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  • 12.16.10

Why Lightspeed Invested in Bonobos

Bonobos is a different kind of apparel store. Andy Dunn, Bonobo’s CEO, understands the differences between the way that men and women shop.

Bonobos

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.

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Earlier this year Lightspeed invested in Living Social and 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.

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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!

Watch 30 Second MBA videos from Bonobos CEO Andy Dunn.

Reprinted from lsvp.wordpress.com

Jeremy Liew is the Managing Director of Lightspeed Venture Partners. He invests primarily in the Internet and mobile sectors, with a particular interest in social media, commerce, gaming, financial and methods for increasing monetization. He joined Lightspeed in early 2006. Follow him on twitter @jeremysliew.

About the author

Jeremy Liew invests primarily in the Internet and mobile sectors, with a particular interest in social media, commerce, gaming, financial and methods for increasing monetization. He joined Lightspeed in early 2006.

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