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Walmart exec Andy Dunn says he’s worried that the ‘music’s about to stop’ for a bunch of retail startups (WMT)

Walmart exec Andy Dunn says he’s worried that the ‘music’s about to stop’ for a bunch of retail startups (WMT)

NEW YORK CITY — When it comes to startups, Andy Dunn has been on both sides of the table.

He's the founder of Bonobos, the popular menswear e-commerce company that launched back in 2007. But after Walmart bought Bonobos for $310 million in 2017, he's taken on a different role as senior vice president of digital consumer brands at the retail giant.

Now that he's on the flipside, assessing brands for Walmart to potentially purchase, Dunn said he's noticed a few things about the current crop of startups.

Speaking at the The Business of Home's first Future of Home conference in Manhattan with Business of Home columnist and podcaster Dennis Scully and Interior Define chairman and founder Rob Royer, Dunn pointed out "how few brands actually make money."

"We're in an era where there's a lot of money out on the craps table and the music's about to stop," Dunn said. "What people, myself included, don't appreciate is that you've got to make money at some point. Particularly in retail. You might be able to get away with it for a period of time in software or another industry."

Read more: Walmart exec Andy Dunn, who founded Bonobos, says being digitally native is now overrated — and Nordstrom is the business's most profitable channel

Dunn didn't diminish the challenges of getting in the black when it comes to retail startups, saying that e-commerce in particular is a "tremendously challenging, frequently unprofitable business."

But even aiming to become profitable has increasingly become an "old school" move. And, while exciting new startups have been able to succeed without demonstrating profitability off the bat, Dunn worries about the implications of that strategy in the long term, especially in the event the economy takes a plunge.

"I am nervous for people that feel like this is just going to keep going the way that it has been," Dunn said. "Because you know, never in human history does it keep going."

That being said, Dunn said that there are still certain startup founders out there who are at least prioritizing becoming profitable the old-fashioned way.

"I really admire the entrepreneurs that have figured out — and they're out there — that figured out that we're going to actually just make money," Dunn told the audience. "I think we have to — whether it's venture-backed or not, whether you raise outside capital or not — get back to the old school of turning profit."