Bombas was started in 2013 with a dual mission: to deliver quality socks and donate much-needed footwear to people living in shelters. By 2021, it had become one of America’s most visible buy-one-give-one companies, with over $250 million in annual revenue and 50 million pairs of socks donated.
Initially the company had to figure out how to price its product. Socks are typically an inexpensive item of clothing, but the founders needed a price that would allow them enough margin to deliver on their social mission. They also needed to determine what role that mission should play in their marketing. Later, as Bombas expanded into underwear, t-shirts, and slippers, the company struggled to determine what pace of growth would best allow it to reach new customers while maintaining its social mission. Harvard Business School assistant professor Elizabeth Keenan discusses the case, Bee-ing Better at Bombas.
BRIAN KENNY: If you were born between 1995 and 2010, you are a member of generation Z. And that means that you, my friend have leverage. You and your peers hold the keys to 29 billion in purchase power and 333 billion in influence. You are digital natives and you are the most diverse generation ever. And according to research by McKinsey, you care deeply about the truth. You have high expectations of the role that business should play in the world, but by a margin of five to one, you just don’t trust them to do it. In fact, you think corporations are causing most of the problems in the world today. But rather than going along, you’ve decided to take matters into your own hands and let your digital wallet do the talking. Your loyalty is reserved for brands that support social justice and economic equity, and those that give back to society in meaningful ways. And brand managers who might be listening should know that you’re just getting started. Today on Cold Call, we’ve invited 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 explores individuals’ pro-social choices and behaviors within the domains of charitable giving and environmental sustainability. Liz, thanks for joining me today.
ELIZABETH KEENAN: Thank you. Thank you for having me.
BRIAN KENNY: I have to ask, are you a customer of Bombas?
ELIZABETH KEENAN: Indeed, I am absolutely a customer.
BRIAN KENNY: All right. I know I’ve talked to several people. I told them we were going to be having this conversation and I would say four out of five of them are Bombas customers.
ELIZABETH KEENAN: Were most of them here?
BRIAN KENNY: Yeah. Most of them are here. And that might explain it. And we’re going to talk about that a little bit because they aren’t the cheapest. They aren’t the most inexpensive product to buy.
ELIZABETH KEENAN: Right.
BRIAN KENNY: So, I think that’ll be an interesting dimension to get into. But also I think it’s so timely given what I sort of teased in the introduction there about the importance of purpose in organizations today and Bombas is all based around that idea. So why don’t we just dive in? I’m going to ask you to start by telling us what’s the central issue of the case, and what’s your cold call that you use when you start the case in the classroom?
ELIZABETH KEENAN: Bombas was founded in 2013 with a dedication to two goals. The first was to create superior socks, and the second was to support the homeless community. As of late 2021, which is about the time of the case, they had crossed nearly 250 million in annual revenue, had 180 employees and had donated their 50 millionth pair of socks.
BRIAN KENNY: Wow. That’s a lot of socks and a lot of good that they’re doing, right?
ELIZABETH KEENAN: Absolutely. Absolutely. And so, the case, what it does is it centers around the company’s success so far and the pace of growth that would best allow them to continue to effectively deliver on the two missions that they have moving forward. Now, the case actually just debuted recently for the first time in class.
BRIAN KENNY: Good.
ELIZABETH KEENAN: But my cold call was, how much would you pay for a pair of socks?
BRIAN KENNY: Ah, to what we were just discussing before?
ELIZABETH KEENAN: Exactly. Exactly. And I asked that of several students. And while this is not the traditional substantive opening cold call question, it was really meant to lay the foundation for getting a sense of the average consumer’s willingness to pay for a pair of socks. And this eventually became a launching point for discussion, when we were thinking about how do we actually push up consumers’ willingness to pay for socks. And traditionally we do that by increasing quality. It could be related to the brand and things of that sort, but in this case they were selling something more and they were selling a social benefit. And so that allowed us to get back to this conversation about ways of increasing willingness to pay in this space.
BRIAN KENNY: Yeah, that’s awesome. How did you hear about Bombas and what made you decide to write the case? How does it relate to the things that you think about as a scholar?
ELIZABETH KEENAN: So, I first heard about Bombas actually from one of my students in class, several years back had mentioned that Bombas, they had worked for Bombas and understood what my interests were and thought that I would really like this company. So, my research, as you mentioned, revolves around pro-social consumer behavior, and a lot of that centers on how nonprofits can best engage donors to give to them charitably. But I’ve increasingly become interested in looking at how firms will use pro-social aspects of their companies to attract consumers in. So I’m looking at the pro-social consumer, but also now pro-social companies and the actions they take to attract those consumers.
BRIAN KENNY: Yeah, and maybe not only consumers these days, but employees too. I want to talk about that a little bit later, and again, with the attitudes of gen Z and millennials in mind. But maybe you can start for people who aren’t familiar with Bombas, now they know they sell socks, but how was the company created and why did they land on socks as the central product?
ELIZABETH KEENAN: So, one of the founders, David Heath had actually come across an infographic that indicated the number one requested item from homeless shelters is socks. And curious to know to what extent that was true, he actually went out and bought some socks himself and started handing them out to those in need. And just the reaction alone of somebody looking at him and saying, how did you know, how did you know this is exactly what I needed, convinced him that this was an important space. And then he went and shared this with a friend and a colleague, Randy Goldberg. And together they started doing some research into why socks are so limited in homeless shelters and whatnot. And they gathered some information around the fact that often used socks are not donated to homeless shelters, or accepted for hygiene reasons. And socks, really themselves don’t last very long, and sooner or later we have a hole in the heel or the toe and they fall apart. And so it was clear that there was a gap and a need in that space. And through that research, they also came across the understanding that there was room for innovation in socks.
BRIAN KENNY: And so, this is part of what the case identifies as the “buy one, give one” model. And maybe you can talk a little bit about that. I actually hadn’t heard that term until I read the case. So maybe our listeners would want to hear a little bit more about other examples of firms that have adopted this model.
ELIZABETH KEENAN: Absolutely. So yeah – so, the “buy one, give one” model which Bombas refers to as one purchased, one donated is a model in which companies will sell products, and for every product they sell, they donate one of those items to somebody in need or an organization in need. The two that really come to mind beyond Bombas that are pretty well known in this space would be TOMS Shoes Company and Warby Parker. And they were the leaders in this space, and in fact, some of the inspiration for the Bombas team to start their business. And many different companies have engaged in this space. Some actually will donate the comparable item. In other cases, they donate other items that aren’t exactly comparable. But in the case of TOMS, Warby and even Bombas, the items for the most part from the beginning, at least had been the same product they were selling, they would also then donate.
BRIAN KENNY: We’ve had a lot of cases on the show in the past about companies that have adopted a purpose. They already had a firm, they were selling a product or a service, and then they adopted a purpose as part of it and many of them have done a great job now providing for that purpose. But these firms are different because they were founded for the purpose and it’s intrinsic to their DNA, right?
ELIZABETH KEENAN: Absolutely. And it’s actually why this case was important to me, both from the perspective of the pro sociology of businesses, but also for a course that I was going to be building, which I ended up teaching recently, which was on purpose-driven marketing. And what we did is we took a look at firms that are both trying to do well and do good at the same time. And in some of those cases, these are organizations that from the ground up started based on purpose. It’s part of the DNA, as you explain, and from the ground up, that’s what they were based on, whereas, other organizations come into purpose later in time. They may adopt it over time and due in part to any number of pressures, whether external or internal that drive the need for focusing in on a mission-driven purpose. But in the case of Bombas, yes indeed, it’s exactly how they start.
BRIAN KENNY: Let’s talk a little bit more about their socks, which we’ve already acknowledged are not the least expensive socks you can buy. It’s curious as to why they would adopt an approach that required them to sell a high priced product. You would think that would somehow limit their ability to grow a market. But maybe you can talk a little bit about why quality mattered in this case.
ELIZABETH KEENAN: So, socks, generally, the commoditized socks that we think of that we buy multi-packs at times, they’re going for about a dollar to $2 a pair. And Bombas at the time of the case was selling pairs for an average of $12.50, which is a lot.
BRIAN KENNY: I don’t think I’ve ever paid that much for a pair of socks.
ELIZABETH KEENAN: I hadn’t, but I have now. As I mentioned earlier, nobody had innovated in the space of socks for quite some time. There is the performance sock market, which involves athletes, runners hikers, and that’s the market where they’re selling for upwards of $20 a pair. And so they looked at that market and realized some of those innovations could actually be used and transferred to these everyday socks that we wear. That would include things like moisture wicking properties, padded heels, seamless toe, arch support, and so on. And they wondered maybe if we could embed these innovations into these everyday socks, we could charge a higher price. And that higher price allows us to do that. It also could be set up in such a way that we are pricing near or below the price of performance socks, but allow us enough margin to actually deliver on the mission of donating socks as well. And so they felt like they could play in that space a little bit. And one thing that was really interesting that they said when we were talking was that it wasn’t like they were trying to dramatically increase the cost of a car, this is something that’s closer to the cost of a cup of coffee or lower. And so dramatic increases in price for that type of product, they felt would work better than if they were working in a space where the base price of that product had started quite high already.
BRIAN KENNY: How much, if any, of their motivation here also was to design a sock that could stand up against the conditions that homeless people encounter?
ELIZABETH KEENAN: It definitely played a role. They wanted to sell socks with those properties. However, they also wanted very much to donate socks with those same properties. When they first started to explore how to even donate, they did learn that some of the features of socks that would be helpful would be reinforced heel, the moisture wicking properties, antimicrobial features, and things of that sort to address the very specific needs that this population has.
BRIAN KENNY: So, what was their go to market strategy with a $12.50 pair of socks? How did they get people to even take that leap?
ELIZABETH KEENAN: Well, they first tested the idea out by putting a crowdfunding campaign together in 2013, with the goal of raising about $15,000, and instead they raised $140,000.
BRIAN KENNY: Wow.
ELIZABETH KEENAN: So, that moment, I think spoke to them and made them realize we may be onto something here. And once they raised that money, they started to create their first pairs of socks and sell them. And by the middle of 2014, they had already sold $450,000 worth of socks. And at that point they gained attention given the growth and they were invited to participate on Shark Tank.
BRIAN KENNY: Aha. I don’t know if that’s a good thing or a bad thing. I guess in this case, it’s a good thing.
ELIZABETH KEENAN: In this case, it seems to have been a good thing. Daymond John, one of the sharks, ended up investing in them. And then at that point they started to grow more and more. Now, most of the sales for them have been direct to consumer. So they’ve focused in on the E-commerce space. However, after some of that early growth, they did start to engage in short-term partnerships with some retailers and eventually they created more long-term relationships with a few of those retailers though the bulk of the sales still are through their E-commerce site. The other part of their strategy was in terms of their marketing. Specifically, they started with Facebook ads where they were featuring primarily pictures of their socks. Understanding that this is a grab and go type of product, they wanted to get pictures of these socks, the colors, and show the variety of socks that they had to sell and get those images out front. Once they could scale on advertising, they started to launch into not just social media, but then they got into radio and podcast. And after a while, once they could expand advertising even further, that’s when they got into print and commercials.
BRIAN KENNY: So, they’re always promoting the socks themselves, the attributes of the socks. Do they also talk about the mission and the purpose of the company, or is that something that they let people discover?
ELIZABETH KEENAN: That’s a really good question. So initially all of their ads pretty much were product focused, given that they had needed people to become aware of the fact that they had socks and that’s what they were selling. It takes longer to tell the mission side of the story and the mission side of the company. And so they didn’t really start to focus on sharing that story with the public until around 2016, when they created videos. In fact, that was around the time that they had finally donated their one millionth pair of socks. And at that point they created a video about their mission and the founding of Bombas and how it started. And at each major milestone, they’ve continued to make these films. They post them on YouTube and on Facebook. And then now that they are settled into a strategy, they focus primarily product type advertising for their social media. And then for the print and for commercial, they focus on speaking to the mission along with the product.
BRIAN KENNY: And so, going back to gen Z for a minute, that to me just sounds so authentic. They’re not leading with the purpose, they’re leading with the product, but the purpose is still such an important part of what they’re doing, but they don’t thump their chest about it.
ELIZABETH KEENAN: No, they don’t. They don’t thump their chest about it. In fact, actually, I’ve, I’ve spoken to a number of Bombas sock wearers just like you have, and interestingly enough, many of them didn’t actually even know that they donated socks. And a number of the students in the class that I had learned about this aspect of their business, because they read the case though, they had also already owned Bombas socks.
BRIAN KENNY: Yeah. And contrast that then with TOMS and the way that they went to market, it felt like TOMS was much more out front about what they were doing. And I don’t say that in a pejorative way, I just say it’s a different approach.
ELIZABETH KEENAN: It is, it is a different approach. And I think either approach could work, especially when you start with this dual mission. I think it’s a lot harder to start marketing the social side of your business later.
BRIAN KENNY: Right. So they’ve donated like millions of socks.
ELIZABETH KEENAN: 50 million.
BRIAN KENNY: 50 million pairs of socks, which is amazing. How do you even begin to scale an effort like that? How do you get the socks into the hands of the people who need them?
ELIZABETH KEENAN: It’s a funny story. When they finally had socks to donate, they realized we don’t know how to donate these socks. And so, they literally Googled “how to donate socks”. And what popped up was an organization called Hannah’s Socks and Hannah’s Socks donated socks. And they reached out and they called Hannah’s Socks and asked, “Do you want some socks?” And they said, “Wait a minute, you’re just offering us socks for free?” And they said, “Yes.” And so, that was one of their first giving partners, but it wasn’t just a giving partner, it became a collaborator and they ended up sharing knowledge, important knowledge about the space of homelessness and the need for items like socks and what aspects and features of those socks would be important. And so there’s partners and this seems to be a theme throughout all of the relationships they have with their giving partners is that these partners often become collaborators in helping them better understand the space that they’re trying to serve.
BRIAN KENNY: Yeah. So, they’re getting all this up and running, they’re figuring out how to get the socks in the hands of the people that need them, and then COVID hits, the pandemic hits. And obviously that impacts everybody across the board, the homeless people and the people at Bombas and every place else. What kind of an impact does that have on them and how do they pivot in that space?
ELIZABETH KEENAN: Once they connected with Hannah’s Socks, word of mouth spread relatively quickly, and the number of giving partners they had grew to a point where they had a waiting list. They, at this point have in 2021, 3,500 giving partners. The pandemic only enhanced the need. And what they ended up doing is recognizing that, hey, you know what? We actually have an opportunity here to be a voice for these partners to help highlight the fact that they have now started to lose out on donations, they are financially struggling and there’s a greater need. So we’re at a point where homelessness is increasing and access to resources, like donations and money have been decreasing because everybody is starting to pull inward and protect against this pandemic. The other thing they recognized is one of their core competencies was to figure out how to distribute supplies and items to those in need. And so a lot of organizations and other companies, brands were turning to them and saying, hey, we have inventory that we want to now donate because of what’s going on, but we don’t know how to do it. And so Bombas became a resource for these other brands to help teach them, how do we start to distribute items.
BRIAN KENNY: Yeah, it’s amazing. We hear so often, cases that are taught here, about companies that start out with one competency and then develop another competency along the way, and it creates a whole new set of opportunities for them. So, this is another good example of that. You mentioned earlier that they had relationships with a couple of retailers, but they’re still doing everything primarily through their website and direct to consumer. I’m wondering why that is. Would they not be able to grow much more quickly and serve their mission in a bigger way, if they were in every store and you could find them anywhere?
ELIZABETH KEENAN: That is one way for growth, but it could be a risky approach for any company. And I think Bombas has recognized that from the beginning, controlled growth has really served them well. And you could see this controlled growth, both in their advertising and marketing, as well as in terms of product line expansions and extensions. And so, they’ve tried to control that growth as much as possible with the vision and the goal of rather than growing the fastest, this is quoting Heath actually that rather than growing the fastest, to stay in the game the longest. And that will allow them to both sell their products and earn profits the way they need to be able to then support this mission. If they grow too quickly, then all of a sudden they have a much more complex issue, both in terms of managing product sales, as well as now managing multiple versions of donations to potentially thousands of giving partners.
BRIAN KENNY: So ,let’s talk a little bit about the fact that they’ve now started to look at branching into other product offerings. They’ve learned about the socks, but there’s also a whole bunch of other items that they are now recognizing are critically important to homeless people. Does that not create a whole new set of challenges for them to face as they move into other product lines?
ELIZABETH KEENAN: You imagine that it will certainly create some complexity in terms of sales and distribution, both on the selling side, the commercial side of their business, as well as on the giving side of their business. But what’s nice about both of the items that they’ve added to sales is that the number two most requested item in homeless shelters is underwear, and the number three is T-shirts. And so all three of these are on your body, you put them on. It’s one of the first sets of things you put on every day, and the story still works. You can easily tell the story about both the need in homeless shelters, as well as the connection of these products in terms of what you do every day.
BRIAN KENNY: And certainly those are things that people can’t donate and places that accept donations, can’t take those as secondhand items. So, it’s consistent with what they’ve done with socks. I guess that makes a lot of sense. Do you think that the mission, and this would go beyond Bombas, but any firm that is focused on a purpose in this way, and that is built around a purpose, does that give them an edge in terms of attracting talent?
ELIZABETH KEENAN: Absolutely. This is a huge recruiting tool. When you talk to Bombas and the staff and the employees at the company, you can tell this is something that they care about and they value deeply. Everyone is onboarded. Everybody is handed socks at the beginning and told, go out and give these away and see what that experience is like, and they’re bought in from the beginning. And many of them stay because of the mission. It’s a great place to work. The culture and the community reflects the good work they’re doing, and it reflects inside of what they’re doing. And in fact, the name Bombas is Latin for bees, and it’s beehives and bees work together in concert. And that’s what this company represents.
BRIAN KENNY: I’m sorry, that explains the title a little bit. I was going to ask you about the title of the case, because “Bee-ing Better at Bombas,” you spelled it with two Es. So, now I get it. Now I get it, thank you.
BRIAN KENNY: Do you think that this idea, this model of buy one, give one is going to become more prominent, particularly in a world where society is expecting a lot more of business? Consumers are trying to find businesses that they can feel good about buying from. And companies like Bombas have found a way to do this that seems sustainable, where they can actually do well and do good at the same time.
ELIZABETH KEENAN: So, I’m not sure that the buy one, give one model will necessarily become the norm in the space of trying to do well and do good. I think it’s going to be one of the approaches that an organization can take. And I think the components that really matter will be the product and whether or not you can actually sell a high quality product at a price that allows the margin for you to make the donation and also to manage and control the growth of the donation side of your business.
BRIAN KENNY: Of course. So, this has been a great conversation, Liz. I can’t let you go without asking one last question. And that would be, what do you want our listeners to take away from this case? What’s one thing you’d like them to remember?
ELIZABETH KEENAN: One thing that I think is important to remember in this case is that the model, the buy one, give one model is a very fragile model because you are effectively running two businesses under one roof. You have the commercial side, and then you have the giving side. And the balance between the two, every change you make to one causes a change in the other. And so, it’s a very careful balance between these two. And you can actually leverage both to help the other. And so, one change to the commercial side will help you to build and grow your giving side and vice versa. Now it seems to be that having a social purpose, whether it’s part of a buy one, give one model or other is becoming table stakes these days. And so, what will become important is not so much the differentiation or the claim to this kind of a model, but instead the care with which you execute that model and the authenticity with which you approach it. The other thing that I think is important for listeners to take away is that Bombas socks are quite comfortable. And once you put that pair on, it’s really hard to actually start putting on any of your other socks. So, every time I open my drawer of socks, I look. I have three pairs and I’m constantly washing them because I want them available. And the one day when I haven’t done all of my laundry and they’re not there, I am very sad.
BRIAN KENNY: They feel good. And you can feel good about putting them on. So that’s a win-win.
ELIZABETH KEENAN: Indeed.
BRIAN KENNY: Elizabeth Keenan, thank you so much for joining me on Cold Call.
ELIZABETH KEENAN: Thank you for having me. This was great.
BRIAN KENNY: If you enjoy Cold Call you might also like our other podcasts: After Hours, Climate Rising, Skydeck, and Managing the Future of Work. Find them on Apple Podcasts or wherever you listen. Be sure to rate and review us on any podcast platform where you listen. If you have any suggestions or just want to say hello, we want to hear from you. Email us at coldcall@hbs.edu.Thanks again for joining us. I’m your host, Brian Kenny, and you’ve been listening to Cold Call, an official podcast of Harvard Business School, brought to you by the HBR Presents network.