Bonobos Inc.

In April 2008, Brian Spaly, founder and chairman of Bonobos Inc., a men’s pants company, began a 6 mile run around Central Park in New York City. As he passed the reservoir, he thought about how tense the last six weeks had been at the company. On one hand, the outlook was very positive. Bonobos had reached a $1 million revenue run rate – an important milestone for the company. Yet three recent challenges had taken up a substantial amount of management time and focus – energy that he would rather direct at delighting his customers. First, a “star” employee had begun underperforming and needed to be given some tough feedback. Secondly, the new customer service representative had turned out to be a hiring mistake and needed to be fired. Lastly, Andy Dunn, the company’s CEO, had recently purchased an online property for the company without fully disclosing the details to Spaly and getting his approval ahead of time. The third situation was particularly difficult since, in addition to being colleagues, the two men were close friends and former Stanford Business School roommates. Spaly wanted to preserve their friendship and knew that working together was bound to put a strain on them. Indeed, this was a major reason why he had agreed to a more generous equity package for Dunn than he would have for anyone else. Nonetheless, for the sake of the company and its shareholders, he also needed to have full confidence and trust in the CEO.