01 Apr 2010, Posted by admin in 20 Questions,Fashion, 1 Comments

20 Questions With Bonobos

Name: Andy Dunn

Job Title: Co-founder and CEO of Bonobos

Launched in 2007 by two former Stanford Business School roommates Brian Spaly and Andy Dunn, Bonobos is an online retailer that has quickly built up its reputation for selling kick-ass fitting pants–by men for men. In less than three years, it has sold more than 55,000 pairs of pants and eliminated “khaki diaper butt.” With free shipping & returns and great customer service provided by Bonobos “ninjas,” guys no longer need to leave the couch to up their fashion quotient.  In this edition of 20 Questions, Dunn tells us why men hate to shop, the biggest challenges in running an online business, and the importance of hiring a good team.

Jennifer Sung: How did you get started with Bonobos?

Andy Dunn: [My business partner and I] couldn’t find pants that fit so we came up with a design of pants that fits better for a guy’s anatomy. Our pants are made with a contoured waistband and they are medium rise–so they’re not too tight or too droopy. And they have a tailored cut in the thigh that eliminates that frumpy mass-market fit but is a little more comfortable than your typical super tight Euro fit. What we saw was that people who were trying these pants on were telling us, ‘This is the best pair of pants I’ve ever put on.’ We tried to figure out how to bring these pants to a wider audience and we decided to put them up on a website. When we did that, a whole group of people were telling us, ‘You can’t do that. You have to launch a brand through traditional channels, you have to launch through stores, you have to do wholesale, you have to sell through your own stores.’ But we figured we’ll put them up on the web, we will get started that way and see how it goes. And we ended up growing like crazy just through our website. What we discovered is that guys can’t find pants that fit and they don’t want to go into stores to look for them. So we married those two things together and that’s really how Bonobos was born.

JS: Why do men hate shopping so much?

AD: So I have to tell you two stories about why men hate shopping. The first story is from every guy’s childhood when your mom takes you away from something fun and forces you to go shopping for clothes. From ages five to twelve, when you’re doing something fun and playing outside, your mom says, ‘Ok, it’s time to go to the store.’ And this is [most guys’] first memory of shopping for clothing. Every guy goes through this –maybe there’s a small fraction of guys who actually do enjoy it, but most are just not happy. This translates to when you become a grown-up and you go to a store and it’s such an ambiguous ambivalent experience, which leads to my second story of a hunter’s approach to shopping.  It’s all about product per second. You find a sweater that you like, pants that you like, and you just repeat. This comes down to the fundamental difference in the psychology between men and women shoppers, which is that women, when they go shopping, will often view it as a social activity, while for men it’s something to do alone –you hunt. We are trying to create an overall experience that caters to that because we don’t think anyone’s focused on it.

JS: Your co-founder (Brian Spaly) created the original Bonobos pant but you helped translate it into a real business. What gave you the confidence to take that leap of faith and start a company?

AD: I once worked for one of the best direct to consumer companies out there, Lands’ End, as a consultant working in their offices. I went to their call center one day and there were 400 notes from customers on this one wall and I looked at one of them and it said, ‘Thank you so much for waking me up on the day of my wedding. My mom was a total mess and there was no one else I could count on on such a chaotic day.’ And I was like, ‘Wow, it’s incredible the relationship that this customer has with this call center rep.’ And I thought to myself, why is there no men’s business out there that works like that? It’s not that I want someone to wake me up on the day of my wedding, but why is there no relationship-driven men’s business? So we [Bonobos] are trying to create that one to one relationship with the customer that doesn’t want to go to a retail shop and even though they never meet us in person, they feel that proximity and connection over the website and with our customer service ninjas. J. Crew, Lands’ End, L.L. Bean–they built their relationships through a catalogue business and it strikes me that now we can build that with an internet and e-commerce business.

JS: What are your core competencies?

AD: Our core competencies are the fit and the ease with which you can access [our product]. It’s the marriage of these two things together. There are other people that make great new products but [few have come up with a] really simple solution that makes [them] easy to buy. And once you get that right, don’t’ forget style and personality. You have to have that as well. I don’t think you can just make amazing fitting white dress shirts and khaki pants, it wouldn’t be quite the same phenomenon. I don’t think that any guy would be lighting up and saying, ‘I love Bonobos, love your Blue Skies [pants].’ We also don’t take ourselves too seriously, which is a very intangible thing. But I think that our irreverence is part of [our success] as well.

JS: What influences your consumer’s buying behavior?

AD: We asked [our customers] actually. We went to 500 of our customers and asked them, why do you shop with us? And the answer that came back was because of our fit, style and personality and awesome service. So what brings people to the site is that they hear that the pants fit great or they see that they fit great on one of their friends. Then they see the energy and personality of the brand–the colors, the pocket liners, the great details, the fabrics, the fact that there’s something different about these pants. Then they get excited about fashion and the knowledge that they are getting a great fitting pair of pants. And the third thing that [gets our customers] over the hump is free shipping both ways and their ability to return something at any time. If you have a problem, you can talk to one of our customer service ninjas who are intelligent, educated, energetic college graduates that actually do service. That’s what gives them the comfort to place the first order. Then they keep coming back and we see this in our data. 50% of [our customers] come back within a year for a repeat purchase, which is quite high given that we sell only one classification and the average guy only owns four pairs of pants. So it’s not just a realization that, oh, this is a really cool pair of pants but, I really like these pants and I actually want to start to replace my wardrobe with this category and this product. Our customers are asking us, when are you going to start making shirts? When are you going to make blazers? Can they buy socks and shoes? So we are now starting to evaluate some of those other things we can offer.

JS: While free shipping both ways sounds like a wonderful service to offer to your customers, it’s not something commonly offered on most websites and I imagine that it can be very expensive. Was it a profitable decision?

AD: In the long run, it can be very profitable if we can get to a size where having direct operations makes sense. In the near term, not so much. You know, we broke even in our first year and we lost money in our second year. This year we aim to break even again and we feel that 2011 is the first year we can really turn a profit.

JS: So what led you to make the strategic decision to offer free shipping and returns?

AD: We were inspired by Zappos. You know ten years ago, the Zappos folks walked into some venture capitalists’ office and said, ‘We want to sell shoes over the web.’ At the time, it was a novel idea because people were saying it was a category that’s really hard to fit. I was actually downtown in a store in Soho trying shoes on the other day and thinking it really is remarkable to think that you can build a one billion dollar business in revenue without being able to [sell product in stores]. Because when you go into a shoe store, you are trying stuff on. And there’s something fun about ideas that don’t make sense at first and trying them knowing they might not be successful, because when they are it creates something really innovative that will delight the customer. So our thought process at Bonobos is if we can just emulate what Zappos has done with customer service, offering free shipping both ways, free returns, but not just selling shoes from other brands but building our own brand, we have a chance to really delight our customers.

JS: Can you describe the production process on a pair of your pants?

AD: We get a patterned pant and then we go out and make it in a bunch of different fabrics. We’ve got corduroy, wool, twill, etc. For a long time, we had been buying fabric by importing it from Europe, buying buttons that were imported to New York, and then manufacturing them in New York City. What we discovered as we’ve gotten bigger is that the apparel industry in the US from a manufacturing standpoint is in decline. It’s very hard as you get bigger and bigger to stay with manufacturing in the US. And this is old news. I think everyone in the apparel industry manufactures outside of the US. What we try to do is be best in class by category and by fabric in terms of where we get that from. So we’re now, in some cases, buying the best corduroy we can find in France and we’re sending it to India because we have seen that they can manufacture awesome corduroy. We recently went into polo shirts and the best pima cotton is found in Peru. [So we get our] cotton from Peru and manufacture our shirts in South America. It’s really a strategy about finding the best in class manufacturers and marrying that with the best fabrics. The whole production process for the business we already do takes about four to six weeks but we are trying to compress that down. Over time, we hope to bring that number down from 4-6 weeks to 2 weeks.

JS: What are the advantages and disadvantages of being an online retailer?

AD: The massive disadvantage is customer acquisition and how you attract customers. You need to be incredibly lucky, which for us happened by word of mouth. We had such incredible word of mouth where the first 1,000 customers that we fitted actually didn’t come over the website but in person over the course of the first six months. That created a word of mouth effect. People used to be able to email us before we had a website and that word of mouth effect led to a PR effect and those things together enabled us to acquire our first 20,000 customers.

The advantage is that you can have a better customer service experience online if you can get it right. Zappos paved the way for that in the e-commerce world. It’s hard to deliver a good customer service experience in a store. There are really only seven or eight companies that I can think of that have done this on a large scale–offering great customer service in person. I can’t really think of any that are apparel companies. The one retailer I can think of is Nordstrom and they’ve done well. Then there’s Southwest Airlines and JetBlue with their in-person airline experience. Trader Joe’s and the Ritz Carlton Hotels as well, but it has taken them 10 to 20 years of just focusing on [customer service].

JS: How are you able to offer competitively priced goods?

AD: I always wanted to develop a product that was as least as good as something offered for twice as much in wholesale driven stores. When I think about our $88 khakis –the quality of our fabric, the construction, the details in our pants like the pocket liners and the fit–they are at least as good as something that costs twice as much in a regular retail store. Is it more expensive than an Old Navy or a Gap pant? Yes. But it’s on par with J. Crew, Banana Republic, or a little bit north of that. Something that our customers believe is that they are getting a better product for our price. Our goal is not to hoard profit. It’s to make a fair margin and then reinvest that margin into the growth of our business and deliver a great customer service experience. And it’s been done well by vertically integrated retailers like J. Crew. One reason why people shop at J. Crew is that they’re paying for something that is worth four to five times the price of those goods sold elsewhere. J.Crew can do this because they don’t have an intermediary. If J. Crew were to sell their goods to Bloomingdale’s you would be paying twice as much for their stuff because they would be sharing the economics between Bloomingdale’s and J. Crew. This is why everyone shops at department stores on sale. Customers are willing to pay full price at J. Crew because their prices are closer [to the cost] and their markdowns are [much less dramatic].

JS: Would you ever consider selling to major department stores or boutiques or opening up a flagship store?

AD: You ask a good question because we are trying to solve that customer acquisition problem and we’re weighing the tradeoffs between taking on wholesale accounts that like our product and would enable us to reach a wider base versus just staying focused on [direct sales]. In the meanwhile, what we’ve decided is we are going to come to the customer in our own ways. So we are launching something this March where we are going to go to places of work like the Goldman Sachses and Googles of the world and get those guys fitted in the product ourselves. So we’ll save you a trip to the mall too. [We thought, many of] our customers are here in New York so let’s just go and meet them.

We are developing Ninja Fit Pods as well, which is our mobile fitting room that we can set up [in various locations]. It’s like a fitting room with a desk off the side of it. It’s a new retail model where we will come to you. We’ll be in your neighborhood or in your office or in the cafeteria for a few days. Pop-up stores have obviously been doing very well which is something we can take advantage of. We’ve been talking about that as well.

On the back end, we want to certify dry cleaners and tailors so [our customers] know where to get their clothes altered. [Our customers] can go to these dry cleaners and tailors and they don’t need to worry about the prices because we’ve already pre-negotiated them.

JS: As your business began to take off, what were the biggest challenges you faced?

AD: The hardest part for me has been [building my] team and getting the right group of people here. At first we thought we didn’t need anyone from the apparel industry because what we were trying to do was different, which was a very dumb idea. What we actually needed were people from the apparel industry who saw what we were doing and got excited about it as a different way to do business and as a way to take what they knew and the experience that they had and bring that into an environment where they were excited to be. The author Deborah Meyerson (who wrote Tempered Radicals: How Everyday Leaders Inspire Change at Work) calls them tempered radicals–people who are in the industry but who have a radical point of view on what they would do differently. Over the course of the last year we have worked really hard to bring in folks like (points to Senior Manager of Public Relations and Marketing Michael Hondorp) who have worked at great companies like Polo [Ralph Lauren]. Our Chief Creative Officer just accepted the position [and comes] from Theory and we have a sourcing person from the Gap. [We have also] built a customer service ninja culture which is its own thing and is about great people and great systems. We’ve hired energetic college graduates who can get on the phone or email with customers. [Customers] will say, ‘This is someone who is with it and more than just alert but can solve a problem and crack a joke at the same time.’ And finally [we’ve worked hard] to get the right technology team. Our store is e-commerce so we need the right technology folks. Getting that mix right has been the hardest part.

JS: What’s your strategy when you’re trying to expand into a new category?

AD: Well, we already learned this lesson the hard way when we did two product extensions last year. One was polo shirts, where we wanted something halfway between the boxy cut and the custom slim fit shirts (think Ralph Lauren and Lacoste). There’s a middle segment of guys who don’t fit great in the boxy fit and they actually don’t fit that great in the slim fits either and we think that’s our customer. So [our shirts] fit great but not so great that it looks like you’re trying too hard. That product did really well for us as a launch. On the flip side, we launched swimsuits which was more style driven. It performed okay but not as well as the polos and so from that launch, we’ve learned that anything we develop has to be about fit as the primary benefit. The details and style have to be great but fit is what gives people the courage to purchase off of our website.

JS: What new products are you working on now?

AD: Coming up next is our attempt at better fitting dress shirts and better fitting blazers. We have 1,000 customers lined up as alphas and betas for our software program as we make a prototype. We are going to test it and learn from it and see for how many guys the Bonobos cut of shirt works. Do we have to go to a pure custom model? Do we need three cuts or five cuts? Do we need corduroy stretch on the neck and sleeve? We are really going to do a scientific and dorky sort of thing that most apparel companies don’t do to make sure that the science of our fit, the underpinning of what our brand is about, remains.

JS: Have you noticed any consistent shopping patterns among your customers?

AD: One of my favorite things is how consistent men are and how predictable they are in the way they shop. So you have the guy who buys the turquoise pants and over the course of the next two years, that customer will buy 18 different pairs of colorful pants. You see that guy at the bar trying to draw some attention to himself. He has a great personality and might be a little flamboyant and likes to show off.  It’s so predictable what that customer will buy. And then you have another guy who gets khakis in grey wool, who won’t have the back pocket flare and doesn’t want to draw any attention to himself. He’s just looking for a comfortable pair of pants. I think it’s fun that we have a company that serves both guys and all those in between. Men are remarkably predictable and creatures of habit in how they shop and what they like. So now when I look back at the growth of our company over the last two years, I attribute it to people saying, ‘Oh, these guys get it. This is actually a company for us, run by people who get us and who are like us.’ That’s new in apparel and fashion. So much of the business is focused on women and high fashion and style. These are things that we men are happy to know go on, but it doesn’t inspire us. It doesn’t move us in the same way so we want to say, we stand for you and we are not dealing with the distraction of a women’s business.

JS: What do you do in your role as CEO of Bonobos?

AD: I had a moment of crisis at one point where I was trying to figure out what I actually do every day. And I called one of my friends who is a successful entrepreneur, and asked him, ‘What do I do?’ He said you do two things: raise money and hire great people. And that’s what an entrepreneur does in the first couple of years of the business. To that I would add a third point, which is I set the strategy and actually evolve the strategy over time every three or six months.

JS: What have you learned about yourself in your role as CEO of the company?

AD: One of the hardest things when you come into an entrepreneurial environment is that you come in with certain perceptions. You go through the process of building a team, recruiting, working with your partner, and there are two things that happen. First, you develop an internal well of strength to get through it all because it is sort of like having to go through a relationship–it’s a roller coaster ride. And second, to the extent that you don’t have as much humility as you need going in, it makes you find it and discover it.  As much as I thought I was self-aware coming into Bonobos–seeing all of the mistakes that I made, the things I’ve done wrong, or things that were pointed out to me as things I could have done better by hiring very capable people–it all increased my self-awareness. That was very hard because I became not only aware of my inner strengths but painfully aware of my weaknesses. [I’ve found that] A’s hire A’s and B’s hire C’s. If you’re not that good at your job, you tend to not want to hire someone better than you but the part I’ve realized is that you have to hire people better than you all of the time. There are things that I don’t know how to do and the best thing I can do for our business is to bring in someone who knows how to do that. That internal examining of what you’re not good at and sort of embracing it, is what you use as a roadmap for when you go out and recruit.

JS: Which living person do you most admire?

AD: My mom (Usha Dunn) is the best manager of people I’ve ever been around in my life. She runs an ultrasound and MRI group in a hospital and strikes the right balance between friendliness and toughness and loyalty to her people.  She’s managed a group of 15 women who have all stayed with her now for 20 years. She just kept that mix right between self-awareness and empathy and also the no BS tough talk. So she’s my role model as a leader.

In terms of professionally within the Bonobos community, I have an amazing mentor on the West Coast by the name of Andy Rachleff who is actually a tech venture capitalist and has invested in our business from the beginning.  He has given me hundreds of years of entrepreneurship learning because he’s worked with all of these entrepreneurs who have built successful companies, as well as with people who have failed. When I have a really tough problem, I call him and I feel like I can stand on the shoulders of those who have done this for so long.

JS: If you could start over again, what would you have done differently?

AD: Hire apparel people earlier. That year when we didn’t hire anyone from the industry I think was a costly one. I think we would be further along if we had had more humility about what we didn’t’ know earlier and sought to attract people in at that stage. On the flip side of that, it was hard to convince people of our idea at that time. You know, I was inviting people over to my apartment at that time and saying, ‘Hey, we are going to be a big business,’ and people were looking at me sitting on my couch thinking, ‘Okay, this guy is crazy.’

JS: What is the best piece of career advice you’ve ever given or received?

AD: The hardest piece of advice to actually live by came through Andy [Rachleff] from another CEO who has been growing his business for a long time. It’s that you work for the people at your company and not the other way around. So if there’s a problem with the company, the first question you have to ask yourself is, ‘What did I do wrong?’ versus bringing someone into your office and chewing them out. Maybe you’re chewing them out because you hired the wrong person. By the way, that’s your fault. Maybe you’re chewing them out because someone who works for you hired the wrong person. By the way, that’s also your fault if you hired that person. Or the business model is not working and the revenue isn’t there. Well, you’re in charge of the business model. So the mindset is really painful and it comes back to having humility where for every problem you have, you have to ask yourself, ‘What did I do wrong here?’ And that’s been the hardest one to actually live by because the natural tendency is to blame or act like a dictator once you have power. It takes some real self-control and soul searching to say, ‘Wait a second, what’s actually going on here? How am I contributing to [the problem]?’

All photos are courtesy of Bonobos and visit Bonobos.com to learn more.

–Jennifer Sung