EP168 - Bombas founder David Heath
David Heath is the CEO and Co-Founder of Bombas (@bombas), a fast growing, energetic e-commerce apparel company, focused on making the most comfortable socks in the history of feet, while helping those in need. Founded because socks are the number one most requested clothing item at homeless shelters, for every pair they sell, they donate a pair to someone in need.
In this interview, we cover a wide range of topics including the Bombas founding story, their SharkTank experience, the DTC business model and growth challenges, social marketing, innovation, the brick and mortar.
If you’re inspired by the Bombas story, they are hiring! FREE SOCKS included. https://boards.greenhouse.io/bombas
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Episode 168 of the Jason & Scot show was recorded on Friday, February 22, 2019 from the eTail West tradeshow in Palm Desert, CA.
Join your hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
Jason: [0:24] Welcome to the Jason and Scott show this episode is being recorded on Friday February 22nd 2019 live from the etail West trade show, here in semi Sunny Palm Desert I’m your host Jason retailgeek Goldberg and unfortunately Scott is trapped on a plane so we’re going to talk about him and assign him a bunch of action items. One of the top trends we always cover on the show is direct to Consumer Brands and so we’re excited to have on the show one of the top DTC companies in the apparel industry, so joining us from bombas we have the CEO and co-founder Dave he.
David: [1:01] Thank you.
Jason: [1:02] Hey Dave thanks very much for being on the show a long time listeners will know we always like to get things started by getting a little bit of the background about how you came to your current role can you tell us a little bit about your bio.
David: [1:13] Yasso born and raised in New York and I don’t think we need to go back that far, but I so actually my dad’s not to renew are so very early on it I knew that entrepreneurship was something that I wanted to do was very inspired by him and watching him build a business from, the basement of our house to you know something that I think we’re all very proud of I need to go to school for entrepreneurship at Babson College and then upon graduation. I always found that every job I had I can end up working for a smaller and smaller and smaller and smaller company ultimately landed at a media company where I was the seventh employee Rana clean up where I ended up meeting one of my co-founders Randy Goldberg, it’s been 6 years there we developed our relationship and kind of always shared his mutual passion for wanting to start a business together one day. We developed business plans for numerous ideas ranging from services to pack the product, ultimately it was kind of one of these moments of Fate that I think let us to where we are today I have Andre scrolling on Facebook back in 2011 I came across a quote that said that socks with the number one most requested clothing item at homeless shelters in. I immediately wasn’t like oh my God there’s some business to be had here I just kind of stopped me in my tracks and I was like what you said something that.
[2:38] I’ve never spent more than a second of my life or day thinking about is perceived as a luxury item for somebody else, so I remember walking over to Randy’s desk and I remember sharing the quote with him and then over the next couple weeks we both found that we just couldn’t shake this idea, obviously followed entrepreneurship and the other Trends were happening in the startup World in, Tom’s was in there 50 or business and growing incredibly fast where we park her just announced that they had launched about six months prior and kind of bug and reinvigorated the conversation around the one for one business model cuz when more be first launched. They were one for one I wear that was kind of their remains take they’ve more position to be a fashion brand these days babe. That’s some kind of the light bulb went off and we were like, what if we created a company where we donated a pair of socks for every pair of socks that we sold to help him solve this problem in homelessness. Remember like okay well what type of socket we integrate how are we going to create, no carve out our place in the in the market and so we spend the next two years looking at your doing research and development trying every pair of sock on in the market and ultimately landed on was.
[3:55] I’m much more comfortable and Innovative kind of everyday casual athletic sock so at the time Brands like happy socks and Paul Smith we’re coming out with these brightly colored dress socks and your funky dress socks for men wear a trend Randy and Iraq start of guys we were jeans and sneakers to work everyday.
Jason: [4:14] And you are tube socks up till then right.
David: [4:16] Oh yeah totally totally you know Walmart all packed everything, and so what we ended up realizing was that there was this large gap in the athletic Market where you guys are. 12 pack from Walmart or you buy these individual premium price products that were really aimed towards the runners and cyclists and basketball players and hikers that were costing 15 1820 $38 a pair and so I was like what did Linnaeus a $38 pair of socks from a $2 pair of socks. So all of this technology and Innovation seamless toe arch support comfort footbed you know high-quality fabric new articulation in the heel. Amounted actually a lot more Comfort just an everyday wear but I was realizing that all of these sock companies are marketing all of these Innovations just towards the enthusiast.
[5:04] I’m kind of waiting our light bulb moment our our our our our moment way so what if we took all those Innovations and marketed towards the mass Market consumer and, pitched in a while seamless toe is better for standing on your feet every day as a nurse or a firefighter or a baker or you know, mom chasing after her kids or a school teacher. And that’s bombas was born and we launched the company back in August of 2013 and here we are five and a half years later we’ve just donated I believe our 15 million pair of socks. Team has grown significantly we continue to double your over here and sales yeah it’s been a wild ride.
Jason: [5:47] That’s awesome I put your key like there’s some pesky details that might have stopped some people from pursuing that like expertise in like design or Manufacturing, Jane or a bunch of stuff I didn’t hear you mention having a having a rich background in.
David: [6:04] Did not did not at all.
Jason: [6:06] Yes I’m sort of curious was bombas able to happen because, those things are now easier to Outsource in your able to leverage that or did you guys just jump in and learn how to do stuff and make some mistakes and kind of grow the expertise organically.
David: [6:20] Yeah I think it was I think it was a mix of luck and the fact that we didn’t have any expertise that allowed us to create a product that was I think far superior than anything that we had, ever experienced it say the lock portion of it was so when I sat down.
[6:36] Early early days of the idea I sat down with my dad and I was like I got this idea for a sock company, yeah expecting him to be like that’s one of the worst ideas you’ve ever had but do you think I’m leaving your godfather was in the sock business for 40 years and I know that you did really well by himself can’t go talk to him, so I called him up and it turns out that in the late eighties and early nineties use presidency of Gold Toe, I’ve been left Gold Toe to start a private label stock manufacturing company which ended up being one of the largest private label stock manufacturing companies in the world so. Falling into kind of expertise and somebody who literally knows every single supplier of socks in the world and knows how to manufacture any type of sock in the world, was a massive advantage and something that I totally totally a tribute to lock, the component that wasn’t luck that I think once we started the R&D and design phase, with the fact that we had no bias and no snow we weren’t skewed by any preconceived notions in manufacturing and I remember. Very vividly talking with one of our manufacturing Partners I said to them I said I want to put a seamless toe on this athletic sock. They’re like why would you want to do that like that’s wildly expensive you only find seamless toes, ano Italian made dress socks because they’re so thin you can actually feel the same they’re like on athletic socks you can’t feel the same cuz they’re cushiony was like I can feel the same like I want to go to see what’s the weather like.
[8:06] Do you know how expensive that is on a per pair of socks be so it’s like I don’t know you know how much and they’re like $0.10 a pair and I was like.
[8:13] 10 senses like I can makeup 10 said that my godmother was like no I used to make socks for less than a penny a pair whose like this is why they’re pushing back on this but I think the fact that we were. Truly designing this coming at it from a consumer’s perspective, and not coming out of her manufacturing or you know resellers perspective of oh well we need to create a product that has this much margins that weekend we didn’t think about it we were just like let’s create the best product possible, and see if people like it and so that’s how we came to me.
Jason: [8:42] That’s awesome and I feel like in some ways that’s not an uncommon story that the disruptors one of their their core advantages as they don’t have the bias of all these preconceived notion of the the people that did them before in some ways II, I feel like I’ve heard similar iterations of that story from like the Tommy John guys or you know a bunch of other even Dollar Shave Club like where, if you would come from Joe at it probably would have been harder to imagine Reinventing the. Product like that exactly so early on the model was that we’re going to put the socks on a website and sell them direct-to-consumer and was that, the the idea why did you guys ever kick around being a wholesale supplier of socks or.
David: [9:30] I mean so rainy and I came out of the online media business so the online space was I think what we knew and I think we were the most comfortable I believe we also thought that you know early days we, United States early days when 2013 doesn’t exactly feel like early days of the internet when you think about it it’s only e-commerce is only been around for you 20 + years or so yo it’s still relatively early days I think we thought that you know. For building a brand around another wise commoditized product like a pair of socks we we need the, the unlimited landscape and palette by which the internet affords to tell deep and enriching stories and produce really great content which is ultimately what builds great brands are at least we believe build brick builds great brands, and similar let you know it’s like the Dollar Shave comes over all that you know I think having. The ability to use things like video and deeply Rich photographic content and copy in a way to talk about a really small product that on a store shelf, would only got you know what to in of packaging space to tell a really how do you tell a deep story like that and so I think.
[10:48] Are whole thesis early on was, let’s see let’s put our content in a brand that’s why we launched an Indiegogo we created a 3-minute video about the socks I only like I don’t know if you’re going to sit through a 3-minute video about Sox ultimately they did and I think the product in and our brand resonated, with the customer base and I think that’s kind of sad our path and I think we always talked about.
[11:14] Wholesale at some point we just launched a small wholesale Partnerships last year with Nordstrom’s Dick’s and QVC. But I think it wasn’t I think we felt like there was so much room and still believe they’re still so much room to grow, online where you kind of really got to have that one-on-one relationship with the customer around and otherwise. Forgotten or not thought about product like a pair of socks.
Jason: [11:41] Yeah and Sumter is one of the things a lot of DTC companies talk about as one of them obviously, is your name higher margins when you’re selling direct to Consumer but a big thing is customer intimacy and you get like the immediate feedback what what’s tough customers like what they didn’t like you hear directly from the voice of customer inside there’s always this hypothesis we can iterate our product faster we can make our product better because we’re directly connected to the customer as opposed to just turn feedback from the Walmart by or something curious if that’s marketing speaker that’s true why are your sock the same as they were the day they want or have you have they evolved in integrated based on customer feedback.
David: [12:21] I mean I think for us I mean it’s it’s not marketing-speak I think a lot of the. The ways that the company is involved and you know I wouldn’t say that we we changed our core product in a whole lot of ways. I mean without without any sort of you guys think we’ve nailed it I think we got it pretty right but things like.
Jason: [12:44] He’s doing a little dance while he’s saying that just so you know.
David: [12:46] I remember one one very distinct moment through customer service we kept getting a lot of Outreach from people saying why don’t you make socks that are size 13 to 15. Or like extra large that’s got to be a small market for us you know who’s really going to buy them. And we were like now is put it on hold us but I’ll hold it like customer service to be like we keep getting request for extra large socks when I okay fine will produce a small number of extra large socks, in kind of summer are course I also, and it ended up representing 10% of our overall business I mean in the in the industry on a whole I think it represents someone like three to 4%. But I didn’t because we were there listening to the market and then serving that market where owning a much larger share of that because we’re producing a product. Foreign otherwise probably over over seen part of the demographic it’s that was one instance and then another one in the incense is wise we, earlier cuz I’m sure you hear from a lot of other d2c brands or Scrappy so like all of our photo shoots for basically like. Me and my other co-founders we happen to be for white males and we got a lot of feedback from from customers of color being like. Yeah why don’t you give him.
Jason: [14:07] Why can we get a good looking feet in that yeah yeah.
David: [14:09] Baphomet why don’t you representing African-American feed or or or more people of color and we were like you’re absolutely right we should you know it wasn’t something that. We had really thought about but we took that feedback and then immediately our next photo shoot we have wide range of diversity and and now it still continues to be one of the pillars of all of our photo shoots and content going for is it we we always learned from an eye of inclusive inclusive and diversity which I don’t leave our socks around ass or shelf I don’t know if we would ever, if we ever would have gotten that feedback all the way back to us but listen to our customers and having that relationship with them we can react and say like yeah. We talked up on that one we oversaw it like shame on us will fix it but we can’t we have the ability to fix it pretty rapidly going forward, and the response we get back from those customers is like, the extra large like I can’t believe you listen to me you were going to buy a ton and then you know the people who are proactive on the photo shoot stuff, they wrote back at me and be like wow thanks for listening to me and and implementing change.
Jason: [15:13] Yeah you know it that’s interesting cuz again I feel like I’ve heard that similar story for my Andy Dunn bonobos and it’s like the exciting take away from that for me is. The because we never had the relationship with that brand that was sitting on the shelf to even care. And said they tasted like that a better connection with you give you feedback might have started off as a negative that it turned into this this positive opportunity to get closer to the customer. So first place I can buy this oxygen to go go I’m guessing you’re going to tell me you were oversubscribed and that was a wildly successful launch. And so the back in 2013 you got all right now I got to stand up a website to sell these things and in 2013 it might not have been totally obvious what the best way to do that was so I’m just I know you’re not the CTO but I’m just curious. Did you guys decide to build your own site from scratch did you find Shopify back then and you remember what you did.
David: [16:09] Yeah so I actually had the fortunate nature of two of my co-founders were former creative agency guys so.
Jason: [16:17] Hold that against him as a creative agency guy.
David: [16:20] It’s been a it’s been a massive massive advantage that have them on our team so they both built design number of websites for clients in the past so it wasn’t. It wasn’t that foreign to us and I think that having worked at this Media company we put a lot of microsites and kind of manage that aspect for four different clients as well, so at the time we were like well we want to be an Enterprise company one day so you know obviously going to go with Magento because Magento runs out of the enterprise software and they had Magento community in Shopify was, not I mean they didn’t have + when we started and it’s amazing to see how how much they’ve grown over the years but. Probably one of the worst mistakes we made was not launching on Shopify to begin with you have a Gen 2 ended up being a bear super resource-intensive you know, from all of this press bike so we got on Today Show Good Morning America Shark Tank every time our website would crash and it wasn’t until we got on Shopify eventually, that we’ve never experienced any of that pain going forwards I’m a big big big Choppa by fan.
[17:33] But yeah I mean it wasn’t signed up we would put up with magenta community site within about 30 days post our Indiegogo campaign we really wanted to capitalize on queue for sales that year and yeah I was Bruce. Relatively easy against again again borrowing against some of the.
[17:54] Bumps along the way I think managing managing the site was not something that was super foreign to us.
Jason: [18:00] Sure sure and don’t beat yourself up I feel like the path forward was very much not clear in 2013 if you like them I feel like the options of four for the incubation stage of clear.
David: [18:12] I couldn’t afford demandware and so.
Jason: [18:14] Fast forward your next problem what you should be on when you’re selling a billion dollars a year and socks like the answer is unclear at the moment to buy, but that’ll be a first world problem I think to solve so then remind me how far along you were when you went on Shark Tank.
David: [18:30] I so we were fourteen months at 11:13 months old so we launched in August of 13 and R episode. Aired September of 2014, they did reach out to us in April that it’s our Indiegogo campaign I think one of the things most people don’t know is that there is an actually there is actually an active casting department at Shark Tank which is. After being on it an hour and I watch the show pretty regularly I now see you there like yeah we had a successful Kickstarter I’m like they found them.
Jason: [19:09] Fishing they weren’t that what they didn’t stumble upon.
David: [19:10] So so what are the tips of your they want to get on Shark Tank have a really successful Indiegogo and Kickstarter campaign cuz that’s where they look to reach out to us an April kind of thought of it as like a laugh to begin with her like really like we want to do that like, like I guess what’s the harm and went to the went to the interviewing process and you created the videos and flew out there and film and then you fill him in there like.
[19:36] Cool with you may or may never hear from you may or may not ever hear from us again if you do will let you know like a week or two before your episode airs, don’t plan on anything basically in the meantime run your business is normal and so we were in the middle of fundraising at that time and so, no I was like man if we are going to be on Shark Tank like, I want to be able to like use this as leverage to like raise a better valuation but ultimately we closed the round about four weeks before the episode aired we got the call and then I cure episodes good are in 2 weeks not a whole lot you can do at that point we staffed up significantly on customer service cuz we just did it now luckily I talked to my friend over Nick over at plated who been on and he was like Overstock customer service he’s like that’s the one thing like that you can actually do before you, go on air everything else is he can’t buy more inventory can’t fix the website you know just going to kind of cross your fingers and hope it all goes well, so yeah we hired I think 30 customer service people and ended up I think’s going up to like 50 that weekend cuz it was just so overwhelming.
Jason: [20:51] It’s in his crazy that you get so little notice there’s an earlier iteration of that phenomenon like Oprah’s West Wendover used to be on and literally by the the end of Oprah’s run she had a full-time team that just helped those aren’t for entrepreneurs like Harden their business to get ready for the show airing because. She put them out of business.
David: [21:13] Yeah yeah you can actually crush a business.
Jason: [21:15] Intermountain my senses shark tank is a lot more there now then it sounds like like I do like that you get more notice than 2 weeks now is that not true or okay.
David: [21:23] I think so I mean at least not from what I what I hear look at the end of the day ABC is trying to reduce the television show. I think they obviously have interest set you know they want to see their their entrepreneurs succeed but at the end of the day they have to protect. They’re their IP and make sure that nothing leaks in advance and yeah they really want to control you know. What businesses are going to be on in and in the messaging around then I think, there’s probably too much liability on there and 4 if they tell you too far in advance is probably going to lie that you’re going to tell somebody and then it’s going to end up in the Press somehow like I think the Press would really give a shit about, like cool your man with long with nine other brands but. You know I hope you know I hope no like ill will against them and neither our interests are two different things but we’re trying to run a business and they’re going to reduce television show. Is partner’s past Shark Tank ABCs been incredible I mean you really do become part of the ABC Family when you when you close a deal with a shark in, you know you got on Good Morning America you get on The View and they put products in you know the Bachelor and dancing with the stars and they do a lot of cross-promotion across their platforms.
[22:43] So they’ve been they’ve been really fantastic since them but in the early days they’re just like you got to run your business. Cuz I also think they don’t want it cuz I’ve also advised the number of other.
Jason: [22:54] Oh yeah don’t ramp up like you’re going to die.
David: [22:57] And I have to say that like I’ll say you have to prepare for the best-case but expect the worst. Because I’ve seen people who bought hundreds of thousands of dollars worth of inventory and then they do like $10,000 and say us. It’s no telling what it’s not like Oprah where I think it’s a little bit more Oprah endorses it it’s probably going to go through the roof if you go on Shark Tank with. Alarm clock that fries bacon how many of those are really going to sell.
Jason: [23:26] One right here but I take your point.
David: [23:27] I volunteer.
Jason: [23:31] Yeah I tell you I tell you get it I know you’re in the ABC family so feel free not to, but like I feel like early on there were some entrepreneurs they were smart enough to say hey this is a great customer acquisition opportunity and I don’t really care if I get a deal and I feel like one of the the secret things that that ABC is done to combat that is they now like they charge a piece of equity just to be on the.
David: [23:53] They don’t actually anymore now so they did that for the first five seasons but actually, Mark I think threatened to walk off the show because he felt like it was to turn good businesses from coming on the show right cuz if you got a, 10 or 20 million dollar business you’re not going to walk on this phone and give up Equity car blondes without knowing really what the outcome is going to be in so. Look I think the way that they try to combat that.
[24:22] I think anybody will realize and admit I mean I could M you even being on it yeah it’s a great obviously exposure opportunity but what I will tell you in the research that I did going on to the show. From the like six or seven brands that I talk to. The people who ended up getting deals ended up having higher success rates from immediately you know airing the episode than those that don’t I think there is a little bit of that Oprah effect where the customer validates. The product or the business if a shark actually invest in it versus if they down is a truss a month, I’m sure there’s probably a number of cases where people have seen Monumental success Following the show just from the exposure from our standpoint we were really like we want to create it we want to do a deal because we know that all kind of guarantee higher degree of success once we are and then also say following that being a part of the ABC family and then kind of the value that we’ve gotten since then and obviously having a shark in our corner, yeah I certainly certainly paid for itself.
Jason: [25:29] That’s awesome and I just wanted something which I truly appreciate so remind us you were funded and who who was your. Daymond John who sort of in the space so that was, probably an aspirational shark to get I always chuckle in this particularly I feel like comes to play with like Robert and Mark is. I have a sentence that like in general the sharks are looking for good deals right like inside other very often is an argument that that you should give away more Equity than you might to. Traditional funding source and part of their argument is always we’re going to bring all this support and expertise and technical help and and Mars always oh and I’ll take care of all your website and all that stuff and as we now know from falling a bunch of these usually what that means is on the throw you on shopping and I’m like. That could be good advice I’m not sure how much Equity I would want to give away for that advice alone so I’m always curious to hear from sharks that they feel like they’re the they got more value than just the cash from there, there shark.
David: [26:35] I mean in our case it’s really been a level of mentorship you know I think Damon will be the first to admit and he always says he gives us a ton of accolades he’s like let these guys understand e-commerce way better than I do you know he understands the wholesale and brand-building side of the world but, there were moments where you’re we were talking about going in the new product categories are going into wholesale and having him as a sounding board. And I think that that’s why each of the relationships are super unique thing in our relationship it’s been. Mutually beneficial because it we were two business guys that come from startup world would come from the online background can we knew how to build a brand. We need to kind of build and scale online we had to do digital marketing so we weren’t there calling him every step of the way being like how do we do this how do we do this how do we do this how to do and in some instances you know I think there are. More inventors are than entrepreneurs or like I came up with this really cool idea and think of my garage. Are the first thing about starting a business and for them the advice of go on top of eyes like they wouldn’t even know which I was I was so it’s hard to. Argue you know somebody doesn’t know something and they got to a path of there with the path of least resistance. Yeah what is the value.
Jason: [28:01] It’s a view from an expensive mistake like absolutely, and I think it’s so a I sit there with a box of popcorn and risking no personal Capital heckling that show all the time and one of the things I feel like is really involved is all of their perspectives about, the value of various channels right now if you like early on it was like oh you might do direct-to-consumer until you could get a wholesale but whole sales only way to get scale and I feel like more recently and I’m like damn John in particular he’s reference did he learn from you guys and I feel like like I said there was at least one show where he mentioned like as a result of my experience with people like you, I’m now a lot more weary about that wholesale model and a lot less excited about it and I think it even says he’s liked it at his own business, based on some of this morning so that’s it like you should be getting some Equity back I think that’s when he calls I’ll tell him.
[28:55] Yeah so so that is totally awesome. One of the things that we see with a lot of direct-to-consumer companies is based on your value proposition there’s a certain Market out there that’s really easy to acquire right in. That’s says the market could while they vary between different kinds of businesses. Whatever it is you launch you grow really fast you get to that point like we’re in the old world if you’re opening Gap stores it might have taken you 5 or 10 years to acquire all the customers that were predisposed to love you today you get all those customers in the first 6 months and so you get this nice first Spike but then most companies, hit this Plateau where the new customers stop being quite so easy to acquire and so I’m always curious for for folks like yourself of kind of, in my perspective gone by that first raunch like like did you go through that and then what what if you had to do and how do you think about things differently about acquiring customers today than you did back in your Indiegogo Shark Tank like.
David: [29:59] Yeah so how how much time do I have okay.
Jason: [30:03] The recorder will be out for 12 hours.
David: [30:05] It’s a great question I think I think it’s obviously something that any d2c brand is constantly thinking about right when is this is when is this going to run out I think for us you know. There are there are number of levers that we continue to Paul that allow us to continue to acquire customers profitably on first purchase and that’s always been our kind of marketing. Principal and guidelines from day one is a we were never going to chase LTV you saw what it did other companies you know you saw that over paying on customers early on that you thought we’re going to repeat didn’t repeat yo ended up tanking the company sue you are always thinking okay as long as we can focus on some of the core metrics that will define success in the business which are.
[30:52] Produce a high margin products as long as you got high margin then you can you’ve got a lot of dollars to work with then contribution margin on on aov so if we start to reach a plateau in terms of being able to acquire that customer how can we raise a OVI you know one of the key things that we did for the beginning we used to be a singles only company that we moved the packs the day that we moved to pack sorry you if you went from $36 to $60 since then we’ve introduced higher-priced product so we’ve got Merino wool and you know ski socks and bar product mixes as is grown from a merchandising perspective than our aov is like $86 so we’re constantly finding ways to combat, yo the inevitable growth of cost-per-acquisition on a customer base is so this year when we introduce a new product categories that all have a much higher price point hopefully will raise its over the $100 mark, simultaneously we’re always looking to optimize channels and I think one of the things that people are people under value, or they don’t think about and it’s one of the things I constantly advised some of the early-stage startups that I either investing or mentor.
[32:03] Is the power of creative. Really really really good creative can actually lower CPAs sum when we introduced to our our million pair video campaign original you’re like okay this is just me a thank you to our customer base will produce this video not really expected to go anywhere and then our CMO is like, I want to test this in marketing or like okay fine potestas in marketing but it’s always like a 2 minute long video or like no way this thing is going to work online, it’s scaled so rapidly we were getting like CPAs in like the $9 for a few months were getting like low team CPS, are the time when we are averaging a thing you are average CP is probably 40 or 50 bucks the time significantly drop that campaign ran. Over a year until it started to see fatigue I think that videos to date is over a hundred and fifty million views probably attributable to close to, 10 to 15 million dollars of Revenue off of that one single piece of creative and so.
[33:10] That was that was a real eye-opener for us we’re like how we need to constantly be reinvesting in in creative and sweet built out this. Full basically internal agency model which is nice cuz two co-founders from Regency people you have a lot of that skill-set internally but we develop. So much creative more constantly pumping it into the marketing field you know and 90% of it.
[33:35] This garbage you know it doesn’t work but the 10% that does well you kind of start to distill down and distilled down into still down to the power I think of e-commerce is that, are being able to see when you put money behind an ad be able to see what performing and why it’s performing in on what audience base is it performing well then you can try to replicate that across similar audiences and then tweaked it, and as long as that engine and you start to build you know that engine up and start a leopard the data you can start to become really really smart about the way. We also have to be willing to take risks is one piece of creative that we came up with last year our laundry back guarantee we’re basically said. Never lose it one of a pair of bombas in the laundry will replace it for free did horribly on Facebook. And our CMO is like well I think this is such a great campaign I got such great press coverage like let’s put it on TV. And I was like why are we spending any more money on this piece of creative it did terribly on Facebook why do you think it’s going to do well on TV, and miraculous agents really really well on TV so you know I think the ability to kind of create content tested iterated but also be able to take risks on where you’re publishing that content, with an eye again towards those metrics.
[34:52] Is for us would what is allowed us to continue and also diversifying channels I think that was the other thing I think realizing. Early on it take 90% of all of our spend was on Facebook, our budget continues to double every year on Facebook by Facebook I think represents 40% of our overall spend today.
[35:13] TV represents a large power podcast audio direct mail I mean every single of these channels add up. Yeah direct Mills great CPAs hard to scale it you know it doesn’t scale like TV in Facebook, but it gives us a really really competitive CPA is so having the overall mix bring the overall cost for a cost for a position. Facebook is higher these days but as a blended mix that’s all we really care about while we also in one of the other advantages of our businesses, kasaks a replenishment item, naturally and we have a very very high repeat Ray and repeat is what ultimately drives the profitability of the of the company, Zack gives us the ability to reinvest into new channels and. Yeah I got not every businesses as fortunate or set up the way that you know our margin structure is or some of the repeat rates but. What’s a lot of Cisco.
Jason: [36:09] That’s why you would spend some time picking the right product categories suicide note that that seems like one path to success has to be really smart about your Performance Marketing and and do great executions and really agonized unlock trade even try lots of different things and learned that’s one way to go is to just spend like a drunken sailor and then I hope to get a choir to go public before anyone notices so I’m just saying for listeners to pads you choose.
David: [36:39] I would recommend against the ladder pass.
Jason: [36:41] I would too but like more.
David: [36:42] Super super stressful yeah I think those are fewer and farther between I think if you look at the Acquisitions that Walmart made by mod fast forward 70 million dollars and they raised 75, I don’t know I don’t think anybody really did well on that deal.
Jason: [37:00] I think the only one that wasn’t a value acquisition was yet for sure.
David: [37:04] Yeah I mean I owe dark bonobos was was in there somewhere.
Jason: [37:07] I think it was close to like One X Revenue. Which it like I would argue I’d like to get a lot more but that’s where you may not be closed yet what we shall see. Once I take you didn’t mention but I feel like I have not been in a in a car in the last year and not have you remind me about the seam in my socks is it is radio or really affected part of the.
David: [37:33] Killer yeah yeah podcast Radio audio serious all the way across the board that continues to be one of our largest growing, are fastest growing channels by spend I think we tripled, tripled spending audio over the last two years represent probably 15% of our overall spend now. Yeah we can meet at 8 it’s a little bit more hit or miss I think it’s like TV and then you’ve got to find the channels that resonate for you and there’s not, unless we will find a podcast that does really well for us and then I think we saturated over time and then it stops performing so it’s kind of move on audio two kind of mining for gold tonight might find you know one that does really well you dig really deep and then the other one the other mine dries up and you got to find something else but across-the-board audio does pretty well but it’s time-consuming for sure cuz you got him that it you know it’s you got to create the spots.
Jason: [38:35] Podcast in particular one thing that podcast from notorious for his like the attribution model is kind of tough. You Tennessee products that are like really fast direct sell direct all the action and it’s usually you’re cracking attribution based on like a URL or promo code is that how you guys look at podcast or do you feel like you have some sense for. Building in that kind of thing.
David: [39:00] Like if anybody I think I think if there was anybody who figures out how to do multi Channel or multi-touch attribution in e-commerce well I think they would. Yeah I think they would be the next multibillion-dollar company honestly we were lying on a pretty easy.
[39:18] Way we do we do how’d you hear about us surveys and yeah we cross metric that against the data coming through the coupon codes for the sights but, what you’re fine and yeah I think the big maybe it’s not a big secret but I think, what most companies do is the same offer that you’ll get by Just landing on their website is the same offer that the promote within a podcaster on a radio show. So what we end up getting is a lot of people just type in bombas. Com and see the promo offer 20% off your first order and then they just go through that. What we find is we got probably, a four times after bution on the how did you hear about a survey when we overlay that data so if it was $100 CPA office specific podcast will come down about 25 bucks. Once we kind of overlay that how did here but you know we’re in so many channels now it starts to become really challenging like did they first learn about us some podcast was that the last one touch point of entry into how many times today you know see us on Facebook or television or you know Direct Mail which was the channel that ultimately got them over the hump this is why were I think.
[40:32] Monitor Channel by Channel acne or cost-per-acquisition to look at efficiency I think the thing at the end of the day that we really really care about it’s just overall cost per acquisition across all channels that’s that’s truly the one metric that allows us to know whether we’re on the right path or not.
Jason: [40:48] Got it so that ends up being your sort of next best dollar calculus is is customer acquisition cost with that makes perfect sense that’s a perfect to my next question you mentioned earlier in the show that you’re just starting to pile at some some wholesale partners and I’m curious. Are you thinking of that is a separate channel in separate piano and just evaluating the ROI from that channel on its own or are you thinking about, that exposure in those those high-traffic retailers as a customer acquisition marketing tactic as well.
David: [41:20] Yeah I think it’s I think it’s a mix of both I think that when I. You know when I eat when I look at the future of the company and we have plans to be a billion dollar company in the next 10 years. I don’t think that the rate at which e-commerce is growing, will we be able to necessarily do be able to do a billion dollars of Revenue just online and look if you like fashion over or proving that you know you can do seven hundred million dollars of Revenue online cuz I got things up first for a, branded only retailer Nan Marketplace retailer to be doing those kind of numbers I think I think more and more brands of get there but. When I look at our strategy and kind of diversifying where we’re going to get growth probably need to be a little bit more strategic about it and not going to put all my eggs in one basket and so I still see you, a large opportunity and also assume there’s a lot of other brands that are in our space I look at Stan’s you know.
[42:21] Over a hundred million dollar your company predominantly at wholesale so when I look at that I’m like okay well apart of the market share you know can I take you know how big can bombas be not necessarily competing against ants and when we interview our customers the majority of our customers are coming from Brands like Hanes for the loom your jockey there they’re buying up rather than buying over. And so when I look at how big of a market share those brands have at retail, Mike well if we’re doing this online we surely should be able to carve out a nice little business for us at wholesale that will just add to the revenue stack over all but.
[43:00] Interesting lie enough when we launched at Nordstrom’s dicks at Nordstrom’s and Dick’s specifically, we were over indexing pretty significantly against every other sock in the category, and remember I was like I can’t believe you know I knew that we were confident that we were going to be successful at at retail or wholesale but, I didn’t think that we would be two to three times the sell through rate of of the next best-selling sock in the category and I remember sitting out with our private Equity partner and they’re like. Will you realize there’s not another sock brand on the Shelf spending $40 a year on marketing and I was like, all right so I think that we’re benefiting at wholesale from a lot of the radio ads and TV and stuff that we’re thinking is all direct response what is actually having a lift at wholesale as well because there’s brand recognition if you’ll rocking through the store is there yeah maybe they’re listening to us in the car and then they get into a Nordstrom’s like alright that’s the brand I just heard about I’m going to buy a pair of those I don’t think we ever kind of really thought about the the overlap effect. Are online or online marketing I just did Eric Woods would have in the offline world.
Jason: [44:14] I’ll put their clothes in the show notes so people can see him, you know you talked about hitting that like billion dollar threshold and you say like how many direct-to-consumer like native brands have gotten a billion dollars and it’s it’s pretty small right, and then you go all right well what about the traditional House of brands that dominate the retail shelf the VF Corp sayings like how many billion dollar brands of a built in the last 10 years smaller so you know where all the new 10 billion billion dollar run rate brands are coming from the retox. It’s cat and Jack its lights to Target to lunch 5 billion dollar brands in the last 2 years Kroger has billion dollar brain is crazy.
David: [45:03] Gary Wright coming out of Aeropostale.
Jason: [45:06] Yeah so there is this to me there’s something to like. And I don’t like using private label cuz I actually think these new brands are our evolution of private label it’s not just a cheaper version of the national brand on the show.
David: [45:20] They put like brand thinking and jolly.
Jason: [45:23] Microcytes they do all these things but you think about it what the common denominator of those Brands is. That retailer has the same customer intimacy that our direct-to-consumer brand has they know the customer to have a direct relationship and then they have us the scale visibility and low customer acquisition cost. Retail some you know if or do I give all that infrastructure has already been amortize somewhere else and so it is like I do and I say you like man, part of the equation for digitally native Brands to get to billions of dollars probably means some you know some blend of that that brick-and-mortar presence is. So this is all been great I do just in case I was stupid enough not to ask any of the right question is there anything that you feel like you’ve learned in this run that would surprise new entrepreneurs are new direct to Consumer brands that, that you’d care to share with us.
David: [46:21] Yeah I think I think one of the biggest piece of advice that I got really really early on for one of my friends who worked at Tom’s was the. The ability to focus our main focus on a relatively small product set. When I remember when we had done like $500,000 in sales those like we’re killing it Riley sales in her first six months we need to be producing shirts and underwear and sweatpants and sweatshirts and he sat down and he was like.
[46:52] We at times is that we sold the first we sold one silhouette in five colors for the first I think like four years I am built like a multi hundred billion dollar company off of that he’s like don’t underestimate.
[47:05] How small you are or don’t overestimate how small you are. Compared to like the larger population and we’re over a hundred million dollar brand today and I still and now I’m not surprised by you no bite as much when I meet people in there like oh I don’t know I’ve never heard of bombas before I cuz I was it just like more humbling at this point where I’m I have to assume that nobody else has heard of us despite our size and even though I think that puts it in respect that you can be a brand over a hundred million dollars, go to the middle of the country and ask people at Warby Parker is our guarantee most of them are like I never heard of Warby Parker I think I remember of somewhere and I was like oh Casper mattresses, what’s a Casper mattress and I like right you live outside your like New York in LA and you know some of the bubbles that we live in and yeah these Brands don’t penetrate quite as deeply as you as you may think there are that’s what brands are thing like Target or able to you know it’s been up brands in a much easier it cuz they owned those customer bases across every single Geographic and demographic, Physicians I would say don’t like don’t overestimate.
[48:18] Your size and stay focused on the one thing that you do really really really really well and frost I was producing socks and selling them online that’s why we didn’t get distracted by going to wholesale we didn’t get distracted by producing other products here we are five and a half years later we still just sell socks, and I still think that we’ve got hundreds of millions of dollars more Justin our core product category just online.
Jason: [48:42] That that is awesome and don’t forget to get out of the New York l a bubble sometimes figure out what the customer in Muskogee wants Muskogee is in Oklahoma, people Walmart frequently talked about like that’s the prototypical Walmart customer at Muscogee random facts on the Jason and Scott show so we’re running out of time I want to get one last question in when you and I are back at the show five years from now you have any sense for how the the market in the world might be different if you have a view for the future of, of Brands and like do we have the same assortment of direct-to-consumer and wholesalers and things that we have today.
David: [49:25] I think there will be a might have been anything there’s going to be some consolidation I think I think it would be great if, I think there’s so much efficiency to be had by rolling up some of these e-commerce Brands together by centralizing marketing centralizing back office operations, I think Andy at Walmart that was kind of their you know what he was charged with I’d love to see him pull it off. If not him I think there’s I think somebody should should come into the space and and kind of wrap up a bunch of these big Brands to make them even bigger.
[50:02] So that’s what I’m kind of hoping for over the next five years and, I bet you will also start to see I’d like to hopefully see some more Acquisitions in the space that aren’t that better, not billion-dollar Acquisitions right I think you know a hundred million two hundred million dollar Acquisitions for the small the native deodorant company right I think those are, in the end the next round of entrepreneurs that I’m meeting interesting Lee enough are all in the product categories that they’re all developing. Are not sitting down being like I’ve got the next billion-dollar idea I think they’re saying that I mean like, I see an opportunity to carve out a 40 million dollar you know Market in this direct-to-consumer space and hopefully somebody will hire us for a hundred hundred twenty million dollars and I think that’s the right mindset of this next round of entrepreneurs you don’t need to go out and raised 50 to 300 million dollars of capital to build this Behemoth or and that’s going to take oatmeal a world domination and be the next P&G, yeah I think I think we’ll start to see a little bit more of a fragmented space and smaller smaller fundraises and smaller a relatively smaller acquisitions.
Jason: [51:13] Interesting in that lights up. I think we talked about the fact that I got our business can be a great business for a bunch of employees I can solve a consumer problem and the challenges, which businesses in that size is they don’t offer the return on investment for the traditional VC model and so if you build your company based on that VC model like that BC does not want you to see.
David: [51:38] We could have a whole nother podcast about vcu’s and where I think their place is in building direct-to-consumer Firenze versatile.
Jason: [51:45] So that’s that’s kind of what I was like in the short version of that like you talked about raising less when you say raising less do you think that’s raising last from the traditional funding sources or do you think that’s a newer funding sources.
David: [51:59] I mean, you know I use us as an example we were we raised $2000000 to seed funding in 3 million in our and haven’t raised a single dollar ever since we raised four million dollars and total and built a hundred billion dollar company in 5 and 1/2 years at Super profitable. It can be done right you don’t need to go out and raise $50 hundred million dollars to build a hundred billion dollar company is like that that’s like to me is like asinine thing k, answer this next wave entrepreneurs I think they’re looking at margin or looking at cost-per-acquisition they’re looking at contribution, they’re looking at the financial is in a much more surgeries way and they’re also not just looking at online they’re looking at omni-channel they’re being a lot more strategic about how they’re bringing products to Market and you know how they’re acquiring customers and realizing that, there’s a subset of Angel Investors and there’s a new wave I think of you to see entrepreneurs like myself and Andy and you know Jeff reiter and all these other due to see CEOs that are now investing in this next wave of companies and saying you don’t need to go raise 20 million dollars from you no first-round or any of these other big you know no knock on them I just think that.
[53:06] They serve a great purpose in writing in funding Technology based companies that require massive amounts of capital that don’t have 90% margin profiles that shouldn’t you know that that don’t generate cash in the first year but like if you’ve gotten retail brands have been being built for the last hundred years without. Massive amounts of VC funding because if your business is set up correctly.
[53:31] As a consumer business you should generate profit on your product like it it sounds crazy to be like stating that as a fact today but like your. Fundamentally if you have the right model setup your business should generate cash and that cash at scale should be able to fund growth I don’t know.
Jason: [53:50] That’s a wildly controversial position I’m sarcasm fully intended totally agree and I that’s a great place to leave it because we’ve done it again we blown through are a lot of time making some people stay at the gym a little extra long for this episode which I like.
David: [54:05] Look at this excerpt Rhapsody.
Jason: [54:06] Exactly I got nose I need them if folks have some comments or questions about the show feel free to jump on our Facebook page will continue the conversation there as always. If you really enjoy this episode we sure appreciate if you jump on iTunes and get us that five star review Dave if folks want to connect with bombas or follow some more of your thought leadership is there a place on the internet that it’s best to hang out are you a Twitter guy.
David: [54:31] I’m not at it I’m actually not a social media user much to my communications Apartments Chagrin but.
Jason: [54:38] I can put your mobile phone number in the show note so that would be better.
David: [54:40] Founder it’s out there somewhere I get a lot of random phone calls from. Bender’s but no I mean by myself, we’ve got to buy me something on Instagram that’s what the kids are using these days but I’ll plug that we’ve got 55 open positions the company right now, incredible company culture so if you’re interested in a job in New York go on our career pages and definitely.
Jason: [55:07] That is awesome and that that best Pat there is the Gear Page on bombas.com will put that in the show notes as well Dave really appreciate your time and really enjoyed our conversation until next time happy commercing.