Building an Impact-Driven Business with Cotopaxi’s Grace Zuncic

Katelin Holloway, host: You're listening to All Hands, a podcast brought to you by Lattice, where people strategy is business strategy. I'm your host, Kaitlin Holloway.

Grace Zuncic, guest: Many companies like Cotopaxi are under all of those growing pains of growth. We have high stress moments in our purpose and impact culture.

Katelin Holloway: Making an impact. It's something we all hope to do as people leaders, but how do we know if we're actually moving the needle? And how can we tackle the world's challenges and harmony with our business goals?

Grace Zuncic: Being a B Corp isn't easy. Just turn the light switch on. We should all do it. Kumbaya.

Katelin Holloway: To find out, we talk to Grace Zuncic, Cotopaxi's very first Chief People and Impact Officer. You might recognize Cotopaxi on the trail for their brightly colored hiking and sportswear gear. In the workplace, Cotopaxi weaves impact into the fabric of the employee experience. The young company is a certified B Corp, with a goal to eliminate poverty, while producing gear as ethically and sustainably as possible.Grace is a force of nature all her own. She's always had a service-oriented mindset. She spent a decade working at Chobani, where she earned the title of Chief People Officer. In this episode, Grace and I talk about how to sustainably grow a company with purpose and inspiration, what's different about working at a B Corp, and how we can integrate impact into the employee experience? Grace, welcome to All Hands.

Grace Zuncic: Thanks Kaitlin. I'm happy to be here.

Katelin Holloway: We're so grateful to have you on the show today and there is so much incredible work that you and the team over at Cotopaxi are up to. So Cotopaxi is known as a purpose-driven company. And you happen to be their very first Chief People and Impact Officer. I want to talk a little bit more about the certified B Corp. This is becoming a more and more popular, and I don't want to call it trend, but a decision, a strategic decision that some companies are making.So Cotopaxi is a certified B Corp, which means impact is very much written into the company DNA. And so when you think about impact at Cotopaxi, and how that mission and vision show up day-to-day in the operations and decision making, for you as a business, you've said that there are systems in place that hold you more accountable and differently. So can you talk a little bit more about what being a certified B Corp does and more or less what you're beholden to, in a beautiful way, as a leadership team?

Grace Zuncic: Most definitely. So I think the first principles are how's the product made? And so when you look at Cotopaxi products, I think something like 97%, that's a precise number because that's what it is, of our products are made out of recycled, remnant, repurposed, or responsibly sourced materials. So we have an inherent commitment to do the least harm in how our products are manufactured and made.And what I love about being in the outdoors industry is that a lot of companies in our sector and in this category really care about the environment. You look at the amazing work and the shining light, the North Star, that Patagonia gave us and their example this year of making Earth their only stakeholder, shareholder. You look at some other competitors that we have, and I wouldn't even call them competitors because I think what's amazing about the outdoors industry is that we just want to grow the pie. I mean, one of the fascinating things that happened through COVID is people are so much more focused on their mental health. People are talking about mental health in the workplace. And one of the greatest things to support mental health and wellbeing is being outdoors. And more people are realizing this. And Kaitlin, a lot of these folks don't look like you and me. I mean the category has really grown to include the BIPOC community, underrepresented communities, to get folks outdoors and getting all the goodness that nature gives to us.So environment is there with the B Corp. Another element is just our social and our community philanthropy. So as mentioned before, 1% of our product revenue is going to the Cotopaxi Foundation. We're donating to fabulous outcomes-based causes and initiatives through vetted organizations to ensure that our efforts are working towards eradicating poverty in our lifetime. That is really the mission and purpose of Cotopaxi. All the good that we can do as a team to get people to love this brand, buy our products, feel good about their wearing, feel confident in what they're wearing, ultimately impacts the foundation. And that is a really motivating force for us each day.Other elements of the B Corp model that I think are interesting is governance. So we talked a bit before about being a public benefit corporation, talking about impact in the boardroom, being held accountable for impact because of our corporate structure. Governance is looking at the diversity of our board, who's in the room, the conversations that are being had, and how the business is being led. So B Corp is really holding us accountable not only to these high standards and how the business should behave and really being an impact and purpose business, but being transparent about it. I mean, we have a score, we try to improve that score every time the BIA comes around, that's the B Corp Impact Assessment and we get measured. We talk about that score externally.So it's a lot more than marketing I have to say. And in fact, if consumers choose a company over another company because they are a B Corp, I think that that is there. But companies that adopt B Corp and are serious about it are doing it because they want to be held to this higher standard of accountability across all the dimensions of their business.

Katelin Holloway: I really appreciate that. I think that it's challenging, I think, especially as the world of work is really evolving under our feet, even at this very moment. We are redefining how we come to work. Employees are redefining the workplace that they want to go to and how they want to show up.

Grace Zuncic: And Kaitlin, this theme around post-COVID, new decade, whatever we're calling this period of time that's led to a tremendous transformation in work, it's ensuring that people in impact and purpose can stay at the forefront while companies are under such profitability pressure. And many companies like Cotopaxi are under all of those growing pains of growth. We have high stress moments in our purpose and impact culture. There are days that are frustrating, that are days that are hard. We're building capabilities. We're trying to catch up with the growth that's happened to us that is subsequent of people just loving what this brand stands for, and it's a commitment to eradicating poverty and it's a commitment to the environment and it's workplace culture. But the expectations are real on people and they're heavy. And so what's wonderful about actually embedding into your business model some practices that enabled you to stay true to your why, is that it doesn't allow these things to go into the back burner because you're board and your management team have a duty to them.Another dimension of Cotopaxi is that we're also a public benefit corporation. So as a public benefit corporation, we have a fiduciary duty to all of our stakeholders to include society and environment. So it's just been fascinating to watch the public benefit corporation, kind of the spirit of that, play out in our boardroom, play out in our meetings as an executive team, to make sure that we are consistently behaving in alignment with the founding principles of the company instead of putting some of these initiatives and the things that we put money behind, 1% of our product revenue every month goes from the company directly to the Cotopaxi Foundation to support our impact partners that are eradicating poverty, improving outcomes all over the world. That doesn't change. That's consistent.In some company environments where you don't have the embedded duty it would be easy to say, "Well, this year it's going to be hard for us to make those philanthropic contributions because Wall Street is expecting something different." And so that is really I think the power of how it needs to be there culturally, it needs to be there in writing, it needs to be a leadership practice, but it's next level when it's embedded in just how you do business. And that's been the thing that's been so motivating even on the hard days as we're building and doing so much great work and doing it together and remotely, at Cotopaxi, is knowing that it's such a worthwhile pursuit.

Katelin Holloway: Well that's the beautiful thing about being mission and vision and values led, is this is not something that comes down the pike and you have to do it. This is not a mandate that was given to you and you're forced into it. People and leaders and founders are choosing this because they say, "Not only do I know I can honor it, I want a partner. I want something and someone outside, external, to link arms." And then there's the whole B Corp community. So understanding, "Yes, I see you and we're in this together." I think it's a really beautiful and powerful thing. And I do see more and more companies starting to adopt this, even at a really young age in the company's life cycle, which is beautiful.

Grace Zuncic: Yeah, they're taking it early on. It's really great. And another, in addition, you had mentioned this mandate in this feeling that purpose and impact, we really hold ourselves accountable to something called human sustainability, that we are ensuring that what we do in this generation doesn't prohibit the next generation's ability to do what they want to do, to live their best lives, to do them the least harm. The business model really being centered around that.But in addition to it not feeling like, "Ah, this is an accountability that we have and I'm not sure who's looking over the shoulder and ensuring that we do it." What the B Corp also does is it fosters a great spirit of innovation within the organization because now a lot of the good ideas and the good thinking, if they are purpose and impact oriented, we want to consider them, to either improve our B Corp score or lean in more. So it fosters the spirit of innovation and collaboration both internally at the company and externally, to dial up better ways of doing things across the measures of B Corp. So that's been a real value add for us too.

Katelin Holloway: I love that. And that was actually the next question I was going to ask is what does this look like for an employee? So it's one thing to understand that the leadership team is beholden to this and has subscribed to this and is engaged and is being held accountable. But what does that look like from the employees experience?

Grace Zuncic: Yeah. So there are three things to point to. So one, impact is in our bonus program. So our annual incentive plan includes impact measures. So I think when you start to tie impact to compensation, not only, and we talked a lot about governance, tying impact to governance and how the companies run, but when you tie into compensation, it's like, "Whoa." And you're tying into compensation beyond your executive team. So some of the things that we look at is the component of impact in our bonus program. And it's not 100% of the bonus program. We're running a company, we're focused on revenue, we're focused on profit. But on the impact component of the bonus program, it's things like the number of hours we're volunteering in our community across the whole business each year.We're looking at the impact of carbon emissions on the business. So right now, less than 1% of our net revenue is attributed to the impact, the carbon impact, of our business. That's a measure that we want to hold. It's actually difficult to be much less than that, but we're holding ourselves to a standard that we could be. We're looking at the diversity of the organization, improving the BIPOC representation across the business each year. We're looking at the consistency of our philanthropy. So things like that in the impact component of the bonus, which I think is wonderful that we're starting at this year.Another element that we're looking at is continuing education on impact. Our employees are really interested in how the work that they're doing and the seat that they're in each day is contributing to the greater common good. And so we are always looking at ways to deeply connect that. Having our philosophy around employee engagement is actually connecting our employees more deeply to the mission and the purpose of their day-to-day work to the mission and purpose of Cotopaxi. So for example, we'll bring in impact partners from the Cotopaxi Foundation to talk about what they're doing. We have the most wonderful impact partners. One of my favorites is called ROMP, the Range Of Mobility Project. They're working in very poor underserved communities in Ecuador to provide prosthetic legs. These are communities that often can't afford shoes. And so really making that connection. Sometimes it's emotional, sometimes it's practical, to the impact work that we're doing with the employees.We'll have innovation sessions on how can we create even more sustainably designed practices in our product innovation. The product team is held to a very high bar with this huge focus on remnant, repurposed, recycled, material. I mean, it's not easy work to do. We spend a lot of time as an organization talking about process improvements and ways of just keeping up with our growth. But overlaying on top of that are all the pressures on the organization to try to scale this thing that we're doing. That's probably easier to do as a smaller company. I mean there are probably some listeners today, Kaitlin, are like, "That would never happen at the multi-billion dollar multinational company that I work for." And I entirely appreciate that. So Cotopaxi has this privilege of having started these practices really early on, but now we need all hold hands, work in the muddy, messy middle of figuring out ways to scale this business model. And that is a real reason why I joined Cotopaxi because those are the kinds of challenges that I want to be a part of professionally.

Katelin Holloway: Excellent. And so just for context here, how many employees do you have across the organization?

Grace Zuncic: Yeah. It's small. So we're over 300 now. So it's a much smaller organization. We added over 100 positions last year. So we were bringing people on quite quickly. We grew 100% last year and we surpassed the $100 million dollar mark, which is a huge thing for the business, which is great.

Katelin Holloway: I've got to admit, hearing that you all are only 300 people big is a surprise to me. And it's a surprise because of how much I see the brand out in the wild.

Grace Zuncic: Yes. Oh, I love that you said in the wild.

Katelin Holloway: Y'all are everywhere and I love it.

Grace Zuncic: Yes.

Katelin Holloway: But that's 300 humans doing that?

Grace Zuncic: Exactly. I know. I think that too. And I think that that is just so amazing. I think there are kind of two things. The business is smaller from a total employee perspective and that includes part-time employees too, that work for us at the stores. But in addition to that, I think that people think the revenue is greater too, that we're bigger. But in a way that's great because people who know of us are really so deeply connected to what we're trying to do and they get it and they understand it and they want to be a part of this very mission-driven business.And then there's this whole bunch of people who have never heard of us before. Why I always wear my Cotopaxi gear to every opportunity I have like this to talk about the brand. The aided and unaided awareness on the brand are very low, but that just means that there's a lot of potential, because once you see it and you're connected to it, there's actually I would say almost like an emotional connection to this business trying to achieve this very worthy thing, as you get to understand it from a sustainability perspective and poverty alleviation perspective and culture perspective. It's really easy to catch on. But, yeah, there's a lot of opportunity and I'm sure we'll be bigger in time, but we want to grow at our own pace too. Growth puts a lot of pressure on an organization, it puts a lot of pressure on people. We're very sensitive to that and we have to keep up with the demand.

Katelin Holloway: Yeah. I understand that very much. And this sounds like a non-sequitur, but bear with me. As an investor that has a deep background in building companies and understanding what success really looks like at the end of the day, there is nothing that makes my heart, or my outlook on your business, better than hearing you say, "We are growing slowly. We are being thoughtful in how we are building our organization. And our growth is because we are trying to keep up with the demand." There are so many different ways to view the growth and success of a business through the lens of supporting people. And so it makes me so happy, because I know that you are laying the groundwork, you are measuring twice, cutting once, you were paying the tax up front, on the things that really, really matter when you are building a multi-generational company versus you were worried about profit margins this quarter. My 2 cents as an investor is, "Oh, this feels like it has all of those goods in there."

Grace Zuncic: Yeah. Well I love, Kaitlin, what you're saying. It's a compliment too. Davis Smith, the founder of Cotopaxi, and his co-founders, Stephan Jacob and Damien Huang, who's our incoming CEO, they're tremendous individuals and they're tremendous leaders. One of the things Davis has really instilled in a high growth, omnichannel balanced business, we have a strong wholesale business, but we also have a very strong e-commerce business and a retail business, is to be profitable. And a lot of these consumer companies, we're profitable now, we've always been profitable, and a lot of these high growth consumer companies get big influxes of capital and go out and spend, spend, spend and the profit comes later and there's a path to profitability. It's a long road. And market conditions change all around them where that path to profitability is harder to get at, harder to achieve, you stretch it out another 24 months.But Davis and Gary Bowen and Julie Bartlett, Karyn McKenna, the whole EC team, have really held us accountable to demonstrating that this business can be profitable now. And so that changes some areas of investment and might slow some things down or being even more thoughtful. But I think having that mindset, especially being in a consumer business that has a D2C component, where the D2C story's been you've seen a gazillion different examples of how this didn't work out, has really held us to a lot of thoughtfulness, a lot of professional maturity in the business, good thinking, good judgment, and I give so much credit to Davis for instilling that core principle in our operating model.

Katelin Holloway: I don't mean to take this beautiful, lovely thought of being purpose built and very aligned with your vision and your values, but oftentimes what happens when we are doing work that feels larger than us, especially as an employee, that can sometimes lead to burn out, overwork, or disengagement, because you feel like it's something that is so much bigger than you. And when you are deeply committed to that, whether you're the founder or the employee, how do you address that? And first of all, is that assumption correct? And do you find that people are working themselves head over heels every day to show up and be their very best selves and do their very best work to have a great impact? So, one, is that true or is my assumption somewhat in the right direction? And if so, how are you helping to support that and help people hold boundaries?

Grace Zuncic: Yeah, it's a great question. I think it is true. I was completely married to my job. For 10 years it was all I could think about. I was like in love with it. And because there was so much there and there was so much opportunity and goodness. And I personally never, I mean going back to sort of my career journey, I didn't think I could love working that much. And it wasn't working for my own success and my own gain. It was seeing how the things that I were doing through a fabulous team, through an amazing organization, were making a difference in other people's lives. Here at Cotopaxi, I'm in the engagement phase. I'm blushing about it. I'm excited about it. I haven't hit my one year mark yet. And I'm realizing that this is another organization where you could easily become so wedded to the idea and the concept that it would be hard to let it go sometimes and turn it off. So it is a real thing.Now, is it worthwhile because of the fruit of it all and the impact that you have on the world and that you interestingly wouldn't want it any other way? Maybe. Possibly. But I think that the thing that we have to do is really prioritize the work, celebrate the wins, no matter how big or small, we have to encourage all, we call our employees the llamas, which is like an affectionate name, we're all llamas, the mascot of the company's a llama, to shut down, shut it off in your mind, shut it off from a practical perspective. We have meeting free zones Monday, Wednesday, Friday to enable people to catch up on work. We encourage employees to get outside every week. We can't offer it to every employee because of the different roles, and we've got some roles that just require you to be on the floor and on your feet. But for our large part, our remote workforce, we have something called In The Wild Time where we encourage employees to spend 10% of their time outdoors and get outside. We have a very open culture where people can come to us and let us know how they're feeling.So I think that we're doing a lot of things to try to not have that happen, but I'm very sensitive to kind of the conditions are there because it feels a lot more than just a job when you're doing this kind of work. We have to set a good example as executives as well. Weekends are weekend time, how we communicate with people, our tone, but there has to be a lot of intentionality around it, because I do agree. I don't know if there's statistics on that being true, but I just so believe it having worked in impact environments now for so long that that's a real thing that can happen.

Katelin Holloway: Thank you, one, for being honest. I think that it's hard to share and admit when things maybe are not exactly as pixel perfect as we would like or we would hope. But one trend is very clear to me, one common denominator, and that is the more you build a culture and a product that serves the employee's needs, their brain, their heart, their resources, their growth, their development, the more you serve that in a way that is deeply values aligned, the harder it becomes. Our goals oftentimes as executive leadership teams are this productivity, this output, how are we going to, growth at all costs again. I think you and I are pretty aligned on, no, thank you, because at all costs is a dear cost.And so the interesting thing that I'm seeing is that with more and more people subscribing and more and more people getting on board and recognizing like, "Oh, hey, when we say humans are our most valuable asset and then we serve them appropriately, and now we're also bringing our values and that includes so much more than how we work, it also is how we are showing up in the world, how we're having an impact on our climate, how we are respecting and being understanding of diversity within the workforce, what inclusion and diversity and belonging truly mean to us," all of a sudden your productivity is going through a roof and now we're having to correct with boundary setting and understanding how do we make sure that you turn off? How do we make sure you're taking your vacation days and you're minding that time with your families?And so I really appreciate you being honest about that because I think the more tools we can equip our listeners with around setting those healthy boundaries so that we can show up and do our best work and feel deeply connected to what we're doing and really impact those business outcomes? How do we make sure that we aren't just running through our teams? So thank you. I appreciate that.

Grace Zuncic: Right. I think you said it so eloquently. And if we're going to elect to work in purpose impact driven businesses that we know will be more of an emotional connection with work because of the mission and the worthy pursuit that we're talking about today, you have to be treated well. You have to be treated with respect. You have to be treated with empathy. That has to be present. Otherwise it's like all consuming. So this is why we talk a lot as a team around above the line behavior and radical candor, challenging directly, caring deeply. It's Kim Scott's idea, but it's a great one.And leading with empathy, active listening skills, these types of things, telling people when they do a good job, recognition, pat on the back, really being intentional about that written communication. Think about how you would feel if you were receiving the message you're delivering. Those types of things, we have to lean into that even more now at Cotopaxi, I think. So we'll be doing that. And I think that that is sort of if people feel that they're being treated kindly, fairly, and it's encouraging and it's motivating and it's inspiring, well, then maybe the burnout that comes from working on something so worthwhile is kind of reconciled.

Katelin Holloway: Well, thank you, Grace. We are rounding the corner to our rapid fire section.

Grace Zuncic: Okay.

Katelin Holloway: You get it? Rapid fire. I'm going to ask you quickly. Answer quickly. Try not to think about it too long, but it's okay if you need a sec. Are you ready?

Grace Zuncic: Sounds good.

Katelin Holloway: Okay. First question, where do you feel most inspired?

Grace Zuncic: Okay. I'm from this little town in upstate New York, Skaneateles, New York. It's a lake in the Finger Lakes. If it didn't come through, I have a little bit of an upstate New York accent. There might have been a couple of things that came through today.

Katelin Holloway: I heard it.

Grace Zuncic: And when I am there, I think it connects me to a very positive childhood experience there, but I am instantly inspired. Just something about being in that lake town and being by the water and the peacefulness of it all is very inspiring to me.

Katelin Holloway: There it is. Nature at its best.

Grace Zuncic: Oh, yes.

Katelin Holloway: Okay. Next question. What is your favorite outdoor activity?

Grace Zuncic: Well, running. I'm training for a half marathon. And it's on my birthday. I'm turning 40 this year, and I wanted to celebrate my birthday very positively and by crossing the finish line as a result. And so that's what I'm up to. I'm training for a race and I'm getting out most mornings for long runs as it gets close to the date.

Katelin Holloway: Yes, good for you. Happy birthday. And what an incredible milestone.

Grace Zuncic: Thanks.

Katelin Holloway: Awesome. Love that. We will be following along to see that photo.

Grace Zuncic: I'll post something, I'm sure

Katelin Holloway: Now we want to know.

Grace Zuncic: Hold me accountable to doing it. Someone said, "Do you run a marathon to run the marathon or to tell everybody you're running the marathon?" I was like, "Oh, that's an honest question."

Katelin Holloway: And it's okay if the answers both, right?

Grace Zuncic: Right.

Katelin Holloway: Get your judgment out of here.

Grace Zuncic: Exactly. Totally.

Katelin Holloway: Okay, one more question before we wrap it up today. When was the last time you were deeply proud of something you've accomplished?

Grace Zuncic: Well, I mean, it's interesting. The one job we didn't talk about today that I love is I am a mom of two kids. And honestly, lately, I have so many things I'm proud of and accomplishments on paper from my professional life now, but lately, with my kids and how my time spent with them and the values I'm trying to instill in them have made a difference, that has offered me a tremendous sense of accomplishment in addition to the joy of work that I have every day and the privileges that I have working with the people I get to work with. So I'm going to close it with a little shout out to Ellie and Charlie.

Katelin Holloway: That makes me so happy. I cannot thank you enough for joining us today. We have so enjoyed it.

Grace Zuncic: Oh, Kaitlin, thank you. I loved it. I really appreciate you giving me this chance, so thank you.

Katelin Holloway: Thank you for being on All Hands. And please keep leading authentically.Thank you so very much for joining me on this week's episode of All Hands. I'm your host, Katelin Holloway.Follow All Hands wherever you get your podcast so you never miss an episode. And if you like the show, tell a friend about us or give us a shout on social.This podcast is brought to you by Lattice. Learn more about how Lattice helps companies deliver great business results with smart people strategy at lattice.com. Find us on Twitter @LatticeHQ.

All Hands is produced by Lattice in partnership with Pod People. Special thanks to our production team, Christine Swor, Annette Cardwell, Rachael King, Aimee Machado, Hannah Pedersen, Danielle Roth, David Swick, and Carter Wogan.I'll see you next time on All Hands. Until then, my friends, please keep leading authentically.