Starting a Clothing Business
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A Stanford business school professor taught Brian Spaly and Andy Dunn to think of business in terms of things they didn't like about the world. For Spaly, it was the way his pants fit. For Dunn, it was the way they were sold. So they took their professor's lesson to heart--and revolutionized the men's apparel industry in the process.
"Every single aspect of the way our company is designed is a rejoinder to the conventional wisdom of clothing and apparel," Spaly says of Bonobos, the company he and Dunn founded together last year. "We really are trying to innovate for the sake of solving a problem we see in the world much more so than for the sake of creating a company that's worth a lot of money. We get a lot of people in the fashion world who just snicker and smirk at what we're doing and jab at us. They kind of turn their noses up at us. I get fired up about that."
Bonobos was born under seemingly mundane circumstances--Spaly, 31, simply could not find pants that fit him the way he wanted. The larger retailers offered only pants that weren't flattering because they were made to fit everyone, and the high-end couture brands offered only pants that weren't made to fit anyone. And the only thing that fit the average guy worse than the pants was the experience of buying them: slow and impersonal customer service, crowded stores with high markup and inflexible return policies.
While still in business school, Spaly was able to solve the first problem with a borrowed sewing machine, which he used to create pants with Bonobos' signature curved waistband, made to give more athletically built men a fit that was comfortable but still flattering. He solved the second with a little help from Dunn, who built a company around the solution.
"What we discovered is that not only is there a market need for great pants, but there's also a market need for an easier way to shop, especially for guys," Dunn says. "If you think about how the retail experience is set up, it's largely designed for women, and guys participate in it because they don't have an alternative. You'll meet very few men who actually enjoy the act of browsing and shopping. It's not a social experience the way it is for women. Guys don't do that. They sort of go because they have to. They often shop alone with sort of a quiet hunter mentality of, 'OK, find something I like and buy a ton of it so I can minimize my total shopping time.'"
It was Dunn, 29, who first decided to pursue Bonobos as a full-time career while Spaly worked at a private-equity firm in Chicago, designing and making the pants in his spare time. While at Stanford, Dunn had seen how well Spaly's early designs were selling both in person and on his website, where people were happy to buy based on pictures because of the company's "any pants, anytime, for any reason" return policy. Dunn finished off the business model with a supreme emphasis on customer service, crafted a brand infused with Spaly's personality and persuaded his friend to pursue the business full time this spring.
"We wouldn't be here if it weren't for Andy," Spaly says. "I'd still be working at my private-equity firm in Chicago and I'd be making 50 pairs of pants and selling them on the internet just to have fun, and I would feel like I'm not as much of a private-equity guy because I have this cool hobby on the side. Instead, my best friend from business school came along and said, 'Look, you're really good at this. I believe in you so much that I'm going to take over your company and do such a good job with it that you're going to have no choice but to come back here and work full time.' "
The dynamic between Spaly and Dunn creates a balance that's as obvious as it is essential to the company's success. It has also created a company that's projecting $1.2 million in net revenue this year.
"We each share one half of the puzzle that you need to be successful as an entrepreneur," Spaly says. "We didn't really have a company until Andy came along and turned the hobby I had into a reality. There's no question that I take credit for the first part, and there's no question that he takes credit for the second part, and we both admire the other person for supplying the piece that we didn't have on our own. We don't ever forget that."
While the company as a whole is a healthy mix of both Spaly's and Dunn's personalities, its branding is uniquely Spaly's, from the pants' irreverent colors and designs to its name, which is borrowed from a species of chimp that is considered the world's most sexually prolific animal. In addition to being one more piece in the company's male-friendly puzzle, Dunn says Bonobos' image also reflects the product and lifestyle the company is offering.
"I think it's become emblematic of our customer base--not in the sense that we have a sex-crazed customer base--but I think we have touched a nerve, which is that this is supposed to be fun," he says. "This is supposed to be about wearing stuff that fits and makes you feel good, and there are stylistic elements of the pants that reflect that."
Dunn says an unexpected result of the Bonobos brand is that the company's customers now almost exclusively refer to the pants by name, something he hopes might even expand to the point where the company's target customers are known as "Bonobos" based on their lifestyle and personality. He says it's a personality he and Spaly both share, something that also keeps their pants affordable.
"We just don't take ourselves that seriously," Dunn says. "A lot of fashion does--New York, Paris, Milan, the fashion shows, the runway models, the serious looks on their faces. It doesn't speak to me personally and it doesn't speak to Brian, and I don't think it speaks to a lot of guys. As a customer, you're also paying for all that. Most customers don't do the math, but they're buying a product for four to 10 times what it costs to make the product."
Like its brand, Bonobos' customer service element is also designed with the male shopper in mind. The company allows its customers to return any pair of pants for any reason at any time, even if they've already been washed or altered. Customers can find their correct size by ordering pairs in two sizes and then returning the pair that doesn't fit, using a pre-paid shipping label provided by Bonobos. Calls to the customer-service department could be answered by anyone in the company, including Dunn or Spaly, and are never put on hold.
"Those are all things I would have paid a lot for, so that's how I conceived of how our company would work," Spaly says.
Spaly says the key to using his former professor's philosophy in the business world is being realistic about what you choose to pursue and meeting the challenge of getting others to buy into it.
"There's other areas of my life where I feel like I'm not served, but there's no way I could possibly do it better," he says. "In the case of Bonobos, I actually looked at it and said, 'Why isn't anyone doing this?' It's the elephant in the room. But what we're trying to do is tough. It's not easy to hire a guy who went to Harvard and absolutely crushed it there to come into your company and do customer service. We have that right now. It's not easy to get a guy like that fired up about coming to work for you, and that's a credit to Andy on being a great motivator and a great leader and a great recruiter of people."
In addition to its skyrocketing sales figures from customers in 41 states and 21 countries, Bonobos has also moved into a new building in Manhattan and now employs a full-time chief of staff and director of operations. It's also looking to bring in a full-time web developer, even though the company continues to do almost all of its marketing through word of mouth and through its referral program, which allows regular customers to get their own business cards from the company and then receive discounts or commissions when they bring in new customers.
Bonobos has also installed a program called Band of Brothers that allows people who have chosen service careers to tell their stories and buy the company's products at a discount. With so much success, it was only a matter of time before Bonobos caught the attention of women. But Dunn insists the company will stay true to its boys'-night-out principles--if only for its own survival.
"I don't know a lot of companies that failed because they were too focused," he says. "I know a lot of companies that failed because they didn't maintain focus and they got excited about the other opportunities that came their way when they obtained success. Our primary focus is in men's pants, and our secondary focus is serving our customer in other categories. So the logical progression for us will be making other things for that customer vs. expanding into the wild and scary unknown that is the enormously competitive women's apparel market."
Spaly and Dunn have more than enough on their plates as they continue to expand the brand that has sprung from their own lifestyles. As for whether the rest of the industry will catch on, Spaly says it's something he's prepared for. But either way, he's happy with the legacy Bonobos is creating.
"It really is a cool entrepreneurship tale--a tale of two guys who could walk away from anything entrepreneurial and just be investors and live the comfortable, cushy life and sit in fancy offices and make a ton of money," Spaly says. "Instead, we realized that what's going to make us happier and more excited about going to work every day is trying to build our own thing. One of the things that I work toward is having people say, 'What those guys did was really cool and revolutionary.' There's an esteem that comes with that in your personal life that I find really satisfying."
Justin Petruccelli is an associate editor for Entrepreneur.com. He can be reached at email@example.com.