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Fast Company
2 days ago
- Business
- Fast Company
Why State Bags went stealth about its philanthropy
Scot and Jacqueline Tatelman never planned on launching a backpack startup—much less a cult brand that now generates $100 million a year in revenue. Each of them had spent their childhood summers going to idyllic places for sleep-away camp, and they wanted kids from under-resourced communities to have this life-changing experience. In 2009, when they were in their early twenties, they started a nonprofit that brought students from Brooklyn and the Bronx to the wilderness, where they could eat s'mores around a campfire. But every year, their hearts broke to see how the children toted their stuff. 'Many brought all their things in trash bags or plastic Duane Reade bags,' says Scot. 'One time, when we were catching a train, a girl's bag ripped, so all her things were on the platform. These were kids who lived less than two miles from us in New York.' The kids needed better bags, the Tatelmans agreed. At the time, Jacqueline was pregnant, but since her family had been in the fashion industry, she felt she had the skills to start a buy one, give one backpack business. In 2013, they cofounded State, which sells high-end backpacks and uses the proceeds to donate backpacks (and other resources) to kids in need. 'We made the deliberate decision to focus on the premium end of the market so we would have enough margin to donate to the philanthropic efforts,' Scot says. Jacqueline focused on the business, first as chief creative officer. In 2020, she decided to take on the role of CEO as State faced financial challenges, and has since increased revenues by 1,000%, rocketing the company to eight figures in revenue. Scot, meanwhile, has been laser focused on the nonprofit. Every year, Jacqueline apportions hundreds of thousands of dollars to support Scot's work, from donating backpacks to organizing summer camps. During the pandemic, Scot pivoted to focus on one-on-one tutoring to kids in New York who were falling behind academically. If the company exceeds its financial targets, it pours more money into the philanthropic work the following year. Scot says that it has always been tricky being a mission-driven brand. This is particularly true now, when the Trump Administration is attacking companies that engage in diversity, equity, and inclusion efforts. But he's found that even when social justice was fashionable, it was still hard to communicate about the brand's work. 'There was a time when every brand said it was mission-driven,' says Scot. 'Consumers began to see it as a cheap marketing ploy. And now, when you're committed to social justice you have a target on your back. You just can't win.' Now, Scot believes that the best approach to corporate philanthropy is to under-communicate, but over-deliver. After all, the evidence suggests that most consumers don't make purchases based on a brand's social mission—and the small number that do will be on the lookout for these efforts, and hold a brand's feet to the fire if they don't follow through. The pendulum of corporate philanthropy When the Tatelmans launched State, it was the norm for startups to describe themselves as mission-driven. Millennials seemed to care more about brands' ethics than previous generations did and in the mid-2010s, a wave of direct-to-consumer startups positioned themselves as brands that made money while also doing good. Warby Parker and Bombas gave away products for each one they sold. Everlane vowed to eradicate virgin plastic from the supply chain. Allbirds and Reformation made eco-friendly sneakers and clothes. Over time, larger companies from Nike to Coca-Cola also aligned themselves with good causes. In 2020, in the wake of George Floyd's murder at the hands of the police, even more companies began supporting DEI. Scot felt ambivalent about this shift toward corporate activism. On the one hand, it validated his thesis that 'business for good' was possible. But on the other, it was so ubiquitous that consumers became skeptical when a brand touted its good deeds. This is when State made the decision to communicate less about its mission. 'The conversations on social media around mission felt opportunistic,' he says. 'I didn't want to add to the noise.' Just a few years later, the corporate landscape is unrecognizable. The Trump administration and right-wing shareholders have demanded that companies abandon their DEI initiatives, and many have complied. Companies once seen as beacons of progressive values—like Target and Google —have pulled back from their DEI programs. As James Surowiecki argues in a Fast Company article, shedding social justice and philanthropy efforts was also a way to cut losses. And on the surface, State also seems primarily focused on selling products. There are clues about the brand's philanthropic efforts, including the company's 'about' page and an occasional Instagram post. 'We've found that the best and most authentic way for people to learn about the mission is organically, as opposed to shoving it down their throat,' he says. 'If they want to know more, they'll dig deeper. But many will not, and we're okay with that.' While consumers report that corporate ethics matter to them, this hasn't been borne out in their buying behavior. In 2024, scholars from the University of Chicago and New York University tracked the spending habits of 24,000 consumers. While most stated a moderate preference for ethical companies, it ultimately had no impact on what they bought. And this was before the mood in the country shifted. So what's the point of corporate philanthropy? All of this surfaces the question of whether it is worth launching a mission-driven business at all. Does it make more sense for nonprofits and companies to stay separate? Scot doesn't think so. For one thing, he believes a social mission is a good way to keep employees engaged. At State, staff can devote part of their time to working on philanthropic projects, from back-to-school backpack drops to helping to plan camps. Jacqueline says the brand's mission has also helped her stay focused as CEO. 'Running a business is hard,' she says. 'We have been through very difficult times as a business, but having larger goals—and people we don't want to let down—really helps us stay motivated.' Jacqueline also believes that some consumers are more loyal to mission-driven brand. While they make the initial purchase because they like the backpack's design and quality, they may learn more about State's philanthropic efforts over time. And if they feel good about their purchase, they are more likely to buy another backpack in the future. Utimately, Scot hasn't given up on the idea that a business can be force for good in the world. Some companies were clearly serious about their mission, given how quickly they abandoned their philanthropic efforts. But others have stayed the course regardless of the political climate, including Patagonia, Levi's, Ben & Jerry's, and Costco. And these companies can continue have a positive impact on many people at a time when many nonprofits are dealing with cuts to their funding. 'Many communities that are struggling because companies offered to help them but are now retreating,' he says. 'We really need more companies to step up and fill in the gaps.'
Entrepreneur
05-08-2025
- Business
- Entrepreneur
Business's 'Cult' Back-to-School Products 'Sell Out So Fast'
Jacqueline and Scot Tatelman's nonprofit summer camp inspired them to start a purpose-driven business that's still going strong over a decade later. When Jacqueline Tatelman and her husband, Scot Tatelman, founded a nonprofit summer camp for hundreds of kids growing up in New York's under-funded neighborhoods in 2009, they didn't yet know that the experience would lay the foundation for a new business with a major give-back mission: STATE Bags. Image Credit: Courtesy of STATE Bags. Jacqueline Tatelman. "The first couple of summers, [campers] were coming to camp with their stuff in trash bags or plastic bags with holes in them," Tatelman says. "We knew that a lot of them were coming with everything they own for one week away and that they were living in foster care, transitional housing, being raised by another, so that was a very challenging sight to see." The Tatelmans started giving backpacks to the campers, many of whom would immediately transfer their belongings into the new bags and fill them with school supplies from the couple's supply shop, which offered in-kind donations from brands like Bombas and KIND Snacks. " Since then, we've evolved a lot on the give side, so now it's for every STATE product sold, we donate to American kids and families in need, but in the ways they need it most, which allows us to do so much more giving and a lot bigger programs," Tatelman says. Related: Shark Tank's Most Successful Brand of All Time Wasn't Even Supposed to Be a Business at First. Here's How It Became One With $1 Billion in Lifetime Revenue. STATE Bags, officially launched in 2013, has grown into a multimillion-dollar brand over the years and continues to center its give-back commitment, which includes donating fully-packed backpacks and funding projects with partner charities and schools. Image Credit: Courtesy of STATE Bags The brand was self-funded until 2021, when it raised a $2 million seed round. STATE hasn't taken additional outside funding since then. STATE launched in an era when it seemed like disruptive unicorn companies were gaining traction left and right — making starting a successful business and brand look easy, Tatelman recalls. Of course, typically the reality is anything but. It's hard enough to "build a beloved brand [with] a cult following," let alone navigate the logistical ins and outs of running a business, Tatelman says. "You really have to understand the importance of profitability and sustainability and what it actually takes to run a company," Tatelman explains. "A lot of people who start brands are dreamers, and they're excited because they're creatives, but they need to know a lot more. It requires a level of patience, intensity and grace that is kind of out of body." Related: Her Self-Funded Brand Hit $25 Million Revenue Last Year — And 3 Secrets Keep It Growing Alongside Her 'Mischievous' Second Venture: 'Entrepreneurship Is a Mind Game' For STATE's first seven years in business, Tatelman saw herself exclusively as one of those creatives, so she hired CEOs to run the company. However, after years building the brand — and with a unique perspective as its founder — she realized she could serve it in a way former leaders hadn't. Tatelman stepped in as CEO in 2020. Five years later, STATE has become a "full-fledged lifestyle family bag brand" with consistent growth. Tatelman attributes much of the STATE's recent growth and success to its category expansion, which began shortly before she assumed the CEO role. Having "owned the market" in children's backpacks for so long, STATE recognized the value in doing the same for the kids' travel in a way that makes life easier for their parents — and products are given the full STATE treatment, Tatelman says. "We like to take it totally over the top," Tatelman explains. "Like, how do we take this dinosaur product and make it ridiculous, so colorful, so beautiful. Every single piece is a work of art, but it also has incredible utility, functionality, quality and all of the things that you want your family travel products to [have]. [To use] the STATE language, [product expansion] totally exploded us." Related: He Founded the App Parents Love for Back-to-School Season — Then Found Himself Ridiculed By Teens on TikTok. Here's How It Led to Serious Innovation. It's currently peak season for STATE, which has always seen sales spike during back-to-school shopping. Last month, amid this period the brand considers its "Super Bowl," STATE released product collaborations with Hot Wheels, Barbie and Love Shack Fancy. Image Credit: Courtesy of STATE Bags But Tatelman says that no matter the time of year and how much growth STATE sees, she always feels grateful to spot one of the brand's bags on the street, and she's only recently come to terms with the brand's "cult" status. "People will write to me like, I'm setting my alarm," Tatelman says. "I'm like, You're setting your alarm for launch day? Over time, since our customer knows we sell out so fast, especially [out] of these crazy novelty products, they are hungry for the new collection. Year after year, it gets crazier and crazier. I still can't believe that's real for STATE." Related: 'Absolute Freedom': Siblings Behind a Self-Funded 8-Figure Brand Reveal 3 Secrets Aspiring Entrepreneurs Should Know About Growth and Success Despite STATE's ongoing success, Tatelman believes the brand has just scratched the surface of its potential, and she looks forward to solidifying its position as a "true family lifestyle brand" with continued product expansion. Image Credit: Courtesy of STATE Bags STATE has transformed a lot over the years, but it's never wavered from its original mission and vision — and it's a principle that any aspiring entrepreneur should keep in mind when it comes to starting a business. "You have to have a vision for it," Tatelman says. "[But] you also have to be malleable in understanding that you have to go where the customer's going to take you sometimes. But, at the same time, what is the vision, and do you love it? Do you have a dying passion for it? Because if you don't, you'll break. [You need] the passion and vision and then the knowledge, or at least the curiosity, on how to get there." This article is part of our ongoing Women Entrepreneur® series highlighting the stories, challenges and triumphs of running a business as a woman. Ready to break through your revenue ceiling? Join us at Level Up, a conference for ambitious business leaders to unlock new growth opportunities.
