Bombas co-founders David Heath & Randy Goldberg on how the apparel brand bucked the DTC doldrums

0:02Hello, everyone, and welcome to the Modern Retail Podcast.

0:30considered one of the most successful Shark Tank companies. So congrats to you guys on that. But you've become sort of like a guiding light in terms of being in the apparel direct to consumer space. You've made some really interesting intentional choices over the last few years. I know that you guys don't have any retail stores and you've expanded, but expanded very intentionally into new areas. And you also have a mission driven approach to your business, the buy one, give one. I want to get into all of that more what you guys are focusing on for the year to come. We're at the end of the year now.

0:58And so I'm sure you guys are very busy thinking about all of those things. But Randy and Dave, how are you guys doing? Thanks for the intro. Sounds great. Thanks for having us. We're doing good. Is it as good as I made it sound? Yeah. One point of clarification, we're actually the number one most successful company on Shark Tank, but who's counting? All right. Yeah. Who's counting? I apologize for the error there. But let's start with you two. So, you know, the company's been around for a little bit. Why don't you just, I'll start with you, Dave. Like, what were you doing before you got into SOX?

1:28How did you end up working with Randy? What's the story that led up to it? Yeah, it's a great story. You know, I went to school for entrepreneurship, so I always kind of knew that I wanted to start my own company. Upon graduating, I worked at a number of kind of small startups, and one of them led me to meeting Randy. We were working at a small media company here in New York. Randy was the sixth employee. I was the seventh. I was there for about five years. Randy, I think, was a little bit over six. But the backs of our chair, it was such a small office that the backs of our chairs actually touched.

2:05And I'm sure Randy has some comments about, you know, his first impressions of me. I was a salesperson, so I was like always on the phone. and it was very loud. Randy was a copy editor, as you know. Oh, wow. Heads down and he's like sitting there and I like lean back on my chair and I'm bumping him and, you know, but all great relationships, I think, start with. Yeah, it was a meet-cute. So, you know, we obviously tight quarters. We got to know each other, became close friends and quickly discovered that we both had a, I think, shared passion or vision to want to start our own company. And so we started throwing ideas around, you know, over our kind of, you know, tenure at this media company.

2:52And, you know, it was early 2010. And I came across a quote on Facebook that said socks are the number one most requested clothing items at homeless shelters. And I remember sharing this fact with Randy, and we both kind of agreed that, you know, this is pretty sad that, you know, here's an item of clothing that the majority of us don't spend, you know, more than a few seconds a day thinking about unless they get a hole or they're wet or whatever. But yet it's being seen as kind of, you know, a luxury item for 600 ,000 people living here in the United States. And so I think both of us kind of looked at each other and were like, maybe we can do something about this and kind of putting our entrepreneurial hat on.

3:36And we obviously had seen what Tom's Shoes had done at the time. You know, they were in their fifth year of business, growing like crazy, really kind of pioneered this buy one, give one model. Warby Parker had just launched and, you know, they adopted that same model to eyewear. And I think we both said, like, yeah, maybe we can do this for socks and, you know, have an impact in our community. Randy, talk about sort of your lead up to starting the company. Do you want me to talk about when Dave's chair was hitting mine? Yeah. Did it constantly disturb you while you were taking away commas and adding other things?

4:12I was actually a copywriter, so I was writing stories and trying to think of ideas. Oh, writing. I apologize. The copy editors never liked me as a writer anyway. A lot of grammatical errors. But yeah, I built my career in branding as a strategist and a copywriter and then wanting to work at a media company kind of on the editorial side and building sort of an ad agency within the company as well. So Dave and I just were fast friends. I mean, we both had a passion for entrepreneurship. I grew up in an entrepreneurial family, so did Dave. We had businesses when we were kids. The idea of doing something together was appealing, but we weren't just going to leap at an idea.

4:55And interestingly enough, when Dave came across the kind of quote that changed everything for us. Our first instinct was how do we help solve this problem? And then eventually, a couple of days later, we came to maybe there's a business idea here, a business solution. And I think we pretty quickly realized there was an amazing fit for the business model and the marketplace and that there was an opportunity because socks hadn't really changed in 50 years, it felt like. And even people who were very thoughtful about what they put on their body didn't care too much about socks. And we came to find out that even companies that were making socks didn't care about socks.

5:33So that was our opportunity. This type of interview, I always find kind of difficult because I feel like we could talk for hours about things that happened 10 years ago, and I don't want to do that. I wanted to ask this specific question, which is what you guys have been very exceptional in doing is there are a lot of brands out there that are just products, and they have a hero product, and it doesn't really go beyond that. But I feel like you have been able to build a brand over the last many years that people think of as socks, but you also have other products, but it's been able to grow with that.

6:03Was it specifically the moment when you were that that was when there were the rise of these other DTC brands and you had a model that resonated with people? Like, what specifically made it work so that you weren't just a company that made socks but were Bombas? Either of you can take that. Yeah, I'll start, and I think Randy can jump in. You know, I think early on, right, we looked at, you know, the apparel landscape, right? And we said, what are the kind of key differentiators for the brands that were truly successful? And, you know, one of the biggest consistencies, and it may sound obvious, is they all had very established brands.

6:43And from day one, as part of our kind of go-to-market strategy, we invested heavily in brand. So Randy is a brand strategist. You know, one of our other co-founders, Aaron, is a creative director who spent his whole life at creative agencies. And so we had that skill and competency in-house from day one. So everything that we did, whether it was launching our Indiegogo campaign to building our website to our customer interactions to our emails to everything, even though we were small and didn't have very many resources, we made sure we looked at everything through a very consistent brand lens.

7:23And I think over the years, you know, that kind of level of consistency and repetition, but also evolution, you know, you can't act the same way as at a million dollar company as you do a hundred million dollar company. You're talking to a bigger customer base and all these different things. We've always invested and I don't just mean resources, but kind of like time, energy, thought into brand. And I think, Randy, you can speak a little bit to kind of the timing and how we came about during kind of the rise of Facebook and some of those other things and developing that other side as a core competency.

8:00Yeah, for sure. I mean, listen, as a brand guy, I love hearing when other people say, hey, we built this business around brand. But this is Dave's. This has been his big idea, I guess, from the beginning. and as our CEO, I think it would be beneficial to a lot of companies to have a CEO that's invested in the idea of brand. For us, we've had two consistent things since the beginning, a commitment to our community, giving back in a meaningful and personal way, and then showing our customers that work, and then also a high-quality product, the idea of comfort. Comfort and communities have been the pillars of our brand since the beginning.

8:39And the way we talk about those things and the stories we tell and even the products we make have shifted a little bit. Like Dave said, you grow into being a bigger company. The demands from your customers change. You have to show them different things. The way into the story changes. But on some level, you have to be so consistent in that messaging. And if you're going to break through in today's world, you're going to get noticed. It's a wildly different media landscape now than it was even 10 years ago, even five years ago. And I'm sure you see this all the time and this comes up all the time.

9:13But the world of marketing has changed. The world of how you put yourself out into the world as a company has changed. Where you meet your customers has changed. And you have to adopt that while also staying consistent and true to yourself. These are the things that we think about all the time. Have you been relatively insulated? I don't know if insulated is the right word, but from the woes of Facebook specifically, given that you've become more established? You were very lucky in the time when you have because you could do quick and cheap customer acquisition, and now it's a very different landscape, as you said.

9:45So how have you been able to ride that, or has just the brand history been there? Well, we did come up in a time where, you know, it's interesting. The time where we launched in 2013, you know, the technology to launch an e-commerce business had become basically free. And the marketing had gotten more expensive, but not so prohibitively expensive as it is now for some companies. No one even thinks about the technology anymore, right? Like that was the main driver of cost. If you launched an e-commerce business in 2006, 7, 8, the technology was prohibitively expensive, but there was no algorithm.

10:22Everything that you put out on Facebook, all of your followers saw, right? It was just a free ride. So if you could afford to get out there, you could build a big business. And then that obviously shifted the other way, and now the marketing is almost prohibitively expensive and the technology is free. We happened to be in that sweet spot where we could put up a website. People were still buying things online, even though it was newer at the time, 10 years ago. And we got really good at marketing on Facebook. And Facebook has been a great partner for us through the years. But the demographic has changed.

10:55The way it works has changed. So we've had to expand and we've had to diversify and we've had to go meet people where they are. I think that's the hallmark of really good modern brands. Is you're going to find people where they are in their world and you're attaching yourself to their life and not asking them to come into your world. You have to grind it out a little bit and you have to find success in multiple different places and you do have to insulate yourself from the woes of Facebook, as you said. But also maybe you can use that to your advantage and you can be great there when everybody else is ignoring it.

11:26Or maybe you can be great at email, which gets ignored sometimes and feels a little bit old school, but is an incredible way to continue to bring life to your customer base. So you have to think a little bit outside the box, but most of all, you have to have a good story to tell and a really clear angle and you have to be consistent in telling it. And I think that because this is a kind of a more industry focused podcast, you know, for kind of examples and context, when we launched, we were, you know, we had three, four or five dollar CPAs pretty consistently for the first few years. And so you could spend very little and acquire customers at a very high volume.

12:07So the amount of budget you needed was very low in order to kind of discover and kind of find the customer base. And then by the time we had kind of grown up, as Randy was talking about, Facebook's still a big partner of ours, but we had diversified away from as an overall media mix where Facebook's now kind of like 20 % of our overall spend. And, you know, we spend on TV, we spend on Google, we spend on all of these other, you know, audio podcasts, these types of channels. Whereas when I talked to other e-commerce brands over the last few years that were just getting started, they were like 90 % Facebook because, you know, that's kind of, you know, where you go to cut your teeth.

12:45And, you know, but they were seeing, you know, 80, 90,$100,$200 CPAs out of the gate, which means that they just needed a lot more budget in order to kind of get that momentum. And we had kind of already like had escape velocity at that point where this had become such a core competency to how we run the business that when iOS 14 updates and all those other kind of privacy things happened, we had amassed such amount of data on our own side. and our tools that we had built internally had gotten so sophisticated that we were able to kind of fly the plane, even though we were missing that one piece of instrumentation that, you know, the Facebook algorithm, we had enough data that we could kind of still directionally point, you know, the plane in the right direction.

13:31Did you see any fallout at all from iOS 14 out of curiosity? I mean, kind of an immediate fallout, sure, like for a first couple months, because, again, the algorithm changed very, very rapidly. But we then started to, you know, reposition some of the instrumentation and tools that we have to fill in that data gap. And all of a sudden, you know, we were very quickly back up. I think iOS was kind of like a June, July thing or maybe it was like an August thing. By holiday that year, like our own internal, you know, what they call like a multi-touch attribution model was primed and working so well that we were able to start capitalizing on, you know, increasing our spend back on that platform.

14:15That's great. That's great. I wanted to ask, just in terms of zooming out, looking at the overall business over the last decade, I feel like companies have certain eras where the very early startup, then they get to sort of growth mode, and they sort of hit the established area. What would you say were those milestones strategically in terms of what you did as a company? Was it when you expanded into t-shirts that you were like, now we're more than what we were five years ago? Or what do you think of as the certain chapters or eras of Bombas? It felt like, I don't know, Randy, if you agree, but it felt like maybe the first five years, you know, it was kind of we were like zero to$100 million in revenue in the first five years.

14:55And that was like pretty consistent, like triple digit year over year growth, right? Like very, you know, it's like 300%, 200%, 100%. And then once we hit 100 million, it started, it was like 50 % year over year. You're like, the dollars are much larger at that number. But we started to see the overall growth rate decline, even though the dollars were bigger. And then it started getting a little bit more into, rather than just like drinking from the fire hose from a marketing perspective, I think around 100 million. The team size started getting to be like 125 people. It started to feel like an organization rather than just like 50 people in a room trying to like put fires out and be super scrappy and agile.

15:45And around that time, I think we started to implement process and, you know, some of the, you know, big scary corporate words that I think a lot of founders, you know, shy away from. But we always say like if a process is done correctly, like it kind of works in the background and it doesn't feel like process. Um, and for me, that's kind of when we started to feel like we were graduating from like true startup to maybe like, you know, early adolescence, you know, small midsize company. Uh, and then I'd say probably around like 250 million of revenue was probably the next milestone where you started feeling like, okay, we're now like a small mid cap company.

16:28and, you know, a lot more systems and reliance on data and information to make decisions rather than kind of like the early days intuition, put your finger in the wind. And, you know, you know, there's still some of that, like, you know, and that's kind of an interesting period where we're at. It's like the tension between good intuition and kind of what the data tells you. And, you know, if you just fly everything by the data, you know, you would just sell black socks all day long. You wouldn't have any, you know, interesting, you know, innovation or whatever. But it also runs a lot more smoothly today, you know, than it did in those early years.

17:09Less kind of like big, crazy, you know, chaotic problems to solve. It's much more predictable and you're doing everything kind of on the margin rather than trying to take big swings. Randy, anything to add? It's interesting. I do think of milestones the way that Dave described them. I think that's really interesting. Look at it. There's a few other different views, right? There's also, we keep track of the number of items we've donated over the years. And we thought it would take us 10 years to donate a million pairs of socks. And we did that in two and a half years. Dave got a tattoo to celebrate that one.

17:49We made a video about it. But But every time we would hit like 5 million items donated, 10 million, the numbers started to get really big. And we used those moments to take a step back, take a look in the mirror, make sure we knew who we were, that we were staying true to ourself as a company, to our principals, to our customers, and making sure our customers understood that they were really powering an engine of good. And the infrastructure of giving that we built that got really real over the last few years is because of our amazing customers. So we use those numbers as milestones. And this past year, this year, we hit 100 million items donated.

18:31And we use that as an opportunity to do a campaign and talk to some people who have experienced homelessness and talk to our customers about some of the myths around homelessness. So that's been another way throughout the years that we've sort of measured growth and milestones. outside of like team size. And I think the other one that you mentioned, you said, oh, when you launched t-shirts, I think that's been a big idea as well. You know, we always feel that we have to earn the right to expand beyond the categories that we're focused on. So when it was socks, before we launched t-shirts and underwear, we felt like we had to really establish socks business.

19:08And before, and now we sell t-shirts, underwear, socks, and slippers. And, you know, before we were going to expand beyond that, we feel like we have to earn the right. And we don't feel like we've earned that right yet. We have high standards for ourselves, for our business, for what it means, for penetration within the marketplace. So I think about the product roadmap. I think about the giving milestones. And I think about the team and the way that Dave set it up. And there's lots of different ways to judge growth and success as a company. I wanted to ask, because you mentioned the buy one, give one, the 100 million milestone.

19:42This is a question I always try to ask companies that have sort of a mission-based ethos behind it, which is, you know, how have you found, like, do you view this as much marketing as it is just a part of what you do? Does it resonate with consumers? Especially now when I talk with, and this isn't the same as your company, but like sustainability is something that a lot of companies talk about and they put that in their marketing. But then they also say that like talking about the fact that they don't pollute or they have a better supply chain doesn't actually resonate with customers. And I find that those sort of social focuses is a difficult tightrope to walk.

20:20So how have you found like in terms of the storytelling that you do, how does that manifest in terms of the actual business? It's intrinsic to who we are as a company, right? You could not remove our mission from Bombas and it would still be Bombas. It's just impossible. It's built into our bylaws, to our core values, to how we operate. And we've really built this company so that if you took out the mission, we'd just be a company. And I don't think people really care as much. And if you took out the products and we were just a charitable organization, we would not have the same impact. So both sides of it really need each other.

20:58And we spend a lot of effort to over-communicate around the mission to our customers. And sure, we look at open rates for an email about mission versus product and things like that. But overall, you have to have conviction around these things. If your company is built around sustainability and you're not talking about sustainability until you're blue in the face, you're not talking about it enough, right? Even if you don't see the same response from customers, they process when a company is true to something or is really acting on it versus just using it for marketing. So we have to market around our mission.

21:33It's super important to tell those stories and to get the word out there and to remind our customers why this company exists. But it's not just marketing. People come to work at this company because they want to give back to the community is where we work and live. You see the impact that we're having by donating products, and we hear firsthand accounts of that. We've built a network of over 4 ,000 giving partners across all 50 states. So for us, it is surely like marketing is important to get that message out there, but it's about the core of who we are and communicating that versus just trying to win extra points in conversion.

22:08I was speaking with a bunch of college students at Duke recently, and we kind of came up with this similar topic of like sustainability and why do they feel like some brands get credit and where others don't from a mission standpoint. And it was interesting to hear, especially, you know, Gen Zers who are obviously very passionate about climate change and all these other things. They said with brands who talk about sustainability, they're like, it's very hard to quantify. They're like, by 2029, we're going to have zero carbon in our – and they're like, okay, like, how do I act on – like, fine, I'll buy what?

22:47Like, to have an impact on that? Whereas I think the feedback we got about Bombas' mission is they're like, it's super quantifiable, right? I buy one. I know someone today who is experiencing homelessness or is at risk of homelessness is going to get a similar item of clothing. And that's a very, very tangible concept for them. I think even within the buy one, give one, where we get, I think, a tremendous amount of credit, and a lot of it is due to the fact that we talk about it a lot, is we're donating locally. Like, we're donating here in the United States. And so when, as Randy mentioned, we have this network of 4 ,000 giving partners, when someone purchases in Juneau, Alaska, like we can serve up, you know, an email to them that says, here's the giving partner within a 50 mile radius of where you live that is receiving donation product from Bombas.

23:43that closes the loop for a customer in a way that I think even the brands that donated to third world countries couldn't really do. Because I think all of us, regardless of where you live, have probably come in some contact with people experiencing homelessness or at risk or, you know, poverty in their own community. and the idea of, oh, that person is going to receive the same product that I'm purchasing is a very, very tangible concept for people. Yeah, I think that quantifiable point is really salient that I never thought of. And that's like the big nut to crack for businesses that talk about other more nebulous things like climate change.

24:21Like, how do you actually make it so that they feel like they're doing something other than like maybe having less of an impact? You think about like 1 % for the planet. It sounds great, but I'm in the business world, and I'm kind of like, I don't know what the impact is at that point. We're going to take a quick break, and we'll be right back. I wanted to follow up on something you said a few minutes ago, Dave, which is, and I don't know if there's probably not an easy answer to this, but you said how you've exceeded$250 million. You have 100-plus staff. You follow data, but then you also do try to follow intuitions when it comes to business decisions.

24:57And like, how are you able to try and sort of codify that? Because that gets really difficult when you have so many millions of data points and you are such an engine. So like, what is the way that you're able to even make it so that someone can be creative and do something? I'm smiling because there is no like system or process for it. I think that's, you know, some of the magic, right? in ensuring that, you know, our chief marketing officer, for instance, she is like, so data minded and like, you know, drives a lot of, you know, decisions through customer insights and all this stuff, which is fantastic.