If you follow the worlds of fashion and technology, the idea that the physical retail is on its way out has become a familiar refrain. Bricks-and-mortar is so twentieth century. Software is eating the world. Over the past few years, Bonobos, an online-first menswear brand founded by Andy Dunn and Brian Spaly in 2007, has demonstrated that physical retail has all sorts of life left in it — it just needed a tune-up. With their Guideshops, spaces focused on providing top-notch customer experiences rather than housing tons of inventory, Bonobos has offered a new model for how retail can function. And they certainly don’t plan to stop there. This interview has been condensed and edited for clarity.
You’re preparing for a big change in role. You’re about to move from CEO to Executive Chairman, and this is a move you’ve been contemplating for some time. So, I’m wondering: why now?
You know, it’s been a few years in the making for us and for me. I merged with the Bonobos belief that the internet was going to fundamentally change the way brands were built. And, four years in, [we made] an almost accidental discovery that the offline retail world has got a huge role to play in the future of online. It’s something I didn’t fully appreciate when we started the company, and now over the last four years, a huge part of the development of our brand from an online pants brand into what I hope is a juggernaut, omni-channel menswear brand has been offline. Our partnership with Nordstrom has taken off in a way that we didn’t know was possible. We’re now the number one chino, the number one short at Nordstrom, at all 118 stores nationwide. It’s grown incredibly quickly.
And then, with invention of the Guideshops — we believe that the Guideshops are the future of retail stores. Really long on great customer service and great experiences, really short on changing rooms filled with clothes. It’s a guide, one-to-one experience. We now have sixteen, and they are e-commerce stores, meaning they’re really built the way that you would shop a website, [but] with a great human touch. And so, it occurred to me that that model took off, and wouldn’t it be great if we had someone who really understood all the things that we don’t about how you build a world class, physical retailer, and how you scale a brand from its early beginnings into something massive and ultimately ubiquitous in nature?
So, I had a good friend who I’d made in the industry, a lady named Fran Della Badia, and I used to joke with her, “Hey, you can come work with us one day!” And every year she laughed a little bit less hard. And, lo and behold, here we are. So, we’re really thrilled to be bringing her on to complement all the things that we have to learn as a digital brand that has now become multi-channel in nature.
What would moving into the role of chairman allow you to do that you weren’t able to as CEO?
CEO is an amazing job. You know, you get to do it all. I think the biggest challenge with the job is that you’re pulled in a lot of jobs.
And I think the great thing of being an entrepreneur is that you get to put something new in the world, and then the privilege of being a CEO is that you get to learn how to build it and scale it, and so my hope is that by bringing someone on who is a superb builder and scaler, I can focus on the core thing that got me into this in the first place, which is creativity, and being able to take the long view.
We now have two other brands with AYR and Maide, both doing amazingly well — AYR just launched at Nordstrom, Maide just launched at Golfsmith — really great digital businesses emerging there that could enable us to look, you know, not like The Sopranos, but like HBO. You know, to not look like NHL ’94, but to look like Electronic Arts. And so as that vision for a portfolio of great brands gets even more clear, I want to take the long view, and thought that Executive Chairman would enable me to stay for the long term, and allow someone who is a world class operator to run the day-to-day.
Let’s talk Guideshops a little more. They’ve been kind of the dominate narrative surrounding Bonobos over the past couple of years, and for good reason. It seems to me that you’ve created kind a legitimately innovative retail model. Do you see the Guideshops, as they exist now, as a more or less fully formed vision of your bricks-and-mortar operations, or is it more of an interstitial?
It’s a work in progress. You know, we’re still learning things. We got on Crosby Street and hired a phenomenal manager from Apple. A few weeks ago, he came to us and said, “Hey, can we tinker with an appointment-driven model entirely, where all we do is take appointments all day as a way to cope with all the foot traffic we were getting?”
And we said that was a great idea. And we had two of our biggest Saturdays, this Saturday and the past Saturday, that we’ve ever had. So, we’re evolving the model as we learn, and we are aware of how much still there is to do in terms of the technology in the store. We’ve got a lot of work to do there. We’re also learning from the Director of Retail that we brought over from Tory Burch, who had been at Tory Burch and Apple before that, how much time and energy is required to build great teams.
So, I’d say that the thing that is more fixed is the real estate, you know, we’ve made sixteen real estate investments, and we’re trying to continue to get good at those. We just opened up our first mall stores with an outdoor mall in San Diego called Westfield and an indoor mall in Bethesda, Maryland called Montgomery. And we’re gonna learn a lot from our biggest store to date, our flagship Guideshop, which is opening [in New York City] on 17th Street and 5th Avenue in about four weeks.
What has been set in stone is that we want these to be the best customer service experiences imaginably in a physical retail clothing store. That’s set in stone. What that also requires is us to be super lean and mean on the inventory in the store, and really have the focus on the try-on. Those, I think, are the things we’ve learned as keepers. Everything else is a work in progress and an evolution.
How do your Guideshop sales stack up against your online sales and against your wholesale business?
I can’t comment on exact figures, but what I would say that it remains a vast minority of the business. We’re really excited about what we’re seeing, which is guys coming to a Guideshop, getting fitted, getting styled, having a great service experience, getting incredibly attached to the brand. And then frequently they’re coming back and shopping the web.
At the same time, the Guideshops themselves have become advertisements for the brand, and having a physical real estate with our own stores in addition to what we’re seeing with Nordstrom, we’re actually driving our web business to the greatest height that it’s ever been at. So, the core majority of the business remains our web business. The Guideshop and the wholesale pieces have become great marketing for that core web business.
Is that an ideal balance in your mind, or are you hoping to see that shift one way or another?
It’s less about wanting the mix to land somewhere, and more about learning and discovering the future. It’s a little bit more like you’re visiting and a new place and you’re wondering what’s around the corner, more so than saying, “I hope that there’s a movie theater when I turn left.” What we’re committed to is great service. What we’re committed is controlling our own destiny. I used to think that stores would subtract from our customer service reputation if we ever did them, which is why we never did, and what we’re seeing is that they actually enhance our customer service reputation. So, the net promoter score of our Guideshops tends to be three to four points higher than the website, which is a revelation. On the one hand it makes sense, because it’s about great, in-person interaction and getting to touch and try on some of the products. On the other hand, it speaks to how different what we’re doing is. You know, most customer service experiences that we have in person are not memorable in a positive way.
And so, I’m in a place now where the bigger the Guideshop channel becomes, the better for us. And I wonder where it’ll land. As many people who are prognosticators of the future of retail wonder, where is online going versus offline? For a digital media brand like Bonobos, we remain a majority online, and I suspect that will stay the case even if the Guideshop business grows for some time, because of the repeat nature. But ultimately, we’re indifferent, because what we’re seeing out of the Guideshop business is so strong in terms of quality of the customer experience of the people who are coming in through that channel, and how attached they’ve become to the brand.
In particular, the one thing I will say that we’re seeing is that there is an even deeper uptake on our shirts and our tailored clothing, like our suits and blazers, coming out of Guideshops, and it makes sense because you get to try on more categories when you come in.
You raised an additional $55 million in venture capital last summer — and that was after you had said that you thought you were probably done with raises. What changed to make you reconsider that position, and to go out and do another round?
It was the discovery of the Guideshop channel as such an investible channel.
If our brand is ultimately going to be about delivering great fit and great service in menswear, we have to enable people to try that product on in person. The ultimate way to get fitted is with the help of one of our guides, and where you can try on all different kinds of classifications. You can do it really fast, in about 30 to 45 minutes, you can try on everything that there is to try on, get fitted, and then shop on the web from there.
So, what we realized is that we really need to invest and get behind building a national footprint of Guideshops, and that was what led to the $55 million dollar raise. We set out to raise a smaller amount, and then it really took off in terms of the amount of interest.
Do you think going the venture capital route is something we will see fashion start ups continue to do? I mean, it’s obviously worked out very well for you guys, but do you think it is, in general, a healthy, smart way to build a business?
We’ve been fortunate. We have attracted people who have proved to be sensational at advising us. Sameer Gandhi from Accel, Kirstin Green at Forerunner, Jeremy Liew at Lightspeed. Jeremy’s on the board of another great digital native brand called The Honest Company. Sameer was one of the key investors in Diapers.com and Soap.com. Kirstin has a made a career now of identifying great retail-technology collision investments. Early investors in Bonobos and Birchbox and Warby Parker and countless others.
I think we’ve been unusually lucky to find investors from venture capital who not only understand retail but have made money in their career identifying great opportunities at the intersection of technology and retail. I don’t think it’s the norm to be able to find that.
Steven Jay Gould once referred to religion and science as non-overlapping magisteria. I don’t agree with that, actually, but I love the concept, and sometimes, when I think of retail and technology, I think of Steven Jay Gould. You know, their world could feel like totally ecosystems that are colliding, and I think there are very few folks out there, from the investment side, or from the entrepreneur side, that understand both. I know I certainly didn’t when I got started.
One of the biggest consistent narratives in the fashion world last year was this collision between and continuing overlap of fashion and technology. Do you think that the tech world in Silicon Valley is starting to actually get the fashion world, or is there still a sort of a fundamental disconnect there?
I think that it doesn’t. There’s more work to do there. I think that we need to see more women in venture capital. I think that there’s a lot to learn from this second wave of e-commerce investment. I think there needs to be more comfort with models that either move offline or have an offline strategy, and I think one of the reasons why I feel very fortunate to be an early investor in companies like Warby Parker, and Birchbox, and up-and-coming brands like Harry’s, and Monica + Andy. There’s a whole suite of companies out there who I feel involved me in part because there’s not clear, tenured investors who have been investing in the category, and I think part of it is because the category is new. Digital native brand building began with Bonobos and has continued with Warby. Now we have maybe five or eight brands that are becoming somewhat well known, but I don’t think they’re all household names yet. I think there’s a lot more work that we have to do. I hope that the investing community figures out how to approach it, because I think right now it’s stuck between technology investors on the one hand who are dabbling in retail and consumer retail private equity investors who are used to bricks-and-mortar being the essential way that brands grow versus e-commerce.
To your point about needing to get more women into venture capital firms, a position that I’ve seen you advance time and again is that you believe that women still face social and workplace inequality. The name of your company speaks to that. What does Bonobos do to try to correct this balance, and try to be a good example for other companies to follow?
I think that we’re on this third chapter of equality across genders. The first chapter, remarkably, within the last hundred years, even, was equal citizenship under the law. You know, the right to vote. It amazes me that it was only 100 years ago in the US that women couldn’t vote. On the other hand, it’s amazing to me that only as of this weekend you have a country like Ireland that is the first country in history to, by popular vote, enable gay marriage. From the vantage point of progressive thinking, the world remains a place that still looks backwards in a lot of ways to me.
So, that was sorta chapter one. Chapter two was matriculation of women into all forms of secondary and post-secondary education in equal vigor as men. And from what I hear, the last five years have been the first five years in the U.S. where we have more female undergraduates in the U.S. than men. So, I feel like, okay, we’re getting there on citizenship and education, there must be whole host of cultural norms around that that are evolving. I think the big challenge now is around women in the workplace, with child care and all the challenges that come with keeping the gender engaged when so much of the primary care giving responsibilities end up with women. And I think that’s a big challenge.
We’ve got as much work to do there as any company. We’ve tried to be pretty progressive in terms of our maternity policy and our paternity policy. I think we’re [moving] in the right direction there. We’re trying to be progressive about crafting the right ways to keep people engaged when they come back. So, we’re trying to get to the front-end frontier of policies, and then there’s a whole host of work from an organizational perspective to make sure that you’re doing right in terms of compensation, both cash and stock, and in terms of the number of women in leadership roles. We didn’t set out to hire a CEO who was female, but I’m thrilled to bring a partner on board that is representing that diversity. And so I think those are the three frontiers: fairness in compensation, representation in leadership, and great policies to keep women engaged through the disproportionate burden years of having kids and raising kids. I think there’s more work to do on all those fronts. We’re the first to say that we’ve got a lot more work to do.
In terms of one fun thing on the side, is my sister Monica’s company, Monica + Andy. We’re trying to really empower moms, both by offering a marketplace in addition to the core brand, and by hiring a lot of moms from the workplace. That’s a company where the whole culture is built around moms because the core customer is a mom. My sister is an entrepreneur and a mom. I think that’s one of the other ways I’m seeing remarkable abilities to stay engaged with work — to not have a boss, and to try to create something on your own. I actually think it’s a lot harder work, but at least you can control your own destiny, and that’s another way to do it. I’ve been really proud to be an investor in Monica’s company and to advise her on a company whose whole focus is on serving moms, both from an employee perspective and a customer perspective.
Right, that’s awesome. Switching gears a little bit — in researching for this interview, I read through a bunch of your Medium posts, read and watched a ton of your interviews. It strikes me that you are much more of, perhaps, an outward-facing executive than a lot of founders and CEOs. You’re a well-spoken, funny, handsome dude. How much of the Bonobos brand, do you feel, is tied up in you personally?
I don’t think that much, because our customers don’t care that much. I was at the Cubs game yesterday, and I ran into an amazing guy named Brad. Brad is at University of Texas, and he’s doing a class project on Bonobos. Him and his mom came over, and they said hello. They said, “Are you Andy Dunn?” And we had a chat about Bonobos, and it was really fun.
Brad is in the vast, vast, vast minority of our customers. Most guys don’t care, they just want great fitting clothes. Whether or not the CEO is someone that they feel they have a personal connection with, I don’t think that’s what matters. A lot of CEOs that you hear less from, they’re fully immersed in that endeavor, and I think that is equally important and equally noble.
The essay I wrote on stepping up was this feeling that I had of being pulled in two directions and realizing, “You know what? We’ve got to focus.” Everything we’ve learned about building a great company has been the power of focus, and so why wouldn’t I apply that learning to my own role? That hopefully enables me to represent the company externally, as I like to do, for whatever that’s worth. I think it is important, but I don’t think it’s the most important thing, which is why having a CEO is 100% focused on running the company day-to-day, and who isn’t pulled between those two, at least in our case, felt like an opportunity to get that much better. The fact that I was able to recruit Fran, who for years I had dreamed of bringing on board in some way, shape, or form, it just blows my mind. Because five years ago it felt like a fantastical dream, that we would recruit someone like her to be our CEO.
You spoke earlier about your new role allowing you to focus on the long view. So, if you’d indulge me and let your imagination run wild a little bit, which I’m sure you’ve probably done, where do you see Bonobos in 10, 15, 20 years?
In 20 years I think there’s an opportunity to own the greatest collection of digitally native brands in human history. I think that owning a collection of great brands is what inspires me. It’s because I think that, in a digitally native world, you’re gonna have a ton of leverage in e-commerce experience, in delivering great service through technology, through the Ninjas [ed. Bonobos’ customer service associates], and through a common understanding of how these brands are built. In the physical era, the bricks-and-mortar era that we’re looking back in time at, you see brands cluster. Rarely do they cluster where there’s true leverage.
That’s my dream is to own that collection, and to, in so doing, deliver customers not just with an answer for one part of their wardrobe for one person in their family but for everyone. And I think that’s why you see us learning what we can about women’s clothing with AYR, and learning what we can about focusing on a golfer with Maide, and then where we would get too distracted internally, building a great baby brand with Monica + Andy, building great furniture brand in Interior Define, advising a great company like Tuft & Needle in the mattress category, being an investor in a razor brand like Harry’s. Four years ago, five years ago, [investing in] an up and coming eyewear idea out of Penn called Warby Parker.
I think there’s this whole ecosystem emerging, and I would love to build the great multi-brand company in that space, and to enable all of those brands to get better as a function of knowing each other, and of having a common shareholder, set of shareholders, who really have the long term in mind. So, that’s part of the dream, and one of the reasons why I’m moving to the Chairman role is that I gotta make sure that we don’t try that too soon, because the lesson of focus is that less is more, so we’ve gotta make sure we have a world-class flagship brand created with Bonobos, and then take our time developing this really promising women’s brand, AYR. We’ve got enough on our plate, and I think my tendency if I’m not careful is to… I’m the guy who goes to the grocery store hungry and buys three things of hummus in three different flavors. There’s an exercise in restraint implicit in me for this move of Chairman, that I think it’s going to be important if I really want to enable that multi-brand dream to unfold and flourish.
Everybody I spoke to in advance of this interview was wondering the same thing: is Bonobos profitable yet? While I’m interested in hearing the answer to that question, I’m maybe more interested in your perspective on whether or not you think we spent too much time focused on that question, and whether that’s perhaps a limited way of thinking about building a company?
Your first question, I have to graciously say no comment. Your second comment, I would say no, I don’t think we’ve spent too much time.
Could you elaborate?
Tthe goal of the business is either to make money, or, the unintended by-product of another goal, which is larger, should be to make money because that’s how you show the world that what you’re creating has enough value that it eclipses what it costs to produce. We’ve spent eight years at Bonobos trying to show the world that we can build the most-loved men’s clothing brand of all time by bundling amazing service and amazing clothing together. There was an era where that necessitated significant investment in building a new way of doing it, the e-commerce driven way, developing the reinvention of the retail stores. We’ve invented a new way to create a brand, and it’s been wonderful to show the world that this can be done, and to see all the companies that have followed, and it’s been great for consumers. The only way to perpetuate that, is to generate cash flow, and to be able to have enough cash flow coming off of our companies that we can reinvest in that future. And so, I don’t think there’s too much attention paid to it because ultimately it’s how you enable your mission to come to life and to continue.
Andy, thank you so much for taking some time to talk to me today. Was there anything else that you wanted to add?
Just to look out for a really cool bonobo conservation campaign that we’re launching in June. The animal itself has become a huge inspiration to me. Endangered species, the only great ape that has matriarchal societies with no violent conflict, so I’m really excited to be launching this project to help protect and rehabilitate bonobo orphans in Congo.