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How The Bonobos Founder Went from “Insufficient ATM Funds” to Over $100 Million in Revenue

Andy Dunn had $150,000 in debt when he became CEO of Bonobos. Eight years later, he sold his millionth pair of chinos.

January 25, 2016

Andy Dunn is the founder of Bonobos, one of the most popular men’s clothing startups in America. Launched in 2007, Bonobos has raised $127 million in funding and is now one of the biggest men’s apparel brands in the country.

However, in the first three years of Bonobos, Andy had, on average, only $3,000 in his bank account. And even though Bonobos had $24 million in funding, at the time they were consistently only 90 days away from running out of cash.

So how did Andy turn it around and make Bonobos one of the biggest men’s apparel brands in America?

We explain it in this week’s infographic.

Andy will be speaking at Hustle Con on May 13th on how he created Bonobos. If you’re interested in learning first-hand from him and meeting 3,000 other startupers, founders, and investors then make sure to get your ticket.

Tickets prices increase from $249 to $299 on February 24th or whenever they run out, so make sure to get yours now.

bonobos_infographic

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What’s Bonobos?

Bonobos is an e-commerce brand that sells men’s clothes. They started in 2007 by selling pants. Just pants. But amazing pants. These pants fit great: not too boxy, not too tight. Just right.

Since launching seven years ago, Bonobos has expanded its inventory to include men’s shirts, sweaters, jackets, a golf line, and a women’s brand, all while emphasizing their online buying experience that made the process easy and – dare I say – fun. They’ve also opened 20 appointment-driven e-commerce stores they call Guideshops, with plans to open more in 2016.

Founded in 2007 by Andy Dunn and Brian Spaly (also the founder of TrunkClub), Bonobos has $127 million in funding, and over 300 employees nationwide.

By the numbers

  • $127.65 million in funding
  • 20 brick and mortar stores “Guideshops”
  • 280 variations of pants offered
  • More than 3K SKUs offered (variations across fit, color and size) in washed chinos alone
  • 230 variations of casual shirts offered
  • Over 200 variations of dress shirts offered
  • 30 customer service employees
  • 118 – number of Nordstrom locations that sell Bonobos
  • 1st digitally native brand launched in the U.S. (2007)
  • 1st e-commerce company to invent the store of the future: Guideshops – stores with no inventory
  • 2 weddings that Andy hawked pants at
  • 475 pairs of pants sold before launching the website
  • 50 countries visited in 10 years (Andy)
  • $3,000 – the balance of Andy’s personal bank account for the first three years of Bonobos
  • 90 days – the length of runway Bonobos had for the first three years

Andy’s Story

February 20, 1979 – Andy Dunn is born in Chicago to an Indian mother who immigrated to the U.S. when she was 19, and a U.S. history teacher father.

August 1996 – Andy enters Northwestern University as a freshman, rushes and joins Sigma Chi Fraternity.

June 2000 – Graduates from Northwestern with a double major in Economics and History.

July 2000 – July 2003 – Joins Bain & Company in Chicago as a consultant. Is sent to San Salvador for a six month project that turns out to be the “most impactful” six months of his life. The exposure to life in a developing country creates a profound appreciation for the privileges he had grown up with in the United States. He begins to think of wealth as measured by who you are and the experiences you have. Works for the national airline of El Salvador, and begins to visit other countries on the weekends. Love of international travel is instilled in him, and he ends up visiting 30 countries over the next two years.

September 2003 – June 2005 – Leaves Bain to work as private equity analyst at Wind Point Partners in Chicago.

July 2005: Enrolls as student at Stanford Business School. Kicks off his career as a natural leader through a new initiative, GSB Talk: a student-led event where a couple of students tell their unique story to the whole GSB class, followed by Q&A. Befriends fellow GSB student Brian Spaly, and the two become housemates. Spaly, who hates the way traditional pants fit him, spends his evenings altering his pants. He begins developing a pair of better-fitting pants.

2006 – Spaly conducts lean consumer research on his GSB classmates, including his roommate, Andy. Spaly discovers that no one really likes their pants. Within a year he produces his first round of “Spaly-Pants”, and sells $10,000 of pants out of Trader Joe’s bags.

2007 – During his second year of grad school, Andy has $150,000 in student debt and a job offer on the table. After agonizing over the financial risk of starting a company, he decides that real risk isn’t financial, it’s “not having access to food, healthcare, and education.” Realizing he’ll never starve and can always sleep on a friend’s couch, decides to start a company instead of taking a cushy job.

Summer 2007 – The duo graduates from GSB. Spaly, who is selling his new pants out of his car trunk, invites Andy to be CEO and take the company from prototype to business. Andy agrees. Andy cashes in his 401k so he can go salary-free for the first few months and the two start selling pants to their network. They throw pants parties, trunk shows, and hawk pants at their friends’ weddings. They sell 475 pairs of pants through in-person sales, validating their business model. Andy and Brian’s classmates from GSB ask if they can invest, so they raise $750k. Over 40 people invest.

October 2007 – Bonobos.com launches. Andy packs up 400 pairs of pants in his car and moves the company to New York City. The pants are making a huge splash among men, with 90% of people who try a pair purchasing, and 25% of buyers purchasing three or more pairs.

November 2007 – An article in UrbanDaddy sends so much traffic to Bonobos.com that the site crashes. They have their biggest day in sales thus far: $2,000.

December 2007 – Although the e-commerce site has only been up for two months, Bonobos makes $100,000 in revenue in its first year, proving that brands can now be launched online. The pants are brightly colored, comfortable, and have an attractive fit (neither too boxy nor too tight) and are an instant hit with consumers.

December 2008 – Although users are unable to try pants on before buying, the brand attracts over 5,000 customers and sells over 12,000 pairs of pants. At this point, Bonobos offers only one style of pants (boot cut), and a handful of fabric and color options. According to Andy, their success comes from having a great product centered around their digital brand, and an excellent customer service team of “Ninjas.”

June 2009 – Bonobos raises $3m, their second round of funding from angel investors. Co-founder Brian Spaly leaves Bonobos, and Andy begins to run the company as a solo founder and CEO. Spaly later goes on to become CEO of TrunkClub.

January 2010 – With over 100 cumulative angel investors, Bonobos raises another $4m round because no venture capital firm thinks Bonobos can be a big business.

December 2010 – They raise a Series A of $18.5m, bringing the total amount raised to $24m.

January 2011 – While everything seems to be going great, Andy later admits, “For the first three years of Bonobos, I lived with $3,000 in the bank, a $3,000 apartment, and $150,000 of debt. During that time, I was only a month away from being out of cash.” Andy learns that his startup salary of $70,000 doesn’t go far in New York.

November 2011 – A huge traffic spike on Cyber Monday 2011 crashes the site, and Andy doubles down on efforts to address the company’s growing popularity. Because of the site’s tech meltdown, the company extends their Cyber Monday sales to the following day, and offers all their customers a $20 credit.

December 2011 – Andy, realizing that the company needs to deliver a more personal experience for their customers, launches the Bonobos Guideshop program, with the idea being that retail stores shouldn’t carry a lot of inventory or make sales. Rather, customers can request a fitting appointment online. Once inside the Guideshop, they’re introduced to the different styles offered by Bonobos and their measurements and preferences are emailed to them. Any purchases they make are delivered to their home or office the following day, so they never have to lug bags of clothes around town.

February 2012 – The first Bonobos Guideshop officially opens in New York City. The company also opens an office in Palo Alto, CA to house its engineering team. They hire former director of engineering at Netflix, Mike Hart. Hart and his team build a sophisticated personalization technology, similar to what Hart built at Netflix.

April 2012 – Bonobos partners with Nordstrom to get their pants online and in 20 department stores across the country. This announcement comes in tangent with the news that Nordstrom led Bonobos’ Series B round of $16.4m. Within a year, Bonobos becomes one of their top selling men’s pants brands in America. They eventually expand into all 118 Nordstrom doors.

May 2012 – The first stand-alone Guideshop outside of Bonobos HQ opens in Boston, followed by Chicago a few months later. As Andy later admits, there were consistent doubts along the way – including his.

The model works: half of all customers won’t make a purchase without trying the clothing on first. With the arrival of Guideshops, consumers finally have a way to test out the clothes and make a purchase, now with a personal guide to help them navigate the products.

2013 – The Bonobos employee number climbs to 150 and Bonobos opens five more Guideshops, bringing the total number of Guideshops in the U.S. to eight. The new locations are: Georgetown, San Francisco, Soho, Bethesda, and Austin. While many thought there wasn’t a market for Bonobos in Texas, the Austin Guideshop becomes one of the most profitable.

In March, Bonobos raises $30m in their Series C, bringing total funding to $73m. Andy and CTO Mike Hart decide that the personalization engine that Hart’s engineering team is building would be better as an entirely independent company. Bonobos would benefit more as a customer of this product. Six of the engineers relocate to NYC to work on Bonobos full time, and Hart and six engineers stay in the Silicon Valley to focus on their new technology. The whole Bonobos team is now housed in the New York office, bringing the entire company under one roof for the first time since 2011. The company also launches its golf line, Maide.

2014 – Bonobos opens the third Guideshop in New York City, as well as Guideshops in Dallas, Los Angeles, and Atlanta. There are now 11 Guideshops scattered in cities around the country. The company raises its Series D of $55m. Andy is named in Fast Company’s Most Creative People in Business issue. Bonobos incubates AYR, a women’s clothing brand that will eventually spin off to become its own company.

Jan 2015 – Andy and the Bonobos team start off the year by opening Guideshops in San Jose, San Diego, and Bethesda. Four more will open in 2015, bringing the total number to 20 by the end of 2015, doubling door count in one year.

June 2015 – Bonobos sells their millionth pair of chinos, marking their role as the largest U.S. retail brand ever built online. Andy steps down as CEO and assumes the role of executive chairman. Francine Della Badia, a former executive at Coach and Victoria’s Secret, takes over as CEO.

August 2015 – Fran Della Badia steps down as CEO after just three months, and Andy once again takes the helm. Over the course of Fran’s time at Bonobos, the company realizes that they still rely heavily on Andy, and he is happy to regain his place as leader of the pack. Della Badia stays on as an advisor and mentor to Andy.

September 2015: Unbreakable Kimmy Schmidt star and best supporting actor nominee Tituss Burgess arrives at the Emmy’s clad in a green Bonobos tuxedo. Bonobos now employees over 325 people.

January 2016: The company announces plans to open its 21st and 22nd Guideshops in Miami and Chicago, with more to openings slated to come throughout the year.

May 2016: Andy speaks to the crowd at Hustle Con 2016, experiencing so much joy that McDonald’s converts the “happy meal” into the “Andy meal”.

How Bonobos Makes Money

You need pants. You hear about Bonobos through Facebook or from a friend (who is likely wearing a pair of attractive, great-fitting pants), and decide to check them out. Then one of two things happens.

Either…

You go on Bonobos.com and browse the hundreds of products. You place an order. It arrives within a couple of days. You love them.

Or…

You aren’t sure how these pants are going to fit, so you go to one of Bonobos’ 20 Guideshops around the country. When you get there, a Bonobos expert walks you through the styles of pants, takes your measurements, and helps you figure out which fit works best for you. You have the option of placing an order in the store, and the inventory is shipped to your home or office the following day.

Later…

You wear the pants out in public, and are shocked by the number of times your butt is pinched.

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