By early 2012, almost six years after its founding, Austin-based Yeti Coolers was hitting its stride. The maker of high-end coolers for the hook-and-bullet set had grown to 20 employees and finished the previous year with $29 million in sales, which would earn the company its third consecutive appearance on the Inc. 5000. Roy and Ryan Seiders, the co-founders, had faith in the company they'd bootstrapped, but they were concerned about having all their wealth tied up in it. "We homed in on the idea of bringing in an equity partner that could help us take some chips off the table and be a resource for us as we navigated the next stages of growth," Roy says.
The Seiders fielded pitches from more than a dozen private equity firms before agreeing to sell Cortec about 70 percent of the company. While neither party will disclose the price, Roy admits that Cortec's wasn't the most lucrative offer on the table. But Cortec's proposal had an intangible the brothers' truly valued. "They gave Ryan and me a ton of confidence that we'd be in the right hands," says Roy.
So far, that confidence appears to be justified. Yeti has become a cult brand that last year brought in $779 million in revenue and raised $288 million in its October IPO. (Roy's holdings are worth more than $170 million.) The now-700-employee company has dropped "Coolers" from its name--thanks to an assist from Cortec in navigating the necessary trademark battles--and expanded the product line beyond $400 heavy-duty coolers to include drinkware (mugs and tumblers), bags, lawn chairs, and even an off-road electric scooter.
Yeti has extended its distribution from regional to national to international, including Australia and Japan. Once aimed exclusively at fishermen and hunters--that is, people like the Seiders--the company has now expanded its sales into other consumer sectors, such as suburbanites for their backyards and barbecues.
"They were a cooler company. That's all," says David Schnadig, managing partner at Cortec, of Yeti circa 2012. "They had 11 SKUs and two colors. So we sat down and said, 'Where do we want to go? Where can we go? Where shouldn't we go?' And we came up with a shared vision."
The Seiders and Schnadig, now the board chair, laid out a road map. First, they tested every element of their cooler to try to ensure that even if competitors created cheaper knockoffs--and they did--Yeti couldn't be bested on quality. Then they agreed that Yeti should move into less expensive offerings, like $200 soft coolers and stainless steel drinkware--specifically, mugs and tumblers priced from around $25 to $50. All have proved to be profitable.
"They brought an entrepreneur mindset," Roy says of the Cortec team. "We prided ourselves back in those early years on making quick decisions. Cortec brought that same energy around being decisive, moving the ball down the field--and if it doesn't work, course-correct and move on."
Another advantage Cortec has offered: the cold objectivity of seeing things from a distance. The affable Roy admits that before Cortec, he'd stuck with vendors, marketing agencies, or employees the company had outgrown. The PE firm wasn't about to let that happen. "So where I might have a personal connection to a person or vendor because they were there in those early years," Roy says, "that outside perspective recognizes, 'OK, they were great at one time, but we're beyond that.' " Cortec also brought in a CEO, Matt Reintjes, who had experience in outdoor products, to pilot the company's growth. That allowed Roy to focus on his obsession with product development. (Ryan has gone fishing--literally--though he still weighs in on some decisions.)
Today, Yeti and Cortec compare notes weekly. It's far less intense than those first three or four months. "In those early days, I was talking to Dave every single day by phone, bouncing ideas," Roy says. "They're very hands-on. And that's what we needed."