Can Bombas Reach New Customers while Maintaining Its Social Mission?

Bombas was begun in 2013 with a double objective: to provide quality socks and contribute much-needed shoes to individuals residing in shelters. By 2021, it had actually turned into one of America’s many noticeable buy-one-give-one business, with over $250 million in yearly income and 50 million sets of socks contributed.

Initially the business needed to determine how to price its item. Socks are usually an economical product of clothes, however the creators required a rate that would permit them adequate margin to provide on their social objective. They likewise required to identify what function that objective must play in their marketing. Later on, as Bombas broadened into underclothing, tee shirts, and slippers, the business had a hard time to identify what speed of development would best enable it to reach brand-new consumers while preserving its social objective. Harvard Business School assistant teacher Elizabeth Keenan goes over the case, Bee-ing Better at Bombas

BRIAN KENNY: If you were born in between 1995 and 2010, you belong to generation Z. And that suggests that you, my buddy have take advantage of. You and your peers hold the secrets to 29 billion in purchase power and 333 billion in impact. You are digital locals and you are the most varied generation ever. And according to research study by McKinsey, you care deeply about the reality. You have high expectations of the function that organization need to play worldwide, however by a margin of 5 to one, you simply do not trust them to do it. You believe corporations are triggering many of the issues in the world today. Rather than going along, you’ve chosen to take matters into your own hands and let your digital wallet do the talking. Your commitment is booked for brand names that support social justice and financial equity, and those that return to society in significant methods. And brand name supervisors who may be listening must understand that you’re simply beginning. Today on Cold Call, we’ve welcomed Professor Elizabeth Keenan to discuss her case entitled, “Bee-ing Better at Bombas”. My name is Brian Kenny, and you’re listening to Cold Call on the HBR Presents Network. Elizabeth Keenan’s research study checks out people’ pro-social options and habits within the domains of charitable offering and ecological sustainability. Liz, thanks for joining me today.

ELIZABETH KEENAN: Thank you. Thank you for having me.

BRIAN KENNY: I need to ask, are you a consumer of Bombas?

ELIZABETH KEENAN: Indeed, I am definitely a client.

BRIAN KENNY: All. I understand I’ve spoken to numerous individuals. I informed them we were going to be having this discussion and I would state 4 out of 5 of them are Bombas clients.

ELIZABETH KEENAN: Were the majority of them here?

BRIAN KENNY: Yeah. The majority of them are here. Which may discuss it. And we’re going to discuss that a bit since they aren’t the most inexpensive. They aren’t the most affordable item to purchase.

ELIZABETH KEENAN:.

BRIAN KENNY: So, I believe that’ll be an intriguing measurement to enter into. Likewise I believe it’s so prompt provided what I sort of teased in the intro there about the significance of function in companies today and Bombas is all based around that concept. Why do not we simply dive in? I’m going to ask you to begin by informing us what’s the main concern of the case, and what’s your sales call that you utilize when you begin the case in the class?

ELIZABETH KEENAN: Bombas was established in 2013 with a commitment to 2 objectives. The very first was to develop remarkable socks, and the second was to support the homeless neighborhood. Since late 2021, which has to do with the time of the case, they had actually crossed almost 250 million in yearly earnings, had 180 workers and had actually contributed their 50 millionth set of socks.

BRIAN KENNY: Wow. That’s a lot of socks and a lot of excellent that they’re doing?

ELIZABETH KEENAN: Absolutely. Definitely. Therefore, the case, what it does is it focuses around the business’s success up until now and the speed of development that would best permit them to continue to successfully provide on the 2 objectives that they have moving on. Now, the case in fact simply debuted just recently for the very first time in class.

BRIAN KENNY: Good.

ELIZABETH KEENAN: But my sales call was, just how much would you spend for a set of socks?

BRIAN KENNY: Ah, to what we were simply going over prior to?

ELIZABETH KEENAN: Exactly. Precisely. And I asked that of numerous trainees. And while this is not the conventional substantive opening sales call concern, it was truly implied to lay the structure for getting a sense of the typical customer’s determination to spend for a set of socks. And this ultimately ended up being an introducing point for conversation, when we were considering how do we in fact rise customers’ determination to spend for socks. And typically we do that by increasing quality. It might be connected to the brand name and things of that sort, however in this case they were offering something more and they were offering a social advantage. Therefore that enabled us to return to this discussion about methods of increasing determination to pay in this area.

BRIAN KENNY: Yeah, that’s remarkable. How did you become aware of Bombas and what made you choose to compose the case? How does it associate with the important things that you think of as a scholar?

ELIZABETH KEENAN: So, I initially became aware of Bombas really from among my trainees in class, numerous years back had actually discussed that Bombas, they had actually worked for Bombas and comprehended what my interests were and believed that I would actually like this business. My research study, as you discussed, revolves around pro-social customer habits, and a lot of that centers on how nonprofits can best engage donors to offer to them charitably. I’ve progressively ended up being interested in looking at how companies will utilize pro-social elements of their business to draw in customers in. I’m looking at the pro-social customer, however likewise now pro-social business and the actions they take to draw in those customers.

BRIAN KENNY: Yeah, and perhaps not only customers nowadays, however workers too. I wish to discuss that a bit later on, and once again, with the mindsets of gen Z and millennials in mind. Possibly you can begin for individuals who aren’t familiar with Bombas, now they understand they offer socks, however how was the business developed and why did they land on socks as the main item?

ELIZABETH KEENAN: So, among the creators, David Heath had in fact stumbled upon an infographic that showed the primary asked for product from homeless shelters is socks. And curious to understand to what level that held true, he really headed out and purchased some socks himself and began handing them out to those in requirement. And simply the response alone of someone taking a look at him and stating, how did you understand, how did you understand this is precisely what I required, persuaded him that this was an essential area. And after that he went and shared this with a buddy and a coworker, Randy Goldberg. And together they began doing some research study into why socks are so restricted in homeless shelters and whatnot. And they collected some info around the truth that typically utilized socks are not contributed to homeless shelters, or accepted for health factors. And socks, truly themselves do not last long, and eventually we have a hole in the heel or the toe and they break down. Therefore it was clear that there was a space and a requirement because area. And through that research study, they likewise encountered the understanding that there was space for development in socks.

BRIAN KENNY: And so, this belongs to what the case determines as the “purchase one, offer one” design. And possibly you can talk a bit about that. I really had not heard that term till I check out the case. Perhaps our listeners would desire to hear a little bit more about other examples of companies that have actually embraced this design.

ELIZABETH KEENAN: Absolutely. Yeah– so, the “purchase one, offer one” design which Bombas refers to as one bought, one contributed is a design in which business will offer items, and for every item they offer, they contribute one of those products to someone in requirement or a company in requirement. The 2 that truly enter your mind beyond Bombas that are quite popular in this area would be TOMS Shoes Company and Warby Parker. And they were the leaders in this area, and in reality, a few of the motivation for the Bombas group to begin their service. And various business have actually participated in this area. Some in fact will contribute the equivalent product. In other cases, they contribute other products that aren’t precisely equivalent. In the case of TOMS, Warby and even Bombas, the products for the a lot of part from the start, at least had actually been the exact same item they were offering, they would likewise then contribute.

BRIAN KENNY: We’ve had a great deal of cases on the program in the previous about business that have actually embraced a function. They currently had a company, they were offering an item or a service, and after that they embraced a function as part of it and a number of them have actually done an excellent task now offering that function. These companies are various since they were established for the function and it’s intrinsic to their DNA?

ELIZABETH KEENAN: Absolutely. And it’s really why this case was essential to me, both from the viewpoint of the professional sociology of services, however likewise for a course that I was going to be developing, which I wound up mentor just recently, which was on purpose-driven marketing. And what we did is we had a look at companies that are both attempting to do well and do proficient at the exact same time. And in a few of those cases, these are companies that from the ground up began based upon function. It’s part of the DNA, as you describe, and from the ground up, that’s what they were based upon, whereas, other companies enter function later on in time. They might embrace it gradually and due in part to any variety of pressures, whether external or internal that drive the requirement for focusing in on a mission-driven function. In the case of Bombas, yes undoubtedly, it’s precisely how they begin.

BRIAN KENNY: Let’s talk a bit more about their socks, which we’ve currently acknowledged are not the least costly socks you can purchase. It’s curious regarding why they would embrace a method that needed them to offer a high priced item. You would believe that would in some way restrict their capability to grow a market. Possibly you can talk a little bit about why quality mattered in this case.

ELIZABETH KEENAN: So, socks, typically, the commoditized socks that we think about that we purchase multi-packs sometimes, they’re choosing about a dollar to $2 a set. And Bombas at the time of the case was offering sets for approximately $1250, which is a lot.

BRIAN KENNY: I do not believe I’ve ever paid that much for a set of socks.

ELIZABETH KEENAN: I had not, however I have now. As I discussed previously, no one had actually innovated in the area of socks for rather a long time. There is the efficiency sock market, which includes professional athletes, runners hikers, which’s the marketplace where they’re costing upwards of $20 a set. Therefore they took a look at that market and understood a few of those developments might really be utilized and moved to these daily socks that we use. That would consist of things like wetness wicking homes, cushioned heels, smooth toe, arch assistance, and so on. And they questioned possibly if we might embed these developments into these daily socks, we might charge a greater cost. Which greater cost enables us to do that. It likewise might be set up in such a method that we are pricing near or listed below the rate of efficiency socks, however permit us adequate margin to really provide on the objective of contributing socks. Therefore they seemed like they might play because area a bit. And something that was truly intriguing that they stated when we were talking was that it wasn’t like they were attempting to considerably increase the expense of a cars and truck, this is something that’s closer to the expense of a cup of coffee or lower. Therefore remarkable boosts in rate for that kind of item, they felt would work much better than if they were operating in an area where the base rate of that item had actually begun rather high currently.

BRIAN KENNY: How much, if any, of their inspiration here likewise was to create a sock that could withstand the conditions that homeless individuals experience?

ELIZABETH KEENAN: It absolutely contributed. They wished to offer socks with those residential or commercial properties. They likewise desired extremely much to contribute socks with those exact same residential or commercial properties. When they initially began to check out how to even contribute, they did find out that a few of the functions of socks that would be practical would be enhanced heel, the wetness wicking residential or commercial properties, antimicrobial functions, and things of that sort to attend to the extremely particular requirements that this population has.

BRIAN KENNY: So, what was their go to market technique with a $1250 set of socks? How did they get individuals to even take that leap?

ELIZABETH KEENAN: Well, they initially checked the concept out by putting a crowdfunding project together in 2013, with the objective of raising about $15,000, and rather they raised $140,000

BRIAN KENNY: Wow.

ELIZABETH KEENAN: So, that minute, I believe spoke with them and made them recognize we might be onto something here. And when they raised that cash, they began to develop their very first sets of socks and offer them. And by the middle of 2014, they had actually currently offered $450,000 worth of socks. And at that point they got attention provided the development and they were welcomed to get involved on Shark Tank

BRIAN KENNY: Aha. I do not understand if that’s an advantage or a bad thing. I think in this case, it’s an advantage.

ELIZABETH KEENAN: In this case, it appears to have actually been a good idea. Daymond John, among the sharks, wound up purchasing them. And after that at that point they began to grow increasingly more. Now, the majority of the sales for them have actually been direct to customer. They’ve focused in on the E-commerce area. After some of that early development, they did begin to engage in short-term collaborations with some merchants and ultimately they produced more long-lasting relationships with a few of those sellers the bulk of the sales still are through their E-commerce website. The other part of their method remained in regards to their marketing. Particularly, they began with Facebook advertisements where they were including mainly photos of their socks. Comprehending that this is a grab and go kind of item, they wished to get photos of these socks, the colors, and reveal the range of socks that they needed to offer and get those images out front. Once they might scale on marketing, they began to introduce into not simply social networks, however then they entered radio and podcast. And after a while, when they might broaden marketing even further, that’s when they entered into print and commercials.

BRIAN KENNY: So, they’re constantly promoting the socks themselves, the characteristics of the socks. Do they likewise speak about the objective and the function of the business, or is that something that they let individuals find?

ELIZABETH KEENAN: That’s a truly excellent concern. At first all of their advertisements quite much were item focused, provided that they had actually required individuals to end up being conscious of the truth that they had socks and that’s what they were offering. It takes longer to inform the objective side of the story and the objective side of the business. Therefore they didn’t truly begin to concentrate on sharing that story with the general public up until around 2016, when they produced videos. That was around the time that they had actually lastly contributed their one millionth set of socks. And at that point they developed a video about their objective and the starting of Bombas and how it began. And at each significant turning point, they’ve continued to make these movies. They publish them on YouTube and on Facebook. And after that now that they are settled into a method, they focus mainly item type marketing for their social networks. And after that for the print and for industrial, they concentrate on talking to the objective together with the item.

BRIAN KENNY: And so, returning to gen Z for a minute, that to me simply sounds so genuine. They’re not leading with the function, they’re leading with the item, however the function is still such a fundamental part of what they’re doing, however they do not thump their chest about it.

ELIZABETH KEENAN: No, they do not. They do not thump their chest about it. Really, I’ve, I’ve spoken to a number of Bombas sock users simply like you have, and surprisingly enough, numerous of them didn’t in fact even understand that they contributed socks. And a variety of the trainees in the class that I had actually learnt more about this element of their service, due to the fact that they check out the case however, they had actually likewise currently owned Bombas socks.

BRIAN KENNY: Yeah. And contrast that then with TOMS and the manner in which they went to market, it seemed like TOMS was far more out front about what they were doing. And I do not state that in a pejorative method, I simply state it’s a various method.

ELIZABETH KEENAN: It is, it is a various technique. And I believe either approach might work, particularly when you begin with this double objective. I believe it’s a lot more difficult to begin marketing the social side of your organization later on.

BRIAN KENNY:. They’ve contributed like millions of socks.

ELIZABETH KEENAN: 50 million.

BRIAN KENNY: 50 million sets of socks, which is remarkable. How do you even start to scale an effort like that? How do you get the socks into the hands of individuals who require them?

ELIZABETH KEENAN: It’s an amusing story. When they lastly had socks to contribute, they recognized we do not understand how to contribute these socks. Therefore, they actually Googled “how to contribute socks”. And what turned up was a company called Hannah’s Socks and Hannah’s Socks contributed socks. And they connected and they called Hannah’s Socks and asked, “Do you desire some socks?” And they stated, “Wait a minute, you’re simply providing us socks free of charge?” And they stated, “Yes.” Therefore, that was among their very first providing partners, however it wasn’t simply a providing partner, it ended up being a partner and they wound up sharing understanding, essential understanding about the area of homelessness and the requirement for products like socks and what elements and functions of those socks would be essential. Therefore there’s partners and this appears to be a style throughout all of the relationships they have with their providing partners is that these partners frequently end up being partners in assisting them much better comprehend the area that they’re attempting to serve.

BRIAN KENNY: Yeah. They’re getting all this up and running, they’re figuring out how to get the socks in the hands of the individuals that require them, and then COVID strikes, the pandemic hits. And clearly that effects everyone throughout the board, the homeless individuals and individuals at Bombas and every location else. What sort of an effect does that have on them and how do they pivot because area?

ELIZABETH KEENAN: Once they got in touch with Hannah’s Socks, word of mouth spread fairly rapidly, and the variety of providing partners they had actually grew to a point where they had a waiting list. They, at this moment have in 2021, 3,500 providing partners. The pandemic just improved the requirement. And what they wound up doing is acknowledging that, hello, you understand what? We really have a chance here to be a voice for these partners to assist highlight the truth that they have actually now begun to lose on contributions, they are economically having a hard time and there’s a higher requirement. We’re at a point where homelessness is increasing and access to resources, like contributions and cash have actually been reducing due to the fact that everyone is beginning to pull inward and safeguard versus this pandemic. The other thing they acknowledged is among their core proficiencies was to find out how to disperse products and products to those in requirement. Therefore a great deal of companies and other business, brand names were relying on them and stating, hello, we have stock that we wish to now contribute due to the fact that of what’s going on, however we do not understand how to do it. Therefore Bombas ended up being a resource for these other brand names to assist teach them, how do we begin to disperse products.

BRIAN KENNY: Yeah, it’s fantastic. We hear so typically, cases that are taught here, about business that begin with one proficiency and after that establish another proficiency along the method, and it produces an entire brand-new set of chances for them. This is another great example of that. You discussed previously that they had relationships with a number of sellers, however they’re still doing whatever mainly through their site and direct to customer. I’m questioning why that is. Would they not have the ability to grow far more rapidly and serve their objective in a larger method, if they remained in every shop and you could discover them anywhere?

ELIZABETH KEENAN: That is one method for development, however it might be a dangerous technique for any business. And I believe Bombas has actually acknowledged that from the start, regulated development has actually served them well. And you might see this regulated development, both in their marketing and advertising, in addition to in regards to line of product growths and extensions. Therefore, they’ve attempted to manage that development as much as possible with the vision and the objective of instead of growing the fastest, this is estimating Heath really that instead of growing the fastest, to remain in the video game the longest. Which will permit them to both offer their items and make earnings the method they require to be able to then support this objective. If they grow too rapidly, then suddenly they have a far more intricate problem, both in regards to handling item sales, in addition to now handling numerous variations of contributions to possibly countless providing partners.

BRIAN KENNY: So, let’s talk a bit about the truth that they’ve now begun to take a look at branching into other item offerings. They’ve learnt more about the socks, however there’s likewise an entire lot of other products that they are now acknowledging are seriously crucial to homeless individuals. Does that not produce an entire brand-new set of obstacles for them to deal with as they move into other line of product?

ELIZABETH KEENAN: You think of that it will definitely develop some intricacy in regards to sales and circulation, both on the selling side, the industrial side of their company, along with on the offering side of their service. What’s great about both of the products that they’ve included to sales is that the number 2 most asked for product in homeless shelters is underclothing, and the number 3 is T-shirts. Therefore all 3 of these are on your body, you put them on. It’s one of the very first sets of things you place on every day, and the story still works. You can quickly inform the story about both the requirement in homeless shelters, along with the connection of these items in regards to what you do every day.

BRIAN KENNY: And definitely those are things that individuals can’t contribute and locations that accept contributions, can’t take those as previously owned products. It’s constant with what they’ve done with socks. I think that makes a great deal of sense. Do you believe that the objective, and this would surpass Bombas, however any company that is concentrated on a function in this method, which is developed around a function, does that provide an edge in regards to bring in skill?

ELIZABETH KEENAN: Absolutely. This is a big recruiting tool. When you speak to Bombas and the personnel and the staff members at the business, you can inform this is something that they appreciate and they value deeply. Everybody is onboarded. Everyone is handed socks at the start and informed, head out and offer these away and see what that experience resembles, and they’re purchased in from the start. And a number of them remain due to the fact that of the objective. It’s an excellent location to work. The culture and the neighborhood shows the great they’re doing, and it shows within what they’re doing. And in reality, the name Bombas is Latin for bees, and it’s beehives and bees interact in performance. Which’s what this business represents.

BRIAN KENNY: I’m sorry, that describes the title a bit. I was going to ask you about the title of the case, since “Bee-ing Better at Bombas,” you spelled it with 2 Es. Now I get it. Now I get it, thank you.

BRIAN KENNY: Do you believe that this concept, this design of buy one, provide one is going to end up being more popular, especially in a world where society is anticipating a lot more of organization? Customers are searching for companies that they can feel great about purchasing from. And business like Bombas have actually discovered a method to do this that appears sustainable, where they can really succeed and do proficient at the exact same time.

ELIZABETH KEENAN: So, I’m not exactly sure that the buy one, offer one design will always end up being the standard in the area of attempting to do well and do great. I believe it’s going to be among the methods that a company can take. And I believe the parts that actually matter will be the item and whether you can in fact offer a high quality item at a cost that permits the margin for you to make the contribution and likewise to handle and manage the development of the contribution side of your organization.

BRIAN KENNY: Obviously. This has actually been a terrific discussion, Liz. I can’t let you go without asking one last concern. Which would be, what do you desire our listeners to eliminate from this case? What’s something you ‘d like them to bear in mind?

ELIZABETH KEENAN: One thing that I believe is necessary to bear in mind in this case is that the design, the buy one, offer one design is an extremely vulnerable design due to the fact that you are successfully running 2 organizations under one roofing. You have the industrial side, and after that you have the offering side. And the balance in between the 2, every modification you make to one triggers a modification in the other. Therefore, it’s a really cautious balance in between these 2. And you can in fact take advantage of both to assist the other. Therefore, one modification to the business side will assist you to construct and grow your providing side and vice versa. Now it appears to be that having a social function, whether it’s part of a buy one, offer one design or other is ending up being table stakes nowadays. Therefore, what will end up being crucial is not a lot the distinction or the claim to this type of a design, however rather the care with which you carry out that design and the credibility with which you approach it. The other thing that I believe is necessary for listeners to remove is that Bombas socks are rather comfy. And as soon as you put that set on, it’s actually difficult to really begin placing on any of your other socks. Every time I open my drawer of socks, I look. I have 3 sets and I’m continuously cleaning them since I desire them offered. And the one day when I have not done all of my laundry and they’re not there, I am really unfortunate.

BRIAN KENNY: They feel great. And you can feel great about putting them on. That’s a win-win.

ELIZABETH KEENAN:.

BRIAN KENNY: Elizabeth Keenan, thank you a lot for joining me on Cold Call.

ELIZABETH KEENAN: Thank you for having me. This was fantastic.

BRIAN KENNY: If you take pleasure in Cold Call you may likewise like our other podcasts: After Hours, Climate Rising, Skydeck, and Managing the Future of Work Discover them on Apple Podcasts or any place you listen. Make certain to rate and evaluate us on any podcast platform where you listen. If you have any ideas or simply wish to state hey there, we wish to speak with you. Email us at coldcall@hbs.edu Thanks once again for joining us. I’m your host, Brian Kenny, and you’ve been listening to Cold Call, a main podcast of Harvard Business School, gave you by the HBR Presents network.