Osprey Packs: Mike Pfotenhauer

We just simply could not deliver. Enough product on time. We just could not grow the manufacturing enough. Simply because there were not enough skilled sowers. We've found it very difficult to find people to do that kind of work in Santa Cruz. It's pretty much a retirement or university town and

You just never knew when your uh employees were gonna show up. You know if if the Grateful Dead came through town, they would be It would be there, not at Osprey. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. They built.

I'm Guy Roz, and on the show today how Mike Fotenauer's love of art, design, and the outdoors. led him to launch a bespoke backpack brand. Osprey, which grew into one of the most popular backpacks in the world. We live at a time when people feel a sense of urgency to succeed quickly. Just look at my inbox. Every single day, I'm inundated with ads for get rich quick schemes and pitches for young entrepreneurs who became rich just a year into launching their business. And to you I say, Congratulations. Except that story, that narrative, the get rich quick with little effort trope, it's extremely rare, and it's usually not that interesting or instructive. What is interesting is a get rich slow story, which is the one you're about to hear today.

Because Mike Fotenauer's company took about 20 years just to hit a million dollars in annual sales. And for a business with several employees, That's not a lot of revenue. Mike found at Osprey, and if you're a camper or a hiker or you drive a Subaru crossover vehicle, you can mute my voice for a moment.

For the rest of you Ossprey are backpacks widely considered to be among the best. Mike founded Osprey in nineteen seventy four in Santa Cruz, California. Which is also partly where he grew up. Now, not surprisingly, Mike came from a family of hikers.

And in the seventies If you were really into hiking and camping, The off the shelf options for gear? weren't that great. In fact, lots of brands you know of today Patagonia, North Face, Columbia.

These companies were started by people who simply wanted gear for their own adventures. And that's why Mike started making backpacks. to solve his problem of not being able to buy one that he liked. And eventually other people wanted him to make Their backpacks.

And so for much of Osprey's first twenty five years in business. It was a very, very small company. Mike Votenauer never had ambitions to build a massive global brand. But something happened in the early 2000s that would change the trajectory of Osprey. the price of making the pac in the United States became unsustainable. So reluctantly,

Like his competitors, Mike moved manufacturing to Asia. That shift, as you might imagine, transformed Osprey into an efficient and eventually huge backpack brand. Yeah. In 2021, the company was acquired by Helen of Troy.

a big consumer products company that also owns things like Hydro Flask and Oxo Kitchen Tools. The price paid for our spray? Over four hundred million dollars. And after fifty years running the business, Mike finally stepped away from the company.

Mike Fotenauer was born in Portland, Oregon in the 1950s and 60s in a large family. Seven kids, in fact. His dad was a Lutheran minister, and Mike can remember going to church every week with the whole family, and not really connecting with the message. I think it was something I never quite understood. And I would sit in church and I would look around me and go, Oh

Do these people believe what they're hearing? Mm. Actually that's probably the place where I gravitated towards designing things in my head just to uh Keep awake and uh Pass the time. Pass the time.

I mean I'd probably heard uh Several thousand sermons of my father's they were Fascinating on one level, but On another level, probably too much for a child. Yeah.

So I mean having seven kids in the family, I mean How did your parents manage it? I mean, it's it's hard to m imagine today, right, raising a family of seven, you know, on a minister's income. I mean people did it, uh people managed, but but what do you remember? I mean were you you know, was was money tight growing up?

Money was very tight. I we didn't really understand how tight it was. Um I think we probably went out to dinner maybe once a year. My father was Born in Canada. grew up in Canada and so every summer we would go up

To Canada on vacation and You would drive up there? Yeah, we had an old Ford ranch wagon and we would fit somehow we would fit Nine of us. I recall I had the wheel well.

From the back of the car as my own space. I I read that f you know, from your early childhood you were on h you were going on hikes with your family. And uh And we we do we hike every weekend with my kids, but for the first couple of years it was a forced march. Like my kids really hated it. And now um they they they'll grudgingly admit that they like it. and they'll go, but if if I think if we left them to to their own devices, they'd probably just want to play video games. But we do hike every weekend.

Do you remember being a kid and not liking it? Oh yeah. Actually I think I was Usually the guy in the back. Trailing everyone else.

Kind of enjoying what I was looking at and wondering why everybody was hustling so fast. But continuously being behind and uh Also wondering why was I doing this? What was the point of all this? Hm. But Yeah. As I grew older I

Definitely fell in love with backpacking and being in the outdoors. And pitching tents and you know and all all of you would do it. All the kids would would be in on these trips. Yeah, they would. We would uh drive long distances, stop

Late in the evening and pitch tense in the dark. horrible old smelly canvas tents that my father Must have had since the war. He was a marine in the in World War Two, so you uh He had a lot of

Year from that. Old backpacks and Things that he's continued to use for his whole life. Yeah.

Um, I heard a story about something that happened when you were A teenager. That you actually Like Went.

Off on your own in the Sierras. And got lost. Wha what's a what's the story? What happened? I uh We were camping in the Sierras, the whole family. Up at a lake at about Seven thousand feet high.

And We were camping and we were going to return. Back to Tahoe. Mm And

The drive to get to that lake was horrendous. It was perhaps a Five hour drive. Along windy dirt roads. And I refused to go in the car. I wanted to have an adventure, so I Announced that I was gonna hike there.

And meet them back where? Uh in Tahoe City. They were gonna drive back. You did not wanna drive back. You were gonna hike back on your own. Yes. And did your parents W were they cool with that?

They argued a bit about it, but my father prevailed and said go Go off, do it. And I had a a ridiculous Map I

Think about Perhaps state of California map. And Somewhere along the trail without paying attention I lost the trail. It just sort of petered out and I I was lost.

And it was growing dark and I uh Scrambled through the Manzanita brush. And For several hours.

Came out on the Exhausted uh into a clearing through my Sleeping back down and fell asleep and woke up and I was a little bit scared.

But I At the same time I kind of appreciated the challenge of Trying to navigate the terrain. I I did see some Basque Shepherds up in those Mountains and Knew that I could probably get help if I needed it. Yeah.

Yeah, I th this is the other thing that's I just just learned about this, that that whole part of Nevada. that's a sort of border area of Nevada, California around Lake Tahoe. There's a a massive community of Basques who grew who were shepherds. Ray Sheep.

Yes. Yeah, they were I could see them in the distance. And I guess When you were uh around like middle school age, your family ended up

uh moving to California to actually to Santa Cruz. And then for college you stayed there. You went to U C Santa Cruz and And and I And I guess m majoring in like

Art and photography? Basically. Yeah. Lot of photography and some etching, drawing and printmaking, which was something I was always quite interested in and I had up my own dark room anyway, and I It allowed me to learn more about that art. Um, to this day I've

Always loved to To art. I still do it. Yeah. Tell me about so so while you're in college, right? I guess you

were also kinda got into into sewing your own backpacks. Like make like this is a time'cause this is early seventies This is a time when uh you know, obviously uh w we s we think of outdoor gear today, just it didn't it wasn't really a huge industry, right? Like a lot of people made their own stuff. They did.

There were kits you could buy that would Send you All the uh cut parts with instructions. Or you could learn how to do it yourself. My mother taught me how to sew and um I have always built my own gear.

Yeah. Oh it it's It's I don't know. It's a I guess it's a feeling that if I'm out in the wilderness I know what I'm using, I can rely on it, I know what's right and what's wrong with it. And I love making things.

Mm. Even built my own bicycles. raising and putting those together. So it's just something I'm always doing. I I feel more comfortable when I I'm surrounded in my environment. By things I've made.

And t what were you m I mean, I'm assuming like early seventies, this is like the the technology obviously has changed a lot, which we'll talk about, but you were w making what You're making backpacks out of like canvas or Cotton material or Maybe polyester? No nyl nylon fabrics.

They were available back then. Night, okay. So you would make th this stuff for yours uh originally for yourself. Right, you were making this for yourself. But I guess at at some point what what happened? Did somebody ask you to make Some stuff for for them.

Yeah, I occasionally build things for other people. Which led eventually to it dawning on me that I could start a business that way. I was working in

A restaurant at the uh university. And I had done some work in the rest in restaurants to make money as a as a young person and I quickly decided that I Really didn't want to work for anyone else. I wanted to start my own company and

I gravitated towards what I knew how to do. But this was not like when you say you wanted to build your own company, you did not have ambitions to build a massive company, I'm assuming you wanted to just have a sort of a storefront where you'd make backpacks for people or I opened a retail shop in Downtown Santa Cruz. And Started out by repairing product for people and uh custom making.

gear for them for their whatever. So this is nineteen seventy four, I think, when you opened a shop and it was c originally called Santa Cruz Recreational Packs and And you dropped out I think you dropped out of s of school. You figured th this is just kinda pointless. I'm not uh this is not what I wanna do. I wanna just get on with my life. Well I realised I

That Making art. And I I think I also felt like I needed to Contribute by making something

Functional. Let's say rather than Then simply artistic. Something more practical. Yeah.

I'm just curious, was it ha I mean Today you think of wow, opening a store, you gotta get a three to ten year lease and you gotta put like all these deposits down and Uh was it complicated like that when you did it? It's actually very simple. I I started the company with my girlfriend, Laurie White.

And we decided to find a location. We looked in the paper, there was an ad From a um I think it was a lumber company in downtown Santa Cruz that said they had a house for rent. I wrote them a letter. Got a reply very quickly, the rent was one hundred and fifty dollars a month for a retail h house and shop.

Things were much easier to Back in those days it was uh Affordable. To start a business. How did people know about it? Was it in a busy part of town? Was it on a street that people passed by? Did you put a sign up in the window?

How did anyone even know that you existed? It was on a main street, a thoroughfare from the highway into downtown. I put a sign up I never spent any money on advertising until Perhaps twenty years later.

And I had a an industrial sewing machine. I I borrowed a thousand dollars from my parents. And they would people would come in and Either they would bring their gear that needed repair or they would uh Explain to me what they were doing and I would draw out a design and build that product for them. Probably like a five week wait list. Wow. And just backpacks. Well, backpacks, but I I did

U other strange custom things, for example, uh I recall once making a A harness. Rescuing Peregrine Falcon. Eggs.

Wow. Off of all. One of the walls and Yosemite. And I would do climbing gear for climbers.

They kind of liked the fact that I throw in a lot of extra stitching where they had concerns. So really you were an artisan. I mean you were like a nineteenth century European artisan, like you know, were a cobbler or a right, I mean y you were a maker. That's what you were doing. If you it might through shoes, you'd be making shoes. You were Making bags. I I was. I was pretty far from uh from being a businessman. I I never paid much attention to uh the the sides of a business that you should finance and sales and marketing. I've never really been

very much interested in that and I've surrounded myself with people that Did that much better than I ever could. But you were really not running a scalable business. It was you and your girlfriend and the two of you were making one bag at a time and Yeah, presumably would take a while to make a bag. It would take a while. I could sew uh an internal frame pack and maybe five hours of work.

Hm. And that back in those days that was a pff a seventy five dollar product. Now it's about three hundred. Yeah. So given that it was hard to scale that, it was just the two of you working in that shop, how I mean

the amount of money you could make was fairly limited. It was enough to survive on. I suppose that's all I really cared about at that time, being twenty, twenty one years old, I uh I didn't have any huge ambitions. I was able to put enough gas into the car to go up to the Sierras. Um And it was I could work at my own hours. I would get up just before

Ten o'clock when the shop would open. And I would work Do a lot of my work late in the evening. Yeah. It was a great life.

I I feel bad for people now that want to do something like that and I just Think it's not quite possible anymore. Yeah, just because the cost of doing business is so much higher. Yeah. And did you and so I imagine, you know

In your mid twenties you're thinking This is great. I mean this is what I do. I've got the store. And I'm happy doing it and This is what my life is gonna be. That's true. I I

I did that sort of Work for Well over ten years. I'd say from nineteen seventy four to uh I got married in nineteen eight.

eighty four to Diane, my wife. Right. She joined the business. She came over to work for With uh Myself.

And my girlfriend at the time. Before head. And uh We grew the business and at some point she said, I think we need to uh move to the next level and I

That involved borrowing money. Which It's always been a difficult But I agreed.

This was in R uh around nineteen eighty six. So we've we've jumped ten years, but I wanna g kind of just understand that ten year period for a moment,'cause you start this in seventy four. And it really is a a custom backpack and repair shop in Santa Cruz. And at some point you change the name to Osprey.

And um d i it's a bird, I know that. Tell me the name. H how you came up with that name. I chose that name. For one reason. A lot of backpack companies. out there uh

were named after the founder or the owner of the company. If you look at how my name's spelled, it's uh it's pretty much unpronounceable and Uh no one could spell it. Yeah. On the other hand, I really didn't want to name a company after myself. I

Felt like it's I just didn't want that. Burden. Of seeing my name out there on product, um I had

Scene. Osprey in the wild. Backpacking with my father and my brothers. believe it was in the little Grand Canyon of Wyoming and it was during an electrical storm and Our hair was standing on end and these

three or four osprey came came zooming up over the edge of the canyon and it was just such a memorable thing and I just chose to use that name. Mm. Alright, so you've got this business going, and at some point Diane joins you as your third employee.

Well actually around that time when we decided to expand there was a fourth persona A woman named uh Gabriella Salinas and the four of us decided to go into wholesaling. You were really a repair shop and a custom store. And uh and but presumably you're getting more work, right? You had to hire

One person than another person. Yes. So what happened to sort of say let's go and and expand even further. If

You know, it seemed like things were Moving. Moving along just fine. Well we had four mouths to feed. We didn't really have enough business on the level that we were. Yeah.

We We're not making enough money. I think at that time Nineteen eighty six. We were we figured we were probably making about three dollars an hour. Right. And it was not enough to live on and

We realize that We needed to grow the company, we needed to move into the wholesale realm or we could pick up a much greater customer Base. And we were extremely naive about what we were doing, moving from uh

Whole from retail to wholesale involves a Pretty radical change in your ability to manufacture product. in a way that's profitable. But We didn't know. We we just decided to do it. We uh went to trade shows and we

I learned also from repair what works and what doesn't work and what's gonna last out in the field and what will fail. You put all those things together and Start talking to uh When we hired sales reps you learn from them.

on what the market needs. So it's it's just a a learning process. So you Like roughly around. Uh nineteen eighty four, I guess.

you decide to get into wholesale and um And w what did that mean? I mean w were there wholesalers in Santa Cruz that you could You know, make a bunch of backpacks for and have them sell them? Go find

Outlets to work with. Well the first thing that it entailed was getting alone. Yeah. This is actually nineteen eighty six. We Borrowed thirty five thousand dollars.

From a local community credit union. And then we had to find a location to start a larger scale production. Yeah, and this is all done by hand. This is all gonna be done by hand. In people making this money, okay? Yeah, with with industrial machinery. Mm-hmm.

And then to tap into the wholesale. Market. I hit the road with my wife. We would drive from one retail mountaineering shop to another and show our product line. And

There were some shops that took a chance on us, though. I think our first Order came in Santa Barbara. We thought it was a big order. It was only eight hundred dollars and It took us like three or four Night and days of sewing.

To put that order together, but we delivered it on time. And the retail I mean the retail price for each of those bags was about seventy five bucks, so But I'm assuming you weren't delivering ten bags, you were probably delivering many more than that because You were gonna

You couldn't sell it to the re to the retailer for seventy five dollars. You had to sell it to them at a wholesale price. Right. I would say it by that time, nineteen eighty six, so Oh backpack was more like maybe a hundred and fifty. Which meant we would sell it to them for roughly around seventy, seventy five dollars.

And it was Just the Initially, um and then we We picked up a small crew of

uh sewers and uh some people who would assemble the packs. And you had a little sp you had an uh sort of a factory space in Santa Cruz, right? What like ten thousand square feet or five thousand square feet? Actually I think it was twenty five hundred square feet. Uh I mean you had a thirty five thousand dollar loan w were you I mean once you

transition to to Did your business start to boom or Did it actually become harder to make money.

Well I initially it was harder. We just simply could not deliver. Enough product on time. Simply because there were not enough skilled sowers.

Hm. We've found it very difficult to find people to do that kind of work in Santa Cruz. It's pretty much a retirement or uh university town and You just never knew when your uh employees were gonna show up. You know if if the Grateful Dead came through town, they would be

It would be there, not not at Osprey. Or if the surf was up or the wind for windsurfing or whatever, it's you just didn't know. When we come back in just a moment. How Mike moves Osprey to a place where the grateful dead has Probably never played. Stay with us, I'm Guy Raz, and you're listening.

to how I built this. Hey, welcome back to how I built this. So it's around 1990, and Osprey is having trouble meeting growing demand. And that's a good problem to have, but it means Mike has to find more workers and a larger factory. And he eventually finds both. In rural Colorado.

I had always wanted to check out Telluride and I got a call from Economic development. In Cortez, Colorado, in the in the Four Corners area. And uh

I liked it The town of Dolores, which is ten miles above Cortez. And There was an old building in town. I kind of was looking for a place that we could afford to rent that was large enough. This building was I think seventy five hundred square feet.

Mm. the economic development guy had no idea what was going on in that building. We knocked on the door and lo and behold uh inside was a A contract. group that was building for Gore Tex, they were Kind of doing top secret.

Work on uh I think NASA space suits. And They told us that That was their last day in operation.

Mm. And that the building would be available and that There were thirty five skilled sowers that needed work. Wow.

In addition to that, there were Several hundred Navajo sewers. Down in Cortez, ten miles to the south, that also were out of work. So we decided this is the place to To move off spray.

This this is a place in It's a quite remote. I mean it's in the what the southwestern corner of Colorado and it's It's very far from Major. cities like Albuquerque, Denver, or Salt Lake City or Las Vegas. It's far. I mean it's not like it's far. It's not like a twenty minute drive. It's like

four hours to the nearest big city. That's right. Albuquerque is the closest four and a half hours. Trevor Burrus So I mean was any part of you a little concerned about Building your your business in such a remote place without access to key markets and distribution networks and you know without a whole lot of instr infrastructure'cause I look at the map I mean Dolores is even now it's tiny. It's a tiny place. Like a thousand or two thousand? It's a thousand. Nine hundred or a thousand people. It hasn't grown since those days. Well I would have to say that's where the uh

Benefits of naivety come in. I Didn't really know what I was getting into. I knew that it was possible to ship. out of Dolores using UPS or FedEx. Right.

But you have to Remember that. Back in nineteen ninety it was Modern technology, uh uh data systems, et cetera, communication systems were still quite primitive. Yeah.

And in fact we would go to the library to do our faxing. And the simple fact that there were so many Skilled unemployed sowers was really what was the most important thing to us. And They were primarily Navajo.

Many of them had been sewing for many years. Right. So at that point and and it was and you had the money to do it. You had a little bit of money and it wasn't gonna cost you a lot. So uh So you decide to Settle down in Dolores, Colorado.

And start Making backpacks there. Um and who are your who are your customers? I mean, again, the small retailers around the country. Small retailers that I would pick up at uh uh trade shows. And that word we didn't advertise the word of mouth to go around that we had unique designs.

Nevertheless, uh it was still difficult to meet demand at uh It was uh The the demand was growing and we couldn't ramp up. Very quickly. So it was Super challenging.

And we didn't have a lot of money, I recall it. When we moved from California we had five thousand dollars in receivables. Hm. That was all the all your orders, or all the money that was owed to you at that time. Yeah. Yeah. Yeah, I had a

Lori and Gabriella had stayed in California, so I I Paid them off what I could. And it was Diane and I and m and my son Rory who moved to uh Colorado. How old was your son at the time?

See, he was about uh Three years old. Right. Okay. So you're still very small. I mean this is a A tiny tiny business and You mentioned this that

They were unique they they had unique designs. What was unique about them? I mean I think of an Osprey backpack today and I think it of that like um that top. Very sort of you know it's it's very recognizable. But what what was unique about it in nineteen ninety one or ninety when he moved to Colorado. Well I think I focused on anatomic design. Having been an artist I understood

Certainly spent a lot of time Drawing naked people. I learned that in in college. So I understood the shape and form of the body and I spent a lot of design time trying to focus on how to make these packs fit comfortably.

And how to uh transmit the load from the Pack to your body. Comfortably. Mm. For example.

How you wear a hip belt. And how that pack sits on your body without Causing you a lot of discomfort. And also a lot on function. You're I think you were talking about the lid, the top pocket of a

The lid. Right. We figured out how to turn that into a a fanny pack. Mm. You know, if you're in a at a base camp you could take the your Top lid off and

Go on a day hike with a fanny pack. Features like that that made us unique. Alright, so you're now in Dolores, Colorado. Tiny town.

Starting from scratch there. And it's you and your wife. um running this thing. And uh you've got Some employees. How many people were you able to hire?

Well, I think initially I hired five. Mm-hmm. You know, we just Picked it up from Day to day we would hire more and more and they were They were primarily Navajo.

And in the meantime I was uh Covering all the other Parts of the business. The designing. Patterning.

Payroll H R. Yeah. Purchasing quality control and oversee the production. And going to to trade shows. to Presume'cause that was probably the best channel you had.

to find new customers. Yeah, I was doing so many jobs the the design Yeah. I would find myself driving to a trade show and Um

Pretty much writing up the price sheet on the steering wheel of my car as I'm driving. Mm. Just to complete all the details that you have to have ready to To present at a trade show.

Mike, I'm wondering how did you know that your designs were the right ones. I mean, were you doing any surveys? Were you Getting feedback from customers, or was it just your intuition and instinct like what you liked? It's a combination of all that. I we would hire sales reps. They would give you feedback on what worked and what didn't, what the retailers needed.

We certainly paid attention to that. I Also would go out backpacking and we would bring um People in like all of our sales reps do our sales meetings out in the canyons and test the backpacks. So uh and then of course you look at the competition and see what they're doing. But there was never uh it I never was happy with what I was making. I knew I could do it better and so it was just a

Hm. Actually I got criticized often for changing designs. Retailers. I I didn't.

Really spend enough. time understanding where they were coming from and I would inflict them with new designs maybe every year and that would obsolete their inventories. Hm. But I to me it was absolutely important that I Move forward and

And Build a better product. Constantly. Yeah. You know, Mike, I keep thinking about you doing all this in this tiny

Little town in Colorado with this This community of Navajo sewers making your backpacks. I mean Do you do you remember any any stories from that time that That just made you realize Like what

An extraordinary like out of the way place that you you you chosen to start this business. Yeah. I mean I I'm not even sure I can like doing peyote ceremonies with the uh Navajo is One example.

Oh, tell me that story. Really? Okay. Um this happened here in Cortez. during our uh the period where we were working with the Navajo in production.

And one day uh One of the guys uh Otis Williams, who uh was sort of in charge of our um quality control and our assembly.

and was also a uh Navajo medicine man came into my office and said, Mike, uh We need you to do a ceremony and it I kinda facetiously said to him, Well, I'll do it as long as I get some peyote. Mm-hmm. And I was really only joking and he he had a serious look on his face and said, Well, of course and The story unfolded that someone had put a curse on our factory.

Huh. An ex employee had uh Gone. And Work with a um

s somebody in the black magic community of the of the Navajo's and had Planted a cachina doll. Which was According to Otis and the People he was with the right.

was active in our factory and was disrupting communication. Mm. And was in extreme danger. And we needed to do a ceremony to cleanse And to eliminate that risk and

I thought well I Hard thing for me to grasp, but I can tell that these people Totally believe this. So I uh My sister who worked with me at that time and uh

Another guy we went down to uh The reservation and um to this guy's place. And we uh Did a ceremony there with about Maybe twenty Navajo.

They had brought in a medicine man, special medicine man who Started bringing out all these relics and Arrowheads and Started grinding up something I It was dark in there. I couldn't really exactly see what he was doing, but he uh

Stood up and Well uh large mouthful of this paste in my mouth. And then proceeded for the whole night. We were under the influence of Peyote. And

Yeah. Uh, medicine man did chanting and uh Very powerful night. They were uh Trying to expel this.

force that had entered our factory and My sister and uh Eric, the guy that was with me, were having visions and I was trying to maintain because I was kinda the face of the company and Having a difficult time and It went on all night.

And Uh. Funny thing is that in the morning we when we got up to leave We were Charge with the task of

Going to locate this. Cochina doll and Which we eventually did. I gave it to Otis, our medicine man, and he uh Took it up into the mountains and

Did a ceremony and cleansed it and proclaim that our factory was now back in running order. Hm. And we've had a number of experiences like that that I could go on and on, but uh

One thing I've learned is working with other cultures you you really gain a lot of understanding the more time you spend with them and uh they add so much to how you see things. It's been uh A very key part of our company. Yeah, I mean it is It is amazing. And you you would actually go through another

Pretty significant cultural shift. like a few years later in in the early two thousands When you you decide to move the company out of Cortez to

To Asia, eventually to Vietnam, which I think you were reluctant to do at first, right? Yeah. I was pretty resistant to that idea. Yeah. 'cause I wanted to uh keep

All the people we had employed. We had about a hundred people, I think, at that time working in Cortez. And uh I felt very Um Responsible for them.

Of course. And It just I could not fathom. Picking up and moving the whole operation.

So what convinced you to That you had to do that. Well, I think m most, if not all, of our competition had moved offshore. And our competition would get better and better at it. I mean the fact that they could buy their product

Made at half the price. And not suffer any loss of quality in fact perhaps get a better product. made the decision not that difficult when you Looked it straight in the face.

And uh The ability to find more skilled Workers was was becoming more difficult. I think you could say that our uh

skilled sewing population was starting to age out. Young kids were not Picking up that skill. And our workforce was Growing old and maybe tired.

Mm and we would have to turn down some great partners because we couldn't meet demand. For example, REI was approaching us every year. To pick up our product and uh We always had to say no, we can't meet that demand and they were baffled. They you know, they were almost angry about that because they there was a demand growing for Osprey and within their retail chain and

I'd go up and talk to him, but I I'd just say we cannot Fulfill orders. Yeah. Uh you know, after you do that enough times you realize this can't go on. We've got to do what everyone else is doing and go off shore.

And I took a trip to uh Korea. A friend of mine took me over there who knew the the industry and introduced me to uh sewing factories over there and They made counter samples and I was Blown away by the quality of their workmanship and uh The price was astounding. It was

Pretty much the equivalent of what we were paying for materials alone. Wow. And you have to understand that the uh raw material supply chain was drying up in the US. It was moving offshore. So that uh

raw materials that you needed to make this were becoming less and less available because Uh all the other. Competitors had already moved off shore and were having everything made over there. Mm.

So obvious that This was a a wave of potential that We couldn't deny in that. No one else was either. Yeah.

And And when you made that decision, I mean it sounds like you kind of agonized over it and uh obviously because of the the workers that you had you know, supported in in Colorado since uh at that point too, since you'd moved there in nineteen nineties, had been eleven years or ten years since he'd been there. Did you feel I don't know, g maybe guilt isn't the right word, but just

Or maybe that is the right word. It just was an inevitable economic move. Yeah. We moved his production to a Kore several three different Korean manufacturers. It was either that or shut down, I think.

When we come back in just a moment. Why Mike decides to move his factory and his family from a town of 800 people to a city of eight million. Stay with us, you're listening to how I built this. Hey, welcome back to How I Built This. I'm Guy Raz. So it's the early 2000s, and Mike is still running Osprey out of Cortez, Colorado.

But he's moved the production of the backpacks to Korea. And then He decides to move again. This time to Vietnam.

So I took a trip down to Ho Chi Minh. Really enjoyed. Being in Vietnam more than Korea just seemed like a warmer, friendlier place. And uh

Vietnam prices. FOB prices were lower. And that once the US had normalized trade, which I believe they did in two thousand one. That's when we decided to move up production to Vietnam. So what do that mean for

sort of the home front in Colorado, were you doing all the designs in Colorado and faxing them to a factory in Vietnam. I mean how is that working? Yeah, I was doing design work in Colorado. I uh We were keeping our Sales and marketing.

Those people continue to work in Cortez. Mm-hmm. Once we started production in Asia, we were w quickly to grow. We're able to

Pick up REI. The orders started pouring in and We were running out of places to store our product. We were filling up all the empty buildings in town. We even Took over the old.

Uh. Walmart building and fill that to the brim. And we're paying a fortune to ship that out. You know, at some point we got wise and moved all of our um fulfillment to uh Utah

Where there was a train service. Mm. Which saved us a lot of money. Uh w what I mean, but what happens like so the you've got the Production happening in Vietnam. These aren't contract factories. Did you have somebody on the ground there all at all times, or

I mean,'cause how would you communicate What you wanted or what you didn't want, or I was travelling there. Probably four times a year. Spending about At least a month each time.

So after Doing that for Uh couple of years. And not having a very happy spouse because I was gone so much. Yeah. And also realizing that my

Kids were growing up in a tiny town and they were uh Perhaps uh Becoming susceptible to the uh dangers of drinking and other things that can happen when you're bored and there's nothing to do. And how many kids did you have by that point? Two kids, uh Rory and Amelia. Yeah.

So yeah, we decided I talked to my wife and I was I said well You don't want me traveling there, why don't we just move there? And I was shocked when she said okay. So you moved to Vietnam, to I think to Ho Chi Min City. In two thousand three. Yeah.

I and you're going from a a place, a town of a thous under a thousand people, to a I don't know, ten million pe I don't know how many people live in Ho Chi Minh City, but a lot of people We went from a town of eight hundred to a town of eight million. Wow. Who what was that like? I loved it. I loved the uh culture shock. The uh

Complete change in the not only the climate. But in the The people, the language, the food was outstanding. And Having

I it freed me up to focus much more on design. Because So many headaches disappeared when I was able to move. It's uh kinda remarkable because this is Roughly.

Almost thirty years at that point. Since the when you started this business, right, which began in the Santa Cruz backpacks. Uh, and you m m m went to Vietnam, and but that move Really it sounds like it really allowed.

Osprey to scale in a big way. Because now you could manufacture at scale and you could Fulfill massive orders for Big retailers. It was a miracle. And it it allowed me to uh

Go back to pure design work without all the uh trouble and headaches of running production and Dealing with HR issues and Where did the design happen? Well the design h happened

Um still with myself and uh one or two people that we had back in Colorado. The thing that happened when production moved to off shore with a lot of companies is that they also forfeited their design to those companies, to those manufacturers. I called it the Vietnam melting pot.

Uh forfeiture of Brands, unique designs. over to the factories. And consequently I decided really early on to

continue to do our own prototyping and design. sample making within our own facility and not allow the factories to do that so that we could maintain our identity and our signature product. Wha what were you trying to I mean uh there are obvious the you know, there are obvious competitors, right? Patagonia, North Face

R E I makes backpacks um uh you know. Yeah. What I mean, were you looking at your competitors to figure out what they were doing that what you could do differently, or like how are you thinking about your products and why somebody would

would choose them over A competitor. Well I think for one thing I didn't look at our competition much. Hm. If I did it was simply to make sure I wasn't Accidentally.

Doing something that they were doing. That they had already done already. I had so many ideas on Product. And how do we evolve it that I

Never was at a loss to move on to the next Idea and concept. I didn't really borrow any concepts. I mean occasionally you'd run into Some idea that somebody else had done that was undeniably the only way to do it properly. Yeah.

And everybody followed. But in general it was it was It was we were trying to do our own thing in our own little Space. W you you stayed in Vietnam I think about a little over

Three and a half years, close to four years maybe. And uh you c ca come back to the U S in two thousand seven. Was there a reason why was it just you sort of had your You felt like The operation there was in good shape and it didn't need you. To be there anymore.

Actually I think the strongest reason I came back was that um Well, I had promised my wife that we would we would be there for two years and it had extended to four. She kinda just said it's time to head back and I said okay, it's You get to pick where we live now and

We move back to uh the Bay Area. So you had the operation still in Cortez? Um Colorado. And then you move to uh the Bay Area to open up a new like a design office here, I I guess. Right. In Mill Valley. Right. I was able to uh

Focus on the design in California it was easier for me to continue traveling. Back and forth to Vietnam. Based out of San Francisco. Right. Uh l let me ask you about

About IP about intellectual property, right? Because It's it uh obviously you can You can design something and patent it in your

in your industry, but it's it's pretty easy to copy it too, and to get away with it. And there's I mean there are plenty of products probably that if I went on Amazon today that really are trying to look like Osprey or and and that's probably the probably been going on for a long time. Um did you ever Worry about

Rip offs and knock-offs. I never worried too much about it. From the beginning I had a a negative attitude about intellectual property and patenting. I always felt like What really matters the most is

Making it. Better. And not uh being frozen and stuck with uh A patent.

So for many, many years I refuse to patent anything. Sometimes I regret that. Hm. Uh because it's a lot of those ideas and concepts were Quickly.

copied in the industry and became a standard, but As the company grew, I certainly care Ran into interference. within the company on that theory and uh we have patented a few things that Uh we felt we're

Important and necessary. W what are some things that you you didn't patent that that were and ended up being copied? Well, one thing that comes to mind is uh if you look at a shoulder strap Normally you would Sew a a tube up and

Turn it inside out and insert foam inside of it. process to build a shoulder strap and I came up with a way of laminating fabrics to foams And punching them with a die cut press and then binding the edges with tape. Yeah.

And you know, it probably took half the time to build a harness. And once I showed that at a trade show, it caught on. There are you know, a few cases like that where I I probably could have made royalties or whatever on a patent, but I was too focused elsewhere to Worry about that. H how I mean, the the other question I I I wondered about uh spray was you really focus on mainly on bags.

Backpacks and travel bags and duffel bags. You never got into I mean There obviously there are other outdoor brands that got into I mean presumably there were people who Even in the in your own company you might have said, Hey, we gotta expand our product line.

It's true. Uh that would come up on occasion and I always my answer to that was we're not experts in those other realms and look how long it's taken to uh get to where we are and you wanna start back again in at the beginning and pretend like you're an expert and That you're competitive in that field. Um I always relished it when I saw my competitors pick up uh

Outline products. Tents, sleeping bags, etc because it To me it meant they were going to lose. Focus and expertise on what they already were doing and Kinda water themselves down.

You know, Mike, it's interesting'cause you started the company, but you really very rarely were you the CEO and really only at the beginning. What was it about? About that role that you didn't not want to do. That you you really I mean

I think already in the By the late nineties you had Um Why didn't you want to

Be doing that. Well I think I relish. The design work so much and really did not enjoy dealing with finance and marketing and money and

And uh I never really had any desire to be CEO of the company, um In fact. When I look back on all the years that I've done this, I think The reason I maintain ownership of

of my company for so long was simply that no one else could tell me what to do. Mm-hmm. And I could focus on what I wanted to do. Have a great time doing it. I I'm curious given that you were

The owner took any Investors on, right? No, I well we did in Two thousand sixteen we uh picked up a minority ownership of a private equity partner.

But really I mean until then but but You didn't You didn't have any outside investors. You were the Primary owner.

Right. We didn't even we really didn't even borrow money unless it was to For example, uh Do an addition on our factory down in Cortez.

So it was financed entirely from From cash flow. Totally. Yeah. Um I have to imagine that it it's a

you know, many points, certainly maybe in the last ten years. You had um uh maybe approaching you to see if Yeah.

And uh and eventually you did. You were um sold, I think in in twenty twenty one, to a company called Helen of Troy. They acquired Um Osprey for four hundred and a little over four hundred million dollars. Um was that w I mean, it's great outcome. I mean you started this this little storefront in Santa Cruz. Was that decision because you didn't I don't know, maybe n none of your kids were interested in in continuing it or You just

You were kind of done. I mean T tell me about the thinking behind that. Uh, it's true that my kids were not interested in taking over the company. My daughter was sometimes think that she could but as

I would tell her you you have no idea what she'd be getting into and you're not prepared, so Unless you start Going to business school or figuring out what how you want to run this, forget it. But also I I wanted to find an owner that would have similar thinking to what I have, where I felt that people were the key of the business.

And we talked to I think maybe thirty five different companies. It was a very difficult time because Covid was going on. Mm. In fact at the uh most intense part of negotiation our factories were shut down because of Covid. In Vietnam.

In Vietnam. How did that affect the the I mean Does that mean does that mean there was no product coming into the US? Right. There was there was nothing coming out of the factories. They were all closed down. Wow. So that that certainly influenced some

Potential buyers. You know, they have had no idea what was gonna go on with Covid, neither did we. And I uh I appreciated the ones that hung in there. It meant they were serious and they uh They really wanted the company and they believed in what we were doing. Now that you're sort of r retired from the company

Um, I mean, do you plan to spend the rest of your life in in Cortez in Colorado? It's a good question. I I sort of am coming out of the woods here. I've done this for fifty years and I'm almost seventy. And there are other things I wanna do. I'm still in good health and uh

My plan is to go back to art. I'm converting my uh backpack design studio over to uh art and print making. Mm. I do consider backpack design to be a form of art and um

It's sort of coming full circle to me, starting with uh pure art and moving back into that. Yeah. And uh I love to travel. One of the things I look forward to is being able to sit back and

And C just how big we are and how successful we've been. And I I do get Big hits of that when I go out travelling. maybe to remote parts of uh Asia or anywhere and I see our packs out in the field and I see people enjoying the use of them and I

I don't usually say anything. to them. Um But I It's a great kick to see that. when you think about uh

This unlikely story, right? And and and everything that's happened and You know, I mean four hundred million dollars is a massive company that that you sold and What an incredible

Outcome. from you know s something that began as a storefront. in nineteen seventy four. Um how much of that do you ha do you think has to do with um Just how hard you worked and how much do you attribute

That too. To luck, to lucky breaks. Oh boy, that's a tough question. I my My feeling about luck is that luck happens when you're prepared to recognize it. You know, sometimes

uh opportunities fly by you and if you aren't aware that they're Present at that moment. You don't catch them? I certainly worked hard. But I've enjoyed it, so to me it hasn't been work. It's been

It's just been a life. It's been a wonderful life. That's Mike Votenauer. Founder of Osprey. By the way, a cool bit of trivia.

Back in 2001? The company got the kind of free publicity that a brand can only dream of. When Time Magazine put Eric Weinmeyer on the cover, Eric was the first blind person to climb Mount Everest. And there on the cover photo. He poses triumphantly on the side of the mountain.

Wearing a bright yellow Osprey backpack. Hey, thanks so much for listening to the show this week. If you want to contact the team, our email address is hibt at id.wondery.com. If you want to follow us on Twitter, our account is at how I built this and mine is at guyRoz, and on Instagram, we're at how I built this and I'm at guy.Roz. And don't forget to follow this show wherever you listen to podcasts so you don't miss a new episode. This episode was produced by Kira Wakim with music composed by Ramtin Eralui.

It was edited by Neva Grant with research help from Catherine Seifer. Our production staff also includes Elaine Coates, John Isabella, Casey Herman, Carrie Thompson, Alex Chung, Chris Massini, Carla Estevez and Sam Paulsen. I'm Guy Raz, and you've been listening. to how I built this.

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