What a Sock Company Can Teach Us About Purpose-Driven Business Purpose and profit aren't mutually exclusive. Here's what happens when purpose meets entrepreneurship.
By Aytekin Tank Edited by Jessica Thomas
Opinions expressed by Entrepreneur contributors are their own.
Socks.
Are they useful? Absolutely. Inspiring? Not to most people.
But David Heath, co-founder and CEO of Bombas, saw things differently. Heath started distributing socks to unhoused people in 2011, handing them out on his way to and from work in New York City. "I saw one guy take his shoes off and on one foot he had wrapped a bandana around his foot and on the other, he'd literally wrapped his foot into a plastic bag to stop the boot from rubbing against it," Heath recalls.
Even though socks are the most requested item at homeless shelters, donation rates don't meet demand. That's because they're a "wear-through" item, meaning people tend to wear them until they fall apart. Inspired by 1-for-1 companies like TOMS and Warby Parker, Heath launched Bombas in 2013 with the mission of donating a pair of socks for every pair sold. All new hires are required to hand out 10 pairs of socks to unhoused people they meet within their first two weeks on the job, which "helps them feel motivated and personally connected to the mission," Heath says.
Bombas has become a $100 million brand not only because it sells top quality socks, but because it also has an impact — and customers understand that. Here's why having a business with a purpose has so many advantages.
Purpose guides strategic focus
Having clear principles makes otherwise difficult choices obvious. Heath says companies have reached out to Bombas about co-branding products and asked if they could receive a discount if they forgo donating a pair. Even though this would have provided welcome capital, especially when the company was young, Heath declined. "This is what our brand is built on," Heath says. "If that doesn't align with you, then we're going to have to walk away."
This clarity is key for staying on track in the long-term. Companies without purpose often find themselves chasing trends in every direction, spreading their resources too thin to do any one thing well. As CEO of JotForm, I'm responsible for creating a narrative that is clear and compelling, and ensuring that it's well known to both my employees and my customers. Ever since I started my company, my purpose has always been to make users' lives easier. It guided me through our early days, and it continues to be the lens through which I make decisions today.
Having a purpose doesn't mean being resistant to change — it's actually the opposite. Purpose-driven companies strive to solve a problem, not just sell a product. That means they're constantly evolving and making smart choices that will serve them in the long term.
Related: 3 Ways to Become a Purpose-Driven Company
Purpose attracts like minds
According to findings from Gallup, only 27 percent of employees strongly believe in their company's values, and less than half strongly agree that they know what their organization stands for.
For organizations hoping to recruit top talent, that's a problem. Deloitte's Millennial Survey 2015 found that 60 percent of respondents chose to join their current employer in part because of the organization's "sense of purpose." Then there's the issue of retention: Employees who believe in their company's mission are 54 percent more likely to stay for five years and 30 percent more likely to become high performers than those who are only toiling for a paycheck.
Beyond feeling like the job itself serves a higher mission, having a defined objective creates cohesion among team members, which is especially important as startups grow, writes Ranjay Gulati in Harvard Business Review.
"From the very beginning, founders should create a clear culture that infuses coherence, connectivity, and soul into the budding enterprise, creating a foundation upon which to scale," he writes. "Purpose creates a shared framework of values and assumptions that serves as a filter for strategies and execution tactics. It also aids collaboration — especially important today, when more team members are working remotely."
At Bombas, the company's thriving brand culture forges what Tim Galles, chief ideas officer at Barkley, refers to as "true believers": super advocates, both employees and consumers, who take an active role in advocating for their chosen companies.
"The modern market is brimming with apathy, infinite choice and bang-bang demands, which means it takes more than a witty Super Bowl ad or witty one-liner to win over consumers," Galles writes. "True believers are your biggest fans. Whole brands are designed for and with them."
Related: Why Your Next Startup Should Be Purpose-Driven
Consumers respond to authenticity
Customers, too, want to patronize businesses that have a positive impact on the world around them: Respondents of the Deloitte Millennial Survey 2018 found that 40 percent of respondents believed that the goal of businesses should be to "improve society." This data is confirmed by their purchases — another survey, this one from the New York-based Zeno Group, revealed that consumers are four to six times more likely to buy from, trust, champion and defend companies with a strong purpose.
Customers can tell the difference between a company driven by an authentic sense of purpose and those that are merely pandering to fit the times. Take the rise of B-Corporations, which meet high standards of social and environmental performance, public transparency and legal accountability to balance profit and purpose. Although the concept was pioneered in 2006, the number of certified B-Corp companies has tripled in five years to 3,500 — a clear indicator of where consumer priorities lie.
Ultimately, authentic purpose creates a feedback loop: A founder who believes in her product is more likely to push through when setbacks arise. Employees driven by a strong sense of purpose work hard toward a shared goal, with an enthusiasm for their workplace that inevitably spreads to customers.
Building a business around a core value has a number of benefits: A purpose serves as a guiding light among the pull of trends and distractions, and it inspires long-term innovation and growth. It gives meaning to employees, who are more likely to work hard for purpose over a paycheck, and incentivizes them to stick around. It attracts customers, who look for companies that are changing the world for the better. While there's never any surefire way to succeed as an entrepreneur, building a business with purpose is a great place to start.
Related: Why a Purpose-Driven Mission Is Key to Motivating Millennials
