BOOK REPORT BURN RATE BY ANDY DUNN | 2023 JANUARY

The importance of mental health has never been more critical, especially dealing with the stigmas attached to various mental illnesses and diseases.

At 28, fresh from Stanford’s MBA program and embedded in the move-fast ethos of Silicon Valley, Andy Dunn was on top of the world. He was building a new kind of startup, a digitally native, direct-to-consumer brand out of his NYC apartment.  Bonobos was a new school approach to selling an old-school commodity product: men’s pants. Against all odds business was booming.

Dunn raised tens of millions of dollars while his boundaries between work and life evaporated. As he poured everything he had into the startup, Dunn was haunted by a diagnosis of bipolar disorder he received after a frightening manic episode in college.  He had understood his diagnosis as an unspeakable shame that should be locked away.

Burn Rate is an unconventional entrepreneurial memoir, a gripping parable of the 21^st century economy, and a revealing look at the prevalence of mental illness in the startup community. In his intimate, radically honest book, Andy Dunn fearlessly shines a light on the dark side of success and challenges us all to take part in the deepening conversation around creativity, performance, and disorder. Here is my recap of his extraordinarily brave memoir.

In Andy’s words “Here is the tabloid-ready summary of my book: In 2016 on the precipice of selling Bonobos, the startup I’d been building for the previous nine years, I flew into a manic spiral and was hospitalized for a week in the psych ward at Bellevue in New York. When I was discharged, I was met by NYPD officers who took me to jail where I was charged with felony and misdemeanor assault.” If this statement doesn’t grab you, I don’t know what will!” His Ghost, the diagnosis of bipolar disorder, isn’t a secret anymore. It had taken five years of therapy for him to be able to write this book.

Mental illness is one of the final taboos, especially in the business community which values stability. The thing is, many, many of us have it. A LOT. The illness Andy dealt with-bipolar disorder-affects 3 percent of the population and, by one estimate is 7 times more prevalent in entrepreneurs. Perhaps this means that 20% of entrepreneurs have this horrible, unpredictable disease. It is an illness where suicide attempt rates approach 60%, and suicide success rates approach 20% all according to the National Institutes of Health.

You might remember that recently in the world of sports, the mental health conversation is beginning, thanks to Naomi Osaka the tennis player, Simone Biles the gymnast, Mardy Fish also a tennis player, and many others.  In the entertainment world, it is understood and accepted that artists face mental health challenges, for example Kanye West, Demi Lovato, and Britney Spears.

In the business world though, no one talks.

You would think that Andy’s grandmother’s psychiatric issues and his grandfather’s career as a psychiatrist might have prepared him and his family for what was to come. Instead, the family tradition did the opposite: it prepared them to bury it all.

Andy went to college at Northwestern and lived in a freshman party dorm where alcohol was the defining fixture of extracurricular life. In high school he had been a late bloomer to partying and dating. He then started to wing-it in the classroom while his focus turned entirely to his social life.

In between his sophomore and junior years, Andy took an internship in New York City with Deloitte, a management consulting firm. It was his first real job in the business world and he loved it.

Six months later after a bout with “magic” mushrooms, Andy had his first manic episode as well as his first serious adult relationship with a woman named Camila.

Once a manic episode starts, it’s incremental at first.  He didn’t know what was happening. Nobody did.

In his book Andy gives us an example of the difference between hypomania and mania. “Hypomania is talking excitedly about the guy you just met about who you are going to marry. Mania is talking excitedly about the watermelon you just ate that is the reincarnation of your grandfather. Hypomania is a vibrant experience of reality. Mania is inventing your own reality, living out your unconscious in Technicolor.”  He continues by saying “It is the year A.D. 2000. Wait. Those are the same as my initials. The Messiah is coming back. And I know who He is. It’s Me.”  After an increasingly difficult episode, he commits himself to the psych ward. He continues to believe he is to be the savior of men. After a week he was discharged with a diagnosis: bipolar disorder type 1, which is the most severe kind. When he got back to his parent’s house, he couldn’t even look up that term. It became a forbidden word. If he had looked it up, he would have learned that there is no cure, that it’s like a time bomb in the brain, one that might go off at any point and that on the flip side, can lead to prolonged periods of depression and stunningly high rates of suicide. If someone told you that this is what your future might look like, would you want to believe it? Would you be willing to?  His only way to cope with the diagnosis was to categorically reject it. The stigma around mental illness makes it logical to skip meds too.  If something is so shameful that it is not spoken about, why take medication and internalize that shame?

At Stanford Graduate School of Business or simply the “GSB” as insiders called it, Brian Spaly was his new roommate. Andy felt that Brian was just like him, only better in every way. They became fast friends, he admired Spaly. He was better at sports. He was funnier, He had more money. He was self-reliant, disciplined and frugal.  Andy was none of those things. From the moment they arrived at Stanford, Spaly had been talking only about one entrepreneurial idea: PANTS.  Spaly believed that most men’s pants didn’t fit. Andy never took Spaly’s business idea seriously. Andy felt that he was the one who was going to do something entrepreneurial, and Spaly’s pants thing was just a curious little idea, like a toy. What he didn’t know at the time was that a lot of great companies start out as toys.

They got together on this venture and it was time to give this pants brand a name. One possible candidate caught Andy’s eye, but it was a word he didn’t’ recognize: Bonobos. Buh-NOH-boze. Bonobos were peace-loving monkeys that like to have sex. Andy wanted to be a bonobo also so agreed to the name. They decided to build the brand digitally from the ground up. The momentum of Zappos, a hot e-commerce company selling shoes inspired them. Zappos was also out-assorting people, offering sizes that were hard to find, and were recognized for great customer service and fast response times. Why couldn’t the same be true for a new pants brand?

Andy and Spaly struck a deal: Andy would become the co-founder and CEO of Bonobos, and Spaly would stick with the private equity job he had just been offered, while working nights and weekends for Bonobos on the side.  Andy said,” Spaly, I think saw me as having the hustle, grit, and cunning to take his kernel of an enterprise and turn it into a company…Spaly didn’t know that I had bipolar disorder.”

With two suitcases of pants shoved in the trunk, Andy moved into a new apartment in NYC. The next morning, he would wake up to join the cutthroat competitive ranks of one of New York’s proudest and most exhausting industries: fashion, and he’d be pursuing a business model that was completely unprecedented, a digitally native, DTC brand. He would be doing this as a first-time founder, an inexperienced CEO, and a 28-year-old male.

All of their angel investors started out as friends or mentors. As Andy hustled to keep up with the company’s growth, he felt a full commitment to one mission: to build Bonobos and, in so doing, serve as inspiration for how brands could be built in the digital age.

They booked $100,000 in sales in their first 6 months, 500 transactions, against a barely organized, couple-hundred-line Excel file of expenses.

Less than a year into the job, three of Andy’s biggest flaws were already evident: implicitly trusting his intuition about people and, even worse, his intuition in general; acting incongruously with how he was feeling and not getting in touch with his negative and vulnerable feelings; and avoiding the difficult, candid conversations that are literally the bedrock of startup CEO life. The flaws of a founder are set into the foundations of the firm.

Six months after launching, the company surged to a $1 million run rate. This meant they were selling $100,000 worth of pants each month, or one thousand pairs each month or 30 pairs a day.

The beauty of hypomania, in Andy’s words is that it’s an “engine for creativity, optimism, and vision.” On the one hand this is what is required to change the world and succeed in business. On the other, the line between fantasy and reality can be threadbare.

According to relationships guru John Guttman, the Four Horsemen of the Apocalypse, the ingredients that spell doom between partners, are criticism, contempt, defensiveness, and stonewalling. Check, check, check and check. While Andy’s relationship with Spaly was disintegrating on the outside, Andy’s mental health was disintegrating on the inside.

The important thing, he remembers thinking, is to tell no one. He became an expert at camouflage. Hiding in workaholism, hiding in alcoholism, showing no vulnerability, doing no serious self-inquiry, and having no hard conversations. In other words, getting no help.

Around the corner from depression is something diabolical, something doctors and therapists know can be the beginning of the end, if left untreated. It’s called suicidal ideation, and it’s an early step to self-inflicted oblivion.

Andy and Spaly did not get along.  The year of the co-founder “divorce” had been the hardest year of his life according to Andy. Now that he was alone at the top, the blame-it-on-Spaly days were over. He could not have imagined things would get worse.  Of course, they did.

Spaly was not replaceable by one person.  As Andy dug into what Spaly actually did he came to realize that his had been not one job but at least five: merchandising, production, design, planning, and creative direction. These areas were all foreign to Andy.

At first he did not understand what was meant by the word “Merchandising”. For a retailer that sells mostly other brands, like a Walmart, the merchants are the people who buy the products the retailer sells. They decide who for, who from, at what cost to buy, and at what price to sell. But what if you are a brand? Then what is merchandising? Eventually he came to understand a merchant at a brand is the human who figures out what products people want and then leads the team in the creation of those products.

They were burning cash faster than expected, and they had to scramble to continue raising angel capital. They got to the point where they might struggle to make payroll.

As Andy boarded a plane to California, capital was no longer feeling infinite.  If he couldn’t raise and close another $250,000 in a week, they might have to lay off much of the team. His headspace during that period was mixed: some days he felt confident that they were going to figure it out, while on other days he gave in to near-total despair, with a sinking feeling that he was going to screw it all up.

There are two ways a startup fails: either the founder gives up or the company runs out of money. If he was perpetually depressed and didn’t get the money, they were by default going to go out of business.  Andy says, “Depression is in my wiring. Losing is not. I’ve always hated it. The only thing I hate more than losing is letting other people down.”

Needless to say, he got the money to remain open.  By the time all was said and done, in their first 3 years, they raised $8 million in total across four angel funding rounds from more than 120 investors.

It’s now the back half of 2010. They realized that due to market size they would be forced to find a successful way to expand into other categories.

They discovered a road map for how to grow the company: by expanding the brand built around fit in the 3 big categories-pants, shirts, and later, suits-rather than smaller categories like swimwear and polos.  Bonobos was no longer just a pants company. It was a menswear company.

Many problems ensued in the next few years. Executives were quitting, and Andy made many bad hires.  Andy looked to his mentors for advice and was told when hiring to put all your attention on 2 things. One, their passion for the mission of what you’re building. And two, their fit with your culture and core values. Andy questioned how to assess passion for the mission. His mentor told him that it can actually be tested. “You make them 2 offers. One offer with higher cash and lower equity, the other one with lower cash and higher equity. If they take the first one, you know they don’t believe as much as they need to.” This resonated with Andy.

The years 2011, 2012, and 2013 were the go-go days. In September 2011, Crain’s New York Business named Bonobos the 16^th best place in New York to work. They continued to recruit stars from more established players in the fashion industry, people who saw Bonobos’ internet-driven approach as the future. They had now not only helped invent how brands were built in the digital age, they had developed a leading example of how to re-imagine store experiences in the internet era.  They opened “guideshops” which opened their eyes to a new reality: brick and mortar wasn’t dying; it was just evolving. So they cut a deal with Nordstrom. Faster than anyone thought possible they became Nordstrom’s top-selling chino brand.

The company continued to grow, but so did their losses. Rather than focusing on building the core business to profitability, Andy developed a new leadership concept. It’s called shiny new object syndrome, and at a startup it means throwing yourself into whatever is your freshest and biggest idea. This time, their ever-increasing money burn rate demanded a cash infusion so large that there might be nowhere to turn. It seemed that Andy could not make the transition from a co-founder with vision to a CEO with realism. They needed to do a layoff, and instead were still hiring.  Things were happening he did not understand. He started seeing what one could call his “soulmate” named Manuela.

Things started spiraling out of control at that point. Slowly, but totally out of control. His family set up an intervention with him. He thinks they are only trying to kill him. This type of paranoid thinking is part of the tragedy of bipolar disorder. Andy told Manuela about his depression. She did not leave him.

Andy was at the helm of Bonobos again after a sabbatical he felt he needed. His energy surged back to a controlled hypomanic state. He wasn’t going off the rails, but he was on. He had had some epiphanies during his sabbatical. The sad truth was that what he became convinced of were things his many board members and executives had been trying to persuade him for years.  At the heart of this: They needed to be more focused on building the one thing right in front of them, a men’s brand called Bonobos, and stop trying to innovate outside of the core.  Andy continues, “As I was gripped for the first time in my life, by a desire to have our company do less, not more, I felt like a real CEO at last…While a spirit of innovation is important, the nature of experimentation is that some things aren’t going to work. When they don’t, it’s important to stop doing them.”

He moved in with Manuela and it seemed like things had turned around for the best. It is sometimes when things are going too well that bipolar disorder plays its most insidious hand.

Andy started at this point to unravel. He howled at the moon. He fell in the bathroom. He took all his clothes off. Manuela and her visiting mother watched a naked man losing his mind.

After passing out, when he came to, he’s lying down, floating down a hallway. He can’t move his arms. His hands are tied. He was in Bellevue Hospital, the oldest public hospital in the U.S. tracing its roots back to 1736. The hospital sees more than one hundred thousand ER visitors and hosts thirty thousand inpatients each year.  Bellevue takes anyone on regardless of their ability to pay. It is known for treating substance users, “criminals”, the homeless, and the mentally ill.  Despite all of his manic escapades, he is soon declared ready to be taken upstairs from the psychiatric ER to the psychiatric ward.  There his meds were beginning to kick in.

Finally, one day Manuela arrived. She had a black eye, partially covered with makeup. “Did I hurt you?” he asked. Nothing was the same after that.

When at last he walked out of Bellevue after a week, he was greeted by an altogether different group: four cops in navy-blue uniforms with NYPD logos. They processed him and charged him on two counts: misdemeanor assault and felony assault of a senior citizen.  He knew he had hit Manuela but what he didn’t know was that he had pushed her mom to the ground and kicked her while she was down.  His family and Manuela came down to the station but he was not allowed to see them. His attorney said some words. The judge said some words. It was all a blur to Andy. He was going to be let loose, with the condition that he come back in a week for a hearing and was not to see Manuela during that time. He went back to work.

For a call with his board of directors, his strategy was to get everything out in the first few sentences.

“I just spent the last week in the hospital. I had an episode, what they call a manic episode, during which I lost my mind. Before getting to the hospital, I struck both Manuela and her mom.”  He continued, “When I got out of the hospital I walked straight into handcuffs. The City of New York charged me.” One of the board members asked, “Has there been a diagnosis?”  Andy answered them with the truth that the diagnosis was bipolar disorder type 1. He told them he was originally diagnosed when he was twenty, and had been in denial about it for 16 years. The board member, Joel Peterson, answered Andy with “It’s entirely manageable. I have full faith in you to take care of yourself, and I have full confidence in you as our CEO.” His words loosened the noose of shame around Andy’s neck.

Andy realized that getting discharged after being hospitalized for a manic episode wasn’t the end of his treatment. It was only the beginning. He got a referral for a doctor who was both a therapist and a psychiatrist, Dr. Z.  He began to see Dr. Z two times a week, and together they rebuilt Andy’s psyche, one day at a time.

A new version of Andy Dunn as a leader came to life.  He felt called to operate at a higher level.  He had lost his mind, and almost lost it all. He tells us, “Forget about being the Messiah. I was happy just to be selling pants.”

Six months after his mega-episode, his case was dismissed, and the records were sealed.

Once he was firmly back in the saddle at Bonobos, the offers came in. Two were private equity, and the other was a strategic buyer, and an unexpected suitor: Walmart. He realized how fortunate he would be to be a part of the digital transformation of the world’s largest company. In the next few weeks, he went from wondering if Walmart was the right owner for the company to praying that such a deal might come to pass. After receiving a letter of intent from Walmart at $310 million, the board gave the green light. They sold to Walmart.

Andy got married to Manuela, converted to Judaism and had a son. He never wanted his son to experience him as a liability. He never wanted him to see his dad manic. He never wanted him to see his dad in bed for weeks or months at a time.

Bipolar disorder is a cruel illness. It is an illness without a cure.  One can never let up on the constellation of efforts required to hold it at bay. But here is the good news that I learned from Andy Dunn’s book: it is eminently treatable. Pills every day. A doctor’s eyes on the “patient” at least once a week. Therapy forever. Transparency with everyone you love. Andy found out most of all he needed honesty with himself. He says in conclusion, “I. Can. Never. Let. Up.” He knew that he never would. 

Andy was named to Fortune’s 40 under 40 list in 2018. He lives in Chicago with his wife and their son.

I hope you enjoyed this remarkable story about a remarkable man.  I hope it also helps you to understand, even a little, about this disease that is prevalent in our industry.  Let’s treat everyone we meet with compassion and love for we do not know what personal struggles they may be going through.

Warm regards,