $40 million dollars when I was there, and Kimball ended up raising some additional money afterward. And so there were some world-class investors, some of the best investors in the world that had invested in this business that didn't work out.

It was embarrassing, and honestly, I felt really bad for my cousin, for Kimball. While our relationship really struggled, I obviously love him, and I wanted him to have a great success, and I knew it was painful for him that he was there on his own. That I had left to do something else, and in my head, I felt like that's what he wanted; that he didn't want me there anymore, but I don't know.

Maybe that's not true, but at the end of the day, there was a lot of pain there thinking of what he was going through, the challenge that he had in building a business in a place where it was just really next to impossible to build something that was going to work, just given a number of different factors that were probably out of his control. So yeah.

Clint Betts:

How are you guys now?

Davis Smith:

You know, I think we're working on it. It's been almost eight years since I left. The day after Thanksgiving, 2013. So yeah, we're working on it. It's painful still, I think, for a number of different reasons. And he started something new, which I'm really excited about, and he actually asked me if I'd be interested in angel investing in the round. They raised a great round from a great VC, and I think that was really kind of him to ask me, and of course, I said yes.

We've done quite a bit of angel investing together. That's something that has brought us together a little bit during this time where maybe it was hard for me to talk to him about what I'm building at Cotopaxi and may be hard for him to talk about what was happening in Brazil, but we found some other things to connect on. And so we're working on that relationship, and I really hope that over time it can continue to get better.

Clint Betts:

Well isn't it fascinating the way ... I mean that's another piece of entrepreneurship and building companies and doing what you do that is so challenging, is the way it affects relationships. It really does affect relationships in a real way.

Davis Smith:

Yeah. It does, and I think any young entrepreneurs that might be listening to this and thinking, "Man, I want to go start something on my own," and, "How should I do it? Should I have a co-founder?" There's not one right way. There's so many different stories that have been told of success that have worked, and it could be spouses that work together and it works great, or cousins or brothers, or best friends. But I think my advice, generally, would be that there's kind of two ways to go pick a co-founder.

You can either choose the person first, and that's what I did with my first two businesses. I chose Kimball and Kimball chose me, and we wanted to work together, but then together we went and tried to find an idea that we could work on together. And the other approach is to say, "I'm going to be the founder. I'm going to go identify an opportunity that I believe in, and then I'm going to go build a team around me."

And that's what I did with Cotopaxi. I had the idea on my own. I went out and started building a team around me, and I chose a couple of people that joined early within the first six months, and I gave them co-founder status. They had a minority ownership. I didn't split it 50-50 or in thirds or anything. I was the founder, I was the CEO, and I was building a team. But when you do it that way, you're more intentional about the people that you're bringing on board—what skillsets they have.

And you can go find the best person on the planet to go solve whatever problem you're going to go solve. And I personally think that works better, and certainly in this case with Cotopaxi ... my COO at Cotopaxi, Stephan Jacob, we were classmates in business school. He's brilliant, and he was in the German special forces, worked for McKinsey in Germany where he's from. Went to business school.

When he finished business school, instead of going back to McKinsey, he started his own business that was venture-backed. He was the CEO. Really smart guy and we just were reconnecting and I told him what I was doing with Cotopaxi. And we hadn't launched yet but I was pretty far down the line with fundraising, and I'd built some of the team already.

And he was exactly what I needed. I had like a hole in this team that I needed filled, and he was exactly it. And he's humble. In eight years together, we have not had a single argument. I mean it is like we have such a great relationship. It's really great, Clint. And not to say we always see things exactly alike. Of course we don't. We're different people, but we just have this mutual respect and love for each other, and I think this model of building a team that kind of fills the needs that you have around you I think is a better model than choosing the person that you really like that you want to work with.

Clint Betts:

So I do want to get to the service project that I think maybe spurred a lot of Cotopaxi for you when you were in school. And can you tell that story? It's such an incredible founding story of ... And when I say founding story of like an entrepreneur's journey, more than just one company.

Davis Smith:

Yeah. Yeah, yeah. For sure. This is my favorite story, and anyone that's heard me speak has heard me talk about Edgar, this little boy that I met in Peru. My wife and I, we live in Utah. We're members of The Church of Jesus Christ of Latter-day Saints, which means we get married young, and we did get married young. We met in college and we got married when we were in school, which seems so bizarre for anyone outside of Utah, but it was awesome.

We were like young and we were totally in love and we were looking for adventure together, and we found this amazing internship in Peru working for a non-profit. So we went and spent a semester there, and when we were in Cusco, this little amazing city ... and I know a lot of you are like, "Oh yeah Cusco, like The Emperor's New Groove, the llama." That's exactly right. It's this amazing city, close to Machu Picchu. Kind of the gateway to that lost city of the Incas and it is magical.

We got into the city and there's ruins everywhere and you see llamas walking around and it just is a really cool place. And I didn't want to eat in a restaurant. I wanted to eat in the center plaza, the heart of this city. And so we bought some food and we went and sat on this bench and we were eating our lunch, and all these little kids ran up to us and started selling us things.

And having grown up in Latin America ... I moved there when I was four years old, so I spent my entire childhood and most of my life there. And so I immediately connected with these kids, joked around with them, and after a while, they all ran off, but one little kid sat next to us on his shoe shining kit and kept insisting to shine my shoes.

And it took me a while to convince him it's not possible to shine tennis shoes, but he kept sitting there and I ended up realizing maybe he's watching us eat because he's hungry. So I gave him my food, and I never remember seeing somebody eat like this before. He absolutely devoured this food, and that night we decided to go look for this little boy, little Edgar. He was nine years old.

Easy to spot, because he had a hole in the butt of his pants with no underwear on, so you could always spot him from a distance. And we found him straight away and we brought this food and he was so shocked that we'd come back to find him. And he ran this food over to all of his friends and they started eating it with their fingers, and it was so touching. It was so fulfilling.

We wanted more of that feeling. And so this became our daily ritual. Every day, the highlight of our day was finding little Edgar, and we'd bring him food. And he just made our day. And so our last night in Cusco as we were walking back to our place ... close to midnight. You could see your breath in the air. It was cold.

We looked across the street and we saw two little boys with their sweaters pulled over their knees, cuddled together, trying to stay warm. And as we got closer, we recognized that one of the boys was our little friend, Edgar. And his little friend woke up first, his other buddy, and I told him ... I was like, "I want to talk to Edgar."

And he woke up Edgar. We woke up Edgar, and Edgar looked at me and had ... I could tell he'd been crying, had these tear-stained cheeks. And he rubbed his eyes and ... By the way, I wrote this all in my journal that night. And that's the amazing thing, is I actually told this story for years without even looking in the journal, and I went back a few years ago and found this journal entry, and it was so amazing like how much of it was aligned with the memories that I'd had.

And there were a few details that I'd kind of forgotten about, but this experience ... He had been sleeping on the street. Someone stole his shoe shining kit. He was too afraid to go home because his dad was an alcoholic, and he was helping to feed his family. His mom depended on him to feed his younger siblings, and so he was too afraid to go home. We gave him some cash that we had.

We didn't have much. And the next day we ... We could hardly sleep that night. So worried about him. We got on this bus the next morning as we were leaving Cusco, and as we go around the main plaza, we look out the bus window and we see Edgar, and he sees us, and he's running down the street next to us, and we slide open the window of the bus.

And he's waving goodbye and he's got this big bag of candy in one arm that he bought with the money we gave him, and he's now selling the candy in the streets. He's a total entrepreneur. But on that bus, my wife and I made a commitment. We made a commitment to each other, a promise, that we were going to use our lives to help people like Edgar.

And so that is why I think I felt such a pressing weight all those years after starting those other businesses where like I had not fulfilled this promise that I was going to use my life to help people, and just with time ... I'll maybe cut this really short, but I actually went back to Peru a few years ago, and I found Edgar. And we are the dearest of friends now. We stay in touch.

Every week we talk, we communicate. I helped him become a tour guide. There's a three-year program that he couldn't afford and we made a deal where if he did well in school I'd help with this program that he couldn’t afford and he worked really hard and graduated and then last year, he was supposed to graduate and the pandemic started. And so just a heartbreaking situation.

He had been orphaned when he was 13. His mom died giving birth to his younger brother. His dad died a couple of years later of alcoholism, and so he's raising his younger siblings. He has his own little boy now, the cutest little boy, but he had no way to feed his family. And so together we brainstormed. I end up having this idea in the middle of the night.

Like at five in the morning, this idea that he could give a virtual walking tour of Cusco. And so for $10 you can buy a ticket and he does a virtual walking tour of Cusco. And so he's sold like 1500 tickets during the pandemic. And so it's amazing. He's got his own business. And the amazing thing too is like for ... I think this is maybe the best part of the story, Clint.

It's just like this wasn't like a one-time thing. It was an experience that I had with him every day in 2001, and then it's something that I just never could forget about. I've thought of Edgar every day since 2001. 20 years. And the story didn't end. Like I went back and found him and then the story didn't end again, and we were able to find ways for him to survive this pandemic, and not only survive it but to thrive.

He's got his own little business now. He got enough money where he could start his own little tour agency. And it's like the story that just keeps getting better, and it keeps enriching my life. Like Edgar has changed my life. I feel so grateful for that friendship, for that relationship, and really that's the question I guess I would challenge every CEO to have, and every person to have.

“Who is your Edgar? Who is that thing or that mission or that person that will help you look beyond yourself?” Because that's what this is about. It's not about how big a business we can build. It's not about building a unicorn or making as much money as possible or doing better than the next person or having the biggest house. That stuff doesn't even matter.

What matters is how many lives we can touch along our way, along this journey, and that's what I hope more CEOs and entrepreneurs will try to find.

Clint Betts:

Well, I can't think of a better way to end this interview than that, my friend. Thank you so much for sharing that. Thanks for everything you're doing in the world, too. I mean you've really pioneered what it means to use capitalism for good, particularly around the arena of benefit corporations, which I encourage people ... You've written about this. You've talked about this in other places. I encourage people to check that out. Davis Smith, thank you so much for coming on, my friend.

Davis Smith:

Thanks, Clint. Really appreciate you having me.

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