Daymond John said his "Shark Tank" company Bombas taught him consumers want to support companies that do more than just chase profits.
- FUBU founder Daymond John has invested in startups for the past nine seasons of "Shark Tank."
- He said 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 last decade, 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.
One of his most successful investments 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 states. Cofounder and CEO David Heath told us that the company has been profitable since 2016 and brought in "just under $50 million" in revenue in 2017.
Heath and his cofounder Randy Goldberg were inspired by apparel company Toms' "one-for-one" model, also popularized by 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 why Bombas has been successful is because "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, he advised the owner of a coconut ice cream startup to fly to their coconut suppliers and determine what the farmers need in their lives rather than just donate proceeds to a random charity.
"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 that he believes 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 believed that business should and does have a positive impact on society, and that this is also the majority point of view across gender, age, parental status, business sector, and size of employer.
John agrees, and 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 $5,000" 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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