How I Built This with Guy Raz - Bombas: David Heath and Randy Goldberg

Episode Date: September 19, 2022

David Heath and Randy Goldberg saw an opportunity to disrupt a long dormant—and arguably boring sector...socks. They met at a startup in their 20s, each already had their own side hustles before they hatched a plan to launch a business together. Randy and David didn’t initially intend to get into the sock business, but in 2011, David read that socks are the most requested clothing item at homeless shelters. That led them to start a company they called Bombas based on a promise: for each pair of socks a customer bought, another would be donated to the homeless. Within about ten years, their one-for-one start-up turned into a quarter of a billion dollar business that has expanded into sweatshirts, underwear, and t-shirts.Listen to The Great Creators launching September 20thSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. Hey, it's Guy here with a very exciting announcement. I have a brand new podcast. It's called The Great Creators and it launches on September 20th. And each week I'll be interviewing some of your favorite actors, comedians, and musicians. about their lives, their work, and where they find creativity. So please check out the great creators.

It's available wherever you find your podcasts. And please do subscribe so you won't miss any of the episodes. And our first episode is with Stephen Colbert. So check out the great creators wherever you get your podcasts. And we'll include a link in the show notes to this episode too. Thanks. Now enjoy how I built this. When I showed up talking about building a sock company,

It was all but pretty much laughed out of the room. Not exciting. Exactly. Like, how big could a sock company be? Or, like, you know, it's a pretty boring category. And I think from a confidence level standpoint, that made us, like, re-questioned things a little bit, too. And so as a salesperson, that was pretty hard for me to take. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

I'm Guy Raz, and on the show today, how two friends decided to take the tools of innovation and apply them to one of the least innovative products, socks, and ended up building a multi-million dollar company, Bombas. A great idea is almost never an original idea. It's usually an improvement on an existing concept. You can apply this logic to some of the most innovative brands. in the world. Tesla didn't invent electric cars, but it made them so much more interesting and efficient. Google didn't invent the search engine. It just made a better one. And Dropbox didn't invent cloud-based storage. It just made it easier to use. Now, all of these examples are technology companies. And many of us typically associate the word innovation with technology. But the reality is the opportunity for innovation is often found in the most boring places. In products that we don't even notice.

Like women's shapewear, no one really bothered to improve that category until Sarah Blakely came up with Spanx. And the same can be said for socks. Sox have been, for the most part, an afterthought. You've got your dress socks, your sports socks, and maybe some thick hiking. socks. But no one was really thinking, hey, you know what needs innovation? Sox. That is until 2011, when David Heath decided to do just that. How he got the idea, well, you're about to hear that in a few minutes. But what David quickly realized is that no one was making a product that had the qualities of a high-performance athletic sock and a casual dress sock all in one

package. So with his friend Randy Goldberg, David began the long process of trying to figure out if there was a market for his idea. They called their brand Bombus. Now, at the time, as you will hear, very few investors were interested. Sox just weren't seen as exciting or profitable. But it turns out, socks are very profitable, almost like popcorn profitable. And over the course of 10 years, David and Randy have managed to build Bombas into a business that does more than a quarter billion dollars in revenue. David and Randy met around 2007 when they were both working for a men's lifestyle website called Urban Daddy. Randy Goldberg grew up in Baltimore, the son of entrepreneurs who ran a business making lenses for glasses. David Heath grew up in Westchester County, just north of New York.

His dad was also an entrepreneur who actually pipe. The technology that makes wood chips for playgrounds. And like his dad, David wanted to pursue a life as an entrepreneur. So he went to Babson College to study, well, entrepreneurship. But it wasn't college that turned him into an entrepreneur. It was a job he had during college, a job selling knives, door-to-door for a company called Cutco. David decided to become a Cutco sales rep after meeting a recruiter on campus. And I like bought full in.

I was like, this is it. I'm like, I could do this. I'm a great salesperson. I was like very into the product. And I also just felt like, okay, there's something I can do on my own. So I ended up joining. And over the course of the next four summers, I became one of the top sales reps in the Northeast.

I'd sold like $400,000 worth of Cutco knives over four summers. What was your sales pitch? I mean, I mean, you'd call it. me up and you say, hey, I've been talking to Susan and she gave me your number guy. And I know that from what I understand, you're in the market for some new kitchen knives and like what? No, I don't know. You don't even like, you don't even get there. You're just like, what do you do? All I need, you know, is 30 minutes of your time, you know. 30 minutes of my time. My time's valuable, David. I don't. And then you're going to say what? I wasn't calling people like you guy.

I was calling, you know. No, anybody. See if you can sell guys some knives, Dave. Sell them some knives. Yeah, sell me some knives. Okay, okay, 30 minutes of my time and then, and then what are you can do with that time? Okay. 30 minutes of your time. You don't need to buy anything. I get college credit for this. Oh, you get college credit for it. Okay. You really like leaned on the college part, right? It's like, I'm a struggling college student. You're a college student. You're getting credit for being involved in this business. Okay, I got you. Okay, that's interesting. Okay. Well, you know, I want to help a college kid. Okay. Well, and I say, sure, you know, how's Tuesday at 3 p.m. And then I come over and I'd have my little roll up of knives.

You know, before I even unrolled it, I'd like put them on the counter, kind of create the misdere of like, what is this thing? And I had a little like sales pamphlet and I'd say, actually, I can't even remember these days. But I just remember you'd always start with, I'd say like, do you have a penny? Yeah. This is one of the big like cut coat like things. So like, do you have a penny? And I'd say, yeah, why do you need a penny?

You've got the penny and you take out these kitchen shears and you cut. the penny into a corkscrew. I'm really enjoying this. And they'd be like, what is going on? I was like, this is Cutco, right? We make high quality American made kitchen cutlery. And then it's like, please go get your three best knives, right?

And they'd like get this knife drawer with like rusty old, you know, dull things. And I'd have a piece of rope. And it's like, we're going to start by cutting, you know, with your knife. Yep. And like, you'd cut it. It's like, you'd ask them to cut it. They'd be like, I can't cut it. Cut what?

Like a chicken bone? No, a piece of rope. Oh, rope. Okay. You'd bring the rope. Yeah. I'd bring the rope. Yeah.

Rope was provided by me. Yep. And they would try and they'd struggle with their... Ah, couldn't get through. Yeah. Then they'd be like, let me go get my sharpest knife, right? They'd always go get a serrated knife. And I got you.

They'd cut it and it would like tear the fibers of the, you know, the rope. No. Like it's all over the place. And I was like, all right, now try it with a cut co because it had a double edge. And it would cut the rope within one, like half of a cold. Oh, my God. Now you've built up this like tremendous amount of like, wow and value. I think, I think honestly, the two things that this job told me or taught me was one in the skills of like how to sell.

Right. How to like, you know, build value, handle objections. or like the like sales 101. They were incredible at sales training, incredible. And really kind of teed me up for, you know, my interest in sales, but also my pursuit and kind of in wanting to be really good at selling and kind of that drive and hunt mentality. But I think the other part was always what was realizing that it was really easy to sell a good product.

Yeah. And I think this idea around if you have a great product, It almost sells itself. Yeah. And so I just, I believed fully in the product. But to do that, you know, at 18, 19 years old, and you made $120,000 in one summer selling knives as a college student? Yep. That's insane.

That's a crazy amount of money. I mean, I mean, you were making, you were making more money than anybody in college. By far. And not to mention, I mean, I can't underscore the fact that, again, I worked four hours. hours a day, four days a week. You were the original Tim Ferriss. You're the four-hour workweek guy before Tim Ferriss did it. He could have written that book.

All right. So you're doing, and when you graduated, did you think, you know, maybe I should just go to Cutco full time? If I made 120 in one quarter times four, I mean, you know, you could be rolling in it right after college. So, no, I did not have a desire to continue to sell lives. But I did follow that line of thinking in the sense of saying, wow, I'm really good at sales. And I think like every broke college kid comes out of school, especially I think as well,

being a product of the 90s and the MTV Cribs generation, everything was about make as much money as possible, right? I think the newer generation of Gen Z millennial, that's like, do what you love. I'm like, thank God that they figured that out a lot earlier than I did. And so I remember approaching graduation, I looked at sales jobs and I figured out what industry do salespeople get paid the most amount of money. And pretty consistently it was in software sales. Wow. All right. So Randy, let me turn to you because by the time David was making like $120,000 on Knives in college, you had already graduated from Georgetown University in, I think, in around 2000, and went straight to a job at a, like, a tech consulting company, I think, in Boston, which was,

I guess, right, right sort of before the dot-com crash, is that right? Yeah, things started to unravel pretty quickly, and I got laid off in April of 2001. So it was seven months into my first job. Wow. I'm out, you know. Wow. Yeah. So seven months you're out and living in Boston. Living in Boston. And so what'd you do next? So this was a moment where I had to decide, am I going to move home and figure things out there? Or am I going to sign a new lease and try and figure things out here? And I felt like if I moved home, I might get a little stuck. I wasn't really certain of what I wanted to do, but I made the decision to, you know, move into a new apart.

with some friends, sign a lease, and then start interviewing. So I got two jobs in the meantime, just to pay the rent. I got a job at a wine shop, and I got a job at a bar. I started out waiting tables and then eventually worked behind the bar and helped manage the place, and I learned a lot pretty quickly. But the whole time I was there, I was interviewing, you know, because I wanted to be doing something else. Yeah. How long did you stay there? Well, I ended up meeting some people who would come in regularly and we became friends and they worked at an ad agency. And they said, you know, I think you would kind of be good at what we do. You know, do you want a chance to like to do a project with us as a copywriter?

And I took a job as like a copywriter working on a brand book for Johnston and Murphy. So the shoe brand. The shoe. Yeah. Yeah. I had never done this before. and it went really well. It was the kind of thing where, you know,

it felt sort of natural to me to do this type of work. Couldn't believe it was a job, that type of feeling. And I thought maybe there's something here. So I started pursuing writing more regularly. And I was still working for this restaurant group for a while after that, for a couple years as I started to build my career as a copywriter. Like freelance, doing freelance work. All freelance.

Right. All freelance. So like writing a campaign or picking a song. for commercial, things like that. And a lot of the work was working on brand books for companies that had sort of lost their way, right? So larger companies that needed to be reminded of why they started in the first place, what was special about them, what was unique.

And you're doing this for companies that had once been great, but had maybe lost their way. That's a very interesting practice. All right. Just hold that thought for a moment. I want to go back to David here for a second. David, when you graduated from Babson around, I think around 2005, you landed the sort of the quote-unquote coveted tech sales job that you wanted. I think it was for an Israeli company called Nice Systems based in New Jersey. So how did that job go?

I did incredibly well at the job. I hated the product. I found no emotional connection to software. it's not anything I studied. It wasn't anything that I was like personally interested in. I'm purely there just for the money. And so after a year and a half there, I kind of gave them an ultimatum. I was like either make me an outside sales rep or I'm going to leave and go do something on my own.

And by the time I was 24, I was kind of in this, you know, I made a bunch of money and put a bunch of money in savings. And I started my first business because they didn't get me the job. I left and I created a social networking site for apartment buildings called building neighbors.com. And what was, how did the social network? How was it supposed to work? So I had just broken up with my girlfriend of a few years and I was in this massive building with mostly young post-college people in it. And, you know, I was like 32 floors, two towers, you know, like 100 apartments each floor type of thing. I mean, this was 2006 or five, yeah, 2006.

So Facebook was not what it is today. It was out there. It was out there, but it wasn't as prolific as it is today. Yeah. And so I was like, and I also think this was the time when everyone was like a social networking site for dogs, for apartments, for people who like to cook, you know. I was just like, oh, maybe this is an interesting way, you know, to meet other. people in my building. Yeah. And I worked on that for a year and put about $50,000 of my savings into that. How long did you end up working on this business? So I worked on it for about eight months.

And as I watched my savings dwindle without any cash flow coming in, I kind of quickly got nervous and was like, whoa, if this takes much longer, I'm not going to have much left. So that's when I said, I'm going to go back and get a job, you know, while I continue to work on this thing. And I said, okay, if this is a online digital focused, you know, first type of company, I should probably go get some skills or experience in the online space. And my roommate at the time was working on this project with my roommate at the time. And I remember he came home one night and he said, I applied for a job for you. And I was like, what do you mean?

It was like, I sent your resume into this newsletter that I get that I really like. It's called Urban Daddy. I was like, I have no idea like what this is. I'd never heard of it. And 30 minutes later, like my phone rings. And they're like, hey, it's Rob at Urban Daddy. Would you like to come in for an interview this afternoon? And I was like, wait, sorry, back up.

Your friend applied to Urban Daddy on your behalf. Why? I mean, you were not a... Because he knew that I was like, wanted to get back and find something. in the online space. Yeah. And again, we were roommates and we were working on the building neighbors project together. Yeah.

And I was bankrolling the whole thing. And he knew that I was like stressed out about like my savings going away. And, you know, so I became pretty focused on like, let's find a job. And like within like a few days, he just like was like, applied for this job for you. Kind of thinking it was a lark. Like, I don't know. They're not going to like reach out or apply. Like 30 minutes later, they called me.

And so you had that, obviously, experience as a salesperson. And this was just a, did you know anything about this site? Was it? Nothing. Nothing. I never seen it. I didn't know anything about it. Called Urban Daddy.

I was like blindly walking into an interview. So. Yeah. It's a horrible name. It's a horrible name. Horrible. Urban Daddy. I spent days.

It's like, it's a sugar daddy. what does it mean? Is it is like this is my sugar urban daddy. I don't understand what it means. It's not just weird. It's terribly terrible. Terrible name. It went on to be successful, I know, but it was an aggressively terrible name.

Keep going, sorry. I spent days trying to convince them. Days trying to convince them to change it. Branding exercises. We just tried so hard. And the founder was, you know, it was his name and he loved it. Yeah, all right. Okay, so, okay, so to David, you get this interview to be, to do business development for, for this website.

And this is an important part of the story because I, like you do when you get a job interview, I put on a suit and tie. And I go downtown and I show up to this office. Office is a stretch. I like open this door and there's like six people sitting at desks and like four in. turn sitting at a big table and then like one small office in the corner there's a single chair and this is like 2005 2007 2007 so there's a single chair by the door and they're like wait here and I'm like full suit and tie in this like cool hip publication everyone's like super stylish like staring at me it's new york it's new york of course This is so embarrassing.

I'm like, I'm never getting this job. I'm leaving. This is awful. I go into the meeting. I meet with the head of sales and the founder. And 30 minutes later, I had a job offer. And I showed up like, whatever, two days later. A job offer to run business development.

I was the second salesperson and like business development and partnerships to like grow our email list. And sales would mean trying to get advertisers basically for the website. Yeah. And then also try to get people. people to partner with us to share email lists so we could grow our email lists and distribution. And this is a key part of the story because my chair, like, backed up against Randy's chair. I remember Dave walking in for that interview as well in his suit and thinking, who is this guy? Yeah. And you were, and Dave and Randy, you were a writer, right? You were writing articles or like

pieces. Yeah, I was, I was writing the New York edition, right? That was, That was my job. And I had started a month earlier. So it's not like I had been there for a long time. You know, there was six of us. And then Dave was seven. And just to be clear, urban daddy still exists. But at the time it focused on.

And it was basically like cool places to go eat, cool clothes to wear, like, cool places to travel. Like it was mostly about using the city. New York. Okay. Like what is a new restaurant, a new club, a something happening? You know, if you were trying to go out or go on a date, it was a resource of like some place to go to impress your friends or impress a date or take your parents. Like it was really about like getting out. And it was for men.

It was designed for young men. It was like geared towards. It was like a male vibe. So tell me about how the two, I mean, you were, it was at a office of seven, eight people. So presumably it wasn't that hard to meet each other. Did the two of you become friends right away? What do you remember about that, Randy? You know, Dave has one of the loudest voices in America, right?

So he comes into this tiny office. There's seven people now in this small office, and we're all in one room, right? So his chair is backed up against my chair. There's no space. It's tiny. It's New York, right? Yeah. And he's sitting on sales calls all day.

And just talking, people's ear off. It's like he was screaming in the, side of my head. You're hearing it all day. Yeah. You know, he's on a sales call and I'm sitting there trying to formulate an angle to write a story, which is the exact opposite environment. Open space offices are not good. Not good. Bad trend. Bad trend. Yeah. So there was some tension at first and I just I remember being like, who does this guy think he is? And then you have an office of seven people. So we went out to lunch and I soon figured out who this guy really was. And I realized that we couldn't be more different in a lot of ways, right?

Like there's a lot about the two of us is super different. But we have a very similar outlook on the world and we're both pretty entrepreneurial. And Dave's got a big heart. And I was like, I like this guy. And we became fast friends. You know, it didn't take long to get over that the guy bumping his chair and the loud voice and just realized like, this is one of my people. And when did you start to think in your head? Like, was it, is it early on when the first, when the two of you met where you thought,

he might be the guy that I could start something with? Or was that, was he just like an office friend and you would just kind of chitch out about ideas? I think because we spent nine hours a day together, we got to know each other's, strengths, weaknesses, you know, what they valued very, very quickly. And then from a creative standpoint, we started just sharing. ideas, right, that would like pop into our heads randomly. Add to that, the commiseration that we had over what was a 50% like amazing office environment was super talented, you know, people that were doing great work with a 50% like pretty toxic

culture that was built on a lack of transparency and a lack of trust. And I think our bond was further forged by the fact that we both felt mistreated a lot of the time or deceived or confused around things that were promised to us that weren't delivered upon. And just this kind of feeling that if we ever had the chance to do something together, that we would take the lessons learned from this experience and do things completely differently. on the culture side, but realize the emphasis on what great talent can actually do and a great product. Yeah, for sure. While the two of you kind of became better friends,

and started to talk about things that you might do because clearly both of you were motivated by this idea of one day having your own business, what kind of ideas would the two of you talk about? I remember Randy came to me, and was like, I think there's an idea for a universal gym membership. Oh, class pass. There you go.

Class pass. We did not start class pass, but, you know. No. Pyle's been on the show before, yeah. So that was an idea. And then another one, I came to Randy and I was like, you know, because I was like a single guy living in New York. And I was like, I think there's an interesting idea around selling like pre-portioned food.

like for menus, like for like recipes. Because I was like, I don't need a whole onion, you know? I just need a quarter of an onion. You founded Blue Apron? So we found a class pass and Blue Apron. And Blue Apron. While you were dreaming of ideas. I had another idea where, you know, I lived in a walk-up building with no doorman.

And I'd have to like be home to get my packages. And so I thought of this other idea where it'd be like, last mile delivery service that would aggregate all your Amazon packages and then like fresh direct you could schedule a two hour window when you'd actually be home to get them but now that didn't turn into anything either and then and then Amazon Locker kind of just yes Dave also invented Amazon Locker so yeah wow amazing you guys are you guys are unstoppable um but actually I mean I mean for real David um I think around 2012 you left urban daddy and you did start a business with your brother Andrew, right?

Which was based on like on truffles, not chocolate truffles, like the kinds that pigs look for in the woods, right? Like that you shave on pasta or scrambled eggs. Truffles, caviar, wild edibles, like rare mushrooms and, you know, different types of, you know, greens and fiddled ferns and ramps. The usual. And what did you call the company, by the way? It was called Rick Alice.

Reales, okay. Yeah, and I ended up getting another job at a private equity firm that paid really well. I was like, this is kind of interesting, but I don't have the time to run this. So my brother really stepped in to kind of run that business. My brother had just come out of MBA at Babson and was looking for a job. And I said, well, why don't you step in and run the operations and finance component of this business? So you were basically a kind of a founder, investor, regales, but you didn't have, you were kind of sort of running it, but not really running. It was

being run by your brother. Yeah. And, and, and, and, I mean, eventually you sold, you sold your share of that company, right? Correct. All right. So you've got that going. You get a job in a private equity firm. Meantime, I mean, clearly, you know, you were both looking for an idea. How did you land on socks? How did that come about? So, you know, it's like meeting your partner, right? These stories happen in kind of the most interesting and unexpected ways. It was February of 2011. I was still working at Urban Daddy, and I was scrolling on Facebook, and I came across a post from the Salvation Army that said, socks are the number one most requested clothing I know at homeless shelters. And I remember thinking to myself, that's both interesting and sad.

It's like I never would have thought that would be the most requested item. I thought would sneakers or jeans or a coat or something like that. And yet, here's an item of clothing that I've never spent more than a few seconds that are thinking about. And this is the number one most requested item for someone who's experiencing homelessness. And I remember walking over to Randy's desk and I said, I just saw this thing that was at socks are the most requested item at homeless shelters. Like this was around the time that I think Tom's was in their fifth year of business and like growing like crazy, taking over the world.

Yeah. Like one for one business model. Shoes. Yeah. Warby Parker had just launched in December of 2010. The one with the one for one glasses. Mandy and myself kind of put two and two together. And we were like, oh.

So maybe there's an interesting idea around solving this problem in the homeless community by building a brand around a sock company that donates socks for every sock item that we sell. That was really kind of the initial like spark. And so the spark was, wait a minute, if this is the number one most requested thing at homeless shelters, maybe there's a model we can build similar to Tom's or to Warby Parker. I mean, were you thinking along those lines or did it just kind of come to you? What do you remember? It was community first, I'd say.

So first we asked why. Why are socks the most requested clothing item in homeless shelters? So we made a call. We called a shelter. And we said, this is true, first of all, and why? And they said, well, you know, if you're living on the street, you might not take off your shoes at night. And, you know, a fresh pair of socks means a lot. You walk everywhere.

You have hygiene issues around your feet. And then it can be a huge issue if it rains. This is a big issue. And because socks are a wear-through item, we don't allow people to donate them. So you cannot donate use socks to the majority of shelters and organizations that help in the homeless community. And they said, so we end up having to buy socks. So it's a big issue. Hmm.

All right. So it was around 2011. You read that quote and it sparked the idea of whether socks could be a one-to-one business model. But you didn't launch right away, right? Like that wouldn't happen for another two years officially. David, you had left Urban Daddy and Randy, I think you hung on. So what made you guys actually take action? and, you know, pull the trigger.

So, Randy, do you want to jump in or? No. Go ahead. I mean, we should probably at some point talk about the Godfather. Yeah, yeah, I was going to get to that. The movie or a person called the Godfather? No, no, no. This is a person called the Godfather.

When we come back in just a moment, how a key connection gave Randy and David a leg up in the sock industry and how they struggled but eventually found their footing without venture capital. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz.

So it's around 2012 or so, and Randy and David are starting to put together a team to launch and run their sock business. But they realize pretty quickly that they know nothing, really nothing, about the sock industry. So enters Stage Right, the Godfather. Remember sitting down,

for dinner with my dad one night and I said you know I'm thinking about starting the sock company it's going to donate a pair for every pair of purchase but I don't know the first thing about making a pair of socks and he turned to me and he said well you know your godfather spent 40 years in the hosiery business and did incredibly well I don't know what I don't know what he did but you should give him a call and so I didn't talk to this guy in 15 years so I give him a call where do he live he lived in in Westchester okay I call him up and I said, hey, Steve, I have this idea for a sock company. And it turns out that Steve Lowenthal was the president and CEO of Gold Toe in the late 80s and 90s, which is like...

Gold Toe socks. I remember gold. They must be still around, right? Yeah, definitely. Gold Toe socks. The toes were gold. Yes. I mean, not real gold. They were gold colored. Gold color. fabric. And the idea was that that's a quality. You've got your toes in the gold part of the sock. That's the quality sock. He left gold toe and then started one of the first and largest

private label sock manufacturing like distributors in the country. He worked for brands like Nautica and Polo and he would make their socks like white label. He would make their socks as a white label. So he understood global supply chain when it came to socks. And so me, Randy, Andrew, and Aaron sat down with him in this meeting once. Andrew is your just a, just a, Andrew's my brother. Andrew's your brother. And Aaron is the fourth co-founder, who I'd worked on Regalis with from the branding perspective. So the four of us sit down with him and we say, here's our idea. And he said, tell me the product you want to make. And I will introduce you to the best factories in the world.

Wow. And so we start working together on figuring out what are the components from each individual sock that we like the most, you know, the toe from this one, the calf from this one, the fabric from this one, the arch support from this one. It kind of Frankenstein this sock together. And we like cut up a bunch of socks, put them in a plastic bag and handed them to the godfather. And he said, let me come back to you in a few weeks and see what I come back with.

ended up introducing us to this factory partner in Asia. And because of his legacy and credibility in the sock business, they were willing to work with us. I mean, this is a factory that produces for Nike and, you know, sockony and smart wool and some of the biggest sock brands in the world. Yeah. And here they were talking to us. And we didn't even, we don't have like two nickels to rub together, let alone like a full-blown brand. or concept. Right.

And their willingness to work with us for almost two years on product development, where we'd go back and forth and say, we like this, we don't like that, send us some samples, we'd try them out, we'd give them to friends. And this development process that, you know, ultimately led us to a product that we thought was pretty great. All right. It reminds me a little bit of, I mean, Warby Parker saw a gap, right? And the gap was glasses shouldn't be so expensive.

I mean, they're, they're, it's, you know, the markup is crazy. And they figure out a way to make them more affordable through this direct-to-consumer model. How did you identify? I mean, how, because now you look back on it. You're like, of course, because socks were like made by Nike or Adidas or they were tube socks you'd buy in packets at Target or dress socks that you would buy, you know, or whatever it was, thin dress socks, athletic tube socks. And, you know, but now I can look back and say, of course, there was a gap. But it didn't, I can't imagine it was super clear to you at the time, was it? I think it was pretty clear, pretty quickly.

I mean, we didn't have the data. We weren't in the apparel business, you know, and I think this was a big advantage for us. Yeah. We just looked, we took a look around and we just saw what was available. And what was available was always the same over and over and over again. And it just, it felt like an afterthought. I don't know, Dave. Maybe you have a different perspective on this,

but I think we knew pretty quickly. Yeah, I think the sampling process for us was a pretty big eye-opening experience, right? We didn't go into the product development process with margin or pricing targets. Or, you know, this speaks to Randy's, you know, common around us not having any experience in the manufacturing or, you know, retail apparel world.

So we kind of came at it from a pretty blank slate of just saying, like, what's the best product that we can make. And then as part of the development process, we would give samples out to friends and family. And they would come back and they'd say, wow, these are really great. And then we'd be like, yeah,

but maybe they say that because they're our friends and family. And so I very distinctly remember bringing samples to the gym with me. And I'd walk up to complete strangers. And I'd say, I know this is really strange, but I'm developing a sock company. Would you be willing to try these socks for me? and, you know, if I see you next week, tell me what you think. And I'd get a lot of really weird looks.

And inevitably, though, I'd show up the next week, and those same people would come back and be like, where can I get those? Those are amazing. Like, what are they? All right. I want to talk about the design process because the four of you are working in this factory's in China? China, yes.

And so they agreed to work with you on product development, which meant that, what, they had a designer there, or you would sort of send them socks? you liked and say, or sort of email them picture and say, I want a sock that looks like this, but has these features? More the latter. So you'd send them a photo and say, I like this, but I want these features in the sock. We'd also send physical samples, and we would send pieces of socks. And they would, you know, they started with a prototype.

Yeah. And they'd send us things. And while you were working with this factory to just get samples, I mean, presumably you had to pay them something. So what did it cost you? Luckily, the sampling was like the inexpensive part. I think they were thinking longer term. Like, oh, if this turns into something, we'll get the business. And again, by having my godfather tied to this, I think they were less concerned

or they had a higher degree of faith that it would be successful. You know, we, you know, I had to incorporate the business, right? So I hired a lawyer. And ultimately, when we decided to launch on Indiegogo, we had to pay for the, you know, know, video and some of the creative assets. But our whole approach to launching this business was try to bootstrap as much as possible. I think by the time we launched on Indiegogo, I had about, I don't know, $12 to $18,000 of credit card debt. Okay. So it wasn't, it was not insignificant, but it wasn't like, it wasn't, it was doable. I mean, there was four of you

involved. And by the way, how did you decide how to divide up the business? Was it based on how much money each person could put in? In terms of the ownership or the work? Yeah, the ownership. So it was pretty, it was pretty easy because, well, I have to say it was pretty easy. A lot of hard conversations early on. That's a fraught conversation. I've had this conversation with my business partner, so I know it's not easy. Yeah. A lot of hard conversations early on. Yeah. that I think were determinant of, you know, I had kind of put most of the capital up front in terms of, you know, paying for the legal incorporation and some of these other things. I think the rest of it was kind of determined by, you know, who could take the risk to, you know, jump first. You know, Aaron had a family at that time, right?

He was like he valued being able to keep his day job and keep a steady paycheck. As a graphic designer, as a creative, yeah. Andrew was working at Regalis, so he had a paycheck coming in. So the most likely, you know, person to kind of take the leap first, like I didn't really have anything else going on. And I didn't really like the job I was working at. So I kind of took the leap first and kind of front-loaded a lot of this stuff. Right.

And I just think naturally, you know, while certainly difficult, it wasn't, it was never like argumentative or contentious. And I think everybody kind of just agreed to let, you know, kind of made separate agreements and decided to divide the business up, you know, the way we decided to divide it up. We had the luxury of time. Right. Right. Because, you know, like we took two years. There was no pressure from anyone but ourselves to build this at that time because it was bootstrapped. And it gave us time to develop the idea. And, you know, like Dave said, he leapt first. And then in early 2013, when I was no

longer at Urban Daddy, we sat down to write the script for our Indiegogo campaign. And that was sort of a moment where we felt like we were writing the covenant of the business. It took three months for us to write that and something today that would take, you know, three hours for, you know, copyrighter to do. But it was putting all of our ideas down on paper in the right way and getting our storytelling, you know, around this product that we believed in at the time. And by the way, the name Bombas, was that the name from the beginning? Yeah, that was the name from the start. And it means Bumblebee, right? It's like the Latin word for bumblebee. Yeah, so the word bombus comes from the Latin word for bumblebee. You know, obviously we're a company that's community based. Bees live in a

hive, they work together to make their world a better place. We love like the inspiration and the idea of things coming together in a hive to work together to improve their world. How did you, did you just come up with a name or did you work with like a branding agency to help you come up with a name? So I think when we got to the point where we were ready to like name it, Randy and Aaron said, give us the weekend. Uh-huh. Right. Let us, we kind of know what this company's kind of feels like and stands for. Let's throw a bunch of things up on the wall and come back and present, you know, me and Andrew in the group with a broader set of ideas. And the two that kind of they came back with that were the most, you know, at the top were something around bees or ants because there are two animals that are naturally altruistic that work together as a community to make their world.

They're collaborative. And so I didn't think that ants were that marketable. Bees tended to be a little bit more playful and fun. And so it kind of landed on bees. And it was mostly Aaron had kind of come up with this idea of naming it bombus. The Latin word for bumblebee is bombus, but with an A, B-A-M-B-U-S. Right. And kind of our thought was, well, if you Google Ambus, you're going to get a bunch of like beekeeper information.

And so we thought, all right, change the A to an O and make it a little bit more unique and ownable. So you guys came up with a name over a weekend. It's a great name. I mean, it doesn't like, I'm sure there are people who are like, well, but it doesn't scream socks. Just call it like, call it feet mittens or call it, you're hired. You know, whatever. Like, right, did anybody say that to you? Like, call it something that screams out socks.

We had somebody tell us that you have to write socks with an X. SoX. It's the only way you're going to stand out in the market. People spanks. Yeah, people tell you crazy things. You know, you have to have conviction around, you know, the reasons you put a brand together and how you build the world of a brand. Yeah, fair enough.

All right. So, so how, I mean, you're getting all these samples back and forth. And I guess we should say, like, I mean, doing research about this interview, you, I discovered a lot about socks, you know, like this arch support in socks and, you know, these like honeycomb weaves and stuff like that. When did, like at what point, you know, because I know you landed on like mainly cotton and marino wool. I think you also do some synthetics now, right? Yes. Yeah, cotton was what we launched with. Cotton, okay. And a different kind of toe seam and like this honeycomb arch support.

So how many iterations of the samples did it take? Do you remember before you were like, that's it? We got it. Hundreds. Hundreds and hundreds. I mean, guys, just for the calf sock, tension level alone, it took us 137 tries. Tension on the foot. On the calf.

Like if you pull up a sock, like on a calf sock, you pull up a calf sock, right? You wanted to feel comfortable and not too tight, but not so loose, it'll stay down. And you want it to be supportive, but you don't want it to leave a mark. So these are the types of details where once you're in it and you have the luxury of time, like this is the type of, this was the approach, right? And this is still sort of the way we approach product design today. But that is it, right? Like thinking about each little detail and the idea that all these little things that nobody thought about

or cared about could when you put them together, just come up with something that's greater than the sum of the parts, right? Like, you don't have to remember the honeycomb arch support or a seamless toe or a Y-stitched heel or that we used, you know, pima cotton. But when you put it on, the feeling is this feels different and I like it more and I want to wear this every day. That's what we were going for. Yeah, you know, it's interesting.

I'm looking at my sock now here. And I got a seamless, yeah. I guess that toe, right? There's like that little, little toe thing there. And I never thought about that, really, you know? Yeah, this is a product that we discovered most people don't think and or care about. Yeah, this is where the opportunity comes in, right? Like, you're a thoughtful guy, but you haven't spent a lot of time thinking about, well, it's not something people think about.

It just wasn't, right? Like, we didn't, Dave and I didn't grow up dreaming of being in the, sock business. I mean, nobody did, right? Like, this is something that we stumbled upon. Yeah. But it was, it was an opportunity to test out an approach and a brand and do something great. And it was all really motivated because we wanted to make a difference, right? The idea looming out there was how can we donate as many pairs of socks as possible? And that's a real motivating factor when you're building a product. All right. So you have this, so you land on this idea. You land on the sock. And at what point do you feel Randy comfortable quitting your job and and quitting

your steady paycheck to actually go into this full, full time, full force? I think things were coming to an end for me at the end of 2012 at Urban Daddy. You know, it was time to move on. It wasn't a good situation at the end. There was conflict. It wasn't ideal, but we were also, you know, things were moving pretty quickly compared to how they had started with Bombas. We started to get a little momentum. And Dave had left his job.

And, you know, there's that moment where you have to say, like, okay, now's the time. Let's, let's do this thing. And again, we had other things going on. So we had a little bit of safety. but after having a job for six years to be in a position where you're just building something, building multiple things even, it's a moment. And I think a lot of people face that moment when they're doing this. And you just have to give it a little bit of a leap.

And you have to have to have put in the legwork, I think. You know, it's interesting because you launched this product as an Indiegogo campaign. Essentially, right, you went out on Indiegogo to raise some money to see if you could get the capital to do it for, presumably, to do a first run of socks. But it's interesting because now that I think about that, and I weren't going to talk a little bit more about this in a second, it's kind of, David, it kind of reminds me of your job at Cutco, right? Because you weren't selling people knives.

You were a college student who was genuinely earnestly trying to gain experience, and that was a gateway in. And then you had this great product that you could also sell. And it seems to me that there's a connection between what you were also offering here, which was the Indiegogo campaign was saying, hey, you can help give people socks and you can also get a pair of socks too. Is that a fair kind of analogy?

We felt like this was really our one shot to get it. And so being relentless, I even think to a certain degree, shameless, I found a way to download my entire Gmail contact database. And I don't mean like just the people that are like in my contacts. I mean, every single person that I'd ever emailed with ever in my Gmail. You can find a way to do this in Gmail. And I remember downloading this like 12,000 person email file and sending it out, not knowing

who was on it entirely. And I got response back from people who are like, this is awesome. I sold you a set of concert tickets on Craigslist four years ago. Like, I'm going to buy a pack of socks. And then I had people. Wow. Everybody would ever. A person that I went to like, you know.

sleepaway camp with eight years ago. It was like, haven't heard from you since. This seems interesting. I also had a fair amount of people be like, bleep you, don't ever email me again. Stop spamming me. And I was just like, whatever. It's actually amazing because you really, I mean, you really had developed all of these tools that would lead you to this moment, right? Like, Randy, you know, you're sort of copywriting and David, like selling, just selling, just selling,

stuff and understanding like how to sell stuff and it all kind of coalesced. It all kind of arrived at this moment on Indiegogo. I'm just making the observations on a question. It's just so smart how you sort of landed on this approach because, you know, Indiegogo, you're not going to raise that much money, you know, but if it works, if it catches fire, it can get a lot of attention. Yeah. And it's a tension. It's attention that we were after. validation, right? You know, our friends and family said, we loved it, but, you know, your mom loving your socks is not that hard, but a complete stranger putting their money in to say, I will, you know, buy this product before it's available to me and wait however many months to get it,

that to us was enough validation to keep going. All right, so you launch an Indigo go-go, and I think the goal is to raise 15,000, but you had raised within, I think, the 30-day period, like 140,000. We did $25,000 in our first day. I mean, now the idea was to do how many, like initially what was your idea? How many socks, pairs of socks were you going to make? We weren't. The $15,000 was the minimum amount we needed in order to place the minimum order production run for like all the styles and colors that we had. But we knew that if we only got $15,000, Those probably curtains. So you needed to make more money, to raise more money.

With $140,000, that's now you've got to fulfill all these orders too, right? And so, yeah, I mean, did you just basically go to the factory and just hit the go button and say, let's go? And I'm assuming you just had one skew, just one kind of sock at that point? Or did you have multiple colors and options? Or was it just like, you're going to get ankle white socks and that's it? Now, we had a calf and an ankle in a black and a gray base with four accent colors. You could like select what you wanted on, you know, when you like fulfill the order. And so about halfway through when we were at about $50,000 of sales, we, that's when we actually hit the go button on the order because we're just like, well, we've clearly surpassed.

and we've got plenty of time left. Like this is way more than we thought. We placed the production order so that we could at least beat the lead time that we would have on the unpromising people when they would get delivered. And there was a thought, well, get them delivered before the holidays so that if we have more inventory, people could come back and re-buy for Christmas. What was the plan once you got the socks delivered? Because this is like, I mean, Shopify's around and kind of this, these, you know, these kind of drop shipping thing is starting to have. happen, but, well, I mean, I'm assuming you're, you're going to get a huge container, maybe or half a container, you know, full of socks. And then what are you guys going to package it

yourself and slap on UPS labels or UPS labels and send them to people? Well, Randy, do you remember? We like, we talked about it. We did the math. And we said, to pack 2,300 orders, and this is where my brother came in with his like finance brand. And he was like, well, it would probably take the four of us two weeks in a garage to pack 2,300 orders. No way. And we looked at each other and we were like, I don't think that's a good use of our time. That's not us. So Andrew went out and found a local 3PL that was willing to do what at the time was a very small run.

What's a 3PL again? A third-party logistics provider. Third-party logistics, sorry. house that would do the pickpacking and shipping of the product. And so they would handle all that. Okay, so you had 2,000 plus orders to fulfill. Was it quick? You're just reminding me now about all the Indie Kikstar campaigns I've contributed to and never got my product.

Yeah, this was a big issue. So where's my damn drone that I bought in 2014? Sorry about your drone. Yes. I know. I got to go back to my Gmail account and find that thing. But how quickly were you guys able to get these socks to people? Well, like Dave was smart about this, right?

Because he said about halfway through the campaign, he hit go on the order. And that's a little risky because we don't know exactly how much it's going to be. But we were very, very adamant about trying to deliver our product within the window that we promised. And then following up every person that ordered with a personalized email thanking them. And listen, like, you launch on. How did you do that? It's, it was, we did it in, in phases, right? Like, every week there would be orders.

Did you use the AI software that you were selling back in the day, David, to make that work? Or was it, it was a human being typing, thank you for your order. We used some of our old email tricks from Urban Daddy to, you know, personalize. Personalize them. Yeah. But you wanted everybody who ordered to get an email. Listen, we had a product, and now we had customers, and we had orders to fulfill. But we didn't have a website and we didn't, we didn't really know what to do next because we weren't sure how this was going to go, right?

And we started to see it happening. We started to plan. Yeah. Okay. Okay. Okay. Like, we know how to build websites. We've done, I've done this for lots of other companies.

But now you've got to do it for yourself. And what are we saying and how are we putting it together? Shopify was not the Shopify it is now. So we had a lot of like technology decisions to make at the time. and we needed to move quickly. Yeah. So this was like a little bit of a period where you say, we've got something here. We've validated it in the marketplace.

We've got these 2,500 customers. Let's build something and then just take one step at a time. All right. You guys, so you have this momentum. And I think pretty not too long after in 2014, you decide to go out and raise a little bit of money. Initially, I think a seed round, mostly from friends and family. It's about a million dollars that you raise because now you've got to stand up a website and try to get the word out because even with the customers that you got from Indiegogo, you now have to build a customer base, right? You need to create awareness around this product.

So you need money to do that. And tell me, and then I know that later that year you raised another $3 million, and this is from angel investors. But tell me with that, I mean, was that money primarily for marketing or was it just to make more product? Yeah. So after Indiegogo, we launched the website, shipped the orders, and we kind of wanted to see, like, would people come back? Would they be rebuy? Would they tell their friends about it? Yeah.

The following few months, we did another couple hundred thousand dollars of the sales. In the beginning of 2014, we said, okay, feels like we have something here. you know, as you mentioned, we ended up raising money from angel investors, but at first, you know, I went out to the broader venture community, right? I met with first round capital, general catalyst, Mavron, you know, all the names that we know today of backing of some of the, you know, biggest and best brands and companies. And despite having connections or relationships with people when I showed up with a deck talking about building a sock company, it was all but pretty much laughed out of the room.

Like how big could a sock company be? It's a pretty boring category. And I think from a confidence level standpoint, that made us re-question things a little bit too. And so I think as a result of that, we said, okay, maybe let's not push it as hard as we could. and let's just focus on building a great brand with great product and give back to the community and kind of see where it goes, right?

And we kind of were tempered our expectations a little bit. Yeah. And so as a salesperson, that was pretty hard for me to take. But it ended up being good for us, Guy, you know. Oh, amazing. Right, because you didn't, did you raise beyond a series A? Did you ever raise any more money after that? We brought in a private equity partner, but we never raised any more primary capital.

Wow. So you got incredibly lucky that those venture firms decided not to invest because it didn't dilute your ownership stake. I mean, in the end, it worked out great. And it also allowed us to focus the business on sustained profitable growth versus go out, raise $50 million, build a multi-hundred million billion brand, but be losing hundreds of millions of dollars every year, which we're starting to see how that's playing out for those companies. today. When we come back in just a moment, how against all odds, a truly lucky chance at a TV show changes the scope of bombus literally overnight, and how that momentum is nearly derailed with a very unlucky server malfunction. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2013, and Randy and Dave

have raised some money and they're feeling pretty good. But at the same time, they don't have an easy way to get their products noticed in a bigger way. You know, my dad, he said at some point, you guys should go on Shark Tank and we said, yeah, good luck with that. You are crazy. And then they get probably a thousand pitches a week. Absolutely. I mean, what do they say, Dave, 30,000 people, companies apply every year, something like that? Yeah.

So it seemed like a long shot. And then out of nowhere, in April of 2014, Dave got an email. And it was from a Gmail account. So we weren't sure if this was somebody like a friend of ours that was just pranking us or if it was real or not. But it was a Shark Tank producer reaching out and asking about our company. They had seen our product on Indiegogo, our campaign. And they were curious about where we were in the process. And that started the conversation for us getting on Shark Tank.

Wow. Did all four of you fly to L.A. to film it or just the two of you? All four of us went, but Randy and I went on the show. All right. And I know the way it works is you don't meet the sharks until they like open the screen. They're like, and well, you know, and here are the sharks. Like, right? You don't really like schmooze them beforehand. No, there's no contact. You are basically in a bubble for a week.

They know nothing about us. We only know what we know about them from the TV show. That's it. Right. Okay. Nervous. You must have been nervous as hell. I'll tell you this. The week that we were set to film Shark Tank, my father passed away. So he passed away on Father's Day in 2014, and we were supposed to fly that day to L.A.

So we almost didn't go. Dave and I had a conversation. We talked to the show. We decided we were keeping the date. I went down to Florida where my parents were living at the time. and my mom and I dealt with the arrangements. We had like a really, like, interesting conversation. And I said, you know, I'm not going to go.

Dave will go on by himself. We'll figure this out. And she said to me, you know, if your father knew that you were skipping this opportunity because of him, he'd be furious at you. And you have to go. And we've done all the work. And the funeral will be next week. And, you know, go.

which was very hard. And I got on a plane, Dave picked me up at the airport with Aaron and Andrew. And the four of us had a moment where, you know, we'd been preparing for this, so we felt prepared. In a weird way,

this took a lot of the pressure off because it just, you know, it was an important moment, but it also, you know, it was just in a very different space. And Dave and I were sharing a hotel room that week, right? And so, I was there with my friend and I was away from my family and it was really hard.

But we were here to do this thing and it sort of galvanized us and at the same time took the pressure off. But yeah, to your point, you get to that moment and it is a moment of nerves, you know, they open those doors and you walk down that hallway and you think to yourself, hey, that looks like shark tank, you know, and you're like, oh, okay, I'm on shark tank. And you walk in that room and then, you know, it's, it's on. All right, so you guys are on the set, make your pitch on Shark Tank. Bombas are athletic leisure socks engineered to look better, feel better, and with a mission to help those in need. The mass market athletic sock hasn't changed in decades. Same basic colors, same styles, same cardboard feel until now. But as soon as you finished with your pitch, you got, like, lots of pushback from the sharks.

I think at first, like, not a single one was interested in investing, but then, like, Like at the last minute, one of them, Damon John, who's been on the show, he kind of stepped out. Okay, guys, I'll tell you what, I'll try to meet you somewhere in the middle. I'm going to finance the inventory, $200,000 for 17.5%. That's it. No line of credit. I'm financing the goods. I'm already, I'm on the hook for the goods right now.

Can we take a moment and call our CFO? No. Your CFO gave you the bad advice already to ask for that valuation. Dame and John did make an investment. I think the deal with the original deal is like 200 grand for like 17 and a half percent equity. I guess what a lot of viewers don't realize is that you don't actually have to take the deal, even if you accept it on the show. And then sometimes you can renegotiate the terms, which from what I understand is what happened, right? You accepted that deal on the show, but then you renegotiated the terms. Yeah, you accept the deal in good faith. It's kind of a good faith clause. you know, a big part was let's even see if the episode airs, right? Because they, they film something like 150 businesses and then they air like 100, right? So there's a 33% chance that we weren't even going to get on air. And so we told Damon or Damon told us, like, let's see if this thing comes on air and then we can talk about it because kind of no sense in doing anything if it gets cut.

And we were out fundraising at the time. And so we were like, all right, we're going to run our business as if we were never. on Shark Tank and we never got a deal and continued to fundraise over that summer. And beginning of September, we get a phone call that says your episode is going to air in three weeks on the season premiere. Get ready. Wow. So pick up the phone, call Damon.

We said, all right, well, we've got to get a deal done. And we just closed our million dollars of seed funding and basically said, look, we don't need any more cash. So, you know, can we renegotiate the deal to provide you with some upside with no kind of cash investment? And the two of us, Damon and Bombas, came to an agreement that both parties that they were pretty amicable with and set the foundation for a really, really amazing relationship that is only built over the years.

And I think, you know, both people feel really happy with what they got. out of it. All right. That episode airs. And what happens? I mean, do you see an instant spike? Yeah, our website crashed guy. And it was terrible.

I mean, that was, you know, it was like a super joyous moment and a huge moment. And then a moment filled with dread and terror. I think we were, we had a viewing party. I mean, do you remember this day of like, and just looking at each other and thinking, we've been up for the last 48 hours. We didn't sleep the night before because we were working on the website. And we were like trying to get the website ready for this massive event. We were like trying to scale up customer service people.

That's the one thing we heard was like people are like, oh, hire a bunch of temporary people to answer the phones and answer emails because like you will not be able to do this on your own. And so we didn't sleep for almost two days. We're at this like viewing party that we had put on. or like zombies, and then we're getting phone calls that the website's crashing over and over and over and over again. Yeah. It was a nightmare.

All right. So this happens. The order start coming in. And is it, I mean, at this point, what are the hires that you're making? I mean, are you thinking about, you got to come up with new designs? You've got to come up with a, do you start to kind of expand your team and designers and marketing experts and, and, and, you know, What do you start to think about in terms of expansion? Well, I think in that moment, you know, there was sort of a new floor for the business.

It's kind of the way we thought of it. We had all these new customers and we had made a lot of promises through this business, right? We promised we'd be donating a pair of socks and how do we show people the work that we're doing on the donation side? We promised a certain level of comfort and quality with our product. How do we ensure that people understand that and what we're communicating? And how do we back that up? So customer service became super important. Dave mentioned he took every customer service call for the first, you know, year plus of the

business, we would be out at a bar. He'd get a call and he'd go outside and disappear for an hour talking to a customer. But in that Shark Tank moment, we brought in a team and, you know, that was the beginning of our customer service team and our happiness guarantee. And then we realized that like we had brought somebody on to help fill that marketing gap, right? we just always wanted to surround ourselves with people that were smarter than we were about the things that we didn't know a ton about. We had our skill sets, right? Dave was a great leader, a salesperson, right?

Aaron and I could handle the creative and the design. Andrew was running the finance and operation side of things. And we just started to fill in the gaps around us. So eventually that was customer service, marketing, product design, right? And then we had a sort of like GM and PR figure. was our first employee, Emily. And this early team started to really galvanize around what we were doing and all with the same attitude of let's figure out the things that we need to do to keep building this,

to keep pushing it, to keep growing it, and be really honest about what we don't know. Yeah. I think this is an important moment to, though, interject that, you know, at a pretty high pinnacle moment. So in the first 13 months before Shark Tank, we did about $900,000 in sales, pretty organically. And then in the two months following Shark Tank,

we did $1.2 million. It sold out of every single item of product that we had leading into holiday. And we felt like we were on top of the world and we'd just close this million dollar seed round. And I think you put three people like me, Aaron, and Randy in a room, right? We're pretty optimistic, you know, growth focused.

And we were like, oh, like, let's go for it. And Andrew really became like the voice of reason from a CFO perspective and kind of, this is your brother. It's my brother. And really instilled this moment of, you know, let's focus on continuing to build a good foundationally unit economic positive business that generates profitability. And we weren't going to sacrifice profitability at the expense of growth. So because we didn't feel like we were getting the recognition or validation from the

venture community, that this might be a little bit of. of a harder road for us to go down. And I think it was also the moment where we looked at the brands and companies that we admired most, right, the Nikes, the Lulus, the underarmors, the Patagonias of the world, right? Brands that had endured the test of time over decades and decades and decades of growth. And the one consistent thing that we found in those companies that was different than our peer set of, you know, the Aways and the Warbys of the world is that they didn't grow by raising hundreds of millions of dollars of capital and trying to skyrocket the highest valuation possible in a short amount of time. They did it brick by brick slowly over time, sustained growth

year over year, over year, over year. And that was the playbook at that time that we kind of at that moment, it was a pretty pinnical moment for us to say that we're not going to try to be the biggest company as quickly as possible. We just want to be the best company and be around as long as possible. Yeah. I think you reached profitability by year three. We did. We were profitable in year one, in year two. We made a lot of capital investments in inventory mostly that, you know, because we were growing so fast that we were just like, sure, we've got to stay on top of inventory. And inventory we kind of came the cash crunch for us always, every single year heading into holiday where we do about 50% of our business, that September PO order was always very expensive because we're front

loading these costs and wouldn't really get those back until the books closed at the end of the year. So I wonder, I mean, you know, you're growing every year over year, over year, and COVID hits in 2020. And most D to C companies were freaking out. Of course, it turned out to be a good year, depending on the company, including for you guys. But before you started to see a spike in sales, were you preparing for the possibility of layoffs and of retrenching? 100%. I mean, we watched our business go from like 50% year-over-year growth in that January to a negative 12% year-over-year growth in March of that year. And I'm grateful that within a matter of weeks it had rebounded and we were back at like 30% plus year over year and then 40% and then we're like had comps that were insane.

But yeah, I don't think anybody was prepared for that moment. I actually think the biggest fear for us is that we had built this amazing incredible culture that we felt like fostered innovation and efficiency and was so collaborative. And we just built out a brand new 33,000 square foot office in Union Square, you know, millions of dollars of investment. It took over a year to build it. And then two months later, everyone's remote. And we're just like, how do we operate? How does the, you know, are people going to show up to work anymore? Are they, you know, just going to mail it in or you turn their videos off or whatever?

And probably one of the proudest moments I've ever had as a leader was we shut the office down on that Friday. And by Monday, everything was like up and running. And like people were showing up to meetings. And they were like, yeah, it was almost like rallied us. I think people were like. And this is a point actually where I think the mission comes back, right? Because it became this moment where we're like, wow, this is actually a time where, we can step up and use this other arm that is mostly used to just distribute socks.

Now, here we are as a, you know, as a platform that's helping a lot of our peer brands learn how, what it means to give in times of need. What is the ultimate, I mean, you do have investors and people who put in some seed money and you're profitable, but, you know, at some point, you either sell or you go public. So I know there's been some chatter about maybe going public. Tell me about the possibilities of selling the company or going public or, you know, something along those lines because, you know, obviously you have, you do have investors. You have some investors involved. Yeah.

I think the way we think about that is we're incredibly opportunistic. We didn't design this business from day one to say, oh, it's got to be. be X billion dollar valuation or we're going to sell it to this person or I think again in hindsight looking back by not having influence from large institutional partners early on it allowed us to really kind of make up our minds and decide that like we're just going to run a great business and if someone comes and is interested in buying us we'll talk to them and you know if it's a good fit and we feel like they'll be good stewards for the product, the brand and the mission going forward, then we'd entertain that. If not, you know, and there's an opportunity in the public

markets to kind of fortify, you know, what we've built and, you know, help us kind of build the dream that we're looking to build in the future. We'll go that route too. You know, when you think about this, you know, the partnership and you guys sort of meeting at this company and, you know, kind of batting around ideas and then coming together and building this brand that is really big, you know, and even the fact that you couldn't raise capital and all these things that happened along the way, the fact that your godfather happened to be involved in the sock business, how much of this do you think has to do with, you know, all the work that you put in the skills and that you brought to the table and how much do you attribute to luck?

So I practice stoicism and one of the great. great stoics is Seneca. And he has a quote that says, luck is when preparation meets opportunity. And so I think for me, we were very opportunistic and we were really prepared. You know, we put ourselves in a lot of these positions, right? We saw this quote and decided to do something about it. We went out and researched product, but then led us to my God, father, which that, you know, so I think a lot of certainly lock that played in part to, you know,

the moment in time in which we formed this company, um, to, you know, all the fortuitous events that have led us here, right? Yeah. You know, it is, it's a combination of course, right? That's, that's kind of the only answer. We've, we time things well, which feels, like luck, but, you know, everything that led us here personally, the two of us to that moment, the four founders to this moment to start the company. And then the things that we committed to doing and that we stood by through the years, you know, things that we've put against tough decisions and those core values Dave mentioned, like understanding what we're great at and what we need help with, being humble leaders, like really committing to doing something that benefits

our neighbors in need, all these ideas, that feels like the hard work. And then it lets you be opportunistic around some of the lucky moments and capitalize on some of the lucky moments and things like that. So it's a wild combination. And it's been a good ride because of that. That's David Heath and Randy Goldberg, co-founders of Bombus. By the way, didn't one of you guys make a promise to customers that, You would like that you wrote into your FAQs like really early on.

Can you tell me that promise? If we get to a million pairs donated, Dave wrote this in, he's promised that he would get a tattoo to celebrate. And we thought that this would take 10 years, right? And mind you, I had none at the time. So this was not like a, oh, whatever, I'll go get another tattoo. Like I had zero. Right.

None. Right. Yeah. So at about the two-year mark, we started to look at each other and we'd say, yeah, we're about to hit a million pairs donated already. And, you know, a promise is a promise. A promise is a promise, right, Dave? And yes, Dave got the tattoo. And yes, it is a B, but with two words under it, be better. It's actually their slogan. Hey, thanks so much for listening to the show this week. If you want to support it, you want to support. what we do, please spread the word or post about how I built this on social media. We really do appreciate it. This episode was produced by Carrie Thompson with music composed by Rumtin Arablui. He was edited by Andrea Bruce with research help from Sam Paulson. Our production staff also includes

J.C. Howard, Neva Grant, Casey Herman, Liz Metzger, Alex Chung, Josh Lash, Catherine Seifer, Elaine Coates, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.