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By Stephen Kurczy
When David Heath advises entrepreneurs to get close to their product, he is speaking from personal experience.
Before officially launching the apparel brand Bombas in 2013, Heath walked around New York City carrying a backpack of prototype socks thathe handed out to almost everyone he encountered, including the homeless community, which, he considered his target audience. This hands-on interaction gave Heath helpful insights and direct feedback that he took into consideration when designing the perfect sock.
Sticking close to your customers is essential for maintaining a mission-focused work culture, Heath told a recent gathering at the Business School. He still personally gives out socks to the homeless during charity events, with participation strongly encouraged among all employees. Bombas holds up to 15 giving events monthly, including serving breakfast at shelters and delivering late-night soups in winter.
“We put a ton of emphasis on company culture,” Heath told the Business and Law students in the audience. “The people at our organization really, really live what we do. ... They come into work every day knowing that they’re fighting for something because they’ve made relationships out in the community and they could see the direct impact.”
Part of a recent crop of for-profit charitable organizations that pledge to give away their product each time they make a sale, New York-based Bombas has donated more than 25 million socks to homeless shelters. Along the way, annual sales have surged beyond $100 million, with year-over-year growth around 100 percent for what has been called the “most high-quality, comfortable pair known to man.”
Heath’s campus visit was part of the Reuben Mark Organizational Leadership Series, a prominent speaker series under the Reuben Mark Initiative for Organizational Character and Leadership, which leverages the intellectual capital of the Business and Law schools to teach leadership skills for optimizing organizational culture. Past speakers who highlighted leadership styles that positively influence and enhance their organization’s workplace culture have included Tim Murphy, the general counsel of Mastercard; Collette Smith, the first African American female coach in the NFL; and Bruce Sewell, the former general counsel of Apple.
Heath, who studied business as an undergraduate at Babson College, got the idea for Bombas in 2011 when he read that socks were the most-requested clothing item in U.S. homeless shelters. At that time, the start-up footwear company Toms (founded in 2006) was promising to donate a pair of shoes for every pair sold, a model adopted by Warby Parker when the eyeglasses-maker launched in 2010. Heath figured it could also work for socks.
Bombas crowdfunded $145,000 in 2013, then raised another $1 million in 2014 from friends and family. That same year, Heath struck a $200,000 investment with Daymond John of Shark Tank. Bombas later raised another $3 million in Series A funding. Within its first two and a half years of business, Bombas sold (and donated) 1 million pairs of socks; the company surpassed 25 million donations late last year. Adding to the company’s social appeal, in 2017, Bombas became a Certified B Corporation, a designation given to companies that meet high standards for sustainability, income equality, and community impact.
“Bombas is a pretty surprising, disruptive company,” said Sam Goodman ‘21, who attended Heath’s presentation and works in advertising sales at Snapchat, where Bombas is a client. Heath’s emphasis on sustainable growth was refreshing,” Goodman added.
“Research suggests millennials and Generation Z consumers really value the fact that companies have a social mission,” said Silvia Bellezza, the Gantcher Associate Professor of Business in Marketing, who led the discussion with Heath. Among MBAs, moreover, Bellezza has noticed a fascination with direct-to-consumer business models; both Columbia Business School and Harvard Business School have developed case studies on online retailer Casper Sleep’s disruption of the stodgy mattress market. “Entrepreneurs that disrupt the way an industry works, they are the heroes of many MBAs,” Bellezza said.
Bellezza’s own research helps to explain the cultural success of companies such as Bombas. She has a working paper that demonstrates consumers are better off when they pay more for a quality product than when they spend the same amount of money for many poorer quality products, which is also the argument Bombas is making with premium socks starting at $12 a pair. Bellezza also published a paper that demonstrates how nonconforming clothing items – such as a unique pair of socks – signal higher social status.
As with any start-up, Heath acknowledged some challenges over the past six years. At one point, Bombas fairly dependent on Facebook for marketing, which became a problem when the social media juggernaut shifted its algorithm in a way that hurt the consumer cost per acquisition – a lesson about the need to diversify marketing channels. They’ve also overcome obstacles in maintaining sufficient inventory. One year, Bombas so under-projected holiday sales that the company had to refund more than 1 million customer orders that couldn’t be fulfilled on time.
Another aspect to the learning curve was figuring out how to design a sock that is most helpful to the homeless community. Initially, Bombas donated the same socks it sold. But the homeless population kept requesting socks in darker colors, which the company’s charity partners explained was because of a preference for socks that wouldn’t show wear. Bombas tweaked the product to reflect that color preference, along with adding features like an antimicrobial treatment and reinforced seams.
In an effort to better measure the social impact of donating socks, Bombas is collecting more quantitative data to determine how communities benefit from its donations. Anecdotally, Heath already knows Bombas is making a difference. By giving socks to a homeless shelter in North Carolina – one of more than 3,000 partners nationwide – the company was able to help the shelter save about $30,000 that was used to send two youths to community college, he said.
Bombas is now expanding into channels beyond socks, including t-shirts, and is also looking into opening retail outlets in the future. To keep up with demand, Bombas nearly tripled its headcount over the past year to 120 employees. Out of the 80 new hires, only four people have left, a low rate of turnover that Heath credits to the company’s strong social mission.
“We attract the right types of people who want to be a part of something that is bigger than just simply showing up to collect a paycheck,” Heath said.