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Why Lightspeed invested in Bonobos December 16, 2010

Posted by jeremyliew in apparel, bonobos, Ecommerce.

Today we’re announcing that Lightpseed and Accel are investing in Bonobos, a vertically-integrated men’s apparel etailer. Bonobos was founded in 2007 by a couple of Stanford Business school students, selling better fitting pants out of their dorm room. Initially their focus was on pants, cut for modern American men who had played sports growing up. Not the too skinny Euro cut that doesn’t work for men who had some muscle in their legs, but not the baggy and pleated looks that Brooks Brothers made the staple of American style. I am happy to say that I have a lot of their pants in my closet!

The company has since moved to the web and grown substantially, both adding product lines under their own brand (shirts, jackets, polos, shorts and sweaters), as well as carefully curating products from other brands that fit their style and aesthetic. Their growth was initially steady, but has really taken off in the last few quarters as they got a better handle on Customer Acquisition Cost versus Lifetime Value. As I’ve mentioned before, companies who understand these customer level economics can quickly reach millions in monthly revenue as they can confidently spend on marketing to grow their customer base. Our investment into Bonobos will enable them to ramp their growth rate in just this manner.

Earlier this year Lightspeed invested in Living Sociaand in Shoedazzle. Both investments were premised on the idea that making shopping fun is driving this current generation of ecommerce companies. Unsurprisingly, both companies have a primarily female customer base.

Bonobos is different. Andy Dunn, Bonobo’s CEO,  captures some of the differences between the way that men and women shop for clothes like this:

Basically, this says that for many women, style, trend and fun are the most important factors. Time and hassle is acceptable if the style, trend and fun are high enough. Shoedazzle certainly focuses on style, trend and fun.

For many men, the equation is different. They do not like to shop, but they do care about looking alright. They focus primarily on fit, but want time and hassle to be minimized. For an e-commerce website, this means that fast, free shipping and returns are important factors to drive men’s apparel sales.

Furthermore, men develop a certain loyalty to brands and retailers that have clothes that fit them. If they have confidence in a particular brand, they can make their annual shopping fast and easy, and they don’t have to cross shop from other places. Whereas the lifetime value for female clothes buyers comes from their frequent purchases driven by entertainment shopping, the lifetime value for male clothes buyers comes from the brand loyalty engendered by meeting their needs for clothes that fit, in a fast and easy buying process.

I’m very excited about our investment in Bonobos. We believe that they are the leading pureplay vertically-integrated men’s apparel etailer, and are well positioned, and well capitalized, to expand on their leadership position. In Shoedazzle, we are also investors in what we believe to be the leading pureplay vertically-integrated women’s apparel etailer as well. JCrew, Lands End and others have grown to be billion dollar businesses in the vertically-integrated catalogue led apparel space, and have transitioned well to the web, but the advantages of being a pureplay etailer will allow for very valuable new companies to emerge.

If you’d like to check them out,  grab something for work, the weekend, a party or the holidays. Use my discount code – SECRETHANDSHAKE, and get 20% off through the holidays!


1. simone - December 16, 2010

they seem to forget fat people

Senith @ MBA tutor - December 16, 2010


Probably an opportunity here. Being a niche that focuses on serving fat people is probably open still. You’ll need to do some research here!

2. simone - December 16, 2010

ah, idea: make .pdf printable paper mock-ups for clothes, so that people can try the paper model before buy.

jeremyliew - December 16, 2010

Shipping and returns are free so people can order a couple of sizes and return the ones that don’t fit

3. Senith @ MBA tutor - December 16, 2010

Congrats Jeremy and lsvp team!

They hypothesis that fit is key for men is dead on. The execution is the challenge – getting clothes to fit well for different types of ppl, managing the skus, sizes, etc. Operations really. I hope they have a process or method to execute on this.

4. Why Lightspeed Invested in Bonobos | PR Blog - December 16, 2010

[…] Reprinted from lsvp.wordpress.com […]

5. Jon - December 16, 2010

Why did Brian Spaly leave?

6. dave - December 16, 2010

its for fit people not fat!

7. hali yikama - December 19, 2010

Thanks for such an interesting article here. I must say that I have never heard about anything like that before.

8. Carl - December 29, 2010

As the CEO of a company that has made tee shirts for the big and tall market for over 20 years I can attest to the fact that it is fit, quality, and brand loyalty that makes all the difference.

Sadly, attempting to find financing for a company that markets something as boring as tee shirts in a market that caters to fat guys is next too impossible.

Congratulations to Bonobos! Stay true to your niche…with 25 years in the apparel industry I know that attempting to be everything to everybody usually ends up in disaster…

9. Heikki - December 29, 2010

Congratulations, Andy!

I love the article, but it’s a changing world – women have increasingly ditched the Fun, they value Time and lack of Hassle. PwC research shows women hate shopping almost as much as men – but they are simply more demanding. It’s prime for apparel e-commerce.

As women and Fit goes, it’s easy to quantify: 60% of returns are due to wrong size received; 15% because the “feel” of the fabric. Women look at Fit just as much as men do. And return rates at apparel e-commerce are high – 25% on average, and 40% – industry average – for trousers (Jeremy has done a great investment as Bonobos is no industry average).

Getting the fit right reduces the risk of online shopping – and risks removed, the sales grow. Bonobos has great positioning!

At Fits.me we saw how the same message – virtual fitting room – grew the sales up to 3x, while reducing return rate by 28%, on average. And that was just for menswear.

Happy New Year to all!

10. Bonobos Raises $18.5 Million. Metrosexuals Unite! | TechCrunch - August 9, 2011

[…] about this product,” he thought. (We’ve noted Liew’s fashion sense here. Go here to steal his Holiday 20% off […]

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