Andy Dunn

CEO at Bonobos. Mission in life to evolve mankind, starting with pants 👖

THIS CHAT HAPPENED ON November 20, 2015

Discussion

Andy Dunn@dunn · Chairman, Bonobos
Hi, I'm Andy Dunn, founder of Bonobos. My mission is to evolve mankind, starting with pants. I also invest in MATE entrepreneurs (that's magnetism, authenticity, tenacity and evolutionary ability) at Red Swan. I'm excited to be here- ask me anything!
Jack Smith@_jacksmith · Serial Entrepreneur & Startup Adviser
Andy, it's been well written you went through the process of bringing in an external CEO, as you thought that someone else would be better placed to help the company scale. That didn't work out; do you envisage yourself being at the helm as CEO for the foreseeable future now, or do you think that you'll be looking for another CEO candidate in the future?
Andy Dunn@dunn · Chairman, Bonobos
@_jacksmith I do envision myself back here in perpetuity now, and I am grateful for it. Hiring an outside CEO is hard. I learned a lot. We adjusted quickly when we realized we still needed the founder at the helm. It was invaluable in some regard because a lot of the learnings I now bring to the CEO role would be impossible if I hadn't had the experience of being gone, the perspective from the time away, and the things I learned from Fran from her brief time here. I actually would do it again, crazy though that sounds. Fran was incredible thoughtful and gracious about the whole experience. I am still sort of amazed, and feel lucky, by how well it went - two CEO transitions in 120 days. :-)
Brandon Rubinshtein@brandonshtein · Founder & CEO of @Verrehere
Andy what is it like to make a huge pivot into retail while you were experiencing such tremendous growth online and were about to IPO? What do you think you learnt the most from that experience?
Graham Gardiner@gbgardiner
@brandonshtein is that a pivot or a new customer acquisition strategy? Still selling clothing.
Brandon Rubinshtein@brandonshtein · Founder & CEO of @Verrehere
@gbgardiner @brandonshtein I feel as its more of a pivot from only providing a online shopping experience. But I see how you can take it as a new customer acquisition strategy
Graham Gardiner@gbgardiner
@brandonshtein ya for sure....still interesting question.
Andy Dunn@dunn · Chairman, Bonobos
@gbgardiner @brandonshtein I think it's not a pivot. Pivot is Burbn to Instagram. Pivot is an over-used word in start-ups. Agree: still a good question.
Lejla Bajgoric@lejlahunts · Intern, Product Hunt
Hi Andy! How have your viewpoints in relation to direct-to-consumer business changed since you created Bonobos? Is there anything you know now that you wish you would've known earlier on?
Andy Dunn@dunn · Chairman, Bonobos
@lejlahunts Wow, so much to say. I wish I had known that offline wasn't going away, just changing. I wish I had known that a company can only do a couple things well at a time. I wish I had known that paying for on the job learning is expensive. I wish I had known that a great partner can really help a company amplify who it is early (in our case: Nordstrom). I wish I had known a digitally native brand is a technology-enabled retail company, not a technology company. I wish I had known that marketing is vital, but too much is a great way to scale a bad business. I wish I had known to hire a great head of HR can be a great investment that must be made when your corporate team hits 100... I guess those weren't all about direct to consumer! Oops.
Graham Gardiner@gbgardiner
@dunn @lejlahunts awesome response! Thanks.
Ben Tossell@bentossell · newCo
Hey Andy - can you explain how you got to decide on the MATE terminology and what it means to you?
Andy Dunn@dunn · Chairman, Bonobos
@bentossell M - Magnetism, A - Authenticity, T - Tenacity, E - Evolutionary ability. The last one is the hardest to predict, and to find, as it's a blend of judgment, intellectual honesty, the desire to experiment, and the wisdom over time to know which experiments to run, and equally importantly, which ones not to.
Sam Parr@thesamparr · Roommates
@dunn Hey Andy. I spoke with you last year about Hustle Con. Nice to see you here. Can you talk about some of the challenges that you and your former cofounder had? How do you amicably deal with differences in opinion while also inspiring and rallying your team? I feel like it's a marriage and you wanna keep the kids in the loop but not scare them, but would be awesome to hear your insight.
Andy Dunn@dunn · Chairman, Bonobos
@thesamparr Our only saving grace was Brian's intellectual honesty that something needed to change, and his grace in being willing to step aside when it was clear that the company (in our case) needed one leader. And then having sage advisors around like Joel Peterson, a remarkable man who told Brian to go get another win on the board, and then invested in Brian's next company - Trunk Club - which has been a staggering success on every measure. I still teach a case at Stanford GSB about what happened, and I say that I feel the better entrepreneur is the one who left. I have done my best with Bonobos and am proud of what our team has accomplished, and the leadership team that we've assembled here is doing great things. I guess the message is : be good at recruiting, and be good at being recruited by a great cofounder (in my case, Brian recruited me to Bonobos) or recruiting one (in other cases, where you have to go find a great one). I'm rambling but I guess what I'm saying is the important thing to find in a cofounder, in addition to everything else, is intellectual honesty - people who will be swayed by data over emotion, ultimately, and then surrounding yourself by incredible advisors like Joel and Andy Rachleff - our founding angel investors - who will tell you the truth when you need to hear it.
Andy Dunn@dunn · Chairman, Bonobos
@dunn @thesamparr I dream of one day teaching a course at Stanford GSB called "Cofounders: Courtship, Marriage and Divorce."
Graham Gardiner@gbgardiner
Hey Andy besides having a product people really liked.......What drove the early success of bonobos? Did you put a focus on paid customer acquisition? Social buzz? Where was the focus and what is driving sales today? I look at companies like Bonobos & Polar Stuff and find it really impressive how they are able to create such a following over instagram.
Andy Dunn@dunn · Chairman, Bonobos
@gbgardiner I don't believe that paid customer acquisition works for digitally native brands - it can work at first, but not if you want to ultimately have a profitable business. One of the great secrets is that paid digital acquisition, for the vast majority of companies, doesn't scale, and most of the great companies that do scale don't need it to succeed. The equation in the early days is WAY more about the product resonating than finding a way to pay for it to matter. And our product, which is a bundle of great clothing and great service, scaled early due to a mixture of great PR, great word of mouth, and great in-person sales (trunk show and in-person sales out of our various apartments). We then applied a lot of digital spend to that in 2009-2011, and it definitely helped us grow, but it was nowhere near as good of customer cohorts as the ones that we are now seeing now that we have put more of our energy to extending our assortment (shirts and suits) and expanding our distribution (guideshops - the reinvention of retail! - catalog, and Nordstrom). I advise most digitally native brands now to think about partnerships and in-person retail earlier than I did, because outside of freak (amazing) stories like Tuft & Needle, there are not many ways to really take off online only..
Graham Gardiner@gbgardiner
@dunn @gbgardiner awesome....thanks for the thoughtful answer.
Graham Gardiner@gbgardiner
In the early days of Bonobos.........What did you put your first 750K in funding towards? Afterwards did you have clear validation that bonobos was going to be a success?....or did that happen later in the companies history?
Andy Dunn@dunn · Chairman, Bonobos
@gbgardiner over a year: $200K inventory, $250K team, $50K PR/marketing/sales, $50K nuts and bolts e-commerce, $50K legal/insurance/rent stuff, $150K cushion.
Eddie Wharton@eawharton · Data Scientist, Dinner Lab
Hey Andy! How has the "Dear Dumb VC" post impacted your relationship with the VC / startup world?
Andy Dunn@dunn · Chairman, Bonobos
@eawharton It has meant dumb VC's don't want to hang out with me. Ever. Since there is not a single VC who thinks they are dumb, it hasn't constrained me at all! I get to hang out with everyone still.
mike lin@mikelinsf · Founder & CEO, influencersTV
Did you ever have any self doubts of the success of Bonobos?
Andy Dunn@dunn · Chairman, Bonobos
@mikelinsf Of course! I still do.
Harry Stebbings@harrystebbings · Podcast Host @ The Twenty Minute VC
@dunn thanks so much for joining us today. I would love to hear how was it establishing Red Swan? How did you put across the message that Red Swan was the 'smart money' for consumer companies? What are your fundamental methods of deal sourcing like? Would be a huge pleasure to have you on @twentyminutevc let me know what you think?
Andy Dunn@dunn · Chairman, Bonobos
@harrystebbings We don't put out the message! If you have to put out a message as an investment firm, then you aren't a good investment firm. Now I'm not sure we are a good investment firm yet, but to the extent we are emerging as one, the only reliable way to do is through entrepreneurs telling other entrepreneurs this is the case.
Andy Dunn@dunn · Chairman, Bonobos
@dunn @harrystebbings As far as deal sourcing goes, it's mostly inbound and through our networks. We don't do much proactive outbound, as we only have one full time partner - we do do a bit.
Emily Hodgins@ems_hodge · Community and Marketing, Product Hunt
@dunn thanks for being here today 🙌 During your career to date, what has been your a) most challenging moment and how did you overcome it? b) proudest moment and why? c) most surprising moment?
Andy Dunn@dunn · Chairman, Bonobos
@ems_hodge Nice fast, hard question. a. The most challenging moment was 2009 when my cofounder Brian Spaly left the company. I don't think I overcame it. I think he did, by volunteering to leave the company with enormous grace and dignity. I was lucky to have partnered with someone so talented and intellectually honest about what the company needed. b. Proudest moment remains being named the #16 best place to work in NYC by Crain's. It's not a perfect survey, but it was when I felt the most proud. We've got some work to do to be at that level. c. Most surprising moment! Hmm... I would have to say it was returning to the CEO role this September when I thought I had "finished the job for me as our CEO" and discovering that there is so much more I am excited do.
Ben Center@benhcenter · Investor Relations Associate, Onevest
@dunn Thank you for taking the time to be here. You've been coveted for the culture that you integrated into Bonobos early on. That word tends to be interpreted in a lot of ways, and no one can seem to define what it actually is. I won't ask you to define it, but I'm curious: how intentional were your efforts in building the culture of Bonobos? Were there team-building activities, "mission statements", or other specific tools you used? Or was it more of a natural flow?
Andy Dunn@dunn · Chairman, Bonobos
@benhcenter Ben! I just whipped up a quick essay for you on this. :-) I am embarrassed by how long it is, and I want to refine it, but that's the short story.
Andy Dunn@dunn · Chairman, Bonobos
Ben Center@benhcenter · Investor Relations Associate, Onevest
@dunn @benhcenter Thanks so much for your replies! I read both of those articles, and it's motivating to read that with a solid foundation of authenticity and empathy for the people you work with, "culture" comes naturally. As I love to say, you don't need to talk about it, just be about it.
Theoharis Dimarhos@theo_dimarhos · Marketing+Biz Dev at AngelouEconomics
@dunn Hi Andy! As an investor, what's your take on online schools/education? What's the component missing that can make them become mainstream?
Andy Dunn@dunn · Chairman, Bonobos
@theo_dimarhos This is one of the most dangerous ideas in business. That an "expert" in one area knows anything about a different domain... :-) I am very proud to be a founding chairman of the Blue Engine. http://blueengine.org/ I guess for me it's not obvious that the future of education is about tech. I still believe that education is about a human to a human. But my dad's a retired AP US History teacher, so we are old school... Don't get me wrong, I am all for technology improving things, but I doubt (seriously) that it's any kind of panacea. Guideshops for me @bonobos were proof that while the future is technology-enabled, the value of humans is going UP, not down, in an increasingly smartphone-distracted world.
Adam Muller@muller_adam · Co-founder ADHD Collective, MullerCast
@dunn very cool of you to do this. What's something you used to strongly believe, but no longer do?
Andy Dunn@dunn · Chairman, Bonobos
@muller_adam That eating meat a lot is okay for myself and our planet. Hey I'm from Chicago - we don't abandon steaks and italian beefs and kosher hot dogs easily. I am now increasingly convinced this is not true, that I have to limit my meat intake - that we need to adjust toward a plant based diet - not out of concern for animal welfare (though I am concerned about that), but out of a more selfish need to keep our planet sustainable *even for just humanity.* I am experimenting with VB6, which is an innovation from Mark Bittman, to reduce a lot of my meat eating, and most weeks I'm down to 1-2 meals a week, though I do eat eggs. I am trying to get to full vegetarian, but as a carnivorous person, it's hard. I credit my girlfriend @manuelasweb with going on this journey, and I do think Jonathan Safran Foer's book Eating Animals is a fun contemplation. I'm proud to be an angel investor in the Purple Carrot, which is Mark Bittman's new company, as a way to follow this idea from an entrepreneurial standpoint..
Scott@scottgabrielson · Founder, Oliver Cabell
how important was inventory management for you guys at the beginning? In a business that thrives on volume, how did you get the prices you needed to have decent margins?
Andy Dunn@dunn · Chairman, Bonobos
@scottgabrielson We didn't have great margins at first. We do now. This is a mistake entrepreneurs make: they price to the margin now, rather than price to (create) the market now, and to margins later (with scale). It did help that we are pursuing a vertical strategy where we own our own margin and are not splitting it with another party for the vast majority of our business, but on a contribution margin basis it's not easy as it is expensive to build your own brand. Nothing in life is too good to be true, except life itself, of course.
Frameology@frameologynyc · Ben Koren
Hi @dunn thanks very much for doing this Q&A! I love what you guys have built, and I'm wearing my Bonobos jeans right now. Question related to your guideshops: how has the model worked so far? Do you ever lose sales because some walk-ins want to walk out with their purchases? Do you consider holding inventory in store at some point in the future?
Andy Dunn@dunn · Chairman, Bonobos
@frameologynyc Ben! Which jeans are you wearing?
Andy Dunn@dunn · Chairman, Bonobos
@frameologynyc The model has exceeded our expectations, which is why we just opened our 20th guideshop at river oaks in Houston. One of the greatest myths in retail is the idea that it's a better customer value proposition in an increasingly urban world to have to do your own fulfillment versus having a brand or retailer do it for you. Of course we sometimes lose sales (tourists, last minute gift purchasers, spilled wine on the shirt), but the vast majority of outcomes is a gain in sales (and real estate productivity!) due to offering -- instead of inventory to walk out -- MUCH BETTER SERVICE *and* THE BEST FIT in menswear. Neither would be possible if we stocked the store, as we would have to dramatically cut down on the variants of sizes and colors and silhouettes, and our staff would then be "playing defense" against inventory instead of serving the customer as their guide. It is of course a journey of customer education, but most innovations are, hence Early Adopters, Early Majority, Late Majority, Late Adopters.. thanks CC.
neeharika sinha@neeeharika · Google, Threadchannel
Hello @dunn Great meeting you here at this AMA. I have 2 questions: 1) Biggest struggles to get bonobos name out there during its early days. How did you market it? 2) Any suggestion for fashion tech companies that are entering the market now?
Andy Dunn@dunn · Chairman, Bonobos
@neeeharika 1. Again the key to great early days marketing is a great product, not great marketing. Founders miss this again and again. 2. Don't! :-) Just kidding, but technology-enabled apparel is a nearly impossible market to crack. I don't recommend it...
Luiz Centenaro@luizcent · eCommerce Consultant
Andy Dunn! Thanks so much for this AMA. Is there anything you would have done differently in launching a men's specific site vs women specific? Are there any discussions of combining them into one ?
Andy Dunn@dunn · Chairman, Bonobos
@luizcent Smart question. Ultimately they are different customers, which is why we set up AYR separately from Bonobos. Our learnings so far is there is not a lot of cross promotional benefit - men are shopping more for men, and men buy things for women sometimes but it is RARELY their clothing - as a result we're focusing even more on how do we make AYR an amazing brand in its own right. AYR is off to a very similar start to Bonobos, so we're excited to see where it goes - with increasing conviction that it's a distinctive brand from Bonobos - which we'd like to be not just about the evolution of menswear, but the evolution of men in general.
Theoharis Dimarhos@theo_dimarhos · Marketing+Biz Dev at AngelouEconomics
Thanks for the AMA Andy. What's one thing that first time entrepreneurs underestimate and one that they overestimate?
Andy Dunn@dunn · Chairman, Bonobos
@theo_dimarhos The overestimate their own ability, and they underestimate how long it takes not to build something not just with momentum (to be acquired or financed), but to build something that an independent financial analyst would look at and call "a great and defensible business" (10+ years).