April 11, 2023

Andy Dunn - Co-Founder of Bonobos - Building an Apparel Co, Future of EComm, and Bipolar Disorder

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Andy Dunn co-founded the menswear brand Bonobos and served as CEO until its 2017 acquisition by Walmart. As an investor, he has backed more than eighty startups, including Warby Parker, Coinbase, Away, Glossier, Real, Parade, SeatGeek, and Alula. 


In May, Dunn will release a memoir, titled Burn Rate: Launching a Startup and Losing My Mind, which explores the intersection of entrepreneurship and mental illness. 


Dunn’s next business venture, called Pumpkin Pie, is a social media app currently in beta that aims to detoxify digital culture.


Dunn, a graduate of Northwestern and Stanford's MBA program, also serves on the boards of Monica + Andy, an organic baby apparel company founded by his sister Monica Royer, tech social good nonprofit Raised By Us, and the Network for Executive Women.


On this episode Chris & Andy discuss:


➡️ How he's dealt with bipolar disorder and why its something common in entrepreneurs

➡️ Why apparel companies succeed and why they fail

➡️ Selling to Walmart

➡️ The future of e-commerce and brick & mortar


Key Takeaways


(00:00:00) - Intro

(00:03:03) - Andy’s experience dealing with mental illness and depression

(00:12:18) - What is it about someone with mental illness that would make them a great entrepreneur?

(00:19:19) - Elon, autism, and narcissism

(00:21:42) - Are these illnesses genetic or nurtured?

(00:24:04) - How is mental illness looked upon now vs. when you were diagnosed?

(00:28:44) - Andy’s experience working for Mark Lore (Of Walmart??)

(00:37:53) - Why did your apparel company succeed and why do so many fail?

(00:44:25) - Were people buying the Bonobos brand or a high-quality garment?

(00:49:33) - What is the world of e-commerce like in 2023 vs. when you started in ’07?

(00:56:07) - Selling Bonobos

(01:02:51) - Walmart vs. Amazon


Additional Resources


👉Andy on Twitter


👉Pumpkin Pie

👉How I Built This - Bonobos: Andy Dunn

👉Burn Rate by Andy Dunn (Releases on May 9th)

👉Monica + Andy


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➡️ Follow Fort Capital on LinkedIn: www.linkedin.com/company/fort-capital/


➡️ Follow Chris on Twitter: www.twitter.com/FortWorthChris


➡️ Follow Chris on LinkedIn: www.linkedin.com/in/chrispowersjr/


➡️ Sign Up for our Newsletter: https://newsletter.thefortpod.com/


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Andy, welcome to the show. Thanks for joining me today.

Andy Dunn:Chris, Thanks for having me. It's an honour to be here. 

Chris Powers: I'm going to start in the deep end today. Would you mind?

Andy Dunn:I love the deep end. 

Chris Powers: You tweeted in May of 2022 about your ghost story. Let's start there. What is your ghost?

Andy Dunn:So my ghost is the diagnosis of bipolar disorder that I received when I was 20 and was in denial for 16 years.

And so I got to unpack that story, the intersection of being an entrepreneur and having a mood disorder. One characterized as a severe mental illness, which I faced a reckoning in 2016 when I was hospitalized for a second time with the diagnosis that I received in 2000 when I was a senior in college and went through living hell for the following year.

And somehow got through it, and I shouldn't say somehow because I know how. With medication, a great doctor, an unbelievably loving wife and a supportive family. And so, as I processed what had happened, I started to feel like I wanted to expunge the shame that I'd felt for so long from having a mental illness which affects so many families. Maybe all families have a story somewhere.

So that was the ghost, and I decided it was time to bring it out of the shadows and say, Hey, here's what I've dealt with. Here's how I've tried to overcome it. And give folks at least one different story out there to be aware of as we all go through the tough stuff in life. 

Chris Powers: How did you know that you had it?

Was it something that happened? Was it a pattern that people were starting to notice? What was the tipping point where they said you had it, and then you acknowledged that you had?

Andy Dunn:There were two moments. There was the moment I was diagnosed, and for many of you who aren't familiar, bipolar disorder is a disorder of mood.

It doesn't mean that you're only high or low; it just means that you're capable of greater extremes on the high and low sides. So for bipolar one on the low side, the depression you experience can become so severe that the suicide attempt rate for bipolar one is 60% at some point in one's life, and the suicide rate from the best available data is 19%.

So one of the reasons why one rejects this illness, which is so frequently diagnosed between 18 and 25, is you know what person at the peak of their powers in feeling invincible, which are people in their early twenties, wants to learn that statistically there's a one in five chance that they might end their life.

And then on the high side, which is psychosis, mania, messianic delusions, elevated speech, grandiosity, irritability, distractibility, rapid cycling of moods, basically people who have lost their mind, who want to know that that could happen again. And what you're told is this could come back at any point, and it might be two weeks, or it might be 20 years.

And in my case, it was 16 years. And so I felt like I had a bomb in my brain that could go off regarding mania. And then I knew I could get so depressed that I might end my life. So what I did with that information was I chose to reject the diagnosis, and I refused therapy, and I refused treatment.

I went off my medication, an all too common story, and I buried this deep down. So much so that most of the time, I wasn't even aware that this had happened. It would be like once every couple of months, I would have this rising panic, and I would remember this thing and push it back down.

And so it wasn't until during the heyday of building a start-up of this e-commerce business, Bonobos, was the first time that I started to sink into depression. And I would have periods where I couldn't get out of bed and go to work, and I didn't want to live. And that's a hard place to be if as any human being.

And indeed, if you're supposed to, you know, lead a team and inspire others. So that was when I started to say, wait for a second. This whole manic depressive diagnosis, maybe that was a thing. And then, in 2016, it just came back with a vengeance. And I had a second psychotic episode, spent in the psychiatric emergency room and then the psychiatric ward at Bellevue Hospital in New York City with psychosis, mania, and Messianic delusion.

And coming out of that now, it was like, okay, no doubt about it because this is what I have. I've been in denial for 16 years, and it's time to wake up and deal with this. And I was also 36 years old. I had 400 employees. I had changed a lot. I'd grown up. The world had evolved; most importantly, everyone rallied around me and was clear-eyed about it.

I moved into a hotel with my mom, and she found me a psychiatrist who my now wife, who I couldn't see for a week due to an episode of violence during the mania, stood by me. Even as I went through the legal system on that, my management team at Bonobo's rallied around me. The board said we back you.

This disorder isn't uncommon. And in fact, the data shows that bipolar disorder affects around 4% of the general population and probably indexes seven to one in entrepreneurs, according to a study from the University of California San Francisco. 

So that's one in five entrepreneurs who might be dealing with a mood disorder, to say nothing of other forms of neurodiversity that over-index in an entrepreneur’s anxiety, panic, unipolar depression, addiction, or the autism spectrum. So in a way, we already know entrepreneurs deal with these issues, and let's talk about it and bring it into the light so that we can take care of ourselves and each other. 

Chris Powers: Real quick. My next point would lead to entrepreneurs and where some of these characteristics show up more.

But when you're going through this, is it a pure chemical imbalance or is something triggering you or is it just a certain level of stress that finally puts you into a state of mind that you can't control? 

Andy Dunn:Yes. My psychiatrist, Doctor Z, has a way of saying that everything is over-determined.

Humans seek these singular narratives that help us understand the past to make sense of the present. And the truth is, there are probably multiple vectors informing something as complicated as bipolar disorder. Something new happened three weeks before my episode: I used psilocybin mushrooms for the first time.

It was the same year that I was using MDMA ecstasy for the first time in my life. I was a senior in college who was drinking a lot and smoking a lot of pot as well. And from what my doctor says, any of those things can interact with mental illness in a way that we may not understand exactly how, but it can be a part of the sauce, you know, the mole that is coming together that perhaps takes, and here's where I'm just venturing a field.

As a citizen, not as a physician or a scientist, that can interact with the underlying mood disorder. And bring it to the surface. And then there were two things happening in my personal life. I'd fallen in love for the first time, creating its euphoria, even without mania.

And I also had this gothic conflict with my dad going on. I had been charged with misdemeanour possession of a fake ID. It isn't the world’s end, but my dad took it hard. And it was the first time in my life that my dad was so disappointed in me, and I felt that, and it was just crushing.

And I also felt angry at him that he was taking such a puritanical view of something that I felt deurgar for a college junior or a senior. So when we look at it in love for the first time, the euphoria from that, the euphoria from the sexual relationship with endorphins going.

The drug use conflict with dad, senior in college, lot of marijuana and alcohol that was all in the stew. I guess I've now used stew sauce and mole as analogies that may have contributed to this eruption of psychosis. The manic episode resulted in the diagnosis of bipolar one. 

Chris Powers: It's interesting you say some of those things.

I've been in those shoes, not to experience the bipolar, but to do many of the things you've done at certain times in my life when you were doing them. And the more I've talked to entrepreneurs, which to you know, I have a business as well, and I hear you and have talked to hundreds of founders, and what you find is a lot of this is a common thread amongst people that start businesses or take big swings and take significant risks.

So let's unpack that a little bit. What about somebody that is bipolar also makes them, in many respects, a fantastic entrepreneur or can lead and set a vision and build teams? When you might hear of bipolar and say that nobody could ever do that, it's bipolar, and it turns out, like you just said, seven in one or one in seven. However, you said it, are doing that.

Andy Dunn:Chris, you told me you're on mushrooms right now when you said at times in your life. 

Chris Powers: Just Kidding!

Andy Dunn:So you said something that I want to Correct benevolently. Which is you said that being bipolar, and I want to make the distinction that no one is bipolar, and we only have it. 

Chris Powers: Okay.

Andy Dunn:And it's a funny thing we do in society. By the way, This is not you. This thing is everyone, and it has been me for so long, and I still have to correct myself. We say Andy is bipolar. The analogy is Andy is cancer, and the analogy is Andy is diabetes. Luckily I don't have cancer or diabetes. But the point is that we would never equate a physical medical ailment with someone's very identity. 

With mental illness, we say someone is bipolar. So we're making your illness your identity. And think about how messed up that is. Because bipolar disorder is scary enough without being like it's scary enough having it. Part of why it's so stigmatized is that it takes on this gothic quality that this person is an unstable thing. When the truth is that it's an eminently treatable illness with medication and therapy, I would argue you might be able to access more stability than someone who doesn't have bipolar disorder because there are phenomenal medications and because therapy is wonderful. I think it should be required for everyone at some point in life. So back to your question.

There's a state in a bipolar disorder called hypomania, the antecedent to mania. It precedes it. So if mania is you're on fire, you know you're a 10 out of 10, you're God, or you're a superhero, you're off the rails. You're ranting about whatever to, and you'll save humanity. You're going to bring peace to the Earth. 

Hypomania is like seven or eight out of 10, let's call it eight. And the characteristics are the flight of ideas. A sense that everything happens for a reason. Not necessarily a messianic delusion but a grandiosity. A sense of self-importance may be an exaggerated narcissism, a little more irritability or distractibility, decreased need for sleep, increased high-risk activities that are pleasure-seeking, financial risk-taking, sexual risk-taking, and flawed judgment. These are the central casting traits of an entrepreneur having a good day. It is what we expect our entrepreneurs to show up with, and it leads to delusion that goes too far.

All you have to do is turn on the news and look at people whose delusions were not checked by reality. And some of these folks end up in jail, and some end up being claimed by suicide. I've invested in an entrepreneur, a wonderful bright light who ended his life.

It's all too common as humans, and there are so many forms of neurodiversity that we don't talk about almost every single form; from what I've learned from the University of California at San Francisco and what any of us who know creative types of artists, founders, and entrepreneurs. It's intuitive that we know and expects a certain level of quote-unquote crazy.

And Steve Jobs ran a campaign when he came back to Apple. What was it called? Here's to the crazy ones. And so, we even celebrated and lionized it. And so, we need to figure out how to acknowledge it. To understand that there are these formidable strengths, these superpowers, but they all come with shadows. They all come with kryptonite.

Chris Powers: The shadows being, like you said, how low you can go, the highs to the highs. But the downside of this is the lows. Is that correct? 

Andy Dunn:Well, I think it's for bipolar disorder. There are three problems. There is mania. Suppose you have bipolar one, where you can lose your mind, which is dangerous. Anything can happen. In my case, I have an episode of violence where I harm two people I love. I think without great lawyers, without being white or half white, without understanding people around me who experienced the violence. I could be in federal prison right now. I was charged with felony assault on a senior citizen.

Maybe if I were in a different geography in the country, we wouldn't be doing this podcast because I would be yet another incarcerated person with a mental illness who doesn't have the privilege of being able to mount their defence. So mania is scary,  it's horrifying, and terrible things can happen.

Then you have depression, which we talked about, either losing your life to depression or, I would argue, equally bad, not wanting to be alive but being alive. And then, hypomania, which we discussed, has many effective attributes. Still, it can produce errors of judgment like sexual indiscretion, financial ruin, and taking something, let's say you're a start-up entrepreneur. That's rising, and figuring out how to crash it. And we see those stories. The high-flying ICARs, like entrepreneurs, look great, and then it crashes. You know, all I have to do is turn on the news or Netflix to see those stories. So there's a lot of costliness, and that's just bipolar disorder.

Let's look at another source of neurodiversity, which is autism, right? Elon Musk disclosed, at least on Saturday Night Live, that he has autism. A high-functioning version of autism is called Asperger's, and one of the symptoms of autism is a deficit of empathy. Well, you come into Twitter on week one, and you lay out 4,000 people, in a way, a superpower because emotions get in the way of capitalism sometimes, sadly.

That's why some of the most successful capitalists who've ever lived have been some of the least empathetic folks ever. And so there is harm from other neurodiversity, which might enable you to excel at what you do, but at what cost to yourself and others?

And that's the conversation we need to start having, which is like at what price Innovation. At what price, creative brilliance, whatever you want to call it? And how do we hold ourselves accountable to showing up as good human beings, which part of which must confront our demons and shadows?

Chris Powers: You think that's why he's capable of dreaming so big and going to Mars, and you know, a guy like that, like everybody knows Elon, can have dreams that are so large that you almost have to think, man, you, you almost have to be a narcissist to think that you're possible. It's possible to do that. Is that why he's able to have these dreams?

Is it because he has some of this disorder, which could be a positive thing, but is that why he can dream on the magnitude and scale, he is? 

Andy Dunn:A hundred %. Anyone starting something and wanting to build something that's never existed has to over-index on magical thinking.

It's an only vision in retrospect, and it's delusional. We have to over-index on narcissism because why l, why you, of all the people on the planet, you're the one that's going to do that. And so, narcissistic personality disorder, which is narcissism taken to the extreme.

I like to joke inappropriately that that might be a hundred % of entrepreneurs because it's almost a prerequisite to trying and a level of delusional self-belief. 

Chris Powers: And maybe last thought on this. Are you born with it, or is this something you're nurtured by how you're raised? Or is this genetic from birth?

Or is this something that's nurtured over time or both? 

Andy Dunn:Yeah, I think both are good answers. Right. And I think there is some genetic heritability and that folks have discovered certain forms of neurodiversity. I think there's data on that, and I think there's data on that for bipolar, for depression, there's data on that for suicide.

There's data on that for autism, and there's data on that for schizophrenia in that regard. Not so dissimilar from a history of diabetes in the family and a history of breast cancer. So that's a thing. And then I would imagine some things are exogenous factors that can promote it, right?

We know specific childhood experiences make one more likely to have something like a borderline personality. Frequently that's being abandoned as an infant by at least one person in the diagnostic. The expected factors might lead to the diagnosis later. We know that ending one's life can be influenced by adverse effects.

And I think if we rerun the play of my college episode, I'd be curious, what if we stripped out? What if I was a teetotaller? What if I'd never done mushrooms? What if I wasn't smoking pot every day? What if I wasn't a functional collegiate alcoholic? Maybe then the conflict with Dad and the first love would have led to some variants in mood, but maybe it wouldn't have teetered off the rails into mania.

Well, I'll never know. But the answer is we are born this way in some regard with a lot of this, and we are not destined to deal with these things without being able to work on them, control them, or try to transcend them. 

Chris Powers: You and I would've had a lot of fun together in college. I'll tell you that much.

Andy Dunn:I'm glad we didn't know each other. We might not be here.

Chris Powers: No kidding. To bring home on this topic, you've seen the progression from when you were diagnosed to where we are today in 2023. Are we now more socially accepting of this? Is it becoming something people are more comfortable discussing, or is it still being suppressed and looked at? Is it something people don't want to admit, or do they think it could ruin their career?

Like how has it progressed as far as acceptance? 

Andy Dunn:Oh my gosh. We've come so far, and we have so far to go. Of course, focusing on the first part, look at the last few years with sports and mental health. We have Simone Biles, Michael Phelps, Marty Fish, and Naomi Osaka. We have so many pioneers in the sporting world talking about this.

We've come to expect it in a brand new way in the arts, right? We almost like our artists crazy, but we've seen some stuff, like unfolding on a national stage with folks dealing with different stripes of neurodiversity or who have disclosed it. And then, in the business community, as I came forward with this story, I discovered I was far from the pioneer I hoped to be.

We had Paul English, the CTO of Kayak, who disclosed a decade ago that he had bipolar disorder. He and I got to sit on a panel with Alicia Keys, who discussed her issues during Covid with depression. It was moderated by Jane Polly, the storied 60 Minutes anchor now on, I believe CBS, this morning, who came forward with her diagnosis of bipolar disorder when she was in her early fifties.

So the more time I spent, the more I realized I was standing on the shoulders of giants who had come before me. And one of the great moments was getting to do a Zoom thing with Kay Redfield Jameson, who wrote the kind of OG memoir of Manic Depressive Illness called An Unquiet Mind and wrote a textbook literally because she's a professor of psychiatry called Manic Depressive Illness.

So it's building, it's snowballing, it's accelerating, and it's doing so in genres where previously it had been under. There was a lower level of awareness and disclosure, which included sports and the business community. And that way, I got to be in front of a group of people at BlackRock, one of the largest financial institutions.

We did this talk at BlackRock. The guy who moderated it, the vice chairman, who is gay, grew up in a Southern Baptist family and had an uncle who was both gay and had a mental illness. So that was equated in his family that being gay was a mental illness, which of course, was a thing, and I think it was scientifically described as such in the psychiatric community for some time.

And he said what's happening with mental illness now reminds him of what happened with the LGBT movement 30 years ago. We started the conversation, and then people started coming. To their families in a new way. They started coming out in the workplace. And then watch how that accelerated, where we went from, I don't know, five states where you had the freedom of marriage passed and then ten and then 15 and then suddenly it became the federal law of the land in 2015.

Barack Obama was against gay marriage in 2008 when he ran, and he was on the record. And then, we saw that slide, and now we take it, I don't want to say take it for granted, given what might be happening with the Supreme Court, but it's pretty ironclad at this point, the gay marriage equality.

 I would be shocked if that were overturned in any state, although with an appropriate degree of humility. So I think we're seeing that accelerating force with mental illness. And my sister and I were driving together, and we've been through hell with my illness, and we're in business together.

We've got a baby brand called Monica and Andy, and we're tight. And we were in a taxi or whatever ride share in New York, and we were going from one thing to another, and she said, I think you did something incredible. And I said, what? She's like, I think you made bipolar disorder cool. It's like a badge of honour.

Right? And we've seen that with other things. We've seen miscarriages not be talked about. Depression wasn't talked about. And then you get to a place where the disclosure is happening more and more. And we've got a ways to go. But it's accelerating, which is exciting.

Chris Powers:I love it. Well, kudos to you for telling your story. And the book you put out's excellent, and just doing podcasts like this and getting more and more people to listen to it brings the problem forward. It's so funny. So many of the characteristics you describe are things I've felt.

I know things in the entrepreneurial community, and it's interesting to hear it from your perspective. Okay. We're going to talk about Bonobos, and we're going to move the conversation there. But before we do, I found another exciting thing in some of my research. You said Mark Lore is the best person I've ever worked for.


Andy Dunn:Well, one of the things I should have said is I've only ever worked for three people. 

Chris Powers: Okay, Something like that. 

Andy Dunn:But I've been around a lot of people who are bosses, who are managers. And Mark's really special in a few dimensions. First, he never tells you what to do, and his whole philosophy on leadership is that you can't tell anyone what to do.

Either they will do it themselves, or they don't want to do it, and they'll do it because they have to. But in neither scenario are you telling them what to do. They're either doing your bidding against their will or doing something that they would be doing anyway. And so his philosophy is you have to hire incredible people and then purely delegate to them.

And that's the foundation of his philosophy, and that's super different. The other thing that Mark does that's super unique is he listens incredibly well. So we would be at meetings, Mark would be a super senior person in the room, executive vice president, CEO of E-commerce at Walmart, and he wouldn't talk.

He would ask questions and, sometimes, only offer his opinion if asked. So, his words carried more weight because he wasn't the kind of leader I have been in my career. Which I want to talk about and persuade and sell. And in fact, he just listened intently, asked great questions, and was super judicious with his contributions.

Chris Powers: You think you can be a start-up founder who listens and offers few opinions? Or did the way that you led to having a direct correlation to the stage of business that you were in, compared to where Mark was at Walmart? 

Andy Dunn:The mix can shift. And anyone lucky enough to be a successful founder has to evolve from founder to CEO at some point, as founders tend to be mediocre CEOs. And then it's the endurance of their companies that requires them to grow into the CEO role.

The starting point of how you think about exchanging ideas can start in a much more beautiful place than I started. And I started because I had good ideas and wanted to figure out how to bring those to life. And then a way that I don't want to say ended, but what I've tried to evolve towards is great ideas can come from anywhere.

How do you create, when you've got a big personality, almost by definition as a founder, a culture where people feel like they can surface dissenting ideas? Because your job isn't different from the person with the idea. It enables the organization to generate ideas such that the best ideas bubble to the top.

And so a small example would be calling on someone in the meeting that hasn't said anything. So I've got a new company now, and this morning we were running a meeting, and I just noticed who has yet to speak. And in my mind, it's like, okay, I know Rob hasn't said anything yet, and Canara hasn't.

Keshawn hasn't said anything yet, and I'm taking inventory. And then the last 20 minutes of the conversation, I'll say, “Hey, Kanara, what do you think about this?” And bring them in because the way to create quality at a table regarding ideas is for everyone to get a chance to participate.

And I didn't use to have that awareness, and I wasn't thinking about the person who hadn't spoken. And then there's this cool thing in life, right? Which is that sometimes the most innovative people are the ones that do the most listening and are the quietest. And so, how do we bring them into a conversation?

And Mark's boss at Walmart, my boss's boss, Doug McMillan, is also a master of this. I only talked a little in the meeting and asked many questions. And then when he did, you hung on every word. And I've heard this about boards of directors as well. Your best board member is the one that asks the best questions and talks the least.

Chris Powers:Man, I've done 266 these episodes, and now and again, there's a specific thing we'll touch on. I am the only student I just learned something huge. I'm not the CEO of my company anymore, and I haven't been for two years. You said something; founders don't always make good CEOs.

This isn't about me so we won't go into it. But 2-3 years ago, I was a miserable company. I started when I was 18. I was 34 then, and I couldn't figure it out. I loved the business, but I was miserable in my role. And like one of the things that you just described, I'm hearing you talk about how I used to lead, and you just put it eloquently.

And the second thing I would say to that is there's just like talking about being bipolar.

Andy Dunn:Having bipolar. 

Chris Powers: Yeah, having bipolar.

Andy Dunn:We'll get you there by the end of the podcast.

Chris Powers: And I've had DD, and I've been told my whole life that you have a DD, and you are a DD. And now I've just thought of that as I'm not a DD, and I have a DD.

Andy Dunn:It's freeing.

It's like freeing not to be the problem. To have a problem is better than to be a problem.

Chris Powers: Well, as soon as you said, You are cancer. That was the light bulb for me. We treat mental health as more of a judgment than what it is. But the other conversation I've discovered about moving out of CEO is that only a few CEOs understand that it's okay not to be CEO. Or it's okay if you are a founder not to be CEO or to be, to admit that might not be the best role.

So anyway, that conversation hit home.

Andy Dunn:A hundred %, and the other thing is nobody cares, right? Like right? People care about their role enduring, their ability to thrive and grow and the enterprise's success. They don't care that much if the CEO is Chris. Or who's the CEO Now?

Chris Powers: My partner, Jason.

Andy Dunn:Jason, as long as Jason is at least as good as Chris was, they don't care. And it's this funny thing you do as a founder is like, I know I did anyway, and I thought everyone was thinking about me way more than they were. And one of the most beautiful things about the disclosure of mental illness is you realize nobody cares that much.

No one's sitting there thinking; Andy has bipolar disorder, which will change my life. They're not thinking about that. They're trying to figure out if I will sync the company because I'm not dealing with it, Right? And it's this freeing thing to realize people think about someone else a lot.

They're thinking about themselves. And so, with that frame in mind, gosh, is that just more relaxing not to have to worry about how your issues are impacting other people? They're not as concerned with it. Only in so far as it impacts them will they go back to worrying about themselves in their own lives.

And that's how it should be.

Chris Powers: Yeah, the pressure I would put on myself was unbearable. It's a lot of what you just said, and it was self-inflicted pressure that I felt other people were paying way more attention to me than they were. And that's the entrepreneurial narcissism that we all have.

Andy Dunn:I'm glad you escaped the CEO role. I was joking with a friend recently who led the last round in my new company. He's done three companies, and I saw him on the day after that he stepped down from his third company, and he'd been at it for ten years. And I just laughed when he told me. He's like, did you see the news yesterday?

And I said no. And my friend said, yeah, I stepped down. I was like, oh my, I'm so happy for you. And he had a big smile, and I just asked him why these things always start with joy. End with escape, right? Like it starts from a place of joy in juvie. And then, at some point, it becomes a prison by definition, and you can feel trapped.

And it's a nice thing to know. Hey, there's this thing that you can do a fantastic HBO show about it, and it's called succession. To build something that will last 50 years, you must figure out succession. And so, how do you take that first step? The first succession work, how do you go from the founder to the next CEO?

And so, I'm so pumped for you, Chris. That sounds like two years ago, and you figured that out. 

Chris Powers:I appreciate it. Yeah, It was a big part of my life and a turning point. Let's move to Bonobos rather than get into how it started because people could listen to how I built this.

Suppose you wanted to get the whole story. I won't, and we don't have to go through here. I wanted to start a little further along: why did your apparel companies succeed, and why did other apparel companies not succeed? Because it's a low barrier to entry industry. Everybody wants to start an apparel brand, but you can do it in something like pants and start there and do it unbelievably well.

So like, what makes great apparel brands and what makes bad ones? 

Andy Dunn:Is that Topo Chico, by the way? 

Chris Powers: Yeah.

Andy Dunn:I love Topo Chico. It's the best. I've got one nearby, and I got to grab one afterwards. It's a giant bubble in the sparking water pantheon.

Chris Powers: So, yeah. That's a great way to say it, and I didn't realize that was what it was.

Andy Dunn:Yeah. That could tie into Bonobos. So you must start a fashion or apparel brand with a hero item. You've got to start with one item that people love, and only if you get that right do you earn the right to the collection, the rest of the wardrobe, the outfit, or whatever.

So whenever I see someone launching a brand with like a collection, I worry because you got to get one thing right and be known for one thing. And so with Dion von Furstenberg, that was a rap dress. With Tory Burch, that was a ballet flat. With Ralph Lauren, that was a tie initially. And then a polo shirt.

Brands are known for items because customers like to have a shortcut to, what am I hiring this brand for? That's how customers shop. We hire brands for a job. People who build brands think we're geniuses, and we're going to make all these great products, and we're going to have a line in a collection. And that's not how companies start.

And Paul Graham, a start-up writer, a start-up person, one of the founders of Y Combinator, this great tech incubator, has this fantastic article called How to Get Start-up Ideas. And he talks about how most people think that companies that currently exist started in some way, shape or form the way that they currently exist.

And yet, if you go back in time, generally, there was a hyper-narrow group or wedge of people who needed something awful that that company had to make well. And so Bonobo's may, I don't even know if it's obvious now, but we started with Boot cut corduroy pants with a curved waistband for guys who grew up playing hockey, soccer, and football. Who lived in Palo Alto and who were tired of shopping in stores. That was our wedge.

It was super narrow. And it turns out that 21 whale stretch corduroy in Northern California is awesome because you can wear it when it's 80 degrees in the middle of the day to class, and you can keep it on when the temperature plummets to 50 at night. And people who attend Stanford Business School are athletes who played sports growing up, whether they were good like my co-founder or bad like I am.

And so having this athletic cut that fits around your seat and thighs but still has trim fit through the waist appealed to those folks. And then we had this channel innovation of, you know what, rather than selling in stores, We're going to sell direct. Well, the truth is that no stores would've taken us, right?

Like who? Do you think Barneys or Nordstrom will carry a quote-unquote fashion line from two idiots at Stanford Business School designing colourful corduroy pants? All these gatekeepers decided in the fashion industry who would succeed and who doesn't. GQ Magazine, you know, such and such a wholesale Bloomingdale's, we didn't have any of those relationships.

We didn't know anything about that. So we were just dumb enough to say, let's sell these online. Let's sell these on the Internet. And it was 2007, and it was before Amazon had launched apparel. It was at a time when people assumed that soft goods would not be sold online. And then we were inspired by Tony Shay from Zappos, who, the rumour, was selling a hundred million dollars worth of shoes on the Internet, where you feel like you got to try on the sizes of anything footwear.

You got to try it on, right? Well, no! If you have free shipping both ways and 365-day returns, you can sell footwear online. And now, who's the biggest clothing retailer in the country? It's Amazon. They passed Macy's at 16 billion in apparel sales about three years ago, and no stopping them now.

So it was focused on a hero item, a super narrow customer demo. Selling to those people out of Trader Joe's, grocery bags directly in person, and then a channel innovation of launching on the internet with great customer service. And so we always thought about what we were building, not as a pants brand, but as a men's wear experience with incredible apparel and excellent customer service. And I can remember when I first pitched an investor, I was on that storied road, Sand Hill Road, talking to a former venture capitalist who is now a professor at Stanford. And I showed him a page in our deck, a slide deck that said pants, shirts, suits, personal care, and had a timeline.

And he said something great. I can remember how he said it, where he was sitting, and he said, "I don't want to hear about any of that until you're selling 10 million dollars worth of pants."

And he understood that you got to get one thing right. And that leads to the last factor, unfair access to capital.

When Most people start a fashion business, no one wants to give them money because they know fashion is complicated. It's like starting a restaurant or an airline. You know, who wants to invest in someone starting a fashion business? Because we were coming not from the fashion industry but from consulting in private equity in business school and finance, we persuaded people to give us angel checks.

And that first 750,000 that we raised from mentors, friends, family, and colleagues, that's unusual to get that kind of money for a clothing company. 

Chris Powers: Did you think about it? And it could be more how the customer thought about it. But if I buy a polo shirt, the joke's always the shirt costs a dollar, and the polo logo costs a hundred dollars. 

You're not buying it because it's the most comfortable shirt in the world, but because it's Polo. But with Bonobos, were people buying Bonobos the brand or buying an amazing product that fits so well? It could have been named anything. 

Andy Dunn:It's a beautiful question because there are several ways to approach innovation. There's product-led innovation, and there's marketing-led innovation. And the polo shirt is an amazing example. So a Ralph Lauren Polo, the cost of goods is around four bucks, and that retails at a total price, if you're dumb enough to pay full price for it, of 70 to $80. 

But it turns out that the largest gross profit pool of those Polo's is buying it at an outlet store for $39. But at $39, at five bucks of cost, that's still an 80% margin. And so, how do they do that? Will they have beautiful mansions in New York City that lose money? They have amazing advertising.

And by the way, their product is quite good. You can figure out how to build the vision and the dream and then monetize it through outlet stores and have the really attractive cost of goods sold. I think you can do that, but you've got to be a master at branding and product and multi-stack distribution that includes an outlet and partnerships.

So Ralph Lauren, the company, makes a lot of money through sub-brands like Chaps at Kohl's and American Living at JCPenney. These brands have changed over time, but that's like the paradox of it. Is that the money at the accessible price point? Stuff that goes mass, and the stuff looks amazing.

Purple label. I was looking at purple label suits last night. Yeah, it's thousands and thousands of dollars. And if you want to check one out, you're going to a beautiful, you know, 25,000 square foot store in Chicago with a restaurant. It's this genius creation of the image. And then monetizing that image with more accessible stuff that's further and further down the price point chain.

If you're starting something from the beginning, it's unusual that you could cultivate and create that image fast enough even to have a shot. So I think for Bonobos, we had to lead with product innovation. The company wouldn't exist if my co-founder weren't a genius who figured out that you got to curve the waistband of a men's pan to enable it to fit right through the seat in the thigh.

You know, his whole thing was he would buy a size 34 to fit his thighs and then tailor the waist to 32 so it wasn't too big in the waist and wasn't too boxy. And then he was like, screw it. I'm done paying for alterations. I'm just going to make pants that have that cut. And he understood how to make the product its marketing by doing this tremendous colourful fabric with these peek-through liners in the back pocket, which was like a conversational wink. And that's also key to branding, right? Generally, it's a logo. Tory Burch Ballet Flats cost $2 to make and sell for 200. Why? Because there's a beautiful gold thing that says, I paid $200 for this. It's a status symbol as well, which is the brand icon. But it was a comfortable shoe as well.

So it's both. Great brands are plentiful in both product and marketing. Let's take Nike, but at the beginning, how did Phil Knight talk about getting Nike going? Because he innovated with this running coach from the University of Oregon, and they built a shoe that was great for runners.

So there's no getting around that at the beginning. 

Chris Powers: Yes, you probably just answered this question. You can start as a product and evolve over a long enough period to be a branding play. If you hang around long enough, you earn the right to the brand like a Polo, Chanel, or Tory Burch, but you can't start that way.

Andy Dunn:That's true, and part of it depends on whether the brand is bootstrapped or funded. So if you're bootstrapping it, the ability to spend money on marketing comes later because you need to fund your marketing with operating profit. If you can raise outside money, then you can market the heck out of your brand before you've earned the right.

And for my part, that's not healthy. I pioneered that model, and it's a bad idea because it's better to take longer and do it in a way where you know the product justifies the marketing investment. It's better to own more of your company than to take all the dilution from these investors.

And it's best not to pretend a retail company is a technology company. I want to return to 2007 and tell myself that.

Chris Powers: You started in 2007 doing e-commerce, so we'll call you early. Now we're in 2023, and that's been 16 years to play out. And much of the conversation is that retail's not dead.

Many of these e-com brands want storefront locations, which may be used differently than they would've been 15 years ago. But what is your thought on where we stand with e-com today, 16 years later, as it relates to retail? What's your opinion on that today? 

Andy Dunn:Yeah, this is one of the best weeks. If not the best in the history of a company I chaired called 'Monica and Andy', a baby organic apparel brand my sister started seven years ago.

And the reason is we've spent seven years trying to direct consumers to the moon with our e-commerce and stores. And this week, we launched at Walmart and warmed up by launching buy-buy baby. And then Target, we just launched a massive partnership at Walmart with over a thousand doors.

And it's exciting because now we can take the brand to many more people. And rather than giving money to Mark Zuckerberg and Larry Page, and Sergey Brynn, who control Facebook, Instagram and Google search, which extract more rent than any landlord ever did. We invented digital gatekeepers who are richer than any landlord, right? Because they extract more rent, they extract 30 or 40% of a revenue dollar, whereas a great retail store rent is 10% of the sales. And so, the way to bring a brand to scale now is to have a digital storefront where you tell the story of your brand and where you serve a lot of customers.

But the key is to significantly amplifying that with wholesale partnerships with great retailers like Walmart. That equation eliminates spending money on digital marketing, which doesn't work, and I don't know anyone on Earth who's happy with their digital marketing spend, strategy, team, or vendor.

So that's key. And then I think of company-owned retail, and I would emphasize that less early because it's hard to get right. It's people-intensive, and they're still our leases. At Bonobos, we considered it a brilliant channel because we didn't have store inventory.

That's true. We had a cool showroom model, but we still had to hire five people per store, and we still had to sign 60 leases. It's very intensive compared to a wholesale partnership that can be managed by a team of three or four people. At Monica and Andy, we're profitable because those people are the same people that manage our direct consumer business.

And now, the wholesale part will likely have two or three XR top-line revenue over the next two years. That's a good trade. 

Chris Powers: Do you think that in that vein, not that e-commerce has topped, is it slowing down? Is retail gaining momentum? Like, What do you think about it? If you were to say one's gaining momentum, one's not.

When you just said, I don't know, one person that's happy with their digital ad spend, which is a massive part of building an e-commerce business. 

Andy Dunn:I think e-commerce, as a way to transact as a % of the total penetration, will continue to deepen. We need to pay more respect to legacy retailers that have figured out their e-commerce and are now playing offence with it.

And I saw that happen at Walmart and was a part of it from the inside, which was unique and super special. To see what Mark Lore did, to see the acquisition of Flip Cart, and to see them go from being behind Amazon to playing offence with grocery pickup, for example. 

Fresh food and frozen food are one of the things Amazon will need to get right. Because they don't have enough locations, and it's not worth it economically to build out what Walmart has, which is 4,000 Supercentres.

So who's going to win in food and e-commerce in the US? Is it going to be a digital upstart? Is it going to be a digital behemoth, which is Amazon? It will be the nation's largest grocer, which has 4,000 points of sale, which is Walmart. 

So, we need to pay more respect to legacy retailers that are figuring out digital. And then, when it comes to brands, great brands have figured out how to do great things digitally. Lululemon's direct business is a monster, and Nike was nowhere on digital 15 years ago. I know people from Bonobos who are now running e-com over there, and that penetration is deepening and deepening. But they must dance out of certain wholesale accounts to do that.

They have to figure out, okay, we're going to keep Dick's Sporting Goods. But we're going to walk away from these other 500 accounts. And then for the little corner of the ecosystem we pioneered at Bonobos, the pure-play digital. Nobody is going to make that work without having a brick-and-mortar strategy.

I don't know a single D to C entrepreneur who doesn't talk about wholesale and is trying to figure out how to get into Target or Walmart. Whereas a decade ago, we were all above that, and we were digital, and we were playing offence, and we were the people that were smarter than those folks.

And it turns out that wasn't true. We weren't. And for me, at Bonobos, the AHA was Nordstrom. They were our key wholesale partners. And I treated it as something to be afraid of. And then we built a 50 million dollar business, becoming the number one Chino at Nordstrom. And we learned that they're better at caring for customers than we are.

And so, for me, that was, I was five years in 2012 when I realized that. And now everyone building digital brands understands that I've been an investor for about 30 and every investor update I get is, Hey, we're a makeup brand, and we just launched at Sephora. Hey! We're a food brand, and we're launching at Whole Foods.

Everyone's trying in that. It makes sense because it's an efficient market; people find stuff out and then chase it. And that's the new ambition of entrepreneurs building Omni brands. 

Chris Powers: Okay, so let's go to 2017. You decided to sell where you approached a sale. How did you get to the decision to sell?

And then I want to go a little deeper into where you just were. What will Walmart win, and what will Amazon win from your perspective today? But let's start real quick with the sale. Was that something that you led, or were you approached? Or why Walmart? How did this whole thing come to be? 

Andy Dunn:We ran a process. I was a decade in and had been through hell back with the mental health stuff the previous year. We had one inside investor who was a retail family, and they said, we will give you 15 million dollars to take this company to profitability and let's keep it independent.

Maybe we take it public, and maybe we don't. And then I had venture capitalists who'd been invested. That investor, by the way, had invested in 2014. So they were earlier in the journey. Then we had venture capitalists who had invested in 2010, and it was dawning on them that the company would be worth a couple hundred million dollars, not 2 billion or 5 billion. 

And I had one conversation with one of them where I said, what would you want? And he was like, look! I'm at a point now where if you wanted to sell it, that would work for me. And I said, what's your price? Like? What is the minimum? And he was like 275. So that became my bogie.

And then, this is the funniest thing, but a close friend of mine from college was at a wedding in LA. And he was talking to one of my angel investors, and he had invested with that angel investor a decade earlier. And my friend told me that that angel investor said, I get Andy's investor updates.

Things are always going well, but we've been in this for a decade and haven't heard anything about returning our money. And that hurt. Because I thought this was capitalism, and people wanted their equity investment back at some point, I took stock of where I was and was getting married.

I'd been at it for ten years and thought I'd be ready to sell. And I also thought I was able to keep going. So we ran a process that was like three possibilities. Take the inside money, 15 million and keep going. Sell the company to private equity, a strategic, or a larger corporation. Or do this, like thread the needle transaction, where we sell about 40% of the company.

Enable the people who want to get out. Enable people like myself on the management team to get some liquidity. And then to roll some in the deal and keep going. And those were the three options. And the middle option is the one that we picked. We found a great investor group that does consumer brands all day long.

They're private equity, but they're willing to buy minority positions, which is super rare. There are like four people on planet Earth that'll do that. So we found one of the four. We had a term sheet, sat down for dinner, more or less, and were like, let's do this. And then we spent weeks negotiating some pretty specific stuff which we could get into another day.

And during that time, I met Mark Lore, and he said, let's do this. Let's take Bonobo's model of digital brand building and figure out how to bring that into the ethos of Walmart. And I was like, that doesn't make sense. I spent time with Mark and loved him. And then I met Doug, the CEO of Walmart.

We sat down for dinner in New York City. And I was like, wow, I would be lucky to be at this table with these two guys. And that was funnily enough, it was the last option, but it was the one we went with in the end.

Chris Powers: And their proposal to you, besides the money, was what? We're going to buy you one. We will bring you in, and you said to make them part of the ethos in 2017. What did that look like? 

Andy Dunn:So it ended up being my pitch to them because I went from sceptical to falling in love with the idea of working with Mark and Doug. And then, I developed a pitch video on what we can do. And the pitch was that the future of commerce would look like the history of video. The large platforms that previously streamed or distributed other people's content realized they had to become studios generating their content.

And I went back and looked at Netflix. When Netflix launched House of Cards and Oranges, the New Black, their stock price tanked because the analyst's concern was, what are they trying to do? Become HBO? 

And now we've seen that streaming other people's content is a race to the bottom. And it's led to everyone realizing we need to stream our content.

And so Netflix and Hulu have become studios. And the studios have decided to build their streaming platform, Disney Plus. I'm now a Paramount Plus subscriber. Who knew? But that's where I have to watch Yellowstone and the various prequels it is spawning. And even now, Tulsa King is with Sylvester Stallone, which is hilarious.

My pitch was that the future of e-commerce looks like the history of video and let me come in with my team and figure out how to do that. And Chris, in all honesty, I failed. I could not operate in a large company environment and be effective, and I was the classic entrepreneur who came in and talked too much.

And I couldn't figure out how to shrink down and become a great corporate executive. And so we succeeded at building an incubator to create new brands. Something that Target has been good at for a while. And we launched a mattress brand called Allswell, which is super cool, and I'm proud of that.

We launched a fashion brand called Free Assembly. I saw my niece wearing one of their jackets yesterday. We did okay with this free assembly thing, and it's cool. They brought in a famous designer named Brandon Maxwell, who now leads that. 

But the strategy of, like, let's buy other brands like Bonobos and bring that in. I wasn't successful at that, which was a bummer. And part of that was my incompetence. 

And part of that was also observed that big companies could only integrate so many acquisitions successfully, and it's hard, and every deal is just as much work and a new culture. And so Walmart realized we needed to make chess moves with acquisitions.

Do big ones like Jet and Flipkart not buy 30 brands because this Andy Dunn guy thinks that's a good idea? 

Chris Powers: All right, let's bring home this discussion on Walmart versus Amazon. And I'll take a Mark Lore approach to this and won't tell you how to answer it; I will say Walmart versus Amazon.

What comes to mind from a business perspective on what's Walmart going to win at, what's Amazon going to win at, and what are your critiques of each model?

Andy Dunn:It's funny after the deal was announced that, Bonobos acquired Walmart. I was getting my haircut, and I was with my barber on West 10th Street in Greenwich Village, who I'd known for a decade.

He came to my wedding, and that's how close we got. He is just a great guy. And he's from Montenegro, and I didn't know that he followed the news at all, let alone about Bonobos or me. So we're mid-haircut, and he goes, Andy, now you are marching with the Elephant. But this guy in Seattle is an octopus. And when a book comes out about Amazon versus Walmart, it should be called The Elephant in the Octopus.

And Then, one day, I was in a meeting at Walmart, and we were talking about Amazon and how it's not one business and it's eight. And I was like, that octopus thing was right. It's commerce and its advertising. It's the most profitable, which is Amazon Web Services. It's third-party fulfilment. It's on and on and on.

Eight businesses are there, and the new CEO will leave a few. But it's not just a retailer; it is a cloud computing provider that also does retail. And that means it has an operating profit that it can use to fund retail at almost a loss, which means it can be the most price competitive.

And so what I saw happen at Walmart is that Walmart realized they were never going to out-assort Amazon. But they could leverage the 4,000 supercentres that they have, which are enormously profitable and powerful businesses, and leverage that unfair advantage to do things that Amazon couldn't.

And grocery delivery was massive. And that comes off the realization, you know, what we talked about earlier, which is fresh and frozen food, and it's just a challenge to do with a pure e-com fulfilment-driven play. And then the other one, which Walmart talks about a lot now, is healthcare. If you have 4,000 locations, you can do stuff with healthcare.

And, of course, Amazon is brilliant, right? So what has Amazon done? They bought Whole Foods and won medical. Because they've realized that they need brick-and-mortar to compete in those areas, Walmart will continue to own food and be the leading grocer in the country.

Amazon on Walmart is in a position to win in healthcare, and Walmart is in a position to win in financial services. It's an opportunity to have a financial services impact with an in-person element. And then, when it comes to pure-play assortment, Amazon will always have more.

They will have more skews in the long tail, and Walmart can match them at the head of the tail selling tide. But in the long tail, Amazon's marketplace will be formidable. And then do I expect Walmart to invent a technology play like Amazon Web Services? No, I don't think so.

And then, we could talk about countries where Walmart is incredible in Mexico, and it can win in India because it bought the equivalent of Amazon in India, Flipkart. But well, if we go geography by geography, we'll go down the rabbit hole. But the short story is that Walmart has proved itself to be a formidable competitor, and part of that is the art of war.

You've got to lean into where you're different rather than try to improve at what you're already losing. 

Chris Powers: That's a perfect way to bring this home. Andy, this was awesome. We went to a place I didn't think we'd go to, but this was one of my favourite conversations. I appreciate it.

Andy Dunn:Chris, It was an honour to be here. I'm looking forward to meeting you in person one day and not doing all the stuff we used to do in college. 

Chris Powers: I hope you've enjoyed this episode of the Fort Podcast. Be sure to follow us on your favourite podcast platform or hop over to YouTube to watch full video episodes if that's what you'd prefer. 

For more information, you can check out the fortpod.com