Apr 4, 2022 · 1h 7m · how-i-built-this
Bonobos: Andy Dunn (2019)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this archival episode of How I Built This, host Guy Raz interviews Bonobos co-founder Andy Dunn about creating a revolutionary digitally native menswear brand, enduring severe co-founder and financial crises, pioneering inventory-free Guide Shops, and negotiating a landmark $310 million acquisition by Walmart.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 29% of the talking time here. How this is scored →
Guy as informed peer 3.8 Guest teaching 2.3 Guest disagreement 1.3 Guy pushing back 1.4
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:06 Dunn confronts misogyny in VC funding
Dunn directly calls out the venture capital system as 'fundamentally misogynistically wired' when comparing his experience to female founders.
Hardest push from Guy ▶ 44:08 Raz presses Dunn on shuttering engineeringRaz refuses to accept that Dunn could abruptly shut down his entire West Coast engineering outpost when tech was vital to the company's survival.
Biggest teaching moment ▶ 47:24 Dunn details the paradoxical guide shop retail economicsDunn educates Raz on how zero-inventory brick-and-mortar stores generated superior profit margins that offset high e-commerce acquisition losses.
Guy holds their own ▶ 18:06 Raz contrasts Dunn's easy fundraising with systemic investor biasRaz demonstrates his cross-interview expertise by contrasting Dunn's seamless seed rounds against Katrina Lake's struggles with investor prejudice.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| The Fit Dilemma and Dunn's Early Life | 4 | 1 | 1 | 0 | Raz introduces the core men's fashion fit problem with the curved waistband backstory, framing the narrative context. Dunn responds openly by sharing personal anecdotes about his bicultural upbringing in suburban Chicago. | |
| From Pre-Med to Stanford Business School | 3 | 2 | 0 | 0 | Raz prompts Dunn on his shift from pre-med to Stanford Business School. Dunn details Stanford's culture and jokes about failed early ventures like imported biltong. | |
| Brian Spaley's Breakthrough Curved Waistband Design | 4 | 3 | 1 | 2 | Raz asks how Brian Spaley's pants differed from established brands like J.Crew and Banana Republic. Dunn articulates the structural design innovation of the curved waistband and Spaley's grassroots campus sales. | |
| Naming the Brand and Dunn Committing as CEO | 5 | 2 | 1 | 2 | Raz probes the business model and initial investor valuation negotiation. Dunn explains his vision of 'Ralph Lauren plus Zappos' and securing angel funding from Joel Peterson and Andy Rachleff at a $3M valuation. | |
| Venture Capital Dynamics and Mentorship Relationships | 6 | 6 | 3 | 2 | Raz contrasts Dunn's rapid fundraising success with Katrina Lake's experience encountering VC bias. Dunn directly addresses systemic misogyny in venture capital while attributing his own success to existing personal mentor relationships. | |
| The Manhattan Trunk Show and New York Relocation | 3 | 2 | 1 | 1 | Raz tracks the move to New York and initial customer acquisition. Dunn details early trunk shows, viral coverage in UrbanDaddy, and rapid early revenue growth. | |
| Apartment Eviction and Spaley's Full-Time Return | 4 | 3 | 2 | 2 | Raz playfully questions if the company had reached a fairy tale ending once Spaley returned. Dunn corrects the romanticized view, detailing how co-founder friction and product disagreements strained their partnership. | |
| Mental Health Struggles and Confronting Anger | 3 | 2 | 1 | 1 | Raz explores the emotional and workplace toll of the leadership dispute. Dunn speaks with raw vulnerability regarding his clinical depression, suppressed anger, and seeking therapy. | |
| Spaley's Departure and Eventual Reconciliation | 4 | 2 | 1 | 1 | Raz asks how the co-founders resolved the stalemate and whether the relationship could have been saved. Dunn credits Spaley's dignity in stepping down while reflecting on the maturity required to navigate such departures. | |
| Mid-Roll Interlude on Executive Turmoil | 4 | 1 | 0 | 1 | Raz anchors the mid-show recap, highlighting the company's precarious state in 2009. Dunn details near-insolvency and securing a clutch $300k angel check at a Starbucks. | |
| Investor Fallout and Board Reconciliation with Peterson | 4 | 2 | 1 | 1 | Raz inquires about managing both apparel and software engineering. Dunn recounts damaging relations with lead investor Joel Peterson over pricing, followed by a humble personal apology and board invitation. | |
| Closing the Tech Outpost and Relocating Engineers | 5 | 3 | 2 | 3 | Raz pushes back hard on how Dunn could risk closing the entire West Coast engineering outpost when tech was critical to the business. Dunn defends the decision as an act of radical candor to end cultural tribalism. | |
| Conceiving the Zero-Inventory Guide Shop | 5 | 3 | 2 | 2 | Raz asks how the business transitioned to profitability. Dunn explains the counterintuitive success of the zero-inventory Guide Shop and wholesale partnership with Nordstrom funding e-commerce losses. | |
| Founder Equity Refresh and Wealth Perspectives | 4 | 3 | 2 | 2 | Raz asks about equity dilution over successive rounds. Dunn discusses demanding an equity refresh from his board and shares his philosophy on wealth distribution versus founder incentives. | |
| Exploring Strategic Liquidity and the Jet.com Connection | 4 | 2 | 1 | 1 | Raz introduces the surprising acquisition by Walmart in 2017. Dunn outlines his fiduciary obligation to early investors and his strategic alignment with Marc Lore on vertical integration. | |
| Navigating the Acquisition Leak and Internal Panic | 3 | 2 | 1 | 1 | Raz asks how Dunn handled the leaked acquisition rumors. Dunn details an emergency all-hands meeting where he calmed employee panic through transparent boundary-setting. | |
| Closing the $310 Million Deal and Managing Backlash | 4 | 2 | 2 | 2 | Raz raises customer skepticism about a premium brand selling to Walmart. Dunn acknowledges the short-term 72-hour backlash and highlights the security and longevity the $310M acquisition provided the brand. | |
| Reflections on Kismet, Privilege, and Gratitude | 4 | 3 | 3 | 2 | Raz poses his signature question on skill versus luck. Dunn reinterprets luck through 'kismet' and acknowledges the foundational privilege of family and supportive networks. | |
| Epilogue on Post-Acquisition Ventures and Case Studies | 0 | 0 | 0 | 0 | Raz delivers the episode outro monologue summarizing Dunn's post-Walmart ventures and business school case studies. Scores are zero for host-only wrap-up. |
Statements from this episode (24)
Dunn: Curved waistbands had not been meaningfully used in men's pants
“And that was this genius insight that actually the way to do this is to make pants with a curved waistband, which would bring in the pant around to your waist in a way where the overall shape looks, looks great. And that hadn't really been done in a meaningful…”
Bonobos sold $16,000 of pants in one Stanford house party
“One day, we had a pants party at our house, and I think we sold 16,000 dollars worth of pants that day, and that was when I kind of looked at him.”
Andy Dunn turned down Maveron job offer to build Bonobos
“I have this offer from a venture capital firm, which was a firm up in Seattle called Maveron, and I said, but I don't think I'm going to take it, because I'm going to sell pants on the internet.”
Joel Peterson offered $100K at $3M valuation or $300K at $2M
“He said, at three, we'll take a 100,000, but if you dropped it down to two, we'll take the whole round.”
Dunn: Benchmark co-founder Andy Rachleff backed Bonobos at $3M valuation
“Well then I went to see the other professor from school who is an amazing business person named Andy Ratcliffe, one of the co-founders of Benchmark, and he also offered to invest, and he was willing to do it at the three million dollar price”
Dunn: The venture capital system is fundamentally misogynistically wired
“So we have a mismatch where men who don't understand women or how women shop are trying to decide how to make investments, and only nine percent of VCs are women. So it's a fundamentally misogynistically wired system.”
Dunn: First Bonobos NYC trunk show converted 13 of 14 attendees
“Seven guys bought three pairs of pants, six guys bought two pairs of pants, only one guy didn't buy anything, and it was at that moment that I decided, we need to build this company in New York.”
Dunn: Bonobos revenue grew from $10K at launch to $90K monthly within six months
“So we properly launched BonobosPants.com in October of oh seven, and we did 10 grand that month, then in November we did 20, December we did 30, came back from the holiday break in January, and we did no sales for the first five days, and I thought, oh my god,…”
Dunn: Going into business with friends completely sublimates the friendship
“What I realized is once you get into a business partnership with a friend, the friendship gets totally sublimated to the business partnership.”
Dunn: Bonobos was a 50-50 partnership, creating decision-making gridlock
“Because we were fifty-fifty partners. You know, I had the title of CEO, but Brian had a ton of business acumen, and so it really was a partnership of equals, and it becomes difficult to figure out who makes the call.”
Dunn hid his clinical depression while leading Bonobos through co-founder conflict
“I got depressed. So it turns out I have a propensity clinically for depression. And so I got to the place where I kind of had to fake it at work that I was doing okay, drag myself out of bed and come to the office and kind of put on a show.”
Bonobos was eight days away from missing payroll in early 2009
“We had enough cash in the bank, I thought, to make payroll, but then we had, I guess, promised a supplier through a letter of credit, and we were about Eight days away from not making payroll, which is not an inspiring moment for your employees.”
Bonobos raised its initial $8 million from more than 120 investors
“And then I had another 90 conversations like that over the course of the next couple months, and pieced together another round, and, you know, we ended up raising our first eight million from, you know, over, over a 120 investors.”
Dunn: Bonobos did $2M in first full year and $4M in 2009
“We did two million in that first year, and of, kind of, full operations in a way, and then four in a nine, and then we were heading towards seven or so”
Lead investor Joel Peterson walked away after Dunn sent a condescending email
“The second angel round that we raised. We raised it too high of a price, and actually, Joel was pretty upset about this. I, actually, I think I wrote the email to Joel that Was a condescending email in some regard around supporting the company, and it was the …”
Andy Dunn: Opening Bonobos' Palo Alto office was a catastrophic error
“You know, we opened an office in Palo Alto, and it turned out to be a catastrophic error.”
Bonobos' retail stores and Nordstrom wholesale profits funded its e-commerce losses
“And our second most profitable were our retail stores, and those two businesses' profits were funding losses from the e-commerce business, which is a wonderful paradox to the way that we conceived of the company.”
Dunn: Bonobos Chinos Line Required 4,000 to 5,000 SKU Variants
“And if you look at our chinos business, we've got 36 waist and inseam combinations, four different fit silhouettes, and we might be running 15 to 20 colors. So if you do the math, that's four to 5000 variants.”
High-SKU apparel retail operates best as zero-inventory showroom stores
“And so the incredible insight was, you don't. You don't stock it. You create a clothing store that has no clothing.”
Andy Dunn started Bonobos with $3,000 in cash and $160,000 in debt
“When I graduated business school, I had 3000 dollars in the bank and 160,000 dollars of debt. And I started a company with that balance sheet.”
Andy Dunn: Bonobos could be built on $20M-$30M in hindsight
“I can't go back in time and do this company on 20 to thirty million. Which is what I think it would take, knowing what I now know”
E-commerce platforms will vertically integrate proprietary brands just like Netflix
“The future of e-commerce was gonna look a little bit like the history of Netflix. That a platform that was streaming other people's content and distributing other people's content would vertically integrate and start to develop their own proprietary content.”