The Ledger
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Walmart acquired Bonobos strategically to change its image and attract elite talent
“The most strategic part of the plan was to change the narrative. I knew that we didn't have the talent inside of Walmart at the time to do what we needed to do. We had to attract the best people in the world, and at that point, you know, honestly, that wasn't …”
Andy Dunn: DTC apparel is an impossible business model due to CAC
“I spent 13 years building something that I think in retrospect is an impossible business model, which is DTC apparel. Like, I don't actually think it works. Like, the math doesn't work on it, because it's too expensive to acquire, acquire customers, right?”
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' physical retail and wholesale channels ultimately funded e-commerce losses
“Our most profitable business became Nordstrom. 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: Founding a business with friends destroys the friendship's emotional support
“Once you get into a business partnership with a friend, the friendship gets totally sublimated to the business partnership. So a lot of the stuff that you used to talk about or do, you don't have time to do because you've got to work on this little growing bab…”
Dunn: Zero-inventory clothing stores generate higher retail sales per square foot
“You create a clothing store that has no clothing. And that was the insight, which is the customer doesn't need it right away, and that flew in the face of everything everyone in retail told me from the traditional industry. Instant gratification. And it turns …”
Andy Dunn: Giving equity to celebrity influencers beats Instagram ads
“And if I could go back and do bonobos again, I wish I understood how much better it is to dilute your brand by giving the equity to someone like that than running Instagram ads.”
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: Opening a Bonobos engineering office in Palo Alto was catastrophic
“You know, we opened an office in Palo Alto, and it turned out to be a catastrophic error.”
Dunn: E-commerce platforms will vertically integrate proprietary brands just like Netflix
“The future of e-commerce was going to 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…”
Scott Tannen: Early DTC brands won via customer acquisition arbitrage
“Warby Parker, Bonobos. Yes, they're making a product, but they're playing customer acquisition arbitrage. They are just trying to acquire a customer for a little bit less than they're making and scale that profitability. And they're playing in categories where…”
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.”
Andy Dunn: Backlash to Walmart acquisition subsided after 72 hours
“For 72 hours, there's a really big reaction and an availability bias of the most vocal people. And then business returns to normal. The vast majority of people don't think about this stuff that much every day.”
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.”
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.”
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”
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.”
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 …”
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…”
Dunn: The Bonobos board initially rejected his request for additional founder equity
“They said no at first. And, you know, said, hey, like, you need to work for the shares that you've got. And then, you know, ultimately I just wore them down, and I got some alternative perspectives from people in the venture capital backed company space, and s…”
Dunn: Founders have a moral obligation to deliver liquidity after ten years
“Once you've got venture investors who've been in For seven years and angel investors who've been in for 10, it just would be wrong to not make other people money.”
Dunn: Retail is a bundle of physical products and customer service
“Retail isn't just physical products. It's a bundle of physical products and customer service, and those two things together create the experience that drives customer enthusiasm.”
Dunn: Knowing what he knows now, building Bonobos required only $30M
“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”
Dunn: Brand acquisition backlash typically lasts 72 hours before returning to normal
“For 72 hours, there's a really big reaction and an availability bias of the most vocal people. And then business returns to normal. The vast majority of people don't think about this stuff that much every day.”
Dunn: Curved waistbands were a novel breakthrough in early menswear design
“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 …”
Andy Dunn: Bonobos Did Not Do Layoffs Until Year 12
“Like Ipponobos, we didn't do a layoff until our 12th year.”
Raz: Walmart acquired Bonobos for roughly $300 million in 2017
“And then in 2017, the brand was acquired by Walmart for around three hundred million dollars.”
Dunn disclosed his psychiatric crisis to only four key Bonobos executives
“What I did, Guy, was I told a small cohort of people who just had to know
I told our general counsel.
I told our head of HR.
I told our CFO.
I told my assistant.”
Bonobos sold to Walmart for $300 million in 2017
“We sold the company for three hundred million dollars”
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.”
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 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.”
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,…”
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.”
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.”
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”
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: Bonobos sold $16,000 worth of pants in one day at Stanford
“One day, we had a pants party at our house, and I think we sold 16,000 dollars worth of pants that day.”
Dunn: Bonobos raised its first $8M from over 120 individual investors
“We ended up raising our first eight million from, you know, over, over a 120 investors.”
Dunn: Bonobos reached $90,000 in monthly revenue within six months of launch
“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: Benchmark co-founder Andy Rachleff backed Bonobos at a $3M valuation
“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: Bonobos was eight days away from missing payroll in 2009
“We had, I guess, promised a supplier through a letter of credit, and we were about Eight days away from not making payroll”
Dunn hid clinical depression while leading Bonobos through severe co-founder conflict
“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 ok, but drag myself out of bed and come to the office and kind of put on a show.”
Dunn: Launched Bonobos with $3,000 in the bank 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.”
Walmart acquisition talks began six months after his 2016 breakdown
“The acquisition conversation with Walmart wouldn't come till about half a year later, so we were more in the warm-up phase.”
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.”