There's a new acronym that Andy Dunn, CEO of Bonobos, really wants you to know: DNVB.
It stands for "digitally native vertical brand," like Bonobos itself, the 350-employee clothing retailer based in New York City that Dunn co-founded in 2007. While the acronym hardly rolls off the tongue, that lack of mellifluousness has seldom mattered in investor circles, where terms like SAAS (software as a service), ARR (annual recurring revenue), and CAC (customer acquisition costs) have taken hold and never let go.
So what is a DNVB, exactly? In back-to-back posts on Medium earlier this week, Dunn attempted to define what he views as a fast-growing category of companies. A DNVB essentially is a brand born online, like a Bonobos, Warby Parker, or Casper, Dunn writes, with a "maniacal" focus on the customer experience. And while DNVBs start online, they often extend offline in some brick-and-mortar manifestation. And unlike typical e-commerce startups, they control their own distribution.
That was the first post. In the second, Dunn created an emerging encyclopedia of DNVBs with at least $1 million in revenue. The list includes Tuft & Needle, Casper's competitor in the mattress space; Harry's and Dollar Shave Club, which sell razors; and actress Jessica Alba's Honest Company, which sells beauty supplies. So far, there are 62 companies on Dunn's list, and he invites you to comment on the post if there's a DNVB you know that ought to be added to the encyclopedia. In the day-and-a-half since the posts went live, Dunn says he's heard from 25 companies seeking inclusion on the list.
I reached out to Dunn, hoping he could answer two questions: Why did he do this, and why did he do it now?
Dunn says he'd been thinking about writing these posts dating back to a conversation he had in February with investor Peter Pham. They were talking about how "fundraising had become more difficult since the markets have cooled," Dunn says. More and more, in explaining their rejections to startups, investors were saying things like "we don't do e-commerce," he adds.
It bothered Dunn and Pham (an investor in DNVBs Dollar Shave Club and MeUndies) that so many investors conflated DNVBs with ordinary e-commerce startups. So Dunn told himself that--as soon as he got the chance--he'd post a blog clarifying the difference between DNVBs and e-commerce startups whose approach was not as brand-monogamous, customer-obsessed, or distribution-controlling. "I had to advocate that [DNVBs] are different," he says. "I had to make it more clear that the e-commerce startups are selling other people's brands." On a recent flight to the West Coast, Dunn finally got the chance to put his thoughts in writing.
Of course, Dunn has plenty of skin in this game. In addition to being the CEO of Bonobos, he is also either an investor or an adviser to nine companies in the DNVB encyclopedia: AYR, BucketFeet, Cotopaxi, Glossier, Interior Define, Koio Collective, Monica + Andy, Pinrose, and Tuft & Needle.
But then again, that's why the subject is important--and personal--to him. He believes that the DNVBs, collectively, are part of a movement that will radically reshape shopping in the next 20 years. Having guided Bonobos from its 2007 inception as a pants-only, online-only retailer to an apparel brand with 20 brick-and-mortar stores in 16 U.S. cities, Dunn has lived through the process of spending investor capital to establish a brand consumers love. To some extent, pants were to Bonobos what books were to Amazon.com: the incipient product that cultivated consumer trust, brand loyalty, and customer-acquisition strategies.
Bonobos could not have survived those early years without investor support. Dunn wants to make sure the next generation of DNVBs, including the many he is advising or investing in, has the same chance. "For these brands to have the liquidity they need," he says, "is the fundamental reason behind writing this."