Bombas – Athletic Socks
DEAL
EPISODE SUMMARY
🕓 Air Date: September 26, 2014
Asking For:
$200,000 for 5%
Investor:
Daymond John
Deal:
$200,000 for 17.50%
PRODUCT SUMMARY
Bombas offers athletic leisure socks with seven substantial improvements for enhanced comfort and design. For every pair sold, they donate a pair to those in need.
WATCH HERE
IN A RUSH?
Click these to jump to the section you want to read.
Background Story
Bombas, a company founded by David and Randy, emerged from a blend of innovative design and social responsibility. David and Randy brought unique backgrounds to the table. Their collective expertise and determination to create something extraordinary fueled the inception of Bombas. The duo spent two years immersed in research and development, committed to transforming the traditional athletic sock.
Drawing inspiration from their individual experiences, David, with a background in engineering, and Randy, a tech entrepreneur, joined forces to address the longstanding issues with athletic socks. Their breakthrough came not just from creating a superior product but from recognizing a broader societal need. During their research phase, they discovered that socks were the most requested clothing item in homeless shelters. This revelation struck a chord with the founders, leading to the establishment of Bombas’ mission: for every pair of socks sold, a pair would be donated to those in need.
The launch of Bombas in October of the previous year marked the beginning of a journey to make better socks for a better world. Beyond product innovation, the founders were driven by a deep sense of social responsibility. The combination of thoughtful design, quality materials, and a commitment to social impact set Bombas apart, making their pitch on “Shark Tank” not just about a product but about a meaningful mission.
The Product
Bombas, the brainchild of David and Randy, offers a revolutionary take on athletic leisure socks, combining comfort, innovation, and a philanthropic mission. The socks boast seven substantial improvements, making them stand out in the market.
Crafted from Peruvian Pima cotton, Bombas socks provide a superior level of comfort. The InvisiToe design eliminates the annoying seam around the toes, ensuring a smooth and irritation-free fit.
In the mid-foot area, a proprietary honeycomb arch-support system enhances support, accompanied by an ultra-comfortable performance footbed for added cushioning. At the heel, a Y-shaped stitch creates a natural cup around the foot, and ankle socks feature a blister tab for additional comfort.
The socks’ material wicks moisture, breathes, and adapts to temperature changes, offering versatility for different seasons. Bombas’ commitment to social impact is embedded in its model — for every pair purchased, a pair is donated to those in need, addressing the high demand for socks in homeless shelters.
Bombas socks can be purchased exclusively online, either through the company’s website or major online retail outlets. Priced at $9 per pair, the socks not only deliver a premium experience to the consumer but also contribute to a socially responsible cause, making them a compelling choice for those seeking both quality and purpose in their purchases.
How It Went
The company’s position before Shark Tank
Bombas has demonstrated robust performance and a strong market position since its launch. In the nine months since its inception in October of the previous year, the company has achieved $450,000 in sales, showcasing a rapid and promising growth trajectory. The founders, David and Randy, have strategically positioned Bombas as an online-exclusive brand, selling directly to consumers through their website and major online retail outlets. The company’s success is not only attributed to its innovative product but also to its commitment to social responsibility.
Bombas has garnered attention through strategic partnerships with major home appliance manufacturers, amplifying its market reach. While the specific names of partners and wholesalers aren’t disclosed, these collaborations have likely contributed to the company’s market presence and distribution channels. Bombas has resonated with a diverse customer base, attracting consumers who appreciate the blend of quality, innovation, and a philanthropic mission. In terms of funding, Bombas has successfully secured $900,000 in external funding at a $4 million valuation. This capital injection has allowed the company to maintain a healthy balance between profitability and expansion.
The founders project closing the current year at $1.1 million in sales, showcasing sustained financial growth. The company’s financial health is complemented by a well-structured organization. The agile organizational structure enables Bombas to adapt quickly to market demands and efficiently manage its operations. The founders have been proactive in fundraising efforts, ensuring a diverse capital base to support their vision for future growth. With a strong foundation, strategic partnerships, and a growing customer base, Bombas stands as a formidable player in the athletic leisure sock market.
The Negotiations:
The negotiations for Bombas on “Shark Tank” were marked by intense scrutiny from the Sharks, with each investor evaluating the company’s valuation and growth strategy. The founders, David and Randy, entered the tank seeking $200,000 for a 5% equity stake, valuing Bombas at $4 million. However, right from the outset, the Sharks expressed skepticism about this valuation, especially considering the competitive nature of the sock industry. Kevin O’Leary, known for his blunt assessments, quickly declared himself out, deeming the $4 million valuation as ludicrous for a company still establishing its market share.
Other Sharks raised concerns about Bombas’ plateauing month-to-month growth and the scalability of its word-of-mouth marketing strategy. Mark Cuban, in particular, questioned the viability of a $9 sock with a $5 margin in a market dominated by higher-margin items from established brands like Warby Parker and TOMS. Despite these challenges, Daymond John saw potential in Bombas and made a counteroffer of $200,000 for a 20% equity stake. The founders, sensing an opportunity, countered again at $200,000 for 15% with an additional $200,000 line of credit.
The negotiation reached a turning point when Daymond John, recognizing the need to finance the inventory, made a final offer of $200,000 for 17.5%, excluding the line of credit, and committed to financing the goods. After a brief consultation, Bombas accepted Daymond John’s offer, securing a deal that cut their initial valuation in half. The negotiation showcased the founders’ willingness to be flexible and the Sharks’ ability to negotiate based on the perceived value they bring to the table. Ultimately, Bombas left the tank with a strategic partnership with Daymond John and a sense of validation for their mission to make better socks for a better world.
