- The Fubu founder Daymond John has invested in startups for the past nine seasons of “Shark Tank.”
- He says the experience has taught him that today’s consumer demands companies have a positive societal impact.
- The CEO of one of the companies he’s invested in, Bombas, says the movement was started by millennials but transcends age demographics.
- This post is part of Business Insider’s ongoing series on Better Capitalism.
After building a portfolio of startups over the past decade, the Fubu founder and “Shark Tank” investor Daymond John has found that his most successful investments have a positive impact on society. Beyond the obvious use of influence for good, it’s simply good business.
“Nowadays you shouldn’t have a company that is not contributing in some fashion or form or sense to a cause, because the people today who buy a product, they want to know what have you done for somebody else lately,” John told Business Insider in 2017.
John’s most successful “Shark Tank” investment has been in Bombas socks, a New York-based company founded in 2013 that donates one pair of socks for every pair purchased to one of 1,100 homeless shelters across all 50 US states. Bombas’ cofounder and CEO, David Heath, told us that the company had been profitable since 2016 and brought in “just under $US50 million” in revenue in 2017.
Heath and his cofounder Randy Goldberg were inspired by the apparel company Toms‘ “one-for-one” model, also popularised by the eyeglass maker Warby Parker, but began with the charitable component and moved on to a business next. That is, they learned that American homeless shelters’ most requested item was a pair of socks, and they decided that building a premium sock company around this could alleviate the problem.
Heath said a main reason Bombas had been successful was that “it comes down to authenticity.” If you force a societal-good aspect of your growing, private business, he said, consumers will see it as a cynical marketing play. It’s why, he said, rather than just donate proceeds to a random charity, he advised the owner of a coconut-ice-cream startup to fly to the startup’s coconut suppliers and determine what the farmers needed in their lives.
“Find something that means something to you as the founders,” Heath said. “That will then permeate the rest of the company.”
When the company scales, he explained, the social aspect will be able to grow alongside it.
Heath said he believed that millennials pioneered the movement to incorporate charitable acts into consumerism but that surveys he’s conducted have shown his Bombas customers demand this regardless of their age.
This is supported by a 2017 survey from Deloitte, which found that 76% of millennials surveyed thought business should and does have a positive impact on society and that this was also the majority point of view across gender, age, parental status, business sector, and size of employer.
John agrees, and he attributes it to the combination of transparency and choice that the internet has fostered, with the maturation of millennials into society’s most influential consumers.
“At the end of the year, you don’t have to give $US5,000” to charity, John told us in a recent interview. “You can say, ‘Every item on my body has given during the course of the year, and I keep giving.'”
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